District Not Recorded
The source did not name an office we could identify. These records remain unassigned rather than guessed.
International Arms Dealer Arrested for Conspiracy<br /> to Supply U.S. Fighter Jet Engines to IranRead the Press Release
Jacques Monsieur, a Belgian national and resident of France suspected of international arms dealing for decades, has been arrested on charges alleging that he conspired to illegally export F-5 fighter jet engines and parts from the United States to Iran. Monsieur is scheduled to have his arraignment today in federal court in Mobile, Alabama.
A six-count indictment returned on Aug. 27, 2009, in the Southern District of Alabama charging Monsieur, 56, and co-defendant Dara Fotouhi, aka Dara Fatouhi, 54, an Iranian national currently living in France, with conspiracy, money laundering, smuggling, as well as violations of the Arms Export Control Act (AECA) and the International Emergency Economic Powers Act (IEEPA).
Monsieur was arrested by federal agents last Friday upon his arrival in New York. Fotouhi remains at large. The charge of conspiracy carries a potential sentence of five years in prison, while smuggling carries a potential 10-year prison term, AECA carries a potential 10-year prison term, money laundering carries a potential 20-year prison term and IEEPA carries a potential 20-year prison term.
According to the indictment and an affidavit filed in the case, defendants Monsieur and Fotouhi are experienced arms dealers who have been actively working with the Iranian government to procure military items for the Iranian government.
The indictment alleges that in February 2009, Monsieur contacted an undercover agent seeking engines for the F-5 (EIF) fighter jet or the C-130 military transport aircraft for export to Iran. Thereafter, Monsieur began having regular e-mail contact with the undercover agent regarding requested F-5 engines and parts.
These engines, known as J85-21 models, are replacement engines for the F-5 fighter jet that was sold to Iran by the United States before the 1979 Iranian revolution. The engines and parts are designated as defense articles on the U.S. Munitions List and may not be exported from the United States without a license from the U.S. State Department. Additionally, these items may not be exported to Iran without a license from the U.S. Treasury Department due to the U.S. trade embargo on Iran.
According to the indictment, in March 2009, Monsieur met with the undercover agent in Paris, where Monsieur again requested engines and parts for the F-5 fighter jet. In May 2009, an undercover agent met with Monsieur in London, where Monsieur introduced Dara Fotouhi as a business associate, and again discussed the illegal export of F-5 fighter jet engines from the United States to Iran. During this negotiation, the defendants allegedly asked the undercover agent if he could obtain or use U.S. shipping or export authorization documents that falsely indicated that the end user of the items would be located in Colombia.
In June 2009, according to the indictment, Monsieur sent an e-mail to the undercover agent and provided a purchase order for F-5 fighter jet parts from a front company for an organization known as Trast Aero Space, located in Kyrgyzstan. The order requested that the parts be located by the undercover agent and illegally exported to the United Arab Emirates for transshipment to Iran.
The following month, Monsieur allegedly contacted the undercover agent indicating that approximately $110,000 had been wired from Dubai to a bank account in Alabama as payment for the parts. He also indicated that a deposit of $300,000 would be forthcoming as a down payment for two F-5 fighter jet engines. In August 2009, Monsieur requested information from the undercover agent about his contact in Colombia for forwarding the aircraft parts from Colombia to the United Arab Emirates, the indictment alleges.
"The facts alleged in this indictment underscore the global reach of Iranian procurement networks and the international arms traffickers who help supply them. This case also highlights the importance of keeping restricted U.S. weapons technology out of their grasp," said Deputy Attorney General Ogden. "I applaud the many agents, analysts and prosecutors who worked tirelessly to bring about this important arrest."
Acting U.S. Attorney Eugene A. Seidel said, "The investigation and prosecution of cases such as this one will have a significant deterrent impact on illegal arms trafficking and will enhance our national security. Foreign governments and illegal arms dealers should know that there are no ‘safe harbors’ for this type of commerce. We all owe a debt of gratitude to the dedicated investigators, agency analysts, and prosecutors who helped bring about the arrest and indictment of the defendant."
"Those who seek to illegally send dangerous weapons to Iran will never quite know whether the ‘merchant’ they’re dealing with is actually the long arm of the law," said John Morton, the Department of Homeland Security Assistant Secretary for ICE. "ICE is committed to combating the flow of arms and sensitive technologies abroad and will utilize all of its resources to do so."
"Safeguarding our military equipment and technology is vital to our nation's defense and the protection of our war fighters," said Director Sharon Woods, Director of the Defense Criminal Investigative Service. "We know that foreign governments are actively seeking our equipment for their own military development. Thwarting these efforts is a top priority of the DCIS. I applaud the agents and prosecutors who worked tirelessly to bring about this result."
This investigation was conducted by the Department of Homeland Security’s U.S. Immigration and Customs Enforcement (ICE) and the Department of Defense’s Defense Criminal Investigative Service (DCIS).
The prosecution is being handled by Assistant U.S. Attorney Gregory A. Bordenkircher of the U.S. Attorney’s Office for the Southern District of Alabama, with assistance from the Counterespionage Section of the Justice Department’s National Security Division.
An indictment is a formal accusation and is not proof of guilt. Defendants are presumed innocent until and unless they are found guilty.
Fraudulent Tax Return Preparer Sentenced to PrisonRead the Press Release
WASHINGTON - Tax preparer Lawrence Sperling, was sentenced to 33 months in prison today by Judge Deborah Chasanow in Greenbelt, Md., for preparing false tax returns for clients, the Justice Department and Internal Revenue Service (IRS) announced.
In April 2009, Sperling pleaded guilty to one count of aiding and assisting in the preparation and presentation of a false tax return. According to the plea agreement and court records, Sperling is a former attorney (now disbarred), who owned and operated a tax preparation business in Silver Spring, Md., that operated under several names, including American Tax Service, American Tax Institute, JAMAR LLC and American Tax Professional Associates Inc.
According to court records, Sperling prepared individual income tax returns for his clients, along with related schedules and attachments. From approximately January 2002 through at least May 2003, Sperling prepared tax returns for his clients that contained fraudulent items that he knew were greater than that to which the taxpayer was entitled. These false items included medial expenses, charitable contributions, miscellaneous employment-related expenses, and child care credits. Sperling conceded that his practice of preparing false tax returns resulted in a tax loss to the United States of $804,335.
According to the plea agreement, Sperling also impeded the IRS with respect to his individual taxes. Beginning in 1988, Sperling failed to file tax returns for eleven years. In 2001, the IRS penalized Sperling and fined him $10,000 for "willful or reckless understatement of taxpayer’s tax liability" with respect to his tax preparation business. The IRS sent him more than two dozen notices of taxes and penalties due and other warning letters. Beginning in at least 1998, Sperling used a nominee to file the tax returns for his clients and to collect his preparation fees. The nominee held these funds and made disbursements to Sperling or others at Sperling’s request. Sperling never reported or paid taxes on these funds, although he used a portion of them to pay business expenses. As a result, Sperling caused a tax loss of $130,847. The total tax loss related to all of his conduct is $935,183.
Acting Deputy Assistant Attorney General Ronald A. Cimino thanked the IRS-Criminal Investigation special agents who investigated the case, as well as Tax Division trial attorneys Jerrod Patterson, Shawn Noud, and Tino Lisella, who prosecuted the case.
Four Arkansas Men Convicted of Civil Rights Charges in Cross Burning ConspiracyRead the Press Release
WASHINGTON – The Justice Department announced that Jacob A. Wingo, Richard W. Robbins, Clayton D. Morrison and Darren E. McKim pleaded guilty today and yesterday to conspiring to drive a woman and her children from their home in Donaldson, Ark., because they associated with African Americans. A fifth defendant, Dustin Nix, 21, pleaded guilty to similar charges in July 2009.
All defendants pleaded guilty in federal court in Hot Springs, Ark., to civil rights charges and charges of making a false statement to a federal law enforcement officer. Each admitted and pleaded guilty to a felony civil rights charge for conspiring with each other to force a woman and her young children from their home by threats and intimidation because she associated with African Americans. Wingo and Morrison also pleaded guilty to an additional civil rights charge related to their direct involvement in an attempt to burn a cross at the victims’ home to intimidate the victims into leaving. All four defendants also pleaded guilty to a related charge of lying to agents of the FBI in an attempt to cover their conduct.
"The defendants used a despicable and unmistakable symbol of hatred, the burning cross, to intimidate a young family because the family associated with African Americans," said Loretta King, Acting Assistant Attorney General for the Civil Rights Division. "The Civil Rights Division will continue to prosecute this type of illegal, hateful behavior to the fullest extent of the law."
As part of the conspiracy, Wingo, 20, admitted to building a cross, transporting it to the victims' home, and attempting to set it on fire. Morrison admitted to helping to prepare the cross and accompanying Wingo and Nix to the victims’ home to burn the cross. McKim and Robbins, 42, admitted to encouraging Wingo and Nix to build the cross and burn it, as well as driving to the victims' home on a separate occasion to threaten and intimidate them. McKim also admitted to providing materials to Wingo and Nix for them to build the cross.
Wingo and Morrison, 29, face a total of 25 years in prison and a fine of up to $750,000. Robbins and McKim face a total of 15 years in prison and a fine of up to $50,000. The defendants will be sentenced at a later date.
Special Agents from the FBI’s Little Rock Field Office investigated this matter. The case was prosecuted by Special Litigation Counsel Gerard Hogan and Trial Attorney Benjamin Hawk of the Civil Rights Division of the Justice Department, with the assistance of Assistant U.S. Attorney Matthew Quinn for the Western District of Arkansas.
Detroit Clinic Manager Pleads Guilty in Medicare Fraud SchemeRead the Press Release
Denver resident Lil Vargas-Arias pleaded guilty today in U.S. District Court in Detroit to participating in a conspiracy to defraud the Medicare program.
Vargas-Arias, 46, pleaded guilty to one count of conspiracy to commit health care fraud before U.S. District Judge Gerald Rosen. At her sentencing, which is scheduled for Feb. 11, 2010, Vargas-Arias faces a statutory maximum of 10 years in prison and a $250,000 fine.
In her guilty plea, Vargas-Arias admitted that in approximately September 2006, she was hired by the owners of Sacred Hope Medical Center Inc. (Sacred Hope), to manage the clinic on a day-to-day basis. Sacred Hope was a Southfield, Mich., facility that purported to specialize in providing injection and infusion therapy services to Medicare patients. Vargas-Arias admitted to helping to obtain a lease for the premises used by the clinic, and to hiring a co-conspirator physician, purportedly to treat patients at the clinic.
Vargas-Arias admitted in her guilty plea that during the time Sacred Hope was open, the clinic routinely billed the Medicare program for services that were medically unnecessary or were never provided. Vargas-Arias admitted she was aware that the clinic had purchased only a small fraction of the medications that the clinic billed the Medicare program for providing. Vargas-Arias also admitted that patients were prescribed medications at the clinic based not on medical need, but on what medications were likely to generate Medicare reimbursements. Vargas-Arias, along with clinic owner Jose Rosario, who pleaded guilty in the same case on Aug. 18, 2009, admitted to helping falsify medical files maintained by the clinic to make the treatments purportedly being given there appear legitimate, when in fact they were not.
Vargas-Arias admitted that Medicare beneficiaries were not referred to Sacred Hope by their primary care physicians, or for any other legitimate medical purpose, but rather were recruited to come to the clinic through the payment of kickbacks. In exchange for those kickbacks, Vargas-Arias admitted, the Medicare beneficiaries would visit the clinic and sign documents indicating that they had received the services billed to Medicare. Kickbacks came in the form of cash and prescriptions for narcotic drugs. Vargas-Arias admitted to knowing that co-conspirator Arnaldo Rosario, who also pleaded guilty in the same case on Aug. 18, 2009, oversaw and facilitated the payment of cash kickbacks to the Medicare beneficiaries.
Vargas-Arias also admitted that beginning in approximately November 2006, she assisted the owners of another purported infusion clinic, Xpress Center Inc. (XPC), to defraud Medicare. XPC was located in Livonia, Mich. Vargas-Arias admitted to hiring the physician at XPC, and instructed the operators of XPC as to how best to create fictitious patient files to cover up fraudulent billings to Medicare. As at Sacred Hope, Vargas-Arias admitted she was fully aware that the clinic routinely billed the Medicare program for services that were medically unnecessary and, in many instances were never provided. As at Sacred Hope, Vargas-Arias admitted to being fully aware that the purpose of the clinic was not to provide legitimate health care to patients, but rather to defraud the Medicare program.
Vargas-Arias also admitted that between approximately September of 2006 and March 2007, she and her co-conspirators caused the submission of approximately $6,577,899 in false and fraudulent claims to the Medicare program for services purportedly provided at Sacred Hope and XPC. Medicare paid approximately $4,931,428 on those claims.
The case is being prosecuted by Trial Attorneys John K. Neal and Benjamin D. Singer of the Criminal Division’s Fraud Section and by Special Assistant U.S. Attorney Thomas W. Beimers of the Eastern District of Michigan. 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 the inception of Strike Force operations in March 2007 – Miami (Phase One), Los Angeles (Phase Two), Detroit (Phase Three), and Houston (Phase Four) – the Strike Force has obtained indictments of 300 individuals and organizations that collectively have billed the Medicare program for more than $680 million. 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.
Each of the Strike Force teams across the separate phases are led by a federal prosecutor from the Criminal Division’s Fraud Section or the U.S. Attorney’s Office. Each team has an agent from the FBI and HHS-OIG.
To learn more about the HEAT team, go to: www.stopmedicarefraud.gov.
President of Missouri Pesticide Company Sentenced for Environmental CrimesRead the Press Release
WASHINGTON—William Garvey, the president of HPI Products Inc., a pesticide company based in St. Joseph, Mo., was sentenced today in federal court in Kansas City, Mo., for violations of the Clean Water Act and hazardous waste storage laws related to the company’s pesticide production, the Justice Department announced.
Garvey was sentenced to serve six months in prison, six months of home confinement and was ordered to pay a $100,000 fine for having disposed of pesticide waste water down the sewers of the city of St. Joseph. Sentencing for the company was delayed by the court.
Garvey pleaded guilty on Jan. 27, 2009, to a felony violation of the Clean Water Act for disposing of the pesticide waste. The company pleaded guilty on the same day to the same violation of the Clean Water Act as well as a felony violation of the hazardous waste storage laws.
According to court documents, HPI Products maintained warehouses at various locations in St. Joseph where it stored wastes from its operations for years without notifying the proper regulatory agencies. Many of the stored wastes were considered hazardous based upon their ingredients or their characteristics. In addition, HPI employees under Garvey’s supervision disposed of waste waters from the production of pesticides down floor drains and into the city of St. Joseph’s sewers for several years without permit.
"Compliance with our regulatory requirements is essential if we are to protect the environment," said John C. Cruden, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. "This company and its president obtained an economic advantage over its competitors by violating the law and placing the environment and the public safety at risk. That is unacceptable."
"By routinely violating federal safeguards for nearly 20 years, this company threatened the environment and put at risk the health and safety of the community," said Matt Whitworth, Acting U.S. Attorney for the Western District of Missouri. "When doing ‘business as usual’ means breaking the law, we will prosecute the offenders and hold them accountable for their actions."
In a related case, Hans Nielsen, vice president of HPI Products, pleaded guilty yesterday to two counts of violating federal pesticides law designed to provide proper regulatory oversight and prevent improper storage of pesticides.
HPI began production of pesticides in 1980 at 417 S. 4th Street in St. Joseph. From the beginning HPI would wash its waste waters from pesticide production down floor drains and into the city’s sewers. HPI expanded its operations to 424 S. 8th Street in 1986. It eventually relocated and consolidated its operations to 222 Sylvanie Street in 1990. Its practice of using the city’s sewer system for disposal continued at all locations until EPA and Missouri Department of Natural Resources (MDNR) inspections in 2007.
In addition the two former HPI facilities and three other locations in St. Joseph were used as warehouses to store pesticides and process waste it didn't dump into sewers. The pesticides and wastes were left for years in unmaintained buildings without the proper notification to state and federal authorities.
When authorities did discover the warehouses many of the containers were found to have leaked or spilled onto the warehouse floors and ground underneath the warehouses. Samples taken at the storage facilities indicated many of the containers held hazardous wastes. The buildings have been cleaned up by HPI under an EPA order. Further investigation of pollution of the soil around the building is pending.
The investigation was conducted by the EPA Criminal Investigation Division and MDNR. The case is being prosecuted by the Justice Department’s Environmental Crimes Section with the U.S. Attorney’s Office for the Western District of Missouri.
Vice President of Missouri Pesticide CompanyPleads Guilty to Environmental CrimesRead the Press Release
WASHINGTON—The vice president of a Missouri pesticide company, HPI Products Inc., pleaded guilty today in federal court in Kansas City, Mo., for violating a federal pesticides law designed to provide proper regulatory oversight and prevent improper storage of pesticides, the Justice Department announced.
Hans Nielsen pleaded guilty before U.S. District Judge Sarah Hays for the Western District of Missouri to two criminal misdemeanor counts for violating sections of the Federal Insecticide, Fungicide and Rodenticide Act, also known as FIFRA. According to the charges, Nielsen did not notify the state or federal regulatory agencies of the illegal storage of pesticides and failed to maintain records of the storage. For more than twenty years, HPI Products stored pesticides and its wastes in various warehouses in St. Joseph, Mo., without notifying state and federal regulatory agencies.
"The failure to properly notify authorities of the pesticide storage prevented the oversight and safeguards needed to monitor stored pesticides," said John C. Cruden, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. "This failure could have led to a potentially dangerous situation for first responders, who, in the event of an emergency, need proper information to assesses the hazards and determine the proper actions to contain leaks or fires."
Nielsen faces up to 12 months in prison and a fine of up to the greater of $100,000 or twice the amount of either the gain realized by the defendant or the loss caused by the defendant.
Today’s plea is related to felony guilty pleas entered by HPI Products Inc., and its president, William Garvey. Garvey pleaded guilty to a felony violation of the Clean Water Act for disposing pesticide waste down the sewers of the city of St. Joseph. The company pleaded guilty to the same violation of the Clean Water Act as well as a felony violation of the hazardous waste storage laws. Garvey and the company are scheduled to be sentenced on Sept.1, 2009, by U.S. District Court Judge Howard F. Sachs.
The investigation was conducted by the Environmental Protection Agency Criminal Investigation Division. The case is being prosecuted by the Justice Department’s Environmental Crimes Section with assistance from the Western District of Missouri U.S. Attorney’s Office.
U.S. Court Rejects Efforts by Schering-Plough Corporation to Repatriate $690 Million in Offshore Earnings Without Paying TaxesRead the Press Release
WASHINGTON - A federal court in Newark, N.J., denied Schering-Plough Corp. a $473 million refund in connection with two transactions in which Schering-Plough sought to avoid taxation on $690 million in profits it repatriated from offshore subsidiaries into the United States.
In 1991 and 1992, Schering-Plough entered into Strippable Increasing Principal Swaps (STRIPS) transactions created by its financial advisor, Merrill Lynch. These transactions involved interest rate swap agreements with most of the receive legs assigned to Schering-Plough's controlled Swiss subsidiaries. The transactions were designed to bring previously untaxed profits made by Schering-Plough's foreign subsidiaries into the United States without paying the tax owed on repatriation.
Judge Katherine S. Hayden found Schering-Plough owed tax because the STRIP transactions' form–a purported sale of the stream of income payments under the swaps–was inconsistent with the substance–a loan from the subsidiaries to Schering-Plough that triggered taxation–and as a result, Schering-Plough was not entitled to the tax treatment it sought. The court found in the alternative that the transactions lacked economic substance, did not have a genuine business purpose, and were designed to avoid tax. The opinion noted that the internal revenue code does not leave room for corporate taxpayers to avoid their obligations.
"This victory for the United States should serve as another warning to taxpayers of all sizes and sophistication who consider attempting to circumvent the federal tax laws and their duty to pay their fair share," said D. Patrick Mullarkey, the Acting Deputy Assistant Attorney General of the Justice Department’s Tax Division.
Mr. Mullarkey thanked the Tax Division trial attorneys who tried the case: David Katinsky, Dara Oliphant, and Lisa Bellamy and former Tax Division Senior Litigation Counsel Richard Jacobus.
Opinion (PDF)
Justice Department Seeks Removal of Detroit-Area Man<br /> Who Shot Jews While Serving as Nazi PolicemanRead the Press Release
The Department of Justice has initiated removal proceedings against a Troy, Mich., resident based on his participation in violent acts of persecution while serving as an armed member of the Nazi-sponsored Ukrainian Auxiliary Police (UAP) in occupied L’viv, Ukraine, during World War II.
The charging document, filed Aug. 27, 2009, in U.S. Immigration Court in Detroit, alleges that John (originally Iwan) Kalymon served as a member of the UAP from at least May 1942 to March 1944; that he personally shot Jews while serving, killing at least one; and that he participated in violent anti-Jewish operations in which Jews were forcibly deported to be murdered in gas chambers and to serve as slave laborers.
"These charges once again demonstrate the resolve of the Department of Justice to deny safe haven in this country to human rights violators, no matter how long ago they committed their heinous acts," said Assistant Attorney General Lanny A. Breuer. "The ultimate removal of John Kalymon will close a very painful chapter and provide a measure of justice to his victims and their families."
As the government established in prior federal court litigation that resulted in a court order revoking Kalymon’s naturalized U.S. citizenship, during the German occupation of L’viv, which had been part of Poland before the war, Nazi German forces assisted by the UAP confined more than 100,000 Jews to a ghetto in the city and carried out periodic operations to reduce the ghetto’s population. In these violent operations, German forces and the UAP rounded up Jews, beating and shooting those who showed any sign of resistance, and sent most of them to be murdered in the gas chambers at the Belzec extermination center. Some were shot or selected to be worked to death in forced labor camps.
Kalymon, 88, admitted in court proceedings that he fled with retreating German forces in 1944. He immigrated to the United States from Germany in May 1949, concealing his UAP service from U.S. immigration officials and obtained U.S. citizenship in Detroit in October 1955. A federal judge in Detroit revoked his citizenship in March 2007, concluding that Kalymon assisted in the wartime persecution of Jews by, "taking part in sweeps of the ghetto during periodic reduction actions; manning cordon posts around the city to prevent Jews from escaping before and during such actions; and hunting for Jews who attempted to hide or flee." The court noted that World War II-era documents, including a handwritten Aug. 14, 1942, report prepared by Kalymon in which he accounted to his UAP superiors for ammunition he had expended that day in shooting Jews, proved that Kalymon personally killed at least one Jew and wounded at least one other. The actions were part of the so-called "Great Operation," which resulted in the removal of 40,000 Jews from the L’viv Ghetto in August 1942.
"With the active assistance of collaborators like John Kalymon, the Nazis annihilated some 100,000 innocent Jewish men, women and children in L’viv," noted Eli M. Rosenbaum, Director of the Criminal Division’s Office of Special Operations (OSI). "Participants in such crimes have forfeited any right to enjoy the precious privilege of U.S. citizenship or to continue residing in the United States."
The proceedings to denaturalize Kalymon were initiated in 2004 by OSI and the U.S. Attorney’s Office in Detroit. The case is a result of OSI’s ongoing efforts to identify, investigate and take legal action against former participants in Nazi crimes of persecution who reside in the United States. Since OSI began operations in 1979, it has won cases against 107 individuals who participated in Nazi-sponsored persecution. In addition, more than 180 suspected participants in Nazi crimes who sought to enter the United States in recent years have been blocked from doing so as a result of OSI’s "Watchlist" program, which is enforced in cooperation with the Departments of State and Homeland Security.
The removal case against Kalymon is being litigated by OSI Senior Trial Attorney William H. Kenety. The Detroit office of U.S. Immigration and Customs Enforcement has provided assistance. Members of the public are reminded that the charging document contains only allegations and that the government will be required to prove its case before an immigration judge.
Arizona Man Sentenced for Selling Bald Eagle FeathersRead the Press Release
WASHINGTON – Cedric E. Salabye of Dilkon, Ariz., was sentenced Friday in federal court in Phoenix for selling 11 bald eagle tail feathers, the Justice Department announced today. Salabye pleaded guilty on April 23, 2009, to one count of a federal indictment charging him with selling eagle feathers in violation of the Bald and Golden Eagle Protection Act. Judge David G. Campbell of the U.S. District Court for the District of Arizona sentenced Salabye to five years of probation, six months of home confinement and 150 hours of community service.
At the time Salabye committed the violation in 2006, the bald eagle was listed as threatened under the Endangered Species Act. The bald eagle was removed from protection under the federal Endangered Species Act in 2007. However, two other federal laws still provide protection for the bald eagle—the Bald and Golden Eagle Protection Act and the Migratory Bird Treaty Act.
Eagles and other protected migratory birds are viewed as sacred in many Native American cultures and the feathers of the birds are central to religious and spiritual Native American customs. By law, enrolled members of federally recognized Native American tribes are entitled to obtain permits to possess eagle parts for religious purposes, but federal law strictly prohibits the sale of bald and golden eagles or their feathers and parts under any circumstance. The U.S. Fish and Wildlife Service operates the National Eagle Repository, which collects eagles that die naturally, by accident or other means, to supply enrolled members of federally recognized tribes with eagle parts for religious use.
"The buying and selling of the feathers of bald eagles, our nation’s symbol, is illegal and those who choose to ignore those laws will be prosecuted," said John C. Cruden, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division.
The case was investigated by the U.S. Fish and Wildlife Service’s Office of Law Enforcement and the Navajo Nation Department of Fish and Wildlife. The case was prosecuted by the Environmental Crimes Section of the Justice Department’s Environment and Natural Resources Division.
United States Transfers Two Guantanamo Bay Detainees<br /> to the Government of PortugalRead the Press Release
The Department of Justice today announced that two Syrian nationals have been transferred from the detention facility at Guantanamo Bay to the control of the government of Portugal.
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, the detainees were approved for transfer from Guantanamo Bay. On Aug. 6, 2009, in accordance with Congressionally-mandated reporting requirements, the Administration informed Congress of its intent to transfer these two detainees.
The transfers were carried out under an arrangement between the United States and the government of Portugal. The United States has coordinated with the government of Portugal to ensure the transfers take place under appropriate security measures and will continue to consult with the government of Portugal regarding these detainees.
Since 2002, more than 540 detainees have departed Guantanamo for other countries including Albania, Algeria, Afghanistan, Australia, Bangladesh, Bahrain, Belgium, Bermuda, Chad, Denmark, Egypt, France, Iran, Iraq, Jordan, Kuwait, Libya, Maldives, Mauritania, Morocco, Pakistan, Portugal, Russia, Saudi Arabia, Spain, Sweden, Sudan, Tajikistan, Turkey, Uganda, United Kingdom and Yemen.
Three Men Charged in Human Trafficking Conspiracy for <br /> Exploiting Thai Farm Workers in HawaiiRead the Press Release
WASHINGTON – The Justice Department announced the indictment of Alec Souphone Sou and Mike Mankone Sou, owners of Aloun Farm in Hawaii, and Thai labor recruiter William Khoo late yesterday for engaging in a conspiracy to commit forced labor and visa fraud. The charges arise from the defendants’ alleged scheme to coerce the labor and services of Thai nationals brought by the defendants to Hawaii to work under the federal agricultural guest worker program. Both Sou defendants are also charged with conspiring to commit document servitude.
The charges set forth in an indictment are merely accusations and the defendant is presumed innocent until proven guilty. If convicted, Alec and Mike Sou each face maximum sentences of 15 years in prison and William Khoo faces a maximum of 10 years in prison.
Alec Sou, Mike Sou and William Khoo conspired and devised a scheme to obtain the labor of 44 Thai nationals by enticing them to come to Aloun Farms in Hawaii with false promises of lucrative jobs, and then maintaining their labor at the farm through threats of serious economic harm, according to the indictment. They arranged for the Thai workers to pay high recruitment fees, which were financed by debts secured with the workers’ family property and homes. Significant portions of these fees went to the defendants themselves, as alleged in the indictment. After arrival at Aloun Farms, the Sou defendants confiscated the Thai nationals’ passports and failed to honor the employment contracts. The Sou defendants maintained the Thai nationals’ labor by threatening to send them back to Thailand, where they would face serious economic harms created by the debts. The indictment also charges that the defendants engaged in a visa fraud conspiracy by making false representations in documents filed to obtain employment-based visas.
This case is being investigated by the FBI and the U.S. Department of Homeland Security Immigration and Customs Enforcement. This case is being prosecuted by trial attorneys Susan French and Kevonne Small of the Criminal Section of the Civil Rights Division.
Three Gang Members Sentenced in Drug Conspiracy <br /> and for Related ChargesRead the Press Release
Three members of the violent gang known as the Almighty Latin King and Queen Nation (ALKQN)were sentenced today for their participation in narcotics and weapons trafficking.
Hiluterio Chavez, aka "Zeus," 33, of Chicago, was sentenced today to 87 months in prison by U.S. District Judge Sam R. Cummings of the Northern District of Texas, Lubbock Division. Chavez pleaded guilty on May 14, 2009, to a superseding indictment charging him with being a convicted felon in possession of firearms, possession of stolen firearms and conspiring to engage in the business of dealing in firearms.
Guerrero Olivas, aka "Screech," 26, of Big Spring, Texas, was sentenced today to 210 months in prison by Judge Cummings. Olivas pleaded guilty on May 29, 2009, to a superseding indictment charging him with conspiring to distribute and possess with intent to distribute five kilograms or more of cocaine and 100 kilograms or more of marijuana.
Eliseo Perez, aka "Wicked," 28, of Mission, Texas, was sentenced today to 188 months in prison by Judge Cummings. Perez pleaded guilty on May 14, 2009, to a superseding indictment charging him with conspiring to distribute and possess with intent to distribute five kilograms or more of cocaine and 100 kilograms or more of marijuana.
According to documents filed in court, Olivas and Perez admitted that they were members of a conspiracy that included Luis Nava, aka "Flaco"; Jose Robledo Nava, aka "Chino"; Reynaldo Nava, aka "Rat"; Robert Allen Ramirez, aka "Nesyo"; Marie Chavez, aka "Shorty"; Carol Ann Rivas Nava; Cecily Dominique Juarez; Jesus Martinez, aka "Solid"; David Hellums, aka "Cutthroat"; James Johnathan Cole, aka "Blitz;"; Eduardo Daniel Mares, aka "Pitt;" Gabriel Lee Gonzales; Michael Conde, aka "Psycho"; John Guzman, and others, and that from 2001 until December 2008, they directly or indirectly agreed to distribute, and possess with intent to distribute, cocaine and marijuana.
Olivas and Perez admitted that the overall scope of the conspiracy involved at least five kilograms of cocaine and 100 kilograms of marijuana. Olivas and Perez further admitted that they and their co-defendants intentionally and knowingly possessed with the intent to distribute cocaine and marijuana and distributed cocaine and marijuana to others. According to the indictment, they acquired the cocaine and marijuana from Mexico and brought it to the South Texas region, where it was packaged, stored, and transported to Big Spring, Lubbock and Midland for further distribution.
During part of the time of the conspiracy, in mid-July 2005, defendant Hiluterio Chavez conspired with others to deal in firearms. Chavez admitted that he organized, managed, and arranged for the acquisition of firearms throughout the Northern District of Texas, and that he would transport firearms within the Northern District of Texas. Court documents filed in the case indicate that the defendants illegally transported and trafficked the firearms throughout Texas with the intent to transport them to the Chicago area.
In addition to these three defendants, 10 defendants have also pleaded guilty and are yet to be sentenced. One defendant, Luis Nava, aka "Flaco," withdrew his guilty plea today and will proceed to trial by court order. Five remaining defendants, including Jose Robledo Nava, the alleged ALKQN leader in Texas, are pending trial. Jose Robledo Nava, along with James Johnathan Cole, Robert Allen Ramirez, Gabriel Lee Gonzales and Eduardo Daniel Mares, are charged in the indictment with the May 4, 2008, murders of Valerie Garcia and Michael Cardona in Big Spring.
An indictment is merely an allegation. Defendants are presumed innocent until and unless proven guilty in a court of law.
The case is being investigated by the National Gang Targeting, Enforcement, and Coordinating Center (Gang TECC); the Organized Crime Drug Enforcement Task Force (OCDETF); the Midland and El Paso U.S. Attorney’s Offices; the U.S. Drug Enforcement Administration; the FBI; U.S. Immigration and Customs Enforcement; the Bureau of Alcohol, Tobacco, Firearms and Explosives; the El Paso Intelligence Center; U.S. Customs and Border Protection; the U.S. Marshals Service; the Texas Department of Public Safety; the police departments of Lubbock, Midland, Houston, San Antonio and Big Spring, Texas; the Lubbock County Sheriff’s Office; and the Howard County District Attorney’s Office.
Trial Attorneys Cody L. Skipper and Joseph A. Cooley of the Criminal Division’s Gang Unit and Assistant U.S. Attorney Jeffrey R. Haag of the Lubbock U.S. Attorney’s Office are prosecuting the case.
Son of Imprisoned Spy Pleads Guilty to Two Counts of Federal IndictmentRead the Press Release
Nathaniel James Nicholson, 25, of Eugene, Oregon, appeared before U.S. District Judge Anna J. Brown and pled guilty to the crimes of conspiracy to act as an agent of a foreign government and conspiracy to commit money laundering. The maximum penalties for those crimes are five years in prison and a fine of $250,000, and 20 years in prison and a fine of $500,000, respectively. Judge Brown scheduled sentencing on January 25, 2010.
Nicholson’s father, Harold J. Nicholson, a former Central Intelligence Agency (CIA) employee, is serving a 283-month sentence at the Federal Correctional Institution (FCI) in Sheridan, Oregon, for a 1997 conviction of conspiracy to commit espionage. The government alleges that defendant Harold J. Nicholson, working through his son Nathaniel J. Nicholson, received cash proceeds for his past espionage activities from agents of the Russian Federation between 2006 and 2008.
Nathaniel J. Nicholson, who has been on pre-trial release, admitted in his plea that he met with his father, Harold J. Nicholson at the prison in Sheridan on several occasions. At these meetings, he received information and directions from his father regarding his contact with agents of the Russian Federation. Defendant admitted he traveled to several locations outside the United States, met with agents of the Russian Federation, and received money in return. Nicholson admitted to receiving instructions from an agent of the Russian Federation to obtain information from his father Harold J. Nicholson. After collecting money from the Russian Federation, he disbursed the money to family members as directed by Harold J. Nicholson.
In entering his plea of guilty, defendant admitted the funds he received from the Russian Federation were proceeds of his father’s past espionage activities. Defendant further admitted traveling to the following international locations and returning to Portland, Oregon with funds received from the Russian Federation:
- Defendant returned to Portland, Oregon on December 17, 2006 from Mexico City, Mexico with approximately $10,000 he received from an agent of the Russian Federation.
- Defendant returned to Portland, Oregon on July 12, 2007 from Mexico City, Mexico with approximately $9,080 received from an agent of the Russian Federation.
- Defendant returned to Portland, Oregon on December 13, 2007 from Lima, Peru with approximately $7,013 received from an agent of the Russian Federation.
- Defendant returned to Portland, Oregon on December 14, 2008 from Cyprus carrying approximately $9,500 received from an agent of the Russian Federation.
As part of the plea, the defendant agreed to forfeit the $9,500 seized by the Federal Bureau of Investigation (FBI) on December 15, 2008 upon his return from Cyprus. Additionally, as part of the plea, he has agreed to testify on behalf of the government about his conduct involving his father and the Russian Federation between 2006 and 2008.
"In his guilty plea today, Nathaniel Nicholson acknowledged his role in the ongoing conspiracy with his father to collect money from the Russian Federation for his father’s past espionage activity," stated Acting U.S. Attorney Robinson. "His plea and his agreement to provide truthful testimony show his willingness to accept responsibility for his actions."
"Nathaniel Nicholson traveled the globe to collect money from and pass information to Russian agents on behalf of his imprisoned father, one of the highest-ranking CIA officials ever convicted of espionage. By doing so, Nathanial joined his father's long-running criminal scheme to provide information to Russia for financial gain. I applaud the many agents, analysts and prosecutors whose tireless efforts helped bring about this guilty plea," said David Kris, Assistant Attorney General for National Security.
"Despite imprisonment, convicted spy Harold Nicholson was able to profit from his previous acts of espionage by continuing to collect money from the Russian Federation through his son, Nathaniel James Nicholson," said Executive Assistant Director Arthur M. Cummings, II, of the FBI National Security Division. "Today’s plea comes only after countless hours of dedicated effort by FBI investigators and analysts in Portland working with our partners to uncover the Nicholsons’ activities and once again disrupt their acts to profit from providing information to the Russian Federation."
The Federal Bureau of Investigation and the Federal Bureau of Prisons (BOP) investigated this case. Assistant U. S. Attorneys Pamala Holsinger and Ethan Knight are prosecuting this case. Trial Attorney Patrick Murphy of the Counterespionage Section of the Justice Department’s National Security Division is also assisting.
Madhatta Haipe Extradited to U.S. for 1995 Hostage Taking Involving U.S. and Philippine CitizensRead the Press Release
Madhatta Haipe, a citizen of the Philippines, has been extradited from the Philippines to face trial in the District of Columbia for various crimes relating to the hostage taking of U.S. and Philippine citizens in 1995. Haipe was arrested Aug. 27 upon his arrival in the United States and is expected to make his initial appearance this afternoon in federal court in the District of Columbia to face a seven-count indictment filed on November 8, 2000.
The extradition, which was announced by David Kris, Assistant Attorney General for National Security; Channing Phillips, Acting U.S. Attorney for the District of Columbia, and Charlene B. Thornton, Special Agent in Charge of the FBI Honolulu Field Office, culminates a long term investigation.
The indictment alleges that defendant Madhatta Haipe, also known as Commander Haipe, led a group of armed individuals on Dec. 27, 1995 in the kidnapping of 16 individuals, including four U.S. citizens, in the rugged area around Trankini Falls, Mindanao Island, in the Philippines.
Haipe, who was a Professor of Islamic Studies at Mindanao State University, and his well-armed group of unidentified co-conspirators allegedly made threats to kill all the hostages if any of them attempted to escape. It is alleged that the group had numerous weapons, including automatic weapons.
The hostages, which included children, were threatened with weapons, forced to march through the jungle, and robbed of their valuables. The hostages were taken by force. Some were struck with rifle butts and all had rope tied around their hands or neck. Several hostages were released to facilitate the payment of the ransom. Those released were threatened that the other hostages would be killed if there was any military action taken against the hostage takers in an effort to free the hostages.
Between Dec. 27 and Dec. 31, 1995, the hostages were released as the kidnappers allegedly collected ransoms of one million pesos (about US $38,000 in 1995) and 500,000 pesos (about US $19,000 in 1995).
"With this extradition, we hope to finally bring justice for the U.S. and Philippine victims who were held hostage and repeatedly threatened with death during this crime," said David Kris, Assistant Attorney General for National Security. "I commend the FBI, the Justice Department prosecutors and the authorities in the Philippines who never stopped pursuing this matter on behalf of the victims."
Channing Phillips, Acting U.S. Attorney for the District of Columbia, said, "We will continue to use the full extent of our terrorism laws to prosecute those who take Americans hostage overseas. The pursuit of justice on behalf of hostage-taking victims remains one of our top priorities."
"The FBI Honolulu Division has investigated this matter in close coordination with the Philippine authorities for approximately 15 years," said Charlene Thornton, Special Agent in Charge of the FBI in Honolulu. "Through this international cooperation, we finally anticipate bringing to justice those who harm our U.S. citizens abroad despite the time and distance."
Presented to the U.S. District Court in Washington, D.C. by a federal grand jury in November 2000, the seven-count indictment charges Haipe with hostage taking, using firearms during a crime of violence and conspiracy, for which maximum prison sentences range between five years and life imprisonment.
The Department of Justice and the FBI, working with their partners in the Philippines have vigorously pursued this case for years. The investigation was conducted by FBI Honolulu Field Office, with substantial assistance from the Philippines Department of Justice, the Philippine National Police, the National Bureau of Investigation, and the Philippine Department of Foreign Affairs.
The prosecution is being handled by Assistant U.S. Attorneys Gregg Maisel and Anthony Asuncion of the U.S. Attorney’s Office for the District of Columbia, as well as Trial Attorney T. J. Reardon, III, of the Counterterrorism Section of the Justice Department’s National Security Division.
The public is reminded that an indictment is an accusation and a defendant is presumed innocent until proven guilty.
United States & Illinois File Clean Air Act Lawsuit Against Midwest GenerationRead the Press Release
WASHINGTON—The United States and the state of Illinois have filed a civil complaint against Midwest Generation LLC, alleging that the company violated, and continues to violate, the Clean Air Act, announced the Justice Department, U.S. Environmental Protection Agency (EPA) and the Illinois Attorney General’s office.
The complaint alleges that Midwest Generation made major modifications to its coal-fired power plants in Illinois without also installing and operating required pollution control equipment. As a result, Midwest Generation’s six Illinois power plants, which have a combined capacity of more than 6,000 megawatts, are illegally emitting massive amounts of sulfur dioxide, nitrogen oxide and particulate matter. The complaint also alleges that emissions from Midwest Generation violated opacity and particulate matter limits.
The lawsuit, filed by the Justice Department on behalf of the EPA and the state of Illinois Attorney General’s Office, asks the court to order Midwest Generation to install and operate state-of-the-art air pollution control technology to substantially reduce emissions from the Midwest Generation power plants. The United States and the state of Illinois also seek civil penalties up to the maximum amount authorized by law, as well as actions by Midwest Generation to mitigate the adverse public health and environmental effects caused by the violations.
"The excess illegal emissions resulting from the violations alleged in the complaint are sufficient to cause serious harm to human health and the environment. Today’s federal court filing is the first step in this litigation and it demonstrates our commitment to ensuring compliance with environmental laws in the energy sector," said John C. Cruden, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division.
"EPA’s first priority is to protect the health of the people who live near these six plants and are most exposed to their pollution," said EPA Region 5 Acting Administrator Bharat Mathur. "Today's filing is a significant step toward improving the air quality not only of the communities in the shadow of these plants but for those downwind of their emissions as well."
"I am very concerned about the negative health effects that these aging plants have on the people who live in the communities where the Midwest Gen facilities are located," said Attorney General Lisa Madigan. "All Midwest Generation power plants must comply with the Clear Air Act and the Illinois Environmental Protection Act to safeguard public health and the environment."
Coal-fired power plants collectively produce more pollution than any other source in the United States. Emissions from coal-fired power plants cause detrimental health effects, including heart attacks, respiratory disease and premature mortality.
To combat these adverse effects, the EPA and the Justice Department are pursuing a national initiative, targeting electric utilities whose coal-fired power plants violate the law. The suit was filed in the U.S. District Court for the Northern District of Illinois.
Stanford Financial Group CFO Pleads Guilty to Charges Related to <br /> $7 Billion Scheme to Defraud InvestorsRead the Press Release
James M. Davis, 60, the former chief financial officer of Houston-based Stanford Financial Group (SFG), pleaded guilty today to fraud and obstruction charges related to a $7 billion scheme to defraud investors.
Davis was charged in a criminal information, filed on June 18, 2009, with conspiracy to commit mail, wire and securities fraud; mail fraud; and conspiracy to obstruct a U.S. Securities and Exchange Commission (SEC) investigation. The criminal information also seeks forfeiture of up to $1 billion in fraud proceeds.
According to the plea documents, Davis admitted that as part of the scheme, he and his co-conspirators defrauded investors who purchased approximately $7 billion in certificates of deposit (CDs) administered by Stanford International Bank Ltd. (SIBL), an offshore bank located on the island of Antigua. Davis further admitted that he and his co-conspirators misused and misappropriated most of those investor assets, including by diverting more than $1.6 billion into undisclosed personal loans to a co-conspirator, while misrepresenting to investors SIBL’s financial condition, its investment strategy and the extent of its regulatory oversight by Antiguan authorities.
According to the plea documents, Davis and his co-conspirators began in 1990 to make false entries into the general ledgers of SIBL relating to revenues and revenue balances. Despite this false reporting, Davis and his co-conspirators promoted SIBL’s investments as being "well-managed, safe and secure" and touted in SIBL’s annual reports false year-by-year percentage and dollar increases in the purported value of SIBL’s earnings, revenue and assets.
Davis further admitted in the plea documents that he and his co-conspirators used bogus revenue numbers for each year to generate the desired "Return on Investment" that was reported to investors. These "reverse engineered" numbers were developed using a secret instruction sheet that Davis admitted was provided to employees in SFG’s accounting group with instructions on to how to make changes to the spreadsheets to generate the false adjusted revenue figures.
Davis also admitted in the plea documents that in order to effectuate the scheme, misrepresentations were made to investors about who managed SIBL’s entire non-cash portfolio of assets. Specifically, Davis admitted that 80 percent of SIBL’s portfolio, internally referred to as "Tier III," was not managed by global money managers, as was represented to investors, but was actually made up of illiquid investments. These included at least $2 billion in personal loans to a co-conspirator, which were disguised as investments, and overvalued real and personal property, including interests in real estate that SIBL had acquired in 2008 for approximately $65 million, but was ultimately valued on SIBL’s books at $3.2 billion. Davis admitted that none of these facts were disclosed to investors.
According to the plea documents, Davis admitted that he and his co-conspirators promoted the sale of SIBL CDs by representing to SIBL CD investors that SIBL’s operations and financial condition were being scrutinized by Antigua’s bank regulator, the Financial Services Regulatory Commission (FSRC). Davis also admitted that he knew these statements to be false, because he and his co-conspirators had funneled bribe payments to a bank regulator, who is also an accused co-conspirator, in order to ensure that Antiguan regulators would not properly examine the financial statements of SIBL.
Also according to the plea documents, from 2005 through February of 2009, Davis admitted that he and his co-conspirators made a number of misrepresentations to the SEC in order to impair and impede the SEC’s investigation.
Davis has also agreed to the entry of a preliminary order of forfeiture in the amount of $1 billion.
In related cases, Robert Allen Stanford, chairman of SFG; Laura Pendergest-Holt, the chief investment officer of SFG; Gilberto Lopez, SFG’s chief accounting officer; Mark Kuhrt SFG’s global controller; and Leroy King, the administrator and chief executive officer of the FSRC, were indicted on June 18, 2009, on fraud and obstruction charges related to the scheme. Each are charged with conspiracy to commit mail, wire and securities fraud; wire fraud; mail fraud; and conspiracy to commit money laundering. In addition, Stanford, Pendergest-Holt and King are charged with conspiracy to obstruct an SEC investigation and obstruction of an SEC investigation. A trial date has not been set.
Also, on June 19, 2009, the U.S. District Court for the Southern District of Florida unsealed an indictment charging Bruce Perraud, a former SFG global security specialist at SFG’s Ft. Lauderdale, Fla., office, with one count of destruction of records in a federal investigation. Perraud is scheduled to stand trial on Sept. 21, 2009.
An indictment is merely an allegation. Defendants are presumed innocent until and unless proven guilty in a court of law.
The case is being investigated by the FBI’s Houston Field Office, Internal Revenue Service - Criminal Investigation and the U.S. Postal Inspection Service. The case is being prosecuted by individuals from the Criminal Division’s Fraud Section, including Paul E. Pelletier, Principal Deputy Chief; Jack Patrick, Senior Litigation Counsel; Matthew Klecka, Trial Attorney; and Allan Medina, Fraud Section Law Clerk, as well as Gregg Costa, Assistant U.S. Attorney for the Southern District of Texas.
The Criminal Division’s Asset Forfeiture and Money Laundering Section continues to assist the trial team by working with our foreign counterparts to facilitate the freezing of assets in the United Kingdom, Canada, Switzerland and other countries. The Criminal Division’s Office of International Affairs and the U.S. Attorney’s Office for the Southern District of Florida also continue to provide assistance in this matter.
North Carolina Doctor Convicted of Tax CrimesRead the Press Release
WASHINGTON – Rodney K. Justin, a medical doctor from Woodleaf, N.C., was convicted yesterday of obstructing the internal revenue laws and of failing to file tax returns for several years, the Justice Department and Internal Revenue Service (IRS) announced. After trial in Winston-Salem, N.C., a federal jury convicted Justin of four felony counts of corruptly obstructing the administration of the internal revenue laws by sending fake financial instruments called "Bills of Exchange" to the Secretary of the Treasury in Washington, D.C., in purported payment of over $350,000 in taxes. The jury also convicted Justin of willful failure to file returns for the tax years 2001 through 2004.
According to the indictment and evidence presented at trial, Justin had not filed a valid tax return since 1997. However, Justin earned in excess of $200,000 each year from 2001 through 2004. Justin sent letters and bogus returns to the IRS advancing false and frivolous tax defier claims purporting to set forth reasons why he was not required to pay taxes. The IRS repeatedly warned Justin that his positions were frivolous and advised him of his legal duty to file returns and pay taxes.
According to the indictment and evidence presented at trial, from 1998 through early 2004, Justin was a client at Guiding Light of God Ministries, also known as American Rights Litigators (ARL), formerly of Mount Dora, Fla. The evidence showed that Justin purchased the four fictitious "Bills of Exchange" he submitted in purported payment of income taxes from ARL.
Chief Judge James A. Beaty, Jr., scheduled sentencing for Feb. 18, 2010. Justin faces a maximum sentence of 16 years in prison and a maximum fine of $1.4 million.
Acting Assistant Attorney General John A. DiCicco of the Justice Department’s Tax Division commended the IRS special agents who investigated the case, as well as Assistant U.S. Attorney Frank Chut of the U.S. Attorney’s Office for the Middle District of North Carolina and Tax Division trial attorney Jeffrey McLellan who prosecuted the case.
In August 2004, a federal district judge permanently enjoined ARL and two of its promoters from the sale of a nationwide tax scam. In April 2008, a federal court in Florida sentenced two promoters of ARL, as well as ARL client Wesley Snipes, to prison for tax offenses. In September 2008, five promoters of ARL were indicted for tax fraud.
More information about the Justice Department’s Tax Division, including its tax enforcement efforts against ARL and its customers, may be found at http://www.usdoj.gov/tax.
Justice Department Settles Race Discrimination Allegations Against Davie, Florida, Apartment ComplexRead the Press Release
WASHINGTON – The Justice Department today announced an agreement with the owner of College Square Apartments, in Davie, Fla., to settle allegations of discrimination against African Americans. Under the consent decree, approved today in U.S. District Court in Miami, the defendants must pay a total of up to $140,000 to victims of discrimination and a civil penalty of $74,000 to the government.
The lawsuit, filed in August 2008 and later amended, alleged that the property manager at the time, Don Murroni, acting under the direction of Craig Forman, the president and sole shareholder of C.F. Enterprises, falsely told African Americans that no apartments were available and discouraged African Americans from applying. Murroni also allegedly offered to waive the application fee or other costs for white applicants, and told white testers that a selling point of College Square Apartments was the absence of black tenants. The allegations were based on evidence obtained through the Department’s fair housing testing unit, where individuals present as potential renters to gather information about possible discriminatory practices. Today’s settlement resolves the government’s claims against C.F. Enterprises and Craig Forman.
"This type of housing discrimination undercuts decades of progress in our nation’s efforts to ensure equal rights for all Americans. The fair housing testing program enables the Justice Department to aggressively root out blatant discrimination. Housing providers who break fair housing laws should view this case as a reminder that they will be sued," said Loretta King, Acting Assistant Attorney General for the Civil Rights Division.
"Eradicating such discriminatory practices from the South Florida area is of the utmost importance. They are a scourge on our community, and will not be tolerated," said Acting U.S. Attorney Jeffery H. Sloman for the Southern District of Florida.
The settlement requires C.F. Enterprises and Forman to implement and publicize a nondiscrimination policy and provide periodic reports to the Justice Department. It also requires these defendants and their employees to undergo training on the requirements of the Fair Housing Act, which prohibits discrimination in housing on the basis of race, color, religion, sex, familial status, national origin and disability. Individuals who believe that they may have been victims of housing discrimination at College Square Apartments should call the Department at 1-800-896-7743 extension 992.
More information about the Civil Rights Division and the laws it enforces is available at http://www.usdoj.gov/crt. Individuals who believe that they may have been victims of housing discrimination can call the Housing Discrimination Tip Line at 1-800-896-7743, email the Justice Department at [email protected] or contact the U.S. Department of Housing and Urban Development at 1-800-669-9777.
Former New York State Supreme Court Justice Thomas J. Spargo<br /> Convicted of Attempted Extortion and BriberyRead the Press Release
Former New York State Supreme Court Justice Thomas J. Spargo was convicted today by a federal jury in Albany, N.Y., of attempted extortion and soliciting a bribe.
Spargo, 66, was convicted following a three-day jury trial. Evidenced introduced at trial showed that on Nov. 13, 2003, Spargo solicited a $10,000 payment from an attorney with cases pending before him in Ulster County, while Spargo was serving as a state supreme court justice. The trial evidence showed that when the attorney declined to pay the money, Spargo increased the pressure by a second solicitation communicated through an associate. According to evidence presented at trial, on Dec. 19, 2003, Spargo directly told the attorney in a telephone conversation that he and another judge close to him had been assigned to handle cases in Ulster County, including the attorney’s personal divorce case. According to the evidence at trial, the attorney felt that if he did not pay the money, both the cases handled by his law firm and his personal divorce proceeding would be in jeopardy.
"It is a sad day indeed when a judge breaks the laws that he is sworn to enforce," said Assistant Attorney General Lanny A. Breuer. "The Criminal Division’s Public Integrity Section will continue in its singular mission to hold accountable wayward public officials who violate the law and the trust that has been placed in them."
"Judges are supposed to serve the people who elected them, not their own self-interests. What Mr. Spargo did is nothing more than old fashioned extortion," said FBI Special Agent in Charge John F. Pikus.
The maximum statutory penalty for the charge of soliciting a bribe is 10 years in prison and the maximum penalty for the charge of attempted extortion is 20 years. Spargo also faces a maximum fine of $250,000 for each count on which he was convicted.
This case is being prosecuted by Senior Trial Attorney Richard C. Pilger and Trial Attorney M. Kendall Day of the Public Integrity Section, which is headed by Chief William M. Welch II. The case was investigated by the FBI’s Albany Division.
Spokane, Washington, Man Indicted on Civil Rights Charges<br /> Related to Threats to Reproductive Health Services ClinicRead the Press Release
WASHINGTON – Loretta King, Acting Assistant Attorney General for the Justice Department’s Civil Rights Division, announced today that a federal grand jury in Denver has charged Donald Hertz with transmitting a threat in interstate commerce and with violating the Freedom of Access to Clinic Entrances (FACE) Act for allegedly threatening an employee of a Colorado abortion clinic. The FACE Act makes it a federal crime to injure, intimidate or interfere with, by force or threat of force, employees of a facility that provides reproductive health services.
The grand jury alleged in a two-count indictment that on June 23, 2009, Hertz, 70, of Spokane, Wash., contacted an employee of the Boulder Abortion Clinic and communicated a threat to the life of the family members of an employee of the clinic. The indictment also alleges the defendant intended to intimidate and interfere with employees of the facility because they were providing reproductive health services.
An indictment is merely an accusation and the defendant is presumed innocent unless proven guilty. If convicted, Hertz faces a maximum prison sentence of up to six years and a fine of up to $350,000.
The case was investigated by special agents from the Denver and Spokane Divisions of the FBI and deputies from the United States Marshals Service. The case is being prosecuted by the Civil Rights Division of the Justice Department with the assistance of the U.S. Attorney’s Office for the District of Colorado.
Sixth Person Pleads Guilty to<br /> Illegally Accessing Confidential Passport FilesRead the Press Release
A sixth individual pleaded guilty today to illegally accessing numerous confidential passport application files. Karal Busch, 28, of District Heights, Md., pleaded guilty before U.S. Magistrate Judge Alan Kay in the District of Columbia to a one-count criminal information charging her with unauthorized computer access. Busch is scheduled to be sentenced on Dec. 15, 2009.
According to court documents, Busch worked fulltime for the State Department as a citizens services specialist in the Office of Children’s Issues from June 2003 through July 2006. In pleading guilty, Busch 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, Busch admitted that between March 4, 2004, and June 1, 2006, she logged onto the PIERS database and viewed the passport applications of more than 65 celebrities and their families, actors, professional athletes, musicians, models and other individuals identified in the press. Busch 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.
Busch is the sixth current or former State Department employee to plead 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. On March 23, 2009, Cross was sentenced 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 one year of probation and ordered to pay a $5,000 fine. On July 10, 2009, William A. Celey, a file assistant, pleaded guilty to unlawfully accessing more than 75 confidential passport files. Celey is scheduled to be sentenced on Oct. 23, 2009. On Aug. 17, 2009, Kevin M. Young, a contact representative, pleaded guilty to unlawfully accessing more than 125 confidential passport files. Young is scheduled to be sentenced on Dec. 9, 2009.
These cases are being prosecuted by Trial Attorney Armando O. Bonilla of the Criminal Division’s Public Integrity Section, headed by Section Chief William M. Welch II. The cases are being investigated by the State Department Office of Inspector General.
More Than $5 Million in Awards <br /> to Washington Tribal CommunitiesRead the Press Release
Following their tour of the Tulalip Reservation, Deputy Attorney General David W. Ogden and Associate Attorney General Tom Perrelli today announced that more than $5 million has been awarded to tribal communities in Washington. The Department of Justice awarded more than $2.16 million in Recovery Act funds to three Washington Tribal Governments by the Office on Violence Against Women (OVW) and more than $3.3 million in FY2009 Community Oriented Policing Services (COPS) grants to 16 Washington tribal law enforcement agencies.
"The Department of Justice is well aware that Indian Country is struggling with complex law enforcement issues involving violent crime, violence against women and crimes against children, and that tribal communities are doing what they can with limited resources," said Deputy Attorney General Ogden. "We stand here as partners in this fight and are pleased to demonstrate our commitment with these grants for tribal communities in the State of Washington."
"Among the things that make me feel confident about this administration’s focus on Indian Country is that much of this money was specifically designated within the American Recovery and Reinvestment Act," said Associate Attorney General Perrelli. "These funds will have an immediate impact on the quality of services offered to survivors and their children by providing advocacy and support services for those who need to be kept safe in emergency situations, and for victims who choose to leave their abusive relationships."
The Justice Department officials were in Seattle for the first of two working sessions with tribal leadership and law enforcement experts leading up to the Attorney General’s Tribal Nations Listening Conference, part of an ongoing Justice Department initiative to increase engagement, coordination and action on tribal justice in Indian Country.
The grants will help combat violence against women in tribal communities and will support efforts by tribal police to reduce crime and disorder, and to enhance the services that they provide.
Recovery Act Violence Against Women Grants
The landmark American Recovery and Reinvestment Act of 2009 (Recovery Act), signed into law by President Obama, provides the Justice Department’s Office on Violence Against Women with $20.8 million for the Indian Tribal Governments Program to decrease the number of violent crimes committed against Indian women, help Indian tribes use their independent authority to respond to crimes of violence against Indian women and make sure that people who commit violent crimes against Indian women are held responsible for their actions. Today, the Department of Justice awarded more than $2.16 million in Recovery Act funds to three Washington Tribal Governments. The award period is 36 months:
The Tulalip Tribes of Washington has been awarded $899,999 to renovate a tribal facility for use as the Legacy of Healing Advocacy Center and Safe House. The funding will support the creation of five full-time jobs, including a manager who will oversee the program and four new Residential Aides. The tribe will also hire a contractor for building and security renovations and a consultant to work with staff to develop shelter program operating policies and procedures. The tribe will implement staff and volunteer training and community outreach and education, as well as provide ongoing education and support groups for Safe House and Transitional Housing clients.
The Squaxin Island Tribe will receive $633,968 through its Northwest Indian Treatment Center in Washington to increase the number and quality of wrap-around services provided to women who have experienced domestic violence. The tribe will hire a Domestic Violence Resource Coordinator for post-treatment case management, resource coordination and outreach, coordinating with WomenSpirit Coalition to provide training and transitional housing assistance for victims of domestic violence, dating violence, sexual assault or stalking.
The Swinomish Indian Community, in Skagit County, will receive $633,703 to establish an educational assistance program and shelter/safe house for victims of domestic violence, dating violence, sexual assault and stalking. The project will improve services available to help Indian women who are victims of domestic violence, dating violence, sexual assault and stalking, develop and enhance effective plans for the tribal government to reduce violent crimes against Indian women and keep them safe and strengthen tribal criminal justice system’s ability to get involved with stopping violence against Indian women.
FY2009 Community Oriented Policing Services (COPS) Grants
Today’s COPS grants were awarded under the Tribal Resources Grant Program (TRGP), which is administered by the Justice Department’s Office of Community Oriented Policing Services. The grants can be used to hire new officers, purchase crime-fighting technology systems and basic law enforcement equipment and can also be used to procure training and technical assistance. Today, the Department awarded more than $3.3 million to 16 Washington tribal law enforcement agencies to support efforts by tribal police to reduce crime and disorder and to enhance the services that they provide.
A number of tribal police departments in Washington received specific funding to hire new officers, for a total of more than $1.3 million to hire 7 new officers:
Grant Recipients Grant Amount Tulalip Tribes of Washington $423,170 (2 officers) Sauk-Suiattle Police Department $184,637 (1 officer) Chehalis Tribal Police Department $170,342 (1 officer) Spokane Tribe of Indians $198,213 (1 officer) Nooksack Indian Tribe $185,826 (1 officer) Port Gamble S'Klallam Indian Tribe $179,759 (1 officer)Ten tribal police departments also received more than $2 million for equipment and training:
Grant Recipients Grant Amount Makah Tribal Council $193,430 Chehalis Tribal Police Department $183,870 Nisqually Indian Tribe $152,100 Suquamish Tribe $199,900 Lower Elwha Klallum Tribe Police Department $185,000 Snoqualmie Tribal Police Services $119,701 Skokomish Indian Nation $200,000 Squaxin Island Tribe $198,895 Upper Skagit Indian Tribe $172,300 Yakama Nation Police Department $400,000The grants announced today are part of a broader federal initiative to bolster the capacity of tribal law enforcement agencies. All federally recognized tribes with established police departments were eligible to apply for funding.
Justice Department Files Lawsuit AllegingDisability-Based Housing Discrimination Against Idaho Condominium DeveloperRead the Press Release
WASHINGTON – The Justice Department today filed a lawsuit against the developer of the Riverwalk Condominiums, a condominium apartment complex in Post Falls, Idaho, for violating the Fair Housing Act by constructing apartments that do not have required accessibility for individuals with disabilities.
The lawsuit, filed in federal court in Idaho, charges that Riverwalk Condominiums LLC, the developer of the 36-unit condominium complex on Greensferry Road, failed to comply with the Fair Housing Act accessibility provisions which apply to 18 ground-floor units. Among other things, the complaint alleges that the public and common use areas are not accessible to people with disabilities; the routes to some units are not accessible; some kitchens and bathrooms are not fully usable by people in wheelchairs; and electrical outlets and environmental controls are mounted too high or too low for access by people in wheelchairs. The lawsuit also alleges that the defendants’ conduct constitutes a pattern or practice of discrimination or a denial of rights to a group of persons.
"Architectural barriers can be as big an obstacle to the housing rights of people with disabilities as an outright refusal to rent to them," said Loretta King, Acting Assistant Attorney General for the Civil Rights Division. "Access to housing is a civil right, and the Justice Department is committed to correcting such violations of the Fair Housing Act."
"The Fair Housing Act expects that persons with disabilities have full access to their homes," said John Trasviña, Assistant Secretary for Fair Housing and Equal Opportunity for the U.S. Department of Housing and Urban Development. "Landlords should understand that the law is clear – it’s illegal to deny a person living with disabilities access to housing of their choice."
The lawsuit arose from complaints filed with the U.S. Department of Housing and Urban Development (HUD) by an apartment seeker and by the Intermountain Fair Housing Council, a private, non-profit fair housing organization based in Boise, Idaho. After investigating the complaints, HUD issued a charge of discrimination. After the complainants named in HUD’s charge elected to have the case heard in federal court, HUD referred the case to the Justice Department.
The lawsuit seeks monetary damages for those harmed by the defendants’ actions, civil penalties and a court order requiring correction of the violations. This complaint is an allegation of unlawful conduct. The allegations must still be proven in federal court. In order to ensure that the corrections can be made, the complaint names the complex’s condominium association as a necessary party for relief under the Federal Rules of Civil Procedure. There is no allegation that the condominium association violated the law.
The federal Fair Housing Act prohibits discrimination in housing based on race, color, religion, national origin, sex, disability and familial status. Individuals who may have information related to this lawsuit should contact the Justice Department toll free at 1-800-896-7743 or email the Department at [email protected]. Individuals who believe that they may have been victims of housing discrimination elsewhere can call the Housing Discrimination Tip Line, 1-800-896-7743, email the Justice Department at [email protected] or contact HUD at 1-800-669-9777.
Fighting illegal housing discrimination is a top priority of the Justice Department. Visit the Civil Rights Division’s Web site at http://www.usdoj.gov/crt for more information about the laws it enforces.
Indiana Man Indicted for Cross BurningRead the Press Release
WASHINGTON – The Justice Department announced that Bruce Mikulyuk, of Mishawaka, Ind., has been indicted by a federal grand jury for charges stemming from a cross burning in September 2007. Mikulyuk made his first court appearance today in South Bend, Ind. A trial has been scheduled for Nov. 3, 2009.
Mikulyuk was charged with one count of interfering with the housing rights of another and one count of using fire in the commission of a felony. According to the indictment, Mikulyuk burned a cross at the home of an African American man and white woman and returned later with a knife and made threats.
The charges set forth in an indictment are merely accusations and the defendant is presumed innocent until proven guilty. If convicted, he faces a maximum punishment of 20 years in prison and a $500,000 fine.
FBI Special Agents Rick Miller and Arthur Grist investigated this case. The case will be prosecuted by Trial Attorney Betsy Biffl from the Civil Rights Division of the Justice Department.
Former Texas Correctional Officer Sentenced to 2 Years<br /> in Prison for Providing False Statements in Civil Rights CaseRead the Press Release
WASHINGTON – Eugene Morris, a former correctional officer with the Texas Department of Criminal Justice, was sentenced today in federal court in Houston for providing a false statement related to a federal civil rights investigation, the Justice Department announced. Morris was sentenced to two years in prison and two years of supervised release.
A federal jury in Houston found Morris guilty on May 21, 2008, of providing false information in an official report relating to the alleged assault of a prison inmate under his supervision. The evidence at trial focused on a physical altercation between Morris and an inmate in which the inmate suffered a fractured skull and brain injuries. Morris was convicted of falsely asserting in his report that the victim’s injuries were caused when the victim’s head unintentionally hit the floor during the struggle. Morris was charged with causing the victim’s injuries by kicking the inmate in the head while the inmate lay on the ground with his hands behind his back; however, the jury found Morris not guilty of a civil rights violation based on these allegations.
"We take any allegations of assaults by law enforcement officers very seriously, and we investigate them thoroughly. Officers who provide false statements to cover up this type of conduct are breaking the law, and they will be prosecuted," said Loretta King, Acting Assistant Attorney General for the Civil Rights Division.
This case was investigated by the FBI and the Office of the Inspector General for the Texas Department of Criminal Justice. Assistant U.S. Attorney Ruben Perez and Trial Attorney Edward Caspar from the Civil Rights Division prosecuted the case.
The Civil Rights Division is committed to the vigorous enforcement of every federal criminal civil rights statute, including those laws that prohibit the willful use of excessive force or other acts of misconduct by law enforcement or other government officials.
Former Sand and Gravel Subcontractor Sentenced to<br /> 5 Years in Prison After Conspiracy and Bribery Conviction<br /> in Connection with a Levee Reconstruction ProjectRead the Press Release
WASHINGTON — A former sand and gravel subcontractor was sentenced today to serve five years in prison and to pay a $5,000 criminal fine by U.S. District Judge Carl J. Barbier after being convicted by a federal jury of conspiracy and bribery in connection with a $16 million hurricane protection project for the reconstruction a New Orleans levee, the Department of Justice announced today. The project involved the Lake Cataouatche Levee, which is south of New Orleans.
Durwanda Elizabeth Morgan Heinrich was found guilty on April 1, 2009, of conspiracy and bribery. The conduct centered on Heinrich’s offer to pay Kern Carver Bernard Wilson and Raul Miranda, former contract employees of the U.S. Army Corps of Engineers in exchange for their attempt to steer a dirt, sand and gravel subcontract on the levee project to her. Heinrich planned to use part of the proceeds from the subcontract to pay the bribes. A jury found both Heinrich and Wilson guilty in the charged conspiracy and bribery. The court sentenced Wilson on Aug. 5, 2009, to serve 70 months in jail and to pay a $15,000 criminal fine. Miranda pleaded guilty on Sept. 12, 2007, to agreeing to accept the bribe and awaits sentencing.
This sentencing is the result of an ongoing investigation of fraud in the procurement of levee reconstruction contracts let by the Corps of Engineers. The investigation is being conducted by the Antitrust Division’s Dallas Field Office, the U.S. Attorney’s Office for the Eastern District of Louisiana, the Vicksburg Fraud Resident Agency of the U.S. Army Criminal Investigation Command and the Department of Defense’s Criminal Investigative Service through the Disaster Fraud Task Force.
In September 2005, the Hurricane Katrina Fraud Task Force, now the Disaster Fraud Task Force, was created to deter, investigate and prosecute disaster-related federal crimes. To date, the Task Force has charged 1301 defendants in 1216 cases.
Anyone with information concerning anticompetitive conduct, fraud or other allegations of illegal activity concerning hurricane-related projects is urged to call the Disaster Fraud Hotline at 866-720-5721, the Antitrust Division’s Dallas Field Office at 214-661-8600, or the Division’s Atlanta Field Office at 404-331-7100.
Detroit Area Physical Therapist Pleads Guilty to Causing More Than $1.6 Million <br /> in Fraudulent Medicare BillingRead the Press Release
Detroit area physical therapist Jay Jha, 45, pleaded guilty today to participating in a conspiracy to defraud the Medicare program of approximately $18.3 million. Jha, of Troy, Mich., pleaded guilty to one count of conspiracy to commit health care fraud before U.S. District Judge Gerald Rosen. At sentencing, scheduled for Dec. 16, 2009, Jha faces a maximum penalty of 10 years in prison and a $250,000 fine.
According to information contained in plea documents, Jha, a physical therapist licensed in the state of Michigan, began working in approximately February 2003 as a contract therapist for a co-conspirator. The co-conspirator owned and controlled several companies operating in the Detroit area that purported to provide physical and occupational therapy services to Medicare beneficiaries. Jha admitted that he, the co-conspirator, and others created fictitious therapy files appearing to document physical and occupational therapy services provided to Medicare beneficiaries, when in fact no such services had been provided. According to court documents, the fictitious services reflected in the files were billed to Medicare through sham Medicare providers controlled by co-conspirators.
In order to create the fictitious therapy files, Jha acknowledged that his co-conspirators paid cash kickbacks and other inducements to Medicare beneficiaries, in exchange for the beneficiaries’ Medicare numbers and signatures on documents falsely indicating that they had received physical or occupational therapy. Jha admitted that he was one of the licensed physical or occupational therapists from whom the co-conspirator obtained signatures on fictitious "progress notes" and other documents in the therapy files, falsely indicating that the therapists had provided therapy services to the Medicare beneficiaries on those dates.
During the course of the scheme, Jha admitted he signed approximately 336 fictitious physical therapy files indicating that he had provided physical therapy services to Medicare beneficiaries, when in fact he had not. Jha admitted that he was paid between $90 and $110 for each file that he falsified. Between approximately February 2003 and December 2005, Jha admitted that he falsified physical therapy files that supported claims to the Medicare program totaling approximately $1,680,000. Medicare actually paid approximately $772,800 on those claims. Jha admitted that, throughout the conspiracy, he was fully aware that Medicare was being billed for physical therapy services that he falsely indicated he had performed.
The case is being prosecuted by Trial Attorneys John K. Neal and Benjamin D. Singer of the Criminal Division’s Fraud Section and by Special Assistant U.S. Attorney Thomas W. Beimers of the Eastern District of Michigan. 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 the inception of Strike Force operations in March 2007 – Miami (Phase One), Los Angeles (Phase Two), Detroit (Phase Three), and Houston (Phase Four) – the Strike Force has obtained indictments of more than 293 individuals and organizations that collectively have billed the Medicare program for more than $680 million. 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.
Each of the Strike Force teams across the separate phases are led by a federal prosecutor from the Criminal Division’s Fraud Section or the U.S. Attorney’s Office. Each team has an agent from the FBI and HHS-OIG.
To learn more about the HEAT team, go to: www.stopmedicarefraud.gov
Tennessee Demolition and Salvage Companies Indicted for Clean Air Act Violations and Defrauding the United StatesRead the Press Release
WASHINGTON— Two demolition and salvage companies and three of their respective owners and supervisors were indicted today by a federal grand jury in Chattanooga, Tenn., the Justice Department announced.
The indictment describes a year-long scheme in which the former Standard Coosa Thatcher plant in Chattanooga was illegally demolished while still containing large amounts of asbestos. The indictment goes on to allege that any asbestos that was removed from the plant prior to demolition was removed illegally, scattered in open debris piles, and left exposed to the elements in the vicinity. The indictment also alleges the efforts owners and supervisors made to cover up their illegal activities by falsifying documents and lying to federal authorities.
The eleven-count indictment charges the defendants with conspiracy to defraud the United States and to violate the Clean Air Act. The two companies and three individuals are also charged with violating the Clean Air Act’s "work-practice standards" intended to prevent releases of asbestos, making false statements to special agents of the U.S. Environmental Protection Agency (EPA), and obstructing justice.
The companies and individuals who have been indicted are:
- Watkins Street Project LLC, Chattanooga, Tenn., a land-holding and salvage company
- Mathis Construction Inc., Chattanooga, Tenn., a demolition company
- Donald Fillers, an owner of Watkins Street Project LLC
- James Mathis, an owner of Mathis Construction Inc.
- David Wood, a supervisor for Watkins Street Project LLC
The conspiracy and substantive Clean Air Act, and false statements counts of the indictment each carry a maximum possible term of five years in prison and a fine of $250,000, twice the gross gain or twice the gross loss to a victim. The obstruction of justice count of the indictment carries a maximum possible term of 20 years in prison and similar fines.
Asbestos has been determined to cause lung cancer, asbestosis and mesothelioma, an invariably fatal disease. The Environmental Protection Agency has determined that there is no safe level of exposure to asbestos.
The allegations in the indictment are mere accusations and all persons are presumed innocent until and unless proven guilty beyond a reasonable doubt in a court of law.
This case is being investigated by special agents of the EPA and investigators with Chattanooga-Hamilton County Air Pollution Control Bureau. The case is being prosecuted by Assistant U.S. Attorney Matthew T. Morris and Todd W. Gleason of the Justice Department’s Environmental Crimes Section.
Former Department of Defense Contractor Sentenced for Participation in Scheme <br /> to Steal Fuel from U.S. Army in IraqRead the Press Release
Lee William Dubois, a former Department of Defense (DoD) contractor, was sentenced today to three years in prison for his participation in a scheme to steal fuel worth approximately $39.6 million from the U.S. Army in Iraq.
Dubois, 32, of Lexington, S.C., was sentenced today by U.S. District Court Judge Gerald Bruce Lee in the Eastern District of Virginia. Dubois had pleaded guilty to a one-count information charging him with theft of government property on Oct. 7, 2008. In connection with his plea, Dubois testified at the trial of his co-conspirator, Robert Jeffery, who was convicted by a jury on Aug. 11, 2009. Dubois also repaid to the U.S. government $450,000 that represented the illicit proceeds of the scheme.
In his plea, Dubois admitted that between July 2007 and May 2008, he and his co-conspirators, purportedly representing DoD contractors in Iraq, used fraudulently-obtained documents to enter the Victory Bulk Fuel Point (VBFP) in Camp Liberty, Iraq, and presented false fuel authorization forms to steal aviation and diesel fuel from the VBFP for subsequent sale on the black market. According to plea documents, the United States owns and operates the VBFP in support of Operation Iraqi Freedom. The VBFP supplies aviation and diesel fuel to both military units and U.S. government contractors operating in and around the VBFP. To retrieve and transport the stolen fuel from the VBFP, Dubois admitted he and his co-conspirators employed approximately 10 individuals to serve as drivers and escorts of the trucks containing the stolen fuel. These individuals were able to enter the VBFP illegally by using government-issued common access cards.
Dubois admitted he obtained the cards by falsely representing to the U.S. Army that the drivers and escorts were employees of a DoD contractor, when, in fact, they were not employed by any government contractors. In addition, Dubois admitted he went to the VBFP and presented false documents authorizing his co-conspirators to draw fuel. Dubois also admitted that for two months during the scheme, he served as the lead escort for the stolen fuel. According to information contained in the plea documents, during the course of the scheme, Dubois and his co-conspirators stole approximately 10 million gallons of fuel worth approximately $39.6 million. Dubois received at least $450,000 in personal profits from the subsequent sale of the fuel on the black market.
In related cases, Robert Jeffery was convicted on Aug. 11, 2009, after a two-day jury trial, of one count of conspiracy and one count of theft of government property for his role in the fuel theft. Robert Young and Michel Jamil each pleaded guilty to participating in the same scheme. The evidence at trial showed that Jeffery served as an escort for the fuel trucks and retrieved hundreds of thousands of gallons of fuel from the VBFP. Sentencing for Jeffery is scheduled for December 11, 2009.
Young, 56, a former captain in the U.S. Army, pleaded guilty on July 24, 2009. In his guilty plea, Young admitted that between October 2007 and May 2008, he and his co-conspirators used fraudulently-obtained documents to enter the VBFP and presented false fuel authorization forms to steal aviation and diesel fuel from the VBFP for subsequent sale on the black market. As a result of the scheme, Young received approximately $1 million in personal profits. Sentencing for Young is scheduled for Oct. 30, 2009.
Jamil, 59, pleaded guilty on July 27, 2009, with his role in the scheme. Jamil admitted that in March 2007, he and two of his co-conspirators arranged for the creation of a false Memorandum for Record (MFR) authorizing individuals to draw fuel from VBFP, purportedly on behalf of a company serving as a contractor to the U.S. government. Jamil admitted that he and his co-conspirators used this false MFR and others to steal large quantities of fuel from the U.S. Army for subsequent sale on the Iraqi black market. As a result of the scheme, Jamil admitted he received between $75,000 and $87,500 in profits. Sentencing is scheduled for Nov. 13, 2009.
The case is being prosecuted by Special Assistant U.S. Attorney Steve Linick, Deputy Chief of the Criminal Division’s Fraud Section, and Fraud Section Trial Attorneys Andrew Gentin and Brigham Cannon. The investigation of this case was conducted by the U.S. Army Criminal Investigation Command, the Defense Criminal Investigative Service, the Washington Field Office of the FBI and members of the National Procurement Fraud Task Force and the International Contract Corruption Task Force (ICCTF).
The National Procurement Fraud Task Force, created in October 2006 by the Department of Justice, was designed to promote the early detection, identification, prevention and prosecution of procurement fraud associated with the increase in government contracting activity for national security and other government programs. The ICCTF is a joint law enforcement agency task force that seeks to detect, investigate and dismantle corruption and contract fraud resulting from U.S. Overseas Contingency Operations, including in Afghanistan, Iraq and Kuwait.
Five Arrested in Houston Sex Trafficking CaseRead the Press Release
Four men and one woman have been arrested on charges of conspiracy and sex trafficking of children, as well as forcing and coercing adults to engage in commercial sex acts.
The charges against the six total defendants represent the single-largest domestic sex trafficking case ever prosecuted in the Southern District of Texas.
"The protection of the innocent and the most vulnerable among us is one of the most important obligations of law enforcement," said Assistant Attorney General of the Criminal Division Lanny A. Breuer. "Sex trafficking, especially the trafficking of children, is unconscionable, and federal law enforcement is working closely with state and local authorities to fight this most reprehensible sort of exploitation."
"It is a horrible reflection on our society when adults prey on the vulnerabilities of children and reduce them to indentured sex slaves," said U.S. Attorney for the Southern District of Texas Tim Johnson. "Whenever and wherever offenses of such a depraved nature occur, our law enforcement community will respond with the sum of our collective prosecutorial resources."
Five of the six defendants were arrested late Monday, Aug. 24, 2009, and early Tuesday, Aug. 25, 2009, in a coordinated effort between federal and local law enforcement with warrants issued following the return of a sealed indictment by a Houston grand jury on Aug. 4, 2009.
The indictment unsealed today charges John Butler, 47; William Hornbeak, 34; Jamine Lake, 27; Andre McDaniels, 39; Kristen Land, 28; all of Houston, and Ronnie Presley, 35, formerly of Houston and currently of Tulsa, Okla., with conspiracy to traffic women and children for the purposes of commercialized sex; sex trafficking of children; sex trafficking by force, fraud and coercion; transportation of minors; transportation; and coercion and enticement.
Upon conviction, each count of sex trafficking and transportation of minors carries a maximum sentence of life in prison. Each count of transportation carries up to 10 years in prison, charges for coercion and enticement carry up to 20 years in prison and conspiracy carries up to five years in prison. All charges carry up to a $250,000 fine.
Butler, Hornbeak, Lake, McDaniels and Land were arrested in Houston. The government will ask the court to hold all the defendants in federal custody without bond pending trial. Presley is a fugitive and a warrant remains outstanding for his arrest. Anyone with information about Presley’s whereabouts is encouraged to contact their local FBI field office, or the Houston FBI Field Office at (713)-693-5000.
According to the unsealed indictment, the defendants allegedly operated commercialized sex businesses often disguised as modeling studios, health spas, massage parlors and bikini bars in Houston, and used sexually oriented publications and Web sites to advertise their illicit business. The criminal enterprise allegedly transported women and minors to and from the Houston area and had ties to Kansas, Nevada, Arizona and Florida. Women and minors as young as 16 were allegedly enticed and coerced into prostitution and were routinely beaten and threatened. The defendants allegedly collected any proceeds the women and minors received as a result of "dates," rendering them dependent upon the defendants for basic necessities.
An indictment is a formal accusation of criminal conduct, not evidence. A defendant is presumed innocent unless convicted through due process of law.
"The defendants are charged with transporting and threatening young women with violence in order to force them into prostitution," Texas Attorney General Greg Abbot said. "A concerted, cooperative effort by state and federal law enforcement is cracking down on the horrific crime of human trafficking – and those who profit from it."
The investigation leading to the charges was conducted by the FBI’s Innocence Lost Task Force and the Houston Police Department as part of the Innocence Lost National Initiative. A joint effort of the FBI, the Criminal Division’s Child Exploitation and Obscenity Section (CEOS) and the National Center for Missing and Exploited Children, the initiative was founded in June 2003 to address criminal enterprises involving the domestic sex trafficking of children. At least one minor was rescued during the course of the investigation. Other minors and several adults have been returned to their families.
"From low-tech methods such as prostituting minors at truck stops, to high-tech methods such as internet advertising, our children are being used as commodities for sale or trade," FBI Special Agent-in-Charge Richard C. Powers said. "Here in Houston we have established unprecedented cooperation among law enforcement agencies that are working together to link cases, make arrests, and rescue children being sold on our streets. We will not allow our city to be a safe haven for this unconscionable activity. If you hear about it, if you suspect it, report it."
The case is being prosecuted by Assistant U.S. Attorney Sherri Zack and Special Assistant U.S. Attorney Angela Goodwin of the Southern District of Texas and of the Texas Attorney General’s Office and Trial Attorney Michael Yoon of CEOS.
Indictment
Federal Court Permanently Bars Texas Man <br /> from Preparing Tax ReturnsRead the Press Release
WASHINGTON - The Justice Department announced today that a federal judge in Dallas has permanently barred Lennon Madzima from preparing federal tax returns for others. The court found Madzima repeatedly understated his customers’ income tax liabilities "by negligently and willfully claiming frivolous and meritless federal fuel tax credits that had no realistic possibility of being sustained on the merits" and "by negligently and willfully inflating or fabricating telephone excise tax refund credits." Madzima’s false claims for federal fuel tax credits have appeared on over 1,100 returns and totaled over $1 million. Fraudulently claiming the fuel tax credit is one of the IRS’s Dirty Dozen tax scams for 2009.
The permanent injunction order requires Madzima to give the Justice Department a list of his customers’ names, Social Security numbers, addresses, and telephone numbers.
In the past year, the Justice Department has obtained injunctions shutting down several tax preparers who allegedly claimed bogus fuel credits.
Acting Assistant Attorney General John DiCicco thanked Justice Department trial attorney Daniel Applegate, who handled the case, as well as Shauna Henline of the IRS’s Small Business/Self Employed Division who investigated it.
Over the past decade, the Justice Department has obtained injunctions against more than 420 tax preparers and ax-fraud promoters. Information about these cases is available on the Justice Department website.
Epson Imaging Devices Agrees to Plead Guilty and Pay $26 Million Fine<br /> for Participating in LCD Price-Fixing ConspiracyRead the Press Release
WASHINGTON – Japanese electronics manufacturer Epson Imaging Devices Corporation (Epson) agreed to plead guilty and pay a $26 million criminal fine for its role in a conspiracy to fix prices in the sale of Thin Film Transistor-Liquid Crystal Display panels (TFT-LCD) sold to Motorola Inc., the Department of Justice announced today.
According to a one-count felony charge filed today in U.S. District Court in San Francisco, Epson, a subsidiary of Seiko Epson Corporation, participated in a conspiracy to fix the prices of TFT-LCD panels sold to Motorola for use in Razr mobile phones from the fall of 2005 to the middle of 2006. According to the plea agreement, which is subject to court approval, Epson has agreed to cooperate with the Department’s ongoing antitrust investigation.
TFT-LCD panels are used in computer monitors and notebooks, televisions, mobile phones and other electronic devices. In 2006, the worldwide market for TFT-LCD panels was approximately $70 billion. Epson, based in Japan, was known as Sanyo Epson Imaging Devices Corporation during the conspiracy.
Epson is charged with carrying out the conspiracy by agreeing, during bilateral meetings, conversations and communications with unnamed co-conspirators in Japan, to charge prices of TFT-LCD to be sold to Motorola at certain predetermined levels. Epson issued price quotations in accordance with the agreements reached and exchanged information on sales of TFT-LCD sold to Motorola, for the purpose of monitoring and enforcing adherence to the agreed-upon prices.
Today’s charge is the result of a joint investigation into the TFT-LCD industry by the Department of Justice Antitrust Division’s San Francisco Field Office and the Federal Bureau of Investigation in San Francisco. Previously in this investigation, on Dec. 15, 2008, LG Display Co. pleaded guilty to participating in a worldwide conspiracy to fix the price for TFT-LCD panels and was sentenced to pay a $400 million criminal fine. On Dec. 16, 2008, Sharp Corp. pleaded guilty to participating in three separate conspiracies to fix the prices of TFT-LCD panels sold to Dell, Apple Computer Inc. and Motorola Inc. and was sentenced to pay a $120 million criminal fine. On Jan. 14, 2009, Chunghwa Picture Tubes Ltd. pleaded guilty to participating in the same worldwide conspiracy as LG, and was sentenced to pay a $65 million criminal fine. On May 22, 2009, Hitachi Displays Ltd. pleaded guilty to participating in a conspiracy to fix the prices of TFT-LCD panels sold to Dell Inc. for use in desktop monitors and notebook computers from April 1, 2001, to March 31, 2004, and was sentenced to pay a $31 million criminal fine. Additionally, nine executives have been charged to date in the Department’s ongoing investigation.
Anyone with information concerning illegal conduct in the TFT-LCD industry is urged to call the Antitrust Division’s San Francisco Field Office at 415-436-6660.
Covenant Medical Center to Pay U.S. $4.5 Million<br /> to Resolve False Claims Act AllegationsRead the Press Release
WASHINGTON – Covenant Medical Center in Waterloo, Iowa has agreed to pay the United States $4.5 million to resolve allegations that it violated the False Claims Act, the Department of Justice announced today.
This settlement resolves allegations that Covenant submitted false claims to Medicare by having financial relationships with five physicians that violated the Stark Law. The Stark Law prohibits a hospital from profiting from referrals of patients made by a physician with whom the hospital has an improper compensation arrangement. An arrangement is improper if a physician is paid above fair market value for their services and that compensation is not commercially reasonable. The Stark Law is intended to ensure that physicians' medical judgments are not compromised by improper financial incentives and are based solely on the best interests of the patient.
The United States alleged that Covenant violated the Stark Law by paying commercially unreasonable compensation, far above fair market value, to five employed physicians who referred their patients to Covenant for treatment. These physicians were among the highest paid hospital-employed physicians not just in Iowa, but in the entire United States.
Tony West, Assistant Attorney General for the Department of Justice's Civil Division, stated, "Health care providers must act in the best interests of their patients. The Justice Department will protect patients by pursuing hospitals that have improper financial relationships with physicians."
"This payment is the largest ever related to claims of health care fraud in the Northern District of Iowa," said U.S. Attorney Matt M. Dummermuth of the Northern District of Iowa. "We are actively working with our investigative partners to ensure Medicare funds are properly spent, and we will continue to aggressively pursue all types of fraud in order to protect federal health care dollars."
The Justice Department's Civil Division and the United States Attorney's Office for the Northern District of Iowa jointly handled this case. The Office of the Inspector General, Department of Health and Human Services provided investigative assistance.
United States Transfers Guantanamo Bay Detainee to AfghanistanRead the Press Release
The Department of Justice today announced that Mohammed Jawad, a native of Afghanistan, has been transferred from the detention facility at Guantanamo Bay to Afghanistan.
On July 30, 2009, consistent with the U.S. government’s notice that it would no longer treat Jawad as detainable under the Authorization for Use of Military Force, a federal court ordered the U.S. government to release him from detention at Guantanamo Bay. On Aug. 6, 2009, in accordance with Congressionally-mandated reporting requirements, the administration informed Congress of its intent to transfer Jawad.
Jawad’s transfer was carried out under an arrangement between the United States and the government of Afghanistan. The United States has coordinated closely with the government of Afghanistan to ensure the transfer takes place under appropriate security measures and will continue to consult with the Afghan government regarding Jawad.
Since 2002, more than 540 detainees have departed Guantanamo for other countries including Albania, Algeria, Afghanistan, Australia, Bangladesh, Bahrain, Belgium, Bermuda, Chad, Denmark, Egypt, France, Iran, Iraq, Jordan, Kuwait, Libya, Maldives, Mauritania, Morocco, Pakistan, Russia, Saudi Arabia, Spain, Sweden, Sudan, Tajikistan, Turkey, Uganda, United Kingdom and Yemen.
Special Task Force on Interrogations and Transfer Policies <br /> Issues Its Recommendations to the PresidentRead the Press Release
Attorney General Eric Holder today announced that the Special Task Force on Interrogations and Transfer Policies, which was created pursuant to Executive Order 13491 on Jan. 22, 2009, has proposed that the Obama Administration establish a specialized interrogation group to bring together officials from law enforcement, the U.S. Intelligence Community and the Department of Defense to conduct interrogations in a manner that will strengthen national security consistent with the rule of law.
The Task Force also made policy recommendations with respect to scenarios in which the United States moves or facilitates the movement of a person from one country to another or from U.S. custody to the custody of another country to ensure that U.S. practices in such transfers comply with U.S. law, policy and international obligations and do not result in the transfer of individuals to face torture.
"The new policies proposed by the Task Force will allow us to draw the best personnel from across the government to conduct interrogations that will yield valuable intelligence and strengthen our national security," said Attorney General Holder. "There is no tension between strengthening our national security and meeting our commitment to the rule of law, and these new policies will accomplish both."
Interrogations
After extensively consulting with representatives of the Armed Forces, the relevant agencies in the Intelligence Community, and some of the nation’s most experienced and skilled interrogators, the Task Force concluded that the Army Field Manual provides appropriate guidance on interrogation for military interrogators and that no additional or different guidance was necessary for other agencies. These conclusions rested on the Task Force’s unanimous assessment, including that of the Intelligence Community, that the practices and techniques identified by the Army Field Manual or currently used by law enforcement provide adequate and effective means of conducting interrogations.
The Task Force concluded, however, that the United States could improve its ability to interrogate the most dangerous terrorists by forming a specialized interrogation group, or High-Value Detainee Interrogation Group (HIG), that would bring together the most effective and experienced interrogators and support personnel from across the Intelligence Community, the Department of Defense and law enforcement. The creation of the HIG would build upon a proposal developed by the Intelligence Science Board.
To accomplish that goal, the Task Force recommended that the HIG should coordinate the deployment of mobile teams of experienced interrogators, analysts, subject matter experts and linguists to conduct interrogations of high-value terrorists if the United States obtains the ability to interrogate them. The primary goal of this elite interrogation group would be gathering intelligence to prevent terrorist attacks and otherwise to protect national security. Advance planning and interagency coordination prior to interrogations would also allow the United States, where appropriate, to preserve the option of gathering information to be used in potential criminal investigations and prosecutions.
The Task Force recommended that the specialized interrogation group be administratively housed within the Federal Bureau of Investigation, with its principal function being intelligence gathering, rather than law enforcement. Moreover, the Task Force recommended that the group be subject to policy guidance and oversight coordinated by the National Security Council.
The Task Force also recommended that this specialized interrogation group develop a set of best practices and disseminate these for training purposes among agencies that conduct interrogations. In addition, the Task Force recommended that a scientific research program for interrogation be established to study the comparative effectiveness of interrogation approaches and techniques, with the goal of identifying the existing techniques that are most effective and developing new lawful techniques to improve intelligence interrogations.
Transfers
The Task Force also made policy recommendations with respect to scenarios in which the United States moves or facilitates the movement of a person from one country to another or from U.S. custody to the custody of another country to ensure that U.S. practices in such transfers comply with U.S. law, policy and international obligations and do not result in the transfer of individuals to face torture. In keeping with the broad language of the Executive Order, the Task Force considered seven types of transfers conducted by the U.S. government: extradition, transfers pursuant to immigration proceedings, transfers pursuant to the Geneva Conventions, transfers from Guantanamo Bay, military transfers within or from Afghanistan, military transfers within or from Iraq, and transfers pursuant to intelligence authorities.
When the United States transfers individuals to other countries, it may rely on assurances from the receiving country. The Task Force made several recommendations aimed at clarifying and strengthening U.S. procedures for obtaining and evaluating those assurances. These included a recommendation that the State Department be involved in evaluating assurances in all cases and a recommendation that the Inspector Generals of the Departments of State, Defense and Homeland Security prepare annually a coordinated report on transfers conducted by each of their agencies in reliance on assurances.
The Task Force also made several recommendations aimed at improving the United States’ ability to monitor the treatment of individuals transferred to other countries. These include a recommendation that agencies obtaining assurances from foreign countries insist on a monitoring mechanism, or otherwise establish a monitoring mechanism, to ensure consistent, private access to the individual who has been transferred, with minimal advance notice to the detaining government.
The Task Force also made a series of recommendations that are specific to immigration proceedings and military transfer scenarios. In addition, the Task Force made classified recommendations that are designed to ensure that, should the Intelligence Community participate in or otherwise support a transfer, any affected individuals are subjected to proper treatment.
Background Information
The Task Force on Interrogations and Transfer Policies is chaired by the Attorney General, with the Director of National Intelligence and the Secretary of Defense serving as Co-Vice-Chairs. Other members of the Task Force are the Secretaries of State and Homeland Security, the Director of the Central Intelligence Agency, the Chairman of the Joint Chiefs of Staff. Each of these officials appointed senior-level representatives to serve on a working-level task force to complete the work of the Executive Order.
The Executive Order directed the Task Force to study and evaluate "whether the interrogation practices and techniques in Army Field Manual 2-22.3, when employed by departments and agencies outside the military, provide an appropriate means of acquiring the intelligence necessary to protect the Nation, and, if warranted, to recommend any additional or different guidance for other departments or agencies."
The Task Force was also directed to study and evaluate "the practices of transferring individuals to other nations in order to ensure that such practices comply with the domestic laws, international obligations, and policies of the United States and do not result in the transfer of individuals to other nations to face torture or otherwise for the purpose, or with the effect, of undermining or circumventing the commitments or obligations of the United States to ensure the humane treatment of individuals in its custody and control."
B. Todd Jones to Chair Attorney General’s Advisory CommitteeRead the Press Release
Attorney General Eric Holder has appointed U.S. Attorney for the District of Minnesota B. Todd Jones to chair the Attorney General’s Advisory Committee (AGAC) of U.S. Attorneys. Jones served as U.S. Attorney for the District of Minnesota from 1998-2001 and has previously served as a member, vice chair and chair of the AGAC (1999-2001).
"U.S. Attorney Jones is a dynamic leader who will bring a wealth of expertise to the Committee as we work together to further the Department’s efforts to preserve our nation’s national security, reduce crime, preserve our environment, protect the rights of each and every one of us, and bring fairness back into the marketplace," Attorney General Holder said.
H. Marshall Jarrett, Director of the Executive Office for United States Attorneys, added that, "Todd Jones is a seasoned prosecutor whose vision and guidance will be invaluable to the Committee in leading this distinguished group of United States Attorneys."
Jones was confirmed as the U.S. Attorney for the District of Minnesota on Aug. 7, 2009. Prior to his appointment, Jones served as a partner with Robins, Kaplan, Miller & Ciresi (2001-2009); partner with Greene Espel, PLLP (2001; 1994-997); presidentially-appointed U.S. Attorney for the District of Minnesota (1998-2001); First Assistant U.S. Attorney for the District of Minnesota (1997-1998); and Assistant U.S. Attorney (1992-1994). Jones is a graduate of University of Minnesota Law School.
The AGAC, created in 1973, provides advice and counsel to the Attorney General on a wide array of policy, management and operational issues affecting U.S. Attorneys Offices throughout the country. It also represents the voice of U.S. Attorneys in the decision-making process at the Department.
Former UBS Banker Sentenced to 40 Months for Aiding<br /> Billionaire American Evade TaxesRead the Press Release
MIAMI – Former UBS banker, Bradley Birkenfeld of Weymouth, Mass., has been sentenced to 40 months incarceration by Judge William J. Zloch in Fort Lauderdale, Fla. On June 19, 2008, Birkenfeld pleaded guilty to conspiring to defraud the United States, the Justice Department announced today.
According to court documents and statements made in court today, Birkenfeld worked as a private banker in Geneva, Switzerland, for UBS AG, one of the country’s largest banks. While at UBS, Birkenfeld assisted an American billionaire real estate developer evade paying $7.2 million in taxes by assisting the developer conceal $200 million of assets hidden offshore in Switzerland and Liechtenstein. While at UBS, Birkenfeld routinely traveled to and had contacts within the United States in an effort to assist wealthy Americans conceal their ownership in assets held offshore and therefore evade the payment of taxes on the income generated on the money hidden offshore.
In order to assist wealthy Americans who concealed assets at UBS in Switzerland, Birkenfeld admitted that he and others advised U.S. clients to place cash and valuables in Swiss safety deposit boxes; purchase jewels, artwork and luxury items using the funds in their Swiss bank account while overseas; misrepresent the receipt of funds from the Swiss bank account in the United States as loans from the Swiss bank; destroy all off-shore banking records existing in the United States; utilize Swiss bank credit cards that they claimed could not be discovered by United States authorities; and file false U.S. individual income tax returns that omitted income earned by their clients and fraudulently misrepresented that their clients did not have an interest in and signature authority over accounts held offshore.
In February 2009, UBS entered into a deferred prosecution agreement and the bank admitted to helping U.S. taxpayers hide accounts from the Internal Revenue Service (IRS). As part of their agreement, UBS provided the United States government with the identities of, and account information for, certain United States customers of UBS’s cross-border business. The deferred prosecution agreement paragraph 13 stated that the United States would be seeking enforcement of a civil "John Doe" summons seeking records for United States persons who maintained accounts with UBS in Switzerland. On Aug. 19, 2009, the civil matter was resolved and UBS agreed to produce the identities and account information of 4,450 additional UBS customers who are believed to have violated United States law.
"To those taxpayers who have illegally hidden their income in foreign bank accounts and to those who have illegally helped clients hide income and assets, today's sentencing serves as notice: come in and completely come clean," said John A. DiCicco, Acting Assistant Attorney General of the Justice Department’s Tax Division. "A failure or delay in doing so until after the Government has discovered the wrongdoing, even if there is then cooperation, has serious consequences."
"Those who have stashed money offshore should not take comfort in the fact that the UBS investigation seems to have reached criminal and civil resolutions," said Jeffrey H. Sloman, Acting U.S. Attorney for the Southern District of Florida. "New leads and additional evidence are being uncovered each day. We are committed to pursuing these new leads and to developing additional cases against those who assist Americans evade their income tax obligations."
Acting Assistant Attorney General John DiCicco and Acting U.S. Attorney Jeffrey H. Sloman commended the investigative efforts of the IRS agents involved in this case. The prosecution is being handled by Senior Litigation Counsel Kevin M. Downing and Trial Attorney Michael P. Ben’Ary of the Tax Division, and Assistant U.S. Attorney Jeffrey A. Neiman.
"Mr. Birkenfeld admitted his role in advising wealthy U.S. clients to take various actions to conceal their assets at UBS in Switzerland from the US Government," said Eileen Mayer, Chief, IRS Criminal Investigation. "Today, he is paying the price for that role. Clients as well as promoters of international tax fraud are under the watchful scrutiny of the IRS. For anyone with hidden offshore assets, the IRS wants to send a clear message. There is still time – although the clock is ticking - to come in and get right with the government."
United States citizens who have an interest in, or signature or other authority over, a financial account in a foreign country with assets in excess of $10,000 are required to disclose the existence of such account on Schedule B, Part III of their individual income tax return.
Additionally, American citizens must file a Report of Foreign Bank and Financial Accounts (FBAR) with the U.S. Treasury, disclosing any financial account in a foreign country with assets in excess of $10,000 for which they have a financial interest in or signature authority, or other authority over.
More information about the Justice Department’s Tax Division and its enforcement efforts is available at http://www.usdoj.gov/tax/.
A copy of this press release may be found on the Web site of the U.S. Attorney’s Office for the Southern District of Florida at www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the U.S. District Court for the Southern District of Florida at www.flsd.uscourts.gov or http://pacer.flsd.uscourts.gov.
Former Military Contractor Sentenced for Participating in Scheme to Steal Large Quantities of Fuel from U.S. Army in AfghanistanRead the Press Release
WASHINGTON - Raschad L. "Sean" Lewis, a former fuel section employee of Kellogg Brown and Root Inc. (KBR) assigned to Bagram Airfield in Afghanistan, was sentenced today to 84 months in prison for his role in a bribery and a fuel diversion scheme, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Dana J. Boente for the Eastern District of Virginia. U.S. District Court Judge Leonie M. Brinkema also ordered Lewis to pay $891,000 in restitution and serve three years of supervised release.
Lewis was convicted by a federal jury on June 17, 2009, of conspiracy, false writing, bribery of a public official and false claims. According to court documents, KBR had a contract to provide support services to the U.S. Army at Bagram Airfield, including unloading truckloads of jet fuel delivered by drivers hired by Red Star Enterprises Limited (Red Star). Evidence at trial proved that between May and September 2006, Lewis and other KBR employees conspired to accept payments from drivers, who in fact were selling their fuel to parties outside the airfield, in return for providing the drivers with documents to deliver to Red Star falsely showing that the truckloads of fuel had been delivered to the airfield. According to evidence presented in court, more than 48 truckloads of fuel were diverted for sale outside the airfield between May and September 2006, valued at more than $800,000.
In related cases, former KBR employee Wallace A. Ward pleaded guilty to conspiracy on Jan. 25, 2008, and was sentenced on April 11, 2008, to 26 months in prison. Another former KBR employee, James N. Sellman, pleaded guilty to conspiracy on Feb. 7, 2008, and was sentenced on May 9, 2008, to 26 months in prison.
The case is being prosecuted by Assistant U.S. Attorney Jack Hanly of the U.S. Attorney’s Office for the Eastern District of Virginia and Trial Attorney James Graham of the Criminal Division’s Fraud Section. The case was investigated by the U.S. Army Criminal Investigative Division in Virginia and Afghanistan, and the Defense Criminal Investigative Service in Virginia. The Defense Energy Support Center’s Office of the General Counsel in Fort Belvoir, Va., also provided assistance.
In October 2006, the National Procurement Fraud Task Force was formed 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 National Procurement Fraud Task Force, chaired by Assistant Attorney General Breuer, includes the U.S. Attorneys’ Offices, the FBI, the U.S. Inspectors General community and a number of other federal law enforcement agencies. This case, as well as other cases brought by members of the Task Force, demonstrates the Department of Justice’s commitment to helping ensure the integrity of the government procurement process.
Former Government Official Indicted on Public Corruption Charges Related to Ongoing Abramoff InvestigationRead the Press Release
WASHINGTON - A former Congressional staffer and chief of staff in two federal agencies was indicted today by a federal grand jury in the District of Columbia on public corruption charges, the Justice Department announced.
The five-count indictment charges Horace M. Cooper, 44, of Lorton, Va., with one count of conspiracy, one count of fraudulent concealment, two counts of false statements, and one count of obstruction of an official proceeding. U.S. Magistrate Judge Alan Kay today issued a criminal summons directing Cooper to make an initial appearance in U.S. District Court for the District of Columbia on Wednesday, Sept. 9, 2009, at 1:45 p.m.
According to the indictment, Cooper was employed from approximately 1994 to late 2001 as a staffer for a member of the U.S. House of Representatives. From approximately late 2001 to December 2002, Cooper served as the chief of staff for Voice of America (VOA), an executive branch agency of the U.S. government and subsequently from December 2002 through approximately August 2005, he served as chief of staff for the Employment Standards Administration of the U.S. Department of Labor.
The indictment alleges that from approximately December 2001 to May 2005, while he worked at VOA and then at the Department of Labor, Cooper conspired with Jack A. Abramoff, a former Washington, D.C., lobbyist, and others, to defraud the United States of his honest services and of its right to have federal executive branch business conducted without improper influence. The indictment also alleges that Cooper, Abramoff and others conspired to give and receive things of value to influence or reward Cooper for official acts as a federal executive branch employee.
Specifically, the indictment alleges that during this time, Cooper solicited and received from Abramoff and his colleagues thousands of dollars worth of tickets to sporting events and concerts; that Cooper and his companions allegedly received free or discounted meals and drinks on dozens of occasions at a restaurant controlled by Abramoff; and that Cooper, at Abramoff’s invitation and expense, allegedly hosted a Super Bowl party for his friends at another restaurant Abramoff controlled. The indictment also alleges that Cooper, rewarded and influenced by the tickets and meals solicited and received from Abramoff and his associates, agreed to use his official positions at VOA and the Department of Labor to advance Abramoff’s interests and those of his clients. In addition, the indictment alleges that from approximately 1998 to 2000, Cooper received from Abramoff and his colleagues thousands of dollars worth of tickets to concerts and sporting events while Cooper was serving as a Congressional staffer.
The indictment also charges Cooper with concealing his relationship with Abramoff, Abramoff’s colleagues and clients and the public by, among other things, failing to report certain gifts received from Abramoff on his annual financial disclosure forms, as he was required to do as a high-level official in both the legislative and executive branches of the U.S. government. In addition, the indictment charges Cooper with making false statements on his 2003 and 2004 Executive Branch Public Financial Disclosure Reports. Specifically, the indictment alleges that Cooper reported he had received no gifts from a single source with an aggregate value of more than $260 during those years, when allegedly he had received from Abramoff many tickets to concerts and sporting events that required disclosure.
Finally, the indictment charges Cooper with obstructing a grand jury investigation by making false statements to federal law enforcement officials and to the grand jury, and by providing investigators with certain documents that he maintained proved his statements regarding alleged free meals were true, when allegedly he knew that they did not.
If convicted, Cooper faces a maximum sentence of five years in prison for conspiracy; five years in prison for fraudulent concealment; five years in prison for each of two false statement counts; and 20 years in prison for obstruction of justice. If convicted, Cooper also faces a maximum fine of $250,000.
To date, 20 individuals, including lobbyists and public officials, have pleaded guilty, been convicted at trial, or are awaiting trial in connection with the ongoing investigation into the activities of Abramoff and his associates. Abramoff pleaded guilty in January 2006 to conspiracy to commit honest services fraud, honest services fraud and tax evasion. Abramoff was sentenced in September 2008 to 48 months in prison and is cooperating in the investigation.
This case is being prosecuted by Trial Attorneys Matthew L. Stennes and Marc E. Levin of the Criminal Division’s Public Integrity Section, headed by Chief William M. Welch II. The case is being investigated by the FBI’s Washington Field Office and the Office of the Inspector General for the U.S. Department of Labor.
An indictment is merely an accusation. All defendants are presumed innocent until proven guilty at trial beyond a reasonable doubt.
Indictment
Boca Raton Man Convicted of Securities Fraud, Tax FraudRead the Press Release
WASHINGTON - Donald Platten of Boca Raton, Fla., was convicted today of conspiracy, securities fraud and tax charges following a jury trial before Judge Donald Middlebrooks in West Palm Beach, Fla., the Justice Department and Internal Revenue Service (IRS) announced.
In December 2008, Platten was indicted on 17 charges, including conspiracy to commit securities fraud, securities fraud, conspiracy to commit wire fraud and impeding the internal revenue laws. He was convicted on the conspiracy to commit securities fraud count, 6 of the 14 securities fraud counts, conspiracy to commit wire fraud and impeding the internal revenue laws.
According to the indictment and evidence introduced at trial, Platten was the president of Harvard Learning Centers Inc., a Florida corporation also located in Boca Raton. Harvard Learning changed its name several times and claimed to be involved in several different business ventures. From 2004 to 2007, Platten caused Harvard Learning to issue stock to his wife, his sister, his ex-sister-in-law and his limousine driver, supposedly as repayment of promissory notes, even though Platten knew that the promissory notes were fraudulent and the company did not owe these individuals the money reflected on the promissory notes. In this manner, Platten caused Harvard Learning to issue stock to repay his own obligations and to enrich himself, his relatives and others. Platten also caused a subsidiary of Harvard Learning to pay the personal expenses of himself, his wife, his mother, his sister and his teenage son.
According to the indictment and evidence introduced at trial, Platten failed to file corporate federal tax returns for Harvard Learning for the years 2004 through 2007 and failed to file his personal federal tax returns for the years 2004 and 2005. For the year 2006, Platten failed to report on his personal tax return the income that he received as a result of Harvard Learning’s stock issuances and payment of his personal expenses.
According to the indictment and evidence introduced at trial, Platten caused his limousine driver to purchase the house and obtain a mortgage by providing false information about his income and assets in order to conceal Platten’s ownership of a house in Boca Raton. The day after he purchased the house, Platten caused his limousine driver to execute a quit claim deed transferring his interest in the property to Platten's wife.
Judge Middlebrooks scheduled sentencing for Oct. 30, 2009, at 10:30 a.m. Platten faces a maximum sentence of 133 years in prison and a maximum fine of $30.75 million.
John A. DiCicco, Acting Assistant Attorney General of the Justice Department’s Tax Division, commended the IRS Criminal Investigation and the Food and Drug Administration Office of Criminal Investigations agents who investigated the case as well, Tax Division Trial Attorneys Steven D. Grimberg, Gregory R. Bockin and Kenneth C. Vert, who prosecuted the case. Acting Assistant Attorney General DiCicco also thanked the U.S. Attorney’s Office for the Southern District of Florida for their assistance in successfully prosecuting this matter.
Tyson Fresh Meats Inc., to Pay More Than $2 Million for Discharges from Nebraska PlantRead the Press Release
WASHINGTON—Tyson Fresh Meats, Inc., the world’s largest supplier of premium beef and pork, has agreed to pay a $2,026,500 civil penalty to settle allegations that it violated terms of a 2002 consent decree and a federally-issued pollution discharge permit at its meat processing facility in Dakota City, Neb., the Justice Department and U.S. Environmental Protection Agency (EPA) announced today.
In April 2002, Tyson Fresh Meats, known as IBP Inc., until May 2003, entered into a consent decree with the federal government and the Nebraska Department of Environmental Quality to bring wastewater discharges at its facility into compliance with state and federal law. Tyson discharges an average of five million gallons of treated effluent from its Dakota City facility into the Missouri River each day.
The 2002 consent decree required IBP to complete a supplemental environmental project, specifically a $2.9 million nitrification system that was intended to reduce the amount of ammonia in its wastewater discharges to the Missouri River.
The 2002 consent decree also provided that once the installation of the nitrification system was complete, the United States would begin to enforce certain limits of a new National Pollution Discharge Elimination System (NPDES) permit relating to toxicity and ammonia levels in the facilities treated wastewater discharge.
According to a filing made today in U.S. District Court in Omaha, the government alleges that from July 2003 through March 2004, Tyson failed to properly operate the nitrification system as required by the 2002 consent decree, and as a result, had numerous discharges of fecal coliform and nitrites in violation of its 2002 NPDES permit. Specifically, nitrites in the discharge caused high levels of toxicity to aquatic life in the Missouri River.
"This penalty serves as an example that we take violations of these agreements seriously and we will take appropriate steps to ensure that their provisions are followed," said John C. Cruden, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division.
"We expect companies to live up to their settlement obligations, and when they don't, they can expect that EPA will take action to assure compliance," said William Rice, Acting Regional Administrator for EPA’s Region 7.
Two Manufacturers Agree to Settle Clean Air Act Claims Resulting from Explosions at Plants in Kentucky and MississippiRead the Press Release
WASHINGTON—Two manufacturing companies, in separate settlements, have agreed to pay civil penalties and take corrective measures to settle Clean Air Act violations resulting from explosions at two plants in 2002 and 2003 in Louisville, Ky., and Pascagoula, Miss., the Justice Department and U.S. Environmental Protection Agency (EPA) announced today.
D. D. Williamson and Co. and First Chemical Corp. have agreed in separate settlements to pay a combined total of $1,331,000 in civil penalties and to implement corrective measures to settle Clean Air Act claims resulting from a 2003 explosion at D.D. Williamson’s Kentucky plant and a 2002 explosion at First Chemical’s Mississippi plant.
"Today’s settlements are a forceful reminder to the regulated community that the failure to adhere to the Clean Air Act’s general duty obligations can lead to serious, even deadly, accidents and harm to the environment," said John C. Cruden, Acting Assistant Attorney General for the Justice Department’s Environmental and Natural Resources Division. "Today’s settlements also demonstrate the Justice Department’s continuing efforts to ensure the public safety, and protection of the environment, by holding industry to the duty to maintain safe facilities."
"This case demonstrates that a failure to fulfill obligations under the law can have serious consequences," said Stan Meiburg, EPA Acting Regional Administrator in Atlanta. "EPA will continue to aggressively pursue those who fail to comply with the laws that protect our environment, and we will hold them accountable."
The complaints filed today against both companies allege that they failed to adhere to the Clean Air Act’s general duty of care provision. The general duty of care requirement obligates companies handling extremely hazardous substances to take steps to identify and reduce the risks associated with the use of these chemicals, including providing layers of protection on their equipment, such as pressure relief valves, automatic shut-off valves or temperature alarms; ensuring the mechanical integrity of their equipment and piping; and properly training employees to monitor and address emergencies.
D.D. Williamson
The complaint filed against D.D. Williamson, a caramel coloring manufacturer, alleges the company failed to comply with the Clean Air Act and its regulations. The 2003 incident at the plant resulted in the death of one employee and the release of an ammonia cloud in a nearby residential neighborhood. Specifically, the complaint alleges that D.D. Williamson failed to comply with the general duty of care imposed on users of extremely hazardous substances and also failed to comply with the chemical accident prevention provisions also known as the risk management program. The risk management program outlines specific safety management requirements for certain extremely hazardous substances, such as ammonia, that are used in amounts over specific limits.
D.D. Williamson, under the consent decree lodged today with the U.S. District Court for the Western District of Kentucky, has agreed to pay $600,000 in civil penalties to be divided equally between the United States and the Louisville Metro Air Pollution Control District, which enforces the risk management program regulations. After the 2003 explosion, D.D. Williamson took steps to improve its Louisville plant by building a new facility that housed its manufacturing operations. Under the consent decree, D.D. Williamson is required to use an outside engineering consultant to complete a full hazard operability study of its manufacturing operations and implement the study’s recommendations, and to train its managers in process-hazard assessment techniques.
First Chemical
The complaint filed against First Chemical, which makes extremely hazardous mononitrotoluene (MNT), asserts the company similarly failed to meet the general duty requirement, leading to the 2002 explosion that resulted in the release of over 1,200 pounds of MNT into the air.
First Chemical, under the consent decree lodged today with the U.S. District Court for the Southern District of Mississippi, has agreed to pay the United States $731,000 in civil penalties, to complete an ongoing comprehensive hazard analysis of its MNT process and to implement all recommendations resulting from the analysis.
The consent decrees lodged today are each subject to a 30-day public comment period and to the approval of the U.S. District Court where each is filed. Copies of the consent decrees are available on the Department of Justice Web site at: http://www.usdoj.gov/enrd/Consent_Decrees.html.
Two Chief Engineers from Oil Tanker “Georgios M” Indicted for Environmental CrimesRead the Press Release
WASHINGTON -- A federal grand jury in Houston has returned an indictment charging two crewmembers of the oil tanker Georgios M with making false statements, violating federal law designed to prevent pollution from ships and obstruction of justice, the Justice Department announced.
According to the indictment, Ioannis Mylonakis and Argyrios Argyropoulos, served as Chief Engineers aboard the oil tanker Georgios M and each have been charged with violating the Act to Prevent Pollution from Ships (APPS), making material false statements to the U.S. Coast Guard and obstruction of justice.
Both are accused of maintaining false oil record books aboard the oil tanker that concealed deliberate discharges of oil-contaminated waste directly into the ocean. The defendants are accused of being responsible for the oil record book when the oil tanker entered various ports in Texas from 2006 to 2008 including Corpus Christi, Texas City and Houston.
Engine room operations on board large oceangoing vessels such as the Georgios M generate oil-contaminated bilge waste. International and U.S. law prohibit the discharge of bilge waste containing more than 15 parts per million of oil without treatment by an oily water separator - a required pollution prevention device. APPS requires all overboard discharges be recorded in an oil record book, a standardized log which is regularly inspected by the Coast Guard.
Knowing violations of APPS are punishable by up to 6 years in prison and a $250,000 fine. Making false statements are punishable by up to 5 years in prison and a $250,000 fine, while obstruction of justice is punishable by up to 20 years in prison and a $250,000 fine.
An indictment is a formal accusation and is not proof of guilt. Defendants are presumed innocent until and unless they are found guilty.
The investigation is being conducted by the Coast Guard Investigative Service and the Environmental Protection Agency Criminal Investigation Division. The case is being prosecuted by the Justice Department’s Environmental Crimes Section with assistance from the Environmental Protection Agency Regional Counsel’s Office.
Ten Alleged Mexican Drug Cartel Leaders Among 43 Defendants Indicted in Brooklyn and Chicago as Part of Coordinated Strike Against Mexican Drug Trafficking OrganizationsRead the Press Release
WASHINGTON – Forty-three defendants in the United States and Mexico, including 10 alleged Mexican drug cartel leaders, have been charged in 12 indictments unsealed yesterday and today in U.S. federal courts in Brooklyn and Chicago, the Department of Justice, U.S. Drug Enforcement Administration (DEA) and U.S. Immigration and Customs Enforcement (ICE) announced. The alleged leaders and other high-ranking members of several of Mexico’s most powerful drug cartels are charged with operating continuing criminal enterprises or participating in international drug trafficking conspiracies.
"Breaking up these dangerous cartels and stemming the flow of drugs, weapons and cash across the Southwest border is a top priority for this Justice Department," said Attorney General Eric Holder. "The cartels whose alleged leaders are charged today constitute multi-billion dollar networks that funnel drugs onto our streets and what invariably follows is more crime and violence in our communities. Today’s indictments demonstrate our unwavering commitment to root out the leaders of these criminal enterprises wherever they may be found. We will continue to stand with our partners in Mexico to dismantle the cartels’ insidious operations."
"Realizing that neither of our two countries can win over drug traffickers on its own, we have built up the bilateral cooperation between the United States and Mexico to allow us to combine our investigative and legal resources to dismantle these transnational drug organizations and bring the leaders to justice," said Mexican Attorney General Eduardo Medina Mora. "We can only protect the right of our societies to live in peace and harmony through our governments’ mutual trust and shared responsibility."
Three of the suspected leaders were charged in both Brooklyn and Chicago. Joaquin "el Chapo" Guzman-Loera, Ismael "el Mayo" Zambada-Garcia and Arturo Beltran-Leyva, who are allegedly among the most powerful drug traffickers in Mexico, are alleged to be present and former heads of an organized crime syndicate known as the "Sinaloa Cartel" and "the Federation." Each of these three is designated as a Consolidated Priority Organization Target or CPOT by the Organized Crime Drug Enforcement Task Force (OCDETF).
Also charged in the Brooklyn indictments were seven other cartel leaders, including CPOT Ignacio "Nacho" Coronel Villarreal, Hector Beltran-Leyva (Arturo’s brother) and Jesus Zambada-Garcia (Ismael’s brother), each alleged leaders within the Federation; CPOT Vicente Carrillo Fuentes, the alleged head of the Juarez Cartel; CPOT Luis and Esteban Rodriguez-Olivera, alleged leaders of Los Gueros; and CPOT Tirso Martinez-Sanchez, the alleged head of his own international drug trafficking organization.
Together, the four Brooklyn and eight Chicago indictments charge that between 1990 and December 2008, Guzman-Loera, Ismael Zambada-Garcia, Arturo Beltran-Leyva and others were responsible for importing into the United States and distributing nearly 200 metric tons of cocaine, additional large quantities of heroin, and the bulk smuggling from the United States to Mexico of more than $5.8 billion in cash proceeds from narcotics sales throughout the United States and Canada.
The indictments unsealed today collectively seek forfeiture of more than $5.8 billion in drug proceeds. Also, more than 32,500 kilograms of cocaine have been seized, including approximately 3,000 kilograms seized during the Chicago investigation, approximately 7,500 kilograms seized during the New York investigation and 22,500 kilograms seized previously that were later linked to the activities of the Federation. The indictments also detail seizures of 64 kilograms of heroin and more than $22.6 million in cash during the course of the investigation.
As part of the coordinated actions, eight defendants have been arrested in the Chicago and Atlanta areas in the last week. Earlier this year, 10 additional defendants, all customers of or couriers for the organizations, were charged separately in Chicago. Five defendants, all New York-based wholesale distributors or logistics coordinators for the cartels, were charged separately in Brooklyn. In all, 58 individuals have been charged in the investigation coordinated between the U.S. Attorneys’ Offices in Brooklyn and Chicago. All but one of the defendants face a maximum sentence of life in prison if convicted of the charges against them.
"The indictments announced today are the result of a sweeping national and international effort to stem the flow of drugs across the U.S./Mexico border and into our communities," said Benton J. Campbell, U.S. Attorney for the Eastern District of New York. "We will apply all available resources to win this battle." Mr. Campbell extended his grateful appreciation to ICE and the DEA Task Force in New York, the agencies responsible for leading the Eastern District’s investigation, and to the assistance provided by ICE and DEA in Miami, Houston, Mexico and Colombia.
"These indictments are among the most significant drug conspiracy charges ever returned in Chicago," said Patrick J. Fitzgerald, U.S. Attorney for the Northern District of Illinois. "They charge two major international supply organizations with importing many tons of cocaine and large quantities of heroin into the United States, often to wholesale distribution customers in Chicago, as well as to customers in other major cities. The defendants allegedly used practically every means of transportation imaginable to move these large amounts of drugs and to funnel massive amounts of money back to Mexico. I applaud the efforts of the DEA investigators who worked hard to put these cases together." Mr. Fitzgerald also thanked the Internal Revenue Service Criminal Investigation Division agents in Chicago and the U.S. Attorney’s Office for the Eastern District of Wisconsin in Milwaukee for their assistance.
"Today’s indictments are yet another strike against the leadership of the Mexican drug cartels," said DEA Acting Administrator Michele M. Leonhart. "Our relentless investigations penetrated deep into these pervasive criminal organizations, connecting street operations in U.S. communities like Chicago and New York to the top drug kingpins calling the shots in Mexico. Make no mistake; along with our courageous partners in Mexico, we will break these cartels and pursue their leaders."
"Law enforcement agencies in the Americas are working closer than ever before and setting up a united, borderless offense against drug cartels," said Homeland Security Assistant Secretary for ICE John Morton. "This is a significant step in breaking down the infrastructure of these criminal organizations."
According to one of the Brooklyn indictments, between 1990 and 2005, Guzman-Loera, Ismael Zambada-Garcia and Arturo Beltran-Leyva, together with Hector Beltran-Leyva, Jesus Zambada-Garcia and Villareal as leaders of the Federation, conspired to import more than 120 metric tons (264,000 pounds) of cocaine into the United States through the cooperative arrangements and coordination that the Federation provided. Members of the Federation shared drug transportation routes and obtained their drugs from various Colombian drug organizations, in particular, the Colombian Norte Valle Cartel. For example, in 2004, two shipments totaling 22,500 kilograms of cocaine were seized by the U.S. Coast Guard off the coast of Mexico. The indictment alleges that the defendants employed "sicarios," or hitmen, who carried out hundreds of acts of violence in Mexico, including murders, kidnappings, tortures and violent collections of drug debts, at their direction.
The indictments in Chicago allege that in approximately early 2008 Arturo Beltran-Leyva split his alliance with Guzman-Loera, Ismael Zambada-Garcia and the Federation due to various issues, including control of lucrative narcotics trafficking routes into the United States and the loyalty of wholesale narcotics customers, including the alleged leaders of a Chicago distribution cell. The indictments charge that Guzman-Loera and Ismael Zambada-Garcia, together with seven other high-ranking associates, including two of their sons, Alfredo Guzman-Salazar (Guzman-Loera’s son) and Jesus Vicente Zambada-Niebla (Ismael Zamada-Garcia’s son, who is in custody in Mexico), coordinated their narcotics trafficking activities to import multi-ton quantities of cocaine from Central and South American countries, through Mexico, and into the United States using various means of transportation, including Boeing 747 cargo aircraft; submarines and other submersible and semi-submersible vessels; container ships; go-fast boats; fishing vessels; buses; rail cars; tractor trailers; and automobiles
Guzman-Loera and Ismael Zambada-Garcia allegedly coordinated their cocaine and heroin smuggling activities to wholesale distributors throughout the United States, including a large distribution cell in Chicago of which 16 individuals were charged in an indictment unsealed today. On average, the Chicago cell allegedly received 1,500 to 2,000 kilograms of cocaine per month, at times obtaining all or a large portion of that quantity from Guzman-Loera and Ismael Zambada-Garcia and the factions of the Sinaloa Cartel they controlled, while also obtaining a substantial portion of that quantity from the Arturo Beltran-Leyva Cartel. From Chicago, the indictments allege that large quantities of cocaine and heroin were further distributed to customers in Cincinnati and Columbus, Ohio; Detroit; Milwaukee; New York; Philadelphia; Washington, D.C.; Vancouver, British Columbia; and elsewhere.
Guzman-Loera, Ismael Zambada-Garcia and the factions of the Sinaloa Cartel they controlled allegedly used various means to evade law enforcement and protect their narcotics distribution activities, including obtaining guns and other weapons; bribes; engaging in violence and threats of violence; and intimidating with threats of violence members of law enforcement, rival narcotics traffickers and members of their own drug trafficking organizations. According to the indictment, Guzman-Loera, Ismael Zambada-Garcia and his son, Jesus Vicente Zambada-Niebla, discussed obtaining weapons from the United States and using violence against American and/or Mexican government buildings in retaliation for each country’s enforcement of its narcotics laws and to perpetuate their narcotics trafficking activities.
In one of the indictments unsealed today in Brooklyn, Vicente Carrillo Fuentes is alleged to be the leader of the Juarez Cartel, which operates in the Juarez-El Paso corridor, one of the primary drug smuggling routes along the border between the United States and Mexico running from Ciudad Juarez, Mexico, to El Paso, Texas. The DEA estimates that approximately 90 percent of the cocaine that enters the United States comes through Mexico. The Juarez Cartel allegedly received multi-ton cocaine shipments in Mexico from the Colombian Norte Valle Cartel and from the Autodefensas Unidas de Colombia (AUC), a Colombian paramilitary organization and a major drug trafficking organization. According to the indictment, the Juarez Cartel maintained its power through the payment of bribes and through numerous acts of violence, including murder.
In another Brooklyn indictment, brothers Luis and Esteban Rodriguez-Olivera are charged with leading Los Gueros, a drug trafficking organization that rose to prominence within the Federation. According to court documents, Los Gueros operated a narcotics supply route that originated in Mexico, stretched into Texas and then branched off to various points, including the New York metropolitan area. Between 1996 and 2008, Los Gueros allegedly imported more than 100,000 kilograms of cocaine into the United States. The DEA estimates that between 2004 and 2006, the organization was responsible for shipping more than 2,000 kilograms of cocaine to New York City alone. In January 2006, Mexican authorities seized approximately 5,200 kilograms of the organization’s cocaine destined for the United States.
Tirso Martinez-Sanchez is alleged in one of the Brooklyn indictments to be an organizer and leader of an extensive international narcotics importation, distribution and transportation organization that is responsible for the distribution of multiple tons of cocaine in the United States. Martinez-Sanchez’s organization allegedly imported cocaine into the United States from Mexico through California and Texas, and then transported the cocaine overland to large distribution centers, including Los Angeles, New York and Chicago. In addition to coordinating the distribution of his own organization’s cocaine, Martinez-Sanchez also allegedly transported and distributed narcotics for members of the Juarez Cartel and the Federation.
The cases in the Eastern District of New York are being prosecuted by Assistant U.S. Attorneys Andrea Goldbarg, Claire Kedeshian, Bonnie Klapper, Stephen Meyer, Walter Norkin, Patricia Notopoulos and Carolyn Pokorny.
The cases in the Northern District of Illinois are being prosecuted by Assistant U.S. Attorneys Thomas Shakeshaft, Michael Ferrara, Greg Deis, Lindsay Jenkins, Renai Rodney, Angel Krull and Halley Guren.
The cases were investigated by the DEA, ICE and Internal Revenue Service Criminal Investigation, in cooperation with Mexican and Colombian law enforcement authorities. Additional assistance was provided by U.S. Attorney’s Offices in Milwaukee, Miami and Houston. The Criminal Division’s Office of International Affairs provided assistance in these cases. The investigative efforts were coordinated with the Special Operations Division, comprised of agents, analysts and attorneys from the Criminal Division’s Narcotic and Dangerous Drug Section (NDDS); DEA; FBI; ICE; the Bureau of Alcohol, Tobacco, Firearms and Explosives; U.S. Marshals Service; and Internal Revenue Service. Certain individuals named in indictments unsealed today have also been charged by other U.S. Attorneys’ Offices around the country and by NDDS.
An indictment is a formal charging document notifying the defendant of the charges. All persons charged in an indictment are presumed innocent until proven guilty.
Copies of indictments can be found at: http://www.usdoj.gov/opa/cartel-indictments.htm
Swiss Banking Executive and Swiss Lawyer Charged<br /> with Conspiring to Defraud the United StatesRead the Press Release
WASHINGTON - Hansruedi Schumacher and Matthias Rickenbach, both of Switzerland, were indicted today for conspiring to defraud the United States, the Justice Department and Internal Revenue Service (IRS) announced. According to the indictment, Schumacher worked as an executive manager at Neue Zuercher Bank (NZB), a Swiss private bank located in Zurich, Switzerland. Rickenbach worked as a Swiss attorney who provided legal advice and services to U.S. clients. Both are alleged to have aided wealthy Americans conceal assets and income in Switzerland from United States authorities.
According to the indictment, Schumacher and Rickenbach helped wealthy American clients conceal their assets by establishing sham and nominee offshore entities to hide their U.S. clients' assets and income while allowing these clients to still control the assets and make investment decisions.
The indictment further alleges that Schumacher and Rickenbach regularly traveled to the United States to conduct banking and investment activities with their U.S. clients and that when they traveled they concealed their business activities in the United States by falsely representing to American authorities that they were traveling to the U.S. for personal reasons. While in the United States, the defendants would sometimes bring cash for their clients..
According to court documents, Schumacher and Rickenbach aided their wealthy American clients repatriate money back to the United States using several deceptive means. Schumacher and Rickenbach helped their clients obtain offshore credit cards and created sham loan documents. Additionally, Schumacher and Rickenbach falsified bank documents to generate the appearance that assets of their U.S. clients belonged to Swiss citizens, and they falsified documents to disguise their United States clients’ repatriation of offshore funds as inheritances from foreign citizens.
According to court documents, Schumacher and Rickenbach discouraged their U.S. clients from voluntarily coming into compliance in the United States. Instead, the defendants encouraged their clients to transfer their assets from UBS, a large Swiss bank, to NZB, a smaller bank in Switzerland. The defendants told their clients that their assets and identification would be safer at NZB because they had no presence in the United States and was therefore less likely to be pressured by the American authorities to disclose the identities of their United States clients.
"The Justice Department will continue to investigate leads provided by U.S. taxpayers who have come forward to disclose foreign bank accounts and will prosecute those foreign bankers and banks who illegally helped U.S. clients evade taxes," said John A. DiCicco, Acting Assistant Attorney General of the Justice Department’s Tax Division. "We encourage foreign banks to come forward and disclose their conduct immediately, before we learn about their criminal conduct from U.S. taxpayers."
"Today’s Indictment is the latest prosecution in this District against foreign bankers and professionals who enabled and assisted wealthy Americans conceal their assets offshore," said Jeffrey H. Sloman, Acting U.S. Attorney for the Southern District of Florida. "As more Americans voluntarily come into compliance and face their financial obligations, more leads are being developed and new investigations are initiated. American taxpayers who sought to avoid taxes by hiding their assets in Swiss accounts are on notice that this investigation continues."
"This is another step in our ongoing effort to pursue hidden offshore assets -- no matter where they are located," said IRS Commissioner Doug Shulman. "We're in the early stages of our work to crack down on offshore tax evasion. Through our efforts, we are gaining access to more and more information on institutions and individuals involved in offshore tax evasion, and you can expect us to use all of our enforcement tools to stop this abuse. For people with hidden offshore assets, they have an opportunity to get right with the government. Time is quickly running out, and people should take advantage of our voluntary disclosure process before special provisions expire September 23."
Acting Assistant Attorney General DiCicco and Acting U.S. Attorney Sloman commended the investigative efforts of the IRS agents involved in this case. The prosecution is being handled by Senior Litigation Counsel Kevin M. Downing and Trial Attorney Michael P. Ben’Ary of the Tax Division, and Assistant U.S. Attorney Jeffrey A. Neiman.
U.S. citizens who have an interest in, or signature or other authority over, a financial account in a foreign country with assets in excess of $10,000 are required to disclose the existence of such account on Schedule B, Part III of their individual income tax return. Additionally, American citizens must file a Report of Foreign Bank and Financial Accounts, or F-Bar, with the U.S. Treasury, disclosing any financial account in a foreign country with assets in excess of $10,000 for which they have a financial interest in or signature authority, or other authority over.
More information about the Justice Department’s Tax Division and its enforcement efforts is available at http://www.usdoj.gov/tax/.
New Hampshire, Massachusetts and Rhode Island Residents <br /> Arrested for Promoting and Using Tax Defier SchemesRead the Press Release
BOSTON - Seven individuals from around New England have been indicted in federal court in Boston for conspiracies to defraud the United States through the promotion and use of multiple tax fraud schemes, the Justice Department and the Internal Revenue Service (IRS) announced today.
William Scott Dion and Catherine Floyd, both of Sanbornville, N.H., Charles Adams of Norwood, Mass., and Gary Alcock of Westborough, Mass., were arrested today on charges that they conspired to defraud the United States by promoting and using illegal schemes to defraud the IRS. Arrest warrants have also been issued for Gail and Myron Thorick, both of West Warwick, R.I., and for Kenneth Scott Alcock of Westborough, Mass.
One of the conspiracy counts in the indictment alleges that Dion, Floyd, and Adams ran a payroll tax scheme to pay employees "under the table" without properly accounting for, withholding, and paying over to the IRS the payroll taxes required by law. It is alleged that the three promoted the payroll scheme to employers and individuals who wanted to avoid payment of employer payroll taxes and individual payroll taxes. According to the indictment, the three ran the payroll scheme under three different names: Contract America, Talent Management, and New Way Enterprises. Approximately 150 individuals subscribed to the payroll scheme.
Another of the conspiracy counts in the indictment further alleges that husband and wife Gail and Myron Thorick conspired with Dion and Floyd to defraud the United States by promoting and operated a "warehouse banking" scheme which helped subscribers conceal income and assets from the IRS. According to the indictment, the warehouse scheme operated under three different names: Your Virtual Office, Office Services, and Calico Management. Allegedly, as part of the warehouse banking scheme, the defendants maintained accounts at several banks and used the accounts to deposit and commingle business receipts and other funds received from subscribers in order to mask the true ownership of the funds.
It is alleged that between 2000 and 2005, Gail and Myron Thorick, along with Dion and Floyd, caused more than $16 million to be deposited into the warehouse bank accounts. The indictment further alleges that in order for subscribers to withdraw cash from the accounts, the Thoricks, Dion, and Floyd wrote checks to withdraw substantial amounts of cash, which was subsequently delivered to subscribers wrapped in aluminum foil.
A third conspiracy count alleges that Gary Alcock and his brother, Kenneth Scott Alcock, conspired to defraud the IRS as subscribers to the payroll tax scheme promoted by Dion, Floyd, and Adams. According to the indictment, Gary Alcock owned and operated G&K Trucking Co. and Barkmulch & Loam Co., two businesses located in Shrewsbury, Mass. It is alleged that Gary and Kenneth Alcock created a nominee entity named "Alex Management" to conceal the business activities of G&K Trucking and Barkmulch & Loam, and also retained the services of Contract America to pay employees of these businesses "under the table."
In addition to conspiracies, Dion and Floyd are each charged with one count of obstructing and impeding the IRS; Adams is charged with three counts of tax evasion; Gail and Myron Thorick are each charged with three counts of filing false joint income tax returns ; Gary Alcock is charged with five counts of evading payroll taxes and one count of willfully failing to file a corporate tax return; and Kenneth Scott Alcock is charged with three counts of tax evasion.
If convicted on conspiracy and tax evasion counts, the defendants face up to five years in prison on each count, together with fines of up to $250,000 or twice the financial gain to the defendant or loss to the IRS, to be followed by three years of supervised release. The charges for obstructing the IRS carry maximum penalties of three years in prison, fines of $250,000 and one year of supervised release. False tax return charges each carry a maximum penalty of three years in prison, with fines of $250,000 and one year of supervised release. The failure to file charge carries a maximum one-year prison term, a fine of $100,000 and one year of supervised release.
The case was investigated by Special Agents of the Internal Revenue Service - Criminal Investigation Division. It is being prosecuted by Assistant U.S. Attorney Victor A. Wild of Loucks’ Economic Crimes Division at the U.S. Attorney’s Office in Boston and by Trial Attorneys John N. Kane and Jeffrey L. Shih of the Justice Department’s Tax Division.
The details contained in the indictment are allegations. The defendants are presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Justice Department Reaches Settlement with Microsemi Corp.Read the Press Release
WASHINGTON – The Department of Justice announced today that it has reached a proposed settlement with Microsemi Corporation that requires the company to divest all of the assets that it acquired from Semicoa Inc. on July 14, 2008. The Department said that without this divestiture, there would be little or no competition in the development, manufacture and sale of certain semiconductor devices used in military and space programs essential to the security of the United States.
The Department’s Antitrust Division has filed a proposed settlement in U.S. District Court for the Central District of California. If approved by the court, the settlement would resolve the lawsuit and address the Department’s competitive concerns.
These semiconductor devices, small signal transistors and ultrafast recovery rectifier diodes, are used to control the flow of electric current. Both small signal transistors and ultrafast recovery rectifier diodes are used in critical military and civil applications ranging from satellites to nuclear missile systems. Highly reliable performance under demanding conditions is essential in these military and space systems, where component failure could result in failure of the mission.
Prior to the acquisition, Microsemi and Semicoa were the only manufacturers of small signal transistors qualified for these applications. In addition, Semicoa and Microsemi were each poised to become qualified for their ultrafast recovery rectifier diodes, which are in critically short supply. The Department alleged in its complaint that Microsemi’s acquisition of Semicoa’s assets would result in increased prices and slower delivery of critical military components.
Microsemi is a Delaware corporation that manufactures a range of products, including QML semiconductors. In fiscal year 2008, Microsemi reported total sales of approximately $500 million. Semicoa was a Costa Mesa, Calif., corporation that, prior to the acquisition, manufactured a variety of QML semiconductors. Semicoa’s United States sales in 2007 were approximately $15 million.
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 Maribeth Petrizzi, Chief, Litigation II Section, Antitrust Division, U.S. Department of Justice, 450 5th Street, N.W., Suite 8700, Washington, D.C. 20530. At the conclusion of the 60-day comment period, the court may enter the Final Judgment upon a finding that it serves the public interest.
U.S. Judge Permanently Bars Suffolk County, N.Y., Tax Preparer <br /> from Doing Returns for OthersRead the Press Release
WASHINGTON – A federal district judge in New York has permanently barred Howard Levine from preparing federal tax returns for others, the Justice Department announced today. The court also ordered Levine to provide his customer lists to the government and to mail copies of the court order to his customers.
According to the government complaint, Levine operated a tax return preparation service under the name Milaur Associates in Suffolk County, N.Y. The complaint states that Levine prepared an estimated 7,160 returns for the tax years 2003 through 2007. The Internal Revenue Service can not determine the exact number of returns that Levine prepared during this time period because he did not properly report his employer identification number on the returns that he prepared. Levine reported all Form 1099 income on a customer’s Schedule C, whether or not the customer had a business, and then reported excessive and unsupported expense deductions, thus resulting in a substantial loss to which the customer was not otherwise entitled. In addition, Levine, reported flow-through losses on customers’ Schedule E that were completely fabricated.
Based on its examination results to date, the government estimates that it has incurred losses in excess of $2.8 million.
"The Justice Department and Internal Revenue Service are working vigorously to shut down return preparers who prepare false or fraudulent returns for their customers, and catch those customers who actually filed false or fraudulent returns," said John A. DiCicco, Acting Assistant Attorney General for the Justice Department’s Tax Division.
In the past decade the Tax Division has obtained injunctions against more than 410 tax preparers and tax-fraud promoters. Information about these cases is available on the Justice Department Web site.
U.S. Discloses Terms of Agreement with Swiss Government Regarding UBSRead the Press Release
WASHINGTON – The Justice Department and the Internal Revenue Service (IRS) today announced that the agreement with the Swiss government has been finalized. As a result of the agreement, the United States will receive substantially all of the accounts of interest when it initiated the John Doe summons against UBS on June 30, 2008.
Under the agreement, the IRS will submit a treaty request to the Swiss government describing the specific accounts for which it is requesting information. The Swiss government will then direct UBS to initiate procedures which could result in the turning over of information on thousands of accounts to the IRS. The IRS will receive information on accounts of various amounts and types, including bank-only accounts, custody accounts in which securities or other investment assets were held and offshore company nominee accounts through which an individual indirectly held beneficial ownership in the accounts.
Also, the agreement retains the U.S. Government’s right, if the results are significantly lower than expected and other measures fail, to seek appropriate judicial remedies, including resuming actions to enforce the John Doe summons.
The agreement involves a number of simultaneous legal actions:
- The judicial enforcement of the John Doe summons will be dismissed. While this enforcement motion will be withdrawn, the underlying John Doe summons remains in effect.
- Upon receiving the treaty request, the Swiss government will direct UBS to notify account holders that their information is included in the IRS treaty request. It is expected that these notices will be sent on a rolling basis with some being sent over the coming weeks and others over the coming months. Receipt of this notice will not by itself preclude the account holder from coming into the IRS under the Voluntary Disclosure Program, which is due to end on Sept. 23, 2009.
In addition, the Swiss Government has agreed to review and process additional requests for information from other banks regarding their account holders to the extent that such a request is based on a pattern of facts and circumstances equivalent to those of the UBS case.
Information provided to the IRS through this process will be thoroughly examined for all potential civil and criminal tax violations. The IRS will assess any additional tax, interest and a number of applicable penalties. This includes the penalty for the willful failure to file a Report of Foreign Bank and Financial Accounts (FBAR). This penalty can be up to 50 percent of the value of the account for each year an FBAR was not filed. Under the Voluntary Disclosure Program, the account holders must pay 20% of the amount of tax that was underpaid for the past six years and 20% of the highest value of the account over the past six years, in addition to all their unpaid taxes and interest due on those taxes.
The IRS will also recommend criminal prosecution in those cases where the facts warrant such an action. To date, the Justice Department and the IRS have successfully prosecuted four U.S. customers of UBS whose information was provided to the IRS by the Swiss bank as part of the Deferred Prosecution Agreement.
Individuals whose information is obtained by the IRS through this process will, by longstanding policy, not be eligible for the voluntary disclosure program.
Swiss Agreement
UBS Agreement
San Diego Tax Return Preparer Convicted of Tax FraudRead the Press Release
WASHINGTON – Fe S. Garrett, a resident of National City, Calif., was convicted today of filing false individual tax returns, failure to pay taxes, and multiple counts of aiding and assisting in the preparation of false tax returns, the Justice Department and Internal Revenue Service (IRS) announced. A federal jury convicted Garrett of 28 counts of the superseding indictment following a nine-day trial before U.S. Judge M. James Lorenz in San Diego.
According to the evidence presented at trial, for tax years 2001 and 2002, Garrett prepared at least 18 federal income tax returns for her clients that were false as to material matters in that the tax returns claimed fraudulent itemized deductions, child care expenses and Schedule E real estate rental expenses in amounts that she knew her clients were not entitled to claim.
Additionally, according to the evidence presented at trial, Garrett was a licensed tax return preparer and licensed real estate broker who operated a tax return preparation and bookkeeping business and a real estate financing business. These businesses operated under multiple names, including Fe's Tax Service, Garrett's Tax Service and Garrett's Realty and Mortgage. Garrett failed to report over $300,000 of her business gross receipts from those businesses on her federal income tax returns for tax years 2001, 2002, 2004 and 2005.
Additionally, the evidence at trial showed that Garrett willfully failed to pay approximately $279,000 in federal income taxes that she owed for tax years 2001 through 2006. Despite filing tax returns for 2001 and 2006 on which she admitted owing tax each year, Garrett spent hundreds of thousands of dollars at local casinos, wired over $100,000 to the Philippines, and did not respond to numerous attempts by the IRS to contact her.
According to the evidence presented at trial, Garrett prepared a false tax return for an undercover IRS agent that included false items similar to those on her client’s returns. In a recording presented at trial, Garrett was heard describing her "style" of preparing tax returns using "loopholes" for claiming deductions on income tax returns.
Judge Lorenz remanded Garrett to the custody of the U.S. Marshals pending sentencing, which is scheduled for Nov 9, 2009. Garrett faces a maximum sentence of 72 years in prison and a maximum fine of $6.1 million.
"While the majority of return preparers provide excellent service to their clients, a few unscrupulous tax preparers file false and fraudulent returns to defraud the government and the tax-paying public, including their own clients," said Ronald A. Cimino, Acting Deputy Assistant Attorney General of the Justice Department's Tax Division. "We are committed to prosecuting those illegal return preparers who betray their clients' trust and their duty to correctly prepare tax returns."
"Today’s guilty verdict sends a clear message to the public that individuals who hold trusted positions in our community and use those positions to abuse our tax system for their personal financial benefit will be prosecuted," said Special Agent in Charge Leslie P. DeMarco. "IRS Criminal Investigation will continue to diligently work tax preparer fraud investigations and ensure the public that our tax system works."
Acting Deputy Assistant Attorney General Cimino commended the IRS-Criminal Investigation special agents who investigated the case, as well as Tax Division trial attorneys Christopher S. Strauss and Elizabeth C. Hadden, who prosecuted the case. Acting Assistant Attorney General DiCicco also thanked the U.S. Attorney’s Office in San Diego for their assistance in successfully prosecuting this matter.