District Not Recorded
The source did not name an office we could identify. These records remain unassigned rather than guessed.
Detention Policy Task Force Issues Preliminary ReportRead the Press Release
The Department of Justice and Department of Defense today announced that the Detention Policy Task Force, which was created pursuant to Executive Order 13493, has issued a preliminary report on military commissions and a process for the determination of prosecution forum for trials of suspected terrorists. A copy of the report is attached. As authorized by the Executive Order, the Attorney General and Secretary of Defense have also decided to extend by six months the period in which the Task Force will conduct its work and submit a final report.
The Attorney General and Secretary of Defense serve as Co-Chairs of the Detention Policy Task Force and have been represented on the Task Force by their designees. Other Task Force participants include designees of the Secretary of State, Secretary of Homeland Security, the Director of National Intelligence, the Director of the Central Intelligence Agency, the Chairman of the Joint Chiefs of Staff, and the Director of the Federal Bureau of Investigation.
According to the Executive Order, the Task Force’s mission is "to conduct a comprehensive review of the lawful options available to the Federal Government with respect to the apprehension, detention, trial, transfer, release, or other disposition of individuals captured or apprehended in connection with armed conflicts and counterterrorism operations, and to identify such options as are consistent with the national security and foreign policy interests of the United States and the interests of justice." The Executive Order directs the Detention Policy Task Force to provide a report to the President within 180 days of the date of the Order, (by July 21, 2009), "unless the Co-Chairs determine that an extension is necessary."
Separately, the Department of Justice today announced that the Special Task Force on Interrogation and Transfer Policies, created pursuant to Executive Order 13491, will have an additional two months to submit its final report to the President. This Task Force is charged with evaluating whether the use of interrogation practices beyond those listed in the Army Field Manual by agencies other than the military provide an appropriate means of acquiring the intelligence necessary to protect the nation. It is also responsible for examining the transfer of individuals to other nations in order to ensure that such individuals are not tortured and that U.S. commitments to ensure the humane treatment of individuals in its custody or control are not undermined or circumvented.
The Detention Policy Task Force and the Special Task Force on Interrogation and Transfer Policies are distinct from the interagency Guantanamo Review Task Force, which was created pursuant to Executive Order 13492. The Guantanamo Review Task Force is conducting a review of the status of all individuals currently detained at Guantanamo Bay and is making recommendations regarding the proper disposition of each in order for the detention facilities at Guantanamo Bay to be closed within one year from the date of the Executive Order.
Related Materials:
Detention Policy Task Force Preliminary Report
Defendant Sentenced to Life in Prison for Participation<br /> in International Child Exploitation EnterpriseRead the Press Release
Warren Mumpower of Spokane, Wash., was sentenced to life in prison today for his activity in a global child pornography trafficking enterprise.
Mumpower, 65, was also ordered to pay a $25,000 fine by Senior U.S. District Judge Lacey A. Collier.
Mumpower, a convicted sex offender, was found guilty following a six-day trial in January 2009 of six counts relating to his criminal activities as a member of the child exploitation enterprise. The charges alleged in these counts included engaging in a child exploitation enterprise; conspiracy to advertise, transport, ship, receive and possess child pornography; advertising, transporting and receiving child pornography and obstruction of justice.
Six of the defendants in the case previously sentenced by Judge Collier also received sentences of life in prison, including: Daniel Castleman of Lubbock, Texas; James Freeman of Santa Rosa Beach, Fla.; Gary Lakey of Anderson, Ind.; Marvin Lambert of Indianapolis; Neville McGarity of Medina, Texas; and Ronald White of Burlington, N.C., also received life sentences. Five additional U.S. defendants also indicted in the case were sentenced on March 10, 2009, to terms in prison ranging from 164 months to 365 months.
According to evidence introduced at trial, the defendants were members of a highly sophisticated international network. The group was a well-organized criminal enterprise whose purpose was to proliferate child sex abuse images to its membership during a two-year period. The defendants were found guilty of participating in an illegal organization that used Internet newsgroups - large file-sharing networks where text, software, pictures and videos can be traded and shared - to traffic in illegal images and videos depicting prepubescent children, including toddlers, engaged in various sexual and sadistic acts. Specifically, an Australian constable who infiltrated the group in August 2006 testified at trial about how group members employed a complex system of pseudonyms, screening tests for new members and sophisticated encryption methods to avoid detection. He also testified that the group traded more than 400,000 images and 1,000 videos of child sexual abuse before it was dismantled by law enforcement.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse, launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
The case is being prosecuted by Assistant U.S. Attorney David Goldberg of the Northern District of Florida and Trial Attorney LisaMarie Freitas of CEOS. The case is being investigated by the Innocent Images Unit of the FBI and the Queensland, Australia, Police Service, with the assistance of the Bundeskriminalamt (BKA) Child Pornography Unit in Germany and the Child Exploitation and Online Protection Centre in the United Kingdom.
Justice Department Hosts Conference Celebrating the 45th Anniversary of Title VI of the Civil Rights Act of 1964Read the Press Release
WASHINGTON – The Justice Department’s Civil Rights Division held a conference today titled 2009 Title VI Conference: Celebrating the 45th Anniversary of the Legislation and Exploring Current Issues in Enforcement at the FDIC Conference Center in Arlington, Va. Approximately 400 representatives from federal, state and local agencies, community organizations and advocacy groups gathered to share new ideas and discuss trends in Title VI enforcement.
The conference commemorated the 45th anniversary of Title VI and emphasized the federal government’s reinvigorated commitment to enforcement of Title VI’s prohibition against discrimination on the basis of race, color or national origin in federally funded programs.
"Title VI is a vital tool in the struggle to end discrimination in our time. The Civil Rights Division and all of the federal agencies that provide federal financial assistance must be vigilant in enforcing its provisions in order to ensure that public funds are not used in programs that engage in discrimination," said Loretta King, Acting Assistant Attorney General for the Civil Rights Division.
As part of the Department’s renewed commitment to civil rights enforcement, the Civil Rights Division issued new guidance to federal funding agencies concerning their Title VI obligations, "Strengthening of Enforcement of Title VI of the Civil Rights Act of 1964." The memorandum can be found online at www.usdoj.gov/crt/. In addition, the Civil Rights Division released an updated version of a video that serves as a training tool on the requirements of Title VI.
Conference speakers included Acting Assistant Attorney General King for the Civil Rights Division; Theodore Shaw, professor of the Columbia University School of Law and former director-counsel and president of the NAACP Legal Defense and Educational Fund; Dr. James Zogby, president of the Arab American Institute; and Russlynn Ali, Assistant Secretary for Civil Rights for the U.S. Department of Education.
Although in recent years, the Civil Rights Division has hosted several conferences focused on Title VI’s requirements concerning access for individuals who are limited English proficient, today’s conference on broader aspects of Title VI was the first of its kind in over 30 years.
To request a translation of this press release in Spanish, Chinese, Vietnamese or Korean, please contact: the Coordination and Review Section of the Department’s Civil Rights Division at (202) 307-2222 or (202) 307-2678 (TDD).
Department of Justice Announces Palmetto Project to Expand Training and Operations at the National Advocacy CenterRead the Press Release
Deputy Attorney General David W. Ogden today announced plans by the Department of Justice to significantly expand its training and education operations at the National Advocacy Center (NAC), the core training facility for local, state and federal attorneys, law enforcement agents and support personnel.
As part of the Palmetto Project – as it is known – the Department of Justice will lease approximately 326,000 square feet of space at the Close-Hipp Building adjacent to the NAC to enhance the training capabilities for the Department and consolidate operations and staff for the Executive Office of the United States Attorneys. The facility, located at the University of South Carolina (USC), will also house new state-of-the-art courtrooms, classrooms, and meeting space for seminars and large scale conferences.
"What we will build here will serve the cause of justice for generations to come," said Ogden, who made the announcement alongside Sen. Lindsey Graham (R-S.C.), university President Harris Pastides, Director of EOUSA H. Marshall Jarrett and U.S. Attorney for the District of South Carolina W. Walter Wilkins at a press conference at the NAC.
"This project was years in the making and took the work of many dedicated staff. The result will greatly enhance our existing presence at the NAC and will enable the University to relocate and expand its business school currently housed in the Close-Hipp building," Ogden said.
The move will bring more than 250 high-paying jobs to Columbia and provide an estimated cost savings of $42.8 million to the Department for the 20-year period of the lease.
Congress approved the relocation of several components and functions of EOUSA. The Department and USC will modify their existing Cooperative Agreement to proceed with the Project, which will take four years to complete.
"This agreement is the winning combination for both the Department of Justice and the University of South Carolina. It is a wise collaboration that will save the taxpayer money and benefit the university in the years to come," said Senator Graham. "I wish we saw more visionary collaborations like this one between the federal government and outside institutions."
University of South Carolina President Harris Pastides said the announcement represents a tremendous gain for the university and the community by allowing the university to move forward to build a new business school building.
"We are thrilled to announce our intent to build a new building. The teaching, learning and research, along with the Moore School's vast array of seminars and conferences that draw visitors from around the world, will help build the intellectual foundation of this school," Pastides said.
" The training and services we provide in this facility are critical to the day-to-day successes of our prosecutors in our nation’s courtrooms," said Jarrett. "The result of this expansion will be that our attorneys are better trained, more professional, and better equipped to fight crime and serve justice."
In addition to leasing the Close-Hipp building, the Department is expected to lease approximately 365 parking spaces from the university.
Monday’s announcement expands the relationship between the University of South Carolina and the Department that began nearly 15 years ago. In 1996, the Department announced plans to build the NAC on the university campus. That $26 million facility, which opened in 1998, has trained more than 170,000 federal and state personnel from around the country over the last dozen years and is named for former U.S. Sen. Ernest F. "Fritz" Hollings.
Alleged Mexican Cartel Leaders, Associates Targeted in Newest Effort to Combat Drug Trafficking OrganizationsRead the Press Release
Today the Departments of Justice, State and Treasury announced coordinated actions against the Gulf Cartel/Los Zetas drug trafficking organization, now known as the "Company," in the latest in a series of efforts by the U.S. government to neutralize and dismantle this violent cartel.
Antonio Ezequiel Cardenas-Guillen, Jorge Eduardo Costilla-Sanchez, Heriberto Lazcano-Lazcano and Miguel Trevino-Morales, high-level Mexican leaders of the Company and 15 of their top lieutenants, have been charged in U.S. federal courts with drug trafficking-related crimes. Also today, the State Department announced rewards of up to $50 million, collectively, for information leading to the capture of 10 of these defendants, including the four leaders who were also specially designated as Narcotics Kingpins today by the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC).
"These indictments allege a stunning and sophisticated operation by the Company to move illegal drugs into our communities and cash back to Mexico," said Assistant Attorney General Lanny A. Breuer. "We have learned that the most effective way to disrupt and dismantle criminal organizations is to prosecute their leaders and seize their funding. Today’s coordinated actions by the Departments of Justice, State and Treasury will serve not only to bring these individuals to justice, but also to significantly slow the flow of cash that is so vital to cartel operations. These actions are also the result of our strong partnership with Mexican Attorney General Medina Mora, Secretary of Public Security Garcia Luna and other Mexican officials. We stand shoulder-to-shoulder with our brave Mexican colleagues in the fight against these destructive cartels."
"Violent drug trafficking organizations represent a threat to the health and safety of people in Mexico and the U.S.," said Acting Drug Enforcement Administration (DEA) Administrator Michele M. Leonhart. "These indictments and rewards prove our commitment to disrupting the cycle of drugs and associated violence that follow the cartels wherever they operate. I am especially proud of our DEA Houston and New York Divisions, whose investigations were the thrust behind the indictments of these offenders. With the help of the public, and in close coordination with the government of Mexico, they will be brought to justice."
"Following on the heels of the President’s naming of Los Zetas as a drug kingpin organization in April, we are today targeting sanctions against four drug lords who are senior leaders in Los Zetas and the Gulf Cartel," said OFAC Director Adam J. Szubin. "We remain committed to using all tools at our disposal to assist President Calderon in his courageous efforts against Mexico’s deadly narcotics cartels."
Today, an indictment was unsealed in the Eastern District of New York charging Miguel Trevino-Morales with operating a continuing criminal enterprise, international cocaine distribution and firearms violations. The indictment also contains a $1 billion forfeiture allegation. If convicted on all charges, he faces life in prison. Miguel Trevino-Morales is a principal leader of Los Zetas, originally a security force used by the Gulf Cartel. The Zetas, whose origin includes former members of the Air Mobile Special Forces Group of the Mexican military, have evolved into not only a security force but a drug trafficking organization in their own right.
In addition, a three-count superseding indictment returned June 9, 2009, in the District of Columbia charges the four leaders and 15 other alleged cartel members with conspiracy to possess with intent to import cocaine and marijuana into the United States and two counts of possession with intent to import cocaine into the United States. Cardenas-Guillen, Costilla-Sanchez and Lazcano-Lazcano are Organized Crime Drug Enforcement Task Force (OCDETF) Consolidated Priority Organization Targets (CPOTs). Conviction on any count carries a mandatory minimum sentence of 10 years and a maximum of life in prison.
According to the superseding indictment, the Company was led primarily by a governing council, or triumvirate, which consisted of Cardenas-Guillen, Costilla-Sanchez and Lazcano-Lazcano. The indictment alleges the Company has operated along the U.S./Mexico border, dividing the territory into areas known as "plazas" and assigning each plaza region a leader known as the "plaza boss." The superseding indictment alleges Cardenas-Guillen, Costilla-Sanchez and Lazcano-Lazcano directed the Company’s cocaine and marijuana shipments via boats, planes and cars from Colombia and Venezuela to Guatemala, as well as to various cities and "plazas" in Mexico. From Mexico, the drugs were then shipped into cities in Texas for distribution to other cities in the United States.
The Company allegedly used sophisticated record keeping programs to track shipping, employment, payroll and payments made to law enforcement officials as well as payments received and owed. The superseding indictment alleges that the defendants discussed, among other things, supply issues, debt collection, pricing for the drugs in specific areas, bonus structures for individuals working at the "plazas," concealment of the drugs during transportation, methods of shipment from Mexico to Texas, seizures of shipments and locations along the U.S./Mexico border where defendants allegedly believed the drugs could move more freely and control of law enforcement in certain areas.
Cardenas-Guillen, Costilla-Sanchez and Lazcano-Lazcano were previously charged with drug trafficking crimes in 2008 in two separate indictments returned in the District of Columbia cases. The other previously charged defendants, included in the superseding indictment, are Jaime Gonzales-Duran; Samuel Flores-Borrego; Mario Ramirez-Trevino; Alfredo Rangel-Buendia; FNU LNU, aka Lino; Gilberto Barragan-Balderas; Juan Reyes Mejia-Gonzales; Omar Trevino-Morales; Jesus Enrique Rejon Aguilar; Alfonso Lam-Liu; Eleazar Medina-Rojas; and Aurelio Cano-Flores. The superseding indictment also added the following defendants: Carlos Cerda-Gonzalez, Victor Hugo Lopez-Valdez and Sigifredo Najera-Talamantes.
Costilla-Sanchez is also charged, along with Osiel Cardenas-Guillen and eight others, in a 17-count superseding indictment filed in the Southern District of Texas in April 2002 with conspiracy to import and possess with intent to distribute cocaine and marijuana, conspiracy to launder drug money and threatening to assault a federal officer. A State Department reward of up to $5 million has previously been offered for information leading to the arrest of Costilla-Sanchez.
Ezequiel Cardenas-Guillen, along with 13 others, is also charged in a 10-count indictment filed in the Southern District of Texas in December 2002 with conspiracy to possess with intent to distribute cocaine, possession with intent to distribute cocaine and conspiracy to launder drug money. Ezequiel Cardenas-Guillen is alleged to have controlled a cocaine and money laundering organization in Matamoros, Mexico, with multiple cells in Houston that warehoused, transported and distributed multi-kilogram quantities of cocaine and laundered millions of dollars in drug proceeds that were smuggled into Mexico beginning in 1998.
Members of the Company on the DEA Most-Wanted List are also subjects of rewards, up to $5 million each, offered by the State Department through the Narcotics Rewards Program for information leading to these individuals’ arrest. They include:
Heriberto Lazcano-Lazcano
(AKA El Verdugo, El Lazca, Laz, Catorce and Licenciado)
Antonio Ezequiel Cardenas-Guillen
(AKA Ezequiel Cardenas-Guillen, Marcos Ledezma, Tony Tormenta and Licenciado)
Miguel Angel Trevino-Morales
(AKA 40, Cuarenta, L-40, David Estrada-Corado and Comandante Forty)
Alejandro Trevino-Morales
(AKA 42, Omar and Comandante Forty Two)
Juan Reyes Mejia-Gonzalez
(AKA R-1, Kike, Kiki, Quique)
Mario Ramirez-Trevino
(AKA Mario Armando Ramirez-Trevino, X-20, Mario Pelon and Pelon)
Gilberto Barragan-Balderas
(AKA Heriberto and Tocayo)
Jesus Enrique Rejon-Aguilar
(AKA Mamito, Caballero and David Enrique Cruz-Maldonado)
Samuel Flores-Borrego
(AKA Metro Tres, Tres, M Three, El Cabezon, Metro Three and Commander Tres)
Aurelio Cano-Flores
(AKA Yankee and Yeyo. Now in custody).
Since the inception of the Narcotics Rewards Program in the 1980s, the Department of State has paid more than $44 million in rewards to individuals whose information helped bring to justice many major violators of U.S. drug laws who were responsible for importing hundreds of tons of illegal narcotics into the United States each year. In addition, the Mexican Attorney General’s Office previously announced rewards of up to $2.4 million (30,000,000 pesos), per individual, for information leading to the capture of Costilla-Sanchez, Cardenas-Guillen, Lazcano-Lazcano and Miguel Trevino-Morales.
In support of the coordinated U.S. government effort against this organization, the U.S. Department of the Treasury’s OFAC today designated Costilla-Sanchez, Cardenas-Guillen, Lazcano-Lazcano and Miguel Trevino-Morales as Specially Designated Narcotics Traffickers through the Foreign Narcotics Kingpin Designation Act (Kingpin Act). Today’s designation action freezes any assets the individuals may have under U.S. jurisdiction and prohibits U.S. persons from conducting transactions or dealings in the property interests of the designated individuals and entities. Penalties for violations of the Kingpin Act range from civil penalties of up to $1,075,000 per violation to more severe criminal penalties. Criminal penalties for corporate officers may include up to 30 years in prison and fines up to $5 million. Criminal fines for corporations may reach $10 million. Other individuals face up to 10 years in prison and fines for criminal violations of the Kingpin Act. On April 15, 2009, the President designated Los Zetas as a Specially Designated Narcotics Trafficker Kingpin organization.
During the coordinated investigation that led to the superseding indictment in the District of Columbia being returned, foreign law enforcement seized substantial amounts of drugs belonging to this organization. Among the shipments intercepted was a 2,400 kilogram cocaine shipment intercepted and seized in Panama on Nov. 30, 2007. On Oct. 5, 2007, Mexican authorities seized an 11.7 ton load of cocaine, which was (at the time) the largest cocaine seizure in Mexican history. On Oct. 16, 2008, Mexican law enforcement agents seized more than 9,000 kilograms of marijuana belonging to the Company in Guadalupe, Mexico.
In September 2008, the Department announced the arrests of more than 175 alleged Gulf Cartel members and associates in Project Reckoning, a multi-agency international law enforcement effort that targeted key leadership elements of this organization. That effort is continuing through the coordinated multi-agency initiatives and developments announced today. To date, Project Reckoning has resulted in more than 620 arrests and the seizure of more than $84 million in U.S. currency, multiple tons of illegal drugs and 934 weapons.
The prosecution in New York is being handled by Assistant U.S. Attorneys from the Eastern District of New York. The case is being investigated by the New York offices of the DEA and U.S. Immigration and Customs Enforcement (ICE). The prosecution in the District of Columbia is being handled by trial attorneys from the Criminal Division’s Narcotic and Dangerous Drug Section (NDDS). The Criminal Division’s Office of International Affairs has provided significant assistance. The case is being investigated by the DEA Houston Office in coordination with the Special Operations Division, comprised of agents, analysts and attorneys from NDDS, DEA, FBI, ICE, ATF, U.S. Marshals Service and Internal Revenue Service.
An indictment is a formal charging document notifying the defendant of his charges. All persons charged in an indictment are presumed innocent until proven guilty.
For more information on the Most-Wanted list, please visit: www.dea.gov. For more information about the Narcotics Reward Program, please visit: www.state.govFor more information on Kingpin Act designations, please visit: http://www.treas.gov/offices/enforcement/ofac/programs/narco/narco.shtml
The DEA Houston Field Division has created an interagency Task Force, as part of the Houston Organized Crime Drug Enforcement Strike Force, whose primary responsibility is coordinating and focusing interagency efforts in a multifaceted attack on the cartel. The Task Force has established an e-mail address, [email protected], and toll-free phone line, 877-800-1323, for the reporting of information concerning the Company.
Indictment
Superseding Indictment
Tampa Bay Doctor Agrees to Pay United States $1.7 Million to Resolve Medicare Fraud AllegationsRead the Press Release
WASHINGTON - Dr. Gabriel DeCandido, a physician practicing internal medicine in Largo, Fla., has agreed to pay the United States $1.7 million to settle allegations that he defrauded the Medicare program, the Department of Justice announced today.
In a complaint filed in the United States District Court for the Middle District of Florida, United States ex rel. Michael Flanery v. Dr. Gabriel DeCandido, et al., the United States alleged that Dr. DeCandido violated the False Claims Act by billing the Medicare program for higher levels of service than he actually rendered to patients and by billing for services not provided.
"Every year, billions of dollars are lost to Medicare and Medicaid fraud," said Tony West, Assistant Attorney of the Justice Department's Civil Division. "This case demonstrates our commitment to vigorously pursuing those who defraud Medicare. Taxpayer dollars should be spent on health care services for patients, not wasted on fraud and abuse."
The court found that the United States presented sufficient evidence showing that Dr. DeCandido attempted to hide and transfer his assets to avoid having to pay a judgment to the United States. To ensure that any judgment against Dr. DeCandido would be satisfied, the court permitted the government to seize five of his vehicles and garnish $976,000 that Dr. DeCandido transferred to his wife.
Today’s settlement also resolves allegations made by a relator, commonly known as a "whistleblower," under the False Claims Act, which allows a qualifying relator to receive a share of the settlement proceeds. The relator’s suit was filed in the United States District Court for the Middle District of Florida. The relator’s share of the recovery is $306,000.
As part of today's agreement, Dr. DeCandido entered into a Corporate Integrity Agreement (CIA) with the United States Department of Health and Human Services, Office of Inspector General, requiring him to engage in significant compliance efforts over the next five years. Among other provisions, the CIA requires Dr. DeCandido to engage independent review organizations to review the accuracy of the claims that he submits to the Medicare program.
Assistant Attorney West acknowledged the contributions made by both the Commercial Litigation Branch of the Civil Division and the Office of Counsel to the Inspector General for the Department of Health and Human Services in investigating and resolving this matter.
Prison Sentence for Cosco Busan pilotRead the Press Release
WASHINGTON— John Joseph Cota, the pilot who caused the Cosco Busan, a 900-foot long container ship, to collide with the San Francisco Bay Bridge and discharge approximately 53,000 gallons of oil into San Francisco Bay, was today sentenced to serve 10 months in federal prison by U.S. District Court Judge Susan Illston for the Northern District of California, the Justice Department announced.
Cota, who was a licensed bar pilot at the time of the collision, gave commands that caused the 65,131-ton Hong Kong-registered ship to collide with the bridge on Nov. 7, 2007.
Cota was sentenced according to an agreement in which he pleaded guilty to negligently causing discharge of a harmful quantity of oil in violation of the Clean Water Act (CWA), as amended by the Oil Spill Act of 1990 – a law passed in the wake of the 1989 Exxon Valdez disaster – and to violating the Migratory Bird Treaty Act, by causing the death of protected species of migratory birds.
In papers filed in court, prosecutors told the judge that Captain Cota should receive a sentence of incarceration because he was "guilty of far more than a mere slip-up or an otherwise innocuous mistake that yielded unforeseeably grave damage. Rather, he made a series of intentional and negligent acts and omissions, both before and leading up to the incident that produced a disaster that, as widespread as it was, could have had even worse consequences."
"Captain Cota abandoned ship by not following required safety procedures which then resulted in an environmental disaster" said John C. Cruden, Acting Assistant Attorney for the Justice Department’s Environment and Natural Resources Division.
"The court’s sentence of John Cota should serve as a deterrent to shipping companies and mariners who think violating the environmental laws that protect our nation’s waterways will go undetected or unpunished," saidJoseph P. Russoniello, U.S. Attorney for the Northern District of California. "They will be vigorously prosecuted."
Prosecutors provided the court with a list of Cota’s errors that included the following:
- Captain Cota left in extreme fog that was so thick that the bow of the vessel was not visible from the bridge. Captain Cota made the decision to leave in the fog while the pilots of six other large commercial vessels decided not to depart in the heavy fog which was less than 0.5 nautical miles.
- Having made the decision to leave port in impenetrable fog, Captain Cota took no action to assure the fortification of the bridge or bow watch or review the passage plan with the master and crew of the Cosco Busan. In particular, Cota failed to have a master-pilot exchange to review the transit plan.
- Captain Cota has subsequently claimed that he found both radar unreliable, but he did not notify the master or the Coast Guard that a required piece of equipment needed to safely navigate the ship had failed. Meanwhile, the captured images of the radar retained on the ship’s computer show that the radar was fully operational.
- The tape recorded conversations from the ship’s bridge show that Captain Cota was confused regarding the operation of the electronic chart system upon which he chose to rely including the meaning of 2 red triangles that marked buoys marking the tower of the bridge that he eventually hit.
- At no time during the voyage after leaving the berth at 8:07 a.m. and prior to 8:30 a.m. did Captain Cota, or any of the ship’s crew, consult the ship’s official paper navigational chart or take a single positional fix. Captain Cota did not ask any crew member to take any fixes or verify the ship’s position despite the lack of visibility. After the incident, Cota told the Coast Guard he did not request fixes because it is like "driving your car out of a driveway."
Prosecutors also filed papers showing that Captain Cota had failed to disclose his medical conditions and prescription drug use on required annual forms submitted to the Coast Guard.
The discharge of heavy fuel oil from the Cosco Busan fouled 26 miles of shoreline, killed more than 2,400 birds of about 50 species, temporarily closed a fishery on the bay, and delayed the start of the crab-fishing season. Monetary damages to the bridge, ship and private parties were in the tens of millions of dollars. Clean-up costs have been estimated to exceed $70 million. The birds killed include Brown Pelicans, Marbled Murrelets and Western Grebes. The Brown Pelican is a federally endangered species and the Marbled Murrelet is a federally threatened species and an endangered species under California law.
Cota was licensed by the Coast Guard and California as a Bar Pilot, according to the indictment. He was a member of the San Francisco Bar Pilots and had been employed in the San Francisco Bay since 1981. In California, large ocean-going vessels are required to be piloted when entering or leaving port.
The grand jury indictment also charges Fleet Management Limited (Hong Kong), a ship management firm, with the same alleged offenses as well as false statements and obstruction of justice charges. Trial in that case is set for Sept. 14, 2009. An indictment is merely an accusation. All defendants are presumed innocent until proven guilty at trial beyond a reasonable doubt.
The investigation has been conducted by the Coast Guard Investigative Service, the EPA Criminal Investigation Division, the Federal Bureau of Investigation, the U.S. Fish and Wildlife Service and the California Department of Fish and Game, Office of Spill Prevention and Response.
The case is being prosecuted by Assistant U.S. Attorneys Stacey Geis and Jonathan Schmidt and Special Assistant U.S. Attorney Christopher Tribolet of the U.S. Attorney’s Office for the Northern District of California, and Richard A. Udell, Senior Trial Attorney with the Environmental Crimes Section of the U.S. Department of Justice.
Under the Crime Victims’ Rights Act, crime victims are afforded certain statutory rights including the opportunity to attend all public hearings and provide input to the prosecution. Those adversely impacted by the oil spill are encouraged to visit http://www.usdoj.gov/usao/can/community/Notifications to learn more about the case and the Crime Victims’ Rights Act.
Los Angeles Jury Convicts Equipment Suppliers of Medicare FraudRead the Press Release
WASHINGTON – A federal jury in Los Angeles convicted the owners and operators of a Los Angeles-area durable medical equipment company of Medicare fraud, Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney for the Central District of California Thomas P. O’Brien; and Glenn R. Ferry, Special Agent-in-Charge for the Los Angeles Region of the Office of Inspector General for the Department of Health of Human Services announced today.
After a one-week trial in federal court in Los Angeles, the jury found Gevork Kartashyan, 45, guilty of conspiracy to commit health care fraud and health care fraud; and Eliza Shurabalyan, 42, guilty of health care fraud. U.S. District Judge Stephen V. Wilson of the Central District of Los Angeles scheduled sentencing for Oct. 5, 2009.
Shubaralyan and Kartashyan owned and operated CHH Medical Supply, a durable medical equipment (DME) supply company. Between January 2005 and June 2008, Shubaralyan and Kartashyan, through CHH Medical Supply, billed Medicare $949,859, and were paid $597,750. Virtually all of these bills were for medically unnecessary power wheelchairs and wheelchair accessories.
At trial, elderly Medicare beneficiaries testified about how they were recruited and taken to Los Angeles-area medical clinics. At the clinics, the beneficiaries turned over their Medicare numbers and other personal identifying information. Some were promised vitamins, diabetic shoes, and other items that they never received. The clinics were in the business of generating fraudulent power wheelchair prescriptions that could be sold to DME company owners who would bill Medicare for the wheelchairs. Many of the beneficiaries did not know they were getting a wheelchair until it was delivered to them by CHH Medical Supply. All of the beneficiaries testified that they did not need or use the wheelchair.
Five physicians testified that they never authorized or approved the power wheelchair prescriptions written under their names, often by physician’s assistants. Three of these physicians testified that they never even worked at the clinics listed on phony prescription pads.
A government witness, who recently pleaded guilty to health care fraud in connection with one of the clinics at issue in this case, testified that Kartashyan would regularly come into the office where he and others worked in order to pick up power wheelchair prescriptions that he had purchased. Upon delivery, Kartashyan would then generate phony forms stating that the beneficiaries’ homes were appropriate for the use of a power wheelchair, even though no home assessment was done.
Shubaralyan, who was the listed owner of CHH Medical Supply, submitted all of the company’s claims to Medicare. Power wheelchairs and accessories constituted over 98 percent of the company’s billings to Medicare. In addition, Shubaralyan withdrew over $195,000 in cash from the company’s bank account in order to purchase the power wheelchair prescriptions.
The case was prosecuted by Assistant Chief John S. (Jay) Darden and Trial Attorney Jonathan Baum of the Criminal Division’s Fraud Section, with the investigative assistance of the FBI. The case was brought as part of the Medicare Fraud Strike Force. Federal Prosecutors have indicted 115 cases with 257 defendants in Miami, Los Angeles, and Detroit since the inception of strike force operations in March 2007. Collectively, these defendants are alleged to have fraudulently billed the Medicare program for more than $600 million.
The joint DOJ-HHS Medicare Fraud Strike Force is a multi-agency team of federal, state and local investigators designed to combat Medicare fraud through the use of Medicare data analysis techniques and an increased focus on community policing. In May 2009, the Department of Justice and the Department of Health and Human Services announced the Health Care Fraud Prevention & Enforcement Action Team ("HEAT"), a joint effort to prevent fraud and enforce current anti-fraud laws around the country. As part of the HEAT initiative, Medicare Fraud Strike Force operations were expanded from South Florida and Los Angeles to Detroit and Houston. To learn more about the HEAT initiative, go to: www.hhs.gov/stopmedicarefraud.
Illinois Man Sentenced to Life in Prison for Production of Child Pornography and Other OffensesRead the Press Release
WASHINGTON – Carl Courtright III, of Granite City, Ill., was sentenced today to life plus 10 years in prison for production of child pornography and other offenses, Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney for the Southern District of Illinois Courtney Cox announced.
A federal jury conv icted Courtright of one count of production of child pornography, two counts of possession of child pornography, one count of receipt of child pornography and one count of bank fraud following a five-day trial in March 2009 .
Evidence presented at trial revealed that the investigation of Courtright began when Illinois Attorney General Lisa Madigan required social networking site MySpace.com to provide information regarding all registered sex offenders in her state who were maintaining profiles on the site. Courtright was identified as someone who had a MySpace profile, and further investigation prompted investigators to seek a search warrant for his residence.
Evidence presented at trial showed that when the warrant was executed, law enforcement agents discovered evidence that Courtright had caused a local female child to engage in sexually explicit conduct and photographed the activity; downloaded and possessed child pornography videos and photographs including videos of prepubescent children being raped by adult males; and engaged in a bank fraud scheme involving his production of counterfeit checks that Courtright deposited into an account at Regions Bank as "donations" to an online ministry he maintains.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit
www.projectsafechildhood.gov.
The case was prosecuted by Assistant U.S. Attorney Nicole E. Gorovsky of the Southern District of Illinois and Trial Attorney James Silver of CEOS. The case was investigated by the Granite City, Ill., Police Department; the State of Illinois Attorney General’s Office; the U.S. Postal Inspection Service; the Illinois Internet Crimes Against Children Task Force; the Madison County, Ill., Sheriff’s Department; the Alton, Ill., Police Department; the Bethalto, Ill., Police Department; the FBI Metro East Cyber Crime Task Force; and CEOS’ High Tech Investigative Unit.
Georgia Temp Company and Its Owner/President Agree to Plead Guilty to Making a False Statement to the U.S. Small Business AdministrationRead the Press Release
WASHINGTON – A Georgia temporary staffing company and its owner/president have agreed to plead guilty to making a false statement to the U.S. Small Business Administration (SBA), the Department of Justice announced today.
Patriot Services Inc. and its owner/president, Stephanie Blackmon, have each agreed to plead guilty to a one-count charge of making a false statement to the SBA, which was filed today in U.S. District Court in Kansas City, Kan. Patriot supplies temporary staffing services to various agencies and departments of the U.S. government at various locations throughout the United States. Under the separate plea agreements, which are subject to court approval, Patriot and Blackmon have agreed to cooperate with the Department’s ongoing investigation.
Blackmon admitted to providing false information to the SBA so that Patriot could qualify for certification under Section 8(a) of the Small Business Act, a designation given to businesses owned and operated by socially and economically disadvantaged persons. Specifically, Blackmon concealed the involvement of her former employer, who was not a socially and economically disadvantaged person, in the management and operations of Patriot because revealing his involvement would have compromised Patriot’s chances of receiving 8(a) certification. By securing 8(a) certification, Patriot qualified for government contracts specifically set aside for 8(a) companies.
According to court documents, Blackmon purchased and became the president of Patriot in November 2003. Although Blackmon was the actual owner/president of Patriot, she was primarily a figurehead whose status as an African-American was used to obtain 8(a) certification for Patriot, thereby enabling Patriot, and her former employer, to obtain government 8(a) set-aside contracts. In fact, Patriot was actually controlled and operated by her former employer and others, who operated another temporary staffing company that was not eligible for the 8(a) program. Blackmon’s status as a service-disabled veteran also was used by Patriot to try to secure government contracts.
Although Blackmon knew that her former employer and others were actually running Patriot, she concealed their involvement so that the company could secure 8(a) certification. SBA regulations prohibit a former employer of any disadvantaged owner of an 8(a) applicant company from being involved in the management of the applicant company unless the SBA determines that the former employer does not have actual control of the applicant company or the potential to control the applicant company. Based in part on Blackmon’s misrepresentations, the SBA granted Patriot 8(a) status in November 2006. Shortly thereafter, Patriot entered into three 8(a) contracts to provide temporary staffing services to the Department of Veterans Affairs (VA) Consolidated Mail Outpatient Pharmacy (CMOP) in Leavenworth, Kan., one of seven such VA pharmacies throughout the nation that process and distribute medical prescriptions to veterans. Those contracts were valued at approximately $5.4 million.
Blackmon faces a maximum sentence of two years in prison and a fine of $5,000 for the false statement charge and Patriot faces a maximum fine of $5,000.
Today’s charges stem from an ongoing investigation into fraudulent conduct involving contract operations at CMOPs in Hines, Ill., and Leavenworth, Kan. On July 24, 2008, Joel M. Gostomelsky, the director of the Hines CMOP, pleaded guilty to conspiracy and to accepting illegal gratuities in connection with awarding temporary staffing and supply contracts. On May 5, 2009, the associate director of the Hines CMOP, William J. Brandt, his wife, Esperana A. Brandt, and her company, Pronto Staffing Inc. each pleaded guilty to being part of a conspiracy to commit wire fraud in connection with a scheme to defraud the VA and the SBA. William Brandt also pleaded guilty to wire fraud.
Today’s charges reflect the Department’s commitment to protecting U.S. taxpayers from procurement fraud through its creation of the National Procurement Fraud Task Force. The National Procurement Fraud Initiative, announced in October 2006, is designed to promote the early detection, prosecution and prevention of procurement fraud associated with the increase in contracting activity for national security and other government programs.
The ongoing investigation into fraudulent conduct involving the VA’s CMOPs is conducted jointly by the Department of Justice Antitrust Division’s Chicago Field Office and the VA’s Office of Inspector General, with assistance from the SBA’s Office of Inspector General; the Department of Defense, Criminal Investigative Service; and the U.S. Secret Service.
Anyone with information concerning bid rigging, fraud, kickbacks, bribery or other crimes relating to violations of federal procurement laws meant to foster competition concerning any of the VA CMOPs should contact the Chicago Field Office of the Antitrust Division at 312-353-7530 or the VA’s Office of Inspector General at 1-800-488-8244. Anyone with information about fraud in any SBA program should contact the SBA’s Office of Inspector General at 1-800- 767-0385 or www.sba.gov/ig/.
Former Bell, California, Police Officer Pleads Guilty to Federal Civil Rights CrimeRead the Press Release
WASHINGTON – Feliciano Sanchez, 34, a former officer with the Bell, Calif., Police Department, pleaded guilty yesterday in federal court in Los Angeles to a federal civil rights charge for sexually assaulting a female motorist, announced Acting Assistant Attorney General for the Civil Rights Division Loretta King and U.S. Attorney for the Central District of California Thomas P. O’Brien.
Sanchez admitted that on May 16, 2007, he sexually assaulted the victim by forcing her to provide oral sex after stopping her for a traffic violation, according to documents filed in court. Sanchez admitted that he took the victim in his patrol car to a location where he placed his hand on his duty weapon and forced her to orally copulate.
Sanchez faces a maximum sentence of 10 years imprisonment and a fine of $250,000. A sentencing hearing has been set for November 18, 2009.
"Law enforcement officers have a duty to protect the safety of all citizens, and citizens have the right to expect officers to help keep them from harm’s way," said Assistant Attorney General King. "Officers who abuse their powers in cases such as this not only violate the law, they violate the public trust. The Justice Department will continue to vigorously investigate and prosecute those who abuse their power."
"Officer Sanchez brutalized a person he had sworn to serve," said U.S. Attorney Thomas P. O’Brien. "As a result of his criminal conduct, Mr. Sanchez now faces a substantial amount of time in federal prison. His conduct eroded public confidence in law enforcement and cast a pall over his former colleagues who obey the law, proudly working to preserve public safety."
The case was investigated by agents from the FBI’s Los Angeles Field Office. The case was prosecuted by Assistant U.S. Attorney Tammy C. Spertus of the U.S. Attorney’s Office for the Central District of California and Civil Rights Division Trial Attorney Karen Ruckert and former Civil Rights Division Trial Attorney Christine Dunn.
Federal Court Permanently Bars Ft. Lauderdale, Florida Firm from Preparing Federal Tax Returns for OthersRead the Press Release
WASHINGTON – A federal court has permanently barred a Ft. Lauderdale, Fla.,-area woman and her company from preparing federal income tax returns for others, the Justice Department announced today. According to the government complaint in the case, Carole Exantus of Plantation, Fla., operated a company called J’s Corporation in Miami. The court found that J’s Corporation repeatedly prepared federal income tax returns claiming false tax credits and deductions that it knew would result in understating customers’ tax liabilities. Exantus agreed to the permanent injunction order without admitting wrongdoing.
The complaint alleged that Exantus and her employees frequently included in customers’ tax returns false claims for the fuel tax credit, which is available only for off-highway business use of fuels. The complaint further alleged that the returns Exantus and her employees prepared often claimed that her customers had bought more fuel than their incomes, as reported in the same returns, could have paid for.
Fuel credit scams are on this year’s IRS list of the Dirty Dozen Tax Scams. In the past few years the Justice Department has obtained injunctions shutting down many tax preparers who claimed the phony credits on customers’ returns.
John DiCicco, Acting Assistant Attorney General for the Justice Department’s Tax Division, thanked Brian H. Corcoran, the Justice Department trial attorney who handled the case, and Shauna Henline, a technical advisor with the IRS’s Small Business/Self-Employed Division, who conducted the investigation.
In the past decade, the Justice Department’s Tax Division has obtained injunctions against more than 410 tax-return preparers and tax-fraud promoters. Information about these cases is available on the Justice Department Web site.
Cocaine Traffickers Sentenced to 235 Months in Prison on Drug ChargesRead the Press Release
WASHINGTON – Rene Oswald Cobar, a Guatemalan national, and Luis Angel Gonzalez-Largo, a Colombian national, were each sentenced today to 235 months in prison on federal drug charges, Assistant Attorney General Lanny A. Breuer of the Criminal Division announced. Cobar and Gonzalez-Largo were sentenced by U.S. District Judge James C. Mahan for the District of Nevada.
Cobar and Gonzalez-Largo were indicted on May 5, 2004, in the District of Nevada for conspiracy to distribute cocaine. They were again indicted on Jan. 24, 2007, in the District of Nevada with conspiracy to import five kilograms or more of cocaine into the United States. Cobar was also charged with additional offenses, including conspiracy to possess with intent to distribute heroin, and possession with intent to distribute heroin.
According to evidence presented at trial, in 2004 the DEA learned that Cobar, Gonzalez-Largo and other individuals were planning to transport 400 kilograms of cocaine from Central America to a buyer in Las Vegas, who was an undercover law enforcement agent. Evidence presented at trial showed that Cobar acted as the broker for the undercover buyer and Gonzalez-Largo was identified as the Colombian supplier of the cocaine. In various recorded phone conversations, the defendants discussed that Gonzalez-Largo had 800 kilograms of cocaine in Panama. The defendants’ efforts to transport the cocaine failed because of law enforcement efforts in Panama, and the defendants’ arrests on unrelated charges.
Evidence presented in court showed that Cobar was also involved in a conspiracy to transport heroin from Central America to Las Vegas.
After a 10-day jury trial, Gonzalez-Largo was convicted on Feb. 18, 2008, of conspiracy to import cocaine into the United States. Cobar elected to waive his right to a jury trial and proceeded with a bench trial. On Feb. 23, 2008, Judge Mahan found Cobar guilty of conspiracy to import cocaine into the United States, and of the additional charges of conspiracy to import heroin into the United States and conspiracy to possess with the intent to distribute heroin.
These cases were prosecuted by Trial Attorneys John Gillies and Steven May of the Criminal Division’s Narcotic and Dangerous Drug Section (NDDS), who were assisted by NDDS paralegal Arianne Tice. The investigation in this case was led by the U.S. Drug Enforcement Administration, in close cooperation with local Nevada law enforcement from the Henderson, Nev., Police Department and the Las Vegas Metropolitan Police Department.
Justice Department Seeks to Close Miami-Area Tax FirmRead the Press Release
WASHINGTON – The United States has sued four Hialeah, Fla., tax return preparers – Alberto Alem, Beatriz Sardinas and Pilar Medina and their company, PCPS Corp. – seeking to put them out of business, the Justice Department announced today. The civil injunction suit was filed in Miami with the U.S. District Court for the Southern District of Florida.
According to the civil injunction complaint, the defendants prepare federal income tax returns with fabricated claims for the federal fuel tax credit. The credit is available in limited circumstances for fuel purchased for off-highway business use. Fraudulently claiming the fuel tax credit is one of the Internal Revenue Service’s Dirty Dozen Tax Scams for 2009. The government complaint alleges that PCPS’s false claims for federal fuel tax credits appeared on almost 1,500 returns in 2006 and 2007 with total fraudulent claims exceeding $3.6 million.
In the past decade the Justice Department’s Tax Division has obtained injunctions against more than 410 tax return preparers and tax-fraud promoters. Information about these cases is available on the Justice Department Web site.
Justice Department Releases New Fact Sheet on the Rights of Persons with HIV or AIDS to Obtain Occupational Training and State LicensingRead the Press Release
WASHINGTON – The Justice Department today released a new technical assistance fact sheet on legal requirements relating to admitting individuals with HIV or AIDS to occupational training schools and granting state licensure in occupations such as barbering, massage therapy and home health care assistance.
Persons with HIV and AIDS unfortunately still face obstacles in obtaining training and state licensure in these occupations because of overly broad state licensure requirements that applicants be free of communicable diseases. Because HIV disease is not communicated through casual contact, excluding individuals with HIV under these licensure requirements is unnecessary and discriminates against these individuals in violation of the Americans with Disabilities Act. This publication is intended to provide guidance for state licensing agencies and occupational training schools so that individuals with HIV or AIDS have an equal opportunity to pursue these occupations.
"People with HIV or AIDS should not be denied access to their chosen profession because of outdated laws or unfounded stereotypes and fears. The Civil Rights Division of the U.S. Department of Justice is committed to the full and fair enforcement of the Americans with Disabilities Act," said Loretta King, Acting Assistant Attorney General for the Civil Rights Division.
The Americans with Disabilities Act protects individuals with disabilities from discrimination in all activities of state and local government entities and by public accommodations. This publication and additional information about the Civil Rights Division is available at the Department’s ADA Web site at http://www.ada.gov.
Former Boeing Engineer Convicted of Economic Espionage<br /> in Theft of Space Shuttle Secrets for ChinaRead the Press Release
A former Rockwell and Boeing engineer from Orange County, Calif., was remanded into custody this morning after a federal judge convicted him of charges of economic espionage and acting as an agent of the People’s Republic of China, for whom he stole restricted technology and Boeing trade secrets, including information related to the Space Shuttle program and Delta IV rocket.
Dongfan "Greg" Chung, 73, who was employed by Rockwell International from 1973 until its defense and space unit was acquired by Boeing in 1996, was found guilty by U.S. District Judge Cormac J. Carney, who presided over a three-week bench trial last month.
In his ruling read this morning in court, Judge Carney found Chung guilty of conspiracy to commit economic espionage, six counts of economic espionage to benefit a foreign country, one count of acting as an agent of the People’s Republic of China and one count of making false statements to the FBI.
Immediately following the reading of the verdicts, Judge Carney remanded Chung into custody, where he will remain until his sentencing, which was scheduled for Nov. 9, 2009. Chung had been freed after being arrested by special agents with the FBI and investigators with NASA in February 2008.
Chung, a native of China who is a naturalized U.S. citizen, held a "secret" security clearance when he worked at Rockwell and Boeing on the Space Shuttle program. He retired from the company in 2002, but the next year he returned to Boeing as a contractor, a position he held until September 2006. At trial last month, the government proved that Chung took and concealed Boeing trade secrets relating to the Space Shuttle and the Delta IV rocket, materials he acquired for the benefit of the PRC.
David Kris, Assistant Attorney General for National Security, said: "For years, Mr. Chung stole critical trade secrets from Boeing relating to the Space Shuttle and the Delta IV rocket – all for the benefit of the government of China. Today’s verdict should serve as a warning to others willing to compromise America's economic and national security to assist foreign governments. The many agents, analysts and prosecutors who worked on this important case deserve special thanks for their efforts."
"Mr. Chung stole restricted technology for the benefit of a foreign nation, and as a result he has lost the freedom he was offered by this nation," said U.S. Attorney Thomas P. O’Brien. "The stolen technology compromised not only the American company that developed and owned the trade secrets, but national security as well because the secrets could be used by the PRC to develop its own military technology."
Salvador Hernandez, Assistant Director in Charge of the FBI in Los Angeles, stated: "The cost of Mr. Chung’s traitorous actions to American security and the economy cannot be quantified, but have now been exposed, and his ability to exploit critical technology has come to an end. FBI counter-intelligence agents and NASA received the full cooperation of the Boeing Company in building this three-year investigation, the successful outcome of which marks the first conviction by trial under the Economic Espionage Act of 1996. I’m confident this milestone conviction will serve as a deterrent to would-be spies contemplating theft of precious U.S. secrets."
The case against Chung resulted from an investigation into another engineer who worked in the United States and obtained sensitive military information for the PRC. That engineer, Chi Mak, and several of his family members were convicted of providing defense articles to the PRC. Chi Mak was sentenced last year to more than 24 years in federal prison (see: http://www.usdoj.gov/usao/cac/pressroom/pr2008/032.html).
According to the evidence presented during the trial, individuals in the Chinese aviation industry began sending Chung "tasking" letters as early as 1979. Over the years, the letters directed Chung to collect specific technological information, including data related to the Space Shuttle and various military and civilian aircraft. Chung allegedly responded in one undated letter that "I would like to make an effort to contribute to the Four Modernizations of China." In various letters to his handlers in the PRC, Chung referenced engineering manuals he had collected and sent to the PRC, including 24 manuals relating to the B-1 Bomber that Rockwell had prohibited from disclosure outside of the company and "selected federal agencies."
Between 1985 and 2003, Chung made multiple trips to the PRC to deliver lectures on technology involving the Space Shuttle and other programs, and during those trips he met with PRC government officials, to include agents affiliated with the People’s Liberation Army. Chung and PRC officials exchanged letters that discussed Chung’s travel to China and recommended methods for passing information, including suggestions that Chung use Chi Mak and his wife Rebecca to transmit information. A May 2, 1987, letter from Gu Weihao, an official in the Ministry of Aviation and China Aviation Industry Corporation, discussed the possibility of inviting Chung’s wife, who is an artist, to visit an art institute so that Chung could use her trip as an excuse to travel to the PRC. This same letter suggested that passing information to the PRC through Chi Mak would be "faster and safer" and concluded with the statement: "It is your honor and China’s fortune that you are able to realize your wish of dedicating yourself to the service of your country."
On Sept. 11, 2006, FBI and NASA agents searched Chung’s house and found more than 250,000 pages of documents from Boeing, Rockwell and other defense contractors inside the house and in a crawl space underneath the house. Among the documents found in the crawl space were scores of binders containing decades’ worth of stress analysis reports, test results and design information for the Space Shuttle.
Each charge of economic espionage carries a maximum possible penalty of 15 years in federal prison and a $500,000 fine. The charge of acting as an agent of a foreign government carries a maximum penalty of 10 years imprisonment and a $250,000 fine. The charges of conspiracy to commit economic espionage and making false statements to federal investigators each carry a maximum possible penalty of five years imprisonment and a $250,000 fine.
In this morning’s ruling, Judge Carney acquitted Chung of one count of obstruction of justice.
The investigation in this case was conducted jointly by the FBI and NASA Counterintelligence. The case was prosecuted by Assistant U.S. Attorneys Greg Staples and Ivy Wang.
Chief Engineer and Second Engineer Plead Guilty to Concealing Vessel PollutionRead the Press Release
WASHINGTON – Panagiotis Stamatakis, the chief engineer on the Cyprus-flagged M/V Myron N, and the second engineer, Dimitrios Papadakis, both citizens of Greece, pleaded guilty today in U.S. District Court in Trenton, N.J., to using falsified records that concealed improper discharges of untreated bilge waste from the cargo ship, the Justice Department announced.
District Court Judge Peter G. Sheridan for the District of New Jersey scheduled sentencing for Sept. 8, 2009. Stamatakis and Papadakis each faces up to six years in prison, to be followed by three years of supervised release and a $250,000 fine.
The government’s investigation began in September 2008, when inspectors from the U.S. Coast Guard conducted an examination of the M/V Myron N, following the ship’s arrival in Gravesend Anchorage, N.Y. and subsequently in the Port of Newark, N.J. The M/V Myron N is a 38,337 gross ton dry bulk carrier vessel operated and managed by Dalnave Navigation Inc., which is incorporated in the Republic of Liberia. The inspections uncovered evidence that crewmembers had improperly handled and disposed of the ship’s untreated bilge waste, using a pipe to bypass its pollution control system. To conceal these activities, Stamatakis and Papadakis knowingly failed to record those discharges in the ship’s official oil record book.
Engine room operations on board large oceangoing vessels such as the M/V Myron N generate large amounts of waste oil and oil-contaminated bilge waste. International and U.S. law prohibit the discharge of waste containing more than 15 parts per million of oil and without treatment by an oily water separator—a required pollution prevention device. Law also requires all overboard discharges be recorded in an oil record book, a required log which is regularly inspected by the Coast Guard.
Stamatakis served as the chief engineer aboard the M/V Myron N between November 2007 and September 2008 and was responsible for all engine room operations. Papadakis served as an engineer on the M/V Myron N from November 2007 until September 2008. Between November 2007 and September 2008, under the supervision of Stamatakis, Papadakis ordered engine room crew members to discharge untreated bilge fluids from the ship’s bilge holding tank directly into the ocean. When the M/V Myron N entered the Gravesend Bay Anchorage on Sept. 8, 2008, and subsequently the Port of Newark, the ship’s log, which Stamatakis was responsible for maintaining, failed to disclose the overboard discharge of oil-contaminated bilge water.
"Lying to the Coast Guard, obstructing a federal investigation and bypassing mandatory pollution controls is unacceptable,"said John C. Cruden, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. "As long as individuals and companies continue to bypass this nation’s environmental laws, the Justice Department will continue to bring charges and seek justice for those involved."
The case was investigated by the U.S. Coast Guard, Coast Guard Investigative Service and the Environmental Protection Agency, Criminal Investigation Division. It was prosecuted by Assistant U.S. Attorney Kathleen P. O’Leary of the U.S. Attorney’s Office for the District of New Jersey, Special Assistant U.S. Attorney Christopher P. Mooradian of the U.S. Coast Guard First District Legal Office, and Trial Attorney Gary N. Donner of the Justice Department’s Environmental Crimes Section.
Attorney General Announces $500,000 Recovery Act Grant for California Transitional Housing ProgramRead the Press Release
Attorney General Eric Holder today announced that $500,000 in Recovery Act funds have been awarded to the Support for Harbor Area Women’s Lives (SHAWL) House, a program of the Volunteers of America of Los Angeles (VOALA). The announcement was made during the Attorney General’s visit to SHAWL House, known for its transitional housing and support services to victims of domestic violence in the South Bay area of Los Angeles.
"Transitional housing assistance programs help bridge a gap between emergency shelter and permanent housing for victims and their families. Providing viable temporary housing options and services that promote self-sufficiency are critical and proven steps toward violence-free lives," said Attorney General Holder. "We all know that the most vulnerable in our society bear the greatest burden in times of economic hardship. The grant we are delivering today to the SHAWL House, and the women these funds will help, is a concrete example of the Recovery Act at work."
The landmark American Recovery and Reinvestment Act of 2009, signed into law by President Obama, provides the Justice Department’s Office on Violence Against Women (OVW) with $43 million for the Transitional Housing Assistance Program to provide holistic, victim-centered support services that move individuals into permanent housing. The grant to VOALA’s SHAWL House is the first grant awarded under the Transitional Housing Assistance Program.
Transitional housing programs meet the goals of the Recovery Act through employing victim advocates and other personnel to assist victims, renovating housing for victims, offering additional housing units, and increasing job opportunities for victims through training, education and other support services. The award period for these grants is 24-36 months.
OVW, a component of the U.S. Department of Justice, provides leadership in developing the nation’s capacity to reduce violence against women through the implementation of the Violence Against Women Act (VAWA) and subsequent legislation. Created in 1995, OVW administers financial and technical assistance to communities across the country that are developing programs, policies and practices aimed at ending domestic violence, dating violence, sexual assault and stalking. In addition to overseeing 19 federal grant programs, OVW often undertakes initiatives in response to special needs identified by communities facing acute challenges.
More information is available at www.ovw.usdoj.gov.
Ship Captain and Chief Officer Plead Guilty to Crimes Related to Pollution from Cargo Ship Traveling to New OrleansRead the Press Release
A Greek citizen, Panagiotis Lekkas, the captain of the bulk cargo ship the M/V Theotokos, pleaded guilty today to four felony counts in federal court in New Orleans for violating anti-pollution laws, ship safety laws and obstructing a U.S. Coast Guard investigation. Additionally, a Philippine citizen, Charles P. Posas, the second highest officer onboard the M/V Theotokos, pleaded guilty to two felony counts of lying to the Coast Guard and violating recordkeeping laws aimed at reducing the risk of marine invasive species.
Posas is the first individual ever charged under the anti-invasive species law, a law designed to mitigate the introduction of marine invasive species into waters of the United States. Aquatic nuisance species are non-indigenous species that threaten the diversity or abundance of native species or the ecological stability of infested waters.
Lekkas, who was the highest ranking officer aboard the ship, pleaded guilty to one count of violating the Act to Prevent Pollution from Ships, one count of obstruction of justice and two counts of violating the Ports and Waterways Safety Act. Posas, who served as the vessel’s chief officer, pleaded guilty to one count of false statement and one count of violating the Nonindigenous Aquatic Nuisance and Prevention Control Act.
The vessel is owned by Liberia-based Mirage Navigation Corporation and is managed by Polembros Shipping Limited. Sentencing for both individual defendants is set for Oct. 14, 2009.
The Coast Guard’s investigation revealed that Lekkas, as the ship’s master, was in charge of the vessel’s operation and was responsible for both the deck department and the engineering department. Chief Officer Posas had direct authority over the deck department, which oversees ship navigation, cargo loading and ballasting. As such, the defendants monitored the ship’s ballast water system and directed the crew to take soundings of the ballast tanks to determine the volume of liquid in particular tanks. Ballast tanks are segregated tanks designed exclusively to hold water and are used to control a ship’s stability and trim. A properly functioning ballast system is essential to safe vessel operation.
In the summer of 2008, during a passage from the Suez Canal to China, Lekkas and Posas suspected that the aftpeak ballast tank was leaking, but the crew was unable to confirm a leak during an inspection. Later, while at a dock, offloading cargo in China, Lekkas and Posas observed an approximately 24-inch crack in the ship’s rudder stem. It was evident that water had passed through the crack because water was streaming out of it from inside of the ship. Lekkas reported the crack to company personnel, but failed to write a written report. Lekkas did not report it to the Coast Guard until he was confronted by Coast Guard inspectors in New Orleans. In court documents, Lekkas admitted that he knew the crack could have adversely affected the safety and safe handling and operation of the vessel. No repairs were undertaken on the rudder stem crack until the Coast Guard ordered it repaired upon its discovery.
The Port and Waterways Safety Act (PWSA) requires that a vessel operator must report all hazardous conditions to the Coast Guard prior to arrival in a U.S. port. Under the PWSA regulations, a hazardous condition does not have to be a definitive danger or imminent threat, but need only be a condition that may adversely affect the safety of any vessel, bridge, structure or shore area or the environmental quality of any port, harbor or navigable waterway of the United States. It may, but need not, involve collision, allision, fire, explosion, grounding, leaking, damage, injury or illness of a person aboard or manning-shortage.
The Coast Guard has notification processes in place to utilize for vessels arriving to U.S. ports that have identified hazardous conditions onboard, such as excessive leaks and major equipment malfunctions. A vessel operator has several options available, including notifying the Coast Guard 96 hours prior to arrival of the hazardous condition or contacting the applicable ports’ 24-hour Sector Command Center or Vessel Traffic Service.
Through further investigation, the Coast Guard also found fuel was leaking, or "migrating" from the deep fuel tanks into the forepeak ballast tank. The forepeak tank is another one of the ballast tanks designed to hold water as part of the ship’s stability and trim control system. The forepeak tank, found in the bow of the ship, is the most forward tank of any sort on the M/V Theotokos. Directly astern of the forepeak tank were two fuel tanks, known as the deep fuel tanks.
In mid-September 2008, Lekkas and Posas learned that fuel oil may have been leaking into the forepeak ballast tank because it was reported that the sounding tapes were dirty with oil. After opening the tank’s hatch, two inspections confirmed the presence of oil in the forepeak tank. Following this discovery, Captain Lekkas ordered the crew to undertake a cleaning operation that initially involved skimming the surface of the water in order to remove the oil. In order to facilitate further cleaning, Lekkas ordered the level of the liquid in the tank lowered by pumping it directly overboard through the ballast pump. As the liquid level was lowered the crew could clean more of the tank, with the cleaning operation expanding to rags and a portable pump. The discharged ballast liquid was contaminated with oil.
The Act to Prevent Pollution from Ships and its regulations require that discharges from the machinery spaces of a cargo ship must be fully and accurately recorded in the oil record book. This obligation extends to emergency, accidental, or other exceptional discharges of oil and oily mixtures. Lekkas ordered the ballast discharges and counter-signed each page of the oil record book, certifying its accuracy. However, none of the contaminated ballast water discharges were recorded in the Oil Record Book.
When the vessel was about two days out from arriving in New Orleans, in late September 2008, it was clear that oil was continuing to leak into the forepeak tank. Prior to entering the Mississippi River and about a day out from New Orleans, Lekkas ordered two fitters to fabricate and install an obstruction device onto the forepeak tank’s sounding tube so that during Coast Guard inspections, when taking a sounding, the results would only reveal water and not the presence of oil in the tank. The obstruction device consisted of a rubber hose with a metal stopper at the bottom end. Before being affixed to the sounding tube, the rubber hose was partially filled with water.
On Oct. 1, 2008, the Coast Guard boarded the M/V Theotokos near New Orleans in order to inspect the ship. During the inspection, the Coast Guard oversaw the sounding of the forepeak tank which indicated the presence of water in the tank but did not reveal the oil. Later, as part of the inspection, the Coast Guard had the crew open the hatch to the forepeak tank which revealed approximately one meter of oil in the tank. During the initial inspection, confined spaces safety regulations prevented the Coast Guard inspectors from retrieving the obstruction device. Although the inspection lasted another two days, Lekkas ordered the fitters to remove the rubber hose from the tank and restore the sounding tube to its original condition. The removal occurred before the Coast Guard had an opportunity to enter the tank.
In addition to the obstruction regarding the sounding pipe, Lekkas admitted in court documents that he knew about the fuel leak into the forepeak tank well before coming to New Orleans and that he chose not to report the leaks to the Coast Guard. Lekkas further admitted that the fuel migration may have adversely affected the safety of the M/V Theotokos or the environmental quality of U.S. ports and shores because the oil contamination in the ballast system meant that captain could not have utilized the ballast system, with its attendant direct overboard discharges, without polluting the marine environment.
Additionally, during the inspection, a Coast Guard inspector asked to see complete ballast records for the Theotokos. Posas responded by physically handing the inspector a copy of the Sept. 27, 2008, ballast report, which is a report of soundings and volumes of water in the ballast system. Posas prepared, signed and maintained these reports as part of his duties as chief officer. In court documents Posas admitted, that at the time he presented the ballast report to the Coast Guard inspector, he knew that the form was false.
Maintenance of accurate ballast water records is required under Ballast Water Management for Control of Nonindigenous Species regulations promulgated under the Nonindigenous Aquatic Nuisance Prevention and Control Act.
"Invasive marine species are a serious problem that can be transmitted in the ballast water of oceangoing vessels. Today’s pleas should act as a warning to industry and crewmembers alike that we will investigate and prosecute those who ignore not only pollution laws but those laws designed to protect native species," said John C. Cruden, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division.
U.S. Attorney Jim Letten noted, "The message should be clear that this office, in conjunction with its partnership with the U.S. Coast Guard, the Department of Justice Environmental Crimes Section and all its law enforcement partners, will vigorously prosecute individuals who impede or obstruct the U.S. Coast Guard’s mission and pollute our marine environment."
"This case clearly demonstrates the Coast Guard’s commitment to work with our interagency partners to aggressively enforce all maritime anti-pollution and safety of life at sea laws. The breadth and magnitude of the investigation that underpinned the charges brought forth is a testament to the dedication of all persons who were involved in resolving this matter including the Coast Guard Investigative Service, the U.S. Department of Justice‘s Environmental Crime Section, and the U.S. Attorney for the Eastern District of Louisiana," said Rear Admiral Mary Landry, Eighth District Coast Guard commander.
"Coast Guard Investigative Service will continue to aggressively investigate those who profit by violating our environmental laws," said Damon Rodriguez, Special Agent in Charge, Gulf Region, Damon Rodriguez.
The case was investigated by the U.S. Coast Guard Investigative Service with assistance from inspectors from Sector New Orleans as well as legal from U.S. Coast Guard in New Orleans and at Headquarters in Washington, D.C. The case is being prosecuted by Christopher L. Hale of the Justice Department’s Environmental Crimes Section along with Dorothy Taylor of the U.S. Attorney’s Office in New Orleans.
Louisiana Tax Defier Sentenced to 46 Months in PrisonRead the Press Release
WASHINGTON – Paul Richard Arceneaux, a resident of Church Point, La., was sentenced today to prison for failing to file his personal tax returns for 2003 and 2004 and corruptly interfering with the due administration of the Internal Revenue laws, the Justice Department and Internal Revenue Service (IRS) announced. The Honorable Walter J. Gex III, U.S. District Court Judge for the Southern District of Mississippi, sentenced Arceneaux to 46 months in prison and three years of supervised release. The court also ordered Arceneaux to pay restitution of $176,616.18.
In April 2009, Arceneaux was convicted of all charges following a jury trial in Jackson, Miss. According to the indictment and the evidence presented at trial, Arceneaux, formerly of Long Beach, Miss., filed false tax returns or amended tax returns for tax years 1998 through 2002 on which he falsely claimed he earned no income. Additionally, Arceneaux failed to file tax returns for tax years 2003 to 2006. Arceneaux filed fictitious liens for millions of dollars against the Chancery Clerk for Harrison County, an employee of the Chancery Clerk’s office, and an employee of the IRS. Arceneaux also filed frivolous lawsuits against the Commissioner of the IRS and an IRS employee.
In July 2004, the Honorable Louis Guirola Jr., a U.S. District Court Judge for the Southern District of Mississippi, dismissed Arceneaux’s frivolous lawsuits in which Arceneaux claimed that he was a citizen of the state of Mississippi, not the United States, and therefore the Internal Revenue code did not apply to him. Judge Guirola wrote that Arceneaux’s arguments that he is not subject to this nation’s federal tax laws "have been considered and uniformly rejected by the courts."
John A. DiCicco, Acting Assistant Attorney General of the Justice Department’s Tax Division commended the IRS-Criminal Investigation special agents who investigated the case, as well as Tax Division trial attorney Jed Silversmith and Assistant U.S. Attorney Mike Hurst, who prosecuted the case.
Houston Computer Administrator Sentenced to Two Years in Prison for Hacking Former Employer's Computer NetworkRead the Press Release
The former director of information technology for a non-profit organ and tissue donation center was sentenced today to two years in prison for hacking into her former employer’s computer network.
Danielle Duann, 51, of Houston, pleaded guilty on April 30, 2009, to a one-count criminal indictment charging her with unauthorized computer access. Duann was sentenced today by U.S. District Judge David Hittner in the Southern District of Texas. In addition to the two-year prison term, Judge Hittner sentenced Duann to a three-year period of supervised release following completion of her prison sentence, and ordered her to pay $94,222 in restitution to compensate her former employer for the damage that resulted from her actions.
In pleading guilty, Duann admitted to illegally accessing the computer network of LifeGift Organ Donation Center and then intentionally deleting organ donation database records, accounting invoice files, database and accounting software applications and various backup files, without authorization. LifeGift is the sole provider of organ procurement services for more than 200 hospitals throughout 109 counties in North, Southeast and West Texas.
According to court documents, LifeGift terminated Duann from her position as their director of information technology on Nov. 7, 2005, and revoked all of her previous administrative rights and access to the LifeGift computer network. In pleading guilty, Duann admitted that beginning on the evening of Nov. 7, 2005, and continuing until Nov. 8, 2005, she repeatedly gained unauthorized access to the LifeGift computer network via a remote connection from her home and intentionally caused damage by deleting numerous database files and software applications, as well as their backups, related to LifeGift’s organ and tissue recovery operations.
Duann further admitted that in an attempt to conceal her activities, she disabled the computer logging functions on several LifeGift computer servers and erased the computer logs that recorded her remote access to the LifeGift network
This case was investigated by the FBI and is being jointly prosecuted by Trial Attorney Thomas Dukes of the Criminal Division’s Computer Crime and Intellectual Property Section and Special Assistant U.S. Attorney Bret W. Davis of the U.S. Attorney’s Office for the Southern District of Texas.
Attorney General Holder Announces $8.7 Million <br /> in Recovery Act Grants to Support Law Enforcement Efforts <br /> on the Southwest BorderRead the Press Release
Attorney General Eric Holder today announced more than $8.7 million in Recovery Act funds for three communities in California to use in fighting crime and drug trafficking as part of the Justice Department’s Southwest Border Strategy. In March 2009, the Department announced its Mexico Cartel Strategy, which uses federal prosecutor-led task forces that bring together federal, state and local law enforcement components to identify, disrupt and dismantle the Mexican drug cartels through investigation, prosecution and extradition of their key leaders and facilitators, and seizure and forfeiture of their assets.
"The Department of Justice is intensifying its efforts to investigate, prosecute and punish members of the Mexican drug cartels," said Attorney General Holder. "The guns, drugs, and bulk cash that are the backbone of the cartels’ business contribute to addiction and drug-related violence in our communities. The Recovery Act funding these three California communities are receiving will help local law enforcement in our joint efforts to combat the threat posed by these cartels."
The Department is increasing its focus on investigations and prosecutions of the southbound smuggling of guns and cash that fuel the violence and corruption and attacking the cartels in Mexico. In recent months, the Department has announced resources for the Southwest border, including an increased law enforcement presence and is now providing additional resources through the Recovery Act grants announced today. In addition, the Department is continuing to collaborate with counterparts in Mexico to strengthen Mexico’s law enforcement capacity and institutions.
Department officials are taking an active role in the national effort to combat the Mexican drug cartels. Two weeks ago, top Department officials participated in the Violent Crime and Arms Trafficking Summit in Albuquerque, N.M., where federal, state and local officials worked to refine enforcement strategies. In June 2009, the Attorney General, along with Secretary Janet Napolitano and Director Gil Kerlikowske from the Office of National Drug Control Policy released President Obama’s National Southwest Border Counternarcotics Strategy, designed to stem the flow of illegal drugs and their illicit proceeds across the Southwest Border by, among other things, increasing coordination and information sharing with state and local law enforcement agencies. Previously, the Attorney General and other Department officials participated in high-level meetings with U.S. and Mexican officials at an arms trafficking conference in Cuernavaca, Mexico.
As part of the efforts to combat Mexican drug cartels, the Office of Justice Programs (OJP) is administering the $30 million Recovery Act Assistance for Law Enforcement along the Southern Border and in High Intensity Drug Trafficking Areas (Southern Border/HIDTA). This will provide resources for hiring, retention, assistance and equipment to law enforcement to combat criminal narcotics activity stemming from the southern border-states.
The Attorney General was joined by local law enforcement officials as he announced grant awards to the California communities of Chula Vista ($2,864,605); San Mateo County ($800,700); and San Diego County ($4,999,996). The Chula Vista Police Department, on behalf of the California Border Alliance Group, plans to use these Recovery Act funds to support task force efforts to gather intelligence related to cross-border violence, including creating or retaining 10 positions. The San Mateo County Sheriff’s Office, along with the Northern California HIDTA, plans to use the funds to develop an automated intelligence management system to track wholesale distribution from Mexican drug trafficking organizations out of the San Francisco area. San Diego County plans to use the funds to create a team of 16 uniformed officers to patrol the border for drug smuggling and criminal activity and fund a dedicated deputy district attorney to prosecute those apprehended. The remaining Southern Border/HIDTA grant awards are being processed and will be announced in the near future.
The Southern Border/HIDTA grant program is part of more than $4 billion in Department of Justice Recovery Act funds available to assist state, local and tribal law enforcement and for other criminal justice activities that help to prevent crime and improve the criminal justice system in the United States, while supporting the creation of jobs and much needed resources for states and local communities.
OJP provides federal leadership in developing the nation’s capacity to prevent and control crime, administer justice and assist victims. OJP has five component bureaus: the Bureau of Justice Assistance; the Bureau of Justice Statistics; the National Institute of Justice; the Office of Juvenile Justice and Delinquency Prevention; and the Office for Victims of Crime. Additionally, OJP has two program offices: the Community Capacity Development Office, which incorporates the Weed and Seed strategy, and the Office of Sex Offender Sentencing, Monitoring, Apprehending, Registering, and Tracking (SMART). More information can be found at www.ojp.gov.
Endoscopic Technologies to Pay U.S. $1.4 Million to Resolve Allegations of Medicare FraudRead the Press Release
WASHINGTON – Endoscopic Technologies Inc. (Estech), a medical device manufacturer, has agreed to pay the United States $1.4 million to resolve civil claims in connection with the alleged promotion of its surgical ablation devices, the Justice Department announced today. Surgical ablation devices use focused energy to create controlled lesions or scar tissue on a patient’s heart or other organs.
The settlement resolves allegations that the San Ramon, Calif.-based company marketed its medical devices to treat atrial fibrillation (the most common cardiac arrhythmia or abnormal heart rhythm), a use that is not approved by the U.S. Food and Drug Administration (FDA). The government also alleged that Estech promoted expensive heart surgeries using the company’s devices when less invasive alternatives were appropriate, advised hospitals to up-code surgical procedures using the company’s devices to inflate Medicare reimbursements, and paid kickbacks to healthcare providers to use its devices. The United States asserted that by engaging in this conduct, Estech knowingly violated the Food, Drug and Cosmetic Act and caused the submission of false and fraudulent claims in violation of the False Claims Act.
"The Department of Justice is committed to protecting Medicare from the unlawful marketing practices of Estech and other medical device manufacturers," said Tony West, Assistant Attorney General for the Justice Department’s Civil Division. "We will continue to work with our partners at the Department of Health and Human Services Inspector General’s Office and the FDA Office of Chief Counsel to preserve the integrity of our public health programs."
The allegations were made against Estech in a lawsuit filed in the U.S. District Court for the Southern District of Texas under the qui tam provisions of the False Claims Act, which permit private citizens, called "relators," to bring lawsuits on behalf of the United States and receive a portion of the proceeds of any settlement or judgment. The relator will receive a total of $210,000 as the statutory share of the settlement.
The Southern District of Texas has also unsealed four additional qui tam lawsuits filed by relators against other surgical ablation device manufacturers. The United States continues to investigate those cases.
The settlement with Estech was the result of a coordinated effort by the U.S. Attorney’s Office for the Southern District of Texas, the Civil Division of the Department of Justice, the Department of Health and Human Services’ Office of Inspector General, and the FDA Office of Chief Counsel.
New Jersey Electrical Services Company Employee Sentenced to 20 Months in Jail for Kickback and Fraud SchemeRead the Press Release
WASHINGTON — An employee of a Sewell, N.J., sub-contractor that provided temporary electrical services was sentenced today to serve 20 months in jail for his role in a kickback and fraud scheme at an Environmental Protection Agency (EPA)-designated Superfund site in New Jersey, the Department of Justice announced. The sub-contractor was also ordered to pay $154,597 in restitution to the EPA, jointly and severally with his co-conspirators.
Christopher Tranchina of Glassboro, N.J., a Service Manager for a Sewell sub-contractor, pleaded guilty on Feb. 26, 2009, in the U.S. District Court in New Jersey, to conspiring to defraud the United States. From approximately the Spring of 2001 until approximately June of 2005, Tranchina and other co-conspirators defrauded the EPA by paying approximately $138,000 in kickbacks to an employee of a prime contractor at the Federal Creosote Superfund site in Manville, N.J. In exchange for the kickbacks, Tranchina’s employer was awarded subcontracts at Federal Creosote. The kickbacks were included in the prices charged to the EPA, which partly funded the remediation of the site. Tranchina received approximately $23,000 of the kickbacks, in the form of a hot tub, an HVAC system, cash and checks.
Tranchina had pricing and bidding authority for all sub-contracts between his employer and the prime contractor at Federal Creosote during the charged period. As a result of the conspiracy and in return for Tranchina’s payment of kickbacks to the prime contractor, Tranchina’s employer received approximately $1.2 million in sub-contracts at Federal Creosote.
"Today’s sentencing should make clear that those who conspire to subvert the competitive bidding process will be held accountable," said Scott D. Hammond, Deputy Assistant Attorney General for Criminal Enforcement of the Department’s Antitrust Division.
The charge is the result of an ongoing federal antitrust investigation into bid rigging, bribery, fraud and tax-related offenses conducted by the Antitrust Division’s New York Field Office, the EPA Office of Inspector General and the Internal Revenue Service Criminal Investigation. To date, a total of three companies and seven individuals have pleaded guilty. Bennett Environmental Inc. was sentenced in December 2008 to pay criminal fines and restitution totaling more than $2.66 million. The other individuals and companies are awaiting sentencing.
Today’s charge reflects the Department’s commitment to protecting U.S. taxpayers from procurement fraud through its creation of the National Procurement Fraud Task Force. The National Procurement Fraud Initiative, announced in October 2006, is designed to promote the early detection, prosecution and prevention of procurement fraud associated with the increase in contracting activity for national security and other government programs.
Anyone with information concerning bid-rigging, kickbacks or fraud relating to sub-contracts awarded at the Federal Creosote site should contact the New York Field Office of the Antitrust Division at 212-264-9308.
Four Members of Casino-Cheating Criminal Enterprise Sentenced <br /> for Targeting Casinos in the United States and CanadaRead the Press Release
George Michael Lee, Duc Cong Nguyen, Hop Nguyen and Tien Duc Vu were sentenced today in San Diego for their roles in a scheme by the "Tran Organization" to cheat casinos across the United States and Canada. Duc Cong Nguyen and Vu admitted that they and their co-conspirators unlawfully obtained up to $2.5 million during card cheats.
A three-count indictment was returned May 22, 2007, and unsealed in the Southern District of California on May 24, 2007, charging Lee, Vu and 12 others each with one count of conspiracy to participate in the affairs of a racketeering enterprise; one count of conspiracy to commit several offenses against the United States, including conspiracy to steal money and other property from Indian tribal casinos; and one count of conspiracy to commit money laundering. The indictment also charged five separate individuals, including Duc Cong Nguyen, each with one count of conspiracy to commit several offenses against the United States, including conspiracy to steal money and other property from Indian tribal casinos; and one count of conspiracy to commit money laundering.
Lee was sentenced to 36 months in prison and three years of supervised release by District Judge John A. Houston in San Diego. The court also ordered forfeiture in the amount of $731,645; and ordered restitution in the amount of $2,208,019, payable to several casinos. Lee pleaded guilty on Dec. 13, 2007, to conspiracy to participate in the affairs of a racketeering enterprise. Lee was also sentenced on two separate indictments to which he pleaded guilty after agreeing to transfer the charges to San Diego from the Western District of Washington. The two indictments related to card-cheating activity at Emerald Queen Casino and Nooksack River Casino, which are Indian gaming establishments in Washington state.
Duc Cong Nguyen was sentenced to one year and one day in prison and three years of supervised release by Judge Houston. The court also ordered restitution in the amount of $945,055, payable to several casinos. Duc Cong Nguyen pleaded guilty on Aug. 10, 2007, to conspiracy to commit several offenses against the United States, including conspiracy to steal money and other property from Indian tribal casinos.
Vu was sentenced by Judge Houston to one year and one day in prison and three years of supervised release. The court also ordered forfeiture in the amount of $53,500; and ordered restitution in the amount of $2,164,632, payable to several casinos. Vu pleaded guilty on Aug. 8, 2008, to conspiracy to participate in the affairs of a racketeering enterprise. Vu was also sentenced on a separate indictment to which he pleaded guilty after agreeing to transfer the charges to San Diego from the Western District of Washington. The transferred indictment related to card-cheating activity at Nooksack River Casino, which is an Indian gaming establishment in Washington state.
Hop Nguyen, who waived indictment and pleaded guilty on Jan. 27, 2009, to filing a false income tax return, was sentenced to one year of supervised release by District Judge William Q. Hayes in San Diego. The court also ordered restitution in the amount of $131,238, payable to several casinos. Hop Nguyen’s plea agreement contained admissions of casino-cheating activities on behalf of the Tran Organization at casinos in the United States and Canada.
A second indictment has alleged that 11 additional defendants conspired to commit offenses on behalf of the Tran Organization. A one-count indictment, unsealed in the Southern District of California on Sept. 11, 2008, charged Bryan Arce; Don Man Duong; Hogan Ho; Thang Viet Huynh; Outtama Keovongsa; Leap Kong, aka Lanida Kong; Qua Le; Khunsela Prom, aka Danny Prom; James Root; Darrell Saicocie; and Dan Thich each with one count of conspiracy to commit several offenses against the United States, including conspiracy to steal money and other property from Indian tribal casinos, and conspiracy to travel in interstate and foreign commerce in aid of racketeering.
According to the two indictments, the defendants and others executed a "false shuffle" cheating scheme at casinos in the United States and Canada during blackjack and mini-baccarat games. The indictments allege that members of the criminal organization bribed casino card dealers and supervisors to perform false shuffles during card games, thereby creating "slugs" or groups of unshuffled cards. The indictments also allege that after tracking the order of cards dealt in a card game, a member of the organization would signal to the card dealer to perform a "false shuffle," and members of the group would then bet on the known order of cards when the slug appeared on the table. By doing so, members of the conspiracy repeatedly won thousands of dollars during card games, including winning several hundred thousand dollars on one occasion.
The indictments also allege that the members of the organization used sophisticated mechanisms for tracking the order of cards during games, including hidden transmitter devices and specially created software that would predict the order in which cards would reappear during blackjack games.
An indictment is merely an allegation and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
To date, 29 defendants have pleaded guilty to charges relating to the casino-cheating conspiracy, including: Phuong Quoc Truong; Tai Khiem Tran; Anh Phuong Tran; Phat Ngoc Tran; Martin Lee Aronson; Liem Thanh Lam; George Michael Lee; Tien Duc Vu; Son Hong Johnson; Barry Wellford; John Tran; Willy Tran; Tuan Mong Le; Duc Cong Nguyen; Han Truong Nguyen; Roderick Vang Thor; Sisouvanh Mounlasy; Navin Nith; Renee Cuc Quang; Ui Suk Weller; Phally Ly; Khunsela Prom; Hop Nguyen; Hogan Ho; Darrell Saicocie; Bryan Arce; Qua Le; Outtama Keovongsa; and Leap Kong. These defendants admitted to targeting, with the aid of co-conspirators, a combined total of approximately 25 casinos during the course of the conspiracy, including:
1) Beau Rivage Casino in Biloxi, Miss.;
2) Casino Rama, in Orillia Ontario, Canada;
3) Foxwoods Resort Casino in Ledyard, Conn.;
4) Gold Strike Casino in Tunica, Miss.;
5) Horseshoe Casino in Bossier City, La.;
6) Horseshoe Casino and Hotel in Tunica, Miss.;
7) Isle of Capri Casino in Westlake, La.;
8) Majestic Star Casino in Gary, Ind.;
9) Mohegan Sun Resort Casino in Uncasville, Conn.;
10) Palace Station Casino in Las Vegas;
11) Resorts East Chicago Hotel and Casino in East Chicago, Ind.;
12) Sycuan Casino in El Cajon, Calif.
13) Cache Creek Indian Bingo and Casino in Brooks, Calif.;
14) Emerald Queen Casino in Tacoma, Wash.;
15) Imperial Palace Casino in Biloxi;
16) Argosy Casino in Baton Rouge, La.;
17) Trump 29 Casino in Coachella, Calif.;
18) Isle of Capri Casino in Bossier City;
19) Agua Caliente Casino in Rancho Mirage, Calif.;
20) Spa Resort Casino in Palm Springs, Calif.;
21) Pechanga Resort and Casino in Temecula, Calif.;
22) L'Auberge du Lac Casino in Lake Charles, La.;
23) Nooksack River Casino in Deming, Wash.;
24) Barona Valley Ranch Casino and Resort in Lakeside, Calif.; and
25) Caesars Indiana Hotel and Casino in Elizabeth, Ind.
The case is being investigated by the FBI’s San Diego Field Office; the Internal Revenue Service-Criminal Investigation; the San Diego Sheriff’s Department; and the California Department of Justice’s Bureau of Gambling Control. The investigation has received assistance from federal, state, tribal and foreign authorities, including: the Ontario Provincial Police; the National Indian Gaming Commission; the U.S. Attorney’s Office for the Western District of Washington; FBI Resident Agencies in Gulfport, Miss., Tacoma, and Toledo, Ohio; the Indiana State Police; the Rumsey Rancheria Tribal Gaming Agency; the Sycuan Gaming Commission; the Barona Gaming Commission; the Mississippi Gaming Commission; and the Washington State Gambling Commission.
The prosecution of the case is led by the Criminal Division’s Organized Crime and Racketeering Section (OCRS). Department of Justice Trial Attorneys Joseph K. Wheatley, Robert S. Tully and Gavin A. Corn are prosecuting the case in San Diego.
United States, UBS and Switzerland Request Stay<br /> in Court ProceedingsRead the Press Release
The Department of Justice, UBS and the Swiss government have requested a stay with a rescheduled hearing date of Aug. 3, 2009, in the proceedings for enforcement of the summons ordering UBS to turn over records of account holders. The stay was requested in order to provide the parties additional time to discuss a possible alternative resolution of the matter.
The parties have agreed that any alternative resolution reached would necessarily include a provision requiring UBS to provide the Internal Revenue Service information on a significant number of individuals with UBS accounts. If an alternative resolution is not reached, the Department of Justice will continue to vigorously pursue enforcement of the summons through the court.
Little Rock, Arkansas, Man Pleads Guilty to Federal<br /> Sex Trafficking and Related ChargesRead the Press Release
Everett Cooney waived indictment and pleaded guilty in court in Little Rock, Ark., to a federal charge of sex trafficking an underage female. Chief U.S. District Judge J. Leon Holmes accepted Cooney’s guilty plea.
During the hearing, Cooney admitted that he knew the underage female with the initials of "DB" was between the ages of 14 and 18 when he caused her to engage in the commercial sex acts, from which he benefitted. Pursuant to the plea agreement, the pending indictment was dismissed upon the court’s acceptance of Cooney’s plea to the sex trafficking charge. Cooney faces a minimum of 10 years and up to life in prison. A sentencing hearing will be scheduled by the court. Cooney remains in custody pending his sentencing.
Cooney’s co-defendant, Tommy Handy, is also in custody awaiting trail. The trial is scheduled for Oct. 5, 2009. Handy was indicted on Feb. 5, 2009, on one count of conspiracy to commit sex trafficking and four counts of sex trafficking; two counts of possessing a firearm in furtherance of a crime of violence; and conspiracy to distribute crack cocaine. Handy is also charged with being a felon in possession of a firearm on July 25, 2005. If found guilty on the federal charges, Handy faces a maximum sentence of life in prison and a fine in excess of $1 million.
The case is the result of a joint investigation conducted by the FBI, the Bureau of Alcohol, Tobacco, Firearms and Explosives; and the Little Rock Police Department. The case is being prosecuted by Assistant U.S. Attorney Joe J. Volpe and Trial Attorney Jim Felte of the Civil Rights Division’s Human Trafficking Prosecution Unit.
Fourth Person Pleads Guilty to<br /> Illegally Accessing Confidential Passport FilesRead the Press Release
A fourth individual pleaded guilty today to illegally accessing numerous confidential passport application files. William A. Celey, 27, of Washington, D.C., pleaded guilty before U.S. Magistrate Judge Deborah A. Robinson in the District of Columbia to a one-count criminal information charging him with unauthorized computer access.
According to court documents, from August 2003 through July 2004, Celey worked as a contract employee for the State Department as a file assistant. According to plea documents, Celey admitted he had access to official State Department computer databases in the regular course of his 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, Celey admitted that between June 22, 2004, and July 15, 2004, he logged onto the PIERS database and viewed the passport applications of more than 75 celebrities and their families, actors, models, musicians, athletes, record producers, family members, a politician and other individuals identified in the press. Celey admitted that he had no official government reason to access and view these passport applications, but that his sole purpose in accessing and viewing these passport applications was idle curiosity.
Celey is the fourth 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. Celey is scheduled to be sentenced on Oct. 23, 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.
Federal Jury Rejects Altria Group's $24 Million Tax Shelter ClaimRead the Press Release
WASHINGTON – A federal jury in New York has rejected the $24 million tax refund claim filed by Altria Group Inc. relating to its investment in lease-in, lease-out (LILO), and sale-in, lease-out (SILO) tax shelters, the Justice Department announced today. The verdict follows a three-week trial in the Southern District of New York before U.S. District Judge Richard J. Holwell.
The evidence at trial showed that Altria made purported investments in four properties: a power plant in Georgia, a power plant in Florida, a Dutch wastewater treatment facility and a New York Metropolitan Transportation Authority rail yard in Queens. Altria claimed ownership of the properties, which were owned by tax-indifferent entities (i.e., entities that do not generally pay federal taxes), for the purpose of taking the tax deductions which those entities could notHowever, the jury found that Altria never acquired the benefits and burdens of ownership and that the transactions lacked economic substance. The jury accordingly rejected Altria’s $24 million refund claim.
The Justice Department has reported that hundreds of LILO and SILO transactions were entered into by taxpayers in the late 1990s, and that billions of dollars may be at stake in disputes over these transactions. The government has prevailed in all four cases, including this one, where such tax shelters have been challenged.
"This victory for the United States should serve as another warning to taxpayers not to engage in abusive tax shelter transactions and that the government will continue to shut these transactions down," said John Dicicco, Acting Assistant Attorney General of the Tax Division.
Mr. DiCicco thanked IRS attorneys Abigail Foster Dunnigan, Steven Balahtsis and John Aramburu for their invaluable assistance, and especially noted the contribution that the late David F.P. O’Connor had made to the successful resolution of this matter.
Assistant U.S. Attorneys David J. Kennedy, Robert William Yalen, Lawrence H. Fogelman and Bertrand Madsen, and Special Assistant U.S. Attorney Matthew Von Schuch of the Justice Department’s Tax Division litigated this case.
Donaldson, Arkansas, Man Pleads Guiltyto Federal Civil Rights ChargesRead the Press Release
Dustin I. Nix, 21, of Donaldson, Ark., pleaded guilty today in federal court in Hot Springs, Ark., to two federal civil rights charges for his role in a conspiracy to force a woman and her young children from their home in Donaldson because she associated with African Americans. Pursuant to the plea agreement, Nix faces up to ten years in prison and a fine of up to $250,000 for each count. A sentencing hearing has not yet been scheduled.
According to documents filed in court, Nix admitted that on June 15, 2008, he conspired with others to force the victims to leave Donaldson because they associated with African Americans. Specifically, Nix and the others agreed to construct a cross and burn it in front of the victims’ home. Nix physically assisted in constructing the cross. On June 21, 2008, Nix and others erected the cross in front of the victims’ home and attempted to set it on fire. Nix admitted that he understood that the purpose of burning the cross was to threaten and intimidate the victims, and that it was not intended as a joke or prank.
"Living in one’s home and associating with individuals of one’s choosing, without intimidation because of race, is a core right of all persons in this country," said Loretta King, Acting Assistant Attorney General for the Civil Rights Division. "The defendant used threats of violence against innocent victims because of his racial prejudice. This is illegal and despicable, and we will prosecute such crimes whenever and wherever they occur."
The Civil Rights Division is committed to the vigorous enforcement of every federal criminal civil rights statute, such as those laws that prohibit the interference with the right of individuals to live in the home and community of their choosing without discrimination and intimidation based on race. The Division has compiled a significant record on criminal civil rights prosecutions.
Agents from the FBI’s Little Rock Division investigated this matter. The case was prosecuted by Assistant U.S. Attorney Matthew Quinn for the Western District of Arkansas and Special Litigation Counsel Gerard Hogan and Trial Attorney Benjamin Hawk of the Civil Rights Division of the Justice Department.
Connecticut Investor Found Guilty in Massive Scheme to Bribe Senior Government Officials<br /> in the Republic of AzerbaijanRead the Press Release
Frederic A. Bourke Jr., 63, was found guilty today by a federal jury in Manhattan of conspiracy to violate the Foreign Corrupt Practices Act (FCPA) and the Travel Act, and making false statements to the FBI. Bourke, of Greenwich, Conn., was convicted following a six-week jury trial before U.S. District Judge Shira A. Scheindlin.
Evidence presented at trial established that Bourke was a knowing participant in a scheme to bribe senior government officials in Azerbaijan with several hundred million dollars in shares of stock, cash, and other gifts. According to evidence presented at court, the bribes were meant to ensure that those officials would privatize the State Oil Company of the Azerbaijan Republic (SOCAR) in a rigged auction that only Bourke, fugitive Czech investor Viktor Kozeny and members of their investment consortium could win, to their massive profit. According to evidence presented at trial, the scheme involved the purchase of vouchers and options that could be used to bid for shares in SOCAR. The vouchers and options were largely purchased with millions of dollars of cash flown into Azerbaijan on private planes. The vouchers and options were intended to be exercised by Oily Rock Ltd., a company Kozeny allegedly controlled, according to evidence presented at trial. Bourke, a friend and neighbor of Kozeny’s in Aspen, Colo., invested approximately $8 million in Oily Rock, on behalf of himself and family members and friends. Evidence also showed that Bourke obtained directorships, salary and stock options with related companies that Kozeny allegedly set up and funded.
Beginning in August 1997 through fall 1998, evidence presented at trial showed that Bourke and others conspired to pay or cause to be paid millions of dollars worth of bribes to Azeri government officials to ensure that their investment consortium would gain, in secret partnership with the Azeri officials, a controlling interest in SOCAR and its substantial oil reserves. For example, evidence presented at trial showed that in August 1997, Kozeny allegedly agreed to transfer to corrupt Azeri officials two-thirds of the vouchers and options Oily Rock purchased, and to give them two-thirds of all of the profits arising from his investment consortium’s participation in SOCAR’s privatization. In addition, evidence presented at trial showed that in June 1998, Bourke knew that Kozeny arranged for Oily Rock to increase its authorized share capital from $150 million to $450 million so that the additional $300 million worth of Oily Rock shares could be transferred to one or more of the Azeri officials as a further bribe payment. Bourke also arranged for two of the corrupt officials to travel to New York City on different occasions in 1998 to receive medical treatment, for which Oily Rock paid. Thereafter, in interviews with the FBI in April and May of 2002, Bourke falsely stated that he was not aware that Kozeny had made the alleged payments to the Azeri Officials.
Bourke and Kozeny were indicted in October 2005. At sentencing, scheduled for Oct. 13, 2009, Bourke faces a maximum penalty of five years in prison and a maximum fine of $250,000 or twice the gross gain or loss resulting from the alleged violations on each of the two counts on which he was convicted. Bourke was acquitted of one count of money laundering.
The prosecution and the related case against Kozeny are being handled jointly by the U.S. Attorney’s Office for the Southern District of New York and the Criminal Division’s Fraud Section. Assistant U.S. Attorneys Harry A. Chernoff and Iris Lan, as well as Fraud Section Deputy Chief Mark F. Mendelsohn and Assistant Chief Robertson Park are prosecuting the case.
The charges contained in the indictment are merely accusations and defendants are presumed innocent unless and until proven guilty.
Minneapolis Man Sentenced for Conspiracy to Provide Material Support to Al-QaedaRead the Press Release
WASHINGTON - A 35-year-old Minneapolis man was sentenced today in federal court on one count of conspiring to provide material support and resources to al-Qaeda.
David Kris, Assistant Attorney General for National Security, and Frank J. Magill, U.S. Attorney for the District of Minnesota announced that on July 9 in Minneapolis, U.S. District Court Judge John Tunheim sentenced Mohammed Abdullah Warsame to 92 months in prison and three years of supervised release.
Warsame, a naturalized Canadian citizen of Somali descent, was charged with one count of conspiracy to provide material support to a foreign terrorist organization – al Qaeda – in a Jan. 20, 2004, indictment returned in the District of Minnesota. A June 21, 2005, superseding indictment also charged Warsame with one count of providing material support to al-Qaeda and three counts of making false statements to the FBI. Warsame pleaded guilty to the material support count of the superseding indictment on May 5, 2009. The government has agreed as part of a plea agreement to dismiss the remaining charges.
"I applaud the many agents, analysts and prosecutors whose tireless efforts led to this sentence. This case serves as a reminder of the continuing threats we face as a nation and our resolve to meet those threats," said David Kris, Assistant Attorney General for National Security.
"Today’s sentence marks the culmination of many years of painstaking investigative and prosecutorial work, and all those involved in this case, particularly the Joint Terrorism Task Force, deserve our thanks," said U.S. Attorney Magill. "Mr. Warsame has admitted to providing material support to the al-Qaeda terrorist organization. Mr. Warsame’s actions demonstrate that he was a member of the organization, that he believed in its cause, and that he was willing to violate United States law in support of al-Qaeda. The sentence imposed today shows that our battle against terrorism continues, including right here in Minnesota, and that those who knowingly provide support to terrorists will be held accountable for their actions."
According to the plea agreement, Warsame admitted that from about March 2000 through at least December 2003, he conspired with others to provide material support to al-Qaeda in the form of personnel, training and currency.
According to court documents, in March 2000, Warsame traveled through the mountains from Pakistan to Afghanistan, where he attended an al-Qaeda training camp outside Kabul. For the next three to five months, Warsame received training in physical fitness, the use of weapons and martial arts. Warsame also traveled to the front lines with the Taliban and observed combat between the Taliban and the Northern Alliance.
In the summer of 2000, he then traveled to the al Faruq training camp, where he received further military training and met Osama Bin Laden. Warsame described Bin Laden as "very inspirational." At this camp, Warsame was trained in the use of AK-47 rifles, Uzis and other weapons, as well as training in tactics and navigation. During this time, Warsame again fought for the Taliban and said he was exposed to heavy fighting.
Warsame returned to Pakistan, and while there, he was in contact via e-mail with al-Qaeda associates he had met in Afghanistan. In one of those e-mails, Warsame described his time spent at the camps as "one of the greatest experiences of my life. I will be going back there very soon."
In another e-mail dated Dec. 6, 2000, Warsame wrote, "If you have any news or important information please let me know, because I don’t want to be late for the action, you know what I mean. We hear there might be an attack soon."
After a few months in Pakistan, Warsame returned to Afghanistan and to an al-Qaeda guesthouse. The guesthouse was used as a place of rest for people attending Bin Laden’s camp. Warsame was assigned to guard the guesthouse and later met a variety of individuals who have been indicted and convicted of terrorism-related offenses in the United States, including Zacarias Moussaoui and Richard Reid.
Warsame attended an Islamic institute near the guesthouse that taught radical Islam and preached jihad to students and said, according to court documents, the institute’s leader was a high-ranking al-Qaeda member. Warsame admitted that he approached this individual for money in order to bring his family from Canada to Afghanistan.
Warsame admitted that in March 2001, he traveled from Pakistan via London to Canada and continued his e-mail contacts with the al-Qaeda associates he had met in Afghanistan. In addition, he sent approximately $2,000 (Canadian) to one of his former training camp commanders. Warsame also provided information to an individual he met in Afghanistan about the process for entering Canada.
Warsame then relocated to Minneapolis. Throughout 2002 and 2003, he continued to exchange e-mail messages with and provide information to several individuals associated with al-Qaeda.
This case was the result of an investigation by the FBI Joint Terrorism Task Force (JTTF). The JTTF is a multi-agency effort combining the resources of federal, state and local law enforcement. In addition to the FBI, the investigation was conducted with the assistance of the U.S. Department of Homeland Security, the U.S. Immigration and Customs Enforcement, the U.S. Marshals Service, the Minneapolis Police Department, the St. Paul Police Department, the Hennepin County Sheriff’s Office and the Minnesota Department of Public Safety.
The case was prosecuted by Assistant U.S. Attorneys W. Anders Folk, Tom M. Hollenhorst and Michael Ward, of the District of Minnesota, and Trial Attorney Joseph N. Kaster from the Counterterrorism Section of the Justice Department’s National Security Division.
Justice Department Files Lawsuit Against City of Milwaukee to Enforce Employment Rights of Member of the Air National GuardRead the Press Release
WASHINGTON – The Justice Department today filed a lawsuit against the city of Milwaukee alleging it violated the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) by refusing to provide Michael Crivello, then an incumbent Milwaukee police officer, with a make-up promotional examination for detective that he missed while away on active duty military service with the Air National Guard and thereby failing to properly determine his reemployment status as a police officer eligible for promotion to detective.
Although Crivello was eventually promoted to detective based upon a subsequent promotional examination, the Department contends that Crivello is entitled to have his date for promotion to detective made retroactive, for all purposes, to the date he would have been promoted to detective had the city allowed him to take a make-up examination for the one he missed while on active duty military service. The suit was filed in U.S. District Court in the Eastern District of Wisconsin.
Enacted by Congress in 1994, USERRA prohibits employers from discriminating or retaliating against employees or applicants for employment because of their past, current or future military obligations. Subject to certain conditions, USERRA also requires employers to promptly reemploy returning service members in the position they would have held had their employment not been interrupted by military service, or in a position of like status, seniority and pay. This protection includes opportunities for advancement.
"The Civil Rights Division is strongly committed to protecting the employment rights of the men and women who serve our country in uniform," said Loretta King, Acting Assistant Attorney General for the Civil Rights Division. "No service member should miss out on an opportunity for advancement in his or her civilian career due to military service."
The Labor Department’s Veterans’ Employment and Training Service investigated and attempted to resolve Crivello’s USERRA complaint before referring it to the Justice Department for litigation.
The Department’s Civil Rights Division has given a high priority to the enforcement of service members’ rights under USERRA. This is the 18th USERRA lawsuit the Civil Rights Division has filed in 2009 on behalf of service members. Additional information about USERRA can be found on the Justice Department’s Web sites http://www.usdoj.gov/crt/emp and http://www.servicemembers.gov, as well as on the Labor Department’s Web site at www.dol.gov/vets/programs/userra/main.htm.
Highland Park, Michigan, Police Officer Indicted on<br /> Civil Rights ChargesRead the Press Release
Brenda Stevenson, an officer with the city of Highland Park, Mich., Police Department, was indicted today by a federal grand jury in Detroit on charges of using unlawful and excessive force and making a false statement to an FBI agent.
The indictment charges that Stevenson, 45, while acting as a sergeant with the Highland Park Police Department, willfully used excessive force when she struck and assaulted an individual identified in the indictment only as "V.B." The indictment also alleges that the defendant caused bodily injury to V.B. and that she later made false statements to an FBI agent investigating the incident.
Stevenson faces up to 15 years of prison and a fine of up to $500,000. An indictment is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it is the government’s burden to prove guilt beyond a reasonable doubt.
The case is being investigated by the FBI’s Detroit Field Office and is being prosecuted by Civil Rights Division Trial Attorney Karima Maloney and Assistant U.S. Attorney Pamela Thompson for the Eastern District of Michigan.
Former State Department Employee Sentenced<br /> for Illegally Accessing Confidential Passport FilesRead the Press Release
A former State Department employee was sentenced today to one year of probation and ordered to pay a $5,000 fine for illegally accessing more than 50 confidential passport application files.
On Jan. 27, 2009, Gerald R. Lueders, 65, of Woodbridge, Va., pleaded guilty to a one-count criminal information charging him with unauthorized computer access. Lueders was sentenced today by U.S. Magistrate Judge Alan Kay in the District of Columbia.
According to court documents, from June 1974 through September 2001, Lueders served as a Foreign Service Officer at the State Department. From October 2001 through February 2009, Lueders worked for the State Department as a retired annuitant, serving as a recruitment coordinator in various State Department bureaus. In the interim, from July 2005 to February 2008, Lueders also worked as a watch officer within the Office of Consular Affairs. According to information contained in plea documents, Lueders admitted he had access to official State Department computer databases in the regular course of his employment, including the Passport Information Electronic Records System (PIERS), which contains, among other data, 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, Lueders admitted that between July 2005 and February 2008, he logged onto the PIERS database and viewed the passport applications of more than 50 celebrities, actors, politicians, musicians, athletes, family members, members of the media, business professionals, colleagues and other individuals identified in the press. Lueders admitted that he had no official government reason to access and view these passport applications, but that his sole purpose in accessing and viewing these passport applications was idle curiosity.
Lueders is the third 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.
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.
Former Jackson, Mississippi Police Department Officer Is Sentenced for Civil Rights ViolationRead the Press Release
Jonathan Haynes, a former police officer with the Jackson, Miss., Police Department, was sentenced today for a civil rights violation for stealing money from a citizen during an off-duty encounter.
U.S. Magistrate Judge James C. Sumner of the Southern District of Mississippi sentenced Haynes to a term of three years probation and six months home confinement with electronic monitoring (employment and employment training permitted). Haynes was ordered to pay a $1,500 fine and $100 restitution for this offense. The judge also ordered Haynes to pay $100 in restitution to the victim. As part of his plea agreement, Haynes, who was fired from the Jackson Police Department, has agreed not to work as a law enforcement officer for any federal, state or local law enforcement agency for three years.
Haynes previously pleaded guilty and admitted during his April 2, 2009, plea hearing that he abused his authority as a law enforcement officer on June 21, 2008, when, while off-duty, but in uniform, he stopped and searched two men without cause or legal justification and stole $100 from one of the men. Haynes agreed that his conduct violated federal law and the constitutional rights of the two men.
The case was investigated by the FBI. The case was prosecuted by Trial Attorney Erin Aslan of the Justice Department’s Civil Rights Division and Assistant U.S. Attorney Glenda Haynes of the U.S. Attorney’s Office for the Southern District of Mississippi. The defendant is not related to and has no known relationship to AUSA Haynes.
Virginia Software Writer Pleads Guilty to <br /> Aiding and Abetting Detroit Spam ConspiracyRead the Press Release
An individual pleaded guilty today in federal court in Detroit for his role in creating and marketing software designed and used to send bulk commercial e-mails, known as "spam," in violation of the CAN-SPAM Act.
David S. Patton, 49, of Centreville, Va., pleaded guilty to aiding and abetting violations of the CAN-SPAM Act committed by Alan Ralsky and Scott Bradley of West Bloomfield, Mich., and others. Under the terms of his plea agreement, Patton acknowledges he is facing up to six years in prison and agrees to pay a fine of $3,000 while forfeiting $50,100 in proceeds from the sale of his software.
The CAN-SPAM Act was passed by Congress in 2003 to address spam e-mails. The criminal provisions of the act prohibit falsification of certain information used in the transmission of e-mail, as well as the use of proxies to disguise the identities of the individuals sending the e-mails.
According to court documents, from January 2004 through September 2005, Patton, through his company Lightspeed Marketing Inc. developed, marketed, sold and distributed customized software products and provided ongoing support services. In his plea agreement, Patton acknowledged that the services he provided enabled users to send large volumes of spam e-mail at high speeds and disguise the true origin of the e-mails from recipients in order to evade anti-spam filters, "blacklisting" and other spam-blocking devices and techniques. These software products included, but were not limited to, the software programs "Nexus" and "Proxy Scanner."
In his plea agreement, Patton admitted that he intentionally designed Nexus to enable users to insert materially false information into the "headers" of the spam e-mails it sent. Patton designed Proxy Scanner to enable users to make use of third-party "proxy" computers to relay or retransmit spam e-mails and in turn disguise their true origin. Patton admitted he sold both Nexus and Proxy Scanner to Alan Ralsky and other customers, knowing that the two software programs would be used to commit violations of the CAN-SPAM Act. Patton also admitted that he provided ongoing support and product updates to his Nexus and Proxy Scanner customers with the intent to assist them in violating the CAN-SPAM Act.
Patton is the twelfth defendant charged in connection with the spam e-mail operation run by Ralsky from January 2004 to September 2005. Ralsky and Bradley, as well as Judy Devenow, John Bown, William Neil, James Fite, Francis Tribble and How Wai John Hui all previously pleaded guilty for their roles in conspiring to commit violations of the CAN-SPAM Act and other offenses, including wire fraud, mail fraud, computer fraud and money laundering.
Also indicted in the case were defendants Anki Neil, James Bragg and Peter Severa. An indictment is merely an accusation. All defendants should be presumed innocent until and unless the government proves their guilt beyond a reasonable doubt in court
The charges arose after a three-year investigation led by the FBI, with assistance from the U.S. Postal Inspection Service and IRS – Criminal Investigations, revealed a sophisticated and extensive spamming operation. The case is being prosecuted by U.S. Attorney Terrence Berg and Trial Attorneys Thomas Dukes and Mona Sedky Spivack of the Criminal Division’s Computer Crime and Intellectual Property Section.
Justice Department Files Suit Against Cheese ManufacturerRead the Press Release
WASHINGTON – The U.S. Department of Justice, on behalf of the U.S. Food and Drug Administration, today filed a complaint seeking injunctive relief against Peregrina Cheese Inc., Brooklyn, N.Y., and two of its officers: Javier Peregrina and Isabel Peregrina.
The company prepares and processes a variety of cheeses, sour cream, flan and gelatin products and distributes them to specialty grocery stores in northeastern Pennsylvania and in the New York City area.
The government’s complaint, filed today in the Eastern District of New York, alleges that the company has an extensive history of operating under insanitary conditions and producing cheese contaminated with Listeria monocytogenes. Listeria is a foodborne pathogen that can cause serious illness and death.
If entered by the court, the injunction would temporarily stop the company and its officers from manufacturing and distributing food until further action is taken by the court.
"This company has consistently failed to make corrections to improve the insanitary conditions under which it processes cheese products, despite frequent warnings to do so," said Michael Chappell, the FDA’s acting associate commissioner for regulatory affairs. "The FDA will not tolerate food companies that fail to provide adequate safeguards."
"When called upon by the FDA, the Department of Justice is ready and able to prevent the distribution of adulterated food to American consumers," said Tony West, Assistant Attorney General for the Justice Department’s Civil Division.
"The public must be able to trust that the food in their grocery stores is safe for them to eat," said Benton J. Campbell, the United States Attorney for the Eastern District of New York. "We will continue to work with the FDA to ensure that companies that produce food under dangerous or insanitary conditions take corrective action to clean up their act."
As alleged in the complaint, on numerous occasions since 2004, FDA investigators found Listeria monocytogenes in finished cheese products and inside Peregrina Cheese’s facility. Additionally, routine laboratory testing by New York State Department of Agriculture and Markets (NYSDAM) also found Listeria in the company’s products on numerous occasions since 2003.
The FDA and NYSDAM inspections also revealed that the company repeatedly violated the current Good Manufacturing Practice (cGMP) requirements for foods. Investigators found filthy conditions, standing water in food processing equipment, workers inappropriately dressed and a dead rodent inside the plant.
The government’s complaint alleges that both the FDA and NYSDAM repeatedly advised Peregrina Cheese and its officers of their cGMP violations; NYSDAM has also assessed fines against the company.
Peregrina Cheese’s lack of effective measures to bring its food processing operations into compliance with the law poses a public health threat because of the potential that Listeria will be in the food processed by the company.
Listeriosis, the illness caused by Listeria monocytogenes, can be serious and sometimes cause fatal infections in young children, frail or older people, and others with weakened immune systems. Although healthy individuals may experience only short-term symptoms, such as high fever, severe headache, stiffness, nausea, abdominal pain and diarrhea, Listeria infection in pregnant women can cause miscarriages and stillbirths.
No illnesses have been reported to date from Peregrina Cheese products. However, if individuals have eaten the products and are experiencing any of the symptoms listed above, they should contact their health care professional.
Former Florida State Corrections Officer Sentenced to Three Years in Prison for Assaulting an InmateRead the Press Release
Paul Tillis, a former Florida Department of Corrections officer, was sentenced today in federal court in Jacksonville, Fla., on a federal civil rights charge related to assaulting an inmate. Tillis was sentenced to three years in prison followed by two years of post-release supervision.
Following a week-long trial, a federal jury in Jacksonville convicted Tillis on Jan. 16, 2009, of violating the civil rights of an inmate at the Florida State Prison in Raiford while on duty as a supervisory corrections officer. The evidence at trial showed that he assaulted the victim by pouring a bottle of scalding water onto the inmate’s chest while the inmate was lying on the floor of his cell. The evidence showed that Tillis also failed to arrange for medical care for the victim, who suffered second degree burns on his chest as a result of this assault.
"Corrections officers must not misuse their positions of authority to inflict physical harm on inmates as punishment," said Acting Assistant Attorney General Loretta King for the Civil Rights Division. "While the vast majority of law enforcement officers carry out their difficult duties in a lawful and professional manner, the Department of Justice will continue to vigorously prosecute those who cross the line and commit acts of cruelty such as this."
This case was investigated by agents from the FBI’s Jacksonville Division and the Florida Office of the Inspector General. The case was prosecuted by Assistant U.S. Attorney Mac Heavener of the U.S. Attorney’s Office for the Middle District of Florida and Department of Justice Civil Rights Division Trial Attorney Douglas Kern.
The Civil Rights Division is committed to the vigorous enforcement of every federal criminal civil rights statute, such as those laws that prohibit unreasonable search and seizure, deprivation of property without due process of law and other acts of misconduct by law enforcement and other government officials. More information about the Civil Rights Division of the Justice Department, and the laws it enforces, is available at http://www.usdoj.gov/crt.
Canadian Executive Pleads Guilty to Fraud and Money Laundering Conspiracies Involving a New Jersey Environmental Protection Agency Superfund SiteRead the Press Release
WASHINGTON — A former executive of Bennett Environmental Inc. (BEI), a Canadian-based company that treats and disposes of contaminated soil, pleaded guilty to participating in a conspiracy to pay kickbacks and commit fraud at the U.S. Environmental Protection Agency (EPA)-designated Superfund site, Federal Creosote, located in Manville, N.J. The former executive also pleaded guilty to participating in a money laundering conspiracy and impeding a proceeding before the U.S. Securities and Exchange Commission (SEC), the Department of Justice announced today.
According to the charges filed in the U.S. District Court of New Jersey today, Robert P. Griffiths pleaded guilty to one count of conspiracy to defraud the EPA by inflating the prices he charged to a prime contractor of the EPA and providing kickbacks to employees of that prime contractor. This conspiracy took place from approximately December 2001 until approximately August 2004 at the Federal Creosote site. Griffiths and his co-conspirators were given the bid prices of BEI’s competitors, which allowed BEI to submit the highest possible bid prices and still be awarded the sub-contracts. On one occasion, Griffiths and his co-conspirators inflated the bid prices to cover approximately $1.3 million in kickbacks and amounts BEI kept for itself. The kickbacks were in the form of money transferred by wire to a co-conspirator’s shell company, lavish cruises for senior officials of the prime contractor, various entertainment tickets, pharmaceuticals and home entertainment electronics. The Department said that the co-conspirators were able to allocate at least $43 million in fraudulently awarded sub-contracts to BEI for the removal, treatment and disposal of contaminated soil at the Federal Creosote site and to fraudulently conceal from the U.S. Army Corps of Engineers that BEI had submitted false invoices for the disposal of approximately 20,000 tons of soil.
Griffiths also pleaded guilty to a second count of conspiracy to commit international money laundering, the purpose of which was for Griffiths to profit personally from the fraud and kickback scheme. From approximately February 2003 through approximately September 2004, Griffiths and a co-conspirator who received more than $1 million in kickbacks through his shell company, laundered approximately $207,000 of the kickback proceeds from the co-conspirator’s bank account in New Jersey to a bank account controlled by Griffiths in Ontario, Canada.
In addition, Griffiths pleaded guilty to a third count of obstructing an official proceeding before the SEC. On or about Nov. 3, 2005, Griffiths made false statements in response to questions asked by the SEC for the purpose of deceiving the SEC and concealing his conduct in the fraudulent scheme. At that time, the SEC was investigating whether Griffiths and others had obtained information not available to the public and relied upon that information to conduct certain securities transactions improperly.
The clean-up at the Federal Creosote site is partly funded by the EPA. Under an interagency agreement between the EPA and the Corps of Engineers, prime contractors oversaw the removal, treatment, disposal of contaminated soil, as well as, other operations at the Federal Creosote site.
"The public relies upon their tax dollars being spent wisely, not for providing kickbacks to corrupt contractors," said Scott D. Hammond, Deputy Assistant Attorney General of the Antitrust Division’s Criminal Enforcement Program. "The Antitrust Division will vigorously investigate and prosecute fraudulent schemes that circumvent the competitive bidding process."
Including Griffiths, seven individuals and three companies have pleaded guilty in this investigation. Bennett Environmental Inc. (BEI) pleaded guilty to participating in a conspiracy to defraud the EPA at the Federal Creosote site and was sentenced on Dec. 15, 2008, to pay a $1 million fine and $1.66 million in restitution. On the same day, Zul Tejpar, a former BEI executive, pleaded guilty to participating in the same fraud conspiracy as BEI. Sentencing is scheduled for Sept. 28, 2009.
In addition, on July 23, 2008, JMJ Environmental Inc., a Laurel Springs, N.J., wastewater treatment supply company, its owner John Drimak, Jr., and Norman Stoerr, a former contracts administrator at the Federal Creosote site pleaded guilty to bid rigging, fraud and tax charges related to New Jersey Superfund sites - Federal Creosote and Diamond Alkali in Newark, N.J. Sentencing for all three is scheduled for Dec. 7, 2009.
On March 4, 2009, National Industrial Services LLC, an industrial pipes, valves and fittings supply company located in Middlesex, N.J., and its co-owner Victor Boski pleaded guilty to participating in a separate kickback and fraud conspiracy at Federal Creosote and Diamond Alkali.
On Feb. 26, 2009, Christopher Tranchina, an employee of a Sewell, N.J., company that provided temporary electrical utilities, pleaded guilty to participating in a separate kickback and fraud conspiracy at Federal Creosote. Tranchina is scheduled to be sentenced on July 13, 2009.
On June 25, 2009, Frederick Landgraber, the co-owner of a landscaping company located in Martinsville, N.J., pleaded guilty to participating in a separate kickback and fraud conspiracy at Federal Creosote. Landgraber is scheduled to be sentenced on Oct. 19, 2009.
The fraud conspiracy that Griffiths is charged with carries a maximum penalty of five years in prison and a $250,000 fine. The obstruction charge carries a maximum penalty of 20 years in prison and a $250,000 fine. The maximum fines resulting from each of these charges may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine. The money laundering conspiracy that Griffiths is charged with carries a maximum penalty of 20 years in prison, five years of supervised release, and a $500,000 fine, or twice the value of the funds involved in the transportation, transmission, or transfer, whichever is greater.
Today’s charges reflect the Department’s commitment to protecting U.S. taxpayers from procurement fraud through its creation of the National Procurement Fraud Task Force. The National Procurement Fraud Initiative, announced in October 2006, is designed to promote the early detection, prosecution, and prevention of procurement fraud associated with the increase in contracting activity for national security and other government programs.
The ongoing investigation is being conducted by the Antitrust Division’s New York Field Office, the EPA Office of Inspector General and the Internal Revenue Service Criminal Investigation. Anyone with information concerning bid rigging, kickbacks, tax offenses, or fraud relating to sub-contracts awarded at the Federal Creosote or Diamond Alkali sites should contact the New York Field Office of the Antitrust Division at 212-264-9308.
U.S. Joins False Claims Act Suit Against Several Corporations and Individuals at Mississippi's Stennis Space CenterRead the Press Release
WASHINGTON – The United States has joined a whistleblower suitagainst Science Applications International Corp. (SAIC); Applied Enterprise Solutions (AES); Dale Galloway, Chief Executive Officer of AES; Stephen Adamec, former Director of the Naval Oceanographic Major Shared Resource Center (NAVO MSRC) at the Stennis Space Center in Hancock County, Mississippi; and Robert Knesel, Deputy Director of NAVO MSRC, the Justice Department announced today.
The lawsuit, filed in the U.S. District Court for the Southern District of Mississippi, alleges that the defendants knowingly violated the False Claims Act when they submitted (or caused to be submitted) false claims and conspired to submit false claims under a $3.2 billion contract with the General Services Administration (GSA) to provide support services to a branch of the NAVO MSRC. In April 2004, GSA awarded the contract to SAIC, which teamed with AES and Lockheed Martin Space Operations to perform the agreement.
The suit alleges that Adamec and Knesel, then government employees, conspired with Galloway, SAIC, and AES to ensure that SAIC and its partners were awarded the contract by (a) sharing non-public, advance procurement information with the SAIC team that was not provided to other potential bidders; (b) sharing information about the solicitation with the SAIC team before providing that information to other bidders; and (c) choosing a type of contract and putting language in the solicitation in order to bias the selection process to favor the SAIC team.
The case was filed by David Magee, a former employee at the NAVO MSRC, under the qui tam or whistleblower provisions of the False Claims Act. Under the False Claims Act, a private party, known as a "relator," can file an action on behalf of the United States and receive a portion of the recovery. The Act further provides that the United States may recover three times the amount of its losses, plus civil penalties.
"Those who do business with the government must act fairly and in accordance with the law," said Tony West, Assistant Attorney General for the Civil Division. "As this case illustrates, the Department of Justice will actively pursue legal action against both contractors and federal employees who seek to gain an unfair advantage in the procurement process." Assistant Attorney General West thanked the Defense Criminal Investigative Service, the Naval Criminal Investigative Service, and the GSA Office of Inspector General, all of which aided the Civil Division in its investigation of this fraud matter.
Kansas Woman Pleads Guilty to Making False Statement to FBI in E-Rate Fraud InvestigationRead the Press Release
WASHINGTON — A Kansas woman pleaded guilty to making a false statement to the FBI during an investigation into allegations of fraud against the Federal Communications Commission’s (FCC) E-Rate program, the Department of Justice announced today.
According to the plea agreement, filed today in U.S. District Court in Kansas City, Kan., Mary Jo LaDuron, aka Mary Jo Gault, of Leavenworth, Kan., lied to FBI agents who were investigating allegations of fraud against the E-Rate program. According to the information, LaDuron worked for Elephantine Corporation beginning in 1999 through at least November 2003. Elephantine was formed and owned by LaDuron’s son, Leonard Douglas "Doug" LaDuron. Mary Jo LaDuron lied to FBI agents on March 23, 2006, when she denied knowing certain information about Elephantine and the E-Rate program.
On April 24, 2008, Mary Jo LaDuron was previously indicted for participating in a conspiracy to defraud the E-Rate program. Today’s plea resolves the Antitrust Division’s charges against her. Other individuals who were charged in connection with the same conspiracy include Leonard Douglas LaDuron, as well as two co-conspirators, Benjamin Rowner and Jay H. Soled. Leonard Douglas LaDuron, Rowner and Soled have all pleaded guilty to participating in the conspiracy, which began in 1999 and ran at least until 2003. All three individuals are awaiting sentencing. Leonard Douglas LaDuron also pleaded guilty to one count of making a false statement to the Lawrence-Douglas County Housing Authority, which administers the Department of Housing and Urban Authority’s Housing Choice Voucher Program in Lawrence, Kan.
The Schools and Libraries Universal Service Fund, a federally funded program known as E-Rate, was created by the Telecommunications Act of 1996. E-Rate is a program through which the Universal Services Administrative Company, a not-for-profit corporation, acting under oversight of the FCC, subsidizes the provision of Internet access and telecommunications services, as well as internal computer and communications networks to economically disadvantaged schools and libraries.
The false statement charge carries a maximum penalty of five years in prison and a $250,000 fine. Today’s charge is the result of an investigation conducted by the Antitrust Division’s Chicago Field Office, the FBI, the Department of Housing and Urban Development Office of Inspector General, and the FCC with assistance from the U.S. Attorney’s Office for the District of Kansas. Anyone with information concerning violations of the E-Rate program or other anticompetitive conduct is urged to call the Antitrust Division’s Chicago Field Office at 312-353-7530.
Jackson, Miss. Man Sentenced to 70 Months in Prison <br /> for Receiving and Possessing Child PornographyRead the Press Release
Joseph McNealy, a former Jackson, Miss., computer systems administrator, was sentenced today to 70 months in prison for receiving and possessing images of child pornography.
McNealy, 39, was also sentenced to lifetime supervised release following his term in prison by U.S. District Judge David C. Bramlette III, and was ordered to pay a $2,000 fine.
McNealy was found guilty after a four-day jury trial in Natchez, Miss., in March 2009 of receiving and possessing image files of child pornography, which federal investigators discovered on his home computer on Sept. 14, 2004. According to testimony presented at trial, McNealy received the child pornography from Internet newsgroups and Web sites on or about April 16, 2003, through on or about May 21, 2003; on or about Feb. 5, 2004, through on or about Sept. 14, 2004; and on or about June 29, 2004.
The original indictment charging McNealy was issued by a federal grand jury in October 2007. A superseding indictment adding to the original charges was issued by the grand jury in August 2008.
The case was prosecuted by Assistant U.S. Attorney Glenda R. Haynes of the U.S. Attorney’s Office in Jackson and Barak Cohen of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS). CEOS’ High-Tech Investigative Unit and U.S. Immigration and Customs Enforcement (ICE) provided forensic analysis of McNealy’s computer. The charges resulted from an ICE investigation.
Former Owner of the Largest Chrysotile Asbestos Mine and Mill in the U.S. Agrees to Address Contamination at Vermont SiteRead the Press Release
WASHINGTON— As part of a multi-site settlement, G-I Holdings Inc. has agreed to address asbestos contamination caused by its past operation of the largest chrysotile asbestos mine and mill in the country, the United States and the state of Vermont announced today.
The 1,673-acre abandoned mine site in Vermont, known as the Vermont Asbestos Group Mine Site (VAG Site) is the most significant of the contaminated sites covered by the settlement, which includes 12 other industrial sites across the country where G-I may have disposed of hazardous waste.
According to a federal complaint filed in New Jersey, the VAG Site has two towering piles of asbestos-containing mine and mill tailings, which are eroding offsite and adversely affecting downstream surface waters and wetlands. These piles also attract hikers, rock collectors, and ATV enthusiasts. In the complaint, the United States alleged that these activities may cause exposure to airborne-asbestos by those who access the site.
Under today’s settlement, G-I will take immediate steps at the VAG Site by constructing fencing, gates and road barriers to restrict public access; providing onsite surveillance and securing the mill buildings. They will also monitor air emissions from the piles; conduct dust suppression, if necessary, and provide support to EPA and Vermont for future sampling and monitoring. These tasks will take place over eight years, at a cost of up to $7.75 million. The need for dust suppression will depend on the air monitoring results. G-I will also reimburse the federal and state governments for past and future cleanup costs at the VAG Site and related off-site contamination. G-I, now in Chapter 11 bankruptcy, will reimburse a portion of EPA and Vermont’s cleanup costs up to 8.6 percent of $300 million. Finally, G-I will pay $850,000 for damages to local wetlands and waterways contaminated by the site.
Also, as part of the settlement, G-I will contribute $104,615 as its share of cleanup costs to resolve federal claims at nine other superfund sites where its predecessors disposed of hazardous waste. In addition, under the decree, the federal government will have up to 10 years to bring claims for cleanup costs and damages to natural resources at three related heavily-contaminated sites in or near Linden, N.J. Under the consent decree, the Linden claims will pass through the bankruptcy and not be discharged, but will eventually be paid at the bankruptcy rate of 8.6 percent on the dollar if G-I is found liable for the contamination.
"The cornerstone of this settlement is that G-I is responsible for completing extensive work at the Vermont Asbestos Group Mine Site, focusing on site security, air monitoring and investigating and sampling certain mine tailings," said John C. Cruden, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. "G-I will also pay for its share of cleanup costs for this Site and nine other contaminated sites around the country."
The consent decree, lodged today in the U.S. Bankruptcy Court for the District of New Jersey, is subject to a 30-day public comment period and approval by the federal court. A copy of the consent decree is available on the Department of Justice Web site at http://www.usdoj.gov/enrd/Consent_Decrees.html.
Federal Court Acts to Stop Alleged $30 Million Scam Involving Tax Credits Based on Fictitious Methane Production at LandfillsRead the Press Release
A federal judge in Tampa, Fla., has permanently barred eight men – including five tax preparers and two Certified Public Accountants (CPA) – from promoting an alleged tax fraud scheme involving bogus income tax credits. The eight men are among 32 defendants named in a civil injunction lawsuit who allegedly helped customers claim more than $30 million in bogus federal income tax credits designed for producers of fuel from non-conventional sources. The court orders were signed by Judge Susan C. Bucklew of the U.S. District Court for the Middle District of Florida.
According to the government complaint in the case, the scheme involved claiming tax credits based on the purported recovery and sale of methane from landfills in Puerto Rico, Illinois, New York, Ohio and Connecticut. In fact, the government’s complaint states that no methane was produced or sold, although some of the defendants created fictitious business records to falsely document the purported production and sales.
The eight men enjoined are George Calvert of Hernando Beach, Fla.; Gregory Guido of Lithia, Fla.; Robert Anderson of Bloomington, Ill.; Ralph Johnson of Alton, Ill.; David Geiger of St. Charles, Mo.; William Neel of Clayton Mo.; Mark Johnson of Mansfield Texas; and Carl Martin-Stewart of Carthage, Texas. All eight consented to be enjoined without admitting wrongdoing. The lawsuit remains pending against the other 24 individual defendants, although the case against some defendants has been transferred to a federal court in Texas.
The government suit alleges that Calvert and Guido, who is a CPA, concocted the scheme and promoted it through tax preparers who acted as subpromoters – including Ralph Johnson, Mark Johnson, Geiger and Neel, who is also a CPA. The tax preparers allegedly sold interests in the fictitious methane-production facilities to thousands of customers in at least 14 states across the country and prepared income tax returns for customers claiming tax credits based on the fictitious methane sales.
According to the complaint, Martin-Stewart sold the scheme to customers and helped create promotional materials that were distributed to subpromoters and customers. The complaint alleges that Anderson prepared false engineering reports for the scheme promoters to use to purportedly substantiate the fictitious methane production. On June 15th Anderson pleaded guilty to conspiracy to defraud the United States and mail fraud in a related federal criminal case. He faces a maximum penalty of five years in prison.
The injunction orders also bar the eight men from interfering with or obstructing Internal Revenue Service (IRS) audits of scheme participants. In addition, Calvert is permanently barred from preparing federal tax returns for others or representing anyone in a matter before the IRS.
John DiCicco, Acting Assistant Attorney General for the Justice Department’s Tax Division, thanked Shana Starnes, the Justice Department trial attorney who handled the case, and Jean Lane, a revenue agent with the IRS’s Small Business/Self-Employed Division, who conducted the investigation.
In the past decade, the Justice Department has obtained injunctions against more than 410 tax return preparers and tax-fraud promoters. Information about the Justice Department’s Tax Division and its efforts to enjoin unscrupulous tax return preparers and tax-fraud promoters is available on the Justice Department Web site.
United States Settles False Claims Act Allegations <br /> Against National Home Builder and Mortgage LenderRead the Press Release
Beazer Homes USA Inc. has agreed to pay the United States $5 million dollars, plus contingent payments of up to $48 million dollars to be shared with victimized private homeowners, to resolve allegations that it, and Beazer Mortgage Corp., were involved in fraudulent mortgage origination activities in connection with federally insured mortgages. Beazer Homes, which is headquartered in Atlanta, operates in at least 21 states.
The U.S. Department of Housing and Urban Development’s Federal Housing Administration guarantees home mortgage loans for low and low-to-moderate income families. The settlement resolves allegations that when Beazer Mortgage Corp. made Federal Housing Administration (FHA) insured mortgage loans for the purchase of homes built by Beazer Homes USA Inc., the companies fraudulently and improperly: 1) required purchasers to pay "interest discount points" at closing, but then kept the cash and failed to reduce interest rates; 2) provided cash "gifts" to home purchasers through certain charities, so purchasers could come up with minimum required down payments, with assurances the "gifts" would not have to be repaid, and then increased home purchase prices to offset the amount of the gifts; 3) obscured which of its branches made defaulting mortgage loans to avoid FHA detection of excessive default rates, and; 4) ignored "stated income" requirements in making loans to unqualified purchasers.
As a consequence, unqualified home buyers were induced to enter into FHA insured mortgages, interest rates for and the amount of FHA insured mortgages were improperly inflated, and Beazer Mortgage branches involved in fraudulent activity were hidden from the FHA. In some instances, mortgages that resulted from these fraudulent activities defaulted. When they did so, holders of the loans made FHA mortgage insurance claims and the FHA was wrongfully required to pay inflated claims, and to pay for the management, maintenance, rehabilitation and marketing of defaulted properties.
The settlement is in conjunction with a Deferred Prosecution Agreement (DPA) entered into between the companies and the U.S. Attorney’s Office for the Western District of North Carolina, also announced today. The DPA provides for restitution to private homeowners who were victims of the companies’ fraudulent activities, as well as to the FHA.
"Fighting mortgage fraud is a top priority for this Administration, especially when public dollars are at stake," said Assistant Attorney General Tony West, who heads the Civil Division. "We will aggressively pursue fraud claims against federal mortgage insurance programs, which are so vitally important to this economy." Assistant Attorney General West commended both the United States Attorneys’ Office and HUD for their work on this lawsuit and stressed that this is an example of the success that can be achieved when there is collaboration among agencies.
"This action shows that the Administration is serious about making the housing market safe from mortgage fraud and will crackdown on those who violate the trust of American homebuyers," said HUD Secretary Shaun Donovan. "At this time of uncertainty in the mortgage market, it is especially important that lenders, including builder-affiliated lenders, are held to the highest standards of conduct."
Retired University Professor Sentenced to Four Years in Prison for <br /> Arms Export Violations Involving Citizen of ChinaRead the Press Release
John Reece Roth, 72, of Knoxville, Tenn., was sentenced to 48 months in prison for violating the Arms Export Control Act by conspiring to illegally export, and actually exporting, technical information relating to a U.S. Air Force (USAF) research and development contract.
The sentencing took place in U.S. District Court in Knoxville before Judge Thomas Varlan, Jr. A former University of Tennessee professor, Roth will serve a term of two years supervised release after completing his prison term.
The illegal exports by Dr. Roth of technical information, known as "technical data," related to his illegal disclosure and transport of restricted military information associated with the USAF contract to develop specialized plasma technology for use on an advanced form of an unmanned aerial vehicle (UAV), also known as a drone.
The illegal exports of military technical information involved specific information about advanced plasma technology that had been designed and was being tested for use on the wings of drones operating as weapons or surveillance systems. The Arms Export Control Act prohibits the export of defense-related materials, including the technical data, to a foreign national or a foreign nation.
After a trial in September 2008, Dr. Roth was convicted of conspiring with Atmospheric Glow Technology, Inc., a Knoxville technology company, of unlawfully exporting in 2005 and 2006 fifteen different "defense articles" to a citizen of the People’s Republic of China in violation of the Arms Export Control Act. This law prohibits the export of defense-related materials, including the technical data, to a foreign national or a foreign nation. These defense articles related to different specific military technical data that had been restricted and was associated with the USAF project to develop plasma technology for use on weapons system drones.
Dr. Roth was also convicted of one count of wire fraud relating to defrauding the University of Tennessee of his honest services by illegally exporting sensitive military information relating to this USAF research and development contract.
The Federal Bureau of Investigation (FBI) led the investigation and was joined in its efforts by U.S. Immigration and Customs Enforcement (ICE), the U.S. Air Force Office of Special Investigations, and the Department of Commerce’s Office of Export Enforcement. The case was prosecuted by Assistant U.S. Attorneys Jeffrey Theodore and Will Mackie of the U.S. Attorney’s Office for the Eastern District of Tennessee.
U.S. Attorney Dedrick commended the efforts of the special agents from the agencies supporting the investigation. He noted that this case was quickly brought to trial and sentencing through the excellent work of the Department of Justice’s National Security Division and the Assistant U.S. Attorneys and support staff from his office. Dedrick added, "This case should send a stern warning to those who would betray the trust of our nation by violating the export control laws by providing our military information to foreign nationals."
David Kris, Assistant Attorney General for National Security, stated, "I applaud the agents and prosecutors who worked tirelessly to bring about this result. The illegal export of restricted military data represents a serious threat to national security. We know that foreign governments are actively seeking this information for their own military development. Today’s sentence should serve as a warning to anyone who knowingly discloses restricted military data in violation of our laws."
FBI Special Agent in Charge Richard Lambert added: "Safeguarding sensitive military technology vital to our nation’s defense remains a top priority of the FBI. We are grateful to the University of Tennessee for its invaluable partnership in this important investigation."
Retired Military Official Pleads Guilty to Bribery and Conspiracy Related to Defense Contracts in AfghanistanRead the Press Release
WASHINGTON – A retired U.S. military official pleaded guilty to bribery and conspiracy charges relating to Department of Defense (DOD) contracts in Afghanistan, the Department of Justice announced today.
According to the plea agreement, which was filed in U.S. District Court in Chicago today, First Lieutenant Robert Moore (Ret.) pleaded guilty to conspiracy and bribery charges. Moore admitted to accepting money from contractors in exchange for the award of DOD contracts at Bagram Airfield, Afghanistan (Bagram). Moore also admitted to falsifying the number of bunkers and barriers delivered at Bagram, causing DOD to pay for bunkers and barriers that were never received. Bunkers and barriers are cement structures used at Bagram for force protection and perimeter walls. Additionally, Moore pleaded guilty to falsifying damage reports for leased vehicles at Bagram, causing DOD to pay for repairs not needed or performed. Moore has agreed to pay $120,000 in restitution and to cooperate with the Department’s investigation.
"Conduct that defrauds the United States and depletes funds intended for the war effort in Afghanistan or elsewhere will not be tolerated," said Christine A. Varney, Assistant Attorney General in charge of the Department’s Antitrust Division.
Moore’s plea follows the return of a related superseding indictment on June 19, 2009, and the entry of guilty pleas by two of the individuals charged in the superseding indictment. Christopher P. West, a U.S. Army Major from Chicago, and Patrick W. Boyd, a U.S. Air Force Master Sergeant from Rockledge. Fla., pleaded guilty to bribery and conspiracy charges relating to DOD contracts at Bagram. The superseding indictment also charged four individuals – Assad John Ramin, Tahir Ramin, Noor Alam and Abdul Qudoos Bakhshi – and four companies – AZ Corporation, Top’s Construction, Northern Reconstruction and Naweed Bakhshi Company – with various counts of bribery, fraud and conspiracy relating to DOD contracts at Bagram. Also on June 19, 2009, Charles Patton, a U.S. Army Sergeant from Chicago, pleaded guilty to charges of receiving stolen property.
Moore is charged with conspiracy, a violation that carries a maximum sentence of five years in prison and a fine of $250,000. Under the statute, the fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum. Moore is also charged with bribery, a violation that carries a maximum sentence of 15 years in prison and a fine of $250,000 or up to three times the amount or value of the bribe, whichever is greater.
This case is part of an ongoing investigation being prosecuted by the Antitrust Division’s National Criminal Enforcement Section (NCES), with assistance from the Criminal Division’s Office of International Affairs. The investigation of this case is being conducted by the Defense Criminal Investigative Service (DCIS), the U.S. Army Criminal Investigation Command (Army CID), and Air Force Office of Special Investigations. Additional assistance was provided by Customs and Border Protection, Field Operations in Chicago; and the Internal Revenue Service, Criminal Investigations Division.
Today’s charges are an example of the Department of Justice’s commitment to protect U.S. taxpayers from procurement fraud through the National Procurement Fraud Task Force. The National Procurement Fraud Initiative, announced in October 2006, is designed to promote the early detection, identification, prevention and prosecution of procurement fraud associated with the increase in contracting activity for national security and other government programs.
Anyone with information concerning illegal conduct in the procurement of goods or services involving DOD contracts in Iraq or Afghanistan is urged to contact NCES at 202-307-6694 or [email protected]; DCIS at 800-424-9098 or [email protected]; or Army CID at www.cid.army.mil.
Jury Convicts Los Angeles Physician Assistant for Stealing Doctors Identity and Defrauding Medicare in $7.7 Million SchemeRead the Press Release
A federal jury in Los Angeles convicted a physician assistant late yesterday for his role in a $7.7 million Medicare fraud scheme.
After a seven-day trial in federal court in Los Angeles, a jury found Ronald Luis Bradshaw, 59, guilty on all charged counts, including conspiracy to commit health care fraud, multiple counts of health fraud and aggravated identity theft for prescribing medically unnecessary durable medical equipment to hundreds of Medicare beneficiaries under the stolen identity of a doctor.
"At the core of Medicare fraud schemes, individuals place personal greed above providing legitimate medical care. In this case, the defendant not only defrauded the Medicare program, he also stole the identification of a doctor to do it" said Assistant Attorney General Lanny A. Breuer. "The jury’s conviction sends a message to health care providers committing Medicare fraud – American taxpayers will not tolerate abuse of a program intended to benefit the elderly and disabled."
"Fraud against public health care programs not only robs taxpayers but also adversely affects millions of legitimate patients in need of the services and equipment to improve their lives," said U.S. Attorney Thomas P. O’Brien. "For years we have pursued fraudsters who attempt to exploit the health care system for their own personal gain. Now, we have another example of an unscrupulous provider being brought to justice."
"Today’sconviction is another milestone for our Medicare Fraud Strike Force here in Los Angeles," said Glenn R. Ferry, Special Agent-in-Charge for the Los Angeles Region of the Office of Inspector General for the Department of Health of Human Services. "Our collaborative partnership under the HEAT initiative is getting concrete results as we continue our efforts to combat health care fraud on behalf of the American people."
According to the evidence presented at trial, Bradshaw worked as a licensed physician assistant at a Los Angeles clinic, Glenmountain Medical Group (Glenmountain), allegedly under the supervision of a doctor. Evidence at trial established that from approximately April 2005 to April 2008, Bradshaw prescribed hundreds of motorized wheelchairs and custom-fitted orthotics to Medicare beneficiaries under the apparent authority and supervision of a doctor. Bradshaw also ordered diagnostic tests for these beneficiaries under the same doctor’s apparent authority.
The doctor, whose unique physician identification number had been used by the defendant to forge medically unnecessary prescriptions, testified that he never worked at Glenmountain and that he never authorized the defendant to use his number. The total amount billed under this doctor’s name for medical equipment and tests prescribed by the defendant was $7,708,069.
Several beneficiaries testified at trial that they were recruited by patient recruiters to be examined at Glenmountain. Some beneficiaries testified that they were enticed by the promise of a free exam, while others were promised free, expensive medical equipment. Juana Aranda, a professional patient recruiter who previously pleaded guilty in connection with this scheme, testified that she was paid cash for bringing Medicare beneficiaries to Glenmountain and that she was paid more if the beneficiary was prescribed a motorized wheelchair.
Each of the beneficiaries who testified at trial stated that they had no difficulties walking and that they did not complain about any difficulties during their respective examinations. After their examinations, however, each received a motorized wheelchair delivered to them by Star Medical Supply Inc., a durable medical equipment company owned and operated by Karen Arakelyan, who previously pleaded guilty in connection with this scheme. Arakelyan testified that he paid a Glenmountain representative $1,200 per prescription. Arakelyan admitted he then delivered a motorized wheelchair to the beneficiary and filed a fraudulent claim with Medicare based on the bogus prescription that he purchased from Glenmountain.
At sentencing, scheduled for Nov. 12, 2009, Bradshaw faces a maximum penalty of 10 years in prison on each of the four health care fraud counts as well as the conspiracy to commit health care fraud count for which he was convicted. In addition, he faces a mandatory two-year prison sentence on the aggravated identity theft count, which must be served consecutive to the sentence on the fraud counts.
The case was prosecuted by Trial Attorney Steven Kim of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Christopher K. Lui, with the investigative assistance of the HHS Office of the Inspector General and the FBI. The case was brought as part of the Medicare Fraud Strike Force. Federal prosecutors have indicted 115 cases with 257 defendants in Miami, Los Angeles and Detroit since the inception of strike force operations in March 2007. Collectively, these defendants are alleged to have fraudulently billed the Medicare program for more than $600 million.
The joint DOJ-HHS Medicare Fraud Strike Force is a multi-agency team of federal, state and local investigators designed to combat Medicare fraud through the use of Medicare data analysis techniques and an increased focus on community policing. In May 2009, the Department of Justice and HHS announced the Health Care Fraud Prevention & Enforcement Action Team (HEAT), a joint effort to prevent fraud and enforce current anti-fraud laws around the country. As part of the HEAT initiative, Medicare Fraud Strike Force operations were expanded from South Florida and Los Angeles to Detroit and Houston. To learn more about the HEAT initiative, go to: www.hhs.gov/stopmedicarefraud.
Former Memphis Police Officer Sentenced to Prison Term of Life Plus 255 Years for Civil Rights, Narcotics, Robbery and Firearms CrimesRead the Press Release
Arthur Sease IV, a former Memphis Police Department officer, was sentenced today to a prison term of life plus 255 years by Chief Judge Jon P. McCalla in Memphis, Tenn. A jury convicted Sease in February 2009 of 44 counts of civil rights, narcotics, robbery, and firearms offenses.
"The peace and prosperity of our nation hinge on the integrity of our law enforcement officers," said Loretta King, Acting Assistant Attorney General for the Civil Rights Division. "We will continue to vigorously prosecute police corruption both to protect the rights of individuals and to maintain faith in our legal system."
"Effective law enforcement begins with honest law enforcement," said U.S. Attorney Lawrence J. Laurenzi. "We will aggressively pursue and convict those officers and agents who violate the law and the public’s trust. We have entrusted law enforcement officers with our safety and protection and we demand that they perform their duties honestly and truthfully."
"The sentence is extraordinary in that it is one of the longest ever imposed for civil rights violations which did not involve a victim’s death," said My Harrison, Special Agent in Charge of the FBI’s Memphis Field Office. "We will vigorously investigate abuses of authority to defend the fundamental right to ethical behavior by government employees."
"This sentencing sends a serious message that police misconduct will not be tolerated and will be dealt with harshly by our courts. While criminal conduct brings dishonor to those who commit them, this officer’s actions should not reflect negatively on our fellow officers who continue to serve this community with pride and integrity," said Police Director Larry Godwin.
The evidence at trial showed that from November 2003 through April 2006, Sease conspired with other members of the Memphis Police Department to use their authority as law enforcement officers, to rob suspected drug dealers of cash, cocaine, and marijuana. Sease and his co-conspirators would then resell the stolen drugs for their own profit. The government proved that Sease committed or was involved in 15 separate robberies.
Five other individuals had already pleaded guilty in this case. Andrew Hunt was sentenced in February 2009 to 10 years in prison after pleading guilty in September 2006 to a federal civil rights conspiracy, robbery affecting interstate commerce and drug distribution. Former Memphis police officer Antoine Owens pleaded guilty in August 2007 and received a sentence of 63 months incarceration and three years of supervised release in March 2009. Alexander Johnson, another former Memphis police officer, pleaded guilty in April 2007 and was sentenced to 30 months in prison and two years of supervised release in March 2009. Laterrica Woods, a civilian who helped Sease and Hunt with one of their robberies, also pleaded guilty to a civil rights conspiracy in September 2007 and was sentenced to 36 months imprisonment and three years of supervised release in April 2009. Harold McCall, also a former Memphis police officer, pleaded guilty to a civil rights conspiracy in a related case in May 2007 and received a sentence of three years probation including one year of home confinement in June 2009.
This case was investigated by Special Agents Tracey Harris, Maria Irizarri and Jaime Corman from the FBI's Memphis Division and Sergeants Matt Whittington and Billy Greenwood of the Memphis Police Department Security Squad. Assistant U.S. Attorney Steve Parker from the U.S. Attorney's Office for the Western District of Tennessee and Trial Attorney Jonathan Skrmetti from the Justice Department’s Civil Rights Division prosecuted the case.
U.S. Attorney Lawrence J. Laurenzi specifically commended Memphis officers Tony Parks and Thurmond Richardson for their contribution to the investigation. Testimony at trial revealed the officers learned that a Memphis police officer was robbing drug dealers. Their investigation revealed Hunt as the officer. Richardson and Parks initiated an undercover operation of a planned robbery, resulting in Hunt’s arrest and evidence implicating Seale.
The Civil Rights Division is committed to the vigorous enforcement of every federal criminal civil rights statute, such as those laws that prohibit unreasonable search and seizure, deprivation of property without due process of law and other acts of misconduct by law enforcement and other government officials. More information about the Civil Rights Division of the Justice Department, and the laws it enforces, is available at http://www.usdoj.gov/crt.