District Not Recorded

WASHINGTON – A Virginia man pleaded guilty today to selling counterfeit computer software on eBay in violation of criminal copyright infringement laws, announced Acting Assistant Attorney General Rita M. Glavin of the Criminal Division and U.S. Attorney Jeffrey A. Taylor for the District of Columbia. According to court documents, the retail value of the software illegally sold was approximately $1 million.

Gregory William Fair, 46, of Falls Church, Va., pleaded guilty to one count of criminal copyright infringement and one count of mail fraud before Judge R.W. Roberts in U.S. District Court for the District of Columbia. According to court documents, from 2001 through February 2008, Fair admitted that he sold a large volume of counterfeit Adobe software on the eBay auction Web site using multiple user IDs. The combined retail value of this software was at least $1 million. Fair agreed to forfeit the proceeds of his unlawful enterprise including: $144,000 in currency seized from a safety deposit box and residence; one BMW 525i; one Hummer H2; one Mercedes CL600; and one 1969 Pontiac GTO.

At sentencing on July 8, 2009, Fair faces up to five years in prison on the criminal copyright infringement count and up to 20 years in prison on the mail fraud count. He also faces a maximum fine of $250,000 and three years of supervised release on each charge.

The case is part of the Department of Justice’s ongoing initiative to combat online auction piracy. Including the plea announced today, the Department has obtained 34 convictions involving online auction and commercial distribution of counterfeit software. The Department’s initiative to combat online auction piracy is just one of several steps being undertaken to address the losses caused by intellectual property theft and hold responsible those engaged in criminal copyright infringement.

The case was investigated by the U.S. Postal Inspection Service in Washington, D.C. The case is being prosecuted by Trial Attorney Marc Miller of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney Glenn S. Leon for the District of Columbia.

WASHINGTON—Texas Oil and Gathering Inc., its owner John Kessel and its operations manager Edgar Pettijohn pleaded guilty today in U.S. District Court in Houston to criminal violations related to the disposal of refinery wastes at an underground injection well in violation of the Safe Drinking Water Act, the Justice Department announced.

The two corporate officers pleaded guilty to conspiracy and violating the Safe Drinking Water Act for disposing of oil-contaminated waste water from its refinery process at an underground injection well permitted to accept wastes only from oil and gas production wastes. The company pleaded guilty to conspiracy and violating the Resource Conservation and Recovery Act (RCRA) for disposing of hazardous waste at an unpermitted facility. The crimes took place from January 2000 through January 2003.

Texas Oil and Gathering Inc. faces a maximum fine of $500,000 or twice monetary gain or loss for the conspiracy count and $50,000 per day, twice the gain or loss, or $500,000, whichever is higher, for the RCRA count. Kessel and Pettijohn face up to eight years in prison and a fine of up to $500,000. U.S. District Court Judge Keith P. Ellison scheduled the sentencing hearing for Sept. 15, 2009.

The charges against the Alvin, Texas-based company and its two officers involved the fraudulent representation to a Rosharon, Texas, injection well that the wastewater the company was disposing at the well came from an oil well Kessel had leased and was developing. In reality the wastewater came from the company’s reclamation process involving the distillation of various liquids from refineries and chemical plants.

Between January 2000 and January 2003, Kessel and Pettijohn directed subordinates to truck its oil and water waste from distillation to the class II injection well and fill out disposal forms indicating it came from an oil well leased by Kessel. A class II injection well is permitted to accept only oil and gas production wastes generated from the exploration of oil and gas. Usually the wastes consist primarily of brine mixed with some crude oil or gas distillate. In this case the waste water was mixed with refined products and chemicals not usually found in oil and gas production wastes such as higher concentrations of toluene and xylene.

The government’s investigation began in January 2003, when the injection well exploded and killed three workers. Although the explosion was not caused by the defendants, a closer review of the waste that went to the injection well led to their prosecution.

"The Safe Water Drinking Act and the regulations overseeing oil and gas related injection wells are designed to ensure safe sources of drinking water. Violations of these laws will be investigated and prosecuted to the fullest extent of the law," said John C. Cruden, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division.

"We remain committed to protecting the precious natural resources of Texas and hope that today’s conviction sends a clear message to everyone in the industrial community that the government will investigate and prosecute anyone who attempts to circumvent our nation’s anti-pollution laws," said Tim Johnson, Acting U.S. Attorney for the Southern District of Texas.

"The defendants tried to make an illegal end run around our environmental laws in order to increase their bottom line," said Warren Amburn, Special Agent-in-Charge of EPA's criminal enforcement office in Dallas. "These guilty pleas serve as a reminder that senior company executives who decide to commit environmental crimes will be prosecuted—not just the company."

The investigation was conducted by the EPA-Criminal Investigation Division, the Texas Commission on Environmental Quality and the Texas Environmental Enforcement Task Force. It was prosecuted by Senior Counsel Rocky Piaggione, Trial Attorney Leslie Lehnert of the Justice Department’s Environmental Crimes Section and Special Assistant U.S. Attorney William Miller of the EPA’s Region Six Office of Regional Counsel.

WASHINGTON — The Department of Justice told the U.S. District Court for the District of Columbia today that it is necessary to extend the term of certain portions of the Microsoft final judgment by at least 18 months. The Department said that an extension is necessary to ensure the quality of the technical documentation Microsoft provides to licensees.

The Department’s Antitrust Division made its views known today as part of its Joint Status Report to Judge Colleen Kollar-Kotelly of the U.S. District Court for the District of Columbia. The Antitrust Division enforces the final judgment in conjunction with antitrust enforcers from 17 states and the District of Columbia, which along with Microsoft joined in today’s filing with the court.

In 2006, Microsoft agreed to a two-year extension of the communications protocol licensing program contained in Section III.E of the final judgment, along with all of the final judgment’s enforcement provisions. Microsoft also agreed that the Department and state antitrust enforcement agencies may, at their discretion, apply to the court for an additional extension of all or part of the extended provisions of the final judgment for a period of up to three additional years, through November 2012. The United States is exercising its right under this provision to seek an extension of Section III.E and its supporting provisions through May 12, 2011. Without this action, the final judgment would have expired on Nov. 12, 2009.

Section III.E of the final judgment requires that Microsoft make available to competing server software developers, on reasonable and non-discriminatory terms, certain technology used by Microsoft to make its server operating systems interoperate with client PCs running the Windows operating system. Microsoft must provide licensees with technical documentation that is designed to enable them to use this technology in their own server products so that those products work better with Windows.

In past status reports, the Department reported to the court its concerns with the quality of the technical documentation Microsoft provides to licensees under this program and with the length of time it is taking Microsoft to improve that documentation.

The Department today also submitted the necessary papers to the court for its consideration.

WASHINGTON - The Justice Department today announced a settlement under the Americans with Disabilities Act (ADA) with the city of Philadelphia to greatly improve accessibility for individuals with mobility disabilities at the city’s 1,200 polling places. Today’s settlement is the first settlement by the Justice Department with a city focused solely on accessible polling places.

Under the terms of the settlement, the city of Philadelphia recognizes that accessible polling places are the cornerstone of its voting accessibility program and will make its polling places accessible to persons with disabilities. The settlement will give people with mobility disabilities the opportunity to vote at polling places, rather than through the use of an absentee-type ballot. The city will also pay for an independent expert, who will assess the accessibility of nearly half the polling places and make recommendations to make polling places accessible on Election Day. The Justice Department will evaluate the remaining polling places for accessibility. The settlement also requires that accessibility based on ADA standards will be a major criterion in the city’s selection of future polling places. In addition, the settlement agreement requires the city to provide access to alternate means of voting for individuals with disabilities until their polling places are made accessible.

"The right to vote is the foundation of our democracy. This agreement will help ensure that persons with mobility disabilities have the opportunity to exercise their right and cast their ballot in person, at the polls, near their homes and alongside their neighbors," said Loretta King, Acting Assistant Attorney General for the Civil Rights Division. "The Justice Department is committed to continued, vigorous enforcement of the Americans with Disabilities Act."

A separate, class-action lawsuit (Kerrigan v. The City of Philadelphia) filed by certain voters with disabilities against Philadelphia regarding the accessibility of the city’s polling places has been resolved along with the Department’s investigation.

More information about this settlement and the ADA is available at the Justice Department’s toll-free ADA Information Line at (800) 514-0301 or (800) 514-0383 (TTY), and via the ADA Web site at http://www.ada.gov.

WASHINGTON – An Iraqi-born Dutch citizen was sentenced to 25 years in prison today for conspiring to murder Americans overseas, including by planting roadside bombs targeting U.S. soldiers in Fallujah, Iraq, and by demonstrating on video how these explosives would be detonated to destroy American vehicles and their occupants.

The sentencing of Wesam al-Delaema, age 36, was announced today by David Kris, Assistant Attorney General for National Security; Jeffrey A. Taylor, U.S. Attorney for the District of Columbia; and Joseph Persichini, Jr., Assistant Director in Charge of the Federal Bureau of Investigation (FBI) Washington Field Office.

At a hearing today in U.S. District Court for the District of Columbia, Judge Paul Friedman imposed the 25-year sentence against al-Delaema for conspiracy to murder U.S. nationals outside the United States. Al-Delaema pleaded guilty to this charge on Feb. 25, 2009.  The Court made a finding that this offense was a federal crime of terrorism. In addition, video materials referenced in al-Delaema’s factual proffer were played in court for the first time.

On Tuesday, in a separate case, al-Delaema was sentenced in Superior Court for the District of Columbia to 18 months imprisonment for aggravated assault. Al-Delaema pleaded guilty to this charge on March 3, 2009, admitting that he kicked a D.C. prison guard to the point of unconsciousness while the guard was prone on the ground during an incident at the D.C. jail in 2007. The prison guard sustained significant injuries, including a subdural hemorrhage, during the incident.

The sentences for these separate offenses are to be served concurrently and were agreed upon as part of the global plea agreement. According to an agreement between the United States and the Netherlands, al-Delaema will serve out his sentence in the Netherlands.

According to the plea agreement and factual proffers filed in court, between October 2003 and May 2, 2005, al-Delaema entered into an agreement with several co-conspirators to murder U.S. nationals in Iraq.  As part of the conspiracy, al-Delaema travelled to Fallujah in October 2003.  There, al-Delaema and his co-conspirators -- calling themselves the "Mujahideen from Fallujah" -- declared their intentions to kill Americans in Iraq using improvised explosive devices (IEDs).

As part of the conspiracy, al-Delaema and his co-conspirators discussed and demonstrated, on video, the way in which the IEDs they had buried in a road near Fallujah would be detonated and would destroy American vehicles driving on the road and kill the American occupants of those vehicles.

According to the factual proffer that he agreed to, al-Delaema not only created "how-to" and recruitment videos, but also filmed the effects of roadside attacks in Iraq.  Furthermore, after his return to the Netherlands, al-Delaema continued to attempt to obtain propaganda videos for those seeking to kill Americans in Iraq, frequently attempting to obtain raw footage of attacks on Americans in Iraq.

Al-Delaema was arrested by Dutch law enforcement authorities on May 2, 2005, and he initially faced similar charges in that country.  Following his arrest, Dutch law enforcement and prosecution authorities worked cooperatively with the FBI in its investigation of al-Delaema’s terrorist activities.

In September 2005, the United States filed a formal request with the Netherlands seeking al-Delaema’s extradition.  The extradition request was subsequently granted by a Dutch court and then by the Dutch Ministry of Justice.  In December 2006, the extradition request was sustained on appeal in the Netherlands.  In January 2007, al-Delaema was flown to the United States, arrested and taken into custody by the FBI.

"This case represents the first use of U.S. criminal courts to prosecute an individual for terrorism offenses against Americans in Iraq," said David Kris, Assistant Attorney General for National Security.  "The sentence imposed today should serve notice that the United States will use all available tools to pursue those who would plot attacks against our men and women serving in Iraq."

"The actions of this defendant were repugnant and contributed to the considerable violence against Americans in Iraq," stated U.S. Attorney Jeffrey A. Taylor.  "This case, which represents the first use of the United States criminal courts to prosecute an individual for terrorism offenses against Americans in Iraq, demonstrates our resolve to use every tool at our disposal to defend Americans, both at home and abroad."

"The FBI is prepared at a moments notice to vigorously investigate injuries and threats to citizens, whether they occur in or outside the United States," said FBI Assistant Director in Charge Joseph Persichini, Jr. "We would particularly like to thank our Dutch law enforcement partners who worked with us for the past four years to bring this case to fruition."  

The investigation into this matter was conducted by the FBI’s Washington Field Office, with assistance from the Dutch National Police Agency and the National Office of the Public Prosecutor in the Netherlands.  The Office of International Affairs in the Criminal Division of the U.S. Department of Justice coordinated the extradition efforts on behalf of the United States.

The prosecutors handling the case are Assistant U.S. Attorneys Gregg Maisel and Rachel Lieber of the U.S. Attorney’s Office for the District of Columbia, and Trial Attorney David I. Miller of the Counterterrorism Section of the Justice Department’s National Security Division.

WASHINGTON – Acting Assistant Attorney General Loretta King of the Civil Rights Division announced today that Thomas Houston, former Chief of the Gary, Ind., Police Department, was sentenced to 41 months in prison followed by two years of supervised release for violating the civil rights of a Gary resident in June 2007.

Houston was convicted in Sept. 2008 of assaulting the victim, identified in court documents as V.A., by striking and kicking him in the stomach while he was handcuffed, resulting in contusions to his face, head, chest and abdomen. Houston, a 42-year veteran of the department, had been chief for just seven days when he committed the assault. He resigned from the post shortly after being indicted in March 2008.

Evidence presented during the six-day trial revealed that Houston’s home was burglarized on June 1, 2007, and that he incorrectly believed that a neighbor was responsible for the burglary. Houston summoned on-duty officers to leave their posts and accompany him to the neighbor’s home. V.A., who was visiting a friend in the home, was handcuffed, dragged out of the home and assaulted by Houston. He was then jailed for four days before being released. No evidence was found linking the victim to the burglary, which remains unsolved.

"Police officers are given tremendous authority and responsibility so that they can protect and serve the public trust," said Loretta King, Acting Assistant Attorney General of the Civil Rights Division. "Those who abuse that authority face serious consequences. The Civil Rights Division is committed to prosecuting all cases of official misconduct and to bringing these individuals to justice."

The case was prosecuted by Trial Attorneys Betsy Biffl and Erin Aslan from the Civil Rights Division of the Justice Department.

WASHINGTON - A federal court has permanently barred Donald Morris of Bloomfield, Conn., from preparing federal income tax returns for others, the Justice Department announced today. Morris consented to the permanent injunction order, which was entered by U.S. District Court Judge Jane C. Hall in the U.S. District Court for the District of Connecticut.

According to the government complaint, Morris prepared over 1,000 federal income tax returns from 2003 through 2008. The complaint alleges that returns prepared by Morris claimed deductions for fictitious or inflated un-reimbursed employee expenses, deductions for fictitious or inflated job search expenses, fictitious or inflated education credits and fictitious or inflated credits for child care expenses.

In the past decade, the Justice Department’s Tax Division has obtained more than 380 injunctions against tax return preparers and tax fraud promoters. Information about these cases is available the Justice Department’s Tax Division Web site.

In connection with ongoing litigation, the Department of Justice today released four previously undisclosed Office of Legal Counsel ("OLC") opinions – one that OLC issued to the Central Intelligence Agency in August 2002 and three that OLC issued to the CIA in May 2005.

"The President has halted the use of the interrogation techniques described in these opinions, and this administration has made clear from day one that it will not condone torture," said Attorney General Eric Holder.  "We are disclosing these memos consistent with our commitment to the rule of law."

Holder also stressed that intelligence community officials who acted reasonably and relied in good faith on authoritative legal advice from the Justice Department that their conduct was lawful, and conformed their conduct to that advice, would not face federal prosecutions for that conduct.    

The Attorney General has informed the Central Intelligence Agency that the government would provide legal representation to any employee, at no cost to the employee, in any state or federal judicial or administrative proceeding brought against the employee based on such conduct and would take measures to respond to any proceeding initiated against the employee in any international or foreign tribunal, including appointing counsel to act on the employee’s behalf and asserting any available immunities and other defenses in the proceeding itself.

To the extent permissible under federal law, the government will also indemnify any employee for any monetary judgment or penalty ultimately imposed against him for such conduct and will provide representation in congressional investigations.

"It would be unfair to prosecute dedicated men and women working to protect America for conduct that was sanctioned in advance by the Justice Department," Holder said.

After reviewing these opinions, OLC has decided to withdraw them:  They no longer represent the views of the Office of Legal Counsel.

WASHINGTON – Quest Diagnostics Incorporated and its subsidiary, Nichols Institute Diagnostics (NID), have entered into a global settlement with the United States to resolve criminal and civil claims concerning various types of diagnostic test kits that NID manufactured, marketed and sold to laboratories throughout the country until 2006, the Justice Department announced today. The payment of $302 million will resolve these allegations and represents one of the largest recoveries ever in a case involving a medical device.

As part of the criminal resolution, NID pleaded guilty today before U.S. District Judge Sterling Johnson Jr. in Brooklyn to a felony misbranding charge in violation of the Food, Drug and Cosmetic Act relating to NID’s Nichols Advantage Chemiluminescence Intact Parathyroid Hormone Immunoassay, a test that was used by laboratories throughout the country to measure parathyroid hormone (PTH) levels in patients. As part of the plea, NID will pay a criminal fine of $40 million. Quest has also entered into a non-prosecution agreement with the United States.

As part of the civil settlement, Quest and NID will pay the United States $262 million plus interest to resolve False Claims Act allegations relating to the Advantage Intact PTH assay and four other assays manufactured by NID that allegedly provided inaccurate and unreliable results. Quest has agreed to pay various state Medicaid programs approximately $6.2 million to resolve similar civil claims. The company has also entered into a Corporate Integrity Agreement with the Office of Inspector General of the U.S. Department of Health and Human Services.

The United States commenced its civil and criminal investigation after the filing of a qui tam or whistleblower suit brought by Thomas Cantor. As a result of today’s settlement, Mr. Cantor will share in the proceeds of the False Claims Act recovery and will receive approximately $45 million.

The criminal resolution focuses solely on the Advantage Intact PTH Assay. As alleged in the information, there were periods of time in which the Advantage Intact PTH Assay provided elevated results. The marketing materials that NID distributed regarding the Advantage Intact PTH Assay described that product as having "excellent correlation" to the IRMA Assay. Additionally, the directional insert for the Intact PTH Assay, in a section entitled "Accuracy," described a study in which the IRMA Assay and the Advantage Intact PTH Assay produced nearly identical results when used to test PTH levels in samples of human blood. Contrary to the claims in NID’s directional inserts and marketing materials, however, in about May 2000, and at various times thereafter, NID was aware that the Advantage Intact PTH Assay was not consistently providing results that were equivalent to those of the IRMA Assay.

Additionally, during some of the periods of time after May 2000, NID was also aware that the Advantage Intact PTH Assay provided elevated PTH results. Nonetheless, NID continued to indicate, in its directional inserts and marketing materials, that the Advantage Intact PTH Assay and the IRMA Assay provided nearly identical results. As part of the guilty plea, NID admitted that in or about May 2000 and at various times thereafter, the company knowingly, intentionally and with intent to mislead, introduced into interstate commerce, and caused the introduction into interstate commerce of the Advantage Intact PTH Assay, that was misbranded.

The civil settlement resolves allegations that NID manufactured, marketed and sold the Intact PTH and Bio-Intact PTH test kits, despite knowing that between May 1, 2000, and April 30, 2006, some of these kits produced results that were materially inaccurate and unreliable, thereby causing: (a) some clinical laboratories that purchased and used the Intact PTH and Bio-Intact PTH test kits to submit false claims for reimbursement to federal health programs; and (b) some medical providers to submit false claims for reimbursement to federal health programs for unnecessary treatments.

The civil settlement also resolves allegations that NID manufactured, marketed and sold test kits, some of which produced results that were materially inaccurate and unreliable, thereby causing some clinical laboratories that purchased and used these test kits to submit false claims for reimbursement to federal health programs.

"This settlement provides further evidence that the Department will vigorously prosecute cases involving violations of the Food, Drug, and Cosmetic Act, and will pursue recovery of taxpayer dollars resulting from fraudulent marketing campaigns by medical device manufacturers," said Michael F. Hertz, Acting Assistant Attorney General for the Civil Division. "Pursuing this case was particularly important in light of the potential for adverse health consequences to beneficiaries of federal healthcare programs."

"The American public has the right to expect medical device manufacturers to make accurate claims in their labeling, especially when the failure to meet those claims could indicate that the performance of the device is suspect," stated U.S. Attorney Benton J. Campbell. "In order to safeguard public health, and when appropriate, to recover taxpayer dollars, the government will vigorously investigate allegations that a manufacturer knowingly sold medical devices, such as test kits, that were materially unreliable or provided significantly inaccurate results."

Besides the Justice Department’s Civil Division and the U.S. Attorney’s Office for the Eastern District of New York, the Department of Health and Human Services Office of Inspector General; FBI: U.S. Postal Inspection Service; and the Food and Drug Administration, Office of Criminal Investigations assisted in the matter.

WASHINGTON - A Rosemount, Minn., man has pleaded guilty in connection with running a Ponzi scheme involving commodity pools, Acting Assistant Attorney General Rita M. Glavin and U.S. Attorney Frank J. Magill for the District of Minnesota announced today.

Charles "Chuck" E. Hays, 56, pleaded guilty before U.S District Court Judge Donovan Frank on April 14, 2009, in St. Paul, Minn., to one count of mail fraud, one count of wire fraud, and one count of structuring transactions to avoid financial reporting requirements. Hays was arrested Feb. 5, 2009, and charged in a criminal complaint with mail fraud and wire fraud. Shortly after Hays’ arrest, the government seized a $3 million yacht Hays purchased with investor funds, as well as two of Hays’ bank accounts, which contain approximately $1 million in funds obtained through the fraudulent scheme. The government estimates in court documents that investors lost more than $20 million in the scheme.

According to the plea agreement, Hays admitted to devising and participating in a scheme in which he solicited individuals to invest money with him and his company, Crossfire Trading LLC (Crossfire), from January 2001 through February 2009. Hays told potential investors he was a day trader in stock index futures and other futures contracts. Hays also admitted falsely representing to potential investors that his trading was consistently profitable and earned approximately three percent per month. According to court documents, many people chose to invest money with Hays and Crossfire based on these misrepresentations.

Once an individual invested money, Hays admitted he provided the investor with a document that outlined the purported terms of the agreement with Crossfire. Hays admitted the investment agreements misrepresented the goal and activities of Crossfire and how investor profits and losses would be handled. According to the investor agreements, Crossfire was falsely presented as a day-trading company whose primary activity was short-term trading of futures. However, instead of using investor funds to trade in the equities listed in the investor agreement, Hays admitted he diverted and converted those funds for his personal use and other unauthorized purposes.

Hays also admitted that he instructed investors to mail him a check or to wire money to Crossfire’s bank account. Hays admitted he then created and sent investors fraudulent monthly summaries purportedly showing investments and any gains clients supposedly realized.

When investors asked Hays for details regarding his trading or investment philosophy, Hays admitted he misrepresented to them that Crossfire traded through an account at a registered brokerage firm in Chicago, where he said investors’ funds were maintained. To support those misrepresentations, Hays admitted he showed several investors a fraudulent statement that reflected a $37 million balance in Crossfire’s account at the registered brokerage firm, when in reality Crossfire did not have an account with the firm. According to court documents, Hays used funds received from new investors to make payments to earlier investors in order to give legitimacy to the scheme.

At sentencing, Hays faces a maximum penalty of 20 years in prison on the mail fraud count, 20 years on the wire fraud count and 10 years on the structuring count. Hays also faces a maximum fine of $250,000 or the greater of twice the gross gain or loss for both the mail and wire fraud counts and a maximum fine of $500,000 on the structuring count. Additionally, as part of the plea agreement, Hays has agreed to forfeit all assets that constitute the proceeds of his offenses. A sentencing date has not yet been scheduled.

In a related action, the U.S. Commodity Futures Trading Commission (CFTC) filed a civil enforcement action against Hays and Crossfire on Feb. 5, 2009.

The case was investigated by the U.S. Postal Inspection Service. The case is being prosecuted by Assistant Chief Robertson Park and Trial Attorney Laura Perkins of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Ann Anaya for the District of Minnesota. Significant assistance was also provided by Assistant U.S. Attorney Jim Alexander for the District of Minnesota. The Department acknowledges the substantial assistance provided by the CFTC in connection with this investigation.

Information

Statement of Offense

WASHINGTON – The United States has reached a settlement with NetApp Inc. and NetApp U.S. Public Sector Inc. (collectively NetApp), following an investigation of alleged false claims and contract fraud, the Justice Department announced today. NetApp has agreed to pay the United States $128 million, plus interest. This is the largest contract fraud settlement the General Services Administration (GSA) has obtained to date.

The settlement relates to contracts entered into by NetApp, a computer storage and data management solutions company, to sell hardware, software and storage management services for computer network environments to government entities through GSA’s Multiple Award Schedule (MAS) program. The MAS program provides the government and other GSA- authorized purchasers with a streamlined process for procurement of commonly-used commercial goods and services. To be awarded a MAS contract, and thereby gain access to the broad government marketplace and the ease of administration that comes from selling to hundreds of government end users under one central contract, contractors must agree to disclose commercial pricing policies and practices, and to abide by the contract terms when selling to purchasers under the MAS contract.

The settlement resolves allegations that in contract negotiations and over the course of the contracts’ administration, NetApp knowingly failed to meet its contractual obligations to provide GSA with current, accurate and complete information about its commercial sales practices, including discounts offered to other customers, and that NetApp knowingly made false statements to GSA about their sales practices and discounts. The settlement further resolves allegations that NetApp knowingly failed to comply with the price reduction clauses of their GSA contracts by failing to disclose to GSA discounts NetApp gave to its commercial customers when they were higher than the discounts that NetApp had disclosed to GSA, and by failing to pass those discounts on to government purchasers. Because of these allegedly fraudulent dealings, it is alleged that the United States accepted lower discounts and paid far more than it should have for NetApp products.

"This settlement shows that the United States will not tolerate misconduct in the pricing of government contracts," said Michael F. Hertz, Acting Assistant Attorney General for the Department of Justice’s Civil Division.

The settlement resolves the lawsuit filed on behalf of the U.S. government by former NetApp employee, Igor Kapuscinski, who will receive a $19,200,000 share of the recovery in the case. Under the False Claims Act, private citizens can bring suit on behalf of the United States and share in any recovery obtained by the government.

"Especially in these difficult economic times of stretched government budgets, we will ensure that government contractors provide the government with the price it has been promised and all of the discounts to which it is entitled," said Jeffrey A. Taylor, U.S. Attorney for the District of Columbia.

This settlement was the result of a coordinated effort by the Department of Justice, Civil Division, Commercial Litigation Branch; the U.S. Attorney’s Office for the District of Columbia; and the General Services Administration, Office of Inspector General, in investigating and resolving the allegations.

This case was investigated as part of a National Procurement Fraud Initiative. In October 2006, the Deputy Attorney General announced the formation of a National Procurement Fraud Task Force designed to promote the early detection, identification, prevention and prosecution of procurement fraud associated with the increase in government contracting activity for national security and other government programs. The Procurement Fraud Task Force is chaired by the Assistant Attorney General for the Criminal Division and includes the Civil Division, the U.S. Attorneys’ Offices, the FBI, the U.S. Inspectors General community and a number of other federal law enforcement agencies. This case, as well as others brought by members of the task force, demonstrate the Justice Department’s commitment to helping ensure the integrity of the government procurement process.

WASHINGTON – Acting Assistant Attorney General for the Civil Rights Division Loretta King and U.S. Attorney for the Eastern District of Oklahoma Sheldon J. Sperling announced today that Ben Milner, a former deputy sheriff with the Choctaw County, Okla., Sheriff’s Department, has been indicted by a federal grand jury for violating the civil rights of a man during a traffic stop and the civil rights of two inmates at the Choctaw County Jail. The grand jury also indicted Milner on two counts of obstructing justice in connection with the incident involving the inmates.

The indictment charges that on or about Oct. 31, 2005, Milner, then a sheriff’s deputy of the Choctaw County Sheriff’s Department, assaulted an individual causing him bodily harm. The indictment also charges that on or about Oct. 18, 2007, Milner assaulted two inmates at the Choctaw County Jail, causing them bodily harm. Finally, the indictment charges that on or about Oct. 18 and 19, 2007, Milner wrote reports relating to the assaults against the inmates in which he provided false justification for the force he used against them. If convicted, Milner faces a maximum term of imprisonment of 10 years on each excessive force count and 20 years on each count of obstruction of justice. Each count also carries up to three years of supervised release and a fine up to $250,000.

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

This matter was investigated by Special Agent Jeffrey Youngblood of the Oklahoma City Division of the FBI and is being prosecuted by Assistant U.S. Attorney Dean Burris for the Eastern District of Oklahoma and Trial Attorneys Roy Conn III and Michael Khoury of the Civil Rights Division of the Justice Department.

WASHINGTON – The Department of Justice today asked a federal court in Denver to approve service of a John Doe summons on First Data Corporation. "John Doe" summonses allow the IRS to obtain information about United States taxpayers whose identities are not yet known. The information expected in response to the summons will help the IRS identify merchants who use offshore accounts to evade their United States tax liabilities. The petition alleges that the merchants have opened bank accounts in offshore jurisdictions and directed their payment card processor, in this instance First Data, to deposit the proceeds from their debit or credit card transactions directly into the offshore accounts.

The courts have previously approved numerous John Doe summonses on credit card companies and third-party credit card processors allowing the IRS to identify individuals who were using debit and credit cards issued by offshore banks to evade their taxes. With this summons, the Department of Justice ratchets up the pressure on tax evaders by seeking the identities of merchants who attempt to hide their business income in offshore accounts.

"Some United States taxpayers are evading billions of dollars per year in United States taxes through the use of offshore accounts. The Department of Justice will ensure that the IRS obtains all the necessary information to identify these taxpayers, whether they are individuals or businesses," said John DiCicco, Acting Assistant Attorney General for the Justice Department’s Tax Division.

"The IRS will not hesitate to use all the tools available to combat offshore tax evasion by individuals and businesses," said Linda Stiff, IRS Deputy Commissioner for Services and Enforcement.

More information about the Justice Department’s Tax Division is available at www.usdoj.gov/tax.

WASHINGTON - Robert Moran, of Lighthouse Point, Fla., pleaded guilty today to a criminal information charging him with filing a false income tax return, the Justice Department and Internal Revenue Service (IRS) announced. Moran appeared today before Judge James I. Cohn in Ft. Lauderdale and accepted responsibility for concealing more than $3 million in assets in a secret bank account at UBS in Switzerland.

According to court records, on or about Oct. 14, 2008, Moran, a Ft. Lauderdale yacht broker, filed a U.S. Individual Income Tax Return Form 1040 for tax year 2007, which he signed under the penalties of perjury. The tax return failed to report that Moran had an interest in, or signature authority over, a financial account at UBS in Switzerland. Additionally, Moran failed to report the income he earned on any UBS Swiss bank accounts.

According to court records, Moran was the beneficial owner of a UBS account in the name of Winter Drive Investments S.A., a nominee Panamanian corporation. From 2001 through 2008, Moran communicated with bankers at UBS via email, telephone and in person about the purchase and sale of securities, and the conversion of investments from U.S. dollars to Euros.

Judge Cohn scheduled sentencing for June 26, 2009. Moran faces a maximum sentence of three years in prison and a maximum fine of $250,000.

"With the filing deadline imminent, most American taxpayers are filing their tax returns and paying the taxes that they owe," said John A. DiCicco, Acting Assistant Attorney General of the Justice Department’s Tax Division. "Honest taxpayers should rest assured that those who hide assets and income from the IRS face investigation, prosecution, and steep fines and jail time."

In February 2009, UBS entered into a deferred prosecution agreement in which the bank admitted to helping U.S. taxpayers hide accounts from the IRS. As part of their agreement, UBS agreed to provide the U.S. government with the identities of, and account information for, certain United States customers of UBS’s cross-border business.

On April 2, 2009, another UBS client, Steven Michael Rubinstein, was charged with filing a false income tax return via a criminal complaint. Rubinstein, of Boca Raton, Florida, is alleged to have failed to report income and assets in a secret Swiss bank account.

"Just two weeks ago, the Southern District of Florida and the Tax Division charged the first UBS client with filing a false tax return. This week, we charge yet another," said R. Alexander Acosta, U.S. Attorney for the Southern District of Florida. "We will continue to prosecute those who use offshore schemes to avoid paying their taxes. If you are hiding income abroad, I suggest you approach us."

"Combating offshore tax evasion continues to be one of the IRS's top priorities," said IRS Deputy Commissioner Linda Stiff. "With each passing day, it is increasingly clear the IRS is committed to pursuing people hiding income offshore. Anyone in this situation needs to immediately come in through our voluntary disclosure process before it's too late. It's better to come clean now instead of waiting and facing a heavier price later."

Acting Assistant Attorney General DiCicco and U.S. Attorney Acosta commended the investigative efforts of the IRS agents involved in this case. The prosecution is being handled by Senior Litigation Counsel Kevin M. Downing and Trial Attorney Michael P. Ben’Ary of the Tax Division, and Assistant U.S. Attorney Jeffrey A. Neiman.

United States citizens who have an interest in, or signature or other authority over, a financial account in a foreign country with assets in excess of $10,000 are required to disclose the existence of such account on Schedule B, Part III of their individual income tax return.

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

 

WASHINGTON – Four individuals have been indicted on charges of federal civil rights violations relating to the in-custody death of a detainee at the Lucas County Jail in Ohio and an alleged subsequent four-year cover-up of the role that jail personnel played in the death.

The indictment returned by a federal grand jury in Toledo, Ohio, was returned today and announced by Acting Assistant Attorney General Loretta King of the Civil Rights Division.

The indictment alleges that on May 30, 2004, former Deputy Sheriff John E. Gray assaulted and strangled a detainee in a cell at the Lucas County Jail and then left the detainee lying unconscious without seeking medical help for him, actions which resulted in the detainee’s death. The indictment also alleges that, shortly prior to the incident that resulted in the detainee’s death, Deputy Sheriff Jay M. Schmeltz struck and assaulted the same detainee, causing bodily injury. Thereafter, according to the charges, Deputies Gray and Schmeltz wrote false reports concealing the incidents and made false statements to the FBI. Finally, the indictment alleges that Lt. Robert McBroom of the jail’s Internal Affairs Department and Sheriff James Telb concealed their knowledge of Deputy Gray’s felonies from federal authorities and that McBroom and Telb made false statements to the FBI during the course of its investigation of the detainee’s death.

"Police officers are given tremendous authority and responsibility so that they can protect and serve the public trust. Those who abuse that authority face serious consequences," said Loretta King, Acting Assistant Attorney General of the Civil Rights Division. "The Civil Rights Division is committed to prosecuting all cases of official misconduct and to bringing these individuals to justice."

If convicted, Gray will face a maximum sentence of life in prison, Schmeltz will face a maximum sentence of ten years, and McBroom and Telb will each face a maximum sentence of three years.

This case is being investigated by the FBI’s Cleveland Division. The case is being prosecuted by Special Litigation Counsel Kristy Parker and Trial Attorney Ryan McKinstry of the Civil Rights Division’s Criminal Section.

WASHINGTON and PENSACOLA, Fla. – Six U.S. defendants convicted for their activity in a global child pornography trafficking enterprise were sentenced today in the Northern District of Florida, Acting Assistant Attorney General of the Criminal Division Rita M. Glavin, U.S. Attorney for the Northern District of Florida Thomas F. Kirwin and FBI Executive Assistant Director J. Stephen Tidwell announced.

 

Five of the defendants were convicted following a six-day trial in January 2009 on multiple charges, including engaging in a child exploitation enterprise; conspiracy to advertise, transport, ship, receive and possess child pornography; advertising child pornography; transporting child pornography; receiving child pornography and obstruction of justice.

 

The defendants sentenced today by Senior U.S. District Judge Lacey A. Collier were Daniel Castleman of Lubbock, Texas; Gary Lakey of Anderson, Ind.; Marvin Lambert of Indianapolis; Neville McGarity of Medina, Texas; Stepan Bondarenko of Philadelphia; and Ronald White of Burlington, N.C. Five additional U.S. defendants also indicted in the case were sentenced on March 10, 2009.

 

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 utilized 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.

 

Stepan Bondarenko was sentenced today to 20 years in prison. Bondarenko pleaded guilty on April 28, 2008, to four counts related 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 child pornography; and receiving child pornography.

 

Daniel Castleman, Gary Lakey, Marvin Lambert, Neville McGarity and Ronald White were all sentenced to terms of life in prison.

 

Castleman, Lakey, Lambert and McGarity, a registered sex offender, were all found guilty following a six-day trial on six counts relating to their 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 child pornography; transporting child pornography; receiving child pornography and obstruction of justice.

 

White was found guilty following trial on four 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 and possess child pornography; receiving child pornography and obstruction of justice.

 

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.

WASHINGTON – The Justice Department today announced that a federal district court judge in Louisville, Ky., approved a settlement of the Department’s lawsuit alleging that those involved in the design and construction of 12 multifamily housing complexes discriminated on the basis of disability. The complexes contain more than 800 units covered by the Fair Housing Act’s accessibility provisions.

Under the settlement, the defendants will pay all costs related to making the apartment complexes accessible to persons with disabilities and pay $255,000 to compensate individuals harmed by the inaccessible housing. The defendants will also pay a $25,000 civil penalty to vindicate the public interest and undergo training on the requirements of the Fair Housing Act.

"The civil rights laws require equal access to housing, including equal access for persons with disabilities," said Loretta King, Acting Assistant Attorney General for the Civil Rights Division. "This comprehensive resolution will ensure that the equal housing opportunities required by law are provided in these housing complexes, and compensate those injured by the builders’ and designers’ failure to provide accessible housing."

"The U.S. Attorney’s Office for the Western District of Kentucky commends the defendants in this action for agreeing to change their plans and construction to assure their developments are accessible to all," said Acting U.S. Attorney Candace G. Hill of the Western District of Kentucky. "The residents of these developments deserve quality housing that complies with Fair Housing Accessibility Guidelines and the Americans with Disabilities Act. The consent decree is a good resolution for the parties and for the people of this community."

The defendants responsible for the payments and retrofits are DKCD Inc. d/b/a Renaissance Development d/b/a Renaissance Homes and d/b/a Renaissance Realty Investments; William M. Carroll, Jr.; Eric Claypool; Cooper Creek Village LLC; Deering Road LLC; Glenmary Village LLC; Hawk Design Inc.; Heritage Engineering LLC; Land Design & Development Inc.; Mindel, Scott & Associates Inc.; Renaissance/Audubon Woods II LLC; Renaissance/Deering Road LLC d/b/a Woodridge Lake; Renaissance-Glenmary Village Apartments LLC; Renaissance Homes LLC; Renaissance/LS LLC d/b/a Springs of Glenmary Village; Renaissance Realty Investments I LLC; Renaissance/St. Andrews LLC; Renaissance/Valley Farms LLC; Renaissance/VFA LLC; Tucker & Booker Inc.; Woodridge Lake Builders LLC; and Woods of St. Andrews LLC. These defendants will retrofit the following complexes in Louisville, Ky.:

1. Audubon Woods Condominiums, Cardinal Dr.

2. Cooper Creek Village Apartments, Cooper Village Terrace

3. Gardens of Glenmary Village Condominiums, Bardstown Rd.

4. Glenmary Village Apartments, Bardstown Rd.

5. Glenmary Village Overlook Condominiums, Bardstown Rd.

6. Renaissance St. Andrews Apartments, Renwood Blvd.

7. Renaissance St. Andrews Condominiums, Renwood Blvd.

8. Springs of Glenmary Village Condominiums, Bardstown Rd.

9. Valley Farms Apartments, Valley Station Rd.

10. Valley Farms Condominiums, Valley Station Rd.

11. Woodridge Lake Patio Homes, Deering Rd.

12. Woods of St. Andrews Condominiums, St. Andrews Woods Cir.

The retrofitting includes modifying walkways, removing steps, providing accessible curb ramps and parking, and providing accessible walks to site amenities, such as the clubhouses, pools, mailboxes and trash facilities. It also requires the defendants to replace inaccessible knob door hardware with levers, lower thermostats to accessible heights, and reconfigure bathrooms and kitchens.

The lawsuit arose as a result of a complaint to the Justice Department by the Fair Housing Council, then a local Louisville non-profit organization that received funding from the Department of Housing and Urban Development. The Fair Housing Council ceased operations in 2007. The Department conducted its own investigation and subsequently filed the lawsuit in September 2007.

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

WASHINGTON—Rene Soliz of Alice, Texas, pleaded guilty today in U.S. District Court in Corpus Christi, Texas, to a violation of the Lacey Act for attempting to receive fifteen Tanzanian leopard tortoises that were transported into the United States in violation of a law, regulation or treaty, specifically, the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), the Justice Department announced. 

 According to statements made in court, in March 2006, Soliz, a U.S. Border Patrol agent, contacted an individual in Dar-Es Salaam, Tanzania, who was selling leopard tortoises.  Soliz asked to buy eight of the tortoises and indicated an interest in buying more at a later date as part of a long-term business relationship.  On April 7, 2006, a U.S. Customs inspector at John F. Kennedy International Airport intercepted the package containing the tortoises being sent to Soliz.  The package was labeled as containing 50 live scorpions.  When a U.S. Fish and Wildlife inspector opened the package, he found 14 live leopard tortoises and one dead leopard tortoise. 

 Leopard tortoises are listed in Appendix II of CITES.  The CITES Appendices list species afforded different levels or types of protection from over-exploitation.  Appendix II lists species that are not necessarily now threatened with extinction but that may become so unless trade is closely controlled.  International trade in specimens of Appendix II species may be authorized by the granting of an export permit from the exporting country.  No export permit accompanied the tortoises bought by Soliz. 

 “Soliz traded in a threatened tortoise species in violation of laws, designed to protect wildlife from extinction,” said John C. Cruden, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division, “Today’s guilty plea affirms the Justice Department’s intention to investigate and prosecute individuals who choose to undermine federal wildlife laws and contribute to the endangerment of protected species.” 

 Soliz faces a maximum sentence of one year in prison and a $100,000 fine.  As part of the plea agreement, Soliz will resign from the U.S. Border Patrol. 

 The case is being prosecuted by Senior Trial Attorney Claire Whitney of the Justice Department’s Environmental Crimes Section.  The case was investigated by the U.S. Fish and Wildlife Service’s Office of Law Enforcement.

 

WASHINGTON – Attorney General Eric Holder today announced comprehensive steps to enhance the Justice Department’s compliance with rules that require the government to turn over certain types of evidence to the defense in criminal cases.

"I am committed to ensuring that our prosecutors are provided sufficient training to understand fully their discovery obligations, and that they receive the support and resources necessary to do their jobs in a manner consistent with the proud traditions of this Department," Attorney General Holder said.

"The actions we are taking today are part of an ongoing process to ensure justice is served in every case the Department brings. We will continue to review how cases are managed before, during and after charges are filed, and where there is room for improvement, we will make additional changes," Holder said.

Actions initiated by the Department today include:

• Providing supplemental training to federal prosecutors throughout the Department on their discovery obligations in criminal cases. Training will begin in the coming weeks.
• Establishing a working group of senior prosecutors and Department officials from each component to review the discovery practices in criminal cases. The working group, to be headed by the Assistant Attorney General of the Criminal Division and the Chair of the Attorney General’s Advisory Committee, will review the need for:
  • Improvements to practices and policies related to the government’s obligations to provide material to the defense in criminal matters;
  • Additional resources, including staffing and information technology, needed to help prosecutors fulfill their discovery obligations;
  • Additional discovery-related training for other Department prosecutors.

WASHINGTON— Invista will pay a $1.7 million civil penalty and spend up to an estimated $500 million to correct self-reported environmental violations discovered at facilities in seven states, the Justice Department and U.S. Environmental Protection Agency (EPA) announced today. The company disclosed more than 680 violations of water, air, hazardous waste, emergency planning and preparedness, and pesticide regulations to EPA after auditing 12 facilities it acquired from DuPont in 2004. 

“This settlement is a significant achievement, as it will reduce air pollution in numerous communities, and demonstrates the United States’ commitment to ensuring that all facility owners come into compliance with environmental requirements,” said John C. Cruden, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. “This settlement reflects an effective use of EPA’s audit policy and the value of companies performing audits and working with the United States to correct violations found at their facilities.”

“By correcting these violations, Invista will reduce harmful air pollution by nearly 10,000 tons per year,” said Catherine R. McCabe, acting assistant administrator of EPA's Office of Enforcement and Compliance Assurance. “Invista is making a clean start in a settlement that achieves significant environmental benefits, and we encourage other new owners to do the same.”

The settlement resolves violations disclosed under Invista’s corporate audit agreement with EPA.  Invista conducted 45 separate audits of environmental practices and compliance at facilities located in Seaford, Del.; Athens, Calhoun, and Dalton, Ga.; Kinston, N.C.; Camden, S.C.; Chattanooga, Tenn.; LaPorte, Orange, and Victoria, Texas; and Martinsville and Waynesboro, Va. 

As part of its corrective action requirements agreed to in the settlement, Invista will install pollution control equipment to treat air pollutants at its Seaford, Del.; Camden, S.C.; Chattanooga, Tenn.; and Victoria, Texas facilities. The company has also applied for applicable air and water permits, has installed adequate secondary containment for oil storage areas, and has notified state and local emergency planning and response organizations of the presence of hazardous substances. 

To ensure continued compliance and minimization of the benzene wastes generated at the Victoria and Orange, Texas facilities, Invista is required under the settlement to either upgrade control equipment or make major changes to its processes used to handle these wastes. EPA estimates that these actions will reduce air emissions of benzene by more than nine tons annually      and eliminate 25 to 750 tons per year of benzene from wastewater.

The emission reductions resulting from correcting these violations will result in estimated annual human health benefits valued at over $325 million, including 30 fewer premature deaths per year, 2,000 fewer days/year when people would miss school or work, and over 9,000 fewer cases of upper and lower respiratory symptoms.

Invista is a multi-national manufacturer of a wide range of polymer-based fibers, including Lycra, Stainmaster, and Coolmax. 

This is the largest settlement under EPA’s audit policy, which was launched in 1995.  The policy provides incentives to companies that voluntarily discover, promptly disclose, and expeditiously correct environmental violations. The companies must also take steps to prevent future violations. EPA may reduce or waive penalties for certain violations if the facility meets the conditions of the policy. Consistent with the audit policy, EPA waived a large portion of the penalty in this case.

EPA’s experience with Invista guided the development of a national interim audit policy for new owners—announced in August 2008—designed to encourage other new owners to make a “clean start” at their recently acquired facilities. 

The states of Delaware, South Carolina and the Chattanooga-Hamilton County Air Pollution Control Board in Tennessee have also joined in today’s consent decree and will share portions of the civil penalty with EPA.

The consent decree, lodged in the U.S. District Court for the District of Delaware, is subject to a 30-day public comment period and approval by the federal court.  A copy of the consent decree is available on the Justice Department Web site at http://www.usdoj.gov/enrd/Consent_Decrees.html.

WASHINGTON – Acting Assistant Attorney General Loretta King and U.S. Attorney for the Eastern District of Missouri Catherine L. Hanaway today announced that defendant Waquita Wallace pleaded guilty to the federal civil rights charge of sex trafficking. Wallace admitted to forcing a young woman to engage in commercial sex acts through a combination of force, fraud and coercion. Defendant Wallace also benefitted financially from the sex trafficking. She faces a maximum sentence of life in prison and a fine of up to $250,000. The court announced that sentencing will take place on July 7, 2009.

"The defendant brutally forced a young woman to sell her body by which the defendant profited," said Loretta King, Acting Assistant Attorney General for the Civil Rights Division. "This type of crime is an affront to the dignity of the victim and the free society in which we live. The Department of Justice will continue to vigorously prosecute these cases."

"Ms. Wallace took advantage of the victim, brutally exploiting her," said U.S. Attorney Catherine L. Hanaway "We have an obligation to protect the most vulnerable members of our community."

Human trafficking prosecutions are a top priority of the Justice Department. In the last seven fiscal years, the Civil Rights Division, in conjunction with the U.S. Attorneys’ Offices, has increased by nearly seven-fold the number of human trafficking cases filed in court as compared to the previous seven fiscal years.

In announcing the plea, Acting Assistant Attorney General King and U.S. Attorney Hanaway commended the FBI and the St. Louis Metro Police Department for their work in this cooperative investigation and prosecution. Assistant U.S. Attorney Howard Marcus and Civil Rights Division attorney Jim Felte are prosecuting this case for the government.

WASHINGTON— California Shellfish Company Inc., doing business as Point Adams Packing Co. (PAPCO), was sentenced today by U.S. District Court Judge Garr M. King in Portland, Ore., to pay $75,000 for a felony violation of the Clean Water Act for unpermitted discharges of wastewater into the Columbia River, the Justice Department announced. 

As part of the criminal fine, $26,250 will be placed in the congressionally-established National Fish and Wildlife Fund in order to fund various environmental projects in the state through the Oregon Governor’s Fund for the Environment.  Projects funded by these grants serve to reduce pollution and otherwise cleanup Oregon rivers, streams, and coastal areas and restore and preserve fish, wildlife, and plant resources critical to those rivers, streams and coastal areas.

PAPCO pleaded guilty on March 27, 2008 and admitted to violating the Clean Water Act, which makes it a crime to knowingly discharge pollutants in violation of a National Pollution Discharge Elimination System (NPDES) permit by discharging unpermitted chicken processing wastewater from its Hammond, Ore., facility. The former manager of the facility, Thomas Libby, was previously sentenced for a misdemeanor violation of the Clean Water Act.  Modesto Tallow Co., doing business as California Spray Dry (CSD), which operated PAPCO’s plant, has also pleaded guilty and been sentenced for a felony Clean Water Act violation. 

According to documents filed with the court, PAPCO had obtained a NPDES permit to discharge fish processing wastewater from its facility and in June 2003 leased a portion of its facility to CSD.  CSD intended to process chicken carcasses at the PAPCO facility for the production of various by-products including flavoring for pet foods.  Neither CSD nor PAPCO obtained a modification to the NPDES permit to allow the discharge of chicken processing wastewater into the Columbia River.  As a result there were unpermitted discharges beginning in December 2003 and lasting until approximately June 2004.  The Environmental Protection Agency (EPA) was prompted to investigate the matter as a result of complaints from several neighbors about odors from the discharges.

 “PAPCO knowingly discharged pollutants into the Columbia River without regard for the law or the environment,” said John C. Cruden, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division.  “This case underscores the Justice Department’s commitment to enforce the nation’s laws that protect the public and the environment from pollution.” 

 Karin Immergut, U.S. Attorney for the District of Oregon, stated, “Corporations that don't play by the rules will be held accountable.  We are pleased that the corporation, as part of its criminal penalty, will contribute to protecting the environment here in Oregon.”

“The defendants’ illegal discharges broke some of the most basic laws put in place to protect the Columbia River,” said Acting Special Agent in Charge Tyler Amon with the EPA’s Criminal Investigation Division, Seattle, WA. “The Oregon Environmental Crimes Task Force did an excellent job of investigating and prosecuting this case, and it will continue to pursue criminal charges against those companies and individuals that pollute Oregon’s waterways.”

 The case was investigated by the EPA’s Criminal Investigation Division and prosecuted by Assistant U.S. Attorney Dwight C. Holton and Senior Trial Attorney J. Ronald Sutcliffe of the Justice Department’s Environmental Crimes Section. 

 

WASHINGTON - The Department of Justice Tax Division today announced highlights of its work during the past year to defend and enforce the nation’s tax laws.

The Tax Division has assisted the Internal Revenue Service (IRS) in tracking down tax cheats who use offshore accounts, combating abusive tax shelters, stopping tax defiers and shutting down tax schemes and scams. During FY 2008, the Tax Division also successfully defended refund suits against the United States representing claims of nearly $803 million, and collected, through affirmative litigation, over $178 million. The Division’s budget in that period was less than $93 million.

"It is important for the vast majority of taxpayers who pay their tax liabilities on time and in full, to know that those taxpayers who don’t will be held fully accountable, either civilly or criminally or both" said Acting Assistant Attorney General John A. DiCicco.

Combating Offshore Tax Evasion

The Tax Division has devoted significant resources this past year to combating offshore tax evasion and locating hidden offshore assets. In June 2008, Bradley Birkenfeld pleaded guilty to conspiring with an American billionaire real estate developer, Swiss bankers and his co-defendant, Mario Staggl, to help the developer evade payment of $7.2 million in taxes by assisting in concealing $200 million of assets in Switzerland and Liechtenstein.

In February 2009, the Tax Division, together with the U.S. Attorney’s Office for the Southern District of Florida, entered into an unprecedented deferred prosecution agreement (DPA) with UBS AG, Switzerland’s largest bank. As part of the agreement, UBS agreed to provide the U.S. government with the identities of, and account information for, certain U.S. customers of UBS’s cross-border business. UBS also admitted in the agreement, in great detail, how it had conspired to defraud the United States by impeding the IRS. UBS also agreed to promptly exit its cross-border business with U.S. clients, to provide continuing cooperation with the government’s investigation, and to pay the United States $780 million.

As part of its continuing review of offshore account information received, in April 2009, the Tax Division, together with the U.S. Attorney’s Office for the Southern District of Florida, charged Steven Michael Rubinstein, of Boca Raton, Fla., with filing a false income tax return. According to court records, Rubinstein, a chartered accountant, failed to disclose in his 2007 Form 1040 that he had an interest in, or signature authority over, a financial account at UBS in Switzerland. Additionally, Rubinstein failed to report the income he earned on any UBS Swiss bank accounts. According to court records, from 2001 through 2008, it is alleged that Rubinstein repatriated approximately $3 million into the United States to purchase property and build a personal residence in Boca Raton. Additionally, it is alleged that Rubinstein deposited and sold more than $2 million in South African Krugerrands through his UBS Swiss bank accounts.

The Tax Division is also seeking from UBS approximately 52,000 additional names and account information of United States taxpayers. In February 2009, the Tax Division filed United States v. UBS (S.D. Fla.), a petition to enforce an IRS summons issued to UBS to obtain this information.

Curbing High-End Tax Shelters

During the past year, the Justice Department and the IRS have continued their civil and criminal enforcement efforts against the promoters and facilitators of abusive tax shelters. Abusive shelters for large corporations and high-income individuals have cost the U.S. Treasury many billions annually, according to Treasury Department estimates. The Tax Division also has had great success in federal court defending the U.S. Treasury against tax shelter-related claims of large companies and individual investors. The Tax Division is currently litigating approximately 94 civil tax shelter cases or groups of cases. Among the successes during the past year in this area are the following:

• In September 2008, attorney Peter Cinquegrani pleaded guilty to conspiracy to commit tax fraud, aiding and abetting tax evasion, and aiding in the submission of false and fraudulent documents to the IRS, in connection with a fraudulent tax shelter called PICO.
• The Tax Division prevailed in a pair of the first LILO/SILO tax shelter cases to be tried, AWG v. United States and Fifth-Third Bank v. United States. The government victories in these civil cases helped lay the groundwork for an IRS settlement initiative in which hundreds of taxpayers settled similar cases involving tens of billions of dollars, on terms extremely favorable to the government.
• The Tax Division prevailed in Enbridge Midcoast Energy Inc. v. United States, the first so-called intermediary transaction to be decided. The decision in this civil case upheld a 20 percent penalty and will be extremely helpful in the dozens more intermediary tax shelters that are either pending in court or before the IRS, involving tens of millions of dollars.
• The Tax Division was victorious in numerous civil cases involving so-called "Son of BOSS" tax shelters, including Jade Trading LLC v. United States, Stobie Creek Investments v. United States, and Salman Ranch v. United States.

Stopping Tax Defiers

The Tax Defier Initiative, which the Tax Division announced in April 2008, targets persons who attempt to undermine our entire tax system. Tax defier cases traditionally involve individuals who spout rhetoric denying the fundamental validity of the tax laws as an excuse for not paying taxes, while also availing themselves of the benefits and rights that the United States provides to its citizens and residents. The number of tax defier cases referred for investigation or prosecution increased significantly during fiscal year 2008.

The success rate in tax defier prosecutions is very high. Some examples:

• In January 2009, Michael C. Irving (D.D.C.), a District of Columbia police officer, was sentenced to 14 months in prison, following his conviction in May 2008 of two counts of tax evasion. Irving had fraudulently arranged for the police department to stop withholding taxes on his paychecks, and had filed a 2002 tax return alleging he earned zero wages, despite earning wages of $155,211 that year.
• In September 2008, Robert B. Beale (D. Minnesota), the founder and former chief executive officer of Comtrol Corp., was sentenced to over 11 years in prison and ordered to pay a $175,000 fine, following his conviction for conspiracy to defraud the IRS and tax evasion. Beale failed to pay income tax on more than $5 million in income and used a shell corporation to conceal his income.
• In August 2008, Hamlet Bennett (D. Hawaii) was sentenced to a term of 78 months in prison and ordered to pay more than $1.3 million in restitution and $35,330 in costs of prosecution, after his conviction for tax evasion for the years 1999 through 2003. Evidence at trial revealed that Bennett purchased "products" from convicted tax offender Royal Lamar Hardy and Hardy’s organization, The Research Foundation, which promoted wide-scale "non-filing" of federal income tax returns.
• In May 2008, Louis Genard (W.D. Louisiana), a dentist, was sentenced to 30 months in prison and ordered to pay $155,683 in restitution, following his conviction on three counts of willful failure to file income tax returns. Genard had claimed that he revoked his U.S. citizenship and declared himself a "citizen of the Republic of Louisiana."
• In April 2008, the court sentenced actor Wesley Snipes (M.D. Fla.), to three years in prison; co-defendants Eddie Kahn and Douglas Rosile received 10 years and four and a half years, respectively.

Halting the Promotion of Tax Fraud Schemes

Because ongoing tax scams cause continuing harm to the U.S. Treasury and leave participants owing taxes, interest, and often, penalties, the government does not wait until a criminal case has been developed to take action to stop the scam. Rather, the Justice Department brings civil injunction suits to stop both the promotion of tax scams and the preparation of false or fraudulent returns. In appropriate cases, the Justice Department brings criminal charges against the promoters, preparers and scam participants to punish them for their unlawful conduct.

In the past decade, the Justice Department has sought and obtained injunctions against over 300 promoters of tax fraud schemes, including a record 71 promoters in fiscal year 2008. These injunctions have stopped promoters from selling tax evasion schemes on the Internet, at seminars, or though other means. The tax scam promoters the government has sought to enjoin have cost the U.S. Treasury several billion dollars, and have had hundreds of thousands of customers. Among the government’s results in this area are:

• In November 2008, a federal court in California ordered Edwin Lichtig III and his firm, GSL Advisory Solutions, to stop promoting unlawful tax fraud schemes involving Individual Retirement Accounts (IRAs) that helped customers improperly avoid federal income tax on tens of million of dollars.
• In October 2008, a federal court in California ordered Scott Cathcart to stop promoting a so-called "90 Percent Stock Loan" program that falsely purported to enable customers to avoid paying income tax on any capital gains, by treating the sale of appreciated stocks or other securities as a loan, in a scheme that allegedly cost the government hundreds of millions in lost tax dollars.
• In May 2008, a federal court in Florida shut down Pinnacle Quest International, which the court found knowingly sponsored "tax fraud trade shows" at offshore locations.

Further details about these and other tax enforcement cases are available on the Tax Division’s Web site http://www.usdoj.gov/tax/, on the IRS’s Web site http://www.irs.gov/, and on the IRS Criminal Division’s Web site http://www.ustreas.gov/irs/ci/.

The Justice Department encourages anyone who has information about suspected tax fraud to report it to the IRS Web site at http://www.irs.gov and click on the links "Contact IRS" and "How Do You Report Suspected Tax Fraud Activity."

WASHINGTON - Tax return preparer Lawrence Sperling pleaded guilty today to aiding in the preparation of false tax returns, the Justice Department and Internal Revenue Service (IRS) announced. Sperling was scheduled to begin trial on April 14, 2009 before Judge Deborah Chasanow in Greenbelt, Md.

According to the indictment and the plea agreement, Sperling, who is a disbarred former attorney, owned and operated a tax preparation business in Silver Spring, Md., from at least 2002 through 2003. The business operated under several names, including American Tax Service, American Tax Institute, JAMAR LLC, and American Tax Professional Associates Inc. (ATPA).

According to the indictment and the plea agreement, Sperling knowingly prepared tax returns for his clients that contained false and fraudulent items, including inflated medial expenses, charitable contributions, miscellaneous employment-related expenses, and child care credits. The tax loss associated with false returns prepared by Sperling is $804,335.

According to the indictment and the plea agreement, beginning in 1988, Sperling failed to file tax returns for eleven years. In 2001, the IRS penalized Sperling and fined him $10,000 for "willful or reckless understatement of taxpayer’s tax liability" with respect to his tax preparation business. The IRS sent him more than two dozen notices of taxes and penalties due, notice of intent to levy, and other warning letters.

Beginning in at least 1998, Sperling arranged for another individual (the nominee) to file the tax returns of Sperling’s clients and to collect Sperling’s preparation fees. The nominee subsequently held these funds in bank accounts in the nominee’s name. The nominee made disbursements of these funds to Sperling or others at Sperling’s request. Sperling never declared or paid taxes on these funds, although he used a portion of them to pay business expenses. As a result of this conduct, Sperling caused an additional tax loss of $130,847.

Judge Chasanow scheduled sentencing of Sperling for July 31, 2009. Sperling faces a maximum sentence of three years in prison and a fine of $250,000 for the aiding in the preparation of false returns conviction.

Acting Assistant Attorney General John A. DiCicco thanked the special agents from IRS-Criminal Investigation who investigated the case, as well as Tax Division trial attorneys Jerrod Patterson, Shawn Noud, and Tino Lisella, who prosecuted the case.

WASHINGTON – Alexander Tajong, a Bronx, N.Y.-based return preparer, was charged today with twenty counts of willfully aiding and assisting in the preparation and filing of false income tax returns for 10 of his clients during the 2002 and 2003 tax years, the Justice Department and Internal Revenue Service (IRS) announced.

According to the indictment, from approximately 2002 to April 2004, Tajong, operating under the name "Tajong Accounting and Tax Services," prepared tax returns for his clients based upon identification, Forms W-2, and Forms 1099 provided by the clients. Tajong then falsified the taxpayers’ returns by including inflated and fictitious deductions, exemptions, credits and losses on the returns. All 20 fraudulent returns charged in the indictment include falsified Schedule A deductions and expenses. This false information lowered the taxpayers’ tax liabilities and resulted in thousands of dollars of unwarranted tax refunds.

An indictment is merely a formal charge by the grand jury. Each defendant is presumed innocent unless and until proven guilty in U.S. District Court. If convicted, the defendant faces maximum potential sentences of 60 years in prison and millions of dollars in fines.

The case is being prosecuted by Tax Division attorneys Nanette L. Davis, who is an Assistant Chief in the Northern Criminal Enforcement Section, and Diana Beinart. The case was investigated by the IRS, Criminal Investigation Division.

Additional information about the Justice Department’s Tax Division and its enforcement efforts may be found at http://www.usdoj.gov/tax/. Additional information about tax fraud schemes to watch out for may be found on the IRS Criminal Investigation Web site.

WASHINGTON—Two commercial fisherman pleaded guilty today in U.S. District Court in Greenbelt, Md., to violations of the Lacey Act, the federal law that prohibits individuals from transporting, selling or buying illegally harvested fish, in this case striped bass or rockfish, the Justice Department announced.

Jerry Decatur Sr. of Stafford, Va., pleaded guilty to a one count criminal information for illegally taking and over-harvesting striped bass. Additionally, Kenneth Dent of Dumfries, Va., pleaded guilty to a one count criminal information for trafficking illegally taken striped bass.

According to documents filed with the court, on at least 13 occasions between 2004 through 2007, Decatur Sr. illegally harvested more than 10,000 pounds of striped bass from the Potomac River. The commercial fisherman fished out of season, kept over-sized fish or used nets that violated applicable regulations. He then sold the catch to two fish wholesalers in Washington, D.C. Additionally, he failed to affix tags to the majority of the striped bass that he caught thereby exceeding their limit by thousands of pounds. In April and May 2003 through 2007, Decatur harvested more than 65,000 beyond his limit. The fair market retail value of the over- and illegally- harvested rockfish was in excess of $329,000.

According to the documents, on multiple occasions, Dent sold hundreds of pounds of rockfish that were illegally harvested or tagged to an undercover special agent with the Virginia Marine Police, who told Dent that the fish were being transported to Pennsylvania. On one occasion, Dent illegally harvested 400 pounds of fish from Virginia tributaries of the Potomac River and sold it to the undercover agent for $990. He knowingly tagged much of the fish with incorrect tags to exceed his limit of Virigina-caught fish. The majority of these fish were also not within the legal size limit. On a second occasion, Dent sold the undercover agent 430 pounds of rockfish for $1000 that were larger than the legal size limit. On a third occasion, he sold the agent 480 pounds of fish for $1,375. All of these fish were more than the legal size limit. The fair market retail value of the transactions was in excess of $5,000. Further Dent illegally sold the undercover agent 100 striped bass tags despite a prohibition against private sales.

Decatur Sr. and Dent both face maximum penalties of up to five years in prison, a fine of $250,000 and three years supervised release for the Lacey Act violations.

Today’s guilty pleas are the result of the investigation by an interstate task force formed by the U.S. Fish and Wildlife Service, the Maryland Natural Resources Police and the Virginia Marine Police, Special Investigative Unit in 2003.  The task force conducted undercover purchases and sales of striped bass in 2003, engaged in covert observation of commercial fishing operations in the Chesapeake Bay and Potomac River area, and conducted detailed analysis of area striped bass catch reporting and commercial business sales records from 2003 through 2007.  The investigation is continuing, and charges against others are possible.

As part of the investigation and prosecution to date, a total of 11 individuals and one company have been charged including today’s defendants. Nine of those have pleaded guilty to wildlife crimes for their involvement in illegally harvesting and trafficking in striped bass. Two fishermen, Joseph Peter Nelson Jr., of Great Mills, Md., and his father Joseph Peter Nelson, of Avenue, Md., are awaiting trial, and one other commercial fisherman is awaiting arraignment and entry of a plea.

Sentencing dates in U.S. District Court in Greenbelt for five Maryland fishermen who pleaded guilty in this case are listed below.

Thomas L. Hallock April 22, 2009 9:30 AM

Charles Quade April 27, 2009 9:30 AM

Thomas L. Crowder April 28, 2009 9:30 AM

John W. Dean April 30, 2009 9:30 AM

Keith A. Collins May 28, 2009 9:30 AM

Cannon Seafood, a Washington, D.C. fish wholesaler, its owner Robert Moore Sr. and his son Robert Moore Jr. are scheduled for sentencing on May 8, 2009, at 9:30 AM in U.S. District Court for the District of Columbia.

        The case is being prosecuted by Assistant U.S. Attorney Stacy Dawson Belf for the District of Maryland and Senior Trial Attorney Wayne Hettenbach of the Justice Department’s Environmental Crimes Section.

WASHINGTON - A woman from the Bronx, N.Y., pleaded guilty today to conspiracy to making false claims and mail fraud, the Justice Department announced. The indictment alleged that between approximately May 1, 2003, and Feb. 28, 2005, Sharon Smith and others participated in a scheme to file false and fraudulent individual income tax returns in the names of individuals who were not entitled to the refunds that were claimed.

Sharon Smith, along with Odell Folks, Tanya Smith and Keith Terry were indicted on Nov. 26, 2008, for a scheme to file false claims for refunds with the Internal Revenue Service (IRS) using names of clients of the New York City Human Resources Administration (HRA) and the Center for Employment Opportunities (CEO). Terry, a resident of Dallas, Ga., pleaded guilty to the false claims conspiracy and a false return charge on Jan. 29, 2009. On March 6, 2009, Folks and Tanya Smith pleaded guilty. Folks pleaded guilty to the false claims conspiracy and mail fraud counts as well as to a count of making and subscribing a false return. Tanya Smith pleaded guilty to the false claims conspiracy count.

The refund checks were mailed to addresses selected by Odell Folks. Folks, Sharon Smith, Tanya Smith and Keith Terry conspired to deposit the checks, conceal the nature, source, location, ownership or control of the proceeds, and keep all or a portion of the proceeds for themselves. The indictment further alleged that Folks failed to report the income that he received from his scheme on the income tax returns that he filed for 2003, 2004 and 2005.

Acting Assistant Attorney General John A. DiCicco thanked Tax Division Trial Attorney Mark F. Daly and Assistant U.S. Attorney Shreve Ariail of the Eastern District of New York. This case was investigated by the IRS Criminal Investigation Division office in Bridgeport, Conn., and the U.S. Postal Inspection Service in New Haven, Conn.

More information about the Justice Department’s Tax Division is available at www.usdoj.gov/tax.

WASHINGTON – Following three and a half days of trial and 19 minutes of deliberations, a Gulfport, Miss., federal jury yesterday convicted Paul Richard Arceneaux, a resident of Church Point, La., of tax crimes, the Justice Department announced. Arceneaux, who owned and operated Speedy Cash Inc. in Gulfport, was convicted of all counts of the indictment charging him with corruptly interfering with the Internal Revenue laws and failing to file his income tax returns for 2003 and 2004.

U.S. District Judge Walter J. Gex III, scheduled sentencing for July 15, 2009. Arceneaux faces potential maximum sentences totaling five years’ in prison followed by one year of supervised release, $450,000 in criminal fines and costs of prosecution.

According to the indictment, Arceneaux, formerly of Long Beach, Miss., 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 Internal Revenue Service and an IRS employee, and Arceneaux filed false tax returns or amended tax returns for tax years 1998 through 2002 on which he falsely claimed he earned no income.

On July 12, 2004, U.S. District Judge Louis Guirola Jr. dismissed Arceneaux’s frivolous lawsuits. In those lawsuits, Arceneaux had asserted 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." In this criminal trial, Arceneaux testified that he relied upon the advice of a number of individuals, including Irwin Schiff, who is now serving time in prison for tax crimes.

"Honest, hard-working taxpayers have a right to expect that all will pay their fair share of taxes. Yesterday’s verdicts make it crystal clear that those thinking about avoiding their federal tax obligations should think twice," said John A. DiCicco, Acting Assistant Attorney General of the Justice Department’s Tax Division. "Together, the Justice Department and the I.R.S. are aggressively enforcing the federal tax laws."

"We should not forget that the ultimate victim of tax fraud is the honest taxpayer," said Eileen C. Mayer, Chief, Criminal Investigation, Internal Revenue Service. "The jury and the courts have once again held that there are no legal grounds for failure to file or pay your taxes."

Acting Assistant Attorney General DiCicco thanked Tax Division attorney Jed Silversmith and Assistant U.S. Attorney Mike Hurst, who prosecuted the case. He also thanked the Internal Revenue Service Criminal Investigation agents in the Gulfport office, who investigated the case.

Additional information about the Justice Department’s Tax Division and its enforcement efforts may be found at http://www.usdoj.gov/tax.

WASHINGTON – A former Jackson County, Mo., sheriff’s deputy was indicted on April 7, 2009, by a federal grand jury for violating the civil rights of a teenage girl whom he forced to perform sexual acts in his patrol car, the Justice Department announced.

The indictment alleges that Steven W. Burgess, 35, of Independence, Mo., then a deputy sheriff with the Jackson County Sheriff’s Department, while acting under color of law, deprived a minor child of her Constitutional rights on July 24, 2007. According to the indictment, Burgess violated the victim’s right not to be deprived of liberty without due process of law, which includes the right to bodily integrity. The indictment alleges that Burgess committed acts that include aggravated sexual abuse, using force against his victim and placing her in fear of death, serious bodily injury and kidnaping.

The indictment was returned by a federal grand jury in Kansas City. The charges contained in the indictment are simply accusations, and not evidence of guilt. Evidence supporting the charges must be presented to a federal trial jury, whose duty is to determine guilt or innocence.

This case is being prosecuted by Assistant U.S. Attorney K. Michael Warner and Eric L. Gibson, a trial attorney with the Criminal Section of the Civil Rights Division. It was investigated by the Jackson County, Mo., Sheriff’s Department and the Federal Bureau of Investigation.

WASHINGTON — Two Department of Defense (DOD) contractors were charged with conspiracy and bribery relating to their roles involving DOD contracts in Afghanistan, the Department of Justice today announced. A Lebanese contracting company is also charged with participating in the same conspiracy.

The criminal complaint, unsealed today and originally filed on April 3, 2009, in U.S. District Court in Alexandria, Va., charges Dinorah Cobos with bribery and conspiracy to commit bribery. Cobos, a U.S. citizen living in Dubai, United Arab Emirates, worked as a contractor with the U.S. Army Corps of Engineers at the Afghanistan Engineer District in Kabul, Afghanistan. The criminal complaint also charged Afghanistan Engineer District contractor Raymond Azar, a citizen of Lebanon, with conspiracy to commit bribery, and Sima Salazar Group, a Lebanese military contracting company, with bribery and conspiracy to commit bribery.

Cobos and Azar were located in Afghanistan at the time the charges were filed. They were taken into U.S. custody and transferred to the United States, with the authorization of Afghan authorities. Cobos and Azar made their initial appearance on Thursday, April 9, 2009, in front of U.S. Magistrate Judge T. Rawle Jones Jr., in Alexandria, Va.

According to the court documents, beginning in 2008, Cobos and Azar conspired to bribe a U.S. Army Corps of Engineers contracting officer in exchange for approval of payment of fraudulent invoices on contracts that Sima Salazar Group held with the U.S. Army Corps of Engineers in Afghanistan. The court documents allege that Cobos offered to pay the contracting officer up to 1.5 percent of any payments made by U.S. Corps of Army Engineers to Sima Salazar Group and that $16,789 in bribe money was, in fact, wired to the contracting officer in the United States.

"We will aggressively prosecute military contractors who attempt to bribe government officials in order to line their own pockets," said Scott D. Hammond, Acting Assistant Attorney General in charge of the Department’s Antitrust Division. "The alleged conduct is particularly egregious because the contracts at issue were intended to assist U.S. soldiers abroad serving their country."

"The FBI remains committed to ensuring a fair and honest procurement process," said Assistant Director Kenneth W. Kaiser of the FBI’s Criminal Investigative Division. "Working with our partners, we will continue to pursue all individuals who engage in bid rigging, bribery or other criminal conduct that impact our U.S. military operations and soldiers overseas."

"Today’s announcement is a testament to our solid and continued partnership with the Department of Justice and other law enforcement agencies in the fight against fraud and greed here and abroad," said Brig. Gen. Rodney Johnson, commander of the U.S. Army’s Criminal Investigation Command.

"The Department of Defense requires contractors to adhere to ethical standards designed to guarantee the integrity of the acquisition process," said Sharon Woods, Director of the Defense Criminal Investigative Service. "Individuals who engage in disreputable activity which compromises the process undermine principles of fair and open competition government agencies strive to support. The Defense Criminal Investigative Service remains committed to ensuring military contractors who engage in fraudulent activity are held firmly accountable."

"As part of its continuing work to prevent fraud, the Afghanistan Engineer District of the U.S. Army Corps of Engineers actively supported these agencies in their investigation. The developments of this case should serve as a warning to other contractors of the consequences they face for criminal actions aimed at the United States and the people of Afghanistan," said Col. Thomas E. O’Donovan, Commander of the Afghanistan Engineer District of the U.S. Army Corps of Engineers.

Cobos faces up to 15 years in prison and a fine of $250,000 or twice the thing of value offered for the bribery count, and Cobos and Azar each face up to five years in prison and a fine of $250,000 for the conspiracy count. Sima Salazar Group faces fines of up to $500,000 for bribery and $500,000 for conspiracy. The maximum fine for each of these violations may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

This case is being prosecuted by the Antitrust Division’s National Criminal Enforcement Section, with assistance from the Criminal Division’s Office of International Affairs and the U.S. Attorney’s Office for the Eastern District of Virginia. The investigation of this case is being conducted by the FBI’s Washington Field Office, U.S. Army Criminal Investigation Command, Defense Criminal Investigative Service, and members of the International Contract Corruption Task Force (ICCTF). The ICCTF is a joint law enforcement agency task force that seeks to detect, investigate and dismantle corruption and contract fraud resulting from U.S. Overseas Contingency Operations, including in Afghanistan, Iraq and Kuwait. Additional assistance was provided by the U.S. Army Corps of Engineers.

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, 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 bid rigging, bribery or other criminal conduct regarding DOD contracts is urged to call the Antitrust Division’s National Criminal Enforcement Section at 202-307-6694; the FBI at 800-225-5324; Defense Criminal Investigative Service at 800-424-9098 or [email protected]; or Army Criminal Investigation Division at www.cid.army.mil.

WASHINGTON — Three international airline companies —Luxembourg-based Cargolux Airlines International S.A., Japan-based Nippon Cargo Airlines Co. Ltd. (NCA), and Korea-based Asiana Airlines Inc. —have each agreed to plead guilty and pay criminal fines totaling $214 million for conspiring to fix prices in the air cargo industry. In addition, Asiana was charged with fixing the passenger fares charged on flights from the United States to Korea.

According to the charges filed today in the U.S. District Court for the District of Columbia, Cargolux engaged in a conspiracy in the United States and elsewhere to eliminate competition by fixing the cargo rates charged to customers for international air shipments, including to and from the United States, from as early as September 2001 and continuing until Feb. 14, 2006. The company has agreed to pay a $119 million criminal fine.

NCA engaged in a conspiracy to eliminate competition by fixing the cargo rates charged to customers in the United States and elsewhere for international air shipments, from in or about April 2000 until at least Feb. 14, 2006. NCA has agreed to pay a $45 million criminal fine.

Asiana engaged in a conspiracy to eliminate competition by fixing both cargo rates and passenger fares from at least as early as January 2000 until at least Feb. 14, 2006. Asiana has agreed to pay a $50 million criminal fine.

Under the plea agreements, which are subject to court approval, Cargolux, NCA and Asiana have agreed to cooperate with the Department’s ongoing investigation.

"Fifteen airlines and three executives have been prosecuted to date for their participation in price-fixing agreements that inflicted a heavy toll on American businesses and consumers as well as the global economy," said Scott D. Hammond, Acting Assistant Attorney General in charge of the Department’s Antitrust Division. "The Department will continue its investigation into this criminal conduct until all co-conspirators are brought to justice."

These cases arise from an ongoing investigation into the air transportation industry. Including Cargolux, NCA, and Asiana’s pleas, 15 companies have pleaded or agreed to plead guilty in the Justice Department’s investigation into price fixing in the air transportation industry. British Airways Plc, Korean Airlines Ltd, Qantas Airways Limited, Japan Airlines International Co. Ltd., Martinair Holland N.V., Cathay Pacific Airways Limited, SAS Cargo Group A/S, Société Air France and Koninklijke Luchtvaart Maatschappij N.V. (KLM Royal Dutch Airlines), LAN Cargo S.A., Aerolinhas Brasileiras S.A., and EL AL Israel Airlines Ltd. have also pleaded guilty. Additionally, three individuals have previously pleaded guilty for their involvement in the illegal activity. Collectively, the companies have paid or agreed to pay fines totaling more than $1.6 billion and all three executives have been sentenced to serve jail time.

Cargolux, NCA, and Asiana are charged with carrying out the air cargo price-fixing conspiracy with co-conspirators by:

• Participating in meetings, conversations and communications in the United States and elsewhere to discuss the cargo rates to be charged on certain routes to and from the United States;
• Agreeing, during those meetings, conversations and communications, on certain components of the air cargo rates to charge for shipments on certain routes to and from the United States;
• Levying cargo rates in the United States and elsewhere in accordance with the agreements reached; and
• Engaging in meetings, conversations and communications in the United States and elsewhere for the purpose of monitoring and enforcing adherence to the agreed-upon cargo rates.

In addition, Asiana is charged with carrying out the air passenger price-fixing conspiracy with co-conspirators by:

• Participating in meetings, conversations and communications in the United States to discuss wholesale and passenger fares to be charged on flights from the United States to Korea;
• Agreeing, during those meetings, conversations and communications, on the wholesale fares and passenger fares to charge on flights from the United States to Korea;
• Levying wholesale and passenger fares on flights from the United States to Korea in accordance with the agreements reached; and
• Engaging in meetings, conversations and communications in the United States for the purpose of monitoring and enforcing adherence to the agreed-upon passenger fares and wholesale fares.

Cargolux, NCA and Asiana are charged with price fixing in violation of the Sherman Act, a violation that carries a maximum fine of $100 million for corporations. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

The ongoing investigation is being conducted by the Antitrust Division’s National Criminal Enforcement Section, the Federal Bureau of Investigation (FBI), the Department of Transportation Office of Inspector General and the U.S. Postal Service Office of the Inspector General.

Anyone with information concerning price fixing or other anticompetitive conduct in the air transportation industry is urged to call the National Criminal Enforcement Section of the Antitrust Division at 202-307-6694 or the FBI Washington Field Office, Northern Virginia Resident Agency at 703-686-6000.

WASHINGTON - The Justice Department today announced the filing of a lawsuit and the settlement of its claims against Fort Bend County, Texas, alleging violations of the Voting Rights Act of 1965, as amended, and the Help America Vote Act (HAVA).

 

The complaint, which was filed in the U.S. District Court for the Southern District of Texas, alleges that Fort Bend County failed to implement an effective bilingual election program for Spanish-speaking voters in violation of 4(f)4 of the Voting Rights Act and that the county prevented eligible voters from receiving assistance from the persons of their choice. The complaint also alleges that Fort Bend County failed to offer eligible voters in federal elections the use of provisional ballots, and it failed to provide provisional voters information on whether their provisional ballots were counted.

 

"The Voting Rights Act requires Fort Bend County to provide meaningful and equal electoral access to its Hispanic citizens who have limited English proficiency. HAVA allows the use of provisional ballots by registered voters who find themselves inadvertently left off voting lists and requires a free mechanism by which voters can learn whether their provisional votes were counted and, if not, the reasons why," said Acting Assistant Attorney General Loretta King for the Civil Rights Division. "I am pleased that Fort Bend County officials have agreed to measures that will protect these important rights and will put in place important electoral safeguards."

 

The agreement, which must still be approved by a federal court, provides for trained bilingual election officials to be available at polling places where language assistance is needed. In addition, the county will train all poll officials and other election personnel present at the polls or early voting locations regarding the language assistance requirements of the Voting Rights Act and on the provisional balloting requirements of HAVA. The agreement also permits the Justice Department to monitor future elections in Fort Bend County.

 

 

Complaints about discriminatory voting practices may be reported to the Voting Section of the Justice Department's Civil Rights Division at 1-800-253-3931. More information about the Voting Rights Act and other federal voting laws is available on the Justice Department Web site at http://www.usdoj.gov/crt/voting .

WASHINGTON — The Justice Department announced today that it has entered into a consent decree with the City of Ecorse, Mich., that, if approved by the U.S. District Court for the Eastern District of Mich., will resolve the Department’s complaint against Ecorse filed in July 2008.

The complaint alleged that Ecorse discriminated against Katina Haynes and Tresa Thomas, two former employees of the city, on the basis of their gender in violation of Title VII of the Civil Rights Act of 1954, as amended (Title VII), among other ways, by subjecting them to sexual harassment by a male supervisor, and by failing or refusing to take appropriate action to prevent and promptly correct the harassment. Title VII prohibits discrimination in the workplace on the basis of race, color, sex, national origin and religion. The complaint was based on a charge of discrimination filed by Ms. Haynes with the Equal Employment Opportunity Commission.

Under the terms of the consent decree, Ecorse must distribute to all its employees copies of city policies prohibiting sex discrimination and the procedures by which its employees may submit complaints of sex discrimination. The city also must provide mandatory training to all its employees on Title VII’s prohibition against discrimination based on sex, the city’s policies prohibiting sex discrimination, and the procedures by which employees may submit complaints of sex discrimination. Further, Ecorse must pay Ms. Haynes $15,000 in compensatory damages; Ms. Thomas settled all her claims separately with the city.

"Women in the workplace have the right to earn a living without being subjected to sexual harassment, especially from their supervisors," said Loretta King, Acting Assistant Attorney General for the Civil Rights Division. "The Civil Rights Division is pleased that the City of Ecorse has adopted a policy against sex discrimination, agreed to provide training to its employees as to the requirements of Title VII, and provide Ms. Thomas with the relief to which she is entitled."

More information about Title VII and other federal employment laws is available on the Department of Justice Web site at http://www.usdoj.gov/crt/emp/index.html.

WASHINGTON – Acting Assistant Attorney General for Civil Rights Loretta King and Acting U.S. Attorney for the Southern District of Texas Tim Johnson today announced the arrest of a former trooper with the Texas Department of Public Safety who is charged with depriving multiple Latino motorists of their civil rights. According to the four count indictment returned by a federal Grand Jury in Corpus Christi, Texas, on April 8, 2009, Michael Anthony Higgins violated federal law by willfully stealing money from Latino motorists that he had stopped on the highway while working as a trooper.

"The brave work of our nation’s law enforcement officers must always be guided by adherence to the laws they are sworn to uphold," said Loretta King, Acting Assistant Attorney General for the Civil Rights Division. "The Civil Rights Division will vigorously investigate and prosecute allegations where a law enforcement officer may have violated the rights of an individual."

"Whenever a law enforcement officer uses his or her position to violate the rights of a victim, quick action will be taken by this office," said Tim Johnson, Acting U.S. Attorney for the Southern District of Texas. "When there are vulnerable victims as in this case, we will advocate for the strictest punishment allowed by law."

If convicted, Higgins faces a maximum sentence of up to four years in prison, restitution and a $400,000 fine. An indictment is merely an accusation, and a defendant is presumed innocent unless and until proven guilty.

The case was investigated by the FBI, the Texas Rangers and Officers of the Texas Department of Public Safety. The case is being prosecuted by Ruben Perez of the U.S. Attorney’s Office for the Southern District of Texas and Jim Felte from the Civil Rights Division.

WASHINGTON – Adam S. Pretti, 31, a former deputy with the Shelby County Sheriff’s Office, pleaded guilty today in federal court in Memphis, Tenn., to using excessive force during an encounter with a citizen, the Justice Department announced.

During his plea hearing, Pretti acknowledged that he abused his authority as a law enforcement officer when, in March 2006, he willfully and without justification used excessive force by striking a man in the head. Pretti came into contact with the man while responding to a residence in Cordova, Tenn. Pretti agreed that his conduct violated federal law and the constitutional rights of the victim.

"This former law enforcement officer betrayed his oath of office and committed a crime," said Acting Assistant Attorney General Loretta King, "and now justice has been served."

A sentencing date for Pretti is scheduled for July 6, 2009. Based on the terms of his plea agreement, Pretti faces a maximum sentence of 18 months in prison.

The Civil Rights Division is committed to the vigorous enforcement of every federal criminal civil rights statute, such as those laws that prohibit the willful use of excessive force or other acts of misconduct by law enforcement and other government officials. In FY2008, the Division filed the largest-ever number of federal criminal civil rights cases in a single year in the Criminal Section’s history, and the second-highest ever number of official misconduct prosecutions.

The case was investigated by the Tarnished Blue Task Force, a multi-agency task force led by the FBI and staffed with investigators from the Shelby County Sheriff’s Office, the Memphis Police Department and the Memphis office of the FBI. The case was prosecuted by Assistant U.S. Attorney Joseph Murphy of the U.S. Attorney’s Office for the Western District of Tennessee and Trial Attorney Erin Aslan of the Justice Department’s Civil Rights Division.

WASHINGTON - A federal court has barred a Chicago tax preparation firm, El Caminante, Inc. and its principal operator, Maria Colica, from preparing federal income tax returns claiming false tax credits, the Justice Department announced today. The company and Colica agreed to the injunction.

The Government civil injunction complaint filed in the case alleged that Colica fraudulently claimed fuel tax credits for customers who were not entitled to them. The fuel tax credit is available only to taxpayers who operate farm equipment or off-highway business vehicles. Colica allegedly claimed large credits by falsely reporting purchases of huge quantities of gasoline where, in most cases, the cost of the gasoline was greater than the customers’ annual income.

Fuel credit scams were on last year’s Internal Revenue Service’s list of the Dirty Dozen Tax Scams. In the past few years the Justice Department has obtained injunctions shutting down many tax preparers who claim the phony credits on customers’ returns.

Colica also claimed bogus earned income tax credits for her customers, according to the complaint. She allegedly claimed false filing statuses on her customers’ returns to enlarge the size of their credits.

Acting Assistant Attorney General John DiCicco thanked Justice Department trial attorney Grayson Hoffman and Shauna Henline of the Internal Revenue Service's Small Business/Self Employed Division for their efforts in obtaining these injunctions for the government.

In the past decade, the Justice Department’s Tax Division has obtained more than 380 injunctions against tax fraud promoters and dishonest tax return preparers. Information about these cases is available on the Justice Department’s Web site, as is information about the Justice Department’s Tax Division.

WASHINGTON – U.S. District Court Judge Robert W. Gettlemen entered an order barring tax preparers, Michael J. Singleton and his wife, Ladonna Singleton, from preparing federal tax returns for others, the Justice Department announced today. The court’s ruling came after the Singletons failed to defend against the government’s allegations.

The government alleged in its complaint that the Homewood, Ill., couple operated a tax return preparation service under the name ITA Services Inc. The government’s complaint states the Singletons prepared approximately 700 federal income tax returns during the years 2005 through 2007, many of which claimed fabricated or inflated deductions for their customers resulting in an understatement of their clients’ tax liabilities. As part of the scheme to reduce their customers’ tax liabilities, some returns prepared under Mr. Singleton’s preparer tax identification number allegedly contained false Schedule C businesses and false Schedule E rental properties.

The court’s order also requires the Singletons to provide the government with a list of everyone for whom they have prepared or helped to prepare a federal income tax return for the income tax years 2005 through 2008. Additionally, they are required to mail a copy of the complaint and the injunction order to all persons or entities for whom they have prepared tax returns or other federal tax documents since January 1, 2006.

Acting Assistant Attorney General John DiCicco thanked Justice Department trial attorney Lisa Bellamy and Agent Peter Chlimon of the Internal Revenue Service’s Abusive Tax Avoidance Transaction Group in Chicago for their efforts in obtaining this injunction for the government.

In the past decade, the Justice Department’s Tax Division has obtained more than 380 injunctions against tax fraud promoters and dishonest tax return preparers. Information about these cases is available on the Justice Department’s Web site, as is information about the Justice Department’s Tax Division.

WASHINGTON – Six former executives of an Orange County, Calif.-based valve company were charged today in connection with a conspiracy to secure contracts by paying bribes to officials of foreign state-owned companies as well as officers and employees of foreign and domestic private companies, Acting Assistant Attorney General Rita M. Glavin of the Criminal Division, U.S. Attorney Thomas P. O’Brien of the Central District of California and Joseph Persichini Jr., Assistant Director in Charge of the FBI’s Washington Field Office, announced. The contracts resulted in net profits to the company of approximately $46.5 million.

According to the indictment, the defendants allegedly engaged in a bribery conspiracy from approximately 1998 through 2007. In the period from 2003 through 2007, the defendants caused the valve company to pay approximately $4.9 million in bribes, in violation of the Foreign Corrupt Practices Act (FCPA), to officials of foreign state-owned companies and approximately $1.95 million in bribes, in violation of the Travel Act, to officers and employees of foreign and domestic privately owned companies. The alleged corrupt payments were made to foreign officials at state-owned entities including Jiangsu Nuclear Power Corp. (China), Guohua Electric Power (China), China Petroleum Materials and Equipment Corp., PetroChina, Dongfang Electric Corporation (China), China National Offshore Oil Corporation, Korea Hydro and Nuclear Power, Petronas (Malaysia), and National Petroleum Construction Company (United Arab Emirates). According to court documents, the valve company designs and manufactures service control valves for use in the nuclear, oil and gas, and power generation industries worldwide.

In total, the indictment alleges that from approximately 2003 through 2007, the defendants and others caused the valve company to make approximately 236 corrupt payments in more than 30 countries, which resulted in net profits to the valve company of approximately $46.5 million from sales related to those corrupt payments.

The six former executives charged in the indictment are:

• Stuart Carson, 70, of San Clemente, Calif., the former chief executive officer of the valve company, is charged with one count of conspiracy to violate the FCPA and the Travel Act, and two counts of violating the FCPA;
• Hong (Rose) Carson, 45, of San Clemente, Calif., the former director of sales for China and Taiwan of the valve company and Stuart Carson’s wife, is charged with one count of conspiracy to violate the FCPA and the Travel Act, five counts of violating the FCPA, and one count of destruction of records in connection with a matter within the jurisdiction of a department or agency of the United States;
• Paul Cosgrove, 61, of Laguna Niguel, Calif., the former director of worldwide sales for the valve company, is charged with one count of conspiracy to violate the FCPA and the Travel Act, six counts of violating the FCPA and one count of violating the Travel Act;
• David Edmonds, 56, of San Clemente, Calif., the former vice president of worldwide customer service at the valve company, is charged with one count of conspiracy to violate the FCPA and the Travel Act, three counts of violating the FCPA and two counts of violating the Travel Act;
• Flavio Ricotti, 47, of Italy, the former vice-president and head of sales for Europe, Africa and the Middle East, is charged with one count of conspiracy to violate the FCPA and the Travel Act, one count of violating the FCPA and three counts of violating the Travel Act; and
• Han Yong Kim, 47, of Korea, the former president of the valve company’s Korean office, is charged with one count of conspiracy to violate the FCPA and the Travel Act, and two counts of violating the FCPA.

The conspiracy count carries a maximum penalty of five years in prison and a fine of the greater of $250,000 or twice the value gained or lost. The FCPA counts each carry a maximum penalty of five years in prison and a fine of the greater of $100,000 or twice the value gained or lost. The Travel Act counts each carry a maximum penalty of five years in prison and a fine of the greater of $250,000 or twice the pecuniary gain or loss. The destruction of records count carries a maximum penalty of 20 years in prison and a fine of $250,000.

In related cases, two defendants previously pleaded guilty to conspiring to bribe officers and employees of foreign state-owned companies on behalf of the Orange County valve company. On Jan. 8, 2009, Mario Covino, the former director of worldwide factory sales for the valve company, pleaded guilty to one count of conspiracy to violate the FCPA and admitted to causing the payment of approximately $1 million in bribes to officers and employees of several foreign state-owned companies. On Feb. 3, 2009, Richard Morlok, the former finance director for the valve company, pleaded guilty to one count of conspiracy to violate the FCPA and admitted to causing the payment of approximately $628,000 in bribes to officers and employees of several foreign state-owned companies. Sentencing for both Covino and Morlok is scheduled for July 20, 2009.

The case is being prosecuted by Assistant Chief Hank Bond Walther and Trial Attorney Andrew Gentin of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Douglas McCormick of the U.S. Attorney’s Office for the Central District of California. The case was investigated by the FBI’s Washington Field Office, and its team of special agents dedicated to the investigation of foreign bribery cases.

An indictment is merely an accusation and the defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.

Indictment

WASHINGTON – Two former senior executives of CSK Auto Corp. (CSK), have been charged in a 31-count indictment for a scheme to manipulate the company’s reported earnings, Acting Assistant Attorney General Rita M. Glavin of the Criminal Division announced today.

The indictment, returned on April 7, 2009, by a federal grand jury in Phoenix, charges Martin G. Fraser, 53, of Glendale, Ariz., and Don W. Watson, 53, of Gilbert, Ariz., with conspiracy, securities fraud, mail fraud, false filings with the U.S. Securities and Exchange Commission (SEC), false books and records, and false statements to its auditor. Watson is charged separately with falsely certifying financial reports.

Fraser, the former president and chief operating officer, and Watson, the former chief financial officer, allegedly engaged in a scheme from 2001 to 2006 to misstate CSK’s income by, primarily, concealing that the company had tens of millions of dollars of uncollectible receivables that it should have written off. Uncollectible receivables are funds that a company reports as income because it expects to collect the funds, but later determines the funds not to be collectable. According to the indictment, during the scheme, CSK operated under the brand names Checker Auto Parts, Schucks Auto Supply and Kragen Auto Parts. At the time the alleged earnings manipulation occurred, CSK was the largest specialty retailer of auto parts and accessories in the western United States and one of the largest such retailers in the entire United States.

According to the indictment, CSK purchased hundreds of millions of dollars worth of auto parts every year, and its vendors gave CSK allowances, or rebates, for products CSK purchased in exchange for CSK using the allowances, generally, for marketing of the vendors’ products for sale in its stores. The vendor allowances reduced CSK’s expenses and thus increased its income. As the indictment alleges, instead of writing off these uncollectible receivables, the conspirators concealed them by moving vendor allowance collections from later years to cover the shortfalls in prior years; by moving uncollectible receivable balances to subsequent years to hide them; and by billing vendors to try to collect allowances CSK was not owed.  As a result of the scheme, CSK allegedly misstated its receivables and pre-tax income in its annual reports (Forms 10-K) in fiscal years 2002, 2003 and 2004 by approximately $10 million, $24 million and $19 million, respectively.

The conspiracy charge carries a maximum penalty of five years in prison and a $250,000 fine. Each charged count of securities fraud, false filings, false books and records, and false statements to auditors carries a maximum penalty of 20 years in prison and a $5 million fine. Each charged count of mail fraud carries a maximum prison sentence of 20 years and a $250,000 fine. Each charged count of falsely certifying financial reporters carries a maximum penalty of 10 years in prison and a $1 million fine.

In related actions, Edward William O’Brien III, the former controller of CSK, pleaded guilty on April 7, 2009, to obstruction of justice. According to court documents, in approximately summer 2006, O’Brien corruptly made material false statements and omitted material information during an internal investigation interview in order to influence, obstruct and impede the SEC’s investigation. O’Brien admitted that at the time of the interview, he knew the SEC was investigating allegations of fraud in connection with financial disclosures by his employer. A sentencing date has not yet been set for O’Brien. In addition, a criminal information was unsealed on April 7, 2009, against Gary Michael Opper, the former director of credits and receivables at CSK, charging him with obstruction of justice. In another related action, the SEC filed a civil enforcement action against Fraser, Watson, O'Brien and Opper on March 5, 2009.

An indictment is merely an accusation, and the defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.

The case is being prosecuted by Senior Trial Attorney Patrick Stokes and Trial Attorney Andrew Warren of the Criminal Division’s Fraud Section. The case is being investigated by the FBI, the IRS-Criminal Investigation and the U.S. Postal Inspection Service. The Department of Justice acknowledges the SEC’s substantial assistance in its investigation.

WASHINGTON — A former owner of an asbestos monitoring contractor that provided services to New York Presbyterian Hospital (NYPH) pleaded guilty today for making false statements to FBI agents and representatives of the Department’s Antitrust Division, the Department of Justice today announced.

Stephen E. McAnulty, of Brooklyn, N.Y., pleaded guilty in U.S. District Court in Manhattan, for lying about his knowledge of a kickback and fraud conspiracy that took place at NYPH.

According to the charge, on Nov. 20, 2007, during an interview with agents of the FBI and representatives of the Antitrust Division, McAnulty falsely claimed that he was not aware that any purchasing official at NYPH received kickbacks in return for asbestos monitoring and asbestos removal contracts at NYPH. In fact, at the direction of the owner of an asbestos removal company, McAnulty negotiated the amount of the kickbacks with a purchasing official in order for McAnulty’s company to be the asbestos monitoring company at NYPH. McAnulty understood that the kickbacks to that purchasing official totaled at least $28,000, the Department said.

"This criminal charge serves to underscore the seriousness with which the Justice Department views attempts to compromise the integrity of our investigations," said Scott D. Hammond, Assistant Attorney General in charge of the Department’s Antitrust Division. "Today’s filing should send a clear signal that the Division is, and will continue to be, committed to prosecuting these violations."

The crime that McAnulty is charged with carries a maximum penalty of five years in prison, three years of supervised release and a $250,000 fine. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

In April 2007, as part of the same investigation, Michael Theodorobeakos and two maintenance and insulation companies he co-owned —Monosis Inc. and STU Associates Inc. —pleaded guilty to conspiring to rig bids on the supply of maintenance and insulation services to NYPH and Mount Sinai Medical Center (Mount Sinai). In addition, Michael Vignola and Mister AC Ltd. pleaded guilty in November 2007 to conspiring to rig bids on heating, ventilation and air conditioning services provided to NYPH and paying kickbacks to former NYPH purchasing officials. In April 2008, Aaron S. Weiner pleaded guilty for participating in a conspiracy wherein Weiner acted as a conduit in another million-dollar kickback scheme also involving one of the same former NYPH purchasing officials involved with the Vignola kickback schemes. On March 25, 2009, Mariusz Debowski pleaded guilty to participating in a conspiracy at NYPH to defraud the Internal Revenue Service. Krzysztof Koczon pleaded guilty to participating in that same tax fraud conspiracy on April 2, 2009.

Today’s charge arose from an ongoing federal antitrust investigation of fraud, bribery, tax-related offenses and bidding irregularities relating to contracts administered by the Facilities Operations Department and Engineering Department at NYPH and in the Engineering Department at Mount Sinai. The investigation is being conducted by the Antitrust Division’s New York Field Office, the FBI and the Internal Revenue Service Criminal Investigation’s New York Field Office.

Anyone with information concerning bid rigging or other fraudulent conduct relating to contracts administered by the Facilities Operations Department at NYPH or the Engineering Department at NYPH or Mount Sinai should contact the New York Field Office of the Antitrust Division at 212-264-9308 or the New York Office of the FBI at 212-384-4467.

WASHINGTON — Attorney General Eric Holder today announced that he will appoint Kenneth E. Melson to serve as acting head of the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), H. Marshall Jarrett to head the Executive Office for United States Attorneys (EOUSA), and Mary Patrice Brown to serve as acting head of the Office of Professional Responsibility (OPR).

"These extremely experienced and capable long time career prosecutors are uniquely qualified to lead these important offices," said Attorney General Holder. "I am pleased that these dedicated public servants, Ken, Marshall, and Mary Pat, have accepted their new challenges with enthusiasm. I know that they will lead their new offices with their usual high standards of professionalism, integrity and dedication."

The Bureau of Alcohol, Tobacco, Firearms and Explosives, is one of the Department’s principal law enforcement agencies dedicated to preventing terrorism, reducing violent crime and enforcing federal criminal laws and regulations in the firearms and explosives industries.

Since 2007, Melson has been the Director of the Executive Office for U.S. Attorneys. Previous to that, he was the First Assistant for the U.S. Attorneys Office for the Eastern District of Virginia. From 1991 to 2001, Melson served as Acting and Interim U.S. Attorney of that office during various periods of time. He began his career as a federal prosecutor in the Eastern District of Virginia in 1983 where he was an Assistant U.S. Attorney until he became First Assistant in 1986.

From 1975 to 1983, Melson served in different positions for the Commonwealth’s Attorney, Arlington County, Va. From 1980 to 1983, he was the Deputy Commonwealth’s Attorney, from 1978 to 1980, he was the Chief Assistant, and from 1975 to 1978 he was an Assistant. He served in private law practice in Arlington, Va., from 1974 to 1975.

Melson is a past President and Distinguished Fellow of the American Academy of Forensic Sciences, and currently participates on behalf of the Department on the American Society of Crime Laboratory Directors/Laboratory Accreditation Board. He has been an adjunct professor at George Washington University for almost 30 years teaching both law and forensic science courses.

Melson received his B.A. from Denison University in 1970 and his J.D. from George Washington University in 1973.

"Ken’s more than 25 years of career federal prosecutor service and his knowledge in forensic science will make him a valuable asset to ATF," said Attorney General Holder. "I am pleased that he will provide his talents to such an important Department of Justice agency."

"As the head of ATF, I am looking forward to using my management and prosecutorial experience, as well as my knowledge of crime labs and forensic science to combat violent crime," said Melson.

The Executive Office for U.S. Attorneys acts as a liaison between the Department and the 94 U.S. Attorneys offices throughout the 50 states, the District of Columbia, Guam, the Marianas Islands, Puerto Rico and the U.S. Virgin Islands.

Since 1998, Marshall Jarrett has been the Counsel for Professional Responsibility. Prior to directing OPR, in1997, Jarrett served in the Office of the Deputy Attorney General as an Associate Deputy Attorney General participating in the formulation of federal criminal law enforcement policy and supervising the prosecution of corrupt officials, violent drug gangs, white collar criminals, and international terrorists. In 1988, he served in the U.S. Attorney’s Office for the District of Columbia as Chief of the Criminal Division. In 1980, he joined the Public Integrity Section of the Department of Justice and rose to become a Deputy Chief. He joined the U.S. Attorney’s Office for the Southern District of West Virginia in 1975, as a trial attorney and ascended to the office’s Criminal Chief and First Assistant.

From 1979 to1980, Jarrett worked at the Commodity Futures Trading Commission as Deputy Director of the Enforcement Division, and as a Deputy Attorney General for the Commonwealth of Pennsylvania from 1973 to 1975. He is the recipient of the Edmund J. Randolph Award for outstanding service to the Department of Justice. Jarrett received his B.S. in 1966 from West Virginia University and his J.D. from West Virginia University College of Law in 1969.

"I have had the privilege of working with Marshall over the years and I have the highest regard for his experience, talents and capabilities," said Attorney General Holder. He has been a tremendous leader in OPR, and I believe that his more than 30 years of career prosecutorial and legal experience, his leadership skills and the respect he receives from his colleagues, make him the ideal individual to oversee the 94 U.S. Attorneys offices at this time."

"I am honored to serve with Attorney General Holder, and I am looking forward to this exciting challenge with the opportunity to build and work with the U.S. Attorney team, offer my unique perspective from working in various positions within the Department, and providing legal advice to the 94 offices," said Jarrett.

The Office of Professional Responsibility is responsible for investigating allegations of professional misconduct involving Department attorneys.

Mary Patrice Brown has been with the U.S. Attorney’s Office of the District of Columbia since 1989. She became the Chief of the office’s Criminal Division in 2007, where she oversaw all aspects of prosecuting criminal cases in the U.S. District Court for the District of Columbia. In that capacity, she supervised 80 attorneys and five sections, including National Security, Fraud and Public Corruption, Organized Crime and Narcotics Trafficking, Asset Forfeiture, and Major Crimes. From 2004 to 2007, Brown was the Executive Assistant U.S. Attorney Operations where she managed and directed the oversight of significant civil and criminal cases and special operations. As Deputy Chief of the Fraud and Public Corruption Section (2002-2004), she oversaw allegations of criminal misconduct by police officers, public officials, and attorneys. She was the Deputy Chief of the Appellate Division (1997-2002), and was an Assistant U.S. Attorney from 1989 to 1997.

During her tenure at the U.S. Attorney’s Office for the District of Columbia, Brown served on the D.C. Circuit’s Committee on Admissions and Grievances for four years, investigating on behalf of the D.C. Circuit allegations of misconduct by attorneys licensed to practice in the Circuit. She also served as one of the office’s Professional Responsibility Officers, and on the "Lewis Committee," which reviews allegations of police misconduct for purposes of Brady and Giglio disclosures.

Previous to her work at the Department, Brown was a litigation associate at the Washington, D.C. office of Dickstein, Shapiro & Morin (now Dickstein Shapiro) from 1984 to 1989.

Brown received her B.S. in Foreign Service from Georgetown University in 1978 and her J.D. from Georgetown Law Center in 1984.

"Mary Pat has a stellar reputation and the highest integrity," said Attorney General Holder. "I have had the privilege of working alongside of Mary Pat in the U.S. Attorney’s office for the District of Columbia and she can always be counted on to do what’s right. I trust her sense of fairness and judgment implicitly."

"I am honored that Attorney General Holder would grant me the opportunity to use my years of experience as an Assistant U.S. Attorney and supervisor to provide guidance and leadership to my colleagues in the Department and in the field as we work together to maintain the highest standards of professional conduct," said Brown.

WASHINGTON – A physicist in Newport News, Va., was sentenced to 51 months in prison today for illegally exporting space launch technical data and defense services to the People’s Republic of China (PRC) and offering bribes to Chinese government officials.

The sentence was announced today by Dana Boente, Acting U.S. Attorney for the Eastern District of Virginia; David Kris, Assistant Attorney General for National Security; Rita M. Glavin, Acting Assistant Attorney General of the Criminal Division; Arthur M. Cummings, II, Executive Assistant Director, FBI National Security Branch; and Alex J. Turner, Special Agent-in-Charge, FBI Norfolk Division.

Shu Quan-Sheng (Shu), 68, a native of China, naturalized U.S. citizen and Ph.D. physicist, was sentenced by Judge Henry C. Morgan, Jr. in U.S. District Court for the Eastern District of Virginia, Norfolk Division. Shu has already forfeited $386,740 to the federal government in connection with the case.

Shu is the President, Secretary and Treasurer of AMAC International Inc. (AMAC), a high-tech company that is based in Newport News and has offices in Beijing. AMAC performs research through grants funded by the Small Business Research program on behalf of the Department of Energy and the National Aeronautics and Space Administration (NASA).

On Nov. 17, 2008, Shu pleaded guilty to a three-count criminal information. Count one alleges that from January 2003 through October 2007, Shu violated the Arms Export Control Act by willfully exporting a defense service from the United States to the PRC without first obtaining the required export license or written approval from the State Department.

Specifically, Shu provided the PRC with assistance in the design and development of a cryogenic fueling system for space launch vehicles to be used at the heavy payload launch facility located in the southern island province of Hainan, PRC. The space launch facility at Hainan will house liquid-propelled heavy payload launch vehicles designed to send space stations and satellites into orbit, as well as provide support for manned space flight and future lunar missions, according to a criminal complaint filed in the case. Among those PRC government entities involved in the Hainan facility are the People's Liberation Army's General Armaments Department and the 101st Research Institute (101 Institute), which is one of many research institutes that make up the China Academy of Launch Vehicle Technology, as overseen by the Commission of Science Technology and Industry for the National Defense.

Count two of the criminal information alleges that on Dec. 20, 2003, Shu violated the Arms Export Control Act by willfully exporting a defense article to the PRC without first obtaining the required export license or written approval from the State Department. Specifically, Shu illegally exported to the PRC controlled military technical data contained in a document entitled "Commercial Information, Technical Proposal and Budgetary Officer – Design, Supply, Engineering, Fabrication, Testing & Commissioning of 100m3 Liquid Hydrogen Tank and Various Special Cryogenic Pumps, Valves, Filters and Instruments."

Count three of the criminal information alleges that Shu offered, paid, promised and authorized the payment of bribes to Chinese government officials to influence their decisions and secure an improper advantage, in violation of the Foreign Corrupt Practices Act. Specifically, Shu, acting on behalf of his company, AMAC, and a French company he represented, offered to pay money to foreign officials of the PRC’s 101 Institute to obtain a contract for the development of a 600 liter per hour liquid hydrogen tank system, according to the information.

The criminal information indicates that Shu offered money on three occasions to three PRC officials with the 101 Institute to secure the contract. In February 2006, he offered "percentage points" worth approximately $56,800. In April 2006, he offered "percentage points" worth some $56,800, and in May 2006, he offered "percentage points" worth approximately $75,700, for a total of $189,300, according to the criminal information. In January 2007, the $4 million hydrogen liquefier project was awarded to the French company that Shu represented.

This investigation was conducted by the FBI, with assistance from U.S. Immigration and Customs Enforcement and the U.S. Department of Commerce, Office of Export Enforcement.

The prosecution is being handled Assistant U.S. Attorney Alan M. Salsbury from the U.S. Attorney’s Office for the Eastern District of Virginia and Assistant Chief Robertson Park from the Criminal Division’s Fraud Section. The Counterespionage Section of the Justice Department’s National Security Division provided critical assistance.

 

WASHINGTON – Latin Node Inc. (Latinode), a privately held Florida corporation, pleaded guilty today to violating the Foreign Corrupt Practices Act (FCPA) in connection with improper payments in Honduras and Yemen, Acting Assistant Attorney General Rita M. Glavin of the Criminal Division announced.

At a hearing before U.S. District Judge Paul Courtney Huck in the Southern District of Florida, Latinode pleaded guilty to a one-count information charging a criminal violation of the FCPA’s anti-bribery provisions. As part of the plea agreement, Latinode agreed to pay a $2 million fine during a three-year period.

According to court documents, Latinode provided wholesale telecommunications services using Internet protocol technology in a number of countries throughout the world, including Honduras and Yemen. In plea documents, Latinode admitted that from approximately March 2004 through June 2007, it paid or caused to be paid approximately $1,099,889 in payments to third parties, knowing that some or all of those funds would be passed on as bribes to officials of Hondutel, the Honduran state-owned telecommunications company. Latinode admitted it made these payments in exchange for obtaining an interconnection agreement with Hondutel, as well as for reducing the rate per minute under the interconnection agreement. According to court documents, each of the payments was made from Latinode’s Miami bank account, and each payment was approved by senior executives of Latinode. The payment recipients included, but were not limited to, a member of the evaluation committee responsible for awarding Hondutel interconnection agreements, the deputy general manager (who later became the general manager) of Hondutel and a senior attorney for Hondutel.

In addition, from approximately July 2005 to April 2006, court documents show that Latinode made 17 payments totaling approximately $1,150,654 to a third-party consultant with the knowledge that some or all of the money would be passed on to Yemeni officials in exchange for favorable interconnection rates in Yemen. Each of those payments was made from Latinode’s Miami bank account. According to court documents, company e-mails indicate that company executives believed potential payment recipients included Yemeni government officials.  Court documents do not allege or refer to evidence showing that the son of the Yemeni president received any payments from Latin Node.  No foreign government officials are the subjects of U.S. investigations of this matter.

The resolution of the criminal investigation of Latinode reflects, in large part, the actions of Latinode’s corporate parent, eLandia International Inc. (eLandia), in disclosing potential FCPA violations to the Department after eLandia’s acquisition of Latinode and post-closing discovery of the improper payments. eLandia’s counsel voluntarily disclosed the unlawful conduct to the Department promptly upon discovering it; conducted an internal FCPA investigation; shared the factual results of that investigation with the Department; cooperated fully with the Department in its ongoing investigation; and took appropriate remedial action, including terminating senior Latinode management with involvement in or knowledge of the violations.

The case is being prosecuted by Trial Attorney Lori A. Weinstein of the Criminal Division’s Fraud Section. The case was investigated by the FBI’s Miami Field Office, and U.S. Immigration and Customs Enforcement, Miami Field Office.

WASHINGTON—Consultores De Navegacion, a Spanish company that operates the M/T Nautilus, an ocean-going chemical tanker ship, pleaded guilty today in U.S. District Court in Boston and has agreed to pay a fine of $2.5 million for criminal violations related to the overboard discharge of oil-contaminated bilge waste on the high seas, the Justice Department announced.

The company pleaded guilty to conspiracy, falsification of records, false statements, obstruction, and two violations of the Act to Prevent Pollution from Ships for failing to maintain an accurate oil record book. The practice of improperly handling and disposing of oil-contaminated waste from the tanker as charged in the indictment took place from at least June 2007 until March 2008.

As part of the plea agreement, Consultores De Navegacion will serve three years of probation and implement a comprehensive environmental compliance plan to ensure there are no future violations of the law. The charges against Cyprus-based Iceport Shipping Co., the owner of the ship, have been dismissed. U.S. District Court Judge Douglas P. Woodlock scheduled sentencing for June, 30, 2009.

Engine room operations on board large oceangoing vessels such as the M/T Nautilus 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. Federal law also requires ships to accurately record each disposal of oil-contaminated bilge water in an oil record book and to have the Oil Record Book available for inspection by the U.S. Coast Guard within the internal waters of the United States.

According to the government, between June 2007 and March 2008, senior engineers on the M/T Nautilus directed subordinate engine room crew members to use a metal pipe to bypass the ship’s oil water separator and instead to discharge oil-contaminated waste directly overboard. On two occasions in August 2007, Vadym Tumakov, a Ukrainian who at that time served as chief engineer of the M/T Nautilus, directed the discharge of pollution overboard. In addition, in February 2008, Carmelo Oria, a Spanish citizen who served as chief engineer at that time, directed a discharge directly overboard from the ship’s bilge wells.

The government’s investigation began in March 2008, when inspectors from the U.S. Coast Guard conducted an examination of the M/T Nautilus, following the ship’s arrival in St. Croix, U.S. Virgin Islands, and subsequently in the Port of Boston. The inspections uncovered evidence that crewmembers aboard the ship had improperly handled and disposed of the ship’s oil-contaminated bilge water and falsified entries in the ship’s official oil record book to conceal these activities.

Oria, who was the chief engineer on the M/T Nautilus between January and March 2008 pleaded guilty on March 9, 2009, to maintaining an oil record book that concealed the improper discharge of untreated waste directly from the ship’s bilges. Vadym Tumakov, who was the chief engineer on the M/T Nautilus in August 2007 pleaded guilty to using falsified records that concealed improper discharges of oil-contaminated bilge waste from the ship. They are both scheduled to be sentenced on April 13, 2009 and face up to 6 years in prison, three years of supervised release and a fine of up to $250,000.

As chief engineers, Oria and Tumakov were responsible for all engine room operations. Charges against Tumakov were originally filed in the District of New Jersey and the case was subsequently transferred to the District of Massachusetts.

"Corporate entities and individual crewmembers that deliberately bypass required environmental controls and pump untreated bilge water directly into the ocean should expect to be investigated and prosecuted. Consultores De Navegacion violated the law and today they are facing the consequences," said John C. Cruden, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. "As long as individuals and maritime companies ignore this nation’s environmental laws, the Justice Department will continue to bring cases and seek justice for those involved."

"We remain committed to protecting our precious natural resources, and hope that today’s conviction sends a clear message to everyone in the worldwide maritime community that the Government will investigate and prosecute anyone who attempts to circumvent our nation’s anti-pollution laws," said U.S. Attorney Michael J. Sullivan.

"This is a clear victory in our ongoing effort to stop intentional or negligent pollution and ensure those responsible are brought to justice," said Rear Admiral Dale G. Gabel, Commander of the First Coast Guard District in Boston, MA. "The Coast Guard remains committed to working with the maritime industry and federal, state and local law enforcement partners to protect the environmental resources of our nation."

The case was investigated by the U.S. Coast Guard, Coast Guard Investigative Service. It was prosecuted by Assistant U.S. Attorney Linda M. Ricci of the U.S. Attorney’s Economic Crimes Unit, Trial Attorney Todd Mikolop of the Justice Department’s Environmental Crimes Section, and Special Assistant U.S. Attorney Christopher Jones of the U.S. Coast Guard First District Legal Office.

WASHINGTON – An Iranian national has been arrested and charged, along with ten other defendants, with participating in a conspiracy to export U.S.-made military aircraft parts to Iran, the Justice Department announced today.

The arrest and indictment were announced by R. Alexander Acosta, U.S. Attorney for the Southern District of Florida; David Kris, Assistant Attorney General for National Security; Michael Johnson, Special Agent in Charge, U.S. Department of Commerce, Office of Export Enforcement; Anthony V. Mangione, Special Agent in Charge, U.S. Immigration and Customs Enforcement, Office of Investigations; Amie R. Tanchak, Resident Agent in Charge, U.S. Department of Defense, Defense Criminal Investigative Service; and James M. Foster, Special Agent in Charge, U.S. Department of State, Diplomatic Security Service.

Defendant Baktash Fattahi, an Iranian national and legal U.S. resident, was arrested in California, on April 3, 2009, on charges of conspiring to export military aircraft parts to Iran.  Federal agents arrested Fattahi at his apartment in Lancaster, Calif.  He remains in federal custody in California and will be removed to Miami to face the charges in the Indictment. 

Baktash Fattahi and ten other defendants were indicted on April 2, 2009, by a federal grand jury sitting in Miami on charges of conspiring to violate the International Emergency Economic Powers Act, the U.S. Iran Embargo, and the Arms Export Control Act for their participation in a conspiracy to export U.S.-made military aircraft parts to Iran. 

The other defendants charged in the indictment are Amir Hosein Atabaki, an Iranian national; Mohammad Javad Mohammad Esmaeil, an Iranian national; Abbas Haider, an Indian citizen residing in Dubai; Mohammed Javid Yahya Saboni, an Iranian national residing in Dubai; Reza Zahedi Pour, an Iranian national; Mahdi Electronic Trading Co, an Iranian business; Planet Commercial Brokerage, a Dubai business; Raht Aseman Co, Ltd, an Iranian business; Sahab Phase, an Iranian business; and Sea Speed UAE, a Dubai business.

The Arms Export Control Act prohibits the export of military items designated as "defense articles" on the U.S. Munitions List (USML) without a license or authorization from the Department of State, Directorate of Defense Trade Controls (DDTC).

The U.S. Iran Embargo (the Embargo) prohibits the exportation from the United States to Iran of any goods, technology, or services, with limited exceptions, unless authorized by the Department of Treasury, Office of Foreign Assets Controls (OFAC).  The Embargo is enforced through the International Emergency Economic Powers Act (IEEPA).

According to the indictment, the defendants conspired to and did export thirteen different types of aircraft parts designated as defense articles on the USML from the United States to Iran by way of Dubai, United Arab Emirates.  Among the aircraft parts the defendants are alleged to have obtained and illegally shipped to buyers in Iran are parts for the F-5 ("Tiger") Fighter Jet, the Bell AH-1 ("Cobra") Attack Helicopter, the CH-53 Military Helicopter, the F-14 ("Tomcat") Fighter Jet, and the UH-1 ("Huey") Military Helicopter. 

All of these aircraft are known to be used primarily, if not exclusively, by the Iranian military.  Moreover, all of the military parts exported by the defendants are manufactured in the United States, are designed exclusively for military use, and have been designated by the U.S. Department of State as "defense articles" on the USML, thus requiring registration and licensing with the DDTC.  None of the defendants are registered or had the required license to ship defense articles to Iran.

According to the Indictment, defendants in Iran sent orders by email to a co-conspirator in Novato, Calif., for specific aircraft parts.  The co-conspirator in Calif. then requested quotes, usually by e-mail, from another co-conspirator in Plantation, Fla., and made arrangements with that co-conspirator in Plantation for the sale and shipment of the parts to one of several defendants in Dubai.  From Dubai, the parts were then shipped on to Iran.

If convicted, the defendants face statutory maximum sentences ranging from ten years’ imprisonment to twenty years’ imprisonment, and face fines of up to $1 million.

Mr. Acosta commended the U.S. Department of Commerce, Office of Export Enforcement; U.S. Immigration and Customs Enforcement, Office of Investigations; the U.S. Department of Defense, Defense Criminal Investigative Service; and the U.S. Department of State, Diplomatic Security Service, for their work on this investigation.  Acosta also thanked the Office of Foreign Assets Control (OFAC) and the U.S. Department of State, Directorate of Defense Trade Controls, for their assistance in this matter.  The case is being prosecuted by Assistant U.S. Attorney Melissa Damian.

WASHINGTON – Today, Jorge Flores-Rojas, 44, an undocumented Mexican national, was sentenced to 24 years in prison by Chief Judge Robert J. Conrad, Jr. in Charlotte, N.C., for two counts of sex trafficking of minors and one count of interstate transportation of an adult for purposes of commercial sex, announced Acting Assistant Attorney General Rita M. Glavin of the Criminal Division and Acting U.S. Attorney Edward R. Ryan of the Western District of North Carolina.

Flores-Rojas pled guilty to the charges on Oct. 7, 2008.

According to testimony at today’s sentencing hearing, in approximately November 2007, Flores-Rojas trafficked a 16-year-old girl between Washington, D.C., and Charlotte for the purpose of causing her to engage in commercial sex acts in the Charlotte area. According to the testimony, the defendant forced the victim, an undocumented Honduran national, to go to Charlotte with him. Also according to the testimony, the defendant repeatedly sexually and physically abused her in order to force her to perform commercial sex acts.

Testimony at the hearing also revealed that in approximately November 2007, Flores-Rojas trafficked a 17-year-old girl and an adult woman between Charlotte and Washington, D.C., for the purpose of causing them to engage in commercial sex acts in the Washington area. Flores-Rojas had previously paid other persons to smuggle these victims from Mexico into the United States, testimony indicated.

In addition to the sentence of 24 years in prison, the court ordered Flores-Rojas to pay $117,000 in restitution to one of the victims, and he will be required to register as a sex offender for the rest of his life. Flores-Rojas will be deported to Mexico upon his release from prison.

The case was prosecuted by Trial Attorney Elizabeth Yusi of the Criminal Division’s Child Exploitation and Obscenity Section and Assistant U.S. Attorneys Kenny Smith and Cortney Escaravage of the Western District of North Carolina. Assistance was provided by Trial Attorney Kayla Bakshi and Special Litigation Counsel Hilary Axam of the Civil Rights Division’s Human Trafficking Prosecution Unit, as well as Assistant U.S. Attorney Catherine Connelly of the District of Columbia. The case was investigated by U.S. Immigration and Customs Enforcement, the Washington Metropolitan Police Department and the Myrtle Beach, S.C., Police Department.

 

WASHINGTON - The Justice Department today announced that on April 7, 2009, it will monitor the election in Kane County, Ill., to ensure compliance with the Voting Rights Act of 1965, as amended.

Under the Voting Rights Act, the Justice Department is authorized to ask the Office of Personnel Management to send federal observers to areas that are specially covered in the act or by a federal court order. Federal observers will be assigned to monitor polling place activities in Kane County pursuant to a federal court order entered in 2007. The observers will watch and record activities during voting hours at polling locations in this county, and Civil Rights Division attorneys will coordinate the federal activities and maintain contact with local election officials.

Each year, the Justice Department deploys hundreds of federal observers from the Office of Personnel Management, as well as departmental staff, to monitor elections across the country. In calendar year 2008, for example, 1,060 federal observers and 344 Department personnel were sent to monitor 114 elections in 75 jurisdictions in 24 states. To file complaints about discriminatory voting practices, including acts of harassment or intimidation, voters may call the Voting Section of the Justice Department’s Civil Rights Division at 1-800-253-3931.

More information about the Voting Rights Act and other federal voting laws is available on the Department of Justice Web site at http://www.usdoj.gov/crt/voting/index.htm.

WASHINGTON — A former senior executive of Bristol-Myers Squibb Company (BMS), Andrew Bodnar, pleaded guilty for his role in BMS’s dishonest dealings with the federal government relating to a patent deal involving the popular blood-thinning drug Plavix, the Department of Justice announced today. This plea agreement follows BMS’s June 11, 2007, agreement to plead guilty and pay a $1 million criminal fine – the maximum fine permitted by statute – for misleading the government about the Plavix patent deal. The Department said that the illegal actions of BMS and its executive threatened to reduce competition that could have lowered the cost of blood-thinning drugs sold to heart attack, stroke and other patients.

According to the court papers filed today in the U.S. District Court for the District of Columbia, in 2006, BMS and another company, Apotex, were engaged in litigation over the validity of the patent for Plavix and were negotiating a settlement of that litigation. At the time, BMS was subject to a separate consent decree – for unrelated conduct – with the Federal Trade Commission (FTC) requiring BMS to submit any proposed patent settlements for review and approval by the FTC. The FTC warned BMS that it would not approve a settlement of the Plavix litigation if BMS agreed not to launch its own generic version of Plavix that would compete against Apotex for generic sales. Notwithstanding these warnings, Bodnar, BMS’s negotiator, made representations to Apotex to reassure it that BMS would not launch a generic version of Plavix if Apotex agreed to a settlement that would prevent Apotex from launching its Plavix generic until 2011. Bodnar pleaded guilty today for later falsely certifying to the FTC that he had not made these representations to Apotex.

"The prosecutions of BMS and its former senior executive, Andrew Bodnar, should send a strong message to the pharmaceutical community that attempts to undermine the federal government’s critical role of ensuring Americans have access to life-saving drugs, like Plavix, at the most competitive prices will not be tolerated," said Scott D. Hammond, Acting Assistant Attorney General in charge of the Department’s Antitrust Division. "Those who attempt to mislead the federal government or undermine the integrity of its functions should expect to face criminal prosecution."

Plavix, a patented pharmaceutical, remains the most widely prescribed blood-thinning drug in the world. Approximately 48 million Americans take Plavix daily to prevent potentially fatal blood clots. The drug was approved for sale in the United States in November 1997.

This case is part of an investigation conducted by the Antitrust Division’s National Criminal Enforcement Section with the assistance of the New York Field Office of the FBI. Anyone with information about this matter should contact the Antitrust Division’s National Criminal Enforcement Section at 202-307-6694.

WASHINGTON – As homeowners and communities throughout the country continue to face devastating consequences from the deep contraction in the economy and the housing market, the Obama Administration today announced a new coordinated effort across federal and state government and the private sector to target mortgage loan modification fraud and foreclosure rescue scams that threaten to hurt American homeowners and prevent them from getting the help they need during these challenging times. The new effort announced today aligns responses from federal law enforcement agencies, state investigators and prosecutors, civil enforcement authorities, and the private sector to protect homeowners seeking assistance under the Administration’s Making Home Affordable program from criminal actors looking to perpetrate predatory schemes.

The U.S. Department of the Treasury, the U.S. Department of Justice (DOJ), the Department of Housing and Urban Development (HUD), the Federal Trade Commission (FTC), and the Attorney General of Illinois today discussed new initiatives to coordinate information and resources across agencies to maximize targeting and efficiency in fraud investigations, alert financial institutions to emerging schemes, step up enforcement actions and educate consumers to help those in financial trouble avoid becoming the victims of a loan modification or foreclosure rescue scam.

Earlier this year, in an effort to stabilize the housing market and ensure responsible homeowners can afford to stay in their homes, the Administration announced Making Home Affordable, a program to help eligible homeowners refinance or modify their mortgages. The plan will help up to 7 to 9 million families restructure or refinance their mortgages to lower their monthly payments and make their mortgages affordable now and in the future – an opportunity for relief that unfortunately also brings greater opportunity for criminal actors to prey upon consumers seeking assistance.

The FTC recently surveyed online and print advertising for mortgage foreclosure rescue operations nationwide and identified approximately 71 distinct companies running suspicious ads.  Treasury’s Financial Crimes Enforcement Network (FinCEN) also conducted recent studies on mortgage fraud that found that between July 2002 and June 2008, depository institutions filed nearly 180,000 mortgage fraud suspicious activity reports (SARs), with those involved in mortgage fraud often involved in other types of crime as well.

"The Administration’s Making Home Affordable program is a critical piece of our efforts to stabilize the financial system and ensure that it works with our efforts to grow the economy," said Treasury Secretary Tim Geithner. "American homeowners desperately need the relief this program offers, but the very last thing they need is to be taken advantage of as they try to hold on to their homes. This Administration is deeply committed not just to providing at-risk homeowners with assistance but also to cracking down on anyone who seeks to defraud them."

To this end, Treasury and FinCEN announced an advanced targeting effort already underway to combat fraudulent loan modification schemes and coordinate ongoing efforts across agencies to investigate fraud and assist with enforcement and prosecutions. In less than a week, FinCEN’s new targeting effort has produced leads that have helped various agencies to halt the illegal practices of those offering loan modification or foreclosure scams. In undertaking this effort, FinCEN will marshal information about possible fraudulent actors, drawing upon a variety of data available to law enforcement, regulatory agencies, and the consumer protection community, for the purpose of identifying and proactively referring potential criminal targets to participating law enforcement authorities.

Through FinCEN, Treasury is also issuing an advisory alerting financial institutions to the risks of emerging schemes related to loan modifications. The advisory identifies certain "red flags" that may indicate a loan modification or foreclosure rescue scam and warrant the filing of a SAR by a financial institution. Examples of possible signs of fraudulent activity, such as requiring that fees be paid before services are provided, are listed in the advisory. In addition, the advisory requests that financial institutions include the term "foreclosure rescue scam" in the narrative sections of all relevant SARs.

As part of the multi-agency effort, Attorney General Eric Holder outlined ways in which DOJ has been cracking down on mortgage fraud schemes, including several successful convictions of scam artists in recent months. He also emphasized the Justice Department’s commitment to working with federal and state law enforcement and regulatory partners to ensure a coordinated and comprehensive response to the problem, describing the department’s work with the FTC and state attorneys general to reinvigorate the Executive Working Group, which allows partners to coordinate and exchange intelligence on competition and consumer fraud issues. The Attorney General also discussed DOJ’s focus on investigating and prosecuting lenders who discriminate against borrowers based on race, national origin, or other prohibited factors.

"For millions of Americans, the dream of home ownership has become a nightmare because of the unscrupulous actions of individuals and companies who exploit the misfortune of others," Attorney General Eric Holder said. "The Department of Justice’s message is simple: if you discriminate against borrowers or prey on vulnerable homeowners with fraudulent mortgage schemes, we will find you, and we will punish you."

On the civil enforcement side, the FTC has filed five new cases to halt the illegal practices of individuals and companies offering loan modification or foreclosure scams – including one company that spent 9 million dollars on TV and radio ads in less than one year. The FTC is also joining forces with a wide array of government, non-profit, and mortgage industry members to launch a new consumer education campaign to help those in financial trouble avoid becoming the victims of a loan modification or foreclosure rescue scam.

"Today the FTC announced five law enforcement actions and sent 71 warning letters to operations using deceptive tactics to market their mortgage loan modification and home foreclosure relief services," said Jon Leibowitz, Chairman of the FTC. "We’re enforcing the law against these scam artists who are deceiving consumers while they’re down; we’re putting others on notice that unless they change their ways, they’re next; and we’re working with other government agencies, non-profits, and mortgage servicers to reach out to our neighbors in distress with the details of how and where to get help."

Under the new campaign, several private sector national loan servicers, including Chase Home Finance, Suntrust Mortgage, GMAC Mortgage, and American Home Mortgage Servicing, are distributing FTC consumer alerts that provide consumers with tips for avoiding mortgage relief scams and direct them to free, legitimate counseling services for at-risk homeowners. The servicers will distribute the materials in monthly statements, in correspondence to delinquent borrowers, in counseling sessions, and on their websites.

Bolstering new outreach efforts to protect homeowners against fraud, HUD Secretary Donovan announced that HUD would begin distributing literature today to all of its housing partners— HUD field offices and staff, housing authorities, state and local agencies, and non-profit organizations—warning consumers nationwide about loan modification fraud. This and other targeted outreach efforts will help alert communities hard-hit by foreclosure about the legitimate foreclosure assistance available to them.

"We have families on the edge of foreclosure that are being offered things that are too good to be true, and we will take every measure we can to educate and protect consumers and homeowners, bring these scams to light, and work to prevent con artists from exploiting the housing crisis," said HUD Secretary Donovan. "There are legitimate people, places, and agencies that American families can turn to when they are facing foreclosure, starting with www.MakingHomeAffordable.gov and the Homeowner’s HOPE Hotline at 1-888-995-HOPE for free foreclosure counseling assistance."

Under the new multi-agency initiative, there will also be strong coordination between federal and state governments that are battling foreclosure scams. The FTC released today a list of more than 20 states that have already taken law enforcement action on loan modification or foreclosure rescue scams. For example, today in Illinois, Attorney General Madigan is filing lawsuits against two Chicago-area mortgage rescue fraud schemes seeking temporary restraining orders to immediately stop the defendants from providing mortgage rescue services.

The numerous rescue fraud lawsuits filed in Illinois –24 to date– illustrate how Attorney General Madigan and other state attorneys general are using their enforcement authority to prosecute mortgage foreclosure rescue fraud across the country. On the state level, more than 150 enforcement actions have been brought against mortgage rescue companies.

"We have repeatedly found that these foreclosure rescue operations are swindling desperate homeowners out of money they can’t afford to lose," said Attorney General Madigan. "Struggling homeowners need to know that free help is available. The 24 lawsuits I have filed prove foreclosure rescue operators don’t help. They don’t call your lender, they don’t modify your loan, and they don’t represent you in court if you’re in foreclosure. All they do is take your money. By combining our powers, state and federal authorities are sending a clear message to these mortgage rescue scammers: It is not a question of if we’ll come after you; it is only a question of when."

 

 

PUBLIC AFFAIRS CONTACTS:

 

Treasury (202) 622-2960 

DOJ (202) 514-2007

HUD (202) 708-0685

FTC (202) 326-2180

Illinois AG (312) 814-3118

WASHINGTON  - “The Department of Justice, through the FBI and Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), is providing federal law enforcement assistance to the Binghamton Police Department in response to the shootings in Binghamton.  The FBI’s Albany, N.Y., field office has sent hostage negotiators, an evidence response team and command post assistance.  ATF is providing seven special agents from the Syracuse and Albany field offices.  The Department will continue to provide assistance as requested in response to this rapidly developing situation.”