District Not Recorded
The source did not name an office we could identify. These records remain unassigned rather than guessed.
Missouri Woman Convicted for International Advance-Fee SchemeRead the Press Release
A Missouri woman was convicted by a federal jury for her role in a multimillion-dollar international advance-fee scheme orchestrated from Nigeria.
According to the evidence presented at trial, Osa Martin, 76, of Carthage, traveled internationally on nine occasions between August 2015 and August 2016 while claiming to represent BB&T Corporation. On these trips, she met with victims of the scheme, who had been led to believe by co-conspirators based in Nigeria that they had multimillion-dollar investment agreements with BB&T. Martin signed the investment agreements, purportedly on behalf of BB&T, and then made sham visits to U.S. embassies to make the victims believe that the U.S. Department of State was notarizing and sponsoring the investment agreements. On each trip, Martin collected $7,500 or more in cash from the victims under the false pretense that the cash payment was a fee charged by the U.S. embassy. After her sham visits, Martin coordinated with co-conspirators to ensure victims received fake receipts and documents bearing State Department seals. The victims were then induced by Nigerian co-conspirators to make large wire payments to bank accounts in the United States on the false belief they were necessary fees before BB&T would release their investment funding.
Martin was convicted on Tuesday of one count of conspiracy to commit wire fraud and one count of conspiracy to wrongfully use government seals. She is scheduled to be sentenced on May 19, and faces up to 20 years in prison for the first count and up to five years in prison for the second count. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division; U.S. Attorney Jennifer Lowery for the Southern District of Texas; Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division; Special Agent-in-Charge James Smith of the FBI’s Houston Field Office; and Special Agent-in-Charge Michael Speckhardt of the U.S. Department of State’s Office of Inspector General (DOS-OIG) made the announcement.
The FBI and DOS-OIG investigated the case.
Assistant Chief William Johnston and Trial Attorney Philip Trout of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Suzanne Elmilady of the Southern District of Texas prosecuted the case.
Minnesota Concrete Company and its CEO Indicted for Rigging Bids for Public ContractsRead the Press Release
Note: The defendants in this case, Steven Dornsbach and Kamida Inc., were acquitted by a jury of the charges alleged in the indictment described in the press release below.
A federal grand jury returned an indictment charging Kamida Inc., a Minnesota-based concrete repair and construction corporation, and its CEO, Steven Dornsbach, with participating in a conspiracy to rig bids for public concrete repair and construction contracts in the state of Minnesota.
According to court documents filed in the U.S. District Court in Minneapolis, Dornsbach and Kamida conspired to rig bids on concrete repair and construction contracts submitted to at least four municipalities in the state of Minnesota, including local governments and school districts in the Minneapolis-St. Paul area, from at least as early as September 2012 and continuing through at least July 2017. Last year, Minnesota concrete contractor Clarence Olson pleaded guilty for his involvement in the conspiracy.
“Bid-rigging schemes that target local government contracts cheat taxpayers out of the benefits of competition,” said Assistant Attorney General Jonathan Kanter of the Justice Department’s Antitrust Division. “This indictment affirms the division’s commitment to safeguarding the integrity of the government procurement process at all levels of government.”
“For years, the defendants allegedly cheated their own communities by conspiring to rig bids on concrete repair and construction contracts for local governments and school districts,” said Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division. “Bid rigging is not a victimless crime; it reduces competition and charges taxpayers the difference. This indictment shows that the FBI and our partners are committed to investigating those who try to cheat the system for their own gain.”
The defendants are each charged with a violation of the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million fine for individuals, and a $100 million fine for corporations. The maximum fine for a Sherman Act charge may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime if either amount is greater than the statutory maximum fine. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
The Antitrust Division’s Chicago Office is prosecuting the case, which was investigated with the assistance of the FBI’s Minneapolis Field Office.
In November 2019, the Department of Justice created the Procurement Collusion Strike Force (PCSF), a joint law enforcement effort to combat antitrust crimes and related fraudulent schemes that impact government procurement, grant and program funding at all levels of government – federal, state and local. For more information, visit https://www.justice.gov/procurement-collusion-strike-force.
Anyone with information in connection with this investigation should contact the Antitrust Division’s Complaint Center at 888-647-3258 or visit http://www.justice.gov/atr/report-violations.
Justice Department and Federal Trade Commission to Hold Joint Spring Enforcers SummitRead the Press Release
The Justice Department’s Antitrust Division and the Federal Trade Commission (FTC) will cohost a Spring Enforcers Summit on April 4. Assistant Attorney General Jonathan Kanter and FTC Chair Lina M. Khan, as well as senior staff from both agencies, will facilitate discussions on modernizing merger guidelines and interagency collaboration. The summit will be held in a hybrid format, with international enforcers and state Attorneys General participating both in-person and virtually. Throughout the day, the agencies will livestream several panel discussions and interviews to the public. The Enforcers Summit agenda and viewing instructions are available at https://www.justice.gov/atr/events/spring-2022-enforcers-summit.
“This summit provides a great opportunity for enforcers across the country and world to gather together and learn from each other,” said Assistant Attorney General Jonathan Kanter of the Justice Department’s Antitrust Division. “Hearing from our international and state counterparts will help us to ensure that our enforcement practices and guidelines reflect modern market realities.”
“Mounting evidence of high concentration across markets and a variety of consequent harms have prompted a broad reassessment of our antitrust enforcement tools and frameworks,” said FTC Chair Lina M. Khan. “As we seek to update our approach to match economic realities, learning from and collaborating with our state and international enforcement partners will best equip us to tackle challenges and chart the right path ahead.”
The Enforcers Summit will include conversations about merger enforcement as well as discussions on how to work with industry regulators as part of a whole of government approach to competition policy. These discussions will inform the agencies’ joint public inquiry on modernizing merger guidelines. As the Antitrust Division and FTC work to revise their joint merger guidelines, the agencies are encouraging input from a wide range of stakeholders and are holding listening sessions throughout the spring to hear from members of the public. This summit will provide a valuable opportunity to gather both international and domestic perspectives on how U.S. merger reform can help us meet the challenges and realities of the modern economy.
Justice Department Announces Director for COVID-19 Fraud EnforcementRead the Press Release
Today, the Justice Department announced the appointment of a Director for COVID-19 Fraud Enforcement to lead the department’s criminal and civil enforcement efforts to combat COVID-19 related fraud, along with the latest results of criminal and civil enforcement actions that include alleged fraud related to over $8 billion in pandemic relief.
Effective immediately, Associate Deputy Attorney General Kevin Chambers will serve as the Director for COVID-19 Fraud Enforcement. Mr. Chambers will lead Justice Department efforts that to date have resulted in criminal charges against over 1,000 defendants with alleged losses exceeding $1.1 billion; the seizure of over $1 billion in Economic Injury Disaster Loan proceeds; and over 240 civil investigations into more than 1,800 individuals and entities for alleged misconduct in connection with pandemic relief loans totaling more than $6 billion.
“The Justice Department remains committed to using every available federal tool — including criminal, civil, and administrative actions — to combat and prevent COVID-19 related fraud,” said Attorney General Merrick B. Garland. “We will continue to hold accountable those who seek to exploit the pandemic for personal gain, to protect vulnerable populations, and to safeguard the integrity of taxpayer-funded programs.”
“As our thousands of COVID-19 fraud investigations demonstrate, our message to those who seek to line their own pockets and benefit from the suffering of so many Americans is: your crimes are not and will not be forgotten,” said Deputy Attorney General Lisa O. Monaco.
“I look forward to this new role and to supporting the excellent work of the department’s prosecutors and trial attorneys since the very beginning of the pandemic,” said Mr. Chambers. “We are receiving an extraordinary amount of data from our state workforce agency partners. This data holds the key to identifying and prosecuting certain types of fraud, including unemployment insurance fraud. Our Strike Teams will enhance the department’s existing efforts and will include analysts and data scientists to review data, agents to investigate the cases, and prosecutors and trial attorneys to bring charges and try the cases. Again, this is on top of the great work our folks in the field are already doing.”
Mr. Chambers plans to focus on large-scale criminal enterprises and foreign actors who sought to profit at the expense of the American people. This will include establishing Strike Teams to prepare for the next phase in the Justice Department’s efforts to fight pandemic fraud.
In March 2020, Congress passed a $2.2 trillion economic relief bill known as the Coronavirus Aid, Relief, and Economic Security (CARES) Act designed to provide emergency financial assistance to the millions of Americans who are suffering the economic effects caused by the COVID-19 pandemic. Anticipating the need to protect the integrity of these taxpayer funds and to otherwise protect Americans from fraud related to the COVID-19 pandemic, the Department of Justice immediately stood up multiple efforts dedicated to identifying, investigating, and prosecuting such fraud. Leveraging data analysis capabilities and partnerships developed through its vast experience combatting economic crime and fraud on government programs, the Justice Department’s response to COVID-19 related fraud serves as a model for proactive, high-impact white-collar crime enforcement, and demonstrates our agility in responding to new and emerging threats. This rapid and nationwide response enabled the Justice Department to quickly ensure accountability for wrongdoing and sent a forceful message of deterrence during an ongoing crisis. The multifaceted and multi-district approach to enforcement during this national health emergency continues and is expected to yield numerous additional criminal and civil enforcement actions in the coming months.
In May 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The task force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts.
The Justice Department’s efforts to combat COVID-19 related fraud schemes have proceeded on numerous fronts, including cases and investigations involving the Paycheck Protection Program (PPP), Economic Injury Disaster Loan (EIDL) program, Unemployment Insurance (UI) programs, and COVID-19 health care fraud enforcement.
These cases involve the Criminal Division’s Fraud Section, U.S. Attorneys’ Offices across the United States, and the department’s Civil Division. They reflect a degree of reach, coordination, and expertise that is critical for enforcement efforts against COVID-19 related fraud to have a meaningful impact and is also emblematic of the Justice Department’s response to criminal wrongdoing.
Prominent among the department’s efforts have been cases involving PPP and EIDL fraud. Across the department, including the Criminal Division’s Fraud Section and U.S. Attorneys' Offices, approximately 500 defendants have been charged in over 340 cases with alleged intended losses of over $700 million.
Relatedly, the department has seized over $1 billion in EIDL loan proceeds, primarily through the work of the U.S. Attorney’s Office for the District of Colorado and their partners at the U.S. Secret Service.
Due to the COVID-19 pandemic, up to $860 billion in federal funds have been appropriated for UI benefits through September 2021. Early investigation and analysis indicate that international organized criminal groups have targeted these funds by using stolen identities to file for UI benefits. Domestic criminals, ranging from identity thieves to violent street gangs to prison inmates, have also committed UI fraud. In response, the department established the National Unemployment Insurance Fraud Task Force, a prosecutor-led, multi-agency task force with representatives from more than eight different federal law enforcement agencies to coordinate those efforts. U.S. Attorneys’ Offices around the country have worked with law enforcement partners to investigate and arrest those responsible for committing UI fraud. Since the start of the pandemic, over 430 defendants have been charged and arrested for federal offenses related to UI fraud.
The unprecedented pace and tempo of these efforts is made possible only through the diligent work of a wide range of Justice Department partners, including the Criminal Division’s Fraud Section and Money Laundering and Asset Recovery Section, the Civil Division’s Commercial Litigation Branch (Fraud Section) and Consumer Protection Branch, U.S. Attorneys’ Offices throughout the country, and law enforcement partners from the FBI; U.S. Secret Service; IRS-Criminal Investigation; Defense Criminal Investigative Service; Homeland Security Investigations; U.S. Postal Inspection Service; the Offices of Inspectors General from the Small Business Administration, Department of Labor, Department of Homeland Security, Social Security Administration, Federal Deposit Insurance Corporation, Department of Health and Human Services, Department of Veterans Affairs, Federal Housing Finance Agency and Federal Reserve Board; Food and Drug Administration’s Office of Criminal Investigations; Treasury Inspector General for Tax Administration; Financial Crimes Enforcement Network; Special Inspector General for Pandemic Relief; Pandemic Response Accountability Committee; OCDETF Fusion Center and OCDETF’s International Organized Crime Intelligence and Operations Center.
For further information on the Criminal Division’s enforcement efforts on PPP fraud, including court documents from significant cases, visit the following website: https://www.justice.gov/criminal-fraud/ppp-fraud. For more information on the department’s response to the pandemic, please visit https://www.justice.gov/coronavirus. For further information on the Civil Division’s enforcement efforts, visit the following website: https://www.justice.gov/civil.
Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form at https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
*The subheadline has been updated to reflect a change from $7 billion to $8 billion in pandemic relief. (March 10, 2022)
Former Sheriff of Franklin County, Arkansas Sentenced to Four Years in Prison for Assaulting Two People in CustodyRead the Press Release
Former Franklin County, Arkansas, Sheriff Anthony Boen, 51, was sentenced today to four years in prison, followed by two years of supervised release and a $4,800 fine for assaulting two individuals in his custody. After a six-day trial in August 2021, a jury in the Western District of Arkansas convicted Boen of two counts of deprivation of rights under color of law.
Evidence presented at trial established that Boen used unreasonable force to punish pretrial detainees on two separate occasions. On Dec. 3, 2018, Boen struck a detainee multiple times in the head with a closed fist while the detainee was sitting on the floor and shackled to a bench inside the Franklin County Jail. Several minutes later, Boen returned to the detainee’s cell and struck him in the head again, then spit on him. On Nov. 21, 2018, Boen slammed a detainee onto the floor and ripped his hair during an interrogation. Both detainees suffered bodily injury as a result of Boen’s actions. During the subsequent investigation of these offenses, Boen contacted officers who witnessed his assaults and pressured them not to provide truthful information to investigators.
“No one is above the law, especially high-ranking law enforcement officers who have a duty to uphold the Constitution and protect individuals in their custody,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “The defendant abused his power as sheriff by assaulting the people he was sworn to protect and pressuring his subordinates to cover up his crimes. The Justice Department will continue to vigorously prosecute law enforcement officials who violate people’s civil rights.”
“Anthony Boen swore an oath to support the U.S. Constitution and the State of Arkansas Constitution,” said U.S. Attorney David Clay Fowlkes of the Western District of Arkansas. “His actions clearly violated not only the civil rights of these individuals but also the trust of the people of Franklin County. Cases like this are very important to our office because they involve the most personal and basic of civil rights: the rights to be protected and unharmed while in the custody of law enforcement officers. Today’s sentencing shows that justice will prevail in cases where a person’s civil rights are violated. We will continue to vigorously pursue cases involving the violation of basic civil rights that should be afforded to everyone.”
"When former Sheriff Boen brutally assaulted individuals in his custody and violated their civil rights, it impacted all Arkansans and their trust in authorities," said Special Agent in Charge James A. Dawson of the FBI’s Little Rock Field Office. “The FBI is committed to maintaining the public's trust in law enforcement. With today's sentencing of Mr. Boen, our community knows we will aggressively investigate and bring to justice any law enforcement officer who would violate the rights of their fellow Americans."
The case was investigated by the FBI and prosecuted by Assistant U.S. Attorney Brandon T. Carter and Civil Rights Division Trial Attorney Michael J. Songer.
Related court documents may be found on the Public Access to Electronic Records website at www.pacer.gov.
Former San Jose State University Director of Sports Medicine Charged with Sexually Assaulting Female Student-AthletesRead the Press Release
Scott Shaw, 54, the former Director of Sports Medicine and athletic trainer at San Jose State University, has been charged today with civil rights violations for engaging in sexual misconduct with female student-athletes under the guise of treating them for their injuries.
The charges allege that between 2017 and 2020, Shaw violated the civil rights of four students who played on women’s athletics teams by touching their breasts and buttocks without their consent and without a legitimate purpose. Shaw, as a state employee for the California State University system, is further alleged to have acted under color of law when he sexually assaulted the victims.
Shaw faces a maximum of six years in prison if convicted of all counts. However, any sentence following a conviction would be imposed by a court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence.
Shaw will appear to face the charges in U.S. District Court in San Jose on a date that has not yet been set.
Assistant Attorney General Kristen Clarke for the Justice Department’s Civil Rights Division, U.S. Attorney Stephanie Hinds of the Northern District of California and Special Agent in Charge Craig D. Fair of the FBI made the announcement.
The case is being prosecuted by Assistant U.S. Attorney Michael Pitman of the Northern District of California and Special Litigation Counsel Fara Gold of the Criminal Section of the Justice Department’s Civil Rights Division. This case is being investigated by the FBI San Francisco Field Office.
Anyone with information should contact the FBI at 510-808-2600.
A charging information is merely a formal accusation of criminal conduct, and the defendant is presumed innocent unless proven guilty.
Departments of Justice and Labor Strengthen Partnership to Protect WorkersRead the Press Release
The Justice Department’s Antitrust Division and the Labor Department signed a memorandum of understanding (MOU) today to strengthen the partnership between the two agencies to protect workers from employer collusion, ensure compliance with the labor laws and promote competitive labor markets and worker mobility. The objectives of the President’s Executive Order on Promoting Competition in the American Economy will be supported by this continued partnership.
“Protecting competition in labor markets is fundamental to the ability of workers to earn just rewards for their work, to live out the American dream, and to provide for their families,” said Assistant Attorney General Jonathan Kanter of the Justice Department’s Antitrust Division. “By cooperating more closely with our colleagues in the Department of Labor, we can share enforcement information, collaborate on new policies, and ensure that workers are protected from collusion and unlawful employer behavior. Protecting the right of workers to earn a fair wage is core to the work of both our agencies, and it will continue to receive extraordinary vigilance from the Antitrust Division.”
“Anticompetitive practices harm both workers and high road employers,” said Solicitor of Labor Seema Nanda. “The Department of Labor looks forward to collaborating with the Antitrust Division to ensure there is a level playing field in the labor market and that workers receive their fair pay. Through this partnership, we will work together to tackle unlawful behavior that we are seeing across industries – including misclassification and wage fixing. This is an important moment in recognizing that protecting competition protects workers. Working with the Justice Department to root out these unscrupulous practices will help us empower workers and improve job quality.”
The Departments of Justice and Labor share an interest in promoting competitive labor markets. Both agencies are charged with protecting workers who have been harmed or may be at-risk of being harmed by anticompetitive and unlawful conduct, including through the use of business models designed to evade legal accountability and business practices, such as illegal agreements to fix wages or inappropriate use of noncompete agreements, that cause direct harm to employees.
The MOU signed today by Assistant Attorney General Kanter and Solicitor Nanda announced new steps the two agencies will take to strengthen this partnership. Through greater coordination in information sharing, enforcement activity and training, the two agencies will maximize the enforcement of federal laws, including worker protection laws under the Labor Department’s jurisdiction and the antitrust laws enforced by the Justice Department’s Antitrust Division. In particular, this MOU will allow the two agencies to refer cases of potentially illegal activity to each other, as appropriate, and to coordinate on policy, strategy and training.
This announcement follows the Department of Treasury releasing a report March 7 highlighting how lack of competition affects workers’ wages and opportunities. The MOU is a further step for the departments in addressing some of the challenges highlighted in the report.
The Labor Department is responsible for protecting and empowering workers through enforcing and administering standards on wage and hour, mine safety, workplace-related benefits, occupational safety and health, and whistleblower protection. The Justice Department is charged with promoting and protecting competition by enforcing the antitrust laws of the United States.
Information about possible antitrust violations or potential anticompetitive activity should be reported to the Antitrust Division Citizen Complaint Center. To learn more about how to seek whistleblower protection under the Criminal Antitrust Anti-Retaliation Act, please go to https://www.whistleblowers.gov/complaint_page.
California Man Pleads Guilty to Misappropriating COVID-19 FundsRead the Press Release
A California man pleaded guilty today in the Central District of California to stealing government funds designed to aid medical providers in the treatment of patients suffering from COVID-19 and using them for his own personal benefit.
According to court documents, Grigor Garibyan, 36, of North Hollywood, admitted that he owned GMA Home Health Inc. (GMA), a home health agency in Van Nuys, which closed around June 2019. GMA, which was never operational during the COVID-19 pandemic, received approximately $57,591 designated for the medical treatment and care of COVID-19 patients. Garibyan admitted he stole the funds by transferring and spending them for his own personal use, rather than using the funds in conjunction with pandemic relief efforts as required.
Garibyan pleaded guilty to two counts of theft of government property. He is scheduled to be sentenced on June 16 and faces up to 10 years in prison for each count. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
The charges against Garibyan resulted from his intentional misuse of funds distributed from the CARES Act Provider Relief Fund, money specially apportioned by the CARES Act to help health care providers who were financially impacted by the COVID-19 pandemic, to provide care to patients who were suffering from COVID-19, and to compensate providers for the cost of that care. These funds were critical to delivering relief to health care providers and maintaining access to medical care during the pandemic.
Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division; U.S. Attorney Tracy L. Wilkison for the Central District of California; and Special Agent in Charge Timothy B. Francesca of the U.S. Department of Health and Human Services Office of Inspector General’s Los Angeles Regional Office made the announcement.
Trial Attorney Chris Wenger and Senior Litigation Counsel Jim Hayes of the National Rapid Response Strike Force of the Criminal Division’s Fraud Section are prosecuting the case.
On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.
Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline via the NCDF Web Complaint Form at https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
Serial Fraudster Extradited to the United States from Mexico to Face Investment Fraud Scheme Charges in North Carolina and TexasRead the Press Release
A California man made his initial appearance in federal court in Charlotte, North Carolina, today after being extradited from Mexico to face charges related to his involvement in two high-yield investment fraud schemes.
According to court documents, Daniel Thomas Broyles Sr., aka Dan Thomas, 64, of Malibu, is charged in an indictment returned in the Western District of North Carolina for a high-yield investment fraud scheme involving a sham company named Niyato Industries Inc. Broyles allegedly conspired with Niyato’s CEO, Robert Leslie Stencil, 65, of Charlotte, North Carolina, and others to fraudulently sell stock in Niyato. Together, Broyles, Stencil and others falsely portrayed Niyato as a leader in its field, manufacturing electric vehicles and converting gasoline vehicles to run on compressed natural gas. Broyles, Stencil and their co-conspirators allegedly told victims that Niyato was run by a team of high-profile executives, and that Niyato had patented technology, state-of-the-art facilities and valuable contracts. Further, they allegedly told victims that Niyato would use 97% of the money it raised selling stock to grow its business, expand its operations and prepare for an imminent initial public offering (IPO). In reality, as alleged in the indictment, Niyato had no patents, facilities, products or plans to commence an IPO, and Niyato’s true business was the sale of worthless stock. Broyles, Stencil and their co-conspirators allegedly used nearly all of the money raised by selling Niyato stock for their own personal benefit, with Stencil paying salespeople – like Broyles – half or nearly half of the money they solicited from each investor on behalf of Niyato.
Broyles is charged with one count of conspiracy to commit mail fraud and wire fraud, 14 counts of mail fraud, 14 counts of wire fraud, and five counts of money laundering. The defendant made his initial court appearance today before U.S. Magistrate Judge David S. Cayer of the U.S. District Court for the Western District of North Carolina. If convicted, Broyles faces up to 30 years in prison on the conspiracy charge, up to 20 years in prison on each count of mail fraud, up to 20 years in prison on each count of wire fraud, and up to 10 years in prison on each count of money laundering. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors. Stencil was convicted following a jury trial and sentenced to 135 months in prison.
Broyles is also charged in an indictment returned in the Northern District of Texas for his role in a second high-yield investment fraud scheme involving a company named EarthWater. According to the indictment, Broyles allegedly conspired with EarthWater’s CEO, Cengiz Jan Comu, 61, of Dallas, Texas, and others to sell EarthWater stock by making numerous false and misleading representations, including that victim investors only had a brief opportunity to purchase EarthWater stock in an unregistered offering before EarthWater’s stock price increased by 10- to 50-fold following an IPO or acquisition by a large well-known company. In reality, as alleged in the indictment, EarthWater never initiated an IPO nor a merger or acquisition. Moreover, Broyles, Comu and others falsely represented to victim investors that EarthWater would use 90% of invested funds to grow its business and expand operations, and that any fees paid to broker-dealers with respect to the sale of EarthWater stock would not exceed 10% of the purchase price of the shares. In reality, as alleged in the indictment, Comu agreed to split victim investors’ funds 50-50 with Broyles and others who sold EarthWater stock. As a result, nearly half of all of the money victims invested in EarthWater went directly into the pockets of the individuals who sold them the stock.
Under the Northern District of Texas indictment, Broyles is charged with one count of conspiracy to commit mail fraud and wire fraud. If convicted, Broyles faces up to 30 years in prison. Comu pleaded guilty in 2020 and is awaiting sentencing.
Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division; U.S. Attorney Dena J. King for the Western District of North Carolina; U.S. Attorney Chad E. Meacham for the Northern District of Texas; Inspector in Charge Tommy Coke of the U.S. Postal Inspection Service’s Atlanta Division; and Inspector in Charge Eric Shen of the U.S. Postal Inspection Service’s Criminal Investigations Group made the announcement.
The Government of Mexico, including the Fiscalía General de la República (FGR), provided significant assistance in the extradition of Broyles to the United States. The Justice Department’s Office of International Affairs also provided substantial assistance in securing the arrest and extradition of Broyles.
The U.S. Postal Inspection Service is investigating this case. The U.S. Marshals Service transported Broyles from Mexico to the United States.
Trial Attorney Christopher Fenton of the Criminal Division’s Fraud Section is prosecuting both cases. Assistant U.S. Attorney Mary Walters of the U.S. Attorney’s Office for the Northern District of Texas is also prosecuting the case involving EarthWater.
An indictment is merely an allegation, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Presque Isle Woman Sentenced for Passing Counterfeit MoneyRead the Press Release
BANGOR, Maine: A Presque Isle woman was sentenced today in federal court for passing counterfeit money, U.S. Attorney Darcie N. McElwee announced.
U.S. District Judge Lance E. Walker sentenced Jessica Jones, 31, to two months in prison and two years of supervised release. Jones pleaded guilty on August 25, 2021.
According to court records, on July 23, 2018, Jones used counterfeit $20 bills at a Domino’s Pizza and a McDonald’s in Presque Isle. Jones later stated that she had received the counterfeit money from an individual who was trading counterfeit bills for drugs.
The Presque Isle Police Department and the U.S. Secret Service investigated the case.
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Chevron Phillips Chemical Company Agrees to Reduce Harmful Air Pollution at Three U.S. Chemical PlantsRead the Press Release
Chevron Phillips Chemical Company LP has agreed to make upgrades and perform compliance measures estimated to cost $118 million to resolve allegations that it violated the Clean Air Act and state air pollution control laws at three petrochemical manufacturing facilities located in Cedar Bayou, Port Arthur, and Sweeney, Texas. Chevron Phillips will also pay a $3.4 million civil penalty. The settlement will eliminate thousands of tons of air pollution from flares.
According to the complaint filed with a consent decree, the company failed to properly operate and monitor its industrial flares, which resulted in excess emissions of harmful air pollution at the three Texas facilities. The company regularly “oversteamed” the flares and failed to comply with other key operating constraints to ensure the volatile organic compounds (VOCs) and hazardous air pollutants (HAPs) contained in the gases routed to the flares are efficiently combusted.
“The Justice Department and EPA will enforce the law against petrochemical plants that violate the Clean Air Act,” said Assistant Attorney General Todd Kim for the Justice Department’s Environment and Natural Resources Division. “We are committed to reducing harmful air pollution from unnecessary and improper flaring, especially near overburdened communities with environmental justice concerns.”
“This settlement will require Chevron Phillips to install pollution control and emissions monitoring equipment at three facilities in Texas, reducing emissions of greenhouse gases and other harmful gases by thousands of tons per year,” said Acting Assistant Administrator Larry Starfield for the EPA’s Office of Enforcement and Compliance Assurance. “Those controls, plus a requirement for fence line monitoring of benzene emissions and corrective actions when benzene readings are high, will result in significant benefits for the local communities in Texas.”
Once fully implemented, the pollution controls are estimated to reduce emissions of climate-change-causing greenhouse gases, including carbon dioxide, methane and ethane, by over 75,000 tons per year. The settlement is also expected to reduce emissions of ozone-forming VOCs by 1,528 tons per year and of toxic air pollutants, including benzene, by 158 tons per year.
The pollutants addressed by the settlement can cause significant harm to public health. VOCs are a key component in the formation of smog or ground-level ozone, a pollutant that irritates the lungs, exacerbates diseases such as asthma, and can increase susceptibility to respiratory illnesses, such as pneumonia and bronchitis. Chronic exposure to benzene, which EPA classifies as a carcinogen, can cause numerous health impacts, including leukemia and adverse reproductive effects in women.
Flares are also often large sources of greenhouse gas emissions. Flares are devices used to combust waste gases that would otherwise be released into the atmosphere during certain industrial operations. Well-operated flares should have high “combustion efficiency,” meaning they combust nearly all harmful waste gas constituents, like VOCs and HAPs, and turn them into water and carbon dioxide. The agreement is designed to improve Chevron Phillips’s flaring practices. First, it requires the company to minimize the amount of waste gas that is sent to the flares, which reduces the amount of flaring. Second, the company must improve the combustion efficiency of its flares when flaring is necessary.
Chevron Phillips will take several steps to minimize the waste gas sent to its flares at each facility. At the Cedar Bayou facility, Chevron Phillips will operate a flare gas recovery system that recovers and “recycles” the gases instead of sending them to be combusted in a flare. The flare gas recovery system will allow Chevron Phillips to reuse these gases as a fuel at its facilities or a product for sale. At the Port Arthur and Sweeny facilities, Chevron Phillips will be required to amend its air quality permits to limit the flow of gas at selected flares. Chevron Phillips will also create waste minimization plans for each facility to further reduce flaring. For flaring that must occur, the agreement requires that Chevron Phillips install and operate instruments and monitoring systems to ensure that the gases sent to its flares are efficiently combusted.
Chevron Phillips will also perform air quality monitoring that is designed to detect the presence of benzene at the fence lines of the three covered plants. Monitoring results must be publicly posted, providing the neighboring communities with more information about their air quality. The monitoring requirements also include triggers for root cause analysis and corrective actions if fence line emissions exceed certain thresholds. Flare compliance is an ongoing priority for EPA under its Creating Clean Air for Communities National Compliance Initiative.
The consent decree, lodged in the Southern District Court of Texas, is subject to a 30-day public comment period and final court approval. The consent decree will be available for viewing at https://www.justice.gov/enrd/consent-decrees.
16 Defendants, Including 12 Physicians, Sentenced to Prison for Distributing 6.6 Million Opioid Pills and Submitting $250 Million in False BillingsRead the Press Release
Sixteen Michigan and Ohio-area defendants, including 12 physicians, have been sentenced to prison for a $250 million health care fraud scheme that included the exploitation of patients suffering from addiction and the illegal distribution of over 6.6 million doses of medically unnecessary opioids. Five physicians were convicted in two separate trials, while 18 other defendants pleaded guilty. Seven defendants await sentencing.
“It is unconscionable that doctors and health care professionals would violate their oath to do no harm and exploit vulnerable patients struggling with addiction,” said Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division. “These are not just crimes of greed, these are crimes that make this country’s opioid crisis even worse – and that is why the department will continue to relentlessly pursue these cases.”
“Patients look to physicians and medical professionals for their expertise and knowledge, trusting that they will do what is best to take care of them,” said Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division. “In this circumstance, these medical professionals provided prescription drugs to those with no medical need. It is unacceptable that in this nation’s current opioid crisis, physicians and medical professionals are exploiting the well-being of their patients for profit. Thanks to the diligent work of the FBI and our law enforcement partners, we are able to navigate the important sphere of healthcare fraud and to continue our mission of bringing those who operate these criminal schemes to justice.”
“Health care professionals who exploit opioid addiction for financial gain do so at the risk of endangering their patients and undermining critical public health efforts to address the opioid epidemic,” said Special Agent in Charge Mario Pinto of the U.S. Department of Health and Human Services, Office of the Inspector General (HHS-OIG). “We will continue working with our law enforcement partners to ensure that bad actors are held accountable for such egregious disregard for patient safety and well-being.”
“IRS-CI is committed to working with its law enforcement partners to help fight the opioid crisis and to prevent unscrupulous heath care professionals from using taxpayer funded programs as their own piggybanks,” said Special Agent in Charge Sarah Kull of the IRS Criminal Investigation (IRS-CI), Detroit Field Office.
According to court documents and evidence presented at trial, the scheme involved doctors refusing to provide patients with opioids unless they agreed to unnecessary back injections. Perpetrated through a multi-state network of pain clinics from 2007 to 2018, the evidence established that the clinics were pill mills frequented by patients suffering from addiction, as well as drug dealers, who sought to obtain high-dosage prescription drugs like oxycodone. The doctors working at the clinics agreed to work only a few hours a week to “stay under the radar” of the Drug Enforcement Administration (DEA), yet were among the highest prescribers of oxycodone in the State of Michigan.
To obtain prescriptions, the evidence showed that the patients had to submit to expensive, unnecessary and sometimes painful back injections, known as facet joint injections. The injections were selected because they were among the highest reimbursing procedures, rather than based on medical need. Trial testimony established that, in some instances, patients experienced more pain from the shots than from the pain they had purportedly come to have treated, and that some patients developed adverse conditions, including open holes in their backs. Patients largely acquiesced to these unnecessary procedures because of their addiction or desire to obtain pills to be resold on the street by drug dealers. Evidence further established that the defendant physicians repeatedly performed these unnecessary injections on patients over several years and were paid more for facet joint injections than any other medical clinic in the United States.
The evidence further established that the proceeds of the fraud were used to fuel lavish lifestyles. Francisco Patino, a doctor and part-owner of the clinics, bought jewelry, cars and vacations, as well as paid Ultimate Fighting Championship and other mixed martial arts fighters to promote his specialized diet program. Mashiyat Rashid, Patino’s business partner and part-owner of the clinics, purchased private jet flights, courtside tickets to the NBA Finals and expensive real estate. Other physicians involved in the scheme purchased luxury cars, gold bars, and indoor basketball courts and swimming pools. Over $16 million in fraud proceeds was forfeited by the United States from the defendants.
The physicians sentenced by the court include:
- Spilios Pappas, M.D., 63, of Lucas County, Ohio, convicted at trial in 2020 for conspiracy to commit health care fraud and wire fraud, and health care fraud, was sentenced on March 9, to nine years in prison and ordered to pay $32,287,758 in restitution.
- Tariq Omar, M.D., 63, of Oakland County, Michigan, convicted at trial in 2020 for conspiracy to commit health care fraud and wire fraud, and health care fraud, was sentenced on March 9, to eight years in prison and ordered to pay $24,243,603 in restitution.
- Joseph Betro, D.O., 60, of Oakland County, Michigan, convicted at trial in 2020 for conspiracy to commit health care fraud and wire fraud, and health care fraud, was sentenced in February 2022 to nine years in prison and ordered to pay $27,417,516 in restitution.
- Mohammed Zahoor, M.D., 53, of Oakland County, Michigan, convicted at trial in 2020 for conspiracy to commit health care fraud and wire fraud, and health care fraud, was sentenced in February 2022 to eight years in prison and ordered to pay $36,645,577 in restitution.
- Zahid Sheikh, M.D., 62, of Macomb County, Michigan, was sentenced to 70 months in prison, and ordered to pay $2,088,797 in restitution in connection with his guilty plea to one count of conspiracy to commit health care fraud.
- Abdul Haq, M.D., 76, of Ypsilanti, Michigan, was sentenced to four years in prison, and ordered to pay $6,927,046.12 in restitution in connection with his guilty plea to one count of conspiracy to commit health care fraud.
- Steven Adamczyk, M.D., 47, of Bloomfield Hills, Michigan, was sentenced to 42 months in prison, and ordered to pay $1,237,570.97 in restitution in connection with his guilty plea to one count of conspiracy to commit health care fraud.
- David Weaver, M.D., 67, of Canton, Michigan, was sentenced to three years in prison, and ordered to pay $229,500 in restitution in connection with his guilty plea to one count of conspiracy to commit health care fraud.
- Glenn Saperstein, M.D., 58, of Commerce Township, Michigan, was sentenced to 20 months in prison, and ordered to pay $2,722,760.95 in restitution in connection with his guilty plea to one count of conspiracy to commit health care fraud.
- Manish Bolina, M.D., 43, of Canton, Michigan, was sentenced to 20 months in prison, and ordered to pay $310,936.95 in restitution in connection with his guilty plea to one count of false statements.
- Hussein Saad, M.D., 42, of Dearborn, Michigan, was sentenced to 10 months in prison, and ordered to pay $415,207.54 in restitution in connection with his guilty plea to one count of false statements.
- David Yangouyian, M.D., 58, of Farmington Hills, Michigan, was sentenced to six months in prison, and ordered to pay $35,480.98 in restitution in connection with his guilty plea to one count of conspiracy to commit health care fraud.
Other defendants sentenced by the court include:
- Mashiyat Rashid was sentenced in March 2021 to 15 years in prison and ordered to pay over $51 million in restitution in connection with his guilty plea to one count of conspiracy to commit health care fraud and wire fraud, and one count of money laundering.
- Yousef Almatrahi, 34, of Romulus, Michigan, the owner of a home health agency, was sentenced to three years in prison and ordered to pay $1,359,512.69 in restitution in connection with his guilty plea to one count of conspiracy to commit health care fraud in connection with his payment of illegal kickbacks for the referral of patients from the clinics for medically unnecessary home health services.
- Hina Qazi, 39, of Rochester Hills, Michigan, the owner of a home health agency, was sentenced to 18 months in prison and ordered to pay $827,713 in restitution in connection with her guilty plea to one count of conspiracy to commit health care fraud in connection with her payment of illegal kickbacks for the referral of patients from the clinics for medically unnecessary home health services.
- Joshua Burns, 43, of Detroit, Michigan, was sentenced to one-day in prison and ordered to pay $144,00 in restitution in connection with his guilty plea to one count of conspiracy to defraud the United States and pay and receive illegal kickbacks and bribes in connection with Patino’s referral of urine drug testing and sponsorship of MMA fighters.
The following defendants are scheduled to be sentenced on future dates:
- Francisco Patino, M.D., is scheduled to be sentenced on his conviction after a one-month trial in 2021 on one count of conspiracy to commit health care fraud and wire fraud, two counts of health care fraud, one count of conspiracy to defraud the United States and pay and receive health care kickbacks, one count of conspiracy to commit money laundering, and one count of money laundering.
- Yasser Mozeb, 39, of Hamtramck, Michigan, the office manager of the Tri-County clinics, is scheduled to be sentenced in connection with his guilty plea to one count of conspiracy to commit health care fraud and one count of conspiracy to defraud the United States and pay and receive illegal kickbacks and bribes.
- Kashif Rasool, M.D., 46, of Troy, Michigan, is scheduled to be sentenced in connection with his guilty plea to one count of conspiracy to commit health care fraud.
- Tariq Siddiqi, 44, of Sterling Heights, Michigan, is scheduled to be sentenced in connection with his guilty plea to one count of conspiracy to commit health care fraud in connection with his payment of illegal kickbacks for the referral of patients from the clinics for medically unnecessary home health services.
- Tasadaq Ali Ahmad, 54, of Canton, Michigan, the owner of a home health agency, is scheduled to be sentenced in connection with his guilty plea to one count of conspiracy to commit health care fraud and one count of conspiracy to defraud the United States and pay and receive kickbacks.
- Stephanie Borgula, 41, of Livonia, Michigan, a licensed physical therapist, is scheduled to be sentenced in connection with her guilty plea to one count of conspiracy to commit health care fraud.
- Meiuttenun Brown, M.D., 51, of Toledo, Ohio, is scheduled to be sentenced in connection with her guilty plea to one count of conspiracy to commit health care fraud.
The FBI, HHS-OIG and IRS-CI investigated the case.
Assistant Chief Jacob Foster of the National Rapid Response Strike Force and Trial Attorneys Thomas Tynan, Steven Scott, Kathleen Cooperstein and Shankar Ramamurthy of the Justice Department’s Fraud Section prosecuted the case.
The Fraud Section leads the Criminal Division’s efforts to combat health care fraud through the Health Care Fraud Strike Force Program. Since March 2007, this Program, comprised of 15 strike forces operating in 24 federal districts, has charged more than 4,200 defendants who collectively have billed the Medicare program for more than $19 billion. In addition, the Centers for Medicare & Medicaid Services, working in conjunction with the Office of the Inspector General for the Department of Health and Human Services, are taking steps to hold providers accountable for their involvement in health care fraud schemes. More information can be found at https://www.justice.gov/criminal-fraud/health-care-fraud-unit.
Two Former Senior Venezuelan Prosecutors Charged for Receiving over $1 Million in BribesRead the Press Release
Two former senior Venezuelan prosecutors have been charged with money laundering for their receipt of bribes in exchange for agreeing not to pursue criminal charges against certain individuals in Venezuela.
According to the indictment, Daniel D’Andrea Golindano (D’Andrea), 43, and Luis Javier Sanchez Rangel (Sanchez), 35, both of Venezuela, are each charged with one count of conspiracy to commit money laundering and two counts of engaging in monetary transactions in criminally derived property.
The indictment alleges that, in or around 2017, D’Andrea and Sanchez, in their official roles as prosecutors within the Venezuelan Attorney General’s Office, were investigating an individual, identified as Contractor 1 in the indictment, for alleged corruption relating to contracts obtained with subsidiaries of Venezuela’s state-owned oil company (PDVSA). D’Andrea and Sanchez discussed and agreed to receive bribes of more than $1 million in exchange for not pursuing criminal charges against Contractor 1 and others.
According to the indictment, D’Andrea caused a co-conspirator to create false invoices seeking payment, purportedly for medical diagnostic equipment, from Contractor 1. In or around 2017, Contractor 1 caused the payment of over $1 million dollars to an account in the Southern District of Florida for the benefit of D’Andrea and Sanchez. As a result of this payment, D’Andrea and Sanchez caused the Venezuelan Attorney General’s Office not to seek criminal charges against Contractor 1 and others. D’Andrea and Sanchez used the proceeds from these bribes for their personal benefit.
If convicted, the defendants face up to 20 years in prison for conspiracy to commit money laundering and up to 10 years in prison for each count of engaging in transactions in criminally derived property. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors. The defendants are in Venezuela and remain at large.
Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division, U.S. Attorney Juan Antonio Gonzalez for the Southern District of Florida, and Special Agent in Charge Anthony Salisbury of Homeland Security Investigations (HSI) Miami office made the announcement.
Trial Attorney Alexander Kramer of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Michael N. Berger of the U.S. Attorney’s Office for the Southern District of Florida are prosecuting the case.
The Fraud Section has lead responsibility for investigating and prosecuting all Foreign Corrupt Practices Act (FCPA) matters. Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.
An indictment is merely an allegation, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Two California Men Sentenced for Conspiracy and Hate Crime Convictions for Attacking and Threatening to Kill Restaurant Patrons and Workers Because of Their Perceived National OriginRead the Press Release
Two California men were sentenced yesterday on conspiracy and hate crime charges for attacking five victims inside a restaurant while shouting ethnic slurs, hurling chairs at the victims and threatening to kill them.
William Stepanyan, 23, of Glendale, was sentenced to five years in prison and Harutyun Harry Chalikyan, 24, of Tujung, was sentenced to 15 months in prison. Each defendant was also sentenced to three years of supervised release. The court also ordered the defendants to jointly pay $21,200 in restitution for damage to the Turkish restaurant. Each defendant previously pleaded guilty to one count of conspiracy and one count of committing a hate crime.
According to the facts admitted in the plea agreements, the defendants, who identify as members of the Armenian-American community, attacked five victims inside a family-owned Turkish restaurant on Nov. 4, 2020, because of their anger about Turkey’s support of Azerbaijan in its conflict with Armenia. Earlier that day, Stepanyan sent a text message saying that he planned to go “hunting for [T]urks.” That evening, the defendants drove to the restaurant with a group of approximately nine individuals who planned to demonstrate outside the establishment because they considered it symbolic of Turkey. Upon arriving at the restaurant, Stepanyan and Chalikyan stormed inside, threw hard wooden chairs at the victims, smashed glassware, destroyed a plexiglass barrier and overturned tables. One of the defendants asked the victims, “Are you Turkish?” and shouted, “We came to kill you! We will kill you!” The attack caused at least $20,000 of damage to the restaurant and physically injured multiple victims.
“The defendants violently attacked people inside a family-owned restaurant because of their perceived nationality,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “Such violence based on national origin has no place in our society. The Justice Department will continue to vigorously prosecute bias-motivated crimes in an effort to secure justice for the victims and the communities they are meant to target and intimidate.”
“These defendants were driven by hate, and their actions were deplorable,” said U.S. Attorney Tracy L. Wilkison for the Central District of California. “The physical injuries and emotional trauma to the victims cannot be understated. We hope that the sentences handed down today will help vindicate those harms.”
“The victims in this case were brutally attacked by the defendants who trampled their civil rights and likely caused lasting psychological pain for nothing more than the perception of where they were born,” said Assistant Director in Charge Kristi Johnson of the FBI Los Angeles Field Office. “The FBI is committed to investigating civil rights violations and holding accountable individuals who commit violent acts motivated by hate.”
Trial Attorney Michael J. Songer of the Justice Department’s Civil Rights Division and Assistant U.S. Attorney Lindsey Greer Dotson of the Central District of California prosecuted the case on behalf of the government. The FBI conducted the investigation with the assistance of the Beverly Hills Police Department.
Pharmacy Owner Convicted of Unlawfully Dispensing 1.5 Million Doses of Controlled SubstancesRead the Press Release
A federal jury in the Southern District of Texas convicted a Texas pharmacy owner yesterday for unlawfully distributing controlled substances and laundering money from his now-shuttered pharmacies.
According to court documents and evidence presented at trial, Clint Carr, 32, of Cypress, co-owned and operated CC Pharmacy in Houston, and CC Pharmacy 2 and CC Pharmacy 3 in the Austin area with co-conspirator Dustin Curry. In just 18 months, Carr, Curry and their co-conspirators unlawfully distributed over 1.5 million dosage units of controlled substances, including over 1.1 million pills of oxycodone and hydrocodone. Trial evidence showed that CC Pharmacy unlawfully dispensed controlled substances — mostly oxycodone and hydrocodone — in bulk for cash, based on mostly forged or stolen prescriptions brought in by drug couriers posing as staff of long-term care facilities. CC Pharmacy brought in over $5.5 million from the unlawful sale of these controlled substances, cash proceeds which Carr and his co-conspirators structured to avoid reporting requirements. Evidence at trial showed that Carr used these drug proceeds to finance a lavish lifestyle, including the down payment on a $100,000 Ford pickup truck.
“Carr’s conviction is a reminder that the Department of Justice will hold accountable those who have helped fuel the country’s opioid epidemic,” said Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division. “This includes pharmacy owners who have effectively poisoned our communities.”
“This case is another example of the DEA’s continued commitment to combat our nation’s opioid crisis to reduce the diversion of controlled substances that drives drug overdose deaths and violent crime in our communities,” said Special Agent in Charge Daniel C. Comeaux of the Drug Enforcement Administration (DEA), Houston Division. “This conviction is a credit to the tireless work of our investigators and prosecutors to make our communities safer.”
Carr was convicted of one count of conspiracy to unlawfully distribute and dispense controlled substances, four counts of unlawfully distributing and dispensing controlled substances, one count of conspiracy to launder monetary instruments, and two counts of engaging in monetary transactions in property derived from specified unlawful activity. He faces a maximum total penalty of up to 140 years in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors. Sentencing is scheduled for May 27.
To date, five other co-conspirators, including Curry, have pleaded guilty to unlawfully distributing controlled substances.
DEA Houston, including the DEA Austin Resident Office, investigated the case.
Trial Attorneys Devon Helfmeyer and Courtney Chester of the Criminal Division’s Fraud Section are prosecuting the case. Assistant U.S. Attorney Kristine Rollinson of the Southern District of Texas is handling forfeiture.
New Jersey Man Pleads Guilty to Making Threatening Interstate Communications to Black Maryland Woman and Her FamilyRead the Press Release
Michael Marotta, 26, of Sewell, New Jersey, pleaded guilty today to making threatening interstate communications. Marotta admitted that he used an anonymizing text message service to threaten physical harm to a Black woman and her family in Maryland.
According to Marotta’s plea agreement, on April 14, 2020, Marotta used an anonymizing mobile phone application to send a threatening message to a Black Maryland woman. In the message, Marotta used racial epithets to describe the Maryland woman and her family, and he threatened to come to their home and do physical harm. As detailed in the plea agreement, Marotta wrote, among other things, “I know where you live now, I’m coming to rape your family” and “eat my bullets.” As detailed in his plea agreement, Marotta claims he does not know the recipient-victim of the message, nor does the recipient-victim know Marotta.
“The vile threats issued by this defendant have no place in civilized society,” said Assistant Attorney General Kristen Clarke for the Justice Department’s Civil Rights Division. “The department, and specifically the Civil Rights Division, will use all tools at our disposal to ensure that people who interfere with the rights of others will be brought to justice.”
“We at the U.S. Attorney’s Office take seriously our obligation to protect the civil rights of all individuals,” said U.S. Attorney Erek L. Barron of the District of Maryland. “We will not tolerate racially based threats and will prosecute such crimes to the fullest extent of the law.”
“The FBI takes threats of violence seriously,” said Special Agent in Charge Thomas J. Sobocinksi of the FBI’s Baltimore Field Office. “We encourage anyone who believes their civil rights were violated to report it to their local police department or FBI field office.”
Marotta faces a maximum sentence of five years in prison. Actual sentences for federal crimes are typically less than the maximum penalties. A federal district court judge will determine any sentence after taking into account the U.S. Sentencing Guidelines and other statutory factors. U.S. District Judge Stephanie A. Gallagher has scheduled sentencing for Marotta on May 25.
Assistant U.S. Attorney Michael Cunningham the District of Maryland and Trial Attorney Thomas Johnson of the Justice Department’s Civil Rights Division are prosecuting the case.
New Jersey Doctor Convicted of Multimillion-Dollar Health Care FraudRead the Press Release
A federal jury convicted a New Jersey rheumatologist today for defrauding Medicare and other health insurance programs by billing for services that patients never received.
According to court documents and evidence presented at trial, Alice Chu, 64, of Fort Lee, owned and operated a rheumatology practice in Clifton. From 2010 through 2019, Chu billed Medicare and other health insurance programs for expensive infusion medication that her practice never purchased. Chu also fraudulently billed millions of dollars for allergy services that patients never needed or received.
Chu was convicted of one count of conspiracy to commit health care fraud and five counts of health care fraud. She is scheduled to be sentenced on July 14 and faces a maximum penalty of 10 years in prison for each count. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division; Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division; Special Agent in Charge George M. Crouch Jr. of the FBI’s Newark Field Office; Special Agent in Charge Scott J. Lampert of the Department of Health and Human Service Office of the Inspector General (HHS-OIG); and Special Agent in Charge Patrick J. Hegarty of the Department of Defense Office of Inspector General, Defense Criminal Investigative Service (DOD-OIG) made the announcement.
The FBI, HHS-OIG and DOD-OIG investigated the case.
Acting Assistant Chief Rebecca Yuan and Trial Attorney Nicholas Peone of the Justice Department’s Fraud Section are prosecuting the case.
Georgia Bar Owner Pleads Guilty to Tax EvasionRead the Press Release
A Georgia bar owner pleaded guilty today to tax evasion.
According to court documents and statements made in court, James Stafford, 44, engaged in a scheme to evade taxes he and others owed on income earned from bars in Statesboro and Milledgeville, Georgia. Stafford was nominally the sole owner of Chrysha Inc., which operated a bar in Statesboro, and BGRG Inc., which operated a bar and a restaurant in Milledgeville. In practice, however, both companies had multiple partners with varying percentages of ownership.
Stafford provided false information to an accountant who prepared the companies’ 2014 corporate tax returns. Specifically, he underreported gross receipts and omitted cash distributions made to the true partners. As a result, Stafford caused false corporate tax returns to be filed with the IRS. By filing false corporate tax returns, Stafford also enabled the true owners of the bars and restaurant to evade their respective individual income tax liabilities. Additionally, Stafford underreported his own income on his 2014 individual tax return filed with the IRS.
Stafford is scheduled to be sentenced at a later date and faces a maximum penalty of five years in prison. He also faces a period of supervised release, restitution and monetary penalties. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and U.S. Attorney David Estes for the Southern District of Georgia made the announcement.
IRS-Criminal Investigation and the FBI are investigating the case.
Assistant Chief David Zisserson and Trial Attorney Casey Smith of the Tax Division, and the U.S. Attorney’s Office for the Southern District of Georgia, are prosecuting the case.
Gillette Man Pleads Guilty to Wire Fraud and Tax ViolationsRead the Press Release
United States Attorney Bob Murray announced today that DAVID A. JACKSON, a/k/a GERALD DAVID JACKSON, a/k/a GERALD D. RODERICK-JACKSON, of Gillette, Wyoming pleaded guilty to charges of wire fraud, willful failure to collect or pay over tax, and filing a false tax return. Jackson appeared for a change of plea hearing before United States District Court Judge Nancy D. Freudenthal on February 23, 2022. Sentencing has been set for May 16, 2022.
Wire fraud carries a maximum penalty of up to 20 years in prison, up to three years of supervised release and a fine of up to $250,000. Willful failure to collect or pay over tax carries a maximum penalty of up to five years in prison, up to three years of supervised release, and a fine of up to $10,000. False statement on a tax return carries a maximum penalty of up to three years in prison, up to one year of supervised release, and a fine of up to $100,000. A federal district court judge will determine the sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
This case was investigated by the Internal Revenue Service – Criminal Investigation and the Gillette Police Department. Assistant United States Attorney Margaret M. Vierbuchen is prosecuting the case.
Case No. 21-cr-00087-NDF
Charges Filed in Connection with Texas Oilfield DeathsRead the Press Release
A federal grand jury in Midland, Texas, returned an indictment charging an oilfield company and an executive of the company with worker safety and environmental crimes.
According to court documents, Aghorn Operating Inc. owns and operates oil wells and leases in Texas. Aghorn and Trent Day, Vice President of Aghorn, were indicted for violating the Clean Air Act relating to releases of hydrogen sulfide from an Aghorn facility, as well as obstructing an Occupational Safety and Health Administration (OSHA) investigation. Aghorn was also charged with three worker safety OSHA crimes for causing the death of an Aghorn employee. In addition, Aghorn and Day, along with another corporation, Kodiak Roustabout Inc., were charged with violating the Safe Drinking Water Act and making false statements regarding the mechanical integrity of Aghorn injection wells in forms and pressure charts filed with the State of Texas Railroad Commission.
The charges are the result of an investigation of the Oct. 26, 2019, death of Aghorn employee, Jacob Dean and his wife, Natalee Dean. Both were overcome by hydrogen sulfide, a poisonous gas, at an Aghorn facility in Odessa.
“The Justice Department will protect and defend the right to a safe workplace, and we will prosecute those who violate federal law aimed at keeping workers safe,” said Assistant Attorney General Todd Kim for the Justice Department's Environment and Natural Resources Division.
“Our nation's environmental laws are designed to protect our communities and workers from hazardous pollutants,” said Assistant Special Agent in Charge Todd “Tony” Adams of EPA's Southwest Area Criminal Investigation Program. “Today's indictments demonstrate that companies intentionally violating those laws and endangering others will be held responsible for their crimes.”
According to the allegations in the indictment, on the night of the incident, Jacob Dean responded to a call to check the pump house at the facility, an enclosed building with two bay doors. His wife, Natalee Dean, knew where Jacob had gone, and started calling him when he did not return in a timely manner. When those calls went unanswered, Natalee drove to the station with her two children, aged nine and six. A pump had failed in the pump house, causing a leak of produced water containing hydrogen sulfide. Jacob had been overcome by hydrogen sulfide in the pump house, and when Natalee arrived at the station, she exited the vehicle and proceeded to the pump house, where she too was overcome by the gas. Both Jacob and Natalee were found dead by the first responders to the scene.
The indictment stated that: “Aghorn was aware that its produced water contained high amounts of H2S as well as the deadly nature of the gas.” Aghorn and Trent Day allegedly “knowingly violated their general duty to prevent the accidental release” of hydrogen sulfide and also knowingly “placed another person in imminent danger of death or serious bodily injury.”
OSHA began an investigation two days later. The indictment alleges that Aghorn and Day obstructed the OSHA investigation, arising out of statements made by Day to OSHA in two separate interviews.
The mechanical integrity of an injection well must be evaluated by conducting pressure tests or alternative testing methods approved by the Railroad Commission. In evaluating the results of a pressure test, the Railroad Commission considers the level of pollution risk that loss of well integrity would cause. Aghorn operated numerous produced water injection wells, and submitted purported well pressure test results to the Railroad Commission. The indictment alleges that the defendants made false statements regarding the mechanical integrity of Aghorn injection wells in forms and pressure charts filed with the Railroad Commission.
If convicted, a federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
The case was investigated by the EPA’s Criminal Investigation Division. Senior Trial Attorney Christopher Costantini and Trial Attorney Mark Romley of the Environment and Natural Resources Divsion’s Environmental Crimes Section are prosecuting the case.
An indictment is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Former Hialeah Police Sergeant Pleads Guilty to Three Civil Rights OffensesRead the Press Release
A former Hialeah Police Department Sergeant pleaded guilty today to three counts of depriving women of their civil rights under color of law by sexually abusing them.
Jesus Manuel Menocal Jr., 34, of Miami was previously charged with three counts of depriving women of their civil rights under color of law.
At the change of plea hearing held today before U.S. District Judge Kathleen M. Williams, Menocal admitted that he kissed a woman and caused her to touch his exposed penis; had a second woman, who was in psychiatric crisis, perform oral sex on him; and coerced a third woman, who was walking alone at night, into submitting to oral and vaginal sex. While not directly related to the offenses to which he pleaded guilty, Menocal also admitted to bringing a fourth female into a Hialeah Police Department building and ordering her to remove her shorts and underwear, causing her to expose her buttocks to him. Menocal admitted that he was on-duty and in uniform during all of these acts, abusing his official authority.
“We will not stand by idly when law enforcement officials abuse their power and position to sexually exploit and harm women,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “The Civil Rights Division will continue to vigorously investigate and prosecute government officials who use the power of their office to sexually abuse and harm vulnerable people in their communities. We hope that this conviction sends a strong message to survivors of law enforcement sexual misconduct, that their allegations will be investigated and taken seriously.”
“Menocal sexually exploited the very people he swore to protect,” said U.S. Attorney Juan Antonio Gonzalez of the Southern District of Florida. “He betrayed his oath as a police officer and cast a dark shadow over the outstanding work done by the fine law enforcement professionals who serve our communities. Such egregious civil rights violations will not be tolerated.”
“Jesus Menocal is a predator who disgraced the badge he once wore by using his status as a police officer to sexually abuse women,” said Assistant Special Agent in Charge John J. Bernard of FBI Miami. “His actions are depraved and serve only to diminish the hard work and professionalism of the vast majority of South Florida law enforcement officers who follow their oath of office and whose conduct is above reproach.”
Menocal is scheduled for sentencing on May 12, 2022. He faces a statutory maximum sentence of three years in prison.
The case was investigated by the FBI with assistance from the Hialeah Police Department. The case is being prosecuted by Assistant U.S. Attorneys Edward N. Stamm and Monica K. Castro of the Southern District of Florida, and Trial Attorney Kyle Boynton and Special Litigation Counsel Samantha Trepel of the Civil Rights Division of the Department of Justice.
Related court documents and information may be found on the website of the District Court for the Southern District of Florida at http://www.flsd.uscourts.gov/ or on http://pacer.flsd.uscourts.gov/.
Weight Management Companies Kurbo Inc. and WW International Inc. Agree to $1.5 Million Civil Penalty and Injunction for Alleged Violations of Children’s Privacy LawsRead the Press Release
The Department of Justice, together with the Federal Trade Commission (FTC), announced today that the government entered into an agreement with Kurbo Inc. and its parent company, WW International Inc. (formerly Weight Watchers International Inc.) (collectively, “Defendants”) and will collect $1.5 million in civil penalties from defendants as part of a settlement to resolve allegations that they violated the Children’s Online Privacy Protection Act (COPPA) and Children’s Online Privacy Protection Rule (COPPA Rule) in connection with their weight management service for children, Kurbo by WW.
In a complaint filed in the U.S. District Court for the Northern District of California, the government alleged that defendants designed and marketed the Kurbo by WW mobile application and website for use by children as young as eight years old. The defendants also possessed actual knowledge that the application and website collected personal information from children, including their names, telephone numbers, email addresses and identifiers used to track their devices, as well as other sensitive information like height, weight, food intake and physical activity. The defendants nonetheless failed to notify parents that they were collecting children’s personal information and to obtain verifiable parental consent for that collection, as required by the COPPA Rule.
“Parents have a right to know and consent before companies collect their children’s personal information,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “The department is committed to enforcing the protections against unauthorized collection of information from consumers, particularly children.”
“Weight Watchers and Kurbo marketed weight management services for use by children as young as eight and then illegally harvested their personal and sensitive health information,” said Chair Lina M. Khan of the FTC. “Our order against these companies requires them to delete their ill-gotten data, destroy any algorithms derived from it, and pay a penalty for their lawbreaking.”
The stipulated order entered requires the defendants to pay $1.5 million in civil penalties and bars them from collecting personal information from children in a manner that violates the COPPA Rule. It also prohibits them from using children’s personal information that was previously collected unless they obtain verifiable parental consent and subjects them to compliance reporting obligations.
This matter was handled by Trial Attorneys Rachael Doud and Zachary Cowan and Assistant Director Lisa Hsiao of the Civil Division’s Consumer Protection Branch. Danielle Estrada and David Walko represented the FTC.
For more information about the Consumer Protection Branch and its enforcement efforts, visit its website at https://www.justice.gov/civil/consumer-protection-branch. For more information about the FTC, visit its website at https://www.FTC.gov.
Two Florida Tax Preparers Sentenced to PrisonRead the Press Release
Two Florida tax preparers were sentenced to prison yesterday for conspiring to defraud the United States and preparing false tax returns.
Nikency Alexis, the owner and operator of Unity Tax & Financial Services (Unity Tax), a Broward County tax preparation business, was sentenced to 45 months in prison, and Thony Guillaume, who worked as a return preparer at Unity Tax, was sentenced to 40 months in prison. According to court documents, from 2011 through 2016, Alexis and Guillaume conspired to defraud the IRS by preparing returns for clients that claimed fictitious business and education expenses the clients never incurred. After learning about the criminal investigation, Alexis and Guillaume continued to file false returns and concealed their involvement in the filing of those returns by listing other individuals as the paid preparers. In total, Alexis and Guillaume sought more than $2.8 million in fraudulent refunds from the IRS.
In addition to the terms of imprisonment, U.S. District Judge Raag Singhal ordered Alexis to serve three years of supervised release and to pay approximately $464,006 in restitution to the IRS. The judge ordered Guillaume to serve three years of supervised release and to pay approximately $221,823 in restitution to the IRS.
Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and U.S. Attorney Juan Antonio Gonzalez for the Southern District of Florida made the announcement.
IRS-Criminal Investigation investigated the case.
Trial Attorney Matthew Hicks of the Justice Department’s Tax Division and Assistant U.S. Attorney Deric Zacca for the Southern District of Florida prosecuted the case.
Northern Indiana Public Service Company to Clean up Remaining Surface Contamination at the Town of Pines Superfund Site Under Federal SettlementRead the Press Release
Northern Indiana Public Service Company (NIPSCO) will clean up soil contamination at individual residences within the Town of Pines Groundwater Plume Superfund site in Porter County, Indiana, at an estimated cost of $11.8 million to resolve federal and state Superfund liability. The complaint, filed simultaneously with the consent decree, alleges that the company is liable for the cleanup of coal ash from its power generation facility that it distributed as landscaping fill in the Town of Pines and its vicinity. The soils contaminated by coal ash contain hazardous substances including arsenic, thallium and lead.
“Today’s settlement requires NIPSCO to address the contamination it contributed to the Town of Pines Superfund site,” said Assistant Attorney General Todd Kim of the Justice Department’s Environment and Natural Resources Division. “This settlement is a critical step toward the remediation of the site and will minimize risks to owners of contaminated property and to the environment.”
“This settlement requires NIPSCO to remove soil contaminated with coal ash from the utility’s power generation facility, and to monitor groundwater in and around the Town of Pines, Indiana,” said Acting Assistant Administrator Larry Starfield of EPA’s Office of Enforcement and Compliance Assurance. “This cleanup work will help protect residents from exposure to arsenic and other hazardous substances.”
“This settlement will help protect the environment and the health of people in northwest Indiana by cleaning up coal ash from residential properties,” said Administrator Debra Shore of EPA Region 5. “Removing contaminated soil and monitoring groundwater at the Town of Pines site is a vital part of this settlement with NIPSCO.”
“Hoosiers stand to benefit from NIPSCO’s commitment to reimburse taxpayers for public money spent during this lengthy process,” said Indiana Attorney General Todd Rokita. “They stand to benefit, as well, from the company’s pledge to finish the cleanup in the Town of Pines made necessary by disposal of its coal ash in residential areas. We must always work to protect Hoosiers and uphold the rule of law.”
“By entering into this settlement with EPA and the state, NIPSCO will complete the process of cleaning up and restoring residential yards impacted by the disposal of coal ash in the Town of Pines, and ensure the safety of the drinking water supply by monitoring both drinking water and groundwater wells for potential contamination caused by the disposal,” said Commissioner Brian Rockensuess of the Indiana Department of Environmental Management.
The consent decree requires NIPSCO to identify residential soil contamination above clean up levels from its disposal of coal ash, excavate the contaminated soils, and transport excavated contaminated soil to a licensed waste disposal facility. NIPSCO is also required to restore excavated properties using clean backfill, implement restrictions at the excavated properties where necessary to prevent exposure to any remaining contamination that might be left at depth, and monitor residential drinking water wells, groundwater monitoring wells, surface water and sediments to ensure that the contamination has not migrated to those locations. The company will also reimburse EPA a large percentage of its past costs and pay all future costs incurred by EPA and the State of Indiana in overseeing the cleanup.
More information about this settlement can be found at https://cumulis.epa.gov/supercpad/cursites/csitinfo.cfm?id=0508071.
The consent decree, lodged in the U.S. District Court for the Northern District of Indiana, is subject to a 30-day public comment period and final court approval. The consent decree will be available for viewing at https://www.justice.gov/enrd/consent-decrees.
Justice Department Seeks to Stop Deceptive Marketing of Herbal Tea Product Advertised as COVID-19 TreatmentRead the Press Release
The Justice Department, together with the Federal Trade Commission (FTC) and the U.S. Food and Drug Administration (FDA), today announced a civil enforcement action against B4B Earth Tea LLC, B4B Corp., and Andrew Martin Sinclair (collectively, “defendants”) for alleged violations of the COVID-19 Consumer Protection Act, the FTC Act, and the Federal Food, Drug, and Cosmetic Act (FDCA).
According to a complaint filed in the U.S. District Court for the Eastern District of New York, the defendants advertised that their herbal tea product, Earth Tea, could prevent or treat COVID-19, without competent or reliable scientific evidence to support those claims. Further, the defendants allegedly made deceptive statements about a scientific study to bolster their unproven COVID-19 claims. The complaint also alleges Earth Tea is an unapproved new drug the defendants are selling in violation of the FDCA. The complaint seeks civil penalties and other available equitable relief, as well as an injunction to stop the defendants from continuing their unlawful marketing and sales of Earth Tea.
“The Department of Justice will not tolerate individuals or companies seeking to profit from the COVID-19 public health emergency by unlawfully advertising unproven products,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Department of Justice’s Civil Division. “The department is committed to protecting consumers and enforcing the COVID-19 Consumer Protection Act and the FDCA against those who unlawfully market unproven COVID-19 treatments.”
“COVID-19 has tragically claimed nearly one million lives in this country and close to six million lives worldwide,” stated U.S. Attorney Breon Peace for the Eastern District of New York. “Unfortunately, there are too many people who are taking advantage of this crisis by pushing alleged treatment products that are nothing more than snake oil. We will not tolerate attempts to make a dishonest dollar while putting our communities at risk during a pandemic.”
“Without any scientific evidence, the defendants claimed that drinking their herbal tea is more effective in preventing COVID-19 than approved vaccines, and cures anyone who has gotten ill within 24 hours,” said Director Samuel Levine of the FTC’s Bureau of Consumer Protection. “In bringing this matter with our partners at the Department of Justice and the Food and Drug Administration, the Commission continues its commitment to using every tool available to stop and deter those who would treat the pandemic as opportunity to peddle bogus treatments.”
“Products like this may delay patients from seeking proven treatments from their health care provider,” said Associate Commissioner Judy McMeekin, Pharm.D., for FDA Regulatory Affairs. “Preying on patients’ vulnerabilities during the COVID-19 pandemic is unacceptable. The FDA will continue to actively monitor the U.S. market for any companies or individuals falsely marketing products with claims it prevents or treats COVID-19, and will take actions against those who violate the law and endanger patients.”
The COVID-19 Consumer Protection Act, passed by Congress in December 2020, prohibits deceptive acts or practices associated with the treatment, cure, prevention, mitigation or diagnosis of COVID-19. Persons who violate the COVID-19 Consumer Protection Act may be subject to civil penalties, injunctive relief and other remedies available under the FTC Act.
The FDCA provides that a product is an unapproved new drug if it is intended for use in the diagnosis, cure, mitigation, treatment or prevention of disease in humans but is not generally recognized as safe and effective for its intended uses and is not the subject of an FDA approval. Remedies for violation of the FDCA include injunctive relief.
This matter is being handled by Senior Trial Attorney James T. Nelson and Trial Attorney Zachary A. Dietert of the Civil Division’s Consumer Protection Branch, and Assistant U.S. Attorney Michael Blume from the U.S. Attorney’s Office for the Eastern District of New York. Robert Van Someren Greve represents the FTC, and Michael Shane represents the FDA.
For more information about the Consumer Protection Branch and its enforcement efforts, visit its website at https://www.justice.gov/civil/consumer-protection-branch. For more information about the FTC, visit its website at https://www.FTC.gov.
Justice Department Finds that Colorado Violates the Americans with Disabilities ActRead the Press Release
The Justice Department concluded today that Colorado unnecessarily segregates people with physical disabilities in nursing facilities, in violation of the Americans with Disabilities Act (ADA) and the Supreme Court’s decision in Olmstead v. L.C. The department’s findings, detailed in a letter to Colorado Governor Jared Polis, follow a thorough and multi-year investigation into the state’s system of care for people with physical disabilities.
The ADA and the Olmstead ruling require state and local governments to make services available to people with disabilities in the most integrated setting appropriate to their needs, regardless of age or type of disability. However, many Coloradans with physical disabilities are denied a meaningful choice to receive the services they need in their own homes and communities. Community-based services that can help people live at home successfully include help bathing, dressing, managing medications and preparing meals.
“People with disabilities have too often been unlawfully segregated in institutions like nursing facilities,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “The Civil Rights Division will vigorously enforce the rights of people with physical disabilities, including older adults, to access the community-based services they need to age in place and thrive at home.”
“Older Coloradans and Coloradans with physical disabilities increasingly expect to remain at home as their support needs increase,” said U.S. Attorney Cole Finegan for the District of Colorado. “I’m hopeful this situation can be remedied so that individuals with physical disabilities are no longer isolated.”
The department’s investigation found that a significant number of Colorado’s Medicaid-funded nursing facility residents are interested in transitioning to community-based settings and could successfully do so with appropriate supports. However, few Coloradans with physical disabilities who want to move out of their nursing facilities are able to do so. The investigation found that most residents are unaware of the services available to help them move and live successfully in the community.
The right to receive needed services in the community instead of an institution has become particularly acute during the COVID-19 pandemic. Reports show that a significant number of all deaths from COVID-19 in the United States are linked to nursing facilities and other long-term care facilities. Enabling people to move out of nursing facilities and into the community can reduce that risk and satisfy the ADA by avoiding unnecessary institutionalization.
This investigation was conducted by the Civil Rights Division’s Disability Rights Section with the assistance of the U.S. Attorney’s Office of the District of Colorado. The full findings letter can be found at www.ada.gov. Additional information about the Civil Rights Division’s Olmstead enforcement is available on its website at https://www.ada.gov/olmstead/.
Fugitive Executive Pleads Guilty in Parking Heaters Price-Fixing ConspiracyRead the Press Release
A German national pleaded guilty in the Eastern District of Michigan to leading a price-fixing conspiracy from 2007 to 2012 and was sentenced to time served.
Volker Hohensee, a German national and onetime Canadian resident who served as President of Espar Inc., a parking heater manufacturing company located in the United States and Canada, was indicted by a grand jury in December 2015. Hohensee fled Canada and remained a fugitive for five years. In December 2020, Hohensee was arrested while attempting to enter the Canary Islands and remained incarcerated in a Spanish facility until his plea today.
“The arrest, plea, and sentencing of Volker Hohensee is a prime example of the Antitrust Division’s commitment to bring fugitives to justice,” said Assistant Attorney General Jonathan Kanter of the Department of Justice’s Antitrust Division. “The price that this defendant paid by choosing to flee — including five years of fugitive status and 15 months spent in the custody of Spanish law enforcement — serves as a cautionary tale for other defendants who contemplate running from a charge rather than facing it. Be assured that the Antitrust Division and our law enforcement partners — domestic and international — have the patience and tools to bring indicted defendants to justice.”
According to the one-count felony information describing the charge to which Hohensee pleaded guilty, Hohensee and his co-conspirators, including an executive at a competing company, worked together to artificially set aftermarket prices for parking heaters in the United States and elsewhere in North America. Parking heaters are devices that heat the interior compartment of a commercial motor vehicle independent of the operation of the vehicle’s engine. Hohensee and his co-conspirators met to discuss parking heater prices, agreed to set a price floor for parking heater kits and agreed to coordinate the timing and amount of price increases for parking heaters.
Two other executives, both German nationals, were indicted alongside Hohensee in 2015. Frank Haeusler is a former Vice President of Espar Inc.’s German affiliate, Eberspaecher, and a former executive of a competing company. Harald Sailer was a vice president at Eberspaecher. Both remain at large. In 2015, in the Eastern District of New York, Espar Inc. pleaded guilty to a price-fixing charge stemming from the same conspiracy and was sentenced to pay a criminal fine of $14.9 million.
After accepting Hohensee’s guilty plea, the federal district court observed that Hohensee had served 15 months in Spain’s custody after being arrested, and sentenced him to time served.
The Justice Department expresses its appreciation for the assistance provided by various enforcement agencies in Spain and the Canary Islands.
This case is the result of a federal antitrust investigation into price-fixing in the parking heaters market, conducted by the Antitrust Division and the FBI. The original charges, and today’s plea and sentencing, were handled by the Antitrust Division’s New York Office and the FBI’s New York Field Office. Assistance was provided by the Justice Department’s Office of International Affairs and the U.S. Attorney for the Eastern District of Michigan.
Anyone with information on price fixing, bid rigging, or other anticompetitive conduct should contact the Antitrust Division’s Citizen Complaint Center at 1-888-647-3258 or visit https://www.justice.gov/atr/citizen-complaint-center.
An indictment is merely an allegation and Haeusler and Sailer are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Former Kentucky Jail Official Charged with Civil Rights Offense, Writing a False Report and Making False Statements to InvestigatorsRead the Press Release
Gregory Evans, 50, was indicted today by a federal grand jury in Lexington, Kentucky, for using unlawful force against a pretrial detainee while Evans was a captain at the Madison County Detention Center.
Today’s indictment charges Evans with one count of deprivation of rights under color of law, one count of writing a false report about the incident and one count of making false statements to law enforcement. The indictment alleges that Evans used unreasonable force when he assaulted pretrial detainee E.B., resulting in bodily injury to E.B.; and it further charges that Evans wrote a false report about the assault and that he made false statements to the FBI.
The first count carries a maximum penalty of 10 years of imprisonment, the second count carries a maximum penalty of 20 years and the third count carries a maximum penalty of five years. Actual sentences, in case of conviction, are decided by the judge.
This case was investigated by the Lexington Resident Agency of the FBI. It is being prosecuted by Assistant U.S. Attorney Zachary Dembo for the Eastern District of Kentucky and Trial Attorney Andrew Manns for the Justice Department’s Civil Rights Division.
Assistant Attorney General Kristen Clarke for the Civil Rights Division, U.S. Attorney Carlton S. Shier IV for the Eastern District of Kentucky and Special Agent in Charge Jodi Cohen of the FBI Louisville Field Office made the announcement.
An indictment is merely an allegation and the defendant is presumed innocent unless proven guilty.
Pain Clinic Owners Convicted of Unlawfully Distributing Opioids and Multimillion-Dollar Health Care FraudRead the Press Release
A federal jury convicted a Tennessee physician and his wife yesterday in the Northern District of Alabama for unlawfully distributing opioids, providing unnecessary services and defrauding insurers from their now-shuttered Alabama clinics.
According to court documents and evidence presented at trial, Mark Murphy, 65, and his wife, Jennifer Murphy, 65, both of Lewisburg, owned and operated North Alabama Pain Services (NAPS), which closed its Decatur and Madison offices in early 2017. Over the approximately five-year period leading up to the clinic closing its Alabama locations, Murphy and his wife, who was the office manager, caused over $50 million in fraudulent or unnecessary medical services to be charged to Medicare, TRICARE, Blue Cross Blue Shield of Alabama and others. Evidence at trial showed that NAPS provided pre-signed prescriptions to thousands of patients a month, including prescriptions written outside the usual course of professional practice without a legitimate medical purpose. The Murphys also solicited and received unlawful payments for referring fraudulent or unnecessary services to patients. Jennifer Murphy was also convicted of tax-related charges for underreporting clinic income.
Both defendants were convicted of conspiracy to unlawfully distribute controlled substances and conspiracy to commit health care fraud, along with various substantive counts related to the same. They were also convicted of conspiring to defraud the United States and receiving kickbacks. The Murphys face a maximum of 20 years in prison for the drug charges and a maximum of 10 years in prison for the health care fraud charges. Both defendants face a maximum of five years in prison for charges stemming from violations of the Anti-Kickback Statute, and Jennifer Murphy faces up to three years in prison for the tax charges. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors. Sentencing is scheduled for June 30.
Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division; U.S. Attorney Prim F. Escalona for the Northern District of Alabama; Special Agent in Charge Bradford L. Byerly of the Drug Enforcement Administration (DEA) New Orleans Field Division; Special Agent in Charge Johnnie Sharp Jr. of the FBI Birmingham Division; Special Agent in Charge James E. Dorsey of IRS Criminal Investigation (IRS-CI) Atlanta Field Office; and Special Agent in Charge Tamala E. Miles of the Department of Health and Human Service Office of the Inspector General (HHS-OIG) Atlanta Region made the announcement.
FBI, HHS-OIG, IRS-CI and DEA investigated the case.
Assistant Chief Jillian Willis and Trial Attorney Emily Gurskis of the Criminal Division’s Fraud Section and Assistant U.S. Attorney J.B. Ward of the Northern District of Alabama are prosecuting the case.
The Fraud Section leads the Appalachian Regional Prescription Opioid (ARPO) Strike Force. Since its inception in October 2018, the ARPO Strike Force, which operates in 10 districts, has charged more than 90 defendants who are collectively responsible for distributing more than 105 million pills. The ARPO Strike Force is part of the Health Care Fraud Strike Force Program, which since March 2007 has charged more than 4,200 defendants who collectively have billed the Medicare program for more than $19 billion. In addition, the Centers for Medicare & Medicaid Services, working in conjunction with the Office of the Inspector General for the Department of Health and Human Services, are taking steps to hold providers accountable for their involvement in health care fraud schemes. More information can be found at: https://www.justice.gov/criminal-fraud/health-care-fraud-unit.
Leader of Alabama Chapter of Oath Keepers Pleads Guilty to Seditious Conspiracy and Obstruction of Congress for Efforts to Stop Transfer of Power Following 2020 Presidential ElectionRead the Press Release
A regional leader of the Oath Keepers pleaded guilty today to seditious conspiracy and obstruction of an official proceeding for his actions before, during and after the breach of the U.S. Capitol on Jan. 6, 2021. His and others’ actions disrupted a joint session of the U.S. Congress convened to ascertain and count the electoral votes related to the presidential election.
Joshua James, 34, of Arab, Alabama, pleaded guilty to seditious conspiracy in connection with the Capitol breach. As part of the plea agreement, James has agreed to cooperate with the government’s ongoing investigation.
As described in court documents, James is the regional leader in charge of the Alabama chapter of the Oath Keepers. The Oath Keepers are a large but loosely organized collection of individuals, some of whom are associated with militias. Though the Oath Keepers will accept anyone as members, they explicitly focus on recruiting current and former military, law enforcement, and first-responder personnel.
In his guilty plea, James, a military veteran, admitted that, from November 2020 through January 2021, he conspired with other Oath Keeper members and affiliates to use force to prevent, hinder and delay the execution of the laws of the United States governing the transfer of presidential power. He used encrypted and private communications, equipped himself with a variety of weapons, donned combat and tactical gear, and was prepared to answer a call to take up arms.
According to court documents, on Jan. 4, 2021, James and others traveled to the Washington, D.C. metropolitan area. He brought a semi-automatic handgun and stored multiple firearms at a Virginia hotel. On Jan. 6, after learning the Capitol had been breached, James and others traveled to the Capitol on golf carts, driving around multiple barricades, including marked law enforcement vehicles. James was wearing a backpack, a combat shirt, tactical gloves, boots, a paracord attachment, and an Oath Keepers hat and patches. He and others unlawfully entered the Capitol together through the East Rotunda doors. Inside the Rotunda, James assaulted a Metropolitan Police Department officer by grabbing the officer’s vest and pulling him towards the mob. While pulling the officer, James yelled, “Get out of my Capitol! This is not yours! This is my Capitol!” James was expelled by law enforcement, including at least one officer who aimed chemical spray at him.
On the evening of Jan. 6, 2021, James and others heard that law enforcement was searching for them and immediately departed the Washington, D.C. metropolitan area. Soon after, James traveled to Texas to join with the leader of the Oath Keepers and other co-conspirators. There, he helped co-conspirators amass thousands of dollars’ worth of firearms, ammunition and firearms equipment – some of which he later stored in storage sheds in Alabama – and prepared to distribute the equipment to others and to engage in violence in the event of a civil war.
James was arrested on March 9, 2021. He was among 11 defendants indicted on Jan. 12, 2022, in the District of Columbia on seditious conspiracy and other charges; the others have pleaded not guilty. James faces up to 20 years in prison for seditious conspiracy and up to 20 years for obstruction of an official proceeding, along with potential financial penalties. No sentencing date was set. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
The case is being prosecuted by the U.S. Attorney’s Office for the District of Columbia and the Department of Justice National Security Division’s Counterterrorism Section. Valuable assistance was provided by the U.S. Attorney’s Office for the Northern District of Alabama.
The case is being investigated by the FBI’s Washington and Birmingham Field Offices.
In the 13 months since Jan. 6, more than 750 individuals have been arrested in nearly all 50 states for crimes related to the breach of the U.S. Capitol, including over 235 individuals charged with assaulting or impeding law enforcement. The investigation remains ongoing.
Attorney General Merrick B. Garland Announces Launch of Task Force KleptoCaptureRead the Press Release
Today, Attorney General Merrick B. Garland announced the launch of Task Force KleptoCapture, an interagency law enforcement task force dedicated to enforcing the sweeping sanctions, export restrictions, and economic countermeasures that the United States has imposed, along with allies and partners, in response to Russia’s unprovoked military invasion of Ukraine. Task Force KleptoCapture will ensure the full effect of these actions, which have been designed to isolate Russia from global markets and impose serious costs for this unjustified act of war, by targeting the crimes of Russian officials, government-aligned elites, and those who aid or conceal their unlawful conduct.
“The Justice Department will use all of its authorities to seize the assets of individuals and entities who violate these sanctions,” said Attorney General Merrick B. Garland. “We will leave no stone unturned in our efforts to investigate, arrest, and prosecute those whose criminal acts enable the Russian government to continue this unjust war. Let me be clear: if you violate our laws, we will hold you accountable.”
“To those bolstering the Russian regime through corruption and sanctions evasion: we will deprive you of safe haven and hold you accountable,” said Deputy Attorney General Lisa O. Monaco. “Oligarchs be warned: we will use every tool to freeze and seize your criminal proceeds.”
Task Force KleptoCapture will be run out of the Office of the Deputy Attorney General and staffed with prosecutors, agents, analysts, and professional staff across the Department who are experts in sanctions and export control enforcement, anticorruption, asset forfeiture, anti-money laundering, tax enforcement, national security investigations, and foreign evidence collection. It will leverage all the Department’s tools and authorities against efforts to evade or undermine the economic actions taken by the U.S. government in response to Russian military aggression. The mission of the Task Force will include:
- Investigating and prosecuting violations of new and future sanctions imposed in response to the Ukraine invasion, as well as sanctions imposed for prior instances of Russian aggression and corruption;
- Combating unlawful efforts to undermine restrictions taken against Russian financial institutions, including the prosecution of those who try to evade know-your-customer and anti-money laundering measures;
- Targeting efforts to use cryptocurrency to evade U.S. sanctions, launder proceeds of foreign corruption, or evade U.S. responses to Russian military aggression; and
- Using civil and criminal asset forfeiture authorities to seize assets belonging to sanctioned individuals or assets identified as the proceeds of unlawful conduct.
The Task Force will be fully empowered to use the most cutting-edge investigative techniques — including data analytics, cryptocurrency tracing, foreign intelligence sources, and information from financial regulators and private sector partners — to identify sanctions evasion and related criminal misconduct.
Arrests and prosecution will be sought when supported by the facts and the law. Even if defendants cannot be immediately detained, asset seizures and civil forfeitures of unlawful proceeds — including personal real estate, financial, and commercial assets — will be used to deny resources that enable Russian aggression. Where appropriate, information gathered through Task Force investigations will be shared with interagency and foreign partners to augment the identification of assets that are covered by the sanctions and new economic countermeasures.
Task Force KleptoCapture will complement the work of the transatlantic task force announced by the President and leaders of the European Commission, France, Germany, Italy, the United Kingdom, and Canada on Feb. 26, which has a mission to identify and seize the assets of sanctioned individuals and companies around the world.
Task Force KleptoCapture will be led by a veteran corruption prosecutor assigned to the Deputy Attorney General’s Office from the U.S. Attorney’s Office for the Southern District of New York. This prosecutor has a long and successful track record of investigating Russian organized crime and recovering illicit assets. The Task Force leadership will include Deputy Directors from both the National Security and Criminal Divisions, and more than a dozen attorneys from these divisions, as well as the Tax Division, Civil Division, and U.S. Attorneys’ Offices across the country.
The Task Force will include agents and analysts from numerous law enforcement agencies, including the FBI; U.S. Marshals Service, U.S. Secret Service; Department of Homeland Security–Homeland Security Investigations; IRS–Criminal Investigation; and the U.S. Postal Inspection Service.
The Task Force is authorized to investigate and prosecute any criminal offense related to its mission, including conspiracy to defraud the United States by interfering in and obstructing lawful government functions; money laundering; false statements to a financial institution; bank fraud; and various tax offenses. The maximum penalty under several of these authorities is 20 years in prison.
Readout of Justice Department Leadership Meeting with FAMMRead the Press Release
Yesterday, Attorney General Merrick B. Garland, Deputy Attorney General Lisa O. Monaco and Associate Attorney General Vanita Gupta met virtually with members of FAMM and a number of individuals and their families who have been impacted by the federal criminal justice system. Department leadership had an opportunity to hear personal stories about how the new earned time credit rule and home confinement policies have changed lives.
The meeting focused on the positive real-world impact of the finalization of the First Step Act Time Credit Rule, and the recent memorandum by the Office of Legal Counsel (OLC) concerning home confinement, as well as the need for Congress to pass the EQUAL Act. The department has strongly urged Congress to pass the EQUAL ACT, which would reduce the disparity between crack cocaine and powder cocaine sentences from 18:1 to 1:1.
The Attorney General emphasized that meetings like these are “vitally important” to help department leadership understand how its “policies on paper affect people and their communities.”
During her remarks, Deputy Attorney General Monaco spoke about the importance of implementing the First Step Act and the Time Credit Rule and praised the work of FAMM. She noted that “as of this month, thousands of people are returning to their communities having put in the work to do so.”
In Associate Attorney General Gupta’s opening remarks, she reiterated the importance of hearing from individuals directly impacted by the criminal justice system and shared that the department provided written testimony to the Senate Judiciary Committee in support of the EQUAL Act in June 2021, saying, “the current sentencing differential between crack and powder cocaine is not based in evidence and yet has caused significant harm in particular to communities of color. It’s past time to correct this.”
Former Delaware Doctor Sentenced to 20 Years in Prison for Unlawfully Distributing Opioid PillsRead the Press Release
A former Delaware doctor was sentenced today to 20 years in prison for unlawful drug distribution and maintaining a drug-involved premises.
Patrick Titus, 58, of Milford, was convicted by a federal jury in July 2021 of 13 counts of unlawfully distributing and dispensing controlled substances and one count of maintaining a drug-involved premises.
“This sentence is a reminder that the Department of Justice will hold accountable those doctors who are illegitimately prescribing opioids and fueling the country’s opioid crisis,” said Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division. “Doctors who commit these unlawful acts exploit their roles as stewards of their patients’ care for their own profit.”
According to court documents and evidence presented at trial, Titus unlawfully distributed or dispensed a variety of powerful opioids – including fentanyl, morphine, methadone, OxyContin and oxycodone – outside the usual scope of professional practice and not for legitimate medical purposes. Titus operated an internal medicine practice where he frequently prescribed these dangerous controlled substances in high dosages, sometimes in combination with each other or in other dangerous combinations, mostly in exchange for cash. Evidence at trial showed he distributed over 1 million opioid pills. Although these Schedule II drugs are approved for pain management treatment, Titus provided no meaningful medical care and instead prescribed these controlled substances to patients he knew were suffering from substance use disorder and/or who demonstrated clear signs that the prescribed drugs were being abused, diverted or sold on the street.
“DEA-registered medical practitioners have an important role in our communities to treat patients compassionately and responsibly,” said DEA Administrator Anne Milgram. “Today’s sentencing makes clear that medical professionals who recklessly prescribe opioids and endanger the safety and health of patients will be held accountable. I applaud the outstanding investigative work conducted by DEA’s Wilmington Resident Office Tactical Diversion Squad and the Department of Justice’s prosecution of the case.”
“As we continue the fight against the opioid crisis, this case serves as an important reminder that health care professionals have a duty to prescribe medication responsibly to ensure the well-being of individuals under their care. Failing to do so can endanger patients and undermines critical, ongoing public health measures,” said Special Agent in Charge Maureen Dixon of the U.S. Department of Health and Human Services, Office of the Inspector General (HHS-OIG). “HHS-OIG will continue to work with our law enforcement partners to hold bad actors accountable.”
The DEA and HHS-OIG investigated the case.
Assistant Deputy Chiefs Aleza Remis and Justin Woodard and Trial Attorney Claire Sobczak of the Criminal Division’s Fraud Section prosecuted the case. Assistant U.S. Attorney Edmond Falgowski of the District of Delaware assisted with the case.
The Fraud Section leads the Criminal Division’s efforts to combat health care fraud through the Health Care Fraud Strike Force Program. Since March 2007, this Program, comprised of 15 strike forces operating in 24 federal districts, has charged more than 4,200 defendants who collectively have billed the Medicare program for more than $19 billion. In addition, the Centers for Medicare & Medicaid Services, working in conjunction with the Office of the Inspector General for the Department of Health and Human Services, are taking steps to hold providers accountable for their involvement in health care fraud schemes. More information can be found at https://www.justice.gov/criminal-fraud/health-care-fraud-unit.
Five Tax Shelter Promoters and Two Appraisers Indicted in Syndicated Conservation Easement Tax SchemeRead the Press Release
A federal grand jury sitting in Atlanta, Georgia, returned a superseding indictment on Feb. 24 charging seven individuals with conspiracy to defraud the United States and other crimes arising out of their promotion of fraudulent tax shelters involving syndicated conservation easements dating back nearly two decades. One of the defendants, Herbert Lewis, was previously charged in an indictment returned on June 9, 2021.
According to the superseding indictment, Jack Fisher, an Atlanta certified public accountant (CPA); James Sinnott; Yekaterina Lopuhina, aka “Kate Joy;” Lewis, an Atlanta-area CPA; Victor Smith, an Atlanta-area CPA; Clayton Weibel, a licensed appraiser; and Walter D. Roberts II, aka “Terry Roberts,” a licensed appraiser, engaged in a conspiracy to design, market and sell false and fraudulent charitable contribution tax deductions to high-income clients. Fisher and Sinnott allegedly caused partnerships to donate conservation easements over land owned by the partnerships. In conjunction with those donations, Fisher and Sinnott allegedly used two hand-picked appraisers, Weibel and Roberts, to generate fraudulent and inflated appraisals of the conservation easements that frequently valued the easements at amounts at least 10 times higher than the price that was actually paid for the partnership — often within months of the appraisals. According to the superseding indictment, the partnerships then claimed a charitable contribution tax deduction in the inflated amount of the conservation easement, resulting in a fraudulent tax deduction flowing to the clients who purchased units in the partnership.
Fisher, Sinnott, Joy, Lewis, Smith and other co-conspirators allegedly promoted, marketed and sold partnership units for $25,000 and guaranteed at least a 4-to-1 tax deduction ratio to their clients, which meant that four units with a total cost of $100,000 would yield a $400,000 tax deduction. The marketing materials allegedly stated, for example, that depending on their personal tax rate, such a $400,000 deduction could result in the client receiving $170,000 back within months of purchasing their units for $100,000. Fisher, Sinnott and Joy allegedly provided Roberts and Weibel with spreadsheets containing information purportedly used to value the conservation easements necessary to deliver the tax deduction ratio promised to their clients.
The superseding indictment charges that the syndicated conservation easement transactions were abusive tax shelters lacking in economic substance or a business purpose. Despite Fisher, Sinnott and Joy allegedly attempting to disguise the transactions as real estate deals, the indictment alleges that the transactions were simply the illegal sale of inflated tax deductions. Additionally, Fisher, Sinnott, Joy, Lewis and Smith allegedly helped clients claim charitable contribution tax deductions after the close of the tax year by accepting late sales, generating backdated documents and preparing, and causing the preparation of, false and fraudulent tax returns and false documents, among other items. In total, the defendants allegedly sold over $1.3 billion in false and fraudulent tax deductions through this scheme.
All defendants are charged with conspiring to defraud the United States, for which they face a maximum sentence of five years in prison. In addition, Fisher, Sinnott, Joy, Roberts and Weibel are charged with one count of conspiracy to commit wire fraud, for which each faces a maximum sentence of 20 years in prison if convicted. Lewis and Smith are both charged with wire fraud, for which they each face a maximum sentence of 20 years in prison for each count. Fisher, Sinnott, Lewis, Smith, Roberts and Weibel are charged with aiding and assisting in the preparation of false returns related to the syndicated conservation easement tax shelters, for which they face a maximum sentence of three years in prison for each count. Fisher, Sinnott, Joy and Lewis are also charged with filing false personal tax returns, for which they each face a maximum sentence of three years in prison for each count. Finally, Fisher is charged with money laundering arising from his purchases of multiple luxury vehicles and domestic and foreign properties with the proceeds of unlawful activity. He faces a maximum sentence of 10 years in prison for each count. In addition to the statutory maximum periods of incarceration, each of the defendants also faces a period of supervised release, monetary penalties, restitution and forfeiture. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
“The Tax Division is continuing to prioritize prosecution of fraudulent tax shelters, which are designed to enable taxpayers to pay far less than their fair share,” said Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division. “Those who contemplate promoting fraudulent tax shelters involving syndicated conservation easements – and the accountants, appraisers and tax preparers who create and execute strategies to assist them – should know that the Tax Division and IRS will unravel even the most elaborate schemes.”
“This superseding indictment demonstrates IRS Criminal Investigation’s commitment to investigate and prosecute illegal tax shelters,” said Chief Jim Lee of IRS Criminal Investigation (IRS-CI). “IRS-CI special agents are focused on ending abusive syndicated conservation easements that allow perpetrators of these schemes to enrich themselves while their wealthy clients skirt their tax obligations.”
Acting Deputy Assistant Attorney General Goldberg of the Tax Division, U.S. Attorney Kurt R. Erskine for the Northern District of Georgia and IRS Criminal Investigation Chief Lee made the announcement, and they thanked U.S. Attorney Dena J. King for the Western District of North Carolina for her office’s assistance in investigating the case.
IRS-CI and the U.S. Postal Inspection Service are investigating the case.
Tax Division Trial Attorneys Brittney Campbell, Parker Tobin, Casey Smith and William Guappone, along with Assistant U.S. Attorney Christopher Huber, Deputy Chief of the Complex Frauds Section, of the Northern District of Georgia, are prosecuting the case.
An indictment is merely an allegation, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Justice Department and Federal Maritime Commission Reaffirm and Strengthen Partnership to Promote Fair Competition in the Shipping IndustryRead the Press Release
The Justice Department and the Federal Maritime Commission (FMC) today reaffirmed their continuing commitment to jointly enforcing competition laws and strengthening their cooperation to promote competition in the ocean freight transportation system.
The FMC is a bipartisan, independent Executive Branch agency whose mission is to ensure a competitive and reliable international ocean transportation supply system that supports the U.S. economy and protects the public from unfair and deceptive practices. The Justice Department is the Executive Branch agency charged with promoting economic competition through enforcing and providing guidance on antitrust laws and principles.
The FMC and the Justice Department possess competition expertise unique to their respective agencies and have successfully worked together in the past. In July 2021, the working relationship between the FMC and the Department was formalized with the signing of a Memorandum of Understanding (MOU). The MOU established a framework for partnership between the FMC and the Justice Department’s Antitrust Division that enhances cooperation in the enforcement of antitrust and competition laws, including the Shipping Act, including by facilitating information exchange between and among attorneys, economists and technical experts. The objectives of the President’s Executive Order on Promoting Competition in the American Economy will be supported by this continued partnership.
Building upon the July 2021 MOU, Attorney General Merrick B. Garland and Chairman Daniel B. Maffei today announced new steps the two agencies will take to strengthen this partnership. The Justice Department will provide the FMC with the support of attorneys and economists from the Antitrust Division for enforcement of violations of the Shipping Act and related laws. The FMC will provide the Antitrust Division with support and maritime industry expertise for Sherman Act and Clayton Act enforcement actions.
“The Justice Department will continue to aggressively enforce our antitrust laws – no matter the industry, no matter the company, and no matter the individual,” said Attorney General Garland. “Competition in the maritime industry is integral to lowering prices, improving quality of service, and strengthening supply chain resilience. Expanding joint enforcement partnerships like the partnership between the FMC and DOJ is one of our most powerful tools for promoting competition. Lawbreakers should know that the Justice Department will provide the Federal Maritime Commission all necessary litigation support as it pursues its mission of promoting competition in ocean shipping.”
“The Attorney General and I share both the priority of a competitive marketplace and a commitment to pursue enforcement actions when necessary,” said Chairman Maffei. “Our agencies have a history of cooperating to the benefit of the American consumer and this new support will help ensure that the working relationship will help both government entities in our shared goal of fair competition.”
Federal Court Enters Preliminary Injunction and Shuts Down Brooklyn Tax Preparers Until Further NoticeRead the Press Release
On Feb. 26, a federal court in the Eastern District of New York issued a preliminary injunction against four Brooklyn tax return preparers and their business.
The civil complaint filed in the case seeks to permanently bar Keith Sang, Kashana Sang, Tareek Lewis, Kimberly Brown and their business K&L Accounting Inc. from preparing tax returns. The preliminary injunction bars the defendants from any involvement in the preparation of federal tax returns during the pendency of this case. Keith Sang, Kashana Sang, Lewis and the business made no objection to the injunction. Brown opposed it.
The complaint alleges that the defendants’ tax return preparation schemes include preparation of individual income tax returns that (1) contain false or exaggerated itemized deductions (for example, unreimbursed employee expenses and charitable donations), (2) false filing statuses, such as improper “head of household” elections, (3) fraudulent and/or fictitious business income and/or expenses, (4) returns that falsify customer’s self-employment income to bring the customer into the “sweet spot” for the maximum available earned income tax credit, and (5) false losses on forms that report supplemental income or loss. The complaint alleges that, each year, K&L is responsible for preparing over 2,000 tax returns for customers, and that Keith Sang, whose electronic tax filing privileges were revoked years ago, has taken numerous steps to disguise his involvement with the tax return preparation, while he continues to prepare returns and supervise others working at K&L.
In granting the preliminary injunction, the court found that defendants engaged in concerted and conscious steps to evade IRS enforcement; that they, acting as a unit, repeatedly filed tax returns understating taxpayer liabilities since at least 2016; and that their past efforts demonstrated that they would continue hampering IRS enforcement unless prohibited from acting as federal tax return preparers during the litigation.
Deputy Assistant Attorney General David A. Hubbert of the Justice Department’s Tax Division made the announcement.
Return preparer fraud is one of the IRS’ Dirty Dozen Tax Scams and taxpayers seeking a return preparer should remain vigilant. (More information can also be found here.) The IRS has information on its website for choosing a tax preparer, has launched a free directory of federal tax preparers, and offers information on how to avoid “ghost” tax preparers, whose refusal to sign a return should be a red flag to taxpayers. The IRS also has a checklist of things to remember when filing income tax returns in 2022.
In addition, IRS Free File, a public-private partnership, offers free online tax preparation and filing options on IRS partner websites for individuals whose adjusted gross income is under $72,000. For individuals whose income is over that threshold, IRS Free File offers electronical federal tax forms that can be filled out and filed online for free. The IRS has tips on how seniors and individuals with low to moderate income can get other help or guidance on tax return preparation, too.
In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers. Information about these cases is available on the Justice Department’s website. An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found this page. If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.
Chicago Woman Convicted on Federal Fraud and Tax ChargesRead the Press Release
A federal jury convicted an Illinois woman on fraud and tax offenses for cashing her deceased grandmother’s pension checks and preparing false tax returns.
According to court documents and evidence presented at trial, Eunice Salley, aka Eunice Sally Dobyns, aka Oya Awanata-Bey, aka Oya Awanata, 37, of Chicago, was found guilty on all 29 counts against her, including pension fraud, embezzlement, mail fraud and tax charges. The jury returned the verdicts Friday after a four-day trial in U.S. District Court in Chicago.
According to evidence presented at trial, Salley worked as a paid tax return preparer. In 2016 and 2017, Salley prepared and filed with the IRS 22 false individual income tax returns on behalf of clients. The returns, which sought more than $1 million in false refunds, contained fictitious wages and withholdings, as well as false medical, charitable and employment related expenses. Salley demanded that many of her clients pay her up to 50% of the refund, in addition to her regular preparation fee.
Evidence regarding the pension fraud revealed that Salley’s grandmother died in 2009 after having worked for American Can Co. After her death, the grandmother’s monthly pension checks continued to be delivered to the residence where Salley continued to reside. From January 2013 to December 2017, 33 pension checks, totaling $14,131, were issued to the grandmother and deposited into one of six bank accounts opened and controlled by Salley. On several occasions during that time Salley notarized and submitted to the pension plan administrator affidavits under her grandmother’s name, fraudulently affirming that the grandmother was alive. Salley did not report approximately $5,000 in income she received in 2017 from the pension checks that she embezzled.
Salley is scheduled to be sentenced on July 21 and faces a maximum penalty of 30 years in prison for mail fraud, five years in prison for each count of theft from an employee benefit plan, three years for each count of aiding and assisting the filing of a false tax return, and three years in prison for filing a false tax return. She also faces a period of supervised release, restitution and monetary penalties. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division; U.S. Attorney John R. Lausch Jr. for the Northern District of Illinois; Special Agent-in-Charge Justin Campbell of IRS Criminal Investigation (IRS-CI) in Chicago; and Special Agent-in-Charge Emmerson Buie Jr. of the Chicago Field Office of the FBI made the announcement.
The IRS-CI and FBI investigated the case.
Assistant Chief Andrew Kameros of the Tax Division and Assistant U.S. Attorney Barry Jonas for the Northern District of Illinois are prosecuting the case.
Massachusetts Man Convicted of COVID-19 Relief FraudRead the Press Release
A federal jury convicted a Massachusetts man for submitting fraudulent loan applications seeking more than $13 million in forgivable Paycheck Protection Program (PPP) loans guaranteed by the Small Business Administration (SBA) under the Coronavirus Aid, Relief and Economic Security Act.
According to evidence presented at trial, Elijah Majak Buoi, 40, of Winchester, submitted six fraudulent PPP loan applications on behalf of his company Sosuda Tech LLC (Sosuda) to four different SBA-approved lenders. In each loan application, Buoi misrepresented the number of employees and payroll expenses. Buoi also submitted fraudulent IRS tax forms in support of his applications. The evidence at trial showed that Sosuda was a startup company with no U.S.-based payroll and no U.S.-based employees. As a result of his scheme, Buoi obtained a $2 million PPP loan. The government recovered approximately $1.97 million of the loan funds.
Buoi was convicted of four counts of wire fraud and one count of making a false statement to a financial institution. He is scheduled to be sentenced on June 16, and faces a maximum penalty of 20 years in prison for each wire fraud conviction and 30 years in prison for making false statements to a financial institution. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division; U.S. Attorney Rachael S. Rollins for the District of Massachusetts; Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division; Special Agent in Charge Joseph R. Bonavolonta of the FBI’s Boston Division; Special Agent in Charge Joleen D. Simpson of IRS Criminal Investigation (IRS-CI) in Boston; Acting Special Agent in Charge Stephen Donnelly of the Office of Inspector General for the Board of Governors of the Federal Reserve System and the Bureau of Consumer Financial Protection (FRB-OIG), Eastern Region; Special Agent in Charge Amaleka McCall-Brathwaite of the SBA Office of Inspector General (SBA-OIG), Eastern Regional Office; and Special Agent in Charge Patricia Tarasca of the Federal Deposit Insurance Corporation Office of Inspector General (FDIC-OIG), New York Region, made the announcement today.
The FBI, IRS-CI, FRB-OIG, SBA-OIG and FDIC-OIG investigated the case.
Trial Attorney Della Sentilles of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Mackenzie A. Queenin of the District of Massachusetts prosecuted the case.
In May 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.
Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
Justice Department Settles Case Against Village of Walthill, Nebraska, for Restricting Christian Church from Building New Place of WorshipRead the Press Release
The Justice Department today announced that it has reached a settlement resolving allegations that the Village of Walthill, Nebraska, violated a church’s rights under the Religious Land Use and Institutionalized Persons Act (RLUIPA). The department alleged that the Village unlawfully refused to grant the necessary permits required for Light of the World Gospel Ministries Inc. (LOTW), a nondenominational Christian Church, to construct a new church building on land it owns in a commercial district of the Village. Under the Village’s zoning code, churches and other religious institutions are required to obtain a special use permit to operate anywhere in the Village.
The settlement, which was approved today by the U.S. District Court for the District of Nebraska, resolves a lawsuit the United States filed in February 2020. The United States alleged that the Village’s refusal to allow LOTW to construct a new church on its property substantially burdened its religious exercise. The lawsuit also alleged that the Village treated LOTW less favorably than nonreligious assemblies and institutions that were allowed to construct buildings for noncommercial uses in the same district during the same period.
“The ability to establish a place for collective worship and other religious services is a fundamental right protected by our civil rights laws,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “The Civil Rights Division will remain vigilant in protecting the rights of religious communities to build houses of worship and use their property for religious purposes.”
“RLUIPA protects the right of every religious community to worship free from unlawful burdens,” said U.S. Attorney Jan W. Sharp for the District of Nebraska. “We will not tolerate the unlawful use of zoning or land use restrictions to infringe on that right.”
The settlement provides for the approval of the necessary permits so that LOTW can construct a new, multi-use church facility in downtown Walthill; prohibits the Village from engaging in future violations of RLUIPA; mandates RLUIPA training for Village Board members and staff; and requires that the Village provide notice to the public regarding rights protected by RLUIPA and comply with recordkeeping and reporting requirements.
The court also recently approved another settlement to resolve a related lawsuit that LOTW filed against the Village.
RLUIPA is a federal law that protects religious institutions from unduly burdensome or discriminatory land use regulations. In June 2018, the Justice Department announced its Place to Worship Initiative, which focuses on RLUIPA’s provisions that protect the rights of houses of worship and other religious institutions to worship on their land. More information is available at www.justice.gov/crt/placetoworship.
Individuals who believe they have been subjected to discrimination in land use or zoning decisions may contact the Civil Rights Division’s Housing and Civil Enforcement Section at 1-833-591-0291 or the U.S. Attorney’s Office for the District of Nebraska at (402) 661-3700, or may submit a complaint through the complaint portal on the Place to Worship Initiative website. More information about RLUIPA, including questions and answers about the law and other documents, may be found at http://www.justice.gov/crt/about/hce/rluipaexplain.php.
BitConnect Founder Indicted in Global $2.4 Billion Cryptocurrency SchemeRead the Press Release
A federal grand jury in San Diego returned an indictment today charging the founder of BitConnect with orchestrating a global Ponzi scheme. BitConnect is an alleged fraudulent cryptocurrency investment platform that reached a peak market capitalization of $3.4 billion.
According to court documents, Satish Kumbhani, 36, of Hemal, India, the founder of BitConnect, misled investors about BitConnect’s “Lending Program.” Under this program, Kumbhani and his co-conspirators touted BitConnect’s purported proprietary technology, known as the “BitConnect Trading Bot” and “Volatility Software,” as being able to generate substantial profits and guaranteed returns by using investors’ money to trade on the volatility of cryptocurrency exchange markets. As alleged in the indictment, however, BitConnect operated as a Ponzi scheme by paying earlier BitConnect investors with money from later investors. In total, Kumbhani and his co-conspirators obtained approximately $2.4 billion from investors.
The indictment further alleges that, after operating for approximately one year, Kumbhani abruptly shut down the Lending Program. Kumbhani then directed his network of promoters to fraudulently manipulate and prop up the price of BitConnect’s digital currency, a commodity known as BitConnect Coin (BCC), to create the false appearance of legitimate market demand for BCC. Kumbhani and his co-conspirators also concealed the location and control of the fraud proceeds obtained from investors by commingling, cycling, and exchanging the funds through BitConnect’s cluster of cryptocurrency wallets and various internationally based cryptocurrency exchanges.
According to the indictment, to avoid regulatory scrutiny and oversight of BitConnect’s cryptocurrency offering, Kumbhani evaded U.S. regulations governing the financial industry, including those enforced by the Financial Crimes Enforcement Network (FinCEN). For example, although BitConnect operated a money transmitting business through its digital currency exchange, BitConnect never registered with FinCEN, as required under the Bank Secrecy Act.
“Crime, particularly crime involving digital currencies, continues to transcend international boundaries,” said Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division. “The department is committed to protecting victims, preserving market integrity, and strengthening its global partnerships to hold accountable criminals engaging in cryptocurrency fraud. We thank our partners around the world for their continued efforts.”
“This indictment alleges a massive cryptocurrency scheme that defrauded investors of more than $2 billion,” said U.S. Attorney Randy Grossman for the Southern District of California. “The U.S. Attorney’s Office and our law enforcement partners are committed to pursuing justice for victims of cryptocurrency fraud.”
“Today’s indictment reiterates the FBI’s commitment to identifying and addressing bad actors defrauding investors and sullying the ability of legitimate entrepreneurs to innovate within the emergent cryptocurrency space,” said Special Agent in Charge Eric B. Smith of the FBI’s Cleveland Field Office. “Dressing up a tried and true fraud scheme with a new twist and basing it overseas will not deter the resolve and dedication of the FBI to meticulously investigate and bring such fraudsters to justice.”
“As cryptocurrency gains popularity and attracts investors worldwide, alleged fraudsters like Kumbhani are utilizing increasingly complex schemes to defraud investors, oftentimes stealing millions of dollars,” said Special Agent in Charge Ryan L. Korner of the IRS Criminal Investigation’s (IRS-CI) Los Angeles Field Office. “However, make no mistake, our agency will continue our long tradition of following the money, whether physical or digital, to expose criminal schemes and hold the fraudsters accountable for their illegal acts of trickery and deceit.”
Kumbhani is charged with conspiracy to commit wire fraud, wire fraud, conspiracy to commit commodity price manipulation, operation of an unlicensed money transmitting business, and conspiracy to commit international money laundering. If convicted of all counts, he faces a maximum total penalty of 70 years in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors. Kumbhani is at large.
The FBI Cleveland Field Office and IRS-CI are investigating the case.
Trial Attorney Kevin Lowell of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Daniel Silva, Mark W. Pletcher, Carl Brooker, and Lisa Sanniti of the Southern District of California are prosecuting the case. The Department of Justice Office of International Affairs provided indispensable assistance to the investigation.
All investor victims of the BitConnect fraud are encouraged to visit the webpage https://www.justice.gov/usao-sdca/us-v-glenn-arcaro-21cr02542-twr to identify themselves as potential victims and obtain more information on their rights as victims, including the ability to submit a victim impact statement.
An indictment is merely an allegation, and the defendant is presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Attorney General Merrick B. Garland Statement on President Biden’s Nomination of Judge Ketanji Brown Jackson to the Supreme CourtRead the Press Release
Attorney General Merrick B. Garland released the following statement regarding the President’s nomination of Judge Ketanji Brown Jackson to be Associate Justice of the United States Supreme Court:
“President Biden has made an outstanding choice in selecting Judge Ketanji Brown Jackson as his nominee to be an Associate Justice of the Supreme Court. I have known Judge Jackson since she served as a federal public defender. I also had the privilege to serve alongside Judge Jackson during her eight years as a district judge before she joined the D.C. Circuit. I have witnessed firsthand her exceptional abilities as both a lawyer and a judge, her commitment to the rule of law and equal justice under law, and her generosity of spirit. I commend President Biden for nominating Judge Jackson. I am confident that she will be an exemplary member of our nation’s highest court.”
United States and United Arab Emirates Sign Bilateral Agreement Enhancing Law Enforcement CooperationRead the Press Release
On Thursday, the United States and United Arab Emirates (UAE) signed a mutual legal assistance treaty (MLAT) enhancing evidence sharing, judicial cooperation and assistance in criminal investigations and prosecutions.
U.S. Embassy Abu Dhabi Chargé d’Affaires Sean Murphy and Emirati Minister of Justice Abdullah Sultan Al Nuaimi signed the MLAT on behalf of their nations at the Ministry of Justice in Abu Dhabi, UAE. The bilateral U.S.-UAE instrument was negotiated over the past several years by the Department of State’s Office of the Legal Adviser and the Justice Department’s Office of International Affairs.
This historical bilateral agreement with the UAE will further strengthen relations and advance law enforcement cooperation between the two countries. The MLAT will improve and streamline U.S. law enforcement’s ability to obtain and exchange evidence needed for investigations and prosecutions and deepen the cooperation against terrorism and transnational organized crime, including cybercrime. The treaty removes onerous procedural obstacles to cooperation while ensuring adherence to the protections of the U.S. Constitution and other laws.
Present at the signing were officials from the Justice Department’s Office of International Affairs, U.S. Department of State, U.S. Embassy Abu Dhabi, FBI and the UAE’s Ministry of Justice and Ministry of Foreign Affairs and International Cooperation.
The new agreement enhances bilateral relations by affording both nations with improved information-sharing and creates a regularized and streamlined channel for obtaining law enforcement assistance. The MLAT will better enable prosecutors to exchange information facilitating the prevention, investigation and prosecution of crime. It will improve cooperation in the fight against terrorism, cybercrime, drug trafficking, bulk cash smuggling, money laundering, fraud and other serious transnational criminal offenses.
Three Former Minneapolis Police Officers Convicted of Federal Civil Rights Violations for Death of George FloydRead the Press Release
Following a trial that lasted nearly five weeks, a federal jury in St. Paul, Minnesota, found three former Minneapolis Police Department (MPD) officers guilty of federal civil rights offenses arising out of the death of George Perry Floyd Jr. on May 25, 2020.
Former MPD Officers Tou Thao and J. Alexander Kueng were found to have deprived Mr. Floyd of his constitutional right to be free from an officer’s unreasonable force when each willfully failed to intervene to stop former MPD Officer Derek Chauvin’s use of unreasonable force, resulting in bodily injury to and the death of Mr. Floyd. Thao, Kueng and former MPD Officer Thomas Lane also were found to have deprived Mr. Floyd of his constitutional right to be free from a police officer’s deliberate indifference to his serious medical needs when they saw him restrained in police custody in clear need of medical care and willfully failed to aid him, resulting in bodily injury to and the death of Mr. Floyd. Both offenses are violations of Title 18, U.S. Code, Section 242.
The convictions announced today are separate from and in addition to any and all charges the State of Minnesota has brought against these former officers related to the death of Mr. Floyd. The federal charges addressed civil rights offenses that criminalize violations of the U.S. Constitution.
“Today’s verdict recognizes that two police officers violated the Constitution by failing to intervene to stop another officer from killing George Floyd, and three officers violated the Constitution by failing to provide aid to Mr. Floyd in time to prevent his death,” said Attorney General Merrick B. Garland. “The Justice Department will continue to seek accountability for law enforcement officers whose actions, or failure to act, violate their constitutional duty to protect the civil rights of our citizens. George Floyd should be alive today.”
Co-defendant Derek Chauvin previously entered a guilty plea in connection with the federal case. Chauvin pleaded guilty to willfully depriving Mr. Floyd of his constitutional rights while Chauvin was serving as an MPD officer. Chauvin also acknowledged that his conduct resulted in death and that he acted in callous and wanton disregard of the consequences to Mr. Floyd’s life. In addition, Chauvin was tried in state court and convicted of second-degree murder. In 2021, Chauvin was sentenced in state court to 22.5 years in prison.
Evidence presented at the federal trial for defendants Thao, Kueng and Lane established that on May 25, 2020, then-MPD Officer Chauvin held his knees on Mr. Floyd’s neck and back as Mr. Floyd lay on the ground, handcuffed and unresisting. As soon as Mr. Floyd was on the ground, Chauvin placed his knee on the back of Mr. Floyd’s neck, while Kueng placed his knee on Floyd’s lower body. Chauvin would not remove his knee for the next nine minutes and 29 seconds, and Kueng maintained his position for the next eight minutes and 11 seconds. Throughout this period, Mr. Floyd pleaded with officers 25 times to let him breathe.
As Mr. Floyd lost consciousness and a pulse, Chauvin and Kueng maintained their positions on his body. Even as Mr. Floyd ceased movement and stopped speaking, and even as Lane noted that Mr. Floyd was “passing out” and Kueng said he could not find a pulse, none of the CPR-certified defendants did anything to stop Chauvin from keeping his knee on Mr. Floyd’s neck or to render the medical aid that they were trained and required to provide. Even as EMTs arrived and checked Mr. Floyd’s pupils and pulse, Chauvin did not move his knee and the other officers on scene did not render aid to Mr. Floyd.
Firefighters and EMTs unsuccessfully attempted to revive Mr. Floyd on the way to the hospital, where he was pronounced dead. The county medical examiner ruled Mr. Floyd’s death was a homicide due to cardiopulmonary arrest complicating law enforcement subdual, restraint and neck compression.
After the incident, an MPD supervisor and, later, an MPD lieutenant, spoke with Lane and Kueng. On both occasions, Lane and Kueng both omitted that Chauvin had knelt on Mr. Floyd’s neck, that Mr. Floyd had been restrained on his stomach for nine and a half minutes, that Mr. Floyd had lost consciousness, and that officers had not been able to find a pulse. Additionally, Kueng told the supervisor that Mr. Floyd did not stop moving until after an ambulance arrived on scene, which he admitted at trial was false. At trial, the MPD lieutenant testified that, after watching video taken by a bystander, he realized that what he was told and what was on the video was “totally different.” He further testified that if an MPD officer observed another officer using too much force or doing something illegal, the officer has a duty to intervene to stop it, regardless of rank or seniority. Testimony offered at trial established that this duty to intervene is enshrined in MPD policy and is a component of the police department’s training program.
Evidence presented at trial also showed that MPD officers were required to complete emergency medical responder (EMR) training prior to entering the police academy, which includes CPR training. Further, MPD policy requires officers to determine if a subject is injured after a use of force and to render medical aid as soon as reasonably practical and requires officers assisting a person experiencing a medical crisis to provide first aid while awaiting EMS.
The jury found that the defendants disregarded this training and willfully violated Mr. Floyd’s constitutional rights. Kueng and Thao failed to intervene to stop Chauvin’s use of unlawful force and all three defendants failed to provide aid to Mr. Floyd as he suffered a medical emergency at the hands of a fellow police officer.
The jury found that the defendants disregarded this training and willfully violated Mr. Floyd’s constitutional rights. Kueng and Thao failed to intervene to stop Chauvin’s use of unlawful force and all three defendants failed to provide aid to Mr. Floyd as he suffered a medical emergency at the hands of a fellow police officer.
No sentencing date has been set. The statutory maximum sentence for the death-resulting violation of Section 242 is life in prison.
Attorney General Merrick B. Garland, Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division, Acting U.S. Attorney Charles J. Kovats and Special Agent in Charge Michael F. Paul of the FBI’s Minneapolis Division announced today’s verdict.
The investigation was conducted by the FBI with the cooperation of the Minnesota Bureau of Criminal Apprehension. The case is being prosecuted by Special Litigation Counsel Samantha Trepel and Trial Attorney Tara Allison of the Justice Department’s Civil Rights Division, and Assistant U.S. Attorneys Samantha Bates, LeeAnn Bell, Evan Gilead, Manda Sertich and Allen Slaughter of the District of Minnesota.
Reptile Dealer Sentenced to Prison on Lacey Act and Firearms ChargesRead the Press Release
A federal judge in Valdosta, Georgia, yesterday sentenced Ashtyn Michael Rance, 35, to 33 months in prison on each count to run concurrently, a $4,300 fine and three years of post-release supervision. The judge also prohibited Rance from possessing or selling wildlife during the supervisory period. Rance pleaded guilty on Nov. 18, 2021, to violating the Lacey Act and unlawfully possessing firearms.
In pleading guilty, Rance admitted that on Feb. 22, 2018, he shipped three eastern box turtles and 16 spotted turtles from Valdosta to a customer in Florida, in a package falsely labeled as containing tropical fish and common lizards. He was paid $3,300 for the turtles and knew they were being subsequently trafficked to China.
Rance further admitted that on May 10, 2018, he shipped 15 Gaboon vipers from Valdosta to Florida. The snakes were worth approximately $900 and also headed to a buyer in China. He falsely labeled the package as containing harmless reptiles and ball pythons. Rance had legally imported 100 Gaboon vipers and other venomous snakes from Africa to Atlanta. He received a special permit to transport the snakes out of Georgia, but he later returned to Valdosta with 16 vipers.
Rance possessed and sold the reptiles in violation of Georgia laws. The federal Lacey Act is the nation’s oldest wildlife trafficking statute and prohibits, among other things, transporting wildlife in interstate commerce if the wildlife is illegal under state laws. It is also a Lacey Act violation to falsely label a package containing wildlife.
The spotted turtle (Clemmys guttata) is a semi-aquatic turtle native to the eastern United States and Great Lakes region. The eastern box turtle (Terrapene carolina carolina) is endemic to forested regions of the East Coast and Midwest. Collectors prize both species in the domestic and foreign pet trade market, where they are resold for thousands of dollars. The Gaboon viper (Bitis gabonica) is native to central Sub-Saharan Africa. Its venom can cause shock, loss of consciousness or death in humans. Authorities intercepted the package containing the vipers to minimize the risk of a bite or escape.
Additionally, Rance acknowledged that he possessed a Bushmaster Carbine .223 caliber rifle and Mossberg 12-gauge shotgun in his Valdosta residence that he was prohibited from owning as a convicted felon.
The U.S. Fish and Wildlife Service Office of Law Enforcement in Vero Beach, Florida, ATF and the Georgia Department of Natural Resources conducted the investigation as part of Southern Surge Task Force’s Operation Middleman. The operation focused on the trafficking of reptiles from the United States to China. The government is represented by Trial Attorney Ryan Connors of the Environment and Natural Resources Division’s Environmental Crimes Section and Assistant U.S. Attorney Sonja Profit for the Middle District of Georgia.
Justice Department Sues to Shut Down Multistate Tax 'Elimination' Scheme Involving Charitable Remainder Annuity TrustsRead the Press Release
On Feb. 23, the United States filed a complaint seeking an order prohibiting John Hugo Eickhoff Jr., Rhonda Kaye Eickhoff, Hoffmann Associates LLC, Aric Elliot Schreiner, Columbia CPA Group LLC, John Williams Gray II and Damon Thomas Eisma from organizing, promoting or selling an allegedly unlawful tax scheme involving the use of charitable remainder annuity trusts (CRATs). The government allegations detail the defendants’ involvement with at least 70 CRATs, in a scheme that has resulted in an estimated $40 million of taxable income going unreported and at least $8 million in tax revenue losses.
According to the complaint filed in the U.S. District Court for the Western District of Missouri, defendants falsely claim that customers following their CRAT scheme can sell property in a way that eliminates the federal tax on the income generated. Specifically, the government alleges that each defendant participates in one or more of the following steps involved in the scheme: (1) convincing customers to contribute property to a CRAT (usually real property that has gained value over time); (2) unlawfully inflating (stepping-up) the cost basis in the property; (3) selling the property to purchase an annuity; and (4) falsely reporting the annuity payments received by the customers as tax-free distributions of income made by the CRAT. The complaint further alleges that the defendants know or have reason to know that their statements to customers about the supposed tax benefits of the transaction they promote are false or fraudulent.
Deputy Assistant Attorney General David A. Hubbert of the Justice Department’s Tax Division made the announcement.
The IRS warns taxpayers to be wary of scams that involve claiming inflated charitable contribution deductions and recommends anyone who may have improperly claimed such deductions to consult a tax professional. Guidelines for valuing and deducting property donations to charity can be found in Publication 526 and Publication 561, available on IRS.gov.
In the past decade, the Tax Division has obtained injunctions against hundreds of tax return preparer and tax fraud promoters. Information about these cases is available on the Justice Department’s website. An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on this page. If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.
Justice Department Sues to Block UnitedHealth Group’s Acquisition of Change HealthcareRead the Press Release
The Department of Justice, together with Attorneys General in Minnesota and New York, filed a civil lawsuit today to stop UnitedHealth Group Incorporated (United) from acquiring Change Healthcare Inc. (Change). The complaint, filed in the U.S. District Court for the District of Columbia, alleges that the proposed $13 billion transaction would harm competition in commercial health insurance markets, as well as in the market for a vital technology used by health insurers to process health insurance claims and reduce health care costs.
“Quality health insurance should be accessible to all Americans,” said Attorney General Merrick B. Garland. “If America’s largest health insurer is permitted to acquire a major rival for critical health care claims technologies, it will undermine competition for health insurance and stifle innovation in the employer health insurance markets. The Justice Department is committed to challenging anticompetitive mergers, particularly those at the intersection of health care and data.”
“The proposed transaction threatens an inflection point in the health care industry by giving United control of a critical data highway through which about half of all Americans’ health insurance claims pass each year,” said Principal Deputy Assistant Attorney General Doha Mekki of the Justice Department’s Antitrust Division. “Unless the deal is blocked, United stands to see and potentially use its health insurance rivals’ competitively sensitive information for its own business purposes and control these competitors’ access to innovations in vital health care technology. The department’s lawsuit makes clear that we will not hesitate to challenge transactions that harm competition by placing so much control of data and innovation in the hands of a single firm.”
As alleged in the complaint, the proposed transaction would give United, a massive company that owns the largest health insurer in the United States, access to a vast amount of its rival health insurers’ competitively sensitive information. Post-acquisition, United would be able to use its rivals’ information to gain an unfair advantage and harm competition in health insurance markets. The proposed transaction also would eliminate United’s only major rival for first-pass claims editing technology — a critical product used to efficiently process health insurance claims and save health insurers billions of dollars each year — and give United a monopoly share in the market.
The proposed acquisition would eliminate an independent and innovative firm, Change, that today provides a variety of participants in the health care ecosystem, including United’s major health insurance competitors, with vital software and services. This includes electronic data interchange (EDI) clearinghouse services, which transmit claims and payment information between insurers and providers, and first-pass claims editing solutions, which review claims under the health insurer’s policies and relevant treatment protocols. Indeed, Change markets itself as a valuable partner for insurers, working closely with them to innovate and problem-solve. United’s acquisition of this neutral player would allow United to tilt the playing field in its favor, harming current competition and allowing United to control and distort the course of innovation in this industry for the foreseeable future.
UnitedHealth Group Incorporated is headquartered in Minnetonka, Minnesota. United is an integrated health care enterprise that includes, among other subsidiaries, UnitedHealthcare, the largest health insurer in the United States; Optum Health, a large network of health care providers located throughout the country; OptumRx, a large pharmacy benefit manager; and OptumInsight, a health care technology business. United’s revenues were $288 billion in 2021.
Change Healthcare Inc. is headquartered in Nashville, Tennessee. Change is a leading independent health care technology company providing health care analytics, software, services and data to health care providers, health insurers and other software and services firms in the health care industry. Change’s revenues were $3.4 billion in 2021.
Justice Department Files Suit Against Pennsylvania Court System for Discriminating Against People with Opioid Use DisorderRead the Press Release
Today, the Justice Department filed suit against the Unified Judicial System of Pennsylvania (UJS) for violating the Americans with Disabilities Act (ADA). The department previously notified the UJS that its courts had engaged in discrimination by prohibiting or limiting the use of lawfully prescribed medication to treat Opioid Use Disorder (OUD) by individuals under court supervision. That letter of findings demanded that the UJS address the civil rights violations identified by the Justice Department’s Civil Rights Division and the U.S. Attorney’s Offices for the Eastern, Middle and Western Districts of Pennsylvania.
The Justice Department identified three individuals with OUD who were discriminated against by UJS Courts — specifically, the Northumberland and Jefferson County Courts of Common Pleas. Two individuals alleged that the Jefferson County Court ordered all probationers to stop using their prescribed medication for OUD. A third individual alleged that the Northumberland County Court required her to stop using her prescribed OUD medication to graduate from drug court. The department’s investigation corroborated these allegations and additionally found evidence that other UJS Courts have policies that discriminate against individuals with OUD.
“This lawsuit aims to safeguard the rights of people with Opioid Use Disorder who are too often subject to discrimination rooted in stereotypes and myths rather than in science,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “Court-involved individuals with Opioid Use Disorder deserve access to medications needed to support their recovery and to break the cycles of addiction. We hope that this lawsuit against the Unified Judicial System of Pennsylvania sends a strong message about the need for courts to protect the rights of individuals with Opioid Use Disorder.”
If you believe that a Pennsylvania court prohibited or limited your use of lawfully prescribed medication to treat OUD, please email [email protected]. For more information on the ADA, please call the Department’s toll-free ADA Information Line at 1-800-514-0301 (TDD 800-514-0383) or visit www.ada.gov. For more information on the Civil Rights Division, please visit www.justice.gov/crt. The letter can be viewed here. The complaint can be viewed here.
Associate Attorney General Vanita Gupta Announces Two New Resources to Support Law Enforcement from Office on Violence Against WomenRead the Press Release
Associate Attorney General Vanita Gupta announced at a webinar today two new training and technical assistance (TTA) resources from the Department of Justice Office on Violence Against Women (OVW): the National Violence Against Women Law Enforcement Training and Technical Assistance Consortium (LETTAC) and the Domestic Violence Resource for Increasing Safety and Connection (DV RISC).
“Reducing violent crime is a top priority for the Department of Justice, and combating domestic violence and sexual assault are important parts of the department’s comprehensive strategy to reduce violent crime,” said Associate Attorney General Gupta. “We cannot reduce, prevent or end violence without providing law enforcement agencies with the tools, training and resources they need. I am proud to introduce LETTAC and DV RISC, as new tools to help law enforcement agencies best respond to, investigate and ultimately prevent domestic violence, sexual assault and stalking by delivering innovative and evolving training and technical assistance to grantees and the field in a more efficient, effective manner.”
“Ensuring that law enforcement and jurisdictions have access to survivor-centered and trauma-informed resources is critical to address and prevent gender-based violence in our communities,” said Principal Deputy Director Allison Randall of OVW. “LETTAC and DV RISC not only fulfill this key role, but also expand training and technical assistance to underserved communities, including rural areas and Tribal lands, helping countless survivors access the justice they seek.”
LETTAC is a single-entry point for law enforcement agencies – including police and sheriffs’ offices as well as prosecutors, civilian staff and campus police – to request TTA in responding to, investigating and prosecuting domestic and dating violence, sexual assault and stalking cases. Planning is also underway to ensure LETTAC resources address the intersection of human trafficking with domestic violence, dating violence, sexual assault and stalking with a focus on Tribal grantees and potential grantees. LETTAC delivers TTA more efficiently, maximizing resources while minimizing duplication and, crucially, promoting collaboration. The LETTAC resource center includes a portal to request TTA; a clearinghouse of webinars, podcasts, publications and other tools; and a learning center to provide quality training for users. Ensuring inclusivity is central to LETTAC’s mission to providing TTA services and support for all justice practitioners, including those in underserved areas, culturally specific communities, and American Indian and Alaska Native jurisdictions. LETTAC will partner with AEquitas to provide training to prosecutors.
DV RISC is a national resource center to help communities prevent domestic violence homicide. The DV RISC website provides multidisciplinary tools and TTA to jurisdictions seeking a coordinated response. Users can obtain access to TTA providers and subject matter experts; on-site and virtual strategic planning assistance; culturally specific TTA providers to ensure diverse and inclusive community engagement; and peer-to-peer learning with communities that have implemented domestic violence homicide prevention strategies. Working in collaboration with Ujima and Esperanza United, DV RISC is led and informed by individuals who have been impacted by intimate partner and domestic violence homicides, ensuring that communities using DV RISC create prevention strategies that are informed by the voices of survivors.
Both LETTAC and DV RISC support the Justice Department’s comprehensive strategy for reducing violent crime.
About the Office on Violence Against Women
The Office on Violence Against Women provides leadership in developing the nation’s capacity to reduce violence through the implementation of the Violence Against Women Act and subsequent legislation. Created in 1995, OVW administers financial and technical assistance to communities across the country that are developing programs, policies and practices aimed at ending domestic violence, dating violence, sexual assault and stalking. In addition to overseeing federal grant programs, OVW undertakes initiatives in response to special needs identified by communities facing acute challenges. Learn more at www.justice.gov/ovw.
Texas Man Pleads Guilty to Hate Crime Charges for Attacking Asian FamilyRead the Press Release
The Justice Department announced today that Jose Gomez III, 21, of Midland, Texas, pleaded guilty to three counts of committing a hate crime for attacking an Asian family he believed was responsible for the COVID-19 pandemic because he believed them to be Chinese.
According to documents filed in connection with the plea, Gomez entered a Sam’s Club Warehouse in Midland, Texas, behind an Asian family with young children on March 14, 2020. Gomez had never seen the family before and believed they were Chinese. Gomez followed the Asian family in the store for several minutes because he perceived them to be a “threat” as they were “from the country who started spreading that disease around.” Gomez then momentarily left the family to find a serrated steak knife in the store. Gomez bent the blade so that when he held the handle in his fist, the blade rested against his knuckles, sharp-edge facing outward. Gomez returned to the Asian family and punched the father, identified by the initials B.C., in the face, cutting him. Gomez then left the scene, only to retrieve an eight-inch knife from the store.
When Gomez returned, he abruptly went after B.C.’s two young children – then aged 6 and 2 years old – who were seated in the front basket of the shopping cart. Gomez slashed open the face of R.C., the then-six-year-old child. The blade entered millimeters from R.C.’s right eye, split his right ear, and wrapped around to the back of his skull. Gomez also stabbed a white Sam’s Club employee who intervened to stop Gomez from further assaulting the Asian family. While being held down on the ground, Gomez yelled at the Asian family, “Get out of America!”
Gomez admitted after his attack that he believed the Asian family was Chinese and he blamed them for the COVID-19 pandemic. Gomez further admitted he had attempted to kill the 6-year-old child. Gomez also admitted he had attacked the store employee because Gomez wanted to kill the 6-year-old child and the store employee was preventing him from doing so.
“An Asian family was shopping when the defendant brutally attacked them because of their race and because he blamed them for the COVID-19 pandemic,” said Assistant Attorney General Kristen Clarke for the Justice Department’s Civil Rights Division. “Racially motivated hate crimes targeting the Asian American community are on the rise and have no place in our society today. All people deserve to feel safe and secure living in their communities, regardless of race, color or national origin.”
“The defendant violently and horrifically attacked an unsuspecting innocent family because of how they looked and where he thought they came from,” said U.S. Attorney Ashley C. Hoff of the Western District of Texas. “This type of hate-based violence has no place in our society and will not be tolerated. These victims and others who suffer such brutal, hate-based attacks deserve justice and to live without fear in our communities. We will continue to vigorously enforce federal laws that protect civil rights and combat bias-motivated violence.”
"No one should be afraid to go shopping or feel like they could be targeted by an act of violence based on their race, ethnicity, religion, disability, sexual orientation, gender or gender identity, country of national origin, or immigration status,” said Special Agent in Charge Jeffrey Downey of the FBI El Paso Field Office. “Acts of hate and racism have no place in our community and will not be tolerated. The FBI encourages people who have been victims or witnessed a hate crime to contact the FBI at 1-800-CALL-FBI.”
Gomez faces a maximum sentence of life in prison and for each offense, a $250,000 fine.
The case was investigated by the Midland Police Department and the FBI. The case is being prosecuted by Assistant U.S. Attorney Glenn Harwood of the Western District of Texas and Trial Attorney Angie Cha of the Civil Rights Division’s Criminal Section.
Hotel Manager and Owner Both Plead Guilty in Tax InvestigationRead the Press Release
A former Clare, Michigan, hotel manager pleaded guilty today to filing a false tax return. His father, the owner of the hotel, also pleaded guilty to witness tampering in an effort to obstruct the grand jury’s investigation of his son.
According to court documents, Harold Walls, 58, managed the day-to-day operations of a Clare hotel, which his father, Karl Walls, 86, owned. Harold Walls did not report to the IRS any of the income he received from working at the hotel from 2013 through 2017. Rather than pay himself wages directly through the hotel’s payroll system, Harold Walls paid himself by other means, including by writing checks to himself from the hotel operating account and using a hotel bank account to pay for personal expenses.
Harold Walls also provided false and incomplete information to the hotel’s tax return preparer for 2012 through 2017, resulting in the hotel’s business income being understated. Specifically, Harold Walls did not disclose to the tax return preparer that the hotel had 11 “off-book” rooms that were not tracked in the hotel’s reservation system. Harold Walls also provided the return preparer documents that overstated the amount of property taxes the hotel had paid to the City of Clare.
After the IRS began its investigation, Harold Walls obstructed the investigation by instructing a hotel employee to make false statements to the IRS about the nature and extent of his work at the hotel. He also denied to IRS special agents that he was employed at the hotel.
Karl Walls also obstructed the investigation of his son by directing two witnesses to lie to the grand jury. In October 2018, two days before a former hotel employee was scheduled to provide grand jury testimony, Karl Walls instructed the employee to testify that Harold Walls did not work at the hotel. Karl Walls also attempted to convince his tax return preparer to make a similar false statement to the grand jury about his son’s employment status.
Both sentencings are scheduled for a later date. Harold Walls faces a maximum penalty of three years in prison for filing a false tax return, and Karl Walls faces a maximum penalty of 20 years in prison for witness tampering. Both men also face a period of supervised release, restitution and monetary penalties. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division made the announcement and thanked the U.S. Attorney’s Office for the Eastern District of Michigan for providing substantial assistance in this matter.
IRS-Criminal Investigation is investigating the case.
Trial Attorneys Melissa S. Siskind and Sam Bean of the Tax Division are prosecuting the case.