District Not Recorded
The source did not name an office we could identify. These records remain unassigned rather than guessed.
California Businessman Indicted for Employment Tax CrimesRead the Press Release
A federal grand jury in Oakland, California, returned an indictment today charging a California businessman with failing to pay over employment taxes to the IRS.
According to the indictment, Larry Kudsk, of Berkeley, operated two construction businesses, M. Gutierrez Inc. and Kudsk Construction Inc. For both companies, Kudsk allegedly was responsible for filing quarterly employment tax returns and collecting and paying to the IRS payroll taxes withheld from employees’ wages. Kudsk allegedly did not timely file employment tax returns, and did not pay withholdings to the IRS, for the last three quarters of 2015 for M. Gutierrez Inc., and for all four quarters of 2016 for Kudsk Construction Inc. In total, Kudsk allegedly caused a tax loss to the IRS of more than $250,000.
Kudsk is scheduled to make his initial court appearance on Feb. 11 before the U.S. District Court for the Northern District of California. If convicted, Kudsk faces a maximum of five years in prison for each of the seven counts of failing to pay over employment taxes. 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 Stephanie M. Hinds for the Northern District of California and Special Agent in Charge Mark H. Pearson of IRS-Criminal Investigation made the announcement.
IRS-Criminal Investigation is investigating the case.
Trial Attorneys Julia M. Rugg and Charles A. O’Reilly of the Tax Division and Assistant U.S. Attorney Katherine Lloyd-Lovett of the U.S. Attorney’s Office for the Northern District of California, Corporate and Securities Fraud 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.
Statement from Attorney General Merrick B. Garland on the Anniversary of Shootings of FBI Special Agents in FloridaRead the Press Release
Attorney General Merrick B. Garland issued the following statement today, commemorating the lives of FBI Special Agent Daniel Alfin and Special Agent Laura Schwartzenberger, who were killed in the line of duty one year ago today while executing a federal court-ordered search warrant in Sunrise, Florida:
“One year ago today, FBI Special Agent Laura Schwartzenberger and Special Agent Daniel Alfin were killed in the line of duty. Today, as we remember their service, their sacrifice and their courage, our nation also mourns the loss of 31 members of law enforcement who have died in the line of duty this year.
“At the Justice Department, we stand shoulder to shoulder with those who protect and serve our communities. We recognize the sacrifices law enforcement officers make every single day, and that the COVID-19 pandemic has made their jobs only more difficult. We will do everything within our power as a Department to help keep members of law enforcement safe as we work together to keep our country safe.”
Pennsylvania Housing Provider Ordered to Pay Damages and Redress Discrimination Based on Pregnancy and Disability StatusRead the Press Release
The Justice Department announced today that the owner and former manager of rental properties in Quakertown, Pennsylvania, have agreed to resolve a federal lawsuit brought by the United States in the Eastern District of Pennsylvania. The United States alleged that the defendants violated the Fair Housing Act when they refused to let a tenant’s girlfriend move in with him because she was pregnant with his son and because the tenant was in recovery from an addiction to alcohol.
In 1988, Congress expanded the Fair Housing Act to prohibit discrimination based on familial status and disability. The Act’s ban on familial status discrimination protects individuals under 18 years old, as well as any person who is pregnant. The Fair Housing Act’s disability protections cover people in recovery from alcohol or drug addiction, but they do not apply to current, illegal use of or addiction to a controlled substance. The tenant in the United States’ lawsuit successfully completed an alcohol treatment program and was in recovery from his addiction for approximately nine months before requesting that his girlfriend move into the property.
“For more than three decades, federal law has prohibited housing discrimination against individuals because they are pregnant or because they are in recovery from alcohol addiction,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “The resolution of this lawsuit advances the Justice Department’s commitment to ensuring that individuals expecting children, as well as people recovering from an addiction, have equal access to housing opportunities free from illegal discrimination.”
“The expectation and arrival of a new baby is supposed to prompt celebration, not the threat of eviction,” said U.S. Attorney Jennifer Arbittier Williams for the Eastern District of Pennsylvania. “The same should be true of individuals putting in the hard work to manage their addictions – they deserve support, not hurdles to access safe, affordable housing. Expanding families and those working to remain on stable footing should be able to rely on the stability of their home.”
The consent order resolving the lawsuit, which was approved by the U.S. District Court for the Eastern District of Pennsylvania, arose as a result of a complaint filed with the Department of Housing and Urban Development (HUD) by the tenant on behalf of himself and his minor daughter. After HUD investigated the complaint, it issued a charge of discrimination and the matter was referred to the Justice Department.
“The Fair Housing Act seeks to ensure that individuals, who are recovering from addiction, and their families can access housing free from housing discrimination,” said Principal Deputy Assistant Secretary Demetria L. McCain for Fair Housing and Equal Opportunity at HUD. “HUD applauds the Department of Justice for its partnership with HUD and its aid in resolution of this matter.”
Under the consent order, the defendants will pay a total of $75,000 to the tenant and his child. The consent order also requires defendants to take actions directed towards preventing future unlawful discrimination, including complying with the Fair Housing Act, undergoing training and implementing nondiscrimination policies on the Fair Housing Act in connection with the rental and management of residential properties, and submitting to compliance and reporting requirements.
Fighting illegal housing discrimination is a top priority of the Justice Department. The federal Fair Housing Act prohibits discrimination in housing on the basis of race, color, religion, sex, familial status, national origin and disability. Visit www.usdoj.gov/crt for more information about the Civil Rights Division and the laws it enforces. Additional information about the Fair Housing Act is available at www.HUD.gov.
Justice Department Seeks to Shut Down Florida Tax Return PreparerRead the Press Release
The United States filed a civil injunction suit to bar Karla Welch and her businesses, Karla R. Welch LLC and Kwik Services LLC, from owning or operating a tax preparation business and preparing tax returns. The complaint also requests that the court require the defendants to disgorge the fees they obtained by preparing false and fraudulent tax returns.
The complaint, filed in the U.S. District Court for the Middle District of Florida, alleges that Welch, through Karla R. Welch LLC and Kwik Services LLC, owns and operates a tax preparation business with as many as 12 stores in Florida, Georgia and North Carolina. According to the complaint, Welch and her businesses prepare and file tax returns to falsely increase their customers’ refunds, and profit through high and often undisclosed preparation fees at the expense of their customers and the Treasury. The complaint alleges that the defendants prepared returns for customers that:
• Falsely claim the Earned Income Tax Credit
• Report fabricated businesses and related business income and expenses
• Report fabricated deductions, including for purported job-related expenses
• Claim false education credits
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.
Justice Department Secures Agreement to Make Online COVID-19 Vaccine Registration Accessible for People with Disabilities at Meijer Supermarket ChainRead the Press Release
The Justice Department today announced that it has secured a settlement agreement with Meijer Inc., under the Americans with Disabilities Act (ADA) that will eliminate barriers preventing people with certain disabilities from getting information about COVID-19 vaccinations and booking vaccination appointments online. Meijer is a Michigan-based retailer that operates more than 250 stores throughout Michigan, Ohio, Indiana, Illinois, Kentucky and Wisconsin. Today’s resolution is the department’s fourth agreement on the critical issue of COVID-19 vaccination website accessibility, following settlement announcements in November 2021 (Rite Aid Corporation), December 2021 (Hy-Vee Inc.), and January 2022 (The Kroger Co.).
Meijer’s COVID-19 vaccine registration portal, currently located at https://clinic.meijer.com, was not accessible to people with certain disabilities, including those who use screen reader software or have a hard time using a mouse. For instance, people who use the “tab” key instead of a mouse to navigate websites could not proceed past the very first step of the vaccine registration process, because they could not select the button stating, “click here to schedule an appointment.” The vaccine registration portal also did not always tell people who use screen readers what information they were supposed to put on scheduling forms, including their first and last names, birthdate and zip code.
“As our nation continues to respond to the COVID-19 pandemic, the Justice Department will not allow members of the disability community to be left behind,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “Individuals with disabilities are an important part of the fabric of our country, and it is critical that they have equal access to potentially life-saving vaccines.”
“Our office is dedicated to upholding the civil rights of all people in the United States, including those with disabilities,” said U.S. Attorney Andrew B. Birge of the Western District of Michigan. “Those rights include full and equal access to health information and medical care, such as COVID-19 vaccinations. This agreement reflects our ongoing commitment to enforcing the ADA, protecting the rights of individuals with disabilities, and supporting our nation’s fight against the COVID-19 pandemic.”
Under today’s settlement, Meijer will conform web content about the COVID-19 vaccine, including the forms for scheduling an appointment to get the vaccine, to the Web Content Accessibility Guidelines (WCAG), Version 2.1, Level AA. WCAG is a set of voluntary industry guidelines for making information on a website accessible to users with disabilities. Meijer also must regularly test the pages of its website that include vaccine scheduling and information about the COVID-19 vaccine, and quickly fix any problems that keep people with disabilities from being able to use these pages.
This matter was handled jointly by the Disability Rights Section of the Civil Rights Division and the U.S. Attorney’s Office for the Western District of Michigan. Title III of the ADA requires public accommodations like drugstores and grocery stores to provide individuals with disabilities with full and equal enjoyment of goods and services, such as vaccines. The ADA also requires public accommodations to ensure effective communication with people with disabilities, including by using auxiliary aids and services like accessible technology.
For more information on the Civil Rights Division, please visit www.justice.gov/crt. For more information on the ADA, please call the department’s toll-free ADA Information Line at 800-514-0301 (TDD 800-514-0383) or visit www.ada.gov. ADA complaints may be filed online at www.ada.gov/complaint. Anyone in the Western District of Michigan may also report civil rights violations directly to the U.S. Attorney’s Office for the Western District of Michigan by calling 616-808-2195 or emailing [email protected].
Former Navy Sailor Stationed on Guam Sentenced to 65 Months for Advertising Child PornographyRead the Press Release
Hagatña, Guam - SHAWN N. ANDERSON, United States Attorney for the Districts of Guam and the Northern Mariana Islands, announced that defendant AUSTIN J. DODGE, age 23, from Portland, Maine, was sentenced in the United States District Court of Guam to 65 months imprisonment for Advertising Material Involving Child Pornography, in violation of 18 U.S.C. §§ 2252A(a)(3)(B) and 2252A(b)(1). Dodge will also serve a 10-year term of supervised release and register as a sex offender following his confinement in federal prison.
On April 22, 2020, an undercover FBI agent in Minneapolis, Minnesota, assumed the online identity of a person involved in trading child pornography on an application called "LiveMe." LiveMe is a free social media application that allows an individual to broadcast live video online. LiveMe users can post comments and interact with people in the video. Users can also create or join groups called "fams," where like-minded individuals can chat or message other users, post videos, images, text, and send links directing users to Internet websites. In this case, the online identity the FBI undercover agent assumed control of was a member of several “fams" on LiveMe, where child pornography was traded either in chat or by posting links to a cloud file hosting service, such as Dropbox, for access and download.
Between April 22, 2020, and April 23, 2020, the FBI undercover agent accessed a LiveMe fam called "LoveCP." During the undercover agent's recorded session, the LoveCP group moderator posted group rules which included a requirement that members actively post, or they would be removed. On the evening of April 22,2020 Central Standard Time, LiveMe SID 299614327 with the screen name "lucyliuc200," was granted access to the LoveCP group. Lucyliuc200, later identified as Dodge, then posted a link to a cloud sharing internet site with the folder name titled, "live." The undercover agent navigated to this posted link and downloaded the contents of the folder. The folder contained approximately 18 videos depicting adolescent and prepubescent females posing naked and engaged in sexually explicit conduct. Following the execution of a federal search warrant at Dodge’s residence on Naval Base Guam, agents discovered an additional video of child pornography on his computer tablet. This video depicted the only known victim of child sexual exploitation identified by the National Center for Missing and Exploited Children.
“This is the first advertisement case prosecuted in the District of Guam,” stated U.S. Attorney Anderson. “It demonstrates the reach of federal law enforcement in combating this disturbing type of crime. The sentence imposed by the Court is a strong message of accountability. Our office will pursue these cases whenever the evidence supports prosecution. We thank our law enforcement partners for their great work in keeping our communities safe.”
“This sentence demonstrates the FBI’s commitment in identifying and investigating those who possess child pornography,” said FBI Special Agent in Charge Steven Merrill. “As a result of this case, we have one less predator who can prey on, and can no longer exploit, the most vulnerable members of our society. The FBI is grateful to collaborate with the Naval Criminal Investigative Service as we remain committed in the fight to protect our children who are our nation’s future.”
This case was part of the Project Safe Childhood (PSC) Initiative, a nationwide initiative by the U.S. Department of Justice to aggressively prosecute people who engage in the sexual victimization of children, possess, or receive child pornography, and fail to register as sex offenders. For more information about Project Safe Childhood, please visit https://www.justice.gov/psc.
The case was investigated by the Federal Bureau of Investigation and the United States Naval Criminal Investigative Service. This case was prosecuted by April Owen, Assistant United States Attorney for the District of Guam.
Woman Pleads Guilty to Misappropriating Funds for Care of COVID-19 PatientsRead the Press Release
A Michigan woman pleaded guilty today in the Eastern District of Michigan to stealing government funds that were designed to aid medical providers in the treatment of patients suffering from COVID-19 and using them for her own personal expenses.
According to court documents, Amina Abbas, 36, of Taylor, admitted that she previously owned 1 on 1 Home Health (1 on 1), a home health agency in LaPorte, Indiana, which she had closed in early 2020. 1 on 1, which was never operational during the pandemic, received approximately $37,657 designated for the medical treatment and care of COVID-19 patients. Abbas admitted that she stole the funds by issuing checks to her family members for personal use, rather than using the funds in conjunction with pandemic relief efforts as required.
Abbas pleaded guilty to one count of theft of public money. She is scheduled to be sentenced on May 19, and faces a maximum penalty of 10 years in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
The charges against Abbas were the first criminal charges for the 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 compensate providers for the cost of that care. These funds were critical to providing 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 Dawn N. Ison for the Eastern District of Michigan, Special Agent in Charge Mario Pinto of the U.S. Department of Health and Human Services’ Office of Inspector General’s (HHS-OIG’s) Chicago Region, and Acting Special Agent in Charge Josh Hauxhurst of the FBI’s Detroit Field Office made the announcement.
Trial Attorneys Emily Gurskis and Jay McCormack of the Criminal Division’s Fraud Section are prosecuting the case.
In May 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the department 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’s False Claims Act Settlements and Judgments Exceed $5.6 Billion in Fiscal Year 2021Read the Press Release
The Justice Department obtained more than $5.6 billion in settlements and judgments from civil cases involving fraud and false claims against the government in the fiscal year ending Sept. 30, 2021, Acting Assistant Attorney General Brian M. Boynton of the Justice Department’s Civil Division announced today. This is the second largest annual total in False Claims Act history, and the largest since 2014. Settlement and judgments since 1986, when Congress substantially strengthened the civil False Claims Act, now total more than $70 billion.
“Ensuring that citizens’ tax dollars are protected from fraud and abuse is among the department’s top priorities,” said Acting Assistant Attorney General Boynton. “The False Claims Act is one of the most important tools available to the department both to deter and to hold accountable those who seek to misuse public funds.”
Of the more than $5.6 billion in settlements and judgments reported by the Department of Justice this past fiscal year, over $5 billion relates to matters that involved the health care industry, including drug and medical device manufacturers, managed care providers, hospitals, pharmacies, hospice organizations, laboratories and physicians. The amounts included in the $5 billion reflect recoveries arising from only federal losses, and, in many of these cases, the department was instrumental in recovering additional amounts for state Medicaid programs.
In addition to being used to combat health care fraud, the False Claims Act serves as the government’s primary civil tool to redress false claims involving a multitude of other government operations and functions. The act helps to support our military and first responders by ensuring that government contractors provide equipment that is safe, effective and cost efficient; to safeguard American businesses and workers by promoting compliance with customs laws, trade agreements, visa requirements and small business protections; and to protect other critical government programs ranging from the provision of disaster relief funds to nutrition benefits for needy families.
In 1986, Congress strengthened the act by increasing incentives for whistleblowers to file lawsuits alleging false claims on behalf of the government. These whistleblower, or qui tam, actions comprise a significant percentage of the False Claims Act cases that are filed. If the government prevails in a qui tam action, the whistleblower, also known as the relator, typically receives a portion of the recovery ranging between 15% and 30%. Whistleblowers filed 598 qui tam suits in fiscal year 2021, and this past year the department reported settlements and judgments exceeding $1.6 billion in these and earlier-filed suits.
Health Care Fraud
Health care fraud was once again the leading source of the department’s False Claims Act settlements and judgments this past year. The department’s health care fraud enforcement efforts restore funds to federal programs such as Medicare, Medicaid and TRICARE, the health care program for service members and their families. But just as important, the department’s vigorous pursuit of health care fraud prevents billions more in losses by deterring others who might try to cheat the system for their own gain. In many cases, the department’s efforts also protect patients from medically unnecessary or potentially harmful actions. The department investigates and resolves matters involving a wide array of health care providers, goods and services.
Combatting the Opioid Epidemic
Opioid abuse remains a serious problem for our nation, with tens of thousands of Americans dying from opioid overdoses each year. Civil enforcement actions against the parties responsible for triggering and fueling the opioid epidemic are a critical part of the department’s ongoing efforts to address this crisis.
Consistent with this focus, the largest False Claims Act settlements in the past year resulted from significant resolutions with prescription opioid manufacturers: Indivior Inc. and Indivior plc (Indivior), and Purdue Pharma (Purdue). As part of a $600 million global resolution of criminal and civil liability, the Indivior companies agreed to pay $209.3 million to the federal government to resolve civil allegations that the companies, among other things, promoted the opioid-addiction-treatment drug Suboxone to physicians who were writing prescriptions that were not for a medically accepted indication and were often diverted; and made false and misleading claims that Suboxone Film was less susceptible to diversion and abuse and to accidental pediatric exposure than other buprenorphine products.
As part of a global resolution of criminal and civil liability, in October 2020, Purdue agreed to an allowed, unsubordinated, general unsecured bankruptcy claim for $2.8 billion to resolve civil allegations that the company promoted its opioid drugs to health care providers it knew were prescribing opioids for uses that were unsafe, ineffective, and medically unnecessary, and that often led to abuse and diversion. The civil settlement also resolved allegations that Purdue paid kickbacks to doctors, certain specialty pharmacies and an electronic health records developer to increase prescriptions of Purdue’s opioid products. Purdue incorporated the civil settlement into its plan of reorganization, but the district court subsequently reversed a bankruptcy court order confirming the plan and litigation over the plan continues. Separately, certain individual members of the Sackler family who were shareholders and board members of Purdue agreed to pay $225 million to resolve civil False Claims Act allegations that they approved a new marketing program that intensified marketing of OxyContin to extreme, high-volume prescribers, causing opioid prescriptions for uses that were unsafe, ineffective and medically unnecessary, and that often led to abuse and diversion.
Medicare Advantage Program (Medicare Part C)
Another important priority for the department has been investigating and litigating a growing number of matters related to the Medicare Advantage program, also known as Medicare Part C, which is Medicare’s managed care program. Medicare Part C pays a capitated amount to private health insurance carriers for each patient enrolled in their plans, rather than a payment for each distinct patient admission or service. CMS adjusts the payments for various “risk” factors that affect expected healthcare expenditures to ensure that plans are paid more for enrollees who pose a greater risk. In 2021, more than 26 million Medicare beneficiaries were enrolled in Part C plans, and the Congressional Budget Office projected that CMS would pay more than $343 billion to private carriers who offered those plans.
The department has pursued plans and healthcare providers that manipulated the risk adjustment process by submitting unsupported diagnosis codes to make their patients appear sicker than they actually were. This year, Sutter Health, a California-based health care services provider, paid $90 million to resolve allegations that it knowingly submitted unsupported diagnosis codes for certain patient encounters, resulting in inflated payments to be made to the Medicare Advantage Plans and Sutter Health. In addition, Kaiser Foundation Health Plan of Washington, formerly known as Group Health Cooperative (GHC), paid $6.3 million to resolve allegations that it submitted invalid diagnoses and received inflated payments as a result. In addition, the department intervened and filed complaints in separate lawsuits against Independent Health Corporation and members of the Kaiser Permanente consortium alleging that those Medicare Advantage organizations submitted or caused the submission of inaccurate information about the health status of beneficiaries enrolled in their plans to increase reimbursement from Medicare.
Unlawful Kickbacks
Kickbacks in the healthcare industry are pernicious because of their potential to subvert medical decision-making and to increase healthcare costs. In addition to pursuing improper payments by drug manufacturers, the department resolved other schemes involving the willful solicitation or payment of illegal remuneration to induce the purchase of a good or service paid for by a federal health care program.
For example, mail-order diabetic testing supply company Arriva Medical LLC and its parent, Alere Inc., agreed to pay $160 million to settle allegations that Arriva paid kickbacks to Medicare beneficiaries by providing them “free” or “no cost” diabetic testing glucometers and by routinely waiving or not making reasonable efforts to collect their copayments for glucometers and diabetic testing supplies. In another example, the department resolved its claims against pain management clinics and urine drug testing (UDT) laboratories owned and operated by Daniel McCollum for paying unlawful kickbacks to providers to induce their referrals of urine drug tests, obtaining default judgments against the clinics and laboratories totaling more than $140 million and a $9 million civil consent judgment against McCollum.
Electronic health records (EHR) technology vendor Athenahealth Inc. paid $18.25 million to resolve allegations that it invited customers and prospective customers to lavish all-expense-paid sporting, entertainment, and recreational events to generate sales of its EHR product. Generic pharmaceutical manufacturers Taro, Sandoz, and Apotex paid over $400 million to resolve allegations that they paid and received compensation prohibited by the Anti-Kickback Statute through arrangements on price, supply and allocation of customers with other pharmaceutical manufacturers as part of a conspiracy to fix the price of certain generic drugs.
Other matters relating to kickback violations involved psychiatric hospitals and a substance abuse treatment facility (Oglethorpe Inc.), home health care agencies (BAYADA), hospitals (Akron General Health System, Texas Heart Hospital of the Southwest LLP, and Prime Healthcare Services), pharmaceutical companies (Biogen Inc.), diagnostic testing (Alliance Family of Companies LLC) and medical devices (Merit Medical Systems Inc).
Unnecessary Medical Services
As in years past, the department also resolved a number of matters in which providers billed federal health care programs for medically unnecessary services or services not rendered as billed. For example, SavaSeniorCare LLC and related entities agreed to pay $11.2 million for alleged false claims for rehabilitation therapy services provided as a result of aggressive corporate targets without regard for its patients’ actual clinical needs, resulting in the provision of medically unreasonable, unnecessary or unskilled services to Medicare patients. The settlement also resolved allegations that Sava provided grossly and materially substandard and/or worthless skilled nursing services.
Alere Inc. and Alere San Diego Inc. (collectively, Alere) paid $38.75 million to resolve allegations that they billed, and caused others to bill, for defective rapid point-of-care testing devices used by Medicare beneficiaries to monitor blood coagulation when taking anticoagulant drugs. In another matter, Apria Healthcare LLC paid $40.5 million to resolve allegations that it submitted false claims for the rental of costly non-invasive ventilators to program beneficiaries who did not need the devices or were not using them. St. Jude Medical Inc. paid $27 million to settle allegations that it knowingly sold defective, implantable heart devices and failed to disclose serious adverse health events in connection with premature battery depletion in those devices. Regency Inc. and its owner agreed to a civil settlement up to $20.3 million to resolve allegations that they falsified documentation to enable the billing of federal healthcare programs for medically unnecessary durable medical equipment. In addition, the department continues to focus on inadequate care and other fraud in nursing facilities, which provide care to a particularly vulnerable population (as reflected by the resolutions this year with SavaSeniorCare LLC, discussed above, and Select Medical Rehabilitation Services Inc).
Procurement Fraud
In the past year, the department also pursued a variety of fraud matters involving the government’s purchase of goods and services. In some cases, the department pursued allegations that government contractors falsified pricing data. For example, Navistar Defense LLC paid $50 million to resolve allegations that it fraudulently induced the U.S. Marine Corps to enter into a contract modification at inflated prices for a suspension system for armored vehicles known as Mine-Resistant Ambush Protected vehicles. In another case, Insitu Inc. paid $25 million to settle allegations that it knowingly submitted materially false cost and pricing data for contracts with the U.S. Special Operations Command and the Department of the Navy to supply and operate Unmanned Aerial Vehicles. The department also recovered $7.1 million from furniture maker Workrite Ergonomics LLC to resolve allegations that the company did not provide the General Services Administration with accurate information about its commercial sales practices during contract negotiations for office furniture, and subsequently violated the terms of its contract by failing to extend lower prices to government customers.
In other cases, the department pursued allegations that government contractors provided goods or services that did not comply with contract requirements. For example, United Airlines Inc. paid $32.1 million to resolve allegations relating to its execution of contracts to deliver mail internationally on behalf of the U.S. Postal Service. In another case, Cognosante LLC paid $18.9 million to resolve allegations that it used unqualified labor and overcharged the government for health care and IT services provided to federal agencies under two General Services Administration contracts. The department also recovered $11 million from AAR Corp. and its subsidiary, AAR Airlift Group Inc., to resolve allegations that AAR Airlift knowingly failed to maintain nine helicopters in accordance with Department of Defense contract requirements and that the helicopters, which were billed under two U.S. Transportation Command contracts to transport cargo and personnel in support of missions in Afghanistan and Africa, were not airworthy and should not have been certified as fully mission capable.
The department also resolved matters involving allegations of kickbacks in government contracts. For example, Level 3 Communications LLC paid $12.7 million to resolve allegations that the owner of two subcontractors paid kickbacks to Level 3 senior managers in return for favorable treatment for those subcontractors on government contracts. The United States also alleged that Level 3 managers misstated compliance with woman-owned small business subcontracting requirements and knowingly obtained protected competitor bid information on the government contract to gain an advantage in bidding on task orders. In another example, Schneider Electric Buildings Americas Inc. paid more than $9 million to resolve allegations that one of its senior project managers solicited kickbacks from subcontractors and that the company fraudulently charged the government for design costs by disguising those costs and spreading them across unrelated pricing components.
COVID-Related Fraud
In response to the COVID-19 crisis, Congress authorized historic levels of emergency funding for federal agencies to provide direct financial assistance to individuals, businesses and state, local, and Tribal governments. Since the start of the COVID-19 pandemic, the department has worked closely with various Inspector Generals and other agency stakeholders to identify, monitor and investigate the misuse of critical pandemic relief monies.
The department’s efforts in this area have included the pursuit of cases involving improper payments under the Paycheck Protection Program (PPP), which was enacted to provide loans guaranteed by the U.S. Small Business Administration (SBA) to eligible small businesses for payroll, rent, utility payments and other business-related costs. For example, the department has pursued small businesses that improperly received multiple PPP loans. Sandeep S. Walia and his medical practice paid a combined $70,000 to resolve allegations under the False Claims Act and the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) that Dr. Walia, on behalf of his practice, falsely certified in an application for a second PPP loan that the medical practice had not previously received a PPP loan. The medical practice also agreed to repay the second PPP loan to the lender, relieving the SBA of liability for the federal guaranty of over $430,000 on the improper loan.
Sextant Marine Consulting LLC, a Florida-based duct cleaning company, paid $30,000 to settle allegations that it improperly obtained more than one PPP loan. Sextant also repaid the duplicative PPP funds in full to its lender, relieving the SBA of liability for the federal guaranty of approximately $170,000 on the improper loan. The department has also pursued cases against eligible borrowers who used PPP funds to pay for impermissible expenses. For example, Seth A. Bernstein, the owner of jet charter company All in Jets LLC dba JetReady, paid $287,055 to settle allegations that he diverted PPP funds to pay for personal, non-company related expenses.
Other Fraud Recoveries
The judgments and settlements announced during fiscal year 2021 reflect the diversity of fraud recoveries arising under the False Claims Act. For example, the United States leases federal lands for the production of natural gas in exchange for the payment of royalties on the value of the gas produced. The department recovered $6.15 million from oil and natural gas exploration and production company Devon Energy Corp. to resolve allegations that it underpaid and underreported royalties for natural gas from federal lands in Wyoming and New Mexico.
Stargate Apparel Inc., Rivstar Apparel Inc., and the chief executive officer of both companies paid $6 million to resolve allegations that they engaged in two schemes to fraudulently underpay customs duties owed to the United States in connection with the garments that they brought into the country.
Concept Schools NFP, agreed to pay $4.5 million for allegedly engaging in non-competitive bidding practices in connection with the Federal Communications Commission’s (FCC) E-Rate Program, which subsidizes eligible equipment and services to make internet access and internal networking more affordable for needy public schools and libraries. Concept Schools, a charter school management company, rigged the bidding for E-Rate contracts in favor of chosen technology vendors so that its network of charter schools could select those vendors without a meaningful, fair and open bidding process. Additionally, the government alleged that Concept Schools’ chosen vendors provided equipment at higher prices than other vendors approved by the FCC for equipment with the same functionality, and that Concept Schools failed to maintain sufficient control over equipment reimbursed by the FCC.
Educational services provider Innovative Educational Programs LLC paid $1.1 million to resolve allegations that it fraudulently obtained federal funds for tutoring services for underprivileged New York City students that it never provided. The New York City Department of Education had paid Innovative to tutor students using funds made available to New York State by the United States under the Elementary and Secondary Education Act of 1965, as amended by the No Child Left Behind Act of 2001.
Guild Mortgage Company paid $24.9 million to resolve allegations that it failed to maintain quality control programs to prevent and correct underwriting deficiencies and to self-report materially deficient loans insured by the Federal Housing Administration.
Cybersecurity Initiative
Malicious cyber activity threatens the health and safety of the American people, and the national and economic security of our country. On May 12, 2021, President Biden signed an Executive Order announcing that preventing, detecting, assessing and remediating cybersecurity incidents affecting federal government networks is a top priority, and set forth an expectation that all federal systems will meet the necessary thresholds for cybersecurity protections. On Oct. 6, 2021, the Deputy Attorney General announced the department’s Civil Cyber-Fraud Initiative to use the False Claims Act to combat new and emerging cyber threats.
Civil enforcement plays an essential role in the department’s cyber defense efforts. The department will pursue misrepresentations by companies in connection with the government’s acquisition of information technology, software, cloud-based storage and related services designed to protect highly-sensitive government information from cybersecurity threats and compromises.
Information on how to report cyber fraud can be found here: https://www.justice.gov/civil/report-fraud.
Holding Individuals Accountable
The department continued its commitment to use the False Claims Act to deter and redress fraud by individuals as well as corporations. In addition to the settlements noted above with certain members of the Sackler family and with corporate entities that included payments by senior executives or owners, the following are additional examples of recoveries involving individuals.
Dr. Ashish Pal, a cardiologist based in Orlando, Florida, paid $6.75 million to resolve allegations that he performed medically unnecessary ablations and vein stent procedures. The government alleged that Dr. Pal performed the ablations and stent procedures on veins that did not qualify for treatment under accepted standards of medical practice and falsified patient medical records to justify the procedures. In addition, many of the ablations were allegedly performed either exclusively or primarily by one or more ultrasound technicians outside their scope of practice.
Two Texas physicians, Robert Wills and Brannon Frank, paid a total of $3.9 million to resolve allegations that they billed federal health care programs for medically unnecessary urine drug testing. The settlements resolved allegations that the physicians, formerly co-owners of now-defunct Austin Pain Associates, knowingly ordered excessive and unnecessary urine drug testing for patients without any individualized assessment of clinical need.
Substance abuse treatment provider A.R.E.B.A.-Casriel Inc. dba Addiction Care Interventions Chemical Dependency Treatment Centers (ACI) and its primary owner and former CEO, Steven Yohay, agreed to pay a total of $6 million to resolve allegations that they provided kickbacks and engaged in fraudulent conduct in connection with the enrollment of Medicaid beneficiaries into ACI’s inpatient treatment program. The United States alleged that ACI offered food and cash to homeless individuals to induce them to enroll in ACI’s inpatient treatment program, offered sham employment to an individual to induce her to refer patients to ACI programs, and used medical admissions forms containing photocopied physician signatures to make it appear that new patients had been evaluated by a qualified health care professional. ACI agreed to pay $3 million, and Yohay agreed to pay an additional $3 million and divest himself of ownership and control of ACI.
Recoveries in Whistleblower Suits
Of the $5.6 billion in settlements and judgments reported by the government in fiscal year 2021, over $1.6 billion arose from lawsuits filed under the qui tam provisions of the False Claims Act. During the same period, the government paid out $237 million to the individuals who exposed fraud and false claims by filing these actions.
The number of lawsuits filed under the qui tam provisions of the Act has grown significantly since 1986, with 598 qui tam suits filed this past year – an average of over 11 new cases every week.
“Industry insiders are uniquely positioned to expose fraud and false claims and often risk their careers to bring these schemes to light,” said Acting Assistant Attorney General Boynton. “Our efforts to protect taxpayer funds benefit from the courageous actions of these whistleblowers, and they are justly rewarded under the False Claims Act.”
In 1986, Senator Charles Grassley and Representative Howard Berman led the successful efforts in Congress to amend the False Claims Act to, among other things, encourage whistleblowers to come forward with allegations of fraud. In 2009 and 2010, further improvements were made to the False Claims Act and its whistleblower provisions.
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Acting Assistant Attorney General Boynton expressed appreciation for all the work over the past year by the many public servants who supported the department’s efforts to protect the public: “We owe a debt of gratitude to the employees in the Civil Division, the U.S. Attorneys’ Offices, the agency Offices of Inspector General and Offices of General Counsel and the many other federal and state agencies who have worked tirelessly to protect the public fisc from fraud.”
Except where indicated, the government’s claims in the matters described above are allegations only and there has been no determination of liability. The numbers contained in this press release may differ slightly from the original press releases due to accrued interest.
Georgia Men Sentenced to Prison for Dog-Fighting and Drug DistributionRead the Press Release
Two Georgia residents convicted on dog-fighting and drug distribution charges resulting from an investigation into a significant multi-state dog-fighting and cocaine trafficking ring were sentenced to prison today.
Jarvis Lockett, 41, of Warner Robins, Georgia, was sentenced to serve 10 years’ imprisonment and three years’ supervised release after previously pleading guilty to conspiracy to participate in an animal fighting venture and cocaine distribution. Co-defendant Christopher Raines, 51, of Talbotton, Georgia, was sentenced to serve 135 months’ imprisonment, five years’ supervised release, and pay a fine of $10,000, after previously pleading guilty to conspiracy to participate in an animal fighting venture and conspiracy to possess with intent to distribute cocaine and cocaine base. U.S. District Judge Tilman E. “Tripp” Self III presided over both hearings. There is no parole in the federal system.
“Lockett and Raines were conspirators in a criminal enterprise that profited from the suffering of both animal and human victims,” said Assistant Attorney General Todd Kim of the Justice Department’s Environment and Natural Resources Division. “Dog-fighting is closely associated with other serious crimes, and today’s sentences show that those who engage in this cruel and inhumane practice face significant prison time.”
“This multi-state investigation began with Jarvis Lockett, who was an active and aggressive participant in the dog-fighting world,” said U.S. Attorney Peter D. Leary of the Middle District of Georgia. “Federal, state and local law enforcement meticulously followed every lead, and their unwavering commitment to justice has put an end to a complex and deadly dog-fighting and drug distribution network. Violent dog-fighting circles are proven breeding grounds for a wide-range of criminal activities that harm the well-being of our communities and will not be tolerated in the Middle District of Georgia.”
“We have investigated animal cruelty cases in the past, so initially when this information came in, we thought that it would involve a handful of local people fighting dogs for sport,” said Peach County Sheriff Terry Deese. “What started out as a local investigation soon turned into a complex investigation that included people from multiple states and all walks of life. It is impossible to comprehend just how cruel these dogs were being treated for the purpose of training them to kill. Our team rescued 168 pit bulls during the execution of the search warrants and not the first dog acted aggressively toward the officers. The dogs just wanted attention and love. Organized dog-fighting is a dark, sick and disgusting culture that has no place in our society.”
According to court documents, law enforcement investigated a criminal organization involved in both cocaine distribution and organized dog-fighting based out of Roberta, Georgia, which extended into North Georgia, Florida and Alabama from May 2019 until February 2020. In February 2020, law enforcement executed 15 residential search warrants and seized more than 150 dogs that were being used for organized dog-fighting.
During this time period, Lockett attended and had his dogs participate in dog fights in Melrose, Florida, and Macon, Georgia, where he also acted as a referee. In addition, he attended, participated and/or attempted to participate in dog fights in Taylor County, Georgia, Eastman, Georgia, and Shiloh, Georgia, where Lockett received $16,000 for his winning dog. Text messages obtained from a search warrant executed on Lockett’s cell phone detailed his dog-fighting ventures, including communications between Lockett and multiple defendants on subjects such as killing an unaggressive dog, planning a dog fight and soliciting a female dog for fighting for $10,000. Additional text messages discussed the purchases of large quantities of cocaine and spending $250,000 on narcotics from co-defendant Derrick Owens. A confidential informant (CI) purchased cocaine from Lockett at a Roberta, Georgia, family home on July 10, 2019 and Sept. 12, 2019.
On Feb. 26, 2020, law enforcement executed a search warrant at the Roberta residence recovering cash, cocaine and evidence of dog-fighting activities to include veterinary penicillin, break sticks, photos of fighting dogs, a dog weight training vest, a dog-fighting pit, a dog treadmill, and blood-stained carpet and walls. 14 dogs were recovered. The dogs had scarring consistent with dogs being used for dog-fighting activities. On the same day, investigators executed a search warrant at a Warner Robins property Lockett owned, where they found a pit bull terrier dog that was extremely injured and lethargic. The injuries had been stapled shut. The dog died two days later of his injuries. Agents found other evidence of dog-fighting activity including medicine and supplies to treat animals for injuries sustained from dog-fighting activities, a notepad containing dog names and dollar amounts, a 50-pound digital scale, paperwork from a veterinary clinic, a blender with dog food and medicine, dog breeding registration certificates and several bags of cash.
Co-defendant Raines’ drug distribution and dog-fighting activities were uncovered during the course of the investigation. Law enforcement executed a search warrant of Raines’ Talbotton property on Feb. 26, recovering 41 dogs used in dog-fighting. The dogs were malnourished with scars, hair loss and spliced ears. Agents seized many items used in dog-fighting including a skin stapler, IV kits, veterinary medical supplies and dog breeding certificates. In his plea agreement, Raines admitted that he was a manager or supervisor in the criminal organization and was responsible for drug transactions ranging from a quarter to 1.5 kilograms of cocaine.
The case was investigated by the Drug Enforcement Administration; The U.S. Department of Agriculture, Office of the Inspector General (USDA-OIG); U.S. Marshals Service; the Department of Justice, Environment and Natural Resources Division (ENRD); Georgia Bureau of Investigation (GBI); Bibb County Sheriff’s Office; Crawford County Sheriff’s Office; Houston County Sheriff’s Office; Merriweather County Sheriff’s Office; Peach County Sheriff’s Office; Taylor County Sheriff’s Office; Webster County Sheriff’s Office; Byron Police Department and the Fort Valley Police Department.
Assistant U.S. Attorney Will Keyes with the U.S. Attorney’s Office for the Middle District of Georgia and Trial Attorney Banu Rangarajan with the Department of Justice, Environmental Crimes Section prosecuted the case.
Note: View photos below:
Exhibit 1 – Picture of the dog that Lockett kept at his residence at 107 Stanton in Warner Robins. This is the dog that could not be saved by the veterinarian. It died two days after being seized. Its wounds had been stapled shut and it was extremely injured and lethargic.
Exhibit 2 – Picture of the blood-stained wall’s from behind Lockett’s property in Roberta, Georgia. The walls circling the room were all stained with dogs’ blood.
Former Louisville, Kentucky Police Officer Sentenced for Using Excessive ForceRead the Press Release
A former Louisville Metro Police Department (LMPD) officer was sentenced today in the U.S. District Court for the Western District of Kentucky for using excessive force on an arrestee. U.S. District Court Judge Rebecca Grady Jennings sentenced Cory P. Evans, 34, to two years’ imprisonment and two years’ supervised release.
Evans previously pleaded guilty to violating the Constitution by using objectively unreasonable force against an arrestee. When he entered his guilty plea, Evans admitted that on May 31, 2020, while he was working as a part of the LMPD Special Response Team, he followed a group of individuals around downtown Louisville to execute arrests for unlawful assembly and violations of curfew. At an intersection, a person in the group surrendered for arrest by getting on his knees and placing his hands in the air. While that person was kneeling in this position, Evans struck him in the back of the head with a riot stick, which created a wound on the back of the kneeling victim’s head. The victim fell forward and was taken into custody by other LMPD officers.
“Former officer Evans abused his authority by violently retaliating against a surrendering arrestee who had been exercising his First Amendment rights during a demonstration in Louisville, during the racial justice demonstrations in the spring of 2020,” said Assistant Attorney General Kristen Clarke for the Justice Department’s Civil Rights Division. “The Justice Department will continue to hold accountable officers who violate their oath and the Constitution.”
“The FBI and LMPD’s Public Integrity Unit did outstanding work in this case,” said U.S. Attorney Michael A. Bennett for the Western District of Kentucky. “The effort of the assigned agents and detectives resulted in a successful prosecution and is a positive step toward strengthening trust and confidence between our citizens and the officers who protect them.”
“In order for the public to have full trust and confidence in the law enforcement officers who have sworn to protect them, those officers who choose to abuse their authority must be held accountable,” said Special Agent in Charge Jodi Cohen of the FBI’s Louisville Field Office. “Today’s sentencing reflects the FBI’s and the Department of Justice’s unwavering commitment to identify, investigate and prosecute law enforcement officials who break the law by violating a person’s Constitutional rights.”
The FBI and LMPD’s Public Integrity Unit jointly investigated the case through the Louisville Public Corruption Civil Rights Task Force. Assistant U.S. Attorney Amanda Gregory for the Western District of Kentucky and Civil Rights Division Trial Attorney Tim Visser prosecuted the case.
Former Engineering Executive Convicted of Rigging Bids and Defrauding North Carolina Department of TransportationRead the Press Release
A former executive of Contech Engineered Solutions LLC was convicted today in New Bern, North Carolina, for his participation in bid-rigging and fraud schemes targeting the North Carolina Department of Transportation (NCDOT).
Following a week-long trial in the U.S. District Court for the Eastern District of North Carolina, a jury convicted Brent Brewbaker, a former Contech executive, for participating in conspiracies to rig bids and submit false certifications of non-collusion for more than 300 aluminum structure projects funded by the state of North Carolina between 2009 and 2018. Evidence showed that Brewbaker instructed a co-conspirator to submit non-competitive bids to NCDOT and to hide his bid rigging and fraud by varying the amount of inflated bids submitted. He also made clear to a co-conspirator that he would hide illegal conduct by deleting text messages he received about the conspiracy.
“Today’s verdict reinforces the division’s commitment to hold accountable executives who target state and local governments with their bid-rigging and fraud schemes,” said Assistant Attorney General Jonathan Kanter of the Justice Department’s Antitrust Division. “With massive investments in infrastructure projects beginning soon, companies that manage those projects must know that the Justice Department and its Procurement Collusion Strike Force partners will have their eyes out for cheaters and schemers.”
“Activities related to collusion, bid rigging and fraud do not promote an environment conducive to open competition, which harms the consumer,” said Executive Special Agent in Charge Ken Cleevely of the U.S. Postal Service (USPS) Office of Inspector General. “Along with the Department of Justice and our federal law enforcement partners, the USPS Office of Inspector General will aggressively investigate those who would engage in this type of harmful conduct.”
“For nearly a decade Brent Brewbaker engaged in a scheme that compromised taxpayers’ investments in transportation projects in the State of North Carolina for commercial gain,” said Special Agent-in-Charge Craig Miles of the U.S. Department of Transportation Office of Inspector General, Mid-Atlantic Region. “Today’s verdict underscores our resolve to continue working with our prosecutorial and law enforcement partners toward protecting the Federally-funded infrastructure projects from fraud, waste and abuse.”
Brewbaker was convicted of conspiring to rig bids, conspiring to commit fraud, three counts of mail fraud and one count of wire fraud. He is scheduled to be sentenced on April 12. He faces a maximum penalty of 10 years in prison for conspiring to rig bids and 20 years in prison for each of the other counts.
Contech previously pleaded guilty to one count of bid rigging under Section One of the Sherman Antitrust Act and one count of conspiring to commit mail and wire fraud. Contech agreed to pay a criminal fine of $7 million and restitution to NCDOT in the amount of $1,533,988.
The Antitrust Division’s Washington Criminal I Section prosecuted this case, which was investigated with the assistance of the USPS Office of Inspector General and the U.S. Department of Transportation Office of Inspector General. The U.S. Attorney’s Office for the Eastern District of North Carolina also provided support throughout the investigation and trial.
In November 2019, the Justice Department created the Procurement Collusion Strike Force, a joint law enforcement effort to combat antitrust crimes and related fraudulent schemes that impact procurement and grant and program funding at all levels of government – federal, state, and local. To contact the Procurement Collusion Strike Force or to report information concerning market allocation, price fixing, bid rigging or other anticompetitive conduct related to federal, state or local transportation projects, visit https://www.justice.gov/procurement-collusion-strike-force.
Chicago-Area Gun and Drug Trafficker Sentenced to Sixty-Five Years in Prison for Firearms and Drug Offenses in East Central IllinoisRead the Press Release
URBANA, Ill. – A Markham, Illinois, man, Deon Evans, 37, was sentenced on January 31, 2022, to sixty-five years and eight months’ imprisonment in the Federal Bureau of Prisons for trafficking heroin and methamphetamine, carrying and possessing a firearm during his drug trafficking crimes, and possessing a firearm as a convicted felon.
At the sentencing hearing, U.S. District Judge Colin S. Bruce found that Evans faced mandatory consecutive twenty-five-year sentences for his separate offenses of carrying a firearm while distributing heroin and possessing a firearm in furtherance of his possession of methamphetamine (in the form of the street drug “ecstasy”) with the intent to distribute it. Judge Bruce further determined that Evans was involved in the trafficking of at least eight to twenty-four firearms. And Judge Bruce found that Evans had obstructed justice by providing false testimony during his case. Evans’s sentence was enhanced because he was on federal supervised release at the time of his offenses from a 2007 conviction for possession of cocaine with the intent to distribute and possession of a firearm in furtherance of a drug trafficking crime in the Southern District of Iowa.
Evans was convicted following a jury trial in January 2020. During the three-day trial, the government presented evidence to establish that Evans traveled from his residence in Markham to a gas station in Gilman, Illinois, in July 2016, where he sold 48.4 grams of heroin in exchange for $4,500. The next month, Evans again travelled to the gas station to meet the same buyer, this time bringing an associate and two loaded firearms. During this meeting, Evans sold 124.3 grams of heroin for $11,250.
After the August 2016 heroin sale, Evans’s BMW was stopped by troopers with the Illinois State Police as it was heading north on Interstate 57. During the search of Evans’s car, troopers found the cash used to purchase the heroin hidden under the back seat, along with the two fully loaded firearms, an extra magazine, and 173 ecstasy pills that contained methamphetamine. Trial evidence established that Evans obtained one of those firearms – a Glock, Model 30, .45 caliber, semi-automatic pistol – by trading a heroin user two grams of heroin and $100 in exchange for the gun, which had been stolen from Indiana. Additional trial evidence showed that Evans used two women – known as “straw purchasers” – to purchase guns for him in Birmingham, Alabama, which he then sold illegally in Chicago.
“Unfortunately, gun violence and deadly opioids, such as the heroin distributed in this case, continue to represent a danger to our communities here in the Central District of Illinois,” said Supervisory Assistant U.S. Attorney Eugene L. Miller, who represented the government at sentencing. “We will continue to support our federal and local law enforcement partners in pursuing these prosecutions in order to deter this dangerous behavior.”
The Drug Enforcement Administration, Chicago Division, Springfield Resident Office; the Bureau of Alcohol, Tobacco, Firearms and Explosives, Springfield, Illinois, and Birmingham Field Offices; and the Illinois State Police investigated the case. Assistant U.S. Attorneys Miller and Rachel E. Ritzer represented the government at trial.
Statement from Assistant Attorney General Kristen ClarkeRead the Press Release
Assistant Attorney General Kristen Clarke for the Civil Rights Division issued the following statement today regarding the hearing in United States v. McMichael et al.:
“We respect the court’s decision to not accept the sentencing terms of the proposed plea and to continue the hearing until Friday.
“The Justice Department takes seriously its obligation to confer with the Arbery family and their lawyers both pursuant to the Crime Victim Rights Act and out of respect for the victim. Before signing the proposed agreement reflecting the defendants’ confessions to federal hate crimes charges, the Civil Rights Division consulted with the victims’ attorneys. The Justice Department entered the plea agreement only after the victims’ attorneys informed me that the family was not opposed to it.”
Attorney General Merrick B. Garland Announces Justice Department Strategy to Combat Human TraffickingRead the Press Release
U.S. Attorney General Merrick B. Garland today released the Justice Department’s new National Strategy to Combat Human Trafficking pursuant to the Justice for Victims of Trafficking Act, 34 U.S.C. § 20711(a).
Rooted in the foundational pillars and priorities of the interagency National Action Plan to Combat Human Trafficking, which President Biden released on Dec. 3, 2021, the Justice Department's National Strategy is expansive in scope. It aims to enhance the department's capacity to prevent human trafficking; to prosecute human trafficking cases; and to support and protect human trafficking victims and survivors.
“Human trafficking is an insidious crime,” said Attorney General Garland. “Traffickers exploit and endanger some of the most vulnerable members of our society and cause their victims unimaginable harm. The Justice Department’s new National Strategy to Combat Human Trafficking will bring the full force of the Department to this fight.”
Among other things, the Justice Department’s multi-year strategy to combat all forms of human trafficking will:
- Strengthen engagement, coordination and joint efforts to combat human trafficking by prosecutors in all 94 U.S. Attorneys’ Offices and by federal law enforcement agents nationwide.
- Establish federally-funded, locally-led anti-human trafficking task forces that support sustained state law enforcement leadership and comprehensive victim assistance.
- Step up departmental efforts to end forced labor by increasing attention, resources and coordination in labor trafficking investigations and prosecutions.
- Enhance initiatives to reduce vulnerability of American Indians and Alaska Natives to violent crime, including human trafficking, and to locate missing children.
- Develop and implement new victim screening protocols to identify potential human trafficking victims during law enforcement operations and encourage victims to share important information.
- Increase capacity to provide victim-centered assistance to trafficking survivors, including by supporting efforts to deliver financial restoration to victims.
- Expand dissemination of federal human trafficking training, guidance and expertise.
- Advance innovative demand-reduction strategies.
The department’s strategy will be implemented under the direction of the National Human Trafficking Coordinator designated by the Attorney General in accordance with the Abolish Human Trafficking Act of 2017, 34 U.S.C. § 20711(d).
To read the National Strategy to Combat Human Trafficking click here.
Former Tennessee Law Enforcement Officer Convicted of Federal Civil Rights OffensesRead the Press Release
Former law enforcement officer Anthony “Tony” Bean was found guilty by a federal court today of violating two arrestees’ civil rights by using excessive force against them. Tony Bean, 61, was convicted following a trial in Chattanooga for using excessive force against two arrestees while he was a law enforcement officer.
Bean was convicted of using excessive force against arrestee C.G. on two occasions during C.G.’s arrest in 2014, while Bean was the Chief of the Tracy City Police Department in Tracy City, Tennessee, and of using excessive force against arrestee F.M. during F.M.’s arrest in 2017, while Bean was the Chief Deputy of the Grundy County Sheriff’s Office in Grundy County, Tennessee. Bean’s co-defendant, T.J. Bean, faced a single charge at trial and was acquitted of using excessive force against arrestee F.M. during the same arrest in 2017.
In June 2021, the court heard evidence over the course of three days that showed that, during C.G.’s arrest in the Tracy Lakes area of Grundy County in 2014, Tony Bean repeatedly punched C.G. in the face while C.G. was handcuffed and compliant, causing C.G. pain and other injuries. The court also heard evidence that, during F.M.’s arrest in Grundy County in 2017, Tony Bean punched F.M. in the face while F.M. was compliant, causing pain and other injuries. In addition, the court heard evidence that Tony Bean bragged about using excessive force against his victims and failed to report his uses of force.
“Every person in our nation has the right to be free from unlawful abuse by police officers, including the use of excessive force during an arrest,” said Assistant Attorney General Kristen Clarke for the Justice Department’s Civil Rights Division. “This verdict makes clear that law enforcement officials who use unlawful force are not above the law. We will not stand idly by in the face of criminal misconduct by law enforcement officials in any part of the country.”
“Tony Bean held a position of public trust, and he willfully violated that trust,” said U.S. Attorney Francis M. Hamilton III. “This violation diminishes the tremendous work performed by law enforcement every day. Our office is committed to ensuring the protection of every person’s civil rights.”
“Civil Rights violations are always of great concern, particularly when an officer betrays the oath to protect and serve,” said Special Agent in Charge Joseph E. Carrico of the FBI Knoxville Division. “The public has an absolute right to trust that law enforcement will protect those they serve. When that trust is violated, the law enforcement community is tarnished, and the community’s confidence is broken.”
Tony Bean’s sentencing has been set for June. He faces a maximum penalty of 10 years of imprisonment on each of the three counts of conviction.
This case was investigated by the Knoxville Division of the FBI and was prosecuted by Trial Attorneys Kathryn E. Gilbert and Andrew Manns of the Justice Department’s Civil Rights Division and Assistant U.S. Attorney James Brooks of the U.S. Attorney’s Office for the Eastern District of Tennessee.
Two Former Federal Correctional Officers Plead Guilty to Bribery and Smuggling Contraband SchemeRead the Press Release
Two former correctional officers pleaded guilty this week to engaging in bribery and smuggling contraband into Leavenworth Detention Center.
According to court documents, Janna Grier, 36, of Horton, Kansas, previously worked as a correctional officer at Leavenworth Detention Center, a privately run, maximum-security federal prison in Leavenworth, Kansas. Grier used her position to smuggle contraband into the prison and also solicited other prison officials to use their position to smuggle contraband into Leavenworth.
On Jan. 25, Grier pleaded guilty to conspiracy to offer bribes and provide contraband to inmates of a federal prison. She is scheduled to be sentenced on April 28, and faces a maximum penalty of five years in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
According to court documents, Willie Golden, 28, of Overland Park, Kansas, also previously worked as a correctional officer at Leavenworth Detention Center. Golden used his position to smuggle contraband — including tobacco, synthetic cannabinoids, cellular telephones and marijuana — into the prison in exchange for bribe payments.
Today, Golden pleaded guilty to conspiracy to accept bribes and provide contraband to inmates of a federal prison. He is scheduled to be sentenced on May 17, and faces a maximum penalty of five years in prison. 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, Special Agent in Charge William J. Hannah of the Department of Justice Office of Inspector General (DOJ-OIG) Chicago Field Office, Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division, and Special Agent in Charge Charles A. Dayoub of the FBI’s Kansas City Field Office made the announcement.
The FBI and DOJ-OIG are investigating the cases.
Trial Attorneys Rebecca M. Schuman and Dahoud A. Askar of the Justice Department’s Public Integrity Section are prosecuting the cases.
The cases are part of the Justice Department’s ongoing efforts to combat prison corruption. In addition to the above matters, the Public Integrity Section is prosecuting three other former Leavenworth officials for similar alleged conduct. See United States v. Cheyonte Harris, Case No. 2:21-cr-20054 (D. Kan.); United States v. Jaqueline Sifuentes, No. 2:21-cr-20053 (D. Kan.); United States v. Jeane Arnette, No. 2:21-cr-20063 (D. Kan.). An indictment is merely an allegation, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Separately, the Public Integrity Section and the FBI recently obtained convictions against three former North Carolina prison officials who smuggled contraband, including illegal narcotics, into a state facility in exchange for bribes. See United States v. Ollie Rose, III, No. 4:20-CR-96 (E.D.N.C.); United States v. Kenneth Farr, No. 4:21-CR-9 (E.D.N.C.); and United States v. Jeremy Chambers, No. 4:21-CR-38 (E.D.N.C.).
Online Contact Lens Company Ordered to Pay $3.5 Million in Civil Penalties and Consumer Redress for Violating Federal Contact Lens LawsRead the Press Release
The Department of Justice, together with the Federal Trade Commission (FTC), today announced that the government will collect $1.5 million in civil penalties and $2 million in consumer redress from online contact lens company Vision Path Inc., dba Hubble Contacts (Hubble), as part of a settlement to resolve allegations that Hubble violated the Fairness to Contact Lens Consumers Act and the FTC’s Contact Lens Rule.
In a complaint filed in the U.S. District Court for the District of Columbia, the government alleged that Hubble violated the federal Fairness to Contact Lens Consumers Act and the FTC’s Contact Lens Rule by selling contact lenses online without taking the steps required to verify the subscriber’s contact lens prescription, improperly substituting Hubble’s own brand of contact lenses for those originally prescribed by consumers’ eye care practitioners and procuring what it falsely portrayed as independent consumer reviews of its products and services. In addition to requiring Hubble to pay civil penalties and consumer redress, the stipulated order entered by the court today requires Hubble to refrain from altering prescriptions to change the brand prescribed, to verify the prescription for contact lens orders submitted without a written prescription, to cease other deceptive practices and to satisfy ongoing recordkeeping, certification and compliance obligations.
“The Department of Justice will not tolerate the violation of laws intended to ensure that consumers receive the products prescribed for them,” said Acting Assistant Attorney General Brian M. Boynton of the Justice Department’s Civil Division. “The department is committed to protecting consumers from companies that engage in deceptive practices.”
“Hubble’s business model boosted its bottom line but created needless risk for its customers’ eye health,” said Director Samuel Levine of the FTC’s Bureau of Consumer Protection. “Today’s action makes clear that firms will pay a price for deceiving their customers, flouting the Contact Lens Rule, and using misleading reviews.”
This matter is being handled by Claude Scott of the Civil Division’s Consumer Protection Branch and Alysa S. Bernstein and Paul Spelman of 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.
North Carolina Surgeon and Wife Sentenced to Prison for Tax CrimesRead the Press Release
A North Carolina surgeon and his wife were sentenced today to five years in prison for federal employment and individual income tax crimes.
According to evidence presented at trial and statements made in court, James Rice, an orthopedic surgeon, and his wife Susan Rice, who worked for his medical practice, conspired to defraud the IRS, evaded payment of taxes, failed to pay over employment taxes and failed to file tax returns. In total, the Rices did not pay more than $2.4 million in personal, corporate and employment taxes that they owed.
From 1992 to present, James Rice owned and operated Sandhills Orthopaedic, a medical practice located in Pinehurst, North Carolina. Susan Rice handled the practice’s administrative operations. Between 2007 and 2016, the Rices conspired to defraud the United States with respect to Sandhills Orthopaedic’s employment taxes and their individual income taxes. To accomplish this, the Rices transferred approximately $1 million from Sandhills Orthopaedic’s business bank accounts to other accounts they controlled, including personal bank accounts and a business account related to an unrelated truffle company owned by Susan Rice. The Rices also used Sandhills Orthopaedic’s business bank accounts to pay for personal expenses, including a country-club membership and dog kennel boarding.
The Rices also withheld nearly $580,000 in taxes from the paychecks of the medical practice’s employees, then used those withholdings for their own personal gain rather than paying them over to the IRS as required by law. Finally, from 2014 to 2016 the Rices did not file individual tax returns, and James Rice did not file corporate taxes for another entity he owned, even though they were respectively required to file returns for all of those years.
“As a result of today’s sentence, James and Susan Rice’s prolonged effort to evade paying their taxes has come to an end,” said Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division. “Each year, the vast majority of Americans and businesses follow the tax laws and pay their fair share. Those who willfully evade such obligations should fully expect to be held accountable for their criminal conduct.”
“Failure to pay over withheld taxes is a serious offense,” said Special Agent in Charge Donald “Trey” Eakins of the IRS Criminal Investigation, Charlotte Field Office. “Employment tax evasion results in the loss of tax revenue to the U.S. government and the loss of future Social Security and Medicare benefits for those employees. The investigation of employment tax fraud is a priority for IRS Criminal Investigation, and our special agents will vigorously pursue anyone who collects these taxes and then uses the funds for their own personal gain.”
On Sept. 20, 2021, a federal jury convicted the Rices of one count of conspiracy to defraud the United States, one count of tax evasion, two counts of failure to pay over employment taxes and three counts of failure to file tax returns. The jury also convicted James Rice of three counts of failure to file corporate tax returns. In addition to the term of imprisonment, U.S. District Judge Catherine C. Eagles ordered the Rices to serve three years of supervised release and to pay approximately $2.4 million in restitution to the United States.
Acting Deputy Assistant Attorney General Goldberg made the announcement.
IRS-Criminal Investigation investigated the case.
Trial Attorneys Alexander Effendi and Michael L. Jones of the Justice Department’s Tax Division prosecuted the case.
Justice Department Secures Agreement to Make Online COVID-19 Vaccine Registration Accessible for People with Disabilities at Kroger Grocery ChainRead the Press Release
The Justice Department today announced that it has secured a settlement agreement with The Kroger Co. (Kroger) under the Americans with Disabilities Act (ADA) that will eliminate barriers preventing people with certain disabilities from getting information about COVID-19 vaccinations and booking their vaccination appointments online. Kroger is an Ohio-based retailer with approximately 2,800 retail grocery stores under the Kroger name and other brands, with a presence in 35 states and the District of Columbia. Today’s resolution is the department’s third agreement on the critical issue of COVID-19 vaccination website accessibility, following settlement announcements in November 2021 (Rite Aid Corporation) and December 2021 (Hy-Vee Inc.).
The COVID-19 vaccine registration portal for Kroger-branded stores, currently located at https://www.kroger.com/health/pharmacy/covid-care, was not accessible to people with certain disabilities, including those who use screen reader software. For instance, critical medical screening questions about current COVID-related symptoms, allergies and reactions to previous vaccines were not read to screen reader users. Further, when a screen reader user selected an available appointment time, the website told them that the available appointment was “unavailable,” instead of “selected.”
“Access for people with disabilities should never be an afterthought, including during the COVID-19 pandemic,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “When a store’s website is inaccessible, people with disabilities may struggle to get potentially life-saving vaccines for themselves and their loved ones. This agreement helps fulfill the promise of the ADA by ensuring individuals with disabilities have equal access to healthcare.”
“All individuals deserve a full and equal opportunity to access services like vaccines,” said U.S. Attorney Kenneth L. Parker for the Southern District of Ohio. “This office will continue to partner with the Department of Justice’s Civil Rights Division to ensure that equal access.”
Under today’s settlement, Kroger will conform web content about the COVID-19 vaccine, including the forms for scheduling an appointment to get the vaccine, to the Web Content Accessibility Guidelines (WCAG), Version 2.1, Level AA. WCAG is a set of voluntary industry guidelines for making information on a website accessible to users with disabilities. Kroger also must regularly test the pages of its website that include vaccine scheduling and information about the COVID-19 vaccine, and quickly fix any problems that keep people with disabilities from being able to use these pages.
This matter was handled jointly by the Disability Rights Section of the Civil Rights Division and the U.S. Attorney’s Office for the Southern District of Ohio. Title III of the ADA requires public accommodations like drugstores and grocery stores to provide individuals with disabilities with full and equal enjoyment of goods and services, such as vaccines. The ADA also requires public accommodations to ensure effective communication with people with disabilities, including by using auxiliary aids and services like accessible technology.
For more information on the Civil Rights Division, please visit www.justice.gov/crt. For more information on the ADA, please call the department’s toll-free ADA Information Line at 800-514-0301 (TDD 800-514-0383) or visit www.ada.gov. ADA complaints may be filed online at www.ada.gov/complaint. Anyone in the Southern District of Ohio may also report civil rights violations to the Civil Rights Coordinator of the U.S. Attorney’s Office for the Southern District of Ohio by calling 614-469-5715 or emailing [email protected].
Court Shuts Down Mississippi Return PreparerRead the Press Release
A federal court in the Southern District of Mississippi has permanently barred a Mississippi tax return preparer from owning or operating a tax return preparation business and preparing tax returns for others.
The permanent injunction is against Terance Price, both individually and doing business as Superior Taxes. The court entered the injunction after Price failed to respond to the complaint the government served on him.
The complaint alleged that Price, who began operating his tax preparation business in 2015, knowingly took unreasonable positions on returns he prepared that understated the tax his customers owed, overstated the refunds owed to his clients, or both. In particular, the complaint alleged that Price prepared returns that falsely claimed residential energy credits, fuel tax credits and unreimbursed employee business expenses.
The government further alleged in the complaint that Price has filed hundreds of tax returns since 2015, and that he has filed tax returns using other tax preparers’ personal identifying information. According to the complaint, the IRS assessed penalties against Price for failing to make reasonable inquiries to ensure that his customers were legitimately entitled to various tax credits, and Price has not paid those penalties.
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.
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.
Texas Biologist Indicted for Wildlife TraffickingRead the Press Release
A federal grand jury sitting in Amarillo, Texas, issued an indictment today charging Dr. Richard Kazmaier, 54, with smuggling goods into the United States and two violations of the Endangered Species Act. The indictment alleges that Kazmaier, an associate professor of biology at West Texas A&M University, imported protected wildlife items into the country without declaring it or obtaining the required permits.
The Endangered Species Act and federal regulations require importers to declare wildlife, including parts and products, to customs and U.S. Fish and Wildlife Service when it enters the country. The indictment charges that, between March 2017 and February 2020, Kazmaier imported wildlife items from around the world into the United States without declaring them. These items included skulls, skeletons and taxidermy mounts.
The Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) regulates trade in endangered or threatened species through permit requirements. The United States and 183 other countries are signatories to the CITES treaty. The indictment also charges Kazmaier with importing wildlife items from 14 protected species without obtaining permits, including the Eurasian otter, lynx, caracal, vervet monkey, greater naked-tailed armadillo and king bird-of-paradise.
The maximum sentence for the felony smuggling charge is 20 years in prison and a $250,000 fine. The two Endangered Species Act charges are misdemeanors with a maximum sentence of one year incarceration and a $100,000 fine.
The U.S. Fish and Wildlife Service’s Office of Law Enforcement in Redmond, Washington, conducted the investigation as part of Operation Global Reach. The operation focused on the trafficking of wildlife from Indonesia to the United States. The government is represented by Assistant U.S. Attorney Anna Bell for the Northern District of Texas and Trial Attorney Ryan Connors of the Justice Department’s Environment and Natural Resource Division’s Environmental Crimes Section.
An indictment is only an allegation, and the defendant is presumed innocent until proven otherwise before a jury at trial.
Man Charged for Threatening Nevada State Election WorkerRead the Press Release
A Nevada man made his initial appearance in federal court today for allegedly making multiple threatening phone calls to an election worker in the Nevada Secretary of State’s Office.
Gjergi Luke Juncaj, aka Gjergj Juncaj, aka Gjurgi Juncaj, aka George Juncaj, 50, of Las Vegas, was arrested by the FBI yesterday in Las Vegas.
According to court documents, on Jan. 7, 2021, Juncaj allegedly made four threatening phone calls to an employee in the Elections Division of the Nevada Secretary of State’s Office. According to the employee, the threats included:
I want to thank you for such a great job you all did on stealing the election. I hope you all go to jail for treason. I hope your children get molested. You are all going to (expletive) die.
This case is part of the Justice Department’s Election Threats Task Force. Announced by Attorney General Merrick B. Garland and launched by Deputy Attorney General Lisa O. Monaco in late June 2021, the task force is leading the department’s efforts to address threats of violence against election workers, and to ensure that all election workers — whether elected, appointed or volunteer — are able to do their jobs free from threats and intimidation. The task force engages with the election community and state and local law enforcement to assess allegations and reports of threats against election workers, and investigates and prosecutes these matters where appropriate, in partnership with FBI field offices and U.S. Attorneys’ Offices throughout the country as warranted.
Under the leadership of Deputy Attorney General Monaco, the task force is led by the Criminal Division’s Public Integrity Section and includes several other entities within the Department of Justice, including the Computer Crime and Intellectual Property Section of the Criminal Division, the Civil Rights Division, the National Security Division and the FBI, as well as key interagency partners, such as the Department of Homeland Security. For more information regarding the Justice Department’s efforts to combat threats against election workers, read the Deputy Attorney General’s memo.
To report suspected threats or violent acts, contact your local FBI office and request to speak with the Election Crimes Coordinator. Contact information for every FBI field office may be found here: https://www.fbi.gov/contact-us/field-offices/. You may also contact the FBI at 1-800-CALL-FBI (225-5324) or file an online complaint at: tips.fbi.gov. Complaints submitted will be reviewed by the task force and referred for investigation or response accordingly. If someone is in imminent danger or risk of harm, contact 911 or your local police immediately.
Juncaj is charged with four counts of making threatening telephone calls. If convicted, he faces a maximum penalty of two years in prison on each count. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
The FBI Las Vegas Field Office is investigating the case.
Trial Attorney Jonathan E. Jacobson of the Public Integrity Section is 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.
La Autoridad Municipal de Servicios Públicos de Jersey City efectuará mejoras considerables a los sistemas municipales de alcantarillado y agua potable de Jersey City según acuerdo con el gobierno de los EE. UU., beneficiando comunidades desventajadasRead the Press Release
Contacto: John Senn, (212) 637-3662, [email protected]
WASHINGTON (27 de enero de 2022) – El Departamento de Justicia y la Agencia Federal de Protección Ambiental (EPA, por sus siglas en inglés) anunciaron hoy un acuerdo con la Autoridad Municipal de Servicios Públicos de Jersey City (JCMUA), en Jersey City, Nueva Jersey, mediante el cual mejorará considerablemente los sistemas municipales de alcantarillado y agua potable en la ciudad, se reducirá significativamente la cantidad de contaminación que se descarga en el Río Hackensack, el Río Hudson y la Bahía de Newark, además favorecerá a muchos vecindarios de Jersey City que enfrentan retos de justicia ambiental. El acuerdo es una modificación de un decreto de consentimiento que la JCMUA celebró con el gobierno de los EE. UU. en 2011.
“Este acuerdo ayudará a mejorar el medioambiente y la salud pública de las comunidades que por largo tiempo han soportado una carga histórica y desproporcionada de contaminación”, indicó Todd Kim, procurador general auxiliar de la División de Ambiente y Recursos Naturales del Departamento de Justicia. “El Departamento de Justicia está comprometido a proteger el derecho del público a tener agua limpia y saludable gracias a la Ley de Agua Limpia de nuestro país.”
“Proporcionar agua limpia a las comunidades, especialmente aquellas ya sobrecargadas por la contaminación, es un derecho fundamental que todos merecen”, comentó Larry Starfield Subadministrador Suplente de la Oficina de Cumplimiento de la EPA. “Las mejoras acordadas en esta resolución permitirán que la Autoridad Municipal de Servicios Públicos de Jersey City gestione efectivamente las dificultades que implican las tormentas intensas y los huracanes provocados por el cambio climático.”
“A través de nuestra colaboracion estatal y federal, NJDEP y USEPA trabajan para asegurar que todas las comunidades de Nueva Jersey disfruten de los beneficios de cuerpos de agua limpios y confiables, además de un abasto de agua potable segura”, explicó Shawn M. LaTourette, Comisionado del Departamento de Protección Ambiental de Nueva Jersey. “Este decreto de consentimiento ayuda a asegurar que la JCMUA continúe tomando medidas importantes que reducen los riesgos de contaminación del agua ahora y en el futuro, y aplaudimos el compromiso de la JCMUA con el reemplazo de las tuberías de servicio de plomo a medida que el servicio público trabaja para mantener el cumplimiento continuo con los requisitos más amplios de la Ley de Agua Limpia y la Ley de Agua Potable Segura.”
Según el acuerdo de hoy, Jersey City se compromete a reparar y mejorar partes significativas de su sistema municipal combinado de alcantarillado ampliando además la capacidad del sistema. Jersey City también mejorará el sistema de agua potable de la ciudad al reemplazar más de 12,000 tuberías de agua potable de plomo. Muchas de las áreas que se verán favorecidas con estas mejoras son comunidades desventajadas que han enfrentado dificultades de justicia ambiental durante décadas. La JCMUA también incorporará la adaptación al cambio climático y prácticas óptimas de resiliencia además de medidas de diseño en sus mejoras de alcantarillado para asegurar que sus sistemas de alcantarillado estén mejor preparados para soportar tormentas intensas y huracanes.
Jersey City estima que el trabajo detallado en el decreto de consentimiento tardará otros 10 años en concluir y costará aproximadamente $1,099 millones.
Conforme al acuerdo inicial en 2011, la JCMUA se comprometió a resolver contravenciones a la Ley de Agua Limpia por no operar y mantener debidamente su sistema de alcantarillado combinado, lo cual provocó reiteradas emanaciones de aguas residuales sin tratar dentro del Río Hackensack, el Río Hudson, la Bahía de Newark y el Arroyo Penhorn. Dicho acuerdo también incluía un requisito de que la JCMUA llevara a cabo una evaluación integral de las condiciones de su sistema de alcantarillado. Esta evaluación reveló mejoras adicionales que necesitaban realizarse para asegurar que el sistema de alcantarillado opere en cumplimiento con la Ley de Agua Limpia. Estas mejoras adicionales se están abordando en este acuerdo.
Aunque el sistema de agua potable municipal está sujeto a regulaciones de la Ley de Agua Potable Segura, y no fue abordado mediante la resolución de la Ley de Agua Limpia de 2011, según la modificación, la JCMUA ha decidido mejorar tanto el sistema de alcantarillado como el de agua potable al mismo tiempo para ahorrar tiempo y costos. La identificación, remoción y reemplazo de las tuberías de servicio de agua potable de plomo son importantes en comunidades como Jersey City para proteger la salud pública, especialmente para la salud de los niños porque ellos son más vulnerables a los impactos del plomo que los adultos.
Los sistemas de alcantarillado combinados como el de Jersey City están diseñados para transportar aguas residuales, aguas servidas industriales y escorrentía de aguas lluvia en las mismas tuberías hacia las plantas de tratamiento de aguas residuales. Durante los periodos de fuertes precipitaciones, el volumen de aguas residuales que viaja por un sistema de alcantarillado combinado puede exceder la capacidad del sistema o de la planta de tratamiento. Los desbordes resultantes, llamados excedentes combinados de alcantarillado (CSO), contienen no solo aguas de escorrentías pluviales sino también contaminantes como residuos humanos e industriales sin tratar, materiales tóxicos y escombros. Estos presentan riesgos para la salud humana, amenazan los hábitats acuáticos y la vida, además de afectar el uso y disfrute de las vías fluviales del país.
La modificación del decreto de consentimiento está sujeta a un periodo de 60 días de comentarios del público y a la aprobación final del tribunal. Se encuentra disponible una copia de la modificación y más información en el sitio web del Departamento de Justicia en http://www.usdoj.gov/enrd/Consent_Decrees.html.
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Justice Department Seeks to Shut Down Florida Tax Return PreparerRead the Press Release
On Jan. 25, the United States filed a civil injunction suit seeking to bar Arnold Zio, individually and doing business as Platinum Citizens Financial LLC and FTP Tax Services, from owning or operating a tax return preparation business and preparing tax returns for others.
The complaint, filed in the U.S. District Court for the Southern District of Florida, alleges that Zio started preparing fraudulent returns with the Maryland firm Money Back Tax before moving his operation to Florida. Zio has prepared returns without identifying himself on the returns, failed to receive proper authorization from his clients before filing their returns, and has failed to give his clients copies of their documents, the complaint alleges.
The government alleges that Zio prepared tax returns claiming over $600,000 in falsified or inflated business expenses, over $500,000 in fabricated business losses and over $850,000 in false tax deductions and credits, including falsified charitable contributions, unreimbursed employee expenses and gambling losses. According to the complaint, Zio has also diverted at least $188,000 from clients by depositing client refunds and Economic Impact Payments, also known as COVID-19 stimulus payments, into his own bank account.
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.
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 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 Reaches Settlement with Withlacoochee River Electric Cooperative Inc. to Enforce the Rights of United States Army National Guard MemberRead the Press Release
The Department of Justice announced today that it has reached a settlement agreement resolving allegations that the Withlacoochee River Electric Cooperative Inc. (WREC) terminated U.S. Army National Guard Staff Sergeant Garrett Woodard when he returned from military service in violation of the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA).
“We greatly value and respect the contributions of all our servicemembers and are committed to challenging any attempts to discriminate against them in their efforts to fulfill their military duties,” said Assistant Attorney General Kristen Clarke of the Civil Rights Division. “It is an honor to fight for the rights of those serving in the Armed Forces, including the Army National Guard, so that they may continue to fight for and protect our freedom without fear of losing their employment.”
“Members of the U.S. Army National Guard make tremendous sacrifices, including spending significant time away from their families and jobs,” said U.S. Attorney Roger B. Handberg for the Middle District of Florida. “Their call to active duty and fulfillment of their military obligations should never be detrimental to their jobs. Our office, in partnership with the Civil Rights Division, remains committed to protecting the employment rights of our servicemembers.”
SSG Woodard has served in the Florida Army National Guard with distinction for over 21 years and is currently attached to the 53rd Support Battalion out of Bartow, Florida. During his service, he has been called up to active duty on multiple occasions, including serving in Afghanistan in 2005 and 2006 and Iraq in 2010 and 2011 in support of Operation Iraqi Freedom. From January 2018 to October 2020, he was also employed by WREC in their apprentice lineman program to become a journeyman where he was consistently rated as an excellent employee. In the summer of 2020, SSG Woodard was deployed to military service for several months with his unit as part of Florida’s emergency mobilization to assist the state in its response to the COVID-19 pandemic. Due to the extended nature of the emergency, his military leave was extended for several months, through Oct. 26, 2020. He reported back to WREC immediately at the end of his deployment, but was terminated by WREC on the day he reported back to work. Woodard filed a complaint with the Department of Labor’s Veterans’ Employment and Training Service (VETS) alleging that WREC terminated him on the basis of his military service obligations in violation of USERRA. VETS investigated this matter and referred it to the Department of Justice after attempts at resolution failed.
Under the terms of the settlement agreement, WREC has agreed to pay Woodard back pay and other damages in the amount of $80,000. The settlement agreement further requires WREC to comply with all of the provisions of USERRA to prevent any further incidents of discrimination, retaliation or interference with a servicemember’s rights under USERRA from occurring in the future
USERRA protects the rights of uniformed servicemembers to retain their civilian employment following absences due to military service obligations and provides that servicemembers shall not be discriminated against because of their military obligations. The Justice Department gives high priority to the enforcement of servicemembers’ rights under USERRA. Additional information about USERRA can be found on the Justice Department’s websites at www.justice.gov/crt-military/employment-rights-userra and www.justice.gov/servicemembers, as well as on the Department of Labor’s website at www.dol.gov/vets/programs/userra.
This matter was handled by Deputy Civil Chief Yohance Pettis of the U.S. Attorney’s Office for the Middle District of Florida, along with Senior Trial Attorney Brian McEntire of the Civil Rights Division’s Employment Litigation Section.
Jersey City Municipal Utilities Authority to Make Significant Improvements to Jersey City’s Municipal Sewer and Drinking Water Systems under Agreement with United States Government, Benefiting Underserved CommunitiesRead the Press Release
The Department of Justice and the Environmental Protection Agency (EPA) today announced an agreement with the Jersey City Municipal Utilities Authority (JCMUA), in Jersey City, New Jersey, that will significantly improve the city’s municipal sewer and drinking water systems, will significantly reduce the amount of pollution being discharged into the Hackensack River, Hudson River and Newark Bay, and will benefit many Jersey City neighborhoods that face environmental justice challenges. The agreement is a modification of a consent decree that JCMUA entered into with the U.S. government in 2011.
“This settlement will help improve the environment and public health of communities that have long endured a historic and disproportionate burden from pollution,” said Assistant Attorney General Todd Kim of the Justice Department’s Environment and Natural Resources Division. “The Department of Justice is committed to protecting the public’s right to clean and healthy water under our nation’s Clean Water Act.”
“Providing clean water to communities, especially those already overburdened by pollution, is a fundamental right everyone deserves,” said Acting Assistant Administrator Larry Starfield for the EPA’s Office of Enforcement and Compliance Assurance. “The improvements agreed upon in this settlement will allow Jersey City Municipal Utilities Authority to effectively manage the challenges that come with severe storms and hurricanes caused by climate change.”
“As a result of this settlement, the sewer system improvements will reduce discharges from Combined Sewer Overflows by 370 million gallons per year, preventing over one million pounds of pollutants from entering nearby waterways each year,” said Regional Administrator Lisa F. Garcia for the EPA. “Furthermore, it will accelerate the replacement of thousands of lead service lines, which means cleaner drinking water for vulnerable communities. EPA is renewing its commitment to safeguarding underserved and overburdened communities such as Jersey City. These and other environmental and health benefits are key to protecting public health.”
“Through our state-federal partnership, NJDEP and USEPA are working to ensure that all New Jersey communities enjoy the benefits of clean waterways and reliable, safe drinking water,” said New Jersey Department of Environmental Protection Commissioner Shawn M. LaTourette. “This consent decree helps to ensure that JCMUA will continue taking important actions that reduce water pollution risks now and in future, and we applaud JCMUA’s commitment to replacing lead service lines as the utility works to maintain continuing compliance with broader Clean Water Act and Safe Drinking Water Act requirements.”
Under today’s agreement, JCMUA is committing to repairing and upgrading significant portions of its municipal combined sewer system while also expanding the system’s capacity. JCMUA will also upgrade the city’s drinking water system by replacing over 12,000 lead drinking water pipes. Many of the areas that these upgrades will benefit are communities of color that have faced environmental justice challenges for decades. JCMUA will also incorporate climate change adaptation and resiliency best practices and design measures into its sewer upgrades to ensure its sewer systems are better prepared to withstand severe storms and hurricanes.
JCMUA estimates the work detailed in the consent decree modifications will take an additional 10 years to complete and cost approximately $1.099 billion.
Under the initial settlement in 2011, JCMUA committed to resolve Clean Water Act violations for failing to properly operate and maintain its combined sewer system, which led to repeated releases of untreated sewage into the Hackensack River, Hudson River, Newark Bay and Penhorn Creek. That agreement also included a requirement for JCMUA to complete a comprehensive assessment of the condition of its sewer system. This assessment revealed additional improvements that needed to occur in order to ensure the sewer system will operate in compliance with the Clean Water Act. These additional improvements are being addressed in this settlement.
While the city’s drinking water system is subject to Safe Drinking Water Act regulations and was not addressed by the 2011 Clean Water Act settlement, under the modification, JCMUA has chosen to upgrade both its sewer and drinking water systems at the same time to save time and costs. The identification, removal and replacement of lead drinking water service lines is important in communities like Jersey City to protect public health, especially children’s health since kids are more vulnerable to the impacts of lead than adults.
Combined sewer systems like the one in Jersey City are designed to transport sewage, industrial wastewater and rainwater runoff in the same pipes to wastewater treatment plants. During periods of heavy rainfall, the volume of wastewater traveling through a combined sewer system can exceed the capacity of the system or the treatment plant. Resulting overflows, called combined sewer overflows (CSOs), contain not only stormwater but also pollutants such as untreated human and industrial waste, toxic materials and debris. They pose risks to human health, threaten aquatic habitats and life, and impair the use and enjoyment of the nation’s waterways.
The consent decree modification is subject to a 60-day public comment period and final court approval. A copy of the modification and more information are available on the Department of Justice website at http://www.usdoj.gov/enrd/Consent_Decrees.html. View the Spanish translation of this press release here.
Blackstone Labs Founder Sentenced for Conspiracy to Sell Anabolic Steroids and Unlawful Dietary SupplementsRead the Press Release
A South Florida man who founded a sports and dietary supplements retailer was sentenced today to 54 months in prison for conspiring to sell illegal anabolic steroids and other products marketed as dietary supplements that were unlawful under federal law.
According to court documents, Aaron Singerman, 41, of Delray Beach, Florida, founded and operated Blackstone Labs LLC, a Boca Raton-based sports and dietary supplements retailer. Singerman is the former CEO of Blackstone. U.S. District Court Judge William P. Dimitrouleas of the Southern District of Florida sentenced Singerman to 54 months in prison and ordered him to forfeit $2.9 million.
In pleading guilty, Singerman admitted to leading a conspiracy to sell products through Blackstone labeled as dietary supplements that were illegal under federal law because they were not approved by the FDA and were controlled substances. According to court documents, Blackstone defrauded the FDA as part of the scheme.
“Selling products labelled as dietary supplements that actually contain controlled substances and unapproved drugs is illegal and potentially dangerous,” said Acting Assistant Attorney General Brian M. Boynton of the Justice Department’s Civil Division. “The Department of Justice will work with its law enforcement partners to prosecute dietary supplement makers who ignore the law and disregard public safety for monetary gain.”
“Drug products that are disguised as dietary supplements can pose a risk to the health of U.S. consumers,” said Special Agent in Charge Justin C. Fielder of the U.S. Food and Drug Administration Office of Criminal Investigations (FDA OCI) Miami Field Office. “We will continue to investigate and bring to justice those who jeopardize the public health.”
Singerman specifically admitted that he conspired with others from 2012 through 2017 to sell products that were unapproved new drugs and/or illegal controlled substances under the Designer Anabolic Steroid Control Act. The defendant admitted that he and his co-conspirators lied to consumers by characterizing Blackstone products as safe and legal dietary supplements. In addition, he falsely represented that the products were made in “FDA approved” registered facilities that followed all required regulations, when in fact they were not. Singerman also admitted to controlling a supplement manufacturer that fraudulently imported raw ingredients for their products from China. Singerman admitted to selling other products in violation of the Food, Drug & Cosmetic Act, including the synthetic stimulants DMAA and DMBA, and the chemical picamilon. Singerman and his co-conspirators ignored injury reports from consumers and did not notify the FDA of such complaints, even when required by law.
Six additional individual defendants and three other corporations previously pleaded guilty to charges related to the conspiracy. One additional defendant, James Boccuzzi, was convicted of conspiracy to distribute controlled substances and conspiracy to defraud the FDA following a jury trial in December 2021. All 10 of these additional defendants are scheduled to be sentenced by Judge Dimitrouleas in February.
FDA OCI investigated the case.
Trial Attorneys Alistair Reader and Stephen Gripkey, Senior Litigation Counsel David Frank and Assistant Director John W. Burke of the Civil Division’s Consumer Protection Branch are prosecuting the cases with assistance from Assistant U.S. Attorney Daren Grove of the U.S. Attorney’s Office for the Southern District of Florida. Laura Akowuah, Brian Furlong and Sarah Hawkins from the FDA’s Office of Chief Counsel provided assistance with the investigation and prosecution.
Venezuelan National Apprehended at Sea Pleads Guilty to Conspiracy to Possess Cocaine on Board a Vessel Subject to the Jurisdiction of the United StatesRead the Press Release
St. Croix, VI – United States Attorney Gretchen C.F. Shappert announced today that 33-year old Venezuelan national Johan Garcia Suarez, one of eleven Venezuelan nationals apprehended at sea off of St. Croix, pleaded guilty today to conspiring to possess with intent to distribute over 5 kilograms of cocaine while on board a vessel subject to the jurisdiction of the United States.
According to court documents, on the evening of September 25, 2019, the United States Coast Guard (USCG) Cutter DONALD HORSLEY intercepted a suspicious 55-foot vessel named LA GRAN TORMENTA displaying Venezuelan nationality indicia approximately 38 nautical miles south of St. Croix. Occupants of the LA GRAN TORMENTA did not reply to DONALD HORSLEY'S efforts to engage in questioning of the crew, and upon detection, the LA GRAN TORMENTA changed course and jettisoned packages. USCG Cutter DONALD HORSLEY crew members subsequently retrieved two bales from the water. The two jettisoned bales contained packages with brick shaped objects, which were subsequently laboratory tested and found to contain approximately 49 kilograms of cocaine hydrocholoride (powder cocaine).
After requesting and receiving permission from the flag state (Venezuela) to stop the vessel, USCG personnel attempted a right of visit boarding, which was ineffective because crew on the LA GRAN TORMENTA disregarded Coast Guard personnel’s instructions. Eventually USCG personnel obtained control of the LA GRAN TORMENTA through use of an "entanglement tactic" which stopped the vessel’s engine. A USCG counter-drug boarding team encountered 11 persons, including the defendant.
Johan Garcia Suarez’s sentencing date has yet to be scheduled. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
The other ten defendants are scheduled for trial on July 18, 2022 in federal court. They face a mandatory minimum of 10 years in prison and maximum of life if convicted.
The case was investigated by the U.S. Coast Guard, Customs and Border Protection, and the U.S. Drug Enforcement Administration (D.E.A.). It is being prosecuted by Assistant U.S. Attorney Melissa P. Ortiz. This effort is part of an Organized Crime Drug Enforcement Task Forces (OCDETF) operation. OCDETF identifies, disrupts, and dismantles the highest-level criminal organizations that threaten the United States using a prosecutor-led, intelligence-driven, multi-agency approach. Additional information about the OCDETF Program can be found at http://www.justice.gov/OCDETF.
Superseding Indictment Charges New York Fisherman with Conspiracy, Fraud and ObstructionRead the Press Release
A federal grand jury in the Eastern District of New York unsealed a superseding indictment charging a fisherman with both conspiracy and substantive charges in connection with a scheme to illegally overharvest fluke and black sea bass.
Christopher Winkler, 61, of Montauk, was charged with one count of conspiracy to commit mail fraud, to obstruct the National Oceanic and Atmospheric Administration (NOAA) through the falsification of fishing logs, and to unlawfully frustrate NOAA’s efforts at regulating federal fisheries.
In April 2021, Winkler was indicted with several others as part of a conspiracy that was incorporated as part of the new indictment. However, the other defendants were not charged in the superseding indictment. The superseding indictment alleges that between May 2014 and February 2017, Winkler, as captain of the F/V New Age, went on at least 220 fishing trips where he caught fluke or black sea bass in excess of applicable trip limits. At various times during the conspiracy, this fish was sold to two now-defunct companies in the New Fulton Fish Market in the Bronx and a fish dealer in Montauk. According to court filings, the overages of fish included at least 200,000 pounds of fluke, and the overall over-quota fish (of all species) were valued at least at $850,000 wholesale.
Under federal law, a fishing captain is required to accurately detail his catch on a form known as a Fishing Vessel Trip Report (FVTR), which is mailed to NOAA. Similarly, the first company that buys fish directly from a fishing vessel, termed a fish dealer, is required to specify what it purchases on a federal form known as a dealer report. Pursuant to statutory mandate, NOAA utilizes this information to set policies designed to ensure a sustainable fishery. The superseding indictment alleges that part of the conspiracy was to falsify both FVTRs and dealer reports in order to cover-up the fact that fish were taken in excess of quotas.
Initiated as part of Operation One-Way Chandelier, the charges are part of a multi-year, ongoing investigation into fisheries fraud on Long Island. NOAA’s Office of Law Enforcement investigated the case. Trial Attorney Christopher Hale and Senior Trial Attorney Kenneth Nelson of the Environment and Natural Resources Division’s Environmental Crimes Section are prosecuting the case.
An indictment is merely an allegation and the defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Readout of Justice Department Leadership Meeting with Election OfficialsRead the Press Release
Attorney General Merrick B. Garland today convened a virtual discussion with a bipartisan group of election officials to provide an update on the work of the Election Threats Task Force.
Notably, the updates included the Task Force’s first charge for interstate threats to kill government officials, information on the work to review the over 850 reports of threats to election officials, and updated guidance to grant recipients that grant funding can be used to deter, detect and protect against threats of violence against election workers, administrators, officials and others associated with the electoral process.
The Attorney General reiterated that the Justice Department has no tolerance for – and will not hesitate to investigate and prosecute – illegal threats or acts of violence that target those who administer our elections. These threats endanger election officials, and they endanger our democracy.
During her remarks, Deputy Attorney General Lisa O. Monaco committed to continued dialogue with the election officials and workers community, and affirmed that the Task Force will continue to work diligently to investigate threats of violence to the individuals administering free and fair elections throughout the nation.
During the meeting, Associate Attorney General Vanita Gupta announced that the Bureau of Justice Assistance has provided guidance to states that Edward Byrne Memorial Justice Assistance Grant (JAG) Program funds can be used to deter, detect and protect against threats of violence against election officials. The Byrne JAG program is a leading source of federal criminal justice funding to state and local jurisdictions, helping to fill gaps in state, local, and tribal criminal justice systems. The broad criminal justice purposes supported by the JAG Program permit JAG funds to be used to deter, detect and protect against threats of violence against election workers, administrators, officials and others associated with the electoral process. Associate Attorney General Gupta also encouraged those that are interested in using JAG funds for these purposes to start conversations with their respective State Administering Agency about purpose and process.
FBI Director Christopher A. Wray and Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department's Criminal Division also participated in the meeting.
The Attorney General and department leadership first met with the bipartisan group of election officials in August 2021 following the formation of the Task Force.
To report suspected threats or violent acts, contact your local FBI office and request to speak with the Election Crimes Coordinator. Contact information for every FBI field office may be found at https://www.fbi.gov/contact-us/field-offices/. You may also contact the FBI at 1-800-CALL-FBI (225-5324) or file an online complaint at tips.fbi.gov. Complaints submitted will be reviewed by the task force and referred for investigation or response accordingly. If someone is in imminent danger or risk of harm, contact 911 or your local police immediately.
Pharmacist Sentenced for $180 Million Health Care Fraud SchemeRead the Press Release
A Mississippi pharmacist was sentenced today to five years in prison in the Southern District of Mississippi for a multimillion-dollar scheme to defraud TRICARE and private insurance companies by paying kickbacks to distributors for the referral of medically unnecessary prescriptions. The conduct resulted in more than $180 million in fraudulent billings, including more than $50 million paid by federal health care programs.
According to court documents, David “Jason” Rutland, 42, of Bolton, a pharmacist and co-owner of compounding pharmacies, schemed to defraud TRICARE and other health care benefit programs by distributing medically unnecessary compounded medications. TRICARE is the health care program for uniformed service members, retirees and their families. Rutland adjusted prescription formulas to ensure the highest reimbursement without regard to efficacy. He solicited recruiters to procure prescriptions for high-margin compounded medications and paid those recruiters commissions based on the percentage of reimbursements paid by pharmacy benefit managers and health care benefit programs, including commissions on claims reimbursed by TRICARE. Rutland also routinely and systematically waived and/or reduced copayments to be paid by beneficiaries and members, including utilizing a purported copayment assistance program to falsely make it appear as if his pharmacy and its affiliate compounding pharmacies had been collecting copayments, among other things.
Rutland pleaded guilty on July 20, 2021, to conspiracy to defraud the United States and solicit, receive, offer and pay illegal kickbacks. In addition to the term of imprisonment, Rutland was ordered to pay restitution and forfeit all assets traced to his ill-gotten gains.
Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division; U.S. Attorney Darren J. LaMarca for the Southern District of Mississippi; Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division; Special Agent in Charge Jermicha Fomby of the FBI’s Jackson Field Office; and Special Agent in Charge Cyndy Bruce of the Department of Defense Office of Inspector General’s Defense Criminal Investigative Service (DoD OIG-DCIS) Southeast Field Office made the announcement.
The FBI Jackson Field Office and DoD OIG-DCIS are investigating the case.
Trial Attorneys Emily Cohen and Alejandra Arias of the Criminal Division’s Money Laundering and Asset Recovery Section and Assistant U.S. Attorney Kathlyn Van Buskirk for the Southern District of Mississippi are prosecuting the case, with assistance from Sara Porter and Dustin Davis of the Criminal Division’s Fraud Section.
Justice Department Establishes Initiative to Strengthen States’ Use of Criminal Justice DataRead the Press Release
The Department of Justice today launched Justice Counts, an effort to help states make smarter policy and budget decisions using up-to-date, actionable criminal justice data. The initiative, announced today by Associate Attorney General Vanita Gupta during a virtual conference with criminal justice practitioners and researchers, is led by the Office of Justice Programs’ Bureau of Justice Assistance (BJA) and the Council of State Governments (CSG) Justice Center in collaboration with 21 professional associations representing every part of the criminal justice system.
“Our justice systems should be built on principles of fairness, effectiveness and efficiency, and policymakers and the public need better data in order to advance these principles,” said Associate Attorney General Gupta. “The better equipped we are with timely data, the more effectively we can serve our communities and secure the trust and confidence of those we serve.”
Justice Counts is being created in response to calls from policymakers and public safety professionals for more actionable data on crime, incarceration, community supervision and related topics. State leaders are making budgetary and policy decisions based on data that are inconsistently collected and reported across the comparable agencies in their jurisdictions. Agencies lack the time, technology and mandate to create scalable solutions. Members of the public are also seeking greater transparency in criminal justice budgets. Justice Counts will deliver a set of key recommended criminal justice metrics as well as aggregation tools that make the most of data already collected to help leaders reach informed decisions without requiring costly upgrades.
“This impressive collaborative of partners is working together to make criminal justice data visible, digestible, actionable and transparent,” said Principal Deputy Assistant Attorney General Amy L. Solomon of the Office of Justice Programs (OJP). “The Justice Counts initiative is building the data infrastructure this country needs — and will use — to create safe and just communities.”
“We take for granted that the fiscal and policy decisions being made by our elected leaders are informed by up-to-date, carefully analyzed data, but we find that, on issues of public safety, that is often not the case,” said Acting Director Kristen Mahoney of the BJA. “This partnership — virtually unprecedented in its size and scope — will drive us toward consensus on the key data points needed to shape our responses to our nation’s crime and justice challenges.”
States and localities and agencies therein will receive tools and assistance from Justice Counts partners to adopt metrics and use the data to inform their decision-making. The Justice Counts Data Scans already demonstrate the concept in a central, practical resource for stakeholders to identify gaps and inconsistencies in corrections reporting across all 50 states.
“Before we can solve the challenges facing our criminal justice system, we first need an accurate picture of what is happening inside the system,” said Director Megan Quattlebaum of the CSG Justice Center. “Unfortunately, many policymakers are forced to make important decisions surrounding public safety and justice based on outdated or incomplete information. Justice Counts is an unparalleled, consensus-based initiative that will empower states to use accurate, comprehensive and up-to-date data, allowing state and local leaders to make informed decisions that increase public safety, health and equity.”
A list of Justice Counts partners follows:
- American Jail Association
- American Probation and Parole Association
- Correctional Leaders Association
- CNA
- International Association of Chiefs of Police
- Justice Management Institute
- Measures for Justice
- National Association of Counties Research Foundation
- National Association of State Budget Officers
- National Association of State Mental Health Program Directors
- NRI
- National Criminal Justice Association
- National Center for State Courts
- National Conference of State Legislatures
- National District Attorneys Association
- National Governors Association
- National Legal Aid & Defender Association
- National Sheriffs’ Association
- RAND Corporation
- Recidiviz
- University of Cincinnati Corrections Institute
For more information, visit the Justice Counts website.
The Office of Justice Programs provides federal leadership, grants, training, technical assistance and other resources to improve the nation’s capacity to prevent and reduce crime, advance racial equity in the administration of justice, assist victims and enhance the rule of law. More information about OJP and its components can be found at www.ojp.gov.
Owner of Health Care and Rehabilitation Facilities Indicted in $38 Million Payroll Tax SchemeRead the Press Release
A federal district court in Newark, New Jersey, unsealed an indictment today charging the owner of a network of health care and rehabilitation facilities with willfully failing to withhold and pay over employment taxes on behalf of his employees, tax evasion, and failing to file benefit plan reports.
According to the indictment, Joseph Schwartz, an insurance broker, failed to collect, truthfully account for, and pay over millions of dollars in payroll taxes owed to the IRS on behalf of his employees as required by law. Schwartz owned and operated the New Jersey-based Skyline Management Group LLC and several related companies (Skyline), which in turn owned and managed 95 health care and rehabilitation facilities operating in at least 11 states. Schwartz allegedly controlled the finances of Skyline and the related companies.
In approximately late 2016, Schwartz and an associate allegedly created several businesses to provide staffing and management services for approximately 15,000 employees of the Skyline-owned health care and rehabilitation facilities. Although the staffing companies were nominally owned by other individuals, Schwartz allegedly controlled their finances and operation. From mid-2017 through June 2018, Schwartz allegedly caused the staffing companies to not pay approximately $38,982,016 in payroll taxes and unemployment taxes due the IRS. To evade unemployment taxes owed by the staffing companies, Schwartz allegedly used nominees to hide his control of the companies. He allegedly also provided, and directed others to provide, insufficient funds to pay the taxes owed.
In addition, as the trustee of Skyline’s 401K retirement plan, Schwartz allegedly did not file required reports with the Department of Labor relating to the financial condition, investments and operation of the retirement plan.
Schwartz made his initial court appearance on Thursday, Jan. 20, before U.S. Magistrate Judge André M. Espinosa of the U.S. District Court for the District of New Jersey. If convicted, Schwartz faces a maximum penalty of five years in prison for each count of willful failure to collect, account for, and pay over employment taxes, five years in prison for each count of tax evasion, and ten years in prison for each count of failure to file a benefit plan report. 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 Philip R. Sullinger for the District of New Jersey; Special Agent In Charge Michael Montanez of IRS-Criminal Investigation, Newark Field Office; and the Department of Labor Criminal Investigations Program made the announcement.
IRS-Criminal Investigation and the Department of Labor Criminal Investigations Program are investigating the case.
Trial Attorney Shawn Noud of the Justice Department’s Tax Division and Senior Litigation Counsel Vincent Grady O’Malley of the U.S. Attorney’s Office 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.
North Carolina Man Indicted for Tax EvasionRead the Press Release
A federal indictment was unsealed today charging a North Carolina man with tax evasion and failing to file tax returns.
According to the indictment, Darren Lee Joy, 63, of Charlotte, earned more than $750,000 in wages between 2015 and 2020, but he did not file any federal income tax returns for those years. Joy, who was employed as an information technology specialist by companies in the Charlotte area, allegedly submitted to his employers IRS Forms W-4 falsely stating he was exempt from federal income tax withholding. By claiming exempt status, Joy allegedly caused his employers to withhold little or no federal income taxes from his wages.
Joy is charged with six counts of tax evasion and six counts of willfully failing to file a tax return. If convicted, Joy faces a maximum penalty of five years in prison for each count of tax evasion and one year in prison for each count of failing to file a tax return. 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 Dena J. King of the Western District of North Carolina made the announcement.
IRS-Criminal Investigation is investigating the case.
Trial Attorney Brian Flanagan of the Justice Department’s Tax Division and Assistant U.S. Attorney Caryn Finley of the U.S. Attorney’s Office of the Western District of North Carolina 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 Settles with Insurance Agency to Resolve Immigration-Related Discrimination ClaimsRead the Press Release
The Department of Justice today announced that it has reached a settlement agreement with James A. Scott & Son Inc., an insurance agency doing business as Scott Insurance headquartered in Lynchburg, Virginia. The settlement resolves the department’s claims that Scott Insurance discriminated on the basis of citizenship status against a non-U.S. citizen by requesting that he present a specific document to prove his permission to work and rejecting the valid document the worker showed. The department also found that Scott Insurance routinely discriminated against non-U.S. citizens by failing to consider and hire them due to their citizenship status.
“Employers cannot refuse to hire applicants based on their citizenship status except when they are authorized by law to do so,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “Employers are also prohibited from discriminating against workers when verifying their permission to work. The Civil Rights Division is committed to protecting workers from unlawful citizenship discrimination.”
The department’s investigation determined that Scott Insurance discriminated against a lawful permanent resident by asking him for his Permanent Resident Card to prove his permission to work and then rejecting the valid documentation he provided. The department further determined that from no later than June 1, 2017, and continuing until at least Aug. 1, 2020, Scott Insurance discriminated against non-U.S. citizens by failing to consider and hire them for positions based on their citizenship status.
The anti-discrimination provision of the Immigration and Nationality Act (INA) protects U.S. citizens, non-U.S. citizen nationals, refugees, asylees and recent lawful permanent residents from hiring discrimination based on their citizenship status. The law has an exception that allows employers or recruiters to limit jobs based on citizenship status if they are authorized to do so by a law, regulation, executive order or government contract. Employers are also prohibited from limiting or specifying the types of documentation a worker is allowed to show to prove permission to work, because of a worker’s citizenship, immigration status or national origin. Employers must allow workers to present whatever valid documentation the workers choose and cannot reject valid documentation that reasonably appears to be genuine.
Under the settlement, Scott Insurance will pay $9,500 in civil penalties to the United States, and up to $70,000 in back pay to affected workers. The settlement also requires Scott Insurance to train employees on the requirements of the INA’s anti-discrimination provision and be subject to departmental monitoring and reporting requirements.
The Civil Rights Division’s Immigrant and Employee Rights Section (IER) is responsible for enforcing the anti-discrimination provision of the INA. The statute prohibits discrimination based on citizenship status and national origin in hiring, firing or recruitment or referral for a fee; unfair documentary practices; and retaliation and intimidation.
Learn more about IER’s work and how to get assistance through this brief video. Find more information on how employers can avoid citizenship status discrimination on IER’s website. Applicants or employees who believe they were discriminated against based on their citizenship, immigration status or national origin in hiring, firing, recruitment or during the employment eligibility verification process (Form I-9 and E-Verify); or subjected to retaliation, may file a charge. The public can also call IER’s worker hotline at 1-800-255-7688 (1-800-237-2515, TTY for hearing impaired); call IER’s employer hotline at 1-800-255-8155 (1-800-237-2515, TTY for hearing impaired); email [email protected]; sign up for a free webinar; or visit IER’s English and Spanish websites. Subscribe to GovDelivery to receive updates from IER. View the Spanish translation of this press release here.
El Departamento de Justicia llega a un acuerdo con una agencia de seguros que resuelve unas acusaciones de discriminación relacionada con la inmigraciónRead the Press Release
WASHINGTON, D.C. – El Departamento de Justicia anunció hoy que ha llegado a un acuerdo con James A. Scott & Son, Inc., una agencia de seguros que opera bajo el nombre de Scott Insurance, con sede en Lynchburg, Virginia. El acuerdo resuelve las acusaciones del Departamento de que Scott Insurance discriminó, por motivos de estatus de ciudadanía, a un no ciudadano estadounidense al pedirle que presentara un documento específico para demostrar su permiso para trabajar y al rechazar el documento válido que el trabajador presentó. Asimismo, el Departamento halló que Scott Insurance discriminaba, de forma rutinaria, a no ciudadanos estadounidenses al negarse a considerar o contratarlo debido a su estatus de ciudadanía.
«Los empleadores no pueden negarse a contratar a candidatos con base en su estatus de ciudadanía salvo cuando por ley están autorizados a hacerlo», declaró Kristen Clarke, la Fiscal Federal Auxiliar de la División de Derechos Civiles del Departamento de Justicia. «Además, se les prohíbe a los empleadores discriminar a trabajadores a la hora de verificar su permiso para trabajar. La División de Derechos Civiles se ha comprometido a proteger a los trabajadores de la discriminación ilícita por motivos de ciudadanía».
La investigación del Departamento determinó que Scott Insurance discriminó a un residente permanente legal al pedir que presentase su Tarjeta de Residente Permanente para demostrar su permiso para trabajar y luego rechazar la documentación válida que él presentó. Más aún, el Departamento determinó que, a más tardar, el 1 de junio del 2017 hasta al menos el 1 de agosto del 2020, Scott Insurance discriminó a no ciudadanos de los EE. UU. al negarse a considerar o contratarlos para puestos, por motivos de su estatus de ciudadanía.
La disposición antidiscriminatoria de la ley de Inmigración y Nacionalidad (INA, por sus siglas en inglés) protege a ciudadanos estadounidenses, nacionales no ciudadanos, refugiados, asilados y residentes permanentes legales recientes de la discriminación por motivos de su estatus de ciudadanía. La ley tiene una excepción que permite que empleadores o reclutadores restrinjan puestos con base en el estatus de ciudadanía si cuentan con la debida autorización para hacerlo bajo alguna ley, un reglamento, una orden ejecutiva o un contrato gubernamental. A los empleadores se les prohíbe restringir o especificar los tipos de documentación que se le permite al trabajador presentar para demostrar que cuenta con permiso para trabajar, por motivos de la ciudadanía, estatus migratorio o nacionalidad de origen de tal trabajador. Los empleadores deben permitir que sus trabajadores presenten cualquier documentación válida que dichos trabajadores quieran y no pueden rechazar documentación válida que parece ser genuina.
Conforme el acuerdo, Scott Insurance pagará una sanción civil a los Estados Unidos que asciende a $9,500 y $70,000 en pagos retroactivos a los trabajadores afectados. Por otra parte, el acuerdo requiere que Scott Insurance capacite sus empleados en cuanto a los requisitos de la disposición antidiscriminatoria de la INA y que se someta a los requisitos de supervisión y declaración del Departamento.
La Sección de Derechos de Inmigrantes y Empleados de la División de Derechos Civiles es responsable de hacer cumplir la disposición antidiscriminatoria de la INA. La ley prohíbe la discriminación por motivos de estatus de ciudadanía o nacionalidad de origen en los procesos de contratación, despido o reclutamiento o recomendación por comisión; prácticas documentales injustas; y represalias o la intimidación.
Aprenda más sobre cómo los empleadores pueden evitar la discriminación por motivos de estatus de ciudadanía en el sitio web de la IER. Aquellos aspirantes o empleados que creen haber sido discriminados por motivos de su estatus de ciudadanía o nacionalidad de origen en los procesos de contratación, despido, reclutamiento o verificación de la elegibilidad para trabajar (Formulario I-9 e E-Verify) o sujetos a represalias pueden presentar una denuncia. El público también puede llamar a la línea directa de la IER para trabajadores al 1-800-255-7688 (1-800-237-2515, TTY para personas con discapacidades auditivas); llamar a la línea directa de la IER para empleadores al 1-800-255-8155 (1-800-237-2515, TTY para personas con discapacidades auditivas); enviar un correo electrónico a [email protected]; inscribirse a un seminario en línea gratuito; o visitar los sitios web de la IER en inglés o español. Para recibir las últimas noticias de la IER, inscríbase a GovDelivery.
Federal Government and State of Colorado Settlement with Mining Companies Paves Way for Additional Cleanup at Bonita Peak Mining District Superfund SiteRead the Press Release
The Justice Department, the Environmental Protection Agency (EPA), the Department of Interior (DOI), the Department of Agriculture (USDA) and the State of Colorado announced a settlement with Sunnyside Gold Corporation and its Canadian parent company Kinross Gold Corporation resolving federal and state liability related to the Bonita Peak Mining District Superfund site, which includes the Gold King Mine and many other abandoned mines near Silverton, Colorado. If entered by the court, this agreement provides for the continued cleanup of mining-related contamination within the Upper Animas Watershed and will protect public health and the environment by improving water quality, stabilizing mine source areas, and minimizing unplanned releases.
Under the agreement, Sunnyside Gold Corporation and Kinross Gold Corporation will together pay $45 million to the United States and State of Colorado, and the United States will dismiss its claims against Sunnyside Gold Corporation and Kinross Gold Corporation. The United States will also contribute $45 million to the continuing cleanup at the Bonita Peak Mining District Superfund site and Sunnyside Gold Corporation and Kinross Gold Corporation will dismiss its claims against the United States.
“Today’s settlement holds these companies accountable for their past mining operations at the site,” said Assistant Attorney General Todd Kim of the Justice Department’s Environment and Natural Resources Division. “This settlement demonstrates the Justice Department’s and cleanup agencies’ continuing efforts, together with our state partners, to ensure that Superfund sites are investigated and remediated.”
“This settlement addresses the cleanup responsibility of the private mining companies and the federal government and ensures that site cleanup work will continue,” said Acting Assistant Administrator Larry Starfield of EPA’s Office of Enforcement and Compliance Assurance. “Working with our state and federal government partners, the cleanup will protect the environment and the health of the people who live, work, and enjoy recreational activities in the area.”
“This settlement will allow EPA to continue our important cleanup work at the site to protect human health and the environment,” said Director Betsy Smidinger of EPA Region 8’s Superfund and Emergency Management Division. “We look forward to working with our state and local partners to use these funds which will be utilized to improve the environment for the people who work, live, and recreate in the area.”
“The Gold King spill is a vivid reminder of the dangers associated with the thousands of abandoned and unclaimed hard rock mines across the United States, particularly in the West,” said Deputy Secretary of the Interior Tommy Beaudreau. “Mining companies should be held accountable for these sites that put communities and tribal lands at risk of disastrous pollution. I’m proud that the Department of the Interior was able to play a part in this important settlement.”
“We are committed to protecting where Coloradan’s live, work and play,” said Director Tracie White of the Colorado Department of Public Health and Environment’s Hazardous Material and Waste Management Division. “This settlement will allow continued cleanup of this Superfund site, in coordination with our federal and local partners, to ensure the protection of human health and the environment for generations to come,”
EPA leads cleanup activities at the Bonita Peak Mining District Superfund site, and DOI and USDA retain authority on publicly managed land. Recent interim cleanup work at the site, including efforts to stabilize mine waste and reduce contaminant releases to surface waters from source areas, have improved environmental conditions and will inform the development of future cleanup remedies for the entire site under an adaptive management framework. EPA has already spent over $75 million on cleanup work at the site and expects to continue significant work at the site in the coming years.
More information about the site and this settlement can be found at www.epa.gov/superfund/bonita-peak.
The consent decree, lodged in the U.S. District Court for the District of New Mexico, is subject to a 30-day public comment period and final court approval. The consent decree will be available for viewing here.
United States Files Civil Forfeiture Complaint for Proceeds of Alleged Fraud and Theft from PrivatBank in UkraineRead the Press Release
The United States filed a civil forfeiture complaint today in the U.S. District Court for the Southern District of Florida alleging that more than $6 million in proceeds from the sale of commercial real estate in Dallas, Texas, which property was maintained and improved using the proceeds of embezzlement and fraud from PrivatBank in Ukraine, are subject to forfeiture based on violations of federal money laundering statutes.
This civil forfeiture action is the fourth such action filed in connection with the same alleged criminal activity. In August 2020, the United States filed two actions in the Southern District of Florida alleging that commercial real estate in Dallas and Louisville, Kentucky, was acquired using funds illegally obtained from PrivatBank in Ukraine as part of a multibillion-dollar fraudulent loan scheme. It filed a third suit in the same district in December 2020 alleging a property in Cleveland, Ohio, was similarly involved.
The four complaints allege that Ihor Kolomoisky and Gennadiy Boholiubov, who owned PrivatBank, one of the largest banks in Ukraine, embezzled and defrauded the bank of billions of dollars. The two allegedly obtained fraudulent loans and lines of credit from approximately 2008 through 2016, when the scheme was uncovered and the bank was nationalized by the National Bank of Ukraine. The complaints allege that they laundered a portion of the criminal proceeds using an array of shell companies’ bank accounts, primarily at PrivatBank’s Cyprus branch, before they transferred the funds to the United States.
As alleged in the complaints, Mordechai Korf and Uriel Laber, who were associates of Kolomoisky and Boholiubov operating out of offices in Miami, created a web of entities, usually under some variation of the name “Optima,” to further launder the misappropriated funds. They purchased hundreds of millions of dollars in real estate and businesses across the country, including commercial towers located at 8787 North Stemmons Freeway in Dallas (Stemmons Towers), which are the subject of this action, as well as the office tower known as 55 Public Square in Cleveland, a Louisville office tower known as PNC Plaza, and a Dallas office park known as the former CompuCom Headquarters.
The newest action alleges that several of the Optima entities, including Optima Ventures LLC, Optima 7171 LLC and Optima Stemmons LLC, used profits from the CompuCom Campus, which had originally been purchased using embezzled funds from PrivatBank, to pay for the improvement and maintenance of Stemmons Towers. Optima Stemmons then sold Stemmons Towers in 2019 using a seller financing agreement, under which more than $6 million in principal and interest is still owed to a specially-created entity owned by Optima Ventures named 87STE LLC. The United States seeks to forfeit the promissory note and deed of trust related to that financing agreement, which includes the right to receive payments due pursuant to the deed and its associated sales contract.
Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division and Special Agent in Charge Eric B. Smith of the FBI’s Cleveland Field Office made the announcement.
FBI’s Cleveland Field Office is investigating the case with support from FBI’s International Corruption Unit and IRS Criminal Investigation.
Trial Attorneys Shai D. Bronshtein and Rachel Goldstein of the Kleptocracy Asset Recovery Initiative in the Criminal Division’s Money Laundering and Asset Recovery Section are handling these cases. The Justice Department’s Office of International Affairs has provided substantial assistance in the investigation.
The Kleptocracy Asset Recovery Initiative is led by a team of dedicated prosecutors in the Money Laundering and Asset Recovery Section, in partnership with federal law enforcement agencies, and often with U.S. Attorneys’ Offices, who work to forfeit the proceeds of foreign official corruption and, where appropriate, to use those recovered assets to benefit the people harmed by these acts of corruption and abuse of office. In 2015, the FBI formed International Corruption Squads across the country to address national and international implications of foreign corruption. Individuals with information about possible proceeds of foreign corruption located in or laundered through the United States should contact federal law enforcement or send an email to [email protected] or https://tips.fbi.gov/.
A civil complaint is merely an allegation, and the government has the burden of establishing that assets are subject to forfeiture by a preponderance of the evidence.
Federal Court Shuts Down Michigan Tax Return PreparerRead the Press Release
A federal court in the Eastern District of Michigan has permanently barred a Detroit-area tax return preparer and her business from preparing federal tax returns for others.
The injunction was entered against Jennifer Sherman and her tax preparation business, Sherman Management Co. Inc. According to the complaint filed against the defendants, Sherman and her company had returns prepared that, among other things, reported false business income and expenses and claimed excessive deductions, resulting in undeserved refunds. The complaint also alleged that Sherman impermissibly lowered some of her customers’ tax liabilities by falsely claiming head of household status for individuals not entitled to claim it. According to the complaint, the fraudulent tax returns that Sherman and her business prepared for customers cost the United States hundreds of thousands of dollars in tax revenue.
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 list of steps to take to make the 2022 filing season easier.
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.
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.
Grady County, Oklahoma Jail Officer Pleads Guilty to Using Excessive ForceRead the Press Release
Johnnie Drewery, 27, a former Sergeant with the Grady County Jail, in Chickasha, Oklahoma, pleaded guilty today to using unreasonable force against an inmate, thereby violating the inmate’s constitutional civil rights.
According to court documents and admissions Drewery made during the plea hearing, Drewery, on July 11, 2020, was involved with changing an inmate, D.H., into a suicide smock and then moving D.H. into a first floor holding cell. Drewery put D.H. into the holding cell and, as the cell door was closing, D.H. spit on Drewery. Drewery then screamed for the cell door to be reopened. When the cell door was unlocked, Drewery rushed into the cell and, in retaliation for being spit on, began to use his hands and knee to strike D.H, which resulted in D.H. suffering a fractured rib as a result of this assault.
“The defendant is being held accountable for using excessive force against a man inside of a jail cell who was not posing a threat at the time he was assaulted,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “The Civil Rights Division will continue to investigate and prosecute law enforcement officials who deprive individuals of their Constitutional rights by using excessive force against them.”
“Law enforcement and corrections officers put their lives on the line every day to keep us safe,” said U.S. Attorney Robert J. Troester for the Western District of Oklahoma. “But when an officer betrays the badge and the public’s trust, as the defendant did here, they dishonor their profession and endanger the safety of their fellow officers. I commend the Oklahoma City FBI Field Office and the entire prosecution team for their diligent work on this case.”
“The FBI is the primary federal agency tasked with investigating violations of federal civil rights,” said Special Agent in Charge Edward J. Gray of the FBI Oklahoma City Field Office. “Along with our partners at the Department of Justice, we work to protect the civil rights of all to ensure that individuals are treated fairly when they are in the custody of law enforcement. We take this responsibility seriously and will hold law enforcement officers accountable when they abuse their authority by using excessive force.”
The crime Drewery pleaded guilty to carries a maximum sentence of 10 years imprisonment and a $250,000 fine. A sentencing will be set by the court in approximately 90 days.
The case was investigated by the Oklahoma City FBI Field Office. Assistant U.S. Attorney Julia E. Barry of the Western District of Oklahoma and Trial Attorney Laura Gilson of the Civil Rights Division are prosecuting the case.
Georgia Dog-Fighting Trainer and Breeder Sentenced to Five Years in PrisonRead the Press Release
A well-known dog-fighting trainer and breeder, who owned Cane Valley Kennels, was sentenced to the statutory maximum of five years in prison resulting from an investigation into a significant multi-state dog-fighting and cocaine trafficking ring.
Vernon Vegas, 49, of Suwanee, Georgia, was also sentenced to three years of supervised release to follow his imprisonment and a $10,000 fine by U.S. District Judge Tilman E. “Tripp” Self III after previously pleading guilty to conspiracy to participate in an animal fighting venture. Additionally, pursuant to his plea agreement, Vegas agreed to forfeit $116,819 in cash seized during the investigation.
“Vernon Vegas is being held accountable for his violent, illegal and inhumane actions,” said Assistant Attorney General Todd Kim of the Justice Department’s Environment and Natural Resources Division. “This case illustrates that dog-fighting is intimately connected with the underworld of drugs and organized crime, and that the Department of Justice will investigate and prosecute it to the fullest extent of the law.”
“Vernon Vegas has received the maximum prison sentence for training others in the brutal and bloody business of dog-fighting, a world that fosters a multitude of other dangerous criminal activity,” said U.S. Attorney Peter D. Leary for the Middle District of Georgia. “Our office, working alongside local, state and federal law enforcement, will hold individuals and groups that participate in illegal dog-fighting accountable for their crimes.”
According to court documents, law enforcement investigated a criminal organization involved in both cocaine distribution and organized dog fighting based out of Roberta, Georgia, which extended into North Georgia, Florida and Alabama from May 2019 until February 2020. In February 2020, law enforcement executed 15 residential search warrants and seized more than 150 dogs that were being used for organized dog fighting.
Between October 1996 and February 2020, Vegas, the owner of Cane Valley Kennels, bred, trained, sold and transported dogs for the purpose of dog fighting, including Grand Champion “Baby Gracie,” Champion “Son of Sam 2XBis,” Champion “Spider,” Champion “Bucky Mike,” Champion “Bear,” Champion “Kocky Mike,” Champion “Fantasmin,” Champion “Julie the Great,” and one-time winner, “Brenda.” As part of his business, Vegas designed and offered a seven-week “keep” where he trained dogs for animal fighting ventures, prepared online pedigrees for the fighting dogs bred and trained at Cane Valley Kennels, provided advice to his co-conspirators on how to train dogs for purposes of engaging in animal fighting ventures and kept a multitude of training and conditioning equipment including slat mills, chains, a staple gun, hanging weight scales, break sticks, flirt poles and various medicines to treat injuries or disease sustained by dogs made to fight. Between January 2017 and February 2020, Vegas attended dog fights with co-conspirators Derrick Owens and Christopher Raines at locations in the Middle District of Georgia and advised Owens on various matters related to preparing dogs for animal fighting.
The case was investigated by the Drug Enforcement Administration, the Department of Agriculture, Office of the Inspector General (USDA-OIG), the U.S. Marshals Service, the Justice Department’s Environment and Natural Resources Division (ENRD), the Georgia Bureau of Investigation (GBI), the Bibb County Sheriff’s Office, the Crawford County Sheriff’s Office, the Houston County Sheriff’s Office, the Merriweather County Sheriff’s Office, the Peach County Sheriff’s Office, the Taylor County Sheriff’s Office, the Webster County Sheriff’s Office, the Byron Police Department and the Fort Valley Police Department.
Trial Attorney Banu Rangarajan of the Justice Department’s Environment and Natural Resources Division’s Environmental Crimes Section and Assistant U.S. Attorney Will Keyes for the Middle District of Georgia prosecuted the case.
Maryland Security Guard Charged with Tax EvasionRead the Press Release
An indictment was unsealed on Friday charging a Maryland security guard with six counts of tax evasion.
A federal grand jury in Greenbelt, Maryland returned an indictment on Dec. 22, 2021, charging Gaston Gilberto Reyes, of Germantown, with not filing income tax returns for 2015 through 2020. As a result, he allegedly did not report to the IRS more than $1 million in total wages from jobs at seven different security firms in the D.C. metropolitan area. During the same period, Reyes allegedly also submitted false tax forms to his employers, claiming he was exempt from federal income tax withholding. This caused the employers to allegedly withhold little or no federal income taxes from his wages.
The defendant made his initial court appearance on Jan. 14 before U.S. Magistrate Judge Timothy J. Sullivan of the U.S. District Court for the District of Maryland. If convicted, Reyes faces a maximum penalty of five years in prison on each of the tax evasion charges. 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 made the announcement.
IRS Criminal Investigation is investigating the case.
Trial attorneys Melissa S. Siskind and George Meggali of the Justice Department’s Tax Division 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 Trade Commission Seek to Strengthen Enforcement Against Illegal MergersRead the Press Release
Today, the Justice Department’s Antitrust Division and Federal Trade Commission (FTC) launched a joint public inquiry aimed at strengthening enforcement against illegal mergers. Recent evidence indicates that many industries across the economy are becoming more concentrated and less competitive – imperiling choice and economic gains for consumers, workers, entrepreneurs and small businesses. These problems are likely to persist or worsen due to an ongoing merger surge that has more than doubled merger filings from 2020 to 2021. To address mounting concerns, the agencies are soliciting public input on ways to modernize federal merger guidelines to better detect and prevent illegal, anticompetitive deals in today’s modern markets.
“Our country depends on competition to drive progress, innovation and prosperity,” said Assistant Attorney General Jonathan Kanter of the Justice Department’s Antitrust Division. “We need to understand why so many industries have too few competitors, and to think carefully about how to ensure our merger enforcement tools are fit for purpose in the modern economy.”
“Illegal mergers can inflict a host of harms, from higher prices and lower wages to diminished opportunity, reduced innovation and less resiliency,” said FTC Chair Lina M. Khan. “This inquiry launched by the FTC and DOJ is designed to ensure that our merger guidelines accurately reflect modern market realities and equip us to forcefully enforce the law against unlawful deals. Hearing from a broad set of market participants, especially those who have experienced first-hand the effects of mergers and acquisitions, will be critical to our efforts.”
Competition is critical to the success of the economy. It ensures that Americans have the freedom to choose among different suppliers and different employers. When businesses face competition, it spurs them to improve their products, develop new ones and lower prices. Mergers can reduce choices for consumers, workers and other businesses, leaving them increasingly dependent on larger and more powerful firms that have purchased greater power to dictate the terms of their deals. To protect competition and prevent increased consolidation, Congress passed a series of antitrust laws and authorized the Justice Department and FTC to enforce them.
The antitrust laws charge the Justice Department and the FTC with preventing mergers that may substantially lessen competition or tend to create a monopoly. Merger guidelines are frameworks for the analysis of mergers under the antitrust laws. The Justice Department first published merger guidelines in 1968, with the goal of providing transparency into the standards it applied in reviewing mergers. Since then, the agencies have published a number of updates, generally specified by whether the transaction is considered horizontal (within the same market) or vertical (within the same supply chain). Although the guidelines identify some of the competitive harms mergers present, markets may fall outside the frameworks under the current approach.
The public inquiry launched today seeks comments on developments in the modern economy and new evidence of mergers’ effects on competition to inform potential revisions to the guidelines. The agencies encourage the public, including market participants, government entities, economists, attorneys, academics, unions, employees, farmers, workers, businesses, franchisees and consumers, to share feedback, evidence and ideas that may inform revisions to the guidelines. Some of the specific areas of inquiry on which the agencies are seeking public input and information include:
- Purpose and scope of merger review: The agencies seek information on whether the guidelines explain and implement the statutory ban on transactions that “may” substantially lessen competition or tend to create a monopoly, and what harms are contemplated by those standards. The agencies further seek input on whether distinctions between horizontal and vertical transactions reflected in the guidelines should be revisited in light of trends in the modern economy.
- Presumptions that certain transactions are anticompetitive: The guidelines identify certain market circumstances that justify a presumption of competitive harm based on market concentration. The agencies seek information on whether concentration thresholds should be adjusted to improve the efficiency and effectiveness of enforcement, whether alternative metrics or qualitative factors should also trigger presumptions of competitive harm, and evidence regarding the accuracy of such presumptions.
- Use of market definition in analyzing competitive effects: The agencies seek input on potential updates to the guidelines’ market definition analysis to better account for non-price competition. They also seek to input on when direct evidence of a transaction’s likely competitive effects, such as evidence of head-to-head competition, may eliminate the need for a separate market definition exercise.
- Threats to potential and nascent competition: The agencies seek input on potential updates to the guidelines’ discussion of potential and nascent competitors, which may be key sources of innovation and competition.
- Impact of monopsony power, including in labor markets: The agencies seek input on how to address the issue of buyer power in more detail in the guidelines. Labor markets are a key example of buyer power, and the agencies seek information regarding how the guidelines should analyze labor market effects of mergers.
- Unique characteristics of digital markets: The agencies seek information on how to account for key areas of the modern economy like digital markets in the guidelines, which often have characteristics like zero-price products, multi-sided markets and data aggregation that the current guidelines do not address in detail.
The Request for Information is available at https://www.regulations.gov/docket/FTC-2022-0003/document.
The comment period is open for 60 days. Comments can be submitted to regulations.gov and must be received no later than Monday, March 21, 2022. The information will be used by the agencies to consider updates and revisions to the guidelines. If such revisions are contemplated in light of the evidence received and the agencies’ independent research, the agencies will publish proposed guidelines for public comment.
Click to view AAG Kanter's remarks.
Click to view Chair Khan's remarks.
Omaha Railcar Cleaning Company and its Owners Sentenced for Violating Environmental and Worker Safety Laws Resulting in Workers’ 2015 DeathsRead the Press Release
Steven Michael Braithwaite, Adam Thomas Braithwaite and their company Nebraska Railcar Cleaning Services LLC (NRCS) were sentenced today in Omaha, Nebraska, for willful violations of worker safety standards that resulted in two worker deaths, knowing violations of the Resource Conservation and Recovery Act (RCRA) involving hazardous waste and knowing endangerment to others, knowing submission of false documents to the Occupational Safety and Health Administration (OSHA) and perjury. Steven Braithwaite will serve 30 months in prison and pay $100,000 in restitution for his role in the offenses. Adam Braithwaite will serve one year and one day in prison and pay $100,000 in restitution. In addition, NRCS and the individual defendants must serve five years of probation and pay a $21,000 fine.
According to court documents, on April 14, 2015, NRCS workers were inside and on top of a rail tanker car, removing petroleum residue from inside the tank, when flammable gases in the tanker car ignited and exploded. Two workers died and another was injured in the blast. NRCS took the job after receiving an inquiry from one of its customers in January 2015. The inquiry included a Safety Data Sheet (SDS) for the product in the railcar, describing it as “natural gasoline” with a “severe” class four flammability rating (the highest rating). The SDS went on to indicate that the natural gasoline would ignite at zero degrees Fahrenheit and that it contained benzene, a “cancer hazard.”
Despite no test for benzene and an unacceptably high explosive gas level test at the beginning of the job, NRCS sent two of its employees into the tanker car. The employees began removing the toxic, ignitable residue, with a third employee helping from outside. The third employee pulled bucket loads of waste up through the top hatch and dumped them into a regular dumpster to be taken to a municipal landfill, even though the residue was hazardous waste. Approximately one hour after the cleaning began, a spark caused the deadly explosion.
Steven Braithwaite was the president and majority owner of NRCS and was responsible for all phases of the business, including both environmental and worker safety issues. Adam Braithwaite was the vice president and a minority owner of NRCS. He too handled both environmental and worker safety issues.
As the defendants admitted in their plea agreements, prior to the explosion, OSHA officials conducted regulatory inspections of NRCS, and cited NRCS and its principals for violating OSHA safety regulations concerning confined space entries. Rail tanker cars are “confined spaces” under the Occupational Safety and Health Act. Confined spaces are dangerous because they may be filled with toxic, explosive, or unbreathable gases, among other reasons. After an inspection of NRCS, Steven Braithwaite entered into a Feb. 5, 2015, written agreement in which he represented that NRCS had been testing for benzene since July 2014. That was a lie. OSHA returned to NRCS in March 2015 to conduct a follow-up inspection, but Steven Braithwaite turned away the inspectors. Afterwards, Adam Braithwaite submitted falsified documents to OSHA purporting to show that NRCS had been purchasing equipment to test the contents of railcars for benzene and had taken other required safety precautions. NRCS had not been taking those steps. Adam Braithwaite also falsely testified under oath in an OSHA hearing that NRCS had been purchasing the benzene testing equipment.
Although they knew what was required, the defendants failed to implement worker safety standards, mishandled hazardous wastes violating the RCRA and knowingly submitted false documents to OSHA during inspections as a cover up. Their decisions led to the deaths of two of their workers. On July 12, Steven Braithwaite pleaded guilty to counts 2-4 of the indictment. Adam Braithwaite pleaded guilty to counts 2-3, 8-9 and 22. NRCS pleaded guilty to counts 1-21.
“Every worker, including every worker doing a dangerous job, has a right to a safe workplace,” said Assistant Attorney General Todd Kim of the Justice Department’s Environment and Natural Resources Division. “Tragically, two workers suffered preventable deaths at Nebraska Railcar Cleaning Services because of the defendants’ failure to follow the law. Today’s sentences provide a measure of justice for them and their families.”
“Violations of worker safety and environmental standards are sometimes belittled as merely regulatory crimes, but this case demonstrates how much those regulations do matter,” said U.S. Attorney Jan W. Sharp of the District of Nebraska. “If the defendants had followed regulations they were well aware of, no one would have been inside a rail tanker with toxic gases at explosive concentrations. If they had followed regulations, buckets of hazardous waste would not have been dumped in regular dumpsters. If they had followed regulations, two men would have gone home at the end of their workdays.”
“The defendants’ decision to ignore environmental and worker safety regulations led to the tragic death of two workers,” said Acting Assistant Administrator Larry Starfield for the Environmental Protection Agency (EPA)’s Office of Enforcement and Compliance Assurance. “Today’s sentencings send a clear message that individuals who intentionally violate these laws will be held responsible for their crimes.”
“Steven and Adam Braithwaite disregarded OSHA regulations, ignored safety protocols, and provided false information to OSHA, which resulted in the tragic loss of two lives,” said Special Agent-in-Charge Steven Grell of the Department of Labor’s Office of Inspector General Dallas Region, which includes Nebraska. “We will continue to work with OSHA and our law enforcement partners to hold accountable those who obstruct Department of Labor agencies from fulfilling their missions.”
“Steven and Adam Braithwaite chose to protect themselves by providing false documentation to OSHA after the death of two employees, making it appear they had followed safety requirements, but in fact, willfully ignored warnings indicating a risk of explosion and sent these two men into a deadly situation,” said Regional Solicitor Christine Heri of the U.S. Department of Labor- Chicago. “The Department of Labor is committed to bring justice to the families of these workers and to hold employers responsible to their legal obligation to protect workers on the job.”
The case was investigated by the EPA’s Criminal Investigation Division and the Department of Labor’s Office of Inspector General. Senior Counsel Krishna S. Dighe of the Department of Justice, Environmental Crimes Section and Assistant U.S. Attorney Donald J. Kleine of the District of Nebraska are prosecuting the case.
Loan Servicer Agrees to Pay Nearly $8 Million to Resolve Alleged False Claims in Connection with Federal Education LoansRead the Press Release
Conduent Education Services LLC, fka Xerox Education Services LLC, dba ACS Education Services LLC (CES), a contractor that serviced student loans for lenders under the Federal Family Education Loan Program (FFEL), has agreed to pay $7.9 million to resolve allegations that it violated the False Claims Act by submitting or causing the submission of false claims to the Department of Education. Prior to this settlement, CES paid $1.4 million to the Department of Education under a remediation plan to partially resolve the allegations and received a credit for that payment under the settlement agreement.
Loan servicers are required to accurately report the impact of monthly student loan repayments, principal capitalization and other changes to borrower accounts to the Department of Education. The settlement announced today resolves allegations that between 2006 and 2016, CES knowingly failed to make required financial adjustments to borrower accounts and improperly treated some borrowers as eligible for military deferments when they were not, resulting in incorrect reporting to the Department of Education and losses to the United States. CES stopped servicing commercially held federal student loans in September 2019.
“The United States expects servicers participating in federal loan programs to accurately report amounts owed to the Department of Education,” said Acting Assistant Attorney General Brian M. Boynton of the Justice Department’s Civil Division. “The resolution announced today reflects the department’s commitment to pursuing entities that fail to meet their obligations to the United States.”
“Holding loan servicers accountable is a top priority for the Biden-Harris Administration, so I am pleased that improper conduct at Conduent Education Services got the oversight and investigation it deserved,” said Under Secretary of Education James Kvaal. “We are grateful to the Department of Justice for working with the Education Department to ensure that CES is held accountable to borrowers and taxpayers.”
The resolution in this matter was the result of an investigation by the Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section, with the assistance of the Department of Education’s offices of Federal Student Aid and General Counsel.
The claims resolved by the settlement are allegations only and there has been no determination of liability.
Lab Owner Pleads Guilty to $6.9 Million Genetic Testing & COVID-19 Testing Fraud SchemeRead the Press Release
A Florida man pleaded guilty today in the Southern District of Florida to a $6.9 million conspiracy to defraud Medicare by paying kickbacks and bribes to obtain doctors’ orders for medically unnecessary lab tests that were then billed to Medicare. The defendant exploited the COVID-19 pandemic by bundling COVID-19 testing with other forms of testing that patients did not need, including genetic testing and tests for rare respiratory pathogens.
According to court documents, Christopher Licata, 45, of Delray Beach, admitted that, as owner of Boca Toxicology LLC (dba Lab Dynamics), he bribed patient brokers who would refer Medicare beneficiaries and doctors’ orders authorizing medically unnecessary genetic testing to Licata’s laboratory. Licata and these patient brokers entered into sham agreements to disguise the true purpose of these payments. Once the COVID-19 pandemic began, Licata exploited patients’ fears of COVID-19 by bundling COVID-19 tests with more expensive, medically unnecessary testing, including respiratory pathogen panel testing and, at times, genetic testing for cardiovascular diseases, cancer, diabetes, obesity, Parkinson’s, Alzheimer’s and dementia. In total, Licata caused his laboratory to submit over $6.9 million in false and fraudulent claims to Medicare for these medically unnecessary tests.
Licata pleaded guilty to one count of conspiring to commit health care fraud. He is scheduled to be sentenced on March 24 and faces a maximum penalty of 10 years in prison. 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; Special Agent in Charge George L. Piro of the FBI’s Miami Field Office; and Special Agent in Charge Omar Pérez Aybar of the U.S. Department of Health and Human Services Office of the Inspector General (HHS-OIG) made the announcement.
The FBI’s Miami Field Office and HHS-OIG are investigating the case.
Trial Attorneys Jamie de Boer and Dermot Lynch of the Criminal Division’s Fraud Section are prosecuting the case.
In May 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the department 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.
The Fraud Section leads the Health Care Fraud Strike Force. Since its inception in March 2007, the Health Care Fraud Strike Force, which maintains 15 strike forces operating in 24 federal districts, has charged more than 4,600 defendants who have collectively billed federal health care programs and private insurers for approximately $23 billion. In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
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 Resolves Housing Discrimination Lawsuit Against the City of Arlington, TexasRead the Press Release
The Justice Department announced today that the City of Arlington, Texas, has agreed to pay $395,000 to resolve a lawsuit alleging that it violated the Fair Housing Act when it refused to support an affordable housing development that would have served low-income families with children.
“Local governments that resort to discriminatory tactics to block the development of affordable housing and to lock out families with children will be held accountable,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “This settlement should send a strong message to jurisdictions across the country that we will use the law to protect families with children from discriminatory denials of housing opportunities.”
“Under the Fair Housing Act, cities cannot discriminate against families with children – nor can they discriminate on the basis of race, color, national origin, sex (including gender identity and sexual orientation), religion or disability,” said U.S. Attorney Chad E. Meacham for the Northern District of Texas. “This law is just as important now as it was when it was passed more than 50 years ago, and we are committed to upholding it.”
The settlement, which still must be approved by the U.S. District Court for the Northern District of Texas, resolves a lawsuit filed today alleging that the City violated federal law in connection with an affordable housing development in 2017. Specifically, the suit alleges that the City violated the Fair Housing Act when it blocked the development of an affordable housing project proposed by Community Development Inc. (CDI), that would have been financed by the federal Low-Income Housing Tax Credit (LIHTC). As alleged in the lawsuit, such tax credits are awarded by the State of Texas on a competitive basis, and it is very difficult for new developments to obtain tax credits unless they receive a Resolution of Support or a Resolution of No Objection from the local government. The lawsuit alleges that the City declined to issue such a resolution for CDI’s development because the City had a policy of supporting LIHTC developments only for senior housing intended for persons 55 years or older. As a result, CDI’s proposed housing for families with children did not receive tax credits and it was not developed.
CDI filed a complaint with the Department of Housing and Urban Development (HUD) alleging that the City’s conduct discriminated against families with children in violation of the Fair Housing Act. After an investigation, HUD determined that the City had violated the statute and referred the matter to the Department of Justice.
“Families with children deserve to have equal access to affordable housing opportunities, and the Fair Housing Act makes it illegal for local governments to discriminate based on familial status,” said Damon Smith, General Counsel of HUD. “HUD commends the Department of Justice for reaching this resolution and will continue to hold government entities accountable when they violate the Fair Housing Act.”
Under the settlement, the City will pay $395,000 to CDI. The settlement also requires the City to maintain a non-discriminatory policy for future LIHTC developments, provide Fair Housing Act training to certain city officials, and submit to compliance and reporting requirements for the term of the settlement.
The federal Fair Housing Act prohibits discrimination in housing on the basis of race, color, religion, sex, familial status (having one or more children under 18), national origin and disability. More information about the Civil Rights Division and the laws it enforces is available at www.justice.gov/crt.
Individuals who believe they have been victims of housing discrimination should contact the Department of Justice toll-free at 1-833-591-0291, by email at [email protected], or submit a report online at www.civilrights.justice.gov. Such individuals may also contact the U.S. Department of Housing and Urban Development at 1-800-669-9777 or by filing a complaint online.
Justice Department Announces Retirement of U.S. Trustee Program Director Cliff WhiteRead the Press Release
The Justice Department today announced the retirement of Clifford White, the Director of the Justice Department’s U.S. Trustee Program (USTP), which oversees the administration of bankruptcy cases, effective March 31, 2022.
“I want to express my appreciation to Cliff, not only for his 17 years of leadership of the U.S. Trustee Program, but also for 40 years of exceptional public service,” said Attorney General Merrick B. Garland. “During his long service as the head of USTP, Cliff oversaw the work of USTP’s 21 regions and 90 field offices to ensure the integrity and efficiency of the bankruptcy system. I wish him all the best in his future endeavors.”
White is a career civil servant who has held numerous leadership positions within the government. He was twice recognized with Presidential Rank Awards — the highest recognition accorded to career officials — first by President George W. Bush and then by President Barack Obama.
Under White’s leadership, USTP successfully implemented many significant statutory changes; launched major enforcement initiatives to combat fraud and abuse; enforced compliance with bankruptcy laws; and, most recently, upheld the legal rights of victims of the opioid crisis in the Purdue Pharma case by challenging releases of liability that shield alleged wrong doers.
Learn more information on the program at: https://www.justice.gov/ust.
Justice Department Announces New Rule Implementing Federal Time Credits Program Established by the First Step ActRead the Press Release
Today, the Department of Justice announced that a new rule has been submitted to the Federal Register implementing the Time Credits program required by the First Step Act for persons incarcerated in federal facilities who committed nonviolent offenses. As part of the implementation process, the Federal Bureau of Prisons (BOP) has begun transferring eligible inmates out of BOP facilities and into either a supervised release program or into Residential Reentry Centers (RRCs) or home confinement (HC).
“The First Step Act, a critical piece of bipartisan legislation, promised a path to an early return home for eligible incarcerated people who invest their time and energy in programs that reduce recidivism,” said Attorney General Merrick B. Garland. “Today, the Department of Justice is doing its part to honor this promise, and is pleased to implement this important program.”
The First Step Act of 2018 provides eligible inmates the opportunity to earn 10 to 15 days of time credits for every 30 days of successful participation in Evidence Based Recidivism Reduction Programs and Productive Activities. The earned credits can be applied toward earlier placement in pre-release custody, such as RRCs and HC. In addition, at the BOP Director’s discretion, up to 12 months of credit can be applied toward Supervised Release. Inmates are eligible to earn Time Credits retroactively back to Dec. 21, 2018, the date the First Step Act was enacted, subject to BOP’s determination of eligibility.
Implementation will occur on a rolling basis, beginning with immediate releases for inmates whose Time Credits earned exceed their days remaining to serve, are less than 12 months from release, and have a Supervised Release term. Some of these transfers have already begun, and many more will take place in the weeks and months ahead as BOP calculates and applies time credits for eligible incarcerated individuals.
The final rule will be published by the Federal Register in the coming weeks and will take immediate effect. The rule, as it was submitted to the Federal Register, can be viewed here: https://www.bop.gov/inmates/fsa/docs/bop_fsa_rule.pdf
Please note: This is the text of the First Step Act Time Credits final rule as signed by the Director of the Federal Bureau of Prisons, but the official version of the final rule will be as it is published in the Federal Register.
Couple Sentenced to 50 Years in Child Pornography CaseRead the Press Release
A married couple has been sentenced to a combined 50 years in federal prison for producing and distributing sexually explicit images of a minor relative, announced U.S. Attorney for the Northern District of Texas Chad E. Meacham.
Edward Lee Wheeler, 27, of Russell Springs, KY, pleaded guilty in September 2021 to production of child pornography and was sentenced Thursday to 30 years in federal prison. His wife, Jessica Roxanna Wheeler, 35, of Lubbock, pleaded guilty in October 2020 to receipt and distribution of child pornography and was sentenced in November 2021 to 20 years in federal prison.
The investigation began in June 2020, when a family member called law enforcement to report he had discovered Facebook messages between Mr. Wheeler and Ms. Wheeler discussing sexual acts with a 13-year-old relative.
In plea papers, the couple admitted to abusing the child.
Mr. Wheeler, they admitted, gave the child over-the-counter supplements – which he called “enhancers” – that he claimed were activated through sexual activity. (These “enhancers” were not real.) He claimed he needed sexually explicit images of the child to track the enhancers’ performance. Ms. Wheeler took the photos and sent them to her husband.
According to Facebook messages, Mr. Wheeler also engaged in sexual acts with the child. At one point, the couple discussed impregnating the child so that they could sell the infant to a European agency that would conduct medical testing on the baby. (Such an agency does not exist.) Mr. Wheeler told Ms. Wheeler the agency had offered him $42 billion; Ms. Wheeler told the child they were considering going through with the deal.
At the sentencing hearing, prosecutors explained that both Mr. Wheeler and Ms. Wheeler knew the “enhancers” did not work and the “agency” did not exist, but concocted the elaborate fantasy as an “escape from reality.”
The child is currently living out of state and receiving psychological care.
The Lubbock Police Department, the Federal Bureau of Investigation’s Dallas Field Office – Lubbock Resident Agency, and Homeland Security Investigations’ Dallas Field Office conducted the investigation with the assistance of the Havelock Police Department in Havelock, NC, the Bowling Green Police Department in Bowling Green, KY, the Russell Springs Sheriff’s Office in Russell Springs, KY, and the FBI’s Louisville Field Office – Bowling Green and Lexington Resident Agencies. Assistant U.S. Attorney Callie Woolam prosecuted the case.