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Tuesday 17 January 2017
Justice Department, EPA and the Navajo Nation Announce Settlement for Cleanup of 94 Abandoned Uranium Mines on the Navajo NationRead the Press Release
The United States and the Navajo Nation have entered into a settlement agreement with two affiliated subsidiaries of Freeport-McMoRan, Inc, for the cleanup of 94 abandoned uranium mines on the Navajo Nation. Under the settlement, valued at over $600 million, Cyprus Amax Minerals Company and Western Nuclear, Inc., will perform the work and the United States will contribute approximately half of the costs. The settlement terms are outlined in a proposed consent decree filed today in federal court in Phoenix, Arizona. With this settlement, funds are now committed to begin the cleanup process at over 200 abandoned uranium mines on the Navajo Nation.
The work to be conducted is subject to oversight of the U.S. Environmental Protection Agency (EPA), in collaboration with the Navajo Nation Environmental Protection Agency.
“This remarkable settlement will result in significant environmental restoration on Navajo lands and will help build a healthier future for the Navajo people,” said Assistant Attorney General John C. Cruden for the Justice Department’s Environment and Natural Resources Division. “We appreciate the extraordinary commitment by Freeport’s affiliated subsidiaries to clean up 94 mines, and to achieve this settlement without litigation. The Justice Department is always ready to work cooperatively with the Navajo Nation and responsible private parties to address the legacy of uranium mining on Navajo lands.”
“This historic settlement will clean up almost twenty percent of the abandoned mines on the Navajo Nation,” said Acting Regional Administrator, Alexis Strauss for the EPA Pacific Southwest. “Cleaning up the uranium contamination continues to be a top environmental priority for our Regional office.”
The Navajo Nation encompasses more than 27,000 square miles within Utah, New Mexico and Arizona in the Four Corners area. The unique geology of the region makes the Navajo Nation rich in uranium, a radioactive ore in high demand after the development of atomic power and weapons at the close of World War II. Many private entities, including Cyprus Amax (a successor-in-interest to Vanadium Corporation of America and Climax Uranium Company) and Western Nuclear, mined approximately thirty million tons of uranium ore on or near the Navajo Nation between 1944 and 1986. The federal government, through the Atomic Energy Commission (AEC), was the sole purchaser of uranium until 1966, when commercial sales of uranium began. The AEC continued to purchase ore until 1970. The last uranium mine on the Navajo Nation shut down in 1986.
Many Navajo people worked in and near the mines, often living and raising families in close proximity to the mines and mills where ore was processed. Since 2008, federal agencies—including EPA, the Department of Energy, the Bureau of Indian Affairs, the Department of the Interior, the Nuclear Regulatory Commission and the Indian Health Service—have collaborated to address uranium contamination on the Navajo Nation. The federal government has invested more than $130 million to address the legacy of abandoned uranium mines on Navajo lands. EPA has also compiled a list of 46 “priority mines” for cleanup and performed stabilization or cleanup work at 9 of those mines. Further, EPA’s cleanup efforts have generated over 100 jobs for Navajo citizens and work for several Navajo owned businesses. The settlement announced today includes 10 priority mines and is expected to create many jobs for Navajo workers.
This settlement agreement resolves the claims of the United States on behalf of EPA against Cyprus Amax and Western Nuclear; of the Navajo Nation against the United States, and against Cyprus Amax and Western Nuclear; and of Cyprus Amax and Western Nuclear against the United States. Cyprus Amax and Western Nuclear agree to perform removal site evaluations, engineering evaluations and cost analyses, and cleanups at the 94 mines. In return for that commitment, the United States, on behalf of the Department of the Interior and the Department of Energy, agrees to place $335 million into a trust account to help fund the cleanup.
In April 2014, the Justice Department and EPA announced in a separate matter that approximately $985 million of a multi-billion dollar settlement of litigation against subsidiaries of Anadarko Petroleum Corp. will be paid to EPA to fund the clean-up of approximately 50 abandoned uranium mines in and around the Navajo Nation, where radioactive waste remains from Kerr-McGee mining operations. EPA commenced field work with the proceeds from this settlement last year. In addition, the United States previously entered into two settlement agreements with the Navajo Nation to fund cleanups at 16 priority mines and investigations at an additional 30 mines for which no viable responsible private party has been identified.
The proposed consent decree, lodged in the U.S. District Court for the District of Arizona, is subject to a 30-day public comment period and approval by the federal court. Information about submitting a public comment is available at: www.justice.gov/enrd/consent-decrees
Justice Department Settles Immigration-Related Discrimination Claim Against J.E.T. Holding Co. Inc.Read the Press Release
The Justice Department reached a settlement today to resolve the department’s claims that J.E.T. Holding Co. Inc. discriminated against U.S. citizens and certain work-authorized immigrants in violation of the Immigration and Nationality Act (INA). J.E.T. is a company based in Saipan, Commonwealth of the Northern Mariana Islands (CNMI), that operates a restaurant, bowling alley and an amusement center.
The department’s investigation found evidence that between approximately January 2016 and June 2016, J.E.T. engaged in a pattern or practice of refusing to hire U.S. citizens and other work-authorized individuals, including lawful permanent residents, for several dishwasher positions. The department concluded that J.E.T. failed to consider qualified U.S. citizen applicants and others based on their citizenship or immigration status because of a preference for hiring non-immigrant foreign workers with CW-1 visas. The CW-1 visa grants temporary work authorization to its beneficiaries and is only available in the CNMI. CNMI employers may apply to the CNMI Department of Labor for permission to hire workers under the CW-1 visa program after advertising vacant positions and certifying that no qualified local workers are available for hire.
Under the terms of the settlement, J.E.T. will pay a civil penalty of $12,000, establish a back pay fund of $40,000 to compensate qualified claimants for any lost wages through a claims process, train its workers on the anti-discrimination provision of the INA and be subject to department monitoring.
“This settlement reflects the Justice Department’s firm commitment to ensuring that we protect the rights of workers in all U.S. jurisdictions,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division. “We commend J.E.T. for its cooperation in achieving this settlement and for taking steps to ensure that workers don’t face discriminatory barriers in the hiring process. ”
“The U.S. Attorney’s Office is committed to protecting the civil rights of all workers and ensuring that employers are not discriminating against individuals based on their citizenship or national origin or immigration status, in violation of the anti-discrimination provision of the INA,” said U.S. Attorney Alicia A.G. Limtiaco of the Districts of Guam and the Northern Mariana Islands. “We all have the right to be treated equally and fairly.”The U.S. Attorney’s Office in the CNMI coordinated with the Justice Department’s Civil Rights Division in its investigative efforts, and will provide assistance during the back pay claims process.
Potential back pay claimants include those who applied for a dishwasher position with J.E.T. between Dec. 13, 2015, and May 14, 2016. Individuals who believe they are potential claimants should contact [email protected] or 202-307-3092, or [email protected] or 671-479-4139.
The Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC) is responsible for enforcing the anti-discrimination provision of the INA. The law prohibits, among other things, citizenship, immigration status and national origin discrimination in hiring, firing or recruitment or referral for a fee; unfair documentary practices in employment eligibility verification; retaliation and intimidation.
To learn more about the protections against employment discrimination under immigration laws, call OSC’s worker hotline at 1-800-255-7688 (1-800-237-2515, TTY for hearing impaired); call OSC’s employer hotline at 1-800-255-8155 (1-800-237-2515, TTY for hearing impaired); sign up for a free webinar at www.justice.gov/crt/about/osc/webinars.php; email [email protected]; or visit OSC’s website at www.justice.gov/crt/about/osc.
Applicants or employees who believe they were subjected to: different documentary requirements based on their citizenship status, immigration status or national origin; or discrimination based on their citizenship status, immigration status or national origin in hiring, firing or recruitment or referral, should contact the worker hotline above for assistance.
JET Settlement AgreementInmate Sentenced for Rioting in a Federal PrisonRead the Press Release
Jackson, Miss. - Juan Geraldo Arredondo, 37, originally from Parral, Mexico, was sentenced by Senior U.S. District Judge David Bramlette III on January 10, 2017, to 120 months in prison for his participation in a prison riot which took place at the Adams County Correctional facility on May 20, 2012, announced U.S. Attorney Gregory K. Davis and FBI Special Agent in Charge Christopher Freeze. Arredondo was also ordered to pay restitution jointly and severally in the amount of $1,382,313. He is subject to deportation following his release from prison.
The cause of the riot was what the inmates perceived to be inadequate food, medical conditions and disrespectful staff members. During the riot, prison fences were destroyed, windows were broken, prison property was stolen, hostages were taken, correctional officers were assaulted, and one corrections officer was killed. Geraldo is the twenty-fourth and final defendant to be sentenced in this case.
"Federal inmates are protected by the constitution from cruel and unusual punishment within correctional facilities, but when they riot inside one of these facilities, it poses a risk to those sworn to protect them and to our society as a whole," said Christopher Freeze, special agent in charge of the FBI in Mississippi. "Almost five years ago, Corrections Officer Catlin Carithers had his life taken while trying to protect others. As this case draws to an end, we hope the sentences of the 24 individuals involved in this riot sends a strong message to those who are incarcerated: rioting is unacceptable, murder is unconscionable and consequences are significant."
The case was investigated by the Federal Bureau of Investigations and prosecuted by Deputy Criminal Chief, Patrick Lemon.
Illinois Business Owner Sentenced to Prison for Stealing Identities to File False Tax ReturnsRead the Press Release
A Northern District of Illinois resident was sentenced to 60 months in prison today announced Principal Deputy Assistant Attorney General Caroline D. Ciraolo, head of the Justice Department’s Tax Division, and U.S. Attorney Zachary T. Fardon for the Northern District of Illinois.
From approximately January 2011 through April 2015, Carlos Smith stole personal identifying information obtained from individuals who sought credit repair or credit card processing services through CLS Financial Services Inc. (CLS), a business Smith operated, and used the information to file false individual income tax returns. Smith also stole identities of individuals who worked for Chicago’s Board of Education and used this information to file false individual income tax returns. Smith filed approximately 92 fraudulent income tax returns, claiming more than $1 million in refunds. Smith directed the fraudulently obtained tax refunds to prepaid debit cards, addresses, and bank accounts he controlled, including accounts opened in the names of individuals whose identities he had stolen. Smith also filed his own false individual income tax returns for 2012 through 2014.
On Oct. 19, 2016, Smith pleaded guilty to aggravated identity theft and theft of government funds. In addition to the term of prison imposed, Smith was ordered to serve two years of supervised release and to pay $ 633,884 in restitution to the IRS.
Principal Deputy Assistant Attorney General Ciraolo and U.S. Attorney Fardon commended special agents of IRS-Criminal Investigation, who conducted the investigation, and Tax Division Trial Attorneys John T. Mulcahy and Sonia M. Owens, and former Tax Division Trial Attorney Assistant U.S. Attorney Ryan R. Raybould, who prosecuted the case.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
Historic Case Involving the Civil Rights of Psychiatric Patients at Kings County Hospital Center Comes to A CloseRead the Press Release
Robert L. Capers, United States Attorney for the Eastern District of New York, today announced the closing of its case against New York City over conditions of patient care and treatment in NYC Health + Hospitals/Kings County, also known as Kings County Hospital Center’s Behavioral Health Service (“BHS”). In a letter dated January 10, 2017 to the Honorable Kiyo A. Matsumoto, Mr. Capers requested that Judge Matsumoto close the case because the BHS is in substantial compliance with the requirements of a January 2010 Consent Judgment between the United States and the City of New York. The Court granted that motion today.
The Consent Judgment was entered after the United States conducted an investigation of the BHS in 2008 and 2009 and concluded that it was failing to properly assess, diagnose, supervise, monitor, and treat its patients. The investigation also revealed violations of patients’ rights, including the improper use of chemical and physical restraints. Hospital Police assaulted patients and handcuffed them to beds and radiators. In a tragic incident in 2008, a patient, Esmin Green, was left unattended and died on the floor as clinical staff and hospital police ignored her. BHS also discharged patients to the community without adequate plans for their care. As a result, large numbers of patients returned to the facility. In addition, the facility was dilapidated and filthy.
In January 2010, the United States and the City entered into the Consent Judgment for the purpose of bringing about a complete overhaul of the BHS, including its initial triage procedures, its assessment and diagnostic procedures, and its treatment planning, as well as its medication management, nursing, discharge planning, and fire and life safety planning. Significantly, the Consent Judgment also included provisions for the reform of KCHC’s Hospital Police force.
In the seven years since the parties signed the Consent Judgment, the BHS has become a model acute care psychiatric facility. The BHS now addresses the critical needs of the vulnerable, mentally ill population that it serves. Its treatment plans and mental health care are individualized, person-centered, and recovery oriented. It has also developed clinical approaches to identify and address potential patient aggression and self-harm. As a result, suicide attempts and self-harm have dropped significantly. Nurses are more attentive and play a significant and assistive role in helping patients get better. Medication is used only for the purpose of treating patients and not for the purpose of controlling their behavior. In addition, the rate of recidivism has dropped sharply as a result of robust discharge planning. And, the BHS is now housed in a new building, which is well-lit, sanitary, and safe.
“This Office takes great pride in the transformation of the Kings County Hospital Center’s Behavioral Health Service and the dramatic improvements in patient care that have resulted from our collaboration with the City,” said U.S. Attorney Capers. “The remarkable changes at the BHS should ensure that tragedies like the death of Esmin Green never occur again.”
The case was handled by Michael J. Goldberger, Chief of Civil Rights in the Office’s Civil Division.
Four Salt Lake City Men Charged with Robberies, Firearms Violations After September Robberies in Salt Lake ValleyRead the Press Release
SALT LAKE CITY – Four residents of Salt Lake City have initial appearances in federal court Wednesday afternoon after a grand jury returned an indictment charging them with violations of federal law in connection with a string of robberies in the Salt Lake Valley during September 2016. A silver handgun was used during each of the robberies.
The hearing is at 1 p.m. before U.S. Magistrate Judge Dustin B. Pead. The grand jury returned the indictment last week. The robbery counts are charged under the federal Hobbs Act.
Charged in the indictment are Tyrell Anthony James, age 23; Damon Keith Grigsby, age 19; Isaiah Alexander Jones, age 19; and Tristan Melchizadek Walker, age 20 – all of Salt Lake City.
Three counts of the indictment charge the defendants in connection with three robberies that occurred on Sept. 10, 2016. The indictment alleges James, Grigsby and Jones participated in a robbery at a 7-Eleven store located at 510 East 1300 South in Salt Lake City. James, Grigsby, Walker and Jones are charged with robbing a Subway store located at 3197 South Redwood Road in West Valley City and James and Grigsby are charged with a robbery of the CVS Pharmacy located at 3148 West 3500 South in West Valley, also on Sept. 10.
James is charged with using, carrying and brandishing a firearm in relation to a crime of violence during the alleged 7-Eleven robbery. James and Grigsby are charged with using, carrying, and brandishing a firearm in connection with the alleged Subway robbery. Both are also charged with using the firearm in the CVS Pharmacy robbery. During the CVS robbery, a shot was fired in the direction of an employee, so the count reads using, carrying, brandishing, and discharging a firearm during a crime of violence.
The indictment also charges James and Grigsby with three alleged robberies that occurred on Sept. 12, 2016, in Salt Lake City, West Jordan, and South Salt Lake City. James and Grigsby are charged with robberies at a 7-Eleven store located at 1692 West North Temple in Salt Lake City, the Nike Factory Store located at 3736 West Center Park Drive in West Jordan, and the Maverick store located at 514 West 3900 South in South Salt Lake City.
James and Grigsby are also charged with using, carrying and brandishing a firearm during the robberies.
The final count of the indictment charges James with possession a firearm after a felony conviction. Federal law prohibits individuals convicted of a felony from possessing a firearm.
After the first robbery, law enforcement officers received information from a witness about a car the suspects were driving. This information ultimately helped officers locate the defendants.
The potential maximum penalty for each count of robbery is 20 years in prison. James is facing a mandatory 130 years in federal prison for using a firearm during the commission of a violent crime and 10 years for the felon in possession count. Grigsby is facing a mandatory 105 years on the firearms counts in the indictment. (James –five years for first count, 25 years for each of the next five. Grigsby – is charged with aiding and abetting the firearms violations, but the penalty is the same – five years for the first count and 25 five years for each of the next four counts. The penalties for each of these counts run consecutive to any other sentence.)
Jones and Walker are not charged with firearms counts and face up to 20 years on each of the robbery counts. Jones is charged with two robberies and Walker is charged with one robbery.
Indictments are not findings of guilt. Individuals charged in indictments are presumed innocent unless or until proven guilty in court.
The case is being prosecuted by the U.S. Attorney’s Office in Salt Lake City and is being investigated by special agents of the FBI with assistance from police departments in Salt Lake City, West Valley City, West Jordan, and South Salt Lake City.
Former U.S. Postal Service Employee Sentenced for Conviction on Destruction of Mail ChargeRead the Press Release
ALBUQUERQUE – Alonzo Gallegos, 33, of Pena Blanca, N.M., pled guilty today in federal court in Albuquerque, N.M., to a destruction of mail charge. After entering his guilty plea, Gallegos was sentenced to six months of probation and ordered to pay a $250 fine.
Gallegos was charged in a misdemeanor information on Nov. 30, 2016, with unlawful delay and destruction of mail while employed as a U.S. Postal Service officer. According to the information, Gallegos committed the crime between Sept. 24, 2016 and Sept. 27, 2016, in Santa Fe County, N.M.
During today’s proceedings, Gallegos pled guilty to the information and admitted that from Sept. 24, 2016 through Sept. 27, 2016, he delayed or destroyed mail and newspapers.
This case was investigated by the U.S. Postal Inspection Service and is being prosecuted by Assistant U.S. Attorney Eva M. Fontanez.
Former U.S. Postal Employee Sentenced to Probation for Conviction on Misdemeanor Destruction of Mail ChargeRead the Press Release
ALBUQUERQUE – Christopher P. Vigil, 30, of Albuquerque, N.M., pled guilty today in federal court to a misdemeanor destruction of mail charge, and was sentenced to one year of probation and ordered to pay a $200 fine. At the time he committed the crime, Vigil was employed by the U.S. Postal Service.
Vigil was charged in an information on Nov. 16, 2016, with the misdemeanor offense of opening and destroying mail not directed to him. According to the information, Vigil committed the crime on Aug. 15, 2016, in Bernalillo County, N.M.
During today’s proceedings, Vigil pled guilty to the information and admitted that on Aug. 15, 2016, he intentionally opened mail not directed to him, and used his position as an employee of a postal unit to steal a gift card.
This case was investigated by the U.S. Postal Inspection Service and is being prosecuted by Edward Han.
Former Physician Pleads Guilty to Health Care Fraud SchemeRead the Press Release
KANSAS CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that a former Kansas City, Mo., physician who lost his medical license due to an earlier fraud scheme, pleaded guilty in federal court today to his role in a fraud scheme that involved disability examinations of veterans.
Wayne W. Williamson, 74, of Kansas City, waived his right to a grand jury and pleaded guilty before U.S. District Judge Howard F. Sachs to a federal information that charges him with health care fraud.
Williamson was a medical consultant at Industrial Medical Center (IMC) during various periods beginning at least as early as 2013 through at least March 2015. IMC was a medical clinic in Independence, Mo.; among other things, it was a drug and DNA testing center, had contracts with various entities to provide medical services to patients, and provided drug testing and physical examinations for drivers of commercial motor vehicles.
Williamson was formerly a medical doctor but voluntarily surrendered his medical license in 2010 after he pled guilty to health care fraud; conspiracy to distribute Oxycotin, Percocet, and Xanax; and harassing or attempting to harass an investigator with the Missouri State Board of Healing Arts. Williamson was sentenced to three years in federal prison and permanently excluded from participation in Medicare or Medicaid programs.
Williamson performed disability examinations for the Department of Veterans Affairs under IMC’s contract with Logistics Health, Inc., to determine the extent of veterans’ impairments and eligibility for benefits. This was done in violation of Logistic Health’s contract with the Department of Veterans Affairs, which required that disability examinations be conducted by credentialed providers and that the examiners must have a clear and unrestricted license and not be excluded from participation in the Medicare or Medicaid programs. However, after the only trained and licensed provider at IMC left on July 16, 2013, Williamson conducted the examinations.
IMC falsely represented that a physician had completed and electronically signed the Disability Benefits Questionnaires. IMC submitted invoices to Logistics Health to be paid for 209 disability examinations on 53 veterans. In turn, Logistics Health submitted invoices to the Department of Veterans Affairs for the disability examinations performed by its subcontractor, IMC. The Department of Veteran’s Affairs paid Logistics Health $39,155 for the disability examinations performed by its subcontractor, IMC.
Under the terms of today’s plea agreement, Williamson must forfeit $39,155 to the government.
In April 2014, Logistics Health contacted the Department of Veterans Affairs—Office of Inspector General hotline and reported the fraudulent activity. Because a credentialed provider did not conduct the disability examinations, the Department of Veterans Affairs had to re-adjudicate all those claims. Some veterans had to be physically re-examined, and others had their claim file reviewed.
Under federal statutes, Williamson is subject to a sentence of up to 10 years in federal prison without parole. The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes, as the sentencing of the defendant will be determined by the court based on the advisory sentencing guidelines and other statutory factors. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.
This case is being prosecuted by Assistant U.S. Attorneys Cindi S. Woolery and Jane Pansing Brown. It was investigated by the Department of Veterans Affairs—Office of Inspector General, the Department of Transportation—Office of Inspector General, the Department of Labor—EBSA and the Department of Health and Human Services—Office of Inspector General.
Former Pharmaceutical Salesman Pleads Guilty in $13 Million Money Laundering Conspiracy Involving 2 Million Doses of OxycodoneRead the Press Release
A former pharmaceutical salesman pled guilty on January 13, 2017, for his role in a $13 million money laundering conspiracy involving more than 2 million dosage units of oxycodone.
Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida, Kelly R. Jackson, Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), Adolphus P. Wright, Special Agent in Charge, Drug Enforcement Administration (DEA), Ric L. Bradshaw, Sheriff, Palm Beach Sheriff’s Office, Albert Arenal, Chief, Coconut Creek Police Department, and Daniel C. Alexander, Chief, Boca Raton Police Department, made the announcement.
Jonathan Sendor, 60, of Aurora, Colorado, pled guilty to one count of conspiracy to commit money laundering involving criminally derived property valued greater than $10,000, in violation of Title 18, United States Code, Sections 1956(h) and 1957. Sentencing is scheduled for March 14, 2017 at 2:00 p.m. At sentencing, Sendor faces up to ten years in prison.
According to court documents, between March 2010 and June 2011, Sendor’s co-conspirators operated six pain clinics in Broward and Palm Beach counties with the purpose of unlawfully dispensing oxycodone that had not been prescribed for a legitimate medical purpose. Approximately 2,007,695 oxycodone 30 mg pills were dispensed and distributed through the pain clinics before they were closed following the execution of search warrants in June 2011. The co-conspirators operated the clinics to ensure that the maximum amount of oxycodone would be prescribed without regard to a legitimate medical need, and purely for the sake of profit. The pain clinics failed to comply with Florida standards for the use of controlled substances. The pain clinics generated approximately $13,466,598 from the unlawful prescribing and dispensing of oxycodone.
For his role in the scheme, Sendor created multiple companies, building upon the connections he had formed as a pharmaceutical salesman, to act as a quasi-broker between the doctors of the pain clinics needing oxycodone and the wholesalers. Sendor misled the wholesale pharmaceutical companies and told them that he would function as an inspector and check whether any prospective customer pain clinic was operating a pill mill by conducting site visits and by requiring the clinic manager/doctor to complete a site survey. Sendor misrepresented the results of the site survey and directed the doctors, pain clinic managers, owners and other coconspirators to lie on the survey form.
In October 2010 the law changed and clinics were prohibited from dispensing oxycodone on-site. Sendor then assisted in opening two pharmacies – one in Boca Raton, Florida and another pharmacy in Orlando, Florida. Patients of the pain clinics were then directed to these pharmacies for oxycodone.
This case is the result of the ongoing efforts by the Organized Crime Drug Enforcement Task Force (OCDETF) a partnership that brings together the combined expertise and unique abilities of federal, state and local law enforcement agencies. The principal mission of the OCDETF program is to identify, disrupt, dismantle and prosecute high level members of drug trafficking, weapons trafficking and money laundering organizations and enterprises.
Mr. Ferrer commended the investigative efforts of IRS-CI, the DEA, PBSO, Coconut Creek Police Department, and Boca Raton Police Department. Mr. Ferrer also recognized the South East Regional Task Force (SERTF) and the Palm Beach Sheriff's Office Multi-Agency Diversion Task Force (PBSO MAADTF). SERTF is headed by the DEA and includes representatives from the Fort Lauderdale Police Department, Pembroke Pines Police Department, Hallandale Beach Police Department, Lauderhill Police Department, Margate Police Department, and Coconut Creek Police Department. PBSO MAADTF is headed by the Palm Beach County Sheriff's Office and includes representatives from the Boca Raton Police Department, Boynton Beach Police Department, DEA, Delray Beach Police Department, Florida Department of Health, Greenacres Police Department, IRS-CI, Jupiter Police Department, Riviera Beach Police Department, Palm Beach County State Attorney’s Office, PBSO, Palm Beach Gardens Police Department and West Palm Beach Police Department. This case is being prosecuted by Assistant U.S. Attorney Donald F. Chase, II.
Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.
Former ICON Communication Senior Vice President Admits to Stealing Company FundsRead the Press Release
LITTLE ROCK—Christopher R. Thyer, United States Attorney for the Eastern District of Arkansas, announced today that Blaine Francis Houser, 52, of Dover, the former Senior Vice President of ICON Communications of Russellville, pleaded guilty to mail fraud after admitting that he used company funds for personal reasons.
Houser pleaded guilty on Tuesday before United States District Court Judge Kristine G. Baker to a one-count federal Information charging him with mail fraud. His scheme to defraud ICON Communications began in September 2012, when Houser was Senior Vice President, and continued through April 2015. According to the Information, in September 2012, Houser opened a commercial credit application in the name of ICON Communications with Blue Tarp Financial, Inc. of Portland, Maine. He then made a purchase of tools by mail order from Northern Tool & Equipment Company. He had the invoice sent to ICON Communications at their office in Russellville, but had the tools shipped to his house in Dover. Once the invoice arrived at ICON, the bill was paid with monies from the company.
Following this purchase there were other instances of mail fraud committed by Houser, who agreed as part of a plea agreement to pay restitution in the amount of $255,606.52 to ICON.
Houser will be sentenced by Judge Baker at a later date. Mail fraud carries a maximum statutory sentence of 20 years’ imprisonment, a $250,000 fine, three years of supervised release and $100 special assessment. The case was investigated by the United States Secret Service and is being prosecuted by First Assistant United States Attorney Patrick C. Harris.
Former Fresno Business CEO Pleads Guilty to Embezzling over $500,000 from Pension PlanRead the Press Release
FRESNO, Calif. — Mary Williams, 70, of Fresno, pleaded guilty today to embezzling from a pension plan, U.S. Attorney Phillip A. Talbert announced.
According to court documents, Williams was the Chief Executive Officer of Aeroplate Corporation, an engineering and contracting firm in Fresno. From June 2011 to November 2016, Williams embezzled approximately $509,000 from a pension plan that Aeroplate established for its employees. One of the fund’s assets was a set of real estate parcels in Fresno that at one point was appraised at over $900,000 in value.
Under federal law, assets that belong to pension plans can only be used to fund the plan, which must pay future benefits to employees, and not the business that started the plan.
According to the plea agreement, Williams and the company used the properties to raise money for the company. Eventually, the company was unable to repay its loans, and the properties were foreclosed on. The fund became insolvent because it did not have enough money to pay expected benefit claims. However, the plan’s benefits are federally insured by the Pension Benefit Guaranty Corporation, which protects employees from losing their benefits when their plans are insolvent.
This case is the product of an investigation by the U.S. Department of Labor’s Employee Benefit Security Administration. Assistant U.S. Attorney Michael G. Tierney is prosecuting the case.
Williams is scheduled to be sentenced by U.S. District Judge Dale A. Drozd on April 3, 2017. Williams faces a maximum statutory penalty of five years in prison and a $250,000 fine. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.
Former Boy Scout Leader Pleads Guilty to Child Pornography ChargeRead the Press Release
CONTACT: Barbara Burns
PHONE: (716) 843-5817
FAX: (716) 551-3051BUFFALO, N.Y. -- Acting U.S. Attorney James P. Kennedy, Jr. announced today that Daniel Huzinec, 25, of Buffalo, NY, pleaded guilty to receipt of child pornography before U.S. District Court Judge Lawrence J. Vilardo. The charge carries a mandatory minimum sentence of five years in prison, a maximum of 20 years, and a $250,000 fine.
Assistant U.S. Attorney Stephanie Lamarque, who is handling the case, stated that the investigation began in December 2014 when the defendant shared photographs of children engaged in sexually explicit conduct on a peer to peer website. This conduct included the sexual abuse of children by adults and children engaging in sexual activity with other children.
On January 27, 2015, agents from Homeland Security Investigations executed a search warrant at Huzinec’s Marilla St. residence. Numerous items were seized from the residence including a laptop computer. During the execution of the warrant, the defendant, an Assistant Scout Master, waived his Miranda rights and admitted that in January 2015, while chaperoning a Boy Scout camping trip, he took several sexually explicit pictures of a sleeping 16-year-old boy with his cell phone.
A subsequent forensic evaluation of the electronic evidence seized from the defendant’s residence determined that such evidence contained images and videos of child pornography, including the sexually explicit pictures of the sleeping child that the defendant had admitted to taking. In addition, law enforcement officers discovered that in November 2014, Huzinec enticed a 15-year-old boy, a former member of the defendant’s Boy Scout troop, to send him sexually explicit pictures by creating a fake email account and posing as a teenage girl. Those pictures were also found on the defendant’s computer. As part of the plea agreement, the defendant admitted to the production of images of child pornography of the 15 and 16-year-old boys.
Sentencing is scheduled for April 27, 2017, at 12:30 p.m. before Judge Vilardo.
The plea is the culmination of an investigation by Immigration and Customs Enforcement, Homeland Security Investigations, under the direction of Acting Special Agent-in-Charge Kevin Kelly.
Former Belleville Doctor's Office Manager Sentenced to Fifty-One Months in Prison for EmbezzlementRead the Press Release
Jerry L. Akin, 61, formerly from Belleville, Illinois, was sentenced to fifty-one months in prison on two counts of wire fraud involving a scheme to embezzle funds from a doctor's office, Don Boyce, United States Attorney for the Southern District of Illinois, announced today. Akin was also ordered to pay restitution of $256,563 and serve three years supervised release. Restitution was less than the total amount embezzled due to an amount taken from Akin’s retirement account. Akin was sentenced on January 12, 2017.
Akin charged personal purchases to the company's credit card that included Cardinal baseball season tickets, concert tickets, medical bills and personal travel expenses. Akin paid personal credit card bills using the business checking account, and he attempted to conceal the payments by altering the payee of the checks in the business's QuickBooks accounting software. The total loss was $369,000.
The successful prosecution is the result of an investigation conducted by the Federal Bureau of Investigation, with the assistance of the doctor's office. The case was prosecuted by Assistant United States Attorney Norman R. Smith.
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Florida Residents Charged with Conspiracy and Wire FraudRead the Press Release
OAKLAND, Calif. - A federal grand jury indicted Karl James Stehlin and Gregory Scott Winters charging them each with conspiracy to commit wire fraud and wire fraud, announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge John F. Bennett. According to the indictment unsealed last Friday, January 13, 2017, the defendants allegedly engaged in a scheme to defraud a victim in Walnut Creek, Calif., into paying in excess of $5,000,000 for fake invoices reflecting goods sold to non-existent customers, including several businesses purportedly in the equine industry.
According to the indictment, Stehlin, 57, of Seminole, Fla., and Winters, 45, a resident of Ocala Fla., at the relevant time, were part of a conspiracy that sold millions of dollars’ worth of fake invoices to a Walnut Creek company that provides accounts receivable collateralized lending services, also called “factoring.” Factoring is a financial transaction in which a business sells its accounts receivable (invoices) to a third party (the factor) at a discount. The factor advances a percentage of the face amount of the invoice to the business and then collects the full amount from the customers of the business in due course. Following collection from the customers, the factor deducts its commission and other fees and then pays the balance to the business.
Stehlin, Winters, and their co-conspirators allegedly created multiple shell entities, including Nature’s Own Pharmacy, a company they claimed sold equine supplements, as well as many other shell companies that were represented to be Nature’s Own Pharmacy’s customers but in fact did no legitimate business with Nature’s Own Pharmacy. According to the indictment, the defendants then created fake invoices that gave the appearance of the sale of goods from Nature’s Own Pharmacy to the fake customers of Nature’s Own Pharmacy. The defendants then allegedly sold the invoices to the Walnut Creek factoring company. The defendants allegedly used false names, virtual office addresses, and other false information to execute their scheme. The fake customers of Nature’s Own Pharmacy supposedly received goods shipped from Nature’s Own Pharmacy to locations in various states around the country including Florida, California, Arizona, and Texas. In reality, the indictment alleges, Nature’s Own Pharmacy sold neither goods nor services, and none of the purported customers bought any goods or services from Nature’s Own Pharmacy; the invoices sold were allegedly completely fake.
Stehlin is in the custody of the Bureau of Prisons on other charges and will be transported to the Northern District of California to make his initial appearance in this case. Winters is scheduled to make an initial appearance before U.S. Magistrate Judge Donna M. Ryu on February 2, 2017.
An indictment merely alleges that crimes have been committed, and the defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, the defendants face a maximum sentence of twenty (20) years in prison, a three-year term of supervised release, a fine of $250,000 or twice the gross gain or loss (whichever is greater), plus restitution, and a $100 special assessment for each count. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant U.S. Attorney William Gullotta is prosecuting the case with the assistance of Michelle Alter Eck and Trina Khadoo. The prosecution is the result of an investigation by the FBI.
Five Springfield Residents Indicted for Meth Conspiracy, Illegal FirearmsRead the Press Release
SPRINGFIELD, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that five Springfield, Mo., residents were indicted by a federal grand jury today for their roles in a conspiracy to distribute methamphetamine in Greene County and Webster County, Mo., and for illegally possessing firearms.
Randy G. Dabney, 53, James O. Mitchell, 45, Christopher R. Mays, 35, Michael J. Boehm 22, and Kayla A. Morrill, 40, all of Springfield, were charged in a 25-count indictment returned by a federal grand jury in Springfield.
Today’s indictment alleges that all five co-defendants participated in a conspiracy to distribute methamphetamine from Nov. 24, 2015, to Sept. 28, 2016.
In addition to the conspiracy, Dabney is charged with three counts of possessing methamphetamine with the intent to distribute, one count of possessing a firearm in furtherance of a drug-trafficking conspiracy, five counts of being a felon in possession of firearms and one count of illegally possessing a sawed-off rifle. Dabney, who has a prior felony conviction, allegedly was in possession of a Rock Island Armory .45-caliber semi-automatic pistol on April 14, 2016; a Ruger .22-caliber rifle on April 26, 2016; a Star B. Echevarria 9mm semi-automatic pistol on May 4, 2016; a Colt .45-caliber semi-automatic pistol on May 24, 2016; and a Jimenez Arms 9mm semi-automatic pistol, a Taurus .45-caliber semi-automatic pistol and an O.F. Mossberg and Sons 12-gauge shotgun on June 1, 2016. Dabney allegedly was in possession of a sawed-off Ruger .22-caliber rifle on April 26, 2016.
Mitchell and Morrill are also charged together in one count of aiding and abetting one another to possess methamphetamine with the intent to distribute.
Mitchell is also charged with one count of distributing methamphetamine, three counts of possessing methamphetamine with the intent to distribute, one count of possessing a firearm in furtherance of a drug-trafficking crime and two counts of being a felon in possession of firearms. Mitchell, who has a prior felony conviction, allegedly was in possession of a Springfield Armory .40-caliber semi-automatic pistol on April 1, 2016; and a Jimenez Arms .32-caliber semi-automatic pistol and a Cobra .380-caliber semi-automatic pistol on June 8, 2016.
Mays is also charged with one count of possessing methamphetamine with the intent to distribute, one count of possessing a firearm in furtherance of a drug-trafficking conspiracy and one count of being a felon in possession of a firearm. Mays, who has a prior felony conviction, allegedly was in possession of a Taurus Millennium 9mm semi-automatic pistol on March 4, 2016.
Boehm is also charged with one count of possessing methamphetamine with the intent to distribute, one count of possessing firearms in furtherance of a drug-trafficking conspiracy and one count of being a felon in possession of firearms. Boehm, who has been convicted of a felony, allegedly was in possession of a Norinco 7.62 x 39mm semi-automatic rifle, a Beretta 9mm semi-automatic pistol, a Smith and Wesson .22-caliber semi-automatic rifle, a Winchester .30-.30-caliber lever-action rifle and a Winchester .300-caliber bolt-action rifle on March 25, 2016.
Dickinson cautioned that the charges contained in this indictment are simply accusations, and not evidence of guilt. Evidence supporting the charges must be presented to a federal trial jury, whose duty is to determine guilt or innocence.
This case is being prosecuted by Special Assistant U.S. Attorney Jody M. Larison and Assistant U.S. Attorney Nhan D. Nguyen. It was investigated by the Drug Enforcement Administration, the Springfield, Mo., Police Department, COMET (the Combined Ozarks Multijurisdictional Enforcement Team) and the Webster County, Mo., Sheriff’s Office.
Fayetteville Man Sentenced to 10 Years for Arranging to have sex with a MinorRead the Press Release
ATLANTA - John Katz has been sentenced to 10 years in prison for communicating with a minor on the Internet for the purpose of engaging in illegal sexual activity with her. Katz drove more than 30 miles to meet the minor and was arrested when he showed up at a pre-arranged site to meet her for sex.
“This case shines a light on some of the darkest corners of the Internet, where predators troll for the opportunity to victimize children,” said U. S. Attorney John Horn. “This was not Katz’s first attempt to reach out from the Internet to actually have sexual contact with a minor. This case prevents him from further attempts to make the Internet a dangerous place for children.”
“Identifying and stopping the sexual abuse of underage victims is one of this agency’s highest investigative priorities,” said Special Agent in Charge of ICE Homeland Security Investigations Atlanta Nick Annan. “Underage children cannot consent to sexual activity -- period. This sentencing clearly illustrates that anyone who seeks out sex with an underage person can and will face serious criminal charges and an extensive period of time behind bars.”
“This conviction illustrates the great work of law enforcement to investigate and prosecute crimes against children. The Georgia Bureau of Investigation is committed to working with our local, state, and federal partners to combat the epidemic of child sexual exploitation and abuse cases,” said Vernon Keenan, Director, Georgia Bureau of Investigation.
According to U.S. Attorney Horn, the charges and other information presented in court: In February 2014, Katz posted an ad on Craigslist that was titled “Daddy looking for teenage slut.” In the ad, Katz expressed his interest in finding a young girl to act out his sexual fantasies. An agent with the Georgia Bureau of Investigation (GBI) posed as a 15-year-old girl and responded to his ad. She wrote that she was “too young” for him but just wanted “to say hey!” Katz continued communicating with the girl and was graphic in his descriptions of the sex acts that he wanted to have with her.
At the same time, Katz was also communicating over the Internet with a 14-year-old girl and was trying to make arrangements to meet with her for the purpose of having sex with her. This 14-year-old girl in reality was another GBI agent acting in an undercover capacity.
On February 28, 2014, Katz drove from his home in Fayetteville to Lithonia, Georgia, to meet the 15-year-old girl. He was arrested when he showed up at a pre-arranged site. Additionally, he had condoms and a number of sex toys with him. After his arrest, he admitted that several years earlier he had actually had sex with a 15-year-old girl when he lived in Ohio and that he knew her age at the time they met.
John Katz, 32, of Fayetteville, Georgia, was sentenced to 10 years in prison to be followed by eight years of supervised release. Katz was convicted of these charges on November 3, 2016, after he pleaded guilty.
This case was investigated by the Georgia Bureau of Investigation and U.S. Immigration and Customs Enforcement’s Homeland Security Investigations.
Assistant United States Attorney Paul R. Jones prosecuted the case.
This case is being brought as part of Project Safe Childhood. In February 2006, the Attorney General launched Project Safe Childhood, a nationwide initiative designed to protect children from online exploitation and abuse. Led by the United States Attorney’s Offices around the country, Project Safe Childhood marshals federal, state and local resources to apprehend and prosecute individuals who exploit children. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
For further information please contact the U.S. Attorney’s Public Affairs Office at [email protected] or (404) 581-6016. The Internet address for the U.S. Attorney’s Office for the Northern District of Georgia is http://www.justice.gov/usao-ndga.
East Chicago Man Sentenced to 60 Months ImprisonmentRead the Press Release
HAMMOND- United States Attorney David A. Capp announced that Victor Castro, 37, of East Chicago, Indiana was sentenced before Chief Judge Philip Simon on January 13, 2017 for distribution of over 500 grams of cocaine.
Castro was sentenced to 60 months imprisonment and 4 years supervised release.
According to documents in this case, in December of 2014, an investigation by the Drug Enforcement Administration revealed that Castro distributed a kilogram of cocaine to a DEA confidential informant at Castro’s place of business, Castro Trucking Service, in Gary, Indiana.
This case was the result of an investigation by the Drug Enforcement Administration. The case was handled by Assistant United States Attorney Thomas M. McGrath.
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Deutsche Bank Agrees to Pay $7.2 Billion for Misleading Investors in its Sale of Residential Mortgage-Backed SecuritiesRead the Press Release
The Justice Department, along with federal partners, announced today a $7.2 billion settlement with Deutsche Bank resolving federal civil claims that Deutsche Bank misled investors in the packaging, securitization, marketing, sale and issuance of residential mortgage-backed securities (RMBS) between 2006 and 2007. This $7.2 billion agreement represents the single largest RMBS resolution for the conduct of a single entity. The settlement requires Deutsche Bank to pay a $3.1 billion civil penalty under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA). Under the settlement, Deutsche Bank will also provide $4.1 billion in relief to underwater homeowners, distressed borrowers and affected communities.
“This resolution holds Deutsche Bank accountable for its illegal conduct and irresponsible lending practices, which caused serious and lasting damage to investors and the American public,” said Attorney General Loretta E. Lynch. “Deutsche Bank did not merely mislead investors: it contributed directly to an international financial crisis. The cost of this misconduct is significant: Deutsche Bank will pay a $3.1 billion civil penalty, and provide an additional $4.1 billion in relief to homeowners, borrowers, and communities harmed by its practices. Our settlement today makes clear that institutions like Deutsche Bank cannot evade responsibility for the great cost exacted by their conduct.”
“This $7.2 billion resolution – the largest of its kind – recognizes the immense breadth of Deutsche Bank’s unlawful scheme by demanding a painful penalty from the bank, along with billions of dollars of relief to the communities and homeowners that continue to struggle because of Wall Street’s greed,” said Principal Deputy Associate Attorney General Bill Baer. “The Department will remain relentless in holding financial institutions accountable for the harm their misconduct inflicted on investors, our economy and American consumers.”
“In the Statement of Facts accompanying this settlement, Deutsche Bank admits making false representations and omitting material information from disclosures to investors about the loans included in RMBS securities sold by the Bank. This misconduct, combined with that of the other banks we have already settled with, hurt our economy and threatened the banking system,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “To make matters worse, the Bank’s conduct encouraged shoddy mortgage underwriting and improvident lending that caused borrowers to lose their homes because they couldn’t pay their loans. Today’s settlement shows once again that the Department will aggressively pursue misconduct that hurts the American public.”
“Investors who bought RMBS from Deutsche Bank, and who suffered catastrophic losses as a result, included individuals and institutions that form the backbone of our community,” said U.S. Attorney Robert L. Capers for the Eastern District of New York. “Deutsche Bank repeatedly assured investors that its RMBS were safe investments. Instead of ensuring that its representations to investors were accurate and transparent, so that investors could make properly informed investment decisions, Deutsche Bank repeatedly misled investors and withheld critical information about the loans it securitized. Time and again, the bank put investors at risk in pursuit of profit. Deutsche Bank has now been held accountable.”
“Deutsche Bank knowingly securitized billions of dollars of defective mortgages and subsequently made false representations to investors about the quality of the underlying loans,” said Special Agent In Charge Steven Perez of the Federal Housing Finance Agency, Office of the Inspector General. “Its actions resulted in enormous losses to investors to whom Deutsche Bank sold these defective Residential Mortgage-Backed Securities. Today’s announcement reaffirms our commitment to working with our law enforcement partners to hold accountable those who deceived investors in pursuit of profits, and contributed to our nation’s financial crisis. We are proud to have worked with the U.S. Department of Justice and the U.S Attorney’s Office for the Eastern District of New York.”
As part of the settlement, Deutsche Bank agreed to a detailed Statement of Facts. That statement describes how Deutsche Bank knowingly made false and misleading representations to investors about the characteristics of the mortgage loans it securitized in RMBS worth billions of dollars issued by the bank between 2006 and 2007. For example:
- Deutsche Bank represented to investors that loans securitized in its RMBS were originated generally in accordance with mortgage loan originators’ underwriting guidelines. But as Deutsche Bank now acknowledges, the bank’s own reviews confirmed that “aggressive” revisions to the loan originators’ underwriting guidelines allowed for loans to be underwritten to anyone with “half a pulse.” More generally, Deutsche Bank knew, based on the results of due diligence, that for some securitized loan pools, more than 50 percent of the loans subjected to due diligence did not meet loan originators’ guidelines.
- Deutsche Bank also knowingly misrepresented that loans had been reviewed to ensure the ability of borrowers to repay their loans. As Deutsche Bank acknowledges, the bank’s own employees recognized that Deutsche Bank would “tolerate misrepresentation” with “misdirected lending practices” as to borrower ability to pay, accepting even blocked-out borrower pay stubs that concealed borrowers’ actual incomes. As a Deutsche Bank employee stated, “What goes around will eventually come around; when performance (default) begins affecting profits and/or the investors who purchase the securities, only then will Wall St. take notice. For now, the buying continues.”
- Deutsche Bank concealed from investors that significant numbers of borrowers had second liens on their properties. In one instance, a supervisory Deutsche Bank trader specifically instructed his team that if investors asked about second liens, “‘[t]ell them verbally . . . [b]ut don’t put in the prospectus.’” Deutsche Bank knew that these second liens increased the likelihood that a borrower would default on his or her loan.
- Deutsche Bank purchased and securitized loans with substantial defects to provide “flexibility” to the mortgage originators on whom Deutsche Bank’s RMBS program depended for a continued supply of loans. Indeed, after the president of a large mortgage originator told Deutsche Bank he was “very upset with the rejection percentage,” Deutsche Bank’s diligence team was instructed, on three separate occasions, to clear loans it previously determined should be rejected.
- While Deutsche Bank conducted due diligence on samples of loans it securitized in RMBS, Deutsche Bank knew that the size and composition of these loan samples frequently failed to capture loans that did not meet its representations to investors. In fact, Deutsche Bank knew “the more you sample, the more you reject.”
- Deutsche Bank knowingly and intentionally securitized loans originated based on unsupported and fraudulent appraisals. Deutsche Bank knew that mortgage originators were “‘giving’ appraisers the value they want[ed]” and expecting the resulting appraisals to meet the originators’ desired value, regardless of the actual value of the property. Deutsche Bank concealed its knowledge of pervasive and consistent appraisal fraud, instead representing to investors home valuation metrics based on appraisals it knew to be fraudulent. Deutsche Bank misrepresented to investors the value of the properties securing the loans securitized in its RMBS and concealed from investors that it knew that the value of the properties securing the loans was far below the value reflected by the originator’s appraisal.
- By May 2007, Deutsche Bank knew that there was an increasing trend of overvalued properties being sold to Deutsche Bank for securitization. As one employee noted, “We are finding ourselves going back quite often and clearing large numbers of loans [with inflated appraisals] to bring down the deletion percentages.” Deutsche Bank nonetheless purchased and securitized such loans because it received favorable prices on the fraudulent loans. Ultimately, Deutsche Bank enriched itself by paying reduced prices for risky loans while representing to investors valuation metrics based on appraisals the Bank knew to be inflated.
- Deutsche Bank represented to investors that disclosed borrower FICO scores were accurate as of the “cut-off date” of the RMBS issuance. However, Deutsche Bank knowingly represented borrowers’ FICO scores as of the time of the origination of their loans despite the bank’s knowledge that these scores had often declined materially by the cut-off date.
Assistant U.S. Attorneys Edward K. Newman, Matthew R. Belz, Jeremy Turk, and Ryan M. Wilson of the U.S. Attorney’s Office for the Eastern District of New York investigated Deutsche Bank’s conduct in connection with the issuance and sale of RMBS between 2006 and 2007. The investigation was conducted with the Office of the Inspector General for the Federal Housing Finance Agency.
The $3.1 billion civil monetary penalty resolves claims under FIRREA, which authorizes the federal government to impose civil penalties against financial institutions that violate various predicate offenses, including wire and mail fraud. It is one of the largest FIRREA penalties ever paid. The settlement does not release any individuals from potential criminal or civil liability. As part of the settlement, Deutsche Bank has agreed to fully cooperate with investigations related to the conduct covered by the agreement.
Deutsche Bank will also provide $4.1 billion in the form of relief to aid consumers harmed by its unlawful conduct. Specifically, Deutsche Bank will provide loan modifications, including loan forgiveness and forbearance, to distressed and underwater homeowners throughout the country. It will also provide financing for affordable rental and for-sale housing throughout the country. Deutsche Bank’s provision of consumer relief will be overseen by an independent monitor who will have authority to approve the selection of any third party used by Deutsche Bank to provide consumer relief.
To report RMBS fraud, go to: http://www.stopfraud.gov/rmbs.html.
About the RMBS Working Group:
The RMBS Working Group, part of the Financial Fraud Enforcement Task Force, was established by the Attorney General in late January 2012. The Working Group has been dedicated to initiating, organizing, and advancing new and existing investigations by federal and state authorities into fraud and abuse in the RMBS market that helped precipitate the 2008 Financial Crisis. The Working Group’s efforts to date have resulted in settlements providing for tens of billions of dollars in civil penalties and consumer relief from banks and other entities that are alleged to have committed fraud in connection with the issuance of RMBS.
# # #
- Deutsche Bank represented to investors that loans securitized in its RMBS were originated generally in accordance with mortgage loan originators’ underwriting guidelines. But as Deutsche Bank now acknowledges, the bank’s own reviews confirmed that “aggressive” revisions to the loan originators’ underwriting guidelines allowed for loans to be underwritten to anyone with “half a pulse.” More generally, Deutsche Bank knew, based on the results of due diligence, that for some securitized loan pools, more than 50 percent of the loans subjected to due diligence did not meet loan originators’ guidelines.
Deutsche Bank Agrees to Pay $7.2 Billion for Misleading Investors in Its Sale of Residential Mortgage-Backed SecuritiesRead the Press Release
WASHINGTON --The Justice Department, along with federal partners, announced today a $7.2 billion settlement with Deutsche Bank resolving federal civil claims that Deutsche Bank misled investors in the packaging, securitization, marketing, sale and issuance of residential mortgage-backed securities (RMBS) between 2006 and 2007. This $7.2 billion agreement represents the single largest RMBS resolution for the conduct of a single entity. The settlement requires Deutsche Bank to pay a $3.1 billion civil penalty under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA). Under the settlement, Deutsche Bank will also provide $4.1 billion in relief to underwater homeowners, distressed borrowers and affected communities.
“This resolution holds Deutsche Bank accountable for its illegal conduct and irresponsible lending practices, which caused serious and lasting damage to investors and the American public,” said Attorney General Loretta E. Lynch. “Deutsche Bank did not merely mislead investors: it contributed directly to an international financial crisis. The cost of this misconduct is significant: Deutsche Bank will pay a $3.1 billion civil penalty, and provide an additional $4.1 billion in relief to homeowners, borrowers, and communities harmed by its practices. Our settlement today makes clear that institutions like Deutsche Bank cannot evade responsibility for the great cost exacted by their conduct.”
“This $7.2 billion resolution – the largest of its kind – recognizes the immense breadth of Deutsche Bank’s unlawful scheme by demanding a painful penalty from the bank, along with billions of dollars of relief to the communities and homeowners that continue to struggle because of Wall Street’s greed,” said Principal Deputy Associate Attorney General Bill Baer. “The Department will remain relentless in holding financial institutions accountable for the harm their misconduct inflicted on investors, our economy and American consumers.”
“In the Statement of Facts accompanying this settlement, Deutsche Bank admits making false representations and omitting material information from disclosures to investors about the loans included in RMBS securities sold by the Bank. This misconduct, combined with that of the other banks we have already settled with, hurt our economy and threatened the banking system,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “To make matters worse, the Bank’s conduct encouraged shoddy mortgage underwriting and improvident lending that caused borrowers to lose their homes because they couldn’t pay their loans. Today’s settlement shows once again that the Department will aggressively pursue misconduct that hurts the American public.”
“Investors who bought RMBS from Deutsche Bank, and who suffered catastrophic losses as a result, included individuals and institutions that form the backbone of our community,” said U.S. Attorney Robert L. Capers for the Eastern District of New York. “Deutsche Bank repeatedly assured investors that its RMBS were safe investments. Instead of ensuring that its representations to investors were accurate and transparent, so that investors could make properly informed investment decisions, Deutsche Bank repeatedly misled investors and withheld critical information about the loans it securitized. Time and again, the bank put investors at risk in pursuit of profit. Deutsche Bank has now been held accountable.”
“Deutsche Bank knowingly securitized billions of dollars of defective mortgages and subsequently made false representations to investors about the quality of the underlying loans,” said Special Agent In Charge Steven Perez of the Federal Housing Finance Agency, Office of the Inspector General. “Its actions resulted in enormous losses to investors to whom Deutsche Bank sold these defective Residential Mortgage-Backed Securities. Today’s announcement reaffirms our commitment to working with our law enforcement partners to hold accountable those who deceived investors in pursuit of profits, and contributed to our nation’s financial crisis. We are proud to have worked with the U.S. Department of Justice and the U.S Attorney’s Office for the Eastern District of New York.”
As part of the settlement, Deutsche Bank agreed to a detailed Statement of Facts. That statement describes how Deutsche Bank knowingly made false and misleading representations to investors about the characteristics of the mortgage loans it securitized in RMBS worth billions of dollars issued by the bank between 2006 and 2007. For example:
-
Deutsche Bank represented to investors that loans securitized in its RMBS were originated generally in accordance with mortgage loan originators’ underwriting guidelines. But as Deutsche Bank now acknowledges, the bank’s own reviews confirmed that “aggressive” revisions to the loan originators’ underwriting guidelines allowed for loans to be underwritten to anyone with “half a pulse.” More generally, Deutsche Bank knew, based on the results of due diligence, that for some securitized loan pools, more than 50 percent of the loans subjected to due diligence did not meet loan originators’ guidelines.
-
Deutsche Bank also knowingly misrepresented that loans had been reviewed to ensure the ability of borrowers to repay their loans. As Deutsche Bank acknowledges, the bank’s own employees recognized that Deutsche Bank would “tolerate misrepresentation” with “misdirected lending practices” as to borrower ability to pay, accepting even blocked-out borrower pay stubs that concealed borrowers’ actual incomes. As a Deutsche Bank employee stated, “What goes around will eventually come around; when performance (default) begins affecting profits and/or the investors who purchase the securities, only then will Wall St. take notice. For now, the buying continues.”
-
Deutsche Bank concealed from investors that significant numbers of borrowers had second liens on their properties. In one instance, a supervisory Deutsche Bank trader specifically instructed his team that if investors asked about second liens, “‘[t]ell them verbally . . . [b]ut don’t put in the prospectus.’” Deutsche Bank knew that these second liens increased the likelihood that a borrower would default on his or her loan.
-
Deutsche Bank purchased and securitized loans with substantial defects to provide “flexibility” to the mortgage originators on whom Deutsche Bank’s RMBS program depended for a continued supply of loans. Indeed, after the president of a large mortgage originator told Deutsche Bank he was “very upset with the rejection percentage,” Deutsche Bank’s diligence team was instructed, on three separate occasions, to clear loans it previously determined should be rejected.
-
While Deutsche Bank conducted due diligence on samples of loans it securitized in RMBS, Deutsche Bank knew that the size and composition of these loan samples frequently failed to capture loans that did not meet its representations to investors. In fact, Deutsche Bank knew “the more you sample, the more you reject.”
-
Deutsche Bank knowingly and intentionally securitized loans originated based on unsupported and fraudulent appraisals. Deutsche Bank knew that mortgage originators were “‘giving’ appraisers the value they want[ed]” and expecting the resulting appraisals to meet the originators’ desired value, regardless of the actual value of the property. Deutsche Bank concealed its knowledge of pervasive and consistent appraisal fraud, instead representing to investors home valuation metrics based on appraisals it knew to be fraudulent. Deutsche Bank misrepresented to investors the value of the properties securing the loans securitized in its RMBS and concealed from investors that it knew that the value of the properties securing the loans was far below the value reflected by the originator’s appraisal.
-
By May 2007, Deutsche Bank knew that there was an increasing trend of overvalued properties being sold to Deutsche Bank for securitization. As one employee noted, “We are finding ourselves going back quite often and clearing large numbers of loans [with inflated appraisals] to bring down the deletion percentages.” Deutsche Bank nonetheless purchased and securitized such loans because it received favorable prices on the fraudulent loans. Ultimately, Deutsche Bank enriched itself by paying reduced prices for risky loans while representing to investors valuation metrics based on appraisals the Bank knew to be inflated.
-
Deutsche Bank represented to investors that disclosed borrower FICO scores were accurate as of the “cut-off date” of the RMBS issuance. However, Deutsche Bank knowingly represented borrowers’ FICO scores as of the time of the origination of their loans despite the bank’s knowledge that these scores had often declined materially by the cut-off date.
Assistant U.S. Attorneys Edward K. Newman, Matthew R. Belz, Jeremy Turk, and Ryan M. Wilson of the U.S. Attorney’s Office for the Eastern District of New York investigated Deutsche Bank’s conduct in connection with the issuance and sale of RMBS between 2006 and 2007. The investigation was conducted with the Office of the Inspector General for the Federal Housing Finance Agency.
The $3.1 billion civil monetary penalty resolves claims under FIRREA, which authorizes the federal government to impose civil penalties against financial institutions that violate various predicate offenses, including wire and mail fraud. It is one of the largest FIRREA penalties ever paid. The settlement does not release any individuals from potential criminal or civil liability. As part of the settlement, Deutsche Bank has agreed to fully cooperate with investigations related to the conduct covered by the agreement.
Deutsche Bank will also provide $4.1 billion in the form of relief to aid consumers harmed by its unlawful conduct. Specifically, Deutsche Bank will provide loan modifications, including loan forgiveness and forbearance, to distressed and underwater homeowners throughout the country. It will also provide financing for affordable rental and for-sale housing throughout the country. Deutsche Bank’s provision of consumer relief will be overseen by an independent monitor who will have authority to approve the selection of any third party used by Deutsche Bank to provide consumer relief. To report RMBS fraud, go to: http://www.stopfraud.gov/rmbs.html
About the RMBS Working Group:
The RMBS Working Group, part of the Financial Fraud Enforcement Task Force, was established by the Attorney General in late January 2012. The Working Group has been dedicated to initiating, organizing, and advancing new and existing investigations by federal and state authorities into fraud and abuse in the RMBS market that helped precipitate the 2008 Financial Crisis. The Working Group’s efforts to date have resulted in settlements providing for tens of billions of dollars in civil penalties and consumer relief from banks and other entities that are alleged to have committed fraud in connection with the issuance of RMBS.
Download Settlement Agreement
- Download Annex 1 -- Statement of Facts
- Download Annex 1A -- Statement of Facts Appendices A through D
- Download Annex 2 -- Consumer Relief
- Download Annex 3 -- RMBS Covered by the Settlement
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Detroit, Michigan Woman Pleads Guilty to Distribution of Cocaine, HeroinRead the Press Release
MUSKOGEE, OKLAHOMA – The United States Attorney’s Office for the Eastern District of Oklahoma announced that ALEXANDRA ELAINE BURRIS, age 27, of Detroit, Michigan, pled guilty to POSSESSION WITH INTENT TO DISTRIBUTE HEROIN, in violation of Title 21, United States Code, Sections 841(a)(1) and 841(b)(1)(C), punishable by no more than 20 years imprisonment, and up to a$1,000,000.00 fine or both; and to POSSESSION WITH INTENT TO DISTRIBUTE COCAINE, in violation of Title 21, United States Code, Sections 841(a)(1) and 841(b)(1)(C), punishable by no more than 20 years imprisonment, and up to a$1,000,000.00 fine or both.
The Indictment alleged that on or about August 11, 2016, within the Eastern District of Oklahoma, the defendant, did knowingly and intentionally possess with intent to distribute a mixture or substance containing a detectable amount of heroin, a Schedule I controlled substance.
The Indictment further alleged that on or about August 11, 2016, within the Eastern District of Oklahoma, the defendant, ALEXANDRA ELAINE BURRIS, did knowingly and intentionally possess with intent to distribute a mixture or substance containing a detectable amount of cocaine, a Schedule II controlled substance.
The charges arose from an investigation by the McAlester Police Department, and the Drug Enforcement Administration.
The Honorable Steven P. Shreder, Magistrate Judge in the United States District Court for the Eastern District of Oklahoma, in Muskogee, accepted the plea and ordered the completion of a presentence investigation report. The defendant will remain in custody pending a sentencing hearing.
Assistant United States Attorney Rob Wallace represented the United States.
Detainee Indicted on Escape ChargeRead the Press Release
PROVIDENCE – A federal grand jury in Providence today returned an indictment charging James Morales, 35, with escape from the custody of the Attorney General, announced United States Attorney Peter F. Neronha.
It is alleged in the indictment that on December 31, 2016, Morales escaped from the custody of the Wyatt Detention Facility in which he was confined by direction of the Attorney General and her authorized representative, by virtue of an Order of detention of a United States Magistrate Judge for the District of Massachusetts.
Morales was captured in Somerville, Massachusetts on January 5, 2017, by Massachusetts State Police and returned to federal custody.
James Morales is scheduled to be arraigned on the indictment before U.S. District Court Magistrate Judge Patricia A. Sullivan on Thursday, January 19, 2017, at 11:00 AM. An indictment is merely an allegation and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
Escape from the custody of the Attorney General is punishable by statutory penalties of up to 5 years imprisonment followed by up to 3 years supervised and a fine of up to $250,000.
The case is being prosecuted by Assistant U.S. Attorney Lee H. Vilker.
District of Arizona, Acting U.s. Attorney AnnouncedRead the Press Release
PHOENIX – Elizabeth A. Strange, the current First Assistant United States Attorney, has been named as Acting United States Attorney for the District of Arizona effective upon the announced resignation of United States Attorney John S. Leonardo, on Jan. 20, 2017. Ms. Strange will maintain that position pending the appointment of a new United States Attorney by the new administration.
RELEASE NUMBER: 2017-003_USA_Acting
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For more information on the U.S. Attorney’s Office, District of Arizona, visit http://www.justice.gov/usao/az/
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Convicted Felon Charged with Possession of A FirearmRead the Press Release
Hyneith Harmon, 24, of Philadelphia, PA, was charged today by Indictment[1] with 2 counts of possession of a firearm by a convicted felon, announced Acting United States Attorney Louis D. Lappen. The indictment alleges that on or about November 3, 2015, Harmon, who has a prior felony conviction, possessed a Kimber .45 caliber pistol, and on December 12, 2015, he possessed a Colt .38 revolver.
If convicted the defendant faces a maximum of 20 years imprisonment.
The case was investigated by the Bureau of Alcohol Tobacco and Firearms, and is being prosecuted by Assistant United States Attorney Virgil B. Walker.
[1]An Indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Construction Company Owner Charged with Paying over $1 Million in Bribes for City of Atlanta ContractsRead the Press Release
ATLANTA - Elvin R. Mitchell, Jr., has been arraigned on conspiratorial bribery and money laundering charges for paying over $1 million to obtain City of Atlanta contracts.
“Mitchell brazenly sought to buy government contracts,” said U.S. Attorney John A. Horn. “Contractors who bribe their way into public work undermine the integrity of the system and ultimately cost taxpayers more money to get important projects done.”
“This case clearly demonstrates that those individuals who attempt to illegally influence our public officials can easily find themselves the subject of a federal investigation and prosecution. Because of the vast harm caused by public corruption, the FBI continues to make it our number one priority within our criminal investigative program and we ask that the public promptly report any information regarding this type of activity to their nearest FBI field office,” said David J. LeValley, Special Agent in Charge, FBI Atlanta Field Office.
“The public contracting process should be one of integrity and fairness,” stated Special Agent in Charge Veronica F. Hyman-Pillot. “Those who elect to pay illegal bribes to further their business interests should know that they are not beyond the reach of the law.”
According to U.S. Attorney Horn, the charges, and other information presented in court: Elvin R. Mitchell, Jr. serves as the owner and operator of E.R. Mitchell Company, Cascade Building System, LLC., E.R. Mitchell Group, Inc. and EC & WT Construction Company, Inc., d/b/a E.R. Mitchell Construction Co.
In an effort to obtain construction-related contracts with the City of Atlanta, Mitchell and another person in the construction industry agreed to pay, and did pay an individual to obtain government contracts. From approximately 2010 to August 2015, Mitchell paid over $1,000,000 to an individual in exchange for City of Atlanta contracts, believing that some of the money would be paid to city official/s who exercised influence over the contracting process.
Mitchell also laundered the money received from the City of Atlanta by attempting to conceal the source of the money and by attempting to evade federal currency transaction reporting requirements by withdrawing cash in amounts under $10,000.
Elvin R. Mitchell, Jr., 63, of Atlanta, Georgia, was charged by information and is expected to plead guilty to the charge later this month.
This case is being investigated by the Federal Bureau of Investigation and Internal Revenue Service Criminal Investigation.
First Assistant United States Attorney Kurt R. Erskine and Assistant United States Attorney Jeffrey W. Davis are prosecuting the case.
For further information please contact the U.S. Attorney’s Public Affairs Office at [email protected] or (404) 581-6016. The Internet address for the U.S. Attorney’s Office for the Northern District of Georgia is http://www.justice.gov/usao-ndga.
Congressional Staffer Sentenced to Prison for Failure to File Income Tax ReturnsRead the Press Release
A congressional staffer was sentenced to prison today for willfully failing to file an individual income tax return, announced Principal Deputy Assistant Attorney General Caroline D. Ciraolo, head of the Justice Department’s Tax Division, and U.S. Attorney Dana J. Boente for the Eastern District of Virginia.
According to documents filed with the court, Issac Lanier Avant, a resident of Arlington, Virginia, has been employed by the U.S. House of Representatives as a Chief of Staff since 2002. In December 2006, Avant assumed the additional role of Democratic Staff Director for the House Committee on Homeland Security. Despite earning more than $165,000, Avant failed to timely file his 2009 through 2013 individual income tax returns, causing a tax loss of $153,522. Avant had no federal income withheld during those years because in May 2005, he caused a form to be filed with his employer that falsely claimed he was exempt from federal income taxes. Avant did not have any federal tax withheld from his paycheck until the Internal Revenue Service (IRS) mandated that his employer begin withholding in January 2013. Avant did not file tax returns until after he was interviewed by federal agents.
The court imposed a prison term of approximately 4 months, consisting of 30 days incarceration, followed by incarceration every weekend for 12 months. Avant was also ordered to serve a one-year term of supervised release and to pay restitution in the amount of $149,962 to the IRS.
Principal Deputy Assistant Attorney General Ciraolo and U.S. Attorney Boente thanked special agents of IRS-Criminal Investigation and the FBI, who conducted the investigation, and Assistant U.S. Attorney Jack Hanly and Assistant Chief Todd Ellinwood of the Tax Division, who are prosecuting the case.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
Calaveras County Man Sentenced to over 15 Years in Prison for Child Pornography OffenseRead the Press Release
SACRAMENTO, Calif. — Miguel Angel Morales, 32, of Valley Springs, was sentenced today by U.S. District Judge John A. Mendez to 15 years and 8 months in prison for receipt of child pornography, U.S. Attorney Phillip A. Talbert announced.
According to court documents, between August 16, 2013, and September 30, 2013, Morales used a smart phone application to induce and entice a 15-year-old girl to produce pornographic photos and videos of herself and to send those images to Morales. During chats with the minor victim, Morales discussed her age and the fact that he would face serious trouble if their activities were discovered. According to court documents, at the time of the offense, Morales had a prior conviction from 2010 for unlawful sex with a minor. After serving his prison term, Morales will serve 10 years of supervised release.
This case was the product of an investigation by the Federal Bureau of Investigation. Assistant U.S. Attorney Matthew G. Morris prosecuted the case.
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the U.S. Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute those who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc. Click on the “resources” tab for information about internet safety education.
Brooklyn Resident Sentenced to 42 Months in Prison for Firearms Trafficking and Illegally Possessing WeaponsRead the Press Release
Earlier today at the federal courthouse in Brooklyn, New York, Troy Barrow, a resident of Brooklyn, was sentenced to 42 months in prison and three years of supervised release, following his July 11, 2016 guilty plea to two counts of an indictment charging him with firearms trafficking, in violation of 18 U.S.C. § 922(a), and being a felon in possession of a firearm, in violation of 18 U.S.C. § 922(g).
The sentencing was announced by Robert L. Capers, United States Attorney for the Eastern District of New York, Ashan M. Benedict, Special Agent in Charge, Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) New York Field Division, and James P. O’Neill, Commissioner, New York City Police Department.
According to public court filings, Barrow was arrested after an undercover investigation by the ATF’s Joint Firearms Task Force between September 2014 and December 2015. During the investigation, Barrow sold fourteen firearms and ammunition to undercover law enforcement officers in twelve different sales. The firearms included a mix of semiautomatic pistols and revolvers. The defendant also offered to procure additional weapons, including an AK-47 assault rifle and a machine pistol with a high capacity magazine. During one conversation recorded by law enforcement using a hidden video camera, the defendant expressed an interest in getting a revolver for himself because it was less likely to leave behind shell casings that could be used to investigate a shooting. And during another recorded conversation, the defendant explained that, if arrested, he would not cooperate with the government against others and would instead “do a bid”—go to jail. The defendant then added: “I know what I’m getting myself in.”
“Criminals like the defendant who brazenly and illegally sell guns on our streets pose a great threat to the safety of our local communities,” stated U.S. Attorney Capers. “We will never cease in our efforts to disrupt such dangerous dealings through determined investigation and prosecution.”
Special Agent in Charge Benedict said, “Troy Barrow, acting with a wanton and callous disregard for how they might be used, trafficked firearms acquired outside New York into our communities in New York City. Through the efforts of the Joint Firearms Task Force and the United States Attorney’s Office, Barrow has earned a lengthy sentence in federal prison as a just reward for his actions.”
The sentence was imposed by United States District Judge Jack B. Weinstein.
Assistant United States Attorney David K. Kessler is in charge of the prosecution.
The Defendant:
TROY BARROW
Age: 48E.D.N.Y. Docket No. 16-CR-94 (JBW)
Brooklyn Man Pleads Guilty to Conspiring to Distribute Heroin on the Dark WebRead the Press Release
FRESNO, Calif. — Chaudhry Ahmad Farooq, 24, of Brooklyn, New York, pleaded guilty today to one count of conspiring to distribute heroin, U.S. Attorney Phillip A. Talbert announced.
According to court documents, from approximately November 2015 through August 2016, Farooq conspired with co-defendant Abdullah Almashwali to distribute heroin on AlphaBay, a dark web marketplace. Under the moniker “DarkApollo,” Farooq distributed more than 600 grams of heroin in exchange for more than $145,000 in Bitcoin.
Dark web marketplaces are operated on computer networks designed to conceal the true Internet Protocol (IP) address of the computers accessing the network. Dark web marketplaces allow for payments to be made only in the form of digital currency, most commonly Bitcoin. While not inherently illegal, digital currency is used by dark web marketplaces because online transactions in digital currency can be completed without a third-party payment processor and are therefore perceived to be more anonymous and less vulnerable to law enforcement scrutiny.
This case is the product of an investigation by the Drug Enforcement Administration, the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), the Internal Revenue Service, Criminal Investigation, the U.S. Postal Inspection Service, and the Fresno Police Department. Assistant U.S. Attorneys Grant B. Rabenn and Ross Pearson are prosecuting the case.
Both Farooq and Almashwali are in federal custody. Almashwali is scheduled for trial on April 18, 2017. The charges against him are only allegations; he is presumed innocent until and unless proven guilty beyond a reasonable doubt.
Farooq is scheduled to be sentenced by U.S. District Judge Dale A. Drozd on May 17, 2017. Farooq faces a maximum statutory penalty of 20 years in prison and a $1 million fine. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.
This case was part of an Organized Crime Drug Enforcement Task Force (OCDETF). The OCDETF program was established in 1982 to conduct comprehensive, multilevel attacks on major drug trafficking and money laundering organizations. The principal mission of the OCDETF program is to identify, disrupt, and dismantle the most serious drug trafficking and money laundering organizations and those primarily responsible for the nation’s drug supply.
Bozeman Man Sentenced to Four Years in Prison for Possession of Child PornographyRead the Press Release
MISSOULA—Zachary Thomas Armstrong, 25, of Bozeman, was sentenced to 48 months in prison, 15 years supervised release, and a $5,100 special assessment by Chief United States District Court Judge Dana L. Christensen on Thursday, January 5, 2017. The sentence stems from Armstrong’s plea to guilty in August of last year. The defendant also has to pay $9,000 in restitution.
The investigation found that the defendant reported that his iPad had been stolen from his apartment in Bozeman. The next day an individual turned the iPad into the Bozeman Police Department stating the device contained images of child pornography. A forensic examiner searched the data and located approximately 1700 images of children, some under the age of 12, engaged in sexually explicit conduct.
Assistant U.S. Attorney Cyndee Peterson prosecuted the case which was investigated by the Internet Crimes Against Children Task Force and the Bozeman Police Department
Barbour County man pleads guilty to methamphetamine distributionRead the Press Release
ELKINS, WEST VIRGINIA – Tyler Robinson, 21, of Belington, West Virginia, was convicted of methamphetamine distribution today, Acting United States Attorney Betsy Steinfeld Jividen, announced.
Robinson pled guilty to one count of “Possession with Intent to Distribute Methamphetamine.” He faces up to twenty years in prison and a fine of up to $1,000,000. Under the Federal Sentencing Guidelines, the actual sentence imposed will be based upon the seriousness of the offenses and the prior criminal history, if any, of the defendant.
Assistant U.S. Attorney Stephen D. Warner prosecuted the case on behalf of the government. The Mountain Region Drug and Violent Crime Task Force investigated.
U.S. Magistrate Judge Michael John Aloi presided.
Bank Robber Sentenced to 29 Years in Federal Prison for Firing Gun at Teller and Customer in Orland Park HeistRead the Press Release
CHICAGO — A convicted bank robber has been sentenced to 29 years in federal prison for firing a gun at a teller and customer during a robbery in Orland Park.
CARL P. WILSON pocketed $20,000 from the Oct. 13, 2014, robbery of First Midwest Bank, 11200 W. 143rd St., in Orland Park. During the robbery, Wilson fired a black semi-automatic handgun at a teller and customer, narrowly missing both of them. Wilson, who had an account at the bank, was arrested nine days later after a traffic stop in Joliet.
Wilson, 28, of Joliet, pleaded guilty last year to one count of armed bank robbery, one count of discharging a firearm during the robbery, and one count of being a felon in possession of a firearm. U.S. District Judge Thomas M. Durkin imposed the 29-year sentence Thursday in federal court in Chicago.
The sentencing was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; and Michael J. Anderson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation. The Joliet Police Department provided valuable assistance.
“While any bank robbery is a serious offense, an armed bank robbery in which the perpetrator discharges a firearm is exceptionally serious,” Assistant U.S. Attorney Ankur Srivastava argued in the government’s sentencing memorandum. “Defendant’s crime was violent, motivated by greed, and put lives in danger.”
According to the charges, Wilson entered the bank wearing a dark hood over his head and a dark cloth draped across his face. Displaying the handgun, Wilson jumped over the teller counter and yelled, “Give me the [expletive] money!” As the teller quickly walked to the cash dispenser, Wilson fired the gun, narrowly missing her. Wilson then shot at a customer who was walking into the bank, barely missing him also. After obtaining the money, Wilson jumped back over the counter, exclaiming, “Have a great [expletive] day!” while waiving his gun in the air.
Wilson also admitted robbing a First Midwest Bank branch in Bolingbrook on Aug. 11, 2014. During the Bolingbrook robbery, Wilson opened fire on a teller within approximately five seconds of entering the bank, striking her in the arm.
At the sentencing hearing in federal court, the victim in the Bolingbrook robbery and several witnesses from the Orland Park robbery testified about their harrowing experiences.
The government was represented by Mr. Srivastava.
Area Man Sentenced on Mailing Threatening CommunicationsRead the Press Release
Contact Person: Lance Crick (864) 282-2100
Columbia, South Carolina ---- United States Attorney Beth Drake stated that Jeffrey Aaron Betrand, of South Carolina, was sentenced late last week to 33 months imprisonment in federal court. In August of 2016, Betrand pled guilty to the sole count in the indictment, Mailing Threatening Communications, in violation of Title 18, United States Code, Section 876. After Betrand completes the term of imprisonment, he will be on federal supervised release for 3 years.
The investigation of the case revealed that Mr. Betrand was incarcerated in a South Carolina state prison for a charge involving a woman who was also one of the victims in this case. He sent several letters to this victim via the U.S. Mail including one in which he threatened a male friend of the victim. After law enforcement was made aware of the letters, investigators with the SC Department of Corrections searched Betrand’s cell and found a drawing depicting a map of the victim’s apartment and a plan to kill a male friend of the victim. The plan included a laundry list of items needed to carry out the violent act.
The case was investigated by the South Carolina Department of Corrections, the Camden Police Department and the US Postal Inspection Service. Assistant United States Attorney John C. Potterfield of the Columbia United States Attorney’s Office prosecuted the case.
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Area Daycare Owner Indicted on Tax ChargesRead the Press Release
St. Louis, MO – Gwendolyn Hampton was indicted on tax evasion charges involving the years 2009-2013. The indictment alleges that during those years she sought to evade $376,463 in tax.
According to the indictment, Hampton owned and operated Hampton Academy, LLC, a daycare center that provided childcare to low income families. Between January 2009 and December 2013, Hampton Academy collected $2,387,386 in revenue. During that time she took $1,338,549 in cash and cashier’s checks from the business. For years 2009 and 2011 she did not file a federal tax return. For the years 2010, 2012 and 2013, Hampton filed false returns understating her income and tax owed.
“CI’s largest enforcement program is directed at the portion of American taxpayers who willfully and intentionally violate their known legal duty of filing and paying their taxes,” said Karl Stiften, Special Agent in Charge of IRS Criminal Investigation, St. Louis Field Office.
Hampton, St. Louis City, was indicted by a federal grand jury on January 4 on five felony counts of tax evasion. She was arrested earlier today and expected to appear in federal court this week.
If convicted, each count carries a maximum penalty of five years in prison and/or fines up to $100,000. In determining the actual sentences, a Judge is required to consider the U.S. Sentencing Guidelines, which provide recommended sentencing ranges.
This case was investigated by IRS Criminal Investigation. Assistant United States Attorney Tom Albus is handling the case for the U.S. Attorney's Office.
As is always the case, charges set forth in an indictment are merely accusations and do not constitute proof of guilt. Every defendant is presumed to be innocent unless and until proven guilty.
Animal Rights Activist Sentenced to 21 Months for Cross-Country Crime Spree Targeting Fur IndustryRead the Press Release
Assistant U.S. Attorneys John Parmley (619) 546-7957 or Michael Kaplan (619) 546-7927
NEWS RELEASE SUMMARY – January 17, 2017
SAN DIEGO – Animal-rights activist Nicole Kissane was sentenced in federal court today to 21 months in prison for terrorizing the fur industry during cross-country road trips in which she and coconspirator Joseph Buddenberg caused hundreds of thousands of dollars in damage by vandalizing properties and releasing mink from commercial farms.
During today’s sentencing hearing, U.S. District Judge Larry A. Burns described Kissane’s conduct as a “calculated, premeditated reign of terror over those in the fur industry.” Judge Burns also ordered Kissane to pay $423,477 in restitution to the victims.
Kissane pleaded guilty on December 27, 2016, to Conspiracy to Violate the Animal Enterprise Terrorism Act. Buddenberg entered his guilty plea to the same charge earlier in the year, on February 9, 2016. He was sentenced on May 2, 2016 to two years in prison and $398,272 in restitution.
“Vandalizing homes and businesses with acid, glue and chemicals in the dark of night is a form of domestic terrorism,” said Acting U.S. Attorney Alana W. Robinson. “Whatever your feelings about the fur industry, these sentences are a pretty strong signal that this isn’t the right way to effect change.”
“Today’s sentence sends a message to those who commit crimes in an attempt to advance their personal agendas,” stated FBI Special Agent in Charge Eric S. Birnbaum. “The FBI and our Joint Terrorism Task Force (JTTF) partners work together, share intelligence, and are able to connect cases to expose individuals engaged in this, or any, form of domestic terrorism.”
According to her plea agreement, Kissane admitted that during the summer and fall of 2013, she and Buddenberg caused hundreds of thousands of dollars in damage during their crime spree.
The defendants were charged under the Conspiracy to Violate the Animal Enterprise Terrorism Act. They were arrested in Oakland by agents from the FBI’s San Francisco field office.
In one instance described in the indictment, the defendants traveled from Oregon to San Diego in their 2012 Honda Fit on July 15, 2013 and used paint, paint stripper, a super glue-type substance, butyric acid, muriatic acid and glass etchant to vandalize Furs by Graf, a retail furrier located in San Diego, as well as the Spring Valley and La Mesa residences and personal property of the current and former owners of the business.
To publicize their crimes, the defendants drafted “communiqués” describing their conduct and posted them on websites associated with animal rights extremists, the indictment said.
Among some of the incidents of vandalism cited in the indictment: The defendants slashed tires of a meat distributor’s truck in San Francisco; smashed windows and glued the door locks at a furrier business in Minneapolis, Minnesota; vandalized and attempted to flood the Sun Prairie, Wisconsin home of an employee of the North American Fur Auctions.
DEFENDANTS
Nicole Juanita Kissane Age: 30 Oakland, CA
Joseph Brian Buddenberg Age: 32 Oakland, CA
SUMMARY OF CHARGES
Conspiracy to Violate the Animal Enterprise Terrorism Act – Title 18, U.S.C., Section 43 (a) (1), (2) (c) and (b) (3) (A) Maximum penalty: Ten years in prison and $250,000 fine
AGENCIES
Federal Bureau of Investigation, San Francisco and San Diego Field Offices
Joint Terrorism Task Force
Albuquerque Man Pleads Guilty to Federal Methamphetamine Trafficking ChargeRead the Press Release
ALBUQUERQUE – Marcos Montoya, Jr., 28, of Albuquerque, N.M., pled guilty today in federal court to a methamphetamine trafficking charge under a plea agreement with the U.S. Attorney’s Office.
Montoya was arrested in Dec. 2015, on a two-count indictment charging him with possession of methamphetamine with intent to distribute on Feb. 20, 2015, and maintaining a place for the purpose of storing, distributing and using methamphetamine and marijuana from Dec. 2014 through Feb. 20, 2015. According to the indictment, Montoya committed both crimes in Bernalillo County, N.M.
During today’s change of plea hearing, Montoya pled guilty to possession of methamphetamine with intent to distribute and admitted that on Feb. 20, 2015, he possessed more than 500 grams of methamphetamine which he intended to distribute to other people. Montoya further admitted that he stored most of the methamphetamine in a storage locker, but sold some of the drugs out of his house in Bernalillo County.
The statutory penalty for the crime to which Montoya pleaded guilty is a minimum of ten years and a maximum of life in federal prison. A sentencing hearing has yet to be scheduled.
This case was investigated by the Albuquerque office of the DEA and is being prosecuted by Assistant U.S. Attorneys Paul Mysliwiec and Letitia C. Simms.
Ahmet Okumus to Pay $180,000 Civil Penalty for Violating Antitrust Premerger Notification RequirementsRead the Press Release
The Justice Department’s Antitrust Division, at the request of the Federal Trade Commission (FTC), filed a civil antitrust lawsuit today in U.S. District Court in Washington, D.C., against Ahmet Okumus for violating the premerger notification and waiting period requirements of the Hart-Scott-Rodino (HSR) Act of 1976 when he acquired voting securities of Web.com Group, Inc. in 2016. At the same time, the department filed a proposed settlement, subject to approval by the court, under which Okumus has agreed to pay a $180,000 civil penalty to resolve the lawsuit.
The HSR Act imposes notification and waiting period requirements for transactions meeting certain size thresholds so that they can undergo premerger antitrust review. Federal courts can assess civil penalties for premerger notification violations under the HSR Act in lawsuits brought by the department. The maximum civil penalty for an HSR violation increased from $16,000 per day to $40,000 per day effective Aug. 1, 2016.
Further details about this matter are described in the FTC’s press release issued today, and in the attached complaint and competitive impact statement.
Consistent with the requirements of the Tunney Act, the proposed settlement, along with the competitive impact statement, will be published in the Federal Register. Any person may submit written comments concerning the proposed settlement during a 60-day comment period to Daniel P. Ducore, Special Attorney, United States, c/o Federal Trade Commission, 600 Pennsylvania Avenue, NW, Washington, D.C. 20580. At the conclusion of the 60-day comment period, the U.S. District Court for the District of Columbia may approve the proposed settlement upon finding that it is in the public interest.
Okumus Complaint Okumus CIS Okumus Explanation Okumus Final Judgment Okumus Stipulation
Monday 16 January 2017
Member of Dockworkers Union Sentenced to 41 Months in Prison in Scheme Involving Fraudulently Billing for Chiropractic ServicesRead the Press Release
LOS ANGELES – A member of the International Longshore and Warehouse Union (ILWU), Local 13, has been sentenced to 41 months in federal prison for his role in a scheme in which two medical clinics submitted more than a quarter-million dollars in bills to the union’s health care plan for chiropractic services that were not provided or were not medically necessary.
David Gomez, 53, of San Pedro, was sentenced on Monday, January 9, by United States District Judge R. Gary Klausner. Gomez was convicted in October of 20 counts of mail fraud. Gomez has been in custody since a federal jury returned its guilty verdicts.
The ILWU represents dockworkers at the ports of Los Angeles and Long Beach. Members of the union receive benefits, including health care benefits, through the ILWU-Pacific Maritime Association Welfare Plan.
According to the evidence presented at trial, Gomez and his co-defendant, Sergio Amador, opened a clinic in Long Beach in 2009 that operated under the name Port Medical and provided medical and chiropractic care. The next year, they opened a second clinic operating under the same name in San Pedro.
Gomez and Amador also created medical management companies that they used to receive funds generated by the medical clinics, which they then used to pay themselves and to pay incentives to ILWU members. These incentives were often paid as “sponsorships” of basketball or softball teams, with the understanding that the ILWU member receiving the “sponsorship” would visit, and encourage other team members to visit, Port Medical.
According to the evidence presented at trial, Port Medical chart entries were falsified to indicate that ILWU members and their dependents, including children as young as 5, had received repeated chiropractic services, including multiple sessions of massage therapy, that they had not. To accomplish this, ILWU members were asked to sign their names on multiple sign-in stickers that were used to create the fabricated chart entries, or their signatures on stickers affixed to the chart entries were simply forged.
Other evidence at trial related to instructions provided to Port Medical massage therapists on how to craft chart entries to maximize billing and make services appear to be medically necessary, a requirement for them to be covered by the ILWU-PMA Welfare Plan. Included were instructions to massage therapists never to write that a patient had indicated “no complaints,” and to make sure not to copy or write chart entries “exactly the same each time, change things up a little!!!”
According to court documents, a conservative assessment determined that the total amount of fraudulent bills was $258,913, and the health plan paid out $228,440. At last Monday’s sentencing hearing, Judge Klausner ordered Gomez to pay $201,000 in restitution to the health plan.
“This defendant managed a fraudulent scheme that targeted a program designed to provide benefits to Gomez’s fellow union members,” said United States Attorney Eileen M. Decker. “He was driven by his personal greed, and his criminal conduct undermined the union’s intention to bring medical benefits to other union members and their families.”
Amador pleaded guilty last year to one count of mail fraud and is scheduled to be sentenced by United States District Judge John A. Kronstadt on April 6.
The case against Gomez and Amador was investigated by the U.S. Department of Labor – Office of Inspector General, Office of Investigations; the U.S. Department of Labor – Employee Benefits Security Administration; and the Federal Bureau of Investigation.
“By defrauding the health plan of his fellow union members, Gomez betrayed and abused the trust of the very people his clinics purported to serve. Though this case is a sobering reminder of the often shameless nature of fraud schemes, today’s sentence sends a stern warning to those who would line their pockets at the expense of health plan participants and sponsoring employers. The Office of Inspector General will continue to work with our law enforcement partners to investigate the theft of union benefit plan assets,” stated Abel Salinas, Special Agent-in-Charge of the Los Angeles Office, Office of Inspector General, U.S. Department of Labor.
“The Employee Benefits Security Administration is pleased with the outcome of this case and hopes it serves as a warning to other potential bad actors. We will continue to work with our investigative partners to bring justice to those who commit similar crimes against the ILWU-PMA Welfare Plan, or any other employee-benefit plan,” said Crisanta Johnson, Regional Director for the Department of Labor's Employee Benefits Security Administration.
“Defendant Gomez concocted an elaborate scheme to enrich himself at the expense of his colleagues, their families and the insurance plan that protected their health,” said Deirdre Fike, the Assistant Director in Charge of the FBI's Los Angeles Field Office. “This successful prosecution was the result of a long-term effort by agents and prosecutors dedicated to combating health care fraud.”
The case was prosecuted by Assistant United States Attorney George S. Cardona, Chief of the Major Frauds Section.
Friday 13 January 2017
Whitefield Man Sentenced to Seven Years for Illegal Possession of a FirearmRead the Press Release
Contact: David B. Joyce
Assistant United States Attorney
Tel: (207) 780-3257Bangor, Maine: United States Attorney Thomas E. Delahanty II announced that Peter Poland, 44, of Whitefield, Maine, was sentenced today in U.S. District Court by Judge John A. Woodcock, Jr. to seven years in prison and three years of supervised release for being a felon in possession of a firearm. He was also sentenced to serve a consecutive term of one year and one day in prison for violating the terms of his supervised release. Poland pleaded guilty to the offense on September 28, 2016.
According to court records, in March 2016, the defendant burglarized a residence in Whitefield and stole three firearms. At the time, he was prohibited from possessing firearms because of a prior felony drug conviction for which he was on supervised release.
The investigation was conducted by the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives and the Lincoln County Sheriff’s Office.
Valencia County Woman Pleads Guilty to Federal Heroin Trafficking ChargeRead the Press Release
ALBUQUERQUE – Fabrienne Rosalinda Morales, 39, of Peralta, N.M., pled guilty today in federal court to a heroin trafficking charge. Under the terms of her plea agreement, Morales will be sentenced to not more than 24 months in federal prison followed by a term of supervised release to be determined by the court.
Morales and her co-defendant Christopher Gonzales, 20, of Rio Rancho, N.M., were arrested in Jan. 2016, on a five-count indictment charging Morales and Gonzales with conspiracy, Gonzales with possession of heroin and suboxone with intent to distribute, and Morales with distribution of heroin and suboxone. The indictment was superseded on Feb. 9, 2016, to add a new codefendant, Ismael Vargas, 29, of Belen, N.M., to the conspiracy charge. According to the superseding indictment, the three defendants committed the crimes charged on Aug. 2, 2015, in Sandoval County, N.M. At the time, Gonzales was a corrections officer at the Sandoval County Detention Center.
During today’s proceedings, Morales pled guilty to one count of heroin distribution. In entering the guilty plea, Morales admitted that on Aug. 2, 2015, she smuggled heroin to the Sandoval County Detention Center and gave it to a corrections officer. A sentencing hearing has yet to be scheduled.
Gonzales and Vargas have entered pleas of not guilty and are pending trial, which is currently scheduled for March 2017. Charges in indictments are merely accusations and defendants are presumed innocent unless found guilty in a court of law.
This case was investigated by the Albuquerque office of the DEA. Assistant U.S. Attorney Edward Han is prosecuting the case as part of the New Mexico Heroin and Opioid Prevention and Education (HOPE) Initiative. The HOPE Initiative was launched in January 2015 by the UNM Health Sciences Center and the U.S. Attorney’s Office in response to the national opioid epidemic, which has had a disproportionately devastating impact on New Mexico. Opioid addiction has taken a toll on public safety, public health and the economic viability of our communities. Working in partnership with the DEA, the Bernalillo County Opioid Accountability Initiative, Healing Addiction in our Community (HAC), the Albuquerque Public Schools and other community stakeholders, HOPE’s principal goals are to protect our communities from the dangers associated with heroin and opioid painkillers and reducing the number of opioid-related deaths in New Mexico.
The HOPE Initiative is comprised of five components: (1) prevention and education; (2) treatment; (3) law enforcement; (4) reentry; and (5) strategic planning. HOPE’s law enforcement component is led by the Organized Crime Section of the U.S. Attorney’s Office and the DEA in conjunction with their federal, state, local and tribal law enforcement partners. Targeting members of major heroin and opioid trafficking organizations for investigation and prosecution is a priority of the HOPE Initiative. Learn more about the New Mexico HOPE Initiative at http://www.HopeInitiativeNM.org.
United States Attorney’s Office Reaches Settlement with Luzerne County over Polling Place Access for VotersRead the Press Release
SCRANTON- The United States Attorney’s Office for the Middle District of Pennsylvania announced today a settlement with Luzerne County under Title II of the Americans with Disabilities Act (ADA) to improve physical accessibility at the county’s polling places for individuals who use wheel chairs and other mobility aids, and for individuals who are blind or have vision impairments.
According to United States Attorney Bruce D. Brandler, in the November 3, 2015 general election, the United States Attorney’s Office along with an architect from the Department of Justice surveyed 52 of the county’s 180 polling place locations. The survey resulted in a finding that many of the county’s polling places contain barriers to access for persons with disabilities.
Title II of the ADA prohibits discrimination on the basis of disability by a state or local
government in any of its programs or services, including its voting program. Thus, the ADA requires Luzerne County to select and use polling places that are accessible.
Luzerne County is working collaboratively with the United States Attorney’s Office to make all polling places accessible. Under the terms of the agreement, the county will use an evaluation form for each current and prospective polling place based on ADA architectural standards. The settlement requires the county to either relocate inaccessible polling places to new, accessible facilities, or to use temporary measures such as portable ramps, signs, traffic cones and doorbells, where appropriate to ensure accessibility on Election Day.
“The right to vote is the foundation of our democracy,” said U.S. Attorney Bruce D. Brandler. “We applaud Luzerne County’s commitment to ensure that all persons with disabilities have equal opportunities to vote in person at their polling places alongside their neighbors.”
This investigation was handled by Assistant United States Attorney Michael J. Butler with the assistance of the United States Department of Justice, Civil Rights Division (Disability Rights Section).
Those interested in finding out more about the ADA can access the ADA website at www.ada.gov.
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Ukrainians Sentenced to 25 Years in Federal Prison for Smuggling $10 Million of Cocaine on “Ghost Ship”Read the Press Release
Tampa, Florida – U.S. District Judge Susan C. Bucklew today sentenced Igor Polshyn (42, Yalta, Ukraine) and Oleskii Tsurkan (52, Moscow, Russia) each to 25 years in federal prison for conspiring to possess and possessing with the intent to distribute five kilograms or more of cocaine on a vessel subject to the jurisdiction of the United States. A federal jury found them guilty on September 30, 2016.
According to testimony and evidence presented at trial, on November 7, 2015, a U.S. Customs and Border Protection P-3 Orion aircraft detected a sailboat 56 miles south of the Dominican Republic, traveling at night on the high seas with no lights, and on a course to travel through the Mona Passage between the Dominican Republic and Puerto Rico. The Orion crew alerted the United States Coast Guard, which dispatched the USCG Cutter Bernard C. Webber to interdict the vessel. The Webber interdicted the sailboat 26 miles south of the Dominican Republic, still on a course to take it through the Mona Passage. The sailboat flew the Spanish flag and bore a Spanish registration number on the stern. Polshyn was the master of the vessel and Tsurkan was its sole crew member.
The Coast Guard eventually boarded the sailboat and, during an initial safety sweep, found over 100 kilograms of cocaine over a bilge access. The Coast Guard ultimately recovered an additional 270 kilograms of cocaine, for a total of 370 kilograms (814 lbs.) of cocaine, including cocaine commingled with the food supplies of the crew. Officials from DEA-Madrid and the Coast Guard Investigative Service traced the vessel registration number back to a sailboat near Barcelona, Spain. The sailboat interdicted by the Coast Guard was a “ghost ship,” using the stolen identity of the vessel in Barcelona to mask its true identity. The recovered cocaine had an approximate wholesale value of $10 million.
This case was investigated by the Panama Express Strike Force, an Organized Crime Drug Enforcement Task Force (OCDETF) comprised of agents and analysts from the Drug Enforcement Administration, the Federal Bureau of Investigation, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, the United States Coast Guard Investigative Service, the Naval Criminal Investigative Service, and U.S. Southern Command's Joint Interagency Task Force South. The principal mission of the OCDETF program is to identify, disrupt, and dismantle the most serious drug trafficking and money laundering organizations and those primarily responsible for the nation’s drug supply. It was prosecuted by Assistant United States Attorney Thomas N. Palermo.
U.S. Attorney Joyce White Vance Retiring After 25 Years as Federal ProsecutorRead the Press Release
BIRMINGHAM – U.S. Attorney Joyce White Vance announced today that she will retire from the Department of Justice, effective at midnight Jan. 19, after 25 years as a federal prosecutor.
“It has been an honor to serve the Northern District of Alabama as U.S. Attorney for the past 7½ years,” Vance said. “I thank the dedicated men and women in my office, and our federal, state and local law enforcement partners, for their tireless dedication. They serve with competence, integrity and a commitment to public service, and they honored me with their trust in my leadership. Together, we’ve taken on a full spectrum of challenges and have left our communities safer, while protecting the civil rights of all who live here.”
“Since the first year of the Obama Administration, U.S. Attorney Joyce White Vance has served the people of the Northern District of Alabama – and all of the American people – with compassion and integrity,” said Attorney General Loretta E. Lynch. “During her tenure, she oversaw the development of a comprehensive initiative to tackle opioid and heroin addiction. She helped lead an ongoing investigation into abuse in Alabama prisons. She fought corruption and brought actions to protect the rights of immigrants. And she has been a valuable partner in the department’s efforts to improve relationships between police officers and the people they serve, including by welcoming me to Birmingham in 2015 during my Community Policing Tour. In these and in so many other ways, Joyce has been a dedicated servant of the law and a tireless champion of justice. I thank her for her outstanding contributions to the Department of Justice, and I wish her well in her future endeavors.”
Vance was one of the first five U.S. Attorneys nominated by President Barack Obama. The Senate unanimously confirmed her nomination on Aug. 7, 2009. Before her appointment as U.S. Attorney, Vance spent 18 years in the federal prosecutor’s office, last serving as chief of its Appellate Division. Before that, she served as both an appellate lawyer and as a criminal prosecutor. Vance served on Attorney General Eric Holder’s Advisory Committee from 2009-2011.
During her seven years as the chief federal law enforcement officer for the 31-county Northern District of Alabama, Vance maintained a keen commitment to protecting civil rights. That commitment was reflected in some of the key civil and criminal cases that the office pursued, including the successful challenge of Alabama’s 2011 HB56 immigration law and the first-ever statewide investigation into conditions and sexual abuse in Alabama’s prisons for men. She also worked with the University of Alabama to develop an action plan to increase diversity of the University’s Greek system and entered into a settlement agreement with Jefferson County that rectified violations of the Americans with Disabilities Act at polling places. Vance partnered with the Department of Justice Civil Rights Division to bring Alabama into compliance with the Motor Voter Act.
In criminal civil rights matters, Vance’s office successfully prosecuted a string of “color of law” cases involving violent police misconduct and prosecuted a hate crime involving a defendant who tried to hire an undercover FBI agent, who he believed was a Ku Klux Klan hitman, to murder his African American neighbor.
Vance developed a community-wide initiative to combat heroin and prescription opiate addiction, based on the belief that it was not a problem we could “arrest our way out of.” She combined prosecutions of significant heroin traffickers with the creation of a Pills to Needles Initiative with the University of Alabama at Birmingham School of Public Health and the Jefferson County Department of Health that educated the public about the resurgence of heroin before it was widely recognized, and worked with a broad array of partners to identify and develop prevention and treatment opportunities.
Vance also worked closely with state and local law enforcement, in Birmingham and other cities, to establish violence reduction programs and to improve police-community relationships. Birmingham was one of six pilot cities for the National Initiative for Building Community Trust and Justice.
Recognizing that a smart criminal justice system focuses not only on enforcement work, but also on prevention and successful reentry to the community by former inmates, Vance initiated a project that seeks to identify and remove barriers to successful reentry, in order to reduce recidivism. That work included championing local businesses that successfully adopted ban-the-box employment practices to help people with criminal records find jobs, and creating a legal clinic at the University of Alabama School of Law to help people obtain driver’s licenses and overcome other obstacles to building productive lives.
Among the key criminal prosecutions during Vance’s tenure, the office prosecuted the state’s first material support of terrorism case in 2012. An Uzbek national was convicted and sentenced to more than 15 years in jail for providing material support to terrorism, threatening to kill President Barack Obama and illegally possessing a weapon.
The office also prosecuted Jonathan Dunning who, as the CEO of two non-profit health clinics meant to provide care to low-income individuals, fraudulently diverted $16 million in money and property for his personal benefit. Dunning was sentenced to 18 years in prison. Another of the office’s multi-million-dollar fraud prosecutions saw the conviction of Maurice William Campbell Jr., former state director of a consortium of business development centers, for a scheme to defraud the State of Alabama of more than $7 million. Campbell was sentenced to 15 years in prison.
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U.S. Attorney Files Civil Rights Suit Against National Developer to Remedy Pattern and Practice of Inaccessible Construction of Rental BuildingsRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced today that the United States has filed a federal civil rights lawsuit against EQUITY RESIDENTIAL and its affiliate ERP OPERATING L.P. (together, “EQUITY RESIDENTIAL”) to require them to remedy conditions at 170 Amsterdam Avenue, a large rental complex in Manhattan that was completed in 2015, to make the building accessible to people with disabilities and to ensure that EQUITY RESIDENTIAL will take steps to make accessible the multiple rental complexes that it is currently developing.
Manhattan U.S. Attorney Preet Bharara said: “With today’s lawsuit, we seek to ensure that a national developer, Equity Residential, not only will fix the inaccessible conditions at 170 Amsterdam Avenue, but also do what is necessary to ensure accessibility at its ongoing construction projects. This is one of more than a dozen suits this Office has brought in recent years to fulfill the Fair Housing Act’s promise of accessibility for people with disabilities.”
The Fair Housing Act’s (“FHA”) accessible design and construction provisions require multifamily housing complexes constructed after January 1991 to have basic features accessible to persons with disabilities. According to the allegations in the Complaint, EQUITY RESIDENTIAL has engaged in a pattern and practice of FHA violations by designing and constructing numerous rental buildings that contain inaccessible conditions, including 170 Amsterdam Avenue as well as earlier constructions like the 1210 Mass Apartments in Washington, D.C., and The Veridian in Silver Spring, Maryland.
According to the Complaint filed today in Manhattan, in 2015, EQUITY RESIDENTIAL designed and constructed 170 Amsterdam Avenue, a 236-unit rental complex on the upper west side of Manhattan, with inaccessible conditions similar to those present at the 1210 Mass Apartments and The Veridian. As alleged, the inaccessible conditions at 170 Amsterdam Avenue include excessively high thresholds from individual apartments to private gardens, insufficiently wide doorways within individual apartments, and insufficient clear width at the entrance to the on-site fitness center. The Complaint also alleges that EQUITY RESIDENTIAL currently is actively involved in designing and constructing several other rental buildings, including in San Francisco, Washington, D.C., and Seattle.
In the Complaint, the United States seeks a court order requiring EQUITY RESIDENTIAL to make appropriate retrofits at 170 Amsterdam Avenue and to take steps necessary to ensure that the rental buildings EQUITY RESIDENTIAL is currently developing will be designed and constructed in compliance with the FHA’s accessibility requirements.
EQUITY RESIDENTIAL was previously sued in 2006, in Maryland, for not complying with the FHA in constructing rental buildings like the 1210 Mass Apartments and The Veridian. In March 2016, the court presiding over the Maryland lawsuit issued a decision finding that EQUITY RESIDENTIAL had violated the FHA’s accessibility requirements in constructing seven rental buildings, including the 1210 Mass Apartments and The Veridian. In December 2016, EQUITY RESIDENTIAL settled the Maryland lawsuit and agreed to remedy inaccessible conditions at the 1210 Mass Apartments and The Veridian and the other five rental buildings. However, the settlement of the Maryland lawsuit did not address the lack of accessible features at 170 Amsterdam Avenue, which was designed and constructed even while the Maryland suit was pending.
The case is being handled by the Office’s Civil Rights Unit. Assistant U.S. Attorneys Li Yu, Jacob Lillywhite, Jessica Jean Hu, and Natasha Teleanu are in charge of the case.
Two Men Pleaded Guilty to Armed Robbery of Multiple Bay Area BusinessesRead the Press Release
OAKLAND, Calif. – Shawan I. Spragans and Merl J. Simpson each pleaded guilty in federal court in Oakland today to robbery affecting interstate commerce (Hobbs Act robbery), conspiracy to commit Hobbs Act robbery, attempted Hobbs Act robbery, discharging a firearm in furtherance of Hobbs Act robbery, and being a felon in possession of firearms, announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge John F. Bennett.
In pleading guilty, Spragans, 41, of Oakland, and Simpson, 47, of Antioch, admitted to participating in a conspiracy to commit robberies in Northern District of California from around February 2016 until April 2016. The pair specifically admitted to committing the armed robbery of a Walgreens pharmacy in Berkeley, Calif.; a bar-b-que restaurant on Shattuck Avenue in Berkeley, Calif.; an Ethiopia food restaurant on Telegraph Avenue in Berkeley, Calif.; and the attempted robbery of a bar on Dolores Street in San Francisco. Spragans and Simpson also admitted that Spragans discharged a firearm during and in furtherance of the robbery of the Ethiopian restaurant.
Further, according to the plea agreements, Spragans, Simpson, and a co-conspirator agreed to rob all of these businesses at gunpoint. On March 3, 3016, Spragans and a co-conspirator entered the Walgreens wearing masks, gloves, and dark-colored clothing, pointed a firearm at Walgreens employees and customers, and stole cash from the Walgreens. Simpson drove the getaway vehicle. On March 20, 2016, Spragans and a co-conspirator entered the bar-b-que restaurant wearing masks and dark clothing, and forced three employees at gunpoint to stand still while Spragans and his co-conspirator robbed the restaurant. They fled the restaurant with the stolen cash, and Simpson drove them all away in the getaway vehicle. On April 7, 2016, Spragans and a co-conspirator entered the Ethiopian food restaurant wearing masks and dark clothing. They each pointed revolvers at two female employees and robbed them of the restaurant’s cash. Spragans entered the kitchen and encountered another employee, who struggled with Spragans as the employee attempted to escape. During that physical encounter, Spragans revolver was fired while pointed in the direction of the employee. The bullet missed the employee. Spragans and his co-conspirator then fled the restaurant with the stolen cash, and Simpson drove them all away in the getaway vehicle. In addition, on April 21, 2016, Spragans and Simpson attempted to rob the bar on Dolores at gunpoint; however, they were encountered by police who were already in place conducting surveillance on the location. The police apprehended and arrested Spragans and Simpson as they attempted to flee the area. The police also arrested a co-conspirator who was waiting in the getaway car.
Spragans and Simpson were arrested on April 21, 2016, by local law enforcement and initially remained in state custody. Spragans and Simpson were indicted federally on June 30, 2016, and made their initial appearance in federal court on July 7, 2016. They have since remained in federal custody.
Spragans’s and Simpson’s sentencing hearings are scheduled for April 5, 2017, before U.S. District Judge Yvonne Gonzalez Rogers. The maximum statutory penalties are (1) life in prison for discharging a firearm in relation to a crime of violence, in violation of 18 U.S.C. § 924(c)(1)(A)(iii); (2) twenty years in prison for Hobbs Act robbery, in violation of 18 U.S.C. § 1951(a); and (3) ten years in prison for being a felon in possession of a firearm, in violation of 18 U.S.C. § 922(g)(1). However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant U.S. Attorney Bill Gullotta is prosecuting the case with the assistance of Michelle Alter Eck and Trina Khadoo. The prosecution is the result of an investigation by the FBI and the Berkeley Police Department.
Two Louisiana Men Sentenced for Roles in On-line Pharmacy SchemeRead the Press Release
PITTSBURGH – Two Louisiana residents have been sentenced in federal court to three years of probation, a forfeiture of $433,833.00 and $2,000 fine on their convictions of fraud conspiracy, wire fraud, mail fraud and money laundering, Acting United States Attorney Soo C. Song announced today.
Chief United States District Judge Joy Flowers Conti imposed the sentence on Anthony Rouse III, 40, of Thibodaux, Louisiana, and Troy Tapia, 46, of Morgan City, Louisiana.
According to the information presented to the court, the court was informed that Anthony Rouse III and Troy Tapia fulfilled US orders from Duangthip Chutivaraporn who operated a series of online pharmacy web sites that offered a wide variety of prescription drugs for sale to United States customers without the need of a prescription or a medical history. There was no physician monitoring drugs used by the customers or requirement of any diagnosis in order to purchase or receive these prescription drugs. The site defrauded customers with false representations as to the legality of obtaining prescription drugs without a prescription. Rouse and Tapia fulfilled orders for Nubain and Fioricet and received payment for their services by means of deposits of their portion of the sale proceeds to foreign bank accounts accessible to them by debit cards.
Assistant United States Attorney Paul E. Hull prosecuted this case on behalf of the government.
Acting United States Attorney Song commended the U.S. Food and Drug Administration, Office of Criminal Investigations; the U.S. Immigration Customs Enforcement, Homeland Security Investigations; the Federal Bureau of Investigation and the Internal Revenue Service, Criminal Investigation; for the investigation leading to a successful prosecution.
Two Defendants Sentenced in $4 Million, Armed, Multistate Jewelry Store RobberiesRead the Press Release
PANAMA CITY, FLORIDA – Abigail Lee Kemp, 25, of Smyrna, GA, was sentenced to 10 years in prison today for conspiracy, interfering with commerce by robbery, and using a firearm during a crime of violence. Larry Bernard Gilmore, 43, of Atlanta, GA, was sentenced to 32 years in prison. They were ordered to pay $1,499,690 in restitution. The sentencing hearings for co-conspirators Lewis Jones III, 36, and Michael Bernard Gilmore, 47, both of Atlanta, GA, were continued to February 16 at 2:00 p.m. The sentences were announced by Christopher P. Canova, United States Attorney for the Northern District of Florida.
Between April 2015 and January 2016, the conspirators committed armed robberies of six jewelry stores in Panama City Beach, Florida; Woodstock and Dawsonville, Georgia; Bluffton, South Carolina; Sevierville, Tennessee; and Mebane, North Carolina. More than $4 million of jewelry was stolen during the time frame of the conspiracy.
After the April 2015 robbery, Jones and the Gilmores began training Kemp to rob the jewelry stores on her own. The training took place at the Gilmore's window tint shop in Atlanta, Georgia. Jones and the Gilmores reviewed jewelry store layouts with Kemp and taught her how to handle a gun, secure employees with zip ties, and what merchandise to steal. They also gave Kemp various code words, decided her clothes and disguises, and then purchased supplies for her. Jones and the Gilmores always selected the dates and locations of the jewelry stores to be robbed.
Thereafter, Kemp would enter an outlet mall jewelry store at approximately the same time of day, brandish a firearm, order the employees to the back of the store, and force them to lie face down while she zip tied their hands behind their backs. Hundreds of thousands of dollars-worth of jewelry was then removed from the jewelry display cases. Kemp would use an earpiece to communicate with her conspirators while Jones and the Gilmores conducted surveillance and security outside.
In December 2015, a jewelry store manager believed Kemp matched the description of the white female who was previously linked to the armed robberies of various jewelry stores in the southeast. The store manager requested that another employee contact the police. The conspirators decided to call off the robbery and left the store. Five days later, they robbed the Mebane, North Carolina, jewelry store.
This case resulted from an investigation by the Federal Bureau of Investigation and the Panama City Beach Police Department. Assistant United States Attorneys Kathryn D. Risinger and Michael J. Frank prosecuted the case.
The United States Attorney's Office for the Northern District of Florida is one of 94 offices that serve as the nation’s principal litigators under the direction of the Attorney General. To access available public court documents online, please visit the U.S. District Court for the Northern District of Florida website. For more information about the United States Attorney’s Office, Northern District of Florida, visit http://www.justice.gov/usao/fln/index.html.
For more information, contact:
Amy Alexander, Public Information Officer(850) 216-3854, [email protected]
Three Corporate Executives Sentenced to Federal Prison for Bribing Dekalb County & Georgia World Congress Center Authority OfficialRead the Press Release
ATLANTA – Anthony Lepore, John Rife, and Brian Domalik, the former President, Regional Vice President, and Division Manager for Rite Way Service, Inc., have been sentenced for conspiracy, bribery and honest services fraud for their roles in a multi-year, multi-million-dollar scheme to bribe a public official who was employed with DeKalb County government and the Georgia World Congress Center Authority.
“Public corruption, whether it’s corrupt officials who take bribes or the boardroom executives who pay them, is absolutely unacceptable,” said U.S. Attorney John Horn. “These sentences should provide a measure of justice to the businesses across the State of Georgia that do business honestly, ethically, and lawfully.”
“This sentencing of three corporate executives brings to close an extensive federal public corruption investigation conducted by the FBI with assistance from the GBI. This case makes it very clear to all that those engaged in enticing public officials via bribes, kickbacks or quid pro quos, are subject to investigation and prosecution as well. The FBI asks that anyone with information regarding similar such activities involving public corruption to contact their nearest FBI field office,” said David J. LeValley, Special Agent in Charge, FBI Atlanta Field Office.
According to U.S. Attorney Horn, the charges and other information presented in court: Lepore was the President and CEO of Rite Way Service, Inc., an Alabama-based company that sought to do business with both DeKalb County and the Georgia World Congress Center Authority (GWCCA), a state government entity that manages the Georgia World Congress Center, the Georgia Dome, Atlanta’s Centennial Olympic Park, and other properties. Rife was the Rite Way Regional Vice President who oversaw the company’s Georgia Division, based in Norcross, Georgia. Domalik was the Division Manager in charge of Rite Way’s Georgia Division between 2010 and 2014.
Beginning in the summer of 2005, Lepore, Rife, and former Rite Way Georgia Division Manager Cecil Clark conspired to bribe Patrick Jackson, a public official who was simultaneously working full time as a contracting official for DeKalb County and the GWCCA, in connection with janitorial services contracts with those government entities. The government contracts were worth millions of dollars. The bribes amounted to over $100,000 in payments for Jackson’s rent, utilities, and a garage lease for a luxury apartment over a six-year period in downtown Atlanta, as well as cash payments, over $24,000 in furniture for the apartment, a $5,100 deposit for event space for a party that that Jackson threw, and other benefits. Domalik joined the conspiracy in late 2010, when Clark resigned from Rite Way, and continued the scheme with Lepore and Rife through 2012.
In exchange for the payments and other benefits from Rite Way, Jackson used his position as a public official to help Rite Way win, maintain and increase profits from multi-year janitorial services contracts with DeKalb County and the GWCCA worth millions of dollars.
Patrick Jackson, 55, of Loganville, Georgia, was indicted by a federal grand jury on September 9, 2014 on one count of conspiracy to commit honest services fraud, and nine counts of honest services fraud. Jackson pleaded guilty to one count of conspiracy, and was sentenced to four years, three months in federal prison, ordered to pay restitution to DeKalb County and GWCCA, and fined $20,000.
Cecil Clark, 55, of Jonesboro, Georgia, waived indictment and pleaded guilty to a Criminal Information charging him with conspiracy to commit bribery on May 26, 2015. Ultimately, Clark was sentenced to serve one year, one month in federal prison, ordered to pay restitution to DeKalb County and GWCCA, and fined $20,000.
Anthony Lepore, 64, of Birmingham, Alabama, was sentenced to nine years in prison, to be followed by two years of supervised release. He was fined $115,000, and ordered to pay $165,415 in restitution.
John Rife, 66, of Cumming, Georgia, was sentenced to three years, one month in prison, to be followed by three years of supervised release. He was fined $100,000, and ordered to pay $168,715 in restitution.
Brian Domalik,49, of Kennesaw, Georgia, was sentenced to one year, eight months in prison, to be followed by two years of supervised release. He was fined $25,000, and ordered to pay $45,408 in restitution.
This case was investigated by the Federal Bureau of Investigation. Valuable assistance was also provided by the Georgia Bureau of Investigation.
Assistant U.S. Attorney Kamal Ghali prosecuted the case. Former Assistant U.S. Attorneys Jamie L. Mickelson and David M. Chaiken previously prosecuted this matter.
For further information please contact the U.S. Attorney’s Public Affairs Office at [email protected] or (404) 581-6016. The Internet address for the U.S. Attorney’s Office for the Northern District of Georgia is http://www.justice.gov/usao-ndga.
The Justice Department and EPA Reach Clean Water Act Settlement with Pepco to Reduce Pollution to Anacostia RiverRead the Press Release
The Department of Justice and the U.S. Environmental Protection Agency announced today a settlement with the Potomac Electric Power Company (Pepco) for alleged violations of Pepco’s Clean Water Act permit at its service center located in Anacostia. Under the settlement, Pepco will implement a number of measures to reduce metals in stormwater entering into its drainage system and will install an in-pipe treatment system to further treat the stormwater, which discharges into the Anacostia River. Pepco also will pay a civil penalty of $1.6 million. Pepco also agreed to perform a mitigation project to eliminate stormwater discharges from another outfall at the facility, and will pay an additional stipulated penalty of $500,000 if it fails to put the project into operation.
The United States filed its complaint in October, 2015, in the US District Court for the District of Columbia and alleged violations of limits in the EPA Clean Water Act Permit for metals, including copper, zinc, iron and nickel, and total suspended solids (TSS). The consent decree filed with the court today requires Pepco to put into place Best Management Practices or BMPs to prevent the metals and other pollutants from entering into Pepco’s stormwater drainage system, including booms and filters at each drain leading into the system, as well as enhanced inspections and other measures. In addition, Pepco will install in-pipe treatment systems in several areas to remove the metals from the stormwater in the drainage system until the permit limits are met. Pepco also will implement a mitigation project using vegetation and a holding pond to capture and treat stormwater that currently drains from the Benning Street facility into the Anacostia River.
At 8.7 miles, the Anacostia River is a major tributary of the Potomac River, which ultimately flows into the Chesapeake Bay. The Anacostia River is impaired for organics, heavy metals and sediment. EPA and its state partners, including the District of Columbia, have focused efforts on addressing pollution in the Anacostia River in the past decade, through Clean Water Act permits, judicial consent decrees and other regulatory mechanisms.
“This agreement will aid the continuing recovery of the Anacostia River by cleaning up contaminated stormwater from this Pepco facility,” said Assistant Attorney General John C. Cruden. “This is part of the ongoing and substantial efforts by EPA and the Department of Justice to address sources of water pollution and bring great American rivers like the Anacostia back to health. I have personally kayaked the River and know its importance in our Washington, D.C. ecosystem.”
“Controlling stormwater runoff is essential to protecting and restoring our urban waterways” said EPA Regional Administrator Shawn M. Garvin. “This settlement underscores EPA’s commitment to continuing the progress that we and our partners have made along the Anacostia.”
The Pepco facility historically included a power plant that was shut down in 2012 and has been removed. The property is also the subject of an on-going study and clean-up of soil and other contamination being performed under a consent decree with the District of Columbia Department of Energy and Environment.
On March 28, 2016, the District Court granted the request of the Anacostia Riverkeeper, an environmental organization, to intervene in the lawsuit.
The consent decree was lodged in the District Court for the District of Columbia. Notice of the lodging will appear in the Federal Register. The Decree is subject to a public comment period of not less than 30 days before the consent decree can be entered by the court. The consent decree can be viewed at www.justice.gov/enrd/consent-decrees.
Takata Corporation Agrees to Plead Guilty and Pay $1 Billion in Criminal Penalties for Airbag SchemeRead the Press Release
Three Takata Executives Charged with Wire Fraud and Conspiracy
Tokyo-based Takata Corporation, one of the world’s largest suppliers of automotive safety-related equipment, agreed to plead guilty to wire fraud and pay a total of $1 billion in criminal penalties stemming from the company’s fraudulent conduct in relation to sales of defective airbag inflators. An indictment was also unsealed charging three Takata executives with wire fraud and conspiracy in relation to the same conduct.
U.S. Attorney Barbara McQuade of the Eastern District of Michigan, Chief Andrew Weissmann of the Fraud Section of the Justice Department’s Criminal Division, Special Agent in Charge David P. Gelios of the FBI’s Detroit Field Office and Inspector General Calvin L. Scovel III of the U.S. Department of Transportation Office of Inspector General made the announcement.
“Automotive suppliers who sell products that are supposed to protect consumers from injury or death must put safety ahead of profits,” said U.S. Attorney McQuade. “If they choose instead to engage in fraud, we will hold accountable the individuals and business entities who are responsible.”
“For more than a decade, Takata repeatedly and systematically falsified critical test data related to the safety of its products, putting profits and production schedules ahead of safety,” said Fraud Section Chief Weissmann. “This announcement is the latest in the automotive industry enforcement actions the Fraud Section has taken to protect U.S. consumers against fraud.”
“Today’s criminal charges of the Takata Corporation and three of its employees should be a reminder to other corporations and their employees that if they commit fraud, the FBI and its law enforcement partners will ensure they are held accountable for their actions,” said Special Agent in Charge Gelios. “Whether it is the manipulation of test results which impact customer safety, defective product development or any other type of fraud, we will continue to aggressively investigate corporate fraud allegations to protect consumers in the United States and elsewhere.”
“I offer my deepest sympathies to the families and friends of those who died and to those who were injured as a result of the Takata Corporation’s failure to fulfill its obligation to ensure the safety of its airbag systems,” said Inspector General Scovel. “Because safety is and will remain the highest priority for my office, we will continue to work tirelessly with our law enforcement and prosecutorial partners in pursuing those who commit criminal violations of transportation-related laws and regulations. Along with similar settlements with General Motors in September 2015 and Toyota in March 2014, today’s agreement makes clear to all auto manufacturers and parts suppliers their duty in keeping the public safe.”
According to the company’s admissions, in the late 1990s, Takata began developing airbag inflators that relied upon ammonium nitrate as their primary propellant. From at least in or around 2000, Takata knew that certain ammonium nitrate-based inflators were not performing to the specifications required by the auto manufacturers. Takata also knew that certain inflators had sustained failures, including ruptures, during testing. Nevertheless, Takata induced its customers to purchase these airbag systems by submitting false and fraudulent reports and other information that concealed the true condition of the inflators. This fraudulent data made the performance of the company’s airbag inflators appear better than it actually was, including by omitting that, in some instances, inflators ruptured during testing. Takata employees – including a number of key executives – routinely discussed the falsification of test reports being provided to Takata’s customers in email and in verbal communications. Even after the inflators began to experience repeated problems in the field – including ruptures causing injuries and deaths – Takata executives continued to withhold the true and accurate inflator test information and data from their customers.
In addition, Takata took no disciplinary actions against those involved in the falsification of test data until 2015, despite the fact that senior executives had been made aware of the fraudulent conduct years earlier.
Takata has agreed to plead guilty to a one-count criminal information filed today in the Eastern District of Michigan and assigned to U.S. District Judge George Caram Steeh, charging the company with one count of wire fraud. Under the terms of the agreement, Takata will pay a total criminal penalty of $1 billion, including $975 million in restitution and a $25 million fine. Two restitution funds will be established: a $125 million fund for individuals who have been physically injured by Takata’s airbags and who have not already reached a settlement with the company, and a $850 million fund for airbag recall and replacement costs incurred by auto manufacturers who were victims of Takata’s fraud scheme. A court-appointed special master will oversee administration of the restitution funds. Takata has also agreed to implement rigorous internal controls, retain a compliance monitor for a term of three years and cooperate fully with the department’s ongoing investigation, including its investigation of individuals.
The three Takata executives – Shinichi Tanaka, 59; Hideo Nakajima, 65; and Tsuneo Chikaraishi, 61, all Japanese citizens – were each charged in an indictment filed on Dec. 7, 2016, in the Eastern District of Michigan with one count of conspiracy to commit wire fraud and five counts of wire fraud for their alleged conduct in connection with the above-described fraud scheme.
The department reached this resolution based on a number of factors, including Takata’s extensive cooperation with the government’s investigation. However, the company did not receive more significant mitigation credit, either in the penalty or the form of resolution, because of the nature of the conduct to which the company is pleading guilty, including the approximate 15-year duration of the fraud, the pervasiveness of the scheme into the executive level of management and the potential risk the fraud posed to drivers and passengers.
An indictment is merely an allegation and all defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
The FBI and the U.S. Department of Transportation’s Office of Inspector General investigated the case. Assistant Chief Robert Zink and Trial Attorneys Brian K. Kidd, Christopher D. Jackson and Andrew R. Tyler of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys John K. Neal, Erin S. Shaw and Andrew J. Yahkind of the Eastern District of Michigan are prosecuting the case. The Criminal Division’s Office of International Affairs also provided assistance.