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12 January 2017
Baxter Healthcare Corporation to Pay More Than $18 Million to Resolve Criminal and Civil Liability Relating to Sterile ProductsRead the Press Release
WASHINGTON - Healthcare company Baxter Healthcare Corporation (Baxter) has agreed to pay $18.158 million to resolve its criminal and civil liability arising from Baxter’s failure to follow current Good Manufacturing Practices (cGMP) when manufacturing sterile drug products in North Carolina, the Department of Justice announced today. Today’s resolution includes a deferred prosecution agreement and penalties and forfeiture totaling $16 million and a civil settlement under the False Claims Act (FCA) with the federal government totaling approximately $2.158 million. Baxter is a Delaware corporation and subsidiary of Baxter International Inc., headquartered in Deerfield, Illinois, with many manufacturing facilities throughout the United States and the world, including one in Marion, North Carolina (North Cove).
In a criminal information filed today in the Western District of North Carolina, the government charged that, between July 2011 and November 2012, Baxter introduced into interstate commerce drugs that were adulterated under the Federal Food, Drug, and Cosmetic Act (FDCA) because Baxter did not follow cGMP when making those products. At North Cove, Baxter manufactured large-volume sterile intravenous (IV) solutions in a clean room that had high-efficiency particulate absorption (HEPA) filters installed in the ceiling. Air was pushed into the clean room through the HEPA filters. As alleged in the information, during the relevant time period, a Baxter employee reported the presence of mold on the HEPA filters to plant management. However, Baxter continued to manufacture IV solutions in that clean room for months while the filters the employee had identified as moldy remained in place. Subsequent testing of the filters following an unannounced U.S. Food and Drug Administration (FDA) inspection revealed several mold species on the filters. There was no evidence of impact on the IV solutions from the mold found on the filters.
In a deferred prosecution agreement to resolve the charge, Baxter admitted that it distributed products in interstate commerce that were adulterated in violation of the FDCA. Under the terms of the deferred prosecution agreement, Baxter will pay a total of $16 million in monetary penalties and forfeiture and will implement enhanced compliance provisions, including periodic certifications to the government concerning its implementation of those provisions. The deferred prosecution agreement will not be final until accepted by the U.S. District Court.
“Following current Good Manufacturing Practices is essential to ensure the safety and efficacy of our drugs,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “Today’s settlement shows that the government will continue to hold companies accountable for failing to fulfill this critically important responsibility.”
“Despite notification by an employee of potential contamination concerns, Baxter was poorly focused on instituting sufficient safety standards for their products,” said U.S. Attorney Jill Westmoreland Rose for the Western District of North Carolina (WDNC). “Today’s resolution reflects WDNC’s commitment to hold accountable drug companies that violate manufacturing standards and wrongly profit from those violations.”
“FDA’s manufacturing standards are designed to ensure the quality, safety, and efficacy of drugs distributed to American consumers, and FDA expects pharmaceutical companies to correct deficiencies in an expedited manner,” said Special Agent in Charge Justin Green of FDA’s Office of Criminal Investigations, Miami Field Office. “We will remain vigilant in our efforts to protect the U.S. public health from potentially dangerous products.”
In addition, Baxter will pay approximately $2.158 million to resolve allegations that the company violated the FCA by submitting false claims to the Department of Veterans Affairs based upon Baxter’s failure to follow cGMPs.
The civil settlement resolves a lawsuit filed by Christopher Wall, an employee of Baxter, under the whistleblower provision of the False Claims Act, which permits private parties to file suit on behalf of the United States for false claims and share in a portion of the government’s recovery. The civil lawsuit was filed in the Western District of North Carolina and is captioned United States ex rel. Christopher Wall v. Baxter International, Inc. et al., No. 13cv42 (W.D.N.C.). Mr. Wall will receive $431,535.99 from the proceeds of the civil settlement.
This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $31.4 billion through False Claims Act cases, with nearly $19.6 billion of that amount recovered in cases involving fraud against federal health care programs.
The settlement with Baxter was the result of a coordinated effort among the U.S. Attorney’s Office for the Western District of North Carolina and the Civil Division’s Consumer Protection Branch and Commercial Litigation Branch, with assistance from the FDA’s Office of Chief Counsel. The criminal investigation was conducted by the FDA’s Office of Criminal Investigations.
Except as to conduct admitted in connection with the deferred prosecution agreement, the claims settled by the civil agreement are allegations only and there has been no determination of civil liability.
For more information about the Consumer Protection Branch and its enforcement efforts, visit its website at http://www.justice.gov/civil/consumer-protection-branch. For more information on the Commercial Litigation Branch’s Fraud Section, visit https://www.justice.gov/civil/fraud-section. For more information about the U.S. Attorney’s Office for the Western District of North Carolina, visit https://www.justice.gov/usao-wdnc.
Bank Manager Indicted on Embezzlement ChargeRead the Press Release
Deirdre M. Daly, United States Attorney for the District of Connecticut, today announced that on January 6, 2017, a federal grand jury in New Haven returned an indictment alleging that CARRIE CAESAR, 46, of New Britain, embezzled funds from her employer, Webster Bank Corporation, where she served as bank manager of the Avon branch office.
According to the indictment and statements made in court, between approximately 2003 and 2016, CAESAR withdrew money from account holders’ certificate of deposit (CD) accounts at Webster Bank, without the knowledge or consent of the account holders, used the embezzled funds for her own purposes, and took steps to conceal her misconduct.
The indictment charges CAESAR with one count of embezzlement by a bank officer or employee, an offense that carries a maximum term of imprisonment of 30 years.
On January 10, 2017, CAESAR appeared before U.S. Magistrate Judge Donna F. Martinez in Hartford, entered a plea of not guilty and was released on a $150,000 bond.
U.S. Attorney Daly stressed that an indictment is not evidence of guilt. Charges are only allegations, and a defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt.
This matter is being investigated by the Federal Bureau of Investigation and prosecuted by Assistant U.S. Attorney John T. Pierpont, Jr.
Armed Carjacker Sentenced to More Than 23 Years in Federal PrisonRead the Press Release
DALLAS — A Dallas man who admitted committing two armed carjackings in Dallas on two consecutive days in May 2015, was sentenced yesterday by Chief U.S. District Judge Barbara M. G. Lynn to a lengthy federal prison sentence, announced U.S. Attorney John Parker of the Northern District of Texas.
Verod Woodard was sentenced to 283 months in federal prison. He pleaded guilty the day his trial was to begin in May 2016 in federal court in Dallas to one count of using, carrying and brandishing a firearm during and in relation to a crime of violence.
According to documents filed in his case, Woodard committed a carjacking at gunpoint in the parking lot of a Family Dollar store in Dallas on the afternoon of May 15, 2015. He took a 2006 Chrysler Sebring from its occupant by pointing a loaded .25 caliber Raven Arms handgun at her. The following day, Woodard brandished the same loaded .25 caliber Raven Arms handgun at a second victim at a gas station/convenience store, and he took the victim’s 2007 Ford F-250 pickup truck. Shortly after driving away from the gas station/convenience store, Woodard ran a red light, and a DART police officer observed that violation and made a traffic stop. After calling in the license plate number, officers discovered that the vehicle had recently been carjacked and Woodard was then arrested. A .25 caliber Raven Arms handgun, that matched the description given by the truck’s owner, was found in the cab of the pickup truck
The case was investigated by the FBI, the Dallas Police Department and the DART Police Department. Assistant U.S. Attorneys Mark Penley and Kate Pfeifle prosecuted the case.
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Armed Career Criminal Sentenced to 15 Years for Gun SalesRead the Press Release
Orlando, Florida – U.S. District Judge Carlos E. Mendoza today sentenced Anthony Jeroid Cue (47, Daytona Beach) to 15 years in federal prison for possessing a firearm as a convicted felon. Cue’s prior criminal history, which includes convictions for several serious drug offenses, subjected him to enhanced penalties pursuant to the Armed Career Criminal Act. He pleaded guilty on October 27, 2016.
According to court documents, over the course of several months, Cue arranged for the sale of illegal narcotics and three firearms to a confidential informant. Following Cue’s arrest, agents recovered an additional five firearms that Cue had stored away from his residence.
This case was investigated by Bureau of Alcohol, Tobacco, Firearms and Explosives and the Daytona Beach Police Department. It was prosecuted by Assistant United States Attorney Embry J. Kidd.
This is another case prosecuted as a part of the Department of Justice’s “Project Safe Neighborhoods” Program - a nationwide, gun-violence reduction strategy. United States Attorney A. Lee Bentley, III, along with Daryl R. McCrary, Special Agent in Charge, ATF, is coordinating the Project Safe Neighborhoods effort here in the Middle District of Florida in cooperation with federal, state, and local law enforcement officials. It is also a part of ATF’s Frontline strategy to reduce violent crime in communities.
Additional Charges Against Nigerian immigrant for Day Care Fraud Linked to International SchemeRead the Press Release
KANSAS CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that additional charges have been filed against the Nigerian owner of a day care center in Kansas City, Mo., who was indicted last summer for engaging in a fraud scheme.
This case is the result of a nationwide sweep that targeted childcare center fraud schemes. The national law enforcement operation in Missouri and six other states was the result of separate, but related, federal investigations into childcare center fraud that resulted in a loss of more than $1 million to the government.
Hauwa Al-Hassan, 47, of Raymore, Mo., was charged in a 17-count indictment returned by a federal grand jury in Kansas City, Mo. Today’s superseding indictment replaces a June 29, 2016, federal indictment and includes additional charges.
Al-Hassan, a Nigerian immigrant, is the owner and CEO of Guidance Child Care Center, LLC, a child day care center at 8101 E. Bannister Rd., Kansas City, Mo. Al-Hassan is also the vice president of Guidance Academy of Science, Technology, Engineering and Math.
Today’s superseding indictment includes the original charge of theft of government property. Al-Hassan allegedly engaged in a pattern of fraudulent billing from June 2011 to June 2016 in order to receive funding to which she was not entitled under the federal Child Care and Development Fund grant program. Al-Hassan allegedly filed claims that reported more hours and children than actually attended her daycare center.
The Child Care and Development Fund provides daycare subsidies for low-income families where the parents are employed or engaged in job training. Providers, such as Guidance, contract with the Children’s Division of the Missouri Department of Health and Senior Services and submit claims electronically.
Based on a review of childcare claims between 2011 and 2016, the indictment says, at least $100,000 has been fraudulently billed by Guidance in connection with this scheme.
The indictment also alleges that Al-Hassan is involved in a fraud scheme with international implications. Al-Hassan allegedly has traveled to Nigeria to teach others who plan to return to the United States how to run similar daycare fraud schemes.
Once a fraud scheme is successfully executed in the United States, the indictment says, the money is either wired by traditional means, or hawala (an Islamic informal system used to transfer currency from one individual to another individual who lives overseas), or hand carried from the United States back to the country where the immigrant was born. For example, the indictment says that on Dec. 20, 2015, $23,000 in cash was hand-carried out of the United States to Nigeria by an unnamed individual on a visa using Al-Hassan’s residential address, which is also the Guidance Childcare Center’s main office address.
Today’s superseding indictment also charges Al-Hassan with six counts of wire fraud, six counts of aggravated identity theft and four counts of money laundering.
According to the indictment, Al-Hassan signed a contract with the Missouri Department of Social Services on May 3, 2010, to operate Guidance Child Care Center as a licensed childcare center providing childcare services to low-income families. Since 2013, Guidance has been audited by the state on four occasions. Each audit, the indictment says, found many hours fraudulently billed for childcare services.
Auditors found, for example, that Guidance Child Care and another provider allegedly billed the state for the childcare of the same child, at overlapping times. Auditors also found a large discrepancy between the timesheets (attendance records initialed by the parents) submitted and the billings made to the state. Other billing discrepancies, such as billing the state for children who were not receiving childcare services, allegedly also occurred. On May 1, 2015, the Department of Social Services mailed Guidance Child Care Center a letter of non-compliance.
Investigators installed two pole cameras near Guidance from Feb. 11 to March 20, 2016. One camera focused on the front doors of Guidance; the second camera showed the parking lot and rear doors. All doors in and out were covered by a pole camera. Timesheets submitted with the billing were compared with children seen on the pole cameras being dropped off and picked up from Guidance during that time. There were significant discrepancies between the timesheets submitted and the pole camera footage.
The indictment also contains a forfeiture allegation, which would require Al-Hassan to forfeit to the government any property obtained from the proceeds of the alleged fraud scheme, including approximately $100,000 received in connection with the scheme.
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 Assistant U.S. Attorney Jane Pansing Brown. It was investigated by the U.S. Department of Health and Human Services – Office of Inspector General, Office of Investigations, the FBI, the Missouri Department of Social Services – Division of Legal Services Investigations, the Kansas City, Mo., Police Department and the Raymore, Mo., Police Department.
"Real Time": Four Men Plead Guilty in Federal Court on Gun-Related ChargesRead the Press Release
Contact Person: Lance Crick (864) 282-2100
COLUMBIA, South Carolina ---- United States Attorney Beth Drake stated today that multiple individuals this week entered guilty pleas this week on federal gun charges. Guilty pleas and sentencing hearings are bifurcated in the federal system and United States District Court Judge Bruce H. Hendricks presided over the guilty plea hearings this week. Judge Hendricks will sentence the defendants at a later date after a presentence investigation report is prepared by United States Probation.
These cases represent a small snapshot of “Real Time,” an ongoing local, state, and federal initiative that expedites the identification, arrest, detention, and federal prosecution of repeat offenders arrested with firearms. The goal of this program is to identify individuals for federal prosecution with significant criminal histories who continue to actively possess firearms in the Greenville community.
In addition to Greenville Police Department, the Greenville County Sheriff’s Office, and the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF), Real Time’s core partners include the South Carolina Department of Probation, Parole, and Pardon Services, the South Carolina Highway Patrol, the Department of Homeland Security, the Federal Bureau of Investigation, the Drug Enforcement Administration, the 13th Circuit Solicitor’s Office, and the United States Attorney’s Office.
Greenville Police Chief Ken Miller and his department were one of the first partners on board for this initiative. “This multi-agency partnership endeavors to keep our communities safe and reduce firearms violence through ‘real time’ identification of dangerous individuals who seek to disrupt our streets and communities with firearms-driven violence.”
Acting U.S. Attorney Beth Drake commended the partnership between the state and federal agencies that led to the Bureau of Alcohol, Tobacco and Firearms and the U.S. Attorney’s Office picking the case up, “We work best when we work together. This ‘real time’ identification of high risk offenders is smart policing, and we welcome the opportunity to work alongside our state chiefs and sheriffs in taking violent repeat offenders out of our communities.”
Since August of 2015, the initiative has resulted in the expedited federal prosecution of some 90 defendants and seizure of over 110 firearms as well as assorted ammunition from prohibited persons.
Guilty Pleas, January 11, 2017:
United States v. Kyle Lamar Carrol:
Evidence presented by the government during the guilty plea hearing established that on October 10, 2016, Deputies with the Greenville County Sheriff’s Office (GCSO) responded to the Spring Grove Apartments, in reference to a call stating people were shooting at the apartment complex. When GCSO arrived and began their investigation, they recovered numerous spent shell casings from the parking lot and viewed surveillance video, which enabled them to identify possible suspects. GCSO charged Carrol and during questioning, Carrol admitted discharging a firearm in the parking lot of the apartment complex. Though no weapons were recovered, prior to this incident date, Carrol had previously been convicted of a crime for which he could have received more than a year in prison, prohibiting his possession of firearms or ammunition, pursuant to federal law.
Sentencing will occur at a later date. The case was investigated by the Greenville County Sheriff’s Office along with agents from the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF). It is assigned to Assistant United States Attorney Max Cauthen in the Greenville U.S. Attorney’s Office.
United States v. Joseph Martin Hunter and Sir Carlton Anthony Baker:
Evidence presented by the government during the guilty plea hearing established that on October 11, 2016, Hunter and Baker possessed and sold a Ruger .22 caliber rifle and .22 caliber ammunition to Greenville Police Department confidential informant in an undercover operation. Hunter and Baker were arrested the next day. Prior to this incident date, Hunter and Baker had each previously been convicted of crimes for which they could have received more than a year in prison, prohibiting their possession of firearms or ammunition, pursuant to federal law.
Sentencing will occur at a later date. The case was investigated by the Greenville Police Department along with agents from the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF). It is assigned to Assistant United States Attorney Max Cauthen in the Greenville U.S. Attorney’s Office.
United States v. Demetrius O’Brian Hunter:
Evidence presented by the government during the guilty plea hearing established that, on June 19, 2016, a Greenville Police Officer stopped a vehicle driven by Hunter for running a stop sign. During the stop, due to observations made by the officer, the officer conducted a brief search of Hunter as well as of the inside of the vehicle.
During that limited search, the officer recovered a loaded .9mm magazine in the center console. Based on the recovery of the ammunition, a search of the entire car was performed and the officers recovered a loaded .9mm pistol and a loaded .40 caliber pistol. Prior to this incident date, Hunter had previously been convicted of a crime for which he could have received more than a year in prison, prohibiting his possession of firearms or ammunition, pursuant to federal law.
Sentencing will occur at a later date. The case was investigated by the Greenville Police Department along with agents from the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF). It is assigned to Assistant United States Attorney Max Cauthen in the Greenville U.S. Attorney’s Office.
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11 January 2017
Zuni Pueblo Man Pleads Guilty to Federal Involuntary Manslaughter ChargeRead the Press Release
ALBUQUERQUE – Darold Ray ZunieFeathers, 20, a member and resident of Zuni Pueblo, N.M., pled guilty today in federal court in Albuquerque, N.M., to an involuntary manslaughter charge.
ZunieFeathers was arrested in April 2016, on a criminal complaint charging him with involuntary manslaughter. According to the complaint, ZunieFeathers killed a Zuni Pueblo man when he ran over him with his vehicle on July 29, 2015, on the Zuni Indian Reservation in McKinley County, N.M. At the time ZunieFeathers ran over the victim, ZunieFeathers was driving under the influence of alcohol. ZunieFeathers was subsequently indicted on the same charge on May 10, 2016.
During today’s proceedings, ZunieFeathers pled guilty to the indictment and admitted killing the victim by driving recklessly while under the influence of alcohol. ZunieFeathers acknowledged that the alcohol rendered him incapable of exercising clear judgment and a steady hand in operating the vehicle.
At sentencing, ZunieFeathers faces a maximum penalty of eight years in federal prison. A sentencing hearing has yet to be scheduled.
This case was investigated by the Gallup office of the FBI and the Zuni Police Department and is being prosecuted by Assistant U.S. Attorney Nicholas J. Marshall.
Worcester Nurse Pleads Guilty to Drug TamperingRead the Press Release
BOSTON – A Worcester nurse pleaded guilty yesterday in connection with stealing painkillers from the nursing home where she worked and attempting to conceal her crime by replacing the medication with saline.
Lea Roberge, 32, pleaded guilty to two counts of tampering with a consumer product, specifically the Schedule II controlled substance morphine, which is used for pain relief. U.S. District Court Judge Timothy S. Hillman scheduled sentencing for April 5, 2017.
On two separate occasions in March 2015, while working as a registered nurse at Holy Trinity Eastern Orthodox Nursing and Rehabilitation Center, Roberge tampered with morphine sulfate contained in emergency narcotic kits. The kits are available for use at the nursing home in case of an emergency when there is not enough time to obtain medication from the pharmacy. Roberge, who had access to these emergency narcotic kits, used a syringe to extract morphine from six vials and one bottle. In an attempt to avoid detection, she replaced the extracted medication with saline, thereby decreasing the potency of the drug.
The charging statute provides for a sentence of no greater than 10 years in prison, three years of supervised release and a fine of $250,000. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
United States Attorney Carmen M. Ortiz; Jeffrey Ebersole, Special Agent in Charge of the Food and Drug Administration, Office of Criminal Investigations, New York Field Office; and Commissioner Monica Bharel, MD, MPH, of the Massachusetts Department of Public Health, made the announcement today. Assistant U.S. Attorney Michelle Lauren Dineen Jerrett of Ortiz’s Worcester Branch Office is prosecuting the case.
Williamson County Man Sentenced for Federal Firearm ViolationRead the Press Release
On January 11, 2017, Russell D. Morris, a/k/a "Dickie Donald," 37, of Herrin, was sentenced to federal prison for a firearm offense, Donald S. Boyce, United States Attorney for the Southern District of Illinois, announced today.
Morris, who had previously pled guilty to a one-count indictment charging unlawful possession of a firearm by a felon, was sentenced to 180 months of imprisonment, 3 years of supervised release, and was fined $300.00. Evidence at the plea and sentencing hearings established that, on January 29, 2016, agents did an Illinois Department of Corrections parole compliance check at Morris’s Herrin residence. During a search of Morris’s residence, agents located multiple firearms, along with methamphetamine. At sentencing, Morris received sentencing enhancements, because he possessed four firearms, three of which were stolen. Morris also received a sentencing enhancement, because at least one of the firearms was possessed in connection to the methamphetamine. Finally, Morris received an increased sentence based on his classification as an Armed Career Criminal.
The investigation was conducted by the Southern Illinois Enforcement Group and Illinois Department of Corrections – Parole Compliance Division. The Williamson County States Attorney’s Office assisted in the investigation.
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Wilkes-Barre Man Sentenced for Drug Distribution ConspiracyRead the Press Release
SCRANTON-The United States Attorney’s Office for the Middle District of Pennsylvania announced today that Barry Patonja, age 33, of Wilkes-Barre, Pennsylvania, was sentenced to 15 months’ imprisonment on January 9, 2017, by United States District Court Judge Malachy Mannion, for his role in the conspiracy of distributing heroin and cocaine.
According to United States Attorney Bruce D. Brandler, Pantjoa and his co-conspirators distributed more than 500 grams of cocaine and more than 100 grams of heroin, which is equivalent to approximately 2,500 retail bags, during the summer of 2014.
This case was brought as part of a district wide initiative to combat the nationwide epidemic regarding the use and distribution of heroin. Led by the United States Attorney’s Office, the Heroin Initiative targets heroin traffickers operating in the Middle District of Pennsylvania and is part of a coordinated effort among federal, state and local law enforcement agencies to locate, apprehend, and prosecute individuals who commit heroin related offenses
The case was investigated by the Scranton Resident Office of the Drug Enforcement Administration and the Wilkes-Barre Police Department. Assistant United States Attorney William S. Houser prosecuted the case.
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Volkswagen AG Agrees to Plead Guilty and Pay $4.3 Billion in Criminal and Civil Penalties; Six Volkswagen Executives and Employees are Indicted in Connection with Conspiracy to Cheat U.S. Emissions TestsRead the Press Release
Volkswagen AG (VW) has agreed to plead guilty to three criminal felony counts and pay a $2.8 billion criminal penalty as a result of the company’s long-running scheme to sell approximately 590,000 diesel vehicles in the U.S. by using a defeat device to cheat on emissions tests mandated by the Environmental Protection Agency (EPA) and the California Air Resources Board (CARB), and lying and obstructing justice to further the scheme, the Justice Department announced today.
In separate civil resolutions of environmental, customs and financial claims, VW has agreed to pay $1.5 billion. This includes EPA’s claim for civil penalties against VW in connection with VW’s importation and sale of these cars, as well as U.S. Customs and Border Protection (CBP) claims for customs fraud. In addition, the EPA agreement requires injunctive relief to prevent future violations. The agreements also resolve alleged violations of the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA).
The Criminal Case:
VW is charged with and has agreed to plead guilty to participating in a conspiracy to defraud the United States and VW’s U.S. customers and to violate the Clean Air Act by lying and misleading the EPA and U.S. customers about whether certain VW, Audi and Porsche branded diesel vehicles complied with U.S. emissions standards, using cheating software to circumvent the U.S. testing process and concealing material facts about its cheating from U.S. regulators. VW is also charged with obstruction of justice for destroying documents related to the scheme, and with a separate crime of importing these cars into the U.S. by means of false statements about the vehicles’ compliance with emissions limits. Under the terms of the plea agreement, which must be accepted by the court, VW will plead guilty to all these crimes, will be on probation for three years, will be under an independent corporate compliance monitor who will oversee the company for at least three years, and agrees to fully cooperate in the Justice Department’s ongoing investigation and prosecution of individuals responsible for these crimes.
In addition, a federal grand jury in the Eastern District of Michigan returned an indictment today charging six VW executives and employees for their roles in the nearly 10-year conspiracy. Heinz-Jakob Neusser, 56; Jens Hadler, 50; Richard Dorenkamp, 68; Bernd Gottweis, 69; Oliver Schmidt, 48; and Jürgen Peter, 59, all of Germany, are charged with one count of conspiracy to defraud the United States, defraud VW’s U.S. customers and violate the Clean Air Act by making false representations to regulators and the public about the ability of VW’s supposedly “clean diesel” vehicles to comply with U.S. emissions requirements. The indictment also charges Dorenkamp, Neusser, Schmidt and Peter with Clean Air Act violations and charges Neusser, Gottweis, Schmidt and Peter with wire fraud counts. This case has been assigned to U.S. District Judge Sean F. Cox of the Eastern District of Michigan.
Schmidt was arrested on Jan. 7, 2017, in Miami during a visit to the United States and appeared in federal court there on Monday. The other defendants are believed to presently reside in Germany.
Today’s announcement was made by Attorney General Loretta E. Lynch, EPA Administrator Gina McCarthy and Assistant Administrator Cynthia Giles, Deputy Attorney General Sally Q. Yates, FBI Deputy Director Andrew McCabe, Acting Deputy Secretary Russell C. Deyo for the Department of Homeland Security, U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan, Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Assistant Attorney General John C. Cruden of the Justice Department’s Environment and Natural Resources Division and Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division.
“Volkswagen’s attempts to dodge emissions standards and import falsely certified vehicles into the country represent an egregious violation of our nation’s environmental, consumer protection and financial laws,” said Attorney General Lynch. “Today’s actions reflect the Justice Department’s steadfast commitment to defending consumers, protecting our environment and our financial system and holding individuals and companies accountable for corporate wrongdoing. In the days ahead, we will continue to examine Volkswagen’s attempts to mislead consumers and deceive the government. And we will continue to pursue the individuals responsible for orchestrating this damaging conspiracy.”
“When Volkswagen broke the law, EPA stepped in to hold them accountable and address the pollution they caused,” said EPA Administrator McCarthy. “EPA’s fundamental and indispensable role becomes all too clear when companies evade laws that protect our health. The American public depends on a strong and active EPA to deliver clean air protections, and that is exactly what we have done.”
“This wasn’t simply the action of some faceless, multinational corporation,” said Deputy Attorney General Yates. “This conspiracy involved flesh-and-blood individuals who used their positions within Volkswagen to deceive both regulators and consumers. From the start of this investigation, we’ve been committed to ensuring that those responsible for criminal activity are held accountable. We’ve followed the evidence—from the showroom to the boardroom—and it brought us to the people whose indictments we’re announcing today.”
“Americans expect corporations to operate honestly and provide accurate information,” said Deputy Director McCabe. “Volkswagen’s data deception defrauded the U.S. government, violated the Clean Air Act and eroded consumer trust. This case sends a clear message to corporations, no matter how big or small, that if you lie and disregard rules that protect consumers and the environment, you will be caught and held accountable.”
“Blatant violations of U.S. customs and environmental laws will not be tolerated, and this case reinforces that,” said Acting Deputy Secretary Deyo. “These actions put our economy, consumers and citizens at risk, and the Department of Homeland Security and U.S. Customs and Border Protection will continue to take every step necessary to protect the American people.”
According to the indictment, the individuals occupied the following positions within the company:
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Heinz-Jakob Neusser: from July 2013 until September 2015, Neusser worked for VW as head of Development for VW Brand and was also on the management board for VW Brand. From October 2011 until July 2013, Neusser served as the head of Engine Development for VW.
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Jens Hadler: from May 2007 until March 2011, Hadler worked for VW as head of Engine Development for VW.
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Richard Dorenkamp: from 2003 until December 2013, Dorenkamp worked for VW as the head of VW’s Engine Development After-Treatment Department in Wolfsburg, Germany. From 2006 until 2013, Dorenkamp led a team of engineers that developed the first diesel engine that was designed to meet the new, tougher emissions standards in the United States.
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Bernd Gottweis: from 2007 until October 2014, Gottweis worked for VW as a supervisor with responsibility for Quality Management and Product Safety.
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Oliver Schmidt: from 2012 through February 2015, Schmidt was the General Manager in charge of the Environment and Engineering Office, located in Auburn Hills, Michigan. From February 2015 through September 2015, Schmidt returned to VW headquarters to work directly for Neusser, including on emissions issues.
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Jürgen Peter: Peter worked in the VW Quality Management and Product Safety Group from 1990 until the present. From March 2015 until July 2015, Peter was one of the VW liaisons between the regulatory agencies and VW.
According to the charging documents and statement of facts filed with the court, in 2006, VW engineers began to design a new diesel engine to meet stricter U.S. emissions standards that would take effect by model year 2007. This new engine would be the cornerstone of a new project to sell diesel vehicles in the United States that would be marketed to buyers as “clean diesel,” a project that was an important strategic goal for VW’s management. When the co-conspirators realized that they could not design a diesel engine that would both meet the stricter NOx emissions standards and attract sufficient customer demand in the U.S. market, they decided they would use a software function to cheat standard U.S. emissions tests.
VW engineers working under Dorenkamp and Hadler designed and implemented a software to recognize whether a vehicle was undergoing standard U.S. emissions testing on a dynamometer or it was being driven on the road under normal driving conditions. The software accomplished this by recognizing the standard published drive cycles. Based on these inputs, if the vehicle’s software detected that it was being tested, the vehicle performed in one mode, which satisfied U.S. NOx emissions standards. If the software detected that the vehicle was not being tested, it operated in a different mode, in which the vehicle’s emissions control systems were reduced substantially, causing the vehicle to emit NOx up to 40 times higher than U.S. standards.
Disagreements over the direction of the project were articulated at a meeting over which Hadler presided, and which Dorenkamp attended. Hadler authorized Dorenkamp to proceed with the project knowing that only the use of the defeat device software would enable VW diesel vehicles to pass U.S. emissions tests. Starting with the first model year 2009 of VW’s new “clean diesel” engine through model year 2016, Dorenkamp, Neusser, Hadler and their co-conspirators installed, or caused to be installed, the defeat device software into the vehicles imported and sold in the United States. In order to sell their “clean diesel” vehicles in the United States, the co-conspirators lied to the EPA about the existence of their test-cheating software, hiding it from the EPA, CARB, VW customers and the U.S. public. Dorenkamp, Neusser, Hadler, Gottweis, Schmidt, Peter and their co-conspirators then marketed, and caused to be marketed, VW diesel vehicles to the U.S. public as “clean diesel” and environmentally-friendly.
Around 2012, hardware failures developed in certain of the diesel vehicles. VW engineers believed the increased stress on the exhaust system from being driven in the “dyno mode” could be the cause of the hardware failures. In July 2012, VW engineers met with Neusser and Gottweis to explain what they believed to be the cause of the hardware failures and explained the defeat device. Gottweis and Neusser each encouraged further concealment of the software. In 2014, the co-conspirators perfected their cheating software by starting the vehicle in “street mode,” and, when the defeat device realized the vehicle was being tested, switching to the “dyno mode.” To increase the ability of the vehicle’s software to recognize that it was being tested on the dynamometer, the VW engineers activated a “steering wheel angle recognition feature.” With these alterations, it was believed the stress on the exhaust system would be reduced because the engine would not be operating for as long in “dyno mode.” The new function was installed in existing vehicles through software updates. The defendants and other co-conspirators falsely represented, and caused to be represented, to U.S. regulators, U.S. customers and others that the software update was intended to improve durability and emissions issues in the vehicles when, in fact, they knew it was used to more quickly deactivate emission control systems when the vehicle was not undergoing emissions tests.
After years of VW selling their “clean diesel” vehicles in the United States that had the cheating software, in March 2014, West Virginia University’s Center for Alternative Fuels, Engines and Emissions published the results of a study commissioned by the International Council on Clean Transportation (ICCT). The ICCT study identified substantial discrepancies in the NOx emissions from certain VW vehicles when tested on the road compared to when these vehicles were undergoing EPA and CARB standard drive cycle tests on a dynamometer. Rather than tell the truth, VW employees, including Neusser, Gottweis, Schmidt and Peter, pursued a strategy to disclose as little as possible – to continue to hide the existence of the software from U.S. regulators, U.S. customers and the U.S. public.
Following the ICCT study, CARB, in coordination with the EPA, attempted to work with VW to determine the cause for the higher NOx emissions in VW diesel vehicles when being driven on the road as opposed to on the dynamometer undergoing standard emissions test cycles. To do this, CARB, in coordination with the EPA, repeatedly asked VW questions that became increasingly more specific and detailed, and tested the vehicles themselves. In implementing their strategy of disclosing as little as possible, Neusser, Gottweis, Schmidt, Peter and their co-conspirators provided EPA and CARB with testing results, data, presentations and statements in an attempt to make it appear that there were innocent mechanical and technological problems to blame, while secretly knowing that the primary reason for the discrepancy was their cheating software that was installed in every VW diesel vehicle sold in the United States. The co-conspirators continued this back-and-forth with the EPA and CARB for over 18 months, obstructing the regulators’ attempts to uncover the truth.
The charges in the indictment are merely accusations and each defendant is presumed innocent unless and until proven guilty.
The case was investigated by the FBI and EPA-CID. The prosecution and corporate investigation are being handled by Securities and Financial Fraud Unit Chief Benjamin D. Singer and Trial Attorneys David Fuhr, Alison Anderson, Christopher Fenton and Gary Winters of the Criminal Division’s Fraud Section; Trial Attorney Jennifer Blackwell of the Environment and Natural Resources Division’s Environmental Crimes Section; and from the U.S. Attorney’s Office for the Eastern District of Michigan, Criminal Division Chief Mark Chutkow and White Collar Crime Unit Chief John K. Neal and Assistant U.S. Attorney Timothy J. Wyse. The Justice Department’s Office of International Affairs also assisted in the case. The Justice Department also extends its thanks to the Office of the Public Prosecutor in Braunschweig, Germany.
The Civil Resolutions:
The first civil settlement resolves EPA’s remaining claims against six VW-related entities (including Volkswagen AG, Audi AG and Porsche AG) currently pending in the multidistrict litigation before U.S. District Judge Charles R. Breyer of the Northern District of California. EPA’s complaint alleges that VW violated the Clean Air Act by selling approximately 590,000 cars that the United States alleges are equipped with defeat devices and, during normal operation and use, emit pollution significantly in excess of EPA-compliant levels. VW has agreed to pay $1.45 billion to resolve EPA’s civil penalty claims, as well as the civil penalty claim of CBP described below. The consent decree resolving the Clean Air Act claims also resolves EPA’s remaining claim in the complaint for injunctive relief to prevent future violations by requiring VW to undertake a number of corporate governance reforms and perform in-use testing of its vehicles using a portable emissions measurement system of the same type used to catch VW’s cheating in the first place. Today’s settlement is in addition the historic $14.7 billion settlement that addressed the 2.0 liter cars on the road and associated environmental harm announced in June 2016, and $1 billion settlement that addressed the 3.0 liter cars on the road and associated environmental harm announced in December 2016, which together included nearly $3 billion for environmental mitigation projects.
A second civil settlement resolves civil fraud claims asserted by U.S. Customs and Border Protection (CBP) against VW entities. VW entities violated criminal and civil customs laws by knowingly submitting to CBP material false statements and omitting material information, over multiple years, with the intent of deceiving or misleading CBP concerning the admissibility of vehicles into the United States. CBP enforces U.S. customs laws as well as numerous laws on behalf of other governmental agencies related to health, safety, and border security. At the time of importation, VW falsely represented to CBP that each of the nearly 590,000 imported vehicles complied with all applicable environmental laws, knowing those representations to be untrue. CBP’s relationship with the importing community is one based on trust, and this resolution demonstrates that CBP will not tolerate abrogation of importer responsibilities and schemes to defraud the revenue of the United States. The $1.45 billion paid under the EPA settlement also resolves CBP’s claims.
In a third settlement, VW has agreed to pay $50 million in civil penalties for alleged violations of FIRREA. The Justice Department alleged that a VW entity supported the sales and leasing of certain VW vehicles, including the defeat-device vehicles, by offering competitive financing terms by purchasing from dealers certain automobile retail installment contracts (i.e. loans) and leases entered into by customers that purchased or leased certain VW vehicles, as well as dealer floorplan loans. These financing arrangements were primarily collateralized by the vehicles underlying the loan and lease transactions. The department alleged that certain of these loans, leases and floorplan financings were pooled together to create asset-backed securities and that federally insured financial institutions purchased certain notes in these securities. Today’s FIRREA resolution is part of the department’s ongoing efforts to deter wrongdoers from using the financial markets to facilitate their fraud and to ensure the stability of the nation’s financial system.
Except where based on admissions by VW, the claims resolved by the civil agreements are allegations only.
The civil settlements were handled by the Environmental and Natural Resources Division’s Environmental Enforcement Section, with assistance from the EPA; the Civil Division’s Commercial Litigation Branch; and CBP.
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Court documents:
VW AG Plea Agreement
VW AG Third Partial Consent Decree
VW AG Notice of Third Partial Consent Decree
VW AG Third Superseding Information
Firrea Settlement Agreement
VW AG CPB Settlement
VW AG Second Superseding Indictment-
Volkswagen AG Agrees to Plead Guilty and Pay $4.3 Billion in Criminal and Civil Penalties and Six Volkswagen Executives and Employees Are Indicted in Connection with Conspiracy to Cheat U.S. Emissions TestsRead the Press Release
VW to Pay $2.8 Billion Criminal Fine in Guilty Plea and $1.5 Billion Settlement of Civil Environmental, Customs, and Financial Violations; Monitor to Be Appointed to Oversee the Parent Company
Volkswagen AG (VW) has agreed to plead guilty to three criminal felony counts, and pay a $2.8 billion criminal penalty, as a result of the company’s long-running scheme to sell approximately 590,000 diesel vehicles in the U.S. by using a defeat device to cheat on emissions tests mandated by the Environmental Protection Agency (EPA) and the California Air Resources Board (CARB), and lying and obstructing justice to further the scheme, the Justice Department announced today.
In separate civil resolutions of environmental, customs, and financial claims, VW has agreed to pay $1.5 billion. This includes EPA’s claim for civil penalties against Volkswagen in connection with Volkswagen’s importation and sale of these cars, as well as U.S. Customs and Border Protection (CBP) claims for customs fraud. In addition, the EPA agreement requires injunctive relief to prevent future violations. The agreements also resolve alleged violations of the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA).
“Volkswagen’s blatant cheating on U.S. emissions standards not only harmed our clean air, but it also created a competitive disadvantage for other automakers who play by the rules,” United States Attorney Barbara McQuade said. “Today’s announcement of a corporate felony guilty plea and indictments against Volkswagen executives demonstrates that corrupt corporations and individual employees will be held accountable.”
“Volkswagen and its executives are accused of involvement in a massive fraud scheme to intentionally sell diesel cars that violated U.S. emissions rules. Today’s charges signify our government’s commitment to protect the American automotive consumer,” said David P. Gelios, Special Agent in Charge, Detroit Division of the FBI. “Any company or its representatives that seeks to undermine American industry regulatory standards to gain an unfair advantage in the marketplace will be subjected to a comprehensive criminal investigation as evidenced in this case".
The Criminal Case:
VW is charged with and has agreed to plead guilty to participating in a conspiracy to defraud the United States and VW’s U.S. customers, and to violate the Clean Air Act, by lying and misleading the EPA and U.S. customers about whether certain VW, Audi, and Porsche branded diesel vehicles complied with U.S. emissions standards, using cheating software to circumvent the U.S. testing process, and concealing material facts about its cheating from U.S. regulators. VW is also charged with obstruction of justice for destroying documents related to the scheme, and with a separate crime of importing these cars into the U.S. by means of false statements about the vehicles’ compliance with emissions limits. Under the terms of the plea agreement, which must be accepted by the court, VW will plead guilty to all these crimes, will be on probation for three years, will be under an independent corporate compliance monitor who will oversee the company for at least three years, and agrees to fully cooperate in the Justice Department’s ongoing investigation and prosecution of individuals responsible for these crimes.
In addition, a federal grand jury in the Eastern District of Michigan returned an indictment today charging six VW AG executives and employees for their roles in the nearly ten-year conspiracy. Heinz-Jakob Neusser, 56, Jens Hadler, 50, Richard Dorenkamp, 68, Bernd Gottweis, 69, Oliver Schmidt, 48, and Jürgen Peter, 59, all of Germany, are charged with one count of conspiracy to defraud the United States, defraud VW’s U.S. customers, and violate the Clean Air Act, by making false representations to regulators and the public about the ability of VW’s supposedly “clean diesel” vehicles to comply with U.S. emissions requirements. The indictment also charges Dorenkamp, Neusser, Schmidt and Peter with Clean Air Act violations and charges Neusser, Gottweis, Schmidt and Peter with wire fraud counts. This case has been assigned to United States District Judge Sean F. Cox.
Schmidt was arrested on Jan. 7, 2017, in Miami during a visit to the United States, and appeared in federal court there on Monday. The other defendants are believed to presently reside in Germany.
Today’s announcement was made by Attorney General Loretta E. Lynch, EPA Administrator Gina McCarthy and Assistant Administrator Cynthia Giles, Deputy Attorney General Sally Q. Yates, FBI Deputy Director Andrew McCabe, Acting Deputy Secretary Russell C. Deyo for the Department of Homeland Security, U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan, Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Assistant Attorney General John C. Cruden of the Justice Department’s Environment and Natural Resources Division, and Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division.
According to the indictment, the individuals occupied the following positions within the company:
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Heinz-Jakob Neusser. From July 2013 until September 2015, Neusser worked for VW AG as head of Development for VW Brand and was also on the management board for VW Brand. From October 2011 until July 2013, Neusser served as the head of Engine Development for VW.
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Jens Hadler. From May 2007 until March 2011, Hadler worked for VW AG as head of Engine Development for VW.
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Richard Dorenkamp. From 2003 until December 2013, Dorenkamp worked for VW AG as the head of VW’s Engine Development After-Treatment Department in Wolfsburg, Germany. From 2006 until 2013, Dorenkamp led a team of engineers that developed the first diesel engine that was designed to meet the new, tougher emissions standards in the United States.
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Bernd Gottweis. From 2007 until October 2014, Gottweis worked for VW AG as a supervisor with responsibility for Quality Management and Product Safety.
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Oliver Schmidt. From 2012 through February 2015, Schmidt was the General Manager in charge of the Environment and Engineering Office, located in Auburn Hills, Michigan. From Feb 2015 through Sept. 2015 Schmidt returned to VW headquarters to work directly for Neusser, including on emissions issues.
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Jürgen Peter. Peter worked in the VW AG Quality Management and Product Safety Group from 1990 until the present. From March 2015 until July 2015, Peter was one of the VW AG liaisons between the regulatory agencies and VW AG.
According to the charging documents and statement of facts filed with the court, in 2006, Volkswagen engineers began to design a new diesel engine to meet stricter U.S. emissions standards that would take effect by model year 2007. This new engine would be the cornerstone of a new project to sell diesel vehicles in the United States that would be marketed to buyers as “clean diesel,” a project that was an important strategic goal for Volkswagen’s management. When the co-conspirators realized that they could not design a diesel engine that would both meet the stricter NOx emissions standards and attract sufficient customer demand in the U.S. market, they decided they would use a software function to cheat standard U.S. emissions tests.
Volkswagen engineers working under Dorenkamp and Hadler designed and implemented a software to recognize whether a vehicle was undergoing standard U.S. emissions testing on a dynamometer or it was being driven on the road under normal driving conditions. The software accomplished this by recognizing the standard published drive cycles. Based on these inputs, if the vehicle’s software detected that it was being tested, the vehicle performed in one mode, which satisfied U.S. NOx emissions standards. If the software detected that the vehicle was not being tested, it operated in a different mode, in which the vehicle’s emissions control systems were reduced substantially, causing the vehicle to emit NOx up to 40 times higher than U.S. standards.
Disagreements over the direction of the project were articulated at a meeting over which Hadler presided, and which Dorenkamp attended. Hadler authorized Dorenkamp to proceed with the project knowing that only the use of the defeat device software would enable VW diesel vehicles to pass U.S. emissions tests. Starting with the first model year 2009 of VW’s new “clean diesel” engine through model year 2016, Dorenkamp, Neusser, Hadler, and their co-conspirators installed, or caused to be installed, the defeat device software into the vehicles imported and sold in the United States. In order to sell their “clean diesel” vehicles in the United States, the co-conspirators lied to the EPA about the existence of their test-cheating software, hiding it from the EPA, CARB, Volkswagen customers, and the U.S. public. Dorenkamp, Neusser, Hadler, Gottweis, Schmidt, Peter, and their co-conspirators then marketed, and caused to be marketed, VW diesel vehicles to the U.S. public as “clean diesel” and environmentally-friendly.
Around 2012, hardware failures developed in certain of the diesel vehicles. VW engineers believed the increased stress on the exhaust system from being driven in the “dyno mode” could be the cause of the hardware failures. In July 2012, VW engineers met with Neusser and Gottweis to explain what they believed to be the cause of the hardware failures, and explained the defeat device. Gottweis and Neusser each encouraged further concealment of the software. In 2014, the co-conspirators perfected their cheating software by starting the vehicle in “street mode,” and, when the defeat device realized the vehicle was being tested, switching to the “dyno mode.” To increase the ability of the vehicle’s software to recognize that it was being tested on the dynamometer, the VW engineers activated a “steering wheel angle recognition feature.” With these alterations, it was believed the stress on the exhaust system would be reduced because the engine would not be operating for as long in “dyno mode”. The new function was installed in existing vehicles through software updates. The defendants and other co-conspirators falsely represented, and caused to be represented, to U.S. regulators, U.S. customers, and others that the software update was intended to improve durability and emissions issues in the vehicles when, in fact, they knew it was used to more quickly deactivate emission control systems when the vehicle was not undergoing emissions tests.
After years of VW selling their “clean diesel” vehicles in the United States that had the cheating software, in March 2014, West Virginia University’s Center for Alternative Fuels, Engines and Emissions published the results of a study commissioned by the International Council on Clean Transportation (ICCT). The ICCT study identified substantial discrepancies in the NOx emissions from certain VW vehicles when tested on the road compared to when these vehicles were undergoing EPA and CARB standard drive cycle tests on a dynamometer. Rather than tell the truth, VW AG employees, including Neusser, Gottweis, Schmidt, and Peter pursued a strategy to disclose as little as possible – to continue to hide the existence of the software from U.S. regulators, U.S. customers, and the U.S. public.
Following the ICCT study, CARB, in coordination with the EPA, attempted to work with VW to determine the cause for the higher NOx emissions in VW diesel vehicles when being driven on the road as opposed to on the dynamometer undergoing standard emissions test cycles. To do this, CARB, in coordination with the EPA, repeatedly asked VW questions that became increasingly more specific and detailed, and tested the vehicles themselves. In implementing their strategy of disclosing as little as possible, Neusser, Gottweis, Schmidt, Peter, and their co-conspirators provided EPA and CARB with testing results, data, presentations, and statements in an attempt to make it appear that there were innocent mechanical and technological problems to blame, while secretly knowing that the primary reason for the discrepancy was their cheating software that was installed in every VW diesel vehicle sold in the United States. The co-conspirators continued this back-and-forth with the EPA and CARB for over eighteen months, obstructing the regulators’ attempts to uncover the truth.
The charges in the indictment are merely accusations and each defendant is presumed innocent unless and until proven guilty.
The case was investigated by the FBI and EPA-CID. The prosecution and corporate investigation are being handled by Securities and Financial Fraud Unit Chief Benjamin D. Singer and Trial Attorneys David Fuhr, Alison Anderson, Christopher Fenton, and Gary Winters of the Justice Department’s Criminal Division Fraud Section; Trial Attorney Jennifer Blackwell of the Environment and Natural Resources Division Environmental Crimes Section, Criminal Division Chief Mark Chutkow and White Collar Crime Unit Chief John K. Neal and Assistant U.S. Attorney Timothy J. Wyse of the U.S. Attorney’s Office for the Eastern District of Michigan. The Justice Department’s Office of International Affairs also assisted in the case. The Justice Department also extends its thanks to the Office of the Public Prosecutor in Braunschweig, Germany.
The Civil Resolutions:
The first civil settlement resolves EPA’s remaining claims against six Volkswagen-related entities (including Volkswagen AG, Audi AG and Porsche AG) currently pending in the multidistrict litigation before U.S. District Judge Charles R. Breyer in the Northern District of California. EPA’s complaint alleges that Volkswagen violated the Clean Air Act by selling approximately 590,000 cars that the United States alleges are equipped with defeat devices and, during normal operation and use, emit pollution significantly in excess of EPA-compliant levels. VW has agreed to pay $1.45 billion to resolve EPA’s civil penalty claims, as well as the civil penalty claim of CBP described below. The consent decree resolving the Clean Air Act claims also resolves EPA’s remaining claim in the complaint for injunctive relief to prevent future violations by requiring VW to undertake a number of corporate governance reforms and perform in-use testing of its vehicles using a portable emissions measurement system of the same type used to catch VW’s cheating in the first place. Today’s settlement is in addition the historic $14.7 billion settlement that addressed the 2.0 liter cars on the road and associated environmental harm announced in June 2016, and $1 billion settlement that addressed the 3.0 liter cars on the road and associated environmental harm announced in December 2016, which together included nearly $3 billion for environmental mitigation projects.
A second civil settlement resolves civil fraud claims asserted by U.S. Customs and Border Protection (CBP) against VW entities. VW entities violated criminal and civil customs laws by knowingly submitting to CBP material false statements and omitting material information, over multiple years, with the intent of deceiving or misleading CBP concerning the admissibility of vehicles into the United States. CBP enforces U.S. customs laws as well as numerous laws on behalf of other governmental agencies related to health, safety, and border security. At the time of importation, Volkswagen falsely represented to CBP that each of the nearly 590,000 imported vehicles complied with all applicable environmental laws, knowing those representations to be untrue. CBP’s relationship with the importing community is one based on trust, and this resolution demonstrates that CBP will not tolerate abrogation of importer responsibilities and schemes to defraud the revenue of the United States. The $1.45 billion paid under the EPA settlement also resolves CBP’s claims.
In a third settlement, VW has agreed to pay $50 million in civil penalties for alleged violations of FIRREA. The Justice Department alleged that a VW entity supported the sales and leasing of certain VW vehicles, including the defeat-device vehicles, by offering competitive financing terms by purchasing from dealers certain automobile retail installment contracts (i.e. loans) and leases entered into by customers that purchased or leased certain VW vehicles, as well as dealer floorplan loans. These financing arrangements were primarily collateralized by the vehicles underlying the loan and lease transactions. The department alleged that certain of these loans, leases, and floorplan financings were pooled together to create asset-backed securities and that federally insured financial institutions purchased certain notes in these securities. Today’s FIRREA resolution is part of the department’s ongoing efforts to deter wrongdoers from using the financial markets to facilitate their fraud and to ensure the stability of the nation’s financial system.
Except where based on admissions by VW, the claims resolved by the civil agreements are allegations only.
The civil settlements were handled by the Environmental Enforcement Section of the Environmental and Natural Resources Division, with assistance from the EPA; the Commercial Litigation Branch of the Civil Division; and CBP.
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Vice President of Berkeley County business pleads guilty to failure to pay taxesRead the Press Release
MARTINSBURG, WEST VIRGINIA – Reba Marcelle Myers, of Winchester, Virginia pled guilty to failing to pay $10,864.60 in taxes for a business where she was employed as Vice President, Acting United States Attorney Betsy Steinfeld Jividen, announced.
She pled guilty to one count of “Willful Failure to Collect/Pay Over Tax.” She faces up to five years in prison and a fine of up to $250,000. 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 Michael D. Stein prosecuted the case on behalf of the government. The Internal Revenue Service investigated.
U.S. Magistrate Judge Michael John Aloi presided.
U.S. Attorney’s Office presents more than $1 million in proceeds from money laundering case to law enforcement agenciesRead the Press Release
SHREVEPORT, La. – United States Attorney Stephanie A. Finley announced today that the U.S. Attorney’s Office, FBI and the IRS presented $800,126 to state and local law enforcement agencies upon completing a forfeiture action involving money laundered through a local car dealership.
At the conclusion of a money laundering prosecution of the owners and operators of Mike’s Auto Sales and A-1 Auto Finance Company, the United States forfeited assets totaling $2,194,270. Of this amount $1,253,783 was allocated for disbursement to law enforcement agencies who participated in the investigation. The Louisiana State Police, Caddo Parish Sheriff’s Office, Bossier Parish Sheriff’s Office, Desoto Parish Sheriff’s Office, Shreveport Police Department and the Bossier City Police Department each received approximately $174,170. The Internal Revenue Service received $208,765. The forfeited funds came from the sale of assets of Mike’s Auto Sales and A-1 Auto Finance Company. The companies obtained these assets by facilitating the acquisition of cars and laundering money for drug dealers.
Michael Paul Boyter, 54, and Anthony Reuben Riley, 53, both of Shreveport, were two of the owners and operators of Mike’s Auto Sales and A-1 Auto Finance Company. They were sentenced on February 18, 2014 by U.S. District Judge Elizabeth E. Foote, on charges arising out of a money laundering conspiracy operated from the businesses. Boyter was sentenced to 60 months in prison for wire fraud and tax evasion charges. He was also ordered to pay $290,381 restitution and a $200,000 fine. Riley was sentenced to 15 months in prison for the failure to file Form 8300 charges and was ordered to pay a $100,000 fine. As part of their plea agreements with the United States, both men also agreed to forfeit property of Mike’s Auto Sales and A-1 Auto Finance, and to pay a money judgment of $1.3 million.
Since the sentencings, the properties where the businesses were housed were sold and funds in bank and brokerage accounts were seized. According to evidence presented at the guilty pleas, the defendants engaged in a conspiracy to commit money laundering beginning in 1996 and continuing through November 2010. The defendants’ scheme concerned the sale and financing of used and new vehicles to individuals who derived, or represented that they derived, significant income from the distribution of illegal drugs. The defendants knowingly accepted cash from drug dealers, allowed vehicle purchases in the names of nominees, and falsified records of payments received. The defendants also provided false information to multiple local and federal law enforcement agencies, including the Shreveport Police Department and the Harrison County Sheriff’s Office, to facilitate the release of vehicles seized from drug dealers.
In 2009 and 2010, the FBI conducted multiple “sting” operations using cooperating individuals to purchase vehicles from Mikes Auto Sales. During the undercover operations, Boyter, Riley, and others accepted large cash payments toward the purchase of vehicles, registered the vehicles in the name of nominees, and failed to report cash received in excess of $10,000 as required by federal law. These operations proved that the defendants routinely accepted large amounts of money thought to be drug proceeds and skimmed cash from down payments by manipulating records to show lower sales prices and reduced amounts of down payments.
“This case serves as an example of what can happen when law enforcement agencies work together,” Finley said. “The defendants in this case shamelessly facilitated drug trafficking by allowing drug dealers to launder their money and obtain vehicles that they otherwise would have been unable to purchase without detection by law enforcement. The dismantling of this criminal enterprise led to the sale of its assets and the funds being distributed today. This money will allow these law enforcement agencies to further provide needed services to our community.”
The case is part of an investigation called Operation NOMAS conducted by the Organized Crime Drug Enforcement Task Force (OCDETF). OCDETF is a joint multi-agency group consisting of federal, state, and local law enforcement agencies with a cooperative approach to combat drug trafficking.
Operation NOMAS was investigated by the FBI’s Northwest Louisiana Violent Crimes Task Force, IRS-Criminal Investigations, Drug Enforcement Administration, United States Marshals Service, Immigration & Customs Enforcement, Shreveport Police Department, Caddo Parish Sheriff’s Office, Bossier Parish Sheriff’s Office, Bossier City Police Department, Louisiana State Police, the Louisiana National Guard Counter-Drug Task Force and the DeSoto Parish Sheriff’s Office and the Tri-Parish Drug Task Force. The Harrison County Sheriff’s Office in Marshall, Texas, also assisted. Assistant U.S. Attorneys Allison D. Bushnell, Cytheria D. Jernigan and Richard A. Willis prosecuted this case.
U.S. Attorney Statement on National Human Trafficking Awareness DayRead the Press Release
The President has designated January as National Slavery and Human Trafficking Prevention Month, and the U.S. Attorney’s Office for the District of Connecticut continues to prioritize human trafficking offenses, which are among the most heinous crimes the Office prosecutes. Federal prosecutors focus their resources on prosecuting the sex trafficking of minors, but also investigates cases involving the sex trafficking of particularly vulnerable adults and labor trafficking.
In November 2015, we announced the formation of the Connecticut Human Trafficking Task Force. The Task Force is composed of special agents from Homeland Security Investigations, the Federal Bureau of Investigation, and the U.S. Department of Labor; investigators from the Connecticut State Police; officers from 16 police departments throughout the state; and representatives from State’s Attorneys’ Offices, and is led by Assistant U.S. Attorney Sarala V. Nagala, Deputy Chief of the Major Crimes and National Security Unit, and Assistant U.S. Attorney David Novick, Chief of the Financial Fraud and Public Corruption Unit.
In recent history, the Office has prosecuted 28 defendants for violations of the human trafficking laws, and in 2016, indicted or obtained guilty pleas from five defendants for sex trafficking. In 2016, in separate cases, Jordan Anate and Romane St. Christopher McKenzie were each sentenced to 10 years in federal prison for engaging in the sex trafficking of minors. In another case, Ramon Gomez pleaded guilty to sex trafficking of a minor in a case where the 17-year-old minor died from an overdose of heroin that was supplied by Gomez.
Members of the U.S. Attorney’s Office routinely participate in trainings for law enforcement officers, hospital workers, school groups and community organizations regarding human trafficking. In January 2017 alone, prosecutors will take part in hotel worker training sponsored by the Connecticut Lodging Association, law enforcement training at the Connecticut Police Officer Standards and Training Academy, and hospital worker training at St. Francis Hospital in Hartford.
Today, as part of National Human Trafficking Awareness Day, I and other members of my Office wore blue in conjunction with the Department of Homeland Security’s Blue Campaign, to stand in solidarity with victims of human trafficking worldwide. The U.S. Attorney’s Office thanks our governmental and non-governmental victim services providers, including the Department of Children and Families and the International Institute of Connecticut, for the critical work they do to help individuals transition from victims to survivors.
Human traffickers, particularly those who prey on children, exploit the most vulnerable segments of our society. We will continue to devote significant federal resources to investigate and prosecute those who profit from the abuse and exploitation of our children.
Deirdre M. Daly
U.S. Attorney for the District of Connecticut
January 11, 2017Two Shreveport residents sentenced for sex trafficking a minorRead the Press Release
SHREVEPORT, La. – United States Attorney Stephanie A. Finley announced a man and woman from Shreveport were sentenced Monday to 32 years and 20 years in prison for having a minor female from Texas engage in prostitution.
Tyrone Larry Smith, 37, and Lacoya Washington, 34, both of Shreveport, were sentenced by U.S. District Judge S. Maurice Hicks Jr. to 384 months and 240 months in prison respectively on one count of sex trafficking of a minor. Smith was also sentenced for one count of coercing or enticing a minor to travel to engage in prostitution. The defendants must also serve five years of supervised release and must register as sex offenders. According to evidence presented at the three-day trial, which ended July 27, 2016, Smith began conversing with a 14-year-old female from Texas over an internet dating service in June of 2015. He convinced her to travel to Shreveport saying he had feelings for her. Upon arriving in Shreveport, the female met Smith and Washington and stayed at their home. That same month, they brought her to local hotels where she engaged in prostitution. If she resisted, Smith struck her and abused her in order for her to continue the illegal activity. Smith also took the money from the prostitution. The minor was contacted by authorities who later arrested Smith and Washington.
“We will continue to work with our law enforcement partners to keep the children of our community safe by prosecuting those who engage in this despicable trade,” Finley stated. “Human trafficking exploits the most vulnerable among us.”
The FBI investigated the case. Assistant U.S. Attorneys James G. Cowles Jr. and Earl M. Campbell prosecuted the case.
January is National Slavery and Human Trafficking Prevention Month. Human trafficking takes many forms, but generally targets the most vulnerable in our society – our children, those who suffered past abuse, people with physical or mental disabilities, the poor and those without legal immigration status.
For more information on human trafficking and the department’s efforts to combat it, visit www.justice.gov/humantrafficking. For those wishing to find out more about victim services, please visit the website of the Department of Justice’s Office for Victims of Crime website – ovc.ncjrs.gov/humantrafficking. To report suspected human trafficking, connect with anti-trafficking services in your area or find anti-trafficking resources, contact the National Human Trafficking Resource Center hotline at 1-888-373-7888, [email protected] or www.traffickingresourcecenter.org. The toll-free hotline is available to answer calls from anywhere in the United States, 24 hours a day/seven days a week, in more than 200 languages.
This case is part of Project Safe Childhood, a U.S. Department of Justice nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse. Led by U.S. Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, visit www.projectsafechildhood.gov.
Those concerned may also leave tips with the FBI at tips.fbi.gov. Tips may be submitted anonymously. The Shreveport FBI office number is (318) 861-1890.
Two KC Men Indicted for Robberies, Illegal Firearm Following Police Chase, CollisionRead the Press Release
KANSAS CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced today that two Kansas City, Mo., men have been indicted by a federal grand jury for their roles in a series of local armed robberies following a head-on collision with a police vehicle in a Quik Trip parking lot while attempting to flee from officers.
Curlie Pruitt, III, 36, and Roy L. House, 38, both of Kansas City, were charged in a three-count indictment returned on Tuesday, Jan. 10, 2017, by a federal grand jury in Kansas City, Mo. The indictment replaces a federal criminal complaint that was filed against Pruitt and House on Dec. 22, 2016.
The federal indictment contains the original charge of being felons in possession of a firearm, and includes an additional count of conspiracy to commit robbery and an additional count of aiding and abetting one another in the use of a firearm during a violent crime.
The indictment alleges that Pruitt and House aided and abetted one another to possess a loaded American Tactical .45-caliber semi-automatic handgun on Dec. 20, 2016. Under federal law, it is illegal for anyone who has been convicted of a felony to be in possession of any firearm or ammunition. Pruitt has prior felony convictions for assault and robbery, as well as a prior federal conviction for being a felon in possession of a firearm. House has prior convictions for assault and robbery as well as a federal conviction for carjacking. House is currently serving a term of supervised release for that federal conviction.
The indictment also alleges that Pruitt and House participated in a conspiracy to rob Road Star Gas Station, 11100 E. US 40 Hwy., Independence, Mo.; Beeline Mini-Mart, 1005 Isley Blvd., Excelsior Springs, Mo.; and Discount Smoke Shop, 4718 N.E. Vivion Rd., Kansas City, Mo. Pruitt and House also are charged with using the loaded American Tactical handgun during those robberies.
According to an affidavit filed in support of the criminal complaint, Independence police officers were contacted by an employee at the Super 8 Hotel, 4031 S. Lynn Court Drive, Independence, at approximately 8:36 p.m. on Tuesday, Dec. 20, 2016, in regard to two men – later identified as Pruitt and House – who were acting suspiciously. The employee feared the men were going to rob the hotel, the affidavit says. They left the hotel but returned at approximately 9:05 p.m.
When officers arrived at the hotel, the affidavit says, Pruitt and House were in a blue Ford 500 and were leaving the area, with Pruitt driving. A police officer activated the emergency equipment on his patrol vehicle to initiate a traffic stop, however, Pruitt allegedly accelerated the vehicle and drove through the parking lot of the Quik Trip at 4024 S. Noland Road, Independence. As Pruitt’s vehicle continued at a high rate of speed through the parking lot, traveling toward S. Noland Road, it collided head-on with the patrol vehicle of another officer who was responding to assist. The collision was severe enough to disable both vehicles.
Pruitt immediately attempted to exit his vehicle and flee, the affidavit says, but was trapped by a third police vehicle that pinned the driver’s side door closed. Pruitt and House were placed under arrest. Officers found a loaded American Tactical .45-caliber semi-automatic handgun on the floor board of the front passenger seat area.
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 Assistant U.S. Attorney Bruce Rhoades. It was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives, the Independence, Mo., Police Department, the Kansas City, Mo., Police Department and the Excelsior Springs, Mo., Police Department.
Two Jackson Men Sentenced to 60 months in Armed Carjacking CaseRead the Press Release
Jackson, Miss - Gregory Hines, age 20 and Deontra Deon Paige, age 19, both of Jackson, were sentenced on January 10, 2017 before U.S. District Judge David Bramlette III to a term of 60 months in federal prison, after having previously pled guilty in U.S. District Court to armed carjacking, announced U.S. Attorney Gregory K. Davis.
The crime took place on February 6, 2016 at a residence in Jackson. The victims, a husband and wife, had arrived home for the evening, when the wife decided to retrieve her Bible from their vehicle. As she attempted to do so, the defendants approached her, both bearing firearms. The defendants ordered her out of the vehicle and demanded the keys. The husband located the keys and tossed them to the defendants. The defendants left in the vehicle where Jackson Police Department officers subsequently apprehended them in the drive thru of the Burger King restaurant on Terry Road in Jackson. Jackson Police Department officers were able to locate the weapons used in the carjacking.
Hines and Paige’s 60 months’ terms of imprisonment shall be immediately followed by a three-year term of supervised release and they were both further ordered to pay a fine in the amount of $1,500.
This case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives along with the Jackson Police Department, and prosecuted by Assistant U.S. Attorney Abe McGlothin, Jr.
Thibodaux Man Sentenced for an Extensive Computer Hacking Scheme Involving Nearly 50 VictimsRead the Press Release
U.S. Attorney Kenneth A. Polite announced that BRADER YELVERTON, age 24, of Thibodaux, was sentenced today after previously pleading guilty as charged to a one-count Bill of Information charging him with unauthorized access of a protected computer.
U.S. District Judge Jay C. Zainey sentenced YELVERTON to 5 years probation and $3,500 in restitution.
According to court documents, between about 2013 and December 2015, YELVERTON accessed the personal online accounts, including email, educational, social media, and “cloud” storage accounts of at least 49 individuals without their knowledge or authorization. All of the individuals whose accounts YELVERTON accessed without authorization were individuals he knew. The vast majority of the victims were females, as well as several of their significant others.
YELVERTON obtained access to an account by using publicly accessible information, or information he knew about the victim, to isolate the password for one of the accounts, usually his/her social media account. YELVERTON then used the information contained in the social media account to obtain the password to other accounts of the victim. Once he obtained access to the accounts, YELVERTON changed the passwords so that he could continue to access them. After YELVERTON obtained access to the accounts, he searched through them and obtained personal information of the victims, including, in some cases, sensitive photographs of the victims.
In the case of one victim, YELVERTON viewed not more than 380 pictures stored on her various online accounts. After saving some of the pictures to his personal computer, YELVERTON uploaded at least two private, sensitive photographs of the victim that he obtained from her private accounts onto an online anonymous image trading board that provides for state-specific and city-specific fora for individuals to upload, view, download, and trade images. During the upload process, YELVERTON entitled the images using the first name and last initial of the victim, so that other visitors to the website could readily identify the victim.
U.S. Attorney Polite praised the work of the Federal Bureau of Investigation in investigating this matter. Assistant United States Attorney Jordan Ginsberg was in charge of the prosecution.
Spartanburg Initiative to Combat Domestic Violence Results in First Guilty PleaRead the Press Release
Contact Person: Lance Crick (864) 282-2100
SPARTANBURG, South Carolina ---- United States Attorney Beth Drake stated today that James Lee Sarratt, Jr., age 49, of Spartanburg, entered a guilty plea this morning in federal court in Greenville for illegally possessing a firearm. United States District Judge Bruce H. Hendricks presided over the guilty plea hearing and will impose a sentence after a presentence investigation report is prepared by United States Probation.
Sarratt, a previously convicted felon who is prohibited from possessing firearms or ammunition, faces a maximum of 10 years in federal prison. Sarratt was arrested on federal firearms charges on October 31, 2016, and has remained in custody, detained without bond, since his federal arrest.
The facts presented at the guilty plea hearing established that on the morning of September 30, 2016, members of the Spartanburg County Sheriff’s Office (SCSO) responded to a domestic disturbance involving a firearm at a residence in
Spartanburg. When deputies arrived at the residence, witnesses alerted SCSO that Sarratt had a firearm. Sarratt did not have a firearm on him when deputies approached him but Sarratt later admitted he put the firearm in a truck at the residence. Inside the bedroom of the residence, a male was on the floor with a gunshot wound to his abdomen.
One witness told SCSO that during an argument in the bedroom, with the child present, Sarratt retrieved his .40 caliber pistol from under the mattress. Ultimately one witness attempted to grab Sarratt’s arm. The gun went off and the witness fell to the ground, shot in the abdomen. Sarratt then left the residence to place his firearm in his truck.
A search warrant obtained for the property yielded a black Hi-Point JCP, .40 caliber pistol loaded with seven (7) rounds of Winchester .40 caliber ammunition in a pick-up truck and a box containing fourteen (14) rounds of Winchester .40 caliber ammunition in the bedroom.
Sarratt’s case was investigated by the Spartanburg County Sheriff’s Office and the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF). The case is assigned to First Assistant United States Attorney Lance Crick.
Sarratt’s plea was the first one to emanate out of “Home Front”, a focused deterrence-based initiative to combat domestic violence led by 7th Circuit Solicitor Barry Barnette. The initiative, launched last month has the support and partnership of the U.S. Attorney’s Office.
Modelled after a program started in High Point, NC, members of the Home Front task force began earlier this fall, meeting with representatives from every police department in Spartanburg county as well as the Sheriff’s Office. The Spartanburg County State Probation office and victim’s advocate stalwart, SAFE Homes, also serve as critical partners in this effort.
Under the guidance of Solicitor Barnette and High Point (NC) Chief Marty Sumner, Home Front has quickly gone from concept to reality. High Point’s model and research suggests that early intervention is key in stopping the cycle of violence. The Home Front strategy identifies and focuses on offenders at the earliest stages of offending, before their violent conduct is entrenched and escalating.
According to the Center for Disease Control and Prevention, domestic violence is a community crime problem that costs the United States over $5.8 billion every year. It is a major drain on law enforcement resources as domestic violence generates a high volume of calls and repeated calls to the same location. Domestic violence homicides make up 40–50 percent of all murders of women in the United States. Women who have experienced a history of domestic violence report more health problems than other women and they have a greater risk for substance abuse, unemployment, alcoholism, and suicide attempts.
Research shows that the repeat domestic violence offender tends to have a significant criminal history that includes a wide range of both domestic violence and non-domestic violence offenses. Most of these offenders are readily identified as they are known to the criminal justice system. The Home Front initiative exposes the repeat domestic violence offender to sanctions because of his pattern of criminal behavior.
According to the 2015 Violence Policy Center When Men Murder Women report, South Carolina led the nation in rates of women murdered by men. Sixty-six percent (66%) of the victims were killed with a firearm and ninety-six percent (96%) of women murdered were killed by someone they knew.
In Spartanburg County during the 2015 calendar year, SAFE Homes serviced 6726 victims of domestic violence. In the same time frame, the Spartanburg Police Department charged 907 domestic violence cases and the Spartanburg County Sheriff’s Office charged 1068 domestic violence cases. There were fourteen (14) domestic related deaths in Spartanburg County in 2015.
Solicitor Barnette has had enough. “Domestic violence is violence, period. It continues to plague our community--so costly and harmful to families and children, persisting year after year. It is time for these offenders to get our best shot—our best efforts. That is Home Front.”
United States Attorney Beth Drake agrees. “The U.S. Attorney’s Office and the Bureau of Alcohol, Tobacco and Firearms welcome the opportunity to partner with Solicitor Barnette and state law enforcement, and to use federal gun laws to pull violent offenders who are abusing their families and loved ones out of the community. The goal is simple – stop the abuse, or swift and sure, the full force of a coordinated law enforcement effort will come to bear to stop you from abusing. Home Front takes the burden of addressing abusers from the victims and shifts it to us – a very engaged group of local, state, and federal law enforcement.”
The Home Front task force began a thorough, eight-step implementation process in the fall. The steps included training officers, synchronizing the coding of calls among the law enforcement agencies to harmonize communication--to create a back stop of sorts so that no domestic calls or offenders slip through the cracks among the sixteen municipal law enforcement entities in Spartanburg County. Very early in the implementation process, the task force began creating a comprehensive list of domestic violence offenders from the previous twelve months of arrests in Spartanburg County for domestic-related incidents. Offenders were categorized from most dangerous (Class A), repeat offender (Class B), first time DV arrest (Class C), and any non-arrest domestic violence interface with law enforcement (Class D). For the most serious or repeat offenders, pending cases are fast-tracked to ATF and the US Attorney’s Office for immediate federal prosecution or prioritized for expedited state prosecution. This process includes creating an enhanced system of tracking for offenders who are notified at any level or category. Custom notification letters, hand-delivered by law enforcement to offenders within 48 hours of the initial law enforcement contact, serve to alert offenders that they are on the Home Front radar going forward as well as detailing presumptive sentences for future acts of violence or prohibited behavior.
Solicitor Barnette is optimistic about the collaboration and is confident the focus and dedication of this task force will not waiver. “Securing our communities and ensuring that victims and children can feel safe in their own homes—breaking this horrific cycle of violence, that is our charge.”
Home Front Task Force:City of Spartanburg Police Department
City of Campobello
City of Pacolet Police Department
City of Chesnee Police Department
City of Cowpens Police Department
City of Duncan Police Department
City of Greer Police Department
City of Inman Police Department
City of Landrum Police Department
City of Lyman Police Department
City of Wellford Police Department
City of Woodruff Police Department
Spartanburg County Sheriff’s Office
Greenville-Spartanburg International Airport Police Department
Victim Advocates
Victim Services Providers
Behavioral Health
SC Dept. of Probation, Pardon and Parole Services
U. S. Attorney's Office, District of South Carolina
Bureau of Alcohol, Tobacco and Firearms
Seventh Circuit Solicitor’s Office
SAFE Homes
Children’s Advocacy Center of Spartanburg, Cherokee, & Union#####
Shire Plc Subsidiaries to Pay $350 Million to Settle False Claims Act AllegationsRead the Press Release
Tampa, FL – United States Attorney A. Lee Bentley, III announced today that Shire Pharmaceuticals LLC and other subsidiaries of Shire plc (Shire) will pay $350 million to settle federal and state False Claims Act allegations that Shire and the company it acquired in 2011, Advanced BioHealing (ABH), employed kickbacks and other unlawful methods to induce clinics and physicians to use or overuse its product “Dermagraft,” a bioengineered human skin substitute approved by the FDA for the treatment of diabetic foot ulcers. Shire plc is a multinational pharmaceutical firm headquartered in Ireland, with its United States operational headquarters in Lexington, Massachusetts. Shire sold the assets associated with Dermagraft in early 2014.
“Flagrant and systemic kickback activity of the type at issue in this case is designed to impair and undermine a physician’s independent medical judgment, and will not be tolerated,” said U.S. Attorney Bentley. “This lawsuit and today’s historic settlement demonstrate our office’s vigilant and on-going efforts to safeguard federal health care program beneficiaries from the effects of such illegal and deplorable conduct.” In addition to this landmark civil settlement, the office continues to work diligently to bring to justice those individuals responsible for these illegal actions. Already, the MDFL has obtained the criminal convictions of three high-level executives who supervised the implementation of the illegal kickback scheme, as well as a number of healthcare providers who received kickbacks.
“This settlement represents the largest False Claims Act recovery by the United States in a kickback case involving a medical device,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “Kickbacks by suppliers of healthcare goods and services cast a pall over the integrity of our health care system. Patients deserve the unfettered, independent judgment of their health care professionals.”
The settlement resolves allegations that Dermagraft salespersons unlawfully induced clinics and physicians with lavish dinners, drinks, entertainment and travel; medical equipment and supplies; unwarranted payments for purported speaking engagements and bogus case studies; and cash, credits and rebates, to induce the use of Dermagraft. The Anti-Kickback Statute prohibits, among other things, the payment of remuneration to induce the use of medical devices covered by Medicare, Medicaid and other federally-funded health care programs, including the Department of Veterans Affairs (VA). Claims filed in violation of the Anti-Kickback Statute are considered false or fraudulent under the False Claims Act. In addition, the Anti-Bribery statute and the Federal Acquisition Regulations prohibit bribes to government officials or employees, including VA physicians, to obtain a contract or favorable treatment under a supply contract. The United States alleged that as a result of its violation of these provisions, Shire submitted or caused to be submitted to federally-funded health care programs hundreds of millions of dollars of false claims for Dermagraft.
The U.S. Attorney’s Office for the District of Columbia also played an active role in this investigation, seeking redress in the civil agreement announced today for the losses sustained by the VA. “Giving kickbacks and gratuities to healthcare providers corrupts medical treatment by interjecting personal financial incentives into decisions that should focus on what is best for a particular patient,” said U.S. Attorney Channing D. Phillips for the District of Columbia. “These types of unlawful incentives are particularly troubling when they seek to corrupt the medical treatment provided to our nation’s veterans. We will aggressively pursue any company that engages in such reprehensible and unlawful conduct, which seeks to put a company’s financial gains ahead of providing the best medical treatment for those who bravely served in our Armed Forces.”
The U.S. Attorneys’ Office for the Eastern District of Pennsylvania and the Middle District of Tennessee also contributed to the investigation and resolution of these matters. “Fraud against the health care program that exists for the benefit of our veterans, some of our most cherished citizens, as well as fraud against the Medicare program, is reprehensible and unacceptable,” said the Acting U.S. Attorney Louis D. Lappen for the Eastern District of Pennsylvania. “This resolution again demonstrates the capacity of the Department of Justice and our law enforcement partners across the country to work together to address unlawful conduct nationwide that affects veterans and other beneficiaries of federally funded health care programs.”
“The best interest of the patient is, and must be, the primary factor in a physician’s decision regarding patient care,” said U.S. Attorney David Rivera for the Middle District of Tennessee. “As such, federal law protects patients from medical providers who enrich themselves through bribes and kickbacks by making illegal the payment of remuneration to induce the use of medical devises covered by federally-funded health care programs. Such kickback schemes that interfere with physician-patient relationships and drive up the cost of healthcare for everyone, will be vigorously pursued and aggressively prosecuted.”
“U.S. Department of Veterans Affairs healthcare providers are obligated to render care free of any improper financial influences” said Special Agent in Charge Michael E. Seitler of the U.S. Department of Veterans Affairs, Office of Inspector General (VA OIG), Northwest Field Office. “This is particularly important at VA, since we care for many of this nation’s heroes who have sacrificed their own welfare for our freedom. In this case, ABH saw a dramatic rise in its sales to the VA during the period of time it provided illegal inducements to multiple VA clinicians across the country. These corrupt practices served to erode the public trust in our healthcare system. The VA OIG is committed to investigating, and bringing to justice, those who engage in these illegal practices.”
In addition to the kickback allegations, the settlement also resolved allegations that Shire and its predecessor (ABH) unlawfully marketed Dermagraft for uses not approved by the FDA, made false statements to inflate the price of Dermagraft, and caused improper coding, verification, or certification of Dermagraft claims and related services.
The allegations resolved by the settlement were brought in six lawsuits filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private parties to sue on behalf of the government for false claims and to receive a share of any recovery. The whistleblower shares to be awarded in this case have not yet been determined.
The six qui tam cases, all of which were either filed or transferred to the U.S. District Court for the Middle District of Florida, are captioned: United States ex rel. Vinca v. Advanced BioHealing, Inc., Case No. 8:11-cv-176-T-30MAP; United States ex rel. Harvey v. Advanced BioHealing, Inc., Case No. 8:16-cv-303-T-30TBM; United States ex rel. Medolla v. Advanced BioHealing, Inc., Case No. 8:12-cv-575-T-30TBM; United States, et al., ex rel. Petty v. Shire Regenerative Medicine, Inc., Case No. 8:14-cv-969-T-30TBM; United States ex rel. Webb v. Advanced BioHealing, Inc., Case No. 8:14-cv-1055-T-30EAJ; and United States ex rel. Montecalvo v. Shire Regenerative Medicine, Inc., Case No. 8:16-cv-268-T-30TBM.
These matters were investigated by the Civil Division’s Commercial Litigation Branch; the U.S. Attorneys’ Offices for the Middle District of Florida, District of Columbia, Middle District of Tennessee and Eastern District of Pennsylvania; the FBI; the U.S. Department of Health and Human Services (HHS) Office of Inspector General; the VA OIG and the Department of Defense Criminal Investigative Service. These cases were handled locally by Assistant United States Attorneys Randy Harwell and Chris Tuite working jointly with Department of Justice Trial Attorney Richard Nicholson.
Shire, which cooperated in the government’s investigation, has been operating under a Corporate Integrity Agreement entered into with HHS that was implemented in late 2014, after the alleged unlawful conduct resolved by today’s settlement occurred, in connection with the settlement of separate False Claims Act allegations.
“Patients must be able to trust that decisions made by their doctors are based on unbiased professional judgment and not personal gain,” said Chief Counsel Gregory E. Demske to the HHS Inspector General. “The Office of the Inspector General will continue to monitor Shire’s compliance with federal healthcare programs through its oversight of Shire’s Corporate Integrity Agreement.”
This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $31.4 billion through False Claims Act cases, with more than $19.6 billion of that amount recovered in cases involving fraud against federal health care programs.
The claims resolved by the settlement are allegations only, and there has been no determination of liability.
Shire PLC Subsidiaries to Pay $350 Million to Settle False Claims Act AllegationsRead the Press Release
The Justice Department announced today that Shire Pharmaceuticals LLC and other subsidiaries of Shire plc (Shire) will pay $350 million to settle federal and state False Claims Act allegations that Shire and the company it acquired in 2011, Advanced BioHealing (ABH), employed kickbacks and other unlawful methods to induce clinics and physicians to use or overuse its product “Dermagraft,” a bioengineered human skin substitute approved by the FDA for the treatment of diabetic foot ulcers. Shire plc is a multinational pharmaceutical firm headquartered in Ireland, with its United States operational headquarters in Lexington, Massachusetts. Shire sold the assets associated with Dermagraft in early 2014.
“This settlement represents the largest False Claims Act recovery by the United States in a kickback case involving a medical device,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “Kickbacks by suppliers of healthcare goods and services cast a pall over the integrity of our health care system. Patients deserve the unfettered, independent judgment of their health care professionals.”
The settlement resolves allegations that Dermagraft salespersons unlawfully induced clinics and physicians with lavish dinners, drinks, entertainment and travel; medical equipment and supplies; unwarranted payments for purported speaking engagements and bogus case studies; and cash, credits and rebates, to induce the use of Dermagraft. The Anti-Kickback Statute prohibits, among other things, the payment of remuneration to induce the use of medical devices covered by Medicare, Medicaid and other federally-funded health care programs, including the Department of Veterans Affairs (VA). Claims filed in violation of the Anti-Kickback Statute are considered false or fraudulent under the False Claims Act. In addition, the Anti-Bribery statute and the Federal Acquisition Regulations prohibit bribes to government officials or employees, including VA physicians, to obtain a contract or favorable treatment under a supply contract. The United States alleged that as a result of their violation of these provisions, ABH and Shire submitted or caused to be submitted to federally-funded health care programs hundreds of millions of dollars of false claims for Dermagraft.
“Flagrant and systemic kickback activity of the type at issue in this case is designed to impair and undermine a physician’s independent medical judgment, and will not be tolerated,” said U.S. Attorney A. Lee Bentley III for the Middle District of Florida (MDFL). “This lawsuit and today’s historic settlement demonstrate our office’s vigilant and on-going efforts to safeguard federal health care program beneficiaries from the effects of such illegal and deplorable conduct.” In addition to this landmark civil settlement, Mr. Bentley’s office continues to work diligently to bring to justice those individuals responsible for these illegal actions. Already, the MDFL has obtained the criminal convictions of three high-level executives who supervised the implementation of the illegal kickback scheme, as well as a number of healthcare providers who received kickbacks.
The U.S. Attorney’s Office for the District of Columbia also played an active role in this investigation, seeking redress in the civil agreement announced today for the losses sustained by the VA. “Giving kickbacks and gratuities to healthcare providers corrupts medical treatment by interjecting personal financial incentives into decisions that should focus on what is best for a particular patient,” said U.S. Attorney Channing D. Phillips for the District of Columbia. “These types of unlawful incentives are particularly troubling when they seek to corrupt the medical treatment provided to our nation’s veterans. We will aggressively pursue any company that engages in such reprehensible and unlawful conduct, which seeks to put a company’s financial gains ahead of providing the best medical treatment for those who bravely served in our Armed Forces.”
The U.S. Attorneys’ Office for the Eastern District of Pennsylvania and the Middle District of Tennessee also contributed to the investigation and resolution of these matters. “Fraud against the health care program that exists for the benefit of our veterans, some of our most cherished citizens, as well as fraud against the Medicare program, is reprehensible and unacceptable,” said the Acting U.S. Attorney Louis D. Lappen for the Eastern District of Pennsylvania. “This resolution again demonstrates the capacity of the Department of Justice and our law enforcement partners across the country to work together to address unlawful conduct nationwide that affects veterans and other beneficiaries of federally funded health care programs.”
“The best interest of the patient is, and must be, the primary factor in a physician’s decision regarding patient care,” said U.S. Attorney David Rivera for the Middle District of Tennessee. “As such, federal law protects patients from medical providers who enrich themselves through bribes and kickbacks by making illegal the payment of remuneration to induce the use of medical devises covered by federally-funded health care programs. Such kickback schemes that interfere with physician-patient relationships and drive up the cost of healthcare for everyone, will be vigorously pursued and aggressively prosecuted.”
"U.S. Department of Veterans Affairs healthcare providers are obligated to render care free of any improper financial influences” said Special Agent in Charge Michael E. Seitler of the U.S. Department of Veterans Affairs, Office of Inspector General (VA OIG), Northwest Field Office. “This is particularly important at VA, since we care for many of this nation’s heroes who have sacrificed their own welfare for our freedom. In this case, ABH saw a dramatic rise in its sales to the VA during the period of time it provided illegal inducements to multiple VA clinicians across the country. These corrupt practices served to erode the public trust in our healthcare system. The VA OIG is committed to investigating, and bringing to justice, those who engage in these illegal practices.”
In addition to the kickback allegations, the settlement also resolved allegations that Shire and its predecessor ABH unlawfully marketed Dermagraft for uses not approved by the FDA, made false statements to inflate the price of Dermagraft, and caused improper coding, verification, or certification of Dermagraft claims and related services.
The allegations resolved by the settlement were brought in six lawsuits filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private parties to sue on behalf of the government for false claims and to receive a share of any recovery. The whistleblower shares to be awarded in this case have not yet been determined.
The six qui tam cases, all of which were either filed or transferred to the U.S. District Court for the Middle District of Florida, are captioned: United States ex rel. Vinca v. Advanced BioHealing, Inc., Case No. 8:11-cv-176-T-30MAP; United States ex rel. Harvey v. Advanced BioHealing, Inc., Case No. 8:16-cv-303-T-30TBM; United States ex rel. Medolla v. Advanced BioHealing, Inc., Case No. 8:12-cv-575-T-30TBM; United States, et al., ex rel. Petty v. Shire Regenerative Medicine, Inc., Case No. 8:14-cv-969-T-30TBM; United States ex rel. Webb v. Advanced BioHealing, Inc., Case No. 8:14-cv-1055-T-30EAJ; and United States, et al., ex rel. Montecalvo v. Shire Regenerative Medicine, Inc., Case No. 8:16-cv-268-T-30TBM.
These matters were investigated by the Civil Division’s Commercial Litigation Branch; the U.S. Attorneys’ Offices for the Middle District of Florida, District of Columbia, Middle District of Tennessee and Eastern District of Pennsylvania; the FBI; the U.S. Department of Health and Human Services (HHS) Office of Inspector General; the VA OIG and the Department of Defense Criminal Investigative Service.
Shire, which cooperated in the government’s investigation, has been operating under a Corporate Integrity Agreement entered into with HHS that was implemented in late 2014, after the alleged unlawful conduct resolved by today’s settlement occurred, in connection with the settlement of separate False Claims Act allegations.
“Patients must be able to trust that decisions made by their doctors are based on unbiased professional judgment and not personal gain,” said Chief Counsel Gregory E. Demske to the HHS Inspector General. “The Office of the Inspector General will continue to monitor Shire’s compliance with federal healthcare programs through its oversight of Shire’s Corporate Integrity Agreement.”
This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $31.4 billion through False Claims Act cases, with nearly $19.6 billion of that amount recovered in cases involving fraud against federal health care programs.
The claims resolved by the settlement are allegations only, and there has been no determination of liability.
Shire PLC Subsidiaries to Pay $350 Million to Settle False Claims Act AllegationsRead the Press Release
WASHINGTON – The Justice Department announced today that Shire Pharmaceuticals LLC and other subsidiaries of Shire plc (Shire) will pay $350 million to settle federal and state False Claims Act allegations that Shire and the company it acquired in 2011, Advanced BioHealing (ABH), employed kickbacks and other unlawful methods to induce clinics and physicians to use or overuse its product “Dermagraft,” a bioengineered human skin substitute approved by the FDA for the treatment of diabetic foot ulcers. Shire plc is a multinational pharmaceutical firm headquartered in Ireland, with its United States operational headquarters in Lexington, Massachusetts. Shire sold the assets associated with Dermagraft in early 2014.
“This settlement represents the largest False Claims Act recovery by the United States in a kickback case involving a medical device,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “Kickbacks by suppliers of healthcare goods and services cast a pall over the integrity of our health care system. Patients deserve the unfettered, independent judgment of their health care professionals.”
The settlement resolves allegations that Dermagraft salespersons unlawfully induced clinics and physicians with lavish dinners, drinks, entertainment and travel; medical equipment and supplies; unwarranted payments for purported speaking engagements and bogus case studies; and cash, credits and rebates, to induce the use of Dermagraft. The Anti-Kickback Statute prohibits, among other things, the payment of remuneration to induce the use of medical devices covered by Medicare, Medicaid and other federally-funded health care programs, including the Department of Veterans Affairs (VA). Claims filed in violation of the Anti-Kickback Statute are considered false or fraudulent under the False Claims Act. In addition, the Anti-Bribery statute and the Federal Acquisition Regulations prohibit bribes to government officials or employees, including VA physicians, to obtain a contract or favorable treatment under a supply contract. The United States alleged that as a result of their violation of these provisions, ABH and Shire submitted or caused to be submitted to federally-funded health care programs hundreds of millions of dollars of false claims for Dermagraft.
“Flagrant and systemic kickback activity of the type at issue in this case is designed to impair and undermine a physician’s independent medical judgment, and will not be tolerated,” said U.S. Attorney A. Lee Bentley III for the Middle District of Florida (MDFL). “This lawsuit and today’s historic settlement demonstrate our office’s vigilant and on-going efforts to safeguard federal health care program beneficiaries from the effects of such illegal and deplorable conduct.” In addition to this landmark civil settlement, Mr. Bentley’s office continues to work diligently to bring to justice those individuals responsible for these illegal actions. Already, the MDFL has obtained the criminal convictions of three high-level executives who supervised the implementation of the illegal kickback scheme, as well as a number of healthcare providers who received kickbacks.
The U.S. Attorney’s Office for the District of Columbia also played an active role in this investigation, seeking redress in the civil agreement announced today for the losses sustained by the VA. “Giving kickbacks and gratuities to healthcare providers corrupts medical treatment by interjecting personal financial incentives into decisions that should focus on what is best for a particular patient,” said U.S. Attorney Channing D. Phillips for the District of Columbia. “These types of unlawful incentives are particularly troubling when they seek to corrupt the medical treatment provided to our nation’s veterans. We will aggressively pursue any company that engages in such reprehensible and unlawful conduct, which seeks to put a company’s financial gains ahead of providing the best medical treatment for those who bravely served in our Armed Forces.”
The U.S. Attorneys’ Office for the Eastern District of Pennsylvania and the Middle District of Tennessee also contributed to the investigation and resolution of these matters. “Fraud against the health care program that exists for the benefit of our veterans, some of our most cherished citizens, as well as fraud against the Medicare program, is reprehensible and unacceptable,” said the Acting U.S. Attorney Louis D. Lappen for the Eastern District of Pennsylvania. “This resolution again demonstrates the capacity of the Department of Justice and our law enforcement partners across the country to work together to address unlawful conduct nationwide that affects veterans and other beneficiaries of federally funded health care programs.”
“The best interest of the patient is, and must be, the primary factor in a physician’s decision regarding patient care,” said U.S. Attorney David Rivera for the Middle District of Tennessee. “As such, federal law protects patients from medical providers who enrich themselves through bribes and kickbacks by making illegal the payment of remuneration to induce the use of medical devises covered by federally-funded health care programs. Such kickback schemes that interfere with physician-patient relationships and drive up the cost of healthcare for everyone, will be vigorously pursued and aggressively prosecuted.”
"U.S. Department of Veterans Affairs healthcare providers are obligated to render care free of any improper financial influences” said Special Agent in Charge Michael E. Seitler of the U.S. Department of Veterans Affairs, Office of Inspector General (VA OIG), Northwest Field Office. This is particularly important at VA, since we care for many of this nation’s heroes who have sacrificed their own welfare for our freedom. In this case, ABH saw a dramatic rise in its sales to the VA during the period of time it provided illegal inducements to multiple VA clinicians across the country. These corrupt practices served to erode the public trust in our healthcare system. The VA OIG is committed to investigating, and bringing to justice, those who engage in these illegal practices.”
In addition to the kickback allegations, the settlement also resolved allegations that Shire and its predecessor ABH unlawfully marketed Dermagraft for uses not approved by the FDA, made false statements to inflate the price of Dermagraft, and caused improper coding, verification, or certification of Dermagraft claims and related services.
The allegations resolved by the settlement were brought in six lawsuits filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private parties to sue on behalf of the government for false claims and to receive a share of any recovery. The whistleblower shares to be awarded in this case have not yet been determined.
The six qui tam cases, all of which were either filed or transferred to the U.S. District Court for the Middle District of Florida, are captioned: United States ex rel. Vinca v. Advanced BioHealing, Inc., Case No. 8:11-cv-176-T-30MAP; United States ex rel. Harvey v. Advanced BioHealing, Inc., Case No. 8:16-cv-303-T-30TBM; United States ex rel. Medolla v. Advanced BioHealing, Inc., Case No. 8:12-cv-575-T-30TBM; United States, et al., ex rel. Petty v. Shire Regenerative Medicine, Inc., Case No. 8:14-cv-969-T-30TBM; United States ex rel. Webb v. Advanced BioHealing, Inc., Case No. 8:14-cv-1055-T-30EAJ; and United States, et al., ex rel. Montecalvo v. Shire Regenerative Medicine, Inc., Case No. 8:16-cv-268-T-30TBM.
These matters were investigated by the Civil Division’s Commercial Litigation Branch; the U.S. Attorneys’ Offices for the Middle District of Florida, District of Columbia, Middle District of Tennessee and Eastern District of Pennsylvania; the FBI; the U.S. Department of Health and Human Services (HHS) Office of Inspector General; the VA OIG and the Department of Defense Criminal Investigative Service.
Shire, which cooperated in the government’s investigation, has been operating under a Corporate Integrity Agreement entered into with HHS that was implemented in late 2014, after the alleged unlawful conduct resolved by today’s settlement occurred, in connection with the settlement of separate False Claims Act allegations.
“Patients must be able to trust that decisions made by their doctors are based on unbiased professional judgment and not personal gain,” said Chief Counsel Gregory E. Demske to the HHS Inspector General. “The Office of the Inspector General will continue to monitor Shire’s compliance with federal healthcare programs through its oversight of Shire’s Corporate Integrity Agreement.”
This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $31.4 billion through False Claims Act cases, with nearly $19.6 billion of that amount recovered in cases involving fraud against federal health care programs.
The claims resolved by the settlement are allegations only, and there has been no determination of liability.
Shire PLC Subsidiaries to Pay $350 Million to Settle False Claims Act AllegationsRead the Press Release
Washington - The Justice Department announced today that Shire Pharmaceuticals LLC and other subsidiaries of Shire plc (Shire) will pay $350 million to settle federal and state False Claims Act allegations that Shire and the company it acquired in 2011, Advanced BioHealing (ABH), employed kickbacks and other unlawful methods to induce clinics and physicians to use or overuse its product “Dermagraft,” a bioengineered human skin substitute approved by the FDA for the treatment of diabetic foot ulcers. Shire plc is a multinational pharmaceutical firm headquartered in Ireland, with its United States operational headquarters in Lexington, Massachusetts. Shire sold the assets associated with Dermagraft in early 2014.
“This settlement represents the largest False Claims Act recovery by the United States in a kickback case involving a medical device,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “Kickbacks by suppliers of healthcare goods and services cast a pall over the integrity of our health care system. Patients deserve the unfettered, independent judgment of their health care professionals.”
The settlement resolves allegations that Dermagraft salespersons unlawfully induced clinics and physicians with lavish dinners, drinks, entertainment and travel; medical equipment and supplies; unwarranted payments for purported speaking engagements and bogus case studies; and cash, credits and rebates, to induce the use of Dermagraft. The Anti-Kickback Statute prohibits, among other things, the payment of remuneration to induce the use of medical devices covered by Medicare, Medicaid and other federally-funded health care programs, including the Department of Veterans Affairs (VA). Claims filed in violation of the Anti-Kickback Statute are considered false or fraudulent under the False Claims Act. In addition, the Anti-Bribery statute and the Federal Acquisition Regulations prohibit bribes to government officials or employees, including VA physicians, to obtain a contract or favorable treatment under a supply contract. The United States alleged that as a result of their violation of these provisions, ABH and Shire submitted or caused to be submitted to federally-funded health care programs hundreds of millions of dollars of false claims for Dermagraft.
“Flagrant and systemic kickback activity of the type at issue in this case is designed to impair and undermine a physician’s independent medical judgment, and will not be tolerated,” said U.S. Attorney A. Lee Bentley III for the Middle District of Florida (MDFL). “This lawsuit and today’s historic settlement demonstrate our office’s vigilant and on-going efforts to safeguard federal health care program beneficiaries from the effects of such illegal and deplorable conduct.” In addition to this landmark civil settlement, Mr. Bentley’s office continues to work diligently to bring to justice those individuals responsible for these illegal actions. Already, the MDFL has obtained the criminal convictions of three high-level executives who supervised the implementation of the illegal kickback scheme, as well as a number of healthcare providers who received kickbacks.
The U.S. Attorney’s Office for the District of Columbia also played an active role in this investigation, seeking redress in the civil agreement announced today for the losses sustained by the VA. “Giving kickbacks and gratuities to healthcare providers corrupts medical treatment by interjecting personal financial incentives into decisions that should focus on what is best for a particular patient,” said U.S. Attorney Channing D. Phillips for the District of Columbia. “These types of unlawful incentives are particularly troubling when they seek to corrupt the medical treatment provided to our nation’s veterans. We will aggressively pursue any company that engages in such reprehensible and unlawful conduct, which seeks to put a company’s financial gains ahead of providing the best medical treatment for those who bravely served in our Armed Forces.”
The U.S. Attorneys’ Office for the Eastern District of Pennsylvania and the Middle District of Tennessee also contributed to the investigation and resolution of these matters. “Fraud against the health care program that exists for the benefit of our veterans, some of our most cherished citizens, as well as fraud against the Medicare program, is reprehensible and unacceptable,” said the Acting U.S. Attorney Louis D. Lappen for the Eastern District of Pennsylvania. “This resolution again demonstrates the capacity of the Department of Justice and our law enforcement partners across the country to work together to address unlawful conduct nationwide that affects veterans and other beneficiaries of federally funded health care programs.”
“The best interest of the patient is, and must be, the primary factor in a physician’s decision regarding patient care,” said U.S. Attorney David Rivera for the Middle District of Tennessee. “As such, federal law protects patients from medical providers who enrich themselves through bribes and kickbacks by making illegal the payment of remuneration to induce the use of medical devises covered by federally-funded health care programs. Such kickback schemes that interfere with physician-patient relationships and drive up the cost of healthcare for everyone, will be vigorously pursued and aggressively prosecuted.”
U.S. Department of Veterans Affairs healthcare providers are obligated to render care free of any improper financial influences” said Special Agent in Charge Michael E. Seitler of the U.S. Department of Veterans Affairs, Office of Inspector General (VA OIG), Northwest Field Office. “This is particularly important at VA, since we care for many of this nation’s heroes who have sacrificed their own welfare for our freedom. In this case, ABH saw a dramatic rise in its sales to the VA during the period of time it provided illegal inducements to multiple VA clinicians across the country. These corrupt practices served to erode the public trust in our healthcare system. The VA OIG is committed to investigating, and bringing to justice, those who engage in these illegal practices.”
In addition to the kickback allegations, the settlement also resolved allegations that Shire and its predecessor ABH unlawfully marketed Dermagraft for uses not approved by the FDA, made false statements to inflate the price of Dermagraft, and caused improper coding, verification, or certification of Dermagraft claims and related services.
The allegations resolved by the settlement were brought in six lawsuits filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private parties to sue on behalf of the government for false claims and to receive a share of any recovery. The whistleblower shares to be awarded in this case have not yet been determined.
The six qui tam cases, all of which were either filed or transferred to the U.S. District Court for the Middle District of Florida, are captioned: United States ex rel. Vinca v. Advanced BioHealing, Inc., Case No. 8:11-cv-176-T-30MAP; United States ex rel. Harvey v. Advanced BioHealing, Inc., Case No. 8:16-cv-303-T-30TBM; United States ex rel. Medolla v. Advanced BioHealing, Inc., Case No. 8:12-cv-575-T-30TBM; United States, et al., ex rel. Petty v. Shire Regenerative Medicine, Inc., Case No. 8:14-cv-969-T-30TBM; United States ex rel. Webb v. Advanced BioHealing, Inc., Case No. 8:14-cv-1055-T-30EAJ; and United States, et al., ex rel. Montecalvo v. Shire Regenerative Medicine, Inc., Case No. 8:16-cv-268-T-30TBM.
These matters were investigated by the Civil Division’s Commercial Litigation Branch; the U.S. Attorneys’ Offices for the Middle District of Florida, District of Columbia, Middle District of Tennessee and Eastern District of Pennsylvania; the FBI; the U.S. Department of Health and Human Services (HHS) Office of Inspector General; the VA OIG and the Department of Defense Criminal Investigative Service.
Shire, which cooperated in the government’s investigation, has been operating under a Corporate Integrity Agreement entered into with HHS that was implemented in late 2014, after the alleged unlawful conduct resolved by today’s settlement occurred, in connection with the settlement of separate False Claims Act allegations.
“Patients must be able to trust that decisions made by their doctors are based on unbiased professional judgment and not personal gain,” said Chief Counsel Gregory E. Demske to the HHS Inspector General. “The Office of the Inspector General will continue to monitor Shire’s compliance with federal healthcare programs through its oversight of Shire’s Corporate Integrity Agreement.”
This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $31.4 billion through False Claims Act cases, with nearly $19.6 billion of that amount recovered in cases involving fraud against federal health care programs.
The claims resolved by the settlement are allegations only, and there has been no determination of liability.
Shelton Man Sentenced to 46 Months in Federal Prison for Distributing Heroin to Overdose VictimRead the Press Release
Deirdre M. Daly, United States Attorney for the District of Connecticut, announced that that JORGE MORALES, also known as “Capone,” 30, of Shelton, was sentenced today by U.S. District Judge Victor A. Bolden in Bridgeport to 46 months of imprisonment, followed by three years of supervised release, for distributing heroin. Judge Bolden also ordered MORALES to serve the first six months of supervised release in home confinement.
This matter stems from an ongoing statewide initiative targeting narcotics dealers who distribute heroin, fentanyl or opioids that cause death or serious injury to users.
According to court documents and statements made in court, on April 15, 2016, a 21-year-old woman was found unresponsive at her Bridgeport residence and was transported to the hospital. She has since died. Bridgeport Police recovered two baggies of suspected heroin packaged in glassine baggies from the bed next to where the victim was located. The baggies were marked with a particular brand stamp. A cellular telephone seized from the victim revealed numerous calls and text messages between the victim and MORALES in the days leading up the victim’s overdose.
On April 15, 2016, law enforcement conducted a controlled purchase of heroin, in baggies marked with the same brand stamp, from MORALES.
MORALES has been detained since his arrest on April 20, 2016. On July 13, 2016, he pleaded guilty to one count of possession with intent to distribute, and distribution of, heroin.
This investigation was conducted by the Drug Enforcement Administration’s New Haven Tactical Diversion Squad with the assistance of the Bridgeport, Derby, Shelton, Monroe, Middlebury and Woodbridge Police Departments. The Tactical Diversion Squad includes participants from the New Haven, Hamden, Greenwich, Shelton, Bristol, Vernon, Wilton, Milford, Monroe, Fairfield and Manchester Police Departments, and the Connecticut State Police. This case was prosecuted by Assistant U.S. Attorney Robert M. Spector.
Second Mesa Man Sentenced to Total of 90 Months for Domestic Violence OffensesRead the Press Release
PHOENIX – This week, Donovan Chaca, 38, of Second Mesa, Ariz., was sentenced by U.S. District Judge G. Murray Snow to 67 months of imprisonment, in addition to 23 months already served on related prosecutions in the Hopi Tribal Court. Chaca had previously pleaded guilty to assault resulting in substantial bodily injury to a dating partner and assault by strangling or suffocating a dating partner.
In August 2014 and January 2015, Chaca, who is a member of the Hopi Tribe, assaulted another member of the Hopi Tribe. The offenses occurred on the Hopi Indian Reservation in Hotevilla, Ariz.
The investigation in this case was conducted by the Federal Bureau of Investigation and the Bureau of Indian Affairs-Office of Justice Services (Hopi Agency). The prosecution was handled by Assistant U.S. Attorney Alexander Samuels, District of Arizona, Phoenix.
CASE NUMBER: CR-16-8005-PCT-GMS
RELEASE NUMBER: 2017-001_Chaca
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For more information on the U.S. Attorney’s Office, District of Arizona, visit http://www.justice.gov/usao/az/
Follow the U.S. Attorney’s Office, District of Arizona, on Twitter @USAO_AZ for the latest news.
Salinas Resident Sentenced to Four and A Half Years in Prison for Bank RobberyRead the Press Release
SAN JOSE – Jose Lemus was sentenced today to serve 54 months in prison for his role in an armed bank robbery, announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge John F. Bennett. The sentence, handed down today by the Honorable Lucy H. Koh, District Judge, follows a guilty plea in which Lemus admitted robbing the Castroville, Calif., branch of a federally-insured bank.
Lemus, 23, of Salinas, pleaded guilty on September 21, 2016, to one count of armed bank robbery and aiding and abetting. According to the plea agreement, on August 22, 2011, Lemus entered the Castroville branch of the bank with another man who was carrying a loaded semi-automatic handgun. Lemus and the other man both wore masks. Lemus admitted that while the other man remained in the lobby and pointed the handgun at customers and employees, Lemus jumped over the partition door that separated the lobby area from the tellers. Lemus went from teller station to teller station gathering money and placing it into a backpack. Lemus acknowledged that he and the other robber absconded with approximately $44,000 of the bank’s money.
On August 18, 2016, Lemus was charged in a one-count information with armed bank robbery, aiding and abetting, in violation of 18 U.S.C. §§ 2213 (a), (d), and 2. Pursuant to his plea agreement, Lemus pleaded guilty to the charge.
In addition to the prison term, Judge Koh also ordered Lemus to pay $42, 930.01 in restitution and to serve five years of supervised release. Lemus currently is in custody on state charges and will begin serving his sentence after the conclusion of his current state prison term.
Assistant U.S. Attorneys Stephen Meyer, Jeffrey Backhus, and Claudia Quiroz are prosecuting the case with the assistance of Ryka Bargi, Jessica Meegan, and Nina Burney Williams. The prosecution is the result of an investigation by the Federal Bureau of Investigation and the Monterey County Sheriff’s Office. The investigation was assisted by the Organized Crime Drug Enforcement Task Force, a focused multi-agency, multi-jurisdictional task force investigating and prosecuting the most significant drug trafficking and criminal organizations throughout the United States by leveraging the combined expertise of federal, state and local law enforcement agencies.
Rockford Man Indicted on Child Pornography ChargesRead the Press Release
ROCKFORD — A Rockford man was indicted yesterday by a federal grand jury on charges of child pornography.
PIERRE D. HAYES, 27, was charged with three counts of transporting child pornography via the internet in 2015.
Each count of transporting child pornography carries a mandatory minimum sentence of five years and a maximum of 20 years in prison, as well as a $250,000 maximum fine. If convicted, the Court must impose a reasonable sentence under federal sentencing statutes and the advisory United States Sentencing Guidelines.
The public is reminded that an indictment contains only charges and is not evidence of guilt. The defendant is presumed innocent and is entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
The indictment was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; and James M. Gibbons, Special Agent in Charge of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) in Chicago.
The government is represented by Assistant U.S. Attorney Monica V. Mallory.
Rochester Man Found Guilty of Lying on Application for Tsa Secure Airport IDRead the Press Release
CONTACT: Barbara Burns
PHONE: (716) 843-5817
FAX: (716) 551-3051ROCHESTER, N.Y. – Acting U.S. Attorney James P. Kennedy, Jr. announced today that a federal jury has convicted Darnell Jerome, 20, of Rochester, NY, of making a false statement. The charge carries a maximum sentence of five years in prison and a fine of $250,000.
Assistant U.S. Attorneys Craig R. Gestring and Kyle P. Rossi, who handled the prosecution of the case, stated that the defendant applied for employment at a restaurant at the Greater Rochester International Airport. The restaurant was located in the sterile area of the airport, beyond the security screening zone. Because they have access to knives and other contraband items to which screened passengers do not, employees of the airport or contractors who work in the restaurants or stores inside the sterile area are required to obtain a special federal Security Identification Display Area (SIDA) badge and pass a federal background investigation, which includes a security threat assessment.
In March 2016, Jerome filled out a security clearance application and falsely reported that he had never been arrested. However, only a month before he falsified the SIDA clearance application form, Jerome was convicted of a felony, Robbery in the Second Degree, in Monroe County for which he was sentenced to five years’ probation. During that robbery, the defendant displayed what appeared to be a firearm.
Federal regulations put in place by the Department of Homeland Security since September 11, 2001, prohibit persons with certain disqualifying felony criminal convictions from obtaining a clearance to work at an airport. The defendant’s 2016 Robbery conviction, which is considered a crime of violence, was such a disqualifying offense. The security clearance application completed by the defendant clearly listed the specific disqualifying conditions on its face.
The verdict is the culmination of an investigation by the Federal Air Marshal Service, under the direction of Supervisory Air Marshal-in-Charge William Hall.Sentencing is scheduled for April 21, 2017, at 10:00 a.m. before Judge Elizabeth A. Wolford, who presided over the trial.
Prior Felon from Artesia Sentenced to Prison for Federal Narcotics Trafficking and Firearms ConvictionRead the Press Release
ALBUQUERQUE – Floyd Albert Sherrell, 34, of Artesia, N.M., was sentenced today in federal court in Las Cruces, N.M., to 57 months in prison followed by three years of supervised release for his conviction on methamphetamine trafficking and firearms charges.
Sherrell was arrested on Sept. 1, 2015, on an indictment charging him with unlawfully possessing firearms on June 10, 2014, and distributing methamphetamine on June 12, 2014. According to the indictment, Sherrell committed the crimes in Eddy County, N.M. At the time, Sherrell was prohibited from possessing firearms or ammunition because he previously had been convicted of larceny of a firearm and burglary.
On Jan. 26, 2016, Sherrell pled guilty to a felony information charging him with being a felon in possession of firearms and distribution of methamphetamine. In entering his guilty plea, Sherrell admitted selling four firearms to an undercover law enforcement agent on June 10, 2014, and selling 25 grams of pure methamphetamine to an undercover law enforcement agent on June 12, 2014.
This case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives and the Pecos Valley Drug Task Force and was prosecuted by Assistant U.S. Attorney Maria Y. Armijo of the U.S. Attorney’s Las Cruces Branch Office.
The Pecos Valley Drug Task Force is comprised of officers from the Eddy County Sheriff’s Office, Carlsbad Police Department and Artesia Police Department and is part of the HIDTA Region VI Drug Task Force. The High Intensity Drug Trafficking Areas (HIDTA) program was created by Congress with the Anti-Drug Abuse Act of 1988. HIDTA is a program of the White House Office of National Drug Control Policy (ONDCP) which provides assistance to federal, state, local and tribal law enforcement agencies operating in areas determined to be critical drug-trafficking regions of the United States and seeks to reduce drug trafficking and production by facilitating coordinated law enforcement activities and information sharing.
President of Office Equipment Leasing Company Sentenced to 4 Years in Prison for Multi-Million Dollar Fraud SchemeRead the Press Release
Earlier today, Michael Conway, the President of Choice Office Solutions LLC, was sentenced by United States District Judge William F. Kuntz to 4 years in prison. In February 2016, Conway had pleaded guilty to wire fraud in connection with a scheme where he forged numerous lease agreements to defraud an individual investor and De Lage Landen Financial Solutions Partner (DLLFSP) of more than $4.5 million. As part of the sentence, Conway was also ordered to pay $3,555,493.40 to the individual investor and $1,203,516 to DLLFSP in restitution.
The sentence was announced by Robert L. Capers, United States Attorney for the Eastern District of New York, and William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI).
According to court filings and facts presented at the sentencing hearing, between March 2014 to August 2015, Conway forged lease agreements with various companies in the business of leasing office equipment, and then used these fraudulent agreements to obtain financing from private investors. As part of the scheme, he induced an individual investor to become partners with him in the leasing business. Conway would then purportedly secure a lease from a company, present the signed lease and invoices to the individual investor, who would provide funds to purchase the office equipment to be leased. In this manner, Conway presented the individual investor with leases from approximately 58 companies, including law firms, universities, hospitals, and hotels, and the individual investor paid Conway approximately $3.5 million to purchase office equipment. In reality, most of the leasing agreements that Conway provided to the individual investor were fraudulent, and Conway pocketed most of the individual investor’s money.
One of the fraudulent leasing agreements was purportedly with the New York Mets. Relying on it, the individual investor wire transferred approximately $500,000 to Conway’s bank account to purchase office equipment. Conway then used the same forged lease agreement, and a forged authorization letter from the New York Mets purportedly signed by Jeffrey Wilpon, the team’s Chief Operating Officer, to obtain financing from DLLFSP. Based on these fraudulent documents, DLLFSP wire transferred a total of approximately $313,000 to Conway’s bank account. Through this and other forgeries, Conway defrauded DLLFSP of more than $1 million.
* * *
The government’s case is being prosecuted by the Office’s Business and Securities Fraud Section. Assistant United States Attorneys Winston Paes and David Pitluck are in charge of the prosecution.
The charges were brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state, and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions, and other organizations. Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants. For more information on the task force, please visit ww.StopFraud.gov.
The Defendant:
MICHAEL CONWAY
Age: 41
Verona, New Jersey
E.D.N.Y. Docket No. 16-CR-052 (WFK)
Orlando Man Convicted of Multiple Counts of Theft of Government Money and Aggravated Identity TheftRead the Press Release
Orlando, FL – United States Attorney A. Lee Bentley, III announces that a federal jury has found Manuel Enrique Santana (36, Orlando) guilty of 10 counts of theft of government money and 5 counts of aggravated identity theft. He faces a maximum penalty of 10 years in federal prison for each of the theft counts, to be followed by a mandatory term of at least 2 years for the aggravated identity theft charges. His sentencing hearing is scheduled for April 12, 2017. Santana was indicted on August 31, 2016.
According to evidence presented at trial, in early 2014, Santana deposited 47 stolen federal tax refund checks into 3 of his own bank accounts during a 10-day period. The majority of the checks were endorsed with forged signatures of the intended payees, all of whom had filed returns for the 2013 tax year and were expecting to receive their refund checks by mail. The combined value of the 47 stolen refund checks was more than $64,000.
This case was investigated by the United States Postal Inspection Service, the Internal Revenue Service - Criminal Investigation, and the Seminole County Sheriff’s Office. It is being prosecuted by Assistant United States Attorney Emily C. L. Chang.
Notice of Court ProceedingsRead the Press Release
Contact Person: Lance Crick (864) 282-2100
Columbia, South Carolina ---- United States Attorney Beth Drake announced today that a sentencing hearing has been set for Thursday, January 12, 2017, at 2:00 P.M. in the federal courthouse in Greenville in the case of the United States v. Melvin Boswell, Jr. Melvin Boswell, Jr., age 48, of Greenville, South Carolina, pled guilty on July 12, 2016, to conspiring to possess with the intent to distribute and to distribute five kilograms or more of cocaine and possessing firearms in furtherance of a drug trafficking crime.
Evidence presented by the government during the guilty plea hearing last year established that on August 20, 2015, Greenville Police Department Officers arrested Boswell at a business in Greenville County after Boswell removed his ankle monitor while on bond for other charges. While searching Boswell’s person and a rental car Boswell had driven to the business, police found: (1) 10 firearms (one of which was stolen); (2) numerous pieces of ammunition; (3) in excess of $70,000 worth of cocaine, crack cocaine, and heroin; (4) digital scales; and (5) in excess of $7000 in U.S. Currency. At the time Boswell possessed these items, he was a convicted felon.
Boswell was arrested during the initiation of “Operation Real-Time.” The goal of this program is to identify individuals for federal prosecution with significant criminal histories who continue to actively possess firearms in the Greenville community. In addition to GPD and ATF, Real Time’s core partners include the Greenville County Sheriff’s Office, the South Carolina Department of Probation, Parole, and Pardon Services, the South Carolina Highway Patrol, United States Probation, the Department of Homeland Security, the Federal Bureau of Investigation, the Drug Enforcement Administration, the 13th Circuit Solicitor’s Office, and the United States Attorney’s Office. Since August of 2015, the initiative has resulted in the expedited federal prosecution of some 70 defendants and seizure of approximately 100 firearms as well as assorted ammunition from prohibited persons.
Greenville Police Chief Ken Miller and his department were one of the first partners on board for this initiative. “This multi-agency partnership endeavors to keep our communities safe and reduce firearms violence through ‘real time’ identification of dangerous individuals who seek to disrupt our streets and communities with firearms-driven violence.”
U.S. Attorney Beth Drake commended the partnership between the state and federal agencies that led to the Bureau of Alcohol, Tobacco and Firearms and the U.S. Attorney’s Office picking the case up, “We work best when we work together. This ‘real time’ identification of high risk offenders is smart policing, and we welcome the opportunity to work alongside our state chiefs and sheriffs in taking violent repeat offenders out of our communities.”
The case was investigated by agents of the Drug Enforcement Administration working in conjunction with the Greenville Police Department and the Greenville County Sheriff’s Office. Assistant United States Attorney Andy Moorman of the Greenville office handled the case.
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North Carolina Man Sentenced on Check Fraud ChargesRead the Press Release
Lynchburg, VIRGINIA – A North Carolina man, who conspired with others to make money by cashing checks that had been stolen or altered, was sentenced last week in the United States District Court for the Western District of Virginia in Lynchburg, Acting United States Attorney Rick A. Mountcastle announced.
LaShawn Clinton, 39, of Mount Holly, North Carolina, previously pled guilty to one count of conspiracy to commit bank fraud and related offenses against the United States and two counts of aggravated identity theft. Last week in District Court, Clinton was sentenced to 85 months in federal prison.
According to evidence presented at previous hearings by Assistant United States Attorney Laura Day Rottenborn and Special Assistant United States Attorney Kari Munro, Clinton, and others he conspired with, agreed to help each other make money by cashing checks that were stolen and altered. Typically, members of the conspiracy, including Clinton, stole checks from the mail in and around business locations, including corporate office parks and other business districts.
Clinton, and other members of the conspiracy, altered the stolen checks, or caused them to be altered, to reflect a new payee name, and in some instances, an increased dollar amount. Members of the conspiracy used razor blades, erasers, typewriters and other tools to alter the checks. Clinton purchased and disposed of typewriters frequently in order to dispose of key evidence of his crimes.
In addition, Clinton and other members of the conspiracy, recruited individuals to cash the fraudulent checks at issuing banks. Typically the conspiracy used women for this role, however men were used as check cashers on occasion. The conspiracy primarily took place in the Western District of Virginia and Western District of North Carolina, however, members of the conspiracy did make check cashing trips to locations as far away as Pennsylvania, Missouri and Tennessee.
The investigation of the case was conducted by the United States Postal Inspection Service, the Franklin County Sheriff’s Office, the Bedford County Sheriff’s Office and the Mount Holly, North Carolina Police Department. Assistant United States Attorney Laura Day Rottenborn and Special Assistant United States Attorney Kari Munro prosecuted the case for the United States.
North Carolina Man Sentenced to 262 Months for Enticing Boyle County Minor to Engage in Sexually Explicit ConductRead the Press Release
LEXINGTON, Ky. – A North Carolina man, previously convicted of enticing a minor in Danville, Ky., to engage in sexually explicit conduct, was sentenced on Tuesday to 262 months in federal prison.
U.S. District Judge Danny C. Reeves sentenced James Matthew Shelton, 30, and also ordered him to serve a lifetime term of supervised release following the completion of his sentence. Under federal law, Shelton must serve at least 85 percent of his prison sentence.
Shelton admitted at his guilty plea that, from July 1, 2014 to August 23, 2014, he persuaded a 13-year-old female in Danville to send sexually explicit photos of herself to his cell phone.
In April of 2015 an investigator with the Office of the Kentucky Attorney General, and other law enforcement agents, executed a search warrant at Shelton’s residence in North Carolina and seized his cell phone. The phone contained images of child pornography. The investigation started in September of 2014, when the Boyle County Sheriff’s Office received a complaint that Shelton had threatened one or more minors in Boyle County.
Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky; Amy Hess, Special Agent in Charge, FBI; Andy Beshear, Attorney General of Kentucky; and Derek Robbins, Boyle County Sheriff, jointly made the announcement.
The investigation was conducted by the FBI, the Office of the Kentucky Attorney General, and the Boyle County Sheriff’s Office.
New York Resident Pleads Guilty in South Florida to Money Laundering Conspiracy Involving Stolen Identity Tax Fraud and Recreational Vehicles Fraud SchemesRead the Press Release
A New York resident pled guilty for his participation in a money laundering conspiracy involving stolen identity tax fraud and a recreational vehicles fraud scheme.
Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida, George L. Piro, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, and Kelly R. Jackson, Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), made the announcement.
Marlen Manukyan, 41, of Brooklyn, New York, pled guilty to one count of conspiracy to commit money laundering, in violation of Title 18, United States Code, Section 1956(h). As part of his plea agreement, Manukyan agreed to restitution in the amount of $124,009.
According to court documents, from August to November 2013, Manukyan opened bank accounts using counterfeit driver's licenses that he knew would be used to conduct financial transactions involving funds derived from unlawful activities. Specifically, from August 1, 2013 to August 9, 2013, Manukyan opened multiple bank accounts using the identities of two individuals without their permission using counterfeit Pennsylvania Driver's Licenses. These accounts received money from two illicit sources for the next several months.
First, Manukyan's co-conspirators filed fraudulent tax returns with the IRS using the stolen identities of various individual taxpayers without the taxpayers' knowledge or consent. The fraudulent tax refunds (minus fees) were sent to several of the bank accounts that were set-up by the defendant. Co-conspirators then withdrew the money through cash withdrawals or debit card transactions. In total, Manukyan's co-conspirators filed approximately 71 fraudulent tax returns with the IRS.
Second, Manukyan's co-conspirators engaged in a scheme to defraud individuals who were seeking to buy used recreational vehicles (RVs) on the internet. To perpetrate this scheme, the defendant's co-conspirators used fake names and advertised on internet websites that they had used RVs for sale. Interested purchasers were told to send their money by wire transfer to a bank account in the name of a shell company that Manukyan opened using a counterfeit driver's license. Specifically, a retired couple was defrauded into believing that they had reached an agreement to purchase a used RV. The individuals sent $39,960 by wire transfer to complete the purchase, but the couple never received the RV and the co-conspirators ceased communicating with the victims once they received the money. The defendant and his co-conspirators caused the bank to send $39,000 by international wire transfer from the shell company’s bank account to a bank account in the name of another individual in Moscow, Russia.
Manukyan is scheduled to be sentenced on March 16, 2017, before United States District Judge Darrin P. Gayles. At sentencing, the defendant faces up to twenty years in prison.
Mr. Ferrer commended the investigative efforts of the FBI and IRS-CI. This case is being prosecuted by Assistant U.S. Attorney Harold E. Schimkat.
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.
New York Man Sentenced to 20 Years in Prison for Robbing Bergen County BankRead the Press Release
NEWARK, N.J. – A Brooklyn, New York, man who was on the FBI’s 10 Most Wanted Fugitive List in 1988 was sentenced today to 240 months in prison for robbing a TD Bank in Oakland, New Jersey, in April 2013, U.S. Attorney Paul J. Fishman announced.
John Edward Stevens, 63, previously pleaded guilty before U.S. District Judge Claire C. Cecchi to Count Two of an indictment charging him with armed bank robbery. Judge Cecchi imposed the sentence today in Newark federal court.
According to documents filed in this case and statements made in court: Stevens admitted that on April 15, 2013, he robbed a TD Bank in Oakland. After entering the bank, Stevens approached several bank employees while carrying a zipper pouch. He opened the zipper pouch, pulled out what appeared to be a black handgun, and brandished it at one of the bank employees. He then took several thousand dollars in cash and fled the scene.
Approximately 20 minutes after the robbery, law enforcement stopped a vehicle that was reported stolen. The driver of the stolen vehicle was identified as Stevens. Law enforcement arrested Stevens and located a TD Bank bag filled with money in the vehicle.
Stevens has been convicted of at least eight prior armed bank robberies in the Central District of California and the Southern District of Ohio.
In addition to the prison term, Judge Cecchi sentenced Stevens to three years of supervised release.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher in Newark, with the investigation leading to today’s plea. He also thanked the Waldwick Police Department, the Oakland Police Department, the Ho-Ho-Kus Police Department and the Bergen County Sheriff’s Office for their contributions to the case.
The government is represented by Assistant U.S. Attorney Melissa Wangenheim of the Criminal Division in Newark.
Defense counsel: Lorraine Gauli-Rufo Esq., Verona, New JerseyNew Orleans Man Pleads Guilty to Possession of Child Pornography and Failure to Register as a Sex OffenderRead the Press Release
U.S. Attorney Kenneth A. Polite announced that DWIGHT JOSEPH, JR., age 34, of New Orleans, pled guilty today to a two-count Indictment charging him with possession of images and videos depicting the sexual exploitation of children under the age of twelve and failure to register as a sex offender.
According to court documents, JOSEPH was convicted in 2005 in Lehigh County, Pennsylvania, for dissemination of photo/film of child sex acts, which required him to register as sex offender for at least ten years. Notwithstanding that obligation, JOSEPH temporarily resided in New Orleans beginning in about April 2015, without notifying the appropriate authorities in either Louisiana or Pennsylvania.
Additionally, on about September 9, 2015, law enforcement authorities executed a search warrant at JOSEPH’S residence, during which time they seized numerous electronic items. A forensic examination of the device revealed that JOSEPH used the devices to download and save images and videos of children as young as less than one-year old engaging in sexually explicit conduct, including being raped, forced to perform oral sex on adult men, and being forced to engage in acts of incest. The forensic examination located approximately 725 images and 69 videos depicting prepubescent children engaging in sexually explicit on JOSEPH’S digital devices.
JOSEPH faces a mandatory minimum of 10 years imprisonment and a maximum term of imprisonment of 20 years for possessing child pornography. He also faces a maximum term of 10 years imprisonment for failing to register as sex offender. Additionally, JOSEPH faces up to a lifetime of supervised release and a $250,000 fine per count. He can also be required to register as a sex offender. U.S. District Judge Sarah S. Vance set sentencing for May 17, 2017.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by United States Attorneys= Offices and the Criminal Division's Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
U.S. Attorney Polite praised the work of the Louisiana Bureau of Investigation Cyber Crime Unit and the United States Marshals Service, with assistance from the United States Department of Homeland Security – Homeland Security Investigations in investigating this matter. Assistant United States Attorney Jordan Ginsberg is in charge of the prosecution.
Montana Couple Pleads Guilty to Conspiring to Defraud the United StatesRead the Press Release
A Montana couple pleaded guilty today in federal court in Missoula, Montana to one count of conspiracy to defraud the United States, announced Principal Deputy Assistant Attorney General Caroline D. Ciraolo, head of the Justice Department’s Tax Division, and U.S. Attorney Michael W. Cotter for the District of Montana.
According to the government’s offer of proof, Peggy DeYoung and John DeYoung, both 71, have not filed an individual income tax return since 1998. From 2007 through 2011, Peggy DeYoung earned income through her ownership interest in two companies that own Southern California mobile home parks. The DeYoungs also enlisted the services of Joseph Hill of Creative Consulting Group to establish a number of purported trusts. The DeYoungs opened bank accounts in the names of those trusts using fabricated taxpayer identification numbers and paid personal expenses from the accounts. The plea agreement specifies that the DeYoungs caused the U.S. Treasury a tax loss of $376,350.
Sentencing is scheduled for April 21. The DeYoungs face a statutory maximum sentence of five years in prison, a period of supervised release, restitution and monetary penalties.
Principal Deputy Assistant Attorney General Ciraolo and U.S. Attorney Cotter thanked special agents of IRS–Criminal Investigation, who conducted the investigation, and Assistant U.S. Attorney Chad Spraker and Trial Attorney Rebecca Sable 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.
Michigan Man Sentenced to Prison ForRead the Press Release
Troy Mitchell McCormick, 51, of Commerce Township, Michigan, was sentenced yesterday to serve 46 months in prison, announced Jack Smith, Acting United States Attorney for the administration of this case. U.S. District Court Judge Marvin E. Aspen also sentenced McCormick to serve 3 years of supervised release and to pay restitution of $107,586.
In March 2016 McCormick pleaded guilty to mail fraud and wire fraud. These charges arose from his conduct while employed as a sales representative and vice president for Emdeon, a Nashville, Tenn. based company that provided services to hospitals and health systems. McCormick admitted that he fraudulently fabricated contracts between his employer and certain customers, including a non-profit hospital, a non-profit hospital system, and the University of Michigan, and that he forged signatures on these contracts. As a result of McCormick’s forged contracts, these customers were billed inflated amounts, and McCormick received $107,586 in additional incentive compensation.
This case was investigated by the Federal Bureau of Investigation. The case was prosecuted by Assistant U.S. Attorneys Cecil W. VanDevender and William F. Abely.
Mexican National Sentenced for Trafficking Multiple DrugsRead the Press Release
McALLEN, Texas – A Mexican man who had been residing in Pasadena has been ordered to prison for importing methamphetamine, cocaine and heroin into the United States from Mexico, announced U.S. Attorney Kenneth Magidson. Gustavo Rivera-Morales pleaded guilty Jan. 28, 2016.
Today, U.S. District Judge Randy Crane ordered Rivera-Morales to serve 72 months in federal prison. He is expected to face deportation proceedings following his release from prison.
At the time of his guilty plea, Rivera-Morales admitted that on Nov. 30, 2015, he had driven a vehicle from Mexico into the United States through the Pharr port of entry, knowing the vehicle contained a controlled substance. Upon inspection, Customs and Border Protection (CBP) officers discovered methamphetamine, cocaine and heroin hidden within the passenger and driver side rear panels of the vehicle. Agents seized numerous bricks of drugs weighing approximately 18 kilograms of methamphetamine, four kilograms of cocaine and three kilograms of heroin.
Rivera has been in custody without bond since his arrest in November 2015 where he will remain pending transfer to a U.S. Bureau of Prisons facility to be determined in the near future.
Immigration and Customs Enforcement’s Homeland Security Investigations and CBP conducted the investigation. Assistant U.S. Attorney Linda Requénez prosecuted the case.
Masters of Cosmetology ChargeRead the Press Release
FORT WAYNE – The United States Attorney for the Northern District of Indiana, David Capp, announced that an information was filed charging Rachel Crawford, 38, of Fort Wayne, Indiana, with obtaining by fraud and materially false statements, federal financial funds within the jurisdiction of the United States Department of Education. The Department of Education provides certain funding through Family Federal Education Loans (FFEL), a program administered by Sallie Mae. This charge relates to Crawford’s actions when she was the financial aid director at Masters of Cosmetology.
In conjunction with this information, Crawford has entered into an agreement wherein she will plead guilty to the charge.
The United States Attorney’s Office advised that Crawford has cooperated with this investigation throughout. This investigation led to the earlier conviction of Kaydean Geist, owner of Masters of Cosmetology.
As part of this overall investigation, the Department of Education agreed to cancel certain FFEL loans through Sallie Mae that were illegally acquired by Masters of Cosmetology, thereby relieving many students from loans that should never have been authorized by Masters of Cosmetology.
The above charge and plea concludes the matter regarding the financial irregularities regarding the Masters of Cosmetology School. Crawford will appear in court for her change of plea hearing before Magistrate Judge Susan Collins at a future date.
The United States Attorney's Office emphasized that an Information is merely an allegation and that all persons charged are presumed innocent until, and unless, proven guilty in court.
If convicted in court, any specific sentence to be imposed will be determined by the judge after a consideration of federal sentencing statutes and the Federal Sentencing Guidelines.
This investigation was conducted by the Federal Bureau of Investigation, Indiana State Police and the United States Department of Education-Office of Inspector General. This case was handled by Assistant United States Attorney Tina L. Nommay.
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Lincoln County Man Pleads Guilty to Federal Meth Trafficking ChargesRead the Press Release
ALBUQUERQUE – Octavio Herrera, 54, of Ruidoso Downs, N.M., pled guilty today in federal court in Las Cruces, N.M., to methamphetamine trafficking charges.
Herrera was one of 34 individuals charged in December 2015, with federal and tribal drug offenses as the result of an 18-month multi-agency investigation led by the DEA and BIA into methamphetamine trafficking on the Mescalero Apache Reservation. Eighteen defendants, including five members of the Mescalero Apache Tribe and 13 non-Natives were charged in six federal indictments and a federal criminal complaint. Sixteen other members of the Mescalero Apache Tribe were charged in tribal criminal complaints approved by the Mescalero Apache Tribal Court.
The investigation leading to the federal and tribal charges was initiated in May 2014, in response to an increase in violent crime on the Mescalero Apache Reservation perpetrated by methamphetamine users. The investigation initially targeted a drug trafficking organization that was allegedly distributing methamphetamine within the Reservation, and later expanded to include two other drug trafficking organizations in southeastern New Mexico that allegedly served as sources of supply for the methamphetamine distributed within the Reservation. In Aug. 2014, the investigation was designated as part of the Justice Department’s Organized Crime Drug Enforcement Task Force (OCDETF) program, which combines the resources and unique expertise of federal agencies, along with their local counterparts, in a coordinated effort to disrupt and dismantle major drug trafficking organizations. The investigation is one of the first OCDETF investigations to utilize electronic surveillance (wiretaps) in Indian Country. More than ten kilograms of methamphetamine were seized during the course of the investigation.
Herrera was arrested in Sept. 2016, on an indictment charging him and his co-defendants Rumaldo Varela Enriquez, 46, a Mexican national and Johnny Flowers, 51, of Hobbs, with methamphetamine trafficking offenses. The indictment charged Herrera with participation in a methamphetamine trafficking conspiracy, possession of methamphetamine with intent to distribute, and use of a communication facility in relation to a drug trafficking crime.
During today’s proceedings, Herrera pled guilty to conspiracy and possession of methamphetamine with intent to distribute. In entering the guilty plea, Herrera admitted that between March 4, 2015 and March 12, 2015, he conspired with others to distribute methamphetamine in Hobbs and Lovington, N.M. Herrera also admitted that on March 12, 2015, he possessed 230.1 grams of methamphetamine which he intended to distribute to others. At sentencing, Herrera faces a statutory mandatory minimum penalty of five years and a maximum of 40 years. A sentencing hearing has yet to be scheduled.
Seventeen of the 18 federal defendants including Herrera’s co-defendants have entered guilty pleas. The remaining federal defendant has entered a not guilty plea. Charges in indictments are merely accusations and defendants are presumed innocent unless found guilty in a court of law.
The federal and tribal cases were investigated by the Las Cruces office of the DEA, District IV of the BIA’s Office of Justice Services (Mescalero Agency), BIA’s Division of Drug Enforcement, Mescalero Tribal Police Department, Hatch Police Department, FBI and Lea County Drug Task Force. Assistant U.S. Attorneys Terri J. Abernathy and Clara Cobos of the U.S. Attorney’s Las Cruces Branch Office are prosecuting the federal cases, and Mescalero Tribal Prosecutor Melissa Chavez is prosecuting the tribal cases.
Leader of Drug Trafficking Ring Sentenced to Life for Distributing Fentanyl That Caused Overdose Death of Madison County ManRead the Press Release
Case represents first time in eastern Kentucky that a life sentence was imposed as a result of
an overdose of fentanyl and that federal overdose penalties were applied to out-of-state
defendants from Detroit, a major source for illicit drugs
LEXINGTON, Ky. — The leader of a drug trafficking organization that brought significant amounts of heroin and fentanyl, from Detroit, Mich., to Richmond, Ky., has been sentenced to life imprisonment for distributing fentanyl that resulted in the overdose death of a Madison County resident.
On Monday, U.S. District Judge Danny Reeves sentenced Navarius Westberry, 38, originally from Michigan, but living in Lexington, for distributing a controlled substance resulting in an overdose death. Anyone convicted under this law is subject to a prison term of 20 years to life. After an extensive hearing, the Court imposed a term of life imprisonment.
“The facts of this case are particularly disturbing,” said Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky. “Mr. Westberry and his co-conspirators moved to Kentucky from Michigan for the sole purpose of establishing a large scale distribution network for heroin and fentanyl. The organization which he led was among the first to introduce large quantities of fentanyl to the Richmond community. The drugs sold by the Westberry organization caused multiple overdoses, including fatalities. The evidence indicates that Mr. Westberry knew the drugs sold by his organization were particularly dangerous. Mr. Westberry exhibited a callous disregard for human life in his quest for easy money. The Court determined that his freedom must be forever forfeited as a result of his criminal conduct. I hope that those inclined toward this sort of destructive conduct, whether they live in Kentucky or occupy a higher position in the drug distribution network, take heed – the people of Kentucky have had enough. The drugs you are peddling will kill people and the price you will pay for that is steep – whether ether you are the street level dealer, or a leader of the criminal organization.”
Westberry admitted that, from January 2014 until August 2015, he organized and operated a drug trafficking organization in Richmond that distributed between 750 grams and one kilogram of heroin and 50 grams of fentanyl. Fentanyl, which is many times stronger than heroin, can be lethal in the 2 mg range.
Westberry also admitted that, in March 2015, he supplied heroin and fentanyl to others, which then led to the overdose death of 25 year-old Cory Brewer. The toxicology report and autopsy showed that Brewer’s death was caused by toxic levels of fentanyl.
This case marks the first time in the Eastern District of Kentucky that the federal overdose penalties were applied in a case involving defendants from Michigan, whose distribution of drugs in Kentucky caused an overdose.
Four other co-conspirators have pleaded guilty and been sentenced, including co-defendant, Benjamin Fredrick Charles Robinson, 21, also from Detroit, who was sentenced to 20 years for distributing a controlled substance that caused another overdose. In that case, the victim survived due to medical assistance.
U.S. Attorney Harvey; Timothy J. Plancon, Special Agent in Charge, Drug Enforcement Administration; and James Ebert, Chief of Police, Richmond Police Department, jointly made the announcement.
The investigation was conducted by the DEA and the Richmond Police. Assistant U.S. Attorney Todd Bradbury prosecuted this case on behalf of the federal government.
Latin King Gang Leader Sentenced for Illegal Gun Possession and Drug TraffickingRead the Press Release
BOSTON – A member of the Latin Kings man was sentenced yesterday in U.S. District Court in Boston for drug and gun possession.
Luis Lopez, 31, of New Bedford, was sentenced by U.S. District Court Judge Rickard G. Stearns to 15 years in prison and three years of supervised release. In October 2016, Lopez pleaded guilty to one count of being a felon in possession of a firearm and one count of possession with intent to distribute heroin.
The police sought and received a search warrant for Lopez’s residence in New Bedford, where approximately $2,000, cell phones, a digital scale, packaging materials, heroin and a Glock 9mm handgun with 16 rounds of ammunition were recovered.
Lopez has previously been convicted of drug dealing and committing violent crimes. Lopez is also an alleged Latin King gang leader, which, among other things, is evidenced by tattoos that adorn his face, including a Latin Kings crown and “shoot to kill.”
United States Attorney Carmen M. Ortiz; Mickey D. Leadingham, Special Agent in Charge of the Bureau of Alcohol, Tobacco and Firearms, & Explosives, Boston Field Division; New Bedford Police Chief Joseph B. Cordeiro; and Bristol County District Attorney Thomas Quinn, made the announcement. Assistant U.S. Attorney Glenn A. MacKinlay of Ortiz’s Organized Crime and Gang Unit prosecuted the case.
Justice Department Seeks to Shut Down Florida and North Carolina Tax Return PreparersRead the Press Release
The owners and operators of the tax return preparation businesses Q A Tax Service Inc., Unik Tax Refund, D&M Tax Solutions, LED Tax Services, and UJM Tax Services prepare false tax returns, according to three separate civil suits filed by the United States. The government seeks court orders barring the owners and operators of these businesses from preparing tax returns for others and owning and operating a tax return preparation business. The government also requests court orders requiring these owners and operators to disgorge the gross receipts they obtained from the preparation of federal tax returns that make, among other things, false claims.
The government filed the first of these three suits, in federal court in Orlando, Florida, against two of the owners and operators of Q A Tax Service Inc., Vicky Barwick of Orlando, Florida and Jasmine Morales of Winter Garden, Florida. According to that complaint, Q A Tax Service Inc. has store locations in Florida, Illinois, Indiana, and North Carolina. The government filed the second of these suits, in federal court in Fayetteville, North Carolina, against another owner and operator of Q A Tax Service Inc., Tanisha Salmon of Fayetteville.
The government filed the third suit, in federal court in Orlando, Florida, against the owners and operators of the following tax return preparation businesses, each of which has locations in Florida:
- Unik Tax Refund LLC – Yves Demesmin of Mt. Dora, Florida;
- UJM Tax Services LLC – Joseph Demesmin of Boca Raton, Florida;
- LED Tax Services – Elie Dorceus of Boynton Beach, Florida; and
- D&M Tax Solutions – Mario Cooper and Dia Fleming of Palm Coast, Florida.
In these complaints, the government alleges that Barwick, Morales, Salmon, Yves Demesmin, Joseph Demesmin, Dorceus, Cooper, and Fleming (the defendants) each use, in their respective businesses, a model previously used by the tax return preparation business formerly known as LBS Tax Services. Since 2014, the United States has sued nearly a dozen former LBS franchisees and managers and obtained court orders requiring these individuals to disgorge millions of dollars in fees, in addition to barring these individuals from owning and operating a tax return preparation business and from preparing tax returns for others.
The government alleges in its complaints that the defendants used the LBS model to prepare and file false tax returns to fraudulently increase their customers’ refunds and profit through exorbitant and often undisclosed fees—all at the expense of their customers and the U.S. Treasury. Specifically, the complaints allege that the defendants engage in fraudulent activity, including:
- Falsely claiming the Earned Income Tax Credit;
- Fabricating businesses and related business income and expenses;
- Fabricating deductions, particularly for unreimbursed employee business expenses; and
- Charging deceptive and unconscionable fees.
The Internal Revenue Service (IRS) is reminding taxpayers that the 2017 individual income tax return filing season begins Jan. 23, and there is information available on the IRS’s website. Return preparer fraud was one of the IRS’s Dirty Dozen Tax Scams for 2016 and taxpayers seeking a return preparer should remain vigilant. The IRS has some tips on their website for choosing a tax preparer and has launched a free directory of federal tax preparers. In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers. Information about these cases is available on the Justice Department’s website. An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on this page. If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.
Justice Department Files Voting Rights Suit Against City of Eastpointe, MichiganRead the Press Release
The Justice Department filed a lawsuit yesterday to challenge the at-large method of electing the city council of Eastpointe, Michigan. The complaint alleges that the election system in Eastpointe violates Section 2 of the Voting Rights Act by denying black citizens in the city the equal opportunity to elect representatives of their choice.
The lawsuit, filed in the U.S. District Court for the Eastern District of Michigan, follows an extensive review of the city’s electoral practices, history and current conditions, guided by extensive precedent applying Section 2 of the Voting Rights Act. Among other important factors highlighted in the case law, the lawsuit alleges that Eastpointe has racially polarized voting patterns, with white voters consistently opposing and defeating the preferred candidates of Eastpointe’s sizable black community. Although black residents comprise roughly one-third of the electorate and consistently support black candidates for local office, no black individual has ever served on the Eastpointe City Council. With Eastpointe’s current system, voting patterns combined with other local factors dilute the black community’s voice and lead to a discriminatory result.
The complaint also alleges that changing the method of voting – for example, by electing each councilmember from a district – could create an equitable opportunity for black voters to elect a candidate of their choice to the Eastpointe City Council. The lawsuit seeks a federal court order implementing a new method of electing the Eastpointe City Council.
“Federal law seeks to protect diverse communities from discriminatory systems that weaken the power of the franchise,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division. “The Justice Department hopes to work cooperatively with Eastpointe to ensure that all communities enjoy equitable opportunity in our elections.”
“Section 2 of the Voting Rights Act prohibits practices such as Eastpointe’s at-large City Council system where they improperly dilute the ability of citizens to elect the candidates of their choice,” said U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan. “We filed this lawsuit to ensure that all voters in Eastpointe have a fair opportunity to participate in their local government.”
The Justice Department continues to have positive discussions with the city of Eastpointe and remains hopeful that a settlement will be reached. As Eastpointe’s next regularly scheduled city council election is set for November 2017, the department’s filing was necessary to preserve the ability of a court to hear this case in a timely manner.
Complaints about discriminatory voting practices may be reported to the Civil Rights Division’s Voting Section at 1-800-253-3931. More information about the Voting Rights Act and other federal voting laws is available on the Justice Department’s website at www.justice.gov/crt/voting.
Justice Department Files Voting Rights Suit Against City of Eastpointe, MichiganRead the Press Release
The Justice Department filed a lawsuit late yesterday to challenge the at-large method of electing the city council of Eastpointe, Michigan. The complaint alleges that the election system in Eastpointe violates Section 2 of the Voting Rights Act by denying black citizens in the city the equal opportunity to elect representatives of their choice.
The lawsuit, filed in the U.S. District Court for the Eastern District of Michigan, follows an extensive review of the city’s electoral practices, history and current conditions, guided by extensive precedent applying Section 2 of the Voting Rights Act. Among other important factors highlighted in the case law, the lawsuit alleges that Eastpointe has racially polarized voting patterns, with white voters consistently opposing and defeating the preferred candidates of Eastpointe’s sizable black community. Although black residents comprise roughly one-third of the electorate and consistently support black candidates for local office, no black individual has ever served on the Eastpointe City Council. With Eastpointe’s current system, voting patterns combined with other local factors dilute the black community’s voice and lead to a discriminatory result.
The complaint also alleges that changing the method of voting – for example, by electing each councilmember from a district – could create an equitable opportunity for black voters to elect a candidate of their choice to the Eastpointe City Council. The lawsuit seeks a federal court order implementing a new method of electing the Eastpointe City Council.
“Federal law seeks to protect diverse communities from discriminatory systems that weaken the power of the franchise,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division. “The Justice Department hopes to work cooperatively with Eastpointe to ensure that all communities enjoy equitable opportunity in our elections.”
“Section 2 of the Voting Rights Act prohibits practices such as Eastpointe’s at-large City Council system where they improperly dilute the ability of citizens to elect the candidates of their choice,” said U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan. “We filed this lawsuit to ensure that all voters in Eastpointe have a fair opportunity to participate in their local government.”
The Justice Department continues to have positive discussions with the city of Eastpointe and remains hopeful that a settlement will be reached. As Eastpointe’s next regularly scheduled city council election is set for November 2017, the department’s filing was necessary to preserve the ability of a court to hear this case in a timely manner.
Complaints about discriminatory voting practices may be reported to the Civil Rights Division’s Voting Section at 1-800-253-3931. More information about the Voting Rights Act and other federal voting laws is available on the Justice Department’s website at www.justice.gov/crt/voting.
Eastpointe ComplaintJury Finds Postal Employee Guilty of Theft of More Than $2 Million in Social Security Checks from MailRead the Press Release
Tampa, Florida – United States Attorney A. Lee Bentley, III announces that a federal jury today found Stacy Darnell Mitchell (48, Tampa) guilty of theft of government property and theft of mail. He faces a maximum penalty of 15 years in federal prison. His sentencing date has not yet been set. Mitchell was indicted on March 1, 2016.
According to evidence presented at trial, Mitchell was a mail handler who had worked for more than 15 years at the Processing and Distribution Center (PDC) in St. Petersburg, which processes mail for all of Pinellas County. From January to October 2012, Mitchell stole Social Security benefit checks totaling over $2 million from that facility. More than 3,000 checks were taken from the PDC in 2012, all of which were destined for disabled or retired beneficiaries living in Pinellas County. Mitchell went on to sell the checks to an accomplice in Tampa, who in turn sold the checks to a network of individuals to be cashed at various convenience stores and check cashing businesses in Florida and elsewhere. Four of Mitchell’s accomplices have been convicted of federal charges related to the same theft scheme.
This case was investigated by the United States Postal Service – Office of Inspector General, the Social Security Administration - Office of Inspector the General, the United States Department of Treasury - Office of Inspector General, and the United States Postal Inspection Service, as well as various local enforcement agencies. It is being prosecuted by Assistant United States Attorney Patrick Scruggs.
Jackson County Man Sentenced for Methamphetamine OffensesRead the Press Release
On January 11, 2017, Charles W. Yearian, a/k/a "Chuckie," 40, of Murphysboro, was sentenced to federal prison for methamphetamine offenses, Donald S. Boyce, United States Attorney for the Southern District of Illinois, announced today.
Yearian, who had previously pled guilty to a second superseding indictment charging him with one count of conspiracy to manufacture and distribute methamphetamine and one count of possession of pseudoephedrine knowing that it would be used to manufacture methamphetamine, was sentenced to 144 months of imprisonment, 3 years of supervised release, and was fined $400.00. Evidence at the plea and sentencing hearings established that Yearian was involved with numerous other persons in the manufacture of methamphetamine and the distribution of ice in Jackson and Perry Counties. Ice is methamphetamine which has a purity level of at least 80%. On multiple occasions in December 2015 and January 2016, Yearian sold methamphetamine to a confidential source working for law enforcement. At sentencing, the District Court found that Yearian was responsible for the possession of 328.8 grams of pseudoephedrine and the distribution of 85.62 grams of ice. Four co-defendants have pled guilty and are awaiting sentencing in this case. Two co-defendants have pled not guilty and are awaiting a January 30, 2017, jury trial.
The ongoing investigation is being conducted by the Jackson County Sheriff’s Office, Murphysboro Police Department, and the Bureau of Alcohol, Tobacco, Firearms, and Explosives. The Union County Sheriff’s Office, Jackson County States Attorney’s Office, and DuQuoin Police Department also assisted in the investigation.
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