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Thursday 3 December 2015
Pittsburgh-area Man Sentenced to 90 Months in Prison for Violating Federal Firearms LawsRead the Press Release
PITTSBURGH – A resident of Baldwin Borough, Pa., has been sentenced in federal court to 90 months imprisonment and three years supervised release on his conviction of violating federal firearms laws, United States Attorney David J. Hickton announced today.
United States District Judge Mark R. Hornak imposed the sentence on Eric Charles Smith, 38.
According to information presented to the court, on or about July 27, 2014, officers of the Baldwin Borough Police Department arrested Eric Smith at his residence in Baldwin for domestic violence assault against his girlfriend and their five-year-old child. Two days later, while Smith was still in jail on that charge, officers were called out to Smith’s residence by Smith’s girlfriend who indicated that she had obtained a Protection from Abuse Order against Smith and wanted his items removed from the residence, thereby giving officers consent to enter and seize items. Upon their entry, officers observed approximately 20 improvised explosive devices, explosive precursor chemicals, written calculations and recipes for explosives, bombmaking literature (such as the Anarchist Cookbook), remote detonating devices and various white supremacist and Nazi paraphernalia, including a podium and business cards which seemed to indicate that his residence was the meeting location for a group known as the “White Church Supremacists.” Among the devices was a six-inch-long fused cylinder device, which has been determined by the ATF to contain a perchlorate-based powder explosive containing aluminum and potassium perchlorate, as well as nails and other fragmentation taped to the outside of the cylinder. This device has been determined to be in operable condition and to fall within the legal definition of a “destructive device” by the ATF. In addition to being a convicted felon who is prohibited from possessing such a weapon, Smith has no items registered to him in the National Firearms Registration and Transfer Record.
Assistant United States Attorney James T. Kitchen prosecuted this case on behalf of the government.
U.S. Attorney Hickton commended the Federal Bureau of Investigation and the Bureau of Alcohol, Tobacco, Firearms and Explosives for the investigation leading to the successful prosecution of Smith.
Pair from Galion charged for armed robbery in Ontario, OhioRead the Press Release
Stephen D. Anthony, Special Agent in Charge of the FBI, Cleveland Division, Northern District of Ohio, and Steven Dettelbach, United States Attorney for the Northern District of Ohio announce the arrest of Taylor Crisman and Chris Hill for the hostage-style armed robbery of KeyBank in Ontario, Ohio in early November.
On November 5, 2015, an unknown suspect held a KeyBank employee and his family hostage at gunpoint overnight in their home. On the morning of November 6, 2015, the suspect ordered the bank employee to travel to the bank, remove a large sum of money from the vault and return home. The suspect held the bank employee's wife and small children hostage until the employee returned home with the money. The bank employee complied with the demand. The suspect then notified an accomplice to pick him up from the residence.
A composite sketch of the unknown suspect was released to the public via the media on November 23, 2015. Various tips were received. Based on the composite sketch being shown by various media outlets, on November 28, 2015, a tip was provided indicating knowledge of the person that committed the KeyBank robbery. Investigators worked with the tipster to corroborate the information obtained over the next several days.
At approximately 12pm today agents from the Cleveland Division of the FBI, Mansfield and Canton resident offices, along with officers from the Ontario Police Department and Richland County Sheriff's Office conducted a traffic stop in Galion, Ohio and placed Crisman, 18, and Hill, 23, both of Galion, Ohio, into custody.
"The FBI commends the media and the public for helping to identify the individual who terrorized a KeyBank employee and his young family overnight," said SAC Anthony. "Crisman and Hill underestimated the collaborative efforts of law enforcement and the community."
"The one thing that these violent criminals did not count on was the incredible work of the FBI, the Ontario Police Department and the Richland County Sheriff's Office," said Dettelbach. "Now they will pay the price at the bar of justice for that oversight."
Crisman was placed into federal custody based on a federal arrest warrant obtained this week. Crisman was transported to Akron, Ohio this afternoon. Hill is currently being held on probable cause charges in the Richland County jail and will be federally charged tomorrow.
Evidence has been obtained at various locations where these two individuals have recently resided. Some items of evidence recovered include the fedora hat and bandana believed to be worn by Crisman during the time he held the family hostage in their home. Also, the .38 caliber handgun believed to be used by Crisman has been recovered.
Investigative activity continues to occur. Additional information will be released when appropriate.
A complaint is only a charge and is not evidence of guilt. The defendants are entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
Any questions regarding this news release can be directed to SA Vicki D Anderson at the Cleveland Office of the FBI, 216-522-1400 or [email protected].
Owner of Arkansas Juvenile Mental Health Facilities Indicted on Bribery ChargesRead the Press Release
The owner of two Arkansas mental health companies that provide inpatient and outpatient mental health services to juveniles was indicted yesterday for engaging in a scheme to bribe a former deputy director of the Arkansas Department of Human Services (ADHS), announced Assistant Attorney General Leslie R. Caldwell of the Department of Justice’s Criminal Division.
A federal grand jury in the Eastern District of Arkansas returned the six-count indictment on Dec. 2, 2015, charging Theodore E. Suhl, 50, of Warm Springs, Arkansas, with conspiracy to commit bribery and honest services fraud, three counts of honest services fraud, one count federal funds bribery and one count of interstate travel in aid of bribery.
The indictment alleges that Suhl bribed Steven B. Jones, former deputy director of ADHS, to perform acts in his official capacity that benefitted Suhl and his mental health companies and to provide internal ADHS information to Suhl. Beginning in approximately April 2007, Suhl, Jones and Phillip W. Carter, a former probation officer in Crittenden County, Arkansas, and a West Memphis, Tennessee, councilmember, allegedly periodically met at restaurants in Memphis, Tennessee, and rural Arkansas in order for Suhl to request assistance from Jones. In exchange for Jones’ agreement to perform official acts, Suhl allegedly paid Jones by issuing checks made payable to the pastor of Carter’s church that Carter and the pastor then deposited and cashed in order to provide cash payments to Jones.
Jones previously pleaded guilty to federal funds bribery and conspiracy for his involvement in the scheme. Carter previously pleaded guilty to conspiracy to commit federal funds bribery and honest services wire fraud. Jones and Carter currently await sentencing.
The charges and allegations contained in the indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
Trial Attorneys Lauren Bell, John D. Keller and Amanda R. Vaughn of the Criminal Division’s Public Integrity Section are prosecuting the case. The FBI’s Little Rock Field Office investigated the case.
Owner of Arkansas Juvenile Mental Health Facilities Indicted on Bribery ChargesRead the Press Release
WASHINGTON—The owner of two Arkansas mental health companies that provide inpatient and outpatient mental health services to juveniles was indicted yesterday for engaging in a scheme to bribe a former deputy director of the Arkansas Department of Human Services (ADHS), announced Assistant Attorney General Leslie R. Caldwell of the Department of Justice’s Criminal Division.
A federal grand jury in the Eastern District of Arkansas returned the six-count indictment on Dec. 2, 2015, charging Theodore E. Suhl, 50, of Warm Springs, Arkansas, with conspiracy to commit bribery and honest services fraud, three counts of honest services fraud, one count federal funds bribery and one count of interstate travel in aid of bribery.
The indictment alleges that Suhl bribed Steven B. Jones, former deputy director of ADHS, to perform acts in his official capacity that benefitted Suhl and his mental health companies and to provide internal ADHS information to Suhl. Beginning in approximately April 2007, Suhl, Jones and Phillip W. Carter, a former probation officer in Crittenden County, Arkansas, and a West Memphis, Tennessee, councilmember, allegedly periodically met at restaurants in Memphis, Tennessee, and rural Arkansas in order for Suhl to request assistance from Jones. In exchange for Jones’ agreement to perform official acts, Suhl allegedly paid Jones by issuing checks made payable to the pastor of Carter’s church that Carter and the pastor then deposited and cashed in order to provide cash payments to Jones.
Jones previously pleaded guilty to federal funds bribery and conspiracy for his involvement in the scheme. Carter previously pleaded guilty to conspiracy to commit federal funds bribery and honest services wire fraud. Jones and Carter currently await sentencing.
The charges and allegations contained in the indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
Trial attorneys Lauren Bell, John D. Keller and Amanda R. Vaughn of the Criminal Division’s Public Integrity Section are prosecuting the case. The FBI’s Little Rock Field Office investigated the case.
Opelousas couple pleads guilty to identity theftRead the Press Release
LAFAYETTE, La. – United States Attorney Stephanie A. Finley announced that an employee of an Opelousas tax preparation business and her boyfriend pleaded guilty Wednesday to stealing customers’ identities in order to pocket income tax refunds.
Frances Owens, 36, and Kevin White, 33, both of Washington, La., pleaded guilty before U.S. District Judge Richard T. Haik to one count of identity theft. According to the guilty plea, Owens worked as a tax preparer at Dee’s Tax Service in Opelousas in 2013. While working at Dee’s Tax Service, Owens prepared false 2012 individual tax returns for at least two people that had not authorized her to do so. While preparing the false tax returns, Owens took steps to ensure that the victims’ tax refund checks were sent to Dee’s Tax Service instead of the victims’ residences. Owens and her boyfriend, White, then took possession of the checks, forged the victims’ signatures and obtained false identification cards in the names of the victims to cash the checks. Specifically, on April 10, 2013, Owens illegally used a false identification card with her picture on it to cash a $5,838 check, and on April 12, 2013, White used a false identification card with his picture on it to cash a $4,727 check.
The defendants face up to 15 years in prison, three years of supervised release, a $250,000 fine and restitution.
The IRS investigated the case. Assistant U.S. Attorney David C. Joseph is prosecuting the case.
Northern District of Texas U.S. Attorney's Office Collects Nearly $17 Million in Civil and Criminal Actions for U.S. Taxpayers in Fiscal Year 2015Read the Press Release
DALLAS — U.S. Attorney John Parker announced today that the Northern District of Texas collected $16,843,994 in criminal and civil actions in the fiscal year (FY) ending Sept. 30, 2015. Of this amount, $13,517,578 was collected in criminal actions and $3,326,415 was collected in civil actions.
Additionally, the Northern District of Texas worked with other U.S. Attorney’s Offices and components of the Department of Justice to collect an additional $577,658 in cases pursued jointly with these offices. Of this amount, $152,634 was collected in criminal actions and $425,024 was collected in civil actions.
Attorney General Loretta E. Lynch also announced today that the Justice Department collected $23.1 billion in civil and criminal actions in FY 2015. The more than $23.1 billion in collections in FY 2015 represents more than seven and a half times the approximately $2.93 billion of the Justice Department’s combined appropriations for the 94 U.S. Attorneys’ offices and the main litigating divisions in that same period.
“The Department of Justice is committed to upholding the rule of law, safeguarding taxpayer resources, and protecting the American people from exploitation and abuse,” said Attorney General Lynch. “The collections we are announcing today demonstrate not only the strength of that commitment, but also the significant return on public investment that our actions deliver. I want to thank the prosecutors and trial attorneys who made this achievement possible, and to reiterate our dedication to this ongoing work.”
“These numbers illustrate that this office’s vigorous prosecutions, criminal and civil, do not end at sentencing or judgment, said U.S. Attorney Parker. “We have a continuing obligation to aggressively pursue the recovery of ill-gotten funds for both victims of crime and the federal treasury, and our efforts in this regard will remain robust.”
Substantial collections in the District in FY 2015 included:
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$1.77 million, almost 75% of the total funds embezzled by defendant returned to his former employer within 60 days of sentencing in U.S. v. Daniel Mangini;
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$1.54 million recovered through garnishment of multiple retirement accounts, life insurance policies, and payoff of lien on homestead in U.S. v. Michael Wolf, a workers’ compensation health care fraud case;
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$780,000 collected through the garnishment of multiple bank accounts, lease payments, and lawsuit settlement proceeds to enforce a $1.7 million civil judgment the U.S. Department of Labor obtained against the defendants on behalf of dozens of disabled men forced to work for years under deplorable conditions in U.S. v. Kenneth Henry and Hill Country Farms;
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$605,000 recovered through foreclosure of liens on real property and garnishment of multiple accounts in U.S. v. Glen McDonald, a counterfeiting and trafficking in contraband case;
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$383,000 in payments toward a $705,000 civil consent judgment in U.S. v. Wilma Aguilera, a False Claims Act case regarding a contract with the Department of Defense; and
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$226,000 recovered through foreclosure of lien on homestead to satisfy restitution imposed against husband and wife in U.S. v. Kenneth and Leah Brown, an insurance fraud conspiracy
The U.S. Attorneys’ Offices, along with the department’s litigating divisions, are responsible for enforcing and collecting civil and criminal debts owed to the U.S. and criminal debts owed to federal crime victims. The law requires defendants to pay restitution to victims of certain federal crimes who have suffered a physical injury or financial loss. While restitution is paid to the victim, criminal fines and felony assessments are paid to the department’s Crime Victims’ Fund, which distributes the funds to state victim compensation and victim assistance programs.
The largest civil collections were from affirmative civil enforcement cases, in which the United States recovered government money lost to fraud or other misconduct or collected fines imposed on individuals and/or corporations for violations of federal health, safety, civil rights or environmental laws. In addition, civil debts were collected on behalf of several federal agencies, including the U.S. Department of Housing and Urban Development, Health and Human Services, Internal Revenue Service, Small Business Administration and Department of Education.
Additionally, the U.S. Attorney’s office in the Northern District of Texas, working with partner agencies and divisions, collected $12,544,766 in asset forfeiture actions in FY 2015. Forfeited assets deposited into the Department of Justice Assets Forfeiture Fund are used to restore funds to crime victims and for a variety of law enforcement purposes.
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North Carolina Man Sentenced for Possession of Stolen FirearmsRead the Press Release
NORFOLK, Va. – Robert James Gibson, 25, of Roxobel, North Carolina, was sentenced today to 72 months in prison for possession of stolen firearms. Gibson was ordered to pay $15,000 in restitution for the cost of the stolen firearms and the damage done to AWH Arms during the course of the burglary.
Gibson pleaded guilty on Sept. 3, 2015. According to court documents, Gibson and a co-conspirator broke into AWH Arms in Virginia Beach and stole 22 firearms which Gibson and the co-conspirator were selling to people on the streets. This case came to light when a drunken individual left a night club and started shooting a gun into the air. After responding to a call about the shooting, police recovered the firearm and discovered it was stolen from the break-in at AWH Arms. The drunken individual identified both Gibson and the co-conspirator who sold him the stolen firearm.
Dana J. Boente, U.S. Attorney for the Eastern District of Virginia; and Charles E. Smith, Special Agent in Charge of the Bureau of Alcohol, Tobacco, Firearms and Explosives’ (ATF) Washington Field Division, made the announcement after sentencing by U.S. District Judge Mark S. Davis. Assistant U.S. Attorney William D. Muhr prosecuted the case.
A copy of this press release may be found on the website of the U.S. Attorney’s Office for the Eastern District of Virginia. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia or on PACER by searching for Case No. 2:15-cr-69.
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North Andover Psychiatrist Settles Drug Diversion AllegationsRead the Press Release
BOSTON – The U.S. Attorney’s Office reached a $20,000 civil settlement today with Dr. Richard Heller, a psychiatrist in North Andover, Mass., in connection with his uncontrolled storage of patient medication in a self-storage unit and his related failure to maintain proper records.
In settlement documents, Dr. Heller admitted to failing to maintain readily retrievable records of controlled substances, failing to conduct required biennial inventories, and failing to maintain complete and accurate records of controlled substances at his office and self-storage unit. An investigation revealed that Dr. Heller was improperly taking back unused medications from his patients, leaving those medications in various unsecured locations within his office, and failing to keep records of those medications, as required by regulations. In addition, investigators learned in May 2015 that Dr. Heller had been maintaining a substantial amount of unused medications for which he did not have accurate records in a North Andover self-storage unit. That storage unit was not registered with the Drug Enforcement Administration (DEA), and the contents of the unit were subject to possible auction as a result of Dr. Heller’s failure to make timely rental payments.
“Ensuring the proper handling of prescription drugs is a critical part of our ongoing efforts to protect patient safety and prevent drug diversion,” said United States Attorney Carmen M. Ortiz. “We will continue to monitor those handling controlled substances, whether they are large pharmacy chains or solo physician practices, to insist that they adhere to these regulations in conducting business.”
“DEA registrants are responsible to handle controlled substances and ensure that complete and accurate records are being properly kept and accounted for in compliance with the Controlled Substance Act,” said Special Agent in Charge Michael J. Ferguson. “Our obligation is to improve public safety and public health, and we are committed to working with our law enforcement and regulatory partners to ensure that these rules and regulations are followed.
“The North Andover Police Department aggressively investigates all reports of potential drug diversion that could result in the misuse and abuse of pharmaceuticals,” said Chief Paul J. Gallagher of the North Andover Police Department. “To that end, we will continue to work with our federal, state, local and community partners to help mitigate the severe negative consequences of drug abuse and addiction present in Massachusetts and throughout the Northeast.”
Dr. Heller has agreed to pay $20,000 to settle these claims and to permit the DEA to perform four administrative inspections of his office over the course of the next two years without a warrant.
U.S. Attorney Ortiz, DEA SAC Ferguson and Chief Paul J. Gallagher of the North Andover Police Department, made the announcement today. The case was handled by Assistant U.S. Attorney Patrick Callahan.
North Alabama U.S. Attorney’s Office Collects $2.4 million in Civil and Criminal Actions for U.S. Taxpayers in Fiscal Year 2015Read the Press Release
BIRMINGHAM -- U.S. Attorney Joyce White Vance announced today that the Northern District of Alabama office collected $2.4 million in criminal and civil actions in Fiscal Year 2015. Of this amount, $1.9 million was collected in criminal actions and $483,146 in civil actions.
Additionally, the north Alabama office worked with other U.S. Attorney’s Offices and components of the Department of Justice to collect an additional $36.7 million in cases pursued jointly with these offices. Those joint cases included a $13 million settlement with the for-profit education company, Education Affiliates, on allegations of fraud against the U.S. Department of Education.
Attorney General Loretta E. Lynch announced today that the Justice Department collected $23.1 billion in civil and criminal actions in the fiscal year ending Sept. 30, 2015. That amount represents more than seven and a half times the approximately $2.93 billion that the Justice Department appropriated for the 93 U.S. Attorneys’ offices and the main litigating divisions for the 2015 fiscal year.
“The Department of Justice is committed to upholding the rule of law, safeguarding taxpayer resources and protecting the American people from exploitation and abuse,” said Attorney General Lynch. “The collections we are announcing today demonstrate not only the strength of that commitment, but also the significant return on public investment that our actions deliver. I want to thank the prosecutors and trial attorneys who made this achievement possible, and to reiterate our dedication to this ongoing work.”
"My office is committed to the primary goal of seeking justice and, to that end, we work every day to put criminals behind bars and ensure that money taken through wrongful action is returned to the federal government and the American taxpayer,” Vance said. “The $2.4 million our office recovered independently this past year, plus the $36.7 million we recovered working collaboratively with other offices, is more than three times the budget of this office," she said.
Among the civil collections made independently by the U.S. Attorney’s Office for north Alabama was $123,036 from Maurice Gant and the Center for Hearing in Huntsville, and $300,000 from Generics Bidco, a Huntsville pharmaceutical distribution facility. The Center for Hearing paid to settle allegations that it made a series of false claims to the government arising from the provision of audiology services to TVA employees and retirees. Generics Bidco paid penalties to settle allegations that it failed to maintain complete and accurate records and inventories of controlled substances.
The U.S. Attorneys’ Offices, along with the department’s litigating divisions, are responsible for enforcing and collecting civil and criminal debts owed to the U.S. and criminal debts owed to federal crime victims. The law requires defendants to pay restitution to victims of certain federal crimes who have suffered a physical injury or financial loss. While restitution is paid to the victim, criminal fines and felony assessments are paid to the department’s Crime Victims’ Fund, which distributes the funds to state victim compensation and victim assistance programs.
The largest civil collections were from affirmative civil enforcement cases, in which the United States recovered government money lost to fraud or other misconduct or collected fines imposed on individuals and/or corporations for violations of federal health, safety, civil rights or environmental laws. In addition, civil debts were collected on behalf of several federal agencies, including the U.S. Department of Housing and Urban Development, Health and Human Services, Internal Revenue Service, Small Business Administration and Department of Education.
Additionally, the U.S. Attorney’s office for the Northern District of Alabama, working with partner agencies and divisions, collected $1.4 million in asset forfeiture actions in FY 2015. Forfeited assets deposited into the Department of Justice Assets Forfeiture Fund are used to restore funds to crime victims and for a variety of law enforcement purposes.
New York Plastic Surgeon to Pay $150,000 to Settle Allegations under the Controlled Substances ActRead the Press Release
Deirdre M. Daly, United States Attorney for the District of Connecticut, today announced that CHERYL KARCHER, M.D., 57, of Brookfield, Conn., and New York, N.Y., has entered into a civil settlement agreement with the government in which she will pay $150,000 to resolve allegations that she violated civil provisions of the Controlled Substances Act.
KARCHER is a plastic surgeon associated with Sadick Dermatology located at 911 Park Avenue in Manhattan. The allegations against her involve claims that she wrote at least 15 prescriptions for Percocet, a Schedule II Narcotic drug, outside the course of her normal medical practice. The 15 prescriptions, which were filled at pharmacies in Connecticut, were not dispensed to the individuals whose name was on the prescriptions.
“The improper diversion of potent pharmaceuticals risks the safety of those individuals that ultimately use these drugs,” said U.S. Attorney Daly. “This settlement sends a message to the medical community that there are real consequences for practicing medicine outside the proper course of medical practice.”
KARCHER was prosecuted by the Office of the Special Narcotics Prosecutor for the City of New York in a related criminal case. The case against her was dismissed after she completed a court-ordered drug treatment program.
The federal investigation was conducted by investigators from the Drug Enforcement Administration’s Office of Diversion Control in Rocky Hill, Conn. The prosecution was led by Assistant U.S. Attorney Alan M. Soloway.
New York Man Sentenced to 60 Month Federal Prison Term for Cocaine DistributionRead the Press Release
HARRISBURG - The United States Attorney’s Office for the Middle District of Pennsylvania announced today that Wesley Jackson, age 52, New York, NY was sentenced to 60 months by Chief United States District Court Judge Christopher C. Conner in Harrisburg, for unlawful distribution of cocaine.
According to United States Attorney Peter Smith, Jackson pled guilty in August 2015 to unlawfully distributing approximately a half of kilogram of cocaine from September to November 2014.
Jackson was indicted by a federal grand jury in December 2015, as a result of an investigation by the Drug Enforcement Administration’s Harrisburg Resident Office and the Harrisburg Police Department. Prosecution of the case was assigned to Assistant United States Attorney William A. Behe.
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New Mexico U.S. Attorney’s Office Collects More Than $12 Million in Civil and Criminal Actions for U.S. Taxpayers in Fiscal Year 2015Read the Press Release
ALBUQUERQUE – U.S. Attorney Damon P. Martinez announced today that the District of New Mexico collected $12,080,100.80 in criminal and civil actions in Fiscal Year 2015. Of this amount, $2,489,785.93 was collected in criminal actions and $9,590,314.87 was collected in civil actions.
Additionally, the Office worked with other components of the Justice Department to collect an additional $78,200,000.00 in civil cases pursued jointly. The Office, working with partner agencies and divisions, also collected $2,039,813.00 in asset forfeiture actions.
Attorney General Loretta E. Lynch announced that the Justice Department collected $23.1 billion in civil and criminal actions in the fiscal year ending Sept. 30, 2015. The more than $23.1 billion in collections in Fiscal Year 2015 represents more than seven and a half times the approximately $2.93 billion of the Justice Department’s combined appropriations for the 94 U.S. Attorneys’ Offices and the main litigating divisions in that same period.
“The Department of Justice is committed to upholding the rule of law, safeguarding taxpayer resources, and protecting the American people from exploitation and abuse,” said Attorney General Loretta Lynch. “The collections we are announcing today demonstrate not only the strength of that commitment, but also the significant return on public investment that our actions deliver. I want to thank the prosecutors and trial attorneys who made this achievement possible, and to reiterate our dedication to this ongoing work.”
“The U.S. Attorney’s Office is dedicated to protecting the public by recovering funds wrongfully taken from the taxpayers and obtaining restitution for victims of federal crimes,” said U.S. Attorney Damon P. Martinez. “By holding accountable those who defraud the taxpayers and criminals who seek to profit from their illegal activities, we seek not only to ensure that justice is served but also deliver a valuable return to the people of New Mexico.”
U.S. Attorney Martinez commended Assistant U.S. Attorneys Howard R. Thomas, Ruth F. Keegan, Stephen R. Kotz and Brock Taylor and staff members Julie Chappell, Lois Agnes, Feather Astor, Lois Golden, Melinda Quick and Roxanne Castillo for their combined efforts in recovering funds on behalf of the United States. He also commended U.S. Marshal Conrad E. Candelaria and the U.S. Marshals Service for facilitating the collection of funds from the criminal and civil forfeiture actions.
The U.S. Attorneys’ Offices, along with the Justice Department’s litigating divisions, are responsible for enforcing and collecting civil and criminal debts owed to the United States and criminal debts owed to federal crime victims. The law requires defendants to pay restitution to victims of certain federal crimes who have suffered a physical injury or financial loss. While restitution is paid to the victim, criminal fines and felony assessments are paid to the Department’s Crime Victims’ Fund, which distributes the funds to state victim compensation and victim assistance programs.
The largest civil collections were from affirmative civil enforcement cases, in which the United States recovered government moneys lost to fraud or other misconduct or collected fines imposed on individuals and/or corporations for violations of federal health, safety, civil rights or environmental laws. In addition, civil debts were collected on behalf of several federal agencies, including the U.S. Department of Housing and Urban Development, Health and Human Services, Internal Revenue Service, Small Business Administration and Department of Education. Forfeited assets deposited into the Department of Justice Asset Forfeiture Fund are used to restore funds to crime victims and for a variety of law enforcement purposes.
New London Man Pleads Guilty to Federal Gun ChargeRead the Press Release
Deirdre M. Daly, United States Attorney for the District of Connecticut, today announced that ELIJAH GRIFFIN, 25, of New London, pleaded guilty yesterday in Hartford federal court to being a felon in possession of firearms.
According to court documents and statements made in court, on April 30, 2015, members of the New London Police Department and the Connecticut State Police executed a state search and seizure warrant at GRIFFIN’s apartment on West Street in New London. Inside a closet in GRIFFIN’s room, officers located and seized a loaded .38 caliber revolver and a loaded .45 caliber pistol.
GRIFFIN has a prior state felony conviction for sale of narcotics. It is a violation of federal law for a person previously convicted of a felony offense to possess a firearm or ammunition that has moved in interstate or foreign commerce.
GRIFFIN has been detained since his arrest on April 30. He is scheduled to be sentenced by Senior U.S. District Judge Alfred V. Covello on February 24, 2016, at which time he faces a maximum term of imprisonment of 10 years.
This matter is being investigated by the New London Police Department with the assistance of the Connecticut State Police and the Norwich Police Department. The case is being prosecuted by Assistant U.S. Attorney Sarah P. Karwan.
New Hampshire Company Pleads Guilty to Hacking into A Competitor’s Computer System for Commercial AdvantageRead the Press Release
CONCORD, N.H. – Acting United States Attorney Donald Feith, and FBI Special Agent in Charge, Harold H. Shaw, announced today that General Linen Services, LLC of Somersworth, New Hampshire, formerly known as General Linen Service Co., Inc. (General Linen Somersworth) pled guilty to violating computer hacking in violation of Title 18, United States Code, Sections 1030(a)(2)(C) & (c)(2)(B)(i). Earlier this month, charges were filed alleging that between September 2009 and April 8, 2010 the company “intentionally accesses a computer without authorization, and thereby obtained information from a protected computer,” a computer used in interstate commerce, “and the offense was committed for purposes of commercial advantage and private financial gain … .”
Today General Linen Somersworth appeared before United States District Judge Steven J. McAuliffe and entered a guilty plea on the company’s behalf. The facts to which the company has agreed in its plea include that in September 2009 its former information technology (IT) director, accessed, without authority, the computer server of a competitor with a similar name, General Linen Services Co. Inc. of Newburyport, Massachusetts. The IT director then shared the login information with others at the company, who then repeatedly accessed the competitor’s computer system, downloading approximately 1,100 of their competitor’s invoices for use in sales efforts directed at the competitor’s customers. The FBI’s examination of the victim’s computer system proved that between September 2009 and April 8, 2010 there were 157 instances of unauthorized access to the victim company’s computer system and that the majority of those intrusions originated at the office of the defendant, General Linen Somersworth.
“Small businesses often rely on relatively small profit margins in their day-to-day business,” stated Acting United States Attorney Donald Feith. “These tight profit margins can be harmed, and the survival of a small business can be compromised, when competitors engage in criminal activity to gain a marketing advantage. This case demonstrates that a relatively small New Hampshire company hacked into the computer system of one of its competitors and stole over 1,000 invoices in an effort to steal customers from its competitor. This case should stand as an example to all business in New Hampshire that the FBI and the U.S. Attorney’s Office do not limit their investigations of computer hacking to Fortune 500 companies. All businesses are entitled to the safe and secure use of their computers and the Internet, and when hacking is suspected investigations and prosecutions will take place.”
The defendant is scheduled to be sentenced on March 26, 2016 and faces a maximum sentence of five years’ probation, up to a $500,000 fine, and may be ordered to pay restitution to the victim of its crime, General Linen Newburyport.
This case was investigated by the Federal Bureau of Investigation, Boston Field Office, and is being prosecuted by Assistant United States Attorney Arnold H. Huftalen.
New Charges Brought against Tobacco WholesalerRead the Press Release
BOSTON – Additional charges were handed down yesterday by a federal grand jury in Springfield against a Middletown, Conn. man in connection with his scheme to defraud Massachusetts and Connecticut of substantial tobacco tax revenue.
Syed I. Bokhari, 51, was charged in a 35-count superseding indictment with one count of racketeering conspiracy, 10 counts of wire fraud, five counts of trafficking in contraband smokeless tobacco, one count of conspiracy to commit money laundering, nine counts of concealment money laundering, five counts of money laundering and five counts of violation of the Prevent All Cigarette Trafficking (PACT) Act. Bokhari was initially charged in a 32-count indictment in October 2014.
The superseding indictment alleges that Bokhari was the head of a sprawling enterprise which included tobacco wholesale businesses, gas stations and convenience stores, real estate, and hotels in Massachusetts, Connecticut and Pennsylvania. Between 2000 and 2012, Bokhari allegedly defrauded Massachusetts and Connecticut by failing to pay excise taxes on smokeless tobacco and cigars. It is alleged that he transferred smokeless tobacco to those states without reporting them to the appropriate state tax authorities, as required under the PACT Act. The superseding indictment also alleges that Bokhari accepted payments for tobacco products in cash amounts of more than $10,000, yet did not file the required federal financial reporting form. He did this to disguise the true volume of the tobacco products being sent to Massachusetts and Connecticut and the source of the cash payments. Bokhari also allegedly provided fake invoices and caused the filing of false excise tax returns to the Massachusetts and Connecticut tax authorities. Lastly, Bokhari allegedly used his non-tobacco businesses to launder the proceeds of the tobacco tax fraud.
The charges of racketeering conspiracy and wire fraud provide for a sentence of no greater than 20 years in prison, three years of supervised release and a fine of $250,000 or twice the gross gain or loss for each count. The change of trafficking in contraband smokeless tobacco provides for a sentence of no greater than five years in prison, three years of supervised release and a fine of $250,000 or twice the gross gain or loss for each count. The charge of conspiracy to commit money laundering provides for a sentence of no greater than 10 years in prison, three years of supervised release and a fine of $250,000 or twice the value of the property involved in the transaction for each count. The charge of concealment money laundering provides for a sentence of no greater than 20 years in prison, three years of supervised release and a fine of $500,000 or twice the value of the property involved in the transaction for each count. The charge of money laundering provides for a sentence of no greater than 10 years in prison, three years of supervised release and a fine of $250,000 or twice the gain or loss for each count. The charge of violation of the PACT Act provides for a sentence of no greater no three years in prison, one year of supervised release and a fine of $250,000 for each count. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based on the U.S. Sentencing Guidelines and other statutory factors.
United States Attorney Carmen M. Ortiz; Daniel J. Kumor, Special Agent in Charge of the Bureau of Alcohol, Tobacco, Firearms & Explosives, Boston Field Division; William P. Offord, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation in Boston; Matthew Etre, Special Agent in Charge of Homeland Security Investigations in Boston; Commissioner Mark Nunnelly of the Massachusetts Department of Revenue; and Commissioner Kevin B. Sullivan of the Connecticut Department of Revenue Services, made the announcement today. The case is being prosecuted by Assistant U.S. Attorneys Alex J. Grant and Katharine Wagner of Ortiz’s Springfield Branch Office.
The details contained in the charging document are allegations. The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Nevada U. S. Attorney’s Office Collects $22.5 Million for U.S. Taxpayers in 2015Read the Press Release
LAS VEGAS, Nev. – U.S. Attorney Daniel G. Bogden announced today that the Nevada U.S. Attorney’s Office collected approximately $22.5 million in Fiscal Year (FY) 2015 related to criminal, civil and asset forfeiture actions. Of this amount, approximately $5 million was collected in criminal actions, $2.5 million was collected in civil actions, and $15 million was collected in asset forfeiture actions in FY 2015.
The District of Nevada also worked with other U.S. Attorney’s Offices and components of the Department of Justice to collect an additional $2.7 million in cases pursued jointly with these offices.
“Our office has been aggressive in enforcing and collecting civil and criminal debts owed to the United States and criminal debts owed to federal crime victims,” said U.S. Attorney Bogden. “These collections are used to help crime victims and for a variety of other law enforcement purposes,” said U.S. Attorney Bogden. “Our FY 2015 collections substantially exceeded the total appropriated budget for our office for the entire year.”
U.S. Attorney General Loretta E. Lynch also announced today that the Justice Department collected $23.1 billion in civil and criminal actions in the fiscal year ending Sept. 30, 2015. The $23.1 billion in collections in FY 2015 represents more than seven and a half times the approximately $2.93 billion of the Justice Department’s combined appropriations for the 94 U.S. Attorneys’ offices and the main litigating divisions in that same period.
Below are summaries of two cases in which the U.S. Attorney’s Office for the District of Nevada collected significant amounts of money during FY 2015.
In December 2014, Concierge Compounding Pharmaceuticals (CCP) paid $273,500 to the U.S. Attorney’s Office for Nevada and the U.S. Department of Justice to settle claims on behalf of the Drug Enforcement Administration and the Defense Health Agency alleging that CCP had shipped compounded pharmaceuticals, many of them controlled substances, outside Nevada without being licensed as a pharmacy in the states where the drugs were received.
In FY 2015, we collected over $7.5 million from defendants Nathan Stoliar and James Jariv, who pleaded guilty in 2015 to conspiracy to defraud the United States, money laundering, and wire fraud, and were sentenced to prison. The money was collected through the seizure and criminal forfeiture of assets, such as bank accounts, jewelry, and real property, which were the proceeds of their complex fraud scheme involving renewable energy credits.
The U.S. Attorneys’ Offices, along with the department’s litigating divisions, are responsible for enforcing and collecting civil and criminal debts owed to the U.S. and criminal debts owed to federal crime victims. The law requires defendants to pay restitution to victims of certain federal crimes who have suffered a physical injury or financial loss. While restitution is paid to the victim, criminal fines and felony assessments are paid to the department’s Crime Victims’ Fund, which distributes the funds to state victim compensation and victim assistance programs. Forfeited assets deposited into the Department of Justice Assets Forfeiture Fund are used to restore funds to crime victims and for a variety of law enforcement purposes.
The largest civil collections were from affirmative civil enforcement cases, in which the United States recovered government money lost to fraud or other misconduct or collected fines imposed on individuals and/or corporations for violations of federal health, safety, civil rights or environmental laws. In addition, civil debts were collected on behalf of several federal agencies, including the U.S. Department of Housing and Urban Development, Health and Human Services, Internal Revenue Service, Small Business Administration and Department of Education.
Nevada City Woman Sentenced to over Five Years in Prison for Marijuana Cultivation and Structuring Currency TransactionsRead the Press Release
SACRAMENTO, Calif. — Patricia Jane Albright, 64, of Nevada City, was sentenced by United States District Judge Troy L. Nunley to five years and five months in prison for conspiring to manufacture marijuana, manufacturing marijuana, and structuring currency transactions to evade federal reporting requirements, United States Attorney Benjamin B. Wagner announced.
On July 21, 2015, Albright pleaded guilty to the charges. Albright’s son and co‑conspirator, Jordan Wirtz, 29, previously pleaded guilty to possession of a firearm in furtherance of a drug trafficking crime, for possessing a loaded Northern England 12 gauge shotgun and ammunition in his residence at the grow site. On February 26, 2015, Judge Nunley sentenced him to five years in prison.
According to court documents, between 2008 and September 2010, Albright and others manufactured marijuana on two properties she owned near Nevada City and Georgetown. Marijuana from Albright’s operation was regularly shipped out of state under fake names and addresses. At the time of her arrest on September 28, 2010, investigators found marijuana plants, cash, processed marijuana, and two firearms.
When Albright purchased the property near Georgetown in 2008 for growing marijuana, she structured 21 cash transactions at six different financial institutions over three days so she could avoid federal reporting requirements related to cash deposits.
This case was the product of an investigation by the Internal Revenue Service, Criminal Investigation; the U.S. Drug Enforcement Administration; the California Department of Justice; the Grass Valley Police Department, and the sheriff’s offices of Nevada County, Placer County, and El Dorado County. Assistant United States Attorneys Michael M. Beckwith and Justin Lee prosecuted the case.
During the course of the investigation which involved the execution of 16 search warrants in three different counties, law enforcement seized over 4,100 marijuana plants, over 200 pounds of processed marijuana, and numerous firearms. A number of the defendants were armed at the time of their arrest, and several of the defendants had prior felony convictions for narcotics offenses. One defendant was arrested in a marijuana grow with a firearm while on pretrial release from an earlier arrest. He was facing charges for manufacturing marijuana in Southern California in 2009. Documents and items found at a number of the search locations show hundreds of thousands of dollars in financial transactions, and the interstate shipment of cash and narcotics.
Nampa Man Sentenced for Selling MethamphetamineRead the Press Release
BOISE – Richard Lobato, 51, of Nampa, Idaho, was sentenced today in United States District Court to 60 months for distributing methamphetamine, U.S. Attorney Wendy J. Olson announced. Chief U.S. District Judge B. Lynn Winmill also ordered Lobato to serve four years of supervised release following his prison term. Lobato was indicted by a federal grand jury on October 15, 2014, and entered a guilty plea on September 1, 2015.
According to the plea agreement, Lobato admitted that he distributed methamphetamine to a confidential informant on two occasions. On October 9, 2013, Lobato and co-conspirator Michael Bradshaw sold approximately one-quarter of an ounce of methamphetamine to the informant. On October 23, 2013, Lobato sold another one-quarter of an ounce of methamphetamine to the informant.
This case and other related cases are the result of an investigation by the Treasure Valley Metro Violent Crimes Task Force, which focused on the “Norteno” Northside gang that is active in Nampa and other parts of the Treasure Valley. Fourteen individuals were indicted on drug and gun charges as a result of the investigation. In addition to Lobato, nine other defendants have been sentenced. Guadalupe Serrano, 35, of Caldwell, was sentenced on April 21, 2015, to 75 months in prison for possession of methamphetamine with intent to distribute and for possessing firearms in furtherance of the drug trafficking crime. Nicole Danelle Nieto, 31, of Nampa, was sentenced on May 26, 2015, to 41 months in prison for distributing methamphetamine. Jose Manuel Menchaca, 35, of Nampa, was sentenced May 28, 2015, to 60 months in prison for distributing methamphetamine. On June 17, 2015, Brandi Larrea, 31, of Nampa, was sentenced to 48 months in prison for distributing methamphetamine and Tara Noelle Rivera, 30, of Nampa, was sentenced to 24 months in prison for distributing methamphetamine. Johnny Lee Martinez, 33, of Nampa, was sentenced on July 20, 2015, to 57 months in prison for distributing methamphetamine. Michael Bradshaw, 31, of Nampa, was sentenced on August 6, 2015, to 66 months in prison for distributing methamphetamine. Kenny P. Breedlove, 35, from California, was sentenced on October 15, 2015, to 110 months in prison. Guillermo Farias Jr., 29, from Nampa, was sentenced on October 26, 2015, to three years of supervised probation. Two other defendants, Jose Enrique Olvera Jr., 51, from Nampa, and Isaac Bright, 21 from Caldwell, are scheduled for sentencing on January 20, 2016. Veronica Cantu, 26, of Nampa, was arrested in Michigan last week and has an initial appearance scheduled for December 10, 2015. One defendant, Ruben Rodriguez, 36, of Nampa, has an outstanding warrant.
These cases are the result of a joint investigation by the Treasure Valley Metro Violent Crime Task Force and the Organized Crime and Drug Enforcement Task Force (OCDETF). The Treasure Valley Metro Violent Crime Task Force is comprised of federal, state and local agencies, including the Federal Bureau of Investigation; Bureau of Alcohol, Tobacco, Firearms and Explosives; Boise Police Department; Ada County Sheriff’s Office; Caldwell Police Department; Nampa Police Department; Meridian Police Department; Canyon County Sheriff’s Office; and Idaho Department of Probation and Parole. The Organized Crime and Drug Enforcement Task Force (OCDETF), includes the cooperative law enforcement efforts of the Federal Bureau of Investigation; Drug Enforcement Administration; Bureau of Alcohol, Tobacco, Firearms and Explosives; U. S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI); Internal Revenue Service-Criminal Investigation; and U.S. Marshals Service. The OCDETF program is a federal multi-agency, multi-jurisdictional task force that supplies supplemental federal funding to federal and state agencies involved in the identification, investigation, and prosecution of major drug trafficking organizations.
These cases are being prosecuted by the Special Assistant U.S. Attorney hired by the Treasure Valley Partnership, the Canyon County Prosecuting Attorney’s Office, and the State of Idaho to address gang crimes. The Treasure Valley Partnership is comprised of a group of elected officials in southwest Idaho dedicated to regional coordination, cooperation, and collaboration on creating coherent regional growth. For more information, visit treasurevalleypartners.org.
Michigan Woman Charged in Fraud SchemeRead the Press Release
PHILADELPHIA - Alyson Cesarz, 43, of Allen Park, Michigan, was charged by information, filed December 1, 2015, with five counts of wire fraud, announced United States Attorney Zane David Memeger. As the owner of Parklane Commercial Lending, Cesarz told clients that she would seek financing for their commercial projects in amounts ranging from fifteen million dollars to almost one billion dollars. She required the clients to pay a large, allegedly refundable deposit, of over $100,000, and for one client over $500,000. Cesarz did not obtain financing for the clients or return the refundable deposits. Four victims were defrauded of at least $1,148,000.
If convicted, the defendant faces a maximum possible sentence of 100 years of imprisonment, three years of supervised release, a fine, and a $500 special assessment.
The case was investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant United States Attorney Laurie Magid.
An information is an accusation. A defendant is presumed innocent unless and until proven guilty.
Mexican National Charged with Illegal Possession of a FirearmRead the Press Release
U.S. Attorney Kenneth A. Polite announced that ERIC de JESUS MENDOZA-MARTINEZ, age 19, from Honduras, was charged today in a one-count Indictment with being an illegal alien in possession of a firearm.
According to the Indictment, MENDOZA-MARTINEZ, an alien illegally and unlawfully present in the United States, was encountered by Department of Homeland Security/Homeland Security Investigations agents and found to be in possession of a .380 semi-automatic pistol.
If convicted, MENDOZA-MARTINEZ faces a maximum term of imprisonment of ten years, a fine of $250,000 and three years of supervised release following any term of imprisonment.
U. S. Attorney Polite reiterated that an Indictment is merely a charge and that the guilt of the defendant must be proven beyond a reasonable doubt.
U.S. Attorney Polite praised the work of the U.S. Department of Homeland Security/Homeland Security Investigations in investigating this matter. Assistant U.S. Attorney Spiro G. Latsis is in charge of the prosecution.
McKinney Texas Man Pleads Guilty to Money Laundering ConspiracyRead the Press Release
MUSKOGEE, OKLAHOMA - The United States Attorney’s Office for the Eastern District of Oklahoma, announced today that NATHAN PHILLIP WEBSTER, age 40, of McKinney, Texas, pled guilty to MONEY LAUNDERING CONSPIRACY, in violation of Title 18, United States Code, Section 1956(h), punishable by not more than 20 years imprisonment, up to a $500,000 fine or both.
Charges arose from an investigation by the Drug Enforcement Administration. The defendant was indicted in April, 2015.
The Indictment alleged that beginning in or about August of 2011, the exact date being unknown and continuing until in or about January 2013, the defendant did willfully and knowingly combine, conspire, confederate, and agree together with others known and unknown, to knowingly conduct and attempt to conduct a financial transaction affecting interstate and foreign commerce, by purchasing a Green, 2001, Ford F150, truck, with proceeds from the distribution and sale of methamphetamine, with the intent to acquire, possess and distribute methamphetamine.
The charge further alleges that the defendant deposited large sums of United States Currency into bank accounts in Dallas, Texas, knowing that the transactions were designed in whole or in part to conceal and disguise the nature, location, source, ownership, and control of the proceeds from the distribution of methamphetamine.
The Honorable Kimberly E. West, Magistrate Judge in the United States District Court for the Eastern District of Oklahoma, in Muskogee, accepted the guilty plea and ordered the completion of a presentence report. Sentencing will be scheduled following its completion. The defendant will remain in the custody of the United States Marshal Service pending sentencing.
Assistant United States Attorney Rob Wallace represented the United States.
Maryland U. S. Attorney’s Office Collects over $155 Million in Civil and Criminal Actions for U.S. Taxpayers in FY 2015Read the Press Release
Baltimore, Maryland – U.S. Attorney Rod J. Rosenstein announced that financial collections in criminal and civil actions in Fiscal Year (FY) 2015 in the District of Maryland reached $155,566,462.75. The U.S. Department of Justice keeps statistics on a fiscal year basis, closing the books each September 30.
Attorney General Loretta Lynch announced today that the Justice Department collected $23.1 billion in civil and criminal actions in the fiscal year ending Sept. 30, 2015. The more than $23 billion in collections in FY 2015 represents nearly seven and a half times the appropriated $2.93 billion budget for the 94 U.S. Attorney’s offices and the main litigating divisions in that same period.
“The Department of Justice is committed to upholding the rule of law, safeguarding taxpayer resources, and protecting the American people from exploitation and abuse,” said Attorney General Loretta Lynch. “The collections we are announcing today demonstrate not only the strength of that commitment, but also the significant return on public investment that our actions deliver. I want to thank the prosecutors and trial attorneys who made this achievement possible, and to reiterate our dedication to this ongoing work.”
“Thanks to the hard work and dedication of employees of the U.S. Attorney’s Office and our partner agencies, funds recovered far exceed the cost of operating the office,” said Maryland U.S. Attorney Rod J. Rosenstein. “We will continue to hold accountable anyone who seeks to profit from illegal activities.”
According to statistics from the Department of Justice, the U.S. Attorney’s Office for the District of Maryland in FY 2015 collected $136,419,084.26 in criminal debts owed to the U.S. government and to federal crime victims, including restitution, criminal fines and felony assessments.
The statistics show that the $19,147,378.49 collected in civil actions in Maryland, include affirmative civil enforcement cases, in which the United States recovered government money lost to fraud or other misconduct or collected penalties imposed on individuals and/or corporations for violations of federal health, safety, civil rights or environmental laws, and debts collected on behalf of several federal agencies, including the U.S. Department of Education, Housing and Urban Development, Health and Human Services, Internal Revenue Service, and Small Business Administration.
Additionally, the District of Maryland worked with other U.S. Attorney’s Offices and components of the Department of Justice to collect an additional $14,429,540.47 in cases pursued jointly with these offices. Of this amount $429,088.54 was collected in criminal actions and $14,000,451.93 was collected in civil actions, including cases resolved under the False Claims Act on behalf of victim agencies such as the Department of Health and Human Services, Department of Defense and the Department of Education. These cases include the successful resolution of United States ex rel. Roman v. Education Affiliates, Inc., United States ex rel Stoneham v. Pole Zero, Inc. and investigations of DRS Technical Services, Inc. and Foundation Health Services, Inc. Additionally, the District of Maryland collected civil penalties under the Controlled Substances Act on behalf of the Drug Enforcement Administration from its investigation of Value Drug, Inc.
The U.S. Attorneys’ offices, along with the Department’s litigating divisions, are responsible for enforcing and collecting civil and criminal debts owed to the United States and criminal debts owed to federal crime victims. The law requires defendants to pay restitution to victims of certain federal crimes who have suffered a physical injury or financial loss. While restitution is paid directly to the victim, criminal fines and felony assessments are paid to the Department’s Crime Victims’ Fund, which distributes the funds to state victim compensation and victim assistance programs.
The largest civil collections were from affirmative civil enforcement cases, in which the United States recovered government money lost to fraud or other misconduct or collected fines imposed on individuals and/or corporations for violations of federal health, safety, labor and controlled substance laws. In addition, civil debts were collected on behalf of several federal agencies, including the U.S. Department of Housing and Urban Development, Health and Human Services, Internal Revenue Service, Small Business Administration and Department of Education.
In addition, the U.S. Attorney’s Office for the District of Maryland, working with partner agencies and divisions, collected $16,708,177 in asset forfeiture actions in FY 2015. Forfeited assets deposited into the Department of Justice Assets Forfeiture Fund are used to restore funds to crime victims and for a variety of law enforcement purposes.
For more information, the Department’s Annual Statistical Reports on prior fiscal years can be found on the internet at: http://www.justice.gov/usao/reading_room/foiamanuals.html.
Man Sentenced to 5 Years’ Probation and Community Confinement for Aiming Laser at California Highway Patrol HelicopterRead the Press Release
OAKLAND – Christian Palomino was sentenced today to five years of probation, including 6 months of community confinement at a halfway house, for aiming a laser at a California Highway Patrol (CHP) Helicopter, announced Acting United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge David J. Johnson.
In pleading guilty, Palomino, 19, of Oakland, admitted that on June 7, 2014, he knowingly aimed the beam of a laser pointer at a CHP Helicopter. The lasing incident was captured by Palomino in a “selfie” video on his phone. In the videos, Palomino can be heard yelling at the helicopter pilot, “Look at this laser!” In addition, a woman can be heard in the background admonishing Palomino, “Don’t do that! You know you could blind . . . You[’re] going to go to jail if you do that. Don’t do that!”
At the time of the lasing incident, the CHP helicopter was assisting the Oakland Police Department in its efforts to locate a domestic violence suspect. Palomino was indicted by a federal grand jury on August 28, 2014, for aiming a laser pointer at an aircraft, in violation of 18 U.S.C. § 39A.
The sentence was handed down late yesterday by the Honorable Phyllis J. Hamilton, U.S. District Judge. Judge Hamilton also imposed conditions of probation requiring Palomino to refrain from possessing a laser pointer and to perform 200 hours of community service, including educating people about the consequences of aiming laser pointers at aircrafts. Palomino was ordered to self-surrender to the halfway house on January 4, 2016.
Assistant U.S. Attorney Brian C. Lewis prosecuted this case with the assistance of Janice Pagsanjan and Melissa Dorton. This prosecution is the result of an investigation by the FBI and the CHP.
MS-13 Member Pleads Guilty in Violent Racketeering ConspiracyRead the Press Release
Defendant Admitted his Participation in MS-13 and Witness Retaliation Murder Conspiracy
A North Plainfield, New Jersey, man pleaded guilty today to conspiracy to commit murder in furtherance of a racketeering enterprise known as La Mara Salvatrucha, or MS-13, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Paul J. Fishman of the District of New Jersey and Acting Special Agent in Charge Richard M. Frankel of the FBI’s Newark, New Jersey, Division.
Jose Romero-Aguirre, aka Conejo, 29, pleaded guilty before U.S. District Judge Stanley R. Chesler of the District of New Jersey, who scheduled sentencing for March 16, 2016. Romero-Aguirre remains detained pending sentencing.
According to court documents, MS-13 is a national and international gang with branches or “cliques” operating throughout the United States, including in Plainfield, New Jersey. In connection with his plea, Romero-Aguirre admitted that he was a member of the Plainfield Locos Salvatrucha (PLS) Clique of MS-13 for a period of time continuing through at least August 2011. Romero-Aguirre admitted that in or around July 2011, MS-13 members began investigating the arrest of several members of the PLS Clique to identify those who had provided police with information on the arrestees, contrary to PLS rules. Romero-Aguirre admitted that he participated in phone calls with other incarcerated MS-13 members discussing the need to find and kill the witnesses and that he agreed to relay the murder instructions from the incarcerated members to the other MS-13 members.
Twelve other members and associates of the PLS Clique are scheduled for trial in front of Judge Chesler on Feb. 9, 2016. The charges include several counts of murder, attempted murder, robbery, extortion, witness retaliation and sexual assault.
FBI’s Newark Division, U.S. Immigration and Customs Enforcement-Homeland Security Investigations’ Newark Field Office, the Plainfield Police Department and the Union County, New Jersey, Prosecutor’s Office investigated the case. Assistant U.S. Attorneys James Donnelly and Jamari Buxton of the District of New Jersey and Trial Attorney Kevin L. Rosenberg of the Criminal Division’s Organized Crime and Gang Section are prosecuting this case.
Leader of Mail Theft Conspiracy Sentenced to 60 MonthsRead the Press Release
Contact Person: Bill Watkins (864) 282-2100
Columbia, South Carolina ---- United States Attorney Bill Nettles stated today that Tonya M. Reid, age 38, of Anderson, was sentenced today in federal court in Anderson, for conspiracy to commit fraud, a violation of Title 18, United States Code, Section 371. United States District Judge Timothy M. Cain of Anderson sentenced Reid to 60 months imprisonment, ordered that she pay $21,272.97 in restitution, and placed her on three years of supervised release.
Evidence presented at the change of plea hearing established that the United States Postal Inspection Service, the Anderson County Sheriff’s Office, the Anderson City Police Department, and other local agencies had undertaken a long-term investigation into the theft of mail in and around Anderson County. It was discovered that an organization existed that regularly stole mail from residential boxes, sorted the stolen mail for checks and person identifying information, created altered or counterfeit checks, and created false identification documents. Multiple counterfeit and altered checks were passed throughout the upstate. Most of the fraud was conducted in an effort to obtain funds to purchase methamphetamine.
Reid was a leader of an organization of more than 20 individuals. She served as a clearing house for stolen mail and aided other co-conspirators in creating and cashing counterfeit checks. Her co-conspirators are awaiting sentencing or trial.
The case was investigated by agents of United States Postal Inspection Service, the Anderson County Sheriff’s Office, the Anderson City Police Department, and other local law enforcement agencies. Assistant United States Attorney Bill Watkins of the Greenville office handled the case.
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Lawrence Man Arrested for Receiving $146,000 in Stolen Tax Refund ChecksRead the Press Release
BOSTON – A Lawrence man was arrested today on charges that he received stolen U.S. Treasury checks.
Rolfi Espinal, 49, was indicted on 24 counts of receipt of stolen public money and two counts of making false statements.
The indictment alleges that from approximately September to December 2011, Espinal accepted fraudulent U.S. Treasury checks totaling $146,698. In January 2013, Espinal falsely told federal agents that he received the checks as payment for used cars that he had sold to an individual, when, in fact, the individual did not exist and Espinal knew that the checks were obtained fraudulently. Furthermore, Espinal allegedly told the agents that he paid taxes on the income although he only paid taxes on $34,000 in gross receipts.
The charge of receipt of stolen public moneys provides for a sentence of no more than 10 years in prison, three years of supervised release and a fine of $250,000. The charge of making false statements provides for a sentence of no more than five years in prison, two 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; William P. Offord, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigations Boston; and Lisa A. Quinn, Special Agent in Charge of the U.S. Secret Service, made the announcement today. The case is being prosecuted by Assistant U.S. Attorney Seth B. Kosto of Ortiz’s Cybercrime Unit.
The details contained in charging document are allegations. Defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt.
Latin King and Two Six Nation Gangs IndictedRead the Press Release
HAMMOND – United States Attorney David Capp announced two additional indictments in the ongoing effort against criminal street gangs in Northwest Indiana. In one indictment, seventeen members or associates of the Latin Kings, all Indiana based, were charged with racketeering and other offenses. In a separate indictment, two additional members of the Two Six Nation were indicted for murder in aid of racketeering.
U.S. Attorney Capp stated, “We have repeatedly announced that if you are a member of a violent street gang we are coming after you. Today’s indictments are the latest in our ongoing enforcement effort to eliminate these criminal organizations from Northwest Indiana. It does not matter how old you are or when your criminal conduct occurred, you are next.”
The Latin King indictment charges 17 members and associates with a criminal conspiracy that spanned a time period from 2003 until November 2015. It alleges that the following individuals were participants in a racketeering conspiracy that involved murder, attempted murder, aggravated battery, kidnapping, sex trafficking and narcotics distribution:
Anton Lamont James aka “Ghost,” 19, of Hammond;
Jason Christopher Brown aka “Midnight,” 21, of Merrillville;
Javier Castillo, 19, of Hammond;
Rodolfo Carlos Flores aka “Big Head,” 29, of Hammond;
Francisco Gamez aka “Frank Nitti,” 30, of Portage;
Alexis Santos, 20, of Hammond;
Joseph Uvalle aka “Little Foot,” 33, of Crown Point;
Pierre Java Forest aka “Joker,” 21, of Harvey, IL;
Keith Trevor Manuel aka “Smiley,” 26, of Gary;
Aldon Perez aka “Spooky,” 20, of Hammond;
Jose Antonio Sanchez aka “Sly,” 26, of Hammond;
Julian Robert Rebeles aka “King Porky,” 24, of Hammond;
Mario Resendiz aka “Spank,” “Rio”, 23, of East Chicago;
Alberto Tirado aka “B Murda,” 25, of East Chicago;
Raymond Fazekas aka “Pirate,” 26, of Lake Station.
The indictment alleges that these defendants were members of various Latin Kings factions in Hammond, East Chicago and Gary. The indictment also alleges a conspiracy to possess and distribute five kilograms of cocaine and 100 kilograms of marijuana against all of these same individuals, in addition to Sean Yancey aka “Demon,” 21 of Gary.
In addition Melinda Milton, 35, of East Chicago and Joseph Uvalle were charged with various counts of sex trafficking by fraud or coercion and interstate transportation for prostitution.
A previous Latin King indictment had charged Anton James, 19, of Hammond, with murder in aid of racketeering and murder resulting from the use of a firearm during a crime of violence for his alleged role in the murder of Martin Hurtado Sr. The indictment alleges that, on Oct. 28, 2014, James shot and killed Hurtado Sr. believing that he was Martin Hurtado Jr., whom James believed was a rival gang member. This count carries over unchanged from the first indictment.
Also, when James was arrested, Dalia Guerrero, 39, of Merrillville, mother of James, used threat of physical force against a witness in order to influence, delay and prevent testimony of a witness in an official proceeding. A week after that incident, Jasmine McMichael, 22, of East Chicago was arrested and charged for her participation in the same confrontation. Guerreo and McMichael were each charged with obstruction of justice under a separate indictment. They have pled guilty to that count, and are awaiting sentencing.
In a separate indictment involving the Two Six Nation criminal organization, Anthony Laviena, 35, of Staten Island, New York, and Deaundra L. Joshua aka “D Ruff,” 45, of Gary, Indiana, were charged with murder in aid of racketeering and use of a firearm in connection with a crime of violence. This is for their alleged roles in the killing of Albert “Greeny” Guzman. The indictment alleges that, on or about October 6, 1999, Laviena and Joshua shot and killed Guzman for the purpose of maintaining and enhancing their positions within the gang.
In addition, the Two Six Nation indictment alleges two more homicides committed by Two Six members in furtherance of this criminal organization. On January 5, 1991, Jesus Fuentes, who recently plead guilty in federal court to racketeering, and others shot an killed Miguel Fernandez, a Latin King member, in East Chicago during an attempted robbery. Also, on October 30, 1997, Fuentes directed Julio Cartagena, now deceased, of Hammond, to kill Edwardo Miranda in Gary as Miranda was believed to have stolen weapons from the Two Six.
The Two Six Nation indictment is being worked in conjunction with the United States Department of Justice, Criminal Division, Organized Crime and Gang Section.
The United States Attorney's Office emphasized that an Indictment 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.
These cases are the result of the investigative efforts of; the Bureau of Alcohol, Tobacco, Firearms and Explosives, the East Chicago Police Department, the Federal Bureau of Investigation, the Gary Police Department, the Hammond Police Department, the Lake County, Indiana, Sheriff’s Department and Lake County High Intensity Drug Trafficking Area officers and agents. The Lake County Prosecutor’s Office also has provided assistance. The Latin King case is being prosecuted by Assistant U.S. Attorneys David J. Nozick, Dean Lanter and Abizer Zanzi of the Northern District of Indiana. The Two-Six case is being prosecuted by Assistant U.S. Attorney David J. Nozick and Thomas M. McGrath of the Northern District of Indiana and Trial Attorney Andrew Creighton of the Criminal Division’s Organized Crime and Gang Section.
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Kuna Man Sentenced for Possession and Distribution of Meth and Unlawful Possession of a FirearmRead the Press Release
BOISE – Brenon Lawrence, 28, of Kuna, Idaho, was sentenced today to 77 months in prison for possession and distribution of methamphetamine, and possession of a firearm in furtherance of drug trafficking, U.S. Attorney Wendy J. Olson announced. Chief U.S. District Judge B. Lynn Winmill also ordered Lawrence to pay a $500 fine and serve five years of supervised release following his incarceration. Lawrence pleaded guilty on July 21, 2015.
According to court proceedings, Lawrence was arrested in Boise, Idaho, on December 9, 2014. Boise police officers went to the Boise residence where Lawrence was then residing to arrest him on a state parole warrant. As he and a female friend left the residence to get into a vehicle, the officers approached him. Lawrence dropped a backpack as he ran back toward the residence. Inside the backpack officers found a loaded 9 mm semi-automatic pistol, a folding knife, an expandable baton, small plastic baggies containing 14.5 grams of meth. Lawrence admitted he had he been “jocky-boxing” in Boise the night before and had stolen the gun from a car to get money.
The case was investigated by the Boise Police Department and the Bureau of Alcohol, Tobacco and Firearms.
KC Man Charged with Producing Child PornRead the Press Release
KANSAS CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that a Kansas City, Mo., man was charged in federal court today with using a two-year-old victim to produce child pornography.
Conner Michael Webb, 27, of Kansas City, was charged in a federal criminal complaint filed in the U.S. District Court in Kansas City, Mo., with one count of producing child pornography.
According to an affidavit filed in support of the complaint, Webb sent a pornographic video of the victim, taken with his cell phone, to the subject of an ongoing federal investigation who was recently arrested in the District of Kansas. That person, identified in court documents as “Subject 1,” allowed federal agents to search his computer and cell phone. Investigators found numerous chat conversations on Subject 1’s cell phone between him and an individual with the username “kinkyconman” and profile name “Kinky PedoBoy,” later identified as Webb.
On Oct. 15, 2015, Webb asked Subject 1 to send him something to “get me in the mood” before he picked up the 2-year-old victim, identified in court documents as “Jane Doe.” Subject 1 sent Webb several images and videos of child pornography on his cell phone. On the afternoon of the same day, Webb sent a pornographic video he had just taken of Jane Doe to Subject 1’s cell phone.
A federal search warrant was executed today to search Webb’s residence, and to seize and search Webb’s computers, phones, and computer media. Webb, who was at home during the search, was transported to FBI headquarters and interviewed. Webb was arrested and remains in federal custody pending a detention hearing.
Dickinson cautioned that the charge contained in this complaint is simply an accusation, and not evidence of guilt. Evidence supporting the charge 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 Teresa Moore. It was investigated by the FBI.
Project Safe Childhood
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc . For more information about Internet safety education, please visit www.usdoj.gov/psc and click on the tab "resources."
Justice Department Recovers over $3.5 Billion from False Claims Act Cases in Fiscal Year 2015Read the Press Release
Recoveries Exceed $3.5 Billion for Fourth Consecutive Year
The Department of Justice obtained more than $3.5 billion in settlements and judgments from civil cases involving fraud and false claims against the government in the fiscal year ending Sept. 30, Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division, announced today. This is the fourth year in a row that the department has exceeded $3.5 billion in cases under the False Claims Act, and brings total recoveries from January 2009 to the end of the fiscal year to $26.4 billion.
“The False Claims Act has again proven to be the government’s most effective civil tool to ferret out fraud and return billions to taxpayer-funded programs,” said Mizer. “The recoveries announced today help preserve the integrity of vital government programs that provide health care to the elderly and low income families, ensure our national security and defense, and enable countless Americans to purchase homes.”
Of the $3.5 billion recovered last year, $1.9 billion came from companies and individuals in the health care industry for allegedly providing unnecessary or inadequate care, paying kickbacks to health care providers to induce the use of certain goods and services, or overcharging for goods and services paid for by Medicare, Medicaid, and other federal health care programs. The $1.9 billion reflects federal losses only. In many of these cases, the department was instrumental in recovering additional millions of dollars for consumers and state Medicaid programs.
The next largest recoveries were made in connection with government contracts. The government depends on contractors to feed, clothe, and equip our troops for combat; for the military aircraft, ships, and weapons systems that keep our nation secure; as well as to provide everything that is needed to fund myriad programs at home. Settlements and judgments in cases alleging false claims for payment under government contracts totaled $1.1 billion in fiscal year 2015.
The False Claims Act is the government’s primary civil remedy to redress false claims for government funds and property under government contracts, including national security and defense contracts, as well as under government programs as varied as Medicare, veterans’ benefits, federally insured loans and mortgages, highway funds, research grants, agricultural supports, school lunches, and disaster assistance. In 1986, Congress strengthened the Act by amending it to increase incentives for whistleblowers to file lawsuits on behalf of the government.
Most false claims actions are filed under the Act’s whistleblower, or qui tam, provisions that allow individuals to file lawsuits alleging false claims on behalf of the government. If the government prevails in the action, the whistleblower, also known as the relator, receives up to 30 percent of the recovery. Whistleblowers filed 638 qui tam suits in fiscal year 2015 and the department recovered $2.8 billion in these and earlier filed suits this past year. Whistleblower awards during the same period totaled $597 million.
Health Care Fraud
Including this past year’s $1.9 billion, the department has recovered nearly $16.5 billion in health care fraud since January 2009 to the end of fiscal year 2015 – more than half the health care fraud dollars recovered since the 1986 amendments to the False Claims Act. These recoveries restore valuable assets to federally funded programs such as Medicare, Medicaid, and TRICARE – the health care program for the military. But just as important, the department’s vigorous pursuit of health care fraud prevents billions more in losses by deterring others who might otherwise try to cheat the system for their own gain. The department’s success is a direct result of the high priority the Obama Administration has placed on fighting health care fraud. In 2009, the Attorney General and the Secretary of the Department of Health and Human Services, the department that administers Medicare and Medicaid, announced the creation of an interagency task force called the Health Care Fraud Prevention and Enforcement Action Team (HEAT), to increase coordination and optimize criminal and civil enforcement. Additional information on the government’s efforts in this area is available at StopMedicareFraud.gov, a webpage jointly established by the Departments of Justice and Health and Human Services.
Two of the largest health care recoveries this past year were from DaVita Healthcare Partners, Inc., the leading provider of dialysis services in the United States. DaVita paid $450 million to resolve allegations that it knowingly generated unnecessary waste in administering the drugs Zemplar and Venofer to dialysis patients, and then billed the government for costs that could have been avoided. DaVita paid an additional $350 million to resolve claims that it violated the False Claims Act by paying kickbacks to physicians to induce patient referrals to its clinics. DaVita is headquartered in Denver, Colorado, and has dialysis clinics in 46 states and the District of Columbia.
Hospitals were involved in nearly $330 million in settlements and judgments this past year. A cardiac nurse and a health care reimbursement consultant filed a qui tam suit against hundreds of hospitals that were allegedly implanting cardiac devices in Medicare patients contrary to criteria established by the Centers for Medicare and Medicaid Services in consultation with cardiologists, professional cardiology societies, cardiac device manufacturers, and patient advocates. The department settled with nearly 500 of these hospitals for a total of $250 million, including $216 million recovered in the past fiscal year. For details, see 500 Hospitals.
Several settlements involved violations of the Stark Law. The Stark Statute prohibits certain financial relationships between hospitals and doctors that could improperly influence patient referrals. Services provided in violation of the Stark Statute are not reimbursable by Medicare or Medicaid. Hospitals settling false claims involving Stark violations include Adventist Health System for $115 million, an organization that operates hospitals and other health care facilities in 10 states; North Broward Hospital District for $69.5 million, a special taxing district of Florida that operates hospitals and other health care facilities in Broward County, Florida; and Georgia hospital system Columbus Regional Healthcare System and Dr. Andrew Pippas for $25 million plus contingent payments up to an additional $10 million. The Adventist settlement also involved allegations of miscoding claims to obtain higher reimbursements for services than allowed by Medicare and Medicaid.
Claims involving the pharmaceutical industry accounted for $96 million in settlements and judgments. Daiichi Sankyo Inc., a global pharmaceutical company with its U.S. headquarters in New Jersey, paid $39 million to resolve allegations of false claims against the United States and state Medicaid programs. Daiichi allegedly paid kickbacks to physicians to induce them to prescribe Daiichi drugs, including Azor, Benicar, Tribenzor and Welchol. Medicare and Medicaid prohibit reimbursement for drugs involved in kickback schemes. AstraZeneca LP and Cephalon Inc. paid the United States $26.7 million and $4.3 million, respectively, in separate settlements for allegedly underpaying rebates owed under the Medicaid Drug Rebate Program. As part of those settlements, the two drug manufacturers agreed to pay an additional $23 million to state Medicaid programs for their losses. And in another settlement, PharMerica Corp., the nation’s second largest nursing home pharmacy, agreed to pay the United States $9.25 million to resolve allegations that it solicited and received kickbacks from pharmaceutical manufacturer Abbott Laboratories in exchange for promoting the drug Depakote for nursing home patients. PharMerica is headquartered in Louisville, Kentucky.
Skilled nursing homes and rehabilitation facilities have also been fertile ground for civil fraud and false claims actions. In the largest failure of care settlement with a skilled nursing home chain in the department’s history, Extendicare Health Services Inc. and its subsidiary, Progressive Step Corporation, agreed to pay the United States $32.3 million to resolve allegations that Extendicare billed Medicare and Medicaid for deficient nursing services and billed Medicare for medically unreasonable and unnecessary rehabilitation therapy services. Extendicare and Pro-Step paid an additional $5.7 million to eight states for their Medicaid losses. The department has ongoing litigation against additional nursing home chains and rehabilitation centers based on similar allegations of false claims for medically unreasonable or unnecessary rehabilitation therapy. For example, see HCR ManorCare.
Housing and Mortgage Fraud
The department has recovered over $5 billion in housing and mortgage fraud from January 2009 to the end of fiscal year 2015, including this past year’s recoveries of $365 million. Notable recoveries this past year include a $212.5 million settlement with First Tennessee Bank N.A. First Tennessee admitted that from 2006 to 2008, through its subsidiary, First Horizon Home Loans Corporation, it originated and endorsed mortgages for federal insurance by the Federal Housing Administration (FHA) that did not meet eligibility requirements. First Tennessee also admitted failing to report such deficiencies to the authorities as required under the program despite widespread knowledge by its senior managers by early 2008. In August 2008, First Tennessee sold First Horizon to MetLife Bank N.A., a wholly-owned subsidiary of MetLife Inc. Metlife admitted similar misconduct regarding the loans it originated and endorsed from September 2008 to March 2012. MetLife paid the United States $123.5 million to resolve liability under the False Claims Act arising from its misconduct in endorsing mortgagees for FHA insurance.
The department also settled claims against Walter Investment Management Corp. for $29.63 million. The government alleged that the company, through subsidiaries Reverse Mortgage Solution Inc., REO Management Solutions LLC, and RMS Asset Management Solutions LLC, caused false claims for fees and other costs in servicing reverse mortgages under the Department of Housing and Urban Development’s (HUD’s) Home Equity Conversion Mortgages (HECM) program. Reverse mortgage loans allow elderly people to access the equity in their homes. The loans provide monthly payments that enable the elderly to meet their day-to-day living expenses while remaining in their homes. To encourage these loans, HUD insures banks and other institutions that service the mortgages against loss, providing the institution complies with requirements to ensure the quality of such loans. Walter Investment allegedly failed to comply with these requirements.
These recoveries are part of the broader enforcement efforts by President Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency task force in 2009, to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information about the task force, visit www.stopfraud.gov.
Government Contracts
Government contracts and federal procurement accounted for $1.1 billion in fraud settlements and judgments in fiscal year 2015, bringing procurement fraud totals to nearly $4 billion from January 2009 to the end of the fiscal year. Significant cases include a $146 million settlement with Supreme Group B.V. and several of its subsidiaries for alleged false claims to the Department of Defense (DoD) for food, water, fuel, and transportation of cargo for American soldiers in Afghanistan. Supreme Group is based in Dubai, United Arab Emirates (UAE). In addition, Supreme Group affiliates Supreme Foodservice GmbH, a privately held Swiss company, and Supreme Foodservice FZE, a privately-held UAE company, pleaded guilty to related criminal violations and paid more than $288 million in criminal fines.
In two other defense contract settlements, Lockheed Martin Integrated Systems, a subsidiary of aerospace giant Lockheed Martin Inc., paid $27.5 million and DRS Technical Services Inc. paid $13.7 million to resolve allegations that their employees lacked required job qualifications while the companies charged for the higher level, qualified employees required under contracts with U.S. Army Communication and Electronics Command (CECOM). The CECOM contracts were designed to give the Army rapid access to products and services for operations in Iraq and Afghanistan.
In a pair of cases involving contracts with the General Services Administration, VMware Inc. and Carahsoft Technology Corporation paid the United States $75.5 million and Iron Mountain Companies paid $44.5 million to settle their respective liability under the False Claims Act. The government alleged that California-based VMware and Virginia-based Carahsoft misrepresented their commercial sales practices, which resulted in overcharging government agencies for their software products and services sold through GSA’s Multiple Award Schedule. Similarly, Iron Mountain, a records storage company headquartered in Massachusetts, misrepresented its commercial sales practices to GSA and failed to give certain discounts given to its commercial customers, as required to gain access to the vast federal marketplace available to contractors through the Multiple Award Schedule.
The department settled allegations that private contractor U.S. Investigations Services Inc. (USIS) violated the False Claims Act in performing a contract with the Office of Personnel Management (OPM) to perform background investigations of federal employees and those applying for federal service. The government alleged that USIS took shortcuts that compromised its contractually-required quality review and that, had the government known, it would not have paid for the services. USIS agreed to forego at least $30 million in payments legitimately owed to the company to settle the government’s allegations.
Other Fraud Recoveries and Actions
Although health care, mortgage, and government contract fraud dominated fiscal year 2015 recoveries, the department has aggressively pursued fraud wherever it is found in federal programs. For example, the department recovered $44 million from Fireman’s Fund Insurance Company for alleged fraud under the U.S. Department of Agriculture’s federal crop insurance program. The United States alleged that Fireman’s Fund knowingly issued federally reinsured crop insurance policies that were ineligible for federal reinsurance. Specifically, Fireman’s Fund allegedly backdated policies, forged farmers’ signatures, accepted late and altered documents, whited-out dates and signatures, and signed documents after relevant deadlines. The policies were issued by Fireman’s Fund offices in California, Kansas, Mississippi, North Dakota, Texas, and Washington.
The department also recovered $13 million from Education Affiliates, a for-profit education company based in White Marsh, Maryland, for alleged false claims to the Department of Education for student aid for students whose qualifications for admission were falsified to get them enrolled so they could receive aid which would be paid to the school. Education Affiliates operates 50 campuses throughout the United States under various trade names.
In other actions, the department filed lawsuits to recover funds disbursed under the Troubled Asset Relief Program (TARP) and payments made under contracts awarded to benefit disadvantaged populations identified under the Small Business Administration’s set-aside programs. In one action, the department sued the estate and trusts of the late Layton P. Stuart, former owner and president of One Financial Corporation, and its operating subsidiary, One Bank & Trust N.A., both based in Arkansas, alleging that Stuart made misrepresentations to induce the Department of the Treasury to invest TARP funds in One Financial as part of Treasury’s Capital Purchase Program. The department recently settled with the Stuart estate and trusts for $4 million, but claims remain pending against One Financial Corporation.
In a second action, the department filed suit against Florida-based Air Ideal Inc. and its owner, Kim Amkraut. The government alleged that Air Ideal and Amkraut falsely certified that the company qualified for preferences given to small businesses located in a Historically Underutilized Business Zone (HUBZone) when Air Ideal’s HUBZone location was no more than a virtual office and its principal place of business was in a non-HUBZone location. The government further alleged that Air Ideal used its fraudulently-procured HUBZone certification to obtain contracts from the Coast Guard, Army, Army Corps of Engineers, and Department of the Interior that were worth millions of dollars. The department settled with Air Ideal and Amkraut for $250,000 plus five percent of Air Ideal’s gross revenues for five years.
These suits and settlements illustrate the diversity of cases pursued by the department and the department’s quest to root out fraud and false claims against the government wherever it may be found.
Holding Individuals Accountable
On Sept. 9, Deputy Attorney General Sally Quillian Yates issued a memorandum on individual accountability for corporate wrongdoing. This memorandum reinforced the department’s commitment to use the False Claims Act and other civil enforcement tools to deter and redress fraud by individuals as well as corporations.
In addition to those suits involving individuals described above, the department settled or filed suit against individuals in an array of cases. For example, Two Florida couples agreed to pay the United States $1.137 million collectively, to resolve allegations that they accepted kickbacks in exchange for home health care referrals to A Plus Home Health Care Inc. The United States previously settled with A Plus, its owner Tracy Nemerofsky, and five other couples that allegedly accepted payments from A Plus. Dr. Charles Denham, of Laguna Beach, California, paid the United States $1 million to settle allegations that he solicited and accepted kickbacks from CareFusion in return for promoting a CareFusion product and influencing recommendations by the National Quality Forum. Denham was a patient safety consultant who co-chaired a National Quality Forum Committee. After settling with two cardiovascular testing laboratories for $48.5 million - Health Diagnostics Laboratory Inc. (HDL) and Singulex Inc., the department intervened in three qui tam suits against another laboratory, Berkeley HeartLab Inc., a marketing company, BlueWave Healthcare Consultants Inc. and three individuals – BlueWave’s owners, Floyd Calhoun Dent III and Robert Bradley Johnson and HDL’s co-founder and former chief executive officer, LaTonya Mallory. The department also intervened in two qui tam suits against Florida cardiologist Dr. Asad Qamar and his practice, the Institute for Cardiovascular Excellence PLLC, alleging that Qamar and his practice billed Medicare for medically unnecessary peripheral artery procedures and interventions and paid kickbacks to patients by waiving Medicare copayments irrespective of financial hardship. The department also filed a complaint against H. Ted Cain, Julie Cain, Corporate Management Inc. and Stone County Hospital Inc. for false claims for Medicare reimbursement. The government alleged that Ted and Julie Cain, the hospital and hospital management company owned and controlled by Ted Cain, claimed reimbursement for the hospital’s costs at inflated rates and for ineligible expenses. These matters are ongoing.
Outside the health care arena, EDF Resource Capital Inc. agreed to transfer assets worth $5.8 million to the United States, and its chief executive officer, Frank Dinsmore, agreed to pay $200,000 to the United States, to settle allegations that they violated the False Claims Act in failing to remit payments to the Small Business Administration under the 504 loan program. The 504 loan program provides growing businesses with long-term, fixed-rate financing for major fixed assets, such as land and buildings. The program operates through local lenders like EDF, who reap benefits from the program in return for shouldering certain financial obligations which Dinsmore and EDF allegedly ignored. The department also entered settlements with two individuals for evasion of Customs duties owed on imports of aluminum extrusions from the People’s Republic of China (PRC). Robert Wingfield, the U.S. sales representative of a Chinese manufacturer, and Bill Ma, owner of an ostensible importer, allegedly misrepresented the country of origin of goods to avoid steep antidumping and countervailing duties imposed by the Department of Commerce and collected by U.S. Customs and Border Protection on imports of aluminum extrusions from the PRC to protect domestic manufacturers from unfair foreign pricing practices. The government previously settled related allegations with four importers, bringing total settlements in the case to $4.6 million, including the $435,000 from Wingfield and Ma.
Recoveries in Whistleblower Suits
Of the $3.5 billion the government recovered in fiscal year 2015, more than $2.8 billion related to lawsuits filed under the qui tam provisions of the False Claims Act. During the same period, the government paid out $597 million to the individuals who exposed fraud and false claims by filing a qui tam complaint, often at great risk to their careers.
The number of lawsuits filed under the qui tam provisions of the Act has grown significantly since 1986, with 638 qui tam suits filed this past year. The growing number of qui tam lawsuits, particularly since 2009, has led to increased recoveries. From January 2009 to the end of fiscal year 2015, the government recovered $19.4 billion in settlements and judgments related to qui tam suits and paid whistleblower awards of $3 billion during the same period.
“Many of the recoveries obtained under the False Claims Act result from courageous men and women who come forward to blow the whistle on fraud they are often uniquely positioned to expose,” said Principal Deputy Assistant Attorney General Mizer.
In 1986, Senator Charles Grassley and Representative Howard Berman led successful efforts in Congress to amend the False Claims Act to, among other things, encourage whistleblowers to come forward with allegations of fraud. In 2009, Senator Patrick J. Leahy, along with Senator Grassley and Representative Berman, championed the Fraud Enforcement and Recovery Act of 2009, which made additional improvements to the False Claims Act and other fraud statutes. And in 2010, the passage of the Affordable Care Act provided additional inducements and protections for whistleblowers and strengthened the provisions of the federal health care Anti-Kickback Statute.
Principal Deputy Assistant Attorney General Mizer also expressed his deep appreciation for the many dedicated public servants who investigated and pursued these cases – the attorneys, investigators, auditors and other agency personnel throughout the Department of Justice’s Civil Division and the U.S. Attorneys’ Offices, as well as the agency Offices of Inspector General and the many federal and state agencies that contributed to the department’s recoveries this past fiscal year.
“The department’s lawyers and staff, together with our law enforcement partners in federal and state governments, work tirelessly and often overcome daunting challenges to achieve these successes on behalf of the taxpayers,” said Principal Deputy Assistant Attorney General Mizer.
The government’s claims in the matters described above are allegations only; except where indicated, there has been no determination of liability.
Justice Department Files Lawsuit Against Lubbock, Texas, Alleging National Origin and Sex Discrimination in Hiring of Police OfficersRead the Press Release
The Justice Department yesterday filed a lawsuit against the city of Lubbock, Texas, alleging that the city’s police department engaged in a pattern or practice of employment discrimination against Hispanics and women in violation of Title VII of the Civil Rights Act of 1964.
The lawsuit, filed in the U.S. District Court for the Northern District of Texas, alleges that the Lubbock Police Department’s (LPD) written and physical fitness examinations had the effect of excluding Hispanic and female applicants from consideration for hire as entry-level police officers without a showing that these tests screened candidates for skills that are required for the job.
“We share with Lubbock the goal of hiring qualified applicants to perform critical public safety functions,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division. “Federal law prohibits employers from using discriminatory employment practices that do not meaningfully evaluate one’s ability to perform a given job. The Department of Justice will ensure that the city eliminates the use of these unlawful tests and we hope to work cooperatively with the city to create new selection procedures that do not unlawfully discriminate.”
This lawsuit seeks a court order requiring LPD to stop using the challenged examinations, develop selection procedures for entry-level police officer positions at LPD that comply with Title VII and provide make-whole relief including, where appropriate, offers of hire, back pay and retroactive seniority, to qualified Hispanics and women who have been or will be harmed as a result of LPD’s use of the challenged examinations.
The enforcement of federal employment discrimination laws is a top priority for the Justice Department. Additional information about Title VII and other federal employment laws is available on the Civil Rights Division’s website at http://www.justice.gov/crt/.
Lubbock Complaint
Justice Department Collects More Than $23 Billion in Civil and Criminal Cases in Fiscal Year 2015Read the Press Release
Attorney General Loretta E. Lynch announced today that the Justice Department collected $23.1 billion in civil and criminal actions in the fiscal year (FY) ending Sept. 30, 2015. Collections in FY 2015 represent more than seven and a half times the approximately $2.93 billion of the Justice Department’s combined appropriations for the 94 U.S. Attorneys’ offices and the main litigating divisions in that same period.
“The Department of Justice is committed to upholding the rule of law, safeguarding taxpayer resources and protecting the American people from exploitation and abuse,” said Attorney General Lynch. “The collections we are announcing today demonstrate not only the strength of that commitment, but also the significant return on public investment that our actions deliver. I want to thank the prosecutors and trial attorneys who made this achievement possible, and to reiterate our dedication to this ongoing work.”
The largest civil collections were from affirmative civil enforcement cases, in which the United States recovered government money lost to fraud or other misconduct or collected fines imposed on individuals and/or corporations for violations of federal financial, health, safety, civil rights and environmental laws. In addition, civil debts were collected on behalf of several federal agencies, including the U.S. Department of Housing and Urban Development, Health and Human Services, Internal Revenue Service, Small Business Administration and Department of Education.
The total includes all monies collected as a result of Justice Department-led enforcement actions and negotiated civil settlements. It includes more than $16.2 billion in payments made directly to the Justice Department and more than $6.8 billion in indirect payments made to other federal agencies, states and other designated recipients.
In measuring collections recovered in FY 2015, this figure necessarily includes some cases that were resolved in previous years but the proceeds of which were collected in FY 2015.
Among the top 20 debt collections, the largest came from financial institutions whose risky practices led up to the 2008 financial crisis and collapse of the U.S. housing market, including $8.2 billion of the settlement in August 2014 with Bank of America Corporation, which included $5 billion in penalties for claims under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) – the largest FIRREA penalty ever – and $687 million from the February 2015 settlement with McGraw Hill Financial Inc. and Standard & Poor’s Financial Services LLC.
The department continued to make polluters pay to safeguard the environment and the taxpayer, collecting $1.8 billion of the total $5.1 billion settlement of the Tronox Inc. bankruptcy in January 2015, the majority of which is being used for cleanups of Kerr-McGee sites, including on tribal lands and in low-income communities across the United States. From the November 2014 settlement with Hyundai and Kia, the automakers paid $93.6 million to the United States, of a $100 million civil penalty owed to the United States and the California Air Resources Board, to resolve violations concerning the testing and certification of vehicles sold in America.
As in previous years, recoveries for health care fraud were among the largest, including $807 million from DaVita Healthcare Partners to settle two False Claims Act cases which involved kickback schemes and fraudulent billing of the federal government.
Growing out of the international scheme to manipulate the London Interbank Offer Rate (LIBOR), the department obtained resolutions from several banks. Notably, Deutsche Bank entered into a deferred prosecution agreement in which it admitted its role in fraud and price-fixing conspiracies by rigging Yen LIBOR contributions with other banks and paid $625 million in penalties, in addition to regulatory penalties and disgorgements imposed by other agencies. A Deutsche Bank subsidiary in the United Kingdom also pleaded guilty for its role in the rate manipulation.
Additionally, in March, Commerzbank AG, agreed to pay a $79 million fine to the department, in addition to a $563 million forfeiture, as part of a global settlement of charges for violating the International Emergency Economic Powers Act and the Bank Secrecy Act. For six years Commerzbank knowingly and willfully moved approximately $263 million through the U.S. financial system on behalf of sanctioned entities in Iran and Sudan.
The Swiss Bank Program yielded more than $350 million in penalties from dozens of Swiss banks that reached non-prosecution agreements with the department in FY 2015.
The department collected hundreds of millions of dollars in criminal fines and penalties from companies involved in conspiracies to subvert competitive markets. Over the last year, the department collected fines greater than $10 million from nine companies involved in price-fixing conspiracies, including more than $200 million from auto parts suppliers and over $100 million from ocean freight companies. The department has also brought civil suits to stop anticompetitive behavior and collected civil penalties and disgorgement that deprived companies of the proceeds of illegal pre-merger coordination.
Justice Department Announces EFG Bank European Financial Group SA, Geneva, and EFG Bank AG Reach Joint Resolution Under Swiss Bank ProgramRead the Press Release
The Department of Justice announced today that EFG Bank European Financial Group SA, Geneva (EFG Group), and EFG Bank AG (EFG Bank) reached a joint resolution under the department’s Swiss Bank Program. EFG Group and EFG Bank (collectively EFG) will pay a penalty of more than $29 million.
“The Tax Division continues to receive detailed information regarding U.S. accountholders, the methods they used to conceal their foreign accounts and the individuals and entities that assisted in this criminal conduct,” said Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division. “Today’s agreement makes clear that our focus extends well beyond Switzerland, and to those who fled Swiss accounts to hide in other foreign financial institutions – we are right on your trail.”
The Swiss Bank Program, which was announced on Aug. 29, 2013, provides a path for Swiss banks to resolve potential criminal liabilities in the United States. Swiss banks eligible to enter the program were required to advise the department by Dec. 31, 2013, that they had reason to believe that they had committed tax-related criminal offenses in connection with undeclared U.S.-related accounts. Banks already under criminal investigation related to their Swiss-banking activities and all individuals were expressly excluded from the program.
Under the program, banks are required to:
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Make a complete disclosure of their cross-border activities;
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Provide detailed information on an account-by-account basis for accounts in which U.S. taxpayers have a direct or indirect interest;
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Cooperate in treaty requests for account information;
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Provide detailed information as to other banks that transferred funds into secret accounts or that accepted funds when secret accounts were closed;
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Agree to close accounts of accountholders who fail to come into compliance with U.S. reporting obligations; and
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Pay appropriate penalties.
Swiss banks meeting all of the above requirements are eligible for a non-prosecution agreement.
According to the terms of the non-prosecution agreement signed today, EFG agrees to cooperate in any related criminal or civil proceedings, demonstrate its implementation of controls to stop misconduct involving undeclared U.S. accounts and pay a penalty in return for the department’s agreement not to prosecute this bank for tax-related criminal offenses.
EFG Group is a holding company and Swiss bank based in Geneva, Switzerland, which is owned by European Financial Group EFG (Luxembourg) SA. EFG Group is the direct and controlling shareholder of EFG International AG, which is a holding company. EFG Bank, which is headquartered in Zurich, Switzerland, and has another Swiss office in Geneva, is the main Swiss private banking subsidiary of EFG International AG. EFG Bank also has representative offices and branches in Asia and the Americas. In 2003, EFG Bank acquired the Geneva-based bank Banque Édouard Constant (BEC). While EFG Group and EFG Bank are participating jointly in the Swiss Bank Program, these two EFG banks are separate legal entities with distinct management and board control.
Until 2013, EFG conducted a U.S. cross-border banking business that aided and assisted certain of its U.S. clients in opening and maintaining undeclared accounts in Switzerland and concealing the assets and income they held in these accounts from the U.S. government. EFG offered a variety of traditional Swiss banking services that it knew could assist, and did in fact assist, U.S. clients in the concealment of assets and income from the IRS.
Certain EFG Bank private bankers based in Switzerland traveled to the United States approximately two to three times per year until July 2008. At least 72 business trips to the United States took place in connection with seven EFG Bank private bankers between 2005 and 2013. Private bankers from EFG Bank conducted meetings with clients in the United States in Arizona, California, Connecticut, Florida, Georgia, Illinois, Massachusetts, Nevada, New Mexico, New York, Ohio, Oklahoma, Pennsylvania, Rhode Island, Texas, Washington, Wisconsin and Washington, D.C.
One EFG Bank private banker had an established third-party client referral model for U.S. clients that involved two lawyers in the United States, one U.S. accountant and one Swiss fiduciary company. At least one member of EFG’s senior management approved and supported this private banker’s relationship with one of the two U.S. lawyers. This same U.S. lawyer asked the EFG private banker not to travel into the United States with a computer and requested that they communicate about U.S. taxpayer clients through faxes rather than email. The EFG private banker responded, “[R]ight – next travel I travel will take no computer with me – I will then buy me one at BestBuy and leave it there for use when I am travelling. So I never will cary [sic] a computer over the border.”
In 2001, EFG entered into a Qualified Intermediary Agreement (QI Agreement) with the Internal Revenue Service (IRS). The Qualified Intermediary regime provided a comprehensive framework for U.S. information reporting and tax withholding by a non-U.S. financial institution with respect to U.S. securities. The QI Agreement required EFG to obtain IRS Forms W-9 and to undertake IRS Form 1099 reporting for new and existing U.S. clients engaged in U.S. securities transactions. Notwithstanding this requirement, EFG chose to continue to service U.S. clients without disclosing their identity to the IRS. In September 2009, a member of EFG Bank’s management discussing its decision to require Forms W-9 from its U.S. clients said that “[t]he intention of the Bank is to cover its back with the IRS, but when clients remitted their W9, I was told that [EFG private bankers] comforted clients by telling them that the Bank will not declare anything systematically to the IRS.” Until June 2013, EFG requested but did not require all of its U.S. clients to provide a signed IRS Form W-9 and to confirm whether their accounts were disclosed to the IRS.
In EFG’s view, the QI Agreement did not apply to accountholders who were not trading in U.S.-based securities or to accounts that were nominally structured in the name of a non-U.S.-based entity. For example, when asked in July 2007 whether an account should be considered a U.S. account if the new corporate account is in the name of a Panama company that was in reality beneficially owned by a U.S. resident, a manager advised that the “account is non-us [sic] for withholding tax QI purposes.” The same manager was asked in March 2008 by an EFG Bank private banker what could be offered to a U.S. couple residing in Mississippi who wanted to open two accounts for $1 million each, and the manager responded, “[i]f they’re declared, they can open in their name and sign W9. If not, suggest they use a pic [private investment company].”
While EFG did not provide direct structuring services to U.S. clients, EFG private bankers and members of EFG’s management suggested the use of structures for EFG’s U.S. clients and provided referrals to third-party service providers. External trust companies created and administered offshore structures incorporated or based in offshore locations such as the British Virgin Islands, Panama and Liechtenstein for certain of EFG’s U.S. clients.
EFG also serviced certain U.S. clients with undeclared accounts held in the names of insurance companies and not the actual beneficial owner of the funds, known colloquially as an insurance wrapper. Insurance wrappers were marketed by third-party providers in the wake of the UBS investigation as a means of disguising the beneficial ownership of U.S. clients. These particular accounts were all held in the name of insurance providers. By the operation of Swiss bank secrecy laws, the U.S. client’s ownership would not be disclosed to U.S. authorities, including the IRS.
In connection with some of the accounts that U.S. clients created and opened in the name of sham offshore entities and insurance wrappers, certain EFG employees suggested, accepted and included in EFG’s account records IRS Forms W-8BEN (or EFG’s substitute forms) provided by the directors of the offshore companies that falsely represented under penalty of perjury that such companies were the beneficial owners, for U.S. federal income tax purposes, of the assets in the accounts. These false Forms W-8BEN were maintained in EFG’s files at the same time as the Swiss Forms A that accurately and truthfully represented the true beneficial owners of the assets in the accounts.
Certain accounts were closed at EFG, since Aug. 1, 2008, in such a way that EFG assisted its U.S. clients in continuing to conceal the assets and income they held at EFG in Switzerland from the IRS. EFG, including senior management in certain instances, assisted U.S. clients with retaining undeclared assets at EFG and allowed undeclared U.S. clients whose accounts were being closed to transfer their assets to non-U.S. accounts at EFG, including accounts held by relatives.
With respect to assets transferred to accounts in countries other than the United States and Switzerland upon account closure, significant amounts were transferred to numerous other jurisdictions. For example, the following amounts were transferred in connection with the closure of U.S.-related accounts:
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At least $12,680,000 was transferred to Bermuda;
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At least $12,460,000 was transferred to Guernsey;
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At least $25,200,000 was transferred to Liechtenstein;
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At least $12,260,000 was transferred to Monaco;
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At least $25,000,000 was transferred to Luxembourg; and
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At least $33,550,000 was transferred to Hong Kong.
In connection with the closure of U.S.-related accounts, significant amounts also were transferred to the Bahamas, the British Virgin Islands, the Cayman Islands, Cyprus, Israel, Panama, Singapore and the United Arab Emirates.
EFG has cooperated with the department and provided timely and comprehensive information to the U.S. government about its cross-border business with U.S.-related accounts. Among other things, EFG provided detailed information concerning the operation of its U.S. cross-border business that included misconduct committed by EFG; names of those private bankers who serviced U.S. clients; and names of those members of management who supervised private bankers servicing U.S. clients, including those private bankers who committed misconduct. EFG also provided responsive, specific and actionable information to the department concerning associated persons, entities and areas of concern for use in other ongoing and potential department investigations.
Since Aug. 1, 2008, EFG held a total of 919 U.S.-related accounts, which included both declared and undeclared accounts, with an aggregate peak of approximately $1.58 billion in assets under management. Of EFG’s 919 U.S.-related accounts, approximately 12 percent were timely disclosed to the IRS through Form 1099 reporting. EFG will pay a penalty of $29.988 million.
In accordance with the terms of the Swiss Bank Program, EFG mitigated its penalty by encouraging U.S. accountholders to come into compliance with their U.S. tax and disclosure obligations. While U.S. accountholders at EFG who have not yet declared their accounts to the IRS may still be eligible to participate in the IRS Offshore Voluntary Disclosure Program, the price of such disclosure has increased.
Most U.S. taxpayers who enter the IRS Offshore Voluntary Disclosure Program to resolve undeclared offshore accounts will pay a penalty equal to 27.5 percent of the high value of the accounts. On Aug. 4, 2014, the IRS increased the penalty to 50 percent if, at the time the taxpayer initiated their disclosure, either a foreign financial institution at which the taxpayer had an account or a facilitator who helped the taxpayer establish or maintain an offshore arrangement had been publicly identified as being under investigation, the recipient of a John Doe summons or cooperating with a government investigation, including the execution of a deferred prosecution agreement or non-prosecution agreement. With today’s announcement of this non-prosecution agreement, noncompliant U.S. accountholders at EFG must now pay that 50 percent penalty to the IRS if they wish to enter the IRS Offshore Voluntary Disclosure Program.
“Today’s resolution with EFG Bank European Financial Group SA, Geneva and EFG Bank AG reflects the continued progress of the Department of Justice’s Swiss Bank Program,” said acting Deputy Commissioner International David Horton of the IRS Large Business & International (LB&I) Division. “In resolving these matters, large and small financial institutions are putting their non-compliance behind them and providing information that will lead us to those U.S. taxpayers who have failed to report their foreign accounts and pay their income taxes.”
“The data we’ve collected to date through the agreements as part of the Swiss Bank Program has already uncovered more banks, more facilitators and more account holders,” said Chief Richard Weber of IRS-Criminal Investigation (CI). “Noncompliant account holders who believe their funds are still hidden will find that simply is not true. With each agreement signed, the probability that these criminals will be found grows even more certain. CI and our partners will vigorously pursue those who hide offshore accounts and those who aided this illegal activity.”
Acting Assistant Attorney General Ciraolo of the Justice Department’s Tax Division thanked the IRS and in particular, IRS-CI and the IRS LB&I Division for their substantial assistance. Acting Assistant Attorney General Ciraolo also thanked Kimberle E. Dodd, who served as counsel on this matter, as well as Senior Counsel for International Tax Matters and Coordinator of the Swiss Bank Program Thomas J. Sawyer and Senior Litigation Counsel Nanette L. Davis.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
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Jury Convicts Modesto Tri Counties Bank RobberRead the Press Release
FRESNO, Calif. — After a three–day trial, a federal jury found Lloyd George Kenney, 65, of San Jose, guilty today of armed bank robbery, using a firearm during a crime of violence, and of being felon in possession of a firearm, United States Attorney Benjamin B. Wagner announced.
According to evidence presented at trial, on the morning of May 25, 2012, Kenney robbed the Tri Counties Bank located inside the Raley’s grocery store at Roselle and Floyd Avenues, in Modesto. Kenney was armed with a semi-automatic handgun and was heavily disguised, wearing a hockey helmet, facemask, long black coat and gloves. After taking $2,872 from tellers at gunpoint, he fled on a bicycle into a neighborhood and rode to where he had parked a van earlier.
Within minutes of being alerted to the robbery, a Modesto police officer saw Kenney, who was still wearing the helmet, enter his van and begin to drive away. Officer Parsons pulled the van over and Kenney was taken into custody. During a search of the van, officers found cash the taken from the Tri Counties Bank, Kenney’s bike, a hockey helmet, a mask, a loaded Glock handgun and a loaded Browning handgun. While searching Kenney, officers found a police scanner set to channels used by the Modesto Police Department.
Court records reflect that Kenney had federal felony convictions in 1984 and 1985, as well as a felony conviction in San Mateo Superior Court in 1974.
This case is the product of an investigation by the Modesto Police Department and the Federal Bureau of Investigation. Assistant United States Attorneys Michael Frye and Mia Giacomazzi are prosecuting the case.
Kenney is scheduled to be sentenced by United States District Judge Anthony W. Ishii on March 14, 2016. Kenney faces a maximum statutory penalty of life in prison and a $250,000 fine. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.
J.R. Simplot Company to Reduce Emissions at Sulfuric Acid Plants in Three StatesRead the Press Release
The Department of Justice and the Environmental Protection Agency (EPA) today announced a settlement with the J.R. Simplot Company that resolves alleged Clean Air Act violations related to modifications made at Simplot’s five sulfuric acid plants near Lathrop, California, Pocatello, Idaho, and Rock Springs, Wyoming. Under the settlement, Simplot will spend an estimated $42 million on pollution controls that will significantly cut sulfur dioxide (SO2) emissions at all five plants and fund a wood stove replacement project in the area surrounding the Lathrop plant. Simplot’s Pocatello plant will receive $15 million in pollution control upgrades.
Once fully implemented, the settlement will reduce SO2 emissions from Simplot’s five sulfuric acid plants by more than 50 percent for approximately 2,540 tons per year of reductions (825 tons per year of which will be at the Pocatello plant). Simplot will implement a plan to monitor SO2 emissions continuously at all five plants and pay an $899,000 civil penalty. Additionally, Simplot will spend $200,000 on a wood stove replacement mitigation project in the San Joaquin Valley, the location of Simplot’s Lathrop facility, to reduce emissions of fine particulate matter (PM2.5), as well as emissions of volatile organic compounds (VOCs), carbon monoxide (CO) and hazardous air pollutants (HAPs).
“Under this proposed settlement, Simplot must upgrade its pollution controls and cut harmful air pollution in half at its acid plants, bringing lasting benefits to communities in three states,” said Principal Deputy Assistant Attorney General Sam Hirsch for the Justice Department’s Environment and Natural Resources Division. “The Justice Department will continue to vigorously enforce the Clean Air Act, which protects public health and air quality for Americans each and every day.”
“This settlement helps address public health risks for local communities in California, Idaho and Wyoming, and furthers EPA’s commitment to reduce harmful air pollution from the largest sources,” said Cynthia Giles, assistant administrator for EPA’s Office of Enforcement and Compliance Assurance. “The system-wide pollution controls Simplot will install will significantly reduce sulfur dioxide emissions, which can cause serious respiratory problems and exacerbate asthma.”
“The people of southeastern Idaho will receive significant benefits from the cleaner air and better health produced by this settlement,” said U.S. Attorney Wendy J. Olson for the District of Idaho. “I am pleased that the federal government and the J.R. Simplot Company are able to reach this agreement that serves Idahoans so well.”
The Department of Justice and EPA alleged that Simplot made modifications at its five sulfuric acid plants without applying for or obtaining the necessary Clean Air Act permits and obtaining “best available control technology” limits for SO2, as well as for sulfuric acid mist and PM2.5 at one of the sulfuric acid plants in Pocatello.
Short-term exposures to SO2 can lead to serious respiratory problems, including constriction of airways in the lungs and increased asthma symptoms. Additionally, SO2 is a precursor to the formation of PM2.5, which causes a wide variety of health and environmental impacts, including asthma attacks, reduced lung function and aggravation of existing heart disease. Simplot’s Lathrop sulfuric acid plant is located in the San Joaquin Valley in California, which is currently classified as nonattainment for the PM2.5 National Ambient Air Quality Standards and has some of the most difficult challenges meeting those standards in the country. SO2 is a precursor for the formation of fine particulates, so both the SO2 emission reductions from Simplot’s Lathrop plant and the wood stove replacement mitigation project will help reduce PM2.5 emissions in the San Joaquin Valley.
The state of Idaho on behalf of its Department of Environmental Quality and the San Joaquin Valley Unified Air Pollution Control District are parties to the proposed settlement.
This settlement is part of EPA’s national enforcement initiative to control harmful emissions from large sources of pollution, which includes acid plants, under the Clean Air Act’s Prevention of Significant Deterioration requirements. The emission rates secured in this settlement will result in the best-controlled, system-wide emissions achieved in any sulfuric acid plant settlement to-date.
The consent decree formalizing the settlement was lodged with the U.S. District Court in the District of Idaho and is subject to a 30-day public comment period and final court approval. The proposed consent decree can be viewed at: http://www.justice.gov/enrd/consent-decrees.
Ilion Man Arrested for Sexual Explotation of A ChildRead the Press Release
SYRACUSE, NEW YORK - Ralph Daniel Smith, 41, of Ilion, New York, was arrested today on a federal indictment, charging him with sexual exploitation of a child, announced United States Attorney Richard S. Hartunian.
The indictment alleges that in November of 2013 Smith, using the pseudonym "Dan Smithson," coerced a 14 year old girl to engage in sexually explicit conduct for the purpose of producing visual depictions of that conduct, in violation of federal law.
The charge filed against Smith carries a minimum sentence of 15 years, and a maximum sentence of 30 years in prison, a fine of up to $250,000.00, and a term of supervised release of at least 5 years and up to life. In addition, a conviction will require Smith to register as a sex offender.
Smith was arraigned today in Syracuse, New York, before a United States Magistrate Judge and remanded pending a detention hearing scheduled for Tuesday, December 8, 2015.
The charges in the indictment are merely accusations. The defendant is presumed innocent until proven guilty.
This case is being investigated by the Ilion Police Department, the Herkimer County District Attorney’s Office, and the Federal Bureau of Investigation, and is being prosecuted by Assistant U.S. Attorney Lisa M. Fletcher, as a 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, Project Safe Childhood is 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.
Honduran National Charged with Illegal Reentry into the United StatesRead the Press Release
U.S. Attorney Kenneth A. Polite announced that NAPTALI ESCOBAR-ARTURO, age 37, from Honduras, was charged today in a one-count Indictment with illegal reentry into the United States after having been previously deported.
According to the Indictment, ESCOBAR-ARTURO was found by Border Patrol agents in the Eastern District of Louisiana after records showed he had been previously deported from the United States to Honduras on October 13, 2009, September 30, 2010, and June 9, 2014.
If convicted, ESCOBAR-ARTURO faces a maximum term of imprisonment of two years, a maximum fine of $250,000, a maximum term of supervised release of one year, and a mandatory $100 special assessment.
U. S. Attorney Polite reiterated that an Indictment is merely a charge and that the guilt of the defendant must be proven beyond a reasonable doubt.
U.S. Attorney Polite praised the work of Border Patrol agents in investigating this matter. Assistant U.S. Attorney Gregory M. Kennedy is in charge of the prosecution.
Gurdon Man Sentenced to Life Imprisonment for Kidnapping Resulting in DeathRead the Press Release
Hot Springs, Arkansas - Kenneth Elser, Acting United States Attorney for the Western District of Arkansas, announced that Kevin Bolton, age 39, of Gurdon, Arkansas, (formerly of Spartanburg, South Carolina) was sentenced today in the United States District Court in Hot Springs to life in prison without the possibility of parole for one count of Kidnapping Resulting in Death. United States District Judge Susan O. Hickey presided over the sentencing hearing.
According to court records, on March 12, 2013, the victim visited an apartment in Gurdon, Arkansas, where she encountered the defendant, Kevin Bolton, a Gurdon resident. According to statements made by witnesses, Bolton and the victim left the apartment together around midnight in her vehicle. The victim’s mother, after repeatedly and unsuccessfully trying to contact her daughter the next day, became alarmed and filed a missing person’s report with the Gurdon, Arkansas Police Department.Because Bolton was the last person known to be seen with the victim, law enforcement began searching for Bolton, the victim, and her vehicle. Law enforcement officials learned that Bolton had friends on the Cherokee Indian Reservation in North Carolina and sent the information regarding Bolton, the victim and the vehicle to the Cherokee Indian Police Department.
On March 20, 2013, Cherokee Indian Police officers located Bolton driving the victim’s vehicle and conducted a traffic stop. After smelling a strong odor, officers opened the trunk of the car where they found the victim’s body.Bolton was arrested and taken into custody.Bolton was interviewed on several occasions by Clark County Sheriff Jason Watson and other law enforcement officers. During the interviews, Bolton admitted that he and the victim had left together from the apartment around midnight on March 12th. He stated that they drove in the victim’s vehicle to an area in Clark County and parked.He stated that he and the victim argued, that after the victim got out of the vehicle he grabbed her around her neck and choked her until she fell to the ground.He stated that he choked her until he believed she was dead and then put her in the backseat of her car. He stated that after a period of time he stopped the car, choked the victim again, and put her in the trunk of her vehicle.Bolton stated that he then drove the vehicle to Little Rock, Arkansas and eventually to Cherokee, North Carolina where he stayed with friends until his arrest.
This case was investigated by the Clark County Sheriff’s Office with assistance from the FBI, the Cherokee Indian Police Department, and the Jackson County, North Carolina Sheriff’s Office. Assistant United States Attorney Kyra Jenner prosecuted the case for the United States.
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Related court documents may be found on the Public Access to Electronic Records website @ www.pacer.gov
Grand Jury Returns Indictment Charging Individual in Connection with Efforts to Purchase, Export 89 Sniper Rifles to BelarusRead the Press Release
SALT LAKE CITY – A federal grand jury in Salt Lake City returned an indictment late Wednesday afternoon charging Kolar Rahman Anees Ur Rahman, age 44, who was born in India and lives in the United Arab Emirates, with violations of federal law in connection with alleged efforts to purchase 89 Sako .308 caliber sniper rifles and have them exported from the United States to Belarus.
The charges in the four-count indictment include conspiracy to commit an offense against the United States, a violation of the Arms Export Control Act, smuggling goods from the United States, and money laundering. Rahman was arrested in early November in Chicago on a complaint filed in Utah. Following a removal proceeding in Chicago, he is being transferred to Salt Lake City by the U.S. Marshals Service. An initial appearance will be scheduled in Utah when he arrives.
According to the indictment, the Arms Export Control Act authorizes the President of the United States to control the export of defense articles and defense services from the United States. Unless a specific exception applies, the Act provides that no defense articles or defense services may be exported without a license for such export. It is the policy of the United States to deny licenses and other approvals for the export of defense articles and defense services destined for Belarus, as well as other countries subject to an arms embargo.
In November 2013, according to the indictment, a firearms manufacturer in Salt Lake City was contacted through email by someone identified as Individual A in the indictment regarding the purchase of 50 sniper rifles to be shipped to Belarus. The firearms manufacturer notified Individual A that the purchase and delivery would be impossible due to current trade sanctions and embargoes against Belarus. The firearms manufacturer subsequently informed a special agent with U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) about the suspicious inquiry.
An HSI Salt Lake City undercover agent contacted Individual A by email. In those communications, Individual A reiterated his desire to procure sniper rifles in the United States for delivery to Belarus. From November 2013 through May 2015, negotiations between the undercover agent and Individual A did not result in a purchase. However, in May 2015, Individual A introduced the undercover agent to Rahman, designating Rahman as the principal broker for the procurement of the sniper rifles.
The indictment alleges that from May 2015 until November 2015, the defendant engaged in a conspiracy to purchase 89 sniper rifles in the United States and have them exported to Belarus without first obtaining licenses as required. In August 2015, Rahman and an undercover agent agreed that Rahman would make a first purchase of 10 sniper rifles and ammunition for approximately $66,285. No party to the transaction obtained export licenses for the rifles.
In September, according to the indictment, Rahman informed the undercover agent that the final contract with Belarus had been completed and sent the undercover agent a down payment of approximately $13,257 for 10 sniper rifles. Rahman agreed to pay the remaining balance once the rifles arrived in Belarus. He told the undercover agent not to include U.S. invoices with the shipment. Rahman requested that the sniper rifles be shipped by the most direct route possible to Belarus. According to the indictment, the undercover agent informed Rahman that the shipment route would be from the United States to South Africa, to Turkey and then to Belarus.
On Nov. 4, 2015, two undercover HSI agents met with an individual who identified himself as Kolar Rahman Anees Ur Rahman at a hotel near Chicago, according to the indictment. Rahman confirmed he was the same individual the agents had been negotiating with since May. Rahman, the indictment alleges, informed the agents that he understood the risk of illegally obtaining and shipping the sniper rifles to Belarus and that he desired to complete their business transaction as planned. Rahman and the agents discussed future purchases and shipments of the .308 caliber rifles to Belarus. Rahman was arrested by the agents in Chicago later that day.
The potential maximum penalty for conspiracy to commit an offense against the United States is up to five years in prison and a fine of $250,000. A violation of the Arms Export Control Act is 20 years in prison and a fine of $1 million. Smuggling goods from the United States has a potential penalty of 10 years in prison with a fine of $250,000. The money laundering count is punishable by up to 20 years in federal prison and a fine of $500,000.
Indictments are not findings of guilt. Individuals charged in an indictment are presumed innocent unless or until proven guilty in court.
Georgia Man Sentenced to Five Years in Prison for Federal Cocaine Trafficking Conviction in New MexicoRead the Press Release
ALBUQUERQUE – Willie Collier, 66, of Macon, Ga., was sentenced this morning in federal court in Albuquerque, N.M., to 60 months in prison followed by four years of supervised release for his cocaine trafficking conviction.
Collier was arrested on Jan. 21, 2014, at the Greyhound Bus Station in Albuquerque after a search of his baggage by DEA agents revealed that Collier was carrying a large amount of cocaine inside a backpack. Collier was subsequently charged in a superseding indictment filed on June 24, 2015 with possession of cocaine with intent to distribute on Jan. 21, 2014, in Bernalillo County.
On Aug. 17, 2015, Collier pled guilty to the superseding indictment. Collier admitted possessing approximately 4.037 kilograms of cocaine on Jan. 21, 2014, and acknowledged that he was being paid to transport the drugs from Phoenix, Ariz., to Memphis, Tenn.
This case was investigated by the Interdiction Unit of the DEA’s Albuquerque office which focuses on disrupting the flow of narcotics, weapons, and the proceeds of illegal activities as they are smuggled into or through New Mexico in passenger buses, passenger trains, commercial vehicles and automobiles. Assistant U.S. Attorney Rumaldo R. Armijo prosecuted the case.
General Electric to Pay $2.25 Million for Violating Federal and State Environmental Laws in Waterford, New YorkRead the Press Release
The General Electric Company (GE) has agreed to pay a $2.25 million civil penalty to resolve a complaint alleging violations of federal and state environmental laws in connection with GE’s use of an incinerator at a manufacturing facility that it once owned and operated in Waterford, New York, announced the Department of Justice, the U.S. Attorney’s Office for the Northern District of New York and , the Environmental Protection Agency (EPA), the New York State Attorney General’s Office and the New York State Department of Environmental Conservation (DEC). Both the complaint and the settlement agreement were filed today in U.S. District Court in Albany.
According to allegations in the complaint, GE owned the Waterford facility from 1947 through 2006 and continued to operate it through early 2007. GE manufactured various products at the facility, including sealants made of silicone. The silicone manufacturing process generated hazardous waste. GE sought and received permits from DEC to dispose of the hazardous waste onsite, subject to compliance with the Clean Air Act (CAA) and the Resource Conservation and Recovery Act (RCRA).
GE disposed of hazardous waste in a rotary kiln incinerator that included an automatic waste feed cut-off system designed to shut down the incinerator if GE deviated from operating parameters designed to ensure compliance with the CAA and RCRA. Unbeknownst to federal and state authorities, GE used a computer program to override the incinerator’s automatic waste feed cut-off system, allowing GE to continue to burn hazardous waste in the incinerator in violation of its CAA and RCRA permits. On at least 1,859 occasions during the period of September 2006 until February 2007, GE employees manually overrode the automatic waste feed cut-off system, thereby potentially exposing the public and the environment to harmful hazardous air pollutants, such as carbon monoxide, dioxins and furans. Though its employees were violating federal and state law, GE submitted routine compliance reports to the United States and the state of New York falsely attesting to compliance with RCRA, the CAA and permits issued pursuant to those statutes.
“GE violated the nation’s and New York’s bedrock environmental laws that were put in place to protect the American public and the environment from harmful air pollution and hazardous materials,” said Assistant Attorney General John C. Cruden for the Justice Department’s Environment and Natural Resources Division. “This settlement penalizes GE for these violations of law, and represents the combined efforts of the federal government and the state of New York to uphold the law and protect public health.”
“By operating a system to bypass safety controls, GE put the public and the environment in harm’s way,” said First Assistant U.S. Attorney Grant C. Jaquith for the Northern District of New York “This office will continue to pursue vigorously companies that thwart laws designed to protect public health, safety, and our environment.”
“GE overrode a system designed to deal with dangerous air pollutants from a hazardous waste incinerator,” said Regional Administrator Judith A. Enck for EPA. “By overriding the system, GE allowed the hazardous waste to continue to be fed into the incinerator, leading to levels of carbon monoxide that exceeded the permit limits.”
“Violations of New York State’s environmental laws and regulations are serious offenses, which carry serious consequences,” said Acting Commissioner Basil Seggos for DEC. “This fine is the result of the collaborative efforts of state and federal partners working together to accomplish a shared mission to protect our citizens and communities and should send a strong message that New York State has zero tolerance for those who shirk environmental policies and procedures put in place as protections. I commend DEC’s Law Enforcement Officers for their determined vigilance in this investigation. This is a great example of the important work they perform in the course of their sworn duty to protect the citizens of New York and the environment.”
This case was investigated by EPA and DEC, and is being handled by Assistant U.S. Attorneys Thomas Spina Jr. and Adam J. Katz and Assistant Attorneys General Maureen F. Leary and James C. Woods.
Gang Associate Sentenced to Federal Prison on Drug Trafficking and Firearms ChargesRead the Press Release
PROVIDENCE, R.I. – Antonio Fortes, 25, of Cranston, an associate of the YNIC street gang, was sentenced today to 48 months in federal prison on drug trafficking and firearm charges, announced United States Attorney Peter F. Neronha and Daniel J. Kumor, Special Agent in Charge of the Boston Field Division of ATF.
At sentencing, U.S. District Court Chief Judge William E. Smith also ordered Fortes to serve 3 years supervised release upon completion of his prison term, the first six months to be served in home confinement. Fortes pleaded guilty on September 15, 2015, to one count each of possession with the intent to distribute heroin, possession with the intent to distribute crack cocaine and being a felon in possession of a firearm.
Fortes is also facing murder, assault and weapons charges in Rhode Island state court for his alleged role in the October 22, 2014, shooting in Providence that resulted in the death of Terry Robinson. Fortes is charged with one count of murder, three counts of discharge of a firearm while in the commission of a crime of violence, two counts of assault with a dangerous weapon, two counts of carrying a firearm without a license, and one count of conspiracy.
According to federal court documents and information presented to the court, an investigation by ATF agents into Fortes drug trafficking activities included controlled purchases of crack cocaine and repeated surveillance by law enforcement. The investigation culminated with the execution of a court authorized search of Fortes’ residence on March 24, 2015, which resulted in the seizure of numerous packets of heroin, crack cocaine and a loaded .45 caliber handgun.
The case was prosecuted by Assistant U.S. Attorneys Milind M. Shah, with the assistance of Assistant U.S. Attorney William J. Ferland.
Law enforcement officers from the Cranston, Pawtucket and Providence Police Departments assisted agents from ATF in the investigation of this matter.
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Jim Martin (401) 709-5357
email: [email protected]
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Fourth Conspirator Admits to the Robbery of a Pikesville Jewelry Store Including Kidnapping and Brandishing a GunRead the Press Release
Baltimore, Maryland – Marat Yelizarov, age 28, of Pikesville, Maryland, pleaded guilty today to conspiracy, kidnapping, and brandishing a firearm in relation to a crime of violence, in connection with the robbery of a jewelry store, including a home invasion robbery, carjacking and kidnapping.
The guilty plea was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Kevin Perkins of the Federal Bureau of Investigation; Chief James W. Johnson of the Baltimore County Police Department; and Baltimore County State’s Attorney Scott Shellenberger.
According to his plea agreement, Yelizarov was part of a conspiracy to rob a Pikesville jewelry store. In the course of the conspiracy, Yelizarov participated in an armed home invasion robbery designed to obtain firearms for use in the later robbery of the jewelry store.
Specifically, on July 22, 2012, Yelizarov, Zilberman and other conspirators robbed a home in Reisterstown, Maryland. Zilberman was familiar with the layout of the home, having been there as a guest on a number of occasions. Zilberman knew that the residents of the home owned firearms and he had handled and fired some of the weapons. After conducting surveillance of the home for several days prior to the robbery, at 2:30 a.m. on July 22, 2012, Yelizarov, Zilberman and their co-conspirators traveled to the home in Reisterstown. Dressed all in black and wearing ski masks and latex gloves, Zilberman and his co-conspirators entered the home through the unlocked garage door. A co-conspirator was armed with a handgun when they entered the residence. Yelizarov, Zilberman and another conspirator grabbed long guns and carried them throughout the home. A resident of the home was asleep when the four robbers entered his bedroom and woke him up, pointing guns at him and shining flashlights in his eyes. A co-conspirator beat the resident when he tried to resist while Yelizarov began to tie up the resident with a belt and a cord. For approximately one hour the robbers ransacked the home looking for firearms and other valuables. After the robbers left, the resident was able to free himself and call police. The resident was taken to the hospital for treatment of his injuries. Among the items stolen from the house were 10 long guns (rifles and shotguns), a crossbow, a laptop computer and jewelry. Numerous electronic devices including computers and televisions were destroyed during the robbery. The value of the items stolen was approximately $10,000.
A co-conspirator devised a plan to commit an armed robbery of a jewelry store, and recruited Yelizarov, Igor Yasinov, Peter Magnis, Grigoriy Zilberman and others to participate in the robbery. Prior to the robbery, the conspirators gathered intelligence, including conducting surveillance and attaching a GPS device to the car of an employee of the jewelry store in order to learn the employee’s travel routine and habits. Zilberman also exploited his friendship with the employee to obtain information about the operation of the jewelry store and the habits of the employee.
According to Yelizarov’s plea agreement, on January 15, 2013, Zilberman enticed the employee to visit his home, in order to alert the other co-conspirators of the employee’s whereabouts. While the employee was at Zilberman’s home, Yelizarov, Yasinov, Magnis and two other conspirators met at the residence of a sixth conspirator to prepare for the kidnapping and robbery, including preparing the firearms and donning masks and gloves. Yelizarov and one of the conspirators then drove to Zilberman’s home in order to alert the other conspirators of the employee’s departure. Early in the morning on January 16, 2013, Yelizarov and the other conspirator followed the employee from Zilberman’s home for a while, and then stopped. Yelizarov was aware that co-conspirators planned to abduct the employee to obtain keys and information to gain entry to and rob the jewelry store. Meanwhile, Yasinov, Magnis and two other co-conspirators driving in a rental car obtained by Yasinov, used a law enforcement-type light bar and a loudspeaker to impersonate a police officer and pull over the employee. Brandishing firearms, Yasinov, Magnis and the other co-conspirators removed the employee from his car, bound and blindfolded the employee, put him into the trunk of his own car, and drove him to a predetermined location. Once at the location, Yasinov, Magnis, and the co-conspirators continued to brandish firearms and threatened to kill the employee’s family if he did not comply with their demands or if he reported the incident to police. The employee complied and at approximately 3:52 a.m., two co-conspirators drove the employee’s vehicle from the remote location to the jewelry store. Yasinov and Magnis stayed with the employee. Yelizarov and another co-conspirator were stationed near the jewelry store to act as “look-outs.” Two co-conspirators entered the jewelry store and stole jewelry, stones, and watches, valued at about $500,000, then drove back to the remote location. The employee was then placed back into the trunk of his car and driven to another location, where he was left. The employee was able to kick his way out of the trunk through the back seat of his car.
On January 18, 2013, one of the conspirators sold a portion of the stolen jewelry for approximately $29,000 to an FBI informant. On January 19, 2013, the conspirator traveled to Brooklyn, New York to sell some of the jewelry and stones taken during the robbery, receiving over $100,000. On January 21, 2013, the conspirator returned to Maryland and divided the cash proceeds among the members of the conspiracy and others. Yelizarov received cash for his role in the crimes.
On January 25, 2013, one of the conspirators was arrested in Buffalo, New York, and contacted Yelizarov, who agreed to assist in cleaning out the conspirator’s residence and disposing of evidence related to the jewelry store robbery, including a gun, laptop computer, ammunition, the GPS device, and other evidence of the crimes.
Yelizarov faces a maximum sentence of 20 years in prison for the robbery conspiracy; a maximum of life in prison for kidnapping; and a minimum mandatory sentence of seven years, and a maximum of life in prison for brandishing a firearm in relation to a crime of violence. U.S. District Judge J. Frederick Motz has scheduled sentencing for March 9, 2016, at 9:30 a.m.
Grigoriy (Greg) Zilberman, age 24, of Owings Mills, Maryland, and Peter Aleksandrov Magnis, age 27, of Hydes, Maryland, and Igor Yasinov, age 26, of Baltimore, previously pleaded guilty to their roles in the robbery conspiracy and are scheduled to be sentenced on December 18, 2015, December 22, 2015, and March 8, 2016, respectively.
United States Attorney Rod J. Rosenstein praised the FBI, Baltimore County Police Department, and Baltimore County State’s Attorney’s Office for their work in the investigation. Mr. Rosenstein thanked Assistant United States Attorney Paul E. Budlow and Aaron S. J. Zelinsky, who are prosecuting the case.
Four St. Bernard Parish, Louisiana, Correctional Officers Charged with Violating the Civil Rights of an Inmate Resulting in her DeathRead the Press Release
WASHINGTON – A grand jury today indicted four correctional officers from the St. Bernard Parish Prison in Chalmette, Louisiana, for violating the civil rights of inmate Nimali Henry by deliberately ignoring serious medical needs that led to her death. The indictment was announced by Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division, U.S. Attorney Kenneth A. Polite of the Eastern District of Louisiana and Special Agent in Charge Jeffrey S. Sallet of the FBI’s New Orleans Division.
The indictment charges that Captain Andre Dominick, Corporal Timothy Williams, Deputy Debra Becnel and Deputy Lisa Vaccarella each knew that Henry had serious medical conditions and willfully failed to provide her with necessary medical attention. As a result of the lack of medical attention, Henry died at the St. Bernard Parish Prison on April 1, 2014. The indictment also charges each of the defendants with making a false statement to the FBI.
The civil rights charge carries a maximum penalty of life in prison and each false statement charge carries a maximum penalty of five years in prison.
An indictment is a formal accusation of criminal conduct, not evidence of guilt. The defendants are presumed innocent unless and until proven guilty.
This case was investigated by the FBI’s New Orleans Division with Special Agent Matthew Russell as the case agent. The case is being prosecuted jointly by Trial Attorney Christine M. Siscaretti of the Civil Rights Division’s Criminal Section and Assistant U.S. Attorney Chandra Menon of the Eastern District of Louisiana.
Four St. Bernard Parish, Louisiana, Correctional Officers Charged with Violating the Civil Rights of an Inmate Resulting in Her DeathRead the Press Release
A grand jury today indicted four correctional officers from the St. Bernard Parish Prison in Chalmette, Louisiana, for violating the civil rights of inmate Nimali Henry by deliberately ignoring serious medical needs that led to her death. The indictment was announced by Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division, U.S. Attorney Kenneth A. Polite of the Eastern District of Louisiana and Special Agent in Charge Jeffrey S. Sallet of the FBI’s New Orleans Division.
The indictment charges that Captain Andre Dominick, Corporal Timothy Williams, Deputy Debra Becnel and Deputy Lisa Vaccarella each knew that Henry had serious medical conditions and willfully failed to provide her with necessary medical attention. As a result of the lack of medical attention, Henry died at the St. Bernard Parish Prison on April 1, 2014. The indictment also charges each of the defendants with making a false statement to the FBI.
The civil rights charge carries a maximum penalty of life in prison and each false statement charge carries a maximum penalty of five years in prison.
An indictment is a formal accusation of criminal conduct, not evidence of guilt. The defendants are presumed innocent unless and until proven guilty.
This case was investigated by the FBI’s New Orleans Division with Special Agent Matthew Russell as the case agent. The case is being prosecuted jointly by Trial Attorney Christine M. Siscaretti of the Civil Rights Division’s Criminal Section and Assistant U.S. Attorney Chandra Menon of the Eastern District of Louisiana.
Dominick et al Indictment
Former U.S. Congressional Staffer Pleads Guilty to Receiving Child PornographyRead the Press Release
WASHINGTON – A former congressional staffer pleaded guilty yesterday to one count of receiving child pornography, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney John Parker of the Northern District of Texas and Special Agent in Charge Thomas M. Class Sr. of the FBI’s Dallas Field Office.
James Maines Jr., 54, of Mesquite, Texas, pleaded guilty before U.S. Magistrate Judge David L. Horan of the Northern District of Texas in Dallas to one count of knowingly receiving child pornography. Maines is scheduled to be sentenced on March 16, 2016, before U.S. District Court Judge Ed Kinkeade of the Northern District of Texas.
In connection with his guilty plea, Maines admitted that in November 2012, he attempted to forward five child exploitation images from his email account to his U.S. House of Representatives email account. Maines also admitted that he had received these and other child exploitation images via the Internet. Forensic analysis of Maines’s computer revealed a number of child exploitation images, some of which Maines had downloaded as early as 2004.
Assistant U.S. Attorney Camille Sparks of the Northern District of Texas and Trial Attorney Mi Yung Park of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS) are prosecuting this case. The FBI’s Dallas Field Office investigated the case with the assistance of the FBI’s Washington, D.C., Field Office.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorney’s Offices and 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.justice.gov/psc.
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Former U.S. Congressional Staffer Pleads Guilty to Receiving Child PornographyRead the Press Release
A former congressional staffer pleaded guilty yesterday to one count of receiving child pornography, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney John Parker of the Northern District of Texas and Special Agent in Charge Thomas M. Class Sr. of the FBI’s Dallas Field Office.
James Maines Jr., 54, of Mesquite, Texas, pleaded guilty before U.S. Magistrate Judge David L. Horan of the Northern District of Texas in Dallas to one count of knowingly receiving child pornography. Maines is scheduled to be sentenced on March 16, 2016, before U.S. District Court Judge Ed Kinkeade of the Northern District of Texas.
In connection with his guilty plea, Maines admitted that in November 2012, he attempted to forward five child exploitation images from his email account to his U.S. House of Representatives email account. Maines also admitted that he had received these and other child exploitation images via the Internet. Forensic analysis of Maines’s computer revealed a number of child exploitation images, some of which Maines had downloaded as early as 2004.
Assistant U.S. Attorney Camille Sparks of the Northern District of Texas and Trial Attorney Mi Yung Park of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS) are prosecuting this case. The FBI’s Dallas Field Office investigated the case with the assistance of the FBI’s Washington, D.C., Field Office.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorney’s Offices and 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.justice.gov/psc.
Former Flight Attendant Pleads Guilty to Making False Bomb ThreatRead the Press Release
BOSTON – A former American Airlines flight attendant pleaded guilty today in U.S. District Court in Boston to making a false bomb threat on a plane scheduled to fly from Boston to Miami.
Nancy Marie Gray, 52, pleaded guilty to one count of giving false information about the presence of a bomb on an aircraft and was sentenced by U.S. District Court Judge Indira Talwani to time served, approximately 18 months in prison.
On Sept. 30, 2009, while working as a flight attendant on American Airlines Flight 1318 scheduled to fly from Boston to Miami, Gray wrote "Bomb on Board! BOS-MIA" on the inside of the airplane’s bathroom storage closet during pre-flight preparations. Claiming that she had discovered the note, Gray informed the lead flight attendant and the pilot. After inspecting the note, the pilot immediately halted the ongoing boarding procedure, evacuated the plane, and notified airport security and law enforcement. Dozens of first responders quickly reported to the scene, and the plane was swept with a bomb-sniffing dog before removing the aircraft to a remote location at Logan International Airport. There, all luggage was unloaded from the plane and checked for explosives, and the exterior of the plane and its cargo hold were thoroughly searched. No bomb was found.
Gray was indicted in August 2010. After a jury trial in March 2013, she was found guilty of making the false bomb threat and sentenced to prison. Gray was released from prison in March 2015 after the First Circuit Court of Appeals granted her a new trial due to an erroneous jury instruction given at the close of the 2013 trial. Instead of a new trial, Gray chose to plead guilty, admitting that she was, in fact, responsible for making the false bomb threat on AA Flight 1318.
United States Attorney Carmen M. Ortiz; Michael Ondocin, Supervisory Air Marshal in Charge of the Federal Air Marshal Service, Boston Field Office; Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division; and Colonel Richard D. McKeon, Superintendent of the Massachusetts State Police, made the announcement today. The case is being prosecuted by Assistant U.S. Attorneys Kelly Begg Lawrence and John A. Capin of Ortiz’s Criminal Division.
Former Credit Union Employee Sentenced to Federal PrisonRead the Press Release
BATON ROUGE, LA - United States Attorney Walt Green announced today that Chief U.S. District Court Judge Brian A. Jackson sentenced WHITTNEY M. LATHAN of Baton Rouge, Louisiana, to ten (10) months in federal prison; a five-year term of supervised release following her release from prison; restitution in the amount of $508,182; and forfeiture of assets in the amount of $309,350.
On September 3, 2015, LATHAN was convicted of bank fraud, in violation of Title 18, United States Code, Section 1344. Her conviction stemmed from her scheme to defraud the Dow Federal Credit Union out of over $500,000 from January 2, 2009 through June 29, 2013, while employed as a teller.
This matter was prosecuted by Assistant United States Attorney Rene Salomon. This matter was investigated by the Federal Bureau of Investigation.
Former Beverly Hills Broker Now Charged with Fugitive Investment Advisor Florian Homm in $200 Million Stock Manipulation SchemeRead the Press Release
Superseding Grand Jury Indictment Adds New Fraud and Money Laundering Charges against Fugitive Hedge Fund Manager, Beverly Hills Broker, and 2 Homm Employees
LOS ANGELES – A former Beverly Hills stockbroker has been indicted – along with fugitive hedge fund manager Florian Homm and two others – in an alleged stock manipulation scheme designed to pump up the reported profits of the Homm-managed hedge funds in a fraud that caused investors to lose approximately $200 million.
A federal grand jury yesterday afternoon returned a superseding indictment that charges three others who alleged participated in a scheme orchestrated by Homm. The new defendants are: Todd Ficeto, 49, of Marion, Ohio, who formerly resided in Malibu; Colin Heatherington, 41, of Port Alberni, British Columbia, Canada; and Craig Heatherington, 38, of Queensland, Australia.
Ficeto today surrendered to federal authorities and is scheduled to be arraigned on the indictment this afternoon in United States District Court in downtown Los Angeles.
Florian Wilhelm Jürgen Homm, 53, was first indicted in March 2013 on charges of securities fraud and wire fraud after he was arrested in Italy (see: http://go.usa.gov/cBCcV). The superseding indictment returned yesterday adds the three new defendants and charges Homm in new counts with investment adviser fraud, money laundering and unlawful monetary transactions.
Homm was the founder and chief investment officer of Absolute Capital Management Holdings (ACMH), a Cayman Islands-based investment advisor that operated from Palma de Majorca in Spain and managed eight hedge funds (the Absolute Funds). Ficeto was the president of a Beverly Hills-based broker-dealer, Hunter World Markets, that he co-owned with Homm. Colin Heatherington was a stock trader at ACMH.
The superseding indictment charges Homm, Ficeto and Colin Heatherington in a conspiracy to commit securities fraud and eight counts of securities fraud. The indictment charges that, between September 2004 and September 2007, Homm directed the Absolute Funds to buy billions of shares of thinly traded, United States-based “penny stocks” through Hunter World Markets. Ficeto allegedly arranged the stock purchases and caused millions of shares of the same penny stocks to be given to Homm, Hunter World Markets, and CIC Global Capital, which was co-owned by the Heatheringtons
After the hedge funds invested hundreds of millions of dollars in the illiquid penny stocks, Homm and Colin Heatherington caused the hedge funds to trade the stocks among themselves in “cross-trades” made with the assistance of Ficeto at Hunter World Markets, according to the indictment. The cross-trades served to increase the trading prices of the previously illiquid stocks and, in turn, to boost the net asset values and apparent performance of the Absolute Funds, in a practice called “portfolio pumping.” This apparent performance improvement at the hedge funds generated additional fees for Homm and Absolute Capital. It also boosted Absolute Capital’s stock price on the London Stock Exchange, Alternative Investment Market, from which Homm profited by selling shares.
According to the indictment, while manipulating the trading of the penny stocks to falsely and artificially increase the profitability of the Absolute Funds, Homm, Colin Heatherington (through CIC Global Capital), and Ficeto also sold their own personal holdings of the same U.S. penny stocks to the Absolute Funds at the inflated prices, which the indictment alleges was simply embezzling money from the funds.
The indictment further charges two money laundering conspiracies. In the first scheme, Homm, Ficeto and other unnamed conspirators allegedly worked together in an elaborate conspiracy to launder Homm’s illicit proceeds throughout the world.
In the second scheme, Ficeto allegedly conspired with the Heatheringtons to launder the proceeds received from CIC Global Capital through Canada and Switzerland.
The indictment also charges various unlawful monetary transactions associated with the money laundering conspiracies.
The indictment further alleges that Ficeto engaged in unlawful monetary transactions by sending nearly $10 million of illicit proceeds to an account the Cook Islands, and then lied to the Securities and Exchange Commission about the Cook Islands account. Ficeto additionally is charged with Investment Adviser Fraud in connection with a hedge fund called the Hunter Fund, in which the Absolute Funds invested and also was used to conceal investments by the Absolute Funds in the penny stocks and to manipulate the stock market.
The indictment alleges that as the scheme unraveled, Homm dumped tens of millions of dollars of his own shares in Absolute Capital and resigned from the firm in the middle of the night on September 18, 2007.
In March 2013, Homm was taken into custody in Italy after being arrested at the Uffizi Gallery in Florence. Homm was arrested pursuant to a provisional arrest warrant sought by federal prosecutors in Los Angeles after they filed a criminal complaint containing charges related to the alleged fraud scheme. The United States sought Homm’s extradition to the United States and he was ordered extradited by the Italian Ministry of Justice, but Homm ultimately was released and is believed to have fled to Germany, where he remains a fugitive.
Colin Heatherington is believed to be in Canada, and Craig Heatherington is believed to be in Australia.
The indictment also contains a forfeiture allegation that would cause the defendants, if convicted of any of the securities or money laundering counts in the indictment, to forfeit to the United States “any and all property, real and personal, which constitutes or is derived from proceeds traceable to” any of those crimes.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in court.
Each charge of conspiracy to commit securities fraud and securities fraud carry a statutory maximum penalty of 25 years in federal prison. The money laundering charges each carry a maximum penalty of 10 years in federal prison. Each charge of investment adviser fraud, obstruction of justice, and false statements carry a maximum statutory penalty of five years in federal prison.
The case against Homm is the product of an ongoing investigation by the Federal Bureau of Investigation. The United States Securities and Exchange Commission and Financial and Regulatory Authority provided assistance to the FBI’s investigation.
The United States Attorney’s Office wishes to thank the Swiss Office of the Prosecutor General of the Confederation for its support and assistance.