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12 March 2015
Exide Technologies Admits Role in Major Hazardous Waste Case and Agrees to Permanently Close Battery Recycling Facility in VernonRead the Press Release
Facility that has Polluted East L.A. for over 90 Years will be Cleaned Up Pursuant to Agreement Designed to Allow Exide to Emerge from Bankruptcy
LOS ANGELES – The United States and Exide Technologies have reached an agreement that calls for the battery manufacturing company to immediately and forever close a battery recycling facility in Vernon and to pay $50 million to clean-up the site and surrounding neighborhoods, which have been affected by environmental toxins for close to a century.
The agreement approved late yesterday calls for Exide to permanently close the plant which, the company admits, produces a host of hazardous wastes, including lead, cadmium, arsenic and volatile organic compounds.
“The reign of toxic lead ends today,” said Acting United States Attorney Stephanie Yonekura. “After more than nine decades of ongoing lead contamination in the City of Vernon, neighborhoods can now start to breathe easier.”
Exide had planned to resume operations at the recycling facility as early as next month, but the agreement calls for the facility to be shuttered, demolished and cleaned up. Exide is also required to make expedited payments that will complete funding of a $9 million trust fund that will be used to clean up 216 nearby residences in the Boyle Heights neighborhood and the City of Maywood.
The deal to close the recycling facility is contained in a Non-Prosecution Agreement (NPA) that was finalized late last night. The agreement calls for the immediate closure of the battery recycling facility and estimates that Exide’s direct costs of compliance are well in excess of $100 million, costs that include the company walking away from recent improvements to the facility and incurring new costs for lead and plastic that must now be purchased to manufacture new batteries.
The United States Attorney’s Office entered into the NPA because negotiations with the bankrupt company revealed that even the threat of a criminal prosecution would almost certainly force the liquidation of the company. The NPA opens the door to new funding for the company, which employs thousands of workers in the United States and around the world, and ensures that money will be available to pay for the clean-up of the Vernon site and several other toxic sites around the United States. Without the NPA, prosecutors believe, Exide would cease to exist as a viable company and responsibility to clean up toxic sites like the recycling plant in Vernon would revert to governmental agencies.
“The agreement with Exide ensures that the Vernon site will be permanently closed, while guaranteeing that the company will survive to adequately finance the clean-up of this long-suffering community,” Yonekura said.
Jared Blumenfeld, EPA’s Regional Administrator for the Pacific Southwest, stated: “The closure of this facility is a victory for the residents of Vernon who have suffered from decades of toxic pollution. This historic action was made possible because of the tireless efforts of local community members, including parents, environmental groups and religious leaders. Today’s announcement shows that companies who fail to meet federal environmental laws will face serious consequences.”
In addition to the commitments to close the Vernon facility and pay for associated clean-up costs, Exide has acknowledged criminal conduct, including the illegal storage, illegal disposal, illegal shipment and illegal transportation of hazardous waste. For example, in the NPA “Exide admits that it knowingly and willfully caused the shipment of hazardous waste contaminated with lead and corrosive acid in leaking van trailers owned by Wiley Sanders Truck Line, Inc. and operated by Lutrel Trucking, Inc. and KW Plastics of California, Inc., from the [Vernon] facility to Bakersfield, California, a significant number of times over the past two decades, in violation of federal law. Each incident could be charged as a felony violation of the federal Hazardous Materials Transportation Act.”
The admissions of criminal violations is important because Exide agreed that it could be prosecuted for the felony environmental offenses it previously committed at any time over the next 10 years if it fails to abide by the terms of the NPA. A violation would include failing to adequate finance clean-up efforts at the recycling facility, a program that will be overseen by the California Department of Toxic Substances Control (DTSC).
The NPA with Exide is the result of an investigation by the United States Environmental Protection Agency – Criminal Investigations Division and the United States Department of Transportation – Office of the Inspector General.
Release No. 15-027
East Alton Man Sentenced to Federal Prison for Illegally Possessing A FirearmRead the Press Release
Jerry D. Roof, 31 of East Alton, Illinois, was sentenced today by United States District Court Judge David R. Herndon to 30 months in federal prison for being a felon in possession of a firearm, announced Stephen R. Wigginton, United States Attorney for the Southern District of Illinois.
According to court documents, in January 2014, Roof’s probation officer found him in possession of a firearm at his residence in violation of his probation and federal law. As a convicted felon, Roof could not lawfully possess a firearm. Roof was charged in federal court in East St. Louis, Illinois and pled guilty.
United States Attorney Wigginton noted that: "My office remains committed to prosecuting felons who illegally arm themselves with firearms. A sentence like this one sends a strong, clear message: If you’re a convicted felon, you simply cannot have a gun. Period."
There is no parole in the federal prison system. In addition to the prison sentence, Judge Herndon also sentenced Roof to serve 3-years of supervised release and to pay a $300 fine as well as $100 in court fees.
The Madison County Sheriff’s Department and the Madison County Probation Department investigated this case with the assistance of the Bureau of Alcohol, Tobacco, Firearms, and Explosives. Assistant United States Attorney Monica A. Stump prosecuted the offense.
Duke Energy Subsidiaries Plea to Criminal Information and Sentencing Set for April 16, 2015Read the Press Release
RALEIGH – A Plea and Sentencing Hearing has been set for Duke Energy Business Services, LLC, Duke Energy Progress, Inc., and Duke Energy Carolinas, LLC for April 16, 2015 at 10:00 a.m. in the federal courthouse in Greenville, North Carolina. The companies were charged with multiple violations of the Clean Water Act.
Persons directly and proximately harmed as a result of the conduct charged in this matter may have rights under the Crime Victims’ Rights Act. See 18 U.S.C. § 3771. If you believe that you are a crime victim in this matter, please contact the United States Attorney’s Office for the Eastern District of North Carolina at [email protected] no later than March 26, 2015.
The U.S. Attorney’s Offices will have no further comment on this matter until after court proceedings.
Drug Dealer Found Guilty at TrialRead the Press Release
BATON ROUGE, LA –United States Attorney Walt Green announced that a federal jury unanimously convicted KENDRICK D. ALEXANDER, age 41, of Baton Rouge, Louisiana, today following a four-day jury trial before U.S. District Judge John W. deGravelles based on an Indictment charging him with possession with the intent to distribute oxycodone, a Schedule II controlled substance, in violation of Title 21, United States Code, Sections 846 and 841(a)(1). ALEXANDER faces a significant term of imprisonment, followed by supervised release, along with a fine and forfeiture of assets. A sentencing date has not yet been set.
The evidence at trial demonstrated that ALEXANDER engaged in illegal drug dealing involving oxycodone, which is a controlled pain medication that has increasingly become a drug of choice for illegal users and dealers. Oxycodone may only be dispensed and used legally when prescribed by a DEA-registered medical doctor for medical necessity reasons. This is because oxycodone is potentially very addictive and has resulted in significant abuse by some users, risking serious injury and death.
U.S. Attorney Green stated: “Drug traffickers will continue to face the multi-pronged attack being waged by my office and all of law enforcement in this district. Today’s verdict is another successful result of that ongoing effort. I greatly appreciate the hard work of the DEA, the Baton Rouge Police Department, and my staff in bringing the defendant to justice.”
Joseph W. Shepherd, Assistant Special Agent-in-Charge of the U.S. Drug Enforcement Administration’s New Orleans Field Office, stated: “Kendrick Alexander is yet another drug dealer who learned today the strength, partnership, and solidarity of the federal, state, and local law enforcement community. The message is simple: the Drug Enforcement Administration and the U.S. Attorney’s Office will stop at nothing to ensure that drug trafficking ventures perpetrated by the likes of Mr. Alexander will not be tolerated.”
The investigation was conducted by the U.S. Drug Enforcement Administration and the Baton Rouge Police Department. The case was prosecuted by Assistant United States Attorneys Cam Le and Ryan Crosswell.
District Man Sentenced to 80 Years in Prison for 2013 Murders of Siblings in Northeast Washington -Sister Died While Trying to Shield Her Younger Brother from Gunfire-Read the Press Release
WASHINGTON – Kevin Walker, 39, of Washington, D.C., was sentenced today to 80 years in prison for killing two people – a sister and her brother - in Northeast Washington, U.S. Attorney Ronald C. Machen Jr. announced.
Walker was found guilty by a jury in December 2014 of two counts of first-degree murder while armed and two related firearms offenses. The verdicts followed a trial in the Superior Court of the District of Columbia. He was sentenced by the Honorable Russell F. Canan.
According to the government’s evidence, on July 20, 2013, at about 4:30 a.m., Walker killed Jamie Jenkins, 28, and her brother, Jamahl Jenkins, 21, in the 5300 block of East Capitol Street NE. Before the shootings, Jamie Jenkins had been involved in a fight with Walker’s girlfriend. Jamahl Jenkins was present, but not involved. After the fight broke up, the siblings left the area, but they came back a few minutes later to look for Jamie Jenkins’s lost cell phone.
Walker then came outside with a gun and approached the pair. Eyewitnesses screamed at Walker that the fight was over, and that it wasn’t serious. However, words were exchanged, and Walker then fired his gun. According to the government’s evidence, Jamie Jenkins was fatally shot when she jumped in front of the first bullet intended for her brother. Walker then followed Jamahl Jenkins and shot him six times in the back as he tried to run away.
After the shooting, Walker fled to North Carolina, where he was apprehended by the U.S. Marshals Service in September 2013.
In announcing the sentence, U.S. Attorney Machen commended the work of the Metropolitan Police Department, which investigated the case. He also expressed appreciation for the assistance provided by the District of Columbia’s Office of the Chief Medical Examiner, the District of Columbia Department of Forensic Services, and the U.S. Marshals Service. He acknowledged the efforts of those who worked on the case from the U.S. Attorney’s Office, including Litigation Technology Specialists Anisha Bhatia and Leif Hickling; Victim/Witness Advocate Marcia Rinker; Investigative Analyst Zachary McMenamin; and Paralegal Specialists Kwasi Fields and Kendra Johnson. Finally, he commended the work of Assistant U.S. Attorneys Magdalena Acevedo and Demian S. Ahn, who investigated and prosecuted the case.
15-043
Dallas-Area Residents Charged with Conspiracy, Drug Trafficking and Firearms OffensesRead the Press Release
DALLAS — Ten Dallas-area residents have been charged with various federal offenses to include conspiracy, drug trafficking, and firearms offenses, including assault on federal agents, announced John Parker, Acting U.S. Attorney for the Northern District of Texas.
Several of the defendants, charged in an indictment and in complaints, were arrested following a law enforcement operation on February 10, 2015. During that operation, at a residence in Grand Prairie, Texas, one of the defendants fired an AK-47 at two special agents with the FBI.
The charges are the result of the continuing investigation of the violent drug trafficking organization (DTO) known as the “Goon Squad,” which operated in Dallas. The Goon Squad consisted of numerous individuals, including defendant Jose Pedro Maya. In June 2014, the FBI arrested 10 members/associates of the Goon Squad and those cases are pending in this district. Shortly after those arrests, Maya fled to Mexico, but returned to the U.S. in September 2014. At some point in 2014, Maya split from the Goon Squad and began leading his own drug trafficking organization, the Maya DTO.
Defendants charged include:
Jose Pedro Maya, a/k/a “Little Maya,” 21, of Grand Prairie
Santiago Reynozo, a/k/a “Santiago Reynosa” and “Pelon,” 21, of Dallas
Baltazar Moreno, a/k/a “Chalan,” 39, of Dallas
Adrian Reynozo, a/k/a “Adrian Reynoso,” 22, of Dallas
Rogelio Lira, a/k/a “Primo,” 25, of Dallas
Guillermo Perez, 18, of Grand Prairie
Emmitt Herrera, Jr., 46, of Grand Prairie
Diego Moreno, 21, of Dallas
Jessie Amaya, 19, of Grand Prairie
Oracio Ferrer Reza, 34 of Mesquite, Texas
Maya is related to Santiago Reynoza and Adrian Reynozo, who are brothers.
The original indictment alleged the Maya DTO distributed methamphetamine and cocaine in the Dallas area; it also possessed and trafficked in firearms. Like the Goon Squad, it targeted individuals believed to be drug dealers for burglary, robbery, or other acts of violence as those individuals were likely to possess large quantities of illegal narcotics, cash or firearms and would not likely report any offenses by the Maya DTO because of their own unlawful activities.
Defendants Maya, Santiago Reynozo, Baltazar Moreno, Adrian Reynozo and Lira are each charged with one count of conspiracy to possess with intent to distribute a controlled substance — methamphetamine and cocaine. As part of the conspiracy, Moreno cooked methamphetamine and provided it to Maya and the other conspirators. Santiago Reynoza, Moreno, Adrian Reynozo and Lira sold the illegal narcotics outside of the Los Campadres Billiards in Dallas. Maya provided the methamphetamine for these individuals to sell, and he received a portion of the sales proceeds. Maya also sold firearms in furtherance of his drug trafficking activities, and all five defendants possessed firearms in furtherance of their drug trafficking activities.
Each of these five defendants is also charged with one count of using, carrying, or brandishing a firearm during or in relation to a drug trafficking crime; Adrian Reynozo is also charged with being an illegal alien in possession of a firearm.
In another indictment, Perez and Herrera are each charged with one count of assault on a federal officer, one count of conspiracy to possess with intent to distribute methamphetamine, and one count of conspiracy to possess with the intent to distribute heroin. In addition, Perez is charged with two counts and Herrera with one count of using carrying, brandishing and discharging a firearm during and in relation to a crime of violence. Herrera is also charged with one count of being a felon in possession of a firearm.
Defendants Diego Moreno and Reza each pleaded guilty this week to Informations charging one count of possession of methamphetamine with intent to distribute. Defendant Lira pleaded guilty to a superseding Information charging the same offense. Defendant Amaya pleaded guilty to an Information charging possession with intent to distribute cocaine. Each faces a maximum statutory penalty of 20 years in federal prison and a $1 million fine.
A trial date of April 20, 2015, is set for the remaining defendants.
According to documents filed in the cases, as law enforcement officers were executing an arrest warrant for Maya at his residence in Grand Prairie, Perez, who was a guest at the residence, grabbed an assault rifle and fired two rounds in the direction of the front door where law enforcement personnel were located. Law enforcement personnel had clearly identified themselves as law enforcement, both visually and orally.
Herrera was also in the residence at the time. He was in the kitchen where law enforcement observed a large quantity of methamphetamine and the water faucet turned on in what appeared to be an attempt to wash the methamphetamine down the sink.
A federal indictment is an accusation by a grand jury. If convicted, however, the statutory maximum penalty for the drug trafficking conspiracy is life in federal prison and millions of dollars in fines. Each firearm conviction carries a statutory penalty of not less than five years in federal prison and up to a $250,000 fine, and the alien in possession conviction carries a maximum statutory penalty of 10 years in federal prison and a $250,000 fine. The assault on a federal officer offense carries a maximum statutory penalty of 20 years in federal prison and a $250,000 fine.
The FBI and Dallas Police Department are investigating. Assistant U.S. Attorney P.J. Meitl is prosecuting.
Cottage Grove Woman Convicted by Jury of Producing Pornographic Images of A ChildRead the Press Release
Roxanne Merrell promised $100,000 to send obscene photos of young girlUnited States Attorney Andrew M. Luger today announced the conviction of ROXANNE MERRELL, 35, for making pornographic images of a pre-pubescent girl. MERRELL was convicted by a jury of the entire indictment against her after a three-day trial before Senior Judge David S. Doty in U.S. District Court in Minneapolis, Minn. A sentencing date has not yet been set.
As proven at trial, Travis Guenthner of Washburn, North Dakota, who was convicted in May 2014 in the District of North Dakota of multiple counts of production of child pornography and other child exploitation offenses, knew ROXANNE MERRELL. Guenthner offered MERRELL $100,000 to take pornographic photos of a young girl, which MERRELL took while the child was sleeping. Other pictures of the child’s naked buttocks and clothed pubic area were also discovered on Guenthner’s computer. The photographs, some of which included an image of an adult hand, were later discovered on Guenthner’s computer. The adult hand appearing in the photos belonged to MERRELL.
“HSI is committed to aggressively pursuing those individuals who trade in child pornography,” said HSI St. Paul Special Agent in Charge J. Michael Netherland. "It is our job to do everything that we can to protect the most vulnerable members of our society.”
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by United States Attorneys’ Offices and the Department of Justice 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 http://www.projectsafechildhood.gov
This case is the result of an investigation conducted by Homeland Security Investigations (HSI) and the Cottage Grove Police Department.
Assistant U.S. Attorneys Katharine T. Buzicky and Sarah E. Hudleston are prosecuting the case.
Defendant Information: ROXANNE MERRELL, 35
Cottage Grove, Minn.
Convicted: • Production of Child Pornography, 2 countsCortland Man Charged with ThreatsRead the Press Release
PLATTSBURGH, NEW YORK – On March 11, 2015, a federal grand jury indicted Roy S. Redeye, age 38, with threatening to kill three Saint Regis Mohawk Police Officers, announced United States Attorney Richard S. Hartunian, Homeland Security Investigations Special Agent in Charge James Spero, and Saint Regis Mohawk Police Chief Matthew Rourke. According to the two-count indictment, on February 6, 2015, Redeye threatened to kill the police officers in posts on his Facebook page.
Redeye was arrested in Cortland, New York, on February 10, 2015, where he was living at that time. On February 26, 2015, he had his initial appearance before United States Magistrate Judge Gary L. Favro
; the defendant has been detained since then. The trial date will be set in the coming days.
If convicted of these charges, the maximum penalties the defendant faces include: a term of imprisonment of 5 years; a fine of $250,000; a term of three years of supervised release; and payment of restitution to the victims.
The case is being investigated by agents of Homeland Security Investigations based in Massena, New York. Assistant United States Attorney Elizabeth Horsman is prosecuting the case.
The charges are merely accusations and the defendant is presumed innocent unless and until proven guilty in a court of law.
Corpus Christi Man Pleads Guilty to Distributing Child PornographyRead the Press Release
CORPUS CHRISTI, Texas – Kevin Justin Esquivel, 24, of Corpus Christi, has pleaded guilty to distribution of child pornography, announced U.S. Attorney Kenneth Magidson.
The court heard today that agents with the FBI Dallas Child Exploitation Task Force, while using peer-to-peer software, were able to successfully download of various files containing child pornography from an IP address that was associated with Esquivel. As a result of this information, the FBI office in Corpus Christi was contacted to assist in the investigation.
In August 2014, agents executed a search warrant at Esquivel’s residence, at which time they seized various electronic devices. Forensic analysis on those devices revealed more than 4,000 images and more than 900 videos of child pornography. Esquivel admitted having an sexual interest in children between the ages of 10 and 13 years of age and having downloaded child pornography.
U.S. Magistrate Judge Jason B. Libby accepted the guilty plea today and set sentencing for June 30, 2015, before U.S. District Judge Nelva Gonzales Ramos. At that time, Esquivel faces a minimum of five and up to 20 years in federal prison and a possible $250,000 maximum fine. Upon completion of any prison term imposed, Esquivel also faces a maximum of life on supervised release during which time the court can impose a number of special conditions designed to protect children and prohibit the use of the Internet.
Esquivel was arrested on the federal charges in August 2014 and has been in custody since that time where he will remain pending his sentencing.
The FBI investigated with the assistance of the Corpus Christi Police Department.
This case, prosecuted by Assistant U.S. Attorney Hugo R. Martinez, 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."
Contract Worker Pleads Guilty to Using Fraudulent TWIC Card to Attempt to Gain Access to Sulphur FacilityRead the Press Release
LAKE CHARLES, La. – United States Attorney Stephanie A. Finley announced today that a contract worker pleaded guilty to using a fraudulent facility access pass to attempt to gain entrance into a Sulphur, La., petrochemical facility.
Cristobal Vargas Zambrano, 32, a contract worker at a Sulphur facility, entered a conditional guilty plea before U.S. Magistrate Judge Kathleen Kay for one count of fraudulent use or possession of an official pass. The plea will become final when accepted by U.S. District Judge Donald E. Walter. According to the guilty plea, Zambrano used a fraudulent transportation worker identification credential (TWIC) on August 14, 2014, to attempt to gain access to Westlake Petrochemicals in Sulphur. Westlake Petrochemicals is a Transportation Security Act regulated facility and workers must present a TWIC card to gain access.
Zambrano faces up to five years in prison, three years supervised release and a $250,000 fine. A sentencing date of June 29, 2015 was set.
The U.S. Coast Guard Investigative Service investigated the case. Assistant U.S. Attorney Robert C. Abendroth is prosecuting the case.
Commerzbank AG Admits to Sanctions and Bank Secrecy Violations, Agrees to Forfeit $563 Million and Pay $79 Million FineRead the Press Release
Commerzbank AG, a global financial institution headquartered in Frankfurt, Germany, and its U.S. branch, Commerzbank AG New York Branch (Commerz New York), have agreed to forfeit $563 million, pay a $79 million fine and enter into a deferred prosecution agreement with the Justice Department for violations of the International Emergency Economic Powers Act (IEEPA) and the Bank Secrecy Act (BSA). The bank has also entered into settlement agreements with the Treasury Department’s Office of Foreign Assets Control (OFAC) and the Board of Governors of the Federal Reserve System.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Ronald C. Machen Jr. of the District of Columbia, U.S. Attorney Preet Bharara of the Southern District of New York, Assistant Director in Charge Diego Rodriguez of the FBI’s New York Field Office, Chief Richard Weber of the Internal Revenue Service Criminal Investigation (IRS-CI) and District Attorney Cyrus R. Vance Jr. of New York County made the announcement.
In entering the deferred prosecution agreement, Commerzbank admitted and accepted responsibility for its criminal conduct in violation of IEEPA, and Commerz New York admitted its criminal conduct in violation of the BSA. Commerzbank further agreed to pay $263 million in forfeiture and a fine of $79 million for the IEEPA violations, and to pay $300 million in forfeiture in connection with the BSA violations, which will be remitted to the victims of a multi-billion dollar securities fraud scheme that was permitted to operate through Commerzbank. Commerzbank also agreed to implement rigorous internal controls and to cooperate fully with the Justice Department, including by reporting any criminal conduct by an employee.
A four-count felony criminal information was filed today in the District of Columbia charging Commerzbank with knowingly and willfully conspiring to commit violations of IEEPA and Commerz New York with three violations of the BSA for willfully failing to have an effective anti-money laundering (AML) program, willfully failing to conduct due diligence on its foreign correspondent accounts, and willfully failing to file suspicious activity reports. Assuming the bank’s continued compliance with the deferred prosecution agreement, the government has agreed to defer prosecution for a period of three years, after which time, the government would seek to dismiss the charges.
The New York County District Attorney’s Office is also announcing today that Commerzbank has entered into a deferred prosecution agreement, and in the corresponding factual statement, Commerzbank admitted that it violated New York State law by falsifying the records of New York financial institutions. In addition, the Board of Governors of the Federal Reserve System is announcing that Commerzbank has agreed to a cease and desist order, to take certain remedial steps to ensure its compliance with U.S. law in its ongoing operations and to pay a civil monetary penalty of $200 million. The New York State Department of Financial Services (DFS) is announcing Commerzbank has agreed to, among other things, pay a monetary penalty to DFS of $610 million. The OFAC has also levied a fine of $258.6 million, which will be satisfied by payments made to the Justice Department. In total, Commerzbank will pay $1.45 billion in penalties.
“Commerzbank concealed hundreds of millions of dollars in transactions prohibited by U.S. sanctions laws on behalf of Iranian and Sudanese businesses,” said Assistant Attorney General Caldwell. “Commerzbank committed these crimes even though managers inside the bank raised red flags about its sanctions-violating practices. Financial institutions must heed this message: banks that operate in the United States must comply with our laws, and banks that ignore the warnings of those charged with compliance will pay a very steep price.”
“Sanctions laws are designed to protect the national security of the United States and promote our foreign policy interests,” said U.S. Attorney Machen. “Commerzbank undermined the integrity of our financial system and threatened our national security by hiding the business they were doing with entities in Iran and Sudan. The bank tried to skirt our laws by hiding its illegal business with Iranian banks from its own employees in the United States. Today’s resolution demonstrates that there will be consequences when global banks try to profit from the benefits of the U.S. financial system without respecting our laws.”
“Today, Commerz New York stands charged with Bank Secrecy Act criminal offenses for its acute, institutional anti-money laundering deficiencies that made it a conduit for over a billion dollars of the Olympus fraud,” said U.S. Attorney Bharara. “These criminal charges follow a multi-year investigation and a guilty plea by a former Commerzbank Singapore employee who helped set up the structure that allowed for the Olympus fraud. Institutions, not just individuals, have an obligation to follow the law, and anti-money laundering laws in particular are critical for financial institutions to follow. With today’s resolution, the bank, as part of a deferred prosecution agreement, has accepted responsibility in a detailed statement of facts, agreed to continue reforming its anti-money laundering practices, and will pay $300 million that will go to victims of the Olympus fraud.”
“Today’s deferred prosecution agreement is a significant milestone – on an international stage – that reaffirms our clear message to other global financial institutions,” said Chief Weber. “IRS-CI’s work in this investigation – as well as the prior sanction cases – has resulted in fundamental changes in the way banks operate worldwide. IRS-CI and our partners will continue to hold financial institutions accountable for international criminal violations.”
“Today, we announce more charges against yet another bank,” said Assistant Director in Charge Rodriguez. “Commerzbank violated the Bank Secrecy Act designed to prevent the movement of money, often with nefarious intent. Commerzbank enabled Olympus to evade detection for years. And worse yet, failed to create a process to prevent this criminal behavior. Management at banks and financial institutions should heed this warming: This behavior will be investigated, vigorously.”
“We have sanctions in place to prevent rogue nations and terrorists from accessing the U.S. financial system,” said District Attorney Vance. “In order to have teeth, sanctions need to be enforced and Manhattan financial institutions need to be protected from being unwittingly used by bad actors. Over the course of eight settlements, my office and our partners have sent a strong message of enforcement that has led to the transformation of compliance in this area.”
IEEPA Violations
According to admissions contained in the deferred prosecution agreement, from 2002 to 2008, Commerzbank knowingly and willfully moved $263 million through the U.S. financial system on behalf of Iranian and Sudanese entities subject to U.S. economic sanctions. Commerzbank engaged in this criminal conduct using numerous schemes designed to conceal the true nature of the illicit transactions from U.S. regulators.
For example, in the deferred prosecution agreement, Commerzbank acknowledged that it used non-transparent payment messages, known as cover payments, to conceal the involvement of sanctioned entities, and also removed information identifying sanctioned entities from payment messages, in transactions processed through Commerz New York and other financial institutions in the United States. Specifically, in 2003, Commerzbank designated a group of employees in the Frankfurt back office to review and amend Iranian payments so that the payments would not be stopped by U.S. sanctions filters. In doing so, Commerzbank ensured that Iranian payment messages did not mention the Iranian entity, as transactions may have otherwise been stopped pursuant to the U.S. sanctions.
Commerzbank admitted that it hid these practices from Commerz New York. For example, in 2003, when two state-owned Iranian banks wanted to begin routing their U.S. dollar clearing business through Commerzbank, a Commerzbank back office employee emailed other Commerzbank employees directing: “If for whatever reason CB New York inquires why our turnover has increase[d] so dramatically, under no circumstances may anyone mention that there is a connection to the clearing of Iranian banks!!!!!!!!!!!!!.”
Commerzbank admitted that this conduct continued even though its senior management was warned that the bank’s practices for Iranian clients “raised concerns.” For example, in October 2003, the head of Commerzbank’s internal audit division stated in an email to a member of Commerzbank’s senior management that Iranian bank names in payment messages going to the United States were being “neutralized” and warned: “it raises concerns if we consciously reference the suppression of the ordering party in our work procedures in order to avoid difficulties in the processing of payments with the U.S.A.”
In another scheme designed to avoid U.S. sanctions, Commerzbank admitted that, in 2004, it agreed with an Iranian bank client that, rather than sending direct wire payments to the United States, the Iranian bank would pay U.S. beneficiaries with Commerzbank-issued checks listing only the Iranian bank’s account number and address in London with no mention of the Iranian bank’s name.
Additionally, Commerzbank admitted that in 2005, it created a “safe payment solution” for an Iranian shipping company client, which allowed the client to conduct transactions using the U.S. financial system. The safe payment solution involved routing payments through special purpose entities controlled by the Iranian company, which were incorporated outside of Iran and bore no obvious connection to the Iranian client. Commerzbank and its client switched use of such special purpose entities when Commerz New York’s sanctions compliance filters were updated to detect the use of a particular special purpose entity. Commerzbank continued to process payments on behalf the Iranian client even after the client had been designated by OFAC as an entity subject to U.S. sanctions for its involvement in weapons of mass destruction proliferation.
In addition, Commerzbank admitted that, from 2002 to 2007, it provided Sudanese sanctioned entities with access to the U.S. financial system by engaging in similar schemes to remove reference to Sudanese companies from the transaction records.
Olympus Accounting Fraud
Since 2008, and continuing until at least 2013, Commerz New York violated the BSA and its implementing regulations. Specifically, Commerz New York failed to maintain adequate policies, procedures and practices to ensure its compliance with U.S. law, including its obligation to detect and report suspicious activity. As a result of the wilful failure of Commerz New York to comply with U.S. law, a multibillion-dollar securities fraud was operated through Commerzbank and Commerz New York.
Olympus was a Japanese-based manufacturer of medical devices and cameras. Its common stock is listed on the Tokyo Stock Exchange, and its American Depository Receipts trade in the United States. From at least the late 1990s through 2011, Olympus perpetrated a massive accounting fraud designed to conceal from its auditors and investors hundreds of millions of dollars in losses. In September 2012, Olympus and three of its senior executives pleaded guilty in Japan to inflating the company’s net worth by approximately $1.7 billion.
Olympus used Commerzbank and Commerz New York to perpetrate its fraud. Commerzbank, through its branch and affiliates in Singapore, both loaned money to off-balance-sheet entities created by or for Olympus to perpetrate its fraud, and transacted more than $1.6 billion through Commerz New York in furtherance of the fraud.
Commerzbank and Commerz New York were used in furtherance of the Olympus fraud during two different time periods. From approximately 1999 through 2000, Olympus perpetrated its fraud primarily through Commerzbank and its Singapore branch and affiliates. Among other things, Olympus used special purpose vehicles to facilitate the fraud, some of which were created by Commerzbank – including several executives based in Singapore – at Olympus’s direction, using funding from Commerzbank. One of those Singapore-based executives, Chan Ming Fon, was involved in creating the Olympus structure in 1999 while at Commerzbank (Southeast Asia) Ltd., and later managed an Olympus-related entity in 2005-2010 on behalf of which he submitted false confirmations to Olympus’s auditors. In September 2013, Chan pleaded guilty in Manhattan federal court to conspiracy to commit wire fraud.
From 1999 through 2000, Olympus executives asked Commerzbank executives to provide certain false documents to Olympus’s auditors, which would have failed to disclose that certain Olympus assets were pledged as collateral for loans from a Commerzbank affiliate. Commerzbank obtained a legal opinion, which, in the words of one Commerzbank executive written to an Olympus executive, “ma[de] clear that our bank could be subject to both civil and criminal penalties if we are seen to be assisting or facilitating you in the non-disclosure.” Although Commerzbank ultimately declined to provide the false documents, its executives suggested a variety of ways Olympus could nonetheless fail to disclose the pledge.
In 2000, Olympus took its business away from Commerzbank and transferred it to another bank. In 2005, however, Olympus – and its fraud – returned to Commerzbank. From that point until at least 2010, Commerzbank executives expressed strong suspicions about the Olympus transactions and structure. One senior executive worried that Olympus would have to “write off [the] full amount” of the relevant transactions, and wondered about the effects on Commerzbank if “any negative news is splash[ed] on the front page.” A senior legal and compliance officer responsible for Commerzbank’s Singapore branch and affiliates wrote at the time that he was “concerned” about fraud, asset stripping, market manipulation and tax offenses, and that “[i]f the [Olympus] structure and transactions can not [be] explained we must file Suspicious Transaction report as a matter of law and [Commerzbank] policy.”
In March 2010, two wire transfers in the amounts of approximately $455 million and $67 million, respectively, related to the Olympus scheme were processed by Commerz New York through the correspondent account for the Singapore branch of Commerzbank. Those wires caused Commerz New York’s automated AML monitoring software to “alert.”
At the time, Commerz New York had conducted no due diligence on the Singapore branch and affiliates of Commerz, consistent with Commerz's policy of not conducting due diligence on its own branches. In response to the alerts, however, Commerz New York sent a request for information to Commerz in Frankfurt and Commerz's Singapore branch, inquiring about the transactions. The Singapore branch responded in a brief e-mail, dated April 20, 2010, referring to the Olympus-related entities involved in the wires:
GPA Investments Ltd. ist [sic] a Caymen Islands SPV, Creative Dragons SPC-Sub Fund E is a CITS administered fund both of which are part of an SPC structure to manage securities investments for an FATF country based MNC.
According to the Relationship Manager the payment reflects the proceeds from such securities investments to be reinvested.
Commerzbank’s Singapore branch did not relay any of the concerns about the Olympus-sponsored structures and transactions.
Based on its response, Commerz New York closed the alert without taking any further action other than to note that in March 2010 alone, GPA Investments had been involved in six transactions through Commerz New York totalling more than $522 million. In fact, between 1999 and 2010, a total of more than $1.6 billion in furtherance of the Olympus fraud was cleared through Commerz New York. Commerz New York failed to file a SAR in the United States concerning Olympus or any of the Olympus-related entities until November 2013 – more than two years after the Olympus accounting fraud was revealed.
Commerz New York had the same designated BSA Officer continuously from approximately 2003 until early 2014. Over those years, she raised concerns about AML compliance, both to her superiors at Commerz New York and with Commerz Frankfurt.
Under the BSA, a financial institution is required to detect and report suspicious activity. This is accomplished, in part, through conducting due diligence, and enhanced due diligence where appropriate, of the correspondent relationship – which Commerz New York failed to do – and by sending requests for further information to the correspondent bank when potentially suspicious transactions are detected. Commerz New York frequently had difficulties getting responses to requests for information generated in connection with automated transaction monitoring “alerts.” Because requests for information went unanswered for as much as eight months without SARs being filed, alerts were often closed without any response to the pending request. As a result of these deficiencies, Commerz New York cleared numerous AML “alerts” based on its own perfunctory Internet searches and searches of public source databases but without ever receiving responses to its requests for information.
On June 24, 2010, a Commerz New York-based compliance officer who had primary responsibility for automated transaction monitoring wrote in an e‑mail to the BSA Officer and the Head of Compliance in New York (who had previously served as the Head of Compliance in Asia) that “we currently have 90 alerts a day,” with “808 alerts outstanding,” which “could lead to a possible back log.” He continued, “I also wanted to make you aware that we have currently over 130 Frankfurt RFIs [i.e., requests for information] outstanding,” noting “a decrease in response to the RFIs” from Frankfurt. The following day, the Head of Compliance in New York forwarded the e‑mail to Commerz’s Global Head of Compliance, adding that “things are not getting better with regards to th[ose] findings. (see below). I will forward you the DRAFT memo on potential revision of staffing needs.” Although the Global Head of Compliance thereafter instituted new procedures designed to increase the speed of responses to RFIs from New York, problems persisted with the timely flow of information from business units outside the United States to compliance officers in New York.
Commerzbank and Commerz New York also failed to conduct adequate due diligence or to obtain “know your customer” information with respect to correspondent bank accounts for Commerzbank’s own foreign branches and affiliates. These systemic deficiencies reflected a failure to maintain adequate policies, procedures and controls to ensure compliance with the BSA and regulations prescribed thereunder and to guard against money laundering.
This case was investigated by the IRS-Criminal Investigation’s Washington D.C. Field Division and FBI’s New York Field Office. This case is being prosecuted by Trial Attorney Sarah Devlin of the Criminal Division’s Asset Forfeiture and Money Laundering Section, Assistant U.S. Attorneys Matt Graves, Maia Miller, Crystal Boodoo and Zia Faruqui of the District of Columbia, and Assistant U.S. Attorney Bonnie Jonas of the Southern District of New York.
The New York County District Attorney’s Office also conducted its own investigation in conjunction with the Justice Department. The Federal Reserve Bank of New York, DFS and OFAC provided substantial assistance with this investigation.
Commerzbank Deferred Prosecution Agreement
Commerzbank Information
Columbus Grove Bank VP Charged with Making False Financial StatementsRead the Press Release
DAYTON – A federal grand jury returned a three-count indictment against Barry J. Von Der Embse, 53 of Kalida, Ohio, alleging three separate counts of making false financial statements in an indictment returned in Dayton. Von Der Embse is charged with making three separate false statements to the Union Bank Company of Columbus Grove, Ohio in the form of personal financial statements in 2004, 2006 and 2007 while employed as a commercial loan officer with the bank.
Carter M. Stewart, United States Attorney for the Southern District of Ohio, Angela L. Byers, Special Agent in Charge, Federal Bureau of Investigation (FBI), Cincinnati Field Office and Joseph Moriarty, Special Agent in Charge, Federal Deposit Insurance Corporation (FDIC) Office of Inspector General, Chicago Field Office, announced the indictment returned today.
The indictment alleges that while employed as a commercial loan officer with Union Bank Company of Columbus Grove, Ohio, Von Der Embse filed materially false personal financial statements. Specifically, Von Der Embse allegedly failed to reveal his ownership of an 85-acre parcel of farmland in Shelby County, Ohio, including 456 head of cattle valued at approximately $421,800. It is also alleged that the defendant did not reveal liabilities in the form of a $12,600 farm loan and a $344,362 line of credit.
Each count of making false financial statements is a crime punishable by up to 30 years in prison and a $1 million fine.
U.S. Attorney Stewart commended the investigation of this case by the FBI and FDIC Office of Inspector General, and Assistant U.S. Attorney Dwight Keller, who is prosecuting the case.
An indictment merely contains allegations, and the defendant is presumed innocent unless proven guilty in a court of law.
Child Exploitation Charges Filed Against Morgantown ManRead the Press Release
PHILADELPHIA - Robert Wendell Landis, 30, of Morgantown, PA, was charged today by indictment with possession, receipt and production of child pornography and online enticement, announced United States Attorney Zane David Memeger.
If convicted the defendant faces a maximum possible sentence of life imprisonment, with a mandatory minimum of 15 years imprisonment, lifetime supervised release, a $1,250,000 fine and a $500 special assessment.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by United States Attorneys’ Offices and the Criminal Division's Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
The case was investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant United States Attorney Roberta Benjamin.
An indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Captain of Genovese Crime Family Pleads Guilty in Manhattan Federal Court to RacketeeringRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced today the guilty plea of DANIEL PAGANO, a Captain of the Genovese Organized Crime Family of La Cosa Nostra (the “Genovese Crime Family”). PAGANO pled guilty before U.S. District Judge Ronnie Abrams to participating in a racketeering conspiracy. As part of his plea, PAGANO admitted to being a leader of the criminal enterprise. PAGANO is scheduled to be sentenced by Judge Abrams on July 10, 2015.
Manhattan U.S. Attorney Preet Bharara said: “Danny Pagano, a capo in the Genovese Crime family, has now admitted to being a leader in a racketeering conspiracy that spanned nearly five years. Today’s plea demonstrates that La Cosa Nostra is not a thing of the past or a relic of movie myth. Our efforts with our law enforcement partners are aimed at making it so.”
According to the Indictment, the plea agreement, and statements made during the plea proceeding:
The Genovese Crime Family is part of a nationwide criminal organization known by various names, including the “Mafia” and “La Cosa Nostra” (“LCN”), which operates through entities known as “Families.” The Genovese Crime Family operates through groups of individuals known as “crews” and “regimes,” most of which are based in New York City. Each “crew” has as its leader a person known as a “Caporegime,” “Capo,” “Captain,” or “Skipper,” who is responsible for supervising the criminal activities of his crew and providing “Soldiers” and associates with support and protection. In return, the Capo typically receives a share of the illegal earnings of each of his crew’s Soldiers and associates, which is sometimes referred to as Atribute.@ DANIEL PAGANO is a Caporegime or Captain in the Genovese Crime Family.
Each crew consists of “made” members, sometimes known as “Soldiers,” “wiseguys,” “friends of ours,” and “good fellows.” Soldiers are aided in their criminal endeavors by other trusted individuals, known as “associates,” who sometimes are referred to as “connected” or identified as “with” a Soldier or other member of the Family. Associates participate in the various activities of the crew and its members. In order for an associate to become a made member of the Family, the associate must first be of Italian descent and typically needed to demonstrate the ability to generate income for the Family and/or the willingness to commit acts of violence.
From 2009 through August 2014, PAGANO, along with other members and associates of the Genovese Crime Family, committed a wide array of crimes including operating an illegal gambling business. PAGANO, a Captain, exercised a leadership role within the Family by, among other things, settling disputes between and among associates of the Family.
PAGANO, 61, of Rockland County, faces a maximum sentence of 20 years in prison. The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
Mr. Bharara thanked the Federal Bureau of Investigation (“FBI”), the Rockland County District Attorney’s Office, the Drug Enforcement Administration, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, the New York City Police Department (“NYPD”), and the New York State Police.
This investigation was a result of the Department of Justice's Organized Crime and Drug Enforcement Task Force Program, and it combined the resources and expertise of its member federal agencies in cooperation with local law enforcement. The investigation was conducted by the FBI-NYPD Joint Organized Crime Task Force.
The prosecution is being handled by the Office’s Violent and Organized Crime Unit. Assistant United States Attorneys Jennifer Burns, Abigail Kurland, and Rahul Mukhi are in charge of the prosecution.
COMMERZBANK AG ADMITS TO SANCTIONS AND BANK SECRECY VIOLATIONS, AGREES TO FORFEIT $563 MILLION AND PAY $79 MILLION FINE Combined with Payments to Regulators, Commerzbank to Pay $1.45 BillionRead the Press Release
WASHINGTON – Commerzbank AG, a global financial institution headquartered in Frankfurt, and its U.S. branch, Commerzbank AG New York Branch (Commerz New York), have agreed to forfeit $563 million, pay a $79 million fine and enter into a deferred prosecution agreement with the Justice Department for violations of the International Emergency Economic Powers Act (IEEPA) and the Bank Secrecy Act (BSA). The bank has also entered into settlement agreements with the Treasury Department’s Office of Foreign Assets Control (OFAC) and the Board of Governors of the Federal Reserve System.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Ronald C. Machen Jr. of the District of Columbia, U.S. Attorney Preet Bharara of the Southern District of New York, Assistant Director in Charge Diego Rodriguez of the FBI’s New York Field Office, Chief Richard Weber of the Internal Revenue Service Criminal Investigation (IRS-CI) and District Attorney Cyrus R. Vance Jr. of New York County made the announcement.
In entering the deferred prosecution agreement, Commerzbank admitted and accepted responsibility for its criminal conduct in violation of IEEPA and the BSA, and Commerz New York admitted its criminal conduct in violation of the BSA. Commerzbank further agreed to pay $263 million in forfeiture and a fine of $79 million for the IEEPA violations, and to pay $300 million in forfeiture in connection with the BSA violations, which will be remitted to the victims of a multi-billion dollar securities fraud scheme that was permitted to operate through Commerzbank. Commerzbank also agreed to implement rigorous internal controls and to cooperate fully with the Justice Department, including by reporting any criminal conduct by an employee.
A four-count felony criminal information was filed today in the District of Columbia charging Commerzbank and Commerz New York with knowingly and willfully conspiring to commit violations of IEEPA and three violations of the BSA for willfully failing to have an effective anti-money laundering (AML) program, willfully failing to conduct due diligence on its foreign correspondent accounts, and willfully failing to file suspicious activity reports. Assuming the bank’s continued compliance with the deferred prosecution agreement, the government has agreed to defer prosecution for a period of three years, after which time, the government would seek to dismiss the charges.
The New York County District Attorney’s Office is also announcing today that Commerzbank has entered into a deferred prosecution agreement, and in the corresponding factual statement, Commerzbank admitted that it violated New York State law by falsifying the records of New York financial institutions. In addition, the Board of Governors of the Federal Reserve System is announcing that Commerzbank has agreed to a cease and desist order, to take certain remedial steps to ensure its compliance with U.S. law in its ongoing operations and to pay a civil monetary penalty of $200 million. The New York State Department of Financial Services (DFS) is announcing Commerzbank has agreed to, among other things, pay a monetary penalty to DFS of $610 million. The OFAC has also levied a fine of $258.6 million, which will be satisfied by payments made to the Justice Department. In total, Commerzbank will pay a total of $1.45 billion in penalties.
“Commerzbank concealed hundreds of millions of dollars in transactions prohibited by U.S. sanctions laws on behalf of Iranian and Sudanese businesses,” said Assistant Attorney General Caldwell. “Commerzbank committed these crimes even though managers inside the bank raised red flags about its sanctions-violating practices. Financial institutions must heed this message: banks that operate in the United States must comply with our laws, and banks that ignore the warnings of those charged with compliance will pay a very steep price.”
“Sanctions laws are designed to protect the national security of the United States and promote our foreign policy interests,” said U.S. Attorney Machen. “Commerzbank undermined the integrity of our financial system and threatened our national security by hiding the business they were doing with entities in Iran and Sudan. The bank tried to skirt our laws by hiding its illegal business with Iranian banks from its own employees in the United States. Today’s resolution demonstrates that there will be consequences when global banks try to profit from the benefits of the U.S. financial system without respecting our laws.”
Manhattan U.S. Attorney Preet Bharara said: “Today, Commerzbank stands charged with Bank Secrecy Act criminal offenses for its acute, institutional anti-money laundering deficiencies that allowed over a billion dollars of the Olympus fraud to flow through its New York office. These criminal charges follow a multi-year investigation and a guilty plea by a former Commerzbank Singapore employee who helped set up the structure that allowed for the Olympus fraud. Institutions, not just individuals, have an obligation to follow the law, and anti-money laundering laws in particular are critical for financial institutions to follow. With today’s resolution, the bank, as part of a deferred prosecution agreement, has accepted responsibility in a detailed statement of facts, agreed to continue reforming its anti-money laundering practices, and will pay $300 million that will go to victims of the Olympus fraud.”
“Today’s deferred prosecution agreement is a significant milestone – on an international stage – that reaffirms our clear message to other global financial institutions,” said IRS-CI Chief Weber. “IRS-CI’s work in this investigation – as well as the prior sanction cases – has resulted in fundamental changes in the way banks operate worldwide. IRS-CI and our partners will continue to hold financial institutions accountable for international criminal violations.”
“We have sanctions in place to prevent rogue nations and terrorists from accessing the U.S. financial system. In order to have teeth, sanctions need to be enforced and Manhattan financial institutions need to be protected from being unwittingly used by bad actors,” said Manhattan District Attorney Vance. “Over the course of eight settlements, my Office and our partners have sent a strong message of enforcement that has led to the transformation of compliance in this area.”
IEEPA Violations
According to admissions contained in the deferred prosecution agreement, from 2002 to 2008, Commerzbank knowingly and willfully moved $263 million through the U.S. financial system on behalf of Iranian and Sudanese entities subject to U.S. economic sanctions. Commerzbank engaged in this criminal conduct using numerous schemes designed to conceal the true nature of the illicit transactions from U.S. regulators.
For example, in the deferred prosecution agreement, Commerzbank acknowledged that it used non-transparent payment messages, known as cover payments, to conceal the involvement of sanctioned entities, and also removed information identifying sanctioned entities from payment messages, in transactions processed through Commerz New York and other financial institutions in the United States. Specifically, in 2003, Commerzbank designated a group of employees in the Frankfurt back office to review and amend Iranian payments so that the payments would not be stopped by U.S. sanctions filters. In doing so, Commerzbank ensured that Iranian payment messages did not mention the Iranian entity, as transactions may have otherwise been stopped pursuant to the U.S. sanctions.
Commerzbank admitted that it hid these practices from Commerz New York. For example, in 2003, when two state-owned Iranian banks wanted to begin routing their U.S. dollar clearing business through Commerzbank, a Commerzbank back office employee emailed other Commerzbank employees directing: “If for whatever reason CB New York inquires why our turnover has increase[d] so dramatically, under no circumstances may anyone mention that there is a connection to the clearing of Iranian banks!!!!!!!!!!!!!.”
Commerzbank admitted that this conduct continued even though its senior management was warned that the bank’s practices for Iranian clients “raised concerns.” For example, in October 2003, the head of Commerzbank’s internal audit division stated in an email to a member of Commerzbank’s senior management that Iranian bank names in payment messages going to the United States were being “neutralized” and warned: “it raises concerns if we consciously reference the suppression of the ordering party in our work procedures in order to avoid difficulties in the processing of payments with the U.S.A.”
In another scheme designed to avoid U.S. sanctions, Commerzbank admitted that, in 2004, it agreed with an Iranian bank client that, rather than sending direct wire payments to the United States, the Iranian bank would pay U.S. beneficiaries with Commerzbank-issued checks listing only the Iranian bank’s account number and address in London with no mention of the Iranian bank’s name.
Additionally, Commerzbank admitted that in 2005, it created a “safe payment solution” for an Iranian shipping company client, which allowed the client to conduct transactions using the U.S. financial system. The safe payment solution involved routing payments through special purpose entities controlled by the Iranian company, which were incorporated outside of Iran and bore no obvious connection to the Iranian client. Commerzbank and its client switched use of such special purpose entities when Commerz New York’s sanctions compliance filters were updated to detect the use of a particular special purpose entity. Commerzbank continued to process payments on behalf the Iranian client even after the client had been designated by OFAC as an entity subject to U.S. sanctions for its involvement in weapons of mass destruction proliferation.
In addition, Commerzbank admitted that, from 2002 to 2007, it provided Sudanese sanctioned entities with access to the U.S. financial system by engaging in similar schemes to remove reference to Sudanese companies from the transaction records.
Olympus Accounting Fraud
Since 2008, and continuing until at least in or about 2013, Commerz New York violated the BSA and its implementing regulations. Specifically, Commerz New York failed to maintain adequate policies, procedures, and practices to ensure its compliance with United States law, including its obligation to detect and report suspicious activity. As a result of the willful failure of Commerz New York to comply with United States law, a multi-billion dollar securities fraud was operated through Commerzbank and Commerz New York.
Olympus was a Japanese-based manufacturer of medical devices and cameras. Its common stock is listed on the Tokyo Stock Exchange, and its American Depository Receipts trade in the United States. From at least the late 1990s through 2011, Olympus perpetrated a massive accounting fraud designed to conceal from its auditors and investors hundreds of millions of dollars in losses. In September 2012, Olympus and three of its senior executives pleaded guilty in Japan to inflating the company’s net worth by approximately $1.7 billion.
Olympus used Commerzbank and Commerz New York to perpetrate its fraud. Commerzbank, through its branch and affiliates in Singapore, both loaned money to off-balance-sheet entities created by or for Olympus to perpetrate its fraud, and transacted more than $1.6 billion through Commerz New York in furtherance of the fraud.
Commerzbank and Commerz New York were used in furtherance of the Olympus fraud during two different time periods. From approximately 1999 through 2000, Olympus perpetrated its fraud primarily through Commerzbank and its Singapore branch and affiliates. Among other things, Olympus used special purpose vehicles to facilitate the fraud, some of which were created by Commerzbank – including several executives based in Singapore – at Olympus’s direction, using funding from Commerzbank. One of those Singapore-based executives, Chan Ming Fon, was involved in creating the Olympus structure in 1999 while at Commerzbank (Southeast Asia) Ltd., and later managed an Olympus-related entity in 2005-2010 on behalf of which he submitted false confirmations to Olympus’s auditors. In September 2013, Chan pleaded guilty in Manhattan federal court to conspiracy to commit wire fraud.
From 1999 through 2000, Olympus executives asked Commerzbank executives to provide certain false documents to Olympus’s auditors, which would have failed to disclose that certain Olympus assets were pledged as collateral for loans from a Commerzbank affiliate. Commerzbank obtained a legal opinion, which, in the words of one Commerzbank executive written to an Olympus executive, “ma[de] clear that our bank could be subject to both civil and criminal penalties if we are seen to be assisting or facilitating you in the non-disclosure.” Although Commerzbank ultimately declined to provide the false documents, its executives suggested a variety of ways in which Olympus could nonetheless fail to disclose the pledge.
In 2000, Olympus took its business away from Commerzbank to another bank. In 2005, however, Olympus – and its fraud – returned to Commerzbank. From that point until at least 2010, Commerzbank executives expressed strong suspicions about the Olympus transactions and structure. One senior executive worried that Olympus would have to “write off [the] full amount” of the relevant transactions, and wondered about the effects on Commerzbank if “any negative news is splash[ed] on the front page.” A senior legal and compliance officer responsible for Commerzbank’s Singapore branch and affiliates wrote at the time that he was “concerned” about fraud, asset stripping, market manipulation and tax offenses, and that “[i]f the [Olympus] structure and transactions can not [be] explained we must file Suspicious Transaction report as a matter of law and [Commerzbank] policy.” Another senior compliance officer – who would later become head of compliance at Commerz New York – internally reported that a senior Singapore-based executive at Commerzbank had stated that “he did not typically ask questions of clients as he felt he was at less risk by not knowing.” The compliance officer responded by “repeat[ing] that it is unacceptable for senior managers to turn blind eyes or otherwise remain ignorant.”
In March 2010, two wire transfers in the amounts of approximately $455 million and $67 million, respectively, related to the Olympus scheme were processed by Commerz New York through the correspondent account for the Singapore branch of Commerzbank. Those wires caused Commerz New York’s automated AML monitoring software to “alert.”
At the time, Commerz New York had conducted no due diligence on the Singapore branch and affiliates of Commerzbank, consistent with Commerzbank’s policy of not conducting due diligence on its own branches and affiliates. In response to the alerts, however, Commerz New York sent a request for information to Commerz Frankfurt and Commerzbank’s Singapore branch, inquiring about the transactions. The Singapore branch responded in a brief e-mail, dated April 20, 2010, referring to the Olympus-related entities involved in the wires:
GPA Investments Ltd. ist [sic] a Caymen Islands SPV, Creative Dragons SPC-Sub Fund E is a CITS administered fund both of which are part of an SPC structure to manage securities investments for an FATF country based MNC.
According to the Relationship Manager the payment reflects the proceeds from such securities investments to be reinvested.
Commerzbank’s Singapore branch did not relay any of the concerns about the Olympus-sponsored structures and transactions.
Based on its response, Commerz New York closed the alert without taking any further action other than to note that in March 2010 alone, GPA Investments had been involved in six transactions through Commerz New York totalling more than $522 million. In fact, between 1999 and 2010, a total of more than $1.6 billion in furtherance of the Olympus fraud was cleared through Commerz New York. Commerz New York failed to file a SAR in the United States concerning Olympus or any of the Olympus-related entities until November 2013 – more than two years after the Olympus accounting fraud was revealed.
The same individual served as Commerz New York’s designated BSA Officer continuously from approximately 1996 or 1997 until early 2014. Over those years, she raised concerns about AML compliance, both to her superiors at Commerz New York, and with Commerz Frankfurt.
Under the BSA, a financial institution is required to detect and report suspicious activity. This is accomplished, in part, through conducting due diligence, and enhanced due diligence where appropriate, of the correspondent relationship – which Commerz New York failed to do – and by sending requests for further information to the correspondent bank when potentially suspicious transactions are detected. Commerz New York frequently had difficulties getting responses to requests for information generated in connection with automated transaction monitoring “alerts.” Because requests for information went unanswered for as much as eight months without SARs being filed, alerts were often closed without any response to the pending request. As a result of these deficiencies, Commerz New York cleared numerous AML “alerts” based on its own perfunctory internet searches and searches of public source databases but without ever receiving responses to its requests for information.
On June 24, 2010, a Commerz New York -based compliance officer who had primary responsibility for automated transaction monitoring wrote in an e‑mail to the BSA Officer and the Head of Compliance in New York (who had previously served as the Head of Compliance in Asia) that “we currently have 90 alerts a day,” with “808 alerts outstanding,” which “could lead to a possible back log.” He continued, “I also wanted to make you aware that we have currently over 130 Frankfurt RFIs [i.e., requests for information] outstanding,” noting “a decrease in response to the RFIs” from Frankfurt. The following day, the Head of Compliance in New York forwarded the e‑mail to Commerz’s Global Head of Compliance, adding that “things are not getting better with regards to th[ose] findings. (see below). I will forward you the DRAFT memo on potential revision of staffing needs.” Although the Global Head of Compliance thereafter instituted new procedures designed to increase the speed of responses to RFIs from New York, problems persisted with the timely flow of information from business units outside the U.S. to compliance officers in New York.
Commerzbank and Commerz New York also failed to conduct adequate due diligence or to obtain “know your customer” information with respect to correspondent bank accounts for Commerzbank’s own foreign branches and affiliates. These systemic deficiencies reflected a failure to maintain adequate policies, procedures, and controls to ensure compliance with the BSA and regulations prescribed thereunder and to guard against money laundering.
This case was investigated by the IRS-Criminal Investigation’s Washington D.C. Field Division and FBI’s New York Field Office. This case is being prosecuted by Trial Attorney Sarah Devlin of the Criminal Division’s Asset Forfeiture and Money Laundering Section, Assistant U.S. Attorneys Matt Graves, Maia Miller and Zia Faruqui of the District of Columbia, and Assistant U.S. Attorney Bonnie Jonas of the Southern District of New York.
The New York County District Attorney’s Office also conducted its own investigation in conjunction with the Justice Department. The Federal Reserve Bank of New York, DFS and OFAC provided substantial assistance with this investigation.
15-042
Brighton Man Arrested for Production, Transportation and Possession of Child PornographyRead the Press Release
Defendant accused of taking a picture of the sexual abuse of an infant
DENVER – Jamie Sailas, age 29, of Brighton, Colorado, was arrested this morning without incident by federal agents with U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI), the U.S Attorney’s Office and HSI announced. The defendant was arrested based on a Criminal Complaint charging one count of production of child pornography, one count of transportation of child pornography, and one count of possession of child pornography. Sailas appeared before a U.S. Magistrate Judge where he was advised of his rights, and the charges pending against him. He is being held in custody pending a detention and preliminary hearing, scheduled for March 17, 2015 at 10:00 a.m.
According to an HSI special agent’s affidavit, in October of 2013 an HSI agent in Washington, DC was conducting proactive undercover investigative activity on the internet. During his investigative work, he encountered a link to a video of a minor child with black marker on her torso with obscene words and an arrow pointing down to her genitalia. It was determined that this image was located in a Dropbox account. The agent learned that Dropbox had independently contacted the National Center for Missing and Exploited Children (NCMEC). Further investigation by HSI revealed that the subscriber to the Dropbox account was Jaime Sailas, who was determined to reside at an address in Brighton, Colorado.
As the investigation progressed it was determined that in addition to Dropbox, Sailas also allegedly used two Google email addresses to transport child pornography. He transported thousands of child pornographic images and videos. He used an email account to send a nude picture of his genitalia to someone he met online. Sailas also worked at a Brighton business named Game Trader. It was determined that child pornography activity was connected to both his home and the business. No business computers were compromised.
In connection to the investigation, agents and officers executed a search warrant at Sailas’ residence. It was discovered that in addition to Sailas, there were five additional adults and one minor child residing in the home. Sailas did have his own bedroom, which was locked. In that room multiple devices containing child pornography were discovered. Also, an image of what appeared to be an adult male’s genitalia inserted into the mouth of an infant was located on one of his devices. The genitalia in this image of child pornography appears to be consistent with the physical characteristics of the images Sailas sent via one of his email accounts. This photo was allegedly produced by Sailas.
“Those who sexually abuse our children, especially those who use infants to produce child pornography, deserve the full weight of federal law enforcement to stop them,” said U.S. Attorney John Walsh. “Thanks to the work of HSI and prosecutors from the U.S. Attorney’s Office, an individual responsible for such child pornography has been arrested and charged with a crime.”
“Since the crimes associated with sexually victimizing children are so heinous, Homeland Security Investigations aggressively investigates these crimes with our law enforcement partners at the local, state, federal and international levels to identify and pursue prosecution against these child predators worldwide,” said David A. Thompson, special agent in charge of HSI Denver. “Our investigations help bring justice to these innocent victimized children.”
If convicted of production of child pornography, the defendant faces not less than 15 years, and not more than 30 years in federal prison, and up to a $250,000 fine. If convicted of transportation of child pornography, the defendant faces not less than 5 years, and not more than 20 years imprisonment, and up to a $250,000 fine. If convicted of possession of child pornography, the defendant faces not more than 10 years in federal prison, and up to a $250,000 fine.
This case was investigated by HSI with support from the Brighton Police Department.
This case is being prosecuted by Assistant U.S. Attorney Alecia L. Riewerts.
A Criminal Complaint is a probable cause charging document. Anyone accused of committing a felony violation of federal law has a Constitutional right to be indicted by a federal grand jury.
The charges contained in the Criminal Complaint are allegations, and the defendant is presumed innocent unless and until proven guilty.
Berkeley County couple convicted of tax evasionRead the Press Release
MARTINSBURG, WEST VIRGINIA – Frank J. Picone, 49, and Toni A. Picone, 44, both of Falling Waters, West Virginia, were convicted in federal court today after they admitted to tax evasion, United States Attorney William J. Ihlenfeld, II, announced.
The defendants, who own Rocky’s New York Pizza in Hagerstown, Maryland, each admitted that they failed to file personal tax returns for tax years 2010 and 2011. They each pled guilty today to two counts of “Failure to File a Personal Income Tax Return.” They each face up to one year in prison and a fine of up to $100,000.00 on each count. Under the Federal Sentencing Guidelines, the actual sentence imposed will be based upon the seriousness of the offenses and the prior criminal history, if any, of the defendants.
Assistant U.S. Attorney Robert McWilliams, Jr. is prosecuting the case on behalf of the government. The Internal Revenue Service - Criminal Investigation is leading the investigation.
U.S. Magistrate Judge Robert W. Trumble presided.
Baltimore County Felon Exiled to 20 Years in Prison for Illegally Obtaining Firearms Through Straw PurchasesRead the Press Release
Baltimore, Maryland – U.S. District Judge J. Frederick Motz sentenced Jeffrey Gregory, age 48, of Sparks, Maryland, today to 20 years in prison, followed by three years of supervised release, in connection with a scheme in which another individual engaged in “straw purchases” to obtain guns for Gregory, a previously convicted felon who was prohibited from possessing firearms.
The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge William P. McMullan of the Bureau of Alcohol, Tobacco, Firearms and Explosives - Baltimore Field Division; Chief James W. Johnson of the Baltimore County Police Department; and Baltimore County State’s Attorney Scott Shellenberger.
According to the facts presented at Gregory’s plea hearing, on three occasions from January 2008 through March 2009, Gregory went with his co-conspirator to have the co-conspirator engage in a “straw purchase” of a firearm on Gregory’s behalf. Gregory was unable to purchase firearms himself because he had a prohibiting criminal conviction. During each visit to the gun stores, the co-conspirator filled out federal and state paperwork, which federal firearms licensed dealers (FFLs) are required by federal law to prepare and maintain as part of each firearm sale.
One of those forms, ATF Form 4473, notifies the buyer that purchasing a firearm on behalf of another person – a straw purchase - is unlawful. In each form, the buyer is asked “[a]re you the actual transferee/buyer of the firearm ....?” The question is followed by a warning in bold print that states: “Warning: You are not the actual buyer if you are acquiring the firearm(s) on behalf of another person.” Finally, the buyer’s certification explicitly states that falsely answering “yes” to the actual buyer question is a crime punishable as a felony.
On each occasion that Gregory and the co-conspirator went to gun stores, Gregory provided the co-conspirator with money, told the co-conspirator what firearm she should obtain, and instructed the co-conspirator to represent herself as the true buyer, which the co-conspirator did. For example, Gregory admitted that on July 8, 2008, the co-conspirator made false statements on a Form 4473 in order to purchase a Ruger .45 caliber firearm for Jeffrey Gregory from an FFL in Baltimore County, Maryland. On July 17, 2008, the co-conspirator picked up the firearm from the dealer and gave the gun to Gregory.
On January 4, 2008, the co-conspirator made false statements on a Form 4473 in order to acquire a Springfield .40 caliber firearm, for Jeffrey Gregory. On January 11, 2008, the co-conspirator picked up the firearm and gave it to Gregory. According to court documents, that .40 caliber gun was used to commit a murder in Baltimore County.
Gregory was previously sentenced to 93 months in federal prison for unrelated charges: possession of a firearm by a convicted felon; and possession of a firearm in furtherance of drug trafficking. In that case, Gregory brandished a handgun during a fight at a York Road restaurant. The resulting investigation recovered the gun used during the fight, as well as another gun and drugs from Gregory’s home.
United States Attorney Rod J. Rosenstein commended the ATF, 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 Michael C. Hanlon and Special Assistant U.S. Attorney Piper F. McKeithen, a cross-designated Baltimore City Assistant State’s Attorney, who prosecuted the case.
Audiologist Sentenced to Two Years in Prison for Tax Fraud Ordered to Pay over $1 Million in RestitutionRead the Press Release
SAN FRANCISCO – Michael Ryan Trythall was sentenced today to twenty-four months in prison for tax evasion, and ordered to pay restitution of $1,006,035, announced U.S. Attorney Melinda Haag and Internal Revenue Service, Criminal Investigation, Special Agent in Charge José M. Martinez.
Trythall, a 37 year-old resident of Los Angeles, pleaded guilty in November 2014 to tax evasion. According to the plea agreement, Trythall, a professional audiologist, embezzled more than $750,000 between 2009 and 2012 from his then-employer, a San Francisco audiology practice. During that period, Trythall performed bookkeeping services for his employer and had access to the business’s financial records. He was authorized to print business checks for others to sign, but he was not authorized to issue or sign checks on his own. Nevertheless, Trythall issued business checks payable to himself, forged the signature of authorized signers, and deposited the checks into his personal bank accounts. Trythall used the money he embezzled to pay for vacations and to shop at luxury retailers.
Trythall concealed his embezzlement by omitting payments to himself from the business’s books, making false entries into the business’s books, and failing to disclose his embezzlement, even when confronted by others. Also, Trythall did not pay income taxes on any of the money he embezzled resulting in tax due and owing of over $230,000 for calendar years 2009 through 2011.
Trythall was charged by Information on September 25, 2014, with three counts of tax evasion. He pleaded guilty to one count.
The sentence was handed down by the Honorable Edward M. Chen, United States District Judge, in San Francisco. In addition to the twenty-four month sentence, Trythall also was sentenced to a one-year period of supervised release and ordered to pay restitution of $1,006,035 ($756,577 of which is to be paid to his former employer and the remaining $249,458 to the Internal Revenue Service). In addition, Trythall agreed he owed $173,496 in civil fraud penalties to the Internal Revenue Service.
Assistant U.S. Attorney Michael G. Pitman is prosecuting the case. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.
Attorney General Holder Statement on the Overnight Shooting of Two Officers in Ferguson, MissouriRead the Press Release
Attorney General Eric Holder released the following statement Thursday on the overnight shooting of two officers in Ferguson, Missouri:
“This heinous assault on two brave law enforcement officers was inexcusable and repugnant. I condemn violence against any public safety officials in the strongest terms, and the Department of Justice will never accept any threats or violence directed at those who serve and protect our communities—from this cowardly action, to the killing of an officer in Philadelphia last week while he was buying a game for his son, to the tragic loss of a Deputy U.S. Marshal in the line of duty in Louisiana earlier this week. Such senseless acts of violence threaten the very reforms that nonviolent protesters in Ferguson and around the country have been working towards for the past several months. We wish these injured officers a full and speedy recovery. We stand ready to offer any possible aid to an investigation into this incident, including the department's full range of investigative resources. And we will continue to stand unequivocally against all acts of violence against cops whenever and wherever they occur.”
Attorney General Holder Statement on the Overnight Shooting of Two Officers in Ferguson, MissouriRead the Press Release
WASHINGTON – Attorney General Eric Holder released the following statement Thursday on the overnight shooting of two officers in Ferguson, Missouri:
“This heinous assault on two brave law enforcement officers was inexcusable and repugnant. I condemn violence against any public safety officials in the strongest terms, and the Department of Justice will never accept any threats or violence directed at those who serve and protect our communities—from this cowardly action, to the killing of an officer in Philadelphia last week while he was buying a game for his son, to the tragic loss of a Deputy U.S. Marshal in the line of duty in Louisiana earlier this week. Such senseless acts of violence threaten the very reforms that nonviolent protesters in Ferguson and around the country have been working towards for the past several months. We wish these injured officers a full and speedy recovery. We stand ready to offer any possible aid to an investigation into this incident, including the department's full range of investigative resources. And we will continue to stand unequivocally against all acts of violence against cops whenever and wherever they occur.”
Attorney General Holder Remarks Announcing Six Pilot Cities for the National Initiative for Building Community Trust and JusticeRead the Press Release
Thank you all for being here this afternoon. I want to address the heinous attacks that occurred against two brave law enforcement officers in Ferguson, Missouri, last night.
I unequivocally condemn these repugnant attacks. I know that all of us in the law enforcement family—and all Americans across the country—are hoping and praying for a speedy recovery. And I stand ready to offer the full investigative resources of the Department of Justice to find the perpetrators of this attack and hold them accountable.
You know, seeing this attack last night turned my stomach—because in the week since the Justice Department released its pattern-and-practice report on Ferguson, we have begun to see really important signs of progress. There were good-faith steps being taken within the city’s leadership to move in a new, more cooperative direction that is beneficial to law enforcement and to community residents. We still have a long way to go to bring about the systemic change needed—but the early indications had been truly positive.
What happened last night was a pure ambush. This was not someone trying to bring healing to Ferguson, but someone who wants to stoke unrest. This disgusting and cowardly attack might have been intended to unravel any sense of progress, but I hope that doesn’t happen. Incidents like the one we have witnessed throw into sharp relief why conversations like the one we convened today—to build trust between law enforcement and community members—are so important.
One year ago, the Obama Administration launched the groundbreaking My Brother’s Keeper initiative, which seeks to create opportunities for all young people in this country to improve their lives and reach their full potential—no matter who they are or where they live. As a part of this effort, the My Brother’s Keeper Task Force recommended that the Justice Department establish a program to help resolve long-standing tensions between law enforcement officers and the communities they serve. And six months ago, I was proud to announce the National Initiative for Building Community Trust and Justice—a nationwide program designed to enhance procedural justice, reduce bias and support reconciliation.
Through the committed work of Department leaders like Assistant Attorney General Karol Mason of the Office of Justice Programs—who is here with us today—and with the partnership of Department components including the COPS Office, the Civil Rights Division, the Community Relations Service and the Office on Violence Against Women, we are redoubling our commitment to restoring faith in the integrity of law enforcement wherever that faith has been eroded.
Today, I am announcing three significant new steps we are taking as part of this exciting initiative. First, we have selected six cities to serve as pilot sites for innovative strategies to strengthen bonds between police and citizens they serve: Birmingham, Alabama; Stockton, California; Gary, Indiana; Minneapolis, Minnesota; Pittsburgh, Pennsylvania; and Fort Worth, Texas. By helping to develop programs that serve their own diverse experiences, these cities will stand on the leading edge of our effort to confront pressing issues in communities across the country.
Second, we have launched a new online resource, available at trustandjustice.org, which will advance cutting-edge research and information about best practices and trust-building policy.
Third, we’re offering training, mentoring, expert consultations, and assistance on racial reconciliation directly to police departments and communities across America through the Office of Justice Programs’ Diagnostic Center.
These are groundbreaking advances—but the Department of Justice will not accomplish these goals alone. We will continue to work side-by-side with law enforcement to identify opportunities for positive change. And we will work with communities to seek avenues for building more healthy environments.
From my own decades-long career in law enforcement, and as the brother of a retired police officer, I know that the overwhelming majority of America’s brave men and women in public safety do their jobs with integrity and at great personal risk. I have enormous respect for the vital role that they play in all of America’s communities – and for the sacrifices that they and their families are too often called to make on behalf of their country.
The dangers they face have been made clear recently not only with the attacks we experienced last night, but also with the killing of Officer Robert Wilson III in Philadelphia last week and with the tragic loss of Deputy U.S. Marshal Josie Wells in Baton Rouge, Louisiana, earlier this week. These devastating incidents serve as a reminder that our law enforcement officers perform a job that is extremely serious, deeply heroic, and deserving of our most emphatic support.
I am committed to ensuring that the reforms we put in place do not impose additional risks on our law enforcement officers in an already hazardous environment. There should be no situation in which an officer’s life is put in jeopardy because of concerns that by appropriately defending themselves, they might be viewed as committing a crime. That is why the Justice Department’s discussions about these matters have centered on proven, common-sense and evidence-based collaborative measures that protect our citizens, strengthen our neighborhoods, and keep our officers safe.
I recognize our goals will not be easy to achieve. Change will not occur overnight. But in conversations like this one—with law enforcement, civil rights, youth and community leaders–I have been struck not by our divisions, but by our common interest in creating the more just society that all Americans deserve. I know that we are undertaking the crucial and necessary work of our time—work that will make a lasting difference for generations to come.
Attorney General Holder Announces the First Six Pilot Sites for the National Initiative for Building Community Trust and JusticeRead the Press Release
As part of the Department of Justice’s ongoing commitment to strengthening the relationship between law enforcement and the communities they serve and protect, Attorney General Eric Holder on Thursday announced the first six cities to host pilot sites for the National Initiative for Building Community Trust and Justice. This $4.75 million initiative will seek to assess the police-community relationship in each of the six pilot sites, as well as develop a detailed site-specific plan that will enhance procedural justice, reduce bias and support reconciliation in communities where trust has been eroded.
The six pilot sites announced Thursday are Birmingham, Alabama; Ft. Worth, Texas; Gary, Indiana; Minneapolis, Minnesota; Pittsburgh, Pennsylvania; and Stockton, California.
“The Department of Justice is committed to using innovative strategies to enhance procedural justice, reduce bias and support reconciliation in communities where trust has been eroded,” said Attorney General Holder. “By helping to develop programs that serve their own diverse experiences and environments, these selected cities will serve on the leading edge of our effort to confront pressing issues in communities around the country.”
Attorney General Holder also announced that the Department of Justice is providing additional training and technical assistance to police departments and communities that are not pilot sites. Through the Office of Justice Program’s Diagnostic Center (www.OJPDiagnosticCenter.org), police departments and community groups can request training, peer mentoring, expert consultation and other types of assistance on implicit bias, procedural justice and racial reconciliation. Additionally, the initiative launched a new online clearinghouse that includes up-to-date information about what works to build trust between citizens and law enforcement. The clearinghouse can be found at www.trustandjustice.org.
“Restoring trust where it has eroded is one of the defining public safety challenges of our day,” said Assistant Attorney General Karol V. Mason of the Office of Justice Programs. “Trust-building is the responsibility of the police and the community, and the National Initiative’s goal is to build the bridge that will define a new era in public safety.”
The Justice Department established the National Initiative for Building Community Trust and Justice as part President Obama’s groundbreaking launch of the My Brother’s Keeper initiative, which seeks to create opportunities for all young people in this country—regardless of their background—to improve their lives and reach their full potential.
The three-year grant has been awarded to a consortium of national law enforcement experts from John Jay College of Criminal Justice, Yale Law School, the Center for Policing Equity at UCLA and the Urban Institute. The initiative is guided by a board of advisors which includes national leaders from law enforcement, academia and faith-based groups, as well as community stakeholders and civil rights advocates. In a holistic approach, the initiative simultaneously addresses the tenets of procedural justice, reducing implicit bias and facilitating racial reconciliation. The initiative complements and is advised by other Justice Department components such as the Office of Justice Programs, the Office of Community Oriented Policing Services, the Office on Violence Against Women, the Civil Rights Division and the Community Relations Service.
Attorney General Holder Announces Birmingham One of Six Pilot Sites for National Initiative for Building Community Trust and JusticeRead the Press Release
WASHINGTON – As part of the Department of Justice’s ongoing commitment to strengthening the relationship between law enforcement and the communities they serve and protect, Attorney General Eric Holder announced Birmingham, Ala.; Ft. Worth, Texas; Gary, Ind.; Minneapolis, Minn.; Pittsburgh, Pa.; and Stockton, Calif., to be the first six cities to host pilot sites for the National Initiative for Building Community Trust and Justice. As part of a larger effort, the National Initiative team will work with each pilot site to assess the police-community relationship as well as develop a detailed site-specific plan that will enhance procedural justice, reduce bias and support reconciliation in communities where trust has been eroded.
“The Department of Justice is committed to using innovative strategies to enhance procedural justice, reduce bias and support reconciliation in communities where trust has been eroded,” said Attorney General Holder. “By helping to develop programs that serve their own diverse experiences and environments, these selected cities will serve on the leading edge of our effort to confront pressing issues in communities around the country.”
"We are always committed to engaging with the community to ensure that we are serving them and hearing their concerns," said United States Attorney Joyce White Vance. "We want to do a good job of listening, so that we can work together to make the community safe. We appreciate the opportunity to be one of the six pilot sites in this initiative, and the recognition from Washington that we are trying to get it right down here," she said.
"We are truly honored that DOJ would select Birmingham as one of six national pilot sites," said Birmingham Police Chief A.C. Roper. "The mayor and I actually started discussing this initiative several months ago and knew there would be over a hundred cities vying for the limited opportunities.
"We are all aware of the modern day issues and national discussion on policing in America," Roper said. "Although we've worked extremely hard building bridges in our communities, we saw this initiative as an opportunity to strengthen relationships, increase public cooperation, and improve the perception of police legitimacy across our city," he said. "We truly recognize that the Birmingham Police Department cannot be successful without community support and community trust. This three-year project will allow us to serve as a national police model and increase our capacity to serve our citizens."
Attorney General Holder also announced that the Department of Justice is providing additional training and technical assistance to police departments and communities that are not pilot sites. Through the Office of Justice Program’s Diagnostic Center (www.OJPDiagnosticCenter.org), police departments and community groups can request training, peer mentoring, expert consultation and other types of assistance on implicit bias, procedural justice and racial reconciliation. Additionally, the initiative launched a new online clearinghouse that includes up-to-date information about what works to build trust between citizens and law enforcement. The clearinghouse can be found at www.trustandjustice.org.
“Restoring trust where it has eroded is one of the defining public safety challenges of our day,” said Assistant Attorney General Karol V. Mason of the Office of Justice Programs. “Trust-building is the responsibility of the police and the community, and the National Initiative’s goal is to build the bridge that will define a new era in public safety.”
The Justice Department established the National Initiative for Building Community Trust and Justice as part President Obama’s groundbreaking launch of the My Brother’s Keeper initiative, which seeks to create opportunities for all young people in this country—regardless of their background—to improve their lives and reach their full potential.
The three-year grant has been awarded to a consortium of national law enforcement experts from John Jay College of Criminal Justice, Yale Law School, the Center for Policing Equity at UCLA and the Urban Institute. The initiative is guided by a board of advisors which includes national leaders from law enforcement, academia and faith-based groups, as well as community stakeholders and civil rights advocates. In a holistic approach, the initiative simultaneously addresses the tenets of procedural justice, reducing implicit bias and facilitating racial reconciliation. The initiative complements and is advised by other Justice Department components such as the Office of Justice Programs, the Office of Community Oriented Policing Services, the Office on Violence Against Women, the Civil Rights Division and the Community Relations Service.
Attorney General Eric Holder Announces Selection of Stockton as A Pilot Site for National Initiative for Building Community Trust and JusticeRead the Press Release
SACRAMENTO, Calif. — As part of the Department of Justice’s ongoing commitment to strengthening the relationship between law enforcement and the communities they serve and protect, Attorney General Eric Holder announced that Stockton, California has been selected as one of only six cities to serve as a pilot site for the National Initiative for Building Community Trust and Justice.
United States Attorney Benjamin Wagner was present in Washington D.C. with the Attorney General when the formal announcement of Stockton’s selection was made earlier today. This $4.75 million national initiative will seek to assess the police-community relationship in each of the six pilot sites, as well as develop a detailed site-specific plan that will enhance procedural justice, reduce bias and support reconciliation. The other five pilot sites are Birmingham, Alabama; Ft. Worth, Texas; Gary, Indiana; Minneapolis, Minnesota; and Pittsburgh, Pennsylvania.
Stockton’s selection was based in part on its size, crime rates, and demographics. However, a critical element in its selection was the Stockton Police Department's willingness to openly participate in this initiative.
Stockton’s City Manager Kurt Wilson said, “Chief Eric Jones is one of the most respected law enforcement leaders in the country. He has been fully engaged locally, statewide, and nationally. We are thankful for his leadership, and by his team joining this initiative, we feel it will boost these leading edge efforts because some of his evidence-based strategies that are already underway fit into this model.”
“The Department of Justice is committed to using innovative strategies to enhance procedural justice, reduce bias and support reconciliation in communities where trust has been eroded,” said Attorney General Holder. “By helping to develop programs that serve their own diverse experiences and environments, these selected cities will serve on the leading edge of our effort to confront pressing issues in communities around the country.”
“I am grateful for Stockton’s enthusiastic participation in this initiative,” said U.S. Attorney Wagner. “Recent events across the country highlight the profound consequences where there is a lack of trust between law enforcement and the communities it serves. Stockton is committed to building and maintaining trust with its community, and ensuring that the difficulties experienced elsewhere do not occur here. Through this initiative, Stockton will set examples that can be used throughout our District.”
“The Stockton Police Department places a high value on building strong relationships with our citizens, and many recent efforts have been undertaken in the City of Stockton to build community trust,” said Chief Eric Jones. “I am proud of the men and women of the Stockton Police Department because they have all helped us to be successful with our Ceasefire Crime-Fighting Strategy and our Police Legitimacy and Procedural Justice Training and application.”
Attorney General Holder also announced that the Department of Justice is providing additional training and technical assistance to police departments and communities that are not pilot sites. Through the Office of Justice Program’s Diagnostic Center (www.OJPDiagnosticCenter.org), police departments and community groups can request training, peer mentoring, expert consultation and other types of assistance on implicit bias, procedural justice and racial reconciliation. Additionally, the initiative launched a new online clearinghouse that includes up-to-date information about what works to build trust between citizens and law enforcement. The clearinghouse can be found at www.trustandjustice.org.
The Justice Department established the National Initiative for Building Community Trust and Justice as part President Obama’s groundbreaking launch of the My Brother’s Keeper initiative, which seeks to create opportunities for all young people in this country—regardless of their background—to improve their lives and reach their full potential.
The three-year grant has been awarded to a consortium of national law enforcement experts from John Jay College of Criminal Justice, Yale Law School, the Center for Policing Equity at UCLA, and the Urban Institute. The initiative is guided by a board of advisors that includes national leaders from law enforcement, academia and faith-based groups, as well as community stakeholders and civil rights advocates. In a holistic approach, the initiative simultaneously addresses the tenets of procedural justice, reducing implicit bias and facilitating racial reconciliation. The initiative complements and is advised by other Justice Department components such as the Office of Justice Programs, the Office of Community Oriented Policing Services, the Office on Violence Against Women, the Civil Rights Division and the Community Relations Service.Army Contracting Official Pleads Guilty in Pentagon Bribery SchemeRead the Press Release
ALEXANDRIA, Va. – James Glenn Warner, 44, of Manassas, Virginia, waived indictment and pleaded guilty to soliciting a $500,000 bribe from executives working for a private company on a contract that Warner managed out of the Pentagon.
According to court documents, in October 2014, Warner made arrangements to meet with two executives of Company A, a Virginia-based company which held a five-year contract with the Department of the Army worth up to $120 million. At the meeting, which took place at a restaurant located in the Pentagon Centre in Arlington, Virginia, Warner instructed the two executives to communicate with him by typing messages into his cell phone, which was passed around the table. Warner then passed a menu to the two executives. Inside the plastic covering for the center section of the menu was a piece of paper which outlined a bribe and extortion solicitation, suggesting that if Company A paid $500,000 it would secure a contract renewal from the Department of the Army and that alleged damaging information about Company A would be destroyed. The Company A executives declined Warner’s solicitation, reported the conduct and began cooperating with law enforcement agents. Acting at the direction of law enforcement, a Company A executive then met with Warner on five subsequent occasions, paying Warner a total of $150,000 cash bribes out of the total $500,000 solicited by Warner. On January 28, 2015, at the last of these meetings, Warner was arrested while in possession of $100,000 in bribe payments.
Warner faces a maximum penalty of 15 years in prison, up to a $1.5 million fine, and mandatory forfeiture of criminal proceeds when he is sentenced on June 19, 2015. The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes, as the sentencing of the defendant will be determined by the court based on the advisory Sentencing Guidelines and other statutory factors.
Dana J. Boente, U.S. Attorney for the Eastern District of Virginia; Andrew G. McCabe, Assistant Director in Charge of the FBI’s Washington Field Office; Robert E. Craig, Special Agent in Charge, Mid Atlantic Field Office, Defense Criminal Investigative Service; and Frank Robey, Director, Major Procurement Fraud Unit, 701st Military Police Group, U.S. Army Criminal Investigation Command, made the announcement after the plea was accepted by U.S. District Judge Leonie M. Brinkema.
This case was investigated by the FBI’s Washington Field Office, the Defense Criminal Investigative Service, and the U.S. Army Criminal Investigative Command. Assistant U.S. Attorneys Kosta S. Stojilkovic and Mark D. Lytle are prosecuting the case.
Any person who believes they may have information regarding public corruption in the Northern Virginia area is encouraged to call the FBI’s Northern Virginia Public Corruption Hotline at 703-686-6225.
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. 1:15-cr-77.Arizona Woman Admits Operating Fraudulent Federal Income Tax Refund SchemeRead the Press Release
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Deirdre M. Daly, United States Attorney for the District of Connecticut, announced that KENYA MALCOLM, 36, of Surprise, Ariz., pleaded guilty today in Bridgeport federal court to operating a fraudulent federal income tax refund scheme.
According to court documents and statements made in court, between November 2012 and May 2013, MALCOLM, Charles Ross, Bernard Brantley and others conspired to file false federal income tax returns in the names of individuals without the individuals’ knowledge. MALCOLM, who operated a business in Arizona called “Biggest Refund Taxes,” held herself out falsely to be a certified public accountant. As part of the scheme, MALCOLM paid Ross, also a resident of Surprise, to recruit individuals to her tax preparation business. Ross subsequently contacted Brantley, a resident of Waterbury, Conn., and offered him a portion of Ross’s recruitment earnings if Brantley would also recruit clients for MALCOLM. Instead of recruiting clients for tax preparation services, Brantley and individuals that Brantley hired recruited victims under false pretenses, telling them that they were eligible for government funding and not telling them that tax returns would be filed in their names. Brantley and his associates then collected victims’ Social Security numbers, dates of birth and other personal information and provided that information to MALCOLM.
MALCOLM and Ross knew that Brantley was recruiting individuals under false pretenses.
MALCOLM used the personal information she was provided, as well as false income and employment information for each victim, to file tax returns that generated large tax refunds. She then directed a portion of the tax refunds to herself, a portion to Ross and Brantley, and a portion to the victim, usually through a prepaid debit card.
Approximately $2.5 million in fraudulent federal income tax refunds were sought through this scheme, and more than $1 million in refunds were disbursed.
MALCOLM pleaded guilty to one count of conspiracy, which carries a maximum term of imprisonment of five years. She is scheduled to be sentenced by U.S. District Judge Jeffrey Alker Meyer on June 4, 2015.
Ross and Brantley have also pleaded guilty and are scheduled to be sentenced on May 12, 2015.
This matter is being investigated by the Internal Revenue Service – Criminal Investigation Division and the United States Postal Inspection Service, and is being prosecuted by Assistant U.S. Attorney Sarala V. Nagala and Senior Litigation Counsel Richard J. Schechter.
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ALBUQUERQUE – Mark Anthony Miller, 48, of Albuquerque, N.M., was sentenced this morning in federal court to 120 months in prison followed by five years of supervised release for his methamphetamine trafficking conviction.
Miller was arrested on Feb. 24, 2013, at the Amtrak train station in Albuquerque after a consensual search by DEA agents revealed that Miller had concealed bundles containing approximately .95 kilograms of methamphetamine in a backpack. Miller subsequently was indicted on March 5, 2013, and charged with possession of methamphetamine with intent to distribute.
Miller entered a guilty plea to the indictment on May 19, 2014. The guilty plea was entered without the benefit of a plea agreement.
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. Attorneys Holland S. Kastrin and Jon K. Stanford prosecuted the case.
Acoma Pueblo Man Pleads Guilty to Federal Sexual Assault ChargeRead the Press Release
ALBUQUERQUE – Eric Chino, 32, a member and resident of Acoma Pueblo, N.M., pleaded guilty this morning in federal court in Albuquerque, N.M., to an abusive sexual contact charge. Under the terms of his plea agreement, Chino will be sentenced to a range of 24 to 36 months in federal prison followed by a term of supervised release to be determined by court.
Chino was arrested on Nov. 26, 2014, on an indictment charging him with aggravated sexual abuse. The indictment alleged that Chino sexually assaulted an Acoma Pueblo woman on June 24, 2012, in Acoma Pueblo within Cibola County, N.M.
During today’s proceedings, Chino pled guilty to a felony information charging him with abusive sexual contact. In entering the guilty plea Chino admitted engaging in and attempting to engage in sexual contact with the victim by force. He admitted forcefully touching the victim’s breast and genitals despite the victim’s demands that he stop.
This case was investigated by the Laguna/Acoma Agency of the BIA’s Office of Justice Services and the Acoma Pueblo Tribal Police Department, and is being prosecuted by Assistant U.S. Attorney David Adams.
The case was brought pursuant to the Tribal Special Assistant U.S. Attorney (Tribal SAUSA) Pilot Project in the District of New Mexico which is sponsored by the Justice Department’s Office on Violence Against Women under a grant administered by the Pueblo of Laguna. The Tribal SAUSA Pilot Project seeks to train tribal prosecutors in federal law, procedure and investigative techniques to increase the likelihood that every viable violent offense against Native women is prosecuted in either federal court or tribal court, or both. The Tribal SAUSA Pilot Project was largely driven by input gathered from annual tribal consultations on violence against women, and is another step in the Justice Department's on-going efforts to increase engagement, coordination and action on public safety in tribal communities.
3 Licking County Brothers Plead Guilty to Fraud, Money LaunderingRead the Press Release
COLUMBUS – Philip C. Clark, Jr., 66, David Clark, 59, and Christopher Clark, 61, all of Newark, pleaded guilty in U.S. District Court to bank fraud and money laundering. The three serve as president, treasurer and vice president of Clark Motor Company in Heath, Ohio.
Carter M. Stewart, United States Attorney for the Southern District of Ohio, Angela L. Byers, Special Agent in Charge, Federal Bureau of Investigation (FBI), Cincinnati Field Division, and Kathy Enstrom, Special Agent in Charge, Internal Revenue Service Criminal Investigation (IRS), announced the plea entered into today before U.S. District Chief Judge Edmund A. Sargus, Jr.
According to court documents, the brothers would make deposits and take withdrawals from two banks to make it appear as if they had $7.4 million, when in actuality they owed the banks $1 million. From July 2012 until January 2013, the Clarks unlawfully obtained money and property by false pretenses from Century National Bank and Ohio Heritage Bank.
“In January 2013, the brothers cross-deposited 214 non-sufficient checks between their accounts in order to artificially inflate the bank accounts at each respective bank, taking advantage of the float time in the bank system, thereby causing checks that would normally be returned for non-sufficient funds to be paid or honored by the issuing banks,” Financial Crimes Chief Brenda Shoemaker told the court.
The defendants would also enter into financial agreements and received advance money for the purchase of the same vehicles from more than one bank, and in doing so the three laundered more than $10,000 each by selling criminally derived property. For example, Century National Bank loaned the Clarks approximately $120,000 in January 2013 as an advance for the purchase of 5 vehicles. Unbeknownst to Century National Bank, the brothers had already received an advance from another lender to finance the purchase of at least one of those vehicles.
It was discovered that at that time only 5 of the 33 vehicles Century National Bank had financed were still on the lot at Clark Motor Company. Other lenders had already repossessed the other 28 vehicles because they had titles to the vehicles for the financing they provided the used car dealership.
Each brother pleaded guilty to one count of bank fraud and one count of money laundering.
“IRS Criminal Investigation is committed to unraveling complex financial transactions and money laundering schemes where individuals attempt to conceal the true source of their money," stated Kathy A. Enstrom, Special Agent in Charge, IRS Criminal Investigation, Cincinnati Field Office.
Bank fraud is a crime punishable by up to 30 years in prison and $1 million fine. Money laundering carries a maximum sentence of 10 years in prison and a $250,000 fine.
U.S. Attorney Stewart commended the cooperative investigation by the FBI and IRS, as well as Financial Crimes Chief Brenda Shoemaker, who is representing the United States in this case.
10th Street Gang Member Pleads Guilty to Rico Conspiracy Involving A Murder; Five Others Also Plead Guilty to Rico ConspiracyRead the Press Release
CONTACT: Barbara Burns
PHONE: (716) 843-5817
FAX: (716) 551-3051Buffalo, N.Y. -- U.S. Attorney William J. Hochul, Jr. announced today that 10th Street Gang member David Deynes, 33, of Buffalo, NY, who was convicted of Racketeering Influenced and Corrupt Organization (RICO) conspiracy, was sentenced to 84 months in prison by U.S. District Judge Richard J. Arcara.
Assistant U.S. Attorney Joseph M. Tripi, who is handling the case, stated that between 2000 and 2010, the defendant was a member of the 10th Street Gang. As a part of his involvement in the gang, Deynes, along with other members and associates of the gang, committed violence, possessed firearms, and sold marijuana, cocaine, crack cocaine, and other controlled substances on the West Side of Buffalo.
The defendant is among 44 10th Street Gang members and associates charged and convicted in this case.
The sentencing is the culmination of an investigation on the part of Special Agents of the Federal Bureau of Investigation Safe Streets Task Force, the New York State Police, under the direction of Major Michael Cerretto, the Buffalo Police Department, under the direction of Commissioner Daniel Derenda, and the Bureau of Alcohol, Tobacco, Firearms and Explosives, under the direction of Special Agent in Charge Delano A. Reid, New York Division.
10th Street Gang Member Pleads Guilty to Rico Conspiracy Involving A Murder; Five Others Also Plead Guilty to Rico ConspiracyRead the Press Release
CONTACT: Barbara Burns
PHONE: (716) 843-5817
FAX: (716) 551-3051
Buffalo, N.Y. -- U.S. Attorney William J. Hochul, Jr. announced today that 10th Street Gang member Matthew Deynes, 33, of Buffalo, N.Y., who was convicted of Racketeering Influenced and Corrupt Organization (RICO) conspiracy, was sentenced to 125 months in prison by U.S. District Judge Richard J. Arcara.
Assistant U.S. Attorney Joseph M. Tripi, who is handling the case, stated that between 2000 and 2010, the defendant was a member of the 10th Street Gang. As a part of his involvement in the gang, Deynes, along with other members and associates of the gang, committed violence, possessed firearms, and sold marijuana, cocaine, crack cocaine, and other controlled substances on the West Side of Buffalo.
The defendant is among 44 10th Street Gang members and associates charged and convicted in this case.
The sentencing is the culmination of an investigation on the part of Special Agents of the Federal Bureau of Investigation Safe Streets Task Force, the New York State Police, under the direction of Major Michael Cerretto, the Buffalo Police Department, under the direction of Commissioner Daniel Derenda, and the Bureau of Alcohol, Tobacco, Firearms and Explosives, under the direction of Special Agent in Charge Delano A. Reid, New York Division.
11 March 2015
Weaubleau Man Sentenced to 17 Years for Child ExploitationRead the Press Release
SPRINGFIELD, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced today that a Weaubleau, Mo., man has been sentenced in federal court for exploiting a minor to produce child pornography.
Larry Allison, 51, of Weaubleau, Mo., was sentenced by U.S. District Judge M. Douglas Harpool on Tuesday, March 10, 2015, to 17 years in federal prison without parole.
On Oct. 20, 2014, Allison pleaded guilty to using a minor to produce child pornography. Allison admitted that he used a minor, identified in the federal indictment as “Jane Doe,” to produce child pornography in January 2014.
According to court documents, Allison contacted the minor victim through a Web site, and they began exchanging text messages, which became sexually explicit. Allison and the minor victim exchanged nude photos with one another and communicated about meeting at a local hotel for sex. The conversations ended when the victim’s mother took her daughter’s cell phone and contacted police.
A Springfield, Mo., police detective began texting Allison, according to court documents, portraying herself as the minor victim. Law enforcement officers executed a search warrant at Allison’s residence on Jan. 30, 2014.
This case was prosecuted by Assistant U.S. Attorney James J. Kelleher. It was investigated by the Springfield, Mo., Police Department, the Hickory County, Mo., Sheriff’s Department and 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."
Wapato Man Who Operated Vehicle During Drive by Shooting Sentenced to 10 Years ImprisonmentRead the Press Release
Spokane – Today, Michael C. Ormsby, United States Attorney for the Eastern District of Washington, announced that Morgan Moses Sampson, age 24, was sentenced for operating a vehicle during a gang related drive by shooting. United States District Judge Salvador Mendoza, Jr. sentenced Sampson to a ten-year term of imprisonment, to be followed by a three-year term of court supervision upon release from Federal prison
According to information disclosed during the court proceedings, on March 21, 2014, Sampson and three other individuals engaged in target shooting. Sampson consumed a great deal of alcohol and ingested marijuana. The four men decided to look for Sureno gang members. Sampson entered the driver’s seat and drove around a residential housing area. At approximately 5:00 p.m., the men spotted what they believed to be a rival gang member. Sampson drove the vehicle very slowly so that the shooter would have a better chance of hitting his target. The shooter fired eight rounds and mistakenly hit a young child who was playing outside. Sampson sped away in an effort to distance himself from the crime scene. However, a neighbor observed the shooting and immediately contacted the police. A short time later, police observed the suspect vehicle and all four men were arrested.
Michael C. Ormsby said, "Gang-related violence will not be tolerated in the Eastern District of Washington. The success of this investigation was the result of strong working partnerships among the Yakama Nation Tribal Police Department, the Yakima County Sheriff’s Office, the Washington State Patrol and the FBI. The United States Attorney’s Office will work in tandem with federal, state, local, and tribal law enforcement officers to prosecute aggressively anyone involved in such horrific acts of violence. Today’s lengthy prison sentences reflects the seriousness of this crime." Page -2-
The investigation was conducted by the Federal Bureau of Investigation, the Yakama Nation Tribal Police Department, the Yakima County Sheriff’s Office, and the Washington State Patrol. The case was prosecuted by Tom Hanlon, an Assistant United States Attorney for the Eastern District of Washington.
U.S. Attorney’s Office Collects $88,000 for Costs of Suppressing Two Escaped Prescribed BurnsRead the Press Release
BOISE — U.S. Attorney Wendy J. Olson announced today that her office’s Affirmative Civil Enforcement Unit has settled a lawsuit for fire suppression costs against John Faulkner and Faulkner Land and Livestock Company. The office collected $88,000. The case involved two fires: the “Faulkner” fire in September, 2008 and the “Castlerock” fire in September, 2010. Both fires started when prescribed burns on Faulkner land near Gooding, Idaho escaped to federal land on a windy afternoon. Idaho burn permits require permit-holders to provide adequate containment equipment and personnel to contain private burns. The permits also require citizens to refrain from burning in windy conditions. Crews from the Bureau of Land Management and the United States Forest Service provided a ground and air attack to suppress the fires in dry and steep terrain.
The United States owns, manages, and administers various parcels of public lands through the Bureau of Land Management and the United States Forest Service. Both agencies suppress uncontrolled wildfires within their jurisdiction pursuant to mutual aid and cooperative agreements. The money collected will reimburse the agencies for funds expended.
“Tactics, communication and human safety are of the utmost importance in order to prevent putting firefighters and private citizens in harm’s way,” said Olson. “We are pleased that our agencies can work cooperatively with efficiency. We are also pleased to be able to recover more than $88,000 for future fire suppression efforts,” Olson added. “We will continue to make strong efforts to ensure that in appropriate cases private parties who cause fires reimburse the taxpayers for putting out fires that burn or threaten federally managed land.”
U.S. Attorney Launches Review of 25 Restaurants for Compliance with Americans with Disabilities ActRead the Press Release
PHILADELPHIA – The Office of United States Attorney for the Eastern District of Pennsylvania has launched a review of 25 of Philadelphia’s most popular restaurants to determine if they are in compliance with the Americans With Disabilities Act of 1990 (the “ADA”), announced United States Attorney Zane David Memeger. The initiative is in accordance with the Government’s congressionally-mandated responsibility to review compliance with the ADA. It is not in response to any specific complaint against a restaurant.
As part of the review, restaurant owners are being asked to complete a Survey Form, supplied by the Government, pertaining to their restaurant’s accessibility. Investigators may then conduct on-site inspections to confirm survey responses and to evaluate compliance with federal ADA regulations. Owners and operators found to be non-compliant will have the option of entering into a Voluntary Compliance Agreement with the Government whereby they voluntarily agree to upgrade their facilities to meet ADA requirements. Owners and operators found to be engaging in a pattern or practice of discrimination, or that fail to enter Voluntary Compliance Agreements, may face a civil lawsuit brought by the Government and/or be subject to penalties, including monetary penalties and civil fines.
The U.S. Attorney’s Office objectively selected the restaurants for this compliance review using recent third party restaurant rankings in order to review 25 of Philadelphia’s most popular and frequented restaurants.
The ADA prohibits discrimination on the basis of disability by places of public accommodation, including restaurants, and requires places of public accommodation to be “designed, constructed, and altered in compliance with the accessibility standards established” by the ADA’s implementing regulations.
“People with disabilities who visit, work, or live in Philadelphia have the right to expect that all public accommodations in the city are accessible according to law,” said Memeger. “The Americans with Disabilities Act is an important civil rights law, and restaurant owners must comply with its accessibility provisions. We will take all reasonable steps within our power to ensure that any restaurants that fall short of compliance make the necessary changes, rather than face litigation.”
Two Plead Guilty to Federal Drug CrimesRead the Press Release
BOISE – Jose Manuel Menchaca, 35, and Nicole Danelle Nieto, 31, both of Nampa, Idaho, pleaded guilty in United States District Court to distribution of methamphetamine, U.S. Attorney Wendy J. Olson announced.
Nieto, who pleaded guilty yesterday, sold methamphetamine to a police informant on two occasions in June 2014, according to information presented in court. Law enforcement agents located additional methamphetamine when they searched Nieto’s residence on June 18, 2014. On that same date, Nieto admitted she was selling methamphetamine.
Menchaca, who pleaded guilty today, sold methamphetamine to a police informant on three separate occasions, according to the plea agreement.
A federal grand jury indicted Menchaca and Nieto in two separate indictments filed on October 15, 2014. Although charged separately, the cases are both part of a larger long-term investigation by the Treasure Valley Metro Violent Crimes Task Force. The investigation focused on the “Norteno” Northside gang, which 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.
The charge against Menchaca is punishable by a minimum of 5 years and up to 40 years in prison, a fine up to $5 million, and a minimum of 4 years supervised release. He is scheduled for sentencing on May 28, 2015, before U.S. District Judge Edward J. Lodge, at the federal courthouse in Boise.
The charge against Nieto is punishable by up to 20 years in prison, a maximum fine of $1 million, and at least 3 years of supervised release. She is scheduled for sentencing on May 26, 2015, before U.S. District Judge Edward J. Lodge, at the federal courthouse in Boise.
These cases and the other related 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.
The 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.
Two Men Sentenced to Prison for Roles in Cross-Country Marijuana Distribution RingRead the Press Release
PHOENIX – On March 9, 2015, two defendants were sentenced by U.S. District Court Judge Neil V. Wake for their roles in a cross-country marijuana distribution ring. Darius Blackwell, 38, of Mesa, Ariz., was sentenced to over 9 years in prison and Grady Blackwell, 62, of Lithonia, Ga., was sentenced to 5 years in prison. Both defendants previously pleaded guilty to conspiracy to possess marijuana with intent to distribute and conspiracy to commit money laundering.
According to their plea agreements, the Blackwells participated in a conspiracy to distribute marijuana using the United States Postal Service. Their organization purchased marijuana in Arizona, mailed it throughout the United States, primarily to Georgia, and then arranged for the proceeds to be sent back to Arizona. Shipping records and seizures show that at least 50 kilograms of marijuana were mailed in this fashion. In addition, seven bank accounts were opened in March 2012 for the purpose of receiving and transferring the proceeds of the scheme. Nearly $410,000 was deposited into these accounts (largely via cash deposits in Georgia) and over $395,000 was withdrawn (largely via cash withdrawals in Arizona).
The investigation in this case was conducted by the United Postal Inspection Service, Internal Revenue Service - Criminal Investigation, and the Mesa Police Department. The prosecution was handled by Donald Pashayan, Brian Larson and Mark Wenker, Assistant U.S. Attorneys, District of Arizona, Phoenix.
CASE NUMBER: CR-13-1462-PHX-NVW
RELEASE NUMBER: 2015-023_Blackwell
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For more information on the U.S. Attorney’s Office, District of Arizona, visit http://www.justice.gov/usao/az/
Follow the U.S. Attorney’s Office, District of Arizona, on Twitter @USAO_AZ for the latest news.
Two Men Plead Guilty to Tax Fraud Conspiracy Involving More Than 300 Stolen IdentitiesRead the Press Release
United States Attorney Andrew M. Luger today announced the guilty pleas of RICHARD J. SCHMIDT, 42, and MATTHEW KLEMMER, 47, for conspiring to prepare and file false individual income tax returns in order to obtain fraudulent income tax refunds. Both defendants were indicted on October 15, 2014. SCHMIDT pleaded guilty on December 17, 2014 before Senior Judge David S. Doty in U.S. District Court in Minneapolis, Minn. On March 9, 2015, KLEMMER also entered his guilty plea before Judge Doty.
“Filing false tax returns and using stolen identities is a serious crime that hurts innocent taxpayers,” stated Special Agent in Charge Shea Jones of the IRS Criminal Investigation St. Paul Field Office. “IRS Criminal Investigation will continue to vigorously pursue those who unjustly enrich themselves by preparing false claims for refunds.”
According to the defendants’ guilty pleas and documents filed in court, from approximately January 2011 to April 2011, SCHMIDT and KLEMMER received refunds from income tax returns reporting false or inflated income, false employment, and other false items. Stolen personal identifying information, including names and social security numbers, was used to create the fraudulent tax returns, which included false or inflated withholding information. As part of the conspiracy, the defendants requested the tax refunds be deposited onto debit cards, allowing them immediate access to the cash. The defendants filed more than 30 fraudulent tax returns and received more than $100,000 in refunds.
This case is the result of an investigation conducted by the Internal Revenue Service-Criminal Investigation Division.
The case is being prosecuted by Assistant U.S. Attorney Robert Lewis.
Defendant Information: RICHARD J. SCHMIDT, 42
Landfall, MN
Convicted: • Conspiracy to Defraud the United States, 1 count
MATTHEW KLEMMER, 47
St. Paul, Minn.
Convicted: • Conspiracy to Defraud the United States, 1 countTwo Indicted for Drug TraffickingRead the Press Release
A federal grand jury returned a one-count indictment charging Hortencia Decaldera, 55, of Indianapolis, and Rodolfo Rodriguez, aka Oscar Rodriguez, 32, of Los Angeles, with possession with the intent to distribute approximately three kilograms of cocaine, said Steven M. Dettelbach, United States Attorney for the Northern District of Ohio.
On February 14, 2015, Decladera and Rodriguez were stopped for speeding by the Ohio State Highway Patrol in Stark County, Ohio. A drug canine officer was called to the scene at which time the dog alerted on the vehicle. A search of the F-150 revealed a hidden compartment inside the cab. The occupants were arrested.
If convicted, the defendant’s sentence will be determined by the Court after review of factors unique to this case, including the defendant’s prior criminal record, if any, the defendant’s role in the offense and the characteristics of the violations. In all cases, the sentence will not exceed the statutory maximum and, in most cases, it will be less than the maximum.
The investigation preceding the indictment was conducted by the Ohio State Highway Patrol, the Stark Safe Street Task Force and the Cleveland Division of the Federal Bureau of Investigation. The matter is being prosecuted by Assistant United States Attorney Teresa Riley.
An indictment is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
Travel Agent Sentenced for $360,000 Fraud Scheme, Stole from Willard High School BandRead the Press Release
SPRINGFIELD, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that a travel agent was sentenced in federal court today for stealing $360,000 from the Willard High School Band Boosters, which forced the cancellation of a trip to Hawaii for more than 300 students and chaperones.
Calliope R. Saaga, also known as “Ope,” 40, of Saratoga Springs, Utah, was sentenced by U.S. Chief District Judge Greg Kays to five years in federal prison without parole. The court also ordered Saaga to pay $782,480 in restitution.
On Oct. 15, 2014, Saaga pleaded guilty to wire fraud. Saaga has also pleaded guilty to a similar $272,500 fraud scheme involving a school district in Fort Smith, Ark. He will be sentenced on that conviction, as well as related conduct for a similar $149,980 fraud scheme involving a West Memphis, Ark., school district, on March 25, 2015, in the Western District of Arkansas. The total loss for the victims in these fraud schemes was $782,480.
Saaga, doing business as Present America Tours, LLC, contracted with the Willard High School Band Boosters in January 2011 to provide travel arrangements for a June 2012 band trip to Hawaii. Saaga was responsible for booking airfare, lodging, transportation, meals, tours, and travel insurance for more than 300 students and chaperones. The Willard High School Band Boosters wired 12 payments of $30,000 each to Saaga between February 2011 and January 2012.
Saaga booked no reservations as required in the contract. Instead, as he received wire transfers from the band boosters, Saaga used the funds to finance his personal lifestyle, including at least 47 days spent gambling in Las Vegas, Nev.
As a result of Saaga’s diversion of funds, the Willard High School band trip was cancelled and the Willard High School Band Boosters suffered a loss of $360,000.
While he was spending the money of the Willard High School Band Boosters to finance his personal lifestyle, Saaga transmitted e-mails about details of the trip to the Willard High School director of bands, which lulled the band boosters into believing that their trip to Hawaii was on schedule.
This case was prosecuted by Assistant U.S. Attorney Abram McGull II. It was investigated by IRS-Criminal Investigation, the FBI and the Willard, Mo., Police Department.
Three Appleton Men Indicted on Methamphetamine Distribution and Firearm ChargesRead the Press Release
United States Attorney James L. Santelle for the Eastern District of Wisconsin, announced that on March 10, 2015, a federal grand jury returned a three-count indictment against Kham Meng Vang a/k/a “K” (age: 32), Sa Xiong a/k/a “Fat Boy” (age: 24), and Bee Vang a/k/a “Skinny”(age: 23) of Appleton, Wisconsin, charging all three with conspiracy to distribute 500 grams or more of methamphetamine in violation of Title 21, United States Code, Section 846 and, further, charging Kham Meng Vang and Sa Xiong with possession of a firearm in furtherance of a drug crime. If convicted of the drug offense, each defendant faces a sentence of between ten years and life imprisonment, a ten million dollar fine, and between five years and a lifetime of supervised release. Conviction on the firearm offense carries a mandatory consecutive term of five years imprisonment.
According to the indictment, the defendants conspired amongst themselves and with others to sell over 500 grams of methamphetamine in the Fox Valley region. Kham Meng Vang and Sa Xiong are alleged to have done so while in possession of semi-automatic weapons.
The case was investigated by the Wisconsin Department of Justice, Division of Criminal Investigation, the Lake Winnebago Area Metropolitan Enforcement Group, the Appleton Police Department, the Fox Valley Metro Police Department, the Kaukauna Police Department, the Town of Menasha Police Department, the Menasha Police Department, the Neenah Police Department, the Oshkosh Police Department, the Calumet County Sheriff’s Department, and the Winnebago County Sheriff’s Department. The case is being prosecuted by Assistant United States Attorney Daniel R. Humble.
An indictment is only a charge and not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government must prove guilt beyond a reasonable doubt.
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Statement by Attorney General Holder on Fatal Shooting of Deputy U.S. Marshal Josie WellsRead the Press Release
Attorney General Eric Holder released the following statement Wednesday regarding the fatal shooting of Deputy U.S. Marshal Josie Wells:
“Deputy Marshal Josie Wells was a dedicated law enforcement officer, a remarkable patriot and a courageous public servant. Though he was taken from us far too suddenly and far too soon, he leaves behind an indelible legacy that will live on in the lives he touched; in the work that the U.S. Marshals Service continues to perform; and in a world that is safer because of his devoted service. His loss is a deeply tragic reminder that the work of our law enforcement officers around the nation is extremely serious, profoundly heroic and deserving of our most emphatic support. The thoughts and prayers of the law enforcement community will be with the family and loved ones of Deputy Marshal Wells throughout this difficult time. And as we go forward, the Department of Justice intends to honor his service and his sacrifice by continuing to fight for the values he protected every day, and to defend the American people for whom he gave his life.”
Statement by Acting Assistant Attorney General for the Civil Rights Division Vanita Gupta on Developments in Ferguson, Missouri, Following Civil Rights Division's FindingsRead the Press Release
Acting Assistant Attorney General for the Civil Rights Division Vanita Gupta released the following statement Wednesday regarding developments in Ferguson, Missouri:
“The results of the Civil Rights Division’s investigation into the practices of Ferguson Police Department remain a top concern and priority. The division will continue to work with Ferguson Police and city leadership, regardless of whomever is in those positions, to reach a court enforceable agreement that will address their unconstitutional practices in a comprehensive manner. As part of this ongoing commitment, in the coming weeks the Civil Rights Division staff will travel to Ferguson, Missouri, to discuss the findings and next steps with community members and Ferguson city leadership.”
Sex Offender Sentenced to 6 Years in Prison on Felony Firearms ChargesRead the Press Release
SHREVEPORT, La. – United States Attorney Stephanie A. Finley announced today that a Shreveport man was sentenced to 72 months in prison for possessing a firearm and ammunition after being convicted of a felony.
Eric Dwayne Williams, 39, of Shreveport, was sentenced by U.S. District Judge Elizabeth E. Foote on one count of possession of a firearm by a convicted felon. He was also sentenced to three years of supervised release and was ordered to forfeit the firearm and ammunition seized during the investigation. According to the October 10, 2014 guilty plea, Williams was arrested by deputy U.S. Marshals and Shreveport Police officers with the U.S. Marshals Violent Offender Task Force in June of 2014 on a warrant from California for a sex offender registration violation. Upon further investigation, it was discovered that Williams had been in possession of a Glock, model 27, .40 caliber pistol and ammunition. Federal authorities located and recovered the firearm and ammunition. It was unlawful for Williams to possess the firearm and ammunition because Williams had previously been convicted of nine felony convictions in California. These felony convictions include his failure to register as a sex offender, second degree burglary, receiving stolen property and possession of a firearm by a convicted felon.
The ATF; U.S. Marshals Service; the Louisiana Department of Corrections and Public Safety, Probation and Parole; and the Shreveport Police Department conducted the investigation. Assistant U.S. Attorney Robert Gillespie Jr. prosecuted the case as part of Project Safe Neighborhoods. Project Safe Neighborhoods is a nationwide program designed to reduce violence by aggressively enforcing existing federal firearms laws.
Settlement Reached in Patriots Park Renovations Civil CaseRead the Press Release
ALEXANDRIA, Va. – Lend Lease Construction, Inc., a global company locally based in Rockville, Maryland, and Cindell Construction Company, based in Frederick, Maryland, agreed to pay a total of $400,000 to settle False Claims Act allegations in connection with an agreement to perform construction work to renovate a property the government is currently leasing in Reston, Virginia known as “Patriots Park.”
“We encourage whistleblowers to come forward in instances where the government is a victim,” said Dana Boente, U.S. Attorney for the Eastern District of Virginia. “This case exemplifies the important role whistleblowers can play in recovering money for the government.”
The purpose of the construction work was to make the property at Patriots Park compliant with General Services Administration (GSA) and Department of Defense security regulations and requirements. Pursuant to the lease agreement, the construction work on the Patriots Park project is subject to the requirements of the Davis-Bacon Act and the Contract Work Hours and Safety Standards Act (CWHSSA). The Davis-Bacon Act requires government contractors to pay the prevailing wage to workers as set by the Secretary of Labor for the corresponding class of laborers and mechanics in the state in which they are employed. The CWHSSA requires that workers be compensated at time and a half their prevailing wage rate for all hours worked over 40 hours per week for contracts subject to the prevailing wage. Lend Lease was hired by the owner of the property to provide construction management services; Lend Lease, in turn, subcontracted with Cindell to perform drywall installation.
The United States will receive $400,000 to settle allegations that Lend Lease and Cindell submitted false claims to the government after lower-tier subcontractors hired by Cindell underpaid workers and failed to compensate the workers properly for overtime hours despite certifying compliance on weekly certified payrolls.
The investigation was initiated after a lawsuit was filed under the qui tam or whistleblowerprovisions of the False Claims Act, which permit private parties to sue on behalf of the government when they believe that defendants submitted false claims for government funds and to receive a share of any recovery. The False Claims Act permits the government time to investigate allegations in qui tam complaints and to intervene in such lawsuits, when the government deems it appropriate. The whistleblower will receive $72,000 from the settlement.
This resolution in this matter was the result of a coordinated effort between the United States Attorney’s Office for the Eastern District of Virginia, the Department of Labor Office of Inspector General, and the GSA Office of Inspector General. The matter was investigated by Assistant United States Attorney Monika Moore and former Special Assistant United States Attorney Erin Murdock-Park. The civil claims settled by this False Claims Act agreement are allegations only; there has been no determination of civil liability.
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. 1:12-cv-1170.Settlement Reached in Patriots Park Renovations Civil CaseRead the Press Release
ALEXANDRIA, Va. – Lend Lease Construction, Inc., a global company locally based in Rockville, Maryland, and Cindell Construction Company, based in Frederick, Maryland, agreed to pay a total of $400,000 to settle False Claims Act allegations in connection with an agreement to perform construction work to renovate a property the government is currently leasing in Reston, Virginia known as “Patriots Park.”
“We encourage whistleblowers to come forward in instances where the government is a victim,” said Dana Boente, U.S. Attorney for the Eastern District of Virginia. “This case exemplifies the important role whistleblowers can play in recovering money for the government.”
The purpose of the construction work was to make the property at Patriots Park compliant with General Services Administration (GSA) and Department of Defense security regulations and requirements. Pursuant to the lease agreement, the construction work on the Patriots Park project is subject to the requirements of the Davis-Bacon Act and the Contract Work Hours and Safety Standards Act (CWHSSA). The Davis-Bacon Act requires government contractors to pay the prevailing wage to workers as set by the Secretary of Labor for the corresponding class of laborers and mechanics in the state in which they are employed. The CWHSSA requires that workers be compensated at time and a half their prevailing wage rate for all hours worked over 40 hours per week for contracts subject to the prevailing wage. Lend Lease was hired by the owner of the property to provide construction management services; Lend Lease, in turn, subcontracted with Cindell to perform drywall installation.
The United States will receive $400,000 to settle allegations that Lend Lease and Cindell submitted false claims to the government after lower-tier subcontractors hired by Cindell underpaid workers and failed to compensate the workers properly for overtime hours despite certifying compliance on weekly certified payrolls.
The investigation was initiated after a lawsuit was filed under the qui tam or whistleblowerprovisions of the False Claims Act, which permit private parties to sue on behalf of the government when they believe that defendants submitted false claims for government funds and to receive a share of any recovery. The False Claims Act permits the government time to investigate allegations in qui tam complaints and to intervene in such lawsuits, when the government deems it appropriate. The whistleblower will receive $72,000 from the settlement.
This resolution in this matter was the result of a coordinated effort between the United States Attorney’s Office for the Eastern District of Virginia, the Department of Labor Office of Inspector General, and the GSA Office of Inspector General. The matter was investigated by Assistant United States Attorney Monika Moore and former Special Assistant United States Attorney Erin Murdock-Park. The civil claims settled by this False Claims Act agreement are allegations only; there has been no determination of civil liability.
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. 1:12-cv-1170.Sentencing in Assault on Federal OfficerRead the Press Release
POCATELLO - Caitlin Eagle, 25, of Fort Hall, Idaho, was sentenced today in United States District Court to twelve months and one day in prison, and six months in a halfway house, followed by three years of supervised release, for assault on a federal officer, U.S. Attorney Wendy J. Olson announced.
On February 18, 2014, Fort Hall police were dispatched to an area in Fort Hall after a report of shots fired. The caller said the persons involved were dressed in black and were running from the area. The responding officer arrived in the area and saw a person in a black coat. The officer tried to talk with the person, but she continued walking away from the officer. The person, later identified as Eagle, gave the officer a false name and was uncooperative. The officer smelled a strong odor of an alcoholic beverage on her person, a violation of Fort Hall tribal law, and the officer attempted to arrest her. As the officer tried to handcuff her, she became combative and struck the officer in the face several times. The officer was able to handcuff Eagle and with the help of another officer was able to get Eagle into the police car. The injured officer was treated at the hospital for abrasions on his cheek and nose.
The case was investigated by the Fort Hall Police Department.
Sentence and Guilty Plea in Cases Involving Theft of Military Equipment Returned from Iraq and AfghanistanRead the Press Release
SACRAMENTO, Calif. — One defendant pleaded guilty and another was sentenced today in two related cases involving the theft of military equipment that was being inventoried at the U.S. Army base in Herlong, California, United States Attorney Benjamin B. Wagner announced.
Tony Herrin, 36, of Reno, Nevada, pleaded guilty today to theft of government property, and Devon Biggs, 38, formerly of Reno, Nevada, was sentenced today by U.S. District Judge Kimberly J. Mueller to 16 months in prison and restitution of $200,000 for the theft of government property.
According to court documents, Herrin and Biggs worked as civilian employees at the Sierra Army Depot (SIAD) in Herlong. As part of their job responsibilities, Biggs and Herrin received, catalogued, and inventoried military equipment returned from Iraq and Afghanistan. Biggs and Herrin worked in the same building, and the two stole numerous items of sophisticated military equipment. Specifically, Herrin played a role in stealing 10 Taser devices, three Vectronix systems used to detect targets (total value $221,787), six military grade flashlights (total value $11,267), and 25 thermal imaging sights. The total value of all these items is approximately $411,000.
Biggs also stole numerous items of sensitive military equipment: machine gun components, night vision goggles, laser GHOST Illumination technology, and low-light video recording equipment.
These cases are the product of investigations by the Law Enforcement Division of the United States Army, Naval Criminal Investigative Service, and the Federal Bureau of Investigation. Assistant United States Attorneys Jean Hobler and Christiaan Highsmith are prosecuting the cases.
Herrin is scheduled to be sentenced by United States District Judge Kimberly J. Mueller on May 27, 2015. Herrin faces a maximum statutory penalty of 10 years in prison and a $250,000 fine. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.Revere Woman Sentenced for Defrauding Government Benefits ProgramsRead the Press Release
BOSTON - A Revere woman was sentenced today for fraudulently receiving over $88,000 in disability payments and rental assistance.
Emily Lardiero, 64, was sentenced by U.S. District Court Judge Rya W. Zobel to three years of probation, including six months of home confinement, and was ordered to pay $47,671 in restitution to the Social Security Administration (SSA) and $40,391 in restitution to the U.S. Department of Housing and Urban Development. In December 2014, Lardiero pleaded guilty to two counts of stealing public money.
In 2003, Lardiero began receiving Supplemental Security Income disability benefits from the SSA. Recipients of these benefits are required to inform SSA if they return to work or if they acquire money or property that might make them financially ineligible to continue receiving benefits. Lardiero did not report any work or income to SSA and stated during a benefits review in November 2013 that she was still disabled and had no income aside from her SSA benefits. In reality, Lardiero was working at Action Emergency Services, a family business in Revere. She also drew income from the business, which she did not report to SSA. By failing to disclose her work and income to SSA, Lardiero received $47,671 in benefits to which she was not entitled.
Additionally, since 2001, Lardiero was illegally receiving rental assistance benefits from the U.S. Department of Housing and Urban Development (HUD). Under this program, HUD pays a significant portion of the monthly rent to the landlord, and the tenant pays the remainder. To receive this subsidy, tenants are not allowed to have any ownership interest in the housing in which they live. In 2007, Lardiero became the sole trustee of the trust that owned the house she was living in and as such she could control the property as if she were the legal owner. Despite signing annual acknowledgements that she knew she could not have any interest in her housing unit, Lardiero continued to participate in the subsidy program. From 2007 to 2010, an acquaintance of Lardiero’s received the monthly landlord’s payments from HUD, and then forwarded the money to Lardiero each month. In this manner, Lardiero illegally received $40,391 in HUD benefits.
This case was brought as part of an ongoing effort by the U.S. Attorney’s Office in partnership with the SSA to investigate and prosecute fraud pertaining to Social Security disability benefits.
In July 2014, Charles Flynn and Steven Grondell of Georgetown were each sentenced to three years of probation, including six months of home confinement, and were ordered to serve 105 hours of community service and to pay $105,158 in restitution to SSA. Flynn received SSA disability benefits while working under Grondell’s identity, and with his permission, to conceal the work from SSA.
Also in July 2014, Carl Lynch, of Ware, was sentenced to three years of probation, including six months of home confinement, and was ordered to pay $50,264 in restitution to SSA. Lynch received SSA disability benefits while working under another man’s identity to conceal the work from SSA.
In January 2014, Antonio Pulinario Brea, of the Dominican Republic, was sentenced to ten months in prison and was ordered to pay $60,455 in restitution to SSA. Pulinario Brea used the identity of an American citizen to obtain SSA disability benefits that he would not have been entitled to receive under his true identity.
United States Attorney Carmen M. Ortiz; Scott Antolik, Special Agent in Charge of the Office of Inspector General, Social Security Administration, Office of Investigations – Boston Field Division; and Christina Scaringi, Special Agent in Charge of the U.S. Department of Housing and Urban Development, Office of the Inspector General, Northeast Regional Office, made the announcement today. The Lardiero case was prosecuted by Special Assistant U.S. Attorney Timothy Landry of Ortiz’s Major Crimes Unit.