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9 April 2014
Two Defendants Sentenced to Prison in Insider Trading SchemeRead the Press Release
NEWARK, N.J. – The two primary traders in an extensive insider trading network were sentenced to prison today for repeatedly using information divulged by insiders at pharmaceutical/medical technology firms operating in New Jersey, U.S. Attorney Paul J. Fishman announced.
Lawrence Grum, 50, of Livingston, N.J., was sentenced to one year and one day in prison and Michael Castelli, 50, of Morris Plains, N.J., was sentenced to nine months in prison. Grum previously pleaded guilty before U.S. District Judge Katharine S. Hayden to an information charging him with two counts of conspiracy to commit securities fraud and four counts of securities fraud. Castelli previously pleaded guilty before Judge Hayden to an information charging him with two counts of conspiracy to commit securities fraud and five counts of securities fraud. Judge Hayden imposed both sentences today in Newark federal court.
According to documents filed in this case and statements made in court: From 2007 to 2012 Grum and Castelli executed numerous, profitable trades based on inside information fed to them by their friend, Mark Cupo, 53, of Morris Plains, who was an executive at Sanofi-Aventis, a global pharmaceutical company with United States operations based in New Jersey. Cupo, in turn, obtained much of the inside information from his friend and former employee, John Lazorchak, 43, of Long Valley, N.J., who was director of financial reporting at Celgene Corp., another global pharmaceutical company based in New Jersey. Lazorchak also obtained certain inside information from Mark Foldy, 44, of Morris Plains, a friend and former high school classmate of Lazorchak, who was a marketing executive at Stryker Corp., a leading medical technology business with a major division located in New Jersey.
During the course of the multi-year insider trading operation, Grum and Castelli regularly received from Lazorchak, via Cupo, material, non-public information about Celgene’s anticipated corporate acquisitions, numerous quarterly earnings results, and regulatory news, with the understanding that Grum and Castelli would trade based on the inside information and share their profits with Lazorchak and Cupo. Grum and Castelli also received inside information directly from Cupo regarding a corporate acquisition planned by Cupo’s employer, Sanofi, as well as inside information Cupo had obtained from Lazorchak regarding a Stryker acquisition. Lazorchak, in turn, had obtained the Stryker inside information from his friend, Foldy.
Grum and Castelli made efforts to conceal their involvement in insider trading by, for example, compiling binders of market research to try to provide an independent basis for their knowledge of confidential, material nonpublic information.
The material, non-public information available to Grum and Castelli enabled them to reap substantial profits by engaging in lucrative securities trading ahead of the public announcement of several corporate acquisitions, numerous quarterly earnings results, and regulatory news. In addition, they shared a portion of their profits with Lazorchak and Cupo for their respective roles in providing Grum and Castelli inside information.
In addition to the prison terms, Judge Hayden sentenced Grum and Castelli to two years each of supervised release.
Grum and Castelli are the last of the six defendants charged with participating in this insider trading network to plead guilty. The other four defendants: Lazorchak, Cupo, Foldy, and Michael Pendolino, 44, of Nashua, N.H., entered their guilty pleas before Judge Hayden on Oct. 7, 2013, and are awaiting sentencing.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark, for the investigation leading to today’s guilty pleas. He also thanked the U.S. Securities and Exchange Commission=s Market Abuse Unit, under the direction of Daniel M. Hawke.The government is represented by Assistant U.S. Attorney Shirley U. Emehelu of the U.S. Attorney’s Office Economic Crimes Unit in Newark.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, please visit www.stopfraud.gov.
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Defense counsel: Lawrence Grum: Scott A. Resnik Esq., New York
Michael Castelli: Daniel Zinman Esq. and Daniel Stein Esq., New York
John Lazorchak: Lawrence S. Lustberg Esq., Newark
Mark Cupo: Joseph J. Bell Jr. Esq. and Joseph J. Bell, IV Esq., Rockaway, N.J.
Mark Foldy: Jonathan Marks Esq., New York, Michael Pendolino: James S. Friedman Esq., NewarkTom's River, N.J., Chiropractor Admits Receiving Bribes for Patient ReferralsRead the Press Release
NEWARK, N.J. – A chiropractor with a practice in Toms River, N.J., admitted today to accepting bribes to refer a number of his patients to a New Jersey-licensed pain management physician, U.S. Attorney Paul J. Fishman announced.
Norman Eastburn, 48, of Jackson, N.J., pleaded guilty to an information charging him with one count of violating the Anti-Kickback statute. He entered his guilty plea before U.S. District Judge Stanley R. Chesler in Newark federal court.
According to documents filed in this case and statements made in court:
Eastburn was paid a cash fee per patient he referred to the pain management physician. As part of the scheme, the pair negotiated specific kickback amounts that would be paid based on which payor would be billed – Medicare or a private healthcare insurer – and what type of pain treatment would be rendered.
Eastburn indicated to the pain physician that a medical doctor’s involvement in pain procedures would increase Eastburn’s likelihood of being reimbursed by insurers. As an example, Eastburn recounted a prior situation in which he misled a patient by telling her that she required an injection that he did not then believe, in fact, was medically necessary, then then paid a doctor $500 in cash to administer it.
The violation of the Anti-Kickback statute carries a maximum potential penalty of five years in prison and a $250,000 fine. In addition, Eastburn has agreed to forfeit to the United States the money he was paid in bribes. Sentencing is scheduled for July 8, 2014.U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford, and the U.S. Department of Health and Human Services, Office of Inspector General, under the direction of Special Agent in Charge Tom O’Donnell, with the investigation.
U.S. Attorney Paul J. Fishman reorganized the health care fraud practice at the New Jersey U.S. Attorney’s Office shortly after taking office, including creating a stand-alone Health Care and Government Fraud Unit to handle both criminal and civil investigations and prosecutions of health care fraud offenses. Since 2010, the office has recovered more than $535 million in health care fraud and government fraud settlements, judgments, fines, restitution and forfeiture under the False Claims Act, the Food, Drug and Cosmetic Act and other statutes.
The government is represented by Senior Litigation Counsel Andrew Leven of the U.S. Attorney’s Office Health Care and Government Fraud Unit in Newark.
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Defense counsel: Peter Carter Esq., Assistant Federal Public Defender, Newark
Eastburn, Norman Information
Three Iowa Men Indicted for Armed Robbery of Burlington Junction BankRead the Press Release
KANSAS CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that three Iowa men were indicted by a federal grand jury today for the armed robbery of a Burlington Junction, Mo., bank.
Donald D. Kestner, Jr., 26, and Torrence Joseph O’Neill, also known as “Torry,” 26, both of Mt. Pleasant, Iowa, and Travis Joe Davis, 27, of Fort Dodge, Iowa, were charged in a three-count indictment returned by a federal grand jury in Kansas City, Mo.
Today’s indictment alleges that Kestner, O’Neill and Davis stole $12,282 from Citizens Bank and Trust, 102 W. Main St., Burlington Junction, Mo., on March 21, 2014.
Kestner, O’Neill and Davis were arrested shortly after the robbery occurred. A Maryville Department of Public Safety officer in an airplane piloted by a citizen spotted the three men walking and they were arrested by the Missouri State Highway Patrol. The vehicle used in the armed bank robbery was discovered hidden among some trees and three men were seen walking away from that vehicle.
Kestner and Davis are also charged with one count of aiding and abetting one another to brandish a firearm during a crime of violence.
Kestner is also charged with being a felon in possession of a firearm. Under federal law, it is illegal for anyone who has been convicted of a felony to be in possession of any firearm or ammunition. Kestner, who has a prior felony conviction for burglary, allegedly possessed a .45-caliber pistol.
Dickinson cautioned that the charges contained in this indictment are simply accusations, and not evidence of guilt. Evidence supporting the charges must be presented to a federal trial jury, whose duty is to determine guilt or innocence.
This case is being prosecuted by Assistant U.S. Attorney Rudolph R. Rhodes, IV. It was investigated by the Nodaway County, Mo., Sheriff’s Department, the Maryville, Mo., Department of Public Safety, the Missouri State Highway Patrol, the Page County, Iowa, Sheriff’s Department and the FBI.Taquarius Ford Charged with Sex Trafficking by Force, Fraud, CoercionRead the Press Release
PORTLAND, Ore. — Taquarius Kaream Ford, also known as “Cameron,” has been indicted by a federal grand jury on sex trafficking and conspiracy charges. Ford has pled not guilty to all charges. Following a detention hearing today, U.S. Magistrate Court Judge Janice M. Stewart detained Ford, pending his trial. Trial is currently set for June 3, 2014, before U.S. District Court Judge Garr M. King.
The grand jury indictment alleges that Ford and a co-conspirator sex trafficked adult females in the District of Oregon and elsewhere, by force, fraud and coercion. In its’ court filings, the government alleges that Ford recruited young women in suburban shopping malls and elsewhere across the United States by posing as a modeling executive and promising them a modeling contract. He convinced young women to travel to Los Angeles, wined and dined them in Hollywood, and then told them that if they want to be models, they must first work for him as prostitutes. In one case, he recruited an 18-year-old girl at a suburban mall, flew her to Los Angeles, and took her to Hollywood parties. He then coerced her to work in his escort business, and when she protested, he forcibly raped her. Ford and his co-defendant also threatened to harm the victim’s family. Thereafter, defendants transported the victim to Portland for the purpose of prostitution, where she was rescued at an airport hotel by Port of Portland officers. Further investigation by the FBI’s Child Exploitation Task Force revealed that defendant had recruited other young women across the country into his “escort” business. The FBI has identified additional victims in Idaho, Arizona, and Georgia.
Sex trafficking by force, fraud, and coercion carries a mandatory minimum sentence of 15 years in prison, and a statutory maximum of life imprisonment. A criminal indictment is only an allegation and not evidence of guilt. Defendant is presumed innocent unless and until proven guilty.
The FBI urges anyone who was victimized by Taquarius “Cameron” Ford, to contact the Portland FBI office at (503) 224-4181.
The charges stem from a continuing investigation by the FBI and the Tigard Police Department, members of the FBI’s Child Exploitation Task Force. The case is being prosecuted by Assistant U.S. Attorney Stacie Fatka Beckerman, and Special Assistant U.S. Attorney Glen Ujifusa of the Multnomah County District Attorney’s Office.
Suffolk Man Indicted for Making Death ThreatsRead the Press Release
NORFOLK, Va. – David Gil Wilkinson, 43, of Suffolk, Va., was indicted by a federal grand jury today for making death threats against both the President and former First Lady Hillary Clinton.
Dana J. Boente, Acting United States Attorney for the Eastern District of Virginia, and William Frantzen, Special Agent in Charge of the United States Secret Service’s Richmond Field Office, made the announcement.
Wilkinson faces a maximum penalty of 10 years if convicted.
According to an affidavit previously filed, Wilkinson, a retired Special Forces Navy Chief, called 911 in Southampton County claiming to be a FBI Agent on a secret mission. When officers responded Wilkinson told them that he was going to run for president and personally execute both the President and Hillary Clinton. Wilkinson was committed for an emergency mental health evaluation for 72 hours. Secret Service agents interviewed Wilkinson where he re-iterated his desire to execute the President and Hillary Clinton. When Wilkinson was released he drove to Henrico County, called 911 and told operators that President Obama was out, people needed to die, and he was part of a group that would take back America.
This case was investigated by the United States Secret Service. Assistant United States Attorney Joseph L. Kosky is prosecuting the case on behalf of the United States.
Criminal indictments are only charges and not evidence of guilt. A defendant is presumed to be innocent until and unless proven guilty.
A copy of this press release may be found on the website of the United States Attorney’s Office for the Eastern District of Virginia at http://www.justice.gov/usao/vae. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia at http://www.vaed.uscourts.gov or on https://pcl.uscourts.gov.Steubenville Man Sentenced to 21 Years for Cocaine TraffickingRead the Press Release
1125 Chapline Street, Federal Building, Suite 3000 ● Wheeling, WV 26003
(304) 234-0100 ● Contact: Chris Zumpetta-Parr, Public Affairs SpecialistWHEELING, WEST VIRGINIA - A Steubenville, Ohio man will serve the next two decades in federal prison for his role in the distribution of cocaine in the Northern District of West Virginia and in Jefferson County, Ohio.
United States Attorney William J. Ihlenfeld, II, announced that MICHAEL T. MCGEE, age 43, of Steubenville, was sentenced to 262 months in prison at a hearing held today before U.S. District Court Judge Frederick P. Stamp, Jr. McGEE was convicted in January of the felony offense of “Conspiracy to Possess with Intent to Distribute and to Distribute Cocaine” after a three-day jury trial.
MCGEE, who has prior convictions for armed robbery and cocaine and marijuana trafficking, was found by the jury to have conspired with co-defendant Ronald Snider and others to distribute cocaine from November of 2012 to June of 2013.
In announcing the sentence, U.S. Attorney Ihlenfeld praised the work of the Jefferson County, Ohio, Drug Task Force and the Drug Enforcement Administration. Ihlenfeld also commended the efforts of Assistant U.S. Attorney Robert H. McWilliams, Jr., who prosecuted the case.
State Audit Director Charged with Federal Program FraudRead the Press Release
BATON ROUGE, LA - United States Attorney Walt Green announced today that DELRICE J. AUGUSTUS, age 34, of Baton Rouge, Louisiana, has been charged in a Bill of Information with federal program fraud, in violation of Title 18, United States Code, Section 666(a)(1)(A).
AUGUSTUS is the Director of the Bureau of Auditing and Compliance Services for the Louisiana Department of Children and Family Services (DCFS). He is currently on leave from his position. DCFS leadership has cooperated fully with the investigation.
If convicted, AUGUSTUS faces up to 10 years imprisonment, a $250,000 fine, forfeiture of the proceeds from the offense, restitution, and up to 3 years of supervised release following a term of imprisonment. His initial appearance will be held on a date to be determined.
The Bill of Information alleges that, during the period from 2010 through March 2014, while serving as Audit Director of a state agency receiving over a billion dollars annually in federal funds, AUGUSTUS fraudulently misused government purchasing cards to obtain items for personal use for himself and others, including an installed dishwasher, televisions, movies, cameras, wireless audio systems, such as Sonos and Jawbone, gaming devices, such as Xboxes, Wii and Leapsters, mobile devices, such as I-Pads, Kindle Fires, and an I-Phone 5, Dyson vacuums, rental vehicles, hotel rooms, and fuel.
The matter is being handled by the U.S. Attorney’s Office for the Middle District of Louisiana, the Louisiana State Police, the Louisiana Inspector General’s Office, and the Federal Bureau of Investigation.
NOTE: A Bill of Information is an accusation by the U.S. Attorney’s Office. The defendant is presumed innocent until and unless adjudicated guilty at trial or through a guilty plea.
Sisters Arrested on Federal Tax Fraud ChargesRead the Press Release
BIRMINGHAM -- Federal authorities today arrested two sisters on charges that they worked together in their Taxes N More business in Tarrant to prepare fraudulent tax returns for themselves and others, often falsely claiming a credit for first-time homebuyers, announced U.S. Attorney Joyce White Vance and IRS, Criminal Investigation, Special Agent in Charge Veronica Hyman-Pillot.
A federal grand jury indicted LUGENIA L. "Gigi" CONNER, 31, of Trussville, and KANESHIA L. "Kiki" CONNER-GOODGAME, 34, of Birmingham, in late March on charges of conspiracy to defraud the United States by obstructing and defeating collection of income taxes by the Internal Revenue Service. The indictment also charges both sisters, individually, with assisting in the preparation and presentation of false and fraudulent returns for the 2008 tax year, and with making and filing false returns for themselves for 2008. The indictment was sealed until both women were arrested.
"Tax return preparers who concoct schemes to collect inflated refunds are stealing from the U.S. Treasury and cheating the millions of hard-working Americans who pay their due share of taxes each year," Vance said. "The U.S. Attorney's Office will continue to work with the IRS to prosecute tax fraud and protect the sanctity and integrity of the tax system."
"As filing season comes to an end, the arrests today should send a message that IRS Criminal Investigation will continue to enforce laws that protect the integrity of our tax system,” Hyman-Pillot said. “Refund fraud is not a victimless crime and it affects everyone who pays taxes. Honest taxpayers who file accurate returns can be assured that the government will pursue the individuals who attempt to defraud the United States tax system."According to the March indictment, Conner and Conner-Goodgame conducted their scheme as follows:
The sisters jointly owned and operated Taxes N More, where they worked together to obtain inflated refunds for their clients in 2009 by falsifying information submitted on clients' 2008 returns. The sisters claimed the First Time Home Buyer's Credit of up to $7,900 on returns they prepared for other taxpayers, knowing those taxpayers were not entitled to the credit. The women also prepared third-party tax returns claiming itemized deductions or business expenses that clients neither had provided information for, nor were entitled to receive.
Conner faces five counts of assisting in the preparation of fraudulent returns for falsely claiming a total of $93,683 in deductions and credits on returns she prepared for five different taxpayers. Conner-Goodgame faces two counts of the same charge for falsely claiming a total of $15,400 with the First Time Home Buyer's Credit for two tax clients.
Conner and Conner-Goodgame also each are charged with creating and submitting 2008 personal tax returns on which they claimed the homebuyers' credit, knowing they were not entitled to that deduction.
The Taxes N More business had a dramatic increase in both the number of returns prepared and the amount of refunds claimed from the 2007 to the 2008 tax year, according to the indictment. For the 2007 tax year, it says the sisters' business prepared 337 third-party tax returns, claiming $1.3 million in refunds. For the 2008 tax year, Taxes N More prepared 670 third-party returns, claiming $3.5 million in refunds.
IRS Criminal Investigation investigated the case, which Assistant U.S. Attorney Amanda Wick is prosecuting.
The public is reminded that an indictment is only a charge and defendants are presumed innocent. It is the government's responsibility to prove guilt beyond a reasonable doubt at trial.
Sentence of 70 Months in Prison for Marijuana ConspiracyRead the Press Release
PLATTSBURGH, NEW YORK – ALAIN FORGET, 43, was sentenced on April 4, 2014 by United States District Court Judge Glenn T. Suddaby to 70 months imprisonment and four years supervised release for conspiracy to possess with intent to distribute and to distribute more than one hundred (100) kilograms of marijuana announced United States Attorney Richard S. Hartunian.
On February 28, 2012, FORGET pled guilty to an information, charging conspiracy to possess with intent to distribute and to distribute a controlled substance, in violation of 21 U.S.C. §§846 and 841(b)(1)(B). FORGET participated in a large scale drug trafficking organization designed to import thousands of pounds of marijuana into the United States and he help generate millions of dollars in drug proceeds. In addition to personally smuggling loads of marijuana into the United States, FORGET assumed a leadership role within the organization, recruiting others into the smuggling scheme and directing their activities.
The investigation and prosecution of FORGET was the result of a joint investigation between the Drug Enforcement Administration (DEA), Homeland Security Investigations (HSI), the New York State Police (NYSP), the United States Border Patrol (USBP), the Plattsburgh Police Department, and Clinton County Sheriff’s Office.
Any questions may be directed to Assistant U.S. Attorney John Duncan in Syracuse, New York at 315-448-0672.
Sentence of 120 Months in Prison for Marijuana ConspiracyRead the Press Release
PLATTSBURGH, NEW YORK – NICHOLAS VARACALLI, 66, was sentenced on April 3, 2014 by United States District Court Judge Glenn T. Suddaby to 120 months imprisonment and five years supervised release for conspiracy to possess with intent to distribute and to distribute more than one thousand (1,000) kilograms of marijuana announced United States Attorney Richard S. Hartunian.
On December 19, 2013, VARACALLI pled guilty to Count 1 of superseding indictment 10-CR- 534 (GTS), charging conspiracy to possess with intent to distribute and to distribute a controlled substance, in violation of 21 U.S.C. §§846 and 841(b)(1)(A). VARACALLI played a key role in an international drug smuggling organization designed to import thousands of pounds of marijuana into the United States and helped generate millions of dollars in drug proceeds. The defendant, along with co-defendant’s Denis Vachon and Jacques Perrault, was responsible for coordinating the acquisition and delivery of large quantities of marijuana, communicating with marijuana dealers in the United States to arrange marijuana shipments and receiving the proceeds of the transactions to pay the suppliers and other members of the organization.
On March 4, 2014, co-defendant Jacques Perrault pled guilty to Count 1 of superseding indictment 10-CR-534. Perrault is scheduled to be sentenced on July 10, 2014.
The investigation and prosecution of VARACALLI was the result of a joint investigation between the Drug Enforcement Administration (DEA), Homeland Security Investigations (HSI), the New York State Police (NYSP), the United States Border Patrol (USBP), the Plattsburgh Police Department, and Clinton County Sheriff’s Office.
Any questions may be directed to Assistant U.S. Attorney John Duncan in Syracuse, New York at 315-448-0672
Ronald House Sentenced on Obstruction of Justice ChargesRead the Press Release
ALBANY, NEW YORK – Richard S. Hartunian, United States Attorney for the Northern District of New York, announced that RONALD L. HOUSE, 58, of Rochester, New York was sentenced today in Buffalo, New York on his November, 2013 conviction for three counts of obstruction of justice and one count of making materially false statements.
Hon. William M. Skretny, Chief United States District Judge for the Western District of New York sentenced House to 48 months imprisonment, 2 years supervised release and a money judgment of $32,000.
House’s conviction came after a jury trial in Buffalo, New York charging that he endeavored to obstruct justice on behalf of criminal defendants with cases pending in the United States District Court in Rochester. He was convicted of obstructing two cases by endeavoring to fraudulently attribute information to criminal defendants that they could use in exchange for sentencing leniency, and in one case, for pre-trial release. As to a third case he was also convicted of obstructing justice by making false representations to a United States Probation Officer in an effort to persuade the officer from filing a supervised release violation against the offender.
House was also convicted of making materially false statements to the then-director of a Rochester halfway house in order to obtain extra liberty for an inmate by falsely representing that the inmate was going to be with House at a church men’s group, while knowing that the inmate instead was going to use the time to spend time with a girlfriend.
HOUSE’s arrest and conviction are the result of an investigation by the Federal Bureau of Investigation - Buffalo Division, the Internal Revenue Service – Criminal Investigation, New York Field Office, the City of Rochester Office of Public Integrity, and the Rochester Police Department. The prosecution was handled by Northern District of New York Assistant U.S. Attorney Lisa Fletcher, who can be reached at 315-448-0672.
Robber Receives 20-Year Federal SentenceRead the Press Release
Four Banks and Two Motels Robbed During Crime Spree Last FallPORTLAND, Ore.- Andrew Frank Laviguer, 57, was sentenced today by Senior U.S. District Judge Robert E. Jones to 240 months in federal prison for the robbery of four banks and two motels in Oregon and Washington during August and September of last year. Laviguer pled guilty to the charges in November of 2013 and has been in custody since the time of his arrest on September 9, 2013.
Laviguer was sentenced for the following robberies: (1) August 14, 2013, armed robbery (replica firearm) of the Columbia Bank on NE Halsey Street in Portland, Oregon; (2) August 30, 2013, robbery of the Key Bank on 17th Avenue SW in Seattle, Washington; (3) September 4, 2013, robbery of the Sterling Savings Bank on Tacoma Mall Blvd. in Tacoma, Washington; (4) September 7, 2013, robbery of the Super 8 Motel on SW Parkway Avenue in Wilsonville, Oregon; (5) September 8, 2013, attempted robbery of the Roadway Inn on Astoria Way NE in Salem, Oregon; and (6) September 9, 2013, armed robbery (replica firearm) of the Wells Fargo Bank on NW 11th Avenue in Portland, Oregon.
Laviguer was arrested by Portland Police Bureau officers after he robbed the Wells Fargo Bank in September of 2013. Laviguer received a sentence of 180 months, following a 1992 Salem bank robbery. After serving that sentence and being released, he was convicted of robbing a bank in Gresham in 2007 and was sentenced to 77 months in prison. Following his release from the Federal Correctional Institution in Williamsburg, South Carolina, on July 9, 2013, he was ordered to report to the Lane County Work Release Center to begin his supervised release for the 2007 bank robbery. He failed to report and the robbery spree began less than one month later.
In order to achieve the 20-year sentence, Jones found that Laviguer was a “career offender” under federal sentencing law and departed upward from that sentencing range because of Laviguer’s aggravated criminal history and the number of robberies he committed.
This case was investigated by the FBI, the Portland Police Bureau, the King County Sheriff’s Office, the Tacoma Police Department, the Clackamas County Sheriff’s Office and the Salem Police Department. It was prosecuted by Assistant U.S. Attorney Fred Weinhouse.
Rapid City Man Indicted for Concealing Person from Arrest and False StatementRead the Press Release
United States Attorney Brendan V. Johnson announced that a Rapid City, South Dakota, man has been indicted by a federal grand jury for Concealing Person from Arrest and False Statement.
Yellow Elk was remanded to the custody of the U.S. Marshals Service. A trial date has not been set.
Justin Robert Yellow Elk, age 28, was indicted on March 18, 2014. He appeared before U.S. Magistrate Judge Veronica L. Duffy on April 7, 2014, and pled not guilty to the Indictment.
The maximum penalty upon conviction is 5 years’ imprisonment and/or a $250,000 fine, 3 years of supervised release, and a $100 assessment to the Federal Crime Victims Fund. Restitution may also be ordered.
The indictment charges that Yellow Elk aided in concealing a man from arrest on a federal charge, and gave false statements to a federal agent during the investigation.
The charges are merely accusations and Yellow Elk is presumed innocent until and unless proven guilty.
The investigation was conducted by the Federal Bureau of Investigation. Assistant U.S. Attorney Sarah B. Collins is prosecuting the case.
Prison Time and Stiff Penalties Await Tax Fraudsters, Prosecutors WarnRead the Press Release
Tax Preparer Fraud, Identity Theft Among The 12 Most Common Tax Scams
CHARLOTTE, NC - With the deadline for filing income tax returns less than a week away, Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina and Jeannine A. Hammett, Special Agent in Charge of the Internal Revenue Service-Criminal Investigation Division (IRS-CI), jointly announce recent tax fraud prosecutions and caution potential tax fraudsters to think twice before they commit tax crimes.
“Prosecuting those who cheat the tax system remains a priority for my Office,” said U.S. Attorney Tompkins in making today’s announcement. “Taxes help pay for important services our communities rely on and tax cheats increase the burden on honest taxpayers who each year file accurate and timely tax returns and pay their tax obligations.” Ms. Tompkins urged tax payers to be vigilant in safeguarding their personal identities and to avoid being victims of tax scams by selecting reliable tax preparers and reporting suspected tax fraud. U.S. Attorney Tompkins also said, “Our experienced tax prosecutors and IRS criminal investigators work hand-in-hand to uncover tax fraud and hold tax cheats accountable for their actions.”
“During tax filing season, return preparers and taxpayers should be aware of the serious consequences facing those who aid or assist in the filing of fraudulent tax returns,” said IRS-CI Special Agent in Charge Hammett. “Those who fly in the face of the tax laws face investigation, prosecution, and if convicted, significant prison sentences and substantial fines.”
Tax Preparer Pleads Guilty to Tax FraudReginald B. Landrum, a Charlotte-area tax return preparer, pleaded guilty today to one count of aiding in the preparation of false tax returns. Court records show that between 2006 and 2010 Landrum prepared and submitted to IRS 58 false tax returns using false information, resulting in larger tax refunds for his clients. Court records show that Landrum used false Schedule C income and expenses, false Schedule A deductions, false wages, false dependents and other false items to prepare the fraudulent tax returns. The total tax loss associated with the 58 fraudulent tax returns Landrum prepared and filed is $229,691. At sentencing, Landrum faces up to three years in prison and a $250,000 fine. A sentencing date has not been set yet. (3:14-cr-46).
Other 2013 Tax ProsecutionsIn the last year, the U.S. Attorney’s Office, with the assistance of IRS-CI, has prosecuted numerous individuals for criminal tax violations. Tax enforcement prosecutions include:
Isaac H. Birch - On August 15, 2013, Isaac Birch, of Franklin, N.C., pleaded guilty to filing false and fraudulent statements with the U.S. Treasury. According to court documents, Birch filed false tax returns in 2007, 2008 and 2009 using fictitious IRS 199OID forms, through which he fraudulently obtained a refund in excess of $480,000. Birch is awaiting sentencing and faces a maximum prison term of three years and a $100,000 fine. (2:13-cr-00020).
Tega Burns - On January 14, 2014, Tega Burns, a/k/a Tega Foy, of Charlotte, was sentenced to 24 months in prison and two years of supervised release and was ordered to pay $306,972.43 as restitution, for committing tax fraud and mortgage fraud. Court records show that from 2007 to 2011, Burns was the owner of Family Homecare Services, which provided in-home care services in the Charlotte area. Court documents show that Burns did not pay a large part of the employment taxes owed for the relevant tax years and used nominees, including her son and her step-father, to hide funds from the IRS. Burns pleaded guilty to failure to account for and pay over employment tax and to making a false statement on a loan application. (3:12-cr-00198).
Candida Figueroa and Cathy Cisneros – On November 7, 2013, Candida Figueroa and Cathy Cisneros, both of Charlotte, were sentenced to prison time for obtaining false and fraudulent income tax refunds. Figueroa was sentenced to 30 months in prison and two years of supervised release, and Cisneros was sentenced to 37 months in prison and three years of supervised release. Figueroa and Cisneros pleaded guilty false claims conspiracy and were ordered to pay $1,658,477.67 as restitution. Court documents indicate that from January to July 2012, the defendants used fraudulent Individual Taxpayer Identification Numbers (ITINs), Mexican birth certificates and other false documents to file at least 1,104 fraudulent tax returns seeking refunds. IRS issued refunds totaling approximately $1.6 million, of which $136,334 has been recovered. (3:12-cr-00260). A third co-conspirator, Ana Portillo, of Charlotte, pleaded guilty to false claims conspiracy in May 2013 for participating in the same tax fraud scheme and is awaiting sentencing. Portillo faces a maximum prison term of 10 years, a $250,000 fine, or both. (3:12-cr-00389).
Teodoro Felix Hernandez – On November 10, 2013, Teodoro Felix Hernandez pleaded to false claims conspiracy. According to filed court documents, from February 2012 to May 2013, Hernandez conspired with others and defrauded the U.S. Treasury by obtaining false tax refunds using fraudulently obtained ITINs. The conspirators prepared and filed false returns using the ITINs and false wage, income, and withholding tax information and claiming multiple dependents, causing the U.S. Treasury to issue tax return checks. The checks were mailed to rural addresses in North Carolina, South Carolina and Georgia, at which the purported taxpayer did not live. According to the documents, Hernandez cashed approx. 109 fraudulent tax return checks with various money service businesses, the value of which totaled $428,065 in false refunds. Hernandez is currently released on bond and awaiting sentencing. He faces a maximum of 10 years in prison and a $250,000 fine. (3:12-cr-158).
James Wesley Hills, II – On March 3, 2014, James Wesley Hills, II, of Asheville, pleaded guilty to making false claims against the United States and aggravated identity theft. According to court documents, Hills gained access to personal identifying information of customers of Primerica, a financial products company, and between 2010 and 2011, he used the stolen information to file fraudulent tax returns. Hills filed at least 38 false tax returns in this manner and collected over $50,000 of stolen U.S. Treasury funds. Hills is awaiting sentencing. He faces a maximum prison term of five years for making false claims and a mandatory term of two years in prison for the aggravated ID theft charge, and a $250,000 fine. (1:14-cr-05).
Jacqueline Pucheta Juarez – On January 7, 2014, Jacqueline Pucheta Juarez pleaded to false claims conspiracy. According to filed court documents, from January 2012 to May 2013, Juarez and others conspired to defraud the U.S. Treasury by participating in a scheme to obtain false tax refunds, using fraudulently obtained ITINs. Juarez and others used these ITINs to prepare fraudulent federal tax returns seeking refunds based on false wage, income, and withholding tax information and by claiming multiple dependents. Based on the fraudulent tax returns, the U.S. Treasury issued tax return checks and mailed them to addresses in rural addresses in North Carolina, South Carolina and Georgia, at which the purported taxpayer did not live. Juarez cashed approx. 350 fraudulent tax refund checks at various money service businesses, the value of which totaled $1,271,377 in false refunds. Juarez is currently in federal custody and awaiting sentencing. She faces a maximum prison term of 10 years, a $250,000 fine, or both. (United 3:12-cr-157).
Yolanda Tiess Kitson - On October 28, 2013, Yolanda Tiess Kitson, of Augusta, Ga., pleaded guilty to false claims conspiracy. Court records show that Kitson conspired with Senita Dill and Ronald Jeremy Knowles to file fraudulent tax returns using stolen personal identifying information. Through her job as a contractor at the Eisenhower Army Medical Center at Fort Gordon in Augusta, Ga., Kitson stole personal information from patient records and passed it her sister, Dill, who used it to file false tax returns. The conspirators filed more than 1,000 false tax returns and received over $3.5 million of stolen U.S. Treasury funds. Dill and Knowles also pleaded guilty to similar charges. All three defendants are awaiting sentencing and face up to 10 years in prison and $250,000 in fines. (1:13-cr-31).
Nghia Ly – On October 2, 2013, Nghia Ly, of Waxhaw, N.C., pleaded guilty to tax evasion for the 2011 calendar year. According to court records, Ly owned half of Kim Sen Jewelry, Inc., d.b.a. KS Nail Supply (KSJ) in Charlotte. From 2007 through 2011, Ly concealed from the IRS some of his personal earnings from KSJ. Court records show that Ly failed to provide bank records and hid a large part of the gross receipts of KSJ from his tax return preparer. For years 2007 through 2011, KSJ earned additional gross receipts totaling more than $4.8 million which Ly failed to report on KSJ corporate tax returns. As a result of the unreported gross receipts, Ly had additional taxable income of $820,396. A sentencing has not been set. Ly faces a maximum sentence of five years in prison and a maximum fine of $250,000. (3:13-cr-00235).
Jessica Ordonez – On March 31, 2014, Jessica Ordonez, of Morganton, N.C., was charged with tax evasion and aiding and abetting the preparation and presentation of a false tax return. Beginning in 2002, Ordonez was the owner of Tax Pros (a/k/a “Ordonez Tax Services”), which offered tax preparation services, among other things. Court documents show that between 2004 and 2012 Ordonez prepared at least 100 false tax returns for 23 taxpayers, using fraudulent ITINs which entitled her clients to large fraudulent tax refunds, with an associated tax loss of at least $202,217. Ordonez also failed to report her own income on her individual tax returns for tax years 2009 to 2011, with a corresponding tax loss between $81,000 and $122,000. Ordonez’s formal plea hearing is scheduled for April 11, 2014. At sentencing, she faces five years in prison and a $250,000 fine for the tax evasion charge and three years in prison and a $250,000 fine for aiding and abetting the preparation and presentation of a false tax return. (3:14-cr-00071).
Edward Rosner – On September 12, 2013, Edward Rosner, of Charlotte pleaded guilty to tax evasion. According to the court records, from 2005 through 2009, Rosner concealed his personal earnings from the IRS by directing funds obtained from his employer to himself through bank accounts in the name a nominee company, New Start LLC, and by directing the transfer of funds to accounts in the name of another individual. During this same time period, Rosner failed to file tax returns, despite obtaining income totaling approximately $2.9 million. Rosner awaits sentencing and faces a maximum prison sentence of five years and a $250,000 fine. (3:13-cr-00172).
Nkhenge Shropshire – On October 15, 2013, Nkhenge Shropshire, a/k/a Konjay Shropshire, of Charlotte, pleaded guilty to conspiracy to defraud the IRS and to making false statements on a loan application. Court records show that from 2009 through 2012, Shropshire owned Tax Connections, a Charlotte tax return preparation business. From 2009 to 2011, Shrophsire aided and assisted in the preparation of more than 600 tax returns for clients which were e-filed with the IRS. Many of the tax returns prepared by Shropshire falsely included Schedule C losses and refundable education credits, which decreased the clients’ tax liabilities, therefore resulting in larger tax refunds and false Earned Income Tax Credits. The tax loss associated with the false education credits is more than $580,000. Shropshire directed that many of the fraudulent tax refunds be deposited into a business bank account she controlled, and kept a portion of the refund as payment for her services. On some occasions, Shropshire did not provide her clients with copies of their completed tax returns or gave them incomplete copies, so clients could know their returns contained false information. The defendant is awaiting sentencing, and faces a maximum sentence of five years in prison and a maximum fine of $250,000 for the conspiracy count and a maximum sentence of 30 years in prison and a $1 million fine for the false statement on a loan application charge. (3:13-cr-00248).
Kenneth Sumner – On January 16, 2014, Kenneth Sumner, of Charlotte, pleaded guilty to filing a false tax return. Court documents indicate that Sumner was the owner of a Charlotte sales company, Ken B. Sumner and Associates. From 2006 through 2010, Sumner failed to file timely tax returns with the IRS despite having the requisite income to file tax returns. In June 2010, Sumner filed his 2006 federal income tax return which omitted gross receipts from Sumner’s business totaling approximately $106,808. For tax years 2007 and 2008, Sumner failed to file timely income tax returns even though he earned approximately $318,433 and $337,090, respectively. A sentencing date has not been set. Sumner faces a maximum sentence of three years in prison and a $250,000 fine. (3:13-cr-00257).
Denise Swanson – On August 22, 2013, Denise Swanson, of Lenoir, N.C., pleaded guilty to tax evasion for tax year 2010. Court documents show that Swanson was the owner and operator of Bottomline Accounting, a tax preparation and bookkeeping business. From 2006 to 2012, Swanson performed tax preparation services for J.W. and K.W., and their business, C.B. (“the Clients”), and was responsible for making tax payments on their behalf. Swanson received money from the Clients to pay various tax obligations to the IRS and other state agencies. But instead of making the payments, Swanson embezzled the money and used it to pay for personal expenses. In total, Swanson embezzled approximately $839,830. Also, Swanson failed to report the embezzled income on her own individual tax returns for tax years 2006 through 2011. Swanson awaits sentencing and faces a maximum sentence of five years in prison and a $250,000 fine. (5:13-cr-61).
Federal penalties for each count of conviction of tax crimes range from a maximum of one year in prison and a $100,000 fine for failure to file a tax return, false withholding exemptions, and delivering or disclosing false tax documents, to a maximum of 10 years in prison and a $250,000 fine for conspiracy to defraud with respect to false refund claims. Other penalties include a mandatory term of two years in prison and a $250,000 fine for aggravated ID theft charges, three years in prison and a $250,000 fine for obstructing or impeding an investigation and filing or preparing a false tax return, and a maximum of five years in prison and a $250,000 fine for tax evasion, failure to pay taxes, conspiracy to commit a tax offense or conspiracy to defraud.
The U.S. Attorney’s Office and the IRS remind tax payers to exercise caution during tax season to protect themselves against a wide range of tax schemes ranging from identity theft to return preparer fraud. The IRS has issued its annual “Dirty Dozen” which lists common tax scams that taxpayers may encounter, particularly during filing season. Taxpayers are urged look out for, and to avoid, the following common schemes:
• Identity theft • Pervasive Telephone Scams • Phishing • False Promises of “Free Money” from Inflated Refunds • Return Preparer Fraud • Hiding Income Offshore • Impersonation of Charitable Organizations • False Income, Expenses or Exemptions • Frivolous Arguments • Falsely Claiming Zero Wages or Using False Form 1099 • Abusive Tax Structures • Misuse of Trusts
Education is the best way to avoid these common schemes. To learn more about the Dirty Dozen scams and for help with recognizing and avoiding abusive tax schemes, the IRS offers educational material at www.irs.gov. Suspected tax fraud can be reported to the IRS using Form 3949-A found on the IRS.gov website.
Physical Therapy Clinics to Pay $2.78 Million to Resolve False Claims Act AllegationsRead the Press Release
WASHINGTON - Two companies that operate physical therapy clinics in Washington, D.C., Virginia, and Maryland, along with three individuals associated with the businesses, have agreed to pay the United States $2.78 million to settle allegations that the firms’ billings to Medicare and the TRICARE health care program violated the False Claims Act.
The settlement was announced today by Ronald C. Machen Jr., U.S. Attorney for the District of Columbia; Nicholas DiGiulio, Special Agent in Charge of the U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG), for the region that includes Washington, D.C., and Robert E. Craig, Special Agent in Charge of the Mid-Atlantic Field Office of the Defense Criminal Investigative Service (DCIS).
The companies -- Alliance Rehabilitation, LLC and Active Physical Therapy Services, LLC -- submitted invoices to Medicare and TRICARE through a consolidated billing office in Fairfax, Va., that was managed and overseen by Geeta Trehan, of Virginia. The companies’ owners, Thomas Bray and Rajeev Gupta, both of Maryland, also managed the operations.
The settlement resolves allegations that, between January 2007 and August 2012, the companies submitted claims which falsely represented that the physical therapy services being billed were either rendered or directly supervised by the physical therapist identified on the claims by his or her National Provider Identifier (NPI) number. In fact, the physical therapist identified on the claim had no involvement in the services rendered. The settlement also resolves allegations that Alliance Rehabilitation, LLC, and Active Physical Therapy Services, LLC, sought payment from TRICARE for physical therapy services that were not provided by the physical therapist identified on the claim.
In addition to the False Claims Act settlement, the companies and Trehan, Bray, and Gupta have entered into a five-year Corporate Integrity Agreement with the U.S Department of Human Health and Services Office of Inspector General. That agreement imposes integrity obligations on each of the entities and individuals and requires them, among other things, to retain an independent review organization to review their coding, billing, and claims submissions to Federal health care programs.
“These physical therapy clinics overbilled the federal programs that provide health care to senior citizens and military families,” said U.S. Attorney Machen. “If health care providers want to be paid for their services with taxpayer dollars, they have to play by the rules. Americans deserve to know that they are getting their money’s worth. This nearly $2.8 million settlement is part of our continued fight to protect taxpayers and to ensure the integrity of federal health care programs.”
“When health care companies and the individuals who run them try to enrich themselves by misrepresenting the medical services they bill to taxpayer-funded health care programs, we will make sure they are held accountable for their deceptive schemes,” said Special Agent in Charge DiGiulio.
“The Defense Criminal Investigative Service seeks to hold those accountable who jeopardize the Department of Defense's objective to provide affordable and safe health care to the men and women serving in the armed forces,” said Special Agent in Charge Craig. “Current and former soldiers deserve adequate care. Health care providers who seek financial gain through inaccurate billing processes and irresponsible treatment of their patients will continue to be diligently investigated by DCIS agents in partnership with the DOJ and other law enforcement agencies. We are extremely pleased with the outcome of this investigation.”
The conduct at issue was brought to light through a lawsuit that was filed in the U.S. District Court for the District of Columbia by two former Alliance employees under the qui tam, or whistleblower provisions, of the False Claims Act. The False Claims Act is one of the government’s most powerful tools in the effort to combat fraud on federal programs. The Act allows private citizens to bring suit on behalf of the United States and share in any recovery obtained by the government. In this case, the two former Alliance employees will receive more than $400,000 as their share of the government’s recovery.
This settlement was the result of a coordinated investigative effort by the U.S. Attorney’s Office for the District of Columbia, the Department of Health and Human Services Office of Inspector General, and the Defense Criminal Investigative Service.
The claims settled by this agreement are allegations only, and there has been no determination of liability. The case is United States ex rel. Angel and Natal v. Alliance Rehabilitation LLC et al., Civil Action No. 10-cv-02124 (D.D.C.).
14-083Physical Therapy Clinics to Pay $2.78 Million to Resolve False Claims Act AllegationsRead the Press Release
WASHINGTON - Two companies that operate physical therapy clinics in Washington, D.C., Virginia, and Maryland, along with three individuals associated with the businesses, have agreed to pay the United States $2.78 million to settle allegations that the firms’ billings to Medicare and the TRICARE health care program violated the False Claims Act.
The settlement was announced today by Ronald C. Machen Jr., U.S. Attorney for the District of Columbia; Nicholas DiGiulio, Special Agent in Charge of the U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG), for the region that includes Washington, D.C., and Robert E. Craig, Special Agent in Charge of the Mid-Atlantic Field Office of the Defense Criminal Investigative Service (DCIS).
The companies -- Alliance Rehabilitation, LLC and Active Physical Therapy Services, LLC -- submitted invoices to Medicare and TRICARE through a consolidated billing office in Fairfax, Va., that was managed and overseen by Geeta Trehan, of Virginia. The companies’ owners, Thomas Bray and Rajeev Gupta, both of Maryland, also managed the operations.
The settlement resolves allegations that, between January 2007 and August 2012, the companies submitted claims which falsely represented that the physical therapy services being billed were either rendered or directly supervised by the physical therapist identified on the claims by his or her National Provider Identifier (NPI) number. In fact, the physical therapist identified on the claim had no involvement in the services rendered. The settlement also resolves allegations that Alliance Rehabilitation, LLC, and Active Physical Therapy Services, LLC, sought payment from TRICARE for physical therapy services that were not provided by the physical therapist identified on the claim.
In addition to the False Claims Act settlement, the companies and Trehan, Bray, and Gupta have entered into a five-year Corporate Integrity Agreement with the U.S Department of Human Health and Services Office of Inspector General. That agreement imposes integrity obligations on each of the entities and individuals and requires them, among other things, to retain an independent review organization to review their coding, billing, and claims submissions to Federal health care programs.
“These physical therapy clinics overbilled the federal programs that provide health care to senior citizens and military families,” said U.S. Attorney Machen. “If health care providers want to be paid for their services with taxpayer dollars, they have to play by the rules. Americans deserve to know that they are getting their money’s worth. This nearly $2.8 million settlement is part of our continued fight to protect taxpayers and to ensure the integrity of federal health care programs.”
“When health care companies and the individuals who run them try to enrich themselves by misrepresenting the medical services they bill to taxpayer-funded health care programs, we will make sure they are held accountable for their deceptive schemes,” said Special Agent in Charge DiGiulio.
“The Defense Criminal Investigative Service seeks to hold those accountable who jeopardize the Department of Defense's objective to provide affordable and safe health care to the men and women serving in the armed forces,” said Special Agent in Charge Craig. “Current and former soldiers deserve adequate care. Health care providers who seek financial gain through inaccurate billing processes and irresponsible treatment of their patients will continue to be diligently investigated by DCIS agents in partnership with the DOJ and other law enforcement agencies. We are extremely pleased with the outcome of this investigation.”
The conduct at issue was brought to light through a lawsuit that was filed in the U.S. District Court for the District of Columbia by two former Alliance employees under the qui tam, or whistleblower provisions, of the False Claims Act. The False Claims Act is one of the government’s most powerful tools in the effort to combat fraud on federal programs. The Act allows private citizens to bring suit on behalf of the United States and share in any recovery obtained by the government. In this case, the two former Alliance employees will receive more than $400,000 as their share of the government’s recovery.
This settlement was the result of a coordinated investigative effort by the U.S. Attorney’s Office for the District of Columbia, the Department of Health and Human Services Office of Inspector General, and the Defense Criminal Investigative Service.
The claims settled by this agreement are allegations only, and there has been no determination of liability. The case is United States ex rel. Angel and Natal v. Alliance Rehabilitation LLC et al., Civil Action No. 10-cv-02124 (D.D.C.).
14-083Pennsylvania Woman Indicted on Drug and Gun ChargesRead the Press Release
Lynda Hang Vang, 46, of Akron, Pennsylvania was charged today by Indictment with attempted possession with intent to distribute Methylenedioxy-N-methylcathinone (“methylone”) and possession of a firearm in furtherance of a drug trafficking crime, announced United States Attorney Zane David Memeger.
If convicted, the defendant faces a maximum possible sentence of 25 years in prison, a fine of up to $1 million, and three years of supervised release.
The case was investigated by Immigration and Customs Enforcement (ICE) Homeland Security Investigations and is being prosecuted by Assistant United States Attorney Yvonne Osirim.
Click here to view the indictment
An Indictment or Information is an accusation. A defendant is presumed innocent unless and until proven guilty.
UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525New York Man Sentenced for Conspiring to Pass Counterfeit Currency in Western PennsylvaniaRead the Press Release
PITTSBURGH - A New York resident has been sentenced in federal court to five years probation, which includes 10 months of home detention with electronic monitoring, on his conviction of conspiracy and passing counterfeit currency, United States Attorney David J. Hickton announced today.
United States District Judge Mark R. Hornak imposed the sentence on Sean R. Marroquin, 26.
According to information presented to the court, Marroquin conspired to pass counterfeit currency in the Western District of Pennsylvania on or about March 9, 2013.
Assistant United States Attorney Shardul S. Desai prosecuted this case on behalf of the government.
U.S. Attorney Hickton commended the United States Secret Service for the investigation leading to the successful prosecution of Marroquin.
National Crime Victim's Right Week 30 Years: Restoring the Balance of JusticeRead the Press Release
BUFFALO, N.Y.—The United States Attorney’s Office for the Western District of New York is commemorating National Crime Victim’s Rights Week. The week of April 6-12 commemorates our nation’s progress in advancing victims’ rights. This year’s theme—30 Years: Restoring the Balance of Justice—celebrates three decades of defending victims’ rights.
“As the chief law enforcement office in the Western District of New York, it is our job to enforce federal laws and bring criminals to justice,” said U.S. Attorney William J. Hochul, Jr. “While we will continue to focus on solving crime, we need be mindful that victims of crime often continue to suffer long after the jailhouse doors have been closed on the perpetrator. This week serves as an opportunity to commemorate victims nationwide, and to also give thanks for all who work on behalf of the oppressed and mistreated.”
In 1984, Congress passed the bipartisan Victims of Crime Act (VOCA), which created a national fund to ease victims’ suffering. Financed, not by taxpayers, but by fines and penalties paid by offenders, the Crime Victims Fund supports victim services, such as rape crisis and domestic violence programs and victim compensation programs that pay many of victims’ out-of-pocket expenses from the crime, such as counseling, funeral expenses, and lost wages.
The nation has made dramatic progress in securing rights, protections, and services for victims in other ways as well. Every state has enacted victims’ rights laws and all have victim compensation programs. More than 10,000 victim service agencies now help people throughout the country.
The following are examples of cases prosecuted by the United States Attorney’s Office in the last year which benefit victims of crime:
U.S. v TONAWANDA COKE
The Tonawanda Coke Corporation, which was convicted of 11 counts of violating the Clean Air Act and three counts of violating the Resource Conservation and Recovery Act by a federal jury in March 2013, was sentenced to pay a $12.5 million fine and five years probation. Tonawanda Coke also must pay $12.2 million to fund two environmental studies to help determine the extent of health and environmental impacts Tonawanda Coke has had in the community. In addition, Tonawanda Coke Environmental Control Manager, Mark L. Kamholz, 66, of West Seneca, N.Y., who was convicted of 11 counts of violating the Clean Air Act, one count of obstruction of justice and three counts of violating the Resource Conservation and Recovery Act, was sentenced to 12 months in prison and a $20,000 fine.
U.S. v ZAVERI
Ashvin Zaveri of Honeoye Falls, N.Y. was indicted on 16 counts of mail fraud, wire fraud and money laundering. Zaveri was specifically accused of defrauding investors who had invested approximately $35,000,000 in oil and natural gas exploration partnerships in Tennessee and Kentucky through his company Zaveri Oil & Gas, Ltd. The defendant died on August 27, 2010, a week before his plea was scheduled and the criminal case was abated. Nevertheless, the government was able to recover $8,938,322.93, most of which was returned to victims.U.S. v GIZZI
John P. Gizzi was convicted of filing false tax returns in 2008 and 2009. In addition, a corporation owned by Gizzi, Rochester Machinery Suppliers, Inc., was convicted of aiding and abetting the preparation of a false tax return. The defendant paid a total of $11,525,064 to the Government as fines and restitution in this case.
In addition to successful prosecutions in the courtroom, the Western District of New York collected $75,146,101 in criminal and civil actions and provided assistance to over 50,000 victims in Fiscal Year 2013. Criminal actions, which include fines and restitution, totaled $20,142,677.26, $20,004,017 of which was returned to victims of crime. The Office also collected $55,003,424 in civil actions, which include proceedings involving health care fraud, government fraud, foreclosures and more. These collections highlight the daily effort by our Office to ensure that victims are heard by the court and receive the restitution to which they are entitled.
In addition to these significant financial recoveries, the Office also helped numerous victims of crime as a result of multiple successful prosecutions involving violent crime, human trafficking, fraud, identity theft and more.Mortgage Broker Sentenced for Bank FraudRead the Press Release
Firas “Russ” Bachi, 41, of Waterford Township, Michigan, was sentenced to 24 months in prison and 2 years of supervised release for defrauding a bank in connection with 10 mortgage loans, United States Attorney Barbara L. McQuade announced today.
McQuade was joined in the announcement by Paul M. Abbate, Special Agent in Charge, Federal Bureau of Investigation, Detroit Division, and Jeffrey Frost, Special Agent in Charge of the Detroit office of the U.S. Secret Service
In addition, United States District Judge Bernard A. Friedman ordered Bachi to pay restitution to JPMorgan Chase Bank in the amount of $885,000.
Bachi pleaded guilty to one count of bank fraud in October 2013. According to court records, Bachi was a mortgage broker based in Farmington Hills who did business under the name First Choice Finance. In 2007, he acquired distressed residential properties in the City of Detroit and placed them in the names of straw sellers. Bachi then caused the appraisals of the properties to be inflated and sold the properties to straw buyers. The sales to the straw buyers were funded by mortgage loans made by Washington Mutual Bank (subsequently acquired by JPMorgan Chase Bank) based on loan applications that inflated the incomes and assets of the straw buyers and misrepresented the source of the down payments. The loans went into default and the houses were foreclosed on.
The investigation of this case was conducted by special agents of the FBI and the U.S. Secret Service, and prosecuted by Assistant U.S. Attorney Stephen Hiyama.
Morrisville Man Sentenced for Receipt of Child PornographyRead the Press Release
RALEIGH – United States Attorney Thomas G. Walker announced that today in federal court, United States District Judge Terrence W. Boyle sentenced ROBERT LOWELL CASSIDY , 58, of Morrisville to 84 months imprisonment, followed by 7 years of supervised release and was ordered to pay a $10,000.00 fine.
CASSIDY was named in a Criminal Information filed on October 18, 2013 charging him with Receipt of Child Pornography, in violation of Title 18, United States Code, Section 2252(a)(2). On November 26, 2013, CASSIDY pled guilty to that charge.
According to the investigation, an undercover officer identified a computer belonging to CASSIDY that was involved with the distribution of online child pornography. A search warrant was executed on CASSIDY’s residence on April 27, 2013 and a computer, several hard drives, and multiple storage devices were seized. A complete forensic examination of CASSIDY’s computer equipment revealed 4,571 still images and 475 video files (475 videos x 75 images = 35,625 images) depicting the sexual exploitation of children.
Investigation of this case was conducted by the Morrisville Police Department and the Federal Bureau of Investigation. Assistant United States Attorney Ethan Ontjes prosecuted the case for the United States.
This case was part of the Project Safe Childhood initiative, a national program aimed at ensuring that criminals exploiting children are effectively prosecuted by making full use of all available law enforcement resources at every level. For more information about this important national project, Project Safe Childhood, go to www.projectsafechildhood.gov.
Morris County, N.J., Physician Admits Taking Bribes in Test-Referrals Scheme with New Jersey Clinical LabRead the Press Release
26th Defendant to Plead Guilty in Connection with Scheme
NEWARK, N.J. – A physician with a practice in Madison, N.J. admitted today to accepting bribes of $2,000 per month in exchange for test referrals as part of a long-running scheme operated by Biodiagnostic Laboratory Services LLC (BLS) of Parsippany, N.J., its president and numerous associates, U.S. Attorney Paul J. Fishman announced.
Wayne Lajewski, 51, pleaded guilty today before U.S. District Judge Stanley R. Chesler in Newark federal court to an information charging him with one count of accepting bribes.
According to documents filed in this and other cases and statements made in court:Lajewski admitted he accepted bribes of $2,000 cash per month over two years in return for referring patient blood specimens to BLS, for which BLS received more than $850,000.
The bribery count to which Lajewski pleaded guilty carries a maximum potential penalty of five years in prison and a $250,000 fine. Sentencing is scheduled for July 8, 2014. As part of his guilty plea, Lajewski agreed to forfeit $48,000, representing the bribes he received from BLS.
Including Lajewski, 26 people – including 15 physicians – have pleaded guilty in connection with the bribery scheme, which its organizers have admitted involved millions of dollars in bribes and resulted in more than $100 million in payments to BLS from Medicare and various private insurance companies.
The investigation has recovered more than $7 million to date through forfeiture.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark; U.S. Department of Health and Human Services, Office of Inspector General, under the direction of Special Agent in Charge Thomas O’Donnell; IRS– Criminal Investigation, under the direction of Acting Special Agent in Charge Jonathan D. Larsen; and inspectors of the U.S. Postal Inspection Service, under the direction of Inspector in Charge Maria L. Kelokates, with the ongoing investigation leading to today’s guilty plea.
The government is represented by Assistant U.S. Attorney Joseph Minish, Senior Litigation Counsel Andrew Leven, and Jacob T. Elberg, Chief of the U.S. Attorney’s Office Health Care and Government Fraud Unit in Newark, as well as Assistant U.S. Attorney Barbara Ward of the office’s Asset Forfeiture and Money Laundering Unit.
U.S. Attorney Paul J. Fishman reorganized the health care fraud practice at the New Jersey U.S. Attorney’s Office shortly after taking office, including creating a stand-alone Health Care and Government Fraud Unit to handle both criminal and civil investigations and prosecutions of health care fraud offenses. Since 2010, the office has recovered more than $535 million in health care fraud and government fraud settlements, judgments, fines, restitution and forfeiture under the False Claims Act, the Food, Drug and Cosmetic Act and other statutes.
14-121Defense counsel: Robert C. Scrivo Esq., Morristown, N.J.
Lajewski, Wayne Information
More Convictions in Relation to Progreso Bribery CaseRead the Press Release
HOUSTON – Jose Vela, 65, and his Michael Vela, 30, have entered guilty pleas to conspiracy and bribery concerning programs receiving federal funds, announced United States Attorney Kenneth Magidson. Also pleading guilty today in a separate, but related case was Orlando Vela, 33.
Jose and Michael Vela were originally charged along with Omar Vela and others based on their alleged participation in a scheme to create a “pay to play” public contracting system in Progreso. Today, they admitted they participated in the scheme from 2004 through 2013. Michael, Omar and Orlando are brothers and Jose is their father. Omar is the mayor of Progreso, while Michael was the president of the Progreso Independent School District Board (PISD) of Trustees.
From 2004 through 2013, PISD received more than $1 million per year in federal program grants and funds from the U.S. Department of Education. In order to obtain contracts from PISD or from the City of Progreso, contractors were required to pay bribes to Vela and others.
The Velas were able to extract bribes from contractors as a result of their political control of Progreso and PISD. As government officials, Michael and Omar had a level of control over local government. In addition, Jose Vela controlled the PISD School Board by rewarding board members who voted as he directed with bribe money. Through this control over the PISD Board, Jose Vela caused contracts with PISD to be awarded to contractors who were willing to pay him bribes and kickbacks in return. Omar and Michael Vela assisted their father by gathering bribe payments from contractors and delivering the payments to him. They were then given a portion of those monies.According to the plea agreement, during the time frame of the conspiracy, the Velas required a local architect, his firm, a construction company and the school board attorney to pay bribes and kickbacks to Vela and others in order to obtain work with PISD or the City of Progreso. In total, Jose, Omar and Michael extracted more than $300,000 in bribe payments.
In a separate, but related case, Orlando Vela entered a guilty plea to a criminal information charging him with theft from a program receiving federal funds. He is employed by PISD as a risk manager. In this role, he is responsible for directing and managing the school district’s risk management, loss control and safety programs. On May 11, 2012, Orlando Vela formed a company called Borderline Office Supplies which purported to be in the business of supplying office and janitorial products to school districts.
Between May 2012 and March 2013, Orlando Vela submitted invoices to PISD for products that Borderline did not actually supply to PISD. The business bank account showed no purchases of the products that it claimed to have resold to PISD. The payments on the fraudulent invoices were approved by PISD’s business manager, Orlando Vela’s wife, and totaled $12,874.42.
On Aug. 12, 2013, Orlando Vela received a subpoena requesting documents related to his business’s alleged purchases of products and subsequent sales to PISD. In response, he provided invoices from a company in Mexico that purported to show that Borderline had purchased the products in Mexico and resold to PISD. However, upon further investigation, agents learned those invoices were in fact fraudulent.
U.S. District Judge David Hittner, who accepted the pleas today, has set sentencing for July 25, 2014. At that time, all face up to 10 years in federal prison for the bribery involving federal programs convictions. Jose and Michael Vela also face up to five years in federal prison for the conspiracy. All convictions also carry as possible punishment a maximum fine of $250,000. All were permitted to remain on bond pending their hearings.
The investigation was conducted by the FBI. Assistant United States Attorney Robert S. Johnson is prosecuting the case.
Moore Resident Sentenced for Committing Disaster Benefits Fraud Following May 2013 TornadoRead the Press Release
Oklahoma City, Oklahoma –BLAKE LYNN SELF, 19, of Moore, Oklahoma, was sentenced today to serve three months in prison, 60 days in a halfway house, and 90 days home confinement for committing disaster benefits fraud in connection with the May 2013 tornados in Moore, announced Sanford C. Coats, United States Attorney for the Western District of Oklahoma. In addition, Self was ordered to pay $12,885.45 in restitution to FEMA and serve five years of supervised release at the conclusion of his confinement term.
Under the Robert T. Stafford Disaster Relief and Emergency Assistance Act, the May 20, 2013, tornado affecting Cleveland County was declared a major disaster and the payment of disaster benefits was authorized. Self was indicted in November of 2013 and charged with submitting a false claim for monetary benefits to be paid by Federal Emergency Management Agency (FEMA) on June 14, 2013. Specifically, it was alleged that Self claimed to a FEMA inspector that his primary residence at the time of the May 20, 2013, tornado, was 916 S.W. 14th Street, in Moore, when in fact it was not his residence at that time.
Self pled guilty to committing benefits fraud on January 8, 2014.
This case was the result of an investigation by the U.S. Department of Homeland Security Office of Inspector General and was prosecuted by Assistant U.S. Attorney Amanda Maxfield Green.
The public may report suspected disaster benefits fraud by contacting the Department of Homeland Security Office of Inspector General (www.oig.dhs.gov or by calling toll free 1-800-323-8603) or by calling the Disaster Fraud Hotline at 1-866-720-5721.
Mission Man Sentenced for Failure to Register as A Sex OffenderRead the Press Release
United States Attorney Brendan V. Johnson announced that a Mission, South Dakota, man convicted of Failure to Register as a Sex Offender was sentenced on March 31, 2014, by U.S. District Judge Roberto A. Lange.
Eugene Featherman, age 25, was sentenced to 13 months in custody, 5 years of supervised release, and a $100 special assessment to the Federal Crime Victims Fund.
Featherman was indicted for Failure to Register as a Sex Offender by a federal grand jury on September 17, 2013. He pled guilty on February 10, 2014.
The conviction relates to a period of time between June 13, 2013, and December 18, 2013, when Featherman, a person required to register under the Sex Offender Registration and Notification Act, and a sex offender by reason of a conviction under federal law, knowingly failed to register and update his registration.
This case was investigated by the U.S. Marshals Service. Assistant U.S. Attorney Marie H. Ruettgers prosecuted the case.
Featherman was immediately turned over to the custody of the U.S. Marshals Service.
Mission Man Charged with Burglary and AssaultRead the Press Release
United States Attorney Brendan V. Johnson announced that a Mission, South Dakota, man has been indicted by a federal grand jury for First Degree Burglary, Assault with a Dangerous Weapon, and Assault Resulting in Serious Bodily Injury.
Marlow Poor Thunder, age 18, was indicted on March 11, 2014. He appeared before U.S. Magistrate Judge Mark A. Moreno on April 4, 2014, and pled not guilty to the Indictment.
The maximum penalty upon conviction is up to 25 years in custody and/or a $250,000 fine, 5 years of supervised release, and up to $700 to the Federal Crime Victims Fund. Restitution may also be ordered.
The Indictment alleges that on or about July 2, 2013, at Soldier Creek, Poor Thunder, and other defendants, unlawfully entered and remained in two residences, and assaulted a victim in one of the residences with a metal object, which resulted in serious bodily injury.
The charges are merely an accusation and Poor Thunder is presumed innocent until and unless proven guilty.
The investigation is being conducted by the Rosebud Sioux Tribe Law Enforcement Services. Assistant U.S. Attorney Marie H. Ruettgers is prosecuting the case.
Poor Thunder was remanded to the custody of the U.S. Marshals Service pending trial, which has been set for June 3, 2014.
Mission Man Charged with Burglary and AssaultRead the Press Release
United States Attorney Brendan V. Johnson announced that a Mission, South Dakota, man has been indicted by a federal grand jury for First Degree Burglary, Assault with a Dangerous Weapon, and Assault Resulting in Serious Bodily Injury.
Na’pe Young, a/k/a Nap’e Young, age 34, was indicted on March 11, 2014. He appeared before U.S. Magistrate Judge Mark A. Moreno on April 4, 2014, and pled not guilty to the Indictment.
The maximum penalty upon conviction is up to 25 years in custody and/or a $250,000 fine, 5 years of supervised release, and up to $700 to the Federal Crime Victims Fund. Restitution may also be ordered.
The Indictment alleges that on or about July 2, 2013, at Soldier Creek, Young and other defendants unlawfully entered and remained in two residences and assaulted a victim in one of the residences with a metal object, which assault resulted in serious bodily injury.
The charges are merely an accusation and Young is presumed innocent until and unless proven guilty.
The investigation is being conducted by the Rosebud Sioux Tribe Law Enforcement Services. Assistant U.S. Attorney Marie H. Ruettgers is prosecuting the case.
Young was remanded to the custody of the U.S. Marshals Service pending trial, which has been set for June 3, 2014.
Miami-Dade Resident Sentenced in Identity Theft SchemeRead the Press Release
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, Alysa D. Erichs, Special Agent in Charge, U.S. Immigration and Customs Enforcement's Homeland Security Investigations (ICE-HSI), and José A. Gonzalez, Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), announce that Jean-Elguentino Cayo, 26, of Miami Gardens, was sentenced today to 37 months in prison, followed by three years of supervised release for his participation in a stolen identity scheme. Cayo previously pled guilty to one count of access device fraud, in violation of Title 18, United States Code, Section 1029(a)(2).
According to court documents, beginning in December 2012 through June 2013, the defendant sold approximately 400 names, dates of birth, and social security numbers belonging to other persons to a confidential informant and undercover law enforcement officer in exchange for money. The defendant had no authorization to traffic in the names, dates of births, and social security numbers belonging to other persons and acted with the intent to defraud.
Mr. Ferrer commended the investigative efforts of ICE-HSI and IRS-CI. The case is being prosecuted by Assistant U.S. Attorney Frank Maderal.
A copy of this press release may be found on the website of the United States Attorney's Office for the Southern District of Florida at http://www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the District Court for the Southern District of Florida at http://www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.
Mexican Man Sentenced on Drug ChargesRead the Press Release
BUFFALO, N.Y.--U.S. Attorney William J. Hochul, Jr. announced today that Adalid Ayala, 39, a Mexican native living in Chicago, Illinois, who was convicted of conspiracy to possess with intent to distribute and to distribute five kilograms or more of cocaine, was sentenced to 130 months in prison by U.S. District Judge Richard J. Arcara.
Assistant U.S. Attorney Thomas S. Duszkiewicz, who is handling the case, stated that on February 13, 2012, the Buffalo Office of the Drug Enforcement Administration received a telephone call regarding an alleged drug trafficking conspiracy transporting and distributing 50 kilograms a month from Chicago to Buffalo. That information resulted in the arrest of seven defendants, including Ayala, all of whom have been convicted.
Also during the investigation, agents seized more than $550,000 in cash, approximately two kilos of cocaine, other drug paraphernalia, four weapons, and a Ford Mustang.
The conviction is the culmination of an investigation on the part of Special Agents of the Drug Enforcement Administration, under the direction of Brian R. Crowell, Special Agent in Charge, New York Field Division.Maple Heights Man Indicted for Robbing Banks in Richmond Heights and Shaker HeightsRead the Press Release
A federal grand jury returned a three-count indictment charging Christian Emerson, age 20, of Maple Heights, Ohio, with armed bank robbery and brandishing a firearm during the commission of a felony, said Steven M. Dettelbach, United States Attorney for the Northern District of Ohio.
The indictment alleges that Christian Emerson robbed a Huntington Bank in Richmond Heights, Ohio, and stole approximately $2,306.00 from the bank. The indictment further alleges that Christian Emerson robbed a Citizens Bank in Shaker Heights, Ohio, stole approximately $1,304.14 from the bank, and brandished a firearm during the commission of the robbery.
If convicted, Emerson’s sentence will be determined by the Court after review of factors unique to this case, including Emerson’s prior criminal record, if any, his role in the offense and the unique characteristics of the violation. In all cases, the sentence will not exceed the statutory maximum and in most cases it will be less than the maximum
The case is being prosecuted by Assistant U.S. Attorney Adam J. Hollingsworth following an investigation by the Federal Bureau of Investigation.
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
Manhattan U.S. Attorney Settles Civil Fraud Lawsuit Against Clothing Importers Engaged in A Scheme to Avoid Payment of Customs DutiesRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, James T. Hayes, Jr., the Special Agent-in-Charge of the New York Field Office of the U.S. Immigration and Customs Enforcement’s (“ICE”) Homeland Security Investigations (“HSI”), and Robert E. Perez, Director of New York Field Operations for U. S. Customs and Border Protection (CBP), announced today that the United States has settled a civil customs fraud lawsuit against DANA KAY, INC. and SIOUNI & ZAR CORPORATION (d/b/a DANNY & NICOLE), two importers of women’s apparel, for cheating the United States out of millions of dollars in customs duties over the course of a decade through the use of false invoices. In the settlement, approved today in Manhattan federal court by U.S. District Judge Colleen McMahon, the defendants accepted responsibility for under-reporting the value of their imported merchandise and agreed to pay $10 million to the United States as damages and penalties under the False Claims Act.
Manhattan U.S. Attorney Preet Bharara said: “Our Office is committed to pursuing those who defraud the public for private gain. Here, as our complaint alleges, a whistleblower exposed a decade-long scheme to defraud the Government out of millions of dollars in customs duties. Through the settlement announced today, the companies responsible for this fraud will be held to account, by having to admit to their misconduct and pay $10 million in damages and penalties.”
ICE HSI Special Agent-in-Charge James T. Hayes, Jr. said: “Companies that circumvent our nation’s customs laws through the use of elaborate frauds cheat the American taxpayers and their law-abiding competitors simultaneously. These two importers should serve as an example that HSI is committed to ensuring a level playing field for all who work in the international trade industry.”
CBP Director of New York Field Operations Robert E. Perez said: “Working in partnership with HSI, our CBP officers, auditors, and import specialists demonstrated the highest level of professionalism, dedication to duty and vigilance in detecting the undervaluation of these imported goods into the United States.”
According to the Government=s Complaint filed in Manhattan federal court:
From approximately 2003 through 2012, DANA KAY, INC. and SIOUNI & ZAR CORPORATION engaged in a fraudulent scheme to avoid the payment of customs duties by presenting the Government with invoices that significantly understated the value of the imported apparel. The defendants paid their overseas manufacturers the full value of the apparel, but deducted a flat fee per garment set before calculating the duty on the apparel. The defendants then recorded only the lower value on the entry forms presented to the Government. Through this fraud, the defendants avoided paying millions of dollars in customs duties.
As part of the settlement, DANA KAY, INC. and SIOUNI & ZAR CORPORATION have admitted, acknowledged, and accepted responsibility for:
- presenting to the Government commercial invoices for women’s apparel being imported into the United States that reported less than the total value of the goods imported;
- paying apparel manufacturers an amount in excess of that recorded on the commercial invoice;
- paying the excess amount pursuant to a second invoice referred to as a “debit note”; and
- failing to disclose to the Government the amounts paid pursuant to the second invoices, instead reporting only the lesser amounts listed in the commercial invoices, which the Government then used to assess customs duties.
The allegations of fraud stated in the Complaint and admitted in the settlement agreement were first brought to the attention of the Government by a whistleblower, who filed a
lawsuit under the qui tam provisions of the False Claims Act. Those provisions allow private parties who have knowledge of fraud committed against the Government to file suit on behalf of the Government and share in any recovery. The United States may then intervene and file a complaint, as it did here.
Mr. Bharara thanked ICE HSI for its work on the case. He also thanked U.S. Customs and Border Protection for its assistance.
The case is being handled by the Office’s Civil Frauds Unit. Assistant United States Attorney Jaimie L. Nawaday is in charge of the case.
Manhattan Physician Sentenced for Unlawfully Prescribing Prescription DrugsRead the Press Release
TOPEKA, KAN. A Manhattan, Kan., physician was sentenced Wednesday to five years in federal prison for unlawfully prescribing prescription drugs, U.S. Attorney Barry Grissom said.
Michael P. Schuster, 54, Manhattan, Kan., pleaded guilty to one count of conspiracy to distribute controlled substances.
In his plea, Schuster admitted the crime occurred from April 2007 to Aug. 2012, while he was doing business as Manhattan Pain and Spine at 1135 Westport Drive in Manhattan. To carry out daily operations at his clinic he employed up to 12 office staff members at a time, none of whom had lawful authority to distribute controlled substances. He directed and allowed staff members to distribute controlled substances to his patients using blank prescription pads he had signed in advance.
Investigators documented approximately 540 patients who received prescriptions for controlled substances while Schuster was out of his office, including times when he was traveling to Canada, Russia, South Africa, Uruguay, New York, Argentina, Chile, Paraguay, Brazil and Israel.
In addition to the prison sentence, Schuster agreed to pay restitution of $100,772 and a fine of $25,000. He also has agreed to forfeit his clinic building at 1135 Westport Drive, a 2012 Ford pickup and more than $11,000 contained in two bank accounts. He also agreed to a forfeiture money judgment of $400,000.
Furthermore, Schuster agreed to surrender his medical license, not to re-apply for a medical license in Kansas, to surrender his DEA registration number for prescribing controlled substances and not to re-apply for a DEA registration number.
According to court documents, the investigation began early in 2012 when the Riley County Police Department received reports that Schuster was issuing prescriptions for high dosages of scheduled drugs based on minimal or cursory physical examinations.
Grissom commended the Riley County Police Department; the FBI; the Department of Defense, Criminal Investigative Service (DCIS); the Department of Health and Human Services, Office of Inspector General (HHS-OIG); the Drug Enforcement Administration (DEA); the Department of Homeland Security - Homeland Security Investigations (DHS-HSI); the Diplomatic Security Service (DSS), Assistant U.S. Attorney Tanya Treadway, Assistant U.S. Attorney Jared Maag, and Special Assistant U.S. Attorney Robin Graham for their work on the case.Man Charged with Murder on the Meskwaki Nation SettlementRead the Press Release
Jonathan Curtis Youngbear, age 20, from the Meskwaki Nation Settlement, Iowa, has been charged with murder in “Indian Country.” The charge is contained in a Complaint filed on April 8, 2014, in United States District Court in Cedar Rapids.
The Complaint alleges that, on or about February 24, 2014, Youngbear murdered a person on the Meskwaki Nation Settlement near Tama, Iowa.If convicted, Youngbear faces a possible maximum sentence of life imprisonment, a $250,000 fine, and a $100 special assessment.
Youngbear appeared today in federal court in Cedar Rapids and was held without bond. Youngbear’s next appearance for preliminary and detention hearings is set for April 14, 2014, at 1:00 p.m.
As with any criminal case, a charge is merely an accusation and a defendant is presumed innocent until and unless proven guilty.
In 2010, the Department of Justice launched an initiative making public safety in tribal communities a top priority. The goal of the initiative is to help tribes build and sustain safe and secure communities across the country. Information about the initiative is available at http://www.justice.gov/tribal.
The case is being prosecuted by Assistant United States Attorneys Peter Deegan and Anthony Morfitt and was investigated by the Meskwaki Nation Tribal Police, the Tama County Sheriff’s Office, the Iowa Division of Criminal Investigation, and the Federal Bureau of Investigation.
Court file information is available at https://ecf.iand.uscourts.gov/. The case file number is 14-mj-105.
Lawrence Man Charged with False ClaimAbout Taxes on Gambling WinningsRead the Press Release
KANSAS CITY, KAN. A Lawrence man has been charged with filing a false tax return, U.S. Attorney Barry Grissom said.
Bradley Stoneking, 30, Lawrence, Kan., was alleged to have made false statements in his income tax return for 2010. He falsely claimed federal tax withholdings on gambling winnings in the amount of approximately $330,000. In fact, the federal tax withholding on his gambling winnings was $300.
If convicted he faces a maximum penalty of three years in federal prison and a fine up to $250,000. The Internal Revenue Service investigated. Assistant U.S. Attorney Scott Rask is prosecuting.
In all cases, defendants are presumed innocent until and unless proven guilty. The indictments merely contain allegations of criminal conduct.
Law Enforcement Officers Receive Victim Service AwardsRead the Press Release
United States Attorney Kevin W. Techau presented the 15th Annual Iowa Law Enforcement Victim Service Awards to three Iowa law enforcement officers. The awards were presented at a press conference held today at the United States Attorney’s Office in Cedar Rapids. Techau presented the awards on behalf of his office and the office of United States Attorney Nicholas Klinefeldt of the Southern District of Iowa.
The Law Enforcement Victim Service Awards are the highest federal honors in the State of Iowa for victim services provided by law enforcement. The awards are presented to law enforcement officers who have gone above and beyond the call of duty to show compassion and care for victims of crime. The Continuous Service Award recognizes a nominee who has provided help to victims for many years or developed an innovative program or policy that continues to serve crime victims. The Single Act Award recognizes officers who have provided exceptional assistance to crime victims in a specific case. Two awards are presented each year during National Crime Victims’ Rights Week; observed this year the week of April 6 through April 12.
The Continuous Service AwardThis year’s Continuous Service Award was presented to Investigator Corey Peiffer from the Cedar Rapids Police Department. Investigator Peiffer has worked for the Cedar Rapids Police Department for over sixteen years and, during that time, has proven himself as someone who is very caring and compassionate to those victimized by crime. Recently, Investigator Peiffer’s work investigating a reported sexual assault on a minor led to the arrest and conviction of Lucas Robinson. Robinson was an Internet predator who convinced young girls, between the ages of 10 and 17 years, to produce and send pornographic images of themselves to Robinson over the Internet. Due in large part to Investigator Peiffer’s work on this case, several other victims of Robinson’s were discovered. Robinson is now serving a 42-year prison sentence. Investigator Peiffer worked with law enforcement agencies across the country to make personal contact with Robinson’s victims and their families and ensure them that Robinson had been identified and arrested. His hard work and dedication in this case exemplifies the way he works with all victims of all types of crimes. Investigator Peiffer has a true passion for helping crime victims and holding their offenders accountable for their actions.
The Single Act AwardSingle Act Awards were presented to Special Agent Darrell Simmons from the Iowa Division of Criminal Investigation and Investigator Rodney Fiser from the Hiawatha Police Department for their work investigating the death of 17 month-old Kamryn Schlitter. Special Agent Simmons and Investigator Fiser combined their efforts to ensure that those responsible for her death were identified, charged and convicted. During their investigation, they never lost sight of the impact this crime had on Kamryn’s grieving family. “This team met with Kamryn’s family members and navigated the tender balance between consoling grief-stricken loved ones and gathering the factual information they needed to uncover the truth about what happened to Kamryn,” said U.S. Attorney Techau. As a result of their unyielding dedication of seeking justice for Kamryn, Zyriah Schlitter and Amy Parmer were charged and convicted. Both are now serving 50-year prison sentences. First Assistant Linn County Attorney Nick Maybanks said in nominating Special Agent Simmons and Investigator Fisher for this award, “We are eternally proud to have worked beside them.”
Without a doubt all of these law enforcement officers go “above and beyond” the call of duty to assist crime victims. Because of their dedication, our communities are better served. The U.S. Attorneys’ Offices in Iowa are proud to present the 2014 Law Enforcement Victim Service Awards to these individuals.KC Truck Driver Sentenced to 30 Years for Transporting a Minor for SexRead the Press Release
Project Safe Childhood
KANSAS CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that a Kansas City, Mo., man was sentenced in federal court today for transporting a child victim on a cross-country trip during which he sexually abused that victim and another child victim.
Jesse Luuloa Pier, 42, of Kansas City, was sentenced by U.S. District Judge Greg Kays to 30 years in federal prison without parole.
On Oct. 2, 2013, Pier pleaded guilty to transporting a minor across state lines to engage in criminal sexual activity. Pier – a commercial truck driver – admitted that he transported a minor victim on a cross-country trip with the intent to engage in sexual activity on several occasions between June 1 through 17, 2007.
On June 9, 2007, Pier and the child victim arrived in Elgin, S.C. Pier attended a party in Elgin, where he met a local minor boy. While staying overnight, Pier molested the minor, who informed authorities. Pier was charged in state court, pleaded guilty to criminal sexual conduct with a minor and was sentenced to 13 years in the South Carolina State Department of Corrections. Pier’s 30-year federal sentence will be served consecutively to his state imprisonment.
Pier committed abusive sexual acts on the minor victim in this case on at least two occasions after forcing him to watch a pornographic video.
This case was prosecuted by Assistant U.S. Attorney Patrick D. Daly. It was investigated by the FBI, the Abilene, Kan., Police Department and the Elgin, S.C., Police Department.
Project Safe Childhood
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc . For more information about Internet safety education, please visit www.usdoj.gov/psc and click on the tab "resources."Justice Department Honors Crime Victims, Advocates, and Teams for Exceptional Perseverance and InnovationRead the Press Release
Deputy Attorney General James M. Cole will preside over the National Crime Victims’ Rights Service Awards ceremony 2 p.m. Wed., April 9, honoring ten individuals and programs for exceptional perseverance and innovation in advancing crime victims’ rights. The Department’s Office for Victims of Crime leads communities across the country in observing National Crime Victims’ Rights Week every year and hosts the award ceremony to honor outstanding work on behalf of crime victims.
“Through their courage and critical contributions to assist and empower victims, these individuals and organizations have given hope to countless Americans victimized by crime--even under the most difficult circumstances,” said Attorney General Eric Holder. “I am proud to recognize these extraordinary advocates by celebrating their achievements and assure them that the Department of Justice is more determined than ever to help ensure their continued success.”
“We are humbled and proud to recognize these extraordinary individuals, teams, and organizations for their outstanding service” said Deputy Attorney General Cole. “These compassionate honorees have become beacons of hope for so many others who have endured shock and deep sadness in the face of too many incidents involving violence and loss.”
President Reagan proclaimed the first Victims’ Rights Week in 1981, calling for renewed emphasis and sensitivity to the rights of victims. National Crime Victims’ Rights Week is observed this year from April 6–12, and the theme is “30 Years: Restoring the Balance of Justice.”
The following is a list of the award recipients nominated by their colleagues and selected by the Attorney General:
Allied Professional Award: Recognizing an individual or organization outside the victim assistance field for services or contributions to the victims’ field. Recipient: Forensic Nurse Examiner Team, Christiana Care Health System, Newark, Del.
Crime Victims Financial Restoration Award: Recognizing individuals, programs, organizations or teams that developed innovative ways of funding services for crime victims or instituted innovative approaches for securing financial restoration for crime victims. Recipient: Mi Yung C. Park, trial attorney, Child Exploitation and Obscenity Section, Criminal Division, U.S. Department of Justice, Washington, D.C.
Federal Service Award: Recognizing the extraordinary efforts of federal agency personnel who lead initiatives or reforms and make extraordinary contributions that impact victims of federal, tribal, and military crimes, or more broadly promote victims’ rights and services for underserved victims nationally and internationally. Recipients : FBI Victim Assistance Program and U.S. Attorney’s Office for the District of Massachusetts; and the U.S. Air Force Special Victims’ Counsel Program.
National Crime Victim Service Award: Honoring extraordinary efforts in direct service to crime victims. Recipients: DC Safe, Washington, D.C.; and Hazel Heckers, victim advocate, Denver, Colo.
Crime Victims’ Rights Award: Honoring those whose efforts to advance or enforce crime victims’ rights have benefited crime victims at the state, tribal, or national level. Recipient: Jamie Balson, prosecutor, Maricopa County District Attorney’s Office, Peoria, Ariz.
Ronald Wilson Reagan Public Policy Award: Honoring leadership, innovation and vision that lead to noteworthy changes in public policy that benefit crime victims. Recipient: Pat Tuthill, advocate, Tallahassee, Fla.
Professional Innovation in Victim Service Award: Recognizing a program, organization or individual who has helped to expand the reach of victims’ rights and services. Recipient : The Rapid DNA Service Team, Richmond, Calif.
Special Courage Award: Recognizing extraordinary bravery in the aftermath of a crime or courageous act on behalf of a victim or potential victim. Recipient: Paul Traub, Burnsville, Minn.
Descriptive narratives and videos of the contributions of recipients are available at the Office for Victims of Crime’s Gallery .
Justice Department Highlights Tax Division's Enforcement ResultsRead the Press Release
With the annual tax filing deadline approaching on April 15, today the Justice Department announced highlights of its work during the past year to enforce the nation’s tax laws. The Tax Division has worked with the Internal Revenue Service (IRS) to carry out their combined tax enforcement missions in critical areas, including prosecuting tax fraud and evasion, halting the spread of abusive tax shelters, tracking down tax cheats who use offshore accounts and combating stolen identity refund fraud. Previously, the division announced that it has shut down more than 60 fraudulent tax preparers over the past 12 months.
The division’s primary purpose is to enforce the nation’s tax laws fully, fairly and consistently through both criminal and civil litigation. Some of the division’s accomplishments from the past fiscal year (FY 2013) include:
· Favorable outcomes in approximately 95 percent of all civil and criminal cases litigated by the division;
· The division authorized 749 grand jury investigations and 1,495 prosecutions of individual defendants;
· Division prosecutors obtained 125 indictments and 114 convictions (not including the additional criminal tax prosecutions handled exclusively by U.S. Attorneys’ Offices nationwide);
· The division collected over $235 million through affirmative civil litigation and retained over $975 million through defensive tax refund and other litigation and;
· Taking into account the tax dollars collected and refunds not paid as a result of the division’s successful litigation efforts, over the past five fiscal years (FY 2009-2013), the division’s attorneys have returned an average of $14 for each dollar invested to the U.S. Treasury.
“The taxes paid by honest taxpayers pay for important government functions, from support for our military to the operation of our national parks,” said Assistant Attorney General Kathryn Keneally. “Those who would cheat their neighbors and fellow citizens should know that we are committed to enforcing the tax laws. The department will continue to use all available law enforcement tools to recover tax revenue and to punish tax offenders.”
“The IRS and Justice Department continue to make important progress on issues ranging from identity theft and offshore evasion to fraudulent return preparers and abusive tax shelters,” said IRS Commissioner John Koskinen. “As the April 15 deadline approaches, taxpayers should remember that we are working year-round to ensure that everyone plays by the rules and follows the law. The hard work of the Justice Department and the IRS can be seen in the long list of criminal and civil tax enforcement actions across the country during the past year.”
Prosecuting Tax Offenses
The division has supervisory authority over all criminal conduct involving federal tax laws. The division has always maintained the investigation and prosecution of tax crimes as a central focus, including tax evasion, failure to file returns, submission of false tax returns and other conduct designed to violate federal tax laws. Division attorneys are also particularly adept at prosecuting tax defiers, individuals who purposefully refuse to comply with tax laws and use frivolous arguments to support their positions.
Some of the division’s criminal tax prosecution highlights from the past 12 months include:
· April 2014 – Tommy Edward Clack, a paving contractor, was sentenced by a federal court in Winston-Salem, N.C., to serve 66 months in prison for filing a false 2007 tax return and making a false statement to a federally insured bank to obtain a mortgage. From 2004 through 2007, Clack underreported income that he received from his paving businesses, which caused a tax loss of more than $1.3 million.
· March 2014 – Matthew Bender, a tax return preparer from Detroit, was convicted for aiding and assisting in the preparation of false income tax returns for his clients, as well as failing to report the income he earned as a return preparer. Bender prepared over 3,000 tax returns between 2006 and 2011 and earned over $500,000 in tax preparation fees, which he failed to report to the IRS. Bender placed false deductions on customers’ returns, which caused their tax refunds to be inflated.
· December 2013 – John Hoang, an attorney and certified public accountant from Woodbridge, Va., was sentenced to serve four years in prison for aiding and assisting in the preparation of false tax returns for his clients, resulting in a tax loss of over $1.5 million.
· July 2013 – Timothy Turner, the self-proclaimed president of the so-called sovereign citizen group Republic for the united States of America (RuSA), was sentenced to serve 18 years in prison for conspiracy to defraud the United States, attempting to pay taxes with fictitious financial instruments, attempting to obstruct and impede the IRS, failing to file a 2009 federal income tax return and falsely testifying under oath.
· July 2013 – Richard Whatley, a former owner of an employee leasing company, was sentenced to serve 51 months in prison for failing to account for and pay over employment taxes.
- May 2013 – Joseph Rizzuti of Stuart, Fla., was sentenced to serve 80 months in prison for conspiracy to commit wire fraud and obstructing the IRS. Rizzuti, an accountant, interfered with the IRS’ ability to collect taxes owed by two clients and admitted to engaging in a conspiracy to commit wire fraud.
Stopping the Spread of Tax Shelters
The division also plays a critical role in the government s efforts to combat abusive tax shelters. According to U.S. Treasury estimates, abusive tax shelters for large corporations and high-income individuals cost the government billions of dollars annually. In recent years, the division’s civil litigators at both the trial and appellate levels have won important victories in cases involving tax shelters with names such as STARS, Son of BOSS, FOCus, BLIPS, OPIS, DAD and SILO/LILO.
Some of the division’s successes over the past 12 months include:
· December 2013 – In United States v. Woods, the Supreme Court unanimously held that a 40 percent gross valuation misstatement penalty applies when a taxpayer engages in an abusive tax shelter scheme that lacks economic substance.
· December 2013 – The division successfully defended a favorable Tax Court decision in Blum v. Commissioner, a case involving the Offshore Portfolio Investment Strategy (OPIS) tax shelter. The 10th Circuit Court of Appeals held that the taxpayer was not entitled to a $45 million loss generated by the OPIS transaction because the transaction lacked economic substance, and that valuation misstatement penalties should be imposed. As the court explained, the “intricacies of this offshore financial transaction and the fog of plausible deniability surrounding it cannot make up for the clarity of the big picture: this was a transaction designed to produce nothing more than tax advantages.”
· September 2013 – After a month-long trial, the division prevailed in the Court of Federal Claims against BB&T Corporation, which had claimed more than $660 million in tax benefits based on a sham transaction known as Structured Trust Advantaged Repackaged Securities (STARS). In Salem Financial Inc. v. United States, the court ruled that BB&T was not entitled to the tax benefits and imposed $112 million in penalties. The court concluded that the conduct of BB&T, the designers and marketers of the STARS transaction and the law firm that provided tax advice supporting the transaction was “nothing short of reprehensible” and that the considerable effort put into the transaction was a “waste of human potential.” This case is currently on appeal.
· August 2013 – The division successfully defended a favorable district court decision in WFC Holdings Corp. v. United States, a case involving a contingent-liability tax shelter. The Eighth Circuit Court of Appeals found that the literal language of the Internal Revenue Code supported the company’s tax treatment of the transaction, but nonetheless disallowed the company’s asserted tax loss and resulting $82 million tax refund because the transaction lacked economic substance and a subjective business purpose.
Investigating Offshore Evasion
The division continues to play a leading role in investigations and prosecutions involving the use of foreign tax havens and remains committed to investigating offshore tax evasion around the globe. The division’s current offshore program began in 2008, with the investigation of UBS, which resulted in the 2009 UBS deferred prosecution agreement . In January 2013, the U.S. Attorney's Office in the Southern District of New York secured the guilty plea of Wegelin Bank, the oldest private bank in Switzerland and the first foreign bank to plead guilty to felony tax charges. In July 2013, Liechtensteinische Landesbank AG, a bank based in Vaduz, Liechtenstein, entered into a non-prosecution agreement and agreed to pay more than $23.8 million stemming from its offshore banking activities and turned over more than 200 account files of U.S. taxpayers who held undeclared accounts at the bank.
Since 2009, the department has publicly charged 74 account holders and 38 bankers and advisors with violations arising from offshore banking activities. So far, 61 account holders have pleaded guilty, seven were convicted at trial and five await trial. Six bankers and financial advisors have pleaded guilty and several are fugitives. In October 2013, Raoul Weil, formerly the third highest banking official at UBS and the subject of a 2008 indictment for his role in assisting U.S. clients to evade taxes, was arrested in Italy, waived extradition and is now awaiting trial.
Additional highlights from the division and the U.S. Attorneys’ Offices include:
· March 2014 – Former Swiss banker Andreas Bachmann pleaded guilty to engaging in a wide-ranging conspiracy to aid and assist U.S. customers in evading their taxes by concealing assets and income in secret Swiss bank accounts.
· March 2014 – Joshua Vandyk, a U.S. citizen, and Eric St-Cyr and Patrick Poulin, Canadian citizens, were indicted for money laundering and conspiracy to launder monetary instruments relating to assisting U.S. citizens in hiding assets from the U.S. government. According to the indictment, the Caribbean-based defendants assisted undercover law enforcement agents, posing as U.S. clients, in laundering criminal proceeds through an offshore entity in order to conceal thetrue owner.
· March 2014 – Victor Lipukhin, a Russian citizen and former lawful permanent U.S. resident, was indicted for attempting to interfere with the administration of the internal revenue laws and for filing false tax returns relating to several secret Swiss bank accounts. According to the indictment, Lipukhin maintained accounts worth more than $10 million at UBS AG in the name of sham entities based in the Bahamas, failed to report his ownership of the accounts and used fictitious mortgages when purchasing real estate in the U.S. to further conceal ownership of the accounts.
· October 2013 – Ashvin Desai, the owner of a medical device company in San Jose, Calif., was convicted of filing false tax returns, aiding and assisting in the preparation of false tax returns, and failing to file Reports of Foreign Bank and Financial Accounts (FBARs) in connection with accounts held at The Hongkong and Shanghai Banking Corporation Ltd. (HSBC) in India that generated over $1.1 million in interest income.
· October 2013 – Patricia Lynn Hough, a physician and owner of two Caribbean-based medical schools, was convicted of conspiring to defraud the U.S. and filing false tax returns. Hough concealed millions of dollars in assets and income in offshore bank accounts held at UBS and other foreign banks.
· April 2013 – Arizona businessmen Stephen M. Kerr and Michael Quiel were convicted after a jury trial of filing false individual tax returns, and Kerr was additionally convicted of failing to file an FBAR related to secret Swiss bank accounts. Co-defendant Christopher Rusch, a San Diego attorney who assisted Kerr and Quiel, pleaded guilty to federal tax charges in February 2013. All three men were sentenced to serve 10 months in federal prison.
The department is also successfully using a variety of law enforcement tools to gather information for use in future enforcement efforts. In two separate actions in 2013, the U.S. District Court in the Southern District of New York authorized the IRS to issue “John Doe” summonses to several U.S. banks that hold correspondent bank accounts for Wegelin & Co. , Zurcher Kantonalbank and The Bank of N.T. Butterfield & Son Limited through which the foreign banks move money into and out of the United States. The division secured a similar order from the U.S. District Court in the Northern District of California relating to a U.S. account used by Canadian Imperial Bank of Commerce FirstCarribean International Bank . Together, the summonses will allow the U.S. government to determine the identity of U.S. taxpayers who may hold accounts in the Bahamas, Barbados, Cayman Islands, Guernsey, Hong Kong, Malta, Switzerland and the United Kingdom.
The department also announced a program on Aug. 29, 2013, that encouraged Swiss banks to cooperate in the department’s ongoing investigations of the use of foreign bank accounts to commit tax evasion. The Program for Non-Prosecution Agreements or Non-Target Letters for Swiss Banks (the Program) allows Swiss banks not currently under investigation to come forward to provide cooperation and pay steep penalties in return for the possibility of a non-prosecution agreement or deferred prosecution agreement. The Program expressly excluded banks that were previously authorized for investigation in connection with their Swiss banking activity, 14 at the time of the announcement, and expressly excludes all individuals. The department has received over 100 letters of intent to participate in the Program from Swiss entities. Every Swiss bank that cooperates under the Program represents an opportunity to obtain valuable law enforcement information.
Combating Identity Theft
The division, in conjunction with the IRS and U.S. Attorneys nationwide, has made the investigation and prosecution of individuals who engage in stolen identity refund fraud (SIRF) a high priority. The division is targeting individuals involved in all stages of these schemes, including those who illegally obtain Social Security numbers and other personal identifying information, those who file the false returns with the IRS, those who facilitate cashing the checks or otherwise obtaining the refunds and those who mastermind or promote these scams.
Some highlights of the division’s success in this area include:
· October 2013 – Vernon Harrison, a corrupt U.S. Postal Service mail carrier, was sentenced to serve nine years and three months in federal prison. According to court documents, tax refunds were placed on debit cards and mailed to addresses on Harrison’s postal route in Montgomery, Ala., which he then stole from the mail and provided to a co-conspirator in exchange for cash.
· September 2013 – Lea’Tice Phillips, an employee of an Alabama state agency, was sentenced to serve seven years and 10 months in federal prison. As alleged in court documents, Phillips had access to databases that contained personal identifying information and conspired with others to file false tax returns using identities stolen from the database.
· July 2013 – Angela Myers, who operated a tax preparation business located in Baton Rouge, La., was sentenced to serve 11 years in federal prison. According to court documents, Myers electronically filed false claims for refunds using the names and social security numbers of identity theft victims, many of whom were nursing home patients.
Return Preparer Fraud
Corrupt accountants and fraudulent tax return preparers present a serious law enforcement concern. Some accountants and return preparers dupe unwitting clients into filing fraudulent returns, while others serve as willing enablers by providing a veneer of legitimacy for clients predisposed to cheat. The division’s civil injunction program, now more than 10 years old, continues to be an effective way to shut down fraudulent return preparers and illegal tax-scheme promoters – especially during filing season – thereby reducing the harm to the public while potential criminal investigations are ongoing. In February, the division announced recent successes in its civil injunction program including more than 60 injunctions entered against both large-scale tax return preparation franchises and smaller, independent return preparers and promoters across the country.
Some of the division’s successes include:
· November 2013 – the division concluded civil actions resulting in permanent injunctions against ITS Financial LLC, the parent company of the Instant Tax Service franchise located in Dayton, Ohio. Earlier in the year, the division obtained injunctions against Instant Tax franchises in Kansas City, Kan. , Los Angeles and Indianapolis . Instant Tax Service claimed to be the fourth-largest tax-preparation firm in the nation.
· September 2013 – the division obtained injunctions that permanently barred the owners, Markey Granberry and Derrick Robinson, as well as Eumora Reese, a former manager, of Mo' Money Taxes, tax-preparation chain based in Memphis, Tenn., that at one time operated as many as 300 offices in 18 states, from preparing tax returns for others and owning or operating a tax return preparation business. Earlier, in March 2013, a federal district court in Tennessee permanently shut down a Nashville, Tenn., licensee of Mo' Money Taxes LLC and MoneyCo USA LLC.
· Numerous smaller tax return preparation businesses and individual preparers around the country who were engaging in fraudulent practices were also subjects of injunctions, including tax return preparers in Indiana , Maryland , Missouri , Texas , Georgia , South Carolina , Florida and California .
· October 2013 – a federal court permanently barred Tobias Elsass and his companies from preparing federal tax returns, promoting the availability of theft loss deductions or engaging in any other tax-related business. The court found that Elsass and Fraud Recovery Group promoted a nationwide scheme that falsely informed customers that they were entitled to claim large theft loss tax deductions, and then prepared the tax returns that improperly claimed such deductions.
Hiding income offshore, identity theft, and return preparer fraud are all part of the IRS’s “ Dirty Dozen Tax Scams .” More information about the Tax Division’s civil and criminal enforcement efforts in these and other areas is available on the Justice Department website . For more on the Dirty Dozen Tax Scams, see the IRS website and the IRS YouTube Channel .
Johnston Resident Pleads Guilty to Credit Card Fraud, Aggravated Identity Theft, Social Security FraudRead the Press Release
PROVIDENCE, R.I. – Henry A. Fellela, Jr., 56, of Johnston, pleaded guilty in federal court in Providence on Tuesday to charges that he fraudulently obtained the identity of a Smithfield resident and using that person’s identity and credit card to purchase more than $3,000 worth of goods. In addition, Fellela pleaded guilty to charges that he fraudulently obtained more than $58,000 in Supplemental Social Security benefits by falsely claiming he had no permanent home address while living with his wife and children in Johnston.
Appearing before U.S. District Court Judge John J. McConnell, Jr., Fellela pleaded as charged in a five-count indictment returned in July 2013 with one count each of credit card fraud, aggravated identity theft and Social Security fraud, and two counts of theft of government funds.
Fellela’s guilty plea was announced by United States Attorney Peter F. Neronha; Shelly Binkowski, Inspector in Charge of the U.S. Postal Inspection Service, Boston Division; Smithfield Police Chief Richard P. St. Sauveur, Jr.; and Scott E. Antolik, Special Agent in Charge of the Boston Field Office of the Social Security Administration, Office of the Inspector General/Office of Investigations.
According to information presented to the court, an investigation by U.S. Postal Inspectors and Smithfield Police revealed that Fellela stole the identity of a Smithfield resident and used that person’s identity and credit card to make numerous purchases including electronic goods and clothing totaling $3,077.13.
In addition, according to information presented to the court, an investigation by the Social Security Administration, Office of the Inspector General/Office of Investigations determined that from March 2004, approximately three months after Fellela was released from federal prison to begin serving a 21-month term of supervised release on an unrelated matter, and continuing until about June 1, 2012, Fellela collected Supplemental Social Security benefits totaling $58,207.34 after falsely reporting that he had no permanent address at the time he applied for and received the benefits.
Fellela, who was released on $50,000 unsecured bond to home incarceration with electronic monitoring following his arrest in July 2013, faces statutory penalties of up 10 years imprisonment, 3 years supervised release and a fine $250,000 on the charge of credit card fraud; up to 10 years imprisonment, 3 years supervised release and a fine $250,000 on each charge of theft of government property; 5 years imprisonment, 3 years of supervised release and a fine of $250,000 on the charge of Social Security fraud; and 2 years imprisonment for aggravated identity theft, to be served consecutive to all other sentences imposed.
The case is being prosecuted by Assistant U.S. Attorney Richard W. Rose.
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To assist the media and the public, a glossary of federal judicial terms and procedures is available at http://www.justice.gov/usao/justice101/
Contact: 401-709-5357
[email protected]Indictment: Kansas Home Health Worker's BillsClaimed She Was Working up to 39 Hours A DayRead the Press Release
TOPEKA, KAN. - A Kansas City, Kan., woman working as a personal care attendant was indicted Wednesday on a federal charge that Medicaid paid more than $587,000 based on fraudulent bills she submitted, U.S. Attorney Barry Grissom and Kansas Attorney General Derek Schmidt announced.
Doris Betts, 54, Kansas City, Kan., was charged with six counts of health care fraud. The indictment alleged the crimes occurred while Betts was claiming to provide personal services, residential support, day support, and sleep cycle support for seven different Medicaid consumers through four different billing agencies since January 2008. Personal services include bathing, house cleaning, meal preparation, toileting, transferring and prompting patients to take medication.
The indictment alleges an analysis of Betts’ documentation of services showed:
- She claimed to be with two or more different clients at the same time.
- She claimed to provide services when clients actually were in the hospital.
- She claimed to provide services when she was at her own medical appointments.
- She claimed to provide services at different locations without any travel time between them.
The indictment alleges she documented more than 750 work days that exceeded 24 hours, the highest of which totaled 39.5 hours.
If convicted, she faces a maximum penalty of 10 years in federal prison and a fine up to $250,000 on each count. Health and Human Services and Kansas Attorney General Derek Schmidt’s Medicaid Fraud Division investigated. Assistant Attorney General Stefani Hepford of the Kansas Attorney General’s Office and Assistant U.S. Attorney Tanya Treadway are prosecuting.
OTHER INDICTMENTS
Shaun Lee Kendall, 29, and Michael Richard Wilkins, 21, both of whom are being held in the Shawnee County Jail, are charged are charged with one count of carjacking. The indictment alleges that on Jan. 29, 2014, in Shawnee County, Kan., they used force against a victim to steal a 1999 Dodge Dakota truck.
If convicted they face a maximum penalty of 15 years and a fine up to $250,000. The FBI investigated. Assistant U.S. Attorney Jared Maag is prosecuting.
Kyle B. Rains, 30, Park City, Kan., is charged with two counts of distributing child pornography and one count of possessing child pornography. The crimes are alleged to have occurred in February and March 2014 in Sedgwick County, Kan.
If convicted, he faces a penalty of not less than five years and not more than 20 years in federal prison and a fine up to $250,000 on the distribution counts, and a maximum penalty of 10 years and a fine up to $250,000 on the possession count. Homeland Security Investigations, the Internet Task Force on Crimes Against Children and the Wichita Police Department investigated. Assistant U.S. Attorney Jason Hart is prosecuting.
Kevin L. Cline, 55, Minneapolis, Kan., and C&R Plating of Minneapolis, are charged with 20 counts of violating the Clean Water Act, one count of making false statements to the Kansas Department of Health and Environment, one count of failing to notify KDHE of changes to their wastewater pretreatment equipment, one count of failing to report a bypass of pretreatment equipment, and one count of illegally introducing pollutants into a sewer system.
The indictment alleges that pollutants from C&R Plating, a metal finishing business, were introduced into the sewer system of the City of Minneapolis, Kan.
If convicted, he faces a maximum penalty of three years in federal prison and a fine up to $50,000 per day of violation on 23 of the 24 counts. The charge of introducing pollutants into a sewer system carries a maximum penalty of five years in federal prison and a fine up to $250,000. The Environmental Protection Agency investigated. Assistant U.S. Attorney Rich Hathaway is prosecuting.
Edith Misael Salas-Rangel, 27, a citizen of Mexico, is charged with one count of unlawfully re-entering the United States after being deported. She was found March 28, 2014, in Geary County, Kan.
If convicted, she faces a maximum penalty of two years in federal prison and a fine up to $250,000. Immigration and Customs Enforcement investigated. Assistant U.S. Attorney Jared Maag is prosecuting.
In all cases, defendants are presumed innocent until and unless proven guilty. The indictments merely contain allegations of criminal conduct.Houston Man Convicted of Sex Trafficking of ChildrenRead the Press Release
HOUSTON – Tevon Harris aka “Da Kidd” and “King Kidd,” 22, of Houston, has entered a plea of guilty on two charges of trafficking children under 18 for commercial sex, announced United States Attorney Kenneth Magidson.
According to the plea agreement, from January through July 2012, Harris forced young girls, who he knew were minors, into prostitution by using force and intimidation. Harris stipulated that in order to gain the trust of victims, whom he met on social networking sites, he would tell them he was going to help them become models. Instead, he picked them up, took them to motel rooms and then forced them to have sex with him. Harris would also deprive them of their cell phones, thereby cutting off their communication with the outside world.
Harris used violence to keep the minors cooperating with him. In one instance, he deprived a victim of food for more than four days because he did not believe she was servicing his clients well enough. He also supplied her with marijuana and alcohol. Another victim was beaten with a towel rack torn from a motel room wall when Harris found her using the phone to call her mother for help.
The victims were photographed and their images were posted in online ads for prostitution. Harris kept all monies they earned.
U.S. District Judge David Hittner accepted the guilty pleas today and set sentencing for July 7, 2014. At that time, Harris faces a minimum of 10 years and up to life imprisonment and a maximum fine of $250,000. Upon completion of any prison term imposed, Harris also faces a maximum of life on supervised release and he will be required to register as a sex offender. He was ordered to remain in custody pending that hearing.
An investigation by the Houston FBI Innocence Lost Task Force, which includes such agencies as the Houston Police Department, developed this case using statements from victims as well as on line advertisements for the victims’ services and hotel records from several hotels.
This case, prosecuted by Assistant United States Attorney Sherri L. Zack, 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."
Hogsett Announces Eleven Individuals Indicted by Federal Grand Jury for Cocaine Drug TraffickingRead the Press Release
INDIANAPOLIS - Joseph H. Hogsett, United States Attorney, and representatives from the Indiana State Police, the Marion County Prosecutor’s Office and the Indianapolis Metropolitan Police Department (IMPD), announced today that federal charges have been filed and are being brought in furtherance of a long standing investigation named “Operation Family Ties” involving a drug trafficking operation in Indianapolis.
Hogsett announced that a federal grand jury returned an indictment charging the following individuals with cocaine trafficking:
Benigno Reyes-Contrerra, 27
Edgar Dominguez-Castillo, 25
Gerardo Baltierra, 29
Fellipe Maguellal, 22
Wade Havvard, 36
Antjuan Dyson, 36
Larry Eugene Coe, 39
Tuwanna Harney, 37
Timika Highbaugh, 39
Waimond Jackson, 53
Earnest McCain, 55All 11 defendants have been charged with conspiracy to possess with intent to distribute a controlled substance. Today’s indictment exposes these defendants to mandatory minimum sentences and higher maximum prison sentences than they originally faced when they were charged in state court.
Beginning in March 2010, IMPD began an investigation into a cocaine drug trafficking operation the Butler-Tarkington neighborhood of Indianapolis. Detectives learned that the organization had been trafficking in cocaine for more than two years.
It is alleged that Wade Havvard, Larry Coe and a previously federally indicted individual, Marvin Golden, 35, were significant cocaine traffickers in the Butler-Tarkington area. Hundreds of telephone and text messages were sent between them consistent with drug trafficking. It is alleged they would stash the cocaine in houses around the Butler-Tarkington area then sell to other middle- level dealers who would distribute the cocaine on the northwest side of Indianapolis.
The investigation culminated in the arrest of over 40 individuals in early January 2014, at which time more than 6 kilograms of cocaine was confiscated. Also seized at the time of arrests were marijuana, nine guns, six vehicles and approximately $198,000 in cash.
United States Attorney Hogsett said, Athe alleged conduct in this case is unacceptable for our community. We seek to impose the harshest penalties on those who refuse to observe even the most basic assumptions of civil society. I have promised to seek out the worst of the worst and hold them fully accountable and based on the allegations in the indictment; these defendants justify enhanced penalties in federal court”
Hogsett further praised his local partners by saying, “I want to thank all of our law enforcement partners, particularly the Drug Enforcement Administration, the Indiana State Police, and the Indianapolis Metropolitan Police Department, for their dedication to taking these drugs off the street, and, therefore, making our neighborhoods safer. I also want to personally thank the Marion County Prosecutor’s Office for their partnership in bringing these individuals to justice.”
According to Assistant U. S. Attorney Michelle Brady, who is the lead prosecutor in the case for the government, if convicted, some of the defendants face a minimum penalty of 10 years to life. Others face 20 years to life and three defendants face mandatory life sentences without the possibility of parole.
An indictment is only a charge and is not evidence of guilt. A defendant is presumed innocent and is entitled to a fair trial at which the government must prove guilt beyond a reasonable doubt.
Hewlett-Packard Russia Agrees to Plead Guilty to Foreign BriberyRead the Press Release
ZAO Hewlett-Packard A.O. (HP Russia), an international subsidiary of the California technology company Hewlett-Packard Company (HP Co.), has agreed to plead guilty to felony violations of the Foreign Corrupt Practices Act (FCPA) and admit its role in bribing Russian government officials to secure a large technology contract with the Office of the Prosecutor General of the Russian Federation.
Deputy Assistant Attorney General Bruce Swartz of the Justice Department’s Criminal Division, U.S. Attorney Melinda Haag of the Northern District of California, Assistant Director in Charge Valerie Parlave of the FBI’s Washington Field Office and Chief Richard Weber of the Internal Revenue Service – Criminal Investigation (IRS-CI) made the announcement.
A criminal information filed today in U.S. District Court for the Northern District of California charges HP Russia with conspiracy and substantive violations of the anti-bribery and accounting provisions of the FCPA. In addition, the government is entering into criminal resolutions with HP subsidiaries in Poland and Mexico relating to contracts with Poland’s national police agency and Mexico’s state-owned petroleum company, respectively. Pursuant to a deferred prosecution agreement, the department filed a criminal information charging Hewlett-Packard Polska, Sp. Z o.o. (HP Poland) with violating the accounting provisions of the FCPA. Hewlett-Packard Mexico, S. de R.L. de C.V. (HP Mexico) has entered into a non-prosecution agreement with the government pursuant to which it will forfeit proceeds and admit and accept responsibility for its misconduct as set forth in the statement of facts. In total, the three HP entities will pay $76,750,224 in criminal penalties and forfeiture.
In a related FCPA matter, HP Co. settled with the U.S. Securities and Exchange Commission (SEC) and will pay an additional $31,472,250 in disgorgement and prejudgment interest, bringing the total amount of U.S. criminal and regulatory penalties paid by HP Co. and its subsidiaries (collectively, HP) to more than $108 million.
“Hewlett-Packard subsidiaries, co-conspirators or intermediaries created a slush fund for bribe payments, set up an intricate web of shell companies and bank accounts to launder money, employed two sets of books to track bribe recipients, and used anonymous email accounts and prepaid mobile telephones to arrange covert meetings to hand over bags of cash,” said Deputy Assistant Attorney General Swartz. “Even as the tradecraft of corruption becomes more sophisticated, the department is staying a step ahead of those who choose to violate our laws, thanks to the diligent efforts of U.S. prosecutors and agents and our colleagues at the SEC, as well as the tremendous cooperation of our law enforcement partners in Germany, Poland and Mexico.”
“The United States Attorney’s Office, working alongside our colleagues in the Criminal Division, will vigorously police any efforts by companies in our district to illegally sell products to foreign governments using bribes or kickbacks in violation of the FCPA,” said U.S. Attorney Haag. “Today’s resolution with HP reinforces the fact that there is no double standard: U.S. businesses must respect the same ethics and compliance standards whether they are selling products to foreign governments or to the United States government.”
“This case demonstrates the FBI's ability to successfully coordinate with our foreign law enforcement partners to investigate and bring to justice corporations that choose to do business through bribery and off-the-book dealings,” said Assistant Director in Charge Parlave. “I want to thank the agents who worked on this case in Washington, New York and in our Legal Attaché offices in Mexico City, Moscow, Berlin and Warsaw as well as the prosecutors. Their work ensures a level playing field for businesses seeking lucrative overseas government contracts.”
“This agreement is the result of untangling a global labyrinth of complex financial transactions used by HP to facilitate bribes to foreign officials,” said IRS-CI Chief Weber. “IRS-CI has become a trusted leader in pursuit of corporations and executives who use hidden offshore assets and shell companies to circumvent the law. CI is committed to maintaining fair competition, free of corrupt practices, through a potent synthesis of global teamwork and our dynamic financial investigative talents.”
According to court documents, in 1999, the Russian government announced a project to automate the computer and telecommunications infrastructure of its Office of the Prosecutor General of the Russian Federation (GPO). Not only was that project itself worth more than $100 million, but HP Russia viewed it as the “golden key” that could unlock the door to another $100 to $150 million dollars in business with Russian government agencies. To secure a contract for the first phase of project, ultimately valued at more than € 35 million, HP Russia executives and other employees structured the deal to create a secret slush fund totaling several million dollars, at least part of which was intended for bribes to Russian government officials.
As admitted in a statement of facts, HP Russia created excess profit margins for the slush fund through an elaborate buy-back deal structure, whereby (1) HP sold the computer hardware and other technology products called for under the contract to a Russian channel partner, (2) HP bought the same products back from an intermediary company at a nearly €8 million mark-up and paid the intermediary an additional €4.2 million for purported services, and (3) HP sold the same products to the GPO at the increased price. The payments to the intermediary were then largely transferred through a cascading series of shell companies – some of which were directly associated with government officials – registered in the United States, United Kingdom, British Virgin Islands and Belize. Much of these payments from the intermediary were laundered through off-shore bank accounts in Switzerland, Lithuania, Latvia and Austria. Portions of the funds were spent on travel, cars, jewelry, clothing, expensive watches, swimming pool technology, furniture, household appliances and other luxury goods. To keep track of these corrupt payments, the conspirators inside HP Russia kept two sets of books: secret spreadsheets that detailed the categories of recipients of the corrupt funds and sanitized versions that hid the corrupt payments from others outside of HP Russia. They also entered into off-the-books side agreements. As one example, an HP Russia executive executed a letter agreement to pay €2.8 million in purported “commission” fees to a U.K.-registered shell company, which was linked to a director of the Russian government agency responsible for managing the GPO project. HP Russia never disclosed the existence of the agreement to internal or external auditors or management outside of HP Russia and conducted no due diligence of the shell company.
According to an agreed statement of facts, in Poland, from 2006 through at least 2010, HP Poland falsified HP books and records and circumvented HP internal controls to execute and conceal a scheme to corruptly secure and maintain millions of dollars in technology contracts with the Komenda G³ówna Policji (KGP), the Polish National Police agency. HP Poland made corrupt payments totaling more than $600,000 in the form of cash bribes and gifts, travel and entertainment to the KGP’s Director of Information and Communications Technology. Among other things, HP Poland gave the government official bags filled with hundreds of thousands of dollars of cash, provided the official with HP desktop and laptop computers, mobile devices and other products and took the official on a leisure trip to Las Vegas, which included drinks, dining, entertainment and a private tour flight over the Grand Canyon. To covertly communicate with the official about the corrupt scheme, an HP Poland executive used anonymous email accounts, prepaid mobile telephones and other methods meant to evade detection.
In Mexico, according to the non-prosecution agreement, HP Mexico falsified corporate books and records and circumvented HP internal controls in connection with contracts to sell hardware, software, and licenses to Mexico’s state-owned petroleum company, Petroleos Mexicanos (Pemex). To secure the contracts, HP Mexico understood that it had to retain a certain third-party consultant with close ties to senior executives of Pemex. HP agreed to pay a $1.41 million “commission” to the consultant and hid the payments by inserting into the deal structure another third party, which had been approved by HP as a channel partner. HP Mexico made the commission payment to the channel partner, which in turn forwarded the payments to the consultant. Shortly thereafter, the consultant paid one of the Pemex officials approximately $125,000.
Court filings acknowledge HP Co.’s extensive cooperation with the department, including conducting a robust internal investigation, voluntarily making U.S. and foreign employees available for interviews, and collecting, analyzing, and organizing voluminous evidence for the department. Court filings also acknowledge the extensive anti-corruption remedial efforts undertaken by HP Co., including taking appropriate disciplinary action against culpable employees, and enhancing HP Co.’s internal accounting, reporting, and compliance functions.
The case is being investigated by the FBI’s Washington Field Office with assistance from the FBI’s New York City Field Office and FBI Legal Attache offices in Mexico City, Moscow, Berlin and Warsaw, and the IRS-CI’s Oakland Field Office. The case is being prosecuted by Trial Attorneys Ryan Rohlfsen and Jason Linder of the Criminal Division’s Fraud Section, and Assistant U.S. Attorney Adam Reeves of the Northern District of California. The Criminal Division’s Office of International Affairs also provided significant assistance in this matter.
The Justice Department expresses its deep appreciation for the significant assistance provided by the SEC’s Division of Enforcement, the Polish Anti-Corruption Bureau (CBA), the Polish Appellate Prosecutor’s Office, the Public Prosecutor’s Office in Dresden, Germany, and also acknowledges the contribution of our law enforcement partners in other countries involved in this matter.
Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.Hewlett-Packard Russia Agrees to Plead Guilty to Foreign BriberyRead the Press Release
WASHINGTON – ZAO Hewlett-Packard A.O. (HP Russia), an international subsidiary of the California technology company Hewlett-Packard Company (HP Co.), has agreed to plead guilty to felony violations of the Foreign Corrupt Practices Act (FCPA) and admit its role in bribing Russian government officials to secure a large technology contract with the Office of the Prosecutor General of the Russian Federation.
Deputy Assistant Attorney General Bruce Swartz of the Justice Department’s Criminal Division, U.S. Attorney Melinda Haag of the Northern District of California, Assistant Director in Charge Valerie Parlave of the FBI’s Washington Field Office and Chief Richard Weber of the Internal Revenue Service – Criminal Investigation (IRS-CI) made the announcement.
A criminal information filed today in U.S. District Court for the Northern District of California charges HP Russia with conspiracy and substantive violations of the anti-bribery and accounting provisions of the FCPA. In addition, the government is entering into criminal resolutions with HP subsidiaries in Poland and Mexico relating to contracts with Poland’s national police agency and Mexico’s state-owned petroleum company, respectively. Pursuant to a deferred prosecution agreement, the department filed a criminal information charging Hewlett-Packard Polska, Sp. Z o.o. (HP Poland) with violating the accounting provisions of the FCPA. Hewlett-Packard Mexico, S. de R.L. de C.V. (HP Mexico) has entered into a non-prosecution agreement with the government pursuant to which it will forfeit proceeds and admit and accept responsibility for its misconduct as set forth in the statement of facts. In total, the three HP entities will pay $76,760,224 in criminal penalties and forfeiture.
In a related FCPA matter, the U.S. Securities and Exchange Commission (SEC) filed a proposed final judgment to which HP Co. consented. Under the terms of the proposed final judgment, HP Co. agreed to pay $31,472,250 in disgorgement, prejudgment interest, and civil penalties, bringing the total amount of U.S. criminal and regulatory penalties paid by HP Co. and its subsidiaries (collectively, HP) to more than $108 million.
“Hewlett-Packard subsidiaries created a slush fund for bribe payments, set up an intricate web of shell companies and bank accounts to launder money, employed two sets of books to track bribe recipients, and used anonymous email accounts and prepaid mobile telephones to arrange covert meetings to hand over bags of cash,” said Deputy Assistant Attorney General Swartz. “Even as the tradecraft of corruption becomes more sophisticated, the department is staying a step ahead of those who choose to violate our laws, thanks to the diligent efforts of U.S. prosecutors and agents and our colleagues at the SEC, as well as the tremendous cooperation of our law enforcement partners in Germany, Poland and Mexico.”
“The United States Attorney’s Office, working alongside our colleagues in the Criminal Division, will vigorously police any efforts by companies in our district to illegally sell products to foreign governments using bribes or kickbacks in violation of the FCPA,” said U.S. Attorney Haag. “Today’s resolution with HP reinforces the fact that there is no double standard: U.S. businesses must respect the same ethics and compliance standards whether they are selling products to foreign governments or to the United States government.”
“This case demonstrates the FBI's ability to successfully coordinate with our foreign law enforcement partners to investigate and bring to justice corporations that choose to do business through bribery and off-the-book dealings,” said Assistant Director in Charge Parlave. “I want to thank the agents who worked on this case in Washington, New York and in our Legal Attaché offices in Mexico City, Moscow, Berlin and Warsaw as well as the prosecutors. Their work ensures a level playing field for businesses seeking lucrative overseas government contracts.”
“This agreement is the result of untangling a global labyrinth of complex financial transactions used by HP to facilitate bribes to foreign officials,” said IRS-CI Chief Weber. “IRS-CI has become a trusted leader in pursuit of corporations and executives who use hidden offshore assets and shell companies to circumvent the law. CI is committed to maintaining fair competition, free of corrupt practices, through a potent synthesis of global teamwork and our dynamic financial investigative talents.”
According to court documents, in 1999, the Russian government announced a project to automate the computer and telecommunications infrastructure of its Office of the Prosecutor General of the Russian Federation (GPO). Not only was that project itself worth more than $100 million, but HP Russia viewed it as the “golden key” that could unlock the door to another $100 to $150 million dollars in business with Russian government agencies. To secure a contract for the first phase of project, ultimately valued at more than €35 million, HP Russia executives and other employees structured the deal to create a secret slush fund totaling several million dollars, at least part of which was intended for bribes to Russian government officials.
As admitted in a statement of facts, HP Russia created excess profit margins for the slush fund through an elaborate buy-back deal structure, whereby (1) HP sold the computer hardware and other technology products called for under the contract to a Russian channel partner, (2) HP bought the same products back from an intermediary company at a nearly €8 million mark-up and paid the intermediary an additional €4.2 million for purported services, and (3) HP sold the same products to the GPO at the increased price. The payments to the intermediary were then largely transferred through a cascading series of shell companies – some of which were directly associated with government officials – registered in the United States, United Kingdom, British Virgin Islands and Belize. Much of these payments from the intermediary were laundered through off-shore bank accounts in Switzerland, Lithuania, Latvia and Austria. Portions of the funds were spent on travel, cars, jewelry, clothing, expensive watches, swimming pool technology, furniture, household appliances and other luxury goods. To keep track of these corrupt payments, the conspirators inside HP Russia kept two sets of books: secret spreadsheets that detailed the categories of recipients of the corrupt funds and sanitized versions that hid the corrupt payments from others outside of HP Russia. They also entered into off-the-books side agreements. As one example, an HP Russia executive executed a letter agreement to pay €2.8 million in purported “commission” fees to a U.K.-registered shell company, which was linked to a director of the Russian government agency responsible for managing the GPO project. HP Russia never disclosed the existence of the agreement to internal or external auditors or management outside of HP Russia and conducted no due diligence of the shell company.
According to an agreed statement of facts, in Poland, from 2006 through at least 2010, HP Poland falsified HP books and records and circumvented HP internal controls to execute and conceal a scheme to corruptly secure and maintain millions of dollars in technology contracts with the Komenda Glówna Policji (KGP), the Polish National Police agency. HP Poland made corrupt payments totaling more than $600,000 in the form of cash bribes and gifts, travel and entertainment to the KGP’s Director of Information and Communications Technology. Among other things, HP Poland gave the government official bags filled with hundreds of thousands of dollars of cash, provided the official with HP desktop and laptop computers, mobile devices and other products and took the official on a leisure trip to Las Vegas, which included drinks, dining, entertainment and a private tour flight over the Grand Canyon. To covertly communicate with the official about the corrupt scheme, an HP Poland executive used anonymous email accounts, prepaid mobile telephones and other methods meant to evade detection.
In Mexico, according to the non-prosecution agreement, HP Mexico falsified corporate books and records and circumvented HP internal controls in connection with contracts to sell hardware, software, and licenses to Mexico’s state-owned petroleum company, Petroleos Mexicanos (Pemex). To secure the contracts, HP Mexico understood that it had to retain a certain third-party consultant with close ties to senior executives of Pemex. HP agreed to pay a $1.41 million “commission” to the consultant and hid the payments by inserting into the deal structure another third party, which had been approved by HP as a channel partner. HP Mexico made the commission payment to the channel partner, which in turn forwarded the payments to the consultant. Shortly thereafter, the consultant paid one of the Pemex officials approximately $125,000.
Court filings acknowledge HP Co.’s extensive cooperation with the department, including conducting a robust internal investigation, voluntarily making U.S. and foreign employees available for interviews, and collecting, analyzing, and organizing voluminous evidence for the department. Court filings also acknowledge the extensive anti-corruption remedial efforts undertaken by HP Co., including taking appropriate disciplinary action against culpable employees, and enhancing HP Co.’s internal accounting, reporting, and compliance functions.
The case is being investigated by the FBI’s Washington Field Office with assistance from the FBI’s New York City Field Office and FBI Legal Attache offices in Mexico City, Moscow, Berlin and Warsaw, and the IRS-CI’s Oakland Field Office. The case is being prosecuted by Trial Attorneys Ryan Rohlfsen and Jason Linder of the Criminal Division’s Fraud Section, and Assistant U.S. Attorney Adam Reeves of the Northern District of California with the assistance of Phillip Villanueva, Maryam Beros and Rayneisha Booth. The Criminal Division’s Office of International Affairs also provided significant assistance in this matter.
The Justice Department expresses its deep appreciation for the significant assistance provided by the SEC’s Division of Enforcement, the Polish Anti-Corruption Bureau (CBA), the Polish Appellate Prosecutor’s Office, the Public Prosecutor’s Office in Dresden, Germany, and our law enforcement partners in Mexico, the United Kingdom, Lithuania, Latvia, Italy, Spain and Hungary.
Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.
(HP Mexico NPA )
(HP Poland DPA )
(HP Poland information )
(HP Russia information )
(HP Russia plea agreement )
Four Organizations Honored by U.S. Attorney’s Office During National Crime Victims’ Rights WeekRead the Press Release
Montgomery, Alabama - In recognition of National Crime Victims’ Rights Week (April 6-12, 2014), the United States Attorney’s Office for the Middle District of Alabama is honoring four organizations for their support and service to communities affected by crime, announced U.S. Attorney George L. Beck Jr. The Alabama Crime Victims’ Compensation Commission, the Family Sunshine Center, and the One Place Family Justice Center, all in Montgomery, along with the Wiregrass Angel House in Dothan, received letters of appreciation from U.S. Attorney Beck on April 9, 2014 to recognize their commitment to serving individuals whose lives have been devastated by crime.
This year’s theme—30 Years: Restoring the Balance of Justice—presents a perfect opportunity to salute these organizations and their long-term commitment to aiding crime victims. As we celebrate three decades of defending victims’ rights, we are reminded of how far we have come, and how much work is yet to be done.
Only 30 years ago, crime victims had virtually no rights and no assistance. Today, the nation has made dramatic progress in securing rights, protections, and services for victims. Every state has enacted victims’ rights laws and all have victim compensation programs. More than 10,000 victim service agencies now help people throughout the country. In 1984, Congress passed the bipartisan Victims of Crime Act (VOCA), which created a national fund to ease victims’ suffering. Financed not by taxpayers but by fines and penalties paid by offenders, the Crime Victims Fund supports victim services, such as rape crisis and domestic violence programs and victim compensation programs that pay many of victims’ out-of-pocket expenses from the crime, such as counseling, funeral expenses, and lost wages.
Crime can have a lasting physical, emotional, or financial impact on people of all ages and abilities, and of all economic and social backgrounds. In addition to these challenges, crime victims face a criminal justice system that often does not have the resources or expertise to help them deal with the remnants of crime.
Thankfully, many organizations in the Middle District have recognized the need for additional services and have made excellent progress in assisting crime victims. The Family Sunshine Center, the One Place Family Justice Center, and the Wiregrass Angel House provide a comprehensive set of services to crime victims in an effort to promote their safety, well-being, and recovery. The Alabama Crime Victims’ Compensation Commission seeks to ease the financial hardships encountered by victims by offsetting some of the lingering and significant expenses of crime.
“I am pleased to honor these organizations for the superb work they have done for crime victims in our communities,” said U.S. Attorney George L. Beck Jr. “They share a commitment to reaching every victim of crime and providing them with the services they desperately need. Although the U.S. Attorney’s Office must focus primarily on the prosecution of offenders, we recognize that nearly every crime we prosecute has a victim, and we want them to know they are not alone.”
Further information about National Crime Victims’ Rights Week is available at ovc.ncjrs.gov/ncvrw.
PRESS CONTACT: Clark Morris
Email: [email protected]
Telephone: (334) 551-1755
Fax: (334) 223-7617Former South Carolina Corrections Officer Sentenced for Beating Inmate with Mental IllnessRead the Press Release
Robin Smith, 38, a former corrections officer at the Alvin S. Glenn Detention Center in Richland County, S.C., was sentenced to serve 24 months in prison to be followed by three years of supervised release today in the U.S. District Court for the District of South Carolina in Columbia for assaulting a pre-trial detainee with mental illness. Smith previously pleaded guilty to violating the detainee’s civil rights.
On Feb. 11, 2012, while working as a corrections officer at the Alvin S. Glenn Detention Center, Smith used unreasonable, unprovoked force against an inmate with mental illness. During the course of a routine search of the victim’s cell, Smith twisted the victim’s wrist and arm and kicked him in the upper body. During the assault, the victim was lying on the floor of the cell with one hand cuffed, was not combative and posed no threat to Smith.
“The overwhelming majority of correctional officers dispatch their difficult duties with honor and professionalism,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division. “The Justice Department will aggressively prosecute those who cross the line to engage in acts of criminal misconduct.”
“What Robin Smith did was wrong,” said U.S. Attorney Bill Nettles for the District of South Carolina. “At the base level, Mr. Smith kicked a man around who was so mentally ill he could not understand or follow the directions Smith was giving him. No just society can allow that kind of conduct on the part of a corrections officer to go unpunished.”
“Aggressive investigation of civil rights violations is a priority of the FBI and we will continue to work with our law enforcement partners to ensure the public’s trust in law enforcement is not compromised by the type of behavior demonstrated in this case,” said FBI Acting Special Agent in Charge Ann Colbert.
Today’s sentence resulted from the investigative work of the FBI and the Richland County Sheriff’s Office. U.S. Attorney Nettles thanked Sheriff Lott and the Richland County Sheriff’s Department for their commitment to the investigation. The case is being prosecuted by Trial Attorneys Jared Fishman and Nicholas Murphy for the Civil Rights Division and First Assistant U.S. Attorney Beth Drake.
Former Sergeant First Class Sentenced for Bribery and Theft SchemesRead the Press Release
GREENVILLE – United States Attorney Thomas G. Walker announced that today in federal court, JAMES EDWARD TRAVIS was sentenced by Senior United States District Judge Malcolm C. Howard to 60 months of imprisonment and 3 years of supervised release. He was also ordered to pay $422,302.65 in restitution and forfeiture was also ordered. On December 9, 2013 TRAVIS pled guilty to a Criminal Information charging him with demanding, seeking, and accepting bribes, in violation of Title 18, United States Code, Sections 201(b)(2)(A) and (B), and to theft of government property in violation of Title 18, United States Code, Sections 641 and 2.
United States Attorney Walker reflected, “Public corruption such as this defendant’s criminal conduct undermines our nation’s reconstruction efforts overseas and dishonors the sacrifice our military makes every day.”
According to the Criminal Information filed on November 13, 2013, and information presented in open court, JAMES EDWARD TRAVIS was a Sergeant First Class in the United States Department of the Army assigned to the Operational Detachment-Bravo for Alpha Company, 4th Battalion, 3rd Special Forces Group for a wartime deployment to Afghanistan. Between January 3, 2012, and October 4, 2012, TRAVIS was deployed to Afghanistan, working out of Forward Operating Base Sharana. During his deployment, TRAVIS acted as both a paying agent and a contracting officer representative. As a contracting officer representative, TRAVIS was responsible for, among other things, approving completion of contracts and then approving payments. TRAVIS was also in charge of contracting for cargo vehicles or “jingle trucks” to move supplies and equipment as well as small construction projects. TRAVIS accepted kickbacks from various vendors on a “quid pro quo” basis for various contracts. The kickbacks ranged from $4,000 to $7,000 per contract. TRAVIS solicited the help of a DOD civilian contractor to get the bribe monies back to the United States. When, during the course of the investigation, TRAVIS was questioned by law enforcement regarding the source of the cash, heinitially lied and claimed that the cash was gambling winnings. TRAVIS also asked the DOD contractor to lie to law enforcement if questioned.
In addition, TRAVIS, another U.S. soldier, and a local Afghan worked together to steal fuel from FOB Sharana in Afghanistan. On multiple occasions, TRAVIS paid the other soldier to escort an Afghan driver to the fuel point on FOB Sharana, to load fuel into the Afghan’s tanker truck, and to escort the driver with the stolen fuel back off FOB Sharana. Agents determined that 182,815 gallons of fuel were stolen. Based on an average price of $2.31/gallon for JP-8 fuel, the loss from the fuel theft scheme to the government is estimated at $422,302.65.
In a letter to the Court, Brigadier General Darsie D. Rogers reflected, “Special Forces units’ successes in Afghanistan are based on trust, cooperation, and mutual respect with our Afghan counterparts and the Afghan people. We pride ourselves in our ‘quiet professionalism.’ SFC Travis’ actions were anything but professional. He disgraced not only US Army Special Forces, but all Soldiers who served honorably in Afghanistan.”
Defense Criminal Investigative Service (DCIS) Special Agent in Charge John F. Khin, Southeast Field Office, commented, "It is disheartening when a military member abandons his code of conduct and violates a position of trust for personal enrichment. The DCIS investigates fraud and corruption that undermines the integrity of the Department of Defense. We continue to aggressively investigate violators to preserve precious American taxpayer dollars and better support our Warfighters serving honorably and selflessly in Southwest Asia."
“American servicemen and women face dangerous situations every day; their lives should not be put at risk by fellow soldiers working for their own profit. James Edward Travis stole thousands of dollars meant to support efforts in Afghanistan, but he could not hide his crimes from the FBI and our military partners dedicated to upholding justice,” said John Strong, Special Agent in Charge of the FBI in North Carolina.
“Theft of fuel in a war zone is serious. Not only does it rob US taxpayers and damage the reconstruction effort, stolen fuel can also wind up in the hands of insurgents bent on harming Americans. There must be zero tolerance for this kind of crime -- and SIGAR is dedicated to ensuring that anyone engaging in this activity will face justice,” commented Special Inspector General for Afghanistan Reconstruction John F. Spoko.
The case was investigated by the Defense Criminal Investigation Service, the Office of the Special Inspector General for Afghanistan Reconstruction, the United States Army Criminal Investigation Command, and the Federal Bureau of Investigation. Assistant U.S. Attorney Banumathi Rangarajan handled the prosecution of this case on behalf of the Eastern District of North Carolina.
Former Partner of A Freehold Office Equipment Leasing Company Admits Stealing More Than $600,000Read the Press Release
TRENTON, N.J. – A former partner of a Freehold, N.J.-based office equipment leasing company today admitted stealing more than $600,000 in a fraudulent loan scheme, U.S. Attorney Paul J. Fishman announced.
Jason Lee Lum, 35, of Yardley, Pa., pleaded guilty before U.S. District Judge Anne E. Thompson in Trenton federal court to an information charging him with wire fraud for receiving approximately $682,000 in fraudulently obtained loan proceeds.
According to documents filed in this case and statements made in court:
Lee Lum was a partner in a company called Superior Data Corp., which was in the business of providing office equipment leasing services. As a result of the high cost of leasing office equipment, the company would obtain loans through a financing company for its clients to lease office equipment. After a client agreed to lease office equipment, a company employee would submit the lease agreement paperwork to the financing company in order to obtain a loan for the client. If the financing company approved the loan, the financing company would send the loan proceeds directly to the company’s bank account. The client would then receive the leased office equipment and would directly repay the loan to the financing company.
As a partner at the company, Lee Lum was responsible for the company’s finances and for submitting loan documentation on behalf of clients. From October 2011 to May 2012, Lee Lum forged signatures of existing company clients on loan documents and then submitted the documents to the financing company. The company clients had neither approved nor consented to the loan documents being submitted, nor did the clients obtain any office equipment in connection with the fraudulent loan applications. When the financing company approved the fraudulent loan applications, Lee Lum directed the proceeds to be sent to the company’s bank account, which he controlled. Lee Lum used the fraudulently obtained loan proceeds to pay personal expenses, company payroll (including his own salary), and to increase the company’s revenue for accounting purposes. Lee Lum sought to conceal his fraud by making payments on the fraudulently obtained loans. When Lee Lum began to fall behind on those payments, the financing company that issued the loans sought payment directly from the company’s clients, whose names were on the fraudulent loans.
The wire fraud count to which Lee Lum pleaded guilty carries a maximum penalty of 20 years in prison and a $250,000 fine. As part of the plea, Lee Lum agreed to pay restitution in the amount of $682,862. Sentencing is scheduled for Sept. 19, 2014.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark, with the investigation leading to today’s guilty plea.
The government is represented by Assistant U.S. Attorney Fabiana Pierre-Louis of the U.S. Attorney’s Office Criminal Division in Trenton.
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Defense counsel: Frederick W. Klepp Esq., Cherry Hill, N.J.
Lee Lum, Jason Information
Former Massachusetts Attorney Sentenced for Mortgage FraudRead the Press Release
BOSTON – A former attorney practicing in Boston was sentenced today for his involvement in a mortgage fraud scheme that resulted in more than $2.5 million in losses.
Charles R. Sammon, 37, of West Pittston, Pa., was sentenced today by U.S. District Court Judge Richard G. Stearns to 33 months in prison, 36 months of supervised release and $977,042 in restitution to defrauded lenders. In November 2013, Sammon pleaded guilty to wire fraud, mail fraud and unlawful monetary transactions.
Sammon participated in at least 13 fraudulent real estate transactions involving triple-decker apartment buildings in various sections of Boston, including Dorchester, Roxbury, and Jamaica Plain. For eight of those transactions, Sammon served as the real estate closing attorney representing the mortgage lender. For the other five, Sammon participated as the seller of real property himself. The basic scheme involved recruiting people to buy properties by promising to pay them as much as $40,000 per transaction, which was not disclosed to the lenders. Many of the buyers were also promised that the seller would pay the mortgage for upwards of a year. Also central to the scheme was telling the lenders that each borrower intended to occupy the property as their primary residence, which was not true.Many of the payments to buyers were made directly from Sammon’s law firm bank account on transactions for which he was the closing attorney, but he failed to disclose those payments to the mortgage lenders that he represented. Sammon also received some of the loan proceeds in addition to his legal fees for doing so, which was also not disclosed to the lender. In one transaction, he received more than $50,000.
Each of the loans given for these 13 transactions went into default, usually 12-18 months after the transaction, and all the properties were sold at foreclosure or through a short sale, resulting in combined losses to the lenders of more than $2.5 million.United States Attorney Carmen M. Ortiz; William P. Offord, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigations in New England; Shelly Binkowski, Inspector in Charge of the United States Postal Inspection Service; Steven Marks, Acting Special Agent in Charge of the United States Secret Service; and Fred Gibson, Acting Inspector General of the Federal Deposit Insurance Corporation, Office of Inspector General, made the announcement today. The case was prosecuted by Assistant U.S. Attorney Mark J. Balthazard of Ortiz's Economic Crimes Unit and DOJ Trial Attorney Alexander H. Berlin.
Former Markham Deputy Police Chief Sentenced to Five Years in Prison for Lying to FBI About Raping Woman in Police CustodyRead the Press Release
CHICAGO — The former deputy police chief in south suburban Markham was sentenced today to the maximum of five years in federal prison after a judge ruled that he sexually assaulted a woman in police custody in 2010. The defendant, TONY D. DEBOIS, pleaded guilty last September to lying to FBI agents in 2012 about having had sex in his office, but he contended at a lengthy sentencing hearing last month that the woman he had sex with was not the victim, and the sex was consensual.
“It is a case about lying about a rape that occurred under the most egregious circumstances that law enforcement could imagine,” Assistant U.S. Attorney April Perry argued today before the sentence was imposed by U.S. District Judge Joan Lefkow.
“The seriousness should not be underestimated,” Judge Lefkow said, adding that she found Debois’ conduct “revolting.”
Debois, 42, of Frankfort, was also placed on supervised release for three years following his sentence, which he was ordered to begin serving on June 10.
Judge Lefkow ruled today that the government established that Debois raped the 21-yearold highly vulnerable victim by a “considerable” preponderance of the evidence presented at the hearing last month, including the victim’s testimony, which the judge said was corroborated by other factors. The victim and a man were arrested by Markham police officers on Sept. 23, 2010, after the man was suspected of engaging in a counterfeit currency transaction. The victim, who had no prior contact with law enforcement, was handcuffed, taken to the Markham Police Department, and placed in a holding cell for about 30 minutes. One of the arresting officers then took her to Debois’ tactical office, where, according to Judge Lefkow’s ruling, “he insinuated she could escape further trouble if she engaged in sex with him.” The judge found that Debois’ conduct was rape and that he later obstructed justice to avoid punishment for the sexual assault.
DeBois served as deputy chief in Markham between 2008 and 2011 and also served as the department’s head of internal affairs until 2011, when he became Markham’s inspector general until 2012. DeBois began his law enforcement career with the former Chicago Housing Authority Police Department in the 1990s, and he was a police officer in south suburban Harvey from 1999 to 2007, when he joined the Markham department.
The sentence was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation. They thanked the Illinois State Police and the Cook County State’s Attorney’s Office for their extensive cooperation in the investigation.
The government was represented by Ms. Perry and Assistant U.S. Attorney Patrick Pope.