Latest Records
Newest first across public DOJ and U.S. Attorney press releases.
Tuesday 14 January 2014
AirTran Employee Sentenced for Bypassing TSA Security with A Machine GunRead the Press Release
ATLANTA - Rasondo Maurice Norris, who attempted to smuggle cocaine and a Mac-11 machine gun onto a commercial flight has been sentenced to ten years in prison.
“Security screening at our airports is vital to keeping citizens safe,” said United States Attorney Sally Quillian Yates. “By using his credentials to bypass security with backpacks of contraband, the defendant tried to allow drugs and a machine gun onboard a commercial flight. Public safety is a responsibility we take seriously, and our office will continue to prosecute those who are endangering our citizens.”
“The defendant abused his position to enrich himself without any regard for the harm that could have resulted from his actions,” said Brock D. Nicholson, special agent in charge of HSI Atlanta. “HSI special agents will continue to work closely with our partners at Hartsfield-Jackson to ensure the safety of the traveling public.”
“As an integral part of the David G. Wilhelm OCDETF Strike Force, IRS Criminal Investigation is proud to have worked with our Strike Force partners to pursue this individual who disregarded the public trust for his own financial benefit.” stated Special Agent in Charge, Veronica F. Hyman-Pillot. “IRS Criminal Investigation not only enforces the nation's tax laws, but we also take particular interest in cases where the public is at risk due to unlawful activity.”
According to United States Attorney Yates, the charges, and other information presented in court: Norris, 30, of Stone Mountain, Ga., worked as a baggage handler for AirTran Airlines at the Hartsfield Jackson International Airport. In May 2013, HSI Special Agents learned that, for a fee, Norris would help people engaged in criminal activity bring contraband onto airplanes by using his security clearance to bypass TSA security.
On or about May 23, 2013, an HSI Special Agent, acting in an undercover capacity, gave the defendant a backpack containing what was represented to be five kilograms of cocaine. Norris took the backpack from the undercover agent, bypassed security, and returned the backpack back to the agent once the agent cleared security. In a similar manner, on May 30, 2013, Norris again bypassed security with a backpack, this time containing what was represented to be $500,000 in drug proceeds. Finally, on June 5, 2013, Norris once more bypassed security with a backpack carrying what was represented to be three kilograms of cocaine, and a Mac 11 automatic firearm (which had been previously rendered inert by law enforcement agents), a magazine and a silencer. Norris was paid between $600 and $800 each time he bypassed security with the contraband.
Norris admitted in court that he violated the Hartsfield-Jackson International Airport’s security measures by bringing the Mac-11 machine gun, silencer, and magazine past the TSA security checkpoints and that he attempted to possess five kilograms of cocaine in the airport.
Norris was sentenced by United States District Judge Steven C. Jones to ten years in prison. Norris was convicted on October 10, 2013, after he pleaded guilty.
The agents who investigated this case are assigned to the David G. Wilhelm OCDETF Strike Force and are employed by the following law enforcement agencies: the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations; the Bureau of Alcohol, Tobacco, Firearms and Explosives; Internal Revenue Service Criminal Investigation; and the Drug Enforcement Administration.
Assistant United States Attorney Kamal Ghali prosecuted the case.
The U.S. Attorney’s Office in Atlanta recommends parents and children learn about the dangers of drugs at the following web site: www.justthinktwice.com.
For further information please contact the U.S. Attorney’s Public Affairs Office at [email protected] or (404) 581-6016. The Internet address for the home page for the U.S. Attorney’s Office for the Northern District of Georgia is www.justice.gov/usao/gan.
Administrative Assistant Charged with Theft from Cambridge Non-ProfitRead the Press Release
BOSTON – The administrative assistant of a non-profit organization was charged yesterday with stealing $118,000 from the institute.
Tysen Julian, 33, of East Hampstead, New Hampshire, was charged by Information, and has agreed to plead guilty to theft from an organization receiving more than $10,000 in federal funds in a one year period. From October 2009 through July 2013, Julian allegedly stole approximately $118,000 from a non-profit institute in Cambridge by submitting false expense reimbursements.
Julian faces a maximum sentence of 10 years in prison, three years of supervised release, $118,000 in restitution, and a $250,000 fine, or twice the gross gain or loss, whichever is greater.
United States Attorney Carmen M. Ortiz and Vincent B. Lisi, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division, made the announcement today. The case is being prosecuted by Assistant U.S. Attorney Sara Miron Bloom of Ortiz's Economic Crimes Unit.
Monday 13 January 2014
Zia Pueblo Man Pleads Guilty to Federal Arson ChargeRead the Press Release
ALBUQUERQUE – Lawrence Shije, 35, a member and resident of Zia Pueblo, pleaded guilty this morning to a federal arson charge.
Shije was indicted on Oct. 30, 2013, and charged with setting fire to and burning a dwelling located on Zia Pueblo on June 30, 2012. Today, Shije pled guilty to the indictment and admitted maliciously setting fire to and burning a small area of a residence located on Zia Pueblo. In his plea agreement, Shije acknowledged that the owner of the residence is the mother of his two children, and that she and the children were in the residence at the time he started the fire.
Under the terms of his plea agreement, Shije will be sentenced to a year and a day in prison followed by a term of supervised release to be determined by the court. Shije remains at a half-way house under pretrial supervision pending his sentencing hearing, which has yet to be scheduled.
This case was investigated by the Northern Pueblos Agency of the BIA’s Office of Justice Services and is being prosecuted by Special Assistant U.S. Attorney David Adams. It was brought pursuant to the Tribal Special Assistant U.S. Attorney (Tribal SAUSA) Pilot Project in the District of New Mexico which is sponsored by the Justice Department’s Office on Violence Against Women under a grant administered by the Pueblo of Laguna. The Tribal SAUSA Pilot Project seeks to train tribal prosecutors in federal law, procedure and investigative techniques to increase the likelihood that every viable violent offense against Native women is prosecuted in either federal court or tribal court, or both. The Tribal SAUSA Pilot Project was largely driven by input gathered from annual tribal consultations on violence against women, and is another step in the Justice Department's on-going efforts to increase engagement, coordination and action on public safety in tribal communities.
Western Pennsylvania U.S. Attorney’s Office Collects $24.4 Million in Civil and Criminal Actions for U.S. Taxpayers in Fiscal Year 2013Read the Press Release
PITTSBURGH - U.S. Attorney David J. Hickton announced today that the Western District of Pennsylvania collected $24,480,775.61 in criminal and civil actions in Fiscal Year 2013. Additionally, the Western District of Pennsylvania worked with other U.S. Attorney’s Offices and components of the Department of Justice to collect an additional $5,702,777.80 in cases pursued jointly with these offices.
Attorney General Eric Holder announced on Thursday that the Justice Department collected approximately $8.1 billion in civil and criminal actions in the fiscal year ending Sept. 30, 2013. The more than $8 billion in collections in FY 2013 represents nearly three times the appropriated $2.76 billion budget for the 94 U.S. Attorney’s offices and the main litigating divisions in that same period.
“The department’s enforcement actions help to not only ensure justice is served, but also deliver a valuable return to the American people,” said Attorney General Holder. “It is critical that Congress provide the resources necessary to match the department’s mounting caseload. As these figures show, supporting our federal prosecutors is a sound investment.”
“Recovering monies due the American taxpayer is a priority and we have made substantial progress improving our performance over the last three years,” said U.S. Attorney Hickton. “The $24.4 million collected in FY 2013 represents a 86.2 percent increase over last year’s collections of $13.1 million. Collections related to civil actions rose 58 percent, to $22.9 million from $9.6 million in FY 2012. Overall, in FY 2013, we collected more than twice the amount of money the federal government allocates us to operate our office.”
The U.S. Attorneys’ Offices, along with the department’s litigating divisions, are responsible for enforcing and collecting civil and criminal debts owed to the U.S. and criminal debts owed to federal crime victims. The law requires defendants to pay restitution to victims of certain federal crimes who have suffered a physical injury or financial loss. While restitution is paid to the victim, criminal fines and felony assessments are paid to the department’s Crime Victims’ Fund, which distributes the funds to state victim compensation and victim assistance programs.
The largest civil collections were from affirmative civil enforcement cases, in which the United States recovered government money lost to fraud or other misconduct or collected fines imposed on individuals and/or corporations for violations of federal health, safety, civil rights or environmental laws. In addition, civil debts were collected on behalf of several federal agencies, including the U.S. Department of Housing and Urban Development, Health and Human Services, Internal Revenue Service, Small Business Administration and Department of Education.
Wendell Man Sentenced for Distributing MethamphetamineRead the Press Release
BOISE – U.S. Attorney Wendy J. Olson announced today that Fernando Manuel Soares, 53, of Wendell, Idaho, was sentenced today for distribution of methamphetamine. U.S. District Judge Edward J. Lodge sentenced Soares this afternoon to 72 months in prison followed by five years of supervised release. He pleaded guilty to the charge on October 21, 2013. Judge Lodge fined Soares $1,000, and ordered him to forfeit $10,000 in proceeds of the offense and $2,292 in seized currency.
According to court proceedings, Soares sold methamphetamine to an undercover law enforcement agent on March 5 and March 19, 2013. On May 21, 2013, Soares made arrangements to sell another ounce of methamphetamine to the undercover agent. Soares was stopped on his way to complete the transaction, and found to have 36 grams of methamphetamine in his vehicle. A search warrant was served at his residence in Wendell, and an additional 437.3 grams of methamphetamine, a set of digital scales, and $2,292 in U.S. currency was found in Soares’ bedroom.
The case was investigated by the Gooding County Sheriff’s Office, the Bureau of Alcohol, Tobacco, Firearms and Explosives, and Drug Enforcement Administration.
United States Settles Action Against New York City Department of Education for Submitting False Claims to Medicaid for Psychological Services to Special Education StudentsRead the Press Release
Loretta E. Lynch, United States Attorney for the Eastern District of New York, today announced that the United States has entered into a settlement with the City of New York in the case of Ohlmeyer ex rel. United States of America v. City of New York, a whistleblower action brought pursuant to the qui tam provisions of the federal False Claims Act, 31 U.S.C. Sections 3729-33 (the FCA). In its civil complaint, the United States alleged that the City of New York Department of Education (DOE) submitted false claims to Medicaid for psychological counseling services to special education students in the New York City public schools. The settlement calls for the City to pay $1,375,000 to the United States.
“When Medicaid shells out scarce dollars for services that are not provided, both the students in need of psychological support and the public fisc are harmed,” stated United States Attorney Lynch. “We will vigorously pursue entities, including local governmental agencies that seek reimbursement of federal funds to which they are not entitled.”
As described in the complaint, Medicaid pays DOE a flat fee of $223 for each student to whom DOE provides at least two psychological counseling sessions in a calendar month. Half of that money comes from the federal government. DOE is not entitled to any payment if an individual student receives fewer than two counseling sessions in a month. The United States alleged that, between 2001 and 2004, the DOE knowingly billed Medicaid for counseling services to individual students, even though it provided fewer than two counseling sessions per month to those students. In one case, DOE requested 15 months of payments from Medicaid for psychological counseling to a student during the 2001-02 and 2002-03 school years. According to DOE’s own service records, the student received fewer than two counseling sessions in 12 of those months.
Of the settlement amount, 15%, or $206,250, will be paid to the Relator, Dana Ohlmeyer, who initiated the case under the qui tam, or whistleblower provisions of the FCA. The City will also pay FCA attorney’s fees of $40,000.
The case was handled by Assistant United States Attorney Michael J. Goldberger with assistance from Department of Health and Human Services Office of Inspector General Special Agent Elysia Doherty.
United States Attorney Ortiz Appoints Fred Wyshak to Head Public Corruption UnitRead the Press Release
BOSTON – United States Attorney Carmen M. Ortiz announced today that she has appointed Assistant United States Attorney Fred Wyshak as the Chief of her Public Corruption and Special Investigations Unit. Mr. Wyshak replaces former Assistant United States Attorney Brian Kelly who left the office at the end of last year.
“Fred has an extraordinary record as a trial lawyer and a profound commitment to public service,” said U.S. Attorney Ortiz. “While he is well-known for his efforts to prosecute and convict James Bulger, Fred’s prosecutorial resume extends far beyond that. He has served this office with distinction for 25 years and I know his experience and legal acumen will serve him well in this position.”
In 1978, Mr. Wyshak began his legal career in the Brooklyn (NY) District Attorney’s Office, as an Assistant District Attorney, later becoming the Deputy Chief of that office’s Economic Crime and Arson Bureau. He came to Boston in 1989, coming from the US Attorney’s Office in New Jersey where he prosecuted organized crime cases, including the acting boss of a prominent LCN family. He joined the United States Attorney’s Office in Massachusetts as a prosecutor in the Organized Crime Strike Force, handling some very difficult and defining cases – including labor racketeering cases. In 2005, he was cross-designated as a state’s attorney in Florida to assist in the prosecution of former FBI agent John Connolly for the murder of John Callahan.
“I am honored to have the opportunity to serve as Chief of the Public Corruption and Special Investigations Unit,” said Wyshak. “I intend to build upon the strong foundation and hard work of each of my predecessors and the dedicated prosecutors in the Public Corruption Unit. These cases are crucial to ensure that the public maintains faith in government, the law is upheld, and taxpayer money is spent correctly. I look forward to continuing to prosecute these very important cases.”
While Mr. Wyshak has prosecuted some of the most high-profile cases handled by this office – including Bulger and the Big Dig cases – he has also worked behind-the-scenes as its Senior Litigation Counsel, providing training and mentoring to Assistant United States Attorneys, for the past 10 years.
“Fred is known for his excellent trial skills, case preparation and an attention to detail and potential legal issues, which have consistently resulted in successful prosecutions. Given his experience and accomplishments, I am thrilled to have him as Chief of the Public Corruption Unit,” added U.S. Attorney Ortiz.
Mr. Wyshak is a graduate of New York University and St. John’s School of Law.
The Public Corruption and Special Prosecutions Unit handles sensitive cases involving offenses at the federal, state and local levels by the actions of corrupt officials who abuse the power and responsibilities that they have been entrusted. Whether it be accepting a bribe, inflating a salary, or selling drugs on the side, corruption takes a heavy toll on communities.
Union County, N.J., Man Admits Distributing Images of Child Sexual AbuseRead the Press Release
NEWARK, N.J.— A Union County, N.J., man today admitted distributing images of child sexual abuse over the Internet, U.S. Attorney Paul J. Fishman announced.
Andrew Johnson, 30, of Cranford, N.J., pleaded guilty before U.S. District Judge Susan D. Wigenton in Newark federal court to an information charging him with one count of distribution of child pornography.
According to documents filed in the case and statements in court:
Johnson admitted that on Dec. 7, 2012, he made available for others to download via an online peer-to-peer file-sharing network images and videos of child pornography that were stored on his home computer. An undercover law enforcement agent successfully downloaded from Johnson one image and 14 videos of child pornography via the file sharing network.
As part of his guilty plea, Johnson agreed to forfeit the computers and computer accessories he used to commit the offense. He will also be required to register as a sex offender.
The count of distributing child pornography to which Johnson pleaded guilty carries a mandatory minimum penalty of five years in prison, a maximum potential penalty of 20 years in prison and a $250,000 fine. Sentencing is currently scheduled for April 22, 2014.
U.S. Attorney Fishman credited special agents of the FBI’s Child Exploitation Task Force, under the direction of Special Agent in Charge Aaron T. Ford in Newark; and the Cranford Police Department with the investigation leading to today’s guilty plea.
The government is represented by Assistant U.S. Attorney Danielle Alfonzo Walsman of the U.S. Attorney’s Office Criminal Division in Newark.
14-013
Defense counsel: Lorraine Gauli-Rufo Esq., Assistant Federal Public Defender, Newark
Johnson Information
U.S. Attorney’s Office Collects over $8.1 Million from Civil & Criminal Actions and Forfeitures in Fy 2013Read the Press Release
GRAND RAPIDS, MICHIGAN – U.S. Attorney Patrick A. Miles, Jr. announced today that the U.S. Attorney’s Office for the Western District of Michigan collected $5,545,164.37 in criminal and civil actions in Fiscal Year 2013. Of this amount, $3,193,153.56 was collected as fines, penalties, and restitution in criminal actions and $2,352,010.81 was collected in civil actions. Working with partner agencies and divisions, the U.S. Attorney’s Office for the Western District of Michigan also collected $2,560,915 from civil, criminal, and administrative forfeiture actions in FY 2013.
Additionally, the U.S. Attorney’s Office for the Western District of Michigan worked with other U.S. Attorney’s Offices and components of the Department of Justice to collect an additional $529,531.18 in cases pursued jointly with these offices. Of this amount, $29,531.18 was collected in criminal actions and $500,000 was collected in civil actions.
Attorney General Eric Holder announced on Thursday that the Justice Department collected approximately $8.1 billion in civil and criminal actions in the fiscal year ending September 30, 2013. The more than $8 billion in collections in FY 2013 represents nearly three times the appropriated $2.76 billion budget for the 94 U.S. Attorney’s offices and the main litigating divisions in that same period.
“The department’s enforcement actions help to not only ensure justice is served, but also deliver a valuable return to the American people,” said Attorney General Holder. “It is critical that Congress provide the resources necessary to match the Department’s mounting caseload. As these figures show, supporting our federal prosecutors is a sound investment.”
“The U.S. Attorney’s Office for the Western District of Michigan is actively working to make sure crime does not pay,” said U.S. Attorney Miles. “We are using all legal tools available to protect the public.”
Among the more significant recoveries in FY 2013, the U.S. Attorney’s Office collected over $1,000,000 in civil damages and criminal restitution in a parallel civil and criminal healthcare fraud case against Babubhai Rathod. Rathod, a disgraced physical therapist, pled guilty to one count of conspiring to violate the federal Anti-Kickback Statute, voluntarily agreed to a 20-year exclusion from federal healthcare programs, and liquidated his business holdings and certain personal property to pay the civil damages and criminal restitution. In a separate case, the U.S. Attorney’s Office collected $988,366 in criminal restitution from Elaine Dawson, the owner of five cinemas in Bellaire, Petoskey, Gaylord, Mackinaw City, and Cheboygan, Michigan. Dawson pled guilty to tax evasion. She routinely under-reported the number of patrons who bought movie tickets, and under-reported her receipts from sales of concessions, gift certificates, and other items, then skimmed the cash from the unreported sales for personal use.
The U.S. Attorneys’ Offices, along with the Department’s litigating divisions, are responsible for enforcing and collecting civil and criminal debts owed to the U.S. and criminal debts owed to federal crime victims. The law requires defendants to pay restitution to victims of certain federal crimes who have suffered a physical injury or financial loss. While restitution is paid to the victim, criminal fines and felony assessments are paid to the Department’s Crime Victims’ Fund, which distributes the funds to state victim compensation and victim assistance programs.
The largest civil collections were from affirmative civil enforcement cases, in which the United States recovered government money lost to fraud or other misconduct or collected fines imposed on individuals and/or corporations for violations of federal health, safety, civil rights or environmental laws. In addition, civil debts were collected on behalf of several federal agencies, including the U.S. Department of Housing and Urban Development, Health and Human Services, Internal Revenue Service, Small Business Administration and Department of Education.
Proceeds generated from civil, criminal, and administrative forfeiture actions are deposited in the Department of Justice Assets Forfeiture Fund or the Treasury Department’s Treasury Forfeiture Fund. These funds are used to restore funds to crime victims and for a variety of law enforcement purposes through the Department of Justice’s equitable sharing program. In FY 2013, the U.S. Attorney’s Office for the Western District of Michigan distributed $330,377 to state and local law enforcement agencies through the equitable sharing program.
These FY 2013 civil and criminal collections and forfeiture figures total $8.1 million for the U.S. Attorney’s Office for the Western District of Michigan. By way of comparison, the total figures for the office in FY 2012 and FY 2011 were approximately $8.2 million and $7.5 million, respectively.
END
U.S. Attorney Warns of Growing Threat of Taxpayer ID TheftRead the Press Release
U.S. Attorney Jenny A. Durkan joined federal law enforcement partners warning about a growing problem of identity theft related to tax refund fraud. Scammers across the country are using other people’s personal information to try to claim income tax refunds. People may not know they are a victim until they try to file their tax return and it is rejected because someone using their Social Security Number has already filed and claimed a refund.
“Protecting your personal information has never been more critical,” said U.S. Attorney Jenny A. Durkan. “Always mail your tax documents from a secure mailbox, or file electronically on a secure network. Using a trusted tax professional and filing early can also protect you from being a victim.”
In 2013, nearly 700 Washington residents reported being a victim of tax related identity theft, and there are likely many more people who simply did not report being victimized. Nationwide tax ID theft fraud is estimated to cost the U.S. Treasury more than $5 billion annually.
“Stealing identities and trying to file false tax returns not only threatens the integrity of our tax system, it victimizes innocent people. It can cost victims time and stress when they have done nothing wrong,” said Kenneth J. Hines, Special Agent in Charge of IRS Criminal Investigation in the Pacific Northwest. “The men and women of IRS, along with our law enforcement partners and the United States Attorney's Office, will continue to pursue fraudsters who try and help themselves to our nation’s tax dollars and who cause so much heartache for the victims of this crime.”
This week as part of Tax Identity Theft Awareness Week, the Federal Trade Commission and the Internal Revenue Service are teaming up to educate the public about ID theft tax refund fraud. The FTC is providing a webinar tomorrow to educate tax preparers about the problem and how to assist their clients if they discover they have been the victim of tax refund ID theft. For those who have had their identities stolen and used for fraud, the IRS will issue a special PIN to use for filing taxes. More information on the PIN program is available at http://www.irs.gov/uac/Newsroom/IRS-Combats-Identity-Theft-and-Refund-Fraud-on-Many-Fronts-2014
IRS-CI Special Agent in Charge Ken Hines is available to talk further with reporters about the problem of tax ID theft refund fraud. To arrange an interview please contact Leia Bellis at (206) 464-4920 or [email protected].
Both the Federal Trade Commission and the Washington Coalition of Crime Victim Advocates (WCCVA) have resources for victims of identity theft. Find them at www.ftc.gov and www.wccva.org
Two Sentenced, Three Plead Guilty in Marijuana Cultivation ProsecutionsRead the Press Release
FRESNO, Calif. — Two more marijuana cultivators were sentenced and three entered guilty pleas today for their involvement in separate cases resulting from Operation Mercury, a six-county effort that focused on large-scale marijuana cultivation on agricultural land in the Central Valley, U.S. Attorney Benjamin B. Wagner announced.
6,158 Marijuana Plants/Firearms Seized from National Forest Grow (1:12-cr-300 LJO)
Osmin Norberto Mejia, aka Osmin Mejia Masariegos, 31, of La Libertad, Petén, Guatemala, was sentenced to seven years and three months in prison following his guilty plea last year to possessing a firearm in furtherance of drug trafficking and cultivating marijuana at a grow site in the Slick Rock area of the Sequoia National Forest in Kern County. He was also ordered to pay $3,393 to the U.S. Forest Service to cover the costs of cleaning up the grow site. Mejia is subject to deportation upon completion of his prison term.
According to court documents, Mejia was in possession of a shotgun when he encountered law enforcement officers executing a search warrant at the grow site and used the weapon to protect himself and the marijuana plants that he was growing there. Drug agents seized 6,158 marijuana plants from the cultivation site, along with the shotgun Mejia possessed and a rifle found in a tent at a campsite at the grow. The cultivation operation caused significant damage to the land and natural resources. Native vegetation and many oak trees were cut down to make room for the marijuana plants and the ground was terraced. Large amounts of trash and fertilizer bags were scattered throughout the grow site.
The case was investigated by the U.S. Forest Service, U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), and the Kern County Sheriff’s Office.
1,313 Marijuana Plants/Handgun Seized from Terra Bella Grow (1:12CR318 LJO)
Jose Guadalupe Zavala Ramos, 33, of Michoacàn, Mexico, was sentenced to two years and three months in prison for conspiring to cultivate, distribute and possess with intent to distribute marijuana plants grown on a 40-acre agricultural parcel in Terra Bella that was rented by Baltazar Rodriguez, 44, also of Michoacàn. According to court documents, Zavala, along with Rodriguez and four others also charged in this case, was found at the cultivation site during the execution of a federal search warrant. The agents seized 1,313 marijuana plants and a loaded .38 caliber handgun from Rodriguez’s residence on the property. The agents obtained the search warrant following surveillance of a drug courier to the Terra Bella site who had delivered supplies to multiple grow sites on National Forest lands in Tulare, Kern, and Ventura Counties.
Zavala was sentenced following his guilty plea last October. In pleading guilty, Zavala acknowledged that he was to be paid $100 a day to assist in tending the marijuana plants. Three of Zavala’s co-defendants have also entered guilty pleas.
Rodriguez and the remaining co-defendant have requested a jury trial, which is set for later this year. The charges against them are only allegations; the defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.
This case was also investigated by the U.S. Forest Service with assistance from, HSI, and the Tulare and Ventura County Sheriff’s Offices.
2,932 Marijuana Plants Seized in Fresno Ag Grow (Case No. 1:12C2341 LJO)
Rassamee Phothidokmai, 53; Paul Nokham, aka Boun Theung Hokham, 49; Thavone Onsyphanla, 51; all of Las Vegas, pleaded guilty today to conspiring to cultivate, distribute and possess with intent to distribute marijuana grown on an agricultural parcel on Marks Avenue in rural southwest Fresno. During the execution of a federal search warrant there, narcotics agents found the men, along with 2,932 marijuana plants, and a firearm. Court records indicate that some of the marijuana was destined for Las Vegas.
Sentencing for Nokham and Onsyphanla is scheduled for March 31, 2014 and for Phothidokmai on April 7, 2014. They face a maximum prison sentence of 20 years and a fine of up to $1 million. Their actual sentences will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.
This case was investigated by the Drug Enforcement Administration and the Fresno County Sheriff’s Office.
***
Each of the above cases stem from Operation Mercury, an intensive marijuana eradication and enforcement effort initiated in 2012 by federal, state, and local law enforcement agencies in six counties to address the increasing problem of the cultivation of marijuana on agricultural land. Operation Mercury resulted in the seizure of nearly half a million marijuana plants and the prosecution of 84 defendants in federal court in Fresno.Assistant U.S. Attorney Karen A. Escobar is handling the above marijuana prosecutions.
Two Sentenced for Assaulting Federal OfficerRead the Press Release
BISMARCK – U.S. Attorney Timothy Q. Purdon announced that on Jan. 13, 2014, Adrienne Ducheneaux, 42, and Chad Lavallie, 40, both of Bismarck, N.D., were sentenced by U.S. District Judge Daniel L. Hovland on a charge of assaulting a federal officer. Ducheneaux pleaded guilty to the charge on Oct. 18, 2013. Lavallie pleaded guilty to the charge on Sept. 10, 2013.
Judge Hovland, after acknowledging that Ducheneaux had amassed three months’ credit for time already served, sentenced Ducheneaux to serve an additional seven month split sentence with four months in federal prison and three months in a half-way house, to be followed by three years of supervised release. Ducheneaux was ordered to pay a $100 special assessment to the Crime Victim’s Fund.
Judge Hovland sentenced Lavallie to serve one year and three months in federal prison, to be followed by three years of supervised release. Lavallie was ordered to pay a $100 special assessment to the Crime Victim’s Fund.
On April 13, 2013, Lavallie was the driver of a vehicle, which was stopped by law enforcement officers near Fort Yates. Ducheneaux was a passenger in the vehicle. While a BIA officer was near Ducheneaux’s window, she grabbed the hand and thumb of the BIA officer and twisted his thumb backwards. As the officer was struggling with Ducheneaux, Lavallie stepped on the vehicle’s accelerator, speeding away from the scene. The officer was able to pull his arm free after having taken several steps with the vehicle.
The case was investigated by the Bureau of Indian Affairs – Standing Rock Agency and the Standing Rock Police Department, with the assistance of the Standing Rock Tribal Prosecutor’s Office.
Assistant U.S. Attorney Gary Delorme prosecuted the case.
Two Former Vice-Presidents of Schuylkill Products, Inc.Read the Press Release
Sentenced In Largest Disadvantaged Business
Enterprise Fraud In Nation's HistoryThe U.S. Attorney's Office for the Middle District of Pennsylvania announced today that Dennis F. Campbell, of Orwigsburg, Pennsylvania, and Timothy G. Hubler, of Ashland, Pennsylvania, were sentenced by the Senior U.S. District Judge Sylvia H. Rambo in Harrisburg in connection with their roles in what the U.S. Department of Transportation (USDOT) has called the largest Disadvantaged Business Enterprise (DBE) fraud in the nation's history.
Campbell, Schuylkill Products, Inc.'s (SPI) former Vice-President in charge of Sales and Marketing, was sentenced to 24 months’ imprisonment, $119 million in restitution to the USDOT and 2 years supervised release. Hubler, SPI's former Vice-President in charge of Field Operations, was sentenced to 33 months’ imprisonment, $119 million in restitution to the USDOT, $82,370 in restitution to the Internal Revenue Service, and 2 years supervised release. Both men were ordered to surrender to the Bureau of Prisons by February 17, 2014 to commence service of their sentences.
Campbell pleaded guilty to DBE fraud in 2008, and Hubler pleaded guilty to DBE fraud and tax fraud in 2008. Romeo P. Cruz, of West Haven, Connecticut, the former owner of Marikina Construction Corporation, the DBE firm which operated as a front for SPI to gain lucrative DBE contracts, pleaded guilty to DBE fraud and tax fraud in 2008 and 2009, and is scheduled to be sentenced on Wednesday, January 15, 2014. All three men cooperated with the government's investigation which led to the conviction of the two former owners of SPI, Ernest G. Fink, of Orwigsburg, Pennsylvania, SPI's former Vice-President and Chief Operating Officer, and Joseph W. Nagle, of Deerfield Beach, Florida, SPI's former President and Chief Executive Officer.
Fink pleaded guilty to DBE fraud in 2010. Nagle was convicted after a four-week jury trial in 2012 of 26 charges relating to the DBE fraud scheme. No sentencing date has been scheduled for Fink and Nagle.
"The sentences handed down today, in what is the largest reported DBE fraud case in USDOT history, serve as clear signals that severe penalties await those who would attempt to subvert USDOT laws and regulations,” said Doug Shoemaker, OIG Regional Special Agent in Charge. “Preventing and detecting DBE fraud are priorities for the Secretary of Transportation and the USDOT Office of Inspector General. Prime contractors and subcontractors are cautioned not to engage in fraudulent DBE activity and are encouraged to report any suspected DBE fraud to the USDOT-OIG. Our agents will continue to work with the Secretary of Transportation, the Administrators of the Federal Highway, Transit and Aviation Administrations, and our law enforcement and prosecutorial colleagues to expose and shut down DBE fraud schemes throughout Pennsylvania and the United States.”
According to U.S. Attorney Peter J. Smith, the DBE fraud lasted for over 15 years and involved over $136 million in government contracts in Pennsylvania alone. SPI, using Marikina as a front, operated in several other states in the Mid-Atlantic and New England regions. Although Marikina received the contracts on paper, all the work was really performed by SPI personnel, and SPI received all the profits. In exchange for letting SPI use its name and DBE status, Marikina was paid a small fixed-fee set by SPI.
The scheme lasted as long as it did because of the numerous fraudulent steps the co-conspirators took to conceal the scheme. SPI personnel routinely pretended to be Marikina personnel by using Marikina business cards, email addresses, stationery, and signature stamps, as well as using magnetic placards and decals bearing the Marikina logo to cover up SPI's logo on SPI vehicles.
SPI and its wholly-owned subsidiary, CDS Engineers, was sold in 2009 and was based in Cressona, Pennsylvania. SPI manufactured concrete bridge beams, as well as other suppliers' products. CDS was SPI’s erection division and installed SPI’s bridge beams as well as other suppliers’ products. USDOT provides billions of dollars a year to states and municipalities for the construction and maintenance of highways and mass transit systems on the condition that small businesses owned and operated by disadvantaged individuals receive a fair share of these federal funds. The DBE fraud here involved SPI's use of Marikina's name and status to obtain DBE contracts that it was not entitled to receive.
The investigation was conducted by the FBI, the USDOT Inspector General's Office, U.S. Department of Labor Inspector General’s Office, and the Criminal Investigation Division of the Internal Revenue Service. Senior Litigation Counsel Bruce Brandler handled the prosecution.
Two Defendants Sentenced for Conspiracy to Distribute MethamphetamineRead the Press Release
Third Co-conspirator Sentencing Set for March 17, 2014
POCATELLO — Vanessa Campos, 25, and Noe Gonzalez, 29, both of Caldwell, Idaho, were sentenced today to serve 47 months and 151 months, respectively, for conspiring to distribute and possess with intent to distribute methamphetamine, U.S. Attorney Wendy J. Olson announced. Judge N. Randy Smith of the Ninth Circuit Court of Appeals, sitting by designation as a district court judge, also ordered Campos and Gonzalez to serve five years of supervised release following their prison terms, and to forfeit all property used to commit the crime and proceeds derived from the crime. Gonzalez was also ordered to pay a $500 fine. Campos pleaded guilty to the charges on October 16, 2013; Gonzalez on August 29.
According to court records, an Idaho State Police trooper stopped a vehicle being driven by Gonzalez on February 12, 2013, in Bonneville County. Campos’s sister was a passenger, and both she and Gonzalez were ultimately arrested. Pursuant to a search warrant, the vehicle was searched the next day. Hidden in the dash of the vehicle, police found a white tube sock containing four baggies of methamphetamine within a larger zip lock bag. The methamphetamine totaled 95.53 grams. Police also found a handgun and loaded magazine in the glove box. Recorded calls between Campos and her sister revealed that Campos planned to get the vehicle out of police impound and recover the methamphetamine before it was discovered by law enforcement. By the time Campos recovered the vehicle, the police had already located the drugs. Gonzalez later admitted to being involved in the conspiracy for two months as the “enforcer,” who attempted to collect money owed for purchased methamphetamine.
Court records further reveal that on March 6, 2013, a probation search of Campos’s residence revealed a digital scale, two glass methamphetamine pipes, a small amount of methamphetamine, and a drug ledger.
Campos’s sister and co-defendant, Angelica Campos, pleaded guilty to the same conspiracy charge on October 23, 2013. She is scheduled to be sentenced in Pocatello on March 17, 2014, by U.S. District Judge Ted Stewart of the District of Utah.
The indictment was the result of an investigation by the Organized Crime Drug Enforcement Task Force (OCDETF), which included the cooperative law enforcement efforts of the Idaho State Police, U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), Bonneville County Sheriff's Office, Idaho Falls Police Department, Madison County Sheriff's Office, Rexburg Police Department, Bingham County Sheriff’s Office, Fremont County Sheriff’s Office, Federal Bureau of Investigation (FBI), Internal Revenue Service-Criminal Investigation (IRS-CI), and the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF). Other federal agencies participating in the OCDETF program include the Drug Enforcement Administration and the U.S. Marshals Service.
The OCDETF program is a federal multi agency, multi-jurisdictional task force that supplies supplemental federal funding to federal and state agencies involved in the identification, investigation, and prosecution of major drug trafficking organizations.
Three Former Rabobank Traders Charged with Manipulating Yen LiborRead the Press Release
Two former Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A. (Rabobank) Japanese Yen derivatives traders and the trader responsible for setting Rabobank’s Yen London InterBank Offered Rate (LIBOR) were charged as part of the ongoing criminal investigation into the manipulation of LIBOR.
Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, Deputy Assistant Attorney General Brent Snyder of the Justice Department’s Antitrust Division and Assistant Director in Charge Valerie Parlave of the FBI’s Washington Field Office made the announcement.
Earlier today, a U.S. Magistrate Judge sitting in the Southern District of New York signed a criminal complaint charging Paul Robson of the United Kingdom, Paul Thompson of Australia, and Tetsuya Motomura of Japan with conspiracy to commit wire fraud and bank fraud as well as substantive counts of wire fraud. All are former employees of Rabobank, which on Oct. 29, 2013, entered into a deferred prosecution agreement with the Department of Justice as part of the department’s LIBOR investigation and agreed to pay a $325 million penalty. Each defendant faces up to 30 years in prison for each count upon conviction.
“Today, less than three months after Rabobank admitted its involvement in the manipulation of LIBOR, we have charged three of its senior traders with participating in this global fraud scheme,” said Acting Assistant Attorney General Raman. “As alleged, these three traders – working from Japan, Singapore and the U.K. – deliberately submitted what they called ‘obscenely high’ or ‘silly low’ LIBOR rates in order to benefit their own trading positions. The illegal manipulation of this cornerstone benchmark rate undermines the integrity of the markets; it harms those who are relying on what they expect to be an honest benchmark; and it has ripple effects that extend far beyond the trading at issue here. The Justice Department has now charged eight individuals and reached resolutions with four multi-national banks as part of our ongoing and industry-wide LIBOR probe and, alongside our law enforcement and regulatory partners both here and abroad, we remain committed to continuing to root out this misconduct.”
“The conspirators charged today conspired to rig the interest rates used by derivative products throughout the financial industry to benefit their own trading books,” said Deputy Assistant Attorney General Snyder. “Today’s charges demonstrate the department’s commitment to hold individuals accountable for schemes that undermine the integrity of markets that rely on competition to flourish.”
“Manipulation of benchmark rates that are routinely referenced by financial products around the world erodes the integrity of our financial markets,” said Assistant Director in Charge Parlave. “The charges against these individuals represent another step in our ongoing efforts to find and stop those who hide behind complex corporate and securities fraud schemes. I commend the Special Agents, forensic accountants and analysts as well as the prosecutors for the significant time and resources they committed to investigating this case.”
According to the complaint, LIBOR is an average interest rate, calculated based on submissions from leading banks around the world, reflecting the rates those banks believe they would be charged if borrowing from other banks. LIBOR is published by the British Bankers’ Association (BBA), a trade association based in London. At the time relevant to the criminal complaint, LIBOR was calculated for 10 currencies at 15 borrowing periods, known as maturities, ranging from overnight to one year. The published LIBOR “fix” for Yen LIBOR at a specific maturity is the result of a calculation based upon submissions from a panel of 16 banks, including Rabobank.
LIBOR serves as the primary benchmark for short-term interest rates globally and is used as a reference rate for many interest rate contracts, mortgages, credit cards, student loans and other consumer lending products. The Bank of International Settlements estimated that as of the second half of 2009, outstanding interest rate contracts were valued at approximately $450 trillion.
According to allegations in the complaint, all three defendants traded in derivative products that referenced Yen LIBOR. Robson worked as a senior trader at Rabobank’s Money Markets and Short Term Forwards desk in London; Thompson was Rabobank’s head of Money Market and Derivatives Trading Northeast Asia and worked in Singapore; and Motomura was a senior trader at Rabobank’s Tokyo desk who supervised money market and derivative traders employed at Rabobank’s Tokyo desk. In addition to trading derivative products that referenced Yen LIBOR, Robson also served as Rabobank’s primary submitter of Yen LIBOR to the BBA.
Robson, Thompson and Motomura each entered into derivatives contracts containing Yen LIBOR as a price component . The profit and loss that flowed from those contracts was directly affected by the relevant Yen LIBOR on certain dates. If the relevant Yen LIBOR moved in the direction favorable to the defendants’ positions, Rabobank and the defendants benefitted at the expense of the counterparties. When LIBOR moved in the opposite direction, the defendants and Rabobank stood to lose money to their counterparties.
The complaint alleges that from about May 2006 to at least January 2011, Robson, Thompson, Motomura and others agreed to make false and fraudulent Yen LIBOR submissions for the benefit of their trading positions. According to the allegations, sometimes Robson submitted rates at a specific level requested by a co-defendant and consistent with the co-defendant’s trading positions. Other times, Robson made a higher or lower Yen LIBOR submission consistent with the direction requested by a co-defendant and consistent with the co-defendant’s trading positions. On those occasions, Robson’s manipulated Yen LIBOR submissions were to the detriment of, among others, Rabobank’s counterparties to derivative contracts.
In addition to allegedly manipulating Rabobank’s Yen LIBOR submissions, Robson, on occasion and on behalf of one or more co-defendants, coordinated his Yen LIBOR submission with the trader responsible for making Yen LIBOR submissions at another Yen LIBOR panel bank. At times, Robson allegedly submitted Yen LIBOR at a level requested by the other trader, and, at other times, that trader submitted Yen LIBOR at a level requested by Robson.
As alleged in the complaint, Thompson, Motomura and another Rabobank trader described in the complaint as Trader-R made requests of Robson for Yen LIBOR submissions through electronic chats and email exchanges. For example, on May 19, 2006, after Thompson informed Robson that his net exposure for his 3-month fixes was 125 billion Yen, he requested by email that Robson “sneak your 3m libor down a cheeky 1 or 2 bp” because “it will make a bit of diff for me.” On or about May 19, 2006, Robson responded: “No prob mate I mark it low.”
On Sept. 21, 2007, Trader-R asked Robson by email, “where do you think today’s libors are? If you can I would like 1mth higher today.” Robson responded, “bookies reckon .85,” to which Trader-R replied, “I have some fixings in 1mth so would appreciate if you can put it higher mate.” Robson answered, “no prob mate let me know your level.” After Trader-R asked for “0.90% for 1mth,” Robson confirmed, “sure no prob[ ] I’ll probably get a few phone calls but no worries mate… there’s bigger crooks in the market than us guys!”
As another example, on Aug. 4, 2008, in a Bloomberg chat, Motomura asked Robson, “Please set today’s 6mth LIBOR at 0.96 I have chunky fixing.” To this, Robson responded, “no worries mate.”
The complaint alleges that Robson accommodated the requests of his co-defendants. For example, on Sept. 21, 2007, after Robson received a request from Trader-R for a high 1 month Yen LIBOR, Rabobank submitted a 1-month Yen LIBOR rate of 0.90, which was 7 basis points higher than the previous day and 5 basis points above where Robson said that “bookies” predicted it, and which moved Rabobank’s submission from the middle to the highest of the panel.
According to court documents, the defendants were also aware that they were making false or fraudulent Yen LIBOR submissions. For example, on May 10, 2006, Robson admitted in an email that “it must be pretty embarrassing to set such a low libor. I was very embarrassed to set my 6 mth – but wanted to help thomo [Thompson]. tomorrow it will be more like 33 from me.” At times, Robson referred to the submissions that he submitted on behalf of his co-defendants as “ridiculously high” and “obscenely high,” and acknowledged that his submissions would be so out of line with the other Yen LIBOR panel banks that he might receive a phone call about them from the BBA or Thomson Reuters.
A criminal complaint is a formal accusation of criminal conduct, not evidence. A defendant is presumed innocent unless and until convicted.
The investigation is being conducted by special agents, forensic accountants, and intelligence analysts in the FBI’s Washington Field Office. The prosecution is being handled by Trial Attorneys Carol L. Sipperly, Brian Young and Alexander H. Berlin of the Criminal Division’s Fraud Section, and Trial Attorneys Ludovic C. Ghesquiere and Michael T. Koenig of the Antitrust Division. Former Deputy Chief Glenn Leon and Senior Counsel Rebecca Rohr of the Criminal Division’s Fraud Section, along with Assistant Chief Elizabeth Prewitt and Trial Attorneys Eric Schleef and Richard Powers of the Antitrust Division, have also provided valuable assistance. The Criminal Division’s Office of International Affairs has provided assistance in this matter as well.
The broader investigation relating to LIBOR and other benchmark rates has required, and has greatly benefited from, a diligent and wide-ranging cooperative effort among various enforcement agencies both in the United States and abroad. The Justice Department acknowledges and expresses its deep appreciation for this assistance. In particular, the Commodity Futures Trading Commission’s Division of Enforcement referred this matter to the department and, along with the U.K. Financial Conduct Authority, has played a major role in the LIBOR investigation. The department has worked closely with the Dutch Public Prosecution Service and the Dutch Central Bank in the investigation of Rabobank. Various agencies and enforcement authorities from other nations are also participating in different aspects of the broader investigation relating to LIBOR and other benchmark rates, and the department is grateful for their cooperation and assistance. In particular, the Securities and Exchange Commission has played a significant role in the LIBOR series of investigations, and the department expresses its appreciation to the United Kingdom’s Serious Fraud Office for its assistance and ongoing cooperation.
This prosecution is part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets and recover proceeds for victims of financial crimes. For more information about the task force visit: www.stopfraud.gov.Third Defendant Sentenced in OCDETF CaseRead the Press Release
POCATELLO – U.S. Attorney Wendy J. Olson announced today that Julian Vega-Valdez, 25, a Mexican national, was sentenced today in federal court in Pocatello to 70 months in prison for distributing five grams or more of actual methamphetamine. He appeared today before Judge N. Randy Smith of the Ninth Circuit Court of Appeals, sitting by special designation as a district court judge.
Vega-Valdez pleaded guilty on August 14, 2013. According to the plea agreement, he admitted that on January 10, 2011, he met with co-defendant Josue Rodriguez-Sanchez in Idaho Falls and provided him with more than five grams of methamphetamine for distribution to other individuals.
Mexican nationals Josue Rodriguez-Sanchez, of Idaho Falls, and Fernando Garcia, of Logan, Utah, were sentenced in December 2013. Rodriguez-Sanchez was sentenced to 120 months in prison for conspiracy to distribute 50 grams or more of actual methamphetamine. Garcia was sentenced to 10 months in prison for possession with intent to distribute a small amount of cocaine.
The charges are the result of an investigation by the Organized Crime Drug Enforcement Task Force (OCDETF), including the Idaho State Police, U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI), Bonneville County Sheriff's Office, Idaho Falls Police Department, Madison County Sheriff's Office, Rexburg Police Department, Bingham County Sheriff’s Office, Fremont County Sheriff’s Office, Federal Bureau of Investigation (FBI), Internal Revenue Service-Criminal Investigation, and the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF). Other federal agencies participating in the OCDETF program include the Drug Enforcement Administration and the U.S. Marshals Service.
The OCDETF program is a federal multi-agency, multi-jurisdictional task force that supplies supplemental federal funding to federal and state agencies involved in the identification, investigation, and prosecution of major drug trafficking organizations.
Tax Preparer Found Guilty in Manhattan Federal Court on All Counts Relating to False Tax Returns and Aggravated Identity TheftRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, and Toni Weirauch, the Special Agent-in-Charge of the New York Field Office of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), announced that MAHAMADOU DAFFE, a tax preparer, was found guilty Friday, January 10, 2014, by a jury in Manhattan federal court of conspiracy to steal government funds, theft of government funds, conspiracy to file false claims, wire fraud, and aggravated identity theft in connection with the preparation and filing of nearly 1,000 false tax returns submitted online using stolen identities. DAFFE was also convicted of conspiracy to steal government funds, theft of government funds, and conspiracy to file false claims in connection with his use of stolen children’s identities to claim false dependents on his clients’ income tax returns. The investigation that led to DAFFE’s arrest and his conviction last week was undertaken by the Criminal Investigation Unit of the Internal Revenue Service (“IRS”), which lost more than $1.5 million as a result of DAFFE’s crimes, during which he attempted to steal more than $4.5 million from the Government. DAFFE was convicted after a one-week trial before U.S. District Judge Naomi Reice Buchwald.
According to the Indictment, as well as evidence presented at DAFFE’s trial:
From 2008 through January 2013, DAFFE engaged in two separate schemes to defraud the IRS. DAFFE filed false tax returns for his tax preparation clients, in which he caused those clients to claim as dependents children who were in fact total strangers to them, and whose identities DAFFE stole. In exchange, DAFFE collected $1,000 per return.
In another scheme, during the same time frame, DAFFE used stolen identities to file hundreds of false tax returns, supported by bogus Forms W-2, through an online tax preparation service intended for use by individual taxpayers. He then funneled the resulting refunds into several bank accounts he controlled—accounts in his own name, the names of co-conspirators, and the names of aliases DAFFE used.
DAFFE, 31, of Queens, New York, was convicted of eight counts relating to theft of government funds, filing false returns, wire fraud, and aggravated identity theft. Each of the counts charging conspiracy to steal government funds carries a maximum penalty of five years in prison and a fine of $250,000, or twice the gross gain or loss from the offense. Each of the counts charging substantive theft of government funds carries a maximum penalty of 10 years in prison and a fine of $250,000, or twice the gross gain or loss from the offense. Each of the false claims conspiracy counts carries a maximum penalty of 10 years in prison and a fine of $250,000, or twice the gross gain or loss from the offense. The conspiracy to commit wire fraud count carries a maximum penalty of 20 years in prison and a fine of $250,000, or twice the gross gain or loss from the offense. The aggravated identity theft count of which DAFFE was convicted carries a mandatory minimum term of imprisonment of two years, to be served consecutively to any other sentence imposed, as well as a maximum fine of $250,000, or twice the gross gain or loss from the offense. DAFFE is scheduled to be sentenced by Judge Buchwald on April 24, 2014, at 3:00 p.m.
DAFFE’s co-conspirator, Mohamed Sangare, previously pled guilty to similar counts and is awaiting sentencing.
Mr. Bharara praised the investigative work of the IRS-CI and thanked the IRS. He noted that the investigation is continuing.
This case is being handled by the Office’s General Crimes Section. Assistant U.S. Attorneys Carolina A. Fornos and Sarah E. McCallum are in charge of the prosecution.
U.S. v. Mahamadou Daffee Indictment S1
Stockton Man Sentenced for Escaping from Mendota Federal Correctional InstitutionRead the Press Release
FRESNO, Calif. – Michael Paul Thompson, 32, of Stockton, was sentenced today by U.S. District Judge Lawrence J. O’Neill to 13 months in prison for escaping from the custody of a federal correctional institution, United States Attorney Benjamin B. Wagner announced.
According to court documents, Thompson escaped from Federal Correctional Institution–Mendota, on October 12, 2011. He had been serving a 10-year sentence following his conviction in June 2010 for conspiring to distribute and possess with intent to distribute methamphetamine.
Thompson was apprehended in Stockton on March 29, 2013, after leading police officers on a 20-minute high-speed chase reaching speeds of 100 mph in moderate-to-heavy traffic. The reckless endangerment during this flight required police officers to undertake physical intervention, resulting in major damage to one police vehicle.
This case was the product of an investigation by the U.S. Marshals Service and the Stockton Police Department. Assistant U.S. Attorney Christopher Baker prosecuted the case.
Steven James Lucy Sentenced for Crack Cocaine DistributionRead the Press Release
MOBILE, AL-- United States Attorney Kenyen R. Brown announces that Steven James Lucy was sentenced on Friday by United States District Court Judge William H. Steele to forty- six months imprisonment for possession with the intent to distribute crack cocaine in violation of Title 21 USC ' 841(a)(1). The defendant plead guilty to this offense in May 2013. Lucy was also ordered to serve three years of supervised release with the United States Probation Office after he completes his term of imprisonment at the Federal Bureau of Prisons. Lucy was also ordered to pay a $100 special assessment which goes into a fund for victims of crime.
United States Attorney Brown stated that the case was investigated by the Alabama Alcoholic Beverage Control Bureau, Enforcement Division. Brown added that his office would continue to aggressively prosecute offenders who distribute illegal drugs and thereby endanger the community.
Steubenville Man Convicted on Cocaine Trafficking ChargeRead the Press Release
1125 Chapline Street, Federal Building, Suite 3000 ● Wheeling, WV 26003
(304) 234-0100 ● Contact: Chris Zumpetta-Parr, Public Affairs SpecialistDefendant faces up to Thirty Years in Prison
WHEELING, WEST VIRGINIA - A 42-year old Ohio man was convicted last week by a federal jury for conspiracy to distribute 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, of Steubenville, was convicted of the felony offense of “Conspiracy to Possess with Intent to Distribute and to Distribute Cocaine” after a three-day jury trial before Judge Frederick P. Stamp, Jr. MCGEE, who has prior convictions for armed robbery and cocaine and marijuana trafficking, was found to have conspired with co-defendant Ronald Snider and others, to distribute cocaine, from November of 2012 to June of 2013.
MCGEE, who is in custody pending sentencing, faces up to 30 years imprisonment and a $2,000,000 fine.
The case was prosecuted by Assistant United States Attorney Robert H. McWilliams, Jr. and investigated by the Drug Enforcement Administration and the Steubenville Police Department.
Statement of U.S. Attorney Goodwin on Investigation into Chemical Release into Water SupplyRead the Press Release
CHARLESTON, W.Va. – United States Attorney Booth Goodwin today issued the following statement regarding his office’s investigation into the release of a potentially dangerous chemical into the southern West Virginia water supply:
“As the immediate water crisis begins to ease and West Virginians regain access to drinkable water, I want to make three things clear. One, my office will continue working as quickly as possible to find out exactly what happened here, including the complete timeline of the release and what was done---or not done---before and after it. Two, if our investigation reveals that federal criminal laws were violated, we will move rapidly to hold the wrongdoers accountable. And three, companies whose facilities could affect the public water supply should be on notice: if you break federal environmental laws, you will be prosecuted. Our drinking water is not something you can take chances with, and this mess can never be allowed to happen again.”
Click here to listen to an audio sound bite from U.S. Attorney Booth Goodwin
Statement of Manhattan U.S. Attorney Preet BhararaOn the Conviction of State Assemblyman Eric StevensonRead the Press Release
“As a unanimous jury swiftly found, Assemblyman Stevenson brazenly betrayed the public that elected him. Graft and greed are intolerable in Albany, and we will go to trial as often as we have to until government in New York is cleaned up.”
St. Francis Woman Charged with Assaulting A Federal OfficerRead the Press Release
United States Attorney Brendan V. Johnson announced that a St. Francis, South Dakota, woman has been indicted by a federal grand jury for Assaulting a Federal Officer.
Amanda Broken Leg, age 20, was indicted on November 14, 2013. She appeared before U.S. Magistrate Judge Mark A. Moreno on January 8, 2014, and pled not guilty to the Indictment.
The maximum penalty upon conviction is up to 20 years in custody and/or a $250,000 fine, 3 years of supervised release, and $100 to the Federal Crime Victims Fund. Restitution may also be ordered.
The charges relate to incidents that occurred on October 18, 2013, when Broken Leg assaulted a law enforcement officer with a dangerous weapon, that is, a motor vehicle. Broken Leg also assaulted and resisted law enforcement officers when they tried to restrain her.
The charge is merely an accusation and Broken Leg 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.
Broken Leg was released on bond pending trial. A trial date has not been set.
Southern Maryland Drug Dealer Sentenced to over 10 Years in PrisonRead the Press Release
Greenbelt, Maryland – Chief U.S. District Judge Deborah K. Chasanow sentenced Travis Tittus Moore, a/k/a “Short Man,” age 31, of Harwood, Maryland, today to 125 months in prison followed by four years of supervised release for possession with intent to distribute crack and powder cocaine, phencyclidine (PCP), and marijuana. Chief Judge Chasanow also ordered that Moore forfeit the $12,192 seized during the investigation.
The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Karl C. Colder of the Drug Enforcement Administration - Washington Field Division; Calvert County Sheriff Mike Evans; and Anne Arundel County Police Chief Kevin Davis.
According to Moore’s plea agreement, on January 19, 2012, agents overheard a co-conspirator arrange for Moore to meet the co-conspirator on Solomons Island Road in Sunderland, Maryland. Officers saw Moore pull up in his car next to the co-conspirator’s vehicle and followed Moore as he left. As the officers followed Moore they saw him swerve and hit the center line and the officers attempted to perform a traffic stop, but Moore sped off, eventually crashing into a telephone pole. Moore climbed out of the passenger side window carrying a bag and tried to hide under the car. Moore was arrested and officers recovered $2,192 in cash from Moore and $10,000 in cash, 32.1 grams of crack cocaine, .71 grams of PCP, 62.3 grams of powder cocaine, 12.6 grams of marijuana, and a scale with cocaine residue from the bag Moore was carrying.United States Attorney Rod J. Rosenstein praised the DEA, Calvert County Sheriff’s Office and Anne Arundel County Police Department for their work in the investigation. Mr. Rosenstein thanked Assistant U.S. Attorney Arun G. Rao and Steven E. Swaney, who prosecuted this Organized Crime Drug Enforcement Task Force case.
Southern Indiana Man Listed on the National Registry of Sex Offenders Sentenced to 10 Years in Prison for Possession of Child PornographyRead the Press Release
LOUISVILLE, Ky. – A Georgetown, Indiana man listed on the National Registry of Sex Offenders was sentenced in United States District Court on January 9, 2014, by U.S. District Judge John G. Heyburn II, to 10 years in prison followed by a lifetime of supervised release, for possession of child pornography announced David J. Hale, U.S. Attorney for the Western District of Kentucky.
James W. Dotts, Jr., 38, was subject to supervised release from the Southern District of Indiana, which began on February 13, 2012, as a result of a conviction for possession of child pornography. On February 12, 2013, Dotts admitted to downloading over 500 computer image files and approximately 12 movie files depicting child pornography onto a computer at his employer's facility located in Louisville, Kentucky. He admitted to defeating his employer's security software, downloading the images from the Internet, saving the images to the computer, and transferring the images to a USB thumb drive that he carried back and forth from home to his job site. Dotts admitted that he began downloading adult pornography in June 2012, then began downloading child pornography in January 2013.
A search of Dotts' locker at his place of employment resulted in the discovery of four high-capacity thumb drives. Dotts admitted that the thumb drives contained images of non-nude children, which he had downloaded from the Internet. The USB drives and the computers used to download the child pornography were seized by the FBI for forensic analysis. The forensic analysis revealed 5 images of child pornography located on one of the computers and approximately 270 images of child erotica. At the time those files were downloaded, Dotts was the only employee with access to the computers.
This case was prosecuted by Assistant United States Attorney A. Spencer McKiness and was investigated by the Federal Bureau of Investigation (FBI).
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."
Social Worker Pleads Guilty to Identity Theft, Tax CrimesRead the Press Release
Rakecia Matrese Brame, formerly of Greensboro, N.C., and now of Grand Prairie, Texas, pleaded guilty on Jan. 10, 2014, to identity theft, tax, and fraud charges, the Department of Justice and the Internal Revenue Service (IRS) announced today. Brame pleaded guilty to one count of wire fraud, one count of aggravated identity theft and one count of aiding and assisting the preparation of a false tax return. U.S. District Judge Thomas Schroeder for the Middle District of North Carolina set a sentencing hearing for May 16, 2014.
According to court documents, from approximately February 2009 to February 2011, Brame was employed as a social worker at the Alamance County Department of Social Services (Alamance DSS) in North Carolina. Brame was responsible for investigating claims of abuse and neglect against minors and disabled adults. As part of her official duties, Brame had authorized access to extensive identifying information – including names, dates of birth and Social Security numbers - of Alamance DSS clients, including abuse victims and recipients of various state benefits, and of witnesses in official investigations.
According to court documents, Brame used her access to identifying information contained in Alamance DSS records to illegally obtain the personal identifying information of Alamance DSS clients and others. Pursuant to an ongoing agreement, Brame sold that personal identifying information to Jennifer Bullock and Saichelle McNeill, two return preparers at the Greensboro branch of Nothing But Taxes, a tax return preparation firm. Bullock and McNeill used the stolen identities to claim false dependents on tax returns they prepared for Nothing But Taxes clients, thereby claiming inflated tax refunds on the clients’ behalf. Bullock and McNeill paid Brame $200 to $300 per identity they purchased, and Brame knowingly sold these identities to Bullock and McNeill to be used for tax fraud.
Court documents state that, as a social worker, Brame owed a legal and professional duty to keep the information she learned about victims and witnesses confidential. She had no authority to sell such information or otherwise use it for personal gain, and doing so violated the professional standards applicable to social workers, as well as federal and state law and Alamance DSS policy.
According to court documents, one victim of the identity theft scheme was referred to Alamance DSS for investigation on or about Feb. 15, 2010, and assigned to Brame. A few days later, Brame sold this victim’s identity to Bullock for use as a false dependent on a tax return. On or about March 3, 2010, Bullock prepared a 2009 tax return for a Nothing But Taxes client which falsely claimed that the victim was a dependent. As a result of the falsification, the tax return claimed a higher tax refund than the Nothing But Taxes client was actually entitled to receive. Approximately one year later, Brame sold the victim’s identity and that of her sister to McNeill, who then prepared 2010 tax returns for two different Nothing But Taxes clients that falsely claimed both victims as dependents.
Brame faces a statutory maximum of 20 years in prison on the wire fraud charge and a maximum of three years in prison for the charge of aiding and assisting in the preparation of a false tax return. The aggravated identity theft charge carries a mandatory two year sentence, which must run consecutively to any sentence on the other charges.
The related case against McNeill resulted in a guilty plea to federal criminal charges of wire fraud, aggravated identity theft and aiding and assisting in the preparation of false tax returns. McNeill was sentenced to serve 27 months in federal prison on Aug. 20, 2013. Brame’s co-defendant Bullock pleaded guilty to wire fraud, aggravated identity theft and tax charges on Dec. 4, 2013, and she is currently awaiting sentencing.
This case and related Nothing But Taxes cases were investigated by agents of the IRS -Criminal Investigation and were prosecuted by Assistant U.S. Attorney Frank Chut and Trial Attorney Jonathan Marx of the Tax Division. The prosecution team wishes to thank the Alamance DSS for their assistance and cooperation in the investigation.
Social Worker Pleads Guilty to Identity Theft, Tax CrimesRead the Press Release
WASHINGTON – Rakecia Matrese Brame, formerly of Greensboro, N.C., and now of Grand Prairie, Texas, pleaded guilty on Jan. 10, 2014, to identity theft, tax, and fraud charges, the Department of Justice and the Internal Revenue Service (IRS) announced today. Brame pleaded guilty to one count of wire fraud, one count of aggravated identity theft and one count of aiding and assisting the preparation of a false tax return. U.S. District Judge Thomas Schroeder for the Middle District of North Carolina set a sentencing hearing for May 16, 2014.
According to court documents, from approximately February 2009 to February 2011, Brame was employed as a social worker at the Alamance County Department of Social Services (Alamance DSS) in North Carolina. Brame was responsible for investigating claims of abuse and neglect against minors and disabled adults. As part of her official duties, Brame had authorized access to extensive identifying information – including names, dates of birth and Social Security numbers - of Alamance DSS clients, including abuse victims and recipients of various state benefits, and of witnesses in official investigations.
According to court documents, Brame used her access to identifying information contained in Alamance DSS records to illegally obtain the personal identifying information of Alamance DSS clients and others. Pursuant to an ongoing agreement, Brame sold that personal identifying information to Jennifer Bullock and Saichelle McNeill, two return preparers at the Greensboro branch of Nothing But Taxes, a tax return preparation firm. Bullock and McNeill used the stolen identities to claim false dependents on tax returns they prepared for Nothing But Taxes clients, thereby claiming inflated tax refunds on the clients’ behalf. Bullock and McNeill paid Brame $200 to $300 per identity they purchased, and Brame knowingly sold these identities to Bullock and McNeill to be used for tax fraud.
Court documents state that, as a social worker, Brame owed a legal and professional duty to keep the information she learned about victims and witnesses confidential. She had no authority to sell such information or otherwise use it for personal gain, and doing so violated the professional standards applicable to social workers, as well as federal and state law and Alamance DSS policy.
According to court documents, one victim of the identity theft scheme was referred to Alamance DSS for investigation on or about Feb. 15, 2010, and assigned to Brame. A few days later, Brame sold this victim’s identity to Bullock for use as a false dependent on a tax return. On or about March 3, 2010, Bullock prepared a 2009 tax return for a Nothing But Taxes client which falsely claimed that the victim was a dependent. As a result of the falsification, the tax return claimed a higher tax refund than the Nothing But Taxes client was actually entitled to receive. Approximately one year later, Brame sold the victim’s identity and that of her sister to McNeill, who then prepared 2010 tax returns for two different Nothing But Taxes clients that falsely claimed both victims as dependents.
Brame faces a statutory maximum of 20 years in prison on the wire fraud charge and a maximum of three years in prison for the charge of aiding and assisting in the preparation of a false tax return. The aggravated identity theft charge carries a mandatory two year sentence, which must run consecutively to any sentence on the other charges.
The related case against McNeill resulted in a guilty plea to federal criminal charges of wire fraud, aggravated identity theft and aiding and assisting in the preparation of false tax returns. McNeill was sentenced to serve 27 months in federal prison on Aug. 20, 2013. Brame’s co-defendant Bullock pleaded guilty to wire fraud, aggravated identity theft and tax charges on Dec. 4, 2013, and she is currently awaiting sentencing.
This case and related Nothing But Taxes cases were investigated by agents of the IRS -Criminal Investigation and were prosecuted by Assistant U.S. Attorney Frank Chut and Trial Attorney Jonathan Marx of the Tax Division. The prosecution team wishes to thank the Alamance DSS for their assistance and cooperation in the investigation.
Sentences and Plea Agreements in Child Exploitation CasesRead the Press Release
FRESNO, Calif. — Today, two defendants were sentenced, three defendants pleaded guilty, and a defendant is back in custody after breaking the terms of his supervised release, United States Attorney Benjamin B. Wagner announced.
“While there is no way to undo the despicable crimes committed against these innocent and vulnerable children, it is a relief that the defendants found guilty of these crimes will no longer be in a position to carry out their criminal acts,” said Mike Prado, resident agent in charge of HSI Fresno “HSI will continue to work tirelessly with its federal and local law enforcement partners to seek justice for the young victims in these cases, who will bear the emotional and physical scars of these crimes for the rest of their lives.”
Except as noted, all cases are being prosecuted by Assistant United States Attorney David Gappa.
Twenty Years in Prison for Idaho Man (1:13-cr-045 LJO)
Allen Trent Carter, 53, of McCammon, Idaho, was sentenced today by United States District Judge Lawrence J. O’Neill to 20 years in prison to be followed by a lifetime term of supervised release.
According to court documents, Carter was identified during the course of an investigation of his son, Bradley Vaine, 27, of Fresno, who is being prosecuted for trafficking in child pornography. According to a criminal complaint, Vaine and Carter exchanged many images of child pornography and engaged in many chat sessions on Facebook in which they discussed the sexual abuse of children. A federal search warrant was executed at Carter’s residence in Idaho, and he admitted he had exchanged images of child pornography with Vaine in August and October 2012. Carter has been detained in federal custody, as a flight risk and danger to the community, since his arrest in Idaho on January 8, 2013. The charges against Vaine are pending. He is presumed innocent until and unless proven guilty beyond a reasonable doubt.
This case was the result of an investigation by the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) offices in Fresno and Idaho Falls, Idaho with assistance from the Idaho State Police and the Bannock County Sheriff’s Office.
Air Force Employee Sentenced to 13 Years in Prison (1:13-cr-145 AWI)
Ronald Townsend, 30, of Rosamond was sentenced to 13 years in prison for receipt and distribution of child pornography. He will also be required to serve a lifetime term of supervised release upon his release from prison during which he will be required to register as a sex offender and his access to the Internet, computers, and minors will be restricted. According to court documents, Townsend came to law enforcement’s attention when he chatted online with an undercover detective on January 30, 2013. At that time he sent about 40 images of child pornography in order to obtain videos from the undercover detective. Townsend also developed relationships online and on the phone with under-aged girls, one 13 and one 16 years old. As part of the plea agreement, he provided the court today with $7,500 that was ordered as restitution.
This case is the product of an investigation by the Air Force Office of Special Investigations.
Bakersfield Cases: Two Plead Guilty and One Admits to Supervised Release Violations
John Brian Noblia, 33, of Bakersfield, pleaded guilty to one count of receipt and distribution of a visual depiction of a minor engaged in explicit conduct. His sentencing is set for March 31, 2014. He faces a sentence of five to 20 years in prison. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. This case is the product of an investigation by HSI. Assistant United States Attorney Megan Richards is prosecuting the case. (1:13-cr-143 LJO)
Fernando David Rangel, 20, of Bakersfield, pleaded guilty today to receiving images of child pornography. He admitted in a plea agreement that he used the Internet and a computer to receive between 300-600 images of child pornography, including images that depicted prepubescent minors and images of violence or sadistic conduct. His sentencing is scheduled for March 31, 2014. He faces a sentence of five to 20 years in prison. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. This case is the product of an investigation by the FBI. (1:13-cr-280 LJO).
Christopher Kent Bowersox, 42, of Bakersfield, today admitted to two violations of his supervised release conditions in a proceeding before U.S. Magistrate Judge Gary S. Austin. Bowersox had been released from prison, after serving a sentence for possession of child pornography and had served five months of a 10-year term of supervised release. He admitted today that he had accessed the Internet and viewed adult pornography in violation of conditions of his supervised release. Bowersox has been in custody since December 26, 2013. He will be sentenced on February 24, 2014, and he faces a potential term of two years in prison. The actual sentence imposed, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines. (1:10-cr-082 AWI).
Modesto Man Pleads Guilty to Receipt and Distribution of Child Pornography (1:12-cr-384 AWI)
Ted Lee Duran, 49, of Modesto, pleaded guilty today to receipt and distribution of child pornography. According to court documents, a relative of Duran went to Modesto Police and reported finding child pornography on a phone that Duran had borrowed. Further investigation revealed that Duran had received more than 600 images of minors being sexually abused, some of which depicted violence or were of sadistic conduct.
Duran is scheduled to be sentenced on March 24, 2014, at 10:00 am. He faces a potential sentence of five to 20 years in prison. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. This case is the product of an investigation by the FBI and the Modesto Police Department.
These cases were 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 those who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc. Click on the “resources” tab for information about Internet safety education.
San Fernando Valley Woman Pleads Guilty to Federal Charges in $25 Million Health Care Fraud CaseRead the Press Release
LOS ANGELES -- A North Hollywood woman who worked in the health care industry pleaded guilty today to federal charges for orchestrating a scheme that submitted nearly $25 million in fraudulent bills to Medicare for services and supplies, including power wheelchairs and diagnostic tests that were medically unnecessary and sometimes were never provided.
Susanna Artsruni, 46, who formerly owned a durable medical equipment (DME) company and worked at a number of medical clinics in Los Angeles, pleaded guilty this afternoon before United States District Judge Margaret M. Morrow. Artsruni, who often used the names “Mary” and “Rose,” pleaded guilty to one count of health care fraud and one count of money laundering.
In a plea agreement filed last year in United States District Court, Artsruni admitted that she defrauded Medicare in a number of ways. In one part of the scheme, Artsruni had physician’s assistants at three Los Angeles medical clinics sign prescriptions and orders for medically unnecessary DME and diagnostic tests that were later referred to other Medicare providers that billed for the equipment and tests. Artsruni also caused the three clinics to bill Medicare for medically unnecessary services. Further, Artsruni fraudulently billed Medicare on behalf of her own DME supply company, Midvalley Medical Supply in Van Nuys, for medically unnecessary DME based on referrals from one of the three medical clinics.
In total, Artsruni caused more than $24.8 million in fraudulent claims to be submitted to Medicare, which paid more than $9.2 million on the bogus bills.
Artsruni also admitted that she wrote checks totaling more than $35,000 from the Midvalley bank account to three corporations that had no connection to the medical industry and apparently had not provided any legitimate business services to Midvalley. Artrsuni admitted that she wrote these checks to conceal the nature of the funds as the proceeds of health care fraud and used the three corporations to launder these funds.
At the time that she worked at two of the clinics and wrote one of the checks to launder the proceeds of her fraud, Artsruni was free on bond in another health care fraud case (United States v. Artsruni, CR08-209-CAS). Although the terms of her pre-trial release in the 2008 case dictated that she not commit crimes and forbid her from working at medical facilities, Artsruni concealed her activities from her Pre-Trial Services Officer and engaged in the fraudulent conduct that led to most of the losses suffered by Medicare in the second case.
As a result of today's guilty pleas, Artsruni faces a statutory maximum sentence of 30 years in federal prison. Judge Morrow is scheduled to sentence Artsruni on April 14.
A second defendant in the case, Erasmus Kotey, a physician's assistant who worked with Artsruni in a medical clinic on North Vermont Avenue in Los Angeles, is scheduled to go on trial before Judge Morrow on April 8.
The case against Artsruni and Kotey is the product of an investigation by the Federal Bureau of Investigation; the U.S. Department of Health and Human Services, Office of Inspector General; and IRS - Criminal Investigation.
Release No. 14-002
Richland Man Sentenced to Five Years in Federal Prison for Receipt of Child PornographyRead the Press Release
Spokane - Michael C. Ormsby, United States Attorney for the Eastern District of Washington, announced that Sky Steven Bennett, age 34, of Richland, Washington, was sentenced on January 13, 2014, after having previously pleaded guilty on October 22, 2013 to Receipt of Child Pornography. United States District Court Judge Wm. Fremming Nielsen sentenced Bennett to a five-year term of imprisonment, to be followed by a twenty-year term of court supervision after he is released from Federal prison. In addition, Bennett was ordered to forfeit to the United States the computer equipment and digital media used to receive and store his child pornography collection.
According to information disclosed during the court proceedings, in August of 2012, the Columbia Energy and Environmental Services (CEES) Human Resource Department conducted an internal investigation of Bennett related to child pornography. The CEES referred their investigation to the Richland Police Department. The Richland Police Department, in partnership with the Federal Bureau of Investigation, conducted further investigation of Bennett and, on August 22, 2012, a search warrant was executed at Bennett's residence. Law enforcement discovered an extensive collection of child pornography at Bennett's residence. A forensic examiner determined that Bennett began receiving child pornography in 2000 and continued to do so until his residence was searched in August of 2012.
Michael C. Ormsby stated, "I commend the collaborative work of the Richland Police Department and Federal Bureau of Investigation in this case. The United States Attorney's Office in the Eastern District of Washington is, and will continue to be, committed to prosecuting aggressively and seeking appropriate punishment for child pornography crimes. Prosecuting offenders who are collecting child pornography is a priority of the United States Attorney's Office."
This case was pursued as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the United States 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. The Project Safe Childhood Initiative ("PSC") has five major components:
- Integrated federal, state, and local efforts to investigate and prosecute child exploitation cases, and to identify and rescue child victims;
- Participation of PSC partners in coordinated national initiatives;
- Increased federal enforcement in child pornography and enticement cases;
- Training of federal, state, and local law enforcement agents; and
- Community awareness and educational programs.
For more information about Project Safe Childhood, please visit www.usdoj.gov/psc . For information about internet safety education, please visit www.usdoj.gov/psc and click on the tab "resources".
This investigation was conducted the Federal Bureau of Investigation and Richland Police Department. The case was prosecuted by Stephanie J. Lister, an Assistant United States Attorney and PSC Coordinator for the Eastern District of Washington.
CR-13-06062-WFN
Portland Man Sentenced in Armed Bank RobberiesRead the Press Release
Armed Bank Robber Sentenced to 22 ½ Years in Federal PrisonPORTLAND, Ore. – Daniel Arthur Carter, who engaged in several takeover-style armed robberies in late 2012, was sentenced today by United States District Judge Marco A. Hernandez to serve 270 months in federal prison. He was sentenced for armed robberies of a U.S. Bank branch on November 21, 2012, and a Chase Bank branch on October 22, 2012, and for using a firearm in those robberies. Carter, 32, most recently resided in Portland, Oregon before his arrest in this case.
In pleading guilty, Carter admitted that on October 22, 2012, he entered a Chase Bank branch located in Tigard, Oregon wearing a mask and a hooded sweatshirt, and wielding a semiautomatic handgun. As he entered the bank he yelled demands to customers and employees, telling them to get down and to not activate any alarms. At gun point, he demanded that the tellers stuff his backpack with money. He then stole a car from one of the customers which he used to get away with $17,401 stolen in the robbery.
He also admitted that on November 21, 2012, he entered a U.S. Bank branch in SW Portland, Oregon wearing a mask and a hooded sweatshirt and wielding a semiautomatic handgun. As he entered the bank he yelled demands to customers and employees, telling them to get down and to not activate any alarms. At gun point, he demanded that the tellers stuff his backpack with money. He then unsuccessfully attempted to steal cars from customers before running away with $11,800 stolen in the robbery. He was apprehended by Portland Police Bureau officers as he was running from the bank.
Carter was sentenced to serve 186 months in federal prison for the armed bank robberies, consecutive to an additional 84 months for using a firearm during the violent crime. He was ordered to pay complete restitution of $29,401 for the robberies. He was also ordered to forfeit the firearm and ammunition which were used in the robberies, and the $17,401 in unrecovered money from the Chase Bank robbery. Carter’s sentence was enhanced because he stole property from a financial institution, used a firearm, physically restrained people, engaged in carjacking, and stole a considerable amount of money.
Carter also agreed to plead guilty in Multnomah County Circuit Court to armed robberies of the following Southwest Portland businesses:
- 45th Street Pub and Grill on July 10, 2012 during which $4,557 was stolen;
- Hillsdale Liquor Store on July 26, 2012 during which $3,821.05 was stolen.;
- Old Market Pub on August 19, 2012 during which ,$2,500 was stolen; and,
- Comfort Suites on July 31, 2012, during which $287.00 was stolen.
Upon release from custody, Carter will serve a five year period of supervised release. During his supervised release he must abide by a number of conditions which include mental health counseling, education and employment.
The case was investigated by the Portland Police Bureau. The case was prosecuted by Assistant U. S. Attorney Sean B. Hoar.
Pleasanton Woman Sentenced to 27 Months in Prison for Filing False Claim with the IRSRead the Press Release
OAKLAND – Denise LaShawn Reed, also known as Brooke Nicholson, Lauren Roberts, Denise Berry, Savana Jones, and Neyce Roberts, was sentenced yesterday to 27 months for her role in a false tax refund scheme, announced United States Attorney Melinda Haag and Internal Revenue Service-Criminal Investigation Special Agent in Charge José M. Martinez.
Reed pleaded guilty on September 5, 2013. According to the plea agreement, from January 2009 through February 2010, Reed filed 14 false and fraudulent federal income tax returns with the IRS. These claims were all filed as Forms 1040, U.S. Individual Income Tax Returns. The total amount of the false claims was $94,700. The claims listed on the returns were all fictitious, with the exception of the taxpayers’ identity. As part of the scheme, some of the returns reported that the taxpayer earned income as part of a business they operated when Reed knew the taxpayer did not own or operate a business. The 14 false tax returns fraudulently reported a refund was due. Reed admitted to receiving tax refunds for 13 of the false claims.
According to court documents, Reed electronically filed tax returns using others’ identities to defraud the United States into paying money in fraudulent tax refunds. The refunds were deposited into bank accounts or debit cards controlled by Reed. Reed then used the funds to pay personal expenses.
Reed, 45, of Pleasanton, California was charged on December 18, 2012, with 14 counts of filing false claims. She pleaded guilty to one count.
The sentence was handed down by the Honorable Yvonne Rogers Gonzalez, U.S. District Court Judge. In addition to 27 months in prison, Judge Gonzalez sentenced the defendant to a 3-year period of supervised release. In an attempt to obtain a lenient sentence, Reed provided false information to the Court in the form of a forged letter on Stanford Hospital letterhead stating that she was being treated for breast cancer, which was not true. As a result, at sentencing Judge Gonzalez found that Reed obstructed justice and increased her sentence accordingly. The defendant is in custody serving her sentence.
Cynthia Stier is the Assistant United States Attorney who is prosecuting the. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.
PCP Dealer Sentenced to 10 Years in PrisonRead the Press Release
Greenbelt, Maryland – U.S. District Judge Roger W. Titus sentenced Richard Brown, age 28, of Lanham, Maryland, today to 10 years in prison followed by five years of supervised release for conspiracy to distribute and possess with intent to distribute phencyclidine (PCP).
The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Karl C. Colder of the Drug Enforcement Administration - Washington Field Division; Special Agent in Charge Steven L. Gerido of the Bureau of Alcohol, Tobacco, Firearms and Explosives - Baltimore Field Division; and Chief Mark A. Magaw of the Prince George’s County Police Department.
According to Brown’s plea agreement, from December 2012 through January 2013, Brown conspired with others to distribute PCP. Specifically, on four occasions between December 5, 2012 and January 16, 2013, Brown distributed approximately 401 grams (over 14 ounces) of PCP to a cooperating witness, meeting the witness at the Suitland and Capitol Heights Metro stations to conduct the transactions. On January 31, 2013, the cooperating witness arranged to purchase 16 ounces of PCP from Brown. As Brown arrived at the meeting location, law enforcement agents approached the vehicle to arrest him. Brown was sitting in the front passenger seat of the vehicle holding a 32-ounce bottle that was half full of liquid. The agents saw Brown dump the contents of the bottle onto the passenger floorboard. Agents seized the bottle, which still contained three ounces of PCP, and soaked two rags with the remaining PCP that was spilled onto the floor and preserved the rags as evidence.Brown admits that he distributed between 700 grams and one kilogram of PCP during the time of the conspiracy.
United States Attorney Rod J. Rosenstein praised the DEA, ATF and Prince George’s County Police Department for their work in the investigation. Mr. Rosenstein thanked Assistant U.S. Attorneys Steven E. Swaney and Arun G. Rao, who prosecuted the case.Nine Individuals Sentenced for Federal Supervised Release ViolationsRead 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 - United States Attorney William J. Ihlenfeld, II, announced that during the month of December nine individuals had their supervised release revoked for violating terms and conditions imposed by the United States District Court.
CLARKSBURG DIVISION REVOCATIONS (Judge Irene M. Keeley)
DUPRE E. PHILLIPS, age 31, of Brooklyn, New York, was sentenced to 15 months in prison for failure to notify probation office of change in residence and failure to participate in treatment program. PHILLIPS was originally sentenced on June 16, 2006, to 122 months in prison and three years of supervised release for distribution of crack cocaine. In February of 2009, PHILLIPS’ sentence was reduced to 98 months in prison pursuant to the crack resentencing guidelines and in November of 2011, PHILLIPS’ sentence was again reduced to 64 months pursuant to the crack resentencing guidelines. PHILLIPS was remanded to the custody of the United States Marshal pending designation to a Federal institution.
ILLES WILLIAMS, age 34, of Morgantown, West Virginia, was sentenced to 12 months in prison for committing a new offense of Perjury. WILLIAMS was originally sentenced on January 22, 2009, to 78 months in prison and three years of supervised release for the distribution of crack cocaine. In February of 2009, WILLIAMS’ sentence was reduced to 63 months pursuant to the crack resentencing guidelines. WILLIAMS self-reported to the designated Federal institution on January 6, 2014.
THOMAS JEFFERSON DEEM, age 25, of Clarksburg, was sentenced to 10 months in prison for the unlawful use and possession of a controlled substance. DEEM was originally sentenced on November 9, 2012, to 6 months in prison and two years of supervised release for the distribution of hydrocodone within 1,000 feet of a protected location. DEEM was remanded to the custody of the United States Marshal pending designation to a Federal institution.
SHANNON ROSE AMSLER, age 27, of Stonewood, West Virginia, was sentenced to 6 months in prison for the use and possession of synthetic marijuana. AMSLER was originally sentenced on April 2, 2009, to 37 months in prison and six years of supervised release for the distribution of crack cocaine within 1,000 feet of a protected location. AMSLER was remanded to the custody of the United States Marshal pending designation to a Federal institution.
The United States was represented at the Clarksburg revocation hearings by Assistant U.S. Attorney Shawn A. Morgan.
ELKINS DIVISION REVOCATIONS (Chief Judge John Preston Bailey)
PATRICK MARTIN, age 35, of Glenville, West Virginia, was sentenced to 11 months in prison and 25 months of supervised release for committing the new offenses of trespassing, public intoxication and excessive use of alcohol. MARTIN was originally sentenced on September 8, 2008, to 18 months in prison and three years of supervised release for being a felon in possession of a firearm. On March 8, 2010, MARTIN’s supervised release was revoked due to his failure to register as a sex offender and he was sentenced to 11 months in prison and 25 months of supervised release. MARTIN was remanded to the custody of the United States Marshal pending designation to a Federal institution.
GREGORY STEPHEN SCOTT, age 33, of Beverly, West Virginia, was sentenced to 3 months in prison and 33 months of supervised release for possession and use of a controlled substance. SCOTT was originally sentenced on May 22, 2012, to 6 months in prison and three years of supervised release for conspiracy to distribute marijuana. SCOTT, who is free on bond, will self-report to the designated Federal institution on January 28, 2014.
The United States was represented at the Elkins revocation hearings by Assistant U.S. Attorneys Shawn A. Morgan and Stephen D. Warner.
WHEELING DIVISION REVOCATIONS (Judge Frederick P. Stamp, Jr.)
DENNIS SHAWN SCHUCH, age 44, of Reynoldsville, West Virginia, was sentenced to 14 months in prison for testing positive for the use of synthetic marijuana, failure to report for drug testing, failure to secure employment and committing another offense of driving on a suspended license. SCHUCH was originally sentenced on November 2, 2002, to 163 months in prison and five years of supervised release for the distribution of LSD within 1,000 feet of a school. On November 30, 2004, SCHUCH’s sentence was reduced to 120 months in prison. SCHUCH was remanded to the custody of the United States Marshal pending designation to a Federal institution.FRANCOIS ANTONIO BROWN, age 24, of Columbus, Ohio, was sentenced to 4 months imprisonment and 56 months of supervised release for testing positive for the use of controlled substances, failure to report for drug screens and failure to attend substance abuse counseling. BROWN was originally sentenced on August 11, 2008, to 70 months in prison and five years of supervised release for conspiracy to distribute more than 50 grams of crack cocaine. BROWN was released to supervised release on June 14, 2013, and these violations began within two months of his release. BROWN was remanded to the custody of the United States Marshal pending designation to a Federal institution.
The United States was represented at the Wheeling revocation hearings by Assistant U.S. Attorney John C. Parr.
MARTINSBURG DIVISION REVOCATIONS (Judge Gina M. Groh)WALTER JOHNSON, age 51, of Washington, DC, was sentenced to 48 months of supervised release with the first six months to be served under home detention for committing the offense of operating a vehicle while impaired. JOHNSON was originally sentenced on January 29, 2008, to 70 months in prison and 4 years of supervised release for the distribution of crack cocaine. In November of 2011, JOHNSON’s sentence was reduced to 60 months pursuant to the crack resentencing guidelines.
The United States was represented at the Martinsburg revocation hearing by Assistant U.S. Attorney Paul T. Camilletti.
The United States Probation Office carries out probation and pretrial services functions throughout the Northern District of West Virginia. With locations in Wheeling, Clarksburg, Martinsburg, and Elkins, the office works to assist the federal courts in the fair administration of justice, to protect the community, and to bring about long-term positive change in individuals under supervision. Jeff Givens is the Chief Probation Officer for the Northern District.
Nigerian Man Sentenced for Bank/Mail Fraud Scheme and ID TheftRead the Press Release
HOUSTON - Olasunkanmi Shittu, 42, has been sentenced to a total of 84 months in federal prison for his role in a bank fraud and mail fraud scheme that defrauded approximately 25 victims, announced United States Attorney Kenneth Magidson. Shittu pleaded guilty Oct. 15, 2013, to one count each of conspiracy to commit bank and mail fraud, four counts of mail fraud and rwo counts of aggravated identity theft.
Today, U.S. District Judge David Hittner handed him a sentence of 18 months for each of the conspiracy to commit mail fraud and mail fraud charges. Those sentences will be served concurrently to each other but consecutive to another 18 months for the conspiracy to commit bank fraud. He was further ordered to serve 24 months on each of the two identity theft charges which will both be served consecutively to each other and to the other sentences imposed for a total term of 84 months in federal prison. He will also pay restitution payment in the amount of $10,550. Not a U.S. citizen, he is expected to face deportation proceedings back to Nigeria following completion of his prison term.
Shittu stole personal identifying information and credit card account information from multiple victims. He and his co-conspirators would then hack into the victim’s credit card accounts via the Internet, steal reward points associated with the account, convert those points into cash and transfer the cash onto debit cards or gift cards under their sole custody and control. Using this scheme, on or about June 11, 2012, Shittu caused four Wal-Mart re-loadable MoneyCards valued at approximately $10,550 to be sent to him and his co-conspirators via the U.S. Mail. The four Wal-Mart cards were funded with reward points stolen from at least 25 different victims.
Shittu will remain in custody pending transfer to a U.S. Bureau of Prisons facility to be determined in the near future.
The case was investigated by the United States Postal Inspection Service and was prosecuted by Assistant United States Attorney Julie Searle.
Mobile Man Sentenced for Filing Fraudulent GCCF ClaimsRead the Press Release
United States Attorney Kenyen R. Brown of the Southern District of Alabama announced that on January 10, 2014, Bradley Tolbert was sentenced to 5 years of Probation by Chief Judge William H. Steele on his conviction of filing a false claim with GCCF. The defendant was ordered to pay full restitution.
The indictment alleged that the defendant filed a claim for and received payment asserting that he lost wages from work he performed at the Alabama State Docks due to the Deepwater Horizon oil spill. In fact, the defendant did not experience any loss of wages due to the oil spill.
The case was investigated by the FBI. The case is being prosecuted by AUSA Vicki Davis.
Mobile Man Sentenced for Bank RobberyRead the Press Release
MOBILE, Ala. - United States Attorney Kenyen R. Brown announced that on January 10, 2014, Jacob L. Anderson, was sentenced by District Judge Kristi K. DuBose to serve 42 months in prison on one count of Bank Robbery after Anderson’s plea of guilty. The indictment alleged that on or about July 12, 2013, Anderson robbed the Tillman’s Corner Branch of Wells Fargo Bank of approximately $2,054.00 in United States currency.
The case was investigated by MPD and the FBI. The case was prosecuted by AUSA Vicki Davis.
Mobile County Man Sentenced to Seven Years Imprisonment for Using A Weapon in Furtherance of A Bank RobberyRead the Press Release
MOBILE, AL-- United States Attorney Kenyen R. Brown announces that Henry Earl Young was sentenced to seven years imprisonment on Friday by United States District Court Judge Kristi D. DuBose, for use of a weapon in furtherance of a crime of violence (bank robbery) in violation of Title 18 USC '924(c). Young committed an armed robbery of $2,731 from Trustmark Bank located at 1025 Highway 43, Saraland, Alabama on April 24, 2013. Young was ordered to serve five years of supervised release with the United States Probation Office after he completes his term of imprisonment at the Federal Bureau of Prisons. Young was also ordered to pay $2,506 in restitution to the bank. Law enforcement recovered the other $225.00 from Young at the time of his arrest. Young was also ordered to pay a $100 special assessment which goes into a fund for victims of crime.
United States Attorney Brown stated that the case was jointly investigated by the Federal Bureau of Investigation, and the City of Saraland Police Department. Brown highly commended the joint efforts of the two investigative agencies in investigating and prosecuting this case. Brown added that his office would continue to aggressively prosecute bank robbers and individuals who use weapons in furtherance of a crime of violence, thus endangering the community.
Man Sentenced to 25 Years in Kansas City, Kan., Carjacking CaseRead the Press Release
KANSAS CITY, KAN. - A Kansas City, Kan., man was sentenced Monday to 25 years in federal prison on charges arising from an armed robbery and carjacking, U.S. Attorney Barry Grissom said.
Derrick L. Freeman, 28, Kansas City, Kan., pleaded guilty to one count of armed robbery, one count of carjacking, and one count of unlawful possession of a firearm after a felony conviction.
In his plea, Freeman admitted that on May 12, 2013, he and his co-defendants went to the home of a Kansas City, Kan., man to buy some synthetic marijuana. Once there, they robbed the man at gunpoint. During the robbery, Freeman fired a handgun and then fled the scene before police arrived.
On May 26, 2013, Freeman and co-defendants walked to a Stop Shop gas station at 6865 State Avenue in Kansas City, Kan., where Freeman suggested they “get a car.” They robbed the driver of a 2004 Ford Freestar minivan of wallet and keys and drove away in the victim’s minivan. When the defendants realized officers had spotted their vehicle they led police on a 17-minute chase at speeds up to 112 miles per hour. The minivan wrecked in a plowed field near Leavenworth Road and North 184th Street in Basehor, Kan., where the defendants fled on foot. Derrick Freeman fired a handgun at a law enforcement officer before being arrested.
Co-defendants include:
Anthony L. Irvin, 19, Kansas City, Kan., who was sentenced to 207 months.
Terry D. Tillman, 26, Kansas City, Kan., who was sentenced to 10 years.
Joe Freeman, 33, Kansas City, Kan., who is awaiting trial.
Jeffrey B. Jackson, 47, Leavenworth, Kan., who is awaiting trial.Grissom commended the Kansas City, Kan., Police Department, the Wyandotte County Sheriff’s Department, the Kansas Highway Patrol, the Basehor Police Department, the Edwardsville Police Department, the Bonner Springs Police Department, the Leavenworth County Sheriff’s Department and Special Assistant U.S. Attorneys Erin Tomasic and Trent Krug for their work on the case.
In all cases, defendants are presumed innocent until and unless proven guilty. The indictments merely contain allegations of criminal conduct.Lewiston Man Sentenced to over Six Years for Illegal Possession of a FirearmRead the Press Release
Contact: Darcie N. McElwee
Assistant United States Attorney
Tel: (207) 780-3257Portland, Maine: United States Attorney Thomas E. Delahanty II announced today
Brunel Constant, a/k/a “Jamal”, 34, of Lewiston, Maine was sentenced in U.S. District Court
by Judge Nancy Torresen on Friday to 74 months in prison and three years of supervised release
for possession of a firearm by a convicted felon. Constant was convicted of the charge on May
21, 2013, following a two day jury trial.According to trial testimony, in August 2011, Constant, a convicted felon, was found
sleeping on the porch of an apartment building to which he had no connection. When residents
there approached him, an argument ensued and Constant threatened to return with a firearm.
Moments later, Constant returned to the apartment building and fired two bullets into one of the
apartments.The investigation leading to the conviction was conducted by the Lewiston Police
Department, the Central Maine Violent Crime Task Force and the Bureau of Alcohol, Tobacco,
Firearms and Explosives.Kings County Woman Sentenced to Prison for Stealing Disability Benefits from Department of Veterans AffairsRead the Press Release
FRESNO, Calif. – Nola Diane Collins, 60, of Armona, was sentenced today by U.S. District Judge Lawrence J. O’Neill to five months in prison for stealing disability compensation benefits paid by the U.S. Department of Veterans Affairs, United States Attorney Benjamin B. Wagner announced. Collins also was ordered to pay $76,998 in restitution to the VA.
According to court documents, Collins’s husband received benefits paid by the U.S. Department of Veterans Affairs (VA) until his death in December 2007. For two years after his death, Collins unlawfully received and spent the VA benefits totaling approximately $76,998. Collins never notified the VA that her husband was deceased. On several occasions, Collins forged her husband’s signature to the benefit checks and passed them at a convenience store, telling the store clerk that her husband was disabled and unable to cash the check himself.
This case was the product of an investigation by the U.S. Department of Veterans Affairs, Office of Inspector General. Assistant U.S. Attorney Christopher Baker prosecuted the case.
Justice Department Alleges “Buy Here, Pay Here” Used-Car Dealerships Engaged in Illegal Lending DiscriminationRead the Press Release
The U.S. Department of Justice, the U.S. Attorney’s Office for the Western District of North Carolina and the North Carolina Department of Justice filed a lawsuit today alleging that defendants Auto Fare Inc., Southeastern Auto Corp. and Zuhdi A. Saadeh—the owners and operators of two “buy here, pay here” used-car dealerships in Charlotte, N.C. —violated the federal Equal Credit Opportunity Act by intentionally targeting African-American customers for the extension and servicing of installment sale contracts on unfair and predatory terms. The State of North Carolina also alleges that the defendants’ actions violated the state’s Unfair and Deceptive Trade Practices Act.
The complaint, which was filed today in the U.S. District Court for the Western District of North Carolina, alleges that the defendants engaged in a pattern or practice of “reverse redlining” by targeting African-American customers for installment sale contracts with inflated sales prices, down payments, and interest rates without meaningfully assessing the customers’ credit. The complaint states that Saadeh, who operates Auto Fare and United Car Sales, has used racial slurs to refer to African-Americans and made statements expressing his views that African-American customers have fewer credit options, making them more likely to accept the predatory terms of the contracts offered by the defendants.
The defendants’ practices resulted in rates of default and repossession that are higher than other subprime used-car dealers. The complaint also alleges that the defendants failed to provide customers with a reasonable notice of repossession, repossessed vehicles of customers who were not in default on their contracts, failed to give customers refunds they were due, improperly seized customers’ personal property in repossessed vehicles and used global positioning system devices to locate and repossess vehicles without informing customers that the dealership had installed these devices.
The U.S. Department of Justice, the U.S. Attorney’s Office for the Western District of North Carolina and the North Carolina Department of Justice investigated and filed the lawsuit jointly.
“Intentionally targeting African-Americans for contracts with predatory terms because of their race violates fair lending laws,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division. “By filing this lawsuit, the Justice Department is acting to ensure that subprime dealers in the auto industry provide credit in accordance with the law. The Justice Department will continue to ensure that people have equal access to credit, regardless of race.”
“The terms of a person’s loan should not be determined by their race,” said U.S. Attorney Anne M. Tompkins for the Western District of North Carolina. “Predatory lending and illegal discrimination will simply not be tolerated.”
“Charging people inflated prices based on their race isn’t the way to do business in our state,” said North Carolina Attorney General Roy Cooper. “These allegations show outrageous behavior that should be stopped.”
The Civil Rights Division and other agencies involved in this matter are part of the Financial Fraud Enforcement Task Force, established by President Obama to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit www.StopFraud.gov.
African-American customers who entered into installment sale contracts for the purchase of automobiles at Auto Fare or United Car Sales since 2006, former employees of the dealerships and any other individuals with information relevant to this lawsuit are encouraged to contact the U.S. Department of Justice at 1-800-896-7743, mailbox 92, or at [email protected].
A copy of the complaint, as well as additional information about fair lending enforcement by the Justice Department, can be obtained from the Justice Department website at www.justice.gov/fairhousing . Fighting illegal lending discrimination is a top priority of the Justice Department. More information about the Civil Rights Division and the laws it enforces is available at www.usdoj.gov/crt .
Jury Convicts Connecticut Man, Georgia Woman of False Tax ClaimsRead the Press Release
KANSAS CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that a New Fairfield, Conn., man and a Chickamauga, Ga., woman were convicted in federal court today of making false claims for tax refunds.
Nkosi Gray, 40, of New Fairfield, Conn., and Kimberly Johnson, 43, of Chickamauga, Ga., were each found guilty of one count of filing false claims for a tax refund.
Gray and Johnson each filed fraudulent tax returns that falsely claimed refunds due to over-withholding of taxes. Gray received a $278,874 refund and Johnson filed a claim for a $61,959 refund on behalf of another person identified in the federal indictment as “M.L.F.” These claims utilized fictitious 1099-OID tax forms (which are legitimately used to pay taxes on income received from the interest on bond investments). In actuality, they had not received interest income from the banks and lenders listed on their Forms 1099, nor had any money been over-withheld.
Co-defendant Gerald A. Poynter, also known as “Brother Jerry Love,” 48, of Kansas City, Mo., pleaded guilty on Nov. 7, 2013, to being the leader of a conspiracy to defraud the government that utilized this fraudulent practice. Conspirators claimed that a total of $96 million dollars in fraudulent tax refunds were due. The IRS mistakenly paid out $3.5 million on these fraudulent claims.
Gray, who received a refund of $278,874 on Oct. 17, 2008, paid a $15,000 fee to Poynter a few days later. After the refund was deposited into his account, Gray made 56 withdrawals over the next two months. By withdrawing the cash in increments of less than $10,000, Gray (a former bank employee) avoided the requirement for his bank to report those transactions to the government.
Johnson filed a refund claim for $61,959 in April 2009 on behalf of “M.L.F.” and that refund was issued.
Following the presentation of evidence, the jury in the U.S. District Court in Kansas City, Mo., deliberated for about six hours over two days before returning the guilty verdicts, ending a trial that began Monday, Jan. 6, 2014.
Under federal statutes, Gray and Johnson are each subject to a sentence of up to five years in federal prison without parole, plus a fine up to $250,000. Separate sentencing hearings are scheduled for May 15, 2014.
Poynter is among 11 defendants who have pleaded guilty, including Kristi Jones, 41, of Riverside, Mo.; Shirley Oyer, 72, of Overland Park, Kan.; Jennifer Wilson, 36, of Cumming, Ga.; Mark J. Murray, 51, of Newton, Ala.; John V. Perdido, 57, of Temecula, Calif.; Earl Lee Davis, 55, of Monroe, La.; Robert E. Morris, 68, of Rocklin, Calif.; and Karen A. Olson, 42, of Wood Dale, Ill. Marian Fine-Kennedy, 36, of Eugene, Ore., and Maria Haro Campos, 42, of Vista, Calif., have each pleaded guilty in separate but related cases.
1099-OID Tax Fraud Scheme
Conspirators utilized 1099-Original Issue Discount forms as part of their scheme.
These forms are legitimately used by tax filers who must pay taxes on income they receive from the interest on their bond investments. Tax on certain bonds must be paid as income accrues. Bond holders receive annual forms, called 1099-Original Issue Discount (OID), from the debt issuers.
However, the scheme described in the indictments utilized the 1099-OID forms in a nonsensical manner. Clients of the conspirators assembled financial documents such as mortgage and loan statements, car payments, foreclosure records, bank statements, credit card statements, and other records of debt and spending. Poynter and his staff used this debt information – rather than any actual bond income – to prepare and/or finalize false tax returns and improperly calculated Forms 1099-OID.
These tax returns falsely claimed that the filers had received interest and dividend income and that federal income tax had been withheld. The fraudulent returns claimed the government had over-withheld taxes from the clients’ purported interest and dividend income, making the clients appear entitled to more than $96 million in tax refunds.
In reality, Poynter’s clients had not earned – or paid tax on – such income. No financial institution had issued any 1099-OID forms. Instead, the income that was listed was calculated by what the indictment describes as an “arbitrary and capricious formula.” Conspirators simply added up the taxpayers’ debts and spending and listed those creditors as “payers” of interest and dividends.
OID Fraud Web Site
A Web site has been established to provide information about the status of this investigation. Updates about this investigation and related cases will be posted at www.justice.gov/usao/mow/divisions/OIDfraud.html
This case is being prosecuted by Assistant U.S. Attorney Daniel M. Nelson. It was investigated by IRS-Criminal Investigation and the Treasury Inspector General for Tax Administration (TIGTA).
Irene Man Sentenced in Methamphetamine Distribution ConspiracyRead the Press Release
United States Attorney Brendan V. Johnson announced that an Irene, South Dakota, man convicted of Conspiracy to Distribute a Controlled Substance was sentenced on January 9, 2014, by U.S. District Judge Karen E. Schreier.
Jacob Franklin Zurcher, age 30, was sentenced to 46 months in custody, to be followed by 3 years of supervised release.
Zurcher was indicted by a federal grand jury on July 9, 2013, for Conspiracy to Distribute 500 Grams of Methamphetamine. He pled guilty on October 29, 2013.
As his part in the conspiracy, Zurcher allowed co-conspirators to sell methamphetamine from his home and also purchased methamphetamine and sold it to customers in Sioux Falls.
This case was investigated by the Sioux Falls Police Department, the Nebraska State Patrol, and the U.S. Drug Enforcement Administration. Assistant U.S. Attorney John E. Haak prosecuted the case.
Zurcher was immediately turned over to the custody of the U.S. Marshals Service.
Huntington Felon Pleads Guilty to Illegal Firearm Possession ChargeRead the Press Release
HUNTINGTON, W.Va. – A Huntington felon faces up to 10 years in prison after pleading guilty to a federal firearm possession charge, U.S. Attorney Booth Goodwin announced today. Jerry T. Kinney, 29, pleaded guilty to possession of a firearm by a prohibited person. On September 5, 2013, Kinney illegally possessed a .45 caliber pistol near Huntington.
Kinney was previously convicted of possession of a controlled substance in November 2002 in the Third Judicial Circuit Court in Detroit, Michigan. Kinney also was previously convicted of possession of a firearm by a prohibited person in October 2010 in the Circuit Court of Cabell County, West Virginia. He did not have his rights to possess a firearm restored.
Kinney is scheduled to be sentenced on April 14, 2014 by Chief United States District Judge Robert C. Chambers.
The investigation was conducted by the Huntington Violent Crimes and Drug Task Force. Assistant United States Attorney Gregory McVey is in charge of the prosecution.
The case is being brought as part of Project Safe Neighborhoods. Project Safe Neighborhoods is a nationwide commitment to reduce gun crime in the United States by networking existing local programs targeting gun crime.
Honolulu Women Arraigned on Indictment for Fraudulent Debt Elimination SchemeRead the Press Release
HONOLULU – After a five-day trial in the United States Court in Honolulu, a federal jury found Matthew Zmuda, 29, of Kauai, guilty on Friday, January 10, of conspiring to distribute and possess with intent to distribute, 50 grams or more of methamphetamine from January to April 2012, as well as attempting to possess 50 grams or more of methamphetamine with the intent to distribute. The jury also found him guilty of conspiring to distribute and possess with intent to distribute a detectable amount of heroin.
Florence T. Nakakuni, United States Attorney for the District of Hawaii, said that according to the evidence presented at trial Zmuda agreed with other individuals to have methamphetamine and heroin sent from California, through a delivery service, to Kauai in February, March, and April 2012. Zmuda was the intended recipient of 447 grams of methamphetamine seized by law enforcement at the Honolulu International Airport on April 3, 2012, and was addressed to a hotel in Kauai. He had also arranged to meet at that hotel to receive the methamphetamine and the heroin from the provider.
Zmuda faces up to life in prison with a mandatory minimum 20 year term of imprisonment when he is sentenced by Senior U.S. District Judge Helen Gillmor on May 12, 2014.
The investigation which resulted in the charges in the case was conducted by the Drug Enforcement Administration and Hawaii Airport Task Force, assisted by the efforts of the Kauai Police Department. Assistant U.S. Attorney Tony R. Roberts handled the prosecution.
Grundy County Man Sentenced to 10 Years in Prison for Possessing A Firearm in October 2012 Shoot-Out with PoliceRead the Press Release
CHATTANOOGA, Tenn. -- Russell Wayne Smith, 46, of Gruetli-Laager, Tenn., was sentenced on Jan. 13, 2014, to serve 10 years in prison by the Honorable Harry S. Mattice, Jr., U.S. District Judge. Smith pleaded guilty in October 2013 to a federal grand jury indictment charging him with being a prohibited person, by virtue of a felony conviction, in possession of a firearm. Smith’s sentence was the maximum allowed by the statute.
The investigation began when Smith, who had escaped from the Grundy County Jail, was found by Grundy County Sheriff’s Office deputies and fled from the scene, first on an all-terrain vehicle and then on foot. Deputies pursued Smith through a heavily wooded area and spotted him pointing a rifle in their direction. The deputies fired upon Smith hitting him at least twice. When he was apprehended he had two loaded firearms in his possession. Smith had previously been convicted of several felony offenses.
The indictment and subsequent conviction of Smith was the result of an investigation conducted by the Bureau of Alcohol, Tobacco, Firearms and Explosives, Tennessee Bureau of Investigation and Grundy County Sheriff’s Office. Assistant U.S. Attorney Terra Bay represented the United States.
This case was brought as part of Project Safe Neighborhoods (PSN), a comprehensive national strategy that creates local partnerships with law enforcement agencies to effectively enforce existing gun laws. It provides more options to prosecutors, allowing them to utilize local, state, and federal laws to ensure that criminals who commit gun crime face tough sentences. PSN gives each federal district the flexibility it needs to focus on individual challenges that a specific community faces.
Government Intervenes in Lawsuits Against Health Management <br /> Associates Inc. Hospital Chain Alleging Unnecessary <br /> Inpatient Admissions and Payment of KickbacksRead the Press Release
The government has intervened in eight False Claims Act lawsuits against Health Management Associates Inc. (HMA) alleging that HMA billed federal health care programs for medically unnecessary inpatient admissions from the emergency departments at HMA hospitals and paid remuneration to physicians in exchange for patient referrals, the Justice Department announced today. The government also has joined in the allegations in one of these lawsuits that Gary Newsome, HMA’s former CEO, directed HMA’s corporate practice of pressuring emergency department physicians and hospital administrators to raise inpatient admission rates, regardless of medical necessity. HMA operates 71 hospitals in 15 states: Alabama, Arkansas, Florida, Georgia, Kentucky, Mississippi, Missouri, North Carolina, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, Washington and West Virginia.
“The Department of Justice is committed to ensuring that health care providers who attempt to misuse federal health care programs for their own profit are held accountable,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery. “Schemes such as this one can contribute significantly to the rising cost of delivering health care and create needless patient risk.”
The lawsuits allege that HMA’s corporate officers, at the direction of Newsome, exerted significant pressure on doctors in the emergency department to admit patients who could have been placed in observation, treated as outpatients or discharged, and that this resulted in the submission of inflated or false claims to federal health care programs. One lawsuit also alleges that patients were improperly admitted for scheduled surgical procedures that should have been done on an outpatient basis. The complaints further allege that HMA paid kickbacks, either in the form of bonuses or awarded contracts, to physician groups staffing HMA emergency rooms to induce the physicians to admit patients unnecessarily.
In addition, the lawsuits allege that HMA paid kickbacks to other physician groups to induce referrals. For example, HMA allegedly provided improper remuneration, both through the provision of free office space and staffing and through direct payments, to Primary Care Associates, a physician practice group in Port Charlotte, Fla., in exchange for referrals to two HMA hospitals in Florida. HMA also allegedly paid kickbacks to physicians in Lancaster, Pa., by paying inflated prices for physician-owned assets, providing sham medical directorship contracts and selling assets to physicians for below fair market value.
The Anti-Kickback Statute prohibits offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by Medicare, Medicaid and other federally funded programs. The Stark Statute prohibits a hospital from submitting claims for patient referrals made by a physician with whom the hospital has an improper financial arrangement. Both the Anti-Kickback Statute and Stark Statute are intended to ensure that a physician’s medical judgment is not compromised by improper financial incentives and is instead based on the best interests of the patient.
“This intervention decision marks the culmination of a lengthy and comprehensive investigation into a variety of serious fraud allegations against one of our district’s largest health care providers,” said Acting U.S. Attorney for the Middle District of Florida A. Lee Bentley III. “We hope that this case will serve as a reminder to our provider community that this office is fully engaged in the struggle against misconduct of this kind.”
“Improper hospital admissions cost the government millions of dollars in unnecessary fees and subject patients to excessive treatment and needless risk, driving up the cost of health care,” said U.S. Attorney for the Western District of North Carolina Anne M. Tompkins. “The government will pursue aggressively providers that boost their profits at the expense of Medicare and other government programs.”“Unlawful financial relationships between hospitals and physicians solely to increase referrals are, unfortunately, a common practice that corrupts the health care system,” said U.S. Attorney for the Southern District of Florida Wifredo A. Ferrer. “The system also suffers a direct financial hit when hospitals fraudulently increase admissions where they are not indicated, solely to benefit hospitals’ bottom line. We will not relent in our efforts to combat these kinds of fraudulent schemes and recover funds for the Medicare program.”
“HMA’s submission of claims to Medicare, Medicaid and TRICARE for unnecessary inpatient stays is a serious matter that threatens the integrity of our entire health care system, and the end result is that those who need health care cannot afford it,” said U.S. Attorney for the Middle District of Georgia Michael J. Moore. “The Middle District of Georgia is committed to fighting health care fraud.”
“Investigations such as these are a very high priority for the FBI because of the potential impact to the nation’s health care system and to the public,” said FBI Assistant Director Ron Hosko. “Because of the priority nature of these cases as well as their complexity, we have created a centralized team to provide nationwide support to our field offices called the Major Provider Response Team. The FBI is committed to working with our partners in these types of investigations and appreciates the public’s involvement in the process.”
The lawsuits were filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private parties to sue on behalf of the government when they believe that defendants submitted false claims for government funds and to receive a share of any recovery. The False Claims Act also permits the government to intervene in such lawsuits, as it has done in these cases. The eight lawsuits are pending in the Southern and Middle Districts of Florida, Middle District of Georgia, Northern District of Illinois, Western District of North Carolina, Eastern District of Pennsylvania and District of South Carolina .
The government’s intervention in these matters illustrates its emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by Attorney General Eric Holder and Health and Human Services Secretary Kathleen Sebelius. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $17 billion through False Claims Act cases, with more than $12.2 billion of that amount recovered in cases involving fraud against federal health care programs.
These matters were investigated by the Commercial Litigation Branch of the Justice Department’s Civil Division; the U.S. Attorney’s Offices for the Southern and Middle Districts of Florida, Middle District of Georgia, Northern District of Illinois, Western District of North Carolina, Middle and Eastern Districts of Pennsylvania and District of South Carolina; the Department of Health and Human Services Office of Inspector General and the Federal Bureau of Investigation.
The cases are captioned United States ex rel. Brummer v. Health Mgmt. Assocs. Inc. , et al.,3-09-cv-135 (CDL)(M.D. Ga.); United States ex rel. Williams v. Health Mgmt. Assocs. Inc. et al., 3:12-cv-151 (M.D. Ga.) United States ex rel. Plantz v. Health Mgmt. Assocs. Inc., et al., 13C-1212 (N.D. Ill.) United States ex rel. Miller v. Health Mgmt. Assocs. Inc., et al., 10-3007 (E.D. Pa.) United States ex rel. Mason v. Health Mgmt. Assocs. Inc., et al., 3:10-CV-472-GCM (W.D.N.C.) United States ex rel. Nurkin v. Health Mgmt. Assocs. Inc., et al., 2:11-cv-14-FtM-29DNF (M.D. Fla.) United States ex rel. Jacqueline Meyer & Cowling v. Health Mgmt. Assocs. Inc., et al.; 0:11-cv-01713-JFA (D.S.C.) and United States ex rel. Paul Meyer v. Health Mgmt. Assocs. Inc., et al.,11-62445 cv-Williams (S.D. Fla.).
The claims asserted against HMA and Newsome are allegations only, and there has been no determination of liability.Government Intervenes in Lawsuits Against Health Management Associates Inc. Hospital Chain Alleging Unnecessary Inpatient Admissions and Payment of KickbacksRead the Press Release
WASHINGTON - The government has intervened in eight False Claims Act lawsuits against Health Management Associates Inc. (HMA) alleging that HMA billed federal health care programs for medically unnecessary inpatient admissions from the emergency departments at HMA hospitals and paid remuneration to physicians in exchange for patient referrals, the Justice Department announced today. The government also has joined in the allegations in one of these lawsuits that Gary Newsome, HMA’s former CEO, directed HMA’s corporate practice of pressuring emergency department physicians and hospital administrators to raise inpatient admission rates, regardless of medical necessity. HMA operates 71 hospitals in 15 states: Alabama, Arkansas, Florida, Georgia, Kentucky, Mississippi, Missouri, North Carolina, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, Washington and West Virginia.
“The Department of Justice is committed to ensuring that health care providers who attempt to misuse federal health care programs for their own profit are held accountable,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery. “Schemes such as this one can contribute significantly to the rising cost of delivering health care and create needless patient risk.”
The lawsuits allege that HMA’s corporate officers, at the direction of Newsome, exerted significant pressure on doctors in the emergency department to admit patients who could have been placed in observation, treated as outpatients or discharged, and that this resulted in the submission of inflated or false claims to federal health care programs. One lawsuit also alleges that patients were improperly admitted for scheduled surgical procedures that should have been done on an outpatient basis. The complaints further allege that HMA paid kickbacks, either in the form of bonuses or awarded contracts, to physician groups staffing HMA emergency rooms to induce the physicians to admit patients unnecessarily.
In addition, the lawsuits allege that HMA paid kickbacks to other physician groups to induce referrals. For example, HMA allegedly provided improper remuneration, both through the provision of free office space and staffing and through direct payments, to Primary Care Associates, a physician practice group in Port Charlotte, Fla., in exchange for referrals to two HMA hospitals in Florida. HMA also allegedly paid kickbacks to physicians in Lancaster, Pa., by paying inflated prices for physician-owned assets, providing sham medical directorship contracts and selling assets to physicians for below fair market value.
The Anti-Kickback Statute prohibits offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by Medicare, Medicaid and other federally funded programs. The Stark Statute prohibits a hospital from submitting claims for patient referrals made by a physician with whom the hospital has an improper financial arrangement. Both the Anti-Kickback Statute and Stark Statute are intended to ensure that a physician’s medical judgment is not compromised by improper financial incentives and is instead based on the best interests of the patient.
“This intervention decision marks the culmination of a lengthy and comprehensive investigation into a variety of serious fraud allegations against one of our district’s largest health care providers,” said Acting U.S. Attorney for the Middle District of Florida A. Lee Bentley III. “We hope that this case will serve as a reminder to our provider community that this office is fully engaged in the struggle against misconduct of this kind.”
“Improper hospital admissions cost the government millions of dollars in unnecessary fees and subject patients to excessive treatment and needless risk, driving up the cost of health care,” said U.S. Attorney for the Western District of North Carolina Anne M. Tompkins. “The government will pursue aggressively providers that boost their profits at the expense of Medicare and other government programs.”
“Unlawful financial relationships between hospitals and physicians solely to increase referrals are, unfortunately, a common practice that corrupts the health care system,” said U.S. Attorney for the Southern District of Florida Wifredo A. Ferrer. “The system also suffers a direct financial hit when hospitals fraudulently increase admissions where they are not indicated, solely to benefit hospitals’ bottom line. We will not relent in our efforts to combat these kinds of fraudulent schemes and recover funds for the Medicare program.”
“HMA’s submission of claims to Medicare, Medicaid and TRICARE for unnecessary inpatient stays is a serious matter that threatens the integrity of our entire health care system, and the end result is that those who need health care cannot afford it,” said U.S. Attorney for the Middle District of Georgia Michael J. Moore. “The Middle District of Georgia is committed to fighting health care fraud.”
“Investigations such as these are a very high priority for the FBI because of the potential impact to the nation’s health care system and to the public,” said FBI Assistant Director Ron Hosko. “Because of the priority nature of these cases as well as their complexity, we have created a centralized team to provide nationwide support to our field offices called the Major Provider Response Team. The FBI is committed to working with our partners in these types of investigations and appreciates the public’s involvement in the process.”
The lawsuits were filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private parties to sue on behalf of the government when they believe that defendants submitted false claims for government funds and to receive a share of any recovery. The False Claims Act also permits the government to intervene in such lawsuits, as it has done in these cases. The eight lawsuits are pending in the Southern and Middle Districts of Florida, Middle District of Georgia, Northern District of Illinois, Western District of North Carolina, Eastern District of Pennsylvania and District of South Carolina.
The government’s intervention in these matters illustrates its emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by Attorney General Eric Holder and Health and Human Services Secretary Kathleen Sebelius. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $17 billion through False Claims Act cases, with more than $12.2 billion of that amount recovered in cases involving fraud against federal health care programs.
These matters were investigated by the Commercial Litigation Branch of the Justice Department’s Civil Division; the U.S. Attorney’s Offices for the Southern and Middle Districts of Florida, Middle District of Georgia, Northern District of Illinois, Western District of North Carolina, Middle and Eastern Districts of Pennsylvania and District of South Carolina; the Department of Health and Human Services Office of Inspector General and the Federal Bureau of Investigation.
The cases are captioned United States ex rel. Brummer v. Health Mgmt. Assocs. Inc., et al.,3-09-cv-135 (CDL)(M.D. Ga.); United States ex rel. Williams v. Health Mgmt. Assocs. Inc. et al., 3:12-cv-151(M.D. Ga.); United States ex rel. Plantz v. Health Mgmt. Assocs. Inc., et al., 13C-1212(N.D. Ill.); United States ex rel. Miller v. Health Mgmt. Assocs. Inc., et al., 10-3007 (E.D. Pa.); United States ex rel. Mason v. Health Mgmt. Assocs. Inc., et al., 3:10-CV-472-GCM (W.D.N.C.); United States ex rel. Nurkin v. Health Mgmt. Assocs. Inc., et al., 2:11-cv-14-FtM-29DNF (M.D. Fla.); United States ex rel. Jacqueline Meyer & Cowling v. Health Mgmt. Assocs. Inc., et al.; 0:11-cv-01713-JFA (D.S.C.) and United States ex rel. Paul Meyer v. Health Mgmt. Assocs. Inc., et al.,11-62445 cv-Williams (S.D. Fla.).
The claims asserted against HMA and Newsome are allegations only, and there has been no determination of liability.
Government Intervenes in Lawsuits Against Health Management Associates Inc. Hospital Chain Alleging Unnecessary Inpatient Admissions and Payment of KickbacksRead the Press Release
The government has intervened in eight False Claims Act lawsuits against Health Management Associates Inc. (HMA) alleging that HMA billed federal health care programs for medically unnecessary inpatient admissions from the emergency departments at HMA hospitals and paid remuneration to physicians in exchange for patient referrals, the Justice Department announced today. The government also has joined in the allegations in one of these lawsuits that Gary Newsome, HMA’s former CEO, directed HMA’s corporate practice of pressuring emergency department physicians and hospital administrators to raise inpatient admission rates, regardless of medical necessity. HMA operates 71 hospitals in 15 states: Alabama, Arkansas, Florida, Georgia, Kentucky, Mississippi, Missouri, North Carolina, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, Washington and West Virginia.
“Unlawful financial relationships between hospitals and physicians solely to increase referrals are, unfortunately, a common practice that corrupts the health care system,” said U.S. Attorney for the Southern District of Florida Wifredo A. Ferrer. “The system also suffers a direct financial hit when hospitals fraudulently increase admissions where they are not indicated, solely to benefit hospitals’ bottom line. We will not relent in our efforts to combat these kinds of fraudulent schemes and recover funds for the Medicare program.”
“The Department of Justice is committed to ensuring that health care providers who attempt to misuse federal health care programs for their own profit are held accountable,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery. “Schemes such as this one can contribute significantly to the rising cost of delivering health care and create needless patient risk.”
The lawsuits allege that HMA’s corporate officers, at the direction of Newsome, exerted significant pressure on doctors in the emergency department to admit patients who could have been placed in observation, treated as outpatients or discharged, and that this resulted in the submission of inflated or false claims to federal health care programs. One lawsuit also alleges that patients were improperly admitted for scheduled surgical procedures that should have been done on an outpatient basis. The complaints further allege that HMA paid kickbacks, either in the form of bonuses or awarded contracts, to physician groups staffing HMA emergency rooms to induce the physicians to admit patients unnecessarily.
In addition, the lawsuits allege that HMA paid kickbacks to other physician groups to induce referrals. For example, HMA allegedly provided improper remuneration, both through the provision of free office space and staffing and through direct payments, to Primary Care Associates, a physician practice group in Port Charlotte, Fla., in exchange for referrals to two HMA hospitals in Florida. HMA also allegedly paid kickbacks to physicians in Lancaster, Pa., by paying inflated prices for physician-owned assets, providing sham medical directorship contracts and selling assets to physicians for below fair market value.
The Anti-Kickback Statute prohibits offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by Medicare, Medicaid and other federally funded programs. The Stark Statute prohibits a hospital from submitting claims for patient referrals made by a physician with whom the hospital has an improper financial arrangement. Both the Anti-Kickback Statute and Stark Statute are intended to ensure that a physician’s medical judgment is not compromised by improper financial incentives and is instead based on the best interests of the patient.
“This intervention decision marks the culmination of a lengthy and comprehensive investigation into a variety of serious fraud allegations against one of our district’s largest health care providers,” said Acting U.S. Attorney for the Middle District of Florida A. Lee Bentley III. “We hope that this case will serve as a reminder to our provider community that this office is fully engaged in the struggle against misconduct of this kind.”
“Improper hospital admissions cost the government millions of dollars in unnecessary fees and subject patients to excessive treatment and needless risk, driving up the cost of health care,” said U.S. Attorney for the Western District of North Carolina Anne M. Tompkins. “The government will pursue aggressively providers that boost their profits at the expense of Medicare and other government programs.”
“HMA’s submission of claims to Medicare, Medicaid and TRICARE for unnecessary inpatient stays is a serious matter that threatens the integrity of our entire health care system, and the end result is that those who need health care cannot afford it,” said U.S. Attorney for the Middle District of Georgia Michael J. Moore. “The Middle District of Georgia is committed to fighting health care fraud.”
“Investigations such as these are a very high priority for the FBI because of the potential impact to the nation’s health care system and to the public,” said FBI Assistant Director Ron Hosko. “Because of the priority nature of these cases as well as their complexity, we have created a centralized team to provide nationwide support to our field offices called the Major Provider Response Team. The FBI is committed to working with our partners in these types of investigations and appreciates the public’s involvement in the process.”
The lawsuits were filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private parties to sue on behalf of the government when they believe that defendants submitted false claims for government funds and to receive a share of any recovery. The False Claims Act also permits the government to intervene in such lawsuits, as it has done in these cases. The eight lawsuits are pending in the Southern and Middle Districts of Florida, Middle District of Georgia, Northern District of Illinois, Western District of North Carolina, Eastern District of Pennsylvania and District of South Carolina.
The government’s intervention in these matters illustrates its emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by Attorney General Eric Holder and Health and Human Services Secretary Kathleen Sebelius. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $17 billion through False Claims Act cases, with more than $12.2 billion of that amount recovered in cases involving fraud against federal health care programs.
These matters were investigated by the Commercial Litigation Branch of the Justice Department’s Civil Division; the U.S. Attorney’s Offices for the Southern and Middle Districts of Florida, Middle District of Georgia, Northern District of Illinois, Western District of North Carolina, Middle and Eastern Districts of Pennsylvania and District of South Carolina; the Department of Health and Human Services Office of Inspector General and the Federal Bureau of Investigation.
The cases are captioned United States ex rel. Paul Meyer v. Health Mgmt. Assocs. Inc., et al.,11-62445 cv-Williams (S.D. Fla.); United States ex rel. Brummer v. Health Mgmt. Assocs. Inc., et al.,3-09-cv-135 (CDL)(M.D. Ga.); United States ex rel. Williams v. Health Mgmt. Assocs. Inc. et al., 3:12-cv-151 (M.D. Ga.); United States ex rel. Plantz v. Health Mgmt. Assocs. Inc., et al., 13C-1212 (N.D. Ill.); United States ex rel. Miller v. Health Mgmt. Assocs. Inc., et al., 10-3007 (E.D. Pa.); United States ex rel. Mason v. Health Mgmt. Assocs. Inc., et al., 3:10-CV-472-GCM (W.D.N.C.); United States ex rel. Nurkin v. Health Mgmt. Assocs. Inc., et al., 2:11-cv-14-FtM-29DNF (M.D. Fla.); United States ex rel. Jacqueline Meyer & Cowling v. Health Mgmt. Assocs. Inc., et al.; 0:11-cv-01713-JFA (D.S.C.).
The claims asserted against HMA and Newsome are allegations only, and there has been no determination of liability.
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.