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Tuesday 1 January 2013
Cahokia Man Sentenced for Firearm OffenseRead the Press Release
Dartayous R. Moore, 34, from Cahokia, IL, was sentenced on March 25, 2013, in District Court in East St. Louis, IL, on one count of Unlawful Possession of a Firearm by a Previously Convicted Felon, the United States Attorney for the Southern District of Illinois, Stephen R. Wigginton, announced today.
Moore was sentenced to 57 months in prison, one year of supervised release, fined $300 and ordered to pay $100 special assessment. Moore, who previously pled guilty, admitted that a firearm recovered during a law enforcement response to a disturbance at a residence in Washington Park, IL, on August 13, 2012, belonged to him. He forfeited the firearm. Moore admitted that he had possessed the gun, knowing that he was a convicted felon and knowing that it was illegal for him to have a gun.
The investigation was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives, and prosecuted by Special Assistant United States Attorney Matthew H. Brooks.
Blackstone Man Sentenced to Life for Using A Firearm to Murder an Individual at Veteran's HospitalRead the Press Release
RICHMOND, Va. – Cornelius I. Hayes, 56, of Blackstone, Va., was sentenced today to life in prison for the murder of James Stephenson Lee in the parking lot of the Veteran’s Administration Hospital in Richmond, Va., on Feb. 22, 2012.
Neil H. MacBride, United States Attorney for the Eastern District of Virginia; Jeffrey C. Mazanec, Special Agent in Charge of the FBI’s Richmond Field Office; and Kim Lampkins, Special Agent in Charge, Department of Veterans Affairs, Office of Inspector General, made the announcement after the sentencing by United States District Court Judge Henry E. Hudson.
“Cornelius Hayes executed a friend in broad daylight; chased his girlfriend at gunpoint; and then shot at and left for dead, someone who had come to help,” said U.S. Attorney MacBride. “Today’s sentence is just punishment for this senseless and callous violence that endangered everyone at the VA Medical Center that fateful morning.”
“Mr. Hayes’ cold-blooded and egregious actions against these victims, including innocent bystanders from the surrounding community, cannot be tolerated and merit today’s sentencing,” said Special Agent in Charge Mazanec.
Hayes pled guilty on Sept. 25, 2012, to use of a firearm in relation to a violent crime causing the death of another. In documents filed with the court, Hayes admitted to approaching Lee and a female in the parking of the Hunter Holmes McGuire Veteran Administration Medical Center on Feb. 22, 2012. After a brief verbal confrontation with the female, Hayes brandished a .38-caliber revolver and shot Lee in the shoulder. Hayes chased the female a short distance, only to return to Lee, and shoot him a second time in the head. Lee died as a result of the gunshots fired by Hayes.
This case was investigated by the FBI’s Richmond Field Office and the Veteran’s Administration-Office of the Inspector General. Assistant United States Attorneys Peter S. Duffey and Erik S. Siebert prosecuted the case on behalf of the United States.
A copy of this press release may be found on the website of the United States Attorney's Office for the Eastern District of Virginia at http://www.justice.gov/usao/vae. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia at http://www.vaed.uscourts.gov or on https://pcl.uscourts.gov.Ansonia Man Sentenced to More Than Nine Years in Federal Prison for Illegally Possessing FirearmsRead the Press Release
February 1, 2013David B. Fein, United States Attorney for the District of Connecticut, announced that DERRICK FOGLE, 33, of Ansonia, was sentenced today by Senior United States District Judge Ellen Bree Burns in New Haven to 110 months of imprisonment, followed by three years of supervised release, for unlawfully possessing firearms.
According to court documents and statements made in court, on December 21, 2010, FOGLE possessed a Ruger P-89 nine millimeter handgun that was reported stolen. The firearm had an extended clip loaded with 16 rounds of ammunition. After subsequent investigation into FOGLE’s crack cocaine trafficking, law enforcement officers executed a search warrant at his residence on June 22, 2011. The search revealed a Charter Arms Inc. Police Undercover .38 Special handgun loaded with six rounds of .38 caliber ammunition, an additional nine millimeter bullet, numerous plastic bags consistent with those used in packaging controlled substances for street-level distribution, three metal razor blades, a digital scale containing powder residue, several small pieces of crack cocaine, and four cellular telephones.
FOGLE has nine prior felony convictions. It is a violation of federal law for a person previously convicted of a felony offense to possess a firearm or ammunition that has moved in interstate or foreign commerce.
FOGLE was detained in state custody from June 22, 2011 until approximately January 8, 2012 on related state charges. He has been detained in federal custody since January 19, 2012.
On June 7, 2012, FOGLE pleaded guilty to one count of possession of a firearm by a convicted felon.
This case was investigated by the Ansonia Police Department, the Shelton Police Department, and the Drug Enforcement Administration, with substantial assistance provided by the Bureau of Alcohol, Tobacco, Firearms and Explosives. The case was prosecuted by Assistant United States Attorney Marc H. Silverman.
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Monday 31 December 2012
Justice Department Announces Successful Resolution of Case Regarding Delaware State PrisonsRead the Press Release
The Justice Department announced that the state of Delaware has fully complied with the parties’ amended memorandum of agreement (MOA) which was reached after an investigation of three Delaware state prisons. The MOA, which includes reforms in mental health care, medical care and suicide prevention, was entered into after an investigation of the conditions at the James T. Vaughn Correctional Center, the Howard R. Young Correctional Institution and the Sussex Correctional Institution.
“Prisons are a critical component of the public safety system. The conditions in prisons affect not only those confined there, but the staff, prisoners’ families and the community at large,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “We commend the state for its successful efforts to improve medical and mental health care for Delaware inmates, and for its commitment to ensuring that the constitutional rights of inmates are protected. In the Justice Department’s view, the state of Delaware has met the requirements necessary for termination of the amended memorandum of agreement.”
Among other reforms, the state established the Bureau of Correctional Healthcare Services, which, with the department’s input, designed and implemented an excellent continuous quality improvement program which has become a sought-after model among other states and municipalities.
In December 2006, the department and state entered into the original MOA to resolve the department’s findings of unlawful conditions at the facilities, following a comprehensive investigation under the Civil Rights of Institutionalized Persons Act (CRIPA) which began in March 2006. The settlement called for broad reforms in areas related to medical care, mental health care, and suicide prevention. When the original MOA expired by its terms in December 2009, the department and the state negotiated a successor, the amended MOA, with which the state has achieved substantial compliance, resulting in this termination.
For more information on the Justice Department’s Civil Rights Division, please visit www.justice.gov/crt.
Sunday 30 December 2012
Attorney General Eric Holder Welcomes Bill Baer as Assistant Attorney General for the Antitrust DivisionRead the Press Release
Attorney General Eric Holder today welcomed the confirmation of Bill Baer as the Department of Justice’s Assistant Attorney General for the Antitrust Division.
“Bill is a highly-skilled and well-respected antitrust lawyer who understands the importance of promoting competition in order for consumers to reap the benefits of lower prices and better quality products and services,” said Attorney General Holder. “I have no doubt that he will lead the Antitrust Division effectively in its vigorous enforcement of the antitrust laws.”
Since January 2000, Baer was a partner and head of Arnold & Porter LLP’s Antitrust Practice Group in Washington, D.C. Baer’s practice included providing counsel on a broad range of antitrust and consumer protection issues, including international cartel investigations and merger and acquisition reviews in the United States and the European Commission. He has extensive antitrust experience in various industries, including high tech, intellectual property, communications and health care. Baer also served as a partner at the firm from 1983 to 1995 and as an associate from 1980 to 1983. During that time, Baer specialized in complex civil and criminal antitrust litigation.
From April 1995 to October 1999, Baer was the Federal Trade Commission’s (FTC) Director of the Bureau of Competition. During that time, the FTC achieved significant enforcement successes, including blocking anticompetitive mergers involving two major office supply stores and of the four leading drug wholesalers. Under his leadership, the commission also successfully challenged exclusionary practices in a variety of industries, including toys, high tech and the leading brand name and generic drug manufacturers. From 1975 to 1980, Baer also served in other positions at the FTC, including Assistant General Counsel for Legislation & Congressional Relations, Assistant to Chairman Michael Pertschuk, and as a trial attorney and Assistant to the Director of the Bureau of Consumer Protection.
Baer is a member of the American Bar Association’s Antitrust Section. He has lectured in the United States and around the world on various antitrust and consumer protection issues.
Baer received his J.D. from Stanford Law School in 1975, and served as editor of Stanford’s Law Review. He received his B.A. from Lawrence University in 1972 where he graduated Cum Laude and Phi Beta Kappa.
Friday 28 December 2012
Federal Court Bars Alleged Co-Owner of Las Vegas Instant Tax Service Franchise from Preparing Tax ReturnsRead the Press Release
A Nevada federal court has permanently barred Benyam Tewolde from preparing tax returns for others, the Justice Department announced today. Tewolde and his wife, Yordanos Kidanits, are the alleged co-owners of an Instant Tax Service franchise that operates at multiple locations in the Las Vegas area. Instant Tax Service is a nationally franchised tax preparation company based in Dayton, Ohio.
Kidantis and the franchisee, Koraggio LLC, were also permanently enjoined from engaging in certain abusive practices. The civil injunction orders, to which the defendants consented without admitting the allegations against them, were signed on Dec. 27 by Judge Miranda M. Du of the U.S. District Court for the District of Nevada.
According to the government complaint, the defendants helped employees at their Instant Tax Service franchise offices to engage in a variety of misconduct, including:
- Preparing phony tax-return forms with fabricated businesses and income,
- Falsely claiming education credits,
- Claiming false filing status,
- Claiming false dependents,
- Selling deceptive loan products,
- Filing tax returns without customer consent or authorization, and
- Preparing bogus W-2 forms, based on information from employee paystubs
The complaint further alleged that Tewolde personally prepared fraudulent returns.
The injunction permanently bars Tewolde from preparing or filing federal tax returns for others, training tax preparers and owning or managing a tax preparation business.
Kidane and Koraggio are enjoined from violating the federal tax laws and consumer protection laws. The court order requires them to hire a monitor at their expense who will periodically report to the Justice Department to ensure compliance with the injunction. The order also bars Kidane and Koraggio from marketing abusive loan products, including holiday, or instant cash loan or advance products offered to customers based on information obtained from the customer’s paystub.
The case is one of five similar lawsuits that the Justice Department brought against Instant Tax Service franchises earlier this year. One of those suits is pending against the nationwide franchisor of Instant Tax Service and its owner, Fesum Ogbazion, in Dayton. The court in that case has entered a preliminary injunction , and trial on the government’s request to shut down the Instant Tax Service franchisor permanently is scheduled for next May.
In the past decade, the Justice Department’s Tax Division has obtained hundreds of injunctions to stop the promotion of tax-fraud schemes and the preparation of fraudulent returns. Information about these cases is available on the Justice Department’s website .
Department Reaches Settlement with Custer County and the State of Idaho for Cooperation over Roads on Federal LandRead the Press Release
BOISE, Idaho – The Department of Justice and the U.S. Bureau of Land Management announced today – Dec. 28, 2012 – a settlement of the United States’ federal court lawsuit against Custer County and the State of Idaho concerning county action on roads and trails on federal land in Custer County. The Environment and Natural Resources Division of the Department of Justice initially filed suit in the U.S. District Court for the District of Idaho to halt the county’s threatened actions to reopen a section of the Herd Creek Road that adjoins the Jerry Peak Wilderness Study Area, which section BLM had closed in 1999. After the Honorable B. Lynn Winmill, Chief District Judge for the U.S. District Court for the District of Idaho, issued an order temporarily restraining the county from taking any action to reopen the road without BLM's approval, the parties reached an agreement to resolve the dispute.
Under the terms of the agreement, Custer County has agreed to refrain from any on-the-ground action affecting roads and trails on federal land without the agreement of federal land management agencies or prior court approval. The County further agrees it will not interfere with any federal employees or agents in the lawful commission of their official activities. In return, the United States agrees to dismiss the lawsuit.
“I am pleased that Custer County has agreed to work together with federal land managers to avoid disputes over the management of federal lands, including public lands managed by the Challis Field Office of the Bureau of Land Management and lands managed by the U.S. Forest Service,” said Ignacia Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. “This settlement furthers both the BLM's and Forest Service's mission to address important interests on federal lands, including protecting public health and safety, wilderness values, and the environment.”
“I commend the cooperation shown by Custer County and our federal land management agencies in reaching this settlement,” said Wendy J. Olson, U.S. Attorney for Idaho. “Under this settlement, the BLM and the Forest Service can continue to manage and protect our public resources in a way that benefits all Idahoans, indeed the entire country.”
Thursday 27 December 2012
Victory Pharma Inc. of San Diego Pays $11.4 Million to Resolve Kickback Allegations in Connection with Promotion of Its DrugsRead the Press Release
Victory Pharma Inc., a specialty pharmaceutical company headquartered in San Diego, has agreed to pay $11,420,743 to resolve federal civil and criminal liability arising from its marketing of the pharmaceutical products Naprelan, Xodol, Fexmid and Dolgic, the Justice Department announced today. Under the agreement announced today, Victory entered into a deferred prosecution agreement and paid a criminal forfeiture of $1.4 million to resolve federal Ant-Kickback Statute allegations, and paid $9,938,310 to resolve False Claims Act allegations.
The settlement resolves allegations that Victory engaged in a scheme to promote its drugs by paying kickbacks to doctors to induce them to write prescriptions for Victory’s products, including prescriptions for patients covered by Medicare and other federal health insurance programs. The kickbacks included tickets to professional and collegiate sporting events; tickets to concerts and plays; spa outings; golf and ski outings; dinners at expensive restaurants; and numerous other out-of-office events. Victory also encouraged its sales representatives to schedule paid “preceptorships,” which involved sales representatives “shadowing” doctors in their offices. The settlement also resolves allegations that Victory improperly used these preceptorships to induce doctors to prescribe Victory’s products.
“Kickback schemes undermine the integrity of medical decisions, subvert the health marketplace and waste taxpayer dollars,” said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Civil Division. “We will continue to hold accountable those who refuse to play by the rules and provide illegal incentives to influence the decision making of health care providers.”
“This resolution underscores the need for physicians to make treatment decisions based on their own independent medical judgment, without being influenced by kickbacks or other improper benefits,” said Laura E. Duffy, U.S. Attorney for the Southern District of California. “Protecting taxpayers from health care fraud is a priority of this office. We will continue to work closely with our investigative partners in taking both criminal and civil measures to combat health care fraud.”
The settlement resolves a False Claims Act lawsuit filed in the Southern District of California by Chad Miller, a former sales representative for Victory. The whistleblower, or qui tam, provisions of the False Claims Act permit the whistleblower (or relator) to obtain a portion of the proceeds obtained by the federal government. As part of today’s resolution, Mr. Miller will receive $1.7 million.
“Patients expect health care providers to be concerned only with patients’ best medical interests,” said Glenn R. Ferry, Special Agent in Charge for the U.S. Department of Health and Human Services Office of Inspector General Los Angeles region. “Financial kickbacks betray that patient trust, and taxpayers’ expectation that federal and state health dollars be put only to the wisest use.”
FBI Special Agent in Charge Daphne Hearn commented, “Many laws of this nation are put in place to protect our citizens from corrupt practices that may endanger our health and safety. When individuals or businesses operate outside of the fence in order to turn a bigger profit the FBI will pursue them in the justice system.”
Chris Hendrickson, Special Agent in Charge, Western Field Office, Defense Criminal Investigative Service, stated: “The Department of Defense is committed to its partnership with the Department of Justice and other federal and state enforcement agencies to aggressively pursue those who take advantage of taxpayer-funded health care systems for illicit gain. Doctors providing services to our military members and their families should be free from undue influence in prescribing medicines and other care decisions, and DCIS will act swiftly against those who engage in these illegal and unethical acts.”
This settlement is the result of a coordinated effort by the Department of Justice, Civil Division, Commercial Litigation Branch; the U.S. Attorney’s Office for the Southern District of California; the FBI; and the Offices of Inspectors General for Health and Human Services, the Department of Defense, the Department of Labor, the U.S. Postal Service, the Veteran’s Administration, and the Office of Personnel Management.
This resolution is part of the government’s emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009. 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 that effort is the False Claims Act, which the Justice Department has used to recover $10.1 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department's total recoveries in False Claims Act cases since January 2009 are over $13.9 billion.
Caddell Construction Co. Commits to Pay $2 Million Penalty<br /> in Agreement to Resolve Criminal Fraud ViolationsRead the Press Release
WASHINGTON – Caddell Construction Company Inc., a major commercial and industrial federal government construction contractor based in Montgomery, Ala., has entered into an agreement with the Department of Justice to resolve criminal fraud violations arising from Caddell’s intentional overstating of developmental assistance provided to a disadvantaged small business as part of a Department of Defense (DoD) program. The agreement, including a $2 million penalty to be paid by Caddell, was announced today by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.
According to the non-prosecution agreement (NPA) between the government and Caddell, in February 2003, Caddell entered into an agreement with Mountain Chief – which is certified as a Native American, woman-owned and economically-disadvantaged small business – to participate in the DoD’s Mentor-Protégé Program, in which major DoD contractors (mentor firms) contract with and provide developmental assistance to disadvantaged small businesses (protégé firms) and are reimbursed by the DoD for related costs.
Around the same time, Caddell began participating with Mountain Chief in DoD’s Indian Incentive Program, which provides incentives – in the form of a rebate of 5 percent of the total dollar amount of work – for major DoD contractors to engage Native-American-owned businesses as subcontractors and suppliers. Caddell and Mountain Chief participated in these programs in connection with two DoD construction contracts at Fort Bragg, N.C., each worth approximately $65 million and a DoD construction project at Fort Campbell, Ky., worth approximately $34 million.
According to the NPA, from February 2004 to March 2005, Caddell submitted more than 20 requests for payment to the DoD in connection with the Mentor-Protégé Program that significantly overstated the amount of developmental assistance Caddell had provided Mountain Chief. In addition, Caddell filed documents falsely stating Mountain Chief’s size and income, as well as the status of Mountain Chief’s technical capabilities and business infrastructure. From April 2003 to October 2004, Caddell also submitted at least eight requests to the DoD for the Indian Incentive Program, for rebates based on services purportedly performed on subcontracts Caddell gave to Mountain Chief. Mountain Chief performed few, if any of these services, and the invoices were created solely to support Caddell’s applications for payment.
As part of the NPA, Caddell will pay a $2 million criminal penalty, and must cooperate with the Department of Justice for the two-year term of the agreement. The agreement recognizes Caddell’s voluntary disclosure; thorough self-investigation of the underlying conduct; and full cooperation with the department and remedial measures already undertaken and to be undertaken, including employment actions and improving reporting systems, corporate governance, and compliance training and oversight. As a result of these factors, among others, the department agreed not to prosecute Caddell for the improper pay requests, provided Caddell satisfies its ongoing obligations under the agreement.
In January 2012, Daniel W. Chattin, 50, of Granite Bay, Calif., the son of Mountain Chief’s owner and a project manager and consultant for Mountain Chief, and Mark L. Hill, 57, of Montgomery, Ala., the Mentor-Protégé Program Coordinator and a director of business development at Caddell, were indicted in the Middle District of Alabama on three counts of major fraud against the United States stemming from the same scheme. In addition, Hill was charged with one count of making a false statement to the DoD. Chattin and Hill await trial, which is scheduled to begin on April 22, 2013. The charges and allegations against Chattin and Hill are merely accusations and they are considered innocent unless and until proven guilty.
This investigation is being conducted by the General Services Administration – Office of Inspector General, and the DoD’s Defense Criminal Investigative Service. This case is being handled by Assistant Chief Albert B. Stieglitz Jr. and Trial Attorney Thomas B.W. Hall of the Criminal Division’s Fraud Section.
Wednesday 26 December 2012
Illinois-based Hardware Distributor W.W. Grainger Pays US<br /> $70 Million to Resolve False Claims Act AllegationsRead the Press Release
W.W. Grainger Inc. has agreed to pay the United States $70 million to resolve allegations that it submitted false claims under contracts with the General Services Administration (GSA) and the U.S. Postal Services (USPS), the Department of Justice announced today. Grainger is a national hardware distributor headquartered in Lake Forest, Illinois.
Grainger entered into a contract to sell hardware products and other supplies to government customers through the GSA’s Multiple Award Schedule (MAS) program. The MAS program provides the government and other GSA-authorized purchasers with a streamlined process for procurement of commonly-used commercial goods and services. To be awarded a MAS contract, and thereby gain access to the broad government marketplace, contractors must agree to disclose their commercial pricing policies and practices to assist the government in negotiating the terms of the MAS contract.
Today’s settlement resolves issues discovered during a GSA post-award audit of Grainger’s MAS contract. The GSA Office of Inspector General learned that Grainger failed to meet its contractual obligations to provide the GSA with current, accurate and complete information about its commercial sales practices, including discounts afforded to other customers. As a result, government customers purchasing items under the Grainger MAS contract paid higher prices than they should have.
In addition, today’s settlement resolves allegations that Grainger failed to meet its contractual obligations to provide “most-favored customer” pricing under two USPS contracts for sanitation and maintenance supplies. The USPS contracts required Grainger to treat USPS as Grainger’s “most-favored customer” by ensuring that USPS received the best overall discount that Grainger offered to any of its commercial customers. Agents and auditors from the USPS Office of Inspector General (OIG) investigated Grainger’s pricing practices and discovered that Grainger did not consistently adhere to this requirement, causing USPS to pay more than it should have for purchases made under the two contracts.
“Misrepresentations during contract negotiations undermine the integrity of the government procurement process,” said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Civil Division. “The Justice Department is committed to ensuring that government purchasers of commercial products receive the prices to which they are entitled.”
“The substantial payment by Grainger reflects the Justice Department’s focused and productive work in the economic interests of our citizen constituents,” commented United States Attorney James L. Santelle of the Eastern District of Wisconsin. “This settlement shows that we are committed to ensuring that false claims are investigated fully and pursued effectively so that government monies are used properly and the integrity of our contracting system is upheld.”
“This case is another demonstration of the value of the work performed by Inspectors General ,” said GSA Inspector General Brian D. Miller. “Our auditors and agents worked tirelessly to reach this critical settlement.”
“The U.S. Postal Service Office of Inspector General aggressively pursues instances of contracting improprieties that negatively impact the Postal Service and cause unnecessary expenses. We appreciate the partnership of the Civil Divisions of the Department of Justice and the United States Attorney’s Office for their support in this case,” said Joanne Yarbrough, Special Agent-in-Charge of the OIG’s Major Fraud Investigations Division.
This settlement was the result of a coordinated effort by the Commercial Litigation Branch of the Justice Department’s Civil Division; the U.S. Attorney’s Office for the Eastern District of Wisconsin; the GSA Office of Inspector General; and the USPS Office of Inspector General and Office of General Counsel. The claims settled by this agreement are allegations only, and there has been no determination of liability.
Friday 21 December 2012
Justice Department Seeks to Shut Down Georgia Tax PreparersRead the Press Release
The United States has asked a federal court in Atlanta to bar Larry J. Heath, who operates Heath’s Income Tax II in Cartersville, Ga., and his brother Andrew R. Heath, who operates Excellent Tax Service of Acworth, Ga., from preparing tax returns for others, the Justice Department announced today. According to the government complaint, the Heaths and their businesses have repeatedly prepared federal tax returns that unlawfully understate customers’ federal tax liabilities. The suit alleges that the defendants concoct bogus losses, expenses, education credits, business expenses and charitable contributions, which they falsely report on their customers’ federal income tax returns.
According to the complaint, the Internal Revenue Service (IRS) previously suspended Larry Heath’s IRS-issued electronic filing identification number (EFIN) because of the large number of erroneous returns he prepared. In response, the complaint alleges, Larry Heath purported to “sell” his business to two different individuals and used their EFINs to continue to file tax returns.
The suit alleges that the IRS has examined thousands of income tax returns prepared by the Heaths and their businesses and found that 94.5 percent of tax returns required IRS adjustments. According to the complaint, the total harm to the U.S. Treasury caused by Larry and Andy Heath’s misconduct could exceed $100 million.
Claiming bogus tax refunds is one of the IRS’s Dirty Dozen Tax Scams . In the past decade, the Justice Department’s Tax Division has obtained injunctions against hundreds of tax fraud promoters and unscrupulous tax preparers. Information about these cases is available on the Justice Department website .
Related Materials:
Heath Injunction Complaint
United States v. Larry J. Heath, et al.
Complaint for Permanent Injunction and Other Relief (PDF)Justice Department Enters into Agreement to Reform the Puerto Rico Police DepartmentRead the Press Release
The Justice Department (DOJ) today entered into a sweeping agreement with the Commonwealth of Puerto Rico and Governor Luis Fortuño to resolve its civil investigation of the Puerto Rico Police Department (PRPD). The complaint and the agreement were filed today in the U.S. District Court of Puerto Rico, along with a joint motion requesting a temporary stay of the proceedings until April 15, 2013 to provide the incoming administration of Governor-elect Alejandro García Padilla sufficient time to review the agreement.
The comprehensive agreement addresses wide-ranging and ongoing constitutional violations by PRPD that were documented in a lengthy DOJ report issued in September 2011. The department found reasonable cause to believe that PRPD engages in a pattern or practice of use of excessive force, use of unreasonable force designed to suppress protected speech, and unconstitutional searches and seizures. The agreement also addresses allegations that PRPD fails to investigate sex crimes and domestic violence, and engages in discriminatory policing.
“We appreciate the hard work of Governor Fortuño, Superintendent Hector Pesquera, and their staff. Together, and with great input from the public, we have designed a comprehensive blueprint for reform that provides a solid foundation that will professionalize and support the hardworking men and women of PRPD as they protect the people of Puerto Rico,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “We have also met with Governor-elect Garcia-Padilla, who recognizes that constitutional policing and effective policing go hand in hand. We look forward to working with Governor-elect García Padilla and his incoming administration to finalize the agreement and begin the critical work of rebuilding PRPD. Ensuring effective, constitutional policing is not a partisan issue, and we appreciate the commitment of Governor Fortuño and Governor-elect García Padilla to the reforms embodied in the agreement. The successful implementation of the reforms contained in this agreement will help to reduce crime, ensure respect for the Constitution and restore public confidence in PRPD.”
Today’s agreement was reached after extensive negotiations with commonwealth officials and their police consultants. The agreement provides a comprehensive blueprint for meaningful, sustainable reform and reflects the input of many community stakeholders from throughout the Commonwealth, including police affinity groups, members of the Puerto Rico business community, students, representatives of the Dominican community, and members of the lesbian, gay, bisexual, transsexual and transgender communities.
The agreement addresses the policies, procedures, training, internal and external oversight, disciplinary systems and information and data integrity mechanisms that caused or contributed to the pattern or practice of misconduct. It also details necessary changes intended to ensure that police services are delivered to the people of Puerto Rico in a manner that is effective, complies with the Constitution, and promotes the community’s trust in PRPD. For instance, the agreement contains provisions that are designed to increase transparency and promote PRPD’s responsiveness to the community, including measures that require regular meetings with community representatives to facilitate cooperation and communication; collection and dissemination of accurate and up-to-date crime statistics; community outreach programs in each PRPD region; and independent and periodic compliance assessments that are available to the public.
The purpose of the joint motion requesting a temporary stay of the proceedings is to provide the incoming administration with a meaningful opportunity to review the agreement. The department and representatives of Governor Fortuño have met independently with Governor-elect García Padilla and his transition team to brief them on the investigation’s findings and the agreement. The stay, requested until April 15, 2013, will provide Governor-elect García Padilla and his incoming administration with a meaningful opportunity to review the agreement, and either accept it or negotiate necessary changes, before the department and Commonwealth request approval and entry of the agreement as an order. During this period, the department will continue its ongoing outreach into communities across Puerto Rico to seek input and feedback. Once approved and entered by the district court, the agreement will resolve the department’s civil action, and the implementation phase will immediately begin.
A copy of the complaint, the agreement, the joint motion to stay the proceedings, and September 2011 letter of findings can be found at www.justice.gov/crt .
Related Materials:
PRPD Summary of Agreement
PRPD Complaint
PRPD Agreement
PRPD Joint MotionJustice Department Announces Agreement with the State of New Hampshire on Bailout of Covered Jurisdictions Under the Voting Rights ActRead the Press Release
The Justice Department announced today that it has reached an agreement with the State of New Hampshire that will allow for all 10 of the towns in that state that are covered jurisdictions under the special provisions of the Voting Rights Act to bail out from coverage by these provisions. These 10 covered jurisdictions are the towns or townships of Antrim, Benton, Boscawen, Millsfield, Newington, Pinkham’s Grant, Rindge, Stewartstown, Stratford, and Unity, in New Hampshire. Bailout would exempt these 10 towns, along with local school districts within these towns, from the preclearance requirements of Section 5 of the Voting Rights Act. The agreement is in the form of a consent decree filed today in the U.S. District Court for the District of Columbia and must be approved by the court.
“In the department’s view, these covered towns and townships have met the requirements necessary for bailout. We reached this conclusion after thoroughly reviewing information provided by the State and the covered jurisdictions gathered during the department’s independent investigation,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “I commend the State and the covered jurisdictions on their cooperation to ensure resolution of this matter.”
Under Section 5 of the Voting Rights Act, certain covered jurisdictions, determined according to Section 5 of the act, are required to seek preclearance for any changes in voting qualifications, standards, practices or procedures from the U.S. District Court for the District of Columbia or from the U.S. attorney general, prior to their implementation. Section 5 of the act provides that a covered jurisdiction may seek to “bail out,” or remove itself from such coverage, and therefore be exempted from the preclearance requirements, by seeking a declaratory judgment before a three-judge panel in the U.S. District Court for the District of Columbia. A bailout judgment can be issued only if the court determines that the jurisdiction meets certain eligibility requirements for bailout contained in the statute, including a 10-year record of nondiscrimination in voting-related actions. The act also provides that the attorney general can consent to entry of a judgment of bailout only if, based upon investigation, the attorney general is satisfied that the jurisdiction meets the eligibility requirements.
The state of New Hampshire filed its bailout action on behalf of the 10 covered towns and townships in the U.S. District Court for the District of Columbia on Nov. 15, 2012. Counsel for the state contacted the attorney general prior to filing the action, indicating that the State was interested in seeking to bailout its covered jurisdictions. The state and covered jurisdictions provided the Justice Department with substantial information, and the department conducted an investigation to determine the covered towns and townships’ eligibility. Based on that investigation, the department is satisfied that the 10 covered towns and townships meet the Voting Rights Act’s requirements for bailout.
The consent decree details the legal and factual basis for a bailout determination and, if approved by the court, the State’s request will be granted. The court will retain jurisdiction of the action for 10 years and can reopen the action upon the motion of the attorney general or any aggrieved person alleging conduct by the towns or townships that would have originally precluded the covered towns or townships from bailing out if it had occurred during the 10-year period preceding entry of the consent decree.
Information about bailout, the Voting Rights Act and other federal voting laws is available on the Department of Justice website at www.justice.gov/crt/voting . Complaints may be reported to the Voting Section of the Justice Department’s Civil Rights Division at 1-800-253-3931.
Related Materials:
New Hampshire Proposed Consent Decree
El Departamento de Justicia realiza acuerdo para la reforma del Departamento de Policía de Puerto RicoRead the Press Release
El Departamento de Justicia [Department of Justice (DOJ)] realizó hoy un acuerdo global con el Estado Libre Asociado de Puerto Rico y el Gobernador Luis Fortuaño en resolución de su investigación civil del Departamento de Policía de Puerto Rico [Puerto Rico Police Department (PRPD)]. La demanda y el acuerdo fueron presentados hoy al Tribunal Federal de Distrito de Puerto Rico, junto con una petición conjunta para el aplazamiento temporal del proceso hasta el 15 de abril de 2013, para brindarle al gobierno entrante del Gobernador electo Alejandro García Padilla tiempo suficiente para examinar el acuerdo.
El acuerdo integral se ocupa de violaciones constitucionales amplias y constantes cometidas por el PRPD que fueron documentadas en una denuncia larga del DOJ emitida en septiembre de 2011. El departamento encontró justificación razonable para creer que el PRPD exhibe un patrón o una práctica de uso de fuerza excesiva, uso de fuerza irrazonable diseñada para suprimir la libertad de expresión, y allanamientos y confiscaciones inconstitucionales. El acuerdo también trata de alegatos de que el PRPD deja de investigar delitos sexuales y violencia doméstica, y realiza acciones policiales discriminatorias.
"Valoramos el arduo trabajo del Gobernador Fortuaño, el Superintendente Héctor Pesquera y los equipos de los mismos. Juntos, y con gran participación del público, hemos diseñado una huella integral para la reforma que brinda una base sólida que profesionalizará y brindará apoyo a los hombres y mujeres trabajadores del PRPD en sus tareas de protección del pueblo de Puerto Rico", dijo Thomas E. Perez, Secretario de Justicia Auxiliar de la División de Derechos Civiles. "También nos hemos reunido con el Gobernador electo García Padilla, quien reconoce que la acción policial constitucional va de la mano con la acción policial efectiva. Nos complacerá trabajar con el Gobernador electo García Padilla y su equipo en finalizar el acuerdo y comenzar la tarea crítica de reconstruir el PRPD. El garantizar una acción policial efectiva y constitucional no es una cuestión partidaria, y valoramos el compromiso asumido por el Gobernador Fortuaño y el Gobernador electo García Padilla para con las reformas reflejadas en el acuerdo. La implementación exitosa de las reformas que contiene este acuerdo ayudarán a reducir la delincuencia, asegurarán el respeto por la Constitución y restaurarán la confianza pública en el PRPD".
El acuerdo de hoy fue alcanzado después de negociaciones amplias con autoridades del estado y sus consultores policiales. El acuerdo brinda una huella integral para una reforma significativa y sostenible y refleja las opiniones de muchos actores de la comunidad de todo el estado, incluidos grupos con afinidad policial, miembros de la comunidad empresaria de Puerto Rico, estudiantes, representantes de la comunidad dominicana y miembros de las comunidades lesbiana, gay, bisexual, transexual y transgénero.
El acuerdo trata de los procedimientos, políticas, capacitación, supervisión interna y externa, sistemas disciplinarios y mecanismos de integridad de la información y de datos que causaron o contribuyeron para el patrón o la práctica de conducta indebida. También detalla cambios necesarios para garantizar que los servicios policiales sean brindados al pueblo de Puerto Rico de manera efectiva, que cumpla con la Constitución y promueva la confianza de la comunidad en el PRPD. Por ejemplo, el acuerdo contiene disposiciones diseñadas para aumentar la transparencia y promover el grado de reacción policial respecto de la comunidad, incluidas medidas que requieren reuniones periódicas con representantes comunitarios para facilitar la cooperación y la comunicación; la recolección y diseminación de estadísticas de delincuencia precisas y actualizadas; programas de extensión comunitaria en cada región del PRPD; y evaluaciones de cumplimiento independientes y periódicas que estén disponibles al público.
La finalidad de la petición conjunta que solicita un aplazamiento temporal del proceso es brindarle al próximo gobierno una oportunidad significativa de examinar el acuerdo. El departamento y representantes del Gobernador Fortuaño se han reunido de manera independiente con el Gobernador electo García Padilla y su equipo de transición para informarles acerca de las conclusiones de la investigación y sobre el acuerdo. El aplazamiento, solicitado hasta el 15 de abril de 2013, le brindará al Gobernador electo García Padilla y su gobierno entrante una oportunidad significativa de examinar el acuerdo y aceptarlo o negociar cambios necesarios, antes de que el departamento y el estado soliciten la aprobación y el asiento del acuerdo en forma de orden. Durante este período, el departamento continuará con sus iniciativas de extensión comunitaria en curso en todo Puerto Rico para pedir opiniones y comentarios. Una vez aprobado y asentado por el tribunal de distrito, el acuerdo resolverá la acción civil entablada por el departamento, y comenzará la fase de implementación de inmediato.
Se encuentra una copia de la demanda, del acuerdo y de la petición conjunta para el aplazamiento del proceso, y la carta de conclusiones de septiembre de 2011 en www.justice.gov/crt.
Material relacionado:
- Resumen del Acuerdo con el PRPD
District Court Enters Permanent Injunction Against New Mexico-Based Producer of Peanut Butter Productsand Company’s President and Chief Executive OfficerRead the Press Release
WASHINGTON - U.S. District Court Judge William P. Johnson entered a consent decree of permanent injunction against Sunland Inc., a Portales, N.M.-based producer of peanut butter, and Jimmie D. Shearer, president and chief executive officer of Sunland, the Justice Department announced today. The department, at the request of the Food and Drug Administration (FDA), asked the court to enter the consent decree.
The Centers for Disease Control and Prevention (CDC) has reported that since September 2012 at least 35 people from 19 states have been infected with a strain of Salmonella Bredeney. Eight of these individuals were hospitalized as a result of their infection. Peanut butter manufactured by Sunland was identified by FDA and the CDC as a likely source of this outbreak.
As set forth in the complaint filed by the United States on December 20, FDA conducted an inspection of defendants’ facility from Sept. 9 to Oct. 16, 2012. According to the complaint, FDA analyses of samples collected during the 2012 inspection confirmed that certain of Sunland’s nut products were contaminated with Salmonella Bredeney and established the widespread presence of Salmonella Bredeney in Sunland’s facility. Salmonella Bredeney is a pathogenic organism that has a reasonable probability of causing serious adverse health consequences or death to humans.
FDA suspended the registration of Sunland’s food facility on Nov. 26, 2012. As the FDA’s suspension letter explained, the FDA’s analysis found that the Salmonella Bredeney detected at Sunland was indistinguishable from the Salmonella Bredeney identified in the multistate outbreak and the FDA’s investigation uncovered a number of practices that likely result in cross-contamination between raw peanuts and peanuts that had been roasted or brined. Specifically, packaging equipment was not effectively cleaned to prevent contamination; collapsible mesh totes used to store and transport nuts were not cleaned and sanitized between uses; employees came into contact with ready to package, roasted, in-shell peanuts with their bare hands; and processing equipment had unused connections that could facilitate the growth of pathogenic bacteria by allowing food material and water to accumulate.
The FDA concluded that unless and until Sunland implemented a number of corrective actions, and FDA evaluated the completed corrective actions to assure their adequacy, food manufactured and held by Sunland would continue to pose a reasonable probability of causing serious adverse health consequences or death to humans or animals.
Shortly after the suspension of Sunland’s registration, the United States filed suit to permanently enjoin Sunland and Shearer from delivering adulterated foods into interstate commerce. The consent decree entered resolves that suit by requiring Sunland to take a wide range of actions to correct its violations and ensure that they do not happen again. Among other actions, Sunland must develop and implement sanitation control programs; provide FDA the opportunity to inspect the facilities to assure Sunland’s compliance with the consent decree, the Food, Drug and Cosmetic Act, and applicable regulations; and receive written authorization from FDA to resume operations. Sunland must also implement testing, monitoring and remediation protocols.“This consent decree prohibits Sunland from selling processed foods to consumers until it fully complies with the law,” said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Justice Department’s Civil Division. “As this case demonstrates, the Department of Justice and FDA will work together to protect the health and safety of Americans by making sure that those who produce and sell the food we eat follow the law.”
Principal Deputy Assistant Attorney General Delery thanked the FDA for referring this matter to the Department of Justice. Roger Gural, Trial Attorney at the Consumer Protection Branch of the Justice Department, in conjunction with Assistant U.S. Attorney Michael Hoses in the District of New Mexico, and Scott Kaplan and Jillian Wein Riley, Counsel at FDA’s Office of the Chief Counsel, brought this case on behalf of the United States.
Thursday 20 December 2012
Ohio-Based Wheelchair Manufacturer Agrees to Consent Decree to Resolve Allegations of Food, Drug and Cosmetic Act ViolationsRead the Press Release
The Justice Department, at the request of the Food and Drug Administration (FDA), today filed a complaint and a proposed consent decree in the U.S. District Court for the Northern District of Ohio against Invacare Corp., Gerald B. Blouch and Ronald J. Clines. The complaint and proposed consent decree are being filed today in accordance with an agreement with the defendants resolving numerous allegations of violations of the Food, Drug and Cosmetic Act (FDCA).
The defendants design, manufacture and distribute powered wheelchairs and powered hospital beds, which are medical devices under the FDCA. Medical device manufacturers are required to comply with the FDA’s Current Good Manufacturing Practices (CGMP) regulatory requirements in order to ensure the safety and effectiveness of their devices.
The FDA conducted multiple inspections of Invacare’s corporate headquarters and Taylor Street manufacturing facility, both located in Elyria, Ohio, between September 2002 and August 2011. Those inspections revealed significant violations of the CGMP regulatory requirements. Many of the violations related to design controls, complaint handling, and corrective and preventive action (CAPA). Those regulations ensure that when a device manufacturer learns that one of its devices has malfunctioned or has caused injury to a patient, the complaint is thoroughly investigated and necessary design changes are implemented. Without such controls, recurring defects may not be identified or corrected, endangering patients who rely on the defendants’ powered wheelchairs and beds.
Under the terms of the agreement reached with the government, the defendants cannot resume manufacturing power wheelchairs or conducting design activities related to wheelchairs and power beds at the two Ohio facilities until an independent expert inspects the company’s operations and certifies that the defendants are in compliance with the law. FDA can then evaluate that certification. Until FDA provides written notification that the facilities are in compliance with the law, they cannot resume operations.
“Today’s proposed consent decree would require Invacare to establish procedures that will help ensure their products are safe and effective for the patients who rely on them,” said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Civil Division of the Department of Justice. “Consumers who need wheelchairs or powered hospital beds should not have to risk being harmed by the very products meant to help them.”
“This resolution underscores the commitment of our office and this department to protecting consumers, particularly those who have to use wheelchairs or hospital beds,” said Steven M. Dettelbach, U.S. Attorney for the Northern District of Ohio.
The matter was handled by the Justice Department’s Consumer Protection Branch, the FDA’s Office of the General Counsel, and the U.S. Attorney’s Office for the Northern District of Ohio.
Justice Department and Lesley University Sign Agreement to Ensure Meal Plan Is Inclusive of Students with Celiac Disease and Food AllergiesRead the Press Release
The Justice Department today announced an agreement with Lesley University in Cambridge, Mass., to ensure that students with celiac disease and other food allergies can fully and equally enjoy the university’s meal plan and food services in compliance with the Americans with Disabilities Act (ADA).
Food allergies may constitute a disability under the ADA. Individuals with food allergies may have an autoimmune response to certain foods, the symptoms of which may include difficulty swallowing and breathing, asthma and anaphylaxis. For example, celiac disease, which is triggered by consumption of the protein gluten (found in foods such as wheat, barley and rye), can cause permanent damage to the surface of the small intestines and an inability to absorb certain nutrients, leading to vitamin deficiencies that deny vital nourishment to the brain, nervous system, bones, liver and other organs. Celiac disease affects about 1 in 133 Americans.
“By implementing this agreement, Lesley University will ensure students with celiac disease and other food allergies can obtain safe and nutritional food options,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The agreement ensures that Lesley’s meal program is attentive to the schedules and demands of college students with food allergies, an issue colleges and universities across the country need to consider.”
Under the settlement, Lesley University agrees to amend its policies and practices to:
· Continually provide ready-made hot and cold gluten- and allergen-free food options in its dining hall food lines;
· Develop individualized meal plans for students with food allergies, and allow those students to pre-order allergen free meals, that can be made available at the university’s dining halls in Cambridge and Boston;
· Provide a dedicated space in its main dining hall to store and prepare gluten-free and allergen-free foods and to avoid cross-contamination;
· Enable students to request food made without allergens, and ensure that a supply of allergen-free food is available;
· Work to retain vendors that accept students’ prepaid meal cards that offer food without allergens;
· Display notices concerning food allergies and identify foods containing specific allergens;
· Train food service and University staff about food allergy related issues;
· Pay $50,000 in compensatory damages to previously identified students who have celiac disease or other food allergies.
The settlement agreement was reached under the ADA, which prohibits discrimination against individuals with disabilities by public accommodations, including colleges and universities, in their full and equal enjoyment of goods, services, and facilities. More information about the Civil Rights Division and the laws it enforces is available at www.justice.gov/crt . More information about the settlement with Lesley University can be found at www.ada.gov or by calling the toll-free ADA Information Line at 800-514-0301 or 800-514-0383 (TTY).
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Justice Department Files Civil Rights Lawsuit Against the Alamance County, N.C., Sheriff’s OfficeRead the Press Release
The Justice Department today filed a civil rights lawsuit against Terry S. Johnson, in his official capacity as head of the Alamance County Sheriff’s Office (ACSO) in North Carolina. The complaint alleges that ACSO routinely discriminates against and targets Latinos for enforcement action, in violation of the U.S. Constitution and Section 14141 of the Violent Crime Control and Law Enforcement Act of 1994.
The lawsuit follows a comprehensive investigation of ACSO’s police practices. The department’s investigation included interviews with over 125 individuals, a review of ACSO policies, procedures, training materials and analysis of data on traffic stops, arrests, citations, vehicle checkpoints, and other documentary evidence. On Sept. 18, 2012, the department issued a formal findings letter detailing ACSO’s discriminatory policing practices and inviting ACSO to negotiate a court-enforceable agreement to remedy the violations found. ACSO declined to enter into meaningful settlement negotiations.
The complaint alleges that ACSO engages in a pattern or practice of discriminatory policing against Latinos in violation of the Equal Protection Clause of the Fourteenth Amendment, the Fourth Amendment and the Violent Crime Control and Law Enforcement Act. The complaint alleges that ACSO’s discriminatory policing activities include:
· ACSO deputies unlawfully target Latino drivers for traffic stops:
o A study of ACSO’s traffic stops on three major county roadways found that deputies were between four and 10 times more likely to stop Latino drivers than non-Latino drivers;
o ACSO deputies arrest Latinos for minor traffic violations while issuing citations or warnings to non-Latinos for comparable violations;
o ACSO deputies use vehicle checkpoints in a discriminatory manner to target Latinos.
· ACSO uses jail booking and detention practices, including practices related to immigration status checks, that discriminate against Latinos.
The complaint further alleges that these discriminatory practices are deeply rooted in a culture that begins with Sheriff Johnson and permeates the entire agency. For example:
· The sheriff and ACSO’s leadership explicitly instruct deputies to target Latinos with discriminatory traffic stops and other enforcement activities;
· The sheriff and ACSO leadership foster a culture of bias by using anti-Latino epithets; and
· ACSO engages in substandard reporting and monitoring practices that mask its discriminatory conduct.
Taken together, these practices violate the constitutional and federal rights of Latinos in Alamance County and undermine ACSO’s ability to serve and protect Alamance County’s Latino residents and the community at large.
“This is an abuse of power case involving a sheriff who misuses his position of authority to unlawfully target Latinos in Alamance County,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “Sheriff Johnson’s directives and leadership have caused ACSO to violate the constitutional rights of Latinos in Alamance County and eroded public trust in ACSO.”
In this lawsuit, the Justice Department seeks a court enforceable, comprehensive, written agreement that will ensure long term structural, cultural and institutional change at ACSO. In particular, ACSO must develop and implement new policies, procedures and training in effective and constitutional policing. Any reform efforts must also include systems of accountability to ensure that ACSO has eliminated unlawful bias from its decision making at all levels.
Members of the Alamance County community who wish to provide information to the Department may call 1-877-871-9726 or email [email protected] . For more information on the Justice Department’s Civil Rights Division, please visit www.justice.gov.crt .
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Federal Inmate in Alabama Pleads Guilty to Tax Fraud Perpetrated While in PrisonRead the Press Release
WASHINGTON – David Marrero, an inmate in the custody of the Federal Bureau of Prisons serving a 10-year sentence for a Florida Medicare fraud scheme, pleaded guilty today in Montgomery, Ala., to filing a false claim for a $2,719,438 tax refund, the Justice Department and Internal Revenue Service (IRS) announced today.
According to court records, while serving a federal sentence in Montgomery County, Ala., Marrero began sending various false documents to the IRS and to the federal judge who had presided over his case. Among the documents he admitted sending were false money orders and false tax returns making claims for refunds. The false tax returns were based upon false IRS Forms 1099-OID that Marrero had fabricated claiming that various companies withheld a substantial amount of federal taxes from him when, in fact, the companies had withheld nothing. Marrero also used financial documents he had obtained from other people, without their knowledge or consent, as supporting documentation for his fraudulent claims.
Under the plea agreement, Marrero faces an additional 46 months in federal prison on top of the 10-year sentence he is currently serving. He also faces a maximum fine of $250,000. A sentencing date has not yet been set by the U.S. District Court in the Middle District of Alabama.
This case was investigated by IRS – Criminal Investigation special agents. Trial Attorneys Justin Gelfand and Jason Poole of the Justice Department’s Tax Division are prosecuting the case.
IRS Form 1099-OID schemes are one of the IRS’s “Dirty Dozen” tax scams for 2012. Additional information about the Tax Division and its enforcement efforts may be found at www.justice.gov/tax.
Department of Justice Will Not Challenge STARS Alliance LLC’s <br /> Joint Procurement ProposalRead the Press Release
WASHINGTON – The Department of Justice today announced that it will not challenge a proposal by STARS Alliance LLC (STARS), a group of seven nuclear power plant operators, to procure jointly certain goods and services. The STARS members each operate single nuclear electric generation plants and seek to obtain efficiencies similar to those of a nuclear fleet operator through the proposed joint procurement.
The department said that, based on representations made by the applicants, the proposed joint procurement was not likely to restrict competition in either the upstream markets for the particular goods and services or the downstream markets for electricity.
The department’s position was stated in a second business review letter to counsel for the STARS Alliance, from Renata B. Hesse, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “The proposed conduct may allow the joint venture to increase efficiencies that result in lower costs for electricity, benefitting consumers,” said Hesse.
On July 3, 2012, the department issued its first business review letter to counsel for STARS stating that the department would not challenge proposed conduct relating to the sharing of resources and coordination of best practices and other operational activities through STARS.
In issuing today’s letter, the department noted that none of the proposed joint procurement involves the sale or purchase of the electric power or the purchase of nuclear fuel, that STARS will adopt measures to prevent anticompetitive exchanges of information and that membership and participation in all of the activities of STARS is voluntary.
The department determined that the expanded joint venture meets the requirements of the antitrust safety zone set forth in Section 4.2 of the Department of Justice’s and Federal Trade Commission’s Collaboration Among Competitors Guidelines. The guidelines provide an “antitrust safety zone” under which, absent extraordinary circumstances, the agencies will not challenge a joint venture when the market shares of the joint venture and its members are not more than 20 percent of each relevant market. STARS represented that its members collectively account for less than 20 percent of each relevant market in which STARS proposed joint procurement.
With respect to electricity, the STARS members, for the most part, are in separate geographic markets and do not compete against each other for the sale of electricity. In the two instances where members both have reactors in the same electricity transmission organization, the members’ nuclear units are not likely to have an impact on price.
The STARS Alliance members are: Union Electric Company, with its Callaway plant in Missouri; Arizona Public Service Company, with its Palo Verde plant in Arizona; Luminant Generation Company LLC, with its Comanche Peak plant in Texas; Pacific Gas and Electric Company, with its Diablo Canyon plant in California; Southern California Edison Company, with its San Onofre plant in California; STP Nuclear Operating Company, with its STP plant in Texas; and Wolf Creek Nuclear Operating Company, with its Wolf Creek plant in Kansas.
Under the department’s business review procedure, an organization may submit a proposed action to the Antitrust Division and receive a statement as to whether the division currently intends to challenge the action under the antitrust laws based on the information provided. The department reserves its right to challenge the proposed action under the antitrust laws if it produces anticompetitive effects.A file containing the business review request and the department’s response may be examined in the Antitrust Division’s Antitrust Documents Group, U.S. Department of Justice, 450 Fifth Street, N.W., Suite 1010, Washington, D.C. 20530. After a 30-day waiting period, the documents supporting the business review will be added to the file, unless a basis for their exclusion for reasons of confidentiality has been established under the business review procedure.
Clinical Director for Miami-based Health Care Clinic Sentenced to Prison for Role in $50 Million Medicare Fraud SchemeRead the Press Release
WASHINGTON – A former clinical director for Biscayne Milieu, a Miami-based mental-health clinic, was sentenced today to 100 months in prison for his participation in a Medicare fraud scheme involving the submission of more than $50 million in fraudulent billings to Medicare, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; Michael B. Steinbach, Acting Special Agent in Charge of the FBI’s Miami Field Office; and Special Agent in Charge Christopher B. Dennis of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), Office of Investigations Miami Office.
Rafael Alalu, 47, of Miami, was sentenced today by U.S. District Judge Robert N. Scola Jr. in the Southern District of Florida. Alalu was convicted on Aug. 24, 2012, of one count of conspiracy to commit health care fraud and two substantive counts of health care fraud, following a two-month jury trial. The evidence at trial showed that Alalu participated in treating ineligible patients, concealing that fact by falsifying patient files and writing fraudulent group therapy notes, and instructing others to do the same. In addition to the prison term, Alalu was ordered to pay more than $5.6 million in restitution, jointly and severally with his co-defendants.
Various owners, doctors, managers, therapists, patient brokers and other employees of Biscayne Milieu have also been charged with various health care fraud, kickback, money laundering and other offenses in two indictments unsealed in September 2011 and May 2012. Biscayne Milieu, its owners, and more than 25 of the individual defendants charged in these cases have pleaded guilty or have been convicted at trial. Antonio and Jorge Macli and Sandra Huarte – the owners and operators of Biscayne Milieu – and Dr. Gary Kushner – its medical director – were each convicted at trial of various offenses and are scheduled for sentencing in March 2013.
According to the evidence at trial, the defendants and their co-conspirators caused the submission of over $50 million dollars in false and fraudulent claims to Medicare through Biscayne Milieu, which purportedly operated a partial hospitalization program (PHP) – a form of intensive treatment for severe mental illness. Instead, the defendants devised a scheme in which they paid patient recruiters to refer ineligible Medicare beneficiaries to Biscayne Milieu for services that were never provided. Many of the patients admitted to Biscayne Milieu were not eligible for PHP because they were chronic substance abusers, suffered from severe dementia and would not benefit from group therapy, or had no mental health diagnosis but were seeking exemptions for their U.S. citizenship applications. The evidence at trial showed that once these ineligible patients were admitted to Biscayne Milieu, Alalu and others concealed the fraud by falsifying patients’ group therapy notes to reflect legitimate PHP treatment that was never provided, and directed others to do so.
The case is being prosecuted by Assistant U.S. Attorneys Michael Davis and Marlene Rodriguez of the U.S. Attorney’s Office for the Southern District of Florida, and by Trial Attorney James V. Hayes of the Fraud Section of the Justice Department’s Criminal Division. The case was investigated by the FBI with the assistance of HHS-OIG, and was brought by the U.S. Attorney’s Office for the Southern District of Florida in coordination with the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,480 defendants who have collectively billed the Medicare program for more than $4.8 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to www.stopmedicarefraud.gov.
Wednesday 19 December 2012
UBS Securities Japan Co. Ltd. to Plead Guilty to Felony Wire Fraud for Long-running Manipulation of LIBOR Benchmark Interest RatesRead the Press Release
UBS Securities Japan Co. Ltd. (UBS Japan), an investment bank, financial advisory securities firm and wholly-owned subsidiary of UBS AG, has agreed to plead guilty to felony wire fraud and admit its role in manipulating the London Interbank Offered Rate (LIBOR), a leading benchmark used in financial products and transactions around the world, Attorney General Eric Holder announced today. The criminal information, filed today in U.S. District Court in the District of Connecticut, charges UBS Japan with one count of engaging in a scheme to defraud counterparties to interest rate derivatives trades by secretly manipulating LIBOR benchmark interest rates.
As part of the ongoing criminal investigation by the Criminal and Antitrust Divisions of the Justice Department and the FBI into LIBOR manipulation, two former senior UBS traders also are charged. Tom Alexander William Hayes, 33, of England, and Roger Darin, 41, of Switzerland, were both charged with conspiracy in a criminal complaint unsealed in Manhattan federal court earlier today. Hayes is also charged with wire fraud, based on the same scheme, and a price fixing violation arising from his collusive activity with another bank to manipulate LIBOR benchmark rates.
UBS Japan has signed a plea agreement with the government admitting its criminal conduct, and has agreed to pay a $100 million fine. In addition, UBS AG, the parent company of UBS Japan headquartered in Zurich, has entered into a non-prosecution agreement (NPA) with the government requiring UBS AG to pay an additional $400 million penalty, to admit and accept responsibility for its misconduct as set forth in an extensive statement of facts and to continue cooperating with the Justice Department in its ongoing investigation. The NPA reflects UBS AG’s substantial cooperation in discovering and disclosing LIBOR misconduct within the financial institution and recognizes the significant remedial measures undertaken by new management to enhance internal controls.
Together with approximately $1 billion in regulatory penalties and disgorgement – $700 million as a result of the Commodity Futures Trading Commission (CFTC) action; $259.2 million as a result of the U.K. Financial Services Authority (FSA) action; and $64.3 million as a result of the Swiss Financial Markets Authority (FINMA) action – the Justice Department’s criminal penalties bring the total amount of the resolution to more than $1.5 billion.
“By causing UBS and other financial institutions to spread false and misleading information about LIBOR, the alleged conspirators we’ve charged – along with others at UBS – manipulated the benchmark interest rate upon which many transactions and consumer financial products are based. They defrauded the company’s counterparties of millions of dollars. And they did so primarily to reap increased profits, and secure bigger bonuses, for themselves,” said Attorney General Holder. “Today’s announcement – and $1.5 billion global resolution – underscores the Justice Department’s firm commitment to investigating and prosecuting such conduct, and to holding the perpetrators of these crimes accountable for their actions.”
“UBS manipulated one of the cornerstone interest rates in our global financial system,” said Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division. “The scheme alleged is epic in scale, involving people who have walked the halls of some of the most powerful banks in the world. Today’s agreement by UBS Japan to plead guilty, the charges against individual alleged perpetrators of these crimes, and our agreement recognizing the steps being taken by UBS AG to right itself demonstrate the Justice Department’s determination to hold accountable those in the financial marketplace who break the law. We cannot, and we will not, tolerate misconduct on Wall Street of the kind admitted to by UBS today, and by Barclays last June. We will continue to follow the facts and the law wherever they lead us in this matter, as we do in every case.”
“The criminal complaint charges two senior UBS traders with colluding to manipulate Yen LIBOR interest rates for the purpose of improving trading positions held by Hayes and UBS,” said Deputy Assistant Attorney General Scott D. Hammond of the Justice Department’s Antitrust Division. “Coordinating the movement of interest rates even by a very small margin meant higher profits and bigger bonuses for the conspirators at the expense of those that relied on LIBOR as a reference rate.”
“The manipulation of LIBOR affects financial products including mortgages, credit cards, student loans and many other interest rate products,” said FBI Associate Deputy Director Kevin L. Perkins. “This practice further erodes Main Street’s confidence in Wall Street. The public expects our financial institutions to maintain proper oversight of their businesses and to ensure the public is not harmed by criminal activity within these institutions. In this case, UBS acknowledged its failures and cooperated with our investigation. The FBI would like to thank its federal partners in this investigation – the Department of Justice Criminal Division’s Fraud Section and Antitrust Division, Commodity Futures Trading Commission’s Division of Enforcement and the Securities and Exchange Commission’s Division of Enforcement whose joint efforts brought a successful resolution to this matter.”
According to documents filed in these cases, 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 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 estimated at approximately $450 trillion.
LIBOR, published by the British Bankers’ Association (BBA), a trade association based in London, is calculated for 10 currencies at 15 borrowing periods, known as maturities, ranging from overnight to one year. The LIBOR for a given currency at a specific maturity is the result of a calculation based upon submissions from a panel of banks.
Between July 2006 and September 2009, Hayes was a senior trader employed in the Tokyo office of UBS Japan, which then operated under the name UBS Securities Japan Ltd. Among other financial products, Hayes traded in interest rate derivatives that essentially consisted of bets against other traders on the direction in which Yen LIBOR would move. UBS was a member of the Yen LIBOR panel, and Darin was, at certain times relevant to the criminal complaint, a trader responsible for making and supervising LIBOR submissions to the BBA on behalf of the bank. In a statement of facts attached to the NPA and plea agreement, Hayes is referred to as “Trader-1” and Darin is referred to as “Submitter-1.”
Beginning in September 2006, UBS Japan and Hayes orchestrated a sustained, wide-ranging and systematic scheme to move Yen LIBOR in a direction favorable to Hayes’ trading positions, defrauding UBS’ counterparties and harming others with financial products referencing Yen LIBOR who were unaware of the manipulation. Between November 2006 and August 2009, Hayes or one of his colleagues endeavored to manipulate Yen LIBOR on at least 335 of the 738 trading days in that period, and during some periods on almost a daily basis. Because of the large size of Hayes’ trading positions, even slight moves of a fraction of a percent in Yen LIBOR could generate large profits. For example, Hayes once estimated that a 0.01 percent movement in the final Yen LIBOR fixing on a specific date could result in a $2 million profit for UBS.
According to the charging documents, UBS Japan and Hayes employed three strategies to execute the scheme: from November 2006 through September 2009, Hayes conspired with Darin and others within UBS to cause the bank to make false and misleading Yen LIBOR submissions to the BBA; also, Hayes caused cash brokerage firms, which purported to provide market information regarding LIBOR to panel banks, to disseminate false and misleading information about short-term interest rates for Yen, which those banks could and did rely upon in formulating their own LIBOR submissions to the BBA; and Hayes communicated with interest rate derivatives traders employed at three other Yen LIBOR panel banks in an effort to cause them to make false and misleading Yen LIBOR submissions to the BBA.
As alleged in the charging documents, Hayes, Darin and other co-conspirators often executed their scheme through electronic chats. On Nov. 20, 2006, for example, Hayes asked a UBS Yen LIBOR submitter who was substituting for Darin, “hi . . . [Darin] and I generally coordinate ie sometimes trade if ity [sic] suits, otherwise skew the libors a bit.” Hayes went on to request, “really need high 6m [6-month] fixes till Thursday.” The submitter responded, “yep we on the case there . . . will def[initely] be on the high side.” The day before this request, UBS’s 6-month Yen LIBOR submission had been tied with the lowest submissions included in the calculation of the LIBOR fix. Immediately after this request for high submissions, however, UBS’s 6-monthYen LIBOR submissions rose to the highest submission of any bank in the contributor panel and remained tied for the highest, precisely as Hayes had requested.
Another example of such an alleged accommodation occurred on March 29, 2007, when Hayes asked Darin, “can we go low 3[month] and 6[month] pls? . . . 3[month] esp.” Darin responded “ok”, and the two had the following exchange:
Hayes: what are we going to set?
Darin: too early to say yet . . . prob[ably] .69 would be our unbiased contribution
Hayes: ok wd really help if we cld keep 3m low pls
Darin: as i said before - i [don’t] mind helping on your fixings, but i'm not setting libor 7bp away from the truth. . . i'll get ubs banned if i do that, no interest in that.
Hayes: ok obviousl;y [sic] no int[erest] in that happening either . . . not asking for it to be 7bp from reality anyway any help appreciated[.]
Hayes received the help he requested.
In addition, the criminal complaint charges Hayes with colluding with a trader employed at another LIBOR panel bank in May 2009, in violation of the Sherman Antitrust Act. Hayes allegedly engaged in the collusive scheme to fix the price of derivative instruments whose price was based on Yen LIBOR. In electronic chats, Hayes asked the trader to move 6-month Yen LIBOR up due to a “gigantic” position Hayes had taken. For the trade in question, UBS trading records confirmed that each 0.01 percent movement in LIBOR would generate profits of approximately $459,000 for Hayes’ book. The trader at the other bank responded that he would comply, and his bank’s submission moved by 0.06 percent compared to its submission the previous day, for which Hayes thanked him.
In entering into the NPA with UBS AG, the Justice Department considered information from UBS, and from regulatory agencies in Switzerland and Japan, demonstrating that in the last two years UBS has made important and positive changes in its management, compliance and training to ensure adherence to the law. T he department received favorable reports from the Swiss Financial Market Supervisory Authority (FINMA) and the Japan Financial Services Authority (JFSA) describing, respectively, progress that UBS has made in its approach to compliance and enforcement and UBS Japan’s effective implementation of the remedial measures the JFSA imposed based on findings relating to the attempted manipulation of Yen benchmarks.
The investigation is being handled by Deputy Chiefs William Stellmach and Daniel Braun and Trial Attorney Luke Marsh of the Criminal Division’s Fraud Section, and Assistant Chief Elizabeth Prewitt and Trial Attorney Richard Powers of the Antitrust Division, New York Field Office. Assistant Chief Rebecca Rohr and Trial Attorneys Alexander Berlin and Thomas Hall of the Criminal Division’s Fraud Section, Trial Attorneys Portia Brown and Wendy Norman of the Antitrust Division, and Assistant U.S. Attorneys Eric Glover and Liam Brennan of the U.S. Attorney’s Office for the District of Connecticut have also provided valuable assistance. The Criminal Division’s Office of International Affairs also provided assistance in this matter. The investigation is being conducted by the FBI’s Washington Field Office.
The investigation leading to these cases 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 FSA, has played a major role in the investigation. The Securities and Exchange Commission has also played a significant role in the LIBOR series of investigations and, among other efforts, has made an invaluable contribution to the investigation relating to UBS. The Department of Justice also wishes to acknowledge and thank FINMA, the Japanese Ministry of Justice, and the JFSA. 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.
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.
Related Material:- UBS Statement of Facts
- UBS Non-Prosecution Agreement
- Hayes, Tom and Darin Complaint
- Hayes Complaints Exhibits
- Plea Agreement
- Attorney General Eric Holder Speaks at the UBS Press Conference
The Department recognizes that parts of these documents may not be in an accessible format. If you have a disability and the format of any material on the site interferes with your ability to access some information, please contact [email protected].
Sanofi US Agrees to Pay $109 Million to Resolve False Claims Act Allegations of Free Product Kickbacks to PhysiciansRead the Press Release
Sanofi-Aventis U.S. Inc. and Sanofi-Aventis U.S. LLC, subsidiaries of international drug manufacturer Sanofi (collectively, Sanofi US), have agreed to pay $109 million to resolve allegations that Sanofi US violated the False Claims Act by giving physicians free units of Hyalgan, a knee injection, in violation of the Anti-Kickback Statute, to induce them to purchase and prescribe the product. The settlement also resolves allegations that Sanofi US submitted false average sales price (ASP) reports for Hyalgan that failed to account for free units distributed contingent on Hyalgan purchases. The government alleges that the false ASP reports, which were used to set reimbursement rates, caused government programs to pay inflated amounts for Hyalgan and a competing product.
The United States contends that, facing pressure from a lower-priced competitor, Sanofi US provided its sales representatives with thousands of free “sample” Hyalgan units and trained its sales representatives to market the “value add” of these units to physicians. In practice, the United States alleges, Sanofi US sales representatives often entered into illegal sampling arrangements with physicians, using the free units as kickbacks and promising to provide negotiated numbers of them in order to lower Hyalgan’s effective price. The government contends that there were numerous such arrangements, including:
- A Southern California-based Sanofi US sales representative who allegedly provided 25 Hyalgan samples to a physician practice for every 100 Hyalgan units purchased, and who supplemented these kickbacks by regularly treating the entire practice to lavish dinners at Sanofi US’s expense and with Sanofi US’s approval.
- A New York-based Sanofi US sales representative who allegedly provided 12 Hyalgan samples to a physician practice for every 50 Hyalgan units purchased, and whose manager supplemented these kickbacks by treating the practice, along with friends and family members, to a lavish dinner in Manhattan at Sanofi US’s expense and with Sanofi US’s approval.
- A Central Texas-based Sanofi US sales representative who allegedly promised a physician practice 125 free Hyalgan syringes in exchange for a purchase of 500 Hyalgan units and was lauded by Sanofi US’s Texas sales team for “[u]tiliz[ing] samples to provide value for the office.”
The United States contends that price was important to physicians because Hyalgan and its direct competitor were reimbursed at the same, fixed rate by Medicare and other insurers. Thus, the less expensive option afforded a greater reimbursement “spread,” or profit, to physicians’ practices. According to the government’s allegations, Sanofi US chose not to compete by lowering the actual invoiced price of Hyalgan, for fear of setting off a price war with its competitor that would lead to a “downward spiral” in prices and reimbursements. Instead, the government alleges, Sanofi US surreptitiously lowered the effective price of Hyalgan by promising the free units to doctors who agreed to purchase the product. The government alleges that Medicare and other federal health care programs paid millions of dollars in kickback-tainted claims for Hyalgan.
“Kickback schemes subvert the health care marketplace and undermine the integrity of public health care programs,” said Principal Deputy Assistant Attorney General for the Civil Division Stuart Delery. “We will continue to hold accountable those who we allege are providing illegal incentives to influence the decision making of health care providers in federal health care programs.”
“The government’s allegations describe a situation where a drug manufacturer used valuable free units of a drug to subvert Medicare’s drug reimbursement system for physicians,” said Carmen M. Ortiz, United States Attorney for the District of Massachusetts. “This is not the first time that this Office has brought action against a manufacturer who engaged in such an illegal scheme, and the government will remain vigilant in policing such conduct.”
“Patients expect their health providers to be concerned solely with their best medical interests” said Daniel R. Levinson, Inspector General for the U.S. Department of Health. “Kickbacks undermine that all-important patient trust, and taxpayers’ expectation that government health dollars be put only to the wisest of uses.”
Today’s settlement with the France-based pharmaceutical manufacturer resolves a lawsuit filed by former sales representative Mark Giddarie under the qui tam, or whistleblower provisions, of the False Claims Act. Under the False Claims Act, private citizens can bring suit on behalf of the United States and share in any recovery. Giddarie will receive $18.5 million as his share of the government’s recovery.
This settlement was the result of a coordinated effort by the Department of Justice, Civil Division, Commercial Litigation Branch; the U.S. Attorney’s Office for the District of Massachusetts; the FBI; and the Offices of the Inspectors General of the U.S. Department of Health and Human Services, the U.S. Postal Service, and the Office of Personnel Management.
This resolution is part of the government’s emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009. 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 that effort is the False Claims Act, which the Justice Department has used to recover $10.1 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in False Claims Act cases since January 2009 are over $13.9 billion.
This case is docketed as United States ex rel. Giddarie v. sanofi-aventis U.S., Inc., No. 10-CV-10070 (D. Mass.).
Owners of Two Miami Home Health Companies Plead Guilty in $48 Million Health Care Fraud SchemeRead the Press Release
The owners and operators of two Miami health care agencies pleaded guilty today for their participation in a $48 million home health Medicare fraud scheme, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; Michael B. Steinbach, Acting Special Agent in Charge of the FBI’s Miami Field Office; and Special Agent in Charge Christopher Dennis of the HHS Office of Inspector General (HHS-OIG), Office of Investigations Miami Office.
Rogelio Rodriguez, 43, and Raymond Aday, 48, each pleaded guilty before U.S. District Judge Federico A. Moreno in the Southern District of Florida to one count of conspiracy to commit health care fraud.
According to court documents, Rodriguez was the owner of both Caring Nurse Home Health Corp. and Good Quality Home Health Inc., and Aday was a manager at Caring Nurse and owner of Good Quality.
According to plea documents, Rodriguez and Aday conspired with patient recruiters for the purpose of billing the Medicare program for unnecessary home health care and therapy services. Rodriguez, Aday and their alleged co-conspirators paid kickbacks and bribes to patient recruiters in return for these recruiters providing patients to Caring Nurse and Good Quality, as well as prescriptions, plans of care (POCs) and certifications for medically unnecessary therapy and home health services for Medicare beneficiaries. Rodriguez and Aday used these prescriptions, POCs and medical certifications to fraudulently bill the Medicare program for home health care services, which Rodriguez and Aday knew was in violation of federal criminal laws.
According to court documents, at Caring Nurse and Good Quality, nurses and office staff falsified patient files for Medicare beneficiaries to make it appear as though those beneficiaries qualified for home health care and therapy services from Caring Nurse and Good Quality when, in fact, Rodriguez and Aday knew that the beneficiaries did not actually qualify for and did not receive such services. Rodriguez admitted to knowing that these files were falsified so that the Medicare program could be billed for medically unnecessary therapy and home health related services.
From approximately January 2006 through June 2011, Caring Nurse and Good Quality submitted approximately $48 million in claims for home health services that were not medically necessary and/or not provided. According to court documents, Medicare paid approximately $33 million for these fraudulent claims.
At sentencing, scheduled for Feb. 27, 2013, Rodriguez and Aday each face a maximum penalty of 10 years in prison.
This case is being prosecuted by Senior Trial Attorney Joseph S. Beemsterboer of the Criminal Division’s Fraud Section. The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,480 defendants who have collectively billed the Medicare program for more than $4.8 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov .
Owner of Pavement Painting Business Sentenced in Alaska for Illegally Disposing Hazardous WasteRead the Press Release
WASHINGTON – The former owner of a road and parking lot painting and striping business in Anchorage, Alaska, was sentenced today for illegally disposing of more than 200,000 pounds of highly flammable hazardous waste in Anchorage, announced Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division, and Karen L. Loeffler, U.S. Attorney for the District of Alaska.
William Duran Vizzerra, Jr., 43, was sentenced by Chief Judge Ralph R. Beistline to 15 months in prison. In addition, the court ordered Vizzerra to pay $395,319 in restitution to two victims.
Vizzerra pleaded guilty on Aug. 17, 2012 in U.S. District Court in the District of Alaska. Vizzerra was the president, director and part-owner of Precision Pavement Markings Inc. (PPMI), a road and parking lot painting and striping business that operated out of a storage lot in Anchorage from 2006 through 2009. Vizzerra used the storage lot to store hazardous waste, including methyl methacrylate paint and toluene that was used to flush the paint lines, nozzles and sprayers used in his business. Vizzerra ordered employees to dispose of the waste at a local landfill but the employees were turned away because the waste was hazardous. Vizzerra was also told by an environmental services company that it would cost tens of thousands of dollars to properly dispose of the hazardous waste. On approximately Nov. 1, 2009, Vizzerra illegally abandoned approximately 321 55-gallon drums, 179 five-gallon pails and two 200-gallon totes of hazardous waste to avoid the costs of proper disposal. Vizzerra abandoned a total of 204,750 pounds of hazardous waste, all of which was determined to be flammable. The landowners where Vizzerra abandoned the hazardous waste incurred almost $400,000 in clean-up costs.
In November 2010, a citizen reported the abandoned drums to the U.S. Environmental Protection Agency (EPA). An investigation led by EPA Criminal Investigation Division agents revealed several hundred 55-gallon drums and smaller containers at the storage lot, some of which were stacked two-high on a trailer and some of which were stored directly on the ground. Many of the drums were marked "waste" or held hazardous markings, such as "flammable" or "flammable liquid." Many were rusted and in decrepit condition or bulging. The investigation revealed that some of the drums were from a prior pavement business of Vizzerra's that had dissolved several years earlier.
Under the Resource Conservation and Recovery Act, hazardous waste, due to its dangerous qualities, may only be disposed of at a licensed treatment, storage or disposal facility. The storage lot Vizzerra used was neither equipped nor permitted for the disposal of hazardous waste. Yet, knowing this, Vizzerra illegally abandoned and disposed of the waste at the lot, which cost the land owner and lease holder $394,062 in clean-up, disposal and legal fees.“The defendant exposed the environment and the public to hundreds of gallons of hazardous waste. Today’s sentence is an appropriate penalty for this egregious crime against the people and environment of Alaska,” said Ignacia S. Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. “This case shows that we will not tolerate and will vigorously prosecute those who abandon their legal responsibility to properly dispose of hazardous waste.”
“The potential danger posed by the improper disposal of hazardous wastes are well known,” said U.S. Attorney Loeffler. “The U.S. Attorney’s Office is committed to enforcing our nation’s environmental laws to protect the people of Alaska. We have an obligation to insure that our citizens are not injured and our lands are not polluted by the illegal disposal of hazardous materials.”
“By abandoning hundreds of bulging, rusty drums of hazardous chemicals, Defendant Vizzera knowingly saddled the property owners with a monumental mess and a cleanup bill of close to $400k,” stated Tyler Amon, Special Agent in Charge of EPA's criminal enforcement program in the Northwest and Alaska. “Being sent to jail should send the message to Vizzera and others -- there are severe consequences for environmental crime.”
The investigation was conducted by the EPA’s Criminal Investigation Division. The case was prosecuted by the Environmental Crimes Section of the Justice Department’s Environment and Natural Resources Division, the U.S. Attorney’s Office for the District of Alaska, and the Regional Criminal Enforcement Counsel for the Environmental Protection Agency’s Region 10 in Seattle.New Mexico Probation Officer Indicted <br /> <br /> on Sexual Assault ChargesRead the Press Release
A federal grand jury in Albuquerque, N.M., has indicted Gordon Chavez, 35, a probation officer with the New Mexico Corrections Department on charges related to the sexual assault of a probationer whom he supervised. The New Mexico Corrections Department placed Chavez on administrative leave following his arrest on Dec. 4, 2012.
Chavez was charged with violating the civil rights of the victim by engaging in unwanted sexual contact. The indictment also charges Chavez with making material false statements to the FBI. Specifically, the latter count charges Chavez with lying to the FBI when he denied touching the breasts of any female under his supervision and when he denied asking females under his supervision for naked photographs. The indictment alleges that Chavez knew these statements were false at the time that he made them because he had, in fact, engaged in these behaviors.
This investigation is ongoing. Anyone with additional information is encouraged to call the Albuquerque Division of the FBI at (505) 889-1300.
Chavez faces a maximum of six years in prison on both counts. An indictment is merely an accusation and Chavez is presumed innocent unless proven guilty.
This case is being investigated by the Albuquerque Division of the FBI and is being prosecuted by Assistant U.S. Attorney Mark Baker for the District of New Mexico and Fara Gold of the Civil Rights Division of the U.S. Department of Justice.
New Jersey Company Pleads Guilty for Role in Bid-Rigging Scheme at Municipal Tax Lien AuctionsRead the Press Release
A New Jersey company in the business of receiving the assignment of municipal tax liens pleaded guilty today for its role in a conspiracy to rig bids for the sale of tax liens auctioned by municipalities in New Jersey, the Department of Justice announced.
A felony charge was filed today in U.S. District Court for the District of New Jersey in Newark, against Mercer S.M.E. Inc., a company located in Burlington, N.J. According to the charges, from at least 2003 until approximately February 2009, Mercer, in conjunction with a nonprofit corporation and others participated in a conspiracy to rig bids at auctions for the sale of municipal tax liens in New Jersey. As part of the conspiracy, the co-conspirators agreed to allocate the liens on which each would bid. Among other things, Mercer was assigned tax liens it understood were purchased in accordance with the unlawful agreement.
“The conspirators agreed to coordinate their bids and allocate the tax liens amongst themselves, at the expense of distressed property owners,” said Scott D. Hammond, Deputy Assistant Attorney General for the Antitrust Division’s criminal enforcement program. “Today’s guilty plea sends a message that those who profit from illegal, anticompetitive conduct will be held accountable.”
The department said that the primary purpose of the conspiracy was to suppress and restrain competition in order to obtain selected municipal tax liens offered at public auctions at non-competitive interest rates. When the owner of real property fails to pay taxes on that property, the municipality in which the property is located may attach a lien for the amount of the unpaid taxes. If the taxes remain unpaid after a waiting period, the lien may be sold at auction. State law requires that investors bid on the interest rate delinquent property owners will pay upon redemption. By law, the bid opens at 18 percent interest and, through a competitive bidding process, can be driven down to zero percent. If a lien remains unpaid after a certain period of time, the investor who purchased the lien may begin foreclosure proceedings against the property to which the lien is attached.According to the court documents, Mercer, along with the nonprofit corporation which assigned some of its liens to Mercer, was involved in a conspiracy with others not to bid against one another at municipal tax lien auctions in New Jersey. Since the conspiracy permitted the conspirators to purchase tax liens with limited competition, each conspirator was able to obtain liens which earned a higher interest rate. Property owners were therefore made to pay higher interest on their tax debts than they would have paid had their liens been purchased in open and honest competition, the department said.
A violation of the Sherman Act carries a maximum penalty of $100 million criminal fine for corporations. The maximum fine for a Sherman Act violation may be increased to twice the gain derived from the crime or twice the loss suffered by the victims if either amount is greater than the statutory maximum.
Today’s plea is the 11th guilty plea resulting from an ongoing investigation into bid rigging or fraud related to municipal tax lien auctions. Eight individuals – Isadore H. May, Richard J. Pisciotta Jr., William A. Collins, Robert W. Stein, David M. Farber, Robert E. Rothman, Stephen E. Hruby and David Butler – and two companies, DSBD LLC and Crusader Servicing Corp., have previously pleaded guilty as part of this investigation.
Today’s charge is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.
This ongoing investigation is being conducted by the Antitrust Division’s New York Field Office and the FBI’s Atlantic City, N.J., office. Anyone with information concerning bid rigging or fraud related to municipal tax lien auctions should contact the Antitrust Division’s New York Field Office at 212-335-8000, visit www.justice.gov/atr/contact/newcase.htm or contact the Atlantic City Resident Agency of the FBI at 609-677-6400.
Las Vegas Real Estate Agent Sentenced to 70 Months in Prison for Her Role in Mortgage Fraud SchemeRead the Press Release
WASHINGTON – A Las Vegas real estate agent was sentenced today to serve 70 months in prison for her participation in a mortgage fraud scheme that netted more than $10 million in fraudulent mortgage loans, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Daniel G. Bogden of the District of Nevada, and Special Agent in Charge Kevin Favreau of the FBI’s Las Vegas Field Office.
Linda Marie Kot, 58, was sentenced by U.S. District Judge Kent J. Dawson in the District of Nevada. In addition to her prison term, Kot was sentenced to serve five years of supervised release and ordered to pay $3,891,811 in forfeiture.
In May 2012, after a five-day trial, a federal jury in Las Vegas found Kot guilty of three counts of bank fraud and one count of conspiracy to commit mail, wire and bank fraud.
According to court documents and evidence presented at trial, Kot participated in a scheme with members of an investment group to submit fraudulent loan documents to lenders that involved “straw buyers,” individuals with good credit scores whose names were put on the properties but who were not intended to be responsible for the payment of the mortgages or other expenses of the properties. The scheme took place in 2006 and involved 13 new home purchases, three existing home sales and several loan applications that were not approved.
According to the evidence at trial and court documents, Kot and her co-conspirators caused material misstatements to be placed on loan applications, including information about the true owners and controllers of the properties; whether the properties would be primary residences; and the level of assets and income of the straw buyers. In some cases, Kot put straw buyers on her bank account to make it appear that the straw buyers had assets that they did not have, in order to help them qualify for mortgage loans for which they otherwise would not have been eligible. Kot made over $276,000 in commissions on the fraudulent sales, the evidence at trial showed.
One of the counts of conviction involved a similar scheme that Kot engaged in with members of her family from 2005 to 2006. The evidence at trial showed that Kot and members of her family used straw buyers and fraudulent loan applications to buy properties. Kot and members of her family paid the straw buyers fees, and any profits on sale of the houses were split among family members.
While Kot and her family members were able to sell most of the properties they bought with straw buyers before the market downturn, the investment group that Kot conspired with was not able to do so, according to evidence presented at trial. As a result, most of the mortgages for the houses that the investment group bought in 2006, where Kot acted as the realtor, ended up in default and foreclosure, with many of the straw buyers ending up in bankruptcy.
Three co-conspirators, Hugo Coutelin, Jeff Thomas and Michael Perry, previously pleaded guilty for their roles in the fraud scheme. In September 2012, Coutelin and Perry were each sentenced to 15 months in prison and Thomas was sentenced to time served.
This case was investigated by the FBI. Trial Attorneys Nicholas S. Acker and Fred Medick of the Fraud Section in the Justice Department’s Criminal Division prosecuted the case, with assistance from the U.S. Attorney’s Office for the District of Nevada. Fraud Section Trial Attorney Brian Young and former Fraud Section Trial Attorneys Matt Klecka and Joseph Capone also assisted with the investigation.
Today’s sentencing was a result of efforts by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.StopFraud.gov.
Justice Department Settles Immigration-Based Discrimination Claim Against New York HospitalRead the Press Release
The Justice Department announced today that it reached an agreement with Holliswood Hospital, a hospital in Queens, N.Y., resolving claims that the hospital violated the anti-discrimination provision of the Immigration and Nationality Act (INA), when it required newly hired lawful permanent residents to provide more or different documents during the Form I-9 employment eligibility verification process.
The investigation stemmed from a charge filed by an individual that Holliswood terminated her after discovering that her employment eligibility needed to reverified in the future, despite the fact that she was work authorized. The subsequent investigation revealed that Holliswood imposed greater requirements to verify employment eligibility for lawful permanent residents as compared to U.S. citizen employees and terminated the charging party as a result of the discriminatory documentary practices. The INA requires employers to treat all authorized workers in the same manner during the employment eligibility verification process, regardless of their national origin or citizenship status.
Under the settlement agreement, Holliswood will pay $1,182 in back pay to the charging party and $5,000 in civil penalties to the United States. Holliswood will also train its human resources staff about employers’ responsibilities to avoid discrimination in the employment eligibility verification process and be subject to reporting and compliance monitoring by the department for 18 months.
“The Civil Rights Division is committed to protecting all work authorized individuals from discriminatory practices in the employment eligibility verification process, which can create unwarranted barriers to the lawful employment of immigrant workers,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “We commend Holliswood for working with the division to reach a fair resolution that prioritizes future compliance.”
The Office of Special Counsel for Immigration Related Unfair Employment Practices (OSC) is responsible for enforcing the anti-discrimination provision of the INA. For more information about protections against employment discrimination under the immigration laws, call the OSC’s worker hotline at 1-800-255-7688 (1-800-237-2525, TDD for hearing impaired), call the OSC’s employer hotline at 1-800-255-8155 (1-800-362-2735, TDD for hearing impaired), sign up for a no-cost webinar at www.justice.gov/about/osc/webinars.php , email [email protected] or visit the website at www.justice.gov/crt/about/osc .
Justice Department Reaches Settlement with New York Manufacturer to Resolve Immigration-Related Unfair Employment PracticesRead the Press Release
The Justice Department announced today that it reached a settlement agreement with R-Tronics LLC, a company based in Rome, N.Y., which manufactures custom and prototype cables, wire harnesses and electro-mechanical assemblies. The agreement resolves allegations that the company violated the anti-discrimination provision of the Immigration and Nationality Act (INA) by limiting its hiring practices to U.S. citizens.
According to the department’s investigation, R-Tronics restricted employment to U.S. citizens, despite the fact that no law, regulation, executive order or government contract required the limitation. Although R-Tronics is a federal contractor subject to the International Traffic and Arms Regulations (ITAR), ITAR does not require or permit employers to limit job applicants to U.S. citizens. The INA’s anti-discrimination provision only allows such hiring restrictions when necessary to comply with a law, regulation, executive order or government contract.
Under the terms of the agreement, R-Tronics will terminate its unwarranted citizenship requirement for employment, modify its employment eligibility verification policies and procedures to reflect the INA’s protections, train its human resources staff about the employer’s responsibilities to avoid discrimination in the employment eligibility verification process, and be subject to reporting and compliance monitoring by the department for three years. The case settled prior to the Justice Department filing a complaint in this matter.
“ Employers must give all eligible candidates the equal opportunity to compete for employment,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Civil Rights Division is committed to ensuring that employers do not discriminate against protected individuals based on citizenship status, but also to educating employers on the anti-discrimination provision of the Immigration and Nationality Act.”
The Office of Special Counsel for Immigration Related Unfair Employment Practices (OSC) is responsible for enforcing the anti-discrimination provision of the INA. For more information about protections against employment discrimination under the immigration laws, call the OSC’s worker hotline at 1-800-255-7688 (1-800-237-2525, TDD for hearing impaired), call the OSC’s employer hotline at 1-800-255-8155 (1-800-362-2735, TDD for hearing impaired), sign up for a no-cost webinar at www.justice.gov/about/osc/webinars.php , email [email protected] or visit the website at www.justice.gov/crt/about/osc .
Indiana Man Pleads Guilty to Religiously Motivated Attack on Toledo-Area MosqueRead the Press Release
An Indiana man faces a likely sentence of 20 years in prison after pleading guilty to hate crimes stemming from the arson of the Islamic Center of Greater Toledo, the Justice Department announced today.
Randolph Linn, 52, of St. Joe, Ind., pleaded guilty to three counts: (1) intentionally defacing, damaging and destroying religious real property because of the religious character of that property; (2) using fire to commit a felony; and (3) using and carrying a firearm to commit a crime of violence.
Under the terms of the plea agreement, both parties recommend a sentence of 20 years in prison.
“The freedom to worship in the manner of one's choosing is one of our most fundamental rights as Americans,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Department of Justice and the Civil Rights Division will continue to aggressively prosecute hate-based attacks on houses of worship. I commend the cooperative efforts of local and federal law enforcement officials to ensure justice in this case.”
Steven M. Dettelbach, U.S. Attorney for the Northern District of Ohio, said, “Religious freedom is at the core of our country, and we will continue to aggressively prosecute such hate crimes whenever and wherever the evidence warrants. This was a true joint effort to seek justice for these victims.”
Stephen D. Anthony, Special Agent in Charge of the FBI’s Cleveland office, said, “We are pleased that Randall Linn has accepted responsibility for his destructive action of setting fire to a sacred place of worship. The FBI, along with its federal, state, and local law enforcement partners, remains committed to protecting the rights of all citizens to practice their chosen religion by enforcing the laws that defend those liberties.”
“This guilty plea represents the tireless efforts of so many agencies to bring this case to justice,” said Robin Shoemaker, Special Agent in Charge, Columbus Field Division, Bureau of Alcohol, Tobacco, Firearms and Explosives. “Criminal damage to a house of worship is taken very seriously by ATF.”
According to court documents, Linn left his home on Sept. 30, 2012, in a red four-door Chevrolet Sonic. Inside the vehicle were numerous firearms and three gas cans. Linn stopped at a gas station near Perrysburg, Ohio, and filled the three gas cans, then drove to the Islamic Center of Greater Toledo. Linn made numerous efforts to enter the Islamic Center before gaining entry. He walked through several rooms with a handgun in his left hand before exiting and then returning with one of the gas cans. Linn then entered the prayer room on the second floor and poured gasoline on the prayer rug; a large Oriental-style rug used by members of the Islamic Center during prayer services. He then set fire to the prayer rug.
According to court documents, Linn acknowledged that he intentionally set the fire because of the religious character of the Islamic Center property. Linn agreed to pay restitution and understands that the amount may exceed $1 million due to the amount of fire and water damage sustained by the Islamic Center.
This case is being prosecuted by Assistant U.S. Attorneys Bridget M. Brennan, Ava Dustin and Special Assistant U.S Attorney Gwen Howe-Gebers. This case was investigated by the FBI, ATF, Perrysburg Township Police Department and the state of Ohio Fire Marshal.
Former Army Contractor Employee and Two Former U.S. Army Staff Sergeants Plead Guilty to Roles in Afghanistan Contract Fraud SchemeRead the Press Release
WASHINGTON – A former employee of a U.S. Army contractor and two former U.S. Army staff sergeants pleaded guilty today for their roles in a fraud scheme involving a contract to provide armored vehicles to the U.S. Military in Afghanistan, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.
Raul Borcuta, 34, of Chicago, pleaded guilty before U.S. District Judge Ronald A. Guzman in the Northern District of Illinois to one count of wire fraud. Former U.S. Army Staff Sergeants Zachery Taylor, 42, of Ft. Belvoir, Va., and Jarred Close, 43, of St. Paul, Minn., each pleaded guilty before Judge Guzman to one count of receiving a gratuity.
According to court documents, in February 2010, Borcuta operated a defense contracting firm in Farah Province, Afghanistan, and Taylor and Close were U.S. Army staff sergeants assigned to a Provincial Reconstruction Team in Afghanistan. A Provincial Reconstruction Team is a multi-agency civil affairs task force charged with awarding and administering development contracts. Taylor and Close awarded Borcuta a $200,000 contract to provide the U.S. military with two armored vehicles to be used by the governor of Farah Province, who had received death threats from Taliban insurgents. According to court documents, Taylor and Close authorized a $200,000 payment to Borcuta before he delivered the vehicles. Borcuta collected the payment, paid Taylor and Close $10,000 each, and failed to deliver the vehicles.
At sentencing, Borcuta faces a maximum penalty of 20 years in prison, and Taylor and Close each face up to two years in prison. Borcuta is scheduled to be sentenced on April 2, 2013. Taylor and Close are scheduled to be sentenced on April 3, 2013.
This case is being prosecuted by Brian R. Young and Thomas B.W. Hall of the Criminal Division’s Fraud Section, with assistance from the U.S. Attorney’s Office for the Northern District of Illinois and Heather Schmidt of the National Security Division’s Counterespionage Section. The case was investigated by the Special Inspector General for Afghanistan Reconstruction, the Defense Criminal Investigative Service, the U.S. Army Criminal Investigation Division and the FBI.
Amgen Inc. Pleads Guilty to Federal Charge in Brooklyn, NY.;Pays $762 Million to Resolve Criminal Liability and False Claims Act AllegationsRead the Press Release
Earlier today, at the federal courthouse in Brooklyn, New York, U.S. District Judge Sterling Johnson, Jr. accepted a guilty plea by American biotechnology giant Amgen Inc. (Amgen) for illegally introducing a misbranded drug into interstate commerce. The plea is part of a global settlement with the United States in which Amgen agreed to pay $762 million to resolve criminal and civil liability arising from its sale and promotion of certain drugs. The settlement represents the single largest criminal and civil False Claims Act settlement involving a biotechnology company in U.S. history.
The announcement was made by Stuart F. Delery, Principal Deputy Assistant Attorney General for the Justice Department’s Civil Division; Marshall L. Miller, Acting U.S. Attorney for the Eastern District of New York; Jenny A. Durkan, U.S. Attorney, Western District of Washington; Carmen M. Ortiz, U.S. Attorney for the District of Massachusetts; Thomas O’Donnell, Special Agent in Charge, U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG), New York Regional Office; John Roth, Director, U.S. Food and Drug Administration (FDA), Office of Criminal Investigations; Eric Schneiderman, New York State Attorney General; and George Venizelos, Assistant Director in Charge of the FBI’s New York Field Office; along with numerous law enforcement and regulatory partners.
As part of the plea agreement and criminal settlement, Amgen entered a guilty plea yesterday before U.S. District Judge Sterling Johnson of the Eastern District of New York to a criminal information charging the company with illegally introducing a misbranded drug, Aranesp, into interstate commerce. Under the Food, Drug and Cosmetic Act, it is illegal for drug companies to introduce into the marketplace drugs that the company intends will be used “off-label,” i.e., for uses or at doses not approved by the FDA. Aranesp is an erythropoiesis-stimulating agent (ESA) that was approved by the FDA at calibrated doses for particular patient populations suffering from anemia. In order to increase sales of Aranesp and reap the resulting profits, Amgen illegally sold the drug with the intention that it be used at off-label doses that the FDA had specifically considered and rejected, and for an off-label treatment that the FDA had never approved. Under the terms of the criminal plea agreement, Amgen will pay a criminal fine of $136 million and criminal forfeiture in the amount of $14 million.
As part of the civil settlement, Amgen has agreed to pay $612 million ($587.2 million to the United States and $24.8 million to the states) to resolve claims that it caused false claims to be submitted to Medicare, Medicaid and other government insurance programs. The federal civil settlement agreement encompasses allegations that Amgen: (1) promoted Aranesp and two other drugs that it manufactured, Enbrel and Neulasta, for off-label uses and doses that were not approved by the FDA and not properly reimbursable by federal insurance programs; (2) offered illegal kickbacks to a wide range of entities in an effort to influence health care providers to select its products for use, regardless of whether they were reimbursable by federal health care programs or were medically necessary; and (3) engaged in false price reporting practices involving several of its drugs. As part of the global settlement, Amgen has also agreed to enter into a Corporate Integrity Agreement (CIA) with HHS-OIG that will govern its conduct, and ensure careful oversight of its branding and marketing practices.
“Today’s resolution reinforces the Department of Justice’s commitment to cracking down on unlawful conduct by pharmaceutical companies,” said Civil Division Principal Deputy Assistant Attorney General Delery. “When drug companies improperly misbrand their products, they not only could put individual patients at risk, but they also undermine the federal health care system that protects all of us.”
“Instead of working to extend and enhance human lives, Amgen illegally pursued corporate profits while jeopardizing the safety of vulnerable consumers suffering from disease. Americans expect - and the law requires - much more. Today’s settlement demonstrates our vigilance in protecting America’s healthcare consumers and pursuing any corporation that seeks to profit by violating U.S. law,” said Acting U.S. Attorney of the Eastern District of New York Miller. “To all who might consider introducing misbranded drugs into the marketplace, you are on notice: we remain steadfastly committed to prosecuting such violations of law.” Mr. Miller also expressed his appreciation to the Offices of Inspector General for the Department of Defense, the Office of Personnel Management and the Veterans Administration for their assistance.
“The public has been well served by this investigation and the FDA commends the efforts of the U.S. Attorney’s Office in the Eastern District of New York, the Department of Justice and the other law enforcement agencies that worked with us to vigorously pursue this matter,” said John Roth, Director of the FDA’s Office of Criminal Investigations in the FDA’s Office of Regulatory Affairs. “Today’s settlement demonstrates our continued scrutiny of any illegal practices used by pharmaceutical and biotechnology companies.”
“Promoting drugs for unapproved purposes is beyond wrong; it jeopardizes the health and safety of the public,” said FBI Assistant Director Venizelos. “Preserving the integrity of the pharmaceutical industry is important work, and the FBI will continue working with our colleagues in law enforcement to investigate and charge those who inappropriately market drugs for scurrilous profits.”
“This sends a powerful message to pharma companies: you must not put profits ahead of patients' health and doctors' trust. Drugs should be prescribed because they make people better, not because they make companies money," said Western District of Washington U.S. Attorney Durkan. "The coordination by our office, the U.S. Attorney’s Offices in the Eastern District of New York and Massachusetts and Main Justice also shows that there is no corner of the country where these actors can hide.”
“Today’s resolution is a testament to coordination and cooperation throughout the Department of Justice to ensure drug manufacturers are held to account and fraud is properly addressed,” said Massachusetts U.S. Attorney Ortiz. “The District of Massachusetts is proud to have played a role in the resolution of this matter, and in ensuring that drug manufacturers’ claims regarding their products are truthful and properly supported.”
“There are no excuses for illegally marketing off label drugs, offering kickbacks to health care professionals and ripping off the taxpayers by defrauding Medicaid and other programs,” said New York State Attorney General Schneiderman. “With this settlement the message we are sending is clear: biotechnology giants are not above the law, and my office will continue to ensure that prescriptions be written based on medical judgment - not profit motive.”
The Criminal Plea Agreement
The information alleges the following:
Beginning at the launch of Aranesp in 2002 and extending until 2007, Amgen illegally introduced Aranesp for uses and at dosage levels that the FDA had specifically declined to approve due to insufficient clinical evidence to establish their safety and efficacy. In particular, Amgen illegally introduced Aranesp into the oncology and nephrology ESA markets, intending that it be used for patients suffering from anemia due to chronic kidney disease or chemotherapy at off-label, unapproved doses that were larger and less frequently administered than those approved by the FDA for these patient populations. Amgen also illegally introduced Aranesp into the oncology ESA market intending that it be used to treat anemia caused by cancer, irrespective of whether the patient had been prescribed chemotherapy - a use which the FDA had never approved and which the FDA subsequently determined caused an increased risk of death. In particular, in 2007, the FDA mandated that a “black box” label be added to Aranesp’s label, warning that Aranesp “increased the risk of death . . . in patients with active malignant disease [cancer] receiving neither chemotherapy nor radiation.” At approximately the time that the FDA issued the black box warning, Amgen ceased its promotion of Aranesp for the treatment of anemia caused by cancer rather than the cancer’s treatment.
Amgen’s internal sales and marketing materials made plain that Amgen’s misbranding of Aranesp was the company’s core business strategy to gain market share from its only ESA competitor, Procrit, sold by Johnson & Johnson. At the time of Aranesp’s 2002 launch, doctors typically prescribed Procrit to treat the anemic patient populations for which Aranesp was approved. To compete with Procrit, Amgen built the Aranesp commercial strategy around the unapproved, off-label approach of a less frequent dosing schedule, which Amgen sales representatives argued was more convenient for patients and more profitable for doctors. Amgen implemented this illegal commercial effort through its promotion of off-label doses from two to four times larger than those approved by the FDA, administered far less frequently than approved by the FDA.
When this unapproved, off-label dosing effort proved commercially successful, Amgen sales and marketing executives determined that capturing the population of anemic cancer patients who were not undergoing chemotherapy was “the next big thing” and would give Amgen a “51 percent [ESA] market share.” Accordingly, the company set about capturing the off-label market of patients suffering from anemia caused by cancer itself, rather than anemia caused by chemotherapy, and its sales representatives began marketing the safety and efficacy of Aranesp in that population. Ultimately, in 2007, the FDA determined that Aranesp increased the risk of death in that very population.
Aware that its misbranding of Aranesp was illegal, Amgen instructed its sales representatives to promote off-label uses through the guise of “reactive marketing.” This technique attempted to circumvent the law by inducing doctors to ask questions about an off-label use, to serve as a smokescreen to hide Amgen’s intentional effort to introduce the drug for unapproved, “off-label” uses. Amgen thus trained its sales representatives to intentionally elicit questions from doctors about off-label uses as legal cover to then provide the doctors with studies supporting the off-label use, thereby promoting the drug for that unapproved use. The studies Amgen provided to doctors to support off-label uses were often the very same studies that the FDA had rejected as insufficient to support the safety and efficacy of those off-label uses, when Amgen had applied to expand Aranesp’s label to encompass them.
The Civil Settlement Agreement
The $612 million dollar civil settlement encompasses broader allegations by the United States against Amgen than those contained in the Information. The civil settlement agreement resolves claims contained in ten lawsuits against Amgen that were brought under the qui tam, or whistle-blower, provisions of the False Claims Act, which allow private citizens to bring civil actions on behalf of the United States and share in any recovery. Seven of these cases currently are pending in the Eastern District of New York; two are pending in the District of Massachusetts and one in the Western District of Washington. The ten cases are: United States ex rel. Cantor v. Amgen, Inc., Civil Action No. CV-04-2511 (E.D.N.Y.), United States ex rel. Osiecki v. Amgen, Inc., Civil Action No. CV-05-5025 (E.D.N.Y.), United States ex rel. Westmoreland v. Amgen, Inc., Civil Action No. 06-CV-10972 (D. Mass.), United States ex rel. Arriazola v. Amgen, Inc., Civil Action No. CV 06-3232 (E.D.N.Y.), United States ex rel. Horwitz v. Amgen Inc., Civil Action No. C07-0248 (W.D. Wash.), United States ex rel. Kelly v. Amgen Corporation, Civil Action No. CV-08-4157 (E.D.N.Y.), United States ex rel. Hanks v. Amgen, Inc., Civil Action No. CV 08-3096 (E.D.N.Y.), United States ex rel. Ferrante v. Amgen, Inc., Civil Action No. CV-08-3931 (E.D.N.Y.), United States ex rel. Tucker v. Amgen, Inc., Civil Action No. CV-09-0887 (E.D.N.Y.), and United States ex rel. DJAE Partnership v. Amgen, Inc., Civil Action No. 11-CV- 11242 (D. Mass.).
Like the Information, the civil settlement contains allegations that Amgen improperly marketed Aranesp. More specifically, the United States contends that between September 2001 and September 2011, Amgen knowingly promoted the sale and use of Aranesp for dosing regiments and indications which were (a) not approved by the FDA, and (b) not medically accepted indications, including anemia caused by cancer, anemia caused by chronic disease, chronic anemia, and anemia caused by myelodysplastic syndrome. The United States further contends that Amgen used journal articles that were insufficient to support the safety and efficacy of the off-label uses at issue, and improperly obtained listings in medical compendia in an effort to establish that the off-label uses were medically accepted, and thereby eligible for coverage by federal health care programs. The United States contends that Amgen similarly promoted its drugs Enbrel and Neulasta for off-label indications that were not eligible for coverage by federal health care programs. The civil settlement agreement also covers claims that Amgen knowingly reported inaccurate pricing information such as Average Sales Prices, Best Prices and Average Manufacturer Prices for several drugs.
In a separate civil settlement, International Nephrology Network (INN), renamed Integrated Nephrology Network, a subsidiary of AmerisourceBergen Corporation, has also agreed to pay $15 million to resolve civil liability arising from its role in the marketing of Aranesp. The agreement encompasses claims that INN offered illegal kickbacks to influence health care providers’ selection of Aranesp for treatment of kidney disease and in so doing also caused false price reporting for Aranesp. This agreement resolves a single qui tam action.
The Corporate Integrity Agreement
In addition to the criminal and civil resolutions, Amgen also executed a CIA with HHS-OIG. The five-year CIA includes provisions designed to increase accountability of individuals and Board members, to increase transparency, and to strengthen Amgen’s compliance program. The CIA requires that a committee of Amgen’s board of directors annually review the effectiveness of the company’s compliance program and that executives in key areas certify to compliance. It also requires that Amgen post on its company website information about payments to doctors. Under the CIA, Amgen must establish and maintain a centralized risk assessment and mitigation program and policies relating to research, publications and Amgen’s interactions with federal payors. Amgen is subject to exclusion from federal health care programs for a material breach of the CIA and subject to monetary penalties for less significant breaches.
“We continue our two-pronged attack on alleged fraudulent corporate behavior,” said Daniel R. Levinson, Inspector General of the U.S. Department of Health and Human Services. “Our investigations expose wrongdoing, and our Corporate Integrity Agreements monitor companies’ compliance with controls designed to prevent future problems.”
This resolution is part of the government’s emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009. 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 that effort is the False Claims Act, which the Justice Department has used to recover $10.1 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in False Claims Act cases since January 2009 are over $13.9 billion.
The government’s multi-year joint criminal and civil investigation and the negotiation of the global settlement were conducted on the criminal side by Assistant U.S. Attorneys Roger Burlingame and Winston Paes and on the civil side by Assistant U.S. Attorneys Deborah B. Zwany, Paul Kaufman and Erin Argo and Affirmative Civil Enforcement Auditor Emily Rosenthal from the Eastern District of New York. Assistant U.S. Attorney Zachary Cunha from the District of Massachusetts, Assistant U.S. Attorneys Harold Malkin and Peter Winn from the Western District of Washington, Trial Attorneys Jessica Champa, John Henebery and Doug Rosenthal from the Department of Justice’s Commercial Litigation Branch also assisted on the civil side. Assistant U.S. Attorney Susan Loitz of the United States Attorney’s Office for the Western District of Washington and Trial Attorney Sondra Mills of the Department of Justice’s Consumer Protection Branch also assisted on the criminal side. The Corporate Integrity Agreement was negotiated by Mary Riordan and Lisa Veigel from the Department of Health and Human Service’s Office of Inspector General. The state civil settlement agreement was negotiated by Jay Speers, Carolyn Ellis, Christopher Miller, and Laura Meehan of the New York State Office of the Attorney General on behalf of the National Association of Medicaid Fraud Control Units.
Tuesday 18 December 2012
Physical Therapy Assistant Pleads Guilty in Connection with Detroit Medicare Fraud SchemeRead the Press Release
WASHINGTON – Detroit-area resident Ankit Patel pleaded guilty today for his role in a $13.8 million home health care fraud scheme, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade; Special Agent in Charge Robert D. Foley III of the FBI’s Detroit Field Office; and Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), Chicago Regional Office.
Patel, 28, of Westland, Mich., pleaded guilty today to one count of conspiracy to commit health care fraud before U.S. District Judge Gerald E. Rosen of the Eastern District of Michigan.
According to court documents, Patel was paid beginning in June 2009 to falsify medical documentation for Physicians Choice Home Health Care LLC, a home health agency owned by his alleged co-conspirators. Patel, a physical therapy assistant, pleaded guilty to creating evaluations, therapy revisit notes and other medical documentation memorializing purported physical therapy for patients he did not see or treat. According to court documents, an alleged co-conspirator instructed Patel on how to falsify medical documentation. Patel also signed therapy revisit notes as a physical therapy assistant for patients he did not see or treat. Patel admitted to knowing that the documents he falsified and the documents he signed would be used to support false claims to Medicare for home health services.
According to Patel’s plea agreement, he was subsequently paid to create and sign falsified medical documentation for First Care Home Health Care LLC, Quantum Home Care Inc. and Moonlite Home Care Inc., which were Detroit-area home health care companies also owned by alleged co-conspirators that billed Medicare.
From approximately June 2009 through September 2011, Medicare paid approximately $1,324,015 to Physicians Choice and Quantum for fraudulent physical therapy claims based on falsified files and notes signed by Patel.
At sentencing, scheduled for March 25, 2013, Patel faces a maximum penalty of 10 years in prison and a $250,000 fine.
Ten of Patel’s co-defendants have pleaded guilty, and one has been sentenced. Three co-defendants are fugitives, and five co-defendants await trial.
This case is being prosecuted by Trial Attorney Catherine K. Dick of the Criminal Division’s Fraud Section. It was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,480 defendants who have collectively billed the Medicare program for more than $4.8 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.
Owner of Brooklyn, N.Y., Clinic Pleads Guilty <br /> in Connection with $71 Million Medicare Fraud SchemeRead the Press Release
WASHINGTON – The owner and manager of a Brooklyn, N.Y., health care clinic pleaded guilty today in federal court for her role in a $71 million Medicare fraud and money laundering scheme, announced Lanny A. Breuer, Assistant Attorney General of the Department of Justice Criminal Division; Loretta E. Lynch, U.S. Attorney for the Eastern District of New York; George Venizelos, Assistant Director in Charge, FBI, New York Field Office; and Thomas O’Donnell, Special Agent in Charge, U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG).
Irina Shelikhova, a Ukranian national and formerly a resident of Brooklyn and Staten Island, N.Y., pleaded guilty before U.S. District Judge Nina Gershon in the Eastern District of New York to one count of conspiracy to commit money laundering.
Shelikhova was an owner and manager of a clinic in Brooklyn that operated under three corporate names: Bay Medical Care PC, SVS Wellcare Medical PLLC and SZS Medical Care PLLC (Bay Medical Clinic). According to court documents, owners, operators and employees of Bay Medical paid cash kickbacks to Medicare beneficiaries and used the beneficiaries’ names to bill Medicare for more than $71 million in medical services and procedures that were medically unnecessary or never provided, including physician office visits, physical therapy and diagnostic tests.
According to the criminal complaint, the co-conspirators allegedly paid kickbacks to corrupt Medicare beneficiaries in a room at the clinic known as the “kickback room,” in which the conspirators paid approximately 1,000 kickbacks totaling more than $500,000 during a period of approximately six weeks from April to June 2010.
Shelikhova and her alleged co-conspirators used various companies to launder the proceeds of the health care fraud and to generate the cash needed to pay the kickbacks.
In July 2010, two days after numerous co-conspirators were arrested in connection with this matter and with an outstanding warrant for her arrest, Shelikhova fled to Ukraine. She voluntarily returned to the United States in June 2012.
At sentencing, Shelikhova faces a maximum penalty of 20 years in prison. Sentencing is scheduled for March 20, 2013.
In total, 16 individuals have been charged in the Bay Medical scheme, including two doctors, nine clinic owners/operators/employees and five external money launderers. To date, 12 defendants have pleaded guilty for their roles in the conspiracy. Four defendants await trial before Judge Gershon on Jan. 22, 2013. As to those defendants, they are presumed innocent unless and until proven guilty.
The case is being prosecuted by Assistant U.S. Attorney Shannon Jones of the Eastern District of New York and Trial Attorney Sarah Hall of the Criminal Division’s Fraud Section. The case was investigated by the FBI and HHS-OIG.
The case was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of New York. The Medicare Fraud Strike Force operations are part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT), a joint initiative announced in May 2009 between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,480 defendants who have collectively billed the Medicare program for more than $4.8 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.
Manalapan, N.J., Woman Sentenced to 30 Years in Prison for Sexually Abusing Girl, Streaming Assault Live over the InternetRead the Press Release
WASHINGTON – A New Jersey woman was sentenced today to serve 30 years in prison for producing child pornography through the sexual exploitation of a five-year-old girl on more than one occasion and streaming footage of a sexual assault over the Internet, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney for the District of New Jersey Paul J. Fishman.
Jennifer Mahoney, 33, of Manalapan, N.J., was sentenced today by Judge Mary L. Cooper in the District of New Jersey. In addition to her prison term, Judge Cooper sentenced Mahoney to lifetime supervised release.“Jennifer Mahoney will serve 30 years in prison for sexually abusing a young girl and streaming the footage of her crime over the Internet,” said Assistant Attorney General Breuer. “No prison sentence can repair the damage Jennifer Mahoney has done, but today’s sentence is appropriate punishment for such heinous crimes, committed against a defenseless victim. The Justice Department is committed to partnering with its law enforcement partners to prevent, deter and punish child exploitation.”
“Today’s sentence is a just and fair punishment for a crime that illustrates just how despicable child pornography is,” said U.S. Attorney Fishman. “The victim in this case was a five-year-old girl that had been entrusted to the defendant’s care. Not only did Mahoney totally betray that trust by subjecting her to multiple sexual assaults, but that little girl’s nightmare will be available for others to watch over and over.”
Mahoney pleaded guilty on May 9, 2012, to a criminal information charging her with one count of the sexual exploitation of a child.
According to court documents, Mahoney admitted she sexually assaulted a five-year-old girl and streamed the assault live over the Internet via a video chat service. Mahoney also admitted that on another occasion last year, she abused the girl, recorded the abuse on her smartphone and emailed the video to at least one other person. Additionally, Mahoney admitted to viewing other videos of child sexual abuse streamed to her using Skype.
Special agents of the FBI and other law enforcement agents executed a search warrant at Mahoney’s home in Manalapan on Dec. 13, 2011. Law enforcement had previously seized a computer during a search of a man’s Texas home. Subsequent to both searches, law enforcement recovered from the Texas computer three videos of Mahoney having sexual contact with a child.
Two of the videos were of the video chat session, in which Mahoney is shown molesting the child while laughing and talking to someone, apparently the party on the other end of the chat session. The third video depicts Mahoney sexually abusing the child in a bathtub while filming it with her phone.
This case was investigated by the FBI Cyber Crimes Task Force and the Monmouth County, N.J., Prosecutor’s Office. The case is being prosecuted by Assistant U.S. Attorney John E. Clabby of the U.S. Attorney’s Office for the District of New Jersey and Trial Attorney Keith A. Becker of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS).
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ offices and CEOS, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
Justice Department Reaches Settlement with <br /> Penguin Group (USA) Inc. in E-Books CaseRead the Press Release
WASHINGTON – The Department of Justice announced today that it has reached a settlement with Penguin Group (USA) Inc.–one of the largest book publishers in the United States–and will continue to litigate against Apple Inc. and Holtzbrinck Publishers LLC, which does business as Macmillan, for conspiring to raise e-book prices to consumers.
Today’s proposed settlement was filed in the U.S. District Court for the Southern District of New York. If approved by the court, the settlement will resolve the department’s competitive concerns as to Penguin, ending Penguin’s role as a defendant in the civil antitrust lawsuit filed by the department on April 11, 2012.
The department’s Antitrust Division previously settled its claims against three book publishers–Hachette Book Group Inc., HarperCollins Publishers L.L.C. and Simon & Schuster Inc. The department said that the publishers eliminated retail price competition, resulting in consumers paying millions of dollars more for their e-books. The settlement with those three publishers was approved by the court in September 2012. A trial against Macmillan and Apple currently is scheduled to begin in June 2013.
“Since the department’s settlement with Hachette, HarperCollins and Simon & Schuster, consumers are already paying lower prices for the e-book versions of many of those publishers’ new releases and bestsellers,” said Jamillia Ferris, Chief of Staff and Counsel at the Department of Justice’s Antitrust Division. “If approved by the court, the proposed settlement with Penguin will be an important step toward undoing the harm caused by the publishers’ anticompetitive conduct and restoring retail price competition so consumers can pay lower prices for Penguin’s e-books.”
According to the complaint, the five publishers and Apple were unhappy that competition among e-book sellers had reduced e-book prices and the retail profit margins of the book sellers to levels they thought were too low. To address these concerns, the department said the companies worked together to enter into contracts that eliminated price competition among bookstores selling e-books, substantially increasing prices paid by consumers. Before the companies began their conspiracy, retailers regularly sold e-book versions of new releases and bestsellers for, as described by one of the publisher’s CEO, the “wretched $9.99 price point.” As a result of the conspiracy, consumers were typically forced to pay $12.99, $14.99, or more for the most sought-after e-books, the department said.Under the proposed settlement agreement, Penguin will terminate its agreements with Apple and other e-books retailers and will be prohibited for two years from entering into new agreements that constrain retailers’ ability to offer discounts or other promotions to consumers to encourage the sale of the Penguin’s e-books. The proposed settlement agreement also will impose a strong antitrust compliance program on Penguin, which will include a requirement that it provide advance notification to the department of any e-book ventures it plans to undertake jointly with other publishers and that it regularly report to the department on any communications it has with other publishers. Also for five years, Penguin will be forbidden from agreeing to any kind of most favored nation (MFN) agreement that could undermine the effectiveness of the settlement.
The department is currently reviewing the proposed joint venture announced by Penguin and Random House Inc., the largest U.S. book publisher. Should the proposed joint venture proceed to consummation, the terms of Penguin’s settlement will apply to it.
Penguin Group (USA) Inc. has its principal place of business in New York City. It publishes e-books and print books through publishers such as The Viking press and Gotham Books. Penguin Group (USA) Inc. is the U.S. subsidiary of The Penguin Group, a division of Pearson plc, which has its principal place of business in London.
Hachette Book Group USA has its principal place of business in New York City. It publishes e-books and print books through its publishers such as Little, Brown and Company and Grand Central Publishing.
HarperCollins Publishers, L.L.C. has its principal place of business in New York City. It publishes e-books and print books through publishers such as Harper and William Morrow.
Macmillan has its principal place of business in New York City. It publishes e-books and print books through publishers such as Farrar, Straus and Giroux, and St. Martin’s Press. Verlagsgruppe Georg von Holtzbrinck GmbH owns Holtzbrinck Publishers LLC, which does business as Macmillan, and has its principal place of business in Stuttgart, Germany.
Simon & Schuster Inc. has its principal place of business in New York City. It publishes e-books and print books through publishers such as Free Press and Touchstone.
Apple Inc. has its principal place of business in Cupertino, Calif. Among many other businesses, Apple distributes e-books through its iBookstore.
The proposed settlement, along with the department’s competitive impact statement, will be published in the Federal Register, consistent with the requirements of the Antitrust Procedures and Penalties Act. Any person may submit written comments concerning the proposed settlement within 60-days of its publication to John R. Read, Chief, Litigation III Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street, NW, 4th Floor, Washington, DC 20530. These comments will be published either in the Federal Register or, with the permission of the Court, will be posted electronically on the department’s website. At the conclusion of the 60-day comment period, the court may enter the final judgment upon a finding that it serves the public interest.
Individual Arrested in Connection withCosta Rica-based Business Opportunity Fraud VenturesRead the Press Release
A dual United States and Costa Rican citizen charged in connection with the operation of a series of fraudulent business opportunities was arrested today in Chicago following his indictment by a federal grand jury in Miami on Nov. 29, 2011, the Justice Department and the U.S. Postal Inspection Service announced today. Sean Rosales was arrested based on charges that he and his co-conspirators purported to sell beverage and greeting card business opportunities, including assistance in establishing, maintaining and operating such businesses. The charges in the indictment form part of the government’s continued nationwide crackdown on business opportunity fraud.
Prior to Rosales’ arrest, 11 other individuals were charged in connection with business opportunity fraud ventures based in Costa Rica. Seven of those other individuals have been convicted in the United States.
“Business opportunity fraud imposes significant financial hardship on innocent, hardworking victims who are simply trying to make better lives for themselves and their families ,” said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Justice Department’s Civil Division. “The Department of Justice will continue its push to prosecute those who defraud Americans to make a quick buck.”
Beginning in May 2005, Rosales and his coconspirators are alleged to have fraudulently induced purchasers in the United States to buy business opportunities in USA Beverages Inc., Twin Peaks Gourmet Coffee Inc., Cards-R-Us Inc., Premier Cards Inc., The Coffee Man Inc. and Powerbrands Distributing Company. According to the indictment, the business opportunities the defendant sold cost thousands of dollars each, and most purchasers paid at least $10,000. Each company operated for several months, and after one company closed, the next opened. The various companies used bank accounts, office space and other services in the Southern District of Florida and elsewhere, according to the indictment.
The indictment alleges that the defendant, using aliases, participated in a conspiracy that used various means to make it appear to potential purchasers that the businesses were located entirely in the United States. In reality, Rosales operated out of Costa Rica to fraudulently induce potential purchasers in the United States to buy the purported business opportunities, the indictment alleges.
According to the indictment, the companies made numerous false statements to potential purchasers of the business opportunities. Among the misrepresentations alleged in the indictment are that purchasers would likely earn substantial profits; that prior purchasers of the business opportunities were earning substantial profits; that purchasers would sell a guaranteed minimum amount of merchandise, such as greeting cards and beverages; and that the business opportunity worked with locators familiar with the potential purchaser’s area who would secure or had already secured high-traffic locations for the potential purchaser’s merchandise stands. The indictment alleges that potential purchasers also were falsely told that the profits of some of the companies were based in part on the profits of the business opportunity purchasers, thus creating the false impression that the companies had a stake in the purchasers’ success and in finding good locations.
The indictment also alleges that the companies employed various types of sales representatives, including fronters, closers, and references. A fronter spoke to potential purchasers when the prospective purchasers initially contacted the company in response to an advertisement. A closer subsequently spoke to potential purchasers to close deals. References spoke to potential purchasers about the financial success they purportedly had experienced since purchasing one of the business opportunities. According to the indictment, the companies also employed locators, who were typically characterized by the sales representatives as third parties who worked with the companies to find high-traffic locations for the prospective purchasers’ merchandise display racks.
The indictment alleges Rosales, using assumed names, was a fronter and reference for USA Beverages, a fronter and reference for Twin Peaks, a fronter, locator and reference for Cards-R-Us, a fronter, locator and reference for Premier Cards, a fronter, locator and reference for Coffee Man, and a locator for Powerbrands.
According to the allegations in the indictment, each of the companies was registered as a corporation and rented office space to make it appear to potential purchasers that its operations were fully in the United States. USA Beverages was registered as a Florida and New Mexico corporation and rented office space in Las Cruces, N.M. Twin Peaks was registered as a Florida and Colorado corporation and rented office space in Fort Collins, Colo., and Cards-R-Us was registered as a Nevada corporation and rented office space in Reno, Nev. Premier Cards was registered as a Colorado and Pennsylvania corporation and rented office space in Philadelphia, and The Coffee Man was registered as a Colorado corporation and rented office space in Denver. Powerbrands was registered as a Wisconsin corporation and rented office space in Glendale, Wis., and Palm Beach Gardens, Fla.
The defendant was charged with conspiracy to commit mail and wire fraud, and with committing this offense via telemarketing. In addition, the defendant was charged with seven counts of mail fraud and 13 counts of wire fraud. If convicted of conspiracy, Rosales faces a maximum statutory term of 25 years in prison, a possible fine and mandatory restitution on the conspiracy count. He also faces a maximum statutory term of imprisonment of 25 years on each of the mail and wire fraud counts, a possible fine and mandatory restitution.
“Fraudulent business opportunity sellers must realize that all financial fraud will be prosecuted vigorously, even if the schemers conduct their fraudulent operations from abroad,” said Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida . “Increased international law enforcement cooperation eliminates safe havens for those who cheat American citizens from overseas.”
“This international and domestic investigation illuminates the Postal Inspection Service’s resolve to protect the American public from business opportunity scams, and to ensure that the U.S. Mail is not used as a conduit for fraudsters to prey on the American public.” said Tony Gomez, Acting U. S. Postal Inspector in Charge in Miami.
Principal Deputy Assistant Attorney General Delery commended the investigative efforts of the Postal Inspection Service. The case is being prosecuted by trial attorneys Jeffrey Steger and Alan Phelps with the U.S. Department of Justice Consumer Protection Branch.
An indictment is merely an allegation, and every defendant is presumed innocent until proven guilty beyond a reasonable doubt.
Former Heber City, Utah Resident Convicted of Filing False Claims for Tax Refunds Totaling More Than $2.2 MillionRead the Press Release
April J. Rampton, 41, formerly of Heber City, Utah, was convicted yesterday in U.S. District Court in Salt Lake City of nine counts of filing false claims for income tax refunds, the Justice Department and Internal Revenue Service (IRS) announced. Rampton, who was indicted on Sept. 14, 2011, was released following the verdict. She is scheduled to be sentenced before U.S. District Judge Dee Benson on Feb. 27, 2013. The jury was unable to reach a verdict on six similar counts.
According to the indictment and the proof at trial, Rampton prepared at least nine false claims for tax refunds on behalf of others. The total amount of false tax refunds claimed for the counts of conviction was more than $2.2 million.
The evidence at trial further established that Rampton used false IRS Forms 1099-OID with fictitious amounts of income and withholdings as the basis for the false claims for tax refund.
For each false claim conviction, Rampton faces a maximum potential sentence of five years in prison and a fine of up to $250,000 or twice the gross gain or loss caused by the offense.
Kathryn Keneally, Assistant Attorney General for the Justice Department’s Tax Division, commended the special agents of IRS Criminal Investigation who investigated the case, and Tax Division Trial Attorneys Michael Romano and Stuart Wexler, who prosecuted the case.
Bogus refund claims based on false Forms 1099-OID is one of the IRS’s “ Dirty Dozen” tax scams for 2012.
Five Foreign Nationals Sentenced to Prison for Role in<br /> Trafficking Identities of Puerto Rican U.S. CitizensRead the Press Release
WASHINGTON – Five foreign nationals were sentenced to prison for their respective roles in trafficking the identities of Puerto Rican U.S. citizens and corresponding identity documents, Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Rosa E. Rodríguez-Vélez for the District of Puerto Rico; Director John Morton of U.S. Immigration and Customs Enforcement (ICE), which oversees Homeland Security Investigations (HSI); Chief Postal Inspector Guy J. Cottrell of the U.S. Postal Inspection Service (USPIS); Scott P. Bultrowicz, Director of the U.S. State Department’s Diplomatic Security Service (DSS); and Internal Revenue Service-Criminal Investigation (IRS-CI) Chief Richard Weber announced today.
Daniel Aparicio-Lara, 29, a Mexican national formerly of Burlington, N.C., was sentenced today to 66 months in prison by U.S. District Judge Thomas D. Schroeder in the Middle District of North Carolina. In addition to his prison term, Aparicio-Lara was sentenced to serve three years of supervised release and ordered to forfeit $140,800 in proceeds. On Sept. 18, 2012, Aparicio-Lara pleaded guilty in front of Judge Schroeder to one count of conspiracy to commit identification fraud and one count of aggravated identity theft.
Manuel Guzman-Santos, 37, a Dominican national formerly of Worcester, Mass., and Marco Pena, 37, a Dominican national formerly of Dorchester, Mass., were sentenced yesterday by U.S. District Judge Joseph L. Tauro in the District of Massachusetts. Both Guzman-Santos and Pena was sentenced to serve 30 months in prison. On Aug. 2, 2012, Guzman-Santos and Pena each pleaded guilty in front of Judge Tauro to one count of conspiracy to commit identification fraud.
Adelfo Perez-Garcia, 36, a Mexican national formerly of Seymour, Ind., and Alma Yesenia Garcia-Ramirez, 29, a Mexican national formerly of Crystal Lake, Ill., were sentenced yesterday by U.S. District Judge Gustavo A. Gelpí in the District of Puerto Rico. Perez-Garcia was sentenced to serve 24 months and one day in prison and Garcia-Ramirez was sentenced to serve 24 months in prison. Judge Gelpí ordered the removal of both defendants from the United States after the completion of their sentences and ordered that Garcia-Ramirez forfeit $35,900 in proceeds. On Aug. 28, 2012, Perez-Garcia pleaded guilty to one count of conspiracy to commit identification fraud in the District of Puerto Rico in front of U.S. Magistrate Judge Silvia Carreño-Coll. On Sept. 4, 2012, Garcia-Ramirez pleaded guilty to one count of conspiracy to commit alien smuggling for financial gain in the District of Puerto Rico before U.S. Magistrate Judge Bruce J. McGiverin.
The five defendants were charged in a superseding indictment returned by a federal grand jury in Puerto Rico on Mar. 22, 2012. To date, a total of 53 individuals have been charged for their roles in the identity trafficking scheme, and 23 defendants have pleaded guilty.
Court documents allege that individuals located in the Savarona area of Caguas, Puerto Rico (Savarona suppliers), obtained Puerto Rican identities and corresponding identity documents. Other conspirators located in various cities throughout the United States (identity brokers) allegedly solicited customers and sold Social Security cards and corresponding Puerto Rico birth certificates for prices ranging from $700 to $2,500 per set. The superseding indictment alleges that identity brokers ordered the identity documents from Savarona suppliers, on behalf of the customers, by making coded telephone calls. The conspirators are charged with using text messages, money transfer services and express, priority or regular U.S. mail to complete their illicit transactions.
Court documents allege that some identity brokers assumed a Puerto Rican identity themselves and used that identity in connection with the trafficking operation. Their customers allegedly generally obtained the identity documents to assume the identity of Puerto Rican U.S. citizens and to obtain additional identification documents, such as legitimate state driver’s licenses. Some customers allegedly obtained the documents to commit financial fraud and attempted to obtain a U.S. passport.
According to court documents, various identity brokers were operating in Rockford, Ill.; DeKalb, Ill.; Aurora, Ill.; Seymour, Ind.; Columbus, Ind.; Indianapolis; Hartford, Conn.; Clewiston, Fla.; Lilburn, Ga.; Norcross, Ga.; Salisbury, Md.; Columbus, Ohio; Fairfield, Ohio; Dorchester, Mass.; Lawrence, Mass.; Salem, Mass.; Worcester, Mass.; Grand Rapids, Mich.; Nebraska City, Neb.; Elizabeth, N.J.; Burlington, N.C.; Hickory, N.C.; Hazelton, Pa.; Philadelphia; Houston; Abingdon, Va.; Albertville, Ala.; and Providence, R.I.
According to court documents, Aparicio-Lara admitted that he was an identity broker who operated in North Carolina and Missouri; Guzman-Santos and Pena admitted that they were identity brokers who operated in Massachusetts; and Perez-Garcia admitted that he was an identity broker who operated in Indiana. Garcia-Ramirez admitted to assisting an Illinois-based identity broker and transferring money on behalf of the organization. The five defendants used either a real Texan or Puerto Rican identity themselves to commit identification fraud and to facilitate their identity trafficking business.
The charges are the result of Operation Island Express, an ongoing, nationally-coordinated investigation led by the ICE-HSI Chicago Office and USPIS, DSS and IRS-CI offices in Chicago, in coordination with the ICE-HSI San Juan Office. The Illinois Secretary of State Police; Elgin, Ill., Police Department; Seymour, Ind., Police Department; and Indiana State Police provided substantial assistance. The ICE-HSI Assistant Attaché office in the Dominican Republic and International Organized Crime Intelligence and Operations Center (IOC-2) as well as various ICE, USPIS, DSS and IRS-CI offices around the country provided invaluable assistance.The case is being prosecuted by Trial Attorneys James S. Yoon, Hope S. Olds, Courtney B. Schaefer, and Christina Giffin of the Justice Department Criminal Division’s Human Rights and Special Prosecutions Section, with the assistance of Acting Deputy Chief Jeannette Gunderson of the Criminal Division’s Asset Forfeiture and Money Laundering Section, and the support of the U.S. Attorney’s Office for the District of Puerto Rico. The U.S. Attorney’s Offices in the Northern District of Illinois, Southern District of Indiana, District of Connecticut, District of Massachusetts, District of Nebraska, Middle District of North Carolina, Southern District of Ohio, District of Rhode Island, Southern District of Texas and Western District of Virginia provided substantial assistance.
Potential victims and the public may obtain information about the case at: www.justice.gov/criminal/vns/caseup/beltrerj.html. Anyone who believes their identity may have been compromised in relation to this investigation may contact the ICE toll-free hotline at 1-866-DHS-2ICE (1-866-347-2423) and its online tip form at www.ice.gov/tipline. Anyone who may have information about particular crimes in this case should also report it to the ICE tip line or website.
Anyone who believes that they have been a victim of identity theft, or wants information about preventing identity theft, may obtain helpful information and complaint forms on various government websites including the Federal Trade Commission ID Theft Website, www.ftc.gov/idtheft. Additional resources regarding identity theft can be found at www.ojp.usdoj.gov/ovc/pubs/ID_theft/idtheft.html; www.ssa.gov/pubs/10064.html; www.fbi.gov/about-us/investigate/cyber/identity_theft; and www.irs.gov/privacy/article/0,,id=186436,00.html.
Department of Justice Enters into Agreement to Reform the Juvenile Court of Memphis and Shelby County, TennesseeRead the Press Release
The Department of Justice today announced that it has entered into a comprehensive memorandum of agreement with the Juvenile Court of Memphis and Shelby County, Tenn., to resolve findings of serious and systemic failures in the juvenile court that violate children’s due process and equal protection rights. This agreement is the first time that the department has used its authority under the Violent Crime Control and Law Enforcement Act of 1994 to address constitutional violations within a juvenile justice system.
The agreement is designed to ensure that the juvenile court protects constitutional rights of children throughout their court proceedings. The agreement also requires the juvenile court to take steps to reduce racial disparities among similarly situated juveniles in different stages of the juvenile justice process.
“We commend the court, led by Juvenile Court Judge Curtis Person, for taking this bold step toward reform,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “This first of its kind agreement reflects a powerful commitment to upholding constitutional rights of all children appearing before the Juvenile Court. We hope that juvenile courts around the country review this agreement to ensure that they are protecting the constitutional rights of children.”
“This unprecedented agreement represents a collaborative effort to ensure that all children in Shelby County, Tennessee receive the full protections provided under our constitution,” said Edward L. Stanton III, U.S. Attorney for the Western District of Tennessee. “These reforms are designed to establish a pre-eminent juvenile court for Shelby County and will ultimately serve as a model for juvenile courts systems across the country.”
The agreement provides for comprehensive reforms in the areas of due process, equal protection, and other areas of court operations. Due process reforms provide procedural safeguards for children at critical phases of their cases, including requirements that the court:
- Establish a dedicated juvenile defender unit in the public defender’s office that will be independent of the court and have the structure and resources to provide independent, ethical, and zealous representation for children.
- Require procedural safeguards against self-incrimination, to provide notice of charges, and to hold transfer hearings.
- Appoint counsel before children appear before a magistrate judge for a probable cause determination and provide the probable cause determination within 48 hours for all warrantless arrests.
- Make written findings for key judicial decisions, including transfer hearings.
- Implement policies in the court’s detention facility that will prohibit use of restraints, ensure a suicide prevention plan and require staff to receive training on adolescent development.
The equal protection reforms in the agreement require that the court administer juvenile justice in a manner that is consistent with the Equal Protection Clause of the Fourteenth Amendment of the Constitution. These reforms require the juvenile court to:
- Assess where and why disproportionate minority contact (DMC) in the juvenile justice system occurs, including analysis of referrals and the court’s decisions at key stages of a child’s court case.
- Prohibit pre-adjudication detention for reasons that are not related to public safety or future appearance in court.
- Hire a DMC coordinator, who will be charged with gathering data, working with the court and other county agencies to develop alternatives to detention, and ensuring that children are not referred to juvenile court based on their race.
- Establish a pilot program allowing law enforcement to phone in information about a recently arrested youth and get guidance on whether the child should be immediately released and provided with an appearance summons or transported to juvenile court.
Additional reforms will provide for strengthening the juvenile court’s community engagement and accountability, including requirements that the court:
- Create a community oversight group comprised of juvenile justice stakeholders and six to nine citizens selected by the mayor and approved by the county commission. This group will include two parents of children who have had delinquency matters before Juvenile Court and a person under the age of 21 who has had direct contact with the juvenile justice system. Juvenile court officials will update this group and be required to answer its questions about any reform efforts.
- Provide bi-annual community updates and publish progress reports on its website and include a data dashboard of its progress with the agreement.
The investigation, opened in August 2009, was conducted by the Special Litigation Section of the Civil Rights Division under provisions of the Violent Crime Control and Law Enforcement Act of 1994. In April 2012, the department announced findings that the juvenile court failed to provide constitutionally required due process and equal protection to children appearing for delinquency proceedings. The department also found constitutional violations in the detention facility.
The department’s Civil Rights Division will host a conference call for local community members to hear directly from Assistant Attorney General Thomas E. Perez. The conference call will take place on Tuesday, Dec. 18, 2012, at 7:00 p.m. EST (6:00 p.m. CST). To participate in the call, please call (866) 843-0890 and use the entry number 3447017. For more information on the Justice Department’s Civil Rights Division, please visit www.justice.gov/crt
Related Materials:
Shelby Co., Tenn., Agreement
Convicted Fraudster Admits Obstructing Justice, Attempting to Corruptly Influence U.s. Attorney to Dismiss CaseRead the Press Release
WASHINGTON – A defendant who tried to escape fraud charges against him by exerting pressure on a U.S. Attorney’s spouse and candidate for office pleaded guilty today to obstruction of justice for perpetrating the scheme, Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division announced today.
James F. Lagona, 52, of Snyder, N.Y., pleaded guilty to a criminal information, filed today, charging him with one count of endeavoring to influence, obstruct and impede the due administration of justice. Lagona entered his guilty plea in Buffalo federal court before Chief U.S. District Judge William M. Skretny. Lagona was arrested pursuant to a criminal complaint on Nov. 15, 2012, and has been detained since his arrest.
Lagona was found guilty of 27 counts of felony mail fraud on Feb. 23, 2011, following a jury trial in the Western District of New York. He was scheduled to be sentenced on Dec. 3, 2012, before being arrested on the obstruction of justice charge to which he pleaded guilty today.
During his guilty plea proceeding, Lagona admitted to obtaining a private meeting with a campaign staffer working for U.S. Representative Kathy Hochul of New York, who was then involved in a close race for reelection against her opponent. Lagona also admitted that during the Nov. 2, 2012, meeting – four days before the election – he identified himself as a clergyman, claimed that he had been involved in discussions with the political party of Rep. Hochul’s election opponent, and falsely claimed that the opponent’s party was interested in featuring him in an advertisement or rally to claim wrongful prosecution and religious persecution. He told the campaign staffer that he would instead publicly support Rep. Hochul, if her spouse, Western District of New York U.S. Attorney William J. Hochul Jr., dismissed the criminal case against him. The campaign staffer subsequently reported the meeting to the FBI.
Lagona admitted to meeting with the campaign staffer a second time on Nov. 3, 2012. During the meeting, which was covertly recorded by the campaign staffer under the FBI’s supervision, Lagona admitted to specifying that he sought a “quid pro quo” in exchange for refusing to campaign with the party of Rep. Hochul’s opponent and for publicly supporting her instead. Lagona admitted he told the staffer that in exchange he wanted his case dismissed and for no further charges to be brought against him. Following the meeting, Lagona made efforts to follow up with the staffer by phone.
The criminal complaint in which Lagona was originally charged with obstruction, unsealed on Nov. 15, 2012, notes that the criminal investigation revealed no evidence that the campaign staffer, Rep. Hochul, or her campaign ever intended to accept or considered accepting Lagona’s proposal, nor that the proposal was ever communicated to or considered by U.S. Attorney Hochul. The investigation has revealed no evidence that any member of the opposing party ever considered using Lagona during the campaign.
At sentencing, currently scheduled for March 20, 2013, before Chief U.S. District Judge Skretny, Lagona faces a maximum penalty of 10 years in prison and a $250,000 fine.
The case is being prosecuted by Trial Attorney J.P. Cooney of the Criminal Division’s Public Integrity Section and investigated by the FBI, Buffalo Division, under the direction of Special Agent in Charge Christopher M. Piehota.
AU Optronics Corporation Executive Convicted for Role in<br /> LCD Price-fixing ConspiracyRead the Press Release
WASHINGTON – Following a three-week trial, a federal jury in San Francisco today convicted an executive of the largest Taiwan liquid crystal display (LCD) producer for his participation in a worldwide conspiracy to fix the prices of thin-film transistor-liquid crystal display (TFT-LCD) panels sold worldwide, the Department of Justice announced.
Shiu Lung Leung, AU Optronics Corp.’s former senior manager in the Desktop Display Business Group, was found guilty today in U.S. District Court for the Northern District of California in San Francisco, of participating in a worldwide TFT-LCD price-fixing conspiracy from May 15, 2002 to Dec. 1, 2006.
AU Optronics Corp., based in Hsinchu, Taiwan, and its American subsidiary, AU Optronics Corp. America, headquartered in Houston, were found guilty on March 13, 2012, following an eight-week trial. Former AU Optronics Corp. president Hsuan Bin Chen and former AU Optronics Corp. executive vice president Hui Hsiung were also found guilty at that time. A mistrial was declared against Leung after that trial. Today’s verdict is the result of Leung’s retrial.
“This international price-fixing conspiracy impacted countless American consumers by raising the price of computer monitors, notebooks and televisions containing LCD panels,” said Scott D. Hammond, Deputy Assistant Attorney General of the Antitrust Division’s criminal enforcement program. “Today’s guilty verdict demonstrates that the Antitrust Division will continue to hold executives accountable for crimes that undermine a competitive marketplace.”
The indictment charged that AU Optronics Corp. participated in the worldwide price-fixing conspiracy from Sept. 14, 2001, to Dec. 1, 2006, and that its subsidiary joined the conspiracy as early as spring 2003. Today a jury found that Leung, along with the previously convicted companies and former executives, was guilty of fixing the prices of LCD panels sold in the United States. The conspirators fixed the prices of LCD panels during monthly meetings with their competitors, which were secretly held in hotel conference rooms, karaoke bars and tea rooms around Taiwan.
LCD panels are used in computer monitors and notebooks, televisions and other electronic devices. By the end of the conspiracy, the worldwide market for LCD panels was valued at $70 billion annually. The LCD price-fixing conspiracy affected some of the largest computer manufacturers in the world, including Hewlett Packard, Dell and Apple.
The company and its U.S. subsidiary were sentenced on Sept. 20, 2012, before Judge Susan Illston, to pay a $500 million criminal fine, matching the largest fine imposed against a company for violating U.S. antitrust laws. Chen and Hsiung were each sentenced to serve three years in prison and to each pay a $200,000 criminal fine.
As a result of this ongoing investigation, eight companies have pleaded guilty or been convicted to date and have been sentenced to pay criminal fines totaling more than $1.39 billion. Of the 22 charged executives, 13 have pleaded guilty or have been convicted and seven remain fugitives. The executives who have been sentenced have been ordered to serve a combined total of 4,871 days in prison.
The maximum penalty for a Sherman Act violation for an individual is 10 years in prison and a $1 million fine. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory fine.
Today’s charges are the result of a joint investigation by the Department of Justice Antitrust Division’s San Francisco Field Office and the FBI in San Francisco. Anyone with information concerning illegal conduct in the TFT-LCD industry is urged to call the Antitrust Division’s San Francisco Field Office at 415-436-6660 or visit
www.justice.gov/atr/contact/newcase.htm.
Monday 17 December 2012
Los Angeles-area Church Pastor Pleads Guilty to Money Laundering and Conspiring with Doctors, Others to Defraud Medicare of More Than $11 MillionRead the Press Release
WASHINGTON — A Los Angeles-area church pastor pleaded guilty today to conspiring with doctors, the operators of fraudulent medical clinics, street-level patient recruiters and others to defraud Medicare of more than $11 million, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney André Birotte Jr. of the Central District of California; Glenn R. Ferry, Special Agent in Charge for the Los Angeles Region of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG); Bill L. Lewis, Assistant Director in Charge of the FBI’s Los Angeles Field Office; and Joseph Fendrick, Special Agent in Charge of the California Department of Justice, Bureau of Medi-Cal Fraud and Elder Abuse.
Charles Agbu, 58, of Carson, Calif., pleaded guilty before U.S. District Judge George Wu in the Central District of California to one count of conspiracy to commit health care fraud and one count of money laundering.
In court documents, Agbu, a church pastor, admitted that he owned and operated Bonfee Inc., a fraudulent durable medical equipment (DME) supply company located in Carson. Agbu admitted that he paid patient recruiters or “marketers” to approach Medicare beneficiaries and convince them to provide their Medicare information in exchange for free DME that the beneficiaries did not need. Often, the marketers told the beneficiaries that they would receive highly-specialized power wheelchairs (PWCs) because PWCs were among the most expensive items that Agbu and his co-conspirators could bill to Medicare and generated the most profit.Agbu also admitted that he knew Medicare required him and his co-conspirators to maintain prescriptions and supporting medical documentation in their files for every PWC and item of DME that they billed to Medicare. To meet these Medicare requirements, Agbu admitted that he paid the operators of fraudulent medical clinics to provide him with prescriptions and supporting medical documentation for the PWCs and DME that he and his co-conspirators billed to Medicare. Agbu admitted that he knew these clinics used marketers to solicit Medicare beneficiaries, and that the prescriptions and medical documents that the clinics produced were fraudulent. Agbu admitted that on average, he paid between $400 and $700 for each prescription he bought from these clinics.
In addition to paying the operators of fraudulent medical clinics for prescriptions, Agbu admitted that he paid doctors to write and provide him and his co-conspirators with prescriptions and medical documents needed to submit PWC and DME claims to Medicare. Agbu admitted that he directed marketers to bring Medicare beneficiaries to the doctors or knew the doctors used marketers to solicit beneficiaries. Agbu admitted that he paid the doctors or members of their staff approximately $100 to $400 for every prescription that the doctors wrote for and provided to him. One of these doctors, Agbu’s co-defendant Dr. Juan Tomas Van Putten, pleaded guilty in November 2012 to conspiring to defraud Medicare and admitted that he accepted payment in exchange for writing medically-unnecessary PWC and DME prescriptions.
Agbu admitted that he and his co-conspirators submitted false claims to Medicare for PWCs and other DME by using the Medicare information obtained by marketers and the prescriptions and medical documentation that he purchased from doctors and operators of fraudulent medical clinics. Agbu and his co-conspirators submitted these claims through Bonfee and Ibon, Inc., a fraudulent DME supply company that was located in the same building as Bonfee and owned by one of Agbu’s alleged co-conspirators. Agbu admitted that with one exception, he and his co-conspirators supported every PWC claim that they submitted to Medicare with fraudulent or purchased prescriptions. Agbu admitted to knowing that the DME claims submitted to Medicare were often for PWCs that were not medically necessary or never provided to beneficiaries.According to court documents, Agbu and his co-conspirators submitted approximately $11,094,918 in false claims to Medicare and received approximately $5,788,725 on those claims. Agbu admitted that he engaged in money laundering when he transferred over $10,000 of these illegally-obtained Medicare funds between his various bank accounts.
At sentencing, scheduled for May 16, 2013, Agbu faces a maximum penalty of 20 years in prison and a $500,000 fine. Dr. Van Putten’s sentencing is scheduled for March 28, 2012. He faces a maximum penalty of 10 years in prison and a $250,000 fine.
Co-defendants Dr. Emmanuel Ayodele, Alejandro Maciel, Candalaria Estrada and Charles Agbu’s daughter Obiageli Agbu are scheduled for trial on Feb. 26, 2013, for their alleged roles in the conspiracy. They are presumed innocent until proven guilty at trial.
The case is being prosecuted by Trial Attorney Jonathan T. Baum of the Criminal Division’s Fraud Section. The case is being investigated by the FBI, HHS-OIG, the California Department of Justice and Internal Revenue Service-Criminal Investigation.
The case was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Central District of California. The Medicare Fraud Strike Force operations are part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT), a joint initiative announced in May 2009 between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,480 defendants who have collectively billed the Medicare program for more than $4.8 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.Leader of $63 Million Mental Health Fraud Scheme Pleads Guilty in MiamiRead the Press Release
WASHINGTON – The owner of a string of community mental health centers pleaded guilty today in connection with a health care fraud and money laundering scheme involving defunct health care provider Health Care Solutions Network Inc. (HCSN), announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; Michael B. Steinbach, Acting Special Agent in Charge of the FBI’s Miami Field Office; and Special Agent in Charge Christopher B. Dennis of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), Office of Investigations Miami office.
Armando Gonzalez, 50, of Hendersonville, N.C., pleaded guilty before U.S. District Judge Cecilia M. Altonaga in the Southern District of Florida to one count of conspiracy to commit health care fraud and one count of conspiracy to commit money laundering. Under the terms of his plea agreement, Gonzalez will also forfeit his interest in property valued at several million dollars, including $987,910 in currency seized in July 2012 as well as several vehicles and properties located in Hendersonville.
According to court documents, HCSN operated community mental health centers (CMHC) at three locations in Miami-Dade County, Fla., and one location in Hendersonville. HCSN purported to provide partial hospitalization program (PHP) services to individuals suffering from mental illness. A PHP is a form of intensive treatment for severe mental illness.
According to Gonzales’s plea agreement, HCSN obtained Medicare beneficiaries to attend HCSN for purported PHP treatment that was unnecessary and, in many instances, not even provided. HCSN obtained beneficiaries in Miami by paying kickbacks to owners and operators of assisted living facilities (ALF). According to court documents, HCSN routinely admitted patients in Miami who were ineligible for PHP treatment because they suffered from medical conditions – including mental retardation, dementia and Alzheimer’s disease – that could not be effectively treated by PHP services HCSN was purporting to provide.
According to Gonzalez’s plea agreement, his employees routinely fabricated patient census data and patient medical records that were then utilized to support false and fraudulent billing to government sponsored health care benefit programs, including Medicare and the Florida Medicaid program.
Gonzalez pleaded guilty to directing his employees in North Carolina to routinely submit fraudulent PHP claims for Medicare patients who were not even present at the CMHC or on days when the CMHC was closed due to snow. Similar to HCSN’s Florida operations, patients who were suffering from conditions such as mental retardation were improperly and routinely admitted to HCSN for purported treatment. To increase its patient base, HCSN Hendersonville employed “marketers” in North Carolina who recruited ineligible patients from surrounding counties. HCSN would then transport the patients daily and reward them for their attendance by giving them cigarettes.
In furtherance of the North Carolina fraud scheme, HCSN employees and licensed therapists routinely fabricated patient progress notes purportedly documenting intensive mental health therapy. In reality, patients were crowded into dysfunctional groups that often exceeded more than 20 people. HCSN therapists would then produce bogus therapy notes for sessions that had little therapeutic value and, in many cases, never even occurred.
According to Gonzales’s plea agreement, he was the president of Miami-based Psychiatric Consulting Network Inc., which he used as a shell corporation to launder HCSN health care fraud proceeds.
According to court documents, from 2004 through 2011, HCSN billed Medicare and the Florida Medicaid program approximately $63 million for purported mental health services. The false and fraudulent billing resulted in more than $28 million in payments from Medicare and Florida’s Medicaid programs.
In addition to Gonzalez, former HCSN employees John Thoen, Alexandra Haynes, Serena Joslin and Sarah Da Silva Keller have pleaded guilty to health care fraud and related charges. ALF owners Daniel Martinez, Raymond Rivero, Ivon Perez and Alba Serrano have pleaded guilty to health care fraud and related charges for their roles in the scheme. Alleged co-conspirators Paul Layman and Wondera Eason are scheduled for trial on Jan. 14, 2013, before judge Altonaga in the Southern District of Florida.
The cases are being prosecuted by Special Trial Attorney William J. Parente and Trial Attorneys Allan J. Medina and Steven Kim of the Criminal Division’s Fraud Section. The case is being investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,480 defendants who have collectively billed the Medicare program for more than $4.8 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.
Justice Department and the City of Portland, Ore., <br /> <br /> Jointly File Court Enforceable Agreement to Reform <br /> <br /> Portland Police Bureau’s Use of Force PracticesRead the Press Release
The United States and the city of Portland, Ore., have jointly filed in federal court a proposed court enforceable settlement agreement to remedy constitutional claims that the Portland Police Bureau (PPB) engages in a pattern or practice of unconstitutional uses of force in response to “low-level offenses” against persons with actual or perceived mental illness. The agreement addresses the allegations described in a civil action also filed today by the United States, under provisions of the Violent Crime Control and Law Enforcement Act of 1994 for alleged violations of the Fourth Amendment of the U.S. Constitution.
Specifically, the United States’ complaint alleges that PPB engages in a pattern or practice of using excessive force on individuals with actual or perceived mental illness by: (1) too frequently using a higher level of force than necessary; (2) using electronic control weapons (ECWs), commonly referred to as Tasers, in circumstances when such force is not justified, or deploying ECWs more times than necessary on an individual; and (3) using a higher degree of force than justified for low-level offenses.
Once approved by the court, the agreement will require changes in PPB’s policy, training, supervisory oversight, community-based mental health services, crisis intervention, employee information systems, officer accountability and community engagement and oversight. The agreement calls for an independent compliance officer and community liaison, who will be responsible for synthesizing data related to PPB’s use of force, reporting to the city council, the Justice Department and the public, and gathering input from the public related to PPB’s compliance with the agreement. The agreement also lays the framework for a community oversight advisory board, which will be a crucial mechanism for civil engagement in the reform process.
The United States and the city jointly filed a motion and other supporting documents requesting that the court approve the agreement and conditionally dismiss the civil action, while allowing the court to retain jurisdiction over the agreement for enforcement purposes if the city does not comply with the terms of the agreement. The agreement is the result of the Justice Department’s 14‑month investigation of PPB’s policies and practices and of subsequent negotiations with the city. The parties solicited and carefully considered extensive community feedback throughout this process.
The United States opened an investigation into PPB’s use of force in June 2011 and issued findings in September 2012. Shortly thereafter, the parties issued a statement of intent, describing their commitment to enter into a court-enforceable agreement regarding necessary reforms. Portland’s city council unanimously voted to approve the agreement on Nov. 14, 2012, following two public hearings.
“This agreement is the product of extensive negotiations between the city of Portland and the Justice Department and is reflective of the significant public feedback we received during our investigation, as well as throughout the settlement negotiation process,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “I am confident that the reforms mandated by this Agreement will result in a Portland Police Bureau that provides police services in a constitutional manner and that better protects the community.”
“I look forward to a continued partnership with the city, Chief Reese and the community in the implementation of this historic agreement,” said Amanda Marshall, U.S. Attorney for the District of Oregon. “The reforms required by this settlement agreement provide the building blocks for a stronger and safer Portland.”
For more information on the Justice Department’s Civil Rights Division, please visit www.justice.gov/crt . If you have any comments or concerns specific to this matter, please feel free to contact us at [email protected] or 1-877-218-5228.
Japanese-Based Toyo Ink and Affiliates in New Jersey and Illinois<br /> <br /> Settle False Claims Allegation for $45 MillionRead the Press Release
Japan-based Toyo Ink SC Holdings Co. Ltd. and various affiliated entities (collectively, Toyo Ink) have agreed to pay $45 million, plus interest, to settle allegations that they violated the False Claims Act by knowingly failing to pay antidumping and countervailing duties, the Justice Department announced today.
Toyo Ink, which has operations worldwide, is a leading provider of printing inks. The Toyo Ink parties to the agreement are the Japanese companies Toyo Ink SC Holdings Co. Ltd. (successor in interest to Toyo Ink Manufacturing Co. Ltd.), Toyocolor Co. Ltd., Toyo Ink Co. Ltd. and Toyochem Co. Ltd., and their United States affiliates Toyo Ink Mfg. America LLC (located in New Jersey), Toyo Ink International Corp. (located in New Jersey), and Toyo Ink America LLC (located in Illinois).
The Department of Commerce assesses antidumping and countervailing duties to protect United States businesses by offsetting unfair foreign pricing and government subsidies. The duties are collected by U.S. Customs, which is an agency of the Department of Homeland Security. Import duties may vary depending on a product’s country of origin, which is identified by determining the last country in which the product underwent a substantial transformation. The government alleged that Toyo Ink knowingly misrepresented, or caused to be misrepresented, the country of origin on documents presented to U.S. Customs and Border Protection to avoid paying duties, particularly antidumping and countervailing duties, on imports of the colorant carbazole violet pigment number 23 (CVP-23) between April 2002 and March 2010.
Specifically, the government alleged that Toyo Ink misrepresented Japan and Mexico as the countries of origin for its CVP-23 imports, rather than the People’s Republic of China (PRC) and India which were the company’s sources for raw CVP-23. Imports of CVP-23 from the PRC and India have been subject to these duties since 2004; there are no such duties on imports from Japan or Mexico. Although Toyo Ink’s CVP-23 from the PRC and India underwent a finishing process in Japan and Mexico before it was imported into the United States, the government alleged that this process was insufficient to constitute a substantial transformation to render these countries as the countries of origin.
“Importers seeking access to United States markets must comply with the law, including the payment of customs duties meant to protect domestic companies from unfair competition abroad,” said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Justice Department’s Civil Division. “This settlement demonstrates that the Department of Justice will zealously guard the public fisc – taking action not only against those who fraudulently obtain government funds, but also against those who inappropriately avoid paying money owed to the United States.”
Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina, stated that, “Fair and lawful trade requires importers to truthfully identify their products and pay the appropriate duties. Our office will vigorously investigate and prosecute importers who make false representations and claims designed to avoid the payment of lawful import duties.”
The allegations resolved by today’s settlement were initially alleged in a whistleblower lawsuit filed under the False Claims Act by John Dickson, president of a domestic producer of CVP-23. Under the False Claims Act, private citizens can sue on behalf of the United States and share in any recovery. Mr. Dickson will receive more than $7,875,000 as his share of the government’s recovery.
The investigation was handled by the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Western District of North Carolina, the Department of Homeland Security’s U.S. Customs and Border Protection and the Department of Commerce’s International Trade Administration. The claims settled by this agreement are allegations only; there has been no determination of liability.
The False Claims Act suit was filed in the U.S. District Court for the Western District of North Carolina, and is captioned United States ex rel. Dickson v. Toyo Ink Manufacturing Co., Ltd., et al., No. 09-CV-438 (W.D.N.C.).
Bridgeport, Conn., Drug Dealer Sentenced to Death<br /> for Murdering Three People in 2005Read the Press Release
WASHINGTON – U.S. District Judge Janet Bond Arterton today sentenced Azibo Aquart to death for murdering three Bridgeport, Conn., residents on Aug. 24, 2005, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, David B. Fein, U.S. Attorney for the District of Connecticut and Kimberly K. Mertz, Special Agent in Charge of the FBI in New Haven.
“Azibo Aquart carried out heinous crimes, and committed horrific acts of violence,” said Assistant Attorney General Breuer. “There is no joy on this day – only the recognition that we must continue not only to seek justice for victims of violent crime, but also to do all we can to prevent and deter drug trafficking and the terror that so often accompanies it.”
“This defendant planned and carried out the brutal bludgeoning murders of three defenseless victims,” said U.S. Attorney Fein. “On this day, we remember the victims, their families and loved ones. I commend our law enforcement partners who tirelessly investigated this matter, notably the FBI, Bridgeport Police Department, Connecticut State Police, Connecticut Department of Correction’s Intelligence Unit, ATF, U.S. Marshals Service and the Bridgeport States Attorney’s Office, for their persistence and dedication to the cause of justice.”
“These types of investigations are extremely difficult to investigate for a variety of reasons, but especially because of the nature of the crimes and the level of violence involved,” said FBI Special Agent in Charge Mertz. “Our thoughts are with the victims of this horrible crime and their families. We are extremely proud of the local, state and federal agents and investigators assigned to this matter who have worked diligently to bring the defendant and his co-conspirators to justice. The importance of their collective efforts cannot be overstated.”
On May 23, 2011, after a month-long trial, a federal jury found Aquart, 31, of Bridgeport, guilty of the murders of Tina Johnson, her boyfriend James Reid and friend Basil Williams. According to the evidence disclosed during the trial, Aquart, also known as “Azibo Smith,” “Azibo Siwatu Jahi Smith,” “D,” “Dreddy” and “Jumbo,” was the founder and leader of a drug trafficking group that primarily sold crack cocaine out of an apartment building located at 215 Charles Street in Bridgeport. Aquart and his associates participated in acts of violence, such as threats and assaults, to maintain their control over the group’s drug distribution activities at the Charles Street Apartments. In the summer of 2005, Aquart and his associates became involved in a drug trafficking dispute with Johnson, a resident of 215 Charles Street who sometimes sold smaller quantities of crack cocaine without Aquart’s approval. On the morning of Aug. 24, 2005, Azibo Aquart, assisted by Azikiwe Aquart, Efrain Johnson and John Taylor, entered Apartment 101 at 215 Charles Street and murdered Johnson, Reid and Williams.
During the trials of Azibo Aquart and Efrain Johnson, the government offered extensive forensic evidence gathered from the apartment, including fingerprints and evidence that contained DNA from Azibo Aquart and his co-conspirators. Azibo Aquart’s fingerprint was found on a piece of duct tape recovered from the crime scene, and Johnson’s DNA was found on a torn piece of a latex glove that was stuck to the duct tape used to bind one of the victim’s wrists.
Azibo Aquart was found guilty of conspiring to commit murder in aid of racketeering and committing the racketeering murders of Johnson, Reid and Williams. The jury also found Azibo Aquart guilty of committing three counts of drug-related murder. In addition, Azibo Aquart was found guilty of one count of conspiracy to possess with intent to distribute 50 grams or more of crack cocaine.
On June 15, 2011, the jury unanimously determined that Azibo Aquart should be sentenced to death for committing both the racketeering and drug-related murders of Johnson and Williams, but could not reach a unanimous decision as to an appropriate penalty – life in prison or death – for the racketeering and drug-related murder of Reid. With respect to the murder of Reid, Judge Arterton imposed a term of life in prison.
This is the first time since the federal death penalty was reinstituted in 1988 that the death penalty has been imposed on a federal defendant in Connecticut.
Judge Arterton also sentenced Aquart today to 10 years in prison for conspiring to commit murder in aid of racketeering and life in prison for conspiring to possess with intent to distribute cocaine base. In addition, Aquart was ordered to pay $17,106 in restitution to the families of the three victims to cover funeral expenses.
On Aug. 26, 2011, Azibo Aquart’s brother, Azikiwe Aquart, also known as “Z” and “Ziggy,” pleaded guilty to three counts of murder in aid of racketeering. In pleading guilty, he admitted that agreed to participate in what he believed would be a robbery with his brother and others and, after entering the apartment, he committed the murder of James Reid while other participants in the crime murdered Tina Johnson and Basil Williams. On December 12, 2011, Azikiwe Aquart was sentenced by U.S. District Judge Stefan R. Underhill in Bridgeport to a mandatory term of life in prison.
On Feb. 24, 2012, a jury found Efrain Johnson, also known as “Pootney,” guilty of three counts of murder in aid of racketeering. When he is sentenced by Judge Arterton, he also faces a mandatory term of life in prison.
On Oct. 18, 2010, John Taylor pleaded guilty to three counts of murder in aid of racketeering. On April 16, 2012, he was sentenced to 108 months in prison. In sentencing Taylor, Judge Arterton credited him for his assistance to the prosecution of his three co-defendants, the extensive testimony he provided during two trials, and his sincere remorse.
This case was investigated by the FBI; Bridgeport Police Department; Connecticut State Police; Connecticut Department of Correction’s Intelligence Unit; Bureau of Alcohol, Tobacco, Firearms and Explosives; U.S. Marshals Service; Bridgeport States Attorney’s Office and the Connecticut U.S. Attorney’s Office.
This case is being prosecuted by Assistant U.S. Attorneys Tracy L. Dayton, Peter D. Markle, Alina P. Reynolds of the U.S. Attorney’s Office for the District of Connecticut, and Trial Attorney Jacabed Rodriguez-Coss of the Department of Justice’s Criminal Division, Capital Case Unit.
Friday 14 December 2012
Payment Processor for Scareware Cybercrime Ring Sentenced to 48 Months in PrisonRead the Press Release
WASHINGTON – A Swedish credit card payment processor was sentenced today to 48 months in prison for his role in an international cybercrime ring that netted $71 million by infecting victims’ computers with “scareware” and selling rogue antivirus software that was supposed to secure victims’ computers but was, in fact, useless, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney for the Western District of Washington Jenny A. Durkan and Special Agent in Charge Laura M. Laughlin of the FBI Seattle Division.
Mikael Patrick Sallnert, 37, a citizen of Sweden, was sentenced by Chief U.S. District Judge Marsha J. Pechman in the Western District of Washington. In addition to his prison term, Sallnert was ordered to pay $650,000 in forfeiture.
“Mikael Patrick Sallnert played an instrumental role in carrying out a massive cybercrime ring that victimized approximately 960,000 innocent victims,” said Assistant Attorney General Breuer. “By facilitating payment processing, Sallnert allowed the cybercrime ring to collect millions of dollars from victims who were duped into believing their computers were compromised and could be fixed by the bogus software created by Sallnert’s co-conspirators. Cybercrime poses a real threat to American consumers and businesses, and the Justice Department is committed to pursuing cybercriminals across the globe.”
“Payment processors like this defendant are the backbone of the cybercrime underworld,” said U.S. Attorney Durkan. “As an established businessman, this defendant put a stamp of legitimacy on cyber criminals. He was involved in defrauding thousands of victims, and his actions contributed to insecurities in e-commerce that stifle the development of legitimate enterprises and increase the costs of e-commerce for everyone.”
“Partnerships are central to the FBI in accomplishing its mission,” said Special Agent in Charge Laughlin. “This cyber crime ring spanned multiple countries—increasing the threat it posed and complicating the necessary law enforcement response. Thanks to the commitment of many foreign partners and FBI entities across the nation, we were able to dismantle that threat and ensure Mr. Sallnert faced justice. The FBI and its partners will continue to work tirelessly until we bring in the remaining perpetrators of this malicious scheme.”Sallnert was arrested in Denmark on Jan. 19, 2012, and extradited to the United States in March 2012. He pleaded guilty on Aug. 17, 2012, to one count of conspiracy to commit wire fraud and one count of accessing a protected computer in furtherance of fraud.
The prosecution of Sallnert is part of Operation Trident Tribunal, an ongoing, coordinated enforcement action targeting international cybercrime. The operation targeted international cybercrime rings that caused more than $71 million in total losses to more than one million computer users through the sale of fraudulent computer security software known as “scareware.” Scareware is malicious software that poses as legitimate computer security software and purports to detect a variety of threats on the affected computer that do not actually exist. Users are then informed they must purchase what they are told is anti-virus software in order to repair their computers. The users are then barraged with aggressive and disruptive notifications until they supply their credit card number and pay for the “anti-virus” product, which is, in fact, fake.
The scareware scheme used a variety of ruses to trick consumers into unknowingly infecting their computers with the malicious scareware products, including web pages featuring fake computer scans. Once the scareware was downloaded, victims were notified that their computers were infected with a range of malicious software, such as viruses and Trojans and badgered into purchasing the fake antivirus software to resolve the non-existent problem at a cost of up to $129. An estimated 960,000 users were victimized by this scareware scheme, leading to $71 million in actual losses.
According to Sallnert’s plea agreement, he agreed to establish and operate credit card payment processing services for the scareware ring, knowing that his co-conspirators were intentionally causing fake and fraudulent messages to display on victims’ computers that would fraudulently induce the victims into purchasing the rogue security software. According to court documents, between approximately August 2008 and October 2009, the payment processing mechanisms established by Sallnert processed approximately $5 million in credit card payments on behalf of the scheme.
This case is being investigated by the FBI Seattle Division Cyber Task Force and other FBI entities. The case is being prosecuted by Trial Attorneys Carol Sipperly and Ethan Arenson of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorneys Norman Barbosa and Kathryn Warma of the Western District of Washington. Substantial assistance was provided by the Criminal Division’s Office of International Affairs.
Critical assistance in the prosecution was provided by the Security Service of Ukraine, German Federal Criminal Police, Netherlands National High-Tech Crime Unit, London Metropolitan Police, Latvian State Police, Lithuanian Criminal Police Bureau, Swedish National Police Cyber Unit, French Police Judiciare, Royal Canadian Mounted Police, Romania’s Directorate for Combating Organized Crime, Cyprus National Police in cooperation with the Unit for Combating Money Laundering and the Danish National Police.
To avoid falling victim to a scareware scheme, computer users should avoid purchasing computer security products that use unsolicited “free computer scans” to sell their products. It is also important for users to protect their computers by maintaining an updated operating system and using legitimate, up-to-date antivirus software, which can detect and remove fraudulent scareware products.
Additional tips on how to spot a scareware scam include:
• Scareware advertising is difficult to dismiss. Scareware purveyors employ aggressive techniques and badger users with pop-up messages into purchasing their products. These fake alerts are often difficult to close and quickly reappear.
• Fake anti-virus products are designed to appear legitimate and can use names such as Virus Shield, Antivirus or VirusRemover. Only install software from trusted sources that you seek out. Internet service providers often make name-brand anti-virus products available to their customers for free.
• Become familiar with the brand, look and functionality of the legitimate anti-virus software that is installed on your computer. This will assist you in identifying scareware.
Computer users who think they have been victimized by scareware should file a complaint with the FBI’s Internet Crime Complaint Center, www.ic3.gov.
New Jersey Man Arrested for Illegally Importing Narwhal Tusksand Money LaunderingRead the Press Release
WASHINGTON— A New Jersey man was arrested today for crimes related to the illegal importation and illegal trafficking of narwhal tusks (whale tusk) and associated money laundering crimes, announced Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division.
On Nov. 14, 2012, a federal grand jury sitting in Bangor, Maine, returned an indictment that was partially unsealed today upon the arrest of Andrew L. Zarauskas of Union, N.J. The indictment also names Jay G. Conrad of Lakeland, Tenn., who was summoned to appear in the District of Maine on Jan. 3, 2013. The indictment charges Conrad and Zarauskas with conspiracy, money laundering conspiracy, smuggling and money laundering violations for buying narwhal tusks knowing the tusks had been illegally imported into the United States, as well as selling or attempting to sell the tusks after their illegal importation. Zarauskas was arrested this morning at his home in Union.
The indictment alleges that from 2007 to 2010, Conrad and Zarauskas each knowingly purchased narwhal tusks that each knew were illegally imported into the United States in violation of federal law. A narwhal is a medium-sized whale with an extremely long tusk that projects from its upper left jaw. A narwhal is a marine mammal that is protected by the Marine Mammal Protection Act and is listed on Appendix II of the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES). It is illegal to import parts of marine mammals into the United States without the requisite permits/certifications, and without declaring the merchandise at the time of importation to U.S. Customs and the U.S. Fish and Wildlife Service. Narwhal tusks are commonly collected for display purposes and can fetch large sums of money.
The indictment further alleges that Conrad and Zarauskas each conspired with persons located in Canada to illegally import the protected tusks for re-sale in the United States. Conrad and Zarauskas also each conspired with persons located in Canada to launder the funds used to purchase the narwhal tusks by transporting, transmitting, or transferring checks and money orders from Tennessee and New Jersey to Canada, intending that the money be used for further illegal imports of narwhal tusks.The charges contained in the indictment are merely accusations and the defendants are presumed innocent unless and until proven guilty in a court of law. If convicted of these charges, Conrad and Zarauskas each face up to twenty years in prison on each of the most serious charges, as well as fines up to $250,000.
The case was investigated by agents from National Oceanic and Atomospheric Administration - Office of Law Enforcement and the U.S. Fish and Wildlife Service - Office of Law Enforcement. The case is being prosecuted by Trial Attorney Todd S. Mikolop of the Justice Department’s Environmental Crimes Section.