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Tuesday 26 June 2012
Justice Department Reaches Settlement Agreement in Longstanding Alabama Desegregation CaseRead the Press Release
The Justice Department announced today that it reached a settlement agreement with the Fort Payne City School District in Alabama and private plaintiffs in a longstanding school desegregation case. The parties filed a proposed consent order in the federal district court in Birmingham, Ala.
If approved by the court, the proposed order would declare the 3,100-student school district partially unitary in the areas of extracurricular activities, school facilities and transportation, and would dismiss the case in those areas. The order would require the district to take additional steps to reach full compliance, including ensuring that its student transfer practices do not impede desegregation and taking measures to promote racial diversity in its faculty and staff. The district may seek full dismissal of the case upon compliance with the terms of the two-year agreement. If approved, the U.S. will monitor and enforce the district’s compliance with the order.
“We are pleased that the Fort Payne City school district has demonstrated significant progress in complying with its desegregation obligations and a willingness to take additional measures to reach our mutual goal of ensuring equal educational opportunities for all students,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “We look forward to working with the district over the next two years to implement the measures required by this order and bring this case to a close after so many years.”
This case is part of a statewide desegregation lawsuit, Lee v. Macon County Board of Education, which was filed in 1963.
The enforcement of the Equal Protection Clause of the U.S. Constitution and Title IV of the Civil Rights Act of 1964 that bars race discrimination in public schools is a top priority of the Justice Department’s Civil Rights Division. Additional information about the Civil Rights Division of the Justice Department is available on its website at www.justice.gov/crt.
Related Materials:
Consent Order
Joint Motion to Approve Consent OrderArmy Sergeant and Associate Convicted on All Counts for Roles in Bribery and Money Laundering Scheme Related to Defense Contracts to Support Iraq WarRead the Press Release
WASHINGTON – A federal jury in Elkins, W. Va., convicted Richard Evick, a U.S. Army Sergeant First Class and Non-Commissioned Officer in charge of contracting at a U.S. military base in Kuwait, and his associate, Crystal Martin, of all counts with which they were charged in connection with a bribery and money laundering scheme related to defense contracts awarded in support of Operation Iraqi Freedom, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney William J. Ihlenfeld II for the Northern District of West Virginia.
Evick was found guilty yesterday of one count of bribery conspiracy, two counts of bribery, one count of money laundering conspiracy, six counts of money laundering and one count of obstructing an agency proceeding. Martin was found guilty of one count of bribery conspiracy, one count of money laundering conspiracy and four counts of money laundering.
“As the highest ranking enlisted officer in the U.S. Army’s contracting office at Camp Arifjan in Kuwait, Mr. Evick had a special duty to strike deals in the best interests of the American people,” said Assistant Attorney General Breuer. “Instead, he steered business to dirty contractors in exchange for tens of thousands of dollars in cash and other items. Mr. Evick, Ms. Martin and their co-conspirators defrauded the government they had sworn to serve. To date, our investigation has led to the convictions of 19 individuals, and we will continue aggressively to pursue corruption and procurement fraud wherever we find it.”
“The investigation and prosecution of public corruption cases continues to be a top priority for the Department of Justice in West Virginia and throughout the country,” said U.S. Attorney Ihlenfeld. “Fortunately the vast majority of our public officials are honest and trustworthy, but those who are not will be held accountable.”
Evick served as the U.S. Army’s Non-Commission Officer in charge of contracting at Camp Arifjan between 2005 and 2006. In that capacity, Evick had the authority to arrange for the award of valuable contracts to supply the U.S. military with bottled water and catering services, maintain Army barracks and install security barriers, among other things.
Evidence presented at trial demonstrated that Evick and his co-conspirators manipulated the contracting process in several ways, including disclosing confidential information about the U.S. military’s plans to procure goods and services and accepting fake bids. In this manner, Evick and two of his fellow contacting officials, former Army Majors James Momon and Chris Murray, steered nearly $24 million worth of contracting business to certain contractors. In exchange, these contractors paid Evick more than $170,000 in bribes, a free New Year’s Eve trip to Dubai and parties.
Among the persons who paid Evick these bribes was Wajdi Birjas, a civilian U.S. government employee at Camp Arifjan who had a secret interest in a military contractor operating in Kuwait. Birjas testified that he provided phony bids to Evick from purportedly independent contractors who were, in reality, controlled by the same individuals. The evidence showed that Evick used these bids to create the false impression that the contracts were awarded according to Army contracting rules providing for a competitive bidding process. Birjas also testified that he had a hidden safe at his villa where Momon stored more than $800,000 in bribe money and which Evick used to exchange a large amount of Kuwaiti currency for U.S. dollars.
According to the evidence, Evick gave much of his bribe money to Martin, who had a concession from the Army and Air force Exchange Service to sell merchandise at Camp Arifjan, which was primarily a cash business. Evick and Martin then transferred tens of thousands of dollars worth of Evick’s bribe money to the U.S. into the hands of Evick’s wife and his girlfriend. The evidence showed that, in order to conceal the fact that this was bribe money, Evick and Martin converted the money into Western Union wires, money orders, cashiers checks and personal checks. Evick and Martin also smuggled cash into the U.S. on their persons, Martin often taking military transport flights to avoid customs screening. Evick used his bribe money, among other things, to purchase and construct a residence on three and one half acres in Parsons, W. Va., and to buy a pickup truck.
The evidence showed that Evick and Martin also participated in a scheme to smuggle $250,000 of bribe money belonging to Momon into the U.S. Momon testified about a summer 2006 meeting at Kuwait international airport with Evick and Martin, at which Martin described how she was laundering Evick’s bribe money and offered to provide the same service for Momon. According to evidence presented at trial, Evick offered to bury Momon’s money on Evick’s West Virginia property. When law enforcement agents interviewed Evick several months later about corruption at Camp Arifjan, Evick falsely stated that he did not know the contractor from whom evidence showed he had received a $150,000 bribe, among other things.
“Contingency contracting provides an opportunity for honest contractors to excel but still runs the inherent risk of fraudulent activity that plagues all government contracting,” said Special Agent in Charge Robert Craig of the Defense Criminal Investigative Service. “While our service members and defense civilians expect the best from their supporting contracts, we root out the worst and, working alongside our law enforcement partners, continue to aggressively bring those who defraud our nation’s warfighters to justice.”
“We are very pleased with the guilty verdicts in this case,” said Frank Robey, the director of the U.S. Army Criminal Investigation Command’s Major Procurement Fraud Unit. “It is a warning to anyone, in or out of uniform, who attempts to defraud the Army or the government that we will investigate credible allegations and bring those responsible to justice. Our agents have done a remarkable job investigating this case along with our fellow law enforcement partners and the DOJ.”
“The fact that a jury convicted these two individuals on all 11 counts stands as a powerful reminder that those who break the public trust to engage in bribery and money laundering with funds meant for the reconstruction of Iraq will face the full force of the law,” said Stuart W. Bowen, Special Inspector General for Iraq Reconstruction (SIGIR). “SIGIR and those who work with us will continue work on those cases still open against those involved in illegal acts.”
Evick and Martin face a maximum sentence of five years in prison for bribery conspiracy, 20 years in prison for money laundering conspiracy and 20 years in prison for each count of money laundering. Evick also faces a maximum of 15 years in prison for each count of bribery, five years for obstructing an agency proceeding and the forfeiture of the proceeds of his bribe scheme, which includes his West Virginia residence. They also face maximum fines of $250,000 per count. They will be sentenced by Chief U.S. District Judge John Preston Bailey. Their sentencing date has not yet been scheduled.
The case against Evick and Martin arose from a corruption probe focusing on the contracting office at Camp Arifjan, a U.S. military base in Kuwait. As a result of this investigation, 19 individuals, including Evick and Martin, have pleaded guilty or been found guilty at trial for their roles in the scheme. Momon pleaded guilty in August 2009 to receiving approximately $1.6 million in bribes and agreed to pay $5.7 million in restitution, and he is awaiting sentencing. Murray pleaded guilty in January 2009 for his role in the scheme and was sentenced in December 2009 to 57 months in prison. Birjas pleaded guilty in September 2010 and he is awaiting sentencing.
The case is being prosecuted by Trial Attorneys Peter C. Sprung, Eric G. Olshan, Timothy J. Kelly and Edward J. Loya Jr. of the Criminal Division’s Public Integrity Section, and Assistant U.S. Attorney Andrew R. Cogar of the U.S. Attorney’s Office for the Northern District of West Virginia. The case is being investigated by special agents of the Defense Criminal Investigative Service, the Army Criminal Investigation Command Division, Internal Revenue Service-Criminal Investigation, the FBI and SIGIR.
Monday 25 June 2012
White House, Justice Department Announce Law Enforcement Grants for Hiring of VeteransRead the Press Release
The U.S. Department of Justice Office of Community Oriented Policing Services (COPS) today announced funding awards to over 220 cities and counties, aimed at creating or saving approximately 800 law enforcement positions. The grants will fund over 600 new law enforcement positions and save an additional 200 positions recently lost or in jeopardy of being cut due to local budget cuts. All new law enforcement positions funded in the COPS 2012 Hiring Program must be filled by recent military veterans who have served at least 180 days since Sept. 11, 2001. In his State of the Union address, President Barack Obama called for a new Veterans Jobs Corps initiative to help put veterans back to work on a range of projects that leverage skills developed in the military, including first responder jobs. In February, the president announced that preference for this year’s COPS and Staffing for Adequate Fire and Emergency Response (SAFER) grants would be given to communities that recruit and hire post-9/11 veterans to serve as police officers and firefighters.
More than $111 million is being awarded to local public safety agencies across the country. The list of this year’s grantees includes Philadelphia and Pittsburgh; Chicago; Boston; Atlanta; Trenton, N.J.; Alameda County, Calif. and Los Angeles; Akron, Ohio; and Tacoma, Wash. The COPS Office will work with transition centers across the country to connect veterans with the new grant-funded law enforcement opportunities. For the entire list of grantees and additional information about the 2012 COPS Hiring Program, visit the COPS website at www.cops.usdoj.gov .
“Today, we step up our support for recent veterans by offering them the chance to pursue meaningful careers in law enforcement,” said Attorney General Eric Holder. “At a time of budget shortfalls, these grants will provide opportunities for much-needed, highly-trained professionals – with a proven commitment to service - to continue their careers in communities all across the country.”
“This new opportunity for veterans is a commitment to support those who are coming home from their tour of duty,” said COPS Director Bernard K. Melekian. “We sincerely hope this effort encourages our veterans to continue to protect and serve the United States through new law enforcement careers.”
The COPS Hiring Program makes grants to state, local and tribal law enforcement agencies to hire or rehire community policing officers. The program provides the salary and benefits for officer and deputy hires for three years. Along with the pledge to hire military veterans, grantees for the 2012 hiring program were selected based on fiscal need and local crime rates. An additional factor in the selection process was each agency’s strategy to address specific problems such as increased homicide rates and gun violence.
Today’s announcement builds on several steps President Obama has taken to support veterans in developing skills and finding work, including by: creating new tax credits for businesses that hire veterans; challenging the private sector to hire or train 100,000 veterans and their spouses by 2013; helping veterans obtain industry-recognized credentials and licenses; increasing access to intensive reemployment services; developing online tools to boost veteran employment; and increasing hiring of veterans in healthcare-related fields.
Statement of Attorney General Eric Holder on <br /> the Supreme Court’s Ruling on Arizona v. the United StatesRead the Press Release
Attorney General Eric Holder issued the following statement today:
“I welcome the Supreme Court’s decision to strike down major provisions of Arizona’s S.B. 1070 on federal preemption grounds. Today’s ruling appropriately bars the State of Arizona from effectively criminalizing unlawful status in the state and confirms the federal government’s exclusive authority to regulate in the area of immigration.
“While I am pleased the Court confirmed the serious constitutional questions the government raised regarding Section 2, I remain concerned about the impact of Section 2, which requires law enforcement officials to verify the immigration status of any person lawfully stopped or detained when they have reason to suspect that the person is here unlawfully. As the Court itself recognized, Section 2 is not a license to engage in racial profiling and I want to assure communities around this country that the Department of Justice will continue to vigorously enforce federal prohibitions against racial and ethnic discrimination. We will closely monitor the impact of S.B. 1070 to ensure compliance with federal immigration law and with applicable civil rights laws, including ensuring that law enforcement agencies and others do not implement the law in a manner that has the purpose or effect of discriminating against the Latino or any other community.
“We will also work to ensure that the verification provision does not divert police officers away from traditional law enforcement efforts in order to enforce federal immigration law, potentially impairing local policing efforts and discouraging crime victims, including children of non-citizens, victims of domestic violence, and asylum seekers, from reporting abuses and crimes out of fear of detention or deportation. We will continue to use every federal resource to protect the safety and civil rights of all Americans.”
Owner of Miami-Area Assisted Living Facility Sentenced to37 Months in Prison for Role in Medicare Fraud SchemeRead the Press Release
WASHINGTON – The owner of a Miami-area assisted living facility was sentenced today to 37 months in prison for her role in a kickback scheme that funneled patients to a fraudulent mental health provider, American Therapeutic Corporation (ATC), the Department of Justice, the FBI and the Department of Health and Human Services announced today.
Billy Denica, 50, was sentenced by U.S. District Judge Joan A. Lenard in Miami. In addition to her prison term, Denica was sentenced to two years of supervised release and was ordered to pay $538,875 in restitution. Denica pleaded guilty on April 2, 2012, to one count of conspiracy to commit health care fraud.
Denica was the owner of an assisted living facility called Robyll Care Assisted Living Facility. According to court documents, Denica agreed to send Robyll residents to ATC in exchange for illegal health care kickbacks. ATC purported to operate partial hospitalization programs, a form of intensive treatment for severe mental illness, in seven different locations throughout south Florida and Orlando. According to court documents, Denica admitted that she knew ATC falsely billed Medicare for PHP treatment based on her fraudulent referrals. Denica was aware that some of the Robyll residents would be offered gifts such as money, cigarettes and candy, so that they would agree to be admitted to a hospital for purposes of later attending ATC. She also admitted that she referred her residents to ATC because they had Medicare, because she would receive a cash kickback and because they were willing to go. According to the plea agreement, Denica’s participation in the fraud resulted in more than $1.1 million in fraudulent billing to the Medicare program.
ATC, its management company Medlink Professional Management Group Inc., and more than 20 individual defendants charged for their participation in the scheme have pleaded guilty or have been convicted at trial.
The sentencing was announced today by 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; Xanthi C. Mangum, Acting Special Agent-in-Charge of the FBI’s Miami Field Office; and Special Agent-in-Charge Christopher B. Dennis of the HHS Office of Inspector General (HHS-OIG), Office of Investigations Miami Office.
The case was prosecuted by Trial Attorneys Allan J. Medina, Steven Kim and William Parente 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 their inception in March 2007, Medicare Fraud Strike Force operations in nine locations have charged more than 1,330 defendants who collectively have falsely billed the Medicare program for more than $4 billion. In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are 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.Ohio Insurance Salesman Indicted for<br /> <br /> Impairing and Impeding the IRSRead the Press Release
William R. Herder of Bellville, Ohio, was arrested today on federal tax charges, Assistant Attorney General of the Justice Department’s Tax Division Kathryn Keneally, U.S. Attorney for the Northern District of Ohio Stephen M. Dettelbach and Special Agent in Charge, Internal Revenue Service (IRS) Criminal Investigation, Cincinnati Field Office, Darryl K. Williams announced. On June 19, 2012, a federal grand jury sitting in Cleveland returned an indictment against Herder, charging him with corruptly endeavoring to impair and impede the due administration of the Internal Revenue laws, failure to file tax returns, failure to pay taxes, and structuring transactions to evade currency reporting requirements.
According to the indictment, Herder, an insurance salesman, failed to file timely and accurate income tax returns for the years 2000-2009 despite earning substantial insurance commissions and receiving warnings and notices from the IRS. Herder filed returns for the years 2010 and 2011 on which he reported that he owed taxes to the government, but failed to pay the almost $50,000 in taxes that he owed for those years.
The indictment further alleges that, to prevent the IRS from collecting his unpaid taxes, Herder attempted to conceal his assets and income. In 2004, Herder formed two entities in Nevada--one for the purpose of hiding his automobiles and another for the purpose of hiding his insurance business. Herder also began converting his insurance commission checks to cash and paying his expenses in cash to prevent the IRS from collecting his taxes from his bank account.
In addition to failing to file valid tax returns and hiding his assets from the IRS, the indictment alleges that Herder submitted numerous obstructive letters and documents to the IRS and the company for whom he sold insurance in an effort to prevent the IRS from assessing and collecting his taxes. In these letters, Herder falsely claimed, among other things, that the tax laws were not applicable to him. In 2005, Herder also attempted to pay his taxes with a fake financial instrument called an “International Bill of Exchange.”
The case was investigated by special agents of IRS – Criminal Investigation and is being prosecuted by Tax Division Trial Attorneys Melissa S. Siskind and Jeffrey A. McLellan.
Loan Officer Sentenced to 54 Months in Prison for Role in Mortgage Fraud Scheme That Resulted in More Than $9.2 Million in LossesRead the Press Release
WASHINGTON – A loan officer for a Florida mortgage company was sentenced today in Miami to 54 months in prison for his role in a mortgage 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, and Department of Housing and Urban Development (HUD) Inspector General David A. Montoya.
Alejandro aka “Alex” Curbelo, 32, of Miami was sentenced before U.S. District Judge Joan Lenard. In addition to his prison term, Curbelo was sentenced to three years of supervised release and was ordered to pay $9.2 million in restitution to HUD. Curbelo was indicted and arrested on Jan. 24, 2012, and pleaded guilty on April 16, 2012, to one count of conspiracy to commit wire fraud.
According to court documents, from approximately February 2006 through July 2008, Curbelo was employed as a loan officer for Great Country Mortgage Bankers. In this role, he assisted in the sales and financing of condominium units at two complexes in Florida – Dadeland Place and Pelican Cove on the Bay. The borrowers who Curbelo assisted at these two complexes were unqualified to obtain mortgage loans due to insufficient income, high levels of debts and outstanding collections.
Curbelo admitted that he conspired with others to create and submit false and fraudulent Federal Housing Administration (FHA) mortgage loan applications and accompanying documents to the lender on behalf of the unqualified borrowers. Curbelo and others offered the borrowers cash back after closing as an incentive for them to purchase the units. These payments were not disclosed properly during the loan application process. According to court documents, the closing costs were paid on behalf of the borrowers by interstate wire. After the loans closed, the unqualified borrowers failed to meet their monthly mortgage obligations and defaulted on their loans.
According to court documents, when the loans went into foreclosure, HUD, which insured the loans, was required to take title to the units and pay the outstanding loan balances to the lenders. As of the date of the sentencing hearing, HUD paid more than $9.2 million for losses related to Curbelo’s conduct.
This case was investigated by the HUD Office of Inspector General, as participants in the Miami Mortgage Fraud Strike Force. Trial Attorney Mary Ann McCarthy of the Fraud Section in the Justice Department’s Criminal Division is prosecuting the case with assistance from the U.S. Attorney’s Office for the Southern District of Florida.
This prosecution is part of efforts under way by the 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.Justice Department to Monitor Elections in New YorkRead the Press Release
The Justice Department announced today that it will monitor primary elections on June 26, 2012, in Orange County and Queens, N.Y., to ensure compliance with the Voting Rights Act of 1965. The Voting Rights Act prohibits discrimination in the election process on the basis of race, color or membership in a minority language group.
Under the Voting Rights Act, the Justice Department is authorized to ask the U.S. Office of Personnel Management (OPM) to send federal observers to jurisdictions that are certified by the attorney general or by a federal court order. Federal observers will be assigned to monitor polling place activities in Orange County based on a federal court order entered in 2012. The observers will watch and record activities during voting hours at polling locations in these counties, and a Civil Rights Division attorney will coordinate the federal activities and maintain contact with local election officials.
In addition, Justice Department personnel will monitor polling place activities in Queens. A Civil Rights Division attorney will coordinate federal activities and maintain contact with local election officials.
Each year, the Justice Department deploys hundreds of federal observers from OPM, as well as departmental staff, to monitor elections across the country. To file complaints about discriminatory voting practices, including acts of harassment or intimidation, voters may call the Voting Section of the Justice Department’s Civil Rights Division at 1-800-253-3931.
Visit www.justice.gov/crt/voting/index.php for more information about the Voting Rights Act and other federal voting laws.
Justice Department Obtains Landmark $10.5 Million Settlement to Resolve Disability-Based Housing Discrimination LawsuitRead the Press Release
WASHINGTON – The Justice Department today announced its largest-ever disability-based housing discrimination settlement fund to resolve allegations that JPI Construction L.P. and six other JPI entities (collectively “JPI”) based in Irving, Texas, discriminated on the basis of disability in the design and construction of multifamily housing complexes throughout the United States.
Under the settlement, which was approved today by the U.S. District Court for the Northern District of Texas, JPI will pay $10,250,000 into an accessibility fund to provide retrofits at properties built by JPI and to increase the stock of accessible housing in the communities where these properties are located. The settlement also requires JPI to pay a $250,000 civil penalty. This is the largest civil penalty the Justice Department has obtained in any Fair Housing Act case.
“Today’s historic settlement demonstrates the Justice Department’s commitment to protecting the fair housing rights of persons with disabilities,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “Builders of multifamily housing must consider accessibility at the outset, or they risk significantly greater expense to retrofit properties. As a result of this settlement, multifamily housing complexes will be retrofitted to comply with the Fair Housing Act and the Americans with Disabilities Act, and persons with physical disabilities will be afforded an equal opportunity to live in and visit these properties.”
“Equal access to housing for persons with disabilities is an important right protected by federal law,” said U.S. Attorney for the Northern District of Texas Sarah R. Saldaña. “This settlement will help eliminate barriers and send a clear message that disability discrimination will not be tolerated. Disabled residents should know that this district remains committed to protecting their fair housing rights.”
The lawsuit was filed in March 2009, after the Justice Department conducted an investigation and found accessibility barriers at various JPI properties. Since 1991, JPI and its affiliates built 210 multifamily properties in 26 states and the District of Columbia; trial involving 32 of JPI’s properties was scheduled to begin July 9, 2012.
In addition to the $10.5 million payment, the consent order prohibits JPI from discriminating on the basis of disability in the future and from interfering with or preventing the retrofitting that will take place at the JPI properties. Although JPI is no longer in the multifamily development and construction business, if JPI reenters the business, it is required to design and construct covered multifamily dwellings to fully comply with the requirements of the Fair Housing Act and the Americans with Disabilities Act.
The JPI entities that are responsible for paying the settlement amount are: JPI Construction L.P.; Multifamily Construction L.L.C.; JPI Apartment Development L.P., dba JPI Campus Quarters; Lifestyle Apartment Development Service L.L.C.; Jefferson Bend L.P., dba Jefferson at Mission Gate Apartments; Jefferson Lake Creek L.P., dba Jefferson Center Apartments; and Apartment Community Realty L.L.C.
The federal Fair Housing Act prohibits discrimination in housing based on race, color, religion, national origin, sex, disability and familial status. Individuals who believe that they may have been victims of housing discrimination should call the Housing Discrimination Tip Line (1-800-896-7743) or email the Justice Department at [email protected]. Such persons may also contact the U.S. Department of Housing and Urban Development at 1-800-669-9777.
Fair housing enforcement is a priority of the Civil Rights Division. More information about the Civil Rights Division and the laws it enforces is available at www.justice.gov/crt.
Friday 22 June 2012
Virginia Man Pleads Guilty in Plot to Carry out <br /> <br /> Suicide Bomb Attack on U.S. CapitolRead the Press Release
Amine El Khalifi, a 29-year-old resident of Alexandria, Va., pleaded guilty today in federal court in the Eastern District of Virginia in connection with his efforts to carry out a suicide bomb attack on the U.S. Capitol Building in February 2012 as part of what he intended to be a terrorist operation.
The guilty plea was announced by Neil H. MacBride, U.S. Attorney for the Eastern District of Virginia; Lisa Monaco, Assistant Attorney General for National Security; and James W. McJunkin, Assistant Director in Charge of the FBI Washington Field Office.
At a hearing today before U.S. District Court Judge James C. Cacheris, El Khalifi pleaded guilty to one count of attempted use of a weapon of mass destruction (specifically, a destructive device consisting of an improvised explosive device) against U.S. property, namely the U.S. Capitol Building in Washington, D.C. As part of the plea agreement, the United States and El Khalifi agree that a sentence within a range of 25 years to 30 years incarceration is the appropriate disposition of this case. Sentencing has been scheduled for Sept. 14, 2012.
El Khalifi, an illegal immigrant from Morocco, was arrested and charged by criminal complaint on Feb. 17, 2012. His arrest was the culmination of an undercover operation during which he was closely monitored by the FBI Washington Field Office’s Joint Terrorism Task Force (JTTF). The explosives and firearm that he allegedly sought and attempted to use had been rendered inoperable by law enforcement and posed no threat to the public.
“Amine El Khalifi sought to bring down the U.S. Capitol and kill as many people as possible,” said U.S. Attorney MacBride. “He admitted today that he picked the targets, weapons, and means of the suicide attack while working with someone he believed was an Al Qaeda operative.”
“Amine El-Khalifi today admitted that he attempted to carry out a suicide attack on the U.S. Capitol as part of what he believed would be a terrorist operation,” said Assistant Attorney General Monaco. “I thank all those responsible for ensuring that El Khalifi’s violent plans never came to fruition.”
“The FBI’s top priority is stopping terrorism, and we remain vigilant against those who attempt to commit violence against the United States,” said Assistant Director in Charge McJunkin. “Today’s plea is the result of the hard work of dedicated Special Agents, analysts and prosecutors as well as officers from our partner law enforcement agencies that make up the Joint Terrorism Task Force.”
According to the statement of facts and other court documents filed in the case, in January 2011, a confidential human source reported to the FBI that El Khalifi met with other individuals at a residence in Arlington, Va., on Jan. 11, 2011. During this meeting, one individual produced what appeared to be an AK-47, two revolvers and ammunition. El Khalifi allegedly expressed agreement with a statement by this individual that the “war on terrorism” was a “war on Muslims” and said that the group needed to be ready for war.
According to court documents, El Khalifi sought to be associated with an armed extremist group, and on Dec 1, 2011, he was introduced by a man he knew as “Hussien” to an individual named “Yusuf,” who was, in reality, an undercover law enforcement officer. Throughout December 2011 and January 2012, El Khalifi proposed to carry out a bombing attack. His proposed targets included a building that contained U.S. military offices, as well as a synagogue, U.S. Army generals and a restaurant frequented by military officials.
During meetings with the undercover officer, El Khalifi handled an AK-47and indicated his desire to conduct an operation in which he would use a gun and kill people face-to-face. He also selected a restaurant in Washington, D.C., for a bombing attack; handled an explosive as an example of what could be used in the attack; conducted surveillance to determine the best place and time for the bombing and purchased materials as part of the planned operation.
On Jan. 7, 2012, “Hussien” informed El Khalifi that he was an al-Qaeda operative. El Khalifi discussed the possibility that his planned bombing of the restaurant would be followed by a second attack against a military installation to be conducted by others who El Khalifi believed to be associated with al-Qaeda.
On Jan. 15, 2012, El Khalifi stated that he had modified his plans for his attack. Rather than conduct an attack on a restaurant, he wanted to conduct a suicide attack at the U.S. Capitol Building. That same day at a quarry in West Virginia, as a demonstration of the effects of the proposed bomb operation, El Khalifi dialed a cell phone number that he believed would detonate a bomb placed in the quarry. The test bomb detonated, and El Khalifi expressed a desire for a larger explosion in his attack. He also selected Feb. 17, 2012, as the day of the operation.
Over the next month, El Khalifi traveled to the U.S. Capitol Building several times to conduct surveillance, choosing the spot where he would be dropped off to enter the building, the specific time for the attack and the method he would use to avoid law enforcement attention. El Khalifi also asked Hussien to remotely detonate the bomb he would be wearing on the day of the attack if El Khalifi encountered problems with security officers, and to provide El Khalifi with a gun that he could use during the attack to shoot any officers who might attempt to stop him.
On Feb. 17, 2012, El Khalifi traveled to a parking garage near the U.S. Capitol Building. El Khalifi took possession of a MAC-10 automatic weapon and put on a vest containing what he believed to be a functioning bomb. Unbeknownst to El Khalifi, both the weapon and the bomb had been rendered inoperable by law enforcement. El Khalifi walked alone from the vehicle toward the U.S. Capitol, where he intended to shoot people and detonate the bomb. El Khalifi was arrested and taken into custody before exiting the parking garage.
This investigation is being conducted by the FBI’s Washington Field Office. The prosecution is being handled by Assistant U.S. Attorneys Gordon Kromberg and Michael Ben’Ary of the U.S. Attorney’s Office for the Eastern District of Virginia, as well as Trial Attorneys Joseph Kaster and Courtney Sullivan from the Counterterrorism Section of the Justice Department’s National Security Division.
Veteran D.C. Defense Attorney Charles F. Daum<br /> <br /> and Two Investigators Found Guilty of Obstruction of Justice ChargesRead the Press Release
Veteran District of Columbia defense attorney Charles F. Daum, 66, of Arnold, Md., was found guilty today of one count of conspiracy to obstruct justice, three counts of obstruction of justice and two counts of subornation of perjury, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; Chief Cathy L. Lanier of the Washington, D.C., Metropolitan Police Department; and James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office.
Daum’s co-defendants, private investigators Daaiyah Pasha, 62, of Washington, D.C., and Iman Pasha, 32, of Springfield, Va., were also found guilty today on one count of conspiracy to obstruct justice.
After a six-week bench trial, Senior U.S District Judge Gladys Kessler of the U.S. District Court for the District of Columbia issued her verdict today. Daum was acquitted on one charge of witness tampering.
The charges resulted from Daum’s representation of Delante White, who was indicted in March 2008 by the U.S. Attorney’s Office for the District of Columbia on federal drug trafficking charges following the execution of a search warrant on Feb. 23, 2008.
“In his zeal to defend his client, Mr. Daum betrayed his profession and obstructed justice,” said Assistant Attorney General Breuer. “He and his co-conspirators fabricated evidence to submit in his client’s criminal trial, and he further suborned perjury from two defense witnesses. It’s astounding that a lawyer could commit these crimes, which undermine the integrity of our criminal justice system. The court found Mr. Daum guilty beyond a reasonable doubt, and he now faces prison time as a result.”
Judge Kessler found beyond a reasonable doubt that Daum, after entering his notice of appearance in the White case, devised a plan to obtain and produce false evidence designed to convince the jury that the drugs seized by the police on Feb. 23, 2008, did not belong to White. Daum enlisted the help of Daaiyah and Iman Pasha, whom Daum had hired as investigators, and others to help carry out his scheme. Following Daum’s directions, the co-conspirators obtained duplicates of several items that were seized as evidence during the execution of the search warrant, including a digital scale, a razor blade, plates, an Adidas shoe box and a pair of Gucci boots. Once those items were obtained, Daaiyah and Iman Pasha made arrangements to take staged photographs of another individual depicted with the items, while apparently “cutting” “rock cocaine” in order to make it appear as though the seized drugs actually belonged to the other individual. Daum later submitted the staged photographs, as well as other fabricated items, as evidence during White’s criminal trial.
Judge Kessler also found that Daum solicited and presented the perjured testimony of two witnesses, to further obstruct and impede the administration of justice.
The defendants face a maximum penalty of five years in prison and a $250,000 fine on the conspiracy charge. Daum faces an additional maximum penalty of 10 years in prison and a $250,000 fine for each count of obstruction. Daum also faces a maximum penalty of five years in prison and a $250,000 fine for each charge of subornation of perjury. Sentencing is scheduled for Nov. 19, 2012.
The case was prosecuted by Trial Attorneys Donnell Turner, Darrin L. McCullough and Tritia Yuen of the Narcotic and Dangerous Drug Section in the Justice Department’s Criminal Division. The case was investigated by the Washington, D.C., Metropolitan Police Department, the FBI’s Washington Field Office and the U.S. Attorney’s Office for the District of Columbia.
Pennsylvania Member of the Internet Piracy Group “Imagine”<br /> Pleads Guilty to Copyright Infringement ConspiracyRead the Press Release
A Pennsylvania man pleaded guilty today to conspiring to willfully reproduce and distribute tens of thousands of infringing copies of copyrighted works without permission, including infringing copies of movies before they were commercially released on DVD, Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney for the Eastern District of Virginia Neil H. MacBride and Special Agent in Charge John P. Torres of U.S. Immigration and Customs Enforcement Homeland Security Investigations (ICE-HSI) in Washington, D.C., announced today.
Willie O. Lambert, 57, of Pittston, Pa., pleaded guilty to one count of conspiracy to commit criminal copyright infringement. The plea was entered before U.S. District Judge Arenda L. Wright Allen in the Eastern District of Virginia. Lambert faces up to five years in prison, a fine of $250,000 and three years of supervised release.
Lambert was indicted on April 18, 2012, along with three other leading members of the IMAGiNE Group, an organized online piracy group seeking to become the premier group to first release Internet copies of new movies only showing in theaters. A co-defendant, Sean M. Lovelady, entered a guilty plea to the same charge on May 8, 2012.
According to court documents, Lambert and his co-conspirators sought to illegally obtain and disseminate digital copies of copyrighted motion pictures showing in theaters. Lambert admitted that he went to movie theaters and secretly used receivers and recording devices to capture the audio sound tracks of copyrighted movies (referred to as “capping”). After obtaining, editing and filtering audio sound tracks and uploading them to servers utilized by the IMAGiNE Group, Lambert used and attempted to use software to synchronize the audio file with an illegally obtained video file of a movie to create a completed movie file suitable for sharing over the Internet among members of the IMAGiNE Group and others. Mr. Lambert also admitted that the IMAGiNE group’s conduct resulted in a readily provable and reasonably foreseeable infringement amount of more than $400,000.
The investigation of the case and the arrests were conducted by agents with ICE-HSI. Assistant U.S. Attorney Robert J. Krask of the Eastern District of Virginia and Senior Counsel John H. Zacharia of the Criminal Division’s Computer Crime and Intellectual Property Section are prosecuting the case on behalf of the United States. Significant assistance was provided by the CCIPS Cyber Crime Lab and the Office of International Affairs in the Justice Department’s Criminal Division.
This case is part of efforts being undertaken by the Department of Justice Task Force on Intellectual Property (IP Task Force) to stop the theft of intellectual property. Attorney General Eric Holder created the IP Task Force to combat the growing number of domestic and international intellectual property crimes, protect the health and safety of American consumers, and safeguard the nation’s economic security against those who seek to profit illegally from American creativity, innovation and hard work. The IP Task Force seeks to strengthen intellectual property rights protection through heightened criminal and civil enforcement, greater coordination among federal, state and local law enforcement partners, and increased focus on international enforcement efforts, including reinforcing relationships with key foreign partners and U.S. industry leaders. To learn more about the IP Task Force, go to www.justice.gov/dag/iptaskforce.
This investigation was supported by the HSI-led National Intellectual Property Rights Coordination Center (IPR Center) in Washington. The IPR Center is one of the U.S. government’s key weapons in the fight against criminal counterfeiting and piracy. As a task force, the IPR Center uses the expertise of its 20 member agencies to share information, develop initiatives, coordinate enforcement actions and conduct investigations related to IP theft. Through this strategic interagency partnership, the IPR Center protects the public's health and safety, the U.S. economy and our war fighters.
Louisiana Hunting Outfitter Sentenced to Prison for First Felony Conviction for Illegally Hunting Protected AlligatorsRead the Press Release
WASHINGTON – Gregory K. Dupont, 38, of Plaquemine, La., was sentenced in U.S. District Court in Baton Rouge, La., to serve six months in prison, to be followed by four months in a half-way house and two years of supervised release. Dupont was also ordered to pay a $3,000 fine. Dupont’s sentencing, handed down by U.S. District Judge Brian Jackson late Thursday, was the first ever felony conviction and prison sentence resulting from the illegal hunting of American alligators (Alligator mississippiensis), in violation of the Lacey Act, the Endangered Species Act, and Louisiana law.
Dupont has owned and operated Louisiana Hunters Inc., a hunting outfitting company, since 2001. His clients hired him to take them on alligator hunts in Louisiana, and they included out-of-state residents who were required to hunt with a licensed resident alligator hunter. Dupont took some of the out-of-state clients to hunt alligators on property where he was not authorized to hunt. On Feb.10, 2012, Dupont pleaded guilty to selling American alligators by providing outfitting and guiding services, knowing the alligators to have been taken illegally, on a hunt in September 2006.
In 1967, American alligators were listed as an endangered species because the total population size in the United States reached drastically low numbers due to severe poaching and overharvesting. The conservation effect of this protected status and of the Lacey Act, the Endangered Species Act, and regulations promulgated by the U.S. Fish and Wildlife Service and the state of Louisiana led to the recovery of the size of the American alligator population in the United States, and American alligators were down-listed to threatened status in 1987. The success of the American alligator conservation program is second only to that of the Bald Eagle.
Because American alligators remain federally protected, alligator hunting is regulated by federal and state rules and regulations, which require, among other things, the tagging of all harvested alligators. The integrity of the tagging system is crucial to Louisiana’s alligator management program because it enables the Louisiana Department of Wildlife and Fisheries to monitor harvest areas, alligator size and the number of alligators taken. This system depends in significant part upon the honesty and self-regulation of Louisiana’s licensed hunters for its continued success.
In Louisiana, an allotted number of alligator hide tags are issued to licensed hunters. Each tag may be used for one alligator only, and Louisiana law requires alligator hunters to hunt only on property for which hide tags are issued. The areas where alligator hunting is permitted are determined on a yearly basis by wildlife biologists, whose decisions are based on the need to maintain a healthy alligator population. If hunters poach alligators from areas for which they do not have tags, then the integrity of the entire alligator management system is undermined, thereby threatening Louisiana’s alligator population and alligator industry, which is a significant component of Louisiana’s economy.
According to court documents, Dupont, in violation of law, guided his clients to places in Louisiana, regardless of whether he had tags for the areas, where he hoped his clients would kill trophy-sized alligators so that they would pay him a trophy fee in addition to the guiding fees.
The case was prosecuted by Shennie Patel and Susan L. Park of the Environmental Crimes Section of the Environment and Natural Resources Division of the Department of Justice, with assistance from the U.S. Attorney’s Office for the Middle District of Louisiana. The case was investigated by the Louisiana Department of Wildlife and Fisheries Law Enforcement Division and by the U. S. Fish and Wildlife Service Office of Law Enforcement.Former State Department Employee Sentenced to 12 Months in Prison for Assaulting His Wife with a Dangerous WeaponRead the Press Release
Michael Makalou, 41, a former State Department employee, was sentenced today to 12 months in prison for assaulting his wife with a dangerous weapon with intent to do bodily harm, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney for the Eastern District of Virginia Neil H. MacBride.
Makalou was sentenced today by U.S. District Judge James C. Cacheris in the Eastern District of Virginia. Makalou was indicted in October 2011 and was found guilty on Feb. 8, 2012, following a two-day bench trial.
According to court documents, Makalou resided with his wife and children in Dakar, Senegal, and worked as a political officer at the U.S. Embassy in Dakar. A s determined by the court in its finding of guilt, on Aug. 13, 2011, Makalou attacked his wife. Without provocation, Makalou repeatedly punched, choked, kicked and dragged his wife in their home, ultimately striking her in the head with a large plastic dollhouse weighing approximately 10 pounds, causing his wife to lose consciousness. This assault lasted approximately 6 hours. The victim suffered multiple injuries, including contusions, lacerations and a concussion.
The case was prosecuted by Trial Attorney Sarah Chang of the Criminal Division’s Human Rights and Special Prosecutions Section and Assistant U.S. Attorney Rebeca H. Bellows of the Eastern District of Virginia. The case was investigated by the Bureau of Diplomatic Security of the U.S. Department of State.
Thursday 21 June 2012
Two Owners of Miami Home Health Company Each Sentenced to More Than Six Years in Prison for $20 Million Health Care Fraud SchemeRead the Press Release
WASHINGTON – Two owners of a Miami home health care agency were sentenced to 73 and 74 months in prison, respectively, for their participation in a $20 million home health Medicare fraud scheme, announced the Department of Justice, the FBI and the Department of Health and Human Services (HHS).
U.S. District Judge Marcia G. Cooke in the Southern District of Florida sentenced Ariel Rodriguez to 73 months in prison and three years of supervised release and Reynaldo Navarro to 74 months in prison and three years of supervised release. Rodriguez and Navarro were each ordered to pay $14 million in restitution, joint and several with co-defendants.
Two co-defendants, Melissa Rodriguez and Ysel Salado were also sentenced today by Judge Cooke to four years of probation.
Ariel and Melissa Rodriguez, Navarro and Salado each pleaded guilty last year to one count of conspiracy to commit health care fraud. Ariel Rodriguez, 41, and Navarro, 37, were the owners of Serendipity Home Health Inc., a Florida home health agency that purported to provide home health care and physical therapy services to eligible Medicare beneficiaries. Melissa Rodriguez, 24, and Salado, 26, were office workers for Serendipity.
According to plea documents, Ariel Rodriguez and Navarro conspired with patient recruiters to bill the Medicare program for unnecessary home health care and therapy services. Ariel Rodriguez, Navarro and their co-conspirators paid kickbacks and bribes to patient recruiters in return for the recruiters providing patients to Serendipity, as well as prescriptions, plans of care (POCs) and certifications for medically unnecessary therapy and home health services for Medicare beneficiaries. Ariel Rodriguez and Navarro used these prescriptions, POCs and medical certifications to fraudulently bill Medicare for home health care services, which Ariel Rodriguez and Navarro knew was in violation of federal criminal laws. Melissa Rodriguez and Salado cashed checks from Serendipity and provided this cash to Ariel Rodriguez and Navarro knowing it would be used to pay the kickbacks and bribes to the patient recruiters.
According to plea documents, at Serendipity, nurses and office staff falsified patient files for Medicare beneficiaries to make it appear that the beneficiaries qualified for home health care and therapy services from Serendipity when, in fact, Ariel Rodriguez and Navarro knew that the beneficiaries did not actually qualify for and did not receive such services. Ariel Rodriguez and Navarro knew that these files were falsified so that Medicare could be billed for medically unnecessary therapy and home health related services.
From approximately April 2007 through March 2009, Ariel Rodriguez, Navarro and their co-conspirators submitted approximately $20 million in false and fraudulent claims to Medicare. Medicare paid approximately $14 million on those claims.
Today’s sentences were announced by 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; John V. Gillies, 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.
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 a 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 their inception in March 2007, Medicare Fraud Strike Force operations in nine locations have charged more than 1,330 defendants who collectively have falsely billed the Medicare program for more than $4 billion. In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are 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.Three Former Executives Convicted for Roles in $200 Million Fraud Scheme Involving Fair Financial Company InvestorsRead the Press Release
Three former executives of Fair Financial Company, an Ohio financial services business, were found guilty for their roles in a scheme to defraud approximately 5,000 investors of more than $200 million, Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; Joseph H. Hogsett, U.S. Attorney for the Southern District of Indiana; and Special Agent in Charge Robert Holley of the FBI in Indiana announced today.
Following an eight-day trial, a federal jury in the Southern District of Indiana returned its verdict late yesterday. Timothy S. Durham, 49, the former chief executive officer of Fair, was convicted of one count of conspiracy to commit wire and securities fraud, 10 counts of wire fraud and one count of securities fraud. James F. Cochran, 56, the former chairman of the board of Fair, was convicted of one count of conspiracy to commit wire and securities fraud, one count of securities fraud and six counts of wire fraud. Rick D. Snow, 48, the former chief financial officer of Fair, was convicted of one count of conspiracy to commit wire and securities fraud, one count of securities fraud and three counts of wire fraud.
“Mr. Durham and his co-conspirators used lies and deceit as their business model,” said Assistant Attorney General Breuer. “They duped investors into thinking they were running a legitimate financial services company and misled regulators and others about the health of their failing firm. But all along, they were lining their pockets with other people’s money. The jury held them accountable for their crimes, and they each now face the prospect of significant prison time.”
“No matter who you are, no matter how much money you have, no matter how powerful your friends are, no one is above the law,” U.S. Attorney Hogsett said. “The Office of the United States Attorney will not stand idly by and allow a culture of corruption to exist in this community, this state, or this country. The decision made in this courtroom sends a powerful warning that if you sacrifice the truth in the name of greed, if you steal from another’s American dream to try and make your own, you will be caught.”
“This verdict represents a victory in the pursuit of justice,” said FBI Special Agent in Charge Holley. “I would like to commend the hard work and dedication of the prosecution team and the FBI investigative team, however, we must remember that the victims of this fraud are still suffering. I would also like to thank Indiana State Police Superintendent Paul Whitesell for the contributions of his task force officer in this investigation.”
Durham and Cochran purchased Fair, whose headquarters were in Akron, Ohio, in 2002. According to the evidence presented at trial, between approximately February 2005 through the end of November 2009, Durham, Cochran and Snow executed a scheme to defraud Fair’s investors by making and causing others to make false and misleading statements about Fair’s financial condition and about the manner in which they were using Fair investor money. The evidence also established that Durham, Cochran and Snow executed the scheme to enrich themselves, to obtain millions of dollars of investors’ funds through false representations and promises, and to conceal from the investing public Fair’s true financial condition and the manner in which Fair was using investor money.
When Durham and Cochran purchased Fair in 2002, Fair reported debts to investors from the sale of investment certificates of approximately $37 million and income producing assets in the form of finance receivables of approximately $48 million. By November 2009, after Durham and Cochran had owned the company for seven years, Fair’s debts to investors from the sale of investment certificates had grown to more than $200 million, while Fair’s income producing assets consisted only of the loans to Durham and Cochran, their associates and the businesses they owned or controlled, which they claimed were worth approximately $240 million, and finance receivables of approximately $24 million.
After Durham and Cochran acquired Fair, they changed the manner in which the company operated and used its funds. Rather than using the funds Fair raised from investors primarily for the purpose of purchasing finance receivables, Durham and Cochran caused Fair to extend loans to themselves, their associates and businesses they owned or controlled, which caused a steady and substantial deterioration in Fair’s financial condition.
Durham, Cochran and Snow terminated Fair’s independent accountants who, at various points during 2005 and 2006, told the defendants that many of Fair’s loans were impaired or did not have sufficient collateral. After firing the accountants, the defendants never released audited financial statements for 2005, and never obtained or released audited financial statements for 2006 through September 2009. With independent accountants no longer auditing Fair’s financial statements, the defendants were able to conceal from investors Fair’s true financial condition.
The evidence presented at trial established that Durham, Cochran and Snow falsely represented, in registration documents and offering circulars submitted to the State of Ohio Division of Securities and in offering circulars distributed to investors, that the loans on Fair’s books were assets that could support Fair’s sale of investment certificates. The defendants knew that in reality, the loans were worthless or grossly overvalued; producing little or no cash proceeds; supported by insufficient or non-existent collateral to assure repayment; and in part advances, salaries, bonuses and lines of credit for Durham and Cochran’s personal expenses.
The defendants engaged in a variety of other fraudulent activities to conceal from the Division of Securities and from investors Fair’s true financial health and cash flow problems, including making false and misleading statements to concerned investors who either had not received principal or interest payments on their certificates from Fair or who were worried about Fair’s financial health, and directing employees of Fair not to pay investors who were owed interest or principal payments on their certificates. Even though Fair’s financial condition had deteriorated and Fair was experiencing severe cash flow problems, Durham and Cochran continued to funnel Fair investor money to themselves for their personal expenses, to their family, friends and acquaintances, and to the struggling businesses that they owned or controlled.
This case was prosecuted by Assistant U.S. Attorneys Winfield D. Ong and NicholasE. Surmacz of the Southern District of Indiana, Trial Attorney Henry P. Van Dyck and Senior Deputy Chief for Litigation Kathleen McGovern of the Fraud Section in the Justice Department’s Criminal Division. The investigation was led by the FBI in Indianapolis.
Durham, Cochran and Snow each face a maximum of five years in prison for the conspiracy count, 20 years in prison for each wire fraud count and 20 years in prison for the securities fraud count. Additionally, each defendant could be fined $250,000 for each count of conviction.
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 .
New Jersey Hospital Pays U.s. $8,999,999 to Settle<br /> <br /> False Claims Act AllegationsRead the Press Release
AHS Hospital Corp., Atlantic Health System Inc., and Overlook Hospital, located in New Jersey, have agreed to pay the United States $8,999,999 to settle allegations that they violated the False Claims Act, the Justice Department announced today.
The settlement resolves allegations that Overlook Hospital, owned and operated by AHS Hospital Corporation, and Atlantic Health Systems Inc., overbilled Medicare for patients who were treated on an inpatient basis when they should have been treated as either observation patients or on an outpatient basis.
This settlement partially resolves a False Claims Act suit filed by former employees of Overlook Hospital. U.S. ex rel. Doe et al. v. AHS Hospital Corp., et al., Civ. No. 08-2042 (D.N.J.). The whistleblower or qui tam provisions of the False Claims Act permit individuals, known as relators, to file these actions and share in a portion of the proceeds recovered by the federal government.
“We expect hospitals that participate in Medicare will bill for their services accurately and honestly,” said Stuart F. Delery, Acting Assistant Attorney General for the Department’s Civil Division. “Hospitals have a responsibility to ensure that the Medicare rules are not abused and patients who should be treated as outpatients are not admitted as inpatients, increasing the hospitals’ reimbursements.”
“Billing Medicare for unnecessary inpatient services steals from taxpayers,” said Daniel R. Levinson, Inspector General for the U.S. Department of Health and Human Services, “Although that’s bad enough, it also requires hospitalizing people who don’t need it, causing inconvenience, discomfort and worse. The size of this settlement underscores the seriousness of the conduct.”
“Proper billing ensures fair compensation and protects Medicare dollars that are much neededfor patient care,” said J. Gilmore Childers , First Assistant U.S. Attorney for the District of New Jersey. “Hospitals taking more than their entitled share of reimbursements, by improperly billing services as more expensive services, subject themselves to federal scrutiny.”
“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 more than $7.7 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 $11.3 billion.”
The case was handled by the U.S. Attorney’s Office for the District of New Jersey, the Department of Justice’s Civil Division and the Office of Inspector General of the Department of Health and Human Services.
Justice Department Settles Lawsuit Alleging Discrimination Against Pregnant Firefighters by the Town of Davie, FloridaRead the Press Release
The Justice Department today announced it has reached a consent decree with the town of Davie, Fla., to resolve allegations that Davie engaged in a pattern or practice of intentional discrimination against pregnant firefighters employed by Davie’s fire department.
The consent decree was filed in U.S. District Court for the Southern District of Florida along with a complaint alleging that Davie violated Title VII of the Civil Rights Act of 1964. Title VII prohibits discrimination in employment on the basis of race, color, sex, national origin and religion. Under Title VII, discrimination based on sex explicitly includes discrimination based on pregnancy. It requires that women affected by pregnancy be treated the same as other employees who are similar in their ability or inability to perform their job.
According to the department’s complaint, the Davie fire department has operated under a policy or practice of denying a pregnant firefighter light duty until the start of her second trimester regardless of her medical or physical needs. Despite this restriction on a pregnant firefighter’s ability to obtain light duty in her first trimester, the fire chief routinely granted other firefighters’ requests for light duty for non-work related injuries. The fire department also required pregnant firefighters to leave active firefighting duty upon the start of their second trimester regardless of their ability to fulfill the essential functions of their positions. According to the department’s complaint, these policies and practices constituted a pattern or practice of discrimination against pregnant female firefighters based on sex and pregnancy.
Under the terms of the consent decree, which must still be approved by the federal court, Davie must review and adopt appropriate policies to protect its employees from discrimination on the basis of sex, including pregnancy, and conduct training of its fire department personnel to ensure that they properly handle future complaints of discrimination.
“Decisions about how and when to restrict a pregnant woman’s work duties should be made by the woman and her doctor, and employers must make certain that their policies and practices treat pregnant women the same as people who are similarly able or unable to work,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “Title VII’s prohibitions against discrimination in the workplace make clear that discrimination based on pregnancy is a form of discrimination based on sex. We will not tolerate public employers engaging in this type of unlawful discrimination.”
“The policies and practices of the Davie Fire Department regarding the assignment of light duty for pregnant women were sexually discriminatory,” said Wifredo A. Ferrer, U.S. Attorney for the South District of Florida. Discrimination on the basis of sex and pregnancy is illegal. We are hopeful that today’s settlement will lead to the establishment of new policies that will promote and respect the rights of all employees to equal opportunities.”
The continued enforcement of Title VII has been a priority of the Justice Department’s Civil Rights Division. Additional information about the Civil Rights Division of the Justice Department is available on its website at www.usdoj.gov/crt/.
Related Materials:
Complaint - U.S. v. Davie
Consent Decree - U.S. v. DavieJustice Department Files Lawsuit Against the Twin Cities of Colorado City, Arizona, and Hildale, Utah, and Local Utility Companies Alleging Religious DiscriminationRead the Press Release
WASHINGTON - The Justice Department filed a lawsuit today against the town of Colorado City, Ariz.; the city of Hildale, Utah; Twin City Water Authority; and Twin City Power alleging a pattern or practice of police misconduct and violations of federal civil rights laws. The complaint alleges discrimination based on religion in violation of the Fair Housing Act, the Violent Crime Control and Law Enforcement Act and Title III of the Civil Rights Act of 1964. This is the first lawsuit by the Justice Department to include claims under both the Fair Housing Act and the Violent Crime Control and Law Enforcement Act.
The adjoining towns of Colorado City and Hildale are located on the border of Arizona and Utah and are populated primarily by members of the Fundamentalist Church of Jesus Christ of Latter-day Saints (FLDS). The FLDS is not affiliated with the Church of Jesus Christ of Latter-day Saints.
The lawsuit, filed in the U.S. District Court for the District of Arizona, alleges that defendants discriminated against individuals who are not members of the FLDS by engaging in a pattern or practice of violating the First, Fourth and Fourteenth Amendments to the U.S. Constitution and the Fair Housing Act. The complaint contends that the cities, their joint police department and local utility providers under the cities’ control have allowed the FLDS Church to improperly influence the provision of policing services, utility services and access to housing and public facilities, and that this improper influence has led to discriminatory treatment against non-FLDS residents.
Specifically, the complaint alleges that the Colorado City Marshal’s Office (CCMO), the cities’ joint police department, routinely uses its enforcement authority to enforce the edicts and will of the FLDS; fails to protect non-FLDS individuals from victimization by FLDS individuals; refuses to cooperate with other law enforcement agencies’ investigations of FLDS individuals; selectively enforces laws against non-FLDS; and uses its authority to facilitate unlawful evictions of non-FLDS, among other unlawful conduct. The complaint also alleges that Colorado City, Hildale, Twin City Water Authority and Twin City Power have denied or unreasonably delayed providing water and electric service to non-FLDS residents, and that the municipalities refuse to issue building permits and prevent individuals from constructing or occupying existing housing because of the individuals’ religious affiliation.
“Religious freedom is a cherished principle of our democracy. City governments and their police departments may not favor one religious group over another and may not discriminate against individuals because of their religious affiliation,” said Thomas E. Perez, Assistant Attorney General for the Justice Department’s Civil Rights Division. “No individual in the United States should be targeted for discriminatory treatment by a city, its officials or the police because of his or her religion.”
Both Utah and Arizona have decertified CCMO officers. Three of the officers were decertified because they refused to cooperate with state law enforcement efforts. In addition, the sheriff’s offices in both states have been actively addressing the issues in the communities. The United States’ complaint seeks a court order prohibiting future discrimination by the defendants, monetary damages for those harmed by the defendants’ actions and a civil penalty.
This matter was investigated by attorneys from the Housing and Civil Enforcement Section and the Special Litigation Section of the Department of Justice’s Civil Rights Division. More information about the Civil Rights Division and the laws it enforces is available at www.usdoj.gov/crt. If you have any information regarding this matter, please contact the Justice Department at 1-800-896-7743 or email the department at [email protected].
The complaint is an allegation of unlawful conduct. The allegations must still be proved in federal court.
Joint Statement on the Negotiation of a EU-U.S. Data Privacy and Protection Agreement by Attorney General Eric Holder and European Commission Vice-President Viviane RedingRead the Press Release
Attorney General Eric Holder and European Commission Vice-President Viviane Reding issued the following statement following the EU-U.S. Justice and Home Affairs Ministerial meeting in Copenhagen:
"We reiterate our determination to finalize negotiations on a comprehensive EU-U.S. data privacy and protection agreement that provides a high level of privacy protection for all individuals and thereby facilitates the exchange of data needed to fight crime and terrorism, as announced at the November 2011 summit by our Presidents. Such an agreement will allow for even closer transatlantic cooperation in the fight against crime and terrorism, through the mutual recognition of a high level of protection afforded equally to citizens of both the United States and the European Union, and will thus facilitate any subsequent agreements concerning the sharing of a specific set of personal data.
“Negotiations have taken place at a steady rhythm since they began in March 2011 and progress has been achieved on a number of provisions. These include important principles such as data security, transparency of data processing or use, accountability, maintaining the quality and integrity of information and the existence of effective authorities ensuring data protection oversight. We are likewise continuing our work on a number of domains such as purpose limitation, retention of personal data, and effective administrative and judicial redress.
“In view of our common objective to achieve mutual recognition, we will continue to make all efforts to come to a conclusion on these key points. To this end, we agree to take stock of progress during the EU-U.S. Justice and Home Affairs Ministerial meeting in 2013, and to consider next steps to ensure the continued rapid advancement of the negotiations."
Hospice Care of Kansas and Texas-based Parent Company to Pay $6.1 Million to Resolve Allegations of False ClaimsRead the Press Release
Hospice Care of Kansas LLC and its parent company, Ft. Worth, Texas-based Voyager HospiceCare Inc., have agreed to pay $6.1 million to resolve allegations that they violated the False Claims Act by submitting claims to the Medicare program for ineligible hospice services, the Justice Department announced today. Hospice Care of Kansas currently provides hospice services throughout the state of Kansas. Hospice Care of Kansas, which is based in Wichita, Kan., was purchased by Voyager in 2004.
The Medicare hospice benefit is available for patients who elect palliative treatment ( medical care focused on providing patients with relief from the symptoms, pain and stress of a serious illness) for a terminal illness, and have a life expectancy of six months or less if their disease runs its normal course. Today’s settlement resolves allegations that Hospice Care of Kansas and Voyager submitted or caused the submission of false Medicare claims between January 2004 and December 2008 for beneficiaries that did not have a terminal prognosis of six months or less.
The government alleged that Hospice Care of Kansas and Voyager engaged in certain practices that resulted in the submission of false claims, including the provision of compensation to clinical employees based on patient census and admissions, delaying discharges of patients determined not to have a six month or less prognosis, instructions to staff to document patient conditions in a misleading manner, and implementation of an inadequate compliance program.
“The Medicare hospice benefit is intended to provide comfort and care to terminally ill persons in the final stages of their disease,” said Stuart F. Delery, Acting Assistant Attorney General for the Department of Justice’s Civil Division. “This settlement shows that the Department of Justice will not tolerate hospice providers that attempt to maximize their profits at the expense of their legal and ethical obligations to the Medicare program, taxpayers, and beneficiaries.”
“Our goals are to protect taxpayer dollars, ensure the viability of government health care programs and strengthen our national health care system,” said Barry Grissom, U.S. Attorney for the District of Kansas. “This case is a step in that direction.”
“We expect providers of Medicare services to operate with the utmost integrity and with the best interests of our beneficiaries in mind. Working with our partners at the Department of Justice, we will hold those accountable who do not operate in this manner,” said Gerald Roy, Special Agent in Charge, U.S. Department of Health and Human Services, Office of Inspector General.
The allegations that are the subject of today’s settlement were originally raised in a lawsuit filed by a former Hospice Care of Kansas nurse, Beverly Landis, under the qui tam, or whistleblower, provisions of the False Claims Act. The act allows private citizens with knowledge of fraud to bring an action on behalf of the United States and share in any recovery. As a part of today’s resolution, Ms. Landis will receive payments totaling $1.342 million.
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 more than $7.7 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 $11.3 billion.
The investigation was jointly handled by the Justice Department’s Civil Division, the FBI, the Office of the Inspector General of the Department of Health and Human Services and the U.S. Attorney’s Office for the District of Kansas. The claims settled by this agreement are allegations only, and there has been no determination of liability.
Global Alliance Against Child Sexual Abuse Online<br /> Joint StatementRead the Press Release
The EU and the U.S., at the EU-U.S. Justice and Home Affairs Ministerial Meeting attended by Attorney General Eric Holder, Department of Homeland Security Secretary Janet Napolitano, Denmark Minister of Justice Morten Bodskov, European Commission Vice-President Viviane Reding , EU Commissioner of Home Affairs Cecilia Malmstrom and Cyprus Minister of Justice and Public Order Loucas Louca today, have agreed to enhance efforts against child sexual abuse online. Such abuse includes the distribution and trade of child pornography via the Internet, and the resulting, continuing harm to the victims depicted. We call upon governments around the world to participate in building a Global Alliance against Child Sexual Abuse Online.
Child sexual abuse online, a substantial problem worldwide, is a crime that is ubiquitous and knows no borders. Child pornography images circulate easily across jurisdictions, and efforts to reduce such circulation have failed to produce satisfactory results to date. Child pornography offenders are increasingly operating in international online groups that use sophisticated technologies and security protocols to frustrate the efforts of law enforcement to investigate their crimes. Different laws and policies across jurisdictions also have created law enforcement vulnerabilities that these international offenders are exploiting. Therefore, we need to act together to successfully confront the problem.
The Global Alliance will seek to unite countries around the world behind a set of shared goals:
- Enhancing efforts to identify victims, whose sexual abuse is depicted in child pornography, and ensuring their assistance, support and protection;
- Reducing the availability of child pornography online and the re-victimization of children;
- Enhancing efforts to investigate cases of child sexual abuse online and to identify and prosecute offenders;
- Increasing public awareness of the risks posed by children’s activities online, including the self-production of images, in order to reduce the production of new child pornography.
We invite partners from around the world to join the Global Alliance against Child Sexual Abuse Online.
Former Las Vegas Nightclub Vip Host Pleads Guilty<br /> <br /> to Filing False Tax ReturnRead the Press Release
Kelly Doll, formerly a VIP host at the Pure Nightclub located within the Caesars Palace Hotel and Casino in Las Vegas, pleaded guilty in federal court Thursday to one count of filing a false federal income tax return for the 2006 tax year, the Justice Department and Internal Revenue Service (IRS) announced today. U.S. District Court Judge Miranda Du presided over the plea hearing.
According to information disclosed at the plea hearing, during the years 2005, 2006 and 2007, some of Pure’s patrons made cash payments to Pure door personnel and “VIP hosts” to bypass the general admissions line and to obtain more desirable seating. This money was collected, pooled and generally distributed on a weekly basis to the door personnel and VIP hosts, as well as to managers of Pure. Distributions from this “tip pool” comprised the bulk of Doll’s compensation during the time he worked at the nightclub. Doll concealed large amounts of this income from the IRS.
Pure’s former managing owner, Steve Davidovici, has also pleaded guilty to tax fraud for failing to report income earned at Pure, as have Doll’s former co-workers, Mikel Hasen, Ali (Sean) Olyaie and Richard Chu. Each of these individuals likewise admitted filing false federal income tax returns for 2006. Doll’s sentencing is set for Sept. 24, 2012.
Kathryn Keneally, Assistant Attorney General for the Justice Department’s Tax Division, commended the efforts of special agents of IRS – Criminal Investigation, who investigated the case, and Tax Division Trial Attorneys Christopher J. Maietta and Joseph A. Rillotta, who prosecuted the case.
More information about the Tax Division and its enforcement efforts is available at www.usdoj.gov/tax/.
Former Chief Investment Officer of Stanford Financial Group Pleads Guilty to Obstruction of JusticeRead the Press Release
WASHINGTON ? Laura Pendergest-Holt, 38, the former chief investment officer of Houston-based Stanford Financial Group, pleaded guilty today to obstructing a U.S. Securities and Exchange Commission (SEC) investigation into Stanford International Bank (SIB), the Antiguan offshore bank owned by convicted financier Robert Allen Stanford.
The plea was announced today by Assistant Attorney General Lanny A. Breuer of the Justice Department?s Criminal Division; U.S. Attorney Kenneth Magidson of the Southern District of Texas; FBI Assistant Director Kevin Perkins of the Criminal Investigative Division; Assistant Secretary of Labor for the Employee Benefits Security Administration Phyllis C. Borzi; Chief Postal Inspector Guy J. Cottrell of the U.S. Postal Inspection Service; and Chief Richard Weber, Internal Revenue Service-Criminal Investigation (IRS-CI).
Holt entered her guilty plea this morning before U.S. District Judge David Hittner. A plea agreement was also filed with the court. If the agreement is accepted by the court at Holt?s Sept. 13, 2012, sentencing, it will result in a sentence of 36 months in prison followed by three years of supervised release. Holt will also be subject to a fine of up to $250,000.
In January 2009, the SEC sought testimony and documents related to SIB?s entire investment portfolio. During her guilty plea, Holt admitted that despite knowing that she was incapable of testifying about the vast majority of that portfolio, Holt agreed to testify before the SEC. Holt acknowledged that her eventual appearance and sworn testimony before the SEC was a stall tactic designed to frustrate the SEC?s efforts to obtain important information about SIB?s investment portfolio, and Holt admitted that she took this action intentionally and corruptly, knowing that her testimony would impede the SEC?s investigation and help SIB continue operating.
In addition to Stanford and Holt, a grand jury in the Southern District of Texas previously indicted additional co-conspirators: Stanford Financial Group Chief Financial Officer James Davis, Stanford Financial Group former Chief Accounting Officer Gilberto Lopez, former Controller Mark Kuhrt, and former head of the Antiguan Financial Services Regulatory Commission Leroy King. Stanford was sentenced last week to 110 years in prison. Davis previously pleaded guilty and faces up to 30 years in prison. The cases against the remaining defendants are still pending. They are presumed innocent unless and until convicted through due process of law.
The investigation was conducted by the FBI?s Houston Field Office, the U.S. Postal Inspection Service, IRS-CI and the U.S. Department of Labor, Employee Benefits Security Administration. The case against Holt is being prosecuted by Assistant U.S. Attorney Jason Varnado of the Southern District of Texas, Deputy Chief Jeffrey Goldberg of the Criminal Division?s Fraud Section, and Fraud Section Trial Attorney Andrew Warren. Former Assistant U.S. Attorney Gregg Costa and Fraud Section Deputy Chief William Stellmach were also involved in this case.
The Justice Department thanks the SEC for their assistance and cooperation in this matter.
Wednesday 20 June 2012
Statement of Attorney General Eric Holder on <br /> the House Oversight and Government Reform Committee VoteRead the Press Release
Attorney General Eric Holder issued the following statement today:
“In recent months, the Justice Department has made unprecedented accommodations to respond to information requests by Chairman Issa about misguided law enforcement tactics that began in the previous administration and allowed illegal guns to be taken into Mexico. Department professionals have spent countless hours compiling and providing thousands of documents -- nearly 8,000 -- to Chairman Issa and his committee. My staff has had numerous meetings with congressional staff to try and accommodate these requests and yesterday, I met with Chairman Issa to offer additional internal Department documents and information that would satisfy what he identified as the Committee’s single outstanding question.
“Unfortunately, Chairman Issa has rejected all of these efforts to reach a reasonable accommodation. Instead, he has chosen to use his authority to take an extraordinary, unprecedented and entirely unnecessary action, intended to provoke an avoidable conflict between Congress and the Executive Branch. This divisive action does not help us fix the problems that led to this operation or previous ones and it does nothing to make any of our law enforcement agents safer. It's an election-year tactic intended to distract attention -- and, as a result -- has deflected critical resources from fulfilling what remains my top priority at the Department of Justice: Protecting the American people.
“Simply put, any claims that the Justice Department has been unresponsive to requests for information are untrue. From the beginning, Chairman Issa and certain members of the Committee have made unsubstantiated allegations first, then scrambled for facts to try to justify them later. That might make for good political theater, but it does little to uncover the truth or address the problems associated with this operation and prior ones dating back to the previous Administration.
“I have spent most of my career in law enforcement and worked closely with brave agents who put their lives on the line every day. I know the sacrifices they make, so as soon as allegations of gunwalking came to my attention – and well before Chairman Issa expressed any interest in this issue -- I ordered the practice stopped. I made necessary personnel changes in the Department's leadership and instituted policy changes to ensure better oversight of significant investigations. And, I directed the Department's Inspector General to open a comprehensive investigation. That investigation is ongoing, and the American people and Congress can count on it to produce a tough, independent review of the facts.
“When Chairman Issa later began his own investigation, I made it clear that the Department would cooperate with all appropriate oversight requests, while still adhering to our legal obligations to protect information involving ongoing law enforcement investigations, legally-protected grand jury material and other sensitive information whose disclosure would endanger the American people or our agents investigating open cases.
“The American people deserve better. That is why, I will remain focused on, and committed to, the Justice Department’s mission to protect the rights, safety, and best interests of my fellow citizens and to stand by my brave colleagues in law enforcement.”
South Carolina Man Pleads Guilty to Committing Federal Hate Crime Against African-American TeenagerRead the Press Release
Chase McClary, 23, of Johnsonville, S.C., pleaded guilty today in federal court in the District of South Carolina to violating the Matthew Shepard-James Byrd Jr. Hate Crimes Prevention Act in his violent assault of an African-American teenager.
During his guilty plea, McClary admitted that in August 2010, he approached a 16-year-old African-American male and struck him numerous times with the jagged end of a broken coffee mug because of the victim’s race. The attack resulted in severe injuries to the victim’s head, face and neck.
Sentencing will be set at a later date. The plea agreement calls for a sentence of 48 months in prison.
“Motivated by hate, the defendant attacked a teenager and scarred him for life. No one should have to endure such an abhorrent act of criminal violence,” said Thomas E. Perez, Assistant Attorney for the Civil Rights Division. “The Justice Department will vigorously prosecute cases of bias motivated violence to the full extent of the law.”
“Prosecution of hate-based crime – whether the motive is the color of skin, sexua l orientation, religion, gender or national origin – is critical to the American way of life and the justice system,” said U.S. Attorney Bill Nettles for the District of South Carolina. I want to thank the Federal Bureau of Investigation, the F lorence County Sheriff’s Office and Ed Clements, the Thirteenth Circuit Solicitor, for their work on this civil rights case.”
This case was investigated by Special Agent Steven Stokes of the FBI, with assistance from the Florence County Sheriff’s Investigator Alvin Powell, and is being prosecuted by Assistant U.S. Attorney Brad Parham and Civil Rights Division Trial Attorney Christopher Lomax.
Jury Convicts Louisiana Tax DefierRead the Press Release
Jack Ray Carr, of Baton Rouge, La., was convicted today after a three-day jury trial of one count of corruptly interfering with the due administration of the Internal Revenue laws, four counts of filing false income tax returns and one count of aiding and assisting in the preparation of a false income tax return, the Justice Department, Internal Revenue Service (IRS) and Treasury Inspector General for Tax Administration (TIGTA) announced.
The evidence at trial established that Carr threatened violence against a federal agent, filed false documents and tax returns with the IRS, and attempted to pay his tax debt with fraudulent bonds, fictitious money orders and a fake check. On three successive personal income tax returns, Carr falsely reported that his and his wife’s income was “$0.00,” despite earning hundreds of thousands of dollars in total during the 2001, 2002 and 2003 tax years. In 2009, on two tax returns, Carr falsely reported more than $100,000 of federal income tax withholdings based on fictitious IRS Forms 1099-OID attached to the tax returns that Carr filed in his own name and in the name of his wife. In doing so, Carr claimed more than $150,000 of fraudulent tax refunds from the U.S. government.
Carr faces a potential maximum sentence of 18 years in federal prison and a fine of up to $1.5 million.
Kathryn Keneally, Assistant Attorney General of the Justice Department’s Tax Division, thanked the special agents of the IRS - Criminal Investigation and TIGTA, who investigated this case. Assistant Attorney General Keneally also thanked Tax Division Trial Attorneys Justin Gelfand, Jason Poole and Gregory Bailey, and former Tax Division Trial Attorney Matthew Mueller, all of whom prosecuted the case at various stages. Finally, Ms. Keneally thanked Donald J. Cazayoux Jr., U.S. Attorney for the Middle District of Louisiana, and his entire office for their assistance.
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.
Homebuilder Toll Brothers Inc. to Pay $741,000 Clean Water Act Penalty and Implement Company-Wide Stormwater ControlsRead the Press Release
WASHINGTON – Toll Brothers Inc., one of the nation’s largest homebuilders, will pay a civil penalty of $741,000 to resolve alleged Clean Water Act violations at its construction sites, including sites located in the Chesapeake Bay Watershed, the Department of Justice and the U.S. Environmental Protection Agency (EPA) announced today. Toll Brothers will also invest in a company-wide stormwater compliance program to improve employee training and increase management oversight at all current and future residential construction sites across the nation. The company is required to inspect its current and future construction sites routinely to minimize stormwater runoff from sites. Polluted stormwater runoff and sediment from construction sites can flow directly into the nearest waterway, affecting drinking water quality and damaging valuable aquatic habitats.
“This settlement will help protect the nation’s waters from the harmful pollutants contained in stormwater runoff from construction sites,” said Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division of the Department of Justice. “The settlement requires Toll Brothers to implement system-wide management controls and training that will help prevent polluted stormwater runoff from contaminating rivers, lakes and sources of drinking water.”
“Keeping contaminated stormwater runoff out of the nation’s waterways, like the Chesapeake Bay, is one of EPA’s top priorities,” said Cynthia Giles, Assistant Administrator for EPA’s Office of Enforcement and Compliance and Assurance. “Today’s settlement will improve oversight of stormwater runoff at construction sites across the country and protect America’s waters.”
EPA estimates the settlement will prevent millions of pounds of sediment from entering U.S. waterways every year, including sediment that would otherwise enter the Chesapeake Bay, North America’s largest and most biologically diverse estuary. The bay and its tidal tributaries are threatened by pollution from a variety of sources and are overburdened with nitrogen, phosphorus and sediment that can be carried by stormwater.
The complaint, filed simultaneously with the settlement agreement, alleges over 600 stormwater violations that were discovered through site inspections and by reviewing documentation submitted by Toll Brothers. The majority of the alleged violations involve Toll Brothers’ repeated failures to comply with permit requirements at its construction sites, including requirements to install and maintain adequate stormwater pollution controls.
The Clean Water Act requires permits for the discharge of stormwater runoff. In general, Toll Brothers’ permits require that construction sites have controls in place to prevent pollution from being discharged with stormwater into nearby waterways. These controls include common-sense safeguards such as silt fences, phased site grading and sediment basins to prevent construction contaminants from entering the nation’s waterways.
The settlement requires Toll Brothers to obtain all required permits, develop site-specific pollution prevention plans for each construction site, conduct additional site inspections beyond those required by stormwater regulations, and document and promptly correct any problems. The company must properly train construction managers and contractors on stormwater requirements and designate trained staff for each site. Toll Brothers must also submit national compliance summary reports to EPA based on management oversight inspections and reviews.
This settlement is the latest in a series of enforcement actions to address stormwater violations from residential construction sites around the country. Construction projects have a high potential for environmental harm because they disturb large areas of land and significantly increase the potential for erosion, and stormwater runoff from sites can pick up other pollutants, including concrete washout, paint, used oil, solvents and trash.
The state of Maryland and the commonwealth of Virginia have joined the settlement and will receive a portion of the $741,000 penalty. The settlement includes Toll Brothers sites in
Arizona, California, Colorado, Connecticut, Delaware, Florida, Georgia, Illinois, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Carolina, Nevada, Ohio, Pennsylvania, Rhode Island, South Carolina, Texas, Virginia and West Virginia.The consent decree, lodged in the U.S. District Court for the Eastern District of Pennsylvania, is subject to a 30-day public comment period and approval by the federal court. Once notice is published in the Federal Register, a copy of the consent decree will be available on the Justice Department website at www.justice.gov/enrd/Consent_Decrees.html.
More information about this settlement is available at: www.epa.gov/compliance/resources/cases/civil/cwa/tollbrothers.html.
More information about EPA’s stormwater enforcement is available at www.epa.gov/oecaerth/data/planning/priorities/cwastorm.html.
Former Executive Director of the American Samoa Special Services Commission Sentenced to 14 Months in Prison for Conspiracy to Steal More Than $325,000 in AmeriCorps Grant FundsRead the Press Release
WASHINGTON – The former executive director of the American Samoa Special Services Commission (the Commission) was sentenced today in Washington, D.C., to 14 months in prison for conspiracy to steal more than $325,000 in AmeriCorps grant funds, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.
U.S. District Judge Reggie B. Walton for the District of Columbia sentenced Mine S. Pase to 14 months in prison, to be followed by three years of supervised release. Judge Walton also ordered Pase to pay $325,408 in restitution.
On Nov. 18, 2011, Pase pleaded guilty to a one-count criminal information charging her with conspiracy to commit theft of federal funds.
According to court documents, between March 2001 and October 2010, Pase served as the Commission’s executive director. As an agency of the American Samoa Government, the Commission established and administered four community-based programs that provided services for American Samoans, including youth literacy programs, youth computer training, environmental conservation activities and family counseling services. The Commission and its programs relied exclusively on AmeriCorps grants from the Corporation for National and Community Service. From approximately January 2007 through October 2010, the Corporation for National and Community Service awarded the Commission and its programs a total of $9.4 million in federal grant funds.
Pase admitted that she arranged for herself, her relatives, commissioners, and Commission staff to receive a total of $325,408 in federal funds to which they were not lawfully entitled. These unlawful payments took the form of $109,532 in unlawful payments for purported business trips that Pase and others did not take; $78,889 in unlawful payments for vacation trips to Apia, Western Samoa; $89,313 in unlawful payments for meals; $19,665 in unlawful payments to Pase’s daughter under a bogus car lease agreement; and $28,009 in unlawful payments to Pase and her relatives for the use of damaged office space in which two of the Commission’s programs were housed.
According to court documents, Pase and her relatives personally received at least $123,236 of the $325,408 in stolen federal funds.
The case against Pase arose from the Corporation for National and Community Service’s Office of Inspector General (OIG) audit and investigation of the Commission. As a result of the OIG’s audit and investigation, the Commission’s federal funding was terminated and the Commission shut down.
The case is being prosecuted by Trial Attorney Edward J. Loya Jr. of the Criminal Division’s Public Integrity Section. The case is being investigated by special agents of the Corporation for National and Community Service OIG, with assistance from special agents of the FBI-Honolulu Division, American Samoa Resident Agency.
Detroit-Area Clinic Owner Pleads Guilty to $16 Million Psychotherapy Fraud SchemeRead the Press Release
WASHINGTON – Detroit-area resident Louisa Thompson pleaded guilty today for her role in a $16 million fraud scheme, announced the Department of Justice, the FBI and the Department of Health and Human Services (HHS).
Thompson, 63, pleaded guilty today before U.S. District Judge Nancy D. Edmunds in the Eastern District of Michigan to one count of conspiracy to commit health care fraud. At sentencing, scheduled for Oct. 18, 2012, Thompson faces a maximum penalty of 10 years in prison and a $250,000 fine.
According to the plea documents, in approximately January 2006, Thompson began billing Medicare for psychotherapy services through two companies, TGW Medical Inc. and Caldwell Thompson Manor Inc. The services billed by Thompson at TGW and Caldwell Thompson were never performed or were performed by unlicensed staff who were not authorized to perform services reimbursed by Medicare. The unlicensed staff members also fabricated therapy notes for patients that were never seen and billed Medicare using document templates created by Thompson.
According to court documents, Thompson also received payments from the owner of P&C Adult Day Care Inc., a psychotherapy clinic. Those payments to Thompson were, in part, for the use of Thompson’s provider number by P&C. Thompson also admitted signing therapy documents for P&C patients she never saw or treated. P&C, like TGW and Caldwell Thompson, billed for psychotherapy services that were either not performed or performed by unlicensed staff. Caldwell Thompson and P&C shared Medicare beneficiaries and/or beneficiary information.
Thompson admitted to submitting or causing to be submitted approximately $15.9 million in fraudulent psychotherapy claims on behalf of TGW, Caldwell Thompson and P&C. Medicare paid approximately $4.9 million of those claims.
The guilty plea was announced by 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; Acting Special Agent in Charge of the FBI’s Detroit Field Office Edward J. Hanko; and Special Agent in Charge Lamont Pugh III of the HHS Office of Inspector General’s (HHS-OIG), Chicago Regional Office.
The case is being prosecuted by Trial Attorney Gejaa T. Gobena of the Criminal Division’s Fraud Section and Assistant U.S. Attorney for the Eastern District of Michigan Philip A. Ross. 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 Eastern District of Michigan.Since its inception in March 2007, Medicare Fraud Strike Force operations in nine locations have charged more than 1,330 individuals and organizations that collectively have billed the Medicare program for more than $4 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are 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.
Tuesday 19 June 2012
Owner and Employee of Miami Home Health Company Sentenced to Prison in $22 Million Medicare Fraud SchemeRead the Press Release
WASHINGTON – The owner and an employee of a Miami home health care agency were sentenced today to 108 months and 46 months in prison, respectively, for their participation in a $22 million Medicare fraud scheme, announced the Department of Justice, the FBI and the Department of Health and Human Services (HHS).
U.S. District Judge Patricia A. Seitz in Miami sentenced Marietha Morales, 38, to 108 months in prison and Eduardo Saborit-Dominguez, 48, to 46 months in prison. Both defendants were each sentenced to three years of supervised release. In addition, Morales was ordered to pay $14 million in restitution and Dominugez was ordered to pay $2 million in restitution, jointly and severally with each other.
Last year, Morales pleaded guilty to one count of conspiracy to commit health care fraud, and Dominguez pleaded guilty to one count of conspiracy to defraud the United States and to receive and pay health care kickbacks.
Morales was the president and Dominguez was an employee of Prime Home Health Services Inc., a Florida home health agency that purported to provide home health care and physical therapy services to eligible Medicare beneficiaries.
According to plea documents, Morales conspired with patient recruiters for the purpose of billing the Medicare program for unnecessary home health care and therapy services. Morales and her co-conspirators paid kickbacks and bribes to patient recruiters in return for the recruiters providing patients to Prime Home Health, as well as prescriptions, plans of care (POCs) and certifications for medically unnecessary therapy and home health services for Medicare beneficiaries. Dominguez distributed the kickbacks and bribes to co-conspirator patient recruiters and knew that the payment of kickbacks and bribes was in violation of federal criminal laws. Morales used these prescriptions, POCs and medical certifications to fraudulently bill Medicare for home health care services, which Morales knew was in violation of federal criminal laws.According to plea documents, nurses and office staff at Prime Home Health falsified patient files for Medicare beneficiaries to make it appear that such beneficiaries qualified for home health care and therapy services. Morales admitted that she knew the beneficiaries did not actually qualify for and did not receive such services. Morales knew that these files were falsified so that Medicare could be billed for medically unnecessary therapy and home health related services.
From approximately February 2005 through April 2011, Morales and her co-conspirators submitted approximately $22 million in false and fraudulent claims to Medicare. Medicare actually paid approximately $14 million on those claims.The sentences were announced by 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; John V. Gillies, 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.
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 their inception in March 2007, Medicare Fraud Strike Force operations in nine locations have charged more than 1,330 defendants who collectively have falsely billed the Medicare program for more than $4 billion. In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are 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 to Monitor Election in MarylandRead the Press Release
The Justice Department announced today that the Civil Rights Division will monitor the municipal election on June 20, 2012, in Crisfield, Md. The monitoring will ensure compliance with the Voting Rights Act of 1965. The Voting Rights Act prohibits discrimination in the election process on the basis of race, color or membership in a minority language group.
Justice Department personnel will monitor polling place activities in Crisfield. A Civil Rights Division attorney will coordinate federal activities and maintain contact with local election officials.
Each year, the Justice Department deploys hundreds of federal observers from the Office of Personnel Management, as well as departmental staff, to monitor elections across the country. To file complaints about discriminatory voting practices, including acts of harassment or intimidation, voters may call the Voting Section of the Justice Department’s Civil Rights Division at 1-800-253-3931.
Visit www.justice.gov/crt/voting/index.php for more information about the Voting Rights Act and other federal voting laws.
Justice Department Files Lawsuit Against Rose Acre Farms in Indiana Alleging Discrimination Against Work-Authorized Non-CitizensRead the Press Release
WASHINGTON – The Justice Department announced today the filing of a lawsuit against Rose Acre Farms Inc., a major U.S. egg producer based in Seymour, Ind., alleging that Rose Acre engaged in a pattern or practice of discrimination against work-authorized non-citizens in the employment eligibility verification process. Rose Acre operates in more than 40 locations in six states.
The complaint alleges that Rose Acre had a standard practice of subjecting newly hired non-U.S. citizens to unauthorized demands for more, different or specific documents issued by the U.S. Department of Homeland Security in order to verify their employment eligibility, while U.S. citizens were permitted to present their choice of documentation. The Immigration and Nationality Act’s (INA) anti-discrimination provision prohibits employers from placing additional documentary burdens on work-authorized employees during the hiring and employment eligibility verification process based on their citizenship status or national origin. According to the complaint, Rose Acre purchased an electronic employment eligibility verification software system in June 2009 that may have prompted human resource officials to demand certain documents from non-U.S. citizens. The complaint seeks a court order prohibiting future discrimination by Rose Acre, changes in Rose Acre's policies and procedures for verifying employment eligibility, monetary damages for those harmed by the Rose Acre’s actions, and civil penalties.“The INA’s anti-discrimination provision requires employers to treat employees equally in the employment eligibility verification process, regardless of citizenship status or national origin,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The department is committed to removing discriminatory hurdles to employment through the enforcement of the anti-discrimination provision.”
The Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC) is responsible for enforcing the anti-discrimination provision of the INA, which protects work authorized individuals against discrimination in hiring, firing and recruitment or referral for a fee on the basis of citizenship status and national origin. The INA also protects all work-authorized individuals from discrimination in the employment eligibility verification process and from retaliation. The U.S. is represented in this matter by Luz V. Lopez-Ortiz and Linda White Andrews, OSC Trial Attorneys.
For more information about protections against employment discrimination under federal immigration law, call OSC’s worker hotline at 1-800-255-7688 (TDD 1-800-237-2515), OSC’s employer hotline at 1-800-255-8155 (TDD 1-800-237-2515), sign up for a no-cost webinar at www.justice.gov/crt/about/osc/webinars.php, or visit OSC’s website at www.justice.gov/crt/about/osc.
Monday 18 June 2012
Owner of Southern California-Based Mesquite Charcoal Distributor <br /> Pleads Guilty to Customer Allocation and Bid-Rigging ConspiracyRead the Press Release
WASHINGTON – The owner of a southern California-based mesquite charcoal distributor pleaded guilty for his role in a customer allocation and bid-rigging conspiracy for the sale of mesquite charcoal, the Department of Justice announced today.According to a one-count felony charge filed on May 7, 2012, in the U.S. District Court in San Francisco, William W. Lord, the owner of Carpinteria, Calif.-based Chef’s Choice Mesquite Charcoal, participated in a conspiracy with competitors to refrain from competing for each other’s customers and to submit noncompetitive bids for the sale of mesquite charcoal. According to the plea agreement, Lord has agreed to cooperate with the department’s ongoing investigation.
“Today’s charge demonstrates the Antitrust Division’s commitment to prosecute bid-rigging conspiracies that involve products used in the everyday lives of consumers and businesses ’ daily operations,” said Acting Assistant Attorney General Joseph Wayland in charge of the Department of Justice’s Antitrust Division.
Chef’s Choice distributes and sells mesquite charcoal throughout the United States. Mesquite charcoal, which is typically used by restaurants and individuals to grill meat, fish and poultry, is primarily produced in Mexico and then sold to distributors in the United States for eventual resale to restaurants and consumers.
According to court documents, the charged conspiracy began as early as January 2000 and lasted until about September 2010. Lord and his competitors, a Los Angeles-area mesquite charcoal distributor and a San Francisco-area mesquite charcoal distributor, entered into an agreement to refrain from competing for the sale of mesquite charcoal to each other’s customers. The purpose of this agreement was to ensure that Lord and his competitors would not have to reduce mesquite charcoal prices in the face of competition in order to retain their customers. Lord and his competitors carried out the conspiracy in various ways, including: refraining from submitting bids for the sale of mesquite charcoal to each other’s customers; submitting intentionally noncompetitive bids to each other’s customers; and communicating with each other regarding what price to bid and then submitting agreed-upon, noncompetitive bids to each other’s customers.
Lord is charged with violating the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victim of the crime if either of those amounts is greater than the statutory maximum fine.
Today’s guilty plea arose from an ongoing federal investigation of the mesquite charcoal industry in the United States. The investigation is being conducted by the Department of Justice Antitrust Division’s Chicago Field Office and the FBI’s San Francisco Office. Anyone with information concerning customer allocation, bid rigging or price fixing related to the mesquite charcoal industry in the United States should contact the Antitrust Division’s Chicago Field Office at 312-353-7530 or visit www.justice.gov/atr/contact/newcase.htm.
Missouri Woman Sentenced to 63 Months in Prison for Vandalism and Arson of Biracial Man’s HomeRead the Press Release
A Missouri woman was sentenced today to 63 months in prison for her role in the vandalism and arson of a biracial man’s home in Independence, Mo., the Department of Justice announced
Teresa Witthar, 43, of Independence, was sentenced in the Western District of Missouri by U.S. District Judge Dean Whipple.
On Feb. 2, 2012, Witthar pleaded guilty to one count of conspiracy, one count of violating the Fair Housing Act and one count of obstruction of justice. Witthar’s co-conspirators, Charles Wilhelm and David Martin, pleaded guilty on March 8, 2012, and March 7, 2012, respectively, to one count of conspiracy to violate the civil rights of the victim and one count of violating the Fair Housing Act for their roles in vandalizing and burning down Nathaniel Reed’s home in Independence.
According to the plea agreement filed with the court, Witthar, Wilhelm and Martin conspired to intimidate and scare Reed, a biracial man, into moving out of the Highland Manor Mobile Home Park in Independence, in part because of his race. On or about June 6, 2006, Witthar, along with Wilhelm and Martin, entered Reed’s mobile home, without his permission, and vandalized it by writing at least 15 racially derogatory slurs on the walls of his trailer.
Two days later, on or about June 8, 2006, Witthar drove Martin and Wilhelm to a neighborhood behind Reed’s home so that they could set fire to his home without being detected. Witthar waited in her vehicle for Wilhelm and Martin to set the fire and then provided them a ride back to the Highland Manor Mobile Home Park.
The investigation further revealed that in the spring of 2011, Witthar unsuccessfully attempted to persuade another individual to testify falsely in front of a grand jury about her role in the vandalism and fire.
“Violent and destructive acts such as the arson of this man’s home seek to undermine the guarantees of equal justice and equal opportunity that are central to our laws,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Department of Justice will continue to act aggressively to ensure that every American enjoys the right to occupy a home free of racially motivated intimidation and violence.”
“Today's tough sentence makes it clear that our community will not tolerate racially-motivated violence and intimidation,” said Acting U.S. Attorney for the Western District of Missouri David M. Ketchmark. “We are satisfied that this defendant is being held accountable for the arson, vandalism and threats that violated Mr. Reed's civil rights. By defending one victim’s right to live freely in his own home, we are upholding Constitutional freedoms for all citizens.”
Sentencing for Wilhelm is scheduled for July 24, 2012. Sentencing for Martin is scheduled for July 26, 2012.
These guilty pleas were the result of a cooperative effort between the U.S. Attorney’s Office for the Western District of Missouri and the Justice Department’s Civil Rights Division. This case was investigated by the Kansas City Division of the FBI. It is being prosecuted by Acting U.S. Attorney David Ketchmark for the Western District of Missouri and Trial Attorney Sheldon L. Beer of the Civil Rights Division.
Data Systems & Solutions LLC Resolves <br /> Foreign Corrupt Practices Act Violations <br /> and Agrees to Pay $8.82 Million Criminal PenaltyRead the Press Release
Data Systems & Solutions LLC (DS&S), a company based in Reston, Va., that provides design, installation, maintenance and other services at nuclear and fossil fuel power plants, has agreed to pay an $8.82 million criminal penalty to resolve violations of the Foreign Corrupt Practices Act (FCPA), announced Principal Deputy Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney for the Eastern District of Virginia Neil H. MacBride.
The department filed a two-count criminal information today in the Eastern District of Virginia charging DS&S with conspiring to violate, and violating, the FCPA’s anti-bribery provisions.
According to court documents, DS&S paid bribes to officials employed by the Ignalina Nuclear Power Plant, a state-owned nuclear power plant in Lithuania, to secure contracts to perform services for the plant. To disguise the scheme, the bribes were funneled through several subcontractors located in the United States and abroad. The subcontractors, in turn, made repeated payments to high-level officials at Ignalina via check or wire transfer.
The department also filed today a deferred prosecution agreement with DS&S. Under the terms of the agreement, the department will defer prosecution of DS&S for two years. In addition to the monetary penalty, DS&S agreed to cooperate with the department, to report periodically to the department concerning DS&S’s compliance efforts, and to continue to implement an enhanced compliance program and internal controls designed to prevent and detect FCPA violations. If DS&S abides by the terms of the deferred prosecution agreement, the department will dismiss the criminal information when the agreement’s term expires.
The agreement acknowledges DS&S’s extraordinary cooperation, including conducting an extensive, thorough and swift internal investigation; providing to the department extensive information and evidence; and responding promptly and fully to the department’s requests. In addition, DS&S has engaged in extensive remediation, including terminating the officers and employees responsible for the corrupt payments; instituting a more rigorous compliance program; enhancing its due diligence protocol for third-party agents and subcontractors; strengthening its ethics policies; providing FCPA training for all agents and subcontractors; and establishing heightened review of most foreign transactions.
The case is being prosecuted by Trial Attorney Daniel S. Kahn of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Charles Connolly from the Eastern District of Virginia. The case was investigated by the FBI’s Washington Field Office, the Department of Energy Office of Inspector General, and the Internal Revenue Service Criminal Investigation’s Washington D.C. Field Office. The Criminal Division’s Office of International Affairs provided assistance.
Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa
Friday 15 June 2012
Three Tax Return Preparers Charged with Helping Clients Evade Taxes by Hiding Millions in Secret Accounts at Two Israeli BanksRead the Press Release
David Kalai, Nadav Kalai and David Almog were indicted by a federal grand jury in the Central District of California and charged with conspiring to defraud the United States, the Justice Department and Internal Revenue Service (IRS) announced today. The superseding indictment, which was returned late yesterday, was unsealed following the defendants’ arrests.
According to the superseding indictment, David Kalai and Nadav Kalai were principals of United Revenue Service Inc. (URS), a tax preparation business with 12 offices located throughout the United States. David Kalai worked primarily at URS’s former headquarters in Newport Beach, Calif., and later at URS’s location in Costa Mesa, Calif. Nadav Kalai, who is David Kalai’s son, worked out of URS’s headquarters in Bethesda, Md., as well as URS locations in Newport Beach and Costa Mesa, Calif. David Almog was the branch manager of the New York office of URS and supervised tax return preparers for URS’s East Coast locations.
As alleged in the superseding indictment, U.S. citizens, resident aliens and legal permanent residents have an obligation to report to the IRS on Schedule B of the U.S. Individual Income Tax Return, Form 1040, whether they had a financial interest in, or signature authority over, a financial account in a foreign country in a particular year by checking “Yes” or “No” in the appropriate box and identifying the country where the account was maintained. They further have an obligation to report all income earned from the foreign financial account on the tax returns. Separately, U.S. citizens, resident aliens and permanent legal residents with a foreign financial interest in, or signatory authority over, a foreign financial account worth more than $10,000 in a particular year, must also file a Report of Foreign Bank and Financial Accounts (FBAR) with the Treasury disclosing such an account by June 30 of the following year.
The superseding indictment alleges that the co-conspirators prepared false individual income tax returns which did not disclose the clients’ foreign financial accounts nor report the income earned from those accounts. In order to conceal the clients’ ownership and control of assets and conceal the clients’ income from the IRS, the co-conspirators incorporated offshore companies in Belize and elsewhere and helped clients open secret bank accounts at the Luxembourg locations of two Israeli banks, Bank A and Bank B. Bank A is a large financial institution headquartered in Tel-Aviv, Israel, with more than 300 branches across 18 countries worldwide. Bank B is a mid-size financial institution also headquartered in Tel-Aviv, with a worldwide presence on four continents.
As further alleged in the superseding indictment, the co-conspirators incorporated offshore companies in Belize and elsewhere to act as named account holders on the secret accounts at the Israeli banks. The co-conspirators then facilitated the transfer of client funds to the secret accounts and prepared and filed tax returns that falsely reported the money sent offshore as a false investment loss or a false business expense. The co-conspirators also failed to disclose the existence of, and the clients’ financial interest in, and authority over, the clients’ secret accounts and caused the clients to fail to file FBARs with the Department of the Treasury.
If convicted, each defendant faces a maximum of five years in prison and a maximum fine of $250,000. The charges contained in the indictment are only allegations. The defendants are presumed innocent and it is the government’s burden to prove guilt beyond a reasonable doubt.
Kathryn Keneally, Assistant Attorney General of the Justice Department’s Tax Division, thanked Tax Division Trial Attorneys Christopher S. Strauss and Ellen M. Quattrucci, who prosecuted the case, and Assistant U.S. Attorney Sandra A. Brown of the U.S. Attorney’s Office for the Central District of California, who assisted with the prosecution. The case was investigated by special agents of IRS – Criminal Investigation.
Former Vice President at California Valve <br /> Company Pleads Guilty to Foreign Bribery OffenseRead the Press Release
WASHINGTON – David Edmonds, the former vice president of worldwide customer service at Rancho Santa Margarita, Calif.-based valve company Control Components Inc. (CCI), pleaded guilty today to violating the Foreign Corrupt Practices Act (FCPA), announced the Justice Department’s Criminal Division, the U.S. Attorney’s Office for the Central District of California and the FBI’s Washington Field Office.
Edmonds, who resides in San Clemente, Calif., pleaded guilty today before U.S. District Judge James V. Selna in Santa Ana, Calif., to a one-count superseding information charging him with making a corrupt payment to a foreign government official in Greece in violation of the FCPA. According to court documents, CCI designed and manufactured service control valves for use in the nuclear, oil and gas, and power generation industries worldwide.
At sentencing, Edmonds, 59, faces up to 15 months in prison. Sentencing is scheduled for Nov. 19, 2012.
Edmonds is the seventh former CCI executive to plead guilty to FCPA charges in connection with the company’s bribery scheme:
On May 29, 2012, Paul Cosgrove, CCI’s former head of worldwide sales, pleaded guilty to one count of making a corrupt payment to a foreign government official.
On April 17, 2012, Stuart Carson, CCI’s former president, and Hong “Rose” Carson, CCI’s former director of sales for China and Taiwan, each pleaded guilty to one count of making a corrupt payment to a foreign government official.
On April 28, 2011, Flavio Ricotti, CCI’s former vice president of sales for Europe, Africa, and the Middle East, pleaded guilty to one count of conspiring to violate the FCPA.
On Feb. 3, 2009, Richard Morlok, the former CCI finance director, pleaded guilty to one count of conspiracy to violate the FCPA.
On Jan. 8, 2009, Mario Covino, the former director of worldwide factory sales for CCI, pleaded guilty to one count of conspiracy to violate the FCPA.
Stuart and Rose Carson, Cosgrove, Covino, Morlok and Ricotti are scheduled to be sentenced later this year. FCPA charges brought in April 2009 against Han Yong Kim, the former president of CCI’s Korean office, are pending. An indictment merely contains allegations and defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
On July 31, 2009, CCI pleaded guilty to a three-count criminal information charging the company with conspiracy to violate the FCPA and the Travel Act, and two substantive violations of the FCPA. CCI was ordered to pay an $18.2 million criminal fine, placed on organizational probation for three years, and ordered to create and implement a compliance program and retain an independent compliance monitor for three years. CCI admitted that from 2003 through 2007, it made corrupt payments in more than 30 countries, which resulted in net profits to the company of approximately $46.5 million from sales related to those corrupt payments.
The case is being prosecuted by Deputy Chief Charles G. La Bella and Trial Attorney Andrew Gentin of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Douglas McCormick and Gregory Staples of the U.S. Attorney’s Office for the Central District of California. The case was investigated by the FBI’s Washington Field Office and its team of special agents dedicated to the investigation of foreign bribery cases.
Related Materials:
Plea Agreement (PDF)
Former Chief Financial Officer of Taylor, Bean & Whitaker Sentenced to 60 Months in Prison for Fraud SchemeRead the Press Release
WASHINGTON – Delton de Armas, a former chief financial officer (CFO) of Taylor, Bean & Whitaker Mortgage Corp. (TBW), was sentenced today to 60 months in prison for his role in a more than $2.9 billion fraud scheme that contributed to the failure of TBW.
De Armas was sentenced today by U.S. District Judge Leonie M. Brinkema in the Eastern District of Virginia. The sentence was announced today by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Neil H. MacBride for the Eastern District of Virginia; Christy Romero, Special Inspector General, Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP); Assistant Director in Charge James W. McJunkin of the FBI’s Washington Field Office; David A. Montoya, Inspector General of the Department of Housing and Urban Development (HUD-OIG); Jon T. Rymer, Inspector General of the Federal Deposit Insurance Corporation (FDIC-OIG); Steve A. Linick, Inspector General of the Federal Housing Finance Agency (FHFA-OIG); and Richard Weber, Chief of the Internal Revenue Service Criminal Investigation (IRS-CI).
De Armas, 41, of Carrollton, Texas, pleaded guilty in March to one count of conspiracy to commit bank and wire fraud and one count of making false statements.
“For years, Mr. de Armas, the CFO of one of the country’s largest private mortgage companies, helped defraud financial institutions by concealing from them billions of dollars in losses,” said Assistant Attorney General Breuer. “His lies and deceits contributed to the devastating losses suffered by major institutional investors. As a consequence for his crimes, he will now spend the next five years of his life behind bars.”
“As CFO, Mr. de Armas could have – and should have – put a stop to the massive fraud at TBW the moment he discovered it,” said U.S. Attorney MacBride. “Instead, he and others lied for years on end to investors, banks, regulators and auditors and caused more than $2.4 billion in losses to major financial institutions.”
“Rather than blow the whistle on billions of dollars in fraud, de Armas chose to help conceal it,” said Special Inspector General Romero. “This CFO lied to investors, banks, regulators and auditors to cover up the massive fraud scheme which resulted in the failure of both TBW and Colonial Bank. The court’s decision to sentence de Armas to five years in prison reflects the seriousness of his role as a gatekeeper within TBW and the contribution of his crime to our nation’s financial crisis.”
“The actions of Mr. De Armas and others resulted in the loss of billions of dollars to major financial institutions,” said Assistant Director in Charge McJunkin. “Today’s sentence serves as a warning to anyone who attempts to take advantage of investors and our banking system. Together with our law enforcement partners, the FBI will pursue justice for anyone involved in such fraudulent schemes.”
According to court documents, de Armas joined TBW in 2000 as its CFO and reported directly to its chairman, Lee Bentley Farkas, and later to its CEO, Paul Allen. He previously admitted in court that from 2005 through August 2009, he and other co-conspirators engaged in a scheme to defraud financial institutions that had invested in a wholly-owned lending facility called Ocala Funding. Ocala Funding obtained funds for mortgage lending for TBW from the sale of asset-backed commercial paper to financial institutions, including Deutsche Bank and BNP Paribas. The facility was managed by TBW and had no employees of its own.
According to court records, shortly after Ocala Funding was established, de Armas learned there were inadequate assets backing its commercial paper, a deficiency referred to internally at TBW as a “hole” in Ocala Funding. De Armas knew that the hole grew over time to more than $700 million. He learned from the CEO that the hole was more than $1.5 billion at the time of TBW’s collapse. De Armas admitted he was aware that, in an effort to cover up the hole and mislead investors, a subordinate who reported to him had falsified Ocala Funding collateral reports and periodically sent the falsified reports to financial institution investors in Ocala Funding and to other third parties. De Armas acknowledged that he and the CEO also deceived investors by providing them with a false explanation for the hole in Ocala Funding.
De Armas also previously admitted in court that he directed a subordinate to inflate an account receivable balance for loan participations in TBW’s financial statements. De Armas acknowledged that he knew that the falsified financial statements were subsequently provided to Ginnie Mae and Freddie Mac for their determination on the renewal of TBW’s authority to sell and service securities issued by them.
In addition, de Armas admitted in court to aiding and abetting false statements in a letter the CEO sent to the U.S. Department of Housing and Urban Development, through Ginnie Mae, regarding TBW’s audited financial statements for the fiscal year ending on March 31, 2009. De Armas reviewed and edited the letter, knowing it contained material omissions. The letter omitted that the delay in submitting the financial data was caused by concerns its independent auditor had raised about the financing relationship between TBW and Colonial Bank and its request that TBW retain a law firm to conduct an internal investigation. Instead, the letter falsely attributed the delay to a new acquisition and TBW’s switch to a compressed 11-month fiscal year.
“We are pleased to have joined our law enforcement colleagues in bringing Mr. de Armas to justice,” said Inspector General Rymer. “The former Chief Financial Officer’s actions contributed to one of the largest bank frauds in the country and led to the demise of TBW. His punishment, along with the earlier sentencings of other co-conspirators involved in the Colonial Bank and TBW scheme, sends a clear message that those who abuse their positions of trust and seek to undermine the integrity of the financial services industry will be held accountable. We will continue to pursue such cases in the interest of ensuring the safety and soundness of our Nation’s banks and the strength of the financial services industry as a whole.”
“Delton de Armas was a key player in the TBW fraud; the significant sentence of 60 months handed down today appropriately takes that role into account,” said Inspector General Linick.
In April 2011, a jury in the Eastern District of Virginia found Lee Bentley Farkas, the chairman of TBW, guilty of 14 counts of conspiracy, bank, securities and wire fraud. On June 30, 2011, Judge Brinkema sentenced Farkas to 30 years in prison. In addition, six individuals have pleaded guilty for their roles in the fraud scheme, including: Paul Allen, former chief executive officer of TBW, who was sentenced to 40 months in prison; Raymond Bowman, former president of TBW, who was sentenced to 30 months in prison; Desiree Brown, former treasurer of TBW, who was sentenced to six years in prison; Catherine Kissick, former senior vice president of Colonial Bank and head of its Mortgage Warehouse Lending Division (MWLD), who was sentenced to eight years in prison; Teresa Kelly, former operations supervisor for Colonial Bank’s MWLD, who was sentenced to three months in prison; and Sean Ragland, a former senior financial analyst at TBW, who was sentenced to three months in prison.
The case is being prosecuted by Deputy Chief Patrick Stokes and Trial Attorney Robert Zink of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Charles Connolly and Paul Nathanson of the Eastern District of Virginia. This case was investigated by SIGTARP, FBI’s Washington Field Office, FDIC OIG, HUD OIG, FHFA OIG and the IRS Criminal Investigation. The Financial Crimes Enforcement Network (FinCEN) of the Department of the Treasury also provided support in the investigation. The Department would also like to acknowledge the substantial assistance of the SEC in the investigation of the fraud scheme.
This prosecution was brought in coordination with 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.
Brooklyn Doctor Convicted for Role in Medicare and Private Insurance Fraud SchemeRead the Press Release
WASHINGTON – A Brooklyn board-certified colorectal surgeon, who owned and operated a New York medical clinic, was convicted for his role in a fraud scheme that billed Medicare and numerous private insurance companies for surgeries and other complex medical procedures that were never performed, the Department of Justice, FBI and Department of Health and Human Services (HHS) announced today.
On Wednesday, June 13, 2012, after a two-week trial in federal court in Brooklyn, a jury found Boris Sachakov, M.D., 43, guilty of one count of health care fraud and five counts of health care false statements.
The trial evidence showed that from January 2008 to January 2010, Sachakov, who owned and operated a clinic called Colon and Rectal Care of New York P.C., defrauded Medicare and private insurance companies by billing for surgeries and medical services that he never provided. According to trial testimony, several private insurance companies began investigating Sachakov after receiving complaints from patients that Sachakov had submitted claims for surgeries, including hemorrhoidectomies, that he never performed.
At trial, 11 of Dr. Sachakov’s patients testified that they had not received the surgeries and other medical services for which Sachakov had billed their insurance companies. The evidence presented at trial showed that the medical records Dr. Sachakov created and maintained on these patients, including letters to the patient’s referring doctors, did not support the extensive billings he submitted. After Dr. Sachakov was confronted by two insurance companies about complaints of billings for surgeries that did not happen, the evidence at trial showed that Dr. Sachakov sent letters to his patients, asking them to falsely certify in writing that they had received the phony surgeries.
The indictment alleged that Sachakov submitted and caused the submission of over $22.6 million in false and fraudulent claims to Medicare and private insurance companies, and received more than $9 million on those claims.
At sentencing, scheduled for Sept. 24, 2012, Sachakov faces a maximum penalty of 35 years in prison and an $18 million fine.
The charges were announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; Assistant Director-in-Charge Janice K. Fedarcyk of the FBI’s New York field office; and Special Agent-in-Charge Thomas O’Donnell of the HHS Office of Inspector General (HHS-OIG).
The case is being prosecuted by Trial Attorney Sarah M. Hall and Assistant Chief William Pericak of the Criminal Division’s Fraud Section. The case was investigated by the FBI, HHS, the New York State Office of Medicaid Inspector General and the New York State Department of Financial Services, Criminal Investigative Division.
The case was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section. 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 their inception in March 2007, strike force operations in nine districts have charged 1,330 defendants who collectively have falsely billed the Medicare program for more than $4 billion. In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about HEAT, visit: www.stopmedicarefraud.gov .
Alleged International Credit Card Trafficker “Badb” Extradited from France to the United StatesRead the Press Release
WASHINGTON – Vladislav Anatolievich Horohorin, aka “BadB” of Moscow, an alleged international credit card trafficker thought to be one of the most prolific sellers of stolen credit card data, has been extradited from France to the United States to face criminal charges filed in the District of Columbia and in the Northern District of Georgia.
The extradition was announced today by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Ronald C. Machen Jr. for the District of Columbia, U.S. Attorney Sally Quillian Yates of the Northern District of Georgia, U.S. Secret Service (USSS) Assistant Director for Investigations David J. O’Connor, and Special Agent in Charge Brian D. Lamkin of the FBI’s Atlanta Field Office.
Horohorin, 29, made his first appearance before U.S. District Judge Ellen Segal Huvelle in the District of Columbia yesterday. He was extradited to the United States on June 6, 2012, and was arraigned before U.S. Magistrate Judge Alan Kay in the District of Columbia on June 7, 2012. He was ordered detained pending trial.
“According to the indictment, Mr. Horohorin was one of the most notorious credit card traffickers in the world, transacting in stolen credit information across the globe,” said Assistant Attorney General Breuer. “Due to our strong relationships with our international law enforcement partners, we secured his extradition to the United States, where he now faces multiple criminal counts in two separate indictments. We will continue to do everything we can to bring cybercriminals to justice, including those who operate beyond our borders.”
“Our indictment alleges that this young man used his technological savvy to profit by selling stolen credit card information over the Internet on a massive scale,” said U.S. Attorney Machen. “We are pleased that he has been extradited to the United States to face these criminal charges in a District of Columbia courtroom. This prosecution demonstrates that those who try to rip off Americans from behind a computer screen across an ocean will not escape American justice.”
“The Secret Service is committed to identifying and apprehending those individuals that continue to attack American financial institutions and we will continue to work through our international and domestic law enforcement partners in order to accomplish this,” said USSS Assistant Director O’Connor.
“International cyber criminals who target American citizens and businesses often believe they are untouchable because they are overseas,” said U.S. Attorney Yates. “But as this case demonstrates, we will work relentlessly with our law enforcement partners around the world to charge, find and bring those criminals to justice.”
“Horohorin’s extradition to the United States demonstrates the FBI’s expertise in conducting long-term investigations into complex criminal computer intrusions, resulting in bringing the most egregious cyber criminals to justice, even from foreign shores,” said Special Agent in Charge Lamkin. “The combined efforts of law enforcement agencies to include our international partners around the world will ensure this trend continues.”
Horohorin was indicted by a federal grand jury in the District of Columbia in November 2009 on charges of access device fraud and aggravated identity theft. In a separate investigation, a federal grand jury in the Northern District of Georgia returned a superseding indictment against Horohorin in August 2010, charging him with conspiracy to commit wire fraud, wire fraud and access device fraud. In August 2010, French law enforcement authorities, working with the U.S. Secret Service, identified Horohorin in Nice, France, and arrested him as he was attempting to board a flight to return to Moscow.
According to the indictment filed in the District of Columbia, Horohorin was the subject of an undercover investigation by USSS agents. Horohorin, who is a citizen of Israel, Russia and Ukraine, allegedly used online criminal forums such as “CarderPlanet” and “carder.su” to sell stolen credit card information, known as “dumps,” to online purchasers around the world. According to the indictment, Horohorin, using the online name “BadB,” advertised the availability of stolen credit card information through these web forums and directed purchasers to create accounts at “dumps.name,” a fully-automated dumps vending website operated by Horohorin and hosted outside the United States. The website was designed to assist in the exchange of funds for the stolen credit card information. Horohorin allegedly directed buyers to fund their “dumps.name” account using funds transferred by services including “Webmoney,” an online currency service hosted in Russia. The purchaser would then access the “dumps.name” website and select the desired stolen credit card data. Using an online undercover identity, USSS agents negotiated the sale of numerous stolen credit card dumps.
According to the indictment filed in the Northern District of Georgia, Horohorin was one of the lead cashers in an elaborate scheme in which 44 counterfeit payroll debit cards were used to withdraw more than $9 million from over 2,100 ATMs in at least 280 cities worldwide in a span of less than 12 hours. Computer hackers broke into a credit card processor located in the Atlanta area, stole debit card account numbers, and raised the balances and withdrawal limits on those accounts while distributing the account numbers and PIN codes to lead cashers, like Hororhorin, around the world.
Horohorin faces a maximum penalty of 10 years in prison for each count of access device fraud, 20 years in prison for each count of conspiracy to commit wire fraud and wire fraud and a statutory consecutive penalty of two years in prison for the aggravated identity theft count.
The charges in the indictments are merely allegations and a defendant is presumed innocent until proven guilty.
The District of Columbia case is being prosecuted by Trial Attorneys Carol Sipperly, Ethan Arenson and Corbin Weiss of the Computer Crime and Intellectual Property Section (CCIPS) in the Justice Department’s Criminal Division. Weiss also serves as a Special Assistant U.S. Attorney for the District of Columbia. The District of Columbia case is being investigated by USSS. Key assistance was provided by the French Police Nationale Aux Frontiers and the Netherlands Police Agency National Crime Squad High Tech Crime Unit. The FBI Atlanta field office provided information helpful to the investigation.
The Northern District of Georgia case is being prosecuted by Assistant U.S. Attorneys Nick Oldham and Lawrence R. Sommerfeld and Trial Attorney Sipperly of CCIPS. The Atlanta case is being investigated by the FBI. Assistance was provided by numerous law enforcement partners. U.S. Secret Service provided information helpful to the investigation.
The Office of International Affairs in the Justice Department’s Criminal Division provided invaluable assistance.
Thursday 14 June 2012
U.S. Parole Commission to Hold its First Reentry and Service Awards Ceremony<br>Thursday, June 21, 2012, 6:00 – 8:00 p.m.Read the Press Release
Washington, DC – Every year, hundreds of thousands of people are released from prison. Recognizing that the more released offenders are able to find homes and jobs, the less likely they are to commit new crimes and return to prison, the federal government, together with state and local governments, is working to assist those returning from prison and jail to become productive citizens.
"Reentry provides a major opportunity to reduce recidivism, save taxpayer dollars, and make our communities safer," said Attorney General Eric Holder. "When reentry fails, the costs – both societal are economic – are high."
On June 21, the U.S. Parole Commission will hold its first Reentry and Service Awards Ceremony. The event is designed to recognize those members of the reentering population who have successfully returned to the community and completed supervision while rebuilding their lives, reconnecting to their families and communities, and supporting and assisting others. The Commission will also recognize others who have significantly aided the reentry population through training, work development, and social and civic engagement.
The event is free and open to the public. The ceremony will begin at 6:00 p.m. Light refreshments will be served.
Parole Commission offices are located on the third floor of 90 K Street, NE, Washington, DC, on the corner of 1st and K Streets. To get there by Metro, take the Red Line to Union Station or New York Avenue. Parking is available in the building and is free after 5:30 p.m.
For more information, please call Jordana Randall at (202) 346-7073.
Two Members of the U.S. Army Plead Guilty to Bribery Charges Related to Fuel Theft in AfghanistanRead the Press Release
WASHINGTON – Two members of the U.S. Army have each pleaded guilty to a bribery charge for their roles in a scheme to steal jet fuel at Forward Operating Base (FOB) Fenty near Jalalabad, Afghanistan, Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division announced today.
Sergeant Regionald Dixon, 30, pleaded guilty yesterday in the District of Hawaii to one count of bribery and Specialist Larry Emmons, 25, pleaded guilty to one count of bribery on June 8, 2012. Dixon and Emmons, both of Schofield Barracks, Hawaii, pleaded guilty before U.S. District Judge Leslie Kobayashi.
According to court documents, on or about Jan. 1, 2012, Dixon and another co-conspirator sergeant in the U.S. Army, agreed to participate in a scheme to steal JP8 jet fuel from FOB Fenty. Specialist Emmons joined the scheme when he returned to FOB Fenty from midtour leave on or about Jan. 22, 2012.
According to court documents, Dixon, Emmons and others surreptitiously filled 3,000-gallon trucks with JP8 jet fuel. The trucks were owned by an Afghan military trucking contractor and were termed “jingle trucks” for their bright adornments. When filling the jingle trucks, the defendants and their co-conspirators took steps to conceal their activities, including filling the trucks in clandestine locations and at times of day least likely to arouse suspicion.
Court documents state that Emmons or a co-conspirator created fraudulent transportation movement requests (TMR), military documents that officially authorize the movement of fuel from FOB Fenty to another location, usually another military base in that geographic area. Emmons and his co-conspirator gave the fraudulent TMRs to the drivers of the jingle trucks, who presented the fraudulent TMRs at the secure departure checkpoint at FOB Fenty to justify their departure with a truckload of JP8 jet fuel.
In return for their official acts in facilitating the theft of fuel from FOB Fenty, Dixon, Emmons and a co-conspirator were paid $6,000 per 3,000-gallon truckload of JP8 jet fuel.
As part of their plea agreements, Dixon and Emmons agreed to forfeit various amounts of cash seized from them or their residences or voluntarily surrendered to federal agents.
At sentencing, scheduled for Oct. 4, 2012, Dixon and Emmons each face up to 15 years in prison.
These cases are being prosecuted by Trial Attorney Mark W. Pletcher of the Fraud Section in the Justice Department’s Criminal Division. The cases were investigated by the Special Inspector General for Afghanistan Reconstruction; the Department of the Army, Criminal Investigations Division; the Defense Criminal Investigative Service; the FBI; and the Department of the Air Force, Office of Special Investigations. Valuable assistance was also provided by the Justice Department’s Office of International Affairs.
Retired U.S. Army Lieutenant Colonel Sentenced to 41 Months in Prison for Bribery Related to Contracting in Support of Iraq WarRead the Press Release
WASHINGTON – A retired lieutenant colonel in the U.S. Army was sentenced yesterday to 41 months in prison for engaging in bribery related to his work as a contracting officer’s representative in Kuwait from 2004 to 2006, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.
Derrick L. Shoemake, 50, of Moreno Valley, Calif., was sentenced by U.S. District Court Judge Dolly M. Gee in the Central District of California. In addition to his prison term, Shoemake was sentenced to two years of supervised release and was ordered to pay $181,900 in restitution and forfeit $68,100.
Shoemake pleaded guilty in June 2011 to two counts of bribery. According to court documents, Shoemake was deployed to Camp Arifjan, Kuwait, as a contracting officer’s representative in charge of coordinating and accepting delivery of bottled water in support of our troops in Iraq. While serving in Kuwait, Shoemake agreed to assist a contractor with his delivery of bottled water. In return, the contractor paid Shoemake a total of approximately $215,000, most of which was delivered to Shoemake’s designee in Los Angeles. Shoemake received an additional $35,000 from a second contractor for his perceived influence over the award of bottled water contracts in Afghanistan. All told, Shoemake admitted receiving approximately $250,000 from these two government contractors in 2005 and 2006.
This case is being prosecuted by Trial Attorney Richard B. Evans of the Criminal Division’s Public Integrity Section and Trial Attorney Mark W. Pletcher of the Criminal Division’s Fraud Section. The case is being investigated by the Army Criminal Investigations Division, the Defense Criminal Investigative Service, the FBI, the Special Inspector General for Iraq Reconstruction, the Internal Revenue Service, U.S. Immigration and Customs Enforcement at the Department of Homeland Security and members of the National Procurement Fraud Task Force and the International Contract Corruption Task Force (ICCTF).
Pennsylvania Man Arrested on Computer Hacking ChargesRead the Press Release
WASHINGTON – Charges were unsealed this morning against a Pennsylvania man, alleging that he hacked into computer networks in Massachusetts and around the country and then sold unauthorized access to those networks.
The charges were announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Carmen M. Ortiz of the District of Massachusetts and Special Agent in Charge Richard DesLauriers of the FBI in Boston.
Andrew James Miller, 23, of Devon, Penn., was arrested this morning on charges contained in a four-count indictment filed in the District of Massachusetts. He is charged with one count of conspiracy, two counts of computer fraud and one count of access device fraud.
According to the indictment, between 2008 and 2011, Miller and others allegedly remotely hacked into computer networks belonging to RNK Telecommunications Inc., a Massachusetts company; Crispin Porter and Bogusky Inc., a Colorado advertising agency; the University of Massachusetts; the U.S. Department of Energy; and other institutions and companies. The indictment alleges that when Miller hacked into the computers, he obtained other users’ access credentials to the compromised computers. He and his co-conspirators then allegedly sold access to these computer networks as well as other access credentials.
If convicted, Miller faces up to five years in prison for the conspiracy count and one of the computer fraud counts, and up to 10 years in prison on one of the computer fraud counts and the access device fraud count, to be followed by three years of supervised release, a $250,000 fine and restitution.
The case was investigated by the FBI and is being prosecuted by Trial Attorney Mona Sedky of the Computer Crime & Intellectual Property Section in the Justice Department’s Criminal Division and Assistant U.S. Attorney Adam J. Bookbinder of U.S. Attorney Ortiz’s Cybercrime Unit.
The details contained in the indictment are allegations. The defendant is presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.Owner and Operator of Halfway House Company Pleads Guilty for Role in Medicare Fraud SchemeRead the Press Release
WASHINGTON – The owner and operator of New Way Recovery Inc., a Florida corporation that operated several halfway houses, pleaded guilty today in Miami to a criminal charge related to a $205 million Medicare fraud scheme involving fraudulent claims for purported partial hospitalization program (PHP) services, the Justice Department, the FBI and the Department of Health and Human Services announced today.
Hassan Collins, 41, pleaded guilty to one count of conspiracy to receive and pay health care fraud kickbacks before U.S. Magistrate Judge Edwin G. Torres.
According to court documents, from in or about April 2004 through September 2010, Collins received kickback payments in exchange for referring Medicare beneficiaries to American Therapeutic Corporation (ATC), a Florida corporation that operated several purported Partial Hospitalization Programs (PHP) throughout Florida. He and his co-conspirators caused false and fraudulent claims to be submitted to Medicare for PHP services purportedly provided at ATC’s locations, when, in fact, the services were never provided.
According to the plea agreement, Collins’s participation in the fraud resulted in more than $2.4 million in fraudulent billing to the Medicare program. At sentencing, scheduled for Sept. 6, 2012, Collins faces a maximum sentence of five years in prison.
In related cases, more than 20 individuals have been convicted for their roles in the ATC fraud scheme. In 2011, ATC executives Lawrence Duran, Marianella Valera and Judith Negron, were sentenced to 50 years, 35 years and 35 years, respectively, for their roles in the scheme. These sentences are the three longest prison sentences ever imposed in a Medicare Fraud Strike Force case. ATC and Medlink pleaded guilty to conspiracy to commit health care fraud. ATC also pleaded guilty to conspiracy to defraud the United States and to pay and receive illegal health care kickbacks. The corporations were sentenced to five years of probation per count and ordered to pay restitution of $87 million. Both corporations have been defunct since their owners were arrested in October 2010. Acevedo, a marketer for ATC, was sentenced to 91 months in prison.
This case is being prosecuted by Trial Attorneys Allan J. Medina, Steven Kim and William Parente of the Criminal Division’s Fraud Section. The case was investigated by the FBI and HHS Office of Inspector General (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 operations in nine locations have charged more than 1,330 defendants that collectively have billed the Medicare program for more than $4 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
North Carolina Resident Found Guilty<br /> of Terrorism ViolationsRead the Press Release
Today in federal court in the Eastern District of North Carolina, a jury found Anes Subasic, 35, guilty of conspiring to provide material support to terrorists and conspiring to murder, kidnap, maim and injure persons abroad, announced Thomas G. Walker, U.S. Attorney for the Eastern District of North Carolina; Lisa Monaco, Assistant Attorney General for National Security; M. Chris Briese, Special Agent-in-Charge of the FBI, Charlotte Division; and John F. Khin, Special Agent-in-Charge, Southeast Field Office, Defense Criminal Investigative Service (DCIS).
Subasic was charged along with seven other defendants in a federal indictment returned on July 22, 2009. In a separate trial in September 2011, Subasic was found guilty of two counts of unlawful procurement of citizenship.
“We must be ever vigilant in our prosecution of those who seek to visit terror on our way of life,” stated U.S. Attorney Walker. “This prosecution demonstrates that commitment.”
“Anes Subasic is the seventh individual to be convicted in connection with this multi-year conspiracy to kill persons abroad and provide material support to terrorism. I applaud the many agents, analysts and prosecutors who helped bring about this successful outcome,” said Assistant Attorney General Monaco.
“Subasic was part of a group of terrorists; some viewed their own country as the enemy. This verdict is the culmination of years of hard work by our Raleigh-Durham Joint Terrorism Task Force, which is composed of our vital law enforcement partners. The JTTF will continue its relentless effort to thwart terrorism in North Carolina,” said FBI Special Agent in Charge Briese.
“The Defense Criminal Investigative Service is proud to have worked jointly with the Raleigh FBI JTTF in the investigation of Anes Subasic and others indicted of terrorism-related charges,” stated DCIS Special Agent in Charge Khin. “Subasic was part of a conspiracy to commit violent acts against U.S. service members and others abroad. The DCIS remains steadfast in its commitment to protect the warfighter and to thwart efforts of individuals like Subasic.”
According to the superseding indictment, from roughly November 2006 through at least July 2009, Subasic and the other defendants conspired to provide material support and resources to terrorists, including currency, training, transportation and personnel. Subasic also conspired to murder, kidnap, maim and injure persons abroad during this period. The object of the conspiracy, according to the indictment, was to advance violent jihad, including supporting and participating in terrorist activities abroad and committing acts of murder, kidnapping or maiming persons abroad.
The defendants allegedly offered training in weapons and financing, and helped arrange overseas travel and contacts so others could wage violent jihad overseas.
The defendants raised money to support training efforts, disguised the destination of such monies from the donors, and obtained assault weapons to develop skills with the weapons. Some defendants also allegedly radicalized others to believe that violent jihad was a personal religious obligation.
In February, 2011, Daniel Boyd, the leader, pleaded guilty to conspiring to provide material support to terrorists and conspiring to murder, kidnap, maim, and injure persons in a foreign country and is currently awaiting sentencing. Boyd’s two sons, Zakariya and Dylan Boyd, have also pleaded guilty. Zakariya Boyd pleaded guilty on June 27, 2011, to conspiring to provide material support to terrorists, and was sentenced to 108 months in prison. Dylan Boyd pleaded guilty on Sept. 14, 2011, to aiding and abetting a conspiracy to provide material support to terrorists and received a 96-month prison sentence.
On Oct. 13, 2011, following a 17-day trial, a jury found Hysen Sherifi, Mohammad Omar Aly Hassan and Ziyad Yaghi guilty. Sherifi was found guilty of conspiring to provide material support to terrorists; conspiring to murder, kidnap, maim and injure persons in a foreign country; two counts of possessing a firearm in furtherance of a crime of violence; and conspiring to kill a federal officer or employee and was sentenced to 540 months in prison. Hassan and Yaghi were found guilty of conspiring to provide material support to terrorists and conspiring to murder, kidnap, maim and injure persons in a foreign country. Hassan received a 180-month prison term and Yaghi received 380 months in prison.
At sentencing, Subasic faces up to 15 years in prison, followed by up to three years supervised release for conspiring to provide material support to terrorists, and up to a term of life in prison followed by up to five years of supervised release for conspiring to murder, kidnap, maim, and injure persons in a foreign country.
The investigation was conducted by the FBI Raleigh-Durham Joint Terrorism Task Force, which includes the FBI, the DCIS, the North Carolina Alcohol Law Enforcement, the Raleigh Police Department, the Durham Police Department and the North Carolina Information Sharing and Analysis Center.
The prosecution was handled by Assistant U.S. Attorney John Bowler of the U.S. Attorney’s Office for the Eastern District of North Carolina and Trial Attorney Jason Kellhofer of the Counterterrorism Section in the Justice Department’s National Security Division.
Justice Department Reaches Agreement with Grayson County, Virginia, on Bailout from the Voting Rights ActRead the Press Release
The Justice Department announced that it has reached an agreement with Grayson County, Va., that will allow for the county and its four political subdivisions, the Grayson County School District and the towns of Independence, Fries and Troutdale, Va., to bail out from their status as “covered jurisdictions” under the special provisions of the Voting Rights Act, and thereby exempt these jurisdictions 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.
Under Section 5 of the Voting Rights Act, certain covered jurisdictions, determined according to Section 4 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 4 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 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.
Grayson County filed its bailout action in the U.S. District Court for the District of Columbia on May 3, 2012. Counsel for the county contacted the attorney general prior to filing the action, indicating that the county was interested in seeking a bailout. The county provided the Justice Department with substantial information, and the department conducted an investigation to determine the county’s eligibility. Based on that investigation, the department is satisfied that the county meets the Voting Rights Act’s requirements for bailout.
“In the department’s view, the county has met the requirements necessary for bailout. We reached this conclusion after thoroughly reviewing information provided by the county and gathered during the department’s independent investigation,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “I commend the county on their cooperation to ensure resolution of this matter.”
The consent decree details the legal and factual basis for a bailout determination and, if approved by the court, the county’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 county that would have originally precluded the county 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.
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Consent Judgment and Decree
Check Cashers in Brooklyn, Philadelphia and Los Angeles Charged for Alleged Violations of Anti-Money Laundering LawsRead the Press Release
WASHINGTON – Seven individuals and four check cashing businesses were charged today in the Eastern District of New York and the Central District of California for their alleged roles in separate schemes to violate the Bank Secrecy Act (BSA). The defendants allegedly failed to follow reporting and anti-money laundering requirements for transactions totaling more than $50 million.
The enforcement actions were announced today by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Loretta E. Lynch of the Eastern District of New York; U.S. Attorney André Birotte of the Central District of California; U.S. Immigration and Customs Enforcement (ICE) Director John Morton; FBI Assistant Directors in Charge Janice K. Fedarcyk and Steven Martinez; Richard Weber, Chief of the Internal Revenue Service Criminal Investigation (IRS-CI); Daniel R. Levinson, Inspector General of the Department of Health and Human Services (HHS); and Benjamin M. Lawsky, Superintendent of the New York State Department of Financial Services.
Four indictments filed under seal on June 12, 2012, and unsealed today, charge the defendants with failure to file currency transaction reports (CTRs) or falsely filing CTRs, as well as failure to have an effective anti-money laundering program, all violations under the BSA.
Two of the indictments, charging three individuals and two check cashing businesses, were returned in Los Angeles and two indictments, charging four individuals and two check cashing businesses were returned in Brooklyn, N.Y. All seven individual defendants were arrested or surrendered to authorities today.
The BSA is a set of laws and regulations enacted by Congress to address an increase in criminal money laundering through financial institutions, which includes check cashing businesses. Check cashers enable people to cash checks without having to go to a bank or maintain a bank account. A check casher will typically charge a fee for this service.
Under the BSA, financial institutions, including check cashers, are required to file a CTR with the Department of Treasury for any transaction involving more than $10,000 in currency. As part of the CTR, the check casher is required to verify and accurately record the name and address of the individual who conducted the currency transaction, the individual on whose behalf the transaction was conducted, as well as the amount and date of the transaction. CTRs are important law enforcement tools for uncovering criminal activity.
The BSA also requires financial institutions, including check cashing businesses, to maintain an effective anti-money laundering (AML) program. The purpose of an AML program is to effectively detect and prevent attempts to facilitate money laundering. Check-cashing businesses are therefore required to have written policies and procedures regarding CTR filings, records maintenance and responses to law enforcement.
According to the indictments, despite these regulations, check-cashing businesses are a common venue for individuals who want to anonymously cash large numbers of checks to facilitate fraud and money laundering schemes. According to the indictments, the use of check cashers to launder money is particularly prevalent in the area of health care fraud, where fraudulent health care businesses commonly convert the proceeds of their fraud into cash by presenting checks to check cashers who they know will not ask for proof of the payee’s identity and will either not file CTRs or file false CTRs.
“Today’s indictments put unscrupulous check cashers on notice that we are scrutinizing their conduct,” said Assistant Attorney General Breuer. “They may think that they are flying under the radar, but they are not. These defendants are charged with filing false currency transaction reports, or not filing them at all, and other serious violations of the Bank Secrecy Act. We will not tolerate check cashing businesses evading anti-money laundering laws.”
“These indictments send a clear message that we will not tolerate the willful failure of check-cashing businesses to take all steps under the law to prevent their businesses from being used to launder the proceeds of crime,” said U.S. Attorney Lynch. “We are pleased to be working closely with the Asset Forfeiture and Money Laundering Section of the Department of Justice and our federal law enforcement partners in the investigation and prosecution of these important cases.”
“The Bank Secrecy Act provides law enforcement with a powerful tool to detect and prevent crime by requiring financial institutions to document and submit reports on certain currency transactions,” said U.S. Attorney Birotte. “Those who seek to evade the restrictions of the Bank Secrecy Act – both individuals and financial institutions – will be aggressively pursued by the Department of Justice and its partners in federal, state and local law enforcement.”
According to a superseding indictment filed in the Eastern District of New York, Belair Payroll Services, a check cashing store in Flushing, N.Y.; its owner, Craig Panzera; and two other individuals, Lasha Goletiani and Zhan Petrosyants, are charged for their alleged roles in a scheme to violate the BSA. Specifically, Goletiani and Petrosyants allegedly caused Belair to file false CTRs and Panzera allegedly caused Belair to fail to have an effective AML program. In addition, Panzera has been charged with conspiring to commit tax violations with respect to the fees Belair received in connection with the scheme.As part of the scheme, which lasted from June 2009 through June 2011, Goletiani, 32, and Petrosyants, 30, presented to Belair’s manager and other employees, checks to be cashed at Belair. The checks were written on accounts of shell corporations that appeared to be health care related, but in fact, the corporations did no legitimate business. The shell corporations and their corresponding bank accounts on which the checks were written, were established in the names of foreign nationals, many of whom were no longer in the United States.
The indictment alleges that employees at Belair accepted these checks and provided cash in excess of $10,000 to Goletiani or Petrosyants. Panzera, 46, and others at Belair never obtained any identification documents or information from Goletiani or Petrosyants. Belair allegedly filed CTRs that falsely stated the checks were cashed by the foreign nationals who set up the shell corporations, and in certain CTRs, Belair allegedly failed to indicate the full amount of cash provided to Goletiani or Petrosyants. Goletiani and Petrosyants cashed more than $19 million through Belair during the course of the scheme. The indictment unsealed today supersedes an indictment returned against Goletiani in July 2011, for conspiring to cause Belair to file false CTRs. Approximately $3.2 million has been seized from Belair’s bank accounts in connection with this conduct.
A second indictment filed in the Eastern District of New York charges Bargain Island, a check cashing business in Philadelphia, and its owner and operator, George Gonchar, 51, with failure to file CTRs and failure to have an effective AML program. According to the indictment, from October 2009 through October 2010, individuals acting as check couriers brought multiple checks from Brooklyn made payable to various medical services companies, to Bargain Island and presented them to Gonchar for cashing. On almost all occasions, the checks exceeded, in the aggregate, $10,000. As alleged in the indictment, Gonchar knew that the check couriers presenting the checks to Bargain Island had no connection to the checks other than acting as couriers. Despite this knowledge, Gonchar falsely indicated in CTR filings that the checks were cashed on behalf of the couriers themselves or for companies associated with the couriers. Bargain Island cashed more than $5.8 million in checks from couriers in this manner.
A third indictment filed in the Central District of California charges G&A Check Cashing, a check cashing business in Los Angeles; its general manager, Karen Gasparian, 31; and an employee and designated compliance officer, Humberto Sanchez, 53, with BSA violations. The indictment alleges that two separate cooperating witnesses presented bundles of checks totaling more than $10,000 to Gasparian and Sanchez at G&A. The checks were written on accounts for businesses that purported to be health care businesses. G&A deposited the checks into its operating accounts over a period of several days, and then provided cash, in excess of $10,000 to the cooperating witnesses. Neither Gasparian nor Sanchez filed CTRs on these transactions even though they were well aware of the requirement to do so. More than $100,000 in checks were cashed in this manner over the course of 10 transactions, yet no CTRs were ever filed. This practice extended beyond the cooperating witnesses. From 2006 through 2012, G&A conducted approximately 800 transactions that were each in excess of $10,000 and paid out more than $20 million in cash on those transactions without ever filing a CTR.
A fourth indictment filed in the Central District of California charges AAA Cash Advance, a check cashing business in Los Angeles, and its manager, Diana Brigitt, 35, with violations of the BSA. From August 2010 through February 2012, Brigitt, on behalf of AAA, allegedly repeatedly cashed bundles of checks totaling more than $10,000 without filing any CTRs. The checks were presented by a cooperating witness and were written on accounts that appeared to be for health care businesses. More than $100,000 in checks were cashed in this manner over eight transactions, yet no CTRs were ever filed. From January 2008 through February 2012, AAA’s banks reported that AAA had withdrawn approximately $5 million in cash, yet during this same time period, AAA filed only seven CTRs on transactions greater than $10,000.
“This complex financial investigation, conducted by Homeland Security Investigation’s (HSI) El Dorado Task Force and our law enforcement partners, is indicative of the lengths that criminal enterprises go in an effort to conceal their illicit conduct,” said ICE Director John Morton. “These individuals permitted the cashing of over $19 million in checks with a blatant disregard for the legal safeguards intended to prevent criminals access to our financial system. HSI is determined to expose these vulnerabilities and to shutdown money laundering operations that threaten our nation’s security.”
“Money laundering is at the foundation of so many criminal schemes, which is why the FBI and our partners place a high priority on policing it,” said FBI Assistant Director Fedarcyk. “By cracking down on money laundering, we put teeth in the truism that crime doesn’t pay.”
“The charges exemplify the increasingly complex schemes devised to evade anti-money laundering laws,” said FBI Assistant Director Martinez. “The FBI and our trusted partners are resolute in our commitment to match and counter those efforts with the resources and long-term focus necessary to decipher these schemes that cost taxpayers hundreds of millions annually in the Los Angeles area.”
“From coast to coast the IRS will take every step necessary to ferret out those who attempt to avoid their reporting obligations under the law,” Chief Weber of IRS-CI. “This joint effort continues to demonstrate our efforts to ensure that the financial services industry will not be used for personal financial gain and will be operated in a fair and honest manner to promote the public interest.”
“Anti-money laundering laws are an important tool in the fight against health care fraud, as check cashers are often used to convert ill-gotten Medicare proceeds,” said Inspector General Levinson.
“These vital investigations show the need for constant vigilance against dirty check cashers,” said Superintendent Lawsky. “We will use all our enforcement tools to stamp out the use of check cashers to facilitate crime such as health care fraud. We will continue to work with all our law enforcement partners on these important investigations.”
The cases announced today are being prosecuted by Money Laundering and Bank Integrity Unit Trial Attorneys Matthew Haslinger, Matthew Klecka and Claiborne Porter and Forfeiture Unit Trial Attorney Jeanette Gunderson from the Asset Forfeiture and Money Laundering Section of the Justice Department’s Criminal Division and Assistant U.S. Attorney Charles Kleinberg of the Eastern District of New York and Assistant U.S. Attorney David Kirman of the Central District of California. The department acknowledges the invaluable assistance of the Department of Treasury’s Financial Crimes Enforcement Network (FinCEN).
The Money Laundering and Bank Integrity Unit investigates and prosecutes complex, multi-district and international criminal cases involving financial institutions and individuals who violate the money laundering statutes, the Bank Secrecy Act and other related statutes. The unit’s prosecutions generally focus on three types of violators: financial institutions, including their officers, managers and employees, whose actions threaten the integrity of the individual institution or the wider financial system; professional money launderers and gatekeepers who provide their services to serious criminal organizations; and individuals and entities engaged in using the latest and most sophisticated money laundering techniques and tools.
The cases are being investigated by agents from the ICE-HSI, FBI, IRS-CI, HHS-OIG and the New York State Department of Financial Services.
An indictment is merely a charge and defendants are presumed innocent until proven guilty.
Allen Stanford Sentenced to 110 Years in Prison for Orchestrating $7 Billion Investment Fraud SchemeRead the Press Release
WASHINGTON – R. Allen Stanford, the former board of directors chairman of Stanford International Bank (SIB), was sentenced today in Houston to a total of 110 years in prison for orchestrating a 20-year investment fraud scheme in which he misappropriated $7 billion from SIB to finance his personal businesses.
The sentencing was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Kenneth Magidson of the Southern District of Texas; FBI Assistant Director Kevin Perkins of the Criminal Investigative Division; Assistant Secretary of Labor for the Employee Benefits Security Administration Phyllis C. Borzi; Chief Postal Inspector Guy J. Cottrell; and Richard Weber, Chief of Internal Revenue Service Criminal Investigation (IRS-CI).
On March 6, 2012, Stanford, 62, was convicted on 13 of 14 counts by a federal jury following a six-week trial and approximately three days of deliberation. The jury also found that 29 financial accounts located abroad and worth approximately $330 million were proceeds of Stanford’s fraud and should be forfeited.
Stanford was sentenced by U.S. District Judge David Hittner. After considering all the evidence, including more than 350 victim impact letters that were sent to the court, Judge Hittner sentenced Stanford to 20 years for conspiracy to commit wire and mail fraud, 20 years on each of the four counts of wire fraud as well as five years for conspiring to obstruct a U.S. Securities and Exchange Commission (SEC) investigation and five years for obstruction of an SEC investigation. Those sentences will all run consecutively. He also received 20 years for each of the five counts of mail fraud and 20 years for conspiracy to commit money laundering which will run concurrent to the other sentences imposed today for a total sentence of 110 years.
As part of Stanford’s sentence, the court also imposed a personal money judgment of $5.9 billion, which is an ongoing obligation for Stanford to pay back the criminal proceeds. The court found that it would be impracticable to issue a restitution order at this time. However, all forfeited funds recovered by the United States will be returned to the fraud victims and credited against Stanford’s money judgment.
According to court documents and evidence presented at trial, the vehicle for Stanford’s fraud was SIB, an offshore bank owned by Stanford and based in Antigua and Barbuda that sold certificates of deposit (CDs) to depositors. Stanford began operating the bank in 1985 in Montserrat, the British West Indies, under the name Guardian International Bank. He moved the bank to Antigua in 1990 and changed its name to Stanford International Bank in 1994. SIB issued CDs that typically paid a premium over interest rates on CDs issued by U.S. banks. By 2008, the bank owed its CD depositors more than $8 billion.
According to SIB’s annual reports and marketing brochures, the bank purportedly invested CD proceeds in highly conservative, marketable securities that were also highly liquid, meaning the bank could sell its assets and repay depositors very quickly. The bank also represented that all of its assets were globally diversified and overseen by money managers at top-tier financial institutions, with an additional level of oversight by SIB analysts based in Memphis, Tenn.
As shown at trial, this purported investment strategy and management of the bank’s assets was followed for only about 10-15 percent of the bank’s assets. Stanford diverted billions in depositor funds into various companies that he owned personally, in the form of undisclosed “loans.” Stanford was thus able to continue the operations of his personal businesses, which ran at a net loss each year totaling hundreds of millions of dollars, at the expense of depositors. These businesses were concentrated primarily in the Caribbean and included restaurants, a cricket tournament and various real estate projects. Evidence at trial established Stanford also used the misappropriated CD money to finance a lavish lifestyle, which included a 112-foot yacht and support vessels, six private planes and gambling trips to Las Vegas.
According to evidence presented at trial, Stanford continued the scheme by using sales from new CDs to pay existing depositors who redeemed their CDs. In 2008, when the financial crisis caused a slump in new CD sales and record redemptions, Stanford lied about personally investing $741 million in additional funds into the bank to strengthen its capital base. To support that false announcement, Stanford’s internal accountants inflated on paper the value of a piece of real estate SIB had purchased for $63.5 million earlier in 2008 by 5,000 percent to $3.1 billion, despite the fact there were no independent appraisals or improvements to the property.
The trial evidence also showed that Stanford perpetuated his fraud by paying bribes from a Swiss slush fund at Societe Generale to C.A.S. Hewlett, SIB’s auditor (now deceased), and Leroy King, the then-head of the Antiguan Financial Services Regulatory Commission.
In addition to Stanford, a grand jury in the Southern District of Texas previously indicted several of his alleged co-conspirators, including: James Davis, the former chief financial officer; Laura Holt, the former chief investment officer; Gil Lopez, the former chief accounting officer; Mark Kuhrt, the former controller; and King. Davis has pleaded guilty and faces up to 30 years in prison under the terms of his plea agreement. The trial of Holt, Kuhrt and Lopez, which was severed from Stanford’s trial, is scheduled to begin before Judge Hittner on Sept. 10, 2012. They are presumed innocent unless and until convicted through due process of law.The investigation was conducted by the FBI’s Houston Field Office, the U.S. Postal Inspection Service, IRS-CI and the U.S. Department of Labor, Employee Benefits Security Administration. The case was prosecuted by Deputy Chief William Stellmach and Trial Attorney Andrew Warren of the Criminal Division’s Fraud Section and former Assistant U.S. Attorney (AUSA) Gregg Costa of the Southern District of Texas. AUSA Kristine Rollinson of the Southern District of Texas and Trial Attorney Kondi Kleinman of the Asset Forfeiture and Money Laundering Section in the Justice Department’s Criminal Division assisted with the forfeiture proceeding, and AUSA Jason Varnado and Fraud Section Deputy Chief Jeffrey Goldberg assisted with the sentencing proceeding.
The Justice Department also wishes to thank several countries for their ongoing cooperation during the investigation and prosecution of Stanford and his co-conspirators, including the Governments of Antigua and Barbuda, Switzerland, the Cook Islands, the United Kingdom and the Isle of Man.