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Newest first across public DOJ and U.S. Attorney press releases.
Thursday 3 May 2012
Justice Department Returns $44 Million to Victims of Qwest Communications FraudRead the Press Release
WASHINGTON – The Justice Department has returned approximately $44 million to victims of a securities fraud scheme related to Qwest Communications International Inc., Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney John F. Walsh for the District of Colorado and Special Agent in Charge James F. Yacone of the FBI’s Denver Division announced today.
The $44 million in funds were forfeited to the United States as a result of the 2007 federal conviction of Qwest’s chief executive officer, Joseph P. Nacchio, for securities fraud. The forfeited funds are being returned to 112,210 victims who incurred losses on Qwest securities purchased during the fraud scheme.
Between 1999 and 2002, Nacchio publicly announced unrealistic revenue projections for Qwest and then caused Qwest to issue false and misleading statements to the public about the company’s financial condition, as part of his scheme to commit securities fraud. After the irregularities were discovered, Qwest stock, which had traded as high as $60 per share, plummeted to about $1 per share.
Following his conviction, Nacchio was sentenced to 70 months in prison and was ordered to forfeit $44 million in funds, the net proceeds he received from the fraud scheme. Nacchio was also ordered to pay a $19 million fine, which, by law, was paid to a fund for victims of crime.
“Securities fraud is a particularly insidious crime because it undermines public confidence in the financial markets,” said U.S. Attorney Walsh. “I am pleased that we were able to recover more than $44 million in criminal proceeds and return it to innocent Qwest investors.”
“Following his conviction for securities fraud, Mr. Nacchio was ordered to forfeit $44 million,” said Assistant Attorney General Breuer. “Today, we are fulfilling a central objective of the Criminal Division’s Victim Asset Recovery Program and returning those funds to the victims of Mr. Nacchio’s crime.”
“In addition to seeking criminal prosecutions to protect our financial markets, seizing and forfeiting ill-gotten gains is a priority for the FBI,” said FBI Special Agent in Charge Yacone. “We are hopeful the money being returned will remedy some of the damage caused by Nacchio.”
The criminal case against Joseph Nacchio was prosecuted by the U.S. Attorney’s Office for the District of Colorado and the Justice Department’s Criminal Division. The case was investigated by the FBI.
The distribution of funds to victims was authorized and overseen by the Department of Justice’s Victim Asset Recovery Program in the Criminal Division’s Asset Forfeiture and Money Laundering Section. The Victim Asset Recovery Program is comprised of a team of experienced professionals, including attorneys, accountants, auditors and claims analysts, who work with federal prosecutors, regulatory agencies, financial investigators, claims administrators and the private bar to recover assets from financial crimes and return them to the victims. In hundreds of cases, the program has successfully utilized its specialized expertise to efficiently convert forfeited assets into victim recoveries.
Persons with questions about the Qwest distribution should contact the Remission Administrator at 1-877-268-3001, or visit the website at www.gilardi.com/qwestremission.
Hyosung Corporation Executive Agrees to Plead Guilty to Obstruction <br /> of Justice for Submitting False Documents<br /> in an ATM Merger InvestigationRead the Press Release
WASHINGTON – An executive of South Korean-based Hyosung Corporation has agreed to plead guilty and to serve time in a U.S. prison for obstruction of justice charges in connection with an automated teller machine (ATM) merger investigation conducted by the Antitrust Division, the Department of Justice announced today.
According to a two-count felony charge filed today in the U.S. District Court in Washington, D.C., Kyoungwon Pyo, in his role as senior vice president for corporate strategy of Hyosung Corporation, an affiliate of Nautilus Hyosung Holdings Inc. (NHI), altered and directed subordinates to alter numerous existing corporate documents before they were submitted to the Department of Justice and the Federal Trade Commission (FTC) in conjunction with mandatory premerger filings. The department said that Pyo’s actions took place in or about July and August 2008. At the time, the department was investigating Korea-based NHI’s proposed acquisition of Triton Systems of Delaware Inc. NHI abandoned the proposed acquisition of competitor Triton Systems before the Antitrust Division reached a decision determining whether to challenge the transaction.
On Oct. 20, 2011, NHI pleaded guilty and paid a $200,000 criminal fine for its role in the obstruction of justice charges. According to the plea agreement, which is subject to court approval, Pyo has agreed to serve five months in prison.
“Maintaining the integrity of the merger review and investigation process is one of our highest priorities,” said Acting Assistant Attorney General Joseph Wayland in charge of the Department of Justice’s Antitrust Division. “Senior corporate executives should understand that anyone who attempts to corrupt the process by falsifying materials submitted to the U.S. government will be held accountable for their actions.”
After receiving the premerger filings, the Antitrust Division opened a civil merger investigation of the proposed acquisition. The department said that in or about August and September 2008, Pyo falsified additional documents in response to a document request from the Antitrust Division with the intention of impairing their integrity and availability for use in an official proceeding. The department said that, among other things, the alterations misrepresented and minimized the competitive impact of the proposed acquisition.
The Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, requires companies contemplating mergers and acquisitions valued above certain thresholds to make filings with the Department of Justice and the FTC. The federal antitrust agencies have authority to investigate and challenge such proposed transactions under Section 7 of the Clayton Act, if the transactions may substantially lessen competition.
NHI was previously charged with obstruction of justice, which carries a maximum criminal fine for a corporation of $500,000 per count. NHI’s agreed-upon criminal fine of $100,000 per count takes into consideration the nature and extent of the company’s disclosure of wrongdoing and its cooperation in the department’s investigation.
Pyo is charged with obstruction of justice, which carries a maximum penalty of 20 years in prison and a criminal fine of $250,000 for individuals.
The investigation that led to these charges was conducted by the Antitrust Division’s National Criminal Enforcement Section. Anyone with information concerning anticompetitive conduct or obstruction of justice in antitrust matters is urged to call the Antitrust Division’s National Criminal Enforcement Section at 202-307-6694 or visit www.justice.gov/atr/contact/newcase.htm.Federal Court Shuts Down Texas Tax Return PreparerRead the Press Release
A federal court in Dallas has permanently barred Joseph Rivas of DeSoto, Texas, from preparing federal tax returns for others, the Justice Department announced today. The civil injunction order, to which Rivas consented without admitting the allegations against him, was signed by Judge Sidney Fitzwater of the U.S. District Court for the Northern District of Texas.
The government complaint in the case alleged that Rivas claimed fake mortgage-interest deductions, illegally deducted Social Security taxes as state and local taxes, and fabricated employee business expenses, among other fraudulent items, on his customers’ tax returns. According to the complaint, the harm to the United States from Rivas’s misconduct could be $7.8 million or more.
The court also ordered Rivas to provide the government with a list of all persons for whom he has prepared federal tax returns since Jan. 1, 2010.
The IRS lists return preparer fraud as one of the “Dirty Dozen” tax scams for 2012. In the past decade, the Justice Department’s Tax Division has obtained injunctions against hundreds of tax-return preparers and tax-fraud promoters. Information about these cases is available on the Justice Department website.
Related Documents:
United States v. Joseph Rivas, etc.,
Rivas Injunction
Final Judgment of Permanent Injunction (PDF)Baton Rouge, Louisiana, Man Pleads Guiltyto Odometer Tampering ChargesRead the Press Release
Beau Michael Guidry of Baton Rouge, La., pleaded guilty today in the U.S. District Court for the Middle District of Louisiana to three counts of odometer tampering.
Guidry, owner of Affordable Imports in Denham Springs, La., purchased high-mileage motor vehicles both online, through eBay, as well as from wholesale automobile auctions in Louisiana, Mississippi and Texas. The vehicles’ odometers were then rolled back as much as 147,000 miles. Guidry subsequently resold the vehicles at his lot in Denham Springs or through eBay to unsuspecting purchasers.
Many vehicles were more than 10 years old when Guidry sold them. Because of the age of the cars, Guidry was not required to sign a disclosure certifying as accurate the mileage on the vehicles that were more than 10 years old. However, each time he altered an odometer with intent to change the mileage on the odometer, he violated federal law.
“Just because a car dealer does not have to certify the mileage on cars he sells, that does not give him a license to roll back odometers,” said Stuart F. Delery, Acting Assistant Attorney General for the Civil Division. “It is equally fraudulent to roll back a so-called ‘exempt’ vehicle as rolling back a non-exempt vehicle. With cars remaining in service longer, people rely on vehicles older than 10 years for basic transportation. These citizens are not fair game for crooked car dealers.”
“The odometer tampering statutes were put in place to protect consumers who pay more for used cars, and suffer other financial and potential mechanical harm when odometers on cars are rolled back,” said U.S. Attorney Donald J. Cazayoux, Jr. of the Middle District of Louisiana. “The Department of Justice is committed to putting in prison those who steal from consumers and put them in danger by selling cars with rolled back odometers.”
The National Highway Traffic Safety Administration Office of Odometer Fraud
Investigation (NHTSA) investigated this case. The case was prosecuted by Justice Department trial attorney David Sullivan of the Civil Division’s Consumer Protection Branch.
Ways to Help Avoid Being Victimized by Odometer Fraud
- Have a mechanic you trust check out the car. This will cost money, but it can save much more.
- Look for loose screws or scratch marks around the dashboard. This is pertinent primarily to mechanical odometers which can be manipulated with tools.
- Also on mechanical odometers, check to make sure that the digits in the odometer are lined up straight--particularly the 10,000 digit.
- Test drive the car and see if the speedometer sticks.
- Check for service stickers inside the door or under the hood that may give the actual mileage. Odometer tamperers try to find these as well, but sometimes miss one.
- Look in the owner’s manual to see if maintenance was listed, or if pages that might have shown high mileage were removed.
- Ask the dealer whether a computer warranty check has been run on the car.
- Use a commercially available computer search program that checks for mileage alterations. Some car dealers will give you one of these for free if you ask for it. While this is an important step to take, it is not foolproof by any means because not all high mileages are recorded on paperwork that makes its way to these databases.
- Ask to see the title documents and look to see if the mileage reading on the documents has been altered.
- Look to see if the steering wheel was worn smooth. Look for other signs of excessive wear on the arm-rest, the floor mats, the pedals for the brakes and gas, and the area around the ignition. If these items were recently replaced, that could also indicate efforts to hide the car's true use and mileage.
- Don’t assume that mileage is accurate just because the vehicle has an electronic odometer.
Austin, Texas, Man Sentenced to 61 Months in Federal Prison for Bankruptcy Fraud and Identity Theft in Connection with Nationwide Foreclosure-rescue SchemeRead the Press Release
WASHINGTON – An Austin, Texas, man was sentenced today in the Western District of Texas to 61 months in prison and was ordered to forfeit $84,010 for his role in operating a foreclosure-rescue scam in Southern California and elsewhere that charged distressed homeowners fees in exchange for fraudulently delaying foreclosure sales.
The sentence was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Andre Birotte Jr. of the Central District of California, U.S. Attorney Robert Pitman of the Western District of Texas, Assistant Director in Charge Steven Martinez of the FBI’s Los Angeles Field Office and Christy Romero, Special Inspector General for the Troubled Asset Relief Program (SIGTARP).
Frederic Alan Gladle, 53, was sentenced by U.S. District Judge Lee Yeakel. Gladle pleaded guilty on Jan. 6, 2012, to one count of bankruptcy fraud and one count of aggravated identity theft. He was originally charged on Dec. 9, 2011. In addition to the $84,010, Gladle was ordered to forfeit 63 prepaid, reloadable debit cards that he used to further his scheme.
“Mr. Gladle concocted an elaborate fraud scheme to use the financial crisis to his criminal advantage,” said Assistant Attorney General Breuer. “He preyed upon vulnerable homeowners facing foreclosure, just as the housing bubble began to burst and stood in the way of financial institutions attempting to collect on their debts. We will continue to pursue scam artists like Mr. Gladle and ensure that they are held accountable for their crimes.”
“Foreclosure-rescue scams are designed to victimize people in extreme financial distress,” said U.S. Attorney André Birotte Jr. “Financial predators like Mr. Gladle need to be held accountable for the harm they cause and today’s sentence does just that, sending the message to scam artists like Mr. Gladle that the final outcome for their criminal schemes is a long stay in federal prison.”
“Gladle preyed on struggling homeowners with promises to delay their foreclosures for a fee,” said Christy Romero, Special Inspector General at SIGTARP. “To forestall the foreclosures, Gladle deeded away a portion of their homes to unsuspecting debtors in bankruptcy, stealing the debtors’ identities and forging their signatures. Gladle exploited homeowners, the debtors whose identities he stole, and multiple banks, including TARP banks. The exploitation of TARP will not be tolerated, and SIGTARP and our partners will hold individuals accountable for their actions.”
“This scheme was particularly insidious in that Mr. Gladle exploited victims who were already in financial straits,” said FBI Assistant Director Martinez. “This sentence should send a message to those contemplating similar fraud targeting vulnerable individuals or the banking system and, in addition, should encourage those trying to salvage their homes to beware of fraudulent rescue offers.”
Gladle admitted that beginning in October 2007 and continuing until October 2011, he operated a foreclosure-rescue fraud scheme that netted him more than $1.6 million in fees from distressed homeowners. According to court documents, Gladle used five aliases to avoid detection, including stealing the identity of at least one person and setting up a mobile phone account in that victim’s name.
Gladle admitted that he recruited homeowners whose properties were in danger of imminent foreclosure and falsely promised to delay the foreclosures for up to six months, in exchange for a fee of approximately $750 per month. Gladle, directly or through salespersons, directed homeowners to sign deeds granting fractional interest in their properties to debtors in bankruptcy proceedings whose names Gladle found by searching bankruptcy records. The debtors were unaware that their names and bankruptcy cases were being stolen by Gladle in his scheme. Gladle then sent the unsuspecting debtors’ bankruptcy petitions, and the deeds that transferred fractional interests to the debtors, to the homeowners’ lenders to stop foreclosure proceedings.
Because bankruptcy filings give rise to automatic stays that protect debtors’ properties, the receipt of the bankruptcy petitions and deeds in the debtors’ names forced lenders to cancel foreclosure sales. The lenders, which included banks that received government funds under the Troubled Asset Relief Program (TARP), could not move forward to collect money that was owed to them until getting permission from the bankruptcy courts, thereby repeatedly delaying the lenders’ recovery of their money. When homeowners wanted to void the deeds to the unsuspecting debtors, Gladle would forge the debtors’ signatures on papers voiding the deeds.
A defendant charged in the Northern and Central Districts of California for a separate similar foreclosure rescue scheme, Glen Alan Ward, was arrested in Canada last month. Ward has been a fugitive sought by U.S. federal authorities since 2000. According to court documents, Ward, who also goes by the name Brandon Michaels, is alleged to have worked with and taught Gladle the scheme. Ward is currently being detained in Canada pending his extradition to the United States.
This case is being prosecuted by Trial Attorney Paul Rosen of the Fraud Section in the Justice Department’s Criminal Division and Assistant U.S. Attorney Evan Davis for the Central District of California, with substantial assistance provided by Assistant U.S. Attorneys Chris Peele of the Western District of Texas. The investigation was conducted by the FBI and SIGTARP, which received substantial assistance from the U.S. Trustee’s Office.
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.
Wednesday 2 May 2012
Vidor, Texas, Man Sentenced to Life in Prison for Atascosa County, Texas, MurderRead the Press Release
WASHINGTON – A Vidor, Texas, man was sentenced today to life in prison for his role in a homicide that took place in Atascosa County, Texas, in May 2008, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Robert Pitman for the Western District of Texas.
Michael Dewayne Smith, 31, aka “Bucky,” was sentenced by U.S. District Judge Xavier Rodriguez in the Western District of Texas. Smith admitted that he participated in the murder of Mark Davis Byrd Sr.According to information presented in court, Smith was a member of the Aryan Brotherhood of Texas (ABT), a powerful race-based, statewide organization that operates inside and outside of state and federal prisons throughout Texas and the United States. The ABT enforces its rules and promotes discipline among its members, prospects and associates through murder, attempted murder, conspiracy to murder, assault, robbery and threats against those who violate the rules or pose a threat to the enterprise. Members, and oftentimes associates, are required to follow the orders of higher-ranking members, often referred to as “direct orders.”
According to court documents, Byrd, an ABT prospect member, was murdered by Smith and Jim Flint McIntyre, 44, aka “Q-Ball,” of Houston, for allegedly stealing drugs he was ordered to deliver to a customer on behalf of the ABT. According to court documents, Byrd was murdered as a result of a “discipline” ordered by Frank Lavelle Urbish, aka, “Thumper.” Byrd’s body was discovered in Atascosa County on May 4, 2008.
On June 2, 2011, Urbish, an ABT member, pleaded guilty to murder and conspiracy to commit murder in the racketeering-related death of Byrd. Sentencing for Urbish will occur before the end of the calendar year. Fellow ABT gang member McIntyre pleaded guilty to the same charges in February 2011 and was sentenced to life in prison on Oct. 19, 2011.
This case is being investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives; the Texas Rangers; the Texas Department of Public Safety; the Atascosa County Sheriff’s Department; and the Beaumont, Texas, Police Department.
The case is being prosecuted by Trial Attorney David Karpel of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorney David Shearer for the Western District of Texas, in full cooperation with the Atascosa County District Attorney’s Office.Prison Inmate Indicted in Alabamafor Filing False Tax ReturnsRead the Press Release
A federal grand jury sitting in Montgomery, Ala., has returned an indictment charging David Marrero, formerly a resident of Florida, with corruptly endeavoring to obstruct the Internal Revenue Service (IRS) and filing false claims, the Justice Department and IRS announced today.
According to the indictment, while Marrero was serving a federal sentence in the custody of the Federal Bureau of Prisons in Montgomery County, Ala., he began sending various false documents to the IRS and to the federal judge who had presided over his case. Among the documents he is alleged to have sent were false money orders and false tax returns making claims for refunds, which were based upon false IRS Forms 1099-OID that Marrero had prepared. Marrero also allegedly used financial documents he had obtained from other people, without their knowledge or consent, as supporting documentation for his fraudulent claims.
An indictment merely alleges that crimes have been committed, and the defendant is presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Marrero faces a potential maximum of three years in prison on the obstruction count and five years in prison on each false claims count, well as up to $1 million in fines.
The case was investigated by Special Agents of the IRS - Criminal Investigation. Trial attorneys Jason H. Poole and Justin K. Gelfand of the Justice Department’s Tax Division are prosecuting the case.
Form 1099-OID schemes are one of the IRS’s “Dirty Dozen” tax scams for 2012. Additional information about the Tax Division and its enforcement efforts may be found at www.justice.gov/tax.
Medicare Fraud Strike Force Charges 107 Individuals for Approximately $452 Million in False BillingRead the Press Release
Attorney General Eric Holder and Health and Human Services (HHS) Secretary Kathleen Sebelius announced today that a nationwide takedown by Medicare Fraud Strike Force operations in seven cities has resulted in charges against 107 individuals, including doctors, nurses and other licensed medical professionals, for their alleged participation in Medicare fraud schemes involving approximately $452 million in false billing.
Attorney General Holder and Secretary Sebelius were joined in the announcement by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, FBI Deputy Director Sean Joyce, Deputy Inspector General for Investigations Gary Cantrell of the HHS Office of Inspector General (HHS-OIG) and Dr. Peter Budetti, Deputy Administrator for Program Integrity of the Centers for Medicare and Medicaid Services (CMS).
This coordinated takedown involved the highest amount of false Medicare billings in a single takedown in strike force history.
HHS also suspended or took other administrative action against 52 providers following a data-driven analysis and credible allegations of fraud. The new health care law, the Affordable Care Act, significantly increased HHS’s ability to suspend payments until an investigation is complete.
The joint Department of Justice and HHS Medicare Fraud Strike Force is a multi-agency team of federal, state and local investigators designed to combat Medicare fraud through the use of Medicare data analysis techniques. More than 500 law enforcement agents from the FBI, HHS-Office of Inspector General (HHS-OIG), multiple Medicaid Fraud Control Units, and other state and local law enforcement agencies participated in the takedown. In addition to making arrests, agents also executed 20 search warrants in connection with ongoing strike force investigations.
“The results we are announcing today are at the heart of an Administration-wide commitment to protecting American taxpayers from health care fraud, which can drive up costs and threaten the strength and integrity of our health care system,” said Attorney General Holder. “We are determined to bring to justice those who violate our laws and defraud the Medicare program for personal gain. As today’s takedown reflects, our ongoing fight against health care fraud has never been more coordinated and effective.”
“Today’s arrests send a strong message to criminals that the consequences of committing Medicare fraud are serious,” said HHS Secretary Sebelius. “In addition to these arrests, we used new authority from the health care law to stop all future payments to 52 health care providers suspected of fraud before they are ever made. Today’s actions are another example of how the Affordable Care Act is helping the Obama Administration fight fraud and strengthen the Medicare program.”
The defendants charged are accused of various health care fraud-related crimes, including conspiracy to commit health care fraud, health care fraud, violations of the anti-kickback statutes and money laundering. The charges are based on a variety of alleged fraud schemes involving various medical treatments and services such as home health care, mental health services, psychotherapy, physical and occupational therapy, durable medical equipment (DME) and ambulance services.
According to court documents, the defendants allegedly participated in schemes to submit claims to Medicare for treatments that were medically unnecessary and oftentimes never provided. In many cases, court documents allege that patient recruiters, Medicare beneficiaries and other co-conspirators were paid cash kickbacks in return for supplying beneficiary information to providers, so that the providers could submit fraudulent billing to Medicare for services that were medically unnecessary or never provided. Collectively, the doctors, nurses, licensed medical professionals, health care company owners and others charged are accused of conspiring to submit a total of approximately $452 million in fraudulent billing.
“As charged in the indictments, these fraud schemes were committed by people up and down the chain of healthcare providers,” said Assistant Attorney General Breuer. “Today’s operations mark the fourth in a series of historic Medicare fraud takedowns over the past two years. These indictments remind us that Medicare is an attractive target for criminals. But it should also remind those criminals that they risk prosecution and prison time every time they submit a false claim.”
“Health care fraud is not a victimless crime,” said FBI Deputy Director Joyce. “Every person who pays for health care benefits, every business that pays higher insurance costs to cover their employees, every taxpayer who funds Medicare—all are victims. The FBI will continue to work closely with our federal, state and local law enforcement partners to address health care vulnerabilities, fraud and abuse. We will use every tool we have to ensure our health care dollars are used to care for the sick—not to line the pockets of criminals.”
“Today over 200 OIG Special Agents, Forensic Examiners and Analysts have deployed throughout the country to ensure that those responsible for committing Medicare fraud are held accountable,” said HHS-OIG Deputy Inspector General Cantrell. “OIG is committed to the strike force model and will continue to use advanced data analytics along with traditional investigative methods to root out those who steal from our Medicare program.”
In Miami, a total of 59 defendants, including three nurses and two therapists, were charged today and yesterday for their participation in various fraud schemes involving a total of $137 million in false billings for home health care, mental health services, occupational and physical therapy, DME and HIV infusion. Two of these 59 defendants were originally charged in April 2012 but were indicted on additional charges today. In one case, 10 defendants were charged for participating in a fraud scheme at Health Care Solutions Network, which led to approximately $63 million in fraudulent billing for community mental health center (CMHC) services. Court documents allege that therapists at Health Care Solutions Network were instructed to alter notes and other medical documents to justify CMHC services for beneficiaries who did not need the services.
Seven individuals were charged today in Baton Rouge, La., for participating in a fraud scheme involving $225 million in false claims for CMHC services. The case represents the largest CMHC-related scheme ever prosecuted by the Medicare Fraud Strike Force. According to court documents, the defendants recruited beneficiaries from nursing homes and homeless shelters, some of whom were drug addicted or mentally ill, and provided them with no services or medically inappropriate services.
In Houston, nine individuals, including one doctor and one nurse, were charged today with fraud schemes involving a total of $16.4 million in false billings for home health care and ambulance services. According to court documents, the owners and operators of four different ambulance companies billed Medicare for ambulance rides that were medically unnecessary.Eight defendants, including two doctors, were charged in Los Angeles for their roles in schemes to defraud Medicare of approximately $14 million. In one case, two individuals allegedly billed Medicare for more than $8 million in fraudulent billing for DME.
In Detroit, 22 defendants, including four licensed social workers, were charged for their roles in fraud schemes involving approximately $58 million in false claims for medically unnecessary services, including home health, psychotherapy and infusion therapy.
In Tampa, Fla., a pharmacist was charged with illegal diversion of controlled substances. One defendant was charged last week in Chicago for his alleged role in a scheme to submit approximately $1 million in false billing to Medicare for psychotherapy services.
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 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.
The cases announced today are being prosecuted and investigated by Medicare Fraud Strike Force teams comprised of attorneys from the Fraud Section of the Justice Department’s Criminal Division and from the U.S. Attorneys’ Offices for the Southern District of Florida, the Eastern District of Michigan, the Southern District of Texas, the Central District of California, the Middle District of Louisiana, the Northern District of Illinois, and the Middle District of Florida, and agents from the FBI, HHS-OIG and state Medicaid Fraud Control Units.
An indictment is merely a charge and defendants are presumed innocent until proven guilty.
Related Materials:
Court Documents
Remarks by Assistant Attorney General for the Criminal Division Lanny A. Breuer
Remarks by Attorney General Eric HolderFormer Magistrate in Portsmouth, Virginia, Pleads Guilty to Accepting BribesRead the Press Release
WASHINGTON – A former state magistrate in Portsmouth, Va., pleaded guilty today in the Eastern District of Virginia to accepting bribes from a bail bondsman in exchange for giving him favorable treatment in setting bonds for criminal defendants who had been arrested, Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Neil H. MacBride for the Eastern District of Virginia announced today.
Deborah Clark, 52, of Portsmouth, Va., pleaded guilty before U.S. District Judge Henry C. Morgan Jr.
Clark was charged in a criminal information filed on April 16, 2012. She faces a maximum penalty of 10 years in prison and a fine of $250,000 when she is sentenced on Oct. 3, 2012.
According to a statement of facts filed with her plea agreement, Clark was a state magistrate in Portsmouth from January 1993 to April 2012. She was authorized to issue arrest and search warrants, and to set bail or order the detention of arrestees. From 2009 through February 2012, she accepted cash and gifts from a bondsman in exchange for referring arrestees to the bondsman as prospective clients and seeking and accepting his advice on the amount of bond to set in particular cases. In addition to regular cash payments, Clark admitted receiving payments for gas, meals and expense money for trips.
Clark is subject to prosecution for bribery under a federal statute because, as a magistrate, she was an agent of the Commonwealth of Virginia, which receives annual benefits in excess of $10,000 under federal programs involving grants and other forms of assistance.
This case was investigated by the FBI. Trial Attorneys Peter Mason and Monique Abrishami of the Public Integrity Section in the Justice Department’s Criminal Division and Assistant U.S. Attorney Alan M. Salsbury and Special Assistant U.S. Attorney Amy E. Cross of the Eastern District of Virginia are prosecuting the case.
Cincinnati Attorney Pleads Guilty to Obstructing IRSRead the Press Release
Suzanne Land, a Cincinnati attorney, pleaded guilty today to obstructing and impeding the Internal Revenue Service (IRS) while representing the estates of two deceased clients, the Justice Department and IRS announced. District Court Judge Herman J. Weber presided over the guilty plea hearing.
Land, who until recently was a partner at a Cincinnati law firmadmitted in court documents that from January 2010 through July 2010 she actively obstructed and impeded the IRS during two separate civil audits her clients’ estate tax returns.
According to the plea agreement and statements made in court, to conceal from the IRS the deficiencies in the documents that she drafted for her wealthy clients, Land forged the posthumous signatures of both her deceased clients and their living children on amendments to the documents. Land also misled an appraiser as to the value of the estates, created fake legal invoices that reflected work she never performed, and lied to the IRS about the circumstances surrounding the creation of the amendments. According to the terms of the plea agreement, Land admitted that the “relevant and foreseeable” tax loss that could have resulted from her obstruction was approximately $1,140,636.
Judge Weber set sentencing for Aug. 7, 2012 in Cincinnati. The maximum potential sentence for obstructing and impeding the IRS is up to three years in prison.
The case was investigated by IRS-Criminal Investigation. Trial Attorneys Jorge Almonte and Andrew P. Young of the Justice Department’s Tax Division handled the prosecution.
Tuesday 1 May 2012
Justice Department Settles Towing Company Case Under the Servicemembers Civil Relief ActRead the Press Release
The Justice Department announced that it had reached a settlement of alleged violations of the Servicemembers Civil Relief Act (SCRA) providing damages and credit repair to 26 servicemembers whose cars were towed and sold while they were on active duty without obtaining court orders as SCRA requires. The settlement resolves allegations that B.C. Enterprises Inc., d/b/a Aristocrat Towing and Aristocrat Towing Inc. (collectively “Aristocrat Towing”), violated the SCRA when it towed and sold these servicemembers’ vehicles without obtaining court orders. The case began with a referral from the U.S. Navy to the Justice Department after Navy Lieutenant Yahya Jaboori returned from deployment in Iraq to find that Aristocrat Towing had towed and sold his vehicle without a court order while he was deployed.
The SCRA protects the rights of servicemembers while on active duty in the military by suspending or modifying certain civil obligations. Under the terms of the settlement, which must be approved by a federal court in Virginia, Aristocrat Towing must pay a total of $75,000 in damages and repair the credit of the identified aggrieved servicemembers.
“Servicemembers make great personal sacrifices. We will ensure that the rights of the brave men and women who serve and protect us are protected at home,” said Assistant Attorney General for the Civil Rights Division Thomas E. Perez. “This settlement sends a strong message to businesses nationwide that the Justice Department will enforce the SCRA to protect against the taking of servicemembers’ property without first seeking court orders as is required by law.”
“No member of the military should come home from deployment to find their car has been towed and sold,” said U.S. Attorney for the Eastern District of Virginia Neil MacBride. “Businesses should be aware of the many rights that SCRA gives to servicemembers and their families, and businesses should also be certain that we’ll work tirelessly to ensure that those rights are protected.”
This lawsuit, filed in 2008, was the first filed by the Civil Rights Division under the SCRA. The Civil Rights Division received enforcement authority under the SCRA in 2006, and has since filed suit and entered into a number of settlements with defendants ranging from local landlords to the nation’s five largest mortgage servicers.
Servicemembers and their dependents who believe that their SCRA rights have been violated should contact the nearest Armed Forces Legal Assistance Program office. Please consult the military legal assistance office locator at http://legalassistance.law.af.mil/content/locator.php . Additional information on the Justice Department’s enforcement of the SCRA and other laws protecting servicemembers is available at www.servicemembers.gov .
Related Materials:
Consent Order
Justice Department Announces Investigations of the Handling of <br /> <br /> Sexual Assault Allegations by the University of Montana, the <br /> <br /> Missoula, Mont., Police Department and <br /> <br /> the Missoula County Attorney’s OfficeRead the Press Release
The Department of Justice today announced a series of investigations stemming from allegations of sexual assault and sexual harassment at the University of Montana and in the greater Missoula, Mont., community. These investigations will seek to determine whether gender discrimination affected the prevention, investigation and prosecution of sexual assaults and sexual harassment in Missoula.
The department has opened a Title IX compliance review and Title IV investigation regarding the University of Montana’s response to sexual assaults and sexual harassment of students. Title IX of the Education Amendments of 1972 and Title IV of the Civil Rights Act of 1964 each prohibit sex discrimination, including sexual assault and sexual harassment, in education programs. There have been at least 11 reported sexual assaults involving university students in an 18-month period. The department will also coordinate with the Department of Education on a related sexual harassment complaint received by that department.
The Justice Department also announced today that it has opened a civil pattern or practice investigation into the University of Montana’s Office of Public Safety (OPS), the Missoula Police Department (MPD) and the Missoula County Attorney’s Office. This investigation will focus on allegations that OPS, MPD and the Missoula County Attorney’s Office are failing to adequately investigate and prosecute alleged sexual assaults against women in Missoula, due to gender discrimination in violation of the Violent Crime Control and Law Enforcement Act of 1994 and the anti-discrimination provisions of the Omnibus Crime Control and Safe Streets Act of 1968. There have been at least 80 alleged rapes in Missoula in the past three years. The investigation will look at assaults against all women in Missoula, not just university students.
Department officials met with city, police and university officials, who pledged their full cooperation with the investigations.
“The allegations that the University of Montana, the local police department and the County Attorney’s Office failed to adequately address sexual assaults are very disturbing,” said Attorney General Eric Holder. “The department's pattern or practice authority enables us to ensure that law enforcement agencies are doing what is necessary to combat this despicable crime without discrimination, and we take that responsibility seriously.”
“Sexual assault and sexual harassment are intolerable; they undermine women’s basic rights and, when perpetrated against students, can negatively impact their ability to learn and continue their education,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “As we approach the 40th anniversary of Title IX this year, incidents of sexual assault on our college campuses remind us of the continuing critical importance of the law to reduce barriers in education. Our goal is to determine whether there are violations of federal law and if we find a problem, work cooperatively with the University of Montana and local law enforcement to ensure that all students and Missoula residents feel safe in their communities, regardless of sex. We salute President Engstrom’s commitment to address these serious problems.”
“Colleges and universities have an obligation to stop and prevent sexual violence against their students, and law enforcement has a fundamental duty to ensure it is properly investigating and prosecuting crimes of sexual assault, whether they occur at the university or in the wider Missoula community,” said Michael W. Cotter , U.S. Attorney for the District of Montana. “We look forward to working with the University of Montana and local law enforcement to ensure these vital obligations are met.”
The department previously found a pattern or practice of gender discrimination in the New Orleans Police Department. Similarly, the department found problems of significant concern involving the handling of sex crimes in both the Puerto Rico Police Department and the Maricopa County, Ariz., Sheriff’s Office.
Attorneys from the Educational Opportunities Section and the Special Litigation Section of the Department of Justice’s Civil Rights Division and the U.S. Attorney’s Office for the District of Montana are jointly conducting this investigation. People with information related to the sexual assaults or sexual harassment in Missoula are encouraged to contact the Department of Justice at 1-855-307-6103 or at [email protected] .
The enforcement of Title IV, Title IX, the Violent Crime Control and Law Enforcement Act and the Safe Streets Act are top priorities of the Justice Department’s Civil Rights Division and U.S. Attorneys’ Offices. Additional information about the Civil Rights Division is available on its website at www.justice.gov/crt . Additional information about the U.S. Attorney’s Office for the District of Montana is available on its website at www.justice.gov/usao/mt .
Related Materials:
Notification Letter - Investigation of the Missoula County Attorney's Office.
Notification Letter - Investigation of the Missoula Police Department
Notification Letter - Investigation of University of Montana, Office of Public Safety
Notification Letter - Investigation of University of MontanaFormer Bryan County, Okla., Sheriff’s Office Lieutenant <br /> <br /> Pleads Guilty to Using Taser to Shock Restrained DetaineeRead the Press Release
The Justice Department announced today that former Bryan County, Okla., Sheriff’s Office Lieutenant Kevin Bennett Holt, 48, from Achille, Okla., pleaded guilty in federal court to using a Taser to assault a detainee inside of the Bryan County Jail in Durant, Okla., thereby depriving the detainee of his civil rights.
During the plea hearing and in the plea documents, Holt admitted that he intentionally used unreasonable force on a detainee when he electronically shocked the detainee by using a Taser device while the detainee was strapped into a restraint chair. The defendant also admitted that his unlawful Taser deployment injured the victim.
“Today the defendant was held accountable for abusing his authority and assaulting the victim,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “Such conduct cannot be tolerated in a civilized society.”
When Holt is sentenced, he faces a maximum penalty of up to 10 years imprisonment and a maximum fine of $250,000 for this crime.
This case was investigated by the FBI. The case was prosecuted by Trial Attorney Nicole Lee Ndumele of the Civil Rights Division and Assistant U.S. Attorney Gregory Dean Burris from the U.S. Attorney' s Office for the Eastern District of Oklahoma.
Colorado Man and Co-defendant Found Guilty for Scheme to File Approximately $22 Million in False Claims with the IrsRead the Press Release
Curtis Morris, 43, of Elizabeth, Colo., and Richard Kellogg Armstrong, 77, of Prescott, Ariz., were found guilty on April 30, 2012, by a jury for mail fraud, filing false claims against the United States and conspiracy to file false claims against the United States, announced the Justice Department’s Tax Division, the U.S. Attorney’s Office for the District of Colorado and IRS-Criminal Investigation. In addition to these counts, Armstrong was also found guilty of engaging in monetary transactions in property derived from the mail fraud. The guilty verdicts were the result of a three week trial before U.S. District Court Judge Robert E. Blackburn. Morris and Armstrong are scheduled to be sentenced on Aug. 10, 2012.
Morris and Armstrong were indicted by a federal grand jury in Denver on June 8, 2010 and were subsequently charged in a superseding indictment on Feb. 15, 2011. The superseding indictment charged a total of twenty-eight counts as well as forfeiture allegations and included, as a defendant, the late Larry Hall. The jury returned guilty verdicts against Morris and Armstrong on all counts with which they were respectively charged. Morris was found guilty of three counts of mail fraud, seventeen counts of filing false claims against the United States and one count of conspiracy to defraud the United States. Armstrong was found guilty of one count of mail fraud, eight counts of filing false claims against the United States, three counts of engaging in monetary transactions in property derived from mail fraud and one count for conspiracy to defraud the United States.
According to the testimony at trial, the scheme involved Hall and Morris working with others to solicit individuals to file tax returns claiming large tax refunds based upon fictitious federal income tax withholdings taken from bogus Forms 1099-OID. Morris was the scheme tax preparer. He prepared over fifty fraudulent tax returns for at least twenty clients claiming illegal refunds of approximately $22 million. Original issue discount (OID) income is a form of interest income typically realized on debt instruments issued at a discount to, or purchased at less than, the ultimate redemption value of the debt instrument. This type of income is reported to the IRS on a Form 1099-OID and can be subject to federal income tax withholding in certain exceptional circumstances that didn’t apply in this case. As part of this scheme, Morris and others fabricated IRS Forms 1099-OID claiming large amounts of bogus federal income tax withholding to make it appear that these forms had been issued by legitimate financial institutions. Morris then used these bogus forms to prepare false tax returns for clients such as Armstrong. He used the federal income tax withholding amounts reported on the bogus Forms 1099-OID to offset and exceed his clients’ calculated income tax liabilities often resulting in hundreds of thousands of dollars in claimed refunds per client per year.
Armstrong was one of the clients who successfully secured a refund through the filing of tax returns prepared by Morris and subsequently served as a promoter and recruiter for the scheme. Armstrong received over $1.6 million and, according to the testimony at trial, quickly moved most of this money into accounts in the names of shell entities and offshore bank accounts. The government seized and is seeking forfeiture of Armstrong’s private plane and two pieces of real property purchased with the fraud proceeds, one of which is a house in Brighton purchased through Larry Hall by a nominee land trust.
“Those who defy the tax laws by preparing or filing false and frivolous tax returns risk criminal prosecution resulting in conviction, substantial penalties and time in prison, as well as being required to pay their taxes, interest and penalties,” said Assistant Attorney General for the Tax Division Kathryn Keneally. “The Tax Division remains committed to prosecuting tax defier conduct.”
“The guilty verdicts are a tribute to the hard work of the trial team,” said U.S. Attorney for the District of Colorado John Walsh. “The defendants have been held accountable for their fraudulent scheme thanks to the prosecutors and IRS-Criminal Investigation. Tax preparers should take note that if they attempt to defraud the IRS they will be caught and held accountable.”
“This verdict should send a clear message that promoting or participating in a fraudulent tax scheme will not be tolerated; rest assured those who do will be brought to justice,” said Sean Sowards, Special Agent in Charge, IRS Criminal Investigation, Denver Field Office.
Mail fraud carries a penalty of not more than 20 years in prison and up to a $250,000 fine, per count. Filing false claims against the United States carries a penalty of not more than 5 years imprisonment and a fine of up to $250,000 per count. Engaging in monetary transactions in property derived from mail fraud carries a penalty of not more than 10 years imprisonment and a fine of up to $250,000 per count. Conspiracy to defraud the United States carries a penalty of not more than 10 years imprisonment and a fine of up to $250,000 per count.
The case was investigated by special agents with IRS-criminal investigation. It was prosecuted by Assistant U.S. Attorney Kenneth Harmon and Special Assistant U.S. Attorney Kevin Sweeney. Kevin Sweeney is a trial attorney from the Justice Department’s Tax Division, currently on detail to the U.S. Attorney’s Office.
Al Qaeda Operative Convicted by Jury in One of the Most Serious Terrorist Plots Against America since 9/11Read the Press Release
BROOKLYN, N.Y. – Earlier today, following a four-week trial, Adis Medunjanin, 28, a Queens, N.Y., resident who joined al-Qaeda and plotted to commit a suicide terrorist attack, was found guilty of multiple federal terrorism offenses. The defendant and his accomplices came within days of executing a plot to conduct coordinated suicide bombings in the New York City subway system in September 2009, as directed by senior al-Qaeda leaders in Pakistan. When the plot was foiled, the defendant attempted to commit a terrorist attack by crashing his car on the Whitestone Expressway in New York in an effort to kill himself and others.
The guilty verdict was announced by Loretta E. Lynch, U.S. Attorney for the Eastern District of New York, and Lisa Monaco, Assistant Attorney General for National Security.
The government’s evidence in this and related cases established that in 2008, Medunjanin and his co-plotters, Najibullah Zazi and Zarein Ahmedzay, agreed to travel to Afghanistan to join the Taliban and kill U.S. military personnel abroad. They arrived in Peshawar, Pakistan, in late August 2008, but Medunjanin and Ahmedzay were turned back at the Afghanistan border. Within days, Medunjanin, Zazi and Ahmedzay met with an al-Qaeda facilitator in Peshawar and agreed to travel to Waziristan for terrorist training. There, they met with al-Qaeda leaders Saleh al-Somali, then the head of al-Qaeda external operations, and Rashid Rauf, a high-ranking al-Qaeda operative, who explained that the three would be more useful to al-Qaeda and the jihad by returning to New York and conducting terrorist attacks.
In Waziristan, Medunjanin, Zazi and Ahmedzay received al-Qaeda training on how to use various types of high-powered weapons, including the AK-47, PK machine gun and rocket-propelled grenade launcher. During the training, al-Qaeda leaders continued to encourage Medunjanin and his fellow plotters to return to the United States to conduct “martyrdom” operations and emphasized the need to hit well-known targets and maximize the number of casualties. Medunjanin, Zazi and Ahmedzay agreed and discussed the timing of the attacks and possible target locations in Manhattan, including the subway system, Grand Central Station, the New York Stock Exchange, Times Square and movie theaters.
Upon their return to the United States, Medunjanin, Zazi and Ahmedzay met and agreed to carry out suicide bombings during the Muslim holiday of Ramadan, which fell in late August and September 2009. Zazi would prepare the explosives, and all three would conduct coordinated suicide bombings. In July and August 2009, Zazi purchased large quantities of component chemicals necessary to produce the explosive TATP (Triacetone Triperoxide) and twice checked into a hotel room near Denver to mix the chemicals. Federal investigators later found bomb-making residue in the hotel room.
On Sept. 8, 2009, Zazi drove from Denver to New York, carrying operational detonator explosives and other materials necessary to build bombs. However, shortly after arriving in New York, he learned that law enforcement was investigating the plotters’ activities. The men discarded the explosives and other bomb-making materials, and Zazi traveled back to Denver, where he was arrested on Sept. 19, 2009.
On Jan. 7, 2010, law enforcement agents executed a search warrant at Medunjanin’s residence. Shortly thereafter, Medunjanin left his apartment and attempted to turn his car into a weapon of terror by crashing it into another car at high speed on the Whitestone Expressway. Moments before impact, Medunjanin called 9-1-1, identified himself and left his message of martyrdom, shouting an al-Qaeda slogan: “We love death more than you love your life.”
Today, Medunjanin was convicted of conspiring to use weapons of mass destruction, conspiring to commit murder of U.S. military personnel abroad, providing and conspiring to provide material support to al-Qaeda, receiving military training from al-Qaeda, conspiring and attempting to commit an act of terrorism transcending national boundaries, and using firearms and destructive devices in relation to these offenses. When sentenced by U.S. District Judge John Gleeson on Sept. 7, 2012, Medunjanin faces a mandatory sentence of life in prison. To date, seven defendants, including Medunjanin, Zazi and Ahmedzay, have been convicted in connection with the al-Qaeda New York City bombing plot and related charges.“Adis Medunjanin was an active and willing participant in one of the most serious terrorist plots against the homeland since 9/11. Were it not for the combined efforts of the law enforcement and intelligence communities, the suicide bomb attacks that he and others planned would have been devastating,” said Assistant Attorney General Monaco. “I thank the many agents, analysts and prosecutors who helped bring about today’s result. I also thank our counterparts in the United Kingdom for their assistance in this investigation and prosecution.”
“Justice was served today in Brooklyn, as a jury of New Yorkers convicted an al-Qaeda operative bent on terrorism, mass murder and destruction in the New York City subways,” said U.S. Attorney Lynch. “Adis Medunjanin’s journey of radicalization led him from Flushing, Queens, to Peshawar, Pakistan, to the brink of a terrorist attack in New York City – and soon to a lifetime in federal prison. As this case has proved, working against sophisticated terrorist organizations and against the clock, our law enforcement and intelligence agencies can detect, disrupt and destroy terrorist cells before they strike, saving countless innocent lives.”
U.S. Attorney Lynch expressed her gratitude and appreciation to the FBI Joint Terrorism Task Force in New York and each of the federal, state and local law enforcement personnel who took part in the investigation, as well as to the law enforcement authorities in the United Kingdom and Norway who assisted with the case.
The government’s case was prosecuted by Assistant U.S. Attorneys David Bitkower, James P. Loonam and Berit W. Berger of the U.S. Attorney’s Office for the Eastern District of New York, with assistance provided by the Counterterrorism Section of the Justice Department’s National Security Division.
Monday 30 April 2012
President of Costa Rican Company Convicted in Half a Billion Dollar Fraud Scheme with Thousands of Victims WorldwideRead the Press Release
WASHINGTON – The president of a Costa Rican company that sold reinsurance bonds to life settlement companies was found guilty by a federal jury in Richmond, Va., today for carrying out a half-billion-dollar fraud scheme that affected more than 2,000 victims throughout the United States and abroad.
U.S. Attorney for the Eastern District of Virginia Neil H. MacBride and Assistant Attorney General Lanny A. Breuer of the Criminal Division made the announcement following the jury’s verdict.
“Mr. Vargas lied to investors across the globe to sell almost half a billion dollars worth of ‘guaranteed’ bonds, which turned out to be worthless,” said U.S. Attorney MacBride. “His fraud affected thousands of victims around the world, many of whom invested their life savings with life settlement companies because of the worthless guarantees PCI made. Mr. Vargas may have thought he was safe operating his scheme from overseas, but his conviction is yet another example to global fraudsters: You can run, but you can’t hide. This verdict demonstrates our ability to pursue justice on behalf of U.S. victims regardless of where the fraudsters may be hiding.”
“Mr. Vargas reaped millions in profit from a sprawling scheme to defraud investors seeking to hedge their risk in the life settlements market,” said Assistant Attorney General Breuer. “He used his ill-gotten gains to fund a soccer team and to provide financial comfort for his family and for himself. Today, a Virginia jury told Mr. Vargas that he would be held accountable, hopefully bringing some measure of peace to the investors he defrauded.”
Minor Vargas Calvo, 60, a citizen and resident of Costa Rica, is the present and majority owner of Provident Capital Indemnity (PCI) Ltd., an insurance and reinsurance company registered in the Commonwealth of Dominica and doing business in Costa Rica. He was convicted of one count of conspiracy to commit mail and wire fraud, three counts of mail fraud, three counts of wire fraud and three counts of money laundering. He faces a maximum penalty of 20 years in prison on each fraud count and up to 10 years in prison on each money-laundering count when he is sentenced on Oct. 23, 2012.According to court records and evidence at trial, PCI sold financial guarantee bonds to companies selling life settlements, or securities backed by life settlements, to investors. These bonds were marketed to PCI’s clients as a way to alleviate the risk of insured beneficiaries living beyond their life expectancy. The clients, in turn, typically explained to their investors that the financial guarantee bonds ensured that the investors would receive their expected return on investment irrespective of whether the insured on the underlying life settlement lived beyond his or her life expectancy.
Evidence at trial showed that Calvo and PCI’s purported independent auditor for PCI, Jorge Castillo, 56, of New Jersey, used lies and omissions to mislead PCI’s clients and investors regarding its ability to pay claims when due on the financial guarantee bonds that PCI issued. Calvo caused Castillo to prepare audited financial statements that falsely claimed that PCI had entered into reinsurance contracts with major reinsurance companies. These false claims, which were supported by a letter from Castillo stating that he conducted an audit of PCI’s financial records, were used to assure PCI’s clients that the reinsurance companies were backstopping the majority of the risk that PCI had insured through its financial guarantee bonds. The fraudulent financial statements PCI distributed showed significant assets and relatively small liabilities.
From 2004 through 2010, PCI sold at least $485 million of bonds to life settlement investment companies located in various countries, including the United States, the Netherlands, Germany, Canada and elsewhere. PCI’s clients, in turn, sold investment offerings backed by PCI’s bonds to thousands of investors around the world. Purchasers of PCI’s bonds were required to pay up-front payments of six to 11 percent of the underlying settlement as “premium” payments to PCI before the company would issue the bonds.
Evidence at trial showed that Vargas sent more than $23 million of his ill-gotten gains to fund his professional soccer team in Costa Rica, to his unrelated companies, to his family and to himself. Due, in part, to these expenditures, when it came time to make good on PCI’s promises to pay bond holders, Vargas resorted to yet more lies to justify PCI’s inability to do so.
Castillo, who was a PCI employee prior to becoming PCI’s “outside auditor,” pleaded guilty on Nov. 21, 2011, to conspiring to commit mail and wire fraud, which carries a maximum penalty of 20 years in prison. Castillo is scheduled to be sentenced on May 22, 2012. In addition, the corporation, PCI, pleaded guilty on April 18, 2012, to conspiring to commit mail and wire fraud, which carries a maximum term of five years’ probation.
This continuing investigation is being conducted by the U.S. Postal Inspection Service, Internal Revenue Service and FBI, with assistance from the Virginia State Corporation Commission, the Texas State Securities Board and the New Jersey Bureau of Securities. This case is being prosecuted by Assistant U.S. Attorneys Michael S. Dry and Jessica Aber Brumberg of the Eastern District of Virginia and Trial Attorney Albert B. Stieglitz Jr. of the Criminal Division’s Fraud Section.
The U.S. Securities and Exchange Commission (SEC) conducted a parallel investigation and in January 2011 filed a parallel civil enforcement action against PCI, Vargas and Castillo. The department thanks the SEC for its assistance in this matter.
The investigation has been coordinated by the Virginia Financial and Securities Fraud Task Force, an unprecedented partnership between criminal investigators and civil regulators to investigate and prosecute complex financial fraud cases in the nation and in Virginia specifically. The task force is an investigative arm of the President’s Financial Fraud Enforcement Task Force, an interagency national task force.
President Obama established the 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.National Express and Petermann to Sell Off School Bus<br /> Contracts in Texas and Washington<br /> to Resolve Antitrust ConcernsRead the Press Release
WASHINGTON – In order to resolve antitrust concerns, National Express Corporation and Petermann Partners Inc. will divest several school bus contracts and associated assets in the states of Washington and Texas in order to proceed with their proposed merger, the Department of Justice announced today. National Express and Petermann contract with school districts throughout the United States to provide school bus services.
The parties have agreed to sell eight school bus transportation contracts in the states of Texas and Washington to Student Transportation of America Inc. (STA). The divested assets include transportation contracts in the school districts of Battle Ground and Hockinson in Washington and the school districts of Bastrop, Boyd, Eagle Mountain-Saginaw, Leander, Manor and Terrell, as well as Dallas-based KIPP Truth Academy, in Texas.
“The sale of the assets will help ensure continued competition for school bus contracts, which will benefit taxpayers in Texas and Washington,” said Acting Assistant Attorney General Joseph Wayland in charge of the Department of Justice’s Antitrust Division.
The parties have committed to completing the divestitures within 30 days, or to have a court monitor the divestitures at that time. The school boards and entities whose contracts are being divested are in the process of approving the transfer of the contracts.
The Antitrust Division conducted its investigation working closely with the Washington and Texas State Attorney Generals’ offices, which simultaneously conducted their own investigations.
National Express Corporation, a subsidiary of National Express Group PLC of the United Kingdom, is based in Warrenville, Ill. It has revenues of more than $700 million. Petermann Partners, headquartered in Cincinnati, has revenues of approximately $150 million.Justice Department Reaches Settlement with Nation’s Largest Mortgage Insurance Provider to Resolve Allegations of Discrimination Against Women on Maternity LeaveRead the Press Release
The Department of Justice announced today that it has settled its lawsuit against the Mortgage Guaranty Insurance Corporation (MGIC) for discriminating against women on maternity leave in violation of the Fair Housing Act. This settlement is the department’s first involving discrimination against women and families in mortgage insurance.
The lawsuit, filed on July 5, 2011, in the U.S. District Court for the Western District of Pennsylvania, alleged that MGIC required women on maternity leave to return to work before the company would insure their mortgages even for women who had a guaranteed right to return to work after the leave. Most mortgage lenders require applicants seeking to borrow more than 80 percent of their home’s value to obtain mortgage insurance.
The settlement, which was approved by the court today, establishes a $511,250 fund to compensate 70 individuals whom the United States identified as aggrieved by the alleged discriminatory treatment between 2007 and 2010. The settlement also requires MGIC to pay a $38,750 civil penalty to the United States. The Department of Justice identified the aggrieved individuals based on its extensive review of MGIC’s mortgage application records. MGIC cooperated with the United States in turning over records during the course of settlement negotiations.
The settlement also requires MGIC to follow a number of detailed nondiscriminatory provisions in its future review of mortgage insurance applications involving women or men who are on, or have returned from, paid or unpaid leave related to the birth, adoption or foster care placement of a child. The settlement also requires MGIC to monitor its treatment of applicants on leave to care for a new child, to train its employees on the requirements of the fair housing laws, and to provide nondiscrimination notices to mortgage applicants.
“No company involved in lending should force a parent to give up her or his legal right to take time off from work to care for a new child in order to obtain a mortgage loan,” said Thomas E. Perez, Assistant Attorney General for the Justice Department’s Civil Rights Division. “Today’s settlement, coming at the close of fair housing month, protects that important right and clearly demonstrates the department will not hesitate to take action against companies who discriminate against women and families.”
“In bringing justice to these 70 victims, this office confirms our resolve to protect the civil rights of citizens of the Western District of Pennsylvania from illegal discriminatory practices,” said David J. Hickton, U.S. Attorney of the Western District of Pennsylvania. “Discrimination in lending has profound and widespread consequences that will not be tolerated.”
“Mortgage insurance is essential in order for many people to buy a home,” said John Trasviña, HUD Assistant Secretary for Fair Housing and Equal Opportunity. “Borrowers should not be denied mortgage insurance for the very reason they often buy a home: to provide a decent home for an expanding family. HUD will continue to work with the Justice Department to take appropriate action against insurers and lenders who violate the Fair Housing Act.”
This lawsuit arose as a result of a complaint filed with the U.S. Department of Housing and Urban Development (HUD) by a Wexford, Penn., loan applicant. After investigating the complaint, HUD issued a charge of discrimination and referred the case to the Department of Justice after the parties were unable to settle their dispute and the complainant elected to have the case heard in federal court. The Department of Justice also filed the case under the attorney general’s authority to seek redress for housing discrimination that raises an issue of general public importance. The HUD complainant will receive $42,500 from the settlement fund, to address her specific pain and suffering and compensate her for leave that she forfeited in response to MGIC’s requirement that she return to work.
Individuals compensated as part of the settlement will remain eligible to receive compensation from the separate private class action lawsuit brought by the HUD complainant. MGIC has entered into a preliminary settlement of the class action lawsuit, which remains subject to court approval, allowing victims of MGIC’s alleged maternity leave discrimination to submit claims for extraordinary damages above the amount covered by the compensation provided through MGIC’s settlement with the United States.
The federal Fair Housing Act prohibits discrimination in housing and mortgage lending based on race, color, religion, national origin, sex, disability and familial status. More information about the Civil Rights Division and the laws it enforces is available at www.usdoj.gov/crt . Individuals who believe that they may have been victims of housing or lending discrimination can call the Housing Discrimination Tip Line at 1-800-896-7743, e-mail the Justice Department at [email protected], or contact HUD at 1-800-669-9777.
Hitachi-LG Data Storage Inc. Executive Agrees to Plead <br /> Guilty for Participating in Bid-Rigging Conspiracies <br /> Involving Optical Disk DrivesRead the Press Release
WASHINGTON – An executive of Korean-based Hitachi-LG Data Storage Inc. (HLDS) has agreed to plead guilty and to serve time in a U.S. prison for his participation in a series of conspiracies to rig bids for the sale of optical disk drives, the Department of Justice announced today.
According to the four-count felony charge filed today in the U.S. District Court for the Northern District of California in San Francisco, Senior Sales Manager Woo Jin Yang, also known as Eugene Yang, conspired with others to suppress and eliminate competition by rigging bids for optical disk drives sold to Hewlett-Packard Co. (HP). Yang participated in the conspiracies at various times between approximately August 2006 and June 2009. Under the plea agreement, which is subject to court approval, Yang has agreed to serve six months in prison, to pay a $25,000 criminal fine and to cooperate with the department’s ongoing investigation. HLDS is a joint venture between Hitachi Ltd, a Japanese corporation, and LG Electronics Inc., a Republic of Korea corporation.
“Today’s charges demonstrate the Antitrust Division’s commitment to prosecute and deter conduct that harms American businesses and consumers,” said Acting Assistant Attorney General Joseph Wayland in charge of the Department of Justice’s Antitrust Division. “The division will continue to pursue those who participated in these bid-rigging and price-fixing conspiracies so they are held accountable for their actions.”
Optical disk drives are devices such as CD-ROMs, CD-RWs (ReWritable), DVD-ROMs and DVD-RWs (ReWritable) that use laser light or electromagnetic waves to read and/or write data and are often incorporated into personal computers and gaming consoles.
According to the charges, from approximately August 2006 until February 2009, HP hosted optical disk drive procurement events in which participants would be awarded varying amounts of optical disk drive supply depending on where their pricing ranked. According to court documents, Yang and co-conspirators participated in a series of conspiracies involving meetings and discussions to predetermine bidding strategies and prices of optical disk drives, resulting in the submission of collusive and noncompetitive bids for HP’s procurement events. Yang and co-conspirators also exchanged information on sales, market share and the pricing of optical disk drives to monitor and enforce adherence to the agreements.
Including Yang, the department has charged four individuals and one company as a result of its ongoing investigation into the optical disk drive industry. On Nov. 8, 2011, HLDS pleaded guilty in the U.S. District Court for the Northern District of California in San Francisco to 14 counts of violating the federal antitrust laws between approximately June 2004 and September 2009. HLDS also pleaded guilty to one count of participating in a scheme to defraud in connection with an April 2009 procurement event. On the same day, HLDS was sentenced to pay a $21.1 million criminal fine and agreed to assist the department in its ongoing investigation into the optical disk drive industry.
HLDS executives Y.K. Park, S.H. Kim and Sik Hur pleaded guilty to multiple violations of the Sherman Act on March 27, 2012, April 17, 2012 and April 10, 2012 respectively. Park, Kim and Hur are currently awaiting sentencing.
Yang is charged with violating the Sherman Act. Each count carries a maximum fine of $1 million and up to 10 years in prison. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
This case is part of an ongoing joint investigation by the Department of Justice Antitrust Division’s San Francisco Office and the FBI in San Francisco and Houston. Anyone with information concerning illegal or anticompetitive conduct in the optical disk drive industry is urged to call the Antitrust Division’s San Francisco Field Office at 415-436-6660 or visit www.justice.gov/atr/contact/newcase.htm.
Arizona Man Sentenced to Seven Years in Prison for Participating in International Child Pornography RingRead the Press Release
WASHINGTON – An Arizona man was sentenced today in Los Angeles to seven years in prison and 15 years of supervised release for conspiracy to distribute child pornography, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney André Birotte Jr. of the Central District of California and Assistant Director in Charge Steve Martinez of the FBI’s Los Angeles Field Office.
Joseph Hines of Tempe, Ariz., was sentenced by U.S. District Judge Virginia A. Phillips. In December 2010, Hines, 24, pleaded guilty to one count of conspiracy to solicit child pornography.
Today’s sentencing is the result of an international investigation into the “Lost Boy” online bulletin board. The Lost Boy bulletin board, according to court documents and proceedings, was dedicated to men who have a sexual interest in young boys and was established to provide a forum to trade child pornography.
Federal authorities, working in conjunction with a coalition of international law enforcement agencies, shut down the Lost Boy bulletin board approximately three years ago. As a result of the investigation, 16 named defendants were charged in the United States and arrested for their roles in the bulletin board. To date, 15 defendants, including Hines, have pleaded guilty or have been convicted at trial and one defendant died in custody. Approximately six more men have been charged with child molestation as a result of the investigation. The investigation also led to the identification of 27 domestic victims of child abuse, some of whom were portrayed in images posted to the Lost Boy bulletin board.
According to court documents and proceedings, law enforcement authorities discovered the Lost Boy bulletin board after receiving information from Eurojust, the judicial cooperation arm of the European Union. Eurojust provided U.S. law enforcement with leads obtained from Norwegian and Italian authorities indicating that a North Hollywood, Calif., man was communicating with an Italian national about child pornography and how to engage in child sex tourism in Romania. Acting on the information from Europe, the FBI executed search warrants that led to the discovery of the Lost Boy network. Further investigation revealed that Lost Boy had 35 members, 16 of whom were U.S. nationals. Other members of the network were located in countries around the world, including Belgium, Brazil, Canada, France, Germany, New Zealand and the United Kingdom.
According to court documents, Lost Boy had a thorough vetting process for new members, who were required to post child pornography to join the organization. Once accepted, members were required to continue posting child pornography to remain in good standing and to avoid removal from the board. According to court documents, Lost Boy members advised each other on techniques to evade detection by law enforcement, which included using screen names to mask identities and encrypting computer data.
International law enforcement efforts involving European law enforcement, the Brazilian Federal Police and other agencies have identified child molestation suspects in South America, Europe and New Zealand. Three suspects in Romania, one in France, and another in Brazil have been charged, and offenders have been convicted in Norway and the United Kingdom. Law enforcement efforts have also identified dozens of child victims located in Norway, Romania, Brazil and other nations.
The investigation into the Lost Boy bulletin board was led by the FBI and the U.S. Postal Inspection Service, in conjunction with the Los Angeles-based Sexual Assault Felony Enforcement (SAFE) Team. The High Technology Investigative Unit of the Child Exploitation and Obscenity Section (CEOS) in the Justice Department’s Criminal Division, along with Eurojust, have provided invaluable assistance during the investigation.
The case is being prosecuted by Assistant U.S. Attorneys Joey L. Blanch and Yvonne Garcia of the Central District of California and CEOS Trial Attorney Andrew McCormack.
Friday 27 April 2012
Virginia Man Sentenced for Filing a False Refund Claim Based<br /> <br /> on Forms-1099 and for Failing to File Tax ReturnsRead the Press Release
Richard Jaensch, 54, of Annandale, Va., was sentenced today to 36 months in prison by U.S. District Judge Gerald Bruce Lee, the Justice Department and Internal Revenue Service (IRS) announced. Jaensch had been found guilty on Dec. 7, 2011, by a federal jury sitting in Alexandria, Va., of corruptly endeavoring to impede the IRS, filing a false claim for a refund and four counts of failing to file tax returns for 2004 through 2007. Judge Lee also sentenced Jaensch to three years supervised release and ordered him to pay $197,984 in restitution to the IRS.
According to evidence introduced at trial, Richard Jaensch, a self-employed plumber, failed to file personal income tax returns for many years, beginning in 2002, despite the fact that he was required to do so by law because of income he made from his business and from stock trading. The first tax return he filed after 2002 was a false 2008 tax return claiming a $774,052 refund based on false Forms 1099-OID that the defendant submitted to the IRS.
Over the years, Jaensch also obstructed and impeded the IRS by, among other acts: filing numerous documents and pleadings in Fairfax County, Va., claiming, that he and his wife, a federal employee, were not persons required to file federal income tax returns; that his wife was not a party to the Constitution of the “united States of America” and that she was not a taxpayer; and providing false information to the IRS. In addition, Jaensch caused his wife to present letters to her employer directing them to stop withholding federal income taxes from her salary. The IRS began levying his wife's paycheck and bank accounts to satisfy her outstanding tax liability and Jaensch continued his obstructive conduct by filing or causing his wife to file correspondence with the IRS claiming that the IRS could not instruct her employer to withhold taxes from her paycheck.
Jaensch’s wife, Janet, was a former high-level civilian employee in the Department of the Navy during the time that she was not filing tax returns at Richard Jaensch´s direction. She pleaded guilty to willfully failing to file a tax return and was sentenced on Dec. 13, 2011, to three years of probation and order to pay more than $137,000 in restitution to the IRS.
This case was investigated by Special Agents of IRS - Criminal Investigation and prosecuted by Trial Attorneys Jason Poole and Caryn Finley of the Justice Department´s Tax Division and Assistant U.S. Attorney Gene Rossi.
More information about the Tax Division and its enforcement efforts is available at www.usdoj.gov/tax/ .
Federal Officials Close Investigation into the Death of Sergio Hernandez-GuerecaRead the Press Release
The Justice Department and the U.S. Attorney’s Office for the Western District of Texas announced today that there is insufficient evidence to pursue federal criminal charges against a U.S. Customs and Border Protection (CBP), Office of Border Patrol agent for the fatal shooting of the late Sergio Hernandez-Guereca, a 15-year-old Mexican national shot within a spillway of the Rio Grande River along the United States – Mexico border on June 7, 2010.
The Justice Department conducted a comprehensive and thorough investigation into the shooting, which occurred while smugglers attempting an illegal border crossing hurled rocks from close range at a CBP agent who was attempting to detain a suspect. In conjunction with agents from the FBI and Department of Homeland Security, Office of the Inspector General (DHS-OIG), prosecutors from the Justice Department’s Civil Rights Division and the U.S. Attorney’s Office interviewed more than 25 law enforcement and civilian witnesses. In addition, they collected, analyzed and reviewed: evidence from the scene of the shooting; civilian and surveillance video; law enforcement radio traffic; 911 recordings; volumes of CBP agent training and use of force materials; and the shooting agent’s training, disciplinary records, and personal history. Also, they conducted site visits and analysis and consulted with the International Boundary and Water Commission concerning jurisdictional issues.
The team of experienced prosecutors examined the shooting as a possible violation of U.S. criminal civil rights laws and as a possible violation of federal homicide statutes. With regard to the federal homicide statutes, the team of prosecutors and agents concluded that there is insufficient evidence to pursue prosecution of the CBP agent for a federal homicide offense. This review took into account evidence indicating that the agent’s actions constituted a reasonable use of force or would constitute an act of self defense in response to the threat created by a group of smugglers hurling rocks at the agent and his detainee. The investigation also revealed that, on these particular facts, the agent did not act inconsistently with CBP policy or training regarding use of force. Based on a careful review and analysis of all the evidence, the team concluded that evidence would not be sufficient to prove beyond a reasonable doubt that the CBP agent violated the federal homicide laws in the shooting of Hernandez-Guereca.
The Justice Department also concluded that no federal civil rights charges could be pursued in this matter. Under the applicable civil rights statutes, prosecutors must establish, beyond a reasonable doubt, that a law enforcement officer willfully deprived an individual of a constitutional right, meaning with the deliberate and specific intent to do something the law forbids. This is the highest standard of intent imposed by law. Accident, mistake, misperception, negligence and bad judgment are not sufficient to establish a federal criminal civil rights violation. After a careful and thorough review, a team of experienced federal prosecutors and FBI agents determined that the evidence was insufficient to prove, beyond a reasonable doubt, that the CBP agent acted willfully and with the deliberate and specific intent to do something the law forbids, as required by the applicable federal criminal civil rights laws. Moreover, a prosecution under the federal criminal civil rights statutes would be barred because the investigation determined that Hernandez-Guereca was neither within the borders of the United States nor present on U.S. property, as required for jurisdiction to exist under the applicable federal civil rights statute.
Accordingly, the investigation into this incident has been closed without prosecution.
The U.S. government regrets the loss of life in this matter, and the Civil Rights Division, the U.S. Attorney's Office for the Western District of Texas, the FBI and DHS devoted significant time and resources into conducting a thorough and complete investigation. The USG commits to continue to work with the Mexican government within existing mechanisms and agreements to prevent future incidents. The Justice Department is committed to investigating allegations of excessive force by law enforcement officers and will continue to devote the resources required to ensure that all allegations of federal civil rights violations are fully and completely investigated. The department aggressively prosecutes criminal civil rights violations whenever there is sufficient evidence to do so.
Federal Jury Finds Ira Isaacs Guilty in Los Angeles Adult Obscenity CaseRead the Press Release
Ira Isaacs, 60, was found guilty today in U.S. District Court in Los Angeles on one count of engaging in the business of producing and selling obscene videos and four counts of distributing obscene videos, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney André Birotte Jr. of the Central District of California, Assistant Director in Charge Steve Martinez of the FBI’s Los Angeles Field Office, and Los Angeles Police Department Chief Charlie Beck.
A federal jury in the Central District of California found Isaacs guilty on all charged counts of a superseding indictment filed in April 2011.
Evidence presented at trial established that beginning in or about 1999 and continuing until at least 2011, Isaacs, doing business under the name L.A. Media, operated numerous websites, through which he advertised and sold obscene videos which he acquired from other persons. The obscene videos included a video approximately two hours in length of a female engaging in sex acts involving human bodily waste and a video one hour and 37 minutes in length of a female engaged in sex acts with animals.
The evidence presented at trial also established that in or about 2004, Isaacs began operating under the name Stolen Car Films, and made obscene videos in which he instructed women to engage in sexual activity involving human bodily waste. He subsequently advertised and sold the videos through his various websites.
Isaacs is scheduled to be sentenced on Aug. 6, 2012.
The case is being prosecuted by Trial Attorney Michael W. Grant and Deputy Chief Damon King of the Criminal Division's Child Exploitation and Obscenity Section (CEOS), with the assistance of Jeannette Gunderson, a trial attorney with the Asset Forfeiture and Money Laundering Section. The investigation was conducted by the FBI and Los Angeles Police Department.
Alabama Real Estate Investor Agrees to Plead Guilty to Conspiracies to Rig Bids and Commit Mail Fraud for the Purchaseof Real Estate at Public Foreclosure AuctionsRead the Press Release
An Alabama real estate investor has agreed to plead guilty and to serve one year in prison for his role in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in southern Alabama, the Department of Justice announced today. To date, as a result of the ongoing investigation, four individuals and one company have pleaded guilty.
Charges were filed yesterday in the U.S. District Court for the Southern District of Alabama in Mobile, Ala., against Steven J. Cox of Mobile. Cox was charged with one count of bid rigging and one count of conspiracy to commit mail fraud. According to the plea agreement, which is subject to court approval, Cox has agreed to serve one year in prison, to pay a $10,000 criminal fine and to cooperate with the department’s ongoing investigation.
According to court documents, Cox conspired with others not to bid against one another at public real estate foreclosure auctions in southern Alabama. After a designated bidder bought a property at the public auctions, which typically take place at the county courthouse, the conspirators would generally hold a secret, second auction, at which each participant would bid the amount above the public auction price he or she was willing to pay. The highest bidder at the secret, second auction won the property.
Cox was also charged with conspiring to use the U.S. mail to carry out a scheme to acquire title to rigged foreclosure properties sold at public auctions at artificially suppressed prices, to make and receive payoffs to co-conspirators and to cause financial institutions, homeowners and others with a legal interest in rigged foreclosure properties to receive less than the competitive price for the properties. Cox participated in the bid-rigging and mail fraud conspiracies from as early as January 2004 until at least May 2010.
“The Antitrust Division continues to work with its law enforcement partners to ensure that real estate foreclosure auctions are fair and competitive,” said Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division Sharis A. Pozen. “The division will vigorously pursue those who engage in collusive schemes to eliminate competition in the marketplace.”FBI Special Agent in Charge of the Mobile FBI Office Lewis M. Chapman recognized the perseverance of agents and prosecutors in this complex investigation. Chapman stated, “This investigation sends the message that real estate fraud including antitrust violations will continue to be pursued in these tough economic times, no matter how intricate the scheme.”
Each violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. The maximum fine for a Sherman Act charge may be increased to twice the gain derived from the crime or twice the loss suffered by the victim if either amount is greater than the statutory maximum fine. Each count of conspiracy to commit mail fraud carries a maximum penalty of 20 years in prison and a fine in an amount equal to the greatest of $250,000, twice the gross gain the conspirators derived from the crime or twice the gross loss caused to the victims of the crime by the conspirators.
The investigation into fraud and bid rigging at certain real estate foreclosure auctions in southern Alabama is being conducted by the Antitrust Division’s Atlanta Field Office and the FBI’s Mobile Office, with the assistance of the U.S. Attorney’s Office for the Southern District of Alabama. Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Antitrust Division’s Atlanta Field Office at 404-331-7100 or visit www.justice.gov/atr/contact/newcase.htm.
Yesterday’s charges are part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency 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 on the task force, visit www.StopFraud.gov.
Thursday 26 April 2012
Two Northern California Real Estate Investors Agree toPlead Guilty to Bid Rigging at Public Foreclosure AuctionsRead the Press Release
Two northern California real estate investors have agreed to plead guilty for their roles in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in northern California, the Department of Justice announced.
The felony charges were filed today in the U.S. District Court for the Northern District of California in San Francisco, against Lydia Fong and Matthew Worthing, both of San Francisco.According to court documents, Fong and Worthing conspired with others for various lengths of time between October 2009 and November 2010, not to compete against one another, but instead to designate a winning bidder to obtain selected properties at public real estate foreclosure auctions in San Francisco County. Worthing was also charged with participating in a similar conspiracy in San Mateo County, Calif. from September 2010 until January 2011. Fong and Worthing also were charged with conspiracies to use the mail to carry out a scheme to fraudulently acquire title to selected properties sold at public auctions.
“The collusion taking place at these auctions eliminated competition from the marketplace and allowed the conspirators to profit from the financial distress of others,” said Acting Assistant Attorney General Sharis A. Pozen in charge of the Department of Justice’s Antitrust Division. “The division will continue to pursue the perpetrators of these fraudulent schemes so they are held accountable for their actions.”
“Fraudulent bid rigging and other anticompetitive activities at foreclosure auctions by conspirators are illegal and unfair to individuals who are forced to sell and legitimate buyers looking to purchase homes in our communities,” said FBI Special Agent in Charge Stephanie Douglas of the San Francisco Field Office. “We continue to work closely with our partners at the Antitrust Division to identify and bring to justice those who engage in this type of activity.”
The department said that the primary purpose of the conspiracies was to suppress and restrain competition and to make and receive payoffs in order to obtain selected real estate offered at San Mateo and San Francisco Counties public foreclosure auctions at non-competitive prices. When real estate properties are sold at these auctions, the proceeds are used to pay off the mortgage and other debt attached to the property, with remaining proceeds, if any, paid to the homeowner.
Each violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. The maximum fine for the Sherman Act charges may be increased to twice the gain derived from the crime or twice the loss suffered by the victim if either amount is greater than the $1 million statutory maximum. Each count of conspiracy to commit mail fraud carries a maximum sentence of 30 years in prison and a $1 million fine. The government can also seek to forfeit the proceeds earned from participating in the conspiracy to commit mail fraud.
The charges today are the latest cases filed by the department in its ongoing investigation into bid rigging and fraud at public real estate foreclosure auctions in San Francisco, San Mateo, Contra Costa and Alameda Counties, Calif. To date, as a result of the investigation, 22 individuals, including Fong and Worthing, have agreed to plead or have pleaded guilty.
The ongoing investigation into fraud and bid rigging at certain real estate foreclosure auctions in northern California is being conducted by the Antitrust Division’s San Francisco Office and the FBI’s San Francisco office. Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Antitrust Division’s San Francisco Office at 415-436-6660, visit www.justice.gov/atr/contact/newcase.htm or call the FBI tip line at 415-553-7400.
Today’s charges are 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 on the task force, visit www.StopFraud.gov.
**The fraud charge against Lydia Fong referenced in this press release was subsequently dismissed on the government’s motion.**
Two Alleged Members of the Philadelphia La Cosa Nostra Family Charged in Second Superseding IndictmentRead the Press Release
WASHINGTON – Two alleged members of the Philadelphia organized crime family of La Cosa Nostra (LCN) were arrested today on racketeering charges contained in a second superseding indictment, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Zane David Memeger for the Eastern District of Pennsylvania and Special Agent in Charge George C. Venizelos of the FBI’s Philadelphia Field Office.
Joseph Licata, 70, of Florham Park, N.J., and Louis Fazzini, 45, of Caldwell, N.J., were arrested today in the Newark, N.J., area and will make initial court appearances in U.S. District Court in Philadelphia at 1:30 p.m. EST. They are each charged with racketeering conspiracy. According to the second superseding indictment, Licata served as a “caporegime” of North Jersey crew of the Philadelphia LCN Family and supervised Louis Fazzini, a fully initiated or “made” member of this crew, in the operation of an illegal sports gambling business and other activities.
The 52-count second superseding indictment also charges 12 defendants who were previously charged in a May 23, 2011, superseding indictment: Philadelphia LCN Family acting boss Joseph Ligambi, Philadelphia LCN Family underboss Joseph Massimino, George Borgesi, Martin Angelina, Anthony Staino Jr., Gaeton Lucibello, Damion Canalichio, Louis Barretta, Gary Battaglini, Robert Verrecchia, Eric Esposito and Robert Ranieri.
The second superseding indictment adds two new charges against Philadelphia LCN Family acting boss Ligambi relating to theft from an employee benefit plan administered by the Teamsters Health and Welfare Fund of Philadelphia and Vicinity. According to the second superseding indictment, from 2003 to 2011, Ligambi unlawfully caused the Teamsters Health and Welfare Fund of Philadelphia and Vicinity to pay the cost of health benefits provided to him and several of his family members through a “no show” job at Top Job Disposal, a Philadelphia-based waste hauling and removal company. As a “no show” employee, he performed no work or productive services for Top Job Disposal, while still receiving pay and health benefits.
The second superseding indictment alleges that for more than a decade, 11 of the defendants, including Ligambi as the acting boss and Massimino as the underboss, as well as other members and associates of the Philadelphia LCN Family in Philadelphia and New Jersey, conspired to conduct and participate in the affairs of the Philadelphia LCN Family through a pattern of racketeering activity and through the collection of unlawful debts. The alleged racketeering activity includes numerous acts involving extortion, extortionate extensions of credit through usurious loans, extortionate collections, illegal gambling, witness tampering and theft from an employee benefit plan. The organization’s collection of unlawful debts allegedly relates to its loan sharking operations and debts that arose from their illegal gambling businesses.
According to the second superseding indictment, the defendants promoted and furthered their illegal money-making activities through violence, actual and implied threats, and the cultivation and exploitation of the Philadelphia LCN Family’s long-standing reputation for violence. The defendants also used this reputation for violence to intimidate and prevent victims and witnesses from cooperating with law enforcement. The second superseding indictment alleges various instances where defendants used phrases such as “chop him up” and “put a bullet in your head” when threatening victims. In one instance, Canalicho allegedly used a bat to beat a victim for not paying a loan debt.
The second superseding indictment alleges that some of the defendants continued their racketeering activities even after being sent to prison. For example, Borgesi and Massimino, while in prison, allegedly generated criminal proceeds for themselves and the Philadelphia LCN Family by using intermediaries to operate criminal businesses and to make extortionate demands at their direction.
Each charge of racketeering conspiracy, collection of unlawful debt, collection of extensions of credit through extortionate means, making extortionate extensions of credit, financing extortionate extensions of credit and witness tampering carries a maximum penalty of 20 years in prison and a $250,000 fine. The illegal gambling and theft from an employee benefit plan charges each carry a maximum penalty of five years in prison and a $250,000 fine.
The case is being prosecuted by Trial Attorney John S. Han of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorney Frank A. Labor III for the Eastern District of Pennsylvania. Valuable prosecutorial assistance was provided by the Pennsylvania Office of the Attorney General.
The case is being investigated by the FBI, the Internal Revenue Service Criminal Investigation Division, the Pennsylvania State Police, the New Jersey State Police, the Philadelphia Police Department and the U.S. Department of Labor Office of Inspector General Office of Labor Racketeering and Fraud Investigations and the Employee Benefits Security Administration. Additional assistance was provided by the New Jersey Department of Corrections.
An indictment is merely an accusation and each defendant is presumed innocent until and unless they are proven guilty.
Statement of the Attorney General on the<br /> Passage of the Reauthorization of <br /> the Violence Against Women ActRead the Press Release
The Attorney General made the following statement today on the Senate’s approval of the reauthorization of the Violence Against Women Act (VAWA):
“No one should suffer from domestic violence, sexual assault, dating violence or stalking, which is why I applaud the passage of the bill to reauthorize the critical Violence Against Women Act (VAWA) through the Senate. This legislation originally transformed our nation’s response to crimes against women, and today it helps us bring justice to victims and hold offenders accountable. The Department of Justice is committed to ending violence against women and vigorously enforcing the provisions of VAWA.”
About the Office of Violence Against Women (OVW):
Since the passage of VAWA in 1994, OVW has awarded over $4.6 billion in grants and cooperative agreements. VAWA grant funds train an average of over 500,000 law enforcement officers, prosecutors, judges, victim advocates, and other personnel every year and provide services to more than 700,000 victims. These investments have supported a wide variety of critical efforts – from initiatives aimed at preventing teen dating violence and sexual assaults, to improving the reporting of these crimes, reducing the backlog of rape kits, and building the capacity of Tribal Courts to combat domestic violence. And several OVW programs support initiatives and organizations that – by providing women with job training, financial literacy training, and housing services – have already had a clear economic impact.
For more information on OVW, go to www.ovw.usdoj.gov.
Second Conspirator Pleads Guilty to Civil Rights Violation in MarylandRead the Press Release
Billie Ray Pratt, age 24, of Halethorpe, Md., pleaded guilty today to his involvement in hanging a raccoon on the porch of a family from Africa.
According to his plea agreement, in April 2010 Pratt, Joshua Wall and three other co-conspirators agreed on a plan to hang a dead raccoon from a noose on the porch of an African family to frighten them and to interfere with their housing rights. Pratt claimed that two of his co-conspirators drove around until they found a dead raccoon and made the noose to put around the raccoon’s neck. Wall and a co-conspirator hung the raccoon on the porch of the home in the middle of the night while Pratt acted as a look-out.
“The hanging of a noose is a powerful symbol of hate that has no place in our country,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The department will continue to prosecute acts such as this one to the fullest extent of the law.”
The investigation remains is ongoing.
Pratt faces a maximum penalty of 10 years in prison and a $250,000 fine for conspiracy to deprive a person of civil rights. U.S. District Judge Ellen L. Hollander has scheduled sentencing for Aug. 17, 2012.
Joshua Wall, age 20, of Essex, Md., pleaded guilty on March 5, 2012 to his involvement in the conspiracy and faces the same maximum penalty at his sentencing scheduled for Aug. 17, 2012.
U.S. Attorney Rod J. Rosenstein and Assistant Attorney General Thomas E. Perez commended the FBI for its work in the investigation and thanked U.S. Department of Justice Trial Attorney AeJean Cha of the Civil Rights Division and Assistant U.S. Attorney P. Michael Cunningham, who are prosecuting the case.
Natural Gas and Oil Drilling Company and Supervisor Sentenced in Oklahoma for Negligent Violation of Clean Water ActRead the Press Release
WASHINGTON – Integrated Production Services Inc. (IPS), a Houston-based natural gas and oil drilling contractor, was sentenced today in federal court in Muskogee, Okla., to pay a criminal fine of $140,000 for violations of the Clean Water Act at its hydraulic fracturing operation in Atoka County, Okla., the Justice Department announced.
Gabriel Henson, a crew supervisor for IPS, was sentenced to two years probation and a fine of $2,500.
In May 2007, IPS was performing hydraulic fracturing (fracking) at the Pettigrew 18-3H well site in Atoka County, where Henson was a crew supervisor. IPS’s fracking operations included using hydrochloric acid to penetrate though bedrock and thousands of feet of substrata.
On May 24, 2007, a tank leaked an estimated 400-700 gallons of hydrochloric acid onto the earthen pad surface of the well site. The earthen pad was also flooded with water from recent heavy rainfall. In order to remove the rainwater from the well site, Henson drove a pickup truck owned by IPS through an earthen berm, causing the rainwater contaminated with hydrochloric acid to flow off the well pad and down into Dry Creek, a tributary of Boggy Creek, a water of the United States under the Clean Water Act. Henson and IPS both pleaded guilty to a negligent violation of the Clean Water Act, on July 10, 2011, and Sept. 21, 2011, respectively.
IPS was also sentenced to a community service payment of $22,000 to the Oklahoma Department of Wildlife Conservation for ecological studies and remediation of Boggy Creek, located in the Eastern District of Oklahoma. IPS will serve a two-year period of probation, during which it will be required to implement and perform an Environmental Compliance Program at a cost of no less than $38,000 to train IPS employees regarding proper hazardous waste handling and spill response procedures.This case was investigated by the U.S. Environmental Protection Agency Criminal Investigation Division and the Oklahoma Attorney General’s Office of Inspector General. The case is a joint prosecution between the U.S. Attorney’s Office for the Eastern District of Oklahoma and the Environmental Crimes Section of the U.S. Department of Justice, Environment and Natural Resources Division.
McKesson Corp. Pays U.S. More Than $190 Million to Resolve False Claims Act AllegationsRead the Press Release
McKesson Corporation has agreed to pay the United States more than $190 million to resolve claims that it violated the False Claims Act by reporting inflated pricing information for a large number of prescription drugs, causing Medicaid to overpay for those drugs.
Stuart F. Delery, Acting Assistant Attorney General for the Justice Department’s Civil Division; New Jersey U.S. Attorney Paul J. Fishman; and Daniel R. Levinson, Inspector General of the U.S. Department of Health and Human Services announced the settlement today.
The government alleges that McKesson, a large drug wholesaler, reported the inflated pricing data to First DataBank (FDB), a publisher of drug prices that are used by most state Medicaid programs to set payment rates for pharmaceuticals.
The Medicaid program is funded jointly by the federal and state governments. This settlement resolves claims based on the federal share of Medicaid overpayments caused by McKesson’s conduct. In addition to the $190 million – which represents the $187 million settlement and interest – state governments can separately negotiate with McKesson to resolve claims based on the states’ shares of the Medicaid overpayments.
The drug pricing data at issue here relates to the “Average Wholesale Price” (AWP) benchmark used by Medicaid and other programs to set payment rates for pharmaceuticals. The settlement announced today is based on the United States’ allegations that McKesson reported inflated mark-up percentages to FDB for a wide variety of brand name drugs, causing FDB to publish inflated AWPs for those drugs.
To date, federal and state governments have recovered more than $2 billion from drug manufacturers that were alleged to have reported inflated AWP information to FDB and other publishers of drug prices.
“This case demonstrates the Department of Justice’s commitment to ensuring that Medicaid funds are expended appropriately,” said Acting Assistant Attorney General Delery. “Companies that report pricing data that affect government payment rates, whether those companies are manufacturers, wholesalers, or otherwise, are required to report that data accurately.”
“This is the latest example of a corporation’s intentionally manipulating the complicated system by which drug purchases are reimbursed,” said U.S. Attorney Fishman. “We have no tolerance for those who take advantage of that system to bring in more business by falsely increasing reimbursements to retailers.”
“This settlement with McKesson highlights the Office of Inspector General’s commitment to protecting against artificially inflated drug prices,” said Inspector General Levinson. “Our analyses of drug price reporting practices – including the use of ‘Average Wholesale Price’ – have consistently identified excessive Medicare and Medicaid payments resulting from these practices.”
U.S. Attorney Fishman credited special agents of the U.S. Department of Health and Human Services Office of Inspector General, under the direction of Special Agent in Charge Thomas O’Donnell of the New York Regional Office, for the investigation leading to today’s settlement.
The government is represented by Assistant U.S. Attorney Alex Kriegsman of the U.S. Attorney’s Office Civil Division in Newark and Jeffrey A. Toll and Justin Draycott of the U.S. Department of Justice’s Civil Division.
McKesson does not admit to any liability regarding the claims settled by this agreement.
Long Island, N.Y., Tax Return Preparer <br /> Sentenced to 37 Months for Tax FraudRead the Press Release
Howard Levine, owner of a Dix Hill, N.Y., tax preparation business was sentenced to 37 months in prison for tax crimes, the Justice Department and Internal Revenue Service (IRS) announced today. On Jan. 5, 2012, Levine pleaded guilty to obstructing the internal revenue laws and aiding in the preparation of false income tax returns for clients.
According to the plea agreement and statements made in court, Howard Levine owned and operated Milaur Associates, also known as Milaur Inc. Many of the tax returns prepared by Levine for 2004 through 2009 were false and contained fictitious deductions, business expenses and corporate losses created by Levine. According to court documents, Levine admitted to preparing no fewer than 56 false income tax returns, resulting in a tax loss of more than $620,000.
In 2009, the U.S. District Court for the Eastern District of New York issued an injunction that barred Levine from preparing federal income tax returns for anyone other than himself. According to the plea agreement, Levine violated that court injunction and continued to prepare false income tax returns for clients. In order to obstruct and mislead the IRS from determining his role in preparing the returns, Levine provided false information in the paid preparer section of the returns he prepared.
U.S. District Court Judge Joseph F. Bianco, sitting in Central Islip, N.Y., also ordered Levine to pay $320,998 in restitution to the IRS.
The case was investigated by Special Agents of IRS - Criminal Investigation and was prosecuted by Trial Attorneys Mark Kotila and Jeffrey B. Bender of the Justice Department’s Tax Division.
Justice Department Settles Lawsuit Alleging Sex Discrimination <br /> <br /> by Waupaca County, WisconsinRead the Press Release
The Justice Department today announced that it has reached a consent decree with Waupaca County, Wis., to resolve allegations that the county discriminated against an employee by denying her a promotion because of her sex.
The Justice Department filed its complaint against the county in June 2011 in the U.S. District Court for the Eastern District of Wisconsin. The complaint alleged that the county violated Title VII of the Civil Rights Act of 1964 when it failed to promote a female patrol officer in its sheriff’s department to sergeant because of her sex. Title VII of the Civil Rights Act of 1964 prohibits discrimination in employment on the basis of race, color, sex, national origin and religion.
According to the Justice Department’s complaint, the county denied Julie Thobaben a promotion to detective sergeant in its sheriff’s department because she is a woman. Although Ms. Thobaben was the most qualified applicant for the position, the county promoted a male patrol officer instead, even though, at the time, he was not eligible for promotion as a result of discipline the county had imposed upon him. The county argued that it lawfully denied Ms. Thobaben the promotion because its nepotism policy prohibited it from making Ms. Thobaben a detective sergeant since, in that capacity, Ms. Thobaben would supervise her husband, who is a patrol officer at the county sheriff’s department. However, the county has not applied its nepotism policy to at least eight other male employees who supervise immediate family members.
Under the terms of the consent decree, which must still be approved by the federal court, the county must promote Ms. Thobaben to the position of detective sergeant within three years and increase her current pay rate to that of a detective sergeant. The county must also pay her $141,641.10 in monetary relief, including backpay with interest, attorney’s fees, and compensatory damages. In addition, the county must review and, if appropriate, amend its equal employment opportunity and nepotism policies in order to protect its employees from discrimination and retaliation. The county must also conduct training of its personnel regarding these policies.
“Title VII ensures that women in the workplace have the right to be considered for promotion without regard to their sex, and the Department of Justice will not tolerate discrimination in employment on the basis of sex,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Civil Rights Division is pleased that Waupaca County will review and amend its policies, provide training to its employees regarding the requirements of Title VII, and provide Ms. Thobaben with the relief to which she is entitled.”
James L. Santelle, U.S. Attorney for the Eastern District of Wisconsin, stated: “Our uniform, focused enforcement of Title VII, including its prohibition on gender-based discrimination in the employment setting, continues to be a significant priority within our diverse affirmative civil docket. The announcement today of the settlement of the claims by Ms. Thobaben not only ensures that she will be compensated monetarily for past discrimination but that she will be serving the people of Waupaca County as a detective sergeant based upon her merit-based qualifications for that position.."
The continued enforcement of Title VII has been and remains 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/ .
Former Tuscaloosa County, Alabama, Sheriff’s Sergeant Sentenced for Criminal Civil Rights ViolationsRead the Press Release
Former Tuscaloosa County Sheriff’s sergeant, Althea Mallisham, 52, has been sentenced to 61 months in prison for civil rights convictions for wrongfully using a Taser against three detainees during separate incidents over a four month period in 2008.
On Nov. 16, 2011, Mallisham pleaded guilty to three felony civil rights offenses at which time she admitted that on separate occasions while she was on duty as a Tuscaloosa Sheriff's sergeant and acting under color of state law, she used an X26 Taser to electro-shock three pre-trial detainees as a means of punishment. In each instance, the pre-trial detainees were either restrained in handcuffs or securely locked in a jail cell. None of the three detainees posed a physical threat to any officers or other detainees when they were electro-shocked. In each instance, Mallisham willfully exceeded and abused her authority under state law.
“Law enforcement officers who abuse their power to maliciously subject those in their custody to extreme pain will be held accountable,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Justice Department will continue to vigorously prosecute those who cross the line to engage in acts of criminal misconduct.”
“Officer Mallisham took an oath to uphold the law. Virtually all of our law enforcement officers respect their oaths and the power they are entrusted with to enforce the law, and they perform their duties with honor and integrity,” said Joyce White Vance, U.S. Attorney for the Northern District of Alabama. “Mallisham, however, violated her oath and broke the law. Today, she has been held accountable and sentenced to five years in prison.”
This case was investigated by the Tuscaloosa resident agency of the FBI’s Birmingham Field Office. The case was prosecuted by Trial Attorney D.W. Tunnage of the Justice Department’s Civil Rights Division and Assistant U.S. Attorney Tamarra Matthews-Johnson for the Northern District of Alabama.
Former District of Columbia Department of Corrections Officer Pleads Guilty to Criminal Civil Rights ChargeRead the Press Release
Former District of Columbia Department of Corrections Officer Victor Bell, 25, pleaded guilty today to a criminal civil rights charge for assaulting an inmate in the District of Columbia Central Detention Facility (D.C. jail).
During the plea proceedings, Bell admitted that on Jan. 4, 2012, he became upset with an inmate who was expressing his disapproval of a pat-down search that Bell was conducting of another inmate in a third-floor corridor. Bell then began following the disapproving inmate as he started to walk away. Bell confronted him chest-to-chest, and the inmate again attempted to walk away. After handing off his eyeglasses to another D.C. jail employee, Bell once again followed the inmate, and with both hands, pushed him in the back.
As the confrontation continued, Bell grabbed the inmate by the shoulder, pushed him into a corner of the corridor, and began punching him repeatedly in the head. In addition, Bell grabbed the inmate’s dreadlocks, pulling one out. Even after another corrections officer called for assistance, Bell continued punching the inmate until other officers pulled him away.
At no point during the incident did the inmate physically fight the defendant. The inmate, who was disoriented, was taken to the infirmary, where a cut to his right eye was sutured.
“While the vast majority of law enforcement officers perform their duties with great care and honor, those who seek to violate the civil rights of those in their custody will be held accountable,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Justice Department will continue to vigorously prosecute officers who cross the line to engage in acts of criminal conduct.”
“No one is above the law, and no one is undeserving of the law’s protection,” said U.S. Attorney Ronald C. Machen Jr. “In the District of Columbia, we expect corrections officers to perform their duties as professionals, which the vast majority do under challenging circumstances every day. This prosecution illustrates the strength of our commitment to vindicating the civil rights of all people.”
“Today, Victor Bell admitted to abusing the power afforded to him as a corrections officer,” said FBI Assistant Director in Charge James W. McJunkin. “This investigation and guilty plea demonstrate that the FBI and our law enforcement partners will pursue justice against anyone who deprives another individual of their civil rights.”
Bell faces a maximum sentence of one year in prison and a $100,000 fine. Sentencing has been set for July 11, 2012.
As part of the plea agreement, Bell agreed to resign from the Department of Corrections and to never again seek employment as a law enforcement officer, in any capacity and in any jurisdiction. In addition, he has agreed to perform 150 hours of community service.
This case was investigated by the FBI and the Office of Internal Affairs of the District of Columbia Department of Corrections and was prosecuted by Assistant U.S. Attorney Jean Sexton of the U.S. Attorney’s Office for District of Columbia and Trial Attorney William Nolan of the Civil Rights Division.
Federal Courts Order Seizure of 36 Website Domains<br /> Involved in Selling Stolen Credit Card NumbersRead the Press Release
WASHINGTON – Seizure orders have been executed against 36 domain names of websites engaged in the illegal sale and distribution of stolen credit card numbers, Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Neil H. MacBride of the Eastern District of Virginia and Acting Executive Assistant Director Kevin Perkins of the FBI’s Criminal, Cyber, Response and Services Branch, announced today.
The seizures are the result of Operation Wreaking hAVoC, an FBI and Justice Department operation targeting the sale of stolen credit card numbers via the Internet. The operation was coordinated with international law enforcement, including the United Kingdom’s Serious Organised Crime Agency (SOCA).
The 36 seized domains are in the custody of the federal government. Visitors to the sites will now find a seizure banner that notifies them that the domain name has been seized by federal authorities.
“The websites we are targeting today were commercial outlets for stolen credit card information,” said Assistant Attorney General Breuer. “By making this information available on the Internet, these websites facilitated fraud on credit card holders around the world. The actions announced today are the result of extraordinary coordination with our international law enforcement partners, and reflect our commitment to use every tool at our disposal to shut down fraudulent, criminal enterprises.”
“Countless lives are thrown into financial turmoil because of these websites,” said U.S. Attorney MacBride. “With a few simple clicks, thousands of stolen credit card numbers can be bought or sold to fraudsters anywhere in the world. Today’s seizures are part of an ongoing campaign to disrupt this online market regardless of where it operates.”
“By seizing the websites the criminal underground uses to blatantly sell stolen personal information, Operation Wreaking hAVoC shows that we are committed to protecting individuals online and preventing criminals from using the Internet to line their pockets,” said FBI Acting Executive Assistant Director Perkins. “The FBI and our partners around the world are committed to disabling these criminal networks. No single law enforcement agency can fight cyber crime on its own, and the FBI is proud to be a part of such an outstanding effort by all of the participating agencies.”
The websites of the seized domain names are commonly referred to as Automated Vending Carts (AVCs). An AVC is a website that functions as an open-ended invitation to any visitor to purchase stolen credit card numbers. AVCs allow a user to buy stolen credit card data over the Web, even using an online “shopping cart,” just like a traditional online retailer. Some AVC sites allow a buyer to select which type of credit card number to purchase, the account’s country of origin, and, in some cases, the state in which the account holder lives. AVCs allow sellers to traffic stolen credit card data without communicating directly with buyers.
During this operation, law enforcement officials made undercover purchases of credit card numbers, including credit card numbers issued by Bank of America, Sun Trust and Capital One. The banks confirmed that the sites were not authorized to sell the credit card numbers. Seizure orders were obtained from a federal magistrate judge in the Eastern District of Virginia.
This U.S. operation was led by FBI’s Washington Field Office, the Computer Crime and Intellectual Property and Asset Forfeiture and Money Laundering Sections of the Justice Department’s Criminal Division and the U.S. Attorney’s Office for the Eastern District of Virginia. The FBI’s Pittsburgh Field Office and the U.S. Attorney’s Office for the Western District of Pennsylvania also assisted in the investigation.
The international operation was led by the United Kingdom’s SOCA. The Australian Federal Police (AFP); German Bundeskriminalamt (BKA); United Kingdom’s Dedicated Cheque and Plastic Crime Unit (DCPCU); Macedonian Ministry of Interior Cyber Crime Unit (MOI); Ukraine Ministry of Internal Affairs; Romanian Ministry of Interior; and the Dutch High-Tech Crimes Unit (KLPD) provided assistance. Activities conducted by these international law enforcement agencies included arrests of AVC operators and purchasers, additional domain seizures and data seizures.
Department of Justice Releases Investigative Findings on the Juvenile Court of Memphis and Shelby County, TennesseeRead the Press Release
Following a comprehensive investigation, the Justice Department today announced its findings regarding the Juvenile Court of Memphis and Shelby County (JCMSC), and the Shelby County Juvenile Detention Center in Tennessee. The Justice Department found that the juvenile court fails to provide constitutionally required due process to all children appearing for delinquency proceedings, that the court’s administration of juvenile justice discriminates against African-American children, and that its detention center violates the substantive due process rights of detained youth by not providing them with reasonably safe conditions of confinement. The investigation, opened in August 2009, was conducted under provision of the Violent Crime Control and Law Enforcement Act of 1994 and Title VI of the Civil Rights Act of 1964.
“This report is a step toward our goal of improving the juvenile court, increasing the public’s confidence in the juvenile justice system, and maintaining public safety,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “Upholding the constitutional rights of children appearing before the court is necessary to achieve these ends. The department will work with Memphis leadership to create a comprehensive blueprint that will create sustainable reforms in the juvenile justice system.”
“While the Civil Rights Division findings are serious and compelling, I am encouraged that the leadership and staff of the Juvenile Court of Memphis, Shelby County and the Shelby Juvenile Detention Center have demonstrated that they intend to take immediate action to remedy the various constitutional deficiencies identified,” said Edward L. Stanton III, U.S. Attorney for the Western District of Tennessee. “Our central objective is to ensure that our juvenile justice system works and adequately protects the rights of all youths who come before juvenile court. We look forward to working together to reach this goal, and ultimately establishing a model juvenile court.”
In January 2010 and 2011, with the full cooperation of JCSMC Judge Curtis S. Person, Justice Department attorneys visited the court and detention center with consultants in the fields of juvenile representation, statistical analysis and juvenile protection from harm. The Justice Department and consultants interviewed magistrates, probation counselors, attorneys, administrators and children appearing before the court on delinquency matters. As part of the investigation, the department’s attorneys and consultants conducted an in-depth analysis of over 60,000 youth files and reviewed policies and procedures, recordings of hearings, court documents, case files, detention material and statistical data.
The Justice Department found a pattern or practice of unconstitutional conduct in several areas, including:
- Failure to provide timely and adequate notice of charges to children appearing on delinquency proceedings;
- Failure to protect youth from self-incrimination during probation conferences;
- Failure to hold timely probable cause hearings for youth arrested without a warrant;
- Failure to provide adequate due process protections for children before transferring them to the adult criminal court;
- The disparate treatment of African-American children; and
- Failure to adequately protect detained youth from self-harm and unnecessary and excessive restraints.
The Justice Department has received extensive cooperation from Judge Person who encouraged court personnel to provide full access to the information necessary for our review. Judge Person and his staff have made improvements since the department began its investigation and demonstrated a desire to continue in a collaborative manner to remedy the deficiencies within the juvenile court and its detention center. The department welcomes this opportunity to continue working with Judge Person and the other stakeholders to improve the court’s services to those children appearing before it and housed in the detention center.
This investigation was conducted by the Special Litigation Section of the Civil Rights Division.
The full report can be found here. For more information on the Justice Department’s Civil Rights Division, please visit www.justice.gov/crt.
DENSO Corporation Executive Agrees to Plead Guilty to<br /> Automobile Parts Price-Fixing and Bid-Rigging ConspiracyRead the Press Release
WASHINGTON – An executive of Japanese-based DENSO Corporation has agreed to plead guilty and to serve 14 months in a U.S. prison for his role in a conspiracy to fix prices and rig bids for heater control panels (HCPs) installed in U.S. cars, the Department of Justice announced today.
According to the one-count felony charge filed today in the U.S. District Court for the Eastern District of Michigan in Detroit, Makoto Hattori, along with co-conspirators, engaged in a conspiracy to rig bids for and to fix, stabilize and maintain the prices of HCPs sold to a customer in the United States and elsewhere. HCPs are located in the center console of an automobile and control the temperature of the interior environment of a vehicle.
According to the charge, Hattori participated in the conspiracy from at least as early as July 2005, until at least July 2008. During the conspiracy, Hattori was an assistant manager in the Toyota Sales Division at DENSO from July 2005 until December 2006, and a manager in the Toyota Sales Division from December 2006 until at least July 2008. According to the plea agreement, which is subject to court approval, Hattori has agreed to serve 14 months in a U.S. prison, to pay a $20,000 criminal fine and to cooperate with the department’s ongoing investigation.
“The Antitrust Division remains committed to holding executives accountable for engaging in illegal conduct that directly impacts the pocketbooks of American consumers and businesses,” said Acting Assistant Attorney General Sharis A. Pozen in charge of the Department of Justice’s Antitrust Division. “Criminal antitrust enforcement remains a top priority and the division will continue to work with the FBI and our law enforcement counterparts to root out this kind of cartel conduct that results in higher, non-competitive prices.”
According to court documents, Hattori and co-conspirators carried out the conspiracy by agreeing, during meetings and conversations, to allocate the supply of HCPs on a model-by-model basis and to coordinate price adjustments requested by an automobile manufacturer in the United States and elsewhere. The department said that Hattori and the co-conspirators sold HCPs at non-competitive prices and engaged in meetings and conversations for the purpose of monitoring and enforcing adherence to the agreed-upon bid-rigging and price-fixing scheme.
Including Hattori, nine individuals and five companies have been charged in the department’s ongoing investigation into price fixing and bid rigging in the auto parts industry. Furukawa Electric Co. Ltd, DENSO Corporation and Yazaki Corporation have pleaded guilty and been sentenced to pay a total of more than $748 million in criminal fines. G.S. Electech Inc. and Fujikura Ltd have agreed to plead guilty and await sentencing. Additionally, seven of the individuals - Junichi Funo, Hirotsugu Nagata, Tetsuya Ukai, Tsuneaki Hanamura, Ryoji Kawai, Shigeru Ogawa and Hisamitsu Takada – have been sentenced to pay criminal fines and to serve jail sentences ranging from a year and a day to two years each. The remaining two individuals, Hattori and Norihiro Imai, have agreed to plead guilty and await sentencing.Hattori is charged with price fixing in violation of the Sherman Act, which carries a maximum sentence of 10 years in prison and a $1 million criminal fine for individuals. The maximum fine for an individual may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
Today’s charge arose from an ongoing federal antitrust investigation into bid rigging, price fixing and other anticompetitive conduct in the automotive parts industry, which is being conducted by the Antitrust Division’s National Criminal Enforcement Section and the FBI’s Detroit Field Office with the assistance of the FBI headquarters’ International Corruption Unit. Anyone with information concerning the focus of this investigation is urged to call the Antitrust Division’s National Criminal Enforcement Section at 202-307-6694 visit www.justice.gov/atr/contact/newcase.htm, or the FBI’s Detroit Field Office at 313-965-2323.
Wednesday 25 April 2012
Three Operators of Miami Home Health CompanySentenced in $60 Million Health Care Fraud SchemeRead the Press Release
WASHINGTON – Three operators of a Miami health care agency were sentenced today to 120, 87 and 87 months in prison, respectively, for their participation in a $60 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 Ursula Ungaro in Miami sentenced Roberto Gonzalez to 120 months in prison, Olga Gonzalez to 87 months in prison and Fabian Gonzalez to 87 months in prison. Each defendant was also sentenced to three years of supervised release and was ordered to pay $40 million in restitution, jointly and severally with co-defendants.
Roberto, Olga and Fabian Gonzalez each pleaded guilty last year to one count of conspiracy to commit health care fraud.According to the court documents, Roberto Gonzalez, 61, was the president and Olga Gonzalez, 57, was the vice president of Nany Home Health Inc., a Florida home health agency that purported to provide home health care and physical therapy services to eligible Medicare beneficiaries. Fabian Gonzalez, 39, was head of the Quality and Assurance Department for Nany.
According to plea documents, the defendants conspired with patient recruiters, including Miami-area staffing agencies, for the purpose of billing the Medicare program for unnecessary home health care and therapy services. The staffing agencies functioned as patient recruiters and provided patients to Nany. The Gonzalezes and their co-conspirators paid kickbacks and bribes to patient recruiters and the staffing agencies in return for providing patients to Nany, as well as prescriptions, plans of care (POCs) and certifications for medically unnecessary therapy and home health services for Medicare beneficiaries.
The Gonzalezes used the prescriptions, POCs and medical certifications to fraudulently bill Medicare for home health care services, which the Gonzalezes knew was in violation of federal criminal laws.
According to court documents, Nany 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 Nany when, in fact, the Gonzalezes knew that the beneficiaries did not qualify for and did not receive such services. The nurses and office staff at Nany described in the nursing notes and patient files symptoms that were non-existent. The Gonzalezes knew that these files were falsified so that Medicare could be billed for medically unnecessary services.
From approximately January 2006 through November 2009, Roberto, Olga and Fabian Gonzalez, and their co-conspirators submitted approximately $60 million in false and fraudulent claims to Medicare, and Medicare paid approximately $40 million on those claims.
The pleas 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 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 Miami.
Since their inception in March 2007, Medicare Fraud Strike Force operations in nine locations have charged more than 1,190 defendants who collectively have falsely billed the Medicare program for more than $3.6 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.
Hess Corporation to Install $45 Million in Pollution Controls and Pay $850,000 Penalty to Resolve Clean Air Act Violations at New Jersey RefineryRead the Press Release
WASHINGTON – Hess Corporation has agreed to pay an $850,000 civil penalty and spend more than $45 million in new pollution controls to resolve Clean Air Act violations at its Port Reading, N.J., refinery, the Department of Justice and the U.S. Environmental Protection Agency (EPA) announced today. Once fully implemented, the controls required by the settlement are estimated to reduce emissions of nitrogen oxide (NOx) by 181 tons per year and result in additional reductions of volatile organic compounds (VOCs). High concentrations of NOx and VOCs, key pollutants emitted from refineries, can have adverse impacts on human health, including contributing to childhood asthma, and are significant contributors to smog.
“This settlement is the 31st such agreement with petroleum refineries across the nation. Hess joins a growing list of corporations who have entered into comprehensive and innovative agreements with the United States that will result in cleaner, healthier air for communities across the nation,” said Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division of the Department of Justice. “For example, this agreement will improve air quality for New Jersey residents by requiring Hess to install advanced pollution control and monitoring technology and adopt more stringent emissions limits.”
“EPA is committed to protecting communities by reducing air pollution from the largest sources,” said Cynthia Giles, Assistant Administrator for EPA’s Office of Enforcement and Compliance Assurance. “This settlement will reduce harmful emissions that impact air quality, protecting the residents of Port Reading and New Jersey.”
The settlement requires new and upgraded pollution controls, more stringent emission limits, and aggressive monitoring, leak-detection and repair practices to reduce emissions from refinery equipment and processing units.
The government’s complaint, filed on April 19, 2012, alleged that the company made modifications to its refinery that increased emissions without first obtaining pre-construction permits and installing required pollution control equipment. The Clean Air Act requires major sources of air pollution to obtain such permits before making changes that would result in a significant emissions increase of any pollutant.
The state of New Jersey actively participated in the settlement with Hess and will receive half of the civil penalty.
The settlement with Hess is the 31st under an EPA initiative to improve compliance among petroleum refiners and to reduce significant amounts of air pollution from refineries nationwide through comprehensive, company-wide enforcement settlements. The first of these settlements was reached in 2000. With today’s settlement, 108 refineries operating in 32 states and territories – more than 90 percent of the total refining capacity in the United States – are under judicially enforceable agreements to significantly reduce emissions of pollutants. As a result of the settlement agreements, refiners have agreed to invest more than $6 billion in new pollution controls designed to reduce emissions of sulfur dioxide, nitrogen dioxide and other pollutants by over 360,000 tons per year.
The consent decree, lodged in the District of New Jersey, is subject to a 30-day public comment period and court approval. A copy of the consent decree is available at www.justice.gov/enrd/Consent_Decrees.html.
More information on the Hess settlement is available at www.epa.gov/compliance/resources/cases/civil/caa/hesscorp.html.
For more information on EPA’s Petroleum Refinery Initiative, visit: www.epa.gov/compliance/resources/cases/civil/caa/oil/index.html.
Former Morgan Stanley Managing Director Pleads Guilty for Role in Evading Internal Controls Required by FCPARead the Press Release
WASHINGTON – A former managing director for Morgan Stanley’s real estate business in China pleaded guilty today for his role in a conspiracy to evade the company’s internal accounting controls, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Loretta E. Lynch for the Eastern District of New York; and Janice Fedarcyk, Assistant Director in Charge of the FBI’s New York Field Office.
Garth Peterson, 42, an American citizen living in Singapore, pleaded guilty to one-count criminal information charging him with conspiring to evade internal accounting controls that Morgan Stanley was required to maintain under the Foreign Corrupt Practices Act (FCPA). Peterson pleaded guilty in Brooklyn, N.Y., before Senior U.S. District Judge Jack B. Weinstein.
“Mr. Peterson admitted today that he actively sought to evade Morgan Stanley’s internal controls in an effort to enrich himself and a Chinese government official,” said Assistant Attorney General Breuer. “As a managing director for Morgan Stanley, he had an obligation to adhere to the company’s internal controls; instead, he lied and cheated his way to personal profit. Because of his corrupt conduct, he now faces the prospect of prison time.”
“This defendant used a web of deceit to thwart Morgan Stanley’s efforts to maintain adequate controls designed to prevent corruption. Despite years of training, he circumvented those controls for personal enrichment. We take seriously our role in detecting and prosecuting efforts to evade those controls,” said U.S. Attorney Lynch.
“The defendant engaged in a pattern of self-dealing and deception that perpetuated his unjust enrichment,” said FBI Assistant Director Fedarcyk. “He not only circumvented his employer’s internal controls; he violated the law.”
According to court documents, Morgan Stanley maintained a system of internal controls meant to ensure accountability for its assets and to prevent employees from offering, promising or paying anything of value to foreign government officials. Morgan Stanley’s internal policies, which were updated regularly to reflect regulatory developments and specific risks, prohibited bribery and addressed corruption risks associated with the giving of gifts, business entertainment, travel, lodging, meals, charitable contributions and employment. Morgan Stanley frequently trained its employees on its internal policies, the FCPA and other anti-corruption laws. Between 2002 and 2008, Morgan Stanley trained various groups of Asia-based personnel on anti-corruption policies 54 times. During the same period, Morgan Stanley trained Peterson on the FCPA seven times and reminded him to comply with the FCPA at least 35 times. Morgan Stanley’s compliance personnel regularly monitored transactions, randomly audited particular employees, transactions and business units, and tested to identify illicit payments. Moreover, Morgan Stanley conducted extensive due diligence on all new business partners and imposed stringent controls on payments made to business partners.
According to court documents, Peterson conspired with others to circumvent Morgan Stanley’s internal controls in order to transfer a multi-million dollar ownership interest in a Shanghai building to himself and a Chinese public official with whom he had a personal friendship. The corruption scheme began when Peterson encouraged Morgan Stanley to sell an interest in a Shanghai real-estate deal to Shanghai Yongye Enterprise (Group) Co. Ltd., a state-owned and state-controlled entity through which Shanghai’s Luwan District managed its own property and facilitated outside investment in the district. Peterson falsely represented to others within Morgan Stanley that Yongye was purchasing the real-estate interest, when in fact Peterson knew the interest would be conveyed to a shell company controlled by him, a Chinese public official associated with Yongye and a Canadian attorney. After Peterson and his co-conspirators falsely represented to Morgan Stanley that Yongye owned the shell company, Morgan Stanley sold the real-estate interest in 2006 to the shell company at a discount to the interest’s actual 2006 market value. As a result, the conspirators realized an immediate paper profit of more than $2.5 million. Even after the sale, Peterson and his co-conspirators continued to claim falsely that Yongye owned the shell company, which in reality they owned. In the years since Peterson and his co-conspirators gained control of the real-estate interest, they have periodically accepted equity distributions and the real-estate interest has appreciated in value.
At sentencing, scheduled for July 17, 2012, Peterson faces a maximum penalty of five years in prison and a maximum fine of $250,000 or twice his gross gain from the offense. After considering all the available facts and circumstances, including that Morgan Stanley constructed and maintained a system of internal controls, which provided reasonable assurances that its employees were not bribing government officials, the Department of Justice declined to bring any enforcement action against Morgan Stanley related to Peterson’s conduct. The company voluntarily disclosed this matter and has cooperated throughout the department’s investigation.The Securities and Exchange Commission today announced civil charges and a settlement with Peterson.
The criminal case is being prosecuted by Trial Attorney Stephen J. Spiegelhalter of the Criminal Division’s Fraud Section and Assistant U.S. Attorney John Nowak of the Eastern District of New York. The Criminal Division’s Office of International Affairs also provided assistance in this matter. The case was investigated by the FBI’s New York Field Office.
Federal Court Bars Two Louisiana Women from Preparing Tax ReturnsRead the Press Release
A federal court in New Orleans has permanently barred Cathy and Lashanda Vinnett from preparing federal tax returns for others, the Justice Department announced today. The civil injunction order, to which the Vinnetts agreed without admitting the government’s allegations, was signed by Judge Helen G. Berrigan of the U.S. District Court for the Eastern District of Louisiana.
The government’s complaint alleged that Cathy Vinnett and her daughter Lashanda, both from Destrehan, La., and their companies – M&C Tax Service, D&C Tax Service, River Parish Tax Professionals and Remarkable Tax Services – prepared federal tax returns for customers claiming fraudulent tax refunds based on fabricated telephone excise tax refund claims, earned-income tax credits and first-time homebuyer tax credits. After claiming these improper refunds, the lawsuit alleged, the Vinnetts kept most of the resulting money for themselves, without telling their customers. The lawsuit alleges that the defendants’ misconduct caused as much as $2.2 million in harm to the government.
The court order also requires the Vinnetts to inform their customers of the order and to provide the government with a list of their customers since Jan. 1, 2007.
In the past decade, the Justice Department’s Tax Division has obtained injunctions against hundreds of tax fraud promoters and unscrupulous tax return preparers. Information about these cases is available on the Justice Department website.
Related Documents:
United States v. Cathy R. Vinnett, et alOrder for Permanent Injunction by Consent
Alleged Acting New England Crime Boss Anthony Dinunzio Charged in Racketeering and Extortion ConspiracyRead the Press Release
Anthony L. Dinunzio, 53, of East Boston, Mass., the alleged leader of the New England organized crime family of La Cosa Nostra (NELCN), was arrested today on racketeering and extortion charges.
The arrest and charges were announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; Peter F. Neronha, U.S. Attorney for the District of Rhode Island; Richard Deslauriers, Special Agent in Charge of the FBI’s Boston Field Office; Colonel Steven G. O’DonnellSuperintendent of the Rhode Island State Police; and Providence Public Safety Commissioner Steven M. Pare.
Dinunzio was ordered detained following an initial appearance in U.S. District Court in Providence, R.I. A third superseding indictment returned on April 24, 2012, and unsealed today in the District of Rhode Island, alleges, among other things, that Dinunzio and other leaders, members and associates of the NELCN extorted protection payments from adult entertainment businesses in Rhode Island.
“According to the indictment unsealed today, as the leader of the New England LCN for more than two years, Mr. Dinunzio used fear and intimidation to control the corrupt activities of his criminal enterprise,” said Assistant Attorney General Breuer. “Among other charged criminal conduct, he allegedly asked an LCN member to extort a businessman in the adult entertainment industry and told others he would use violence against insubordinates. These charges are another step in our unrelenting efforts to stamp out the mafia.”
“This superseding indictment is the latest in a step by step, block by block, effort by this office, our partners in the Department of Justice’s Criminal Division, the FBI, the Rhode Island State Police and the Providence Police Department to charge, prosecute and send to federal prison long-time members of, and in particular, the leadership of, organized crime,” said U.S. Attorney Neronha.
“The FBI and its law enforcement partners have shattered Omerta, the New England LCN’s code of silence. In doing so , we have severely disrupted their criminal activity,” said FBI SAC DesLauriers. “Our persistent, methodical, and unyielding investigation of those who are part of the LCN and other groups will not stop. Looking forward, organized crime groups and transnational criminal enterprises are emerging from every corner of the globe. Through our task-force and intelligence based model, our joint efforts will continue to disrupt and dismantle emerging organized crime syndicates to prevent their entrenchment in our communities.”
Dinunzio is charged with one count each of racketeering and extortion, and five counts of travel in aid of racketeering. Since January 2011, he is the ninth alleged leader, underboss, member or associate of the NELCN to be indicted by a federal grand jury in Providence on federal racketeering and related charges. Five of the defendants, including admitted longtime former NELCN underboss and boss Luigi Manocchio and admitted capo regime Edward Lato, have pleaded guilty and are detained while awaiting sentencing. A sixth defendant pleaded guilty and was sentenced on Dec. 12, 2011, to 30 months in prison.
The third superseding indictment alleges that Anthony Dinunzio, a member and capo of the NELCN, assumed a leadership role of the NELCN in late 2009 and early 2010, and ultimately became the acting boss. This superseding indictment alleges that Dinunzio participated with other NELCN members and associates in a racketeering conspiracy in which monthly cash payments for protection of $2,000 to $6,000 were demanded from the owners and operators of several adult entertainment businesses in Rhode Island. Several of those NELCN members and associates have previously pleaded guilty to racketeering charges. This superseding indictment also alleges that on several occasions, at Dinunzio’s direction, crime family members from New England, New York and New Jersey were consulted with and/or traveled to Massachusetts to discuss various criminal activities and crime family matters. Dinunzio also allegedly directed NELCN members to travel to various locations, including New York, for meetings to discuss various criminal activities and crime family matters.
According to this indictment, it is alleged that one such meeting occurred on Nov. 3, 2009, in Boston, at a wake of an NELCN member’s mother, and later that same evening at a local restaurant. During these meetings, Dinunzio and another NELCN member allegedly discussed, among other things, the distribution of proceeds from the extortion of the Rhode Island adult entertainment businesses. Dinunzio allegedly indicated that a portion of those extorted monies would now be coming to him and to the NELCN leadership in Boston. Previously, as alleged, the money had been going to former Rhode Island NELCN boss Luigi Manocchio who had stepped down as boss in 2009.
In addition, this indictment alleges that in late 2009 or early 2010, Dinunzio asked another NELCN member to extort money from a prominent businessman in the adult entertainment industry in Rhode Island, who had paid protection money to the Gambino crime family from New York over the years. Dinunzio allegedly dispatched an NELCN member to New York to meet with Gambino crime family members on several occasions to receive Gambino family permission to extort money from the businessman for businesses he was operating in New England.
According to this indictment, it is alleged that on June 22, 2011, Dinunzio met with a senior made member of the Gambino crime family at a restaurant in Malden, Mass. Dinunzio allegedly discussed the extortion of the Rhode Island strip clubs, indicating that “it is still going.” Dinunzio also discussed a May 5, 2011, FBI search of his person and the seizure of $5,000 cash in alleged protection money paid by Rhode Island businesses and brought to him by a NELCN leader from Rhode Island.
In this June 22, 2011, meeting with a senior Gambino crime family member, Dinunzio allegedly discussed the rules for joining the NELCN. In discussing a fellow LCN member, Dinunzio allegedly stated, “You know what I can’t understand? How the hell did he get made, because he’s half Irish…I don’t understand that...that’s not the rules…you gotta do one hundred percent (Italian).” Referring to a person sponsored for membership, Dinunzio allegedly stated, ‘I said he’s good.’ For ten years he waited. Then he come and see me and said ‘Thank you Anthony. You know I’m with you all the way.’ He deserved it though.”
According to this indictment, at the same June 22, 2010, meeting with a senior Gambino crime family member, Dinunzio allegedly discussed his NELCN leadership style stating, “As soon as I took over I changed everything. One guy… ‘What if nobody wants to listen to you?’ ‘I said you’re shelved.’ He said ‘What if they don’t wanna get shelved?’ ‘Well then you and I get to watch you die in the ground….I’ll bury you right in the [expletive] ground puts all the dirt. You’re alive. They stay there. I’ll stay there [expletive] 10 hours until you’re dead. And I’ll dig you back up and make sure you’re dead.’”
The indictment alleges that Dinunzio continued to be concerned about the investigation, arrests of other members and possible government cooperators in the case. The third superseding indictment alleges that despite these concerns, he continued to try to get other members to assist in running the Rhode Island part of the criminal enterprise. At one point, during a Dec. 7, 2011, meeting with a senior Gambino made member, Dinunzio allegedly commented, “If I go to the can. I’m still the boss…no matter what.”
An indictmentis merely an allegation and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
The cases are being prosecuted by Trial Attorney Sam Nazzaro of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorney William J. Ferland for the District of Rhode Island. The matter is being investigated by the FBI, Rhode Island State Police and the Providence Police Department.
Tuesday 24 April 2012
U.S. Intervenes in False Claims Lawsuit Alleging Knowing Failure to Pay Import Duties by Japanese and U.S. CompaniesRead the Press Release
The United States has intervened in a lawsuit against Japanese company, Toyo Ink Manufacturing Co. Ltd. and its U.S. subsidiaries: Toyo Ink International Corp., located in New York; Toyo Ink America LLC, located in Illinois; and Toyo Ink Manufacturing America LLC, located in New Jersey, the Justice Department announced today. Toyo Ink, which has operations worldwide, is a leading provider of printing inks.
The suit alleges that the Toyo Ink companies knowingly misrepresented the country of origin on documents presented to U.S. Customs and Border Protection to avoid paying antidumping and countervailing duties on imports of the colorant carbazole violet pigment number 23 (CVP-23). The Department of Commerce assesses antidumping and countervailing duties, which are collected by U.S. Customs, to protect U.S. businesses by offsetting unfair foreign pricing and government subsidies. Imports of CVP-23 from China and India have been subject to these duties since 2004.
The suit alleges that Toyo misrepresented Japan and Mexico as the countries of origin for its CVP-23 imports to avoid these duties. Although Toyo’s CVP-23 imports from China and India underwent a finishing process in Japan and Mexico, the complaint alleges that this process was insufficient to change the country of origin.
“Companies taking advantage of United States markets must comply with the law, including the payment of import duties levied to protect domestic manufacturers and producers from unfair competition abroad,” said Stuart F. Delery, Acting Assistant Attorney General for the Civil Division of the Department of Justice. “As we have done today, the Department of Justice will take action against those we believe have inappropriately avoided paying money owed to the United States.”
The lawsuit was filed in the U.S. District Court for the Western District of North Carolina by whistle blower John Dickson under the qui tam, or whistleblower, provisions of the False Claims Act. The act permits private parties to sue companies and individuals on behalf of the United States that they believe have falsely claimed federal funds or, as in this case, made misrepresentations to avoid paying funds owed to the government. The government may intervene and take over the action, as it has done here. The act allows the government to recover three times its damages plus civil penalties to ensure that the public treasury is made whole for the loss and for the costs of investigating and prosecuting false claims. The whistle blower is entitled to a share of any funds recovered through the lawsuit.
The claims asserted in the complaint against Toyo are allegations only, and there has been no determination of liability.
Massachusetts Financial Advisor Sentenced to 60 Months in Prison for Tax Crimes and ContemptRead the Press Release
Kevin P. Mahoney of Attleboro, Mass., was sentenced today to 60 months in prison, following trial convictions on corruptly endeavoring to obstruct the administration of the Internal Revenue laws, filing false tax returns with the Internal Revenue Service (IRS) and criminal contempt of court, the Justice Department and the IRS announced. U.S. District Judge Joseph L. Tauro presided over the trial and imposed the sentence. A Boston jury convicted licensed stockbroker, insurance agent and financial advisor Mahoney on Jan. 25, 2012. Mahoney was charged with one count of corruptly endeavoring to obstruct the administration of the Internal Revenue laws, eight counts of contempt of court and eight counts of filing false tax returns. He was convicted on all counts. Judge Tauro also ordered Mahoney to pay $367,000 in restitution to the IRS. Mahoney was remanded to prison immediately following the sentencing hearing.
The evidence at trial showed that Mahoney had failed to pay all of his taxes for the years 1996 through 2001 but had attempted to pay tax-related debts by submitting to the IRS more than $2.2 million in fictitious financial instruments, called Bills of Exchange, and checks drawn on a closed bank account. The evidence further showed that Mahoney obtained fake Bills of Exchange from American Rights Litigators (ARL), a now-defunct Florida-based organization that was permanently enjoined from promoting and selling certain fraudulent tax schemes based on its prior promotion and sale of the same. ARL was also used by imprisoned actor Wesley Snipes . After filing for bankruptcy, Mahoney caused a worthless promissory note made by now-deceased “sovereign citizen” Jerry Ralph Kane to be submitted to the IRS as purported payment for approximately $805,000 in taxes that Mahoney owed at that time.
The evidence also showed that Mahoney submitted to the IRS false individual income tax returns for the years 2000 through 2006 that he knew failed to report more than $1.3 million in taxable income received from various financial institutions. Along with his tax returns, Mahoney had submitted altered IRS Forms 1099-MISC on which he changed to zero the amount of non-employee compensation that the financial institutions had reported paying him. For instance, Mahoney attached to his 2006 tax return an altered Form 1099-MISC in which he claimed that a life insurance company paid him non-employee compensation of zero when it had actually paid him approximately $73,000. Mahoney also filed a false 2007 Nonresident Alien Tax Return in which he falsely claimed a refund of almost $389,000.
According to evidence at trial, the U.S. District Court for the District of Massachusetts had permanently enjoined Mahoney in July 2002 from, among other things, engaging in conduct that interfered with the administration of the Internal Revenue laws. The injunction proceedings were brought against Mahoney in accordance with a lawsuit filed by the Justice Department’s Tax Division. Mahoney committed criminal contempt by violating the permanent injunction in that he assisted in the preparation and submission to the IRS of income tax returns for other people that falsely claimed more than $50 million dollars in refunds based on false IRS Forms 1099-OID and an IRS Form 1099-C falsely reporting $300 million in debt purportedly owed to a third party by an IRS employee.
The case was investigated by Special Agents from IRS - Criminal Investigation and was prosecuted by Trial Attorneys Jeffrey McLellan and Kenneth Vert of the Justice Department’s Tax Division. Assistant Attorney General Kathryn Keneally of the Tax Division commended the special agents and thanked U.S. Attorney Carmen M. Ortiz and her entire office for their assistance.
Additional information about the Tax Division and its enforcement efforts may be found at www.justice.gov/tax .
Individual Indicted in Connection with Machine Gun<br /> Attack on U.S. Embassy in Bosnia-Herzegovina in 2011Read the Press Release
WASHINGTON – Mevlid Jasarevic, 23, a citizen of Serbia, was indicted today by a federal grand jury in the District of Columbia on charges of attempted murder and other violations in connection with his alleged machine gun attack on the U.S. Embassy in Sarajevo, Bosnia-Herzegovina, on Oct. 28, 2011.
The indictment was announced by Lisa Monaco, Assistant Attorney General for National Security; Ronald C. Machen Jr., U.S. Attorney for the District of Columbia; and James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Division.
The 10-count indictment charges Jasarevic with one count of attempt to murder U.S. officers or employees; one count of attempt to murder U.S. nationals within the special maritime and territorial jurisdiction of the United States (the U.S. Embassy); one count of assault with a dangerous weapon with intent to do bodily harm within the special maritime and territorial jurisdiction of the United States; one count of assaulting U.S. officers or employees with a deadly weapon; one count of destruction of property within the special maritime and territorial jurisdiction of the United States; and five counts of use of a firearm during a crime of violence.
Yesterday, authorities in Bosnia-Herzegovina brought charges against Jasaveric and two others in connection with the alleged attack on the U.S. Embassy. Jasaveric is in the custody of Bosnia-Herzegovina authorities. The United States has closely cooperated with Bosnia-Herzegovina authorities in their investigation of the U.S. Embassy attack and strongly supports their decision to charge and prosecute those allegedly involved. The United States will continue to cooperate fully with authorities in Bosnia-Herzegovina to bring to justice those involved.
The case is being investigated by the FBI Washington Field Office. The case is being prosecuted by Assistant U.S. Attorney Robert Bowman of the U.S. Attorney’s Office for the District of Columbia and Trial Attorney Joshua Larocca of the Counterterrorism Section of the Justice Department’s National Security Division. The Office of International Affairs in the Justice Department’s Criminal Division also provided assistance.
The attempted murder charges against Jasarevic, as well as the charges of assaulting U.S. officers and employees with a deadly weapon, and destruction of property each carry a maximum sentence of 20 years. Each charge of using a firearm during a crime of violence carries a mandatory minimum sentence of 30 years for use of a machinegun. The charge of assault with a dangerous weapon with intent to do bodily harm within the special maritime and territorial jurisdiction of the United States carries a maximum sentence of 10 years.
The public is reminded that an indictment contains mere allegations. Defendants are presumed innocent unless and until proven guilty in a court of law.
Related Materials:
Jasarevic Indictment (PDF)
Freeport-McMoRan Corp. and Freeport-McMoRan Morenci Inc. Will Pay $6.8 Million in Damages for Injuries to Natural Resources from the Morenci Copper Mine in ArizonaRead the Press Release
WASHINGTON – The Department of Justice and the Department of the Interior announced today that Freeport-McMoRan Corporation and Freeport-McMoRan Morenci Inc. (Freeport-McMoRan) have agreed to pay $6.8 million to settle federal and state natural resource damages claims related to the Morenci copper mine in southeastern Arizona.
The complaint, which was filed jointly by the United States and the state of Arizona on April 24, 2012, in the U.S. District Court for the District of Arizona, alleges that Freeport-McMoRan is civilly liable for injuries to natural resources that resulted from hazardous substance releases at and from Freeport-McMoRan’s Morenci Mine site. The complaint further alleges that surface waters, terrestrial habitat and wildlife, and migratory birds have been injured, destroyed or lost as a result of releases of hazardous substances at and from the mine site. The hazardous substances that have been released include sulfuric acid and metals. The cause of action for natural resource damages is based on Section 107(a) of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended (CERCLA). Historically, the Morenci Mine was owned and operated by Phelps Dodge Corporation until that company was acquired by Freeport-McMoRan entities in 2007.
Under the consent decree lodged today in federal court, Freeport-McMoRan will pay $6.8 million to the U.S. Department of the Interior’s Natural Resource Damage Assessment and Restoration Fund. This money will be used by the federal and state natural resources trustees to plan and implement projects designed to restore, replace or acquire the equivalent of wildlife and wildlife habitat in the vicinity of the impacted area. Of this amount, $98,000 is designated for payment to the Department of the Interior for its remaining unpaid past damage assessment costs. Freeport-McMoran has already repaid over $842,000 in injury assessment costs.
“Today’s settlement will help compensate the people of Arizona for the loss of habitat and wildlife, and the injuries to the overall quality of the local environment caused by open-pit mining at the Morenci Mine,” said Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division. “This agreement also fosters federal and state efforts to restore and protect important wildlife habitat in injured areas.”
“Mining has long been, and continues to be, an important part of Arizona’s history and economy,” said Ann Birmingham Scheel, Acting U.S. Attorney for the District of Arizona. “Likewise, protecting Arizona’s environment has long been, and continues to be, a priority for the U.S. Attorney’s Office and the Department of Justice. This settlement strikes a balance between mining and protecting the environment and will allow the natural resources trustees to focus on restoration efforts rather than on litigation.”
The designated natural resources trustees for the Morenci Mine area include the Department of the Interior’s Fish and Wildlife Service and the Trustee for Natural Resources for the State of Arizona.This is the second settlement with Freeport-McMoRan Corporation and its mining subsidiaries in as many months. On Feb. 21, 2012, the federal district court in New Mexico approved a consent decree between the United States, the state of New Mexico and Freeport-McMoRan entities that resolved natural resource damages claims at three Freeport-McMoRan mining sites in southwestern New Mexico.
The proposed consent decree, lodged in the District of Arizona, is subject to a 30-day public comment period and court review and approval. A copy of the consent decree is available at www.usdoj.gov/enrd/Consent_Decrees.html.
Related Materials:
Freeport-McMoRan Consent Decree (PDF)
Four Alleged Members of the Internet Piracy Group “IMAGiNE” <br /> Indicted in VirginiaRead the Press Release
WASHINGTON – Four individuals have been charged in the Eastern District of Virginia for their alleged roles in an Internet piracy group that distributed via the Internet copies of movies showing only in theaters, 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 U.S. Immigration and Customs Enforcement (ICE) Director John Morton announced today.
An indictment returned on April 18, 2012, and unsealed yesterday charges Jeramiah Perkins, 39, of Portsmouth, Va.; Gregory Cherwonik, 53, of New York; Willie Lambert, 57, of Pennsylvania; and Sean Lovelady, 27, of California; with one count of conspiracy to commit criminal copyright infringement and two counts of criminal copyright infringement. Perkins, Cherwonik and Lambert are charged with two additional counts of criminal copyright infringement, and Perkins and Cherwonik are charged with a sixth count of criminal copyright infringement of a work being prepared for commercial distribution.
Perkins, Cherwonik and Lambert were arrested yesterday and Lovelady reported to authorities today. The defendants are scheduled to be arraigned on May 9, 2012.
“These four defendants are charged with serious intellectual property crimes,” said Assistant Attorney General Breuer. “Through IMAGiNE, they allegedly sought to become the leading source of pirated movies on the Internet. This Justice Department, working with our partners at ICE, has made fighting intellectual property crime a top priority, and we will continue to bring cases against individuals and entities devoted to cheating consumers and undermining artistic pursuits.”
“Piracy is outright theft, regardless of the technology or business model used,” said U.S. Attorney MacBride. “Large-scale copyright infringement is a serious crime that hurts not only those in the entertainment industry but also those who legally pay for that entertainment.”
“The indictment in this case demonstrates ICE Homeland Security Investigations’ commitment to identifying and dismantling pirates that are weakening our economy through their illegal acts,” said ICE Director Morton. “Criminals engaged in piracy are stealing from the 2.4 million Americans employed by the entertainment industry. ICE, along with our partners at the Justice Department, will continue to vigorously investigate and prosecute cases involving piracy and counterfeiting.”
According to the indictment, the defendants and their co-conspirators identified themselves as the IMAGiNE Group and sought to become the premier group to first release Internet copies of new movies only showing in theaters. From September 2009 until September 2011, they allegedly reproduced and distributed over the Internet tens of thousands of illegal copies of copyrighted works. The indictment charges that the group regularly and illicitly obtained copies of the video and audio components of motion pictures showing in theaters and then edited and combined them into one infringing movie file, which thousands of members of the group shared with one another by use of BitTorrent file sharing technology and then released to the Internet.
The indictment alleges that the IMAGiNE Group rented computer servers to host websites that included member profiles, a server called a torrent tracker that assists in communications among members using BitTorrent file sharing technology, discussion forums, a message board and news, rules and other information about making donations to and using the website.
The maximum prison sentence for the charge of conspiracy to commit criminal copyright infringement and for each count of criminal copyright infringement is five years in prison.
Charges contained in an indictment are merely allegations, and the defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
The investigation of the case and the arrests were conducted by agents with ICE Homeland Security Investigations. 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.
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.
Former BP Engineer Arrested for Obstruction of Justice in Connection with the Deepwater Horizon Criminal InvestigationRead the Press Release
WASHINGTON – Kurt Mix, a former engineer for BP plc, was arrested today on charges of intentionally destroying evidence requested by federal criminal authorities investigating the April 20, 2010, Deepwater Horizon disaster, announced Attorney General Eric Holder, Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Jim Letten of the Eastern District of Louisiana and Kevin Perkins, Acting Executive Assistant Director for the FBI’s Criminal Cyber Response and Services Branch.
Mix, 50, of Katy, Texas, was charged with two counts of obstruction of justice in a criminal complaint filed in the Eastern District of Louisiana and unsealed today.
“The department has filed initial charges in its investigation into the Deepwater Horizon disaster against an individual for allegedly deleting records relating to the amount of oil flowing from the Macondo well after the explosion that led to the devastating tragedy in the Gulf of Mexico,” said Attorney General Holder. “The Deepwater Horizon Task Force is continuing its investigation into the explosion and will hold accountable those who violated the law in connection with the largest environmental disaster in U.S. history.”
According to the affidavit in support of a criminal complaint and arrest warrant, on April 20, 2010, the Deepwater Horizon rig experienced an uncontrolled blowout and related explosions while finishing the Macondo well. The catastrophe killed 11 men on board and resulted in the largest environmental disaster in U.S. history.
According to court documents, Mix was a drilling and completions project engineer for BP. Following the blowout, Mix worked on internal BP efforts to estimate the amount of oil leaking from the well and was involved in various efforts to stop the leak. Those efforts included, among others, Top Kill, the failed BP effort to pump heavy mud into the blown out wellhead to try to stop the oil flow. BP sent numerous notices to Mix requiring him to retain all information concerning Macondo, including his text messages.
On or about Oct. 4, 2010, after Mix learned that his electronic files were to be collected by a vendor working for BP’s lawyers, Mix allegedly deleted on his iPhone a text string containing more than 200 text messages with a BP supervisor. The deleted texts, some of which were recovered forensically, included sensitive internal BP information collected in real-time as the Top Kill operation was occurring, which indicated that Top Kill was failing. Court documents allege that, among other things, Mix deleted a text he had sent on the evening of May 26, 2010, at the end of the first day of Top Kill. In the text, Mix stated, among other things, “Too much flowrate – over 15,000.” Before Top Kill commenced, Mix and other engineers had concluded internally that Top Kill was unlikely to succeed if the flow rate was greater than 15,000 barrels of oil per day (BOPD). At the time, BP’s public estimate of the flow rate was 5,000 BOPD – three times lower than the minimum flow rate indicated in Mix’s text.
In addition, on or about Aug. 19, 2011, after learning that his iPhone was about to be imaged by a vendor working for BP’s outside counsel, Mix allegedly deleted a text string containing more than 100 text messages with a BP contractor with whom Mix had worked on various issues concerning how much oil was flowing from the Macondo well after the blowout. By the time Mix deleted those texts, he had received numerous legal hold notices requiring him to preserve such data and had been communicating with a criminal defense lawyer in connection with the pending grand jury investigation of the Deepwater Horizon disaster.
A complaint is merely a charge and a defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt.
If convicted, Mix faces a maximum penalty of 20 years in prison and a fine of up to $250,000 as to each count.
The Deepwater Horizon Task Force, based in New Orleans, is supervised by Assistant Attorney General Breuer and led by Deputy Assistant Attorney General John D. Buretta, who serves as the Director of the task force. The task force includes prosecutors from the Criminal Division and the Environment and Natural Resources Division of the Department of Justice, the U.S. Attorney’s Office for the Eastern District of Louisiana and other U.S. Attorney’s Offices, and investigating agents from the FBI, Environmental Protection Agency, Department of Interior, U.S. Coast Guard, U.S. Fish and Wildlife Service and other federal law enforcement agencies.
The task force’s investigation of this and other matters concerning the Deepwater Horizon disaster is ongoing.
The case is being prosecuted by task force Deputy Directors Derek Cohen and Avi Gesser of the Justice Department’s Criminal Division, and task force prosecutors Assistant U.S. Attorney Richard Pickens II of the Eastern District of Louisiana and Assistant U.S. Attorney Scott Cullen of the Eastern District of Pennsylvania.
Related Materials:
Mix Complaint (PDF)
Mix Affidavit (PDF)Florida Tax Preparer Pleads Guilty to Identity Theft and Wire FraudRead the Press Release
Ernst Pierre, a Port St. Lucie, Fla., tax preparer, pleaded guilty today to wire fraud and aggravated identity theft, the Justice Department and Internal Revenue Service (IRS) announced. Pierre was charged with a scheme to file false federal income tax returns using stolen identity information.
According to the indictment and Pierre’s admissions in his plea, from October 2009 through May 2011, Pierre filed false tax returns for clients of Tax Max, a Port St. Lucie tax return preparation business he owned and operated. Pierre obtained the names and Social Security numbers of relatives of clients for whom he had prepared and submitted federal income tax returns and then fraudulently used those names and Social Security numbers as “dependents” on other client tax returns and on his own tax return. Inclusion of a dependent on a federal income tax return can result in a higher tax refund.
Sentencing has been set for July 2, 2012, before the Judge Donald L. Graham of the Southern District of Florida. Pierre faces a maximum potential sentence of 20 years in prison for the wire fraud count and a mandatory two-year sentence for the aggravated identity theft count. Pierre also faces up to $500,000 in fines and an order of mandatory restitution.
This case was investigated by IRS - Criminal Investigation special agents. Trial Attorneys Justin K. Gelfand and Thomas J. Krepp of the Justice Department’s Tax Division are prosecuting the case with the assistance of the U.S. Attorney’s Office in the Southern District of Florida.
Additional information about the Tax Division and its enforcement efforts may be found at www.justice.gov/tax.
Dallas Compounding Pharmacy Owner Pleads Guiltyin Connection with Misbranded Drug ShipmentRead the Press Release
Gary D. Osborn and his corporation, ApothéCure Inc., pleaded guilty today in the U.S. District Court for the Northern District of Texas to two misdemeanor criminal violations of the Food, Drug and Cosmetic Act (FDCA). The pleas are in connection with ApothéCure’s interstate shipment of two lots of misbranded colchicine injectable solution that led to the deaths of three people in the Pacific Northwest.
ApothéCure, which is located in Dallas, is a compounding pharmacy. Compounding Pharmacies create particular pharmaceutical products to fit the unique needs of patients by combining appropriate ingredients.
Colchicine is used to prevent gout attacks (sudden, severe pain in one or more joints caused by abnormally high levels of a substance called uric acid in the blood) in adults, and to relieve the pain of gout attacks when they occur.
The government’s charges were based on ApothéCure’s February 2007 shipment of 72 vials of compounded colchicine to a now-defunct medical center in Portland, Ore. On March 19, 2007, a patient in Yakima, Wash., who received colchicine from this shipment, died after receiving the infusion. The medical examiner determined that the cause of death was multiple organ failure and acute colchicine toxicity.
On March 30, 2007, colchicine from ApothéCure was administered to two other patients who were suffering from back pain. Within hours of receiving the colchicine injections, both patients became seriously ill, were taken to local hospitals, and died shortly thereafter. The medical examiner in Oregon determined colchicine toxicity to be the cause of death for both patients.
FDA testing of vials selected from the lethal shipment revealed that some of the vials were super-potent, containing 640 percent of the level of colchicine declared on the label. Other vials were determined to be sub-potent, and contained less than 62 percent of the declared levels on the labels.
“This plea shows that the Department of Justice will enforce the Food, Drug and Cosmetic Act against responsible corporate officers of companies that fail to control the quality of their products,” said Stuart F. Delery, Acting Assistant Attorney General of the Civil Division of the Department of Justice. “The drugs mixed by Mr. Osborn’s company were not merely misbranded, but lethal. Drug makers of all sizes, from large corporations to small compounding pharmacies, have a duty to ensure their products are safe.”
Sentencing is scheduled for July 27, 2012.
This case was investigated by Food and Drug Administration’s Office of Criminal Investigations, which referred this matter to the Justice Department. The case is being prosecuted by Trial Attorneys John Claud and Patrick Runkle of the Civil Division’s Consumer Protection Branch.