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Wednesday 11 April 2012
Alabama Tax Preparation Business Owner and Five Preparers Indicted for Tax Fraud SchemeRead the Press Release
Bruce King, the owner of a Montgomery, Ala., tax preparation business, and five tax preparers from Montgomery have been charged with conspiring to defraud the United States and aiding in the filing of false tax returns, the Justice Department and the Internal Revenue Service (IRS) announced today. A federal grand jury in Montgomery returned an indictment on March 28, 2012, charging Bruce King, Jenika Williams, Antoinette Djonret, Nakesha Donaldson, Angela Smith and Vonecia Orum with participating in a scheme to file false tax returns. Williams, Djonret, Donaldson and Smith have also been charged with wire fraud and aggravated identity theft. The indictment was unsealed yesterday.
According to the indictment, from July 2007 to October 2010, King owned and operated Premier Tax, a tax preparation business in Montgomery along with four other locations in Alabama and Georgia. King allegedly instructed his employees how to falsify federal income tax returns for the purpose of inflating claimed tax refunds. Williams, Djonret, Donaldson, Smith and Orum then allegedly prepared false returns by reporting figures that they knew were not correct.
The indictment also alleges that Williams, Djonret, Donaldson and Smith used the names and Social Security numbers of individuals without their knowledge or consent. Williams, Djonret, Donaldson and Smith allegedly used these names and Social Security numbers to report the individuals as dependents on a customer’s tax return when, in fact, the individuals were not the legitimate dependents of the customer.
An indictment merely alleges that crimes have been committed, and each defendant is presumed innocent until proven guilty beyond a reasonable doubt. If convicted, King, Williams, Djonret, Donaldson, Smith and Orum face a potential maximum of five years in federal prison for conspiring to defraud the United States and a potential maximum of three years for each count of aiding in the preparation of false tax returns. Williams, Djonret, Donaldson and Smith also face a potential maximum of 20 years for each wire fraud count and a mandatory two-year sentence for the aggravated identity theft counts. They all are also subject to fines and mandatory restitution if convicted.
This case was investigated by IRS - Criminal Investigation. Trial Attorneys Justin Gelfand, Jason Poole and Chad Spraker of the Justice Department’s Tax Division, and Assistant U.S. Attorney Jared Morris are prosecuting the case.
Additional information about the Tax Division and its enforcement efforts may be found at www.justice.gov/tax.
Tuesday 10 April 2012
Statement of the Department of Justice’s Antitrust Division on Its Decision to Close Its Investigation of Highmark’s Affiliation Agreement with West Penn Allegheny Health SystemRead the Press Release
WASHINGTON – The Department of Justice’s Antitrust Division issued the following statement today after announcing the closing of its investigation into Highmark’s affiliation agreement with West Penn Allegheny Health System (WPAHS). Highmark is the Blue Cross and Blue Shield licensee in western Pennsylvania and WPAHS is the second-largest hospital network in the Pittsburgh region:
“After a thorough review of the affiliation agreement and other evidence collected by the Antitrust Division in its investigation, the division has determined that the affiliation agreement likely will not reduce competition in the markets for hospital, physician or health insurance services.
“The proposed affiliation holds the promise of bringing increased competition to western Pennsylvania’s health care markets by providing WPAHS with a significant infusion of capital and increases the incentives of market participants to compete vigorously.
“The affiliation agreement is a vertical combination of Highmark, the region’s dominant health insurance company, and WPAHS. Highmark does not own any hospital assets and owns only a small number of physician groups, and WPAHS does not compete in the health insurance markets. The affiliation agreement between Highmark and WPAHS will not eliminate any material horizontal competition between the parties.
“Vertical agreements, such as the affiliation agreement, can reduce competition by limiting entry or expansion by third parties. Such effects are unlikely here for several reasons. The hospital market in the Pittsburgh region is highly concentrated. Other than WPAHS, the only other significant hospital network is the University of Pittsburgh Medical Center (UPMC), the region’s dominant hospital network. In the absence of the affiliation agreement, Highmark would likely not sponsor expansion by a hospital network other than WPAHS because there is no other significant network with which Highmark could partner.
“WPAHS on its own likely would not have promoted entry or expansion by other health insurers. WPAHS has previously tried to sponsor entry by national insurers and largely failed. The affiliation agreement is not likely to reduce WPAHS’s incentive to offer competitive rates to insurers other than Highmark because WPAHS has strong incentives to increase its patient volume.
“Finally, the affiliation agreement likely will not facilitate horizontal collusion by health plans because new entrant national insurers are for the first time in many years aggressively attempting to reduce Highmark’s dominant market share.
“The division remains mindful that vertical acquisitions and affiliations between health insurers and hospitals with market power can potentially reduce competition. The division will continue to monitor developments in the Pittsburgh health care market as part of our broader commitment to vigilantly enforce the antitrust laws and thereby protect competition in our nation’s health care markets.”
Background
In November 2011, Highmark and WPAHS formalized an affiliation agreement under which a new nonprofit parent company will hold all the corporate membership rights in both Highmark and WPAHS. Highmark has agreed to make a financial commitment of up to $475 million to WPAHS.
Market OverviewHigh concentration levels have long marked the hospital, physician and health insurance markets in western Pennsylvania. On the insurance side, Highmark maintains shares exceeding 60 percent. On the hospital side, and among certain physician specialties, the UPMC wields a similar degree of market power. These high shares have been stable for many years and have not been upset by either new entry or expansion of smaller market participants.
Recently, there have been developments which could increase competition in both the health insurance and hospital markets. For instance, national insurers recently obtained contracts from UPMC that are significantly more competitive than their prior arrangements, improving their prospects of bringing increased competition to the area’s health insurance markets. And the capital that Highmark will contribute to West Penn under the affiliation agreement will likely make West Penn a stronger competitor to UPMC.
The signs of increased competition are appearing just as an existing long-term contract between Highmark and UPMC comes up for renewal. Long-term contracts between dominant hospitals and insurers can dull their incentives to compete, leading to higher prices and fewer services. If a dominant hospital is guaranteed a predictable revenue stream for many years from a dominant insurer, then the hospital may be less likely to promote the growth of new insurers by offering them competitive rates. Similarly, if a dominant health insurer is guaranteed rates from a dominant hospital for an extended period, then the insurer may be less likely to promote competition in the hospital market by investing in more affordable hospitals.
Not all contracts between dominant hospitals and insurers are anticompetitive. Contracts with shorter terms can provide significant benefits to consumers by providing consumers with more options, while at the same time encouraging dominant hospitals to promote competition among health insurers, and encouraging dominant health insurers to promote competition among hospitals. The foreseeable expiration of the contracts increases the need for both the dominant hospital and the insurer to have alternatives to their dominant counterparts. In the circumstances here, it appears that the long-term contract between Highmark and UPMC did diminish the incentives of each to compete and expand competition in these highly concentrated health insurance and hospital markets.
This affiliation agreement between WPAHS and Highmark, along with recent market entry, may help to bolster incentives to expand competition. Increased competition in the insurance and hospital markets can increase consumers’ access to affordable healthcare services by lowering health plan and hospital prices and improving transparency, which enables consumers to make more informed choices. In addition, we recognize that other considerations, including access to unique healthcare facilities, may require other policy and enforcement measures outside the purview of antitrust analysis.
The Antitrust Division’s Closing Statement Policy
The division provides this statement under its policy of issuing statements concerning the closing of investigations in appropriate cases. This statement is limited by the division’s obligation to protect the confidentiality of certain information obtained in its investigations. As in most of its investigations, the division’s evaluation has been highly fact-specific, and many of the relevant underlying facts are not public. Consequently, readers should not draw overly broad conclusions regarding how the division is likely in the future to analyze other collaborations or activities, or transactions involving particular firms. Enforcement decisions are made on a case-by-case basis, and the analysis and conclusions discussed in this statement do not bind the division in any future enforcement actions. Guidance on the division’s policy regarding closing statements is available at www.justice.gov/atr/public/closing/index.html.
Pennsylvania Tax Defier Sentenced to More Than Six Years in PrisonRead the Press Release
Troy A. Beam of Shippensburg, Pa., was sentenced today to 74 months in prison by U.S. District Judge Christopher C. Conner, the Justice Department and the Internal Revenue Service (IRS) announced. On May 4, 2011, a federal jury in the Middle District of Pennsylvania convicted Beam of tax evasion, obstructing and impeding the due administration of the Internal Revenue laws, and willful failure to file federal income tax returns.
According to evidence introduced at trial, Beam, a former certified public accountant and state auditor in the Pennsylvania Auditor General’s Office, earned substantial sums of income from 1992 to the date of the indictment while operating a home construction business known as “Sunbeam Builders,” as well as owning and operating two real estate businesses known as “Latrobe Leasing” and “Goldstar Property Management” that purchased, rented and sold real estate. Despite earning substantial income from these businesses, as well as other activities, Beam failed to file any federal income tax returns since April 1996, when he filed his 1995 tax return reporting a loss. In April 1996, Beam also filed false amended federal income tax returns for 1992, 1993 and 1994, seeking tax refunds for taxes he previously had paid for those years.
The evidence at trial proved that from 1999 to 2007, Beam earned more than $10.3 million in gross income from his various home construction and rental property businesses. Beam obstructed the IRS in its attempt to calculate and collect his taxes by using numerous sham trusts and other entities, including North Star Investment Holdings Ltd. to hide his income and assets. He used North Star to set up a bank account in the Cayman Islands into which he deposited nearly $3 million of income derived from his construction business.
“Convictions such as this send a loud and clear message that those who defy our nation's tax laws will be investigated and prosecuted to the fullest extent of the law,” said Kathryn M. Keneally, Assistant Attorney General of the Justice Department's Tax Division.
“The evidence showed beyond a reasonable doubt that Troy Beam is a consummate fraud and hypocrite who evaded his responsibilities as a citizen while participating in a charade to deceive the government, other citizens and himself for his own selfish ends,” said Peter J. Smith, U.S. Attorney for the Middle District of Pennsylvania.
“The use of abusive trust schemes and sham entities intended to conceal income from the IRS isn't tax planning; it’s criminal activity,” said Rick A. Raven, Acting Chief, IRS Criminal Investigation. “As the tax filing season comes to a close, it’s more important than ever that the American people feel confident that everyone is paying the taxes they owe.”
This case was investigated by IRS-Criminal Investigation and was prosecuted by Assistant U.S.s Attorney Bruce Brandler and Trial Attorneys Jorge Almonte and Mark McDonald of the Tax Division.
Pennsylvania Man Indicted for Cross BurningRead the Press Release
Ryan M. Held, aka Ryan M. Foley, 20, of Philipsburg, Penn., was indicted on March 27, 2012, by a federal grand jury on charges stemming from a cross burning he committed in August 2010. The indictment was unsealed today.
According to the indictment, on or about Aug. 20, 2010, Held burned the cross because a woman was associating with an African-American male within the residence. The two-count indictment charges Held with violating the housing rights of the two victims by burning the cross for the purpose of threatening and intimidating the victims in order to interfere with their rights to occupy a dwelling free from racial discrimination.
If convicted, Held faces a maximum punishment of 10 years in prison and a fine up to $250,000 on each count.
This case was investigated by the FBI and the Pennsylvania State Police and is being prosecuted by the U.S. Attorney's Office for the Western District of Pennsylvania and the Criminal Section of the Civil Rights Division of the Department of Justice.
Pakistani Citizen Sentenced to 31 Months in Prison for Human Smuggling Conspiracy ChargeRead the Press Release
WASHINGTON – A Pakistani citizen was sentenced yesterday in the District of Columbia to 31 months in prison on a human smuggling charge announced Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Ronald C. Machen Jr. for the District of Columbia; John Morton, Director of U.S. Immigration and Customs Enforcement (ICE); and John V. Gillies, Special Agent in Charge of the FBI Miami Division.
Muhammad Abid Hussain, 27, was sentenced by U.S. District Judge John D. Bates. On Jan. 31, 2012, a federal jury in Washington, D.C., found Hussain guilty of conspiring to encourage and induce an individual to come to the United States unlawfully.
According to the evidence presented at trial, in February and March 2011, Hussain and a co-conspirator conducted a human smuggling operation in Quito, Ecuador, that attempted to smuggle an individual from Pakistan to the United States. No individuals or material were actually smuggled from Pakistan as part of the operation. Hussain was arrested in Miami on March 13, 2011.
Hussain was acquitted of a second charge of conspiring to provide material support to a foreign terrorist organization relating to the same conduct.
The investigation was conducted by the ICE Homeland Security Investigations (HSI) attaché office in Quito, Ecuador, with the HSI office in Atlanta, the Miami Division of the FBI and the Ecuadorian National Police.
The investigation was conducted under the Extraterritorial Criminal Travel Strike Force (ECT) program, a joint partnership between the Justice Department’s Criminal Division and HSI. The ECT program focuses on human smuggling networks that may present particular national security or public safety risks, or present grave humanitarian concerns. ECT has dedicated investigative, intelligence and prosecutorial resources. ECT coordinates and receives assistance from other U.S. government agencies and foreign law enforcement authorities.
The Criminal Division’s Office of International Affairs, the U.S. National Central Bureau of INTERPOL, the U.S. Customs and Border Protection, the U.S. Embassy in Quito and the government of Ecuador provided invaluable support.
The case was prosecuted jointly by prosecutors from the Human Rights and Special Prosecutions Section of the Criminal Division, the Counterterrorism Section of the National Security Division and the U.S. Attorney’s Office for the District of Columbia.
Las Vegas Real Estate Agent Sentenced to 18 Months in Prison for Tax and Bankruptcy FraudRead the Press Release
German A. Posada was sentenced to 18 months in prison following a guilty plea to charges of filing a false 2004 individual income tax return and making a false statement in a bankruptcy proceeding, the Justice Department and the Internal Revenue Service (IRS) announced today.
According to court documents and statements made in court, Posada admitted to filing a false individual income tax return for 2004 that under-reported the income from his business as a real estate agent in the Las Vegas area. Between 2003 and 2005, Posada earned commission income from International Realty and another realtor. He asked that International Realty issue some of his commission checks in the name of his then-girlfriend, and deposited those checks into a bank account in her name. Posada also admitted under-reporting his business income on his 2003 Form 1040 and failing to file a timely 2005 Form 1040, despite knowing of his legal duty to report the approximately $557,212 in income that he received in 2005.
Court records establish that, in 2005, Posada filed for bankruptcy in the U.S. Bankruptcy Court for the District of Nevada. In his May 13, 2005, bankruptcy petition, and again in his Aug. 2, 2005, amended petition, he made false statements, including that he had no current income, he had received no income during the two years immediately preceding 2005, and 17 creditors held unsecured non-priority claims totaling $466,885 against him. Then, on Sept. 2, 2005, at a meeting of creditors, Posada falsely testified under oath before the bankruptcy trustee that he had received “one or two” and “probably two” commissions since May 13, 2005, when in fact he knew that he had received at least 19 commission checks totaling $130,575 during that time period.
Posada was also ordered to pay $212,016 in restitution to the IRS, and to pay $ $24,628 in restitution to victims of the bankruptcy fraud.
Special agents from IRS - Criminal Investigation investigated the case and Trial Attorneys John P. Scully and Thomas W. Flynn of the Justice Department’s Tax Division prosecuted the case.
More information about the Tax Division and its enforcement efforts can be found at www.justice.gov/tax .
Former Detention Officer and Inmate Sentenced in North Carolina for Assault on Another InmateRead the Press Release
The Justice Department announced today that Senior U.S. District Judge Malcolm J. Howard sentenced former Sergeant Danny Ray Duncan, of the Columbus County Detention Center in Whiteville, N.C., and inmate Terry McMillian on charges relating to the assault of another inmate. Duncan, 63, received 20 months in prison followed by two years supervised release. McMillian, 26, received 46 months in prison followed by three years supervised release.
“These defendants were brought to justice for abusing their power and violating the rights of an inmate,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The department will continue to prosecute defendants that violate our nation’s civil rights laws.”
U.S. Attorney for the Eastern District of North Carolina Thomas G. Walker stated, “No one is above the law. Those responsible for the beating of this inmate must face consequences for their criminal conduct.”
During plea proceedings on Oct. 6, 2011, Duncan, while working on the night shift as a sergeant with the Columbus County Detention Center admitted that on Aug. 2, 2010, he placed a pretrial detainee into a cell knowing there was a substantial risk that the inmates in the cell would assault the detainee. Duncan further admitted that he acted with deliberate indifference to the risk of assault, and that the detainee suffered bodily injury as a result of the assault.
McMillian pleaded guilty on Dec. 5, 2011, for conspiring to commit an offense against the United States. McMillan with another inmate brutally beat the detainee.
This case was investigated by the FBI and the North Carolina State Bureau of Investigation. Assistant U.S. Attorney Toby Lathan from the U.S. Attorney’s Office of the Eastern District of North Carolina and Trial Attorney Ryan R. McKinstry from the Civil Rights Division of the U.S. Department of Justice prosecuted the case.
Former Antitrust Division Assistant Attorney General James F. Rill Receives the Justice Department’s 2012 John Sherman AwardRead the Press Release
Attorney General Eric Holder presented the 2012 John Sherman Award to James F. Rill for his lifetime contributions to the development and enforcement of antitrust law and the advancement of antitrust policy internationally. Rill served as an Assistant Attorney General for the department’s Antitrust Division from 1989 to 1992 and is currently a partner at Baker Botts LLP in Washington, D.C.
On April 10, 2012, Attorney General Holder honored Rill with the department’s highest antitrust award in the Great Hall of the Robert F. Kennedy Department of Justice building. Officials of several federal agencies and members of the antitrust bar attended the award ceremony.
“Jim was a visionary on many antitrust fronts. From issuing the first joint Department of Justice and Federal Trade Commission Horizontal Merger Guidelines in 1992, to negotiating the historic U.S.-European Union Antitrust Cooperation Agreement in 1991, his leadership and antitrust expertise is beyond compare,” said Acting Assistant Attorney General Sharis A. Pozen in charge of the Department of Justice’s Antitrust Division. “He is truly deserving of this award for his outstanding efforts on behalf of American consumers.”
During his tenure as Assistant Attorney General, Rill oversaw matters in a number of important industries, including airlines and banking.
In 1997, Rill was appointed by then-Attorney General Janet Reno and then-Assistant Attorney General Joel Klein to serve as Co-Chair of the department’s International Competition Policy Advisory Committee (ICPAC). The proposal to create a global competition forum that allows government competition authorities throughout the world to meet and discuss antitrust issues served as the stimulus for what has become the International Competition Network (ICN). The ICN was established in 2001, and has more than 100 member nations.
Rill was chairman of the Competition Committee of the Business and Industry Advisory Committee to the Organisation for Economic Co-operation and Development from 2005 to 2007, and vice chairman from 1993 to 2005. He serves on the American Bar Association’s (ABA) Section of Antitrust Law International Task Force and is vice-chairman of the Competition Committee of the U.S. Council for International Business.
Created in 1994, the John Sherman Award is presented by the Department of Justice’s Antitrust Division to a person or persons for outstanding and substantial contributions to the field of antitrust law, the protection of American consumers and the preservation of economic liberty.
The award is named for the author of the Sherman Act of 1890, the nation’s first and foremost antitrust law. John Sherman, a former congressman and senator, also served as Secretary of the Treasury from 1877 to 1881 and as Secretary of State from 1897 to 1898.
Previous recipients include Robert Pitofsky (2010), Herbert Hovenkamp (2008), Robert H. Bork (2005), Richard A. Posner (2003), Milton Handler (1998), Thomas E. Kauper and William F. Baxter (1996), Phillip E. Areeda (1995) and Howard Metzenbaum (1994).
Department of Justice Seizes More Than $896,000 in Proceeds from the Online Sale of Counterfeit Sports ApparelRead the Press Release
WASHINGTON – The Department of Justice has seized more than $896,000 in proceeds from the distribution of counterfeit sports apparel and jerseys as the result of an investigation into the sale of counterfeit goods on commercial websites, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; Ronald C. Machen Jr., U.S. Attorney for the District of Columbia; and John Morton, Director of the Department of Homeland Security’s Immigration and Customs Enforcement (ICE).
The investigation also resulted in the seizure of seven domain names engaged in the sale of counterfeit goods. The funds were seized from interbank accounts and three PayPal accounts. The seizure warrants were unsealed in U.S. District Court in the District of Columbia on April 5, 2012.
The investigation is a product of Operation In Our Sites, a law enforcement initiative targeting online commercial intellectual property crime announced by ICE’s Office of Homeland Security Investigations (HSI) in June 2010. Operation In Our Sites targeted online retailers of a diverse array of counterfeit goods, including sports equipment, shoes, handbags, athletic apparel, sunglasses and DVD boxed sets. To date, 758 domain names of websites engaged in the sale and distribution of counterfeit goods and illegal copyrighted works have been seized as a result of Operation In Our Sites.
According to court documents, investigation by federal law enforcement agents revealed that several subjects whose domain names had been seized in a November 2010 In Our Sites operation continued to sell counterfeit goods using new domain names. In particular, the individuals, based in China, sold counterfeit professional and collegiate sports apparel, primarily counterfeit sports jerseys. Law enforcement agents made numerous undercover purchases from the websites associated with the new domain names. After the goods were confirmed to be counterfeit or infringing, seizure warrants for seven domain names used to sell the infringing goods were obtained from a U.S. Magistrate Judge in U.S. District Court for the District of Columbia.
According to court documents, the individuals conducted sales and processed payments for the counterfeit goods using PayPal Private Ltd. accounts and then wired their proceeds to bank accounts held at Chinese banks. Under warrants issued by a U.S. District Judge, law enforcement agents seized $826,883 in proceeds that had been transferred from PayPal accounts to various bank accounts in China. The funds were seized from correspondent, or interbank, accounts held by the Chinese banks in the United States. Under additional seizure warrants issued by a U.S. Magistrate Judge, law enforcement agents also seized $69,504 in funds remaining in three PayPal accounts used by the subjects.
“We are working hard to protect American businesses and consumers from the damaging effects of intellectual property crime,” said Assistant Attorney General Breuer. “This investigation disrupted an online counterfeit goods operation and also struck at the heart of the criminal enterprise by seizing hundreds of thousands of dollars in illegal profits. The Justice Department, together with our partners at ICE, will continue to do all that we can to punish and deter the sale and distribution of counterfeit goods.”
“Those who traffic in counterfeit goods harm the American economy as well as the consumers who purchase the substandard merchandise,” said U.S. Attorney Machen. “Seizing the domain names of these unscrupulous operators was one big step, and seizing their ill-gotten proceeds should send them another message that these counterfeit sales will not be tolerated.”
“Counterfeiting and intellectual property theft are seriously undermining U.S. business and innovation,” said ICE Director Morton. “Consumers are at risk, American industry is harmed and U.S. jobs are lost. As a country, we can ill afford the toll that intellectual property theft exacts on our economy and industries. Operation In Our Sites and the related efforts of the National Intellectual Property Rights Coordination Center are critical to combating intellectual property crime and consumer fraud over the Internet.”
The investigation was conducted by the National Intellectual Property Rights Center and ICE-HSI. The case is being prosecuted by Assistant U.S. Attorneys Jonathan Hooks and Diane Lucas and Special Assistant U.S. Attorney Katharine Wagner of the District of Columbia, Senior Trial Attorney Pamela Hicks of the Asset Forfeiture and Money Laundering Section in the Justice Department’s Criminal Division and Trial Attorney Thomas Dougherty of the Computer Crime and Intellectual Property Section in the Justice Department’s Criminal Division.
This enforcement action is one of many efforts being undertaken by the Department of Justice Task Force on Intellectual Property (IP Task Force). 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/.
Dallas-based Tenet Healthcare Pays More Than $42 Million to Settle Allegations of Improperly Billing MedicareRead the Press Release
Tenet Healthcare Corporation has agreed to pay the United States $42.75 million to settle allegations that it violated the False Claims Act by overbilling the federal Medicare program, the Justice Department announced today.
The settlement resolves allegations pertaining to the various inpatient rehabilitation facilities (IRFs) that Dallas-based Tenet has owned and operated throughout the country. IRFs are designed for patients who need an intense rehabilitation program that requires a multidisciplinary, coordinated team approach to improve their ability to function. Because the patients treated at these facilities require more intensive rehabilitation therapy and closer medical supervision than is provided in other settings, such as acute care hospitals or skilled nursing facilities, Medicare generally pays IRFs at a higher rate for rehabilitation care than it pays for such care in other settings.
The Justice Department alleged that, between May 15, 2005, and Dec. 31, 2007, Tenet improperly billed Medicare for the treatment of patients at its IRFs when, in fact, these patient stays did not meet the standards to qualify for an IRF admission. Today’s settlement is the United States’ single largest recovery pertaining to inappropriate admissions to IRFs.
“The Department of Justice is committed to protecting the Medicare program against all types of overcharging by health care providers,” said Stuart F. Delery, Acting Assistant Attorney General for the Justice Department's Civil Division. “As today's settlement demonstrates, inpatient rehabilitation facilities will not be permitted to bill Medicare for patients who were not qualified for admission.”
“This settlement demonstrates our office’s continued commitment to protect crucial Medicare dollars from fraud and abuse. Inpatient rehabilitation facilities are expensive, and Medicare dollars should be reserved for patients who need the services–not for hospitals seeking to make money through improper billing,” said Sally Quillian Yates, U.S. Attorney for the Northern District of Georgia.
“Tenet disclosed this matter to my office as required under its corporate integrity agreement (CIA),” said Daniel R. Levinson, Inspector General of the U.S. Department of Health and Human Services. “Our CIA reporting provisions have resulted in recovery of millions of taxpayer dollars back into the Medicare program.”
This resolution is part of the government’s emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009. The partnership between th e two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover more than $6.6 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in False Claims Act cases since January 2009 are over $8.8 billion.
Acting Assistant Attorney General Delery and U.S. Attorney Yates expressed appreciation to the Department of Justice’s Civil Division, the U.S. Attorney’s Office for the Northern District of Georgia, the FBI and the Department of Health and Human Services’ Office of Inspector General and Centers for Medicare and Medicaid Services for their collaboration in investigating this matter.
Monday 9 April 2012
New Mexico Man Sentenced to Life in Prison for Kidnapping That Resulted in the Death of 16-Year-Old VictimRead the Press Release
WASHINGTON – Larry Lujan, 33, was sentenced today to life in prison for a kidnapping that resulted in the death of a 16-year-old, announced U.S. Attorney Kenneth J. Gonzales for the District of New Mexico and Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.
Lujan, originally from Chamberino, N.M., was found guilty on Aug. 9, 2011, of kidnapping and fatally stabbing Dana Joseph “Joe” Grauke Jr. The jury was unable to reach a unanimous verdict on whether Lujan should be sentenced to death, and thus he was sentenced to life in prison by U.S. District Judge Robert C. Brack.According to the evidence and testimony presented at trial, Lujan targeted 16-year-old Grauke for attack because he failed to pay a $600 “tax” to Lujan for selling marijuana in a neighborhood in San Antonio that Lujan considered his “turf.” The evidence established that on March 7, 2005, Lujan led a group of teenagers in breaking into Grauke’s home in San Antonio, where they ransacked the residence; beat and tortured Grauke for several hours; and then transported Grauke, who was bound, gagged and blindfolded, in the luggage compartment of a sport utility vehicle to Anthony, N.M. Approximately 36 hours after kidnapping Grauke, Lujan stabbed the teenager nine times in the back and cut his throat so deeply that his head was almost severed from his body. Grauke’s body was found on March 20, 2005, in an irrigation ditch.
During the penalty phase of the trial, the jury heard testimony about Lujan’s role in the stabbing deaths of a Chamberino couple in 1998. The double homicides also were related to a drug dealing dispute. Lujan pleaded “no contest” in December 2011 to first degree murder charges for that double homicide in a separate state case and was sentenced to two consecutive life prison terms.
The case was investigated by the FBI; the Dona Ana County, N.M., Sheriff’s Office; and the San Antonio Police Department. It was prosecuted by Assistant U.S. Attorneys Maria Y. Armijo and Mark A. Saltman for the District of New Mexico and Trial Attorney Michael S. Warbel of the Criminal Division’s Capital Case Unit.
Friday 6 April 2012
Memphis Man Found Guilty of Child Sex Trafficking <br /> and Firearms OffensesRead the Press Release
WASHINGTON- A federal jury in Memphis, Tenn., has convicted Maurice Mabon of child sex trafficking and a firearms offense, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Edward L. Stanton III for the Western District of Tennessee and Special Agent in Charge Aaron T. Ford of the FBI’s Memphis Field Office.
Mabon, 23, of Memphis, was found guilty yesterday of child sex trafficking, attempted child sex trafficking and conspiracy to commit child sex trafficking for his role in advertising a 15-year-old girl for prostitution on the website backpage.com on April 16, 2011. He also was found guilty of being a felon in possession of ammunition.
The evidence at trial showed, among other things, that Mabon posted the advertisement to backpage.com after taking numerous photographs of the 15-year-old victim in lingerie. Mabon and his co-defendants then drove the 15-year-old to an address provided by an individual responding to the advertisement. A suspicious neighbor contacted the Shelby County, Tenn., Sheriff’s Department and deputies intervened.
A later search of Mabon’s home led to the discovery of 12 live rounds of 9 mm Luger ammunition, 17 live rounds of 7.65 ammunition, 25 live rounds of .380 ammunition, 20 live rounds of .45 auto ammunition and eight spent rounds of 7.62 ammunition. As a previously-convicted felon, Mabon was prohibited from possessing any ammunition by federal law.
“Mr. Mabon used the Internet to facilitate sex trafficking of a minor,” said Assistant Attorney General Breuer. “The jury’s guilty verdict ensures that he will now be imprisoned for his crimes. We will continue to prioritize the fight against predators who exploit children for profit or any other reason.”
“Child sex traffickers like Maurice Mabon prey upon young victims because they are vulnerable and often defenseless,” said U.S. Attorney Stanton. “The jury’s guilty verdict underscores this office’s relentless commitment to working with our law enforcement partners to prosecute and bring to justice those who exploit children for profit.”
“The cruel exploitation of children will not be tolerated, and the FBI, along with our law enforcement partners, is committed to targeting those who prey on innocent juveniles,” said FBI Special Agent in Charge Ford. “This conviction is a message to those who would seek to take part in human trafficking or commercial sex trafficking, that you will be investigated brought to justice and held accountable.
Mabon faces a mandatory minimum sentence of 10 years in prison and faces a maximum penalty of life in prison. He will be sentenced on July 13, 2012, by Chief U.S. District Judge Jon Phipps McCalla. Mabon’s co-defendants, Arieke Lester and Chauntta Lewis, pleaded guilty to related charges last week. Lester will be sentenced on Aug. 10, 2012, and faces up to life in prison. Lewis will be sentenced on June 6, 2012, and faces up to 20 years in prison.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend, and prosecute individuals who exploit children, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
The case was investigated by the FBI, working with the Shelby County Sheriff’s Department and the Bureau of Alcohol, Tobacco, Firearms and Explosives. The case was prosecuted by Assistant U.S. Attorney Jonathan Skrmetti of the Western District of Tennessee and CEOS Trial Attorney Keith Becker.
District of Columbia Return Preparer Indicted for Preparing False Tax ReturnsRead the Press Release
A federal grand jury in the District of Columbia returned an indictment charging Enyinnaya Udo with 25 counts of aiding and assisting in the preparation of false income tax returns, the Justice Department and Internal Revenue Service (IRS) announced today.
According to the indictment, the defendant operated a tax preparation business called Anic and Associates, located in Washington, D.C. The defendant allegedly aided, advised and prepared false individual income tax returns for the tax years 2005 through 2008 for at least seven taxpayers. These individual income tax returns allegedly claimed fraudulent filing statuses and false deductions.
If convicted, the defendant faces a potential maximum sentence of three years in prison and a maximum fine of $250,000 on each count.
This case was investigated by the IRS-Criminal Investigation and is being prosecuted by Tax Division Trial Attorneys Jessica Moran and Erin Pulice.
Arkansas Man Sentenced for His Role in Firebombing Residence of Interracial CoupleRead the Press Release
The Department of Justice announced today that Gary Dodson, 33, of Waldron, Ark., was sentenced in Little Rock for his involvement in firebombing the residence of an interracial couple. On Dec. 7, 2011, Dodson pleaded guilty to conspiring to violate the civil rights, criminal interference with housing rights due to race and possession of an unregistered firearm/destructive device. District Judge Billy Roy Wilson sentenced Dodson to 15 years in prison and 3 years of supervised release for the three counts of conviction.
During his plea, Dodson admitted that on the night of Jan. 14, 2011, he attended a party where he and three other men, Jake Murphy, Dustin Hammond and Jason Barnwell, devised a plan to firebomb the victims’ house. Dodson then drove the other men to purchase gas for the firebomb and then Dodson drove everyone to the victims’ house in Hardy, Ark. When they arrived, Barnwell, Murphy and Hammond constructed three Molotov cocktails and threw them at the house. They damaged the victims’ house; however, no one was injured.
Murphy and Hammond previously pleaded guilty to conspiring to and violating the civil rights of the victim. Both received sentences of 54 months incarceration and three years of supervised release. In June 2011, Wendy Treybig, who co-hosted the party on Jan. 14, 2011, with Barnwell, pleaded guilty to obstructing justice. She was sentenced on Dec. 13, 2011, to 21 months incarceration and three years of supervised release. Jason Barnwell pleaded guilty on Aug. 26, 2011, and was sentenced on Jan. 27, 2012 to 20 years incarceration.
“With today’s sentencing, we can finally close the book on this terrible incident of racial hatred,” stated Assistant Attorney General for the Civil Rights Division Thomas E. Perez. “The sentence reflects the gravity of these kinds of crimes. The Civil Rights Division will continue to pursue justice in hate crimes such as these, where victims are targeted because of the color of their skin.”
U.S. Attorney for the Eastern District of Arkansas Christopher R. Thyer said, “The very strength we have in our communities is a result of the diversity of its people. Those who perpetrate crimes against others solely because of racial differences will find, as these four defendants have, that there is a price to pay. The laws that protect our communities leave no tolerance for hate crimes.”
This case was investigated by the Little Rock Office of the FBI and the Little Rock Office of the Bureau of Alcohol, Tobacco, Firearms and Explosives, with assistance from the Arkansas State Police, the Hardy and Waldron Police Departments, and the Scott and Sharp County Sheriff’s Offices. It was prosecuted by Assistant U.S. Attorney John Ray White of the Eastern District of Arkansas, and Trial Attorneys Cindy Chung and Henry Leventis of the U.S. Department of Jus tice Civil Rights Division.
Thursday 5 April 2012
U.S. Announces Innovative Clean Air Agreement for Industrial Flares with Marathon Petroleum CompanyRead the Press Release
WASHINGTON – The Department of Justice and the U.S. Environmental Protection Agency (EPA) today announced an innovative environmental agreement with Ohio-based Marathon Petroleum Company that already has significantly reduced air pollution from all six of the company’s petroleum refineries. In a first for the refining industry, Marathon has agreed to state of the art controls on combustion devices known as flares and to a cap on the volume of waste gas it will send to its flares. When fully implemented, the agreement is expected to reduce harmful air pollution by approximately 5,400 tons per year and result in future cost savings for the company.
“This agreement is a great victory for the environment and will result in cleaner and healthier air for the benefit of communities across the country in Illinois, Kentucky, Louisiana, Michigan, Ohio and Texas,” said Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division of the Department of Justice. “By spurring corporate ingenuity, this settlement will dramatically reduce emissions from all 22 flares at Marathon’s six refineries.”
“Today’s agreement will result in cleaner air for communities across the South and Midwest,” said Cynthia Giles, Assistant Administrator for EPA’s Office of Enforcement and Compliance Assurance. “By working with EPA, Marathon helped advance new approaches that reduce air pollution and improve efficiency at its refineries and provide the U.S. with new knowledge to bring similar improvements in air quality to other communities across the nation.”
“We commend Marathon for taking this action, which will reduce pollution in the areas around its refineries, including one in Detroit,” said Barbara McQuade, U.S. Attorney for the Eastern District of Michigan. “While this agreement helps protect clean air for future generations, it also protects the public health right now for the people living near the refineries.”
The settlement is part of the EPA’s national effort to reduce air pollution from refinery, petrochemical and chemical flares. A flare is a mechanical device, ordinarily elevated high off the ground, used to combust waste gases. The more waste gas a company sends to a flare, the more pollution occurs. The less efficient a flare is in burning waste gas, the more pollution occurs. EPA wants companies to flare less, and when they do flare, to fully combust the harmful chemicals found in the waste gas.
A consent decree filed today in the U.S. District Court in Detroit resolves Marathon’s alleged violations of the Clean Air Act. As part of the effort to reach this agreement, Marathon, under the direction and oversight of EPA, spent more than $2.4 million to develop and conduct pioneering combustion efficiency testing of flares and to advance the understanding of the relationship between flare operating parameters and flare combustion efficiency.
In addition, beginning in 2009, Marathon installed equipment, such as flow monitors and gas chromatographs, to improve the combustion efficiency of its flares. To date, Marathon has spent approximately $45 million on this equipment and projects that it will spend an additional $6.5 million for this equipment. Marathon also will spend an as yet undetermined sum to comply with the flaring caps required in the consent decree.
At the same time, Marathon indicates that the equipment it already has installed is saving it approximately $5 million per year through reduced steam usage and product recovery. Marathon also projects additional savings through the operation of the equipment to be installed in the future.
From 2008 to the end of 2011, the controls Marathon installed eliminated approximately 4720 tons per year of volatile organic compounds (VOCs) and 110 tons per year of hazardous air pollutants (HAPs) from the air. An additional 530 tons per year of VOCs and 30 tons per year of HAPs are projected to be eliminated in the future.
Under the agreement, Marathon will also implement a project at its Detroit refinery to remove another 15 tons per year of VOCs and another one ton per year of benzene from the air. At an estimated cost of $2.2 million, Marathon will install controls on numerous sludge handling tanks and equipment.
Marathon’s six refineries are located in: Robinson, Ill.; Catlettsburg, Ky.; Garyville, La.; Detroit; Canton, Ohio; and Texas City, Texas. Together, the refineries have a capacity of more than 1.15 million barrels per day.
Marathon, headquartered in Findlay, Ohio, will pay a civil penalty of $460,000 to the United States.
The consent decree – subject to a 30-day public comment period and final court approval – is available at: www.justice.gov/enrd/.
To learn more about the settlement, visit: www.epa.gov/compliance/resources/cases/civil/caa/marathonrefining.html.To learn more about EPA’s civil enforcement of the Clean Air Act, visit: www.epa.gov/compliance/civil/caa/index.html.
To learn more about EPA’s refinery initiative, visit: www.epa.gov/compliance/resources/cases/civil/caa/oil/.
Montgomery, Alabama, Woman Indicted for Using Stolen Identities and Debit Cards to Obtain Tax RefundsRead the Press Release
A federal grand jury in Montgomery returned an indictment on March 28, 2012, charging Antoinette Djonret for using stolen identities to file false tax returns, the Justice Department, U.S. Attorney George L. Beck Jr. and the Internal Revenue Service (IRS) announced today. The 19-count indictment, which was unsealed today following her arrest, charges Djonret with filing false claims, theft of government funds, access device fraud, aggravated identity theft and possession of unauthorized access devices.
Djonret had earlier been charged with making false claims in a criminal complaint that was filed on February 22, 2012. According to the indictment and other court documents, Djonret used stolen identities to file false tax returns which fraudulently claimed refunds. Djonret had some of the refunds deposited onto a prepaid debit card in her name. Court documents state that nearly 650 tax returns were electronically filed from an IP address assigned to her residence. According to the criminal complaint, on May 22, 2010, Djonret was arrested during a traffic stop and police officers seized from her car several prepaid debit cards in the names of other individuals. The cards were linked to bank accounts that had received federal income tax refunds.
If convicted, she faces a maximum potential sentence of five years in prison for each false claims count and each theft of government funds count, 15 years in prison for the access device fraud count, 10 years in prison for the possession of unauthorized access devices count, and a mandatory two-year sentence for the aggravated identity theft counts. She is also subject to fines and mandatory restitution if convicted.
An indictment merely alleges that crimes have been committed, and the defendant is presumed innocent until proven guilty beyond a reasonable doubt.
The case was investigated by Special Agents of the IRS - Criminal Investigation. Trial attorneys Jason H. Poole and Michael Boteler of the Justice Department’s Tax Division and Assistant U.S. Attorney Jared Morris are prosecuting the case.
Additional information about the Tax Division and its enforcement efforts may be found at www.justice.gov/tax .
Justice Department Files Complaint Against Home Depot for Violating the Employment Rights of a California Army National Guard SoldierRead the Press Release
WASHINGTON – The Justice Department announced today the filing of a complaint in U.S. District Court in Arizona against Home Depot U.S.A. Inc. for violating the employment rights of California Army National Guard soldier Brian Bailey under the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA).
The department’s complaint alleges that Home Depot willfully violated USERRA by terminating Bailey’s employment because of his military service obligations. Bailey, an Iraq War veteran, worked at a Home Depot store in Flagstaff, Ariz., as a department supervisor while at the same time serving in the California Army National Guard. Throughout his employment with Home Depot, Bailey took periodic leave from work to fulfill his military obligations with the National Guard. According to the Justice Department’s complaint, Bailey was removed from his position as a department supervisor after Home Depot management officials at the Flagstaff store openly expressed their displeasure with his periodic absences from work due to his military obligations and further indicated their desire to remove him from his position because of those absences.
Bailey initially filed a complaint with the Labor Department’s Veterans’ Employment and Training Service, which investigated the matter, determined that the complaint had merit and referred the matter to the Justice Department. The Justice Department’s Civil Rights Division subsequently decided to represent Bailey in this matter and filed this lawsuit on his behalf.
USERRA prohibits employers from discriminating against National Guard soldiers, such as Bailey, with respect to employment opportunities based on their past, current or future uniformed service obligations. Under USERRA, it is unlawful for an employer to terminate an employee because he has to miss work due to military obligations.
Among other things, the suit seeks compensation for Bailey’s lost wages and benefits, liquidated damages and reinstatement of Bailey’s employment with Home Depot.
“The men and women who wear our nation’s uniform need to know that they do not have to sacrifice their job at home in order to serve our country,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Civil Rights Division is committed to aggressive enforcement of USERRA to protect the rights of those who, through their bravery and sacrifice, secure the rights of all Americans.”
“The National Guard is composed primarily of civilian men and women who serve their country, state and community on a part-time basis,” said Acting U.S. Attorney Ann Birmingham Scheel. “National Guard members, and their employers, should know that we will employ all of USERRA’s tools to protect the employment rights of those in uniform while they sacrifice time away from their families and jobs for training and active duty.”
This case is being handled by the Employment Litigation Section of the Justice Department’s Civil Rights Division and the U.S. Attorney’s Office for the District of Arizona.
Additional information about USERRA can be found on the Justice Department websites www.usdoj.gov/crt/emp and www.servicemembers.gov, as well as the Labor Department website www.dol.gov/vets/programs/userra/main.htm.
Juarez Drug Cartel Leader Pleads Guilty to Charges Related to U.S. Consulate Murders and Is Sentenced to Life in PrisonRead the Press Release
WASHINGTON – The Juarez Drug Cartel’s leader in Juarez and Chihuahua, Mexico, pleaded guilty today in El Paso, Texas, and was sentenced to life in prison for his participation in drug-trafficking and numerous acts of violence in connection with the Barrio Azteca gang, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Robert Pitman for the Western District of Texas, FBI Special Agent in Charge Mark Morgan of the FBI’s El Paso Office and Administrator Michele M. Leonhart of the U.S. Drug Enforcement Administration (DEA).
Jose Antonio Acosta-Hernandez, 34, aka “Diego,” “Dienton,” “Diez” and “Bablazo,” of Chihuahua, was extradited to the United States from Mexico on March 16, 2012. Today, he pleaded guilty to four counts of racketeering, narcotics trafficking and money laundering. Acosta-Hernandez also pleaded guilty to seven counts of murder and weapons charges, which specifically related to the March 13, 2010, triple homicide in Juarez of U.S. Consulate employee Leslie Enriquez, her husband Arthur Redelfs and Jorge Salcido Ceniceros, the husband of another U.S. Consulate employee. Immediately after the guilty plea hearing, Acosta-Hernandez was sentenced to seven concurrent life terms, three additional consecutive life terms and 20 years in federal prison by U.S. District Judge Kathleen Cardone of the Western District of Texas, El Paso Division.
Today’s action is the result of close coordination between U.S. law enforcement and the government of Mexico in the investigation and prosecution of this case. The cooperation and assistance of the government of Mexico was essential to achieving the successful extradition, plea and sentencing of Acosta-Hernandez.
“As the leader of La Linea’s enforcement wing, Mr. Acosta-Hernandez directed a reign of terror,” said Assistant Attorney General Breuer. “Today’s guilty plea and sentence are a significant step in our effort to bring to justice those responsible for the consulate murders, and it would not have been possible without the extraordinary assistance of our law enforcement partners in Mexico, including Attorney General Marisela Morales Ibáñez. We are determined to hold accountable those individuals who committed the consulate murders, and to dismantle the dangerous criminal enterprise that fueled these and many other tragic and senseless acts of violence. Gangs and other criminal organizations that threaten public safety on both sides of the border are on notice that we are working more closely than ever with our Mexican counterparts to shut them down.”
“This plea represents the culmination of a virtual textbook example of cooperation among law enforcement agencies, both in the United States and in Mexico, to hold accountable those at the highest level of the drug trafficking trade,” said U.S. Attorney Pitman. “We will continue to work together with our counterparts in Mexico to target those responsible for the heinous crimes associated with cartel activity.”
“This investigation exemplifies the FBI’s commitment and that of our federal, state, local and international partners to investigate and prosecute individuals and organized criminal organizations who commit violent acts and other crimes impacting the U.S. and our border area with the Republic of Mexico,” said Special Agent in Charge Morgan. “The joint effort included the participation of USM Service, CBP, DEA, HSI, DOS, Texas DPS, El Paso Police, El Paso County Sheriff’s office and our Mexican partners.”
“Acosta-Hernandez is a cold blooded murderer with no respect for human life or the rule of law,” said DEA Administrator Leonhart. “His violent and deadly actions were put to a stop due to the combined efforts of U.S. law enforcement, and the will of the Mexican government. Together, we will relentlessly continue our pressure on the Mexican cartels and gangs that carry out violence on both sides of the border.”
The third superseding indictment, returned on March 2, 2011, alleged that Acosta-Hernandez was an associate of the Barrio Azteca (BA), a violent street and prison gang that began in the late 1980s and expanded into a transnational criminal organization. According to information presented in court, the BA formed an alliance with “La Linea,” which is part of the Juarez Drug Cartel and is also known as the Vincente Carrillo Fuentes Drug Cartel or “VCF.” The purpose of the BA-La Linea alliance was to battle the Chapo Guzman Cartel and its allies for control of the drug trafficking routes through Juarez and Chihuahua. The drug routes through Juarez, known as the Juarez Plaza, are important to drug trafficking organizations because they are a principal illicit drug trafficking conduit into the United States.
Acosta-Hernandez admitted that in approximately 2008, he became the leader of La Linea’s armed enforcement wing and acted as the VCF’s plaza boss in Chihuahua and Juarez. In this role, Acosta-Hernandez, in coordination with the BA, led violent attacks against their common enemies. Acosta-Hernandez admitted that he directed or participated in more than 1,500 murders since 2008.
For example, Acosta-Hernandez admitted that on Jan. 30, 2010, he ordered hit-men in his organization to kill members of the opposition that were sighted at a daytime birthday party at a home in Juarez. As part of this incident, 16 individuals were killed and 10 individuals were wounded at three different residences in Juarez. On July 15, 2010, Acosta-Hernandez directed a car bombing in Juarez that ultimately killed four people.
Acosta-Hernandez admitted that his purpose for engaging in these violent attacks was, in part, to protect and enhance the La Linea-BA alliance’s importation of heroin, cocaine and marijuana into the Western District of Texas and elsewhere, and ultimately to make possible the distribution of those drugs in the United States. Acosta-Hernandez admitted that he knew that the La Linea-BA alliance earned millions of dollars in drug trafficking profits each year. He also knew that these profits were reinvested into the organization to purchase additional drugs to import into the United States and/or to purchase weapons, ammunition or supplies to continue fighting enemies of La Linea and the BA.During the guilty plea hearing, Acosta-Hernandez also pleaded guilty to charges relating to the triple homicide of Enriquez, Redelfs and Salcido, based on his leadership position within La Linea and association with the BA. According to information presented in court, on March 13, 2010, Enriquez, her husband Redelfs, and Salcido, the Mexican national husband of a second U.S. Consulate employee, were shot and killed by other BA members in Juarez in separate but related incidents. According to information presented in court, on March 13, employees of the U.S. Consulate hosted a child’s birthday party in Juarez. Salcido was shot and killed in his vehicle as he left the party. His three children also were in the car and sustained minor injuries. His wife, a Mexican national employee at the U.S. Consulate, was following Salcido in a separate vehicle and was unharmed in the attack.
At approximately the same time, U.S. citizens Enriquez and Redelfs left the same party and were shot and killed in their vehicle. Enriquez was four months pregnant at the time of the shooting. Enriquez’s and Redelfs’ nine-month-old daughter also was in the vehicle but was unharmed.
During the hearing, Acosta-Hernandez acknowledged that Salcido, Enriquez and Redelfs were murdered by members and associates of the BA to further the gang’s racketeering activities. Acosta-Hernandez admitted that at the time, under his leadership as VCF’s plaza boss and coordinator of enforcement actions with the BA in Juarez, La Linea and the BA had agreed to unite and commit murders to further their criminal enterprise.A total of 35 defendants were charged in the third superseding indictment and are alleged to have committed various criminal acts, including racketeering, narcotics distribution and importation, retaliation against persons providing information to U.S. law enforcement, extortion, money laundering, obstruction of justice and murder, including the 2010 Juarez consulate murders. Of the 35 defendants charged, 32 have been apprehended; 23 of those defendants have pleaded guilty, while seven others are pending extradition from Mexico. U.S. and Mexican law enforcement are actively seeking to apprehend the three remaining fugitives in this case, including Eduardo Ravelo, an FBI Top Ten Most Wanted Fugitive. Trial against Ramon Renteria, aka “Spooky,” is scheduled to begin in El Paso on May 18, 2012.
The case is being prosecuted by Trial Attorney Joseph A. Cooley of the Criminal Division’s Organized Crime and Gang Section, Trial Attorney Brian Skaret of the Criminal Division’s Human Rights and Special Prosecutions Section and Assistant U.S. Attorney George Leal of the Western District of Texas - El Paso Division. The U.S. Attorney’s Office for the District of New Mexico provided significant assistance in this case, including by Assistant U.S. Attorney Sarah Davenport. Valuable assistance was provided by the Criminal Division’s Offices of International Affairs and Enforcement Operations.
The case was investigated by the FBI’s El Paso Field Office, Albuquerque Field Office (Las Cruces Resident Agency), DEA Juarez and DEA El Paso. Special assistance was provided by the Bureau of Alcohol, Tobacco, Firearms and Explosives; Immigration and Customs Enforcement; the U.S. Marshals Service; U.S. Customs and Border Protection; Federal Bureau of Prisons; U.S. Diplomatic Security Service; the Texas Department of Public Safety; the Texas Department of Criminal Justice; El Paso Police Department; El Paso County Sheriff’s Office; El Paso Independent School District Police Department; Texas Alcohol and Beverage Commission; New Mexico State Police; Dona Ana County, N.M., Sheriff’s Office; Las Cruces, N.M., Police Department; Southern New Mexico Correctional Facility; and Otero County Prison Facility New Mexico.
Former Wilcox County, Georgia, Jail Trustee Pleads Guilty to Assaulting InmateRead the Press Release
WASHINGTON – The Justice Department announced today that former jail trustee Willie James Caruthers pleaded guilty yesterday to acting with several others, including law enforcement officials, to assault an inmate inside of the Wilcox County, Ga., Jail on July 23, 2009. Caruthers also pleaded guilty to conspiring to tamper with a witness in connection with the assault.
During his plea hearing and in the factual basis he signed, Caruthers admitted that he, along with several other individuals, including former Wilcox County Sheriff Stacy Bloodsworth, assaulted Wilcox County inmate K.H., causing K.H. to suffer a broken jaw. Caruthers further admitted that he was present when several individuals, including then-Sheriff Bloodsworth, assaulted inmates K.F. and T.O., causing both of them to sustain bruises, scratches and pain. During the plea hearing, Caruthers further admitted that he conspired with several other people, including Stacy Bloodsworth, to cover up the fact that law enforcement officials and others had used excessive force against inmates K.H., K.F. and T.O. Caruthers acknowledged that the plan of the conspiracy was for the co-conspirators to prepare false reports and submit them to Wilcox County Sheriff’s Office officials and to make statements consistent with those false reports to anyone inquiring about the excessive use of force incident.
“The Department of Justice is committed to promoting confidence in our criminal justice system and will vigorously prosecute anyone who acts with law enforcement officials to violate the civil rights of another person,” said Assistant Attorney General for the Civil Rights Division Thomas E. Perez.
U.S. Attorney for the Middle District of Georgia Michael J. Moore said, “Today’s guilty plea is another example of the zero tolerance the Department of Justice has for those defendants who violate the civil rights of another citizen.”
When Caruthers is sentenced, he faces a maximum penalty of up to 10 years on the civil rights violation and a maximum penalty of up to five years on the conspiracy charge.
On Feb. 17, 2012, the Justice Department unsealed a 14-count indictment against Stacy Bloodsworth; his son, Austin Bloodsworth; former Wilcox County Jailer Casey Owens; and Caruthers. The indictment charges the four defendants with civil rights violations in connection with the July 23, 2009, assault of the three inmates and with conspiring to cover up the assaults. In addition, the indictment charges Stacy Bloodsworth, Austin Bloodsworth and Caruthers with lying to the FBI, and it charges Caruthers and Owens with writing false reports. Stacy Bloodsworth was also charged with tampering with one of the victims, as well as with tampering with two witnesses.
On March 5, 2012, former South Central Georgia Drug Task Force Agent Timothy King Jr., 31, pleaded guilty to a bill of information charging him with conspiring to tamper with a witness in connection with the July 23, 2009, assaults of inmates K.H., K.F. and T.O. During his plea hearing, King admitted that he conspired with several other people, including a law enforcement official, to cover up the fact that law enforcement officials and others had used excessive force against the three inmates. When King is sentenced, he faces a maximum penalty of up to five years.
This case was investigated by the FBI and is being prosecuted by Trial Attorney Christine M. Siscaretti and Special Litigation Counsel Gerard V. Hogan of the Justice Department’s Civil Rights Division and Assistant U.S. Attorney Paul C. McCommon III of the U.S. Attorney’s Office for the Middle District of Georgia.
Former CIA Officer John Kiriakou Indicted for Allegedly Disclosing Classified Information, Including Covert Officer’s Identity, to Journalists and Lying to CIA’s Publications BoardRead the Press Release
ALEXANDRIA, Va. – Former CIA officer John Kiriakou was indicted today for allegedly repeatedly disclosing classified information to journalists, including the name of a covert CIA officer and information revealing the role of another CIA employee in classified activities, Justice Department officials announced. Kiriakou was charged in a five-count indictment returned by a federal grand jury in the Eastern District of Virginia, after he was initially charged in a criminal complaint and arrested in January 2012.
The indictment charges Kiriakou with one count of violating the Intelligence Identities Protection Act for allegedly illegally disclosing the identity of a covert officer and with three counts of violating the Espionage Act for allegedly illegally disclosing national defense information to individuals not authorized to receive it. The indictment also charges him with one count of making false statements for allegedly lying to the Publications Review Board of the CIA in an unsuccessful attempt to trick the CIA into allowing him to include classified information in a book he was seeking to publish.
Kiriakou, 47, of Arlington, Va., was a CIA intelligence officer between 1990 and 2004, serving at headquarters and in various classified overseas assignments. He remains free on bond and is expected to be arraigned on April 13, 2012, in U.S. District Court in Alexandria, Va.
The charges result from an investigation that was triggered by a classified defense filing in January 2009, which contained classified information the defense had not been given through official government channels, and, in part, by the discovery in the spring of 2009 of photographs of certain government employees and contractors in the materials of high-value detainees at Guantanamo Bay, Cuba. The investigation revealed that, on multiple occasions, one of the journalists to whom Kiriakou is alleged to have illegally disclosed classified information, in turn, disclosed that information to a defense team investigator, and that this information was reflected in the classified defense filing and enabled the defense team to take or obtain surveillance photographs of government personnel. There are no allegations of criminal activity by any members of the defense team for the Guantanamo Bay detainees.
The indictment alleges that Kiriakou made illegal disclosures about two CIA employees and their involvement in classified operations to two journalists on multiple occasions between 2007 and 2009. In one case, by revealing an employee’s name as a CIA officer, Kiriakou allegedly disclosed classified information – as the employee was and remains covert (identified in the indictment as “Covert Officer A”). In the second case, Kiriakou allegedly disclosed the name and contact information of another CIA employee, identified in the indictment as “Officer B,” whose participation in an operation to capture terrorism subject Abu Zubaydah in 2002 was then classified. Kiriakou’s alleged disclosures occurred prior to a June 2008 front-page story in The New York Times disclosing Officer B’s alleged role in the Abu Zubaydah operation.
The indictment was announced by Patrick J. Fitzgerald, U.S. Attorney for the Northern District of Illinois, who was appointed Special Attorney in 2010 to supervise the investigation. He announced the charges with James W. McJunkin, Assistant Director in Charge of the Washington Field Office of the FBI. Together, they thanked the CIA for its very substantial assistance in the investigation, as well as the Air Force Office of Special Investigations for its significant assistance.
The Justice Department’s National Security Division, working with the FBI, began the investigation. To avoid the risk of encountering a conflict of interest because of the pending prosecutions of some of the high-value detainees, Mr. Fitzgerald was assigned to supervise the investigation conducted by a team of attorneys from the Southern District of New York, the Northern District of Illinois and the Counterespionage Section of the National Security Division who were not involved in pending prosecutions of the detainees.
The count charging violation of the Intelligence Identities Protection Act, as well as each count of violating the Espionage Act, carries a maximum penalty of 10 years in prison, and making false statements carries a maximum prison term of five years. Each count carries a maximum fine of $250,000. If convicted, the court must impose a reasonable sentence under federal sentencing statutes and the advisory U.S. Sentencing Guidelines.
An indictment contains only allegations and is not evidence of guilt. The defendant is presumed innocent and is entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
The government is being represented in court by Assistant U.S. Attorneys Iris Lan (Southern District of New York) and Mark E. Schneider (Northern District of Illinois), and Trial Attorney Ryan Fayhee, of the Counterespionage Section of the Justice Department’s National Security Division. Assistant U.S. Attorney Lisa Owings (Eastern District of Virginia) will assist in the matter under local court rules.
Alabama Woman Indicted for Tax Fraud Using Stolen IdentitiesRead the Press Release
A federal grand jury in Montgomery, Ala., returned an indictment charging Jacqueline Slaton for using stolen identities to file false tax returns, the Justice Department, U.S. Attorney George L. Beck Jr. and the Internal Revenue Service (IRS) announced today. The 12-count indictment, which was unsealed following her arrest, charges Slaton with filing false claims, wire fraud, and aggravated identity theft.
According to the indictment, Slaton used stolen identities to file false tax returns which fraudulently claimed refunds. Slaton directed a portion of the proceeds to be deposited onto prepaid debit cards.
An indictment merely alleges that crimes have been committed, and the defendant is presumed innocent until proven guilty beyond a reasonable doubt. If convicted, she faces a potential maximum of five years in prison for each false claims count, 20 years in prison for each wire fraud count, and a mandatory two-year sentence for the aggravated identity theft counts. She is also subject to fines and mandatory restitution if convicted.
The case was investigated by Special Agents of the IRS - Criminal Investigation. Trial Attorneys Jason H. Poole and Michael Boteler of the Justice Department’s Tax Division and Assistant U.S. Attorney Jared Morris are prosecuting the case.
Additional information about the Tax Division and its enforcement efforts may be found at www.justice.gov/tax .
Wednesday 4 April 2012
Former Executive of Miami-Based Ocean Bank Sentenced to Serve 37 Months in Prison for Participating in Bribery Scheme and Filing False Tax ReturnsRead the Press Release
WASHINGTON – A former executive of Ocean Bank, a financial institution headquartered in Miami, was sentenced today for participating in a scheme to accept bribes and for failing to report income on federal income tax returns, the Department of Justice announced.
Danilo P. Perez, a former vice president of Ocean Bank, was sentenced today in the U.S. District Court in Miami by District Judge Donald L. Graham to serve 37 months in prison followed by one year of supervised release.
On Jan. 25, 2012, Perez pleaded guilty to one count of conspiracy to solicit or demand money and other things of value to influence an employee of a financial institution and three counts of tax offenses. The charges against Perez stemmed from his accepting nearly $500,000 in cash and other items from co-conspirators in connection with his supervision of certain customer business with the bank. As vice president, Perez generally oversaw Ocean Bank’s lending relationships with corporate customers of the bank.
Perez admitted to accepting bribes, including payments for expensive watches, Super Bowl tickets and other items for his personal use, as well as substantial amounts of cash. Perez accepted the payments intending to be rewarded and influenced in connection with his role in approving Ocean Bank’s issuance of letters of credit, loans and overdraft privileges to his co-conspirators. Perez also admitted that he failed to report income from those bribes for tax years 2005, 2006 and 2007, resulting in lost tax revenue of approximately $91,000 to the federal government.
The investigation was conducted by the Antitrust Division’s Atlanta Field Office and Internal Revenue Service-Criminal Investigation in Atlanta and Miami, with assistance from the U.S. Attorney’s Office for the Southern District of Florida. Anyone with information concerning anticompetitive conduct in the banking industry is urged to call the Antitrust Division’s Atlanta Field Office at 404-331-7100 or visit www.justice.gov/atr/contact/newcase.htm.
Five New Orleans Police Officers Sentenced on Civil Rights and Obstruction of Justice Violations in the Danziger Bridge Shooting CaseRead the Press Release
WASHINGTON – The Justice Department announced today that five officers from the New Orleans Police Department (NOPD) were sentenced in connection with the federal civil rights prosecution of a police-involved shooting that occurred on the Danziger Bridge in the days after Hurricane Katrina, leaving two innocent civilians dead and four others seriously wounded. The defendants were also sentenced for their roles in an extensive cover-up of the shooting
U.S. District Court Judge Kurt Englehardt imposed long prison sentences on the four officers who were involved in the shooting on the bridge. He sentenced those four officers as follows:- Sergeant Kenneth Bowen was sentenced to 40 years in prison;
- Sergeant Robert Gisevius was sentenced to 40 years in prison;
- Officer Robert Faulcon was sentenced to 65 years in prison; and
- Officer Anthony Villavaso was sentenced to 38 years in prison.
The fifth officer, Sergeant Arthur “Archie” Kaufman, was a supervisor who was not involved in the shooting, but who helped the other officers cover up what they had done. Kaufman was sentenced to six years in prison.
“We hope that today’s sentences give a measure of peace and closure to the victims of this terrible shooting, who have suffered unspeakable pain and who have waited so patiently for justice to be done. The officers who shot innocent people on the bridge and then went to great lengths to cover up their own crimes have finally been held accountable for their actions,” said Assistant Attorney General for the Civil Rights Division Thomas E. Perez. “As a result of today’s sentencing, the city of New Orleans can take another step forward.”
“Our undying gratitude goes to our partners in the Civil Rights Division and FBI who, together with the tremendous professionals in the United States Attorney=s Office, made today=s closure – and justice – possible,” said U.S. Attorney for the Eastern District of Louisiana Jim Letten. “I am equally grateful to the courageous families of James Brissette and Ronald Madison who gave their lives on the bridge, as well as to those who suffered abuse needlessly at the hands of a few corrupt police officers. We will never relent, back down or give up our fight to ensure that our citizens – especially those most vulnerable among us – never have to fear those who are sworn to protect them.”
“Today’s sentencings send a strong message that no one is above the law and the civil rights of all of our citizens are paramount in a free society,” said Special Agent in Charge of the FBI’s New Orleans Division David Welker. “My hope as we move forward is that the men and women of NOPD and all law enforcement will conduct themselves always in a manner that will withstand the scrutiny of the bright light of justice.”
Bowen, Gisevius, Faulcon and Villavaso were convicted in connection with the shootings of multiple victims, including 17-year-old James Brissette and 40-year-old Ronald Madison, who died on the bridge. Those four officers and a supervisor, Kaufman, also were convicted of obstructing justice during the subsequent investigations.
Five other officers pleaded guilty before trial and cooperated with the federal investigation. Those officers testified at trial about the unjustified shooting on the bridge and about a massive police cover-up that followed.
The evidence at trial established that a group of police officers – including Sergeant Bowen, Sergeant Gisevius, Officer Faulcon and Officer Villavaso – opened fire with assault rifles and a shotgun, shooting at an unarmed family walking on the east side of the bridge. Police gunfire struck the victims multiple times, wounding a New Orleans couple, their daughter, and their nephew, and killing family-friend James Brissette. Susan Bartholomew, 38, suffered serious injuries, including the loss of her right arm, which was shot off by a high-powered assault rifle; Leonard Bartholomew III, 44, was shot in the leg and the back of the head, but survived his wounds; Lesha Bartholomew, 17, was shot in both legs and in the stomach; and the Bartholomew’s nephew, Jose Holmes, 19, was shot in the face, the neck, both arms, the hand and the stomach. James Brissette, who was shot in the back, the leg, both arms and the back of the head, died on the bridge. The Bartholomew’s 14-year-old son ran away from the shooting and was fired at, but was not injured.
According to the evidence presented at trial, a second shooting occurred several minutes later, on the west side of the Danziger Bridge. After shooting at the Bartholomew Family and James Brissette, officers traveled to the other side of the bridge to chase two men – brothers Lance and Ronald Madison – who had run away when the shooting started. Officers caught up to the Madisons on the west side of the bridge, where Officer Faulcon used a shotgun to shoot Ronald Madison in the back as Madison was running away. Ronald, a 40-year-old man with severe mental and physical disabilities, died near the base of the bridge.When the shooting was over, according to witnesses at trial, the officers at the scene immediately started a cover-up. Lance Madison was arrested and falsely charged with eight counts of attempting to kill police officers. Officers collected no guns or shell casings on the day of the shooting, and 30 casings they collected more than a month later were fired by officers rather than civilians. Three weeks after the shooting, Kaufman testified at a court appearance for Madison, claiming falsely that Madison had had a gun on the bridge and had shot at police. Madison was held in jail for three weeks, but was eventually released without being formally charged.
The evidence at trial also established that all five defendants conspired with each other, and with the officers who pleaded guilty, to cover-up what had happened on the bridge and to make the shootings appear justified. As part of the conspiracy, Kaufman obtained a gun from his home and claimed to have found the gun at the bridge on the day after the shooting. According to testimony, Kaufman also made up the existence of two phony eyewitnesses and fabricated alleged statements that he claimed to have taken from these witnesses and that he claimed helped justify the shootings. There was also testimony that Kaufman and the other members of the conspiracy held a meeting in an abandoned and gutted out NOPD building, where the officers practiced getting their stories straight before they gave formal audiotaped statements about the shooting.
Kaufman, who wrote a formal report about the incident, in which he concluded that the shooting was justified and that Lance Madison and Jose Holmes should be arrested, was also found guilty of conspiring with other officers to have Madison and Holmes prosecuted on the basis of false evidence.The five former NOPD officers who pleaded guilty before trial, admitting that they had participated in a conspiracy to obstruct justice and cover-up what happened on Sept. 4, 2005, were all sentenced previously. Former Officer Mike Hunter was sentenced to serve eight years in prison; former officer Ignatius Hills was sentenced to serve six-and-a-half years; former officer Robert Barrios was sentenced to serve five years; former lieutenant Michael Lohman was sentenced to serve four years; and former detective Jeffrey Lehrmann was sentenced to serve three years.
This case was investigated by the FBI’s New Orleans Field Office, and was prosecuted by Deputy Chief Bobbi Bernstein and Trial Attorney Cindy Chung of the Justice Department’s Civil Rights Division, along with Assistant U.S. Attorney Theodore Carter of the Eastern District of Louisiana.Departments of Justice and Health and Human Services Highlight Obama Administration Efforts, Health Reform Tools to Combat Medicare FraudRead the Press Release
WASHINGTON – At a Chicago summit highlighting a new high-tech war against health care fraud, Health and Human Services (HHS) Secretary Kathleen Sebelius and Attorney General Eric Holder today discussed how the Affordable Care Act and the Obama Administration’s Health Care Fraud Prevention and Enforcement Action Team (HEAT) are helping fight Medicare fraud. The Chicago summit is the seventh regional health care fraud prevention summit hosted by the Department of Justice and HHS.
The regional summits bring together a wide array of public and private partners, and are part of the HEAT partnership between HHS and the Department of Justice to prevent and combat health care fraud. The Obama Administration’s HEAT efforts have resulted in record-breaking health care fraud recoveries. In fiscal year 2011, for the second year in a row, the departments’ anti-fraud activities resulted in more than $4 billion in recoveries, an all-time high.
“This Administration continues to move aggressively in protecting patients and consumers and bringing health care fraud criminals to justice,” said Attorney General Holder. “Through HEAT, we have achieved unprecedented, record-breaking successes in combating health care fraud and as a result of the Affordable Care Act, we have additional critical resources, tools and authorities to continue this great success.”
“We have a simple message to criminals thinking about committing Medicare fraud: don’t even try,” said Secretary Sebelius. “Thanks to health reform and our Administration’s work, we have new tools and resources to catch criminals and stop Medicare fraud before it happens.”
New tools provided by the Affordable Care Act are strengthening the Obama Administration’s efforts to fight health care fraud. As a result of Affordable Care Act provisions:
- Criminals face tougher sentences for health care fraud, 20-50 percent longer for crimes that involve more than $1 million in losses;
- Contractors that police the Medicare program for waste, fraud and abuse will expand their work to Medicaid, Medicare Advantage and Medicare Part D programs;
- Government entities, including states, the Centers for Medicare and Medicaid Services (CMS) and law enforcement partners at the Office of the Inspector General (OIG) and the Justice Department, have greater abilities to work together and share information so that CMS can prevent money from going to bad actors by using its authority to suspend providers and suppliers engaged in suspected fraudulent activity.
A fact sheet with additional details about the Obama Administration’s efforts to combat health care fraud can be found at www.healthcare.gov/news/factsheets/2012/02/medicare-fraud02142012a.html.
Increased collaboration has yielded significant results through the HEAT partnership. Since the creation of HEAT in 2009, the Medicare Fraud Strike Force operations have expanded from two to nine locations throughout the United States, including Chicago. Strike force operations expanded to Chicago in February 2011 and since that time, charges have been filed against more than 35 defendants in the Northern District of Illinois for offenses related to health care fraud. Overall, in fiscal year 2011, strike force operations in nine locations charged a total of more than 320 defendants for allegedly billing more than $1 billion in false claims.
In February 2012, as a result of HEAT and strike force actions, a Dallas-area physician and the office manager of his medical practice, along with five owners of home health agencies, were arrested on charges related to their alleged participation in a nearly $375 million health care scheme involving fraudulent claims for home health services. In conjunction with this action, CMS imposed payment suspensions against 78 home health agencies in the Dallas area.
Today, the Obama Administration also announced more progress from its anti-fraud efforts, beyond the nearly $4.1 billion recovered last year:
- In the early phase of revalidating the enrollment of providers in Medicare, 234 providers were removed from the program because they were deceased, debarred or excluded by other federal agencies, or were found to be in false storefronts or otherwise invalid business locations;
- In 2011, HHS revoked 4,850 Medicaid providers and suppliers and deactivated 56,733 Medicare providers and suppliers as HHS took steps to close vulnerabilities in the Medicare program;
- In 2011, HHS saved $208 million through pre-payment edits that stop implausible claims before they’re paid;
- Prosecutions are up: the number of individuals charged with fraud increased from 797 in fiscal year 2008 to 1,430 in fiscal year 2011 – nearly a 75 percent increase;
- In the first few weeks of enhanced site visits required under the ACA screening requirements, HHS found 15 providers and suppliers whose business locations were non-operational and terminated their billing privileges;
- Through outreach and engagement efforts more than 49,000 complaints of fraud from seniors and people with disabilities reported to 1-800-MEDICARE were referred for further evaluation;
- A recent re-design of the quarterly Medicare Summary Notices received by Medicare beneficiaries makes it easier to spot and report fraud.
Tuesday 3 April 2012
Three Men Convicted in Puerto Rico for Roles in Providing Armed Security for Drug TransactionsRead the Press Release
WASHINGTON – Three men, including a former officer with the Puerto Rico Department of Corrections, were convicted by a federal jury in San Juan, Puerto Rico, yesterday for their roles in providing security for drug transactions, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Rosa E. Rodriguez-Velez of the District of Puerto Rico and Special Agent in Charge Joseph S. Campbell of the FBI’s San Juan Field Office.
Wendell Rivera Ruperto, 37, was convicted of five counts of conspiracy to possess with intent to distribute more than five kilograms of cocaine, five counts of attempting to possess with the intent to distribute more than five kilograms of cocaine and five counts of possession of a firearm in furtherance of a drug transaction.
Bernis Gonzalez Miranda, 27, a former Puerto Rico Department of Corrections officer, was convicted of three counts of conspiracy to possess with intent to distribute more than five kilograms of cocaine, three counts of attempting to possess with the intent to distribute more than five kilograms of cocaine and three counts of possession of a firearm in furtherance of a drug transaction.
Jose M. Nieves-Velez, 39, was convicted of one count each of conspiracy to possess with intent to distribute more than five kilograms of cocaine, attempting to possess with the intent to distribute more than five kilograms of cocaine and possession of a firearm in furtherance of a drug transaction.
Rivera Ruperto, Gonzalez Miranda and Nieves-Velez were charged in a superseding indictment returned on Oct. 28, 2010, along with 88 law enforcement officers in Puerto Rico and 42 other individuals, as part of the FBI undercover operation known as Guard Shack.
According to the evidence presented in court, Rivera Ruperto provided security for what he believed were illegal cocaine deals on five separate occasions (April 14, April 27, June 9, June 25, and Sept. 16, 2010); Gonzalez Miranda on three separate occasions (June 15, July 2, and July 7, 2010); and Nieves-Velez on one occasion (July 7, 2010). In fact, the purported drug transactions were part of the undercover FBI operation. According to information presented at trial, the three men acted as security guards for what they believed were multi-kilogram cocaine deals by frisking the buyer, providing armed protection for the deal and escorting the buyer in and out of the transaction. Information presented at trial also showed that Rivera Ruperto and Gonzalez Miranda recruited other individuals, including law enforcement officers, to participate in the transactions.
One of those officers, Jose Bermudez Quinones, a Puerto Rico Department of Corrections officer recruited by Gonzalez Miranda, pleaded guilty on Feb. 2, 2012, to attempting to possess with intent to distribute cocaine, and possessing a firearm in furtherance of a drug trafficking crime. He is scheduled to be sentenced on June 15, 2012.
In return for the security they provided, Rivera Ruperto, Gonzalez Miranda and Nieves-Velez received cash payments of $2,000 for each transaction, and in one instance, Rivera Ruperto received $3,000.
U.S. District Judge Juan Pérez-Giménez scheduled sentencing for Aug. 10, 2012. At sentencing, Rivera Ruperto faces a mandatory minimum sentence of 115 years in prison and a maximum penalty of life in prison; Gonzalez Miranda faces a mandatory minimum of 65 years and a maximum penalty of life in prison; and Nieves-Velez faces a mandatory minimum of 15 years and a maximum penalty of life in prison.
The case was prosecuted by Trial Attorneys Kevin Driscoll and Monique Abrishami of the Criminal Division’s Public Integrity Section. The case was investigated by the FBI. The Bureau of Alcohol, Tobacco, Firearms and Explosives also provided assistance in this case. The U.S. Attorney’s Office for the District of Puerto Rico also participated in the investigation and prosecution of this case.
Miami-Area Assisted Living Facility Owner Pleads Guilty to Fraud and Kickback SchemeRead the Press Release
WASHINGTON – The owner of a Miami-area assisted living facility pleaded guilty yesterday for her role in a kickback scheme that funneled patients to a fraudulent mental health provider, American Therapeutic Corporation (ATC), announced the Department of Justice, FBI and Department of Health and Human Services (HHS).
Billy Denica, 50, pleaded guilty before U.S. District Judge Joan A. Lenard in Miami to one count of conspiracy to commit health care fraud. Denica was the owner of an assisted living facility called Robyll Care Assisted Living Facility.
According to court documents, Denica agreed to send Medicare beneficiaries who resided at Robyll to ATC for mental health treatment called partial hospitalization program (PHP) services in exchange for illegal health care kickbacks. ATC purported to operate PHPs in seven different locations throughout south Florida and Orlando. According to court documents, Denica admitted that she knew ATC fraudulently billed Medicare for the PHP treatment that her referrals purportedly received at ATC. Denica was aware that some of the Robyll residents would be offered gifts such as money, cigarettes and candy, so that they would agree to be admitted to a hospital for purposes of later attending ATC. She also admitted that she referred her residents to ATC simply because they had Medicare, because she would receive a cash kickback and because they were willing to go.
According to the plea agreement, Denica’s participation in the fraud resulted in more than $1.1 million in fraudulent billing to the Medicare program. At sentencing, scheduled for June 11, 2012, Denica faces a maximum of 10 years in prison and a $250,000 fine.
ATC, its management company Medlink Professional Management Group Inc., a related company called American Sleep Institute (ASI), and various owners, managers, doctors, therapists, patient brokers and marketers of ATC and Medlink and ASI, were charged with various health care fraud, kickback, money laundering and other offenses in two indictments unsealed on Feb. 15, 2011. ATC, Medlink and 14 of the individual defendants have pleaded guilty or have been convicted at trial. Seven other defendants are scheduled for trial April 9, 2012, before U.S. District Judge Patricia A. Seitz, and one defendant’s trial has been deferred until after June 2012. A defendant is presumed innocent unless proven guilty beyond a reasonable doubt in a court of law.
The guilty plea was announced today by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; John V. Gillies, Special Agent-in-Charge of the FBI’s Miami Field Office; and Special Agent-in-Charge Christopher B. Dennis of the HHS Office of Inspector General (HHS-OIG), Office of Investigations Miami Office.
The case is being prosecuted by Trial Attorneys Steven Kim and Jennifer L. Saulino of the Criminal Division’s Fraud Section. The case was investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.
Since its inception in March 2007, the Medicare Fraud Strike Force operations in nine locations have charged more than 1,190 defendants that collectively have billed the Medicare program for more than $3.6 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.
Georgia-Based Radiation Oncology Practice to Pay $3.8 Million to Settle False Claims Act CaseRead the Press Release
WASHINGTON – Radiotherapy Clinics of Georgia LLC, a radiation oncology practice, and its affiliates RCOG Cancer Centers LLC, Physician Oncology Services Management Company LLC, Frank A. Critz, M.D. and Physician Oncology Services L.P. (collectively, RCOG) agreed to pay $3.8 million to settle claims that they violated the False Claims Act, the Justice Department announced today. RCOG, which is located in Decatur, Ga., allegedly billed Medicare for medical treatment that they provided to prostate cancer patients in excess of those permitted by Medicare rules and for services that were not medically necessary.
The civil settlement resolves complaints filed by two whistleblowers, called relators, under the qui tam, or whistleblower, provisions of the False Claims Act by a former employee and a former doctor who both worked for RCOG. The government alleged that RCOG overbilled Medicare for port films (X-ray images of the treatment area) and for simulations (the process by which radiation treatment fields are defined, filmed and marked on the skin in preparation for personalized radiation therapy). Additionally, it was alleged that the practice overbilled Medicare for physics consults (production of complete special consultative reports for an individual patient) and for pre-plans ordered by Dr. Critz that were not medically necessary and/or never reviewed by the doctor.“Protecting the integrity of the Medicare program, which over 47 million individuals rely on for their medical care, is one of the department’s highest priorities. Health care providers are put on notice that they must bill only for medically appropriate care” said Stuart F. Delery, Acting Assistant Attorney General for the Justice Department’s Civil Division.
The complaints, which were filed separately by the two relators, were consolidated into the case captioned United States ex rel. R. Jeffrey Wertz and Rebecca S. Tarlton v. Radiotherapy Clinics of Georgia, LLC, et al., Civil Action No. 1:08-CV-2244, pending in the U.S. District Court for the Northern District of Georgia. The relators, R. Jeffrey Wertz and Rebecca S. Tarlton, M.D., will receive $646,000 as their share of the proceeds.
Sally Quillian Yates, U.S. Attorney for the Northern District of Georgia, said, “This settlement demonstrates our office's continued commitment to stop Medicare fraud. Unfortunately, otherwise legitimate businesses continue to take advantage of federal healthcare programs for their private profit. We will not ignore these violations.”
“The OIG would like to remind providers that if they know a claim to be false, it is their responsibility to bill the claim properly,” said Derrick L. Jackson, Special Agent in Charge of the U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG) for the Atlanta region. “The OIG will continue to hold companies like RCOG responsible for improper claims.”
Brian D. Lamkin, Special Agent in Charge, FBI Atlanta Field Office, stated: “The FBI continues to dedicate many investigative resources to the protection of the federally funded Medicare program from individuals who would attempt to divert these much needed funds through fraud. The public is reminded that anyone with information regarding healthcare fraud, to include Medicare fraud, related activity should contact their nearest FBI field office.”
This resolution is part of the government’s emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover more than $6.7 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department's total recoveries in False Claims Act cases since January 2009 are over $9 billion.
This case was investigated jointly by the Commercial Litigation Branch of the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Northern District of Georgia, the FBI and HHS-OIG.The claims settled by today’s agreement are allegations only; there has been no determination of liability.
G.S. Electech Agrees to Plead Guilty to Price Fixing on Auto Parts Installed in U.S. CarsRead the Press Release
WASHINGTON – Toyota City, Japan-based G.S. Electech Inc. has agreed to plead guilty and to pay a $2.75 million criminal fine for its role in a conspiracy to fix the prices of auto parts used on antilock brake systems installed in U.S. cars, the Department of Justice announced today.
According to a one-count felony charge filed today in the U.S. District Court for the Eastern District of Michigan, in Detroit, G.S. Electech engaged in a conspiracy to rig bids and to fix the prices of speed sensor wire assemblies, which are installed on automobiles with an antilock brake system (ABS) and were sold to an automaker in the United States and elsewhere. According to the charge, G.S. Electech’s involvement in the conspiracy lasted from at least as early as January 2003 until at least February 2010. According to the plea agreement, which is subject to court approval, G.S. Electech has agreed to pay a criminal fine and to cooperate with the department’s ongoing investigation.
"The Antitrust Division continues to uncover and prosecute illegal conduct in its ongoing and active investigation into price fixing and bid rigging in the auto parts industry,” said Acting Assistant Attorney General Sharis A. Pozen in charge of the Department of Justice’s Antitrust Division. “Today’s announcement demonstrates that the Antitrust Division, working with its law enforcement partners, will continue to pursue those who engage in anticompetitive behavior that harms American businesses and consumers.
Including G.S. Electech, eight executives and four companies have been charged and have agreed to plead guilty in the investigation thus far. Three of the companies have pleaded guilty and have been sentenced to pay criminal fines totaling more than $748 million. Seven of the executives have pleaded guilty and have been sentenced to serve a total of more than 122 months in jail.
G.S. Electech manufactures, assembles and sells a variety of automotive electrical parts, including speed sensor wire assemblies. The speed sensor wire assemblies connect a sensor on each tire to the ABS and carry electrical signals from the sensors to the ABS to instruct it when to engage.
According to the charge, G.S. Electech and its co-conspirators carried out the conspiracy by, among other things, agreeing during meetings and discussions in Japan to coordinate bids submitted to, and price adjustments requested by, an automobile manufacturer. In court documents, G.S. Electech and its co-conspirators employed measures to keep their conduct secret, including using code names and instructing participants to destroy evidence of collusion.
G.S. Electech is charged with price fixing in violation of the Sherman Act, which carries a maximum fine of $100 million for corporations. The maximum fine for the company 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 is the result of an investigation 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 call the FBI’s Detroit Field Office at 313-965-2323.
Florida-Based Wellcare Health Plans Agrees to Pay $137.5 Million to Resolve False Claims Act AllegationsRead the Press Release
WASHINGTON – WellCare Health Plans Inc. will pay $137.5 million to the federal government and nine states to resolve four lawsuits alleging violations of the False Claims Act, the Justice Department announced today. WellCare, based in Tampa, Fla., provides managed health care services for approximately 2.6 million Medicare and Medicaid beneficiaries nationwide.
The lawsuits alleged a number of schemes to submit false claims to Medicare and various Medicaid programs, including allegations that WellCare falsely inflated the amount it claimed to be spending on medical care in order to avoid returning money to Medicaid and other programs in various states, including the Florida Medicaid and Florida Healthy Kids programs; knowingly retained overpayments it had received from Florida Medicaid for infant care; and falsified data that misrepresented the medical conditions of patients and the treatments they received.
Additionally, it was alleged that WellCare engaged in certain marketing abuses, including the “cherrypicking” of healthy patients in order to avoid future costs; manipulated “grades of service” or other performance metrics regarding its call center; and operated a sham special investigations unit.
The settlement requires that Wellcare pay the United States and nine states – Connecticut, Florida, Georgia, Hawaii, Illinois, Indiana, Missouri, New York and Ohio – a total of $137.5 million. WellCare may also be required to pay an additional $35 million in the event that the company is sold or experiences a change in control within three years of this agreement.
“Government health plans increasingly rely on managed care organizations to provide patient care. This case illustrates our commitment to ensure that government funds are in fact used to render care and not to line the pockets of those more concerned with the bottom line,” said Stuart F. Delery, Acting Assistant Attorney General for the Justice Department’s Civil Division.
This is the second monetary settlement reached with WellCare since the government initiated a criminal and civil investigation of WellCare in 2006. On May 5, 2009, in order to resolve potential criminal charges related to losses by the Florida Medicaid and Healthy Kids programs, WellCare entered a Deferred Prosecution Agreement (DPA) with the U.S. Attorney in the Middle District of Florida, under which WellCare paid $40 million in restitution and forfeited an additional $40 million. The U.S. Attorney’s office also has pursued criminal charges against several former Wellcare employees. One former WellCare analyst, Gregory West, entered into a plea agreement and pleaded guilty to a conspiracy charge shortly after execution of a search warrant on WellCare’s corporate headquarters in Tampa; he is currently awaiting sentencing. Five former executives – including former CEO Todd Farha, former CFO Paul Behrens and former general counsel Thaddeus Bereday – were indicted in March 2011 and are currently awaiting trial, which is presently scheduled for January 2013. Additionally, Wellcare previously executed a Corporate Integrity Agreement (CIA) with the Office of Inspector General of the U.S. Department of Health and Human Services (HHS-OIG) that imposes compliance obligations on the company for a period of five years.
The resolution of the civil suits announced today brings the total recoveries from WellCare to $217.5 million, a number that will rise to over a quarter billion ($252.5 million) if the contingency payment provision is triggered.
“The monies recovered in restitution and from this settlement agreement will go to the federal and state programs which suffered these losses, while the forfeited funds will go to law enforcement to help fund future investigations,” said Robert E. O’Neill, U.S. Attorney for the Middle District of Florida. O’Neill continued, “In an era of decreasing federal and state budgets, and increasing healthcare costs, we must pursue all available civil remedies to recover losses suffered by government healthcare programs. This settlement should serve as notice to those defrauding state and federal healthcare programs that, in addition to appropriate criminal prosecutions, we will utilize civil suits to root out their conduct and recover their ill-gotten gains.”
“Fraud committed by managed care companies harms the integrity of the Medicare and Medicaid programs and increases the healthcare burden for all of us,” said David B. Fein, U.S. Attorney for the District of Connecticut. “The government is committed to preventing fraud in federal and state health care programs, and managed care companies that are dishonest will be held accountable.”
“Ensuring the integrity of the Medicaid and Medicare managed care programs is one of our highest priorities ” said Daniel R. Levinson, Inspector General of the U.S. Department of Health & Human Services. “OIG will work vigilantly with law enforcement partners at all levels of government to safeguard this vital program.”
The four lawsuits were filed by whistleblowers, known as relators, under the qui tam provisions of the False Claims Act, which allows private parties to file suit on behalf of the United States and share in any recovery. Sean Hellein, a financial analyst formerly employed by WellCare whose qui tam complaint initiated the government’s investigation, will receive approximately $20.75 million. The other three relators – Clark Bolton, SF United Partners Inc. and Eugene Gonzalez – will split about $4.66 million and will be entitled to receive an additional share of any contingency payment.
This resolution is part of the government's emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover more than $6.7 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department's total recoveries in False Claims Act cases since January 2009 are over $9 billion.
This case was investigated jointly by the Commercial Litigation Branch of the Justice Department’s Civil Division, the United States Attorney’s Office for the Middle District of Florida and the District of Connecticut, the National Association of Medicaid Fraud Control Units, the FBI, and the HHS-OIG.
The claims settled by today’s agreement are allegations only; there has been no determination of liability except as noted in the referenced criminal proceeding.
Monday 2 April 2012
Two Owners and Two Employees of Miami Home Health Company Plead Guilty in $20 Million Health Care Fraud SchemeRead the Press Release
WASHINGTON – Two owners and two employees of a Miami home health care agency pleaded guilty for their participation in a $20 million Medicare fraud scheme involving false billings for home health care services, announced the Department of Justice, the FBI and the Department of Health and Human Services (HHS).
Ariel Rodriguez, 41, Reynaldo Navarro, 37, and Ysel Salado, 26, each pleaded guilty today before U.S. District Judge Marcia G. Cooke to one count of conspiracy to commit health care fraud, and Melissa Rodriguez, 24, pleaded guilty on March 28, 2012, before Judge Cooke to the same charge.
According to court documents, Ariel Rodriguez and Reynaldo Navarro were the owners of Serendipity Home Health Inc., a Florida home health agency that purported to provide home health care and physical therapy services to eligible Medicare beneficiaries. Melissa Rodriguez and Ysel Salado were employees at Serendipity Home Health.According to plea documents, Ariel Rodriguez, Navarro and their co-conspirators paid kickbacks and bribes to patient recruiters. In return, the recruiters provided patients to Serendipity, as well as prescriptions, plans of care (POCs) and certifications for medically unnecessary therapy and home health services. Ariel Rodriguez and Navarro used the prescriptions, POCs and medical certifications to fraudulently bill the Medicare program, which Ariel Rodriguez and Navarro knew was in violation of federal criminal laws.
Melissa Rodriguez and Salado admitted that they cashed checks from Serendipity and provided the cash to Ariel Rodriguez and Navarro to use for the kickback payments.
According to plea documents, Serendipity nurses and office staff falsified patient files for Medicare beneficiaries to make it appear that the beneficiaries qualified for home health care and therapy services. In fact, the beneficiaries did not actually qualify for and did not receive such services. Ariel Rodriguez and Navarro admitted that they knew files were falsified so that Medicare could be billed for medically unnecessary services.
From approximately April 2007 through March 2009, Ariel Rodriguez, Navarro and their co-conspirators submitted approximately $20 million in false and fraudulent claims to Medicare. Medicare paid approximately $14 million on those claims.
The pleas were announced today by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; 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 Florida.
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.
New Hampshire and Massachusetts Residents Convicted for Promoting and Using Tax Defier SchemesRead the Press Release
A federal jury in Worcester, Mass., convicted William Scott Dion and Catherine Floyd, both of Sanbornville, N.H., and Charles Adams of Norwood, Mass., for conspiracies to defraud the United States through the promotion and use of multiple tax fraud schemes, the Justice Department and the Internal Revenue Service (IRS) announced today.
Dion and Floyd were released on electronic monitoring bracelets pending sentencing and Adams was released on call in/voice recognition pending sentencing. Dion’s sentencing is scheduled for June 21, 2012, Floyd’s sentencing is scheduled for June 26, 2012 and Adams’s sentencing is scheduled on June 27, 2012, all before U.S. District Judge F. Dennis Saylor.
Dion, Floyd and Adams were convicted of conspiracy to defraud the IRS by promoting an “under the table” payroll scheme. Dion and Floyd were also convicted for conspiracy to defraud the IRS through the use of an “underground warehouse banking” scheme designed to conceal customer income and assets from the IRS. Floyd and Dion were also convicted separately for corruptly endeavoring to obstruct the IRS’s ability to determine their own income. Adams was separately convicted of tax evasion.
According to the evidence presented at trial, Dion, Floyd and Adams ran a payroll tax scheme in order to pay employees “under the table” without properly accounting for, withholding and paying over to the IRS the payroll taxes required by law. The three promoted the payroll scheme to employers and individuals who wanted to avoid payment of employer payroll taxes and individual payroll taxes. The three ran the payroll scheme under three different names: Contract America, Talent Management and New Way Enterprises. Approximately 150 individuals subscribed to the payroll scheme and in excess of $2.5 million in unreported wages and compensation were paid through the system.
The evidence at trial also proved that Dion and Floyd conspired to defraud the United States by promoting and operating an “underground warehouse banking” scheme which helped subscribers conceal income and assets from the IRS. According to the evidence, the warehouse scheme operated under three different names: Your Virtual Office, Office Services and Calico Management. As part of the warehouse banking scheme, the defendants maintained accounts at several banks and used the accounts to deposit and commingle business receipts and other funds received from subscribers in order to mask the true ownership of the funds. According to evidence presented at trial, more than $28 million in deposits were made into the various bank accounts used in the scheme.
In August 2009, the three defendants were indicted with four other individuals relating to the promotion and use of these schemes. On Dec. 9, 2011, prior to trial, Gail and Myron Thorick of West Warwick, R.I., pleaded guilty to conspiring to defraud the United States by helping operate the “warehouse banking” scheme and for filing false tax returns. On that same date, Gary Alcock pleaded guilty to conspiracy by using the payroll scheme, as well as to tax evasion and willful failure to file tax returns. OnJan. 24, 2012, Kenneth Scott Alcock pleaded guilty to conspiracy relating to the payroll scheme and to multiple counts of tax evasion. All four defendants are awaiting sentencing.
The defendants face up to five years in prison on each count of conspiracy to defraud the United States and tax evasion, together with fines of up to $250,000 or twice the financial gain to the defendant or loss to the IRS, to be followed by three years of supervised release. The charges for obstructing the IRS carry maximum penalties of three years in prison, fines of $250,000 and one year of supervised release.
The U.S. Attorney and the Principal Deputy Assistant Attorney General of the Tax Division jointly announced the verdict.
The case was investigated by Special Agents of the IRS-Criminal Investigation. It is being prosecuted jointly by the U.S. Attorney’s Office in Boston, and the Tax Division of the U.S. Department of Justice in Washington DC. Assistant U.S. Attorney Victor A. Wild, and Assistant Chief John N. Kane and Trial Attorney Jeffrey L. Shih of the Justice Department’s Tax Division prosecuted the case.
More information about the Tax Division and its enforcement efforts can be found at www.justice.gov/tax .
Michigan Man Arrested on Tax ChargesRead the Press Release
Steven Kern of Marine City, Mich., was arrested today following his indictment on March 27, 2012, on eight counts of failing to file his individual tax returns and eight counts of filing false corporate tax returns, the Justice Department and Internal Revenue Service (IRS) announced today.
The indictment alleges that Kern failed to file individual tax returns for tax years 2003 to 2010, despite earning more $1.2 million in gross income during that time period. The indictment further alleges that Kern filed false corporate tax returns on the behalf of Kern Chiropractic Center, failing to report cash and check payments diverted from the center by Kern from 2003 to 2010.
According to the indictment, Kern has not submitted a tax return to the IRS since tax year 2002. The indictment alleges that Kern used funds diverted from the Kern Chiropractic Center to pay for his own personal expense.
An indictment is merely a formal charge by the grand jury. Kern is presumed innocent unless and until proven guilty in U.S. District Court. If convicted of all charges, Kern faces a maximum potential sentence of 32 years in prison and maximum fines of up to $2.8 million.
The case was investigated by the IRS Criminal Investigation Division and is being prosecuted by Trial Attorneys Mark McDonald and Jeff Bender of the Justice Department’s Tax Division.
Justice Department to Monitor Election in WisconsinRead the Press Release
WASHINGTON – The Justice Department announced today that the Civil Rights Division will monitor the election on April 3, 2012, in Milwaukee. The monitoring will ensure compliance with the Voting Rights Act of 1965 and other federal voting rights statutes. The Voting Rights Act prohibits discrimination in the election process on the basis of race, color or membership in a minority language group. In addition, the act requires certain covered jurisdictions to provide language assistance during the election process. The city of Milwaukee is required to provide assistance in Spanish.
Justice Department personnel will monitor polling place activities in Milwaukee. Civil Rights Division attorneys will coordinate federal activities and maintain contact with local election officials.
Each year, the Justice Department deploys hundreds of federal observers from the Office of Personnel Management, as well as departmental staff, to monitor elections across the country. To file complaints about discriminatory voting practices, including acts of harassment or intimidation, voters may call the Voting Section of the Justice Department’s Civil Rights Division at 1-800-253-3931.
Visit www.justice.gov/crt/voting/index.php for more information about the Voting Rights Act and other federal voting laws.
Justice Department Alleges GFI Mortgage Bankers Engaged in Illegal Lending DiscriminationRead the Press Release
WASHINGTON – The Department of Justice and the U.S. Attorney’s Office for the Southern District of New York filed a lawsuit alleging that GFI Mortgage Bankers Inc., a mortgage banker with operations in seven states, violated federal fair lending laws by charging African-American and Hispanic borrowers higher interest rates and fees on home mortgage loans because of their race or national origin, not based on their creditworthiness.
The complaint, filed today in the Southern District of New York under the federal Fair Housing Act and Equal Credit Opportunity Act, alleges that GFI engaged in a pattern or practice of discrimination on the basis of race and national origin by charging African-American and Hispanic borrowers higher interest rates and fees on home mortgage loans compared to similarly-situated white borrowers. The Department of Justice and the U.S. Attorney’s Office for the Southern District of New York investigated and filed the lawsuit jointly.
“Charging people more for home loans simply because of their race or national origin – as we have alleged in our complaint against GFI – is illegal. The Justice Department will act aggressively to ensure that all people have equal access to credit and a level playing field ,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “For that reason, vigorous enforcement of fair lending laws remains a top priority.”
U.S. Attorney for the Southern District of New York Preet Bharara said, “As the lawsuit we filed today alleges, discrimination still exists in certain quarters and it has profound consequences for the victims. At a time when so many American homeowners of all races and nationalities are struggling to make their mortgage payments, it is unacceptable that, as we allege, the impact of GFI Mortgage’s business practices resulted in its African-American and Hispanic customers paying higher fees and interest rates for their residential mortgages. As today’s suit demonstrates, this type of discriminatory action will not be tolerated. We will continue to work to ensure that fair lending laws are enforced throughout the district.”
“HUD and the Justice Department work together to end lending discrimination in America. This case and others nationwide demonstrate our commitment to pursue lenders if they violate the Fair Housing Act and seek relief for discrimination victims,” said Department of Housing and Urban Development (HUD) Assistant Secretary for Fair Housing and Equal Opportunity John Trasviña.
From 2005 through at least 2009, GFI charged higher loan prices to African-American and Hispanic borrowers than it charged to similarly-situated white borrowers by charging higher interest rates and fees for home mortgage loans. For example, an African-American borrower who took out a home mortgage loan in 2007 paid on average approximately $7,500 more over the first four years of the loan than a similarly-situated white borrower. For a Hispanic borrower, the difference was approximately $5,600 more over the first four years of the loan than a similarly-situated white borrower. The disparities, based on race or national origin, are statistically significant, and are unrelated to credit risk or loan characteristic.
During the period when the discrimination occurred, GFI had a policy or practice of allowing and encouraging its loan officers in New York and New Jersey to promote loan products, price loans and charge fees in a manner that was unrelated to credit risk or loan characteristics. GFI knew that its loan officers priced loans in ways unrelated to a borrower’s creditworthiness, resulting in thousands of dollars in overcharges for African-American and Hispanic borrowers based on their race or national origin. By providing its loan officers a substantial percentage of the profits generated on each loan, GFI’s compensation scheme provided strong financial incentives to loan officers to price their loan products in a discriminatory manner. Moreover, GFI failed to supervise, train, or adequately monitor its loan officers to ensure that they were pricing loans in a non-discriminatory manner.
During the period when the discrimination occurred, the number of home mortgage loans issued by GFI increased from 974 in 2005 to 2,270 in 2009. At the same time, GFI’s revenue from its home mortgage loan services increased from $305 million in 2005 to $768 million in 2009.
This case resulted from a referral by HUD to the Justice Department’s Civil Rights Division in 2010.
The Civil Rights Division and other agencies involved in this matter are part of the Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit www.StopFraud.gov.
African-American and Hispanic borrowers who received GFI loans since 2005, former employees of GFI or any other individuals with information relevant to this lawsuit are encouraged to contact the U.S. Department of Justice at 1-800-896-7743, mailbox 9992, or at:
Chief, Civil Rights Unit
U.S. Attorney’s Office, S.D.N.Y.
86 Chambers Street, 3rd Floor
New York, NY 10007A copy of the complaint, as well as additional information about fair lending enforcement by the Justice Department, can be obtained from the Justice Department website at www.justice.gov/fairhousing. Fighting illegal housing discrimination is a top priority of the Justice Department. More information about the Civil Rights Division and the laws it enforces is available at http://www.usdoj.gov/crt.
Former Civilian Contractor Pleads Guilty in North Carolina for Role in Scheme to Steal and Sell Military Equipment in IraqRead the Press Release
WASHINGTON – A former U.S. civilian contractor pleaded guilty today in the Eastern District of North Carolina to conspiring to steal military generators in Iraq in 2011 and selling them on the black market, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Thomas G. Walker for the Eastern District of North Carolina.
David John Welch, 36, of Hope Mills, N.C., pleaded guilty before U.S. District Judge W. Earl Britt to a criminal information charging him with one count of conspiracy to steal property under the control of a government contractor.
According to court documents, in 2011, Welch was the operations and maintenance manager of a U.S. government contractor on Victory Base Complex in Baghdad. In this capacity, Welch had the ability to influence the distribution and movement of military equipment as well as U.S. government equipment. In addition, Welch was in charge of overseeing the movement of generators from the compound to the Defense Reutilization & Marketing Office (DRMO). In October 2011, Welch and a co-conspirator entered into a scheme to steal and later sell approximately 38 generators on the black market in Iraq to unknown co-conspirators by diverting these generators from the DRMO to an undisclosed location off-base in Iraq.
After the generators were stolen from the compound, Welch’s co-conspirator provided him with four stacks of $100 bills, totaling approximately $38,600.
At sentencing, scheduled for July 9, 2012, Welch faces a maximum penalty of five years in prison, a $250,000 fine and three years of supervised release following his prison term. As part of his guilty plea, Welch agreed to pay $160,000 in restitution to the United States.
This case is being prosecuted by Special Trial Attorney Mark Grider of the Criminal Division’s Fraud Section, on detail from the Special Inspector General for Iraq Reconstruction (SIGIR), and by Assistant U.S. Attorney Banumathi Rangarajan of the U.S. Attorney’s Office for the Eastern District of North Carolina. The case is being investigated by the FBI, SIGIR and the Major Procurement Fraud Unit of the U.S. Army Criminal Investigative Command.
Attorney General Holder Recognizes Six Cities for Youth Violence Prevention EffortsRead the Press Release
WASHINGTON – Attorney General Eric Holder today recognized six cities for their progress in preventing youth violence at the second annual summit of the National Forum on Youth Violence Prevention held in Washington, D.C. The Attorney General was joined by Secretary of Education Arne Duncan, Secretary of Health and Human Services Kathleen Sebelius, Secretary of Housing and Urban Development Shaun Donovan, White House Senior Advisor Valerie Jarrett and Office of National Drug Control Policy Director R. Gil Kerlikowske at the two-day summit.
In his remarks before summit participants today, the Attorney General announced preliminary plans to expand the forum to four additional cities through a competitive application process. The Attorney General also announced the launch of an online toolkit that will be available to the public and will provide resources on how to gather and use data on youth violence, identify community assets, develop measurable objectives and create and implement plans.
“Our goal is to expand the national conversation about youth violence and its impact on our homes and communities,” said Attorney General Holder. “The department is committed to working with our partners to create and sustain strategies to prevent this violence and keep our youth and communities safe.”
Launched in 2010 at the direction of President Obama, the forum is a network of communities and federal agencies working together to share information and build local capacity to prevent and reduce youth violence. Participating cities include Boston, Chicago, Detroit, Memphis, Tenn., Salinas, Calif., and San Jose, Calif. An interim independent assessment of the forum’s work in the six participating cities, conducted by John Jay College of Criminal Justice and Temple University’s Department of Criminal Justice recently, indicated promising results and progress to date.
On the first day of the two-day summit, mayors from the six cities presented their successes and challenges in addressing youth violence in their communities. Thirteen youth from various cities also led discussions and provided recommendations on how to prevent youth violence in their communities and Grammy-nominated hip hop artist Lecrae Moore shared his experiences with violence and gave a special performance. Tomorrow, representatives from the Department of Labor will announce jobs available for youth in the forum’s cities as part of the administration’s Summer Jobs+ initiative to support joint interagency youth violence prevention efforts.
Other forum speakers included Congressman Robert C. Scott, forum Mayors Dennis Donohue (Salinas), Rahm Emanuel (Chicago), Chuck Reed (San Jose), A C Wharton (Memphis) as well as Mayors Michael Nutter (Philadelphia) and Antonio Villaraigosa (Los Angeles), and representatives from Target Corporation, Casey Family Programs, and other business, faith and philanthropic leaders.
On Wednesday, April 4, 2012, following the forum, the White House will recognize 12 forum representatives as “Champions of Change” at a special awards ceremony to be held at the White House. The 12 will be honored as local leaders who have made a difference in their communities through their youth violence prevention efforts.
The Departments of Justice, Education, Health and Human Services, Housing and Urban Development and Labor and the White House Office of National Drug Control Policy are the forum’s federal partners. Participating cities are selected based on need, geographic diversity and willingness and capacity to undertake comprehensive efforts that are the hallmark of the forum. More details about the forum’s goals and city plans, the toolkit and the assessment are available at: www.findyouthinfo.gov.
Alabama Woman Indicted for Tax FraudRead the Press Release
A federal grand jury in Montgomery, Ala., returned an indictment on March 28, 2012, charging Wanda Davis with filing false federal income tax returns, the Justice Department and the Internal Revenue Service (IRS) announced today. The indictment was unsealed today following Davis’s initial appearance.
Davis is charged with 23 counts of filing false tax returns for clients. According to the indictment, from 2007 to 2011, Davis prepared 23 false tax returns while working at Davis Fast Tax and later her own business, Davis Tax Service. The tax returns claimed false deductions and business, resulting in inflated tax refunds.
An indictment merely alleges that crimes have been committed, and the defendant is presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Davis faces a maximum of three years in federal prison for each of the 23 false tax return counts. Davis is also subject to fines if convicted.
This case was investigated by IRS – Criminal Investigation special agents. U.S. Department of Justice Tax Division Trial Attorneys Michael Boteler and Chad Spraker are prosecuting the case with the assistance of the U.S. Attorney’s Office in the Middle District of Alabama.
Additional information about the Justice Department’s Tax Division and its enforcement efforts may be found at www.justice.gov/tax .
Friday 30 March 2012
West Memphis, Ark., Police Department Officer Convicted of Criminal Civil Rights ViolationRead the Press Release
WASHINGTON – A federal jury convicted West Memphis, Ark., Police Department (WMPD) Officer Scott McCall, 39, of West Memphis, Ark., of one misdemeanor count of Deprivation of Rights under Color of Law.
According to the evidence presented at trial, on June 14, 2010, McCall, while in the lobby of the WMPD, choked an arrestee who was handcuffed behind his back. Two WMPD dispatchers physically removed McCall from the man he was choking.
“This officer pledged to protect and serve, not to abuse and victimize those who are in his custody,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Justice Department is committed to holding officers who engage in such conduct accountable.”
West Memphis Police Department Director of Internal Affairs Lester Ditto, 56, was also charged with three counts of witness tampering for his role in the same incident. Ditto is scheduled to go to trial later this year.
A misdemeanor count of deprivation of rights under color of law carries a possible punishment of up to one year in prison and a fine of up to $100,000.
The investigation was conducted by the FBI. The case was prosecuted by Department of Justice Civil Rights Division Trial Attorneys Chiraag Bains and Henry Leventis, and Assistant U.S. Attorney Julie Peters from the Eastern District of Arkansas.
Virginia Man Sentenced to 24 Months for Scheme to Conceal Pakistan Government Funding for His U.S. Lobbying EffortsRead the Press Release
WASHINGTON – Syed Ghulam Nabi Fai, 62, a U.S. citizen and resident of Fairfax, Va., was sentenced today to 24 months in prison, followed by three years of supervised release, for conspiracy and tax violations in connection with a decades-long scheme to conceal the transfer of at least $3.5 million from the government of Pakistan to fund his lobbying efforts in America related to Kashmir.
The sentencing was announced by Neil MacBride, U.S. Attorney for the Eastern District of Virginia; Lisa Monaco, Assistant Attorney General for National Security; John DiCicco, Acting Principal Deputy Assistant Attorney General for the Justice Department’s Tax Division; James McJunkin, Assistant Director in Charge of the FBI Washington Field Office; and Eric Hylton, Special Agent in Charge of the Internal Revenue Service (IRS) Criminal Investigation’s Washington, D.C., Field Office, after sentencing by U.S. District Court Judge Liam O’Grady in the Eastern District of Virginia.
On Dec. 7, 2011, Fai pleaded guilty to a two-count criminal information. Count one of the information charged Fai with conspiracy to: 1) falsify, conceal and cover up material facts he had a duty to disclose in matters within the jurisdiction of executive branch agencies of the U.S. government; and to 2) defraud the Treasury Department by impeding the lawful functions of the IRS in the collection of revenue. Count two of the information charged Fai with endeavoring to impede the administration of tax laws.
According to court documents filed with his plea agreement, Fai served as the director of the Kashmiri American Council (KAC), a non-governmental organization in Washington, D.C., that held itself out to be run by Kashmiris, financed by Americans, and dedicated to raising the level of knowledge in the United States about the struggle of the Kashmiri people for self-determination. But according to court documents, the KAC was secretly funded by officials employed by the government of Pakistan, including the Inter-Services Intelligence Directorate (ISI).
“Mr. Fai spent 20 years operating the Kashmiri American Council as a front for Pakistani intelligence,” said U.S. Attorney MacBride. “He lied to the Justice Department, the IRS and many political leaders throughout the United States as he pushed the ISI’s propaganda on Kashmir.”
“Syed Fai is today being held accountable for his role in a decades-long scheme to conceal the fact that the government of Pakistan was secretly funding his efforts to influence U.S. policy on Kashmir,” said Assistant Attorney General Monaco.
“Today’s sentence sends a strong message that using the tax-exempt status of charitable entities to promote or conceal federal crimes carries heavy consequences,” said Acting Principal Deputy Assistant Attorney General DiCiccio.
“Mr. Fai had a duty to inform the U.S. government of the finances which he received from Pakistan to fund lobbying efforts,” said FBI Assistant Director in Charge McJunkin. “Concealed foreign affiliations can be a significant threat to our democracy, and those who engage in hiding these associations will be brought to justice.”
“Today’s sentencing further shows that IRS-Criminal Investigation is working vigorously to stop the misuse and abuse of charities in promoting or concealing federal crimes,” said IRS Special Agent in Charge Hylton. “The message is clear that those who engage in this type of activity will face stiff criminal penalties.”
The Scheme
Fai admitted in court that, from 1990 until about July 18, 2011, he conspired with others to obtain money from officials employed by the government of Pakistan, including the ISI, for the operation of the KAC in the United States, and that he did so outside the knowledge of the U.S. government and without attracting the attention of law enforcement and regulatory authorities.
To prevent the Justice Department, FBI, Department of Treasury and the IRS from learning the source of the money he received from officials employed by the government of Pakistan and the ISI, Fai made a series of false statements and representations, according to court documents. For example, Fai told FBI agents in March 2007 that he had never met anyone who identified himself as being affiliated with the ISI and, in May 2009, he falsely denied to the IRS on a tax return for the KAC that the KAC had received any money from foreign sources in 2008.
In addition, according to court documents, Fai sent a letter in April 2010 to the Justice Department falsely asserting that the KAC was not funded by the government of Pakistan. Later that year, Fai falsely denied to the IRS that the KAC had received any money from foreign sources in 2009. In July 2011, Fai falsely denied to FBI agents that he or the KAC received money from the ISI or government of Pakistan.
In fact, Fai repeatedly submitted annual KAC strategy reports and budgetary requirements to Pakistani government officials for approval. For instance, in 2009, Fai sent the ISI a document entitled “Plan of Action of KAC / Kashmir Centre, Washington, D.C., for the Fiscal Year 2010,” which itemized KAC’s 2010 budget request of $658,000 and listed Fai’s plans to secure U.S. congressional support for U.S. action in support of Kashmiri self-determination.
Fai also admitted that, from 1990 until about July 18, 2011, he corruptly endeavored to obstruct and impede the due administration of the internal revenue laws by arranging for the transfer of at least $3.5 million to the KAC from employees of the government of Pakistan and the ISI.
According to court documents, Fai accepted the transfer of such money to the KAC from the ISI and the government of Pakistan through his co-defendant Zaheer Ahmad and middlemen (straw donors), who received reimbursement from Ahmad for their purported “donations” to the KAC. Fai provided letters from the KAC to the straw donors documenting that their purported “donations” to the KAC were tax deductible and encouraged these donors to deduct the transfers as “charitable” deductions on their personal tax returns. Fai concealed from the IRS that the straw donors’ purported KAC “donations” were reimbursed by Ahmad, using funds received from officials employed by the ISI and the government of Pakistan.
This investigation is being conducted by the FBI’s Washington Field Office and the IRS Criminal Investigation’s Washington Field Office.
The prosecution is being handled by Assistant U.S. Attorneys Gordon Kromberg and Daniel Grooms of the U.S. Attorney's Office for the Eastern District of Virginia; Trial Attorney John Gibbs of the Counterterrorism Section of the Justice Department’s National Security Division; and Special Assistant U.S. Attorney Allison Ickovic from the Justice Department’s Tax Division.
Miami-Area Resident Pleads Guilty to Participating in $200 Million Medicare Fraud SchemeRead the Press Release
WASHINGTON – A Miami-area resident pleaded guilty today for his role in structuring monetary transactions to provide cash for the furtherance of a fraud scheme that resulted in the submission of more than $200 million in fraudulent claims to Medicare, announced the Department of Justice, the FBI and the Department of Health and Human Services (HHS).
Lazaro Acosta, 41, pleaded guilty before U.S. District Judge Patricia A. Seitz in Miami to one count of currency structuring to avoid reporting requirements. Acosta admitted that he structured currency transactions to avoid reporting requirements so he could provide $2.4 million in cash to the owners and operators of American Therapeutic Corporation (ATC); its management company, Medlink Professional Management Group Inc.; and the American Sleep Institute (ASI).
On March 21, 2012, Acosta’s co-defendant, Leyanes Placeres, 31, pleaded guilty before U.S. Magistrate Judge Andrea Simonton in Miami to one count of conspiracy to commit health care fraud and one count of conspiracy to defraud the United States and to pay and receive illegal health care kickbacks. Placeres admitted that she participated in the fraud scheme orchestrated by the ATC, Medlink and ASI owners and operators. Placeres and Acosta were both charged in an indictment unsealed on Feb. 15, 2011, in the Southern District of Florida.
ATC, Medlink and ASI were Florida corporations headquartered in Miami. ATC operated purported partial hospitalization programs (PHPs) in seven different locations throughout South Florida and Orlando. A PHP is a form of intensive treatment for severe mental illness. ASI purported to provide diagnostic sleep disorder testing.
According to court filings, ATC’s owners and operators paid kickbacks to owners and operators of assisted living facilities and halfway houses and to patient brokers in exchange for delivering ineligible patients to ATC and ASI. In some cases, the patients received a portion of those kickbacks. Throughout the course of the ATC and ASI conspiracy, millions of dollars in kickbacks were paid in exchange for Medicare beneficiaries to attend illegitimate treatment programs so that ATC and ASI could bill Medicare for medically unnecessary services. According to court filings, to obtain the cash used to pay the kickbacks, the co-conspirators laundered millions of dollars of payments from Medicare and structured their transactions to avoid detection by bank officials and the authorities.
In pleading guilty, Acosta admitted that he worked with Lawrence Duran, one of the owners and operators of ATC, Medlink and ASI, to use fake identities and create fake Medlink employees. Those fake identities were used to cash thousands of dollars of checks each week through a check cashing business co-owned by Acosta, South Dade Trade Interprises.Placeres admitted that she served as a driver who worked with patient brokers to provide patients to ATC and ASI in exchange for kickbacks in the form of checks and cash. Placeres drove all of the patients provided by the brokers who worked with her, and she admitted to passing on kickback payments to the brokers. The amount of the kickback was based on the number of days each patient spent at ATC.
According to the plea agreements, Acosta’s structuring amounted to more than $2.4 million in structured funds, and Placeres’s participation in the ATC fraud resulted in $6.5 million in fraudulent billings to the Medicare program.Sentencing for Acosta is scheduled for June 28, 2012. Acosta faces a maximum penalty of 10 years in prison, and he has agreed to forfeit $162,000 to the federal government. Sentencing for Placeres is scheduled for June 11, 2012. Placeres faces a maximum penalty of 15 years in prison and a $250,000 fine.
ATC, its management company Medlink Professional Management Group Inc., and various owners, managers, doctors, therapists, patient brokers and marketers of ATC, Medlink and ASI, were charged with various health care fraud, kickback, money laundering and other offenses in two indictments unsealed on Feb. 15, 2011. ATC, Medlink and 12 other individual defendants have pleaded guilty or have been convicted at trial. Seven other defendants are scheduled for trial April 9, 2012, before Judge Seitz, and one defendant’s trial has been deferred until after June 2012. A defendant is presumed innocent unless proven guilty beyond a reasonable doubt in a court of law.
The guilty 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.
The criminal case is being prosecuted by Trial Attorneys Jennifer L. Saulino, Steven Kim and Robert Zink of the Criminal Division's Fraud Section. A related civil action is being handled by Vanessa I. Reed and Carolyn B. Tapie of the Civil Division and Assistant U.S. Attorney Ted L. Radway of the Southern District of Florida. The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.
Since its inception in March 2007, the Medicare Fraud Strike Force operations in nine locations have charged more than 1,190 defendants that collectively have billed the Medicare program for more than $3.6 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.Justice Department Reaches Americans with Disabilities Act Settlement with Trinity Health Systems in IowaRead the Press Release
WASHINGTON - The Justice Department announced today a settlement under the Americans with Disabilities Act (ADA) with Trinity Health Systems to ensure that Trinity Regional Medical Center in Fort Dodge, Iowa, provides effective communication to individuals who are deaf or hard of hearing. The settlement resolves a lawsuit that alleged that Trinity failed to provide deaf individuals with sign language interpreters that were needed to communicate effectively with health care providers. The lawsuit also alleged that Trinity relied on a seven-year-old girl to serve as a sign language interpreter for her deaf mother. As a result of the failure to provide effective communication, deaf patients could not understand medical instructions, were confused about medical procedures and were forced to wait long periods of time without being able to communicate with medical staff, according to the complaint.
The Justice Department’s lawsuit, which was filed today along with the settlement in the U.S. District Court for the Northern District of Iowa, alleged that Trinity Health Systems violated the ADA by failing to provide appropriate auxiliary aids and services, including sign language interpreter services, to deaf individuals at Trinity Regional Medical Center. The parties will ask the court to retain jurisdiction over the case to enforce the terms of the settlement.
“The Justice Department is committed to protecting the rights of those who are deaf or hard of hearing and to ensure that they are provided an equal opportunity to benefit from goods and services,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “Effective communication with individuals who are deaf is especially critical in a hospital setting where confusion and uncertainty can lead to serious consequences.”
“This settlement is a demonstration that Trinity and the Department of Justice are working towards the same goal – to make sure that deaf and hard of hearing individuals can communicate effectively throughout their medical care,” said Stephanie M. Rose, U.S. Attorney for the Northern District of Iowa.
The settlement requires Trinity to pay $198,000 to aggrieved individuals and a $20,000 civil penalty; provide training to hospital staff on the requirements of the ADA; and adopt specific policies and procedures to ensure that auxiliary aids and services are promptly provided to patients or companions who are deaf or hard of hearing.
The ADA prohibits discrimination against individuals with disabilities by hospitals. Among other things, the ADA requires doctors, hospitals and other health care providers to provide equal access for patients and companions who are deaf or hard of hearing. When medical services involve important, lengthy or complex oral communications with patients or companions, hospitals are generally required to provide qualified sign language interpreters and other auxiliary aids, free of charge, to individuals who are deaf, are hard of hearing or have speech disabilities. The appropriate auxiliary aid to be provided depends on a variety of factors including the nature, length and importance of the communication; the communication skills and knowledge of the individual who is deaf or hard of hearing; and the individual’s stated need for a particular type of auxiliary aid.
Those interested in finding out more about this settlement or hospitals’ effective communication obligations under the ADA may call the Justice Department’s toll-free ADA information line at 800-514-0301 or 800-514-0383 (TDD), or access its ADA website at www.ada.gov. ADA complaints may be filed by email to [email protected].
Justice Department Files Lawsuit Alleging Retaliation by the City of Selma, Texas, Fire DepartmentRead the Press Release
WASHINGTON – The Department of Justice announced today the filing of a civil suit against the city of Selma, Texas, alleging that the city discriminated against firefighter Adam Sadler in violation of Title VII of the Civil Rights Act of 1964. The complaint alleges that the city violated Title VII by retaliating against Mr. Sadler because he engaged in activity protected under the act. The suit was filed in the U.S. District Court for the Western District of Texas.
According to the Justice Department’s complaint, in 2009, the fire chief sought and received permission from the city administrator to demote Sadler from lieutenant to firefighter because Sadler complained of the fire chief’s use of ethnic slurs in the workplace. The complaint alleges that the demotion occurred less than one month after Sadler submitted a complaint to the city regarding the fire chief’s use of the discriminatory comments.
“Title VII protects an employee from retaliation when he or she opposes employment discrimination. The Department of Justice is committed to enforcing Title VII’s anti-retaliation provisions,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “A person cannot be demoted from his position because he complains to his employer about the use of discriminatory comments in the workplace.”
The San Antonio Field Office of the Equal Employment Opportunity Commission (EEOC) investigated and attempted to resolve Sadler’s charge of discrimination before referring it to the Department of Justice for litigation. More information about the EEOC is available on its website at www.eeoc.gov.
The enforcement of Title VII is a top priority of the Justice Department’s Civil Rights Division. Additional information about the Civil Rights Division is available on its website at www.justice.gov/crt.
Former Senate Office Manager Sentenced to 20 Months in Prison<br /> for Wire Fraud and Theft of Government PropertyRead the Press Release
WASHINGTON – A former office manager in the U.S. Senate was sentenced today to 20 months in prison for wire fraud and theft of government property, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office.
Ngozi Pole, of Waldorf, Md., also was sentenced by U.S. District Judge Emmet G. Sullivan in the District of Columbia to serve three years of supervised release and 500 hours of community service following his prison term and ordered to pay $77,608.86 in restitution. Pole was found guilty at trial on Feb. 1, 2011, of five counts of wire fraud and one count of theft of government property.
According to evidence presented at trial, beginning in at least 2003 and continuing until January 2007, Pole repeatedly submitted paperwork causing the Senate to pay him larger bonus payments than had been approved by either the chief of staff or former U.S. Senator Edward M. Kennedy. According to the evidence presented at trial, these unauthorized bonus payments totaled more than $75,000. Pole hid the existence of these unauthorized payments by repeatedly transmitting information to the chief of staff that falsely showed that he received only those payments that had been authorized.
This sentencing was handled by Trial Attorney Tracee Plowell of the Criminal Division’s Public Integrity Section. The case was investigated by the FBI’s Washington Field Office. Former Senator Kennedy’s office cooperated fully with the investigation.
Former Corrections Officer at Shiprock, N.M., Detention Center Charged for Sexually Abusing a Female InmateRead the Press Release
WASHINGTON - A federal grand jury in Albuquerque indicted Sylvester Bruce, 44, a former corrections officer with Navajo Nation’s Shiprock, N.M., Detention Center, on charges related to the sexual abuse of an inmate during the summer and fall of 2010. The indictment was returned on March 28, 2012, and was publicly posted earlier today.
Bruce is charged with one count of violating the civil rights of the victim by engaging in sexual contact with the victim and depriving her of her right to bodily integrity. The defendant is also charged with abusive sexual contact of the victim without her consent. Bruce is also charged with two counts of making false statements to the FBI, for denying that he had sexual contact with the inmate and for further denying that he took pictures of inmates inside the cells of the Shiprock Detention Center.
Bruce faces a maximum penalty of two years in prison for abusive sexual contact, one year in prison for the civil rights violation and 10 years in prison for the charges related to false statements.
An indictment is merely an accusation, and the defendant is presumed innocent unless proven guilty.
This case is being investigated by the Farmington, N.M., Resident Agency of the Albuquerque Division of the FBI and is being prosecuted by Assistant U.S. Attorney Mark Baker for the District of New Mexico and Fara Gold of the Civil Rights Division of the U.S. Department of Justice.
Florida Woman Pleads Guilty to Obstruction of Justice in Relation to Her Husband’s DisappearanceRead the Press Release
Abby Beard Hogan, 50, pleaded guilty yesterday in the Northern District of Florida for her role in the obstruction of a multinational investigation into the disappearance of her husband, James Hogan, then an employee in the U.S. Consulate in Curacao, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney Pamela Cothran Marsh for the Northern District of Florida, U.S. Department of State Assistant Secretary for Diplomatic Security Eric J. Boswell and John V. Gillies, Special Agent in Charge of the FBI’s Miami Field Office.
Abby Hogan pleaded guilty before U.S. Magistrate Judge Gary R. Jones to one count of obstruction of justice.
According to court documents, on the night of Sept. 24, 2009, James Hogan, an employee at the U.S. Consulate in Curacao, a Caribbean island that was part of the Netherlands Antilles, left his home on foot and subsequently disappeared. In the early hours of Sept. 25, 2009, James Hogan called his wife and spoke for approximately three minutes. The next day, when James Hogan failed to report to work, the U.S. government and Dutch and Antillean law enforcement launched an island-wide search and opened an investigation into Hogan’s disappearance. On Sept. 25, 2009, a diver located James Hogan’s blood-stained clothing on a local beach.
Abby Hogan admitted that during the course of the investigation, she repeatedly provided false information to U.S. law enforcement about the time period before James Hogan’s disappearance and withheld relevant information. Abby Hogan initially told investigators that, before his disappearance, she and her husband had an argument. She subsequently modified that statement and claimed that there had been no argument, just a minor disagreement over her husband’s next assignment for the State Department. Abby Hogan further told U.S. law enforcement agents that James Hogan had been in a “good mood” prior to leaving for his walk on the evening of his disappearance. She repeatedly denied that there had been any marital problems or that her husband had been upset, depressed or suicidal in any way. Abby Hogan further stated that she could not remember the full three-minute conversation before her husband disappeared because she was sound asleep when her husband called. She claimed she fell back asleep after the call, and did not awake until the following morning.
According to court documents, after law enforcement interviews, between Sept. 30, 2009, and Jan. 15, 2010, Abby Hogan deleted more than 300 emails from her Internet email account. These emails contained information that Abby Hogan knew was relevant to specific questions she had been asked by U.S. law enforcement. The emails also contained information that she had either previously misrepresented or knowingly omitted during her interviews with law enforcement, including that she was engaged in an extramarital affair; the night James Hogan disappeared, the couple had argued, and he left the house angry and upset; and that she did not want law enforcement to know what had happened that evening.
Abby Hogan faces a maximum of 20 years in prison for obstruction of justice.
The case was prosecuted by Senior Trial Attorney Teresa Wallbaum of the Criminal Division’s Human Rights and Special Prosecutions Section and Assistant U.S. Attorney Frank Williams for the Northern District of Florida. The Criminal Division’s Office of International Affairs provided assistance. The case was investigated by the U.S. Department of State, Diplomatic Security Service and the FBI’s Miami Field Office and Legal Attaché Office in Bridgetown, Barbados. Assistance was also provided by Curacao law enforcement authorities.
Attorney General Eric Holder Welcomes Confirmation of Kathryn Keneally and Michael E. HorowitzRead the Press Release
WASHINGTON – Attorney General Eric Holder today welcomed the confirmation of Kathryn Keneally as Assistant Attorney General for the Tax Division and Michael E. Horowitz as Inspector General for the Justice Department. Keneally and Horowitz were confirmed yesterday by the U.S. Senate.
“I'm confident Kathryn and Michael will provide strong leadership to the department, and will play an instrumental role in fulfilling our critical mission of protecting the American people,” said Attorney General Holder. “Kathryn will be integral to our efforts to enforce our nation's tax laws fully and fairly, and Michael will promote integrity, financial austerity and effectiveness in Department of Justice operations. They are both welcome additions to our senior leadership team."
Keneally most recently worked as a partner at Fulbright & Jaworski LLP in New York. For over 25 years, Keneally represented clients in tax controversies and defended against allegations of tax, securities and bank fraud, money laundering, currency transaction reporting, false statements and other financial crime.
Since 1994, Keneally has chaired numerous committees for the American Bar Association (ABA) Taxation Section. Most recently, she served vice chair for Committee Operations for the ABA Taxation Section and as co-chair of the ABA National Institute on Criminal Tax Fraud and Tax Controversy. She previously served as chair of the ABA Civil and Criminal Tax Penalties Committee, the ABA Standards of Tax Practice Committee and the ABA Subcommittee on Department of Justice Procedures.
From 1993 to 2008, Keneally served on the U.S. Sentencing Commission Practitioner’s Advisory Group.
Keneally began her legal career in 1982 as the law clerk for U.S. District Judge for the Eastern District of New York Edward R. Neaher. She received her J.D. from Fordham Law School, her LL.M in Taxation from New York University and her B.S. from Cornell University.
Most recently, Horowitz worked as a partner at Cadwalader, Wickersham, & Taft LLP, where he focused on white collar defense, internal investigations and regulatory compliance.
From 2003 to 2009, Horowitz served as a commissioner for the U.S. Sentencing Commission. As commissioner, Horowitz was instrumental in rewriting guidelines for fraud, antitrust, intellectual property and money laundering offenses and corporate compliance programs.
Horowitz previously worked for the Justice Department in the Criminal Division from 1999 to 2002, when he served as Deputy Assistant Attorney General and then Chief of Staff.
Prior to joining the Criminal Division, Horowitz served as an Assistant U.S. Attorney for the Southern District of New York from 1991 to 1999. From 1997 to 1999, he was chief of the Public Corruption Unit for the Southern District of New York. In 1995, he was awarded the Attorney General’s Award for Distinguished Service for his work on a five-year corruption investigation.Before joining the department, Horowitz was an associate at Debevoise & Plimpton and clerked for Judge John G. Davies of the U.S. District Court for the Central District of California.
Horowitz is a board member of the Ethics Resource Center, the Society of Corporate Compliance and Ethics and the Lawyers Committee for Civil Rights Under Law. He earned his J.D. from Harvard Law School and his B.A. from Brandeis University.
Thursday 29 March 2012
Six Arraigned on Tax Conspiracy in a Corporate Bonus Scheme Based in Western New YorkRead the Press Release
Six officials of an Upstate New York firm were arraigned yesterday before Magistrate Judge Leslie G. Foschio. On March 21, a federal grand jury in the Western District of New York indicted the six defendants, Philip R. DeLuca, Alfred R. LaGreca, Frank A. Fracassi, Michael A. Elia, Laurence A Elia and Richard A. Elia, on tax charges, including conspiring to defraud the Internal Revenue Service (IRS).
According to the superseding indictment, between the late 1990s and at least April 2007, the defendants were officers of Sevenson Environmental Services Inc., a Subchapter S corporation (a corporation treated like a partnership for tax purposes) located in Niagara Falls, N.Y., that was involved in remediation of sites contaminated with hazardous waste. During that time, the defendants allegedly conspired to defraud the IRS by developing and managing a scheme whereby they and other Sevenson employees received bonus compensation that was not reported to the IRS.
The superseding indictment also alleges that this compensation permitted certain Sevenson employees to obtain goods and services that were paid for by the corporation, but not reported to the IRS. In order to facilitate Sevenson’s payment for these goods and services, it is alleged that the defendants caused documents to be fabricated, invoices to be falsified and false individual income tax returns to be filed. From the late 1990s through at least April 2007, Sevenson awarded at least 23 employees a total of approximately $1 million in unreported, non-cash bonuses.
If convicted, each defendant faces a potential maximum of five years in prison and a maximum fine of $250,000 on the conspiracy charge.
An indictment merely alleges that a crime has been committed, and a defendant is presumed innocent until proven guilty beyond a reasonable doubt.
This case was investigated by the IRS-Criminal Investigation and is being prosecuted by Tax Division Trial Attorneys Shawn Noud, Robert Kennedy, and Erin Pulice.
New Orleans Man Sentenced for Shooting Two Hispanic MenRead the Press Release
WASHINGTON – Mark Gautreau, 50, was sentenced today in federal court in New Orleans to 72 months in prison for shooting two Hispanic men on the Bonnet Carre Spillway in St. Charles Parish, La., on Aug. 20, 2006.
In November 2011, Gautreau pleaded guilty to one count of assault with a dangerous weapon within the maritime and territorial jurisdiction of the United States.
In the factual basis supporting his plea, Gautreau admitted he was in a parking lot in the spillway when he told a bystander that he intended to “shoot some Mexicans.” Gautreau admitted that he then loaded ammunition into his 12-gauge shotgun and drove off toward the area where four Hispanic men were fishing. Once he reached them, Gautreau got out of his truck and fired his shotgun one time. The shotgun blast hit two of the Hispanic men, who suffered injuries that required hospitalization. Gautreau admitted that the four Hispanic men did not shoot at him or threaten him in any way that would require him to defend himself.
“Justice has been met for the two Hispanic men who were the victims of a random act of violence,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The department is committed to vigorously enforcing our nation’s civil rights laws.”
“Together with our partners in the Civil Rights Division, who led this important prosecution, and the FBI, we will remain true to our commitment to fiercely protect the rights of all within our borders to be free from abuse and violence,” said James Letten, U.S. Attorney for the Eastern District of Louisiana.
This case was investigated by the New Orleans office of the FBI. The case was prosecuted by Trial Attorney Angie Cha of the Civil Rights Division and Assistant U.S. Attorney Emily Greenfield of the U.S. Attorney’s Office for the Eastern District of Louisiana.
Justice Department Asks Federal Court to Bar Indiana Firm from Preparing Tax ReturnsRead the Press Release
The United States has asked a federal court to bar a tax preparation firm and its owner, John Newlin, from preparing federal tax returns for others, the Justice Department announced today. According to the government complaint in the civil injunction suit, Newlin’s business, Quick Sam Tax Refund of Gary, Ind., has repeatedly prepared federal income tax returns that unlawfully understate customers’ income tax liabilities by fabricating expenses, creating false losses, and claiming bogus dependents.
According to the complaint, Quick Sam guarantees its customers that they will receive the largest refund by getting their taxes prepared at Quick Sam. In order to deliver on this promise, the complaint alleges that Quick Sam employees fabricate business expenses, claim improper tax credits and report fictitious dependents to increase customers’ tax refunds illegally. Newlin and Quick Sam allegedly give bonuses to employees for engaging in these fraudulent practices.
According to the complaint, over 96 percent of the Quick Sam returns examined by the Internal Revenue Service (IRS) contained deficiencies requiring IRS adjustments. The complaint alleges that the total harm to the government caused by the illegal conduct could exceed $35 million.
The complaint also states that Charles Standifer, Rhonda Murphy, Chanel Bandy and Brittaney Walker-Lipsey, all former Quick Sam return preparers, have recently pleaded guilty to tax-related crimes.
Claiming bogus tax refunds is one of the IRS’s “Dirty Dozen” tax scams for 2012 . 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. John Newlin, et al. Complaint for Permanent Injunction and Other Relief (PDF)Georgia Tax Preparer Charged with Tax Fraud and Identity TheftRead the Press Release
Willie C. Grant, a Bibb County, Ga., tax return preparer who owned and operated “Grant Income Tax Bookkeeping and Check Cash,” was indicted on March 15, 2012, by a federal grand jury with 23 counts of making false claims for tax refunds, four counts of theft of government money and four counts of aggravated identity theft, the Justice Department and Internal Revenue Service (IRS) announced today. The indictment was unsealed yesterday.
According to the indictment, Grant knowingly used the names and Social Security numbers of individuals to steal tax refunds from the IRS without lawful authority. The indictment further alleges that Grant directed the IRS to pay tax refunds intended for other people into his bank account.
An indictment merely alleges that a crime has been committed, and a defendant is presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Grant faces a minimum of two years in federal prison for aggravated identity theft, a potential maximum of five years in federal prison and a $250,000 fine for each false claims count, and a maximum of ten years in federal prison and a $250,000 fine for each theft of government money count.
An indictment merely alleges that a crime has been committed, and a defendant is presumed innocent until proven guilty beyond a reasonable doubt.
This case was investigated by the IRS-Criminal Investigation and is being prosecuted by Tax Division Trial Attorneys Justin Gelfand and Charles Edgar Jr.
More information about the Department of Justice Tax Division and its enforcement efforts can be found at www.justice.gov/tax .