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Tuesday 20 March 2012
Justice Department Seeks to Shut Down Mississippi Tax Return PreparerRead the Press Release
The United States has asked a federal court to bar Cynthia H. Carter from preparing federal tax returns for others, the Justice Department announced today. The civil injunction suit alleges that Carter, who does business as Cynthia’s Tax Service in Columbus, Miss., prepares returns for customers that report false income and expense amounts and falsely claim several tax credits, including the first-time-homebuyer credit.
Congress enacted the first-time-homebuyer credit in 2008 to strengthen the real estate market and help the economy. Persons who had not owned a home in the previous three years could claim a credit of up to $8,000 against their federal income taxes if they bought a home after April 8, 2008. Congress later expanded the program to allow current homeowners to claim the credit for a purchase of a new home, under certain conditions. The credit has since expired.
The government complaint alleges that Carter claimed the first-time-homebuyer credit on her customers’ returns even though the customers had not bought new homes in those tax years and were ineligible for the credit. The complaint also alleges that Carter claimed fabricated deductions for employee business expenses and inflated earned income tax credits on her customers’ returns. According to the complaint, the Internal Revenue Service (IRS) estimates that Carter’s tax return preparation could have resulted in over $4.25 million in lost revenue to the United States.
The IRS lists return preparer fraud and claiming false income and expenses as two of the “Dirty Dozen” tax scams for 2012. The Justice Department’s Tax Division has obtained injunctions against hundreds of unscrupulous return preparers and tax-fraud promoters in the past decade. Information about these cases is available on the Justice Department website .
Complaint for Permanent Injunction and Other Relief (PDF)
Justice Department Seeks to Bar Las Vegas Couple from Preparing Federal Tax ReturnsRead the Press Release
The United States has sued Marge L. Cellini and Harry Portnoy of Las Vegas seeking to bar them from preparing federal tax returns for others, the Justice Department announced today. According to the government complaint, Cellini and Portnoy, who are married and do business as Tax Factory Inc. and/or Myst Inc., repeatedly prepare tax returns that include false or inflated deductions for personal or business expenses in order to reduce their customers’ federal income tax liabilities fraudulently.
Among the allegations cited in the complaint, Cellini and Portnoy advise their customers to form corporations and then claim false or grossly exaggerated deductions for purported business expenses on the corporate tax returns they prepare. The government alleges that the bogus deductions create phony business losses or reductions in corporate income that carry over to the customers’ personal income tax returns, thereby fraudulently reducing the customers’ taxable income.
According to the complaint, an Internal Revenue Service (IRS) investigation revealed that Cellini and Portnoy claimed refunds for their customers on nearly 90 percent of the returns they prepared. The suit alleges that Cellini and Portnoy attempted to hide their improper return-preparation activity by repeatedly failing to identify themselves as the preparers of tax returns – sometimes fraudulently using Cellini’s ex-husband’s social security number as their preparer identification number. Despite this, the IRS was able to identify nearly 1,000 federal tax returns allegedly prepared by Cellini and Portnoy since 2001. The complaint alleges that the defendants’ misconduct may have cost the U.S. Treasury tens of millions of dollars.
The IRS lists return preparer fraud as one of its “Dirty Dozen” tax scams for 2012. In the past ten years, the Justice Department’s Tax Division has obtained hundreds of injunctions to stop the promotion of tax-fraud schemes and the preparation of fraudulent tax returns. Information about these cases is available on the Justice Department website .
Complaint for Permanent Injunction and Other Relief (PDF)
Harbert Companies Agree to Pay $47 Million to Resolve False Claims Act AllegationsRead the Press Release
Harbert Corporation, Harbert International, Inc., Bill Harbert International Constructions Inc., Harbert Construction Services (U.K.) Ltd. and Bilhar International Establishment have agreed to pay the United States $47 million to settle claims that they submitted false claims, and caused others to submit false claims, to the U.S. Agency for International Development (USAID), the Justice Department announced today.
The settlement resolves claims under the False Claims Act that the Harbert entities conspired to rig the bids on a USAID-funded construction contract that was bid and performed in Cairo, Egypt, in the late 1980s and early 1990s. Harbert International Inc. was part of a joint venture that bid on, and was ultimately awarded, Contract 20A to build a sewer system. The United States alleges that various Harbert entities entered into agreements with other potential bidders on Contract 20A to ensure that the joint venture would win the bid. The United States contends that other potential bidders agreed to either not bid or bid intentionally high in return for a payoff. The United States previously obtained a judgment against Harbert Construction Services (U.K.) Ltd. and Bilhar International Establishment on these claims.
“Attempts to collude or rig bids undermine the integrity of the government contracting process,” said Stuart F. Delery, Acting Assistant Attorney General for the Civil Division. “As this case demonstrates, we will take action against those who seek to abuse that process and pad their profits at taxpayer expense.”
"This case demonstrates our endurance in the fight against corporations that attempt to defraud the government," said Vincent H. Cohen, Jr., Principal Assistant U.S. Attorney of the District of Columbia "Two decades after a bid-rigging conspiracy corrupted a massive construction project in Egypt, we have obtained a $47 million settlement on behalf of the American taxpayer. Our resolve in this matter should serve as a warning to other contractors who are thinking about abusing the contracting process."
The allegations that the Harbert entities conspired to rig the bidding on the contract were first made in a lawsuit that whistleblower Richard F. Miller filed in the U.S. District Court for the District of Columbia in 1995. Under the qui tam provisions of the False Claims Act, private citizens may file actions on behalf of the United States alleging the submission of false claims and share in any recovery. The claims settled by this agreement against Harbert Corporation, Harbert International Inc., and Bill Harbert International Constructions Inc. are allegations only, and there has been no determination of liability.
“It’s been a very long road to justice in this case. We are pleased that it has ended with this significant recovery of taxpayer funds,” said Michael G. Carroll, Acting Inspector General, USAID.
This matter was handled by the Commercial Litigation Branch of the Civil Division, the U.S. Attorney’s Office for the District of Columbia and USAID’s Office of Inspector General.
Former Chief Financial Officer of Taylor, Bean & Whitaker Pleads Guilty to Fraud SchemeRead the Press Release
WASHINGTON – Delton de Armas, a former chief financial officer (CFO) of Taylor, Bean & Whitaker Mortgage Corp. (TBW), pleaded guilty today to making false statements and conspiring to commit bank and wire fraud for his role in a more than $2.9 billion fraud scheme that contributed to the failures of TBW and Colonial Bank.
The guilty plea was announced today by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Neil H. MacBride for the Eastern District of Virginia; Christy Romero, Deputy Special Inspector General, Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP); Assistant Director in Charge James W. McJunkin of the FBI’s Washington Field Office; David A. Montoya, Inspector General of the Department of Housing and Urban Development (HUD-OIG); Jon T. Rymer, Inspector General of the Federal Deposit Insurance Corporation (FDIC-OIG); Steve A. Linick, Inspector General of the Federal Housing Finance Agency (FHFA-OIG); and Rick A. Raven, Acting Chief of the Internal Revenue Service Criminal Investigation (IRS-CI).
De Armas, 41, of Carrollton, Texas, pleaded guilty before U.S. District Judge Leonie M. Brinkema in the Eastern District of Virginia. De Armas faces a maximum penalty of 10 years in prison when he is sentenced on June 15, 2012.
“As TBW’s chief financial officer, Mr. de Armas concealed a massive $1.5 billion deficit in TBW’s funding facility and another large deficit on TBW’s books,” said Assistant Attorney General Breuer. “He tried to conceal the gaping holes by falsifying financial statements and lying to investors as well as the government. Ultimately, Mr. de Armas’ criminal conduct, along with that of his co-conspirators, contributed to the collapse of TBW and Colonial Bank. With today’s guilty plea, Mr. de Armas joins seven other defendants – including the former chairman of TBW Lee Bentley Farkas – who have been convicted of participating in this massive fraudulent scheme.”
“When Mr. de Armas learned of a hole in Ocala Funding’s assets, he used his position as CFO to cover it up and mislead investors,” said U.S. Attorney MacBride. “Today’s plea is the eighth conviction in one of the nation’s largest bank frauds in history. As CFO, Mr. de Armas could have put a stop to the fraud the moment he discovered it. Instead, the hole in Ocala Funding grew to $1.5 billion on his watch, and as it grew, so did his lies to investors and the government.”
According to court documents, de Armas joined TBW in 2000 as its CFO and reported directly to its chairman, Lee Bentley Farkas, and later to its CEO, Paul Allen. He admitted in court that from 2005 through August 2009, he and other co-conspirators engaged in a scheme to defraud financial institutions that had invested in a wholly-owned lending facility called Ocala Funding. Ocala Funding obtained funds for mortgage lending for TBW from the sale of asset-backed commercial paper to financial institutions, including Deutsche Bank and BNP Paribas. The facility was managed by TBW and had no employees of its own.
According to court records, shortly after Ocala Funding was established, de Armas learned there were inadequate assets backing its commercial paper, a deficiency referred to internally at TBW as a “hole” in Ocala Funding. De Armas knew that the hole grew over time to more than $700 million. He learned from the CEO that the hole was more than $1.5 billion at the time of TBW’s collapse. De Armas admitted he was aware that, in an effort to cover up the hole and mislead investors, a subordinate who reported to him had falsified Ocala Funding collateral reports and periodically sent the falsified reports to financial institution investors in Ocala Funding and to other third parties. De Armas acknowledged that he and the CEO also deceived investors by providing them with a false explanation for the hole in Ocala Funding.
De Armas also admitted in court that he directed a subordinate to inflate an account receivable balance for loan participations in TBW’s financial statements. De Armas acknowledged that he knew that the falsified financial statements were subsequently provided to Ginnie Mae and Freddie Mac for their determination on the renewal of TBW’s authority to sell and service securities issued by them.
In addition, de Armas admitted in court to aiding and abetting false statements in a letter the CEO sent to the U.S. Department of Housing and Urban Development, through Ginnie Mae, regarding TBW’s audited financial statements for the fiscal year ending on March 31, 2009. De Armas reviewed and edited the letter, knowing it contained material omissions. The letter omitted that the delay in submitting the financial data was caused by concerns its independent auditor had raised about the financing relationship between TBW and Colonial Bank and its request that TBW retain a law firm to conduct an internal investigation. Instead, the letter falsely attributed the delay to a new acquisition and TBW’s switch to a compressed 11-month fiscal year.
“With our nation in a housing crisis, de Armas, as chief financial officer of TBW, one of the country’s largest mortgage lenders, papered over a gaping hole in the balance sheet of TBW subsidiary Ocala Funding and lied to regulators and investors to cover it up,” said Deputy Special Inspector General Romero for SIGTARP. “The fraud provided cover to others at TBW to misappropriate more than $1 billion in Ocala funds and sell fraudulent, worthless securities to conspirators at Colonial BancGroup. SIGTARP and its law enforcement partners stopped $553 million in TARP funds from being lost to this fraud and brought accountability and justice that the American taxpayers deserve.”
“Mr. de Armas has admitted that, during his tenure at TBW, he purposefully misled investors in a massive scheme to defraud financial institutions,” said FBI Assistant Director in Charge McJunkin. “The actions of Mr. de Armas and his co-conspirators contributed to the financial crisis and led to the collapse of one of the country’s largest commercial banks. The FBI and our partners remain vigilant in investigating such fraudulent activity in our banking and mortgage industries.”
“The guilty plea of Mr. de Armas is one small measure in our continued efforts to restore the trust and confidence of the general public and of investors in our financial system,” said HUD Inspector General Montoya. “In response to the many recent articles of mortgage fraud and misconduct, the mortgage industry needs to do much to rethink their values and their idea of client service in order to help rebuild a stronger economy and to restore the confidence of American homeowners.”
“The Federal Deposit Insurance Corporation Office of Inspector General is pleased to have played a role in bringing to justice yet another senior official in a position of trust who was involved in one of the biggest and most complex bank fraud schemes of our time,” said FDIC Inspector General Rymer. “The former chief financial officer of Taylor, Bean & Whitaker is the latest participant who will be held accountable for seeking to undermine the integrity of the financial services industry. Even as the financial and economic crisis seems to be easing, we reaffirm our commitment to ensuring that those contributing to the failures of financial institutions and corresponding losses to the Deposit Insurance Fund will be punished to the fullest extent of the law.”
“Mr. de Armas and his colleagues committed an egregious crime,” said FHFA Inspector General Linick. “FHFA-OIG is proud to be part of the team that continues to protect American taxpayers.”
In April 2011, a jury in the Eastern District of Virginia found Lee Bentley Farkas, the chairman of TBW, guilty of 14 counts of conspiracy, bank, securities and wire fraud. On June 30, 2011, Judge Brinkema sentenced Farkas to 30 years in prison. In addition, six individuals have pleaded guilty for their roles in the fraud scheme, including: Paul Allen, former chief executive officer of TBW, who was sentenced to 40 months in prison; Raymond Bowman, former president of TBW, who was sentenced to 30 months in prison; Desiree Brown, former treasurer of TBW, who was sentenced to six years in prison; Catherine Kissick, former senior vice president of Colonial Bank and head of its Mortgage Warehouse Lending Division (MWLD), who was sentenced to eight years in prison; Teresa Kelly, former operations supervisor for Colonial Bank’s MWLD, who was sentenced to three months in prison; and Sean Ragland, a former senior financial analyst at TBW, who was sentenced to three months in prison.
The case is being prosecuted by Deputy Chief Patrick Stokes and Trial Attorney Robert Zink of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Charles Connolly and Paul Nathanson of the Eastern District of Virginia. This case was investigated by SIGTARP, FBI’s Washington Field Office, FDIC-OIG, HUD-OIG, FHFA-OIG and IRS-CI. The Financial Crimes Enforcement Network (FinCEN) of the Department of the Treasury also provided support in the investigation. The Department would also like to acknowledge the substantial assistance of the U.S. Securities and Exchange Commission in the investigation of the fraud scheme.
This prosecution was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit: www.stopfraud.gov.
Former Army Contractor Sentenced to 39 Months in Prison for Role in Bribery and Money Laundering Scheme Related to DoD ContractsRead the Press Release
WASHINGTON –Terry Hall, 46, was sentenced today in Birmingham, Ala., to 39 months in prison for his participation in a bribery and money laundering scheme related to bribes paid for contracts awarded in support of the Iraq war, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division.
U.S. District Court Judge Virginia Emerson Hopkins for the Northern District of Alabama also ordered Hall to serve one year of supervised release following the prison term. Hall has agreed to forfeit $15,757,000 as well as real estate and a Harley Davidson motorcycle.
Hall pleaded guilty on Feb. 18, 2010, to bribery conspiracy and money laundering and agreed to testify against his co-defendants, former U.S. Army Major Eddie Pressley and his wife, Eurica Pressley. The Pressleys were convicted on March 1, 2011, of bribery, conspiracy to commit bribery, honest services fraud, money laundering conspiracy and engaging in monetary transactions with criminal proceeds.
The case against Hall and the Pressleys arose from a corruption probe focusing on Camp Arifjan, a U.S. military base in Kuwait. As a result of this investigation, 17 individuals, including Hall, have pleaded guilty or been found guilty at trial for their roles in the scheme.
According to evidence presented at the Pressleys’ trial, from spring 2004 through fall 2007, Hall operated and had an interest in several companies, including Freedom Consulting and Catering Co. and Total Government Allegiance. The companies received more than $20 million from contracts and blanket purchase agreements (BPAs) – a contract that allows the U.S. Department of Defense (DoD) to order supplies on an as-needed basis at a pre-negotiated price – to deliver bottled water and erect security fences for the U.S. military in Kuwait and Iraq.
Hall testified that, to obtain the contracting business and facilitate unlawful payments by other contractors, he made more than $3 million in unlawful payments and provided other valuable items and services to U.S. Army contracting officials stationed at Camp Arifjan, including to Eddie Pressley and former U.S. Army Majors John Cockerham, James Momon, Christopher Murray and Derrick Shoemake.
According to Hall’s testimony and other evidence presented at the Pressley trial, Eddie Pressley demanded a $50,000 bribe before he would issue bottled water orders or “calls” to Hall. Hall testified that in April 2005, he and his associates arranged for Pressley to receive the money in a bank account established in the name of a shell company, EGP Business Solutions Inc., which was controlled by Eurica Pressley.
Hall testified that soon after the $50,000 bribe was paid, Pressley and Cockerham, another U.S. Army contracting official, increased the bribe demand to $1.6 million, which consisted of $800,000 for Pressley and $800,000 for Cockerham. After Hall and others agreed to pay the money, Pressley and Cockerham issued calls for bottled water and fencing, arranged for Hall to receive a fence contract and modified Hall’s agreement to remove the upper limit of the money Hall could receive from the DoD under the bottled water BPA.
Evidence at trial also showed that Eddie Pressley enlisted the help of his wife, Eurica, to receive the bribes. Eurica Pressley traveled to Dubai with Hall in May 2005 and to the Cayman Islands in June 2005 to open bank accounts to receive the bribe money. Hall testified that he and the Pressleys attempted to conceal the true nature of their corrupt scheme by having Eurica Pressley execute bogus “consulting agreements.” They also prepared false invoices that were designed to justify the bribe payments as payment for non-existent “consulting services.”
Hall testified that, in total, he transferred approximately $2.9 million in bribe payments to the Pressleys, approximately $1.6 million of which consisted of payments from other contractors that Hall facilitated for Eddie Pressley. Bank statements, wire transfer reports and other records presented at trial showed that the Hall and Eddie Pressley used approximately $2.9 million of the money to purchase commercial real estate in Muscle Shoals, Ala.
In addition, Hall testified that, after Eddie Pressley and Cockerham left Kuwait, he paid Momon more than $300,000, approximately $100,000 of which consisted of unlawful payments from another corrupt military contractor, which Hall facilitated by routing the money through bank accounts in Kuwait controlled on Hall’s behalf. In exchange, Momon issued calls under Hall’s bottled water BPA worth more than $6.4 million. Hall also testified that he paid Murray approximately $30,000 in exchange for official acts that benefited Hall and his companies.
On Jan. 5, 2012, Eddie Pressley was sentenced to 144 months in prison, and on Feb. 23, 2012, Eurica Pressley was sentenced to 72 months in prison.
On Aug. 13, 2009, Momon pleaded guilty to receiving approximately $1.6 million in bribes and agreed to pay $5.7 million in restitution. Momon’s sentencing has not yet been scheduled. On Jan. 8, 2009, Murray pleaded guilty to charges of bribery and making a false statement. He was sentenced on Dec. 17, 2009, to 57 months in prison and ordered to pay $245,000 in restitution. On Jan. 31, 2008, Cockerham pleaded guilty to participating in a bribery and money laundering scheme at Camp Arifjan. He was sentenced on Dec. 2, 2009, to 210 months in prison and ordered to pay $9.6 million in restitution. On June 9, 2011, Shoemake pleaded guilty to two counts of bribery, including receiving $215,000 from Hall. He is scheduled to be sentenced on April 18, 2012.
The case is being prosecuted by Trial Attorneys Peter C. Sprung and Edward J. Loya Jr. of the Criminal Division’s Public Integrity Section. Assistance was also provided by the Criminal Division’s Office of International Affairs. The cases are being investigated by the U.S. Army Criminal Investigation Command, Defense Criminal Investigative Service, U.S. Immigration and Customs Enforcement, FBI, Internal Revenue Service - Criminal Investigation, Special Inspector General for Iraq Reconstruction and the International Contract Corruption Task Force (ICCTF). The ICCTF is a joint law enforcement agency task force that seeks to detect, investigate and dismantle corruption and contract fraud resulting from U.S. Overseas Contingency Operations worldwide, including in Kuwait, Afghanistan and Iraq.
Monday 19 March 2012
Police Chief in Omega, Georgia, Indicted on Federal Civil Rights ChargesRead the Press Release
WASHINGTON – The Justice Department announced today that a federal grand jury in Macon, Ga., returned a one-count indictment against Walter Young, 54, police chief of the Omega Police Department, for physically abusing a man in his custody.
The indictment alleges that, on March 24, 2011, Young, while acting in his capacity as the chief of police, assaulted “A.M.”, a pretrial detainee, thereby violating the civil rights of the detainee. The indictment further charges that A.M. suffered bodily injury as a result of Young’s use of excessive force.
If convicted, the defendant faces a maximum penalty of 10 years in prison and a $250,000 fine. An indictment is merely an accusation, and the defendant is presumed innocent unless proven guilty.
This case is being investigated by the FBI, and is being prosecuted by Special Litigation Counsel Forrest Christian and Trial Attorney Tona Boyd of the Civil Rights Division of the U.S. Department of Justice, and Assistant U.S. Attorney Robert McCullers of the U.S. Attorney’s Office for the Middle District of Georgia.
Justice Department to Monitor Elections in IllinoisRead the Press Release
WASHINGTON – The Justice Department announced today that the Civil Rights Division will monitor elections on March 20, 2012, in Cook and Lake Counties, Ill. 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.
Justice Department personnel will monitor polling place activities in Cook and Lake Counties. 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.
Fort Worth, Texas, Man Sentenced for Sex Trafficking and Related Federal ChargesRead the Press Release
WASHINGTON — Marcus Choice Williams, 36, of Fort Worth, Texas, was sentenced this morning by U.S. District Judge David C. Godbey to 30 years in prison followed by 30 years of supervised release for various felony offenses related to a conspiracy to traffic women for prostitution, the Department of Justice announced. Williams was also ordered to pay $1,100 special assessment fee.
In March 2011, Williams, also known as “Cross Country Redd,” “Redd” and “Marcus Choice,” pleaded guilty to one count of conspiracy to transport individuals for prostitution; six counts of transporting individuals for prostitution; one count of sex trafficking by force, fraud or coercion; two counts of attempted sex trafficking by force; and one count of money laundering. Co-defendants Kenya Thomas, 32, of Plano, Texas, and, Preston Petitt, 45, of Houston, were sentenced in April 2011, to 37 months in prison and 2 years supervised release for their roles in the conspiracy.
Court documents showed that Williams operated an interstate prostitution ring, including adult escort web sites, headquartered in the Dallas-Fort Worth area and operating in Boston and the Washington, D.C. metro area. Williams recruited vulnerable women, specifically single mothers from troubled backgrounds, and, in some cases used a combination of deception, fraud, coercion, threats and physical violence to compel the women to engage in prostitution, requiring each young woman to secure a daily quota of money, and if operating out of town, to wire the funds to him. Williams made thousands of dollars in profits, while the victims received next to nothing.
“The court’s sentence clearly reflects the seriousness of these awful sex trafficking crimes,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The victims suffered physical assaults, sexual abuse and daily degradation all because of this defendant’s greed and callous disregard for them as individuals. We are committed to prosecuting sex traffickers and vindicating victims’ rights, as they were vindicated today.”
“The idea that an individual can be held in captivity by another person and forced to work in the world of prostitution is shocking to most people, and today’s sentence of 30 years in federal prison, shows the seriousness of the defendant’s crimes,” said Sarah R. Saldaña, U.S. Attorney for the Northern District of Texas. “This office calls upon the public to report any and all suspicious activity which may lead to apprehending and prosecuting those persons engaged in this activity and giving freedom to their victims.”
The case was investigated by the FBI and was prosecuted by Assistant U.S. Attorney Errin Martin and Civil Rights Division Trial Attorney Myesha Braden.
Friday 16 March 2012
Miami-Area Resident Pleads Guilty to Participating in $200 Million Medicare Fraud SchemeRead the Press Release
WASHINGTON – A Miami-area resident pleaded guilty yesterday for his role in 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).
Frank Criado, 33, pleaded guilty before U.S. Magistrate Judge Barry L. Garber 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. Criado was charged in an indictment unsealed on Feb. 15, 2011, in the Southern District of Florida.Criado admitted to participating in a fraud scheme that was orchestrated by the owners and operators of American Therapeutic Corporation (ATC); its management company, Medlink Professional Management Group Inc.; and the American Sleep Institute (ASI). ATC, Medlink and ASI were Florida corporations headquartered in Miami. ATC operated purported partial hospitalization programs (PHPs), a form of intensive treatment for severe mental illness, in seven different locations throughout South Florida and Orlando. 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 who did not qualify for PHP services to attend treatment programs that were not legitimate PHPs so that ATC and ASI could bill Medicare for the medically unnecessary services. According to court filings, to obtain the cash required to support the kickbacks, the co-conspirators laundered millions of dollars of payments from Medicare.
Criado admitted to serving as a patient broker who provided patients for ATC and ASI in exchange for kickbacks in the form of checks and cash. The amount of the kickback was based on the number of days each patient spent at ATC.
According to his plea agreement, Criado’s participation in the ATC fraud resulted in $7.3 million in fraudulent billings to the Medicare program.Sentencing for Criado is scheduled for May 31, 2012, at 8:30 a.m. He faces a maximum penalty of 15 years in prison and a $250,000 fine.
ATC, Medlink, 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 11 of the individual defendants have pleaded guilty or have been convicted at trial. Other defendants are scheduled for trial April 9, 2012, before U.S. District Judge Patricia A. Seitz. A defendant is presumed innocent unless proven guilty beyond a reasonable doubt in a court of law.The guilty plea was 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 B. 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, is taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.Justice Department Settles Charge of Employment Discrimination by Puerto Rico Security CompanyRead the Press Release
WASHINGTON – The Justice Department and Puerto Rico-based Indrescom Security Technology Inc. have agreed to settle allegations that the company discriminated against a work-authorized individual during the Employment Eligibility Verification Form I-9 process by requiring him to present a lawful permanent resident card, despite the fact that the employee had already produced documents establishing his identity and authority to work in the United States, and not allowing him to work when he did not produce the card. Indrescom Security Technology Inc. is a for-profit corporation which provides security personnel to hotels and other establishments in Puerto Rico.
The charging party, a lawful permanent resident of Venezuelan descent, alleged that in early 2011 he presented a valid Puerto Rican driver’s license and an unrestricted Social Security card during the Employment Eligibility Verification Form I-9 process, which together are sufficient to establish identity and work authorization. His charge further alleged that Indrescom rejected his valid documentation and told him that he needed to present an unexpired lawful permanent resident card. The man alleges he was denied employment when he failed to produce the additional documentation. The department’s investigation revealed that Indrescom did not reject driver’s licenses and unrestricted Social Security cards presented by U.S. citizens. The Immigration and Nationality Act (INA) prohibits employers, both private and public, from imposing different or greater employment eligibility verification standards based on citizenship status or national origin.“The anti-discrimination provision of the Immigration and Nationality Act (INA) demands that employers not place additional barriers in front of work-authorized, non-U.S. citizens before allowing them to work,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “This resolution is further evidence that the Civil Rights Division is committed to making that demand of equal treatment a reality in America’s worksites.”
Under the terms of the settlement agreement, Indrescom agrees to pay $7,000 in back pay to the charging party, train its human resources personnel about employers’ responsibilities to avoid discrimination in the employment eligibility verification process and be subject to reporting and compliance monitoring requirements for three years.
The Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC) is responsible for enforcing the anti-discrimination provisions of the INA, which protect U.S. citizens and certain work-authorized individuals from citizenship status discrimination. The INA also protects all work-authorized individuals from national origin discrimination, over-documentation in the employment eligibility verification process and retaliation.
For more information about protections against employment discrimination under the immigration laws, call 1-800-255-7688 (OSC’s worker hotline) (1-800-237-2525, TDD for hearing impaired), 1-800-255-8155 (OSC’s employer hotline) (1-800-362-2735, TDD for hearing impaired), or 202-616-5594. Email [email protected], or visit the website at www.justice.gov/crt/osc.
Georgia Couple Convicted of Conspiring to Defraud Irs and Filing False Returns in South Florida Refund SchemeRead the Press Release
Elmo Antonio George and Nasheba Necia Hunte, formerly from the U.S. Virgin Islands and currently residents of Villa Rica, Ga., were found guilty today by a federal jury in Ft. Lauderdale, Fla., of conspiring to defraud the Internal Revenue Service (IRS) and filing false individual income tax returns for 2005 and 2006, the Justice Department and the IRS announced.
According to the evidence introduced at trial, George and Hunte created shell corporate entities, Winco Holdings Inc., Dikingdom Inc. and Ministry of Dikingdom Inc., in the state of Florida. They also opened business checking and credit card accounts in the names of the entities. They used an internet payroll service, Paycycle Inc., to create false documents and returns that they filed with the IRS containing fictitious salaries, losses and tax withholdings from Winco Holdings Inc. claiming that they were the only officers and employees of the company.
The evidence also showed that in their tax filings, the defendants reported that they earned over $4 million dollars in income from Winco and paid over $1.6 million in withholdings to the IRS. No tax withholdings were ever paid over to the IRS and the defendants submitted a fictitious promissory note and a $1.6 million fraudulent check in an attempt to continue their scheme. For 2005, George received a refund totaling $229,305 to which he was not entitled. George deposited the refund into the defendants’ joint bank account in the name of Dikingdom Inc. which they used to purchase, among other things, a house, furniture, car, jewelry and airline tickets. To conceal the scheme, Hunte purchased the house in Villa Rica on March 21, 2006, and deeded it to George on the same day. On Sept. 26, 2006, George transferred the house to the Overseer of Dikingdom, a name associated with his purported ministry, and thereafter claimed the house was a church.
According to the evidence presented at trial, less than one week after IRS-Criminal Investigation tried to contact the defendants, Hunte changed her home address in her employment contact documents from Villa Rica to a non-existent address. When IRS-Criminal Investigation special agents attempted contact with Hunte, she affirmatively denied who she was to the agents.
George and Hunte each face a potential maximum prison sentence of 11 years and a fine of up to $750,000 when they are sentenced.
This case was investigated by the IRS-Criminal Investigation’s Atlanta Field Office. Trial Attorneys Rebecca Perlmutter and Chad Edgar of the Justice Department’s Tax Division, who prosecuted the case, thanked Wilfredo A. Ferrer, U.S. Attorney for the Southern District of Florida, for his office’s assistance.
Former Georgia Sheriff’s Deputy Pleads Guilty to Assaulting DetaineeRead the Press Release
The Justice Department announced today that former Thomas County Sheriff’s Deputy Julian Scott Law pleaded guilty today to assaulting a detainee inside of the Thomas County Jail in Thomasville, Georgia, thereby depriving the detainee of his civil rights.
During the plea hearing, Law admitted that on Aug. 20, 2010, while he was working as a deputy, he punched a detainee and knocked him into a wall, causing the detainee to suffer a bloody nose, swelling, bruising, and pain. Law admitted that he punched the detainee because the detainee had thrown a cell phone case onto the floor.
Sentencing for Law is set for July 16, 2012. At sentencing, Law faces a maximum penalty of ten years in jail.
“The Department of Justice will continue to vigorously prosecute officers who betray their oath to society by abusing their official authority,” said Thomas E. Perez, Assistant Attorney General of the Civil Rights Division.
“We count on our law enforcement officers to protect and serve, and to honor the badge they wear. When they betray their oath, they dishonor the public trust and their fellow officers who uphold the law, rather than break it,” said U.S. Attorney for the Middle District of Georgia Michael J. Moore.
This case was investigated by the FBI and was prosecuted by Trial Attorney Christine M. Siscaretti of the Justice Department’s Civil Rights Division and Assistant U.S. Attorneys Sharon Ratley and Paul C. McCommon III of the U.S. Attorney’s Office for the Middle District of Georgia.
Delaware Man Pleads Guilty to Transportation of Child PornographyRead the Press Release
A New Castle, Del., man pleaded guilty today to one count of transportation of child pornography, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Charles M. Oberly III of the District of Delaware and Special Agent in Charge Richard A. McFeely of the FBI’s Baltimore Division.
David Osborn, 40, pleaded guilty before U.S. District Judge Richard G. Andrews in the District of Delaware.
According to statements made at today’s hearing and documents filed in court, Osborn was identified by the FBI through reports of child pornography trafficking provided by AOL LLC to the National Center for Missing and Exploited Children (NCMEC). Under federal law, internet service providers, such as AOL, are required to report suspected child pornography being transmitted over their servers to NCMEC, which then directs these “cybertips” to the appropriate law enforcement agency. AOL reported that a particular online username, later linked to Osborn, had been used to trade images of child pornography with another computer user in South Florida.
On May 26, 2011, federal agents executed a search warrant at Osborn’s New Castle residence and arrested Osborn after finding more than 700 images of child pornography on his computer equipment. Law enforcement agents also searched Osborn’s email account, which was found to contain numerous images of child pornography. Osborn’s child pornography collection included images of girls, ranging from prepubescence to mid-teen age, engaged in various sexual acts or posing lasciviously. Forensic data found on the equipment indicated that Osborn had been receiving and distributing images of child pornography for a number of years. Also found on Osborn’s computer equipment were more than 500 internet chat logs between Osborn and others regarding child sexual exploitation.
According to information provided at court hearings, in the past, Osborn worked as a school bus driver, substitute teacher and with the Newport, Del., chapter of Job’s Daughters, a youth organization for girls.
At sentencing, Osborn faces a mandatory minimum sentence of five years in prison and a maximum sentence of 20 years in prison. Osborn also faces a term of supervised release following his prison sentence of five years to life, and will be required to register as a sex offender in any jurisdiction in which he lives, works, or attends school. Osborn has been detained since his May 26, 2011, arrest.
This case is being investigated by the FBI and prosecuted by Assistant U.S. Attorney Edward J. McAndrew of the District of Delaware and Trial Attorney Andrew McCormack of the Child Exploitation and Obscenity Section in the Justice Department’s Criminal Division.
For more information about reporting online child exploitation to the national CyberTipline, visit the NCMEC’s website at: www.missingkids.com. For more information about the Department of Justice’s Project Safe Childhood program, visit www.justice.gov/psc.
Thursday 15 March 2012
New Orleans Man Charged for Alleged Role in Five MurdersRead the Press Release
WASHINGTON – A New Orleans man was charged today by a federal grand jury in the Eastern District of Louisiana in a 17-count superseding indictment for his alleged role in five murders, announced U. S. Attorney Jim Letten in the Eastern District of Louisiana and Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.
The superseding indictment charges Steven Earl Hardrick, 27, with violations of the federal controlled substances act and federal firearms laws, carjacking, witness tampering and murder. The superseding indictment alleges that Hardrick allegedly carried out the Oct. 1, 2007, murder of Dwayne Landry; the Oct. 13, 2007, home invasion, shooting and killing of off-duty New Orleans Police Officer Thelonius Dukes; and the Oct. 24, 2007, carjacking and murder of Brett Jacobs, David Alford and Howard Pickens.
According to the superseding indictment, Hardrick conspired to possess with intent to distribute drugs. He did so by obtaining drugs through force and violence, as well as firearms, which he then used to facilitate the theft or robbery of the drugs. The superseding indictment alleges that Hardrick obtained firearms in all three incidents, and in two of the incidents, he attempted to obtain drugs. The superseding indictment alleges that Howard Pickens was killed in the Oct. 24, 2007, murders to prevent him from reporting information about the carjacking that resulted in the murders of Brett Jacobs and David Alford.
An indictment is merely a charge and a defendant must be proven guilty beyond a reasonable doubt.
The superseding indictment includes offenses with a maximum penalty of death.
The case is being investigated by the FBI Violent Crime Task Force, Jefferson Parish Sheriff’s Office and the New Orleans Police Department. The case is being prosecuted by Assistant U.S. Attorneys Duane A. Evans and Elizabeth Privitera of the Eastern District of Louisiana and Trial Attorney Laura Gwinn of the Organized Crime and Gang Section of the Justice Department’s Criminal Division.
Justice Department’s 2010 ADA Standards for Accessible Design Go into EffectRead the Press Release
WASHINGTON – The Justice Department announced that the 2010 ADA Standards for Accessible Design go into effect today. On July 26, 2010, the 20th anniversary of the Americans with Disabilities Act (ADA), President Obama announced newly revised ADA regulations. These regulations reflect the fundamental principle that all Americans with disabilities should have equal access and an equal right to participate fully in our society.
“People with disabilities should have the opportunity to participate in American society as fully and equally as those without disabilities,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The department encourages businesses and governments around the country to help break down barriers for people with disabilities so that we give every individual access to equal opportunity and equal justice.”
These standards were adopted as part of the revised regulations for Title II and Title III of the Americans with Disabilities Act of 1990 (ADA) and will make buildings and facilities accessible to more than 54 million Americans with disabilities. The standards can be found at www.ada.gov/2010ADAstandards_index.htm.
The 2010 Standards will set new requirements for fixed or built-in elements in facilities such as detention facilities and courtrooms, amusement rides, boating facilities, golf and miniature golf facilities, swimming pools and play areas. These rules also clarify and refine issues that have arisen over the past 20 years, including reach ranges, toilet room dimensions and accessible routes. The 2010 Standards provide clarified requirements for dispersal and lines of sight for accessible seating and companion seating in assembly areas such as stadiums. The 2010 Standards also address dispersion of accessible hotel rooms among the different classes of rooms provided, as well as the overlap between wheelchair accessible rooms and rooms with communication features.
The final regulations were published in the Federal Register on Sept. 15, 2010. The 2010 Standards, which were adopted as part of the revised regulations, consist of regulatory text and the 2004 ADA Accessibility Guidelines, originally published in the Federal Register as 36 CFR Part 1191, Appendices B and D.
Title II of the ADA protects people with disabilities from discrimination on the basis of disability in services, programs and activities provided by state and local government entities.
Title III prohibits discrimination on the basis of disability by places of public accommodation (businesses that are generally open to the public and that fall into one of 12 categories listed in the ADA, such as restaurants, movie theaters, schools, day care facilities, recreational facilities and doctors’ offices).
Newly constructed or altered places of public accommodation, commercial facilities and state and local government facilities are required to comply with the ADA Standards. Places of public accommodation in existing facilities are required to remove accessibility barriers to the extent it is readily achievable – meaning easy to accomplish without much difficulty or expense. State and local governments using existing facilities are required to ensure their programs, services and activities, when viewed in their entirety, are accessible.
Requirements for existing swimming pools will be extended for 60 days. The department will also publish a Notice of Proposed Rulemaking with a 15-day comment period on a possible six-month extension in order to allow additional time to address misunderstandings regarding compliance with these ADA requirements. More information on pool requirements can be found at http://www.ada.gov/pools_2010.htm.
People interested in finding out more about the ADA or the 2010 ADA Standards for Accessible Design can call the toll-free ADA Information Line at 800-514-0301 (Voice) or 800-514-0383 (TTY), or access the ADA website at www.ada.gov.
Justice Department Reaches Agreement with Pinson, Alabama, on Bailout from Preclearance Requirements of the Voting Rights ActRead the Press Release
WASHINGTON – The Justice Department announced that it has reached an agreement with Pinson, Ala., that, if approved by the court, will allow for the city to bail out from its status as a “covered jurisdiction” under the special provisions of the Voting Rights Act, and thereby exempt the city from the preclearance requirements of Section 5 of the Voting Rights Act. If granted, this would be the first such bailout for a covered jurisdiction in Alabama. The agreement is in the form of a consent decree filed today in the U.S. District Court for the District of Columbia.
Under Section 5 of the Voting Rights Act, certain covered jurisdictions, determined according to Section 4 of the act, are required to seek preclearance for any changes in voting qualifications, standards, practices or procedures from the U.S. District Court for the District of Columbia, or from the U.S. attorney general, prior to their implementation. Section 4 of the act provides that a covered jurisdiction may seek to “bail out,” or remove itself from such coverage, and therefore be exempted from the preclearance requirements, by seeking a declaratory judgment before a three-judge panel in U.S. District Court for the District of Columbia. A bailout judgment can be issued only if the court determines that the jurisdiction meets certain eligibility requirements for bailout contained in the statute, including a 10-year record of nondiscrimination in voting-related actions. The act also provides that the attorney general can consent to entry of a judgment of bailout only if, based upon investigation, the attorney general is satisfied that the jurisdiction meets the eligibility requirements.
Pinson filed its bailout action in the U.S. District Court for the District of Columbia on Feb. 15, 2012. City officials had contacted the attorney general prior to filing its action, indicating that the city was interested in seeking to bail out. The city provided the Justice Department with substantial information, and the department conducted an investigation to determine the city’s eligibility. Based on that investigation, the department is satisfied that the city meets the Voting Rights Act’s requirements for bailout.
“In this case, the department carefully evaluated the information provided by the city and conducted its own investigation, which has satisfied us that the city is eligible for a bailout,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “I appreciate the cooperation of city officials in providing the department with information that we have requested and in moving toward a resolution of this matter in the way envisioned by the Voting Rights Act.”The consent decree details the legal and factual basis for a bailout determination and, if approved, will grant the city’s request. The court will retain jurisdiction of the action for 10 years and can reopen the action upon the motion of the attorney general or any aggrieved person alleging conduct by the city that would have originally precluded the city from bailing out if it had occurred during the 10 year period preceding entry of the consent decree.
Information about bailout, the Voting Rights Act and other federal voting laws is available on the Department of Justice website at www.justice.gov/crt/voting/. Complaints may be reported to the Voting Section of the Justice Department’s Civil Rights Division at 1-800-253-3931.Former Humphreys County, Tennessee, Sheriff’s Deputies Indicted for Federal Civil Rights OffensesRead the Press Release
WASHINGTON – The Justice Department announced today that a federal grand jury in Nashville, Tenn., returned a one count indictment charging former Humphreys County, Tenn., Sheriff’s Deputies Timothy Wayne Hedge, 50, and James Benjamin Lee, 32, for violating the civil rights of an individual on Jan. 23, 2011, in Humphreys County.
The indictment alleges that on Jan. 23, 2011, Hedge and Lee, while acting under color of law and while aiding and abetting each other, violated an individual’s right to be free from unreasonable seizures by kicking and striking an individual with a collapsible baton during the course of arresting the individual, resulting in bodily injury.
An indictment is only an accusation of a crime, and a defendant should be presumed innocent unless and until proven guilty. If convicted, Hedge and Lee could face a maximum sentence of 10 years in prison and a $250,000 fine plus three years of supervised release.
This case was investigated by the Clarksville, Tenn., Office of the FBI’s Memphis Division and the Tennessee Bureau of Investigation, and is being prosecuted by Assistant U.S. Attorney Harold B. McDonough and Civil Rights Division Trial Attorney Adriana Vieco.
Wednesday 14 March 2012
Three Detroit-Area Clinic Owners Plead Guilty for Their Roles in $5.4 Million Medicare Fraud SchemeRead the Press Release
WASHINGTON – Three Detroit-area clinic owners pleaded guilty today for their participation in a Medicare fraud scheme, announced the Department of Justice, the FBI and the Department of Health and Human Services (HHS).
Karina Hernandez, 28, Marieva Briceno, 46, and Henry Briceno, 58, all of Miami, pleaded guilty before U.S. District Judge Arthur J. Tarnow in the Eastern District of Michigan to one count of conspiracy to commit health care fraud. At sentencing, each defendant faces a maximum penalty of 10 years in prison and a $250,000 fine.
According to the plea documents, Hernandez managed the daily operations of three Livonia, Mich., clinics: Blessed Medical Clinic, Alpha & Omega Medical Clinic and Manuel Medical Clinic. Marieva Briceno contributed capital to fund the opening of one clinic, and assisted her daughter, Hernandez, in the daily management of the clinics. At each clinic, Hernandez and Marieva Briceno hired recruiters, who paid cash bribes to Medicare beneficiaries to attend the clinics and provide their Medicare numbers and other information. Hernandez and Marieva Briceno admitted that they used the beneficiary information to bill for medically unnecessary diagnostic tests and treatments. Henry Briceno admitted that he incorporated Manuel Medical Clinic and opened a bank account to conceal the actual ownership of the clinic. According to court documents, Blessed Medical Clinic, Alpha & Omega Medical Clinic and Manuel Medical Clinic fraudulently billed Medicare for $5.4 million during the course of the scheme.
Today’s guilty pleas were announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade; Special Agent in Charge Andrew G. Arena of the FBI’s Detroit Field Office; and Special Agent in Charge Lamont Pugh III of the HHS Office of Inspector General’s (OIG) Chicago Regional Office.
This case is being prosecuted by Assistant U.S. Attorneys Frances Lee Carlson and Philip A. Ross of the Eastern District of Michigan, with assistance from Assistant Chief Gejaa T. Gobena 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 Eastern District of Michigan.
Since their inception in March 2007, the Medicare Fraud Strike Force operations in nine districts have charged more than 1,190 individuals, who collectively have falsely 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, is taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.Former Employee of Nursing Home Company Operating in North Carolina and Virginia Pleads Guilty to Kickback Schemes and Tax EvasionRead the Press Release
WASHINGTON – The former director of corporate maintenance and renovations at Medical Facilities of America Inc. (MFA) pleaded guilty today to accepting kickbacks and evading taxes, the Department of Justice announced. MFA operates healthcare and nursing home facilities throughout Virginia and North Carolina.
According to a four-count charge filed today in U.S. District Court in Roanoke, Va., John D. Henderson, a resident of Colonial Heights, Va., conspired with others to steer contracts for repair, maintenance and renovations at MFA facilities to co-conspirator contractors in return for kickbacks beginning as early as June 1998 through December 2006. Henderson was also charged with evading taxes on his 2005 and 2006 federal tax returns. According to the plea agreement, which is subject to court approval, Henderson has agreed to cooperate with the department’s ongoing investigation.
According to court documents, as the director of corporate maintenance and renovations at MFA, Henderson was responsible for overseeing maintenance, repairs and renovations of the various MFA locations throughout Virginia and obtaining quotes from contractors for capital improvements and equipment purchases. Henderson participated in a conspiracy with contractors Donald R. Holland and Larry R. Sumpter to defraud MFA by circumventing MFA’s competitive procurement process and steering contracts to Hardy Plumbing & Heating Corp., formerly owned by Holland and Sumpter, in return for monetary payments. The department said that Henderson created fictitious competitor bids that were higher than the quotes submitted by Hardy Plumbing, and directed subordinates to solicit quotes only from Hardy Plumbing. As a result of the conspiracy, Henderson received payments from Holland and Sumpter totaling more than $250,000.
According to court documents, Henderson also participated in a separate conspiracy with contractors Edward T. Fodrey, Gary L. Johns and others to defraud MFA by circumventing MFA’s competitive procurement process and steering contracts to the contractors’ companies in return for monetary payments to himself and a co-conspirator. The department said that Henderson created fictitious competitor bids that were higher than the quotes submitted by co-conspirators’ companies, and directed subordinates to solicit quotes only from the conspiring vendors. As a result of the conspiracy, Henderson received more than $400,000 in kickbacks from Fodrey, Johns and other co-conspirators.
Henderson is charged with two counts of conspiracy to commit mail and honest services fraud for the two separate kickback schemes, each of which carries a maximum penalty of 20 years in prison and a $250,000 criminal fine. Henderson is also charged with two counts of tax evasion, each of which carries a maximum penalty of five years in prison and a $250,000 criminal fine, together with the cost of prosecution. The maximum fines for each of these charges 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 maximums.
Henderson is the fifth individual to plead guilty in the department’s fraud investigation into the award of repair, maintenance and renovation contracts at facilities owned by MFA. On Oct. 18, 2011, both Holland and Sumpter pleaded guilty in the U.S. District Court in Roanoke to participating in the scheme. On Jan. 31, 2012, Holland and Sumpter were each sentenced by Judge Samuel G. Wilson to two years of probation and fined $50,000 and $15,000, respectively. On April 4, 2011, Fodrey pleaded guilty in the U.S. District Court in Norfolk,Va., and was sentenced by Judge Mark S. Davis on Jan. 31, 2012, to serve 37 months in prison and was ordered to pay $326,799 in restitution. Johns pleaded guilty on Dec. 12, 2011, in the U.S. District Court in Roanoke and was sentenced today by Judge Wilson to serve three years of probation and to pay $169,341 in restitution.
The investigation is being conducted by the Antitrust Division’s Philadelphia Field Office, the U.S. Attorney’s Office for the Western District of Virginia, the FBI in Roanoke and the Internal Revenue Service-Criminal Investigation in Roanoke. Anyone with information concerning fraudulent behavior relating to the award of contracts by MFA should contact the Antitrust Division’s Philadelphia Field Office at 215-597-7405 or visit www.justice.gov/atr/contact/newcase.htm.
Former Arizona State Representative Pleads Guilty to Wire Fraud and Tax Evasion Related to the Misuse of More Than $140,000 in Charity FundsRead the Press Release
WASHINGTON – Richard David Miranda, a former Arizona state representative, pleaded guilty today in the U.S. District Court for the District of Arizona to a two-count information charging him with defrauding a charity of more than $140,000 and evading income tax related to those unlawfully obtained funds.
The guilty plea was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; Special Agent in Charge James L. Turgal of the FBI’s Phoenix Field Office; and Special Agent in Charge Dawn Mertz of the Internal Revenue Service-Criminal Investigation (IRS-CI) Phoenix office.
“Mr. Miranda, a former member of the Arizona legislature and executive director of a non-profit organization, pleaded guilty today to using over $140,000 of the charity’s funds for his personal expenses, and then failing to disclose the extra income on his tax return,” said Assistant Attorney General Breuer. “Having admitted this illegal conduct, Miranda will now face the consequences of his actions. This Justice Department will continue to hold elected officials, just like ordinary citizens, accountable for their crimes.”
“The Federal Bureau of Investigation, the Internal Revenue Service and the Department of Justice remain steadfast in our efforts to combat public corruption at all levels of government by investigating and prosecuting those who deliberately abuse the public’s trust by using their office for personal gain stated,” said FBI Special Agent in Charge James L. Turgal Jr. “The FBI and our law enforcement partners are committed to holding our elected officials accountable from intentionally engaging in schemes to profit from fraudulent activity and exploiting the faith placed in them by the American public.”
“It is an embarrassment to the state and its people when a state representative deceives those he was elected to represent,” said IRS Special Agent in Charge Mertz. “Former Representative Miranda selfishly defrauded a charity that was established to assist disadvantaged members of the community and used the profits for his own benefit. Those in public office should be held to a higher standard and are not exempt from criminal prosecution.”
Miranda, 55, of Tolleson, Ariz., served as a member of the Arizona House of Representatives for the 13th District from 2011 until his resignation, effective Feb. 20, 2012. Miranda previously served as a member of the Arizona State Senate from 2002 until 2011, and the Arizona House of Representatives from 1999 until 2002. According to court documents, since July 2002, Miranda also served as executive director of Centro Adelante Campesino Inc. (Centro), a non-profit charitable organization that provided food, clothing and educational assistance to persons in need, including migrant farm workers, in and around Maricopa County, Ariz.
According to court documents, in May 2005, Miranda initiated a scheme to wind down Centro, sell Centro’s sole remaining asset (a building), and use the proceeds of the sale for personal expenses. To do so, Miranda removed the charity’s longstanding volunteer accountant as an authorized signer on the charity’s bank and credit union accounts, and assumed sole control of the charity’s accounts and financial records. He also told the volunteer accountant that the proceeds of the sale would be used to fund scholarships. In March 2007, the building was sold for $250,000, and on March 7, 2007, a significant portion of the profits of that sale – $144,576 – were wired across state lines into Centro’s credit union account.
According to court documents, within one week of the wire transfer, Miranda began to withdraw the proceeds from Centro’s credit union account without the authorization or knowledge of Centro’s board of directors. For example, Miranda obtained two checks payable to himself totaling $37,000, and paid off personal credit card debts totaling more than $60,000. By Dec. 31, 2007, Miranda had withdrawn the remaining proceeds (approximately $46,836) using checks, withdrawals and electronic funds transfers, and used the funds to pay off additional personal debts and make numerous purchases for personal travel, services, clothing, food and household items. Miranda also failed to report the proceeds of the sale as income on his IRS Form 1040 for calendar year 2007.
The charge of wire fraud carries a maximum penalty of 20 years in prison and a $250,000 fine, or twice the amount gained or lost in the scheme. The charge of attempt to evade or defeat tax carries a maximum penalty of five years in prison and a $100,000 fine. Sentencing has been scheduled for June 5, 2012.
The case is being prosecuted by Trial Attorneys Edward T. Kang, Monique T. Abrishami and Brian A. Lichter of the Criminal Division’s Public Integrity Section, and Assistant U.S. Attorney Frederick A. Battista of the District of Arizona. The case is being investigated by agents from the FBI Phoenix Field Office and IRS-CI Phoenix Office.
Bizjet International Sales and Support Inc., Resolves Foreign Corrupt Practices Act Investigation and Agrees to Pay $11.8 Million Criminal PenaltyRead the Press Release
WASHINGTON – BizJet International Sales and Support Inc., a provider of aircraft maintenance, repair and overhaul (MRO) services based in Tulsa, Okla., has agreed to pay an $11.8 million criminal penalty to resolve charges related to the Foreign Corrupt Practices Act (FCPA) for bribing government officials in Latin America to secure contracts to perform aircraft MRO services for government agencies, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division.
The department filed a one-count criminal information today charging BizJet with conspiring to violate the FCPA’s anti-bribery provisions and a deferred prosecution agreement in U.S. District Court for the Northern District of Oklahoma.
According to court documents, BizJet paid bribes to officials employed by the Mexican Policia Federal Preventiva, the Mexican Coordinacion General de Transportes Aereos Presidenciales, the air fleet for the Gobierno del Estado de Sinaloa, the air fleet for the Gobierno del Estado de Sonora and the Republica de Panama Autoridad Aeronautica Civil. In many instances, BizJet paid the bribes directly to the foreign officials. In other instances, BizJet funneled the bribes through a shell company owned and operated by a BizJet sales manager. BizJet executives orchestrated, authorized and approved the unlawful payments.Under the terms of the department’s agreement with BizJet, the department agreed to defer prosecution of BizJet for three years. In addition to the monetary penalty, BizJet agreed to cooperate with the department in ongoing investigations, to report periodically to the department concerning BizJet’s compliance efforts, and to continue to implement an enhanced compliance program and internal controls designed to prevent and detect FCPA violations. If BizJet abides by the terms of the deferred prosecution agreement, the department will dismiss the criminal information when the agreement’s term expires.
In addition, BizJet’s indirect parent company, Lufthansa Technik AG, itself a German provider of aircraft-related services, entered into an agreement with the department in connection with the unlawful payments by BizJet and its directors, officers, employees and agents. The department has agreed not to prosecute Lufthansa Technik provided that Lufthansa Technik satisfies its obligations under the agreement for a period of three years. Those obligations include ongoing cooperation and the continued implementation of rigorous internal controls.
The agreements acknowledge BizJet’s and Lufthansa Technik’s voluntary disclosure of the FCPA violations to the department and their extraordinary cooperation, including conducting an extensive internal investigation, voluntarily making U.S. and foreign employees available for interviews, and collecting, analyzing and organizing voluminous evidence and information for the department. In addition, BizJet and Lufthansa Technik engaged in extensive remediation, including terminating the officers and employees responsible for the corrupt payments, enhancing their due-diligence protocol for third-party agents and consultants, and heightening review of proposals and other transactional documents for all BizJet contracts.
The case is being prosecuted by Trial Attorneys Daniel S. Kahn and Stephen J. Spiegelhalter of the Criminal Division’s Fraud Section. Assistant U.S. Attorney Kevin Leitch from the Northern District of Oklahoma has provided assistance in the case. The department has also worked closely with its law-enforcement counterparts in Mexico and Panama in this matter and is grateful for their assistance. The ongoing investigation is being assisted by the FBI’s Washington Field Office.
Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.
Tuesday 13 March 2012
United Kingdom Citizen and Two Americans Charged in Alabama for Allegedly Conspiring to Defraud United States GovernmentRead the Press Release
WASHINGTON – United Kingdom citizen Ahmed Sarchil Kazzaz and his company, Leadstay Company, were charged in an indictment unsealed today in the Northern District of Alabama for their roles in a conspiracy to defraud the United States and pay kickbacks in exchange for receiving subcontracts for a Department of Defense program in Iraq, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Joyce White Vance of the Northern District of Alabama.
Kazzaz, 45, and Leadstay were charged with one count of conspiracy to defraud and commit offenses against the United States; six counts of unlawful kickbacks; one count of wire fraud; and three counts of mail fraud. Kazzaz was arrested on Feb. 14, 2012, in Los Angeles. In addition, two informations filed in the Northern District of Alabama were unsealed today, charging Gaines R. Newell Jr., 52, and Billy Joe Hunt, 57, with conspiracy to commit the federal offenses of kickbacks, wire fraud and mail fraud, and with filing false tax returns.
According to the indictment, Kazzaz paid more than $947,500 in unlawful kickbacks to two employees of a prime contractor to the United States government in order to obtain lucrative subcontracts for himself and Leadstay, in connection with the Coalition Munitions Clearance Program (CMCP). CMCP is operated in Iraq by the U.S. Army Corps of Engineers, Huntsville Engineering and Support Center (HESC). HESC, located in the Northern District of Alabama, operated the CMCP to clear out, store and dispose of weapons that were seized or abandoned in Iraq since the 2003 invasion. HESC awarded a contract to perform this work to an international engineering and construction firm headquartered in Pasadena, Calif.
The indictment alleges that beginning in about March 2006, Kazzaz entered into a kickback agreement with the California prime contractor’s program manager and deputy program manager, who arranged for the award of subcontracts to Kazzaz and Leadstay to provide materials, heavy equipment and operators for equipment for the CMCP. Kazzaz also allegedly obtained multiple funding increases to those subcontracts. From April 2006 through August 2008, Kazzaz and Leadstay received more than $23 million in U.S. funds for services under the CMCP.
According to the two informations unsealed today, Newell was the program manager in Iraq for the California-based prime contractor to HESC, and Hunt was the deputy program manager. Both are charged with conspiring to solicit and accept kickbacks to award subcontracts under the CMCP program and to commit mail and wire fraud by knowingly and intentionally devising a scheme to defraud the United States. In addition, both are charged with failing to report the kickback income on their federal tax returns.
“Mr. Kazzaz allegedly paid kickbacks to two employees of a California-based contractor in order to secure subcontracts for Department of Defense programs in Iraq,” said Assistant Attorney General Breuer. “Federal contracts must be won or lost based on the merits of the bid, and we will continue to take aggressive steps to hold accountable anyone who tries to play by their own set of rules instead.”
“Government contracts fraud is an insult to all law-abiding taxpayers,” said U.S. Attorney Vance. “These defendants’ conduct was even worse in that they tried to illegally profit from defense contracts in Iraq, where American men and women were willing to put their lives on the line for freedom.”
“These charges clearly demonstrate that we will take firm action against those who make illegal payments while engaged in wartime contracting,” said Stuart W. Bowen, Special Inspector General for Iraq Reconstruction (SIGIR). “SIGIR and its investigative partners will continue our vigorous pursuit of those whose illegal acts undermined the U.S. government’s management of the stabilization and reconstruction effort in Iraq.”
“Individuals and businesses that illegally enrich themselves at the expense of the U.S. taxpayer, especially as wartime profiteers, or those who diminish the combat readiness or effectiveness of the U.S. military, will be aggressively investigated by DCIS and our investigative partners,” said Defense Criminal Investigative Service (DCIS) Special Agent in Charge Chris D. Hendrickson. “The combined investigative effort, the Department of Justice and the U.S. Attorney’s Office’s work demonstrate the combined federal commitment to combating fraud, waste and abuse.”
“IRS Criminal Investigation provides financial expertise with our law enforcement partners,” said Special Agent in Charge Leslie P. DeMarco of the Internal Revenue Service Criminal Investigations (IRS-CI) Los Angeles Field Office. “Today’s unsealing of these charges demonstrates our collective efforts in tracing illicit funds internationally to enforce the laws and ensure public trust.”
Kazzaz, Newell and Hunt are also facing criminal forfeiture proceedings.
The cases were investigated by the DCIS, IRS-CI, SIGIR, the FBI, and the U.S. Army Criminal Investigations Division. The cases are being prosecuted by Trial Attorney Catherine Votaw, on detail from SIGIR to the Fraud Section of the Justice Department’s Criminal Division, and Assistant U.S. Attorney David Estes of the Northern District of Alabama.
An indictment and information contain charges, and defendants are innocent until proven guilty.
U.S. Orders Pennylvania Diet Supplement Company to Cease Operations Pending Reinspection by FDARead the Press Release
The United States has entered a consent decree against ATF Fitness Products Inc., Manufacturing ATF Dedicated Excellence Inc. (MADE), and the owner and president of both companies, James G. Vercellotti, the Justice Department announced today. The decree, filed in the Western District of Pennsylvania on March 9, 2012, enjoins the firms and Mr. Vercellotti from violating the Food, Drug and Cosmetic Act (FDCA) in connection with their business of manufacturing, packing and distributing over 400 dietary supplements.
The decree orders the defendants to cease operations unless and until the FDA re-inspects the businesses and determines they no longer violate the FDCA. Additionally, the decree requires the defendants to retain an independent expert to review their production and distribution of supplements to ensure their continued compliance with the law.
“Almost by definition, consumers purchase dietary supplements to enhance and improve their health,” said Stuart F. Delery, Acting Assistant Attorney General for the Civil Division. “The Department of Justice took this action because consumers must, at the very least, be assured that they are buying what they think they are buying, and that the products are safe.”
During an inspection last year by the Food and Drug Administration (FDA), FDA inspectors found numerous current good manufacturing practice (“cGMP”) violations. Inspectors determined that the defendants failed to clean manufacturing equipment, failed to maintain proper records concerning the ingredients of the supplements, and failed to label their products correctly. Additionally, the FDA determined that defendants failed to notify the FDA of possible adverse events involving consumers who used the defendants’ supplements.
“Through this consent decree, we will ensure that the public is protected from purchasing and consuming tainted supplements and misbranded products,” said David J. Hickton, U.S. Attorney for the Western District of Pennsylvania.
The FDA previously inspected the defendant’s facilities, and noted a history of violations and warnings dating to 2001. As a result of the FDA’s findings of recent violations, as well as its findings of a history of unheeded warnings, the Justice Department filed suit, seeking this permanent injunction.
Acting Assistant Attorney General Delery thanked the FDA for referring this matter for litigation, as well as U.S. Attorney Hickton for his office’s assistance with the litigation.
Taiwan-Based AU Optronics Corporation, Its Houston-Based Subsidiary and Former Top Executives Convicted for Role in LCD Price-Fixing ConspiracyRead the Press Release
WASHINGON – Following an eight-week trial, a federal jury in San Francisco today convicted the largest Taiwan liquid crystal display (LCD) producer, its Houston-based subsidiary and their two former top executives for their participation in a five-year conspiracy to fix the prices of thin-film transistor-liquid crystal display (TFT-LCD) panels sold worldwide, the Department of Justice announced. The jury also found that the ill-gotten gain to the conspirators as a result of the fixed sales in the United States was at least $500 million.
AU Optronics Corporation and its American subsidiary, AU Optronics Corporation America, were found guilty today in the U.S. District Court in San Francisco. The trial began on Jan. 9, 2012. AU Optronics Corporation is based in Hsinchu, Taiwan. AU Optronics Corporation America is headquartered in Houston. The companies and individuals were indicted on June 9, 2010. The indictment charged that AU Optronics Corporation participated in the worldwide price-fixing conspiracy from Sept. 14, 2001, to Dec. 1, 2006, and that its subsidiary participated at various times during the conspiracy.
Former AU Optronics Corporation president Hsuan Bin Chen and former AU Optronics Corporation executive vice president Hui Hsiung were also found guilty. The department said that both executives participated in the conspiracy from Oct. 19, 2001, to Dec.1, 2006.
In addition to today’s convictions, seven companies have pleaded guilty to date to charges arising out of the department’s ongoing investigation and have been sentenced to pay criminal fines totaling more than $890 million. In addition to the individuals convicted today, 17 executives have been charged. Ten of the executives have pleaded guilty and have been sentenced to serve a combined total of 2,681 days in prison.
“The jury finding $500 million in ill-gotten gains by members of the cartel demonstrates the harmful effect of this price-fixing conspiracy on American businesses and consumers,” said Acting Assistant Attorney General Sharis A. Pozen in charge of the Department of Justice’s Antitrust Division. “The jury’s decision to hold not only the companies but also their top executives accountable for their anticompetitive actions should send a strong deterrent message to board rooms around the world.”
TFT-LCD panels are used in computer monitors and notebooks, televisions, mobile phones and other electronic devices. By the end of the conspiracy period, the worldwide market for TFT-LCD panels was valued at $70 billion annually. Companies directly affected by the LCD price-fixing conspiracy include some of the largest computer manufacturers in the world, including Apple, Dell and Hewlett Packard.
At trial, the department said that the convicted companies and former executives fixed the prices of LCD panels sold into the United States. The prices were fixed during monthly meetings with their competitors secretly held in hotel conference rooms, karaoke bars and tea rooms around Taiwan. The indictment alleged that the conspiracy lasted for more than five years before it was detected.
Also today, the jury found two AU Optronics Corporation employees not guilty--Lai-Juh Chen, former director of the Desktop Display Business Group, and Tsannrong Lee, former senior manager of the Notebooks Business Group. A mistrial was declared against Hsiu Lung Leung, former AU Optronics Corporation senior manager of Desktop Display Business Group.
The maximum penalty for a Sherman Act violation for an individual is 10 years in prison and a $1 million fine. Since the jury found that the gain derived from the conspiracy was at least $500 million, the maximum fine for the corporations is $1 billion.
Today’s charges are the result of a joint investigation by the Department of Justice Antitrust Division’s San Francisco Field Office and the FBI in San Francisco.
Anyone with information concerning illegal conduct in the TFT-LCD industry is urged to call the Antitrust Division’s San Francisco Field Office at 415-436-6660 or visit www.justice.gov/atr/contact/newcase.htm
Six Plead Guilty in Ohio to Tax and Mail Fraud Conspiracies Involving I.D. Theft of DeceasedRead the Press Release
Muaad Salem, Hanan Widdi, Najeh Widdi, Hazem Woodi, Daxesj Patel and Fahim Suleiman each entered guilty pleas before the Honorable James S. Gwin today to charges arising from a scheme to obtain false and fraudulent U.S. Treasury tax refund checks, the Justice Department, the U.S. Attorney’s Office for the Northern District of Ohio and the Internal Revenue Service (IRS) announced. Specifically, Salem, Najeh Widdi and Woodi entered guilty pleas to conspiracy to defraud the United States, conspiracy to commit mail fraud and mail fraud; Hanan Widdi entered a guilty plea to conspiracy to defraud the United States and conspiracy to commit mail fraud; Patel entered a guilty plea to two counts of submitting false claims and one count of false statements; and Suleiman entered a guilty plea to conspiracy to defraud the United States, conspiracy to commit mail fraud; mail fraud and aggravated identity theft.
According to the indictment, between April 15, 2009 to at least August 2011, Salem, Suleiman, Najeh Widdi, Hanan Widdi, Woodi, Patel and other unknown co-conspirators defrauded the United States by filing false and fraudulent tax returns, many in the names of recently deceased taxpayers, and directing refunds to controlled locations in the state of Florida. The U.S. Treasury checks generated by the false and fraudulent returns were then sent by the U.S. mail to co-conspirators in Ohio who sold and distributed the checks for negotiation at various businesses and banking institutions. As part of their plea agreements, the defendants admitted that the fraud loss caused by their conduct was between $1 and 2.5 million and that the offenses involved more than ten victims.
Sentencing is scheduled on May 29, 2012, for Najeh Widdi and Patel; on May 30, 2012, for Hanan Widdi and Woodi; and on June 1, 2012, for Salem and Suleiman. Mail fraud is punishable by a maximum potential sentence of 20 years in prison; conspiracy to defraud the United States is punishable by a maximum potential sentence of 10 years; conspiracy to commit mail fraud, making a false claim against the United States and making a false statement are each punishable by a maximum potential sentence of five years in prison; aggravated identity theft is punishable by a mandatory minimum prison sentence of two years to follow conviction on any other offense. All of the above sentences are also punishable by a fine of $250,000 for each count of conviction.
The case was prosecuted by Assistant U.S. Attorney Gary D. Arbeznik of the Northern District of Ohio and Trial Attorney Jessica W. Knight of the Justice Department’s Tax Division following investigation by the Cleveland Division of the Federal Bureau of Investigation, the IRS-Criminal Investigation, and the United States Postal Service.
Riverton, Illinois, Man Sentenced to 216 Months in Prison for Production and Possession of Child PornographyRead the Press Release
WASHINGTON – A Riverton, Ill., man was sentenced yesterday to 216 months in prison and lifetime supervised release for production and possession of child pornography, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney James A. Lewis for the Central District of Illinois.
Jeffrey Price, 47, was sentenced by U.S. District Judge Sue E. Myerscough in Springfield, Ill. Price was convicted on Nov. 4, 2011, of one count of production and one count of possession of child pornography, following a four-day jury trial.
According to evidence presented at trial, on several occasions between October 2002 and October 2004, Price produced sexually explicit photographs of an eleven-year-old girl. Trial evidence also showed that Price possessed more than 900 images and 20 movies that depict children engaged in sexually explicit activity.
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 prosecuted by Assistant U.S. Attorneys Greggory R. Walters and Elly Peirson of the Central District of Illinois and Assistant Deputy Chief Alexandra Gelber with the Criminal Division’s CEOS. The charges were investigated by the U.S. Immigration and Customs Enforcement Office of Homeland Security Investigations and the Springfield Police Department with assistance provided by the Illinois Department of Children and Family Services and the Sangamon County Child Advocacy Center.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 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).
Mathis Moore, 56, pleaded guilty before U.S. Magistrate Judge Barry L. Garber 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. Moore was charged in an indictment unsealed on Feb. 15, 2011, in the Southern District of Florida.Moore admitted to participating in a fraud scheme that was orchestrated by the owners and operators of American Therapeutic Corporation (ATC); its management company, Medlink Professional Management Group Inc.; and the American Sleep Institute (ASI). ATC, Medlink and ASI were Florida corporations headquartered in Miami. ATC operated purported partial hospitalization programs (PHPs), a form of intensive treatment for severe mental illness, in seven different locations throughout South Florida and Orlando. 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 who did not qualify for PHP services to attend treatment programs that were not legitimate PHPs so that ATC and ASI could bill Medicare for the medically unnecessary services. According to court filings, to obtain the cash required to support the kickbacks, the co-conspirators laundered millions of dollars of payments from Medicare.
Moore admitted to serving as a patient broker who provided patients for ATC and ASI in exchange for kickbacks in the form of checks and cash. The amount of the kickback was based on the number of days each patient spent at ATC.
According to his plea agreement, Moore’s participation in the ATC fraud resulted in $17 million in fraudulent billings to the Medicare program.Sentencing for Moore is scheduled for May 29, 2012, at 9:30 a.m. He faces a maximum penalty of 15 years in prison and a $250,000 fine.
ATC, Medlink, 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 10 of the individual defendants have pleaded guilty or have been convicted at trial. Other defendants are scheduled for trial April 9, 2012, before U.S. District Judge Patricia A. Seitz. A defendant is presumed innocent unless proven guilty beyond a reasonable doubt in a court of law.
Today’s guilty plea was 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 B. 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 Files Lawsuit Against United Airlines for USERRA ViolationRead the Press Release
WASHINGTON - The Justice Department filed a lawsuit against United Airlines Inc., alleging violations of the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA).
The complaint, filed in the U.S. District Court in Denver, alleges that United Airlines violated USERRA by denying pilot TenEyck LaTourrette employment benefits during his military service. LaTourrette is currently a major serving in the Colorado Air National Guard and a first officer for United Airlines.
The complaint alleges that United Airlines violated USERRA by under compensating LaTourrette’s pension during his military service. Specifically, United based its pension contributions on a minimum monthly schedule, rather than using LaTourrette’s actual schedule during the 12 months preceding his military obligations, as required by USERRA.
Because most pilots work beyond a minimum schedule, United’s actions resulted in an underpayment to LaTourrette and other military reservists’ pensions until United changed its policy to comply with USERRA in November 2010.
“This nation depends upon our reservists to faithfully carry out their military obligations. No members of our armed forces should ever be penalized for answering the call of duty,” said Thomas Perez, Assistant Attorney General for the Civil Rights Division. “The filing of this lawsuit reflects the Civil Rights Division’s continuing commitment to fully protect our uniformed servicemembers’ employment rights under USERRA.”
“We ask the men and women of our armed forces to fight for our country’s freedom and to be willing to risk their lives for that cause,” said John Walsh, U.S. Attorney for the District of Colorado. “When they return home they should not have to fight to be properly compensated. I would like to recognize the outstanding efforts of the Civil Rights Division for their work to protect the benefits of this service member.”
The Justice Department’s lawsuit was filed after the Veterans’ Employment and Training Service (VETS) of the Department of Labor referred Major LaTourrette’s complaint to the Justice Department upon completion of its investigation and failed settlement efforts. The Labor Department and Justice Department work cooperatively together to protect the jobs and benefits of National Guard and Reserve servicemembers upon their return to civilian life.
More information about USERRA is available at www.dol.gov/vets/programs/userra/main.htm.
Haji Bagcho Convicted by Federal Jury in Washington, D.C., on Drug Trafficking and Narco-terrorism ChargesRead the Press Release
WASHINGTON – An Afghan national with ties to the Taliban was convicted today by a jury in U.S. District Court for the District of Columbia of conspiracy, distribution of heroin for importation into the United States and narco-terrorism, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and Administrator Michele M. Leonhart of the Drug Enforcement Administration (DEA).
Haji Bagcho, from Nangarhar Province, Afghanistan, was investigated by the DEA for narcotics offenses. The investigation revealed that Bagcho was one of the largest heroin traffickers in the world and manufactured the drug in clandestine laboratories along Afghanistan’s border region with Pakistan. Bagcho sent heroin to more than 20 countries, including the United States. Proceeds from his heroin trafficking were then used to support high-level members of the Taliban to further their insurgency in Afghanistan.Beginning in 2005 and continuing for the next five years, the DEA, in cooperation with Afghan authorities, conducted an investigation of Bagcho’s organization. With the help of cooperating witnesses, the DEA purchased heroin directly from the organization on two occasions, which Bagcho understood was destined for the United States. They also conducted several searches of residences belonging to Bagcho and his associates, recovering evidence consistent with drug trafficking. During one search, ledgers belonging to the defendant were found. One ledger, cataloguing Bagcho’s activities during 2006, reflected heroin transactions of more than 123,000 kilograms, worth more than $250 million, according to Bagcho’s ledger. Based on heroin production statistics compiled by the United Nations Office of Drugs and Crime for 2006, the defendant’s trafficking accounted for approximately 20% of the world’s total production for that year.
The investigation also obtained evidence that over several years, Bagcho used a portion of his drug proceeds to provide the former Taliban governor of Nangarhar Province and two Taliban commanders responsible for insurgent activity in eastern Afghanistan with cash, weapons and other supplies so that they could continue their “jihad” against western troops and the Afghan government.
“Haji Bagcho was a prolific and dangerous heroin manufacturer, trafficking in over 123,000 kilograms of the drug in 2006 alone,” said Assistant Attorney General Breuer. “Moreover, he used proceeds from his crimes to fund Taliban insurgents and fuel their ongoing ‘jihad’ against the United States and others. The effects of Bagcho’s criminal activity were felt all over the world, and today’s guilty verdict ensures that he will serve a lengthy prison term.”
“One of the world’s most prolific drug trafficker’s reign has come to an end,” said DEA Administrator Leonhart. “Now Haji Bagcho will serve time behind bars on the same soil he sought to destroy with his drugs, and whose troops he sought to kill through his support to the Taliban. DEA stands committed to stopping narco-traffickers, like Bagcho, and their funding of terror.”
A grand jury returned an indictment against Bagcho on Nov. 8, 2006, charging him with distributing heroin, knowing that it would be imported into the United States. A superseding indictment returned on Jan. 28, 2010, added additional charges of conspiracy to distribute and distribution of heroin, knowing or intending that it would be imported in the United States, as well as engaging in drug trafficking knowing or intending to provide something of pecuniary value to a terrorist or terrorist organization. Bagcho was brought to the United States on June 24, 2009. He faces a mandatory minimum sentence of 20 years and a maximum of life in prison. A sentencing hearing is scheduled before the Honorable Ellen S. Huvelle on June 12, 2012.
The case was prosecuted by Trial Attorneys Matthew Stiglitz and Marlon Cobar of the Criminal Division’s Narcotic and Dangerous Drug Section. The case was investigated by the DEA Special Operations Division in the United States, with assistance from the DEA’s Foreign Deployed Advisory Support Team and Kabul Country Office in Afghanistan, the U.S. Embassy in Kabul, and in close cooperation with Afghan law enforcement. The Criminal Division’s Office of International Affairs provided invaluable support.
Former Haitian Government Official Convicted in Miami for Role in Scheme to Launder Bribes Paid by Telecommunications CompaniesRead the Press Release
WASHINGTON – Jean Rene Duperval, a former director of international relations for Telecommunications D’Haiti S.A.M. (Haiti Teleco), a Haitian state-owned telecommunications company, has been convicted by a federal jury on all counts for his role in a scheme to launder bribes paid to him by two Miami-based telecommunications companies. The jury reached its verdict late yesterday after less than three hours of deliberations, following a week-long trial.
The conviction was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer for the Southern District of Florida; and Special Agent in Charge Jose A. Gonzalez of Internal Revenue Service, Criminal Investigation (IRS-CI), Miami Field Office.
“Mr. Duperval was convicted by a Miami jury of laundering $500,000 paid to him as part of an elaborate bribery scheme,” said Assistant Attorney General Breuer. “As the director of international relations for Haiti’s state-owned telecommunications company, Duperval doled out business in exchange for bribes and then used South Florida shell companies to conceal his crimes. This Justice Department is committed to stamping out corruption wherever we find it.”
“To conceal the payment and receipt of bribes, Duperval participated in a money laundering scheme to funnel about half a million dollars to two shell companies under his control,” said U.S. Attorney Ferrer. “This verdict confirms that American taxpayers will not tolerate bribery, either at home or abroad, to obtain unfair business advantages.”
“Today’s announcement sends a strong message to those hiding monies in bogus business entities: no matter how elaborate or complex the scheme, you will get caught,” said IRS Special Agent in Charge Gonzalez. “IRS criminal investigators will continue to aggressively investigate bribery schemes to ensure that honest businesses have the benefit of a competitive market.”
Duperval, 45, of Miramar, Fla., was convicted of two counts of conspiracy to commit money laundering and 19 counts of money laundering. According to the charges, the funds that were laundered were the proceeds of violations of the Foreign Corrupt Practices Act (FCPA), Haitian bribery law and the wire fraud statute.
Duperval was the director of international relations for Haiti Teleco, the sole provider of land line telephone service in Haiti. According to the evidence presented at trial, two Miami-based telecommunications companies had a series of contracts with Haiti Teleco that allowed the companies’ customers to place telephone calls to Haiti.
Duperval was convicted for participating in a scheme to commit money laundering from 2003 to 2006, during which time the telecommunications companies collectively paid $500,000 to two shell companies to funnel the bribes to Duperval.
The purpose of these bribes, according to the evidence presented at trial, was to obtain various business advantages from Duperval, including the issuance of preferred telecommunications rates, a continued telecommunications connection with Haiti and the continuation of a particularly favorable contract with Haiti Teleco. To conceal the bribe payments, Duperval instructed the companies to forward the payments to the shell companies. To support these payments, the companies and their executives created false documents claiming that the payments were for “consulting services” or for “international minutes from USA to Haiti.” No actual services were performed. The funds were then disbursed from the shell companies for the benefit of Duperval and his family. To conceal the nature of these funds, Duperval falsely characterized these payments as “commissions” and “payroll.”Duperval was remanded to the custody of the U.S. Marshals. Sentencing is scheduled for May 21, 2012. The conspiracy to commit money laundering count carries a maximum penalty of 20 years in prison and a fine of the greater of $500,000 or twice the value of the property involved in the transaction. The money laundering counts each carry a maximum penalty of 20 years in prison and a fine of the greater of $500,000 or twice the value of the property involved in the transaction. The indictment also seeks forfeiture, which will be determined by the court at a later date.
Duperval was the eighth defendant involved in the corruption scheme to be convicted, which includes the following individuals:
- On April 27, 2009, Antonio Perez, a former controller at one of the Miami-based telecommunications companies, pleaded guilty to one count of conspiracy to violate the FCPA and money laundering. On Jan. 12, 2010, he was sentenced to 24 months in prison, which he is currently serving.
- On May 15, 2009, Juan Diaz, the president of J.D. Locator Services, pleaded guilty to one count of conspiracy to violate the FCPA and money laundering. He admitted to receiving more than $1 million in bribe money from telecommunications companies. On July 30, 2010, he was sentenced to 57 months in prison, which he is currently serving.
- On Feb. 19, 2010, Jean Fourcand, the president and director of Fourcand Enterprises Inc., pleaded guilty to one count of money laundering for receiving and transmitting bribe monies in the scheme. On May 5, 2010, he was sentenced to six months in prison.
- On March 12, 2010, Robert Antoine, a former director of international affairs for Haiti Teleco, pleaded guilty to one count of conspiracy to commit money laundering. He admitted to receiving more than $1 million in bribes from Miami-based telecommunications companies. On June 2, 2010, he was sentenced to 48 months in prison, which he is currently serving.
- On Aug. 4, 2011, Joel Esquenazi and Carlos Rodriguez, who were the former president and vice-president, respectively, of one of the telecommunications companies, were convicted by a federal jury of one count of conspiracy to violate the FCPA and wire fraud, seven counts of FCPA violations, one count of money laundering conspiracy and 12 counts of money laundering. On Oct. 25, 2011, Esquenazi was sentenced to 15 years in prison, the longest sentence ever imposed in a case involving the FCPA. On the same day, Rodriguez was sentenced to 84 months in prison for his role in the bribery scheme. Both are currently serving their sentences.
In a second superseding indictment, Washington Vasconez Cruz, Amadeus Richers and Cecilia Zurita were charged in a related scheme to commit foreign bribery and money laundering from December 2001 through January 2006. The defendants are fugitives. An indictment is merely an accusation, and defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.
The Department of Justice is grateful to the government of Haiti for continuing to provide substantial assistance in gathering evidence during this investigation. In particular, Haiti’s financial intelligence unit, the Unité Centrale de Renseignements Financiers (UCREF), the Bureau des Affaires Financières et Economiques (BAFE), which is a specialized component of the Haitian National Police, and the Ministry of Justice and Public Security provided significant cooperation and coordination in this ongoing investigation.
To learn more about the government’s FCPA enforcement efforts, go to www.justice.gov/criminal/fraud/fcpa.
The case is being prosecuted by Senior Trial Attorney James M. Koukios and Trial Attorney Daniel S. Kahn of the Criminal Division’s Fraud Section. The Criminal Division’s Office of International Affairs also provided assistance in this matter. These cases were investigated by the IRS-CI Miami Field Office.
Alabama Woman Sentenced to More Than Five Years in Prison for Identity Theft and Tax Fraud SchemeRead the Press Release
Melinda Clayton of Montgomery, Ala., was sentenced today to 61 months in prison, following a guilty plea to conspiracy to make false claims, wire fraud and aggravated identity theft, the Justice Department and the Internal Revenue Service (IRS) announced. U.S. District Judge Mark Fuller also ordered Clayton to pay $494,424 in restitution.
Court records indicate that on April 8, 2011, Clayton was arrested on a criminal complaint following the execution of a search warrant at her house that same day. Clayton and Alchico Grant were both named in the original indictment which was returned in April 2011. On Aug. 31, 2011, Clayton, along with Veronica Dale and Alchico Grant, was charged in a 43-count superseding indictment with conspiring to defraud the United States by filing false claims, filing false claims, wire fraud and aggravated identity theft. That indictment also charged Stephanie Adams with conspiracy and with theft of government funds, and named Valerie Byrd as an unindicted co-conspirator. According to the indictment, the conspiracy involved using stolen identities to file false tax returns. Veronica Dale, Alchico Grant, Stephanie Adams and Valerie Byrd have all pleaded guilty to federal crimes.
According to the indictment and plea agreement, Clayton stored tens of thousands of stolen means of identification (names and Social Security numbers) at her house, which came from numerous sources, including private companies, health clinics and prisons. Dale and Clayton used the stolen identities to file false returns that fraudulently claimed tax refunds. They directed the refunds to bank accounts and debit cards. Grant and Dale would buy debit cards to use in the scheme, while Clayton, Adams and Byrd all provided bank accounts to receive fraudulent refunds. Between January and up to the day of the search warrant, April 8, 2011, the conspirators filed returns claiming almost $500,000 in fraudulent refunds.
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 Todd Brown of the Middle District of Alabama are prosecuting the case.
Additional information about the Tax Division and its enforcement efforts may be found at www.justice.gov/tax.
Monday 12 March 2012
Three Former Corrections Officers Charged with Federal Civil Rights Offenses for Role in Beating Death of an Inmate at Ventress Correctional Facility in AlabamaRead the Press Release
WASHINGTON – The Justice Department announced today that a federal grand jury has charged Michael Smith, 37, Matthew Davidson, 43, and Joseph Sanders, 31 – former corrections officers of the Alabama Department of Corrections – in a 17-count indictment. The indictment alleges that the officers participated in the beating of an inmate that resulted in bodily injury and the inmate’s death, and that the officers conspired with each other and other officers to cover up the incident.
The indictment charges all three former officers with felony civil rights violations, with obstruction of justice-related violations, and with making false statements to the FBI. Defendants Davidson and Sanders are charged with assaulting the victim, which resulted in bodily injury to the victim. Smith is also charged with assaulting the victim, which resulted in bodily injury to, and the death of, the victim. Agents of the FBI and the Alabama Bureau of Investigation arrested all three defendants earlier this morning.
The charges stem from an incident that occurred at Ventress Correctional Facility in Clayton, Ala., on Aug.4, 2010, when inmate Rocrast Mack, was severely beaten, suffered significant injuries, and died the following day in a Montgomery, Ala., hospital. As set forth in the indictment, at the time of the incident, Michael Smith was a lieutenant with supervisory authority over other officers on his shift. Davidson and Sanders were corrections officers on the same shift with Smith.
Scottie Glenn, another former corrections officer at Ventress, pleaded guilty on Nov.18, 2011, in U.S. District Court in Montgomery to one count of violating the civil rights of Rocrast Mack for his role in the incident and to one count of conspiring with other corrections officers to cover up the incident. In court, Glenn admitted that he escorted Rocrast Mack in handcuffs to an office at the prison, knowing that Rocrast Mack would be beaten in retaliation for a prior incident. Glenn also admitted that he and other officers, at the direction of another officer, identified in court documents as Officer A, lied in written reports and lied to investigators to cover up the incident.
If convicted, Smith faces a maximum potential penalty of life in prison or the death penalty. Davidson faces a maximum sentence of 105 years in prison. Sanders faces a maximum sentence of 75 years in prison.
This case is being investigated by the Mobile, Ala., Division of the FBI, in partnership with the Alabama Bureau of Investigation, and is being prosecuted by Trial Attorney Patricia Sumner of the U.S. Department of Justice Department’s Civil Rights Division and Assistant U.S. Attorney Jerusha Adams of the U.S. Attorney’s Office for the Middle District of Alabama.
An indictment is merely an accusation, and the defendant is presumed innocent unless proven guilty.
Federal Court Sets $128 Million Aggregate Back Pay Damages in Employment Discrimination Lawsuit Against the City of New York’s Fire DepartmentRead the Press Release
WASHINGTON – A federal court announced last week that it had determined the aggregate amount of back pay damages owed to African-American and Hispanic applicants who were discriminated against by the city of New York in the hiring of entry-level firefighters for the Fire Department of New York (FDNY). As part of the remedy for the city’s violation of Title VII of the Civil Rights Act of 1964, the court calculated the aggregate amount of gross wage losses at $128,696,803. The city of New York will have an opportunity to reduce the aggregate amount of back pay by proving that discrimination victims mitigated their losses through interim employment.
The United States filed its complaint in May 2007, which alleged that the city’s pass/fail and rank order use of two written examinations, administered in 1999 and 2002, resulted in disparate impact upon African-American and Hispanic applicants and were not job-related and consistent with business necessity, in violation of Title VII. In July 2009, the U.S. District Court for the Eastern District of New York agreed and found that the city’s use of these two written examinations violated Title VII. Title VII’s prohibitions of discrimination in employment on the basis of race, color, sex, national origin or religion proscribe not only intentional discrimination, but also the use of employment practices (e.g., written tests) that result in disparate impact. Unless the employer can prove that such practices are job related and consistent with business necessity, employment practices that disproportionately screen out applicants based upon race and national origin do not identify the best qualified candidates and violate the law. In its July 2009 order, the court found that the city’s pass/fail use of the challenged written examinations did not usefully distinguish between candidates who were qualified to perform the job of firefighter, nor did the rank-order use of the exam meaningfully distinguish between candidates who were more or less qualified to do the job.
“The Department of Justice will not tolerate discrimination in employment on the basis of race or national origin, whether that discrimination is intentional or the result of employment practices that have discriminatory impact,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The court’s order will provide relief to potentially thousands of individuals who were harmed by such discriminatory practices in New York City.”
“FDNY’s hiring practices have deprived many qualified African-Americans and Hispanics of the opportunity to serve the people of New York City as firefighters,” said Loretta E. Lynch, U.S. Attorney for the Eastern District of New York. “The court’s order sends a strong message to FDNY and to all other employers, public and private, that they must comply with the requirements of Title VII.”
According to the court’s order, a process for distributing monetary damages to individuals harmed by the city’s discriminatory practices will be established in a future order. The Department of Justice has established a website with information about the lawsuit for individuals who believe that they may have been victims of the city’s discriminatory practices, which is available at www.usdoj.gov/fdnycase.
Devon Energy to Pay U.S. $3.5 Million to Resolve Allegations of Royalty Underpayments from Federal and Indian LandsRead the Press Release
Devon Energy Corporation and its affiliates have agreed to pay the United States $3,492,463 to resolve claims that PennzEnergy, a predecessor to Devon, violated the False Claims Act by knowingly underpaying royalties owed on natural gas produced from federal and Indian lands, the Justice Department announced today. Devon is an independent oil and natural gas exploration and production company with operations focused onshore in the United States and Canada.
PennzEnergy, formerly known as Pennzoil Company, was acquired by Devon in May 1999. Prior to the merger, PennzEnergy was involved in the production of natural gas from federal leases offshore in the Gulf of Mexico and onshore in the Gulf Coast.
Congress has authorized federal and Indian lands to be leased for the production of natural gas in exchange for the payment of royalties on the value of the gas that is produced. Each month companies are required to report and pay to the U.S. Department of the Interior the amount of royalty that is due. This settlement resolves claims by the United States under the False Claims Act that PennzEnergy improperly deducted from royalty values costs associated with boosting gas up to pipeline pressures and failed to report and pay royalties on gas used to fuel boosting compressors.
“Natural gas royalties are an important source of income for the United States, Native Americans, and various states, and they help support critical programs from which we all benefit,” said Stuart F. Delery, Acting Assistant Attorney General for the Justice Department’s Civil Division. “Through cases such as this, we continue to make certain that companies that lease public and Indian lands, and that extract non-renewable resources from those lands, pay their full share of royalties.”
“This settlement demonstrates that the Department remains committed to ensuring that energy companies accurately report production and pay the required royalties,” said Greg Gould, Interior’s Acting Deputy Assistant Secretary for Natural Resources Revenue. Gould added that ONRR “will continue to pursue every dollar due to taxpayers and the Federal Government from extracting these precious natural resources from Federal and American Indian lands.”
The resolution of this matter is one of the last in a series of settlements arising out of qui tam, or whistleblower, litigation that has been pending for over a decade.
Today’s settlement arises from a lawsuit filed by Harrold Wright under the False Claims Act. Under the qui tam, or whistleblower, provisions of the False Claims Act, private citizens may file actions on behalf of the United States and share in any recovery. Because Mr. Wright is deceased, his heirs will receive $908,040.38 or 26 percent of the settlement.
The United States has intervened against Devon for the purpose of completing this settlement. The Department of Justice previously intervened against several other defendants in the Wright lawsuit. Settlements in the case to date exceed $300 million. The claims in the complaint are merely allegations and do not constitute a determination of liability.
The investigation and settlement of this matter was jointly handled by the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Eastern District of Texas and the Department of the Interior’s Office of Natural Resource Revenue, Office of the Solicitor and Office of the Inspector General.
The case is U.S. ex rel. Wright v. Chevron USA, Inc. et al., 5:03-CV-264 (E.D. Tex.) .
Accused Member of Foreign Terrorist Organization Extradited to United States on Hostage Taking ChargesRead the Press Release
WASHINGTON – Alexander Beltran Herrera, 35, aka Jhon Alexander Beltrain Herrera, aka Rodrigo Pirinolo, an accused member of the Revolutionary Armed Forces of Colombia (FARC), has been extradited from Colombia to face hostage taking and terrorism charges in the United States.
The extradition was announced by Lisa Monaco, Assistant Attorney General for National Security; Ronald C. Machen Jr., U.S. Attorney for the District of Columbia; and Dena Choucair, Acting Special Agent in Charge of the FBI’s Miami Division.
Beltran Herrera was extradited from Colombia to the United States over the weekend to face charges in an indictment returned in the District of Columbia on Feb. 22, 2011. The indictment, which names as defendants 18 members of the FARC, charges Herrera specifically with one count of conspiracy to commit hostage taking; three counts of hostage taking; one count of using and carrying a firearm during a crime of violence; one count of conspiracy to provide material support to terrorists and one count of conspiracy to provide material support to a designated foreign terrorist organization.
Beltran Herrera is scheduled to be arraigned today at 11:15 a.m. before Chief Judge Royce C. Lamberth in federal court in the District of Columbia. If convicted of all the charges against him, he faces a maximum potential sentence of life in prison.
According to the indictment, the FARC is an armed, violent organization in Colombia, which since its inception in 1964, has engaged in an armed conflict to overthrow the Republic of Colombia, South America’s longest-standing democracy. The FARC has consistently used hostage taking as a primary technique in extorting demands from the Republic of Colombia. Hostage taking has been endorsed and commanded by FARC senior leadership. The FARC has characterized American citizens as “military targets” and has engaged in violent acts against Americans in Colombia, including murders and hostage taking. The FARC was designated as a foreign terrorist organization by the U.S. Secretary of State in 1997 and remains so designated.
The indictment alleges that Beltran Herrera was a member of the 27th Front in the FARC’s Southern Block. Beltran Herrera was allegedly involved in the hostage taking of three U.S. citizens, Marc D. Gonsalves, Thomas R. Howes and Keith Stansell. These three individuals, along with Thomas Janis, a U.S. citizen, and Sergeant Luis Alcides Cruz, a Colombian citizen, were seized on Feb. 13, 2003, by the FARC after their single engine aircraft made a crash landing near Florencia, Colombia. Janis and Cruz were murdered at the crash site by members of the FARC.
According to the indictment, Gonsalves, Howes and Stansell were held by the FARC at gunpoint and were advised by FARC leadership that they would be used as hostages to increase international pressure on the government of the Republic of Colombia to agree to the FARC’s demands.
The FARC at various times marched the hostages from one site to another, placing them in the actual custody of various FARC Fronts. At the conclusion of one 40-day march, in or about November 2004, the hostages were delivered to members of the FARC’s 27th Front, commanded by Daniel Tamayo Sanchez, who was responsible for the hostages for nearly two years, after which they were delivered to the FARC’s 1st Front. During part of this two year period with the 27th Front, Beltran Herrera was responsible for moving the hostages and keeping them imprisoned.
Throughout the captivity of these three hostages, FARC jailors and guards, including Beltran Herrera, used choke harnesses, chains, padlocks and wires to restrain the hostages, and used force and threats to continue their detention and prevent their escape. The indictment also accuses Beltran Herrera of using and carrying a military-type machine gun during the hostage taking and providing material support and resources to aid in the hostage taking and to aid the FARC.
“Today’s extradition underscores our resolve to hold accountable all those responsible for this crime and we will not rest until every one of them is brought to justice,” said Assistant Attorney General Monaco.
“This extradition is another step toward justice on behalf of Americans taken hostage and held in chains by a Colombian terrorist organization,” said U.S. Attorney Machen. “We will not hesitate to bring to justice anyone who targets Americans around the world with violence to advance their political agendas.”
“This extradition further disrupts and dismantles the FARC, a foreign terrorist organization that has engaged in violent acts against American and Colombian citizens,” said FBI Acting Special Agent in Charge Choucair. “The outstanding, long term cooperation between the Colombian National Police and U.S. law enforcement has struck another blow to international terrorism.”
This investigation is being led by the FBI’s Miami Field Division. The prosecution is being handled by Assistant U.S. Attorneys Anthony Asuncion and Fernando Campoamor-Sanchez from the U.S. Attorney’s Office for the District of Columbia, and Trial Attorney David Cora from the Counterterrorism Section of the Justice Department’s National Security Division.
Substantial assistance in the case was provided by the Justice Department’s Office of International Affairs, the Department’s Judicial Attachés in Colombia, and the FBI’s Office of the Legal Attaché in Colombia. The Directorate of Intelligence (DIPOL) and the Anti-Kidnapping Unit (GAULA) of the Colombian National Police also provided substantial assistance.
The public is reminded that an indictment contains mere allegations and that defendants are presumed innocent unless and until proven guilty.
$25 Billion Mortgage Servicing Agreement Filed in Federal CourtRead the Press Release
View the court documents.
WASHINGTON – The Justice Department, the Department of Housing and Urban Development (HUD) and 49 state attorneys general announced today the filing of their landmark $25 billion agreement with the nation’s five largest mortgage servicers to address mortgage loan servicing and foreclosure abuses.
The federal government and state attorneys general filed in U.S. District Court in the District of Columbia proposed consent judgments with Bank of America Corporation, J.P. Morgan Chase & Co., Wells Fargo & Company, Citigroup Inc. and Ally Financial Inc., to resolve violations of state and federal law.
The unprecedented joint agreement is the largest federal-state civil settlement ever obtained and is the result of extensive investigations by federal agencies, including the Department of Justice, HUD and the HUD Office of the Inspector General (HUD-OIG), and state attorneys general and state banking regulators across the country.
The consent judgments provide the details of the servicers’ financial obligations under the agreement, which include payments to foreclosed borrowers and more than $20 billion in consumer relief; new standards the servicers will be required to implement regarding mortgage loan servicing and foreclosure practices; and the oversight and enforcement authorities of the independent settlement monitor, Joseph A. Smith Jr.
The consent judgments require the servicers to collectively dedicate $20 billion toward various forms of financial relief to homeowners, including: reducing the principal on loans for borrowers who are delinquent or at imminent risk of default and owe more on their mortgages than their homes are worth; refinancing loans for borrowers who are current on their mortgages but who owe more on their mortgage than their homes are worth; forbearance of principal for unemployed borrowers; anti-blight provisions; short sales; transitional assistance; and benefits for service members.
The consent judgments’ consumer relief requirements include varying amounts of partial credit the servicers will receive for every dollar spent on the required relief activities. Because servicers will receive only partial credit for many of the relief activities, the agreement will result in benefits to borrowers in excess of $20 billion. The servicers are required to complete 75 percent of their consumer relief obligations within two years and 100 percent within three years.
In addition to the $20 billion in financial relief for borrowers, the consent judgments require the servicers to pay $5 billion in cash to the federal and state governments. Approximately $1.5 billion of this payment will be used to establish a Borrower Payment Fund to provide cash payments to borrowers whose homes were sold or taken in foreclosure between Jan. 1, 2008, and Dec. 31, 2011, and who meet other criteria.
The court documents filed today also provide detailed new servicing standards that the mortgage servicers will be required to implement. These standards will prevent foreclosure abuses of the past, such as robo-signing, improper documentation and lost paperwork, and create new consumer protections. The new standards provide for strict oversight of foreclosure processing, including third-party vendors, and new requirements to undertake pre-filing reviews of certain documents filed in bankruptcy court. The new servicing standards make foreclosure a last resort by requiring servicers to evaluate homeowners for other loss mitigation options first. Servicers will be restricted from foreclosing while the homeowner is being considered for a loan modification. The new standards also include procedures and timelines for reviewing loan modification applications and give homeowners the right to appeal denials. Servicers will also be required to create a single point of contact for borrowers seeking information about their loans and maintain adequate staff to handle calls.
The consent judgments provide enhanced protections for service members that go beyond those required by the Servicemembers Civil Relief Act (SCRA). In addition, the servicers have agreed to conduct a full review, overseen by the Justice Department’s Civil Rights Division, to determine whether any service members were foreclosed or improperly charged interest in excess of 6 percent on their mortgage in violation of SCRA.
The oversight and enforcement authorities of the settlement’s independent monitor are detailed in the court documents filed today. The monitor will oversee implementation of the servicing standards and consumer relief activities required by the agreement and publish regular public reports that identify any quarter in which a servicer fell short of the standards imposed in the settlement. The consent judgments require servicers to remediate any harm to borrowers that are identified in quarterly reviews overseen by the monitor and, in some instances, conduct full look-backs to identify any additional borrowers who may have been harmed. If a servicer violates the requirements of the consent judgment it will be subject to penalties of up to $1 million per violation or up to $5 million for certain repeat violations.
The consent judgments filed today resolve certain violations of civil law based on mortgage loan servicing activities. The agreement does not prevent state and federal authorities from pursuing criminal enforcement actions related to this or other conduct by the servicers. The agreement does not prevent the government from punishing wrongful securitization conduct that will be the focus of the new Residential Mortgage-Backed Securities Working Group. In the servicing agreement, the United States also retains its full authority to recover losses and penalties caused to the federal government when a bank failed to satisfy underwriting standards on a government-insured or government-guaranteed loan; the United States also resolved certain Federal Housing Administration (FHA) origination claims with Bank of America as part of this filing and with Citibank in a separate matter. The agreement does not prevent any action by individual borrowers who wish to bring their own lawsuits. State attorneys general also preserved, among other things, all claims against the Mortgage Electronic Registration Systems (MERS), and all claims brought by borrowers.
Investigations were conducted by the U.S. Trustee Program of the Department of Justice, HUD-OIG, HUD’s FHA, state attorneys general offices and state banking regulators from throughout the country, the U.S. Attorney’s Office for the Eastern District of New York, the U.S. Attorney’s Office for the District of Colorado, the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Western District of North Carolina, the U.S. Attorney’s Office for the District of South Carolina, the U.S. Attorney’s Office for the Southern District of New York, the Special Inspector General for the Troubled Asset Relief Program and the Federal Housing Finance Agency-Office of the Inspector General. The Department of the Treasury, the Federal Trade Commission, the Consumer Financial Protection Bureau, the Justice Department’s Civil Rights Division, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the Department of Veterans Affairs and the U.S. Department of Agriculture made critical contributions.
For more information about the mortgage servicing settlement, go to www.NationalMortgageSettlement.com. To find your state attorney general’s website, go to www.NAAG.org and click on “The Attorneys General.”
The joint federal-state agreement is part of enforcement efforts by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information about the task force visit: www.stopfraud.gov.
Friday 9 March 2012
Three Individuals Sentenced to Prison for Participating in International Child Pornography RingRead the Press Release
WASHINGTON – Three men were sentenced to prison today in Los Angeles for their participation in an international child pornography ring announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney André Birotte Jr. of the Central District of California and Assistant Director in Charge Steve Martinez of the FBI’s Los Angeles Field Office.
Andrew Neil Scott, 31, of Flint, Mich., was sentenced to 30 years in prison followed by lifetime supervised release. Scott pleaded guilty on Dec. 2, 2010, to participating in a child exploitation enterprise and two counts of production of child pornography.
Woodrow Tracy, 68, of Sun Valley, Calif., was sentenced to 96 months in prison followed by lifetime supervised release. Tracy pleaded guilty on Sept. 21, 2010, to conspiracy to transport child pornography.
Justin Lee, 34, of League City, Texas, was sentenced to 66 months in prison followed by lifetime supervised release. Lee pleaded guilty on Sept. 7, 2010, to conspiracy to advertise, receive, distribute, solicit and possess child pornography.
Tracy, Lee and Scott were all sentenced by U.S. District Judge Virginia A. Phillips.
The sentences are the result of an international investigation into the “Lost Boy” online bulletin board. The Lost Boy bulletin board, according to court documents and proceedings, was dedicated to men who have a sexual interest in young boys and was established to provide a forum to trade child pornography.
Federal authorities, working in conjunction with a coalition of international law enforcement agencies, shut down the Lost Boy bulletin board approximately three years ago. As a result of the investigation, 16 named defendants were charged in the United States and arrested for their roles in the bulletin board. To date, 15 defendants have pleaded guilty or have been convicted at trial and one defendant passed away. Six additional men have been charged with child molestation as a result of the investigation, which also led to the identification of 27 domestic victims of child abuse, some of whom were portrayed in images posted to the Lost Boy bulletin board.
According to court documents and proceedings, law enforcement authorities discovered the Lost Boy bulletin board after receiving information from Eurojust, the judicial cooperation arm of the European Union. Eurojust provided U.S. law enforcement with leads obtained from Norwegian and Italian authorities indicating that a North Hollywood, Calif., man was communicating with an Italian national about child pornography and how to engage in child sex tourism in Romania. Acting on the information from Europe, the FBI executed search warrants that led to the discovery of the Lost Boy network. Further investigation revealed that Lost Boy had 35 members, 16 of whom were U.S. nationals. Other members of the network were located in countries around the world, including Belgium, Brazil, Canada, France, Germany, New Zealand and the United Kingdom.
According to court documents, Lost Boy had a thorough vetting process for new members, who were required to post child pornography to join the organization. Once accepted, members were required to continue posting child pornography to remain in good standing and to avoid removal from the board. According to court documents, Lost Boy members advised each other on techniques to evade detection by law enforcement, which included using screen names to mask identities and encrypting computer data.
International law enforcement efforts involving European law enforcement, the Brazilian Federal Police and other agencies have identified child molestation suspects in South America, Europe and New Zealand. Three suspects in Romania, one in France and another in Brazil have been charged, and offenders have been convicted in Norway and the United Kingdom. Law enforcement efforts have also identified dozens of child victims located in Norway, Romania, Brazil and other nations.
The investigation into the Lost Boy bulletin board was led by the FBI and the U.S. Postal Inspection Service, in conjunction with the Los Angeles-based Sexual Assault Felony Enforcement (SAFE) Team. The High Technology Investigative Unit of the Child Exploitation and Obscenity Section (CEOS) in the Justice Department’s Criminal Division, along with Eurojust, provided invaluable assistance during the investigation.
The case is being prosecuted by Assistant U.S. Attorneys Joey L. Blanch and Yvonne Garcia of the Central District of California and CEOS Trial Attorney Andrew McCormack.
Richmond Cell Manager of Sophisticated, Violent Fraudulent Document Ring Sentenced to 84 Months in PrisonRead the Press Release
WASHINGTON – Armando Gonzalez-Medina, 35, of Richmond, Va., was sentenced today to 84 months in prison, after pleading guilty to participating in a racketeering conspiracy and conspiring to possess, produce and transfer fraudulent identification documents. The defendant is illegally within the United States and will be deported following the service of his prison sentence. Gonzalez-Medina was a member of the Richmond cell of a highly sophisticated and violent fraudulent document trafficking organization based in Mexico, with cells in 19 cities within the United States and 11 states, including three cells in Virginia.
Neil H. MacBride, U.S. Attorney for the Eastern District of Virginia; Assistant Attorney General Lanny A. Breuer of the Criminal Division; and John P. Torres, Special Agent in Charge of the U.S. Immigration and Customs Enforcement Homeland Security Investigations (ICE-HSI) field office in Washington, D.C., made the announcement after the sentencing by Chief U.S. District Judge James R. Spencer in the Eastern District of Virginia.
According to evidence presented during the trial of co-conspirator Edy Oliverez-Jimnez in November 2011, Israel Cruz Millan, aka “El Muerto,” 28, of Raleigh, N.C., managed the organization’s operations in the United States, overseeing 19 cells in 11 states, including three in Virginia, that produced high-quality false identification cards distributed to illegal aliens. In each city where the organization operated, Millan placed a cell manager to supervise a number of “runners,” the lower level members of the organization who distributed business cards advertising the organization’s services and helped facilitate transactions with customers. The cost of fraudulent documents varied depending on the location, with counterfeit Resident Alien and Social Security cards typically selling from $150 to $200. Each cell allegedly maintained detailed sales records and divided the proceeds between the runner, the cell manager and the upper level managers in Mexico. In addition, from January 2008 through November 2010, members of the organization wired more than $1 million to Mexico.
In entering a guilty plea to the racketeering and document distribution conspiracy charges, Gonzalez-Medina admitted to working on behalf of the enterprise in Richmond.
Evidence during the Oliverez-Jiminez trial detailed how members of the organization sought to drive competitors from their territory by posing as customers in search of fraudulent documents and then attacking the competitors when they arrived to make a sale. These attacks allegedly included binding the victims’ hands, feet and mouth; repeatedly beating them; and threatening them with death if they continued to sell false identification documents in the area. The victims were left bound at the scene of the attack, and at least one victim died from one such attack that occurred in Little Rock, Ark., on July 6, 2010.
The government further alleged at trial that Cruz Millan tightly controlled the organization’s activities by keeping in regular contact with cell managers about fraudulent document inventory, bi-weekly sales reports and the presence of any rival document vendors. Members of the organization who violated internal rules imposed by Millan were subject to discipline, including shaving eyebrows, wearing weights, beatings and other violent acts.
Twenty-seven members of the organization were originally arrested on Nov. 18, 2010. To date, 26 of those arrested have pleaded guilty in this case. On Nov. 29, 2010, the remaining charged defendant, Edy Oliverez-Jiminez, was convicted by a jury for racketeering conspiracy; murder, kidnapping and assault in aid of racketeering; conspiracy to possess, produce and transfer false identification documents; and money laundering conspiracy. On March 2, 2012, U.S. District Judge sentenced Oliverez-Jiminez to two consecutive life sentences. In support, Judge Hudson explained from the bench that he imposed the life sentences to send a message of deterrence for Oliverez-Jiminez’s involvement with the violent racketeering organization based out of Mexico. He further stated that the sentences were just, in light of the defendant’s involvement in one of the most violent murders that he has observed in his career.
The investigation was led by the Norfolk office of ICE-HSI, which falls under the Washington, D.C., office. ICE-HSI received assistance from the FBI, Virginia State Police and Chesterfield County Police Department. Assistant U.S. Attorneys Michael Gill and Angela Mastandrea-Miller of the Eastern District of Virginia and Trial Attorney Addison Thompson of the Criminal Division’s Human Rights and Special Prosecutions Section are prosecuting the case on behalf of the United States.
Owner of Houston Health Care Company Sentenced to 30 Months in Prison in Connection with Medicare Fraud SchemeRead the Press Release
WASHINGTON – An owner and operator of a Houston durable medical equipment (DME) company was sentenced today in Houston federal court to 30 months in prison for his role in a Medicare fraud scheme, announced the Department of Justice, the FBI and the Department of Health and Human Services (HHS).
Akinsunbo Akinbile, 44, of Richmond, Texas, was sentenced by U.S. District Judge Keith P. Ellison in Houston. In addition to his prison term, Akinbile was sentenced to three years of supervised release and was ordered to pay $471,022 in restitution.
Akinbile pleaded guilty on Nov. 29, 2011, to eight counts of health care fraud.
According to court documents, Akinbile was the owner and operator of Hallco Medical Supply, a company that purported to provide orthotics and other DME to Medicare beneficiaries. According to court documents, Hallco submitted claims to Medicare for DME, including orthotic devices that were medically unnecessary and/or not provided. Many of the orthotic devices were components of an “arthritis kit,” and purported to be for the treatment of arthritis-related conditions. The arthritis kit generally contained a number of orthotic devices including braces for both sides of the body and related accessories such as heating pads. From June 2007 through May 2009, Akinbile submitted claims of approximately $737,770 to Medicare and was paid approximately $471,022.
Today’s sentence was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Kenneth Magidson of the Southern District of Texas; Special Agent-In-Charge Stephen L. Morris of the FBI’s Houston Field Office; Special Agent-in-Charge Mike Fields of the Dallas Regional Office of HHS’s Office of the Inspector General (HHS-OIG), Office of Investigations; Joseph J. Del Favero, Special Agent-in-Charge of the Chicago Field Office of the Railroad Retirement Board Office of Inspector General; and the Texas Attorney General’s Medicaid Fraud Control Unit (MFCU).
This case was prosecuted by Special Assistant U.S. Attorney Justin S. Blan and Trial Attorney Laura M.K. Cordova of the Criminal Division’s Fraud Section. The case was brought as part of the Medicare Fraud Strike Force, supervised by the U.S. Attorney’s Office for the Southern District of Texas and the Criminal Division’s Fraud Section.
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, 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 Agreement with Prince William County, Virginia, on Bailout Under the Voting Rights ActRead the Press Release
WASHINGTON – The Justice Department filed a consent decree today in the U.S. District Court for the District of Columbia after reaching an agreement with Prince William County, Va., that will allow for the county’s bailout from its status as a “covered jurisdiction” under the special provisions of the Voting Rights Act. If approved by the court, the bailout will exempt the county from the preclearance requirements of Section 5 of the act.
Covered jurisdictions, as determined according to Section 4 of the Voting Rights Act, are required under Section 5 of the act to seek preclearance from the U.S. District Court in the District of Columbia or from the U.S. attorney general for any changes in voting qualifications, standards, practices or procedures prior to their implementation. Section 4 of the act provides that a covered jurisdiction may seek to “bailout,” or remove itself from coverage, and therefore be exempted from the preclearance requirements, by seeking a declaratory judgment before a three-judge panel in federal district court. A bailout judgment can only be issued if the court determines that the jurisdiction meets certain eligibility requirements for bailout contained in the statute, including a 10-year record of nondiscrimination in voting-related actions. The act also provides that the attorney general can consent to entry of a judgment of bailout if, based upon investigation, the attorney general is satisfied that the jurisdiction meets the eligibility requirements.
Prince William County filed its bailout action in U.S. District Court in Washington, D.C., on Jan. 6, 2012. County officials had contacted the attorney general prior to filing its action, indicating that the county was interested in seeking bailout. The county provided the Justice Department with substantial information, and the department conducted an investigation to determine the county’s eligibility. Based on that investigation, the department is satisfied that the county meets the Voting Rights Act’s requirements for bailout.
"The department's investigation was thorough, and evaluated the information provided by the county. Based on that review, the department determined that the county is eligible for a bailout," said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. "The county's cooperation in this investigation has allowed the parties to reach a resolution consistent with the requirements of the Voting Rights Act."
The consent decree details the legal and factual basis for a bailout determination and, if approved, will grant the county’s request. The court will retain jurisdiction for 10 years. The action can be reopened upon motion of the attorney general or any aggrieved person where the party alleges conduct by the county that would have originally precluded the county from bailing out if it had occurred during the 10-year period preceding entry of the consent decree.
Information about bailout, the Voting Rights Act and other federal voting laws is available on the Department of Justice website at www.justice.gov/crt/voting/. Complaints may be reported to the Voting Section of the Justice Department’s Civil Rights Division at 1-800-253-3931.Broward County, Fla.-Area Halfway House Owner Sentenced to 24 Months in Prison for Participating in Fraud and Kickback SchemeRead the Press Release
WASHINGTON – The owner and operator of a Broward County, Fla.-area halfway house was sentenced today to 24 months in prison for his role in a Medicare fraud kickback scheme that funneled patients through a fraudulent mental health company, announced the Department of Justice, the FBI and the Department of Health and Human Services (HHS).
Barry Nash, 69, was also sentenced by U.S. District Judge James Lawrence King in Miami to serve three years of supervised release following his prison term. Nash pleaded guilty on Jan. 9, 2012, to one count of conspiracy to commit health care fraud. Nash was the owner and operator of Starter House, a halfway house operating in Broward County.
Nash admitted that, in exchange for illegal health care kickbacks, he agreed to refer Medicare beneficiaries who resided at Starter House to American Therapeutic Corporation (ATC) and American Sleep Institute (ASI), a company related to ATC. Nash knew that ATC and ASI fraudulently billed Medicare for partial hospitalization program (PHP) services and sleep treatment purportedly provided to his referrals. PHP is a form of intensive mental health treatment.
According to court documents, ATC’s principals 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 conspiracy, millions of dollars in kickbacks were paid in exchange for Medicare beneficiaries who did not qualify for PHP services. Ultimately, ATC and ASI billed Medicare for more than $200 million in medically unnecessary services.
According to the plea agreement, Nash’s participation in the fraud resulted in more than $959,901 in fraudulent billing to the Medicare program.
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 nine of the individual defendants have pleaded guilty or have been convicted at trial. Other defendants are scheduled for trial April 9, 2012, before U.S. District Judge Patricia A. Seitz.
Today’s sentencing was 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 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.
Thursday 8 March 2012
Two Missouri Men Plead Guilty for Their Roles in the Vandalism and Arson of a Bi-Racial Man’s Mobile HomeRead the Press Release
WASHINGTON - The Justice Department announced today that Charles Wilhelm, 23, of Independence, Mo., pleaded guilty in U.S. District Court in Kansas City, Mo., to federal hate crime charges in connection with the vandalism and arson of a bi-racial man’s home in 2006. Yesterday, Wilhelm’s co-conspirator, David Martin, 23, of Independence, pleaded guilty to federal hate crime charges for his role in the same incident.
Wilhelm and Martin were each charged with one count of conspiracy to violate the civil rights of the victim and one count of violating the Fair Housing Act, for their roles in vandalizing and burning down Nathaniel Reed’s home. Wilhelm and Martin entered guilty pleas to both counts.
The federal investigation revealed that in the summer of 2006, Wilhelm, Martin and Teresa Witthar conspired to intimidate and scare Reed, a bi-racial man, into moving out of the Highland Manor Mobile Home Park in Independence in part because of his race. On or about June 6, 2006, Wilhelm, along with Martin and Witthar, entered Reed’s home, without his permission, and vandalized it by writing at least 15 racially derogatory slurs on the walls.
Two days later, on or about June 8, 2006, Witthar drove Wilhelm and Martin to a neighbourhood behind Reed’s home so that they could set fire to Reed’s home without being detected. Wilhelm and Martin then set fire to Reed’s home, and Witthar drove them back around to Highland Manor.
In February 2012, Witthar pleaded guilty for her role in the conspiracy.
“The Department of Justice is committed to ensuring that all Americans are able to occupy their homes without fear of racially-motivated reprisals,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “As this case illustrates, the Civil Rights Division will aggressively prosecute anyone who attacks and destroys a home based on the race of the person who lives there.”
“Racially-motivated violence and intimidation will not be tolerated in our community,” said Beth Phillips, U.S. Attorney for the Western District of Missouri. “These conspirators resorted to vandalism, racial slurs and arson to violate another person’s civil rights, and they will be held accountable for their criminal conduct.”
These guilty pleas were the result of a cooperative effort between the U.S. Attorney’s Office for the Western District of Missouri and the Justice Department’s Civil Rights Division. This case was investigated by the Kansas City Division of the FBI. It is being prosecuted by First Assistant U.S. Attorney David Ketchmark for the Western District of Missouri and Trial Attorney Sheldon L. Beer of the Civil Rights Division of the Department of Justice.
Justice Department Reminds Employers of Eligibility Verification Rules for Salvadoran WorkersRead the Press Release
WASHINGTON - The Justice Department announced today the launch of an educational video reminding employers that Salvadorans with Temporary Protected Status (TPS) may continue working beyond the March 9, 2012, expiration date of their Employment Authorization Documents.
This announcement by the Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC) informs employers that they can continue to employ workers with TPS from El Salvador and at the same time avoid claims of discrimination in the employment eligibility reverification process. TPS is a temporary immigration benefit allowing qualified individuals from designated countries who are in the U.S. to stay here for a limited time period, due to conditions such as on-going armed conflict, environmental disaster or other extraordinary and temporary conditions in the designated country. Individuals with TPS can obtain employment authorization documents to work legally in the United States. Often, when the Department of Homeland Security (DHS) announces an extension to TPS, it also automatically extends TPS workers’ Employment Authorization Documents. Employers may become confused by this automatic extension because it creates an exception to the rule that Employment Eligibility Verification Form I-9 documents must be unexpired. DHS has automatically extended Employment Authorization documents for individuals with TPS from El Salvador until September 9, 2012.
OSC enforces the anti-discrimination provision of the Immigration and Nationality Act (INA), which requires employers to treat all authorized workers in the same manner with respect to hiring, firing or recruitment or referral for a fee, regardless of their citizenship status or national origin. The law also prohibits discrimination during the Form I-9 and E-Verify processes. OSC runs a hotline, which generally receives an uptick in calls from employers and employees concerning TPS near the expiration date on the face of the Employment Authorization Documents that have been automatically extended. The video is an attempt to educate employers and prevent potential claims of discrimination from work-authorized individuals losing their jobs.
The video may be viewed at www.justice.gov/crt/pressroom/videos.php?group=3.
“We hope this video will help employers across the country understand employment eligibility verification rules and will allow work-authorized workers to maintain their employment,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “Federal law prohibits discrimination in the employment eligibility verification process, and the Justice Department is committed to enforcing the law.”OSC also offers live webinars on avoiding workplace discrimination. To participate in a webinar, sign up online at www.justice.gov/crt/about/osc/webinars.php. For more information about protections against employment discrimination under the immigration law, call OSC’s worker hotline at: 1-800-255-7688 (1-800-237-2525, TDD for the hearing impaired); call OSC’s employer hotline at: 1-800-255-8155 (1-800-362-2735, TDD for the hearing impaired); send e-mail to: [email protected]; or visit OSC’s website at www.justice.gov/crt/about/osc.
Justice Department Officials Raise Awareness of Disaster Fraud HotlineRead the Press Release
WASHINGTON – The Department of Justice, the FBI and the National Center for Disaster Fraud (NCDF) remind the public there is a potential for disaster fraud in the aftermath of a natural disaster. Suspected fraudulent activity pertaining to relief efforts associated with the recent series of tornadoes in the Midwest and South should be reported to the NCDF hotline at 866-720-5721. The hotline is staffed by a live operator 24 hours a day, seven days a week, for the purpose of reporting suspected scams being perpetrated by criminals in the aftermath of disasters.
NCDF was originally established in 2005 by the Department of Justice to investigate, prosecute and deter fraud associated with federal disaster relief programs following Hurricanes Katrina, Rita and Wilma. Its mission has expanded to include suspected fraud related to any natural or man-made disaster. More than 20 federal agencies, including the Justice Department’s Criminal Division, U.S. Attorneys’ Offices and the FBI, participate in the NCDF, allowing the center to act as a centralized clearinghouse of information related to disaster relief fraud.
In the wake of natural disasters, many individuals feel compelled to contribute to victim assistance programs and organizations across the country. The Department of Justice and the FBI remind the public to apply a critical eye and do its due diligence before giving to anyone soliciting donations on behalf of tornado victims. Solicitations can originate from e-mails, websites, door-to-door collections, mailings and telephone calls, and similar methods.
Before making a donation of any kind, consumers should adhere to certain guidelines, including the following:
- Do not respond to any unsolicited (spam) incoming emails, including clicking links contained within those messages, because they may contain computer viruses.
- Be skeptical of individuals representing themselves as surviving victims or officials asking for donations via email or social networking sites.
- Beware of organizations with copycat names similar to but not exactly the same as those of reputable charities.
- Rather than following a purported link to a website, verify the existence and legitimacy of non-profit organizations by utilizing various Internet-based resources.
- Be cautious of emails that claim to show pictures of the disaster areas in attached files, because the files may contain viruses. Only open attachments from known senders.
- To ensure that contributions are received and used for intended purposes, make donations directly to known organizations rather than relying on others to make the donation on your behalf.
- Do not be pressured into making contributions; reputable charities do not use coercive tactics.
- Do not give your personal or financial information to anyone who solicits contributions. Providing such information may compromise your identity and make you vulnerable to identity theft.
- Avoid cash donations if possible. Pay by debit or credit card, or write a check directly to the charity. Do not make checks payable to individuals.
- Legitimate charities do not normally solicit donations via money transfer services.
- Most legitimate charities maintain websites ending in .org rather than .com.
In addition to raising public awareness, the NCDF is the intake center for all disaster relief fraud. Therefore, if you observe that someone has submitted a fraudulent claim for disaster relief, or any other suspected fraudulent activities pertaining to the receipt of government funds as part of disaster relief or clean up, please contact the NCDF.
If you believe that you have been a victim of fraud by a person or organization soliciting relief funds on behalf of tornado victims, or if you discover fraudulent disaster relief claims submitted by a person or organization, contact the NCDF by phone at (866) 720-5721, fax at (225) 334-4707 or email at [email protected].
You can also report suspicious e-mail solicitations or fraudulent websites to the FBI’s Internet Crime Complaint Center at www.ic3.gov.
Wednesday 7 March 2012
U.S. Army Captain Pleads Guilty to Accepting Illegal Gratuities Related to Contracting in Support of Iraq WarRead the Press Release
WASHINGTON – A captain in the U.S. Army pleaded guilty in Alaska today for accepting thousands of dollars in gratuities from a contractor during his deployment to Iraq as a civil affairs officer at a forward operating base in Rustimaya, Iraq, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and Acting U.S. Attorney Kevin Feldis for the District of Alaska.
Michael George Rutecki, 33, of North Pole, Alaska, pleaded guilty today before U.S. District Judge Ralph R. Beistline in the District of Alaska to a criminal information charging him with one count of accepting illegal gratuities.
According to the court document, Rutecki was a pay agent responsible for directing Commanders Emergency Response Program (CERP) funds to pay contractors to perform work in accordance with civil development objectives set forth by U.S. Army commanders. Pay agents are accorded significant discretion in so doing. It is a violation of federal law for pay agents to accept personal gifts or gratuities from contractors dependent upon pay agents for contracts.
According to court documents, during and after the solicitation of contracts, Rutecki accepted cash and other things of value from an Iraqi contractor, including: $10,000 in cash, two silver rings with diamond stones, 15 gold coins worth more than $10,000 and other valuables from the contractor. Rutecki admitted that he took the valuables and money with the understanding and belief that they were for or because of his assistance to the contractor, who received the contract.
Rutecki faces up to two years in prison and a fine of $250,000. In addition, Rutecki agreed to forfeit all gratuities and pay $10,000 in restitution to the United States. A sentencing date has not yet been scheduled by the court.
This case was prosecuted by Special Trial Attorney Mark Grider of the Criminal Division’s Fraud Section, on detail from SIGIR, with assistance from Assistant U.S. Attorney Craig M. Warner. The case is being investigated by the Major Procurement Fraud Unit, U.S. Army Criminal Investigation Command and the Defense Criminal Investigative Service.
Former Department of Veterans Affairs Official Sentenced to Serve 60 Months in Prison for Conspiracy and Wire FraudRead the Press Release
WASHINGTON — The former associate director of the Department of Veterans Affairs (VA) Consolidated Mail Outpatient Pharmacy in Hines, Ill., his wife and their temporary staffing company were sentenced today for their participation in a conspiracy to defraud the VA and the Small Business Administration (SBA), the Department of Justice announced.
William J. Brandt, the associate director of the VA facility from 1996 until April 2007, his wife, Esperanza A. Brandt, and Pronto Staffing Inc. were sentenced today in U.S. District Court in Chicago by Judge Milton I. Shadur. William Brandt was sentenced to serve 60 months in prison and Esperanza Brandt was sentenced to serve 24 months of probation. The Brandts and Pronto Staffing were also sentenced to pay $400,000 in restitution jointly and severally.
On May 9, 2009, the Brandts and Pronto each pleaded guilty to one charge of conspiracy to commit wire fraud. William Brandt also pleaded guilty to one charge of wire fraud, which deprived the VA and the public of his honest services. The Outpatient Pharmacy in Hines, one of seven regional VA mail-out pharmacies, currently processes and sends out more than 90,000 prescriptions each day to veterans.
The Brandts and Pronto admitted to conspiring with others to commit wire fraud in a scheme to fraudulently allow Pronto to provide temporary pharmacists to the Outpatient Pharmacy where William Brandt worked and supervised pharmacists. Pronto was created by the Brandts in 2000 to provide pharmacists to the Hines Outpatient Pharmacy. The company later sought SBA certification as a woman-owned, minority-owned small disadvantaged business and 8(a) Program participant. As part of the conspiracy, the Brandts agreed to allow another company to fraudulently use Pronto’s SBA status to bid on contracts set aside for SBA and 8(a) participants.
William Brandt also pleaded guilty to wire fraud for making materially false misrepresentations to the VA and other government officials and hiding his involvement with Pronto. Brandt claimed that Pronto was solely managed by his wife in order to avoid conflict of interest laws governing federal employees. During the course of the scheme, William Brandt, working with others, secretly agreed that the billing rates charged to the VA for certain pharmacists provided by Pronto should be increased. Between 2000 and 2007, the Brandts and other co-conspirators used Pronto to bill the VA for more than $8 million in services to the Hines Outpatient Pharmacy facility. The department said that this conduct deprived the VA and the public of Brandt’s honest service.
Four individuals and one company have pleaded guilty and have been sentenced in this investigation. On June 30, 2008, Joel M. Gostolmelsky, the former director of the VA facility, pleaded guilty to conspiracy and to accepting illegal gratuities in connection with awarding staffing and supply contracts, including contracts for temporary pharmacists. On Oct. 7, 2010, Gostolmelsky was sentenced to serve five months in prison and to pay $49,484 in restitution. On Aug. 13, 2009, Stephanie D. Blackmon and a temporary staffing company she owned, Patriot Services Inc., pleaded guilty to making a false statement to the SBA. On Sept. 28, 2010, Blackmon was sentenced to pay a $3,000 criminal fine and Patriot was sentenced to pay a $5,000 criminal fine.
The investigation of unlawful conduct concerning the VA’s Consolidated Mail Outpatient Pharmacies was conducted jointly by the Department of Justice Antitrust Division’s Chicago Field Office and the VA’s Office of Inspector General. The SBA’s Office of Inspector General, the Department of Defense Criminal Investigative Service and the U.S. Secret Service assisted in the investigation.
Anyone with information concerning bid rigging, fraud, kickbacks, bribery or other crimes relating to violations of federal procurement laws meant to foster competition concerning any of the VA Consolidated Mail Outpatient Pharmacies should contact the Antitrust Division’s Chicago Field Office at 312-353-7530 or the VA Office of Inspector General at 1-800-488-8244.
Tuesday 6 March 2012
Kansas Refinery to Pay Nearly $1 Million Penalty for Environmental Violations Related to Air EmissionsRead the Press Release
WASHINGTON – Coffeyville Resources Refining & Marketing (CRRM) has agreed to pay a civil penalty of more than $970,000 and invest more than $4.25 million in new pollution controls and $6.5 million in operating costs to resolve alleged violations of air, Superfund and community right-to-know laws at its Coffeyville, Kan., refinery, announced the Department of Justice and the U.S. Environmental Protection Agency (EPA) today.
The settlement will benefit the environment and human health by requiring new and upgraded pollution controls, more stringent emission limits and more aggressive leak-detection and repair practices to reduce emissions from refinery equipment and process units. Sulfur dioxide (SO2) and nitrogen oxide (NOx), two pollutants emitted from refineries, can cause health problems and are significant contributors to acid rain, smog and haze.
“This settlement puts CRRM on a level playing field with the more than 100 petroleum refineries that have agreed to implement aggressive pollution control measures, thereby reducing the threats posed by harmful emissions to area residents,” said Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division of the Department of Justice. “The agreement reaffirms our commitment to ensure that the petroleum refining industry complies with the nation’s Clean Air Act.”
“The Clean Air Act is designed to protect people’s health from emissions of harmful pollutants,” said Cynthia Giles, Assistant Administrator of EPA’s Office of Enforcement and Compliance Assurance. “Today’s settlement will protect residents living near the facility and ensure that the necessary pollution controls are installed to protect the residents of southeastern Kansas in the future.”
The settlement resolves alleged violations of the Clean Air Act (CAA), Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA, aka “Superfund”), and Emergency Planning and Community Right-to-Know Act (EPCRA). The government alleged that the company made modifications to its refinery that increased emissions without first obtaining pre-construction permits and installing required pollution control equipment. The CAA requires major sources of air pollution to obtain such permits before making changes that would result in a significant emissions increase of any pollutant. The settlement also resolves alleged violations in which CRRM failed to timely notify state and local emergency responders of releases of hydrogen sulfide and sulfur dioxide from the refinery, as required by the CERCLA and EPCRA.
Once fully implemented, the pollution controls required by the settlement will annually reduce an estimated 200 tons of NOx and more than 110 tons of SO2. The settlement will also reduce emissions of volatile organic compounds, particulate matter, carbon monoxide and other pollutants that affect air quality. CRRM has also agreed to perform a voluntary environmental project at the refinery valued at more than $1.2 million. The project will benefit the environment and surrounding communities by reducing emissions of volatile organic compounds and hydrogen sulfide, reducing the frequency of future acid gas flaring incidents, and conserve 15 million gallons of water each year that would previously have come from the Verdigris River.
The settlement with CRRM is the 30th under an EPA initiative to improve compliance among petroleum refiners and to reduce significant amounts of air pollution from refineries nationwide through comprehensive, company-wide settlements. The first of EPA’s settlements was reached in 2000, and with today’s settlement, 107 refineries operating in 32 states and territories – more than 90 percent of the total refining capacity in the United States – are under judicially enforceable agreements to significantly reduce emissions of pollutants. As a result of the settlement agreements, refiners have agreed to invest more than $6 billion in new pollution controls designed to reduce emissions of sulfur dioxide, nitrogen dioxide and other pollutants by more than 360,000 tons per year.
CRRM’s refinery has the capacity to refine more than 115,000 barrels of crude oil per day, producing gasoline, diesel fuels and propane.
The state of Kansas has joined in the settlement and will receive a portion of the civil penalty.
The consent decree, lodged in the U.S. District Court for the District of Kansas, is subject to a 30-day public comment period and court approval and may be viewed at www.justice.gov/enrd/Consent_Decrees.html.
More information on the CRRM settlement: www.epa.gov/compliance/resources/cases/civil/caa/coffeyville.html.
More information on other petroleum refinery settlements: www.epa.gov/compliance/resources/cases/civil/caa/oil/index.html.
Justice Department to Monitor Elections in OhioRead the Press Release
WASHINGTON – The Justice Department announced today that the Civil Rights Division will monitor elections today in Cuyahoga, Hamilton and Lorain Counties, Ohio. The monitoring will ensure compliance with the Voting Rights Act of 1965 and the Help America Vote Act of 2002. The Voting Rights Act prohibits discrimination in the election process on the basis of race, color or membership in a minority language group. The Help America Vote Act includes requirements regarding provisional ballots during elections for federal office.
Under the Voting Rights Act, the Justice Department is authorized to ask the U.S. Office of Personnel Management (OPM) to send federal observers to jurisdictions that are certified by the attorney general or by a federal court order. Federal observers will be assigned to monitor polling place activities in Cuyahoga and Lorain Counties based on court orders. The observers will watch and record activities during voting hours at polling locations, and Civil Rights Division attorneys will coordinate the federal activities and maintain contact with local election officials.
In addition, Justice Department personnel will monitor polling place activities in Hamilton County. A Civil Rights Division attorney will coordinate federal activities and maintain contact with local election officials.
Each year, the Justice Department deploys hundreds of federal observers from OPM, as well as departmental staff, to monitor elections across the country. To file complaints about discriminatory voting practices, including acts of harassment or intimidation, voters may call the Voting Section of the Justice Department’s Civil Rights Division at 1-800-253-3931.
Visit www.justice.gov/crt/voting/index.php for more information about the Voting Rights Act and other federal voting laws.
Federal Court in Illinois Shuts Down Nationwide “Employee Benefit Plan” Tax SchemeRead the Press Release
A federal court has permanently barred Tracy L. Sunderlage, Linda Sunderlage and four companies from operating an alleged scheme to help high-income individuals attempt to avoid income taxes by funneling money through purported employee benefit plans, the Justice Department announced today. Judge John W. Darrah of the U.S. District Court for the Northern District of Illinois entered the permanent injunction orders, to which the defendants consented, against the Sunderlages, SRG International Ltd., of Nevis, West Indies, and three Illinois companies - SRG International U.S. LLC, Maven U.S. LLC and Randall Administration LLC.
According to the government complaint , the defendants claimed to promote and operate plans that provide insurance benefits to participating companies’ employees, when in fact the scheme is simply a mechanism for the companies’ owners to receive purportedly tax-free or tax-deferred income for their personal use. Tracy Sunderlage and the two SRG International companies allegedly marketed the scheme to high-income professionals who own small, closely held companies. In the most recent version of the alleged scheme, each participant’s company made supposedly tax deductible payments to a purported benefit plan operated by Maven U.S. and Randall Administration. The company’s contributions were then allegedly transferred to an account within a company based in the Caribbean island of Anguilla, in which they were allegedly invested until the owner terminated from the program and received the assets for his or her personal use. The complaint alleged that many participants owned these accounts through offshore trusts, which Tracy Sunderlage and SRG International Ltd. often helped to establish. The complaint alleged that participants from across the country have transferred at least $239 million as part of the scheme and that total contributions may exceed $300 million.
The injunction orders bar the defendants from operating or promoting any purported “welfare benefit plans.” The court also ordered the defendants to provide the government with a list of their customers and to send copies of the injunction orders to their customers.
In the past decade, the Justice Department’s Tax Division has obtained hundreds of injunctions against promoters of tax schemes and preparers of fraudulent tax returns. Information about these cases is available on the Justice Department website .
Allen Stanford Convicted in Houston for Orchestrating $7 Billion Investment Fraud SchemeRead the Press Release
WASHINGTON – A Houston federal jury today convicted Robert Allen Stanford, the former Board of Directors Chairman of Stanford International Bank (SIB), for orchestrating a 20-year investment fraud scheme in which he misappropriated $7 billion from SIB to finance his personal businesses.
The guilty verdict was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Kenneth Magidson of the Southern District of Texas; FBI Assistant Director Kevin Perkins of the Criminal Investigative Division; Assistant Secretary of Labor for the Employee Benefits Security Administration Phyllis C. Borzi; Chief Postal Inspector Guy J. Cottrell; Special Agent in Charge Lucy Cruz of the Internal Revenue Service-Criminal Investigations (IRS-CI).
Following a six-week trial before U.S. District Judge David Hittner, and approximately three days of deliberation, the jury found Stanford guilty on 13 of 14 counts in the indictment.
Stanford, 61, was convicted of one count of conspiracy to commit wire and mail fraud, four counts of wire fraud, five counts of mail fraud, one count of conspiracy to obstruct a U.S. Securities and Exchange Commission (SEC) investigation, one count of obstruction of an SEC investigation and one count of conspiracy to commit money laundering. The jury found Stanford not guilty on one count of wire fraud.
At sentencing, Stanford faces a maximum prison sentence of 20 years for the count of conspiracy to commit wire and mail fraud, each count of wire and mail fraud, and the count of conspiracy to commit money laundering, and five years for the count of conspiracy to obstruct an SEC investigation and the count of obstruction of an SEC investigation.
The investigation was conducted by the FBI’s Houston Field Office, the U.S. Postal Inspection Service, the IRS-CI and the U.S. Department of Labor, Employee Benefits Security Administration. The case was prosecuted by Deputy Chief William Stellmach of the Criminal Division’s Fraud Section, Assistant U.S. Attorney Gregg Costa of the Southern District of Texas and Trial Attorney Andrew Warren of the Criminal Division’s Fraud Section.