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Friday 17 February 2012
Moex Offshore Agrees to $90 Million Partial Settlement of Liability in Deepwater Horizon Oil SpillRead the Press Release
WASHINGTON – MOEX Offshore 2007 LLC has agreed to settle its liability in the Deepwater Horizon oil spill in a settlement with the United States valued at $90 million, announced the Department of Justice, the U.S. Coast Guard and the U.S. Environmental Protection Agency (EPA) today. Approximately $45 million of the $90 million settlement is going directly to the Gulf in the form of penalties or expedited environmental projects.
According to the terms of the settlement, MOEX will pay $70 million in civil penalties to resolve alleged violations of the Clean Water Act resulting from the spill and agreed to spend $20 million to facilitate land acquisition projects in several Gulf states that will preserve and protect in perpetuity habitat and resources important to water quality and other environmental features of the Gulf of Mexico region. At the time of the spill, MOEX was a minority investor in the lease for the Macondo well. It no longer owns any share of the lease.
The terms of today’s settlement do not affect the potential liability of – or recoveries from – other parties involved in the Deepwater Horizon oil spill.
Beginning with a well blowout and explosion on April 20, 2010, the owners and operators of the Macondo Well and the drilling rig Deepwater Horizon allowed millions of barrels of oil to escape into the Gulf of Mexico, affecting the entire region. Oil spills can cause both immediate and long-term harm to people’s health and the environment. The Clean Water Act provides for civil penalties for such discharges. This is the largest civil penalty ever recovered under the Clean Water Act.“The Department of Justice has not wavered in its commitment to hold all responsible parties fully accountable for what stands as the largest oil spill in U.S. history,” said Attorney General Eric Holder. “This landmark settlement is an important step – but only a first step – toward achieving accountability and protecting the future of the Gulf ecosystem by funding critical habitat preservation projects.”
“This will move the Gulf Coast along in its recovery as it continues to rebound from the largest spill in U.S. history,” said Coast Guard Commandant Adm. Bob Papp. “The settlement demonstrates our firm commitment to hold accountable those who pollute our environment.”“This is good news for the Gulf Coast communities that are continuing to rebuild their economy and restore their ecosystem. This administration is going to stand with the people here to ensure a full recovery from the Deepwater Horizon oil spill,” said EPA Administrator Lisa P. Jackson. “Dedicating funds to actions that restore the local waters is a vital part of restoring these communities. As someone who grew up on the Gulf Coast, I know how important clean water is to the lives and livelihoods of the people here, and I know we need to take every possible action to get the ecosystem here on a path to long-term restoration.”
As part of the settlement, MOEX Offshore has agreed to pay $70 million in civil penalties, of which, $45 million will go to the United States. The money will go toward replenishing the Oil Spill Liability Trust Fund, where by law it will be available to pay for response actions, cleanup and damages caused by future spills. The remaining penalty will go to Gulf states that participate in the settlement. Those states will receive penalty payments as follows: $6.75 million to Louisiana, $5 million each to Alabama, Florida and Mississippi, and $3.25 million to Texas.
MOEX Offshore has also agreed to secure and protect properties of ecological significance for the Gulf habitats. MOEX Offshore will ensure that properties within the states of Louisiana, Texas, Mississippi and Florida are transferred to – or acquired by – state governments, non-profit groups, land trusts or other appropriate entities, to protect those properties from development. In all, these projects are expected to cost at least $20 million. The negotiation process with MOEX included numerous discussions with the Gulf states, who have been indispensible in reaching this important agreement.
This settlement does not affect the government’s claims against any other defendant in the Deepwater Horizon lawsuit that was filed on Dec. 15, 2010. The trial of the first phase of the case is set to begin in federal district court in New Orleans on Feb. 27, 2012.MOEX Offshore is a wholly-owned subsidiary of the MOEX USA Corporation. Mitsui Oil Exploration Co. Ltd. is the corporate parent of MOEX USA, which in turn is owned by Mitsui & Co. Ltd. of Japan.
The proposed settlement, lodged in the U.S. District Court for the Eastern District of Louisiana, is subject to a 30-day comment period and final court approval. Information on submitting comment is available at www.justice.gov/enrd/Consent_Decrees.html.
For more information on the settlement, visit: www.epa.gov/compliance/resources/cases/civil/caa/moex.html.
Man Pleads Guilty to Illegal Dumping in Upstate New YorkRead the Press Release
WASHINGTON – Julius DeSimone of Rome, N.Y., pleaded guilty today in federal court in Utica, N.Y., for conspiring to violate the Clean Water Act and to defraud the United States, and to making false statements to federal law enforcement, the U.S. Attorney’s Office for the Northern District of New York and the U.S. Department of Justice Environment and Natural Resources Division announced today.
DeSimone pleaded guilty before U.S. District Judge Hurd for the Northern District of New York to two criminal felony counts for conspiring to violate the Clean Water Act’s prohibition on filling wetlands and then lying to federal agents in an attempt to conceal his crimes. According to the charges, DeSimone and other co-conspirators engaged in a multi-year scheme to illegally dump 8,100 tons of pulverized construction and demolition debris that was processed at New York and New Jersey solid waste management facilities and then transported to a farmer’s property in Frankfort, N.Y.
According to court documents, DeSimone and other conspirators concealed the illegal dumping by fabricating a New York State Department of Environmental Conservation (DEC) permit and forging the name of a DEC official on the fraudulent permit. DeSimone admitted in the plea agreement that once DEC and the U.S. Environmental Protection Agency (EPA) learned of the illegal dumping, he lied to federal agents in an effort to conceal the crimes.
DeSimone faces up to five years in prison and a $250,000 fine for each felony count and may be ordered to pay for portions of the cleanup at the site.
Today’s plea is related to the pleas of Eagle Recycling and Jonathan Deck who pleaded guilty to similar conspiracy charges in 2009 and 2011.
This case was investigated by the New York State Environmental Conservation Police, Bureau of Environmental Crimes, EPA’s Criminal Investigation Division and the Internal Revenue Service, investigators from the New Jersey State Police Office of Business Integrity Unit, the New Jersey Department of Environmental Protection and the Ohio Department of Environmental Protection. The case is being prosecuted by Assistant U.S. Attorney Craig A. Benedict, of the Northern District of New York, and Todd W. Gleason of the Environmental Crimes Section of the Environment and Natural Resources Division of the U.S. Department of Justice.
Thursday 16 February 2012
Utah Man Charged with Filing False Claims for Tax RefundsRead the Press Release
Stanley Wardle of Spanish Fork, Utah, was indicted Wednesday by a federal grand jury in Salt Lake City with nine counts of filing false claims for income tax refunds, the Justice Department and Internal Revenue Service (IRS) announced today. According to the indictment, Wardle prepared one such false claim on his own behalf, through an individual income tax return for 2008, and prepared eight other such false claims on behalf of others. In total Wardle sought false federal income tax refunds of $875,218.
If convicted, Wardle faces a maximum of five years in prison and a maximum $250,000 fine for each count.
An indictment is only an allegation of criminal conduct and is not evidence of guilt. A person is presumed innocent until and unless proven guilty beyond a reasonable doubt in a court of law.
This case was investigated by IRS Criminal Investigation and is being prosecuted by Trial Attorneys Michael Romano and Stuart Wexler of the Justice Department’s Tax Division. More information about the Tax Division and its enforcement efforts can be found at www.justice.gov/tax .
Umar Farouk Abdulmutallab Sentenced to Life in Prison for Attempted Bombing of Flight 253 on Christmas Day 2009Read the Press Release
WASHINGTON – Umar Farouk Abdulmutallab, the so-called “underwear bomber,” was sentenced today to life in prison as a result of his guilty plea to all eight counts of a federal indictment charging him for his role in the attempted Christmas Day 2009 bombing of Northwest Airlines flight 253.
The sentence, handed down by U.S. District Court Judge Nancy G. Edmunds in Detroit, was announced by Attorney General Eric Holder; Barbara L. McQuade, U.S. Attorney for the Eastern District of Michigan; Andrew G. Arena, Special Agent in Charge of the FBI’s Detroit Field Office; and Brian M. Moskowitz, Special Agent in Charge of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) in Detroit.
Abdulmutallab, 25, of Kaduna, Nigeria, pleaded guilty on Oct. 12, 2011, to conspiracy to commit an act of terrorism transcending national boundaries; attempted murder within the special aircraft jurisdiction of the United States; willfully placing a destructive device on an aircraft, which was likely to have endangered the safety of the aircraft; attempted use of a weapon of mass destruction; willfully attempting to destroy and wreck a civil aircraft; and three counts of possession of a destructive device in furtherance of a crime of violence.
“As this investigation and prosecution have shown, Umar Farouk Abdulmutallab is a remorseless terrorist who believes it is his duty to kill Americans. For attempting to take the lives of 289 innocent people, he has been appropriately sentenced to serve every day of the rest of his life in prison,” said Attorney General Holder. “Today’s sentence once again underscores the effectiveness of the criminal justice system in both incapacitating terrorists and gathering valuable intelligence from them.”
“On behalf of the victims, we are gratified that this al-Qaeda terrorist has been defeated and will spend the rest of his life in prison, where he can never hurt innocent civilians again,” U.S. Attorney McQuade said. “I am very proud of the work of our prosecutors and agents in Detroit. Their work shows that the civilian court system is a valuable mechanism for obtaining intelligence and convicting terrorists with the legal certainty and transparency that instills public confidence in American justice.”
“The case against Abdulmutallab was a combination of the hard work and dedication of FBI personnel as well as multiple federal, state and local agencies. Those individuals who experienced Christmas Day 2009 first hand should be rest assured that justice has been done.” said FBI Special Agent in Charge Arena.
“When it counted most, under pressure and in the heat of the moment, the metro Detroit law enforcement community responded as one and acted decisively,” said HSI Special Agent in Charge Moskowitz. “Their collective actions epitomized the concept of ‘one team, one fight’ and showed the power of collaboration in the protection of our homeland.”
According to the indictment filed in this case, in August 2009, Abdulmutallab traveled to Yemen for the purpose of becoming involved in violent “jihad” on behalf of al-Qaeda. There, he conspired with other al-Qaeda members to bomb a U.S. aircraft over U.S. soil and received an explosive device for that purpose. Abdulmutallab traveled with the bomb concealed in his underwear from Yemen to Africa and then to Amsterdam, the Netherlands, where he boarded Flight 253 on Christmas Day 2009. The bomb contained PETN and TATP, two high explosives, and was designed to be detonated with a syringe containing other chemicals.
Abdulmutallab’s purpose in taking the bomb on board Flight 253 was to detonate it during flight, causing the plane to crash and killing the 290 passengers and crew members on board. As Flight 253 was on descent into Detroit Metropolitan Airport, the defendant detonated the bomb, which resulted in a fire, but otherwise did not fully explode. Passengers and flight attendants tackled the defendant and extinguished the fire.
This investigation was conducted by the Detroit Joint Terrorism Task Force, which is led by the FBI and includes U.S. Customs and Border Protection, HSI, the Federal Air Marshal Service and other law enforcement agencies. Additional assistance has been provided by the Transportation Security Administration, the State Department’s Bureau of Diplomatic Security, the Wayne County Airport police, as well as international law enforcement partners.
This case is being prosecuted by Assistant U.S. Attorneys Jonathan Tukel, Cathleen M. Corken and Michael C. Martin of the U.S. Attorney’s Office for the Eastern District of Michigan, with assistance from the Counterterrorism Section of the Justice Department’s National Security Division.
To view or download the government video exhibit introduced in court during today’s sentencing hearing, visit: http://www.justice.gov/usvabdulmutallab-200.html .
Maryland Tax Defier Sentenced to 65 Months in PrisonRead the Press Release
Andrew Isaac Chance of Clinton, Md., was sentenced Wednesday to 65 months in prison for filing false claims for tax refunds and for filing a false retaliatory lien against a federal prosecutor. The sentencing was announced today by the Justice Department, Internal Revenue Service Criminal Investigation (IRS-CI) and Treasury Inspector General for Tax Administration (TIGTA).
Chance was convicted by a federal jury in Greenbelt, Md., on Nov. 18, 2011. At the time the defendant filed the false retaliatory lien and false claims for tax refunds, he was on federal supervised release for a 2007 tax conviction.
According to evidence presented at trial, Chance was convicted and sentenced to 27 months in prison in 2007, for filing a false claim for an income tax refund for the tax year 2005. Shortly after he was released from prison for that crime, he filed a UCC Financing Statement with the Maryland Department of Assessments and Taxation, falsely claiming that the federal prosecutor, who prosecuted the 2007 case, owed him $1.313 billion. The evidence showed that Chance filed a similar lien against a Maryland state prosecutor for her role in prosecuting him for crimes relating to his attempts to cash the fraudulently obtained U.S. Treasury check for the 2005 tax return. According to the evidence, when arrested in December 2010, Chance admitted to a federal agent that he had filed the liens because the prosecutors had “done him wrong.”
The evidence at trial established that a year after filing the false lien, Chance filed three false claims for tax refunds for tax years 2007, 2008 and 2009, seeking a total of $900,000. These three false tax returns were almost identical to the 2005 return for which he was previously convicted. On the 2005 tax return, Chance claimed he was the Andrew Chance Trust. On the 2007-2009 returns, he claimed he was the Andrew I Chance Trust.
On each return in the current case, Chance claimed $300,000 in refunds based on completely false income and withholding amounts. The government introduced evidence that, despite having claimed withholdings on the false returns, Chance had no withholdings and, in fact, had demanded that the Washington, D.C., Metropolitan Area Transit Authority, from which he retired as a station manager in 1999, not withhold taxes from his retirement pay.
“ Those who file false tax returns cheat not only the government but also their fellow taxpayers. This sentence shows that filing false tax returns and retaliating against federal prosecutors and other government officials, who are simply doing their jobs, will not be tolerated,” said Principal Deputy Assistant Attorney General John A. DiCicco of the Justice Department’s Tax Division.
Chance still faces a federal violation of supervised release hearing as well as a state court action for a violation of probation related to his use of false identification in an attempt to cash the fraudulent refund check he received for the 2005 tax return.
The case was prosecuted by Tax Division Trial Attorneys Jen E. Ihlo and Erin Pulice and investigated by the Internal Revenue Service Criminal Investigation and the Treasury Inspector General for Tax Administration (TIGTA).
More information about the Tax Division and its tax defier enforcement efforts can be found at www.justice.gov.tax.
MS-13 Gang Leader in San Francisco Sentenced to Life in PrisonRead the Press Release
WASHINGTON –Danilo Velasquez, aka “Triste,” a local leader of La Mara Salvatrucha, or MS-13, was sentenced yesterday in federal court in San Francisco by U.S. District Judge William H. Alsup to life in prison, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Melinda Haag for the Northern District of California and Director John Morton of U.S. Immigration and Customs Enforcement (ICE). Velasquez was convicted in November 2011 by a federal jury of racketeering-related charges. At sentencing, Judge Alsup described the defendant as a “vicious murderer.”
Velasquez was part of the violent, transnational gang known as MS-13, which claimed part of the Mission District of San Francisco as its territory and operated in the Bay Area since the 1990s. Velasquez joined the “20th Street” clique, or local MS-13 chapter, in 2004. Since its inception, MS-13 members have warred with rival gang members and sought to extort payments from other criminals in its territory. When the federal government indicted the majority of the 20th Street clique members on Oct. 22, 2008, Velasquez assumed leadership on the streets. T he evidence presented at trial showed how Velasquez, with others, conspired to commit a variety of crimes to further the goals of the gang, including attacking and killing rival gang members and others who defied or challenged MS-13.
During Velasquez’s trial, the government presented evidence of multiple murders committed by MS-13 members in 2008. Several of the victims were not involved in gangs or any illegal activity, including a 14-year-old, but were mistaken to be rival gang members by MS-13 members.
The evidence at trial showed that on Feb. 19, 2009, Velasquez and fellow gang members Luis Herrera, aka “Killer” and Jaime Balam, aka “Tweety,” went looking to kill rival gang members in the San Francisco Bay area. In the Excelsior District of San Francisco, they spotted a car of young Latino professionals – two were college graduates of UC Berkeley, one a law student at UC Hastings, one a bank employee and another a student at City College in San Francisco who was working his way through school at the time. According to evidence presented at trial, these victims were targeted because some of the men wore baseball caps in colors associated with rival gang members. None of the victims were gang members themselves.
Herrera, Velasquez and Balam followed the victims’ car into Daly City, Calif., boxed the car in at a red light, whereupon Velasquez and Balam flanked the victims’ car carrying semi-automatic handguns and began shooting. By the time they finished firing, they had severely wounded two of the passengers and murdered a third passenger, Moises Frias Jr. Frias, who was 21-years-old, suffered nine gunshot wounds, including several to the head. He died en route to the hospital.
Herrera pleaded guilty mid-trial to seven racketeering-related counts, including use of a firearm causing the death of Frias. As part of his plea, Herrera admitted that he was part of the MS-13 hunting party that followed the victims’ car and murdered Frias. Herrera was sentenced on Jan. 24, 2012, to 35 years in prison. Balam remains a fugitive.
Velasquez’s trial was the second of three consecutive federal trials of members of the 20th Street clique of MS-13. Six of Velasquez’s fellow MS-13 gang members were convicted in August 2011 after a five-month trial that involved more than 150 witnesses. The six gang members – Marvin Carcamo, aka “Psycho”; Angel Noel Guevara, aka “Peloncito”; Erick Lopez, aka “Spooky”; Moris Flores, aka “Slow Pain”; Jonathan Cruz-Ramirez, aka “Soldado”; and Luis Herrera’s brother Guillermo Herrera, aka “Sparky” – were each sentenced to life in prison in December 2011.
Today, a federal jury convicted the sole defendant in the third trial, Manuel Franco, aka “Dreamer,” on one count of violent crime in aid of racketeering (VICAR) conspiracy.
These cases were prosecuted by Assistant U.S. Attorneys Wilson Leung, Wil Frentzen, Derek Owens, Andrew Scoble and David Hall of the Organized Crime Strike Force of the U.S. Attorney’s Office for the Northern District of California, and Trial Attorney Theryn G. Gibbons of the Criminal Division’s Organized Crime and Gang Section. These cases were investigated by Daly City Police Department, San Francisco Police Department and ICE Homeland Security Investigations.
Former New England La Cosa Nostra Mob Boss, Capo and Associates to Plead Guilty in Rhode Island for Racketeering ActivityRead the Press Release
WASHINGTON – Five Rhode Island men previously identified as leaders or associates of the New England organized crime family of the La Cosa Nostra (NELCN) have agreed to plead guilty to racketeering-related charges, according to documents filed today with the U.S. district court in Providence, R.I.
The announcement was made by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Peter F. Neronha for the District of Rhode Island; Richard DesLauriers, Special Agent in Charge of the FBI’s Boston Field Office; Colonel Steven G. O’DonnellSuperintendent of the Rhode Island State Police; and Providence Public Safety Commissioner Steven M. Pare.
The defendants were charged in a second superseding indictment returned by a federal grand jury in Providence in September 2011, which alleges their participation in an extortion and racketeering conspiracy involving “protection” payments from several Rhode Island businesses. The defendants face sentences of up to 20 years in prison and fines of up to $250,000.
According to plea agreements signed by the defendants and filed with the court, Luigi “Baby Shacks” Manocchio; Edward “Eddy” Lato; Alfred “Chippy” Scivola; and Richard Bonafiglia will plead guilty to one count of conspiracy to participate in a racketeering enterprise. Raymond R. Jenkins will plead guilty to one count of conspiracy to participate in a Hobbs Act extortion.
According to the plea agreements, in addition to admitting to their criminal conduct, Manocchio, Lato and Scivola admit to their membership in the enterprise charged in the second superseding indictment, which is the NELCN. In addition, in their signed plea agreements, Manocchio and Lato admit to being organizers and leaders of the enterprise’s criminal activity. As alleged in the indictment, Manocchio was an underboss and boss of the NELCN and Lato was an NELCN capo, primarily responsible for Rhode Island. Lato also admitted in his plea agreement to related extortion activity charged in the indictment.
Theodore Cardillo and Albino “Albie” Folcarelli, also named in the second superseding indictment and identified as alleged associates of the NELCN, are scheduled for trial on April 23, 2012.
An indictmentis merely an allegation and is not evidence of guilt. A defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
An eighth defendant named in a previous superseding indictment in this matter, Thomas Iafrate, of Johnston, R.I., pleaded guilty on July 21, 2011, to one count of conspiracy to participate in a racketeering enterprise. He also admitted that he was an associate of the NELCN. Iafrate was sentenced in December 2011 to 30 months in federal prison, to be followed by three years of supervised release.
The cases are being prosecuted by Assistant U.S. Attorney William J. Ferland for the District of Rhode Island and Trial Attorney Sam Nazzaro of the Criminal Division’s Organized Crime and Gang Section. The matter was investigated by the FBI, Rhode Island State Police, Providence Police and Internal Revenue Service – Criminal Investigation.
Federal Court Bars California Woman from Preparing Federal Tax ReturnsRead the Press Release
A federal court has permanently barred Maria Teresita Viray from preparing federal tax returns for others, the Justice Department announced today. The civil injunction order, to which Viray consented, was signed by Judge George Wu of the U.S. District Court for the Central District of California.
According to the government complaint in the case, Viray, of Reseda, Los Angeles County, Calif., operates businesses called TVDM Tax Services, MTV Tax Services and New Horizon Tax Services, and has prepared thousands of federal tax returns since 2008. The complaint alleges that Viray reported bogus deductions for charitable contributions and business expenses on her customers’ tax returns and that she fabricated documents to provide to the Internal Revenue Service (IRS) to substantiate the false claims she made on the returns. The complaint states that Viray told one customer that she had a special printer that allowed her to change the dates and amounts on charitable contribution receipts.
According to the complaint, Viray’s tax return preparation resulted in an estimated loss of over $45 million in tax revenue to the United States from 2008 to 2010, in addition to IRS resources devoted to recovering erroneous refunds and collecting unpaid taxes and penalties from her customers. The injunction order requires Viray to provide the government with a list of all persons for whom she prepared federal tax returns for tax years 2007 through 2010.
The Justice Department’s Tax Division has obtained injunctions against hundreds of unscrupulous tax-return preparers and tax-fraud promoters in the past decade. Information about these cases is available on the Justice Department www.justice.gov/tax .
Complaint for Permanent Injunction and Other Relief (PDF)
Final Order of Permanent Injunction (PDF)Detroit Man Sentenced for Mailing Noose to Threaten CoupleRead the Press Release
WASHINGTON – Glenn E. Morgan Jr., 41, of Detroit, was sentenced by U.S. District Judge Robert H. Cleland to three months in prison followed by two years supervised release after pleading guilty to sending a threatening communication through the mail to a Detroit couple, the Justice Department announced today.
In November 2008, Morgan mailed a noose, photographs of black men being lynched and a photograph of the murdered body of Nicole Brown Simpson to the couple because of their race. The envelope Morgan sent to the couple also contained threatening written messages indicating that black men who marry white women should be lynched and that white women who marry black men will share Nicole Brown Simpson's fate.
U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade said, "The law protects people from threats and harassment based on their race, and we will prosecute anyone who seeks to racially intimidate members of our community."
“Threats based on race have no place in our country,” Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The department will aggressively prosecute those who threaten any person based on the color of their skin.”
Andrew Arena, Special Agent in Charge of the FBI in Detroit said, "This sentencing should send as a strong message that hate crimes will be investigated vigorously and those responsible for these heinous acts will be brought to justice."
The case was investigated by the FBI. The case was prosecuted by Assistant U.S. Attorney Pamela Thompson from the U.S. Attorney's Office the Eastern District of Michigan, and Trial Attorney Sanjay Patel from the Civil Rights Division.
California Resident and Company Plead Guilty to Conspiracy to Export Computer-Related Equipment to IranRead the Press Release
WASHINGTON – Massoud Habibion, 49, aka “Matt Habibion” and “Matt Habi,” a U.S. citizen and co-owner of a Costa Mesa, Calif., company, Online Micro LLC, pleaded guilty today in the District of Columbia to conspiracy to illegally export computers from the United States to Iran through the United Arab Emirates (UAE). Additionally, Mohsen Motamedian, 44, aka “Max Motamedian” and “Max Ehsan,” a U.S. citizen and co-owner of Online Micro, pleaded guilty to obstruction of justice.
The guilty pleas were announced by Lisa Monaco, Assistant Attorney General for National Security; Ronald C. Machen Jr., U.S. Attorney for the District of Columbia; John Morton, Director of U.S. Immigration and Customs Enforcement (ICE); David W. Mills, Assistant Secretary for Export Enforcement, Department of Commerce; and Adam Szubin, Director of the Office of Foreign Assets Control (OFAC), Department of the Treasury.
At a hearing today before U.S. District Judge Ellen S. Huvelle, Habibion and Online Micro each pleaded guilty to conspiracy to violate the International Emergency Economic Powers Act and to defraud the United States. Motamedian pleaded guilty to obstruction of justice. Judge Huvelle set sentencing for May 16, 2012. The maximum sentence for Habibion and the company is five years in prison and $1 million. The maximum sentence for Motamedian is 20 years in prison.
Under the terms of the plea and related civil settlements with the Department of Commerce’s Bureau of Industry and Security (BIS) and OFAC, Habibion and his company have agreed to forfeiture of a money judgment in the amount of $1.9 million. In addition, Habibion and Online Micro are denied export privileges for 10 years, although the denial order will be suspended provided that neither Habibion nor Online Micro commit any export violations during the 10-year probationary period and comply with the terms of the criminal plea agreements and sentences. Motamedian separately agreed to a $50,000 monetary penalty to settle a civil charge that he solicited a false statement to federal law enforcement agents.
Habibion and Motamedian were arrested on a criminal complaint in California on April 7, 2011. The defendants and their company were later indicted on April 21, 2011.
Habibion and Online Micro today admitted that they willfully conspired with a company operating in Dubai, UAE, and Tehran, Iran, to procure U.S.-origin computers from the United States and export those computers from the United States to Iran through Dubai without first obtaining licenses or authorizations from OFAC.
In or around May 2007, Online Micro purchased 1,000 computer units from Dell Inc. for approximately $500,000. Later that year, Dell began receiving service calls concerning Dell computer units from individuals in Iran, and after conducting an internal investigation, suspended Online Micro from placing further orders with Dell.
Beginning around Nov. 9, 2009, and continuing through December 2010, Habibion and Online Micro conspired with Company X, a firm operating in Dubai and Tehran, to procure U.S.-origin computer-related goods and export those goods to Iran via the UAE. During the scope of the conspiracy, defendants Online Micro and Habibion sold and exported from the United States to Company X numerous shipments of computer-related goods, worth a total of more than $4,904,962, with knowledge that the majority of those goods were destined for Iran.
Online Micro also caused Shipper’s Export Declarations to be filed with U.S. Customs and Border Protection falsely identifying the ultimate destination of the goods as the UAE. During the course of the investigation, Habibion and Motamedian told a government cooperator (Individual A) to lie to U.S. law enforcement officials about the transactions. Specifically, the defendants told Individual A to lie about Iran being the true ultimate destination for the goods and counseled him to tell U.S. law enforcement agents that the computer-related goods remained in Dubai.
Motamedian and Habibion also acknowledged to Individual A that the sanctions “are serious” and “were not a joke.” Yet Motamedian told Individual A to “Say, ‘I sold over there’ and have your guys make up invoices;” and “[d]efinitely delete your communication with [Company X’s agent in Iran] on Yahoo.” Similarly, Habibion stated to Individual A that he should tell U.S. law enforcement agents that the computer-related goods remained in Dubai: “Well, you can say, ‘I kept the goods there.’ How does he know what happened?”
This investigation was conducted by the ICE’s Homeland Security Investigations (HSI) field offices in San Diego and Orange County, Calif. U.S. Customs and Border Protection and the U.S. Department of Commerce’s BIS Los Angeles Field Office also assisted in the investigation.
Senior Attorney Adrienne Frazier from the U.S. Department of Commerce’s BIS, and Assistant Director of Enforcement Michael Geffroy and Enforcement Officer Elizabeth Beam from OFAC handled the civil settlements for their agencies, respectively.
The prosecution is being handled by Assistant U.S. Attorneys T. Patrick Martin and Anthony Asuncion from the U.S. Attorney's Office for the District of Columbia, and Trial Attorney Jonathan C. Poling from the Counterespionage Section of the Justice Department’s National Security Division.
Wednesday 15 February 2012
Pennsylvania Dairy Farmer Operator Found in Violation of Food, Drug and Cosmetic ActRead the Press Release
The U.S. District Court for the Eastern District of Pennsylvania awarded summary judgment to the government on a finding that Daniel Allgyer, dba Rainbow Acres Farm and Rainbow Valley Farms, violated the Food, Drug and Cosmetic Act and the Public Health Services Act, the Justice Department announced today. The court made the ruling on Feb. 3, 2012.
Allgyer is the owner and operator of a dairy farm located in Kinzers, Pa. An investigation conducted by the Food and Drug Administration (FDA) showed that Allgyer was packaging unpasteurized milk (also known as “raw milk”) in unlabeled containers, and was then distributing the milk for human consumption in interstate commerce.
The FDA warned Mr. Allgyer that his conduct violated federal law. Instead of ceasing his illegal operations, Mr. Allgyer attempted to evade federal regulations that prohibit the interstate sale of raw milk by creating a private membership organization that he used to enter into cow-sharing agreements with his customers. In the order granting summary judgment in the government’s favor, the court found that the cow-sharing agreements were “merely a subterfuge” and issued an order enjoining Mr. Allgyer and his associates from distributing unlabeled or unpasteurized milk for human consumption in interstate commerce.
While some states, including Pennsylvania, permit the sale of unpasteurized milk, it is illegal to transport unpasteurized milk across state lines. Unpasteurized milk can contain a wide variety of harmful bacteria, including Listeria, E.coli, Salmonella, Campylobacter, Yersinia and Brucella.
“The FDA has determined that drinking raw milk can cause significant harm,” said Tony West, Assistant Attorney General for the Justice Department’s Civil Division. “Working with our federal partners, we will bring enforcement actions like this one to ensure that the American food supply is safe and consumers are not exposed to such risks. We are pleased that the court has ordered Mr. Allgyer to stop distributing unpasteurized milk across state lines.”
This matter was handled by Department of Justice Trial Attorney Jessica R. Gunder of the Civil Division’s Consumer Protection Branch and Associate Chief Counsel Karen C. Corallo of the FDA’s Office of the General Counsel.
Justice Department Settlement Requires Gunnison Energy and SG Interests to Pay the United States a Total of $550,000 for Antitrust and False Claims Act ViolationsRead the Press Release
WASHINGTON – The Department of Justice today announced that it has reached a settlement with Gunnison Energy Corporation (GEC), SG Interests I Ltd. and SG Interests VII Ltd. (SGI) that requires the companies to pay a total of $550,000 to the United States for antitrust and False Claims Act violations related to an agreement not to compete in bidding for four natural gas leases sold at auction by the U.S. Department of Interior’s Bureau of Land Management (BLM). Today’s action marks the first time the Department of Justice has challenged an anticompetitive bidding agreement for mineral rights leases.
The department’s Antitrust Division today filed a civil antitrust complaint in U.S. District Court for the District of Colorado, and at the same time filed a proposed settlement that, if approved by the court, would resolve the lawsuit. The complaint alleges that the agreement between GEC and SGI restrained trade in violation of Section 1 of the Sherman Act.
“Today’s unprecedented antitrust enforcement action involving illegal bidding at Bureau of Land Management auctions, demonstrates the U.S. government’s resolve to ensure there is vigorous competition for federal oil and gas rights,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “At a time of budgetary constraint, it is crucial that the federal government receive the most competitive prices for these important leases, which ultimately benefits American taxpayers.”
According to the complaint, GEC and SGI were separately developing natural gas resources in Western Colorado. In 2005, GEC and SGI entered into a written agreement under which they agreed that only SGI would bid at the auctions and then assign an interest in the acquired leases to GEC. The department determined that the agreement was not part of any procompetitive or efficiency-enhancing collaboration.
As a result of the agreement between GEC and SGI, the United States received less revenue from the sale of the four leases than it would have had SGI and GEC competed at the auctions. The United States has the legal ability to obtain monetary damages when it has been injured by an antitrust violation. The proposed settlement provides that GEC and SGI each pay $275,000 to the United States to resolve the antitrust violations.
The payments will also resolve civil claims that the United States has under the False Claims Act against GEC and SGI for making false statements to the gover nment in connection with the agreement not to compete. The U.S. Attorney’s Office for the District of Colorado has entered into separate settlement agreements with the companies to resolve these claims.
BLM is responsible for issuing leases for oil and gas exploration and development on lands owned or controlled by the federal government. BLM provides notice of parcels to be leased and then auctions a lease for each parcel. The winning bidder is required to certify that its bid was not the product of collusion with another bidder.
“BLM relies on competition among bidders at onshore oil and gas auctions to ensure that the United States receives a fair and competitive price for its leases,” said BLM Director Bob Abbey. “We are hopeful that the outcome of this case will deter anticompetitive and fraudulent conduct at BLM auctions.”
The United States’ investigation resulted from a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act. Those provisions allow for private parties to sue on behalf of the United States. They also give the United States time to investigate to decide whether to take over prosecution of the allegations or allow the whistleblower to proceed. The whistleblower is entitled to receive a portion of any recovery.
GEC, an affiliate of Oxbow Corporation, is a Delaware corporation with its principal place of business in Denver. SGI is Texas limited partnerships with their headquarters in Houston. The managing partner of both limited partnerships is Gordy Oil Company, a Texas corporation.
The proposed settlement, along with the department’s competitive impact statement, will be published in The Federal Register, as required by the Antitrust Procedures and Penalties Act. Any person may submit written comments concerning the proposed settlement within 60 days of its publication to William H. Stallings, chief, Transportation, Energy and Agriculture Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street, N.W., Suite 8000, Washington, D.C. 20530. At the conclusion of the 60-day comment period, the court may enter the settlement upon a finding that it serves the public interest.
Justice Department Resolves Sexual Harassment Lawsuit Against the Louisiana Department of Public Safety and CorrectionsRead the Press Release
WASHINGTON – The Department of Justice announced today the filing of a consent decree, filed in the U.S. District Court in the Eastern District of Louisiana, with the Louisiana Department of Public Safety and Corrections (LDPSC) that resolves allegations of sexual harassment of an office administrator in violation of Title VII of the Civil Rights Act of 1964, as amended (Title VII).
According to the department’s complaint, Laura Arceneaux, an office administrator, was subjected to a hostile work environment during the period between May 2002 and December 2008, which culminated in two attempts of sexual assault by her supervisor, District Administrator Farrell Veillion. At least four other LDPSC employees, including a part-time internal affairs investigator, were aware of the harassment and did not report it. The complaint alleges that the LDPSC did not have an effective sexual harassment policy in place at the time of the harassment.
The consent decree, if approved by the court, requires the LDPSC to modify its policy designed to prevent harassment in the workplace and provide annual training of LDPSC supervisors and employees about harassment. The decree also awards monetary damages in the amount of $50,000 to Arceneaux as well as other relief.
“Federal law requires employers to maintain a workplace free of harassment and hostility,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “ The d epartment commends the state for agreeing to put effective policies in place to prevent workplace harassment and to provide appropriate relief to Ms. Arceneaux. ”
The filing of this lawsuit and consent decree reflects the Civil Rights Division’s ongoing commitment to actively enforce federal employment discrimination laws such as Title VII. Additional information about the Civil Rights Division is available at www.justice.gov/crt .
Barrio Azteca Gang Leader Sentenced in Texas to Life in PrisonRead the Press Release
WASHINGTON – A Barrio Azteca (BA) gang leader was sentenced to life in prison without parole for his participation in a racketeering conspiracy, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Robert Pitman for the Western District of Texas, FBI Assistant Director of the Criminal Investigative Division Kevin Perkins and Administrator Michele M. Leonhart of the U.S. Drug Enforcement Administration (DEA).
Roberto Angel Cardona, aka “Little Angelillo,” of El Paso, Texas, was sentenced yesterday by U.S. District Judge Kathleen Cardone in the Western District of Texas, El Paso Division. Cardona pleaded guilty on Aug. 2, 2011.
“This sentence reflects the severity of Roberto Cardona’s crimes as a leader of the brutal Barrio Azteca gang, as well as his individual acts of violence and drug trafficking,” said Assistant Attorney General Breuer. “On both sides of the border, Barrio Azteca gang members use violence, intimidation and fear to further their illegal activities. Lengthy prison sentences are an appropriate consequence and should cause would-be gang members to think twice about participating in such destructive activities.”
“The violent activities of Barrio Azteca members are representative of the dangers of drug trafficking,” said U.S. Attorney Pitman. “This sentence represents our response and our continued dedication to fighting senseless acts of violence and organized drug dealing in our communities.”
“This sentence is a powerful step taken against trans-border violence, one that the FBI’s El Paso Field Office has taken with partners at the federal, state and local levels,” said FBI Assistant Director Perkins. “Gangs like the Barrio Azteca represent threats to both Mexico and the United States, and together we have supported each other to investigate and prosecute criminals who affect us on both sides of the border.”
“The sentencing of Barrio Azteca leader Robert o Cardona is a victory for both U.S. and Mexican law enforcement,” said DEA Administrator Leonhart. “Together, we will relentlessly pursue violent drug organizations, their leaders and gang members who brutally destroy lives on both sides of the border.”
According to court documents and testimony, the BA gang began in the late 1980s as a violent prison gang and has expanded into a transnational criminal organization. The BA is primarily based in West Texas; Juarez, Mexico; and throughout state and federal prisons in the United States and Mexico.
According to court documents and testimony, members and associates of the BA have engaged in a host of criminal activity committed since Jan. 1, 2003, including drug trafficking, extortion, money laundering, kidnapping and murder, including the March 13, 2010, murders in Juarez of U.S. consulate employee Leslie Ann Enriquez Catton, her husband Arthur Redelfs and Jorge Alberto Salcido Ceniceros, the husband of a U.S. consulate employee.
The BA profits by importing heroin, cocaine and marijuana into the United States from Mexico. Gang members and associates also charge a “street tax” or “cuota” on businesses and criminals operating in their turf. These profits are used to support gang members in prison by funneling money into prison commissary accounts of gang leaders and to pay for defense lawyers or fines. The “cuota” profits are also allegedly reinvested into the organization to purchase drugs, guns and ammunition.
According to testimony presented at sentencing, Cardona was a leader in the Barrio Azteca gang. Specifically, he was the El Paso BA leader in 2010 until he was arrested on drug charges on April 30, 2010. He also participated in the BA’s activities by distributing narcotics, including heroin and cocaine, and collected extortion funds that were sent to the commissary accounts of fellow BA members in prison. One witness testified that Cardona ordered beatings of fellow BA members and personally assaulted a drug dealer who would not pay extortion money. Witnesses testified that BA members used weapons in the course of violence and regularly carried guns at meetings.
At sentencing, a witness testified about personally attending a meeting where Cardona ordered extortions, assaults and kidnappings. The witness testified that Cardona contacted him for the purposes of kidnapping someone in El Paso and delivering him to Juarez. According to testimony, Cardona arranged for the witness and others to meet with the victim, assault him, drug him, bind him and transport him to Juarez. The court also found that Cardona's offense involved more than 30 kilograms of heroin and 150 kilograms of cocaine. Cardona directly imported large quantities of these drugs and sold them to retail drug dealers.
Thirty-five members and associates of the BA gang, including Cardona and 18 others who have pleaded guilty, were charged in a third superseding indictment unsealed in March 2011 with various counts of racketeering, murder, drug offenses, money laundering and obstruction of justice. Trial is set to begin April 6, 2012.
The case is being prosecuted by Trial Attorney Joseph A. Cooley of the Criminal Division’s Organized Crime and Gang Section, Trial Attorney Brian Skaret of the Criminal Division’s Human Rights and Special Prosecutions Section and the U.S. Attorney’s Office of the Western District of Texas - El Paso Division. The U.S. Attorney’s Office for the District of New Mexico provided significant assistance in this case, including Assistant U.S. Attorney Sarah Davenport. Valuable assistance was provided by the Criminal Division’s Offices of International Affairs and Enforcement Operations.
The investigation in this case was led and conducted by the FBI’s El Paso Field Office. Special assistance was provided by the DEA; the Bureau of Alcohol, Tobacco, Firearms and Explosives; Immigration and Customs Enforcement; the U.S. Marshals Service; U.S. Customs and Border Protection; Federal Bureau of Prisons; U.S. Diplomatic Security Service; the Texas Department of Public Safety; the Texas Department of Criminal Justice; El Paso Police Department; El Paso County Sheriff’s Office; El Paso Independent School District Police Department; Texas Alcohol and Beverage Commission; New Mexico State Police; Dona Ana County, N.M., Sheriff’s Office; Las Cruces, N.M., Police Department; Southern New Mexico Correctional Facility and Otero County Prison Facility New Mexico.
Barren County, Kentucky, Sheriff and Four Deputies Indicted for Federal Civil Rights ViolationsRead the Press Release
WASHINGTON – The Justice Department announced today that a federal grand jury in Kentucky returned a 10-count indictment against Barren County Sheriff Christopher Eaton and Sheriff’s Deputies Danny McCown, Aaron Bennett, Adam Minor and Eric Guffey.
The indictment charges that the defendants used unreasonable force on and injured a man they captured following a vehicle pursuit on Feb. 24, 2011, thereby violating his civil rights. According to the indictment, the defendants assaulted and aided and abetted others in assaulting the victim. Eaton further failed to prevent officers under his command from assaulting the victim.
The indictment also charges each defendant with making false statements to the FBI concerning the assault. In addition, Eaton was charged with falsifying police reports in an effort to cover up the assault, and for tampering with a witness by directing him to create a false report concerning the incident.
The civil rights charges carry a maximum penalty of 10 years in prison for each count, and the false statements charges carry a maximum penalty of up to five years in prison. Additionally, Eaton faces a maximum penalty of 20 years in prison for each count of witness tampering and for falsification of reports.
This case is being investigated by the FBI and prosecuted by Trial Attorneys Roy Conn and Sanjay Patel of the Department of Justice’s Civil Rights Division.
An indictment is merely an accusation, and the defendant is presumed innocent unless proven guilty.
Alabama Man Pleads Guilty to Selling Anhinga FeathersRead the Press Release
WASHINGTON – Alexander D. Alvarez of Atmore, Ala., pleaded guilty in federal court today to violating the Lacey Act and the Migratory Bird Treaty Act (MBTA) for illegally selling and possessing the feathers of anhingas and other migratory birds protected under the MBTA, the Department of Justice Environment and Natural Resources Division and the U.S. Attorney’s Office for the Southern District of Alabama announced.
Alvarez was charged by criminal information on Feb. 1, 2012, with one felony Lacey Act violation, one felony MBTA violation and one misdemeanor MBTA violation. The Lacey Act charge carries a maximum penalty of five years in prison and a fine of $250,000. The felony MBTA charge carries a maximum penalty of two years in prison and a fine of $250,000. The misdemeanor MBTA charge carries a maximum penalty of six months in prison and a fine of $15,000. Sentencing is scheduled for May 22, 2012.
Under the MBTA, the Secretary of the Interior maintains a list of migratory birds which are protected from, among other things, being killed, sold, bartered, transported or possessed, except as otherwise permitted by federal regulation. Enrolled members of federally-recognized American Indian tribes may possess eagle and other migratory bird feathers and parts for religious and ceremonial purposes, but federal law strictly prohibits the sale of migratory birds, feathers or their parts by any person. Alvarez is not an enrolled member of a federally-recognized American Indian tribe. The Lacey Act prohibits, among other things, the sale of wildlife knowing that the wildlife was taken or possessed in violation of any federal wildlife-related regulation or law.
“Mr. Alvarez sought to profit from selling protected bird feathers he had no legal right to possess,” said Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division of the Department of Justice. “Federal law prohibits the sale of migratory birds, feathers or their parts for commercial gain. In enforcing these wildlife laws in partnership with tribal law enforcement, we share a duty to protect the nation’s scarce and precious wildlife resources. In protecting these resources for future generations, we also ensure the ability of federally recognized tribal members to possess eagle and migratory bird feathers for religious and ceremonial practices.”
“Protecting our natural resources, particularly wildlife, from being exploited against the law for personal gain continues to be a significant function of the Department of Justice,” said Kenyen R. Brown, U.S. Attorney for the Southern District of Alabama. “Successful prosecutions of this nature help ensure that the next generation of Americans enjoy the same level of wildlife that we do today.”
According to court documents, Alvarez communicated via email with an individual in Louisiana and eventually exchanged two anhinga tails that Alvarez possessed for a crested caracara tail, a Harris’s hawk tail and $400, which the individual possessed. Alvarez later sent 14 sets of anhinga tail feathers to this individual and asked the individual to photograph and offer the tails for sale via email. Alvarez received payment from the Louisiana individual for the anhinga tail feathers that were sold. A federal search warrant was executed at Alvarez’s home on March 11, 2009, and feathers from several migratory bird species were seized.
This case resulted from an investigation by the U.S. Fish and Wildlife Service’s Office of Law Enforcement into the illegal commercialization of eagles and other migratory birds protected by federal law. The investigation was jointly conducted with the Navajo Nation Department of Fish and Wildlife. The case is being prosecuted by the U.S. Attorney’s Office for the Southern District of Alabama and the Department of Justice’s Environment and Natural Resources Division, Environmental Crimes Section.
Tuesday 14 February 2012
U.S. Army Reserves Sergeant Pleads Guilty to Conspiracy to Defraud the United States Related to Contracting in Support of Iraq WarRead the Press Release
WASHINGTON – A sergeant in the U.S. Army Reserves pleaded guilty today to one count of conspiracy to defraud the United States for receiving money from a local contractor in return for preferentially processing its invoices for payment outside of the proper procedures and protocols, announced Assistant Attorney General Lanny Breuer of the Justice Department’s Criminal Division.
Sergeant Amasha M. King, 33, of Forsyth, Ga., pleaded guilty before U.S. District Judge Marc T. Treadwell in Macon, Ga., to criminal information charging her with one count of conspiracy to defraud the U.S. Department of Defense (DoD).
According to the court documents filed in the Middle District of Georgia, Sergeant King served at Camp Arifjan, Kuwait, from November 2004 to February 2006, in support of Operation Iraqi Freedom as part of the 374th Finance Battalion. While in Kuwait, King was responsible for receiving and processing pay vouchers and invoices from military contractors for various contracts and blanket purchase agreements (BPAs), including BPAs for bottled potable water. A BPA is a type of contract by which the DoD agrees to pay a contractor a specified price for a particular good or service. With King’s approval, the contractors were paid from the finance battalion, and in some instances, King was responsible for the issuance of U.S. government checks to those contractors.
According to the court documents, King agreed to receive money from a military contractor in return for defrauding the United States by preferentially processing the contractor’s invoices outside of the proper procedures and protocols for payment. This allowed the contractor to be paid much faster than usual and ultimately to bid for more contracts than it otherwise could have financed.
Sergeant King admitted that she received four wire transfers totaling approximately $20,500. King admitted that she instructed the contractor to wire the money to designees in the United States and to keep the amounts under $10,000 in order to avoid bank reporting requirements.
King faces up to five years in prison and a fine of $250,000 or twice the amount of the criminally derived property she received. In addition, King has agreed to pay $20,500 in restitution to the United States. A sentencing date has not yet been scheduled by the court.
This case is being prosecuted by Trial Attorney Mark W. Pletcher of the Criminal Division’s Fraud Section. The case is being investigated by the U.S. Army Criminal Investigation Command, the Defense Criminal Investigative Service, the FBI, the Internal Revenue Service, the Special Inspector General for Iraq Reconstruction, and U.S. Immigration and Customs Enforcement’s Homeland Security Investigations.
Two Houston-Area Nurses Sentenced to More Than Five Years in Prison for Roles in $5.2 Million Medicare Fraud SchemeRead the Press Release
WASHINGTON – Two Houston-area nurses and two of their co-conspirators have been sentenced in Houston for their participation in a $5.2 million Medicare fraud scheme, announced the Department of Justice, the FBI and the Department of Health and Human Service (HHS).
- Mary Ellis, 56, a licensed vocational nurse, was sentenced today to 63 months in prison followed by three years of supervised release and was ordered to pay $401,000 in restitution. Ellis was convicted of one count of conspiracy to commit health care fraud, one count of conspiracy to pay kickbacks, three counts of receiving illegal kickbacks and two counts of making false statements following a May 2011 trial.
- Caroline Njoku, 46, also a licensed vocational nurse, was sentenced yesterday to 63 months in prison followed by one year of supervised release and was ordered to pay $631,295 in restitution. Njoku was convicted of one count of conspiracy to commit health care fraud and one count of conspiracy to pay kickbacks following a May 2011 trial.
Terrie Porter, 48, was sentenced yesterday to two years in prison and two years of supervised release and was ordered to pay $482,380 in restitution. Porter was convicted of one count of conspiracy to receive kickbacks and one count of receiving illegal kickbacks following a May 2011 trial. - Florida Holiday Island, 62, was sentenced yesterday to 20 days in prison, five months of home detention and two and a half years of supervised release and was ordered to pay $59,739 in restitution. Island pleaded guilty in March 2011 to one count of conspiracy to receive kickbacks and one count of receiving illegal kickbacks.
The defendants were sentenced by U.S. District Judge Nancy Atlas in the Southern District of Texas. The four defendants were ordered to pay restitution jointly and severally with co-conspirators and defendants in a related case. As part of the sentencing, the court found that Ellis had obstructed justice by testifying untruthfully at trial.
According to the evidence presented at trial and in court documents, Family Healthcare Group, a Houston home health care company, purported to provide skilled nursing to Medicare beneficiaries. Family Healthcare Group paid Ellis, Porter, Island and other co-conspirators to recruit Medicare beneficiaries for the purpose of filing claims with Medicare for skilled nursing that was medically unnecessary and/or not provided. According to evidence presented at trial, Njoku and Ellis falsified documents to support the fraudulent payments. After the Medicare beneficiaries were recruited, other co-conspirators fraudulently signed plans of care stating that the beneficiaries needed home health care when in fact they knew the beneficiaries were not home-bound and not in need of skilled nursing.
Co-defendant Adelma Casas Sevilla, a registered nurse, was previously sentenced to 18 months in prison. A second co-defendant, Sammie Wilson, received three years of probation after pleading guilty to one count of conspiracy to commit health care fraud. Four other defendants involved in the scheme are pending sentencing.
The sentences were 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) and the Texas Attorney General’s Medicaid Fraud Control Unit (MFCU).
This case is being prosecuted by Trial Attorney Charles D. Reed and Deputy Chief Sam S. Sheldon of the Criminal Division’s Fraud Section. The case was investigated by the FBI, HHS-OIG, Texas OAG-MFCU and the Federal Railroad Retirement Board-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 Texas.
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 $3.2 billion. In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.
Health Care Fraud Prevention and Enforcement Efforts Result in Record-breaking Recoveries Totaling Nearly $4.1 BillionRead the Press Release
Attorney General Eric Holder and Department of Health and Human Services (HHS) Secretary Kathleen Sebelius today released a new report showing that the government’s health care fraud prevention and enforcement efforts recovered nearly $4.1 billion in taxpayer dollars in Fiscal Year (FY) 2011. This is the highest annual amount ever recovered from individuals and companies who attempted to defraud seniors and taxpayers or who sought payments to which they were not entitled.
These findings, released today, in the annual Health Care Fraud and Abuse Control Program (HCFAC) report, are a result of President Obama making the elimination of fraud, waste and abuse a top priority in his administration. The success of this joint Department of Justice and HHS effort would not have been possible without the Health Care Fraud Prevention & Enforcement Action Team (HEAT), created in 2009 to prevent fraud, waste and abuse in the Medicare and Medicaid programs, and to crack down on the fraud perpetrators who are abusing the system and costing American taxpayers billions of dollars. These efforts to reduce fraud will continue to improve with the new tools and resources provided by the Affordable Care Act.
“This report reflects unprecedented successes by the Departments of Justice and Health and Human Services in aggressively preventing and combating health care fraud, safeguarding precious taxpayer dollars and ensuring the strength of our essential health care programs,” said Attorney General Holder. “We can all be proud of what's been achieved in the last fiscal year by the department’s prosecutors, analysts and investigators – and by our partners at HHS. These efforts reflect a strong, ongoing commitment to fiscal accountability and to helping the American people at a time when budgets are tight.”
“Fighting fraud is one of our top priorities and we have recovered an unprecedented number of taxpayer dollars,” said Secretary Sebelius. “Our efforts strengthen the integrity of our health care programs, and meet the President’s call for a return to American values that ensure everyone gets a fair shot, everyone does their fair share, and everyone plays by the same rules.”
Approximately $4.1 billion stolen or otherwise improperly obtained from federal health care programs was recovered and returned to the Medicare Trust Funds, the Treasury and others in FY 2011. This is an unprecedented achievement for HCFAC, a joint effort of the two departments to coordinate federal, state and local law enforcement activities to fight health care fraud and abuse.
The recently-enacted Affordable Care Act provides additional tools and resources to help fight fraud that will help boost these efforts, including an additional $350 million for HCFAC activities. The administration is already using tools authorized by the Affordable Care Act, including enhanced screenings and enrollment requirements, increased data sharing across government, expanded overpayment recovery efforts and greater oversight of private insurance abuses.
Since 2009, the Departments of Justice and HHS have enhanced their coordination through HEAT and have increased the number of Medicare Fraud Strike Force teams. During FY 2011, HEAT and the Medicare Fraud Strike Force expanded local partnerships and helped educate Medicare beneficiaries about how to protect themselves against fraud. The departments hosted a series of regional fraud prevention summits around the country, provided free compliance training for providers and other stakeholders and sent letters to state attorneys general urging them to work with HHS and federal, state and local law enforcement officials to mount a substantial outreach campaign to educate seniors and other Medicare beneficiaries about how to prevent scams and fraud.
In FY 2011, the total number of cities with strike force prosecution teams was increased to nine, all of which have teams of investigators and prosecutors from the Justice Department, the FBI and the HHS Office of Inspector General, dedicated to fighting fraud. The strike force teams use advanced data analysis techniques to identify high-billing levels in health care fraud hot spots so that interagency teams can target emerging or migrating schemes along with chronic fraud by criminals masquerading as health care providers or suppliers. In FY 2011, strike force operations charged a record number of 323 defendants, who allegedly collectively billed the Medicare program more than $1 billion. Strike force teams secured 172 guilty pleas, convicted 26 defendants at trial and sentenced 175 defendants to prison. The average prison sentence in strike force cases in FY 2011 was more than 47 months.
Including strike force matters, federal prosecutors filed criminal charges against a total of 1,430 defendants for health care fraud related crimes. This is the highest number of health care fraud defendants charged in a single year in the department’s history. Including strike force matters, a total of 743 defendants were convicted for health care fraud-related crimes during the year.
In criminal matters involving the pharmaceutical and device manufacturing industry, the department obtained 21 criminal convictions and $1.3 billion in criminal fines, forfeitures, restitution and disgorgement under the Food, Drug and Cosmetic Act. These matters included the illegal marketing of medical devices and pharmaceutical products for uses not approved by the Food and Drug Administration (FDA) or the distribution of products that failed to conform to the strength, purity or quality required by the FDA.
The departments also continued their successes in civil health care fraud enforcement during FY 2011. Approximately $2.4 billion was recovered through civil health care fraud cases brought under the False Claims Act (FCA). These matters included unlawful pricing by pharmaceutical manufacturers, illegal marketing of medical devices and pharmaceutical products for uses not approved by the FDA, Medicare fraud by hospitals and other institutional providers, and violations of laws against self-referrals and kickbacks. This marked the second year in a row that more than $2 billion has been recovered in FCA health care matters and, since January 2009, the department has used the False Claims Act to recover more than $6.6 billion in federal health care dollars.
The fraud prevention and enforcement report announced today coincides with the announcement of a proposed rule from the Centers for Medicare and Medicaid Services aimed at recollecting overpayments in the Medicare program. Before the Affordable Care Act, providers and suppliers did not face a deadline for returning taxpayers’ money. Thanks to the Affordable Care Act, there will be a specific timeframe by which self-identified overpayments must be returned. The Obama Administration has made prevention and recollection of overpayments a government-wide priority. These announcements today are just the latest in a series of steps that the administration is taking to protect taxpayer dollars and keep money in the pockets of Americans.
The HCFAC annual report can be found here, oig.hhs.gov/publications/hcfac.asp. For more information on the joint DOJ-HHS Strike Force activities, visit: www.StopMedicareFraud.gov/
Boca Raton, Florida-based CPA Indicted for Preparing False Tax Returns and Obstructing Internal Revenue LawsRead the Press Release
John P. Miller, a Certified Public Accountant, was indicted by a federal grand jury sitting in the Southern District of Florida with obstructing the Internal Revenue laws and preparing false tax returns the Justice Department and Internal Revenue Service (IRS) announced today.
According to the indictment, Miller, a resident of Boca Raton, created and directed his clients to create Subchapter S corporations and corporate bank accounts into which the clients would deposit personal income. It is alleged that Miller directed his clients to use the corporate bank accounts to pay their personal expenses; Miller, in turn, prepared false individual and corporate tax returns for his clients which falsely claimed personal expenses as business expenses. It is further alleged that Miller made false and misleading statements to special agents from the IRS who were conducting a criminal investigation of his clients.
The indictment returned by the grand jury charges Miller with one count of corruptly endeavoring to obstruct and impede the due administration of the Internal Revenue laws and one count of aiding and assisting in the preparation of false tax returns. If convicted, Miller faces a maximum of three years in prison and a maximum $250,000 fine for each count.
An indictment is only an allegation of criminal conduct and is not evidence of guilt. A person is presumed innocent until and unless proven guilty beyond a reasonable doubt in a court of law.
This case was investigated by IRS-Criminal Investigation and is being prosecuted by Trial Attorneys Matthew J. Mueller and Adam F. Hulbig of the Justice Department’s Tax Division. More information about the Tax Division and its enforcement efforts can be found at www.justice.gov/tax .
100 Women Attend “Lifetime Makeover” Forum Assisting Women Returning from PrisonRead the Press Release
Washington, DC – More than 100 women attended a public symposium last weekend geared toward empowering and motivating women to rebuild their lives after returning home to the District of Columbia from prison or jail.
The Women’s Reentry Forum is an annual event begun several years ago by the Court Services and Offender Supervision Agency (CSOSA). This year’s program was a joint effort co-sponsored by CSOSA, the U.S. Attorney’s Office for the District of Columbia, Our Place, DC, and DC Healthy Start Consortium, Inc., in addition to the U.S. Parole Commission. Numerous other community service organizations also participated.
“We at the Commission were glad to collaborate in the Women’s Reentry Forum, as we did last year,” said Isaac Fulwood, Jr., Chairman of the Parole Commission. “I am firmly of the belief that we are all connected. In this effort to reduce recidivism and effect positive change, the success of the Commission and our partners is inextricably tied to the success of these women as they reenter the community. The tools and the information provided at this forum, along with the close supervision of CSOSA, are just what is needed for the ladies to press forward and be successful. I wish them well.”
Hundreds of women have returned to the community in recent years after serving prison time. In 2009, for example, more than 200 women returned home from prison under CSOSA’s supervision.
“Women returning home face special challenges, and this event was an important opportunity to pull together as a community to help them succeed,” said U.S. Attorney Ronald C. Machen Jr.
“For example,” Parole Commissioner Patricia W. Smoot notes, “besides needing a job when they return from prison, they often have childcare responsibilities too.” Adds Parole Commissioner Patricia K. Cushwa, “They have fewer programming opportunities than male prisoners, and often return with fewer job skills. We are realizing that they often don’t get the programs needed before and after release.”
The reentry program, entitled “Lifetime Makeover: Stepping In, Stepping Out and Stepping Up,” took place on Saturday, February 11, 2012, at Temple of Praise Church, 700 Southern Avenue SE. The forum served a twofold purpose: educating the broader community on the importance of supporting reentry efforts, and providing access to the resources women need to reenter society. Noted U.S. Attorney Machen, “Our public safety depends on giving former offenders the support they need to get back on the right track when they return home from prison.”
The symposium featured panel discussions on housing, employment, life skills/mentoring support, drug treatment/addiction recovery, and building healthy relationships. Speakers included people who supervise and work with female ex-offenders, as well as women who are successfully making the transition. Many panels showcased success stories and first-person accounts from the returnees themselves.
“What was most touching for me, personally, were the stories of these women regarding their initial struggles,” said Cushwa, adding, “When I heard how these smart and savvy women managed to overcome so many reentry obstacles, I wanted to stand up and cheer. They are teaching us what other women need to succeed.”
The day culminated with a “Lifetime Makeover” fashion show in which 24 returning women modeled professional attire and make-up. The show was possible because of a drive at CSOSA and the U.S. Attorney’s Office, as well as the Parole Commission, that garnered hundreds of donated suits and shoes in all sizes and styles. Volunteers from the U.S. Attorney’s Office and CSOSA personally provided styling and make-up application to prepare the women for the show. The make-overs were dramatic, inside and out, as the women were uplifted and encouraged during the process. The women were able to see themselves in a new light after experiencing the transformation. The Lifetime Makeover women walked with a brand new look and outlook on their lives that was evident for all to see.
“We at CSOSA are grateful for the collaboration with our criminal justice and community partners that enabled our Women’s Reentry Program to be a great success,” said Nancy M. Ware, director of CSOSA. “We were able to provide the women in attendance with helpful information about job retention, housing, drug treatment and recovery, and healthy relationships. The women left the event with some of the tools they need to begin their ‘Lifetime Makeover.’ As they go forward in their journey, we will continue to assist and support them in overcoming the challenges they face.”
For more information, please call Johanna Markind at (202) 346-7036.
Monday 13 February 2012
Two Individuals Arrested in Connection with Costa Rica-based Business Opportunity Fraud VenturesRead the Press Release
A U.S. citizen and a Canadian citizen were arrested last week in Costa Rica in connection with the operation of a series of fraudulent business opportunities following their indictment by a federal grand jury in Miami on Nov. 29, 2011, the Justice Department and the U.S. Postal Inspection Service announced.
John White, an American, and Kerry Michael Deevy, a Canadian, were arrested based on charges that they and their co-conspirators purported to sell beverage and greeting card business opportunities, including assistance in establishing, maintaining and operating such businesses. The charg es in the indictment form part of the government’s continued nationwide crackdown on business opportunity fraud. Prior to these arrests, eight other individuals were charged and arrested in connection with business opportunity fraud ventures based in Costa Rica. Seven of those eight other individuals have been convicted in the United States. The eighth individual, Jeffrey Pearson, is in custody in Costa Rica.
Beginning in May 2005, White, Deevy and their co-conspirators are alleged to have fraudulently induced purchasers in the United States to buy business opportunities in USA Beverages Inc., Twin Peaks Gourmet Coffee Inc., Cards-R-Us Inc., Premier Cards Inc., The Coffee Man Inc. and Nation West Distribution Company. According to the indictment, the business opportunities the defendants sold cost thousands of dollars each, and most purchasers paid at least $10,000. Each company operated for several months, and after one company closed, the next opened. The various companies used bank accounts, office space and other services in the Southern District of Florida and elsewhere, according to the indictment.
The indictment alleges that the defendants, using aliases, participated in a conspiracy that used various means to make it appear to potential purchasers that the businesses were located entirely in the United States. In reality, according to the indictment, White and Deevy operated out of Costa Rica to fraudulently induce potential purchasers in the United States to buy the purported business opportunities.
According to the indictment, the companies made numerous false statements to potential purchasers of the business opportunities. Among the misrepresentations alleged in the indictment are that purchasers would likely earn substantial profits; that prior purchasers of the business opportunities were earning substantial profits; that purchasers would sell a guaranteed minimum amount of merchandise, such as greeting cards and beverages; and that the business opportunity worked with locators familiar with the potential purchaser’s area who would secure or had already secured high-traffic locations for the potential purchaser’s merchandise stands. Potential purchasers also were falsely told that the profits of some of the companies were based in part on the profits of the business opportunity purchasers, thus creating the false impression that the companies had a stake in the purchasers’ success and in finding good locations, according to the indictment.
The indictment alleges that the companies employed various types of sales representatives, including fronters, closers, and references. A fronter spoke to potential purchasers when the prospective purchasers initially contacted the company in response to an advertisement. A closer subsequently spoke to potential purchasers to close deals. References spoke to potential purchasers about the financial success they purportedly had experienced since purchasing one of the business opportunities.
The indictment alleges that White, using assumed names, was a fronter and reference for USA Beverages, a fronter and reference for Twin Peaks, a fronter and reference for Cards-R-Us, a fronter, closer and reference for Premier Cards, and a fronter, closer and reference for Coffee Man.
The indictment alleges that Deevy, using assumed names, was a fronter and reference for Cards-R-Us, a fronter and reference for Premier Cards, a fronter for Coffee Man, and a fronter and reference for Nation West.
Each of the companies was registered as a corporation and rented office space to make it appear to potential purchasers that its operations were fully in the United States. USA Beverages was registered as a Florida and New Mexico corporation and rented office space in Las Cruces, N.M. Twin Peaks was registered as a Florida and Colorado corporation and rented office space in Fort Collins, Colo., and Cards-R-Us was registered as a Nevada corporation and rented office space in Reno, Nev. Premier Cards was registered as a Colorado and Pennsylvania corporation and rented office space in Philadelphia, and The Coffee Man was registered as a Colorado corporation and rented office space in Denver. Nation West was registered as a Colorado corporation and also rented office space in Denver.
Both defendants were charged with conspiracy to commit mail and wire fraud, and with committing their offenses via telemarketing. In addition, both defendants were charged with five counts of mail fraud and 13 counts of wire fraud. If convicted of conspiracy, White and Deevy face a maximum statutory term of 25 years in prison, a possible fine and mandatory restitution on the conspiracy count. They also face a maximum statutory term of 25 years in prison on each of the mail and wire fraud counts, a possible fine and mandatory restitution.
“Business opportunity fraud is a serious crime. Fraudsters carefully construct legitimate-sounding self-employment opportunities, complete with professional-looking materials and convincing but fake research to back up their claims, then target hardworking individuals who are looking for a chance to make life better for themselves and their families,” said Tony West, Assistant Attorney General for the Justice Department’s Civil Division. “Often, fraudsters use a variety of techniques—U.S.-based postal addresses, reincorporated U.S. businesses that went defunct years before, or U.S.-based toll-free numbers—to make it appear as if the business opportunity they’re offering is legitimate and is based in the U.S. In fact, these schemes are sometimes perpetrated from overseas. That’s why the Justice Department has been vigilant in working with our overseas law enforcement partners so that borders are no barrier to justice being served.”
“Fraudulent business opportunity sellers must realize that all financial fraud will be prosecuted vigorously, even if the schemers operate their fraud from abroad,” said Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida . “Increased international law enforcement cooperation eliminates safe havens for those who cheat American citizens from overseas.”
“This investigation, conducted both here and abroad, shows the Postal Inspection Service’s resolve to protect the American public from business opportunity scams,” said Henry Gutierrez, U. S. Postal Inspector in Charge in Miami.
The United States intends to seek the extradition of White and Deevy from Costa Rica.
Assistant Attorney General West commended the investigative efforts of the Postal Inspection Service. The case is being prosecuted by trial attorneys Jeffrey Steger and Alan Phelps with the U.S. Department of Justice Consumer Protection Branch.
An indictment is merely an allegation, and every defendant is presumed innocent until proven guilty beyond a reasonable doubt.
Statement of the Department of Justice’s Antitrust Division on Its Decision to Close Its Investigations of Google Inc.’s Acquisition of Motorola Mobility Holdings Inc. and the Acquisitions of Certain Patents by Apple Inc., Microsoft Corp. a...Read the Press Release
WASHINGTON – The Department of Justice’s Antitrust Division issued the following statement today after announcing the closing of its investigations into Google Inc.’s acquisition of Motorola Mobility Holdings Inc., the acquisitions by Apple Inc., Microsoft Corp. and Research in Motion Ltd. (RIM) of certain Nortel Networks Corporation patents, and the acquisition by Apple of certain Novell Inc. patents:
“After a thorough review of the proposed transactions, the Antitrust Division has determined that each acquisition is unlikely to substantially lessen competition and has closed these three investigations. In all of the transactions, the division conducted an in-depth analysis into the potential ability and incentives of the acquiring firms to use the patents they proposed acquiring to foreclose competitors. In particular, the division focused on standard essential patents (SEPs) that Motorola Mobility and Nortel had committed to license to industry participants through their participation in standard-setting organizations (SSOs). The division’s investigations focused on whether the acquiring firms could use these patents to raise rivals’ costs or foreclose competition.
“The division concluded that the specific transactions at issue are not likely to significantly change existing market dynamics.
“During the course of the division’s investigation, several of the principal competitors, including Google, Apple and Microsoft, made commitments concerning their SEP licensing policies. The division’s concerns about the potential anticompetitive use of SEPs was lessened by the clear commitments by Apple and Microsoft to license SEPs on fair, reasonable and non-discriminatory terms, as well as their commitments not to seek injunctions in disputes involving SEPs. Google’s commitments were more ambiguous and do not provide the same direct confirmation of its SEP licensing policies.
“In light of the importance of this industry to consumers and the complex issues raised by the intersection of the intellectual property rights and antitrust law at issue here, as well as uncertainty as to the exercise of the acquired rights, the division continues to monitor the use of SEPs in the wireless device industry, particularly in the smartphone and computer tablet markets. The division will not hesitate to take appropriate enforcement action to stop any anticompetitive use of SEP rights.”
BACKGROUND
Google/ Motorola Mobility
On Aug. 25, 2011, Google entered into an agreement to acquire Motorola Mobility, a manufacturer of smartphones and computer tablets and the holder of a portfolio of approximately 17,000 issued patents and 6,800 applications, including hundreds of SEPs relevant to wireless devices that Motorola Mobility committed to license through its participation in SSOs.
Rockstar Bidco
Rockstar Bidco, a partnership that includes, among others, RIM, Microsoft and Apple, was formed to acquire patents at the June 2011 Nortel bankruptcy auction, and to license and distribute them to certain partners. Nortel’s portfolio of approximately 6,000 patents and patent applications includes many SEPs that Nortel committed to license through its participation in SSOs and that are relevant to wireless devices (the Nortel SEPs).
Apple/Novell
Apple also proposes to acquire patents held by CPTN Holdings LLC, formerly owned by Novell, following CPTN’s acquisition in April 2011 of those patents on behalf of Apple, Oracle Corporation and EMC Corporation. As a member of the Open Invention Network (OIN), Novell committed to cross-license its patents on a royalty-free basis for use in the open source “Linux system,” a defined term in the OIN.
Competitive Landscape
Google, Apple, Microsoft and RIM have each developed mobile operating systems for smartphones and tablets. Apple and RIM manufacture and sell the smartphones and tablets that run on their proprietary mobile operating systems. In contrast, Microsoft licenses its proprietary mobile operating systems, Windows Phone 7 and Windows Mobile, to non-affiliated wireless handset original equipment manufacturers (OEMs). Google, in turn, sponsors Android, a mobile operating system that it distributes to OEMs without monetary charge under an open source license. These operating systems provide platforms for a variety of products and services offered by competing handset and tablet manufacturers, as well as, application developers.
At the end of 2011, Google’s Android accounted for approximately 46 percent of the U.S. smartphone operating system platform subscribers and Apple’s iOS was used by about 30 percent of subscribers. RIM and Microsoft accounted for approximately 15 percent and 6 percent of the share of smartphone subscribers, respectively.
Apple’s iPad is the leading tablet in the market, although the recently introduced Android-based tablets are rapidly gaining share. Thus far, tablets running RIM’s and Microsoft’s operating systems have a minimal presence in the marketplace.
The Importance of Standard Setting in the Wireless Industry
Today’s wireless device industry, which includes smartphones and tablets, relies on complex operating systems that allow seamless interaction with wireless communications technologies while providing audio, video and computer functionalities.
To facilitate seamless interoperability, industry participants work through SSOs collectively to develop technical standards that establish precise specifications for essential components of the technology. For example, wireless devices typically implement a significant number of telecommunication and computer standards, including cellular air interface standards (e.g., 3G and 4G LTE standards), wireless broadband technologies (e.g., WiFi and WiMax) and video compression technologies (e.g., H.264). As with other industries, these standards facilitate compatibility among products and provide consumers with a wider range of products and capabilities than would otherwise be available.
Often, many technologies adopted by the SSOs fall within the scope of existing patents or patent applications. Once a patent is included in a standard, it becomes essential to the implementation of that standard, thus the term “Standard Essential Patent.” After industry participants make complementary investments,abandoning the standard can be extremely costly. Thus, after the standard is set, the patent holder could seek to extract a higher payment than was attributable to the value of the patented technology before the standard was set. Such behavior can distort innovation and raise prices to consumers . A comparable harm may also arise in situations outside of the SSO context where a patent holder’s prior actions, such as open source commitments, lead others to make complementary investments (See U.S. Department of Justice and Federal Trade Commission, Antitrust Enforcement & Intellectual Property Rights: Promoting Innovation and Competition, April 17, 2007 at 35-6).
Most SSOs therefore require the owners of patents essential to the proposed standard that are participating in the SSO’s standard-setting activities to make disclosure and licensing commitments with respect to their essential patents. These commitments are intended to reduce the subsequent inappropriate use of the patent rights at issue, and thus prevent disputes that can inhibit innovation and competition. One com mon licensing requirement is to require SSO members to commit to license patented technologies essential to a standard on reasonable and nondiscriminatory (RAND) terms (for SSOs based in the United States) or on fair, reasonable and nondiscriminatory (FRAND) terms (for SSOs based outside the United States) (collectively F/RAND). In practice, however, SSO F/RAND requirements have not prevented significant disputes from arising in connection with the licensing of SEPs, including actions by patent holders seeking injunctive or exclusionary relief that could alter competitive market outcomes.
ANALYSIS
The division’s investigations regarding the acquisitions of the Motorola Mobility and Nortel SEPs focused on whether the acquiring firms would have the incentive and ability to exploit ambiguities in the SSOs’ F/RAND licensing commitments to hold up rivals, thus preventing or inhibiting innovation and competition (The division’s analysis was limited to SEPs encumbered by F/RAND commitments). Such hold up could include raising the costs to rivals by demanding supracompetitive licensing rates, compelling prospective licensees to grant the SEP holder the right to use the licensee’s differentiating intellectual property, charging licensees the entire portfolio royalty rate when licensing only a small subset of the patent holder’s SEPs in its portfolio, or seeking to prevent or exclude products practicing those SEPs from the market altogether. In this analysis, the critical issue is whether the patent holder has the incentive and ability to hold up its competitors, particularly through the threat of an injunction or exclusion order. The division’s analysis focused on how the proposed transactions might change that incentive and ability to do so.
The division concluded that each of the transactions was unlikely to substantially lessen competition for wireless devices. With respect to RIM’s and Microsoft’s acquisition of Nortel patents, their low market shares in mobile platforms would likely make a strategy to harm rivals either through injunctions or supracompetitive royalties based on the acquired Nortel SEPs unprofitable. Because of their low market shares, they are unlikely to attract a sufficient number of new customers to their mobile platforms to compensate for the lost patent royalty revenues. Moreover, Microsoft has cross-license agreements in place with the majority of its Android-based OEM competitors, making such a strategy even less plausible for it.
Apple’s and Google’s substantial share of mobile platforms makes it more likely that as the owners of additional SEPs they could hold up rivals, thus harming competition and innovation. For example, Apple would likely benefit significantly through increased sales of its devices if it could exclude Android-based phones from the market or raise the costs of such phones through IP-licenses or patent litigation. Google could similarly benefit by raising the costs of, or excluding, Apple devices because of the revenues it derives from Android-based devices.
The specific transactions at issue, however, are not likely to substantially lessen competition. The evidence shows that Motorola Mobility has had a long and aggressive history of seeking to capitalize on its intellectual property and has been engaged in extended disputes with Apple, Microsoft and others. As Google’s acquisition of Motorola Mobility is unlikely to materially alter that policy, the division concluded that transferring ownership of the patents would not substantially alter current market dynamics. This conclusion is limited to the transfer of ownership rights and not the exercise of those transferred rights.
With respect to Apple/Novell, the division concluded that the acquisition of the patents from CPTN, formerly owned by Novell, is unlikely to harm competition. While the patents Apple would acquire are important to the open source community and to Linux-based software in particular, the OIN, to which Novell belonged, requires its participating patent holders to offer a perpetual, royalty-free license for use in the “Linux-system.” The division investigated whether the change in ownership would permit Apple to avoid OIN commitments and seek royalties from Linux users. The division concluded it would not, a conclusion made easier by Apple’s commitment to honor Novell’s OIN licensing commitments.
In its analysis of the transactions, the division took into account the fact that during the pendency of these investigations, Apple, Google and Microsoft each made public statements explaining their respective SEP licensing practices. Both Apple and Microsoft made clear that they will not seek to prevent or exclude rivals’ products from the market in exercising their SEP rights.
Apple outlined its view of F/RAND in a letter to the European Telecommunications Standards Institute (ETSI) on Nov. 11, 2011, stating among other things:
“A party who made a FRAND commitment to license its cellular standards essential patents or otherwise acquired assets/rights from a party who made the FRAND commitment must not seek injunctive relief on such patents. Seeking an injunction would be a violation of the party’s commitment to FRAND licensing.” (emphasis supplied)
Microsoft stated publicly on Feb. 8, 2012, among other things:
“This means that Microsoft will not seek an injunction or exclusion order against any firm on the basis of those essential patents.”
If adhered to in practice, these positions could significantly reduce the possibility of a hold up or use of an injunction as a threat to inhibit or preclude innovation and competition.
Google’s commitments have been less clear. In particular, Google has stated to the IEEE and others on Feb. 8, 2012, that its policy is to refrain from seeking injunctive relief for the infringement of SEPs against a counter-party, but apparently only for disputes involving future license revenues, and only if the counterparty: forgoes certain defenses such as challenging the validity of the patent; pays the full disputed amount into escrow; and agrees to a reciprocal process regarding injunctions. Google’s statement therefore does not directly provide the same assurance as the other companies’ statements concerning the exercise of its newly acquired patent rights. Nonetheless, the division determined that the acquisition of the patents by Google did not substantially lessen competition, but how Google may exercise its patents in the future remains a significant concern.
For these reasons the division continues to have concerns about the potential inappropriate use of SEPs to disrupt competition and will continue to monitor the use of SEPs in the wireless device industry, particularly as they relate to smartphones and computer tablets. The division’s continued monitoring of how competitors are exercising their patent rights will ensure that competition and innovation are unfettered in this important industry.
All three of the transactions highlight the complex intersection of intellectual property rights and antitrust law and the need to determine the correct balance between the rightful exercise of patent rights and a patent holder’s incentive and ability to harm competition through the anticompetitive use of those rights.
Agency Cooperation
During the course of its investigation of the Google/Motorola Mobility transaction, the Department of Justice cooperated closely with the European Commission. In addition, the Department of Justice had discussions with the Australian Competition and Consumer Commission, Canadian Competition Bureau, Israeli Antitrust Authority and the Korean Fair Trade Commission. In connection with the investigations relating to the Nortel patent assets, the division worked closely with states of New York and California and with the Canadian Competition Bureau.
The Antitrust Division’s Closing Statement Policy
The division provides this statement under its policy of issuing statements concerning the closing of investigations in appropriate cases. This statement is limited by the division’s obligation to protect the confidentiality of certain information obtained in its investigations. As in most of its investigations, the division’s evaluation has been highly fact-specific, and many of the relevant underlying facts are not public. Consequently, readers should not draw overly broad conclusions regarding how the division is likely in the future to analyze other collaborations or activities, or transactions involving particular firms. Enforcement decisions are made on a case-by-case basis, and the analysis and conclusions discussed in this statement do not bind the division in any future enforcement actions. Guidance on the division’s policy regarding closing statements is available at: www.usdoj.gov/atr/public/guidelines/201888.htm.
North Carolina Corporate Hog Farm and President Sentenced to Pay $1.5 Million for Violating the Clean Water ActRead the Press Release
WASHINGTON – Freedman Farms Inc. was sentenced today in federal court to five years probation and ordered to pay $1.5 million in fines, restitution and community service payments for violating the Clean Water Act when they discharged hog waste into a stream that leads to the Waccamaw River, announced the Department of Justice’s Environment and Natural Resources Division and the U.S. Attorney’s Office for the Eastern District of North Carolina.
William B. Freedman, president of Freedman Farms, was sentenced to six months in prison to be followed by six months of home confinement.
Freedman Farms was sentenced to pay a $500,000 criminal fine and $925,000 in restitution. The judge will hold a status conference in 30 days to determine the scope of restitution to compensate for or repair lost or injured resources that resulted from these violations. In addition, a community service payment of $75,000 will be paid directly to the Southern Environmental Enforcement Network (SEEN), one of four U.S. regional environmental enforcement associations established to train environmental enforcement professionals. SEEN is to use the funds for funding environmental projects designed to preserve and restore waters in the Eastern District of North Carolina.
Freedman Farms also is required to implement a comprehensive environmental compliance program and institute an annual training program.
“William Freedman and Freedman Farms will be held accountable for polluting waterways and wetlands in Columbus County and the Waccamaw River watershed,” said Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division of the Department of Justice. “Owners and operators of concentrated animal feeding operations must comply with the nation’s Clean Water Act for the protection of America’s streams, wetlands and rivers.”
“It is vital to the well-being of our residents to protect our natural resources, including the numerous streams and marshes found in the Eastern part of North Carolina,” said Thomas G. Walker, U.S. Attorney for the Eastern District of North Carolina. “This prosecution reflects our ongoing efforts to protect the environment and resources that we all cherish.”
“Concentrated Animal Feeding Operations (CAFOs), like Freedman Farms, are an EPA enforcement priority because manure, if not properly controlled, can contaminate both surface waters and ground waters that may be used as drinking water sources and harm fish and other aquatic species,” said Maureen O'Mara, Special Agent-in-Charge of EPA's criminal enforcement office in Atlanta. “In this case, hog wastes flowed through sensitive wetlands, posing a risk to water and wildlife. Today's sentences send a clear message to CAFO's and their owners that if you disregard the law, you will be prosecuted.”
According to evidence presented in court, Freedman Farms discharged hog waste into Browder’s Branch, a tributary to the Waccamaw River that flows through the White Marsh, a large wetlands complex. Freedman Farms, located in Columbus County, N.C., is in the business of raising hogs for market, and this particular farm had some 4,800 hogs. The hog waste was supposed to be directed to two lagoons for treatment and disposal. In December 2007, hog waste was discharged from Freedman Farms directly into Browder’s Branch.
The Clean Water Act is a federal law that makes it illegal to knowingly or negligently discharge a pollutant into a water of the United States.
The case was investigated by the U.S. Environmental Protection Agency (EPA) Criminal Investigation Division and the North Carolina State Bureau of Investigation, with assistance from the EPA Science and Ecosystem Support Division. The case was prosecuted by Assistant U.S. Attorney J. Gaston B. Williams of the Eastern District of North Carolina and Trial Attorney Mary Dee Carraway of the Environmental Crimes Section of the Justice Department’s Environment and Natural Resources Division.
New York Man Arrested on Identity Theft and Tax Fraud ChargesRead the Press Release
Gary Rogers, of East Meadow, N.Y., was arrested today after being charged with identity theft and tax fraud after filing more than 200 false tax returns with the Internal Revenue Service (IRS), the Justice Department and IRS announced.
Rogers was named in a federal criminal complaint that alleged he used stolen identification information to make false claims against the U.S. government by filing false tax returns to obtain fraudulent refunds. According to the affidavit in support of the criminal complaint filed in U.S. District Court in Brooklyn, Rogers filed approximately 200 federal income tax returns from 2004 through 2010 using the identification information of others. The complaint alleges that Rogers sought approximately $4,393,356 in fraudulent refunds over the six year period.
“The Justice Department will remain vigilant in protecting Americans’ identities and tax dollars from thieves,” said Principal Deputy Assistant Attorney General John A. DiCicco of the Justice Department’s Tax Division. “Those who steal identities and use them to commit tax refund fraud will be punished to the full extent of the law.”
“The IRS is aggressively pursuing those who steal others’ identities in order to file false returns,” said Steven Miller, IRS Deputy Commissioner for Services and Enforcement. “Our cooperative work with the U.S. Attorney’s Office and the Tax Division will help protect taxpayers in New York from being victimized by identity theft. The IRS is taking additional steps this tax season to further prevent, detect and resolve identity theft cases as soon as possible.”
A criminal complaint is merely an allegation and a defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law. If convicted on these charges, Rogers faces a two year mandatory minimum sentence for aggravated identity theft, a potential maximum sentence of five years in prison for each count of filing a false claim against the United States and mail fraud.
The case was investigated by the IRS - Criminal Investigation and is being prosecuted by Trial Attorneys Mark Kotila and Andrew P. Young of the of Justice Department’s Tax Division.
Additional information about the Tax Division and its enforcement efforts may be found at www.justice.gov/tax.
Massachusetts Man Sentenced to 60 Months in Prison for Participating in International Child Pornography RingRead the Press Release
WASHINGTON – A Massachusetts man was sentenced today in Los Angeles to 60 months in prison, followed by 20 years of supervised release, for conspiracy to distribute child pornography, 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.
Joseph Tierney, 24, of Wellesley, Mass., was sentenced by U.S. District Judge Virginia A. Phillips. Tierney pleaded guilty in August 2011 to one count of conspiracy to distribute child pornography.
Today’s sentencing is the result of an international investigation into the “Lost Boy” online bulletin board. The Lost Boy bulletin board, according to court documents and proceedings, was dedicated to men who have a sexual interest in young boys and was established to provide a forum to trade child pornography.
Federal authorities, working in conjunction with a coalition of international law enforcement agencies, shut down the Lost Boy bulletin board approximately three years ago. As a result of the investigation, 16 named defendants were charged in the United States and arrested for their roles in the bulletin board. To date, 15 defendants 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, have provided invaluable assistance during the investigation.
The case is being prosecuted by Assistant U.S. Attorneys Joey L. Blanch and Yvonne Garcia of the Central District of California and CEOS Trial Attorney Andrew McCormack.
Justice Department Settles with City of Highland Park, Michigan, to Enforce Employment Rights of U.S. Army ReservistRead the Press Release
WASHINGTON – The Justice Department announced today that it has reached a settlement with the city of Highland Park, Mich., to resolve allegations that the city willfully violated the Uniformed Services Employment and Reemployment Rights Act (USERRA) by failing to properly reemploy firefighter and U.S. Army reservist Paul A. Baetz in July 2009 when he returned from military service in Afghanistan in support of Operation Enduring Freedom.
The Justice Department’s complaint, filed in the U.S. District Court for the Eastern District of Michigan in Detroit, alleges that while Mr. Baetz was overseas in military service, the city of Highland Park promoted three auxiliary firefighters with less seniority than Mr. Baetz to full-time firefighter and refused to properly re-employ Mr. Baetz as a full-time firefighter upon his return. Subject to certain conditions, USERRA requires employers to promptly re-employ returning service members in the positions they would have held had their employment not been interrupted by military service, or in a position of like seniority, status and pay.
Under the terms of the settlement, embodied in a consent decree that was approved by the district court, the city of Highland Park must pay Baetz approximately $25,000 in compensation for lost wages, back pension contributions and other damages. Although the city promoted Mr. Baetz after the Justice Department opened its investigation, the consent decree also requires that the city retroactively adjust the date of Mr. Baetz’s promotion back to the time he should have received it in 2009.
“Uniformed service benefits our nation and should not require a service member to lose his or her chance for civilian career advancement,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Justice Department will take the steps necessary to ensure that all employers meet their obligations under USERRA.”“The U.S. Attorney’s Office is committed to enforcing the rights of our soldiers and veterans,” said Barbara L. McQuade, the U.S. Attorney for the Eastern District of Michigan. “We owe it to our service members to protect their civilian career opportunities while they are sacrificing so much to serve our country.”
The case was litigated by Assistant U.S. Attorney Susan K. DeClercq in the U.S. Attorney’s Office for the Eastern District of Washington, in collaboration with Jodi Danis, Special Counsel, in the Civil Rights Division of the Justice Department. The case stems from a referral from the U.S. Labor Department following an investigation by its Veterans’ Employment and Training Service.
The Justice Department’s Civil Rights Division and the U.S. Attorney’s Offices have given a high priority to the enforcement of service members’ rights under USERRA. Additional information about USERRA can be found on the Justice Department’s websites at www.justice.gov/crt/emp and www.servicemembers.gov, as well as on the Labor Department’s website at www.dol.gov/vets/programs/userra/main.htm.Department of Justice FY 2013 Budget RequestRead the Press Release
Attorney General Eric Holder announced today that President Obama’s FY 2013 Budget proposal totaling $27.1 billion for the Department of Justice identifies over $1 billion in efficiencies, savings and rescissions while providing resources to sustain critical national security programs, uphold the department’s traditional missions with an increased focus on financial and mortgage fraud and civil rights enforcement, invest in prisons and detention capacity, and assist our state, local and tribal law enforcement partners. The request represents a 0.4 percent decrease in budget authority from the FY 2012 enacted level.
“The President’s Budget request will provide the department with the resources necessary to continue protecting the American people from terrorism and other urgent threats to our national security. It will enable us to safeguard citizens from violent crime and threats to the most vulnerable among us. And it will strengthen critical efforts to combat financial and mortgage fraud, while recognizing the valuable role of state, local and tribal law enforcement partners in achieving national goals,” said Attorney General Holder. “As in previous years, this budget incorporates department-wide savings and efficiencies while identifying new ways to cut costs without affecting our core missions.”
The $27.1 billion budget request includes program increases for critical administration priorities, including $55 million to investigate and prosecute financial and mortgage crimes; $31.8 million to increase funding for traditional missions, including $5 million in new money to prevent human trafficking, hate crimes and police misconduct; and $141.2 million for prisons and detention to ensure prisoners and detainees are confined in secure facilities. The budget addresses the federal prison population by allowing eligible inmates to earn sentence reductions for good behavior and participation in certain reentry programs, freeing up federal prison space and reducing long-term costs. In addition, the budget provides $4 billion to sustain the department’s critical national security mission and nearly $2 billion in funding to maintain security along the Southwest Border. Finally, the budget continues to foster valued partnerships through state, local and tribal assistance to enhance public safety, protect women and children, and reduce recidivism.
The Department of Justice’s key priorities include:
· $4 billion to sustain national security;
· $55 million increase for investigating and prosecuting financial and mortgage fraud;
· $31.8 million increase to uphold traditional law enforcement, immigration and litigation-related missions;
· $8.6 billion for federal prisons and detention;
· $2 billion to maintain assistance to state, local and tribal law enforcement;
· Over $1 billion in administrative efficiencies, programmatic savings redirections in grant programs and rescissions from balances.
National Security
Defending national security from both internal and external threats remains the Department of Justice’s highest priority. The FY 2013 Budget request provides a total of $4 billion to maintain critical counterterrorism and counterintelligence programs and sustain recent increases for intelligence gathering and surveillance capabilities.
The administration supports critical national security programs within the department, including those led by the Federal Bureau of Investigation (FBI) and the National Security Division (NSD). In FY 2011, the FBI dedicated approximately 4,200 agents to investigate more than 33,000 national security cases. NSD has continued to carry out its primary functions to prevent acts of terrorism and espionage in the United States and to facilitate the collection of information regarding the activities of foreign agents and powers.
Investigating cybercrime and protecting our nation’s critical network infrastructure is a top priority of the department. The President’s FY 2013 Budget request maintains recent increases for the FBI’s cyber terrorism investigations, the National Cyber Investigative Joint Task Force (NCIJTF) and the forensic examination of digital evidence. In addition, other department components have made critical investments to protect U.S. citizens and secure our homeland, and these components will continue their efforts in FY 2013.
For more information, view the National Security Fact Sheet at http://www.justice.gov/jmd/2013factsheets/.
Financial and Mortgage Fraud
The administration and the Department of Justice remain committed to investigating and prosecuting financial fraud that harms the American people and the financial markets. To strengthen our efforts at combating this fraud, we propose a program increase of $55 million for financial and mortgage fraud initiatives to complement ongoing efforts to root out various forms of fraud, including health care fraud, that are supported by existing direct resources and reimbursable funding.
The department plays a crucial role in the federal financial recovery effort through criminal and civil litigation. The FY 2013 Budget requests resources that will strengthen the department’s ability to pursue large-scale financial fraud investigations so Americans’ investments are protected. The department will increase its efforts to help restore confidence in our markets, protect the federal Treasury and defend the interests of the U.S. government.
The department requests program increases for a variety of economic fraud enforcement efforts, including work being done by Department of Justice members of the President’s Financial Fraud Enforcement Task Force. This increase will support additional FBI agents, criminal prosecutors, civil litigators, investigators, forensic accountants and other support positions. The additional resources will support the department’s investigation and prosecution of the broad range of crimes that fall under the definition of financial fraud, including securities and commodities fraud, investment scams and mortgage foreclosure schemes.
For health care fraud enforcement, the department uses funding provided by the Department of Health and Human Services (HHS). The FY 2013 Budget for HHS requests an additional $71.7 million for the department to address health care fraud. This increase will strengthen and expand Department of Justice and HHS’ Medicare Fraud Strike Forces, support the expansion of the department’s civil litigation efforts, specifically in areas such as pharmaceutical fraud and off-label marketing, and provide additional resources in our efforts to eliminate abuse and substandard care in public health care facilities, Medicare and Medicaid funded nursing homes and other long-term care facilities.
For more information, view the Financial and Mortgage Fraud Fact Sheet and the Health Care Fraud Fact Sheet at http://www.justice.gov/jmd/2013factsheets/
Traditional Missions
The budget requests program increases for transnational enforcement of intellectual property law. In addition, it requests increases to address new emerging cyber security threats, including insider threats; provide advanced intrusion detection and response capabilities; and implement cost efficient, scalable enterprise information technology architecture. Budget increases also support operational and administrative expenses in pursuit of the department’s transnational organized crime enforcement activities, and provide additional funding for the Office of Tribal Justice, the Office of the Inspector General and the Office of the Pardon Attorney.
The department also maintains substantial responsibilities with respect to immigration, including, but not limited to, enforcement, detention, judicial functions, administrative hearings and litigation. The FY 2013 Budget requests funds for the Executive Office for Immigration Review (EOIR) to expand the Legal Orientation Program, which educates detained aliens on EOIR immigration proceedings. This allows detained aliens to make more informed decisions early in the adjudication process, reducing overall program costs for both EOIR courts and Department of Homeland Security detention programs.
Finally, the department requests additional resources to provide for the vigorous enforcement of the nation’s civil rights laws. The FY 2013 Budget requests resources for the Civil Rights Division to address areas such as human trafficking, hate crimes, voting rights enforcement and fair lending enforcement. Funds are also requested for the Community Relations Service.
For more information, view the Traditional Missions Fact Sheet at http://www.justice.gov/jmd/2013factsheets/
Prisons and Detention
The department has made strategic investments in law enforcement initiatives that have improved the nation’s security and made communities safer. The result of these important enforcement efforts has been an expansion in the need for prison and detention capacity. The department continues to prioritize the maintenance of secure, controlled detention and prison facilities, as well as investment in programs that can reduce recidivism. The FY 2013 Budget requests a total of $8.6 billion for prisons and detention. The request invests in prisons and detention capacity, providing $223.9 million in prison and detention adjustments and $141.2 million for program increases to maintain current services, improve prisoner reentry and ensure prisoners are confined in secure facilities.
For the Federal Bureau of Prisons (BOP), the budget includes resources to fully activate two prisons: Federal Corrections Institution (FCI) Aliceville, Ala., and FCI Berlin, N.H. These prisons received partial activation funding in FY 2012, which will increase federal prison capacity and alleviate overcrowding and related security issues. BOP also plans to expand the residential drug abuse treatment program (RDAP), in support of Second Chance Act objectives. The requested funding will help BOP reach the goal of providing 12-month sentence credits for completion of the RDAP program to all eligible inmates, resulting in fewer taxpayer resources directed at housing inmates.
Program increases are essential to help BOP keep pace with a growing inmate population and to ensure the secure detention of an increased number of inmates. Increases for BOP include funds to begin activation of two prisons, U.S. Penitentiary Yazoo City, Miss. and FCI Hazleton, W.Va.
For more information, view the Prisons and Detention Fact Sheet at http://www.justice.gov/jmd/2013factsheets/
State, Local and Tribal Law Enforcement
In total, the FY 2013 budget requests $2 billion for state, local and tribal law enforcement assistance. These funds will allow the department to continue to support our state, local and tribal partners who fight violent crime, combat violence against women and support victim programs. The department continues to maintain key partnerships with state, local and tribal community members through programs such as the Community Oriented Policing Services (COPS) grant program.
The FY 2013 Budget request for the Office on Violence Against Women (OVW), a total of $412.5 million ($268 million in direct funding) with the balance funded through receipts from the Crime Victims Fund (CVF), will provide communities with the opportunity to combat sexual assault and violence against women. The request includes an increase of $3.5 million to the Rural Domestic Violence and Child Abuse Enforcement Assistance Program, which will improve the safety of children, youth and adults who are victims of domestic violence, dating violence, sexual assault and stalking by supporting projects uniquely designed to address and prevent these crimes in rural jurisdictions. The department is requesting $1.4 billion for the Office of Justice Programs’ (OJP) grant programs ($1.18 billion in direct funding, with the balance derived through receipts from the CVF). A total of $20 million is requested for the Byrne Criminal Justice Innovation Program, $21 million for Residential Substance Abuse Treatment, $80 million for Second Chance, $70 million for Part B Juvenile Justice Formula Grants and $20 million for a new evidence-based juvenile justice competitive demonstration grant program.
The budget proposes to preserve important OVW and OJP grant programs that directly or indirectly assist victims of crime by funding them through CVF receipts, which continue to surpass historical levels, rather than with discretionary budget authority, which has been declining. Use of these funds will not interfere with formula funding for crime victims, which is fully protected under the proposal.
For more information, view the State, Local and Tribal Law Enforcement Fact Sheet at http://www.justice.gov/jmd/2013factsheets/
Savings and Efficiencies
The FY 2013 Budget streamlines programs and redirects funding to improve the capabilities of the department. As such, the budget proposes over $1 billion in efficiencies, offsets, redirections of grant program funding and rescissions. Excluding the redirection of grant program funding, the budget includes $647 million in savings, program and management offsets and one-time rescissions of prior year balances to support our highest priority missions.
Savings and efficiencies include information technology savings, space reductions, administrative efficiencies, overhead reductions and operational efficiencies. The department also proposes to consolidate and realign components to increase efficiencies, including refocusing and realigning the National Drug Intelligence Center functions into the Drug Enforcement Administration. In addition, the budget proposes to merge the detention functions currently performed by the Office of the Federal Detention Trustee into the U.S. Marshals Service to better align detention resources with operations, simplify the financial process supporting detention housing and reduce administrative costs. In addition to department-wide initiatives, component-unique program savings have been identified, including expanding BOP’s compassionate release to inmates with medical conditions that have served at least two-thirds of their sentence (excluding those sentences for violent or sex offenses) and implementing proposed legislation to make changes in the federal inmate good conduct time credit incentives.
The department has actively pursued savings and efficiencies in other areas consistent with the President’s Campaign to Cut Waste and will continue to do so in FY 2013. We have made significant efforts to limit and reduce spending in the areas of publication, travel, supplies, fleet, advisory contracts, promotional items and information technology devices to meet or exceed a reduction target of $146 million from FY 2010 levels.
For more information, view the Savings and Efficiencies Fact Sheet at http://www.justice.gov/jmd/2013factsheets/
Co-Owner of Two Los Angeles-Area Health Care Companies Sentenced to 96 Months in Prison for Health Care FraudRead the Press Release
WASHINGTON – The co-owner of two Los Angeles-area health care companies was sentenced today to 96 months in prison for his conviction stemming from a nine-year scheme to defraud Medicare, announced the Departments of Justice and Health and Human Services (HHS).
U.S. District Judge Stephen V. Wilson also ordered Evans Oniha, 49, to pay $7 million in restitution and to serve three years of supervised release following his prison term. A federal jury in the Central District of California found Oniha guilty on July 7, 2011, of one count of conspiracy to commit health care fraud, four counts of health care fraud and one count of false statements relating to health care matters.
According to court documents, in 2002, Oniha and co-defendant Camillus Ehigie founded and began operating Prosperity Home Health Services Inc., a home health agency, and Caravan Medical Supplies Inc., a durable medical equipment (DME) company. According to testimony presented at trial, from October 2002 to February 2011, Oniha conspired with Ehigie and others to defraud Medicare by paying “marketers” for Medicare beneficiary information, fraudulent prescriptions and other documents for DME and home health services. Testimony at trial showed that the marketers were individuals who acquired patient Medicare numbers and doctors’ prescriptions and sold them to Oniha. Oniha used these fraudulent documents to submit and cause the submission of false claims to Medicare for DME and home health services that were not medically necessary and that often were not provided to Medicare beneficiaries. According to court documents, Oniha caused Prosperity to submit approximately $8 million in fraudulent claims to Medicare for home health services purportedly provided by Prosperity. Oniha caused Caravan to submit approximately $5.8 million in fraudulent claims to Medicare for DME purportedly provided by Caravan.
On July 5, 2011, Ehigie pleaded guilty to 11 counts of health care fraud, one count of conspiracy to commit health care fraud, one count of making false statements in a federal health care investigation and one count of obstructing a criminal health care investigation. Ehigie is scheduled to be sentenced on July 9, 2012.
The case is being prosecuted by Trial Attorney William G. Kanellis and Deputy Chief Charles La Bella of the Criminal Division’s Fraud Section. The case was investigated by the FBI and HHS Office of Inspector General (HHS-OIG) and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Central District of California.
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 $3.2 billion. In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov .
Friday 10 February 2012
U.S. Files Criminal Charges Against Dallas Company in Connection with Misbranded Drug Shipment That Led to Three DeathsRead the Press Release
The Justice Department, at the request of the Food and Drug Administration’s Office of Criminal Investigations (FDA-OCI), has charged Gary D. Osborn and his corporation, ApothéCure Inc., with two misdemeanor criminal violations of the Federal Food, Drug and Cosmetic Act (FDCA) in connection with their interstate shipment of two lots of misbranded colchicine injectable solution that led to the deaths of three people in the Pacific Northwest. The United States filed the criminal information in the U.S. District Court for the Northern District of Texas. ApothéCure is a compounding pharmacy. The company, founded in 1991, is located in Dallas.
Colchicine is used to prevent gout attacks (sudden, severe pain in one or more joints caused by abnormally high levels of a substance called uric acid in the blood) in adults, and to relieve the pain of gout attacks when they occur.
The government’s charges are based on ApothéCure’s February 2007 shipment of 72 vials of compounded colchicine to a now-defunct medical center in Portland, Ore. On March 19, 2007, a patient in Yakima, Wash., received colchicine from this shipment. That patient died after receiving the infusion. The medical examiner there determined that the cause of death was multiple organ failure and acute colchicine toxicity. On March 30, 2007, colchicine from ApothéCure was administered to two other patients who were suffering from back pain. Within hours of receiving the colchicine injections, both patients became seriously ill and were taken to local hospitals. Both patients died shortly thereafter. The medical examiner in Oregon determined colchicine toxicity to be the cause of death for both patients.
FDA testing of vials selected from the lethal shipment revealed that some of the vials were super-potent, containing 640 percent of the level of colchicine declared on the label. Other vials were determined to be sub-potent, and contained less than 62 percent of the declared levels on the labels.
“The criminal charges we are filing today allege that the drugs mixed by Mr. Osborn’s company were misbranded which led to the tragic deaths of three people,” said Tony West, Assistant Attorney General of the Civil Division of the Department of Justice. “We can’t allow those who fail to take care that their products are safe to escape accountability, and today's enforcement action demonstrates we won’t.”
The criminal information filed today charges that ApothéCure committed two prohibited acts under the FDCA by shipping misbranded drugs in interstate commerce. Mr. Osborn, as the person with responsibility over the firm’s operations, is strictly liable under the FDCA for the firm’s failure to follow federal law. In addition to the federal government’s criminal charges, Attorneys General have pursued civil actions in Texas and Oregon against Mr. Osborn and ApothéCure.
Assistant Attorney General West acknowledged the close partnership with the FDA and OCI, which referred this matter to the Justice Department. The case is being prosecuted by Trial Attorneys John Claud and Patrick Runkle of the Civil Division’s Consumer Protection Branch.
A criminal misdemeanor information is merely an allegation, and every defendant is presumed innocent until proven guilty beyond a reasonable doubt.Pennsylvania-based Lender to Pay U.S. $3.9 Million to Resolve False Claims Liability Related to Two Nursing Home MortgagesRead the Press Release
Capmark Finance LLC in Horsham, Pa., has agreed to pay the United States $3.9 million, to settle a False Claims Act lawsuit, the Justice Department announced today. The lawsuit, filed in the Central District of California, alleges that Capmark made false statements in connection with two nursing home mortgage loans insured by the U.S. Department of Housing and Urban Development (HUD). Shortly after the United States filed its complaint in 2009, Capmark filed for bankruptcy protection.
The United States alleges that Capmark misrepresented material facts critical to the borrowers’ creditworthiness in the two loan applications and that Capmark’s false statements induced HUD to insure the loans, both of which defaulted, causing a loss to the government. The two nursing homes were Canoga Care Center in Canoga Park, Calif., and Hudson Valley Care Center in Ghent, N.Y.
The allegations arise from investigation and audit work conducted by the HUD Office of Inspector General. This case was handled by the Justice Department’s Civil Division with the assistance of HUD’s Office of General Counsel, Program Enforcement Branch.
“Today’s action should be a reminder to all FHA mortgage lenders. Attesting to things you know to be false is not only lying, it is against the law and there will be consequences,” said Helen Kanovsky, HUD’s General Counsel.
This law enforcement action is in part sponsored by the interagency Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. It includes representatives from a broad range of federal agencies, including 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, 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 rimes.
Louisiana Hunting Outfitter Pleads Guilty to Illegally Killing Protected AlligatorRead the Press Release
WASHINGTON - Gregory K. Dupont, 38, of Plaquemine, La., pleaded guilty today in U.S. District Court in Baton Rouge, La., to one felony count of illegally guiding out-of-state sport hunters to unauthorized areas to hunt American alligators (Alligator mississippiensis) in violation of the Lacey Act, the U.S. Endangered Species Act and Louisiana law, the Justice Department announced.
Sentencing in this case has been scheduled for June 20, 2012. Dupont was also ordered to surrender custody of his firearms to pre-trial services.
Gregory K. Dupont was a licensed alligator hunter, who, in September 2006, guided his clients to an area which was unapproved, that is an area for which he did not have the required Convention on International Trade of Endangered Species (CITES) tags. During this illegal hunt, Dupont took his clients to a property in Iberville Parish, La., where one of his clients killed an American alligator. Dupont tagged the alligator illegally with a tag for another property. He did not have tags permitting them to hunt in that area at all.
In 1967, American alligators were listed as an endangered species because the total population size in the United States reached drastically low numbers due to severe poaching and overharvesting. This protected status and of the Lacey Act, the Endangered Species Act and regulations promulgated by the U.S. Fish and Wildlife Service and the state of Louisiana led to the recovery of the American alligator population, and American alligators were down-listed to threatened status in 1987. The American alligator is currently listed on Appendix II of CITES, which is the only treaty that deals with international trade in protected species. There are 175 member countries, including the United States. The success of the American alligator conservation program in the United States is second only to that of the Bald Eagle.
Because American alligators remain federally protected, alligator hunting is regulated by federal and state rules and regulations, which require, among other things, the tagging of all harvested alligators. The integrity of the tagging system is crucial to Louisiana’s alligator management program because it enables the Louisiana Department of Wildlife and Fisheries to monitor harvest areas, alligator size and the number of alligators taken. This system depends in significant part upon the honesty and self-regulation of Louisiana’s licensed hunters for its continued success.
In Louisiana, an allotted number of alligator hide tags are issued to licensed hunters. Each tag may be used for one alligator only, and Louisiana law requires alligator hunters to hunt only on property for which hide tags are issued. The areas where alligator hunting is permitted are determined on a yearly basis by wildlife biologists, whose decisions are based on the need to maintain a healthy alligator population. If hunters poach alligators from areas for which they do not have tags, then the integrity of the entire alligator management system is undermined, thereby threatening Louisiana’s alligator population and alligator industry, which is a significant component of Louisiana’s economy.The case was prosecuted by Shennie Patel and Susan L. Park of the Environmental Crimes Section of the Environment and Natural Resources Division of the Department of Justice. The case was investigated by the Louisiana Department of Wildlife and Fisheries and by the U.S. Fish and Wildlife Service Office of Law Enforcement.
Justice Department Settles Allegations of Employment Discrimination at the Massachusetts Department of CorrectionRead the Press Release
WASHINGTON – The Department of Justice announced today that it has entered into a settlement that, if approved by the court, will resolve the department’s allegations that the Commonwealth of Massachusetts and the Massachusetts Department of Correction (collectively Massachusetts) violated Title VII of the Civil Rights Act of 1964 by discriminating against female applicants for entry-level correction officer (CO) and correction program officer (CPO) positions at the Massachusetts Department of Correction (MDOC).
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., physical 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 sex do not identify the best qualified candidates and violate the law. The United States’s complaint, filed in the U.S. District Court for the District of Massachusetts in Boston, alleges that Massachusetts’s use of a physical abilities test to pre-screen and select applicants for CO and CPO positions with the MDOC disproportionately excluded female applicants since 2007 and was not job related and consistent with business necessity.
The Justice Department, along with Massachusetts, filed a joint motion today requesting that the court provisionally approve the settlement agreement executed by the parties and schedule an initial fairness hearing regarding the terms of the settlement agreement.
The settlement agreement requires that Massachusetts no longer use the physical abilities test challenged by the United States for pre-screening and selecting CO and CPO positions with the MDOC and requires that Massachusetts develop a new lawful selection procedure that complies with Title VII. The settlement agreement, if approved by the court, also requires that Massachusetts pay $736,000 towards back pay to female CO and CPO applicants who were harmed by the hiring practice challenged by the United States and who are determined to be eligible for relief. Additionally, female CO and CPO applicants determined to be eligible for relief under the settlement agreement may receive a priority offer of hire to a CO and CPO position with the MDOC. All CO and CPO applicants must pass a physical test and other lawful selection procedures to be considered for priority hire relief. Female CO and CPO applicants eligible for priority hire relief and those currently employed with the MDOC who are entitled to delay hire relief are also eligible for retroactive seniority relief.
“The Department of Justice will not tolerate discrimination in employment on the basis of sex, 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 department commends Massachusetts for working to put in place a new physical test that complies with Title VII and enables Massachusetts to choose qualified applicants for CO and CPO positions, and to provide relief to those female applicants who have been harmed by the prior employment practices challenged by the department.”
More information about Title VII and other federal employment laws is available on the Department of Justice website at www.usdoj.gov/crt/emp/index.html .
Justice Department Requires Mill Divestitures in International Paper’s Acquisition of Temple-InlandRead the Press Release
WASHINGTON — The Department of Justice announced today that it will require International Paper Company and Temple-Inland Inc. to divest three containerboard mills in order to proceed with their $4.3 billion merger. The department said that the merger, as originally proposed, would have substantially lessened competition in the production and sale of containerboard, the type of paper used to make corrugated boxes, in the United States.
The department’s Antitrust Division filed a civil antitrust lawsuit today in U.S. District Court in Washington, D.C., to block the proposed transaction. At the same time, the department filed a proposed settlement that, if approved by the court, will resolve the lawsuit by requiring International Paper and Temple-Inland to divest three containerboard mills to resolve the competitive concerns alleged in the lawsuit.
“Corrugated boxes made from containerboard are used to ship more than 90 percent of all goods nationwide,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “With the mill divestitures, the transaction can proceed and American consumers and businesses across the country can be assured that competition is preserved in this important industry that is vital to the U.S. economy.”
According to the complaint, International Paper and Temple-Inland are, respectively, the largest and third-largest producers of containerboard in North America. The merger, as originally proposed, would have produced a single firm in control of approximately 37 percent of North American containerboard capacity.
The department said that by combining the containerboard capacity of International Paper and Temple-Inland, the proposed merger would significantly expand the volume of containerboard over which International Paper would benefit from a price increase, and likely would have led International Paper to strategically reduce its output of containerboard in order to increase the market price.
The proposed settlement requires the divestiture of Temple-Inland’s containerboard mills in Waverly, Tenn., and Ontario, Calif., and either International Paper’s containerboard mill in Oxnard, Calif., or International Paper’s containerboard mill in Henderson, Ky., but not both of those mills. Collectively, the divestitures account for approximately 950,000 tons of containerboard capacity. The department’s Antitrust Division must approve the purchaser or purchasers of the divested mills.
International Paper is a New York corporation headquartered in Memphis, Tenn. International Paper owns and operates 12 containerboard mills and 133 box plants that convert containerboard into corrugated boxes in the United States. In 2010, International Paper reported revenues of approximately $25.2 billion, with its North American Industrial Packaging Group, which produces containerboard and corrugated products, accounting for $8.4 billion.
Temple-Inland is a Delaware corporation headquartered in Austin, Texas. Temple-Inland owns and operates seven containerboard mills and 53 box plants in the United States. In 2010, Temple-Inland reported revenues of approximately $3.8 billion, with its corrugated-packing business accounting for approximately $3.2 billion.
The proposed settlement, along with the department’s competitive impact statement, will be published in the Federal Register, as required by the Antitrust Procedures and Penalties Act. Any person may submit written comments concerning the proposed settlement within 60 days of its publication to Joshua H. Soven, Chief, Litigation I Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street, N.W., Suite 4100, Washington, D.C. 20530. At the conclusion of the 60-day comment period, the court may enter the settlement upon a finding that it is in the public interest.
Former IRS Employee from Texas Sentenced to Nearly Nine Years in Prison on Theft of Government Property and Aggravated Identity Theft ConvictionsRead the Press Release
Thomas W. Richardson was sentenced Thursday by U.S. District Judge Jane J. Boyle in Dallas to 105 months in prison and ordered to pay $30,649 in restitution, following his guilty plea in August 2011 to one count of theft of government property and one count of aggravated identity theft, the Justice Department announced today. Judge Boyle ordered that Richardson surrender to the Bureau of Prisons on March 6, 2012. According to an order filed that set conditions for his release, Richardson is a resident of Mansfield, Tex.
In handing down the sentence, Judge Boyle commented that Richardson was a former IRS employee who used his inside knowledge of IRS operations to commit his crime.
According to the factual resume filed in the case, Richardson admitted that within a two-day period, April 15, 2006 to April 17, 2006, he filed or caused to be filed 29 fraudulent 2005 individual income tax returns. Each federal income tax return claimed a refund of between $215,801 and $473,832. Richardson admitted that the refunds claimed by all 29 tax returns totaled $7,922,657.
He further admitted that each tax return was filed claiming the married filing jointly election and listed two taxpayers, husband and wife. In each case, the Social Security number reported on the tax returns was assigned to individuals and in most cases, the names on the tax returns matched the names of the individuals to whom the Social Security numbers were assigned. Richardson admitted that the tax returns were prepared without the authorization of the 58 taxpayers listed on the tax returns. All of the returns directed that the Internal Revenue Service (IRS) pay the money to one of Richardson’s bank accounts. According to the factual resume filed in the case, the IRS paid out seven refunds totaling $1,865,401 between May 12, 2006 and May 19, 2006. All but $30,649 was recouped by the IRS.
The case was investigated by the IRS-Criminal Investigation. Trial Attorneys Robert A. Kemins and Jed Silversmith of the Justice Department’s Tax Division, as well as Assistant U.S. Attorney Joe Revesz, prosecuted the case.
More information about the Tax Division and its enforcement efforts can be found at http://www.justice.gov/tax/
Florida Resident Convicted for Interfering with the IRS and Filing False Tax ReturnsRead the Press Release
Roanne Eye , 57, of Plantation, Fla., was found guilty of tax charges late Thursday after a four-day jury trial, the Justice Department and Internal Revenue Service (IRS) announced. Eye was convicted interference with the administration of Internal Revenue laws and of filing false individual income tax returns.
According to evidence presented at trial, Eye attempted to obstruct and interfere with the administration of the laws and regulations of the IRS by telling her employer not to comply with IRS notices and by submitting IRS forms falsely claiming she was exempt from income tax withholding. Eye failed to file timely income tax returns for tax years 1996 and 1999 -2005, even after she received notices that her taxes were due. In March 2006, Eye filed tax returns for 1996 and 1999 - 2005, all claiming refunds to which she was not entitled. She subsequently filed a fraudulent return for tax year 2006. In total, Eye falsely claimed more than $1 million in fraudulent refunds.
In addition to filing the fraudulent income tax returns, Eye flooded IRS offices throughout the United States and Puerto Rico with frivolous letters challenging the authority of the IRS to collect taxes from her.
Sentencing has been scheduled for April 26, 2012, before U.S. District Judge James I. Cohn. At sentencing, Eye faces a statutory maximum prison sentence of up to three years in prison on the interference charge and up to five years in prison on the false claims charge.
Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida, John A. DiCicco, Principal Deputy Assistant Attorney General for the Justice Department’s Tax Division, and Jose A. Gonzalez, Special Agent in Charge, Internal Revenue Service, Criminal Investigation Division (IRS-CID), announced the conviction.
Mr. Ferrer commended the investigative efforts of the agents of the IRS for their hard work in this matter. The case is being prosecuted by Assistant U.S. Attorney Jennifer Keene and Matthew Mueller of the Tax Division.
Attorney General Eric Holder Launches Consumer Protection Working Group to Combat Consumer FraudRead the Press Release
The Consumer Protection Working Group, formed under President Barack Obama’s Financial Fraud Enforcement Task Force (FFETF), convened its first meeting in Washington, D.C., today to address consumer fraud, which can financially cripple households and can cause extensive losses to our economy. The newly-created group will work across federal law enforcement and regulatory agencies, and with state and local partners, to strengthen efforts to address consumer-related fraud, including schemes targeting vulnerable populations, such as the unemployed, those in need of payday loans, and those suffering from the burden of high credit card and other debt. The new working group will also focus on scams that exploit prospective students, active-duty military personnel and veterans.
“The schemes we are combating are as diverse as the imaginations of those who perpetrate them, and as sophisticated as modern technology will permit. Thanks in large part to the leadership of the President’s Financial Fraud Enforcement Task Force we are tackling financial fraud, in all its forms, head on,” said Attorney General Eric Holder. “Through the extensive and coordinated partnership we start today, we will strengthen our collective efforts, enhance civil and criminal enforcement of consumer fraud and educate the public in an effort to prevent consumers from being victimized in the first place.”
Attorney General Holder delivered remarks at today’s meeting which was convened by FFETF Executive Director Michael Bresnick along with the working group’s co-chairs: Assistant Attorney General for the Department of Justice’s Civil Division Tony West, Assistant Attorney General for the Department of Justice’s Criminal Division Lanny Breuer, U.S. Attorney for the Central District of California André Birotte and Director of the Bureau of Consumer Protection for the Federal Trade Commission (FTC) David Vladeck. Another co-chair, Director of Enforcement for the Consumer Financial Protection Bureau Kent Markus, was unable to attend the meeting.
“We know all too well how opportunistic fraudsters have adapted their schemes to take advantage of consumers facing financial hardships, using false promises of mortgage modification, debt relief, and job placement, to name a few. Since 2009, the FTC has brought over 90 cases to stop these scams,” said Director of the Bureau of Consumer Protection for the FTC David Vladeck. “This partnership will only serve to enhance our collective efforts to protect consumers.”
The Consumer Protection Working Group will address several areas of concern, including payday lending and other high-pressure telemarketing or Internet scams, business opportunity schemes, for-profit schools that engage in fraud or misrepresentation and fraudulent third party payment processors that facilitate payments on behalf of other fraudsters without the permission of the customer.
At today’s meeting, the Consumer Protection Working Group members set priorities and discussed taking collaborative steps to continue to seek out and prosecute consumer fraud as well as protect consumers from fraud before it happens through outreach and education. The new working group plans to establish a best-practices tool kit, legislative, regulatory and policy initiatives and an information sharing structure.
Other members of the Consumer Protection Working Group include representatives from the Department of Treasury, FBI, Internal Revenue Service-Criminal Investigation, Federal Deposit Insurance Corporation, U.S. Secret Service, Financial Crimes Enforcement Network, Executive Office for U.S. Attorneys, Department of Education’s Office of the Inspector General, U.S. Trustee Program, the National Association of Attorneys General, U.S. Postal Inspection Service, the Office of the Comptroller of the Currency, the Federal Reserve Board and the National Credit Union Administration. The state attorneys general are represented on the working group by Attorney General Lisa Madigan from Illinois, Attorney General Greg Zoeller from Indiana and Attorney General Roy Cooper from North Carolina.
The Consumer Protection Working Group is part of ongoing enforcement efforts by President 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.
Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Task force members have charged a record number of mortgage fraud cases in the past two years, trained more than 100,000 professionals responsible for awarding and overseeing Recovery Act funds and held regional summits around the country to discuss strategies, resources and initiatives, as well as to meet with communities most affected by the financial crisis.
Learn more about the Financial Fraud Enforcement Task Force at www.stopfraud.gov .
Thursday 9 February 2012
Three Northern California Real Estate Investors Agree to Plead Guilty to Bid Rigging at Public Foreclosure AuctionsRead the Press Release
Three Northern California real estate investors have agreed to plead guilty today for their roles in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in Northern California, the Department of Justice announced. To date, as a result of the ongoing investigation, 20 individuals have agreed to plead guilty.
Charges were filed today in U.S. District Court for the Northern District of California in Oakland, Calif., against Barry Heisner of Brentwood, Calif.; Dominic Leung of Alameda, Calif.; and Hilton Wong of San Ramon, Calif.
According to court documents, for various lengths of time between August 2008 and January 2011, Heisner, Leung and Wong conspired with others not to bid against one another at public real estate foreclosure auctions. Instead, the investors designated a winning bidder to obtain selected properties at public real estate foreclosure auctions in Contra Costa County.
“The Antitrust Division will continue to pursue vigorously the perpetrators of these fraudulent schemes. Those who eliminated competition from the marketplace and lined their pockets while preying on the misfortune of others will be held accountable for their actions,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “The division also will aggressively seek to forfeit the proceeds earned by those who took a leading role in facilitating these conspiracies.”
“The integrity of the real estate market depends on the transparency and fairness of all participants,” said FBI Special Agent in Charge Stephanie Douglas. “When individuals take advantage of the public’s trust to enrich themselves they damage the very foundation of our economy. The FBI is committed to working with our local and federal partners to continue to bring those who engage in anticompetitive activities to justice.”
Heisner, Leung and Wong also were charged with conspiracies to use the mail to carry out a scheme to fraudulently acquire title to selected properties sold at public auctions, to make and receive payoffs, and to divert money to co-conspirators that would have gone to mortgage holders and others by holding second, private auctions open only to members of the conspiracy. The department said that the selected properties were then awarded to the conspirators who submitted the highest bids in the second, private auctions. The private auctions took place at or near the courthouse steps where the public auctions were held. According to court documents, a forfeiture allegation was also included in the charges against Heisner.
The department said that the primary purpose of the conspiracies was to suppress and restrain competition and to conceal payoffs in order to obtain selected real estate offered at Contra Costa County public foreclosure auctions at noncompetitive prices. When real estate properties are sold at these auctions, the proceeds are used to pay off the mortgage and other debt attached to the property, with remaining proceeds, if any, paid to the homeowner.
Each violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. Each count of conspiracy to commit mail fraud carries a maximum sentence of 30 years in prison and a $1 million fine. The government can also seek to forfeit the proceeds earned from participating in the conspiracy to commit mail fraud. The maximum fine for the Sherman Act charges may be increased to twice the gain derived from the crime or twice the loss suffered by the victim if either amount is greater than the $1 million statutory maximum.
Today’s charges are the latest cases filed by the department in its ongoing investigation into bid rigging and fraud at public real estate foreclosure auctions in San Francisco, San Mateo, Contra Costa and Alameda Counties, Calif.
The investigation into fraud and bid rigging at certain real estate foreclosure auctions in Northern California is being conducted by the Antitrust Division’s San Francisco Field Office and the FBI’s San Francisco office. Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Antitrust Division’s San Francisco Field Office at 415-436-6660, visit www.justice.gov/atr/contact/newcase.htm or call the FBI tip line at 415-553-7400.
Today’s charges are part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit www.StopFraud.gov.
**The fraud charge(s) referenced in this press release were subsequently dismissed on the government’s motion.**
Justice Department Dismisses Antitrust Lawsuit Against Deutsche Börse and NYSE EuronextRead the Press Release
WASHINGTON – The Department of Justice today announced that it filed a notice with the U.S. District Court for the District of Columbia to dismiss its antitrust lawsuit regarding the potential merger of Deutsche Börse AG and NYSE Euronext. The department said that the lawsuit and proposed settlement are no longer necessary since the parties have formally abandoned their plans to merge.
Background
On Dec. 22, 2011, the department filed an antitrust lawsuit in U.S. District Court for the District of Columbia, alleging that the transaction as originally proposed would have substantially lessened competition for displayed equities trading services, listing services for exchange-traded products, including exchange-traded funds, and real-time proprietary equity data products in the United States. At the same time, the department filed a proposed settlement of the lawsuit that would preserve competition in the United States by requiring Deutsche Börse to direct its subsidiary, International Securities Exchange Holdings Inc., to sell its 31.5 percent stake in Direct Edge Holdings LLC, the fourth largest stock exchange operator in the United States, and agree to other restrictions.
The European Commission recently prohibited the transaction due to the proposed deal’s effect on European consumers. The department’s Antitrust Division and the European Commission communicated extensively throughout the course of their respective investigations, with frequent contact between the leadership and investigative staffs, aided by waivers provided by the merging parties.
Former Owner of Illinois Technology Company Sentenced to Serve 30 Months in Prison for Role in Multi-State Scheme to Defraud Federal E-Rate ProgramRead the Press Release
WASHINGTON — A former owner of two Illinois-based technology companies was sentenced today to serve 30 months in prison for her participation in a conspiracy to defraud the federal E-Rate program, the Department of Justice announced. Gloria Harper was sentenced by U.S. District Court Judge Carl J. Barbier.
Harper was charged in U.S. District Court in New Orleans on Nov. 18, 2010, with conspiring to defraud the E-Rate program by providing bribes and kickbacks to school officials in Arkansas, Florida, Illinois and Louisiana. Harper pleaded guilty on June 2, 2011.
Including today’s sentencing, as a result of the Antitrust Division’s ongoing investigation into fraud and anticompetitive conduct in the E-Rate program, a total of seven companies and 24 individuals have pleaded guilty, been convicted at trial or entered civil settlements. Those companies and individuals have been sentenced to pay criminal fines and restitution totaling more than $40 million. Nineteen individuals, including Harper, have been sentenced to serve prison time. In June 2011, Barrett C. White and Tyrone Pipkin, Harper’s co-conspirators, were each sentenced to serve one year and one day in prison for their roles in the conspiracy.
According to court documents, Harper, former co-owner of Global Networking Technologies and former owner of Computer Training Associates, acting on behalf of these companies as well as on her own behalf, participated in the conspiracy beginning on or about December 2001 through September 2005. Harper conspired to provide bribes and kickbacks to school officials and employees responsible for the procurement of Internet access services at certain schools in Arkansas, Florida, Illinois and Louisiana. The department said that in return, those individuals ceded control of the E-Rate competitive bidding process to Harper and a co-conspirator, ultimately allowing them to ensure E-Rate contracts at these schools were awarded to their companies.
The schools and school districts affected by the conspiracy include: in Arkansas – Gould and Holly Grove public school districts; in Florida – Innovation Child Development Center and Innovation School of Excellence; in Illinois – Antioch Center, Fairfield Center, Ingleside Center, St. Mary’s Center, Waukegan Center, Zion Center and Niles Terrace Center; and in Louisiana – All Saints School, St. Augustine High School, St. David School and St. Monica School.
The E-Rate program was created by Congress in the Telecommunications Act of 1996, and is administered by the Universal Service Administrative Company, under the oversight of the Federal Communications Commission (FCC). The program provides subsidies to economically disadvantaged schools and libraries. Depending on the financial needs of the applicant schools, the program pays 20 to 90 percent of the cost for Internet access and telecommunications services, as well as internal computer and communications networks.
Today’s sentencing resulted from an investigation by the Department of Justice Antitrust Division’s Dallas Field Office, the FBI’s Dallas Field Office and the FCC’s Office of Inspector General, with assistance from the U.S. Attorney’s Office for the Eastern District of Louisiana. Anyone with information concerning violations of the E-Rate program is urged to call the Antitrust Division’s Dallas Field Office at 214-661-8600 or visit www.justice.gov/atr/contact/newcase.htm.
Food Storage and Processing Facility in Washington State Agrees to Resolve Seizure ActionRead the Press Release
The U.S. District Court for the Eastern District of Washington has entered a consent decree against Dominguez Foods of Washington Inc. to resolve a food seizure action alleging violations of the Food, Drug and Cosmetic Act (FDCA), the Justice Department announced today.
During an inspection in August and September 2011, investigators from the Food and Drug Administration (FDA) observed evidence of rodent and insect infestation in a facility in Zillah, Wash., where Dominguez Foods stores and processes foods. At the conclusion of the inspection, FDA investigators issued a detention order covering all food in the facility that was not in hermetically sealed containers. At the request of FDA, the United States sought a warrant of arrest for the detained products, alleging that the food was adulterated under the FDCA due to the conditions in the warehouse documented during FDA’s inspection. The court issued the warrant and, on Sept. 30, 2011, the U.S. Marshals seized various articles of food at the Dominguez facility, including spices, tea, chile pods and dried beans. After negotiations with the government, Dominguez Foods agreed to resolve the matter through a consent decree.
Under the consent decree, Dominguez Foods must certify that it has taken the necessary corrective actions to render its facility fit for the storage and handling of food and must also implement an ongoing sanitation control program. The consent decree also bans the firm from causing the adulteration of food by maintaining them in insanitary conditions.
“Public health and safety demand that food be processed and stored under sanitary conditions,” said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. “The Court’s consent decree requires Dominguez Foods to put in place programs and procedures to ensure that the food handled in its facility is safe.”
The matter was handled by Department of Justice Trial Attorney Shannon Pedersen of the Civil Division’s Consumer Protection Branch and Assistant Chief Counsel Scott Kaplan of the FDA’s Office of the Chief Counsel.
Federal Government and State Attorneys General Reach $25 Billion Agreement with Five Largest Mortgage Servicers to Address Mortgage Loan Servicing and Foreclosure AbusesRead the Press Release
WASHINGTON – U.S. Attorney General Eric Holder, Department of Housing and Urban Development (HUD) Secretary Shaun Donovan, Iowa Attorney General Tom Miller and Colorado Attorney General John W. Suthers announced today that the federal government and 49 state attorneys general have reached a landmark $25 billion agreement with the nation’s five largest mortgage servicers to address mortgage loan servicing and foreclosure abuses. The agreement provides substantial financial relief to homeowners and establishes significant new homeowner protections for the future.
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 joint federal-state group entered into the agreement with the nation’s five largest mortgage servicers: Bank of America Corporation, JPMorgan Chase & Co., Wells Fargo & Company, Citigroup Inc. and Ally Financial Inc. (formerly GMAC).
“This agreement – the largest joint federal-state settlement ever obtained – is the result of unprecedented coordination among enforcement agencies throughout the government,” said Attorney General Holder. “It holds mortgage servicers accountable for abusive practices and requires them to commit more than $20 billion towards financial relief for consumers. As a result, struggling homeowners throughout the country will benefit from reduced principals and refinancing of their loans. The agreement also requires substantial changes in how servicers do business, which will help to ensure the abuses of the past are not repeated.”
“This historic settlement will provide immediate relief to homeowners – forcing banks to reduce the principal balance on many loans, refinance loans for underwater borrowers, and pay billions of dollars to states and consumers,” said HUD Secretary Donovan. “ Banks must follow the laws. Any bank that hasn’t done so should be held accountable and should take prompt action to correct its mistakes. And it will not end with this settlement. One of the most important ways this settlement helps homeowners is that it forces the banks to clean up their acts and fix the problems uncovered during our investigations. And it does that by committing them to major reforms in how they service mortgage loans. These new customer service standards are in keeping with the Homeowners Bill of Rights recently announced by President Obama – a single, straightforward set of commonsense rules that families can count on.”
“This monitored agreement holds the banks accountable, it provides badly needed relief to homeowners, and it transforms the mortgage servicing industry so now homeowners will be protected and treated fairly,” said Iowa Attorney General Miller.
“This settlement has broad bipartisan support from the states because the attorneys general realize that the partnership with the federal agencies made it possible to achieve favorable terms and conditions that would have been difficult for the states or the federal government to achieve on their own,” said Colorado Attorney General Suthers.
The joint federal-state agreement requires servicers to implement comprehensive new mortgage loan servicing standards and to commit $25 billion to resolve violations of state and federal law. These violations include servicers’ use of “robo-signed” affidavits in foreclosure proceedings; deceptive practices in the offering of loan modifications; failures to offer non-foreclosure alternatives before foreclosing on borrowers with federally insured mortgages; and filing improper documentation in federal bankruptcy court.
Under the terms of the agreement, the servicers are required to collectively dedicate $20 billion toward various forms of financial relief to borrowers. At least $10 billion will go toward reducing the principal on loans for borrowers who, as of the date of the settlement, are either delinquent or at imminent risk of default and owe more on their mortgages than their homes are worth. At least $3 billion will go toward refinancing loans for borrowers who are current on their mortgages but who owe more on their mortgage than their homes are worth. Borrowers who meet basic criteria will be eligible for the refinancing, which will reduce interest rates for borrowers who are currently paying much higher rates or whose adjustable rate mortgages are due to soon rise to much higher rates. Up to $7 billion will go towards other forms of relief, including forbearance of principal for unemployed borrowers, anti-blight programs, short sales and transitional assistance, benefits for service members who are forced to sell their home at a loss as a result of a Permanent Change in Station order, and other programs. Because servicers will receive only partial credit for every dollar spent on some of the required activities, the settlement will provide direct benefits to borrowers in excess of $20 billion.
Mortgage servicers are required to fulfill these obligations within three years. To encourage servicers to provide relief quickly, there are incentives for relief provided within the first 12 months. Servicers must reach 75 percent of their targets within the first two years. Servicers that miss settlement targets and deadlines will be required to pay substantial additional cash amounts.
In addition to the $20 billion in financial relief for borrowers, the agreement requires the servicers to pay $5 billion in cash to the federal and state governments. $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. This program is separate from the restitution program currently being administered by federal banking regulators to compensate those who suffered direct financial harm as a result of wrongful servicer conduct. Borrowers will not release any claims in exchange for a payment. The remaining $3.5 billion of the $5 billion payment will go to state and federal governments to be used to repay public funds lost as a result of servicer misconduct and to fund housing counselors, legal aid and other similar public programs determined by the state attorneys general.
The $5 billion includes a $1 billion resolution of a separate investigation into fraudulent and wrongful conduct by Bank of America and various Countrywide entities related to the origination and underwriting of Federal Housing Administration (FHA)-insured mortgage loans, and systematic inflation of appraisal values concerning these loans, from Jan. 1, 2003 through April 30, 2009. Payment of $500 million of this $1 billion will be deferred to partially fund a loan modification program for Countrywide borrowers throughout the nation who are underwater on their mortgages. This investigation was conducted by the U.S. Attorney’s Office for the Eastern District of New York, with the Civil Division’s Commercial Litigation Branch of the Department of Justice, HUD and HUD-OIG. The settlement also resolves an investigation by the Eastern District of New York, the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) and the Federal Housing Finance Agency-Office of the Inspector General (FHFA-OIG) into allegations that Bank of America defrauded the Home Affordable Modification Program.
The joint federal-state agreement requires the mortgage servicers to implement unprecedented changes in how they service mortgage loans, handle foreclosures, and ensure the accuracy of information provided in federal bankruptcy court. The agreement requires new servicing standards which will prevent foreclosure abuses of the past, such as robo-signing, improper documentation and lost paperwork, and create dozens of 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. In addition, banks 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 agreement will also provide enhanced protections for service members that go beyond those required by the Servicemembers Civil Relief Act (SCRA). In addition, the four servicers that had not previously resolved certain portions of potential SCRA liability have agreed to conduct a full review, overseen by the Justice Department’s Civil Rights Division, to determine whether any servicemembers were foreclosed on in violation of SCRA since Jan. 1, 2006. The servicers have also agreed to conduct a thorough review, overseen by the Civil Rights Division, to determine whether any servicemember, from Jan. 1, 2008, to the present, was charged interest in excess of 6% on their mortgage, after a valid request to lower the interest rate, in violation of the SCRA. Servicers will be required to make payments to any servicemember who was a victim of a wrongful foreclosure or who was wrongfully charged a higher interest rate. This compensation for servicemembers is in addition to the $25 billion settlement amount.
The agreement will be filed as a consent judgment in the U.S. District Court for the District of Columbia. Compliance with the agreement will be overseen by an independent monitor, Joseph A. Smith Jr. Smith has served as the North Carolina Commissioner of Banks since 2002. Smith is also the former Chairman of the Conference of State Banks Supervisors (CSBS). The monitor will oversee implementation of the servicing standards required by the agreement; impose penalties of up to $1 million per violation (or up to $5 million for certain repeat violations); and publish regular public reports that identify any quarter in which a servicer fell short of the standards imposed in the settlement.
The agreement resolves 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. 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 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, SIGTARP and FHFA-OIG. The Department of 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.
~ ~Department of Justice Reaches Agreement to Compensate Servicemembers for Wrongful ForeclosuresRead the Press Release
The settlement agreement with the nation’s five largest servicers announced today by Attorney General Eric Holder and the Department of Justice’s federal and state partners includes substantial financial compensation to homeowners who are servicemembers and establishes significant new protections for servicemembers in the future. The financial compensation to servicemembers is in addition to the $25 billion settlement.
JPMorgan Chase & Co., Wells Fargo & Company, Citigroup Inc. and Ally Financial Inc. (formerly GMAC) have agreed to conduct a full review, overseen by the Department of Justice’s Civil Rights Division, to determine whether any servicemembers were foreclosed on in violation of the Servicemembers Civil Relief Act (SCRA) since Jan.1, 2006. Wells Fargo, Citigroup and Ally will be required to provide any servicemember who was a victim of a wrongful foreclosure a minimum payment of $116,785 plus the servicemember’s lost equity and interest. The servicemember’s payment could be higher as a result of the review conducted by the banking regulators. To ensure consistency with an earlier private settlement, JP Morgan Chase will provide any servicemember who was a victim of a wrongful foreclosure either his or her home free and clear of any debt or the cash equivalent of the full value of the home at the time of sale. In addition, servicemebers will receive compensation for any additional harm suffered. All compensation for servicemembers wrongfully foreclosed on is in addition to the $25 billion settlement amount.
In addition, Citigroup, Wells Fargo and Ally have also agreed to conduct a thorough review, overseen by the Department of Justice’s Civil Rights Division, to determine whether any servicemember, from January 1, 2008 to the present, was charged interest in excess of 6% on his or her mortgage, after a valid request to lower the interest rate, in violation of the SCRA. Servicers will be required to provide any servicemember who was wrongfully charged interest in excess of 6% with a payment equal to a refund, with interest, of any amount charged in excess of 6% plus triple the amount refunded or $500, whichever is larger. This compensation for servicemembers is in addition to the $25 billion settlement amount. JP Morgan Chase had already compensated servicemembers charged interest in excess of 6% on their mortgage through the earlier private settlement.
“The men and women who serve our nation in the armed forces deserve, at the very least, to know that we will protect their rights while they are serving our country,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “We appreciate that Wells Fargo, JP Morgan Chase, Citigroup and Ally agreed, through this settlement, to compensate servicemembers whose rights were violated.”
All four servicers agreed to numerous other measures, including SCRA training for employees and agents and developing SCRA policies and procedures to ensure compliance with the SCRA. The servicers will also repair any negative credit report entries related to the allegedly wrongful foreclosures and will not pursue any remaining amounts owed under the mortgages.
The joint federal-state agreement also includes expanded protections for servicemembers. The SCRA prohibits foreclosures on servicemembers without court orders on mortgages that were originated before military service began. The settlement extends this protection to all servicemembers, regardless of when their mortgage was secured, if they were receiving Hostile Fire/Imminent Danger Pay and were stationed away from their home within nine months of the foreclosure. The agreement requires all five servicers to provide certain servicemembers who are forced to move because of Permanent Change in Station (PCS) orders access loan modifications without going into default or, in the event that they must sell their home at a loss, but are ineligible for funding from the Department of Defense’s Homeowners’ Assistance Program (HAP), with short sale agreements and mandatory deficiency waivers. On the servicemember relief, the Department worked closely with the Delaware Attorney General’s Office, who led the servicemember negotiations on behalf of the state attorneys general.
In May 2011, the Department of Justice reached a more than $20 million settlement with Bank of America for wrongfully foreclosing on servicemembers without court orders. That settlement only resolved allegations related to non-judicial foreclosures. The Department did not release as part of today’s announced settlement any potential claims related to judicial foreclosures or possible 6% violations by Bank of America.
The JP Morgan Chase investigation was handled jointly by the Civil Rights Division and the United States Attorney’s Office in South Carolina.
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 .
Servicemembers and their dependents who believe that their SCRA rights have been violated should contact the nearest Armed Forces Legal Assistance office. Please consult the military legal assistance office locator at http://legalassistance.law.af.mil and click on the Legal Services Locator. Additional information about the Justice Department’s enforcement of the SCRA and the other laws protecting servicemembers is available at www.servicemembers.gov.
Wednesday 8 February 2012
Us Court Bars Two in Alabama from Preparing Federal Tax ReturnsRead the Press Release
WASHINGTON – A federal court has permanently barred Paul E. Foster Jr. and Sheree McDade, both of Montgomery, Ala., from preparing federal tax returns for others, the Justice Department announced today. The civil injunction order, to which Foster and McDade agreed without admitting the government’s allegations, was signed by Chief Judge W. Keith Watkins of the U.S. District Court for the Middle District of Alabama.
The government complaint alleged that Foster and McDade, through businesses called Miami Tax, Paul’s Tax Service and Advance Taxes Inc., prepared tax returns for customers that reported phony business expenses for fictitious businesses, inflated earned income and falsely claimed dependents in order to increase refunds based on the earned income tax credit. The complaint also alleged that at least 48 returns that Foster and McDade prepared for the 2008 tax year contained false claims for the first-time homebuyer tax credit. According to the complaint, Foster and McDade’s misconduct has thus far resulted in $1 million of lost tax revenue, plus resources spent by the Internal Revenue Service (IRS) to assess and collect unpaid taxes from the customers.
The court ordered Foster and McDade to send a copy of the injunction order to all customers for whom they prepared a federal tax return for tax years 2006 and later. The court also ordered the pair to provide the government with a list of those customers.
In the past decade, the Justice Department’s Tax Division has obtained injunctions against hundreds of unscrupulous tax-return preparers and tax-fraud promoters. Information about these cases is available on the Justice Department website.
Related Documents:
United States v. Paul E. Foster Jr., et al.
Final Judgment
Complaint for Permanent Injunction and Other Relief
Foster Order
McDade Order
(PDF documents)Portable Document Format (PDF) files may be viewed with a free copy of Adobe Acrobat Reader
Accessibility InformationU.S. and Chinese Defendants Charged with Economic Espionage and Theft of Trade Secrets in Connection with Conspiracy to Sell Trade Secrets to Chinese CompaniesRead the Press Release
SAN FRANCISCO – A federal grand jury in San Francisco has charged five individuals and five companies with economic espionage and theft of trade secrets for their roles in a long-running effort to obtain U.S. trade secrets for the benefit of companies controlled by the government of the People’s Republic of China (PRC), announced U.S. Attorney Melinda Haag; Lisa Monaco, Assistant Attorney General for National Security at the Department of Justice; and Stephanie Douglas, Special Agent in Charge of the FBI San Francisco Division.
According to the superseding indictment, the government of the PRC identified as a priority the development of chloride-route titanium dioxide (TiO2) production capabilities. TiO2 is a commercially valuable white pigment with numerous uses, including coloring paint, plastics and paper. To achieve that goal, companies controlled by the PRC government, specifically the Pangang Group companies named in the superseding indictment, and employees of those companies conspired and attempted to illegally obtain TiO2 technology that had been developed over many years of research and development by E.I. du Pont de Nemours & Company (DuPont).
According to the superseding indictment, the Pangang Group companies were aided in their efforts by individuals in the United States who had obtained TiO2 trade secrets and were willing to sell those secrets for significant sums of money. Defendants Walter Liew, Christina Liew, Robert Maegerle and Tze Chao obtained and possessed TiO2 trade secrets belonging to DuPont. Each of these individuals allegedly sold information containing DuPont TiO2 trade secrets to the Pangang Group companies for the purpose of helping those companies develop large-scale chloride route TiO2 production capability in the PRC, including a planned 100,000 ton TiO2 factory at Chongqing, PRC.
According to the superseding indictment, the Liews, USA Performance Technology Inc. (USAPTI), and one of its predecessor companies, Performance Group, entered into contracts worth in excess of $20 million to convey TiO2 trade secret technology to Pangang Group companies. The Liews allegedly received millions of dollars of proceeds from these contracts. The proceeds were wired through the United States, Singapore and ultimately back into several bank accounts in the PRC in the names of relatives of Christina Liew.
The five individuals charged in the indictment are:
- Walter Lian-Heen Liew, aka “Liu Yuanxuan,” 54, of Orinda, Calif. Mr. Liew is a naturalized U.S. citizen and co-owner of USAPTI. Mr. Liew is charged with conspiracy to commit economic espionage, conspiracy to commit theft of trade secrets, attempted economic espionage, attempted theft of trade secrets, possession of trade secrets, conveying trade secrets, conspiracy to obstruct justice, witness tampering, conspiracy to tamper with evidence and false statements. Mr. Liew was charged in August 2011 with obstruction of justice and making false statements to the FBI. He was arrested at that time and has been ordered detained pending trial based on a finding by Magistrate Judge Nathanael Cousins that he is a flight risk. Mr. Liew’s next scheduled court appearance is before the Honorable Jeffrey S. White on Feb. 9, 2012, at 2:00 pm.
- Christina Hong Qiao Liew, aka “Qiao Hong,” 49, of Orinda. Mrs. Liew is a naturalized U.S. citizen and co-owner with her husband, Walter Liew, of USAPTI. Mrs. Liew is charged with conspiracy to commit economic espionage, conspiracy to commit theft of trade secrets, attempted economic espionage, attempted theft of trade secrets, witness tampering, conspiracy to tamper with evidence and false statements. Mrs. Liew also was charged in August 2011 with obstruction of justice and making false statements to the FBI. She was released by the court on conditions that include travel restrictions and electronic monitoring. Mrs. Liew’s next scheduled court appearance is before the Honorable Jeffrey S. White on Feb. 9, 2012, at 2:00 pm.
- Hou Shengdong, 42, a citizen of the PRC. Hou was the vice director of the Chloride Process TiO2 Project Department for the Pangang Group Titanium Industry Company Ltd. According to the superseding indictment, Hou and other Pangang Group employees requested DuPont blueprints as a condition of working on the Pangang Group project. Hou is charged with conspiracy to commit economic espionage, conspiracy to commit theft of trade secrets and attempted economic espionage. A warrant has been issued for Hou’s arrest.
- Robert Maegerle, 76, of Harbeson, Del. Maegerle was employed by DuPont as an engineer from 1956 to 1991. According to the superseding indictment, Maegerle had access to DuPont TiO2 trade secrets, including specific information regarding DuPont’s TiO2 facility at Kwan Yin, Taiwan. Maegerle is charged with conspiracy to commit theft of trade secrets, attempted theft of trade secrets, conveying trade secrets and conspiracy to obstruct justice. Maegerle was arrested this morning in Harbeson.
- Tze Chao, 77, of Newark, Del. Chao was employed by DuPont from 1966 to 2002. Chao is charged with conspiracy to commit economic espionage. Chao was served with a summons to appear in court in San Francisco on March 1, 2012, at 9:30 a.m. for arraignment on the superseding indictment.
The superseding indictment also names five companies as defendants:
- Pangang Group Company Ltd. Pangang Group is a state-owned enterprise controlled by the State-Owned Assets Supervision and Administration Commission of the PRC State Council and located in Sichuan Province, PRC.
- Pangang Group Steel Vanadium & Titanium Company Ltd. (PGSVTC). PGSVTC is a subsidiary of the Pangang Group.
- Pangang Group Titanium Industry Company Ltd. Pangang Group Titanium is a subsidiary of PGSVTC and was the entity directly responsible for constructing the 100,000 ton chloride-route TiO2 factory at Chongqing, PRC. Pangang Group Titanium entered into an agreement with USAPTI in 2009 under which USAPTI conveyed DuPont TiO2 technology to Pangang Group Titanium and its employees.
- Pangang Group International Economic & Trading Co. (PIETC). PIETC is a subsidiary of PGSVTC and is responsible for financial matters related to the construction of the Chongqing TiO2 factory. PIETC signed a 2009 agreement with USAPTI under which DuPont technology was transferred.
- USA Performance Technology Inc. (USAPTI). USAPTI is an Oakland, Calif.-based engineering consulting company owned and operated by Walter and Christina Liew. According to the superseding indictment, USAPTI succeeded two other companies owned by the Liews – Performance Group USA and LH Performance – which also were used in the conspiracy to convey DuPont trade secrets to PRC-based companies.
Each of the five corporate defendants named in the superseding indictment are charged with conspiracy to commit economic espionage, conspiracy to commit theft of trade secrets and attempted economic espionage. Summonses were issued to each corporate defendant requiring them to appear in court in San Francisco on March 1, 2012, at 9:30 a.m. for arraignment on the superseding indictment.
DuPont is a company based in Wilmington, Del., that manufactures a wide variety of products, including TiO2. DuPont invented the chloride-route process for manufacturing TiO2 in the late-1940s and since then has invested heavily in research and development to improve that production process. The global titanium dioxide market has been valued at roughly $12 billion, and DuPont has the largest share of that market.
The chloride-route process is more efficient and cleaner than the sulfate-route process prevalent in the PRC. The superseding indictment alleges that the object of the defendants’ conspiracy was to convey DuPont’s secret chloride-route technology to the PRC companies for the purpose of building modern TiO2 production facilities in the PRC without investing in time-consuming and expensive research and development.
DuPont reported information to the FBI that its TiO2 trade secrets had been misappropriated. The FBI opened an investigation in March 2011.
“As today’s case demonstrates, technology developed by U.S. companies is vulnerable to concerted efforts by competitors – both at home and abroad – to steal that technology,” said U.S. Attorney Haag. “Fighting economic espionage and trade secret theft is one of the top priorities of this Office and we will aggressively pursue anyone, anywhere who attempts to steal valuable information from the United States.”
Assistant Attorney General Monaco said, “The theft of America’s trade secrets for the benefit of China and other nations poses a substantial and continuing threat to our economic and national security, and we are committed to holding accountable anyone who robs American businesses of their hard-earned research. I thank the agents and prosecutors who helped bring about this important case.”
FBI Special Agent-in-Charge Stephanie Douglas stated, “The conduct alleged in the superseding indictment reveals a methodical effort by foreign interests to misappropriate valuable U.S. technology by using individuals operating within our borders. The goal of this scheme was to obtain the benefit of research and development investments by U.S. companies, without making the same investment of time and money. This is not only unfair, but it does great damage to the U.S. economy and as a result undercuts on national security. The FBI is committed to rooting out commercial espionage that puts U.S. companies at a disadvantage in the global market.”
The maximum statutory penalty for each of the charges alleged in the superseding indictment is as follows:
- Count One, conspiracy to commit economic espionage: 15 years in prison, $500,000 fine and restitution. The fine for an organizational defendant is not more than the greatest of $10,000,000 or twice the pecuniary gain or loss.
- Count Two, conspiracy to commit theft of trade secrets: 10 years in prison, $250,000 fine or twice the gross gain or loss, and restitution. The fine for an organizational defendant is not more than the greatest of $5,000,000 or twice the pecuniary gain or loss.
- Count Three, attempted economic espionage: 15 years in prison, $500,000 fine and restitution. The fine for an organizational defendant is not more than the greatest of $10,000,000 or twice the pecuniary gain or loss.
- Count Four, attempted economic espionage: 15 years in prison, $500,000 fine and restitution. The fine for an organizational defendant is not more than the greatest of $10,000,000 or twice the pecuniary gain or loss.
- Count Five, attempted theft of trade secrets: 10 years in prison, $250,000 fine or twice the gross gain or loss, and restitution. The fine for an organizational defendant is not more than the greatest of $5,000,000 or twice the pecuniary gain or loss.
- Counts Six and Seven, possession of trade secrets: 10 years in prison, $250,000 fine or twice the gross gain or loss, and restitution. The fine for an organizational defendant is not more than the greatest of $5,000,000 or twice the pecuniary gain or loss.
- Count Eight, conveying trade secrets: 10 years in prison, $250,000 fine or twice the gross gain or loss, and restitution. The fine for an organizational defendant is not more than the greatest of $5,000,000 or twice the pecuniary gain or loss.
- Count Nine, possession of trade secrets: 10 years in prison, $250,000 fine or twice the gross gain or loss, and restitution. The fine for an organizational defendant is not more than the greatest of $5,000,000 or twice the pecuniary gain or loss.
- Count 10, conspiracy to tamper with witnesses and evidence: 20 years in prison, $250,000 fine or twice the gross gain or loss, and restitution.
- Counts 11 and 12, witness tampering: 20 years in prison, $250,000 fine or twice the gross gain or loss, and restitution.
- Count 13, conspiracy to tamper with evidence: 20 years in prison, $250,000 fine or twice the gross gain or loss, and restitution.
- Count 14, false statements in a matter within the jurisdiction of the executive branch: five years in prison, $250,000 fine, and restitution.
The case is being prosecuted by the Special Prosecutions and National Security Unit of the U.S. Attorney’s Office in San Francisco, and the Counterespionage Section of the U.S. Department of Justice. The investigation, which is ongoing, is being conducted by the FBI.
Please note, an indictment contains only allegations and, as in all cases, the defendants must be presumed innocent unless and until proven guilty.
U.S. Court Bars Two in Alabama from Preparing Federal Tax ReturnsRead the Press Release
A federal court has permanently barred Paul E. Foster Jr. and Sheree McDade, both of Montgomery, Ala., from preparing federal tax returns for others, the Justice Department announced today. The civil injunction order, to which Foster and McDade agreed without admitting the government’s allegations, was signed by Chief Judge W. Keith Watkins of the U.S. District Court for the Middle District of Alabama.
The government complaint alleged that Foster and McDade, through businesses called Miami Tax, Paul’s Tax Service and Advance Taxes Inc., prepared tax returns for customers that reported phony business expenses for fictitious businesses, inflated earned income and falsely claimed dependents in order to increase refunds based on the earned income tax credit. The complaint also alleged that at least 48 returns that Foster and McDade prepared for the 2008 tax year contained false claims for the first-time homebuyer tax credit. According to the complaint, Foster and McDade’s misconduct has thus far resulted in $1 million of lost tax revenue, plus resources spent by the Internal Revenue Service (IRS) to assess and collect unpaid taxes from the customers.
The court ordered Foster and McDade to send a copy of the injunction order to all customers for whom they prepared a federal tax return for tax years 2006 and later. The court also ordered the pair to provide the government with a list of those customers.
In the past decade, the Justice Department’s Tax Division has obtained injunctions against hundreds of unscrupulous tax-return preparers and tax-fraud promoters. Information about these cases is available on the Justice Department website .
Justice Department Signs Agreement with the City of Humboldt, Kansas, to Ensure Civic Access for People with DisabilitiesRead the Press Release
WASHINGTON - The Justice Department today announced an agreement with the city of Humboldt, Kan., to improve access to all aspects of civic life for individuals with disabilities. The agreement was reached under Project Civic Access (PCA), the department’s wide-ranging initiative to ensure that cities, towns and counties throughout the country comply with the Americans with Disabilities Act (ADA). The department has now reached 197 agreements under the PCA initiative, improving access to civic life for more than four million individuals with disabilities nationwide. According to census data, the city population is just under 2,000, and just over 21 percent of Humboldt residents have a disability.
“Individuals with disabilities must have the opportunity to participate in civic life in every city, town and county in the country, no matter how large or small, and this agreement represents another positive step forward,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “We applaud Humboldt officials for their commitment to improving access for all residents and visitors with disabilities to the full range of city programs, activities, services and facilities.”
“Kansans with disabilities have much to contribute,” said Barry Grissom, U.S. Attorney for the District of Kansas. “This agreement will help remove the barriers that prevent them from participating fully in community life. I am pleased this matter was resolved without protracted litigation.”
PCA was initiated to ensure that persons with disabilities have an equal opportunity to participate in civic life, a fundamental part of American society. As part of the PCA initiative, Justice Department investigators, attorneys and architects survey state and local government facilities, services and programs in communities across the country to identify the modifications needed for compliance with ADA requirements. The agreements are tailored to address the steps each community must take to improve access.
Under the agreement announced today, Humboldt officials will take several important steps to improve access for individuals with disabilities, such as:
- Making physical modifications to its facilities so that parking, routes into the buildings, entrances, service areas and counters, restrooms, locker rooms and drinking fountains are accessible to persons with disabilities. The agreement specifies which modifications will be made at each facility.
- Surveying other facilities and programs and making modifications wherever necessary to achieve full compliance with ADA requirements.
- Implementing a comprehensive plan to improve the accessibility of the city’s sidewalks, transportation stops and pedestrian crossings by installing accessible curb ramps throughout the city.
- Ensuring that buildings and outdoor facilities that will be built or altered by or on behalf of the city comply with the ADA’s architectural requirements.
- Officially recognizing the Kansas telephone relay service as a key means of communicating with individuals who are deaf, are hard-of-hearing, or have speech impairments and training staff in using the relay service for telephone communications.
- Posting, publishing and distributing a notice to inform members of the public of the provisions of Title II of the ADA and their applicability to the city’s programs, services and activities.
- Ensuring that the city’s official website and other web-based services are accessible to people with disabilities.
- Developing a method for providing information for interested persons with disabilities concerning the existence and location of the city’s accessible services, activities and programs.
- Undertaking the required planning and modifications to ensure equal, integrated access to emergency management for individuals with disabilities, including emergency preparedness, notification, evacuation, sheltering, response, clean up, and recovery .
Today’s agreement was reached under Title II of the ADA, which prohibits discrimination against individuals with disabilities by state and local governments. The department will actively monitor compliance with today’s agreement, which will remain in effect for three years from Feb. 8, 2012, or until the department has confirmed that all required actions have been completed, whichever is later.
People interested in finding out more about the ADA, today’s agreement, the PCA initiative, or the ADA Best Practices Tool Kit for State and Local Governments can access the ADA website at www.ada.gov or call the toll-free ADA Information Line at 800-514-0301 or 800-514-0383 (TTY).
The agreement with the City of Humboldt is available at http://www.ada.gov/humboldt_KS_pca/humboldt_KS_sa.htm.
Florida Resident Sentenced to Year in Prison in Connection with Selling Fraudulent Business Opportunities to ConsumersRead the Press Release
James Cummings, a resident of Boca Raton, Fla., has been sentenced for committing fraud in connection with a coffee machine business opportunity scheme, the Justice Department and U.S. Postal Inspection Service announced today.
The government alleged that the defendant sold a business package that included coffee machines, locations in which to place those machines and on-going support and assistance in the operation of the machines. Cummings sold the business opportunities for a minimum price of approximately $10,000 each.
In pleading guilty, Cummings admitted that, in making sales to consumers, he made a number of false claims about the profits generated by the machines. In addition, he admitted that he led potential buyers to believe that they would recoup their investment in 12 to 18 months. Cummings admitted that he misrepresented to his customers that “locating companies” would find high traffic, high profit locations in which to place the vending machines. In reality, as the government alleged, buyers suffered a total loss on their investments and some buyers did not receive their purchased machines.
Cummings was sentenced by U.S. District Judge William P. Dimitrouleas in Ft. Lauderdale, Fla., to a year and a day in prison and three years supervised release, and ordered to pay over $137,000 in restitution. Cummings had pleaded guilty on Nov. 29, 2011, to conspiracy to commit mail fraud for his participation at three Florida companies: M & D Gourmet Coffee Inc. of Boca Raton, Fla.; Coffee Heaven LLC of Deerfield Beach, Fla.; and Divino Trio Coffee & Vending Company of Ft. Lauderdale. The criminal information charging Cummings alleged that he served as a salesman at these companies from December 2003 to February 2008.
“This defendant took advantage of investors who wanted to make a better living for themselves, causing them to pay thousands of dollars for worthless business opportunities,” said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. “This prosecution and the court’s sentence should send a signal to others that we will pursue those who perpetrate fraud regardless of their position in the scheme.”
Cummings’ co-conspirator, Manuel Rodriguez, the leader of the scheme, was convicted by a jury of one count of conspiracy and seven counts of wire fraud in September 2011. In December 2011, Rodriguez was sentenced to 120 months in federal prison.
“Business opportunity fraud often involves a number of perpetrators – owners, salespeople, locators, references, and others,” said U.S. Postal Inspector in Charge, Henry Gutierrez, based in Miami. “As this case and many others show, the Postal Inspection Service will vigorously pursue anyone who plays a part in bilking consumers of their hard earned money through the U.S. mails.”
Assistant Attorney General West commended the investigative efforts of the U.S. Postal Inspection Service. The case was prosecuted by Matthew Ebert of the Justice Department’s Consumer Protection Branch.
Florida Jury Holds Tax Preparer Liable for $135,000 in Penalties for False Tax ReturnsRead the Press Release
An eight-member jury has unanimously found that a former Jackson Hewitt tax preparer, Frances Carlson of Bradenton, Fla., prepared 27 federal tax returns that she knew would understate her customers’ tax liabilities, the Justice Department announced today. The verdict followed an eight-day trial in Tampa, Fla., before Judge Susan Bucklew of the U.S. District Court for the Middle District of Florida.
The jury answered 36 separate questions in favor of the government in reaching the verdict. As a consequence, based on evidence presented at the trial, Carlson is liable for penalties totaling $135,000, plus interest.
According to evidence presented at the trial, Carlson worked at JH Accounting, a Sarasota, Fla., accounting firm controlled by Daniel Prewett. The evidence showed that Carlson also worked as a tax preparer for a Sarasota franchise of Jackson Hewitt Tax Service Inc. that Prewett controlled. According to trial evidence, Prewett was previously convicted by a federal jury on charges related to cocaine distribution and money laundering and was sentenced to 18 years in prison in 2008.
In 2009, a federal court in Tampa permanently barred Prewett and Carlson from preparing federal tax returns for others.
Further information about the recent enforcement efforts of the Justice Department’s Tax Division against unscrupulous tax-return preparers and tax-fraud promoters is available on the Justice Department’s website .
Judgment in a Civil Case (PDF)
Verdict Form (PDF)
Dava Pharmaceuticals to Pay U.S. $11 Million to Settle False Claims Act AllegationsRead the Press Release
Dava Pharmaceuticals Inc. has agreed to pay the United States $11 million to settle allegations that it violated the False Claims Act by misreporting drug prices in order to reduce its Medicaid Drug Rebate obligations, the Justice Department announced today.
The settlement resolves allegations that between Oct. 1, 2005 and Sept. 30, 2009, Dava and its corporate predecessors knowingly underpaid their rebate obligations under the Medicaid Prescription Drug Rebate Program. Under that program, participating drug companies are required to pay quarterly rebates to state Medicaid programs based, in part, on whether a drug is a “generic” or “branded” product and the difference between what the health care program paid for the drug and prices paid by other purchasers.
The government contends that i n order to reduce its Medicaid rebate obligation, Dava incorrectly treated its version of the drugs cefdinir, clarithromycin and methotrexate as “generic” drugs rather than “branded” products, thereby lowering the overall percentage rebate payable to Medicaid. In addition, the government further alleges Dava reduced its Medicaid rebate obligations by incorrectly calculating average manufacturer prices for its versions of the drugs cefdinir, clarithromycin, methotrexate and rheumatrex. As a result, the government alleges that Dava underpaid drug rebates to the Medicaid program and overcharged certain public health service entities for these products.
“Pharmaceutical companies that participate in Medicaid must accurately report drug prices and pay their fair share of rebates to the federal and statement governments,” said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. “Settlements like this one help maintain important programs on which so many depend for needed health care.”
The federal government’s portion of the settlement is approximately $5.7 million. Dava will also pay over $5 million to the Medicaid participating states and approximately $200,000 to certain public health services entities who paid inflated prices for the drugs at issue.
The settlement resolves a lawsuit filed in federal court in the District of Maryland under the qui tam, or whistleblower, provisions of the False Claims Act, which allow private citizens to bring civil actions on behalf of the United States and share in any recovery. As part of today’s resolution, the whistleblower – Jim Conrad – will receive 15 percent of the settlement proceeds.
This resolution is part of the government’s emphasis on combating health care fraud and another success for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid fraud through enhanced cooperation. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover more than $6.6 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in False Claims Act cases since January 2009 are over $8.8 billion.
The investigation was handled by the Justice Department’s Civil Division, the U.S. Attorney’s Office for the District of Maryland, the Department of Health and Human Services’ Office of Inspector General and Office of Counsel to the Inspector General, and the National Association of Medicaid Fraud Control Units.