Latest Records
Newest first across public DOJ and U.S. Attorney press releases.
Wednesday 8 February 2012
Assistant Administrator of Houston Hospital Indicted for Alleged Role in $116 Million Medicare Fraud SchemeRead the Press Release
WASHINGTON – An assistant administrator of a Houston hospital was arrested today on charges related to his alleged participation in a $116 million Medicare fraud scheme involving false claims for mental health treatment, announced the Department of Justice, the FBI and the Department of Health and Human Services (HHS).
An indictment filed in the Southern District of Texas and unsealed today charges Mohammed Khan, 62, of Houston, with one count of conspiracy to commit health care fraud, one count of conspiracy to pay and receive illegal health care kickbacks and five counts of paying or offering to pay health care kickbacks. Khan is expected to make his initial appearance in federal court today in Houston.
“The indictment against Mr. Kahn alleges that he used his position as a hospital assistant administrator to submit millions in false claims to the Medicare program,” said Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division. “According to the charges, he paid kickbacks to patient recruiters, owners of group homes and assisted living facilities, and beneficiaries so that he could fill his hospital with patients for whom he could bill the government for medically unnecessary services or services that were never provided. We will continue aggressively to pursue individuals who attempt to enrich themselves at the expense of the Medicare program.”
“The defendant charged in this indictment is accused of stealing precious Medicare resources by billing for services that were medically unnecessary or never provided," said Special Agent in Charge Stephen L. Morris of the FBI’s Houston Field Office. “Our health care fraud efforts have never been more collaborative and aggressive. We will continue to work with our law enforcement partners to protect patients and fight against health care fraud.”
According to the indictment, Khan, as the assistant administrator of a Houston hospital, allegedly operated a scheme to defraud Medicare beginning in 2008 and continuing until his arrest today. Khan allegedly caused the submission of false and fraudulent claims for partial hospitalization program (PHP) services to Medicare through the hospital. A PHP is a form of intensive outpatient treatment for severe mental illness.
The indictment alleges that Khan paid kickbacks to owners and operators of group care homes and assisted living facilities and to patient recruiters in exchange for delivering ineligible Medicare beneficiaries to the hospital’s PHPs. The indictment alleges that Khan also paid kickbacks to Medicare beneficiaries who attended the hospital’s PHPs. These kickbacks included cigarettes, food and coupons redeemable for items available at the hospital’s “country stores.” Khan and his co-conspirators submitted or caused to be submitted approximately $116 million in claims to Medicare for PHP services purportedly provided by the hospital to the recruited beneficiaries, when in fact, the PHP services were medically unnecessary or never provided.
Today’s charges were announced by Assistant Attorney General Breuer of the Justice Department’s Criminal Division; U.S. Attorney Kenneth Magidson of the Southern District of Texas; Special Agent in Charge 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); the Texas Attorney General’s Medicaid Fraud Control Unit (MFCU Special Agent in Charge Lucy R. Cruz of the Internal Revenue Service (IRS) Houston Field Office; Joseph J. Del Favero, Special Agent in Charge of the Chicago Field Office of the Railroad Retirement Board, Office of Inspector General (RRB-OIG); and Scott Rezendes, Special Agent in Charge of Field Operations of the Office of Personnel Management, Office of Inspector General (OPM-OIG).
The case is being prosecuted by Trial Attorney Laura M.K. Cordova, Attorney Allan Medina, Assistant Chief William Pericak and Deputy Chief Sam S. Sheldon of the Criminal Division’s Fraud Section. The case was investigated by the FBI, HHS-OIG, MFCU, IRS, RRB-OIG and OPM-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, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
Tuesday 7 February 2012
Three Men Sentenced for Attempting to Intimidate African-American Students at a Louisiana Middle SchoolRead the Press Release
WASHINGTON – The Department of Justice announced today that three men were sentenced for a federal hate crime stemming from an incident that took place at Beekman Junior High School in Beekman, Morehouse Parish, La. U.S. Magistrate Judge Karen Hayes sentenced James Lee Wallis Jr. to eight months in prison, Tony L. Johnson to six months in prison and Brian Wallis to five months in prison. All three defendants will also receive one year of supervised release and must attend a cultural diversity and sensitivity program.
On Aug. 12, 2011, defendant Johnson pleaded guilty to intentionally attempting to intimidate and interfere with African-American students who were attending Beekman Junior High School. Brothers Brian Wallis, 21, and James Lee Wallis Jr., 25, pleaded guilty to the same offense on Sept. 2, 2011. During their respective plea hearings, all three defendants admitted that they hung a dead raccoon in a noose from a flagpole located in front of Beekman Junior High School. They each further admitted that they were angered by the school’s new busing policy, which had increased the number of African-American children attending the school, and that they wanted to scare the African-American children into leaving the school.
“Every child, regardless of race, is entitled to an education free from intimidation or discrimination,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “Unfortunately, acts of hate such as this one are all too common in this country in 2012. The Justice Department will continue to enforce our nation’s civil rights laws in order to protect the most vulnerable in our society.”
“There is no place in our schools for this kind of intimidation,” said Stephanie A. Finley, U.S. Attorney for the Western District of Louisiana. “Every child has the right to an education and to feel safe in school. I hope this case sends a message that this type of activity will not be taken lightly.”
This case was investigated by the FBI and prosecuted by Senior Litigation Counsel Mark Blumberg and Trial Attorney Christine M. Siscaretti of the Justice Department’s Civil Rights Division and Assistant U.S. Attorney Mary J. Mudrick for the Western District of Louisiana.
Los Angeles Man Sentenced to 77 Months in Prison for Medicare Fraud Scheme Resulting in More Than $18.9 Million in Fraudulent Claims to MedicareRead the Press Release
WASHINGTON – A Los Angeles-area man was sentenced yesterday to 77 months in prison for organizing and leading a medical clinic fraud scheme that used the stolen identities of physicians to submit more than $18.9 million in fraudulent claims to Medicare, the Department of Justice, the FBI and the Department of Health and Human Services (HHS) announced.
Eduard Aslanyan, 38, of Sherman Oaks, Calif., was sentenced by U.S. District Judge Consuelo B. Marshall in the Central District of California. In addition to his prison term, Aslanyan was sentenced to three years of supervised release and was ordered to pay $10.8 million in restitution.
Aslanyan pleaded guilty in April 2011. He admitted that between March 2007 and September 2008, he established a series of fraudulent medical clinics in and around Los Angeles to defraud Medicare. Carolyn Vasquez, who previously pleaded guilty to conspiring with Aslanyan to defraud Medicare, recruited physicians to serve as the medical directors of Aslanyan’s fraudulent medical clinics. The physicians did not perform services at the clinics and were rarely present at the clinics. Physician assistants were hired by Aslanyan and Vasquez and were complicit in the fraud scheme at the clinics.
According to court documents, Aslanyan hired patient recruiters to find Medicare beneficiaries who were willing to provide the recruiters with their Medicare billing information in exchange for expensive, high-end power wheelchairs and other medical equipment which the patient recruiters told the beneficiaries they could receive for free. Often, the Medicare beneficiaries did not have a legitimate medical need for the power wheelchairs and equipment. The patient recruiters then provided the beneficiaries’ Medicare billing information to Aslanyan or brought the beneficiaries to Aslanyan’s clinics. Aslanyan paid the patient recruiters cash kickbacks in exchange for recruiting the Medicare beneficiaries.
In court documents, Aslanyan admitted that he and Vasquez instructed and paid physician assistants who worked at his clinics to prescribe medically unnecessary power wheelchairs, medical equipment and diagnostic tests for the Medicare beneficiaries. The physician assistants used stolen identities of physicians who did not supervise them or work at the clinics.
According to court documents, Aslanyan profited from the scheme at his fraudulent medical clinics in several ways. Aslanyan admitted that he allowed fraudulent diagnostic testing facilities to use the Medicare billing information he purchased from patient recruiters to submit false claims to Medicare for tests ordered at the clinics. In exchange, the fraudulent diagnostic testing facilities paid Aslanyan cash kickbacks that were disguised as rent payments to Aslanyan.
Aslanyan also profited from the scheme by selling fraudulent prescriptions and documents generated at his clinics to the owners and operators of fraudulent durable medical equipment (DME) supply companies, which used the prescriptions and documents to submit false claims to Medicare. Aslanyan also used the fraudulent prescriptions and documents to submit false claims to Medicare through his own fraudulent DME supply companies, Vila Medical Supply Inc. and Blanc Medical Supplies.
According to court documents, as a result of Aslanyan’s conduct, he and his co-conspirators submitted approximately $18.9 million in fraudulent claims to Medicare.
Currently, Aslanyan is serving a three-year state sentence for assault. On Jan. 9, 2012, Judge Marshall sentenced Vasquez to 60 months in prison for her role in the fraud scheme and ordered her to pay more than $6.2 million in restitution to Medicare. A second co-defendant, David James Garrison, a physician assistant who worked at the fraudulent medical clinics with Vasquez and Aslanyan, is scheduled for trial on Feb. 7, 2012. Defendants are presumed innocent until proven guilty at trial.
The sentence was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney André Birotte Jr. for the Central District of California; Glenn R. Ferry, Special Agent-in-Charge for the Los Angeles Region of the HHS Office of Inspector General (HHS-OIG); Steven Martinez, Assistant Director in Charge of the FBI’s Los Angeles Field Office; and Tony Sidley, Assistant Chief of the California Department of Justice, Bureau of Medi-Cal Fraud and Elder Abuse.
The case is being prosecuted by Trial Attorney Jonathan T. Baum of the Criminal Division’s Fraud Section. Former Special Trial Attorney Joseph Hudzik participated in the prosecution. The case is being investigated by the FBI. The case 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, strike force operations in nine districts have charged more than 1,160 defendants who collectively have falsely billed the Medicare program for more than $2.9 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 & Enforcement Action Team, go to: www.stopmedicarefraud.gov .
Fourteen Hospitals to Pay U.S. More Than $12 Million to Resolve False Claims Act Allegations Related to KyphoplastyRead the Press Release
Fourteen hospitals located in New York, Mississippi, North Carolina, Washington, Indiana, Missouri and Florida have agreed to pay the United States a total of more than $12 million to settle allegations that the health care facilities submitted false claims to Medicare, the Justice Department announced today.
The settling facilities include the following: Plainview Hospital, Plainview, N.Y. ($2,307,265); North Shore Syosset Hospital, Syosset, N.Y. ($192,735); North Mississippi Medical Center, Tupelo, Miss. ($1,894,683.30); Mission Hospital, Asheville, N.C. ($1.5 million); Wenatchee Valley Medical Center, Wenatchee, Wash. ($1,224,709.96); Community Hospital Anderson, Anderson, Ind. ($500,561.36); St. John’s Mercy Hospital, Creve Coeur, Mo. ($365,000); Gulf Coast Hospital, Fort Myers, Fla. ($173,005.86); Lee Memorial Hospital, Fort Myers, Fla. ($159,571.87); and Cape Coral Hospital, Cape Coral, Fla. ($73,279.47). Four hospitals affiliated with Adventist Health System/Sunbelt Inc. in Florida will pay a total of $3.9 million, and these include Florida Hospital Orlando, Florida Hospital-Oceanside, Florida Hospital Fish Memorial and Florida Hospital Heartland Medical Center.
The settlements resolve allegations that these hospitals overcharged Medicare between 2000 and 2008 when performing kyphoplasty, a minimally-invasive procedure used to treat certain spinal fractures that often are due to osteoporosis. In many cases, the procedure can be performed safely as a less costly outpatient procedure, but the government contends that the hospitals performed the procedure on an inpatient basis in order to increase their Medicare billings.
“Patients want reassurance that their health care provider is making treatment decisions based on the patient’s best interests, not an interest in maximizing profits,” said Tony West, Assistant Attorney General for the Justice Department’s Civil Division. “By recovering taxpayer dollars lost to improper billing, this settlement will help support the vital public health care programs we depend on.”
The Justice Department has now reached settlements with more than 40 hospitals totaling over $39 million to resolve false claims allegations related to kyphoplasty claims submitted to Medicare. These settlements follow the government’s 2008 settlement with Medtronic Spine LLC, corporate successor to Kyphon Inc., which paid $75 million to settle allegations that the company defrauded Medicare by counseling hospital providers to perform kyphoplasty procedures as an inpatient procedure even though the minimally-invasive procedure should have been done in many cases on an outpatient basis.
“These hospitals put profits ahead of sound medical judgment, making decisions based on a desire to maximize Medicare reimbursement rather than on individualized assessments of medical necessity,” said William J. Hochul Jr., U.S. Attorney for the Western District of New York in Buffalo. “The U.S. Attorney’s Office is committed to protecting the Medicare program by ensuring that medicine, and not financial profit, is used to determine the best course of medical care in all cases.”
All of the settling facilities were named as defendants in a qui tam, or whistleblower, lawsuit brought under the False Claims Act, which permits private citizens, known as “relators,” to bring lawsuits on behalf of the United States and receive a portion of the proceeds of any settlement or judgment awarded against a defendant. The lawsuit was filed in 2008 in federal district court in Buffalo, N.Y., by Craig Patrick and Charles Bates. Mr. Patrick is a former reimbursement manager for Kyphon, and Mr. Bates was formerly a regional sales manager for Kyphon in Birmingham, Ala. The relators will receive a total of approximately $2.1 million from the settlements.
This resolution is part of the government’s emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover more than $6.6 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 more than $8.8 billion.
The settlement with these hospitals was the result of a coordinated effort among the U.S. Attorney’s Office for the Western District of New York, the Commercial Litigation Branch of the Justice Department’s Civil Division, and the Department of Health and Human Services’ Office of Inspector General and Office of Counsel to the Inspector General.
Dover Chemical Corporation in Ohio to Pay $1.4 Million for Unauthorized Production of Chemical SubstancesRead the Press Release
WASHINGTON – Dover Chemical Corporation has agreed to pay $1.4 million in civil penalties for the unauthorized manufacture of chemical substances at facilities in Dover, Ohio, and Hammond, Ind., the Department of Justice and the U.S. Environmental Protection Agency (EPA) announced today. The settlement resolves violations of the Toxic Substances Control Act (TSCA) premanufacture notice obligations for Dover Chemical’s production of various chlorinated paraffins. Dover Chemical produces the vast majority of the chlorinated paraffin products sold in the United States.
As part of the settlement, Dover Chemical has ceased manufacturing short-chain chlorinated paraffins, which have persistent, bioaccumulative and toxic (PBT) characteristics. PBTs pose a number of health risks, particularly for children, including genetic impacts, effects on the nervous system and cancer. Dover Chemical will also submit premanufacture notices to EPA for various medium-chain and long-chain chlorinated paraffin products.
“This settlement will require Dover to participate in an EPA review of all types of chlorinated paraffin products sold by the company and bring Dover into compliance with the Toxic Substances Control Act,” said Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division of the Department of Justice. “By halting production of short-chain chlorinated paraffins, this settlement will reduce undue risks to human health and the environment.”
“Assuring the safety of chemicals is one of EPA’s top priorities,” said Cynthia Giles, Assistant Administrator for EPA’s Office of Enforcement and Compliance Assurance. “Today’s action reinforces the need for chemical manufacturers to follow the law and protects Americans from chemicals that could be harmful to their health.”
Chlorinated paraffins are a family of chemical substances with different properties depending on their carbon chain lengths and are generally identified as short, medium or long-chain. Chlorinated paraffins are used as a component of lubricants and coolants in metal cutting and metal forming operations, as a secondary plasticizer and flame retardant in plastics, and as an additive in paints. Short-chain chlorinated paraffins, however, have been found to be bioaccumulative in wildlife and humans, persistent and transported globally in the environment, and toxic to aquatic animals at low concentrations. EPA has developed an action plan for these chemicals based on the potential for significant impacts on the environment. The environmental and health concerns relating to medium-chain chlorinated paraffins and long-chain chlorinated paraffins may be similar to those associated with short-chain chlorinated paraffins. Those chemicals may also be persistent and bioaccumulative based on their physical-chemical properties, bioaccumulation modeling, and because they are also found in the environment.
In 1978, EPA compiled the initial TSCA Inventory of chemical substances from industry submissions and those substances were grandfathered onto the TSCA Inventory without additional human health or environmental review. Chemical substances not on the TSCA Inventory constitute “new chemical substances” for which a premanufacture notice (PMN) must be submitted to EPA at least 90 days before a company begins producing the substance. A PMN includes information such as the specific chemical identity, use, anticipated production volume, exposure and release information and existing available test data. EPA identifies risks associated with new chemicals through the PMN process. In the PMN process, EPA can require additional testing or issue orders prohibiting or limiting the production or commercial use of such substances.
The proposed settlement agreement, lodged in the U.S. District Court for the Northern District of Ohio, is subject to a 30-day public comment period and approval by the federal court.
More information on the settlement: www.epa.gov/compliance/resources/cases/civil/tsca/doverchemical.html.
Monday 6 February 2012
Ohio Man Pleads Guilty to Providing Support to Somali-based Terrorist GroupRead the Press Release
FOR IMMEDIATE RELEASE
February 6, 2012
MINNEAPOLIS – Earlier today in federal court, a 27-year-old man from Westerville, Ohio,
pleaded guilty to conspiring to provide money and personnel to al-Shabaab, a designated foreign
terrorist organization based in Somalia. Ahmed Hussein Mahamud, formerly of Eden Prairie,
Minnesota, pleaded guilty to one count of conspiracy to provide material support to a foreign
terrorist organization. Mahamud, who was indicted on June 7, 2011, entered his plea before
United States District Court Chief Judge Michael J. Davis.
In his plea agreement, Mahamud admitted that from 2008 through February of 2011, he
conspired with others to provide money and people to al-Shabaab, a U.S.-designated foreign
terrorist organization, in its fight against the Transitional Federal Government of Somalia
(“TFG”) and the Ethiopian military, which supports the TFG. The defendant also admitted that
he and his co-conspirators raised money from the Somali-American community in Minnesota
under false pretenses to pay for men in Minnesota to travel to Somalia to join al Shabaab.
Specifically, the defendant and his co-conspirators claimed the money raised would be used for a
local mosque or to help orphans in Somalia. In fact, the money collected was used to purchase
airline tickets and to pay other expenses so men could travel from Minnesota to Somalia to join
al-Shabaab.
Further, Mahamud admittedly sent money via wire transfers to a co-conspirator in Somalia,
knowing the money would be used to purchase weapons or otherwise support al-Shabaab.
Court documents indicate that since September of 2007, approximately 20 young men have
left the Minneapolis area for Somalia, where they have trained with al-Shabaab. The charges
against Mahamud stem from an ongoing, three-year investigation into that activity. To date, 18
people have been charged in the District of Minnesota in unsealed indictments or criminal
complaints. Eight of those individuals have been arrested in the U.S. or overseas; of these eight, seven have pleaded guilty to related charges. Of the remaining ten defendants, eight are at large
and believed to be abroad, while two others are believed to have died in Somalia. The charge
levied against Mahamud carries a potential maximum sentence of 15 years in federal prison. A
federal judge will determine the actual sentence at a hearing not yet scheduled.
This case was investigated by the FBI’s Minneapolis Joint Terrorism Task Force (“JTTF”),
with assistance from the FBI’s JTTF in Columbus, Ohio. It is being prosecuted by Assistant U.S.
Attorneys Charles J. Kovats, Jr. and John Docherty and Trial Attorney William M. Narus of the
Counterterrorism Section of the Justice Department’s National Security Division.Nebraska Man Pleads Guilty for Fraudulently Seeking Corrupt Payments in Return for Promising to Obtain Reduction in Associate’s Prison SentenceRead the Press Release
WASHINGTON – An Omaha, Neb., man pleaded guilty today to committing wire fraud for trying to solicit corrupt payments from an individual in return for a promised reduction in the individual’s ultimate prison sentence, announced Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.
Austin Galvan, 30, was charged in a two-count indictment unsealed on Aug. 29, 2011, with wire fraud and obstruction of justice. According to court documents filed in U.S. District Court for Nebraska, Galvan told an associate, who was facing federal criminal charges in the District of Nebraska, that he had a law enforcement contact in Nebraska who could secure a substantial reduction in his associate’s prison sentence in exchange for corrupt payments. Galvan, in fact, had no such contact.
According to court documents, in subsequent conversations, Galvan urged his associate not to cooperate with federal authorities. Galvan admitted that he assured his associate that his contact was in a position to help secure a reduction in the associate’s prison sentence, contingent upon corrupt payments. Galvan also admitted that he gave his associate what he claimed was official material given to him by his purported law enforcement contact. Specifically, Galvan provided his associate with an audio recording of a court hearing and claimed that his purported law enforcement contact had given it to him. In fact, Galvan had downloaded the recording from the Public Access to Court Electronic Records system, or PACER. Moreover, Galvan had provided his associate with what he claimed to be the business card of a federal judge who would assist in securing the sentence reduction, when in fact the federal judge was not handling the case.
Wire fraud carries a maximum penalty of five years in prison and a $250,000 fine. Sentencing is scheduled for May 11, 2012.
The case is being prosecuted by Trial Attorneys Kevin Driscoll and Barak Cohen of the Criminal Division’s Public Integrity Section. The case is being investigated by the FBI.
Medical Device Company Smith & Nephew Resolves <br /> Foreign Corrupt Practices Act InvestigationRead the Press Release
WASHINGTON – Smith & Nephew Inc. has entered into a deferred prosecution agreement with the Department of Justice to resolve improper payments by the company and certain affiliates in violation of the Foreign Corrupt Practices Act (FCPA), the Department of Justice announced today. The matter is part of an investigation into bribery by medical device companies of physicians employed by government institutions.
Smith & Nephew, a Delaware corporation, is headquartered in Memphis, Tenn., and is a wholly-owned subsidiary of Smith & Nephew plc, an English company traded on the New York Stock Exchange. The company manufactures and sells medical devices worldwide.
Smith & Nephew acknowledged responsibility for the actions of its affiliates, subsidiaries, employees and agents who made various improper payments to publicly-employed health care providers in Greece from 1998 until 2008 to secure lucrative business.
According to the criminal information filed today in U.S. District Court in the District of Columbia in connection with the agreement, Smith & Nephew, through certain executives, employees and affiliates, agreed to sell products at full list price to a Greek distributor based in Athens, and then pay the amount of the distributor discount to an off-shore shell company controlled by the distributor. These off-the-books funds were then used by the distributor to pay cash incentives and other things of value to publicly-employed Greek health care providers to induce the purchase of Smith & Nephew products. In total, from 1998 to 2008, Smith & Nephew, its affiliates and employees authorized the payment of approximately $9.4 million to the distributor’s shell companies, some or all of which was passed on to physicians to corruptly induce them to purchase medical devices manufactured by Smith & Nephew.
The agreement recognizes Smith & Nephew’s cooperation with the department’s investigation, thorough self-investigation of the underlying conduct, and the remedial efforts and compliance improvements undertaken by the company. As part of the agreement, Smith & Nephew will pay a $16.8 million penalty and is required to implement rigorous internal controls, cooperate fully with the department and retain a compliance monitor for 18 months.
In a related matter, Smith & Nephew reached a settlement today with the U.S. Securities and Exchange Commission, under which Smith & Nephew agreed to pay $5.4 million in disgorgement of profits, including pre-judgment interest.
This case is being prosecuted by Trial Attorney Kathleen M Hamann of the Criminal Division’s Fraud Section with assistance from the FBI Washington Field Office’s dedicated FCPA squad.
The Justice Department acknowledges and expresses its appreciation for the assistance provided by the authorities of the 8th Ordinary Interrogation Department of the Athens Court of First Instance and the Athens Economic Crime Squad in Greece, as well as the significant coordination with and assistance by the Securities and Exchange Commission’s Division of Enforcement.
Louisiana Patient Recruiter Pleads Guilty in Health Care Fraud SchemeRead the Press Release
WASHINGTON – A Baton Rouge, La.,-area resident pleaded guilty today for his role in a Medicare fraud scheme involving false claims for unnecessary durable medical equipment (DME), announced the Department of Justice, the FBI, the Department of Health and Human Services (HHS) and the Louisiana State Attorney General’s Office.
Rodney D. Taylor, 45, pleaded guilty before U.S. District Judge James J. Brady of the Middle District of Louisiana to one count of conspiracy to commit health care fraud and one count of conspiracy to defraud the United States and to pay and receive health care kickbacks.
According to court documents, Taylor worked as a recruiter for Healthcare 1 LLC, Medical 1 Patient Services LLC and Lifeline Healthcare Services Inc., Louisiana-based companies that fraudulently billed DME to the Medicare program from 2004 to 2009. He and other recruiters were hired to obtain prescriptions for DME such as leg braces, arm braces, power wheel chairs and wheel chair accessories. Taylor obtained information from Medicare beneficiaries as well as prescriptions for medical equipment from the beneficiaries’ physicians. Taylor then sold these prescriptions so they could be used by Healthcare 1, Medical 1 Patient Services and Lifeline Healthcare Services to submit fraudulent claims to the Medicare program.
The indictment alleges that from 2004 to 2009 Medicare was billed more than $21 million as part of this conspiracy.
Taylor faces a maximum penalty of 10 years in prison on the conspiracy to commit health care fraud count and five years in prison on the conspiracy to defraud the United States count. A sentencing date has not yet been set.
Today’s plea was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Donald J. Cazayoux Jr. of the Middle District of Louisiana; Mike Fields, Special Agent-in-Charge of the Dallas Region for the HHS Office of the Inspector General (HHS-OIG); David Welker, Special Agent-in-Charge of the FBI’s New Orleans division; and Louisiana State Attorney General James Buddy Caldwell.
The case is being prosecuted by Trial Attorneys David Maria and Abigail Taylor and Assistant Chief William Pericak of the Criminal Division’s Fraud Section. The case was investigated by the FBI, HHS-OIG and the Medicaid Fraud Control Unit of the Louisiana State Attorney General’s Office (MFCU), 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 Middle District of Louisiana.
Since its inception in March 2007, the Medicare Fraud Strike Force operations in nine locations have charged more than 1,160 defendants that collectively have billed the Medicare program for more than $2.9 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to www.stopmedicarefraud.gov .
Justice Department Files Lawsuit Against Lee County, Florida, for Race and National Origin DiscriminationRead the Press Release
WASHINGTON – The Justice Department announced today the filing of a lawsuit against Lee County, Fla., alleging that the county discriminated against three Hispanic employees on the basis of race and national origin in violation of Title VII of the Civil Rights Act of 1964, as amended. Title VII is a federal statute which prohibits employment discrimination on the basis of gender, race, color, national origin or religion.
The suit, filed in U.S. District Court in Fort Myers, Fla., alleges that Lee County discriminated against tradesworkers Marco Ferreira, Eduardo Rivera and Leonides Sepulveda by subjecting them to racial and ethnic harassment over a period of approximately two years beginning in 2007 and ending in 2009. According to the complaint, these employees were subjected to the discriminatory actions of several of their co-workers who regularly used racial and ethnic slurs, repeatedly mocked Ferreira’s and Rivera’s accents, refused to perform work assigned by Rivera and made false accusations against Ferreira and Rivera to Lee County’s Office of Equal Opportunity in an effort to have the county terminate the two employees.
The United States alleges that despite timely complaints about the harassment by the workers to their supervisors, as well as direct observation of the harassment on several occasions by county supervisory employees, Lee County failed to take any meaningful steps to stop the harassment or discipline the harassers until January 2009, when the harassers were terminated. Through this lawsuit, the United States is seeking declaratory and injunctive relief requiring Lee County to develop and implement policies that would prevent its employees from being subjected to harassment based on race or national origin as well as monetary damages for the victims of the county’s discriminatory actions.
“No one should have to endure harassment because of his or her race or national origin in the workplace,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Civil Rights Division is committed to enforcing this nation’s employment discrimination laws.”
Ferreira, Rivera and Sepulveda initially filed charges of discrimination with the Equal Employment Opportunity Commission (EEOC), which investigated the matter, determined there was reasonable cause to believe discrimination occurred and referred the matter to the Justice Department.The continued enforcement of Title VII has been a priority of the Justice Department’s Civil Rights Division. Additional information about the Civil Rights Division of the Justice Department is available on its website at www.justice.gov/crt/ and www.justice.gov/crt/about/emp/.
Former U.S. Marine Corps Gunnery Sergeant Sentenced to Prison for Role in Scheme to Steal Military Equipment in IraqRead the Press Release
WASHINGTON – A former U.S. Marine Corps (USMC) gunnery sergeant was sentenced today to 18 months in prison for conspiring to steal at least 55 electrical generators from USMC bases in Iraq in 2008, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Bill Nettles for the District of South Carolina.
Eric Scott Hamilton, 40, of Carrollton, Ga., also was sentenced today by U.S. District Judge J. Michelle Childs in Greenville, S.C., to three years of supervised release following his prison term. In addition, Hamilton was ordered to pay $124,944 in restitution to the U.S. Department of Defense. Hamilton pleaded guilty on Aug. 10, 2011, to a criminal information charging him with two counts of conspiracy to steal public property.
According to court documents and information presented at his plea hearing, Hamilton was stationed from May to September 2008 at Camp Fallujah, Iraq, where he was in charge of a military storage yard containing electrical generators and other equipment for use by USMC units in Iraq. Hamilton admitted that while he was stationed at Camp Fallujah, he entered into a scheme with a USMC officer to facilitate the theft of electrical generators from the base by private Iraqi contractors. Hamilton admitted that he identified the generators to be stolen, painted markings on them to designate them for theft by Iraqi contractors, and facilitated access to the storage yard by the contractors’ trucks to load and remove the generators. Hamilton also entered into a separate scheme with a private Iraqi contractor to facilitate that contractor’s theft of electrical generators from the base. Both of these theft schemes continued after the USMC closed Camp Fallujah in approximately October 2008 and relocated personnel there to Camp Ramadi, Iraq. According to court documents, Hamilton was assigned at Camp Ramadi from October to December 2008.
In pleading guilty, Hamilton admitted that he received more than $124,000 in payments from the USMC officer and the Iraqi contractor in return for facilitating the theft of at least 55 generators from Camps Fallujah and Ramadi. Hamilton received the funds through cash payments in Iraq, checks issued to Hamilton’s wife in the United States by the USMC officer’s wife and wire transfer payments to a bank account in the United States. Hamilton sent home approximately $43,000 of the cash he received from the thefts at Camp Fallujah by concealing it among American flags contained in foot lockers that he mailed from Iraq to his wife. The investigation in this case continues.
This case is being prosecuted by Assistant U.S. Attorney William C. Lucius from the U.S. Attorney’s Office for the District of South Carolina and Special Trial Attorney Mark Grider of the Criminal Division’s Fraud Section, on detail from the Special Inspector General for Iraq Reconstruction (SIGIR). The case is being investigated by SIGIR and the Defense Criminal Investigative Service.
Californian Sentenced to Five Years in Prison for Evading More Than $150,000 in TaxesRead the Press Release
William H. Nurick, of Camarillo, Cal., was sentenced to 60 months in prison and ordered to pay $286,443 in restitution by U.S. District Judge Dale S. Fischer in Los Angeles, the Justice Department and Internal Revenue Service (IRS) announced today. On September 14, 2011, Nurick was convicted of evading the payment of more than $150,000 in taxes following a five-day jury trial.
Nurick’s conviction arises from his involvement with the Genesis Fund. According to evidence presented at trial and summarized in the government’s sentencing memorandum, the Genesis Fund was an investment fund that operated from approximately 1994 through 2002. Genesis Fund literature described foreign currency trading as the principal activity of the fund. The evidence at trial proved that Nurick received approximately $1.1 million in distributions from the Genesis Fund between 1995 and 2002. During this time, he used eight different entities to conceal his control over bank accounts, vehicles, and real property.
The evidence at trial further demonstrated that in May 2000, Nurick filed an amended 1995 individual income tax return admitting he owed $106,542 related to his investment in the Genesis Fund. Thereafter, Nurick deliberately and systematically attempted to conceal assets between May 2000 and April 2001 in order to evade payment of the balance owed to the IRS for his 1995 income taxes. Following a notice of balance due from the IRS, Nurick transferred approximately $133,000 from an offshore bank account that he controlled to a witness’s offshore bank account. Nurick also submitted a false “Offer in Compromise” to the IRS, offering to pay less than one tenth of his outstanding debt. Nurick’s Offer in Compromise, signed under penalties of perjury, falsely understated his net worth and income, and failed to indicate a bank account in Costa Rica with a balance in excess of $200,000, which consisted primarily of distributions he had received from the Genesis Fund. Nurick also falsely claimed on this document that he would receive no further distributions from the Genesis Fund, when in fact, he received over $350,000 from it through distributions to multiple entities that he controlled.
Of the nine defendants originally charged in this case, eight defendants pleaded guilty to charges including tax fraud, obstruction of justice, and securities violations. Judge Fischer sentenced many of the defendants to significant prison terms and ordered restitution payments totaling millions of dollars. The last of the eight guilty pleas was entered in court on December 12, 2011, by defendant Marlyn D. Hinders. Hinders was a fugitive until June 2011 when he was deported from Mexico and arrested by the United States Marshal’s Service. After a detention hearing in July 2011, Judge Fischer ordered Hinders held without bond pending trial. Hinders, formerly a resident of Colorado, pleaded guilty to tax fraud and is scheduled to be sentenced on April 2, 2012.
This complex fraud case was investigated by special agents of the IRS - Criminal Investigation in Laguna Niguel and prosecuted by Trial Attorneys Lori A. Hendrickson, Matthew J. Kluge, Ellen M. Quattrucci, and Danny N. Roetzel of the Justice Department’s Tax Division, with the assistance of the United States Attorney’s Office in Los Angeles.
California Seafood Corporation Sentenced to Pay $1 Million for False Labeling of Seafood ProductsRead the Press Release
WASHINGTON – Seafood Solutions Inc., a California corporation, was sentenced in federal court in Los Angeles today to pay $1 million in fines and community service payments for its role in the false labeling of frozen fish fillets. The corporation was fined $700,000 and ordered to make a community service donation of $300,000 to the National Fish and Wildlife Foundation. The money is to be used to fund projects related to methodologies, databases and other research into the identification of marine organisms. In addition, the company was sentenced to three years of probation, was ordered to forfeit all remaining inventory of the falsely labeled fish and to develop and implement a corporate compliance plan.
The sentence stemmed from the conviction of Seafood Solutions on July 25, 2011, on a single count of trafficking in fish knowing that the fish had been transported and sold in violation of the U.S. Lacey Act. Specifically, the fish was Pangasius hypophthalmus, a species in the catfish family that were misleadingly labeled as “Paradise Grouper” and “Falcon Baie Grouper.” Seafood Solutions was one of three defendants named in the same charging document. Co-defendants Chau-Shing (Duke) Lin, and Christopher Ragone also entered guilty pleas on July 25, 2011, according to plea agreements.
Duke Lin, 64, of Rancho Palos Verdes, Calif., pleaded guilty to one count of trafficking in fish when in the exercise of due care he should have known that the fish had been transported and sold in violation of the Lacey Act. Duke Lin also pleaded guilty to one count of misbranding food. Christopher Ragone, 50, of Santa Ana, Calif., pleaded guilty to two counts of misbranding food. The sentencing hearing for the individuals is set for Feb. 13, 2012.
According to the plea agreements, in approximately June 2004, Seafood Solutions began to sell a fish it declared to customs as “ponga.” The fish being imported as ponga was Pangasius hypophthalmus, a species in the catfish family. The fish was then sold under the brand names, and in boxes labeled in part as, “Paradise Grouper” and “Falcon Baie Grouper.”
Between July 2005 and February 2006, a wholesale distributor that had purchased this product returned approximately $411,194 worth of the product labeled as “Paradise Grouper” and “ponga” or “Falcon Baie Grouper” and “ponga” because the wholesale distributor’s customer mistakenly believed that the fish product was grouper. Seafood Solutions agreed to be invoiced for and received the returned product, knowing that it had been inaccurately labeled. Defendants Lin, Ragone and Seafood Solutions knowingly again sold and transported the fish in interstate commerce even after its return from the customer, knowing that it was misleadingly labeled. From February 2006 to April 2006, Defendant Ragone sold approximately $2 million worth of Pangasius fillets knowing that the product bore the “Paradise Grouper” and “ponga” labels and was thus misleadingly labeled.
The case was investigated by the National Oceanic and Atmospheric Administration, Office of Law Enforcement and the Department of Homeland Security, Immigration and Customs Enforcement. The case is being prosecuted by the Environmental Crimes Section of the Department of Justice and the U.S. Attorney’s Office for the Central District of California.
Friday 3 February 2012
Louisiana Medical Equipment Company Owner Pleads Guilty in $21 Million Fraud SchemeRead the Press Release
WASHINGTON – An owner of multiple Baton Rouge medical equipment companies pleaded guilty today for her role in a Medicare fraud scheme involving false claims and illegal kickback payments for unnecessary durable medical equipment (DME), announced the Department of Justice, the FBI, the Department of Health and Human Services (HHS) and the Louisiana State Attorney General’s Office.
Chikenna D. Jones, 36, pleaded guilty before U.S. District Judge James J. Brady of the Middle District of Louisiana to one count of conspiracy to commit health care fraud and one count of conspiracy to defraud the United States and to pay and receive health care kickbacks.
According to court documents, Jones owned and operated Healthcare 1 LLC, Medical 1 Patient Services LLC, Lifeline Healthcare Services Inc., and Rose Medical Inc., Louisiana-based companies that fraudulently billed DME to the Medicare program from 2004 to 2009. She and Henry Jones, who was her husband at the time, hired patient recruiters to obtain prescriptions for DME such as leg braces, arm braces, power wheel chairs and wheel chair accessories. Specifically, the patient recruiters obtained information from Medicare beneficiaries and used the information to acquire prescriptions for DME from the beneficiaries’ primary care physicians. Chikenna Jones paid the recruiters illegal kickbacks for the DME prescriptions, which she knew were not medically necessary.
Court documents allege that the companies owned and operated by Chikenna Jones billed Medicare for more than $21 million.
Jones faces a maximum penalty of 10 years in prison on the conspiracy to commit health care fraud count and five years in prison on the conspiracy to defraud the United States count. A sentencing date has not yet been set.
Today’s plea was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Donald J. Cazayoux Jr. of the Middle District of Louisiana; Mike Fields, Special Agent-in-Charge of Dallas Region for the HHS Office of the Inspector General (HHS-OIG); David Welker, Special Agent-in-Charge of the FBI’s New Orleans division; and Louisiana State Attorney General James Buddy Caldwell.
The case is being prosecuted by Trial Attorneys David Maria and Abigail Taylor and Assistant Chief William Pericak of the Criminal Division’s Fraud Section. The case was investigated by the FBI, HHS-OIG and the Medicaid Fraud Control Unit of the Louisiana State Attorney General’s Office (MFCU), 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 Middle District of Louisiana.
Since its inception in March 2007, the Medicare Fraud Strike Force operations in nine locations have charged more than 1,160 defendants that collectively have billed the Medicare program for more than $2.9 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to www.stopmedicarefraud.gov .
Justice Department Announces Luke J. McCormack as New Chief Information OfficerRead the Press Release
The Department of Justice today announced that Luke J. McCormack will become its new chief information officer (CIO), arriving in late March. McCormack will provide leadership and oversight of the department’s information technology programs and services in support of the department’s technology-intensive law enforcement mission.
McCormack will replace Vance Hitch who left the department in August 2011. Eric R. Olson, deputy CIO, has served as acting CIO since Hitch’s departure. Olson will continue to serve as deputy CIO.
“Luke has the expertise needed to oversee the Justice Department’s information management and technology programs, and I am pleased to welcome him in this new role,” said Deputy Attorney General James M. Cole. “I’m confident that under his leadership the department will continue to enhance its cybersecurity, enterprise network and law enforcement sharing programs in a cost-effective way – while fulfilling our most critical missions. I would also like to thank Eric Olson, our acting CIO, for his hard work and outstanding dedication to these efforts during this transition.”
The Office of the CIO provides strategic direction, management services, and oversight to cross-component information technology efforts, and provides IT infrastructure services such as telecommunications, desktop and data center services, and IT security.
Prior to joining the department, McCormack was the CIO of the Department of Homeland Security’s (DHS) Immigration and Customs Enforcement (ICE) since July 2005. In that capacity, he was responsible for all aspects of the information technology portfolio, including strategic planning, enterprise architecture and cybersecurity. During his tenure at ICE, he strengthened the agency’s cybersecurity and infrastructure operations and modernized a variety of business systems.
McCormack served as acting director of DHS Customs and Border Protection’s (CBP) infrastructure services division from January 2004 to July 2005. While there, he managed the design, implementation and operation of the customer information technology infrastructure. McCormack has served in other roles in CBP, including director of architecture and engineering, and as director of systems engineering.
He has received numerous awards and honors, including the Secretary of Homeland Security’s silver award–the second highest award at DHS–and a presidential meritorious award for his outstanding efforts in information technology. McCormack received his M.B.A. from the University of Maryland’s Smith School of Business in 2005. A native of Long Island, N.Y., Mr. McCormack has two sons and resides in Virginia.
Hungarian Citizen Sentenced in Maryland to 30 Months in Prison for Hacking into Marriott Computers to Extort Employment from the CompanyRead the Press Release
WASHINGTON – Attila Nemeth, 26, a Hungarian citizen, was sentenced today by U.S. District Judge J. Frederick Motz to 30 months in prison for transmitting a malicious code to Marriott International Corporation computers and threatening to reveal confidential information obtained from the company’s computers if Marriott did not offer him a job.
The prison sentence was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney for the District of Maryland Rod J. Rosenstein and Special Agent in Charge David Beach of the U.S. Secret Service, Washington Field Office.
Judge Motz also ordered Nemeth to serve three years of supervised release following his prison term. Nemeth pleaded guilty in the District of Maryland on Nov. 23, 2011.
According to court documents, on Nov. 11, 2010, Nemeth emailed Marriott personnel, advising that he had been accessing Marriott’s computers for months and had obtained proprietary information. Nemeth threatened to reveal this information if Marriott did not give him a job maintaining the company’s computers. On Nov. 13, 2010, after receiving no response from Marriott, Nemeth sent another email containing eight attachments, seven of which were confirmed as documents stored on Marriott’s computer system. These documents included financial documentation and other confidential and proprietary information. Nemeth admitted that through an infected email attachment sent to specific Marriott employees, he was able to install malicious software on Marriott’s system that gave him a “backdoor” into the system. Using the “backdoor,” Nemeth was able to access proprietary email and other files belonging to Marriott.
According to the plea agreement, on Nov. 18, 2010, Marriott created the identity of a fictitious Marriott employee for the use by the U.S. Secret Service in an undercover operation to communicate with Nemeth. Nemeth, believing he was communicating with Marriott human resources personnel, continued to call and email the undercover agent, and demanded a job with Marriott in order to prevent the public release of the Marriott documents. Nemeth emailed a copy of his Hungarian passport as identification and offered to travel to the United States.
On Jan. 17, 2011, Nemeth arrived at Washington Dulles Airport for an “employment interview.” A Secret Service agent conducted the interview by assuming the role of the Marriott employee with whom Nemeth believed he had been communicating. During the course of the interview, Nemeth admitted that he accessed Marriott’s computer systems; stole Marriott’s confidential and proprietary information; and initiated the emails to Marriott threatening to publicly release Marriott’s data unless he was given a job on his terms by Marriott. To further prove his identity as the perpetrator, Nemeth demonstrated exactly how he accessed the Marriott network, his continued ability to access the Marriott network, and the location of the stolen Marriott proprietary data on a computer server located in Hungary.
As a result of the compromise of its computer network, Marriott was compelled to engage more than 100 of its employees in a thorough search of its network to determine the scope of the compromise and to identify the data that may have been compromised. The loss to Marriott as a result of the intentional damage caused by Nemeth was approximately $1 million in salaries, consultant expenses and other costs associated with Nemeth’s intrusion.
The case is being investigated by the U.S. Secret Service and prosecuted by Special Assistant U.S. Attorney Anthony V. Teelucksingh assigned from the Computer Crime and Intellectual Property Section of the Justice Department’s Criminal Division. The Criminal Division’s Office of International Affairs provided assistance in this matter.
Former Soldier Pleads Guilty in Texas for Leading Role in Scheme to Illegally Obtain Military Recruiting BonusesRead the Press Release
WASHINGTON – A former soldier pleaded guilty today to conspiracy to obtain a total of at least approximately $240,000 in fraudulent recruiting bonuses from various U.S. military components and their contractor, and to one count of aggravated identity theft for unlawfully using the means of identification of a potential soldier, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.
Former Specialist Xavier Aves, 40, of San Antonio, Texas, was indicted on Sept. 13, 2011, along with former Corporal Christopher Castro, 30, of San Antonio; former Staff Sergeant Grant E. Bibb, 40, of Eagle Pass, Texas; Sergeant First Class Jesus Torres-Alvarez, 31, of El Paso, Texas; Specialist Paul Escobar, 32, of San Antonio; and Specialist Richard Garcia Jr., 28, of San Antonio.
According to court documents filed in U.S. District Court for the Western District of Texas, between approximately 2005 and 2008, the U.S. Army, the U.S. Army Reserves and the National Guard Bureau entered into contracts with Document and Packaging Broker Inc., to administer recruiting programs designed to offer monetary incentives to U.S. soldiers who referred others to join the Army, the Army Reserves and the Army National Guard. In addition, the Army managed its own recruiting programs to offer bonuses to soldiers who referred other individuals to join the Army or the Army Reserves.
Through these recruiting programs, a participating soldier could receive up to $2,000 in bonus payments for every person referred to join the U.S. military. Based on certain milestones achieved by the referred soldier, a participating soldier would receive payments in the form of direct deposits and pre-paid debit card payments.
According to court documents, Aves enlisted in the Army National Guard in approximately January 2004. Aves admitted that, between approximately December 2005 and February 2010, he and certain U.S. soldiers who participated in the recruiting programs agreed to pay active duty and civilian contract military recruiters – including, among other recruiters, Castro and Torres-Alvarez – for the names and Social Security numbers of potential soldiers, many of whom were “walk-ins” or people who had decided to join the U.S. military without any referral.
Aves admitted that he and his co-conspirators used the means of identification for these potential soldiers to claim that they were responsible for referring these potential soldiers, when in fact Aves and his co-conspirators had not referred them.
As a result of these fraudulent representations, Aves and his co-conspirators collected at least approximately $244,000 in fraudulent recruiting bonus payments from the various recruiting programs. Aves personally received at least approximately $69,000 in fraudulent bonuses. Aves admitted that he and other participating soldiers split the payments with the active duty and civilian contract military recruiters who provided them with the information concerning the new recruits.
The charge of conspiracy to commit wire fraud carries a maximum penalty of five years in prison and a maximum fine of $250,000 or twice the pecuniary gain or loss. The charge of aggravated identity theft carries a mandatory sentence of two years in prison, which must be imposed consecutively to any prison term imposed on the conspiracy count, and a maximum fine of $250,000 or twice the pecuniary gain or loss. Sentencing has been scheduled for May 25, 2012, before Chief U.S. District Judge Fred Biery in San Antonio.
The case against Aves arises from an investigation involving allegations that former and current military recruiters and U.S. soldiers in the San Antonio area engaged in a wide-ranging scheme to obtain fraudulent recruiting bonuses. To date, the investigation has led to charges against seven individuals, five of whom have pleaded guilty.
On Jan. 28, 2010, Sergeant Ernest Gonzales, 50, of San Antonio, pleaded guilty to a one-count criminal information charging him with conspiracy to commit wire fraud for his role in the scheme.
On Nov. 3, 2011, Castro pleaded guilty to one count of conspiracy to commit wire fraud for his role in the scheme. On Jan. 26, 2012, Torres-Alvarez pleaded guilty to one count of conspiracy to commit wire fraud. According to court documents, Torres-Alvarez, an active duty recruiter, admitted that he sold the names and Social Security numbers of potential soldiers to Aves and others involved in the scheme. On Jan. 30, 2012, Bibb pleaded guilty to one count of conspiracy to commit wire fraud.
The case against Escobar and Garcia is scheduled for trial on April 23, 2012, in San Antonio. These defendants are presumed innocent until proven guilty in a court of law.
The case is being prosecuted by Trial Attorneys Edward J. Loya Jr. and Brian A. Lichter of the Criminal Division’s Public Integrity Section. The case is being investigated by agents from the San Antonio Fraud Resident Agency of the Major Procurement Fraud Unit, U.S. Army Criminal Investigation Command.
Thursday 2 February 2012
Utah Man Charged with Tax Fraud and Bank StructuringRead the Press Release
A federal grand jury in Salt Lake City has returned an indictment charging Michael Lavery with one count of presenting a false claim to the United States and one count of structuring a currency transaction to avoid the reporting requirements, the Justice Department and Internal Revenue Service (IRS) announced.
According to the indictment, in February of 2009, Michael Lavery, a resident of Sandy, Utah, filed a joint 2008 income tax return, claiming an income tax refund of over $249,000 that was based on the use of false IRS Forms 1099-OID. The indictment further alleges that Lavery attempted to structure a transaction, by making withdrawals of $10,000 or less from the proceeds of his false income tax return, in order to evade the laws that require financial institutions to report currency transactions that exceed $10,000.
The charges and allegations contained in the indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt. If convicted, Lavery faces a maximum prison sentence of 10 years.
The case is being investigated by IRS-Criminal Investigation and is being prosecuted by Trial Attorneys Michael Romano and Stuart Wexler of the Justice Department’s Tax Division.
Swiss Bank Indicted on U.S. Tax ChargesRead the Press Release
Wegelin & Co., a Swiss private bank, was indicted today for conspiring with U.S. taxpayers and others to hide more than $1.2 billion in secret accounts and the income these accounts generated from the Internal Revenue Service (IRS), the Justice Department announced today. This is the first time an overseas bank has been charged by the United States for facilitating tax fraud by U.S. taxpayers.
At the same time, the U.S. government seized more than $16 million from Wegelin’s correspondent bank account in the United States, in accordance with a civil forfeiture complaint and seizure warrant. Wegelin is charged in a superseding indictment with Michael Berlinka, Urs Frei and Roger Keller, three client advisers at the bank who were previously charged with the same conspiracy. The case is pending before U.S. District Judge Jed S. Rakoff. The civil forfeiture case has been assigned to U.S. District Judge Laura Taylor Swain.
The following allegations are based on the Superseding Indictment and civil forfeiture Complaint unsealed today in Manhattan federal court:
Wegelin, founded in 1741, is Switzerland’s oldest bank. At all times relevant to the superseding indictment, Wegelin provided private banking, asset management and other services to clients around the world, including U.S. taxpayers living in the Southern District of New York. Wegelin had no branches outside Switzerland, but it directly accessed the U.S. banking system through a correspondent bank account that it held at UBS AG in Stamford, Conn. As of December 2010, Wegelin had approximately $25 billion in assets under management. Berlinka, Frei and Keller began working as client advisers at the Swiss bank in 2008, 2006 and 2007 respectively.
From 2002 through 2011, Wegelin, Berlinka, Frei and Keller conspired with various U.S. taxpayers and others to hide the existence of bank accounts held at Wegelin and the income generated in those secret accounts from the IRS. Among other things, in 2008 and 2009, Wegelin, Berlinka, Frei and Keller opened and serviced dozens of undeclared accounts for U.S. taxpayers in an effort to capture clients lost by UBS in the wake of widespread news reports that the IRS was investigating UBS for helping U.S. taxpayers evade taxes and hide assets in Swiss bank accounts. By mid-2008, UBS had stopped servicing undeclared accounts for U.S. taxpayers.
In the wake of the IRS investigation, members of Wegelin’s senior management affirmatively decided to capture the illegal business that UBS exited. To capitalize on the business opportunity this presented and to increase the assets under management, along with the fees earned from managing those assets, Berlinka, Frei, Keller and others, acting on behalf of Wegelin, told various U.S. taxpayer-clients that their undeclared accounts would not be disclosed to U.S. authorities because the bank had a long tradition of secrecy. They also persuaded U.S. taxpayer-clients to transfer assets from UBS to Wegelin by emphasizing, among other things, that unlike UBS, Wegelin did not have offices outside of Switzerland and was therefore less vulnerable to U.S. law enforcement pressure. Members of the Swiss bank’s senior management approved efforts to capture the clients who were leaving UBS and also participated in some meetings with U.S. taxpayer-clients who were fleeing UBS. In February 2009, UBS entered into a deferred prosecution agreement with the Justice Department on charges of conspiring to defraud the United States by impeding the IRS. As part of the deferred prosecution agreement, UBS paid $780 million in fines, penalties, interest and restitution.
To further the goals of the conspiracy, Wegelin, acting through Berlinka, Frei, Keller and/or others, took steps that included the following:
· Opening and servicing undeclared accounts for U.S. taxpayer-clients in the names of sham corporations and foundations formed under the laws of Liechtenstein, Panama, Hong Kong and other jurisdictions for the purpose of concealing some clients’ identities from the IRS;
· Accepting, as part of Wegelin’s client files, documents that falsely declared that the sham entities were the beneficial owners of certain accounts, when in fact the accounts were owned by U.S. taxpayers;
· Permitting certain U.S. taxpayer-clients to open and maintain undeclared accounts at Wegelin using code names and numbers to minimize references to the actual names of the U.S. taxpayers on Swiss bank documents;
· Ensuring that account statements and other mail for U.S. taxpayer-clients were not mailed to them in the United States;
· Communicating with some U.S. taxpayer-clients using their personal email accounts to reduce the risk of detection by law enforcement; and
· Issuing checks drawn on, and executing wire transfers through, its U.S. correspondent bank account for the benefit of U.S. taxpayers with undeclared accounts at Wegelin and at least two other Swiss banks. In doing so, the bank sometimes separated the transactions into batches of checks or multiple wire transfers in amounts that were less than $10,000 to reduce the risk that the IRS would detect the undeclared accounts.
U.S. taxpayers are required to report the existence of any foreign bank account on their federal income tax returns if it holds more than $10,000 at any time during a given year, as well as any income it earns. By 2010, the collective maximum value of the assets in undeclared accounts beneficially owned by U.S. taxpayer-clients of Wegelin was more than $1.2 billion, with many accounts holding more than $10,000 in any one year.
The civil forfeiture complaint and the related seizure warrant arise out of Wegelin’s use of its correspondent bank account to help U.S. taxpayers with undeclared accounts repatriate money that they had hidden at the Swiss bank. This was often done in a manner designed to evade detection by U.S. authorities. For example, U.S. taxpayers routinely asked Wegelin to issue and send them checks, which were drawn off the bank’s correspondent bank account, that represented funds held in their secret accounts at the bank. Further, Wegelin permitted at least two other Swiss banks to issue checks drawn on its correspondent bank account for the benefit of U.S. taxpayers holding undeclared accounts at these other Swiss banks. The sheer volume of transactions in Wegelin’s correspondent bank account served to conceal the repatriation of money from U.S. taxpayers’ undeclared accounts at Wegelin and the other banks.
“As alleged, Wegelin Bank aided and abetted U.S. taxpayers who were in flagrant violation of the tax code,” said Preet Bharara, U.S. Attorney for the Southern District of New York. “And they were undeterred by the crystal clear warning they got when they learned that UBS was under investigation for the identical practices. Today’s indictment makes clear that we will seek to punish not only those U.S. taxpayers who violate the law in an effort to avoid paying their fair share of taxes, but also the individuals and entities who facilitate their crimes.”
IRS Commissioner Douglas Shulman said, “ Today's indictment is another step in our ongoing effort to pursue hidden offshore assets – no matter where they are located. We are continuing our work to crack down on offshore tax evasion. Through our efforts, we are gaining access to more and more information on institutions and individuals involved in offshore tax evasion, and you can expect us to pursue all avenues to stop this abuse.”
Wegelin is headquartered in St. Gallen, Switzerland, and faces a fine of the greatest of $500,000, or twice the gross gain derived from the offense or twice the gross loss to the victims.
Berlinka, Frei, and Keller, 41, 51 and 47, respectively, reside in Switzerland. They each face a maximum term of five years in prison, a maximum term of three years of supervised release and a fine of the greatest of $250,000, or twice the gross gain derived from the offense or twice the gross loss to the victims.
Wegelin has been summoned to appear before Judge Rakoff on Feb. 10, 2012, at 3 p.m. Berlinka, Frei and Keller have not been arrested.
Mr. Bharara praised the outstanding efforts of IRS-CID in the investigation. He also thanked U.S. Department of Justice's Tax Division for their significant assistance in the investigation.
This criminal case is being handled by the Office’s Complex Frauds Unit and the civil forfeiture proceeding is being handled by the Office’s Asset Forfeiture Unit. Assistant U.S. Attorneys David B. Massey, Daniel W. Levy and Jason H. Cowley are in charge of the prosecution and civil forfeiture proceeding.
The charges and allegations contained in the superseding indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty. The allegations contained in the civil forfeiture complaint and seizure warrant are merely accusations.
Indictment (PDF)
Verified Complaint (PDF)Rehabilitation Agency Owner in Detroit Found Guilty for Role in $2 Million Therapy Fraud SchemeRead the Press Release
WASHINGTON - The owner of a rehabilitation agency in Dearborn, Mich., was convicted today by a federal jury in Detroit for his leading role in a fraudulent Medicare therapy scheme, announced the Department of Justice, FBI and the Department of Health and Human Services (HHS).
Detroit-area resident Tariq Mahmud, 55, was convicted of one count of conspiracy to commit health care fraud and six counts of health care fraud. At sentencing, Mahmud faces a maximum penalty of 10 years in prison on the conspiracy count and each count of health care fraud, as well as a $250,000 fine per count. A sentencing date has not yet been set by the court.
According to evidence presented during the four-day trial, Mahmud was the owner of Comprehensive Rehabilitation Services Inc (CRS), a fraudulent rehabilitation agency located in Dearborn. Between January 2003 and February 2007, CRS purchased pre-packaged, falsified physical and occupational therapy files from more than 30 therapy and rehab companies and used them to fraudulently bill Medicare for more than $2 million.As part of the scheme, Medicare beneficiaries were paid cash kickbacks and given prescription drugs to sign forms and visit sheets that were later falsified to indicate that they received therapy service that they had never received. Physical and occupational therapists created false evaluations, progress notes and discharge papers indicating that the therapy services were given, when in fact they never were. Evidence at trial showed that the therapists never met the beneficiaries and Mahmud never provided or supervised the therapy billed to Medicare.
In addition to submitting more than $2 million in false therapy claims, Mahmud made additional false statements to Medicare regarding services that were never rendered. For instance, when Medicare inquired regarding a beneficiary who complained that he had not received the services for which CRS billed Medicare, Mahmud returned the payment and told Medicare that he consulted with his professional staff and the beneficiary had not been satisfied with services. In fact, CRS had no professional staff; the therapists who signed the beneficiary’s file never rendered any services; and the beneficiary never received services. Evidence at trial established that the beneficiary’s identity was stolen and used by CRS and a fraudulent file-making company to bill Medicare.
Today’s conviction was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade; Special Agent in Charge Andrew G. Arena of the FBI’s Detroit Field Office; and Special Agent in Charge Lamont Pugh III of the HHS Office of Inspector General’s (OIG) Chicago Regional Office.
This case was prosecuted by Assistant Chief Benjamin S. Singer and Trial Attorney Catherine K. Dick of the Criminal Division’s Fraud Section. It was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan.
Since their inception in March 2007, the strike force operations in nine districts have charged more than 1,160 individuals who collectively have falsely billed the Medicare program for more than $2.9 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to www.stopmedicarefraud.gov.
Nine Indicted for Conspiring to Distribute, Receive and Possess Child PornographyRead the Press Release
WASHINGTON – Nine men have been indicted in the Western District of Virginia for allegedly conspiring to receive, distribute, possess and access with intent to view child pornography, Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Timothy J. Heaphy of the Western District of Virginia and Assistant Director Gordon M. Snow of the FBI’s Cyber Division, announced today.
An indictment returned under seal on Jan. 25, 2012, and unsealed today, charges Jesse Leon Coleman, 47, of Lynchburg, Va.; Thomas Syfor, 71, of Bethlehem, Pa.; Matthew Ackerman, 49, of Bethlehem, Pa.; Peter Franklin Ortiz, 56, of Greenville, S.C.; Manuel Antonio Mares, 56, of Miami; Jeremy Hart Yost, 25, of West Bend, Ore.; Richard Phillip Allen, 65, of Redondo Beach, Calif.; and James Calvin Boyd, 58, of Pell City, Ala., with one count of conspiring to receive, distribute, possess and access with the intent to view child pornography. Coleman is also charged with one count of receiving child pornography and one count of accessing with intent to view child pornography. The ninth defendant, known as “Andy Danilov,” is believed to reside in Russia.
Coleman, Ortiz, Yost and Boyd were arrested yesterday, and Allen self-surrendered to authorities yesterday. Syfor, Ackerman and Mares were arrested at earlier dates.
According to the indictment, beginning in August 2010, Danilov distributed emails to a group of individuals, including the defendants, that allegedly contained links to compressed files and file attachments depicting minors engaged in sexually explicit conduct. Danilov often used the screen name “Cinemaboy” in the emails.
If convicted, each defendant faces a maximum penalty of 20 years in prison, a $250,000 fine and lifetime supervised release on the conspiracy count. In addition, Coleman faces a maximum penalty of 20 years in prison, a $250,000 fine and lifetime supervised release on the receipt count and 10 years in prison, a $250,000 fine and lifetime supervised release on the access count.
The investigation of the case was conducted by the FBI Innocent Images Operations Unit. The case is being prosecuted by Assistant U.S. Attorney Nancy Healey of the Western District of Virginia and Trial Attorney Chantel Febus of the Child Exploitation and Obscenity Section in the Justice Department’s Criminal Division.
An indictment is only a charge and not evidence of guilt. Defendants are innocent until proven guilty beyond a reasonable doubt.
Missouri Woman Pleads Guilty for Role in the Vandalism and Arson of a Mobile HomeRead the Press Release
Teresa Witthar, 43, of Independence, Mo., pleaded guilty today in U.S. District Court in Kansas City to federal hate crime charges in connection with the vandalism and arson of a bi-racial man’s mobile home in 2006.
Witthar was indicted by a federal grand jury in August 2011, on one count of conspiracy, one count of violating the Fair Housing Act, one count of using fire to commit a felony, two counts of obstruction of justice and two counts of making false statements for her role in the vandalism and fire of Nathaniel Reed’s mobile home. Witthar entered a guilty plea to one count of conspiracy, one count of violating the Fair Housing Act and one count of obstruction of justice.
According to the indictment, in the summer of 2006, Witthar, Charles Wilhelm and David Martin conspired to intimidate and scare Nathaniel Reed, a bi-racial man, into moving out of the Highland Manor Mobile Home Park in Independence, Mo., in part because of his race. On or about June 6, 2006, Witthar, along with Wilhelm and Martin, entered Reed’s mobile home, without his permission, and vandalized it by writing at least fifteen racially derogatory slurs on the walls of his trailer. Two days later, Witthar drove Martin and Wilhelm to a neighbourhood behind Reed’s mobile home so that they could set fire to Reed’s trailer without being detected. Witthar waited in her vehicle while they set the fire and then provided them a ride back to the Highland Manor Mobile Home Park.
In the spring of 2011, Witthar unsuccessfully attempted to persuade another individual to testify falsely in front of a grand jury about her role in the vandalism and fire.
“Every American has the right to enjoy their home free from racially-motivated violence, threats and intimidation,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division of the United States Department of Justice. “The Civil Rights Division will aggressively prosecute those who violate this right.”
“When threats and vandalism failed to drive their victim out of the neighborhood, these conspirators escalated their racially-motivated campaign by burning down his home,” said Beth Phillips, U.S. Attorney for the Western District of Missouri. “The Constitution protects each of us from racially-motivated intimidation, and this defendant will be held accountable for violating Mr. Reed’s civil rights.”
“Today’s guilty plea exemplifies the FBI’s continued long term commitment to aggressively pursue justice for those who are victims of racially motivated crimes,” said Brian A. Truchon, Special Agent in Charge of the Kansas City Division of the FBI.
The guilty plea was the result of a cooperative effort between the U.S. Attorney’s Office for the Western District of Missouri, the Civil Rights Division of the Department of Justice, and the Kansas City Division of the FBI. The case is being prosecuted by First Assistant U.S. Attorney David Ketchmark for the Western District of Missouri and Trial Attorney Sheldon L. Beer of the Civil Rights Division’s Criminal Section.
Las Vegas Real Estate Agent and Mortgage Broker Convicted for Their Roles in Mortgage Fraud SchemeRead the Press Release
WASHINGTON – A real estate agent and a mortgage broker, both of Las Vegas, were found guilty today for their participation in a mortgage fraud scheme that netted nearly $2.5 million in fraudulent mortgage loans, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Daniel G. Bogden of the District of Nevada and Special Agent in Charge Kevin Favreau of the FBI’s Las Vegas Field Office.
After a seven-day trial, a federal jury in Las Vegas found Jeannie Sutherland and Kelly Nunes guilty of one count of bank fraud and one count of conspiracy to commit wire and bank fraud. Sutherland, 67, and Nunes, 41, were acquitted on a second count of bank fraud. A third individual, Michael Toren, 41, was acquitted on the one charge against him.
According to the evidence at trial and court documents, Sutherland, a real estate agent, and Nunes, a mortgage broker, participated in a scheme to submit fraudulent loan documents to a lender and to artificially inflate the sales price of two Las Vegas homes. The scheme netted nearly $2.5 million in mortgage loans, more than $600,000 of which was diverted by the defendants in the form of kickbacks and commissions. The participants then attempted to cover up their scheme by lying to state regulators and federal investigators.
Sutherland and Nunes face a maximum sentence of 30 years in prison on each count.
Two co-conspirators, John Williams and Carson Winget, previously pleaded guilty for their roles in the fraud scheme and will be sentenced at a later date.
This case was investigated by the FBI. Trial Attorneys Thomas B.W. Hall and Brian R. Young of the Fraud Section in the Justice Department’s Criminal Division prosecuted the case. The U.S. Attorney’s Office for the District of Nevada provided assistance with the prosecution. Former Fraud Section Trial Attorney Joseph Capone also assisted with the investigation.
Today’s guilty pleas 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 about the task force, visit www.stopfraud.gov.
Four Individuals and Three Corporations Convicted for Roles in Wire Fraud Conspiracy at New York Presbyterian HospitalRead the Press Release
WASHINGTON — A Manhattan jury today convicted four individuals and three corporations for their participation in an eight-year conspiracy, involving kickbacks in excess of $2 million, to defraud New York Presbyterian Hospital (NYPH), the Department of Justice announced. In addition to today’s convictions, previously 10 individuals and three companies have pleaded guilty to date to charges arising out of this investigation.
After a four week trial, Michael Yaron and two companies owned by him, Cambridge Environmental & Construction Corp., which does business as National Environmental Associates (Cambridge/NEA), an asbestos abatement company, and Oxford Construction & Development Corp., a construction company; Moshe Buchnik, the president of two asbestos abatement companies; Santo Saglimbeni, a former vice president of facilities operations at NYPH; Artech Corporation, a company owned by a relative of Saglimbeni; and Emilio “Tony” Figueroa, a former director of facilities operations at NYPH were each convicted of engaging in a wire fraud conspiracy to defraud NYPH. Additionally, Yaron, Cambridge/NEA, Oxford, Buchnik, Saglimbeni and Artech were also convicted of wire fraud for transferring money electronically from the bank account of one co-conspirator to Artech’s bank account.
“We are very pleased that the jury found these individuals and companies guilty of conspiracy to defraud New York Presbyterian Hospital,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Justice Department’s Antitrust Division. “This verdict sends a clear message that corrupt purchasing officials and the contractors who paid them kickbacks will be held accountable for this type of illegal conduct.”
According to the court document, the scheme to defraud NYPH centered on Saglimbeni, with the assistance of Figueroa, awarding asbestos abatement, air monitoring and general construction contracts to Yaron, Buchnik, Cambridge/NEA and Oxford in return for over $2.3 million in kickbacks paid to Saglimbeni. A portion of those kickbacks were funneled by Yaron to Saglimbeni through Artech, a sham company Saglimbeni created in the name of his mother in order to conceal the kickbacks. Counts three and four of the superseding indictment charging Saglimbeni and Figueroa with mail fraud conspiracy and mail fraud were severed from the matter and will be tried on April 16, 2012, in U.S. District Court in Manhattan.
Sentencing for all defendants is scheduled for June 20, 2012, before Judge George B. Daniels. The wire fraud and wire fraud conspiracy charges each carry a maximum penalty of 20 years in prison for individuals and a $1 million criminal fine for individuals and companies. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
The convictions announced today resulted from a federal antitrust investigation of bid rigging, fraud, bribery and tax-related offenses in the award of construction, maintenance and service contracts to the facilities operations department of NYPH.
The investigation is being conducted by the Antitrust Division’s New York Field Office with the assistance of the FBI and the Internal Revenue Service-Criminal Investigation’s New York Field Office. Anyone with information concerning bid rigging, bribery, tax offenses or fraud at NYPH should contact the Antitrust Division’s New York Field Office at 212-264-9308, visit www.justice.gov/atr/contact/newcase.htm or contact the FBI’s New York Division at 212-384-1000.
Florida Man Indicted for Tax Fraud and Identity TheftRead the Press Release
A federal grand jury in Fort Pierce, Fla., returned an indictment charging Ernst Pierre with filing false federal income tax returns and identity theft, the Justice Department and the Internal Revenue Service (IRS) announced. The indictment was unsealed today following Pierre’s arrest. Pierre is charged with 11 counts of filing a false tax return for clients of his business, one count of filing a false tax return for himself, three counts of wire fraud and three counts of aggravated identity theft.
According to the indictment, from October 2009 through May 2011, Pierre filed false tax returns for clients of Tax Max, a Port St. Lucie, Fla., tax return preparation business he owned and operated. Pierre obtained the names and Social Security numbers of clients for whom he prepared and submitted federal income tax returns and that he then fraudulently used those names and Social Security numbers as “dependents” on client tax returns and on his own tax return. Inclusion of a dependent on a federal income tax return can result in a higher tax refund.
“Identity theft is a serious crime. And, when combined with tax refund schemes, it threatens the financial security of our citizens,” Wifredo Ferrer, U.S. Attorney for the Southern District of Florida. “It is time for tax refund scammers to realize that we will not allow them to steal others’ identities and line their pockets through fraud.”
“The Tax Division is dedicated to protecting the personal identities of U.S. taxpayers and prosecuting criminals who steal those identities to commit federal crimes, including tax refund fraud,” said Principal Deputy Assistant Attorney General John A. DiCicco of the Justice Department’s Tax Division. “We are working closely with the IRS and the United States Attorneys to protect the public from these crimes.”
“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 Southern Florida 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.”
An indictment merely alleges that crimes have been committed, and the defendant is presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Pierre faces a maximum potential sentence of three years in prison for each of the twelve false tax return counts, up to twenty years in prison for each of the three wire fraud counts, and a mandatory two-year sentence for each aggravated identity theft count. Pierre is also subject to fines and mandatory restitution if convicted.
This case was investigated by special agents from the IRS - Criminal Investigation. Tax Division trial attorneys Justin K. Gelfand and Thomas J. Krepp are prosecuting the case with the assistance of the United States Attorney’s Office in the Southern District of Florida.
Additional information about the Tax Division and its enforcement efforts may be found at www.justice.gov/tax.
Danish Man Sentenced to 30 Years in Prison for Producing Child Pornography and Extorting a MinorRead the Press Release
WASHINGTON – A Danish man was sentenced today in the Western District of Missouri to 30 years in prison for producing and transporting child pornography and for extortion against an 11-year-old Missouri girl, Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Beth Phillips of the Western District of Missouri announced.
Kai Lundstroem Pedersen, 61, a citizen of Denmark, was sentenced by U.S. District Judge Greg Kays. Pedersen pleaded guilty to the federal indictment on Sept. 6, 2011.
According to court documents, in July 2010, Pedersen engaged in a video web chat from his home in Denmark with an 11-year-old girl in Buchanan County, Mo., identified as Jane Doe #1. Pedersen used a fake Facebook account to pose as a juvenile-aged male. Pedersen admitted that he instructed the girl to engage in sexually explicit conduct that he recorded and saved as a digital video on his computer. This video, as well as screen capture images from the video, were later edited and distributed to others, including family and friends of the victim. Pedersen distributed the images and video over the Internet via file-sharing software.
Pedersen contacted Jane Doe #1 using various aliases through email and chat programs from July to September 2010 in an effort to convince her to engage again in sexually explicit conduct via video web chat. Pedersen threatened to disseminate sexually explicit images of her over the Internet if she did not comply with his demands. For example, on Aug. 15, 2010, Pedersen used nine different aliases on Facebook to contact Jane Doe #1, relaying rape and murder fantasies, asserting that various individuals had watched her video and describing the various sexual acts that these individuals wanted to perform on her.
According to court documents, in August 2010, Pedersen initiated contact with another minor female in rural Missouri, whom he believed to be a close friend of Jane Doe #1. Pedersen contacted this victim, identified as Jane Doe #2, in an effort to exert pressure to have either Jane Doe #1 or Jane Doe #2 perform sexually explicit conduct for him via video web chat.
On Aug. 13, 2010, Jane Doe #1=s mother contacted law enforcement authorities. The mother told an officer that she learned of the contact with Pedersen after receiving Facebook messages that contained nude images of her daughter. A law enforcement officer, posing as a minor victim, communicated online with Pedersen and learned that he was traveling for vacation on Aug. 20, 2010. When Pedersen logged into his Facebook account on Aug. 25, 2010, investigators were able to trace his Internet protocol address to a residence in Stonybrook, N.Y., where he was arrested on Sept. 3, 2010.
This case was prosecuted by Assistant U.S. Attorney Patrick D. Daly of the Western District of Missouri and Trial Attorney Keith Becker of the Child Exploitation and Obscenity Section (CEOS) in the Justice Department’s Criminal Division. It was investigated by the Buchanan County, Mo., Sheriff=s Department; the Western Missouri Cyber Crimes Task Force; the U.S. Immigration and Customs Enforcement (ICE) Office of Homeland Security Investigations (HSI); and CEOS.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys= Offices and the Criminal Division=s CEOS, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
Wednesday 1 February 2012
Principal of Offshore Brokerage Firm and Las Vegas Stock Promoter Convicted in Miami for $7 Million Stock Manipulation ScamRead the Press Release
WASHINGTON – The principal of a Costa Rican brokerage firm and a Las Vegas stock promoter were each convicted yesterday in the Southern District of Florida of all charges for their roles in a stock manipulation scheme that defrauded investors, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida, Chief Postal Inspector Guy Cottrell of the U.S. Postal Inspection Service (USPIS) and James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office.
Jonathan Curshen, 47, the principal of Red Sea Management and Sentry Global Securities, two companies located in San Jose, Costa Rica, that provided offshore accounts and facilitated trading in penny stocks, was found guilty of conspiracy to commit securities fraud, wire fraud and mail fraud; two counts of mail fraud; and conspiracy to commit international money laundering. Nathan Montgomery, 30, a Las Vegas stock promoter, was found guilty of conspiring to commit securities fraud and wire fraud.
The evidence at trial showed that in January and February 2007, Curshen, of Costa Rica and Sarasota, Fla., and Montgomery, of Las Vegas, were involved in a scheme to illegally manipulate the stock price of a company called CO2 Tech (ticker CTTD), which traded on the Pink Sheets, an inter-dealer electronic quotation and trading system.
Evidence at trial showed that Curshen’s and Montgomery’s co-conspirators controlled the outstanding shares of CO2 Tech, which were used in the stock manipulation scheme. Montgomery and his conspirators engaged in coordinated trades in conjunction with the issuance of false and misleading press releases that were designed to artificially inflate the price of CO2 Tech shares to make it appear that it had significant business prospects. According to these press releases, CO2 Tech purported to have a business relationship with Boeing to reduce polluting gases emitted from airplanes, when in fact CO2 Tech never had any business or relationship with Boeing.
According to the evidence at trial, Montgomery and his co-conspirators, Robert Weidenbaum, Timothy Barham Jr., Ryan Reynolds and others fraudulently “pumped” the market price and demand for CO2 Tech stock through these press releases and coordinated trades of shares of CO2 Tech stock in order to create the appearance of legitimate buying interest by legitimate investors. The evidence showed that as Montgomery and his conspirators pumped the price of the stock, Curshen and his conspirators facilitated the “dumping” of shares through the trading desk at Red Sea and Sentry Global Securities by selling the shares at the direction of their conspirators to the general investing public. The evidence showed that these shares, which became virtually worthless, were purchased by unsuspecting investors, including investors in the Southern District of Florida. The evidence showed that Montgomery, Weidenbaum, Reynolds and Barham were paid approximately $1 million in cash by their conspirators to participate in sham stock trades of CO2 Tech. The cash was delivered to Miami via a private jet from an airport outside New York.
The evidence further showed that, from approximately 2003 through 2008, Curshen operated Red Sea as a money laundering hub in Costa Rica that established bank accounts and brokerage accounts in the United States and Canada under false pretenses and through nominee owners. The evidence further showed that Curshen and his co-conspirators laundered the proceeds of the stock fraud from accounts in the United States to an account in Canada, all in an effort to conceal and disguise the nature and source of the proceeds.
At sentencing, Curshen faces a sentence of up to five years in prison on the conspiracy to defraud count, and up to 20 years on each count of mail fraud and money laundering conspiracy. Montgomery faces a sentence of up to five years for the conspiracy to defraud count. The defendants are scheduled to be sentenced by Judge Richard W. Goldberg on May 11, 2012.
Stock promoters Weidenbaum, Barham and Reynolds, who were also charged in this case, previously pleaded guilty to conspiring to commit securities fraud, wire fraud and mail fraud. They also will be sentenced by Judge Goldberg on May 9, 2012. Michael Simon Krome, a securities attorney from New York, who participated in the conspiracy and evaded federal securities registration requirements in order to provide co-conspirators with millions of unregistered and “free trading” shares of CO2 Tech that were used to execute the stock manipulation, also pleaded guilty to conspiring to commit securities fraud, mail fraud and wire fraud.
The case was investigated by the FBI’s Washington Field Office and the USPIS. The case is being prosecuted by Trial Attorneys N. Nathan Dimock and Rina Tucker Harris of the Fraud Section in the Justice Department’s Criminal Division. The U.S. Attorney’s Office for the Southern District of Florida provided significant assistance in this case. The Department of Justice acknowledges the significant assistance of the Financial Industry Regulatory Authority (FINRA) and the U.S. Securities and Exchange Commission (SEC) in its investigation. The SEC has a pending parallel civil case. The Criminal Division’s Office of International Affairs and Costa Rican authorities also provided assistance.
This prosecution is part of efforts under way by the Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
Justice Department Settles Americans with Disabilities Act Lawsuit with Michigan’s Henry Ford Health SystemRead the Press Release
WASHINGTON – The Justice Department has reached a settlement with the Henry Ford Health System to ensure effective communication with individuals who are deaf or hard of hearing in the provision of medical services. The agreement, under the Americans with Disabilities Act (ADA), resolves a complaint filed with the Department of Justice that alleged that the Henry Ford Health System failed to provide sign language interpreters to a deaf patient at one of its in-patient psychiatric facilities and to his family members who are also deaf and need interpreters to communicate effectively with health care providers.
The complaint alleged that the health system violated the ADA by failing to provide appropriate auxiliary aids and services, including sign language interpreter services, to a deaf patient and his family at Kingwood Hospital in Ferndale, Mich. Because of the hospital’s failure to provide sign language interpreter services, a deaf individual was denied the benefit of effective communication with hospital staff, the opportunity to effectively participate in medical treatment decisions, and the full benefit of health care services provided by Kingswood Hospital, which is a part of the health system. The Justice Department then conducted a full review of the health system and determined that systems were not adequate to ensure that deaf and hard of hearing patients are provided with auxiliary aids and services to guarantee effective communication throughout their medical treatment.
“The ADA protects the right of individuals who are deaf or hard of hearing to be able to access medical services, and this settlement is the latest example of the Justice Department’s unwavering commitment to enforcing the ADA,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “This settlement also demonstrates Henry Ford Health System’s commitment to provide effective communication to people who are deaf or hard of hearing.”
"This settlement enables the Henry Ford Health System and the federal government to achieve their common goal to ensure that deaf and hard of hearing patients can communicate with their doctors and obtain equal access to medical treatment, especially at critical moments in their care," said Barbara McQuade, U.S. Attorney for the Eastern District of Michigan.
The settlement agreement requires the health system to provide training to hospital staff on the requirements of the ADA; to adopt specific policies and procedures to ensure that auxiliary aids and services are promptly provided to patients or companions who are deaf or hard of hearing; to appoint a corporate ADA administrator and ADA facilitators at each of its hospitals, urgent care facilities, medical clinics, community health centers and affiliated health care facilities to ensure access to appropriate auxiliary aids and services. The settlement agreement also requires the Henry Ford Health System to pay $70,000 to family members who were denied effective communication.
The ADA prohibits discrimination against individuals with disabilities by hospitals. Among other things, the ADA requires doctors, hospitals and other health care providers to provide equal access to patients and companions who are deaf or hard of hearing. When medical services involve important, lengthy or complex oral communications with patients or companions, hospitals are generally required to provide qualified sign language interpreters and other auxiliary aids, free of charge, to individuals who are deaf, hard of hearing or have speech disabilities. The appropriate auxiliary aid to be provided depends on a variety of factors, including the nature, length and importance of the communication; the context of the communication; the communication skills and knowledge of the individual who is deaf or hard of hearing; and the individual’s stated need for a particular type of auxiliary aid.
Those interested in finding out more about this settlement or hospitals’ effective communication obligations under the ADA may call the Justice Department’s toll-free ADA information Line at 800-514-0301 or 800-514-0383 (TDD), or access its ADA website at www.ada.gov . ADA complaints may be filed by email to [email protected] . This investigation was handled jointly by the U.S. Attorney’s Office for the Eastern District of Michigan and the Civil Rights Division of the Department of Justice.
Federal Court Orders Iowa Man and Eight Companies to Pay Employment TaxesRead the Press Release
A federal court has ordered James Watts and eight corporations to begin paying employment taxes to the United States on a timely basis, the Justice Department announced today. According to the government complaint in the case, Watts, of Bettendorf, Iowa, is the president of Watts Trucking Service, Inc., an Iowa corporation, of which the other seven corporations are subsidiaries. The complaint alleges that the companies fail to pay over to the Internal Revenue Service (IRS) all of their employment and unemployment taxes, including the income and social security taxes withheld from their employees’ wages.
Chief Judge James E. Gritzner of the U.S. District Court for the Southern District of Iowa entered the preliminary injunction order, which requires Watts and the companies to comply with federal employment tax filing, deposit, and payment requirements, and to certify to the government that they have done so. The injunction also prohibits the defendants from closing a waste-handling business and reopening it under a new name without the written consent of the government.
According to the complaint, Watts has formed and controlled at least 23 different business entities over the past two decades, most of which have accrued delinquent tax liabilities. The complaint states that the defendant corporations, along with 15 inactive entities, owe the government over $30 million in federal employment and unemployment taxes.The preliminary injunction will remain in effect while the case proceeds to final judgment. Violation of an injunction can result in civil and criminal sanctions, including fines and imprisonment.
In the past decade, the Justice Department’s Tax Division has obtained hundreds of injunctions prohibiting a wide variety of improper conduct, including repeated non-payment of employment taxes. Information about these cases is available on the Justice Department website .
First Amended Complaint for Permanent Injunction and for Other Relief (PDF)
Order (PDF)Department of Justice Reaches Settlement with Mercer County School District in West Virginia to Ensure Equal Opportunities for ELL StudentsRead the Press Release
WASHINGTON – The Justice Department reached a settlement agreement yesterday with the Mercer County School District in West Virginia. With the district’s cooperation, the department conducted an extensive examination of the district’s English Language Learner (ELL) program to determine whether the district’s ELL students were receiving adequate services as required by the Equal Educational Opportunities Act of 1974.
The three-year settlement agreement will ensure that this rural district takes appropriate action to serve its small but growing and widely dispersed ELL population. The district has agreed to dedicate funding, resources and time through the end of 2014 toward teacher professional development, ELL-specific materials and translator and interpreter services. The district also has agreed to adopt policies to identify incoming ELL students properly through a home language survey and testing, to identify and serve special education ELLs and to monitor the academic performance of current, former and opt-out ELL students.
“Students who are not proficient in English are entitled to language acquisition services that ensure their equal and meaningful participation in educational programs,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Department of Justice is committed to ensuring that all English Language Learners are provided the services they need to succeed, whether they attend large urban districts or smaller rural districts like the Mercer County School District. We applaud the Mercer County School District’s decision to enter into this important agreement and look forward to continuing to work cooperatively with the district to address the diverse needs of its English Language Learners.”
The enforcement of the Equal Educational Opportunities Act is a top priority of the Justice Department’s Civil Rights Division. Additional information about the Civil Rights Division of the Justice Department is available on its website at www.justice.gov/crt .
Tuesday 31 January 2012
Virginia Contractor Sentenced to Serve 37 Months in Prison for Kickback Scheme and Failure to File Tax ReturnRead the Press Release
WASHINGTON — A Virginia contractor was sentenced today to serve 37 months in prison for participating in a scheme to steer contracts to him for repair, maintenance and renovation work at healthcare and nursing home facilities owned by Medical Facilities of America Inc. (MFA), the Department of Justice announced.
Edward T. Fodrey, a resident of Norfolk, Va., was sentenced in U.S. District Court in Norfolk by Judge Mark S. Davis and was ordered to pay $326,799 in restitution. Fodrey pleaded guilty on April 4, 2011, to one count of conspiracy to commit mail fraud in connection with his participation in a kickback scheme and one count of failing to file a tax return.
According to the charge filed on March 30, 2011, from about May 2006 until at least December 2006, Fodrey conspired with an MFA employee who oversaw the bidding process for repair, maintenance and renovation contracts at MFA facilities in North Carolina and Virginia. The MFA employee steered contracts to Fodrey in return for kickbacks by creating fictitious competitor bids that were higher than the quotes submitted by Fodrey and other co-conspirator venders in order to create the appearance of competition. The MFA employee directed subordinates to solicit quotes only from Fodrey or other conspiring vendors and specified the amount Fodrey should quote to MFA as well as the amount of the kickback on each of the contracts.
Fodrey paid more than $160,000 in kickbacks to the MFA employee and received contracts and subcontracts totaling more than $750,000. The court document states that as a result of the kickback scheme, MFA was deprived of competitive pricing to its financial detriment. Fodrey was also charged with failing to file a tax return for 2006, which is the year in which Fodrey received payment on the MFA contracts.
Fodrey is the first to be sentenced of the four individuals charged to date in connection with the department’s ongoing fraud investigation into the award of repair, maintenance and renovation contracts at facilities owned by MFA. The investigation is being conducted by the Antitrust Division’s Philadelphia Field Office, the U.S. Attorney’s Offices for the Eastern District of Virginia and the Western District of Virginia, the FBI in Roanoke, Va., and the Internal Revenue Service-Criminal Investigation in Roanoke. Anyone with information concerning fraudulent behavior relating to the award of contracts by MFA should contact the Antitrust Division’s Philadelphia Field Office at 215-597-7405 or visit www.justice.gov/atr/contact/newcase.htm.
South San Francisco Food Processing Factory Will Pay Nearly $700,000 in Penalties, Spend $6 Million to Update Refrigeration System SafetyRead the Press Release
WASHINGTON – South San Francisco, Calif., food processor Columbus Manufacturing Inc., a wholly owned subsidiary of Columbus Foods LLC, has agreed to pay a penalty and make significant upgrades to settle Clean Air Act violations, the Department of Justice and the U.S. Environmental Protection Agency (EPA) announced today. The case stems from two releases of anhydrous ammonia that occurred in 2009 at its manufacturing facility located in South San Francisco, Calif.
The releases were the result of Columbus’s failure of its general duty of care to identify hazards and to maintain a safe facility and its failure to comply with regulatory requirements for process safety management under Section 112(r) of the Clean Air Act.
“This settlement appropriately penalizes Columbus for violations of the Clean Air Act that resulted in two illegal releases of poisonous gas that put the community at risk, including one release that caused the hospitalization of people in the affected community,” said Ignacia S. Moreno, Assistant Attorney General of the Environment and Natural Resources Division at the Department of Justice. “Today’s agreement will prevent future violations of the Clean Air Act safety standards by requiring Columbus to upgrade its refrigeration technology and emergency notification system.”
“Columbus is responsible for letting plumes of poisonous gas escape into the open air,” said Jared Blumenfeld, EPA’s Regional Administrator for the Pacific Southwest. “Our goal is to safeguard neighbors and workers by requiring critical improvements to the company’s plant to prevent these industrial accidents from happening again.”
As part of the consent decree announced today, Columbus will pay a penalty of $685,446 and spend approximately $6 million converting its refrigeration system to a safer technology that uses glycol and ammonia. The company will also improve its alarm and ammonia release notification procedures.
The first accidental ammonia release, in February 2009, sent 217 pounds of poisonous gases into the atmosphere. Six months later in August 2009, the plant again released an ammonia cloud, this time approximately 200 pounds of anhydrous ammonia was released into the atmosphere.
The August incident resulted in the evacuation of all facility employees and several neighboring businesses. Nearly 30 people from the downwind Genentech campus sought medical attention and 17 individuals were hospitalized. One person remained hospitalized for four days. In addition, off-ramps from Highway 101 and several local streets were shut down as a result of the release.
EPA took action following the August 2009 incident, ordering Columbus to complete initial upgrades to its ammonia refrigeration system, including the replacement of safety relief valves and components with any signs of corrosion, and the proper labeling of all its piping. In 2011, the company paid $850,000 in fines to San Mateo County as a result of the incident.
Anhydrous ammonia is considered a poisonous gas. Exposure to its vapors can cause temporary blindness and eye damage, and irritation of the skin, mouth, throat, respiratory tract and mucous membranes. Prolonged exposure to anhydrous ammonia vapor at high concentrations can lead to serious lung damage and even death. Anhydrous ammonia is one of the listed extremely hazardous substances to which Section 112(r) of the Clean Air Act applies.
Enforcement of the general duty of care and of the regulatory requirements under Section 112(r)(1) and (7) of the Clean Air Act is critical to ensuring that industry focuses on the safety of the public and the environment.
For more information, including a copy of the consent decree lodged in the U.S. District Court for the Northern District of California, please visit: www.epa.gov/region09/superfund/emerprep.html .
Patient Recruiter Pleads Guilty in Louisiana Health Care Fraud SchemeRead the Press Release
WASHINGTON – An Atlanta resident pleaded guilty today for his role in a Louisiana-based Medicare fraud scheme involving fraudulent claims for unnecessary durable medical equipment (DME), announced the Department of Justice, the FBI, the Department of Health and Human Services (HHS) and the Louisiana State Attorney General’s Office.
Fred D. Belcher, 61, pleaded guilty before U.S. District Judge James J. Brady of the Middle District of Louisiana to one count of conspiracy to commit health care fraud.
Belcher admitted that he worked as a recruiter for Healthcare 1 LLC, Medical 1 Patient Services LLC and Lifeline Healthcare Services Inc., Louisiana-based companies that fraudulently billed DME to the Medicare program from 2004 to 2009. He and other recruiters were hired to obtain prescriptions for DME such as leg braces, arm braces, power wheel chairs and wheel chair accessories. Specifically, Belcher recruited Medicare beneficiaries to attend “health fairs” that he organized at churches and other locations in the beneficiaries’ communities. At these fairs, he obtained information from the beneficiaries and paid a doctor to prescribe medically unnecessary DME for the beneficiaries. Belcher then sold these prescriptions so they could be billed to Medicare by Healthcare 1 LLC, Medical 1 Patient Services LLC and Lifeline Healthcare Services Inc.
According to plea documents, from 2004 to 2009, Medicare was billed approximately $1.15 million for the beneficiaries that Belcher provided as part of this fraudulent scheme.
One of Belcher’s co-defendants, Beulah Renaee Richardson, pleaded guilty before Judge Brady on Jan. 26, 2012, for her role in the fraud scheme. Richardson, 47, admitted that she also served as a recruiter for Healthcare 1 LLC, Medical 1 Patient Services LLC and Lifeline Healthcare Services Inc. In addition, eight other defendants have pleaded guilty for their roles in the fraud scheme.
Belcher and Richardson face a maximum penalty of 10 years in prison and a $250,000 fine. A sentencing date has not yet been set.
Today’s plea was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Donald J. Cazayoux Jr. of the Middle District of Louisiana; Mike Fields, Special Agent-in-Charge of Dallas Region for the HHS Office of the Inspector General (HHS-OIG); David Welker, Special Agent-in-Charge of the FBI’s New Orleans division; and Louisiana State Attorney General James Buddy Caldwell.
The case is being prosecuted by Trial Attorneys David Maria and Abigail Taylor and Assistant Chief William Pericak of the Criminal Division’s Fraud Section. The case was investigated by the FBI, HHS-OIG and the Medicaid Fraud Control Unit of the Louisiana State Attorney General’s Office (MFCU), 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 Middle District of Louisiana.
Since its inception in March 2007, the Medicare Fraud Strike Force operations in nine locations have charged more than 1,160 defendants that collectively have billed the Medicare program for more than $2.9 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to www.stopmedicarefraud.gov .
Justice Department Charges St. Bernard Parish, Louisiana for Limited Rental Housing Opportunities for African-AmericansRead the Press Release
WASHINGTON – The Department of Justice today filed a lawsuit against St. Bernard Parish, La., alleging that the parish violated the Fair Housing Act by engaging in a multi-year campaign to limit rental housing opportunities for African-Americans in the parish.
The complaint, filed in the U.S. District Court for the Eastern District of Louisiana, alleges that the parish violated the Fair Housing Act when it took repeated actions to limit the availability of multi-family and rental housing in the parish. These actions include the establishment of an onerous permit-approval process for single-family rentals, the elimination of multi-family housing in large portions of the parish and repeated attempts to block the development of multi-family affordable-housing. The complaint alleges that the parish’s actions both were intended to and had the effect of disproportionately disadvantaging African-Americans seeking to rent housing in St. Bernard Parish.
The parish has been sued previously over housing and land-use decisions since Hurricane Katrina and found in contempt of court orders repeatedly. In October 2011, a federal district court found that the parish had engaged in intentional discrimination in violation of the Fair Housing Act by “doggedly attempt[ing] to preserve the pre-Katrina demographics of St. Bernard Parish.”
“Every person should have the opportunity to choose where they will live. When a local government puts up discriminatory barriers, as St. Bernard Parish has, it violates the law,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “We will use our enforcement tools to break down such barriers and ensure that people have housing choice free of discrimination.”
“The Department of Justice is committed to ensuring that everyone in our community – regardless of race, color or national origin – enjoys the equal protection of our Constitution and our laws, as well as the absolute right to live in any community of their choosing without discrimination,” said James Letten, U.S. Attorney for the Eastern District of Louisiana.
“Today’s action exemplifies how HUD and the Justice Department are working together to eradicate housing discrimination,” stated John Trasviña, HUD Assistant Secretary for Fair Housing and Equal Opportunity. “Our agencies will not allow zoning or other exclusionary means to deny housing because of race.”
The complaint is based in part on referrals from the Department of Housing and Urban Development (HUD). From March 2008 to September 2011, 10 residents and homeowners filed complaints with HUD, alleging that the parish’s actions violated the Fair Housing Act. HUD referred these complaints to the Department of Justice in accordance with a provision in the Fair Housing Act that authorizes the department to enforce allegations of discriminatory zoning or land use practices by a local government.
Assistant Secretary for Fair Housing and Equal Opportunity, John Trasviña, also filed a complaint on behalf of the HUD Secretary alleging that the parish violated the Fair Housing Act by passing an ordinance that restricted new multifamily housing construction to certain areas of the city and prohibited it in others. HUD referred this complaint to the Department of Justice on Jan. 20, 2012.
The department’s lawsuit seeks a court order that would enjoin the parish from making unavailable or denying housing on the basis of race and requires it to take actions to prevent any similar discriminatory conduct in the future. The lawsuit also seeks monetary damages for persons harmed by the parish’s actions and a civil penalty.
The federal Fair Housing Act prohibits discrimination in housing based on race, color, religion, national origin, sex, disability and familial status. Fair housing enforcement is a priority of the Civil Rights Division. More information about the Civil Rights Division and the laws it enforces is available at www.justice.gov/crt. Individuals who believe that they may have been victims of housing discrimination can call the Housing Discrimination Tip Line at 1-800-896-7743, email the Justice Department at [email protected], or contact HUD at 1-800-669-9777.
Justice Department Celebrates 25th Anniversary of False Claims Act Amendments of 1986Read the Press Release
The Justice Department today celebrated the 25th anniversary of the 1986 amendments to the False Claims Act. The False Claims Act has been called the single most important tool that American taxpayers have to recover funds when false claims are made to the federal government, including health care fraud, mortgage fraud, and procurement fraud.
“In the last quarter century, the False Claims Act’s success has been unparalleled with more than $30 billion dollars recovered since it was amended in 1986 and $8.8 billion since January 2009,” said Attorney General Eric Holder. “In these challenging economic times when resources are scarce, government budgets are being tightened and so many Americans are forced to do more with less, the need to act as sound stewards of every taxpayer dollar has never been more clear or more urgent. The Department of Justice has achieved record recoveries in recent years and we will continue to aggressively pursue those who would take advantage of their fellow citizens.”
The False Claims Act was originally passed by Congress during the administration of President Abraham Lincoln in 1863 to help the government recover federal funds stolen through fraud by U.S. government contractors. During the Civil War, the law was used to recover monies from unscrupulous contractors who sold the Union Army decrepit horses and mules in ill health, faulty rifles and ammunition, and rancid rations and provisions.
In 1986, Senator Charles Grassley and Representative Howard Berman led successful efforts in Congress to amend the False Claims Act. The amendment permitted the government to seek treble damages and revised the statute’s qui tam, or whistleblower, provisions to increase the incentives for whistleblowers to come forward with allegations of fraud. Since those changes were enacted, the Justice Department has recovered more than $30 billion under the act.
On this, the 25th anniversary of the 1986 amendments, Tony West, Assistant Attorney General of the Civil Division of the Department of Justice, paid tribute to the bill’s sponsors, thanking them for “their foresight in providing the Department with this powerful tool to fight fraud, waste and abuse.” He also expressed his gratitude to Senator Patrick J. Leahy, Chairman of the Senate Judiciary Committee, and to Senator Grassley and Representative Berman for their support of the Fraud Enforcement and Recovery Act of 2009, which made additional improvements to the False Claims Act and other fraud statutes.
“ One need look no further than the record recoveries this department has obtained in civil fraud cases to demonstrate the tremendous importance and effectiveness of the False Claims Act,” said Assistant Attorney General West. “That framework was put in place in 1986, but our successes would not have been possible without the ongoing efforts and collaboration of career civil servants, private counsel, and, of course, the whistleblowers who come forward to report fraud.”
In FY 2011 alone, the Department of Justice secured more than $3 billion in settlements and judgments in civil cases involving fraud against the government. Since January 2009, the department has recovered $8.8 billion under the False Claims Act – the largest three-year total in the Justice Department’s history, and 28 percent of all recoveries since the False Claims Act was amended in 1986.
Among the top settlements the government has achieved since the passage of the 1986 amendments are the following, which include, in some cases, criminal and state civil recoveries: $2.3 billion – Pfizer Inc. (2010); $1.7 billion – Columbia/HCA I & II (2000 and 2003); $1.415 billion – Eli Lilly and Company (2009); $950 million – Merck Sharp & Dohme (2011); $923 million – Tenet Healthcare Corporation (2006); $875 million – TAP Pharmaceuticals (2002); $750 million – GlaxoSmithKline (2010); $704 million – Serono, S.A. (2005); $650 million – Merck (2008); and $634 million – Purdue Pharma (2007).
Fort Lauderdale, Florida-Area Halfway House Owner Sentenced to 28 Months in Prison for Participating in Medicare Fraud Kickback SchemeRead the Press Release
WASHINGTON – The owner and president of a Fort Lauderdale, Fla.-area halfway house company was sentenced today to 28 months in prison for her role in a kickback scheme that funneled patients to a fraudulent mental health provider, American Therapeutic Corporation (ATC), announced the Department of Justice, the FBI and the Department of Health and Human Services (HHS).
Natalie Evans, 50, was sentenced by U.S. District Judge Jose E. Martinez in the Southern District of Florida. In addition to her prison term, Evans was sentenced to three years of supervised release and was ordered to pay $253,867 in restitution.
Evans pleaded guilty in October 2011 to one count of conspiracy to commit health care fraud. Evans was the president of Vision of Hope Recovery Inc., which operated five halfway houses in Fort Lauderdale.
According to court documents, most of the residents at Evans’s halfway houses were recovering from drug and/or alcohol addictions, and some had recently been released from prison. ATC purported to operate partial hospitalization programs (PHPs) in seven different locations throughout south Florida and Orlando. A PHP is a form of intensive treatment for severe mental illness.
According to court documents, Evans agreed to provide Medicare beneficiaries from Vision of Hope halfway houses to ATC for PHP services. Evans admitted that she knew the beneficiaries at her halfway houses needed day treatment for addiction and not PHP services. Evans also knew that ATC fraudulently billed the Medicare program for the PHP services provided to the beneficiaries she referred to ATC. According to court documents, Evans gave patient information, such as Medicare numbers, to a co-conspirator, and the patients were then transported to and from ATC by ATC employees.
According to court filings, ATC’s owners and operators paid kickbacks to owners and operators of assisted living facilities and halfway houses and to patient brokers in exchange for delivering ineligible patients to ATC and ASI. In some cases, the patients received a portion of those kickbacks. Throughout the course of the ATC and ASI conspiracy, millions of dollars in kickbacks were paid in exchange for Medicare beneficiaries who did not qualify for PHP services. The ineligible beneficiaries attended treatment programs that were not legitimate so that ATC and ASI could bill Medicare for more than $200 million in medically unnecessary services.
According to the plea agreement, Evans’s participation in the fraud resulted in more than $645,975 in fraudulent billing to the Medicare program.
ATC, its management company Medlink Professional Management Group Inc., and various owners, managers, doctors, therapists, patient brokers and marketers of ATC, Medlink and ASI, were charged with various health care fraud, kickback, money laundering and other offenses in two indictments unsealed on Feb. 15, 2011. ATC, Medlink and 10 of the individual defendants have pleaded guilty or have been convicted at trial. Other defendants are scheduled for trial April 9, 2012, before U.S. District Judge Patricia A. Seitz.
Today’s sentence was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; John V. Gillies, Special Agent-in-Charge of the FBI’s Miami field office; and Special Agent-in-Charge Christopher B. Dennis of the HHS Office of Inspector General (HHS-OIG), Office of Investigations Miami office.
The case is being prosecuted by Trial Attorneys Steven Kim and Jennifer L. Saulino of the Criminal Division’s Fraud Section. The case was investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.
Since its inception in March 2007, the Medicare Fraud Strike Force operations in nine locations have charged more than 1,160 defendants that collectively have billed the Medicare program for more than $2.9 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
Attorney General Eric Holder’s Task Force Examines Children’s Exposure to Violence in Rural and Tribal CommunitiesRead the Press Release
Attorney General Eric Holder’s National Task Force on Children Exposed to Violence today held a public hearing in Albuquerque, N.M., on the challenges rural and tribal communities face in preventing children’s exposure to violence. In a recent survey of youth in New Mexico by the Centers for Disease Control and Prevention, nearly 20 percent reported they were bullied on school property and almost 10 percent experienced dating violence. Nearly 16 percent seriously considered attempting suicide during the 12 months before the survey.
“Protecting our nation’s children and young people from violence is a responsibility that every American shares. For today’s Justice Department, this work is one of our most important, and most urgent, priorities,” said Attorney General Holder. “That’s why this task force represents a powerful and promising step forward. It brings a wealth of experience and talent together to focus on one of the greatest public safety epidemics of our time: children’s exposure to violence.”
“Our children are exposed to far more violence than we realize,” said U.S. Attorney Kenneth J. Gonzales, who delivered opening remarks at today’s hearing. “The task force will enhance how we work together to serve our children in cities and towns, on reservations, and in rural areas throughout the nation.”
Speakers at today’s hearing at the Vincent E. Griego Council Chambers also included task force co-chairs Joe Torre, chairman of the board of the Joe Torre Safe at Home® Foundation, and Robert Listenbee Jr., chief of the Juvenile Unit of the Defender Association of Philadelphia, as well as other task force members and Albuquerque area residents who have experienced or witnessed family, community and other types of violence.
“Rural and tribal communities face unusual challenges, such as lack of resources or access to services, that complicate efforts to reduce the impact of violence on children,” said task force member Sarah Deer, a citizen of the Muscogee (Creek) Nation of Oklahoma and an assistant professor at William Mitchell School of Law in St. Paul Minn. “This hearing in Albuquerque will help the task force understand these unique challenges and guide us toward solutions.”
The task force will identify promising practices, programming and community strategies to prevent and respond to children’s exposure to violence. It also will issue a final report to the attorney general in December 2012 that will present policy recommendations and serve as a blueprint for preventing and reducing the negative effects of such violence across the United States.
“The task force is focused on the well-being of our most precious resource: our children,” said Torre. “I hope that our work will make a significant contribution to solving this urgent problem.”
The task force is comprised of 13 leading experts including practitioners, child and family advocates, academic experts and licensed clinicians. The full list of task force members is located at: www.justice.gov/defendingchildhood/tf-members.html
The task force held its first hearing in Baltimore in November 2011, and will hold two additional hearings this spring in Miami and Detroit. Details on past and future hearings are available on the Defending Childhood website: www.justice.gov/defendingchildhood
The task force is part of the attorney general’s Defending Childhood Initiative and is staffed by the National Council on Crime and Delinquency (NCCD), a nonprofit research and consulting agency.
About the Defending Childhood Initiative and the Task Force
For more information about Attorney General Holder’s Defending Childhood initiative, the Defending Childhood Task Force and upcoming hearings, please visit www.justice.gov/defendingchildhood and www.justice.gov/defendingchildhood/task-force.html
About the National Council on Crime and Delinquency
NCCD promotes just and equitable social systems for individuals, families and communities through research, public policy and practice. For more information about NCCD, please visit www.nccd-crc.org
Alabama Man Pleads Guilty to Production of Child PornographyRead the Press Release
WASHINGTON – An Alabama man who was employed as a security officer in the Birmingham, Ala., City Schools system pleaded guilty today to one count of production of child pornography, announced U.S. Attorney for the Northern District of Alabama Joyce White Vance, Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, Northern District of Alabama FBI Special Agent in Charge Patrick J. Maley and Birmingham Police Chief A.C. Roper.
Michael Wayne Wooten, 60, of Alabaster, Ala., pleaded guilty before U.S. District Judge Inge P. Johnson in the Northern District of Alabama.
According to court documents and proceedings, between August 2009 and April 2010, Wooten, while employed as a security officer for the Birmingham City Schools system, used an office at Dupuy Elementary School to take modeling photos of numerous minor girls. A search of Wooten’s residence yielded multiple computers containing child pornography images, including images produced by Wooten depicting several victims, between four and nine years of age, engaged in sexually explicit conduct.
Wooten faces a mandatory minimum sentence of 15 years in prison and a maximum sentence of 30 years in prison, as well as the possibility of lifetime supervised release. Wooten also faces a fine of $250,000.
This case was investigated by the FBI and the Birmingham Police Department. This case was prosecuted by Assistant U.S. Attorney Daniel Fortune of the Northern District of Alabama and Trial Attorney Jeffrey H. Zeeman of the Child Exploitation and Obscenity Section in the Justice Department’s Criminal Division.
Monday 30 January 2012
Yazaki Corp., Denso Corp. and Four Yazaki Executives Agree to Plead Guilty to Automobile Parts Price-Fixing and Bid-Rigging ConspiraciesRead the Press Release
WASHINGTON – Two Japanese suppliers of automotive electrical components–Yazaki Corporation and DENSO Corporation–have agreed to plead guilty and to pay a total of $548 million in criminal fines for their involvement in multiple price-fixing and bid-rigging conspiracies in the sale of parts to automobile manufacturers in the United States, the Department of Justice today announced. Four executives, all Japanese nationals, have also agreed to plead guilty and to serve prison time in the United States.
Yazaki has agreed to pay a $470 million criminal fine–the second largest criminal fine obtained for a Sherman Act antitrust violation–and DENSO has agreed to pay a $78 million criminal fine. The four executives from Yazaki–Tsuneaki Hanamura, Ryoji Kawai, Shigeru Ogawa and Hisamitsu Takada–will serve prison time ranging from 15 months to two years. The two-year sentences would be the longest term of imprisonment imposed on a foreign national voluntarily submitting to U.S. jurisdiction for a Sherman Act antitrust violation. The fine amount and prison sentences are subject to court approval.
“As a result of the Antitrust Division’s ongoing criminal investigation of price fixing and bid rigging in the auto parts industry, more than $748 million in fines have been obtained–which already surpasses the total amount in criminal fines obtained by the division for all of last fiscal year,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “Criminal antitrust enforcement remains a top priority and the Antitrust Division will continue to work with the FBI and our law enforcement counterparts to root out this kind of pernicious cartel conduct that results in higher prices to American consumers and businesses.”
“I would like to commend the employees of the FBI’s Detroit Field Office and the Department of Justice Antitrust Division, for their fine work on this very important antitrust investigation. This team has devoted countless hours to the investigation and I appreciate their devotion to the mission. The companies involved in this case conspired to the price fixing and bid rigging of automotive parts. This criminal activity has a significant impact on the automotive manufacturers in the United States, Canada, Japan and Europe and had been occurring at least a decade. The conduct had also affected commerce on a global scale in almost every market where automobiles are manufactured and/or sold,” said FBI’s Special Agent in Charge Andrew G. Arena.
According to court documents filed today in U.S. District Court for the Eastern District of Michigan in Detroit, Yazaki, DENSO, Hanamura, Kawai, Ogawa, Takada and their co-conspirators carried out the conspiracies by agreeing, during meetings and conversations, to allocate the supply of the named products on a model-by-model basis and to coordinate price adjustments requested by automobile manufacturers in the United States and elsewhere. They sold automotive electrical components to automobile manufacturers at inflated prices and engaged in meetings and conversations for the purpose of monitoring and enforcing adherence to the agreed-upon bid-rigging and price-fixing scheme.
According to a three-count felony charge, Yazaki engaged in three separate conspiracies: to rig bids for and fix, stabilize and maintain the prices of automotive wire harnesses and related products from 2000 through 2010; to rig bids for and fix, stabilize and maintain the prices of instrument panel clusters from 2002 through 2010; and to fix, stabilize and maintain the prices of fuel senders from 2004 through 2010. All three conspiracies involved products sold to customers in the United States and elsewhere. Automotive wire harnesses are automotive electrical distribution systems used to direct and control electronic components, wiring and circuit boards in cars. Instrument panel clusters, also known as meters, are the mounted array of instruments and gauges housed in front of the driver of an automobile. Fuel senders reside in the fuel tank of an automobile and measure the amount of fuel in the tank.
According to a two-count felony charge, DENSO engaged in conspiracies to rig bids for and to fix, stabilize and maintain the prices of electronic control units (ECUs) and heater control panels (HCPs) sold to customers in the United States and elsewhere. An ECU is an embedded system that controls one or more of the electronic systems or subsystems in a motor vehicle. HCPs are located in the center console of an automobile and control the temperature of the interior environment of a vehicle.
According to four separate one-count felony charges, Hanamura, Kawai, Ogawa and Takada each engaged in a conspiracy to rig bids for and to fix, stabilize and maintain the prices of automotive wire harnesses and related products sold to customers in the United States and elsewhere. The department said that the individuals participated in the conspiracies at various times from at least as early as January 2000, until at least February 2010. During the conspiracies, the individuals held the following positions: Hanamura was a branch manager at Yazaki North America in Columbus, Ohio, and a Honda division sales manager in Japan; Kawai was director of Toyota Sales of Yazaki North America in Lexington, Ky., and vice division head of Yazaki’s Toyota Business Unit in Japan; Ogawa was assistant section manager and later section manager in Yazaki’s Honda Business Unit in Japan, and branch manager in Yazaki’s Honda Sales Unit and later director at Yazaki North America in Columbus; Takada was assistant manager in Yazaki’s Toyota Business Unit, director of Yazaki North America in Lexington, and manager of a sales department of Yazaki’s Toyota Business Unit in Japan. According to the plea agreements, which are subject to court approval, Ogawa and Takada have each agreed to serve 15 months in a U.S. prison. Hanamura and Kawai have each agreed to serve two years in a U.S. prison. Each of the four executives has also agreed to pay a $20,000 criminal fine. According to the plea agreements, Yazaki, DENSO, Hanamura, Kawai, Ogawa and Takada have all agreed to assist the department in its ongoing investigation into the automotive parts industry.
On Nov. 14, 2011, Furukawa Electric Co. Ltd. pleaded guilty and was sentenced to pay a $200 million fine for its role in the wire harnesses price-fixing and bid-rigging conspiracy. Three of Furukawa’s executives also pleaded guilty. The court sentenced two of the executives to 15 and 18 month prison sentences, to be served in the United States. Sentencing of the third executive, who agreed to serve a year and a day in prison in the United States, is scheduled for Feb. 28, 2012.
Yazaki and DENSO are charged with price fixing in violation of the Sherman Act, which carries a maximum $100 million criminal fine for a corporation. Hanamura, Kawai, Ogawa and Takada are also charged with a violation of the Sherman Act, which carries a maximum sentence of 10 years in prison and a $1 million criminal fine for an individual. The maximum fine for both a company and an individual may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
Today’s charges arise from an ongoing federal antitrust investigation into bid rigging, price fixing and other anticompetitive conduct in the automotive parts industry, which is being conducted by the Antitrust Division’s National Criminal Enforcement Section and the FBI’s Detroit Field Office with the assistance of the FBI headquarters’ International Corruption Unit. Anyone with information concerning the focus of this investigation is urged to call the Antitrust Division’s National Criminal Enforcement Section at 202-307-6694 or the FBI’s Detroit Field Office at 313-965-2323.
UBS Clients and Tax Attorney Indicted in Phoenix for Hiding Assets in Secret Foreign Bank AccountsRead the Press Release
Phoenix-area businessmen Stephen M. Kerr and Michael Quiel and former San Diego attorney Christopher M. Rusch were charged in Phoenix with conspiracy to defraud the Internal Revenue Service (IRS) for concealing millions of dollars in assets in numerous secret Swiss bank accounts held at UBS and elsewhere, the Justice Department and Internal Revenue Service (IRS) announced. The charges are contained in an indictment returned by a federal grand jury on Dec. 8, 2011, which was unsealed today. Kerr and Quiel were each also charged with filing false individual income tax returns for tax years 2007 and 2008 and failing to file Reports of Foreign Bank and Financial Accounts (FBARs) for those same years. Rusch was arrested yesterday by U.S. law enforcement agents in Miami after being removed from Panama by Panamanian authorities at the request of the United States. Quiel was also arrested yesterday in the Phoenix area.
According to the indictment, Kerr and Quiel separately owned and operated a number of businesses, including two venture capital firms: CCN Worldwide Inc. and Legend Advisory Corporation, respectively. These companies provided financial capital to start-up companies and other services to businesses seeking to become publicly traded through mergers and acquisitions. Rusch was an attorney licensed and practicing in California. Rusch’s law practice focused on international business planning, criminal and civil tax defense, international tax, and creating and maintaining offshore structures.
Beginning in or before 2004, and continuing through at least December 2007, Kerr and Quiel obtained control of shares of stock of publicly traded domestic companies in a way that concealed their ownership of the stock. Kerr and Quiel then deposited the stock, or proceeds from the sale of the stock, to multiple undeclared bank accounts set up with the assistance of Rusch at UBS in Switzerland and at another Swiss bank. These accounts were all held in the names of nominee entities to further conceal Kerr’s and Quiel’s ownership. Kerr and Quiel also used the accounts to conceal income earned from the subsequent sale of this stock from the IRS. In 2007, the combined total net assets in Kerr’s accounts exceeded $5.6 million and Quiel’s accounts exceeded $2.6 million. Rusch maintained signature authority over the secret accounts and, with the assistance of a Swiss account manager and financial intermediary, facilitated transactions on behalf of Kerr and Quiel.
In addition, the indictment alleges that Rusch maintained his own separate secret offshore accounts, including accounts held in the names of nominee entities at UBS and a Panamanian bank. Among other things, Rusch utilized his nominee Panamanian entity to assist Kerr in concealing the purchase of a golf course in Colorado with funds transferred from Kerr’s secret Swiss accounts. In addition, Rusch utilized his client trust account to transfer funds to Kerr’s and Quiel’s undeclared Swiss accounts and to repatriate funds back to the United States for the benefit of Kerr and Quiel. None of the three defendants disclosed the existence of these offshore accounts, or any income earned through these offshore accounts, to the IRS for the years charged in the indictment.
The conspiracy and FBAR charges each carry a maximum potential penalty of five years in prison and a $250,000 fine. The false return charges each carry a maximum potential penalty of three years in prison and a $250,000 fine.
This case is being prosecuted by Trial Attorneys Timothy Stockwell and Monica Edelstein of the Justice Department’s Tax Division and was investigated with the assistance of the IRS.
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.
Three Men and Company Convicted of Conspiracy to Violate the Clean Air Act During Demolition of Tennessee FactoryRead the Press Release
WASHINGTON – Three men and a demolition company were convicted by a federal jury in Chattanooga, Tenn., of environmental crimes and obstruction of justice charges related to the illegal demolition of a Chattanooga factory containing large amounts of the toxic air pollutant asbestos, announced William C. Killian, U.S. Attorney for the Eastern District of Tennessee, and Ignacia S. Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. David Wood, Donald Fillers, James Mathis and Watkins Street Project LLC, a business formed for the purpose of salvaging and demolishing the facility, were convicted today of conspiracy, Clean Air Act and obstruction-related offenses. James Mathis was found not guilty of one of the Clean Air Act charges, but guilty of conspiracy and three other substantive Clean Air Act counts.
During the course of the three week trial, the evidence proved that the defendants entered into a year-long scheme, from August 2004 to September 2005, in which the former Standard Coosa Thatcher Plant was illegally demolished while still containing large amounts of asbestos. Any asbestos that was removed from the plant prior to demolition was removed illegally, scattered in open debris piles and left exposed to the elements in the vicinity of the 1700 block of Watkins Street in Chattanooga. During the course of these illegal operations, visible emissions engulfed surrounding businesses, residences and a day-care center, potentially exposing the surrounding community to substantial quantities of asbestos – a substance for which the U.S. Environmental Protection Agency (EPA) has determined there is no safe-level given its demonstrated tendency to cause lung cancer, mesothelioma and asbestosis. The evidence also showed the defendants tried to cover up their illegal activities by falsifying documents and lying to federal authorities.
Sentencing is currently set for June 7, 2012. The conspiracy, substantive Clean Air Act and false statements counts of the indictment each carry a maximum possible term of five years in prison and a fine of $250,000, twice the gross gain to the defendants, or twice the gross loss to a victim. The obstruction of justice charge carries a maximum possible term of 20 years in prison and similar fines.
This case was investigated by Special Agents of the EPA’s Criminal Investigation Division and investigators with Chattanooga-Hamilton County Air Pollution Control Bureau. The case is being prosecuted by Assistant U.S. Attorney Matthew T. Morris and Todd W. Gleason, Environmental Crimes Section of the Environment and Natural Resources Division of the U.S. Department of Justice.
South Florida Corrections OfficersSentenced on Federal Civil Rights and Obstruction ChargesRead the Press Release
MIAMI – Two corrections officers were sentenced to prison today for civil rights and obstruction charges stemming from prisoner abuse that took place at the South Florida Reception Center (SFRC), a state prison in Doral, Fla., the Justice Department announced. Florida Department of Corrections (FDOC) Sergeant Alexander McQueen, 31, was sentenced by U.S. District Court Judge Cecilia Altonaga to serve one year in prison, followed by one year of supervised release. Judge Altonaga also sentenced FDOC Officer Steven Dawkins, 31, to serve one month in prison, followed by six months of supervised release.
On Oct. 17, 2011, following a jury trial, McQueen was found guilty of conspiracy against civil rights and obstruction of justice for his involvement in, and attempts to cover up, prisoner abuse at SFRC. The same jury convicted Dawkins of obstruction of justice. A second jury was unable to reach a verdict with regard to co-defendant Guruba Griffin, 31, and acquitted co-defendant Scott Butler, 32.
According to evidence presented at trial, on Feb. 25, 2009, SFRC corrections officers physically abused inmates by choking, punching and striking them with wooden broom handles. The officers further forced the inmates to fight one another. Additionally, McQueen and Dawkins falsified reports relating to these incidents.
“Conduct by corrections officers who abuse their power and violate the civil rights of those in their custody will not be tolerated,” said Thomas E. Perez, Assistant Attorney General for Civil Rights. “The Justice Department will continue to vigorously prosecute those who cross the line to engage in acts of criminal violence and obstruction.”
U.S. Attorney Wifredo A. Ferrer stated, “The U.S. Attorney’s Office is committed to prosecuting civil rights violators, especially when they seek to hide behind color of law or official position.”
“We are pleased with the sentence for McQueen and Dawkins because their actions affected more than those they physically abused, they undermined the public’s trust in law enforcement,” said Special Agent in Charge John V. Gillies of the FBI Miami Division. "Even though they participated in and attempted to cover up prisoner abuse at the Florida Department of Corrections’ South Florida Reception Center, they failed. The FBI will continue to work with our partners to remove those corrections officers who cross the line to engage in criminal misconduct.”
Co-defendant Griffin entered a guilty plea to one count of deprivation of rights under color of law on Dec. 13, 2011, and is scheduled to be sentenced on Feb. 22, 2012.
This case was investigated by the FBI and the Inspector General’s Office, Florida Department of Corrections, and is being prosecuted by Assistant U.S. Attorney Susan Rhee Osborne of the U.S. Attorney’s Office for the Southern District of Florida and Senior Litigation Counsel Gerard Hogan and Trial Attorney Henry Leventis of the Civil Rights Division.
Ohio Man Sentenced to 35 Years in Prison for His Participation in an Online Child Pornography Bulletin BoardRead the Press Release
WASHINGTON – An Ohio man was sentenced today in Riverside, Calif., to 35 years in prison and lifetime supervised release for his participation in an online child pornography bulletin board, 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.
Billy Wade Carroll of Dayton, Ohio, was sentenced by U.S. District Judge Virginia A. Phillips. In October 2011, Carroll, 51, was found guilty of one count of conspiracy to advertise, solicit, transport, distribute, receive and possess child pornography and one count of committing a child pornography offense while being required to register as a sex offender in Ohio.
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.
Evidence presented at trial established that from at least September 2007 until January 2009, Carroll was an active member of the bulletin board and made more than 100 posts. He supplied images of child pornography for other members to download and also made requests on the board seeking out particular images to help supplement his child pornography collection.
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 died in custody. Approximately six more men have been charged with child molestation as a result of the investigation. The investigation also led to the identification of 27 domestic victims of child abuse, some of whom were portrayed in images posted to the Lost Boy bulletin board.
According to court documents and proceedings, law enforcement authorities discovered the Lost Boy bulletin board after receiving information from Eurojust, the judicial cooperation arm of the European Union. Eurojust provided U.S. law enforcement with leads obtained from Norwegian and Italian authorities indicating that a North Hollywood, Calif., man was communicating with an Italian national about child pornography and how to engage in child sex tourism in Romania. Acting on the information from Europe, the FBI executed search warrants that led to the discovery of the Lost Boy network. Further investigation revealed that Lost Boy had 35 members, 16 of whom were U.S. nationals. Other members of the network were located in countries around the world, including Belgium, Brazil, Canada, France, Germany, New Zealand and the United Kingdom.
According to court documents, Lost Boy had a thorough vetting process for new members, who were required to post child pornography to join the organization. Once accepted, members were required to continue posting child pornography to remain in good standing and to avoid removal from the board. According to court documents, Lost Boy members advised one another 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 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.
Memphis Man Sentenced for Interstate Transportation for Purpose of Prostitution in Connection with Sex Trafficking SchemeRead the Press Release
WASHINGTON - Charles Kizer, 53, from Memphis, Tenn., was sentenced late Friday by U.S. District Judge Samuel H. Mays, Jr. to 10 years in prison for violating the Mann Act.
Kizer pleaded guilty in federal court on Aug. 31, 2011, to violating the Mann Act by transporting a woman across state lines for the purpose of having her engage in prostitution. As part of the plea, Kizer admitted that between Aug. 1, 2010, and Sept. 1, 2010, he drove an 18 year-old woman across state lines from Memphis, Tenn., to West Memphis, Ark., to engage in prostitution at a truck stop. Evidence presented at the sentencing showed that Kizer used threats of force and violence to create a climate of fear to cause the woman to engage in prostitution for his financial gain.
“The defendant’s actions robbed this vulnerable young woman of her freedom and dignity,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “We will continue to prosecute those who engage in such reprehensible conduct of coercion and exploitation.”
“Human trafficking is tragically a widespread form of modern-day slavery. This office – in particular, our dedicated Civil Rights Unit - will continue our efforts to rescue victims of trafficking by vigorously pursuing and prosecuting those who seek to exploit them,” said U.S. Attorney Edward L. Stanton, III.
“Sex trafficking is an unconscionable crime and a violation of human rights that the FBI is dedicated to eradicating from our free society ,“ said Aaron T. Ford, Special Agent in Charge of the Memphis Division of the FBI. “ FBI Memphis is proud of the role that it played in bringing this matter to justice, and protecting and defending those who may not be able to evade or escape the grip of sex trafficking .”
The case has been investigated by the FBI and the Memphis Police Department. The case is being prosecuted by Assistant U.S. Attorney Jonathan Skrmetti and Civil Rights Division Trial Attorney Saeed Mody.
Justice Department Settles Case Against One of Nation’sLargest Debt BuyersRead the Press Release
WASHINGTON – Asset Acceptance LLC, a Michigan-based debt buyer, has agreed to a consent decree to settle a civil lawsuit regarding its debt collection activities, the Justice Department announced today. In the decree, Asset agrees to implement a range of new practices to protect consumers and to pay a $2.5 million civil penalty. Asset specializes in purchasing old consumer debts from other companies, and then holding and collecting on these debts over a long period of time. According to the complaint, as of Sept. 30, 2010, Asset held more than 34 million individual accounts with an original value of more than $42 billion, making it one of the nation’s largest debt buyers and a market leader.
If accepted by the court, the proposed consent decree, filed today in the U.S. District Court for the Middle District of Florida in Tampa, will settle charges alleging that Asset violated the Federal Trade Commission Act, the Fair Credit Reporting Act and the Fair Debt Collection Practices Act. The complaint bringing these civil charges was also filed today.
According to the complaint, many of the debts Asset purchased are outside of the statute of limitations and consumers have no enforceable legal obligation to pay that debt. In some states, consumers can reset the statute of limitations if they promise to pay the debt or make a partial payment on the debt. Asset is alleged to have collected on this so-called “zombie” debt without informing consumers that these debts were not legally enforceable, or that in making a partial payment or promise to pay, they may have unwittingly breathed life back into these debts.
The complaint also charges additional violations of federal consumer protection laws, including that Asset systematically failed to conduct a reasonable investigation when a consumer told the company that a debt Asset called about was not the consumer’s debt, that the debt had already been paid or that the consumer had been the victim of identity theft. Similarly, when learning of a consumer dispute from a consumer reporting agency, the company is alleged to have systematically failed to conduct a reasonable investigation of the dispute. Asset also allegedly reported negative information about consumers to credit bureaus, even when the company was aware that a consumer had not received a written notice of that fact because the notice was returned as undelivered mail. According to the complaint, some of these consumers would only learn that Asset had reported them to a credit bureau when applying for a mortgage or auto loan. Even if they believed the debt was invalid, some consumers would pay Asset to avoid losing out on a new loan they needed to get quickly.
The complaint further charges that Asset repeatedly called the wrong person when attempting to collect on a debt, even after being told that the company had reached the wrong number.
“Debt collectors can play a legitimate role in our economy, but only if they follow the law,” said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. “As this resolution demonstrates, those who do not deal fairly and honestly with consumers will be held accountable. The consent decree we are filing today – which requires Asset Acceptance to pay a stiff penalty and change the way it does business – can serve as a model for the entire debt collection industry.”
Under the terms of the settlement, when Asset attempts to collect a debt that may be beyond the statute of limitations, the company must inform the consumer that he or she will not be sued on the debt; further, the company must remind consumers of this promise in any situation where the consumer is likely to have forgotten the disclosure or its effects.
The settlement also requires other changes to Asset’s business practices that create safeguards for consumers. For example, the company must conduct a reasonable investigation into the legitimacy of a debt when it becomes aware of a consumer dispute or if the company who sold a debt to Asset provided unreliable information about the original debt. The company can no longer consider undelivered mail to constitute notice that information about a consumer is being reported to a credit reporting agency or repeatedly contact third parties in a way that violates the Fair Debt Collection Practices Act.
“We are proud to announce this landmark consumer protection settlement in an area that is of great concern to our residents and to this office,” stated Robert E. O'Neill, U.S. Attorney for the Middle District of Florida. “We hope that this consent decree will have the added benefit of deterring other debt collectors from engaging in the sharp practices that we are addressing here.”
The Department of Justice’s Consumer Protection Branch and the U.S. Attorney for the Middle District of Florida filed the complaint and proposed consent decree on behalf of the Federal Trade Commission (FTC), which investigated the violations and referred the case to the Department of Justice. The agreed civil penalty is the second-largest ever in an FTC debt collection case and should deter other debt buyers and debt collectors from engaging in similar misleading practices as those alleged in the complaint.
This matter was investigated by Tracy S. Thorleifson and Julie Mayer of the FTC. The case is being prosecuted by Adrienne Fowler and Sang Lee of the Justice Department’s Consumer Protection Branch.
NOTE : The stipulated final order is for settlement purposes only and does not constitute an admission by the defendant of a law violation. Stipulated orders have the full force of law only when signed by the judge.
Former Suburban Massage Parlor Operator Convictedof Human Trafficking of Four Women in IllinoisRead the Press Release
CHICAGO – A federal jury today convicted Alex Campbell, 45, a northwest Chicago suburban massage parlor owner, of various federal crimes including sex-trafficking, forced labor, harboring illegal aliens, confiscating passports to further forced labor and extortion involving four foreign women whom he mentally and physically abused while forcing them to work for him between July 2008 and January 2010. Campbell was found guilty of three counts each of forced labor, harboring illegal aliens for financial gain, and confiscating passports and other immigration documents to force the victims to work, and one count each of sex trafficking by force and extortion. The jury deliberated approximately two to three hours beginning last Thursday afternoon following a three-week trial in U.S. District Court. The trial showed that Campbell, who formerly operated the Day and Night Spa on Northwest Highway in Mt. Prospect, Ill., used violence and threats of violence to force three women from the Ukraine and one from Belarus to work for him without pay and, at times, little to no subsistence.
Campbell, also known as “Dave” and “Daddy,” formerly of Glenview, Ill., remains in federal custody without bond and faces a mandatory minimum sentence of 15 years in prison and a maximum of life on the sex-trafficking count alone, as well as prison terms ranging from a maximum of 5 to 20 years on each of the remaining counts.
U.S. District Judge Robert Gettleman scheduled a hearing on post-trial motions for April 19, 2012. No date was immediately set for sentencing.
“The Civil Rights Division is committed to bringing human traffickers to justice and to protecting the victims of modern-day slavery,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “These crimes against the individual rights of the most vulnerable members of our society will not be tolerated in the United States.”
“I commend the prosecutors and investigators for their dedication and teamwork in working with the victims to bring this case to trial and achieve a successful result,” said Patrick J. Fitzgerald, U.S. Attorney for the Northern District of Illinois.
“Forced labor and sex trafficking preys upon vulnerable women and is tantamount to modern-day slavery,” said Gary J. Hartwig, Special Agent-in-Charge of ICE Homeland Security Investigations (HSI) in Chicago. “The jury has vindicated the rights of four women who suffered mental and physical abuse, sexual exploitation, extortion and threats of deportation, all so Alex Campbell could make a profit. HSI is at the forefront of the government's fight against human trafficking. We will continue to work with our law enforcement partners to combat this serious crime.”
All four victims testified as government witnesses at trial, as well as co-defendant, Danielle John, 25, who pleaded guilty before trial to two counts of harboring illegal aliens for financial gain and is also awaiting sentencing.
The testimony and evidence showed that Campbell recruited and groomed foreign women without legal status in the United States to become part of his “Family,” which he claimed was an international organization that would provide them with support. He offered them jobs in his massage parlor, a place to live, assistance with immigration and lured each of them to enter into a romantic relationship with him. After gaining their trust, he forced the victims to get tattooed with his moniker, which he said made them his property and allowed him to stop paying them. At the same time, he acquired the women’s passports and visas. The women were forced to work long hours every day and do as Campbell instructed them, and they were beaten and punished if they disobeyed him.
Trial testimony established that Campbell confiscated passports and identity documents from three of the victims, as well as harbored and transported them to ensure their continued labor. Campbell forced one victim to engage in commercial sex acts with customers at various other massage parlors, but not at the Day and Night Spa, which testimony showed he operated “cleanly” to avoid problems with law enforcement. He extorted another victim to pay him more than $25,000 to leave the “Family” by threatening to send a sexually-explicit video recording to her parents in Belarus.
The Cook County State’s Attorney’s Office assisted in the investigation, which was coordinated by the Cook County Human Trafficking Task Force. The task force, together with the Salvation Army Family and Community Services STOP-IT Initiative Against Human Trafficking, operate a toll-free hotline, (877) 606-3158, which victims of trafficking or those with information about human trafficking can call for assistance. The government is represented by Assistant U.S. Attorneys Diane MacArthur and Steven Grimes and Special Litigation Counsel John Richmond of the Civil Rights Division’s Human Trafficking Prosecution Unit.
Former Soldier and Contract Military Recruiter Pleads Guilty<br /> in Texas for Role in Scheme to Illegally Obtain Military Recruiting BonusesRead the Press Release
WASHINGTON – A former soldier who also served as a contract military recruiter pleaded guilty today to conspiracy to obtain more than $200,000 in fraudulent recruiting bonuses from various U.S. military components and their contractor, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.
Former Staff Sergeant Grant E. Bibb, 40, of Eagle Pass, Texas, was indicted on Sept. 13, 2011, along with former Specialist Xavier Aves, 40, of San Antonio; former Corporal Christopher Castro, 30, of San Antonio; Sergeant First Class Jesus Torres-Alvarez, 31, of El Paso, Texas; Specialist Paul Escobar, 31, of San Antonio; and Specialist Richard Garcia Jr., 28, of San Antonio.
According to court documents filed in U.S. District Court for the Western District of Texas, Grant E. Bibb served in the Army National Guard from approximately January 2003 until July 2007. Bibb served in the Army Reserves from approximately October 2007 until November 2010. Bibb also served as a contract military recruiter from December 2007 until April 2009.
According to court documents, between approximately 2005 and 2008, the U.S. Army, the U.S. Army Reserves and the National Guard Bureau entered into contracts with Document and Packaging Broker Inc., to administer recruiting bonus programs designed to offer monetary incentives to U.S. soldiers who referred others to join the U.S. military. In addition, the Army managed its own recruiting programs to offer bonuses to soldiers who referred other individuals to join the Army or the Army Reserves.
Through these recruiting programs, a participating soldier could receive up to $2,000 in bonus payments for every person he referred to join the U.S. military. Based on certain milestones achieved by the referred soldier, a participating soldier would receive payments in the form of direct deposits and pre-paid debit card payments.
Bibb admitted that, between approximately September 2007 and February 2010, he participated with others in a scheme to obtain fraudulent recruiting bonuses. Bibb admitted that he paid certain active duty recruiters and another individual for the names and Social Security numbers of potential soldiers. Bibb also admitted that he used this information to claim that he was responsible for referring certain potential soldiers to join the military, when in fact he did not refer them to join. As a result of his fraudulent representations, Bibb personally received a total of approximately $35,000 in fraudulent recruiting bonuses. In addition, Bibb admitted that he and certain active duty recruiters helped U.S. soldiers establish online accounts to enable the soldiers to participate in the fraudulent bonus scheme.
Bibb admitted that, in total, he and his co-conspirators obtained at least approximately $205,000 in fraudulent recruiting bonuses.
The charge of conspiracy to commit wire fraud carries a maximum penalty of five years in prison and a $250,000 fine. Sentencing has been scheduled for May 25, 2012, before Chief U.S. District Judge Fred Biery in San Antonio.
The case against Bibb arises from an investigation involving allegations that former and current military recruiters and U.S. soldiers in the San Antonio area engaged in a wide-ranging scheme to obtain fraudulent recruiting bonuses. To date, the investigation has led to charges against seven individuals, four of whom have pleaded guilty.
On Jan. 28, 2010, Sergeant Ernest Gonzales, 50, of San Antonio, pleaded guilty before Chief Judge Biery to a one-count criminal information charging him with conspiracy to commit wire fraud for his role in the scheme. Gonzales has not yet been sentenced.
On Nov. 3, 2011, Castro pleaded guilty before Chief Judge Biery to one count of conspiracy to commit wire fraud. According to court documents, Castro admitted that he participated with others in the scheme to defraud the Army’s recruiting bonus programs. Castro has not yet been sentenced.
On Jan. 26, 2012, Torres-Alvarez pleaded guilty before Chief Judge Biery to one count of conspiracy to commit wire fraud. According to court documents, Torres-Alvarez, an active duty recruiter, admitted that he sold the names and Social Security numbers of potential soldiers to others involved in the scheme. Torres-Alvarez has not yet been sentenced.
The case against Bibb’s co-defendants – Aves, Escobar and Garcia – is scheduled for trial on April 23, 2012, in San Antonio. These defendants are presumed innocent until proven guilty in a court of law.
The case is being prosecuted by Trial Attorneys Edward J. Loya Jr. and Brian A. Lichter of the Criminal Division’s Public Integrity Section. The case is being investigated by agents from the San Antonio Fraud Resident Agency of the Major Procurement Fraud Unit, U.S. Army Criminal Investigation Command.
Federal Court Bars Nevada Man from Promoting Tax Fraud SchemeRead the Press Release
A federal court has permanently barred David Champion from promoting a tax fraud scheme designed to assist his customers evade federal taxes, the Justice Department announced today. The civil injunction order was signed by Judge Percy Anderson of the U.S. District Court for the Central District of California.
The court determined that Champion promotes a tax fraud scheme based on the frivolous claim that U.S. citizens can choose to opt out of federal income taxation by declaring themselves to be “non-taxpayers.” The court found that Champion promotes the scheme through websites, a radio program and a self-published work entitled Income Tax: Shattering the Myths. According to the government complaint, Champion, who currently resides in Nevada, repeatedly helped his customers evade taxes by establishing sham “pure trusts” to which they transferred their business and personal assets, and he falsely informed his customers that their purported trusts did not need to file income tax returns or pay taxes.
In granting the permanent injunction, Judge Anderson held that Champion’s theories concerning the government’s taxing authority are wrong. Among other things, the injunction order bars Champion from instructing people that they may become “non-taxpayers,” from offering his services to assist others in taking advantage of this false status, and from forming trusts for others.
The government alleged that Champion’s misconduct led to civil and criminal penalties against his customers. The complaint states that Internal Revenue Service (IRS) inquiries into eight of Champion’s customers revealed that he had assisted them in evading payment of approximately $1.4 million in income taxes.
In the past decade, the Justice Department’s Tax Division has obtained hundreds of injunctions to stop tax-fraud promoters and unscrupulous tax-return preparers. Information about these cases is available on the Justice Department website .
Friday 27 January 2012
U.S. Attorney General Holder, State and Federal Officials Announce Collaboration to Investigate Residential Mortgage-backed Securities MarketRead the Press Release
WASHINGTON – Attorney General Eric Holder along with Housing and Urban Development (HUD) Secretary Shaun Donovan, Securities and Exchange Commission (SEC) Director of Enforcement Robert Khuzami and New York Attorney General Eric T. Schneiderman today announced the formation of the Residential Mortgage-Backed Securities Working Group under President Obama’s Financial Fraud Enforcement Task Force (FFETF).
At the direction of the President, this Working Group brings together the Department of Justice (DOJ), several state attorneys general and other federal entities to investigate those responsible for misconduct contributing to the financial crisis through the pooling and sale of residential mortgage-backed securities. This effort will be in coordination with and in addition to the ongoing efforts and investigations by the Justice Department, FFETF members and state and federal law enforcement investigating and prosecuting other types of financial fraud.
Attorney General Holder announced that the new Working Group will consist of at least 55 Department of Justice attorneys, analysts, agents and investigators from around the country. Currently, 15 civil and criminal attorneys are part of the Working Group, along with 10 FBI agents and analysts who will be assigned to the Working Group efforts. An additional 30 attorneys, investigators and other staff around the country will join the Working Group efforts in the coming weeks. This team will join existing state and federal resources investigating similar misconduct under those authorities.
The goals of this collaboration will be: to hold accountable any institutions that violated the law; to compensate victims and help provide relief for homeowners struggling from the collapse of the housing market, caused in part by this wrongdoing; and to help Americans finally turn the page on this destructive period in our nation’s history.
“This Working Group brings together federal and state partners to strengthen current and future efforts to investigate and prosecute instances of wrongdoing in the residential mortgage-backed securities market,” said Attorney General Holder. “With this focus on collaboration – and by bringing our government’s full enforcement resources to bear – I have no doubt that we will improve our ability to recover losses, to prevent fraud, to bring abuses to light, and to hold those who violate the law accountable. That’s what the challenge before us demands, and that’s what the American people deserve.”
The working group will be co-chaired by senior officials at the Department of Justice and SEC, including Lanny Breuer, Assistant Attorney General, Criminal Division, DOJ; Robert Khuzami, Director of Enforcement, SEC; John Walsh, U.S. Attorney, District of Colorado; and Tony West, Assistant Attorney General, Civil Division, DOJ.
The working group will also be co-chaired by New York Attorney General Schneiderman, who will lead the effort from the state level. Other state Attorneys General have been and will be joining this effort.
“I am pleased to co-chair this important effort. Each of us offers different tools and talents, but we are all united by a common and continuing desire to identify misconduct in the mortgage securitization process,” said SEC Enforcement Director Khuzami. “The SEC has issued scores of subpoenas, obtained millions of documents, and interviewed dozens and dozens of key witnesses related to mortgage-backed securities. This collaborative effort will enable us pool our knowledge and leverage our resources.”“Millions of American families have been harmed by the foreclosure crisis,” said HUD Secretary Donovan. “These families deserve justice. They deserve relief. That is why this investigation is so important. With a new Residential Mortgage-Backed Securities Working Group led by Attorney General Holder and state leaders like New York Attorney General Schneiderman, we will build on the work of the President’s Financial Fraud Enforcement Task Force by investigating misconduct we know led directly to the financial crisis. And I’m proud that the Office of the HUD Inspector General David Montoya —which over the past year has been central to uncovering wrongdoing with respect to faulty foreclosure servicing practices—will play a critical role in the mortgage origination component of this review.”
“I would like to thank President Obama and Attorney General Holder for their leadership in combating financial fraud in this country and I look forward to co-chairing this working group that marshals state and federal resources to build on those efforts by bringing justice on behalf the victims of the misconduct that caused the mortgage crisis,” said Attorney General Schneiderman. “In coordination with our federal partners, our office will continue its steadfast commitment to holding those responsible for the mortgage crisis accountable, providing meaningful relief for homeowners commensurate with the scale of the misconduct, and getting our economy moving again. The American people deserve a thorough investigation into the global financial meltdown to ensure nothing like it ever happens again, and today’s announcement is a major step in the right direction.”
The Obama Administration is committed to ensuring that justice and relief are provided for the millions of American families harmed by the financial crisis.
President Obama created the Financial Fraud Enforcement Task Force by executive order in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ Offices and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud and bring to bear a powerful array of criminal and civil enforcement resources.
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 Residential Mortgage-Backed Securities Working Group and the Financial Fraud Enforcement Task Force at www.stopfraud.gov .
Download Attorney General Holder’s memo to the Financial Fraud Enforcement Task Force here: http://www.justice.gov/ag/residential-mortgage-backed-securities.pdf.
Former United Nations Employee Sentenced to 18 Months in PrisonRead the Press Release
WASHINGTON – Jeffery K. Armstrong, 52, of South Riding, Va., was sentenced today to 18 months in prison for obtaining more than $100,000 in salary payments by fraudulently holding concurrent jobs at the United Nations (U.N.) and the National Labor Relations Board (NLRB). He was ordered to serve a three-year term of supervised release following his sentence and to pay $128,153 in restitution.
The sentencing was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Neil H. MacBride for the Eastern District of Virginia; Assistant Director in Charge James W. McJunkin of the FBI’s Washington Field Office; and David P. Berry, Inspector General for the NLRB.
Armstrong was convicted by a federal jury on Oct. 21, 2011, on nine counts of wire fraud. He was indicted on June 28, 2011, by a federal grand jury in the Eastern District of Virginia for his scheme to defraud the U.N., an international organization committed to humanitarian and peace-keeping efforts, and the NLRB, an independent agency of the U.S. government.
According to evidence presented in the trial, in March 2008, Armstrong took a leave of absence from his position as a supervisory security specialist with the Department of the Army to accept a full-time position at the U.N. As an assistant chief of the Security and Safety Service at the U.N., Armstrong was responsible for all physical security of U.N. facilities in New York City, among other functions. According to evidence at trial, Armstrong received an annual salary from the U.N. of approximately $160,000. In February 2009, after working at the U.N. for almost a year, Armstrong applied for a position as chief of the security branch within the Division of the Administration at the NLRB in Washington, D.C. In April of 2009, Armstrong became a full-time employee at the NLRB, with an annual salary of approximately $121,000.
From approximately April to September 2009, Armstrong was an employee of both the U.N. and the NLRB. Armstrong concealed his dual employment from both employers by, among other things, dissuading NLRB personnel from contacting his supervisor at the U.N., submitting incomplete or inaccurate employment forms to the NLRB, and causing to be mailed to the NLRB false correspondence suggesting that he no longer worked at the U.N. In addition, Armstrong submitted medical leave documentation to the U.N., indicating that he was unable to work and was undergoing medical treatment, despite his full-time employment at the NLRB. According to the evidence presented at trial, Armstrong failed to notify his superiors at both entities of his concurrent employment and received more than $100,000 in concurrent salary.
This case was investigated by the FBI’s Washington Field Office and the NLRB Office of Inspector General. Trial Attorney Eric G. Olshan of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Karen L. Dunn of the Eastern District of Virginia prosecuted the case on behalf of the United States.