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Monday 12 September 2011
Detroit Man Pleads Guilty to Threatening Couple Because of Their RaceRead the Press Release
WASHINGTON – The Justice Department announced today that Glenn E. Morgan Jr. of Detroit pleaded guilty in federal court to sending a noose and threatening photographs through the mail to a Detroit couple because of their race.
Morgan, 40, admitted in court that in November 2008, he mailed a noose, photographs of black men being lynched and a photograph of the murdered body of Nicole Brown Simpson to the couple because of their race. The envelope Morgan sent to the couple also contained threatening written messages indicating that black men who marry white women should be lynched and that white women who marry black men would share Nicole Brown Simpson’s fate.
“It is inconceivable that acts of hate like this one continue to occur in the year 2011,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The department will vigorously prosecute individuals who threaten or intimidate others because of the color of their skin.”
“Threats and intimidation based on race have no place in our multi-cultural society,” U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade said. “We are committed to protecting the rights and safety of all of our citizens.”
Andrew Arena, Special Agent in Charge of the FBI in Detroit said, “Actions motivated by hate will not be tolerated. The FBI, along with its local, state and federal law enforcement partners will continue to investigate and prosecute those who engage in hate crimes.”
Morgan faces a maximum punishment of 10 years of in prison and a fine of $250,000.
The case was investigated by the FBI. The case was prosecuted by Assistant U.S. Attorney Pamela Thompson from the Eastern District of Michigan, and Trial Attorney Sanjay Patel from the Civil Rights Division of the U.S. Department of Justice.
Delaware Man Pleads Guilty to Production and Transportation of Child PornographyRead the Press Release
WASHINGTON – A Wilmington, Del., man pleaded guilty today to production and transportation of child pornography, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney Charles M. Oberly III of the District of Delaware and John P. Kelleghan, Special Agent in Charge of U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI) in Philadelphia.
Leonard Wasylyk, 49, pleaded guilty before U.S. District Judge Sue L. Robinson in the District of Delaware. Wasylyk has been detained since his Dec. 9, 2010, arrest.
According to statements made and documents filed in court, an undercover agent from the Wilmington office of the Department of Homeland Security HSI identified Wasylyk during an online undercover investigation into a private peer-to-peer network being used to trade images of child pornography. After downloading computer files containing child pornography from Wasylyk’s home computer, federal agents arrested Wasylyk and executed a search warrant at his North Wilmington residence on Dec. 9, 2010. Law enforcement agents recovered a computer from Wasylyk’s bedroom that contained over 60,000 images of child pornography. The majority of the images depicted mostly prepubescent, adolescent and teenage boys engaged in sex acts with other boys or adult males. Through a forensic analysis of Wasylyk’s computer, agents learned that Wasylyk had traded images of child pornography with approximately 150 individuals, with whom he had engaged in over 15,500 instant message chats.
According to court documents, during the forensic review of Wasylyk’s computer, agents discovered more than 60 images of a young boy engaged in sexually explicit conduct with Wasylyk in the bedroom of his Wilmington residence. Agents subsequently identified the child and located him in Southeastern Pennsylvania. The child reported that Wasylyk produced the sexually explicit images when the boy was 12 or 13 years old. Forensic analysis also revealed that Wasylyk distributed the sexually explicit images that he produced to other child sex offenders while bragging about having molested the boy.
At sentencing, scheduled for Jan. 4, 2012, Wasylyk faces a mandatory minimum sentence of 15 years in prison and a maximum sentence of 30 years in prison on the production of child pornography charge and a mandatory minimum sentence of five years in prison and a maximum sentence of 20 years in prison on the transportation of child pornography charge. Wasylyk also faces a term of supervised release of five years to life following his prison sentence, and will be required to register as a sex offender in any jurisdiction in which he lives, works or attends school.
This case is being investigated by HSI. This case is being prosecuted by Trial Attorney Thomas Franzinger of the Criminal Division’s Child Exploitation and Obscenity Section and Assistant U.S. Attorney Edward J. McAndrew of the District of Delaware.
Canadian National Sentenced to Serve 50 Months in Prison for Role in Fraud and Money Laundering Conspiracies Involving New Jersey Environmental Protection Agency at Superfund SiteRead the Press Release
WASHINGTON — A former executive at Bennett Environmental Inc. (BEI), a Canada-based company that treats and disposes of contaminated soil, was sentenced today to 50 months in prison for participating in money-laundering and fraud conspiracies in connection with contracts at a Superfund site in New Jersey, as well as impeding a proceeding before the U.S . Securities and Exchange Commission (SEC), the Department of Justice announced. The U.S. Environmental Protection Agency (EPA)-designated Superfund site, Federal Creosote, is located in Manville, N.J.
Robert P. Griffiths was also sentenced in U.S. District Court in Newark, N.J., by Judge Susan D. Wigenton to pay a $15,000 criminal fine and to pay $4,644,378.56 in restitution, joint and severally with co-conspirators to the victim, the EPA. On July 6, 2009, Griffiths pleaded guilty to defrauding the EPA with others by inflating the prices he charged to a prime contractor of the EPA and providing kickbacks to employees of that prime contractor from approximately December 2001 until approximately August 2004 at the Federal Creosote site. Griffiths and his co-conspirators were given the bid prices of BEI’s competitors, which allowed BEI to submit the highest possible bid prices and still be awarded the sub-contracts. On one occasion, Griffiths and his co-conspirators inflated the bid prices to cover approximately $1.3 million in kickbacks and amounts BEI kept for itself. The kickbacks were in the form of money transferred by wire to a co-conspirator’s shell company, lavish cruises for senior officials of the prime contractor, various entertainment tickets, pharmaceuticals and home entertainment electronics. The department said that the co-conspirators were able to allocate at least $43 million in fraudulently awarded sub-contracts to BEI for the removal, treatment and disposal of contaminated soil at the Federal Creosote site and to fraudulently conceal from the U.S. Army Corps of Engineers that BEI had submitted false invoices for the disposal of approximately 20,000 tons of soil.
According to court documents, Griffiths and his co-conspirators also conspired to commit international money laundering, the purpose of which was for Griffiths to profit personally from the fraud and kickback scheme. From approximately February 2003 through approximately September 2004, Griffiths and a co-conspirator who received more than $1 million in kickbacks through his shell company, laundered approximately $207,000 of the kickback proceeds from the co-conspirator’s bank account in New Jersey to a bank account controlled by Griffiths in Ontario, Canada.
In addition, the department said that Griffiths obstructed an official proceeding before the SEC. On or about Nov. 3, 2005, Griffiths made false statements in response to questions asked by the SEC for the purpose of deceiving the SEC and concealing his conduct in the fraudulent scheme. At that time, the SEC was investigating whether Griffiths and others had obtained information not available to the public and relied upon that information to conduct certain securities transactions improperly.
The clean-up at Federal Creosote is partly funded by the EPA. Under an interagency agreement between the EPA and the Army Corps of Engineers, prime contractors oversaw the removal, treatment and disposal of contaminated soil as well as other operations at the Federal Creosote site.
Including Griffiths, a total of three companies and 10 individuals have been charged as part of the investigation. More than $6 millionin criminal fines and restitution have been imposed and five individuals have been sentenced to serve prison time.
Today’s sentence is the result of an ongoing investigation being conducted by the Antitrust Division’s New York Field Office, the EPA Office of Inspector General and the Internal Revenue Service-Criminal Investigation. Anyone with information concerning bid rigging, kickbacks, tax offenses or fraud relating to sub-contracts awarded at the Federal Creosote site or Diamond Alkali sites should contact the Antitrust Division’s New York Field Office at 212-335-8000 or visit www.justice.gov/atr/contact/newcase.htm.
Accenture Pays U.S. $63.675 Million to Settle False Claims Act AllegationsRead the Press Release
WASHINGTON – Accenture LLP has agreed to pay the United States $63.675 million to resolve a whistleblower lawsuit, the Justice Department announced today. The lawsuit, filed in the U.S. District Court for the Eastern District of Arkansas, alleges that Accenture submitted or caused to be submitted false claims for payment under numerous contracts with agencies of the United States for information technology services.
Accenture has agreed to resolve allegations that it received kickbacks for its recommendations of hardware and software to the government, fraudulently inflated prices and rigged bids in connection with federal information technology contracts.
“Kickbacks and bid rigging undermine the integrity of the federal procurement process,” said Tony West, Assistant Attorney General for the Justice Department’s Civil Division. “At a time when we're looking for ways to reduce our public spending, it is especially important to ensure that government contractors play by the rules and don’t waste precious taxpayer dollars.”
“We strive each and every day to bring justice to the citizens of the Eastern District of Arkansas,” stated Christopher R. Thyer, U.S. Attorney for the Eastern District of Arkansas. “Fraudulent business practices that steal hard earned and much needed tax dollars from appropriate use will not be tolerated. The United States Attorney’s Office is committed to pursuing these cases to the full extent of the law.”
The lawsuit was initially filed by Norman Rille and Neal Roberts under the qui tam or whistleblower provisions of the federal False Claims Act, which permit private individuals, called “relators” to bring lawsuits on behalf of the United States and receive a portion of the proceeds of a settlement or judgment awarded against a defendant. The portion of the proceeds to be paid in this case has not yet been resolved.
“Companies profiting off the breach of their government contracts will pay,” said Brian D. Miller, General Services Administration Inspector General.
The case was handled by the Department of Justice’s Civil Division and the US Attorney’s Office for the Eastern District of Arkansas, with the assistance of the Defense Criminal Investigative Service and the Offices of Inspector General of the Department of Energy, the Department of Education, Department of Treasury Tax Administration (TIGTA), General Services Administration, Department of State and Transportation Security Administration.
The Justice Department’s total recoveries in False Claims Act cases since January 2009 are more than $7.5 billion.
Friday 9 September 2011
Washington, D.C., Resident Sentenced to 80 Months in Prison for Possession of Child PornographyRead the Press Release
WASHINGTON –Anthony Moreno, 25, of Washington, D.C., was sentenced today to 80 months in prison for one count of possession of child pornography, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney for the District of Columbia Ronald C. Machen Jr.; James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office; Cathy L. Lanier, Chief of the Metropolitan Police Department (MPD); and Brigadier General Kevin J. Jacobsen, Commander for Air Force Office of Special Investigations.
Moreno pleaded guilty to the charge in May 2011 in U.S. District Court for the District of Columbia. He was sentenced by U.S. District Judge Beryl A. Howell. In addition to his prison term, Moreno was sentenced to 10 years of supervised release.
According to information presented during the plea hearing, on Sept. 18, 2010, a law enforcement agent, utilizing a publicly available peer-to-peer Internet file sharing program, observed that Moreno had approximately 299 images of child pornography in his shared-file folders on the network.
On Nov. 26, 2010, law enforcement agents executed a warrant to search Moreno’s computer equipment located at his residence at the Bolling Air Force Base in Washington, D.C. After law enforcement confirmed that Moreno possessed child pornography, Moreno was arrested. Forensic analysis of Moreno’s computer equipment confirmed that he had collected more than 8,800 images and 250 videos of child pornography.
This case was brought as part of the Department of Justice’s Project Safe Childhood initiative. Project Safe Childhood is a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov
This case was prosecuted by Trial Attorney Darcy Katzin of the Criminal Division’s CEOS and Assistant U.S. Attorney David B. Kent of the District of Columbia. The case was investigated by the FBI’s Child Exploitation Task Force, which includes members of the FBI’s Washington Field Office and MPD. The Air Force Office of Special Investigations and CEOS’s High Technology Investigative Unit also assisted in the investigation.
Virginia Woman Sentenced to 60 Months in Prison for Importing and Selling Counterfeit Cisco Computer Networking EquipmentRead the Press Release
WASHINGTON – A Virginia woman was sentenced today to 60 months in prison for leading a sophisticated conspiracy to import and to sell counterfeit Cisco-branded computer networking equipment, laundering criminal proceeds and obtaining her citizenship through fraud, announced U.S. Attorney Neil H. MacBride for the Eastern District of Virginia and Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.
At sentencing, U.S. District Court Judge Gerald Bruce Lee also ordered Chun-Yu Zhao, 43, of Chantilly, Va., to pay $2,709,238 in restitution and to pay a $17,500 fine. Zhao was also ordered to serve three years of supervised release following her prison term. In addition, Judge Lee stripped Zhao of her U.S. citizenship and ordered that the following assets be forfeited to the United States: four homes in Maryland and northern Virginia and three condominiums in Chantilly with a total value of more than $2.6 million; a Porsche Boxster, Porsche Cayenne and Mercedes sedan; and seven bank accounts containing more than $1.6 million. Zhao has been in federal custody since her July 22, 2010, arrest by agents of U.S. Immigration and Customs Enforcement (ICE).
In May 2011, following a three-week trial, a federal jury convicted Zhao of 16 felony counts, including conspiracy to commit importation fraud and to deal in counterfeit goods, importation fraud, dealing in counterfeit goods, obtaining citizenship by fraud, making false statements to law enforcement and money laundering. According to court documents, Zhao and her family members and other co-conspirators in China agreed to lie on declaration forms and to sell shipments of counterfeit Cisco-branded computer networking equipment. Zhao and her co-conspirators used counterfeit labels and packaging to mislead consumers into believing that they were purchasing genuine Cisco products. To evade detection, Zhao and her co-conspirators used various names and addresses in importation documents and hid millions of dollars of counterfeiting proceeds through a web of bank accounts and real estate held in the names of Zhao’s family members. Zhao also fraudulently obtained United States citizenship based on lies on her citizenship application.
The case was investigated by ICE’s Homeland Security Investigations’ Washington, D.C., office, as well as the Office of the Inspector General from the General Services Administration. U.S. Customs and Border Protection made a criminal referral to ICE after intercepting counterfeit products from China destined for addresses associated with Zhao, her business and her family.
The case was prosecuted by Assistant U.S. Attorneys Jay V. Prabhu and Lindsay A. Kelly from the Eastern District of Virginia, and Senior Counsel Michael J. Stawasz from the Computer Crime and Intellectual Property Section in the Justice Department’s Criminal Division.
The sentencing announced today is an example of the type of efforts being undertaken by the Department of Justice Task Force on Intellectual Property (IP Task Force). Attorney General Eric Holder created the IP Task Force to combat the growing number of domestic and international intellectual property crimes, protect the health and safety of American consumers, and safeguard the nation’s economic security against those who seek to profit illegally from American creativity, innovation and hard work. The IP Task Force seeks to strengthen intellectual property rights protection through heightened criminal and civil enforcement, greater coordination among federal, state and local law enforcement partners, and increased focus on international enforcement efforts, including reinforcing relationships with key foreign partners and U.S. industry leaders. To learn more about the IP Task Force, go to www.justice.gov/dag/iptaskforce/.
U.S. Joined False Claims Act Lawsuit Against Florida’s Halifax Hospital Medical Center and Halifax Staffing Inc.Read the Press Release
WASHINGTON – The United States has partially intervened in a lawsuit under the False Claims Act against Halifax Hospital Medical Center and Halifax Staffing Inc. in the U.S. District Court for the Middle District of Florida, the Department of Justice announced today.
The government partially intervened with respect to allegations that Halifax, which is located in Daytona Beach, Fla., violated the Stark law, which prohibits a hospital from billing Medicare for services referred by physicians that have an improper financial relationship with the hospital. The United States alleges that Halifax’s contracts with three neurosurgeons and six medical oncologists were improper, in part, because they either paid physicians more than fair market value, were not commercially reasonable or took into consideration the volume or value of the physicians’ referrals.
“Improper financial arrangements between hospitals and physicians threaten patient safety because personal financial considerations, instead of what's best for the patient, can influence the type of health care that is provided,” said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. “The department is committed to preventing kickbacks that can corrupt the integrity of health care delivery.”
“The Stark law was enacted to prevent financial ties between a physician and an entity providing health care services from influencing the level of care provided to a patient,” said Robert E. O’Neill, U.S. Attorney for the Middle District of Florida. “By bringing cases such as this one, we hope to ensure that precious health care resources are not being wasted as a result of questionable financial relationships between health care providers.”
The lawsuit was initially filed in July 2009 by Elin Baklid-Kunz, currently employed at Halifax Staffing as the director of physician services, under the whistleblower provisions of the False Claims Act. Those provisions authorize private parties to sue on behalf of the United States, and permit the United States to intervene and take over the lawsuit. The whistleblower is entitled to receive a portion of any recovery. In this case, the United States elected to intervene in only a portion of the allegations asserted by Ms. Baklid-Kunz.
The government’s involvement in this case is part of the United States’ 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 $5.9 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 $7.5 billion.
U.S. Bureau of Prisons Employee Indicted in Florida for Sexual Abuse of a Ward and False StatementsRead the Press Release
WASHINGTON – U.S. Bureau of Prisons (BOP) employee Jack Chris Jackson, 45, was indicted today on charges of sexual abuse of an inmate and false statements, the Justice Department announced.
The indictment alleges that on or about June 27, 2011, Jackson, while working in the Federal Correctional Institution (FCI) in Miami, engaged in a sexual act with an inmate who was in the defendant’s custodial, supervisory and disciplinary authority. The indictment further alleges that, when questioned on July 1, 2011, the defendant falsely denied having sex with the inmate or any other inmate at FCI.
If convicted, the defendant faces a maximum statutory sentence of 15 years in prison for the sexual abuse charge and a maximum penalty of five years in prison for the false statements charge.
An indictment is merely an accusation, and the defendant is presumed innocent unless proven guilty.
This case was investigated by the FBI and the Department of Justice Office of Inspector General. BOP wardens at FCI and Federal Detention Center provided full assistance and coordination throughout this investigation. The case 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 Trial Attorney Henry Leventis of the Civil Rights Division.
Anyone with information concerning these offenses or related criminal conduct is encouraged to contact the FBI at 305-944-9101.
Two Los Angeles Residents Permanently Barred by Federal Court from Forming Trusts for TaxpayersRead the Press Release
WASHINGTON – A federal court in California has permanently barred Gwenn Wycoff and Frank Ozak from forming trusts for others, the Justice Department announced today. The civil injunction order, to which Wycoff and Ozak consented without admitting the allegations against them, was signed by Judge Jacqueline H. Nguyen of the U.S. District Court for the Central District of California.
The government complaint alleged that Wycoff and Ozak, both of Los Angeles, promoted a trust scheme through personal appearances, a website, and a two-volume publication called The Art of Passing the Buck. The defendants allegedly promised their customers that forming so-called “common-law trusts” was a way to “own nothing” but “control everything,” which the defendants allegedly said could help their customers avoid paying taxes. But the court previously determined, in preliminarily enjoining the defendants in March 2011, that such trusts are shams. The complaint alleged that the total tax deficiencies of the four customers mentioned in the preliminary injunction order was more than $1.1 million.
The injunction order also requires Wycoff and Ozak to remove from unsold copies of The Art of Passing the Buck the printed advertisements for their trust-creation business. The order also obligates them to inform all past and future purchasers of that publication that they should not rely on its content in determining a trust’s income tax liability, but should instead seek appropriate professional assistance.
In the past decade, the Justice Department’s Tax Division has obtained hundreds of injunctions against tax-fraud promoters and tax-return preparers. Information about these cases is available on the Justice Department website.
Online Identity Thief Sentenced in Virginia to 14 Years in Prison for Selling Counterfeit Credit Cards Leading to More Than $3 Million in LossesRead the Press Release
WASHINGTON – A Hammond, Ind., man was sentenced today in U.S. District Court in Alexandria, Va., to 14 years in prison for operating an online business that sold counterfeit credit cards encoded with stolen account information, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Neil H. MacBride for the Eastern District of Virginia.
Tony Perez III, 21, was sentenced by U.S. District Judge Liam O’Grady. In addition to his prison term, Perez was ordered to pay $2.8 million in forfeiture and a $250,000 fine and to serve three years of supervised release. Perez pleaded guilty on April 4, 2011, to one count of wire fraud and one count of aggravated identity theft.
In his plea, Perez admitted that he ran an online business that sold counterfeit credit cards encoded with stolen account information. According to court documents, Perez utilized multiple online personas in criminal “carding forums,” Internet discussion groups set up to facilitate buying and selling stolen financial account information and other goods and services to promote credit card fraud. In these forums and in other electronic communications over the Internet, Perez regularly purchased or received stolen credit card account information.
U.S. Secret Service special agents executing a search warrant in June 2010 at Perez’s apartment found a counterfeit credit card manufacturing operation and nearly 21,000 stolen credit card numbers and related information in his computers and email accounts. According to court documents, credit card companies have identified thousands of fraudulent transactions using the card numbers found in Perez’s possession, totaling more than $3 million.
The case was investigated by the U.S. Secret Service and was prosecuted by Michael J. Stawasz, a Senior Counsel for the Computer Crime and Intellectual Property Section of the Justice Department’s Criminal Division and a Special Assistant U.S. Attorney for the Eastern District of Virginia.
Ninja Video Website Operators Charged with Criminal Copyright ConspiracyRead the Press Release
WASHINGTON - A federal grand jury has returned an indictment in Alexandria, Va., charging five individuals with one count of conspiracy and five substantive copyright infringement counts for their involvement with the Internet website NinjaVideo.net, announced 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 and U.S. Immigration and Customs Enforcement (ICE) Director John Morton.
According to the indictment returned yesterday, the NinjaVideo website operated from February 2008 until it was shut down by law enforcement in June 2010. NinjaVideo allegedly provided millions of website visitors with the ability to illegally download infringing copies of copyright-protected movies and television programs in high-quality formats. Many of the movies offered on the website were still playing in theaters, while others had not yet been released. The website allegedly offered many copyrighted movies and television shows free of charge, and offered access to a greater selection of copyrighted content for a “donation” of at least $25. The website also generated significant revenue through advertising. The defendants allegedly collected more than $500,000 during the website’s two-and-a-half years of operation and facilitated the infringement of millions of dollars of copyrighted movies, television programs and software products.
The indictment charges the following individuals: Hana Amal Beshara, 29, of North Brunswick, N.J., and Matthew David Howard Smith, 23, of Raleigh, N.C. , identified in the indictment as founders and administrators of NinjaVideo; Joshua David Evans, 34, of North Bend, Wash., and Zoi Mertzanis, 36, a resident of Greece, alleged to be two of the most active uploaders of copyrighted material to the site; and Jeremy Lynn Andrew, 33, of Eugene, Ore., the alleged head of security for the website.
The defendants are scheduled to be arraigned on Sept. 16, 2011, at 9:00 a.m. before U.S. District Judge Anthony J. Trenga in the Eastern District of Virginia.
Criminal indictments are only charges and are not evidence of guilt. A defendant is presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
The case is being prosecuted by Assistant U.S. Attorneys Jay V. Prabhu and Lindsay A. Kelly, and Trial Attorney Glenn Alexander of the Criminal Division’s Computer Crime & Intellectual Property Section.
The investigation was conducted by ICE’s Homeland Security Investigations-led National Intellectual Property Rights Coordination Center (IPR Center). This IPR Center is one of the U.S. government’s key weapons in the fight against criminal counterfeiting and piracy. As a task force, the IPR Center uses the expertise of its 19 member agencies to share information, develop initiatives, coordinate enforcement actions, and conduct investigations related to IP theft. Through this strategic interagency partnership, the IPR Center protects the public's health and safety, the U.S. economy and the war fighters.
To report IP theft or to learn more about the IPR Center, visit www.IPRCenter.gov.
The indictment announced today is an example of efforts being undertaken by the Department of Justice Task Force on Intellectual Property (IP Task Force). Attorney General Eric Holder created the IP Task Force to combat the growing number of domestic and international intellectual property crimes, protect the health and safety of American consumers, and safeguard the nation’s economic security against those who seek to profit illegally from American creativity, innovation and hard work. The IP Task Force seeks to strengthen intellectual property rights protection through heightened criminal and civil enforcement, greater coordination among federal, state and local law enforcement partners, and increased focus on international enforcement efforts, including reinforcing relationships with key foreign partners and U.S. industry leaders. To learn more about the IP Task Force, go to www.justice.gov/dag/iptaskforce.
CSK Auto Corporation Agrees to Pay $20.9 Million to Resolve Violations of Securities Laws Related to Scheme to Manipulate Corporate EarningsRead the Press Release
WASHINGTON – CSK Auto Corporation, a specialty retailer of automotive parts and accessories and formerly a publicly-traded company, has agreed to pay a $20.9 million penalty to resolve securities law violations stemming from a corporate earnings manipulation and double-billing scheme, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division.
As part of an agreement with the Department of Justice, CSK has accepted responsibility for the illegal conduct of its former employees. According to the non-prosecution agreement, from 2001 through 2006, certain former CSK employees, including senior executives, conspired to willfully manipulate CSK’s earnings. To date, the criminal investigation has resulted in charges against three former CSK executives, all of whom have pleaded guilty. Don W. Watson, CSK’s former chief financial officer, pleaded guilty to conspiracy to commit securities and mail fraud in connection with the scheme. Edward W. O’Brien III, the former controller of CSK, and Gary M. Opper, the former director of credits and receivables at CSK, each pleaded guilty to obstruction of justice for making material false statements during an internal investigation of CSK’s accounting practices.
As part of an agreement with the Department of Justice, CSK has accepted responsibility for the illegal conduct of its former employees. According to the non-prosecution agreement, from 2001 through 2006, certain former CSK employees, including senior executives, conspired to willfully manipulate CSK’s earnings.
According to the agreement, CSK purchased hundreds of millions of dollars in automotive parts and accessories every year from vendors. CSK received vendor allowances, or discounts, on its purchases in return for marketing vendors’ products for sale in CSK’s stores. These allowances reduced CSK’s expenses and thereby increased its pre-tax income. CSK recognized vendor allowances based on anticipated purchases from vendors. According to the agreement, certain employees manipulated CSK’s largest and most lucrative vendor allowance program by concealing amounts it had recognized based on anticipated purchases that ultimately did not take place, thus making the allowances uncollectible. The employees concealed these uncollectible amounts by applying collections for allowances from subsequent years to cover shortfalls in collections from prior years and by moving uncollectible balances to subsequent years. In so doing, the employees gave the false appearance that CSK had collected or was going to collect vendor allowances that it had already recognized as earnings. As a result of these manipulations, the employees caused CSK to conceal approximately $52 million in uncollectable receivables for fiscal years 2002 through 2004. By failing to write off uncollectible balances in these fiscal years, CSK overstated its pre-tax income in its public filings.
According to the agreement, in July 2005, CSK employees attempted to conceal their scheme by billing CSK’s vendors for approximately $30 million in vendor allowances, approximately $15 million of which they knew the vendors did not owe CSK. Additionally, throughout the duration of the scheme, they provided false information to CSK’s independent auditor to further conceal the accounting improprieties.
O’Reilly Automotive Inc., which acquired CSK after the accounting improprieties were uncovered and disclosed to the government, is also a party to the non-prosecution agreement because of its acquisition of CSK. The agreement and monetary penalty recognizes CSK’s timely, voluntary and complete disclosure of the illegal conduct; CSK’s and O’Reilly’s thorough cooperation with the government’s investigation; O’Reilly’s extensive remedial efforts pertaining to CSK’s internal training, compliance and reporting; and O’Reilly’s acquisition of CSK after the illegal conduct was discovered and disclosed to the government. As a result of these mitigating factors, the department agreed not to prosecute CSK or O’Reilly for the manipulation of CSK’s earnings, provided that CSK and O’Reilly satisfy their ongoing obligations under the agreement for a period of two years.
The sentencings for the CSK executives are scheduled to take place in Phoenix in September and November before U.S. District Judge Susan Bolton.
The U.S. Securities and Exchange Commission (SEC) conducted its own investigation, which resulted in a filed action against CSK and pending actions against Watson, O’Brien and Opper. The SEC also referred the conduct to the department.
The case is being prosecuted by Deputy Chief Patrick Stokes and Trial Attorney Andrew H. Warren of the Criminal Division’s Fraud Section. The case is being investigated by the FBI, the IRS-Criminal Investigation and the U.S. Postal Inspection Service. The department thanks those agencies as well as the SEC for their substantial assistance in this matter.
Arizona-Based TriWest Healthcare Alliance Corp. Agrees to Pay $10 Million to Resolve False Claims Act Allegations Concerning the TRICARE ProgramRead the Press Release
WASHINGTON - TriWest Healthcare Alliance Corporation, a contractor to TRICARE Management Activity, has agreed to pay $10 million to resolve civil false claims allegations, the Justice Department announced today. TRICARE is the U.S. medical benefit plan which covers uniformed personnel, retirees, their dependents and reserve components.
The settlement resolves a lawsuit filed by four former TriWest employees, Judi Jerdee, Deborah Thornton, Linda Glassgow and Paige Fiorillo, under the qui tam, or whistleblower provisions, of the False Claims Act. The United States partially intervened in the case on Aug. 29, 2011. The United States and the qui tam plaintiffs allege that between 2004 and 2010, TriWest failed to give TRICARE the benefit of negotiated discounts with service providers under letters of agreement (LOAs). Notwithstanding contractually binding LOAs with health care providers, TriWest submitted claims to TRICARE at higher rates billed by the providers, failing to pass on to TRICARE the savings negotiated through the LOAs. Together, the qui tam relators will receive $1.7 million as their share of the government’s recovery.
“Those who overbill TRICARE threaten to undermine the health care provided to our men and women in uniform,” said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. “At a time when the federal government must tighten its belt, settlements like this one help maintain important programs that people depend on.”
“This office is committed to safeguarding the federal health care programs from fraud and false claims,” said Melinda Haag, U.S. Attorney for the Northern District of California. “Ensuring that the programs receive the contractual savings and deductions to which they are entitled is essential to our commitment.”
This settlement is part of the government’s commitment to combating health care fraud. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover more than $5.9 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s recoveries in false claims act cases since January 2009 are more than $7.5 billion.
The investigation and settlement of these matters were jointly handled by the Department of Justice’s Civil Division and the U.S. Attorney for the Northern District of California, with assistance from the TRICARE Office of Program Integrity and the Department of Defense’s Criminal Investigative Service.
The case is U.S. ex rel. Jerdee, Thornton, Glassgow and Fiorillo v. TriWest Healthcare Alliance Corp., C 08-4096 SI (N.D. Cal.).
Thursday 8 September 2011
Missouri CPA Sentenced to 42 Months in Prison for Mail Fraud and Tax EvasionRead the Press Release
WASHINGTON – Murphy Hubbard, a Springfield, Mo., CPA, was sentenced on Sept. 7, 2011, to 42 months in prison for his mail fraud and tax evasion convictions, the Justice Department and Internal Revenue Service (IRS) announced today. Sentence was imposed by District Court Judge Ortrie D. Smith in the Western District of Missouri and follows a plea of guilty to two counts of mail fraud and one count of tax evasion previously entered by the defendant. Hubbard was remanded into custody immediately following the sentencing.
According to court documents, Hubbard owned and operated an accounting and tax business known as The Hubbard Group PC. Hubbard embezzled more than $400,000 from two trusts placed under his control by local families between 1998 and 2009. The first of these trusts, created by Ms. Hazel Beatrice S. Hirst of Springfield designated four local charities as the beneficiaries of her life’s savings. The second trust, established by the heirs of Mr. Noel C. Rummens of Rogersville, Mo., was created for the express purpose of funding educational expenses for Mr. Rummens’s surviving heirs and relatives.
Rather than fulfilling the wishes of these families by faithfully executing their trust agreements, Hubbard instead took the vast majority of this money for himself, using it to pay personal expenses, to buy items such as automobiles and farm equipment and for travel. Virtually all of the money taken from these trusts went unreported to the IRS, resulting in a tax loss of approximately $79,434.
In addition to the 42 month prison term, Judge Smith also ordered Hubbard to pay full restitution to the victims in this case, including $389,221 to the lawful representatives of the estate of Ms. Hirst and the Noel C. Rummens Educational Trust and $79,434 to the IRS.
The case was investigated by the IRS – Criminal Investigation and prosecuted by Tax Division Trial Attorneys Michael C. Boteler and Mitchell S. Bober, and Assistant U.S. Attorney Steven M. Mohlhenrich for the Western District of Missouri.
Additional information about the Justice Department’s Tax Division and its enforcement efforts may be found atwww.usdoj.gov/tax.
Justice Department Requires Divestitures in Cumulus Media Inc.’s Acquisition of Citadel Broadcasting CorporationRead the Press Release
WASHINGTON – The Department of Justice announced today that it will require Cumulus Media Inc., one of the largest operators of radio stations in the United States, to divest three radio stations in two markets in order for Cumulus to proceed with its acquisition of Citadel Broadcasting Corporation. The department said that the transaction, as originally proposed, would substantially lessen competition for radio advertising in Flint, Mich., and Harrisburg-Lebanon-Carlisle, Pa.
The department’s Antitrust Division filed a civil antitrust lawsuit today in U.S. District Court in Washington, D.C., to block the proposed acquisition. At the same time, the division filed a proposed settlement that, if approved by the court, would resolve the lawsuit and the department’s competitive concerns.
“The divestitures required by the consent decree will enable radio advertisers to continue to receive the benefits of competition in Harrisburg and Flint,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.
According to the complaint, Cumulus’s and Citadel’s radio stations compete head-to-head against one another for the business of local and national companies that seek to purchase radio advertising time that targets listeners in Harrisburg-Lebanon-Carlisle and Flint. Cumulus’s acquisition of Citadel would have eliminated the competition in these markets, increasing prices and reducing levels of service in the sale of radio advertising time. Under the terms of the proposed settlement, Cumulus must divest two stations in Harrisburg-Lebanon-Carlisle and one station in Flint to buyers approved by the division. The divestitures will reduce Cumulus’s share in advertising revenues in Harrisburg-Lebanon-Carlisle and Flint to less than 40 percent, preserving choices for advertisers and ensuring competition.
Cumulus, a Delaware corporation headquartered in Atlanta, is one of the four largest radio broadcast companies in the United States in terms of revenue. In 2010, Cumulus reported radio broadcast revenues of approximately $259 million. Citadel, a Delaware corporation headquartered in Las Vegas, is one of the three largest radio broadcast companies in the United States in terms of revenue. For the period between June 1, 2010, and Dec. 31, 2010, Citadel reported net revenues of approximately $444 million.
As required by the Tunney Act, the proposed settlement, along with the department’s competitive impact statement, will be published in the Federal Register. Any person may submit written comments concerning the proposed settlement during a 60-day comment period to John R. Read, Chief, Litigation III Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street, N.W., 4th Floor, Washington, D.C. 20530. At the conclusion of the 60-day comment period, the court may enter the final judgment upon a finding that it serves the public interest.
German Shipping Company Sentenced in Puerto Rico to Pay $800,000 Penalty for Intentional Cover-Up of Oil PollutionRead the Press Release
WASHINGTON – Uniteam Marine Shipping GmbH, a German corporation, was sentenced in federal court in San Juan, Puerto Rico, for violating the Act to Prevent Pollution from Ships (APPS) and making false statements to the U.S. Coast Guard, announced Assistant Attorney General Ignacia S. Moreno and U.S. Attorney Rosa Emilia Rodriguez-Velez.
The company was sentenced to pay an $800,000 criminal penalty, to include a $200,000 payment to the National Fish and Wildlife Foundation to fund a community service project in the District of Puerto Rico. In addition, the company was placed on three years of supervised probation and will have to implement a comprehensive advanced training and verification program to continuously monitor vessel operations and train crewmembers to prevent pollution from any ship it operates.
“The Department of Justice will continue to prosecute shipping companies who break the laws that protect our oceans,” said Assistant Attorney General Moreno. “The penalty imposed by this sentence not only holds Uniteam Marine fully accountable for violating the Act to Prevent Pollution from Ships, but also will fund projects that rehabilitate damaged marine ecosystems in Puerto Rico.”
Uniteam Marine Shipping GmbH operated a 16,800 ton, 603 foot ocean going container ship named the M/V CCNI Vado Ligure that was engaged in global commercial trade. On May 10, 2010, the U.S. Coast Guard in San Juan, conducted an inspection of the vessel and discovered an excessive amount of oil in the discharge lines of the vessel’s oil water separator, a pollution prevention device designed to prevent the discharge of oily waste. When the device is operated properly, there should be no oil in the discharge lines. Subsequent investigation revealed that from Jan. 8, 2010, until May 10, 2010, the crew on the vessel manipulated the oil water separator so that is failed to function properly and allowed the illegal discharge of oily bilge wastes directly into the ocean.
All discharges of oil or oily bilge waste from a vessel are required to be recorded in the vessel’s oil record book. However, none of the illegal discharges were recorded in the oil record book for the M/V CCNI Vado Ligure.
“This sentence should serve as an eye opener to vessel owners and operators that choose to violate federal and international environmental laws that destroy our marine environment," said Capt. Drew W. Pearson, Sector San Juan Commander. "The U.S. Coast Guard is committed to protecting the maritime environment and works closely with our dedicated interagency partners and the U.S. Department of Justice to bring criminal environmental offenders to justice. This outcome would not have been possible without the outstanding investigative efforts and professionalism put forth by Sector San Juan pollution investigators and the Coast Guard Investigative Service who worked diligently with Department of Justice prosecutors to properly resolve this case.”
“Because we live on an island, the sea is without a doubt one of our most precious resources. This case should send a strong message that the Department of Justice and the United States Attorney’s Office will prosecute any entity which pollutes our environment to the fullest extent allowed by the law,” said Rosa Emilia Rodríguez-Vélez, U.S. Attorney for the District of Puerto Rico.
The National Fish and Wildlife Foundation will receive $200,000 to fund projects aimed at the restoration of marine and aquatic resources in the District of Puerto Rico, including projects intended to protect and rehabilitate marine mammals and their habitat, including manatees.
During the period of probation, Uniteam will be required to implement an advanced training and verification program which will ensure that any ship operated by Uniteam complies with all maritime environmental requirements established under applicable international, flag state, and port state laws. The program ensures that Uniteam’s employees and the crew of any vessel operated by Uniteam are properly trained in preventing maritime pollution. An independent monitor will report to the court about Uniteam’s compliance with its obligations during the period of probation.
This case was investigated by the U.S. Coast Guard Investigative Service. The case was prosecuted by Marshal Morgan in the U.S. Attorney’s Office in the District of Puerto Rico and by Ken Nelson in the Environmental Crimes Section of the Environment and Natural Resources Division of the Department of Justice.
Former Fort Pierce, Fla., Detective and Tax Preparer Sentenced for Tax FraudRead the Press Release
WASHINGTON – The owner of First Premium Financial Services and a former employee were sentenced today to federal prison for conspiring to defraud the United States in connection with fraudulent tax returns they prepared for clients. Inuka Rhaheed, a former detective with the Fort Pierce, Fla., Police Department, was sentenced to 78 months in prison. Wilens Bertrand, a tax preparer at First Premium, was sentenced to 41 months in prison.
Today’s sentences were announced by Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida; John A. DiCicco, Principal Deputy Assistant Attorney General of the Justice Departments Tax Division; and Jose A. Gonzalez, Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI).
On June 11, 2011, Rhaheed and Bertrand were convicted after a four-day trial. According to evidence introduced at trial, Inuka and his wife Jacqueline Rhaheed owned and worked at First Premium Financial Services, a tax preparation business with offices in Fort Pierce and Vero Beach, Fla. Bertrand worked at the Fort Pierce office of First Premium Financial Services as a tax preparer.
According to the testimony of some of First Premium’s clients, the defendants placed false deductions on client tax returns without the clients’ knowledge or consent. In addition, evidence revealed that First Premium prepared and filed approximately 5,500 tax returns for the 2006-2008 tax years and that approximately 98 percent of those returns made a claim for a tax refund. The resulting total tax loss to the United States, based on expert testimony at trial, was at least $500,000.
According to evidence presented during the trial, clients paid a minimum fee of $300 for tax preparation services at First Premium. Clients included many law enforcement officers, who went to First Premium because they knew Inuka Rhaheed was a former law enforcement officer and trusted him and his business to prepare their taxes. In addition, other clients testified that they went to First Premium because they had heard through word of mouth that First Premium allowed deductions that other tax preparation services would not consider.
In addition to the prison term, the court sentenced Inuka Rhaheed to pay $727,729 in restitution and Bertrand to pay $539,954 in restitution and to serve three years of supervised release.
Jacqueline Rhaheed pleaded guilty to one count of conspiring to defraud the United States on June 2, 2011. Jacqueline Rhaheed is scheduled to be sentenced on Nov. 7, 2011.
U.S. Attorney Ferrer and Principal Deputy Assistant Attorney General DiCicco commended the investigative efforts of the IRS-CI for their work investigating this case. The case was prosecuted by Justin Gelfand, Trial Attorney with the Justice Department’s Tax Division, and Assistant U.S. Attorney Diana M. Acosta of the Southern District of Florida.
More information about the Tax Division and its enforcement efforts can be found at www.justice.gov/tax.
Former CEO of U.S. Telecommunications Company Sentenced to 46 Months in Prison for Bribing Foreign Government OfficialsRead the Press Release
WASHINGTON - A former chief executive officer of Florida-based telecommunications company Latin Node Inc. (LatiNode) was sentenced yesterday to 46 months in prison for paying bribes to former government officials in Honduras, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.
U.S. District Judge Joan A. Lenard for the Southern District of Florida also ordered Jorge Granados, of Miami, to serve two years of supervised release following the prison term.
Granados, 55, pleaded guilty on May 19, 2011, to conspiracy to violate the anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA) in connection with a scheme to pay Honduran officials more than $500,000 in bribes. To date, four former senior executives of LatiNode have pleaded guilty to conspiring to pay bribes to the Honduran officials.
In his guilty plea, Granados admitted to authorizing corrupt payments to foreign government officials for the purpose of securing business advantages for LatiNode from Honduras’s state-owned telecommunications company, Empresa Hondureña de Telecomunicaciones (Hondutel). According to court documents, LatiNode provided wholesale telecommunications services using Internet protocol technology to countries throughout the world, including Honduras. In December 2005, LatiNode learned that it was the sole winner of an “interconnection agreement” with Hondutel, permitting LatiNode to use Hondutel’s telecommunications lines to establish a network between Honduras and the United States and to provide long distance services between the two countries.
According to court documents, Granados and other LatiNode executives, including Manuel Salvoch, the chief financial officer; Manuel Caceres, the vice president for business development; and Juan Pablo Vasquez, the chief commercial officer, agreed to a secret deal to pay bribes to Hondutel officials, including the general manager, a senior attorney for Hondutel, and a minister of the Honduran government who became a representative on the Hondutel Board of Directors. According to court documents, between September 2006 and June 2007, Granados and others caused more than $500,000 in bribes to be paid to the Honduran officials, concealing many of the payments by laundering the money through LatiNode subsidiaries in Guatemala and to accounts in Honduras controlled by the Honduran government officials.
LatiNode pleaded guilty on April 7, 2009, to a one-count information charging the company with a criminal violation of the FCPA and agreed to pay a $2 million fine. The resolution of the criminal investigation of LatiNode reflected, in large part, the actions of eLandia International Inc. in disclosing potential FCPA violations to the department after eLandia’s acquisition of LatiNode in 2007 and discovery of the improper payments.
Salvoch pleaded guilty on Jan. 12, 2011, to conspiracy to violate the FCPA and is scheduled to be sentenced on Dec. 7, 2011. Vasquez pleaded guilty on Jan. 21, 2011, to conspiracy to violate the FCPA and is scheduled to be sentenced on Dec. 8, 2011. Caceres pleaded guilty on May 18, 2011, to conspiracy to violate the FCPA, and is scheduled to be sentenced on Nov. 28, 2011. The three defendants each face prison sentences of up to five years.
The case was prosecuted by Principal Deputy Chief Jeffrey H. Knox and Trial Attorney Amanda Aikman of the Criminal Division’s Fraud Section. Significant assistance was provided by Trial Attorney James M. Koukios. The case was investigated by the FBI’s Miami Field Office and ICE Homeland Security Investigation’s Foreign Corruption Investigations Group in Miami.
El Departamento de Justicia Divulga Averiguaciones en la Investigación del Departamento de Policía de Puerto RicoRead the Press Release
WASHINGTON - Después de una investigación exhaustiva, el Departamento de Justicia anunció hoy sus averiguaciones acerca de que el Departamento de Policía de Puerto Rico [Puerto Rico Police Department (PRPD)] ha exhibido un patrón y prácticas de conducta indebida en violación de la Constitución y la ley federal. La investigación iniciada en julio de 2008 fue llevada a cabo de acuerdo con la Ley de Control de Delitos Violentos y Coacción Legal de 1994 y la Ley Amplia de Control de la Delincuencia y Calles Seguras de 1968.
La investigación exhaustiva e independiente del Departamento de Justicia consistió en un análisis de las prácticas del PRPD, así como participación extensa de la comunidad. Abogados e investigadores del Departamento realizaron entrevistas exhaustivas con el personal de comando y funcionarios comunes en la sede central del PRPD y diez de las 13 áreas policiales del PRPD; participaron en recorridos con agentes y supervisores; participaron en cursos de capacitación en la academia de policías, y analizaron miles de páginas de documentos. La división también se reunió con, y entrevistó, partes interesadas externas, entre las que se incluyeron miembros de la comunidad y de organizaciones locales de derechos civiles.
El Departamento de Justicia encontró causa razonable para creer que ocurrieron patrones y prácticas de conducta inconstitucional y/o violaciones de la ley federal en varias áreas, entre los que se incluyen:
- Uso de fuerza excesiva;
- Uso de fuerza irrazonable y otros tipos de conducta indebida, dise�ados para suprimir el ejercicio de derechos protegidos asociados a la Primera Enmienda; y
- �rdenes de alto, allanamientos y arrestos inconstitucionales.
También surgieron de la investigación pruebas perturbadoras de que, con frecuencia, el PRPD omite actuar ante delitos sexuales e incidentes de violencia doméstica y exhibe prácticas policiales discriminatorias contra personas de ascendencia dominicana, en violación de la Constitución y/o ley federal.
El Departamento de Justicia encontró una serie de deficiencias sistémicas antiguas y enraizadas que provocaron o contribuyeron para estos patrones de conducta ilícita, incluidos:
- La omisión por parte del PRPD de implementar políticas para orientar a los agentes respecto de prácticas policiales lícitas, incluida la aplicación de fuerza;
- Unidades tácticas, a las que se les ha permitido desarrollar subculturas violentas;
- Capacitación insuficiente previa al servicio y durante el servicio;
- Supervisión inadecuada;>
- Sistemas ineficaces de toma de denuncias, investigación y adjudicación;
- Un sistema disciplinario ineficaz;
- Gestión de riesgos limitada; y
- Falta de supervisión y responsabilización externas.
"Hace demasiado tiempo que el Departamento de Policía de Puerto Rico falla en la protección del pueblo de Puerto Rico. Este fracaso es el resultado de deficiencias sistémicas e institucionales profundas y crónicas", dijo Thomas E. Perez, Secretario de Justicia Auxiliar de la División de Derechos Civiles. "Nuestras conclusiones deben servir como cimientos para la transformación del departamento de policía y para ayudar a restaurar la fe de la comunidad en una coacción legal equitativa, justa y efectiva. Nuestro equipo espera con interés trabajar con el pueblo de Puerto Rico, el Gobernador Fortu�o, el Superintendente Emilio Díaz Colón y sus funcionarios en la creación e implementación de un anteproyecto amplio para una reforma sustentable".
A lo largo de la investigación, la división brindó información y ofreció asistencia técnica al PRPD, y el PRPD ha tomado ciertas medidas correctivas. Las conclusiones alcanzadas en la investigación del Departamento de Justicia demuestran que los problemas que enfrenta el PRPD son amplios y están profundamente arraigados en la cultura del PRPD. Para crear una reforma duradera, Puerto Rico debe actuar de forma decisiva, transparente e inmediata. El PRPD debe desarrollar e implementar nuevas políticas y protocolos y capacitar a sus agentes en servicios policiales eficaces y constitucionales. Además, el PRPD debe implementar sistemas que garanticen la responsabilización, promuevan asociaciones entre la policía y la comunidad, mejoren la calidad de los servicios policiales en todo el Estado Libre Asociado y eliminen la parcialidad ilícita en todos los niveles de las decisiones policiales.
El departamento buscará obtener un decreto por consentimiento y trabajará con el PRPD, el Estado Libre Asociado de Puerto Rico y la comunidad en el desarrollo y la implementación de un plan de reforma integral con la supervisión judicial necesaria para corregir las violaciones de la Constitución y la ley federal. Un proceso de reforma transparente, en el que las partes interesadas de la comunidad ocupen un papel integral, renovará el respeto por la Constitución y el imperio de la ley, y restaurará la confianza pública en el PRPD.
Esta investigación fue llevada a cabo por la Sección de Litigios Especiales de la División de Derechos Civiles con la asistencia de profesionales de las fuerzas del orden público, incluidos ex jefes de policía y supervisores que brindaron sus conocimientos profundos y su experiencia.
Se encuentra el resumen ejecutivo y el informe completo en www.justice.gov/crt/about/spl/pr.php. Para obtener más información sobre la División de Derechos Civiles del Departamento de Justicia, visite www.justice.gov/crt.
Department of Justice Releases Investigative Findings on the Puerto Rico Police DepartmentRead the Press Release
WASHINGTON– Following a comprehensive investigation, the Justice Department today announced its findings that the Puerto Rico Police Department (PRPD) has engaged in a pattern and practice of misconduct that violates the Constitution and federal law. The investigation, launched in July 2008, was conducted in accordance with the Violent Crime Control and Law Enforcement Act of 1994 and the Omnibus Crime Control and Safe Streets Act of 1968.
The Justice Department found reasonable cause to believe that a pattern and practice of unconstitutional conduct and/or violations of federal law occurred in several areas, including:
- Use of excessive force;
- Use of unreasonable force and other misconduct designed to suppress the exercise of protected First Amendment rights; and
- Unconstitutional stops, searches and arrests.
In addition to these findings, the investigation uncovered other serious concerns. In particular, the investigation uncovered troubling evidence that PRPD frequently fails to properly investigate and document sex crimes and incidents of domestic violence, and that PRPD engages in discriminatory policing practices that target individuals of Dominican descent. At this time, the division has not made a formal finding of a pattern and practice violation in these areas, in part because PRPD does not adequately collect data to evaluate these issues.
The Justice Department found a number of long-standing and entrenched systemic deficiencies that caused or contributed to these patterns of unlawful conduct, including:
- A failure of PRPD to implement policies to guide officers on lawful policing practices, including the application of force;
- Tactical units that have been permitted to develop violent subcultures;
- Insufficient pre-service and in-service training;
- Inadequate supervision;
- Ineffective systems of complaint intake, investigation and adjudication;
- An ineffective disciplinary system;
- Limited risk management; and
- A lack of external oversight and accountability.
“The Puerto Rico Police Department is broken in a number of critical ways. The problems are wide ranging and deeply rooted, and have created a crisis of confidence that makes it extremely difficult to develop police-community partnerships that are a cornerstone of effective policing,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “Our findings should serve as a foundation to transform the police department and to help restore the community’s trust in fair, just and effective law enforcement. The problems within the PRPD have been present for many years and will take time to fix, but we look forward to continuing our work with the people of Puerto Rico, Governor Luis Fortuño, Superintendent Emilio Díaz Colón and his officers to create and implement a comprehensive blueprint for sustainable reform.”
The Justice Department’s thorough and independent investigation involved an in-depth review of PRPD practices, as well as extensive community engagement. Department attorneys and investigators conducted exhaustive interviews with command staff and rank-and-file officers at PRPD headquarters and 10 of PRPD’s 13 police areas; participated in ride-alongs with officers and supervisors; attended training courses at the police academy; and reviewed thousands of pages of documents. The division also met with and interviewed external stakeholders, including community members and local civil rights organizations.
Throughout the investigation, the division provided feedback and technical assistance to PRPD, and PRPD has taken a number of remedial measures. To create lasting reform, Puerto Rico must act decisively, transparently and immediately. PRPD must develop and implement new policies and protocols, and train its officers in effective and constitutional policing. In addition, PRPD must implement systems to ensure accountability, foster police-community partnerships, improve the quality of policing throughout the commonwealth and eliminate unlawful bias from all levels of policing decisions.
The department will seek to obtain a court enforceable agreement and will work with PRPD, the Commonwealth of Puerto Rico and the community to develop and implement a comprehensive reform plan with the judicial oversight needed to address the violations of the Constitution and federal law.
“The findings are an outgrowth of a transparent, inclusive process in which we heard critical feedback from police officers, community leaders, governmental officials and other key stakeholders. We will continue to actively engage all stakeholders in the process of developing and implementing a comprehensive blueprint for sustainable reform that will reduce crime, ensure respect for the Constitution and restore public confidence in the Puerto Rico Police Department,” continued Assistant Attorney General Perez.
This investigation was conducted by the Special Litigation Section of the Civil Rights Division with the assistance of law enforcement professionals, including former police chiefs and supervisors who provided in-depth knowledge and expertise.
The executive summary and full report can be found at www.justice.gov/crt/about/spl/pr.php . For more information on the Justice Department’s Civil Rights Division, please visit www.justice.gov/crt . If you have any comments or concerns, please feel free to contact us at [email protected] .
Wednesday 7 September 2011
Six Individuals Indicted for Tax Fraud and Identity Theft Schemes in AlabamaRead the Press Release
WASHINGTON – Three separate indictments were returned by a federal grand jury in the Middle District of Alabama charging six different individuals on a variety of charges stemming from tax fraud and identity theft schemes, the Justice Department and Internal Revenue Service (IRS) announced today.
Alchico Grant, of Lowndes County, Ala.; and Melinda Clayton, Veronica Dale and Stephanie Adams, all of Montgomery County, Ala., were charged in a superseding indictment unsealed today on a variety of counts stemming from an identity theft and tax fraud scheme. The 43-count indictment charges all four with conspiring to defraud the United States by filing false claims. Clayton, Dale and Grant are also charged with filing false claims, wire fraud and aggravated identity theft, while Adams is charged with theft of government funds.
According to the superseding indictment, the defendants conspired to fraudulently obtain federal income tax refunds by using stolen identities to file tax returns. Dale illegally obtained stolen identity information during her earlier employment at Electronic Data Systems Inc., and passed that information along to her co-conspirators. Clayton also obtained identity information from other sources. Clayton and Dale electronically filed false tax returns using the stolen identities and had the refunds deposited into bank accounts and prepaid debit cards they controlled. Dale and Grant purchased prepaid debit cards to receive refunds, while Adams made her bank account available to receive refunds.
Clayton and Grant had been charged in the first indictment in this case, which was returned April 27, 2011. The superseding indictment adds charges against both, and also charges Dale and Adams. Clayton had previously been arrested on a criminal complaint on April 8, 2011, following the execution of a search warrant at her house that same day. Grant and Dale had both previously been indicted in December 2010, along with several co-conspirators, for their involvement in an earlier conspiracy to obtain tax refunds using stolen identities.
The same federal grand jury in Montgomery, Ala., returned an indictment charging Chiquanta Davis, aka Nikki Davis, of Montgomery County, with using stolen identities to file false tax returns. She was charged on Aug. 31, 2011 with filing false claims, theft of government funds and aggravated identity theft.
Davis had earlier been charged with making false claims in a criminal complaint that was filed on July 12, 2011. She was arrested two days later. According to the indictment and other court documents, Davis used stolen identities to file false tax returns which fraudulently claimed refunds. Davis had some of the refunds deposited into her own bank accounts. Court documents state that nearly 200 tax returns were electronically filed from an IP address belonging to Davis.
Marsha Elmore of Elmore County, Ala., was also indicted on Aug. 31, 2011, by a federal grand jury in Montgomery, for using stolen identities to file false tax returns. The 32-count indictment charges Elmore with filing false claims, wire fraud and aggravated identity theft.
Elmore was also charged in a criminal complaint that was filed on July 12, 2011, with making false claims. She was arrested two days later. According to the indictment and other court documents, between 2009 and 2011, Elmore owned and operated a tax preparation business called Community Tax, located in Wetumpka, Ala. Elmore used stolen identities to file false tax returns which fraudulently claimed refunds. The indictment and other court documents state that Elmore has been filing false tax returns since 2009 and that 400 tax returns were linked to Elmore in 2011 and 2010.
An indictment merely alleges that crimes have been committed, and the defendants are presumed innocent until proven guilty beyond a reasonable doubt.
If convicted, Grant, Clayton, Dale and Adams face 10 years in prison for the conspiracy charge. Dale, Grant, Clayton, Davis and Elmore face five years in prison for each false claims count. Dale, Grant, Clayton and Elmore face 20 years in prison for each wire fraud count. Dale, Grant and Clayton, Davis and Elmore face a mandatory two year sentence for each aggravated identity theft counts. Adams and Davis also face five years in prison for each theft of government funds count. All the defendants are also subject to fines and mandatory restitution if convicted.
These cases were investigated by Special Agents of the IRS - Criminal Investigation. Trial attorneys Jason H. Poole and Michael Boteler of the Justice Department’s Tax Division, and Assistant U.S. Attorney Jared Morris are prosecuting the case.
More information about the Tax Division and its enforcement efforts can be found at www.justice.gov/tax.
Noted Scientist Pleads Guilty to Attempted EspionageRead the Press Release
WASHINGTON - Stewart David Nozette, a scientist who once worked for the Department of Energy, the Department of Defense, the National Aeronautics and Space Administration and the White House’s National Space Council, pleaded guilty today to attempted espionage for providing classified information to a person he believed to be an Israeli intelligence officer.
The guilty plea, which took place this morning in the U.S. District Court for the District of Columbia, was announced by Lisa Monaco, Assistant Attorney General for National Security; Ronald C. Machen Jr., U.S. Attorney for the District of Columbia; and James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office.
Nozette, 54, of Chevy Chase, Md., pleaded guilty to one count of attempted espionage. Senior Judge Paul L. Friedman, who presided at the plea hearing, scheduled a status hearing for Nov. 15, 2011. No sentencing date was set. The plea agreement, which is subject to the judge’s approval, calls for an agreed-upon prison term of 13 years.
Nozette has been in custody since his arrest on Oct. 19, 2009. FBI agents arrested him following an undercover operation in which he provided classified materials on three occasions, including one occasion that forms the basis for today’s guilty plea. He was subsequently indicted by a federal grand jury. The indictment does not allege that the government of Israel or anyone acting on its behalf committed any offense under U.S. laws in this case.
“ Stewart Nozette betrayed America’s trust by attempting to sell some of the nation’s most closely-guarded secrets for profit. Today, he is being held accountable for his actions. As this case demonstrates, we remain vigilant in protecting America’s secrets and in bringing to justice those who compromise them,” said Assistant Attorney General Monaco.
“Stewart Nozette was once a trusted scientist who maintained high-level government security clearances and was frequently granted access to classified information relating to our national defense. Today he is a disgraced criminal who was caught red-handed attempting to trade American secrets for personal profit. He will now have the next 13 years behind bars to contemplate his betrayal,” said U.S. Attorney Machen. “The FBI and its partners deserve tremendous credit for their outstanding work on this case. This investigation and prosecution demonstrate our commitment to identifying and punishing those who would put our national security at risk.”
“Preventing the loss or compromise of high-technology and vital national security information is a top priority of the FBI,” said Assistant Director in Charge McJunkin. “This case is a prime example of what happens when a person decides to sell our nation’s most valuable secrets for individual gain.”
Background
Nozette received a Ph.D. in Planetary Sciences from the Massachusetts Institute of Technology in 1983. He has worked in various capacities on behalf of the U.S. government in the development of state-of-the-art programs in defense and space. For example, Nozette worked at the White House on the National Space Council, Executive Office of the President, from approximately 1989 through 1990. He also worked as a physicist for the U.S. Department of Energy’s Lawrence Livermore National Laboratory from approximately 1990 to 1999, where he designed highly advanced technology.
Among other things, Nozette assisted in the development of the Clementine bi-static radar experiment which purportedly discovered water ice on the south pole of the moon. A version of the Clementine satellite currently hangs on display at the National Air and Space Museum of the Smithsonian Institution in Washington, D.C., and was later hailed as the vanguard of the new “faster, cheaper, better” revolution in space exploration.
Nozette was also the president, treasurer and director of the Alliance for Competitive Technology (ACT), a non-profit organization that he organized in March 1990. Between January 2000 and February 2006, Nozette, through his company, ACT, entered into agreements with several government agencies to develop highly advanced technology. Nozette performed some of this research and development at the U.S. Naval Research Laboratory in Washington, D.C., the Defense Advanced Research Projects Agency in Arlington, Va., and the National Aeronautics and Space Administration Goddard Space Flight Center in Greenbelt, Md.
According to a factual proffer in support of the guilty plea, from 1989 through 2006, Nozette held security clearances as high as TOP SECRET and had regular, frequent access to classified information and documents related to the national defense of the United States. The factual proffer also provides details about the undercover operation that led to Nozette’s arrest.
The Investigation
According to the factual proffer, on Feb. 16, 2007, law enforcement agents executed a search warrant at Nozette’s home in Maryland as part of a fraud investigation and found classified documents. Further investigation into the classified documents revealed that in 2002, Nozette sent an e-mail threatening to take a classified program he was working on, “to [foreign country] or Israel and do it there selling internationally...” As a result of this and other information giving rise to suspicion of espionage, the FBI decided to conduct an undercover operation.
On Sept. 3, 2009, Nozette was contacted via telephone by an individual purporting to be an Israeli intelligence officer from the Mossad, but who was, in fact, an undercover employee of the FBI. During that call, the defendant agreed to meet with the undercover employee that day on Connecticut Avenue N.W., in front of the Mayflower Hotel in downtown Washington, D.C.
Later that day, Nozette met with the undercover employee and had lunch in the restaurant of the Mayflower Hotel. After the undercover employee made it clear that he was a “Mossad” agent, Nozette stated, “Good. Happy to be of assistance.”
After lunch in the hotel restaurant, Nozette and the undercover employee retired to a hotel suite to continue their discussion. During the conversation, the defendant informed the undercover employee that he had clearances “all the way to Top Secret SCI, I had nuclear…,” that “anything that the U.S. has done in space I've seen,” and that he would provide classified information for money and a foreign passport to a country without extradition to the United States.
The defendant and the undercover employee met again on Sept. 4, 2009, at the Mayflower Hotel. During this encounter, Nozette assured the undercover employee that, although he no longer had legal access to any classified information at a U.S. government facility, he could, nonetheless, recall the classified information to which he had been granted access. The defendant said, “It’s in my” head, and pointed to his head.
Undercover Operation Continues
On Sept. 10, 2009, FBI agents left a letter in the prearranged “dead drop” facility for the defendant. In the letter, the FBI asked Nozette to answer a list of questions concerning classified U.S. satellite information. FBI agents also provided signature cards, in the defendant’s true name and an alias, for Nozette to sign and asked the defendant to provide four passport sized photographs for the Israeli passport the defendant requested. The FBI agents also left $2,000 cash for the defendant in the “dead drop” facility, which Nozette retrieved the same day, along with the questions and signature cards.
On Sept. 16, 2009, Nozette left a manila envelope in the “dead drop” facility in the District of Columbia. One of the “answers” provided by the defendant contained information classified as SECRET/SCI which related to the national defense, in that it directly concerned classified aspects and mission capabilities of a prototype overhead collection system and which disclosure would negate the ability to support military and intelligence operations. In addition to disclosing SECRET/SCI information, Nozette offered to reveal additional classified information that directly concerned nuclear weaponry, military spacecraft or satellites, and other major weapons systems.
On Sept. 17, 2009, FBI agents left a second communication in the “dead drop” facility for the defendant. In the letter, the FBI asked Nozette to answer another list of questions concerning classified U.S. satellite information. Nozette retrieved the questions from the “dead drop” facility later that same day.
On Oct. 1, 2009, Nozette left a manila envelope in the “dead drop” facility in the District of Columbia. The FBI also left a cash payment of $9,000 in the “dead drop” facility. Later that day, the FBI agents retrieved the sealed manila envelope left by the defendant. Inside the envelope, FBI agents discovered the encrypted thumb drive that was provided to Nozette on Sept. 17, 2009, which included another set of “answers” from the defendant. The “answers” contained information classified as TOP SECRET/SCI and other information classified as SECRET/SCI. This classified information related to the national defense, in that it directly concerned satellites, early warning systems, means of defense or retaliation against large-scale attack, communications intelligence information, and major elements of defense strategy. (This information is what formed the basis for the charge in today’s guilty plea.)
On Oct. 5, 2009, Nozette left a manila envelope in the “dead drop” facility in the District of Columbia. Later that day, the FBI agents retrieved the sealed manila envelope left by the defendant. Inside the envelope, FBI agents discovered the encrypted thumb drive that was provided to Nozette on Oct. 1, 2009, which included another set of “answers” from the defendant. The “answers” contained information classified as TOP SECRET/SAR. This classified information related to the national defense, in that it directly concerned capabilities of a U.S. military weapon system research and development effort.
Nozette and the undercover employee met again on Oct. 19, 2009, at the Mayflower Hotel. During that meeting, the following exchanges took place:
NOZETTE: “So, uh, I gave you even in this first run, some of the most classified information that there is. . . . I’ve sort of crossed the Rubicon. . . . Now the, uh, so I think when I said like fifty K, I think that was probably too low. . . .The cost to the U.S. Government was two hundred million. . . . to develop it all. Uh, and then that’s not including the launching of it. . .Uh, integrating the satellites. . . . So if you say okay that probably brings it to almost a billion dollars. . . So I tell ya at least two hundred million so I would say, you know, theoretically I should charge you certainly, you know, at most a one percent.”
Nozette was arrested soon after he made these statements. He was subsequently indicted on four charges of attempted espionage. Under the plea agreement, Nozette pleaded guilty to the third count of the indictment, arising out of his passing of TOP SECRET/SCI information on Oct. 1, 2009.
At the time of his arrest, Nozette was awaiting sentencing in another federal case. On Jan. 30, 2009, he pleaded guilty in the U.S. District Court for the District of Columbia to charges of conspiracy to defraud the U.S. government with respect to false claims and tax evasion in an amount up to $399,999. In that case, Nozette agreed to pay restitution of $265,205 to the U.S. government. Nozette is awaiting sentencing in the case. Under terms of today’s plea, the sentence in the fraud case is to run concurrently with the sentence for attempted espionage.
This investigation was conducted by the FBI’s Washington Field Office, with assistance from the Naval Criminal Investigative Service, Naval Audit Service, National Reconnaissance Office, Air Force Office of Special Investigations, Defense Computer Forensics Laboratory, Defense Advanced Research Projects Agency, Defense Criminal Investigative Service, Defense Contract Audit Agency, U.S. Army 902nd Military Intelligence Group, National Aeronautics and Space Administration (NASA) Office of Counterintelligence, NASA Office of Inspector General, Department of Energy , Internal Revenue Service (IRS) Criminal Investigation Division, IRS Tax Exempt & Government Entities group, U.S. Customs and Border Protection and U.S. Postal Inspection Service, as well as other partners in the U.S. intelligence community.
The prosecution is being handled by Trial Attorneys Deborah A. Curtis and Heather M. Schmidt, from the Counterespionage Section of the Justice Department’s National Security Division, and Assistant U.S. Attorney Anthony Asuncion, from the U.S. Attorney’s Office for the District of Columbia.
Medicare Fraud Strike Force Charges 91 Individualsfor Approximately $295 Million in False BillingRead the Press Release
WASHINGTON – Attorney General Eric Holder and Health and Human Services (HHS) Secretary Kathleen Sebelius announced today that a nationwide takedown by Medicare Fraud Strike Force operations in eight cities has resulted in charges against 91 defendants, including doctors, nurses, and other medical professionals, for their alleged participation in Medicare fraud schemes involving approximately $295 million in false billing.
Attorney General Holder and Secretary Sebelius were joined in the announcement by FBI Executive Assistant Director Shawn Henry, Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and HHS Inspector General Daniel R. Levinson.
As part of a coordinated action, 70 individuals were charged by Strike Force prosecutors in indictments unsealed yesterday and today in six cities alleging a variety of Medicare fraud schemes involving approximately $263.6 million in false billings. As part of takedown operations last week, 18 additional defendants were charged in Detroit and one defendant was charged in Miami in cases unsealed on Sept. 1, 2011, for their alleged roles in Medicare fraud schemes involving approximately $29.4 million in fraudulent claims. Additionally, two individuals are scheduled to appear in court today on charges filed on Aug. 24, 2011, for their roles in a separate $2 million health care fraud scheme. This coordinated takedown involved the highest amount of false Medicare billings in a single takedown in Strike Force history.
The joint Department of Justice-HHS Medicare Fraud Strike Force is a multi-agency team of federal, state and local investigators designed to combat Medicare fraud through the use of Medicare data analysis techniques and an increased focus on community policing. Over the course of the past week, approximately 400 law enforcement agents from the FBI, HHS-Office of Inspector General (HHS-OIG), multiple Medicaid Fraud Control Units, and other state and local law enforcement agencies participated in the takedown. In addition to making arrests, agents also executed 18 search warrants in connection with ongoing strike force investigations.
“The defendants charged in this takedown are accused of stealing precious taxpayer resources and defrauding Medicare – jeopardizing the integrity of our health care system and our nation’s most critical health care program for personal gain,” said Attorney General Holder. “Our highly coordinated, nationwide Strike Force operations are working aggressively to combat Medicare fraud and our anti-health care fraud efforts have never been more innovative, collaborative, aggressive – or effective. We will continue to work with our law enforcement partners and partners across government to fight against health care fraud.”
“Today’s arrests are a powerful warning to those who would try to defraud taxpayers and Medicare beneficiaries,” said HHS Secretary Sebelius. “These arrests illustrate close cooperation between the Medicare program that identified these fraudsters and the law enforcement officials who acted swiftly to cut them off. And our efforts to stop criminals don’t end here because the Affordable Care Act gives us new tools to prevent Medicare fraud before it is committed – better protecting seniors and the integrity of the Medicare program for generations to come.”
The defendants charged are accused of various health care fraud-related crimes, including conspiracy to defraud the Medicare program, health care fraud, violations of the anti-kickback statutes and money laundering. The charges are based on a variety of alleged fraud schemes involving various medical treatments and services such as home health care, physical and occupational therapy, mental health services, psychotherapy and durable medical equipment (DME).
According to court documents, the defendants allegedly participated in schemes to submit claims to Medicare for treatments that were medically unnecessary and oftentimes never provided. In many cases, indictments and complaints allege that patient recruiters, Medicare beneficiaries and other co-conspirators were paid cash kickbacks in return for supplying beneficiary information to providers, so that the providers could submit fraudulent billing to Medicare for services that were medically unnecessary or never provided. Collectively, the doctors, nurses, medical professionals, health care company owners and others charged in the indictments and complaints are accused of conspiring to submit a total of approximately $295 million in fraudulent billing.
“The health care system is part of our nation’s infrastructure and we must do everything in our power to protect the integrity of Medicare and the system at large,” said FBI Executive Assistant Director Henry. “Working together as partners, we can stop criminals who seek to steal American taxpayers’ hard-earned dollars and we help ensure our nation’s health care system is there for those who need it.”
“As charged in these indictments, the defendants cover nearly the entire spectrum of healthcare providers, and perpetrated a variety of fraudulent schemes,” said Assistant Attorney General Breuer. “From Brooklyn to Miami to Los Angeles, the defendants allegedly treated the Medicare program like a personal piggy bank. Today’s Strike Force operations should serve as a wake-up call to would-be fraudsters nationwide. With Strike Force teams now in nine cities across the country, and employing sophisticated, data-driven law enforcement methods, we are determined to hold criminally responsible those who defraud Medicare.”
“The warning should be unambiguously clear by now,” said HHS Inspector General Levinson. “We will continue using the combined law enforcement might of Strike Forces around the country to combat health care fraud.”
In Miami, 45 defendants, including one doctor and one nurse, were charged today and yesterday for their participation in various fraud schemes involving a total of $159 million in false billings for home health care, mental health services, occupational and physical therapy, DME and HIV infusion. Another defendant in Miami was charged on Sept. 1, 2011, for a $1 million Medicare fraud scheme. In one case, 24 defendants are charged for participating in a community mental health center fraud scheme involving more than $50 million in fraudulent billing. According to court documents, the defendants allegedly paid patient recruiters to refer ineligible beneficiaries to the mental health center. In some instances, beneficiaries who were residents of halfway houses were allegedly threatened with eviction if they did not agree to attend the mental health center.
In Houston, two individuals were charged today with fraud schemes involving $62 million in false billings for home health care and DME. According to an indictment, one defendant allegedly sold beneficiary information to 100 different Houston-area home health care agencies in exchange for illegal payments. The indictment alleges that the home agencies then used the beneficiary information to bill Medicare for services that were unnecessary or never provided.
Ten defendants were charged in Baton Rouge, La., for participating in schemes involving more than $24 million related to false claims for home health care and DME. According to one indictment, a doctor, nurse and five other co-conspirators participated in a scheme to bill Medicare for more than $19 million in skilled nursing and other home health services that were medically unnecessary or never provided.
Six defendants, including two doctors, were charged in Los Angeles for their roles in schemes to defraud Medicare of more than $10.7 million. In Brooklyn, three defendants, including two doctors, were charged for a fraud scheme involving more than $3.4 million in false claims for medically unnecessary physical therapy. Two defendants, including a doctor, are making initial appearances today in U.S. federal court in Dallas after being charged for a scheme to defraud Medicare of approximately $2.1 million.
In Detroit, 18 defendants, including three doctors, were charged last week for schemes to defraud Medicare of more than $28 million. According to an indictment, 14 of the defendants participated in a home health care scheme that submitted more than $14 million in false claims to Medicare. Finally, four defendants including one doctor were charged in Chicago for their alleged roles in schemes to defraud Medicare of more than $4.4 million.
The Medicare Fraud Strike Force operations are part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT), a joint initiative announced in May 2009 between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country.
Since their inception in March 2007, Strike Force operations in nine locations have charged more than 1,140 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.
The cases announced today are being prosecuted and investigated by Medicare Fraud Strike Force teams comprised of attorneys from the Fraud Section of the Justice Department’s Criminal Division and from the U.S. Attorney’s Offices for the Southern District of Florida, the Eastern District of Michigan, the Eastern District of New York, the Southern District of Texas, the Central District of California, the Middle District of Louisiana; the Northern District of Illinois, and the Northern District of Texas; and agents from the FBI, HHS-OIG, and state Medicaid Fraud Control Units.
An indictment is merely a charge and defendants are presumed innocent until proven guilty.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.
Related Documents
Indictments
Remarks of Attorney General Eric Holder
Remarks of Assistant Attorney General BreuerJustice Department Files Lawsuit Alleging Racial and Sexual Harassment by the Texas Department of Family and Protective ServicesRead the Press Release
WASHINGTON – The Department of Justice announced today the filing of a lawsuit against the Texas Department of Family and Protective Services (DFPS), alleging the agency discriminated against a black male former employee on the basis of race and/or sex by subjecting him to a hostile work environment and then terminating him in violation of Title VII of the Civil Rights Act of 1964, as amended. The suit was filed in federal district court in the Western District of Texas.
According to the department’s complaint, from early 2007 until his termination in July 2007, Michael Lewis was subjected to race- and gender-based slurs and insults and other objectionable conduct by his first- and second-line supervisors. Additionally, the supervisors ignored and even ridiculed his repeated complaints to them about being harassed by one of his assigned clients at DFPS, in contrast to the office’s prior practice of transferring non-black, female investigators from cases in which they experienced harassment from clients. The racial and sexual harassment of Lewis ultimately culminated in his termination.
“All workers have the right to go to work each without facing discrimination and without having to suffer racial and sexual harassment. Public employers should set an example for others by upholding the law and taking prompt and effective action to stop discrimination when it occurs,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Department of Justice will vigorously pursue such violations of Title VII.”
The El Paso, Texas, area office of the Equal Employment Opportunity Commission (EEOC) investigated and attempted to resolve Lewis’s charge of discrimination before referring it to the Department of Justice for litigation. More information about the EEOC is available on its website at www.eeoc.gov.
The enforcement of Title VII is a top priority of the Justice Department’s Civil Rights Division. Additional information about the Civil Rights Division is available on its websites at www.justice.gov/crt/ and www.justice.gov/crt/emp/ .
Former Campaign Treasurer for U.s. Congressman from New Jersey<br /> <br /> Sentenced to 30 Months in Prison for Embezzling Campaign FundsRead the Press Release
WASHINGTON – The former campaign treasurer for Representative Frank LoBiondo of New Jersey was sentenced today to 30 months in prison for embezzling more than $450,000 from the congressman’s election and re-election campaign accounts, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney Paul J. Fishman for the District of New Jersey and Special Agent in Charge Michael B. Ward of the FBI’s Newark, N.J., Field Office.
Andrew J. McCrosson Jr., 60, of Egg Harbor Township, N.J., also was sentenced by Senior U.S. District Judge Joseph E. Irenas to serve three years of supervised release following his prison term, and to pay $458,000 in restitution. McCrosson pleaded guilty on March 4, 2011, in Camden, N.J., to a two-count criminal information charging him with one count of wire fraud and one count of embezzling and converting funds contributed to a federal candidate.
According to court documents and information presented in court, McCrosson was the campaign treasurer for Congressman LoBiondo from 1995 through Aug. 23, 2010. The election and re-election campaign committees were known as LoBiondo for Congress. As campaign treasurer, McCrosson was responsible for maintaining the campaign committee’s financial records, keeping track of contributions to and expenditures of the campaign committee and filing necessary submissions with the Federal Election Commission (FEC). McCrosson was paid a fee for his services ranging between $3,000 and $8,000, either per election cycle or per calendar year.
According to court documents, the campaign committee maintained bank accounts into which campaign contributions were deposited and from which expenditures were paid. During his guilty plea hearing, McCrosson acknowledged that he controlled those bank accounts on behalf of the campaign committee and was responsible for reporting all campaign contributions and expenses to the FEC. McCrosson admitted that from 1995 to August 2010, he wrote checks totaling approximately $458,000 from the LoBiondo for Congress bank accounts to himself without authorization and for no legitimate campaign purpose. According to the court document, McCrosson used the embezzled funds for personal purposes such as the repayment of a federal income tax lien, home mortgage payments, college tuition payments for his children and other living expenses.
McCrosson failed to report to the FEC all of the checks he wrote to himself, in an effort to conceal his theft. McCrosson also admitted that he materially misrepresented in these FEC filings the amount of cash on hand held by the campaign committee in its bank accounts to further conceal his embezzlement from Congressman LoBiondo, the campaign committee, the FEC and the public.
Congressman LoBiondo represents the Second Congressional District of New Jersey which includes all of Salem, Cumberland and Cape May counties and parts of Gloucester, Atlantic and Burlington counties. McCrosson performed his duties as campaign treasurer for the committee from his home in Marmora, N.J., and later from his home in Egg Harbor Township.
The case was investigated by the FBI, and is being prosecuted by Assistant U.S. Attorney Matthew Skahill of the U.S. Attorney’s Office Criminal Division in Camden, as well as Trial Attorneys Tracee Plowell and Nancy Simmons of the Public Integrity Section in the Justice Department’s Criminal Division.
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Fact Sheet: the Department of Justice Ten Years After 9/11Read the Press Release
Ten years after the terrorist attacks of Sept. 11, 2001, the United States has been defined by its resolve, its values and the resilience with which it has overcome this tragedy. The 9/11 attacks and other acts of terrorism have failed to undermine our values or weaken our society. Americans continue to embrace democratic values and fundamental liberties, instead of fear and oppression.
As the Justice Department and the entire nation honor the memory of those who lost their lives in the 9/11 attacks, the department remains fully committed to the fight against those who target Americans and our way of life. The best way to honor the legacies of the victims of 9/11 is to prevent further terrorist attacks on this country, which remains the highest priority and most urgent work of the department.
Even as we pledge continued vigilance against those who target Americans, our nation can be justifiably proud of its response to these threats over the past decade. America is both stronger and safer than it was a decade ago. Ten years after 9/11, al-Qaeda and its affiliates, while still a serious threat, have a severely degraded capability to attack the homeland. As a result of offensive actions abroad and vigilant security measures at home, the U.S. government has reduced terrorists’ capabilities to perpetrate spectacular attacks on American soil.
For its part, the department has improved its ability to identify, penetrate and dismantle terrorist plots as a result of a series of structural reforms; the development of new intelligence and law enforcement tools; and a new mindset that values information sharing and prevention, while vigorously protecting civil liberties and privacy interests. Working with partners in the intelligence community, the military and law enforcement, as well as with communities across America and counterparts around the world, the department has not rested -- and will never rest -- in its efforts to safeguard America.
Even as we strive to thwart 100 percent of the plots against us, we know that violent extremists need only succeed once. While absolute security is not possible and much work remains to be done, the Justice Department and its partners have built a much stronger security architecture to maximize our ability to protect the homeland, and are constantly adapting operations in a way that enhances the nation’s security while further delegitimizing the actions of terrorists.
Below are some of the key actions taken by the department over the past decade to enhance the nation’s counter-terror efforts, while upholding civil liberties and privacy interests. For more information on how the department is commemorating 9/11, please see: www.justice.gov/911. To view this fact sheet online, please see: I.) Protecting America Through Investigation and Criminal Prosecution; II.) Structural Changes to Enhance Counter-Terrorism Efforts; III.) Legal Changes to Enhance Counter-Terrorism Efforts; IV.) Protecting the Privacy and Civil Liberties of Americans; V.) Partnering with the Muslim, Arab and Sikh Communities; and VI.) Partnering with Domestic and International Counterparts.
I. Protecting America Through Investigation and Criminal Prosecution
Over the past decade, the department has successfully and securely used the criminal justice system to convict and incarcerate hundreds of defendants for terrorism and terrorism-related offenses that occurred both in the United States and overseas, including plots targeting both civilian and military targets. These post-9/11 terror prosecutions have proceeded without any terror defendant escaping federal custody or terrorist retaliation against a judicial district.
Over the past three years, America has dealt with some of the most significant terrorist threats to the homeland since 9/11. These threats have become increasingly diverse and decentralized, often making them more challenging to identify and counter. There has been an expanding universe of groups and people targeting our country, including al-Qaeda in the Arabian Peninsula, the Pakistani Taliban and other affiliates, as well as an increasing number of radicalized U.S. citizens and residents. There has also been greater diversity in terms of tactics, with a trend toward smaller, faster-developing plots, rather than larger, long-term plots like those carried out on 9/11.
The Justice Department has played a vital role in combating these emerging threats, and it continues to adapt its operations. During calendar years 2009 and 2010, the Justice Department charged more defendants in federal court with the most serious terrorism offenses than in any two-year period since 9/11. Some of the more significant international terrorism prosecutions in recent years include the following:
- New York Subway Plot: In September 2009, a combined law enforcement and intelligence effort thwarted an al-Qaeda-sponsored plot to attack the New York subway system. Najibullah Zazi and Zarein Ahmedzay pleaded guilty in the Eastern District of New York in February and April 2010, respectively, in connection with their roles in the plot. Co-defendant Adis Medunjanin is currently awaiting trial. Zazi’s cousin also pleaded guilty to helping Zazi obtain al-Qaeda training and obstructing the terrorism investigation, and Zazi’s father and uncle have also been convicted of conspiring to obstruct justice in the terrorism investigation. An additional person was convicted of lying to federal agents in connection with the case. Five additional defendants, including Adnan El-Shukrijumah, who is accused of being a senior leader of al-Qaeda, have also been indicted as part of the investigation.
- Times Square Plot: In June 2010, Faisal Shahzad pleaded guilty in the Southern District of New York to attempting to detonate a car bomb in New York City’s Times Square on the evening of May 1, 2010. Shahzad admitted that he received explosives training from trainers affiliated with the Pakistani Taliban. In October 2010, Shahzad was sentenced to life in prison.
- Mumbai and Denmark Terror Plots: In March 2010, David Headley pleaded guilty in the Northern District of Illinois to a dozen terrorism charges, admitting that he participated in planning the November 2008 terrorist attacks in Mumbai, India, as well as later planning to attack a Danish newspaper that had published cartoons of the Prophet Mohammed. In June 2011, Headley co-defendant Tahawwur Rana was convicted of participating in the Denmark terror conspiracy and providing material support to the Pakistani terrorist organization Lashkar-e-Tayyiba. Six other defendants, including alleged Pakistani terror leader Ilyas Kashmiri and accused Lashkar-e-Tayyiba operative Sajid Mir, have been indicted as part of the investigation.
- Al-Shabaab Terror Recruitment: Since 2009, 19 individuals have been charged in the District of Minnesota as part of “Operation Rhino,” an investigation that has focused on the recruitment of young men from the Minneapolis-area to fight on behalf of the terrorist organization, al-Shabaab, in Somalia. Six of the defendants have pleaded guilty thus far. Many other defendants remain fugitives in Somalia. The earliest group of identified travelers departed in 2007, while others left in 2008 and 2009. Upon arriving in Somalia, the men resided in al-Shabaab safe-houses until constructing an al-Shabaab training camp, where they were trained by a senior member of al-Shabaab and a senior member of al-Qaeda. At least two of the travelers from Minneapolis have died in suicide bomb attacks in Somalia and several others have been killed in combat fighting for al-Shabaab. In other judicial districts, the department has charged numerous other defendants with terror violations involving al-Shabaab.
Countering Homegrown Violent Extremism
In recent years, the Department of Justice has brought charges against an increasing number of individuals, including U.S. citizens and legal permanent residents, who were living in this country; had become radicalized; and had taken steps to act on their extremist beliefs. While some have acted at the direction of foreign terrorist groups, many were lone actors, operating independently of foreign terrorist organizations but motivated or radicalized by terrorist propaganda. Examples of recent homegrown terror prosecutions are below:
- Michael Finton pleaded guilty in May 2011 in the Central District of Illinois to attempted use of a weapon of mass destruction stemming his efforts to detonate a vehicle bomb outside a federal courthouse in Illinois. Finton was sentenced to 28 years in prison.
- Farooque Ahmed pleaded guilty in the Eastern District of Virginia in April 2011 to attempting to provide material support to al-Qaeda and collecting information to assist in planning terrorist attacks on transit facilities in the Washington, D.C., area. He was sentenced to 23 years in prison.
- Daniel Boyd pleaded guilty in February 2011 in the Eastern District of North Carolina to conspiracy to provide material support to terrorists, and conspiracy to kill abroad, stemming from his efforts to recruit and help individuals travel abroad to kill on behalf of violent extremists. Daniel’s son, Zakariya Boyd, pleaded guilty to conspiracy to provide material support to terrorists in June 2011.
- Zachary Chesser pleaded guilty in the Eastern District of Virginia in February 2011 to charges of communicating threats against the writers of the South Park television show, soliciting jihadists to desensitize law enforcement and attempting to provide material support to al-Shabaab. He was sentenced to 25 years in prison.
- Colleen LaRose pleaded guilty in February 2011 in the Eastern District of Pennsylvania to conspiracy to provide material support to terrorists, conspiracy to kill abroad and other charges stemming from her role in a plot to murder a Swedish cartoonist who depicted the Prophet Mohammed. Her co-defendant, Jamie Paulin-Ramirez, pleaded guilty in March 2011 to conspiracy to provide material support to terrorists.
- Hosam Smadi pleaded guilty in May 2010 in the Northern District of Texas to attempted use of a weapon of mass destruction stemming from his efforts to bomb a 60-story skyscraper in Dallas in 2009. Smadi was sentenced to 24 years in prison.
Assisting in the Intelligence-Gathering Process
Over the past decade, in case after case, the Justice Department has sought not just to convict and incarcerate criminals but also to develop cooperators and informants who can be used to hold accountable co-conspirators and others involved in plots against the United States. Some examples from the past 10 years in which valuable information about terrorist organizations has been elicited through the questioning of individuals at different stages of the criminal justice process, are below.
- David Headley, who pleaded guilty in 2010 in the Northern District of Illinois in connection with a plot to bomb a Danish newspaper and his role in planning the 2008 terror attacks in Mumbai, has provided valuable intelligence on those attacks, the terrorist organization Lashkar-e-Tayyiba, and Pakistan-based terrorist leaders. Headley also testified in the trial of c o-defendant Tahawwur Rana, who was convicted in June 2011 of participating in the Denmark terror conspiracy and providing material support to Lashkar-e-Tayyiba.
- Earnest James Ujaama pleaded guilty in 2007 in the Southern District of New York to terrorism charges arising from his efforts to establish a jihad training camp in Bly, Ore., and his efforts to facilitate violent jihad in Afghanistan. Ujaama later testified in the trial of Oussama Kassir, who was charged with a conspiracy in connection with the Bly training camp and with operating numerous terrorist websites. Kassir was found guilty of all 11 counts against him in May 2009, and received a life sentence plus 115 years in September 2009. Ujaama’s testimony was considered instrumental in helping to secure Kassir’s conviction.
- Iyman Faris, who trained and fought in Kashmir and Afghanistan in the late 1980s, provided valuable intelligence about al-Qaeda operations, leaders and plans for attacks in the United States. Faris pleaded guilty in the Eastern District of Virginia to casing a New York City bridge for al-Qaeda, and providing information to al-Qaeda on tools necessary for possible attacks on U.S. targets. He was sentenced in 2003 to 20 years in prison.
- John Walker Lindh pleaded guilty and was sentenced to 20 years in prison in 2002 in the Eastern District of Virginia for supplying services to the Taliban while fighting on the Taliban’s front lines in Afghanistan. As part of his plea agreement, he provided valuable intelligence about training camps and fighting in Afghanistan.
II. Structural Changes to Enhance Counter-Terrorism Efforts
Over the past decade, the Justice Department and its component agencies have fundamentally restructured their operations to better address national security threats and prevent terrorist attacks. Some of the major structural reforms during this period include the following:
Creating the Justice Department’s National Security Division
In 2006, the Justice Department created the National Security Division (NSD), the first new Justice Department division in 49 years, to merge the department’s primary national security components into a single division to more effectively combat national security threats. The division brought together the former Office of Intelligence Policy and Review, the Counterterrorism Section and the Counterespionage Section from separate parts of the department. The new Office of Law and Policy, the Executive Office and the Office of Justice for Victims of Overseas Terrorism have completed the NSD. NSD’s structure is designed to fuse the authorities and capabilities of the law enforcement and intelligence communities to strengthen the government’s national security efforts. Since its inception, some of NSD’s accomplishments include:
- Improved coordination between prosecutors and law enforcement agencies, on the one hand, and intelligence attorneys and the Intelligence Community, on the other, to strengthen the effectiveness of the nation’s counterterrorism efforts.
- Developed and promoted a national counterterrorism enforcement program that has yielded prosecutions against hundreds of defendants as a result of collaboration with department leadership, the FBI, the intelligence community and the U.S. Attorneys’ Offices.
- Re-organized and dramatically increased staffing for the Office of Intelligence (formerly the Office of Intelligence Policy and Review), with three new sections to handle the increased Foreign Intelligence Surveillance Act (FISA) workload, better coordinate FISA litigation and improve national security oversight.
- Reviewed, processed and submitted thousands of FISA applications to the FISA Court on behalf of the government to ensure that intelligence community agencies have the legal authorities necessary to conduct intelligence operations.
- With the lowering of the FISA “wall” between intelligence and law enforcement investigations, NSD has overseen and processed a steady increase in the number of requests to use information from FISA-authorized activities as evidence in criminal prosecutions of terrorists and spies.
- Created and staffed a new Office of Law and Policy to harmonize national security legal and policy functions for the entire department, and to promote important national security priorities, such as updating FISA and other legislation, supporting cyber security efforts and strengthening counter-terrorism capabilities of our partners overseas.
- Funded and staffed the Office of Justice for Victims of Overseas Terrorism, and designated 159 international terrorism events to allow for U.S. victim expense reimbursement.
Transforming the FBI to Meet the New Threat
Since 9/11, the FBI has undertaken the most significant transformation in its history. The bureau has restructured its operations in order to better detect, penetrate and dismantle terrorist enterprises as part of its larger cultural shift to a threat-based, intelligence-driven, national security organization. Today, the FBI serves as a vital link between the intelligence and law enforcement communities, bringing the discipline of the criminal justice system to its domestic intelligence activities in a manner that is consistent with American expectations and protections for privacy and civil liberties. As part of this strategic shift, the FBI has overhauled its counterterrorism operations, expanded its intelligence capabilities, modernized its business practices and technologies, and improved coordination with its partners. Some of the major changes include:
- Established clear priorities emphasizing prevention while ensuring the protection of privacy rights and civil liberties.
- Established the FBI National Security Branch in 2005, which centralized the FBI’s national security programs, including its Counterterrorism Division, Counterintelligence Division, Directorate of Intelligence, Weapons of Mass Destruction Directorate and the Terrorist Screening Center, into a single branch.
- Established Field Intelligence Groups in all 56 FBI field offices and embedded intelligence groups in each operational division at FBI headquarters.
- Doubled the number of FBI intelligence analysts and tripled the number of linguists.
- Created the National Joint Terrorism Task Force (NJTTF) at FBI headquarters, consisting of approximately 41 member agencies.
- Realigned resources , shifting some agents from criminal programs to counterterrorism matters and creating threat-based fusion cells to address the FBI’s top counterterrorism priorities, and to ensure that the collection of intelligence is focused against priority threats.
- Established various units that have enhanced counterterrorism capabilities, including the 24/7 Counterterrorism Watch, which serves as the FBI’s primary point of notification for all potential terrorist threats; the Terrorism Financing Operation Section, which centralizes efforts to track and shut down terrorist financing; and fly teams, which respond to terrorism incidents or threats around the world.
- Created and implemented a new operating manual for domestic operations based on new Attorney General Guidelines that apply across all program areas.
III. Legal Changes to Enhance Counter-Terrorism Efforts
Over the past decade, the Justice Department has worked closely with Congress and other federal agencies to strengthen the nation’s laws against terrorism, update the legal authorities needed to detect and disrupt terror plots, and tear down walls hindering intelligence and law enforcement officials from gathering and sharing information critical to protecting the nation. Some of the most significant changes in this area include the following:
USA PATRIOT Act of 2001 and the USA PATRIOT Act Improvement and Reauthorization Act of 2005
The USA PATRIOT Act, which was enacted in 2001, has helped investigators identify, dismantle and disrupt many terrorist plots. Expiring provisions of the Act were reauthorized by the USA PATRIOT Act Improvement and Reauthorization Act of 2005, and by subsequent legislation in 2009 and 2011, allowing investigators to continue to use these vital authorities. These laws have helped law enforcement and intelligence agencies protect the nation in the following ways:
- Helped tear down the so-called FISA “wall” that prevented effective information sharing between law enforcement and intelligence personnel.
- Allowed federal agents to better track sophisticated terrorists trained to evade detection, and provided national security investigators with tools comparable to those commonly used in criminal cases.
- Updated investigative tools to reflect new technologies and threats, and allowed authorities to obtain search warrants from a single court regardless of where terrorist-related activity occurred.
- Increased penalties for those who commit certain terrorist crimes and those who support them.
- The USA PATRIOT Act Improvement and Reauthorization Act added dozens of additional safeguards to protect privacy interests and civil liberties.
The Foreign Intelligence Surveillance Act (FISA) Amendments Act of 2008
In 2008, legislation was enacted that modernized the Foreign Intelligence Surveillance Act of 1978. The FISA Amendments Act of 2008, which passed with a bipartisan majority of Congress and broad support from the intelligence community, allows intelligence professionals to more quickly and effectively monitor terrorist communications, while protecting the civil liberties of Americans. Among other things, the law accomplishes the following:
- Ensures that the intelligence community has the tools it needs to determine who terrorists are communicating with, what they are saying and what they may be planning.
- Provides critical authorities that allow the intelligence community to acquire foreign intelligence information by targeting foreign persons reasonably believed to be outside the United States.
- Preserves and provides new civil liberties protections for Americans.
- Requires court orders to target Americans for foreign intelligence surveillance, no matter where they are, and requires court review of the procedures used to protect information about Americans.
- Provides critical liability protections for companies whose assistance is necessary to protect the country from terrorist threats.
IV. Protecting the Privacy and Civil Liberties of Americans
As the nation’s primary law enforcement agency, the Justice Department strives to be a model for ensuring that Americans’ privacy and civil liberties are forcefully protected in all the department’s national security efforts. In recent years, the department has dramatically enhanced oversight of its national security activities. It has also restored the department’s Civil Rights Division as the nation’s preeminent civil rights law enforcement agency. In Fiscal Year 2009, there were more federal criminal civil rights cases filed by the Justice Department than in any prior year – and in Fiscal Year 2010, the department broke that record once again. The department’s commitment to civil rights has never been stronger, and protecting the rights of the Muslim and Arab-American communities, and other communities, is a critical part of that commitment. Below are some of the advances the department has made since 9/11:
- The Civil Rights Division and U.S. Attorneys’ Offices have brought federal hate crime charges in 52 post-9/11 backlash cases, with 47 convictions to date. Department attorneys have also coordinated with state and local prosecutors in numerous non-federal criminal prosecutions, in many cases providing substantial assistance.
- The Civil Rights Division has also worked to ensure that Muslims are free to practice their religion without facing illegal barriers or discrimination. Using its authority under the Religious Land Use and Institutionalized Persons Act, the division has taken action in a number of jurisdictions around the country to ensure that land use and zoning decisions are not used to illegally prevent Muslim communities from building places of worship.
- The department appointed its first Chief Privacy and Civil Liberties Officer in 2006, and subsequently created the Office of Privacy and Civil Liberties to support the duties and responsibilities of the Chief Privacy and Civil Liberties Officer. The principal mission of the Office of Privacy and Civil Liberties is to protect the privacy and civil liberties of the American people through review, oversight and coordination of the department’s privacy operations.
- The department’s National Security Division has dramatically enhanced its oversight of FBI national security activities, and in many cases, those of other intelligence community agencies, to ensure adherence to the nation’s laws, rules and regulations, including privacy interests and civil liberties.
- The FBI created the Office of Integrity and Compliance in 2007 to ensure the bureau’s compliance with laws, rules and procedures, not only in national security activities, but in all FBI activities.
- The department developed and issued guidance to federal agencies in 2003 expressly prohibiting racial profiling in federal law enforcement practices.
V. Partnering with the Muslim, Arab and Sikh Communities
In conducting national security investigations and prosecuting cases, the FBI and Justice Department rely on the support, cooperation and trust of the communities we serve and protect. Members of the Muslim and Arab-American communities are valuable partners in a shared effort to combat terrorist threats. They have regularly denounced terrorist acts and those who carry them out, and have provided critical assistance in helping to disrupt terrorist plots and combat radicalization. The department and the FBI regularly engage in extensive outreach efforts with the Muslim and Arab-American communities, and many other communities, to improve our ability to perform our duties in a manner consistent with civil liberties, diversity and a commitment to religious freedom. Among the actions taken since 9/11:
- The Justice Department and the FBI have constructed strong, lasting relationships with national Arab-American, Muslim, Sikh and South Asian American organizations and their leaders.
- The Attorney General has made engagement with the Muslim American and Arab American communities a priority, and U.S. Attorneys are active in reaching out to Muslim communities in their districts, with a special focus on local situations and issues.
- The department’s Civil Rights Division holds bi-monthly meetings that bring together top officials from various federal agencies with representatives of the Muslim, Arab, Sikh and South Asian communities to address civil rights issues.
- The Justice Department’s Community Relations Service has held more than 250 town and community meetings around the country in the last decade, addressing 9/11 backlash discrimination issues against Arab-Americans, Muslims, Sikhs and South Asian-Americans. The Service has also deployed conflict resolution specialists to more than 50 communities to alleviate tensions in the wake of backlash incidents.
- The FBI has launched innovative grassroots programs in each of its 56 field offices to meet the needs of Arab-Americans, Muslims, Sikhs, South Asian-Americans, and other communities within their domains.
- FBI outreach efforts range from formal national-level relationships with established groups to local multi-cultural advisory boards, Citizen’s Academies and youth activities. Most important are the individual relationships established by FBI personnel in the field with leaders in their local communities through regular dialogue and information sharing.
VI. Partnering with Domestic and International Counterparts
In order to address terrorist networks operating around the world, the department has increased its partnerships at every level of government in the United States and has forged strong ties with its counterparts overseas. Some of these efforts include:
Coordinating with Federal, State and Local Partners
- Created Anti-Terrorism Advisory Councils in each U.S. Attorney’s Office to enhance information sharing with state and local authorities in each district, and to enhance communications between the department and U.S. Attorneys on terrorism matters.
- Increased the number of Joint Terrorism Task Forces (JTTFs) around the country from 35 to 104, and increased the number of JTTF personnel from approximately 1,000 to nearly 4,500.
- Helped fund and participate in the 72 information fusion centers that have been created in states and localities around the country since 9/11 to serve as the focal points within the state and local environment for the receipt, analysis, gathering and sharing of threat-related information.
- Partnered with other agencies to establish the Nationwide Suspicious Activity Reporting (SAR) Initiative (NSI), which provides standards, policies and processes for federal, state, local, tribal and territorial law enforcement to share timely, relevant information about behaviors recognized as precursor activities to terrorism. The NSI also is training analysts to recognize patterns and share behavior-related patterns and trends with law enforcement.
- Provided critical participation and support to the multi-agency National Counterterrorism Center (NCTC), which integrates terrorism intelligence, conducts strategic operational planning, and serves as a central repository for terrorism intelligence.
- Provided critical leadership and support to the Terrorist Screening Center, a multi-agency center under the umbrella of the FBI’s National Security Branch that manages the consolidated terrorist watch list.
- Provided critical participation in the multi-agency Foreign Terrorist Tracking Task Force, which provides information that helps keep foreign terrorists and their supporters out of the United States, or leads to their removal, location, detention, surveillance or prosecution.
- Created the FBI Office of Law Enforcement Coordination to build bridges to national, state, municipal, county, tribal and local partners.
Coordinating with International Counterparts
In the past 10 years, the department has leveraged international law enforcement cooperation to target and dismantle terrorist enterprises both at home and abroad. In this area, the department has:
- Expanded the number of FBI Legal Attaché offices in foreign countries from 44, on 9/11, to 62 operation offices and 13 sub-offices today.
- 112 agents and 74 support employees, in 2001, to 182 agents and 107 support personnel, for a total of 289 employees stationed abroad—an increase of nearly 55 percent.
- Responded to hundreds of formal requests from partners around the world for assistance in terrorism investigations, though our global network of Mutual Legal Assistance Treaties.
- Shared thousands of pieces of threat-related information with our international partners.
- Provided critical evidence to other countries for use in terrorism-related prosecutions, and received critical evidence from other countries for use in U.S. terrorism-related prosecutions.
Assistant Attorney General Ignacia S. Moreno Announces New Additions to Senior Management PositionsRead the Press Release
WASHINGTON – Ignacia S. Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division (ENRD), today announced two new members of her senior leadership team.
Bruce S. Gelber has been appointed to serve as the career deputy assistant attorney general, overseeing the work of the division’s Environmental Enforcement Section (EES) and the Environmental Defense Section (EDS). EES is responsible for representing the United States in affirmative civil litigation under the federal pollution control and environmental protection statutes, including the Comprehensive Environmental Response, Compensation, and Liability Act, the Resource Conversation and Recovery Act, the Clean Air Act, the Clean Water Act, the Safe Drinking Water Act and the Oil Pollution Act. EDS represents the United States in complex civil litigation arising under a broad range of environmental statutes, including defending Environmental Protection Agency (EPA) regulations in federal court.
Prior to his appointment, Gelber served as chief of EES for 11 years, one of the largest litigating sections in the Department of Justice. In his role as EES chief, he has supervised some of the section’s most significant cases, including the Justice Department’s civil lawsuit arising from the explosion and sinking of the Deepwater Horizon oil platform in April 2010.
Gelber previously served as an assistant section chief for the litigation group responsible for the EPA Region 3 and 8 dockets. He also served as a senior lawyer in the Region 1 and 2 litigation group and as lead counsel for the government in the superfund litigation over the Love Canal landfill site. Prior to joining the Department of Justice in 1985, Gelber was general counsel of the National Committee Against Discrimination in Housing in Washington, D.C. Gelber received his B.A., summa cum laude, from Cornell University in 1972 and a J.D. from the Harvard Law School in 1975.
“Bruce brings years of outstanding management experience to this important position in the Division, where he has served as my trusted advisor,” said Assistant Attorney General Moreno. “We will continue to benefit from Bruce’s expertise in environmental laws and his leadership in service to the American people.”
Shirley Rivadeneira recently joined ENRD to serve as counsel to the assistant attorney general. In this position she will be responsible for advising the assistant attorney general on several initiatives, such as outreach to the U.S. Attorneys’ Offices, environmental justice, international environmental enforcement, human capital management and other special projects.
Rivadeneira brings to ENRD significant environmental, litigation, regulatory and management experience from both the public and private sectors. She recently worked at the White House, first as director of the Energy and Environment Team and later as director of the Domestic Team in the Presidential Personnel Office. In both roles, Rivadeneira supported the Departments of Justice, Health and Human Services, Energy, Interior, Agriculture, Education, Labor, Transportation, Housing and Urban Development, and the National Aeronautics and Space Administration, EPA, the Office of Personnel Management, the Council on Environmental Quality and the Office of Science Technology Policy. Prior to that, she was an appointee at the U.S. Department of Labor, serving as a special assistant to the assistant secretary for Administration and Management and as an attorney advisor in the Office of the Solicitor, where she worked on developing a grants framework for green jobs training programs.
Before joining the administration, Rivadeneira was a litigation associate at Alston & Bird LLP and Clifford Chance LLP, where she focused on complex commercial litigation, white collar defense, regulatory compliance, environmental law, international arbitration and human rights.
Rivadeneira holds a B.A., with highest honors, from Emory University, and a J.D./M.A. joint-degree from American University, Washington College of Law and the School of International Service. During law school, she was a symposium editor of the Administrative Law Review.
“I am pleased to welcome Shirley to the Department of Justice,” said Assistant Attorney General Moreno. “Her extensive experience in environmental and international law, complex litigation, and record of distinguished service to the Executive branch will serve the division and the American people well.”
Alabama Woman Sentenced 33 Months in Prison for Role in Tax Fraud ConspiracyRead the Press Release
MONTGOMERY, Ala. – Laquanta Grant, a resident of Montgomery County, Ala., was sentenced to 33 months in prison for conspiring to defraud the United States and ordered to pay restitution in the amount of $2,326,738.08, the Justice Department and Internal Revenue Service announced today.
Along with four other defendants, Grant was indicted by a Montgomery, Ala., federal grand jury on Dec. 14, 2010, on a variety of charges stemming from a large-scale tax fraud and identity theft conspiracy based in that city. According to the indictment and other court documents, the conspirators used stolen identities to file millions of dollars in false tax returns claiming fraudulent refunds over a two-year period in 2009 and 2010. During the conspiracy, Grant was responsible for funneling more than $100,000 in fraudulent refunds to her co-conspirators.
According to the indictment and other court documents, in February 2009, Grant caused another person (W.D.) to open a bank account that was used to deposit the fraudulent tax refunds. The false refunds were provided to co-conspirator Veronica Dale and others. Between March 2010 and May 2010, Grant accompanied W.D. to the bank to ensure that W.D. withdrew the fraudulent refunds from the bank account and provided the monies to Grant and her co-conspirators. Between March 2010 and July 2010, Grant received more than $100,000 in checks from Betty Washington, who was also helping move fraudulent refunds, and provided some of the money to Alchico Grant and others. Laquanta Grant retained a portion of the false refunds.
Several other members of the conspiracy have already been sentenced. Wendy Delbridge and Betty Washington, who were not indicted with the other conspirators, both pleaded guilty to charges of conspiring to defraud the United States. Delbridge was sentenced to three years probation with six months of home confinement, while Washington was sentenced to 21 months in prison. One of the individuals indicted with Laquanta Grant, Leroy Howard, pleaded guilty to conspiring to defraud the United States and was sentenced to four years of probation with six months home confinement.
IRS-Criminal Investigation agents investigated this case, and Justice Department Tax Division Trial Attorneys Jason Poole and Michael Boteler, and Jared Morris, Assistant U.S. Attorney in the Middle District of Alabama are prosecuting the case.
More information about the Tax Division and its enforcement efforts can be found at: www.justice.gov/tax .
Tuesday 6 September 2011
New York Stock Broker Sentenced to Prison in International Stock Fraud SchemeRead the Press Release
WASHINGTON - A New York stock broker was sentenced today to 24 months in prison for his role in a wide-ranging international stock fraud scheme involving the illegal use of bulk commercial emails, or “spamming,” to promote thinly-traded Chinese penny stocks, announced A ssistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Barbara McQuade for the Eastern District of Michigan.
Gregg M. S. Berger, 47, of New York, N.Y., was ordered by U.S. District Judge Marianne O. Battani in Detroit to serve three years of supervised release following his prison term. Berger agreed to forfeit $600,000 to the United States.
According to court documents, Berger conspired with Alan Ralsky, Francis Tribble, How Wai John Hui, Scott Bradley and others to carry out a sophisticated stock fraud scheme from January 2005 through December 2007. Ralsky, Tribble, Hui and Bradley have all been convicted and sentenced for their roles in the scheme.
“Mr. Berger used his position as a stock broker to generate more than $30 million in illegal proceeds for his co-conspirators, and more than half a million dollars for himself,” said Assistant Attorney General Breuer. “Today’s sentence reflects our sustained commitment to ensuring the integrity of our financial markets, and to holding accountable those who try to manipulate them.”
“Schemes that manipulate stock prices undermine public confidence in the stock market, and can have serious impact on our economy,” said U.S. Attorney McQuade.
“Illegal activity involving the investment industry has brought financial ruin to many Americans. IRS Criminal Investigation is pleased to bring our forensic accounting skills to this joint venture to put a stop to this and other types of white collar fraud,” said Erick Martinez, Special Agent in Charge of the IRS Criminal Investigation Detroit Field Office.
Berger was indicted in the Eastern District of Michigan in December 2010 and pleaded guilty in April 2011 to conspiring to commit securities fraud and wire fraud.
The charges arose after a multi-year investigation, led by agents from the FBI, with assistance from the U.S. Postal Inspection Service and the Internal Revenue Service (IRS), revealed a sophisticated and extensive operation that largely focused on running a “pump and dump” scheme, whereby the defendants sent spam touting thinly-traded Chinese penny stocks, drove up their stock price, and reaped profits by selling the stock at artificially inflated prices.
In pleading guilty, Berger acknowledged that he established brokerage accounts at the direction of Hui and Tribble, and communicated with Ralsky and Bradley during the conspiracy. Berger’s role was to trade the stocks that were illegally promoted by spam email campaigns, arrange for shares of the stocks to be transferred into the brokerage accounts, and execute stock trades at the direction of Tribble, rather than the direction of the named account holders. Berger also caused the transfer of the proceeds from the trading of the stocks to bank accounts controlled by the conspirators. He also provided confidential account information, including trade amounts, prices, cash balances and wire transfer details to Tribble, Bradley and others involved in the scheme who were not entitled to such information and did not have authorization from the actual named account holders.
The stocks pumped-and-dumped included China World Trade Corporation (CWTD), Pingchuan Pharmaceutical Inc. (PGCN), China Digital Media Corporation (CDGT), World Wide Biotech and Pharmaceutical Co. (WWBP), China Mobility Solutions (CHMS) and m-Wise (MWIS).
According to court documents, during the course of the scheme, Berger caused the sale of approximately 30 million shares of stock, generating approximately $30 million for the co-conspirators and over $600,000 in commissions for Berger.
The case was prosecuted by Assistant U.S. Attorney Terrence Berg of the U.S. Attorney’s Office for the Eastern District of Michigan and Senior Counsel Thomas Dukes of the Criminal Division’s Computer Crime and Intellectual Property Section. The case was investigated by the FBI, IRS and U.S. Postal Inspection Service. The U.S. Securities and Exchange Commission’s Philadelphia Regional Office has provided significant ongoing assistance in this case.
Miami Construction Business Owner Pleads Guilty to Tax FraudRead the Press Release
WASHINGTON – Braynert Marquez of Miami pleaded guilty to a one-count information charging him with aiding and assisting in the preparation and filing of a false employment tax return, the Justice Department and the Internal Revenue Service (IRS) announced today.
According to the plea agreement and information, Marquez operated and at least partly owned two Dade County, Fla., construction companies known as Bema Block Corp. and Bema Group Corp. From 2004 through 2007, Marquez paid employees of Bema Block and Bema Group “off-the-books” wages in two different ways. First, from late 2006 through 2007, Marquez obtained cash to pay his employees by causing Bema Block and Bema Group corporate checks to be issued to DJ Construction Group Inc. DJ Construction was a shell corporation created by others for use in the check cashing scheme. DJ Construction did no actual work for either Bema Block or Bema Group. Marquez caused the checks to be cashed at a check cashing store that was aware of the arrangement. Marquez then caused his employees to be paid with the cash from the checks. In 2007, $698,848.82 in Bema Block and Bema Group checks were written to DJ Construction and cashed to pay employees. Marquez failed to report the cash wages on quarterly employment tax returns and failed to withhold and pay over employment taxes on the wages.
According to court documents, Marquez also caused certain Bema Block employees to be paid with two checks: one payroll check from which the employment taxes were withheld and an additional check with no taxes withheld. The additional check was issued not from Bema Block, but from one of two corporations, MFCM Group Corporation and MJMF Group Corporation, created by Marquez and others solely for this purpose. From 2004 through 2007, Marquez caused approximately $664,535 in checks from MFCM Group and at least $469,049 in checks from MJMF Group to be written to Bema Block employees. Marquez failed to report the wages paid by these checks on quarterly employment tax returns and failed to withhold and pay over employment taxes on the wages.
According to the information, Marquez willfully aided and assisted in the preparation and presentation to the IRS of a false Employer’s Quarterly Federal Tax Return (IRS Form 941) for the calendar quarter ending Dec. 31, 2010. The tax return falsely and fraudulently reported $130,021 in wages, tips and other compensation by Bema Group Corp. to its employees that quarter.
The court scheduled sentencing for Nov. 3, 2011. Marquez faces a maximum of three years in prison, a maximum of one year of supervised release and a fine of $250,000. As part of his plea agreement, Marquez agreed that the United States suffered an employment tax loss of at least $200,000 but not more than $400,000 and he agreed to pay restitution to the IRS in the amount of $280,362.
Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida, and John A. DiCicco, Principal Deputy Assistant Attorney General for the Department of Justice, Tax Division, thanked the IRS Special Agents who investigated this case and Tax Division Trial Attorneys Matthew J. Mueller, Jason H. Poole and Assistant Chief Gregory E. Tortella who are prosecuting the case.
Las Vegas Man Pleads Guilty in Connection with Fraud Scheme to Gain Control of Condominium Homeowners' AssociationsRead the Press Release
WASHINGTON – A Las Vegas man pleaded guilty today for his role in a scheme to fraudulently gain control of condominium homeowners’ associations (HOA) in the Las Vegas area so that the HOAs could direct business to a certain law firm and construction company, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, Special Agent in Charge Kevin Favreau of the FBI’s Las Vegas Field Office and Sheriff Doug Gillespie of the Las Vegas Metropolitan Police Department.
Darryl Scott Nichols, 47, pleaded guilty before U.S. District Judge Philip M. Pro in the District of Nevada to one count of conspiracy to commit mail and wire fraud.
According to the plea agreement, Nichols admitted that, beginning in approximately November 2005, he joined a fraud scheme aimed at controlling various HOA boards of directors so that the HOA boards could award the handling of construction-related lawsuits and remedial construction contracts to a law firm and construction company designated by Nichols’ co-conspirators. According to court documents, the fraud scheme operated from approximately August 2003 through February 2009.
According to court documents, in order to accomplish the scheme, co-conspirators used straw purchasers to obtain mortgage loans for units within HOA communities. Nichols admitted that he became a straw purchaser and used his name and credit to purchase condominiums at the Chateau Versailles, Sunset Cliffs and Palmilla condominium complexes. Nichols admitted that his co-conspirators provided the down payments and monthly payments, including HOA dues and mortgage payments, for the condominiums and were the true owners of the properties. According to plea documents, Nichols' co-conspirators managed and operated the payments associated with maintaining straw properties owned and controlled by co-conspirators by running a so-called “Bill Pay Program” by which co-conspirators funded the properties through several limited liability companies at the direction of a co-conspirator. Many of the payments were wired from California to Nevada.
Nichols admitted that he agreed to run for election to the HOA boards at the condominiums and became a board member at Chateau Versailles and Sunset Cliffs. Once elected to the boards, Nichols breached his statutory fiduciary duty to the homeowners by accepting from his co-conspirators compensation, gratuities and other remuneration that improperly influenced, or reasonably appeared to influence, his decisions – resulting in a conflict of interest. Nichols admitted that after being elected to the boards and accepting payments from his co-conspirators, he subsequently voted in a manner directed by and favorable to his co-conspirators.
According to court documents, to ensure Nichols and other straw purchasers would win HOA board elections, Nichols and his co-conspirators employed deceitful tactics such as creating fake labels and ballots, calling out-of-state homeowners in order to gather information about their voting intentions, and supplying mailing lists to co-conspirators to create forged ballots for non-voting homeowners. Nichols admitted that in approximately June 2008, at the request of his co-conspirators, he agreed to mail forged ballots from California to Las Vegas to make the forged votes for out-of-town homeowners appear legitimate.
Nichols admitted that he was given cash payments for his assistance in purchasing the properties, obtaining HOA membership status, rigging elections, and using his position to manipulate the HOA’s business to enrich the co-conspirators at the expense of the HOA and the legitimate homeowners.
The maximum prison sentence for conspiracy to commit mail fraud and wire fraud is 30 years. Sentencing is scheduled for Dec. 4, 2011.
The case is being prosecuted by Deputy Chief Charles La Bella, Assistant Chief Michael Bresnick and Trial Attorneys Nicole H. Sprinzen and Mary Ann McCarthy of the Criminal Division’s Fraud Section. The case is being investigated by the FBI and the Las Vegas Metropolitan Police Department, Criminal Intelligence Section.
This prosecution is part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information about the task force visit: www.stopfraud.gov.
Justice Department Settles Lawsuit Against the City of Winchester, Va., to Enforce Employment Rights of U.S. Marine Corps ReservistRead the Press Release
WASHINGTON - The U.S. Department of Justice announced today that it has reached a settlement with the city of Winchester, Va., to resolve allegations that the city violated the reemployment rights of U.S. Marine Corps reservist Jon Fultz. The suit alleged the city violated Fultz’s reemployment rights under the Uniformed Services Employment and Reemployment Rights Act (USERRA) when he returned to work after military training during which he suffered a knee injury.
The complaint by the Justice Department, filed on behalf of Fultz in the U.S. District Court for the Western District of Virginia, alleged that, in 2009, the city failed to properly reemploy Fultz in his pre-service position as a full duty community resource officer assigned to manage the city police department’s fleet of vehicles. According to the complaint, when Fultz returned to work, the city restored him to his previous fleet manager assignment, but placed him in a temporary “light duty” status he had not requested and which subjected him to removal from his job. Months later, the city removed him from his position without prior notice, purportedly for safety-related reasons, and ultimately terminated his employment.
“The men and women who bravely serve our nation in the armed forces should not have to sacrifice their civilian employment to do so. Employers have a legal obligation to reemploy service members injured during their service in the correct job status when they return from military duty,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Civil Rights Division is committed to protecting the rights of those who, through their bravery and sacrifice, secure the rights of all Americans.”
“The United States Attorney’s Office is committed to enforcing the laws that protect the rights of those brave men and women who serve our country proudly,” U.S. Attorney for the Western District of Virginia Timothy J. Heaphy said today. “Our soldiers must be able to serve with the confidence that they will be restored to their prior employment when they return to the workforce.”
Under the terms of the settlement, embodied in a consent decree that has been submitted for approval to the federal district court in Harrisonburg, Va., the city must provide Fultz with $32,000 in compensation for the lost wages that Fultz claimed he would have received had he been properly reemployed as a full duty community resource officer following his military service. The settlement also requires the city to provide training to its human resources director and its department heads on the rights and obligations of covered employees and their employers under USERRA.
Subject to certain conditions, USERRA requires employers to promptly reemploy returning service members in the position they would have held had their employment not been interrupted by military service, or in a position of like seniority, status, and pay. T his case stems from a referral from the U.S. Labor Department following an investigation by its Veterans’ Employment and Training Service.
The Justice Department’s Civil Rights Division has given a high priority to the enforcement of service members’ rights under USERRA. Additional information about USERRA can be found on the Justice Department’s websites at www.usdoj.gov/crt/emp and www.servicemembers.gov , as well as on the Labor Department’s website at www.dol.gov/vets/programs/userra/main.htm
Justice Department Resolves Lawsuit Alleging Religious Discriminaton by Henrico County, Va., Against Muslim GroupRead the Press Release
WASHINGTON – The Justice Department today announced a settlement with Henrico County, Va., resolving allegations that the county violated the Religious Land Use and Institutionalized Persons Act of 2000 (RLUIPA) when it denied the application of a Muslim organization to rezone property to construct a mosque. The settlement, which must still be approved by a federal district judge in Richmond, resolves a lawsuit between the United States and the county of Henrico.
“Religious freedom is one of our most cherished rights, and that right includes the ability to assemble and build places of worship without facing discrimination,” said Thomas Perez, Assistant Attorney General of the Civil Rights Division. “We are pleased that the county of Henrico has agreed to take steps to ensure that all people exercising this basic American right will not encounter discrimination during the zoning and land use process.”
“The law – not stereotypes or bias – should dictate whether a worship facility can be built in a community.” said Neil H. MacBride, U.S. Attorney for the Eastern District of Virginia. “No one should be discriminated against based on their religion, and this agreement will ensure that religious freedom is upheld in Henrico County.”
The case arose from the county’s denial of a 2008 application from a Muslim organization for construction of a mosque. The government’s complaint, which was filed with the court along with a consent decree resolving the lawsuit, alleged that the county’s denial of the rezoning application was based on the religious bias of county officials and to appease members of the public who, because of religious bias, opposed the construction of a mosque. The complaint further alleged that the county treated the Muslim organization differently than non-Muslim religious groups that regularly have been granted similar rezoning requests.
As part of the settlement, the county has agreed to treat the mosque and all religious groups equally and to publicize its non-discrimination policies and practices. The county also agreed that its leaders and various county employees will attend training on the requirements of RLUIPA. In addition, the county will report periodically to the Justice Department.
RLUIPA, enacted in 2000, prohibits religious discrimination in land use and zoning decisions. Persons who believe that they been subjected to religious discrimination in land use or zoning may contact the Housing and Civil Enforcement Section of the Justice Department’s Civil Rights Division at 1-800-896-7743. More information about RLUIPA, including a report on the first 10 years of its enforcement, may be found at www.justice.gov/crt/about/hce/rluipaexplain.php .
Friday 2 September 2011
Washington Man Sentenced for Racially Motivated Hate CrimeRead the Press Release
TACOMA, Wash. - The Justice Department announced today that Zachary Beck was sentenced to 51 months in prison for civil rights crimes related to his participation in a racially-motivated attack on an African-American man in Vancouver, Wash., in January 2010. Beck was also sentenced to three years supervised release. The sentencing took place in U.S. District Court for the Western District of Washington.
According to court documents, Beck and his co-conspirators, Kory Boyd and Lawrence Silk, attacked an African-American man in a Vancouver sports bar on Jan. 7, 2010, because of the man’s race. Beck, Boyd and Silk each have associated with white supremacist organizations. Beck ran for city council in Coeur d’Alene, Idaho, in 2003 under the Aryan Nations banner. On Jan. 7, 2010, Beck saw an African-American man socializing with white friends in Captain’s Sports Bar in Vancouver. Beck twice told the bartender that the man should leave or there would be trouble. When the man did not leave, Beck met Boyd and Silk outside the bar and agreed to attack the man inside. Beck led Boyd and Silk back into the bar and confronted the man, who was the only black man in the bar. Beck told the man that he should have left, and then swung his fist at the man’s head. The man successfully defended himself; however, Boyd and Silk threw bottles at the man and shouted racial epithets at him. Directly after, Beck, Boyd and Silk left the bar shouting more racial slurs and promising to return. The man whom they attacked followed them out of the bar and pursued them while calling 911. The Vancouver Police apprehended Silk, and federal authorities later charged and arrested Beck and Boyd.
“The Department of Justice is committed to aggressively prosecuting hate-fueled acts of violence,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “Today’s sentence makes clear that racially-motivated attacks will not be tolerated in this country.”
“Fortunately, the victim was not badly injured,” said U.S. Attorney for the Western District of Washington Jenny A. Durkan. “Others came to his aid and together they were able to fend off the hateful attack. Hate crimes affect not just the victim. They corrode communities and send a message of fear to everyone who is labeled by the same prejudices.”
Beck waived his right to a jury, and after a trial, federal Judge Robert J. Bryan on June 7, 2011, found Beck guilty of conspiring to violate the civil rights of an African-American man; forcefully interfering with the man’s civil rights; and trying to persuade a witness to lie about the crimes. Silk pleaded guilty to Washington state charges of malicious harassment and received a two-year sentence. Boyd pleaded guilty to a federal hate crime charge and was sentenced in January 2011 to 34 months in prison.
The case was investigated by Vancouver Police and the FBI, and prosecuted by Assistant U.S. Attorney Bruce Miyake and Trial Attorney Edward Caspar from Department of Justice Civil Rights Division.
Member of Aryan Brotherhood Pleads Guilty to Hate Crime in Connection with Church Arson and Attempted Murder of Disabled African-American in TexasRead the Press Release
WASHINGTON – Steven Scott Cantrell, of Crane, Texas, pleaded guilty today to hate crime charges stemming from a series of racially-motivated arsons in December 2010, including the arson of a historic African-American church as part of an effort to murder a disabled African-American man, the Justice Department announced today.
Cantrell, 25, pleaded guilty to damaging religious property and interfering with housing rights in violation of federal hate crime laws before U.S. District Judge Robert A. Junell in federal court in Midland, Texas.
During the plea hearing, Cantrell admitted that on Dec. 28, 2010, he set fire to Faith in Christ Church, a predominantly African-American church, as part of an effort to murder a disabled African-American man who he saw passing by the church in his wheelchair. Before starting the fire, Cantrell admitted that he intentionally attempted to kill the disabled African-American man whom he believed lived at a shelter within the church, and was present when he set the fire. The man was not hurt. Cantrell ransacked the church, wrote a series of threatening and racist messages in large letters across the wall of the church next to the pastor’s office, and “tagged” the church with references to the Aryan Brotherhood.
The arson of Faith in Christ Church was part of a series of racially-motivated arsons that Cantrell perpetrated that day in his attempt to gain status with the Aryan Brotherhood of Texas. In addition to the church, Cantrell admitted that he set fire to the house of another man in the community because he believed that man to be Jewish and because he sought to injure, intimidate or interfere with that man’s right to rent or occupy that house. Cantrell also admitted to setting fire to Craig’s Gym in violation of federal arson laws. At the plea hearing, Cantrell acknowledged that he set fire to Craig’s Gym because he believed the owners served Mexican-Americans and African-American patrons and because the gym was owned by a Caucasian man married to a woman of Mexican descent. Cantrell added that he felt “disrespected” by a Caucasian man marrying a woman of Mexican descent because he believed “the white race needed to be kept pure.”
“Every person, regardless of race or national origin, should have the opportunity to practice their religion of choice without fear of threat or harm,” said Thomas E. Perez, Assistant Attorney General for Civil Rights. “The department will continue to vigorously prosecute those that commit heinous acts like this one.”
“The defendant’s cowardly acts of setting fire to a house of worship, an apartment and a gym were motivated by racial, ethnic and religious bigotry,” said John E. Murphy, U.S. Attorney for the Western District of Texas. “His conduct and motivation are deplorable and repugnant to the basic principles of our society.”
“The FBI is committed to vigorously investigating all hate crimes,” said W. Jay Abbott, FBI Acting Special Agent in Charge. “The resolution of this investigation is a demonstration of the FBI’s resolve to investigate such crimes and to be responsive to the citizens we serve in dealing with these intolerable acts. The FBI is also grateful for the professionalism and rapport which exists with local, state and other federal entities which worked in close coordination with the FBI to bring this investigation to its conclusion.”
Cantrell’s sentencing has been set for Nov. 30, 2011, at 8:30 a.m. Cantrell faces a maximum penalty of life in prison for burning the church with intent to commit murder and his other crimes.
This case was jointly investigated by the FBI, the Bureau of Alcohol, Tobacco, Firearms and Explosives, the Crane Police Department and the Texas Department of Insurance. The case is being prosecuted by Trial Attorney Victor Boutros from the Justice Department’s Civil Rights Division and Assistant U.S. Attorney John Klassen for the Western District of Texas, with the cooperation of the District Attorney for the 109th Judicial District of the State of Texas.
Louisiana Men Plead Guilty to Intimidating Students Based on RaceRead the Press Release
WASHINGTON – The Justice Department today announced that brothers Brian Wallis, 21, and James Lee Wallis Jr., 25, pleaded guilty to committing a hate crime by intentionally attempting to intimidate African-American students who were attending Beekman Junior High School in Beekman, Morehouse Parish, La. Tony L. Johnson, 30, previously pleaded guilty to the same offense.
During their respective plea hearings, each of the 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 children into leaving the school.
“Racially-motivated intimidation and violence is contrary to the American ideal of freedom, and it is particularly deplorable when it targets children,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Department of Justice remains committed to prosecuting hate crimes whenever and wherever they occur.”
“All children should feel comfortable at school,” said U.S. Attorney for the Western District of Louisiana Stephanie A. Finley. “This kind of activity has no place in our educational system or in our communities. We hope this case sends a strong message that this type of activity is unacceptable and criminal.”
Sentencing for all three defendants is set for Dec. 6, 2011. At sentencing, Brian Wallis, James Lee Wallis Jr. and Johnson each face a maximum sentence of one year in prison.
This case was investigated by the FBI and is being prosecuted by Senior Litigation Counsel Mark Blumberg and Trial Attorney Christine M. Siscaretti of the Justice Department’s Civil Rights Division and Assistant United States Attorney Mary J. Mudrick of the U.S. Attorney’s Office for the Western District of Louisiana.
Former Russell County, Ala., Sheriff’s Deputy Convicted for Assaulting a Man in CustodyRead the Press Release
WASHINGTON – A federal jury in Opelika, Ala., has convicted a former deputy sheriff with the Russell County, Ala., Sheriff’s Office of a civil rights offense for his role in the assault of a handcuffed man, announced the Department of Justice. Timothy Andrew Watford, 42, of Phenix City, Ala., was found guilty of willfully depriving Patrick Harrington of his constitutional rights while acting under color of law.
“When law enforcement officers abuse their power and violate the civil rights of those in their custody, they will be held accountable,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Justice Department will continue to vigorously prosecute those who cross the line to engage in acts of criminal misconduct.”
“This case would not have been successful without the courage of the investigators, the witnesses and the victim,” said George L. Beck Jr., U.S. Attorney for the Middle District of Alabama. “We are especially appreciative of Russell County Sherriff, Heath Taylor, for his prompt administrative and cooperative actions. While it is always difficult to prosecute a member of our law enforcement community, my office is dedicated to seeking justice for all.”
The guilty verdict came after three days of testimony and represented the culmination of an investigation that began in November 2010. Evidence presented at trial established that shortly before midnight on Nov. 26, 2010, Harrington was apprehended and handcuffed by bail recovery agents in Lee County, Ala. Minutes later, Watford and another Russell County officer named Kirby Dollar learned of Harrington’s apprehension and drove to his location in an unmarked police vehicle. The two men were accompanied by a Phenix City police officer named Rachel Hauser. All three officers had been off-duty attending a party at Dollar’s house.
When the officers arrived, Dollar and Watford approached Harrington, who was lying handcuffed on the ground and offering no resistance. According to all eye-witnesses, Dollar and Watford then began punching, kicking and slapping Harrington about his head and body, causing Harrington to suffer multiple lacerations, facial fractures and a ruptured eardrum. Witnesses also confirmed that the attack was entirely unprovoked.
Dollar and Watford were both indicted by a federal grand jury in March 2011. In mid-August, Dollar pleaded guilty under an agreement that capped his sentence at 57 months. During the trial, Dollar was called as a witness by the defense and told the jury that he and Watford had committed the assault together. Watford then took the stand and admitted slapping the handcuffed man twice in the face.
Watford faces a maximum penalty of 10 years in prison and a fine of up to $250,000 on the civil rights charge. A sentencing date has not been set.
The case was investigated by the Mobile Division of the FBI- Montgomery Office and the Alabama Bureau of Investigation, with assistance from the Russell County Sheriff’s Office, the Lee County Alabama Sheriff’s Office and the Columbus, Ga., Police Department. The case was prosecuted by Assistant U.S. Attorneys Nathan D. Stump and Jared H. Morris and Trial Attorney Benjamin J. Hawk of the Justice Department’s Civil Rights Division.
Five Alleged East Side Los Guada Bloods Gang Members and Associates Indicted in Arizona on Federal Racketeering and Attempted Murder ChargesRead the Press Release
WASHINGTON - Five alleged members of the violent gang known as the East Side Los Guada Bloods (East Side Bloods) have been charged in an indictment returned yesterday in Phoenix with various racketeering and attempted murder charges, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; Acting U.S. Attorney Ann B. Scheel for the District of Arizona; Special Agent in Charge of the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Phoenix Division, Thomas E. Brandon; Chief Karl Auerbach, Salt River Pima-Maricopa Indian Community; Chief Frank Milstead, Mesa Police Department; and Director Robert Halliday of the Arizona Department of Public Safety.
The following defendants from Phoenix have been charged:
- Martinez Francisco Jr., 31, aka “Boych” and “B-Dog;”
- Denean Medina, 28;
- Amorette Hough, 23, aka “Ammy;”
- Timothy Reyes, 23, aka “Booma;” and
- Delola Graycene Medina, 25, aka “Lola Bug.”
The defendants are charged with various counts of conspiracy to commit murder in aid of racketeering activity, attempted murder in aid of racketeering activity, assault resulting in serious bodily injury in aid of racketeering activity, conspiracy to commit murder, assault resulting in serious bodily injury, conspiracy to make false statements in the acquisition of a firearm and false statements in the acquisition of a firearm. Francisco is currently in state custody, and Reyes is currently in tribal custody. The other three defendants were arrested on Aug. 29, 2011. Hough will appear before a U.S. Magistrate Judge in U.S. District Court in Phoenix for a detention hearing today at 11:00 a.m. MST. Denean and Delola Medina will appear for a detention hearing today at 3:45 p.m. MST.
According to the indictment, the defendants were members and associates of the East Side Los Guada Bloods gang, a violent street gang that originated in the early 1990s on the Salt River Pima-Maricopa Indian Reservation, outside of Phoenix. The East Side Bloods gang, its members and associates engaged in acts of violence including murder, attempted murder, aggravated assault, threatening and intimidating witnesses, and firearms trafficking within the territorial boundaries of the Salt River Pima-Maricopa Indian Reservation.
The indictment alleges that on July 26, 2009, the defendants brutally attacked a victim on the Salt River Pima-Maricopa Indian Reservation by physically striking and kicking the victim on the head, face and torso until the victim was unconscious. The indictment also alleges that the victim was then placed in the road, for the express purpose and intent of a vehicle running over the victim and causing death.
An indictment is merely an accusation and defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
The following charges each carry maximum penalties of 10 years in prison: conspiracy to commit murder in aid of racketeering activities; attempted murder in aid of racketeering activity; and assault with serious bodily injury. The charge of assault with serious bodily injury in aid of racketeering activity carries a maximum penalty of 20 years in prison, and the conspiracy to commit murder charge carries a maximum penalty of life in prison. Each count of conspiracy to make false statements in the acquisition of a firearm, and false statements in the acquisition of a firearm, carries a maximum penalty of five years in prison.
The case was investigated by the ATF; the Salt River Pima-Maricopa Indian Community Police Department; the Mesa, Ariz., Police Department; the Scottsdale, Ariz., Police Department and the Arizona Department of Public Safety’s State Gang Task Force.
The case is being prosecuted by Trial Attorney Leshia M. Lee-Dixon of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorney Keith E. Vercauteren of the U.S. Attorney’s Office in the District of Arizona.
Thursday 1 September 2011
U.S. Attorneys Paul J. Fishman and Loretta E. Lynch to Lead Attorney General’s Advisory CommitteeRead the Press Release
WASHINGTON - Today, Attorney General Eric Holder announced the appointment of U.S. Attorney for the District of New Jersey Paul J. Fishman as chair of the Attorney General’s Advisory Committee of U.S. Attorneys (AGAC). Attorney General Holder also appointed U.S. Attorney for the Eastern District of New York Loretta E. Lynch to serve as vice chair. Both appointments will become effective Sept. 7, 2011.
“U.S. Attorneys Fishman and Lynch have the expertise and dedication to lead this distinguished group as we continue to work together to enhance the department’s commitment to keeping America safe,” said Attorney General Holder. “I will be working closely with the United States Attorneys to further our law enforcement efforts to protect the people of this nation.”
U.S. Attorney Fishman was appointed to the AGAC in October 2009 and serves as vice chair. He replaces U.S. Attorney for the District of Minnesota B. Todd Jones, who was appointed acting director for the Bureau of Alcohol, Tobacco, Firearms and Explosives on Aug. 31, 2011. U.S. Attorney Lynch has served as a member of the AGAC since May 2010 and chairs the Advisory Committee’s Office, Management and Budget Subcommittee.
Attorney General Holder also thanked U.S. Attorney Jones for serving as chair of the AGAC for the past two years. “U.S. Attorney Jones’s leadership, vision and unselfish dedication have brought the U.S. Attorney community together to address a myriad of law enforcement issues. His guidance and sage counsel have been invaluable to department leadership as we work together to enforce the laws of this nation.”
The AGAC was created in 1973 to serve as the voice of the U.S. Attorneys and to advise the attorney general on policy, management and operational issues impacting the offices of the U.S. Attorneys.
Thirteen Individuals Charged with Illegal Distribution of Anabolic Steroids, Human Growth Hormones and OxycodoneRead the Press Release
MIAMI – Thirteen individuals, including five doctors, one pharmacist and one chiropractor, were charged today for their participation in the illegal distribution of pain killers, steroids and human growth hormones through “pill mills” operating in Broward, Palm Beach and Martin Counties in Florida, and through the internet, respectively. The charges in this case, dubbed “Operation Juice Doctor 2,” involve a wide-ranging scheme to illegally distribute these drugs nationwide.
The indictment, filed Aug. 31, 2011, and unsealed today, was announced by Tony West, Assistant Attorney General for the Civil Division of the Department of Justice; Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida; and Mark R. Trouville, Special Agent in Charge, Drug Enforcement Administration (DEA) Miami Field Division.
“According to the indictment unsealed today, these defendants were involved in a scheme to push dangerous drugs -- steroids, human growth hormone and oxycodone -- into the hands of buyers who lacked legitimate prescriptions,” said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. “Sadly, the defendants include physicians who, we allege, were doctors doing harm: ignoring their oaths and obligation to put the health and safety of patients first.”
U.S. Attorney Ferrer stated, “Operation Pill Nation, Operation Snake Oil, Operation Oxy Alley, and now Operation Juice Doctor 2. In a span of just six months, we have attacked from every angle what can only be described as a homegrown prescription drug epidemic. In Operation Juice Doctor2, we have charged corrupt pharmacy and clinic owners, complicit doctors and employees, all of whom made a handsome living dealing in prescription drugs, while hiding behind a medical license. Working with our federal and local partners, we are shutting down these dangerous pill mills and internet pharmacy operations.”
DEA Special Agent in Charge Trouville added, “Today’s announcement reflects the Drug Enforcement Administration’s continued efforts to take the profit out of the illegal diversion of pharmaceutical drugs. Furthermore, we are sending the message once again to those that are still profiting and those who are considering entering this business, that we remain vigilant and aggressively pursue those conducting business outside the course of accepted medical practice.”
The 42-count indictment charges the defendants with numerous crimes, including conspiracy to distribute anabolic steroids (count 1); distribution of anabolic steroids (counts 2 through 21); conspiracy to distribute oxycodone (count 22); distribution of oxycodone (counts 23 through 25); conspiracy to distribute human growth hormone (count 26); distribution of human growth hormone (counts 27 through 41); and attempted importation of anabolic steroids (count 42).
Charged in the indictment are Peter DelToro, Pharm.D., 38, of Palm City, Fla.; Richard DelToro, 60, of Port St. Lucie, Fla.; Jaclyn Rubino, 31, of Stuart, Fla.; Pedro Carrillo, M.D., 52, of Escondido, Calif.; Jeffrey Perelman, M.D., 54, of Fort Lauderdale, Fla; Paul Joyce, 49, of Palm Beach Gardens, Fla.; Charles Cook, 50, of Palm Beach Gardens; Donald Montano, 74, of Jupiter, Fla.; Kevin Johnson, 41, of Jupiter; Craig Beaver, D.C., 47, of Lake Worth, Fla.; Alan Lefkin, M.D., 53, of Parkland, Fla.; Steven Pearlstein, M.D., 56, of Coral Springs, Fla.; and Timothy Sigman, M.D., 40, of Sebastian, Fla.
According to the indictment, Peter DelToro, Richard DelToro and Jaclyn Rubino operated Treasure Coast Specialty Pharmacy, in Jensen Beach, Fla., and distributed steroids, human growth hormone and oxycodone to individuals and clinics across the nation and abroad. Other defendants named in the indictment allegedly operated various clinics, including “anti-aging,” “hormone replacement therapy” and “pain management” clinics. The indictment alleges that the clinics employed physicians who signed prescriptions that were written by clinic operators and salespeople. The indictment further alleges that the prescriptions were issued without a physical examination of the patient, outside the usual course of professional medical practice, and not for a legitimate medical need. The prescriptions were for controlled substances and human growth hormone for unapproved uses.
The indictment also alleges that the clinics forwarded the prescriptions to Treasure Coast Specialty Pharmacy in Jensen Beach for filing and shipment directly to customers and, at times, to the clinics. According to the indictment, the pharmacy owner illegally attempted to import steroids, of the same type used to fill the clinics’ prescriptions, from China.
Researchers from the Centers for Disease Control and Prevention report that Schedule II prescription painkillers, like oxycodone, today cause more drug overdose deaths than cocaine and heroin combined. Oxycodone and other Schedule II drugs have a high potential for abuse and can be crushed and snorted, or dissolved and injected, to get an immediate high. This abuse can lead to addiction, overdose, and sometimes death.
If convicted, the defendants face a statutory maximum penalty of 10 years in prison on counts 1, 7, 8, 10-14, 17-21 and 42; five years on counts 2-6, 9, 15, 16, and 26-41; and 20 years on count 22 through 25.
Today’s case is the result of the ongoing efforts of the Organized Crime Drug Enforcement Task Force (OCDETF), a partnership between federal, state and local law enforcement agencies. The OCDETF mission is to identify, investigate and prosecute high-level members of drug trafficking enterprises, bringing together the combined expertise and unique abilities of federal, state and local law enforcement.
The case was investigated by the DEA with assistance from the Food and Drug Administration’s Office of Criminal Investigations and the Boca Raton Police Department. The case is being prosecuted by Trial Attorney Cindy Cho of the Civil Division’s Consumer Protection Branch and Assistant U.S. Attorney Ellen L. Cohen.
An indictment is only an accusation and the defendants are presumed innocent until proven guilty.
Former Columbus County, N.C., Detention Center Inmate Charged with Civil Rights Violations and Obstruction of JusticeRead the Press Release
WASHINGTON – The Justice Department today announced the unsealing of a federal indictment charging former inmate Terry Lashavious McMillian, 26, of Whiteville, N.C., with federal civil rights violations involving the assault of an inmate and related acts of obstruction of justice.
The three-count indictment, returned by a grand jury in Wilmington, N.C, on Aug. 24, 2011, charges McMillian for his role in a conspiracy and assault of an inmate during an Aug. 2, 2010, incident at the Columbus County Detention Center in Whiteville. Specifically, the indictment charges McMillian with conspiracy to deprive rights, deprivation of rights under color of law and witness tampering.
If convicted, the conspiracy and civil rights counts in the indictment each carry a maximum sentence of 10 years in prison. The witness tampering count carries a maximum sentence of 20 years. Each count also carries a maximum fine of $250,000.
This case is being jointly investigated by the Wilmington office of the FBI Charlotte Division and the North Carolina State Bureau of Investigation. The case is being jointly prosecuted by Assistant U.S. Attorney Toby W. Lathan from the U.S. Attorney’s Office for the Eastern District of North Carolina, and Trial Attorney Ryan R. McKinstry from the Civil Rights Division of the U.S. Department of Justice.
An indictment is only an accusation of crimes, and the defendant is presumed innocent unless and until proven guilty.
Former Arizona Army National Guard Member Charged with Participating in Bribery and Drug Trafficking ConspiracyRead the Press Release
WASHINGTON – A former member of the Arizona Army National Guard was charged today for his role in a widespread bribery and illegal drug trafficking conspiracy that operated from January 2002 through March 2004, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.
The 10-count indictment returned today in U.S. District Court in Arizona charges Raul Portillo, 38, of Phoenix, with two counts of conspiracy, two counts of bribery, two counts of bribery involving programs receiving federal funds, two counts of Hobbs Act extortion under color of official right and two counts of possession with intent to distribute cocaine. The charges arise from Operation Lively Green, an undercover FBI investigation that began in December 2001.
According to the indictment, Portillo was a sergeant in the Arizona Army National Guard at the time he allegedly participated in the conspiracy. According to the indictment, Portillo conspired to enrich himself by obtaining cash bribes from individuals he believed to be illegal narcotics traffickers, but who were actually FBI agents. In return for the bribes, Portillo allegedly used his official position as a sergeant in the Arizona Army National Guard to assist, protect and participate in the activities of an illegal narcotics trafficking organization that was transporting and distributing cocaine from Arizona to other locations in the southwestern United States. In order to protect the shipments of cocaine, Portillo allegedly wore official uniforms and carried official forms of identification, used official vehicles, and used his official authority where necessary to prevent police stops, searches and seizures of the narcotics as he drove the cocaine shipments through checkpoints manned by the U.S. Border Patrol, the Arizona Department of Public Safety and Nevada law enforcement officers.
According to the indictment, Portillo transported cocaine on two separate occasions and, as a result, received bribe payments totaling $12,000 for the 50 kilograms of cocaine involved. According to the indictment, Portillo also accepted a $2,000 cash payment in exchange for recruiting another public official into the conspiracy.
In 2006, an arrest warrant was issued for Portillo. In May 2011, Portillo was arrested, arraigned and released on personal recognizance. He has since failed to report to Pretrial Services and repeated attempts to locate and contact him have been unsuccessful. Portillo is now considered a fugitive and anyone with information regarding his whereabouts is encouraged to contact their local FBI office.
If convicted on the conspiracy charges, Portillo faces a maximum of five years in prison. The bribery and Hobbs Act charges each carry maximum prison sentences of 20 years. The federal program bribery charges each carry a maximum penalty of 10 years in prison, as do each of the drug conspiracy and possession charges. Portillo also faces a maximum $250,000 fine for each charged count.
To date, 57 additional defendants have been convicted and sentenced on related charges as part of Operation Lively Green. An additional 14 defendants have pleaded guilty in the Western District of Oklahoma in a related investigation known as Operation Tarnish Star.
Operation Lively Green cases are part of a joint investigation being conducted by the Southern Arizona Corruption Task Force (SACTF), which includes the FBI; the Drug Enforcement Administration; the U.S. Immigration and Customs Enforcement at the Department of Homeland Security; and the Tucson, Ariz., Police Department. The Arizona Air National Guard, Air Force Office of Special Investigations, Defense Criminal Investigative Service and the Criminal Investigation Division of the Internal Revenue Service are also participating in the investigation.
The case is prosecuted by Trial Attorneys Peter Koski and Monique Abrishami of the Criminal Division’s Public Integrity Section.
An indictment is a formal accusation of criminal conduct, not evidence. A defendant is presumed innocent unless and until convicted through due process of law.
California Medical Billing Company Agrees to Pay U.S. $4.6 Million to Resolve Allegations of False Claims to Federal Health Care ProgramsRead the Press Release
WASHINGTON – Janzen, Johnston & Rockwell Emergency Medicine Management Services Inc. (JJ&R), a provider of billing services for physicians, hospitals and other health care providers, has agreed to pay the United States $4.6 million to settle allegations that it submitted false claims to Medicare and Louisiana’s Medicaid program, the Justice Department announced today. JJ&R is headquartered in El Segundo, Calif.
Today’s settlement resolves allegations that JJ&R inflated claims that it had coded on behalf of emergency room physicians in Louisiana and California. From approximately 2000 through 2007, JJ&R utilized a coding formula that had a tendency to generate claims for a marginally higher level of evaluation and management service than the physicians had actually provided. In addition, JJ&R routinely added charges to the evaluation and management claim for minor services, such as pulse oximetry, that had been provided by hospital nursing staff or other physicians.
Finally, during this time period, JJ&R often failed to comply with Medicare’s coding rules governing the submission of claims for teaching physicians, resulting in the submission of claims that were not properly payable. While these coding practices had a relatively small impact on the reimbursement of any particular claim, over time they generated significant overpayments from Medicare and Medicaid.
“Inflating individual health care claims by even small amounts can cause significant losses to Medicare and Medicaid,” said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. “Taxpayers should not be on the hook for charges that shouldn’t have been added or claims that shouldn’t have been submitted.”
“ In Louisiana’s Middle District we are committed to using all available tools, including affirmative civil actions, to combat health care fraud,” said Donald J. Cazayoux Jr., U.S. Attorney for the Middle District of Alabama.
“The Office of the Inspector General recognizes and appreciates the importance of whistleblowers in the fight against health care fraud,” said William W. Root, Assistant Special Agent-in-Charge for the U.S. Department of Health and Human Services (HHS).
Today’s settlement resolves allegations that were the subject of a federal investigation and a lawsuit brought by Le Jeanne Harris, a former employee of JJ&R. The lawsuit was filed under the False Claims Act, which enables private persons to sue on behalf of the United States, and to receive a share of any recovery. In this case, Ms. Harris will receive $774,450.
This matter was handled by the U.S. Attorney’s Office for the Middle District of Louisiana, as well as HHS Office of the Inspector General (OIG) and the Commercial Litigation Branch - Fraud Section of the Justice Department’s Civil Division. HHS-OIG investigated the matter.
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 HHS, 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 $5.9 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 $7.5 billion.
Wednesday 31 August 2011
New Mexico Farmer Sentenced to Five Years in Prison for Tax Fraud, Fraudulently Collecting Farm SubsidiesRead the Press Release
WASHINGTON – Bill Melot, a Hobbs, N.M., farmer, was sentenced to five years in prison yesterday to be followed by three years of supervised release for tax evasion, program fraud and other crimes, the Justice Department, Internal Revenue Service (IRS) and U.S. Department of Agriculture’s (USDA) Office of Inspector General announced today.
Melot was previously convicted of tax evasion, failure to file tax returns, making false statements to the USDA, and impeding the IRS following a four-day jury trial in Albuquerque, N.M. According to the indictment and evidence presented at trial and at sentencing, Melot owes the IRS more than $25 million in federal taxes and more than $7 million in taxes to the state of Texas. Melot has not filed a personal income tax return since 1986. In addition, Melot has improperly collected more than $225,000 in federal farm subsidies from USDA by furnishing false information to the agency. Specifically, Melot provided the USDA with a false Social Security number (SSN) and fictitious employer identification number (EIN) to collect federal farm aid.
According to the indictment and evidence presented at trial, Melot took numerous steps to conceal his ownership of 250 acres in Lea County, N.M., including notarizing forged deeds and titling the property in the name of nominees. The evidence also showed that Melot used false SSNs and fictitious EINs to hide his assets from the IRS. Additionally, Melot maintained a bank account with Nordfinanz Zurich, a Swiss financial institution, which he set up in Nassau, Bahamas, in 1992. Melot failed to report the Swiss bank account to the U.S. Treasury Department as required by law.
Melot was also ordered to pay $18,493,099 in restitution to the IRS and $226,526 in restitution to the USDA.
Kenneth J. Gonzales, U.S. Attorney for the District of New Mexico, and John A. DiCicco, Principal Deputy Assistant Attorney General of the Justice Department’s Tax Division, commended the investigative efforts of IRS Criminal Investigation and the USDA’s Office of Inspector General, as well as Tax Division Trial Attorney Jed Silversmith and Assistant U.S. Attorney George Kraehe, who prosecuted the case. Principal Deputy Assistant Attorney General DiCicco and U.S. Attorney Gonzales also thanked the Criminal Investigation Division of the Texas Comptroller of Public Accounts for its assistance in prosecuting this matter.
More information about the Justice Department’s Tax Division and its enforcement efforts is available at www.usdoj.gov/tax/ .
Miami-Area Nurse Pleads Guilty in $25 Million Health Care Fraud SchemeRead the Press Release
WASHINGTON – Miami-area resident Farah Maria Perez, a registered nurse, pleaded guilty today for her participation in a $25 million Medicare fraud scheme involving false billings for home health services, announced the Department of Justice, the FBI and the Department of Health and Human Services (HHS).
Perez, 40, pleaded guilty before U.S. District Judge Joan A. Lenard in Miami to one count of conspiracy to commit health care fraud. She was originally charged in a February 2011 indictment.
According to plea documents, Perez worked for Florida Home Health Care Providers Inc., a Miami home health care agency that purported to provide home health and therapy services to Medicare beneficiaries. Perez and her co-conspirators operated Florida Home Health for the purpose of billing the Medicare program for expensive physical therapy and home health care services that were medically unnecessary and/or never provided. The medically unnecessary services were prescribed by doctors.
According to court documents, beginning in approximately January 2006 and continuing until approximately March 2009, Perez and her co-defendant nurses falsified patient files for Medicare beneficiaries to make it appear that they qualified for home health care and therapy services from Florida Home Health. Perez admitted that she knew the beneficiaries did not actually qualify for and did not receive the services. Perez and her co-defendant nurses described in nursing notes and patient files symptoms such as tremors, impaired vision, weak grip and inability to walk without assistance. Although the patients did not actually exhibit these symptoms, the symptoms were nevertheless included in patient files to make it appear that the patients were unable to self-inject insulin and were homebound, thus appearing to qualify for home health care benefits under Medicare. Perez admitted that she knew the files were falsified so that the Medicare program could be billed for medically unnecessary therapy and home health related services. As a result of Perez’s participation in the illegal scheme, the Medicare program was billed approximately $118,000 for purported home health care services that were medically unnecessary and/or never provided.
Perez also admitted that she recruited Medicare beneficiaries who would allow Florida Home Health to bill the Medicare program for home health care and therapy services that were unnecessary or never provided. Perez solicited and received kickbacks and bribes from the owners and operators of Florida Home Health in return for allowing Florida Home Health to bill Medicare on behalf of the patients she recruited. Perez knew that the patients did not qualify for the services that were billed to Medicare.
Four other co-conspirators who were charged in the February 2011 indictment for their roles in the Florida Home Health fraud scheme have pleaded guilty: Jose Nunez, M.D.; Lisandra Alonso; Luisa Morciego; and Vicente Guerra.
Sentencing for Perez is scheduled for Nov. 14, 2011.
The charge of conspiracy to commit health care fraud carries a maximum prison sentence of 10 years. The defendant also face fines and terms of supervised release, as well as forfeiture of any property or proceeds derived from her criminal activities.
Today’s charges were announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; John V. Gillies, Special Agent-in-Charge of the FBI’s Miami field office; and Special Agent-in-Charge Christopher Dennis of the HHS Office of Inspector General (HHS-OIG), Office of Investigations Miami office.
This case is being prosecuted by Trial Attorney Joseph S. Beemsterboer of the Criminal Division’s Fraud Section. The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Miami.
Since their inception in March 2007, Strike Force operations in nine locations have obtained indictments of more than 1,000 defendants who collectively have falsely billed the Medicare program for more than $2.3 billion. In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov .
Justice Department Reaches Agreement with Culpeper County, Virginia, on Bailout Under the Voting Rights ActRead the Press Release
WASHINGTON – The Justice Department has reached an agreement with Culpeper County, Va., that, if approved by the court, will allow for the county’s bailout from its status as a “covered jurisdiction” under the special provisions of Voting Rights Act, and thereby exempt the county from the preclearance requirements of Section 5 of the act. The agreement is in the form of a consent decree filed today in the U.S. District Court for the District of Columbia.
Under Section 5 of the Voting Rights Act, certain covered jurisdictions, determined according to Section 4 of the act, are required to seek preclearance for any changes in voting qualifications, standards, practices or procedures from the U.S. District Court in Washington, D.C., or from the U.S. Attorney General, prior to their implementation. Section 4 of the act provides that a covered jurisdiction may seek to “bailout,” or remove itself from such coverage, and therefore be exempted from the preclearance requirements, by seeking a declaratory judgment before a three-judge panel in federal district court. Such a bailout judgment can only be issued if the court determines that the jurisdiction meets certain eligibility requirements for bailout contained in the statute, including a 10-year record of nondiscrimination in voting-related actions. The act also provides that the attorney general can consent to entry of a judgment of bailout if, based upon investigation, the attorney general is satisfied that the jurisdiction meets the eligibility requirements.
Culpeper County filed its bailout action in U.S. District Court in Washington, D.C., on Aug. 16, 2011. County officials had contacted the attorney general prior to filing its action, indicating that the county was interested in seeking bailout. The county provided the Justice Department with substantial information, and the department conducted an investigation to determine the county’s eligibility. Based on that investigation, the department is satisfied that the county meets the Voting Rights Act’s requirements for bailout.
“In this case, the department carefully evaluated the information the county provided to us and conducted our own investigation, which has satisfied the department that the county is eligible for a bailout,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “I appreciate the cooperation of county officials in providing the department with substantial information, and moving toward a resolution of this matter in the way envisioned by the Voting Rights Act.”
The consent decree details the legal and factual basis for a bailout determination and, if approved, will grant the county’s request. The court will retain jurisdiction of the action for 10 years and can reopen the action upon the motion of the attorney general or any aggrieved person alleging conduct by the county that would have originally precluded the county from bailing out if it had occurred during the 10-year period preceding entry of the consent decree.
Information about bailout, the Voting Rights Act, and other federal voting laws is available on the Department of Justice website at www.justice.gov/crt/voting/. Complaints may be reported to the Voting Section of the Justice Department’s Civil Rights Division at 1-800-253-3931.
Justice Department Files Antitrust Lawsuit to Block AT&T’s Acquisition of T-MobileRead the Press Release
WASHINGTON – The Department of Justice today filed a civil antitrust lawsuit to block AT&T Inc.’s proposed acquisition of T-Mobile USA Inc. The department said that the proposed $39 billion transaction would substantially lessen competition for mobile wireless telecommunications services across the United States, resulting in higher prices, poorer quality services, fewer choices and fewer innovative products for the millions of American consumers who rely on mobile wireless services in their everyday lives.
The department’s lawsuit, filed in U.S. District Court for the District of Columbia, seeks to prevent AT&T from acquiring T-Mobile from Deutsche Telekom AG.
“The combination of AT&T and T-Mobile would result in tens of millions of consumers all across the United States facing higher prices, fewer choices and lower quality products for mobile wireless services,” said Deputy Attorney General James M. Cole. “Consumers across the country, including those in rural areas and those with lower incomes, benefit from competition among the nation’s wireless carriers, particularly the four remaining national carriers. This lawsuit seeks to ensure that everyone can continue to receive the benefits of that competition.”
“T-Mobile has been an important source of competition among the national carriers, including through innovation and quality enhancements such as the roll-out of the first nationwide high-speed data network,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “Unless this merger is blocked, competition and innovation will be reduced, and consumers will suffer.”
Mobile wireless telecommunications services play a critical role in the way Americans live and work, with more than 300 million feature phones, smart phones, data cards, tablets and other mobile wireless devices in service today. Four nationwide providers of these services – AT&T, T-Mobile, Sprint and Verizon – account for more than 90 percent of mobile wireless connections. The proposed acquisition would combine two of those four, eliminating from the market T-Mobile, a firm that historically has been a value provider, offering particularly aggressive pricing.
According to the complaint, AT&T and T-Mobile compete head to head nationwide, including in 97 of the nation’s largest 100 cellular marketing areas. They also compete nationwide to attract business and government customers. AT&T’s acquisition of T-Mobile would eliminate a company that has been a disruptive force through low pricing and innovation by competing aggressively in the mobile wireless telecommunications services marketplace.
The complaint cites a T-Mobile document in which T-Mobile explains that it has been responsible for a number of significant “firsts” in the U.S. mobile wireless industry, including the first handset using the Android operating system, Blackberry wireless email, the Sidekick, national Wi-Fi “hotspot” access, and a variety of unlimited service plans. T-Mobile was also the first company to roll out a nationwide high-speed data network based on advanced HSPA+ (High-Speed Packet Access) technology. The complaint states that by January 2011, an AT&T employee was observing that “[T-Mobile] was first to have HSPA+ devices in their portfolio…we added them in reaction to potential loss of speed claims.”
The complaint details other ways that AT&T felt competitive pressure from T-Mobile. The complaint quotes T-Mobile documents describing the company’s important role in the market:
- T-Mobile sees itself as “the No. 1 value challenger of the established big guys in the market and as well positioned in a consolidated 4-player national market”; and
- T-Mobile’s strategy is to “attack incumbents and find innovative ways to overcome scale disadvantages. [T-Mobile] will be faster, more agile, and scrappy, with diligence on decisions and costs both big and small. Our approach to market will not be conventional, and we will push to the boundaries where possible. . . . [T-Mobile] will champion the customer and break down industry barriers with innovations. . . .”
The complaint also states that regional providers face significant competitive limitations, largely stemming from their lack of national networks, and are therefore limited in their ability to compete with the four national carriers. And, the department said that any potential entry from a new mobile wireless telecommunications services provider would be unable to offset the transaction’s anticompetitive effects because it would be difficult, time-consuming and expensive, requiring spectrum licenses and the construction of a network.
The department said that it gave serious consideration to the efficiencies that the merging parties claim would result from the transaction. The department concluded AT&T had not demonstrated that the proposed transaction promised any efficiencies that would be sufficient to outweigh the transaction’s substantial adverse impact on competition and consumers. Moreover, the department said that AT&T could obtain substantially the same network enhancements that it claims will come from the transaction if it simply invested in its own network without eliminating a close competitor.
AT&T is a Delaware corporation headquartered in Dallas. AT&T is one of the world’s largest providers of communications services, and is the second largest mobile wireless telecommunications services provider in the United States as measured by subscribers. It serves approximately 98.6 million connections to wireless devices. In 2010, AT&T earned mobile wireless telecommunications services revenues of $53.5 billion, and its total revenues were in excess of $124 billion.
T-Mobile, is a Delaware corporation headquartered in Bellevue, Wash. T-Mobile is the fourth-largest mobile wireless telecommunications services provider in the United States as measured by subscribers, and serves approximately 33.6 million wireless connections to wireless devices. In 2010, T-Mobile earned mobile wireless telecommunications services revenues of $18.7 billion. T-Mobile is a wholly-owned subsidiary of Deutsche Telekom AG.
Deutsche Telekom AG is a German corporation headquartered in Bonn, Germany. It is the largest telecommunications operator in Europe with wireline and wireless interests in numerous countries and total annual revenues in 2010 of €62.4 billion.
Download a copy of the Complaint (PDF)
Former Massachusetts State Senator Pleads Guilty to Wire FraudRead the Press Release
WASHINGTON - Bernard Joseph Tully, a former Massachusetts state senator, has pleaded guilty for devising a scheme to defraud a Boston-area businessman out of approximately $18,000 by falsely representing that Tully and his co-conspirator were using the funds to bribe public officials. Unbeknownst to Tully, the businessman reported Tully’s overtures to the FBI.
The guilty plea was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Carmen M. Ortiz for the District of Massachusetts and Richard DesLauriers, Special Agent in Charge of the FBI’s Boston Field Office.
Tully, 84, of Dracut, Mass., pleaded guilty yesterday before U.S. District Judge Patti B. Saris to one count of wire fraud. According to court documents, Tully formerly served as the city manager for Lowell, Mass., from approximately 1979 to 1987. Prior to serving as city manager, Tully was a state senator representing Lowell and other areas.
According to information presented at the plea hearing and in court documents, the Massachusetts Registry of Motor Vehicles (RMV) determined in early 2009 that it needed to discontinue its lease for the Lowell RMV, due to lack of funds. According to court documents, Tully became aware of the possible closure of the Lowell RMV and contacted the Boston-area businessman who owned the space where the Lowell RMV was housed. Tully told the businessman that if he paid Tully, Tully would ensure a state senator would find money in order to keep the RMV in the space owned by the businessman. Later, according to court documents, Tully again contacted the businessman and told him that he need to pay Tully so that Tully could pay the public official, otherwise the RMV would have to move out of the space.
On July 3, 2009, the RMV announced it was closing the Lowell office as well as other RMV offices on July 23, 2009. Tully and a co-conspirator subsequently visited the businessman and told him that he would need to pay $20,000 to keep the RMV in Lowell. The businessman agreed that he wanted the RMV to stay, and Tully said he would start making telephone calls while his co-conspirator said he would talk to the public official.
On July 15, 2009, the businessman gave the co-conspirator a $5,000 check, which the co-conspirator cashed and gave a portion of the funds to Tully. On July 17, 2009, the businessman received a 90-day extension on the lease from the RMV to Oct. 31, 2009.
Thereafter, according to court documents, the businessman had a series of meetings and telephone conversations with Tully and his co-conspirator about securing another lease extension from the RMV. During these conversations, Tully and his co-conspirator falsely represented to the businessman that they needed additional money to make payments to various public officials in exchange for their official acts to secure the RMV’s continued presence in the businessman’s building. Between November 2009 and March 2010, the businessman, while cooperating with the FBI, paid Tully and the co-conspirator approximately $18,000 as bribe payments designed to secure the official assistance of various public officials.
In fact, Tully and his co-conspirator never paid any money to any public officials. According to court documents, Tully admitted in a May 2010 interview with FBI agents that he received approximately $12,000 in cash and checks from the businessman, and that he split the money with his co-conspirator. Tully also admitted that he had heard about the RMV’s plan to move the Lowell office out of the businessman’s office building from people who worked in the office, and that the businessman had contacted him for assistance. Tully admitted that he spoke with friends of friends of the Lowell legislative delegation about obtaining a lease extension and preventing the move of the Lowell RMV.
Tully admitted that he told the businessman that he was “throwing money around” at elected officials, but in actuality he did not. He admitted that he did this to give the businessman the impression that he, Tully, was influencing the legislative delegation.
Sentencing is scheduled for Dec. 1, 2011, at 3:00 p.m. According to the plea agreement, the government has agreed not to seek punishment beyond home confinement, 36 months of supervised release, a fine to be calculated under the U.S. Sentencing Guidelines and restitution of $18,000.
The case was investigated by the FBI, with assistance from the Massachusetts Inspector General’s Office and the Lowell Police Department. It is being prosecuted by Senior Litigation Counsel William M. Welch II and Kevin Driscoll of the Criminal Division’s Public Integrity Section, with assistance from the U.S. Attorney’s Office, Public Corruption Unit.
Florida Couple Indicted for Conspiracy to Defraud the United States and Failure to Account for and Pay over Employment TaxesRead the Press Release
WASHINGTON – Anthony Chaudhuri and Margaret Chaudhuri, of Naples, Fla. were indicted by a federal grand jury on Aug. 8, 2011, in Detroit, with one count of conspiracy to defraud the United States, 11 counts of failure to account for and pay over employment taxes and one count of corruptly endeavoring to obstruct or impede the due administration of the Internal Revenue laws, the Justice Department and the Internal Revenue Service (IRS) announced today. The Chaudhuris appeared in U.S. District Court today for arraignment.
The indictment alleges that Anthony and Margaret Chaudhuri owned and operated a hospital inventory control software company under the name Ariel Computing and various other nominee names, including ADI. Ariel Computing was operated from various addresses in Ann Arbor, Mich. The indictment alleges that between 1996 and 2008 the Chaudhuris withheld approximately $888,353.23 in employment taxes from Ariel Computing employees, but failed to pay over to the IRS approximately $600,984.11 of these withheld taxes. Instead, the Chaudhuris used these monies on business expenses, employee salaries and personal expenses.
The indictment further alleges that between 2004 and 2007, Anthony Chaudhuri earned approximately $985,857.39 in income from Ariel Computing, yet failed to file any U.S. Individual Income Tax Return Form 1040 for the tax years 2004 through 2008, or pay any federal income tax due and owing in those years. Additionally, the indictment alleges that between 2005 and 2007, the Chaudhuris generated more than $2 million in income in the name of ADI, but failed to file any income tax return reporting that income. Instead, in an effort to obstruct and impede the due administration of the Internal Revenue laws, the Chaudhuris committed a number of corrupt endeavors, including making false statements to the IRS misrepresenting their income and the source of their income, using nominee bank accounts, issuing false and fraudulent Forms W-2 to Ariel Computing employees and failing to file individual tax returns.
An indictment merely alleges that a crime has been committed, and a defendant is presumed innocent until proven guilty beyond a reasonable doubt.
If convicted, the Chaudhuris face a maximum of five years in prison and a $250,000 fine for the conspiracy charge and for each of the failure to account for and pay over employment tax charges and a maximum of three years in prison and a $250,000 fine for the corruptly endeavoring to obstruct or impede the due administration of the Internal Revenue laws charge.
The case was investigated by the IRS–Criminal Investigation and is being prosecuted by U.S. Department of Justice Tax Division.
More information about the Tax Division and its enforcement efforts can be found at www.justice.gov/tax .
Alabama Woman Pleads Guilty to Filing False Tax Refund ClaimsRead the Press Release
WASHINGTON – Melinda M. Lambert, a resident of Montgomery County, Ala., pleaded guilty to one count of aiding and assisting the filing of a false tax return, the Justice Department and the Internal Revenue Service (IRS) announced today. Lambert pleaded guilty before federal Chief Magistrate Judge Susan Russ Walker in the U.S. District Court in Montgomery, Ala.
According to the court documents, Lambert was employed as a tax return preparer at Flash Tax, a tax return preparation business, from December 2004 through January 2007. During her employment at Flash Tax, Lambert prepared and filed at least approximately 400 tax returns in 2005 and 2006 and 100 tax returns in 2007. The majority of these tax returns were false. Lambert admitted that she manipulated refund amounts on clients’ tax returns by inflating or deflating specific number and/or by adding totally fictitious numbers to the return. The false returns she prepared resulted in the IRS dispersing approximately $900,000 in false tax refunds that her clients were not entitled to receive.
Lambert faces a maximum of three years in prison and a fine of $250,000.
The case was investigated by the IRS - Criminal Investigation and is being prosecuted by Tax Division Trial Attorneys Charles M. Edgar Jr. and Michael Boteler.