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Thursday 21 July 2011
“Project Delirium” Results in Nearly 2,000 Arrests During 20-Month <br /> Operation, Seizures of More Than 12 Tons of Drugs and $62 Million in U.S. CurrencyRead the Press Release
WASHINGTON – Approximately 1,985 individuals have been arrested on narcotics-related charges as part of a 20-month multi-agency law enforcement investigation known as “Project Delirium,” which targeted the La Familia Michoacana drug cartel, the Department of Justice announced today.
As part of an ongoing takedown that began June 1, 2011, 221 individuals have been arrested across the United States as part of Project Delirium, including more than 70 individuals apprehended yesterday and today. In addition, $770,499 in U.S. currency, 635 pounds of methamphetamine, 118 kilograms of cocaine and 24 pounds of heroin were seized by law enforcement agents since June 1, 2011.
“Through coordinated and strategic efforts like Project Delirium, we are disrupting the operations of Mexican drug cartels in the United States and Mexico,” said Deputy Attorney General James Cole. “Today, we see drug traffickers operating in urban and rural communities alike. The arrests and seizures we are announcing today have stripped La Familia of its manpower, its deadly product and its profit, and helped make communities large and small safer. The department is determined to continue our aggressive efforts, along with our Mexican law enforcement partners, to diminish and ultimately eliminate the threat posed by these dangerous groups.”
“Through the Secretariat of Public Security, the Government of Mexico has seen increased results in their fight against the drug trafficking organizations,” said Mexico’s Secretary of Public Security Genaro Garcia Luna. “Due to increased information sharing and collaboration with the DEA, these efforts have resulted in successful and significant arrests and seizures of drugs and money.”
“Project Delirium is the second successful, strategic and surgical strike to disrupt and destroy one of the most violent Mexican cartels, La Familia,” said Administrator Michele M. Leonhart of the U.S. Drug Enforcement Administration (DEA). “Through their violent drug trafficking activities, including their hallmark of supplying most of the methamphetamine imported into the United States, La Familia is responsible for recklessly and violently destroying countless lives on both sides of the border. The strong joint efforts with our Mexican and U.S. law enforcement partners are crippling this brutal organization by capturing its leaders, strangling its distribution networks, and relentlessly pursuing its members and those who facilitate them.”
“Law enforcement officials here in the U.S., in Mexico and all around the world are cooperating at unprecedented levels. There is a willingness - like never before - to work hand-in-hand to fight the cartels, the criminal enterprises and the violent gangs that threaten the peace and security of people on both sides of the border,” said John Morton, director of U.S. Immigration and Customs Enforcement (ICE).
“Investigations such as Project Delirium target the dangers these organizations pose to the United States and Mexico,” said Shawn Henry, FBI’s executive assistant director of the Criminal, Cyber, Response, and Services Branch. “The FBI, together with our federal and international law enforcement partners, will continue to commit our resources to combat the threat posed by transnational criminal enterprises.”
Project Delirium is the result of information gathered during the course of a previous effort targeting La Familia, known as Project Coronado. To date, Project Delirium has led to the arrest of 1,985 individuals and the seizure of approximately $62 million in U.S. currency, and approximately 2,773 pounds of methamphetamine, 2,722 kilograms of cocaine, 1,005 pounds of heroin, 14,818 pounds of marijuana and $3.8 million in other assets.
As part of Project Delirium, arrests have been made or charges have been unsealed to date in the following districts: the Northern District of Alabama; the Central, Eastern and Southern Districts of California; the District of Colorado; the District of Columbia; the Northern District of Georgia; the District of Kansas; the Eastern District of Michigan; the District of Minnesota; the Eastern District of Missouri; the District of New Mexico; the Eastern and Western Districts of North Carolina; the Western District of Tennessee; and the Northern, Southern and Western Districts of Texas. On June 21, 2011, Mexican law enforcement arrested La Familia leader and Consolidated Priority Organizational Target (CPOT) Jose de Jesus Mendez-Vargas, aka “El Chango” or “The Monkey,” based on Mexican charges.
Individuals indicted in these cases are charged with a variety of crimes, including: conspiracy to distribute methamphetamine, cocaine and marijuana; distribution of methamphetamine, cocaine and marijuana; conspiracy to import narcotics into the United States; money laundering; and other violations of federal law. Numerous defendants face forfeiture allegations as well.
An indictment is merely an allegation and defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
The investigative efforts in Project Delirium were coordinated by the multi-agency Special Operations Division, comprised of agents and analysts from the DEA, FBI, ICE, Internal Revenue Service, U.S. Customs and Border Protection, U.S. Marshals Service, as well as attorneys from the Criminal Division’s Narcotic and Dangerous Drug Section and Office of International Affairs. More than 300 federal, state, local and foreign law enforcement agencies contributed investigative and prosecutorial resources to Project Delirium through the Organized Crime Drug Enforcement Task Forces.
The department thanks the Government of Mexico and its Mexican law enforcement partners for their continued partnership and collaboration in the ongoing efforts to combat Mexican drug cartels.
Swiss International Bank's Former Head of North America Offshore Banking, Others Charged with ConspiracyRead the Press Release
WASHINGTON – Markus Walder, former head of North America Offshore Banking at an international bank headquartered in Zurich; Susanne D. Rüegg Meier, a former manager with the international bank; Andreas Bachmann, a former banker at a subsidiary of the international bank; and Josef Dörig, the founder of a Swiss trust company, have been charged with conspiring with other Swiss bankers to defraud the United States, the Justice Department and Internal Revenue Service (IRS) announced today. The four are charged in a superseding indictment together with four other defendants (Marco Parenti Adami, Emanuel Agustino, Michele Bergantino and Roger Schaerer) who were charged in an indictment returned on Feb. 23, 2011.
According to the superseding indictment, the international bank’s managers and bankers engaged in illegal cross-border banking that was designed to assist U.S. customers evade their income taxes by opening and maintaining secret bank accounts at the bank and other Swiss banks. As of the fall of 2008, the international bank maintained thousands of secret accounts for U.S. customers with as much as $3 billion in total assets under management in those accounts. The conspiracy dates back to 1953 and involved two generations of U.S. tax evaders including U.S. customers who inherited secret accounts at the international bank.
Moreover, according to the superseding indictment, the conspirators utilized a representative office in New York City to provide unlicensed and unregistered banking services to U.S. customers with undeclared accounts. Walder, Schaerer, their co-conspirators and others allegedly made false statements and provided misleading information to the Federal Reserve Bank of New York and to the IRS in order to conceal the international bank’s U.S. cross-border banking business and the role of the New York representative office in that business.
The superseding indictment alleges that Walder supervised the U.S. cross-border banking business, including the New York representative office headed by Schaerer, a Geneva-based team of bankers led by manager Marco Parenti Adami and a Zurich-based team of bankers led by manager Rüegg Meier. Rüegg Meier was a member of senior management at the international bank and also served as a private banker, providing unlicensed and unregistered banking services to U.S. customers with undeclared accounts at the bank. The superseding indictment further alleges that Bachmann was a private banker for a wholly-owned subsidiary of the international bank who traveled to the United States to assist U.S. taxpayers in evading their U.S. taxes through the use of secret bank accounts. It is further alleged that Dörig, founder of a Swiss trust company, was a preferred provider of the international bank who assisted U.S. customers in forming and maintaining nominee tax haven entities and opening secret accounts at the international bank and its subsidiaries in the names of the entities.
According to the superseding indictment, the defendants and their co-conspirators solicited U.S. customers to open secret accounts because Swiss bank secrecy would permit them to conceal from the IRS their ownership of accounts at the international bank and other Swiss banks. It is further alleged that they provided unlicensed and unregistered banking services and investment advice to customers in the United States in person while on travel to the United States, including at the international bank’s representative office in New York City and by mailings, email and telephone calls to and from the United States. It is further alleged that the international bank’s employees destroyed statements and other account records that were sent via email or facsimile to the representative office in New York so that records regarding the undeclared accounts would not be maintained in the United States.
The superseding indictment alleges that the defendants and their co-conspirators caused U.S. customers to travel outside the United States to conduct banking related to their secret accounts; opened secret accounts in the names of nominee tax haven entities for U.S. customers; accepted IRS forms that falsely stated under penalties of perjury that the owners of the secret accounts were not subject to U.S. taxation; advised and caused United States customers to structure withdrawals from their secret accounts in amounts less than $10,000 in an attempt to conceal the secret accounts and the transactions from American authorities; mailed bank checks in amounts less than $10,000 to customers in the United States; and advised U.S. customers to utilize offshore charge, credit and debit cards linked to their secret accounts and provided the customers with such cards, including cards issued by American Express, Visa and Maestro.
According to the superseding indictment, after the bank decided to close the secret accounts maintained by U.S. customers, the defendants encouraged and assisted U.S. customers to transfer their secret accounts to other foreign banks as a means of continuing to hide their assets from the IRS and discouraged the customers from disclosing their secret accounts to the IRS through the IRS’s Voluntary Disclosure Program.
Neil H. MacBride, U.S. Attorney for the Eastern District of Virginia; John A. DiCicco, Principal Deputy Assistant Attorney General for the Justice Department’s Tax Division; and Douglas H. Shulman, Commissioner of the IRS, made the announcement.
A criminal indictment is only an accusation and a defendant is presumed innocent until proven guilty. If convicted, the defendants each face a maximum of five years in prison and a maximum fine of $250,000.
U.S. Attorney MacBride and Principal Deputy Assistant Attorney General DiCicco commended the investigative efforts of the IRS agents involved in this case, as well as Senior Litigation Counsels Kevin M. Downing and John E. Sullivan and Trial Attorneys Mark F. Daly, Tino M. Lisella, Michelle M. Petersen and Melissa Siskind of the Tax Division, and Assistant U.S. Attorney Mark Lytle, who are prosecuting the case.
Patient Recruiter for Miami Health Care Agency Pleads Guilty in $25 Million Medicare Fraud SchemeRead the Press Release
WASHINGTON – A patient recruiter of a Miami health care agency pleaded guilty today for his participation in a $25 million home health Medicare fraud scheme, announced the Department of Justice, the FBI and the Department of Health and Human Services (HHS).
Vicente Guerra-Nistal, 54, pleaded guilty before U.S. District Judge Joan A. Lenard in Miami to one count of conspiracy to commit health care fraud. Guerra was charged in a February 2011 indictment. According to plea documents, Guerra was a patient recruiter for ABC Home Health Care Inc. ABC was a Miami home health care agency that purported to provide home health and physical therapy services to Medicare beneficiaries.
According to court documents, ABC was operated for the purpose of billing the Medicare program for expensive physical therapy and home health care services that were medically unnecessary and/or were never provided. Court documents allege that the medically unnecessary services were prescribed by doctors, including Jose Nunez, M.D., and Francisco Gonzalez, M.D. Nunez and Gonzalez were also charged in the February 2011 indictment along with Guerra, and 18 other co-conspirators.
According to court documents, beginning in approximately January 2006, and continuing until approximately March 2009, Guerra offered and paid kickbacks and bribes to Medicare beneficiaries in return for those beneficiaries allowing ABC to bill Medicare for home health care and therapy services that were medically unnecessary and/or never provided. Guerra was paid kickbacks and bribes by the owners of ABC in return for recruiting the Medicare beneficiaries to ABC. Guerra admitted that he knew the patients he recruited for ABC did not qualify for the services that ABC billed to Medicare. In addition, Guerra knew that the patient files for his recruited patients were falsified in order to make it appear that the patients qualified for home health care and therapy services so that Medicare could be billed for medically unnecessary services.
As a result of Guerra’s participation in the illegal scheme, the Medicare program was billed approximately $194,000 for purported home health care services that were medically unnecessary and/or were never provided.
Sentencing has been scheduled for Oct. 17, 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 his criminal activities.
Co-defendants Lisandra Alonso and Luisa Morciego pleaded guilty for their roles in the fraud scheme on July 13, 2011. Drs. Nunez and Gonzalez are scheduled to begin trial on Oct. 10, 2011. An indictment is merely a charge and defendants are presumed innocent until proven guilty.
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, Medicare Fraud Strike Force operations in nine locations have charged 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 .
Longtime Associate of the New England La Cosa Nostra Pleads Guilty in Extortion and Racketeering ConspiracyRead the Press Release
WASHINGTON – Thomas Iafrate, 70, of Johnston, R.I., pleaded guilty in U.S. District Court in Providence, R.I., today to participating in an extortion and racketeering conspiracy that shook down several Rhode Island businesses for “protection” payments, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Peter F. Neronha for the District of Rhode Island. Iafrate admitted to the court that he was an associate of the New England La Cosa Nostra (NELCN).
Iafrate pleaded guilty to one count of conspiracy to participate in a racketeering enterprise. He faces maximum penalties of 20 years in prison, a fine of $250,000 and three years of supervised release when he is sentenced on Oct. 21, 2011, by U.S. District Court Judge William E. Smith.
According to court records and information presented in court, Iafrate was an associate of the NELCN enterprise while working as a longtime bookkeeper for various Providence adult entertainment businesses, including the Satin Doll, Cadillac Lounge and Northeast Sales. Iafrate participated in the racketeering conspiracy by setting aside and by delivering extortion payments to members of the NELCN, including co-defendant Luigi Manocchio, on behalf of the owners. All three businesses were owned by the same people.
Four alleged members and associates of the NELCN, including an alleged former boss, were charged with crimes involving racketeering, extortion and related crimes in a superseding indictment unsealed in Providence on March 1, 2011. Iafrate was initially charged in an indictment unsealed in January 2011 as part of a coordinated nationwide takedown of organized crime figures. At that time, 91 leaders, members and associates of seven organized crime families of La Cosa Nostra were charged with federal crimes in four judicial districts, including Rhode Island.
The superseding indictment charges longtime NELCN boss Luigi Manocchio, 83, aka “Louie,” “Baby Shacks,” “the Professor” and “the Old Man,” and associate Thomas Iafrate with racketeering conspiracy, extortion conspiracy and extortion. Richard Bonafiglia, 57, and Theodore Cardillo, 67, are charged with racketeering conspiracy and extortion conspiracy. An indictment is merely an allegation and defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Manocchio and Bonafiglia are detained while awaiting trial. Cardillo is free on bond while awaiting trial.
The cases against the four defendants are being prosecuted by Trial Attorney Sam Nazzaro of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorney William J. Ferland of the District of Rhode Island.
The matter was investigated by the District of Rhode Island’s Organized Crime Task Force, which includes law enforcement agents from the FBI, Rhode Island State Police, the Providence Police Department and the Internal Revenue Service’s Criminal Investigations Division.
Justice Department Settles Allegations of Employment Discrimination by Louisiana Industrial Services CompanyRead the Press Release
WASHINGTON – The Justice Department today reached a settlement with Brand Energy and Infrastructure Services and its subsidiary, Industrial Services LLC (ISI), resolving allegations that ISI, which provides craft services to industry, engaged in a pattern or practice of discrimination against non-citizens in the hiring and employment eligibility verification process.
The department’s investigation was prompted after a work-authorized immigrant lost his job when he could not comply with ISI’s request to provide specific employment documentation beyond what was required by law. Further investigation revealed that ISI’s Prairieville, La., office required all newly hired non-U.S. citizens to present documents issued by the Department of Homeland Security upon hire. The company did not require U.S. citizens to present any particular documents. Under the Immigration and Nationality Act’s (INA’s) anti-discrimination provision, employers are not allowed to discriminate against work-authorized employees during the hiring and employment eligibility verification process.
In addition to ending its impermissible document requests, ISI has agreed to pay $43,560 in civil penalties and $7,200 in back pay, plus interest, to the injured party. Brand and ISI have also agreed to monitoring provisions, as well as training for their human resources personnel.
“The Justice Department will continue to protect the right of work-authorized immigrants to work without having to overcome discriminatory hurdles during the hiring process,” said Thomas E. Perez, the Assistant Attorney General in charge of the Civil Rights Division. “We are pleased to have reached a settlement in this matter, and will continue to educate the public about the anti-discrimination provision of the INA.”
The Office of Special Counsel for Immigration Related Unfair Employment Practices is responsible for enforcing the anti-discrimination provision of the INA, which protects work authorized individuals against employment discrimination on the basis of citizenship status or national origin discrimination, including discrimination in hiring and the employment eligibility verification (Form I-9) process. For more information about protections against employment discrimination under federal immigration law, call OSC’s worker hotline at 1-800-255-7688 (1-800-237-2515, TDD for hearing impaired), OSC’s employer hotline at 1-800-255-8155 (1-800-237-2515, TDD for hearing impaired); e-mail [email protected] ; or visit OSC’s website at www.justice.gov/crt/about/osc
Department of Justice Proposes Legislation to Help Tribes Combat Violence Against Native Women in Indian CountryRead the Press Release
WASHINGTON – Today the Department of Justice proposed legislation that would significantly improve the safety of women in American Indian tribal communities and allow federal and tribal law-enforcement agencies to hold more perpetrators of domestic violence accountable for their crimes.
“The Obama Administration has placed a high priority on combating violence against women in tribal communities,” said Associate Attorney General Tom Perrelli. “We believe that enacting these targeted reforms would significantly improve the safety of women in tribal communities and allow federal and tribal law-enforcement agencies to hold more perpetrators of domestic violence accountable for their crimes.”
The proposed legislation identifies three legal gaps that can be addressed through congressional action:
Recognizing certain tribes’ power to exercise concurrent criminal jurisdiction over domestic-violence cases, regardless of whether the defendant is Indian or non-Indian.
Clarifying that tribal courts have full civil jurisdiction to issue and enforce protection orders involving any persons, Indian or non-Indian — confirming the intent of Congress in enacting the Violence Against Women Act of 2000.
Providing more robust federal sentences for certain acts of domestic violence in Indian Country: a 10-year offense for assaulting a spouse, intimate partner or dating partner by strangling, suffocating or attempting to strangle or suffocate; a five-year offense for assaulting a spouse, intimate partner or dating partner, resulting in substantial bodily injury; and a one-year offense for assaulting a person by striking, beating or wounding.
Violence against American Indian women occurs at epidemic rates. Research reveals that one-third of Native women will be raped during their lifetimes, and nearly 3 out of 5 have been assaulted by their spouses or intimate partners.
The introduction of legislation marks another step in the Justice Department’s ongoing initiative to increase engagement, coordination and action on public safety in tribal communities. This effort is driven largely by input gathered from the department’s 2009 Tribal Nations Listening Session, the department’s annual tribal consultations on violence against women, and 2011 tribal consultations specifically addressing potential new legislation to improve safety for Native women.
Review the legislation and read Associate Attorney General Tom Perrelli’s testimony before the Senate Committee on Indian Affairs, July 14, 2011.
Attorney General Holder, Secretary Duncan Announce Effort to Respond to School-to-Prison Pipeline by Supporting Good Discipline PracticesRead the Press Release
WASHINGTON –Attorney General Eric Holder and Secretary of Education Arne Duncan today announced the launch of the Supportive School Discipline Initiative, a collaborative project between the Departments of Justice and Education that will address the “school-to-prison pipeline” and the disciplinary policies and practices that can push students out of school and into the justice system. The initiative aims to support good discipline practices to foster safe and productive learning environments in every classroom.
“Ensuring that our educational system is a doorway to opportunity – and not a point of entry to our criminal justice system – is a critical, and achievable, goal,” said Attorney General Holder. “By bringing together government, law enforcement, academic, and community leaders, I’m confident that we can make certain that school discipline policies are enforced fairly and do not become obstacles to future growth, progress, and achievement.”
"Maintaining safe and supportive school climates is absolutely critical, and we are concerned about the rising rates and disparities in discipline in our nation’s schools,” said Secretary Duncan. “By teaming up with stakeholders on this issue and through the work of our offices throughout the department, we hope to promote strategies that will engage students in learning and keep them safe.”
The goals of the Supportive School Discipline Initiative are to: build consensus for action among federal, state and local education and justice stakeholders; collaborate on research and data collection that may be needed to inform this work, such as evaluations of alternative disciplinary policies and interventions; develop guidance to ensure that school discipline policies and practices comply with the nation’s civil rights laws and to promote positive disciplinary options to both keep kids in school and improve the climate for learning; and promote awareness and knowledge about evidence-based and promising policies and practices among state judicial and education leadership.
In order to implement the initiative, the two departments will coordinate with other organizations in the non-profit and philanthropic communities who are also working to help ensure students succeed by addressing inappropriate school discipline. These groups include the Council of State Governments and the National Council of Juvenile and Family Court Judges. The Supportive School Discipline Initiative will build upon the Department of Education’s Office for Civil Rights’ work to increase and enhance the school discipline data available through the Civil Rights Data Collection and the Departments’ proactive efforts to ensure disciplinary policies support students and are administered in a non-discriminatory manner.
Attorney General Holder and Secretary Duncan announced this initiative during the quarterly meeting of the Coordinating Council on Juvenile Justice and Delinquency Prevention, whose membership includes representatives from 12 federal agencies and nine practitioners. The council coordinates federal juvenile justice and prevention programs to help better serve at-risk youth. A priority issue for the council is education and at-risk youth. More information on the Coordinating Council on Juvenile Justice is available at: www.juvenilecouncil.gov/index.html.
Wednesday 20 July 2011
Supervisor for Texas Natural Gas and Oil Drilling Company Pleads Guilty in Oklahoma to Negligent Violation of Clean Water ActRead the Press Release
WASHINGTON—Gabriel Henson, a supervisor for Integrated Production Services, Inc., a Houston-based natural gas and oil drilling contractor, pleaded guilty to a negligent violation of the Clean Water Act in federal court in Muskogee, Okla., the Department of Justice announced.
Henson was a crew supervisor for Integrated Production Services (IPS), which was performing hydraulic fracturing (also known as “fracking”) at the Pettigrew 18-3H well site, located in Atoka County, Oklahoma. IPS’s fracking operations included using hydrochloric acid to penetrate though bedrock and thousands of feet of substrata.
On May 24, 2007, a tank had leaked an estimated 400-700 gallons of hydrochloric acid onto the earthen pad surface of the well site. The earthen pad was also flooded with water from recent heavy rainfall. In order to remove the rainwater from the well site, Henson drove a pickup truck owned by IPS through an earthen berm, causing the rainwater contaminated with hydrochloric acid to flow off the well pad and down into Dry Creek, a tributary of Boggy Creek, a water of the United States under the Clean Water Act. Environmental damage to the creek was minimized by spill response crews that responded to the site.
“There is no question that the lawful exploration and development of sources of domestic energy is vital to the national interest,” said Assistant Attorney General Ignacia S. Moreno of the Justice Department’s Environment and Natural Resources Division. “With the increased use of hydraulic fracturing across the country, it is essential that we vigorously enforce all laws intended to protect the environment, as shown by this prosecution involving the discharge of acid into a stream.”
“The defendant's discharge of hydrochloric acid waste into a tributary of Boggy Creek threatened public health and the environment, and required a costly emergency response to minimize harm,” said Ivan Vikin, Special Agent in Charge of EPA’s criminal enforcement program in Oklahoma. “Today’s guilty plea demonstrates that those who negligently violate environmental laws will be held accountable for their actions.”
According to a plea agreement, Henson entered a plea of guilty to a negligent violation of the Clean Water Act. If his plea is accepted by the court, Henson faces a term of imprisonment up to one year and a criminal fine of $100,000. The case was investigated by EPA Criminal Investigation Division and Oklahoma Attorney General’s Office of the Inspector General. The case is a joint prosecution between U.S. Attorney’s Office for the Eastern District of Oklahoma and the Environmental Crimes Section of the U.S. Department of Justice, Environment and Natural Resources Division.
Pennsylvania Anesthesiologist Pleads Guilty to Filing a False Document with the Internal Revenue ServiceRead the Press Release
WASHINGTON - Eliseo Roquiz of Erie, Penn., pleaded guilty before U.S. District Judge Sean J. McLaughlin of the Western District of Pennsylvania to charges of filing a false document with the Internal Revenue Service (IRS), the Justice Department and IRS announced today.
According to court documents and statements made in court, Dr. Roquiz, an anesthesiologist, used multiple tax fraud promoters to prevent the IRS from assessing and collecting his income taxes. In 1998, Dr. Roquiz established two sham trusts with the assistance of a California-based organization called National Trust Service and paid an affiliate of National Trust Service to prepare false individual and trust tax returns for him for the years 1998, 1999 and 2000. As part of the fraud, Dr. Roquiz had medical providers pay fees for his services to the sham trusts and then claimed false deductions on the trust returns to reduce the taxes on the income to zero. Dr. Roquiz also opened bank accounts in the name of the sham trusts and transferred title to his personal residence to one of the trusts.
According to court documents and statements made in court, in 2003, after the IRS began to audit his tax returns, Dr. Roquiz hired American Rights Litigators/Guiding Light of God Ministries (ARL/GLGM), an organization located in Florida that sold abusive tax schemes, to send obstructive and frivolous correspondence to the IRS in response to notices that the IRS sent to Dr. Roquiz. After ARL/GLGM was permanently enjoined in February 2004, Dr. Roquiz hired a third fraud promoter, Joseph Saladino, to file frivolous amended U.S. Individual Income Tax Returns (IRS Forms 1040X) for the years 2000 and 2001.
According to public documents and statements, Dr. Roquiz’s efforts to disrupt IRS collection activities culminated with the submission of three false Collection Information Statements for Wage Earners and Self-Employed Individuals (IRS Forms 433-A) between January and June 2005. All three Forms 433-A, which Dr. Roquiz signed under penalties of perjury, were materially false in that Dr. Roquiz failed to disclose that he had transferred his personal residence to his sham trust and that he was a party to a lawsuit. The second and third Forms 433-A, which Dr. Roquiz submitted in May and June of 2005, were also materially false in that Dr. Roquiz failed to disclose the existence of a bank account that he opened in the name on an LLC he had established in New Mexico.
As part of the plea agreement, the parties agreed that the tax loss associated with Dr. Roquiz’s conduct was $342,361.11 plus interest.
The charge against Dr. Roquiz carries a maximum sentence of up to three years in prison. Sentencing is set for Nov. 15, 2011.
More information about the Tax Division and its enforcement efforts can be found at www.justice.gov/tax.
Court Bars Georgia Man from Preparing Federal Tax ReturnsRead the Press Release
WASHINGTON – A federal court has permanently barred Cecil A. Collier from preparing federal tax returns for others, the Justice Department announced today. The civil injunction order was signed by Judge W. Louis Sands of the U.S. District Court for the Middle District of Georgia. The court also ordered Collier to provide a list of his customers to the government and to mail a copy of the order to each person for whom he prepared a federal income tax return since Jan. 1, 2007.
According to the injunction order, Collier, working under the trade name “Cairo Fast Tax,” employed at least two schemes to generate false or overstated claims for earned income tax credits, and correspondingly excessive tax refunds, on his customers’ tax returns. The order states that Collier falsely claimed dependents or qualifying children, and falsely overstated customers’ earned income to create inflated tax credit amounts.
According to the court, of the returns prepared by Collier that the Internal Revenue Service (IRS) audited for issues concerning the earned income tax credit, 98 percent of them required adjustments. The order states that Collier’s tax preparation may have caused government losses exceeding $12 million.
Return preparer fraud is one of the IRS’s “Dirty Dozen” tax scams for 2011. In the past decade, the Justice Department’s Tax Division has obtained injunctions against hundreds of tax fraud promoters and unscrupulous tax return preparers. Information about these cases is available on the Justice Department website .
Tuesday 19 July 2011
Two Charged with Conspiring to Act as Unregistered Agents of Pakistani GovernmentRead the Press Release
WASHINGTON – Two individuals have been charged with participating in a long-term conspiracy to act as agents of the Pakistani government in the United States without disclosing their affiliation with the Pakistani government as required by law.
The charges were announced by Lisa Monaco, Assistant Attorney General for National Security; Neil MacBride, U.S. Attorney for the Eastern District of Virginia; and James McJunkin, Assistant Director in Charge of the FBI Washington Field Office.
Syed Ghulam Nabi Fai, 62, a U.S. citizen and resident of Fairfax, Va., and Zaheer Ahmad, 63, a U.S. citizen and resident of Pakistan, are charged in a one-count criminal complaint in the Eastern District of Virginia. The complaint alleges that the defendants have conspired to: 1) act as an agent of a foreign principal without registering with the Attorney General in violation of the Foreign Agents Registration Act (FARA); and 2) falsify, conceal, and cover up material facts they had a duty to disclose in matters within the jurisdiction of Executive Branch agencies of the U.S. government.
Fai was arrested this morning. Ahmad remains at large and is believed to be in Pakistan. Both face a potential sentence of five years in prison if convicted.
“FARA is designed to ensure that the U.S. government and American public know the underlying source of information and identity of persons attempting to influence U.S. policy and laws. The defendants are accused of thwarting this process by concealing the fact that a foreign government was funding and directing their lobbying and public relations efforts in America,” said Assistant Attorney General Monaco.
“Mr. Fai is accused of a decades-long scheme with one purpose – to hide Pakistan’s involvement behind his efforts to influence the U.S. government’s position on Kashmir,” said U.S. Attorney MacBride. “His handlers in Pakistan allegedly funneled millions through the Kashmir Center to contribute to U.S. elected officials, fund high-profile conferences, and pay for other efforts that promoted the Kashmiri cause to decision-makers in Washington.”
“Foreign governments who try to influence the United States by using unregistered agents threaten our national security,” said FBI Assistant Director in Charge McJunkin. “Mr. Fai’s alleged conduct illustrates the risk to our fair and open government. The charges underscore the dedication of Special Agents who enforce laws - like the FARA violations charged here - that are designed to detect and defeat those who attempt to surreptitiously exert foreign influence on our government by using agents who conceal their foreign affiliations . ”
According to an affidavit filed in support of the criminal complaint, Fai serves as the director of the Kashmiri American Council (KAC), a non-governmental organization located in Washington, D.C., that was founded in 1990 and also goes by the name “Kashmir Center.” The KAC describes itself in educational materials as a “not-for-profit organization dedicated to raising the level of knowledge in the United States about the struggle of the Kashmiri people for self-determination.”
The affidavit alleges that, although the KAC held itself out to be a Kashmiri organization run by Kashmiris and financed by Americans, the KAC is one of three “Kashmir Centers” that are actually run by elements of the Pakistani government, including Pakistan’s military intelligence service, the Inter-Services Intelligence Agency (ISI). The two other Kashmir Centers are in London, England, and Brussels, Belgium.
According to the affidavit, a confidential witness told investigators that he participated in a scheme to obscure the origin of money transferred by Pakistan’s ISI to Fai to use as a lobbyist for the KAC in furtherance of Pakistani government interests. The witness explained that the money was transferred to Fai through Ahmad, an American living in Pakistan. A second confidential witness told investigators that the ISI created the KAC to propagandize on behalf of the government of Pakistan with the goal of uniting Kashmir. This witness said ISI’s sponsorship and control of KAC were secret and that ISI had been directing Fai’s activities for the past 25 years.
When questioned by the FBI about these relationships in March 2007, Fai allegedly stated that he had never met anyone who identified himself as being affiliated with the ISI. In March 2010, the Justice Department sent Fai a letter notifying him of his possible obligation to register as a foreign agent with the Justice Department. In his written response to the Justice Department, Fai asserted that neither he nor KAC had ever engaged in any activities for or provided any services to Pakistan or any foreign entity. In a March 2011 interview with the FBI, Fai again denied having any relationship with anyone in the Pakistani government.
The affidavit alleges that Fai has acted at the direction of and with the financial support of the Pakistani government for more than 20 years. The affidavit alleges that four Pakistani government handlers have directed Fai’s U.S. activities and that Fai has been in touch with his handlers more than 4,000 times since June 2008. Fai’s handlers have also allegedly communicated with Ahmad regularly.
For example, the affidavit alleges that Fai repeatedly submitted annual KAC strategy reports and budgetary requirements to his Pakistani government handlers for approval. One document entitled “Plan of Action of KAC / Kashmir Center for Fiscal Year 2009” laid out Fai’s intended strategy to secure U.S. Congressional support in order to encourage the Executive Branch to support self-determination in Kashmir; his strategy to build new alliances in the State Department, the National Security Council, the Congress and the Pentagon, and to expand KAC’s media efforts.
According to the affidavit, Fai also set forth KAC’s projected budgetary requirements from the Pakistani government for 2009, including $100,000 for contributions to members of Congress. There is no evidence that any elected official who received financial contributions from Fai or the KAC was aware that the money originated from any part of the Pakistani government.
According to the affidavit, Fai and the KAC have received at least $4 million, from the Pakistani government since the mid-1990s through Ahmad and his funding network. The money is allegedly routed to Fai through Ahmad and a network of other individuals connected to Ahmad. Ahmad allegedly arranges for his contacts in the United States to provide money to Fai in return for repayment of those amounts in Pakistan.
To date, neither Fai, nor Ahmad, nor the KAC has registered as an official agent of the Pakistani government with the Attorney General as required by FARA.
This investigation is being conducted by the FBI’s Washington Field Office. The prosecution is being handled by Assistant U.S. Attorneys Gordon Kromberg and Daniel Grooms of the U.S. Attorney's Office for the Eastern District of Virginia and Trial Attorney John Gibbs of the Counterterrorism Section of the Justice Department’s National Security Division.
The public is reminded that an indictment and criminal complaint contain mere allegations and that defendants are presumed innocent unless and until proven guilty.
Sixteen Individuals Arrested in the United States for Alleged Roles in Cyber AttacksRead the Press Release
WASHINGTON - Fourteen individuals were arrested today by FBI agents on charges related to their alleged involvement in a cyber attack on PayPal’s website as part of an action claimed by the group “Anonymous,” announced the Department of Justice and the FBI. Two additional defendants were arrested today on cyber-related charges.
The 14 individuals were arrested in Alabama, Arizona, California, Colorado, the District of Columbia, Florida, Massachusetts, Nevada, New Mexico and Ohio on charges contained in an indictment unsealed today in the Northern District of California in San Jose. In addition, two individuals were arrested on similar charges in two separate complaints filed in the Middle District of Florida and the District of New Jersey. Also today, FBI agents executed more than 35 search warrants throughout the United States as part of an ongoing investigation into coordinated cyber attacks against major companies and organizations. Finally, the United Kingdom’s Metropolitan Police Service arrested one person and the Dutch National Police Agency arrested four individuals today for alleged related cyber crimes.
According to the San Jose indictment, in late November 2010, WikiLeaks released a large amount of classified U.S. State Department cables on its website. Citing violations of the PayPal terms of service, and in response to WikiLeaks’ release of the classified cables, PayPal suspended WikiLeaks’ accounts so that WikiLeaks could no longer receive donations via PayPal. WikiLeaks’ website declared that PayPal’s action “tried to economically strangle WikiLeaks.”
The San Jose indictment alleges that in retribution for PayPal’s termination of WikiLeaks’ donation account, a group calling itself Anonymous coordinated and executed distributed denial of service (DDoS) attacks against PayPal’s computer servers using an open source computer program the group makes available for free download on the Internet. DDoS attacks are attempts to render computers unavailable to users through a variety of means, including saturating the target computers or networks with external communications requests, thereby denying service to legitimate users. According to the indictment, Anonymous referred to the DDoS attacks on PayPal as “Operation Avenge Assange.”
The defendants charged in the San Jose indictment allegedly conspired with others to intentionally damage protected computers at PayPal from Dec. 6, 2010, to Dec. 10, 2010.
The individuals named in the San Jose indictment are: Christopher Wayne Cooper, 23, aka “Anthrophobic;” Joshua John Covelli, 26, aka “Absolem” and “Toxic;” Keith Wilson Downey, 26; Mercedes Renee Haefer, 20, aka “No” and “MMMM;” Donald Husband, 29, aka “Ananon;” Vincent Charles Kershaw, 27, aka “Trivette,” “Triv” and “Reaper;” Ethan Miles, 33; James C. Murphy, 36; Drew Alan Phillips, 26, aka “Drew010;” Jeffrey Puglisi, 28, aka “Jeffer,” “Jefferp” and “Ji;” Daniel Sullivan, 22; Tracy Ann Valenzuela, 42; and Christopher Quang Vo, 22. One individual’s name has been withheld by the court.
The defendants are charged with various counts of conspiracy and intentional damage to a protected computer. They will make initial appearances throughout the day in the districts in which they were arrested.
In addition to the activities in San Jose, Scott Matthew Arciszewski, 21, was arrested today by FBI agents on charges of intentional damage to a protected computer. Arciszewski is charged in a complaint filed in the Middle District of Florida and made his initial appearance this afternoon in federal court in Orlando, Fla.
According to the complaint, on June 21, 2011, Arciszewski allegedly accessed without authorization the Tampa Bay InfraGard website and uploaded three files. The complaint alleges that Arciszewski then tweeted about the intrusion and directed visitors to a separate website containing links with instructions on how to exploit the Tampa InfraGard website. InfraGard is a public-private partnership for critical infrastructure protection sponsored by the FBI with chapters in all 50 states.
Also today, a related complaint unsealed in the District of New Jersey charges Lance Moore, 21, of Las Cruces, N.M., with allegedly stealing confidential business information stored on AT&T’s servers and posting it on a public file sharing site. Moore was arrested this morning at his residence by FBI agents and is expected to make an initial appearance this afternoon in Las Cruces federal court. Moore is charged in with one count of accessing a protected computer without authorization.
According to the New Jersey complaint, Moore, a customer support contractor, exceeded his authorized access to AT&T’s servers and downloaded thousands of documents, applications and other files that, on the same day, he allegedly posted on a public file hosting site that promises user anonymity. According to the complaint, on June 25, 2011, the computer hacking group LulzSec publicized that they had obtained confidential AT&T documents and made them publicly available on the Internet. The documents were the ones Moore had previously uploaded.
The charge of intentional damage to a protected computer carries a maximum penalty of 10 years in prison and a $250,000 fine. Each count of conspiracy carries a maximum penalty of five years in prison and a $250,000 fine.
An indictment and a complaint merely contain allegations. Defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
To date, more than 75 searches have taken place in the United States as part of the ongoing investigations into these attacks.
These cases are being prosecuted by Assistant U.S. Attorneys in the U.S. Attorneys’ Offices for the Northern District of California, Middle District of Florida and the District of New Jersey. The Criminal Division’s Computer Crime and Intellectual Property Section also has provided assistance.
Today’s operational activities were done in coordination with the Metropolitan Police Service in the United Kingdom and the Dutch National Police Agency. The FBI thanks the multiple international, federal and domestic law enforcement agencies who continue to support these operations.
Richmond, Virginia, Businessman Sentenced to 97 Months in Prison for Role in Investment Fraud Scheme Causing Millions in LossesRead the Press Release
WASHINGTON – Julius Everett “Bud” Johnson, 62, a resident of Richmond, Va., was sentenced today to 97 months in prison for his role in an investment scheme resulting in millions of dollars in losses, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney Neil H. MacBride of the Eastern District of Virginia, Acting Special Agent in Charge Jeannine A. Hammett of the Internal Revenue Service-Criminal Investigation (IRS-CI) and Special Agent in Charge Michael Morehart of the FBI Richmond Field Office.
On April 11, 2011, Johnson pleaded guilty before U.S. District Chief Judge James R. Spencerto one count of conspiracy to commit mail, wire and bank fraud and one count of engaging in unlawful monetary transactions. A hearing will be held before Judge Spencer in Richmond on Sept. 29, 2011, to determine the amount of restitution , which, according to the plea documents, is currently estimated to be approximately $8.9 million.
According to court filings, from prior to July 2009 until at least March 2010, Johnson owned and operated several businesses based in Richmond, including Virginia Group Benefits (VGB); Mid-Atlantic Insurance (MAI); F.I.C. Financial Group Inc.; Benefit Contractors Administrators Inc. (BCA); River City Cleaners LLC; Roberts Awning LLC; Norvell Awning LLC; MHC Linen Services LLC; The Everett Group; and Living Well. Johnson and his coconspirator offered investments in the different businesses, generally including a promise of returns of up to 10 percent within one to four years. Johnson and his coconspirator represented to potential investors that their investment funds would be funneled directly into specific companies, which would generate the returns on investment. Instead, a significant portion of the invested funds was used to repay other investors and to cover operating costs for unrelated businesses.
The case was prosecuted by Trial Attorney Kevin B. Muhlendorf of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Mike Gill of the Eastern District of Virginia. The case was investigated by the IRS-CI, FBI and the Virginia State Corporation Commission Bureau of Insurance.
This prosecution was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information about the task force visit: www.stopfraud.gov .
President of Washington, D.C., Area Community Newspaper Chain Pleads Guilty to Failing to Pay Employment TaxesRead the Press Release
WASHINGTON – Peter Labovitz, of Alexandria, Va., pleaded guilty to two counts of failing to pay employment taxes to the Internal Revenue Service (IRS), the Justice Department and IRS announced today. Specifically, Labovitz pleaded guilty to willfully failing to pay over to the IRS the federal income taxes and Federal Insurance Contributions Act (FICA) taxes due and owing to the United States for Connections Newspapers LLC for the quarters ending Sept. 30, 2007, and Dec. 31, 2007.
According to the plea agreement and statement of facts, Labovitz was the president of Connection Newspapers LLC, a Northern Virginia newspaper publisher that currently publishes approximately 15 community newspapers throughout Northern Virginia and Maryland. Between 2002 and 2008, Labovitz ran Connection Newspapers’ day-to-day operations, directed employees, approved payments by the company and made financial decisions on behalf of the company. Labovitz admitted that between 2002 and 2008, he caused to be deducted and collected from the total taxable wages of his employees federal income taxes and FICA taxes. However, Labovitz failed to timely pay over more than $940,000 in federal income taxes and FICA taxes withheld and due and owing to the United States, despite the fact that he was required to do so by law.
Labovitz faces up to one year in prison, a $100,000 fine and up to one year of supervised release for each count of conviction. Magistrate Judge John F. Anderson scheduled sentencing for Sept. 27, 2011, at 10 a.m.
The case was investigated by the IRS-Criminal Investigation Division and prosecuted by Assistant U.S. Attorney Tim Belevetz and Justice Department‘s Tax Division Trial Attorney Caryn Finley.
More information about the Tax Division and its enforcement efforts can be found at www.justice.gov/tax.
Jersey City, N.J. to Upgrade and Repair Sewer System to Resolve Clean Water Act ViolationsRead the Press Release
WASHINGTON – A settlement between the United States and the Jersey City, N.J. Municipal Utilities Authority (JCMUA) will resolve Clean Water Act violations by JCMUA for failing to properly operate and maintain its combined sewer system, the Department of Justice and the Environmental Protection Agency (EPA) announced today.
JCMUA violations included releases of untreated sewage into the Hackensack River, Hudson River, Newark Bay and Penhorn Creek. JCMUA will invest more than $52 million in repairs and upgrades to its existing infrastructure and pay a civil penalty of $375,000.
Under the settlement, JCMUA is required to comply with its Clean Water Act permit and will conduct evaluations to identify the problems within the system that led to releases of untreated sewage. JCMUA will also complete repairs to approximately 25,000 feet of sewer lines over the next eight years. Finally, JCMUA will invest $550,000 into a supplemental environmental project that will remove privately-owned sewers from homes in several neighborhoods in Jersey City and replace them with direct sewer connections, creating better wastewater collection in those areas.
“This agreement, like others reached with cities across the country, addresses critically important and long-overdue upgrades to the municipal sewer system in Jersey City, which are required if JCMUA is to achieve compliance with the nation’s Clean Water Act,” said Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division of the Department of Justice. “Among the actions required by the agreement, a supplemental environmental project will replace privately-owned sewers with direct sewer connections, directly benefiting economically disadvantaged residents by improving wastewater collection and preventing sewage backups in their homes.”
“Investment in municipal infrastructure and local commitments like those in today’s agreement are practical and necessary solutions to sewer overflow problems,” said Judith A. Enck, Administrator for EPA’s Region 2 Office. “Today’s agreement will help improve water quality in waters around Jersey City and protect community residents from exposure to raw sewage and contaminated stormwater, now, and into the future.”
Combined sewer systems are designed to transport sewage, industrial wastewater and rainwater runoff in the same pipes to wastewater treatment plants. During periods of heavy rainfall, the volume of wastewater traveling through a combined sewer system can exceed the capacity of the treatment plant. Resulting overflows, called Combined Sewer Overflows (CSOs), contain not only stormwater but also pollutants such as untreated human and industrial waste, toxic materials, and debris. They pose risks to human health, threaten aquatic habitats and life, and impair the use and enjoyment of the nation’s waterways.
EPA recently released a report, Keeping Raw Sewage and Contaminated Stormwater Out of the Public’s Water, to answer commonly asked questions about combined sewer overflows. To read or download a copy of the report, visit www.epa.gov/region2/water/ .
The consent decree is subject to a 30-day public comment period and final court approval. A copy of the consent decree is available on the Department of Justice web site at www.usdoj.gov/enrd/Consent_Decrees.html
Executive of Taiwan Aftermarket Auto Lights Manufacturer Arrested and Indicted for Participation in Price-Fixing ConspiracyRead the Press Release
WASHINGTON – An executive of a Taiwan manufacturer of aftermarket auto lights was arrested on July 12, 2011, at Los Angeles International Airport and indicted today for participating in a global conspiracy to fix the prices of aftermarket auto lights, the Department of Justice announced today. Aftermarket auto lights are incorporated into an automobile after its original sale, often as repairs following a collision or as accessories and upgrades.
According to a one-count felony indictment filed today in U.S. District Court in San Francisco, Homy Hong-Ming Hsu conspired with others to suppress and eliminate competition by fixing the prices of aftermarket auto lights. The department said that Hsu, the vice chairman and second highest-ranking officer of a Taiwan manufacturer of aftermarket auto lights, participated in the conspiracy from as early as November 2001 until about September 2008.
According to the charge, Hsu and co-conspirators participated in a conspiracy in which the participants met and agreed to charge prices of aftermarket auto lights at certain predetermined levels. The participants in that conspiracy issued price announcements and price lists in accordance with the agreements reached, and collected and exchanged information on prices and sales of aftermarket auto lights for the purpose of monitoring and enforcing adherence to the agreed-upon prices. The department said that the conspirators met in Taiwan, the United States and elsewhere for their discussions.
Hsu is the third individual to be charged in connection with the department’s ongoing investigation into the aftermarket auto lights industry. On March 30, 2011, Polo Shu-Sheng Hsu was sentenced to serve 180 days in prison and to pay a $25,000 criminal fine for his participation in the aftermarket auto lights price-fixing conspiracy. On June 7, 2011, Chien Chung Chen, aka Andrew Chen, pleaded guilty to his participation in the conspiracy and is scheduled to be sentenced on Dec. 13, 2011. Both Polo Shu-Sheng Hsu and Chen were executives at U.S. companies that distributed aftermarket auto lights.
Hsu is charged with violating the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million criminal fine for individuals. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims, if either of those amounts is greater than the statutory maximum fine.
This case is part of an ongoing joint investigation of the Department of Justice Antitrust Division’s San Francisco Office and the FBI in San Francisco. Anyone with information concerning illegal or anticompetitive conduct in the aftermarket auto lights industry is urged to call the Antitrust Division’s San Francisco Field Office at 415-436-6660 or visit www.justice.gov/atr/contact/newcase.htm.
Monday 18 July 2011
Two Arkansas Men Plead Guilty to Federal Hate Crime for Cross BurningRead the Press Release
WASHINGTON – Tony Branscum, 25, and James Bradley “Brad” Branscum, 23, both of Salado, Ark., pleaded guilty today to criminal violations of housing rights related to their role in the Aug. 28, 2010, cross burning in front of an African American man’s apartment in Salado, the Department of Justice announced.
The two men, who are first cousins, along with co-defendant, Curtis Coffee, 19, also of Salado, were indicted in November 2010, by a federal grand jury on civil rights charges and other related federal charges stemming from their participation in the cross burning.
Both Branscums admitted in court that on the night of Aug. 28, 2010, they, along with Coffee, devised a plan to burn a cross in the yard of an African-American in the Salado community. Thereafter, Tony Branscum constructed a wooden cross in a workshop behind his house. The men then covered the cross in gasoline-soaked clothing and Brad Branscum drove them and the cross to the victim’s residence. Upon arriving at the residence, one of the men propped up the cross on a satellite dish and ignited it.
“Interfering with a person’s housing rights because of his race will not be tolerated in our country,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Justice Department will vigorously prosecute individuals that violate the rights of others because of race.”
Both Tony and Brad Branscum face up to 10 years in prison and fines of up to $250,000.
This case was investigated by the Little Rock, Ark., Division of the FBI and is being prosecuted by Assistant U.S. Attorney John Ray White of the Eastern District of Arkansas and Trial Attorneys Cindy Chung and Henry Leventis of the Civil Rights Division.
Tax Defendant Pleads Guilty in Florida to Filing False Liens for $48.489 Billion Against Federal Law EnforcementRead the Press Release
WASHINGTON - Mark D. Leitner entered a plea of guilty in the Northern District of Florida to filing false liens against federal law enforcement and corruptly endeavoring to impede and impair the Internal Revenue Service (IRS), the Justice Department announced today. Senior District Court Judge Lacey A. Collier presided over the hearing at the U.S. District Court in Pensacola, where Leitner admitted to filing the false liens against the former U.S. Attorney for the Northern District of Florida, the former clerk of court, and numerous Assistant U.S. Attorneys, Department of Justice trial attorneys and an IRS criminal investigation special agent involved in a 2010 tax fraud prosecution against Leitner.
According to the documents filed in the court proceeding, Leitner was previously a defendant in a criminal trial, U.S. v. Hirmer, et. al., in the Northern District of Florida in March 2010. A jury in the Northern District of Florida found him guilty of conspiracy to defraud the IRS after a month-long jury trial. During that jury trial and after the jury returned the guilty verdict, Leitner publicly filed false maritime liens against the property of the prosecutors, investigators and court personnel involved in the criminal trial. The liens falsely claimed that Leitner was owed $48.489 billion from each individual. On five of the seven false liens, Leitner publicly disclosed individuals’ correct Social Security numbers and other personal identifying information. Leitner also filed and mailed numerous harassing and frivolous documents to the courts and personnel involved in this case.
Leitner, who is presently serving a five year sentence for his 2010 tax fraud conviction, now faces up to an additional thirteen years of incarceration and fines of more than $500,000. Judge Collier scheduled sentencing for Sept. 27, 2011.
The case was investigated by Treasury Inspector General for Tax Administration, Department of Treasury.
Additional information about the Justice Department’s Tax Division and its enforcement efforts may be found at www.justice.gov/tax.
Owner of Miami Company Sentenced to 63 Months <br /> in Prison for Scheme to Defraud the U.S. Export-Import BankRead the Press Release
WASHINGTON – The owner of an investment planning company in Miami was sentenced today to 63 months in prison for his role in a scheme to defraud the Export-Import Bank of the United States (Ex-Im Bank) of $5.2 million, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and Osvaldo L. Gratacos, Inspector General of the Ex-Im Bank.
Carlos L. Morano, 51, was sentenced by Judge Cecilia M. Altonaga in U.S. District Court in Miami. In addition to his prison term, Morano was sentenced to three years of supervised release and was ordered to pay $5.2 million in restitution and $6.8 million in forfeiture. Morano pleaded guilty on May 6, 2011, to one count of conspiracy to commit wire fraud and one count of wire fraud in connection with a scheme to defraud the Ex-Im Bank of approximately $5.2 million. Morano, a naturalized U.S. Citizen, most recently resided in Buenos Aires, Argentina, until his arrest on Nov. 8, 2010, in Atlanta, where he arrived after an international flight from Argentina. The warrant for his arrest was obtained by Ex-Im Office of Inspector General (OIG) Special Agents.
According to court documents, Morano was the owner of CLM Financing and Investments, an investment planning company located in Miami that purported to be in the business of brokering loans and providing financial advice to Florida exporters. During his plea hearing, Morano admitted that he assisted 17 exporters obtain fraudulent loans that were insured by the Ex-Im Bank. According to court records, Morano and others misappropriated the loan proceeds for their own use and benefit. From 2007 through 2010, Morano, through his company CLM, charged exporters up to $35,000 to prepare fraudulent loan applications and financial statements. Morano admitted that he instructed the exporters on how to prepare false purchase orders, invoices, account receivable forms, and bills of lading to falsely represent to various lending banks and the Ex-Im Bank the purchase and export of U.S. goods to buyers in South and Central America. Morano often charged the exporters a monthly service fee to continue providing false shipping documents and financial documents that would pass Ex-Im Bank review.
According to court records, all of the loans involving Morano were fraudulent. As a result of the fraud, the loans went into default, causing the Ex-Im Bank to pay claims losses to the lending banks in the amount of $5,219,756.
The Ex-Im Bank is an independent federal agency that helps create and maintain U.S. jobs by filling gaps in private export financing. The Ex-Im Bank provides a variety of financing mechanisms to help foreign buyers purchase U.S. goods and services.
The case is being prosecuted by Trial Attorneys Patrick Donley and William Bowne of the Criminal Division’s Fraud Section. The case was investigated by the Ex-Im Bank OIG.
Michigan Businessman Sentenced to 15 Months in Prison for Defrauding the Federal E-Rate ProgramRead the Press Release
WASHINGTON — The president and part owner of a Michigan-based Internet and technology services company was sentenced today to serve 15 months in prison for defrauding the federal E-Rate program, the Department of Justice announced.
Jeremy R. Sheets was also sentenced by Judge Paul L. Maloney of U. S. District Court in Kalamazoo, Mich., to pay a $12,000 criminal fine and to pay $115,534 in restitution for engaging in wire fraud in connection with the E-Rate applications of two school districts his company serviced in western Michigan. Sheets was charged with wire fraud on Dec. 9, 2010, and pleaded guilty on Jan. 24, 2011.
As a result of the Antitrust Division’s investigation into fraud and anticompetitive conduct in the E-Rate program, a total of seven companies and 24 individuals have pleaded guilty, been convicted at trial or entered civil settlements. Those companies and individuals have been sentenced to pay criminal fines and restitution totaling more than $40 million. Eighteen individuals, including Sheets, have been sentenced to serve prison time.
According to the charge, Sheets violated E-Rate program rules by compensating two school districts for their share of E-Rate expenses. In addition, Sheets utilized E-Rate funds to purchase undisclosed items, some of which were not eligible for E-Rate funding. Sheets concealed his violation of E-Rate program rules from the E-Rate program by fraudulently misrepresenting that the schools had been billed for their E-Rate expenses when, in fact, Sheets had reimbursed the schools for their share of expenses. The department said Sheets engaged in the wire fraud beginning in or about December 2001 and continuing until about December 2007.
The E-Rate program was created by Congress in the Telecommunications Act of 1996 and is administered by the Universal Service Administrative Company, under the auspices of the Federal Communications Commission (FCC). The program provides subsidies to economically disadvantaged schools and libraries. Depending on the financial needs of the applicant schools, the program pays 20 to 90 percent of the cost for Internet access and telecommunications services, as well as internal computer and communications networks.
Today’s sentencing resulted from an investigation by the Department of Justice Antitrust Division’s Chicago Field Office, with the assistance of the U.S. Attorney’s Office in Grand Rapids, the FBI’s Grand Rapids Office of its Detroit Division and the FCC’s Office of Inspector General. Anyone with information concerning violations of the E-Rate program or other anti-competitive conduct is urged to call the Antitrust Division’s Chicago Field Office at 312-353-7530 or visit www.justice.gov/atr/contact/newcase.htm.
D.C. Federal Court Bars Company from Promoting Alleged Tax Scheme Involving Improper Easements on Historic BuildingsRead the Press Release
WASHINGTON – A District of Columbia federal court has entered a permanent injunction order against Steven McClain and the Trust for Architectural Easements Inc. (formerly known as the National Architectural Trust), the Justice Department announced today. The civil court order bars the defendants from promoting a scheme that, according to the government complaint, encouraged taxpayers in Boston, New York City, Baltimore and Washington D.C. to claim unwarranted charitable tax deductions for donations of façade conservation easements on historic buildings. The defendants consented to the injunction without admitting the allegations against them. The injunction order does not preclude the Internal Revenue Service (IRS) from assessing monetary penalties against the defendants for past actions, and also does not preclude the defendants from challenging any such penalties.
According to the government complaint, the defendants falsely told prospective customers that, in exchange for donating easements on their historic properties preventing façade alteration, the customers could claim charitable deductions equal to 10 to 15 percent of the property value, and that this range reflected official IRS policy. In fact, the complaint alleges, the IRS never had any such policy, and the actual value of façade easements, if any, must be determined on a case-by-case basis. The complaint also alleges that the defendants manipulated the easement appraisal process by steering donors to appraisers who the defendants knew would employ the 10-to-15-percent valuation method, leading to improper appraisals that yielded large tax deductions regardless of the easements’ actual effect on property value.
Through 2008, the complaint alleges, the total value of façade easement tax deductions attributable to the defendants’ scheme exceeded $1.2 billion. The complaint states that the IRS has repeatedly disallowed charitable deductions claimed by the defendants’ customers and estimates that the tax revenue lost through 2006 as a result of the scheme is $250 million.
The injunction order bars the defendants from promoting the existence of a 10-to-15-percent valuation range and from accepting donations of easements that the defendants know or have reason to know lack a conservation purpose as defined by federal tax law. The order also blocks the defendants from participating in the appraisal process for an easement in any regard, other than by referring donors to lists of potential appraisers prepared by neutral third parties. The defendants are enjoined from representing to donors that they can expect an easement to diminish the value of their property in all circumstances or to result automatically in a charitable deduction. The order also requires the defendants to submit to independent monitoring of their practices for the next two years to ensure compliance with the injunction.
In the past decade, the Justice Department’s Tax Division has obtained injunctions against hundreds of unscrupulous tax-return preparers and tax-fraud promoters. Information about these cases is available on the Justice Department website.
Friday 15 July 2011
Virginia Real Estate Businessman Pleads Guilty to Mortgage and Investment Fraud SchemesRead the Press Release
WASHINGTON – Alexander Otis Matthews, a Virginia real estate businessman pleaded guilty today to fraud charges in connection with mortgage and investment schemes to obtain more than $12 million in fraudulent loans.
The guilty plea was announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney Neil H. MacBride of the Eastern District of Virginia, U.S. Attorney Rod J. Rosenstein of the District of Maryland, Assistant Director James W. McJunkin and Special Agent in Charge Richard McFeely of the FBI.
Matthews, 46, of Dunn Loring, Va., pleaded guilty today before Judge Liam O’Grady in U.S. District Court in the Eastern District of Virginia to one count of bank fraud and one count of wire fraud. Matthews was charged with bank fraud on Nov. 17, 2010, in an indictment filed in the District of Maryland and charged with wire fraud on Feb. 17, 2011, in an indictment filed in the Eastern District of Virginia. Matthews’ sentencing is scheduled for Sept. 30, 2011.
In his guilty plea, Matthews admitted that between November 2005 and May 2011, he orchestrated at least three mortgage fraud schemes in which he used “straw borrowers” with good credit scores to apply for and obtain nearly $11.5 million in fraudulent loans relating to three Northern Virginia residential properties. Matthews did so by causing lenders to receive false and inflated income information about the straw borrowers, and Matthews submitted forged and fraudulent documentation to lenders purporting to verify that false information. After attempting to refinance the loans and forestall foreclosure, Matthews ultimately defaulted on the loans for each of the three properties.
Matthews also admitted in his plea that between June 2008 and October 2010, he engaged in a fourth, related scheme to obtain more than $800,000 in fraudulent loans from at least eight residents of Maryland and Virginia. Matthews obtained the loans by promising those individuals high rates of return over short periods of time in exchange for money that Matthews claimed he would invest in various property ventures. Matthews later defaulted on each of those loans, generally paying back no more than 10 percent of the borrowed amounts.
According to court documents, Matthews perpetrated his schemes through various purported real estate entities, including American Investments Real Estate Corporation (AIREC), AIREC Realty, Kibra Construction, Ezana Corporation and Farmville Group LLC.
At sentencing, Matthews faces a maximum penalty of 30 years in prison on the bank fraud count and 20 years in prison on the wire fraud count. For each count, Matthews also faces a fine of the greater of $250,000 or twice the value gained or lost from the scheme. In his plea, Matthews agreed to forfeiture of $7.9 million and restitution of approximately $5.3 million.
The case is being prosecuted by Trial Attorneys Ryan S. Faulconer and Peter A. Frandsen of the Criminal Division’s Fraud Section, as well as Assistant U.S. Attorneys Raymond E. Patricco Jr. and Jack Hanly for the Eastern District of Virginia and Assistant U.S. Attorney Michael J. Leotta for the District of Maryland. The case is being investigated by the FBI’s Washington and Baltimore Field Offices, with substantial assistance from the Montgomery County, Md., State’s Attorney’s Office and the Alexandria, Va., Office of the U.S. Trustee.
Richard A. Wieland to Serve as U.S. Trustee for Colorado, Utah and Wyoming for Interim PeriodRead the Press Release
WASHINGTON - Richard A. Wieland, the U.S. Trustee for Kansas, Oklahoma and New Mexico (Region 20), has been designated by Attorney General Eric Holder to also serve as the U.S. Trustee for Colorado, Utah and Wyoming (Region 19) for an interim period beginning on July 15, 2011, the Executive Office for U.S. Trustees announced today. He replaces Charles F. McVay, who is resigning after serving as U.S. Trustee since March 2004.
Mr. Wieland was appointed U.S. Trustee for Region 20 in January 2008, after serving as a Trial Attorney in the U.S. Trustee Program's Wichita, Kan., office since 1988. From November 2003 to November 2007, Mr. Wieland was designated as a Special Assistant U.S. Attorney in the District of Kansas to assist in the prosecution of criminal bankruptcy fraud cases, and in 2002 he received the Director's Award for the Prevention of Fraud and Abuse. Mr. Wieland received his law degree from the University of Tulsa. He received his undergraduate degree and a Masters in Business Administration from Western Illinois University in Macomb, Ill.
The U.S. Trustee Program (USTP) is the component of the Justice Department that protects the integrity of the bankruptcy system by overseeing case administration and litigating to enforce the bankruptcy laws. The USTP has 21 regions and 95 field offices. Region 19 is headquartered in Denver with additional offices in Salt Lake City and Cheyenne, Wyo.
Contact:Jane Limprecht, Public Information Officer
Executive Office for U.S. Trustees
(202) 305-7411Organized Romanian Criminal Groups Targeted by DOJ and Romanian Law EnforcementRead the Press Release
WASHINGTON – An ongoing Internet fraud scheme conducted by several networks of organized cyber criminals in Romania and the United States has been disrupted as a result of a series of law enforcement actions coordinated since 2010 between Romanian and U.S. law enforcement, including numerous arrests and searches that took place yesterday in Romania.
More than 100 individuals have been arrested and charged in Romania and judicial districts in the United States as a result of close cooperation between the Romanian General Inspectorate of Police, Directorate for Combating Organized Crime, the Romanian Directorate for Investigating Infractions of Organized Crime and Terrorism (DIICOT), the Romanian Intelligence Service (SRI), the General Directorate of Jandarmeria in Romania (GIJR) and the FBI, the U.S. Secret Service, the Computer Crime and Intellectual Property Section (CCIPS) in the Justice Department’s Criminal Division, and the U.S. Attorneys’ Offices for the Southern District of Florida, the Western District of Pennsylvania and the Eastern District of Missouri.
Yesterday, Romania law enforcement executed 117 searches targeting more than 100 individuals allegedly involved in the fraudulent scheme involving fake sales of merchandise through the Internet. Romanian law enforcement targeted individuals organizing and perpetrating this fraud from Romania.
According to U.S. court documents, in many of the cases, conspirators located in Romania would post items for sale such as cars, motorcycles and boats on Internet auction and online websites. They would instruct victims located in the United States and elsewhere who wanted to buy those items to wire transfer the purchase money to a fictitious name they claimed to be an employee of an escrow company. Once the victim wired the funds, the co-conspirators in Romania would text information about the wire transfer to co-conspirators in the United States known as “arrows” to enable them to retrieve the wired funds. They would also provide the arrows with instructions as to where to send the funds after retrieval. The arrows in the United States would go to money transmitter service counters such as Western Union or MoneyGram International, provide false documents including passports and drivers’ licenses in the name of the recipient of the wire transfer, and obtain the funds. They would subsequently wire the funds overseas, typically to individuals in Romania, minus a percentage kept for their commissions. In some cases, co-conspirators in Romania also directed arrows to provide bank accounts in the United States where larger amounts of funds could be wired by victims of the fraud. The victims would not receive the items they believed they were purchasing.
The Romania investigation is being conducted in conjunction with ongoing criminal investigations in the United States that also have been targeting this criminal activity. Since May 2010, the FBI and the U.S. Attorney’s Office for the Southern District of Florida have arrested and prosecuted numerous individuals from Romania, Moldova and the United States allegedly involved in this fraud scheme. Vadim Gherghelejiu, 29, of Moldova; Anatolie Bisericanu, 25, of Moldova; Jairo Osorno, 22, of Surfside, Fla.; Jason Eibinder, 22, of Sunny Isles Beach, Fla.; and Ciprian Jdera, 25, of Romania, have been convicted in the Southern District of Florida of conspiracy to commit wire fraud.
A 21-count indictment returned in Miami on Feb. 22, 2011 charged Pedro Pulido, 41, of Pembroke Pines, Fla.; Ivan Boris Barkovic, 19, of Sunny Isles Beach; Beand Dorsainville, 20, of North Miami Beach, Fla.; Sergiu Petrov, aka “Serogia,” 27, of Moldova; Oleg Virlan, 32, of Moldova; Marian Cristea, 22, of Romania; and Andrian Olarita, 26, of Moldova, with conspiracy to commit wire fraud and substantive counts of wire fraud. Pulido, Barkovic, Dorsainville and Olarita have pleaded guilty to conspiracy to commit wire fraud. Petrov, Virlan and Cristea remain at large and are considered fugitives.
On July 8, 2011, Adrian Culda, 37, of Romania, was arrested and subsequently charged in a complaint filed in Miami with conspiracy to commit wire fraud as part of this alleged cyber crime activity. Tiberiu Zachiteanu, 19, of Romania, was also charged in the same complaint with conspiracy to commit wire fraud and was arrested on July 12, 2011.
An investigation conducted by the U.S. Attorney’s Office for the Western District of Pennsylvania led to the arrests of seven defendants, including one individual in Pittsburgh, three individuals in the Eastern District of Missouri, two individuals in Fort Bend County, Texas, and one individual in Kentucky.
Marion Potcovaru, 30, of Romania, pleaded guilty on Feb. 2, 2011, to wire fraud related charges in the Western District of Pennsylvania. In St. Louis, the U.S. Attorney’s Office charged Augustin Prundurelu, 32, and Georgiana Andrei, 25, both of Romania, with forgery and passport fraud. Both defendants pleaded guilty and each were sentenced to six months in prison and ordered to pay restitution of $18,365. In addition, Sorin Mihai Madaian, 22, of Romania, pleaded guilty on May 23, 2011, in the Eastern District of Missouri to passport fraud charges. Victor Angelescu, 28, of Romania, was charged by the Commonwealth Attorney’s Office for the 27th Judicial Circuit of Kentucky with related wire fraud charges.
In Fort Bend County, Texas, Klara Mirabela Rusu, 24, and Eduard Sorin Neacsu, 36, were arrested on June 3, 2011, by officers from the Houston Police Department and charged by Fort Bend and Harris County authorities with money laundering and making false statements to obtain property. Rusu was indicted by a Fort Bend County grand jury on July 11, 2011, and charged with the felony offenses of money laundering and making a false statement. Neacsu’s grand jury date is pending due to possible additional charges. Both individuals are currently detained.
According to court documents, detectives observed Rusu and Neacsu enter a WalMart store, where Rusu and Neacsu presented a MoneyGram voucher and false identifications to a store clerk. Rusu and Neascu received $2,890 through Western Union and Money Gram from a victim in another state who had wired the money in response to an Internet advertisement for merchandise, which the victim never received. Rusu and Neacsu were later arrested and a search of their room produced a large amount of U.S. currency, computers, printers, plastic for manufacturing false identifications, an exacto knife, multiple mobile phones and false identifications with Neacsu’s picture.
An indictment is merely an allegation, and defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
The Internet fraud scheme has resulted in an estimated loss of more than $10 million from victims, including those in the United States. The full loss amount and identification of additional victims is ongoing.
Over the last 10 years, U.S. law enforcement authorities have strengthened ties with Romanian law enforcement authorities to address the rising threats posed by Romanian-based organized cyber criminal networks. To date, hundreds of defendants have been arrested and charged in the United States, Romania, and other countries as a result of this cooperation.
The Department of Justice International Organized Crime Intelligence and Operations Center (IOC-2) has provided support and assistance to these ongoing investigations. IOC-2 partners with various law enforcement agencies to combine data and produce actionable leads for investigators and prosecutors working nationwide to combat international organized crime. IOC-2 also coordinates the resulting multi-jurisdictional investigations and prosecutions with its member agencies, U.S. Attorneys’ Offices and foreign law enforcement authorities.
The ongoing investigations are being led by the FBI and the U.S. Secret Service. U.S. Immigrations and Custom Enforcement is participating in the investigation related to the Pittsburgh cases. The federal cases are being prosecuted by Assistant U.S. Attorneys from the U.S. Attorneys’ Offices for the Southern District of Florida, the Western District of Pennsylvania and the Eastern District of Missouri, with support from CCIPS.
Local law enforcement assisting in these prosecutions include the Medina County, Ohio, Sheriff’s Office; the London, Ky., Police Department; Memphis, Tenn., Airport Police; the Kirkwood, Mo., Police Department; the Fort Bend and Harris County, Texas, District Attorneys’ Offices; the Houston Police Department; the Hallandale Beach, Fla., Police Department; the Pembroke Pines Police Department; the Miami Gardens Police Department; the Sunny Isles Beach Police Department; the North Miami Beach Police Department and the Davie, Fla., Police Department.
Also assisting law enforcement were the FBI’s Internet Crime Complaint Center (IC3), Wal-Mart Stores, Western Union, MoneyGram International, the National Cyber-Forensics and Training Alliance (NCFTA) and Publix Grocery Stores.
Victims of Internet crime are encouraged to report evidence of fraudulent activity to the IC3 via www.ic3.gov .
Internet Communications Firm Owners Plead Guilty to Employment Tax Fraud and Failure to Pay TaxRead the Press Release
WASHINGTON – Frank G. Bivings and Isabelle Blanco of Washington, D.C., husband and wife and co-owners of The Bivings Group Inc., pleaded guilty today to charges stemming from the failure to pay more than $2 million in employment taxes to the Internal Revenue Service (IRS). The guilty plea took place in U.S. District Court for the District of Columbia.
Bivings pleaded guilty to one count of failure to pay over employment taxes. Blanco pleaded guilty to one count of failure to pay a tax. Sentencing for both defendants is scheduled for Oct. 20, 2011.
The Bivings Group was a full-service Internet communications business. In pleading guilty, Bivings and Blanco both admitted that between Jan. 1, 2002, and June 30, 2008, The Bivings Group failed to pay over to the IRS a total of $2,420,927 in employment taxes, which includes withholding and Federal Insurance Contributions Act (FICA) taxes. Of this amount, $1,813,488 represented the money that was withheld from employees for taxes but that was not paid over to the IRS. The department said that, instead of paying these payroll taxes to the IRS, the defendants used the funds to pay themselves substantial salaries and withdrew additional corporate funds for other expenses.
Bivings faces a maximum of five years in prison, and Blanco faces a maximum of one year in prison. The parties agreed, however, that the calculation under the advisory U.S. Sentencing Guidelines for each defendant is 30 to 37 months in prison. Both defendants also agreed to pay $2,420,927 in restitution.
In announcing today’s guilty plea, Principal Deputy Assistant Attorney General John A. DiCicco, U.S. Attorney Ronald C. Machen Jr., of the District of Columbia and Acting Special Agent in Charge Jeannine A. Hammett commended the investigatory work of IRS-Criminal Investigation Special Agent Michael Helgesen. They also praised the work of Assistant U.S. Attorney Susan B. Menzer and Tax Division Trial Attorney Tino Lisella, who investigated and prosecuted the case.
Former President of Lee Dynamics International Pleads Guilty to Conspiracy and <br /> Bribery Related to Department of Defense Contracts in IraqRead the Press Release
WASHINGTON – The former president of Lee Dynamics International, a defense contractor providing services to the U.S. military in Iraq, pleaded guilty today to an indictment charging him with a scheme to bribe military officials in order to obtain government contracts, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division.
Justin W. Lee, 33, a resident of Philadelphia, pleaded guilty before U.S. District Judge Joel H. Slomsky in the Eastern District of Pennsylvania to one count of conspiracy to commit bribery and four counts of bribery. Lee and his father, George H. Lee Jr., were charged in an indictment unsealed on May 27, 2011, in the Eastern District of Pennsylvania.
Justin Lee admitted that he conspired with his father and others to bribe military contracting officers in order to obtain government contracts to support U.S. combat operations in Iraq. According to court documents, Justin Lee provided things of value, including cash, airline tickets, meals, hotel stays, spa visits and jobs, which were valued at a total of more than $1.2 million, to public officials in return for official acts which helped him obtain lucrative Department of Defense contracts. The contracts included multi-million dollar contracts for the storage of weapons at various warehouses in Iraq as well as bottled water.
“For Justin Lee and others, bribery was a way of doing business,” said Assistant Attorney General Breuer. “He offered military officials vacations to Thailand and Europe, Rolex watches, cash, and even employment with their company, all in order to secure lucrative defense contracts. Private contractors will not be allowed to win business by stacking the deck against the competition and, as this investigation shows, the military officials who participate in such fraudulent schemes will also be held to account.”
“Justin Lee’s guilty plea is a prime example of the teamwork amongst Special Agents of the Major Procurement Fraud Unit (MPFU), US Army Criminal Investigation Command (CID), our law enforcement partner agencies, and with the DOJ attorneys that comprised the former Kuwait Fraud Task Force,” said James K. Podolak, director of Army CID’s MPFU. “Charged with protecting the Army’s interests with respect to contract fraud and corruption, in a global environment, the MPFU stands ready with Special Agents strategically assigned throughout the U.S. and abroad to bring these criminals to justice.”
“This plea illustrates that it does not matter where they reside, work, or travel, the Defense Criminal Investigative Service will not stop pursuing those individuals who steal funds from the Department of Defense and U.S. Taxpayers” said Robert Craig, Special Agent in Charge for the Defense Criminal Investigative Service, Mid-Atlantic Field Office.
“I am pleased that Justin Lee pleaded guilty to the bribery charges filed against him for the abusive and illegal contracting schemes he engineered as a private contractor in Iraq,” said Stuart W. Bowen Jr., Special Inspector General for Iraq Reconstruction. “I commend my SIGIR agents and our partners for persevering in this complex case, which is part of perhaps the largest fraud conspiracy yet uncovered in the reconstruction program.”
Four of the military contracting officials with whom Justin Lee conspired have pleaded guilty: John Cockerham Jr., Markus McClain, Kevin A. Davis and Levonda Selph.
Justin Lee faces up to 15 years in prison for each count of bribery, as well as a fine of $250,000 or three times the value of the bribe for each count. He also faces up to five years in prison for the conspiracy count as well as a fine of $250,000.
George Lee, the former chairman and chief executive officer of Lee Dynamics International, remains at large. An indictment is merely a charge and a defendant is presumed innocent until proven guilty.
The case is being prosecuted by Trial Attorney Richard B. Evans of the Criminal Division’s Public Integrity Section and Trial Attorneys Mark W. Pletcher and Emily W. Allen of the Criminal Division’s Fraud Section. Substantial assistance has been provided by the Criminal Division’s Office of International Affairs and the U.S. Attorney’s Office for the Eastern District of Pennsylvania. The case is being investigated by the Army Criminal Investigations Division, the Defense Criminal Investigative Service, the Special Inspector General for Iraq Reconstruction, the FBI, the U.S. Immigration and Customs Enforcement of the Department of Homeland Security and the Internal Revenue Service.
Former Alabama Mayor Sentenced to Two Years in Prison for Filing False Tax ReturnsRead the Press Release
WASHINGTON -- John Jackson, the former mayor of White Hall, Ala., was sentenced to two years in prison today, the Department of Justice and the Internal Revenue Service (IRS) announced. According to court documents, Jackson filed false joint 2004, 2005 and 2006 U.S. Individual Income Tax Returns (IRS Forms 1040) that did not report all of the total income earned by Jackson and his spouse. Jackson did not report as income money he took from the city of White Hall and money he diverted from non-profit companies who handled the gaming license for White Hall.
Jackson was also sentenced to one year of supervised release, and ordered to pay a $25,000 fine and restitution in the amount of $11,065.
John A. DiCicco, Principal Deputy Assistant Attorney General for the Justice Department’s Tax Division and George Beck, U.S. Attorney for the Middle District of Alabama, commended the IRS special agents who investigated this case and Trial Attorney Michael Boteler of the Justice Department’s Tax Division, Southern Criminal Enforcement Section and Assistant U.S. Attorney Todd Brown who prosecuted the case.
Additional information about the Justice Department’s Tax Division and its enforcement efforts may be found at www.justice.gov/tax .
Thursday 14 July 2011
Pittsburgh Crips Gang Member Sentenced to 128 Months in PrisonRead the Press Release
WASHINGTON – A Pittsburgh man was sentenced today to 128 months in prison for conspiring to conduct a racketeering enterprise related to his membership in a Pittsburgh Crips gang, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney David J. Hickton of the Western District of Pennsylvania.
Vallon Wallace, 24, aka “VL,” pleaded guilty on Feb. 24, 2011, before Senior U.S. District Judge Gustave Diamond to one count of conspiracy to engage in a racketeering enterprise. On July 12, 2011, Aaron Ford, 22, aka “.40 Cal.,” pleaded guilty to one count of conspiracy to engage in a racketeering enterprise related to his membership in the Pittsburgh Crips gang. Sentencing for Ford is scheduled for Nov. 10, 2011.
According to court documents, Wallace, Ford and others participated in a pattern of racketeering activity that included multiple acts involving robberies at gun point; attempted murders; distribution of controlled substances, including cocaine, heroin and crack cocaine; and obstruction of justice and witness intimidation.
According to court documents, Wallace and Ford were members of the Brighton Place Crips, a criminal street gang that controlled an area of Brighton Place and Morrison Street, also known as the Mad Cave, and Federal Street in the Northside area of Pittsburgh. The Brighton Place Crips were formed in the early 1990s; in 2003, it formed an alliance with the Northview Heights/ Fineview Crips. This alliance expanded the gang’s drug trafficking territory, and increased the number of gang members and associates available to preserve and protect the gang’s power, territory and profits through violence.
The Brighton Place/Northview Heights Crips gang maintains exclusive control over drug trafficking in these neighborhoods through continuous violence and intimidation of rivals and witnesses. Members of the gang support each other through payment of attorneys’ fees and bonds, as well as payments to jail commissary accounts and support payments to incarcerated members’ families.
In addition, gang members had violent confrontations with members of the rival Manchester OGs and other street gangs operating in the Northside area of Pittsburgh. Members and associates obtained greater authority and prestige within the enterprise based on their reputation for violence and their ability to obtain and sell a steady supply of illegal drugs. According to court documents, the Brighton Place/Northview Heights Crips gang members identify themselves by wearing blue, flashing Crips gang hand signals, and using phrases such as “Cuz,” “C-Safe,” “Loc” and “G.K.”
According to court documents, Wallace was considered a respected member and leader of the enterprise due to his reputation for violence, as well as his demonstrated ability to instruct other members as to how to conduct the affairs of the enterprise, including the possession and distribution of firearms, acts of violence, the possession and distribution of controlled substances, and acts of witness intimidation. Wallace also served as a “hustler” for the gang. Hustlers were gang members who distributed controlled substances on behalf of the gang, in the territory controlled by the Northview Heights/ Brighton Place Crips.
According to court documents, Ford was considered a “gorilla” or “soldier” for the gang, providing protection for the enterprise through the possession and use of firearms, and the commission of violent acts.
Wallace and Ford are two of 26 defendants charged in February 2010 with being members of, and conducting racketeering activity through, the Brighton Place/Northview Heights Crips gang. This prosecution resulted from a Project Safe Neighborhoods Task Force investigation that began in 2005. To date, 18 members of the Brighton Place/ Northview Heights Crips who were charged in this indictment have pleaded guilty to racketeering charges.
These cases are being prosecuted by Assistant U.S. Attorneys Charles A. Eberle and Troy Rive tti of the Western District of Pennsylvania and Trial Attorney Kevin Rosenberg of the Criminal Division’s Organized Crime and Gang Section. The case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives; the City of Pittsburgh Bureau of Police; the Allegheny County, Penn., Police Department; and the Allegheny County Sheriff’s Office.
Pennsylvania Man Indicted for Soliciting Jihadists to Kill AmericansRead the Press Release
WASHINGTON – Emerson Winfield Begolly, 22, of New Bethlehem, Pa., was indicted by a federal grand jury in Alexandria, Va., today for allegedly soliciting Islamic extremists to engage in acts of terrorism within the United States and posting bomb-making instruction materials online.
The indictment was announced by Lisa Monaco, Assistant Attorney General for National Security; Neil H. MacBride, U.S. Attorney for the Eastern District of Virginia; James W. McJunkin, Assistant Director in Charge of the FBI Washington Field Office; and David J. Hickton, U.S. Attorney for the Western District of Pennsylvania.
“Today’s case underscores the continuing threat posed by homegrown extremists seeking to use the Internet to incite violence,” said Assistant Attorney General Monaco.
“Emerson Begolly is accused of repeatedly using the Internet to promote violent jihad against Americans,” said U.S. Attorney MacBride. “These allegations demonstrate how young people in the United States can become influenced by – and eventually participate in – jihadist propaganda that is a serious threat to the safety of us all.”
“Today, the FBI is faced with a complex threat environment that combines homegrown extremism and the Internet,” said Assistant Director in Charge McJunkin. “The FBI’s top priority is stopping terrorism, and we remain vigilant against those who solicit violent acts in the United States.”
“Those who attempt to harm or kill Americans will face a determined, coordinated law enforcement effort,” said U.S. Attorney Hickton.
According to the two-count indictment, Begolly has been an active moderator of a popular, internationally known Islamic extremist web forum, the Ansar al-Mujahideen English Forum (AMEF), used by its members to promote and distribute jihadist propaganda. The indictment alleges that since July 2010, Begolly has placed a number of postings encouraging attacks within the United States, including the use of firearms, explosives and propane tanks against targets such as police stations, post offices, synagogues military facilities, train lines, bridges, cell phone towers and water plants.
Following the reported shootings in Northern Virginia at the Pentagon and the Marine Corps Museum in October 2010, Begolly allegedly posted a comment online that praised the shootings and hoped the shooter had followed his previous postings encouraging similar acts of violence that might “seem small but cause big damage.”
On Dec. 28, 2010, Begolly allegedly posted links to a 101-page document that contains information on how to set up a laboratory, conduct basic chemistry and manufacture explosives.
The indictment charges Begolly with solicitation to commit a crime of violence, which carries a maximum penalty of 10 years in prison, and distribution of information relating to explosives, destructive devices and weapons of mass destruction, which carries a maximum penalty of 20 years in prison.
On Feb. 2, 2011, Begolly was indicted for allegedly assaulting federal agents and firearms-related charges in the Western District of Pennsylvania. He faces a maximum sentence of life in prison if convicted of the charges filed in that district.
Criminal indictments are only charges and not evidence of guilt. A defendant is presumed to be innocent until and unless proven guilty.
This case is being investigated by the FBI Washington Field Office. Assistant U.S. Attorney Neil Hammerstrom of the U.S. Attorney’s Office for the Eastern District of Virginia’s National Security and International Crime Unit, Assistant U.S. Attorney James Kitchen of the U.S. Attorney’s Office for the Western District of Pennsylvania, and Trial Attorney Stephen Ponticiello of the Counterterrorism Section in the Justice Department’s National Security Division are prosecuting the case.
Owner of Fraudulent Physical Therapy Company<br /> Pleads Guilty to Medicare Fraud SchemeRead the Press Release
WASHINGTON – A Miami-area resident and owner of a fraudulent physical therapy company in Lakeland, Fla., pleaded guilty today for his role in a scheme to defraud Medicare, the Departments of Justice and Health and Human Services (HHS) announced.
Jorge Zamora, 48, pleaded guilty before U.S. Magistrate Judge Mark A. Pizzo in Tampa, Fla., to one count of conspiracy to commit health care fraud.
According to court documents, Zamora was an owner of Dynamic Therapy Inc. Zamora and his co-conspirators purchased Dynamic from its previous owners, and transformed it into a fraudulent enterprise. Dynamic purported to provide physical therapy services to Medicare beneficiaries, but in reality used the stolen identities of a physical therapist and scores of patients to bill Medicare for physical therapy services that were never provided.
According to court documents, from fall 2009 to summer 2010, Zamora and his co-conspirators submitted and caused the submission of $757,654 in fraudulent claims to the Medicare program by Dynamic. Zamora admitted that he and his co-conspirators submitted claims to Medicare for physical therapy services that were never provided.
Three officers of Dynamic Therapy also have pleaded guilty to conspiracy to commit health care fraud.
At sentencing, Zamora faces a maximum penalty of 10 years in prison and a $250,000 fine. A sentencing date has not been set.
Today’s guilty plea was announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Robert E. O’Neill of the Middle District of Florida; Steven E. Ibison, Special Agent-in-Charge of the FBI’s Tampa Division; and Special Agent-in-Charge Christopher Dennis of the HHS Office of Inspector General (HHS-OIG), Office of Investigations’ Miami office.
This case was prosecuted by Acting Assistant Chief Benjamin D. Singer of the Criminal Division’s Fraud Section and Special Assistant U.S. Attorney Christina M. Burden of the U.S. Attorney’s Office for the Middle District of Florida. The case was investigated by the HHS-OIG, Defense Criminal Investigative Service and FBI, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Middle District of Florida.
Since their inception in March 2007, Medicare Fraud Strike Force operations in nine locations have charged 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 Files a Lawsuit Alleging Employment Discrimination by a Georgia Poultry Processing PlantRead the Press Release
WASHINGTON – The Justice Department today filed a lawsuit against Mar-Jac Poultry Inc., a poultry processing plant in Gainesville, Ga., alleging that Mar-Jac requires all newly hired non-U.S. citizens to present documents issued by the Department of Homeland Security in order to secure their jobs, but the company does not require U.S. citizens to show any specific documentation. The Immigration and Nationality Act’s (INA’s) anti-discrimination provision prohibits employers from placing additional burdens on work-authorized employees during the hiring and employment eligibility verification process based on their citizenship status or national origin.
The department’s investigation revealed that Mar-Jac engages in a pattern or practice of discriminatory documentary conduct against non-U.S. citizens by requiring them to produce specific documents during the Form I-9 process. The non-U.S. citizens subjected to the practice were determined to be work authorized by E-Verify, the Department of Homeland Security’s Internet-based employment eligibility verification system.
“Employers are not allowed to impose more burdensome employment eligibility verification procedures on certain workers based on their citizenship status,” said Thomas E. Perez, Assistant Attorney General in charge of the Civil Rights Division. “The Justice Department is committed to vigorously enforcing the anti-discrimination provisions of the INA, including those protecting employees from discriminatory documentary requirements.”
The lawsuit charging Mar-Jac with discriminatory practices was filed before the Office of the Chief Administrative Hearing Officer within the Executive Office for Immigration Review, another component of the Department of Justice.
The Office of Special Counsel for Immigration Related Unfair Employment Practices is responsible for enforcing the anti-discrimination provision of the INA, which protects work authorized individuals against employment discrimination on the basis of citizenship status or national origin discrimination, including discrimination in hiring and the employment eligibility verification (Form I-9) process. For more information about protections against employment discrimination under federal immigration law, call OSC’s worker hotline at 1-800-255-7688 (1-800-237-2515, TDD for hearing impaired); OSC’s employer hotline at 1-800-255-8155 (1-800-237-2515, TDD for hearing impaired); e-mail [email protected] ; or visit OSC’s website at www.justice.gov/crt/about/osc
Justice Department Files Lawsuit Against Maryland Man for FACE Act Violation at a Planned ParenthoodRead the Press Release
WASHINGTON – The Justice Department today filed a civil complaint in the U.S. District Court for the District of Columbia against Richard Retta for violating the Freedom of Access to Clinic Entrances Act (FACE Act).
According to court documents, on or about Jan. 8, 2011, Retta physically obstructed a patient and volunteer escorts attempting to enter the Planned Parenthood of Metropolitan Washington facility in Washington, D.C., (PPMW). The FACE Act prohibits the physical obstruction of any person providing or obtaining reproductive health services with the intent to intimidate or interfere with that person.
In its complaint, the United States seeks an order preventing Retta from coming within 20 feet of PPMW’s gate entrance or physically obstructing PPMW patients, staff or volunteer escorts. The complaint also seeks monetary damages and penalties.
“Individuals who seek to obtain or provide reproductive health services have the right to do so without encountering hazardous physical obstructions,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “We will continue to aggressively enforce FACE against those who seek to violate the rights of their fellow Americans to safely provide or obtain such services.”
This civil action was filed by the Civil Rights Division Special Litigation Section Deputy Chief Julie Abbate and Trial Attorneys Aaron Zisser and Michelle Leung.
Federal Court Permanently Shuts Down Iowa Tax PreparersRead the Press Release
WASHINGTON – A federal court has permanently barred Howard Musin, his wife Jill Schwartz-Musin and their three companies from preparing federal tax returns for others, the Justice Department announced today. The three businesses named in the court’s civil injunction order are SSC Services Inc., M-S Services Inc. and Schwartz’s Systems Corporation. Trial evidence showed that the Musins reside in Clive, Iowa.
Following an eight-day trial, U.S. District Court Judge John A. Jarvey found that the defendants engaged in a wide variety of misconduct in preparing tax returns for their customers, many of which were distributors for Shaklee Corporation, a large multi-level marketing firm. According to court documents, the couple improperly claimed business expense deductions on customers’ returns for costs of personal items . Court documents also state that the Musins attempted to hide their improper deductions, including disguising nearly $70,000 in personal cattery expenses for a customer who bred cats as a hobby by listing them as business expenses of the customer’s computer consulting business.
According to evidence presented at trial, Schwartz-Musin worked for the Internal Revenue Service (IRS) from 1972 to 1978, and for part of that time she was a criminal investigator. The complaint alleges that Schwartz-Musin became a tax return preparer in 1982 and, in 2000, pleaded guilty to one criminal count of obstructing the administration of the tax laws. The court found that, the earlier criminal conviction notwithstanding, the defendants created and submitted a backdated, false form to the IRS during a customer audit in 2006 in a fraudulent attempt to justify an improper deduction.
The case was investigated by IRS Revenue Agents Jean Lane and Kathleen Roberts, and was handled by Tax Division attorneys Miranda Bureau, Sean Beaty and Ann Reid.
In the past decade, the Justice Department’s Tax Division has obtained injunctions against hundreds of unscrupulous tax return preparers and tax scam promoters. More information about these cases is available on the Justice Department website .
Wednesday 13 July 2011
Washington Business Owner Sentenced to 18 Months in Prison for Participating in Conspiracy to Defraud the United States and Making False Claims on Government ContractRead the Press Release
WASHINGTON – A founder and president of a Washington-area design firm was sentenced today to 18 months in prison for her role in a conspiracy to defraud the United States in the award of a government contract for U.S. Department of Homeland Security’s (DHS) Immigration and Customs Enforcement (ICE), the Department of Justice announced today.
Darlene Mathis-Gardner was also sentenced by Judge Richard J. Leon to 36 months of supervised release after her incarceration and to pay $389,738 in restitution to ICE. Mathis-Gardner was charged with the conspiracy in U.S. District Court for the District of Columbia on April 8, 2011, and she pleaded guilty on April 18, 2011.
According to the two-count felony charge, Mathis-Gardner conspired with others to defraud the United States in order to obtain the award of a contract by the General Services Administration (GSA) for interior design work to be performed on Potomac Center North, a building in the southwest of Washington that ICE was renovating as a new headquarters. Mathis-Gardner provided false information and documents to GSA officials in order to obtain the contract. According to the court documents, Mathis-Gardner and her co-conspirators misrepresented their company’s background and qualifications and created fictitious documentation of the company’s past performance in order to convince government officials that they were qualified to perform the work. Based on the misrepresentations and false documents, the government awarded Mathis-Gardner’s company a contract worth approximately $1.3 million. The department said that the conspiracy to fraudulently obtain the contract took place from in or about March 2007 until at least in or about June 2007.
The charges further state that once the contract was obtained, Mathis-Gardner knowingly presented invoices to GSA that falsely overstated the number of hours that her firm had worked. The department said that the falsely inflated invoices were submitted during the period between June 2007 and January 2009. According to the court documents, as a result of the charged offenses, ICE suffered a loss of $389,738.
Mathis-Gardner’s plea arose from an investigation into procurement fraud occurring against ICE conducted by the Antitrust Division’s National Criminal Enforcement Section (NCES) and the ICE Office of Professional Responsibility.
Anyone with information concerning collusion or fraud by businesses seeking ICE contracts is urged to call NCES at 202-307-5777, visit www.justice.gov/atr/contact/newcase.htm or contact the DHS tipline at 1-877-2INTAKE or [email protected].
Three Miami-Area Residents Plead Guilty to Participating <br /> in $200 Million Medicare Fraud SchemeRead the Press Release
WASHINGTON – Three Miami-area residents pleaded guilty today in U.S. District Court in Miami for their roles in a fraud scheme that resulted in the submission of more than $200 million in fraudulent claims to Medicare, the Department of Justice, the FBI and the Department of Health and Human Services (HHS) announced.
Joseph Valdes, 30; James Edwards, 65; and Adriana Mejia, 40, each admitted to participating in a fraud scheme that was orchestrated by the owners and operators of American Therapeutic Corporation (ATC), its management company, Medlink Professional Management Group Inc., and the American Sleep Institute (ASI). ATC, Medlink and ASI were all Florida corporations headquartered in Miami. ATC operated purported partial hospitalization programs (PHPs) in seven different locations throughout South Florida and Orlando, Fla. A PHP is a form of intensive treatment for severe mental illness. ASI purported to provide diagnostic sleep disorder testing.
Valdes and Edwards each pleaded guilty to one count of conspiracy to commit health care fraud and one count of conspiracy to defraud the United States and to pay and receive illegal health care kickbacks. Mejia pleaded guilty to one count of conspiracy to commit money laundering. All three defendants were charged in an indictment unsealed on Feb. 15, 2011, in the Southern District of Florida.
According to court filings, ATC’s owners and operators paid kickbacks to owners and operators of assisted living facilities (ALFs) and halfway houses and to patient brokers in exchange for delivering ineligible patients to ATC and ASI. In some cases, the patients received a portion of those kickbacks. Throughout the course of the ATC and ASI conspiracy, millions of dollars in kickbacks were paid in exchange for Medicare beneficiaries, who did not qualify for PHP services, to attend treatment programs that were not legitimate PHP programs so that ATC and ASI could bill Medicare for more than $200 million in medically unnecessary services. According to court filings, to obtain the cash required to support the kickbacks, the co-conspirators laundered millions of dollars of payments from Medicare.
In pleading guilty, Valdes admitted to serving as a marketer for ATC and Medlink and paying kickbacks to patient brokers and owners and operators of assisted living facilities and halfway houses in exchange for providing patients to attend ATC’s facilities. Edwards admitted to serving as a patient broker and providing patients to ATC in exchange for kickbacks in the form of checks and cash based on how many days each patient attended ATC. Mejia admitted to serving as a money launderer and creating fictitious entities and bank accounts in order to convert millions of dollars of Medicare payments into cash.
According to the plea agreements, Valdes’s and Edwards’s participation in the scheme resulted, respectively, in $9.9 million and $8.16 million in fraudulent billings to the Medicare program. Mejia’s money laundering resulted in $2.25 million in laundered funds.
Edwards and Mejia are scheduled to be sentenced on Jan. 18, 2011 and Valdes is scheduled to be sentenced on Jan. 19, 2011. Valdes and Edwards each face a maximum penalty of 15 years in prison and a $250,000 fine. Mejia faces a maximum penalty of 20 years in prison and a $4.5 million fine.
ATC, Medlink and the owners and the lead manager of ATC, Medlink and ASI were each charged with multiple health care fraud-related and money laundering counts in a superseding indictment unsealed on Feb. 15, 2011. Lawrence Duran and Marianella Valera, two of the three owners; Margarita Acevedo, the lead manager; ATC; and Medlink have each pleaded guilty for their roles in the scheme. They are scheduled to be sentenced on Sept. 14, 2011, by U.S. District Judge James Lawrence King. Trial against the third owner charged in the superseding indictment, Judith Negron, is scheduled to begin Aug. 15, 2011.
The indictment charging Valdes, Edwards and Mejia also charges 15 other individuals for their roles in the fraud scheme. Co-defendant Alan Gumer, MD, pleaded guilty on June 30, 2011. Trial against the remaining 14 co-defendants is scheduled for Nov. 7, 2011 before Judge Patricia A. Seitz.
Today’s guilty pleas 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.
The criminal case is being prosecuted by Trial Attorney Jennifer L. Saulino of the Criminal Division’s Fraud Section. A related civil action is being handled by Vanessa I. Reed and Carolyn B. Tapie of the Civil Division and Assistant U.S. Attorney Ted L. Radway of the Southern District of Florida. The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.
Since its inception in March 2007, the Medicare Fraud Strike Force operations in nine locations have charged more than 1,000 defendants that collectively have billed the Medicare program for more than $2.3 billion. In addition, HHS's Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov .
New Hampshire Man Pleads Guilty to Computer Intrusion<br /> into Former Employer’s Computer SystemsRead the Press Release
WASHINGTON - Lawrence R. Marino, a 41-year-old from Goffstown, N.H., pleaded guilty today in federal court to computer intrusion, stemming from his repeated hacks into his former employer’s computer systems, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and Acting U.S. Attorney Michael J. Gunnison for the District of New Hampshire.
Marino pleaded guilty before U.S. District Court Judge Steven J. McAuliffe in Concord, N.H., to a one-count criminal information charging him with computer intrusion.
Marino admitted at the plea hearing that from May 2009 through September 2009, he repeatedly hacked into the computer systems of his former employer, OneSky Jets. OneSky, which is based in Manchester, N.H., provides charter flight services to customers around the country. According to the criminal information, while employed at OneSky, Marino acquired other employees’ log-in credentials for their OneSky email accounts. After Marinos’ employment at OneSky was terminated, he began working for a Regent Jet, a competitor private jet company. While employed at Regent Jet, Marino repeatedly accessed the email accounts of OneSky employees and obtained information about OneSky’s existing and prospective customers. Marino also hacked into OneSky’s computer system and obtained a copy of a database with tens of thousands of customer names and other information. According to the court document, Marino used this illegally-obtained customer information to then solicit new customers on behalf of Regent Jet.
A sentencing hearing has been scheduled for Oct. 17, 2011, at 11:30 a.m. EDT. At sentencing, Marino faces a maximum penalty of five years in prison and a fine of up to $250,000, and restitution.
The case was investigated by the FBI. The case is being prosecuted by Assistant U.S. Attorney Arnold Huftalen of the U.S. Attorney’s Office for the District of New Hampshire and Mona Sedky of the Computer Crime and Intellectual Property Section of the Justice Department’s Criminal Division.
Manager of Miami Health Care Agency and Registered Nurse Plead Guilty in $25 Million Health Care Fraud SchemeRead the Press Release
WASHINGTON – The manager of a Miami health care agency and a registered nurse pleaded guilty today for their participation in a $25 million home health Medicare fraud scheme, announced the Department of Justice, the FBI and the Department of Health and Human Services (HHS).
Lisandra Alonso, 33, and Luisa Morciego, 39, each pleaded guilty before U.S. District Judge Joan A. Lenard in Miami to one count of conspiracy to commit health care fraud. Alonso and Morciego were charged in a February 2011 indictment. According to plea documents, Alonso was a manager and patient recruiter for ABC Home Health Care. Morciego was a registered nurse and worked for ABC and Florida Home Health Care Providers Inc. ABC and Florida Home Health were Miami home health care agencies that purported to provide home health and physical therapy services to Medicare beneficiaries. According to court documents, ABC and Florida Home Health were operated for the purpose of billing the Medicare program for expensive physical therapy and home health care services that were medically unnecessary and/or were never provided. Court documents allege that the medically unnecessary services were prescribed by doctors, including Jose Nunez, M.D., and Francisco Gonzalez, M.D. Nunez and Gonzalez were also charged in the February 2011 indictment along with Alonso, Morciego and 17 other co-conspirators.
According to court documents, beginning in approximately January 2006 and continuing until approximately March 2009, Alonso taught the owners and operators of ABC how to operate a fraudulent home health agency. Alonso explained the structure of the corrupt scheme, specifically the importance of recruiters, kickbacks, doctors, beneficiaries and Medicare billing. Alonso negotiated kickback payment rates between patient recruiters and the ABC owners and operators, and distributed the kickback payments to patient recruiters on behalf of the ABC owners and operators. Alonso also served as a patient recruiter for ABC. She paid kickbacks and bribes to beneficiaries in return for those beneficiaries allowing ABC to bill Medicare for services that were medically unnecessary and/or never provided.
Alonso also taught nurses at ABC how to falsify patient files for Medicare beneficiaries to make it appear that such beneficiaries qualified for home health care and therapy services from ABC. Alonso taught the nurses to do so by, among other things, describing in the nursing notes and patient files non-existent symptoms such as tremors, impaired vision, weak grip and inability to walk without assistance. These symptoms were described to make it appear that the patients qualified for home health care benefits under Medicare. Alonso admitted that the files were falsified so that ABC could bill Medicare for medically unnecessary services. Nurses employed by ABC also paid kickbacks to Alonso in return for being assigned patients at ABC.
As a result of Alonso’s participation in the illegal scheme, the Medicare program was billed approximately $17 million for home health care services that were medically unnecessary and/or were never provided.
According to court documents, from January 2006 to March 2009, Morciego worked as a registered nurse for ABC and Florida Home Health. During that time, Morciego falsified patient files for Medicare beneficiaries to make it appear that the beneficiaries qualified for home health care and therapy services. Morciego knew that the beneficiaries did not actually qualify for and did not receive the services. Morciego described in nursing notes and patient files symptoms that were non-existent, such as tremors, impaired vision, weak grip and inability to walk without assistance. Morciego admitted that the files were falsified so that ABC and Florida Home Health could bill Medicare for medically unnecessary services.
As a result of Morciego’s participation in the fraud schemes at ABC and Florida Home Health, Medicare was billed approximately $296,000 for services that were medically unnecessary and/or were never provided.
Morciego is scheduled to be sentenced on Dec. 5, 2011. Alonso is scheduled to be sentenced on Oct. 3, 2011. The charge of conspiracy to commit health care fraud carries a maximum prison sentence of 10 years. The defendants also face fines and terms of supervised release, as well as forfeiture of any property or proceeds derived from their criminal activities.
Drs. Nunez and Gonzalez are scheduled to begin trial on Oct. 10, 2011. An indictment is merely a charge and defendants are presumed innocent until proven guilty.
Today’s guilty pleas 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 Florida.
Since their inception in March 2007, Medicare Fraud Strike Force operations in nine locations have charged 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 Sues to Stop Nationwide “Welfare Benefit Plan” Tax SchemeRead the Press Release
WASHINGTON – The Justice Department is seeking to block a husband and wife from operating a scheme that allegedly helps high-income individuals attempt to improperly avoid income taxes by funneling money through purported “welfare benefit plans,” the Justice Department announced today. The civil injunction suit was filed in federal court in Chicago against Tracy L. Sunderlage and his wife, Linda Sunderlage, of Huntley, Ill. SRG International, Ltd., of Nevis, West Indies, and three related Illinois companies – SRG International U.S. LLC, Maven U.S. LLC and Randall Administration LLC – were also named as defendants.
According to the complaint, the defendants claim to operate plans that provide benefits like life and health insurance to participating companies’ employees, when in fact the scheme is simply a mechanism for the companies’ owners to receive purportedly tax-free or tax-deferred income for their personal use. Tracy Sunderlage and the two SRG International companies allegedly market the scheme to h igh-income professionals who own small, closely held companies. Tracy Sunderlage allegedly tells scheme participants that their companies’ contributions to these plans are tax-deductible.
In the alleged current version of the scheme, each participant’s company makes supposedly tax-deductible payments to a purported benefit plan operated by Maven and Randall Administration. The company’s contributions are allegedly transferred into an account within an Anguilla company in which they are invested until the owner terminates from the program and receives the assets for his or her personal use. The complaint alleges that many participants own these foreign accounts through offshore trusts, which Tracy Sunderlage and SRG International Ltd. often help to establish.
The complaint alleges that participants from across the country have transferred at least $239 million to the purported welfare benefit plans and that total contributions may exceed $300 million.
Tracy Sunderlage has allegedly been involved with other tax schemes as well. According to the complaint, he has promoted the use of offshore “asset protection” trusts and an offshore “business protection plan.” In addition, the complaint states that he participated in the illegal Aegis trust scheme and promoted it to at least one welfare benefit scheme participant.
The Internal Revenue Service has warned t hat many programs claiming to provide substantial tax deductions through contributions to purported welfare benefit plans are, in fact, abusive tax schemes. In April, a federal judge in Los Angeles permanently enjoined a California man who allegedly promoted sham welfare-benefit plans.
In the past decade, the Justice Department’s Tax Division has obtained hundreds of injunctions against promoters of tax schemes and preparers of fraudulent tax returns. Information about these cases is available on the Justice Department website .
Former Washington County, Missouri, Chief Deputy Sentenced to 10 Years in Prison for Beating Four InmatesRead the Press Release
WASHINGTON - Vernon Wilson, former Chief Deputy of the Washington County Sheriff’s Department in Potosi, Mo., was sentenced today in U.S. District Court in St. Louis, for violating the civil rights of four former inmates of the Washington County Jail on four separate occasions, the Justice Department announced today. Wilson was sentenced to 10 years in prison, followed by three years of supervised release.
A jury found Wilson guilty on March 3, 2011, of beating two of the inmates and arranging for the beatings of two other inmates. Wilson was also convicted of two counts of lying to the FBI about his role in two of the attacks. According to evidence presented at trial, on two occasions, Wilson struck inmates repeatedly in the face, banging their heads into a concrete wall. On two other occasions, Wilson orchestrated the beatings of inmates by instigating another inmate, who was known for fighting, to assault them. Both times Wilson rewarded his inmate accomplice for the beatings by giving him cigarettes. As a result of one of these orchestrated beatings, the victim had to be hospitalized for his serious injuries, which included a broken orbital bone.
“Corrections officers are charged with the very important task of maintaining security and discipline in their facilities,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “When corrections officers seek to inflict unjustified punishments on inmates by inciting and inflicting beatings, they threaten the very fabric of our criminal justice system, and they will be prosecuted by the Department of Justice.”
“We are pleased with the sentence for Vernon Wilson because his actions affected more than those he physically abused,” said Special Agent in Charge Dennis L. Baker of the FBI St. Louis Division. “He undermined the public's trust in law enforcement.”
Wilson’s daughter, Valeria Wilson Jackson, 26, a former employee of the Sheriff’s Department who worked under Vernon Wilson’s supervision, previously pleaded guilty on July 14, 2010, to one count of obstruction of justice for lying to the FBI about her role in one of the beatings. Jackson was sentenced on March 10, 2011, to five years of probation, including six months of home confinement.
These cases were both investigated by the St. Louis Division of the FBI and were prosecuted by Trial Attorneys Fara Gold and Patricia A. Sumner of the Civil Rights Division of the U.S. Department of Justice.
Florida Telecommunications Company, Two Executives, an Intermediary and Two Former Haitian Government Officials Indicted for Their Alleged Participation in Foreign Bribery SchemeRead the Press Release
WASHINGTON - Cinergy Telecommunications Inc., Cinergy’s president and director, the president of Florida-based Telecom Consulting Services Corp. and two former Haitian government officials have been charged in a superseding indictment for their alleged roles in a foreign bribery, wire fraud and money laundering scheme, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida and Special Agent in Charge Jose A. Gonzalez of the Internal Revenue Service - Criminal Investigation’s (IRS-CI) Miami Field Office.
According to the superseding indictment, the defendants allegedly participated in a scheme to commit foreign bribery and money laundering from December 2001 through January 2006. The indictment alleges that during this time period Cinergy and its related company, Uniplex Telecommunications Inc., allegedly paid more than $1.4 million to shell companies to be used for bribes to foreign officials of the Republic of Haiti’s state-owned national telecommunications company, Telecommunications D’Haiti (Haiti Teleco).
According to court documents, Cinergy and Uniplex executed a series of contracts with Haiti Teleco that allowed the companies’ customers to place telephone calls to Haiti. The bribe payments allegedly were authorized by Washington Vasconez Cruz, the telecommunications companies’ president, and Amadeus Richers, the companies’ director, and were allegedly paid to Haitian government officials at Haiti Teleco, including Patrick Joseph and Jean Rene Duperval. According to the superseding indictment, the purpose of these bribes was to obtain various business advantages from the Haitian officials for Cinergy and Uniplex, including preferred telecommunications rates and credits toward sums owed. To conceal the bribe payments, the defendants allegedly used various shell companies to receive and forward the payments, including J.D. Locator Services, Fourcand Enterprises and Telecom Consulting Services.
The six defendants charged in the superseding indictment are:
Washington Vasconez Cruz, 63, of Miami, the president of Cinergy and Uniplex, is charged with one count of conspiracy to violate the Foreign Corrupt Practices Act (FCPA) and to commit wire fraud, six counts of FCPA violations, one count of conspiracy to commit money laundering and 19 counts of money laundering;
Amadeus Richers, 60, of Pembroke Pines, Fla., and Brazil, the then-director of Cinergy and Uniplex, is charged with one count of conspiracy to violate the FCPA and to commit wire fraud, six counts of FCPA violations, one count of conspiracy to commit money laundering and 19 counts of money laundering;
Cinergy Telecommunications Inc., a privately-held telecommunications company incorporated in Florida, is charged with one count of conspiracy to violate the FCPA and to commit wire fraud, six counts of FCPA violations, one count of conspiracy to commit money laundering and 19 counts of money laundering;
Patrick Joseph, 49, of Miami and Haiti, a former general director for telecommunications at Haiti Teleco, is charged with one count of conspiracy to commit money laundering;
Jean Rene Duperval, 44, of Miramar, Fla., and Haiti, a former director of international relations for telecommunications at Haiti Teleco, is charged with two counts of conspiracy to commit money laundering and 19 counts of money laundering; and
Marguerite Grandison, 42, of Miramar, the former president of Telecom Consulting Services Corp., and Duperval’s sister, is charged with two counts of conspiracy to commit money laundering and 19 counts of money laundering.
The superseding indictment also charges Duperval and Grandison with laundering corrupt payments authorized by Joel Esquenazi and Carlos Rodriguez on behalf of another Florida telecommunications company.
Duperval was charged previously in the indictment returned on Dec. 7, 2009, with one count of conspiracy to commit money laundering and 12 counts of money laundering. Grandison was previously charged with one count of conspiracy to violate the FCPA and to commit wire fraud, seven counts of FCPA violations, one count of conspiracy to commit money laundering and 12 counts of money laundering.
Esquenazi and Rodriguez were charged in the initial December 2009 indictment and are unaffected by the superseding indictment. They are scheduled to stand trial on July 18, 2011.
An indictment is merely an accusation, and defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt in a court of law.
The conspiracy to commit violations of the FCPA and wire fraud count carries a maximum penalty of five years in prison and a fine of the greater of $250,000 or twice the value gained or lost. The FCPA counts each carry a maximum penalty of five years in prison and a fine of the greater of $100,000 or twice the value gained or lost. The conspiracy to commit money laundering counts each carry a maximum penalty of 20 years in prison and a fine of the greater of $500,000 or twice the value of the property involved in the transaction. The money laundering counts each carry a maximum penalty of 20 years in prison and a fine of the greater of $500,000 or twice the value of the property involved in the transaction. The superseding indictment also gives notice of criminal forfeiture.
On May 15, 2009, Juan Diaz, the president of J.D. Locator Services, pleaded guilty to one count of conspiracy to violate the FCPA and money laundering. He admitted to receiving more than $1 million in bribe money from telecommunications companies. On July 30, 2010, he was sentenced to 57 months in prison.
On Feb. 19, 2010, Jean Fourcand, the president and director of Fourcand Enterprises Inc., pleaded guilty to one count of money laundering for receiving and transmitting bribe monies in the scheme. On May 5, 2010, he was sentenced to six months in prison.
On March 12, 2010, Robert Antoine, the former director of international affairs for Haiti Telco, pleaded guilty to one count of conspiracy to commit money laundering. He admitted to receiving more than $1 million in bribes from Miami-based telecommunications companies. On June 2, 2010, he was sentenced to 48 months in prison.
The government’s investigation is ongoing. The Department of Justice is grateful to the government of Haiti for continuing to provide substantial assistance in gathering evidence during this investigation. In particular, Haiti’s financial intelligence unit, the Unité Centrale de Renseignements Financiers (UCREF), the Bureau des Affaires Financières et Economiques (BAFE), which is a specialized component of the Haitian National Police, and the Ministry of Justice and Public Security provided significant cooperation and coordination in this ongoing investigation.
The case is being prosecuted by Senior Trial Attorneys Nicola J. Mrazek and James M. Koukios of the Criminal Division’s Fraud Section, with the assistance of the U.S. Attorney’s Office for the Southern District of Florida. The Office of International Affairs in the Justice Department’s Criminal Division also provided assistance in this matter. The cases were investigated by the IRS-CI Miami Field Office.
Final Co-conspirator Sentenced to 10 Years in Prison for Role in Texas HomicideRead the Press Release
WASHINGTON – A New Caney, Texas, woman was sentenced to 10 years in prison today for her role in a homicide that took place in Nacogdoches, Texas, in August 2007, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney John M. Bales for the Eastern District of Texas.
Carrie Christine Wood, 38, pleaded guilty before U.S. District Judge Marcia Crone in Beaumont, Texas, on Feb. 17, 2011, to committing violent crime in aid of racketeering activity related to the murder of David Mitchamore.
According to information presented in court, Wood was a close associate and confidant of her co-defendant, Carl Carver, a general of the Aryan Brotherhood of Texas (ABT). The ABT is a race-based, state-wide organization that operates inside and outside of state and federal prisons throughout Texas and the United States. The ABT enforces its rules and promotes discipline among its members, prospects and associates through murder, attempted murder, conspiracy to murder, assault, robbery and threats against those who violate the rules or pose a threat to the enterprise. Members, and oftentimes associates, are required to follow the orders of higher ranking members, often referred to as “direct orders.”
According to court documents, Mitchamore, aka “Super Dave,” an ABT member, and his girlfriend, Christie Rochelle Brown, were murdered by Wood’s co-defendant Brent Stalsby as a result of a “direct order” issued by Carver because of Mitchamore’s failure to repay an outstanding debt he allegedly owed to an Aryan Brotherhood general. Wood communicated the direct order from Carver to Charles Cameron Frazier, who then responded to the jail where Carver was incarcerated to receive further instructions from Carver about Mitchamore’s punishment. The bodies of Mitchamore and Brown were discovered in Nacogdoches County on Aug. 10, 2007.
On June 27, 2011, Carver was sentenced to life in prison. On May 25, 2011, Brent Stalsby was sentenced to life in federal prison and Terry Stalsby, who was present when the “direct order” issued by Carver was delivered to Frazier, was sentenced to 162 months in federal prison. Frazier was sentenced on June 22, 2011, to life in prison. April Flanagan was sentenced on April 26, 2011, to 180 months in prison after she admitted, among other things, that she knew and approved of the plan to murder Mitchamore, and provided ABT members with the shotgun used to murder Mitchamore and Brown.
“With today’s sentencing of Carrie Wood, all of the conspirators involved in the murders of David Mitchamore and Christie Brown have now been held accountable for their crimes,” said Assistant Attorney General Breuer. “Whether gang members and their associates pull the trigger or provide support for violent crimes, they will be brought to justice. ABT traffics in fear, intimidation and violence. But, as this case shows, the department is committed to dismantling criminal enterprises like ABT and holding their members criminally responsible.”
“With the conviction and sentencing of Carrie Wood, the last remaining defendant in this case has answered for her crimes,” said U.S. Attorney Bales. “We promised to bring David Mitchamore’s and Christie Brown’s killers to justice and we have done that. But equally important is our commitment and effort to neutralize the ABT in east Texas. To that end, we will continue to investigate and prosecute the criminal activities of the ABT until we have completely diminished its menace. The agents and officers working on this case and others like it are doing a superlative job for their fellow citizens – I congratulate them.”
This case was investigated by the FBI; the Bureau of Alcohol, Tobacco, Firearms and Explosives; the National Gang Targeting, Enforcement and Coordination Center (Gang-TECC); the Nacogdoches Sheriff’s Department; the Nacogdoches Police Department; the Angelina County, Texas, Sheriff’s Department; the Texas Department of Public Safety; and the Texas Rangers. The case is being prosecuted by the Office of the U.S. Attorney in Lufkin, Texas, and the Criminal Division’s Organized Crime and Gang Section, in full cooperation with the Nacogdoches County District Attorney’s Office.
Federal Court Bars Idaho Woman from Promoting “Form 1099-OID” Tax SchemeRead the Press Release
WASHINGTON – A federal court has permanently barred Penny Jones from preparing federal tax returns for others and from promoting the use of false tax forms, the Justice Department announced today. The civil injunction order, entered by Judge Edward J. Lodge in U.S. District Court for the District of Idaho, found that Jones operated a tax preparation business using a post office box in Shelley, Idaho, and prepared more than 400 federal tax returns claiming fraudulent tax refunds exceeding $168 million.
The court also found that Jones prepared various false Internal Revenue Service (IRS) forms, including Form 1099-OID, for use in requesting refunds based on phony claims of large income tax withholding. The court order says the scheme is rooted in the long-discredited “redemption” theory which, according to its proponents, allows taxpayers to use IRS forms to access secret Treasury accounts to satisfy their tax liabilities. The court found that this theory has been “routinely rejected” by other courts, that the forms attached to tax returns prepared by Jones were “phony,” and that Jones knew her actions were fraudulent.
The court order requires Jones to provide the government with a list identifying all persons for whom she prepared federal tax returns for tax years 2005 through 2009.
Return preparer fraud and bogus refund claims based on false Forms 1099-OID are two of the IRS’s “Dirty Dozen” tax scams for 2011. In the past decade, the Justice Department’s Tax Division has obtained injunctions against hundreds of dishonest return preparers and tax fraud promoters. Information about these cases is available on the Justice Department website .
Armor Holdings Agrees to Pay $10.2 Million Criminal Penalty to Resolve Violations of the Foreign Corrupt Practices ActRead the Press Release
WASHINGTON – Armor Holdings Inc. has entered into an agreement with the Department of Justice to pay a $10.29 million penalty to resolve violations of the Foreign Corrupt Practices Act (FCPA), announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and Assistant Director in Charge James W. McJunkin of the FBI’s Washington Field Office.
According to the non-prosecution agreement, at the time of the conduct at issue, Armor was headquartered in Jacksonville, Fla., and was listed on the New York Stock Exchange. At that time, the company manufactured security products, vehicle armor systems, protective equipment and other products primarily for use by military, law enforcement, security and corrections personnel. On July 31, 2007, Armor was acquired by BAE Systems Inc. and is currently a subsidiary of BAE.
According to the agreement, Armor accepts responsibility for its subsidiary’s payment of more than $200,000 in commissions to a third-party sales agent, a portion of which it knew was to be passed on to a U.N. procurement official to induce the official to award two separate U.N. contracts to Armor’s subsidiary. The contracts were for the sale of approximately $6 million of body armor. Armor also acknowledged that it falsely recorded the commission payments on its books and records. In addition, Armor admitted that it kept off its books and records approximately $4.4 million in additional payments to agents and other third-party intermediaries used by its Products Group to assist it in obtaining business from foreign government customers. Armor acknowledged that it failed to devise and maintain an appropriate system of internal accounting controls.
In a related matter, Armor reached a settlement today with the U.S. Securities and Exchange Commission (SEC) and agreed to pay more than $5.69 million in disgorgement of profits, including pre-judgment interest, and a civil money penalty.
The Justice Department’s agreement recognizes Armor’s complete voluntary disclosure of the conduct; its internal investigation and cooperation with the department and the SEC; the fact that the conduct took place prior to the acquisition of Armor by BAE; and Armor’s extensive remedial efforts undertaken before and after its acquisition by BAE. Due to Armor’s implementation of BAE’s due diligence protocols and review processes, its application of BAE’s compliance policies and internal controls to all Armor businesses, its extensive remediation and improvement of its compliance systems and internal controls, as well as the enhanced compliance undertakings included in the agreement, Armor is not required to retain a corporate monitor. Armor will be required to report to the department on implementation of its remediation and enhanced compliance efforts every six months for the duration of the agreement.
In addition to the $10.29 million penalty, the agreement requires that Armor continue to implement rigorous internal controls and that it cooperate fully with the department.
This case is being handled by Trial Attorney Laura Perkins of the Criminal Division’s Fraud Section with assistance from the FBI’s Washington Field Office’s dedicated FCPA squad.
The Justice Department acknowledges and expresses its appreciation for the assistance provided by the SEC’s Division of Enforcement.
Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa
Tuesday 12 July 2011
Patient Recruiter Sentenced to 27 Months in Prison <br /> in Connection with Detroit-Area Infusion Therapy SchemesRead the Press Release
WASHINGTON – A patient recruiter for three Detroit-area clinics was sentenced to 27 months in prison for his role in fraud schemes that attempted to defraud the Medicare program of more than $15 million, the Departments of Justice and Health and Human Services (HHS) announced.
Arnaldo Rosario, 30, was sentenced by U.S. District Judge Gerald E. Rosen in the Eastern District of Michigan. In addition to the prison term, Rosario was sentenced to three years of supervised release and was ordered to pay, jointly and severally with other defendants in the case, $10,765,325 in restitution.
Rosario pleaded guilty to one count of conspiracy to commit health care fraud on Aug. 18, 2009. According to court documents, Arnaldo Rosario admitted that he was responsible for overseeing and facilitating the payment of cash kickbacks to Medicare beneficiaries who visited Sacred Hope Medical Center Inc., Dearborn Medical Rehabilitation Center Inc. (DMRC) and Xpress Center Inc. (XPC). In exchange for the cash kickbacks, the beneficiaries would visit the clinics and sign documents falsely indicating that they had received services that were then billed to Medicare. According to information contained in his plea documents, Rosario admitted to obtaining cash on a daily basis from his co-conspirators to pay the beneficiaries cash kickbacks. After obtaining the cash, Rosario admitted that he would then distribute the money to several other co-defendants who were responsible for recruiting and paying the kickbacks to the beneficiaries. Arnaldo Rosario admitted to being directed to pay bonuses to the co-defendants if they were able to recruit additional Medicare beneficiaries to come to Sacred Hope, DMRC or XPC.
Rosario admitted that, between approximately March 2006 and March 2007, he and his co-conspirators caused the submission of approximately $15.3 million in false and fraudulent claims to Medicare for services supposedly provided at Sacred Hope, DMRC and Xpress Center. Based on the fraudulent claims, Medicare paid approximately $10,765,325.
Today’s sentence was announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade; Special Agent in Charge Andrew G. Arena of the FBI’s Detroit Field Office; and Special Agent in Charge Lamont Pugh III of the HHS Office of Inspector General’s (HHS-OIG) Chicago Regional Office.
The case was prosecuted by Assistant Chief Benjamin D. Singer and Trial Attorney Gejaa T. Gobena of the Criminal Division’s Fraud Section, and Assistant U.S. Attorney John K. Neal of the Eastern District of Michigan. The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan.
Since its inception in March 2007, Medicare Fraud Strike Force operations in nine districts have obtained indictments of 1,000 defendants that collectively have billed the Medicare program for more than $2.3 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov .
Justice Department and EPA Officials Focus on Environmental Justice in Newark, New JerseyRead the Press Release
NEWARK, N.J. – Senior environmental enforcement officials from the U.S. Justice Department and Environmental Protection Agency (EPA) toured sites in Newark, N.J., today and met with federal partners and with environmental and community organizations to discuss mutual efforts to address environmental challenges and enforce environmental laws, and in particular efforts to achieve environmental justice.
Officials included Ignacia S. Moreno, Assistant Attorney General of the Environment and Natural Resources Division; Paul J. Fishman, U.S. Attorney for the District of New Jersey; and Cynthia Giles, Assistant Administrator for the EPA Office of Enforcement Compliance Assurance. They were joined by Judith A. Enck, EPA Region 2 Administrator; and Lisa F. Garcia, EPA Senior Advisor for Environmental Justice.
The goal of environmental justicea major priority of the Department of Justice and the EPA, isto provide all Americans – regardless of their race, ethnicity or income status – full protection under the nation’s environmental laws and protection from pollution, hazardous waste and toxic substances.
“The people of New Jersey understand the critical importance of environmental protection, and the real world consequences of industrial pollution,” said Assistant Attorney General Moreno. “By enforcing the nation’s environmental laws in a fair and even-handed way, we are taking steps to ensure that we achieve environmental justice. We are listening to communities and giving voice to those that have too frequently suffered an unfair burden from pollution in America.”
“New Jersey has seen an unjust share of environmental damage, and we have the opportunity and obligation to do something about it,” said U.S. Attorney Fishman. “Specific, targeted criminal and civil enforcement actions can make a real difference to our environment - preserving it for those who treasure it and punishing those who break laws that protect it.”
“Enforcement is a powerful tool in advancing environmental justice and deterring illegal pollution,” said Assistant Administrator Giles. “We are aggressively going after pollution problems that make a difference in communities, like keeping raw sewage and contaminated stormwater out of our nation’s waters and cutting toxic air pollution that affects communities’ health.”
“Low income communities across the country have historically shouldered a heavy pollution burden,” said Judith A. Enck, EPA Regional Administrator. “Just because someone lives in a low income neighborhood, they should not be exposed to air pollution, toxic chemicals, degraded water quality or have less access to parks and open space. The EPA is committed to protecting public health and environmental quality in every part of the country. With improved environmental quality should also come opportunities for job creation.”
Justice Department Files Lawsuit Against Louisiana Alleging Violations of the National Voter Registration ActRead the Press Release
WASHINGTON – The Department of Justice announced today that it has filed a lawsuit against the state of Louisiana and a number of Louisiana state agencies and officials alleging that the state has violated its obligations under the National Voter Registration Act (NVRA).
The complaint, filed today in the U.S. District Court for the Middle District of Louisiana, alleges that Louisiana has violated the NVRA by failing to provide voter registration services at offices providing public assistance and serving persons with disabilities in Louisiana. Specifically, the complaint alleges that Louisiana officials have not routinely offered voter registration forms, assistance and services to the state’s eligible citizens who apply, recertify or provide a change address for public assistance or disability services, or benefits.
“The voting process begins with registration. Therefore, it is essential that all citizens have unfettered access to voter registration opportunities,” said Thomas E. Perez, Assistant Attorney General for the Justice Department’s Civil Rights Division. “The department is committed to enforcing the National Voter Registration Act so that neither income nor disability status stands in the way of equal voter registration opportunities for all citizens.”
The lawsuit seeks a court order declaring that the defendants have failed comply with the requirements of Section 7 of the NVRA, and requiring Louisiana to take all necessary steps to come into compliance with federal law. The suit seeks to require Louisiana to effectively publicize the required voter registration opportunities and provide the court with a remedial plan that will ensure future compliance.
Congress enacted the NVRA in 1993 in part to enhance citizen participation in elections by making voter registration opportunities readily available and accessible to the largest possible segment of the American public. In addition to requiring that voter registration be offered at motor vehicle offices and by mail, the NVRA also mandates that states offer voter registration through agencies that provide essential services to citizens with disabilities and low income citizens. Congress found that if it did not require states to offer voter registration at public assistance and disability services agencies, it would exclude a large segment of American citizens from having convenient opportunities to participate in our democracy.
More information about the NVRA and other federal voting laws is available on the Department of Justice website at www.justice.gov/crt/about/vot/ . Complaints about discriminatory voting practices may be reported to the Voting Section of the Justice Department’s Civil Rights Division at 1-800-253-3931.
Federal Court Bars Three Men from Promoting “Intermediary Transaction” Tax ShelterRead the Press Release
WASHINGTON – A federal court has permanently barred Charles Klink, Caleb Grodsky and Steven Block from promoting abusive tax shelters known as “intermediary transactions” and “distressed asset trusts,” the Justice Department announced today. The civil injunction orders, to which the three men consented without admitting to the allegations against them, were entered by Judge Joseph Irenas of the U.S. District Court for the District of New Jersey. The court orders require the defendants to give the government a list of all persons who participated in any tax plan or arrangement that they promoted since Jan. 1, 2000.
According to the government complaint , Klink and Grodsky, who are both attorneys in Southern California, and Block, who resides in Louisville, Ky., and has worked in the financial services industry for more than two decades, received millions of dollars from customers across the country for helping them dispose of corporate assets without paying federal corporate income taxes on the resulting capital gain income. The complaint alleges that the three men used an intricate web of trusts and corporations to act as intermediaries between their customers, who owned closely held corporations, and buyers who wanted to purchase the corporations’ assets.
The complaint alleges that the defendants purchased all of the stock in a customer’s corporation shortly before or after the asset sale. They then allegedly falsely told the customer that, following defendants’ purchase of the corporation, the defendants would restructure the corporation into a profitable new business and have it pay the corporation’s federal income taxes resulting from the asset sale. However, according to the complaint, rather than pay the taxes owed after the asset sale, the defendants allegedly claimed deductions for sham fees and bogus bad debt write-offs generated from distressed-asset-trust tax shelters to offset most or all of the capital gains. The defendants also allegedly took steps to siphon off the corporation’s assets, leaving it with no funds to pay any taxes due once the Internal Revenue Service learned of the scheme and assessed taxes.
The complaint against Klink, Grodsky and Block alleges that they have caused the corporations they acquired to deduct improperly more than $112 million of distressed consumer receivables. The government estimates that the tax loss resulting from their promotion of the tax schemes at issue in this case exceeds $40 million.
In the past decade, the Justice Department’s Tax Division has obtained hundreds of injunctions against promoters of tax schemes and preparers of fraudulent tax returns. Information about these cases is available on the Justice Department website .
Monday 11 July 2011
Virginia Couple Sentenced for Conspiracy to Defraud the United StatesRead the Press Release
WASHINGTON – A husband and wife from Mathews County, Va., were sentenced today for conspiring to impair and obstruct the Internal Revenue Service (IRS) in the ascertainment and assessment of federal income taxes from 2001 through 2010, the Justice Department and the IRS announced. John Scott Miles was sentenced to 30 months in prison and Kathryn Charles Miles was sentenced to 20 months in prison. Both were sentenced to three years of supervised release and ordered to pay $215,591.27 in restitution.
John Miles and Kathryn Miles were charged in October 2010 and pleaded guilty in March 2011 before U.S. District Judge Raymond A. Jackson in Norfolk, Va., who sentenced them today.
At their plea hearings, Kathryn Miles and John Miles admitted to earning taxable income as the owners and operators of a construction business named “Scotts Construction” and “KCM Construction & Design.” Kathryn Miles also admitted to earning taxable income as a nurse at various Virginia hospitals. The Miles’ joined American Rights Litigators, a business they knew sold and promoted tax avoidance methods, in 2001 and maintained an annual membership. Kathryn Miles admitted that, in 2005 and 2006, she submitted six tax returns to the IRS in which she falsely claimed that she earned no wages and in which she did not disclose the operation of her construction business. She submitted falsified tax documents with each tax return. John Miles admitted that he did not file tax returns during the time of the conspiracy.
U.S. Attorney for the Eastern District of Virginia Neil H. MacBride and Principal Deputy Assistant Attorney General for the Tax Division John A. DiCicco commended the investigative efforts of the IRS agents involved in this case, as well as Assistant U.S. Attorney Brian Samuels and Tax Division Trial Attorney Justin Gelfand, who are prosecuting this case on behalf of the United States.
For more information on the Tax Division and its enforcement efforts, please visit www.justice.gov/tax.
Statement of Deputy Attorney General James Cole Regarding Information Requests for Multiple Sales of Semi-Automatic Rifles with Detachable MagazinesRead the Press Release
WASHINGTON – Deputy Attorney General James Cole issued the following statement today regarding information requests for multiple sales of semi-automatic rifles with detachable magazines in select states along the Southwest Border:
“The international expansion and increased violence of transnational criminal networks pose a significant threat to the United States. Federal, state and foreign law enforcement agencies have determined that certain types of semi-automatic rifles – greater than .22 caliber and with the ability to accept a detachable magazine – are highly sought after by dangerous drug trafficking organizations and frequently recovered at violent crime scenes near the Southwest Border. This new reporting measure -- tailored to focus only on multiple sales of these types of rifles to the same person within a five-day period -- will improve the ability of the Bureau of Alcohol, Tobacco, Firearms and Explosives to detect and disrupt the illegal weapons trafficking networks responsible for diverting firearms from lawful commerce to criminals and criminal organizations. These targeted information requests will occur in Arizona, California, New Mexico, and Texas to help confront the problem of illegal gun trafficking into Mexico and along the Southwest Border.”
Detroit-Area Men Plead Guilty to Tax EvasionRead the Press Release
WASHINGTON – Two Michigan residents pleaded guilty to tax evasion, the Justice Department and the Internal Revenue Service (IRS) announced today. A federal grand jury in Detroit returned an indictment against David A. Cusumano and Henry Nino in January 2011.
According to court documents, Cusumano was a mechanical engineer from Plymouth, Mich., and Nino was an electrician from Northville, Mich. Both men admitted to committing tax evasion by failing to file income tax returns and maintaining Employee’s Withholding Allowance Certificates (IRS Forms W-4) with their employers that falsely claimed they were exempt from tax withholding.
According to court documents, both men admitted to using the services of Florida-based tax fraud promoter American Rights Litigators/Guiding Light of God Ministries (ARL/GLGM). Nino and Cusumano both paid ARL/GLGM to submit false and obstructive correspondence to the IRS and to their banks, and to submit complaints to the Treasury Inspector General for Tax Administration that falsely accused IRS employees of criminal conduct.
According to court documents, Nino attempted to prevent the IRS from collecting his unpaid taxes for the years 1996, 1997 and 2000-2003 by transferring title of his personal residence to a nominee entity called the Michigan Natural Group, using money orders to make mortgage payments, cashing paychecks rather than depositing them in a bank account, and submitting fake financial instruments to the Department of the Treasury in purported payment of his tax liabilities.
According to court documents, in addition to the actions carried out by ARL/GLGM on his behalf, Cusumano attempted to evade the assessment of his 2003-2008 taxes by failing to file tax returns for each of these years as required by law and by submitting fake financial instruments to the Department of the Treasury in purported payment of his tax liabilities.
In August 2004, a federal district judge permanently enjoined the operators of ARL from the sale of a nationwide tax scam. In April 2008, a federal court in Florida sentenced two promoters of ARL, as well as ARL client Wesley Snipes, to prison for tax offenses. In August 2010, three promoters of ARL were each sentenced in the District of Columbia to 10 years in prison, along with ARL founder Eddie Ray Kahn, who was sentenced to 20 years in prison.
The total tax loss associated with Nino’s conduct, for sentencing purposes, is $366,088 and the total tax loss associated with Cusumano’s conduct, for sentencing purposes is $390,185.
The charges against Cusumano and Nino carry a maximum sentence of up to five years in prison. Sentencing is scheduled for Oct. 20, 2011.
The case was investigated by IRS-Criminal Investigation, and Tax Division Trial Attorneys Melissa Siskind and Jeffrey McLellan are prosecuting the case.
More information about the Justice Department’s Tax Division and its enforcement efforts is available at www.justice.gov/tax/ .