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Tuesday 28 June 2011
Attorney General Eric Holder Welcomes Confirmation of James Cole, Lisa Monaco and Virginia SeitzRead the Press Release
WASHINGTON – Attorney General Eric Holder today welcomed the confirmation of James Cole, as Deputy Attorney General; Lisa Monaco, as Assistant Attorney General for National Security; and Virginia Seitz, as Assistant Attorney General of the Office of Legal Counsel. All three were confirmed today by the U.S. Senate.
“I am pleased the Senate moved to confirm Jim, Lisa and Virginia, following their appointments by President Obama,” said Attorney General Holder. “I’m confident they will provide invaluable leadership to the department, and will play a critical role in protecting the American people, ensuring the fairness and integrity of our financial markets and restoring the traditional missions of the department.”
Cole, who has been serving as Deputy Attorney General since Jan. 3, 2011, first joined the department in 1979 as part of Attorney General’s Honors Program and served there for 13 years – first as a trial attorney in the Criminal Division, and later as the Deputy Chief of the Division’s Public Integrity Section.
He entered private practice in 1992, becoming a partner with Bryan Cave LLP in 1995, specializing in white collar defense. He served as a court-appointed independent monitor to businesses to establish and oversee corporate compliance programs and ensure they adhere to laws and regulations. He also counseled businesses on securities, regulatory and criminal law issues.
In 2005, Cole was appointed to serve as an independent monitor at the insurance company AIG to review five years of transactions following a settlement with regulators involving allegations the company was setting up sham transactions to hide losses. His role there led to another appointment involving AIG in 2006, in which he was charged with developing financial reporting and regulatory compliance programs.
Cole has been a member of the adjunct faculty at Georgetown University Law Center, teaching courses on public corruption law and legal ethics, and has lectured at Harvard University’s Kennedy School of Government. He is a former chair of the American Bar Association (ABA) White Collar Crime Committee and serves as the first vice-chair of the ABA Criminal Justice Section.
He received his B.A. from the University of Colorado and his J.D. from the University of California-Hastings.
Most recently, Monaco served as the Principal Associate Deputy Attorney General, where she was the Deputy Attorney General’s primary advisor on a broad range of criminal, national security and civil matters. Prior to joining the Deputy Attorney General’s office, Monaco was the chief of staff to FBI Director Robert S. Mueller. Monaco also served as special counsel to Director Mueller. Monaco initially joined the FBI on detail from the U.S. Attorney’s Office for the District of Columbia.
From 2001 to 2007, Monaco served as a federal prosecutor. She was appointed to the Enron Task Force, serving as a co-lead trial counsel in the prosecution of five former executives of Enron Broadband Services. For her work on the Enron Task Force, Monaco received the Attorney General’s Award for Exceptional Service, the Justice Department’s highest award.
Monaco served as counsel to Attorney General Janet Reno from 1998 to 2001, providing advice and guidance on national security, law enforcement, budget and oversight issues.
Before joining the department, Monaco clerked for the Honorable Jane R. Roth, U.S. Court of Appeals for the Third Circuit. She earned her J.D. from the University of Chicago Law School and her B.A. from Harvard University.
Seitz most recently worked as a partner in Sidley Austin LLP’s Washington, D.C. office, where she focused on appellate litigation before the federal courts of appeals and the U.S. Supreme Court. Seitz has over 20 years of litigation experience and has worked on more than 100 Supreme Court briefs and petitions for certiorari and hundreds of filings in lower courts. She was the counsel of record on the amicus brief filed on behalf of retired military officers in Grutter v. Bollinger, which was cited by the Supreme Court in the oral argument and opinion in that case.
Before joining private practice, Seitz clerked for Judge Harry T. Edwards of the Court of Appeals for the D.C. Circuit and for Associate Justice William J. Brennan of the U.S. Supreme Court. From 1995 until 2000, she served on the board of directors of the Congressional Office of Compliance, which promulgates regulations and adjudicates disputes concerning legislative branch employees under the Congressional Accountability Act.
She received a B.A., summa cum laude, from Duke University, was a Rhodes Scholar at Oxford University, and holds a J.D. from Buffalo Law School, where she graduated first in her class.
Monday 27 June 2011
Miami Doctor Sentenced to 235 Months in Prison for Medicare Fraud SchemeRead the Press Release
WASHINGTON – Miami doctor Rene De Los Rios, 72, was sentenced today to 235 months in prison for his participation in a $23 million HIV injection and infusion Medicare fraud scheme , announced the Departments of Justice and Health and Human Services (HHS).
U.S. District Court Judge Joan A. Lenard of the Southern District of Florida also sentenced De Los Rios to three years of supervised release following his prison term and ordered him to pay a minimum of $11.7 million in restitution, jointly with his co-defendants. The final amount of restitution will be determined at a later hearing. On April 14, 2011, De Los Rios was convicted by a jury of one count of conspiracy to commit health care fraud and four counts of submission of false claims. De Los Rios was remanded to the custody of the U.S. Marshals Service after his conviction and has been detained since that time.
According to evidence presented at trial and sentencing, De Los Rios worked at multiple fraudulent medical clinics and signed medical documents authorizing tests and treatments that were medically unnecessary or never provided. The court found De Los Rios responsible for a total of $46 million in fraudulent billings to Medicare.
According to evidence presented at trial, De Los Rios was hired by the owner of Metro Med of Hialeah Corporation, an HIV infusion clinic that purportedly provided injection and infusion therapies to HIV-positive Medicare beneficiaries. Evidence presented at trial established that De Los Rios ordered unnecessary tests, signed medical analysis and diagnosis forms, and authorized treatments to make it appear that legitimate medical services, including injection and infusion therapies, were being provided to Medicare beneficiaries at Metro Med. However, the injection and infusion therapies were medically unnecessary and never provided. De Los Rios also signed medical charts, often without seeing the patient, indicating that certain treatments were medically necessary, when, in fact, he knew they were not.
Evidence at trial established that De Los Rios diagnosed almost all of the patients at Metro Med with the same rare blood disorders, which the patients did not have, in order to ensure maximum reimbursement from Medicare. The evidence at trial also showed that De Los Rios prescribed expensive medications, including Winrho, Procrit and Neupogen, to patients for the sole purpose of receiving reimbursement from the Medicare program. From approximately April 2003 through October 2005, Metro Med submitted approximately $23 million in claims to the Medicare program for injection and infusion treatments that were not medically necessary and were never provided. The Medicare program paid approximately $11.7 million in claims.
The owner and operator of Metro Med, Damaris Oliva, and three other individuals have each pleaded guilty for their roles in the Metro Med fraud scheme. Oliva was sentenced in December 2010 to 82 months in prison. Co-defendants Estrella Rodriguez, Jose Diaz and Lisandra Aguilera were sentenced to 57 months in prison, 54 months in prison and 70 months in prison, respectively.
Evidence at trial and sentencing also established that De Los Rios engaged in almost identical conduct at additional sham HIV injection and infusion therapy clinics in South Florida during the same time period. At J&F Community Medical Center Inc. and Rochris Medical Center Inc., De Los Rios prescribed the same medications that he prescribed at Metro Med to patients who he knew did not need them.
In a two-and-half-year period, De Los Rios made more than $587,000 in profits from the fraud schemes.
At sentencing, the court also found that De Los Rios obstructed justice by testifying falsely at his trial; that as a doctor, De Los Rios occupied a position of trust, which he violated; and that by prescribing medically unnecessary injections and infusions for HIV-positive patients, De Los Rios caused a reckless risk of serious bodily injury to those patients.
The court declared a mistrial in De Los Rios’ first trial in March 2011.
Today’s sentence was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; John V. Gillies, Special Agent-in-Charge of the FBI’s Miami Field Office; and Special Agent-in-Charge Christopher Dennis of the HHS Office of Inspector General (HHS-OIG), Office of Investigations Miami office.
The case was prosecuted by Trial Attorney Joseph S. Beemsterboer of the Criminal Division’s Fraud Section and Robert J. Luck, Assistant U.S. Attorney for 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 and organizations 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 .
Lufkin, Texas, Man Sentenced to Life in Prison for Involvement in Double HomicideRead the Press Release
WASHINGTON –A Lufkin, Texas, man was sentenced today to life in prison for his role in a double 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.
Carl Carver, 44, pleaded guilty on Jan. 19, 2011, before U.S. District Judge Marcia Crone in Beaumont, Texas, to committing a violent crime in aid of racketeering activity. Specifically, Carver admitted that he had participated in the murder of David Mitchamore.
According to information presented in court, Carver was a general of the Aryan Brotherhood of Texas (ABT), 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, David Mitchamore, aka “Super Dave,” an ABT member, and his girlfriend, Christie Rochelle Brown, were murdered by 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. The bodies of Mitchamore and Brown were discovered in Nacogdoches County on Aug. 10, 2007. Terry Stalsby was present when the “direct order” issued by Carver was delivered to Frazier. On May 25, 2011, Brent Stalsby was sentenced to life in federal prison and Terry Stalsby was sentenced to 162 months in federal prison. On June 22, 2011, Frazier was sentenced to life in prison.
This case is being 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 and the Criminal Division’s Organized Crime and Gang Section, in full cooperation with the Nacogdoches County District Attorney’s Office.
Justice Department Files Lawsuit Alleging Immigration-Related Employment Discrimination by Farmland Foods Inc. in MissouriRead the Press Release
WASHINGTON -The Justice Department today filed a lawsuit against Farmland Foods Inc., a major producer of pork products in the United States, alleging that it engaged in a pattern or practice of discrimination by imposing unnecessary documentary requirements on non-U.S. citizens when establishing their authority to work in the United States. Farmland Foods, a subsidiary of Smithfield Foods Inc., is headquartered in Kansas City, Mo.
The department’s investigation revealed that Farmland required all newly hired non-U.S. citizens and some foreign-born U.S. citizens at its Monmouth plant in Illinois to present specific and, in some cases, extra work authorization documents beyond those required by federal law. The Immigration and Nationality Act (INA) requires employers to treat all authorized workers in the same manner during the hiring process, regardless of their citizenship status. Farmland imposed different and greater requirements on non-U.S. citizens and foreign-born U.S. citizens as compared to applicants who were native-born U.S. citizens.
“Employers may not treat authorized workers differently during the hiring process based on their citizenship status,” said Thomas E. Perez, the Assistant Attorney General in charge of the Civil Rights Division. “Federal law prohibits discrimination in the employment eligibility verification process, and the Justice Department is committed to enforcing the law.”
The lawsuit charging Farmland with discriminatory practices has been filed before the Office of the Chief Administrative Hearing Officer (OCAHO) within the Executive Office for Immigration Review, another component of the Department of Justice.
The Office of Special Counsel (OSC) for Immigration Related Unfair Employment Practices is responsible for enforcing the anti-discrimination provision of the INA, which protects work authorized individuals from 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 the immigration law, call 1-800-255-7688 (OSC’s worker hotline) (1-800-237-2525, TDD for hearing impaired), 1-800-255-8155 (OSC’s employer hotline) (1-800-362-2735, TDD for hearing impaired), or 202-616-5594; email [email protected] ; or visit OSC’s website at www.justice.gov/crt/osc
Contractor Sentenced to 30 Months in Prison<br /> for Death of Afghan National in Kabul, AfghanistanRead the Press Release
WASHINGTON – Justin Cannon, 29, of Corpus Christi, Texas, was sentenced today to 30 months in prison for his role in shooting and killing an Afghan national while on an unauthorized convoy in Kabul, Afghanistan, on May 5, 2009, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Neil H. MacBride of the Eastern District of Virginia and James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office. U.S. District Judge Robert G. Doumar also ordered Cannon to serve two years of supervised release following his prison term.
On March 11, 2011, Cannon and Christopher Drotleff, 31, of Virginia Beach, Va., were convicted of involuntary manslaughter while working as contractors for the U.S. Department of Defense in Afghanistan. Cannon and Drotleff were acquitted of other charges, including second-degree murder, assault resulting in serious bodily injury and firearms offenses. On June 14, 2011, Drotleff was sentenced to 37 months in prison.
“Justin Cannon was hired to support the Defense Department mission in Afghanistan,” said Assistant Attorney General Breuer. “Instead, he recklessly fired on a civilian car, killing an Afghan national. He dishonored the American military, the Afghan people, and the many men and women in uniform who serve this country honorably. Today’s sentence brings some measure of justice to an otherwise tragic situation.”
“Justin Cannon opened fire with an AK-47 at the rear of a retreating vehicle and took the life of an innocent Afghan,” said U.S. Attorney MacBride. “While Mr. Cannon was in Afghanistan to support to U.S. troops, his incredibly reckless behavior instead undermined our military mission and weakened the bond of trust with the Afghans. Those serving overseas – even in dangerous places like Afghanistan – must follow the law and not make up their own rules. Today’s sentence makes clear that those who break the law will be held accountable, regardless of where their crimes occur.”
Cannon and Drotleff were charged under the Military Extraterritorial Jurisdiction Act (MEJA) in a superseding indictment filed on Aug. 5, 2010. Cannon and Drotleff were Department of Defense contractors employed by a subsidiary of Xe (formerly known as Blackwater Worldwide).
According to evidence presented at trial, on May 5, 2009, both men left their military base without authorization to transport local interpreters. The evidence at trial established that, after the lead vehicle in the convoy crashed and was overturned on the side of the road, Cannon and Drotleff fired multiple shots into the back of a civilian car that had attempted to pass the accident scene. The passenger of the car was fatally shot and the driver was seriously injured. An individual who happened to be walking his dog in the area was also killed in the shooting. The jury found the defendants guilty of involuntary manslaughter for the death of Romal Mohammad Naiem, the front-seat passenger. They were acquitted of charges relating to the death of the person walking his dog and injuries to the driver.
According to court records, as contractors, Cannon and Drotleff provided training to the Afghan National Army for the Islamic Republic of Afghanistan in the use and maintenance of weapons and weapons systems.
The case is being prosecuted by Trial Attorney Robert McGovern of the Criminal Division’s Human Rights and Special Prosecutions Section and Assistant U.S. Attorneys Randy C. Stoker and Alan M. Salsbury from the U.S. Attorney’s Office for the Eastern District of Virginia - Norfolk Division. The case was investigated by the FBI’s Washington Field Office and the U.S. Army Criminal Investigation Command.
Friday 24 June 2011
Michigan Man Who Operated Residential Facility for Youth in Haiti Indicted for Sexual Abuse of Minors at the FacilityRead the Press Release
WASHINGTON – The operator of Morning Star Center, a residential facility located in Port-au-Prince, Haiti, that provided food and shelter to minors, has been charged with offenses involving the sexual abuse of minors in Haiti, 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 Director John Morton, U.S. Immigration and Customs Enforcement (ICE).
Matthew Andrew Carter, aka “William Charles Harcourt” and “Bill Carter,” 66, of Brighton, Mich., was charged in a superseding indictment filed yesterday in the Southern District of Florida with four counts of traveling in foreign commerce for the purpose of engaging in illicit sexual conduct with minors. On May 8, 2011, Carter was arrested in Miami on a criminal complaint filed in the Southern District of Florida. He is currently detained.
“The acts that the defendant is charged with committing, quite simply, defy belief. As charged in the indictment, he preyed upon and terrorized impoverished Haitian children who were in dire need of the services offered by the Morning Star Center – the very children he was purporting to help,” said Assistant Attorney General Breuer. “As this indictment shows, we will not allow sexual predators to avoid facing justice by committing their crimes in foreign countries. Together with our law enforcement partners abroad, we are determined to combat the sexual abuse of children no matter where it occurs.”
“This defendant preyed on innocent Haitian children living in severely depressed conditions, making his conduct particularly deplorable,” said U.S. Attorney Ferrer. “Rather than using Morning Star as he promised – to administer aid and provide sanctuary to needy children – he used the center to manipulate, abuse and sexually exploit them. Sexual predators like this defendant cannot act with impunity. We will pursue and prosecute them, no matter where they choose to commit their heinous crimes.”
“Few crimes are as despicable as the ones committed against these children in Haiti. For years, he sexually abused poor and orphaned children who depended upon him for food and shelter – all under the guise of doing noble work,” said ICE Director Morton, “ICE is committed to working with our partners here and abroad to catch individuals, like this man, who engage in child sex tourism.”
According to court documents, prior to his arrest, Carter operated and lived at Morning Star Center in Port-au-Prince, Haiti. Morning Star Center, which Carter operated since the mid-1990s, was a residential facility that provided shelter, food and education to Haitian minors. The minors who lived at the center were orphans or from impoverished families who could not support them. From the mid-1990s to the present, Carter frequently traveled back and forth between the United States and the center in Haiti, often to raise funds for the continued operation of the center. According to court documents, Carter allegedly sexually abused several minors in his care and custody at Morning Star Center during this time period. As alleged in court documents, Carter required the child victims to engage in illicit sexual conduct in exchange for gifts or money or in order to remain at the center and continue receiving food, shelter and schooling.
The case against Carter was investigated by ICE’s Homeland Security Investigations (HSI) in Miami; the ICE HSI Assistant Attache’s Office in Santo Domingo, Dominican Republic; and the ICE HSI Santo Domingo Transnational Criminal Investigative Unit. Substantial assistance was provided by the FBI’s Washington and Miami Field Offices, the U.S. Secret Service in Miami, and the U.S. Embassy in Port-au-Prince, Haiti. The case is being prosecuted by Trial Attorney Bonnie L. Kane of the Criminal Division’s Child Exploitation and Obscenity Section and Assistant U.S. Attorney Maria K. Medetis of the Southern District of Florida.
If convicted, Carter faces a maximum sentence of 15 years in prison for one count of child sex tourism and a maximum sentence of 30 years in prison for each of the other three child sex tourism counts.
The details contained in the indictment are allegations. The defendant is presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
East Hartford, Conn., Woman Sentenced to More Than Nine Years in Prison for Sex Trafficking of MinorsRead the Press Release
WASHINGTON – An East Hartford, Conn., woman was sentenced yesterday by U.S. District Judge Mark R. Kravitz in New Haven, Conn., to 110 months in prison for the sex trafficking of two minor girls in 2009, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney David B. Fein for the District of Connecticut.
Hassanah Delia, 24, was also ordered to serve five years of supervised release following her prison term. Delia pleaded guilty on Dec. 7, 2010, to two counts of sex trafficking by force, fraud or coercion.
According to court documents and statements made in court, Delia and Jarell Sanderson recruited two 14-year-old girls to work as prostitutes. In July 2009, Sanderson and Delia transported the girls to hotels in Hartford and East Hartford where the girls engaged in sexual conduct with men in exchange for money that was paid either to Sanderson or Delia. The men who paid to engage in sexual conduct with the girls had responded to an advertisement Sanderson placed on a website by calling a phone that was answered by Delia, who then set up appointments for the girls.
Sanderson pleaded guilty on Jan. 20, 2011, to one count of conspiracy to commit sex trafficking of children and two counts of sex trafficking of children. On June 7, 2011, he was sentenced to 310 months in prison.
Delia and Sanderson will be required to pay restitution to the minor victims in an amount to be determined after additional court proceedings.
This matter was investigated by the FBI and the East Hartford Police Department. The case was prosecuted by Assistant U.S. Attorney David E. Novick and Trial Attorney Alecia Riewerts Wolak of the Criminal Division’s Child Exploitation and Obscenity Section.
Thursday 23 June 2011
Two Men Charged in Plot to Attack Seattle Military Processing CenterRead the Press Release
SEATTLE – Two men were arrested late last night and are charged by criminal complaint with terrorism and firearms related charges. The complaint alleges that Abu Khalid Abdul-Latif, aka Joseph Anthony Davis, 33, of Seattle, and Walli Mujahidh, aka Frederick Domingue, Jr., 32, of Los Angeles, took possession of machine guns that they purchased and planned to use in an attack on the Military Entrance Processing Station (MEPS) located on East Marginal Way, Seattle.
Law enforcement has been monitoring Abdul-Latif and Mujahidh, including the weapons transaction, to prevent the attack and protect the public. Unbeknownst to the defendants, the weapons were rendered inoperable and posed no risk to the public. The defendants initially planned an attack on Joint Base Lewis-McChord in Washington State, but later changed targets. The defendants intended to carry out their attack with both grenades and machine guns.
“The complaint alleges these men intended to carry out a deadly attack against our military where they should be most safe, here at home,” said U.S. Attorney Jenny A. Durkan. “This is a sobering reminder of our need to be vigilant and that our first line of defense is the people who live in our community. We were able to disrupt the plot because someone stepped forward and reported it to authorities. I commend the joint efforts of the FBI, the Seattle Police Department, and the Joint Terrorism Task Force who quickly recognized the seriousness of the threat and ensured the safety of the community.”
Law enforcement first became aware of the potential threat when a citizen alerted them that he/she had been approached about participating in the attack and supplying firearms to the conspirators. The person then agreed to work with law enforcement, which began monitoring Abdul-Latif and Mujahidh. Since early June the conspirators were captured on audio and videotape discussing a violent assault on the Military Entrance Processing Station. The MEPS is where each branch of the military screens and processes enlistees. In addition to housing many civilian and military employees, the building houses a federal daycare center.
“Driven by a violent, extreme ideology, these two young Americans are charged with plotting to murder men and women who were enlisting in the Armed Forces to serve and protect our country. This is one of a number of recent plots targeting our military here at home, ” said Todd Hinnen, Acting Assistant Attorney General for National Security. “The threat was averted by the combined efforts of the federal, state and local law enforcement officers that make up the FBI’s Joint Terrorism Task Force.”
“The FBI remains committed to utilizing intelligence-based investigations to thwart would-be terrorists,” said Laura Laughlin, Special Agent in Charge of the FBI Seattle Division. “This case epitomizes the value and capabilities of the FBI’s Joint Terrorism Task Force concept as a means of preventing acts of terrorism. But for the courage of the cooperating witness, and the efforts of multiple agencies working long and intense hours, the subjects might have been able to carry out their brutal plan.”
“This attack was foiled because of the trust and relationships the men and women of the Seattle Police Department enjoy with our community,” said Seattle Police Chief John Diaz. “The complainant felt safe approaching a Seattle Police Detective and, in doing so, ended the plot intended to take innocent lives. This cooperative investigation involving local, state, and federal partners worked exactly as intended.”
Abdul-Latif and Mujahidh are charged by complaint with conspiracy to murder officers and employees of the United States, conspiracy to use a weapon of mass destruction (grenades), and possession of firearms in furtherance of crimes of violence. Abdul-Latif is also charged with two counts of illegal possession of firearms The defendants will make their initial appearance on the complaint at 2:30 p.m. in front of Magistrate Judge Mary Alice Theiler, on the 12th floor of the federal courthouse at 700 Stewart Street, Seattle.
Both Abdul-Latif and Mujahidh face potential sentences of life in prison if convicted of the charges.
The case is being prosecuted by the U.S. Attorney’s Office for the Western District of Washington, with assistance from the Counterterrorism Section of the Justice Department’s National Security Division. The investigation is being conducted by the FBI’s Joint Terrorism Task Force, which has investigators from federal, state and local law enforcement. The Bureau of Alcohol, Tobacco, Firearms & Explosives contributed significant expertise to this investigation.
The charges contained in the complaint are only allegations. A person is presumed innocent unless and until he or she is proven guilty beyond a reasonable doubt in a court of law.
Two Indicted in Kentucky on Conspiracy and Harboring of Undocumented Bolivian National for Financial GainRead the Press Release
WASHINGTON – Javier Arce, 58, and Cristina Mier Arce, 55, were indicted by a federal grand jury for conspiracy and harboring of an undocumented Bolivian national for their financial gain, the Justice Department announced today.
According to the indictment, the defendants, who were formerly married to one another, recruited an undocumented Bolivian woman to work as their domestic servant and harbored her unlawfully for a total of nearly 15 years. The indictment alleges that beginning in 1994, the defendants recruited the woman to travel to the United States, and then conspired to harbor her and derive financial benefit from her labor as a full-time domestic servant from 1994 to 2006.
The indictment, filed in the Western District of Kentucky, also alleges that the defendants confiscated the woman’s passport, threatened that she would be arrested and deported if she left their home, and falsely assured her that her wages were being deposited into a bank account maintained on her behalf, while actually failing to pay her as promised for her service. The indictment further alleges that Javier Arce harbored the woman for financial gain from 2006-2009.
At arraignment today, both defendants entered not guilty pleas and were released on $100,000 bonds. A trial date has been scheduled in U.S. District Court in Louisville, Ky., on Aug. 30, 2011, at 9:30 a.m. before Judge John G. Heyburn II. If convicted, Javier Arce faces a maximum sentence of 30 years in prison, $750,000 fine and three years supervised release. Christina Mier Arce faces a maximum sentence of 20 years in prison, $500,000 fine and three years supervised release.
The charges in the indictment are merely allegations, and all defendants are presumed innocent until proven guilty in a court of law.
The case is being investigated by the FBI and prosecuted jointly by Assistant U.S. Attorney Joshua Judd and Trial Attorney Daniel Weiss of the Civil Rights Division’s Human Trafficking Prosecution Unit.
Three Brooklyn Physical Therapy Clinic Employees Plead Guilty in a $3.4 Million Health Care Fraud SchemeRead the Press Release
WASHINGTON – Three employees of the Solstice Wellness Center, a Brooklyn-area clinic that purported to specialize in providing physical therapy and various diagnostic tests, have pleaded guilty in connection with a $3.4 million Medicare fraud scheme, announced the Departments of Justice and Health and Human Services (HHS).
Solstice employee Dmitry Shteyman, 36, pleaded guilty today before U.S. Magistrate Judge Steven M. Gold in Brooklyn, N.Y. Solstice employees Aleksey Shteyman, 42, and Maxsim Shvedkin, 39, pleaded guilty before Judge Gold on June 20, 2011, and June 21, 2011, respectively. All three defendants pleaded guilty to one count of conspiracy to commit health care fraud.
According to court documents, Dmitry and Aleksey Shteyman and Shvedkin were involved in a scheme to pay cash kickbacks to Medicare beneficiaries to induce the beneficiaries to visit Solstice. The beneficiaries were transported to and from Solstice purportedly to receive physicians’ services, physical therapy and diagnostic tests. At their plea hearings, Dmitry and Aleksey Shteyman and Maxsim Shvedkin admitted that they paid kickbacks to the beneficiaries so that Medicare could be billed for services and diagnostic tests that were not medically necessary. As a result of the fraud scheme, Medicare was billed more than $3.4 million for services that were not actually rendered and that were not medically necessary.
At sentencing, the defendants face a maximum sentence of 10 years in prison. Sentencing for Dmitry Shteyman is scheduled for Oct. 20, 2011. Sentencing for Aleksey Shteyman and Maxsim Shvedkin has not yet been scheduled.
Defendant Sara Kalantarov, a Solstice employee, and Yefim Drakhler, a Medicare beneficiary, have also pleaded guilty for their roles in the scheme. Ilya Gershkovich, Evgeny Gil, Yefim Kornfeld, Valentina Mushinskaya, Shelya Pinskaya and Vladimir Rubin were also charged for participating in the scheme and are scheduled for trial in October 2011.
The guilty pleas were announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney Loretta E. Lynch for the Eastern District of New York and Special Agent-in-Charge Thomas O’Donnell of the HHS-Office of Inspector General (HHS-OIG).
The case is being prosecuted by Acting Assistant Chief O. Benton Curtis III and Trial Attorneys Katherine Houston and Steven Kim of the Criminal Division’s Fraud Section. HHS-OIG, the New York Attorney General’s Medicaid Fraud Control Unit, and the New York Office of the Medicaid Inspector General conducted the investigation. The case was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of New York.
Since their inception in March 2007, 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 .
Texas Contract Security Officer Charged with Sexual AbuseRead the Press Release
WASHINGTON - The Justice Department today announced the unsealing of an indictment charging Contract Security Officer Edwin Rodriguez, 31, of Raymondville, Texas, with sexual abuse of a female Immigration and Customs Enforcement (ICE) detainee who was under his supervision at the Willacy Detention Center, a federally contracted detention facility in Raymondville, Texas.
Rodriguez is charged in a one-count felony indictment returned by a Brownsville, Texas, grand jury under seal on June 21, 2011, with the felony offense of sexual abuse of a ward. The indictment was unsealed following Rodriguez’s arrest on June 22, 2011. According to allegations contained in the indictment, Rodriguez engaged sexual intercourse with a female detainee on or about Oct. 26, 2008, while she was being held in official detention pending deportation.
Rodriguez appeared today before U.S. Magistrate Felix Recio in the Southern District of Texas today, and entered a plea of not guilty. The court has ordered Rodriguez to remain in federal custody without bond pending a detention hearing on June 27, 2011.
An indictment is only an accusation of a crime, and a defendant is presumed innocent unless and until proven guilty. If convicted, Rodriguez faces a maximum sentence of 15 years in prison, $250,000 fine and three years of supervised release.
The case has been investigated by ICE’s Office of Professional Responsibility in Harlingen, Texas. Assistant U.S. Attorney Kebharu Smith and Civil Rights Division Criminal Section Trial Attorney Adriana Vieco are handling the prosecution.
Pittsburgh Crips Gang Member Sentenced to 10 Years in PrisonRead the Press Release
WASHINGTON – A Pittsburgh man was sentenced today to 10 years 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.
Lynn Gibson, 26, was also sentenced by Senior U.S. District Judge Gustave Diamond to serve three years of supervised release following the prison term. Gibson pleaded guilty on Feb. 2, 2011, to one count of conspiracy to engage in a racketeering enterprise.
According to the guilty plea, Gibson 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, Clark was a member of the Northview Heights/ Fineview Crips, a criminal street gang operating out of the Northview Heights public housing facility in the Northside neighborhood, and in the nearby Fineview neighborhood of Pittsburgh. The gang had been operating in the Northside since 2002; in 2003, it formed an alliance with the Brighton Place Crips to expand the gang’s drug trafficking territory and increase the gang’s capability for 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, the Brighton Place/Northview Heights Crips gang maintains an ongoing feud with the Manchester Original Gangsters, a criminal street gang located in the Manchester area of the Northside Section of Pittsburgh. Brighton Place/Northview Heights Crips gang members identify themselves by wearing blue, using Crips gang hand signals, and using phrases such as “Cuz,” “C-Safe,” “Loc,” and “G.K.” According to court documents, members and associates of the gang gain greater authority and prestige within the gang based upon their reputation for violence and their ability to obtain and sell a steady supply of illegal drugs.
According to court documents, Gibson was considered a respected member of the gang who sold narcotics and taught other members how to successfully distribute narcotics. Gibson was involved in the distribution of heroin, and possessed firearms in connection with the enterprise’s criminal activities.
Gibson is one 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, 16 members of the Brighton Place/ Northview Heights Crips who were charged in this indictment have pleaded guilty to racketeering charges.
This case is being prosecuted by Assistant U.S. Attorneys Charles A. Eberle and Troy Rivetti 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 ATF; the City of Pittsburgh Bureau of Police; the Allegheny County, Penn., Police Department; and the Allegheny County Sheriff’s Office.
Members of International Procurement Network Indicted for Supplying Iran with U.S. Military Aircraft ComponentsRead the Press Release
MACON, Ga. – Seven individuals and five corporate entities based in the United States, France, the United Arab Emirates (U.A.E.) and Iran have been indicted in the Middle District of Georgia for their alleged roles in a conspiracy to illegally export military components for fighter jets and attack helicopters from the United States to Iran. One of the defendants and his company were sentenced yesterday, with the individual receiving nearly five years in prison. Another defendant and his company have admitted their illegal conduct and also pleaded guilty in the investigation.
Federal prosecutors today unsealed a superseding indictment in Macon, Ga., charging eight of the defendants with conspiring to violate and violating the Arms Export Control Act (AECA), the International Emergency Economic Powers Act (IEEPA) and the Iranian Transactions Regulations, as well as conspiracy to defraud the United States, money laundering and false statement violations. Charges against the four other defendants, who have pleaded guilty in the case, are contained in the original indictment in the investigation that was filed previously.
The indictment and other enforcement actions were announced by Todd Hinnen, Acting Assistant Attorney General for National Security; Michael J. Moore, U.S. Attorney for the Middle District of Georgia; Brock Nicholson, Special Agent-in-Charge of the U.S. Immigration and Customs Enforcement, Homeland Security Investigations (ICE-HSI) office in Atlanta; Brian D. Lamkin, Special Agent-in-Charge of the FBI’s Atlanta Field Division; and Robert Luzzi, Special Agent-in-Charge of the Commerce Department, Office of Export Enforcement (OEE) Miami Field Office.
The Defendants
Thus far, four defendants based in the United States have been charged as part of the investigation. They are The Parts Guys LLC, a company in Port Orange, Fla., that maintains a warehouse at the Middle Georgia Municipal Airport in Macon, as well as the president of The Parts Guys, Michael Edward Todd, who is a U.S. national. In addition, Galaxy Aviation Services, a company in St. Charles, Ill., and its president, Hamid Seifi, also known as Hank Seifi, an Iranian-born U.S. national, have been charged.
Todd was arrested last year in Atlanta based on the original indictment in the case. Todd and his company, The Parts Guys, pleaded guilty to conspiracy to violate the AECA on May 9, 2011, and have yet to be sentenced. Federal agents arrested Seifi in Atlanta earlier this year, also based on the original indictment. Seifi and his company, Galaxy Aviation, pleaded guilty on Feb. 24, 2011, to conspiracy to violate the AECA and violating the IEEPA. Yesterday, Seifi was sentenced to 56 months in prison followed by three years of supervised release, a fine of $12,500 and forfeiture of $153,950, while Galaxy Aviation, which is now defunct, received a $400 special assessment.
Three defendants based in France have also been indicted as part of the investigation. They are Aerotechnic, a company in Pinsaguel, France, and its president, Philippe Sanchez, a French national, as well as Luc Teuly, a French national and the sales manager of Aerotechnic. Each of these defendants remains a fugitive.
Two defendants based in the U.A.E. have also been indicted in the case. They are Aletra General Trading, a company in Dubai doing business as “Erman & Sultan Trading Co,” and Syed Amir Ahmed Najfi, an Iranian national and purchaser for Aletra. Najfi remains a fugitive.
Three defendants based in Iran have also been charged in the case. They are Sabanican Company, a company in Tehran, and its president, Hassan Seifi, an Iranian national, as well as Reza Seifi, an Iranian national and the managing director of Sabanican Company. Each of these defendants remains at large.
As part of the U.S. government’s coordinated action against this procurement network, the Commerce Department announced today that it will add the eight defendants in France, Iran and the U.A.E. to its “Entity List.” The Entity List provides notice to the public that certain exports, re-exports and transfers (in-country) to parties identified on the Entity List require a license from the Commerce Department, and that availability of license exceptions in such transactions is limited. All eight parties will be added to the Entity List with a licensing requirement for all items subject to the Commerce Department export regulations and with a presumption of denial.
The Charges
According to the charges, the defendants conspired to export components for attack helicopters and fighter jets to Iran without obtaining the required U.S. export licenses. These components included military parts for the Bell AH-1 attack helicopter, the UH-1 Huey attack helicopter, as well as the F-5 and F-4 fighter jets.
Defendant Najfi and his firm in the U.A.E. are alleged to have placed orders and purchased military aircraft parts, including those for the Bell AH-1 attack helicopter, from Todd and his company, The Parts Guys, in the United States. Todd and other conspirators then attempted to and did cause the export of the aircraft parts to the U.A.E.
Defendant Hank Seifi and his firm in Illinois also allegedly placed orders and purchased U.S. aircraft parts from Todd and his company in Georgia -- on behalf of Hassan Seifi, Reza Seifi and their company in Iran. According to the charges, Todd and other conspirators then caused these aircraft parts to be exported to Iran via the defendants in France: Sanchez, Teuly and their company, Aerotechnic.
The charge of conspiracy carries a maximum penalty of five years in prison, while violating the AECA carries a maximum penalty of 20 years in prison, and violating IEEPA carries a maximum penalty of 20 years in prison. Money laundering carries a maximum 20 years in prison, while making false statements carries a maximum of five years in prison.
“The defendants in this case are alleged to have conspired to defraud the United States by illegally acquiring and exporting fighter jet and attack helicopter components. Keeping such advanced weaponry, which is designed to protect the men and women of our Armed Forces and to defend our national interests, from falling into the hands of state sponsors of terror has never been more important,” said Todd Hinnen, Acting Assistant Attorney General for National Security.
“Through coordinated law enforcement efforts, we have cut off more than a branch of this illegal supply tree; we have cut off the tree at its trunk. These parts have a military purpose, and I am determined to see that they are not used to harm the United States, its soldiers, citizens or friends. This type of criminal activity should remind each of us that we must be ever vigilant in our efforts to protect our national security. The threat is very real, and comes from even the least suspected places, including middle Georgia,” said U.S. Attorney Michael Moore.
“The illegal export of U.S. weapons and military technology presents a direct threat to our national security,” said Brock Nicholson, Special Agent-in-Charge of ICE-HSI in Atlanta. “This investigation demonstrates the importance of preventing our military equipment from falling into the wrong hands, where it could potentially be used against our military members, our homeland and our allies. Enforcing U.S. export laws is one of our top priorities, and we will continue working with our law enforcement partners to ensure that those who put our country at risk are discovered and brought forward for prosecution.”
Brian D. Lamkin, Special Agent-in-Charge, FBI Atlanta, stated: “The cooperative efforts among the FBI, ICE and U.S. Commerce was critical in bringing this case forward for prosecution by the U.S. Department of Justice. The enforcement of U.S. laws that prohibit the acquisition of specified defense related items is paramount to national security and is a daunting task when back dropped against the vast movement of legitimate international trade that occurs every day in the U.S. The FBI is pleased with the role that it has played in this multi-agency enforcement effort.”
“ The Commerce Department's Office of Export Enforcement (OEE) dedicates one hundred percent of its resources to enforcing export laws, and today's case is the result of ongoing cooperation with Immigration and Customs Enforcement and the FBI to protect our national security,” said Robert Luzzi, Special Agent-in-Charge of OEE's Miami Field Office. “Parties who export to embargoed destinations such as Iran will be pursued and prosecuted to the fullest extent of the law.”
This case was investigated by ICE Homeland Security Investigations in Atlanta, FBI Atlanta Field Division and the Department of Commerce’s OEE.
The prosecution is being handled by Assistant U.S. Attorneys Jennifer Kolman and Danial E. Bennett from the U.S. Attorney’s Office for the Middle District of Georgia and Trial Attorneys Ryan P. Fayhee and Brandon L. Van Grack from the Counterespionage Section of the Justice Department’s National Security Division.
The public is reminded that an indictment contains mere allegations and that defendants are presumed innocent unless and until proven guilty.
Justice Department Reaches Settlement with George’s Inc.Read the Press Release
WASHINGTON – The Department of Justice announced today that it has reached a settlement with George’s Inc. that requires George’s to make important capital improvements to a Harrisonburg, Va., chicken processing plant in order to settle the litigation surrounding George’s acquisition of the Tyson Foods Inc. plant. The department said that the settlement will avert the likely adverse competitive effects that would arise from the acquisition in western Virginia.
The department’s Antitrust Division filed a proposed settlement in U.S. District Court for the Western District of Virginia in Harrisonburg. If approved by the court, the settlement would resolve the civil antitrust lawsuit filed by the department on May 10, 2011, and would resolve the lawsuit’s competitive concerns.
“The proposed settlement enhances the competitive viability and increases the production of the Harrisonburg poultry processing plant, which translates into more opportunities to grow and process poultry,” said Christine Varney, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “This resolution not only benefits poultry growers, but also the Shenandoah Valley community. It also demonstrates our commitment to enforcing the antitrust laws to protect competition in important agricultural markets.”
In May 2011, George’s acquired Tyson Foods’ Harrisonburg chicken processing plant. The department learned of the transaction, which was not required to be reported under the premerger notification law, shortly before it was completed. The department filed a lawsuit alleging that the acquisition would likely have the anticompetitive effect of reducing the prices paid to Shenandoah Valley area farmers who raise chickens for processors such as Tyson Foods and George’s.
The settlement requires that George’s make capital improvements to the Harrisonburg chicken processing plant that will lead to a significant increase in the number of chickens that will be processed at the facility. The improvements include the installation of a special freezer and deboning equipment, which will allow George’s to produce a variety of highly valued products at both its Harrisonburg and Edinburg facilities in the Shenandoah Valley. As a result of these improvements, George’s will have the incentive and ability to increase local poultry production, thereby increasing the demand for grower services and averting the likely adverse competitive effects arising from the acquisition. In addition, the division will monitor George’s efforts to improve the plant until the new equipment is installed and operational.
The department also noted in its court documents that there were significant concerns associated with the viability of the Harrisonburg processing plant, which was operating at a loss over the past few years. Taking all of the facts and circumstances into consideration, including the likely benefits resulting from the required improvements, the department determined that the proposed settlement is an effective remedy.
George’s, headquartered in Springdale, Ark., is the 11th largest chicken processor in the United States, with output of more than 20 million pounds of chicken per week. In addition to its Shenandoah Valley operations, George’s processes chicken in Springdale and Cassville, Mo.
Tyson Foods, headquartered in Springdale, is the largest chicken processor in the United States, with output of more than 205 million pounds of chicken per week.
The proposed settlement, along with a competitive impact statement, will be published in the Federal Register. Any person may submit written comments concerning the proposed settlement during a 60-day comment period to William H. Stallings, Chief, Transportation, Energy & Agriculture Section, 450 Fifth Street, N.W., Suite 8000, Washington, D.C. 20530. At the conclusion of the 60-day comment period, the court may enter the proposed settlement upon finding that it is in the public interest.
Justice Department Issues Technical Assistance Document on Enforcement of the Supreme Court Decision in Olmstead v. L.C.Read the Press Release
WASHINGTON – The Department of Justice released a new technical assistance document describing public entities’ obligations and individuals’ rights under the integration mandate of title II of the Americans with Disabilities Act (ADA) and the 1999 landmark Supreme Court decision, Olmstead v. L.C. The Olmstead decision held that the ADA requires public entities to provide community-based services to persons with disabilities when such services are appropriate; the affected persons do not oppose community-based treatment; and community-based services can be reasonably accommodated. The document also provides questions and answers on a variety of ADA enforcement issues related to Olmstead.
Additionally, in commemorating the 12th anniversary of the Olmstead decision yesterday, the department launched a new section of its ADA website, www.ada.gov/olmstead , providing information and resources about the decision and its enforcement. In addition to the newly created technical assistance document, users can visit the site to find briefs filed by the Department, as well as other materials relevant to this important area of law. The ADA website provides easy access to an extensive collection of ADA technical assistance materials and settlement agreements, as well as information about enforcement, mediation, technical assistance and certification activities and links to other sites with ADA information. The addition of the new Olmstead section of the site will provide critical information to individuals with disabilities, advocates and state and local officials responsible for complying with the ADA’s integration mandate.
“The Olmstead decision recognized the rights of individuals with disabilities to live the lives they choose, but its promise has not yet been fully realized. Far too many people remain segregated in institutions when they would rather be thriving in their communities,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Justice Department is committed to making the promise a reality, and will continue to aggressively enforce Olmstead.”
President Obama has made clear his commitment to Olmstead enforcement, and in 2009 launched “The Year of Community Living,” directing agencies to vigorously enforce Olmstead and the rights of individuals with disabilities. Since that time, the Civil Rights Division has made Olmstead enforcement a top priority, joining or initiating Olmstead litigation in more than 25 cases in 17 states. In 2010, the division reached a landmark settlement agreement with the state of Georgia that will allow thousands of individuals with disabilities to receive services in community settings, and will serve as a model for comprehensive agreements going forward.
For more information about the ADA , including how to file complaints related to Olmstead enforcement, c all the Justice Department’s toll-free ADA Information Line at (800) 514-0301 or (800) 514-0383 (TTY), or access the department’s ADA website at www.ada.gov/olmstead. For the full technical assistance document, please visit www.ada.gov/olmstead/q&a_olmstead.htm.
Justice Department Files Lawsuit Against the Alamance County, North Carolina, Sheriff’s OfficeRead the Press Release
WASHINGTON– The Justice Department filed a lawsuit today against the Alamance County Sheriff’s Office (ACSO), Alamance County and Alamance County Sheriff Terry Johnson seeking a judicial declaration that department attorneys may interview particular ACSO personnel outside the presence of ACSO’s counsel. The relevant North Carolina rule of professional conduct permits department attorneys to interview current non-command staff and all former ACSO employees outside the presence of ACSO’s counsel.
The Department of Justice is currently investigating allegations that ACSO, Alamance County and Sheriff Terry Johnson have engaged in discriminatory policing and unconstitutional searches and seizures. In the complaint, the department alleges that numerous current and former ACSO personnel are fearful that if they cooperate with the United States' investigation, they may be subject to retaliation. Therefore, the department’s ability to conduct interviews outside the presence of ACSO’s counsel is necessary to ensure that former and current employees feel free to openly share information with the government concerning ACSO practices.
“It is unfortunate that the department was forced to resort to litigation when the applicable ethical rules are so clear in this instance,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “A judicial decision will allow the department to move forward with the investigation.”
The department filed today’s lawsuit after exhausting all cooperative measures to negotiate access to the interviews with ACSO. The department has attempted to secure voluntary compliance with its investigation since July 2010.
The department’s investigation remains open and ongoing. For more information on the Justice Department’s Civil Rights Division, please visit www.justice.gov/crt
Justice Department Files Lawsuit Against City of New Berlin, Wisconsin, for Blocking Affordable HousingRead the Press Release
WASHINGTON - The Department of Justice announced today that it has filed a lawsuit against the city of New Berlin, Wis., alleging that the city violated the Fair Housing Act by repeatedly taking action to prevent the construction of an affordable housing development by a private developer, MSP Real Estate Inc.
The complaint, filed today in the U.S. District Court for the Eastern District of Wisconsin, alleges that the city of New Berlin violated the Fair Housing Act when it took actions to block a proposal by MSP, first submitted in March 2010, to construct 180 units of affordable housing in the City Center area of New Berlin. All 180 units were to be reserved for persons earning 60 percent of the area median income or less, with some units set aside for persons earning less than 50 percent of the area median income. MSP’s project was to be financed using state-allocated tax credits under the federal Low Income Housing Tax Credit program, which provides federal tax credits to private developers as an incentive to create affordable housing. The planning commission initially approved the project on May 3, 2010. Later that month, however, the mayor and other city officials received numerous emails, calls and other communications from residents opposing the project. Some of the opponents expressed concern that the prospective tenants would be African-Americans or other minorities and used racially derogatory terms to refer to the prospective residents, or implied racial bias as the reason for objecting to the development. In response to the opposition, the planning commission reversed itself and denied MSP’s proposal on July 12, 2010. The common council of New Berlin denied a revised proposal submitted by MSP on Jan. 25, 2011.
“At a time when so many families are in need of decent and affordable housing, it is imperative that unlawful discrimination not be a barrier to the construction of housing that is affordable for seniors and working families with modest incomes,” said Thomas E. Perez, Assistant Attorney General for Civil Rights. “This case demonstrates our resolve to contest discriminatory actions by municipalities that unlawfully block the development of affordable housing wherever they occur.”
“This filing shows a history of discriminatory conduct and the department not only seeks a reversal of the discriminatory denial of permission to build that housing but other forms of remedial relief under the Fair Housing Act—including the municipality’s commitment to prevent a recurrence of this behavior. Today’s action highlights our strong, focused, tireless work to ensure that the civil rights of all Americans are observed and enforced in all communities—in the housing area and all others guaranteed by our Constitution and laws,” said U.S. Attorney for the Eastern District of Wisconsin James A. Santelle.
The lawsuit seeks a court order that would, among other things, require the city to approve MSP’s proposal to construct affordable housing in the City Center and require it to take steps to prevent the recurrence of any similar discriminatory conduct. The lawsuit also seeks monetary damages for persons harmed by the city’s actions and a civil penalty. The complaint is an allegation of unlawful conduct. The allegations in the complaint must still be proven in federal court.
The federal Fair Housing Act prohibits discrimination in housing based on race, color, religion, national origin, sex, disability and familial status. Fair housing enforcement is a priority of the Civil Rights Division. More information about the Civil Rights Division and the laws it enforces is available at www.justice.gov/crt . Individuals who believe that they may have been victims of housing discrimination can call the Housing Discrimination Tip Line at 1-800-896-7743, email the Justice Department at [email protected] , or contact the U.S. Department of Housing and Urban Development at 1-800-669-9777.
Illinois Man Pleads Guilty to Federal Duck Hunting ViolationsRead the Press Release
WASHINGTON – Professional duck hunter and guide Jeffrey B. Foiles pleaded guilty today in federal court in Springfield, Ill., to wildlife charges arising from the illegal sale of guided waterfowl hunts, the Department of Justice’s Environment and Natural Resources Division announced today.
Foiles, 54, of Pleasant Hill, Ill., pleaded guilty to an information charging him with one misdemeanor count of unlawful sale of wildlife in violation of the Lacey Act, as well as one misdemeanor count of unlawfully taking migratory game birds in violation of the Migratory Bird Treaty Act. At the same time, the company that operates Foiles’ hunting club, the Fallin’ Skies Strait Meat Duck Club LLC, located in Pike County, Ill., pleaded guilty to an information charging it with one felony count of unlawful sale of wildlife in violation of the Lacey Act and one felony count of making false writings in a matter within the jurisdiction of the U.S. Fish and Wildlife Service.
The Lacey Act is a federal law that makes it illegal to knowingly transport or sell wildlife taken in violation of federal law or regulation. The act defines the sale of wildlife to include the sale of guiding services for the illegal taking of wildlife.
According to the plea agreements filed today, between 2003 and 2007, Foiles sold and guided waterfowl hunts at the club for the purpose of illegally hunting ducks and geese in excess of hunters’ individual daily bag limits. Guided hunters paid $250 per day for hunts at the club. Foiles and others at the club also falsified hunting records in order to conceal the excesses.
According to the plea agreements filed today, the government and the defendants have jointly asked the court to sentence Foiles to 13 months in prison, to be followed by one year of supervised release during which time he may not hunt or guide hunters, and to pay a $100,000 fine for which Fallin’ Skies Strait Meat Duck Club LLC agreed to serve as guarantor. Further, Foiles agreed to one additional year, following completion of his term of supervised release, during which he will not hunt or guide.
The court must determine whether or not to accept the plea agreements. If the plea agreements are accepted by the court, the government has agreed to dismiss the pending felony indictment against Foiles.
The sentencing hearing for Foiles is currently set for Sept. 21, 2011, before U.S. Magistrate Judge Byron G. Cudmore. The sentencing hearing for Fallin’ Skies Strait Meat Duck Club LLC is scheduled for Oct. 27, 2011, before U.S. District Judge Richard Mills.
The case was investigated by the U.S. Fish & Wildlife Service, in cooperation with the Illinois Department of Natural Resources, the Iowa Department of Natural Resources, and the government of Canada. The case is being prosecuted by the U.S. Attorney’s Office for the Central District of Illinois and the Justice Department’s Environmental Crimes Section of the Environment and Natural Resources Division.
Wednesday 22 June 2011
Owners of Houston Health Care Company Plead Guilty to <br /> Medicare FraudRead the Press Release
WASHINGTON – Two owners of a Houston health care company pleaded guilty for their roles in a scheme to defraud Medicare of more than $800,000, announced the Departments of Justice and Health and Human Services (HHS).
Kemmie Houston, 43, pleaded guilty today and Sharon Beal, 47, pleaded guilty yesterday in U.S. District Court in Houston. Houston and Beal both pleaded guilty before U.S. District Judge David Hittner to one count of conspiracy to commit health care fraud. In their pleas, Beal and Houston admitted that they defrauded Medicare of $851,212.
According to court documents, Beal and Houston owned and operated STK Consultants. STK maintained a Medicare provider number in order to submit Medicare claims for the costs of durable medical equipment (DME) and purported to provide orthotics, power wheelchairs, power wheelchair accessories and other DME to Medicare beneficiaries. According to court documents, STK submitted claims to Medicare for DME that was medically unnecessary and/or not provided. Many of the orthotic devices were components of what was referred to as an “arthritis kit,” and were purported to be for the treatment of arthritis-related conditions; in fact, however, they were not medically necessary or appropriate for such conditions. The arthritis kit generally contained a number of orthotic devices including braces for both sides of the body and related accessories such as heat pads. In total, from August 2005 through August 2010, STK submitted approximately $851,212 in fraudulent claims to Medicare.
Beal is scheduled to be sentenced on Sept. 14, 2011, and Houston is scheduled to be sentenced on Sept. 15, 2011. Beal and Houston each face a maximum sentence of 10 years in prison.
The guilty pleas were announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney José Angel Moreno of the Southern District of Texas; Texas Attorney General Greg Abbott; Acting Special Agent-in-Charge Russell D. Robinson of the FBI’s Houston Field Office; and Special Agent-in-Charge Mike Fields of the Dallas Regional Office of HHS Office of Inspector General (HHS-OIG), Office of Investigations.
This case is being prosecuted by Trial Attorney Laura M.K. Cordova and Assistant Chief Sam S. Sheldon of the Criminal Division’s Fraud Section. The case was brought as part of the Medicare Fraud Strike Force, supervised by the U.S. Attorney’s Office for the Southern District of Texas and the Criminal Division’s Fraud Section.
Since their inception in March 2007, Medicare Fraud Strike Force operations in nine locations have charged more than 1,000 individuals who collectively have falsely 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 .
Owner of Houston Health Care Company Pleads Guilty in Connection with $1.3 Million Medicare Fraud SchemeRead the Press Release
WASHINGTON – An owner of a Houston health care company pleaded guilty today to committing health care fraud and making false statements relating to health care matters, announced the Departments of Justice and Health and Human Services (HHS).
Ekpedeme Obot, 34, pleaded guilty before U.S. District Court Judge Lee Rosenthal in Houston to one count of making false statements relating to health care matters and one count of health care fraud.
According to court documents, Obot was an owner and operator of Praise DME. Praise maintained a Medicare provider number in order to submit Medicare claims for the costs of durable medical equipment (DME) and purported to provide orthotics and other DME to Medicare beneficiaries. According to court documents, Praise submitted claims to Medicare for DME, including orthotic devices that were medically unnecessary and/or not provided. Many of the orthotic devices were components of an “arthritis kit,” and were purported to be for the treatment of arthritis-related conditions; in fact, however, they were not medically necessary or appropriate for such conditions. The arthritis kit generally contained a number of orthotic devices including braces for both sides of the body and related accessories such as heat pads. From March 2007 through August 2008, Obot submitted claims of more than $1.3 million to Medicare and was paid approximately $945,637.
In addition, according to the plea agreement, Obot admitted that he made false statements to Medicare in his supplemental Medicare Enrollment Application when he failed to provide information about a prior felony conviction. Specifically, the Medicare Enrollment Application included a section entitled “Adverse Legal Actions/Convictions,” which required DME providers to list prior felony convictions. Obot was convicted on March 5, 2007, in Harris County, Texas, on a felony theft charge, but in his application, he represented only that he had been subject to a recoupment action by Texas Medicaid in November 2006 that was resolved by entering into a payment plan.
At sentencing, Obot faces a maximum penalty of 10 years in prison on the health care fraud charge and five years in prison on the false statements charge. Sentencing is scheduled for Oct. 12, 2011, at 9:00 a.m., CDT before Judge Rosenthal.
Today’s guilty plea was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney José Angel Moreno of the Southern District of Texas; Texas Attorney General Greg Abbott; Joseph J. Del Favero, Special Agent -in-Charge of the Chicago Field Office of the Railroad Retirement Board Office of Inspector General; Acting Special Agent-in-Charge Russell D. Robinson of the FBI’s Houston Field Office; and Special Agent-in-Charge Mike Fields of the Dallas Regional Office of HHS Office of Inspector General (HHS-OIG), Office of Investigations.
This case is being prosecuted by Special Assistant U.S. Attorney Justin Blan and Trial Attorney Laura M.K. Cordova of the Criminal Division’s Fraud Section. The case was brought as part of the Medicare Fraud Strike Force, supervised by the U.S. Attorney’s Office for the Southern District of Texas and the Criminal Division’s Fraud Section.
Since their inception in March 2007, Medicare Fraud Strike Force operations in nine districts have obtained indictments of more than 1,000 individuals who collectively have falsely 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 .
Nacogdoches, Texas, Man Sentenced to Life in Prison for Role <br /> in 2007 MurdersRead the Press Release
WASHINGTON – A Nacogdoches, Texas, man has been sentenced to life in federal prison for his role in a double homicide that took place in Nacogdoches 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.
Charles Cameron Frazier, aka “Mojo,” 29, pleaded guilty on Jan. 14, 2011, to committing a violent crime in aid of racketeering activity and was sentenced yesterday by U.S. District Judge Marcia Crone in federal court in Beaumont, Texas. Specifically, Frazier admitted that he had participated in the murders of David Mitchamore and Christy Rochelle Brown.
According to information presented in court, Frazier was a member of the Aryan Brotherhood of Texas (ABT), a powerful, 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 commit 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, David Mitchamore, aka “Super Dave,” an ABT member, and his girlfriend, Christie Rochelle Brown, were murdered by Brent Stalsby as a result of a “direct order” issued by ABT member Carl Carver because of Mitchamore’s failure to repay an outstanding debt he allegedly owed to an Aryan Brotherhood general. The bodies of Mitchamore and Brown were discovered in Nacogdoches County on Aug. 10, 2007. Terry Stalsby was present when the “direct order” issued by Carver was delivered to Frazier. On May 25, 2011, Brent Stalsby was sentenced to life in federal prison and Terry Stalsby was sentenced to 162 months in federal prison.
This case is being investigated by the FBI; the Bureau of Alcohol, Tobacco, Firearms and Explosives; the National Gang Targeting, Enforcement and Coordination Center ( Gang-TECC); the National Gang Intelligence Center; 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 U.S. Attorney’s Office in Lufkin, Texas, and the Criminal Division’s Organized Crime and Gang Section, in full cooperation with the Nacogdoches County District Attorney’s Office.
Michael Jackson’s Former General Manager Pleads Guilty to Tax Charges in Washington, D.C., CourtRead the Press Release
WASHINGTON - Raymone Bain, a public relations specialist and the former general manager of the late pop star Michael Jackson, pleaded guilty today in federal court in Washington, D.C., to charges that she failed to file federal and District of Columbia income tax returns, the Justice Department, Internal Revenue Service (IRS) and the District of Columbia Office of Tax and Revenue (OTR) announced.
Bain, a resident of Washington, D.C., pleaded guilty to two counts of failure to file federal income tax returns (Forms 1040) and District of Columbia income tax returns (Forms D-40). U.S. Magistrate Alan Kay scheduled sentencing for Aug. 31, 2011. The federal criminal violation carries a maximum penalty of 12 months in prison and a $100,000 fine. The District of Columbia criminal violation carries a maximum penalty of six months in prison and $5,000 fine.
According to the evidence presented in court, Bain worked in the sports and entertainment industry in the District of Columbia and founded her public relations firm, Davis, Bain & Associates. Beginning in 2006, Bain became personal general manager for the performer Michael Jackson and president of the Michael Jackson Company. In that capacity, she was responsible for daily operations of the Michael Jackson Company, including financial, public relations and marketing tasks. Bain was compensated for her services.
Despite earning substantial income, Bain knowingly failed to file her federal her District of Columbia income tax returns, and she failed to pay income taxes owed during 2006 through 2008. According to the plea documents filed in court today, the tax loss is between $200,000 and $400,000.
Ronald C. Machen Jr., U.S. Attorney for the District of Columbia; John DiCicco, Principal Deputy Assistant Attorney General for the Justice Department’s Tax Division; Rebecca A. Sparkman, Special Agent in Charge for the IRS-Criminal Investigation; and Stephen M. Cordi, OTR Deputy Chief Financial Officer Cordi praised the efforts of those who worked on the case. Assistant U.S. Attorney Susan Menzer and Department of Justice Trial Attorney Karen E. Kelly are prosecuting the matter.
Justice Department Moves to Intervene in Texas Case to Enforce the Supreme Court’s Olmstead DecisionRead the Press Release
WASHINGTON – The Justice Department today filed papers seeking to intervene in Steward, et al. v. Perry, et al., a case filed on behalf of thousands of Texans with developmental disabilities to enforce their right under the Americans with Disabilities Act (ADA) to receive services provided by the state in the most integrated setting appropriate to their needs.
The proposed complaint by the United States, which must first be approved for filing by the U.S. District Court in San Antonio alleges that Texas unnecessarily segregates individuals with developmental disabilities in nursing homes instead of providing them the opportunity to receive integrated, community-based services. The proposed complaint also alleges that Texas places individuals with developmental disabilities who currently live in the community at risk of unnecessary placement in nursing facilities by failing to provide necessary community-based services in violation of the ADA and Section 504 of the Rehabilitation Act.
“Individuals with disabilities have a right to access appropriate community-based services, and the administration is committed to helping them do so,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “For the Department of Justice, this suit presents an opportunity to turn the promise of the Olmstead decision into a reality for individuals with developmental disabilities confined to nursing facilities in Texas.”
The Justice Department’s filing in Texas comes on the 12th anniversary of the Supreme Court’s decision in Olmstead v. L.C., which held that the ADA requires public entities to provide community-based services to persons with disabilities when such services are appropriate; the affected persons do not oppose community-based treatment; and community-based services can be reasonably accommodated. The filing is part of the department’s continuing effort to enforce civil rights laws that require states to ensure that individuals with disabilities are served in the most integrated setting appropriate to meet their needs. The Justice Department has intervened, brought suit, or filed amicus briefs in support of Olmstead enforcement in 17 different states over the past two years.
The ADA protects individuals with disabilities from discrimination by public entities. People interested in finding out more about the ADA can call the Justice Department’s toll-free ADA Information Line at 1-800-514-0301 or 1-800-514-0383 (TTY), or access its ADA website on Olmstead at www.ada.gov/olmstead , where all relevant information can be found.
Iowa Man Sentenced to 41 Months in Prison for Conspiring to Violate the Clean Air ActRead the Press Release
WASHINGTON – Bobby Joe Knapp, the former owner and operator of the Equitable Building in downtown Des Moines, Iowa, was sentenced today by U.S. District Judge James E. Gritzner to 41 months in prison for conspiring to violate the Clean Air Act and the Clean Air Act’s asbestos work practice standards for his role during the renovation of more than 10 floors of the building between 2005 and 2008.
Knapp’s prison sentence will be followed by two years of supervised release and 300 hours of community service. He must also pay a $12,500 fine and a $200 crime victim special assessment fee. On March 18, 2011, Knapp, of West Des Moines, Iowa, pleaded guilty to one count of conspiracy to violate the Clean Air Act and one count of failing to remove all regulated asbestos-containing material from the Equitable Building before beginning the renovation project. K napp owned the building and oversaw the renovation project, which involved converting several floors into luxury residential condominium units, and renovating other floors to attract additional commercial tenants.
“Knapp’s illegal conduct put at risk the health of workers who lacked basic training and protective equipment,” said Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division at the Department of Justice. “The Clean Air Act work practice standards are designed to protect people’s health from real dangers, and we will hold violators fully responsible for their actions.”
“This office will continue to pursue serious violations of the environmental laws that put the community at risk,” said Nicholas A. Klinefeldt, U.S. Attorney for the Southern District of Iowa. “Compliance with the Clean Air Act is tremendously important to ensuring good health and the quality of life that Iowans enjoy.”
“Ignoring the safeguards put into place to protect workers and the public from the risk of exposure to asbestos is inexcusable,” said Cynthia Giles, assistant administrator for EPA’s Office of Enforcement and Compliance Assurance. “Today’s sentence reflects the seriousness of the crime and sends a strong warning to any anyone thinking of cutting corners to save money at the expense of people’s health.”
In the plea agreement, Knapp admitted that he conspired with Russell Coco, who was also charged and pleaded guilty to the same counts on Feb. 15, 2011, to remove asbestos-containing materials from the Equitable Building without complying with the requirements of the Clean Air Act. Exposure to asbestos increases the risk of developing lung cancer and other respiratory diseases
According to testimony presented at sentencing, while Knapp was overseeing the project, asbestos-containing material was removed from the building and disposed of in an uncovered dumpster. The testimony also showed that the demolition work was performed by workers who were not provided with personal protective equipment to reduce exposure to the asbestos. Testimony also showed that the building workers, one of whom was disabled, and tenants, were exposed to large amounts of dust that resulted from the demolition. A worker testified that the workers were not instructed to wet the tile containing asbestos before and during the demolition process, which increased their exposure to dust.
The Clean Air Act requires that owners of public buildings that contain asbestos follow federally established work practice standards to ensure the safe removal of the asbestos. The required standards include providing notice to the U.S. Environmental Protection Agency (EPA) before starting asbestos removal, adequately wetting the asbestos during the removal and before disposal, and properly disposing of the asbestos at an EPA-approved disposal site.
The case was investigated by the EPA’s Criminal Investigation Division and the Iowa Department of Natural Resources. The case was prosecuted by the U.S. Attorney’s Office for the Southern District of Iowa and the U.S. Justice Department’s Environmental Crimes Section of the Environment and Natural Resources Division.
Former Army Contracting Officials Charged with Conspiracy to Defraud the U.S. & Filing False Tax Returns and Ethics FormsRead the Press Release
WASHINGTON, D.C. – Kenneth H. Nix and Velma I. Salinas-Nix, both of Boerne, Texas, were indicted by a federal grand jury in San Antonio on a multi-count indictment alleging tax fraud and false statements to the U.S. government, the Justice Department announced today. The Nixes were charged with one count of conspiring for the dual purpose of impeding the Internal Revenue Service (IRS) in assessment and collection of income taxes and making false statements to the government, and four counts of filing false tax returns with the IRS. Velma Salinas-Nix also was charged with two counts of making false statements to the U.S. government by filing false financial disclosure ethics forms.
According to the indictment, the Nixes, both former high-level contracting officials with the U.S. Army, conspired between 2003 through 2010 to impede the IRS in the assessment and collection of income taxes and to make false statements to the federal government to conceal income that Kenneth Nix earned from a federal contractor to whom he awarded approximately $1.3 million in military contracts. To conceal this income, the Nixes were paid in cash, blank money orders and checks in another person’s name, among other things. They also structured cash deposits into their joint bank accounts, cashed money orders using false payor names, submitted false financial disclosure forms to the Army and filed false tax returns.
The conspiracy charge carries a maximum penalty of five years’ in prison and a $250,000 fine. The false tax return charges each carry a maximum penalty of three years in prison and a $250,000 fine. The false statement charges against Velma Salinas-Nix each carry a maximum penalty of five years in prison and a $250,000 fine.
A trial date has not yet been set. An indictment is merely an allegation, and Kenneth Nix and Velma Salinas-Nix are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Department of Justice Tax Division Trial Attorney Rebecca Perlmutter is prosecuting the case for the United States. This case was investigated by the Department of the Army-Criminal Investigation Division, IRS-Criminal Investigation, the FBI and the Defense Criminal Investigative Service.
More information about the Justice Department’s Tax Division and its enforcement efforts can be found at www.justice.gov/tax .
Department of Justice Launches Crimesolutions.Gov WebsiteRead the Press Release
Washington, D.C. – The Department of Justice’s Office of Justice Programs (OJP) today launched the website Crimesolutions.gov . This new site is a central, credible resource to inform practitioners and policymakers about what works in criminal justice, juvenile justice, and crime victim services. The site includes information on more than 150 justice-related programs and assigns “evidence ratings” – effective, promising, or no effects — to indicate whether there is evidence from research that a program achieves its goals.
“We all have tight budgets today. CrimeSolutions.gov helps us take a ‘smart on crime’ approach that relies on data-driven, evidence-based analysis to identify and replicate justice-related programs that have shown real results in preventing and reducing crime and serving crime victims,” explained Laurie O. Robinson, Assistant Attorney General.
CrimeSolutions.gov is a searchable online database of evidence-based programs covering a range of justice-related topics, including corrections; courts; crime prevention; substance abuse; juveniles; law enforcement; technology and forensics; and victims. The site is a tool to understand, access and integrate scientific evidence about programs into programmatic and policy decisions.
The new website is part of the Evidence Integration Initiative (E2I) launched by Assistant Attorney General Robinson in 2009. The Initiative’s three goals are improving the quantity and quality of evidence OJP generates; integrating evidence into program, practice and policy decisions within OJP and the field; and improving the translation of evidence into practice.
OJP, headed by Assistant Attorney General Laurie O. Robinson, provides federal leadership in developing the nation’s capacity to prevent and control crime, administer justice, and assist victims. OJP has six components: the Bureau of Justice Assistance; the Bureau of Justice Statistics; the National Institute of Justice; the Office of Juvenile Justice and Delinquency Prevention; the Office for Victims of Crime; and the Office of Sex Offender Sentencing, Monitoring, Apprehending, Registering, and Tracking. More information about OJP can be found at www.ojp.gov .
Department of Justice Disrupts International Cybercrime Rings Distributing ScarewareRead the Press Release
WASHINGTON – Today the Department of Justice and the FBI, along with international law enforcement partners, announced the indictment of two individuals from Latvia and the seizure of more than 40 computers, servers and bank accounts as part of Operation Trident Tribunal, an ongoing, coordinated enforcement action targeting international cybercrime. The operation targeted international cybercrime rings that caused more than $74 million in total losses to more than one million computer users through the sale of fraudulent computer security software known as “scareware.”
Scareware is malicious software that poses as legitimate computer security software and purports to detect a variety of threats on the affected computer that do not actually exist. Users are then informed they must purchase what they are told is anti-virus software in order to repair their computers. The users are then barraged with aggressive and disruptive notifications until they supply their credit card number and pay for the “anti-virus” product, which is, in fact, fake.
Warrants obtained from the U.S. District Court for the Western District of Washington and elsewhere throughout the United States led to the seizure of 22 computers and servers in the United States that were involved in facilitating and operating a scareware scheme. In addition, 25 computers and servers located abroad were taken down as part of the operation, including equipment in the Netherlands, Latvia, Germany, France, Lithuania, Sweden and the United Kingdom.
The first of the international criminal groups disrupted by Operation Trident Tribunal infected hundreds of thousands of computers with scareware and sold more than $72 million worth of the fake antivirus product over a three-year period. The scareware scheme used a variety of ruses to trick consumers into unknowingly infecting their computers with the malicious scareware products, including web pages featuring fake computer scans. Once the scareware was downloaded, victims were notified that their computers were infected with a range of malicious software, such as viruses and Trojans and badgered into purchasing the fake antivirus software to resolve the non-existent problem at a cost of up to $129. An estimated 960,000 users were victimized by this scareware scheme, leading to $72 million in actual losses. Latvian authorities also executed seizure warrants for at least five bank accounts that were alleged to have been used to funnel profits to the scam’s leadership.
A second international crime ring disrupted by Operation Trident Tribunal relied on online advertising to spread its scareware products, a tactic known as “malvertising.” An indictment unsealed today in U.S. District Court in Minneapolis charges the two operators of this scareware scheme with two counts of wire fraud, one count of conspiracy to commit wire fraud and one count of computer fraud. The defendants, Peteris Sahurovs, 22, and Marina Maslobojeva, 23, were arrested yesterday in Rezekne, Latvia, on the charges filed in the District of Minnesota. According to the indictment, the defendants created a phony advertising agency and claimed that they represented a hotel chain that wanted to purchase online advertising space on the Minneapolis Star Tribune’s news website, startribune.com. The defendants provided an electronic version of the advertisement for the hotel chain to the Star Tribune, and technical staff at startribune.com tested the advertising and found it to operate normally.
According to court documents, after the advertisement began running on the website, the defendants changed the computer code in the ad so that the computers of visitors to startribune.com were infected with a malicious software program that launched scareware on their systems. The scareware caused users’ computers to “freeze up” and then generate a series of pop-up warnings in an attempt to trick users into purchasing purported “antivirus” software, which was, in fact, fake. Users’ computers “unfroze” if the users paid the defendants for the fake antivirus software, but the malicious software remained hidden on their computers. Users who failed to purchase the fake antivirus software found that all information, data and files stored on the computer became inaccessible. The scam allegedly led to at least $2 million in losses. If convicted,the defendants face penalties of up to 20 years in prison and fines of up to $250,000 on the wire fraud and conspiracy charges, and up to 10 years in prison and fines of up to $250,000 on the computer fraud charge. The defendants also face restitution and forfeiture of their illegal profits. An indictment is merely a charge and defendants are presumed innocent until proven guilty.
“Today’s operation targets cybercrime rings that stole millions of dollars from unsuspecting computer users,” said Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division. “These criminal enterprises infected the computers of innocent victims with malicious scareware, and then duped them into purchasing fake anti-virus software. Cybercrime is profitable, and can prey upon American consumers and companies from nearly any corner of the globe. We will continue to be aggressive and innovative in our approach to combating this international threat. At the same time, computer users must be vigilant in educating themselves about cyber security and taking the appropriate steps to prevent dangerous and costly intrusions.”
“This case shows that strong national and global partners can ensure there is no sanctuary for cyber-crooks,” said U.S. Attorney Jenny A. Durkan of the Western District of Washington. “We will continue to work with the public and the computer industry, to fortify our cyber defenses. A combination of safe online habits and smart technology will help reduce the threat posed by these organized criminal groups.”
“The global reach of the Internet makes every computer user in the world a potential victim of cybercrime,” said U.S. Attorney B. Todd Jones of the District of Minnesota. “Addressing cybercrime requires international cooperation; and in this case, the FBI, collaborating with our international law enforcement and prosecution partners, has worked tirelessly to disrupt two significant cybercriminal networks. Their efforts demonstrate that no matter the country, Internet criminals will be pursued, caught and prosecuted.”
Assistant Director Gordon M. Snow of the FBI’s Cyber Division said, “Scareware is just another tactic that cyber criminals are using to take money from citizens and businesses around the world. This operation targeted a sophisticated business enterprise that had the capacity to steal millions. Cyber threats are a global problem, and no single country working alone can be effective against these crimes. The FBI thanks the participating foreign law enforcement agencies for their ongoing partnership and commitment in disrupting this threat.”
Operation Trident Tribunal was conducted by the FBI’s Cyber Division, Seattle Field Office and Minneapolis Field Office; the Computer Crime and Intellectual Property Section and the Asset Forfeiture and Money Laundering Section of the Justice Department’s Criminal Division; the U.S. Attorney’s Office for the District of Minnesota; and the U.S. Attorney’s Office for the Western District of Washington. Operation Trident Tribunal was the result of significant international cooperation and substantial assistance from the Criminal Division’s Office of International Affairs. Multiple foreign law enforcement partners provided invaluable assistance in this operation, including the Cyprus National Police in cooperation with its Unit for Combating Money Laundering (MOKAS); German Federal Criminal Police (BKA); Latvian State Police; Security Service of Ukraine; Lithuanian Criminal Police Bureau; French Police Judiciare; the Netherlands’ National High-Tech Crime Unit; the Cyber Unit of the Swedish National Police; London Metropolitan Police; Romania’s Directorate for Combating Organized Crime; and the Royal Canadian Mounted Police.
To avoid falling victim to a scareware scheme, computer users should avoid purchasing computer security products that use unsolicited “free computer scans” to sell their products. It is also important for users to protect their computers by maintaining an updated operating system and using legitimate, up-to-date antivirus software, which can detect and remove fraudulent scareware products.
Additional tips on how to spot a scareware scam include:
Scareware advertising is difficult to dismiss. Scareware purveyors employ aggressive techniques and badger users with pop-up messages into purchasing their products. These fake alerts are often difficult to close and quickly reappear;
Fake anti-virus products are designed to appear legitimate, and can use names such as Virus Shield, Antivirus or VirusRemover. Only install software from trusted sources that you seek out. Internet service providers often make name-brand anti-virus products available to their customers for free;
Become familiar with the brand, look and functionality of the legitimate anti-virus software that is installed on your computer. This will assist you in identifying scareware.
Computer users who think they have been victimized by scareware should filea complaint with the FBI’s Internet Crime Complaint Center, www.ic3.gov.
Belarusian National is Sentenced to 41 Months in Prison for Participating in International Online Scheme to Steal U.S. Tax RefundsRead the Press Release
WASHINGTON – A Belarusian national and resident of Nantucket, Mass., was sentenced today in federal court to 41 months in prison for his participation in an international online scheme to steal income tax refunds from U.S. taxpayers around the country, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney Carmen M. Ortiz of the District of Massachusetts and Special Agent in Charge William P. Offord of the Internal Revenue Service-Criminal Investigation (IRS-CI).
Mikalai Mardakhayeu, 31, was sentenced by U.S. District Court Judge George A. O’Toole Jr. in the District of Massachusetts. Mardakhayeu pleaded guilty in January 2011 to one count of conspiracy and nine counts of wire fraud. Judge O’Toole also sentenced Mardakhayeu to two years of supervised release and ordered him to pay $209,000 in restitution.
According to court documents and information presented at the change of plea hearing, from 2006 through 2007, Mardakhayeu’s co-conspirators lured victims by operating websites that falsely claimed to be authorized by the IRS to offer lower-income taxpayers free online tax return preparation and electronic tax return filing (e-filing). After taxpayers input and uploaded their tax information, co-conspirators in Belarus collected the data and altered the returns to increase the refund amounts and to direct the refunds to U.S. bank accounts controlled by Mardakhayeu. They then caused the fraudulently altered returns to be e-filed with the IRS. The conspirators ultimately caused the U.S. Treasury and various state treasury departments to deposit more than $200,000 in stolen refunds into bank accounts controlled by Mardakhayeu.
The case was investigated by the IRS-Criminal Investigation and the Treasury Inspector General for Tax Administration. The case was prosecuted by Trial Attorney Mona Sedky of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney Adam Bookbinder of the District of Massachusetts’s Computer Crimes Unit.
Tuesday 21 June 2011
U.S. Parole Commission Moves into the DistrictRead the Press Release
Washington, DC – On May 23, 2011, the United States Parole Commission relocated its offices from Chevy Chase, MD, into Washington, DC.
The new offices are closer to many of our partner agencies in the District of Columbia. The location – four blocks north of Union Station – is also convenient to mass transportation. The new address and phone number are:
For more information, please call Johanna Markind at (202) 346-7036.
U.S. Army Sergeant and Associate Indicted for Alleged Bribe Scheme Involving Contracts at Camp Arifjan in KuwaitRead the Press Release
WASHINGTON – An 11-count indictment unsealed today in federal court in Wheeling, W.V., charges an Army sergeant first class and his associate for their alleged roles in a bribery and money laundering scheme at Camp Arifjan, a U.S. military base in Kuwait, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney William J. Ihlenfeld II for the Northern District of West Virginia.
The indictment, returned by a federal grand jury in the Northern District of West Virginia on June 8, 2011, charges Sergeant First Class Richard Evick, 41, of Parsons, W.V., with receiving more than $170,000 in bribes from two firms that had contracts with the U.S. Department of Defense (DoD) in Kuwait. The indictment also charges Evick and his associate, Crystal Martin, 48, of Pontiac, Mich., with laundering the bribe money through bank accounts in Kuwait and the United States. Evick and Martin were arrested today by special agents from the Army Criminal Investigation Division (Army CID), Defense Criminal Investigation Service (DCIS) and the Special Inspector General for Iraq Reconstruction (SIGIR). Martin made her initial appearance today in Detroit before U.S. Magistrate Judge Mona K. Majzoub of the Eastern District of Michigan. Evick is expected to make his initial appearance tomorrow in Raleigh, N.C., before U.S. Magistrate Judge James E. Gates of the Eastern District of North Carolina.
The indictment alleges that Evick, a senior procurement non-commissioned officer who served at Camp Arifjan from February 2005 to December 2006, along with former Majors James Momon and Christopher Murray, awarded Army contracting business and improperly disclosed contracting information to two firms that were seeking contracts from the U.S. military. According to the indictment, as a result of the actions taken by Evick, Momon and Murray, these firms received nearly $25 million from contracts to deliver bottled water and other commodities to U.S. military bases in Iraq and Kuwait, as well as to paint and clean DoD facilities in Kuwait. In exchange, Evick, Momon and Murray allegedly received cash, airplane tickets, hotel accommodations, and the ability to conceal large amounts of cash in a hidden safe located in the villa of Wajdi Rezik Birjas, a DoD contract employee who worked in the host nation affairs office at Camp Arifjan.
The indictment also alleges that Evick entrusted his bribe money to Martin, a former Army master sergeant, who from October 2005 to December 2008, operated a concession to sell clothing and other items at various U.S. military bases in Kuwait and maintained bank accounts in Kuwait and the United States. The indictment alleges that Martin arranged to transfer the bribe money from Kuwait to the United States and into the possession of Evick, his wife and his girlfriend. Additionally, the indictment alleges that Evick and Martin assisted Momon’s efforts to retrieve between $200,000 and $250,000 of Momon’s bribe money from Birjas and to transfer that money from Kuwait to the United States.
Evick is charged with one count of conspiracy to commit bribery, two substantive bribery counts, one count of conspiracy to commit money laundering, six substantive money laundering counts and one count of obstructing an agency proceeding. If convicted, he faces up to five years in prison on the bribery conspiracy charge, 15 years in prison for each of the bribery counts, 20 years in prison for the money laundering conspiracy count and each of the substantive money laundering counts and five years in prison on the obstruction charge.
Martin is charged with one count of conspiracy to commit bribery and four substantive money laundering counts. She faces up to 20 years in prison for the money laundering conspiracy count and each of the substantive money laundering counts. Evick and Martin also face fines and a term of supervised release, if convicted. The indictment also seeks the forfeiture of any property or money involved in the alleged offenses.
Momon, Murray and Birjas have pleaded guilty to crimes relating to their activities at Campr Arifjan and are awaiting sentencing.As a result of this investigation, 17 individuals have pleaded guilty or been found guilty at trial for their roles in the corruption at Camp Arifjan, and four others, including Evick and Martin, are awaiting trial.
An indictment is merely an accusation and defendants are presumed innocent unless and until proven guilty at trial beyond a reasonable doubt.
The case is being prosecuted by Trial Attorneys Peter C. Sprung and Timothy J. Kelly of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Robert McWilliams of the U.S. Attorney’s Office for the Northern District of West Virginia. The ongoing investigation is being handled by the Army CID, DCIS, FBI and SIGIR.
Texas Man Sentenced to Jail in Connection with Kansas Deer Hunting and Guiding OperationRead the Press Release
WASHINGTON – ATexas man was sentenced today in federal court in Wichita on felony charges of conspiracy, wildlife trafficking and obstruction of justice related to the illegal sale of guided deer hunts in southern Kansas, announced Ignacia S. Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division and Barry Grissom, U.S. Attorney for the District of Kansas.
James Bobby Butler, Jr., 42, of Martinsville, Tex., was sentenced to 41 months in federal prison, to be followed by three years of supervised release during which Butler will be banned from all hunting and guiding. Butler was also ordered to pay a $25,000 fine to the Lacey Act reward fund, and $25,000 restitution to the Kansas Department of Wildlife and Parks. Butler pleaded guilty in March 2010 to one count of conspiracy to violate the Lacey Act, one Lacey Act interstate trafficking count and one count of obstruction of justice. His brother, Marlin Jackson Butler, 36, also of Martinsville, pleaded guilty in March 2011 to one count of conspiracy to violate the Lacey Act and one Lacey Act count. Marlin Butler is scheduled to be sentenced on June 24, 2011.
“Thanks to outstanding cooperation between federal and state law enforcement agents and prosecutors, we put an end to a criminal conspiracy that took valuable and limited wildlife resources through unlawful and unethical means,” said Assistant Attorney General Moreno. “This prosecution sends a message to hunters and guides in Kansas and elsewhere that there will be serious consequences for those who seek to profit by violating state and federal wildlife laws, especially at the expense of those who hunt and guide lawfully.”
“Illegal wildlife trafficking is a threat to the natural resources of Kansas,” Grissom said. “Our goal is to preserve and protect wildlife for everyone to enjoy – including hunters who abide by the law.”
The Lacey Act is a federal law that makes it illegal to knowingly transport or sell in interstate commerce any wildlife taken or possessed in violation of state law or regulation.
According to court documents filed in the case, James and Marlin Butler conspired together to knowingly transport and sell in interstate commerce deer that had been hunted in violation of Kansas state law. In particular, the brothers operated a guiding service and hunting camp near Coldwater, Kan., at which they sold guiding services to out-of-state hunters for the purpose of illegally hunting and killing white-tailed deer and mule deer. Hunters guided by the Butler brothers killed deer in excess of annual bag limits, hunted deer without permits or with permits for the wrong deer management unit, killed deer using illegal equipment, and hunted using prohibited methods such as spotlighting. The guided hunts were sold for between $2,500 and $5,500, and in several instances resulted in the killing of trophy-sized buck deer. In addition to selling guiding services, the brothers also arranged for transport of the deer, in particular the antlers and capes, from Kansas to Texas and Louisiana.
James Butler also pleaded guilty to instructing another person to conceal or destroy evidence during the investigation.
“This is the largest case in the history of wildlife law enforcement in Kansas,” said Steve Oberholtzer, Special Agent in Charge of the Mountain-Prairie Region, U.S. Fish and Wildlife Service. “Trophy deer are an important resource for the state of Kansas from both wildlife and economic standpoints. Joint investigations such as this one demonstrate that the combined efforts of state and federal agencies and our federal prosecutors result in prosecutions that hold those who violate the law accountable. We are grateful to the Kansas Department of Wildlife and Parks and the U.S. Attorney's Office for their assistance in this case and hope that it will serve as a deterrent to others who might consider exploiting our nation's wildlife for personal gain.”
The case was investigated by the U.S. Fish & Wildlife Service, the Kansas Department of Wildlife and Parks and the Texas Parks and Wildlife Department, and jointly prosecuted by District of Kansas U.S. Attorney Barry Grissom’s office and the Justice Department’s Environment and Natural Resources Division, Environmental Crimes Section.
Special Master Sheila L. Birnbaum Announces Draft Regulations <br /> to Govern 9/11 Victim Compensation FundRead the Press Release
NEW YORK – One month after assuming the position, September 11th Victim Compensation Fund (VCF) Special Master Sheila L. Birnbaum today published draft regulations to govern the VCF, and asked the public to give her feedback on the proposals before victims can begin submitting claims to the fund later this year.
The VCF was created under the James Zadroga 9/11 Health & Compensation Act to reactivate the September 11th Victim Compensation Fund that operated from 2001-2003. The Act expands the pool of claimants to include first responders and other individuals who experienced latent physical injuries associated with the attacks or with debris removal.
Birnbaum’s draft rules include a process by which claimants from the first VCF can amend their claims to reflect new injuries and an allowance for the fund to cover additional health conditions as scientific knowledge evolves. The draft rules also significantly expand the geographic area covered by the VCF from its first iteration. The VCF will begin by covering the same physical injuries that are covered by the medical monitoring and treatment program that the Zadroga Act established as the VCF’s companion program.
In an email to potential VCF claimants and others, Birnbaum reiterated that her goal is “to create a process that is fair, transparent, and easy to navigate.” She said that the proposed rules will help the VCF make its decisions based on the best scientific and medical evidence that is available, and that the rules seek to minimize administrative expenses and maximize the funds available to be distributed to claimants.
Birnbaum was appointed as Special Master by Attorney General Eric Holder on May 18, 2011, and has spent the month since her appointment meeting with the men and women who will be most affected by the VCF. In her email, Birnbaum indicated that she hoped to meet with many more over the coming months and would value the public’s feedback on the draft regulations.
Individuals who wish to receive communications regarding the VCF should visit: www.justice.gov/vcf .
Individuals interested in commenting on the draft regulations can visit: www.regulations.gov/#!documentDetail;D=DOJ-CIV-2011-0017-0001.
Pittsburgh Crips Gang Member Pleads Guilty to Racketeering ChargesRead the Press Release
WASHINGTON – A Pittsburgh man has pleaded guilty in federal court to charges of 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.
Terrance Clark, 22, aka “Doo Wop,” pleaded guilty yesterday before Senior U.S. District Judge Gustave Diamond to one count of conspiracy to engage in a racketeering enterprise.
According to the guilty plea, Clark 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, Clark was a member of the Northview Heights/ Fineview Crips, a criminal street gang operating out of the Northview Heights public housing facility in the Northside neighborhood, and in the nearby Fineview neighborhood of Pittsburgh. The gang had been operating in the Northside since 2002; in 2003, it formed an alliance with the Brighton Place Crips to expand the gang’s drug trafficking territory and increase the gang’s capability for 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, the Brighton Place/Northview Heights Crips gang maintains an ongoing feud with the Manchester Original Gangsters, a criminal street gang located in the Manchester area of the Northside Section of Pittsburgh. Brighton Place/Northview Heights Crips gang members identify themselves by wearing blue, using Crips gang hand signals, and using phrases such as “Cuz,” “C-Safe,” “Loc” and “G.K.” According to court documents, members and associates of the gang gain greater authority and prestige within the gang based upon their reputation for violence and their ability to obtain and sell a steady supply of illegal drugs.
According to court documents, Clark acted as a “hustler” or distributor of controlled substances, including heroin, cocaine and crack cocaine, for the gang. He also acted as a “soldier/ gorilla” or enforcer for the gang, providing protection for the enterprise through the commission of violent crimes. According to information presented in court, Clark and a co-conspirator were responsible for at least two armed robberies, one of which involved a carjacking. Clark was also involved in at least two instances relating to the obstruction of criminal investigations, including a homicide prosecution. In addition, in December 2007, Clark pointed a firearm at several Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) agents and task force officers as they drove an unmarked car through the Brighton Place neighborhood seeking to serve a subpoena on a government witness. Subsequent recorded telephone conversations from jail between Clark and his co-conspirators showed that Clark initially believed the occupants of the vehicle were members of a rival gang attempting to shoot at him and his fellow Crips members.
Clark is one 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, 16 members of the Brighton Place/ Northview Heights Crips who were charged in this indictment have pleaded guilty to racketeering charges.
Clark faces a maximum sentence of life in prison and a fine of $250,000. He is scheduled to be sentenced on Oct. 20, 2011.
This case is being prosecuted by Assistant U.S. Attorneys Charles A. Eberle and Troy Rivetti 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 ATF; the City of Pittsburgh Bureau of Police; the Allegheny County, Penn., Police Department; and the Allegheny County Sheriff’s Office.
Owner of Detroit-Area Medical Clinic Sentenced to Prison for Role in $1.12 Million Diagnostic Testing Fraud SchemeRead the Press Release
WASHINGTON – An owner of a Detroit-area medical clinic was sentenced today to 15 months in prison for her role in a $1.12 million Medicare fraud scheme, the Departments of Justice and Health and Human Services (HHS) announced.
Maria Haber, 46, an owner of CompleteHealth LLC, also was sentenced by U.S. District Judge Patrick J. Duggan in the Eastern District of Michigan to three years of supervised release following her prison term and was ordered to pay $ 1,004,343 in restitution, jointly and severally with other defendants in the case.
Haber pleaded guilty on Oct. 27, 2010, to one count of conspiracy to commit health care fraud. She was one of 10 individuals charged in connection with a fraudulent diagnostic testing scheme operating at CompleteHealth and Ritecare LLC, another related clinic. Co-defendants Emilio Haber, Genna Yates, Alejandro Haber, Grant Johnson, Darrell Nichols, Elizabeth Egan, Hans Lobato, Emma King and Melvin Young previously pleaded guilty to health care fraud conspiracy for their roles in the scheme.
According to court documents, Haber incorporated a limited liability company called CompleteHealth on Sept. 20, 2007, which purported to provide primary care services at a facility in Livonia, Mich. Haber signed the provider application submitted by CompleteHealth to enroll in the Medicare program and admitted that she helped operate the clinic.
Haber admitted that she and her co-conspirators, including her then-husband Emilio Haber, billed Medicare for medically unnecessary tests and services. Haber admitted in court documents that she obtained patients for CompleteHealth by paying kickbacks to driver recruiters and directly to Medicare beneficiaries. Haber and her co-conspirators typically paid patient recruiters $100-$150 per patient, with $50-$75 going to the patient in exchange for visiting CompleteHealth and subjecting themselves to medically unnecessary tests.
According to court documents, Haber’s co-conspirators instructed the patient recruiters to have the patients feign certain symptoms to justify the medically unnecessary tests. The kickbacks paid to the recruiters and the patients were contingent upon the Medicare beneficiaries identifying the symptoms necessary to justify the medically unnecessary tests reflected in the patients’ medical records. The fraudulent conduct continued at Ritecare after CompleteHealth merged with it in June 2008.
Today’s sentence was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade; Special Agent in Charge Andrew G. Arena of the FBI’s Detroit Field Office; and Special Agent in Charge Lamont Pugh III of the HHS Office of Inspector General’s (HHS-OIG) Chicago Regional Office.
The case was prosecuted by Trial Attorney Gejaa T. Gobena of the Criminal Division’s Fraud Section. The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan.
Since 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 .
Massachusetts Man Sentenced to 96 Months in Prison on Child Pornography ChargesRead the Press Release
WASHINGTON – George H. Lunt, 27, of Plymouth, Mass., was sentenced today to 96 months in prison, to be followed by five years of supervised release for his transportation and possession of child pornography, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney Carmen M. Ortiz for the District of Massachusetts and Richard DesLauriers, Special Agent in Charge of the FBI Boston Field Office.
Lunt was sentenced by U.S. District Judge George A. O’Toole Jr. in Boston. On March 15, 2011, Lunt pleaded guilty to two counts of transportation of child pornography and one count of possession of child pornography. In pleading guilty, Lunt admitted to possessing thousands of images and videos of child sexual abuse, including depictions of prepubescent children and toddlers and sadistic conduct. Lunt admitted to distributing graphic depictions of child sexual abuse through online peer-to-peer file-sharing software. This case arose from an FBI investigation of individuals sharing and trading child pornography over the Internet.
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by U.S. Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
The case against Lunt was prosecuted by Assistant U.S. Attorney Michael I. Yoon of the District of Massachusetts and CEOS Trial Attorney Bonnie L. Kane of the Criminal Division. The case was investigated by the FBI.
Former TBW CEO Sentenced to 40 Months in Prison for Fraud SchemeRead the Press Release
WASHINGTON – The former chief executive officer (CEO) of Taylor, Bean & Whitaker (TBW) was sentenced today to 40 months in prison for his role in a more than $2.9 billion fraud scheme that contributed to the failure of TBW. At one time, TBW was one of the largest privately held mortgage lending companies in the United States.
Paul Allen was sentenced today by U.S. District Judge Leonie M. Brinkema in the Eastern District of Virginia. The sentence was announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Neil H. MacBride for the Eastern District of Virginia; Acting Special Inspector General Christy Romero for the Troubled Asset Relief Program (SIGTARP); Assistant Director in Charge James W. McJunkin of the FBI’s Washington Field Office; Michael P. Stephens, Deputy Inspector General of the Department of Housing and Urban Development (HUD-OIG); Jon T. Rymer, Inspector General of the Federal Deposit Insurance Corporation (FDIC-OIG); Steve A. Linick, Inspector General of the Federal Housing Finance Agency (FHFA-OIG); and Victor S. O. Song, Chief of the Internal Revenue Service-Criminal Investigation (IRS-CI).
Allen, 55, of Oakton, Va., pleaded guilty in April 2011 to one count of making false statements and one count of conspiring to commit bank and wire fraud. Co-conspirator Sean Ragland, a former senior financial analyst at TBW who reported to Allen, was also sentenced today by Judge Brinkema to three months in prison. Ragland, 37, of San Antonio, pleaded guilty in March 2011 to one count of conspiracy to commit bank and wire fraud. Allen and Ragland both admitted to conspiring with Lee Bentley Farkas, the former chairman of TBW, and others, to defraud financial institutions that had invested in Ocala Funding LLC, a facility wholly-owned by TBW.
Farkas was convicted on April 19, 2011, on 14 counts of fraud for his role in masterminding the scheme, which was one of the largest bank frauds in the country. Farkas is scheduled to be sentenced on June 27, 2011. The Securities and Exchange Commission (SEC) has a civil action pending against Farkas in the Eastern District of Virginia.
Co-conspirators Catherine Kissick, a former senior vice president of Colonial Bank and head of its Mortgage Warehouse Lending Division (MWLD); Teresa Kelly, a former operations supervisor in Colonial Bank’s MWLD; Raymond Bowman, the former president of TBW; and Desiree Brown, the former treasurer of TBW, have also pleaded guilty for their participation in the scheme. Earlier this month, Kissick was sentenced to eight years in prison, Brown was sentenced to six years in prison, Bowman was sentenced 30 months in prison and Kelly was sentenced to 3 months in prison.
“As TBW’s chief executive officer, Mr. Allen served as an accomplice to Lee Farkas and his massive fraud scheme,” said Assistant Attorney General Breuer. “He concealed TBW’s staggering deficits through false financial reports, which ultimately caused investors to lose more than $1.5 billion. Today’s sentence sends a strong message that corporate fraud by senior executives will not be tolerated. At the same time, it demonstrates that substantial assistance in the government’s investigation and prosecution of corporate fraud will be taken into account at sentencing.”
“Paul Allen was a well-respected mortgage executive hired by Lee Farkas to be TBW’s chief executive officer. Working from Oakton, Va., Mr. Allen led Ocala Funding, a TBW multi-billion dollar lending facility that was used to defraud investors of more than $1 billion,” said U.S. Attorney MacBride. “Mr. Allen’s sentence reflects his ultimate cooperation with this investigation, but also sends the message that unless executives expose and stop fraud when they first learn of it, they will be punished.”
According to court documents and information presented at trial, Allen and Ragland participated in the scheme from early 2005 through August 2009 by distributing materially false documents to investors in Ocala Funding that misrepresented the financial condition of the facility. The fraud scheme ultimately caused investors in Ocala Funding to lose more than $1.5 billion and Colonial Bank to lose $900 million.
According to court documents and information presented at trial, TBW began running overdrafts in its master bank account at Colonial Bank because of TBW’s inability to meet its operating expenses, which included payroll, servicing payments owed to third-party purchasers of loans and/or mortgage-backed securities and other obligations. In or about 2002, Farkas and other co-conspirators engaged in a series of fraudulent actions to cover up the overdrafts, first by sweeping overnight money from one TBW account with excess funds into another, and later through the fictitious “sales” of mortgage loans to Colonial Bank, a fraud scheme the conspirators dubbed “Plan B.” The conspirators accomplished Plan B by selling Colonial Bank mortgage loans that did not exist or that TBW had already committed or sold to other third-party investors. As Plan B evolved, co-conspirators at TBW also caused TBW to engage in sham sales of groups of mortgage loans, known as “pools,” that other entities already owned to Colonial Bank. As a result, false information was entered on Colonial Bank’s books and records, giving the appearance that the bank owned interests in legitimate pools of mortgage loans, when in fact the pools had no value and could not be securitized or sold. Neither Allen nor Ragland participated in the effort to cover up TBW’s overdrafts or Plan B.
Additionally, the co-conspirators at TBW caused TBW to misappropriate more than $1.5 billion in collateral from Ocala Funding. According to court documents, both Allen and Ragland played significant roles in the Ocala Funding misappropriation. The misappropriation caused Colonial Bank and the Federal Home Loan Mortgage Corporation (Freddie Mac) to falsely believe that they each had an undivided ownership interest in thousands of the same loans worth hundreds of millions of dollars.
According to court documents, the fraud scheme also included an effort by certain conspirators in the fall of 2008 to obtain $570 million in taxpayer funding through the Capital Purchase Program, a sub-program of the U.S. Treasury Department’s TARP. In connection with the application, Colonial BancGroup submitted financial data and filings that included materially false information related to mortgage loan and securities assets held by Colonial Bank as a result of the fraudulent activity at TBW. Colonial BancGroup never received the TARP funding. According to court documents, Allen played a key role in causing materially false information to be submitted to and received by the government in connection with Colonial Bank’s TARP application. Ragland was not aware of this aspect of the fraud scheme.
In August 2009, the Alabama State Banking Department, Colonial Bank’s regulator, seized the bank and appointed the FDIC as receiver. Colonial BancGroup also filed for bankruptcy in August 2009.
“Instead of upholding his position of power and trust as CEO of TBW, Paul Allen chose the path of fraud and deception in helping facilitate the long-running fraud carried out by TBW and Colonial Bank. Fortunately, the scheme came to a halt when an attempt was made to steal more than a half billion dollars from the TARP,” said Acting Special Inspector General for the TARP Romero. “Today’s sentence appropriately recognizes the severity of Allen’s participation in the fraud along with his cooperation in the Government’s investigation.”
“As a result of this complex fraud scheme, these defendants cost investors and our financial markets billions of dollars,” said Assistant Director in Charge McJunkin. “Today’s sentence shows that those who take advantage of investors and our banking and mortgage systems will be held accountable. The FBI will continue to work with our law enforcement partners and remain vigilant in investigating these illegal transactions.”
“Today’s sentencing marks the culmination of a large effort on the part of this agency and of the law enforcement and regulatory community,” said Deputy Inspector General Stephens of HUD-OIG. “More importantly, however, it shows our nation that is slowly recovering from a damaged housing market that we are committed to bringing to justice those whose pernicious behavior contributed to this condition.”
“ The Federal Deposit Insurance Corporation (FDIC) Office of Inspector General is pleased to join our law enforcement colleagues in announcing this sentencing,” said Inspector General Rymer of FDIC. “We are particularly concerned in cases like this one where fraudulent activities involving employees of Colonial Bank in association with officials of Taylor, Bean and Whitaker contributed to the failure of Colonial Bank, resulting in a $3.8 billion loss to the Deposit Insurance Fund. We are committed to continuing our investigations of such criminal misconduct to help ensure the integrity of the financial services industry and maintain the safety and soundness of the nation’s financial institutions and the viability of the fund.”
“Paul Allen used his extensive experience gained from employment with the government sponsored enterprises (GSEs) to assist Lee Farkas in his massive fraud scheme,” said Inspector General Linick of FHFA-OIG. “This sentence sends a strong message to individuals who would try to defraud Freddie Mac and American taxpayers, who have invested over $163 billion in the GSEs to date.”
The case is being prosecuted by Deputy Chief Patrick Stokes and Trial Attorney Robert Zink of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Charles Connolly and Paul Nathanson of the Eastern District of Virginia. This case was investigated by SIGTARP, FBI’s Washington Field Office, FDIC-OIG, HUD-OIG, FHFA-OIG and the IRS-CI. The department recognizes the substantial assistance of the SEC. The department also recognizes the assistance of the Financial Crimes Enforcement Network (FinCEN) of the Department of the Treasury.
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.
Former Hickman County, Tennessee Deputy Sheriff Pleads Guilty to Civil Rights ChargesRead the Press Release
WASHINGTON - The Justice Department announced that former Hickman County Deputy Sheriff Kenneth H. Smith, 43, pleaded guilty today to violating the rights of two women by photographing parts of their unclothed bodies under the false pretense that those photographs were necessary for an official investigation. Smith also pleaded guilty to making material false statements to federal investigators. Sentencing is scheduled for Oct. 7, 2011, before Chief U.S. District Judge Todd J. Campbell.
“Our law enforcement officers are tasked with protecting and serving our communities, and those who use their power to take advantage of vulnerable individuals will be prosecuted to the fullest extent of the law,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division.
While working as a deputy sheriff, Smith was assigned to investigate two domestic violence complaints. During his investigatory interviews, Smith told the victims that he needed to take photographs of their exposed bodies to document injuries, including intimate areas of their bodies where no injury had occurred. Smith, abusing his power and position, lied to the victims and claimed these photographs were necessary for the police investigation and prosecution, when in fact the photos were not for legitimate law enforcement purposes, but for himself . The victims, trusting a law enforcement officer to protect them, acquiesced to Smith’s authority.
Smith also lied to FBI agents about sending text messages to a former female inmate in which he requested the former inmate send him nude pictures of herself, in return for Smith’s help in dismissing or reducing the outstanding criminal charges against her. When Smith was confronted with photographs of the explicit text messages coming from his personal cell phone number, Smith continued to lie to FBI agents that he had not sent them.
The case has been investigated by investigators with the FBI and the Tennessee Bureau of Investigation. The case is being prosecuted by Assistant U.S. Attorney Hal McDonough and Civil Rights Division Trial Attorney Saeed Mody.
Former Co-Owner of Illinois Technology Company Sentenced to Serve One Year and a Day in Prison for Role in Conspiracy to Defraud the Federal E-Rate ProgramRead the Press Release
WASHINGTON — A former co-owner of an Illinois-based technology company, Global Networking Technologies Inc. (GNT), was sentenced today to serve one year and a day in prison for his participation in a conspiracy to defraud the federal E-Rate program, the Department of Justice announced.
Tyrone Pipkin was also sentenced by U.S. District Court Judge Jay C. Zainey to pay a $6,000 criminal fine for conspiring to defraud the E-Rate program by providing bribes and kickbacks to school officials in multiple states. Pipkin was charged with the conspiracy in U.S. District Court in New Orleans on Nov. 18, 2010, and pleaded guilty on March 28, 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. Seventeen individuals, including Pipkin, have been sentenced to serve prison time. On June 9, 2011, Barrett C. White, Pipkin’s co-conspirator, was sentenced to one year and one day in prison for his role in the conspiracy. On June 2, 2011, Gloria F. Harper, a second conspirator, pleaded guilty to the conspiracy in a separate charge and awaits sentencing set for Sept. 8, 2011
According to court documents, Pipkin, who acted on his own behalf and on behalf of Computer Training Associates and GNT, participated in the conspiracy beginning on or about December 2001 through September 2005. The department said that Pipkin participated in the conspiracy to provide bribes and kickbacks to school officials and employees responsible for the procurement of Internet access services at certain schools in Arkansas, Florida, Illinois and Louisiana. In return, those individuals ceded control of the E-Rate competitive bidding process to Pipkin and his co-conspirators, ultimately allowing them to ensure E-Rate contracts at these schools were awarded to their companies.
The E-Rate program was created by Congress in the Telecommunications Act of 1996 and is administered by the Universal Service Administrative Company, under the oversight of the Federal Communications Commission (FCC). The program provides subsidies to economically disadvantaged schools and libraries. Depending on the financial needs of the applicant schools, the program pays 20 to 90 percent of the cost for Internet access and telecommunications services, as well as internal computer and communications networks.
Today’s sentencing resulted from an investigation by the Department of Justice Antitrust Division’s Dallas Field Office, the FBI’s Dallas Field Office and the FCC’s Office of Inspector General, with assistance from the U.S. Attorney’s Office for the Eastern District of Louisiana. Anyone with information concerning violations of the E-Rate program is urged to call the Antitrust Division’s Dallas Field Office at 214-661-8600 or visit www.justice.gov/atr/contact/newcase.htm.
Bloods Gang Member in Nashville Pleads Guilty to <br /> Federal Racketeering ChargesRead the Press Release
WASHINGTON – A Nashville, Tenn., man pleaded guilty today to conspiring to participate in racketeering activity related to his membership in the Bloods criminal enterprise , announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney for the Middle District of Tennessee Jerry E. Martin.
Antonio Washington, 22, aka “T.O.,” pleaded guilty in Nashville before U.S. District Judge Aleta Trauger to one count of conspiracy to participate in racketeering activity.
According to court documents, Washington and other Bloods gang members and associates agreed to commit multiple acts of robbery, narcotics trafficking and bribery on behalf of the Bloods gang. Washington and numerous Bloods gang members met on a regular basis at various locations throughout the Middle District of Tennessee, including Shelby Park, Cedar Hill Park and the Galaxy Star Drug Awareness and Gang Prevention Center to report on gang-related business, collect dues, commit disciplinary actions against fellow gang members, discuss acts of violence against rival gang members, and initiate or “jump in” new members by beating them for a period of time, among other things.
Washington admitted that o n March 28, 2010, during a joint Bloods gang meeting at Galaxy Star Drug Awareness and Gang Prevention Center, he and numerous other Bloods gang members voted to punish Bloods member Joedon Bradley. Following the vote, the Bloods gang members exited the building and formed a large circle in the backyard behind a wooden fence, where several groups of Bloods gang members violently assaulted Bradley. According to court documents, Bradley collapsed after being punched and kicked numerous times on his face and body.
Also according to court documents, o n April 14, 2010, Washington and other known Bloods gang members and associates agreed to rob an individual of approximately 30 pounds of marijuana near Bud’s Hardware Store in Nashville. Washington admitted that, armed with a pistol, he rode in a vehicle with several known Bloods gang members to commit the robbery. However, when Washington and the other Bloods gang members arrived at the location, they were unable to commit the robbery because of the presence of law enforcement in the area.
At sentencing, scheduled for Sept. 26, 2011, Washington faces a maximum penalty of life in prison and a $250,000 fine.
The case was investigated by the ATF; the Metropolitan Nashville Police Department; the Gallatin, Tenn., Police Department; and assisted by the U.S. Marshals Service and the Davidson County, Tenn., District Attorney’s Office.
The case is being prosecuted by Assistant U.S. Attorney Scarlett Singleton and Trial Attorney Cody L. Skipper of the Criminal Division’s Organized Crime and Gang Section.
Monday 20 June 2011
Owner of Houston Health Care Company Pleads Guilty to Defrauding MedicareRead the Press Release
WASHINGTON – An owner of a Houston health care company pleaded guilty today in connection with a $654,227 Medicare fraud scheme, announced the Departments of Justice and Health and Human Services (HHS).
Simone Ball, 24, pleaded guilty before U.S. District Judge Lee Rosenthal in Houston to one count of conspiracy to commit health care fraud. In her plea, Ball admitted that she defrauded Medicare of $654,227
According to court documents, Ball was an owner and operator of Preferred Plus Medical Supply. Preferred Plus maintained a valid Medicare provider number in order to submit Medicare claims for the costs of durable medical equipment (DME) and purported to provide orthotics and other DME to Medicare beneficiaries. According to court documents, Preferred Plus submitted claims to Medicare for DME, including orthotic devices, which were medically unnecessary and/or not provided. Many of the orthotic devices were components of “arthritis kits,” and purported to be for the treatment of arthritis-related conditions, although they were neither medically necessary nor appropriate for such conditions. The arthritis kit generally contained a number of orthotic devices including braces for both sides of the body and related accessories such as heat pads. In total, from August through December 2008, Preferred Plus submitted approximately $654,227 in fraudulent claims to Medicare.
At sentencing, scheduled for Oct. 12, 2011, Ball faces a maximum sentence of 10 years in prison.
Today’s guilty plea was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney José Angel Moreno of the Southern District of Texas; the Texas Attorney General Greg Abbott; Acting Special Agent-in-Charge Russell D. Robinson of the FBI’s Houston Field Office; and Special Agent-in-Charge Mike Fields of the Dallas Regional Office of HHS Office of Inspector General (HHS-OIG), Office of Investigations.
This case is being prosecuted by Trial Attorneys Laura M.K. Cordova and Benjamin O’Neil, and Deputy Chief Charles La Bella of the Criminal Division’s Fraud Section. The case was brought as part of the Medicare Fraud Strike Force, supervised by the U.S. Attorney’s Office for the Southern District of Texas and the Criminal Division’s Fraud Section.
Since their inception in March 2007, Medicare Fraud Strike Force operations in nine districts have obtained indictments of more than 1,000 individuals who collectively have falsely 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 Reaches Agreement with City of Manassas Park, Virginia, on Bailout from the Voting Rights ActRead the Press Release
WASHINGTON – The Justice Department announced that it has reached an agreement with the city of Manassas Park, Va., that, if approved by the court, will allow for the city to bail out from its status as a “covered jurisdiction” under the special provisions of the Voting Rights Act, and thereby exempt the city from the preclearance requirements of Section 5 of the Voting Rights Act. The agreement is in the form of a consent decree filed today in the U.S. District Court for the District of Columbia.
Under Section 5 of the Voting Rights Act, certain covered jurisdictions, determined according to Section 4 of the act, are required to seek preclearance for any changes in voting qualifications, standards, practices or procedures from the U.S. District Court for the District of Columbia or from the U.S. Attorney General, prior to their implementation. Section 4 of the act provides that a covered jurisdiction may seek to “bail out,” or remove itself from such coverage, and therefore be exempted from the preclearance requirements, by seeking a declaratory judgment before a three-judge panel in U.S. District Court for the District of Columbia. A bailout judgment can be issued only if the court determines that the jurisdiction meets certain eligibility requirements for bailout contained in the statute, including a 10-year record of nondiscrimination in voting-related actions. The act also provides that the attorney general can consent to entry of a judgment of bailout only if, based upon investigation, the attorney general is satisfied that the jurisdiction meets the eligibility requirements.
Manassas Park filed its bailout action in the U.S. District Court for the District of Columbia on April 19, 2011. City officials had contacted the attorney general prior to filing the action, indicating that the city was interested in seeking a bailout. The city provided the Justice Department with substantial information, and the department conducted an investigation to determine the city’s eligibility. Based on that investigation, the department is satisfied that the city meets the Voting Rights Act’s requirements for bailout.
“In this case, the department carefully evaluated the information provided by the city and conducted its own investigation, which has satisfied us that the city is eligible for a bailout,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “I appreciate the cooperation of city officials in providing the department with the information requested, and in moving toward a resolution of this matter in the way envisioned by the Voting Rights Act.”
The consent decree details the legal and factual basis for a bailout determination and, if approved, will grant the city’s request. The court will retain jurisdiction of the action for 10 years and can reopen the action upon the motion of the attorney general or any aggrieved person alleging conduct by the city that would have originally precluded the city from bailing out if it had occurred during the 10-year period preceding entry of the consent decree.
Information about bailout, the Voting Rights Act, and other federal voting laws is available on the Department of Justice website at www.justice.gov/crt/voting/ . Complaints may be reported to the Voting Section of the Justice Department’s Civil Rights Division at 1-800-253-3931.
Justice Department Files Gender Discrimination Lawsuit Against Waupaca County, WisconsinRead the Press Release
WASHINGTON — The Justice Department today announced it has filed a lawsuit alleging that Waupaca County, Wis., discriminated against Waupaca County Sheriff’s Department patrol officer Julie Ann Thobaben because of her gender when it failed to promote her. The suit was filed in federal district court in Wisconsin.
Title VII prohibits employers from discriminating against individuals based on their race, color, gender, national origin or religion when making employment-related decisions, including decisions about whether to promote, hire or fire someone.
Thobaben is a well-regarded, 16-year veteran of the Waupaca County Sheriff’s Department. The Justice Department’s complaint alleges that in March 2006, Waupaca County unlawfully discriminated against Thobaben when it failed to promote her from patrol officer to detective sergeant because she is a woman. According to the complaint, Waupaca County managers conceded that Thobaben was the most qualified candidate for the promotion. Despite her superior qualifications, the county claimed it could not promote Thobaben because Thobaben’s husband works as a patrol officer at the sheriff’s department, and promoting Thobaben would violate the county’s nepotism policy. Although the policy prohibits employees from supervising their relatives, the complaint alleges that the county has ignored this policy on at least 10 other occasions when it permitted males to supervise their family members. Also, months after denying Thobaben the promotion, Waupaca County took the position, in a labor dispute, that detective sergeants do not supervise patrol officers.
“Gender discrimination in employment will not be tolerated,” said Thomas Perez, Assistant Attorney General for the Civil Rights Division. “This lawsuit should send a clear message that the department will take necessary action to eliminate and remedy the effects of gender discrimination in our public sector workplaces.”
The case stems from a referral by the Equal Employment Opportunity Commission following that agency’s investigation. The case will be handled by the Civil Rights Division in cooperation with the U.S. Attorney’s Office in the Eastern District of Wisconsin.
Additional information about Title VII can be found on the Justice Department website, www.justice.gov/crt/emp , as well as on the Equal Employment Opportunity Commission’s website at www.eeoc.gov.
Iowa Ready-Mix Concrete Company Pleads Guilty to Participating in Price-Fixing ConspiracyRead the Press Release
WASHINGTON - An Iowa ready-mix concrete company pleaded guilty to participating in a price-fixing conspiracy for the sales of ready-mix concrete, the Department of Justice announced today.
According to a one-count felony charge filed on June 10, 2011, in U.S. District Court in Sioux City, Iowa, Tri-State Ready Mix Inc., a producer of ready-mix concrete headquartered in Rock Valley, Iowa, participated in a conspiracy with GCC Alliance Concrete Inc. and its predecessor entity to fix prices for ready-mix concrete sold in the northern district of Iowa. The department said that the conspiracy took place beginning at least as early as January 2006 and continuing until as late as August 2009.
Ready-mix concrete is a product comprised of cement, aggregate (sand and gravel), water and other additives. The concrete generally is produced in a concrete plant and is transported by concrete-mixer trucks to work sites, where it is used in various types of construction projects, including buildings and roads.
According to court documents, Tri-State Ready Mix participated in the conspiracy through its president, Chad Van Zee, who engaged in discussions and reached agreements with Steven VandeBrake of GCC Alliance Concrete and its predecessor entity regarding the conspirators’ prices for ready-mix concrete sold in Iowa. Tri-State Ready Mix then accepted payment for those sales at collusive and noncompetitive prices, the department said.
Tri-State Ready Mix is charged with violating the Sherman Act, which carries a maximum fine of $100 million for corporations. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
Today’s plea arose from an ongoing federal antitrust investigation of the ready-mix concrete industry in Iowa and surrounding states. As a result of the investigation, on May 20, 2011, GCC Alliance Concrete Inc., another ready-mix concrete producer, pleaded guilty to participating in three separate conspiracies to fix prices and/or rig bids for the sales of ready-mix concrete. On May 26, 2010, VandeBrake, former sales manager of GCC Alliance Concrete, pleaded guilty to participating in the conspiracies and, on Feb. 8, 2011, was sentenced to serve 48 months in prison and to pay a criminal fine of $829,715. On the same day, Kent Robert Stewart, the president of another Iowa ready-mix concrete company, was sentenced to serve a year and a day in prison and to pay a $83,427 criminal fine for conspiring with VandeBrake to fix prices and rig bids. Stewart pleaded guilty on May 24, 2010. Van Zee pleaded guilty to conspiring with VandeBrake to fix prices of ready-mix concrete on Dec. 6, 2010, and is scheduled to be sentenced tomorrow.
The investigation is being conducted by the Antitrust Division’s Chicago Field Office, the FBI’s Sioux City Resident Agency and the Department of Transportation’s Office of Inspector General, with the assistance of the U.S. Attorney’s Office in Sioux City. Anyone with information concerning bid rigging, price fixing or territorial allocation related to the ready-mix concrete industry in Iowa and its surrounding states should contact the Antitrust Division’s Chicago Field Office at 312-353-7530 or visit www.justice.gov/atr/contact/newcase.htm.
California UBS Clients Plead Guilty to Hiding Assets in Secret Swiss Bank AccountRead the Press Release
WASHINGTON – Sean Roberts and Nadia Roberts of Tehachapi, Calif., pleaded guilty before U.S. District Judge Anthony W. Ishii of the Eastern District of California to a criminal information charging them with filing a false tax return related to an undisclosed Swiss bank account that they maintained at UBS, as well as other offshore bank accounts, the Justice Department and the Internal Revenue Service (IRS) announced today.
According to court documents and statements made in court, the Robertses pleaded guilty to filing a false 2008 individual U.S. income tax return in which they failed to report that they had an interest in or a signature authority over a secret Swiss financial account at UBS, as well as several other foreign accounts, failed to report income earned on the foreign accounts, and falsely deducted transfers from their domestic business to the foreign accounts on their corporate tax returns. The false deductions allowed the Robertses to under-report their income on their individual income tax returns. The Robertses own and operate the National Test Pilot School and Flight Research Incorporated in Mojave, Calif. National Test Pilot School is a non-profit educational institute that trains test pilots from domestic and foreign aerospace industries and governments. Flight Research Inc. owns and maintains most of the aircraft used by the school.
In or about 1991, the Robertses opened a bank account at an Isle of Man branch of a United Kingdom bank, in the name of nominee entity Interline Trade Associates Limited. From at least 2002 through 2004, the Robertses transferred funds from their company, Flight Research Incorporated of Mississippi (FRI Mississippi), to the Interline account, and caused the transfers to be falsely deducted as interest payments on corporate income tax returns as a sham aircraft loan.
In or about 1995, the Robertses, with the assistance of a UBS banker, established an account in their own names at UBS in Switzerland. In 2004, the Robertses, with the assistance of an account manager at a Zurich-based financial services company, acquired a nominee Hong Kong entity called Excalibur Investments Limited and opened a new UBS account in Excalibur’s name. In July 2004, the Robertses closed the UBS account in their own names and transferred the assets to the nominee Excalibur UBS account. In February 2005, the Robertses also closed their Interline account and, with the assistance of the Zurich account manager, transferred the assets to the Excalibur UBS account. From 2004 through 2008, the Robertses transferred more than $1.2 million from FRI Mississippi to the Excalibur UBS account, and caused the transfers to be falsely deducted as interest payments on corporate income tax returns as a sham aircraft loan.
In or about May 2008, the Robertses closed their Excalibur UBS account and, with the assistance of the Zurich account manager, transferred more than $4.8 million to an account in Excalibur’s name at a Swiss branch of a Liechtenstein bank. This was done after the account manager informed the Robertses that UBS was under investigation by U.S. authorities and that they should leave UBS to ensure the continued secrecy of their account. In 2008, the Robertses transferred more than $1.4 million from FRI Mississippi to the Excalibur account at the Liechtenstein bank, and again caused the transfers to be falsely deducted on a corporate income tax return. Also in May 2008, the Robertses, again with the assistance of the Zurich account manager, opened a bank account in the name of Modest Winner, a nominee Hong Kong entity, at the Liechtenstein bank. In 2008 and 2009, the Robertses transferred funds from another of their entities, Tisours LLC, to the Modest Winner account. In 2009, with the assistance of the Zurich account manager, the Robertses transferred that account to a bank in Hong Kong. The Robertses also maintained numerous undeclared foreign bank accounts in New Zealand and South Africa held in their own names.
The Robertses admitted to filing false tax returns for tax years 2004 through 2008 that concealed their interest in these various offshore accounts, failing to report income earned from these accounts, and falsely deducting transfers from their business to these accounts. The Robertses also admitted that they never filed reports of Foreign Bank and Financial Accounts (FBARs) disclosing their interest in any offshore financial accounts. As part of their plea agreements, the Robertses agreed to pay restitution to the IRS in the amount of $709,675, and to pay a 50 percent penalty for the one year with the highest balance in their offshore accounts in order to resolve their civil liability for failing to file FBARs, Forms TD F 90-22.1.
In February 2009, UBS entered into a deferred prosecution agreement under which the bank admitted to helping U.S. taxpayers hide accounts from the IRS. As part of their agreement, UBS provided the United States government with the identities of, and account information for, certain U.S. customers of UBS's cross-border business, including the Robertses.
Sentencing has been set for Sept. 6, 2011, and the Robertses remain free on bail pending sentencing, where each faces a maximum sentence of three years in prison.
U.S. Attorney for the Eastern District of California Benjamin B. Wagner and Principal Deputy Assistant Attorney General John A. DiCicco of the Justice Department’s Tax Division commended the efforts of the IRS-Criminal Investigation agents who investigated the case and Tax Division Trial Attorneys Timothy J. Stockwell and John P. Scully, as well as Assistant U.S. Attorney Mark E. Cullers, who are prosecuting the case.
More information about the Tax Division and its enforcement efforts is available at www.justice.gov/tax .
Associate Attorney General Tom Perrelli and Interior Secretary Ken Salazar Applaud Final Approval of Cobell SettlementRead the Press Release
WASHINGTON – Today, the Departments of Justice and Interior applauded the final approval by U.S. Senior District Judge Thomas F. Hogan of Cobell v. Salazar, a long-running and contentious individual American Indian trust class-action lawsuit. Unless the decision is appealed, the court’s approval of the $3.4 billion settlement paves the way for payments to be made to as many as a half-million individual American Indians who had Individual Indian Money accounts or an interest in trust or restricted land managed by the Department of the Interior. The suit has been pending for 15 years.
Reaching a final settlement of Cobell has been a priority of the Obama administration.
“The judge’s finding that the settlement is fair and reasonable is a major milestone in the Administration’s effort to reach a resolution of litigation that has cast a cloud over the government’s relationship with American Indians,” said Associate Attorney General Tom Perrelli, who has twice testified before Congress on the settlement.
“Judge Hogan’s decision is another milestone in empowerment and reconciliation for the American Indians,” Interior Secretary Ken Salazar said, noting in particular the contributions of Deputy Secretary David J. Hayes and Interior’s Solicitor Hilary Tompkins in reaching the settlement. “The Cobell settlement not only resolves the contentious 15-year litigation, but also honorably and responsibly turns the page on an unfortunate chapter in the Department’s history, demonstrating President Obama's commitment to reconciliation and empowerment for American Indian nations.”
“The Cobell settlement is the beginning of true trust reform,” said Interior Deputy Secretary Hayes, noting that Interior is establishing a Secretarial Commission on Indian Trust Administration and Reform in consultation with tribes. This commission will undertake a forward-looking, comprehensive evaluation of how the Interior Department manages and administers its trust responsibilities. “Interior needs to be more transparent and customer-friendly,” said Deputy Secretary Hayes. "The status quo is not acceptable.”
Following an earlier ruling by Judge Hogan, Interior Deputy Secretary Hayes began scheduling consultation meetings with tribal leaders to begin discussions on the land consolidation component of the settlement. Deputy Secretary Hayes and other Department officialswill hold six regional government-to-government tribal consultations which will provide valuable input in developing an implementation strategy that will benefit tribal communities and help free up trust lands. The consultation process is fundamental to respecting the government-to-government relationship with the tribes.
Additional information is available at www.cobellsettlement.com and the Office of Special Trustee website at www.doi.gov/ost . More information on the Cobell settlement, including resources for Indian Trust Beneficiaries, is available at www.doi.gov/ost/cobell/index.html or www.indiantrust.com/index .
Anadarko and Kerr-Mcgee to Pay More Than $17 Million to Resolve Allegations of Royalty Underpayments from Federal and Indian LandsRead the Press Release
WASHINGTON – Anadarko Petroleum Corporation, Kerr-McGee Corporation and their affiliates have agreed to pay the United States more than $17 million to resolve claims that the companies violated the False Claims Act by knowingly underpaying royalties owed on natural gas produced from federal and Indian leases, and numerous additional administrative claims,
the Justice Department announced today. Anadarko is among the largest independent oil and natural gas exploration and production companies in the world. Anadarko and Kerr-McGee were independent companies and were separately sued when this case was originally filed in 1996. In June of 2006, Kerr-McGee Corporation became a wholly-owned Anadarko subsidiary.
Congress has authorized federal and Indian lands to be leased for the production of natural gas in exchange for the payment of royalties on the value of the gas that is produced. Each month companies are required to report to the U.S. Department of the Interior the amount of royalty that is due. This settlement resolves claims by the United States under the False Claims Act that the Anadarko and Kerr-McGee defendants improperly deducted from royalty values the cost of boosting gas up to pipeline pressures and improperly reported processed gas as unprocessed gas to reduce royalty payments, as well as a series of outstanding administrative claims.
“This case is one in a series of significant oil and gas settlements that demonstrate our commitment to ensuring that companies pay all of the royalties they owe,” said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. “When companies pay natural gas royalties for the privilege to extract non-renewable resources from public lands, that income supports vital federal programs from which we all benefit.”
“We remain committed to ensuring that energy companies accurately report production and report and pay all of the required royalties, with no exceptions,” said Rhea Suh, Assistant Secretary for the Department of the Interior's Office of Policy, Management and Budget. “We will continue to pursue every dollar due to taxpayers and the federal government from extracting these precious natural resources from federal and American Indian lands.”
Today’s settlement arises from a lawsuit filed by Harrold Wright under the False Claims Act. Under the qui tam, or whistleblower, provisions of the act, private citizens may file actions on behalf of the United States and share in any recovery. Because Mr. Wright is deceased, his heirs will receive $1.95 million plus interest as their share of the settlement. The United States will intervene against the Anadarko and Kerr-McGee defendants for the purpose of completing this settlement. The Justice Department previously intervened against several other defendants in the Wright lawsuit. Total settlements in the case to date exceed $249 million.
The investigation and settlement of this matter was jointly handled by the Justice Department’s Civil Division and the U.S. Attorney for the Eastern District of Texas, with assistance from the Department of the Interior’s Office of Natural Resource Revenue, Office of the Solicitor and Office of the Inspector General.
The case is U.S. ex rel. Wright v. Chevron USA, Inc. et al., 5:03-CV-264 (E.D. Tex.) .
Friday 17 June 2011
United States and Two California State Agencies File Civil Lawsuit Against Greka Oil & Gas Inc. for Oil Spills in Santa Barbara CountyRead the Press Release
WASHINGTON – The United States, the California Department of Fish and Game and the California Regional Water Quality Control Board, Central Coast Region, filed a civil complaint today in federal court against Greka Oil & Gas Inc. (now known as HVI Cat Canyon Inc.) alleging that the company violated federal and state water laws.
According to the complaint, announced today by the Department of Justice, the U.S. Environmental Protection Agency (EPA), the California Regional Water Quality Control Board, Central Coast Region and the California Department of Fish and Game, Greka illegally discharged crude oil and produced water from its oil and gas production facilities in Santa Barbara County during 21 spills between June 2005 and December 2010. The spills resulted from ruptured storage tanks, corroded pipelines and overflowing injection ponds. Oil from each of the spills flowed into nearby waterways.
The complaint, filed in U.S. District Court for the Central District of California, also alleges that at 12 facilities, Greka failed to prepare plans and implement measures required by the Clean Water Act to prevent, contain, and respond to spills.
The lawsuit asks the court to order Greka to take all appropriate action to prevent future spills, and to fully implement the oil pollution prevention requirements of the Clean Water Act. The United States and the two California state agencies also seek civil penalties up to the maximum amount authorized by law.
In addition, the United States seeks the recovery of $2.4 million in costs incurred responding to and directing the cleanup of Greka’s spills. The California Department of Fish and Game also seeks the recovery of its unpaid response costs and damages for harm caused to natural resources by the spills.
In May 2011, Greka changed its name to HVI Cat Canyon Inc. The company is a privately held Colorado corporation and a wholly-owned subsidiary of Greka Integrated Inc.
Texas-Based Fluor Corporation to Pay U.S. $4 Million to Resolve False Claims Act and Anti-Kickback Act LiabilityRead the Press Release
WASHINGTON - Fluor Hanford Inc., a wholly-owned subsidiary of Fluor Federal Services Inc. and Fluor Corporation, has agreed to pay the United States $4 million to resolve allegations that it knowingly submitted false claims and paid and received kickbacks relating to a contract to operate and manage mixed radioactive waste at the Department of Energy’s (DOE) Hanford Nuclear Site in Hanford, Wash. Fluor Corporation is headquartered in Irving, Texas, near Dallas.
Between 2003 and 2008, Fluor employed individuals known as material coordinators, whose job responsibilities included purchasing supplies for use by Fluor on its DOE contract. Between 2003 and 2008, three such material coordinators, Susanna Zuniga, Gregory Detloff and Paul Kempf, made hundreds of fraudulent purchases using government purchase cards, using their positions and exploiting weaknesses in Fluor’s internal control system to funnel DOE funds to themselves.
“Vigorously prosecuting financial fraud is one of the Justice Department’s top priorities,” said Assistant Attorney General Tony West. “Government contractors who line their bank accounts with kickbacks or money from fraudulent claims undermine the public's trust and will continue to attract our enforcement attention.”
As early as 2001 and repeatedly between 2001 and 2008, internal audits conducted by Fluor alerted it to weaknesses in its purchase card controls, weaknesses exploited by the three material coordinators. Nonetheless, Fluor failed to address these weaknesses, allowing these schemes to go undetected for years.
“The cleanup of the Hanford Nuclear Facility is a high priority for this region; Government contractor fraud undermines these efforts and at Hanford simply will not be tolerated,” said Michael C. Ormsby, U.S. Attorney for the Eastern District of Washington. “This resolution demonstrates that corporations will be held accountable when they turn a blind eye to fraud and self-dealing.”
Additionally, between 2005 and 2008, at least 14 Fluor material coordinators solicited, received and accepted kickbacks from a Hanford-area vendor known as Fast Pipe and Supply Company and its owner, Shane Fast. These kickbacks, which took the form of cash, tickets to sporting events, gift cards and other things of value, were intended to influence the material coordinators to purchase from Fast rather than competing vendors. In return for these kickbacks, the 14 Fluor material coordinators did more than $3.5 million in business with Fast.
“The $4 million settlement announced today and the successful outcome of this case reflect our commitment to aggressively pursuing those who defraud the Department of Energy and to protect the interests of U.S. taxpayers,” said Gregory H. Friedman, Department of Energy Inspector General. “I commend the hard work of the DOJ Attorneys and IG Special Agents. Strong working relationships like this are vital to the successful resolution of major fraud cases."
Five former Fluor employees have been indicted for their participation in the fraudulent schemes. Four of the individuals have pleaded guilty, with the fifth awaiting trial.
The government’s investigation was conducted by the Civil Division of the U.S. Department of Justice, the U.S. Attorney’s Office for the Eastern District of Washington and the Department of Energy Office of Inspector General.
Since January 2009, the Department of Justice’s total False Claims Act recoveries have exceeded $7.3 billion.
Justice Department Reaches Settlement with Nixon State Bank to Resolve Allegations of Lending DiscriminationRead the Press Release
WASHINGTON – The Justice Department announced today that Nixon State Bank of Nixon, Texas, will establish uniform pricing policies, conduct employee training, and pay nearly $100,000 as part of a settlement to resolve allegations that it engaged in a pattern or practice of discrimination on the basis of national origin.
The settlement, which is subject to court approval, was filed in conjunction with the Justice Department’s complaint in the U.S. District Court for the Western District of Texas. The complaint alleges that Nixon charged higher prices on unsecured consumer loans made to His panic borrowers through the bank’s branch offices in violation of the Equal Credit Opportunity Act (ECOA).
“Fair and equal access to credit is critical and lenders have a responsibility to have protocols in place that ensure all of their lending programs comply with the law and don’t discriminate,” said Thomas E. Perez, Assistant Attorney General in charge of the Justice Department’s Civil Rights Division. “The Civil Rights Division is committed to fair lending enforcement that stops abuses across the entire spectrum of credit markets. We are pleased that this settlement will compensate the victims of this discriminatory conduct and we commend Nixon for working cooperatively with the Justice Department in reaching an appropriate resolution of this case.”
“Any form of discrimination is intolerable, including in the lending of money,” stated U.S. Attorney John E. Murphy. “The rates consumers pay for credit should be based solely upon factors directly related to their creditworthiness without any reference to their race or ethnicity.”
“The FDIC is committed to ensuring its supervised banks comply with fair lending laws, including the Equal Credit Opportunity Act,” said Mark Pearce, Director of the Federal Deposit Insurance Corporation’s (FDIC) Division of Depositor and Consumer Protection. “This particular matter highlights the dangers of discretionary pricing in loan products. We appreciate the collaboration with the Department of Justice to address this matter.”
Prior to mid-2009, Nixon did not have a written loan pricing guideline for its unsecured consumer loans. Instead, the bank’s loan officers were granted broad discretion in handling all aspects of the unsecured consumer loan transaction. The Justice Department’s complaint alleges that this policy had a disparate impact on Hispanic borrowers.
Nixon began to develop uniform pricing policies in late 2009, which included implementation of a uniform rate matrix to price unsecured consumer loans. As part of the settlement, Nixon will further revise these and other pricing policies to ensure that the price charged for its loans is set in a non-discriminatory manner consistent with the requirements of ECOA. The settlement also requires the bank to pay nearly $100,000 to Hispanic victims of discrimination, monitor its loans for potential disparities based on national origin, and provide equal credit opportunity training to its employees. The agreement also prohibits the bank from discriminating on the basis of national origin in any aspect of a credit transaction.
The lawsuit originated from a 2010 referral by the FDIC to the Justice Department’s Civil Rights Division. Nixon is a member of the FDIC.
The Civil Rights Division, the U.S. Attorney’s Office for the Western District of Texas, and the FDIC are members of the Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit www.StopFraud.gov .
A copy of the complaint, as well as additional information about fair lending enforcement by the Justice Department, can be obtained from the Justice Department’s website at www.justice.gov/fairhousing .
Former Colonial Bank Senior Vice President Sentenced to 8 Years in Prison for Fraud SchemeRead the Press Release
WASHINGTON – A former senior vice president and head of Colonial Bank’s Mortgage Warehouse Lending Division was sentenced today to eight years in prison for her role in a more than $2.9 billion fraud scheme that contributed to the failures of Colonial Bank and Taylor, Bean & Whitaker (TBW). Colonial Bank was one of the 25 largest banks in the United States and TBW was one of the largest privately-held mortgage lending companies in the United States in 2009.
Catherine Kissick was sentenced today by U.S. District Judge Leonie M. Brinkema in the Eastern District of Virginia. The sentence was announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Neil H. MacBride for the Eastern District of Virginia; Acting Special Inspector General Christy Romero for the Troubled Asset Relief Program (SIGTARP); Assistant Director in Charge James W. McJunkin of the FBI’s Washington Field Office; Michael P. Stephens, Deputy Inspector General of the Department of Housing and Urban Development (HUD-OIG); Jon T. Rymer, Inspector General of the Federal Deposit Insurance Corporation (FDIC-OIG); Steve A. Linick, Inspector General of the Federal Housing Finance Agency (FHFA-OIG); and Victor S. O. Song, Chief of the Internal Revenue Service-Criminal Investigation (IRS-CI).
Kissick, 50, of Orlando, Fla., pleaded guilty in March 2011 to one count of conspiracy to commit bank, wire and securities fraud. Co-conspirator Teresa Kelly, a former operations supervisor at Colonial Bank who reported to Kissick, was also sentenced today by Judge Brinkema to three months in prison. Kelly, 35, of Ocoee, Fla., pleaded guilty in March 2011 to one count of conspiracy to commit bank, wire and securities fraud. Kissick and Kelly both admitted to conspiring with Lee Bentley Farkas, the former chairman of TBW, and others, to fraudulently obtain funding for TBW to cover expenses related to operations and servicing payments owed to third-party purchasers of loans and/or mortgage-backed securities.
Farkas was convicted on April 19, 2011, on 14 counts of fraud for his role in masterminding the scheme, which was one of the largest bank frauds in the country. Farkas is scheduled to be sentenced on June 27, 2011. The Securities and Exchange Commission (SEC) has civil actions pending against Farkas and Kissick in the Eastern District of Virginia.
Co-conspirators Paul Allen, the former chief executive officer of TBW; Raymond Bowman, the former President of TBW; Desiree Brown, the former Treasurer of TBW; and Sean Ragland, a former senior financial analyst at TBW, have also pleaded guilty for their participation in the scheme. Earlier this month, Brown and Bowman were sentenced to six years in prison and 30 months in prison, respectively.
“As a senior executive at Colonial Bank, Catherine Kissick helped execute one of the largest bank frauds in history,” said Assistant Attorney General Breuer. “For years, she used her position within the bank to buy hundreds of millions of dollars in worthless assets from TBW, deceiving shareholders, investors and regulators. If she had refused to participate in the fraud, Lee Farkas’ scheme could have been stopped dead in its tracks. Ms. Kissick ultimately cooperated with the government, and that assistance is reflected in today’s sentence. But she, like her co-conspirators, will pay for her crimes with substantial time in prison.”
“Lee Farkas pulled off one of history’s largest bank frauds because he had people inside Colonial Bank with the power to do it and hide it,” said U.S. Attorney MacBride. “Without help from Catherine Kissick – a high-level executive at one of the nation’s top regional banks – the fraud scheme might have been discovered in its infancy. Her conviction and sentence should be a cautionary tale to other financial executives who may be tempted to bend the rules for favored clients.”
According to court documents and information presented at trial, Kissick and Kelly participated in the scheme from 2002 through August 2009. The fraud scheme caused Colonial Bank and Colonial BancGroup to purchase tens of millions of dollars of worthless assets, caused Colonial BancGroup to report false information in its financial statements, and artificially inflated the value of TBW’s mortgage servicing rights.
According to court documents and information presented at trial, TBW began running overdrafts in its master bank account at Colonial Bank because of TBW’s inability to meet its operating expenses, which included payroll, servicing payments owed to third-party purchasers of loans and/or mortgage-backed securities and other obligations. In or about 2002, Farkas, Kissick, Kelly and other co-conspirators engaged in a series of fraudulent actions to cover up the overdrafts, first by sweeping overnight money from one TBW account with excess funds into another, and later through the fictitious “sales” of mortgage loans to Colonial Bank, a fraud scheme the conspirators dubbed “Plan B.” The conspirators accomplished Plan B by selling Colonial Bank mortgage loans that did not exist or that TBW had already committed or sold to other third-party investors.
As Plan B evolved, co-conspirators at TBW also caused TBW to engage in sham sales of groups of mortgage loans, known as “pools,” to Colonial Bank that other entities already owned. As a result, false information was entered on Colonial Bank’s books and records, giving the appearance that the bank owned interests in legitimate pools of mortgage loans, when in fact the pools had no value and could not be securitized or sold. According to court documents, Kissick played a leadership role in the sweeping and Plan B portions of the fraud scheme and directed Kelly’s activities in the scheme.
Additionally, the co-conspirators at TBW caused TBW to misappropriate more than $1.5 billion in collateral from Ocala Funding LLC, a mortgage lending facility owned by TBW. The misappropriation caused Colonial Bank and the Federal Home Loan Mortgage Corporation (Freddie Mac) to falsely believe that they each had an undivided ownership interest in thousands of the same loans worth hundreds of millions of dollars. Kissick and Kelly did not participate in the Ocala Funding misappropriations.
According to court documents, the fraud scheme also included an effort by certain conspirators in the fall of 2008 to obtain $570 million in taxpayer funding through the Capital Purchase Program (CPP), a sub-program of the U.S. Treasury Department’s TARP. In connection with the application, Colonial BancGroup submitted financial data and filings that included materially false information related to mortgage loan and securities assets held by Colonial Bank as a result of the fraudulent activity at TBW. Colonial BancGroup never received the TARP funding. According to court documents, Kissick knew that Colonial BancGroup’s TARP application relied upon false bank financial data; however, Kelly was not aware of this aspect of the fraud scheme.
In August 2009, the Alabama State Banking Department, Colonial Bank’s regulator, seized the bank and appointed the FDIC as receiver. Colonial BancGroup also filed for bankruptcy in August 2009.
“As a senior bank official of Colonial Bank, Catherine Kissick had a fiduciary duty to speak up and report fraud but instead played an active role in perpetrating and concealing this large-scale fraud, including attempting to deceive the federal government and steal over $550 million from TARP,” said Acting Special Inspector General for the TARP Romero. “SIGTARP and its partners in the Financial Fraud Enforcement Task Force skillfully discovered the fraud and prevented the loss of significant taxpayer funds. SIGTARP will continue to vigorously investigate and prosecute persons who commit fraud or attempt to do so in connection with any program implemented under TARP, regardless of whether such person receives TARP funds.”
“This was a complex investigation that required careful efforts of investigators, forensic accountants and analysts poring through thousands of pages of complicated mortgage and lending documents,” said Assistant Director in Charge McJunkin. “Today’s result is a testament to the hard work and close cooperation of our law enforcement partners. Together we are committed to ensuring the integrity of our banking and mortgage systems.”
“We will continue to work side-by-side with our partners to protect the American dream and the American taxpayers and ensure that criminals who try to enrich themselves through fraud schemes are brought to justice,” said Deputy Inspector General Stephens of HUD.
“ The FDIC Office of Inspector General is pleased to join our law enforcement colleagues in defending the integrity of the financial services industry,” said FDIC Inspector General Rymer. “We are particularly concerned in cases like this one where fraudulent activities involving employees of Colonial Bank and officials of Taylor Bean and Whitaker contributed to the failure of Colonial Bank, resulting in a $3.8 billion loss to the Deposit Insurance Fund. We are committed to continuing our investigations of such criminal misconduct to help maintain the safety and soundness of the nation’s financial institutions and the viability of the fund.”
“This sentence sends a strong message to individuals who would try to defraud Freddie Mac and American taxpayers, who have invested $64.2 billion in Freddie Mac to date,” said Inspector General Linick of the FHFA-OIG. “FHFA-OIG looks forward to future cooperative efforts with law enforcement partners to combat fraud against FHFA, Freddie Mac, Fannie Mae, and the Federal Home Loan Banks.”
The case is being prosecuted by Deputy Chief Patrick Stokes and Trial Attorney Robert Zink of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Charles Connolly and Paul Nathanson of the Eastern District of Virginia. This case was investigated by SIGTARP, FBI’s Washington Field Office, FDIC-OIG, HUD-OIG, FHFA-OIG and the IRS-CI. The department recognizes the substantial assistance of the SEC. The department also recognizes the assistance of the Financial Crimes Enforcement Network (FinCEN) of the Department of the Treasury.
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 .