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2 January 2013
Morris County, N.J., Man Admits Distributing Images of Child Sexual Abuse over the InternetRead the Press Release
NEWARK, N.J. – A Morris County, N.J., man today admitted possessing and distributing over the Internet images of child sexual abuse, U.S. Attorney Paul J. Fishman announced.
Khalil Survey, 39, of Lake Hiawatha, N.J., was previously arrested on a Complaint and later charged by Indictment with one count of possession of child pornography and one count of distributing child pornography. He pleaded guilty to both counts of the Indictment today before U.S. District Judge William H. Walls in Newark federal court.According to documents filed in this case and statements made in court:
Special agents of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations and other law enforcement officers executed a search warrant at Survey's home on August 4, 2011, and seized a computer, an iPhone, and several electronic storage devices that contained images and videos of child pornography. The devices included 46,353 images of child sexual abuse, including 983 images involving infants or toddlers and 783 images involving sadomasochistic abuse. On Survey’s iPhone law enforcement found photographs he had taken of himself downloading child pornography onto his home computer.
On the distribution count, Survey faces a mandatory minimum sentence of 5 years in prison and a maximum sentence of 20 years in prison and a $250,000 fine. Sentencing is scheduled for April 9, 2013.
U.S. Attorney Fishman credited special agents of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations, under the direction of Special Agent in Charge Andrew M. McLees in Newark, with the investigation leading to today's guilty plea.The government is represented by Assistant U.S. Attorney Andrew J. Bruck of the U.S. Attorney's Office General Crimes Unit in Newark.
13-001Defense counsel: Joseph Rotella Esq., Newark
Survey Indictment
Las Vegas Physician Pleads Guilty to Tax EvasionRead the Press Release
WASHINGTON – Robert David Forsyth, of Las Vegas, pleaded guilty today in federal district court to count one of a federal indictment charging him with income tax evasion, the Justice Department and Internal Revenue Service (IRS) announced. Forsyth was indicted for tax crimes in April 2012.
According to court documents, from 1999 through 2008, Forsyth worked as a physician and earned income from a variety of sources, including his medical practice, expert witness fees, and Social Security benefits beginning in 2002. Forsyth failed to file an individual income tax return from 1999 through 2008, however. In fact, according to the indictment, Forsyth has not filed an income tax return since the 1994 tax year.
According to papers filed as part of the plea agreement, instead of filing tax returns and paying his taxes, Forsyth, a Canadian citizen and U.S. permanent resident alien, admitted that he closed all of his personal bank accounts and used a third party business to cash his paychecks. Forsyth also used the same third party business to make payments on his behalf, including his American Express credit card bills. Forsyth made extensive use of cash including using cash to pay personal expenses in an effort to avoid detection.
According to court documents, throughout the years that Forsyth evaded payment of his taxes, he used income that he earned to fund his own lifestyle. Instead of paying the IRS, Forsyth spent money on gambling, luxury items, and hotel accommodations in San Jose, Costa Rica and Bangkok, Thailand. Forsyth admitted to taking trips to Costa Rica, Thailand and Mexico rather than pay his tax liabilities.
Forsyth’s actions resulted in a tax loss to the United States, including interest and penalties, of over $600,000. As part of his plea agreement, Forsyth has agreed to pay restitution to the IRS in full, including $50,000 prior to his sentencing, which is scheduled for April 22, 2013, before U.S. District Judge Philip Pro at the federal courthouse in Las Vegas.
Forsyth faces a maximum possible sentence of five years in prison and a fine of up to $250,000.
The case was investigated by the Criminal Investigations Division of the IRS and was prosecuted by Tax Division Trial Attorney Mark L. Williams and former Tax Division Trial Attorney Stephanie Courter.
Lake Wales Man Sentenced to More Than Eight Years in Federal Prison for Child Pornography OffensesRead the Press Release
Tampa, FL - United States District Judge Steven D. Merryday today sentenced Clinton Duane Pancake (37, Lake Wales) to 97 months in federal for transportation and receipt of child pornography. He was sentenced to 15 years of supervised release, following his release from prison. The court also ordered Pancake to forfeit a laptop computer, which was used in the commission of the offense. Pancake pleaded guilty in October 2012.
According to court documents, in March 2012, Pancake distributed 14 files containing child pornography to an undercover agent via the Internet. In July 2012, Pancake admitted to downloading child pornography over the Internet, viewing it on his computer, and deleting it. A forensic review of his laptop revealed more than 600 files containing child pornography.
This case was investigated by the Federal Bureau of Investigation and the Polk County Sheriff's Office. It was prosecuted by Assistant United States Attorney Jennifer L. Peresie.
It is another case 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 the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc. For more information about internet safety education, please visit www.usdoj.gov/psc and click on the tab "resources."
Justice Department Reaches Agreement with California Irrigation District on Bailout Under the Voting Rights ActRead the Press Release
The Justice Department announced that it has reached an agreement with the Browns Valley Irrigation District, a special district in California, that, if approved by the court, will allow for the district to bail out from its status as a “covered jurisdiction” under the special provisions of the Voting Rights Act, and thereby exempt the district from the preclearance requirements of Section 5 of the Voting Rights Act. The district covers part of Yuba County, which is a jurisdiction subject to Section 5. 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.
The Browns Valley Irrigation District filed its bailout action in the U.S. District Court for the District of Columbia on Sept. 26, 2012. District officials had contacted the attorney general prior to filing its action, indicating that the district was interested in seeking a bailout. The district provided the Justice Department with substantial information, and the department conducted an investigation to determine the district’s eligibility. Based on that investigation, the department is satisfied that the district meets the Voting Rights Act’s requirements for bailout.
“In this case, the department carefully evaluated the information provided by the district, and conducted its own investigation, which has satisfied us that the district is eligible for bailout,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “I appreciate the cooperation of district officials in providing the department with information that we have 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 district’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 district that would have originally precluded the district 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.
Golden Living Nursing Homes Settle Allegations of Substandard Wound CareRead the Press Release
Golden Living Failed to Provide Adequate Wound Care to Its Nursing Home Residents
ATLANTA - The United States Attorney’s Office today announced that the United States and the State of Georgia have reached a settlement with GGNSC Holdings, LLC, of Plano, Texas, the operator of skilled nursing facilities located in Atlanta, Georgia, to resolve allegations under the False Claims Act and the Georgia State False Medicaid Claims Act, that GGNSC provided inadequate and worthless wound care services to residents at two of its Atlanta area nursing homes. GGNSC operates nursing homes under the “Golden Living” name. GGNSC has agreed to pay $613,300 to resolve these allegations. The United States’ share of the settlement is $423,544.
Sally Quillian Yates, United States Attorney for the Northern District of Georgia, said, “Our office is committed to protecting our most vulnerable citizens and improving the lives of nursing home residents. By failing to provide adequate wound care services to its nursing home residents, Golden Living placed at risk the life and health of individuals who were entrusted to its care. This type of threat to the health and well-being of the elderly in our communities will not be tolerated.”
“Golden Living fraudulently billed Medicaid for nursing services which were substandard and, tragically, resulted in harm to patients,” said Attorney General Sam Olens. “The nursing home patients depended on Golden Living to provide them with quality wound care services to help them heal, but, instead, were mistreated. We will not stand for such egregious misconduct by a Medicaid provider.”
“Quality of care in nursing homes is a top priority for the Office of Inspector General,” said Derrick L. Jackson, Special Agent in Charge of the U.S. Department of Health and Human Services, Office of Inspector General for the Atlanta region. “Health care providers need to know that if they provide worthless services to those most in need, they will pay the price.”
Mark F. Giuliano, Special Agent in Charge, FBI Atlanta Field Office, stated: “The FBI will continue to dedicate its investigative personnel and resources toward such cases of Medicaid and Medicare fraud as was seen here. These federally funded programs provide much needed services but are limited and healthcare providers that abuse these programs will be held accountable.”
“The Defense Criminal Investigative Service is committed to ensuring that TRICARE beneficiaries receive the high quality medical care that they deserve,” said John F. Khin, Special Agent in Charge, Southeast Field Office, Defense Criminal Investigative Service. “This settlement sends the message that providers of substandard care will be brought to justice through the collaborative efforts of law enforcement agencies and the Department of Justice.”
The government alleges that GGNSC submitted false claims to Medicare, Medicaid, and the Veterans Administration because it provided residents at Golden LivingCenter–Glenwood (GLCG) and Golden LivingCenter–Dunwoody (GLCD), f/k/a Golden LivingCenter–Northside, with inadequate and worthless monitoring, documentation, and prevention and treatment of wounds during the period from January 1, 2006 through May 31, 2011. The claims settled in the civil settlement are allegations only, and there has been no determination of liability.
GGNSC executed a Corporate Integrity Agreement (CIA) with the U.S. Department of Health and Human Services, Office of Inspector General, which will require six GGNSC facilities in the Atlanta area (in addition to GLCG and GLCD, Golden LivingCenter–Briarwood, Golden LivingCenter–Decatur, Golden LivingCenter–Kennestone, and Golden LivingCenter–Medical Arts) to continue to implement certain policies and procedures to ensure compliance with applicable statutes and regulations governing patient care. In addition, an independent monitor was appointed to oversee operations at the six Atlanta-area GGNSC facilities for up to five years to verify that the policies and procedures are working effectively and that patients receive appropriate care.
The civil settlement resolves some of the claims in a lawsuit filed by Dr. Joseph L. Micca under the qui tam or whistleblower provisions of the False Claims Act, which allow private citizens to bring civil actions on behalf of the United States and share in any recovery. The case, pending in the Northern District of Georgia, is filed under United States & State of Georgia ex rel. Micca v. GGNSC Holdings, LLC, et al., No. 1:10-cv-1055-ODE (N.D. Ga. Apr. 9, 2010). Dr. Micca will receive a share of the settlement payment that resolves certain claims in the qui tam suit that he filed.
This case was investigated by Special Agents of the Federal Bureau of Investigation; the U.S. Department of Health & Human Services, Office of Inspector General; the Defense Criminal Investigative Service; and the Georgia Medicaid Fraud Control Unit.
The civil settlement was reached by Assistant United States Attorneys Amy Berne and Lena Amanti.
For further information please contact the U.S. Attorney’s Public Information Office at [email protected] or (404) 581-6016. The Internet address for the HomePage for the U.S. Attorney's Office for the Northern District of Georgia is www.justice.gov/usao/gan.
Fort Totten Man Sentenced for Assaulting the Bureau of Indian Affair Chief of Police on the Spirit Lake Indian ReservationRead the Press Release
FARGO - U.S. Attorney Timothy Q. Purdon announced that on Jan. 2, 2013, Brandt Richard Yankton, a/k/a Brandt Richard Jetty of Fort Totten, N.D., was sentenced before U.S. District Judge Ralph R. Erickson on a charge of assault on a federal officer resulting in bodily injury.
Judge Erickson sentenced Yankton to 27 months’ imprisonment to be followed by three years of supervised release. Yankton was ordered to pay a $100 special assessment to the Crime Victim's Fund.
Yankton, 24, pleaded guilty on Aug. 27, 2012, to biting through the skin of the right forearm of Bureau of Indian Affairs Chief of Police, Raymond Cavanaugh, while Chief Cavanaugh was arresting Yankton for a traffic violation. Chief Cavanaugh’s injury required medical attention and left a permanent scar. The incident occurred in April of 2012 on the Spirit Lake Indian Reservation.
The case was investigated by the Federal Bureau of Investigation and the Fort Totten Police Department.
Assistant U.S. Attorney Janice M. Morley prosecuted the case.
Former Payroll Service Provider Pleads Guilty to Tax EvasionRead the Press Release
MINNEAPOLIS—Today in federal court, Mohamed Abdi, a former payroll service provider, pleaded guilty to one count of tax evasion. Abdi, who was indicted on April 9, 2012, entered his plea before United States District Judge John R. Tunheim.From January 1, 2005 through June 2007, Abdi was the sole owner of Siham Solutions, Inc., which provided payroll services to clients in Minnesota. These services included paying federal income and employment taxes withheld from employees of Siham’s clients to the Internal Revenue Service (“IRS”) on a quarterly basis. In his plea agreement, Abdi acknowledged that from the first quarter of 2005 through the second quarter of 2007, he received between $80,000 and $200,000 of payments from clients that were supposed to be paid to the IRS. Instead, Abdi used the money received from his clients for his own purposes.
In particular, during the third quarter of 2006, Abdi received $3,817.12 from a Siham client, United Care Inc., which he agreed to pay to the IRS on United Care’s behalf on October 15, 2006. Instead, Abdi took the money and used it for other purposes.
For his offenses, Abdi faces a potential maximum penalty of five years in federal prison, as well as possible fines and an order of restitution. Judge Tunheim will determine his sentence at a future hearing, not yet scheduled.
This case is the result of an investigation by the IRS-Criminal Investigation Division. It is being prosecuted by Assistant U.S. Attorney Michael L. Cheever.
Per U.S. Department of Justice policy, the U.S. Attorney’s Office is not allowed to provide the age and city of residence for defendants charged in criminal tax cases.
Fairfield Man Sentenced for Being A Felon in Possession of A FirearmRead the Press Release
Michael D. McCullough, 58, of Fairfield, Illinois, was sentenced today in United States District Court in Benton to a term of imprisonment of 12 months and 1 day following his previous guilty plea to being a felon in possession of a firearm, announced Stephen R. Wigginton, United States Attorney for the Southern District of Illinois. The indictment charging McCullough with possessing two firearms, a Smith & Wesson .357 caliber revolver and a Freedom Arms .22 caliber revolver, was returned by a Federal Grand Jury on May 8, 2012. It further alleged that the offense occurred on August 28, 2011, and that prior to that date McCullough had been convicted of two felonies in Wayne County Circuit Court. McCullough pled guilty to the indictment on October 4, 2012.
Evidence introduced to support the guilty plea and sentence showed that the firearms were found after a fire broke out in McCullough’s unoccupied residence in Fairfield on August 28, 2011. Police were notified by fire fighters that upon entering the residence to fight the fire, they located 5 marijuana plants growing in an indoor grow operation in McCullough’s bathroom. The Fairfield Police Department secured a search warrant for McCullough’s residence through the Wayne County State’s Attorney’s office and thereafter located and seized the marijuana plants along with the two firearms and several rounds of ammunition from McCullough’s bedroom.
In addition to the term of imprisonment, McCullough was ordered to pay a $1000 fine and $100 special assessment to the United States and was placed on a 2 year term of supervised release to follow his incarceration.
The case was investigated by the Carmi office of the Southern Illinois Drug Task Force and the Fairfield Police Department, with the assistance of the Bureau of Alcohol, Tobacco, and Firearms.
The case is being prosecuted by Assistant United States Attorney James M. Cutchin.
Department of Justice Will Not Challenge Proposed Joint <br /> Venture Between Flight Support Service Operators at <br /> Connecticut AirportRead the Press Release
WASHINGTON – The Department of Justice today announced that it will not challenge a proposal by Columbia Fuel Services Inc. and Lanmar Aviation Inc., the only providers of flight support services at the Groton-New London Airport, in Groton, Conn., to combine their fuel and hangar resources into a newly formed joint venture, Mystic Jet Center. Flight support service operators, or fixed-base operators (FBOs), provide an array of flight support services to general aviation customers including fuel, ramp and hangar rentals; office space rentals; and other services such as pilot lounges, baggage handling and flight planning support.
The department’s position was stated in a business review letter to counsel for Columbia and Lanmar, from Renata B. Hesse, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. In issuing today’s letter, Acting Assistant Attorney General Hesse stated, “Based on parties’ representations, it does not appear likely that the proposed joint venture between Columbia and Lanmar will produce anticompetitive effects.”
According to representations made by Columbia and Lanmar, although the joint venture will result in Mystic Jet Center being the solitary, but not exclusive, FBO at the airport, Mystic Jet Center will not be able to impose supra-competitive prices due to sufficient competitive pressure from several sources, including the pricing and availability of aviation fuel and hangar storage at surrounding airports, the ability of modern private aircraft to tanker fuel and the availability of developable land for future and additional FBOs at the airport.
Based on these representations, as well as the department’s investigation into the particular facts and circumstances relating to competitive conditions at the airport, the department has no present intention to challenge the proposed joint venture.
Under the department’s business review procedure, an organization may submit a proposed action to the Antitrust Division and receive a statement as to whether the division currently intends to challenge the action under the antitrust laws based on the information provided. The department reserves the right to challenge the proposed action under the antitrust laws if it produces anticompetitive effects.
A file containing the business review request and the department’s response may be examined in the Antitrust Documents Group of the Antitrust Division, U.S. Department of Justice, 450 Fifth Street, N.W., Suite 1010, Washington, D.C. 20530. After a 30-day waiting period, the documents supporting the business review will be added to the file, unless a basis for their exclusion for reasons of confidentiality has been established under the Business Review Procedure.
Christie Ann Medicine Tail Pleads Guilty in U.S. Federal CourtRead the Press Release
The United States Attorney's Office announced that during a federal court session in Billings, on December 28, 2012, before Chief U.S. District Judge Richard F. Cebull, CHRISTIE ANN MEDICINE TAIL, a 35-year-old resident of Lodge Grass, pled guilty to distribution methamphetamine. Sentencing has been set for March 28, 2013. She is currently released on special conditions.
In an Offer of Proof filed by Assistant U.S. Attorney Marcia Hurd, the government stated it would have proved at trial the following:
Law enforcement had information that defendant CHRISTIE MEDICINE TAIL was selling methamphetamine as part of a bigger drug operation in Big Horn County and on the reservations. On August 19, 2011, MEDICINE TAIL sold a confidential informant methamphetamine for $200 while at MEDICINE TAIL's residence in Big Horn County.
At trial, the United States would present the testimony of cooperating witnesses and agents, as well as narcotics and lab personnel to identify those narcotics.
MEDICINE TAIL faces possible penalties of 20 years in prison, a $2,000,000 fine and at least 4 years supervised release.
The investigation was conducted by the Montana Division of Criminal Investigation.
Canadian Man Pleads Guilty to Making False StatementsRead the Press Release
BUFFALO, N.Y.– U.S. Attorney William J. Hochul, Jr. announced today that Abdi Ali Kulmie, 47, of Toronto, Ontario, pleaded guilty to making false statements to a Customs and Border Protection Officer before Chief U.S. District Court Judge William M. Skretny. The charge carries a maximum sentence of five years in prison, a $250,000 fine or both.
Assistant U.S. Attorney Anthony M. Bruce, who is handling the case, stated that on October 27, 2012, the defendant attempted to enter the United States from Canada at the Peace Bridge. When questioned by Customs and Border Protection officers, Kulmie indicated he was a Somalian citizen, not a citizen of Canada. In fact, the defendant became a naturalized Canadian citizen in the early 1990's and is an Ethiopian.
The plea is the culmination of an investigation by Customs and Border Protection, under the direction of James T. Engleman, Director of Field Operations.
1 January 2013
Woodbridge Woman Pleads Guilty to Failing to Register as A Sex OffenderRead the Press Release
ALEXANDRIA, Va. – Jakia J. Carroll, 31, of Woodbridge, Va., pleaded guilty today to one count of failing to register as a sex offender.
Neil H. MacBride, United States Attorney for the Eastern District of Virginia, and Robert Mathieson, U.S. Marshal for the Eastern District of Virginia, made the announcement after the plea hearing before United States District Judge Claude M. Hilton.
Carroll faces a maximum penalty of 10 years in prison, followed by a mandatory minimum of five years — and up to a lifetime — of supervised release when she is sentenced on April 12, 2013.
According to the indictment and other court records, Carroll was convicted in 2002 of abduction, assault and battery, and sexual battery in the Circuit Court of Prince William County. Under the Sex Offender Registration and Notification Act, also known as the Adam Walsh Act, Carroll is considered a “Tier III” offender, the highest tier. She is required to register as a sex offender wherever she resides, works, or attends school for the duration of her life. Although she had been living in Woodbridge, Va., since December 2010, she knowingly failed to register as a sex offender in Virginia.The case was investigated by the U.S. Marshals Service. Assistant United States Attorney Ryan K. Dickey is prosecuting the case on behalf of the United States.
A copy of this press release may be found on the website of the United States Attorney’s Office for the Eastern District of Virginia at http://www.justice.gov/usao/vae. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia at http://www.vaed.uscourts.gov or on https://pcl.uscourts.gov.New York City Man Sentenced to 145 Months in Federal Prison for Heroin and Firearms ConvictionsRead the Press Release
January 1, 2013The Office of the United States Attorney for the District of Vermont stated that, on October 17, 2013, Videsh Raghoonanan, a.k.a. ABush,@ 26, of Queens, New York was sentenced to 145 months in federal prison after his guilty plea to charges that he conspired to distribute cocaine base and more than 100 grams of heroin and possessed firearms in furtherance of that drug distribution conspiracy. Chief United States District Judge Christina Reiss, sitting in Rutland, also ordered that Raghoonanan serve four years of supervised release following his prison term.
According to court records, Raghoonanan sold large quantities of controlled substances, including over one kilogram of heroin, during a drug distribution conspiracy that lasted from at least 2011 until Raghoonanan's arrest in December of 2012. Raghoonanan obtained primarily heroin, and sometimes cocaine base, in New York City and transported it to Vermont for re-sale at a significant profit. On at least two occasions, he obtained handguns from customers in Vermont in exchange for heroin and then transported those firearms back to New York City. Raghoonanan would also carry a handgun while dealing drugs in Vermont.
On the drug conspiracy charge, Raghoonanan was subject to a maximum term of 40 years in prison and up to a $5,000,000 fine. For having possessed firearms in furtherance of the drug distribution conspiracy, he faced a mandatory five-year term of imprisonment and a maximum of life imprisonment, and up to a $250,000 fine. The five-year mandatory minimum sentence must be served in addition to any term of imprisonment imposed for the drug distribution conspiracy.
In determining the sentence, Judge Reiss noted, among other factors, the scale of the conspiracy, Raghoonanan's use of handguns, and the harm that heroin addiction causes the community. She also considered Raghoonanan's immigration status. According to court records, Raghoonanan is a citizen of Trinidad and Tobago who was brought to the United States by his parents as a child. He never obtained legal authorization to reside in the United States and committed his crimes while living in the United States without permission. Accordingly, once he has finished serving his federal prison sentence, Raghoonanan faces likely deportation to Trinidad and Tobago.
During the course of this investigation, a number of Raghoonanan's associates and co-conspirators have been convicted of federal offenses. On November 11, 2012, Justin Morrill was sentenced to serve 37 months in prison on a heroin conspiracy charge. On January 15, 2013, Maria Hunton was sentenced to serve 30 months in prison on a heroin conspiracy charge. On January 17, 2013, Ryan Orvis was sentenced to serve 57 months in prison on a cocaine conspiracy charge. On June 3, 2013, Patrick Lepore was sentenced to time-served on a cocaine base conspiracy charge. On October 9, 2013, Eric Jophlin was sentenced to 60 months in prison on a heroin conspiracy charge. Defendants Marc Wells, Barton Gray, and Justin Bosley have all been convicted of controlled substance or firearms charges and are awaiting sentencing before Judge Reiss.This case was investigated by the Burlington Police Department, the Bureau of Alcohol Tobacco Firearms and Explosives, and the Drug Enforcement Administration. United States Attorney Tristram J. Coffin commended the efforts of these agencies during this lengthy investigation.
The prosecutor is Assistant United States Attorney Timothy C. Doherty, Jr. Raghoonanan is represented by defense attorney John-Claude Charbonneau.Justice Department Settles Sex Discrimination and Retaliation Lawsuit Against the City of Millbrook, AlabamaRead the Press Release
January 1, 2013Montgomery, Alabama - The Department of Justice announced today that it has entered into a Consent Decree with the city of Millbrook, Ala., that, if approved by the U.S. District Court for the Middle District of Alabama, will resolve the department’s complaint alleging sex discrimination and retaliation in violation of Title VII of the Civil Rights Act of 1964, as amended. The complaint, which was filed along with a proposed consent decree, alleges that Millbrook discriminated against Kristen Spraggins, a female officer employed by the Millbrook Police Department, by subjecting her to harassment and disparate treatment based on her sex, and then terminating her in retaliation for her opposition to the discrimination.
Spraggins began employment with Millbrook as patrol officer in January 2008 and, at the time, was Millbrook’s only female police officer. According to the complaint, Spraggins received excellent performance evaluations from her superiors in the Millbrook Police Department until she rejected unwanted sexual advances by a co-worker and reported those advances to her superiors. The complaint alleges that Millbrook violated Title VII by failing to take effective disciplinary action against the co-worker who harassed her, a male sergeant, and instead subjecting Spraggins to unwarranted disciplinary actions. The complaint further alleges that Millbrook eventually terminated Spraggins from employment with the Police Department in retaliation for her pursuing internal complaints with the department about the sexual harassment and because she filed a charge of sex discrimination with the Equal Employment Opportunity Commission. Under the terms of the consent decree, Millbrook must pay Spraggins compensatory damages as part of the settlement with the department. The consent decree also provides for injunctive relief requiring Millbrook to revise and enforce its policies and procedures that prohibit sex discrimination and retaliation, and to train its officers and other employees on the prevention of sex discrimination and retaliation.
“The Justice Department is committed to the vigorous enforcement of all federal civil rights laws under its jurisdiction, including Title VII’s prohibition against harassment and retaliation in the workplace,” said Jocelyn Samuels, Principal Deputy Assistant Attorney General of 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 unlawful harassment in our public sector workplaces.”
The enforcement of Title VII and other federal employment discrimination laws is a top priority of the Justice Department’s Civil Rights Division. Additional information about the Civil Rights Division and its work is available on its website at www.justice.gov/crt.
PRESS CONTACT: Clark Morris
Email: [email protected]
Telephone: (334) 551-1755
Fax: (334) 223-7617Granite City Man Sentenced for Solicitation to Commit Crime of ViolenceRead the Press Release
A Granite City, Illinois, man was sentenced in federal court to serve 20 years in prison (the maximum statutory sentence) after pleading guilty to the crime of Solicitation of a Crime of Violence on December 4, 2012, the United States Attorney for the Southern District of Illinois, Stephen R. Wigginton, announced today.
“This was a harsh, but fair and deserved sentence for what could only be described as a crime involving bizarre circumstances and extreme violence,” said United States Attorney Wigginton.
In addition to the 20 years in prison, Brett Nash, 46, was sentenced to three years of supervised release following imprisonment, a $500 fine, and a $100 special assessment. There is no parole in the federal system. Nash had been charged with soliciting his wife to abduct, seize, and confine a person, and to hold that person in order to obtain money from him.
Previous court proceedings revealed that the charge arose from incidents occurring in late 2011 and January, 2012, in which Nash sought the help of his wife, TN, and another person in abducting a Granite City lawyer and obtaining money from him. A Factual Stipulation filed with the Court explained the scheme in great detail.
At the sentencing hearing today, Nash argued that he did not have the intent to murder. In response, the prosecution played several recorded conversations between Nash and TN, and between Nash and the CW, leading the judge to conclude that the intention to murder the victim was clear. The judge cited the earnestness with which Nash explained his plans for the victim to the CW as the reason for finding that Nash had the intention to murder the victim.
The recordings indicated that Nash wanted his wife to lure the victim from his home, whereupon Nash and the CW would seize the victim and take him back to his house. There, they would rig him with a fake explosive device; then Nash planned to take the victim to his bank, and force him to withdraw all his money under the threat that Nash would detonate the explosive if the victim did not cooperate.
The recordings indicated that Nash’s initial plan was to electrocute the victim by putting the victim in a hot tub and electrocuting him by throwing in a radio. He would then throw in a cat and electrocute the cat to make it look like the cat had accidentally knocked the radio into the hot tub. However, one of the recordings indicated that on the day Nash was arrested, he told the CW that he wanted two guns for the robbery. He told the CW that it didn’t make any difference what caliber the gun was because the victim was going “to commit suicide,” implying that he and the CW would shoot the victim and make it look like a suicide. “Dead men don’t talk,” said Nash in one of the recordings.
The case was investigated by members of the Federal Bureau of Investigation, the Illinois State Police, the Granite City Police Department, the Metropolitan Enforcement Group of Southwestern Illinois, and the Madison County Sheriff's Department. The case was prosecuted by Assistant U.S. Attorney Stephen B. Clark.
Fairview Heights Man Pleads Guilty to Failure to Register as A Sex OffenderRead the Press Release
On December 3, 2013, Otto W. Jean, a fifty-nine year old Fairview Heights, Illinois, man pled guilty in federal district court, in East St. Louis, to failure to register as a sex offender, the United States Attorney for the Southern District of Illinois, Stephen R. Wigginton, announced today. Jean is scheduled for sentencing on April 7, 2014. He faces a term in prison of up to ten (10) years, a fine up to $250,000, or both, and a term of supervised release of five (5) years to life, and a mandatory special assessment of $100.
The violation occurred between November 2011 and June 2013. Jean was required to register as a sex offender under both Illinois law and the Sex Offender Registration and Notification Act because he was convicted of Statutory Sodomy in the 2nd Degree on March 1, 2000, in St. Louis, Missouri. In November 2011, Jean moved from Missouri to Fairview Heights, Illinois. He was aware of his requirements to register as a sex offender in the State of Illinois and to update his registration with the State of Missouri, upon his move to Illinois in November 2011. Jean was contacted by the Fairview Heights Police Department on June 6, 2013, for non-compliance. He admitted to not having registered in Illinois.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by United States 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 sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc. For more information about internet safety education, please visit www.usdoj.gov/psc and click on the tab “resources.”
The case was investigated by the United States Marshals Service and the Fairview Heights Police Department. Daniel T. Kapsak, Assistant United States Attorney prosecuted the case.
East St. Louis Man Sentenced for Felon in Possession of A FirearmRead the Press Release
An East St. Louis man, Chris L. Hibbler, 44, was sentenced to 27 months’ imprisonment today in United States District Court, East St. Louis, for Unlawful Possession of a Firearm by a Previously Convicted Felon, the United States Attorney for the Southern District of Illinois, Stephen R. Wigginton, announced today. Hibbler was also ordered to pay a $250 fine and a $100 special assessment and to serve a term of 3 years of supervised release following imprisonment. There is no parole in the federal system. Hibbler has been in custody since his arrest on July 17, 2012.
Court documents establish that on February 17, 2012, East St. Louis Police Officers were dispatched at approximately 1:40 a.m. to the 100th block of 5th Street in reference to a male armed with a shotgun. When the officers arrived, they encountered Chris L. Hibbler, who was armed with a Winchester, Model 37, 20-gauge sawed off shotgun. Hibbler agreed to an interview with law enforcement and admitted to possessing the firearm. Hibbler claimed that he found a bag on the ground near the Metro Link station which contained the sawed off shotgun and a round of ammunition. Hibbler stated that he intended to take the firearm to the south end of the city to shoot it. Court documents further establish that prior to February 17, 2012, Hibbler had been convicted of a felony.
The investigation was conducted by the East St. Louis Police Department and the WAVE Task Force. The WAVE Task Force focuses its efforts on combating violent crime in East St. Louis, Washington Park, and surrounding communities. WAVE was formed in November, 2009, and is a collaboration of law enforcement officers from the Illinois State Police, the Metropolitan Enforcement Group of Southwestern Illinois (MEGSI), the East St. Louis Police Department, the Federal Bureau of Investigation, and the Bureau of Alcohol, Tobacco, Firearms, and Explosives. The WAVE Task Force receives financial support through the Department of Justice’s Project Safe Neighborhoods (PSN) initiative, a nationwide federal program which endeavors to address gun-related violence.
The case was prosecuted by Assistant United States Attorney Ali Summers.
Child Predator Is Sentenced to 35 Years in Prison for His Massive Online Sextortion SchemeRead the Press Release
January 1, 2013Montgomery, Alabama - Christopher Patrick Gunn, age 31, of Montgomery, Alabama, was sentenced by U.S. District Judge Mark Fuller to 35 years in prison for producing child pornography in connection with an online sextortion scheme that spans the globe, U.S. Attorney George L. Beck, Jr., announced. Because there is no parole in the federal system, Gunn will serve a minimum of 30 years in the federal penitentiary.
Over a period of more than two years, Gunn repeatedly used computers, chat rooms and other social media outlets to threaten hundreds of young girls, ages 9 to 16, located throughout the United States and internationally. Gunn used those threats to pressure a number of the children and teenagers to produce elicit and pornographic material of themselves. Gunn pled to charges brought in the Middle District of Alabama as well as the Northern District of Florida, and his plea included two counts of making child pornography, fifteen counts of interstate extortion, and seven counts of internet stalking.
The investigation of Gunn started in April 2011 by officers of the Prattville (Alabama) Police Department, after female students at Prattville Junior High School complained that someone using the screen name “Tyler Mielke” had been asking them for sexually explicit pictures over Facebook. Prattville investigators were able to trace an IP address for the bogus “Tyler Mielke” account back to Gunn’s residence in Montgomery and obtained and executed a state search warrant for his residence on April 14, 2011. The seized computers revealed evidence of the online sextortion plot under the account names “Tyler Mielke” and “Jason Lempke.”
Separate investigations conducted in September 2011 by the Biloxi (Mississippi) Police Department and the Livingston Parish (Louisiana) Sheriff’s Office revealed that someone in the Montgomery area had been committing the very same crimes against young girls in those areas using Facebook accounts with the names “C.J. Harper” and “Dalton Powers.”
Based upon the information obtained from these investigations, the FBI was able to determine that Gunn was the person behind all of the criminal conduct. On March 20, 2012, FBI agents executed a federal search warrant at Gunn’s residence, where they discovered a cell phone and a laptop computer containing images and videos of child pornography.
Among the pictures that Gunn possessed were several of young girls posing in various states of undress and which appear to have been produced by the girls themselves using their cell phones cameras. These images confirmed the information that the FBI’s investigation had already uncovered – that for over a year Gunn had been repeatedly using fake Facebook profiles to obtain nude and partially nude photos and videos from young girls in numerous states, including Alabama, Mississippi, and Louisiana.
Gunn used two principal schemes to obtain photos of these young girls in various states of undress.
The first scheme – dubbed “The New Kid Ruse” –began sometime in 2009 and continued until at least August 2011. Under that scheme, Gunn contacted the minor victims by sending them a message over Facebook. He then pretended to be a new kid in town looking for friends. For this purpose, Gunn allegedly established and used a number of different online aliases, including Tyler Mielke, Jason Lempke, CJ Harper, Dalton Powers, Dalton Walthers, Daniel Applegate, and Daniel Rodgers. Once he had gained their trust through chatting, Gunn would ask the girls a series of personal questions, such as their bra size, their sexual history, intimate details about their bodies, and so on. When they had finished divulging that personal information, Gunn would then ask the girls to send him a topless photo. If they refused, he would threaten to e-mail their intimate conversation to the school principal or post it on Facebook for everyone to see.
The second scheme – dubbed “The Justin Bieber Ruse” –began sometime in November 2011, or possibly even earlier, and continued until shortly before Gunn was arrested in March of this year. Under that scheme, Gunn pretending to be the internationally famed pop star, Justin Bieber, contacted the minor victims primarily by using internet-based interactive video chat services, such as Omegle and Skype. Once he had convinced the minor victims that he was, in fact, Justin Bieber, Gunn would allegedly offer them free concert tickets, backstage passes, or some other fan-related benefits if they would agree to send him a webcam transmission or a photo of themselves with their breasts exposed.
Some of the minor victims of Gunn’s two extortion schemes complied to varying degrees with his demands; others did not. For those who complied, Gunn continued sending further demands and more threatening communications. For example, girls who provided a photo of themselves in nothing but underwear were extorted for topless photos. Those who provided topless photos were extorted for pictures of themselves completely naked. And for the minor victims who continued to accede to his demands, Gunn would require them to appear on webcam and perform sexually explicit acts on themselves. If any of his demands were not met, Gunn would threaten to withhold the benefits he had promised the girls and/or to injure the girls’ reputations by publishing their compromising images and videos over the internet.
During the sentencing hearing, Assistant U.S. Attorney Jared Morris described conversations that occurred over the computer between Gunn and his young victims. During those conversations, the victims begged and pleaded for Gunn to allow them to stop performing degrading, humiliating, and sexually explicit acts. Each time the victims wanted to stop, Gunn threatened to send the sexually explicit, nude or degrading pictures to the victim’s friends and family. Mr. Morris further described one incident when the victim begged to stop because the act was hurting her. Gunn would not relent.
At the sentencing hearing, Mr. Morris read a transcript of a conversation between Gunn and a 13 year old victim. In the transcript, the victim told Gunn that she did not want to take her shirt off in front the webcam. Gunn replied that if she doesn’t, he will push send, meaning send the prior pictures to the victim’s friends and family. The victim responded that she is only 13 years old. She further stated that she has “a life, please do not ruin it.” Gunn responded “I am sending it now since u won’t do what I want.” The victim then told Gunn that if he pushes send, she will kill herself. Gunn completely disregarded her cry for help and demanded that she take off her top. The victim complied.
Gunn asked the Court for mercy. To which, Mr. Morris replied that “as a prosecutor, he believed in justice tempered with mercy. However, Gunn showed no mercy to these young victims and Gunn’s sentence should reflect such.” Judge Fuller agreed and gave Gunn the 420 month sentence.
“The actions of these child predators like Gunn will never be erased in the minds of the children that he victimized,” stated U.S. Attorney Beck. “Gunn not only preyed upon children in our community, but in communities across the United States. This long prison sentence serves as a warning to child predators that these crimes will be discovered, will be prosecuted and will be punished severely. I also want to especially thank the Prattville Police Department for initiating this case and for all of their hard work.”
“One of the most important things law enforcement does is protect our children’s innocence and wellbeing from internet predators,” said Stephen Richardson, Federal Bureau of Investigation, Special Agent in Charge, Mobile Division. “The success of this investigation is directly related to our law enforcement partner’s cooperation and commitment to our children.”
This case was investigated by the Montgomery field office of the Federal Bureau of Investigation, with assistance from the Alabama Bureau of Investigation, the Prattville (Alabama) Police Department, the Walton County (Florida) Sheriff’s Department, the Biloxi (Mississippi) Police Department, and the Livingston Parish (Louisiana) Sheriff’s Office. The case was prosecuted by Assistant United States Attorney Jared H. Morris.
This case is being 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 the United States Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit justice.gov/psc For more information about internet safety education, please visit justice.gov/psc/resources.
PRESS CONTACT: Clark Morris
Email: [email protected]
Telephone: (334) 551-1755
Fax: (334) 223-7617Cahokia Man Sentenced for Firearm OffenseRead the Press Release
Dartayous R. Moore, 34, from Cahokia, IL, was sentenced on March 25, 2013, in District Court in East St. Louis, IL, on one count of Unlawful Possession of a Firearm by a Previously Convicted Felon, the United States Attorney for the Southern District of Illinois, Stephen R. Wigginton, announced today.
Moore was sentenced to 57 months in prison, one year of supervised release, fined $300 and ordered to pay $100 special assessment. Moore, who previously pled guilty, admitted that a firearm recovered during a law enforcement response to a disturbance at a residence in Washington Park, IL, on August 13, 2012, belonged to him. He forfeited the firearm. Moore admitted that he had possessed the gun, knowing that he was a convicted felon and knowing that it was illegal for him to have a gun.
The investigation was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives, and prosecuted by Special Assistant United States Attorney Matthew H. Brooks.
Blackstone Man Sentenced to Life for Using A Firearm to Murder an Individual at Veteran's HospitalRead the Press Release
RICHMOND, Va. – Cornelius I. Hayes, 56, of Blackstone, Va., was sentenced today to life in prison for the murder of James Stephenson Lee in the parking lot of the Veteran’s Administration Hospital in Richmond, Va., on Feb. 22, 2012.
Neil H. MacBride, United States Attorney for the Eastern District of Virginia; Jeffrey C. Mazanec, Special Agent in Charge of the FBI’s Richmond Field Office; and Kim Lampkins, Special Agent in Charge, Department of Veterans Affairs, Office of Inspector General, made the announcement after the sentencing by United States District Court Judge Henry E. Hudson.
“Cornelius Hayes executed a friend in broad daylight; chased his girlfriend at gunpoint; and then shot at and left for dead, someone who had come to help,” said U.S. Attorney MacBride. “Today’s sentence is just punishment for this senseless and callous violence that endangered everyone at the VA Medical Center that fateful morning.”
“Mr. Hayes’ cold-blooded and egregious actions against these victims, including innocent bystanders from the surrounding community, cannot be tolerated and merit today’s sentencing,” said Special Agent in Charge Mazanec.
Hayes pled guilty on Sept. 25, 2012, to use of a firearm in relation to a violent crime causing the death of another. In documents filed with the court, Hayes admitted to approaching Lee and a female in the parking of the Hunter Holmes McGuire Veteran Administration Medical Center on Feb. 22, 2012. After a brief verbal confrontation with the female, Hayes brandished a .38-caliber revolver and shot Lee in the shoulder. Hayes chased the female a short distance, only to return to Lee, and shoot him a second time in the head. Lee died as a result of the gunshots fired by Hayes.
This case was investigated by the FBI’s Richmond Field Office and the Veteran’s Administration-Office of the Inspector General. Assistant United States Attorneys Peter S. Duffey and Erik S. Siebert prosecuted the case on behalf of the United States.
A copy of this press release may be found on the website of the United States Attorney's Office for the Eastern District of Virginia at http://www.justice.gov/usao/vae. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia at http://www.vaed.uscourts.gov or on https://pcl.uscourts.gov.Ansonia Man Sentenced to More Than Nine Years in Federal Prison for Illegally Possessing FirearmsRead the Press Release
February 1, 2013David B. Fein, United States Attorney for the District of Connecticut, announced that DERRICK FOGLE, 33, of Ansonia, was sentenced today by Senior United States District Judge Ellen Bree Burns in New Haven to 110 months of imprisonment, followed by three years of supervised release, for unlawfully possessing firearms.
According to court documents and statements made in court, on December 21, 2010, FOGLE possessed a Ruger P-89 nine millimeter handgun that was reported stolen. The firearm had an extended clip loaded with 16 rounds of ammunition. After subsequent investigation into FOGLE’s crack cocaine trafficking, law enforcement officers executed a search warrant at his residence on June 22, 2011. The search revealed a Charter Arms Inc. Police Undercover .38 Special handgun loaded with six rounds of .38 caliber ammunition, an additional nine millimeter bullet, numerous plastic bags consistent with those used in packaging controlled substances for street-level distribution, three metal razor blades, a digital scale containing powder residue, several small pieces of crack cocaine, and four cellular telephones.
FOGLE has nine prior felony convictions. It is a violation of federal law for a person previously convicted of a felony offense to possess a firearm or ammunition that has moved in interstate or foreign commerce.
FOGLE was detained in state custody from June 22, 2011 until approximately January 8, 2012 on related state charges. He has been detained in federal custody since January 19, 2012.
On June 7, 2012, FOGLE pleaded guilty to one count of possession of a firearm by a convicted felon.
This case was investigated by the Ansonia Police Department, the Shelton Police Department, and the Drug Enforcement Administration, with substantial assistance provided by the Bureau of Alcohol, Tobacco, Firearms and Explosives. The case was prosecuted by Assistant United States Attorney Marc H. Silverman.
PUBLIC AFFAIRS CONTACT:
U.S. ATTORNEY'S OFFICE
Tom Carson
(203) 821-3722 [email protected]
31 December 2012
Justice Department Announces Successful Resolution of Case Regarding Delaware State PrisonsRead the Press Release
The Justice Department announced that the state of Delaware has fully complied with the parties’ amended memorandum of agreement (MOA) which was reached after an investigation of three Delaware state prisons. The MOA, which includes reforms in mental health care, medical care and suicide prevention, was entered into after an investigation of the conditions at the James T. Vaughn Correctional Center, the Howard R. Young Correctional Institution and the Sussex Correctional Institution.
“Prisons are a critical component of the public safety system. The conditions in prisons affect not only those confined there, but the staff, prisoners’ families and the community at large,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “We commend the state for its successful efforts to improve medical and mental health care for Delaware inmates, and for its commitment to ensuring that the constitutional rights of inmates are protected. In the Justice Department’s view, the state of Delaware has met the requirements necessary for termination of the amended memorandum of agreement.”
Among other reforms, the state established the Bureau of Correctional Healthcare Services, which, with the department’s input, designed and implemented an excellent continuous quality improvement program which has become a sought-after model among other states and municipalities.
In December 2006, the department and state entered into the original MOA to resolve the department’s findings of unlawful conditions at the facilities, following a comprehensive investigation under the Civil Rights of Institutionalized Persons Act (CRIPA) which began in March 2006. The settlement called for broad reforms in areas related to medical care, mental health care, and suicide prevention. When the original MOA expired by its terms in December 2009, the department and the state negotiated a successor, the amended MOA, with which the state has achieved substantial compliance, resulting in this termination.
For more information on the Justice Department’s Civil Rights Division, please visit www.justice.gov/crt.
30 December 2012
Attorney General Eric Holder Welcomes Bill Baer as Assistant Attorney General for the Antitrust DivisionRead the Press Release
Attorney General Eric Holder today welcomed the confirmation of Bill Baer as the Department of Justice’s Assistant Attorney General for the Antitrust Division.
“Bill is a highly-skilled and well-respected antitrust lawyer who understands the importance of promoting competition in order for consumers to reap the benefits of lower prices and better quality products and services,” said Attorney General Holder. “I have no doubt that he will lead the Antitrust Division effectively in its vigorous enforcement of the antitrust laws.”
Since January 2000, Baer was a partner and head of Arnold & Porter LLP’s Antitrust Practice Group in Washington, D.C. Baer’s practice included providing counsel on a broad range of antitrust and consumer protection issues, including international cartel investigations and merger and acquisition reviews in the United States and the European Commission. He has extensive antitrust experience in various industries, including high tech, intellectual property, communications and health care. Baer also served as a partner at the firm from 1983 to 1995 and as an associate from 1980 to 1983. During that time, Baer specialized in complex civil and criminal antitrust litigation.
From April 1995 to October 1999, Baer was the Federal Trade Commission’s (FTC) Director of the Bureau of Competition. During that time, the FTC achieved significant enforcement successes, including blocking anticompetitive mergers involving two major office supply stores and of the four leading drug wholesalers. Under his leadership, the commission also successfully challenged exclusionary practices in a variety of industries, including toys, high tech and the leading brand name and generic drug manufacturers. From 1975 to 1980, Baer also served in other positions at the FTC, including Assistant General Counsel for Legislation & Congressional Relations, Assistant to Chairman Michael Pertschuk, and as a trial attorney and Assistant to the Director of the Bureau of Consumer Protection.
Baer is a member of the American Bar Association’s Antitrust Section. He has lectured in the United States and around the world on various antitrust and consumer protection issues.
Baer received his J.D. from Stanford Law School in 1975, and served as editor of Stanford’s Law Review. He received his B.A. from Lawrence University in 1972 where he graduated Cum Laude and Phi Beta Kappa.
28 December 2012
Federal Court Bars Alleged Co-Owner of Las Vegas Instant Tax Service Franchise from Preparing Tax ReturnsRead the Press Release
A Nevada federal court has permanently barred Benyam Tewolde from preparing tax returns for others, the Justice Department announced today. Tewolde and his wife, Yordanos Kidanits, are the alleged co-owners of an Instant Tax Service franchise that operates at multiple locations in the Las Vegas area. Instant Tax Service is a nationally franchised tax preparation company based in Dayton, Ohio.
Kidantis and the franchisee, Koraggio LLC, were also permanently enjoined from engaging in certain abusive practices. The civil injunction orders, to which the defendants consented without admitting the allegations against them, were signed on Dec. 27 by Judge Miranda M. Du of the U.S. District Court for the District of Nevada.
According to the government complaint, the defendants helped employees at their Instant Tax Service franchise offices to engage in a variety of misconduct, including:
- Preparing phony tax-return forms with fabricated businesses and income,
- Falsely claiming education credits,
- Claiming false filing status,
- Claiming false dependents,
- Selling deceptive loan products,
- Filing tax returns without customer consent or authorization, and
- Preparing bogus W-2 forms, based on information from employee paystubs
The complaint further alleged that Tewolde personally prepared fraudulent returns.
The injunction permanently bars Tewolde from preparing or filing federal tax returns for others, training tax preparers and owning or managing a tax preparation business.
Kidane and Koraggio are enjoined from violating the federal tax laws and consumer protection laws. The court order requires them to hire a monitor at their expense who will periodically report to the Justice Department to ensure compliance with the injunction. The order also bars Kidane and Koraggio from marketing abusive loan products, including holiday, or instant cash loan or advance products offered to customers based on information obtained from the customer’s paystub.
The case is one of five similar lawsuits that the Justice Department brought against Instant Tax Service franchises earlier this year. One of those suits is pending against the nationwide franchisor of Instant Tax Service and its owner, Fesum Ogbazion, in Dayton. The court in that case has entered a preliminary injunction , and trial on the government’s request to shut down the Instant Tax Service franchisor permanently is scheduled for next May.
In the past decade, the Justice Department’s Tax Division has obtained hundreds of injunctions to stop the promotion of tax-fraud schemes and the preparation of fraudulent returns. Information about these cases is available on the Justice Department’s website .
Department Reaches Settlement with Custer County and the State of Idaho for Cooperation over Roads on Federal LandRead the Press Release
BOISE, Idaho – The Department of Justice and the U.S. Bureau of Land Management announced today – Dec. 28, 2012 – a settlement of the United States’ federal court lawsuit against Custer County and the State of Idaho concerning county action on roads and trails on federal land in Custer County. The Environment and Natural Resources Division of the Department of Justice initially filed suit in the U.S. District Court for the District of Idaho to halt the county’s threatened actions to reopen a section of the Herd Creek Road that adjoins the Jerry Peak Wilderness Study Area, which section BLM had closed in 1999. After the Honorable B. Lynn Winmill, Chief District Judge for the U.S. District Court for the District of Idaho, issued an order temporarily restraining the county from taking any action to reopen the road without BLM's approval, the parties reached an agreement to resolve the dispute.
Under the terms of the agreement, Custer County has agreed to refrain from any on-the-ground action affecting roads and trails on federal land without the agreement of federal land management agencies or prior court approval. The County further agrees it will not interfere with any federal employees or agents in the lawful commission of their official activities. In return, the United States agrees to dismiss the lawsuit.
“I am pleased that Custer County has agreed to work together with federal land managers to avoid disputes over the management of federal lands, including public lands managed by the Challis Field Office of the Bureau of Land Management and lands managed by the U.S. Forest Service,” said Ignacia Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. “This settlement furthers both the BLM's and Forest Service's mission to address important interests on federal lands, including protecting public health and safety, wilderness values, and the environment.”
“I commend the cooperation shown by Custer County and our federal land management agencies in reaching this settlement,” said Wendy J. Olson, U.S. Attorney for Idaho. “Under this settlement, the BLM and the Forest Service can continue to manage and protect our public resources in a way that benefits all Idahoans, indeed the entire country.”
27 December 2012
Victory Pharma Inc. of San Diego Pays $11.4 Million to Resolve Kickback Allegations in Connection with Promotion of Its DrugsRead the Press Release
Victory Pharma Inc., a specialty pharmaceutical company headquartered in San Diego, has agreed to pay $11,420,743 to resolve federal civil and criminal liability arising from its marketing of the pharmaceutical products Naprelan, Xodol, Fexmid and Dolgic, the Justice Department announced today. Under the agreement announced today, Victory entered into a deferred prosecution agreement and paid a criminal forfeiture of $1.4 million to resolve federal Ant-Kickback Statute allegations, and paid $9,938,310 to resolve False Claims Act allegations.
The settlement resolves allegations that Victory engaged in a scheme to promote its drugs by paying kickbacks to doctors to induce them to write prescriptions for Victory’s products, including prescriptions for patients covered by Medicare and other federal health insurance programs. The kickbacks included tickets to professional and collegiate sporting events; tickets to concerts and plays; spa outings; golf and ski outings; dinners at expensive restaurants; and numerous other out-of-office events. Victory also encouraged its sales representatives to schedule paid “preceptorships,” which involved sales representatives “shadowing” doctors in their offices. The settlement also resolves allegations that Victory improperly used these preceptorships to induce doctors to prescribe Victory’s products.
“Kickback schemes undermine the integrity of medical decisions, subvert the health marketplace and waste taxpayer dollars,” said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Civil Division. “We will continue to hold accountable those who refuse to play by the rules and provide illegal incentives to influence the decision making of health care providers.”
“This resolution underscores the need for physicians to make treatment decisions based on their own independent medical judgment, without being influenced by kickbacks or other improper benefits,” said Laura E. Duffy, U.S. Attorney for the Southern District of California. “Protecting taxpayers from health care fraud is a priority of this office. We will continue to work closely with our investigative partners in taking both criminal and civil measures to combat health care fraud.”
The settlement resolves a False Claims Act lawsuit filed in the Southern District of California by Chad Miller, a former sales representative for Victory. The whistleblower, or qui tam, provisions of the False Claims Act permit the whistleblower (or relator) to obtain a portion of the proceeds obtained by the federal government. As part of today’s resolution, Mr. Miller will receive $1.7 million.
“Patients expect health care providers to be concerned only with patients’ best medical interests,” said Glenn R. Ferry, Special Agent in Charge for the U.S. Department of Health and Human Services Office of Inspector General Los Angeles region. “Financial kickbacks betray that patient trust, and taxpayers’ expectation that federal and state health dollars be put only to the wisest use.”
FBI Special Agent in Charge Daphne Hearn commented, “Many laws of this nation are put in place to protect our citizens from corrupt practices that may endanger our health and safety. When individuals or businesses operate outside of the fence in order to turn a bigger profit the FBI will pursue them in the justice system.”
Chris Hendrickson, Special Agent in Charge, Western Field Office, Defense Criminal Investigative Service, stated: “The Department of Defense is committed to its partnership with the Department of Justice and other federal and state enforcement agencies to aggressively pursue those who take advantage of taxpayer-funded health care systems for illicit gain. Doctors providing services to our military members and their families should be free from undue influence in prescribing medicines and other care decisions, and DCIS will act swiftly against those who engage in these illegal and unethical acts.”
This settlement is the result of a coordinated effort by the Department of Justice, Civil Division, Commercial Litigation Branch; the U.S. Attorney’s Office for the Southern District of California; the FBI; and the Offices of Inspectors General for Health and Human Services, the Department of Defense, the Department of Labor, the U.S. Postal Service, the Veteran’s Administration, and the Office of Personnel Management.
This resolution is part of the government’s emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover $10.1 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department's total recoveries in False Claims Act cases since January 2009 are over $13.9 billion.
Caddell Construction Co. Commits to Pay $2 Million Penalty<br /> in Agreement to Resolve Criminal Fraud ViolationsRead the Press Release
WASHINGTON – Caddell Construction Company Inc., a major commercial and industrial federal government construction contractor based in Montgomery, Ala., has entered into an agreement with the Department of Justice to resolve criminal fraud violations arising from Caddell’s intentional overstating of developmental assistance provided to a disadvantaged small business as part of a Department of Defense (DoD) program. The agreement, including a $2 million penalty to be paid by Caddell, was announced today by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.
According to the non-prosecution agreement (NPA) between the government and Caddell, in February 2003, Caddell entered into an agreement with Mountain Chief – which is certified as a Native American, woman-owned and economically-disadvantaged small business – to participate in the DoD’s Mentor-Protégé Program, in which major DoD contractors (mentor firms) contract with and provide developmental assistance to disadvantaged small businesses (protégé firms) and are reimbursed by the DoD for related costs.
Around the same time, Caddell began participating with Mountain Chief in DoD’s Indian Incentive Program, which provides incentives – in the form of a rebate of 5 percent of the total dollar amount of work – for major DoD contractors to engage Native-American-owned businesses as subcontractors and suppliers. Caddell and Mountain Chief participated in these programs in connection with two DoD construction contracts at Fort Bragg, N.C., each worth approximately $65 million and a DoD construction project at Fort Campbell, Ky., worth approximately $34 million.
According to the NPA, from February 2004 to March 2005, Caddell submitted more than 20 requests for payment to the DoD in connection with the Mentor-Protégé Program that significantly overstated the amount of developmental assistance Caddell had provided Mountain Chief. In addition, Caddell filed documents falsely stating Mountain Chief’s size and income, as well as the status of Mountain Chief’s technical capabilities and business infrastructure. From April 2003 to October 2004, Caddell also submitted at least eight requests to the DoD for the Indian Incentive Program, for rebates based on services purportedly performed on subcontracts Caddell gave to Mountain Chief. Mountain Chief performed few, if any of these services, and the invoices were created solely to support Caddell’s applications for payment.
As part of the NPA, Caddell will pay a $2 million criminal penalty, and must cooperate with the Department of Justice for the two-year term of the agreement. The agreement recognizes Caddell’s voluntary disclosure; thorough self-investigation of the underlying conduct; and full cooperation with the department and remedial measures already undertaken and to be undertaken, including employment actions and improving reporting systems, corporate governance, and compliance training and oversight. As a result of these factors, among others, the department agreed not to prosecute Caddell for the improper pay requests, provided Caddell satisfies its ongoing obligations under the agreement.
In January 2012, Daniel W. Chattin, 50, of Granite Bay, Calif., the son of Mountain Chief’s owner and a project manager and consultant for Mountain Chief, and Mark L. Hill, 57, of Montgomery, Ala., the Mentor-Protégé Program Coordinator and a director of business development at Caddell, were indicted in the Middle District of Alabama on three counts of major fraud against the United States stemming from the same scheme. In addition, Hill was charged with one count of making a false statement to the DoD. Chattin and Hill await trial, which is scheduled to begin on April 22, 2013. The charges and allegations against Chattin and Hill are merely accusations and they are considered innocent unless and until proven guilty.
This investigation is being conducted by the General Services Administration – Office of Inspector General, and the DoD’s Defense Criminal Investigative Service. This case is being handled by Assistant Chief Albert B. Stieglitz Jr. and Trial Attorney Thomas B.W. Hall of the Criminal Division’s Fraud Section.
26 December 2012
Illinois-based Hardware Distributor W.W. Grainger Pays US<br /> $70 Million to Resolve False Claims Act AllegationsRead the Press Release
W.W. Grainger Inc. has agreed to pay the United States $70 million to resolve allegations that it submitted false claims under contracts with the General Services Administration (GSA) and the U.S. Postal Services (USPS), the Department of Justice announced today. Grainger is a national hardware distributor headquartered in Lake Forest, Illinois.
Grainger entered into a contract to sell hardware products and other supplies to government customers through the GSA’s Multiple Award Schedule (MAS) program. The MAS program provides the government and other GSA-authorized purchasers with a streamlined process for procurement of commonly-used commercial goods and services. To be awarded a MAS contract, and thereby gain access to the broad government marketplace, contractors must agree to disclose their commercial pricing policies and practices to assist the government in negotiating the terms of the MAS contract.
Today’s settlement resolves issues discovered during a GSA post-award audit of Grainger’s MAS contract. The GSA Office of Inspector General learned that Grainger failed to meet its contractual obligations to provide the GSA with current, accurate and complete information about its commercial sales practices, including discounts afforded to other customers. As a result, government customers purchasing items under the Grainger MAS contract paid higher prices than they should have.
In addition, today’s settlement resolves allegations that Grainger failed to meet its contractual obligations to provide “most-favored customer” pricing under two USPS contracts for sanitation and maintenance supplies. The USPS contracts required Grainger to treat USPS as Grainger’s “most-favored customer” by ensuring that USPS received the best overall discount that Grainger offered to any of its commercial customers. Agents and auditors from the USPS Office of Inspector General (OIG) investigated Grainger’s pricing practices and discovered that Grainger did not consistently adhere to this requirement, causing USPS to pay more than it should have for purchases made under the two contracts.
“Misrepresentations during contract negotiations undermine the integrity of the government procurement process,” said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Civil Division. “The Justice Department is committed to ensuring that government purchasers of commercial products receive the prices to which they are entitled.”
“The substantial payment by Grainger reflects the Justice Department’s focused and productive work in the economic interests of our citizen constituents,” commented United States Attorney James L. Santelle of the Eastern District of Wisconsin. “This settlement shows that we are committed to ensuring that false claims are investigated fully and pursued effectively so that government monies are used properly and the integrity of our contracting system is upheld.”
“This case is another demonstration of the value of the work performed by Inspectors General ,” said GSA Inspector General Brian D. Miller. “Our auditors and agents worked tirelessly to reach this critical settlement.”
“The U.S. Postal Service Office of Inspector General aggressively pursues instances of contracting improprieties that negatively impact the Postal Service and cause unnecessary expenses. We appreciate the partnership of the Civil Divisions of the Department of Justice and the United States Attorney’s Office for their support in this case,” said Joanne Yarbrough, Special Agent-in-Charge of the OIG’s Major Fraud Investigations Division.
This settlement was the result of a coordinated effort by the Commercial Litigation Branch of the Justice Department’s Civil Division; the U.S. Attorney’s Office for the Eastern District of Wisconsin; the GSA Office of Inspector General; and the USPS Office of Inspector General and Office of General Counsel. The claims settled by this agreement are allegations only, and there has been no determination of liability.
21 December 2012
Justice Department Seeks to Shut Down Georgia Tax PreparersRead the Press Release
The United States has asked a federal court in Atlanta to bar Larry J. Heath, who operates Heath’s Income Tax II in Cartersville, Ga., and his brother Andrew R. Heath, who operates Excellent Tax Service of Acworth, Ga., from preparing tax returns for others, the Justice Department announced today. According to the government complaint, the Heaths and their businesses have repeatedly prepared federal tax returns that unlawfully understate customers’ federal tax liabilities. The suit alleges that the defendants concoct bogus losses, expenses, education credits, business expenses and charitable contributions, which they falsely report on their customers’ federal income tax returns.
According to the complaint, the Internal Revenue Service (IRS) previously suspended Larry Heath’s IRS-issued electronic filing identification number (EFIN) because of the large number of erroneous returns he prepared. In response, the complaint alleges, Larry Heath purported to “sell” his business to two different individuals and used their EFINs to continue to file tax returns.
The suit alleges that the IRS has examined thousands of income tax returns prepared by the Heaths and their businesses and found that 94.5 percent of tax returns required IRS adjustments. According to the complaint, the total harm to the U.S. Treasury caused by Larry and Andy Heath’s misconduct could exceed $100 million.
Claiming bogus tax refunds is one of the IRS’s Dirty Dozen Tax Scams . In the past decade, the Justice Department’s Tax Division has obtained injunctions against hundreds of tax fraud promoters and unscrupulous tax preparers. Information about these cases is available on the Justice Department website .
Related Materials:
Heath Injunction Complaint
United States v. Larry J. Heath, et al.
Complaint for Permanent Injunction and Other Relief (PDF)Justice Department Enters into Agreement to Reform the Puerto Rico Police DepartmentRead the Press Release
The Justice Department (DOJ) today entered into a sweeping agreement with the Commonwealth of Puerto Rico and Governor Luis Fortuño to resolve its civil investigation of the Puerto Rico Police Department (PRPD). The complaint and the agreement were filed today in the U.S. District Court of Puerto Rico, along with a joint motion requesting a temporary stay of the proceedings until April 15, 2013 to provide the incoming administration of Governor-elect Alejandro García Padilla sufficient time to review the agreement.
The comprehensive agreement addresses wide-ranging and ongoing constitutional violations by PRPD that were documented in a lengthy DOJ report issued in September 2011. The department found reasonable cause to believe that PRPD engages in a pattern or practice of use of excessive force, use of unreasonable force designed to suppress protected speech, and unconstitutional searches and seizures. The agreement also addresses allegations that PRPD fails to investigate sex crimes and domestic violence, and engages in discriminatory policing.
“We appreciate the hard work of Governor Fortuño, Superintendent Hector Pesquera, and their staff. Together, and with great input from the public, we have designed a comprehensive blueprint for reform that provides a solid foundation that will professionalize and support the hardworking men and women of PRPD as they protect the people of Puerto Rico,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “We have also met with Governor-elect Garcia-Padilla, who recognizes that constitutional policing and effective policing go hand in hand. We look forward to working with Governor-elect García Padilla and his incoming administration to finalize the agreement and begin the critical work of rebuilding PRPD. Ensuring effective, constitutional policing is not a partisan issue, and we appreciate the commitment of Governor Fortuño and Governor-elect García Padilla to the reforms embodied in the agreement. The successful implementation of the reforms contained in this agreement will help to reduce crime, ensure respect for the Constitution and restore public confidence in PRPD.”
Today’s agreement was reached after extensive negotiations with commonwealth officials and their police consultants. The agreement provides a comprehensive blueprint for meaningful, sustainable reform and reflects the input of many community stakeholders from throughout the Commonwealth, including police affinity groups, members of the Puerto Rico business community, students, representatives of the Dominican community, and members of the lesbian, gay, bisexual, transsexual and transgender communities.
The agreement addresses the policies, procedures, training, internal and external oversight, disciplinary systems and information and data integrity mechanisms that caused or contributed to the pattern or practice of misconduct. It also details necessary changes intended to ensure that police services are delivered to the people of Puerto Rico in a manner that is effective, complies with the Constitution, and promotes the community’s trust in PRPD. For instance, the agreement contains provisions that are designed to increase transparency and promote PRPD’s responsiveness to the community, including measures that require regular meetings with community representatives to facilitate cooperation and communication; collection and dissemination of accurate and up-to-date crime statistics; community outreach programs in each PRPD region; and independent and periodic compliance assessments that are available to the public.
The purpose of the joint motion requesting a temporary stay of the proceedings is to provide the incoming administration with a meaningful opportunity to review the agreement. The department and representatives of Governor Fortuño have met independently with Governor-elect García Padilla and his transition team to brief them on the investigation’s findings and the agreement. The stay, requested until April 15, 2013, will provide Governor-elect García Padilla and his incoming administration with a meaningful opportunity to review the agreement, and either accept it or negotiate necessary changes, before the department and Commonwealth request approval and entry of the agreement as an order. During this period, the department will continue its ongoing outreach into communities across Puerto Rico to seek input and feedback. Once approved and entered by the district court, the agreement will resolve the department’s civil action, and the implementation phase will immediately begin.
A copy of the complaint, the agreement, the joint motion to stay the proceedings, and September 2011 letter of findings can be found at www.justice.gov/crt .
Related Materials:
PRPD Summary of Agreement
PRPD Complaint
PRPD Agreement
PRPD Joint MotionJustice Department Announces Agreement with the State of New Hampshire on Bailout of Covered Jurisdictions Under the Voting Rights ActRead the Press Release
The Justice Department announced today that it has reached an agreement with the State of New Hampshire that will allow for all 10 of the towns in that state that are covered jurisdictions under the special provisions of the Voting Rights Act to bail out from coverage by these provisions. These 10 covered jurisdictions are the towns or townships of Antrim, Benton, Boscawen, Millsfield, Newington, Pinkham’s Grant, Rindge, Stewartstown, Stratford, and Unity, in New Hampshire. Bailout would exempt these 10 towns, along with local school districts within these towns, 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 and must be approved by the court.
“In the department’s view, these covered towns and townships have met the requirements necessary for bailout. We reached this conclusion after thoroughly reviewing information provided by the State and the covered jurisdictions gathered during the department’s independent investigation,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “I commend the State and the covered jurisdictions on their cooperation to ensure resolution of this matter.”
Under Section 5 of the Voting Rights Act, certain covered jurisdictions, determined according to Section 5 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 5 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 the 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.
The state of New Hampshire filed its bailout action on behalf of the 10 covered towns and townships in the U.S. District Court for the District of Columbia on Nov. 15, 2012. Counsel for the state contacted the attorney general prior to filing the action, indicating that the State was interested in seeking to bailout its covered jurisdictions. The state and covered jurisdictions provided the Justice Department with substantial information, and the department conducted an investigation to determine the covered towns and townships’ eligibility. Based on that investigation, the department is satisfied that the 10 covered towns and townships meet the Voting Rights Act’s requirements for bailout.
The consent decree details the legal and factual basis for a bailout determination and, if approved by the court, the State’s request will be granted. 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 towns or townships that would have originally precluded the covered towns or townships 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.
Related Materials:
New Hampshire Proposed Consent Decree
El Departamento de Justicia realiza acuerdo para la reforma del Departamento de Policía de Puerto RicoRead the Press Release
El Departamento de Justicia [Department of Justice (DOJ)] realizó hoy un acuerdo global con el Estado Libre Asociado de Puerto Rico y el Gobernador Luis Fortuaño en resolución de su investigación civil del Departamento de Policía de Puerto Rico [Puerto Rico Police Department (PRPD)]. La demanda y el acuerdo fueron presentados hoy al Tribunal Federal de Distrito de Puerto Rico, junto con una petición conjunta para el aplazamiento temporal del proceso hasta el 15 de abril de 2013, para brindarle al gobierno entrante del Gobernador electo Alejandro García Padilla tiempo suficiente para examinar el acuerdo.
El acuerdo integral se ocupa de violaciones constitucionales amplias y constantes cometidas por el PRPD que fueron documentadas en una denuncia larga del DOJ emitida en septiembre de 2011. El departamento encontró justificación razonable para creer que el PRPD exhibe un patrón o una práctica de uso de fuerza excesiva, uso de fuerza irrazonable diseñada para suprimir la libertad de expresión, y allanamientos y confiscaciones inconstitucionales. El acuerdo también trata de alegatos de que el PRPD deja de investigar delitos sexuales y violencia doméstica, y realiza acciones policiales discriminatorias.
"Valoramos el arduo trabajo del Gobernador Fortuaño, el Superintendente Héctor Pesquera y los equipos de los mismos. Juntos, y con gran participación del público, hemos diseñado una huella integral para la reforma que brinda una base sólida que profesionalizará y brindará apoyo a los hombres y mujeres trabajadores del PRPD en sus tareas de protección del pueblo de Puerto Rico", dijo Thomas E. Perez, Secretario de Justicia Auxiliar de la División de Derechos Civiles. "También nos hemos reunido con el Gobernador electo García Padilla, quien reconoce que la acción policial constitucional va de la mano con la acción policial efectiva. Nos complacerá trabajar con el Gobernador electo García Padilla y su equipo en finalizar el acuerdo y comenzar la tarea crítica de reconstruir el PRPD. El garantizar una acción policial efectiva y constitucional no es una cuestión partidaria, y valoramos el compromiso asumido por el Gobernador Fortuaño y el Gobernador electo García Padilla para con las reformas reflejadas en el acuerdo. La implementación exitosa de las reformas que contiene este acuerdo ayudarán a reducir la delincuencia, asegurarán el respeto por la Constitución y restaurarán la confianza pública en el PRPD".
El acuerdo de hoy fue alcanzado después de negociaciones amplias con autoridades del estado y sus consultores policiales. El acuerdo brinda una huella integral para una reforma significativa y sostenible y refleja las opiniones de muchos actores de la comunidad de todo el estado, incluidos grupos con afinidad policial, miembros de la comunidad empresaria de Puerto Rico, estudiantes, representantes de la comunidad dominicana y miembros de las comunidades lesbiana, gay, bisexual, transexual y transgénero.
El acuerdo trata de los procedimientos, políticas, capacitación, supervisión interna y externa, sistemas disciplinarios y mecanismos de integridad de la información y de datos que causaron o contribuyeron para el patrón o la práctica de conducta indebida. También detalla cambios necesarios para garantizar que los servicios policiales sean brindados al pueblo de Puerto Rico de manera efectiva, que cumpla con la Constitución y promueva la confianza de la comunidad en el PRPD. Por ejemplo, el acuerdo contiene disposiciones diseñadas para aumentar la transparencia y promover el grado de reacción policial respecto de la comunidad, incluidas medidas que requieren reuniones periódicas con representantes comunitarios para facilitar la cooperación y la comunicación; la recolección y diseminación de estadísticas de delincuencia precisas y actualizadas; programas de extensión comunitaria en cada región del PRPD; y evaluaciones de cumplimiento independientes y periódicas que estén disponibles al público.
La finalidad de la petición conjunta que solicita un aplazamiento temporal del proceso es brindarle al próximo gobierno una oportunidad significativa de examinar el acuerdo. El departamento y representantes del Gobernador Fortuaño se han reunido de manera independiente con el Gobernador electo García Padilla y su equipo de transición para informarles acerca de las conclusiones de la investigación y sobre el acuerdo. El aplazamiento, solicitado hasta el 15 de abril de 2013, le brindará al Gobernador electo García Padilla y su gobierno entrante una oportunidad significativa de examinar el acuerdo y aceptarlo o negociar cambios necesarios, antes de que el departamento y el estado soliciten la aprobación y el asiento del acuerdo en forma de orden. Durante este período, el departamento continuará con sus iniciativas de extensión comunitaria en curso en todo Puerto Rico para pedir opiniones y comentarios. Una vez aprobado y asentado por el tribunal de distrito, el acuerdo resolverá la acción civil entablada por el departamento, y comenzará la fase de implementación de inmediato.
Se encuentra una copia de la demanda, del acuerdo y de la petición conjunta para el aplazamiento del proceso, y la carta de conclusiones de septiembre de 2011 en www.justice.gov/crt.
Material relacionado:
- Resumen del Acuerdo con el PRPD
District Court Enters Permanent Injunction Against New Mexico-Based Producer of Peanut Butter Productsand Company’s President and Chief Executive OfficerRead the Press Release
WASHINGTON - U.S. District Court Judge William P. Johnson entered a consent decree of permanent injunction against Sunland Inc., a Portales, N.M.-based producer of peanut butter, and Jimmie D. Shearer, president and chief executive officer of Sunland, the Justice Department announced today. The department, at the request of the Food and Drug Administration (FDA), asked the court to enter the consent decree.
The Centers for Disease Control and Prevention (CDC) has reported that since September 2012 at least 35 people from 19 states have been infected with a strain of Salmonella Bredeney. Eight of these individuals were hospitalized as a result of their infection. Peanut butter manufactured by Sunland was identified by FDA and the CDC as a likely source of this outbreak.
As set forth in the complaint filed by the United States on December 20, FDA conducted an inspection of defendants’ facility from Sept. 9 to Oct. 16, 2012. According to the complaint, FDA analyses of samples collected during the 2012 inspection confirmed that certain of Sunland’s nut products were contaminated with Salmonella Bredeney and established the widespread presence of Salmonella Bredeney in Sunland’s facility. Salmonella Bredeney is a pathogenic organism that has a reasonable probability of causing serious adverse health consequences or death to humans.
FDA suspended the registration of Sunland’s food facility on Nov. 26, 2012. As the FDA’s suspension letter explained, the FDA’s analysis found that the Salmonella Bredeney detected at Sunland was indistinguishable from the Salmonella Bredeney identified in the multistate outbreak and the FDA’s investigation uncovered a number of practices that likely result in cross-contamination between raw peanuts and peanuts that had been roasted or brined. Specifically, packaging equipment was not effectively cleaned to prevent contamination; collapsible mesh totes used to store and transport nuts were not cleaned and sanitized between uses; employees came into contact with ready to package, roasted, in-shell peanuts with their bare hands; and processing equipment had unused connections that could facilitate the growth of pathogenic bacteria by allowing food material and water to accumulate.
The FDA concluded that unless and until Sunland implemented a number of corrective actions, and FDA evaluated the completed corrective actions to assure their adequacy, food manufactured and held by Sunland would continue to pose a reasonable probability of causing serious adverse health consequences or death to humans or animals.
Shortly after the suspension of Sunland’s registration, the United States filed suit to permanently enjoin Sunland and Shearer from delivering adulterated foods into interstate commerce. The consent decree entered resolves that suit by requiring Sunland to take a wide range of actions to correct its violations and ensure that they do not happen again. Among other actions, Sunland must develop and implement sanitation control programs; provide FDA the opportunity to inspect the facilities to assure Sunland’s compliance with the consent decree, the Food, Drug and Cosmetic Act, and applicable regulations; and receive written authorization from FDA to resume operations. Sunland must also implement testing, monitoring and remediation protocols.“This consent decree prohibits Sunland from selling processed foods to consumers until it fully complies with the law,” said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Justice Department’s Civil Division. “As this case demonstrates, the Department of Justice and FDA will work together to protect the health and safety of Americans by making sure that those who produce and sell the food we eat follow the law.”
Principal Deputy Assistant Attorney General Delery thanked the FDA for referring this matter to the Department of Justice. Roger Gural, Trial Attorney at the Consumer Protection Branch of the Justice Department, in conjunction with Assistant U.S. Attorney Michael Hoses in the District of New Mexico, and Scott Kaplan and Jillian Wein Riley, Counsel at FDA’s Office of the Chief Counsel, brought this case on behalf of the United States.
20 December 2012
Ohio-Based Wheelchair Manufacturer Agrees to Consent Decree to Resolve Allegations of Food, Drug and Cosmetic Act ViolationsRead the Press Release
The Justice Department, at the request of the Food and Drug Administration (FDA), today filed a complaint and a proposed consent decree in the U.S. District Court for the Northern District of Ohio against Invacare Corp., Gerald B. Blouch and Ronald J. Clines. The complaint and proposed consent decree are being filed today in accordance with an agreement with the defendants resolving numerous allegations of violations of the Food, Drug and Cosmetic Act (FDCA).
The defendants design, manufacture and distribute powered wheelchairs and powered hospital beds, which are medical devices under the FDCA. Medical device manufacturers are required to comply with the FDA’s Current Good Manufacturing Practices (CGMP) regulatory requirements in order to ensure the safety and effectiveness of their devices.
The FDA conducted multiple inspections of Invacare’s corporate headquarters and Taylor Street manufacturing facility, both located in Elyria, Ohio, between September 2002 and August 2011. Those inspections revealed significant violations of the CGMP regulatory requirements. Many of the violations related to design controls, complaint handling, and corrective and preventive action (CAPA). Those regulations ensure that when a device manufacturer learns that one of its devices has malfunctioned or has caused injury to a patient, the complaint is thoroughly investigated and necessary design changes are implemented. Without such controls, recurring defects may not be identified or corrected, endangering patients who rely on the defendants’ powered wheelchairs and beds.
Under the terms of the agreement reached with the government, the defendants cannot resume manufacturing power wheelchairs or conducting design activities related to wheelchairs and power beds at the two Ohio facilities until an independent expert inspects the company’s operations and certifies that the defendants are in compliance with the law. FDA can then evaluate that certification. Until FDA provides written notification that the facilities are in compliance with the law, they cannot resume operations.
“Today’s proposed consent decree would require Invacare to establish procedures that will help ensure their products are safe and effective for the patients who rely on them,” said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Civil Division of the Department of Justice. “Consumers who need wheelchairs or powered hospital beds should not have to risk being harmed by the very products meant to help them.”
“This resolution underscores the commitment of our office and this department to protecting consumers, particularly those who have to use wheelchairs or hospital beds,” said Steven M. Dettelbach, U.S. Attorney for the Northern District of Ohio.
The matter was handled by the Justice Department’s Consumer Protection Branch, the FDA’s Office of the General Counsel, and the U.S. Attorney’s Office for the Northern District of Ohio.
Justice Department and Lesley University Sign Agreement to Ensure Meal Plan Is Inclusive of Students with Celiac Disease and Food AllergiesRead the Press Release
The Justice Department today announced an agreement with Lesley University in Cambridge, Mass., to ensure that students with celiac disease and other food allergies can fully and equally enjoy the university’s meal plan and food services in compliance with the Americans with Disabilities Act (ADA).
Food allergies may constitute a disability under the ADA. Individuals with food allergies may have an autoimmune response to certain foods, the symptoms of which may include difficulty swallowing and breathing, asthma and anaphylaxis. For example, celiac disease, which is triggered by consumption of the protein gluten (found in foods such as wheat, barley and rye), can cause permanent damage to the surface of the small intestines and an inability to absorb certain nutrients, leading to vitamin deficiencies that deny vital nourishment to the brain, nervous system, bones, liver and other organs. Celiac disease affects about 1 in 133 Americans.
“By implementing this agreement, Lesley University will ensure students with celiac disease and other food allergies can obtain safe and nutritional food options,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The agreement ensures that Lesley’s meal program is attentive to the schedules and demands of college students with food allergies, an issue colleges and universities across the country need to consider.”
Under the settlement, Lesley University agrees to amend its policies and practices to:
· Continually provide ready-made hot and cold gluten- and allergen-free food options in its dining hall food lines;
· Develop individualized meal plans for students with food allergies, and allow those students to pre-order allergen free meals, that can be made available at the university’s dining halls in Cambridge and Boston;
· Provide a dedicated space in its main dining hall to store and prepare gluten-free and allergen-free foods and to avoid cross-contamination;
· Enable students to request food made without allergens, and ensure that a supply of allergen-free food is available;
· Work to retain vendors that accept students’ prepaid meal cards that offer food without allergens;
· Display notices concerning food allergies and identify foods containing specific allergens;
· Train food service and University staff about food allergy related issues;
· Pay $50,000 in compensatory damages to previously identified students who have celiac disease or other food allergies.
The settlement agreement was reached under the ADA, which prohibits discrimination against individuals with disabilities by public accommodations, including colleges and universities, in their full and equal enjoyment of goods, services, and facilities. More information about the Civil Rights Division and the laws it enforces is available at www.justice.gov/crt . More information about the settlement with Lesley University can be found at www.ada.gov or by calling the toll-free ADA Information Line at 800-514-0301 or 800-514-0383 (TTY).
Related Materials:
Lesley University Agreement
Justice Department Files Civil Rights Lawsuit Against the Alamance County, N.C., Sheriff’s OfficeRead the Press Release
The Justice Department today filed a civil rights lawsuit against Terry S. Johnson, in his official capacity as head of the Alamance County Sheriff’s Office (ACSO) in North Carolina. The complaint alleges that ACSO routinely discriminates against and targets Latinos for enforcement action, in violation of the U.S. Constitution and Section 14141 of the Violent Crime Control and Law Enforcement Act of 1994.
The lawsuit follows a comprehensive investigation of ACSO’s police practices. The department’s investigation included interviews with over 125 individuals, a review of ACSO policies, procedures, training materials and analysis of data on traffic stops, arrests, citations, vehicle checkpoints, and other documentary evidence. On Sept. 18, 2012, the department issued a formal findings letter detailing ACSO’s discriminatory policing practices and inviting ACSO to negotiate a court-enforceable agreement to remedy the violations found. ACSO declined to enter into meaningful settlement negotiations.
The complaint alleges that ACSO engages in a pattern or practice of discriminatory policing against Latinos in violation of the Equal Protection Clause of the Fourteenth Amendment, the Fourth Amendment and the Violent Crime Control and Law Enforcement Act. The complaint alleges that ACSO’s discriminatory policing activities include:
· ACSO deputies unlawfully target Latino drivers for traffic stops:
o A study of ACSO’s traffic stops on three major county roadways found that deputies were between four and 10 times more likely to stop Latino drivers than non-Latino drivers;
o ACSO deputies arrest Latinos for minor traffic violations while issuing citations or warnings to non-Latinos for comparable violations;
o ACSO deputies use vehicle checkpoints in a discriminatory manner to target Latinos.
· ACSO uses jail booking and detention practices, including practices related to immigration status checks, that discriminate against Latinos.
The complaint further alleges that these discriminatory practices are deeply rooted in a culture that begins with Sheriff Johnson and permeates the entire agency. For example:
· The sheriff and ACSO’s leadership explicitly instruct deputies to target Latinos with discriminatory traffic stops and other enforcement activities;
· The sheriff and ACSO leadership foster a culture of bias by using anti-Latino epithets; and
· ACSO engages in substandard reporting and monitoring practices that mask its discriminatory conduct.
Taken together, these practices violate the constitutional and federal rights of Latinos in Alamance County and undermine ACSO’s ability to serve and protect Alamance County’s Latino residents and the community at large.
“This is an abuse of power case involving a sheriff who misuses his position of authority to unlawfully target Latinos in Alamance County,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “Sheriff Johnson’s directives and leadership have caused ACSO to violate the constitutional rights of Latinos in Alamance County and eroded public trust in ACSO.”
In this lawsuit, the Justice Department seeks a court enforceable, comprehensive, written agreement that will ensure long term structural, cultural and institutional change at ACSO. In particular, ACSO must develop and implement new policies, procedures and training in effective and constitutional policing. Any reform efforts must also include systems of accountability to ensure that ACSO has eliminated unlawful bias from its decision making at all levels.
Members of the Alamance County community who wish to provide information to the Department may call 1-877-871-9726 or email [email protected] . For more information on the Justice Department’s Civil Rights Division, please visit www.justice.gov.crt .
Related Materials:
ACSO Complaint
Federal Inmate in Alabama Pleads Guilty to Tax Fraud Perpetrated While in PrisonRead the Press Release
WASHINGTON – David Marrero, an inmate in the custody of the Federal Bureau of Prisons serving a 10-year sentence for a Florida Medicare fraud scheme, pleaded guilty today in Montgomery, Ala., to filing a false claim for a $2,719,438 tax refund, the Justice Department and Internal Revenue Service (IRS) announced today.
According to court records, while serving a federal sentence in Montgomery County, Ala., Marrero began sending various false documents to the IRS and to the federal judge who had presided over his case. Among the documents he admitted sending were false money orders and false tax returns making claims for refunds. The false tax returns were based upon false IRS Forms 1099-OID that Marrero had fabricated claiming that various companies withheld a substantial amount of federal taxes from him when, in fact, the companies had withheld nothing. Marrero also used financial documents he had obtained from other people, without their knowledge or consent, as supporting documentation for his fraudulent claims.
Under the plea agreement, Marrero faces an additional 46 months in federal prison on top of the 10-year sentence he is currently serving. He also faces a maximum fine of $250,000. A sentencing date has not yet been set by the U.S. District Court in the Middle District of Alabama.
This case was investigated by IRS – Criminal Investigation special agents. Trial Attorneys Justin Gelfand and Jason Poole of the Justice Department’s Tax Division are prosecuting the case.
IRS Form 1099-OID schemes are one of the IRS’s “Dirty Dozen” tax scams for 2012. Additional information about the Tax Division and its enforcement efforts may be found at www.justice.gov/tax.
Department of Justice Will Not Challenge STARS Alliance LLC’s <br /> Joint Procurement ProposalRead the Press Release
WASHINGTON – The Department of Justice today announced that it will not challenge a proposal by STARS Alliance LLC (STARS), a group of seven nuclear power plant operators, to procure jointly certain goods and services. The STARS members each operate single nuclear electric generation plants and seek to obtain efficiencies similar to those of a nuclear fleet operator through the proposed joint procurement.
The department said that, based on representations made by the applicants, the proposed joint procurement was not likely to restrict competition in either the upstream markets for the particular goods and services or the downstream markets for electricity.
The department’s position was stated in a second business review letter to counsel for the STARS Alliance, from Renata B. Hesse, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “The proposed conduct may allow the joint venture to increase efficiencies that result in lower costs for electricity, benefitting consumers,” said Hesse.
On July 3, 2012, the department issued its first business review letter to counsel for STARS stating that the department would not challenge proposed conduct relating to the sharing of resources and coordination of best practices and other operational activities through STARS.
In issuing today’s letter, the department noted that none of the proposed joint procurement involves the sale or purchase of the electric power or the purchase of nuclear fuel, that STARS will adopt measures to prevent anticompetitive exchanges of information and that membership and participation in all of the activities of STARS is voluntary.
The department determined that the expanded joint venture meets the requirements of the antitrust safety zone set forth in Section 4.2 of the Department of Justice’s and Federal Trade Commission’s Collaboration Among Competitors Guidelines. The guidelines provide an “antitrust safety zone” under which, absent extraordinary circumstances, the agencies will not challenge a joint venture when the market shares of the joint venture and its members are not more than 20 percent of each relevant market. STARS represented that its members collectively account for less than 20 percent of each relevant market in which STARS proposed joint procurement.
With respect to electricity, the STARS members, for the most part, are in separate geographic markets and do not compete against each other for the sale of electricity. In the two instances where members both have reactors in the same electricity transmission organization, the members’ nuclear units are not likely to have an impact on price.
The STARS Alliance members are: Union Electric Company, with its Callaway plant in Missouri; Arizona Public Service Company, with its Palo Verde plant in Arizona; Luminant Generation Company LLC, with its Comanche Peak plant in Texas; Pacific Gas and Electric Company, with its Diablo Canyon plant in California; Southern California Edison Company, with its San Onofre plant in California; STP Nuclear Operating Company, with its STP plant in Texas; and Wolf Creek Nuclear Operating Company, with its Wolf Creek plant in Kansas.
Under the department’s business review procedure, an organization may submit a proposed action to the Antitrust Division and receive a statement as to whether the division currently intends to challenge the action under the antitrust laws based on the information provided. The department reserves its right to challenge the proposed action under the antitrust laws if it produces anticompetitive effects.A file containing the business review request and the department’s response may be examined in the Antitrust Division’s Antitrust Documents Group, U.S. Department of Justice, 450 Fifth Street, N.W., Suite 1010, Washington, D.C. 20530. After a 30-day waiting period, the documents supporting the business review will be added to the file, unless a basis for their exclusion for reasons of confidentiality has been established under the business review procedure.
Clinical Director for Miami-based Health Care Clinic Sentenced to Prison for Role in $50 Million Medicare Fraud SchemeRead the Press Release
WASHINGTON – A former clinical director for Biscayne Milieu, a Miami-based mental-health clinic, was sentenced today to 100 months in prison for his participation in a Medicare fraud scheme involving the submission of more than $50 million in fraudulent billings to Medicare, 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; Michael B. Steinbach, Acting Special Agent in Charge of the FBI’s Miami Field Office; and Special Agent in Charge Christopher B. Dennis of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), Office of Investigations Miami Office.
Rafael Alalu, 47, of Miami, was sentenced today by U.S. District Judge Robert N. Scola Jr. in the Southern District of Florida. Alalu was convicted on Aug. 24, 2012, of one count of conspiracy to commit health care fraud and two substantive counts of health care fraud, following a two-month jury trial. The evidence at trial showed that Alalu participated in treating ineligible patients, concealing that fact by falsifying patient files and writing fraudulent group therapy notes, and instructing others to do the same. In addition to the prison term, Alalu was ordered to pay more than $5.6 million in restitution, jointly and severally with his co-defendants.
Various owners, doctors, managers, therapists, patient brokers and other employees of Biscayne Milieu have also been charged with various health care fraud, kickback, money laundering and other offenses in two indictments unsealed in September 2011 and May 2012. Biscayne Milieu, its owners, and more than 25 of the individual defendants charged in these cases have pleaded guilty or have been convicted at trial. Antonio and Jorge Macli and Sandra Huarte – the owners and operators of Biscayne Milieu – and Dr. Gary Kushner – its medical director – were each convicted at trial of various offenses and are scheduled for sentencing in March 2013.
According to the evidence at trial, the defendants and their co-conspirators caused the submission of over $50 million dollars in false and fraudulent claims to Medicare through Biscayne Milieu, which purportedly operated a partial hospitalization program (PHP) – a form of intensive treatment for severe mental illness. Instead, the defendants devised a scheme in which they paid patient recruiters to refer ineligible Medicare beneficiaries to Biscayne Milieu for services that were never provided. Many of the patients admitted to Biscayne Milieu were not eligible for PHP because they were chronic substance abusers, suffered from severe dementia and would not benefit from group therapy, or had no mental health diagnosis but were seeking exemptions for their U.S. citizenship applications. The evidence at trial showed that once these ineligible patients were admitted to Biscayne Milieu, Alalu and others concealed the fraud by falsifying patients’ group therapy notes to reflect legitimate PHP treatment that was never provided, and directed others to do so.
The case is being prosecuted by Assistant U.S. Attorneys Michael Davis and Marlene Rodriguez of the U.S. Attorney’s Office for the Southern District of Florida, and by Trial Attorney James V. Hayes of the Fraud Section of the Justice Department’s Criminal Division. The case was investigated by the FBI with the assistance of HHS-OIG, and was brought by the U.S. Attorney’s Office for the Southern District of Florida in coordination with the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,480 defendants who have collectively billed the Medicare program for more than $4.8 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to www.stopmedicarefraud.gov.
19 December 2012
UBS Securities Japan Co. Ltd. to Plead Guilty to Felony Wire Fraud for Long-running Manipulation of LIBOR Benchmark Interest RatesRead the Press Release
UBS Securities Japan Co. Ltd. (UBS Japan), an investment bank, financial advisory securities firm and wholly-owned subsidiary of UBS AG, has agreed to plead guilty to felony wire fraud and admit its role in manipulating the London Interbank Offered Rate (LIBOR), a leading benchmark used in financial products and transactions around the world, Attorney General Eric Holder announced today. The criminal information, filed today in U.S. District Court in the District of Connecticut, charges UBS Japan with one count of engaging in a scheme to defraud counterparties to interest rate derivatives trades by secretly manipulating LIBOR benchmark interest rates.
As part of the ongoing criminal investigation by the Criminal and Antitrust Divisions of the Justice Department and the FBI into LIBOR manipulation, two former senior UBS traders also are charged. Tom Alexander William Hayes, 33, of England, and Roger Darin, 41, of Switzerland, were both charged with conspiracy in a criminal complaint unsealed in Manhattan federal court earlier today. Hayes is also charged with wire fraud, based on the same scheme, and a price fixing violation arising from his collusive activity with another bank to manipulate LIBOR benchmark rates.
UBS Japan has signed a plea agreement with the government admitting its criminal conduct, and has agreed to pay a $100 million fine. In addition, UBS AG, the parent company of UBS Japan headquartered in Zurich, has entered into a non-prosecution agreement (NPA) with the government requiring UBS AG to pay an additional $400 million penalty, to admit and accept responsibility for its misconduct as set forth in an extensive statement of facts and to continue cooperating with the Justice Department in its ongoing investigation. The NPA reflects UBS AG’s substantial cooperation in discovering and disclosing LIBOR misconduct within the financial institution and recognizes the significant remedial measures undertaken by new management to enhance internal controls.
Together with approximately $1 billion in regulatory penalties and disgorgement – $700 million as a result of the Commodity Futures Trading Commission (CFTC) action; $259.2 million as a result of the U.K. Financial Services Authority (FSA) action; and $64.3 million as a result of the Swiss Financial Markets Authority (FINMA) action – the Justice Department’s criminal penalties bring the total amount of the resolution to more than $1.5 billion.
“By causing UBS and other financial institutions to spread false and misleading information about LIBOR, the alleged conspirators we’ve charged – along with others at UBS – manipulated the benchmark interest rate upon which many transactions and consumer financial products are based. They defrauded the company’s counterparties of millions of dollars. And they did so primarily to reap increased profits, and secure bigger bonuses, for themselves,” said Attorney General Holder. “Today’s announcement – and $1.5 billion global resolution – underscores the Justice Department’s firm commitment to investigating and prosecuting such conduct, and to holding the perpetrators of these crimes accountable for their actions.”
“UBS manipulated one of the cornerstone interest rates in our global financial system,” said Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division. “The scheme alleged is epic in scale, involving people who have walked the halls of some of the most powerful banks in the world. Today’s agreement by UBS Japan to plead guilty, the charges against individual alleged perpetrators of these crimes, and our agreement recognizing the steps being taken by UBS AG to right itself demonstrate the Justice Department’s determination to hold accountable those in the financial marketplace who break the law. We cannot, and we will not, tolerate misconduct on Wall Street of the kind admitted to by UBS today, and by Barclays last June. We will continue to follow the facts and the law wherever they lead us in this matter, as we do in every case.”
“The criminal complaint charges two senior UBS traders with colluding to manipulate Yen LIBOR interest rates for the purpose of improving trading positions held by Hayes and UBS,” said Deputy Assistant Attorney General Scott D. Hammond of the Justice Department’s Antitrust Division. “Coordinating the movement of interest rates even by a very small margin meant higher profits and bigger bonuses for the conspirators at the expense of those that relied on LIBOR as a reference rate.”
“The manipulation of LIBOR affects financial products including mortgages, credit cards, student loans and many other interest rate products,” said FBI Associate Deputy Director Kevin L. Perkins. “This practice further erodes Main Street’s confidence in Wall Street. The public expects our financial institutions to maintain proper oversight of their businesses and to ensure the public is not harmed by criminal activity within these institutions. In this case, UBS acknowledged its failures and cooperated with our investigation. The FBI would like to thank its federal partners in this investigation – the Department of Justice Criminal Division’s Fraud Section and Antitrust Division, Commodity Futures Trading Commission’s Division of Enforcement and the Securities and Exchange Commission’s Division of Enforcement whose joint efforts brought a successful resolution to this matter.”
According to documents filed in these cases, LIBOR is an average interest rate, calculated based on submissions from leading banks around the world, reflecting the rates those banks believe they would be charged if borrowing from other banks. LIBOR serves as the primary benchmark for short-term interest rates globally, and is used as a reference rate for many interest rate contracts, mortgages, credit cards, student loans and other consumer lending products. The Bank of International Settlements estimated that as of the second half of 2009, outstanding interest rate contracts were estimated at approximately $450 trillion.
LIBOR, published by the British Bankers’ Association (BBA), a trade association based in London, is calculated for 10 currencies at 15 borrowing periods, known as maturities, ranging from overnight to one year. The LIBOR for a given currency at a specific maturity is the result of a calculation based upon submissions from a panel of banks.
Between July 2006 and September 2009, Hayes was a senior trader employed in the Tokyo office of UBS Japan, which then operated under the name UBS Securities Japan Ltd. Among other financial products, Hayes traded in interest rate derivatives that essentially consisted of bets against other traders on the direction in which Yen LIBOR would move. UBS was a member of the Yen LIBOR panel, and Darin was, at certain times relevant to the criminal complaint, a trader responsible for making and supervising LIBOR submissions to the BBA on behalf of the bank. In a statement of facts attached to the NPA and plea agreement, Hayes is referred to as “Trader-1” and Darin is referred to as “Submitter-1.”
Beginning in September 2006, UBS Japan and Hayes orchestrated a sustained, wide-ranging and systematic scheme to move Yen LIBOR in a direction favorable to Hayes’ trading positions, defrauding UBS’ counterparties and harming others with financial products referencing Yen LIBOR who were unaware of the manipulation. Between November 2006 and August 2009, Hayes or one of his colleagues endeavored to manipulate Yen LIBOR on at least 335 of the 738 trading days in that period, and during some periods on almost a daily basis. Because of the large size of Hayes’ trading positions, even slight moves of a fraction of a percent in Yen LIBOR could generate large profits. For example, Hayes once estimated that a 0.01 percent movement in the final Yen LIBOR fixing on a specific date could result in a $2 million profit for UBS.
According to the charging documents, UBS Japan and Hayes employed three strategies to execute the scheme: from November 2006 through September 2009, Hayes conspired with Darin and others within UBS to cause the bank to make false and misleading Yen LIBOR submissions to the BBA; also, Hayes caused cash brokerage firms, which purported to provide market information regarding LIBOR to panel banks, to disseminate false and misleading information about short-term interest rates for Yen, which those banks could and did rely upon in formulating their own LIBOR submissions to the BBA; and Hayes communicated with interest rate derivatives traders employed at three other Yen LIBOR panel banks in an effort to cause them to make false and misleading Yen LIBOR submissions to the BBA.
As alleged in the charging documents, Hayes, Darin and other co-conspirators often executed their scheme through electronic chats. On Nov. 20, 2006, for example, Hayes asked a UBS Yen LIBOR submitter who was substituting for Darin, “hi . . . [Darin] and I generally coordinate ie sometimes trade if ity [sic] suits, otherwise skew the libors a bit.” Hayes went on to request, “really need high 6m [6-month] fixes till Thursday.” The submitter responded, “yep we on the case there . . . will def[initely] be on the high side.” The day before this request, UBS’s 6-month Yen LIBOR submission had been tied with the lowest submissions included in the calculation of the LIBOR fix. Immediately after this request for high submissions, however, UBS’s 6-monthYen LIBOR submissions rose to the highest submission of any bank in the contributor panel and remained tied for the highest, precisely as Hayes had requested.
Another example of such an alleged accommodation occurred on March 29, 2007, when Hayes asked Darin, “can we go low 3[month] and 6[month] pls? . . . 3[month] esp.” Darin responded “ok”, and the two had the following exchange:
Hayes: what are we going to set?
Darin: too early to say yet . . . prob[ably] .69 would be our unbiased contribution
Hayes: ok wd really help if we cld keep 3m low pls
Darin: as i said before - i [don’t] mind helping on your fixings, but i'm not setting libor 7bp away from the truth. . . i'll get ubs banned if i do that, no interest in that.
Hayes: ok obviousl;y [sic] no int[erest] in that happening either . . . not asking for it to be 7bp from reality anyway any help appreciated[.]
Hayes received the help he requested.
In addition, the criminal complaint charges Hayes with colluding with a trader employed at another LIBOR panel bank in May 2009, in violation of the Sherman Antitrust Act. Hayes allegedly engaged in the collusive scheme to fix the price of derivative instruments whose price was based on Yen LIBOR. In electronic chats, Hayes asked the trader to move 6-month Yen LIBOR up due to a “gigantic” position Hayes had taken. For the trade in question, UBS trading records confirmed that each 0.01 percent movement in LIBOR would generate profits of approximately $459,000 for Hayes’ book. The trader at the other bank responded that he would comply, and his bank’s submission moved by 0.06 percent compared to its submission the previous day, for which Hayes thanked him.
In entering into the NPA with UBS AG, the Justice Department considered information from UBS, and from regulatory agencies in Switzerland and Japan, demonstrating that in the last two years UBS has made important and positive changes in its management, compliance and training to ensure adherence to the law. T he department received favorable reports from the Swiss Financial Market Supervisory Authority (FINMA) and the Japan Financial Services Authority (JFSA) describing, respectively, progress that UBS has made in its approach to compliance and enforcement and UBS Japan’s effective implementation of the remedial measures the JFSA imposed based on findings relating to the attempted manipulation of Yen benchmarks.
The investigation is being handled by Deputy Chiefs William Stellmach and Daniel Braun and Trial Attorney Luke Marsh of the Criminal Division’s Fraud Section, and Assistant Chief Elizabeth Prewitt and Trial Attorney Richard Powers of the Antitrust Division, New York Field Office. Assistant Chief Rebecca Rohr and Trial Attorneys Alexander Berlin and Thomas Hall of the Criminal Division’s Fraud Section, Trial Attorneys Portia Brown and Wendy Norman of the Antitrust Division, and Assistant U.S. Attorneys Eric Glover and Liam Brennan of the U.S. Attorney’s Office for the District of Connecticut have also provided valuable assistance. The Criminal Division’s Office of International Affairs also provided assistance in this matter. The investigation is being conducted by the FBI’s Washington Field Office.
The investigation leading to these cases has required, and has greatly benefited from, a diligent and wide-ranging cooperative effort among various enforcement agencies both in the United States and abroad. The Justice Department acknowledges and expresses its deep appreciation for this assistance. In particular, the Commodity Futures Trading Commission’s Division of Enforcement referred this matter to the Department and, along with the FSA, has played a major role in the investigation. The Securities and Exchange Commission has also played a significant role in the LIBOR series of investigations and, among other efforts, has made an invaluable contribution to the investigation relating to UBS. The Department of Justice also wishes to acknowledge and thank FINMA, the Japanese Ministry of Justice, and the JFSA. Various agencies and enforcement authorities from other nations are also participating in different aspects of the broader investigation relating to LIBOR and other benchmark rates, and the Department is grateful for their cooperation and assistance.
This prosecution is part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets and recover proceeds for victims of financial crimes. For more information about the task force visit: www.stopfraud.gov.
Related Material:- UBS Statement of Facts
- UBS Non-Prosecution Agreement
- Hayes, Tom and Darin Complaint
- Hayes Complaints Exhibits
- Plea Agreement
- Attorney General Eric Holder Speaks at the UBS Press Conference
The Department recognizes that parts of these documents may not be in an accessible format. If you have a disability and the format of any material on the site interferes with your ability to access some information, please contact [email protected].
Sanofi US Agrees to Pay $109 Million to Resolve False Claims Act Allegations of Free Product Kickbacks to PhysiciansRead the Press Release
Sanofi-Aventis U.S. Inc. and Sanofi-Aventis U.S. LLC, subsidiaries of international drug manufacturer Sanofi (collectively, Sanofi US), have agreed to pay $109 million to resolve allegations that Sanofi US violated the False Claims Act by giving physicians free units of Hyalgan, a knee injection, in violation of the Anti-Kickback Statute, to induce them to purchase and prescribe the product. The settlement also resolves allegations that Sanofi US submitted false average sales price (ASP) reports for Hyalgan that failed to account for free units distributed contingent on Hyalgan purchases. The government alleges that the false ASP reports, which were used to set reimbursement rates, caused government programs to pay inflated amounts for Hyalgan and a competing product.
The United States contends that, facing pressure from a lower-priced competitor, Sanofi US provided its sales representatives with thousands of free “sample” Hyalgan units and trained its sales representatives to market the “value add” of these units to physicians. In practice, the United States alleges, Sanofi US sales representatives often entered into illegal sampling arrangements with physicians, using the free units as kickbacks and promising to provide negotiated numbers of them in order to lower Hyalgan’s effective price. The government contends that there were numerous such arrangements, including:
- A Southern California-based Sanofi US sales representative who allegedly provided 25 Hyalgan samples to a physician practice for every 100 Hyalgan units purchased, and who supplemented these kickbacks by regularly treating the entire practice to lavish dinners at Sanofi US’s expense and with Sanofi US’s approval.
- A New York-based Sanofi US sales representative who allegedly provided 12 Hyalgan samples to a physician practice for every 50 Hyalgan units purchased, and whose manager supplemented these kickbacks by treating the practice, along with friends and family members, to a lavish dinner in Manhattan at Sanofi US’s expense and with Sanofi US’s approval.
- A Central Texas-based Sanofi US sales representative who allegedly promised a physician practice 125 free Hyalgan syringes in exchange for a purchase of 500 Hyalgan units and was lauded by Sanofi US’s Texas sales team for “[u]tiliz[ing] samples to provide value for the office.”
The United States contends that price was important to physicians because Hyalgan and its direct competitor were reimbursed at the same, fixed rate by Medicare and other insurers. Thus, the less expensive option afforded a greater reimbursement “spread,” or profit, to physicians’ practices. According to the government’s allegations, Sanofi US chose not to compete by lowering the actual invoiced price of Hyalgan, for fear of setting off a price war with its competitor that would lead to a “downward spiral” in prices and reimbursements. Instead, the government alleges, Sanofi US surreptitiously lowered the effective price of Hyalgan by promising the free units to doctors who agreed to purchase the product. The government alleges that Medicare and other federal health care programs paid millions of dollars in kickback-tainted claims for Hyalgan.
“Kickback schemes subvert the health care marketplace and undermine the integrity of public health care programs,” said Principal Deputy Assistant Attorney General for the Civil Division Stuart Delery. “We will continue to hold accountable those who we allege are providing illegal incentives to influence the decision making of health care providers in federal health care programs.”
“The government’s allegations describe a situation where a drug manufacturer used valuable free units of a drug to subvert Medicare’s drug reimbursement system for physicians,” said Carmen M. Ortiz, United States Attorney for the District of Massachusetts. “This is not the first time that this Office has brought action against a manufacturer who engaged in such an illegal scheme, and the government will remain vigilant in policing such conduct.”
“Patients expect their health providers to be concerned solely with their best medical interests” said Daniel R. Levinson, Inspector General for the U.S. Department of Health. “Kickbacks undermine that all-important patient trust, and taxpayers’ expectation that government health dollars be put only to the wisest of uses.”
Today’s settlement with the France-based pharmaceutical manufacturer resolves a lawsuit filed by former sales representative Mark Giddarie under the qui tam, or whistleblower provisions, of the False Claims Act. Under the False Claims Act, private citizens can bring suit on behalf of the United States and share in any recovery. Giddarie will receive $18.5 million as his share of the government’s recovery.
This settlement was the result of a coordinated effort by the Department of Justice, Civil Division, Commercial Litigation Branch; the U.S. Attorney’s Office for the District of Massachusetts; the FBI; and the Offices of the Inspectors General of the U.S. Department of Health and Human Services, the U.S. Postal Service, and the Office of Personnel Management.
This resolution is part of the government’s emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover $10.1 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in False Claims Act cases since January 2009 are over $13.9 billion.
This case is docketed as United States ex rel. Giddarie v. sanofi-aventis U.S., Inc., No. 10-CV-10070 (D. Mass.).
Owners of Two Miami Home Health Companies Plead Guilty in $48 Million Health Care Fraud SchemeRead the Press Release
The owners and operators of two Miami health care agencies pleaded guilty today for their participation in a $48 million home health Medicare fraud scheme, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; Michael B. Steinbach, Acting 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.
Rogelio Rodriguez, 43, and Raymond Aday, 48, each pleaded guilty before U.S. District Judge Federico A. Moreno in the Southern District of Florida to one count of conspiracy to commit health care fraud.
According to court documents, Rodriguez was the owner of both Caring Nurse Home Health Corp. and Good Quality Home Health Inc., and Aday was a manager at Caring Nurse and owner of Good Quality.
According to plea documents, Rodriguez and Aday conspired with patient recruiters for the purpose of billing the Medicare program for unnecessary home health care and therapy services. Rodriguez, Aday and their alleged co-conspirators paid kickbacks and bribes to patient recruiters in return for these recruiters providing patients to Caring Nurse and Good Quality, as well as prescriptions, plans of care (POCs) and certifications for medically unnecessary therapy and home health services for Medicare beneficiaries. Rodriguez and Aday used these prescriptions, POCs and medical certifications to fraudulently bill the Medicare program for home health care services, which Rodriguez and Aday knew was in violation of federal criminal laws.
According to court documents, at Caring Nurse and Good Quality, nurses and office staff falsified patient files for Medicare beneficiaries to make it appear as though those beneficiaries qualified for home health care and therapy services from Caring Nurse and Good Quality when, in fact, Rodriguez and Aday knew that the beneficiaries did not actually qualify for and did not receive such services. Rodriguez admitted to knowing that these files were falsified so that the Medicare program could be billed for medically unnecessary therapy and home health related services.
From approximately January 2006 through June 2011, Caring Nurse and Good Quality submitted approximately $48 million in claims for home health services that were not medically necessary and/or not provided. According to court documents, Medicare paid approximately $33 million for these fraudulent claims.
At sentencing, scheduled for Feb. 27, 2013, Rodriguez and Aday each face a maximum penalty of 10 years in prison.
This case is being prosecuted by Senior Trial Attorney Joseph S. Beemsterboer of the Criminal Division’s Fraud Section. The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,480 defendants who have collectively billed the Medicare program for more than $4.8 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov .
Owner of Pavement Painting Business Sentenced in Alaska for Illegally Disposing Hazardous WasteRead the Press Release
WASHINGTON – The former owner of a road and parking lot painting and striping business in Anchorage, Alaska, was sentenced today for illegally disposing of more than 200,000 pounds of highly flammable hazardous waste in Anchorage, announced Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division, and Karen L. Loeffler, U.S. Attorney for the District of Alaska.
William Duran Vizzerra, Jr., 43, was sentenced by Chief Judge Ralph R. Beistline to 15 months in prison. In addition, the court ordered Vizzerra to pay $395,319 in restitution to two victims.
Vizzerra pleaded guilty on Aug. 17, 2012 in U.S. District Court in the District of Alaska. Vizzerra was the president, director and part-owner of Precision Pavement Markings Inc. (PPMI), a road and parking lot painting and striping business that operated out of a storage lot in Anchorage from 2006 through 2009. Vizzerra used the storage lot to store hazardous waste, including methyl methacrylate paint and toluene that was used to flush the paint lines, nozzles and sprayers used in his business. Vizzerra ordered employees to dispose of the waste at a local landfill but the employees were turned away because the waste was hazardous. Vizzerra was also told by an environmental services company that it would cost tens of thousands of dollars to properly dispose of the hazardous waste. On approximately Nov. 1, 2009, Vizzerra illegally abandoned approximately 321 55-gallon drums, 179 five-gallon pails and two 200-gallon totes of hazardous waste to avoid the costs of proper disposal. Vizzerra abandoned a total of 204,750 pounds of hazardous waste, all of which was determined to be flammable. The landowners where Vizzerra abandoned the hazardous waste incurred almost $400,000 in clean-up costs.
In November 2010, a citizen reported the abandoned drums to the U.S. Environmental Protection Agency (EPA). An investigation led by EPA Criminal Investigation Division agents revealed several hundred 55-gallon drums and smaller containers at the storage lot, some of which were stacked two-high on a trailer and some of which were stored directly on the ground. Many of the drums were marked "waste" or held hazardous markings, such as "flammable" or "flammable liquid." Many were rusted and in decrepit condition or bulging. The investigation revealed that some of the drums were from a prior pavement business of Vizzerra's that had dissolved several years earlier.
Under the Resource Conservation and Recovery Act, hazardous waste, due to its dangerous qualities, may only be disposed of at a licensed treatment, storage or disposal facility. The storage lot Vizzerra used was neither equipped nor permitted for the disposal of hazardous waste. Yet, knowing this, Vizzerra illegally abandoned and disposed of the waste at the lot, which cost the land owner and lease holder $394,062 in clean-up, disposal and legal fees.“The defendant exposed the environment and the public to hundreds of gallons of hazardous waste. Today’s sentence is an appropriate penalty for this egregious crime against the people and environment of Alaska,” said Ignacia S. Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. “This case shows that we will not tolerate and will vigorously prosecute those who abandon their legal responsibility to properly dispose of hazardous waste.”
“The potential danger posed by the improper disposal of hazardous wastes are well known,” said U.S. Attorney Loeffler. “The U.S. Attorney’s Office is committed to enforcing our nation’s environmental laws to protect the people of Alaska. We have an obligation to insure that our citizens are not injured and our lands are not polluted by the illegal disposal of hazardous materials.”
“By abandoning hundreds of bulging, rusty drums of hazardous chemicals, Defendant Vizzera knowingly saddled the property owners with a monumental mess and a cleanup bill of close to $400k,” stated Tyler Amon, Special Agent in Charge of EPA's criminal enforcement program in the Northwest and Alaska. “Being sent to jail should send the message to Vizzera and others -- there are severe consequences for environmental crime.”
The investigation was conducted by the EPA’s Criminal Investigation Division. The case was prosecuted by the Environmental Crimes Section of the Justice Department’s Environment and Natural Resources Division, the U.S. Attorney’s Office for the District of Alaska, and the Regional Criminal Enforcement Counsel for the Environmental Protection Agency’s Region 10 in Seattle.New Mexico Probation Officer Indicted <br /> <br /> on Sexual Assault ChargesRead the Press Release
A federal grand jury in Albuquerque, N.M., has indicted Gordon Chavez, 35, a probation officer with the New Mexico Corrections Department on charges related to the sexual assault of a probationer whom he supervised. The New Mexico Corrections Department placed Chavez on administrative leave following his arrest on Dec. 4, 2012.
Chavez was charged with violating the civil rights of the victim by engaging in unwanted sexual contact. The indictment also charges Chavez with making material false statements to the FBI. Specifically, the latter count charges Chavez with lying to the FBI when he denied touching the breasts of any female under his supervision and when he denied asking females under his supervision for naked photographs. The indictment alleges that Chavez knew these statements were false at the time that he made them because he had, in fact, engaged in these behaviors.
This investigation is ongoing. Anyone with additional information is encouraged to call the Albuquerque Division of the FBI at (505) 889-1300.
Chavez faces a maximum of six years in prison on both counts. An indictment is merely an accusation and Chavez is presumed innocent unless proven guilty.
This case is being investigated by the Albuquerque Division of the FBI and is being prosecuted by Assistant U.S. Attorney Mark Baker for the District of New Mexico and Fara Gold of the Civil Rights Division of the U.S. Department of Justice.
New Jersey Company Pleads Guilty for Role in Bid-Rigging Scheme at Municipal Tax Lien AuctionsRead the Press Release
A New Jersey company in the business of receiving the assignment of municipal tax liens pleaded guilty today for its role in a conspiracy to rig bids for the sale of tax liens auctioned by municipalities in New Jersey, the Department of Justice announced.
A felony charge was filed today in U.S. District Court for the District of New Jersey in Newark, against Mercer S.M.E. Inc., a company located in Burlington, N.J. According to the charges, from at least 2003 until approximately February 2009, Mercer, in conjunction with a nonprofit corporation and others participated in a conspiracy to rig bids at auctions for the sale of municipal tax liens in New Jersey. As part of the conspiracy, the co-conspirators agreed to allocate the liens on which each would bid. Among other things, Mercer was assigned tax liens it understood were purchased in accordance with the unlawful agreement.
“The conspirators agreed to coordinate their bids and allocate the tax liens amongst themselves, at the expense of distressed property owners,” said Scott D. Hammond, Deputy Assistant Attorney General for the Antitrust Division’s criminal enforcement program. “Today’s guilty plea sends a message that those who profit from illegal, anticompetitive conduct will be held accountable.”
The department said that the primary purpose of the conspiracy was to suppress and restrain competition in order to obtain selected municipal tax liens offered at public auctions at non-competitive interest rates. When the owner of real property fails to pay taxes on that property, the municipality in which the property is located may attach a lien for the amount of the unpaid taxes. If the taxes remain unpaid after a waiting period, the lien may be sold at auction. State law requires that investors bid on the interest rate delinquent property owners will pay upon redemption. By law, the bid opens at 18 percent interest and, through a competitive bidding process, can be driven down to zero percent. If a lien remains unpaid after a certain period of time, the investor who purchased the lien may begin foreclosure proceedings against the property to which the lien is attached.According to the court documents, Mercer, along with the nonprofit corporation which assigned some of its liens to Mercer, was involved in a conspiracy with others not to bid against one another at municipal tax lien auctions in New Jersey. Since the conspiracy permitted the conspirators to purchase tax liens with limited competition, each conspirator was able to obtain liens which earned a higher interest rate. Property owners were therefore made to pay higher interest on their tax debts than they would have paid had their liens been purchased in open and honest competition, the department said.
A violation of the Sherman Act carries a maximum penalty of $100 million criminal fine for corporations. The maximum fine for a Sherman Act violation may be increased to twice the gain derived from the crime or twice the loss suffered by the victims if either amount is greater than the statutory maximum.
Today’s plea is the 11th guilty plea resulting from an ongoing investigation into bid rigging or fraud related to municipal tax lien auctions. Eight individuals – Isadore H. May, Richard J. Pisciotta Jr., William A. Collins, Robert W. Stein, David M. Farber, Robert E. Rothman, Stephen E. Hruby and David Butler – and two companies, DSBD LLC and Crusader Servicing Corp., have previously pleaded guilty as part of this investigation.
Today’s charge is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.
This ongoing investigation is being conducted by the Antitrust Division’s New York Field Office and the FBI’s Atlantic City, N.J., office. Anyone with information concerning bid rigging or fraud related to municipal tax lien auctions should contact the Antitrust Division’s New York Field Office at 212-335-8000, visit www.justice.gov/atr/contact/newcase.htm or contact the Atlantic City Resident Agency of the FBI at 609-677-6400.
Las Vegas Real Estate Agent Sentenced to 70 Months in Prison for Her Role in Mortgage Fraud SchemeRead the Press Release
WASHINGTON – A Las Vegas real estate agent was sentenced today to serve 70 months in prison for her participation in a mortgage fraud scheme that netted more than $10 million in fraudulent mortgage loans, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Daniel G. Bogden of the District of Nevada, and Special Agent in Charge Kevin Favreau of the FBI’s Las Vegas Field Office.
Linda Marie Kot, 58, was sentenced by U.S. District Judge Kent J. Dawson in the District of Nevada. In addition to her prison term, Kot was sentenced to serve five years of supervised release and ordered to pay $3,891,811 in forfeiture.
In May 2012, after a five-day trial, a federal jury in Las Vegas found Kot guilty of three counts of bank fraud and one count of conspiracy to commit mail, wire and bank fraud.
According to court documents and evidence presented at trial, Kot participated in a scheme with members of an investment group to submit fraudulent loan documents to lenders that involved “straw buyers,” individuals with good credit scores whose names were put on the properties but who were not intended to be responsible for the payment of the mortgages or other expenses of the properties. The scheme took place in 2006 and involved 13 new home purchases, three existing home sales and several loan applications that were not approved.
According to the evidence at trial and court documents, Kot and her co-conspirators caused material misstatements to be placed on loan applications, including information about the true owners and controllers of the properties; whether the properties would be primary residences; and the level of assets and income of the straw buyers. In some cases, Kot put straw buyers on her bank account to make it appear that the straw buyers had assets that they did not have, in order to help them qualify for mortgage loans for which they otherwise would not have been eligible. Kot made over $276,000 in commissions on the fraudulent sales, the evidence at trial showed.
One of the counts of conviction involved a similar scheme that Kot engaged in with members of her family from 2005 to 2006. The evidence at trial showed that Kot and members of her family used straw buyers and fraudulent loan applications to buy properties. Kot and members of her family paid the straw buyers fees, and any profits on sale of the houses were split among family members.
While Kot and her family members were able to sell most of the properties they bought with straw buyers before the market downturn, the investment group that Kot conspired with was not able to do so, according to evidence presented at trial. As a result, most of the mortgages for the houses that the investment group bought in 2006, where Kot acted as the realtor, ended up in default and foreclosure, with many of the straw buyers ending up in bankruptcy.
Three co-conspirators, Hugo Coutelin, Jeff Thomas and Michael Perry, previously pleaded guilty for their roles in the fraud scheme. In September 2012, Coutelin and Perry were each sentenced to 15 months in prison and Thomas was sentenced to time served.
This case was investigated by the FBI. Trial Attorneys Nicholas S. Acker and Fred Medick of the Fraud Section in the Justice Department’s Criminal Division prosecuted the case, with assistance from the U.S. Attorney’s Office for the District of Nevada. Fraud Section Trial Attorney Brian Young and former Fraud Section Trial Attorneys Matt Klecka and Joseph Capone also assisted with the investigation.
Today’s sentencing was a result of efforts by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.StopFraud.gov.
Justice Department Settles Immigration-Based Discrimination Claim Against New York HospitalRead the Press Release
The Justice Department announced today that it reached an agreement with Holliswood Hospital, a hospital in Queens, N.Y., resolving claims that the hospital violated the anti-discrimination provision of the Immigration and Nationality Act (INA), when it required newly hired lawful permanent residents to provide more or different documents during the Form I-9 employment eligibility verification process.
The investigation stemmed from a charge filed by an individual that Holliswood terminated her after discovering that her employment eligibility needed to reverified in the future, despite the fact that she was work authorized. The subsequent investigation revealed that Holliswood imposed greater requirements to verify employment eligibility for lawful permanent residents as compared to U.S. citizen employees and terminated the charging party as a result of the discriminatory documentary practices. The INA requires employers to treat all authorized workers in the same manner during the employment eligibility verification process, regardless of their national origin or citizenship status.
Under the settlement agreement, Holliswood will pay $1,182 in back pay to the charging party and $5,000 in civil penalties to the United States. Holliswood will also train its human resources staff about employers’ responsibilities to avoid discrimination in the employment eligibility verification process and be subject to reporting and compliance monitoring by the department for 18 months.
“The Civil Rights Division is committed to protecting all work authorized individuals from discriminatory practices in the employment eligibility verification process, which can create unwarranted barriers to the lawful employment of immigrant workers,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “We commend Holliswood for working with the division to reach a fair resolution that prioritizes future compliance.”
The Office of Special Counsel for Immigration Related Unfair Employment Practices (OSC) is responsible for enforcing the anti-discrimination provision of the INA. For more information about protections against employment discrimination under the immigration laws, call the OSC’s worker hotline at 1-800-255-7688 (1-800-237-2525, TDD for hearing impaired), call the OSC’s employer hotline at 1-800-255-8155 (1-800-362-2735, TDD for hearing impaired), sign up for a no-cost webinar at www.justice.gov/about/osc/webinars.php , email [email protected] or visit the website at www.justice.gov/crt/about/osc .
Justice Department Reaches Settlement with New York Manufacturer to Resolve Immigration-Related Unfair Employment PracticesRead the Press Release
The Justice Department announced today that it reached a settlement agreement with R-Tronics LLC, a company based in Rome, N.Y., which manufactures custom and prototype cables, wire harnesses and electro-mechanical assemblies. The agreement resolves allegations that the company violated the anti-discrimination provision of the Immigration and Nationality Act (INA) by limiting its hiring practices to U.S. citizens.
According to the department’s investigation, R-Tronics restricted employment to U.S. citizens, despite the fact that no law, regulation, executive order or government contract required the limitation. Although R-Tronics is a federal contractor subject to the International Traffic and Arms Regulations (ITAR), ITAR does not require or permit employers to limit job applicants to U.S. citizens. The INA’s anti-discrimination provision only allows such hiring restrictions when necessary to comply with a law, regulation, executive order or government contract.
Under the terms of the agreement, R-Tronics will terminate its unwarranted citizenship requirement for employment, modify its employment eligibility verification policies and procedures to reflect the INA’s protections, train its human resources staff about the employer’s responsibilities to avoid discrimination in the employment eligibility verification process, and be subject to reporting and compliance monitoring by the department for three years. The case settled prior to the Justice Department filing a complaint in this matter.
“ Employers must give all eligible candidates the equal opportunity to compete for employment,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Civil Rights Division is committed to ensuring that employers do not discriminate against protected individuals based on citizenship status, but also to educating employers on the anti-discrimination provision of the Immigration and Nationality Act.”
The Office of Special Counsel for Immigration Related Unfair Employment Practices (OSC) is responsible for enforcing the anti-discrimination provision of the INA. For more information about protections against employment discrimination under the immigration laws, call the OSC’s worker hotline at 1-800-255-7688 (1-800-237-2525, TDD for hearing impaired), call the OSC’s employer hotline at 1-800-255-8155 (1-800-362-2735, TDD for hearing impaired), sign up for a no-cost webinar at www.justice.gov/about/osc/webinars.php , email [email protected] or visit the website at www.justice.gov/crt/about/osc .
Indiana Man Pleads Guilty to Religiously Motivated Attack on Toledo-Area MosqueRead the Press Release
An Indiana man faces a likely sentence of 20 years in prison after pleading guilty to hate crimes stemming from the arson of the Islamic Center of Greater Toledo, the Justice Department announced today.
Randolph Linn, 52, of St. Joe, Ind., pleaded guilty to three counts: (1) intentionally defacing, damaging and destroying religious real property because of the religious character of that property; (2) using fire to commit a felony; and (3) using and carrying a firearm to commit a crime of violence.
Under the terms of the plea agreement, both parties recommend a sentence of 20 years in prison.
“The freedom to worship in the manner of one's choosing is one of our most fundamental rights as Americans,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Department of Justice and the Civil Rights Division will continue to aggressively prosecute hate-based attacks on houses of worship. I commend the cooperative efforts of local and federal law enforcement officials to ensure justice in this case.”
Steven M. Dettelbach, U.S. Attorney for the Northern District of Ohio, said, “Religious freedom is at the core of our country, and we will continue to aggressively prosecute such hate crimes whenever and wherever the evidence warrants. This was a true joint effort to seek justice for these victims.”
Stephen D. Anthony, Special Agent in Charge of the FBI’s Cleveland office, said, “We are pleased that Randall Linn has accepted responsibility for his destructive action of setting fire to a sacred place of worship. The FBI, along with its federal, state, and local law enforcement partners, remains committed to protecting the rights of all citizens to practice their chosen religion by enforcing the laws that defend those liberties.”
“This guilty plea represents the tireless efforts of so many agencies to bring this case to justice,” said Robin Shoemaker, Special Agent in Charge, Columbus Field Division, Bureau of Alcohol, Tobacco, Firearms and Explosives. “Criminal damage to a house of worship is taken very seriously by ATF.”
According to court documents, Linn left his home on Sept. 30, 2012, in a red four-door Chevrolet Sonic. Inside the vehicle were numerous firearms and three gas cans. Linn stopped at a gas station near Perrysburg, Ohio, and filled the three gas cans, then drove to the Islamic Center of Greater Toledo. Linn made numerous efforts to enter the Islamic Center before gaining entry. He walked through several rooms with a handgun in his left hand before exiting and then returning with one of the gas cans. Linn then entered the prayer room on the second floor and poured gasoline on the prayer rug; a large Oriental-style rug used by members of the Islamic Center during prayer services. He then set fire to the prayer rug.
According to court documents, Linn acknowledged that he intentionally set the fire because of the religious character of the Islamic Center property. Linn agreed to pay restitution and understands that the amount may exceed $1 million due to the amount of fire and water damage sustained by the Islamic Center.
This case is being prosecuted by Assistant U.S. Attorneys Bridget M. Brennan, Ava Dustin and Special Assistant U.S Attorney Gwen Howe-Gebers. This case was investigated by the FBI, ATF, Perrysburg Township Police Department and the state of Ohio Fire Marshal.
Former Army Contractor Employee and Two Former U.S. Army Staff Sergeants Plead Guilty to Roles in Afghanistan Contract Fraud SchemeRead the Press Release
WASHINGTON – A former employee of a U.S. Army contractor and two former U.S. Army staff sergeants pleaded guilty today for their roles in a fraud scheme involving a contract to provide armored vehicles to the U.S. Military in Afghanistan, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.
Raul Borcuta, 34, of Chicago, pleaded guilty before U.S. District Judge Ronald A. Guzman in the Northern District of Illinois to one count of wire fraud. Former U.S. Army Staff Sergeants Zachery Taylor, 42, of Ft. Belvoir, Va., and Jarred Close, 43, of St. Paul, Minn., each pleaded guilty before Judge Guzman to one count of receiving a gratuity.
According to court documents, in February 2010, Borcuta operated a defense contracting firm in Farah Province, Afghanistan, and Taylor and Close were U.S. Army staff sergeants assigned to a Provincial Reconstruction Team in Afghanistan. A Provincial Reconstruction Team is a multi-agency civil affairs task force charged with awarding and administering development contracts. Taylor and Close awarded Borcuta a $200,000 contract to provide the U.S. military with two armored vehicles to be used by the governor of Farah Province, who had received death threats from Taliban insurgents. According to court documents, Taylor and Close authorized a $200,000 payment to Borcuta before he delivered the vehicles. Borcuta collected the payment, paid Taylor and Close $10,000 each, and failed to deliver the vehicles.
At sentencing, Borcuta faces a maximum penalty of 20 years in prison, and Taylor and Close each face up to two years in prison. Borcuta is scheduled to be sentenced on April 2, 2013. Taylor and Close are scheduled to be sentenced on April 3, 2013.
This case is being prosecuted by Brian R. Young and Thomas B.W. Hall of the Criminal Division’s Fraud Section, with assistance from the U.S. Attorney’s Office for the Northern District of Illinois and Heather Schmidt of the National Security Division’s Counterespionage Section. The case was investigated by the Special Inspector General for Afghanistan Reconstruction, the Defense Criminal Investigative Service, the U.S. Army Criminal Investigation Division and the FBI.