Latest Records
Newest first across public DOJ and U.S. Attorney press releases.
7 December 2012
Justice Department Supports Week of Public Safety Events in Indian CountryRead the Press Release
AGUA CALIENTE, Calif. – U.S. Department of Justice Acting Associate Attorney General Tony West today addressed tribal leaders, law enforcement officers, lawyers and judges, policy experts and health and social services providers, and representatives from federal, state, local and tribal governments following a week of public safety events at the 13th National Indian Nations Conference in Agua Caliente, Calif. The conference is focused on bringing together Native American victims, victim advocates, as well as federal and state agency representatives, to share their knowledge, experiences and ideas for developing programs that serve the unique needs of crime victims in Indian Country.
Acting Associate Attorney General West told the audience about Justice Department efforts to strengthen tribal sovereignty and public safety in Indian Nations, such as increasing the number of federal personnel to investigate and prosecute cases on Indian lands, including a dozen FBI Indian country victim specialists, the launch of the National Indian Country Training Initiative, which has trained more than 2,000 criminal-justice professionals, and the institution of a streamlined and coordinated Justice Department grant program for tribes. The department has also established the Office of Tribal Justice as a permanent component within the Justice Department and created the Tribal Nations Leadership Council to facilitate consultation and advise the attorney general on issues critical to tribal governments.
“I am proud that over the last four years we have developed strong and vital partnerships with tribal nations. We've made some excellent progress, but our work in Indian country is far from over,” said Associate Attorney General West. “Tribal communities still face uniquely difficult challenges, from crime rates that remain far above the national average to the alarming levels of violence against native women. We won't rest until we've met those challenges.”
Organized by the Justice Department’s Office for Victims of Crimes (OVC) the conference began Thursday and continues through Saturday, Dec. 8. Office of Justice Programs (OJP) Acting Assistant Attorney General Mary Lou Leary addressed participants at Thursday’s opening plenary session.“OJP, through OVC, has been proud to support tribes and tribal victim services for almost 25 years,” said Assistant Attorney General Leary. “We have come a long way, but many challenges remain. Even while we are still confronted with familiar crimes like child abuse and sexual assault, new crimes – some of them enabled by technology – present new obstacles. We are committed to addressing these enduring and emerging challenges.”
Events began earlier this week with the first meeting of the National Coordination Committee on the American Indian/Alaska Native Sexual Assault Nurse Examiner-Sexual Assault Response Team (AI/AN SANE-SART) Initiative on Tuesday and Wednesday. The AI/AN SANE-SART initiative is an OVC, FBI and Indian Health Service partnership focusing on enhancing and improving the federal, state, local and tribal responses to adult and child victims of sexual violence in Indian Country.
Activities at the Agua Caliente reservation also included training and technical assistance workshops for grant recipients through the Justice Department’s 2012 Coordinated Tribal Assistance Solicitation (CTAS), the primary funding source for department funded public safety programs and initiatives in Indian Country. The CTAS orientation workshops provided instruction and guidance necessary for recipients to successfully implement and operate programs funded through CTAS. The training workshops were focused on topics such as reporting and grant management; grant compliance; and training and technical assistance resources.
The 13th National Indian Nations Conference is part of the Justice Department’s ongoing efforts to create better communication and coordination to fight crime and promote justice in tribal communities. The roots of the conference stretch back more than two decades, with OVC organizing the very first in 1988. It was held on the reservation of the Agua Caliente Band of Cahuilla Indians, with the theme, “Strength from Within: Rekindling Tribal Traditions to assist Victims of Crime” and coordinated by the Tribal Law and Policy Institute through a grant from OVC.
For more information on the 13th National Indian Nations Conference, please visit: www.ovcinc.org/agendaFor more information on the AI/AN SANE-SART initiative, please visit: www.ovc.gov/AIANSane-Sart/index.html
For more information on the CTAS, please visit: www.justice.gov/tribal/ctas2012/ctas-factsheet.pdf
Florida CPA Sentenced for Role in Foreclosure SchemeRead the Press Release
Barrington Coombs, 58, of Weston, Fla., was sentenced today to serve a year and a day in prison for his role in a foreclosure rescue scheme that victimized desperate homeowners on the brink of losing their homes, the Justice Department announced. Coombs was sentenced by U.S. District Judge Kenneth A. Marra in the Southern District of Florida.
Coombs was convicted of one count of conspiracy to commit mail and wire fraud and one count of wire fraud, following a two week jury trial in July 2012.
According to the indictment and evidence presented at trial, two of Coombs’ accomplices, Lisa Wright and Cathy Saffer, operated Foreclosure Solution Specialists (FSS) from 2006 to 2009. FSS targeted homeowners facing foreclosure, advertising that it could assist those homeowners in remaining in their homes. When contacted by distressed homeowners seeking assistance, FSS misrepresented to those homeowners that their homes would be sold to investors. According to the indictment and evidence presented at trial , FSS also claimed that customers could remain in their homes after the sales and promised them an opportunity to repurchase the homes at a later date. Rather than selling the homes to legitimate investors, FSS designed sham sales to straw purchasers whom they paid to participate in the scheme.
According to the indictment and evidence presented at trial, FSS paid Certified Public Accountant Barrington Coombs to write a fraudulent letter that vouched for the false information on various loan applications. Lenders relied on Coombs’ fraudulent letter in deciding to fund the loans.
“The individual sentenced today lent his credibility as a professional accountant to a foreclosure scheme and, in doing so, caused lenders and consumers to suffer substantial losses,” said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Civil Division. “We will continue to work with the FBI and our other law enforcement partners to investigate and prosecute mortgage fraud and foreclosure rescue schemes such as this one.”
Coombs is the last member of the scheme to be sentenced. In November 2012, the two individuals who operated FSS were sentenced. Lisa Wright was sentenced to a 66 month term of imprisonment, while Cathy Saffer received a sentence of 60 months.
Mortgage transactions completed by FSS drew equity out of the homes, which FSS’ principals pocketed for their own purposes. After doing so, FSS allowed the loans to go into foreclosure. Homeowners ultimately lost all of the equity in their homes, and most of the victims were forced to move out of their homes.
The case was investigated by the FBI, and is being prosecuted by Christopher E. Parisi and John Claud, Trial Attorneys at the Civil Division’s Consumer Protection Branch.
Today’s announcement 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 .
Department of Justice, Federal Trade Commission to Hold<br /> Workshop on Patent Assertion Entity ActivitiesRead the Press Release
WASHINGTON – The Department of Justice and the Federal Trade Commission (FTC) will hold a joint public workshop on Dec. 10, 2012, to explore the impact of patent assertion entity (PAE) activities on innovation and competition and the implications for antitrust enforcement and policy.
This workshop will examine the economic and legal implications of PAE activity, as distinct from prototypical “non-practicing entity” (NPE) activity, such as developing and transferring technology. By contrast, PAE activities often include purchasing patents from existing owners and seeking to maximize revenues by licensing the intellectual property to (or litigating against) manufacturers who are already using the patented technology.
Supporters of the PAE business model say that it facilitates the transfer of patent rights, rewards inventors and funds ongoing research and development efforts. Critics describe adverse effects on competition and innovation, including increased costs and a lack of technology transfer, ultimately taxing consumers and industry.
The workshop will provide a forum for industry participants, academics, economists, lawyers and other interested parties to discuss the economic and legal analyses of PAE activity. It will consist of a series of panels examining, among other topics, the legal treatment of PAE activity, economic theories concerning PAE activity and industry experiences. Panelists for the workshop will include academics, private attorneys, economists and industry representatives.
T he Department of Justice and the FTC are interested in receiving comments on PAE activities and will accept written submissions from the public before the workshop and until March 10, 2013. Interested parties may submit public comments to: [email protected] . Submitted comments will be made publicly available on the Department of Justice and FTC websites.
Due to an overwhelming response and limited space, interested parties are encouraged to view the webcast of the event, available here
The workshop will take place at the FTC’s satellite conference center at 601 New Jersey Ave., N.W., Washington, D.C. from 9:00 a.m. to 5:30 p.m. EST on Dec. 10, 2012. Additional participants will be added to the agenda as they are confirmed. Updates to the agenda will be posted on the Department of Justice and FTC websites. The workshop will include the following panels, presentations and confirmed participants:
9:00 a.m. – Opening Remarks : FTC Chairman Jon Leibowitz
SESSION A: FRAMEWORK
9:15 a.m. – Lecture 1: Introduction to PAE Activity
Colleen Chien, Assistant Professor of Law, Santa Clara University School of Law
9:35 a.m. – Lecture 2: Introduction to PAE Licensing
Carl Shapiro, Transamerica Professor of Business Strategy, University of California at Berkeley, Walter A. Hass School of Business
10:05 a.m. – Q & A with Professors Chien and Shapiro
BREAK (10:20 - 10:30 a.m.)
10:30 a.m. – Panel 1: Realities of Licensing and Litigation Practices
- Cynthia Bright, Associate General Counsel, IP Litigation and Public Policy, Hewlett-Packard
- Scott Burt, Vice President & Chief Intellectual Property Counsel, Mosaid Technologies Inc.
- John Desmarais, Partner, Desmarais LLP; Founder, Round Rock Research LLC
- Peter Detkin, Founder and Vice-Chairman, Intellectual Ventures
- Sarah Guichard, Vice President of Patent & Standards Strategy, Research In Motion (RIM)
- Paul Melin, Chief Intellectual Property Officer, Nokia
- Neal Rubin, Vice President Litigation, Cisco Systems Inc.
- Mary Stich, Vice President and Associate General Counsel, Rackspace Hosting
- Mallun Yen, Executive Vice President, RPX Corporation
LUNCH (12:00 - 1:15 p.m.)
1:15 p.m. – Remarks
Stuart Graham, Chief Economist, U.S. Patent & Trademark Office
Session B: Potential Efficiencies and Harms from PAE ACTIVITY: Effects on competition and innovation
1:45 p.m. – Academic Introduction to Potential Efficiencies from PAE Activity
Timothy Simcoe, Assistant Professor of Strategy and Innovation, School of Management, Boston University
Panel 1: Potential Efficiencies from PAE Activity
- Ron Epstein, CEO, Epicenter IP Group LLC
- Anne Layne-Farrar, Vice President, Antitrust & Competition Economics Practice, Charles River Associates
- C. Graham Gerst, Partner, Global IP Law Group
- Adam Mossoff, Professor of Law, George Mason University
Academic Introduction to Potential Harms from PAE Activity
Iain Cockburn, Professor of Finance and Economics and Everett W. Lord Distinguished Faculty Scholar, School of Management, Boston University
Panel 2: Potential Harms from PAE Activity
- Brad Burnham, Managing Partner, Union Square Ventures
- Thomas Ewing, Principal Consultant, Avancept LLC
- Robin Feldman, Professor of Law, University of California Hastings College of the Law
- Michael Meurer, Professor of Law and Abraham and Lillian Benton Scholar, Boston University School of Law
- David Schwartz, Associate Professor of Law, Illinois Institute of Technology Chicago-Kent College of Law
Panel 3: Industry Reaction
BREAK (3:45 - 4:00 p.m.)
SESSION C: HOW DOES ANTITRUST APPLY TO THE POTENTIAL EFFICIENCIES AND HARMS GENERATED BY PAE ACTIVITY
4:00 p.m. – Academic Introduction
Phillip Malone, Clinical Professor of Law, Harvard Law School; Clinical Co-Director and Senior Fellow, Berkman Center for Internet & Society, Harvard Law School
4:20 p.m. – Panel Discussion
- Logan Breed, Partner, Hogan Lovells
- Susan Creighton, Partner, Wilson, Sonsini, Goodrich & Rosati PC
- Hanno Kaiser, Partner, Latham & Watkins LLP
- Carl Shapiro, Transamerica Professor of Business Strategy, University of California at Berkeley, Walter A. Hass School of Business
- Hill Wellford III, Partner, Bingham McCutchen LLP
5:00 p.m. – Q & A
5:20 p.m. – Closing Remarks: Acting Assistant Attorney General for the Antitrust Division Renata B. Hesse
Directions to the FTC’s Conference Center are available at http://www.ftc.gov/bcp/workshops/transportationguide.shtml.
Reasonable accommodations for people with disabilities are available upon request. Requests should be submitted via email to [email protected] or by calling Samantha Konstandt at 202-326-3348. Requests should be made in advance. Please include a detailed description of the accommodation needed and provide contact information.
6 December 2012
Statement by Attorney General Eric Holder on the Resignation of U.S. Attorney Jim LettenRead the Press Release
Attorney General Eric Holder issued the following statement today on the resignation of U.S. Attorney for the Eastern District of Louisiana Jim Letten:
“As the longest-serving U.S. Attorney in the country today, U.S. Attorney Jim Letten has demonstrated an unwavering commitment to the people of his district and the nation by working tirelessly to make their communities safer through reducing violent crime, fighting public corruption and protecting their civil rights.
“More recently, he and his office were instrumental in the department's efforts in ensuring that those who exploited the tragedy of Hurricane Katrina were held accountable. He has been a valued partner, dedicated public servant and a good friend, and I am grateful for his service to the department over these many years.”
Pharmacy Owner Pleads Guilty in Miami for Role in $23 Million Health Care Fraud SchemeRead the Press Release
WASHINGTON – A co-owner and operator of three Miami discount pharmacies pleaded guilty today in connection with a $23 million health care 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 B. Dennis of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), Office of Investigations Miami office.
Jose Carlos Morales, 55, of Miami, pleaded guilty today before U.S. District Judge Joan A. Lenard in the Southern District of Florida to one count of conspiracy to commit health care fraud and one count of conspiracy to pay illegal health care kickbacks.
According to court documents, Morales was the co-owner of Pharmovisa Inc., which operated two pharmacies in Miami, and PharmovisaMD Inc., which operated one pharmacy in Miami. Morales pleaded guilty to agreeing to pay illegal health care kickbacks to co-conspirators in return for a stream of beneficiary information to be used to submit claims to Medicare and Medicaid. The beneficiaries who were referred to Pharmovisa and PharmovisaMD (Morales pharmacies) in exchange for kickbacks payments resided at assisted living facilities (ALFs) located in Miami. Morales and his alleged co-conspirators also paid illegal health care kickbacks to physicians in exchange for prescription referrals, which the Morales pharmacies ultimately billed to Medicare.
Court documents also reveal that beginning in approximately 2007, at Morales’ direction, drivers working for Morales pharmacies delivered “bingo cards” containing pop out medications to ALFs located throughout the Southern District of Florida, and Morales instructed these drivers to pick up any unused “bingo cards” so that Morales pharmacy personnel could place these medications back into pill bottles. Unused and partially used medications were eventually re-billed to Medicare and Medicaid, and a majority of the previously submitted claims to Medicare and Medicaid were never reversed. Morales also instructed Morales pharmacy personnel to place unused and partially used medications into bottles to be sold directly to the general public from the “community” pharmacy shelves.
In furtherance of the conspiracies, according to court documents, Morales and his alleged co-conspirators also engaged in sham financial transactions to facilitate and conceal the fraud schemes and the flow of fraud proceeds. In most instances, the sham transactions involved shell entities owned and/or controlled by Morales or his alleged co-conspirators.
On Oct. 16, 2012, Esperanza Navailles, a former “marketer” for the Morales pharmacies, pleaded guilty to conspiracy to defraud the United States and pay illegal health care kickbacks. From February 2011 to January 2012, Navailles, on behalf of the Morales pharmacies, paid ALF owners and operators $30 per patient per month for each Medicare beneficiary they referred to the pharmacies. The Morales pharmacies then submitted claims to Medicare for items and services on behalf of the referred Medicare beneficiaries. Navailles admitted that she knew the kickback payments were illegal.
According to court documents, Morales and his co-conspirators submitted and caused to be submitted approximately $23,367,755 in false and fraudulent claims to the Medicare and Florida Medicaid programs.
The cases are being prosecuted by Trial Attorney Allan J. Medina and Special Trial Attorney William Parente of the Criminal Division’s Fraud Section. This 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.
Pharmacy Owner Pleads Guilty in Miami for Role in $23 Million Health Care Fraud SchemeRead the Press Release
WASHINGTON ? A co-owner and operator of three Miami discount pharmacies pleaded guilty today in connection with a $23 million health care 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 B. Dennis of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), Office of Investigations Miami office.
Jose Carlos Morales, 55, of Miami, pleaded guilty today before U.S. District Judge Joan A. Lenard in the Southern District of Florida to one count of conspiracy to commit health care fraud and one count of conspiracy to pay illegal health care kickbacks.
According to court documents, Morales was the co-owner of Pharmovisa Inc., which operated two pharmacies in Miami, and PharmovisaMD Inc., which operated one pharmacy in Miami. Morales pleaded guilty to agreeing to pay illegal health care kickbacks to co-conspirators in return for a stream of beneficiary information to be used to submit claims to Medicare and Medicaid. The beneficiaries who were referred to Pharmovisa and PharmovisaMD (Morales pharmacies) in exchange for kickbacks payments resided at assisted living facilities (ALFs) located in Miami. Morales and his alleged co-conspirators also paid illegal health care kickbacks to physicians in exchange for prescription referrals, which the Morales pharmacies ultimately billed to Medicare.
Court documents also reveal that beginning in approximately 2007, at Morales? direction, drivers working for Morales pharmacies delivered ?bingo cards? containing pop out medications to ALFs located throughout the Southern District of Florida, and Morales instructed these drivers to pick up any unused ?bingo cards? so that Morales pharmacy personnel could place these medications back into pill bottles. Unused and partially used medications were eventually re-billed to Medicare and Medicaid, and a majority of the previously submitted claims to Medicare and Medicaid were never reversed. Morales also instructed Morales pharmacy personnel to place unused and partially used medications into bottles to be sold directly to the general public from the ?community? pharmacy shelves.
In furtherance of the conspiracies, according to court documents, Morales and his alleged co-conspirators also engaged in sham financial transactions to facilitate and conceal the fraud schemes and the flow of fraud proceeds. In most instances, the sham transactions involved shell entities owned and/or controlled by Morales or his alleged co-conspirators.
On Oct. 16, 2012, Esperanza Navailles, a former ?marketer? for the Morales pharmacies, pleaded guilty to conspiracy to defraud the United States and pay illegal health care kickbacks. From February 2011 to January 2012, Navailles, on behalf of the Morales pharmacies, paid ALF owners and operators $30 per patient per month for each Medicare beneficiary they referred to the pharmacies. The Morales pharmacies then submitted claims to Medicare for items and services on behalf of the referred Medicare beneficiaries. Navailles admitted that she knew the kickback payments were illegal.
According to court documents, Morales and his co-conspirators submitted and caused to be submitted approximately $23,367,755 in false and fraudulent claims to the Medicare and Florida Medicaid programs.
The cases are being prosecuted by Trial Attorney Allan J. Medina and Special Trial Attorney William Parente of the Criminal Division?s Fraud Section. This 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.
Las Vegas Playboy Bloods Member Pleads Guilty to Racketeering ChargesRead the Press Release
WASHINGTON – A Las Vegas man pleaded guilty today in federal court to conspiring to conduct a racketeering enterprise as a member of the Playboy Bloods criminal street gang, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Daniel G. Bogden of the District of Nevada.
Steven Booth, 27, aka “Stevie-P,” pleaded guilty today before U.S. District Judge Phillip Pro in the District of Nevada to one count of conspiracy to engage in a racketeering enterprise.According to court documents, the Bloods is a criminal street organization whose members engage in drug trafficking and acts of violence. The Playboy Bloods is a local affiliate of the Bloods, with control and operation within the Las Vegas metropolitan area. A subset of the Playboy Bloods is Full Throttle Clique, a group made up of Playboy Bloods members who engage in acts of violence, including murder.
According to Booth’s plea agreement, he is a member of the Playboy Bloods and the Full Throttle Clique. Booth pleaded guilty to conspiring to conduct and participate in the conduct of the affairs of the Playboy Bloods through a pattern of racketeering activity.
According to court documents, Booth aided and abetted the murder of security guard Brian Wilcox in the Jets housing complex located in Playboy Blood controlled territory in Las Vegas. On approximately Jan. 20, 2004, Wilcox and another security guard approached Booth and several other Playboy Bloods and told them they had to leave the property. An argument ensued, and the security guards rode away on their bicycles to call for backup. According to court documents, a Playboy Blood fired a gun at Wilcox, hitting him three times, and Booth and the others fled the scene. On Jan. 21, 2004, Wilcox was pronounced dead.
Booth also pleaded guilty to aiding and abetting the murder of Billy Thomas. On Oct. 31, 2004, Playboy Bloods and Full Throttle member Quazi Burns was murdered, and Playboy Bloods members believed that a rival Crips gang member was responsible for the crime. That night, according to court documents, several Playboy Bloods members, including the defendant, met at the Jets complex and discussed retaliating against the Crips. Booth and the other Playboy Bloods members got into two cars and spotted Billy Ray Thomas, who was working on his car, at Pecos Terrace Apartments in Las Vegas. According to court documents, several Playboy Bloods’ members got out of the cars carrying firearms, approached Thomas and shot and killed him, believing that he was a Crips gang member.
At sentencing, scheduled for April 5, 2013, Booth faces a maximum penalty of 20 years in prison.Booth is one of 10 defendants charged in October 2008 with conducting racketeering activity through the Playboy Bloods criminal enterprise. To date, six defendants have pleaded guilty and been sentenced to prison on this indictment.
This case is being prosecuted by Assistant U.S. Attorneys Nicholas D. Dickinson and Phillip N. Smith Jr. of the District of Nevada and Trial Attorney Kevin L. Rosenberg of the Criminal Division’s Organized Crime and Gang Section. The case was investigated by the FBI and the Las Vegas Metropolitan Police Department.Justice Department and Consumer Financial Protection Bureau Pledge to Work Together to Protect Consumers from Credit DiscriminationRead the Press Release
The Department of Justice and the Consumer Financial Protection Bureau (CFPB) signed an agreement today to strengthen coordination on fair lending enforcement and avoid duplication of their respective federal law enforcement efforts.
“The Department of Justice welcomes the new tools and resources the CFPB can bring to the fight against lending discrimination,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “Cooperation between our two agencies promotes strong and effective civil rights enforcement, and today’s agreement will further our ongoing collaborative efforts.”
“Discrimination undermines equal access to credit,” said Richard Cordray, Director of the CFPB. “Today’s agreement is a critical step to better protecting consumers from illegal and discriminatory lending practices. We look forward to continuing our partnership with the Justice Department under this new framework.”
The memorandum of understanding (MOU) can be found at: http://files.consumerfinance.gov/f/201212_cfpb_doj-fair-lending-mou.pdf.
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB works with the department and other regulators to promote consistent, efficient and effective enforcement of federal fair lending laws. The Dodd-Frank Act also expressly authorizes the CFPB to conduct joint investigations with the department in matters relating to fair lending.
Both the CFPB and the Justice Department have authority to protect against discriminatory lending under the Equal Credit Opportunity Act (ECOA). The ECOA makes it illegal for creditors to discriminate against applicants in credit transactions because of race, color, religion, national origin, sex, marital status, age, income coming from a public assistance program or an applicant’s exercise of certain consumer protection rights.
The department has the authority to bring federal lawsuits to enforce the ECOA against any creditor that engages in a pattern or practice in violation of the ECOA or based on referrals of ECOA violations from federal bank regulators including the CFPB. The CFPB is authorized to bring public enforcement actions against any person subject to the CFPB’s supervisory or enforcement authority for violations of the ECOA. The CFPB is also required to refer certain violations of the ECOA to the department for possible enforcement actions.
The agencies are committed to cooperation and avoiding duplicative efforts. Today’s MOU outlines the general framework for:
- Sharing information and preserving its confidentiality : The agencies will be sharing information in matters that the CFPB refers to the Justice Department, in joint investigations under the ECOA, and in order to coordinate fair lending enforcement. The MOU establishes strict confidentiality protections for this shared information.
- Joint investigations and coordination : The MOU provides for collaboration in investigations as well as coordination in joint investigations. The agencies will also meet regularly to discuss pending fair lending investigations and opportunities for coordination.
- Referrals and notifications between the agencies: Like other federal bank regulators, the CFPB will refer matters to the Justice Department when it has reason to believe that a creditor has engaged in a pattern or practice of lending discrimination. Because a referral to the Justice Department does not affect the CFPB’s authority to pursue its own supervisory or enforcement action, the CFPB and the Justice Department will coordinate their efforts to avoid unnecessarily duplicative actions. The agencies have also agreed to notify each other at key stages of their enforcement work, such as the opening of an investigation or filing of a lawsuit.
The agencies will periodically assess the implementation of this agreement and are committed to finding ways to further strengthen their coordination efforts.
The CFPB’s Office of Fair Lending and Equal Opportunity, together with the bureau’s Office of Enforcement, leads the bureau’s enforcement of fair lending laws, including the ECOA and the Home Mortgage Disclosure Act (HMDA). Today, the CFPB published its first annual Fair Lending Report, which highlights the Bureau’s recent accomplishments in fair lending. The report discusses the bureau’s efforts to fulfill its mandate to ensure fair, equitable, and nondiscriminatory access to credit for American consumers. Additionally, the report fulfills the Bureau’s congressional reporting requirements under the Dodd-Frank Act, the ECOA and HMDA.
A copy of this report is available at: http://files.consumerfinance.gov/f/201212_cfpb_fair-lending-report.pdf
The Justice Department’s enforcement of fair lending laws is conducted by the Fair Lending Unit of the Housing and Civil Enforcement Section in the Civil Right Division. Since the Fair Lending Unit was established in February 2010, it has filed or resolved 22 lending matters under the Fair Housing Act, the ECOA and the Servicemembers Civil Relief Act. The settlements in these matters provide for a minimum of $500 million in monetary relief for more than 300,000 individual borrowers. The attorney general’s annual reports to Congress subject to the ECOA highlight the department’s accomplishments in fair lending and are available at www.justice.gov/crt/publications/
The fair lending enforcement work of the CFPB and the Justice Department is part of efforts underway by the Financial Fraud Enforcement Task Force (FFETF) which was created to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The CFPB and the department’s Civil Rights Division are among the co-chairs of the FFETF’s Non-Discrimination Working Group. 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. The task force has established financial fraud coordinators in every U.S. attorney’s office around the country to help make these broad mandates a reality on the ground. 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.
Healthpoint Ltd. to Pay up to $48 Million for False <br /> <br /> Medicaid and Medicare Claims for Unapproved Prescription DrugRead the Press Release
Healthpoint Ltd. and DFB Pharmaceuticals will pay up to $48 million to resolve allegations that Healthpoint caused false claims to be submitted to Medicare and Medicaid for an unapproved drug, Xenaderm, which was ineligible for reimbursement by those programs, the Justice Department announced today. Under the terms of the agreement, Healthpoint and DFB will pay $28 million, plus another $20 million if there is a change in ownership of Healthpoint or DFB over the next three years.
Under the Federal Food Drug and Cosmetic Act, manufacturers must obtain Food and Drug Administration (FDA) approval before introducing any new drug into the market. In January 2011, the United States intervened in, and later filed, a civil False Claims Act case against Healthpoint, alleging that it launched Xenaderm, a prescription skin ointment for the treatment of nursing home patients’ bed sores, without any FDA approval. The complaint alleged that Healthpoint’s business strategy was to market new prescription drug products modeled after drug products that were on the market before October 1962, in order to avoid the time, effort, and expense of obtaining FDA approval. The complaint further alleged that at no time prior to its introduction of Xenaderm into the market did Healthpoint complete any double-blind placebo-controlled clinical studies that established the safety and effectiveness of Xenaderm. In fact, one of Healthpoint’s own clinical researchers expressly conceded in an internal e-mail that the safety and efficacy data for Xenaderm was “cruelly insufficient” to meet FDA standards. Notwithstanding the lack of FDA approval, the government alleges, Healthpoint actively promoted Xenaderm as a prescription drug that, unlike non-prescription skin ointments such as Vaseline, was “Medicaid reimbursed” and thus cost nursing homes nothing to administer to Medicaid patients.
While products containing Xenaderm’s principal active ingredient, trypsin, were on the market prior to 1962, the FDA had determined in the 1970s that trypsin was less-than-effective for its intended use. The government contends that those determinations rendered Xenaderm ineligible for Medicaid and Medicare reimbursement. Nonetheless, the government alleges, Healthpoint misrepresented the regulatory status of Xenaderm when it submitted quarterly reports to the government. As a result, the government contends, Healthpoint knowingly caused false claims to be submitted for Xenaderm.
“Today’s settlement once again demonstrates our commitment to making sure that taxpayer dollars are not spent on unapproved and less-than-effective drugs ,” said Stuart Delery, Principal Deputy Assistant Attorney General of the Department of Justice’s Civil Division.
“This resolution is yet another example of the government’s enduring efforts to ensure that drug manufacturers comply with the critical FDA requirements for the efficacy of their drugs and the integrity of their data,” said US Attorney Carmen M. Ortiz. “This office will continue to vigorously police these key requirements that ensure that the public has access to, and the government pays only for effective medications.”
“The plain fact is that unapproved drugs place consumers at risk. FDA does not know what is in these products, nor whether they are effective or safe, or how they are made,” said FDA Commissioner Margaret M. Hamburg, M.D. ”This case demonstrates why we must be vigilant in taking action against companies that circumvent the regulatory process.”
The settlement resolves allegations against Healthpoint in a multi-defendant whistleblower action captioned United States ex rel. Constance Conrad v. Healthpoint, Ltd., et al., No. 02-11738-RWZ (D. Mass.). The lawsuit was brought under the qui tam, or whistleblower, provisions of the False Claims Act, which allow private parties with knowledge of fraud to sue on behalf of the United States and share in any recovery. This settlement is part of a series of recoveries totaling over $100 million from manufacturers of unapproved drugs. The United States and the relator, Ms. Constance Conrad, have not reached agreement on a share of the proceeds of this settlement.
The case was litigated by the Justice Department’s Civil Division, and the U.S. Attorney’s Office for the District of Massachusetts, with the active cooperation of the Office of Inspector General of the Department of Health and Human Services, the Centers for Medicare & Medicaid Services, the Food and Drug Administration, and the National Association of Medicaid Fraud Control Units.
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.
The claims settled by this agreement are allegations only; there has been no determination of liability.
Attorney General Eric Holder Announces Interim Appointment of<br /> Dana J. Boente as U.S. Attorney for the Eastern District of LouisianaRead the Press Release
The Department of Justice announced today the interim appointment of Dana J. Boente as U.S. Attorney for the Eastern District of Louisiana.
Mr. Boente currently serves as First Assistant U.S. Attorney for the Eastern District of Virginia, a position he has held since 2007. He also served as the Acting U.S. Attorney for the Eastern District of Virginia from 2008 to 2009. He previously served as the Principal Deputy Assistant Attorney General for the Justice Department’s Tax Division from 2005 to 2007 and from 2000 to 2005, he handled numerous complex fraud prosecutions for the Eastern District of Virginia. Previously, Mr. Boente served for 16 years as a trial attorney in the Justice Department’s Tax Division where he began his career with the department in 1984.
“Dana Boente is a veteran federal prosecutor with a record over the past 28 years of distinguished service to the Department of Justice,” said Attorney General Eric Holder. “I am confident that he will lead the U.S. Attorney’s Office through this time of transition and ensure the office’s continued commitment to justice for the people of the Eastern District of Louisiana.”
The Attorney General also announced that Assistant U.S. Attorney John A. Horn, a career prosecutor and currently the First Assistant U.S. Attorney in the U.S. Attorney’s Office for the Northern District of Georgia, has been assigned by the department to ensure compliance with the court’s recent order in U.S. v. Kenneth Bowen, et al. Mr. Horn will be recommencing the investigation and review previously handled by the U.S. Attorney’s Office for the Eastern District of Louisiana. Mr. Horn will report directly to the Office of the Deputy Attorney General in connection with this matter. Mr. Horn has been a federal prosecutor for over 10 years.
5 December 2012
Virginia Anesthesiologist Sentenced for Filing <br /> <br /> False Tax ReturnsRead the Press Release
Dr. George Anderson, 57, of Farmville, Va., was sentenced today to 33 months in prison, followed by one year of supervised release, for criminal tax fraud, the Justice Department and Internal Revenue Service (IRS) announced. U.S. District Judge Henry Hudson, sitting in Richmond, Va., also ordered Anderson to pay $471,919 of restitution to the IRS.
Anderson had earlier pleaded guilty to two counts of willfully filing false tax returns. According to the statement of facts filed with the court, Anderson was the sole owner of Farmville Anesthesia Associates Inc. Beginning in 2001, Anderson attempted to reduce his business’s tax liability to zero by diverting income to sham and nominee entities. Specifically, Anderson paid hundreds of thousands of dollars worth of bogus expenses out of Farmville Anesthesia’s bank accounts to other accounts held in the names of nominee trusts and limited liability companies Anderson himself controlled. He then falsely reported these payments on Farmville Anesthesia’s corporate income tax returns as legitimate business expenses. Later, Anderson spent substantial funds out of the nominee bank accounts for his personal benefit, including for the construction of his personal residence, and did not report the expenditures as income on his personal tax returns.
In his guilty plea, Anderson admitted that he filed a false 2007 corporate income tax return on behalf of Farmville Anesthesia Associates. That return was false because it reported the bogus expenses paid to Anderson-controlled sham entities. Anderson also admitted to filing a false 2005 personal income tax return. That return was false because it did not report the income Anderson spent for his benefit out of the bank accounts held in the names of the nominee trusts and LLCs.
This case was investigated by IRS Criminal Investigation and was prosecuted by Trial Attorney Jonathan Marx of the Justice Department’s Tax Division and Assistant U.S. Attorney David Maguire of the U.S. Attorney’s Office for the Eastern District of Virginia.
US and Local Governments Achieve $50 Million Settlement to Address Contamination at Superfund Site in Rialto, Calif.Read the Press Release
WASHINGTON – The United States has entered into two settlements worth more than $50 million to clean up contamination from the B.F. Goodrich Superfund Site in San Bernardino County, Calif. There are a dozen settling parties including Emhart Industries and Pyro Spectaculars, Inc. (PSI), as well as the cities of Rialto and Colton and County of San Bernardino.
The Superfund site has been used to store, test and manufacture fireworks, munitions, rocket motors and pyrotechnics and was added to the EPA’s National Priorities List in September 2009. The area’s groundwater is contaminated with trichloroethylene (TCE) and perchlorate, which have resulted in the closure of public drinking water supply wells in the communities of Rialto and Colton.
“After decades of harmful groundwater contamination and following protracted and costly litigation, the parties responsible for releases of TCE and perchlorate at the BF Goodrich Superfund Site have agreed to a comprehensive long-term plan to clean up the contaminated groundwater at the site,” said Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division. “The commitment made under the consent decrees announced today will provide immeasurable benefits to the environment and the communities who live in Rialto and Colton, California.”
“For decades, the defendants have been polluting this critical source of drinking water with both perchlorate and industrial solvents,” said Jared Blumenfeld, EPA’s Regional Administrator for the Pacific Southwest. “Today's historic settlement ensures that the impacted communities in Southern California will finally have their drinking water sources restored.”
Under one agreement, Emhart will perform the first portion of the cleanup, which is estimated to cost $43 million over the next 30 years to design, build and operate groundwater wells, treatment systems and other equipment needed to clean up the contaminated groundwater at the site. A significant portion of these funds will come from other settling parties, including the Department of Defense. The cities of Rialto and Colton will receive $8 million.
The Emhart settlement includes the following entities: Emhart Industries Inc., Black & Decker Inc, American Promotional Events Inc., the Department of Defense, the Ensign-Bickford Company, Raytheon, Whittaker Corporation, Broco Inc., and J. S. Brower & Associates Inc. and related companies, as well as the cities of Rialto and Colton and the County of San Bernardino.
As part of the second agreement, six entities, including PSI and its former subsidiary, will pay a combined $4.3 million to the EPA toward cleanup at the site and $1.3 million to the cities of Rialto and Colton and San Bernardino County. The entities involved in this settlement are PSI; Astro Pyrotechnics (a defunct subsidiary of PSI); Trojan Fireworks; Thomas O. Peters and related trusts; and Stonehurst Site, LLC.
EPA used government funds to pay for investigation and clean up work at the site while investigating potentially responsible parties for their role in the contamination. The United States, on behalf of EPA, sued Emhart and PSI, as well as the Goodrich Corporation, the estate of Harry Hescox and its representative, Wong Chung Ming, Ken Thompson Inc. and Rialto Concrete Products, in 2010 and 2011 to require cleanup and recover federal money spent at the site. Prior to EPA’s lawsuit, the cities of Rialto and Colton initiated litigation against many of the settling parties, including the Department of Defense, in 2004.
A company acquired by Emhart manufactured flares and other pyrotechnics at the site for the military in the 1950s. PSI has operated at the site since 1979, designing fireworks shows produced throughout the United States.
TCE is an industrial cleaning solvent. Drinking or breathing high levels may cause damage to the nervous system, liver and lungs. Perchlorate is an ingredient in many flares and fireworks, and in rocket propellant, and may disrupt the thyroid’s ability to produce hormones needed for normal growth and development.
The consent decree for the Emhart settlement (City of Colton v. American Promotional Events Inc., et al.) will be lodged with the federal district court by the U.S. Department of Justice and is subject to a comment period and final court approval. Copies of the proposed decrees are available on the Justice Department website at: www.justice.gov/enrd/Consent_Decrees.html. The PSI settlement is also subject to court approval.
For more information on the B.F. Goodrich Site, please visit: www.epa.gov/region09/bfgoodrichShreveport, La., Wastewater General Manager and Former Owner Sentenced to Five Years in Prison for Discharging Pollutants into the Red RiverRead the Press Release
WASHINGTON – John Tuma, 55, of Centerville, Texas, was sentenced today following his March 21, 2012, trial conviction by a federal jury for discharging untreated wastewater directly into the Red River without a permit, discharging untreated wastewater into the city of Shreveport sewer system in violation of its permit and obstructing an EPA inspection, announced Ignacia S. Moreno, Assistant Attorney General of the Justice Department’s Environment and Natural Resources Division and U.S. Attorney Stephanie A. Finley of the Western District of Louisiana. U.S. District Judge Tom Stagg sentenced John Tuma to a 60-month prison sentence, three years of supervised release and a $100,000 fine.
John Tuma, who was both general manager and the former owner of Arkla Disposal Services Inc., was charged in a five-count indictment with violations of the Clean Water Act, conspiracy and obstruction of justice related to illegal discharges coming from the Arkla Disposal Services Inc., a facility in Shreveport. The Arkla facility, located at 10845 Highway 1 South in Shreveport, was a centralized wastewater treatment facility that received wastewater from industrial processes and oilfield exploration and production facilities. Arkla contracted to treat the wastewater through a multi-step treatment process and then discharge the treated wastewater to either the City of Shreveport publicly owned treatment works or the Red River.
The case was investigated by EPA’s Criminal Investigation Division and is being prosecuted by Assistant U.S. Attorney C. Mignonne Griffing and Trial Attorney Leslie E. Lehnert of the Environmental Crimes Section of the Department of Justice.Notorious Sex Trafficker Terrence “T-Rex” Yarbrough Faces up to Life in Prison Following Sex Trafficking Conviction in TennesseeRead the Press Release
Terrence Yarbrough, a/k/a, “T-Rex,” 37, of Memphis, Tenn., was convicted today in federal court on 10 counts of sex trafficking and one count of conspiracy to commit food stamp fraud, the Justice Department announced today.
”This verdict sends a clear message that human trafficking will not be tolerated in the United States,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The defendant brutally exploited vulnerable young women and girls and deprived them of their rights and dignity so he could profit by selling their bodies. Securing justice on behalf of the victims of modern-day slavery is one of the highest priorities of the Civil Rights Division.”
“The brutal and depraved acts that this individual inflicted upon these women are almost impossible to fathom,” said Edward L. Stanton III, U.S. Attorney for the Western District of Tennessee. “The conviction of Yarbrough reiterates this office’s firm commitment to bring sex traffickers to justice. Our office’s dedicated civil rights unit will continue to prosecute these cases in order to protect the vulnerable and innocent victims of such crimes.”
At the trial, victims recounted a series of violent acts perpetrated by Yarbrough to coerce them into prostituting for him, including beatings with belts, wooden coat hangers, crowbars, padlocks and dog chains. They also testified to being thrown down stairs, having their heads smashed in car doors, having their legs burned with irons and being scalded with boiling water.
Yarbrough faces a minimum of 15 years in prison with no parole, and could be sentenced to up to life in prison. U.S. District Court Judge S. Thomas Anderson will sentence Yarbrough on April 18, 2013.
“Sex traffickers can be violent abusers or simply subtle manipulators who prey upon those whose circumstances of life make them vulnerable, and cruelly exploit their victims for profit,” said Aaron T. Ford, Special Agent in Charge of the Memphis Division of the Federal Bureau of Investigation. “The FBI is committed to working closely with our law enforcement partners to hold accountable human traffickers for their crimes and get help for the victims in these heartbreaking cases.”
Evidence presented at trial included the testimony of 10 victims identified in the indictment, as well as several eyewitnesses and others. Numerous witnesses testified that Yarbrough repeatedly enticed vulnerable women as young as 15 years old into prostitution with false promises of love, family and prosperity. Any time a victim refused to engage in prostitution, he resorted to threats, intimidation and violence. The jury heard testimony that Yarbrough’s pattern of recruitment, exploitation, and violent coercion continued for years before his 2009 arrest in St. Louis.
“The Office of Inspector General (OIG) at USDA is committed to the investigation and prosecution of individuals and retailers who defraud the Supplemental Nutrition Assistance Program (SNAP), more commonly referred to as the food stamp program. Protecting the integrity of the SNAP is a major investigative priority for OIG. OIG agents helped determine that Terrence Yarborough committed Electronic Benefit Transfer (EBT) fraud by submitting false information to apply for SNAP benefits, and using the benefits to fund his prostitution operation. The Tennessee Department of Human Service – Investigations Division, the FBI, and the U.S. Attorney's Office did an excellent job in this joint investigation. We look forward to working with them on future endeavors,” stated Karen Citizen-Wilcox, Special Agent-in-Charge of the Southeast Region.
One of the victims testified that Yarbrough forced her to engage in prostitution the entire time she was pregnant with his child. He frequently beat her on the stomach when she did not want to comply with his demands. He had her working as a prostitute in Tunica in her eighth month of pregnancy when he induced her labor through a severe beating. Yarbrough drove her back to Memphis and dropped her off at a hospital. The day after she left the hospital following childbirth, Yarbrough forced her to resume prostituting. Sometime later, Yarbrough smashed her on the head with a lamp and kicked out her front teeth when she tried to stop prostituting for him.
Another victim testified that Yarbrough lured her into prostitution by promising to reunite her with their children, and then beat her severely when she insisted on seeing them and refused to continue working. Yarbrough punched her in the face so hard he broke three of her teeth. On another occasion, he beat her knees with a metal pipe and caused injuries which continue to affect her. She also testified that Yarbrough threatened to prostitute their nine-year-old daughter.
The jury heard testimony that one exhausted victim slept through a phone call from a client after serving prostitution clients for days on end with almost no sleep. When Yarbrough found out she missed the call, he smashed her head into a car door, dragged her by the hair to his hotel room, and beat her with his belt. Jurors also saw a letter addressed to that victim and signed by Terrence Yarbrough stating that he was proud of how she did not scream while he beat her with the belt.
Witnesses further testified that Yarbrough bragged about his beatings of some victims to other victims to let them know what would happen to them if they disobeyed him. Jurors also saw the “T-Rex” logos Yarbrough tattooed on four separate victims, and heard that he claimed that they had been “branded” as his property. Testimony and jail recordings showed that Yarbrough confiscated his victims’ identification documents as well as all their money to make it difficult for them to escape.
Jurors also heard testimony that Yarbrough conspired with his mother, Norma Yarbrough Webb, 65, and Michelle Johnson, 40, to fraudulently obtain food stamp benefits while Yarbrough was incarcerated. Johnson and Webb previously pled guilty to related charges.
The case was investigated by the FBI and the U.S. Department of Agriculture Office of Inspector General, with assistance from the St. Louis Police Department. Assistant U.S. Attorney Jonathan Skrmetti and Trial Attorney Benjamin J. Hawk of the United States Department of Justice Civil Rights Division’s Human Trafficking Prosecution Unit prosecuted the case.
Kentucky-Based Defense Contractors, Owners Agree to Pay $6.25 Million to Resolve Allegations That They Submitted False Statements and Claims to Obtain Army Contracts Intended for Small BusinessesRead the Press Release
Kentucky-based Lusk Mechanical Contractors and Commonwealth Technologies, and their owners, Harry Lusk and Wendell Goodman, have agreed to pay $6.25 million to resolve allegations that they submitted false statements to the Small Business Administration and false claims to the Army, the Justice Department announced today.
Congress established the Historically Underutilized Business Zone (HUBZone) program in 1997 to help inner cities and rural counties that have low household income and high unemployment, and whose communities have suffered from a lack of investment. Under the HUBZone program, small businesses that maintain their principal office in a designated HUBZone, and meet certain other requirements, can apply to the Small Business Administration (SBA) for certification as a HUBZone company. HUBZone companies can then use this certification to their advantage when bidding on government contracts.
Today’s settlement resolves allegations that Lusk Mechanical, Commonwealth Technology and their owners made, or caused to be made, false statements to the SBA to obtain certification as a HUBZone company, and then used this certification to wrongfully obtain Army contracts to build a courthouse in Fort Knox, Ky., and to complete maintenance and other repairs to Army facilities in Fort Knox. Specifically, the United States alleged that in February 2005, Commonwealth submitted an application to the SBA representing that it was a small business with its principal place of business in a designated HUBZone. In fact, Commonwealth allegedly operated out of Lusk Mechanical’s headquarters, which was not located in a HUBZone area. Commonwealth’s business office was identified on the application as 212 East Caroline Street, Irvington, Ky. The United States alleged that this location was nothing more than a vacant office space with no employees, and that Commonwealth’s application did not disclose that Wendell Goodman and Harry Lusk were, in fact, affiliated with Lusk Mechanical. At the time, Harry Lusk and his wife were the sole owners of Lusk Mechanical and Wendell Goodman was the chief executive officer of Lusk Mechanical. According to the United States’ allegations, neither Lusk nor Goodman disclosed in the application to the SBA that Commonwealth did not operate as an independent company, but instead shared facilities, equipment, personnel, insurance and bonding with Lusk Mechanical, nor did they inform the SBA about the financial relationship between Commonwealth and Lusk Mechanical. The United States alleged that, using the falsely obtained HUBZone certification, the companies obtained contracts from the Army that had been restricted to qualified HUBZone companies, in violation of the False Claims Act and the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA).
Under the terms of the settlement, Commonwealth, Lusk Mechanical, Goodman, and Lusk have agreed to pay $3,741,739.96, and to forfeit $2,506,260.24 seized by federal agents from their bank accounts under a civil forfeiture action.
“As our economy continues to improve, the HUBZone program provides a critical lifeline to small businesses that voluntarily choose to locate in areas that often have difficulty attracting business,” said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Justice Department’s Civil Division. “Companies that set up sham offices not only break the law, but deprive the HUBZone communities and legitimate HUBZone businesses of the benefits of the HUBZone program.”
“They abused a program meant to assist small businesses located in financially disadvantaged communities,” stated David J. Hale, U.S. Attorney for the Western District of Kentucky. “Today’s multimillion dollar settlement is the result of a successfully coordinated effort among law enforcement agencies and the Department of Justice, working together to hold these business owners accountable.”
“The HUBZone Program offers significant benefits to eligible small businesses and is an important tool for unlocking the potential of historically underutilized business zones,” said Inspector General Peggy E. Gustafson of the Small Business Administration. “Preferences for federal contract awards must not be given to persons who lie in order to claim eligibility. I applaud the dedication and perseverance of our law enforcement partners as justice is served here today on behalf of the American taxpayer”
“SBA’s contracting programs, including the HUBZone program, provide small businesses with the opportunity to grow and create jobs,” stated SBA’s General Counsel Sara Lipscomb. “But, SBA has no tolerance for waste, fraud or abuse in any government contracting program and is committed to ensuring the benefits of these programs flow to the intended recipients. SBA works closely with our federal partners to prevent bad actors from participating in contracting programs and taking action and holding those accountable when they lie to or mislead the government.”
“This investigation is the result of a highly successful joint effort by the Defense Criminal Investigative Service (DCIS) and one of our key law enforcement partners — the SBA’s Office of Inspector General, in collaboration with the Department of Justice. Fraud in military contracting undermines the confidence of the American public who demand a military procurement system that spends their tax dollars wisely and responsibly. This investigation should serve as a warning for those who submit false claims for U.S. military and public funds that DCIS will aggressively investigate these matters,” said Bret Flinn, Resident Agent in Charge of the DCIS Dayton Resident Agency.
Principal Deputy Assistant Attorney General Delery thanked the U.S. Attorney’s Office for the Western District of Kentucky, the Office of General Counsel and the Office of the Inspector General for the Small Business Administration, the Defense Criminal Investigative Service, and the Justice Department’s Commercial Litigation Branch for the collaboration that resulted in today’s settlement. The claims settled by this agreement are allegations only, and there has been no determination of liability.
Justice Department Seeks to Shut Down Nashville, Tennessee Mo’ Money Taxes LicenseeRead the Press Release
The United States has asked a federal court to shut down a Mo’ Money Taxes tax preparation office in Nashville, the Justice Department announced today. The civil injunction suit, filed against Mo’ Money licensee Toney Fields and co-defendant Trumekia Shaw in U.S. District Court in Nashville, alleges that the two defendants intentionally prepare and file fraudulent federal income tax returns to obtain improper tax refunds for customers.
According to the complaint, Fields and Shaw get an improper jump on their competition by opening Mo’ Money Taxes in Nashville in late December and before the tax year ends. The defendants allegedly use customers’ end-of-year pay stubs to prepare tax returns, before employers have issued Internal Revenue Service (IRS) W-2 wage-statement forms to employees. Preparing tax returns based on pay stubs rather than proper W-2 Forms violates IRS rules. Fields and Shaw allegedly use the pay stubs to create fake W-2 Forms to include with the returns. End-of-the-year pay stubs frequently omit income and distributions that are shown on employer-issued W-2 Forms. This inevitably results in errors on federal tax returns.
The lawsuit further alleges that Fields and Shaw inflate or claim false tax credits on customers’ tax returns. According to the complaint, Fields and Shaw frequently claim improper dependent exemptions in order to claim inflated earned-income credits or child tax credits for their customers. The suit also alleges that the defendants include false filing statuses and bogus claims for charitable contributions on customers’ returns. The complaint says the government estimates that the defendants’ misconduct may have caused revenue losses of more than $5 million from the more than 1,100 tax returns they prepared in 2011.
The IRS lists return preparer fraud as one of its “Dirty Dozen” tax scams .
In the past decade the Justice Department’s Tax Division has obtained injunctions against hundreds of tax-return preparers and tax-fraud promoters. Information about these cases is available on the Justice Department website.
Related Documents:
United States v. Toney Fields, et al.
Complaint for Permanent Injunction and Other Relief (PDF)
International Cyber-Fraud Ring Responsible for Millions of Dollars in Fraud DismantledRead the Press Release
WASHINGTON – In a coordinated international takedown, law enforcement officials in Romania, the Czech Republic, the United Kingdom and Canada, acting on provisional arrest requests made by the United States, arrested six Romanian nationals today for their alleged involvement in a sophisticated multimillion dollar cyber fraud scheme that targeted consumers on U.S.-based Internet marketplace websites, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Loretta E. Lynch of the Eastern District of New York and FBI Assistant Director in Charge George Venizelos of the New York Field Office.
“As a result of extensive cooperation between U.S. and European law enforcement officials, the defendants have been charged with a scheme to defraud unsuspecting Americans of millions of dollars,” said Assistant Attorney General Breuer. “The Department of Justice is committed to finding and prosecuting Internet fraud aggressively, wherever it happens and however hard the perpetrators work to conceal their crimes.”
“Thanks to our international law enforcement partnerships, even the most sophisticated criminal organizations are not beyond our reach, and we will continue our efforts to protect American consumers from these fraud schemes on Internet marketplace websites,” said U.S. Attorney Lynch.
“The FBI is committed to protecting the American public from predatory conduct whether it originates here or abroad,” said FBI Assistant Director in Charge Venizelos. “The international nature of many organized crime groups makes it essential for us to work with our partners here and overseas – as we did in this investigation – to rein in the alleged criminals.”A criminal complaint unsealed today in U.S. District Court in the Eastern District of New York charges Romanian nationals Emil Butoi, 34, Aurel Cojorcaru, 43, Nicolae Ghebosila, 43, Cristea Mircea, 30, Ion Pieptea, 36, and Nicolae Simion, 37, and Albanian national Fabian Meme, 42, each with one count of wire fraud conspiracy and one count of money laundering conspiracy. Butoi, Cojocaru, Meme, Mircea, Pieptea and Simion are also each charged with one count of passport fraud conspiracy.
Butoi, Cojorcaru, Ghebosila, Mircea, Pieptea and Simion were arrested today. Meme is already incarcerated in the Czech Republic.
The government will seek the defendants’ extradition to the United States pursuant to the relevant international treaties.
As alleged in the complaint, the defendants were responsible for saturating Internet marketplace websites including eBay, Cars.com, AutoTrader.com and CycleTrader.com with detailed advertisements for cars, motorcycles, boats and other high-value items generally priced in the $10,000 to $45,000 range. Unbeknownst to the buyers, however, the merchandise did not exist. The defendants allegedly employed co-conspirators who corresponded with victim buyers by email, sending fraudulent certificates of title and other information designed to lure the victims into parting with their money. Sometimes, the defendants allegedly pretended to sell cars from nonexistent auto dealerships in the United States and even created phony websites for these fictitious dealerships. In at least one transaction involving Ghebosila, the “seller” allegedly pretended to be the widow of an Iraq war veteran who was selling her family’s mobile home so that she could care for her children. In other transactions, the defendants allegedly duped victims into sending tens of thousands of dollars for non-existent vehicles, including Lexus, Audi, Ford, Chevrolet, Dodge, Toyota, Mercedes, Porsche and BMW cars; Big Dog Mastiff and Ninja motorcycles; a Fleetwood Storm motor home; and boats.As part of the scheme, Cojocaru, Meme, Butoi and others produced high-quality fake passports so that foreign national co-conspirators in the United States, known as “arrows,” could use the passports as identification to open American bank accounts. The complaint alleges that Cojocaru was recorded on video during the investigation displaying new holograms that he was using to create more authentic-looking passports.
According to the complaint, after the “sellers” reached an agreement with the victim buyers, they would often email them invoices purporting to be from Amazon Payments, PayPal or other online payment services, with wire transfer instructions. However, the defendants and their co-conspirators allegedly used counterfeit service marks in designing the invoices so that they would appear identical to communications from legitimate payment services. The fraudulent invoices directed the buyers to send money to the American bank accounts that had been opened by the “arrows.” Finally, the arrows would allegedly collect the illicit proceeds and send them to the defendants in Europe by wire transfer and other methods. For example, the arrows allegedly forwarded Pieptea $18,000 cash in fraud proceeds hidden inside hollowed-out audio speakers. Other arrows allegedly used the proceeds to purchase expensive Audemars Piguet watches, and then sent the watches to the defendants abroad.
According to the complaint, it is estimated that the defendants earned over $3 million from the fraudulent scheme.
If convicted, the defendants each face a maximum sentence of 20 years in prison on the wire fraud conspiracy and money laundering conspiracy counts, and 10 years in prison on the passport fraud conspiracy count.
The charges in the complaint are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
The government’s case is being prosecuted by Assistant U.S. Attorneys Cristina Posa, Vamshi Reddy and Claire Kedeshian of the U.S. Attorney’s Office for the Eastern District of New York, and Trial Attorney Carol Sipperly of the Criminal Division’s Computer Crime and Intellectual Property Section.The offices of the FBI Legal Attachés in Romania, the Czech Republic, the United Kingdom, Canada and Hungary were instrumental in coordinating efforts with the United States’ international partners, and the Justice Department Criminal Division’s Office of International Affairs worked with its counterparts in these countries to effect the provisional arrests and requests for mutual legal assistance, including the forfeiture of illegal proceeds of these crimes. The Department of Justice’s Asset Forfeiture and Money Laundering Section also provided assistance in the forfeitures.
The U.S. government thanks the Romanian government, in particular the Ministry of Justice, the Directorate for Combating Organized Crime and the Romanian Intelligence Service, for their collaborative efforts throughout this long-term investigation, as well as the Czech National Police, Hungarian National Bureau of Investigation, Metropolitan Police Service in England, Montreal Police Service, Royal Canadian Mounted Police, International Organized Crime Intelligence and Operations Center, Internet Crime Complaint Center, Costa Mesa, Calif., Police Department, Orange County, Calif., District Attorney’s Office and the New York City Police Department for their assistance.
Founder and President of Labor Union Convicted in Washington <br /> for Stealing from Union’s Treasury and Pension Fund, Related CrimesRead the Press Release
WASHINGTON – The founder and president of the National Association of Special Police and Security Officers (NASPSO) – which represents private security guards assigned to protect federal buildings in the metropolitan Washington area – was convicted yesterday in Washington federal court, following a jury trial, of 18 counts related to his theft of union treasury and pension funds, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.
Caleb Gray-Burriss, 62, of Washington, was convicted on six counts of mail fraud, seven counts of theft from a labor organization, one count each of obstruction of justice and criminal contempt, and three counts of union recordkeeping offenses. Joining in the announcement of the verdict were Marc I. Machiz, Director of the Philadelphia Regional Office of the Employee Benefits Security Administration of the Department of Labor; Michael S. Barcus, Special Agent in Charge of the Washington Regional Office of the Department of Labor, Office of the Inspector General, Office of Labor Racketeering and Fraud Investigations; and District Director Mark Wheeler, of the Department of Labor’s Washington District Office of the Office of Labor-Management Standards.
In June 2010, Mr. Gray-Burriss was charged with four counts of mail fraud in connection with his operation of a pension plan for members of NASPSO. A grand jury returned two superseding indictments in April 2011 and August 2012, which also charged offenses committed by Gray-Burriss while he was released on bail.
According to the evidence at trial, from approximately June 2004 through February 2011, Gray-Burriss wrote numerous checks to himself or to other third parties from the NASPSO pension plan checking account. The evidence also showed that Gray-Burriss spent more than $100,000 of the pension plan funds in this way, while falsely maintaining it was an operational fund that he was properly administering and that was providing benefits to the beneficiaries. The evidence further showed that Gray-Burriss committed criminal contempt of a court order addressing his prior misappropriation of pension and health plan funds after Gray-Burriss resumed his scheme in 2009 to defraud employers and NASPSO members of pension funds.
In addition, the evidence presented at trial showed that Gray-Burriss, while an officer and employee of NASPSO, stole over $150,000 in NASPSO funds consisting of cash withdrawals to himself, unauthorized salary increases and bonuses to himself and another person, fraudulently drawn checks to himself – purportedly for employment taxes on behalf of NASPSO – and unlawfully used NASPSO funds to pay his personal fines in a civil lawsuit.
The jury also found that Gray-Burriss committed obstruction of justice by destroying or concealing NASPSO financial records during a grand jury investigation; failing to file required annual reports on behalf of NASPSO, falsifying those reports, and failing to maintain properly the records of NASPSO.
At sentencing, which is currently scheduled for Feb. 28, 2013, Gray-Burris faces a maximum potential penalty of 20 years in prison and a $250,000 fine on each of the mail fraud counts, five years in prison and a $10,000 fine on each of the theft from a labor organization and conspiracy counts; five years in prison and a $250,000 fine on the criminal contempt count; 20 years in prison and a $250,000 fine on the obstruction count, and a year in prison and a $10,000 fine for the recordkeeping offenses.
The investigation was conducted by agents and investigators of the U.S. Department of Labor. Trial Attorney Vincent J. Falvo of the Criminal Division’s Organized Crime and Gang Section and Trial Attorney Tracee Plowell, of the Criminal Division’s Public Integrity Section prosecuted the case.
4 December 2012
Utah Woman Pleads Guilty to Tax FraudRead the Press Release
Gillette Barton, a resident of Taylorsville, Utah, pleaded guilty Monday to presenting a false claim to the United States, the Justice Department and Internal Revenue Service (IRS) announced. Barton appeared before U.S. Magistrate Judge Evelyn J. Furse in Salt Lake City.
According to the plea agreement, in October of 2009, Barton filed a false 2008 U.S. Individual Income Tax Return claiming an income tax refund of $58,299. Barton’s false claim was based on the use of false Forms 1099-OID, Original Issue Discount.
Barton faces a potential maximum sentence of five years in prison and a fine of up to $250,000.
This case was investigated by IRS-Criminal Investigation. Trial Attorneys Michael Romano and Stuart Wexler of the Justice Department’s Tax Division handled the prosecution.
Sentencing is tentatively scheduled for Feb. 19, 2013, before U.S. District Court Chief Judge Ted Stewart in Salt Lake City.
Two Mississippi Men Plead Guilty for Committing Hate Crimes Against African-AmericanRead the Press Release
William Kirk Montgomery, 23, from Puckett, Miss., and Jonathan K. Gaskamp, 20, from Brandon, Miss., pleaded guilty today in U.S. District Court in Jackson, Miss., to conspiracy and federal hate crime charges in connection with their roles in the assault of African-Americans in Jackson, the Justice Department announced today. Defendants Deryl Paul Dedmon, 20; John Aaron Rice, 19; and Dylan Wade Butler, 21, all from Brandon, Miss., have previously entered guilty pleas in connection with their roles in these offenses. The conspiracy culminated in the death of James Craig Anderson, who was assaulted and killed on June 26, 2011.
Montgomery and Gaskamp were both charged with one count of conspiracy and one count of violating the Matthew Sheppard James Byrd, Jr. Hate Crimes Prevention Act.
Beginning in the spring of 2011, Montgomery, Gaskamp and others conspired with one another to harass and assault African-Americans in and around Jackson. On numerous occasions, the co-conspirators used dangerous weapons, including beer bottles, sling shots and motor vehicles, to cause, and attempt to cause, bodily injury to African-Americans, specifically targeting those they believed to be homeless or under the influence of alcohol because they believed that such individuals would be less likely to report an assault. Additionally, the co-conspirators would often boast about these racially motivated assaults.
“We hope that today’s guilty pleas provide further closure to James Craig Anderson’s family and to the community that has mourned his senseless death and been further disheartened by the scope of the conspiracy to commit racially motivated assaults in Jackson by these and other co-conspirators,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Justice Department’s focus in this matter is ongoing and broad; we will vigorously pursue those who commit racially motivated assaults and will use every tool at our disposal to ensure that those who commit such acts are brought to justice.”
According to plea documents presented in court today, the defendants engaged in a series of racially-motivated assaults in and around Jackson. On one occasion, Montgomery, Gaskamp, Deryl Paul Dedmon, John Aaron Rice and two other co-conspirators chased down and stopped an African-American man’s vehicle and then beat the man to the point that he begged for his life. Gaskamp kicked the victim in the head and body at least two times.
On another occasion, Montgomery, Gaskamp and others attended a birthday party/bonfire in Puckett, Miss., during which they discussed going to Jackson to harass and assault African-Americans. Montgomery, Dedmon, Rice, Butler and three other co-conspirators agreed to carry out the plan. At around 4:15 a.m. on June 26, 2011, Montgomery, Rice, Butler and another co-conspirator drove to Jackson in Montgomery’s white Jeep with the understanding that Dedmon and two other co-conspirators would join them a short time later. Gaskamp did not go to Jackson on this occasion. Upon arriving in Jackson, Montgomery and the other three occupants of the Jeep drove around and threw beer bottles at African-American pedestrians.
At approximately 5:00 a.m., Montgomery and the other three occupants of the Jeep spotted Anderson in a motel parking lot off Ellis Avenue. Rice and another co-conspirator decided to get out of the Jeep to distract Anderson while they waited for Dedmon and the other co-conspirators to arrive. After Dedmon and the other two co-conspirators arrived, Dedmon and Rice physically assaulted Anderson. After the assault, one of the co-conspirators yelled, “White Power!”, with Dedmon responding by also yelling “White Power!” Dedmon then deliberately used his vehicle to run over Anderson, causing injuries that resulted in his death.
Thereafter, a number of the co-conspirators, including Montgomery, agreed to, and did, give false statements to law enforcement officials about the nature of their interactions with Anderson.
“The defendants today took responsibility for committing federal hate crimes by assaulting vulnerable Americans solely because of their race,” said U.S. Attorney Gregory K. Davis. “Working with the Civil Rights Division of the Department of Justice, our office will continue to make the prosecution of hate crimes and other civil rights violations a top priority in the Southern District of Mississippi.”
“As the agency responsible for investigating criminal violations of federal civil rights statutes, the FBI takes very seriously its responsibility to uphold the civil rights of all citizens,” said Daniel McMullen, the Special Agent in Charge of the FBI’s Jackson Division. “The FBI will continue its efforts to identify and bring to justice all those individuals who participated in depriving Anderson and other citizens of their civil rights because of the color of their skin.”
These guilty pleas were the result of a cooperative effort between the U.S. Attorney’s Office for the Southern District of Mississippi, the Civil Rights Division of the Department of Justice, and the Hinds County District Attorney’s Office. This case was investigated by the Jackson Division of the FBI and the Jackson Police Department. It is being prosecuted by Trial Attorney Sheldon L. Beer and Deputy Chief Paige M. Fitzgerald of the Civil Rights Division and Assistant U.S. Attorney Glenda R. Haynes of the U.S. Attorney’s Office for the Southern District of Mississippi.
Three Men Sentenced to Prison for Participation in Online Conspiracy to Trade Child PornographyRead the Press Release
WASHINGTON – Two Wisconsin men and a Missouri man were sentenced to prison for their role in a conspiracy to advertise, distribute and possess child pornography, Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney for the Western District of North Carolina Anne M. Tompkins announced today.
Daniel Slott, 44, of Merrill, Wis., was sentenced today by U.S. District Judge Richard L. Voorhees in the Western District of North Carolina to serve 228 months in prison and lifetime supervised release.
Brian Slott, 42, of Merrill, was sentenced today Judge Voorhees to serve 180 months in prison and lifetime supervised release.
Henry Wright, 50, of Jefferson County, Mo., was sentenced yesterday by Judge Voorhees to serve 70 months in prison and 10 years of supervised release.Following their release, all three co-conspirators must register as sex offenders.
In November 2010, a grand jury charged six individuals, including Brian Slott, Daniel Slott and Wright, with conspiracy to advertise, distribute and possess child pornography. All three pleaded guilty to the charges in July 2011.According to filed court documents and court proceedings, Brian Slott, Daniel Slott and Wright engaged in a conspiracy with others to share child pornography on Facebook. Court records indicate that all three were members of several Facebook groups dedicated to sharing child pornography and child erotica, including groups called “girls girls girls :)” and “little girls love to play to :).” These groups contained over 10,000 images of child pornography and child erotica. According to filed documents and statements made in court, Wright engaged in chats with the group leader and commented on images of prepubescent children posted to the Facebook groups. Daniel Slott, a registered sex offender, traveled to his brother’s house to participate in the groups and download images of children engaged in sexually explicit conduct. Brian Slott also downloaded images from the groups’ sites. In August 2010, agents with the FBI executed a search warrant at Daniel Slott, Brian Slott and Henry Wright’s residences and seized multiple computers and storage media devices. Hundreds of images of child pornography were located on these items.
Three co-conspirators were sentenced earlier this fall: James Byrd was sentenced in August 2012 to serve 87 months in prison; David Large was sentenced in October 2012 to 70 months in prison; and Michael Engelking was sentenced in October 2012 to serve 210 months in prison.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse, launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
The investigation was conducted by the FBI’s Violent Crimes Against Children Unit headquartered in Maryland. The case was prosecuted by Assistant U.S. Attorney Cortney S. Escaravage of the Western District of North Carolina and Trial Attorney LisaMarie Freitas of CEOS.
Texas Man Sentenced in Indiana to 330 Months in Prison <br /> for Participating in International Child Pornography Distribution RingRead the Press Release
WASHINGTON – A Texas man was sentenced today to serve 330 months in prison for his participation in an international child pornography distribution ring, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Joseph H. Hogsett of the Southern District of Indiana.
Jeremy Daniel Labrec, 22, of Lubbock, Texas, was sentenced by U.S. District Judge Jane Magnus-Stinson in the Southern District of Indiana. In addition to his prison term, Labrec was sentenced to serve lifetime supervised release.
Labrec’s prosecution is the result of “Operation Bulldog,” a multi-jurisdictional effort to dismantle and prosecute the members of an international child pornography distribution ring. The ring was discovered in the course of investigating the production and distribution of child pornography by David Bostic, a Bloomington, Ind., man, who pleaded guilty to multiple charges in June 2011 and was sentenced in November 2011 to serve 315 years in prison. A total of nine defendants have been prosecuted in the Southern District of Indiana for their participation in the group, and all nine defendants have been sentenced to prison.
On June 6, 2012, Labrec pleaded guilty to 22 counts charging he sexually exploited children, distributed and received child pornography and conspired to commit these offenses.
Labrec was charged by indictment in February 2011, and he was arrested in March 2011. According to court documents, during the course of the investigation, law enforcement discovered that, in addition to his child pornography trafficking activities, Labrec had sexual contact with six young boys, all of whom were five years of age or younger.
A total of more than two dozen children have now been rescued as a result of Operation Bulldog. Efforts to identify additional defendants and victims in the United States and abroad are active and ongoing.This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
This case was investigated by the FBI, with local assistance from the Indiana State Police, the Kokomo, Ind., Police Department and the Brownsburg, Ind., Police Department.
The case is being prosecuted by Assistant U.S. Attorney A. Brant Cook of the Southern District of Indiana and Trial Attorney Michael Grant of CEOS.
New Mexico Probation Officer Arrested on Sexual Assault ChargesRead the Press Release
Gordon Chavez, 35, a probation officer with the New Mexico Corrections Department of Probation and Parole, was arrested today in Albuquerque, N.M., on charges related to the sexual assault of a probationer whom he supervised.
According to court documents, Chavez was arrested for violating the civil rights of the victim by depriving her of her right to bodily integrity. The complaint affidavit describes Chavez’s escalating behavior, including Chavez commenting on the victim’s appearance, the clothes she was wearing and her sexual activity. During office visits that the victim was required to attend, Chavez stared at the victim’s breasts while rubbing his own genital area through his pants. He also asked the victim to bring naked pictures of herself. Ultimately, Chavez groped and fondled the victim’s breast under her clothes against her will. Anyone with additional information is encouraged to call the Albuquerque Division of the FBI at (505) 889-1300.
Chavez will appear in federal court tomorrow for an initial appearance. A complaint merely establishes probable cause. 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.
Justice Department Recovers Nearly $5 Billionin False Claims Act Cases in Fiscal Year 2012Read the Press Release
The Justice Department secured $4.9 billion in settlements and judgments in civil cases involving fraud against the government in the fiscal year ending Sept. 30, 2012, Tony West, Acting Associate Attorney General, and Stuart F. Delery, Principal Deputy Assistant Attorney General for the Civil Division, announced today. This figure constitutes a record recovery for a single year, eclipsing the previous record by more than $1.7 billion, and brings total recoveries under the False Claims Act since January 2009 to $13.3 billion – which is the largest four-year total in the Justice Department’s history and more than a third of total recoveries since the act was amended 26 years ago in 1986.
The False Claims Act is the government’s primary civil remedy to redress false claims for federal money or property, such as Medicare benefits, federal subsidies and loans and payments under contracts for goods and services, including military contracts. The 1986 amendments strengthened the act and increased incentives for whistleblowers to file lawsuits on behalf of the government, leading to more investigations and greater recoveries.
Most false claims actions are filed under the act’s whistleblower, or qui tam, provisions, which allow private citizens to file suits alleging false claims on behalf of the government. If the United States prevails in the action, the whistleblower, known as a relator, receives up to 30 perc ent of the recovery. The department saw a record 647 qui tam suits filed last fiscal year and recovered a record $3.3 billion in suits filed by whistleblowers during the same period.
The Justice Department’s 2012 efforts also included record recoveries for health care fraud, where recoveries topped $3 billion for the first time in a single fiscal year, thereby besting the previous record which had been set in fiscal year 2011. Housing and mortgage fraud accounted for an unprecedented $1.4 billion.
“Today’s announcement underscores the Obama Administration’s ongoing commitment to recover losses, to prevent fraud, to bring abuses to light, and to hold accountable those who violate the law and exploit some of the government’s most critical programs,” said Attorney General Eric Holder. “Thanks to the dedicated work of attorneys, investigators, analysts, and support staff at every level of the Justice Department – along with our state and local partners across the country – we have secured the largest annual recovery in the Department's history. By aggressively investigating allegations of waste and pursuing those who would take advantage of the most vulnerable members of society, I'm confident that we will continue to build on this historic progress in the months and years ahead.”
“The Justice Department, using the False Claims Act, recovered nearly $5 billion in taxpayer for false claims on the treasury, by far a record for any one year,” said Acting Associate Attorney General West. “This Administration’s commitment to fighting fraud in its many forms has led to the most successful four-year period in the department’s history. Vigorous enforcement of the False Claims Act not only protects taxpayer dollars; it also protects the integrity of important government programs on which so many of us rely.”
“Redressing fraud and abuse in government programs has been a top priority of the Department of Justice,” Principal Deputy Assistant Attorney General Delery said. “This success is also largely attributable to the brave individuals who initiate many of the investigations through whistleblower suits and to the Obama Administration’s efforts to coordinate enforcement efforts across government. While today we focus on federal recoveries, the cases successfully pursued by the Civil Division and the United States Attorneys throughout the country also returned billions of dollars to state Medicaid funds and homeowners threatened with foreclosure. In some cases, the individuals and corporations involved were also subject to criminal sanctions and were required to enter into corporate integrity agreements to prevent future misconduct.”
Health Care Fraud
As noted, this year represents the second straight year in which the department has set a new record for recoveries under the False Claims Act for health care fraud. This steady, significant and continuing success can be attributed in part to the high priority placed by the administration on fighting health care fraud. In 2009, Attorney General Holder and Health and Human Services (HHS) Secretary Kathleen Sebelius announced the creation of an interagency task force, the Health Care Fraud Prevention and Enforcement Action Team (HEAT), to increase coordination and optimize criminal and civil enforcement. This coordination has yielded historic results: From January 2009 through the end of the 2012 fiscal year, the department used the False Claims Act to recover more than $9.5 billion in federal health care dollars – also a record for any four-year period. Most of these recoveries relate to frauds against Medicare and Medicaid. For more information, go to StopMedicareFraud.gov , a web page jointly established by the Department of Justice and HHS that provides additional information on the government’s efforts in this area.
Enforcement actions involving the pharmaceutical and medical device industry were the source of some of the largest recoveries this year. The department recovered nearly $2 billion in cases alleging false claims for drugs and medical devices under federally insured health programs and, in addition, returned $745 million to state Medicaid programs. These cases include recoveries from GlaxoSmithKline LLC (GSK) and Merck, Sharp & Dohme (Merck) – two of the three top settlements this year. These recoveries do not include a $561 million False Claims Act settlement with Abbott Laboratories Inc., part of a $1.5 billion global resolution (which will be reflected in FY 2013 numbers) (details at Abbott Labs ).
GSK paid $1.5 billion to resolve False Claims Act allegations that the company (1) promoted the drugs Paxil, Wellbutrin, Advair, Lamictal and Zofran for uses not approved by the Food and Drug Administration, known as off-label use, and paid kickbacks to physicians to prescribe those drugs as well as the drugs Imitrex, Lotronex, Flovent and Valtrex; (2) made false and misleading statements concerning the safety of the drug Avandia; and (3) reported false best prices and underpaid rebates owed under the Medicaid Drug Rebate Program. The $1.5 billion in federal civil recoveries was part of a $3 billion global settlement including criminal fines and forfeitures as well as state Medicaid recoveries, making GSK the largest health care fraud settlement in U.S. history. For details, go to GSK settlement .
The department also recovered $441 million, including interest, from Merck to resolve allegations that the company promoted the drug Vioxx for off-label use for relief of rheumatoid arthritis and that company representatives made inaccurate, unsupported or misleading statements about Vioxx’s cardiovascular safety to increase sales, resulting in payments by federal health care programs. In addition, Merck paid nearly $322 million in criminal fines and returned more than $200 million to state Medicaid programs. For details, go to Merck settlement .
Adding to its successes under the False Claims Act, the Civil Division, through its Consumer Protection Branch, and together with U.S. Attorneys across the country, obtained 14 criminal convictions and $1.5 billion in criminal fines and forfeitures under the Food, Drug and Cosmetic Act (FDCA).
Mortgage and Housing Fraud
In addition to health care fraud, the department continued its aggressive pursuit of financial fraud, including fraud in the housing and mortgage industries that came to light in the wake of the financial crisis. In November 2009, President Obama established the Financial Fraud Enforcement Task Force to hold accountable the individuals and corporations who contributed to the crisis as well as those who would claim illegal advantage through false claims for funds intended to stimulate economic recovery. The task force is the broadest coalition of law enforcement, investigative, and regulatory agencies ever assembled to combat fraud. For more information on the efforts and results of the Financial Fraud Enforcement Task Force in mortgage and other financial fraud, go to StopFraud.gov .
In fiscal year 2012, the Task Force’s efforts resulted in a landmark $25 billion agreement between the federal government, the attorneys general of 49 states and the District of Columbia, on the one hand, and the nation’s five largest mortgage servicers, on the other, to address mortgage loan servicing and foreclosure abuses. The five settling companies are the Bank of America Corporation, JP Morgan Chase & Co., Wells Fargo & Company, Citigroup Inc. and Ally Financial Inc. (formerly GMAC). Among its other provisions – which included significant relief for struggling homeowners – the settlement included resolutions under the False Claims Act that returned more than $900 million to federal mortgage insurance programs, including programs designed to promote home ownership by families and veterans. In addition, the agreement provides substantial financial relief to homeowners and establishes significant new homeowner protections for the future. For details, go to $25 billion agreement .
Other significant settlements to redress false claims in connection with federally insured mortgages include a $202.3 million settlement with Deutsche Bank AG and its subsidiary MortgageIT Inc., a $158.3 million settlement with Citibank subsidiary CitiMortgage Inc. and a $132.8 million settlement with Flagstar Bank. For details, go to Deutsche Bank/MortgageIT , CitiMortgage , and Flagstar Bank .
Procurement Fraud
The department, with the assistance of other members of the Financial Fraud Enforcement Task Force, also achieved great success in the pursuit of procurement fraud, including fraud connected to the procurement of equipment and services for the military. In fiscal year 2012, the department recovered $427 million in false claims for goods and services purchased by the government, bringing total recoveries for procurement fraud since January 2009 to $1.7 billion.
The department recovered $73 million in cases related to the wars in Iraq and Afghanistan. These cases include a $37 million settlement with ATK Launch Systems Inc. to resolve allegations that ATK sold dangerous and defective illumination flares used by the Army and the Air Force for nighttime combat and for covert and search and rescue operations. In another wartime contracting case, Maersk Line Limited paid the United States $31.9 million to resolve allegations that the company knowingly overcharged the Department of Defense to transport cargo to U.S. troops in Afghanistan and Iraq. For details on these settlements, go to ATK and Maersk .
The department also recovered $200 million from software manufacturer Oracle Corp. and Oracle USA in the largest False Claims Act settlement ever obtained under a General Services Administration contract. GSA negotiates contracts with private sector companies for the purchase of commonly used commercial goods and services by agencies throughout the government. As part of their contract to gain access to the vast federal marketplace, these companies agree to disclose the discounts given to their commercial customers and to pass along those discounts to the government. The $200 million settlement with Oracle resolved allegations that the company overcharged the government by failing to disclose substantially lower prices offered to its commercial customers. For more details, go to Oracle settlement .
Recoveries in Whistleblower Suits
As part of a commemoration of the 25th anniversary of the False Claims Act amendments, the department noted earlier this year the importance of the legislation providing the tools needed to combat fraud against the government, especially by strengthening the False Claims Act’s qui tam provisions. In 1986, Senator Charles Grassley and Representative Howard Berman led successful efforts in Congress to amend the False Claims Act to, among other things, encourage whistleblowers to come forward with allegations of fraud. In 2009, Senator Patrick J. Leahy, chairman of the Senate Judiciary Committee, along with Senator Grassley and Representative Berman, championed the Fraud Enforcement and Recovery Act of 2009, which made additional improvements to the False Claims Act and other fraud statutes. And in 2010, the passage of the Affordable Care Act provided additional inducements and protections for whistleblowers and strengthened the provisions of the federal health care Anti-Kickback Statute.
The increased incentives for whistleblowers have led to an unprecedented number of investigations and greater recoveries. Of the $4.9 billion in fiscal year 2012 recoveries, a record $3.3 billion was recovered in whistleblower suits. In fiscal year 2012 alone, relators filed 647 qui tam suits. Of the nearly 8,500 qui tam suits filed since the 1986 amendments, nearly 2,200 were filed since January 2009. Looking at qui tam recoveries for the same periods, the department tallied $24.2 billion since 1986, with nearly $10.5 billion of that amount recovered from January 2009 through fiscal year 2012. Since 1986, whistleblowers have been awarded nearly $4 billion, with $439 million in awards in fiscal year 2012.
“The whistleblowers who bring wrongdoing to the government’s attention are instrumental in preserving the integrity of government programs and protecting taxpayers from the costs of fraud,” said Principal Deputy Assistant Attorney General Delery. “We are extremely grateful for the sacrifices they make to do the right thing.”
Acting Associate Attorney General West and Principal Deputy Assistant Attorney General Delery also expressed their deep appreciation for the dedicated public servants who contributed to the investigation and prosecution of these cases. These individuals include attorneys, investigators, auditors and other agency personnel throughout the Civil Division, the U.S. Attorneys’ Offices, HHS, Department of Defense and the many other federal and state agencies that contributed to the department’s record recoveries this past year.
“The department’s record recoveries this past year are a product of the tremendous skill and dedication of the people who worked on these cases and investigations,” Mr. Delery said.
Related Materials:
Principal Deputy Assistant Attorney General Stuart Delery Speaks at Pen and Pad Briefing Announcing Record Civil FY 2012 Recoveries
Acting Associate Attorney General Tony West Speaks at Pen and Pad Briefing Announcing Record Civil FY 2012 RecoveriesFlorida Man Charged with Filing False Claims for Tax RefundsRead the Press Release
A federal grand jury in Fort Lauderdale, Fla., returned an indictment charging Paul F. Wrubleski with corruptly impeding the due administration of the internal revenue laws and four counts of filing false claims for tax refunds, the Justice Department and the Internal Revenue Service (IRS) announced today.
According to the indictment, Wrubleski impeded the IRS by filing False W-4s that claimed he was exempt from income tax withholding, and filing false tax returns, including four tax returns that requested over $1.5 million in federal refunds. Wrubleski also sent obstructive letters, tax returns and other false documents to the IRS between 1999 and 2010. In addition, the indictment alleges that Wrubleski filed for bankruptcy in 2006 to impede IRS collection actions.
An indictment merely alleges that crimes have been committed and the defendant is presumed innocent until proven guilty beyond a reasonable doubt. If convicted on all counts, Wrubleski faces a maximum potential sentence of 23 years in prison and faces a fine of up to $1.2 million.
This case was investigated by special agents of IRS - Criminal Investigation. Trial Attorneys Charles Edgar, Jr. and Jed Silversmith of the Justice Department’s Tax Division and Assistant U.S. Attorney Bertha Mitrani are prosecuting the case.
Additional information about the Tax Division and its enforcement efforts may be found at www.justice.gov/tax .
County Commissioner Convicted in Georgia <br /> for Attempted Extortion and BriberyRead the Press Release
WASHINGTON — A federal jury in Albany, Ga., convicted Sumter County, Ga., County Commissioner Al J. Hurley late yesterday on corruption charges stemming from his acceptance of illicit payments in exchange for his official efforts to secure government contracts for a private contractor, Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and Middle District of Georgia U.S. Attorney Michael J. Moore announced.
Hurley, 54, of Americus, Ga., was found guilty of one count each of attempted extortion and federal program bribery.
Hurley was first elected to the five-member board of commissioners in 1999. As the primary governing body for the county, the board presided over a variety of official matters, including the bidding process for and award of various county contracts.
Evidence at trial showed that from September to December 2011, Hurley, in his capacity as a county commissioner, solicited and agreed to accept cash payments – including $5,000 on Oct. 23, 2011, and $15,000 on Dec. 19, 2011 – from a private contractor, in exchange for Hurley’s repeated promises to use official action and influence to help facilitate the award of county contracting work to the contractor.
In particular, Hurley told the contractor that he would help him win a $100,000 depot renovation contract in a city within Hurley’s district. Trial testimony also established that, in order to drive up the bribe amount, Hurley invented two inside contacts that he claimed to have at a new racetrack project in his district, and claimed the contacts could influence the award of related contracting work in favor of the contractor. Hurley, who testified, admitted the contacts did not exist.
Hurley faces a maximum potential penalty of 20 years in prison for the attempted extortion charge and 10 years in prison on the bribery charge. Each count also carries a maximum $250,000 fine. A sentencing date has not yet been set.
This case was prosecuted by Trial Attorney Eric G. Olshan of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney K. Alan Dasher of the Middle District of Georgia. This case was investigated by the FBI.
Attorney General Eric Holder and High-Level Officials Launch Global Alliance Against Child Sexual Abuse OnlineRead the Press Release
Attorney General Eric Holder and European Union (EU) Commissioner for Home Affairs Cecilia Malmström will launch the Global Alliance Against Child Sexual Abuse Online at a ministerial conference tomorrow, Dec. 5, 2012, in Brussels. The initiative aims to unite decision-makers all around the world to better identify and assist victims and to prosecute the perpetrators.
Participants at the launch include ministers and high-level officials from 27 EU member states, who are also joined by 22 countries outside the EU, including Albania, Australia, Cambodia, Canada Croatia, Georgia, Ghana, Japan, Moldova, Montenegro, New Zealand, Nigeria, Norway, the Philippines, Serbia, Republic of Korea, Switzerland, Thailand, Turkey, Ukraine, United States and Vietnam.
“This international initiative will strengthen our mutual resources to bring more perpetrators to justice, identify more victims of child sexual abuse, and ensure that they receive our help and support,” said Attorney General Holder. “Through this global alliance we can build on the success of previous cross-border police operations that have dismantled international pedophile networks and safeguard more of the world’s children.”
“Behind every child abuse image is an abused child, an exploited and helpless victim. When these images are circulated online, they can live on forever. Our responsibility is to protect children wherever they live and to bring criminals to justice wherever they operate. The only way to achieve this is to team up for more intensive and better coordinated action worldwide,” said Commissioner for Home Affairs Cecilia Malmström.
The countries of the alliance are committing themselves to a number of policy targets and goals aimed at combating the pervasive problem of child sexual abuse online - including the manufacturing and sharing of child pornography, online enticement of minors and online child prostitution. Thanks to increased international cooperation, the fight against child sexual abuse online will therefore be more effective.
End Child Prostitution, Child Pornography and Trafficking of Children for Sexual Purposes International studies indicate that more than one million images of children subjected to sexual abuse and exploitation are currently online. According to the U.N. Office on Drugs and Crime, 50,000 new child abuse images are added online each year.
No country can fight this horrible phenomenon alone, as the criminal networks behind it know no boundaries and exploit the lack of information exchange and the legal loopholes that exist within and between countries. This is why international cooperation is crucial to effectively investigate cases of child sexual abuse online and to better identify and prosecute offenders.
Global Alliance: Greater Commitments for Better Results
Tomorrow at the launching conference, the participating countries will make political commitments to pursue a number of goals, notably:
- Enhancing efforts to identify victims and ensuring that they receive the necessary assistance, support and protection;
- Enhancing efforts to investigate cases of child sexual abuse online and to identify and prosecute offenders;
- Increasing children's awareness of online risks, including the self-production of images and 'grooming' methods used by paedophiles
- Reducing the availability of child abuse material online and the re-victimization of children.
Countries would then choose the appropriate action to take at national level to achieve them, and would report regularly.
Background
The United States, through the Department of Justice, the Department of Homeland Security, Secret Service, Postal Inspection Service and other government agencies, in collaboration with non-governmental organizations (NGOs), industry and international partners, has made progress in combating all forms of child sexual exploitation.
The largest U.S. prosecution of an international criminal network organized to sexually exploit children, called Operation Delego, was a U.S.-led operation announced just last year by Attorney General Holder and Department of Homeland Security Secretary Janet Napolitano. Operation Delego resulted in 72 defendants being charged in the U.S. and more than 500 individuals being targeted for investigation by foreign authorities for their participation in Dreamboard – a private, members-only, online bulletin board that was created and operated to promote pedophilia and encourage the sexual abuse of very young children, in an environment designed to avoid law enforcement detection.
The identification and arrest of the defendants spanned years and involved extensive international cooperation between the United States; Eurojust, the European Union’s Judicial Cooperation Unit; Europol, the European law enforcement agency; and dozens of law enforcement agencies throughout the world. Dreamboard members across five continents were arrested in countries like Canada, Denmark, Ecuador, France, Germany, Hungary, Kenya, the Netherlands, the Philippines, Qatar, Serbia, Sweden and Switzerland. The location and arrest of Dreamboard members abroad have led to the capture and investigation of other global targets, as well as the identification of numerous children suffering ongoing abuse at their hands. Operation Delego is a good example of the success we can achieve when we work together with our international partners.
To better prosecute these crimes, the Justice Department has created a dedicated team of prosecutors in its Criminal Division called the Child Exploitation and Obscenity Section (CEOS) and appointed one specialist in each of the 93 U.S. Attorneys’ Offices around the country. CEOS regularly trains and advises the specialists in those offices and has created a network that joins them together, known as Project Safe Childhood. The Justice Department also created a dedicated team of computer forensic specialists and co-located them with our CEOS prosecutors, to ensure that they have the technical support they need to build these important investigations and operations.
In addition, the U.S. Congress has funded the creation of state-level task forces, known as the Internet Crimes Against Children (ICAC) Task Forces which help state and local agencies to develop successful, long-term responses to online child exploitation. These task forces are supported by the Department of Justice, not just with funding, but with training.
Despite vigorously fighting all aspects of child exploitation, the Justice Department recognizes that more work remains to be done and that work is vital to our collective success in combating this global problem.
For more information regarding the Justice Department’s efforts to combat child exploitation, please visit: www.justice.gov/criminal/ceos
The Global Alliance Against Child Sexual Abuse Online ministerial conference will take place in Brussels on Dec. 5, 2012. Experts and practitioners from participating governments, as well as representatives from international organizations and academics will examine the state of the problem and discuss the different policy targets of the Global Alliance. Attending ministers from the participating countries will endorse the alliance, in the form of a declaration.
Related Materials:
Child Exploitation and Obscenity Section
Attorney General Eric Holder Speaks at the Global Alliance Against Child Sexual Abuse Online Ministerial
3 December 2012
Ohio-based Glass Container Manufacturer Agrees to Install Pollution Controls and Pay $1.45 Million to Settle Clean Air Act ViolationsRead the Press Release
WASHINGTON – Ohio-based Owens-Brockway Glass Container Inc., the nation’s largest glass container manufacturer, has agreed to install pollution control equipment to reduce harmful emissions of nitrogen oxides (NOx), sulfur dioxide (SO2) and particulate matter (PM) by nearly 2,500 tons per year and pay a $1.45 million penalty to resolve alleged Clean Air Act violations at five of the company’s manufacturing plants, the Department of Justice and the U.S. Environmental Protection Agency (EPA) announced today.
“This agreement will significantly reduce the amount of air pollution, known to cause a variety of environmental and health problems, from the nation’s largest manufacturer of glass containers,” said Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division of the Department of Justice. “The settlement, the latest in a series of agreements with the glass manufacturing sector, addresses major sources of pollution at facilities located in four states and will mean cleaner air for the people living in those communities.”
“The pollution controls required by today’s settlement will significantly reduce emissions that can impact residents’ health and local environment in communities located near glass manufacturing plants,” said Cynthia Giles, Assistant Administrator for the EPA’s Office of Enforcement and Compliance Assurance. “These new pollution controls will improve air quality and protect communities from Georgia to Texas from emissions that can lead to respiratory illnesses, smog and acid rain.”
The pollution controls required as part of the settlement to reduce NOx, SO2, and PM will cost an estimated $37.5 million. Owens-Brockway will also spend an additional $200,000 to mitigate excess emissions at its plant in Atlanta by working with the Georgia Retrofit Program to retrofit diesel school buses and fleet vehicles with controls to reduce emissions, or it will assist with the purchase of new natural gas, propane or hybrid vehicles.
Reducing air pollution from the largest sources of emissions, including glass manufacturing plants, is one of the EPA’s National Enforcement Initiatives for 2011-2013. NOx, SO2, and PM, three key pollutants emitted from glass plants, have numerous adverse effects on human health and the environment. NOx and SO2 contribute to ground-level ozone, or smog, acid rain and the destruction of terrestrial and aquatic ecosystems. NOx and SO2 can also irritate the lungs and aggravate pre-existing heart or lung conditions. PM contains microscopic particles that can travel deep into the lungs and cause difficulty breathing, coughing, decreased lung function, and even death.
This is the fourth settlement in EPA’s National Glass Manufacturing Plant Initiative.
The facilities covered by the settlement are located in Atlanta, Ga.; Clarion, Pa.; Crenshaw, Pa.; Muskogee, Okla.; and Waco, Texas.
The Oklahoma Department of Environmental Quality is also a signatory to this consent decree.
The proposed consent decree will be lodged with the U.S. District Court for the Northern District of Ohio, and will be subject to a 30-day public comment period. Information on submitting comments is available at the Department of Justice website: www.justice.gov/enrd/Consent_Decrees.html .
More information on the settlement: www.epa.gov/enforcement/air/cases/owensbrockway.html
Learn more about EPA’s National Enforcement Initiatives: www.epa.gov/oecaftp/compliance/data/planning/initiatives/index.html
Justice Department Settles Discrimination Claim Against Oregon Homecare ProviderRead the Press Release
The Justice Department announced today that it reached an agreement with ComForcare In-Home Care & Senior Services, a home care provider for sick and elderly patients in Tigard, Ore. The agreement resolved claims that the provider violated the anti-discrimination provision of the Immigration and Nationality Act (INA), when it demanded unnecessary documentation from a newly naturalized citizen in response to an initial mismatch in E-Verify and then refused to hire her when she did not produce it.
The investigation stemmed from a charge filed by a naturalized U.S. citizen, who was not allowed to work for ComForcare after the company received an initial mismatch in her data in E-Verify, called a tentative non-confirmation. E-Verify is an Internet-based system run by U.S. Citizenship and Immigration Services (USCIS) that confirms employment eligibility by comparing information from an employee’s Form I-9, the form that all new employees must complete upon hire, to data in the Department of Homeland Security’s and Social Security Administration’s records.
If an employee receives a tentative non-confirmation, E-Verify requires the employer to provide the employee with a tentative non-confirmation notice offering the employee the choice to contest the mismatch. If the employee decides to contest the mismatch, the employee must be allowed to work while resolving a tentative non-confirmation, and the rules do not permit an employer to request additional documentation based on a tentative non-confirmation. ComForcare failed to provide the charging party with written notice of her tentative non-confirmation, as required by E-Verify, demanded that she produce an “alien card” and did not allow her to start working. When the charging party informed ComForcare that, as a naturalized citizen, she did not possess an alien card, ComForcare demanded her naturalization papers even though she had already produced proper work authorization documents during the Form I-9 process. The investigation also established that ComForcare requested that non-U.S. citizens and persons perceived to be non-U.S. citizens produce specific employment eligibility documents to establish their employment eligibility rather than allowing these individuals to show their choice of valid documentation.
Under the settlement agreement, ComForcare will pay approximately $525 in back pay to the charging party and $1,210 in civil penalties to the United States. ComForcare 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 eighteen months.
“This case illustrates the importance of following E-Verify rules consistently regardless of citizenship status or perceived status, or risk running afoul of the anti-discrimination provision,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “Subjecting naturalized citizens to heightened documentary standards that result in the loss of employment constitutes discrimination, and the Division is fully committed to enforcing the law that prohibits it.”
The Office of Special Counsel (OSC) for Immigration-Related Unfair Employment Practices is responsible for enforcing the anti-discrimination provision of the INA, which protects work-authorized individuals from employment discrimination on the basis of citizenship status or national origin discrimination, including discrimination in hiring and the employment eligibility verification (Form I-9) process.
For more information about protections against employment discrimination under federal immigration law, call OSC’s worker hotline at 1-800-255-7688 (1-800-237-2515, TDD for hearing impaired), OSC’s employer hotline at 1-800-255-8155 (1-800-237-2515, TDD for hearing impaired), or 202-616-5594; e-mail [email protected] or visit OSC’s website at www.justice.gov/crt/about/osc.
Foreign National Pleads Guilty in Houston to Human Smuggling ChargesRead the Press Release
WASHINGTON – A foreign national pleaded guilty today for his role in a scheme to smuggle undocumented immigrants from India into the United States, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Kenneth Magidson for the Southern District of Texas; and Special Agent in Charge Brian M. Moskowitz of U.S. Immigration and Customs Enforcement Homeland Security Investigations (ICE-HSI) in Houston
Kaushik Jayantibhai Thakkar, 33, an Indian national, pleaded guilty today at a hearing before U.S. District Judge Ewing Werlein Jr., in Houston, to one count of conspiracy to bring undocumented immigrants into the United States for profit and to one count of unlawfully bringing two undocumented immigrants into the United States for profit.
Thakkar was arrested in New York on April 8, 2012, on a complaint filed in the Southern District of Texas charging him with one count of conspiracy to unlawfully smuggle undocumented immigrants into the United States. On June 6, 2012, Thakkar was charged by superseding indictment, along with four other individuals, with one count of conspiracy to smuggle undocumented immigrants into the United States and six human smuggling counts related to three incidents in which Thakkar helped smuggle undocumented immigrants into the United States. Based on Thakkar’s guilty plea, the government will dismiss the remaining human smuggling counts against him at sentencing.
At the plea hearing and in related court documents, Thakkar admitted that between January 2011 and April 2012, he conspired with his codefendants to bring undocumented immigrants to the United States, and to encourage and induce undocumented immigrants to come to the United States unlawfully. According to court documents, Thakkar and his co-conspirators devised the scheme to profit financially.
In support of the conspiracy, Thakkar and other conspirators recruited individuals in India who were willing to pay to be smuggled into the United States. For their smuggling operations, Thakkar and his conspirators used a network of conspirators in South America, Central America, the Caribbean and the United States, including the state of Texas. Using this network, Thakkar and his conspirators transported groups of undocumented immigrants from locations within India through South America, Central America and the Caribbean and then into the United States by various means, including by air travel, automobiles, water craft and foot. Many of these smuggling events, including five of the incidents described in the indictment, involved illegal entry into the United States via the border between the United States and Mexico near McAllen and Laredo, Texas.
At sentencing, which is scheduled for Feb. 22, 2013, Thakkar faces a maximum sentence of 15 years in prison and a fine of up to $500,000.
Thakkar’s co-conspirator Maria Adela De Luna pleaded guilty on Nov. 9, 2012, to one count of conspiracy to harbor undocumented immigrants in the United States. Co-conspirator Fabiano Augusto Amorim has been charged with one count of conspiracy to smuggle undocumented immigrants into the United States and 10 human smuggling counts related to five incidents in which Amorim allegedly helped smuggle undocumented immigrants into the United States.
The investigation was conducted by agents with ICE-HSI in McAllen and Houston. This case is being prosecuted jointly by Trial Attorney Stephen Curran of the Criminal Division’s Human Rights and Special Prosecutions Section and Assistant U.S. Attorneys Leo J. Leo III and Casey MacDonald of the Southern District of Texas.
The investigation was conducted under the Extraterritorial Criminal Travel Strike Force (ECT) program, a joint partnership between the Justice Department’s Criminal Division and HSI. The ECT program focuses on human smuggling networks that may present particular national security or public safety risks, or present grave humanitarian concerns. ECT has dedicated investigative, intelligence and prosecutorial resources. ECT coordinates and receives assistance from other U.S. government agencies and foreign law enforcement authorities.
Brooklyn, N.Y., Clinic Employee Pleads Guilty in Connection with $71 Million Medicare Fraud SchemeRead the Press Release
WASHINGTON – A Brooklyn, N.Y., resident pleaded guilty today for his role in a $71 million Medicare fraud scheme, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney for the Eastern District of New York Loretta E. Lynch, Acting Assistant Director in Charge George Venizelos of the FBI’s New York Field Office and Special Agent in Charge Thomas O’Donnell of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG).
Yuri Khandrius, 50, pleaded guilty today before U.S. District Judge Nina Gershon in the Eastern District of New York to one count of conspiracy to commit health care fraud, one count of health care fraud and one count of conspiracy to pay kickbacks.
Khandrius was an employee of a clinic in Brooklyn that operated under three corporate names: Bay Medical Care PC, SVS Wellcare Medical PLLC and SZS Medical Care PLLC (Bay Medical clinic). According to court documents, owners, operators and employees of the Bay Medical clinic paid cash kickbacks to Medicare beneficiaries and used the beneficiaries’ names to bill Medicare for more than $71 million in services that were medically unnecessary or never provided. The defendants billed Medicare for a wide variety of fraudulent medical services and procedures, including physician office visits, physical therapy and diagnostic tests.
According to the criminal complaint, the co-conspirators allegedly paid kickbacks to corrupt Medicare beneficiaries in a room at the clinic known as the “kickback room,” in which the conspirators paid approximately 1,000 kickbacks totaling more than $500,000 during a period of approximately six weeks from April to June 2010.
Khandrius admitted in court that he conspired with co-workers at Bay Medical to commit health care fraud and to pay cash kickbacks to Medicare beneficiaries as part of the scheme.
At sentencing, Khandrius faces a maximum penalty of 25 years in prison. Sentencing is scheduled for March 11, 2013.
In total, 16 individuals have been charged in the Bay Medical scheme, including two doctors, nine clinic owners/operators/employees and five external money launderers. To date, 11 defendants have pleaded guilty for their roles in the conspiracy. Five individuals await trial before Judge Gershon on Jan. 22, 2013.
The case is being prosecuted by Assistant U.S. Attorney Shannon Jones of the Eastern District of New York and Trial Attorney Sarah M. Hall of the Criminal Division’s Fraud Section. The case was investigated by the FBI and HHS-OIG.
The case was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of New York. The Medicare Fraud Strike Force operations are part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT), a joint initiative announced in May 2009 between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country.
Since 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.
Air Duct Company, President and Manager Plead Guilty in Las Vegas to Environmental CrimesRead the Press Release
WASHINGTON – DPL Enterprises Inc. (dba Air Care Indoor Quality Specialists), Richard Papaleo, the company’s president and owner, and Michael Stanovich, a company manager pleaded guilty today in U.S. District Court in Las Vegas to making and selling a misbranded pesticide.
According to charges filed in U.S. District Court in Las Vegas, the defendants knowingly manufactured and sold fake Sporicidin, an EPA approved a pesticide, intended for use in disinfecting air ducts. The unapproved product was sold with a label that was false because it was not actually Sporicidin, because neither the diluted pesticide nor the label were EPA approved, because the label represented that the pesticide contained the concentration of the active ingredient found in the real product, and because the label contained a trademarked brand-name when it was really a 10:1 dilution. The fake Sporicidin label made by the defendants was copied from a real label and claimed that it could kill various organisms, including the HIV, Avian Flu, Salmonella, Staph and MRSA. However, Papaleo and his company sold diluted Sporicidin containing approximately 10 parts water for every 1 part of Sporicidin.
In court today, the defendants admitted to deliberately selling a misbranded pesticide knowing that the EPA had not approved the diluted product for sale or the label that failed to disclose that the product being was actually a 10:1 dilution.
Papaleo and his company also pleaded guilty to intentionally making false statements to federal agents from the EPA Criminal Investigations Division at the time of a federally authorized search warrant at Air Care. When interviewed, Papaleo told the agents that his company was not diluting Sporicidin and that the pesticide purchased from the maker was being re-packaged and re-labeled by Air Care solely for branding purposes, knowing that these statements were untrue and that diluted Sporicidin pesticide was being sold without approved labels in violation of law.
According to documents filed in court, Papaleo had been warned by the maker of Sporicidin that his company must obtain EPA approval for its label and that misbranding was “illegal.” Air Care admitted to selling approximately 6,312 gallons of the misbranded and diluted pesticide between 2005 and 2010.
The government’s investigation was initiated after EPA received complaints from the maker of Sporicidin. EPA made an undercover purchase of the fake Sporicidin sold by Air Care. EPA’s National Enforcement Investigations Center (NEIC) laboratory in Colorado found it was diluted with water even though the fake label made by Air Care claimed it contained the original strength of the active ingredient.
EPA regulates pesticides under the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA), which makes it a crime manufacture a pesticide in the United States without first being registered with the EPA and obtaining from the EPA a manufacturer establishment number. Approved labels must be affixed to any container of the pesticide that is distributed or sold. A pesticide is deemed “misbranded” if among other things the labeling is false or misleading. Misbranding pesticides is a misdemeanor offense.
The maximum penalty for violating FIFRA is one year in prison, and/or a fine of not more than $100,000, or up to twice the gross gain or loss from the crime. The corporation can face up to a $200,000 fine. Papaleo faces up to five years in prison and up to $200,000 in fines or up to twice the gross gain or loss from the crime for making false statements. Air Care could be fined up to $500,000 for making false statements or up to twice the gross gain or loss from the crime.
EPA Criminal Investigation Division conducted the investigation with assistance from the FBI. The case was prosecuted by Senior Trial Attorney Richard A. Udell of the Department of Justice Environmental Crimes Section and Assistant U.S. Attorney Kathryn Newman, of the U.S. Attorney’s Office for the District of Nevada.
30 November 2012
Statement by Attorney General Eric Holder on the Release of the National Advisory Committee on Violence Against Women RecommendationsRead the Press Release
Attorney General Eric Holder issued the following statement today on the release of the recommendations by the National Advisory Committee on Violence Against Women:
“For the past two years, the National Advisory Committee on Violence Against Women has displayed remarkable leadership and dedication to the cause of ending violence against women. I appreciate the thoughtful recommendations they have submitted in their final report.
“My intention when I re-chartered the advisory committee in March 2010 was to convene leaders in the field to solicit recommendations about how to improve the nation’s response to violence against women, with a specific focus on successful interventions with children and teens who witness or are victimized by domestic violence, dating violence and sexual assault.
“Prevention and successful interventions with children and teens will help break the cycle of violence that afflicts our nation. There is an unmistakable relationship between young people who witness or are victims of violence and the overall public safety of communities across the country.
“Together, I hope we can end this destructive violence and offer safety, security and hope to our children.”
Information on the National Advisory Committee can be found at: www.ovw.usdoj.gov/nac.html.
Related Materials:
National Advisory Committee on Violence Against Women
New Jersey Man Sentenced to 54 Months in Prison for Half-Billion Dollar Fraud Scheme with Thousands of Victims WorldwideRead the Press Release
A certified public accountant (CPA) and purported outside auditor for Provident Capital Indemnity Ltd. (PCI) was sentenced today in Richmond, Va., to 54 months in prison for his role in an approximately half-billion-dollar fraud scheme that affected more than 3,500 victims throughout the United States and abroad, announced U.S. Attorney for the Eastern District of Virginia Neil H. MacBride and Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.
Jorge Luis Castillo, 57, a resident of New Jersey, was sentenced today by U.S. District Judge John A. Gibney in the Eastern District of Virginia. In addition to his prison term, Castillo was sentenced to three years of supervised release and ordered to pay $43,582,699 in forfeiture.
Castillo pleaded guilty on Nov. 21, 2011, to one count of conspiring to commit mail and wire fraud. Castillo was a PCI employee prior to becoming PCI’s “outside auditor.”
“As a licensed accountant, Mr. Castillo used his expertise to create fraudulent financial statements out of whole cloth,” said U.S. Attorney MacBride. “Many elderly investors relied on Mr. Castillo’s credibility as an outside auditor before entrusting their life savings in this fraud scheme. Accountants and auditors are the gatekeepers of our financial system and are entrusted with the critical role of protecting the public from fraud. Today’s sentence will hopefully send a strong message to those in the accounting profession that they will be held responsible when they break that trust by facilitating or participating in fraud.”
“Jorge Luis Castillo will spend 54 months in prison for trading on his qualifications as a CPA to facilitate a massive fraud scheme that harmed investors throughout the United States and abroad,” said Assistant Attorney General Breuer. “Mr. Castillo’s prison sentence demonstrates the Justice Department’s commitment to holding accountable any fraudster who preys on innocent, unsuspecting investors.”
According to court records, PCI was an insurance and reinsurance company registered in the Commonwealth of Dominica and doing business in Costa Rica. PCI sold financial guarantee bonds to companies selling life settlements, or securities backed by life settlements, to investors. PCI marketed these bonds to its clients as a way to alleviate the risk of insured beneficiaries living beyond their life expectancy. PCI’s clients, in turn, typically explained to their investors that the financial guarantee bonds ensured that the investors would receive their expected return on investment irrespective of whether the insured on the underlying life settlement lived beyond his or her life expectancy.
Castillo admitted that he conspired with Minor Vargas Calvo, 61, the president and majority owner of PCI, to prepare audited financial statements that falsely claimed that PCI had entered into reinsurance contracts with major reinsurance companies. These claims, which were supported by a letter from Castillo stating that he conducted an audit of PCI’s financial records, were used to assure PCI’s clients that the reinsurance companies were backstopping the majority of the risk that PCI had insured through its financial guarantee bonds.
Castillo further admitted that he never performed an audit of PCI’s financial statements and that, in fact, he personally created the statements he claimed to be independently auditing. He also admitted that he and others at PCI knew that the company never actually entered into reinsurance contracts with any major companies. Castillo also admitted that he and other conspirators provided the false financial statements and fraudulent independent auditors’ report to Dun & Bradstreet (D&B), which D&B relied on in compiling its commercial reports on PCI and issuing its 5A rating of PCI’s financial strength.
From 2004 through 2010, PCI sold at least $485 million of bonds to life settlement investment companies located in various countries, including the United States, the Netherlands, Germany, Canada and elsewhere. PCI’s clients, in turn, sold investment offerings backed by PCI’s bonds to thousands of investors around the world. Purchasers of PCI’s bonds were allegedly required to make up-front payments of six to 11 percent of the underlying settlement as “premium” payments to PCI before the company would issue the bonds. Court records state that Castillo received approximately $84,000 from his work as the purported outside auditor of PCI from 2004 through 2010.
Vargas, a citizen and resident of Costa Rica, was convicted on April 30, 2012, of one count of conspiracy to commit mail and wire fraud, three counts of mail fraud, three counts of wire fraud and three counts of money laundering. On Oct. 23, 2012, he was sentenced to 60 years in prison. PCI pleaded guilty on April 18, 2012, to conspiring to commit mail and wire fraud, and was sentenced on Sept. 6, 2012, to one year of probation.
This investigation is being conducted by the U.S. Postal Inspection Service, Internal Revenue Service – Criminal Investigation, and FBI, with assistance from the Virginia State Corporation Commission, the Texas State Securities Board and the New Jersey Bureau of Securities. This case is being prosecuted by Assistant U.S. Attorneys Michael S. Dry and Jessica Aber Brumberg of the Eastern District of Virginia and Assistant Chief Albert B. Stieglitz Jr. of the Justice Department Criminal Division’s Fraud Section.
The U.S. Securities and Exchange Commission (SEC) conducted a parallel investigation and in January 2011 filed a parallel civil enforcement action against PCI, Vargas and Castillo. The department thanks the SEC for its assistance in this matter.
The investigation has been coordinated by the Virginia Financial and Securities Fraud Task Force, an unprecedented partnership between criminal investigators and civil regulators to investigate and prosecute complex financial fraud cases in the nation and in Virginia specifically. The task force is an investigative arm of the President’s Financial Fraud Enforcement Task Force, an interagency national task force.
President Obama established the Financial Fraud Enforcement Task Force (FFETF) 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.
New Jersey Couple Sentenced to Prison for Failing to Pay Employment TaxesRead the Press Release
James and Theresa DeMuro of Bridgewater, N.J., were each sentenced by U.S. District Judge Anne E. Thompson to 44 months in prison, followed by three years supervised release, the Justice Department and the Internal Revenue Service (IRS) announced today. Judge Thompson also ordered the DeMuros to pay restitution to the IRS in the amount of $1,337,952.12. A jury had convicted the DeMuros of one count of conspiracy to defraud the United States and 21 counts of willfully failing to pay over employment taxes. Today’s sentencing follows an April 23, 2012, order by the U.S. Court of Appeals for the Third Circuit, which affirmed the convictions but remanded the case for resentencing.
According to the indictment and evidence introduced during trial, the DeMuros co-owned and operated an engineering and surveying firm called TAD Associates LLC dba DeMuro Associates. From 2002 through 2008, they withheld employment taxes from their employees’ paychecks but failed to pay more than $546,000 in taxes to the IRS. In addition, they operated under a prior entity name DA Resources Inc., which they ceased operating in an effort to thwart the ability of the IRS to collect unpaid employment taxes related to that entity.
At trial, the government introduced evidence that, beginning with the first quarter of 2007 through the last quarter in 2008, the defendants paid employees’ wages and withheld employment taxes from paychecks but did not pay any of the employee withholdings to the U.S. Treasury. In addition, the DeMuros withheld funds from their employees’ pay checks for health insurance, child support and retirement savings accounts, and failed to pay these funds over to the appropriate entities.
Evidence was also introduced that the DeMuros converted withheld funds for their business and personal use, including more than $280,000 in purchases from QVC, Home Shopping Network and Jewelry Television.
Kathryn Keneally, Assistant Attorney General for the Justice Department’s Tax Division, commended the IRS Criminal Investigation special agents who investigated the case as well as Tax Division Trial Attorneys Tino M. Lisella and Jessica Moran, who prosecuted the case. Assistant Attorney General Keneally also thanked U.S. Attorney for the District of New Jersey Paul J. Fishman and his entire office for their assistance.
Justice Department Settles Immigration-Related Discrimination Claim Against North Carolina CompanyRead the Press Release
The Justice Department announced today that it reached an agreement with Gamewell Mechanical Inc., a subsidiary of Woodfin Heating, Inc. based in Salisbury, N.C., resolving claims that the company violated the anti-discrimination provision of the Immigration and Nationality Act (INA), when it terminated three employees based on the incorrect assumption that they were undocumented foreign nationals when they were in fact U.S. citizens. The company is in the mechanical construction business and fabricates and installs heating and cooling systems.
The investigation stemmed from a charge filed by one of the three U.S. citizens. The investigation revealed that Gamewell officials had terminated the three individuals when it received information that six of their co-workers were undocumented foreign nationals and incorrectly assumed that the three U.S. citizens were similarly not authorized to work in the United States.
Under the settlement agreement, Gamewell Mechanical will pay a total of $10,560 in back pay to the three discharged U.S. citizens, and $9,600 in civil penalties to the United States. Gamewell Mechanical 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 anti-discrimination provision protects work-authorized individuals from being treated differently in employment based on discriminatory assumptions about their status,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Civil Rights Division is fully committed to vigorously enforcing the law.”
The Office of Special Counsel (OSC) for Immigration-Related Unfair Employment Practices is responsible for enforcing the INA’s anti-discrimination provision of the INA, which, among other things, protects work-authorized individuals from employment discrimination on the basis of citizenship status or national origin discrimination in connection with hiring, firing, and the employment eligibility verification process.
For more information about protections against employment discrimination under the immigration laws, call the OSC’s worker hotline at 1-800-255-7688 or the OSC’s employer hotline at 1-800-255-8155. TDD for hearing impaired is 800-237-2515. You may also sign up for a no-cost webinar at www.justice.gov/crt/osc/webinars.php , email [email protected] or visit the website at www.justice.gov/crt/about/osc .
Former Fair Financial Company CEO Sentenced in Indianapolis to 50 Years in Prison for Role in $200 Million Fraud SchemeRead the Press Release
WASHINGTON – The former chief executive officer of Fair Financial Company, an Ohio financial services business, was sentenced today to serve 50 years in prison for his role in a scheme to defraud approximately 5,000 investors of more than $200 million, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney for the Southern District of Indiana Joseph H. Hogsett.
Timothy S. Durham, 50, of Fortville, Ind., was sentenced today by U.S. District Judge Jane Magnus-Stinson. In addition to his prison term, Durham was sentenced to serve two years supervised release.
James F. Cochran, the former chairman of the board of Fair, was sentenced today by Judge Magnus-Stinson to serve 25 years in prison and three years of supervised release.
Rick D. Snow, the former chief financial officer of Fair, was sentenced today by Judge Magnus-Stinson to ten years in prison and two years of supervised release.
Judge Snow also ordered Durham, Cochran and Snow to pay restitution in the amount of $208 million.
“The lengthy prison sentences handed down today are just punishment for a group of executives who built a business on smoke and mirrors,” said Assistant Attorney General Breuer. “By deliberately misleading their investors and state regulators, Mr. Durham and his co-conspirators were able defraud thousands of innocent investors. The Justice Department will continue to devote considerable time and resources to ensure that fraudsters like Mr. Durham, Mr. Cochran and Mr . Snow are brought to justice for their crimes.”
“This ordeal is truly a tragedy for all families involved,” said U.S. Attorney Hogsett. “All we can do is ask that today's decision send a warning to others in Indiana that if you sacrifice truth in the name of greed, if you steal from another's American dream to enhance your own, you will be caught and you will pay a significant price.”
“The FBI will continue to aggressively pursue financial crimes investigations,” said Special Agent in Charge Robert A. Jones of the FBI Indianapolis Division. “Today’s sentencing represents a significant step toward justice. We must remain mindful that the victims of this crime still suffer.”
On June 20, 2012, following an eight-day trial, a federal jury in the Southern District of Indiana convicted Durham and two co-conspirators for their roles in this scheme. Durham was convicted of one count of conspiracy to commit wire and securities fraud, 10 counts of wire fraud and one count of securities fraud. James F. Cochran, 57, of McCordsville, Ind., was convicted of one count of conspiracy to commit wire and securities fraud, one count of securities fraud and six counts of wire fraud. Rick D. Snow, 49, Fishers, Ind., was convicted of one count of conspiracy to commit wire and securities fraud, one count of securities fraud and three counts of wire fraud.
Durham and Cochran purchased Fair, whose headquarters was in Akron, Ohio, in 2002. According to evidence presented at trial, between approximately February 2005 through November 2009, Durham, Cochran and Snow executed a scheme to defraud Fair’s investors by making and causing others to make false and misleading statements about Fair’s financial condition and about the manner in which they were using Fair investor money. The evidence also established that Durham, Cochran and Snow executed the scheme to enrich themselves, to obtain millions of dollars of investors’ funds through false representations and promises and to conceal from the investing public Fair’s true financial condition and the manner in which Fair was using investor money.
When Durham and Cochran purchased Fair in 2002, Fair reported debts to investors from the sale of investment certificates of approximately $37 million and income producing assets in the form of finance receivables of approximately $48 million. By November 2009, after Durham and Cochran had owned the company for seven years, Fair’s debts to investors from the sale of investment certificates had grown to more than $200 million, while Fair’s income producing assets consisted only of the loans to Durham and Cochran, their associates and the businesses they owned or controlled.
Durham, Cochran and Snow terminated Fair’s independent accountants who, at various points during 2005 and 2006, told the defendants that many of Fair’s loans were impaired or did not have sufficient collateral. After firing the accountants, the defendants never released audited financial statements for 2005, and never obtained or released audited financial statements for 2006 through September 2009. With independent accountants no longer auditing Fair’s financial statements, the defendants were able to conceal from investors Fair’s true financial condition.
Evidence introduced at trial showed that the defendants engaged in a variety of other fraudulent activities to conceal from the State of Ohio Division of Securities and from investors Fair’s true financial health and cash flow problems. Evidence showed that the defendants made false and misleading statements to concerned investors who either had not received principal or interest payments on their certificates from Fair or who were worried about Fair’s financial health. The defendants also directed employees of Fair not to pay investors who were owed interest or principal payments on their certificates.
Even though Fair’s financial condition had deteriorated and Fair was experiencing severe cash flow problems, Durham and Cochran continued to funnel Fair investor money to themselves for their personal expenses, to their family, friends and acquaintances, and to the struggling businesses that they owned or controlled.
This case is being prosecuted by Trial Attorney Henry P. Van Dyck and Senior Deputy Chief for Litigation Kathleen McGovern of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Winfield D. Ong and Nicholas E. Surmacz of the Southern District of Indiana. The investigation was led by the FBI in Indianapolis.
This case 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 .
Former Director of Accounting and Outside Auditor of American Mortgage Specialists Inc. Plead Guilty to Roles in Fraud Against BNC National BankRead the Press Release
The former director of accounting and the former outside auditor of Arizona-based residential mortgage loan originator American Mortgage Specialists Inc. (AMS) pleaded guilty in Arizona to conspiracy to defraud BNC National Bank and obstruction of justice, respectively, Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Timothy Q. Purdon of the District of North Dakota; Christy Romero, Special Inspector General for the Troubled Asset Relief Program (SIGTARP); and Steve A. Linick, Inspector General of the Federal Housing Finance Agency Office of Inspector General (FHFA-OIG) announced today.
Lauretta Horton, 45, and David Kaufman, 69, both residents of Arizona, pleaded guilty yesterday before U.S. District Judge Daniel L. Hovland of the District of North Dakota, who took the pleas in Arizona federal court. Horton and Kaufman were charged in separate criminal informations unsealed on Oct. 2, 2012, for their roles in the fraud scheme against BNC.
“ While the nation was reeling from a financial downturn, Lauetta Horton conspired with AMS executives to deceive BNC Bank about AMS’s true financial stability, and AMS auditor David Kaufman lied to federal investigators to impede their investigation,” said Assistant Attorney General Breuer. “Horton and Kaufman’s guilty pleas reflect our continued vigilance in investigating and punishing criminal conduct relating to the financial crisis.”
“Banks in North Dakota were not immune from illegal conduct related to the mortgage crisis that impacted banks all across the country,” said U.S. Attorney Purdon. “These guilty pleas are the result of close collaboration with our federal investigative partners and the Justice Department’s Criminal Division and should send the message that the Department of Justice is committed to prosecuting cases such as these wherever they might arise.”
“As the controller and director of accounting of mortgage originator AMS, Horton sent to TARP-recipient BNC National Bank false financial statements she had prepared so that BNC would continue to fund AMS,” said Special Inspector General Romero. “In a cover-up and an attempt to impede the federal grand jury investigation, AMS’s external auditor Kaufman lied to SIGTARP agents about his telling an AMS executive that he had changed the financial statements so that BNC would not discover the truth. Kaufman is the third person convicted of lying to SIGTARP agents, which shows that SIGTARP will aggressively pursue those who fail to tell the truth and impede our investigations.”
“This is a significant case because it holds accountable an individual who participated in a scheme to defraud a member bank of the Federal Home Loan Bank System, and another individual who lied to federal investigators,” said Inspector General Linick. “This case is a reminder that there are consequences for giving investigators false information and manipulating numbers.”
AMS was in the business of originating residential real estate mortgage loans to borrowers and then selling the loans to institutional investors. In 2006, AMS entered into a loan participation agreement with BNC whereby BNC provided funding for the loans issued by AMS. According to court documents, Horton, the director of accounting at AMS, conspired from February 2009 to April 2010 to defraud BNC by making false representations regarding the financial well-being of AMS in order for AMS to continue to obtain funding from BNC. Specifically, Horton admitted to inflating asset items and altering financial information in the AMS balance sheet provided to BNC to falsely reflect that AMS had substantial liquid assets when, in fact, it did not.
According to court documents, Kaufman, a certified public accountant and the outside auditor of AMS’ annual financial statements, lied to federal agents during the criminal investigation and obstructed the grand jury investigation. Specifically, Kaufman admitted denying to agents that he had a conversation with an AMS executive in which Kaufman explained to the AMS executive that Kaufman had combined two expenses on AMS’s financial statements in order to conceal the true nature and extent of AMS’s financial condition from BNC.
Although BNC’s holding company had received approximately $20 million under the TARP and had injected approximately $17 million of the TARP funds into BNC, BNC incurred losses exceeding the millions received from TARP. BNC then did not make its required TARP dividends to the Department of Treasury for nearly two years.
At sentencing, scheduled for May 6, 2013, Kaufman and Horton face a maximum penalty of 10 years and five years in prison, respectively.
The investigation was conducted by agents assigned to the Offices of the Inspector General of SIGTARP and of FHFA. The case is being prosecuted by Trial Attorney Robert A. Zink and Senior Litigation Counsel Jack B. Patrick of the Criminal Division’s Fraud Section and by Assistant U.S. Attorney Clare Hochhalter of the District of North Dakota, with the assistance of Trial Attorney Jeannette Gunderson of the Criminal Division’s Asset Forfeiture and Money Laundering Section.
This case 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 .
29 November 2012
Third Member of Internet Piracy Group "IMAGiNE" Sentenced in Virginia to 40 Months in Prison for Criminal Copyright ConspiracyRead the Press Release
WASHINGTON – A third member of the Internet piracy group “IMAGiNE” was sentenced today to 40 months in prison, and a fifth member of IMAGiNE pleaded guilty today for his role in the conspiracy, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Neil H. MacBride for the Eastern District of Virginia and Special Agent in Charge John P. Torres of U.S. Immigration and Customs Enforcement Homeland Security Investigations (ICE-HSI) in Washington, D.C.
Gregory A. Cherwonik, 53, of Canandaigua, N.Y., was sentenced today by Senior U.S. District Judge Arenda L. Wright Allen in the Eastern District of Virginia. In addition to his prison term, Cherwonik was sentenced to serve three years of supervised release and ordered to pay $15,000 in restitution. Cherwonik pleaded guilty to one count of conspiracy to commit criminal copyright infringement on July 11, 2012.
Javier E. Ferrer, 41, of New Port Richey, Fla., pleaded guilty today to one count of conspiracy to commit criminal copyright infringement before U.S. District Judge Henry C. Morgan Jr. in the Eastern District of Virginia. At sentencing, scheduled for March 14, 2013, Ferrer faces a maximum sentence of five years in prison.
Cherwonik was indicted along with three other defendants on April 18, 2012, for their roles in the IMAGiNE Group, an organized online piracy ring that sought to become the premier group to first release Internet copies of movies only showing in theaters. Ferrer was charged in an information on Sept. 13, 2012, for his role in the IMAGiNE Group.
According to court documents, Cherwonik, Ferrer and their co-conspirators sought to illegally obtain and disseminate digital copies of copyrighted motion pictures showing in theaters. Cherwonik admitted to ordering a receiver to be used to capture the audio sound tracks of copyrighted movies (referred to as “capping”). Cherwonik wrote the computer code for the IMAGiNE Group’s website. He also worked with another IMAGiNE Group leader to establish a PayPal account for donations made to support the site and to create the new website, which was hosted on a computer server in France. Ferrer admitted he secretly used a video camera to film copyrighted motion pictures in movie theatres. He then used software to synchronize an audio file with his illegally obtained video of the movie to create a completed movie file suitable for sharing over the Internet. According to testimony by a representative of the Motion Picture Association of America, the IMAGiNE Group constituted the most prolific motion picture piracy release group operating on the Internet from September 2009 through September 2011.
Co-defendants Sean M. Lovelady, Willie O. Lambert and Jeramiah B. Perkins each pleaded guilty to one count of conspiracy to commit criminal copyright infringement on May 9, June 22 and Aug. 29, 2012, respectively. Lambert and Lovelady were sentenced on Nov. 2, 2012, to 30 months and 23 months in prison, respectively. Perkins is scheduled to be sentenced on Jan. 3, 2013.
The investigation of the case and the arrests were conducted by agents with HSI. Assistant U.S. Attorney Robert J. Krask of the Eastern District of Virginia and Senior Counsel John H. Zacharia of the Criminal Division’s Computer Crime and Intellectual Property Section (CCIPS) are prosecuting the case. Significant assistance was provided by the CCIPS Cyber Crime Lab and the Criminal Division’s Office of International Affairs.
This case is part of efforts being undertaken by the Department of Justice Task Force on Intellectual Property (IP Task Force) to stop the theft of intellectual property. Attorney General Eric Holder created the IP Task Force to combat the growing number of domestic and international intellectual property crimes, protect the health and safety of American consumers, and safeguard the nation’s economic security against those who seek to profit illegally from American creativity, innovation and hard work. The IP Task Force seeks to strengthen intellectual property rights protection through heightened criminal and civil enforcement, greater coordination among federal, state and local law enforcement partners, and increased focus on international enforcement efforts, including reinforcing relationships with key foreign partners and U.S. industry leaders. To learn more about the IP Task Force, go to www.justice.gov/dag/iptaskforce .
This investigation was supported by the HSI-led National Intellectual Property Rights Coordination Center (IPR Center) in Washington. The IPR Center is one of the U.S. government’s key weapons in the fight against criminal counterfeiting and piracy. As a task force, the IPR Center uses the expertise of its 21 member agencies to share information, develop initiatives, coordinate enforcement actions and conduct investigations related to IP theft. Through this strategic interagency partnership, the IPR Center protects the public’s health and safety, the U.S. economy and our war fighters.
Justice Department Settles Lawsuit Against Wisconsin Landlord and Former Manager for Discriminating on the Basis of RaceRead the Press Release
The Justice Department announced today that the manager and owner of the Geneva Terrace Apartments Inc. in La Crosse, Wis., have agreed to pay $57,500 to settle a lawsuit alleging they violated the Fair Housing Act by discriminating against African-Americans who were seeking to rent apartments at the complex.
The complaint, filed in the U.S. District Court for the Western District of Wisconsin on Oct. 26, 2011, alleged that Nicolai Quinn, the manager of the apartment complex, told prospective African-American renters that apartments were not available when they were, while telling prospective white renters that there were apartments available.
“Nobody should be denied housing in this country because of their race.” said Thomas E. Perez, Assistant Attorney General for the Civil Rights. “The Fair Housing Act prohibits discrimination in housing on the basis of race, and we will continue to vigorously enforce the law to ensure access to housing regardless of the race of an applicant.”
“The Department of Justice and this U.S. Attorney’s Office will do everything possible to ensure that everyone has the freedom to choose where they live, regardless of race,” said John W. Vaudreuil, the U.S. Attorney for the Western District of Wisconsin.
“It’s against the law to misrepresent a home’s availability because of race,” said John Trasviña, HUD’s Assistant Secretary for Fair Housing and Equal Opportunity. “HUD and the Justice Department will continue to take action against anyone who violates the nation’s fair housing laws.”
As alleged in the complaint, in 2009 and 2010, Quinn told an African-American couple who were interested in renting an apartment in Geneva Terrace that there were no apartments available, even though the complex had posted a sign advertising vacancies. The couple found it suspicious and asked a white friend to contact the complex. Quinn told the white friend that he had available apartments. The couple then reported their experience to the Metropolitan Milwaukee Fair Housing Council (MMFHC), a nonprofit fair housing organization. MMFHC conducted fair housing tests, which confirmed that Quinn was telling African Americans that apartments were not available while showing available apartments to white persons.
The couple also filed a complaint with HUD, which conducted an investigation and, after issuing a charge of discrimination, referred the matter to the Department of Justice.
Under the terms of the settlement, which is subject to approval by the U.S. District Court, the defendants will pay the complainants $47,500 in damages. Defendants will also pay a civil penalty of $10,000 to the United States. Defendant Geneva Terrace Apartments LLC will also develop and maintain non-discrimination housing policies and attend fair housing training.
The federal Fair Housing Act prohibits discrimination in housing on the basis of race, color, religion, sex, familial status, national origin and disability.
Fighting housing discrimination is a top priority of the Justice Department. The federal Fair Housing Act prohibits discrimination in housing on the basis of race, color, religion, sex familial status, national origin and disability. More information about the Civil Rights Division and the laws it enforces is available at www.justice.gov/crt . Individuals who believe that they have been victims of housing discrimination or have information related to this lawsuit can call the Housing Discrimination Tip Line at 1-800-896-7743, e-mail the Justice Department at [email protected] or contact the Department of Housing and Urban Development at 1-800-669-9777.
Former Puerto Rico Police Officers Charged <br /> with Extorting a Commonwealth Defendant for $50,000Read the Press Release
WASHINGTON – Two former police officers with the Police of Puerto Rico were charged with allegedly attempting to extort a commonwealth defendant and soliciting bribe payments of $50,000, Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division announced today.
Abimael Arroyo-Cruz, 30, of Rio Grande, Puerto Rico, and Josue Becerril-Ramos, 36, of Carolina, Puerto Rico, were both charged in an indictment returned yesterday in the District of Puerto Rico with one count of conspiracy, one count of federal programs bribery, one count of conspiracy to commit extortion and one count of attempted extortion.
According to the indictment, Arroyo and Becerril arrested eight individuals for possession of unregistered firearms and marijuana on Aug. 2, 2012. The officers then allegedly solicited from one defendant a bribe payment of $50,000 to have his case dismissed. Beginning on Sept. 11, 2012, both officers allegedly spoke with the commonwealth defendant multiple times over the telephone, discussing payment details and strategies for dismissing the commonwealth defendant’s case.
The indictment alleges that Arroyo and Becerril collected approximately $35,000, of the $50,000 demanded, from the commonwealth defendant in two different payment installments. Unbeknownst to the officers, however, the individuals who dropped off the payments were cooperating with federal law enforcement.
In exchange for the bribes, the indictment alleges, Arroyo and Becerril devised a plan whereby the officers would misidentify a co-defendant in court, leading to dismissal of the commonwealth defendant’s case. According to the indictment, when asked under oath at the preliminary hearing to identify the commonwealth defendant, Arroyo instead identified a co-defendant. The indictment alleges that Arroyo confirmed to the commonwealth defendant following the hearing that he deliberately misidentified the co-defendant as part of the plan to have the commonwealth defendant’s case dismissed.
The case is being prosecuted by Assistant U.S. Attorney Timothy Henwood of the District of Puerto Rico and Trial Attorneys Menaka Kalaskar and Marquest J. Meeks of the Criminal Division’s Public Integrity Section. The case was investigated by the FBI’s San Juan Field Office.
An indictment is merely an allegation, and a defendant is presumed innocent until proven guilty beyond a reasonable doubt.
Baton Rouge, Louisiana, Used Car Dealer Sentenced to Prisonfor Odometer Tampering Fraud SchemeRead the Press Release
Beau Michael Guidry of Baton Rouge, La., was sentenced today in connection with an odometer tampering scheme that defrauded victims in and around Louisiana, the Justice Department announced. U.S. District Judge for the Middle District of Louisiana James J. Brady sentenced Guidry to a term of 20 months in prison and a term of one year of supervised release during which he cannot be involved in the sale of motor vehicles. In addition, the court ordered Guidry to pay $72,805.51 in restitution to the victims of his crimes.
Guidry purchased high-mileage motor vehicles via eBay and wholesale automobile auctions in Louisiana, Mississippi and Texas. The vehicles’ odometers were then rolled back as much as 147,000 miles and resold via Guidry’s used vehicle company, Affordable Imports in Denham Springs, La., or through eBay to unsuspecting purchasers. Guidry exclusively rolled back vehicles that were more than 10 years old when he sold them.
Because of the age of the cars, Guidry was not required to sign a disclosure certifying the mileage on those 10-year old vehicles as accurate. However, each time he altered an odometer with intent to change the mileage on the odometer, he violated federal law.
“Odometer tampering preys mostly on those in society who can least afford to be defrauded,” said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Civil Division. “In these tough economic times, we will take strong action against anyone who defrauds consumers and jeopardizes the safety of our roads and highways.”
Special Agent Wendell Espeland of The National Highway Traffic Safety Administration Office of Odometer Fraud Investigation (NHTSA) investigated this case. The case was prosecuted by Justice Department trial attorney David Sullivan of the Civil Division’s Consumer Protection Branch.
28 November 2012
Two Brooklyn Clinic Employees Plead Guilty in Connection with $71 Million Medicare Fraud SchemeRead the Press Release
WASHINGTON – Two Brooklyn, N.Y., residents pleaded guilty today for their roles in a $71 million Medicare fraud scheme, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney for the Eastern District of New York Loretta E. Lynch; Acting Assistant Director in Charge Mary E. Galligan of the FBI’s New York Field Office; and Special Agent in Charge Thomas O’Donnell of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG).
Katherina Kostiochenko, 34, pleaded guilty today before U.S. District Judge Nina Gershon in the Eastern District of New York to one count of conspiracy to commit health care fraud, one count of health care fraud and one count of conspiracy to pay kickbacks. Sergey V. Shelikhov, 51, pleaded guilty today before Judge Gershon to one count of conspiracy to commit health care fraud.
Co-conspirator Leonid Zheleznyakov, 28, pleaded guilty yesterday before Judge Gershon to one count of conspiracy to commit health care fraud for his role in the scheme.
Kostiochenko, Shelikhov and Zheleznyakov were employees of a clinic in Brooklyn that operated under three corporate names: Bay Medical Care PC, SVS Wellcare Medical PLLC and SZS Medical Care PLLC (Bay Medical clinic). According to court documents, owners, operators and employees of the Bay Medical clinic paid cash kickbacks to Medicare beneficiaries and used the beneficiaries’ names to bill Medicare for more than $71 million in services that were medically unnecessary or never provided. The defendants billed Medicare for a wide variety of fraudulent medical services and procedures, including physician office visits, physical therapy and diagnostic tests.
According to the criminal complaint, the co-conspirators allegedly paid kickbacks to corrupt Medicare beneficiaries in a room at the clinic known as the “kickback room,” in which the conspirators paid approximately 1,000 kickbacks totaling more than $500,000 during a period of approximately six weeks from April to June 2010.
Kostiochenko, Shelikhov and Zheleznyakov pleaded guilty to conspiring to commit health care fraud for their roles in the Bay Medical scheme. Kostiochenko also pleaded guilty to paying cash kickbacks to Medicare beneficiaries as part of the scheme.
At sentencing, Kostiochenko faces a maximum penalty of 25 years in prison, and Shelikhov and Zheleznyakov both face a maximum penalty of 10 years in prison. Kostiochenko and Zheleznyakov are scheduled for sentencing on March 12, 2013, and Shelikhov is scheduled for sentencing March 13, 2013.
In total, 16 individuals have been charged in the Bay Medical scheme, including two doctors, nine clinic owners/operators/employees and five external money launderers. To date, 10 defendants have pleaded guilty for their roles in the conspiracy. Six individuals await trial before Judge Gershon on Jan. 22, 2013.
The case is being prosecuted by Trial Attorney Sarah M. Hall of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Shannon Jones of the Eastern District of New York. The case was investigated by the FBI and HHS.
The case was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of New York. The Medicare Fraud Strike Force operations are part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT), a joint initiative announced in May 2009 between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country.
Since 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 .
Member of Latin Kings Street Gang and Two Associates Sentenced in Indiana for Racketeering Conspiracy and Related CrimesRead the Press Release
WASHINGTON – A member of the Latin Kings street gang and two associates were sentenced to prison this week in Hammond, Ind.,federal court for racketeering conspiracy and other crimes in support of the gang, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney David Capp of the Northern District of Indiana.
David Lira, aka “Flaco,” 39, of Chicago, was sentenced today to 180 months in prison after pleading guilty on July 13, 2012, to racketeering conspiracy. Gang associates Bianca Fernandez, 23, and Serina Arambula, 23, both of Chicago, were sentenced on Nov. 26, 2012, to 36 months and 21 months in prison, respectively. U.S. District Judge Rudy Lozano imposed the sentences.
Fernandez pleaded guilty on Aug. 8, 2012, to conspiring to murder in aid of racketeering. Arambula pleaded guilty on August 7, 2012, to withholding information on a murder.
According to the third superseding indictment filed in this case, the Latin Kings is a nationwide gang that originated in Chicago and has branched out throughout the United States. The Latin Kings is a well organized street gang that has specific leadership and is composed of regions that include multiple chapters. The third superseding indictment charges that the Latin Kings were responsible for more than 20 murders.
Also according to the third superseding indictment, the Latin Kings enforces its rules and promotes discipline among its members, prospects and associates through murder, attempted murder, conspiracy to murder, assault and threats against those who violate the rules or pose a threat to the Latin Kings. Members are required to follow the orders of higher-ranking members, including taking on assignments often referred to as “missions.”
During his guilty plea proceeding, Lira admitted to being a Latin Kings member at an early age. He also acknowledged he was aware that the Latin Kings, specifically some of his co-defendants, distributed more than 150 kilograms of cocaine and 1,000 kilograms of marijuana over the course of the racketeering conspiracy.
Lira also acknowledged that on Feb. 24, 2007, Jose Zambrano, a regional enforcer for the gang, and other Latin Kings members dropped two firearms off at Lira’s residence in Lansing, Ill. The next evening, Zambrano and the others returned to retrieve the weapons from Lira before riding to the Soprano’s Bar in Griffith, Ind., where they gunned down and killed two rival gang members.
Fernandez admitted in court that on Nov. 26, 2006, at the direction of a Latin Kings member, she accompanied two members of the rival Latin Dragons gang to Jackson Park, Ill., near La Rabida Children’s Hospital on the south side of Chicago. Fernandez also admitted she made arrangements for Latin Kings gang members to meet them at the location, where those gang members shot the Latin Dragons gang members, killing one. Fernandez admitted that when interviewed by Chicago police, she concealed the true nature of the murder.
During her guilty plea proceeding, Arambula admitted to accompanying Fernandez and the Latin Dragon members to Jackson Park, and admitted to providing false information to Chicago police regarding the identity of the shooters.
Twenty-three Latin Kings members and associates have been indicted in this case. Twenty have pleaded guilty; one was found guilty following a jury trial, one awaits trial, and one remains a fugitive.
This case was investigated by the FBI; the Bureau of Alcohol, Tobacco, Firearms and Explosives; the Drug Enforcement Administration; U.S. Immigration and Customs Enforcement-Homeland Security Investigations (ICE-HSI); the National Gang Intelligence Center; the Chicago Police Department; the Houston Police Department; the Griffith Police Department; the Highland, Ind., Police Department; the Hammond, Ind., Police Department; and the East Chicago Police Department.
The case is being prosecuted by Joseph A. Cooley of the Criminal Division’s Organized Crime and Gang Section and David J. Nozick of the U.S. Attorney’s Office for the Northern District of Indiana. Andrew Porter of the U.S. Attorney’s Office for the Northern District of Illinois provided significant assistance.
The third superseding indictment is not evidence of guilt. The defendants who have not been convicted are innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Justice Department Settles Lawsuit Against Sussex County, Delaware, for Blocking Affordable HousingRead the Press Release
The Justice Department announced today that it has settled a lawsuit against Sussex County, Del., and the Planning and Zoning Commission of Sussex County for race and national origin discrimination in violation of the Fair Housing Act.
The lawsuit, filed today in the U.S. District Court for the District of Delaware, alleges that the county’s planning and zoning commission denied land use approval for a 50-lot affordable housing subdivision proposed by Diamond State Community Land Trust, a Delaware affordable housing developer, in southwestern Sussex County near the town of Laurel, Del. The suit alleges that the Sussex County Council later affirmed the denial of the proposed development. The suit alleges that opposition to the proposal was based partly on the assumption that the subdivision’s residents would be Latino and African-American and on stereotypes based on race, color and national origin. The lawsuit arose from a complaint to the U.S. Department of Housing and Urban Development (HUD) that was referred to the Department of Justice.
The settlement, also filed today as a proposed consent decree that must be approved by the court, requires that the defendants reconsider the affordable housing proposal using nondiscriminatory criteria and take no actions to obstruct or delay the development of the subdivision. It also requires the county to pay $750,000 to Diamond State Community Land Trust in compensation for its damages.
In addition, the settlement requires that the county take affirmative steps to provide for future affordable housing, communicate its commitment to fair housing, and establish mechanisms to ensure affordable and fair housing in Sussex County. Among other things, the county must formulate an affordable and fair housing marketing plan to encourage the development of housing opportunities that are available and accessible to all residents of Sussex county regardless of race, color or national origin, appoint a fair housing compliance officer, and ensure that county officials and staff undergo fair housing training.
“The Fair Housing Act guarantees that all Americans have the opportunity to live where they choose regardless of the color of their skin,” said Thomas E. Perez, Assistant Attorney General for Civil Rights Division. “It is especially important that counties employ their land use powers in a manner that does not obstruct housing choice, and we will take action when jurisdictions block housing because of the race or ethnicity of those who would live there.”
In addition to the Justice Department’s action, today HUD and Sussex County entered into a voluntary compliance agreement resolving a related enforcement action by HUD. As a result of its investigation, HUD determined that the county violated federal civil rights laws by its actions relating to Diamond State Community Land Trust and by failing to administer its programs in a manner that affirmatively furthers fair housing. Under the Voluntary Compliance Agreement, Sussex County has agreed to perform a number of corrective actions, including development of a priority fair housing plan to address impediments to fair housing choice, strategies to integrate affordable housing into all communities in the county, and an evaluation of certain predominantly minority communities for future infrastructure and community development efforts.
“Today’s groundbreaking settlement recognizes the importance of the obligation to affirmatively further fair housing in the activities of local governments. Actions that establish or continue barriers to full fair housing choices deny Americans equal access to housing,” said John Trasviña, HUD's Assistant Secretary for Fair Housing and Equal Opportunity. "HUD and DOJ will continue to work together to make sure communities are open to everyone and that past patterns of discrimination are addressed.”
The federal Fair Housing Act prohibits discrimination in housing based on race, color, religion, national origin, sex, disability and familial status. Fair housing enforcement is a priority of the Civil Rights Division. More information about the Civil Rights Division and the laws it enforces is available at www.justice.gov/crt. Individuals who believe that they may have been victims of housing discrimination can call the Housing Discrimination Tip Line at 1-800-896-7743, email the Justice Department at [email protected] or ontact the U.S. Department of Housing and Urban Development at 1-800-669-9777.
Amerigroup Corp.’s Divestiture of Its Virginia Operations <br /> Addresses Department of Justice’s Concerns with Wellpoint Inc.’s <br /> Proposed Acquisition of AmerigroupRead the Press Release
WASHINGTON – The Department of Justice announced today that Amerigroup Corp.’s sale of its subsidiary, Amerigroup Virginia Inc., addresses the department’s concerns with WellPoint Inc.’s proposed acquisition of Amerigroup. The department said that the merger, as originally proposed, would have substantially lessened competition in the provision of Medicaid managed care plans in Northern Virginia. WellPoint and Amerigroup are the only two providers of Medicaid managed care plans in Northern Virginia.Amerigroup has agreed to sell Amerigroup Virginia to the Inova Health System Foundation. Today, the department closed its investigation of the sale of Amerigroup Virginia to the Inova Health System Foundation, allowing the parties to proceed to consummate their transaction. The department worked closely with the Virginia Attorney General’s office in reviewing that transaction.
“The divestiture of Amerigroup Virginia will ensure continued competition in the markets for Medicaid managed care plans in Northern Virginia,” said Acting Assistant Attorney General Renata B. Hesse in charge of the Department of Justice’s Antitrust Division. “Preserving competition in health care markets is vital to ensuring that consumers receive better and more innovative health care services.”
Without the divestiture, WellPoint’s proposed acquisition of Amerigroup would result in a merger to monopoly in Medicaid managed care in Arlington, Culpeper, Fairfax, Fauquier, Frederick, Loudon, Prince William, Rappahannock and Warren counties, plus the cities of Alexandria, Falls Church, Fairfax and Manassas Park. No new Medicaid managed care plan has entered these areas since 2005. The divestiture ensures that Medicaid beneficiaries in Northern Virginia will continue to have a choice of at least two Medicaid managed care entities.
The Virginia Medicaid managed care program provides enrollees with access to preventive and coordinated care through managed care organizations, including WellPoint and Amerigroup.
WellPoint and Amerigroup compete in Northern Virginia on the breadth and quality of their provider networks of physicians, hospitals and pharmacies; plan design; service; care management; and programs and services to improve the health status of Medicaid enrollees, such as immunization incentives, disease prevention and health education. Congress has recognized the importance of choice to Medicaid beneficiaries by generally requiring that states give beneficiaries a choice of at least two Medicaid managed care entities if the state requires beneficiaries to enroll in managed care plans.WellPoint is headquartered in Indianapolis, and is a licensee of the Blue Cross and Blue Shield Association. WellPoint and its subsidiaries serve more than 65 million members and had 2011 revenues of $60.7 billion.
Amerigroup Corporation is headquartered in Virginia Beach, Va., and coordinates services for individuals in publicly funded healthcare programs. Amerigroup serves more than 2 million members and had 2011 revenue of more than $6 billion.
27 November 2012
Project Longevity Launched to Reduce Gang and Gun Violence in Connecticut’s CitiesRead the Press Release
Attorney General Eric Holder, U.S. Attorney David Fein and Connecticut Governor Dannel Malloy joined members of law enforcement, public officials, social service providers, community leaders and researchers in New Haven today to launch “Project Longevity,” a comprehensive initiative to reduce gun violence in Connecticut’s major cities. Project Longevity uses a strategy that has shown violence can be reduced dramatically when community members and law enforcement join together to directly engage with these groups and clearly communicate a community message against violence, a law enforcement message about the consequences of further violence and an offer of help for those who want it. To accomplish this, law enforcement, social service providers and community members are recruited, assembled and trained to engage in a sustained relationship with violent groups.
“Project Longevity will send a powerful message to those who would commit violent crimes targeting their fellow citizens that such acts will not be tolerated and that help is available for all those who wish to break the cycle of violence and gang activity,” said Attorney General Holder. “Today’s announcement underscores our commitment to working together – across levels of government and jurisdictional boundaries – to protect the American people from the crime that threatens too many neighborhoods and claims far too many innocent lives.”
Project Longevity is based on a model that has been successful in reducing gun violence in multiple neighborhoods across the country and represents the first time the strategy is being implemented statewide.
“On the state level, I have directed my administration to focus our criminal justice resources on urban violence,” Governor Malloy said. “We agree that no strategy will be effective without the support of the community. This means parents, clergy, neighborhood leaders, grandmothers, grandfathers, aunts, uncles – everyone working toward one goal. We are working to regain the trust of the African American and Latino communities. We need their help. The lives of these young people are too valuable not to act.”
Funded by federal, state and local sources, Project Longevity is being launched initially in three Connecticut cities – New Haven, Hartford and Bridgeport.
“After more than a year of hard work and preparation by so many public and private partners, I am pleased to announce Project Longevity, our statewide anti-violence initiative,” said U.S. Attorney Fein. “Many dedicated people and organizations have come together to support this proven strategy to reduce gang and gun violence through focused deterrence.”
A critical component of the Project Longevity strategy is the “call-in,” a face-to-face meeting where partners engage group members and deliver certain key messages. First, that group members are part of a community, that gun violence is unacceptable and that the community needs it to end. Second, that help is available to all who will accept it in order to transition out of the gang lifestyle, and that social service providers are standing by to assist with educational, employment, housing, medical, mental health and other needs. Third, that any future violence will be met with clear and certain consequences. The next time a homicide is traced to any member of a violent group, all members of that group will receive increased and comprehensive law enforcement attention to any and all crimes any of its members are committing.
Yesterday, the first call-ins of two groups were convened in New Haven. At the call-ins, approximately 25 individuals heard the Project Longevity message from senior leadership of the New Haven Police Department, federal and state prosecutors, outreach workers and other members of the New Haven community. One Project Longevity participant, Adult Education Director for the New Haven Board of Education Alicia Caraballo, spoke about losing her 24-year-old son when he was shot and killed in New Haven in April 2008.
Project Longevity is based on the Group Violence Reduction Strategy developed by the Center for Crime Prevention and Control at John Jay College of Criminal Justice in New York. The research behind the strategy, which was first implemented in Boston as “Operation Ceasefire” in the mid-1990s, has found that violence in troubled neighborhoods is caused predominantly by a small number of people who are members of street gangs, drug crews and other identified groups. These groups, whose members typically constitute less than 0.5 percent of a city’s population, often have little organization, hierarchy or common purpose, and commit violent acts primarily for personal reasons, not to achieve any economic gain or other advantage. The Group Violence Reduction Strategy, which also has been deployed in areas of Chicago, Cincinnati, Providence, R.I., and elsewhere, has resulted in a 40 to 60 percent reduction in group-related homicides in certain neighborhoods. After Project Longevity is established in Hartford and Bridgeport, the program may be deployed in other Connecticut cities if research and data analysis of a city’s homicide rate determine that the model offers an appropriate solution to gun violence .
The Rev. William Mathis has been appointed as Project Longevity’s New Haven Program Manager. The Rev. Mathis is also the Pastor of Springs of Life-Giving Water Church in New Haven, an attorney, a former prosecutor and an adjunct professor at Quinnipiac University and the University of New Haven. As program manager, the Rev. Mathis is responsible for developing effective and sustainable working relationships between law enforcement, service providers and community members to insure Project Longevity’s success.
The organizational structure of Project Longevity in New Haven includes a Governing Board, Strategy and Implementation Team, Research Team, Law Enforcement Team, Community Service Provider Team and Community Engagement Team, all of which meet regularly. Project Longevity’s Governing Board includes: U.S. Attorney Fein, Governor Malloy, State Senator Toni Harp, State Representative Toni Walker, New Haven Mayor John DeStefano, New Haven Alderperson Jorge Perez, New Haven State’s Attorney Michael Dearington, Court Support Services Executive Director William Carbone, Connecticut Department of Correction Commissioner Leo Arnone, Director of the Center for Crime Prevention and Control at John Jay College of Criminal Justice David Kennedy, and Yale University’s Vice President for New Haven and State Affairs and Campus Development Bruce Alexander.
The Strategy and Implementation Team is co-chaired by New Haven Police Chief Dean Esserman and New Haven businessman Howard Hill, and includes members of law enforcement, service providers, researchers and the community. Chief Esserman has previously partnered with the Center for Crime Prevention and Control to implement a similar strategy when he served as police chief in Providence. Several community and business leaders in New Haven, as well as members of the New Haven Clergy Association, are also actively involved in Project Longevity. In order to assist identified individual transition from a destructive gang lifestyle, Project Longevity has engaged nine service providers in the New Haven area, including Children’s Community Program of Connecticut, Community Service Administration for the City of New Haven, Consultation Center (Yale), Gateway Community College, Elm City Communities, New Haven Family Alliance, Project Model Offender Reintegration Experience (M.O.R.E.), Workforce Alliance/CT Works and United Way of Greater New Haven. The University of New Haven, Yale University and the University of Cincinnati are working with law enforcement to collect and analyze crime data and provide research support to identify the groups and individuals that will be contacted through Project Longevity. Many of these individuals are already known to law enforcement and/or are under the supervision of probation or parole officers.
Other participating Justice Department agencies in Project Longevity include: the FBI; Drug Enforcement Administration; the Bureau of Alcohol Tobacco, Firearms and Explosives; and the U.S. Marshals Service.
Related Materials:
Attorney General Eric Holder Speaks at the Project Longevity Announcement
Justice Department Launches Investigation of the <br /> <br /> Albuquerque, N.M., Police Department’s Use of ForceRead the Press Release
The Justice Department announced today that it has opened a civil investigation into use of force by the city of Albuquerque, N.M., Police Department (APD). The investigation will focus on allegations that APD officers engage in use of excessive force, including use of unreasonable deadly force, in their encounters with civilians.
Through the investigation the department will seek to determine whether APD engages in a pattern or practice of use of excessive force in violation of the Constitution and federal law. The investigation will include a comprehensive review of the police department’s policies, training and systems of accountability. The investigation will also examine the police department’s engagement with the community and external oversight of officer-involved shootings and other force incidents.
Prior to the announcement, department officials met with Albuquerque Mayor Richard Berry and APD Chief Ray Schultz, who pledged their full cooperation with the investigation.
The Violent Crime Control and Law Enforcement Act of 1994 prohibits state and local governments from engaging in a pattern or practice of misconduct by law enforcement officers that deprives individuals of federally-protected rights. The department has conducted similar investigations into use of force by law enforcement agencies, both large and small, across the country.
Attorneys and staff from the Special Litigation Section of the Justice Department’s Civil Rights Division will conduct the investigation, assisted by the U.S. Attorney’s Office for the District of New Mexico. Individuals who may have relevant information are encouraged to contact the department via email at [email protected] or by calling the department’s toll free number at 885-544-5134 which is available in both English and Spanish.
Additional information about the Civil Rights Division is available on its website at www.justice.gov/crt . Additional information about the U.S. Attorney’s Office for the District of New Mexico is available on its website at www.justice.gov/usao/nm .
Baylor University Medical Center to Pay More Than $900,000 <br /> <br /> for False Medicare Claims for Radiation Oncology ServicesRead the Press Release
Baylor University Medical Center, Baylor Health Care System and HealthTexas Provider Network (collectively, Baylor) have agreed to pay the United States $907,355 to settle allegations that Baylor submitted false claims to Medicare, the Civilian Health and Medical Program of the Uniformed Services (TRICARE) and the Federal Employees Health Benefit Program (FEHBP) for various radiation oncology services, including intensity modulated radiation therapy, the Justice Department announced today. Intensity modulated radiation therapy is a sophisticated radiation treatment indicated for specific types of cancer where extreme precision is required to spare patients’ surrounding organs or healthy tissue.
The government alleges that Baylor submitted improper claims to Medicare from 2006 through May 2010 in which Baylor double billed Medicare for several procedures affiliated with radiation treatment plans, billed for certain high reimbursement radiation oncology services when a different, less expensive service should have been billed, billed for procedures without supporting documentation in the medical record, and improperly billed for radiation treatment delivery without corroboration of physician supervision.
“Physicians who participate in Medicare must bill for their services accurately and honestly,” said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Justice Department’s Civil Division. “The Department of Justice is committed to ensuring that federal health care funds are spent appropriately.”
Principal Deputy Assistant Attorney General Delery also noted that the settlement with Baylor was the result of a coordinated effort among the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Northern District of Texas, the Department of Health and Human Services’ Office of Inspector General, FBI and Defense Criminal Investigative Services.
U.S. Attorney for the Northern District of Texas Sarah R. Saldaña praised these investigative efforts and said, “this civil recovery is a testament to the efforts of the Department of Justice to hold all parties, regardless of position, accountable for the submission of improper claims to federal health care programs.”
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 $13.8 billion.
The claims settled by this a gre ement are alle gations onl y, and the re has b een no det ermination of liabilit y.
26 November 2012
Mexican National Sentenced to 54 Months in Prison for Trafficking the Identities of Puerto Rican U.S. Citizens<br />Read the Press Release
WASHINGTON – A Mexican national was sentenced today to 54 months in prison for trafficking of identities of Puerto Rican U.S. citizens and corresponding identity documents, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Rosa E. Rodríguez-Vélez for the District of Puerto Rico; Director John Morton of U.S. Immigration and Customs Enforcement (ICE), which oversees Homeland Security Investigations (HSI); Chief Postal Inspector Guy J. Cottrell of the U.S. Postal Inspection Service (USPIS); Scott P. Bultrowicz, Director of the U.S. State Department’s Diplomatic Security Service (DSS); and Internal Revenue Service-Criminal Investigation (IRS-CI) Chief Richard Weber.
Jose Sergio Garcia-Ramirez, 37, formerly of Rockford, Ill., was sentenced by U.S. District Judge Gustavo A. Gelpí, in the District of Puerto Rico. Judge Gelpí also ordered that Garcia-Ramirez forfeit $35,900 in proceeds and ordered the removal of Garcia-Ramirez from the United States after the completion of his sentence.
On July 17, 2012, Garcia-Ramirez pleaded guilty to one count of conspiracy to commit identification fraud and one count of aggravated identity theft before U.S. Magistrate Judge Bruce J. McGiverin in the District of Puerto Rico.
Garcia-Ramirez was charged in a superseding indictment returned by a federal grand jury in Puerto Rico on Mar. 22, 2012. To date, a total of 53 individuals have been charged for their roles in the identity trafficking scheme, and 18 defendants have pleaded guilty.
Court documents allege that individuals located in the Savarona area of Caguas, Puerto Rico (Savarona suppliers), obtained Puerto Rican identities and corresponding identity documents. Other conspirators located in various cities throughout the United States (identity brokers) allegedly solicited customers and sold Social Security cards and corresponding Puerto Rico birth certificates for prices ranging from $700 to $2,500 per set. The superseding indictment alleges that identity brokers ordered the identity documents from Savarona suppliers, on behalf of the customers, by making coded telephone calls. The conspirators are charged with using text messages, money transfer services and express, priority or regular U.S. mail to complete their illicit transactions.
Court documents allege that some identity brokers assumed a Puerto Rican identity themselves and used that identity in connection with the trafficking operation. Their customers allegedly generally obtained the identity documents to assume the identity of Puerto Rican U.S. citizens and to obtain additional identification documents, such as legitimate state driver’s licenses. Some customers allegedly obtained the documents to commit financial fraud and attempted to obtain a U.S. passport.
According to court documents, various identity brokers were operating in Rockford, Ill.; DeKalb, Ill.; Aurora, Ill.; Seymour, Ind.; Columbus, Ind.; Indianapolis; Hartford, Conn.; Clewiston, Fla.; Lilburn, Ga.; Norcross, Ga.; Salisbury, Md.; Columbus, Ohio; Fairfield, Ohio; Dorchester, Mass.; Lawrence, Mass.; Salem, Mass.; Worcester, Mass.; Grand Rapids, Mich.; Nebraska City, Neb.; Elizabeth, N.J.; Burlington, N.C.; Hickory, N.C.; Hazelton, Pa.; Philadelphia; Houston; Abingdon, Va.; Albertville, Ala.; and Providence, R.I.
Garcia-Ramirez admitted that he was an identity broker in the conspiracy and operated in Illinois. Garcia-Ramirez is the fourth defendant to be sentenced in this case.
The charges are the result of Operation Island Express, an ongoing, nationally-coordinated investigation led by the ICE-HSI Chicago Office and USPIS, DSS and IRS-CI offices in Chicago, in coordination with the ICE-HSI San Juan Office. The Illinois Secretary of State Police; Elgin, Ill., Police Department; Seymour, Ind., Police Department; and Indiana State Police provided substantial assistance. The ICE-HSI Assistant Attaché office in the Dominican Republic and International Organized Crime Intelligence and Operations Center (IOC-2) as well as various ICE, USPIS, DSS and IRS-CI offices around the country provided invaluable assistance.
The case is being prosecuted by Trial Attorneys James S. Yoon, Hope S. Olds, Courtney B. Schaefer and Christina Giffin of the Justice Department Criminal Division’s Human Rights and Special Prosecutions Section, with the assistance of Acting Deputy Chief Jeannette Gunderson of the Criminal Division’s Asset Forfeiture and Money Laundering Section, and the support of the U.S. Attorney’s Office for the District of Puerto Rico. The U.S. Attorney’s Offices in the Northern District of Illinois, Southern District of Indiana, District of Connecticut, District of Massachusetts, District of Nebraska, Middle District of North Carolina, Southern District of Ohio and Western District of Virginia provided substantial assistance.
Potential victims and the public may obtain information about the case at: www.justice.gov/criminal/vns/caseup/beltrerj.html. Anyone who believes their identity may have been compromised in relation to this investigation may contact the ICE toll-free hotline at 1-866-DHS-2ICE (1-866-347-2423) and its online tip form at www.ice.gov/tipline. Anyone who may have information about particular crimes in this case should also report it to the ICE tip line or website.
Anyone who believes that they have been a victim of identity theft, or wants information about preventing identity theft, may obtain helpful information and complaint forms on various government websites including the Federal Trade Commission ID Theft Website, www.ftc.gov/idtheft. Additional resources regarding identity theft can be found at www.ojp.usdoj.gov/ovc/pubs/ID_theft/idtheft.html; www.ssa.gov/pubs/10064.html; www.fbi.gov/about-us/investigate/cyber/identity_theft; and www.irs.gov/privacy/article/0,,id=186436,00.html.