Latest Records
Newest first across public DOJ and U.S. Attorney press releases.
Friday 25 March 2011
Justice Department Sues Bakersfield, Calif., Landlord for Sexual HarassmentRead the Press Release
WASHINGTON – The Justice Department today filed suit against Rawland Leon Sorensen, the owner and manager of more than 50 residential rental properties in Bakersfield, Calif., alleging a pattern or practice of sexual harassment in violation of the Fair Housing Act.
The suit, filed in the U.S. District Court for the Eastern District of California, alleges that Sorensen sexually harassed female tenants by making unwelcome sexual comments and advances; exposing his genitals to female tenants; touching tenants without their consent; granting and denying housing benefits based on sex; and taking adverse action against women who refused his sexual advances. Sorensen has operated his rental business for more than 30 years.
“No person should have to fear sexual harassment from a landlord who holds a key to their home,” said Thomas E. Perez, Assistant Attorney General for the Justice Department’s Civil Rights Division. “Sexual harassment in housing is intolerable, and landlords should be on notice that the Justice Department will vigorously prosecute landlords who engage in this type of discrimination.”
“This type of behavior is unconscionable and unacceptable,” said Benjamin B. Wagner, U.S. Attorney for the Eastern District of California. “The U.S. Attorney’s Office is committed to using all of our legal tools to ensure that no one is subjected to this type of harassment.”
The suit seeks monetary damages to compensate the victims, a civil penalty and a court order barring future discrimination.
Fighting illegal housing discrimination is a top priority of the Justice Department. The federal Fair Housing Act prohibits discrimination in housing based on race, color, religion, national origin, sex, disability and familial status. More information about the Civil Rights Division and the laws it enforces is available at www.justice.gov/crt . Individuals who believe that they may have been victims of housing discrimination can call the Housing Discrimination Tip Line at 1-800-896-7743, email the Justice Department at [email protected] or contact the U.S. Department of Housing and Urban Development at 1-800-669-9777.
Justice Department Files Suit Against Winchester, Va., to Protect Employment Rights of U.S. Marine Corps ReservistRead the Press Release
WASHINGTON - The Department of Justice today filed a lawsuit on behalf of Jon Fultz, a U.S. Marine Corps reservist, against the city of Winchester, Va., alleging that it violated the Uniformed Services Employment and Reemployment Rights Act (USERRA) by failing to properly reemploy Fultz in September 2009 when he returned from military service during which he sustained a knee injury.
Subject to certain conditions, USERRA requires employers to promptly reemploy returning service members in the position they would have held had their employment been not interrupted by military service, or in a position of like seniority, status and pay.
According to the department’s complaint, filed in the U.S. District Court for the Western District of Virginia in Harrisonburg, Va., the city violated USERRA by not reemploying Fultz in his previous pre-service permanent position as a community resource officer assigned to manage its police department’s fleet of motor vehicles. When Fultz returned to work in September 2009, after performing military service where he injured his knee, the city assigned him fleet manager duties. However, the city placed Fultz in a lesser “light duty” status that he did not request, and which subjected him to removal from his job. For the next five months, Fultz satisfactorily performed his fleet manager duties, which were the same as his pre-service duties despite the “light duty” label. During that period, Fultz did not have any workplace problems with his knee that would have caused concern about his job performance, safety or health.
In February 2010, the city, without prior notice, removed Fultz from his position and stopped paying him wages. Although the city told Fultz that its sudden action was due to supposed safety concerns, it did not explain the nature of those concerns or give any factual basis for them. Even when Fultz provided medical information requested by the city to permit his return to work, the city refused to reinstate him, or to identify an alternate city position for which he qualified or could become qualified. The city ultimately terminated Fultz’s employment in October 2010. In its lawsuit, the Justice Department seeks the lost wages and benefits that he would have received if he had been properly reemployed in his pre-service status as a permanent full-duty community resource officer.
“Employers have a legal obligation to reemploy our uniformed service members in the correct position and status after they return from military duty,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Civil Rights Division is committed to protecting the rights of those who, through their bravery and sacrifice, secure the rights of all Americans.”
The Labor Department’s Veterans’ Employment and Training Service investigated and attempted to resolve Fultz’s USERRA complaint before referring it to the Justice Department for litigation.
“Our two agencies work closely together to ensure that our service members are treated right when they return from service” said Ray Jefferson, Assistant Secretary of Labor for Veterans’ Employment and Training.
The Justice Department’s Civil Rights Division has given a high priority to the enforcement of service members’ rights under USERRA. Additional information about USERRA can be found on the Justice Department’s websites at www.usdoj.gov/crt/emp and www.servicemembers.gov, as well as on the Labor Department’s website at www.dol.gov/vets/programs/userra/main.htm
Departments of Justice and Education Reach Settlement with Arizona Department of Education to Ensure That Potential ELL Students Are Properly IdentifiedRead the Press Release
WASHINGTON - The Department of Justice’s Civil Rights Division and the Department of Education’s Office for Civil Rights today entered into a settlement agreement with the Arizona Department of Education (ADE) to ensure that Arizona’s English Language Learner (ELL) students receive the educational services that they need. The agreement requires ADE to revoke its one-question Home Language Survey (HLS), which failed to identify and serve all eligible ELL students, and reinstate its three-question HLS so that all potential ELLs are identified for assessment and service.
“Proper identification of ELLs is the essential first step in ensuring that students receive the services they need to help them overcome language barriers and participate equally in the instructional process,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division at the Department of Justice. “We commend Arizona’s Superintendent of Public Instruction and ADE for voluntarily agreeing to reinstate the three-question HLS and take remedial steps to identify ELL students who were missed by the one-question process.”
“This agreement highlights our commitment to ensuring that all ELL students receive the services they need to learn,” said Russlynn Ali, Assistant Secretary for the Office for Civil Rights at the Department of Education. “All students are entitled to equal opportunities, and this resolution will help to make sure Arizona students receive the education they deserve.”
With the cooperation of ADE and Arizona school districts, the Departments of Justice and Education conducted an extensive investigation of the state’s policies and practices for identifying ELL students. Prior to July 1, 2009, ADE used a three-question Home Language Survey (HLS) that asked:
- “What is the primary language used in the home regardless of the language spoken by the student?”
- “What is the language most often spoken by the student?” and
- "What is the language that the student first acquired?”
Since July 1, 2009, ADE has allowed only a one-question HLS that asks, “What is the primary language of the student?” If a student answered English to this one question, ADE prohibited school districts from assessing the student’s English language proficiency unless and until a teacher documented specific language problems on a form prescribed by ADE, and met with the parents in person to obtain their permission to assess the student.
In the 2009-10 school year, ADE reported almost 100,000 ELL students, which reflected a decline of approximately 33,000 students from the prior school year. School districts attributed at least part of this decrease to the one-question HLS. The federal government’s investigation determined that the one-question HLS failed to identify and serve eligible ELL students in violation of the Equal Educational Opportunities Act of 1974 and Title VI of the Civil Rights Act of 1964. The investigation further revealed that the teacher referral process for the one-question HLS unnecessarily delayed the identification of ELL students, and therefore delayed ELL services, in violation of both laws.
The settlement agreement will ensure that all ELL students who attend Arizona public schools will be identified and served in a timely manner. Under the agreement, ADE will revoke its one-question HLS and its accompanying burdensome teacher referral process and reinstate its three-question HLS and prior HLS policies and practice of giving teachers more flexibility in referring students to be evaluated for English proficiency. ADE has agreed that an answer other than English to any of the three questions on the HLS will trigger timely assessment of the student’s English language proficiency. In order to capture potential ELLs who are now registering for the 2011-2012 school year, ADE will send a directive to each of its local educational agencies in two weeks informing them of the reinstated three-question HLS, and explaining how to identify potential ELL students among those students whose parents already completed the one-question HLS. ADE will also train the local education agencies regarding these changes and monitor them over the next school year to ensure that they are appropriately administering the three-question HLS. As a result of the settlement agreement, new students in Arizona schools who are ELL students will be timely identified, and students who were improperly identified as non-ELL students will be identified and offered ELL services.
The enforcement of the Equal Educational Opportunities Act and Title VI are top priorities of the Justice Department’s Civil Rights Division. Additional information about the Civil Rights Division of the Justice Department is available on its website at www.justice.gov/crt . Enforcement of Title VI is also a top priority of the Department of Education’s Office for Civil Rights. Additional information about the Department of Education’s Office for Civil Rights is available on its website at www.ed.gov/ocr/ .
California Man Sentenced to More Than 10 Years in Prison for Child Pornography ChargesRead the Press Release
WASHINGTON - Charles Douglas Johnson, 47, of Garden Valley, Calif., was sentenced today to 10 years and one month in prison for receiving child pornography, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Benjamin B. Wagner for the Eastern District of California.
U.S. District Judge Edward Garcia also ordered Johnson to serve 10 years of supervised release following his release from prison. Johnson pleaded guilty on Sept. 21, 2010.
According to court documents, images of child pornography were found on Johnson’s work laptop computer after he was terminated for allegedly stealing trade secrets. The computer was returned to the company on July 27, 2007, and the company sent it to a private forensic lab to see if any company trade secrets had been stored improperly on the computer. During this analysis, the forensic analyst found evidence of child pornography. A forensic review revealed 2,100 images of child pornography that had been downloaded onto the computer between Sept. 27, 2005, and June 18, 2007. In addition, 80 videos of child pornography were recovered.
This case was brought as part of Project Safe Childhood (PSC), a nationwide initiative by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by U.S. Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), PSC mobilizes federal, state and local resources to locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information, visit www.projectsafechildhood.gov .
This case is the result of a joint investigation by the Folsom, Calif., Police Department; the El Dorado County, Calif., Sheriff’s Department; the FBI’s Cyber Crime Task Force and CEOS’ High Technology Investigative Unit. The case was prosecuted by Assistant U.S. Attorney Michelle Prince for the Eastern District of California and CEOS Trial Attorney Keith Becker of the Justice Department’s Criminal Division.
Thursday 24 March 2011
Sex Trafficking Ring Leader Sentenced to 40 Years in PrisonRead the Press Release
WASHINGTON – Amador Cortes-Meza, 36, of Tlaxcala, Mexico, was sentenced today by U.S. District Judge Richard W. Story to serve 40 years in federal prison followed by five years of supervised release on charges of sex trafficking of minors; sex trafficking by force, fraud and coercion; transporting minors for the purpose of prostitution; smuggling aliens into the United States for purposes of prostitution; and conspiracy to do the same, announced the Department of Justice.
Cortes-Meza was also ordered to pay restitution to the victims in the amount of $292,000. The sentencing follows Cortes-Meza’s conviction on these charges on Nov. 21, 2010 after a trial.
“The victims suffered sexual abuse, physical assaults, threats of harm to their families, and daily degradation all because of this defendant’s greed and callous disregard for them as individuals. The court’s sentence clearly reflects the seriousness of these awful sex trafficking crimes,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “We are committed to prosecuting sex traffickers and vindicating victims’ rights, as they were vindicated today.”
U.S. Attorney for the Northern District of Georgia Sally Quillian Yates said, “No one wants to believe that there are people who will enslave other human beings and require them to commit innumerable commercial sex acts. Yet this intolerable crime is happening right in our own neighborhoods in metropolitan Atlanta. This defendant tricked young girls and juveniles into leaving their families in Mexico, beat them, and forced them into more than 20 acts of prostitution a night here in Atlanta. These survivors courageously testified against the defendant and played a significant role in bringing him to justice. This defendant earned every day of his 40 year sentence.”
“Few crimes are more heinous than the sex trafficking of human beings," said Brock Nicholson, special agent in charge of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE HSI) in Atlanta. “ICE HSI will vigorously pursue and prosecute any members of a criminal organization engaged in this dangerous, dehumanizing and illegal business.”
According to the charges and other information presented in court, Cortes-Meza was the ring leader of an organization that brought 10 victims, including four juveniles, to the United States and forced them into prostitution. Nine of the victims testified at trial that the defendant, his brother, Juan Cortes-Meza, and a nephew, Francisco Cortes-Meza, would trick and deceive young women in Mexico into coming to the United States. Amador and his family members would pretend to be romantically interested in the young girls, many of whom were from rural areas and some of whom did not have much education. The defendant and his co-conspirators would promise the victims they would have a life together and then tell them they needed to travel to the United States to make money working in restaurants or cleaning homes. Victims testified at trial that Amador Cortes-Meza was physically abusive both in Mexico and the United States if they disagreed with his plans or told him no.
The defendant also obtained false identification for the victims and made arrangements to smuggle the victims and himself into the United States.
Victims identified homes in the Norcross, Ga., area where they were housed by the defendant and his co-conspirators. The co-conspirators took turns monitoring the victims, and various drivers transported the victims to residences of clients where the victims were required to engage in commercial sex. The victims testified that when they refused to engage in prostitution, the defendant or his co-defendants would beat them and threaten them and their families with physical harm. The co-conspirators and the drivers split the proceeds of the prostitution.
Five co-defendants previously pleaded guilty to various human trafficking crimes. Francisco Cortes-Meza was sentenced to 20 years in prison. Juan Cortes-Meza was sentenced to 16 years and eight months in prison. Raul Cortes-Meza, the defendant’s nephew, received 10 years in prison.
This case was investigated by special ICE HSI special agents assigned to the Atlanta special agent in charge office. Assistant U.S. Attorney Susan Coppedge and Deputy Chief Karima Maloney of the Justice Department’s Civil Rights Division Criminal Section prosecuted the case.
Human trafficking prosecutions such as this one are a top priority in the Justice Department. In order to bring defendants to justice, victims of crime may be eligible for immigration status in the United States to assist in the prosecution. The Department of Homeland Security Tip Line to report trafficking crimes is 1-866-347-2423.
Second Caesars Palace Nightclub Host Pleads Guilty to Tax CrimeRead the Press Release
WASHINGTON – Ali “Shawn” Olyaie, a former “VIP host” at the Pure Nightclub located in Caesars Palace Hotel and Casino in Las Vegas, pleaded guilty in Las Vegas before U.S. District Court Judge Kent Dawson to one count of filing a false federal individual income tax return for the 2006 tax year, the Justice Department and Internal Revenue Service (IRS) announced today.
According to information disclosed at Olyaie’s plea hearing, during the years 2005 and 2006, Olyaie’s responsibilities as a VIP host at the Pure Nightclub included promoting the club, booking reservations and catering to the club’s clientele. In addition to paying an admissions fee, some Pure patrons typically made cash payments to Pure door personnel and VIP hosts to bypass the general admissions line and to obtain more desirable seating inside the nightclub. The cash payments were collected, pooled and generally distributed on a weekly basis to Pure managers, door personnel and VIP hosts, including Olyaie. Olyaie’s cash distributions from the pool of money collected from patrons of Pure comprised the bulk of his compensation during the time he worked at Pure. Olyaie concealed the cash payments he received by not reporting the income to the IRS on his individual income tax returns during the years he worked at the Pure Nightclub.
Judge Dawson set Olyaie’s sentencing for June 29, 2011, at 9:00 a.m.
On Nov. 9, 2010, Richard Chu, another former VIP Host at the Pure Nightclub, pleaded guilty to filing a false 2006 federal individual income tax return that did not report the cash payments he received at Pure. Chu is also awaiting sentencing.
This case is being investigated by IRS – Criminal Investigation and is being prosecuted by Tax Division Trial Attorneys Christopher J. Maietta and Joseph A. Rillotta.
More information about the Justice Department’s Tax Division and its enforcement efforts is available at www.usdoj.gov/tax/.
Rhode Island La Cosa Nostra Member Pleads Guilty <br /> in Murder-For-Hire CaseRead the Press Release
WASHINGTON – Anthony St. Laurent Sr. pleaded guilty today in federal court in Providence, R.I., to an attempted murder-for-hire, and acknowledged in a written plea agreement his participation in an extortion conspiracy outlined in a previous criminal complaint in which he, his wife Dorothy St. Laurent, his son Anthony St. Laurent Jr. and others extorted protection money from bookmakers in the Taunton, Mass.-area under the threat of violence. St. Laurent Sr. acknowledged in his plea agreement that he is a “made” member of the New England branch of the La Cosa Nostra (NELCN.)
St. Laurent Sr.’s guilty plea before U.S. District Judge William E. Smith was announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney Peter F. Neronha for the District of Rhode Island and Richard DesLauriers, Special Agent in Charge of the FBI’s Boston Field Office.
According to information presented in court, in 2006 and in 2007, St. Laurent Sr. offered money to individuals, including some known to be violent criminals, to murder Robert “Bobby” DeLuca, another “made” member of the NELCN, in retaliation for Deluca having publicly accused St. Laurent Sr. of being a government informant. According to information presented in court, St. Laurent Sr. phoned an individual in Massachusetts to set up a meeting in Rhode Island on April 12, 2006, at which he solicited the individual to kill DeLuca.
St. Laurent Sr., who is presently detained, faces maximum penalties of 10 years in federal prison, a $250,000 fine and three years of supervised release following his prison term.
Anthony St. Laurent Jr. was sentenced in December 2010 to 78 months in prison, followed by three years of supervised release, to include 500 hours of community service each year during the term of supervised release for his role in the extortion conspiracy. Dorothy St. Laurent was sentenced in December 2010 to three years of probation, the first six months of which will be served in home confinement. She also was ordered to perform 500 hours of community service per year during the term of supervised release.
The case is being prosecuted by Trial Attorney Sam Nazzaro of the Criminal Division’s Gang Unit. Assistant U.S. Attorney William J. Ferland for the District of Rhode Island is assisting with the prosecution of this case.
The matter was investigated by the FBI, with the assistance of the Rhode Island State Police and the Providence Police Department.
Massachusetts Man Pleads Guilty to Child Pornography ChargesRead the Press Release
WASHINGTON - Stanley R. MacKinnon, 66, of Haverhill, Mass., pleaded guilty today to five counts of receipt and attempted receipt of child pornography and one count of possession of child pornography, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney for the District of Massachusetts Carmen M. Ortiz and Robert Bethel, Inspector in Charge of the U.S. Postal Inspection Service (USPIS).
MacKinnon pleaded guilty before U.S. District Court Judge Rya W. Zobel in Boston. MacKinnon was indicted on July 14, 2010. The charges against him were the result of an ongoing national investigation by USPIS of individuals who purchase child pornography via U.S. mail. In pleading guilty, MacKinnon admitted to ordering and purchasing child pornography movies depicting prepubescent minors, and receiving the movies via U.S. mail. MacKinnon also admitted to possessing images of child pornography that he had produced himself approximately 30 years ago.
MacKinnon is scheduled to be sentenced on June 16, 2011. MacKinnon faces a mandatory minimum penalty of five years in prison, a fine of $250,000 and possible restitution.
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by U.S. Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section, 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 case against MacKinnon was investigated by USPIS and the Haverhill Police Department. The case is being prosecuted by Assistant U.S. Attorney Michael I. Yoon of the District of Massachusetts and CEOS Trial Attorney Bonnie L. Kane of the Criminal Division.
Former Administrative Assistant to U.S. Senator Charged with Making Prohibited Communications to Senate OfficeRead the Press Release
WASHINGTON – The former administrative assistant to a U.S. senator was charged today by a federal grand jury in the District of Columbia with violating criminal conflict of interest laws, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Ronald C. Machen of the District of Columbia; and James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office.
The indictment charges Douglas Hampton, 48, formerly of Las Vegas, with seven counts of violating the criminal conflict of interest laws. Hampton will be arraigned on March 31, 2011, in U.S. District Court in the District of Columbia.
According to the indictment, from January 2007 to April 30, 2008, Hampton was employed as the administrative assistant to a U.S. senator. The administrative assistant and chief of staff positions were the most senior positions in the senator’s office. While he was serving as administrative assistant, Hampton allegedly signed a form certifying that he had completed training required by the Senate Select Committee on Ethics that included training on the one-year post-employment lobbying restrictions mandated by The Honest Leadership and Open Government Act of 2007.
According to the indictment, that legislation was enacted by Congress for the purpose of providing greater transparency and accountability in both Houses by, among other things, slowing down the “revolving door” between congressional employment and post-employment lobbying activities. The legislation prohibits a senior Senate staffer, for a period of one year after termination of employment with the Senate, from knowingly making any communication to a Senate office with the intent to influence official actions on behalf of another person.
The indictment alleges that on May 1, 2008, Hampton left his employment with the U.S. senator and obtained employment as a government affairs consultant with an airline company and an energy company, both headquartered in Las Vegas.
According to the indictment, between May 1, 2008, and May 1, 2009, while he was subject to The Honest Leadership and Open Government Act’s one-year restriction, Hampton knowingly and willfully made, with the intent to influence, communications to staff members of the U.S. senator on behalf of the Las Vegas airline company and energy company, seeking action by the senator and the staff members in their official capacities.
The indictment alleges that Hampton, on behalf of the airline company, sought the assistance of the senator and the staff members in convincing the Department of Transportation to reconsider its position on a fuel surcharge pricing issue and to delay or withdraw an enforcement action regarding fees charged on the company’s website, as well as to help schedule a meeting in March 2009 involving the secretary of transportation and executives from the airline company.
The indictment also alleges that Hampton, on behalf of the energy company, sought the assistance of the senator and the staff members to convince the Department of Interior to expedite release of an environmental impact statement that would allow the energy company to move forward on its delayed proposal to build a coal-fired power plant in eastern Nevada.
The maximum penalty for each of the seven counts alleged in the indictment is five years in prison. Hampton also faces a maximum fine of $250,000 per count.
An indictment is merely an accusation, and a defendant is presumed innocent unless proven guilty in a court of law.
This case is being prosecuted by Trial Attorneys Deborah Sue Mayer and Edward T. Kang of the Criminal Division’s Public Integrity Section, and Assistant U.S. Attorney Bryan Seeley for the U.S. Attorney’s Office in the District of Columbia. The case was investigated by the FBI’s Washington Field Office.
DC-Area Plumber Charged with Obstructing the IRSRead the Press Release
WASHINGTON - Richard Jaensch, a resident of Annandale, Va., has been indicted by a Alexandria, Va., federal grand jury with one count of corruptly endeavoring to impede the Internal Revenue Service (IRS), one count of filing a false claim for a refund and four counts of failing to file a tax return for 2004 through 2007, the Justice Department and the IRS announced today.
According to the indictment, Richard Jaensch, a self-employed plumber, failed to file personal income tax returns between 2001 and 2007, despite the fact that he was required to do so by law. Between 2002 and October 2009, Jaensch obstructed and impeded the IRS by, among other acts: filing numerous documents and pleadings in Fairfax County, Va.; claiming, that he and his wife, a federal employee, were not persons required to file federal income tax returns; that his wife was not a party to the Constitution of the “united States of America” (sic) and that she was not a taxpayer; providing false information to the IRS; and filing with the IRS a false 2008 federal income tax return, Form 1040.
In addition, Jaensch caused his wife to yearly present a letter to her employer directing them to stop withholding federal income taxes from her salary. The IRS began levying his wife’s paycheck and bank accounts to satisfy her outstanding tax liability, and Jaensch continued his obstructive conduct by filing or causing his wife to file correspondence with the IRS claiming that the IRS could not instruct her employer to withhold taxes from her paycheck. In addition, in April 2009, Jaensch electronically filed with the IRS a false 2008 individual income tax return claiming a tax refund of $774,052, which he knew to be false and fraudulent.
An indictment is merely a formal charge by the grand jury. The defendant is presumed innocent unless and until proven guilty in U.S. District Court. If convicted, the defendant faces a maximum potential sentence of 12 years in prison. The court has not yet set a trial date.
This case was investigated by IRS-Criminal Investigation and is being prosecuted by Department of Justice’s Tax Division Trial Attorney Caryn Finley and Assistant U.S. Attorney Gene Rossi.
More information about the Justice Department’s Tax Division and its enforcement efforts is available at www.usdoj.gov/tax/.
Wednesday 23 March 2011
Second New Jersey Pipe Supply Company and Its Owner Plead Guilty to Fraud and Bribery Conspiracy in Power Generation IndustryRead the Press Release
WASHINGTON — A second New Jersey industrial pipe supply company and its owner pleaded guilty today to participating in a conspiracy to commit fraud and pay bribes to a purchasing manager at Consolidated Edison of New York (Con Edison) in return for the manager’s efforts to steer contracts to the company, the Department of Justice announced today. The owner also pleaded guilty to obstructing the department’s investigation into fraudulent conduct in the power generation industry.
A two-count charge was filed today in U.S. District in Manhattan against Bernard Grobart of New York City and his company, Teneyck Inc., formerly known as Neill Supply Co. Inc. of Lyndhurst, N.J. Grobart and Teneyck pleaded guilty today to participating in a conspiracy to defraud Con Edison. Grobart also pleaded guilty to an obstruction count for instructing a subordinate employee at the company to delete a subpoenaed electronic document. Grobart and Teneyck are scheduled to be sentenced on June 24, 2011.
According to the charge, Grobart and Robert D. Rosenberg, a former sales broker for Neill Supply, paid approximately $297,000 in cash bribes to James M. Woodason, a department manager of the purchasing department at Con Edison. In return, Woodason steered Con Edison industrial pipe supply contracts to Neill Supply by secretly providing Rosenberg with confidential competitor bid information, thereby causing Con Edison to pay higher, non-competitive prices for materials. The department said the conspiracy took place from approximately November 2003 through approximately August 2008. According to the court document, Grobart also directed an employee of Neill Supply to destroy an electronic document that tallied the bribe payments in order to prevent the production of the document to a federal grand jury.
Con Edison is a regulated utility headquartered in Manhattan. It provides electric service to approximately 3.2 million customers and gas service to approximately 1.1 million customers in New York City and Westchester County, N.Y. Con Edison received more than $10,000 in federal funding each year between 2003 through 2010.
Grobart and Teneyck are charged with conspiracy, which carries a maximum fine of $500,000 for companies, and a maximum penalty of five years in prison and a $250,000 fine for individuals. Each of the maximum fines may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine. Grobart is also charged with obstruction, which carries a maximum penalty of 20 years in prison and a $250,000 fine.
Today’s pleas arise from an ongoing federal investigation of bid rigging, bribery, fraud and tax-related offenses in the power generation industry. On Nov. 19, 2010, Woodason pleaded guilty to charges that he accepted and agreed to accept bribes from Grobart and Neill Supply, and American Pipe Bending and Fabrication Co. Inc. and its owner, Andrew Martingano. Rosenberg pleaded guilty on Dec. 2, 2010, for his role in the Neill Supply conspiracy. Martingano and American Pipe pleaded guilty on March 14, 2011, to a one-count felony charge for paying and agreeing to pay Woodason $510,000 in bribes in exchange for which Woodason steered an industrial pipe supply contract to American Pipe. The investigation is being conducted by the Antitrust Division’s New York Field Office, with the assistance of the FBI’s New York Division and the Internal Revenue Service-Criminal Investigation. Con Edison cooperated with the department’s investigation.
Anyone with information concerning bid rigging, bribery, tax offenses or fraud in the power generation industry should contact the Antitrust Division’s New York Field Office at 212-264-9308, visit www.justice.gov/atr/contact/newcase.htm or contact the FBI’s New York Division at 212-384-3252.
Pittsburgh Man Pleads Guilty to Racketeering ChargesRead the Press Release
WASHINGTON - A resident of Pittsburgh pleaded guilty today in U.S. District Court for the Western District of Pennsylvania to conspiring to conduct a racketeering enterprise, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney David J. Hickton of the Western District of Pennsylvania.
Kevin Underwood, 29, pleaded guilty to one count of conspiracy before Senior U.S. District Judge Gustave Diamond in Pittsburgh.
According to the guilty plea, Underwood participated in an enterprise, the activities of which affected interstate and foreign commerce, through a pattern of racketeering activity. The enterprise’s activities included multiple acts involving robbery, attempted murder, distribution of controlled substances including cocaine, heroin and crack cocaine, and acts of obstruction of justice and intimidation. Underwood is one of 26 defendants charged in February 2010 with being members of, and conducting racketeering activity through, a criminal organization known as the Brighton Place/Northview Heights Crips street gang that operated on the north side of Pittsburgh.
Underwood is scheduled to be sentenced on July 21, 2011, at 10 a.m. He faces a maximum sentence of 20 years in prison and a fine of $250,000.
This case is being prosecuted by Assistant U.S. Attorneys Charles A. Eberle and Troy Rivetti of the Western District of Pennsylvania and Trial Attorney Kevin Rosenberg of the Criminal Division’s Gang Unit.
The case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives; the City of Pittsburgh Police Department; the Allegheny County, Penn., Police Department; and the Allegheny County Sheriff's Office.
Founder of A&O Entities <br /> Convicted in $100 Million Fraud SchemeRead the Press Release
WASHINGTON – Christian M. Allmendinger, 39, of Houston, was convicted by a federal jury today for his role in a $100 million fraud scheme with more than 800 victims across the United States and Canada.
The conviction was announced today by U.S. Attorney for the Eastern District of Virginia Neil H. MacBride and Assistant Attorney General Lanny A. Breuer of the Criminal Division.
“Christian Allmendinger stole millions from elderly retirees to buy flashy cars and a multi-million-dollar home,” said U.S. Attorney MacBride. “This was a national fraud case brought by the Virginia Financial and Securities Fraud Task Force that has real implications to dozens of investors in Richmond, who gave most of their life savings and have seen it all disappear. Mr. Allmendinger has now been held accountable for his crimes, and we will continue to pursue other financial fraudsters who prey on those in Virginia and throughout the country.”
“Christian Allmendinger operated a business that relied on deceit, and he used the profits of his fraudulent scheme to spend lavishly on himself,” said Assistant Attorney General Breuer. “Today a federal jury held him to account. Other would-be criminals should take note.”
On Sept. 7, 2010, a federal grand jury returned an 18-count indictment against Allmendinger and two other principals of A&O Resource Management Ltd. and various related entities that acquired and marketed life settlements to investors. Today, Allmendinger was convicted on one count of conspiracy to commit mail fraud, two counts of mail fraud, one count of conspiracy to commit money laundering, two counts of money laundering, and one count of securities fraud. At sentencing on Aug. 12, 2011, Allmendinger faces up to 20 years in prison on each count except the securities fraud count, on which he faces up to 5 years in prison.
Allmendinger’s co-defendant, Adley H. Abdulwahab, 35, is scheduled for a jury trial beginning July 5, 2011. Evidence at Allmendinger’s trial established that during his involvement with the company, A&O obtained approximately $80 million from approximately 500 investors. The indictment alleges that the A&O fraud scheme as a whole exceeds $100 million and affected more than 800 investors, many of whom were elderly.
According to court records and evidence at trial, Allmendinger was a co-founder and vice president of A&O and was active in the day-to-day management of the companies, as well as in the marketing of A&O life settlement investment products to investors. He and others engaged in a scheme to defraud investors by making misrepresentations about such things as A&O’s prior success, its size and office locations, its number of employees, the risks of its investment offerings, and its safekeeping and use of investor funds. Evidence at trial showed that Allmendinger routinely used investor funds for personal enrichment, including a $2 million home, a Lamborghini Spyder, and a 15-carat diamond ring, among other property.
When state regulators began to scrutinize A&O’s investment products, Allmendinger and his co-conspirators decided to sell A&O in August 2007, which ended Allmendinger’s association with the fraud scheme. The indictment alleges that, through a series of sham sales, co-conspirators, including Abdulwahab and David White, continued the fraud scheme through September 2009.
Five individuals have pleaded guilty in connection with the A&O fraud scheme: White, the former President of A&O; Brent Oncale, former vice president of A&O; Russell E. Mackert, an attorney for A&O; Eric M. Kurz, a wholesaler of A&O investment products; and Tomme Bromseth, an A&O sales agent in the Richmond area.
This continuing investigation is being conducted by the U.S. Postal Inspection Service, Internal Revenue Service, and FBI, with significant assistance from the Texas State Securities Board. These cases are being prosecuted by Assistant U.S. Attorneys Michael S. Dry and Jessica Aber Brumberg from the Eastern District of Virginia and Trial Attorney Albert B. Stieglitz Jr., of the Criminal Division’s Fraud Section.
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. 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 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
Chinese Counterfeit Perfume Importers Indicted for Allegedly Trafficking in Counterfeit GoodsRead the Press Release
WASHINGTON - A federal grand jury in Brooklyn, N.Y., has returned a two- count indictment against Shaoxia Huang, Shaoxiong Zhou and Shaowu Zhou for trafficking in counterfeit goods and conspiracy, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Loretta E. Lynch for the Eastern District of New York.
The Zhous and Huang, all of Guangdong Province, China, allegedly imported more than 37,000 individual units of counterfeit cosmetic fragrances into the United States. According to the indictment returned yesterday, the counterfeit perfume, believed to have been manufactured in China, bore trademarks belonging to well-known fragrance brands, and were packaged in a manner likely to be confused for genuine fragrances sold under these well-known brands.
Huang and Shaoxiong Zhou were arrested in Las Vegas on March 2, 2011, and have been held in custody since their arrest.
If convicted, each defendant faces up to five years in prison on the conspiracy charge, up to 10 years in prison on the counterfeit products charge, and fines of up to $2,250,000. The indictment also seeks forfeiture of profits from illicit trafficking in counterfeit goods as well as the seizure of the goods.
An indictment is merely an accusation, and defendants are presumed innocent unless proven guilty beyond a reasonable doubt.
The case is being investigated by the New York office of U.S. Immigration and Customs Enforcement - Homeland Security Investigations, and is being prosecuted by Senior Counsel Jason Gull of the Criminal Division’s Computer Crime and Intellectual Property Section.
This indictment is part of a larger department-wide effort led by the Department of Justice Task Force on Intellectual Property (IP Task Force). Attorney General Eric Holder created the IP Task Force to combat the growing number of domestic and international intellectual property crimes, protect the health and safety of American consumers and safeguard the nation’s economic security against those who seek to profit illegally from American creativity, innovation and hard work. The IP Task Force seeks to strengthen intellectual property rights protection through heightened criminal and civil enforcement, greater coordination among federal, state and local law enforcement partners, and increased focus on international enforcement efforts, including reinforcing relationships with key foreign partners and U.S. industry leaders. To learn more about the IP Task Force, go to http://www.justice.gov/dag/iptaskforce/
Tuesday 22 March 2011
Wisconsin Man Charged with<br /> Sexual Exploitation of Minor in BelizeRead the Press Release
WASHINGTON - Today a grand jury in the Eastern District of Wisconsin returned a one-count indictment against U.S. citizen Roland J. Flath for traveling in foreign commerce and engaging in and attempting to engage in illicit sexual conduct with a minor less than 18 years of age, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney James L. Santelle of the Eastern District of Wisconsin; John Morton, Director of U.S. Immigration and Customs Enforcement (ICE); and Assistant Secretary of State for Diplomatic Security Eric J. Boswell.
According to court documents, Flath, 71, of Wisconsin, allegedly traveled to Belize in July 2006 and subsequently sexually molested a minor girl from Belize. Flath was originally charged by a criminal complaint filed in the Eastern District of Wisconsin in October 2010. He was arrested by the Guatemalan National Civil Police on Feb. 20, 2011, expelled to the United States and arrested in the United States by ICE agents and the U.S. Marshal Service.
Flath faces a maximum penalty of up to 30 years in prison and a fine of $250,000. Charges against Flath for aggravated assault of a minor are also pending in Belize.
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 is being prosecuted by Assistant U.S. Attorney Penelope Coblentz of the Eastern District of Wisconsin and Trial Attorney Mi Yung Park of CEOS. This case is a result of investigative efforts led by ICE Homeland Security Investigations (HSI) in Milwaukee and the U.S. Department of State, Bureau of Diplomatic Security’s Regional Security Office in Belize, with the assistance of the Bureau of Diplomatic Security’s Regional Security Office in Guatemala, ICE HSI’s Attache Office in Guatemala, the U.S. Marshal Service and the Belize Police Department.
Virginia Couple Pleads Guilty to Tax Fraud ConspiracyRead the Press Release
WASHINGTON – Kathryn Charles Miles and husband John Scott Miles, of Mathews County, Va., pleaded guilty to conspiring to impair and obstruct the IRS in the ascertainment and assessment of federal income taxes from 2001 through 2010.
The pleas were announced by U.S. Attorney for the Eastern District of Virginia Neil H. MacBride, Principal Deputy Assistant Attorney General for the Justice Department’s Tax Division John A. DiCicco and the Internal Revenue Service (IRS).
Kathryn Miles, who was charged in October 2010, pleaded guilty March 19, 2011, before U.S. District Judge Raymond A. Jackson in Norfolk, Va. John Miles pleaded guilty today.
At her plea hearing, Kathryn Miles admitted to earning taxable income as a nurse at various Virginia hospitals and with her husband, as an owner and operator of a construction business named “Scotts Construction” and “KCM Construction & Design.” Kathryn Miles and John Miles admitted that in 2001 they joined American Rights Litigators, a business they knew sold and promoted abusive tax schemes, and maintained an annual membership. Kathryn Miles also admitted that, in 2005 and 2006, she submitted six tax returns to the IRS in which she falsely claimed that she earned no wages and in which she did not disclose the operation of her construction business. Kathryn Miles submitted falsified tax documents with each tax return she filed with the IRS and John Miles admitted that he did not file tax returns for tax years 2004 and 2005, despite being required to do so by law.
Judge Jackson released the defendants on bond pending sentencing. Kathryn Miles’s sentencing is scheduled for June 30, 2011 and John Miles’s sentencing is scheduled for July 11, 2011. Both defendants face a maximum potential penalty of five years in prison and a $250,000 fine, and both defendants have agreed to pay all taxes, interest and penalties.
U.S. Attorney MacBride and Principal Deputy Assistant Attorney General DiCicco commended the investigative efforts of the IRS agents involved in this case, as well as Assistant U.S. Attorney Brian Samuels and Tax Division Trial Attorney Justin Gelfand, who are prosecuting this case on behalf of the United States.
Additional information about the Justice Department’s Tax Division and its enforcement efforts may be found at www.usdoj.gov/tax.
Occidental Oil Companies to Pay $2.05 Million to Resolve Allegations of Royalty Underpayments from Federal LandRead the Press Release
WASHINGTON – Occidental Petroleum Corporation, Occidental Oil and Gas Corporation, and OXY USA Inc. have agreed to pay the United States $2.05 million plus interest to resolve claims that the companies violated the False Claims Act by knowingly underpaying royalties owed on natural gas produced from federal leases, the Department of Justice announced today. Occidental Petroleum Corporation is an international oil and gas exploration and production company headquartered in Los Angeles.
Congress has authorized federal land to be leased for the production of natural gas in exchange for the payment of royalties on the value of the gas that is produced. Each month, companies are required to report to the Department of the Interior the amount of royalty that is due. This settlement resolves claims that the Occidental oil companies improperly deducted from the royalty values they reported the cost of boosting gas up to pipeline pressures, and failed to properly report and pay royalties related to a natural gas keep-whole agreement, pool pricing for gas and gas re-sold to affiliates.
“Natural gas royalties provide an important source of federal and state income that is essential to support education, critical infrastructure improvements, and natural disaster protection, among other things,” said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. “The Justice Department will protect public lands to ensure that when companies are given the opportunity to extract non-renewable resources from those lands, they pay their fair share of royalties.”
“We remain committed to ensuring that energy companies accurately report production and pay the required royalties,” said Chris Henderson, Acting Assistant Secretary for the Department of the Interior’s Office of Policy, Management and Budget. “We will continue to pursue every dollar due to taxpayers and the federal government from energy production that occurs on federal and American Indian lands.”
The settlement arises from a lawsuit filed by Harrold Wright under the False Claims Act against the Occidental oil companies as well as a number of other companies. Under the qui tam, or whistleblower, provisions of the Act, private citizens may file actions on behalf of the United States and share in any recovery. Because Harrold Wright is deceased, his heirs will receive $91,000, plus interest, as his share of the settlement. The United States initially declined to participate in this case, but was actively involved in the discussions that led to this settlement. The current settlement brings the total recovery in the case to approximately $230 million.
The investigation and settlement of this matter were jointly handled by the Justice Department’s Civil Division and the U.S. Attorney for the Eastern District of Texas, with assistance from the Department of the Interior’s Office of Natural Resources Revenue, Office of the Solicitor and Office of Inspector General.
New Jersey Couple Sentenced for Failing to Pay Employment TaxesRead the Press Release
WASHINGTON - James and Theresa Demuro of Bridgewater, N.J., were each sentenced by U.S. District Judge Garrett E. Brown Jr. to 51 months in prison, followed by three years supervised release, the Justice Department and the Internal Revenue Service (IRS) announced today. Judge Brown also ordered the Demuros to pay restitution to the IRS in the amount of $1,337,952.12.
The DeMuros were convicted following a jury trial that began on Nov. 9, 2010, of one count of conspiracy to defraud the United States and 21 counts of willfully failing to pay over employment taxes. 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 approximately $546,247.39 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.
Principal Deputy Assistant Attorney General John A. DiCicco of 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 L. Nuzzelillo who prosecuted the case. Principal Deputy Assistant Attorney General DiCicco also thanked U.S. Attorney for the District of New Jersey Paul J. Fishman and his entire office for their assistance.
Missouri CPA Pleads Guilty to Mail Fraud and Tax EvasionRead the Press Release
WASHINGTON – Murphy Hubbard, a Springfield, Mo., CPA, pleaded guilty to two counts of mail fraud and one count of tax evasion before Judge James England in the Western District of Missouri, the Department of Justice and Internal Revenue Service (IRS) announced today.
According to the terms of Hubbard’s plea, he has agreed to be sentenced to 42 months in prison and shall be ordered to pay full restitution to the victims in this case, including the IRS.
According to court documents, Hubbard owned and operated an accounting and tax business known as The Hubbard Group PC. Hubbard embezzled more than $400,000 from two trusts placed under his control by local families between 1998 and 2009. The first of these trusts, created by Ms. Hazel Beatrice S. Hirst, of Springfield, designated four local charities as the beneficiaries of her life’s savings. The second trust, established by the heirs of Mr. Noel C. Rummens, of Rogersville, Mo., was created for the express purpose of funding educational expenses for Mr. Rummens’s surviving heirs and relatives. Rather than fulfilling the wishes of these families by faithfully executing their trust agreements, Hubbard instead took the vast majority of this money for himself, using it to pay personal expenses, to buy items such as automobiles and farm equipment, and for travel. Virtually all of the money taken from these trusts went unreported to the IRS, resulting in a tax loss of approximately $79,434.
The case is being prosecuted by Tax Division Trial Attorneys Michael C. Boteler and Mitchell S. Bober, and Assistant U.S. Attorney Steven M. Mohlhenrich. The case was investigated by the IRS – Criminal Investigation Division.
Additional information about the Justice Department’s Tax Division and its enforcement efforts may be found at www.usdoj.gov/tax .
Miami Contractor Pleads Guilty to Employment Tax FraudRead the Press Release
WASHINGTON – Reynaldo Orozco pleaded guilty to one count of filing a false tax return before U.S. District Court Judge Adalberto Jordan in the Southern District of Florida, the Department of Justice and the Internal Revenue Service (IRS) announced today. The court set sentencing for June 17, 2011.
According to court documents, during tax years 2004 through 2007, Orozco owned and operated Rock Construction Builders Inc. (RCB), a construction business located in Miami-Dade County, Fla. Orozco issued RCB corporate checks to various other corporations holding them out to be legitimate subcontractors. In truth, these corporations did not perform work for RCB. Orozco cashed the checks at local check cashing stores and used the bulk of the cash obtained in this manner to pay RCB employees. Orozco failed to report the cash wages on quarterly employment tax returns and failed to withhold and pay employment taxes on the wages. From 2004 through 2007, RCB failed to report approximately $3,294,426 in cash wages to the IRS.
Court documents also stated that on Feb. 11, 2005, Orozco made and subscribed to a false IRS Form 941 (Employer’s Quarterly Federal Tax Return) for the quarter ending Dec. 31, 2004. Orozco knew this return was false because it failed to report the substantial cash wages paid to RCB employees that quarter.
Based on the conduct described above, the U.S. Treasury suffered an employment tax loss of approximately $504,047. Orozco faces a maximum of three years in prison.
Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida, and John A. DiCicco, Principal Deputy Assistant Attorney General for the Department of Justice’s Tax Division, commended the IRS special agents who investigated this case and Tax Division Trial Attorneys Matthew J. Mueller and Gregory E. Tortella, who prosecuted the case.
Additional information about the Justice Department’s Tax Division and its enforcement efforts may be found at www.usdoj.gov/tax.
Managing Director of Bank’s Investment Company<br /> Convicted of Embezzling More Than $571,000Read the Press Release
WASHINGTON – The former managing director of the Pamrapo Service Corporation (Service Corporation), the investment arm of the former Pamrapo Savings Bank, was convicted today of embezzling more than $571,000 in commissions and fees belonging to the Service Corporation through a mail fraud scheme, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Paul J. Fishman for the District of New Jersey.
The jury returned the guilty verdict against Brian M. Campbell, 42, of Bayonne, N.J., following an eight-day trial before U.S. District Judge Dickinson R. Debevoise in Newark. Campbell was convicted of all 33 mail fraud counts charged in the superseding indictment on which he was tried. The jury was unable to reach a verdict on three counts of money laundering.
According to court documents and evidence presented at trial, Campbell was the managing director and employee of the Service Corporation, d/b/a Pamrapo Financial Center, headquartered in Bayonne. The now-defunct Service Corporation was the investment subsidiary of Pamrapo Savings Bank S.L.A., a savings and loan association. The Service Corporation provided securities and investment services, such as the sale of stocks and bonds, mutual funds, annuities, various types of insurance policies and other money management services, to clients for a fee.
In August 2001, according to court documents and evidence presented at trial, the Service Corporation entered into a contract with Prime Capital Services Inc. (Prime), a broker-dealer of securities transactions. In addition, in August 2001, Campbell entered into a contract with Prime where he agreed to act as a registered representative for Prime on behalf of the Service Corporation. Based on these contracts and the Service Corporation’s own written policy statements, all commissions and fees were required to be paid by Prime, and its sister company, Asset and Financial Planning Ltd., directly to the Service Corporation. Asset and Financial Planning was an investment advisory business that managed investors’ money for a flat rate. Thereafter, the Service Corporation paid Campbell his salary and a portion of the commissions received by the Service Corporation. The government did not allege any wrongdoing on behalf of Prime or Asset and Financial Planning and representatives of these companies testified on behalf of the government at trial.
In August 2001, the Service Corporation’s board of directors and later the Pamrapo Savings Bank’s board of directors revised Campbell’s commission structure, resulting in a substantial pay cut for Campbell.
In early 2007, according to court documents and evidence presented at trial, Campbell contacted representatives from Prime and Asset and Financial Planning, falsely telling them that Pamrapo Savings Bank wanted to get out of the investment advisory business and that the bank wanted all commissions sent directly to Campbell. In May 2007, Campbell sent a letter to Prime’s president, repeating these false statements. During the trial, Campbell’s administrative assistant testified that she typed this letter after Campbell repeatedly requested her to type it. At trial, the bank’s chairman of the board, another director on the board and the bank’s chief financial officer testified that statements Campbell made were false, and that Campbell was not authorized by the bank to speak on its behalf.
On July 25, 2007, Campbell had his father, the bank’s president, sign a letter that directed Prime to send a substantial amount of Prime and Asset and Financial Planning’s commissions and fees directly to Campbell. Campbell did this despite the fact that approximately two days before, he told the general counsel of Prime that he did not believe the bank would change the commission arrangement because it required a board meeting. The testimony at trial established that this letter was concealed from the chief financial officer and the bank’s board of directors.
According to court documents and evidence presented at trial, Campbell concealed the fact that he was receiving these checks from Prime and Asset and Financial Planning by, among other ways, directing his administrative assistant to falsify financial records related to these diverted checks.
Each of the 33 counts on which Campbell was convicted carries a maximum sentence of 20 years in prison and a $250,000 fine, as well as forfeiture and restitution. Sentencing is currently scheduled for June 20, 2011.
The case was investigated by IRS-Criminal Investigation and the Federal Deposit Insurance Corporation–Office of Inspector General. The case was prosecuted by Trial Attorney Keith Liddle of the Criminal Division’s Asset Forfeiture and Money Laundering Section and Assistant U.S. Attorney Anthony Moscato of the U.S. Attorney’s Office Organized Crime/Gangs Unit in Newark.
Former Executive of California Aftermarket Auto Lights Distributor Agrees to Plead Guilty in Price-Fixing ConspiracyRead the Press Release
WASHINGTON – A former executive of a California aftermarket auto lights distributor has agreed to plead guilty for his participation in a global conspiracy to fix the prices of aftermarket auto lights, the Department of Justice announced today. Aftermarket auto lights are incorporated into an automobile after its original sale, often as repairs following a collision or as accessories and upgrades.
According to a one-count felony charge filed today in U.S. District Court in San Francisco, Chien Chung Chen, aka Andrew Chen, conspired with others to suppress and eliminate competition by fixing the prices of aftermarket auto lights. The department said that Chen, a former executive vice president of a U.S. distributor for a Taiwan producer of aftermarket auto lights, participated in the conspiracy from as early as September 2003 until in or about September 2005.
According to the charge, Chen and co-conspirators participated in a conspiracy in which the participants met and agreed to charge prices of aftermarket auto lights at certain predetermined levels. According to the court document, the participants in the conspiracy issued price announcements and price lists in accordance with the agreements reached, and collected and exchanged information on prices and sales of aftermarket auto lights for the purpose of monitoring and enforcing adherence to the agreed-upon prices. The department said that the conspirators met in Taiwan, the United States and elsewhere for their discussions. The plea agreement is subject to court approval.
Chen is the second individual to be charged in connection with the aftermarket auto lights investigation. On Feb. 8, 2011, the department charged Polo Shu-Sheng Hsu for his participation in the aftermarket auto lights price-fixing conspiracy.
Chen is charged with violating the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million criminal fine for individuals. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims, if either of those amounts is greater than the statutory maximum fine.
This case is part of an ongoing investigation of the Antitrust Division’s San Francisco Office and the FBI in San Francisco. Anyone with information concerning illegal or anticompetitive conduct in the aftermarket auto lights industry is urged to call the Antitrust Division’s San Francisco Field Office at 415-436-6660 or visit www.justice.gov/atr/contact/newcase.htm.
Attorney General Launches Law Enforcement Officer Safety InitiativeRead the Press Release
WASHINGTON – In the wake of an increase in law enforcement officer fatalities, Attorney General Eric Holder launched a law enforcement officer safety initiative today, directing every U.S. Attorney to meet with federal, state and local law enforcement officials in their districts to ensure the department’s resources are made available to help stem officer deaths. In addition, Attorney General Holder convened a meeting of law enforcement officers in Washington, D.C., to solicit input for further action to improve officer safety.
“Our law enforcement officers put themselves in harm’s way every day to ensure the safety and security of the American people in cities and communities across the country, and we need to do everything we can to protect them,” Attorney General Holder said.
After a two-year decline in law enforcement fatalities, 2010 was one of the deadliest years on record for law enforcement in nearly two decades. Since the beginning of this year, 27 law enforcement officers around the country were killed either by firearms or felonious assaults, including Deputy U.S. Marshal Derek Hotsinpiller in West Virginia, Deputy U.S. Marshal John Perry in Missouri and U.S. Immigration and Customs Enforcement Special Agent Jaime Zapata in Mexico. This is an increase of more than 13 % in fatalities over 2010, when 20 officers were killed by firearms or felonious assault at this same point in time.
In his memo to U.S. Attorneys, Attorney General Holder laid out several steps for them to take immediately:
Ask local prosecutors to identify the “worst of the worst” – offenders with criminal histories who cycle in and out of local jails and state prisons – and discuss whether any of these repeat offenders may be prosecuted under federal law for offenses that make the offender eligible for a stiffer sentence.
Ensure that our state and local law enforcement partners are fully informed about the resources that the department makes available to help protect officers. The department has developed a number of programs to help our state and local law enforcement partners protect their officers, including:
- VALOR – Preventing Violence Against Law Enforcement and Ensuring Officer Resilience and Survivability – the Bureau of Justice Assistance’s national training initiative to improve the safety of our officers. As part of the VALOR Initiative, a new officer safety website has been established on the secure servers of the Regional Information Sharing Systems (RISS). This site has been designed to serve as a secure “one stop shop” for law enforcement to access all types of officer safety-related information, including awareness materials, videos, information on armed and dangerous subjects, information on concealment methods and a training calendar.
- RISSafe Officer Safety Event Deconfliction System, which the Bureau of Justice Assistance established to share information on planned law enforcement events – such as raids, controlled buy operations, surveillance and warrant service actions – to identify and alert affected agencies and officers of potential conflicts on a 24/7 basis.
- Bulletproof Vest Partnership (BVP), which provides reimbursement for law enforcement agencies that purchased vests that meet program criteria. Since 1999, more than 13,000 jurisdictions have participated in the BVP Program, with $277 million in federal funds committed to support the purchase of an estimated 800,000 vests. This year alone vests purchased using BVP funds have saved the lives of six law enforcement officers.
- A new Bureau of Justice Assistance law enforcement officer safety “toolkit,” which will be developed in the next 60 days, that can be used by federal, state and local law enforcement leaders to learn more about the resources that have been made available to promote officer safety, including training, deconfliction services, funding and other information resources.
Ensure that all federal task forces are making effective use of deconfliction systems . In addition to the case deconfliction that federal task forces use, the Attorney General directed all federally-supported task forces to utilize event deconfliction services provided by the department through RISS.
The attorney general's memo is available at: www.justice.gov/ag/AG_Officer_Initiative_3-22-11.pdf.
Monday 21 March 2011
Justice Department Issues Letter Regarding Illegal Exclusion of Individuals with HIV/AIDS from Occupational Training and State LicensingRead the Press Release
WASHINGTON – The Justice Department has issued letters to the attorneys general of all 50 states, as well as U.S. territories to request their assistance in addressing the illegal exclusion of individuals with HIV/AIDS from occupational training and state licensing. Persons with HIV and persons with AIDS are covered by the Americans with Disabilities Act (ADA), which gives federal civil rights protections to persons with disabilities in public accommodations, employment, and state and local government services.
The Justice Department has learned that public and private trade schools for barbering, cosmetology, massage therapy, home health care work and other occupations, as well as state licensing agencies, may be illegally denying individuals with HIV/AIDS admission to trade schools and/or occupational licenses because of their HIV status. However, because HIV cannot be transmitted by casual contact or by the circumstances present in these occupations, HIV-positive status is irrelevant.
In his letter to the attorneys general, Assistant Attorney General for the Civil Rights Division Thomas E. Perez asked that they review their respective jurisdictions’ admission and licensing criteria for trade schools and licensing agencies to identify the existence of any criteria that unlawfully exclude or discriminate against persons with HIV/AIDS, and to take the steps necessary to bring all such programs into compliance with the ADA.
“It is critical that we continue to work to eradicate discriminatory and stigmatizing treatment towards individuals with HIV based on unfounded fears and stereotypes,” Assistant Attorney General Perez said. “The ADA clearly protects individuals with HIV and other disabilities from this kind of exclusion or marginalization.”
The department recently entered into a settlement agreement with Modern Hairstyling Institute Inc., a private cosmetology school in Bayamón, Puerto Rico, for delaying the admission of an HIV-positive individual. That settlement agreement requires the school to remove questions about applicants’ HIV/AIDS status and to promptly enroll the aggrieved individual in its cosmetology program. The department has also addressed related issues in its guidance entitled “Questions and Answers: The Americans with Disabilities Act and the Rights of Persons with HIV/AIDS to Obtain Occupational Training and State Licensing” ( www.ada.gov/qahivaids_license.htm).
Alabama Couple Charged with Tax Evasion and ConspiracyRead the Press Release
WASHINGTON – A superseding indictment was unsealed against Patricia Ervin and Monty Ervin of Dothan, Ala., charging them with three counts of tax evasion and one count of conspiring to defraud the United States, the Justice Department and the Internal Revenue Service (IRS) announced today. Patricia Ervin also remains charged with structuring cash deposits to evade laws requiring banks to report currency transactions in excess of $10,000.
The indictment was announced by Leura G. Canary, U.S. Attorney for the Middle District of Alabama, and John A. DiCicco, Principal Assistant Attorney General for the Tax Division.
According to the indictment, Monty Ervin and Patricia Ervin owned and managed Southern Realty, a property management company in Dothan. As alleged in the indictment, they placed properties in the names of nominees in an attempt to conceal their income and assets from the IRS.
An indictment merely alleges that a crime has been committed, and a defendant is presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Patricia Ervin faces a maximum of 25 years in prison and a maximum fine of $1.25 million. If convicted, Monty Ervin faces a maximum of 20 years in prison and a maximum fine of $1 million.
This case was investigated by IRS – Criminal Investigation and is being prosecuted by Tax Division Trial Attorneys Justin Gelfand and Michael Boteler and Assistant U.S. Attorney Brent Woodall.
Friday 18 March 2011
Samsung SDI Agrees to Plead Guilty in Color Display Tube Price-Fixing ConspiracyRead the Press Release
WASHINGTON – Samsung SDI Company Ltd. has agreed to plead guilty and to pay a $32 million criminal fine for its role in a global conspiracy to fix prices, reduce output and allocate market shares of color display tubes (CDTs), a type of cathode ray tube used in computer monitors and other specialized applications, the Department of Justice announced today.
According to a one-count felony charge filed today in U.S. District Court in San Francisco, Republic of Korea-based Samsung SDI participated in a conspiracy from at least as early as January 1997, until at least as late as March 2006, to suppress and eliminate competition by fixing prices, reducing output and allocating market shares of CDTs to be sold in the United States and elsewhere. According to the plea agreement, which is subject to court approval, Samsung SDI has agreed to cooperate with the department’s ongoing cathode ray tube investigation.
According to the charge, Samsung SDI and co-conspirators agreed to charge prices of CDTs at certain target levels or ranges, to reduce output of CDTs by shutting down CDT production lines for certain periods of time and to allocate market shares of CDTs. As part of the conspiracy, Samsung SDI and co-conspirators exchanged CDT sales, production, market share and pricing information for the purpose of monitoring and enforcing adherence to their agreements. The department charged that the conspirators met in Taiwan, Korea, Malaysia, China and elsewhere for their discussions.
Samsung SDI is charged with violating the Sherman Act, which carries a maximum fine of $100 million for corporations. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
In addition to today’s charge, six individuals have been indicted in connection with the CDT investigation. On Feb. 10, 2009, Cheng Yuan “C.Y.” Lin was indicted for his participation in both the CDT conspiracy and a price-fixing conspiracy in the color picture tube industry. On Aug. 18, 2009, Wen Jun “Tony” Cheng was indicted for his participation in the CDT conspiracy. On March 30, 2010, Chung Cheng “Alex” Yeh was indicted for his participation in the CDT conspiracy. On Nov. 9, 2010, Seung-Kyu “Simon” Lee, Yeong-Ug “Albert” Yang and Jae-Sik “J.S.” Kim were also indicted for their participation in the CDT conspiracy.
This case is part of an ongoing joint investigation by the Department of Justice Antitrust Division’s San Francisco Office and the FBI in San Francisco. Anyone with information concerning illegal or anticompetitive conduct in the cathode ray tube industry is urged to call the Antitrust Division’s San Francisco Field Office at 415-436-6660 or visit www.justice.gov/atr/contact/newcase.htm.
Owner of Renovated Des Moines, Iowa Building Pleads Guilty to Environmental CrimesRead the Press Release
WASHINGTON – The owner of the Equitable Building in Des Moines, Iowa, pleaded guilty today in federal court in Des Moines to conspiracy to violate the Clean Air Act and to violating the Clean Air Act’s work practice standards related to asbestos removal, the Department of Justice Environment and Natural Resources Division and the U.S. Attorney’s Office for the Southern District of Iowa announced.
Bob Knapp, 61, of Des Moines, pleaded guilty before U.S. District Judge James E. Gritzner to one count of conspiracy to violate the Clean Air Act and one count of failing to remove all regulated asbestos containing material from the Equitable Building before commencement of the renovation project that occurred at the building from 2005 until 2008.
The Clean Air Act requires that owners of public buildings that contain asbestos follow federally-established work practice standards to ensure the safe removal of the asbestos. The required standards include providing notice to the U.S. Environmental Protection Agency (EPA) before commencing asbestos removal, adequately wetting the asbestos during the removal and before disposal, and properly disposing of the asbestos at an EPA-approved disposal site.
According to a plea agreement filed with the court, from 2006 through February 2008, Mr. Knapp oversaw the renovation project which involved converting several floors in the Equitable Building into luxury residential condominium units, and renovating other floors to attract additional commercial tenants.
Mr. Knapp admitted that he conspired with Russell Coco, who was also charged and pleaded guilty to the same counts on Feb. 15, 2011, to remove asbestos containing materials from the Equitable Building without complying with the requirements of the Clean Air Act. While Mr. Knapp was overseeing the project, asbestos containing material was removed from the building and disposed of in an uncovered dumpster.
According to the plea agreement, Mr. Knapp has agreed that the characteristics of his offenses put his potential prison sentence in the 33 to 41 month range , and under the law, he may be subject to a fine of up to $250,000. A sentencing date has been set for June 10, 2011.
The investigation was conducted by the EPA Criminal Investigation Division. The case is being prosecuted by the U.S. Attorney’s Office for the Southern District of Iowa together with the Justice Department’s Environmental Crimes Section of the Environment and Natural Resources Division.
Justice Department Reaches Agreement with Rhode Island on Voter Registration at Public Assistance and Disability OfficesRead the Press Release
WASHINGTON – The Justice Department announced today that it has reached an agreement with Rhode Island officials to ensure that all public assistance and disability services offices in Rhode Island offer voter registration services to their clients. The agreement is necessary to bring Rhode Island into compliance with the National Voter Registration Act (NVRA).
The agreement was filed in conjunction with a lawsuit by the Justice Department’s Civil Rights Division alleging that Rhode Island violated federal law by failing to provide voter registration services at all public assistance offices and all offices that provide state-funded programs primarily aimed at persons with disabilities.
Congress enacted the NVRA in 1993 in part to enhance citizen participation in elections by making voter registration opportunities available at offices that provide essential services, like public assistance and disability services.
“The voting process begins with registration, and it is essential that all citizens have unfettered access to voter registration opportunities,” said Thomas E. Perez, Assistant Attorney General for the Justice Department’s Civil Rights Division. “I am pleased that officials in Rhode Island worked cooperatively with the Justice Department to reach this agreement, which will ensure that all citizens who apply for public assistance or disability services in Rhode Island will be able to register to vote as easily and conveniently as possible.”
The two-year agreement, if approved by the district court, commits Rhode Island to undertake a variety of measures, including offering voter registration opportunities to all applicants for public assistance, WIC, rehabilitative services, developmental disabilities services and mental health services; distributing voter registration applications in public assistance and disability services offices and via mail; training employees on NVRA compliance; conducting regular internal compliance audits; and reporting the number of voter registration applications processed by public assistance and disability service offices. In the event compliance is not achieved within two years, the agreement will continue until compliance is reached.
More information about the NVRA and other federal voting laws is available on the Department of Justice website at www.justice.gov/crt/about/vot/. Complaints about discriminatory voting practices may be reported to the Voting Section of the Justice Department’s Civil Rights Division at 1-800-253-3931.
Justice Department Officials Raise Awareness of Disaster Fraud <br /> Hotline for Reporting Fraudulent Charitable Contribution SchemesRead the Press Release
WASHINGTON – The Department of Justice reminds members of the public to be aware of and report any instances of suspected fraudulent charitable contribution schemes related to the natural disasters in Japan.
Members of the public should perform due diligence before giving contributions to individuals or organizations soliciting donations or claiming to provide assistance to the victims of natural disasters. Suspected fraudulent charity schemes should be reported to the National Center for Disaster Fraud (NCDF) Disaster Fraud Hotline at 866-720-5721, the Disaster Fraud Fax at 225-334-4707 or the Disaster Fraud e-mail at [email protected] .
“The unprecedented tragedy in Japan is inspiring many Americans to provide assistance to those in need,” said Assistant Attorney General Lanny A. Breuer of the Criminal Division. “To ensure these efforts reach the causes for which they are intended, individuals must be vigilant and wary of fraud schemes that seek to exploit their generosity. Suspicious or illegitimate charities should be reported to the National Center for Disaster Fraud.”
“As we watch one of the worst global disasters of the last century unfold in Japan, Americans will have increasing opportunities to help those affected through the work of dedicated charities,” said U.S. Attorney Jim Letten of the Eastern District of Louisiana, Executive Director of the National Center for Disaster Fraud. “As we should be generous, Americans must also be smart in recognizing that as with other disasters, some will try to exploit that generosity through fraud, deceit and theft. We will therefore depend on the vigilance of our citizens to report any suspected fraudulent charities or conduct to the NCDF.”
The NCDF was created in 2005 in response to a significant amount of fraud associated with federal disaster relief programs following Hurricanes Katrina, Rita and Wilma. The NCDF mission has expanded to include suspected fraud related to any natural or man-made disaster. More than 20 federal agencies, including the Justice Department’s Criminal Division and the U.S. Attorneys’ Offices, participate in the NCDF. The NCDF – based on its extensive expertise and established infrastructure – has helped victims of fraud related to Hurricanes Katrina, Rita, Wilma, Ike and Gustav, as well as those affected by the Gulf Coast oil spill, severe storms in more than 20 different states, earthquakes, tsunamis and wildfires.
To date, the Department of Justice has charged more than 1,300 defendants in 47 judicial districts throughout the country for disaster fraud related to Hurricanes Katrina, Rita and Wilma, the Gulf Coast oil spill and other disasters.
Thursday 17 March 2011
Operator of Tax Preparation Business Sentenced to 17 ½ Years in Prison in Fraudulent Tax Shelter ConspiracyRead the Press Release
GREENBELT, Md. – U.S. District Judge Roger W. Titus sentenced Irvin Hannis Catlett Jr., 64, of Crownsville, Md., today to 210 months in prison, followed by three years of supervised release for tax offenses in connection with a scheme to prepare individual income tax returns for clients, which reported bogus tax losses from a purported car leasing company. Judge Titus also entered an order of restitution against Catlett for $3,810,244. A federal jury convicted Catlett on Nov. 4, 2010.
The sentence was announced by U.S. Attorney for the District of Maryland Rod J. Rosenstein; Principal Deputy Assistant Attorney General for the Department of Justice’s Tax Division John A. DiCicco; Special Agent in Charge Rebecca Sparkman of the Internal Revenue Service (IRS) - Criminal Investigation Washington, D.C., Field Office; and Special Agent in Charge Robert Geary of the Treasury Inspector General for Tax Administration (TIGTA).
“Irvin Catlett’s ‘tax shelter’ scheme was a fraud,” said U.S. Attorney Rosenstein. “People who want to reduce their taxes should seek reliable and independent advice and avoid con artists selling magical schemes that are too good to be true.”
“Sentences like this one send a loud and clear message that crooked tax return preparers will be investigated, prosecuted and punished for their actions,” said Principal Deputy Assistant Attorney General DiCicco.
“People who create elaborate schemes that have no purpose other than to defraud the Government will be prosecuted,” stated Special Agent in Charge Sparkman. “Today’s sentencing further shows that the IRS-Criminal Investigation is working to stop fraud schemes whose activities unfairly shift the burden to honest taxpayers.”
“Congratulations all around for the excellent work on this case,” said Inspector General George. “This is another example of outstanding collaboration between TIGTA and the IRS’s Criminal Investigation unit to stop fraudulent schemes in their tracks. Those who engage in them will be investigated and prosecuted to the fullest extent of the law. Paid preparers are a critical component in our system of tax administration,” he added. “When preparers violate the law, they harm their victims and severely damage the credibility and reputation of the tax preparation community.”
According to testimony at the nine day trial, Catlett operated Tax Resolutions Inc. located in Laurel, Md. He falsely held out Motors Holding Company Inc., Motors Holding Company II through VI Inc. and Rentown Inc. to his clients as operating businesses involved in automobile leasing and sales. Catlett knew however that these entities were not engaged in automobile leasing and sales, nor in any other legitimate, profit-making business. From 1999 to 2009, Catlett worked with others to sell to clients purported “investments” in the tax shelter entities. These investments were payments to Catlett for the purchase of bogus tax losses, purportedly generated by the tax shelter entities’ automobile leasing operations. Catlett, Walter Cullum and James Unterreiner prepared fraudulent tax returns for their clients that included the fictitious business losses, thereby reducing the amount of taxable income and total tax reported by the clients, and resulting in the clients falsely claiming refunds from the IRS.
Trial testimony further showed that Catlett paid Mark Hunt, an IRS revenue officer, for providing Catlett with IRS taxpayer information on Tax Resolutions’ clients and for allowing Catlett to introduce Hunt to clients and potential clients as Catlett’s connection at the IRS, in order to assure them that the tax returns prepared by Tax Resolutions would not be the subject of adverse IRS actions.
As part of the scheme, Catlett and Cullum supplied clients with copies of stock certificates to assure the clients of the legitimacy of their investment in the tax shelter. Catlett and Cullum also provided clients with fraudulent IRS forms that reported the clients’ portions of fictitious business losses incurred by the tax shelter entities. Catlett instructed Cullum and Unterreiner to prepare client tax returns by first determining each client’s tax without the tax shelter loss, and then adding to the return a fictitious loss from a tax shelter entity large enough to reduce the client’s tax due to zero. Catlett also instructed Cullum and Unterreiner on how to prepare false tax returns so that they could maintain the scheme while Catlett was in prison from November 2002 to September 2004on other charges.
As a result of the scheme, approximately 275 tax returns were filed with the IRS which reported $22,009,021 in bogus Schedule E losses, which resulted in a tax loss to the United States of $3,810,244.
Cullum Jr., 37, of Columbia, Md.; Hunt, 45, of Baltimore; and Unterreiner, 34, of Bowie, Md., pleaded guilty to their participation in the tax evasion scheme and were each sentenced to three years probation. Tressa Nivens, 45, of Frederick, Md., also pleaded guilty to her role in the scheme and was sentenced to two years probation.
U.S. Attorney Rosenstein and Principal Deputy Assistant Attorney General DiCicco praised the IRS and TIGTA for their investigative work and thanked Assistant U.S. Attorney Gregory Bockin and Trial Attorney Shawn T. Noud of the Department of Justice Tax Division, who prosecuted the case.
Maryland Sports Manager Pleads Guilty to Tax Evasion, Conspiracy to Commit Bank and Wire FraudRead the Press Release
WASHINGTON – Nathan A. Peake, 40, a sports manager and resident of Silver Spring, Md., entered a plea of guilty today in U.S. District Court for the the District of Columbia to one count of tax evasion and one count of conspiracy to commit bank and wire fraud.
The plea was announced by U.S. Attorney for the District of Columbia Ronald C. Machen Jr.; Principal Deputy Assistant Attorney General John A. DiCicco of the Department of Justice’s Tax Division; Rebecca A. Sparkman, Special Agent in Charge of the Washington, D.C., Field Office of the Internal Revenue Service (IRS) – Criminal Investigation; D.C. Office of Tax and Revenue Deputy Chief Financial Officer Stephen M. Cordi; and Assistant Inspector General for Investigations Scott Berenberg of the U.S. Department of Commerce Office of Inspector General.
According to court documents, Peake has managed professional basketball players and boxers since 1999 under the name Peake Management Group Inc. (PMG). Peake did not file income tax returns for the years 2000 through 2007, despite earning significant amounts of income over that period of time.
Between 2000 and 2007, Peake diverted approximately $5,836,940 in management and agent fees from his business to personal bank accounts or commercial bank accounts that he controlled in names other than PMG. Peake committed numerous affirmative acts of evasion, including misappropriating proceeds from a $3.5 million commercial line of credit that one of his client athletes guaranteed and ultimately paid off; paying himself and his wife out of those commercial bank accounts that he controlled in names other than PMG; using cash to pay personal and business expenses; withdrawing cash in amounts less than $10,000 (an amount greater would have required banks to file currency transaction reports); and paying personal expenses with business receipts.
In total, Peake admitted to evading in excess of $1 million in income taxes.
In addition, Peake and others conspired to provide false information to several mortgage lenders over a nine-year period regarding Peake employment, income, rental receipts and obligations to the federal government. This included fabricated letters that falsely represented that Peake had filed federal income tax returns, reporting self employment wages, which had been reviewed by a certified public accountant.
Judge Ricardo M. Urbina set a sentencing date of Aug. 2, 2011. Peake faces a maximum prison sentence of 10 years. Under federal sentencing guidelines, the likely range is a prison term of 41 to 51 months.
A co-defendant in the case, Gregory L. McCormick, is awaiting trial on charges, including conspiracy to commit bank and wire fraud.
U.S. Attorney Machen, Principal Deputy Assistant Attorney General DiCicco, IRS Special Agent in Charge Sparkman, D.C. Deputy Chief Financial Officer Cordi, and Assistant Inspector General Berenberg praised the efforts of the many individuals from the IRS – Criminal Investigation, D.C. Office of Tax and Revenue and Department of Commerce Office of the Inspector General who investigated the case, as well as Assistant U.S. Attorney Susan Menzer and Department of Justice Trial Attorney Sean Delaney, who prosecuted this matter.
Federal Court Bars Two Los Angeles Residents from Promoting Sham Trust Tax SchemeRead the Press Release
WASHINGTON – A federal court has issued a preliminary injunction barring Gwenn Wycoff and Frank Ozak, both of Los Angeles, from promoting so-called “common-law trusts” that help individuals evade taxes, the Justice Department announced today. The injunction order, entered by U.S. District Judge Jacqueline H. Nguyen of the U.S. District Court for the Central District of California, will remain in effect while the government’s lawsuit seeking a permanent injunction is pending.
In granting the preliminary injunction, the court found that Wycoff and Ozak promote their scheme through personal appearances, a website and a self-published two-volume work they wrote with others called The Art of Passing the Buck, which contains false statements about the internal revenue laws. The court determined that the trusts promoted by Wycoff and Ozak (including one they created for themselves) are shams and have caused substantial harm to the government. The court found that the total amount of tax deficiencies assessed by the government with respect to four customers mentioned in the court order is more than $1.1 million.
The court also ordered Wycoff and Ozak to post a copy of the injunction order on their website and to provide the government with a list of all persons who have purchased their products, services advice or publications in the past five years.
In the past decade, the Justice Department’s Tax Division has obtained hundreds of injunctions to stop tax fraud promoters and preparers of false tax returns. Information about these cases is available on the Justice Department website .
Department of Justice Releases Investigative Findings Involving the New Orleans Police DepartmentRead the Press Release
WASHINGTON – Following a comprehensive investigation, the Justice Department today announced its findings that the New Orleans Police Department (NOPD) has engaged in patterns of misconduct that violate the Constitution and federal law. The investigation, announced on May 15, 2010, was conducted pursuant to the Violent Crime Control and Law Enforcement Act of 1994, the Omnibus Crime Control and Safe Streets Act of 1968 and Title VI of the Civil Rights Act of 1964.
The Justice Department’s thorough and independent investigation involved extensive community engagement and in-depth review of NOPD practices. Department attorneys and investigators held interviews and meetings with NOPD officers, supervisors and command staff, as well as members of the public, city and state officials, and other community stakeholders. The Justice Department participated in more than 40 community meetings with various advocacy groups, civic leaders and public officials. The investigation also involved thorough review of a wide range of NOPD documents, as well as ride-alongs and other opportunities to observe police activity. On May 5, 2010, Mayor Mitch Landrieu sent a letter to the Justice Department asking for an independent investigation of NOPD’s systems and operations.
The Justice Department found reasonable cause to believe that patterns and practices of unconstitutional conduct and/or violations of federal law occurred in several areas, including:
- Use of excessive force;
- Unconstitutional stops, searches and arrests;
- Biased policing, including:
- Racial and ethnic profiling and lesbian, gay, bi-sexual and transgender (LGBT) discrimination;
- A systemic failure to provide effective policing services to persons with limited English proficiency; and
- A systemic failure to investigate sexual assaults and domestic violence.
The Justice Department also found a number of long-standing and entrenched practices within NOPD that caused or contributed to these patterns or practices of unconstitutional conduct, including:
- Failed systems for officer recruitment, promotion and evaluation;
- Inadequate training;
- Inadequate supervision;
- Ineffective systems of complaint intake, investigation and adjudication;
- A failed “Paid Detail” system;
- Failure to engage in community oriented policing;
- Inadequate officer assistance and support services; and
- Lack of sufficient community oversight.
“For far too long, the New Orleans Police Department failed to adequately protect the citizens of the city. This was a result of its failure to ensure respect for and adherence to the Constitution,” said Deputy Attorney General James Cole. “Today’s findings should serve as a foundation not only to rebuild the police department, but to help restore the community’s trust in fair, just and effective law enforcement.”
“Our findings show that the problems facing the NOPD are wide ranging, systemic, and deeply rooted in the culture of the Department,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “Our team looks forward to working with the people of New Orleans, Mayor Landrieu, Chief Serpas and his officers in creating and implementing a comprehensive blueprint for sustainable reform.”
“Today, the Justice Department has taken a critical step forward towards building a police department which the people deserve and desperately need – one which is free from corruption and which is dedicated to the protection of its citizens,” said U.S. Attorney for the Eastern District of Louisiana James Letten. “Through this partnership, and through the tireless efforts of our U S Attorney’s Office, the department’s Civil Rights Division and our federal partners, we will continue to do whatever it takes to reach these essential goals and to restore trust in the men and women of the police department.”
The Justice Department will work with the NOPD and the city of New Orleans to address the violations of constitutional and federal law by developing and implementing comprehensive reforms that will reduce crime, ensure respect for the Constitution and the rule of law, and restore public confidence in the NOPD. The NOPD must develop and implement new policies and protocols and train its officers in effective and constitutional policing. In addition, the NOPD must implement systems to ensure accountability, foster police-community partnerships, improve the quality of policing to all parts of the city and eliminate unlawful bias from all levels of policing decisions.
This investigation was not related to any ongoing federal criminal prosecutions of NOPD officers.
This investigation was conducted by the Special Litigation Section of the Civil Rights Division with the assistance of the U.S. Attorney’s Office for the Eastern District of Louisiana. In addition, the investigators consulted with a number of police experts from around the country and with Department experts within the Office of Justice Programs, the Office on Violence Against Women, the Office of Community Oriented Policing Services, the Office on Juvenile Justice Delinquency Prevention and the Access to Justice Initiative. Over the past six months, the Community Relations Service has facilitated community participation, allowing community members to express their concerns and to share their ideas.
The executive summary and full report can be found at www.justice.gov/crt/about/spl/nopd.php . Over the next few weeks and months, Department of Justice personnel will be meeting with interested community groups. Comments or suggestions can also be e-mailed to [email protected] .
Denton County, Texas, Man Pleads Guilty to Sex Trafficking and Related Federal ChargesRead the Press Release
DALLAS — Marcus Choice Williams, 36, of Fort Worth, Texas, pleaded guilty this morning before U.S. Magistrate Judge Irma C. Ramirez to various felony offenses related to a conspiracy to traffic young women for prostitution, the Department of Justice announced.
Williams pleaded guilty to one count of conspiracy to transport individuals for prostitution; six counts of transporting individuals for prostitution; one count of sex trafficking by force, fraud or coercion; two counts of attempted sex trafficking by force; and one count of money laundering.
According to documents filed in the case, Williams operated an interstate prostitution enterprise headquartered in the Dallas-Fort Worth area. He began operating in Texas in 2003 and, in 2006, expanded his enterprise into a multi-state operation that included advertising on websites. Williams was also known as “Cross Country Redd,” “Redd,” and “Marcus Choice.”
Court documents showed that Williams recruited vulnerable women, specifically single mothers from troubled backgrounds, and, in some cases used a combination of deception, fraud, coercion, threats and physical violence to compel the women to engage in prostitution. Williams required each young woman to secure a daily quota of money, and if operating out of town, to wire the funds to him.
“The exploitation of vulnerable women through sex trafficking is the equivalent of modern-day slavery, and will not be tolerated in this nation,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Justice Department is committed to the aggressive prosecution of all human trafficking cases.”
“The idea that an individual can be held in captivity by another person and forced to work in the world of prostitution is shocking to most people, said U.S. Attorney for the Northern District of Texas James T. Jacks. “As evidenced by this and other cases brought by the Department of Justice, these activities are all too prevalent. This office and the Department of Justice as a whole are working to change that fact. We call upon the public to report any and all suspicious activity which may lead to apprehending and prosecuting those persons engaged in this activity and giving freedom to their victims.”
Under the terms of the plea agreement, Williams faces a sentence of 30 years in prison, if the Court accepts the sentencing recommendation in the plea agreement. Williams, who has been in custody in the Northern District of Texas since October 2010, when his pretrial release was revoked, is scheduled to be sentenced on June 20, 2011, by U.S. District Judge David C. Godbey.
Co-defendant Kenya Thomas, 31, of Plano, Texas, the mother of two of Williams’ children, assisted Williams in managing the operation and supervising new recruits. Thomas pleaded guilty to her role in the conspiracy in December 2009.
The case remains pending against the other co-defendant in the case, Preston Petitt, 44, of Houston, Texas. According to court documents, in addition to serving as Williams’ butler and bodyguard, Petitt allegedly provided child care for the other defendants and for victims while they performed commercial sex acts at the defendants’ direction. Williams made thousands of dollars in profits, while the victims received next to nothing.
The case was investigated by the FBI and is being prosecuted by Assistant U.S. Attorney Errin Martin and Department of Justice Civil Rights Division Trial Attorney Myesha Braden.
Wednesday 16 March 2011
United States Files Counterclaims Against KBR Alleging False Claims and KickbacksRead the Press Release
WASHINGTON – In response to a pending lawsuit from Kellogg Brown & Root Services Inc. (KBR) in the U.S. Court of Federal Claims, the Department of Justice has filed counterclaims alleging that KBR managers had received kickbacks from a dining facility subcontractor in violation of the False Claims Act and the Anti-Kickback Act. The subcontractor was retained in connection with KBR’s contract with the U.S. Army to provide logistical support to the military in Iraq and elsewhere. The counterclaims also allege that the kickbacks should cause KBR to forfeit its claims against the United States and to return money paid by the United States as reimbursement to KBR upon the tainted subcontract.
The counterclaims assert that, from late 2002 through 2003, Terry Hall, who was KBR’s regional food services manager for Iraq and Kuwait, and his deputy, Luther Holmes, received more than $45,000 in kickbacks from Mohammad Shabbir Khan, vice president of Tamimi Global Company. Khan provided the kickbacks to ensure that Tamimi was treated favorably by KBR. Hall and Holmes used their positions to advocate on behalf of Tamimi, and, during the time that they received the kickbacks, KBR awarded Tamimi subcontracts worth more than $400 million. Other KBR managers knew of apparent irregularities involving the Tamimi subcontracts, but approved them anyway.
The subcontracts were awarded under the Logistics Civil Augmentation Program (LOGCAP) III contract, which was awarded to KBR by the Army in 2001 to provide logistical support for U.S. military operations abroad. One of the tasks directed by the Army under the LOGCAP III contract was for KBR to provide dining facilities at its bases in Iraq and Kuwait. The Army reimbursed KBR for its costs in doing so plus a fee, based upon the amount of costs incurred. Thus, all of the allegedly improperly awarded subcontracts and KBR’s profit on these subcontracts were paid for by U.S. taxpayers.
“Kickbacks in military subcontracts open the door to wartime profiteering and corrupt the integrity of our government contracting process,” said Assistant Attorney General for the Civil Division Tony West. “When we learn of such illegal conduct at the expense of taxpayers, we will pursue it.”
KBR’s original lawsuit seeks approximately $41 million that the United States required KBR to return after a Defense Contract Audit Agency (DCAA) audit. The DCAA found that KBR overpaid Tamimi $41 million for dining facility costs from July 2004 to December 2004, compared to what it was paying other contractors during that time period.
The assertion of these counterclaims demonstrates the Department of Justice’s commitment to ensuring the integrity of the government procurement process.
Three Former Executives Charged in $200 Million Fraud Scheme Involving Fair Financial Company InvestorsRead the Press Release
WASHINGTON – Three former executives of Fair Financial Company, an Ohio financial services business, were arrested today and charged in an indictment filed in the Southern District of Indiana for their roles in a scheme to defraud approximately 5,000 investors of more than $200 million, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division; Timothy M. Morrison, First Assistant U.S. Attorney for the Southern District of Indiana; and Special Agent in Charge Michael E. Welch of the FBI in Indiana.
The indictment, returned by a federal grand jury on March 15, 2011, and unsealed today, charges Timothy S. Durham, 48; James F. Cochran, 55; and Rick D. Snow, 47, with one count of conspiracy to commit wire and securities fraud, 10 counts of wire fraud and one count of securities fraud. Durham was arrested in Los Angeles, and Cochran and Snow were arrested in Indianapolis.
According to the indictment, Durham and Cochran purchased Fair, whose headquarters were in Akron, Ohio, in 2002. Durham was the chief executive officer of Fair and a member of the board of directors, Cochran was the chairman of the board of Fair, and Snow, a certified public accountant, served as the chief financial officer of Fair.
The indictment alleges that between approximately February 2005 through the end of 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 indictment further alleges 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.
According to the indictment, 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. The indictment alleges that in 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, which they claimed were worth approximately $240 million, and finance receivables of approximately $24 million.
“These former executives are charged with engaging in fraudulent and deceptive business practices to hide from investors and regulators Fair’s true financial condition and their misuse of the company’s funds,” said Assistant Attorney General Breuer. “As alleged in the indictment, by using investors’ money to fund their failing business ventures and personal lifestyles, they perpetrated a $200 million fraud. Today’s charges and arrests reflect that investigating and prosecuting financial fraud is a Justice Department priority.”
“This has been an arduous journey, as are most large white collar cases,” said First Assistant U.S. Attorney Morrison. “But we now welcome the opportunity to prove the indictment’s allegations against these three men beyond a reasonable doubt.”
“These arrests follow the largest corporate fraud investigation in the history of the FBI in Indiana which resulted in over 5,000 victims and an estimated loss of $200 million dollars,” said Special Agent in Charge Welch.
According to the indictment, when Durham and Cochran bought Fair in 2002 its primary business was purchasing and collecting finance receivables. Fair financed its purchase of finance receivables by selling investment certificates to investors. Investors who purchased investment certificates were promised regular interest payments for a set period of time, at the end of which they were entitled to the return of their principal investment.
In order to sell its investment certificates, Fair was required to register the investment certificates with the State of Ohio Division of Securities. Fair did so by submitting registration documents and a proposed “offering circular” to the Division of Securities that was required to contain truthful and accurate disclosures about Fair’s business.
The indictment alleges that after Durham and Cochran acquired Fair, they changed the manner in which the company operated and used its funds. Rather than using the funds Fair raised from investors primarily for the purpose of purchasing finance receivables, Durham and Cochran caused Fair to extend loans to themselves, their associates and businesses they owned or controlled, which caused a steady and substantial deterioration in Fair’s financial condition.
According to the indictment, companies owned or controlled by Durham and Cochran, including DC Investments LLC (DCI) and Obsidian Enterprises Inc., as well as other businesses controlled through Obsidian and DCI, were among the primary beneficiaries of the loans Durham and Cochran made with Fair investor money. Durham and Cochran allegedly loaned money through Obsidian and DCI to a variety of struggling businesses and start-up ventures, including a car magazine, restaurants, a surgery center, trailer manufacturers, internet companies, a race car team, a replica vintage car manufacturer, a rubber reclaiming plant and a luxury bus leasing business. The indictment further alleges that after receiving loans from Fair, many of these businesses failed and were never able to repay the money they borrowed, while others, with the benefit of continued loans from Fair, struggled as unprofitable entities for years. In addition, Durham and Cochran allegedly took loans of Fair investor money for themselves, and used a significant portion of the proceeds of the loans to maintain their lifestyles and to pay for personal expenses.
According to the indictment, 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. The indictment alleges that 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. The indictment further alleges that with independent accountants no longer auditing Fair’s financial statements, the defendants were able to conceal from investors Fair’s true financial condition.
The indictment also alleges that Durham, Cochran and Snow falsely represented, in registration documents and offering circulars submitted to the Division of Securities and in offering circulars distributed to investors, that the loans on Fair’s books were assets that could support Fair’s sale of investment certificates. According to the indictment, the defendants knew that in reality, the loans were worthless or grossly overvalued; producing little or no cash proceeds; supported by insufficient or non-existent collateral to assure repayment; and in part advances, salaries, bonuses and lines of credit for Durham and Cochran’s personal expenses.
The indictment alleges that the defendants engaged in a variety of other fraudulent activities to conceal from the Division of Securities and from investors Fair’s true financial health and cash flow problems, including making 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, and directing employees of Fair not to pay investors who were owed interest or principal payments on their certificates. According to the indictment, 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.
An indictment is only a charge and is not evidence of guilt. A defendant is presumed innocent and is entitled to a fair trial at which the government must prove guilt beyond a reasonable doubt.
Also today, the U.S. Securities and Exchange Commission filed civil securities charges against Durham, Cochran and Snow.
This case is being prosecuted by Assistant U.S. Attorneys Winfield D. Ong and Joe H. Vaughn of the Southern District of Indiana and Assistant Chief Robertson Park and Trial Attorney Henry P. Van Dyck of the Fraud Section of the Criminal Division. The investigation was led by the FBI in Indianapolis.
Durham, Cochran and Snow each face a maximum of five years in prison for the conspiracy count, 20 years in prison for each wire fraud count and 20 years in prison for the securities fraud count. Additionally, each defendant could be fined $250,000 for each count of conviction. An initial hearing was held today in Indianapolis before a U.S. Magistrate Judge Kennard Foster for Cochran and Snow, and an initial hearing for Durham will be held in Los Angeles.
This prosecution is part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information about the task force visit: www.stopfraud.gov .
Maryland Resident Charged with Making False Statements<br /> and Submitting False Documents in Applications for Federal JobsRead the Press Release
WASHINGTON – A Maryland woman has been charged by a federal grand jury in Alexandria, Va., with making false statements and submitting false documents in multiple job applications to U.S. federal government agencies, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Neil H. MacBride of the Eastern District of Virginia; James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office; and Inspector General H. David Kotz of the U.S. Securities and Exchange Commission (SEC.)
The indictment returned today charges Karen M. Lancaster, 52, of Upper Marlboro, Md., with four counts of making false statements, three counts of submitting false documents and one count of engaging in a concealment scheme. Lancaster will be arraigned on March 25, 2011, in U.S. District Court in Alexandria.
According to the indictment, Lancaster was employed in various positions with the U.S. Department of Defense (DoD) from 1991 until March 2005, when she was notified by DoD that she was being fired due to performance failures. In October 2006, according to the indictment, Lancaster reached a settlement with DoD in which she was allowed to resign from DoD, retroactive to March 2005.
Between 2006 and 2008, Lancaster applied for jobs at the U.S. Departments of State, Commerce and Defense, as well as with the SEC. According to the indictment, as part of the application processes, Lancaster allegedly submitted documents that falsified and concealed information about her criminal history, employment history and suitability for employment with the federal government. Among the documents submitted by Lancaster were SF-50 forms, which are used by the U.S. federal government to document and report certain personnel actions such as hirings, promotions, conversions and separations; OF-306 forms, which are used to, among other things, determine an applicant’s acceptability for federal employment; and SF-86 forms, which are used in conducting background investigations for applicants and employees requiring a security clearance. According to the indictment, Lancaster made false statements on, among other documents, OF-306 and SF-86 forms, and provided two federal agencies with fraudulent versions of her SF-50 form.
Specifically, according to the indictment, Lancaster concealed and falsified information in her application materials about her prior arrests, charges, convictions and prison terms; the unfavorable circumstances under which she had resigned from prior federal employment; the roles and responsibilities she had at previous federal jobs; and her salary history.
The maximum penalty for each count of making a false statement, submitting a false document and engaging in a concealment scheme is five years in prison. Lancaster also faces a maximum fine of $250,000 per count.
An indictment is merely an accusation, and a defendant is presumed innocent unless proven guilty in a court of law.
This case is being prosecuted by Trial Attorneys Ethan H. Levisohn and Peter Mason of the Criminal Division’s Public Integrity Section, and Assistant U.S. Attorney Mark D. Lytle for the Eastern District of Virginia. The case was investigated by the FBI’s Washington Field Office and the SEC’s Office of Inspector General.
Leaders of Colorado-Based Vending Machine Fraud Sentenced to PrisonRead the Press Release
DENVER – The two leaders of a Colorado-based scheme that defrauded more than 400 consumers throughout the country of $5 million were sentenced to prison, the Justice Department and U.S. Postal Inspection Service announced today. Gary Luckner, 41, of Highlands Ranch, Colo., was sentenced today to 90 months in prison and was ordered to pay $4,524,456 in restitution. Richard Black, 52, of Arcadia, Calif., was sentenced yesterday to 97 months in prison and was ordered to pay $5,066,456 in restitution.
Black and Luckner created, led and operated the fraudulent scheme from 2007-2009, according to documents filed in the case. The two men arranged for various telemarketing sales rooms to sell business opportunities for vending machines that dispensed highly caffeinated energy chews and energy shots. For a purchase price of typically about $10,000, purchasers were promised vending machines, high-traffic locations for the vending machines and ongoing assistance in operating the vending machine business. Most of the victims never made any money and lost their entire investment. The largest of the telemarketing sales rooms involved – and the one that made the most sales – was American Vending Systems, which was located in Centennial, Colo.
Black and Luckner acknowledged in their plea agreements that sales representatives lied about likely profits from the business, the quality of locations that were available for the vending machines and the level of customer service that purchasers would receive. Black and Luckner also used phony “references” to persuade the victims to buy. Black himself was one such reference. Using an alias, Black falsely told potential buyers that he was an American Vending customer who operated a financially profitable vending route.
Black and Luckner pleaded guilty to conspiracy to commit mail fraud. Four other defendants were also convicted as part of the same scheme:
Trey Friedmann, 46, of Denver, was sentenced yesterday by Judge David M. Ebel to two years in prison and was ordered to pay $465,734 in restitution. Friedmann was the top salesman at American Vending.
Louis J. Gubitosa, 63, of Littleton, Colo., was sentenced earlier this year to 18 months in prison. Gubitosa was the president of American Vending.
Henry Melvin Hendrix, 48, of Galt, Calif., was ordered earlier this year to serve five years of probation, including eight months of home confinement. Hendrix was a phony reference who was paid to pretend to be a successful vending route owner.
Jennifer Putnam, 33, of Bluffton, S.C., was sentenced earlier this year to five years of probation, including eight months of home confinement. Putnam operated a locating company involved in the scheme that falsely claimed to have good locations ready and waiting in the area of the potential buyer.
“The victims’ stories are heartbreaking,” said Tony West, Assistant Attorney General of the Justice Department’s Civil Division. “Like so many Americans struggling to make ends meet, these folks were trying to supplement modest incomes by investing in themselves and starting their own businesses. Instead of taking a step up the financial ladder, their losses now put them in a financial hole because these defendants lied to them. That’s why this department will continue to prosecute and seek stiff sentences for fraudsters like those sentenced today.”
“Prosecuting perpetrators of financial fraud is a top priority,” said U.S. Attorney for the District of Colorado John Walsh. “Victims of these crimes are more than just names on a piece of paper, they are real people who have lost their hard earned money. That is why it is so important to pursue cases such as this.”
“Federal agents with the United States Postal Inspection Service work diligently to protect citizens from being victimized by criminals who use the mail to commit fraud,” said Inspector in Charge of the U.S. Postal Inspection Service Denver Division Andrew Balkin. “Postal Inspectors from the Denver office are pleased with the efforts of the Justice Department in seeing these criminals brought to justice. Investigations like this will always be a priority for Postal Inspectors.”
The case was investigated by the U.S. Postal Inspection Service. Luckner, Black and the other defendants were prosecuted by Trial Attorney Patrick Jasperse of the U.S. Justice Department’s Office of Consumer Litigation.
Former Colonial Bank Mortgage Lending Supervisor <br /> Pleads Guilty to Fraud SchemeRead the Press Release
WASHINGTON – Teresa Kelly, a former operations supervisor in Colonial Bank’s Mortgage Warehouse Lending Division (MWLD), pleaded guilty today to conspiring to commit bank, wire and securities fraud for her role in a fraud scheme that contributed to the failures of Colonial Bank and Taylor, Bean & Whitaker (TBW).
The guilty plea was announced today by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Neil H. MacBride for the Eastern District of Virginia; Special Inspector General Neil Barofsky for the Troubled Asset Relief Program (SIGTARP); Assistant Director in Charge James W. McJunkin of the FBI’s Washington Field Office; Michael P. Stephens, Inspector General of the Department of Housing and Urban Development (HUD OIG); Jon T. Rymer, Inspector General of the Federal Deposit Insurance Corporation (FDIC OIG); Steve A. Linick, Inspector General of the Federal Housing Finance Agency (FHFA OIG); and Victor F. O. Song, Chief of the Internal Revenue Service (IRS) Criminal Investigation.
Kelly, 35, of Ocoee, Fla., pleaded guilty before U.S. District Judge Leonie M. Brinkema in the Eastern District of Virginia. Kelly faces a maximum penalty of five years in prison when she is sentenced on June 17, 2011. In a related action, the U.S. Securities and Exchange Commission (SEC) today filed civil charges against Kelly in the Eastern District of Virginia.
According to court documents, Kelly admitted that from 2002 through August 2009, she and her co-conspirators at Colonial Bank and TBW engaged in a scheme to defraud various entities and individuals, including Colonial Bank, a federally-insured bank; Colonial BancGroup Inc.; and the investing public. Kelly admitted that she knowingly and intentionally placed Colonial Bank and Colonial BancGroup at significant risk by causing them to purchase more than $400 million in assets that had no value.
Court documents state that in early 2002, TBW began running overdrafts in its master bank account at Colonial Bank because of TBW’s inability to meet its operating expenses, which included payroll, servicing payments owed to third-party purchasers of loans and/or mortgage-backed securities and other obligations. Kelly and her co-conspirators engaged in a series of fraudulent actions to cover up the overdrafts, first by sweeping overnight money from one TBW account with excess funds into another, and later through the fictitious “sales” of mortgage loans to Colonial Bank, a fraud scheme the conspirators dubbed “Plan B.” The conspirators accomplished this by sending mortgage data to Colonial Bank for loans that did not exist or that TBW had already committed or sold to other third-party investors. Kelly admitted that she knew and understood she and her co-conspirators had caused Colonial Bank to pay TBW for assets that were worthless to the bank.
According to court documents, Kelly and her conspirators also caused TBW to engage in sales to Colonial Bank of fictitious trades that had no collateral backing them and had no value. To obtain fraudulent funding through these trades, TBW co-conspirators would contact Kelly or another co-conspirator at Colonial Bank when the mortgage company needed an advance from the bank. Conspirators at TBW would wire a request that included false documentation purporting to represent the sale of the trades to Colonial Bank to support the release of the funds. Kelly and others caused the false information to be entered into Colonial Bank’s books and records, giving the appearance that Colonial Bank owned a 99 percent interest in legitimate securities, when in fact the securities had no value and could not be sold.
Kelly admitted today that she and her co-conspirators took steps to hide the fraud scheme from Colonial Bank’s and Colonial BancGroup’s senior management, auditors and regulators, and Colonial BancGroup’s shareholders, including by providing materially false information that significantly overstated assets held in the MWLD portfolio. Kelly knew that these actions caused materially false financial data to be reported to Colonial BancGroup and incorporated in its publicly filed statements.
In August 2009, the Alabama State Banking Department, Colonial Bank’s regulator, seized the bank and appointed the FDIC as receiver. Colonial BancGroup also filed for bankruptcy in August 2009.
Raymond Bowman, the former president of TBW; Desiree Brown, the former treasurer of TBW; and Catherine Kissick, a former senior vice president of Colonial Bank and head of its Mortgage Warehouse Lending Division, previously pleaded guilty for their roles in the fraud scheme.
The case is being prosecuted by Deputy Chief Patrick Stokes and Trial Attorney Robert Zink of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Charles Connolly and Paul Nathanson of the Eastern District of Virginia. This case was investigated by SIGTARP, FBI’s Washington Field Office, FDIC OIG, HUD OIG, FHFA OIG and the IRS Criminal Investigation. The Financial Crimes Enforcement Network (FinCEN) of the Department of the Treasury also provided support in the investigation.
This prosecution was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
Brothers Plead Guilty to Felonies in Connection with Kansas Deer Hunting and Guiding OperationRead the Press Release
WASHINGTON – James Bobby Butler Jr. and Marlin Jackson Butler pleaded guilty today in federal court in Wichita, Kan., to felony conspiracy and wildlife trafficking charges stemming from the illegal sale of guided deer hunts in southern Kansas, the Department of Justice and the U.S. Attorney’s Office for the District of Kansas announced.
James Bobby Butler Jr., 42, pleaded guilty to one count of conspiracy to violate the Lacey Act, one substantive Lacey Act count and one count of obstruction of justice. His brother, Marlin Jackson Butler, 36, pleaded guilty to one count of conspiracy to violate the Lacey Act and one Lacey Act count. Both men are from Martinsville, Texas.
The Lacey Act is a federal law that makes it illegal to knowingly transport or sell in interstate commerce any wildlife taken or possessed in violation of state law or regulation.
According to the May 2010 indictment in the case and today’s plea agreements, James and Marlin Butler conspired together to knowingly transport and sell in interstate commerce deer that had been hunted in violation of Kansas state law. The brothers operated a guiding service and hunting camp near Coldwater, Kan., at which they sold guiding services to out-of-state hunters for the purpose of illegally hunting and killing white-tailed and mule deer. Hunters guided by the Butler brothers killed deer in excess of annual bag limits, hunted deer without permits or using permits for the wrong deer management unit, killed deer using illegal equipment and hunted using prohibited methods such as spotlighting.
The guided hunts were sold for between $2,500 and $5,500, and in several instances resulted in the killing of trophy-sized buck deer. In today’s plea agreements, the Butlers admitted knowingly selling guided hunts for the illegal taking of the 25 buck deer identified in the indictment, for which hunters paid them a total of $77,500 in guiding fees plus tips. In addition to selling guiding services, the brothers also arranged for transport of the deer, in particular the antlers and capes, from Kansas to Texas and Louisiana.
James Butler also admitted in his plea agreement that he instructed another person to conceal or destroy evidence during the investigation.
The maximum penalty for a felony violation of the conspiracy statute and the Lacey Act includes up to five years in prison and a $250,000 fine. The maximum penalty for the obstruction charge against James Butler includes up to 20 years in prison and $250,000 fine. According to the plea agreements filed today, the prosecution agreed to recommend sentences of 41 months in prison for James Butler and 27 months in prison for Marlin Butler, in addition to fines, restitution and three years of supervised release during which time both Butler brothers would be prohibited from all hunting and guiding activity. Sentencing hearings for both defendants are set for June 2, 2011.
The case was investigated by the U.S. Fish & Wildlife Service, the Kansas Department of Wildlife and Parks, and the Texas Parks and Wildlife Department. The case is being jointly prosecuted by the U.S. Attorney’s Office for the District of Kansas and Environmental Crimes Section of the Justice Department’s Environment and Natural Resources Division.
Tuesday 15 March 2011
Texas Man Sentenced to 84 Months in Prison for<br /> Conspiracy to Distribute and Receive Child PornographyRead the Press Release
WASHINGTON – Daniel Cox of Houston was sentenced today in the Western District of Pennsylvania to 84 months in prison and lifetime supervised release for conspiracy to distribute and receive child pornography, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney for the Western District of Pennsylvania David J. Hickton and U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI) Special Agent in Charge John Kelleghan.
Cox, 45, pleaded guilty before U.S. District Court Judge Arthur J. Schwab on July 21, 2010, to one count of conspiracy to distribute and receive child pornography. According to court documents and proceedings, Cox and others distributed images and videos of children being sexually abused to other members of an international group that had restricted membership and was formed on a social networking website. Members of the group distributed to one another thousands of sexually explicit images and videos of children, many of which graphically depicted prepubescent, male children, including some infants, being sexually abused and sometimes sodomized or subjected to bondage.
This case was investigated by HSI in Pittsburgh and the High Technology Investigative Unit of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS). Assistant U.S. Attorney Craig W. Haller of the Western District of Pennsylvania and CEOS Trial Attorney Andrew McCormack prosecuted the case.
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 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
Massachusetts Man Pleads Guilty to Child Pornography ChargesRead the Press Release
WASHINGTON – George H. Lunt, 26, formerly of Plymouth, Mass., pleaded guilty today to two counts of transportation of child pornography and one count of possession of child pornography, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division , U.S. Attorney for the District of Massachusetts Carmen M. Ortiz and Richard DesLauriers, Special Agent in Charge of the FBI Boston Field Office.
Lunt pleaded guilty before U.S. District Court Judge George A. O’Toole Jr. in Boston. Lunt was indicted on May 26, 2010. In pleading guilty, Lunt admitted to possessing thousands of images and videos of child pornography that included depictions of prepubescent children and toddlers, and sadistic conduct. Lunt admitted to distributing child pornography through online peer-to-peer file-sharing software. This case arose from an FBI investigation of individuals sharing and trading child pornography over the Internet.
Lunt is scheduled to be sentenced on June 21, 2011. Lunt faces a mandatory minimum penalty of five years in prison, a fine of $250,000 and restitution if appropriate.
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by U.S. Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
The case against Lunt was prosecuted by Assistant U.S. Attorney Michael I. Yoon of the District of Massachusetts and CEOS Trial Attorney Bonnie L. Kane of the Criminal Division. The case was investigated by the FBI.
Latin Kings Member Convicted in Maryland of <br /> Racketeering Conspiracy, Murder, Robbery and Firearms OffensesRead the Press Release
WASHINGTON - A federal jury convicted Chinua Shepperson, aka “Nu,” “NuNu” and “King Nu,” 28, of Washington, D.C., late yesterday of conspiracy to participate in a racketeering enterprise known as the Almighty Latin King and Queen Nation (Latin Kings), murder in aid of racketeering, robbery, using a gun during a crime of violence and murder resulting from the use of a gun during a crime of violence.
The conviction was announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Theresa R. Stoop of the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) - Baltimore Field Division; Chief J. Thomas Manger of the Montgomery County Police Department; Montgomery County State’s Attorney John McCarthy; Interim Chief Mark Magaw of the Prince George’s County Police Department; and Prince George’s County State’s Attorney Angela Alsobrooks.
“The Latin Kings is a brutal gang that uses violence to achieve its ends,” said Assistant Attorney General Breuer. “With Mr. Shepperson’s conviction, all 19 defendants charged in this investigation have been held to account. Our deliberate approach to prosecuting the Latin Kings and other gangs is taking violent offenders off our streets, and working to make our communities safer.”
“Chinua Shepperson robbed and murdered a Hyattsville man, and participated in an armed robbery in order to further his position in the Latin Kings,” said U.S. Attorney Rosenstein. “The strategy of combining the resources and intelligence of local, state and federal law enforcement agencies to pursue federal racketeering charges against criminal gangs is proving effective in removing violent offenders from the streets and making our neighborhoods more safe.”
“The ATF RAGE Task Force built a strong case against the Latin Kings through tireless police work documenting the criminal acts of the defendants and the RICO enterprise,” said ATF Special Agent in Charge Stoop. “The jury heard the facts of the investigation, including the violence perpetrated by Shepperson and the Latin Kings. The success of this investigation shows the effectiveness of the criminal justice system, and how hard ATF works to combat gang violence.”
According to court documents, the Latin Kings is a violent street gang with thousands of members across the country and overseas. The Latin Kings have a detailed and uniform organizational structure, which is outlined – along with various “prayers,” codes of behavior and rituals – in a written “manifesto” widely distributed to members throughout the country. Members of the Latin Kings are also traditionally given “King Names” or “Queen Names,” which are names other than their legal names by which they are known to members of the gang and to others on the street. At the local level, groups of Latin Kings are organized into “tribes,” including, the Royal Lion Tribe, MOG, Sun Tribe and UTL.
According to evidence presented during the two-week trial, Shepperson conspired with other Latin Kings members to engage in gang activities from a date unknown until November 2009. Specifically, evidence presented at trial showed that on Dec. 14, 2007, Sheppersonand other gang members participated in the armed robbery of a prostitute at a motel in Laurel, Md. In addition, evidence showed that on April 25, 2008, Shepperson conspired with other gang members to rob John Realpe Montoya of cocaine, and fatally shot him behind the Marylander Condominiums in Langley Park, Md.
All of Shepperson’s 18 co-defendants previously pleaded guilty to the racketeering conspiracy.
Shepperson faces a maximum sentence of life in prison. U.S. District Judge Alexander Williams scheduled sentencing for June 17, 2011, at 9:30 a.m.
The ATF-led Regional Anti-Gang Enforcement (RAGE) Task Force, which includes the Gaithersburg, Md., Police Department; the Montgomery County Department of Police; the Montgomery County State’s Attorney’s Office; the Prince George’s County Police Department; the Prince George’s County State’s Attorney’s Office; the Montgomery County Sheriff’s Office; the Maryland National Capital Park Police - Prince George’s County Division; and the Maryland State Police; as well as the New York City Police Department , the U.S. Secret Service and the Internal Revenue Service - Criminal Investigation provided assistance in the investigation and prosecution.
The case was prosecuted by Assistant U.S. Attorneys Emily Glatfelter and David Salem, and Trial Attorney Lara M. Peirce with the Criminal Division’s Gang Unit.
Justice Department Settles with Hertford County, N.C., Involving Pregnancy DiscriminationRead the Press Release
WASHINGTON – The Justice Department announced today that it has resolved a lawsuit alleging that Kimberly Sathoff was subjected to pregnancy discrimination by the Hertford County, N.C., Public Health Authority, in violation of Title VII of the Civil Rights Act of 1964.
The complaint, which was filed along with a consent Decree in the U.S. District Court for the Eastern District of North Carolina, alleges that the health authority discriminated against Ms. Sathoff on the basis of her sex by when the authority’s former health director rescinded an offer of employment and failed to hire Ms. Sathoff for a position with the health authority once the health director found out she was pregnant.
Under the terms of the consent decree, the health authority will implement policies and procedures that prohibit sex discrimination, including pregnancy discrimination, and provide training to all health authority employees with hiring responsibilities and all supervisors on the law of equal employment opportunity, including discrimination based on sex. Additionally, the health authority will pay Ms. Sathoff a $20,000 monetary award.
“A woman should not be regarded as unable to perform a job simply by virtue of her pregnancy. The Department of Justice is committed to protecting the employment rights of women,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division.
The enforcement of Title VII is a top priority of the Justice Department’s Civil Rights Division. Additional information about the Civil Rights Division and its work is available on its website at www.justice.gov/crt.
Justice Department Files Lawsuit Against the State of California for Violating Inmate’s Right to Practice His ReligionRead the Press Release
WASHINGTON– The Justice Department filed a lawsuit today against the state of California, Governor Jerry Brown and the California Department of Corrections and Rehabilitation for violating the right of an inmate to practice his religion. The lawsuit follows a Justice Department investigation that revealed that California’s inmate grooming policy substantially burdens the rights of an inmate to practice his Sikh faith.
By filing the complaint, the department seeks to resolve its investigation and participate in a lawsuit filed recently on behalf of the inmate, who has been subjected to punishment for maintaining an unshorn beard in accordance with the dictates of his religion. By requiring the inmate, Sukhjinder S. Basra, to cut his beard, California compels him to violate his religious beliefs in contravention of the Religious Land Use and Institutionalized Persons Act (RLUIPA). Basra is housed at the California Men’s Colony in San Luis Obispo, Calif.
“The freedom to practice one’s faith in peace is among our most cherished rights. RLUIPA has proven to be a powerful tool in combating religious discrimination and ensuring religious freedom,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Department of Justice is committed to vigorously enforcing RLUIPA to ensure that religious liberty for all remains protected.”
“The rights guaranteed by the Constitution extend to all people in the United States,” said André Birotte Jr., U.S. Attorney for the Central District of California. “By protecting those rights – even for those incarcerated – we strengthen those rights for all.”
RLUIPA, which protects the religious freedom of persons confined to institutions such as prisons, mental health facilities and state-run nursing homes, was enacted by both houses of Congress unanimously and signed into law on Sept. 22, 2000. The law also addresses religious discrimination in land use, and was passed in response to concerns that places of worship, particularly those of religious and ethnic minorities, were frequently subjected to discrimination in zoning matters. In the 10 years since its passage, RLUIPA has helped secure the ability of thousands of individuals and institutions to practice their faiths freely and without discrimination.
More information on the Civil Rights Division’s efforts to combat religious discrimination may be found at www.justice.gov/crt .
Departments of Justice and Health and Human Services Team up in Detroit to Crack Down on Health Care FraudRead the Press Release
WASHINGTON – Attorney General Eric Holder and Department of Health and Human Services (HHS) Secretary Kathleen Sebelius visited Detroit today to participate in the fifth regional health care fraud prevention summit. These summits bring together a wide array of federal, state and local partners, beneficiaries, providers and other interested parties to discuss innovative ways to eliminate fraud within the U.S. health care system. The summits are part of a larger effort on behalf of the Obama Administration to root out waste, fraud and abuse within the U.S. health care system.
In Detroit, the joint efforts of the Departments of Justice (DOJ) and HHS have achieved significant results in an area with major health care fraud problems. Since May 2009, this collaboration has resulted in charges against 120 defendants, in 18 separate criminal cases, for fraud schemes totaling approximately $120 million in taxpayer funds. So far, eight of these individuals have been convicted at trial and 63 have pleaded guilty.
“Here in Detroit and communities across this region, many of you have witnessed the devastating effects of health care fraud,” said Attorney General Holder. “Through a collaborative DOJ-HHS effort, we are working in partnership with government, law enforcement and industry leaders to protect taxpayer dollars, control health care costs and ensure the strength and integrity of our most essential health care programs. The results are clear: thanks to our efforts, health care fraud schemes throughout this region and across the country are being aggressively and permanently shut down. And as we renew our commitment to this work today, I am committed to building on the progress we’ve made, continuing to collaborate with each of you, and seeking new ways to expand our operations to fight health care fraud.”
“Thanks to provisions in the Affordable Care Act, the prospects for a criminal thinking about targeting our health care system have gotten a lot gloomier,” said Secretary Sebelius. “Here in Detroit, we are honoring our commitment to America’s seniors, meeting our obligation to taxpayers, and standing up to criminals who, in the past, have gotten away with far too much.”
In addition to remarks by the Attorney General and the Secretary, the summit featured three educational panels aimed at identifying best practices for providers, law enforcement and beneficiaries in preventing health care fraud.
The summits are integral to the overall health care fraud-fighting effort undertaken jointly by DOJ and HHS through the Health Care Fraud Prevention and Enforcement Action Team (HEAT). As one part of HEAT’s efforts, Medicare Fraud Strike Force operations have expanded from South Florida and Los Angeles to a total of nine health care fraud hot spots including Houston; Detroit; Brooklyn, N.Y.; Baton Rouge, La.; Tampa, Fla.; Chicago and Dallas. The Strike Force is a partnership between the Criminal Division’s Fraud Section, U.S. Attorneys’ Offices, HHS Office of Inspector General, FBI and other federal, state and local law enforcement partners. Since their inception in 2007, Strike Force operations have charged more than 1,000 defendants for Medicare fraud involving more than $2.3 billion in claims.
In addition, the Affordable Care Act provides new tools and resources to fight fraud in federal health care programs by providing an additional $350 million over the next 10 years through the Health Care Fraud and Abuse Control Account. The law toughens sentencing for criminal activity, enhances screenings and enrollment requirements, encourages increased sharing of data across government, expands overpayment recovery efforts and provides greater oversight of private insurance abuses. For information on the Health Care Fraud and Abuse Control Program Report for Fiscal Year 2010, please visit: http://oig.hhs.gov/publications/docs/hcfac/hcfacreport2010.pdf .
For a summary of new tools and resources the Affordable Care Act has put in place to help fight fraud, visit: www.HealthCare.gov/news/factsheets/fraud03152011a.html .
Investments in fraud detection and enforcement have been shown to pay for themselves many times over, and the Administration’s tough stance against fraud is already yielding results. In FY 2010, more than $4 billion was returned to the Medicare Health Insurance Trust Fund, the U.S. Department of the Treasury and others as a result of enforcement activities targeting false claims and fraud perpetrated against government health care programs. This was an increase of $1.4 billion, or 56 percent, over FY 2009. The $4 billion recovered in FY 2010 includes recoveries from the $2.5 billion in settlements and judgments obtained in FY 2010 by the Department of Justice in False Claims Act matters alleging health care fraud. This is an unprecedented level of funds obtained in a single year and represents a 53 percent increase over FY 2009, in which $1.63 billion was obtained.
On June 8, 2010, President Obama announced this nationwide series of regional fraud prevention summits as part of a multi-faceted effort to crack down on health care fraud. The Detroit summit was the fifth in a series, with additional summits to follow in the coming months. Previous summits were held in Miami (July 16, 2010), Los Angeles (Aug. 26, 2010), Brooklyn, N.Y. (Nov. 5, 2010) and Boston (Dec. 16, 2010).
Monday 14 March 2011
UBS Client Sentenced in San Diego for Hiding Assets in Secret Bahamian and Swiss Bank AccountsRead the Press Release
WASHINGTON – Jeffrey Chatfield of San Diego was sentenced before U.S. District Judge Michael M. Anello to three years probation for hiding assets in secret offshore UBS bank accounts, the Justice Department and the Internal Revenue Service (IRS) announced today. Chatfield was also ordered to pay more than $96,000 to resolve his civil liability with the IRS for failing to file the required Reports of Foreign Bank and Financial Reports (FBARs) on Forms TD F 90-22.1.
According to court documents and statements made in court, Chatfield filed false tax returns for 2000 through 2008 in which he failed to report that he had an interest in or a signature authority over Bahamian and Swiss financial accounts at UBS and Credit Suisse. He also failed to report income earned on these Swiss bank accounts and never filed any FBARs disclosing his interest in any offshore financial accounts.
According to court documents and statements made in court, in or about 2000, with the assistance of a UBS banker, Chatfield opened a bank account at UBS Bahamas Ltd. in the name of nominee entity Alder West. Chatfield deposited into the account approximately $900,000 in untaxed securities and cash that he received in 2000 from his consulting work, which included advising private companies seeking to go public.
In August 2002, Chatfield closed the Alder West account and with the assistance of his UBS banker and others, formed Iberia West Ltd., a Bahamian nominee entity. Chatfield then opened a new Swiss account at UBS in the name of Iberia West and transferred into that account securities and cash previously held at UBS Bahamas Ltd. In August 2004, Chatfield closed his Iberia West account and transferred all remaining assets to an account at Credit Suisse, also held in the name of the nominee entity Iberia West. In 2008, Credit Suisse told Chatfield that it was closing all accounts held by U.S. taxpayers. Chatfield closed this account in 2008.
In February 2009, UBS entered into a deferred prosecution agreement under which the bank admitted to helping U.S. taxpayers hide accounts from the IRS. As part of their agreement, UBS provided the United States government with the identities of, and account information for, certain U.S. customers of UBS’s cross-border business, including Chatfield.
Principal Deputy Assistant Attorney General for the Justice Department’s Tax Division John A. DiCicco commended the investigative efforts of the IRS-Criminal Investigation agents who investigated the case, and Tax Division trial attorney Timothy J. Stockwell, who is prosecuting the case.
Additional information about the Justice Department’s Tax Division and its enforcement efforts is available at www.usdoj.gov/tax
New Jersey Pipe Supply Company and Its Owner Plead Guilty to Fraud and Bribery Conspiracy in Power Generation IndustryRead the Press Release
WASHINGTON — A New Jersey industrial pipe supply company and its owner pleaded guilty today to participating in a conspiracy to commit fraud and pay bribes to a purchasing manager at Consolidated Edison of New York (Con Edison) in return for the manager’s efforts to steer contracts to the company, the Department of Justice announced today.
Andrew Martingano of Staten Island, N.Y., and his company, American Pipe Bending and Fabrication Co. Inc. of Edison, N.J., each pleaded guilty today in U.S. District Court in Manhattan to participating in a conspiracy to defraud Con Edison.
According to a one-count felony charge filed on Feb. 1, 2011, against Martingano and American Pipe, Martingano and others agreed to pay approximately $510,000 in cash bribes to James M. Woodason, a department manager of the purchasing department at Con Edison. In exchange for the bribes, Woodason steered Con Edison industrial pipe supply contracts to American Pipe by secretly providing Martingano with confidential competitor bid information, thereby causing Con Edison to pay higher, non-competitive prices for materials. At the time of Woodason’s arrest in August 2010, Woodason had already received approximately $45,000 in cash bribe payments from Martingano and American Pipe. The department said the conspiracy took place from approximately January 2009 through approximately August 2010.
Con Edison is a regulated utility headquartered in Manhattan. It provides electric service to approximately 3.2 million customers and gas service to approximately 1.1 million customers in New York City and Westchester County, N.Y. Con Edison received more than $10,000 in federal funding each year between 2003 through 2010.
Martingano and American Pipe are charged with conspiracy, which carries a maximum fine of $500,000 for companies, and a maximum penalty of five years in prison and a $250,000 fine for individuals. Each of the maximum fines may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
Today’s pleas arise from an ongoing federal investigation of bid rigging, bribery, fraud and tax-related offenses in the power generation industry. On Nov. 19, 2010, Woodason pleaded guilty in U.S. District Court in Manhattan to charges that he accepted and agreed to accept bribes from American Pipe and another industrial pipe supply vendor. Robert D. Rosenberg, a former sales broker for a Lyndhurst, N.J.-based industrial pipe supply company, pleaded guilty on Dec. 2, 2010, for his role in a conspiracy to defraud Con Edison.
The investigation is being conducted by the Antitrust Division’s New York Field Office, with the assistance of the FBI’s New York Division and the Internal Revenue Service-Criminal Investigation. Con Edison cooperated with the department’s investigation.
Anyone with information concerning bid rigging, bribery, tax offenses or fraud in the power generation industry should contact the Antitrust Division’s New York Field Office at 212-264-9308, visit www.justice.gov/atr/contact/newcase.htm or contact the FBI’s New York Division at 212-384-3252.
Kentucky Couple Charged with Lacey Act Crimes Based on the Illegal Harvest of Paddlefish from the Ohio RiverRead the Press Release
WASHINGTON – A Kentucky couple and their caviar companies were charged today with trafficking in and falsely labeling illegally harvested paddlefish (Polydon spathula), the Department of Justice and the U.S. Attorney for the Southern District of Ohio announced today.
The American paddlefish (Polydon spathula), also called the Mississippi paddlefish or the spoonbill (hereinafter paddlefish), is a freshwater fish that is primarily found in the Mississippi River drainage system. Paddlefish eggs are marketed as caviar. Paddlefish were once common in waters throughout the Midwest. However, the global decline in other caviar sources, such as sturgeon, has led to an increased demand for paddlefish caviar. This increased demand has led to over-fishing of paddlefish, and consequent decline of the paddlefish population. Paddlefish, whose eggs are marketed as caviar, are protected by both federal and Ohio law. It is illegal to harvest paddlefish in Ohio waters, but they can be harvested legally in Kentucky waters.
The indictment charges Steve T. Kinder, 51, and Kinder Caviar Inc. with illegally harvesting paddlefish from Ohio waters and falsely reporting to the Kentucky Department of Fish & Wildlife Resources that he caught the fish in Kentucky. The indictment charges Cornelia Joyce Kinder, 53, as well as Kinder Caviar Inc. and Black Star Caviar Company with providing false information about the paddlefish eggs to the U.S. Fish & Wildlife Service in order to obtain permits to export the paddlefish eggs to foreign customers, including the amount of paddlefish eggs to be exported, the names of the fishermen that harvested the paddlefish and the location where the paddlefish were harvested. The alleged violations occurred between March 2006 and December 2010.
Steve Kinder and his wife Cornelia Joyce Kinder, both of Owenton, Ky., owned and operated Kinder Caviar and Black Star Caviar. Those companies were in the business of exporting paddlefish eggs as caviar to customers in foreign countries.
If convicted, the Kinders face a maximum penalty of five years in prison, a $250,000 fine or both on each count. The companies could be fined up to $500,000 per count.
An indictment is merely an accusation and a defendants is presumed innocent unless and until proven guilty beyond a reasonable doubt.
The case is being investigated by the U.S. Fish & Wildlife Service Office of Law Enforcement, the Ohio Department of Natural Resources, Division of Wildlife; and the Kentucky Department of Fish & Wildlife Resources. It is being prosecuted by the U.S. Attorney’s Office for the Southern District of Ohio and the Environmental Crimes Section of the Environmental and Natural Resources Division of the Department of Justice.
Justice Department’s New ADA Rules Go into Effect on March 15, 2011Read the Press Release
WASHINGTON – Revised regulations implementing the Americans with Disabilities Act (ADA) will take effect tomorrow, March 15, 2011, the Department of Justice announced. The revised rules are the department’s first major revision of its guidance on accessibility in 20 years.
The regulations apply to the activities of more than 80,000 units of state and local government and more than seven million places of public accommodation, including stores, restaurants, shopping malls, libraries, museums, sporting arenas, movie theaters, doctors’ and dentists’ offices, hotels, jails and prisons, polling places, and emergency preparedness shelters. The rules were signed by Attorney General Eric Holder on July 23, 2010, and the official text was published in the Federal Register on September 15, 2010.
The department is also releasing a new document, “ADA Update: A Primer for Small Business,” to help small businesses understand the new and updated accessibility requirements. In addition, the department is announcing the release of a new publication explaining when the various provisions of its amended regulations will take effect. Both documents will be available tomorrow on the department’s ADA website, www.ada.gov .
“The new rules usher in a new day for the more than 50 million individuals with disabilities in this country,” said Thomas E. Perez, Assistant Attorney General for Civil Rights. “The rules will expand accessibility in a number of areas and, for the first time, provide detailed guidance on how to make recreation facilities, including parks and swimming pools, accessible.”
The new ADA rules adopt the 2010 ADA Standards for Accessible Design, which have been retooled to be more user-friendly for building code officials, builders, and architects, and have been harmonized with state and local accessibility codes. The 2010 standards also include, for the first time, standards on making swimming pools, parks, golf courses, boating facilities, exercise clubs, and other recreation facilities accessible for individuals with disabilities. Entities covered by the ADA have until March 15, 2012 to comply with the 2010 Standards. In addition to adopting the new ADA 2010 Standards, the amended regulations contain many new or expanded provisions on general nondiscrimination policies, including the use of service animals, the use of wheelchairs and other power-driven mobility devices, selling tickets for wheelchair-accessible seating at sports and performance venues, reserving and guaranteeing accessible rooms at hotels, providing interpreter services through video conferencing, and the effect of the new regulations on existing facilities. The compliance date for the all the new nondiscrimination provisions, except for those on hotel reservations, is March 15, 2011. Compliance with the hotel reservation provisions is not required until March 15, 2012.
“ADA Update” and “ADA 2010 Revised Requirements: Effective Date/Compliance Date” are the first of several planned publications aimed at helping businesses, not-for-profit organizations, and state and local governments understand their obligations under the amended Title II and Title III regulations. Individual print copies of the Effective Date/Compliance Date publication can be ordered from the ADA Information Line (800-514-0301 voice or 800-514-0383 TTY).
For more information about the ADA , c all the Justice Department’s toll-free ADA Information Line at 800-514-0301 or 800-514-0383 (TTY), or access the department’s ADA website at www.ada.gov .