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13 November 2012
South Carolina Man Sentenced for Committing Federal Hate Crime Against an African-American TeenagerRead the Press Release
Chase McClary, 24, of Johnsonville, S.C., was sentenced today in federal court to four years in prison followed by three years supervised release for his racially-motivated attack of an African-American teenager.
In June 2012, McClary pleaded guilty to violating the Matthew Shepard James Byrd, Jr Hate Crimes Prevention Act by violently assaulting an African-American teenager. During his guilty plea, McClary admitted that in August 2010, he approached a 16-year-old African-American male and struck him numerous times with the jagged end of a broken coffee mug because of the victim’s race. The attack resulted in severe injuries to the victim’s head, face and neck.
“The Department of Justice is committed to aggressively prosecuting hate-fueled acts of violence,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “Today’s sentence makes clear that racially-motivated attacks will not be tolerated in this country.”
“Working with the Civil Rights Division, this U.S. Attorney’s Office will continue to prioritize the prosecution of hate crimes and other civil rights violations in the District of South Carolina,” said William N. Nettles, U.S. Attorney for the District of South Carolina.
This case was investigated by Special Agent Steven Stokes of the FBI, with assistance from the Florence County Sheriff’s Investigator Alvin Powell, and is being prosecuted by Assistant U.S. Attorney Brad Parham and Civil Rights Division Trial Attorney Christopher Lomax.
Saudi Student Sentenced to Life in Prison<br /> for Attempted Use of Weapon of Mass DestructionRead the Press Release
Khalid Ali-M Aldawsari, 22, a citizen of Saudi Arabia and resident of Lubbock, Texas, was sentenced today by U.S. District Judge Donald E. Walter in federal court in Amarillo, Texas, to life in prison.
Aldawsari was convicted on June 27, 2012, on an indictment charging one count of attempted use of a weapon of mass destruction in connection with his purchase of chemicals and equipment necessary to make an improvised explosive device (IED) and his research of potential U.S. targets, including persons and infrastructure. He was lawfully admitted into the United States in 2008 on a student visa and was enrolled at South Plains College near Lubbock.
Today’s announcement was made by Sarah R. Saldaña U.S. Attorney for the Northern District of Texas; Lisa Monaco, Assistant Attorney General for National Security; and Diego G. Rodriguez, Special Agent in Charge of the FBI Dallas Field Division.
According to court documents and evidence presented during trial, at the time of his arrest last year, Aldawsari had been researching online how to construct an IED using several chemicals as ingredients. He had also acquired or taken a substantial step toward acquiring most of the ingredients and equipment necessary to construct an IED and he had conducted online research of several potential U.S. targets. In addition, he had allegedly described his desire for violent jihad and martyrdom in blog postings and a personal journal.
“This case, in which private citizens paid attention to details and notified authorities of their suspicions, serves as a reminder to all private citizens that we must always be observant and vigilant, as there are some who intend to cause great harm,” said U.S. Attorney Saldaña. “Khalid Aldawsari, acting as a lone wolf, may well have gone undetected were it not for the keen observations of private citizens. We owe them, and all the hundreds of hard-working members of our law enforcement community, our deepest gratitude.”
“Khalid Aldawsari came to this country intent on carrying out an attack. He then began purchasing ingredients to construct a bomb and was actively researching potential targets in America. Thanks to the hard work of many agents, analysts and prosecutors, his plot was thwarted before anyone was harmed; he was convicted at trial and, today at sentencing, he was held accountable for his actions,” said Assistant Attorney General Monaco.
“Today’s sentencing demonstrates our commitment to detecting, investigating and prosecuting individuals who seek to do harm to others in our country. Our success was the result of the cooperation of law enforcement and intelligence resources, particularly, the FBI’s North Texas Joint Terrorism Task Force, the Texas Tech Police Department, the Lubbock Police Department and the Lubbock County Sheriff’s Office,” said FBI Special Agent in Charge Rodriguez. “The dedicated agents, officers, and analysts; the computer forensics team; and the linguists are all to be commended for their diligent work on this investigation and the U.S. Attorney’s Office in the Northern District for the successful prosecution of Mr. Aldawsari.”
The government presented evidence that on Feb. 1, 2011, a chemical supplier reported to the FBI a suspicious attempted purchase of concentrated phenol by a man identifying himself as Khalid Aldawsari. Phenol is a toxic chemical with legitimate uses, but can also be used to make the explosive trinitrophenol, also known as T.N.P., or picric acid. Ingredients typically used with phenol to make picric acid, or T.N.P., are concentrated sulfuric and nitric acids.
Aldawsari attempted to have the phenol order shipped to a freight company so it could be held for him there, but the freight company told Aldawsari that the order had been returned to the supplier and called the police. Later, Aldawsari falsely told the supplier he was associated with a university and wanted the phenol for “off-campus, personal research.” Frustrated by questions being asked over his phenol order, Aldawsari cancelled his order, placed an order with another company, and later emailed himself instructions for producing phenol. In December 2010, he had successfully purchased concentrated nitric and sulfuric acids.
Aldawsari used various email accounts in researching explosives and targets, and often sent emails to himself as part of this process. He emailed himself a recipe for picric acid, which was described in the email as a “military explosive” and also emailed himself instructions on how to convert a cell phone into a remote detonator and how to prepare a booby-trapped vehicle using household items. Aldawsari also purchased many other items, including a Hazmat suit, a soldering iron kit, glass beakers and flasks, a stun gun, clocks and a battery tester.
Excerpts from a journal found at Aldawsari’s residence indicated that he had been planning to commit a terrorist attack in the United States for years. One entry describes how Aldawsari sought and obtained a particular scholarship because it allowed him to come directly to the United States and helped him financially, which he said “will help tremendously in providing me with the support I need for Jihad.” The entry continues: “And now, after mastering the English language, learning how to build explosives and continuous planning to target the infidel Americans, it is time for Jihad.”
In another entry, Aldawsari wrote that he was near to reaching his goal and near to getting weapons to use against infidels and their helpers. He also listed a “synopsis of important steps” that included obtaining a forged U.S. birth certificate; renting a car; using different driver’s licenses for each car rented; putting bombs in cars and taking them to different places during rush hour; and leaving the city for a safe place.
Aldawsari conducted research on various targets and emailed himself information on these locations and people. One of the documents he sent himself, with the subject line listed as “Targets,” contained the names and home addresses of three American citizens who had previously served in the U.S. military and had been stationed for a time at Abu Ghraib prison in Iraq. In others, Aldawsari sent himself the names of 12 reservoir dams in Colorado and California and listed two categories of targets: hydroelectric dams and nuclear power plants. He also sent himself an email titled “Tyrant’s House,” in which he listed the Dallas address for former President George W. Bush. Aldawsari also conducted research that indicated he considered using infant dolls to conceal explosives and the possible targeting of a nightclub with an explosive concealed in a backpack.
This case was investigated by the FBI’s Dallas Joint Terrorism Task Force, which includes many federal, state and local partners, with assistance from the Lubbock Police Department and the Texas Tech Police Department. The prosecution was handled by Assistant U.S. Attorneys Jeffrey R. Haag, Denise Williams and Matthew J. Kacsmaryk and Trial Attorney David Cora from the Counterterrorism Section of the Justice Department’s National Security Division.
Roquette America Inc., to Pay $4.1 Million Penalty to Settle Violations of Clean Water Act at Its Keokuk, Iowa, FacilityRead the Press Release
Roquette America, Inc., has agreed to pay a $4.1 million civil penalty to settle alleged violations of the Clean Water Act and its National Pollutant Discharge Elimination System (NPDES) permit at its grain processing facility in Keokuk, Iowa, the Department of Justice and the Environmental Protection Agency (EPA) announced today.
As early as 2008, Roquette was aware that its waste water treatment plant was marginally adequate and that it could not handle spills or surges in loading. Instead of constructing additional containment structures for waste water surges, or routing spills to the waste water treatment plant, Roquette allowed the industrial waste to be discharged directly into the Mississippi River and Soap Creek.
“Roquette’s actions resulted in over a thousand permit violations and allowed the discharge of untreated industrial waste into the Mississippi River and another Iowa waterway even after it was informed on numerous occasions it was violating its state permit and federal law,” said Ignacia S. Moreno, Assistant Attorney General of the Justice Department’s Environment and Natural Resources Division. “This settlement holds Roquette accountable for its multiple violations of the nation’s Clean Water Act and requires sewer improvements, wastewater treatment upgrades, enhanced monitoring and independent compliance audits that will benefit public health and the environment for the people of Iowa for years to come.”
“The magnitude of these violations warrants the magnitude of the penalty,” said EPA Region 7 Administrator Karl Brooks. “The Mississippi River is a vital waterway, used by millions of Americans for commerce, recreation and drinking water. It is imperative that industrial facilities abide by their discharge permits to protect our valuable water resources.”
The Iowa Department of Natural Resources has issued three administrative orders and eight notices of violation to Roquette since 2000. Despite these orders and notices, Roquette continued to overload its waste water treatment plant and failed to address the deficiencies at other portions of its facility, resulting in permit violations and illegal discharges of untreated industrial waste.
The Keokuk facility violated its NPDES permit at least 1,174 times, and on at least 30 occasions illegally discharged via storm drains resulting in at least 250,000 gallons of industrial waste being released into the Mississippi River and Soap Creek. In addition to these permit violations and illegal discharges, Roquette discharged partially treated industrial waste from its waste water treatment plant, and discharged steam condensate into Soap Creek through an unpermitted outfall.
In addition to paying the penalty, Roquette will complete other requirements valued at more than $17 million to further protect the Mississippi River and Soap Creek. Among these requirements are the completion of a sewer survey to identify possible discharge locations, the implementation of sewer modifications, the construction of upgrades to the wastewater treatment plant, and the performance of enhanced effluent monitoring. In addition, Roquette will obtain annual third party audits of its compliance with the operations and maintenance program, the Storm Water Pollution Prevention Program, the company’s NPDES permits, and the compliance requirements set out in the consent decree.
The consent decree is subject to a 30-day public comment period and approval by the federal court. Once it is published in the Federal Register, a copy of the consent decree will be available on the Justice Department website at www.usdoj.gov/enrd/Consent_Decrees.html
Learn more about EPA’s civil enforcement of the Clean Water Act: www.epa.gov/compliance/civil/cwa/index.html
Justice Department Files Civil Rights Lawsuit Against the City of San Jacinto, California, Alleging Discrimination Against Persons with DisabilitiesRead the Press Release
The Justice Department has filed a lawsuit against the city of San Jacinto, Calif., alleging violations of the Fair Housing Act and the Americans with Disabilities Act based on its treatment of group homes for persons with disabilities. This lawsuit is part of the Justice Department’s continuing effort to enforce civil rights laws that require states and municipalities to end discrimination against, and unnecessary segregation of, persons with disabilities.
The lawsuit, filed on Friday in the U.S. District Court for the Central District of California, alleges that the city has impermissibly restricted the ability of group homes for people with disabilities to operate within the city. Under the city’s zoning code, group homes that are not required to be licensed by the state, as well as some licensed homes, are not permitted uses in any zoning district within the city, and their ability to operate in multi-family zones is restricted. The United States’ lawsuit further alleges that the city targeted housing for persons with disabilities for enforcement actions, including a November 2008 sweep in which city and county officials, including armed and uniformed police officers and sheriff’s deputies, appeared at homes unannounced and interrogated residents with disabilities from a prepared questionnaire that included intrusive questions targeted to persons with mental disabilities. The complaint also alleges that the city has conditioned the grant of reasonable accommodations on the adoption of unwarranted limitations on the residents of homes for persons with disabilities.
This lawsuit arose as a result of complaints filed with the U.S. Department of Housing and Urban Development (HUD) by the operators of group homes who were impacted by the city’s discriminatory enforcement activities.
The suit seeks a court order preventing the city from enforcing its laws in a way that unlawfully discriminates on the basis of disability, and prohibiting the city from failing to make reasonable accommodations. It also seeks monetary damages to compensate victims and a civil penalty.
“No person should be denied an equal opportunity for housing in his or her community, or suffer harassment or intimidation, because he or she is a person with a disability,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Justice Department is committed to preventing discriminatory treatment of people with disabilities.”
“This suit is part of my office’s continuing efforts, in partnership with DOJ’s Civil Rights Division, to ensure that all residents of the Central District are accorded the rights to which they are entitled under the law,” said André Birotte Jr., U.S. Attorney for the Central District of California. “Under the law, people with disabilities, including mental disabilities, must be given the opportunity to live in our community, free from discriminatory efforts to exclude them. This suit seeks to ensure that this opportunity is fully and fairly provided.”
“Local governments may not zone out people with disabilities from the opportunity to live in mainstream communities,” said John Trasviña, HUD Assistant Secretary for Fair Housing and Equal Opportunity. “HUD and DOJ are united in our efforts to combat unlawful interference with the rights of people with disabilities, whether in the form of unfair zoning restrictions, selective enforcement of ordinances, or otherwise.”
The federal Fair Housing Act prohibits discrimination in housing on the basis of race, color, national origin, religion, sex, familial status and disability. Title II of the Americans with Disabilities Act requires that State and local governments give people with disabilities an equal opportunity to benefit from all of their programs, services and activities. More information about the Civil Rights Division and the laws it enforces is available at www.usdoj.gov/crt . Individuals who believe they have been victims of housing discrimination or have information related to this lawsuit can call the Housing Discrimination Tip Line at 1-800-896-7743, e-mail the Justice Department at [email protected] , or contact the Department of Housing and Urban Development (HUD) at 1-800-669-9777.
The complaint is an allegation of unlawful conduct. The allegations must still be proven in federal court.
Former U.S. Army Major Sentenced to 18 Months in Prison for Bribery Scheme Related to Department of Defense Contracts in KuwaitRead the Press Release
WASHINGTON – A former U.S. Army Major was sentenced today to 18 months in prison for his participation in a bribery scheme related to his activities as a contracting official in Camp Arifjan, Kuwait, in 2005 and 2006, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.
James Momon Jr., 40, of Alexandria, Va., was sentenced today by U.S. District Judge Emmet G. Sullivan in the District of Columbia. In addition to his prison term, Momon was sentenced to serve three years of supervised release and pay $5.8 million in restitution, jointly and severally with co-defendants.
Momon pleaded guilty on Aug. 13, 2008, to two counts of bribery and one count of conspiracy.
According to plea documents, Momon, was involved in a criminal conspiracy to accept cash bribes from multiple U.S. Department of Defense (DoD) contracting firms that supplied bottled water and other goods and services to U.S. military bases in Kuwait. In return, Momon assisted in the award of contracts as well as blanket purchase agreements (BPA) – contracts that allow DoD to order supplies on an as-needed basis at a pre-negotiated price. Momon agreed to accept approximately $5.8 million from his co-conspirators as payment for his actions, including $1.6 million in cash and luxury items.
According to plea documents, Momon took over contracting duties at Camp Arifjan from former U.S. Army Major John C. Cockerham, who served as a contracting official in Kuwait in 2004 and 2005. Cockerham, who solicited and received bribes from DoD contractors in exchange for contracts and BPAs for bottled water and other goods and services, pleaded guilty for his role in the conspiracy in February 2008 and was sentenced to serve 210 months in prison and ordered to pay $9 million in restitution.
To date, a total of 19 individuals have pleaded guilty or been convicted at trial in the ongoing investigation of corrupt contracting at Camp Arifjan.
This case was prosecuted by Trial Attorneys Peter C. Sprung, Eric G. Olshan, Edward J. Loya Jr. and Timothy J. Kelly of the Criminal Division’s Public Integrity Section. The case is being investigated by special agents of the Defense Criminal Investigative Service, the Army Criminal Investigation Command Division, Internal Revenue Service-Criminal Investigation, the FBI and the Special Inspector General for Iraqi Reconstruction.
9 November 2012
United States Files Suit to Stop Virginia Man from Promoting Tax Fraud SchemeRead the Press Release
The United States has sued Charles Sewell of Bristol, Va., to bar him from promoting an alleged scheme involving fraudulent tax refund claims, the Justice Department announced today.
According to the government’s amended complaint, Sewell creates fraudulent types of Internal Revenue Service (IRS) Forms 1099 for other taxpayers and files them with the IRS. The fraudulent types of Forms 1099 are allegedly designed to help Sewell’s customers request large tax refunds to which they are not entitled, based on false claims of income earned and federal tax withheld. The complaint alleges that Sewell’s scheme is based on the “commercial redemption” theory, in which individuals make refund claims based on the bogus theory that the federal government maintains secret accounts for U.S. citizens and that taxpayers can gain access to the accounts by issuing 1099-OID forms to the IRS. The lawsuit alleges that Sewell’s customers sought $67 million in bogus refunds as a result of Sewell’s conduct.
Claiming bogus tax refunds based on false Forms 1099-OID is one of the IRS’s “Dirty Dozen” tax scams for 2012. In the past decade, the Justice Department’s Tax Division has obtained injunctions against hundreds of tax fraud promoters and unscrupulous tax preparers. Information about these cases is available on the Justice Department website.
Related Documents:
United States v. Charles Sewell, et al.
First Amended Complaint for Permanent Injunction and Other Equitable Relief (PDF)
Moneygram International Inc. Admits Anti-Money Laundering and Wire Fraud Violations, Forfeits $100 Million in Deferred ProsecutionRead the Press Release
WASHINGTON – MoneyGram International Inc. – a global money services business headquartered in Dallas – has agreed to forfeit $100 million and enter into a deferred prosecution agreement (DPA) with the Justice Department in which it admits to criminally aiding and abetting wire fraud and failing to maintain an effective anti-money laundering program, as charged in an information filed today in the Middle District of Pennsylvania.
The announcement was made by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Peter Smith for the Middle District of Pennsylvania; and Karen V. Higgins, Inspector in Charge, Philadelphia Division, U.S. Postal Inspection Service (USPIS).
According to court documents, MoneyGram was involved in mass marketing and consumer fraud phishing schemes, perpetrated by corrupt MoneyGram agents and others, that defrauded tens of thousands of victims in the United States. MoneyGram also failed to maintain an effective anti-money laundering program in violation of the Bank Secrecy Act. The Justice Department will return the forfeited funds to the victims of the fraud scheme through its Victim Asset Recovery Program.
“MoneyGram’s broken corporate culture led the company to privilege profits over everything else,” said Assistant Attorney General Breuer. “MoneyGram knowingly turned a blind eye to scam artists and money launderers who used the company to perpetrate fraudulent schemes targeting the elderly and other vulnerable victims. In addition to forfeiting $100 million, which will be used to compensate victims, MoneyGram must for the next five years retain a corporate monitor who will report regularly to the Justice Department.”
U.S. Attorney Smith said, “Thousands of citizens in Pennsylvania and other states suffered heartbreaking financial losses for years because of these international telemarketing schemes which depended on MoneyGram’s facilities to give them an electronic highway to move their illegal profits quickly out of the country. The determined work of U.S. Postal Inspectors and federal prosecutors disrupted and closed that electronic highway, hopefully for good. This case provides a way to get restitution for victims and ensure that MoneyGram does its part to deter similar scams in the future.”
“This agreement demonstrates the ongoing and important work of the U.S. Postal Inspection Service in protecting consumers all across America,” said Karen V. Higgins, Inspector in Charge, Philadelphia Division. “Businesses are supposed to provide their customers with fair and honest services. Today’s agreement reflects the commitment of the U.S. Postal Inspection Service in seeking justice and, to every extent possible, restitution for the most vulnerable in our society.”
As part of the DPA, MoneyGram has agreed to enhanced compliance obligations and structural changes to prevent a repeat of the charged conduct, including:
Creation of an independent compliance and ethics committee of the board of directors with direct oversight of the chief compliance officer and the compliance program; Adoption of a worldwide anti-fraud and anti-money laundering standard to ensure all MoneyGram agents throughout the world will, at a minimum, be required to adhere to U.S. anti-fraud and anti-money laundering standards; Adoption of a bonus system which rates all executives on success in meeting compliance obligations, with failure making the executive ineligible for any bonus for that year; and
Adoption of enhanced due diligence for agents deemed to be high risk or operating in a high-risk area.To oversee implementation and maintenance of these enhanced compliance obligations and evaluate the overall effectiveness of its anti-fraud and anti-money laundering programs, MoneyGram has agreed to retain an independent corporate monitor who will report regularly to the Justice Department. Under the DPA, the department will recommend the dismissal of the criminal information in five years, provided MoneyGram fully abides by the DPA’s terms.
The Fraud Scheme
According to court documents, starting in 2004 and continuing until 2009, MoneyGram violated U.S. law by processing thousands of transactions for MoneyGram agents known to be involved in an international scheme to defraud members of the U.S. public. MoneyGram profited from the scheme by collecting fees and other revenues on the fraudulent transactions.
The scams – which generally targeted the elderly and other vulnerable groups – included posing as victims’ relatives in urgent need of money and falsely promising victims large cash prizes, various high-ticket items for sale over the Internet at deeply discounted prices or employment opportunities as “secret shoppers.” In each case, the perpetrators required the victims to send them funds through MoneyGram’s money transfer system.
Despite thousands of complaints by customers who were victims of fraud, MoneyGram failed to terminate agents that it knew were involved in scams. As early as 2003, MoneyGram’s fraud department would identify specific MoneyGram agents believed to be involved in fraud schemes and recommended termination of those agents to senior management. These termination recommendations were rarely accepted because they were not approved by executives in the sales department and, as a result, fraudulent activity grew from 1,575 reported instances of fraud by customers in the United States and Canada in 2004 to 19,614 reported instances in 2008. Cumulatively, from 2004 through 2009, MoneyGram customers reported instances of fraud totaling at least $100 million.
The USPIS and U.S. Attorney’s Office for the Middle District of Pennsylvania have been investigating and prosecuting telemarketing scams that used MoneyGram’s money transfer system and corrupt MoneyGram agents since 2007. To date, the U.S. Attorney’s Office for the Middle District of Pennsylvania has brought conspiracy, fraud and money laundering charges against 28 former MoneyGram agents.
Ineffective Anti-Money Laundering Program
MoneyGram’s involvement in this international fraud scheme resulted from a systematic, pervasive, and willful failure to meet its anti-money laundering (AML) obligations under the Bank Secrecy Act (BSA), a set of laws and regulations enacted by Congress to strengthen the U.S. financial system’s protections against criminal money laundering activity through financial institutions, including money services businesses like MoneyGram. Court documents show that MoneyGram failed to meet its AML obligations by, among other things, failing to:
Implement policies or procedures governing the termination of agents involved in fraud and/or money laundering; Implement policies or procedures to file the required Suspicious Activity Reports (SARs) when victims reported fraud to MoneyGram on transactions over $2,000; File SARs on agents MoneyGram knew were involved in the fraud; Conduct effective AML audits of its agents and outlets; Conduct adequate due diligence on prospective and existing MoneyGram Agents by verifying that a legitimate business existed; and
Sufficiently resource and staff its AML program.MoneyGram’s BSA failures spanned five years, and resulted, among other things, from the failure of its fraud and AML compliance functions to share information and from its regularly resolving disagreements between its sales and fraud departments in the sales department’s favor. One notable such disagreement occurred in April 2007, when, at a meeting attended by senior MoneyGram executives, the fraud department recommended that 32 specific Canadian agents that were characterized as “the worst of the worst” in terms of fraud be immediately closed. The sales department disagreed with the fraud department’s recommendation, and these outlets were not closed; instead, MoneyGram continued to process transactions from the 32 outlets despite continued complaints of fraud.
This case was prosecuted by Money Laundering and Bank Integrity Unit Trial Attorney Craig Timm of the Criminal Division’s Asset Forfeiture and Money Laundering Section (AFMLS) and Assistant U.S. Attorney Kim Douglas Daniel of the U.S. Attorney’s Office for the Middle District of Pennsylvania. The forfeiture was handled by Acting Assistant Deputy Chief Jeannette Gunderson of AFMLS’ Forfeiture Unit. The case was investigated by the Harrisburg, Pa., office of the USPIS, Philadelphia Division.
The Money Laundering and Bank Integrity Unit is a corps of prosecutors with a boutique practice aimed at hardening the financial system against criminal money laundering vulnerabilities by investigating and prosecuting financial institutions and professional money launderers for violations of the money laundering statutes, the Bank Secrecy Act and other related statutes.
Information regarding victim compensation through the Victim Asset Recovery Program (VARP) will be posted on the Department of Justice’s victim website at http://www.justice.gov/criminal/vns/caseup/. Persons who believe they were victims of the fraud scheme should visit that site for instructions on how to request compensation.
VARP, operated by AFMLS, is composed of a team of experienced professionals, including attorneys, accountants, auditors and claims analysts. In hundreds of cases, VARP has successfully used its specialized expertise to efficiently convert forfeited assets to victim recoveries.
Mississippi Laboratory Operator Charged with Falsifying Records on Industrial WastewaterRead the Press Release
An owner and sole operator of an environmental laboratory has been charged in U.S. District Court for the Southern District of Mississippi with falsification of records and obstructing a federal criminal investigation, announced U.S. Attorney for the Southern District of Mississippi Gregory K. Davis and Assistant Attorney General Ignacia S. Moreno of the Justice Department’s Environment and Natural Resources Division.
Tennie White, owner, operator and manager of Mississippi Environmental Analytical Laboratories Inc. was charged in a three-count felony indictment with two false statements counts and one count of obstructing proceedings.
According to the indictment, White was hired to perform laboratory testing of a manufacturer’s industrial process waste water samples and then to use those results to complete monthly discharge monitoring reports for submission to the Mississippi Department of Environmental Quality (MDEQ). The indictment alleges that from February to August 2009 White created three discharge monitoring reports (DMRs) that falsely represented that laboratory testing had been performed on samples when, in fact, such testing had not been done. The indictment further alleges that White created a fictitious laboratory report and presented it to her client for use in preparing another DMR.
The indictment further alleges that White made false statements to a federal agent during a subsequent criminal investigation.
An indictment is not a finding of guilt, and a defendant is presumed innocent unless and until proven guilty in a court of law.
The false statements charges carry a maximum sentence of five years in prison and a $250,000 fine per count. The obstructing proceedings charge carries a maximum sentence of 20 years in prison and a $250,000 fine.
This case is being prosecuted by Trial Attorney Richard J. Powers of the Environmental Crimes Section of the Justice Department’s Environment and Natural Resources Division, and Assistant U.S. Attorney Gaine Cleveland of the U.S. Attorney’s Office for the Southern District of Mississippi.
Las Vegas Woman Convicted for Role in Mortgage Fraud SchemeRead the Press Release
WASHINGTON – A Las Vegas mortgage agent was found guilty today for participation in a mortgage fraud scheme that netted $1.2 million in fraudulent mortgage loans, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Daniel G. Bogden of the District of Nevada and Special Agent in Charge Kevin Favreau of the FBI’s Las Vegas Field Office.
After a four-day trial before U.S. District Judge Miranda Du in the District of Nevada, a federal jury convicted Heidi Haischer, 44, of one count of wire fraud and one count of conspiracy to commit wire fraud for submitting fraudulent loan documents to purchase two homes.
According to court documents and evidence presented at trial, Haischer submitted to lending institutions loan applications in which she misrepresented her income, submitted false verification of employment and misrepresented her intent to reside in one of the properties as her primary residence. Evidence at trial established that Haischer participated in an illegal property flipping ring that fraudulently obtained properties that Haischer and her co-conspirators intended to sell for a profit. Haischer and her co-conspirators also enriched themselves by collecting brokerage commissions generated by the sales of the properties.
Co-conspirator Kelly Nunes was convicted in a related case in Las Vegas on Feb. 2, 2012, of one count of bank fraud and one count of conspiracy to commit wire and bank fraud.
This case was investigated by the FBI. Trial Attorneys Thomas B.W. Hall and Brian R. Young of the Criminal Division’s Fraud Section are prosecuting the case, with assistance from the U.S. Attorney’s Office for the District of Nevada.
Today’s conviction is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF), which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants, including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.
Justice Department Seeks to Shut Down Ohio Promoterof Alleged Tax-fraud SchemeRead the Press Release
The Justice Department announced today that it has asked a federal court in Columbus, Ohio, to permanently bar John Allen from promoting tax-fraud schemes and preparing federal tax returns. The civil injunction lawsuit alleges that Allen, who does business as Allen & Associates, promotes several schemes involving the preparation of fraudulent federal income tax returns based on the false premise that his customers do not receive “wages” as defined by law.
The complaint alleges that Allen has promoted at least three tax-fraud schemes, moving from scheme to scheme when the Internal Revenue Service (IRS) identifies the bogus nature of the tax returns that are filed as part of Allen’s arrangement. The complaint alleges that, as part of the promotion, Allen prepares his customers’ tax returns, but does not sign the returns as the preparer. According to the complaint, Allen prepares frivolous letters addressed to the Secretary of the Treasury and the commissioner of the IRS on behalf of customers, and also aided a customer in an attempt to file a frivolous lien against the United States by preparing a bogus lien document and directing his customer to file it. Allen allegedly solicits up-front fees of $250 from customers to prepare their returns and handle any correspondence with the IRS, and asks for a “donation” of 10% of any refund issued to his customers by the IRS.
The complaint further alleges that Allen falsely holds himself out as an attorney to his customers and to third parties, including the IRS, despite being enjoined from the unauthorized practice of law by the Supreme Court of Ohio.
The Justice Department has obtained injunctions against hundreds of tax-return preparers and tax-fraud promoters in the past decade. Information about these cases is available on the Justice Department website.
Related Documents:
United States v. John Allen, etc.
Complaint for Permanent Injunction and Other Relief
Justice Department Reaches Settlementwith Georgia School District to Ensure All StudentsCan Enroll in and Attend SchoolRead the Press Release
The Justice Department announced that it has entered into a settlement agreement with the Henry County School District in Henry County, Ga., to ensure that all students in the district are able to enroll in school, regardless of national origin or immigration status. The settlement agreement resolves the department’s investigation into allegations that the district improperly notified parents that their children would be withdrawn from school for not providing a social security number, and failed to make its enrollment procedures accessible to parents with limited proficiency in English.
Under the settlement agreement, the district will ensure that all parents understand that providing their child’s social security number is voluntary, and no child will be denied enrollment or attendance in school for declining to provide a social security number. The settlement agreement also requires the district to provide parents who have limited English proficiency with enrollment and registration information in a language they can understand. The district further agreed to conduct training for administrators and staff on registration and enrollment procedures and proper communication with limited English proficient parents.
“Public schools serve all children in this country, no matter where they or their parents were born,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “No one benefits when a child is kept out of the classroom. The Justice Department is committed to ensuring that all that students and their families are welcomed in school, regardless of background. ”
“No child should face barriers to enrolling in school,” said Sally Quillian Yates, U.S. Attorney for the Northern District of Georgia “We commend the Henry County School District for working collaboratively with the department and for taking the steps necessary to enroll all students and communicate effectively with limited English proficient families.”
The settlement agreement reflects guidance that the Georgia Department of Education issued to all Georgia school districts in September 2012, after the Justice Department raised concerns about student enrollment practices in the state. The new guidance makes clear that no student can be denied enrollment in any public school or program for declining to provide a social security number or declining to apply for a social security number.
The enforcement of Title IV of the Civil Rights Act of 1964, which prohibits discrimination on the basis of race or national origin in public schools, and of the Equal Educational Opportunities Act of 1974, which r equires schools to take appropriate action to overcome language barriers that impede students’ equal participation in instructional programs, 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.
Related Materials:
Henry County, Ga., School District Settlement
Former U.S. Immigration and Customs Enforcement Miami Office Special Agent in Charge Sentenced to 70 Months in Prison for Transporting Child PornographyRead the Press Release
WASHINGTON – A former Special Agent in Charge of the U.S. Immigration and Customs Enforcement (ICE) Miami Office was sentenced today to serve 70 months in prison for transporting child pornography, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, Acting Special Agent in Charge Michael B. Steinbach of the FBI Miami Field Office and Sheriff Al Lamberti of the Broward County, Fla., Sheriff’s Office.
Anthony Mangione, 52, of Parkland, Fla., was sentenced by U.S. District Judge Kenneth A. Marra in West Palm Beach, Fla. In addition to his prison term, Mangione was sentenced to serve 20 years of supervised release.
On July 16, 2012, Mangione pleaded guilty to one count of transportation of child pornography in U.S. District Court in the Southern District of Florida. He was indicted on Sept. 27, 2011, by a grand jury in Fort Lauderdale, Fla.
According to court documents, between March 2010 and September 2010, Mangione used a computer and other means to transport visual depictions of minors engaging in sexually explicit conduct. Specifically, according to court documents, Mangione established several AOL email accounts to transport numerous images of minors engaging in sexually explicit conduct, including transmitting several images to an individual in Delaware.
During the period of time in which he transported child pornography, Mangione served as the Special Agent in Charge for the ICE Miami Office. Mangione was placed on administrative leave by ICE in April 2011 and has since retired.
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 exploitation and abuse. Led by U.S. Attorneys’ offices and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state, and local resources to better locate, apprehend and prosecute individuals who exploit children, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
This case was prosecuted by Deputy Chief Alexandra R. Gelber and Trial Attorney Michael W. Grant of CEOS. The investigation was conducted by the Broward County Sheriff’s Office and the FBI, with assistance from the Department of Homeland Security, Office of the Inspector General.
Army National Guard Recruiter Admits Crimes in<br /> Fraudulent Recruiting Referral Bonus SchemeRead the Press Release
An Army National Guard recruiter pleaded guilty today in the Western District of Texas for his role in a bribery and fraud scheme that caused approximately $98,000 in losses to the Army National Guard Bureau, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.
Staff Sergeant Jermaine Britt, 39, of Richmond, Texas, pleaded guilty to a three-count criminal information charging him with one count of bribery, one count of conspiracy to commit bribery and wire fraud and one count of obstruction of justice. The criminal information was filed on Nov. 2, 2012, in the U.S. District Court for the Western District of Texas.
The case against Britt arises from an investigation involving allegations that former and current military recruiters and U.S. soldiers in the San Antonio and Houston areas engaged in a wide-ranging bribery and fraud scheme to illegally obtain fraudulent recruiting bonuses. To date, the investigation has led to charges againstten individuals, all of whom have now pleaded guilty.
According to court documents, in approximately September 2005, the National Guard Bureau entered into a contract with Document and Packaging Broker Inc. to administer a recruiting program designed to offer monetary incentives to soldiers of the Army National Guard who referred others to join. Through this program, a participating soldier could receive up to $2,000 in bonus payments for every person whom the participating soldier referred to join the Army National Guard. Based on certain milestones achieved by the referred soldier, a participating soldier would receive payment through direct deposit into the participating soldier’s designated bank account. To participate in the program, soldiers were required to create online recruiting assistant accounts.
According to court documents, Britt enlisted in the Army National Guard in approximately July 2005, and served as a military recruiter from approximately November 2006. Britt admitted that between approximately May 2008 and April 2011, he and other recruiters obtained the names and Social Security numbers of potential soldiers and provided them to recruiting assistants, including Stephanie Heller, with the understanding that these recruiting assistants would use the information to obtain fraudulent recruiting bonuses. The recruiting assistants used the information to claim they were responsible for referring these potential soldiers to join the Army National Guard, when they were not. In exchange, Britt admitted that he personally received a total of $23,750 in cash payments.
Britt also admitted that after learning of a federal investigation into the fraudulent bonus scheme, he attempted to persuade Heller to falsify her statements to special agents of the U.S. Army Criminal Investigation Command (Army CID agents), whom Britt understood at the time were conducting a federal investigation of Britt’s and Heller’s unlawful activities. Specifically, Britt coached Heller on how she could provide false exculpatory explanations to Army CID agents concerning, among other things, Heller’s large cash withdrawals from her personal bank account, Britt’s e-mails to Heller in which he provided her with the personal identifiers of potential soldiers, and Heller’s use of Britt’s military computer to make fraudulent referrals under her recruiting assistant account.
On Oct. 4, 2012, Stephanie Heller pleaded guilty to one count of bribery and one count of conspiracy to commit bribery and wire fraud in connection with her unlawful dealings with Britt and another recruiter and her personal receipt of approximately $44,500 in fraudulent recruiting bonuses.
The charge of bribery carries a maximum potential penalty of 15 years in prison, the charge of conspiracy carries a maximum potential penalty of five years in prison and the charge of obstruction carries a maximum potential penalty of 20 years in prison. Each charge also carries a maximum $250,000 fine, or twice the pecuniary gain or loss from the offense. Sentencing has been scheduled for Feb. 8, 2013, before Chief U.S. District Judge Fred Biery in San Antonio.
The case is being prosecuted by Trial Attorneys Edward J. Loya Jr., Brian A. Lichter, and Sean F. Mulryne of the Criminal Division’s Public Integrity Section. The case is being investigated by agents from the San Antonio Fraud Resident Agency of the Major Procurement Fraud Unit, U.S. Army Criminal Investigation Command.
Alabama Real Estate Developer Charged with Illegally Filling Protected Mississippi WetlandsRead the Press Release
William R. “Rusty” Miller, a real estate developer from Fairhope, Ala., has been indicted by a federal grand jury in Jackson, Miss., for the unpermitted filling of wetlands near Bay St. Louis, Miss., in violation of the Clean Water Act, announced U.S. Attorney for the Southern District of Mississippi Gregory K. Davis and Assistant Attorney General Ignacia S. Moreno of the Justice Department’s Environment and Natural Resources Division.
The indictment alleges that during 2007, Miller caused the excavation and filling of wetlands on a 1,710 acre parcel of undeveloped property in Hancock County, west of the intersection of Route 603 and Interstate 10. The indictment states that Miller was a part-owner of corporations that purchased and intended to develop the land. It alleges that in 2001 when Miller and his companies purchased the property, he was informed by a wetland expert that as much as 80 percent of the land was federally protected wetland connected by streams and bayous leading to the Gulf of Mexico and as such could not be developed without a permit from the U.S. Army Corps of Engineers. Such permits typically require that developers protect and preserve other wetlands to compensate for those they are permitted to fill and destroy. In spite of additional notice he had received of the prohibition against filling and draining wetland without authorization, the indictment alleges that Miller hired an excavation contractor to trench, drain, and fill large portions of the property to lower the water table and thus to destroy the wetland that would otherwise be an impediment to commercial development.
The indictment charges that Miller knowingly ditched, drained and filled wetland at 10 locations on the Hancock County property without having obtained a permit from the Army Corps of Engineers. It also charges him with the unauthorized discharge of silt, sand, vegetation, debris and other material into and from canals and ditches on the Hancock County property into tributaries of Bayou Marone, a tributary of the Jourdan River.
It is a felony under the Clean Water Act for any person knowingly to discharge pollutants into waters of the United States without a permit. Any person convicted of this offense is subject to imprisonment of up to three years and a penalty of not more than $250,000.
An indictment is merely an accusation, and a defendant is presumed innocent unless and until proven guilty in a court of law.
34 Alleged Aryan Brotherhood of Texas Gang Members <br /> Indicted on Federal Racketeering ChargesRead the Press Release
Thirty-four alleged members of the Aryan Brotherhood of Texas gang (ABT), including four of its most senior leaders, have been indicted by a federal grand jury in Houston for allegedly conspiring to participate in a racketeering enterprise, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Kenneth Magidson of the Southern District of Texas, Special Agent in Charge Melvin D. King of the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) Houston Division and FBI Special Agent in Charge Stephen L. Morris of the Houston Field Office.
The 17 count superseding indictment was returned by a federal grand jury on Oct. 22, 2012, and unsealed today in U.S. District Court in the Southern District of Texas. Fourteen individuals were taken into custody today, and 15 defendants charged in the superseding indictment are already in custody. Five defendants remain at large.
“Today’s takedown represents a devastating blow to the leadership of ABT,” said Assistant Attorney General Breuer. “Four ABT generals, 13 additional alleged ABT leaders, and numerous other gang members and associates are named in the indictment. As charged, ABT uses extreme violence and threats of violence to maintain internal discipline and retaliate against those believed to be cooperating with law enforcement. Through violence and intimidation, ABT allegedly exerts control over prison populations and neighborhoods, and instills fear in those who come in contact with its members. As today’s operations show, the Criminal Division, working closely with its federal, state, and local law enforcement partners, is determined to continue disrupting and dismantling ABT and other violent, criminal gangs.”
“This indictment is the culmination of a joint federal, state and local law enforcement effort targeting a large-scale prison gang involved in violent organized crime,” said U.S. Attorney Magidson. “Only when we work in partnership utilizing all our resources can we attack a criminal organization and dismantle it entirely.”
“ATF is serious about fighting violent crime. We remain steadfast in our commitment to focus on those violent criminals who illegally use firearms to prey on their victims,” said ATF Special Agent in Charge King. “Through a collective effort with our law enforcement partners this operation was a success today.”
“This multi-year investigation and indictment clearly targets the worst-of-the-worst among the ABT,” said FBI Special Agent in Charge Morris. “This effort not only exemplifies the level of effort the FBI and our law enforcement partners will expend to prevent prison gang racism and criminal activity from poisoning our communities. It sends a clear message that we will relentlessly pursue and prosecute the leaders and members of these criminal enterprises regardless of where they lay their heads.”
As charged, the defendants range from senior leaders to soldiers of the ABT, a “whites only,” prison-based gang with members operating inside and outside of state and federal prisons throughout Texas and elsewhere in the United States since at least the early 1980s.
According to court documents, the ABT has a detailed and uniform organizational structure, with territory divided into five regions, each run by a “general.” The superseding indictment charges four generals, Terry Ross Blake, 55, aka “Big Terry”; Larry Max Bryan, 51, aka “Slick”; William David Maynard, 42, aka “Baby Huey”; and Charles Lee Roberts, 68, aka “Jive,” with conspiracy to participate in the racketeering activities of the ABT, among other charges.
In total, the superseding indictment charges 34 alleged members of the ABT with conspiracy to participate in the racketeering activities of the ABT. Alleged members of the ABT are also charged with involvement in three murders, multiple attempted murders, kidnappings, assaults and conspiracy to distribute methamphetamine and cocaine.
According to the superseding indictment, the ABT was established in the early 1980s within the Texas prison system. The gang modeled itself after and adopted many of the precepts and writings of the Aryan Brotherhood, a California-based prison gang that was formed in the California prison system during the 1960s. According to court documents, previously, the ABT was primarily concerned with the protection of white inmates and white supremacy/separatism. Over time, the ABT is alleged to have has expanded its criminal enterprise to include illegal activities for profit.
Court documents allege that the ABT enforced its rules and promoted discipline among its members, prospects and associates through murder, attempted murder, conspiracy to murder, arson, assault, robbery and threats against those who violate the rules or pose a threat to the enterprise. Members, and oftentimes associates, were required to follow the orders of higher-ranking members, often referred to as “direct orders.”
According to the superseding indictment, in order to be considered for membership, a person must be sponsored by another ABT member. Once sponsored, a prospective member must serve an unspecified term, during which he is referred to as a prospect, while his conduct is observed by the members of the ABT.
Ten defendants have been charged with offenses that are eligible for the death penalty. The remaining 24 defendants face a maximum penalty of life in prison.
An indictment is not evidence of guilt. All defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
This case is being investigated by a multi-agency task force consisting of the ATF; Drug Enforcement Administration; FBI; U.S. Marshals Service; Federal Bureau of Prisons; U.S. Immigration and Customs Enforcement Homeland Security Investigations; Texas Rangers; Texas Department of Public Safety; the Montgomery County, Texas, Sheriff’s Department; Houston Police Department-Gang Division; Texas Department of Criminal Justice – Office of Inspector General; Harris County, Texas, Sheriff’s Office; Tarrant County, Texas, Sheriff’s Office; Atascosa County, Texas, Sheriff’s Office; Orange County, Texas, Sheriff’s Office; Waller County, Texas, Sheriff’s Office; Fort Worth, Texas, Police Department; San Antonio Police Department; Baytown, Texas, Police Department; Carrollton, Texas, Police Department; Alvin, Texas, Police Department; Montgomery County District Attorney’s Office; Atascosa County District Attorney’s Office; Harris County District Attorney’s Office; and the Kaufman County, Texas, District Attorney’s Office.
The case is being prosecuted by David Karpel of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorney Jay Hileman of the Southern District of Texas.
Related Materials:
Assistant Attorney General Lanny A. Breuer Speaks at Press Conference to Announce Charges Against Alleged Aryan Brotherhood of Texas Leaders
Fact Sheet of Defendants and Charges
8 November 2012
Virginia Charter Fishing Boat Captains Indicted for Lacey Act Violations and Other CrimesRead the Press Release
WASHINGTON – Five charter fishing boat captains operating out of Rudee Inlet in Virginia Beach, Va. – Jeffery S. Adams, Raymond Carroll Webb, David Dwayne Scott, William W. “Duby” Lowery, IV and Nolan L. Agner – were indicted today for violating the Lacey Act by selling illegally harvested Striped Bass, the Department of Justice Environment and Natural Resources Division and the U.S. Attorney for the Eastern District of Virginia announced. The captains also face charges of making false statements to law enforcement officers and destroying property to prevent its seizure by law enforcement.
In 1984, Congress passed the Atlantic Striped Bass Conservation Act, recognizing that “Atlantic striped bass are of historic commercial and recreational importance and economic benefit to Atlantic coastal States and to the Nation,” and that it “is in the national interest to implement effective procedures and measures to provide for effective inter-jurisdictional conservation and management of this species.” Since 1990, the Secretary of Commerce has imposed a moratorium on fishing for Striped Bass within the Exclusive Economic Zone (EEZ), the zone where the U.S. and other coastal nations have jurisdiction over economic and resource management. The moratorium makes it unlawful to fish for or harvest Striped Bass in the EEZ. The moratorium also makes it unlawful to retain any Striped Bass that were taken in or from the EEZ.
The Lacey Act makes it unlawful for any person to import, export, transport, sell, receive, acquire or purchase any fish and wildlife taken, possessed, transported or sold in violation of any law or regulation of the United States, or to attempt to do so. Such conduct constitutes a felony crime if the defendant knowingly engaged in conduct involving the sale, offer to sell or intent to sell fish with a market value in excess of $350, knowing that the fish were taken, possessed, transported or sold in violation of, or in a manner unlawful under, a law or regulation of the United States. Under the Lacey Act, it is a “sale” of fish or wildlife for any person, for money or other consideration, to offer or provide guiding, outfitting, or other services.
Each of the five charter fishing boat captains face charges that they sold charter fishing trips and harvested Striped Bass from the EEZ.
Jeffrey Adams, captain of the F/V Providence II, and his corporation Adams Fishing Adventures, are charged with conspiracy, trafficking in illegally harvested Striped Bass in violation of the Lacey Act and making false statements to law enforcement officers. The indictment alleges that, between March 4, 2009, and Feb. 9, 2011, the defendants sold charter fishing trips to harvest Striped Bass illegally from the EEZ. The indictment also alleges that, as part of the conspiracy, Adams and others would puncture the air bladder of Striped Bass and, if contacted by law enforcement, would throw illegally-harvested Striped Bass into the sea in hopes of avoiding detection. Adams is also charged with making a false statement to law enforcement officers regarding the location where his charter fishing clients harvested Striped Bass.
Raymond Carroll Webb, captain of the F/V Spider Webb, and his corporation Peake Enterprisees, Ltd., were charged with trafficking in illegally harvested Striped Bass and Destruction of Evidence for actions taken during a Striped Bass charter fishing trip on Feb. 12, 2011.
David Dwayne Scott, captain of the Stoney’s Kingfisher, was charged with trafficking in illegally harvested Striped Bass and destruction of evidence for actions taken during a Striped Bass charter fishing trip on Feb. 7, 2009.
William W. “Duby” Lowery, captain of the Anna Lynn, was charged with trafficking in illegally harvested Striped Bass and destruction of evidence for actions taken during a Striped Bass charter fishing trip on Jan. 15, 2010.
Nolan L. Agner, captain of the Flat Line, and his corporation, Agner, Inc., were charged with trafficking in illegally harvested Striped Bass for actions taken during a Striped Bass charter fishing trip on Jan. 16, 2011.
If convicted, the individual defendants face a maximum penalty of five years in prison, and a $250,000 fine per count, as well as forfeiture of the fishing vessels used during the commission of the crimes. If convicted, the corporate defendants face a maximum penalty of a $500,000 fine per count, as well as forfeiture of the fishing vessels used during the commission of the crimes.
The case was investigated by the National Oceanic and Atmospheric Administration, Fisheries, Office for Law Enforcement, and the Virginia Marine Police with assistance from the Federal Communications Commission Enforcement Bureau, Norfolk Office. The case is being prosecuted by Department of Justice’s Environmental Crimes Section of the Justice Department’s Environment and Natural Resources Division and the U.S. Attorney’s Office for the Eastern District of Virginia.
An indictment is a formal accusation and is not proof of guilt. Defendants are presumed innocent until and unless they are found guilty.
US Government Intervenes in False Claims Lawsuit<br /> <br /> Against Fluor CompaniesRead the Press Release
The government has intervened in a lawsuit against Fluor Hanford Inc. and its parent company, Fluor Corporation (collectively Fluor), in the U.S. District Court for the Eastern District of Washington, the Justice Department announced today. Fluor Hanford, Inc. is a subsidiary of Fluor Corporation, a Texas-based corporation that provides a wide variety of services to government and private customers. The False Claims Act lawsuit was originally filed by whistleblower Loydene Rambo, a former employee of Fluor.
Between 1999 and 2008, Fluor had a prime contract with the Department of Energy (DOE) to provide a wide variety of security, maintenance and operational services at the DOE’s Hanford Nuclear Site in southeastern Washington State. As part of its contract, Fluor was responsible for managing and operating the Hazardous Materials Management and Emergency Response (HAMMER) Center, a federally-funded facility established to train Hanford site workers as well as first responders and law enforcement personnel.
The whistleblower complaint alleges that, as a condition of receiving its DOE contract, Fluor was required to certify that it would not use federal funds for lobbying activities. The complaint further alleges that between 2005 and 2008, Fluor ignored these restrictions and used DOE funding to lobby Congress and executive branch officials for more funding for HAMMER. The complaint alleges that Fluor, and two lobbying firms hired by Fluor and paid using DOE funds, Secure Horizons LLC and Congressional Strategies LLC, lobbied members of Congress and executive branch agencies to include additional funds for HAMMER in agency appropriations. The United States intervened in the lawsuit with respect to Fluor, but declined to intervene with respect to additional defendants, including Secure Horizons LLC and Congressional Strategies LLC.
“The taxpayer money Congress allocated for this program was for training federal emergency response personnel and first responders, not to lobby Congress and others for more funding,” said Stuart F. Delery, Acting Assistant Attorney General for the Civil Division of the Department of Justice. “When public funds are misused, as alleged in this case, the Justice Department will work to restore them to the Treasury.”
“The allegations set forth in the whistleblower complaint are troubling and very serious,”
said Michael C. Ormsby, U.S. Attorney for the Eastern District of Washington. “My Office will continue to work with the Justice Department to ensure a just resolution of these alleged violations of federal law.”
Ms. Rambo’s lawsuit was filed under the False Claims Act, which authorizes private parties to sue on behalf of the United States and share in any recovery. The act authorizes the United States to intervene in such a suit and take over the responsibility for litigating it. The United States has informed the court that it intends to file its own complaint in the action.
The case is being handled by the Civil Division of the Department of Justice and the U.S. Attorney’s Office for the Eastern District of Washington, with the assistance of the Department of Energy Office of Inspector General.
Ms. Rambo’s lawsuit is captioned U.S. ex rel. Rambo v. Fluor Hanford, et al., cv-11-5037. The claims asserted in this case are allegations only, and there has been no determination of liability.
Two Former U.S. Soldiers Sentenced for Roles in Fraudulent Military Recruiting Referral Bonus SchemeRead the Press Release
WASHINGTON – Two former members of the U.S. military were sentenced today for their participation in a conspiracy to obtain approximately $244,000 in fraudulent recruiting referral bonuses from various U.S. military components and their contractor, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.
Grant E. Bibb, 41, of Eagle Pass, Texas, and Paul Escobar, 32, of San Antonio, were sentenced today by Chief U.S. District Judge Fred Biery in the Western District of Texas. Judge Biery sentenced Bibb to serve one year and one day in prison and three years of supervised release. Escobar was sentenced to six months in prison, six months of community confinement and three years of supervised release. Judge Biery also held Bibb and Escobar jointly and severally liable for $244,000 in restitution.Bibb pleaded guilty to conspiracy to commit wire fraud on Jan. 30, 2012. Escobar pleaded guilty to conspiracy to commit wire fraud on July 19, 2012.
According to court documents, Bibb served in the Texas National Guard between January 2003 and July 2007 and in the U.S. Army Reserves from October 2007 until November 2010. In addition, from December 2007 until April 2009, Bibb worked as a contract military recruiter in Katy, Texas.
Escobar served in the U.S. Army Reserves from November 2005 until February 2007. Escobar then served in the U.S. Army from November 2007 to January 2010.
According to court documents, between 2005 and 2008, the U.S. Army, the U.S. Army Reserves and the National Guard Bureau entered into contracts with Document and Packaging Broker Inc. (Docupak) to administer recruiting bonus programs designed to offer monetary incentives to soldiers who referred others to join the U.S. military. In addition, the Army managed its own recruiting bonus programs, which offered bonuses to soldiers who referred other individuals to join the Army or the Army Reserves after registering online as recruiting assistants (RA) or sponsors. Through these recruiting programs, a participating soldier could receive up to $2,000 in bonus payments for every person he referred to serve in the U.S. military.
Bibb and Escobar admitted that they participated in a fraud scheme whereby active duty and civilian contract recruiters provided RAs and sponsors with the names and Social Security numbers of “walk-in” soldiers, which are individuals who decided to join the military without being referred by anyone. Using this information, the RAs and sponsors claimed credit for referring these potential soldiers to join the military, when in fact they did not refer them. As part of the fraud scheme, the RAs and sponsors split the bonus payments with the recruiters and others who provided the potential soldiers’ personal identifying information.
According to court documents, Bibb, Escobar and their co-conspirators received at least $244,000 in fraudulent recruiting referral bonuses in total. Bibb personally received $35,000 in fraudulent recruiting referral bonuses using RA accounts in his name and an RA account in a relative’s name. Bibb also worked with other soldiers and active duty recruiters to set up RA accounts in those soldiers’ names for the purpose of claiming fraudulent recruiting referral bonuses. Bibb, the recruiters and at least four soldiers split a total of at least $4,000 in fraudulent bonuses. Escobar permitted a co-conspirator to receive $6,000 in fraudulent recruiting referral bonuses using Escobar’s RA account and made fraudulent representations to Docupak to carry out the scheme.
This case arose from an investigation concerning allegations that former and current soldiers and military and civilian contract recruiters in the San Antonio area engaged in a wide-ranging scheme to obtain fraudulent recruiting referral bonuses. To date, 9 individuals have been charged, all of whom have pleaded guilty. The investigation is ongoing.
The case is being prosecuted by Trial Attorneys Edward J. Loya Jr., Brian A. Lichter and Sean F. Mulryne of the Criminal Division’s Public Integrity Section. The case is being investigated by agents from the San Antonio Fraud Resident Agency of the Major Procurement Fraud Unit, U.S. Army Criminal Investigation Division.
Texas Inmate Pleads Guilty to Federal Hate Crimefor Assaulting Fellow InmateRead the Press Release
John Hall, 27, an inmate at the Federal Correctional Institution in Seagoville, Texas, pleaded guilty today in federal court to violating the Matthew Shepard and James Byrd, Jr. Hate Crimes Prevention Act stemming from his assault of a fellow inmate, who he believed to be gay, the Department of Justice announced. Hall assaulted his fellow inmate with a dangerous weapon, causing bodily injury to the victim on Dec. 20, 2011.
According to information presented during the plea hearing, Hall targeted the victim, a fellow inmate, because of the victim’s perceived sexual orientation. Hall admitted that he assaulted the victim because of his perceived sexual orientation by repeatedly punching and kicking the victim while calling the victim gay slurs. The victim sustained multiple lacerations to his face, and chipped and fractured teeth as a result of Hall’s unprovoked attack. The assault occurred inside the Federal Correctional Institution, which is within the special maritime or territorial jurisdiction of the United States.
“The Justice Department continues to investigate and prosecute acts of violence targeting individuals because of their sexual orientation; this case is just another example of the department’s commitment to the pursuit of justice on behalf of all people regardless of their sexual preference or orientation.” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The department will continue to vigorously enforce the Matthew Shepard and James Byrd, Jr. Hate Crimes Prevention Act, and all the laws under our jurisdiction, to protect the rights of all individuals.”
Hall faces a maximum sentence of 10 years in prison for this crime.
This case was investigated by the FBI Dallas Division. The case was prosecuted by Assistant U.S. Attorney Errin Martin and Trial Attorney Adriana Vieco of the Civil Rights Division.
North Carolina Real Estate Investor Pleads Guilty to Mail Fraud Scheme for the Purchase of Real Estate at Public Foreclosure AuctionsRead the Press Release
A real estate investor pleaded guilty today to conspiring to commit mail fraud at public real estate foreclosure auctions held in Raleigh, N.C., and surrounding areas, the Department of Justice announced. This is the second charge in the department’s ongoing investigation into real estate foreclosure auctions in eastern North Carolina.
According to the one-count felony charge filed on Oct. 4, 2012, in the U.S. District Court for the Eastern District of North Carolina, in Greenville, real estate investor, Darren K. Phillips, conspired with a group of real estate speculators to participate in a scheme to defraud financial institutions, homeowners and others with a legal interest in select properties, and to obtain money and property from financial institutions, homeowners and others with a legal interest in rigged properties through false and fraudulent pretenses or representations. According to the plea agreement, Phillips has agreed to cooperate with the department’s ongoing investigation.
The primary purpose of the conspiracy was to fraudulently acquire title to rigged foreclosure properties offered through public auctions at artificially suppressed prices, to make and receive payoffs from co-conspirators and to divert money away from financial institutions, homeowners and others with a legal interest in the rigged foreclosure properties, the department said in court papers. The conspiracy resulted in mortgage holders, some of which were financial institutions, receiving a lower price for the foreclosure property. Philips is charged with participating in the conspiracy beginning at least as early as February 2001 and continuing until at least May 2004.
“By artificially suppressing auction prices through payoffs and other illegal actions, the conspirators profited at the expense of homeowners and financial institutions,” said Scott D. Hammond, Deputy Assistant Attorney General in charge of the Antitrust Division’s criminal enforcement program. “The division will continue to work with our law enforcement partners to investigate anticompetitive practices in real estate foreclosure auctions in North Carolina and elsewhere.”
Phillips is charged with conspiracy to commit mail fraud affecting a financial institution, which carries a maximum sentence of 30 years in prison and a $1 million fine.
Phillips is the second person to be charged in this investigation. In September 2010, Christopher Deans, a real estate speculator from Raleigh, pleaded guilty in the U.S. District Court in Greenville in connection with the investigation.
Today’s plea arose from an ongoing federal antitrust investigation of fraud and bidding irregularities in certain real estate foreclosure auctions in the Eastern District of North Carolina. The investigation is being conducted by the Antitrust Division’s Atlanta Field Office and the FBI’s Atlanta Field Office, with assistance from the U.S. Attorney’s Office for the Eastern District of North Carolina. Anyone with information concerning bid rigging or fraud related to real estate foreclosure auctions should contact the Antitrust Division’s Atlanta Field Office at 404-331-7100, or visit www.justice.gov/atr/contact/newcase.htm .
Today’s plea 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. One component of the task force is the national Mortgage Fraud Working Group, co-chaired by Benjamin B. Wagner, U.S. Attorney for the Eastern District of California. For more information on the task force, visit www.StopFraud.gov.
Michigan Man Charged with Selling<br /> Counterfeit Microsoft Software Worth More Than $1.2 MillionRead the Press Release
WASHINGTON – A Michigan man was arraigned today in U.S. District Court for the Eastern District of Michigan on charges of mail fraud and selling counterfeit Microsoft software with a retail value of more than $1.2 million, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney for the Eastern District of Michigan, Barbara L. McQuade and Lev J. Kubiak, Director of the National Intellectual Property Rights Coordination Center (IPR Center).
Bruce Alan Edward, 48, of Atlanta, Mich., was charged in an indictment returned on Oct. 24, 2012, and unsealed on Nov. 1, 2012, by the federal grand jury in Bay City, Mich. The indictment charges Edward with five counts of criminal copyright infringement and one count of mail fraud.
According to the indictment, Edward unlawfully distributed counterfeit copies of Microsoft Office 2003 Professional and Microsoft Windows XP Professional software by purchasing counterfeit copies of the copyrighted works from China and Singapore, selling the copyrighted works on eBay and then using the U.S. Postal Service to deliver the counterfeit software. The indictment further alleges that Edward obtained more than $140,000 between May 2008 and September 2010 by selling more than 2,500 copies of counterfeit Microsoft software that had a retail value of over $1.2 million.
If convicted of all counts in the indictment, Edward faces a maximum of 45 years in prison and $1.5 million in fines. The indictment also contains a forfeiture allegation that requires the defendant, if convicted, to forfeit all criminal proceeds and counterfeit items and any property used to commit the alleged criminal activity.
The case is being prosecuted by Trial Attorney Thomas Dougherty of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney Janet Parker of the U.S. Attorney’s Office for the Eastern District of Michigan.The investigation was conducted by the National Intellectual Property Rights Coordination Center (IPR Center) in Crystal City, Va., and U.S. Immigration and Customs Enforcement Homeland Security Investigations in Sault Ste. Marie, Mich.
The IPR Center is one of the U.S. government’s key weapons in the fight against criminal counterfeiting and piracy. As a task force, the IPR Center uses the expertise of its 21 member agencies to share information, develop initiatives, coordinate enforcement actions and conduct investigations related to IP theft. Through this strategic interagency partnership, the IPR Center protects the public's health and safety, the U.S. economy and our war fighters.
The enforcement action announced today is one of many efforts being undertaken 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 www.justice.gov/dag/iptaskforce/.
7 November 2012
Two Pakistani Nationals Indicted for Conspiring to Illegally Ship Pharmaceuticals into the USRead the Press Release
Two Pakistani nationals have been indicted by a federal grand jury in the District of Columbia on charges alleging that they operated Internet sites that illegally shipped pharmaceuticals from Pakistan and the United Kingdom to customers in the United States.
Sheikh Waseem Ul Haq, 39, and Tahir Saeed, 50, are accused of operating Internet sites that, since late 2005, illegally shipped $2 million of pharmaceuticals from Pakistan and the United Kingdom to customers worldwide, including nearly $780,000 in sales to U.S. purchasers.
According to the indictment, the defendants and others owned, operated and conducted business as Waseem Enterprises and Harry’s Enterprises, wholesale pharmaceutical companies that were located in Pakistan. The businesses were used to unlawfully distribute a wide variety of controlled substances and prescription drugs through Internet sites. The defendants and others also advertised their companies on Internet sites to generate business.
Ul Haq and Saeed directed U.S. customers to submit payments via Western Union to numerous individuals in Karachi, Pakistan, in order to conceal the fact that the funds were going to Ul Haq and Saeed. As alleged in the indictment, the defendants admitted in e-mails that they paid bribes to Pakistani customs officials to facilitate shipment of the drugs out of Pakistan, and warned that U.S. customers bore the risk of interception by U.S. customs officials. The indictment alleges that the defendants packaged the drug shipments in ways which reduced the likelihood of interdiction by customs inspectors and told customers that, despite the packaging, some of the shipments might not get through.
The drugs shipped into the United States included methylphenidate (sold as Ritalin); various anabolic steroids; alprazolam (sold as Xanax); diazepam (sold as Valium), lorazepam (sold as Ativan), clonazepam (sold as Klonapin) and other controlled and non-controlled substances.
The indictment, which was returned on Nov. 6, 2012, was announced today by Ronald C. Machen Jr., U.S. Attorney for the District of Columbia; Acting Assistant Attorney General Stuart F. Delery of the Department of Justice’s Civil Division; James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office; Robert Brisolari, Acting Special Agent in Charge of the Washington Division Office of the Drug Enforcement Administration; Gary R. Barksdale, Inspector in Charge, Washington Division, U.S. Postal Inspection Service, and Antoinette V. Henry, Special Agent in Charge of the Metro Washington Field Office of the U.S. Food & Drug Administration’s Office of Criminal Investigations.
The indictment was returned following a presentation of evidence by the U.S. Attorney’s Office for the District of Columbia, working in conjunction with the Department of Justice’s Consumer Protection Branch. It charges the defendants with conspiracy to import controlled substance pharmaceuticals into the United States; conspiracy to distribute controlled substance pharmaceuticals; conspiracy to introduce misbranded pharmaceuticals into interstate commerce; importation and distribution of controlled substance pharmaceuticals; introduction into interstate commerce of misbranded drugs, and conspiracy to commit international money laundering. It also includes a forfeiture allegation seeking all proceeds that can be traced to the scheme.
If convicted, the defendants face up to 20 years in prison for each of the two counts involving the conspiracy to import and distribute controlled substances, as well as up to 20 years for the conspiracy to commit international money laundering. They face a maximum penalty of five years for conspiracy to introduce misbranded pharmaceuticals into interstate commerce, and additional time if convicted of the other charges.
In early October 2012, a law enforcement task force investigating the case learned that the defendants would be traveling from Pakistan to northern Europe. With coordination from the U.S. Department of Justice’s Office of International Affairs, U.S. authorities lodged provisional arrest warrants for the defendants first in Germany and then in the United Kingdom.
With the assistance of Interpol and law enforcement agents in Germany and the United Kingdom, the defendants were tracked from Germany to London, where they were arrested by the London Metropolitan Police Service Fugitive Squad at a hotel near Heathrow Airport on Oct. 19, 2012. They were presented to Westminster Magistrate’s Court in London and ordered held pending extradition to the United States.
“This indictment alleges an international conspiracy to sell anabolic steroids, anti-anxiety medications, and other prescription drugs over the Internet to American consumers without any doctor involved,” said U.S. Attorney Machen. “These Pakistani nationals are alleged to have engaged in a scheme to ship unregulated pharmaceuticals to American consumers in exchange for money wired to their cohorts in Pakistan. The controlled substances were packaged to conceal the illegal shipments from being discovered by customs officials. Our Office, along with our law enforcement colleagues, will continue to aggressively investigate and prosecute those who are intent on shipping unregulated and potentially dangerous drugs into the United States.”
“This prosecution aims to curb the flow of dangerous drugs into the hands of United States citizens,” said Stuart F. Delery, Acting Assistant Attorney General for the Civil Division. “The drugs allegedly sold by the defendants were not approved for distribution into the United States, were not dispensed by U.S. licensed pharmacies, and were not prescribed by any physician. Along with the FBI, FDA and our other law enforcement partners, we will continue to protect our citizens from unsafe and potentially harmful drugs.”
“This complex investigation and subsequent arrests disrupted an international black market for potentially dangerous drugs entering the United States,” said Assistant Director in Charge McJunkin. “This indictment is the direct result of the hard work of FBI Agents in partnership with the Drug Enforcement Administration, U.S. Postal Inspection Service, U.S. Food & Drug Administration’s Office of Criminal Investigations and the London Metropolitan Police Service as well as the prosecutors working on this case.”
“This indictment shows the commitment of the U.S. Postal Inspection Service to keep its customers safe from potentially harmful products,” said Inspector in Charge Barksdale. “We would also like to thank our federal partners in our continued effort to rid the U.S. Mail of illegal pharmaceuticals.”
“The FDA Office of Criminal Investigations is committed to working with our international and domestic law enforcement partners in aggressively pursuing unscrupulous individuals who seek to sell adulterated and misbranded pharmaceuticals to U.S. citizens via the Internet,” said Special Agent in Charge Henry.
An indictment is merely a formal charge that a defendant has committed a violation of criminal laws and every defendant is presumed innocent until, and unless, proven guilty.
This investigation was sponsored and supported by the Department of Justice’s Organized Crime Drug Enforcement Task Force. The case was investigated by the FBI’s Washington Field Office; the Drug Enforcement Administration; the U.S. Postal Inspection Service, and the FDA’s Office of Criminal Investigations. It is being prosecuted by Assistant U.S. Attorney John P. Dominguez and Linda I. Marks, Senior Litigation Counsel for the Department of Justice’s Consumer Protection Branch, who coordinated the investigation and presented the evidence to the grand jury.
Mexican Pecan Company Owner Sentenced to 48 Months in Prison<br /> for Scheme to Defraud the U.S. Export-Import BankRead the Press Release
WASHINGTON – The owner of a pecan brokerage company in Ciudad Juarez, Chihuahua, Mexico, was sentenced today to serve 48 months in prison for his role in a scheme to defraud the Export-Import Bank of the United States (Ex-Im Bank) of approximately $400,000, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney for the Western District of Texas Robert Pitman and Osvaldo L. Gratacos, Inspector General of the Ex-Im Bank.
Leopoldo Valencia-Urrea, 50, was sentenced by Judge Kathleen Cardone in U.S. District Court in El Paso, Texas. Valencia pleaded guilty on Oct. 13, 2011, to one count of conspiracy to commit wire fraud, one count of wire fraud and one count of money laundering conspiracy in connection with a scheme to defraud the Ex-Im Bank of approximately $400,000. In addition to his prison term, Valencia was sentenced to serve three years of supervised release and was ordered to pay $58,000 in restitution and $399,075 in forfeiture.
According to court documents, Valencia, a U.S. citizen, was the owner of a pecan brokerage company in Ciudad Juarez and resided in El Paso. Valencia admitted that in 2006, he applied for an Ex-Im insured loan for $406,258 through a bank in Miami. As part of his fraudulent loan application, Valencia and others submitted a fraudulent loan application, financial statements, invoices, letters and bills of lading to falsely represent to the Miami bank and the Ex-Im Bank the purchase and export of U.S. goods to Valencia in Mexico. After the exporter who conspired with Valencia received $399,075 from the Miami bank, Valencia and others diverted the loan proceeds directly to Valencia and others in Mexico. As a result of the fraud, Valencia’s loan defaulted, causing the Ex-Im Bank to pay a claim to the lending bank on a $371,962 loss.
The Ex-Im Bank is an independent federal agency that helps create and maintain U.S. jobs by filling gaps in private export financing. The Ex-Im Bank provides a variety of financing mechanisms to help foreign buyers purchase U.S. goods and services.
The case is being prosecuted by Senior Litigation Counsel Patrick Donley and Trial Attorney William Bowne of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Steven Spitzer of the Western District of Texas, El Paso Division. The case was investigated by the Ex-Im Bank Office of Inspector General, Homeland Security Investigations in El Paso, under the leadership of Acting Special Agent in Charge Dennis Ulrich; Internal Revenue Service-Criminal Investigation in Washington, D.C., under the leadership of Special Agent in Charge Rick A. Raven; and the U.S. Postal Inspection Service in Washington, D.C., under the leadership of Inspector in Charge Daniel S. Cortez. Significant financial analysis and strategic assistance was provided during the course of this investigation by the Financial Crimes Enforcement Network (FINCEN).
Barbados National Sentenced to Prison for Using Stolen<br /> <br /> Identities to Obtain Tax RefundsRead the Press Release
Andrew J. Watts, a Barbados national, was sentenced in Chicago by U.S. District Judge Joan Gottschall to 114 months in prison and ordered to pay restitution of just under $1.7 million for devising and executing a stolen identity federal income tax refund fraud scheme, the Justice Department and the Internal Revenue Service (IRS) announced today.
According to court documents, between 2007 and 2011, Watts filed false federal income tax returns in the names of deceased taxpayers seeking fraudulent refunds. Watts either signed the name of the deceased taxpayer to the tax return, or would falsely list himself as the deceased taxpayer’s representative. As part of the scheme, Watts filed over 470 false federal income tax returns, claiming fraudulent refunds in excess of $120 million, and the IRS issued refunds in excess of $10 million. Watts directed the IRS to either mail the refund checks to an address he controlled or to electronically deposit the refund into a bank account under his control.
“While all taxpayers are victims when criminals file false tax returns using stolen identities, those who falsely use the names of deceased individuals add to the grief and burdens of their families,” said Kathryn Keneally, Assistant Attorney General for the Justice Department's Tax Division. “We will prosecute and seek just punishment against those who seek to commit these crimes.”
“IRS-Criminal Investigation has made investigating refund fraud and identity theft a top priority and we will vigorously pursue those who undermine the integrity of the U.S. tax system,” said Richard Weber, Chief, IRS-Criminal Investigation. “Individuals who commit refund fraud and identity theft of this magnitude deserve to be punished to the fullest extent of the law.”
On July 10, 2012, Watts pleaded guilty to one count of mail fraud and one count of aggravated identity theft.
The case was investigated by IRS-Criminal Investigation and prosecuted by Assistant U.S. Attorney Patrick J. King, Jr., Northern District of Illinois, and Trial Attorney Michelle Petersen, Department of Justice, Tax Division.
More information about the Justice Department’s Tax Division and its enforcement efforts is available at www.usdoj.gov/tax/ .
6 November 2012
Virginia Man Convicted of Tax CrimesRead the Press Release
A Newport News, Va., federal jury has found Jeffrey Charles guilty for conspiring with his daughter and son-in-law to defraud the United States, the Justice Department and the Internal Revenue Service (IRS) announced today. Charles was found guilty of one count of conspiracy, three counts of aiding and assisting in the preparation of false tax returns and one count of filing a false tax return.
According to the evidence presented at trial, Charles conspired with his daughter and son-in-law to impair and impede the IRS in ascertaining, computing, assessing and collecting federal income taxes. The evidence also proved that Charles aided and assisted in the preparation of three false tax returns in his daughter’s name for tax years 2000, 2001 and 2005, and attached false documents to each tax return. The evidence at trial also established that Charles filed a false tax return in his own name for tax year 2006 in which he allegedly falsely reported earning $0.00 income.
Senior Judge Henry Coke Morgan, Jr. scheduled sentencing for Feb. 25, 2012 in Norfolk, Va.
The case was investigated by IRS Criminal Investigation and was prosecuted by Assistant U.S. Attorney Brian Samuels and Trial Attorney Justin K. Gelfand of the Justice Department’s Tax Division.
Former New Mexico Navajo Police Officer Sentenced to over Four Years in Prison on Sexual Abuse ChargesRead the Press Release
Lawrence Etsitty , 31, a former police officer with the Navajo Police Department (NPD), was sentenced today in federal court on charges related to the sexual abuse of a woman who was in his custody on Jan. 25, 2009. Earlier this year, Etsitty pleaded guilty to violating the civil rights of the victim when he groped, touched and kissed her against her will, while she was handcuffed. Etsitty also was charged and pleaded guilty to making false statements to the FBI.
According to court documents, on Jan. 25, 2009, at 2:40 a.m., Etsitty, while working in his capacity as an officer of the NPD, arrested the victim outside of the Fire Rock Casino in Churchrock, N.M. Etsitty then handcuffed the victim and placed her in the back of his patrol vehicle. Etsitty then drove the victim to an isolated road in the desert, opened the back door of his patrol car where the handcuffed victim was sitting, and forcibly pulled her toward him and out of the car. Etsitty then began groping the victim, while she struggled to get free, pleading for Etsitty to take her home. Ultimately, Etsitty agreed to do so and dropped the victim off in a parking lot near her home, at which point the victim ran away.
On Jan. 27, 2009, Etsitty voluntarily spoke to the FBI and falsely claimed that he did not grope the victim while she was in his custody. Etsitty later wrote a letter of apology to the victim in which he admitted to groping and kissing her while she was in his patrol car, and acknowledged that what he did was wrong and should not have happened.
Etsitty was sentencing to 54 months in prison followed by three years of supervised release. He will also be barred from serving in a law enforcement capacity.
“Police officers who use the power of their badge to sexually assault persons in their custody pose a serious threat to the rule of law,” said Thomas E. Perez, Assistant Attorney General of the Civil Rights Division.. “We commend the courage of the victim in coming forward and speaking out about this terrible crime. The Department of Justice and the Civil Rights Division will continue to vigorously investigate and prosecute these crimes.”
This case was investigated by the Albuquerque Division of the FBI and was prosecuted by Fara Gold of the Civil Rights Division of the U.S. Department of Justice.
5 November 2012
Owner of Miami Assisted Living Facility Sentenced to 15 Months in Prison for Role in Medicare Fraud ConspiracyRead the Press Release
WASHINGTON – The owner of a Miami-Dade County assisted living facility (ALF) was sentenced today to 15 months in prison for her role in a kickback scheme that funneled ALF patients to fraudulent mental health providers American Therapeutic Corporation (ATC) and Health Care Solutions Network (HCSN), announced Assistant Attorney General Lanny A. Breuer of the Justice Department's Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; Michael B. Steinbach, Acting Special Agent in Charge of the FBI's Miami Field Office; and Special Agent in Charge Christopher B. Dennis of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), Office of Investigations Miami Office.
Alba Serrano, 66, of Miami, was sentenced today by U.S. District Judge Patricia A. Seitz in the Southern District of Florida. In addition to her prison term, Serrano was sentenced to serve three years of supervised release and ordered to pay $258,329 in restitution.
On June 6, 2012, Serrano pleaded guilty in Miami to one count of conspiracy to commit health care fraud.
According to court documents, Serrano was the owner of Elsa's House, an ALF that she operated for more than two decades in South Miami. Serrano pleaded guilty to sending Medicare beneficiaries who resided at Elsa’s House to both ATC and HCSN for partial hospitalization program (PHP) services, a form of intensive treatment for severe mental illness, in exchange for illegal health care kickbacks. In her plea agreement, Serrano admitted that she referred beneficiaries to both ATC and HCSN in exchange for cash kickbacks, even though she knew that some of the beneficiaries did not suffer from severe mental illness and accepting health care kickbacks was illegal.
According to the plea agreement, Serrano's participation in the fraud resulted in at least $591,385 in fraudulent billing to the Medicare program.
In related cases, ATC, its management company, Medlink Professional Management Group Inc., and various owners, managers, doctors, therapists, patient brokers and marketers of ATC, were charged with various health care fraud, kickback, money laundering and other offenses in two indictments unsealed in February 2011. ATC, Medlink and more than 20 of the individual defendants charged in these cases have pleaded guilty or have been convicted at trial.An indictment unsealed on May 2, 2012, charged nine defendants for their alleged roles in the HCSN health care fraud scheme. Four defendants have pleaded guilty, and five defendants are scheduled for trial on Jan. 14, 2013, before U.S. District Judge Cecilia M. Altonaga in Miami. Defendants are presumed innocent until proven guilty at trial.
The case is being prosecuted by Trial Attorney William Parente of the Criminal Division's Fraud Section. The case was investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division's Fraud Section and the U.S. Attorney's Office for the Southern District of Florida.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,480 defendants who have collectively billed the Medicare program for more than $4.8 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.
Missouri Hospital System Agrees to Pay $9.3 Million to Resolve False Claims Act and Stark Law ViolationsRead the Press Release
Freeman Health System, a healthcare provider and hospital system located in Joplin, Mo., has agreed to pay $9,316,139 to resolve allegations that it violated the Stark Law and the False Claims Act by knowingly providing incentive pay to physicians in a manner that violated federal law, the Justice Department announced today.
The Stark Law forbids a hospital from billing Medicare for certain services referred by physicians that have a financial relationship with the hospital. A prohibited financial relationship includes an agreement between a hospital and a physician to compensate a physician based on the volume of the physician’s referrals or the revenue realized through those referrals.
Freeman disclosed to the U.S. Attorney for the Western District of Missouri that a number of its physicians were eligible for incentive compensation that may have taken into account the value and volume of their referrals. Based on its investigation of Freeman’s disclosures, the United States alleged that Freeman knowingly compensated some of its physicians in a manner that violated the Stark Law. Specifically, the United States alleged that Freeman provided incentive pay to 70 physicians employed at clinics operated by the health system based on the revenue generated by the physicians’ referrals for certain diagnostic testing and other services performed at the clinic, and that this financial arrangement created an incentive to refer patients for such procedures.
“Today’s resolution underscores our commitment to ensure that health care decisions are based on the best interests of patients rather than the personal financial interests of referring physicians,” said Stuart F. Delery, Acting Assistant Attorney General for the Department’s Civil Division. “The Department of Justice encourages companies to disclose potential violations of law, as was the case here .”
“Our priority is protecting the patients,” said David M. Ketchmark, Acting U.S. Attorney for the Western District of Missouri. “These laws are intended to ensure that physicians make referrals for health care services based solely on the medical needs of their patients rather than any financial incentives. These laws also protect the integrity of the government-funded health care benefit programs.”
This resolution is part of the government’s emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover $10.1 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in False Claims Act cases since January 2009 are over $13.8 billion.
This case was handled by the Department of Justice’s Civil Division, the U.S. Attorney’s Office for the Western District of Missouri, the Office of Inspector General of the U.S. Department of Health and Human Services, and the FBI. The claims settled by this agreement are allegations only, and there has been no determination of liability.
Five Men Plead Guilty in Virginia for Roles in Child Pornography Distribution ConspiracyRead the Press Release
WASHINGTON – Five men pleaded guilty today in Virginia for conspiring to receive, distribute, possess and access with intent to view child pornography, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and the U.S. Attorney for the Western District of Virginia Timothy J. Heaphy.
Manuel Antonio Mares, 57, of Miami; Jeremy Hart Yost, 26, of West Bend, Ore.; Richard Phillip Allen, 66, of Redondo Beach, Calif.; and James Calvin Boyd, 58, of Pell City, Ala., pleaded guilty today before Senior District Judge Norman K. Moon in the Western District of Virginia to one count of conspiring to receive, distribute, possess and access with the intent to view child pornography. Jesse Leon Coleman, 48, of Lynchburg, Va., pleaded guilty today before Judge Moon to one count of receiving child pornography.
Mares, Yost, Allen, Boyd and Coleman were charged along with four others in an indictment unsealed on Feb. 2, 2012. Co-defendant Peter Franklin Ortiz, 56, of Greenville, S.C., pleaded guilty in the Western District of Virginia on Oct. 16, 2012, to one count of conspiring to receive, distribute, possess and access with the intent to view child pornography. Co-defendants Thomas Syfor, 71, and Matthew Ackerman, 49, both of Bethlehem, Pa., were previously transferred to the Eastern District of Pennsylvania for disposition in that district. The ninth defendant, known as “Andy Danilov,” is believed to reside in Russia and remains at large.
According to court documents, beginning in August 2010 and continuing until at least November 2011, Danilov distributed emails to a group of individuals, including the defendants, that contained links to compressed files and file attachments depicting minors engaged in sexually explicit conduct. Danilov often used the screen name “Cinemaboy” in the emails. According to information presented at today’s plea hearing, forensic analysis of each of the defendants’ computers confirmed their involvement in the conspiracy, and some of the defendants were found to possess very large numbers of images and movies depicting the sexual abuse of children.
Each of the defendants who pleaded guilty today faces a maximum penalty of 20 years in prison, a $250,000 fine and lifetime supervised release at sentencing. Due to one or more prior convictions involving the sexual exploitation of a minor, Ortiz faces enhanced penalties, including a maximum sentence of 40 years in prison. All of the defendants will be required to register as sex offenders.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse, launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ offices and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
The investigation of the case was conducted by the FBI Innocent Images Operations Unit. The case is being prosecuted by Assistant U.S. Attorney Nancy Healey of the Western District of Virginia and CEOS Trial Attorney Darcy Katzin.
2 November 2012
Two Members of Internet Piracy Group “IMAGiNE” Sentenced in Virginia for Criminal Copyright ConspiracyRead the Press Release
WASHINGTON – Two members of the Internet piracy group “IMAGiNE” were sentenced to prison today in Virginia, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Neil H. MacBride for the Eastern District of Virginia and Special Agent in Charge John P. Torres of U.S. Immigration and Customs Enforcement Homeland Security Investigations (ICE-HSI) in Washington, D.C.
Willie Lambert, 57, of Pittston, Pa., was sentenced today by U.S. District Judge Arenda L. Wright Allen in the Eastern District of Virginia to serve 30 months in prison, three years of supervised release and $449,514 in restitution, jointly and severally with co-defendants. Sean M. Lovelady, 28, of Pomona, Calif., was sentenced today by Judge Wright Allen to 23 months in prison, three years of supervised release and $7,500 in restitution.
Lambert and Lovelady were indicted along with two other defendants on April 18, 2012, for their roles in the IMAGiNE Group, an organized online piracy ring that sought to become the premier group to first release to the Internet copies of movies only showing in theaters.
Lovelady and Lambert each pleaded guilty in U.S. District Court for the Eastern District of Virginia to one count of conspiracy to commit criminal copyright infringement on May 9, 2012, and June 22, 2012, respectively.
According to court documents, Lambert, Lovelady and their co-conspirators sought to illegally obtain and disseminate digital copies of copyrighted motion pictures showing in theaters. Both Lovelady and Lambert admitted that they went to movie theaters and secretly used receivers and recording devices to capture the audio sound tracks of copyrighted movies (referred to as “capping”). After obtaining, editing and filtering audio sound tracks and uploading them to servers utilized by the IMAGiNE Group, Lambert and Lovelady used and attempted to use software to synchronize the audio file with an illegally obtained video file to create a completed movie file suitable for sharing over the Internet among members of the IMAGiNE Group and others.
Co-defendants Jeramiah B. Perkins and Gregory Cherwonik each pleaded guilty to one count of conspiracy to commit criminal copyright infringement on Aug. 29, 2012, and July 11, 2012, respectively. Perkins is scheduled to be sentenced on Jan. 3, 2013, and Cherwonik is scheduled to be sentenced on Nov. 29, 2012.
The investigation of the case and the arrests were conducted by agents with HSI. Assistant U.S. Attorney Robert J. Krask of the Eastern District of Virginia and Senior Counsel John H. Zacharia of the Justice Department Criminal Division’s Computer Crime and Intellectual Property Section (CCIPS) are prosecuting the case. Significant assistance was provided by the CCIPS Cyber Crime Lab and the Criminal Division’s Office of International Affairs.
This case is part of efforts being undertaken by the Department of Justice Task Force on Intellectual Property (IP Task Force) to stop the theft of intellectual property. Attorney General Eric Holder created the IP Task Force to combat the growing number of domestic and international intellectual property crimes, protect the health and safety of American consumers, and safeguard the nation’s economic security against those who seek to profit illegally from American creativity, innovation and hard work. The IP Task Force seeks to strengthen intellectual property rights protection through heightened criminal and civil enforcement, greater coordination among federal, state and local law enforcement partners, and increased focus on international enforcement efforts, including reinforcing relationships with key foreign partners and U.S. industry leaders. To learn more about the IP Task Force, go to www.justice.gov/dag/iptaskforce.
This investigation was supported by the HSI-led National Intellectual Property Rights Coordination Center (IPR Center) in Washington. The IPR Center is one of the U.S. government’s key weapons in the fight against criminal counterfeiting and piracy. As a task force, the IPR Center uses the expertise of its 21 member agencies to share information, develop initiatives, coordinate enforcement actions and conduct investigations related to IP theft. Through this strategic interagency partnership, the IPR Center protects the public's health and safety, the U.S. economy and our war fighters.
Two Florida Residents Sentenced for Rolesin Foreclosure Rescue SchemeRead the Press Release
Lisa Wright, 46, and Cathy Saffer, 52, of Pompano Beach, Fla., were sentenced today to serve 66 and 60 months respectively for defrauding homeowners and mortgage lenders as part of a foreclosure rescue scheme, the Justice Department announced. The two women were sentenced by U.S. District Judge Kenneth A. Marra in the Southern District of Florida.
Wright pleaded guilty on March 27, 2012, to one count of conspiracy to commit mail and wire fraud, one count of mail fraud and one count of wire fraud. Saffer was convicted of one count of conspiracy to commit mail and wire fraud, three counts of mail fraud and two counts of wire fraud, following a two week jury trial in July.
According to the indictment and evidence presented at trial, Wright and Saffer operated Foreclosure Solution Specialists (FSS) from 2006 to 2009. Through FSS, Wright and Saffer targeted homeowners facing foreclosure, advertising that FSS could assist those homeowners in remaining in their homes. When contacted by distressed homeowners seeking assistance, Wright and Saffer misrepresented to those homeowners that their homes would be sold to investors. They also claimed that customers could remain in their homes after the sales and promised them an opportunity to repurchase the homes at a later date. Rather than selling the homes to legitimate investors, Wright and Saffer designed sham sales to straw purchasers whom they paid to participate in the scheme.
According to the indictment and evidence presented at trial, Wright and Saffer paid Florida Certified Public Accountant Barrington Coombs to write a fraudulent letter which falsely vouched for the fraudulent information on various loan applications. Coombs, who was also convicted by the jury, is scheduled to be sentenced Dec. 7, 2012.
Mortgage transactions completed by FSS drew equity out of the homes, which Wright and Saffer pocketed for their own purposes. After doing so, Wright and Saffer allowed the loans to go into foreclosure. Homeowners ultimately lost all of the equity in their homes, and most of the victims were forced to move out of their homes.
“The individuals sentenced today took advantage of desperate homeowners hoping to shed the weight of debt and foreclosure, ,” said Stuart F. Delery, Acting Assistant Attorney General for the Civil Division. “We will continue to work with the FBI and our other law enforcement partners to investigate and prosecute mortgage fraud and foreclosure rescue schemes such as this one.”
Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida stated, “ This case illustrates the lengths that fraudsters will go to victimize and ruin the lives of hard working families. This mortgage fraud scheme robbed homeowners of more than just their homes; it also robbed them of hope and the American dream of home ownership. The best way to avoid being victimized is to do your homework and ask hard questions. Be wary of those whose promises seem too good to be true. Through this prosecution, these fraudsters have been brought to justice.”
The case was investigated by the FBI. The case is being prosecuted by Christopher E. Parisi and John Claud, Trial Attorneys at the Civil Division’s Consumer Protection Branch.
Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov .
Portsmouth, Va., Bail Bondsman Sentenced to 30 Months in Prison<br /> <br /> for Bribing Public OfficialsRead the Press Release
A bail bondsman in Portsmouth, Va., was sentenced today to serve 30 months in prison for bribing public officials in exchange for receiving favorable treatment, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney for the Eastern District of Virginia Neil H. MacBride.
Ulysses “Tugger” Stephenson, 51, of Portsmouth, was sentenced by U.S. Chief District Judge Rebecca Beach Smith in the Eastern District of Virginia. In addition to his prison term, Stephenson was sentenced to serve three years of supervised release.
Stephenson pleaded guilty on July 26, 2012, to one count of conspiracy to commit federal programs bribery and one count of federal programs bribery.
According to court documents, Stephenson earned money as a bail bondsman by charging arrestees a percentage of the amount of bond set by a magistrate. In order to obtain additional clients and thereby maximize his profits, Stephenson gave cash and gifts to Deborah Clark – a Portsmouth magistrate who pleaded guilty to bribery and was sentenced last month to 12 months in prison – in exchange for her referring arrestees to him as prospective clients and accepting his advice on the amount of bond to set in particular cases. From January 2009 through February 2012, Stephenson gave Clark up to $150 per month as well as expense money for trips and numerous cash payments for gas and meals. Additionally, according to court documents, from January 2009 through July 2010, Stephenson made cash payments of up to $150 per week to an employee of the Portsmouth Sheriff’s Office in exchange for referrals.
Stephenson is subject to prosecution for bribery under a federal statute because the two people he admitted to bribing were agents of an organization or state receiving annual benefits in excess of $10,000 under federal programs involving grants and other forms of assistance.
This case was investigated by the FBI. Trial Attorneys Peter Mason and Monique Abrishami of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Alan M. Salsbury and Special Assistant U.S. Attorney Amy E. Cross of the Eastern District of Virginia are prosecuting the case.
Owner of Tax Preparation Firm Operating in Alabama and Georgia Pleads Guilty to Fraud and Filing False ReturnsRead the Press Release
Bruce King, the owner and operator of Premier Tax, pleaded guilty in federal court this week to charges of conspiring to defraud the United States and filing false tax returns, the Justice Department and the Internal Revenue Service (IRS) announced today. Additionally, on Thursday, Vonecia Orum, a return preparer who worked at Premier Tax, pleaded guilty to delivering false tax returns to the IRS.
With the guilty pleas of King and Orum, a total of nine people associated with Premier Tax have now been convicted of crimes. Six were named in a 28-count indictment that was returned on March 28, 2012. These six were King and Orum, as well as Antoinette Djonret, Nakesha Donaldson, Angela Smith and Jenika Williams, all of whom had previously pleaded guilty. In July and August of 2011, three other defendants – Tonja Toney, Kimberly Womack and Kina Lane – pleaded guilty to criminal informations charging them with filing false tax returns.
According to court documents, Premier Tax was a tax preparation business operated by King that had several locations in Alabama and in Georgia. King held training sessions in which he taught preparers how to falsify tax returns in order to fraudulently increase clients’ tax refunds. Those he taught went on to work at Premier Tax and filed numerous false tax returns. According to court documents, the tax loss caused by these fraudulent returns exceeded $1 million.
Court records also indicated that in addition to falsifying tax returns , some preparers working at Premier Tax also used false dependents on tax returns – they would use people’s personal identifying information, without their consent, as dependents on clients’ tax returns. Four of the defendants—Djonret, Donaldson, Smith, and Williams—were involved in this aspect of Premier Tax and they pleaded guilty to charges of aggravated identity theft, in addition to charges of conspiracy to defraud the United States or filing false tax returns.
This case was investigated by Special Agents of the IRS - Criminal Investigation. Trial attorneys Jason Poole and Justin Gelfand of the Justice Department’s Tax Division and Assistant U.S. Attorney Jared Morris of the Middle District of Alabama are prosecuting this case.
Additional information about the Tax Division and its enforcement efforts may be found at www.justice.gov/tax.
Orthofix Subsidiary, Blackstone Medical, Pays U.S. $30 Million<br /> <br /> to Settle False Claims Act AllegationsRead the Press Release
Orthofix International NV, has agreed to pay the United States $30 million to settle allegations that an Orthofix subsidiary, Blackstone Medical Inc., paid illegal kickbacks to physicians in order to induce use of the company’s products, the Justice Department announced today. Orthofix, which manufactures spinal implants and other spinal surgery products, is a publicly traded company headquartered in Curacao.
The civil settlement resolves allegations that Blackstone paid kickbacks to spinal surgeons. These alleged kickbacks took a number of forms, including sham consulting agreements, sham royalty arrangements, sham research grants, travel and entertainment.
“Kickbacks to physicians are incompatible with a properly functioning health care system,” said Stuart F. Delery, the Acting Assistant Attorney General for the Department’s Civil Division. “They can corrupt physicians’ medical judgment and cause misallocation of vital health care resources. Today’s settlement reflects the progress we are making in the ongoing fight against abusive and illegal practices in the healthcare industry.”
“This settlement demonstrates the government’s continued resolve to ensure that patients receive, and the government pays for, health care that is based solely on sound medical judgment, not compromised by kickbacks,” said Carmen M. Ortiz, U.S. Attorney for the District of Massachusetts. “We believe that this is a just and meaningful resolution that is in the best interests of the citizens of the Commonwealth and taxpayers across the nation.”
“To those contemplating taking advantage of Medicare for their own gain, today’s settlement sends a loud, clear message,” said Susan Waddell, Special Agent in Charge of the U.S. Department of Health and Human Services Office of Inspector General New England region. “Law enforcement will work aggressively to eliminate efforts to abuse vital taxpayer-funded health care programs.”
“Our men and women in uniform and their beneficiaries rely on their healthcare providers to perform their jobs without bias and make decisions in the best interest of their patients,” said Kathryn Feeney, Resident Agent in Charge for the Defense Criminal Investigative Service, New Haven Resident Agency. “Kickbacks, like those alleged here, undermine the TRICARE Military Health System . A settlement like this helps maintain the integrity of an important program our armed services depend on.”
“Blackstone Medical, Inc. now knows the FBI and our law enforcement partners are committed to investigating and uncovering healthcare fraud in all its forms, particularly schemes like the kickbacks Blackstone perpetrated to obtain profits at the expense of taxpayers,” said Richard DesLauriers, Special Agent in Charge of the Federal Bureau of Investigation Boston Field Division.
As part of the settlement, Orthofix also agreed to enter into a corporate integrity agreement with the Office of Inspector General of the Department of Health and Human Services, which provides for procedures and reviews to be put in place to avoid and promptly detect conduct similar to that alleged in this matter.
The allegations resolved by today’s settlement were initially alleged in a whistleblower suit filed under the False Claims Act, which authorizes private citizens to bring suit on behalf of the government for false claims for government funds, and share in any recovery. The whistleblower in this case, Susan Hutcheson, will receive $8 million as her share of the settlement amount.
This resolution is part of the government’s emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover $9.5 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in False Claims Act cases since January 2009 are over $13.2 billion.
The case was handled by the Justice Department’s Civil Division, the U.S. Attorney’s Office for the District of Massachusetts, Office of Inspector General of the Department of Health and Human Services, the FBI and the Defense Criminal Investigative Service of the Department of Defense. The claims settled by this agreement are allegations only, and there has been no determination of liability.
The lawsuit was captioned United States ex rel. Hutcheson v. Blackstone Medical, Inc., et al., Civil Action No. 06-11771-WGY (D. Mass.).
Ohio Attorney Sentenced to 85 Months in Prison for Tax Fraud and Obstruction of Justice CrimesRead the Press Release
The Justice Department and Internal Revenue Service (IRS) announced today that attorney Aristotle R. Matsa (Rick Matsa), of Worthington, Ohio, was sentenced to 85 months in prison by the Judge Edmund A. Sargus Jr. of the U.S. District Court for the Southern District of Ohio. Judge Sargus also ordered Matsa to pay a criminal fine of $265,000, make restitution to the IRS in the amount of $388,000, and pay restitution to a client from whom Rick Matsa embezzled funds in the amount of $24,069.
After a five-week trial in Columbus, Ohio, a jury convicted Matsa of numerous tax fraud and obstruction of justice related offenses, including witness tampering and making a false statement. Matsa’s mother and co-defendant, Loula Z. Matsa, was sentenced today to three years of probation and ordered to pay a $150,000 criminal fine for her role in the conspiracy with her son to obstruct justice, commit perjury and make false statements.
Rick Matsa individually was convicted of one count of a corrupt endeavor to obstruct and impede the IRS, 15 counts of aiding and assisting in the preparation of false and fraudulent tax returns, that related to five different trusts; one count of willfully failing to file a Report of Foreign Bank and Financial Accounts (FBAR); one count of conspiracy to obstruct justice, commit perjury and make false statements; two counts of witness tampering; one count of submitting a false statement; and one count of obstruction of justice.
According to the indictment, which was returned on June 23, 2010, and the evidence admitted at trial, Rick Matsa, who in addition to being an attorney was also an architect, a real estate broker, and a licensed minister in Ohio, created and operated several nominee entities in order to disguise and conceal his income and assets from the IRS. The false trust return charges relate to filings for at least five separate trust entities during the tax years 2003 to 2005. In fact, the evidence at trial showed that he had been filing similarly false returns for the trusts dating back to 1990. Each of the trusts reported receiving significant amounts of interest income each year, yet no income tax was ever reported as due because the trust tax returns fraudulently claimed deductions for distributions purportedly paid annually to a foreign beneficiary.
The evidence at trial established, however, that Rick Matsa used funds from these trusts to purchase a 150-acre farm in Hocking County as well as a home in Worthington, both of which he used as a personal residence. In addition, the trusts’ purported foreign beneficiary was located in the Netherlands and testified that she was not the beneficiary of the trusts.
The evidence at trial also showed that Rick Matsa violated FBAR, the foreign bank account reporting requirements, by failing to disclose his ownership and control over a foreign bank account held in The Netherlands during calendar year 2003, where an account was maintained by Rick Matsa with funds in excess of $300,000 from at least August 2003 to November 2003.
The evidence at trial further showed that after learning of the federal grand jury investigation into his business activities in May of 2006, Rick Matsa, together with Loula Matsa and others, conspired to obstruct justice by concealing evidence from the grand jury, making false statements to the grand jury, creating false documents, tampering with witnesses and lying to federal investigators.
George Pappas, formerly an attorney in Urbana, Ohio, who previously pleaded guilty to making false statements to federal agents during the grand jury investigation, testified at trial. Pappas testified that he falsely claimed ownership of Rick Matsa’s law firm, located in the Short North area of Columbus, in their efforts to withhold records from the grand jury. Pappas was sentenced to two years probation and a home confinement term earlier this year.
Rick Matsa’s tenant, P. Maria Galloway, the owner of an art gallery located next door to Matsa’s law firm, also testified after pleading guilty to conspiracy to obstruct justice. Galloway testified that she signed numerous documents at Rick Matsa’s direction, including federal income tax returns for Matsa’s law firm and a number of his nominee entities, which Matsa used as part of his scheme to obstruct the IRS, and that she made false statements to agents and the grand jury during the investigation. Galloway also was sentenced to a two year term of probation earlier this year with some home confinement.
“Prosecuting individuals who evade taxes through fraudulent schemes has always been and will remain our priority,” said Kathryn Keneally, Assistant Attorney General for the Justice Department’s Tax Division. “The sentence handed down today demonstrates that nobody, and especially not an attorney, should expect to profit financially at the expense of the American taxpayer.”
“Mr. Matsa created and operated several nominee entities in order to disguise and conceal his income and assets from the IRS,” said Richard Weber, Chief, IRS Criminal Investigation. “Today, Mr. Matsa is finding out IRS special agents will untangle complex financial transactions to hold accountable those seeking to evade the legal responsibility to pay taxes.”
Assistant Attorney General Keneally and Mark D’Alessandro, Acting U.S. Attorney for the Southern District of Ohio on this matter, commended the IRS-Criminal Investigation special agents who investigated the case, as well as Tax Division Trial Attorneys Richard M. Rolwing, Jorge Almonte and Steve Descano who prosecuted the case.
More information about the Tax Division and its enforcement efforts is available at http://www.justice.gov/tax.
Justice Department to Monitor Polls in 23 States <br /> <br /> on Election DayRead the Press Release
The Justice Department announced today that its Civil Rights Division plans to deploy more than 780 federal observers and department personnel to 51 jurisdictions in 23 states for the Nov. 6, 2012, general election.
Although state and local governments have primary responsibility for administering elections, the Civil Rights Division is charged with enforcing the federal voting rights laws that protect the rights of all citizens to access the ballot on Election Day.
In the days leading up to and throughout Election Day, Civil Rights Division staff members will be available by telephone to receive complaints related to possible violations of the federal voting rights laws (toll free 1-800-253-3931 or 202-307-2767 or TTY 1-877-267-8971). In addition, individuals may also report such complaints by fax to 202-307-3961, by email to [email protected] and by a complaint form on the department ’s website : www.justice.gov/crt/about/vot/.
Allegations of election fraud are handled by the 94 U.S. Attorneys’ Offices across the country and the Criminal Division’s Public Integrity Section. Complaints may be directed to any of the local U.S. Attorneys’ Offices, the local FBI offices or the Public Integrity Section at 202-514-1412.
Since the passage of the Voting Rights Act of 1 965, the department has regularly sent observers and monitors around the country to protect the rights of voters . The Voting Rights Act prohibits discrimination in the election process on the basis of race, color or membership in a minority language group. In addition, the act requires certain covered jurisdictions to provide language assistance during the election process. Under the Voting Rights Act, the department is authorized to ask the Office of Personnel Management to send federal observers to areas that have been certified for coverage by a federal court or the attorney general. The department also may send its own staff to monitor elections in other jurisdictions.
On Election Day, federal observers will monitor polling place activities in 17 jurisdictions:
- Russell County, Ala.;
- Maricopa County, Ariz.;
- Alameda County, Calif.;
- Riverside County, Calif.;
- Randolph County , G a.;
- East Carroll Parish, La.;
- Panola County, Miss.;
- Colfax County, Neb.;
- Sandoval County, N.M.;
- Orange County, N.Y.;
- Cuyahoga County, Ohio;
- Lorain County, Ohio;
- Williamsburg County, S.C.;
- Shannon County ; S.D.;
- Dallas County, Texas;
- Fort Bend County, Texas; and
- Jefferson County, Texas.
Justice Department personnel will monitor the election in an additional 34 jurisdictions:
- Mobile County, Ala. ;
- Pima County, Ariz.;
- Arapahoe County, Colo.;
- Denver;
- Duval County, Fla.;
- Hendry County , Fl a.;
- Hillsborough County, Fla.;
- Lee County, Fla.;
- Miami-Dade County, Fla.;
- Orange County, Fla.;
- Osceola County, Fla.;
- Chicago & Cook County, Ill.;
- LaPorte County, Ind.;
- Finney County, Kan.;
- Detroit & Hamtramck, Mich.;
- Alamance County, N.C.;
- Wake County, N.C.;
- Bernalillo County, N.M.;
- Cibola County, N.M.;
- Queens County, N.Y.;
- Franklin County, Ohio;
- Hamilton County, Ohio;
- Allegheny County, Pa.;
- Chester County, Pa.;
- Delaware County, Pa.;
- Lehigh County, Pa.;
- Philadelphia ;
- Richland County, S.C.;
- Davidson County, Tenn.;
- Shelby County , Tenn. ;
- Harris County, Texas; and
- Milwaukee
The observers and department personnel will gather information on, among other things, whether voters are subject to different voting qualifications or procedures on the basis of race, color, or membership in a language minority group; whether jurisdictions are complying with the minority language provisions of the Voting Rights Act; whether jurisdictions permit voters to receive assistance by a person of his or her choice if the voter is blind, has a disability, or is unable to read or write; whether jurisdictions allow voters with disabilit ies to cast a private and independent ballot; whether jurisdictions comply with the voter registration list requirements of the National Voter Registration Act; and whether jurisdictions comply with the provisional ballot requirements of the Help America Vote Act. To assist in these inquiries, the department has deployed observers and monitors who speak Spanish and a variety of Asian and Native American languages. Both the federal observers and department personnel will coordinate monitoring activities, and department attorneys maintain contact with local election officials.
Last month, the Justice Department announced efforts to ensure that all qualified voters have the opportunity to cast their ballots and have their votes counted free of discrimination, intimidation or fraud in the election process. More information about the Voting Rights Act and other federal voting and election-related laws is available on the Civil Rights Division ’s web site at www.usdoj.gov/crt/voting
Justice Department to Monitor Early Voting in FloridaRead the Press Release
The Justice Department announced today that it will monitor portions of the early voting period for the Nov. 6, 2012, general election in Miami-Dade County, Fla., to ensure compliance with the Voting Rights Act of 1965. The Voting Rights Act prohibits discrimination in the election process on the basis of race, color or membership in a minority language group.
Justice Department personnel will monitor polling place activities during early voting in this county. Civil Rights Division attorneys will coordinate federal activities and maintain contact with local election officials.
Each year, the Justice Department deploys hundreds of federal observers from the Office of Personnel Management, as well as departmental staff, to monitor elections across the country. To file complaints about discriminatory voting practices, including acts of harassment or intimidation, voters may call the Voting Section of the Justice Department’s Civil Rights Division at 1-800-253-3931. The Justice Department previously announced that it would be monitoring early voting for the general election in Dallas and Harris Counties in Texas.
Visit www.justice.gov/crt/voting/index.php for more information about the Voting Rights Act and other federal voting laws.
German Shipping Companies Convicted in Texas and Alaska for Environmental CrimesRead the Press Release
WASHINGTON – Two German shipping companies pleaded guilty today in federal court in Houston to criminal charges that they concealed the illegal dumping of oil at sea from U.S. Coast Guard inspectors.
Nimmrich & Prahm Bereederung and Nimmrich & Prahm Reedrei, the operator and owner of the commercial cargo vessel M/V Susan K, will pay a $1.2 million dollar criminal penalty, $200,000 of which will go to the National Marine Sanctuaries Fund as a community service payment for projects aimed at preserving and restoring the Flower Garden Banks National Marine Sanctuary located off the Texas coast. As a condition of probation, all vessels owned or operated by the defendants will be prohibited from entering U.S. ports or waters for five years.
Federal and international law requires that cargo vessels like the M/V Susan K dispose of oily bilge waste water by using an oil water separator (OWS) or disposing of the waste water at shore facilities. The law also requires that the crew record the disposal of oily waste water in an oil record book that is presented to the Coast Guard during a port inspection.
According to the plea agreement, the chief engineer and other crew members on board the vessel repeatedly discharged oily bilge waste water from the vessel into the ocean from before Aug. 1, 2011, to March 4, 2012, by using a hose that bypassed the vessel’s OWS. The chief engineer then falsified the vessel’s oil record book to conceal the dumping from Coast Guard inspectors when the vessel entered the U.S. ports in Alaska on Jan. 24, 2012, and then in Houston on March 4, 2012.“Illegal discharges of oil at sea by commercial shippers is an all too common practice, and today’s sentence shows that there are serious consequences for it,” said Ignacia S. Moreno, Assistant Attorney General of the Justice Department’s Environment and Natural Resources Division. “The defendants will pay a significant penalty and be barred from U.S. waters for deliberately concealing from U.S. authorities their illegal dumping of oil from Alaska to the coast of Texas while at sea. Vessel companies that deliberately violate the laws enacted to protect the oceans will be pursued and prosecuted.”
“The outcomes of these cases demonstrate the commitment of the U.S. Coast Guard and the Department of Justice to protecting our marine environment,” said Rear Admiral Roy A. Nash, Eighth Coast Guard District Commander. “We continue to ensure that companies and individuals who break the law and endanger our natural resources are held accountable.”
The community service payment to the National Marine Sanctuary Foundation will be used to conduct critical monitoring, research and restoration projects in and around Flower Garden Banks National Marine Sanctuary in the Gulf of Mexico. These projects will include coral reef surveys, especially to collect data on coral spawning events and coral resilience. They will also include species monitoring projects, such as acoustic tagging of sensitive, threatened and endangered marine species including manta rays and tiger sharks, as well as commercially important species such as red snapper.
According to court documents, the Coast Guard boarded the vessel in Houston on April 6, 2012, after receiving a tip from a lower level crew member about the illegal dumping of oil and found the hose used to dump the oily waste overboard. During the inspection, the chief engineer lied to the Coast Guard about the hose and the oil dumping and instructed a crew member to lie to the Coast Guard about the use of the hose. The three whistle blowers on the vessel who assisted in the criminal investigation were each awarded $67,000 by the court.
Overall, the companies pleaded to two obstruction of justice charges and one violation of the Act to Prevent Pollution from Ships for the violations in the District of Alaska and Southern District of Texas; the single obstruction of justice charge in Alaska was transferred procedurally to Houston. On Sept. 10, 2012, the chief engineer of the vessel pleaded guilty to one criminal charge in Texas and was fined $1,000 and sentenced to one year probation.
This case is being investigated by the U.S. Coast Guard Investigative Service. It is being prosecuted by David P. Kehoe, Senior Trial Attorney, Environmental Crimes Section of the Justice Department’s Environment and Natural Resources Division, Gary Cobe, Assistant U.S. Attorney for the Southern District of Texas, and Kevin Feldis, Assistant U.S. Attorney, District of Alaska.
Aryan Brotherhood of Texas Gang Member Sentenced in Houston for Violent Crime in Aid of RacketeeringRead the Press Release
WASHINGTON – A Houston resident and member of the Aryan Brotherhood of Texas (ABT) gang was sentenced today to 72 months in prison for his role in an aggravated assault that took place in Tomball, Texas, in September 2008, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Kenneth Magidson of the Southern District of Texas.
Bobby Teets, 46, aka “Bull,” pleaded guilty on Dec. 9, 2010, to racketeering aggravated assault for his role in the assault of an applicant for membership in the gang, and was sentenced today by U.S. District Court Judge Ewing Werlein Jr. Teets is to serve the 72-month sentence consecutively to the state prison term he is currently serving. In addition to the prison term, Teets was ordered to serve three years of supervised release and ordered to pay a $3,000 fine.
According to court documents, Teets was a member of the ABT, a race-based, state-wide organization that operated inside and outside of state and federal prisons throughout the United States. The ABT was established in the early 1980s within the Texas prison system. The gang modeled itself after and adopted many of the precepts and writings of the Aryan Brotherhood, a California-based prison gang that was formed in that state’s prison system during the 1960s. According to court documents, the ABT was concerned at one time primarily with the protection of white inmates, white supremacy and separatism. Over time, the ABT has expanded its criminal enterprise to include illegal activities for profit.
According to court documents, the ABT enforced its rules and promoted discipline among its members, prospects and associates through murder, attempted murder, conspiracy to murder, assault, robbery and threats against those who violate their rules or pose a threat to the enterprise. Members, and oftentimes associates, were required to follow the orders of higher-ranking members, often referred to as “direct orders.”
According to court documents, on Sept. 22, 2008, Teets and 11 fellow ABT gang members participated in the beating of a prospective ABT member, at the home of ABT gang leader Steven Walter Cooke, 48, aka “Stainless,” in Tomball. The prospective ABT member, who sustained serious bodily injury, was beaten by ABT gang members because he violated ABT rules of conduct.
Eleven of the 12 defendants have pleaded guilty for their roles in the assault. The 12th ABT gang member, David Harlow, 43, aka “Bam Bam,” was found guilty following his trial in the Southern District of Texas by Judge Werlein on March 21, 2012.
This case is being investigated by a multi-agency task force consisting of the Bureau of Alcohol, Tobacco, Firearms and Explosives; the Drug Enforcement Administration; the FBI; U.S. Marshals Service; Texas Rangers; Texas Department of Public Safety; Walker County, Texas, Sheriff’s Office; Montgomery County, Texas, Sheriff’s Department; Houston Police Department-Gang Division; Tomball Police Department; Texas Department of Criminal Justice – Inspector General; and Harris County, Texas, Sheriff’s Office.
The case is being prosecuted by David Karpel of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorney Jay Hileman of the Southern District of Texas.
1 November 2012
Washington, DC, Tax Return Preparer Sentenced to Two Years<br /> <br /> in Prison for Preparing False Tax ReturnsRead the Press Release
Enyinnaya Udo was sentenced to 24 months in prison today and ordered by U.S. District Judge Barbara J. Rothstein to pay more than $262,966 in restitution to the Internal Revenue Service (IRS) as a condition of supervised release, the Justice Department and IRS announced.
Following a four-day trial, a federal jury convicted Udo of 25 counts of aiding and assisting in the preparation of false individual income tax returns. According to the indictment and evidence presented at trial, Udo operated a tax preparation business called Anic and Associates, CPAs PC located in Washington. Udo prepared false 2005 through 2008 individual income tax returns for seven taxpayers, falsely reporting that the taxpayers had unreimbursed employee expenses.
Kathryn Keneally, Assistant Attorney General for the Justice Department’s Tax Division, commended the IRS - Criminal Investigation special agent who investigated the case as well as Tax Division Trial Attorneys Jessica Moran and Erin Pulice, who prosecuted the case.
Northern California Real Estate Investor Agrees to Plead Guilty to Bid Rigging at Public Foreclosure AuctionsRead the Press Release
A Northern California real estate investor has agreed to plead guilty for his role in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in Northern California, the Department of Justice announced.
A four-count felony charge was filed today in the U.S. District Court for the Northern District of California, in San Francisco, against Norman Montalvo, of Concord, Calif. Montalvo is the 26th individual to plead guilty or agree to plead guilty as a result of the department’s ongoing antitrust investigation into bid rigging and fraud at public real estate foreclosure auctions in Northern California.
According to court documents, Montalvo conspired with others not to bid against one another, but instead to designate a winning bidder to obtain selected properties at public real estate foreclosure auctions in San Francisco and San Mateo counties, Calif . Montalvo was also charged with a conspiracy to use the mail to carry out a scheme to fraudulently acquire title to selected properties sold at public auctions, to make and receive payoffs, and to divert to co-conspirators money that would have otherwise gone to mortgage holders and others.
The department said Montalvo conspired with others to rig bids and commit mail fraud at public real estate foreclosure auctions in San Francisco and San Mateo counties beginning as early as June 2008 and continuing until about September 2010.
“The real estate investors involved in the conspiracy illegally restrained competition at foreclosure auctions by falsely creating the appearance of unfettered bidding while they were secretly colluding to suppress prices,” said Scott D. Hammond, Deputy Assistant Attorney General of the Antitrust Division’s criminal enforcement program. “The Antitrust Division remains committed to holding accountable those involved in anticompetitive acts that harm lenders and distressed homeowners.”The department said that the primary purpose of the conspiracies was to suppress and restrain competition and to conceal payoffs in order to obtain selected real estate offered at San Francisco and San Mateo County public foreclosure auctions at non-competitive prices. When real estate properties are sold at these auctions, the proceeds are used to pay off the mortgage and other debt attached to the property, with remaining proceeds, if any, paid to the homeowner. According to court documents, these conspirators paid and received money that otherwise would have gone to pay off the mortgage and other holders of debt secured by the properties, and, in some cases, the defaulting homeowner.
“Our vigorous pursuit in enforcing fraudulent anticompetitive practices at foreclosure auctions here in northern California is evident in this guilty plea,” said Joel Moss, Acting Special Agent in Charge of the FBI San Francisco Division. “Criminals who take advantage of the real estate auction process will be brought to justice by the FBI and the Department of Justice.”
A violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. The maximum fine for the Sherman Act charges may be increased to twice the gain derived from the crime or twice the loss suffered by the victim if either amount is greater than $1 million. A count of conspiracy to commit mail fraud carries a maximum sentence of 30 years in prison and a $1 million fine. The government can also seek to forfeit the proceeds earned from participating in the conspiracy to commit mail fraud.
The charges today are the latest cases filed by the department in its ongoing investigation into bid rigging and fraud at public real estate foreclosure auctions in San Francisco, San Mateo, Contra Costa and Alameda counties, Calif. These investigations are being conducted by the Antitrust Division’s San Francisco Office and the FBI’s San Francisco office. Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Antitrust Division’s San Francisco Field Office at 415-436-6660, visit www.justice.gov/atr/contact/newcase.htm or call the FBI tip line at 415-553-7400.
Today’s charges are part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF), which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants, including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.
**The fraud charge(s) referenced in this press release were
subsequently dismissed on the government’s motion.**
Justice Department Officials Raise Awareness<br /> of Disaster Fraud HotlineRead the Press Release
WASHINGTON – The Department of Justice, the FBI and the National Center for Disaster Fraud (NCDF) remind the public there is a potential for disaster fraud in the aftermath of a natural disaster. Suspected fraudulent activity pertaining to relief efforts associated with Hurricane Sandy should be reported to the toll-free NCDF hotline at 866-720-5721. The hotline is staffed by a live operator 24 hours a day, seven days a week, for the purpose of reporting suspected scams being perpetrated by criminals in the aftermath of disasters.
NCDF was originally established in 2005 by the Department of Justice to investigate, prosecute and deter fraud associated with federal disaster relief programs following Hurricanes Katrina, Rita and Wilma. Its 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, U.S. Attorney’s Offices, Department of Homeland Security Office of Inspector General, FBI, U.S. Postal Inspection Service and the U.S. Secret Service – participate in the NCDF, allowing the center to act as a centralized clearinghouse of information related to disaster relief fraud.
In the wake of natural disasters, many individuals feel moved to contribute to victim assistance programs and organizations across the country. The Department of Justice and the FBI remind the public to apply a critical eye and do due diligence before giving to anyone soliciting donations on behalf of hurricane victims. Solicitations can originate as emails, websites, door-to-door collections, mailings, telephone calls and similar methods.
Before making a donation of any kind, consumers should adhere to certain guidelines, including the following:
- Do not respond to any unsolicited (spam) incoming emails, including by clicking links contained within those messages, because they may contain computer viruses.
- Be cautious of individuals representing themselves as victims or officials asking for donations via email or social networking sites.
- Beware of organizations with copycat names similar to but not exactly the same as those of reputable charities.
- Rather than following a purported link to a website, verify the existence and legitimacy of non-profit organizations by using Internet-based resources.
- Be cautious of emails that claim to show pictures of the disaster areas in attached files, because those files may contain viruses. Only open attachments from known senders.
- To ensure that contributions are received and used for intended purposes, make donations directly to known organizations rather than relying on others to make the donation on your behalf.
- Do not be pressured into making contributions; reputable charities do not use coercive tactics.
- Do not give your personal or financial information to anyone who solicits contributions. Providing such information may compromise your identity and make you vulnerable to identity theft.
- Avoid cash donations if possible. Pay by debit or credit card, or write a check directly to the charity. Do not make checks payable to individuals.
- Legitimate charities do not normally solicit donations via money transfer services.
- Most legitimate charities maintain websites ending in .org rather than .com.
In addition to raising public awareness, the NCDF is the intake center for all disaster relief fraud. Therefore, if you observe that someone has submitted a fraudulent claim for disaster relief, or observe any other suspected fraudulent activities pertaining to the receipt of government funds as part of disaster relief or clean up, please contact the NCDF.
If you believe that you have been a victim of fraud by a person or organization soliciting relief funds on behalf of hurricane victims, or if you discover fraudulent disaster relief claims submitted by a person or organization, contact the NCDF by phone at (866) 720-5721, fax at (225) 334-4707 or email at [email protected].
You can also report suspicious e-mail solicitations or fraudulent websites to the FBI’s Internet Crime Complaint Center at www.ic3.gov.
Federal Court in Ohio Issues Preliminary InjunctionAgainst Instant Tax Service Franchiser and Its CEORead the Press Release
A federal court has preliminarily enjoined ITS Financial LLC, the parent company that owns the Instant Tax Service tax-preparation franchise operation, the Justice Department announced today. Dayton, Ohio-based ITS claims to be the fourth-largest tax-preparation firm in the nation, according to the government complaint in the civil lawsuit. Judge Timothy Black of the U.S. District Court for the Southern District of Ohio signed the order, which also applies to the company’s CEO, Fesum Ogbazion. The defendants consented to the preliminary injunction.
The preliminary injunction will remain in force pending the court’s decision following trial in the case. Trial on the government’s suit seeking to shut down the defendants with a permanent injunction is scheduled to begin on May 20, 2013, in Dayton.
According to the government complaint in the case, ITS franchisees routinely prepare and file fraudulent federal tax returns, fabricate deductions and invent phony businesses. The suit further alleges that ITS franchisees file tax returns without customer authorization and without proper employer-issued W-2 wage statements, and charge customers exorbitant and bogus fees. Defendants and their franchisees allegedly lure mostly low-income customers into ITS stores by offering deceptive and misleading loans such as “Instant Cash” or “Holiday” loans, often before the tax return filing season begins. Defendants have denied the allegations in the complaint.
Under the terms of the preliminary injunction, defendants are barred from encouraging or preparing false or fraudulent tax returns, from filing tax returns without customer authorization, from charging customers exorbitant and bogus fees, from deceiving their customers and the government, and from otherwise violating the tax laws. In addition, defendants are barred from offering any Instant Cash loan or similar loan product that relies on a customer’s paystub (rather than an employer-issued IRS W-2 year-end wage statement), and from offering any loan product that violates any federal or state law. Defendants may offer only genuine loan products provided by independent, third-party lenders. The preliminary injunction also requires defendants, at their own expense, to hire third-party monitors who will review and audit tax returns prepared by all ITS franchisees. In addition, defendants must hire a neutral company to conduct “secret shopper” visits to ITS franchisees to test their compliance with the law.
The preliminary injunction order notes that the United States ultimately seeks to permanently bar ITS and Ogbazion from further operating a tax-preparation business.
In the past 10 years, the Justice Department’s Tax Division has obtained hundreds of injunctions to stop the promotion of tax-fraud schemes and the preparation of fraudulent returns. Information about these cases is available on the Justice Department’s website .
Related Documents:
United States v. Fesum Ogbazion, et al.
Stipulated Order for Preliminary Injunction Against Fesum Ogbazion, Its Financial LLC, TCA Financial LLC, and Tax Tree LLC (PDF)Company to Pay $101,500 Civil Penalty for Dumping Sensitive Consumer Documents in Publicly-Accessible DumpstersRead the Press Release
A company that operates payday loan and check cashing stores in at least nine states has settled with the government over allegations that it violated federal regulations, the Justice Department announced today. In April 2010, law enforcement officers retrieved boxes of intact consumer documents, including credit reports, from trash cans and dumpsters near four PLS Financial Services stores in the Chicago area. The improper disposal of these documents led to an investigation by the Federal Trade Commission (FTC).
A complaint filed by the Department of Justice on behalf of the FTC, naming PLS Financial Services, PLS Group and The Payday Loan Store of Illinois as defendants, alleged that the companies violated the Federal Trade Commission Act, and the Disposal Rule, the Safeguards Rule and the Privacy Rule by improperly disposing of sensitive financial documents, failing to develop reasonable safeguards to protect sensitive consumer information, failing to provide privacy notices to consumers and misleading consumers about its privacy policies.
Judge Joan Gottschall of the U.S. District Court for the Northern District of Illinois today entered a stipulated final judgment, which requires the defendants to pay a civil penalty of $101,500 for its violations of the Disposal Rule. The Disposal Rule requires that any person who possesses consumer information derived from consumer reports for a business purpose must take reasonable measures to protect against unauthorized access or use of that information. Violations of the Disposal Rule can result in a civil penalty of up to $3,500 per violation. The stipulated final judgment also includes a permanent injunction prohibiting the defendants from misrepresenting their security and privacy policies and from violating the Disposal, Safeguards and Privacy Rules. In addition, the proposed order requires the defendants to maintain a comprehensive information security program that meets the standards of the Safeguards Rule, and to obtain third-party biennial assessments of their information security procedures for a twenty-year period.
“Companies that handle sensitive consumer documents have a duty to keep that information secure and to dispose of it properly,” said Stuart F. Delery, Acting Assistant Attorney General for the Civil Division. “Improper disposal of these documents can lead to dire consequences for consumers, including identity theft and other crimes. The Department of Justice will continue to support the FTC’s efforts to enforce federal regulations that protect consumer financial information.”
Acting Assistant Attorney General Delery thanked the FTC for referring this matter to the Department. The Consumer Protection Branch of the Justice Department’s Civil Division brought the case on behalf of the United States.
31 October 2012
United States Sues Virginia-based Contractor<br /> <br /> for False Claims Under Contract for Security in IraqRead the Press Release
The United States has filed a complaint against a Virginia-based contractor alleging that the company submitted false claims for unqualified security guards under a contract to provide security in Iraq, the Justice Department announced today. The company, Triple Canopy Inc. is headquartered in Reston, Va.
In June 2009, the Joint Contracting Command in Iraq/Afghanistan (JCC-I/A) awarded Triple Canopy a one-year, $10 million contract to perform a variety of security services at Al Asad Airbase – the second largest air base in Iraq. The multi-national JCC-I/A was established by U.S. Central Command in November 2004, to provide contracting support related to the government’s relief and reconstruction efforts in Iraq.
The government’s complaint alleges that Triple Canopy knowingly billed the United States for hundreds of foreign nationals it hired as security guards who could not meet firearms proficiency tests established by the Army and required under the contract. The tests ensure that security guards hired to protect U.S. and allied personnel are capable of firing their AK-47 assault rifles and other weapons safely and accurately. The government also alleges that Triple Canopy’s managers in Iraq falsified test scorecards as a cover up to induce the government to pay for the unqualified guards, and that Triple Canopy continued to bill the government even after high-level officials at the company’s headquarters had been alerted to the misconduct. The complaint further alleges that Triple Canopy used the false qualification records in an attempt to persuade the JCC-I/A to award the company a second year of security work at the Al Asad Airbase.
“For a government contractor to knowingly provide deficient security services, as is alleged in this case, is unthinkable, especially in war time,” said Stuart F. Delery, Acting Assistant Attorney General for the Civil Division of the Department of Justice. “The department will do everything it can to ensure that contractors comply with critical contract requirements and that contractors who don’t comply aren’t permitted to profit at the expense of our men and women in uniform and the taxpayers at home who support them.”
“We will not tolerate government contractors anywhere in the world who seek to defraud the United States through deliberate or reckless conduct that violates contractual requirements and risks the security of government personnel,” said Neil H. MacBride, U.S. Attorney for the Eastern District of Virginia.
The government’s claims are based on a whistleblower suit initially filed by a former employee of Triple Canopy in 2011. The suit was filed under the qui tam, or whistleblower, provision of the False Claims Act, which allows private persons to file suit on behalf of the United States. Under the act, the government has a period of time to investigate the allegations and decide whether to intervene in the action or to decline intervention and allow the whistleblower to go forward alone.
This matter was investigated by the U.S. Attorney’s Office for the Eastern District of Virginia; the Commercial Litigation Branch of the Justice Department’s Civil Division; and the Army Criminal Investigative Command (CID) and Defense Criminal Investigative Service (DCIS) of the Department of Defense.
The claims asserted against Triple Canopy are allegations only; there has been no determination of liability. The government is not aware of any injuries that occurred as a result of the alleged misconduct.
The lawsuit was filed in the U.S. District Court for the Eastern District of Virginia in Alexandria, and is captioned United States ex rel. Badr v. Triple Canopy, Inc.
Former Middle School Employee Pleads Guilty in Texas to Production and Distribution of Child PornographyRead the Press Release
WASHINGTON – A former middle school employee pleaded guilty today in Austin, Texas, to production and distribution of material relating to the sexual exploitation of children, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney for the Western District of Texas Robert Pitman.
Robert Ramos Jr., 33, of Austin, pleaded guilty today before U.S. Magistrate Judge Mark Lane in the Western District of Texas to one count of production of child pornography and one count of distribution of child pornography.
At his plea hearing, Ramos, who was previously an assistant band director at Dessau Middle School in Pflugerville, Texas, admitted that he obtained sexually explicit images of a 13-year-old girl by communicating with her on Facebook and that, to do so, he used Facebook accounts that falsely portrayed him as a teenage girl. Ramos also admitted to distributing those images to Timothy Bek, a teacher in New York who was also contacting underage girls for the purpose of obtaining sexually explicit images.
Ramos also admitted at his plea hearing that he viewed via Internet webcam and saved to his computer a video of a five-year-old girl being sexually abused by Jennifer Mahoney, of New Jersey.
Bek was sentenced on May 23, 2012, in U.S. District Court for the Western District of New York to 30 years in prison for production and possession of child pornography. Mahoney pleaded guilty on May 9, 2012, in the U.S. District Court for the District of New Jersey to one count of sexual exploitation of a child, and she awaits sentencing.
Ramos has been in custody since his arrest by FBI agents in January 2012.At sentencing, Ramos faces a maximum penalty of 50 years in prison.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse, launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ offices and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
This case was investigated by the FBI and CEOS. CEOS Trial Attorney Keith Becker and Assistant U.S. Attorney Matthew Devlin of the Western District of Texas are prosecuting this case.
Federal Court Permanently Bars<br /> <br /> Mississippi Woman from Preparing Tax ReturnsRead the Press Release
A federal court has permanently barred Cynthia Carter, a Columbus, Miss., tax return preparer, from preparing federal tax returns for others, the Justice Department announced today. The civil injunction order, to which Carter consented without admitting the allegations against her, was signed by Judge Sharion Aycock of the U.S. District Court for the Northern District of Mississippi.
The government complaint alleged that Carter, who does business as Cynthia’s Tax Service, prepared returns for customers that reported false income and expenses and falsely claimed several tax credits, including the first-time-homebuyer credit.
The complaint alleged that Carter claimed the credit on her customers’ tax returns even though the customers had not bought new homes and were ineligible for the credit, and that the Internal Revenue Service (IRS) paid out more than $900,000 in erroneous refunds to Carter’s customers as a result. The complaint also alleged that Carter claimed fabricated employee business expense deductions and earned income tax credits on her customers’ returns. According to the complaint, the IRS estimates that Carter’s fraudulent tax return preparation could have resulted in $4.25 million or more in lost revenue to the United States.
The IRS lists tax-preparer fraud as one of the “Dirty Dozen” tax scams . The Justice Department has obtained injunctions against hundreds of tax-return preparers and tax-fraud promoters in the past decade. Information about these cases is available on the Justice Department website .
Alabama Woman Pleads Guilty to a Sophisticated Million Dollar Identity Theft SchemeRead the Press Release
Antoinette Djonret pleaded guilty today in two cases: one involving the filing of more than a million dollars worth of false tax returns using stolen identities and the other case involving the filing of false tax returns for clients, the Justice Department and the Internal Revenue Service (IRS) announced today.
On Aug. 9, 2012, a federal grand jury in Montgomery, Ala., returned a superseding indictment charging Djonret and five others for conspiring to file false tax returns using stolen identities and various other charges. Djonret had earlier been charged with making false claims in a criminal complaint that was filed on Feb. 22, 2012, and in an indictment that was filed on March 28, 2012. Djonret pleaded guilty in this case to one count of conspiring to file false tax returns and one count of aggravated identity theft.
“The Justice Department will not tolerate criminals stealing people’s identities and robbing the public fisc,” said Kathryn Keneally, Assistant Attorney General for the Justice Department’s Tax Division. “We will prosecute and seek just punishment against those who commit stolen identity refund fraud.”
“Identity theft causes victims great harm,” stated George L. Beck, U.S. Attorney for the Middle District of Alabama. “It victimizes honest taxpayers and causes them an enormous amount of hardship. We will continue to work tirelessly to rid our citizens of this horrible crime.”
According to the court documents, between October 2009 and April 2012, Djonret and her co-conspirators filed more than 1,000 false tax returns that claimed more than $1.7 million in fraudulent tax refunds. Djonret obtained stolen identities from multiple sources, including Alabama state databases. She and her co-conspirators filed most of the tax returns from her residence in Montgomery. They used an elaborate network of individuals to launder the tax refunds and recruited individuals to purchase prepaid debit cards to which the fraudulent tax refunds were directed. Djonret and her co-conspirators would then use the prepaid debit cards to obtain the proceeds.
In March 2012, the owner of a Montgomery tax preparation business and five return preparers, one of whom was Djonret, were charged with conspiring to defraud the United States and aiding in the filing of false tax returns. According to court documents, in 2007 and 2008, Djonret was employed as a tax preparer at Premier Tax in Montgomery. Djonret received instructions on how to file false tax returns and admitted to filing false tax returns for real clients. She pleaded guilty to one count of aiding and abetting the presentation of a false tax return in relation to this case.
Sentencing has been scheduled for Feb. 6, 2013. Djonret faces between two and 15 years in prison, three years of supervised release, restitution and a maximum fine of $750,000, or twice the loss caused by the offense.
Kathryn Keneally, Assistant Attorney General for the Justice Department’s Tax Division, and U.S. Attorney George L. Beck, Jr. commended the efforts of special agents of IRS – Criminal Investigation, who investigated the case, and Tax Division Trial Attorneys Jason H. Poole, Justin Gelfand and Michael Boteler, and Assistant U.S. Attorney Jared Morris, who are prosecuting the case.
Additional information about the Tax Division and its enforcement efforts may be found at www.justice.gov/tax.
30 October 2012
Japanese Automobile Parts Manufacturer Agrees to Plead <br /> Guilty to Price Fixing and Obstruction of JusticeRead the Press Release
WASHINGTON — Nagoya, Japan-based Tokai Rika Co. Ltd., has agreed to plead guilty and to pay a $17.7 million criminal fine for its role in a conspiracy to fix prices of heater control panels (HCPs) installed in cars sold in the United States and elsewhere, the Department of Justice announced today. Tokai Rika has also agreed to plead guilty to a charge of obstruction of justice related to the investigation of the antitrust violation.
According to a two-count felony charge filed today in U.S. District Court for the Eastern District of Michigan in Detroit, Tokai Rika engaged in a conspiracy, by agreeing during meetings and conversations, to rig bids for, and to fix, stabilize and maintain the prices of HCPs sold to Toyota in the United States and elsewhere, on a model-by-model basis. According to the court document, Tokai Rika and its co-conspirators carried out the conspiracy from at least as early as September 2003 until at least February 2010.
Tokai Rika manufactures and sells a variety of automotive parts, including HCPs. HCPs are located in the center console of an automobile and control the temperature of the interior environment of a vehicle.
“The conspirators used code names and chose meeting places and times to avoid detection,” said Scott D. Hammond, Deputy Assistant Attorney General of the Antitrust Division’s criminal enforcement program. “They knew their actions would harm American consumers, and attempted to cover it up when caught. The division will continue to hold accountable companies who engage in anticompetitive conduct and who obstruct law enforcement.”
According to the charge, in or about February 2010, after the company and its executives and employees became aware that the FBI had executed a search warrant on Tokai Rika’s U.S. subsidiary, a company executive directed employees to delete electronic data and destroy paper documents likely to contain evidence of antitrust crimes in the United States and elsewhere. The department said that as a result, electronic data was deleted and paper documents were destroyed, and some of the deleted electronic data and destroyed paper documents were non-recoverable.
“Those who engage in price fixing and obstruction of legal process will face severe consequences for their illegal acts,” said Robert D. Foley III, Special Agent in Charge of the FBI’s Detroit Division. “The FBI is committed to stopping such criminal activity.”
As part of the plea agreement, which will be subject to court approval, Tokai Rika has agreed to cooperate with the department’s ongoing investigation.
Including Tokai Rika, nine companies and 11 executives have pleaded guilty or agreed to plead guilty in the department’s ongoing investigation into price fixing and bid rigging in the auto parts industry. Furukawa Electric Co. Ltd., DENSO Corp., Yazaki Corp., G.S. Electech Inc., Fujikura Ltd., Autoliv Inc. and TRW Deutschland Holding GmbH pleaded guilty and were sentenced to pay a total of more than $790 million in criminal fines. Nippon Seiki Co. Ltd., has agreed to plead guilty and awaits arraignment and sentencing. Additionally, Junichi Funo, Hirotsugu Nagata, Tetsuya Ukai, Tsuneaki Hanamura, Ryoki Kawai, Shigeru Ogawa, Hisamitsu Takada, Norihiro Imai, Kazuhiko Kashimoto, Toshio Sudo and Makoto Hattori have pleaded guilty and been sentenced to pay criminal fines and to serve jail sentences ranging from a year and a day to two years each.
Tokai Rika is charged with price fixing in violation of the Sherman Act, which carries a maximum penalty of a $100 million criminal fine for corporations. The maximum fine for the company 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. The maximum fine for a company found guilty of obstruction of justice is $500,000.
Today’s prosecution arose from an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the automotive parts industry, which is being conducted by the Antitrust Division’s National Criminal Enforcement Section and the FBI’s Detroit Field Office with the assistance of the FBI headquarters’ International Corruption Unit. Anyone with information concerning the focus of this investigation is urged to call the Antitrust Division’s National Criminal Enforcement Section at 202-307-6694, visit www.justice.gov/atr/contact/newcase.htm , or call the FBI’s Detroit Field Office at 313-965-2323.
26 October 2012
Ohio Insurance Salesman Pleads Guilty to Tax Obstruction and Currency StructuringRead the Press Release
William R. Herder of Bellville, Ohio, pleaded guilty yesterday to corruptly endeavoring to obstruct the administration of the tax laws and currency structuring, Assistant Attorney General for the Justice Department’s Tax Division Kathryn Keneally, U.S. Attorney for the Northern District of Ohio Stephen M. Dettelbach and Special Agent in Charge, Internal Revenue Service (IRS) - Criminal Investigation, Cincinnati Field Office, Darryl K. Williams announced. Herder was previously indicted in June of this year.
According to documents filed in the case, Herder, an independent insurance salesman for Aflac Inc., failed to file timely and accurate income tax returns for the years 2000-2009 despite earning substantial insurance commissions and receiving warnings and notices from the IRS. Herder filed returns for the years 2010 and 2011 on which he reported that he owed taxes to the government, but failed to pay the almost $50,000 in taxes that he owed for those years.
According to the plea agreement and indictment filed in this case, to prevent the IRS from collecting his unpaid taxes, Herder attempted to conceal his assets and income. In 2004, Herder formed two entities in Nevada—one for the purpose of hiding his automobiles and another for the purpose of hiding his insurance business. Herder also began converting his insurance commission checks to cash and paying his expenses in cash to prevent the IRS from collecting his taxes from his bank account.
The plea agreement and indictment filed in this case also stated that Herder submitted numerous obstructive letters and documents to the IRS, Aflac, and his credit union in an effort to prevent the IRS from assessing and collecting his taxes. In these letters, Herder falsely claimed, among other things, that the tax laws were not applicable to him. In 2005, Herder attempted to pay his taxes with a fake financial instrument called an “International Bill of Exchange.”
Earlier this year, William A. Herder was found guilty at trial of tax evasion, corruptly endeavoring to obstruct the administration of the tax laws and five counts of failing to file tax returns and was sentenced to 37 months in prison. According to public records filed in that case, William A. Herder, who also sold insurance for Aflac Inc. as an independent contractor, is William R. Herder’s father.
The case was investigated by Special Agents of IRS – Criminal Investigation and is being prosecuted by Tax Division Trial Attorneys Melissa S. Siskind and Jeffrey A. McLellan.