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15 October 2012
Houston Ambulance Company Administrator Pleads Guilty to FraudRead the Press Release
WASHINGTON – The administrator of CardioMax EMS, a Houston-based ambulance company, pleaded guilty today to charges that he submitted approximately $1,734,550 in fraudulent claims to Medicare, 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 Stephen L. Morris of the FBI’s Houston Field Office; Special Agent-in-Charge Mike Fields of the Dallas Regional Office of the U.S. Department of Health and Human Service’s Office of the Inspector General (HHS-OIG); and the Texas Attorney General’s Medicaid Fraud Control Unit (MFCU).
Okechukwu Ofoegbu, 31, of Houston, pleaded guilty today in U.S. District Court in the Southern District of Texas to one count of conspiracy to commit health care fraud.
Ofoegbu was the administrator of Cardiomax EMS, a Houston-based ambulance company that primarily transported patients to community mental health centers. According to Ofoegbu’s plea agreement, from January 2011 through December 2011, Ofoegbu and others at Cardiomax were involved in transporting patients that did not meet the requirements for ambulance transport under Medicare regulations, falsifying ambulance run sheets that described patients’ conditions and using the falsified run sheets to file claims with Medicare. Ofoegbu admitted in his plea agreement that he conspired to submit claims to Medicare for ambulance services that he knew were miscoded, not medically necessary and, in some cases, not provided.
As part of the plea agreement, Ofoegbu has agreed to pay $553,002 in restitution to the United States. At sentencing, scheduled for Jan. 24, 2013, Ofoegbu faces a maximum sentence of 10 years in prison.
Ofoegbu was originally indicted as part of a nationwide takedown on May 2, 2012, that resulted in charges against 107 individuals, including doctors, nurses and other licensed medical professionals, for their alleged participation in Medicare fraud schemes involving approximately $452 million in false billing.
The case was prosecuted by Trial Attorney Laura M.K. Cordova, Special Trial Attorney James S. Seaman, Special Trial Attorney Ronald Cummings and Deputy Chief Sam S. Sheldon of the Criminal Division’s Fraud Section. The case was investigated by HHS-OIG, FBI and the Texas Attorney General’s Medicaid Fraud Control Unit, as part the Medicare Fraud Strike Force, supervised by the U.S. Attorney’s Office for the Southern District of Texas and the Criminal Division’s Fraud Section.
Since 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.
Former Colombian Prosecutor Pleads Guilty to Role in International Drug Trafficking ConspiracyRead the Press Release
WASHINGTON – A former Colombian prosecutor pleaded guilty today to providing law enforcement information to drug traffickers as part of a conspiracy to import cocaine into the United States, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Drug Enforcement Administration (DEA) Special Agent in Charge Mark R. Trouville of the Miami Field Division.
Ramiro Anturi Larrahondo, 55, a Colombian national, pleaded guilty before U.S. District Judge John D. Bates in the District of Columbia to one count of conspiracy to distribute five kilograms or more of cocaine, knowing and intending that the cocaine would be illegally imported into the United States. The plea agreement is subject to court approval.
Anturi Larrahondo is the first Colombian prosecutor ever to be extradited to the United States.
“Ramiro Anturi Larrahondo used his position as a Colombian prosecutor to leak sensitive law enforcement intelligence to large-scale drug traffickers in exchange for his own personal enrichment,” said Assistant Attorney General Breuer. “Anturi Larrahondo undermined international law enforcement operations and betrayed the trust placed in him by the Colombian government. As the first case ever in which a Colombian prosecutor is being extradited to the United States, this matter shows how dogged we are in our pursuit of narcotics traffickers and how determined we are to hold accountable those smuggling drugs into this country.”
“The DEA will not tolerate any acts that put our agents’ lives in jeopardy,” said DEA Special Agent in Charge Trouville. “Mr. Anturi Larrahondo will now face the consequences of his criminal conduct to assist drug traffickers.”
Anturi Larrahondo was indicted by a federal grand jury on Jan. 26, 2010, in the District of Columbia. According to court documents, in 2009, while serving as a Colombian prosecutor, Anturi Larrahondo provided sensitive law enforcement investigative information to a major Colombian maritime drug trafficking organization.
According to Anturi Larrahondo’s plea agreement, the drug trafficking organization Anturi Larrahondo conspired with was responsible for transporting cocaine by go-fast vessels from the port city of Buenaventura, Colombia, to Central America, with the ultimate destination being the United States. During the investigation, Colombian judicial wire intercepts recorded Anturi Larrahondo speaking to representatives of the drug trafficking organization and a DEA cooperating source regarding financial payments to Anturi Larrahondo, delivery of documents to the drug trafficking organization and the coordination of meetings between Anturi Larrahondo and representatives of the drug trafficking organization.
As part of his plea agreement, Anturi Larrahondo admitted he received regular monthly payments from the Colombian drug trafficking organization in order for the drug traffickers to find out what, if any, criminal investigation the governments of Colombia or the United States were conducting against the drug traffickers. Anturi Larrahondo further admitted that he received the corrupt payments in order to protect the drug trafficking organization from law enforcement. Members of the Colombian drug trafficking organization made regular monthly cash payments to Anturi Larrahondo of 21 million pesos, the equivalent of approximately $10,000 in U.S. currency.
Anturi Larrahondo’s sentencing hearing has been scheduled for Nov. 26, 2012.
This case is being prosecuted by Trial Attorneys Mark Maldonado, Stephen May and Stephen Sola of the Criminal Division’s Narcotic and Dangerous Drug Section, with significant assistance from the section’s judicial attaches in Bogota, Colombia, the Criminal Division’s Office of International Affairs and the Prosecutor General’s Office of the Republic of Colombia. The case was investigated by DEA’s Bogota Country Office and the Miami Field Division, in coordination with the Judicial Police of the Prosecutor General’s Office in Colombia and the Colombian National Police.
CVS Subsidiary, RxAmerica, Reaches $5 Million Settlement with US for Allegedly Submitting False Pricing Relating to the Company’s Medicare Part D PlanRead the Press Release
In one of the first False Claims Act settlements involving Medicare’s Prescription Drug Program, known as Part D, RxAmerica LLC. has entered into a civil settlement agreement with the United States in which it has agreed to pay the government $5.25 million to resolve allegations that it made false submissions to the Centers for Medicare & Medicaid Services (CMS), the Justice Department announced today. RxAmerica, a wholly-owned subsidiary of CVS Caremark Corporation, provides prescription drug benefits to Medicare beneficiaries pursuant to a prescription drug plan.
The Medicare program offers Part D participants prescription drug coverage. For Medicare participants to obtain this drug coverage, they must join a Medicare-approved plan, often referred to as a Part D plan. Medicare Part D plans can vary in both the drugs that they cover, the amount they reimburse for those drugs, and the deductibles and co-pays they require their participants to pay.
To assist participants to choose a Part D plan that minimized their out-of-pocket costs, CMS offered a web-based tool called Plan Finder, which allowed Medicare Part D beneficiaries to determine estimated prescription drug prices for each Medicare Part D plan that the beneficiary considered for enrollment. CMS obtained the pricing information that is contained on Plan Finder from data submitted to CMS by each Part D Plan sponsor.
The United States alleged that during the period Jan. 1, 2007, to Dec. 31, 2008, RxAmerica made false submissions to CMS regarding prices for certain generic prescription drugs used for Plan Finder, despite certifying to CMS that it would submit accurate pricing data for Plan Finder. As a result, the government alleged that RxAmerica received Medicare Part D payments for claims for the covered drugs at prices that in some cases were significantly higher than the pricing data RxAmerica submitted to CMS for use on Plan Finder.
“The Department of Justice is committed to protecting the Medicare drug prescription program against all types of misconduct,” said Stuart F. Delery, Acting Assistant Attorney General for the Justice Department's Civil Division. “As today's settlement demonstrates, we will ensure that Medicare Part D sponsors submit accurate drug pricing information, to ensure the integrity of the Medicare Part D program and to protect the beneficiaries who participate in the program.”
“The health care choices facing Americans are complicated enough without patients being misinformed and forced to select a Part D plan based on false data. Those navigating our Medicare system deserve accurate information so they can make informed choices and obtain the benefits to which they are entitled. The Medicare system deserves honest input from plan sponsors, so it can continue to safeguard taxpayer dollars. Nothing less will suffice,” stated Loretta Lynch, U.S. Attorney for the Eastern District of New York. “This case exemplifies our continuing dedication to combating all types of alleged health care fraud that can eat away at our precious public health care dollars.”
“ RxAmerica was charged with advertising false drug prices to Medicare Part D enrollees,” said Daniel R. Levinson, Inspector General of the Department of Health and Human Services. “Protecting people in government health programs from those seeking to profit by misrepresenting goods and services is one of our top law enforcement priorities.”
Today’s settlement resolves allegations made in two separate complaints against RxAmerica filed under the False Claims Act’s qui tam or whistleblower provisions, which permit a private individual to file suit for false claims to the United States and share in any recovery. The first complaint, U.S. ex rel. Doe v. RxAmerica, was filed in the United States District Court of the Eastern District of New York in November 2008. The second complaint, U.S. ex rel. Hauser v. CVS Caremark Corp. and RxAmerica, was filed in the United States District Court for the Western District of North Carolina in June 2009. The two cases were consolidated in the Eastern District of New York in November 2011.
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 over $10 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in False Claims Act cases since January 2009 are over $13.8 billion.
The Federal Trade Commission reached an agreement with CVS, RxAmerica’s parent corporation, earlier this year in which CVS agreed to pay $5 million to resolve allegations relating to RxAmerica’s inaccurate Plan Finder submissions from late 2007 through 2008. The resolution from the FTC’s settlement is being used to compensate beneficiaries.
The investigation in this matter was handled by the Department of Justice’s Civil Division, the U.S. Attorney’s Office for the Eastern District of New York, HHS-OIG and CMS. The claims resolved by this settlement are allegations only, and there has been no admission of liability by RxAmerica or CVS.
12 October 2012
Man Pleads Guilty in Ohio Federal Court to Tax and Mortgage Fraud ConspiraciesRead the Press Release
Steven R. Hinz pleaded guilty today to tax fraud and mortgage fraud charges in Cleveland federal court, the Justice Department and Internal Revenue Service (IRS) announced. Hinz’s guilty pleas followed recent guilty pleas of three other defendants – Heather L. English, Patricia A. Polk and William E. Phillips III – who were charged in indictment in December 2011 on a tax conspiracy and various false return charges. The case is assigned to U.S. District Judge Patricia A. Gaughan, who scheduled the sentencing for January 2013.
Hinz pleaded guilty to one count of conspiracy to defraud the United States, one count of making a false 2008 income tax return, fifteen counts of aiding and assisting the preparation of false income tax returns and one count of conspiracy to commit bank fraud involving a mortgage fraud scheme. On Oct. 11, 2012, co-defendant Polk also pleaded guilty to the tax fraud conspiracy and the bank fraud conspiracy. On Oct. 4, 2012, co-defendant English pleaded guilty to tax fraud conspiracy and one count of aiding and assisting the preparation and presentation of Hinz’s false 2008 tax return. Also on Oct. 4, 2012, co-defendant Phillips pleaded guilty to the tax fraud conspiracy. Hinz was arrested in Miami in January 2012 and Polk was arrested in Sarasota, Fla., in February 2012. Phillips was arrested in Los Angeles in June 2012, after being deported from the Philippines upon request of the U.S. government. Hinz and Polk were also charged with the bank fraud conspiracy in supplemental information that was filed with the district court yesterday.
According to the indictment and documents submitted to the court, Hinz promoted a scheme to defraud the United States by filing false federal income tax returns claiming large tax refunds using the so-called Original Issue Discount (OID) process. The OID process involved the preparation of fictitious IRS Forms 1099-OID, falsely reporting that financial institutions, creditors and other entities had withheld large amounts of federal income tax on behalf of the defendants and other taxpayers, with respect to fictitious income. Hinz and English recruited potential clients by promoting the OID scheme to investors and employees of Hinz’s real estate business in Youngstown, Ohio. English prepared or directed the preparation of the 1099-OID forms and prepared and electronically filed the tax returns. Based on these fictitious withholdings, at least 17 false income tax returns for the year 2008 were filed with the IRS, claiming false refunds totaling over $3 million dollars. Under the scheme, taxpayers recruited by Hinz were to pay 20 percent of their refunds to Hinz and English, split equally between the two.
According to the supplemental information and other documents filed with the court, from approximately December 2006 through May 2009, Hinz conducted his real estate business in part through a scheme to defraud two federally-insured banks, Wells Fargo Bank and Huntington National Bank, which provided mortgage loans to the investors. The scheme was carried out through the filing of false mechanic’s liens for work not actually done and the providing of undisclosed down payment assistance to the investors. The scheme was designed to induce the banks to make mortgage loans based on false representations concerning the true price and value of the properties, the sources of down payments, and the disposition of loan proceeds. According to court documents, Polk began conspiring with Hinz to conduct the scheme beginning approximately April 2008.
Each defendant’s sentence will be determined by Judge Gaughan. The maximum potential sentence for Hinz is 83 years in prison. The maximum potential sentence for Polk is 35 years. The maximum potential sentence for Phillips is five years. The maximum potential sentence for English is eight years in prison.
The case is being handled by Assistant U.S. Attorneys John M. Siegel and Henry F. DeBaggis and Tax Division Trial Attorney Robert C. Kennedy, following investigation by the IRS, Criminal Investigation, the Office of Investigations of the Department of Housing and Urban Development Office of Inspector General and the FBI.
Justice Department Announces Policy on Tribal Member Use of Eagle FeathersRead the Press Release
WASHINGTON – The Department of Justice announced today a policy addressing the ability of members of federally recognized Indian tribes to possess or use eagle feathers, an issue of great cultural significance to many tribes and their members. Attorney General Eric Holder signed the new policy after extensive department consultation with tribal leaders and tribal groups. The policy covers all federally protected birds, bird feathers and bird parts.The Attorney General's memorandum is the first formal policy statement adopted by the Justice Department on this issue. It clarifies and expands on longstanding Department practice, consistent with the Department of the Interior's 35-year old Morton Policy, of not prosecuting tribal members for possessing or using eagle feathers and other protected bird parts.
Federal wildlife laws such as the Bald and Golden Eagle Protection Act generally criminalize the killing of eagles and other migratory birds and the possession or commercialization of the feathers and other parts of such birds. These important laws are enforced by the Department of Justice and the Department of the Interior and help ensure that eagle and other bird populations remain healthy and sustainable.
At the same time, the Department of Justice recognizes that eagles play a unique and important role in the religious and cultural life of many Indian tribes. Many Indian tribes and tribal members have historically used, and today continue to use federally protected birds, bird feathers or other bird parts for their tribal cultural and religious expression. Federal wildlife laws recognize the importance of accommodating tribal spiritual needs by allowing exceptions for the religious purposes of Indian tribes. Eagle feathers are made available to tribal members every year from the Fish and Wildlife Service's National Eagle Repository.
“This policy will help ensure a consistent and uniform approach across the nation to protecting and preserving eagles, and to honoring their cultural and spiritual significance to American Indians,” said Attorney General Holder. “The Department of Justice is committed to striking the right balance in enforcing our nation’s wildlife laws by respecting the cultural and religious practices of federally recognized Indian tribes with whom the United States shares a unique government-to-government relationship.”
The department is issuing this policy to address the concerns of tribal members who are unsure of how they may be affected by federal wildlife law enforcement efforts, and because of a concern that this uncertainty may hinder or inhibit tribal religious and cultural practices. The department first announced it was considering formalizing a policy on eagle feathers in October 2011 and sought tribal input at that time. The department held formal consultations with tribal leaders in June, July and August 2012.
“From time immemorial, many Native Americans have viewed eagle feathers and other bird parts as sacred elements of their religious and cultural traditions,” said Ignacia S. Moreno, Assistant Attorney General of the Justice Department’s Environment and Natural Resources Division. “The Department of Justice has taken a major step forward by establishing a consistent and transparent policy to guide federal enforcement of the nation’s wildlife laws in a manner that respects the cultural and religious practices of federally recognized Indian tribes and their members.”
“The Justice Department’s policy balances the needs of the federally recognized tribes and their members to be able to obtain, possess and use eagle feathers for their religious and cultural practices with the need to protect and preserve these magnificent birds,” said Donald E. “Del” Laverdure, Principal Deputy Assistant Secretary for Indian Affairs. “Its reasoned approach reflects a greater understanding and respect for cultural beliefs and spiritual practices of Indian people while also providing much-needed clarity for those responsible for enforcing federal migratory bird protection laws.”
“This policy helps to clarify how federal law enforcement goes about protecting these special birds and also should reassure federally recognized tribal members that they do not have to fear prosecution for possessing or using eagle feathers for their religious and cultural purposes,” said Brendan V. Johnson, U.S. Attorney for the District of South Dakota and the Chairman of the Native American Issues Subcommittee of the Attorney General’s Advisory Committee.
“Eagles and other native migratory bird species are a vital part of our nation’s natural heritage, and we remain dedicated to providing every American with the opportunity to experience them in the wild,” said U.S. Fish and Wildlife Service Director Dan Ashe. “This new policy honors the past while looking to the future, contributing to the preservation of these species and ensuring that tribal members can continue their religious and cultural practices for generations to come.”
The policy provides that, consistent with the Department of Justice’s traditional exercise of its discretion, a member of a federally recognized tribe engaged only in the following types of conduct will not be subject to prosecution:
· Possessing, using, wearing or carrying federally protected birds, bird feathers or other bird parts (federally protected bird parts);
· Traveling domestically with federally protected bird parts or, if tribal members obtain and comply with necessary permits, traveling internationally with such items;
· Picking up naturally molted or fallen feathers found in the wild, without molesting or disturbing federally protected birds or their nests;
· Giving or loaning federally protected bird parts to other members of federally recognized tribes, without compensation of any kind;
· Exchanging federally protected bird parts for federally protected bird parts with other members of federally recognized tribes, without compensation of any kind;
· Providing the feathers or other parts of federally protected birds to craftspersons who are members of federally recognized tribes to be fashioned into objects for eventual use in tribal religious or cultural activities.
The Department of Justice will continue to prosecute tribal members and non-members alike for violating federal laws that prohibit the killing of eagles and other migratory birds or the buying or selling of the feathers or other parts of such birds.
The policy expands upon longstanding Department of Justice practice and Department of the Interior policy. It was developed in close coordination with the Department of the Interior. The Department of Justice’s Environment and Natural Resources Division (ENRD) and United States Attorneys’ Offices work closely with the Department of the Interior’s U.S. Fish and Wildlife Service and Bureau of Indian Affairs on enforcement of federal laws protecting birds.
To view the policy and a fact sheet on the policy, visit: www.justice.gov/tribal.
Department of Justice Executes Restraint Against Additional $4 Million in Assets of Former Nigerian GovernorRead the Press Release
WASHINGTON – The Department of Justice has executed restraints on more than $4 million in additional corruption proceeds in connection with the prosecution and conviction in the United Kingdom of James Onanefe Ibori, the former governor of Nigeria’s oil-rich Delta State, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Immigration and Customs Enforcement (ICE) Director John Morton. As a result of this action, the United States has restrained more than $7 million in assets tied to Ibori and his associates, including the $4 million that were restrained last week and more than $3 million in assets previously made subject to a restraining order issued by Chief Judge Royce C. Lamberth of the U.S. District Court for the District of Columbia on May 22, 2012.
Specifically, the Department of Justice filed an application to supplement the prior order in the District of Columbia to identify for restraint a luxury condominium unit at the Residences at the Ritz-Carlton in Washington, D.C., as well as proceeds from the sale of another condominium, a penthouse unit, located at the Ritz-Carlton. On Oct. 4, 2012, the District Court amended its prior order to name these additional assets, which the United States executed against the Ritz-Carlton condominium and over $3 million in proceeds from the sale of the penthouse unit. The United States is working closely with the United Kingdom’s Crown Prosecution Service and the Metropolitan Police Service to forfeit these corruption proceeds.
According to the original and supplemental applications, Governor Ibori served as the governor of Nigeria’s oil-rich Delta State from 1999 to 2007, and misappropriated millions of dollars in Delta State funds. He laundered those proceeds through a myriad of shell companies, intermediaries and nominees in several jurisdictions, including the United Kingdom. Although Nigeria’s Constitution prohibits state governors from maintaining foreign bank accounts and serving as directors of private companies, Governor Ibori and his associates accumulated millions of dollars in assets in the United Kingdom and the United States, according to the applications. Governor Ibori was convicted in the United Kingdom of money laundering and conspiracy to defraud and was sentenced by a British court on April 18, 2012, to 13 years in prison.
The case is being prosecuted by trial attorneys Woo S. Lee and Elizabeth Aloi of the Criminal Division’s Asset Forfeiture and Money Laundering Section. The case was investigated by ICE Homeland Security Investigations’ (HSI) Foreign Corruption Investigations Group, HSI Asset Identification and Removal Group in Miami and HSI Attaché London.
This case is part of the Justice Department’s Kleptocracy Asset Recovery Initiative. This initiative is carried out by a dedicated team of prosecutors in the Criminal Division’s Asset Forfeiture and Money Laundering Section, working in partnership with federal law enforcement agencies to forfeit the proceeds of foreign official corruption and where appropriate return those proceeds to benefit those harmed.
Individuals with information about possible proceeds of foreign corruption located in or laundered through institutions in the United States should contact federal law enforcement or email [email protected].
ICE-HSI’s Foreign Corruption Investigations Group in Miami targets corrupt foreign officials around the world that attempt to utilize U.S. financial institutions to launder illicit funds. The group conducts investigations into the laundering of proceeds emanating from foreign public corruption, bribery or embezzlement. The objective is to prevent foreign derived ill-gotten gains from entering the U.S. financial infrastructure, to seize identified assets in the United States and repatriate these funds on behalf of those affected by foreign official corruption.
11 October 2012
Owner of Texas Home Health Services Company Pleads <br /> Guilty, Admits Role in $374 Million Fraud SchemeRead the Press Release
WASHINGTON - A Dallas-area home health services company owner today admitted his role in a $374 million home health fraud scheme in which he and others conspired to bill Medicare for unnecessary services that were never performed. Cyprian Akamnonu, 64, of Arlington, Texas, entered his guilty plea to one count of conspiracy to commit health care fraud before U.S. District Judge Sam A. Lindsay in Dallas federal court.The guilty plea was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department's Criminal Division; U.S. Attorney for the Northern District of Texas Sarah R. Saldaña; Special Agent in Charge Diego G. Rodriguez of the FBI’s Dallas Field Office; Special Agent in Charge Mike Fields of the U.S. Department of Health and Human Services Office of Inspector General's (HHS-OIG) Dallas Regional Office; and the Texas Attorney General’s Medicaid Fraud Control Unit (MFCU).
According to court documents, beginning in at least January 2006, Akamnonu, along with his wife Pat Akamnonu, owned and operated Ultimate Care Home Health Services, Inc. Cyprian Akamnonu admitted that he directed his wife and others to recruit Medicare beneficiaries from Dallas neighborhoods for home health services they did not need and for which they did not qualify. Once the beneficiaries were recruited, Cyprian Akamnonu would take prescriptions for home health services to the offices of Medistat Group Associates, P.A., owned and operated by co-defendant Jacques Roy, M.D.
Cyprian Akamnonu admitted he brought the prescriptions to Roy because he and Roy had a fraudulent arrangement whereby Ultimate provided Roy with beneficiaries to bolster Medistat’s patient roster in exchange for Roy’s certification for skilled nursing services of any beneficiary brought to him. Roy’s office manager, co-defendant Teri Sivils, and others would allegedly then sign these prescriptions on Roy’s behalf. Cyprian Akamnonu admitted to paying Sivils cash to sign the prescriptions.Cyprian Akamnonu admitted that once he obtained signed prescriptions, nurses acting at his direction would perform cursory visits for the beneficiaries they had recruited that bore little relationship to the skilled nursing services which Roy had purportedly prescribed. Ultimate would then bill Medicare, at Cyprian Akamnonu’s direction, for skilled nursing services that were not necessary and were not performed.
Court documents show that from January 2006 through November 2011, Roy or another Medistat physician allegedly certified over 78% of the beneficiaries serviced by Ultimate. Ultimate billed over $43 million to the Medicare program for these beneficiaries. Roy, in turn, allegedly incorporated these beneficiaries into his own practice and billed over $2.4 million for services related to them.At sentencing, Cyprian Akamnonu faces a maximum potential penalty of 10 years in prison and a $250,000 fine on the conspiracy count. Sentencing is currently scheduled for Feb. 4, 2013. As part of his plea agreement, he has also agreed not to contest the forfeiture of 21 real properties, four automobiles, and funds in a number of personal and business accounts connected to proceeds of the fraud.
His six co-defendants, including his wife, await trial on related charges, currently set for June 2013. The charges and allegations contained in the indictment against them are merely accusations and the defendants are presumed innocent unless and until proven guilty.
The case is being prosecuted by Assistant U.S. Attorneys Michael Elliott and Mindy Sauter of the U.S. Attorney’s Office for the Northern District of Texas, and Deputy Chief Sam Sheldon and Trial Attorney Ben O’Neil 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 Northern District of Texas.
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, are taking steps to increase accountability and decrease the presence of fraudulent providers.
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Miami-Area Therapist Sentenced to 108 Months in Prison for Participating in $205 Million Medicare Fraud SchemeRead the Press Release
WASHINGTON – Miami-area resident Vanja Abreu (Ph.D), former program director at the mental health care company American Therapeutic Corporation (ATC), was sentenced today to 108 months in prison for participating in a $205 million Medicare fraud scheme, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; Acting Special Agent-in-Charge Michael B. Steinbach of the FBI’s Miami Field Office; and Special Agent-in-Charge Christopher Dennis of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), Office of Investigations Miami office.
Abreu, 49, of Pembroke Pines, Fla., was sentenced by U.S. District Judge Patricia A. Seitz in the Southern District of Florida. In addition to her prison term, Judge Seitz sentenced Abreu to serve three years of supervised release following her prison term and pay $72,771,469 in restitution, jointly and severally with co-defendants.
On June 1, 2012, after a seven week trial, a federal jury in the Southern District of Florida found Abreu guilty of one count of conspiracy to commit health care fraud.
Evidence at trial demonstrated that Abreu and her co-conspirators caused the submission of false and fraudulent claims to Medicare through ATC, a Florida corporation headquartered in Miami that operated purported partial hospitalization programs (PHPs), intensive treatments for severe mental illness, in seven different locations throughout South Florida and Orlando.
Evidence at trial revealed that ATC secured patients by paying kickbacks to assisted living facility owners and halfway house owners who would then steer patients to ATC. These patients attended ATC, where they were ineligible for the treatment ATC billed to Medicare and where they did not receive the treatment that was billed to Medicare. After Medicare paid the claims, some of the co-conspirators then laundered the Medicare money in order to create cash to pay the patient kickbacks.
Evidence at trial revealed that Abreu was a program director at ATC’s Boca Raton, Fla., center from September 2005 to November 2005. In November 2005, Abreu moved to ATC’s Miami center, where she was the program director until February 2009, at which point she was promoted to corporate leadership and oversaw operations at all ATC centers until April 2010. Evidence at trial revealed that program directors, including Abreu, helped doctors at ATC sign patient files without reading the files or seeing the patients. Evidence further revealed that Abreu and others would assist the owners of ATC in fabricating doctor notes, therapist notes and other documents to make it falsely appear in ATC’s patient files that patients were qualified for this highly specialized treatment and that the patients were receiving the intensive, individualized treatment PHP is supposed to be. Included in these false and fraudulent submissions to Medicare were claims for patients who were in the late stages of diseases causing permanent cognitive memory loss and patients who had substance abuse issues and were living in halfway houses. These patients were ineligible for PHP treatment, and because they were forced by their assisted living facility owners and halfway house owners to attend ATC, they were not receiving treatment for the diseases they actually had.
Abreu was charged in an indictment returned on Feb. 8, 2011. ATC, the management company associated with ATC, and 20 individuals, including the ATC owners, have all previously pleaded guilty or have been convicted at trial.
ATC executives Lawrence Duran, Marianella Valera, Judith Negron and Margarita Acevedo were sentenced to 50 years, 35 years, 35 years and 91 months in prison, respectively, for their roles in the fraud scheme. The 50- and 35-year sentences represent the longest sentences for health care fraud ordered to date. Acevedo, who was one of the first defendants to plead guilty and has been cooperating with the government since November 2010, testified at the doctors’ trial.
ATC and its management company, Medlink Professional Management Group Inc., pleaded guilty in May 2011 to conspiracy to commit health care fraud. ATC also pleaded guilty to conspiracy to defraud the United States and to pay and receive illegal health care kickbacks. On Sept. 16, 2011, the two corporations were sentenced to five years of probation per count and ordered to pay restitution of $87 million. Both corporations have been defunct since their owners were arrested in October 2010.
The case was prosecuted by Trial Attorneys Jennifer L. Saulino, Robert A. Zink and James V. Hayes 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.
Justice Department Settles with Florida Bus Companies over Accessibility ViolationsRead the Press Release
The Justice Department reached four settlement agreements with over-the-road bus companies in Florida in the last month, to ensure that bus transportation is accessible for people with disabilities. The settlements under the Americans with Disabilities Act (ADA) are with Dynamic Tours & Transportation Inc., Alltour America Transportation, Jet Set Line Inc. and VIP’s Jet Tours Corp./Pegasus Transportation.
The settlements are the product of collaborative enforcement efforts between the Justice Department and the Federal Motor Carrier Safety Administration (FMCSA) of the U.S. Department of Transportation . The agreements remedy violations by the bus companies, including failing to maintain wheelchair lifts in working condition, failing to file required reports regarding ADA compliance, and lack of staff training on accessibility requirements. The settlement agreements require the bus companies:
- To comply with all ADA requirements for accessible service, and not exclude persons with disabilities from their transportation services;
- To train all employees and contractors on the requirements of the ADA;
- To properly maintain all wheelchair lifts (to the extent a company has lift-equipped buses); and
- To file required annual reports with the FMCSA.
“People with disabilities must be able to count on accessible bus service that is equal to the service provided to others,” said Thomas E. Perez, Assistant Attorney General of the Civil Rights Division.
“FMCSA will continue to work closely with the Department of Justice to enforce ADA compliance so that all travelers can enjoy destinations across America by way of commercial bus,” said Anne S. Ferro, Administrator of the Department of Transportation's Federal Motor Carrier Safety Administration.
Title III of the ADA prohibits discrimination against people with disabilities by public accommodations, including small over-the-road bus companies. The Department of Transportation’s regulations implementing the ADA require that such companies perform regular maintenance checks to ensure that wheelchair lifts work, provide prompt accessible service with an alternative carrier if a small company does not have a lift-equipped bus, train their employees on accessibility requirements, and file annual accessibility reports with the FMCSA.
In the past year, the Justice Department has reached a total of 22 settlements with bus companies to ensure compliance with accessibility obligations.
People interested in finding out more about the ADA or these settlements can call the toll-free ADA Information Line at 800-514-0301 (TDD 800-514-0383) or access the ADA website at www.ada.gov .
Justice Department Files Lawsuit Against Three Related Companies for Violating Fair Credit Reporting ActRead the Press Release
The United States has filed a complaint against three related companies that bought and sold consumer credit reports, the Justice Department announced today. The government’s complaint charges these companies with violating the Fair Credit Reporting Act (FCRA). The companies have agreed to pay a $1.2 million civil penalty to resolve these charges.
In a complaint filed Oct. 9, 2012, the United States alleged that Direct Lending Source Inc., and Bailey & Associates Advertising Inc., both Florida corporations, Virtual Lending Source LLC, based in San Diego, Calif., and the principals of all of these entities, Robert M. Bailey, Jr. and Linda Giordiano , violated the FCRA by failing to comply with provisions forbidding the sale of credit reports without a “permissible purpose.” The complaint alleges that the defendants purchased thousands of “pre-screened” consumer lists, or collections of credit report data. The only permissible purpose under the Act for using such prescreened lists is to make “firm offers of credit or insurance” to consumers. However, the complaint alleges that the defendants re-sold the lists to dealers who marketed loan modification, debt relief and credit repair services rather than making firm offers of credit. According to the complaint, some of the dealers who purchased the defendants’ credit report data have become the subject of law enforcement actions or warnings involving fraud committed against consumers in financial trouble.
The complaint also alleges that the defendants did not take reasonable steps to identify the ultimate purchasers of the credit reports. In some cases, according to the complaint, the defendants sold lists to brokers who then re-sold them to unidentified entities.
“The sensitive financial information in credit reports must be protected from those who would use it to target vulnerable consumers for sham offers,” said Stuart Delery, Acting Assistant Attorney General for the Civil Division. “We will work with the Federal Trade Commission to aggressively enforce the laws that safeguard these reports.”
Along with the $1.2 million civil penalty, the defendants agreed to injunctions against future FCRA and FTC violations in a proposed consent decree that must be approved by the court. The proposed order would prohibit the defendants from using, obtaining or reselling consumer reports for unauthorized purposes. The proposed order also would prohibit the defendants from selling consumer reports in connection with solicitations for debt relief and mortgage relief services that charge advance fees.
The Federal Trade Commission (FTC), which oversees the FCRA, referred the case to the Department. The lawsuit, United States v. Direct Lending Source et al., was filed in the Southern District of California.
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.
Justice Department Announces Lawsuit to Protect Rights of Military and Overseas Voters in VermontRead the Press Release
The Justice Department announced today that it has filed a lawsuit against the state of Vermont and its chief election official to help ensure that military service members, their family members and U.S. citizens living overseas have the opportunity to participate fully in the Nov. 6, 2012 federal general election.
The lawsuit, brought under the Uniformed and Overseas Citizens Absentee Voting Act (UOCAVA), was filed in federal district court in Vermont, in coordination with the U.S. Attorney’s Office for the District of Vermont. The department brought this enforcement action after the state failed to send more than 20 percent of the absentee ballots requested by Vermont’s military and overseas voters for the Nov. 6, 2012 federal general election by the 45th day prior to the election, as required by UOCAVA. The United States seeks an order requiring the state of Vermont to ensure that military and overseas voters will have sufficient opportunity to receive, cast and return their ballots in time to be counted by extending the deadline until Nov. 16, 2012, for the receipt of ballots from affected UOCAVA voters. The lawsuit also seeks relief requiring Vermont to notify affected UOCAVA voters, to provide reports to the United States about Vermont’s compliance with UOCAVA, and to take all necessary actions to ensure UOCAVA compliance in future federal elections.
“Our armed forces, their families and overseas citizens deserve a meaningful opportunity to fully participate in our nation’s elections,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “ We are filing this lawsuit to ensure that Vermont’s military and overseas voters will be provided the full 45 days guaranteed by UOCAVA to receive, mark and return their ballots in the upcoming November general election. ”
UOCAVA requires states to allow uniformed service voters (serving both overseas and within the United States) and their families as well as overseas citizens to register to vote and to vote absentee for all elections for federal office. In 2009, Congress enacted the MOVE Act, which made broad amendments to UOCAVA, including the requirement that states transmit absentee ballots to voters covered under UOCAVA, by mail or electronically at the voter’s option, no later than 45 days before federal elections.
More information about UOCAVA and other federal voting laws is available on the Department of Justice website at www.justice.gov/crt/about/vot/misc/activ_uoc.php . Please report any complaints to the Voting Section of the Justice Department’s Civil Rights Division at 1-800-253-3931.
Former U.S. Navy Seaman Sentenced to Five Years in Prison for Possessing Child PornographyRead the Press Release
WASHINGTON – A former U.S. Navy seaman was sentenced today to five years in prison for possessing child pornography, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.
James Driver, 24, of Midland, Mich., was sentenced today by U.S. District Judge Thomas L. Ludington in the Eastern District of Michigan. In addition to his prison term, Driver was sentenced to five years of supervised release. After Driver completes his prison term, he must register as a sex offender as a condition of release.
Following a four-day jury trial, Driver was found guilty on May 21, 2012, of one count of possessing child pornography. According to court documents and testimony presented during the trial, the case originated from a Naval Criminal Investigative Service (NCIS) investigation into an individual, later identified as Driver, suspected of possessing and distributing child pornography using a peer-to-peer file sharing network. Driver, who at the time was a U.S. Navy seaman stationed in Japan, admitted in an interview to being interested in child pornography for the past five years.
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 Child Exploitation and Obscenity Section (CEOS) of the Justice Department’s Criminal Division, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
The case was prosecuted by CEOS Trial Attorney Mi Yung Park and former CEOS Trial Attorney Thomas Franzinger. The case was investigated by NCIS and CEOS’s High Technology Investigative Unit. Assistance was provided by the FBI’s Innocent Images Unit.Former Owners of Los Angeles DME Wholesale Company Arrested<br /> and Charged with Participating in $16.6 Million<br /> Medicare Fraud SchemeRead the Press Release
WASHINGTON – The former owners of a durable medical equipment (DME) wholesale company located in Ontario, Calif., were arrested late yesterday at Los Angeles International Airport in connection with a DME fraud scheme that resulted in the submission of over $16.6 million in false claims to Medicare and are expected to appear this afternoon in Los Angeles federal court.
The arrest was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney André Birotte Jr. of the Central District of California; Glenn R. Ferry, Special Agent-in-Charge for the Los Angeles Region of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG); and Timothy Delaney, Special Agent in Charge of the FBI’s Los Angeles Field Office.Rajinder Singh Paul, 69, and his wife, Baljit Kaur Paul, 65, were arrested on conspiracy and health care fraud charges at the airport as they returned from a trip abroad. According to the indictment unsealed upon their arrests, Rajinder and Baljit Paul owned and operated a DME wholesale supply company called Major’s Wholesale Medical Supply Inc., which was located in Ontario. Between 2002 and 2009, according to the indictment, when they were terminated from Major’s after selling its assets to a new owner, Rajinder and Baljit Paul sold primarily high-end power wheelchairs to DME supply companies for approximately $850 to $1,000 per wheelchair. The DME companies, many of which were allegedly fraudulent, billed these power wheelchairs to Medicare at a cost of $3,000 to $6,000 per wheelchair.
According to the indictment, in order to attract and keep the DME companies’ business and prevent Medicare from withholding money that the companies would use to pay Major’s, Rajinder and Baljit Paul provided over 170 DME companies with backdated, altered, and fabricated invoices which reflected that the companies had purchased power wheelchairs and DME from Major’s earlier than they had. Rajinder and Baljit Paul also allegedly provided the DME companies with false invoices for DME that the companies never purchased from Major’s. Rajinder Paul, Baljit Paul, or employees acting at their direction, allegedly created these false invoices using invoice numbers from old invoices or serial numbers from DME that Major’s had already sold or not yet received from its manufacturers. The DME companies then allegedly used these backdated, altered, and fabricated invoices to defraud Medicare or thwart Medicare audits.
In addition, the indictment alleges that the Pauls provided the DME companies with false inventory purchase agreements that showed the companies had credit limits with Major’s which were higher than the credit limits that Major’s actually extended to the companies. The DME companies then submitted these false inventory purchase agreements to Medicare to meet one of the Medicare regulations necessary for the companies to obtain and maintain their Medicare billing privileges, namely, that the companies had contracts with DME wholesalers and other parties to purchase the DME that they billed to Medicare.
The indictment alleges that as a result of this scheme, the Pauls and the owners and operators of certain of the companies that Rajinder and Baljit Paul provided with fraudulent invoices submitted approximately $16,662,143 in false claims to Medicare, and received approximately $9,743,609 on those claims.
Rajinder and Baljit Paul are each charged with one count of conspiracy to commit health care fraud and one count of making false statements. The conspiracy count carries a maximum potential penalty of 10 years in prison, and the false statements count carries a maximum potential penalty of five years in prison. Each count also carries a maximum $250,000 fine.
The case is being prosecuted by Trial Attorney Jonathan T. Baum of the Criminal Division’s Fraud Section. The case is being investigated by the FBI, HHS-OIG, and the California Department of Justice, 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 Central District of California.
The charges and allegations contained in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.Since its inception in March 2007, strike force operations in nine locations have charged more than 1,480 defendants who collectively have billed the Medicare program for more than $4.8 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to www.stopmedicarefraud.gov.
Former COO of Louisiana Construction Management Company and Brother-In-Law Charged in Fraud SchemeRead the Press Release
WASHINGTON – Mark J. Titus, former Chief Operations Officer of Garner Services Ltd. (GSL), and his brother-in-law Dominick Fazzio, have been charged in a second superseding indictment returned today by a federal grand jury in New Orleans for defrauding GSL of over $1 million, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.
The 32-count indictment returned today in U.S. District Court in New Orleans charges Titus and Fazzio with conspiracy, mail fraud, wire fraud, money laundering and tax charges for participating in the fraud scheme. Fazzio has also been charged with a separate tax fraud scheme.
According to the second superseding indictment, between approximately May 2008 and approximately May 2011, Titus and Fazzio defrauded GSL, a construction management company based in Pascagoula, Miss., by creating and submitting fraudulent invoices for services never rendered on construction projects managed by GSL, causing payments to be made from GSL to two companies owned by Fazzio. The two defendants then allegedly laundered the money by engaging in a series of financial transactions for the purpose of concealing the illegal nature of the payments. According to the second superseding indictment, Titus and Fazzio also submitted false tax returns by improperly deducting the disbursement of their fraudulently obtained money as legitimate business activity and failing to report the money received from the fraud scheme as taxable income.
In addition, Fazzio is charged in connection with a tax fraud scheme perpetrated with Hendrikus Ton, the owner of Abe’s Boat Rentals in Belle Chase, La., and two other companies that provide services to offshore oil production facilities. Fazzio and Ton allegedly conspired to under-report income paid to employees of Ton’s by transferring taxable income from Abe's Boat Rentals to a dormant company, improperly deducting that money as legitimate business activity and using that money to pay employees of Abe’s Boat Rentals in order to conceal the actual amount of income paid to the employees, thereby reducing the tax liability of Ton’s companies by over $3.5 million. According to the second superseding indictment, Fazzio prepared the tax returns for Ton’s companies and willfully omitted wages paid out of the dormant company.
In October 2011, Titus pleaded guilty to one count of conspiracy to commit mail fraud, arising from his role in a fraud scheme allegedly related to the scheme set forth in the second superseding indictment returned today. Last month, Titus moved to withdraw his October 2011 guilty plea, but the request was denied yesterday by U.S. District Judge Ivan Lemelle in the Eastern District of Louisiana, and sentencing proceeded yesterday as scheduled. U.S. District Judge Lemelle sentenced Titus yesterday to 60 months in prison on his guilty plea. Judge Lemelle also sentenced Titus to pay a $100,000 fine and ordered Titus to pay $925,320 in restitution to GSL.
An indictment is merely a charge and is not evidence of guilt. The defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.The case is being prosecuted by Deputy Chief Peter Koski and Trial Attorneys Brian Lichter and Menaka Kalaskar of the Criminal Division’s Public Integrity Section, as well as Assistant U.S. Attorney Gregory Kennedy of the Eastern District of Louisiana. The case is being investigated by the FBI and the New Orleans Office of the Internal Revenue Service-Criminal Investigation Division.
Former Bryan County, Okla., Sheriff’s Office Lieutenant Sentenced for Assaulting Detainee with a TaserRead the Press Release
The Justice Department announced today that former Bryan County, Okla., Sheriff’s Office Lieutenant Kevin Bennett Holt, 48, from Achille, Okla., was sentenced to 18 months in the custody of the Federal Bureau of Prisons, followed by 24 months of supervised release, for using a Taser to assault a detainee inside of the Bryan County Jail in Durant, Okla., in violation of the victim’s civil rights.
The defendant pleaded guilty on May 1, 2012. During the plea hearing and in the plea documents, Holt admitted that he intentionally used unreasonable force on a detainee when he electronically shocked the detainee by using a Taser device while the detainee was strapped into a restraint chair. The defendant also admitted that his unlawful Taser deployment injured the victim.
“Excessive force by officers sworn to respect and uphold the law undermines our criminal justice system,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The federal government is committed to prosecuting officers who abuse the authority entrusted to them.”
This case was investigated by the FBI. The case was prosecuted by Trial Attorney Nicole Lee Ndumele of the Civil Rights Division and Assistant U.S. Attorney Gregory Dean Burris from the U.S. Attorney’s Office for the Eastern District of Oklahoma.
10 October 2012
Two U.S. Contractor Employees Sentenced for Kickback Conspiracy and Tax Crimes Related to Iraq Reconstruction EffortsRead the Press Release
WASHINGTON – Two former employees of The Parsons Company, an international engineering and construction firm, were sentenced in federal court in the Northern District of Alabama for their participation in a kickback conspiracy in Iraq and related tax crimes, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney for the Northern District of Alabama Joyce White Vance.
Billy Joe Hunt, 57, was sentenced today by U.S. District Judge Abdul Kallon in federal court in Huntsville, Ala., to 15 months in prison, three years of supervised release, $66,212 in restitution to the Internal Revenue Service (IRS) and forfeiture of $236,472. Gaines R. Newell Jr., 53, was sentenced yesterday by U.S. District Judge Virginia Hopkins in federal court in Birmingham, Ala., to 27 months in prison, three years of supervised release, $1,102,115 in restitution ($861,027 to the U.S. Army Corps of Engineers and $241,088 to the IRS) and forfeiture of $861,027.
On May 8, 2012, Hunt pleaded guilty to one count of conspiracy to commit mail and wire fraud and pay kickbacks, and one count of subscribing a false tax return. On April 10, 2012, Newell pleaded guilty to one count of conspiracy to commit mail and wire fraud and to pay kickbacks, and one count of subscribing a false tax return.
According to court documents, Newell and Hunt were employed by Parsons in Iraq as program manager and deputy program manager, respectively, under a contract that Parsons held to support the Coalition Munitions Clearance Program operated by the U.S. Army Corps of Engineers in Huntsville. The Coalition Munitions Program sought to preclude insurgents and other unfriendly groups from getting munitions that had been stockpiled, abandoned or seized, and using them against Coalition forces or the Iraqi public. In their plea proceedings, Newell and Hunt admitted taking over $1 million in kickbacks from subcontractors from 2005 to 2007, in return for arranging to award contracts on the munitions clearance program to subcontractors. Newell and Hunt also admitted filing false federal income tax returns by not disclosing kickback income.On May 21, 2012, Hunt and Newell’s co-conspirator Ahmed Sarchil Kazzaz, 45, pleaded guilty for his role in the scheme. Kazzaz and his business, Leadstay Company, were indicted in the Northern District of Alabama in September 2011 for paying over $947,000 in kickbacks to Newell and Hunt. According to the plea agreement, between March 2006 and June 2007, Kazzaz agreed to pay kickbacks to Newell and Hunt totaling 13 percent of the amounts paid by Parsons, and thus obtained over $23 million in subcontracts providing materials and equipment to Parsons. After Kazzaz’s arrest in Los Angeles on Dec. 2, 2011, this case was transferred to the Central District of California, where Kazzaz pleaded guilty. His sentencing is set for Oct. 29, 2012 before U.S. District Judge R. Gary Klausner in the Central District of California.
The cases are being prosecuted by Catherine Votaw, Director of Procurement Fraud for the Criminal Division’s Fraud Section, and Assistant U.S. Attorney David Estes of the Northern District of Alabama. The investigation was handled by the Special Inspector General for Iraq Reconstruction, the Defense Criminal Investigative Service, the IRS-Criminal Investigations Division and the FBI.
Ten Individuals Indicted in National Business Opportunity Fraud ScamRead the Press Release
The Justice Department announced today the unsealing of an indictment charging 10 individuals in connection with a vending machine “business opportunity” that defrauded thousands of victims across the country.
The indictment alleges that managers, sales representatives and operators of “locating companies” associated with Multivend LLC, d/b/a Vendstar, made material misrepresentations about the profits customers would make from and the locations customers would receive for bulk candy vending machines. The indictment also alleges that, during these telemarketing calls, Vendstar’s sales representatives falsely claimed to operate their own profitable vending machine businesses.
According to the indictment, Vendstar advertised nationwide in newspapers and on the Internet. Vendstar sales representatives promised to provide consumers with everything they needed to operate a successful business, including vending machines, an initial supply of candy, assistance in finding locations for the vending machines, training and ongoing customer assistance. The locating companies who worked with Vendstar to close deals had no special skills, tools or expertise in finding locations and generally placed consumers’ machines wherever they could as quickly as they could, often in businesses that had not consented to housing the machines and that soon demanded that the machines be removed. The vending machines generated little business and Vendstar’s customers lost nearly all if not all of their investments. The typical customer paid about $10,000 for the business opportunity.
“Business opportunity fraud is a serious crime that insidiously targets Americans in search of a better future for their families. We will continue to work with the Postal Inspection Service and use our law enforcement resources to investigate and uncover business opportunity fraud,” said Stuart F. Delery, Acting Assistant Attorney General for the Civil Division, which includes the Consumer Protection Branch that handles criminal cases.
Tony Gomez, Acting Inspector in Charge, U.S. Postal Inspection Service - Miami Division, stated: “The U.S. Postal Inspection Service will continue to work with our partners in law enforcement to ensure that the U.S. Postal Service isn’t used as a conduit to defrauding the American consumer. The protection of our citizens is at the cornerstone of our mission.”
“Business opportunity schemes, like this candy vending machine venture, take advantage of individuals through misrepresentations and outright fraud,” said Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida. “Instead of becoming successful entrepreneurs, the individual investors become victims of fraud, often losing their life’s savings. In this way, business opportunity schemes tarnish the American Dream of success through hard work. We will help protect the investing public by prosecuting these cases aggressively.”
Vendstar was incorporated in Indiana and operated until July 2010 from Deer Park, N.Y., according to the indictment. The indictment was returned by a federal grand jury in Miami. The charges are part of a continuing crackdown by federal authorities on business opportunity fraud that during the last several years has resulted in more than 100 convictions in the Southern District of Florida alone.
Named as defendants in the indictment were:
- Edward Morris “Ned” Weaver, 39, of Perrysburg, Ohio, the president and chief executive officer of Vendstar.
- Lawrence A. Kaplan, 54, of Brooklyn, N.Y., the technical support manager for Vendstar.
- Scott M. Doumas, 40, of East Setauket, N.Y., a salesman and sales manager at Vendstar.
- Mark Benowitz, 65, of Holtsville, N.Y., a salesman at Vendstar.
- Richard R. Goldberg, 40, of Bay Shore, N.Y. a salesman at Vendstar.
- Richard Linick, 70, of Coram, N.Y., a salesman at Vendstar.
- Paul E. Raia, 61, of Brookhaven, N.Y., a salesman at Vendstar.
- Howard S. Strauss, 63, of Jericho, N.Y., a salesman at Vendstar.
- Wallace W. DiRenzo, 67, of Cleveland, Ohio, who operated Nationwide Locating Company, which was based in North Palm Beach, Fla.
- James P. Ellis, 42, of Northport, Ala., who operated Vending Dreams, Priority Placements, Clear Vision Marketing, Map Marketing and Secure Placement.
Each of the defendants is charged with conspiracy to commit mail and wire fraud, and an enhanced penalty for telemarketing , which together provide for a maximum sentence of 10 years in prison. Weaver, Kaplan, Benowitz, Goldberg, Linick, Raia, Strauss and DiRenzo also are charged with mail fraud, and/or wire fraud, each of which carry a maximum of 20 years in prison.
The indictment contains only accusations against the defendants and is not evidence of guilt. The defendants should be presumed innocent unless and until proven guilty.
Acting Assistant Attorney General Delery commended the investigative efforts of the United States Postal Inspection Service. The case is being prosecuted by Patrick Jasperse and Adrienne Fowler, Trial Attorneys, U.S. Department of Justice, Consumer Protection Branch.
Justice Department Settles Lawsuit Against Las Vegas Casino for Unfair Documentary PracticesRead the Press Release
The Justice Department today reached an agreement with Tuscany Hotel and Casino LLC in Las Vegas resolving a lawsuit alleging that the company discriminated in the employment eligibility verification and re-verification process. The Immigration and Nationality Act (INA) requires employers to treat all authorized workers equally during the hiring, firing and employment eligibility verification process, regardless of their national origin or citizenship status.
The department’s case, filed on May 11, 2012, alleged that Tuscany treated non-citizens differently from U.S. citizens during the employment eligibility verification and reverification process. The complaint alleged the casino required non-citizen employees to provide more or different documents or information than it required from citizen employees during the initial employment eligibility verification process. According to the complaint, the company then used the documents or information it gathered to impose improper document requests on non-citizens during the reverification process as a condition of continued employment. The complaint further alleged that the casino subjected non-citizen employees’ documents to a heightened review process by senior human resources representatives that was not applied to documents presented by U.S. citizens.
Under the settlement agreement, Tuscany will pay $49,000 in civil penalties to the United States and full back pay to a victim. In addition to corrective action already taken, Tuscany also agrees to implement new employment eligibility verification policies and procedures that treat all employees equally regardless of citizenship status, conduct training of its human resources staff on their responsibilities to avoid discrimination in the employment eligibility verification process, and be subject to reporting and monitoring requirements.
“Employers may not treat authorized workers differently during the employment eligibility verification and reverification process based on their citizenship status or national origin,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “ I am pleased that Tuscany Hotel and Casino has worked cooperatively with the department to reach an amicable resolution, and encourage the casino industry to include the anti-discrimination provision of the INA as an integral part of part of their statutory and regulatory compliance program.”
The Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC) is responsible for enforcing the anti-discrimination provision of the INA, which protects work authorized individuals from employment discrimination on the basis of citizenship status or national origin, including discrimination in hiring, firing and the employment eligibility verification (Form I-9) process. For more information about protections against employment discrimination under federal immigration law, call the OSC’s worker hotline at 1-800-255-7688 (TDD 1-800-237-2525), the OSC’s employer hotline at 1-800-255-8155 (TDD 1-800-362-2735), sign up for a no-cost webinar at www.justice.gov/crt/about/osc/webinars.php or visit OSC’s website at www.justice.gov/crt/about/osc .
Justice Department Files Fair Housing Lawsuit Against Florida Homeowners Association and Management Company for Discrimination Against Families with ChildrenRead the Press Release
The Justice Department today filed a lawsuit against the homeowners association and former manager of a 249-townhome community in Gibsonton, Fla., for violating the Fair Housing Act by discriminating against families with children.
The lawsuit, filed in the U.S. District Court for the Middle District of Florida, charges that Townhomes of Kings Lake HOA Inc. engaged in a pattern or practice of violating the Fair Housing Act by adopting, maintaining, ratifying, and, along with Vanguard Management Group Inc., enforcing occupancy standards unduly limiting the number of individuals who can reside in the townhomes. The suit also charges that the defendants violated the Fair Housing Act by threatening to evict a couple and their six minor children from the four-bedroom townhome they were renting and by taking other actions to interfere with their tenancy.
“The Fair Housing Act ensures that families with children have an equal right to use and enjoy housing of their choice,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Justice Department will continue its vigorous enforcement of fair housing laws that protect the rights of families with children.”
The lawsuit arose when the family filed a complaint with the Department of Housing and Urban Development (HUD). After the family had moved into the home, the management company and the homeowners association indicated there was a problem with the number of children living there. The defendants’ occupancy policy allowed only six individuals to occupy the home, which was far more stringent than what Hillsborough County permitted. The homeowners association also adopted similarly restrictive limitations on the number of individuals who could live in two- and three-bedroom townhomes in Kings Lake. After HUD investigated the complaint, it issued a charge of discrimination and the matter was referred to the Justice Department.
“Housing providers may set occupancy standards but those standards cannot be so restrictive that they exclude families who, based on a home’s overall size and configuration, should be able to live there,” said John Trasviña, HUD Assistant Secretary for Fair Housing and Equal Opportunity. “HUD and the Department of Justice are committed to taking action against anyone who unlawfully denies housing to families with children.”
The lawsuit seeks a court order prohibiting future discrimination by the defendants, monetary damages for those harmed by the defendants’ actions, and a civil penalty. Any individuals who have information relevant to this case are urged to contact the Housing and Civil Enforcement Section of the Civil Rights Division at 1-800-896-7743.
The federal Fair Housing Act prohibits discrimination in housing on the basis of race, color, religion, sex, familial status, national origin and disability. More information about the Civil Rights Division and the laws it enforces is available at www.usdoj.gov/crt. Individuals who believe that they have been victims of housing discrimination can call the Housing Discrimination Tip Line at 1-800-896-7743, e-mail the Justice Department at [email protected], or contact HUD at 1-800-669-9777.
The complaint is an allegation of unlawful conduct. The allegations must still be proven in federal court.
Army Sergeant Pleads Guilty to Facilitating Theft of Fuel in AfghanistanRead the Press Release
WASHINGTON – U.S. Army Sergeant Christopher Weaver pleaded guilty today to bribery charges for his role in the theft of fuel at Forward Operating Base (FOB) Fenty, near Jalalabad, Afghanistan, announced Assistant Attorney General for the Justice Department’s Criminal Division Lanny A. Breuer.
Weaver, 29, of Fort Carson, Colo., pleaded guilty before U.S. District Judge Marcia S. Krieger in the District of Colorado to one count of conspiracy to commit bribery and one count of bribery.
Weaver’s plea is the second guilty plea arising from an investigation into fuel thefts at FOB Fenty. On Aug. 3, 2012, Weaver’s co-conspirator Jonathan Hightower, 30, of Houston, pleaded guilty for his role in the scheme.
According to court documents, from approximately January 2010 through June 2010, Weaver and Hightower were involved in overseeing the delivery of fuel from FOB Fenty to other military bases. As part of this process, documents generally described as “transportation movement requests” (TMRs) were created, which authorized the movement of the fuel. Weaver pleaded guilty to participating in a conspiracy in which fraudulent TMRs, which purported to authorize the transport of fuel from FOB Fenty to other military bases, were created even though no legitimate fuel transportation was required. After the trucks were filled with fuel, these fraudulent documents were used by the drivers of the fuel trucks at FOB Fenty’s departure checkpoint in order to justify the trucks’ departures from FOB Fenty. In truth, according to court documents, the fuel was simply stolen.
Weaver pleaded guilty to receiving payments from a representative of a military contractor that was responsible for transporting fuel in Afghanistan in exchange for facilitating the theft of approximately 100 fuel trucks. According to Weaver’s signed plea agreement, the loss to the United States as a result of the scheme was in excess of $1.5 million. According to court documents, Weaver sent cash back from Afghanistan to the United States, in part, by mailing the money inside a stuffed bear.
According to court documents, Hightower worked in Afghanistan as an employee of FLUOR Inc., a U.S. government contractor, from January 2010 to June 2010, where he served as a petroleum supply specialist and was responsible for receiving and disbursing fuel – primarily jet fuel known as JP-8 – for use at FOB Fenty or for transport to other military bases. According to court documents, Hightower, Weaver and others would receive cash from a representative of a military contractor that was responsible for transporting fuel in Afghanistan, and the money would be apportioned among the conspirators.
Hightower pleaded guilty before U.S. District Judge William J. Martinez in the District of Colorado to two counts of conspiracy to receive bribes – one count involving his conspiracy with Weaver, and another count involving his conspiracy with another alleged co-conspirator at FOB Fenty. Hightower admitted facilitating the theft of over 100 trucks of fuel and a loss to the United States in excess of $1.5 million.
The cases are being prosecuted by Assistant U.S. Attorney Mark W. Pletcher of the U.S. Attorney’s Office for the Southern District of California, formerly of the Criminal Division’s Fraud Section, and Special Trial Attorney Mark H. Dubester of the Fraud Section. The cases were investigated by the Special Inspector General for Afghanistan Reconstruction; the Department of the Army, Criminal Investigations Division; the Defense Criminal Investigative Service; the FBI; and the Department of the Air Force, Office of Special Investigations. Valuable assistance was also provided by the Justice Department’s Office of International Affairs.
AVX Corp. to Pay $366 Million in Settlement, Accelerating Cleanup of New Bedford Harbor Contamination in MassachusettsRead the Press Release
The Department of Justice, on behalf of the U.S. Environmental Protection Agency (EPA), along with the Massachusetts Attorney General’s Office, on behalf of the Massachusetts Department of Environmental Protection, have reached a settlement with AVX Corp. for $366.25 million plus interest regarding the New Bedford Harbor Superfund Site, in New Bedford, Mass.
The settlement paves the way for expedited implementation of the cleanup of the New Bedford Harbor Site at full capacity, providing more rapid protection of public health and the environment in addressing polychlorinated biphenyl (PCB) contaminated sediment in the harbor. PCBs are mixtures of up to 209 individual synthetic chlorinated compounds that are chemically stable, attach onto sediment particles readily and are resistant to biodegradation. PCBs are characterized as a probable carcinogen in humans.
The settlement follows an April 18, 2012, enforcement order issued by EPA to AVX to implement the ongoing cleanup work at the Harbor Site.
The “cash-out” settlement will be paid to the United States and the commonwealth jointly, and retained by EPA for use at the Harbor Site. The settlement provides the United States and the commonwealth with funding from AVX Corp. to continue to take action to remediate contamination. This includes dredging PCB-contaminated sediment and disposing the dredged sediment at an appropriately licensed off-site facility, in a confined aquatic disposal cell in the Lower Harbor, and in confined disposal facilities to be built along the shoreline. AVX’s payment resolves its remaining liabilities to pay for the costs of cleanup at the site. If approved by the court, this will be the largest single-site cash settlement in the history of the Superfund program.
“This agreement is the product of our commitment to pursue the government’s legal rights to defray costs borne by the Superfund and U.S. taxpayers in the cleanup of the New Bedford Harbor and to hold polluters ultimately accountable,” said Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division of the Department of Justice. “The recovery of these settlement funds will result in a more rapid reduction of human health and environmental risks and faster restoration of the harbor for the use and benefit of the public.”
“With this settlement, we are making good on our pledge to the citizens of New Bedford to help clean their harbor. Cleanup work will proceed much faster with dedicated funding, and we will more rapidly be able to ensure that both human health and ecological health are being protected from exposure to PCBs in New Bedford Harbor,” said Curt Spalding, the Regional Administrator of EPA’s New England Office. “Further, the settlement is consistent with EPA’s longstanding ‘polluter pays’ principle.”
“This settlement is a victory for the people of the Commonwealth,” said Governor Deval Patrick. “These funds will allow us to expedite the ongoing cleanup efforts at the Harbor Site in order to protect the environment and the public health of our residents.”
“This settlement brings hundreds of millions of dollars to the City of New Bedford to clean up contamination that subjected people to unacceptable health risks and limited economic development,” said Massachusetts Attorney General Martha Coakley. “The AVX Corporation is responsible for the contamination and will pay for the cleanup, not Massachusetts taxpayers. The settlement also significantly accelerates the schedule so the region can feel the economic benefits sooner rather than later.”
“Thanks to this record settlement, those who live and work along the harbor will see a significant reduction in risk to humans and the environment, and people will not have to wait decades to begin to enjoy the harbor’s natural resources,” said Commissioner Kenneth Kimmell of the Massachusetts Department of Environmental Protection. “As the natural resources return to vitality, so will tourism, recreation and redevelopment for harbor-side communities.”
The settlement with AVX will provide the bulk of the estimated funding needed to allow EPA to complete the cleanup remedy for the New Bedford Harbor Superfund Site in approximately five to seven years, in contrast to the estimated 40 or more years it would take to complete the remedy under current funding of $15 million per year from the Superfund and payment of $1.5 million per year by the commonwealth.
From the 1940s to the 1970s, AVX’s corporate predecessor, Aerovox Corp., owned and operated what was known as the Aerovox facility, an electrical capacitor manufacturing facility located on the western shore of New Bedford Harbor. The United States and the commonwealth have determined that Aerovox discharged hazardous substances, including PCBs, into the harbor, and that Aerovox’s facility was the primary source of PCBs released into the harbor.
In 1983, the New Bedford Site was listed on the EPA’s Superfund National Priorities list, and the United States and the commonwealth of Massachusetts filed suit against AVX and other companies for injury to natural resources at the site from releases of PCBs. In 1984, the civil action was amended to include claims on behalf of EPA for recovery of response costs. AVX previously paid $66 million, plus interest, for past and future response costs and natural resource damages at the Harbor Site as a result of a 1992 settlement with the U.S. and the commonwealth. The governments reserved certain rights in that settlement through reopener provisions, which were exercised to bring about this current settlement. In addition, in 2010 AVX entered into a settlement with the U.S. to demolish the Aerovox facility, which was accomplished in 2011, and AVX entered into a separate settlement with the commonwealth to address the remaining contamination at the Aerovox facility.
Under the supplemental consent decree lodged today in federal district court in Boston supplementing and modifying the 1992 consent decree, AVX agrees to pay $366.25 million plus interest to settle its remaining liabilities for cleanup at the harbor site.
The supplemental consent decree will be published in the Federal Register and is subject to a 30-day public comment period and approval by the federal court. A copy of the consent decree will be available on the Justice Department website at www.usdoj.gov/enrd/Consent_Decrees.html .
More information: EPA’s New Bedford Harbor website www.epa.gov/nbh .
9 October 2012
Financial Fraud Enforcement Task Force Members Reveal Results of Distressed Homeowner InitiativeRead the Press Release
PLEASE NOTE: The press release below inadvertently reported inaccurate figures. An extensive review of the reported cases concluded that, contrary to the figures contained in the initial announcement, the initiative resulted in 107 criminal defendants charged in U.S. District Courts across the country. These cases involved more than 17,185 homeowner victims and total losses by those victims estimated by law enforcement at more than $95 million. In federal civil actions involving distressed homeowner victims, the Justice Department’s U.S. Trustee Program, the Federal Trade Commission and the Consumer Financial Protection Bureau (CFPB), protectors of the nation’s bankruptcy laws and federal consumer laws, filed cases against 128 defendants in federal cases across the country, with at least 19,198 victims identified and losses estimated at more than $54 million.
The discrepancy occurred due to the fact that the original figures included in the Distressed Homeowner Initiative materials included not only criminal defendants who had been charged in Fiscal Year 2012, but also a number of defendants who were the subject of other prosecutive actions – such as a conviction or sentencing – in Fiscal Year 2012. In addition, the announcement included a number of defendants who were charged in mortgage fraud cases in which the victim(s) did not fit the narrow definition of “distressed homeowner” that the initiative targeted.
Attorney General Eric Holder, Housing and Urban Development (HUD) Secretary Shaun Donovan, FBI Associate Deputy Director Kevin L. Perkins and Federal Trade Commission (FTC) Chairman Jon Leibowitz today announced the results of the Distressed Homeowner Initiative, the first-ever nationwide effort to target fraud schemes that prey upon suffering homeowners. The yearlong initiative, launched by the FBI, a co-chair of the Financial Fraud Enforcement Task Force’s Mortgage Fraud Working Group, resulted in 107 criminal defendants charged in U.S. District Courts across the country. These cases involved more than 17,185 homeowner victims and total losses by those victims estimated by law enforcement at more than$95 million.
“These comprehensive efforts represent an historic, government-wide commitment to eradicating mortgage fraud and related offenses,” said Attorney General Holder. “The success of the Distressed Homeowner Initiative, and the developments we announce today, underscore our determination to pursue these and other financial fraud criminals around the country.”
From Oct. 1, 2011, to Sept. 30, 2012 (FY 2012), the Distressed Homeowner Initiative focused on fraud targeting homeowners, such as foreclosure rescue schemes that take advantage of homeowners who have fallen behind on their mortgage payments. Typically, the con-artist in such a scheme promises the homeowner that he can prevent foreclosure for a substantial fee by, for example, having so-called investors purchase the mortgage, or transferring title in the home to persons in league with the scammer. In the end, the homeowner can lose everything. Other targets of the Distressed Homeowner Initiative include perpetrators of loan modification schemes who obtained advance fees from homeowners after falsely promises that they would negotiate more favorable mortgage terms on behalf of the homeowners.
“With home price increases helping homeowners get back above water and billions of dollars in new resources for families still at risk through the recent mortgage servicing settlement, borrowers are finally beginning to see the light at the end of the tunnel. We know, however, that too many families are still facing threats to sharing in that recovery,” said HUD Secretary Donovan. “The Financial Fraud Enforcement Task Force has made important progress through its Mortgage Fraud Working Group to crack down on some of the same types of scam artists that got us into this crisis in the first place—pushing predatory or fraudulent loans on families who simply wanted to own a home, and now pushing false hope for modification of those loans— often preying upon the trust families have in HUD and the Federal Housing Administration. With actions like those announced today, we send a very clear message: if you don’t operate ethically, transparently, and within the boundaries of the law, we will not hesitate to act.”
As a part of the Justice Department’s efforts to improve the lives of struggling homeowners, the Financial Fraud Enforcement Task Force’s Victims’ Rights Committee, in partnership with the Certified Financial Planning Board and the Foundation for Financial Planning, will begin offering unprecedented pro-bono financial planning assistance to the victims of a foreclosure rescue scheme, indicted by the U.S. Attorney’s Office for the Central District of California. All 4,000 victims of the scheme, many of whom lost their homes as a result of the fraud, have been invited to attend a free financial planning workshop in Riverside, California. Those who attend the workshop will receive free financial information and education to assist them in recovering from the devastating effects the crime had on their lives and to help them plan for the future. The financial planners at the workshop will be able to answer critical questions relating to tax planning, debt management, foreclosure assistance, job loss, retirement planning, investment advice, insurance, employee benefits and more.
“We recognize the negative impact that mortgage fraud and foreclosures have on our economy and on our communities. We cannot merely investigate after the fact. We must use intelligence and sophisticated techniques to identify and stop those who seek to defraud American homeowners. We will continue to work with our partners across the country to ensure the integrity of the housing market, and to keep our communities safe,” said FBI Associate Deputy Director Perkins.
In federal civil actions involving distressed homeowner victims, the Justice Department’s U.S. Trustee Program, the Federal Trade Commission and the Consumer Financial Protection Bureau (CFPB), protectors of the nation’s bankruptcy laws and federal consumer laws, filed cases against 128 defendants in federal cases across the country, with at least19,198 victims identified and losses estimated at more than $54 million. False or abusive filings in U.S. Bankruptcy Court are commonly used to execute foreclosure rescue scams. State Attorneys General also filed criminal cases against 51defendants, with losses at more than $2 million, and also filed at least 104 civil enforcement actions against 125 defendants with losses to homeowners at approximately $5 million. Last, the Treasury Department’s Office of Financial Stability’s Antifraud Unit and the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), in order to protect homeowners from fraudulent or confusing websites that misuse the Treasury seal and key TARP housing program names, such as the Home Affordable Modification Program, shut down or forced into compliance more than 900 mortgage rescue websites or web advertisers.
“With many homeowners still struggling to hold onto their homes, the FTC takes a hard line against con artists who are seeking their next victim,” said FTC Chairman Leibowitz.
In order to protect struggling homeowners and increase the number of criminal enforcement actions made as part of this initiative, the members of the Mortgage Fraud Working Group were proactive. The FBI generated new investigations by gathering victim complaint data from FTC databases and other sources, analyzed the data and distributed information of lead value to field offices from coast-to-coast. The FBI, together with HUD Office of Inspector General, also utilized sophisticated undercover operations to facilitate the development of federal distressed homeowner criminal cases. Further, the FBI led a surge consisting of several law enforcement agencies in southern California, where many foreclosure rescue scam operators are located, to develop investigations that could be prosecuted in various federal districts. Many of the investigations initiated as part of the Distressed Homeowner Initiative are ongoing and will result in additional enforcement actions in the near future.
The initiative included federal criminal prosecutions brought by various U.S. Attorneys’ offices and the Department of Justice’s Criminal and Civil Divisions, civil enforcement cases filed by the Department of Justice’s U.S. Trustee Program, FTC and CFPB and criminal and civil cases brought by Attorneys General in over 11 states. Participating federal agencies included the FBI, the Office of Inspector General of the Department of Housing and Urban Development, the Federal Housing Finance Agency’s Office of Inspector General (FHFA-OIG), SIGTARP, Internal Revenue Service-Criminal Investigation, U.S. Postal Inspection Service and the U.S. Secret Service. In addition, the Financial Crimes Enforcement Network, a task force partner, announced today that during the Distressed Homeowner Initiative it collected 4,395 foreclosure rescue Suspicious Activity Reports, a critical tool for law enforcement agencies when conducting investigations. For more on this announcement, please visit: www.FinCEN.Gov .
To learn more about scams targeting homeowners, how protect yourself from scams or how to report fraud if you believe you have been a victim, please visit: www.stopfraud.gov .
For information about the Distressed Homeowner Initiative, including stories about common scams, fraudsters’ sample marketing materials, plus radio and television public service announcements, please visit: www.stopfraud.gov .
The Mortgage Fraud Working Group of President Obama’s interagency Financial Fraud Enforcement Task Force was established to lead an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force, chaired by Attorney General Eric Holder, includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
For more information about the Financial Fraud Enforcement Task Force, please visit: www.stopfraud.gov .
Related Materials:
Attorney General Eric Holder Speaks at the Distressed Homeowner Initiative Press Conference
StopFraud.gov Mortgage Fraud Resources
PSA featuring Tim DeKay of TV's White Collar
FBI Resources for Distressed Homeowners
5 October 2012
US Customs and Border Protection Officer and Two Associates Charged with Undertaking Multi-Year Bribery and Alien Smuggling Operation Along the US/Mexico BorderRead the Press Release
WASHINGTON – A U.S. Customs and Border Protection (CBP) Officer, his girlfriend and an associate have been charged in Brownsville, Texas, for engaging in a multi-year bribery and alien smuggling operation along the U.S./Mexico border, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.
The indictment, which was unsealed today in U.S. District Court in the Southern District of Texas, charges U.S. Customs and Border Protection Officer Juan Carlos Guerrero, 39, of Mission, Texas; Guerrero’s girlfriend, Claudia Flores, 34, of Mission; and Maribel Rivera, 43, of Mission, each with one count of conspiracy to commit bribery, one count of conspiracy to smuggle aliens for financial gain and various substantive counts of bribery and alien smuggling.
In a related case that was unsealed today, Guerrero’s nephew Jose P. Cantu pleaded guilty in U.S. District Court in the Southern District of Texas on July 24, 2012, to conspiracy to commit bribery and alien smuggling, and a separate charge of conspiracy to import marijuana and cocaine.
According to the indictment, between approximately October 2009 and approximately January 2011, Guerrero worked the midnight shift as a CBP Office of Field Operations officer at the Pharr and Anzalduas Ports of Entry near McAllen, Texas. As part of his official duties, Guerrero was responsible for, among other things, handling vehicle inspections of northbound traffic traveling from Mexico to the United States.According to the indictment, between approximately October 2009 and approximately January 2011, Guerrero, his girlfriend Flores and their associates – including Rivera and Guerrero’s nephew Cantu – perpetrated a bribery and alien smuggling operation along the U.S./Mexico border. As part of the unlawful operation, Guerrero, Flores, Cantu and Rivera allegedly agreed to smuggle undocumented aliens (UDAs) from Mexico to the United States, in exchange for bribe payments to Guerrero and Flores. Guerrero and Flores allegedly charged between approximately $1,000 and $3,000 per UDA. According to the indictment, Flores, Cantu, Rivera and others recruited and solicited UDAs in Mexico who were willing to pay to be unlawfully smuggled from Mexico into the United States. To accomplish the unlawful smuggling events, Guerrero and Flores allegedly arranged for drivers, including Cantu, to pick up UDAs in Mexico. Guerrero allegedly facilitated the unlawful operation by permitting the UDAs to pass illegally through his inspection lane, in exchange for the bribe money. In order to conceal their unlawful activities, Guerrero and Flores allegedly arranged for the majority of the illegal crossings to take place at approximately midnight – shortly before the closing of the Pharr Port of Entry.
An indictment is merely a charge and is not evidence of guilt. The defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law. A trial date for Guerrero, Rivera and Flores has not been set. Cantu’s sentencing date has not been set.
The case is being prosecuted by Trial Attorneys Edward J. Loya Jr. and J.P. Cooney of the Criminal Division’s Public Integrity Section. The case is being investigated by agents from the FBI’s South Texas Border Corruption Task Force, which includes agents from the FBI, DHS ICE Office of Professional Responsibility, CBP Office of Internal Affairs, DHS Office of Inspector General, DHS CBP U.S. Border Patrol and the Texas Rangers Division.
Member of Philadelphia La Cosa Nostra Pleads Guilty to Racketeering ConspiracyRead the Press Release
WASHINGTON – Louis Fazzini, 45, of Caldwell, N.J., pleaded guilty today to participating in a racketeering conspiracy involving illegal gambling and theft from an employee benefit plan, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Zane David Memeger of the Eastern District of Pennsylvania and George C. Venizelos, Special Agent in Charge of the FBI’s Philadelphia Division.
At the plea hearing before U.S. District Judge Eduardo C. Robreno of the Eastern District of Pennsylvania, Fazzini pleaded guilty to conspiring to conduct and participate in the affairs of the Philadelphia La Cosa Nostra (LCN) Family through a pattern of racketeering activity. He admitted that, as a made member of the North Jersey crew of the Philadelphia LCN Family, he operated a sports bookmaking business and devised a fraudulent scheme to obtain health benefits through a “no-show” job controlled by the LCN in furtherance of the racketeering conspiracy. As a no-show employee, he performed no work or productive services and still received health benefits.
Fazzini’s sentencing is scheduled for Jan. 17, 2013.
Fazzini was among 14 members and associates of the Philadelphia LCN Family charged with crimes involving racketeering conspiracy, extortion, loan sharking, illegal gambling, witness tampering and theft from an employee benefit plan in a third superseding indictment returned by a federal grand jury in Philadelphia on July 25, 2012. The other defendants charged in the 52-count third superseding indictment included Philadelphia LCN Family Boss Joseph Ligambi, Philadelphia LCN Family Underboss Joseph Massimino, George Borgesi, Martin Angelina, Anthony Staino, Gaeton Lucibello, Damion Canalichio, Louis Barretta, Gary Battaglini, Robert Verrecchia, Eric Esposito, Robert Ranieri and Joseph Licata.
Lucibello pleaded guilty to racketeering conspiracy charges on Aug. 2, 2012, and was sentenced to 51 months in prison. Angelina pleaded guilty to racketeering conspiracy charges on Aug. 8, 2012, and was sentenced to 57 months in prison. Barretta also pleaded guilty to racketeering conspiracy charges on Sep. 5, 2012, and was sentenced to 33 months in prison.
The trial for Ligambi, Massimino, Borgesi, Staino, Canalichio, Battaglini and Licata is scheduled for Oct. 9, 2012. The trial for Verrecchia, Esposito and Ranieri has not yet been scheduled. Ligambi, Massimino, Borgesi, Canalichio and Fazzini are detained while awaiting trial. Staino, Battaglini, Verrecchia, Esposito and Ranieri are free on bond while awaiting trial.
The case is being prosecuted by Trial Attorney John S. Han of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorneys Frank A. Labor III and Suzanne B. Ercole of the Eastern District of Pennsylvania. Valuable prosecutorial assistance was provided by the Pennsylvania Office of the Attorney General.
The case is being investigated by the FBI, the Internal Revenue Service-Criminal Investigation, the Pennsylvania State Police, the New Jersey State Police, the Philadelphia Police Department, the U.S. Department of Labor’s Office of Inspector General Office of Labor Racketeering and Fraud Investigations and the U.S. Department of Labor’s Employee Benefits Security Administration. Additional assistance was provided by the New Jersey Department of Corrections.
Los Angeles Medical Equipment Supplier Sentenced to 30 Months in Prison for Medicare Fraud SchemeRead the Press Release
WASHINGTON – A Los Angeles medical equipment supplier, who submitted almost $1 million in false claims to Medicare for expensive, high-end power wheelchairs, was sentenced today to serve 30 months in prison, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney André Birotte Jr. of the Central District of California; Glenn R. Ferry, Special Agent-in-Charge for the Los Angeles Region of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG); and Timothy Delaney, Acting Assistant Director in Charge of the FBI’s Los Angeles Field Office.
Adejare Ademefun, 57, was sentenced by U.S. District Judge John F. Walter in the Central District of California. In addition to the prison term, Ademefun was sentenced to three years of supervised release and ordered to pay $499,548 in restitution to Medicare.
In February 2010, Ademefun pleaded guilty to health care fraud. As part of his plea, Ademefun admitted that from January 2006 to his arrest in October 2009, he owned and operated Jamef Medical Supply, a fraudulent durable medical equipment (DME) supply company, which he used to submit almost $1 million in false claims to Medicare. Ademefun admitted he paid illicit kickbacks to co-conspirators for medical prescriptions and other documents he needed to defraud Medicare. Ademefun focused his fraudulent billings on power wheelchairs, which were among the most expensive DME that a Medicare provider could bill to Medicare. In fact, Ademefun admitted that approximately 95 percent of all the claims he submitted to Medicare were for power wheelchairs. Ademefun admitted he supplied these power wheelchairs to Medicare beneficiaries who were illegally solicited by patient recruiters or “marketers” for medical equipment they did not want or need.
Ademefun admitted he was deliberately indifferent to the fact that the power wheelchair claims he submitted to Medicare were false even though Ademefun knew there was a high probability that the doctors whose names appeared on the prescriptions he purchased from his co-conspirators did not prescribe the power wheelchairs. Ademefun also knew that only six doctors were supposedly responsible for referring approximately 50 percent of his business, and that approximately 60 percent of his customers lived more than 100 miles from Jamef. Ademefun admitted he submitted approximately $941,028 in false claims to Medicare during the course of the scheme.
On March 24, 2010, Ademefun’s co-conspirator Leonard Nwafor was sentenced to 108 months in prison for his role in the scheme.
The case is being prosecuted by Trial Attorney Jonathan T. Baum of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Kerry O’Neill of the Central District of California. The case is being investigated by the California Department of Justice 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 Central District of California.
Since its inception in March 2007, strike force operations in nine locations have charged more than 1,480 defendants who collectively have billed the Medicare program for more than $4.8 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to www.stopmedicarefraud.gov.
Justice Department Settles Lawsuit Against City of Selma, Texas, for Retaliating Against FirefighterRead the Press Release
The Justice Department announced today that it has entered into a settlement to resolve allegations that the city of Selma, Texas, violated Title VII of the Civil Rights Act of 1964 by engaging in retaliation against a firefighter for filing a complaint against a superior for using ethnic slurs in the workplace.
The department’s complaint alleges that the city discriminated against Adam Sadler, who is employed by the city, by demoting him from lieutenant to firefighter because he filed a complaint regarding the fire chief’s use of ethnic slurs in the workplace. Title VII prohibits an employer from retaliating against an individual for opposing any employment practice that would violate Title VII, for filing a complaint of discrimination, or for assisting in the investigation of such a complaint.
Under the terms of the consent decree, the city will modify its existing Equal Employment Opportunity (EEO) policies and procedures to include, among other things, a specific process by which complaints of discrimination and retaliation will be investigated. The city also will provide live training to all city supervisory employees and all city fire department employees concerning the new EEO policies, including Title VII’s prohibition against discrimination and retaliation. Additionally, the city will pay Sadler, who has since secured employment with another fire department, $28,500 in back pay.
“Title VII protects employees who oppose workplace discrimination from retaliation. A person cannot be demoted from his position simply because he reports the use of discriminatory language in the workplace by a supervisor,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Department of Justice is committed to enforcing Title VII’s anti-retaliation provisions, which are critical to ensure effective protection from discrimination.”
“We are pleased that the city of Selma has agreed to additional EEO training for its staff,” said Robert L. Pitman, U.S. Attorney for the Western District of Texas. “All public servants must be held to a high standard when it comes to treating one another – as well as the public – with dignity, respect, and equality.”
The San Antonio Field Office of the Equal Employment Opportunity Commission (EEOC) investigated and attempted to resolve Mr. Sadler’s charge of discrimination before referring it to the Department of Justice for litigation. More information about the EEOC is available on its website at www.eeoc.gov.
The enforcement of the Title VII is a top priority of the Justice Department’s Civil Rights Division. Additional information about the Civil Rights Division is available on its website at www.justice.gov/crt.
Arizona State Representative Pleads Guilty,<br /> Admits Taking Bribe to Influence Official DutiesRead the Press Release
WASHINGTON – Arizona State Representative Paul Ben Arredondo pleaded guilty today in Phoenix federal court, admitting that he solicited and took a bribe in exchange for promises of official action both as a city councilmember and a state representative. Arredondo also pleaded guilty to mail fraud, admitting that he defrauded donors to the Ben Arredondo scholarship fund. The guilty plea was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and Special Agent in Charge James L. Turgal of the FBI’s Phoenix Field Office.
Arredondo pleaded guilty to depriving the citizens of the city of Tempe, Ariz., and the state of Arizona of his honest services as an elected official, and to committing mail fraud. He entered his guilty plea before U.S. Magistrate Judge Lawrence Anderson.
Arredondo, 65, of Tempe, was a Tempe city councilmember for approximately 16 years, until July 2010. In November 2010, Arredondo was elected to the House of Representatives of the Arizona State Legislature.
During his plea, Arredondo admitted that from February 2009 to November 2010, he solicited and accepted things of value, collectively a bribe, from representatives of “Company A,” a fictitious company operated by FBI undercover agents that was purportedly seeking to develop real estate projects in Tempe. Arredondo took the bribe with the intent to be influenced in the performance of his official duties, first as a councilmember and later as an elected member of the Arizona House of Representatives. Arredondo admitted that the things he took included tickets to college and professional sporting events, some of which he caused to be mailed to his home, and tables at charity events with his choice of guests.
In exchange for the bribe, Arredondo agreed to take a number of official actions, including revealing confidential information to Company A – such as the price Tempe would be willing to accept for property and the best way to present a purchase proposal. He also agreed to use his position as a councilmember to influence the decisions of other Tempe officials in ways that were favorable to Company A; to contact various Tempe officials to facilitate and promote the company’s efforts to win support for its real estate project; and, following his election to the Arizona House of Representatives, to assure representatives of Company A that he would continue to support Company A’s project. Arredondo did not disclose that he had received anything of value from representatives of the company during any of his interactions with Tempe officials about Company A.
Arredondo also admitted during his plea that he fraudulently used the Arredondo Scholarship Fund – which he established in 2001 and operated through at least 2011 – to benefit his own relatives without informing donors. In support of the fund, Arredondo solicited and received contributions – in part by telling prospective donors that the Fund would pay for college fees and books for “average” students – and assured donors that fund payments would not go to those “whose parents have saved a college fund” or otherwise qualified for scholarships. Arredondo never told prospective donors that a portion of their donations would be used to make scholarship payments for the benefit of his own family members. Through 2011, Arredondo caused the scholarship fund to pay approximately $49,750 to three different educational institutions in Arizona on behalf of seven of his relatives. In furtherance of his scheme to defraud donors, he caused a letter sent to ASU on behalf of the fund which directed how payments should be allocated, stating: “The students are not the children nor any other direct relatives” of the fund’s administrators.
Arredondo pleaded guilty to one count each of honest services mail fraud and mail fraud. Each charge carries a maximum potential penalty of 20 years in prison and a $250,000 fine, or twice the amount gained or lost in the scheme. Sentencing has been scheduled for Jan. 22, 2013.
The case is being prosecuted by Deputy Chief M. Kendall Day and Trial Attorney Monique T. Abrishami of the Criminal Division’s Public Integrity Section, and Assistant U.S. Attorney Frederick A. Battista of the District of Arizona. The case is being investigated by agents from the FBI Phoenix Field Office.
4 October 2012
U.S. District Court Orders Community Notice to Corpus Christi, Texas, Residents Who May Be Victims of Environmental Crimes by Citgo RefineryRead the Press Release
WASHINGTON – Persons living around the CITGO refinery in Corpus Christi, Texas, who suffered immediate negative health effects from emissions from two large tanks at the facility that were operated between January 1994 and May 2003 in violation of the federal Clean Air Act, may be crime victims in United States v. CITGO Petroleum Corporation et al.
U.S. District Judge John D. Rainey has ordered the government to make this announcement so that any member of the community at large who believes they may be a crime victim and wishes to participate in the proceeding is made aware of their potential rights. To be able to participate, members of the community must submit by Nov. 4, 2012, (40 days from the order) a victim impact statement consistent with the Sept. 14, 2012, order, which is attached to this release. Under the Crime Victim’s Rights Act, persons who are directly and proximately harmed by the commission of a crime are crime victims and have certain, enumerated rights under the law. In this instance, community members may be considered crime victims based on the immediate negative health effects they suffered from breathing noxious fumes from Tanks 116 and 117 during the 1994 – 2003 time frame.
In June 2007, a jury convicted CITGO Petroleum Corporation and CITGO Refining and Chemicals Company L.P. for illegally operating two massive tanks at their Corpus Christi East Plant Refinery between January 1994 and March 2002. The tanks were the source of emissions including benzene, a known carcinogen, that may have affected persons in the surrounding communities of Hillcrest and Oak Park. Witnesses at the trial testified that emissions from the tanks could be detected in Oak Park and Hillcrest in the form of strong gaseous type odors.
On Sept. 25 and 26, 2007, the U.S. Department of Justice and the U.S. Environmental Protection Agency held community meetings at the Oveale Williams Senior Center in Corpus Christi during which more than 300 persons submitted victim impact statements. The current order is to identify any additional persons who may qualify as crime victims.
For more information, including how to submit a victim impact statement, members of the community who have not filed a victim impact statement may call U.S. Environmental Protection Agency (EPA) Special Agent De’Montra Rainey at (713) 209-4892.
Medicare Fraud Strike Force Charges 91 Individuals for Approximately $430 Million in False BillingRead the Press Release
Medicare Fraud Strike Force operations in seven cities have led to charges against 91 individuals – including doctors, nurses and other licensed medical professionals – for their alleged participation in Medicare fraud schemes involving approximately $429.2 million in false billing, Attorney General Eric Holder and Health and Human Services (HHS) Secretary Kathleen Sebelius announced today.
Attorney General Holder and Secretary Sebelius were joined in the announcement of the nationwide takedown by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, FBI Associate Deputy Director Kevin Perkins, Inspector General Daniel R. Levinson of the HHS Office of Inspector General (HHS-OIG) and Dr. Peter Budetti, Deputy Administrator for Program Integrity of the Centers for Medicare and Medicaid Services (CMS).
“Today’s enforcement actions reveal an alarming and unacceptable trend of individuals attempting to exploit federal health care programs to steal billions in taxpayer dollars for personal gain,” said Attorney General Holder. “Such activities not only siphon precious taxpayer resources, drive up health care costs, and jeopardize the strength of the Medicare program – they also disproportionately victimize the most vulnerable members of society, including elderly, disabled and impoverished Americans.”
“Today’s arrests put criminals on notice that we are cracking down hard on people who want to steal from Medicare,” said HHS Secretary Sebelius. “The health care law gives us new tools to better fight fraud and make Medicare stronger. In addition to the arrests made today, HHS used new authority from the health care law to stop future payments to many of the health care providers suspected of fraud, saving Medicare resources and taxpayer dollars from being lost to fraud in the first place.”
Dozens of charged individuals were arrested or surrendered in the last 24 hours as indictments were unsealed across the country. Together, those indictments charge more than $230 million in home health care fraud; more than $100 million in mental health care fraud and more than $49 million in ambulance transportation fraud; and millions more in other frauds.
HHS also suspended or took other administrative action against 30 health care providers following a data-driven analysis and based upon credible allegations of fraud. Under the Affordable Care Act, HHS is able to suspend payments until the resolution of an investigation.
The joint Department of Justice and HHS Medicare Fraud Strike Force is a multi-agency team of federal, state and local investigators and prosecutors designed to combat Medicare fraud through the use of Medicare data analysis techniques. More than 500 law enforcement agents from the FBI, HHS-OIG, multiple Medicaid Fraud Control Units, and other state and local law enforcement agencies participated in the takedown.
The defendants charged are accused of various health care fraud-related crimes, including conspiracy to commit health care fraud, health care fraud, violations of the anti-kickback statutes and money laundering. The charges are based on a variety of alleged fraud schemes involving various medical treatments and services such as home health care, mental health services, psychotherapy, physical and occupational therapy, durable medical equipment (DME) and ambulance services.
According to court documents, the defendants allegedly participated in schemes to submit claims to Medicare for treatments that were medically unnecessary and oftentimes never provided. In many cases, court documents allege that patient recruiters, Medicare beneficiaries and other co-conspirators were paid cash kickbacks in return for supplying beneficiary information to providers, so that the providers could submit fraudulent billing to Medicare for services that were medically unnecessary or never provided. Collectively, the doctors, nurses, licensed medical professionals, health care company owners and others charged are accused of conspiring to submit a total of approximately $429.2 million in fraudulent billing.
“Today’s coordinated actions represent one of the largest Medicare fraud takedowns in Department of Justice history, as measured by the amount of alleged fraudulent billings,” said Assistant Attorney General Breuer. “We have made it one of the Department’s missions to hold accountable those who abuse the Medicare program for personal profit. And there are Medicare fraudsters in prisons across the country – some who will be there for decades – who can attest to our determination, and our effectiveness.”
“Health care fraud leads to higher health care costs and makes quality care more difficult to obtain,” said FBI Associate Deputy Director Perkins. “Working together to stop fraud, as we did today, will ensure that Americans’ hard-earned dollars are used to care for the sick – not to line the pockets of criminals.”
“Today’s coordinated operation demonstrates that law enforcement is flexible enough to address health care fraud in its many evolving forms,” said HHS Inspector General Levinson. “When home health agencies, durable medical equipment companies, pharmacies, or other health care providers are suspected of breaking the law, they can expect to be caught and held accountable.”
“This is the result of coordinated anti-fraud efforts – including Medicare flagging suspicious activity, efforts between agencies to investigate this criminal activity, and today’s actions by law enforcement and HHS,” said CMS Deputy Administrator for Program Integrity Budetti. “As we stop payments to these providers suspected of fraud, we continue our efforts to move from a pay-and-chase model to one where we stop fraudsters before they can successfully bill Medicare and Medicaid.”
In Miami, a total of 33 defendants are charged for their alleged participation in various fraud schemes involving a total of $204.5 million in false billings for home health care, mental health services, occupational and physical therapy, and DME. In one case, three defendants are charged for participating in a fraud scheme at LTC Professional Consultants and Professional Home Care Solutions Inc. which led to approximately $74 million in fraudulent billing for home health care. In another case, five defendants are charged for participating in a fraud scheme at Hollywood Pavilion which led to $67 million in fraudulent billing for mental health services.
Sixteen individuals, including three doctors and one licensed physical therapist, are charged in Los Angeles with participating in various fraud schemes involving a total of $53.8 million in false billings. In one case, four defendants are charged for allegedly participating in a fraud scheme at Alpha Ambulance Inc., which led to approximately $49.2 million in fraudulent billing for ambulance transportation. The case represents the largest ambulance fraud scheme ever prosecuted by the Medicare Fraud Strike Force. According to court documents, the defendants provided beneficiaries ambulance rides that were medically unnecessary.
In Dallas, 14 individuals – including two doctors and two registered nurses – are charged for their alleged participation in various fraud schemes involving a total of $103.3 million in false billings. In one case, three defendants – a medical doctor and two registered nurses – are charged with participating in a fraud scheme at Raphem Medical Practice and PTM Healthcare Services which led to approximately $100 million in fraudulent billing for home health care services. According to court documents, Dr. Joseph Megwa signed approximately 33,000 prescriptions for more than 2,000 unique Medicare beneficiaries from 2006 to 2011. Many of these Medicare beneficiaries had primary care physicians who never certified home healthcare services for them. In order to handle the volume of prescriptions, Megwa allegedly signed stacks of documents without reviewing them.
Seven individuals are charged in Houston for their participation in a fraud scheme at a hospital which led to $158 million in fraudulent billing for community mental health center services. According to court documents, the defendants who served as administrators at the hospital paid kickbacks – in the form of cigarettes, food and coupons redeemable for items available at the hospital’s “country stores” – to Medicare beneficiaries in exchange for those beneficiaries’ attendance at the hospital’s partial hospitalization programs (PHP). Allegedly, beneficiaries watched television, played games and engaged in other non-PHP activities rather than receiving the services for which the hospital billed Medicare. Previously, on Feb. 22, 2012, the assistant administrator of the hospital, Mohammad Kahn, pleaded guilty to conspiracy to commit health care fraud and paying kickbacks related to $116 million worth of fraudulent claims submitted to Medicare. After his guilty plea, an additional $42 million in fraudulent claims were discovered that are included in today’s totals.
In Brooklyn, 15 individuals, including one doctor and four chiropractors, are charged for their alleged participation in various fraud schemes involving a total of $23.2 million in false billings. In one case, nine defendants, including a medical doctor, are charged with participating in a fraud scheme at Cropsey Medical Care PLLC which led to approximately $13.8 million in fraudulent billing for physical therapy and related services. According to court documents, the defendants paid cash kickbacks to Medicare beneficiaries in exchange for physical therapy that was not medically necessary and on some occasions never provided to beneficiaries.
In Baton Rouge, four defendants, including a licensed practical nurse, are charged for their roles in fraud schemes involving approximately $2.4 million in false claims for medically unnecessary durable medical equipment.
In Chicago, two defendants, including a dermatologist and a psychologist, are charged for their roles in fraud schemes involving, according to court documents, millions of dollars in false claims for medically unnecessary laser treatments and psychotherapy services.
The Medicare Fraud Strike Force operations are part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT), a joint initiative announced in May 2009 between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country.
Since their inception in March 2007, strike force operations in nine locations have charged more than 1,480 defendants who collectively have falsely billed the Medicare program for more than $4.8 billion. In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
The cases announced today are being prosecuted and investigated by Medicare Fraud Strike Force teams comprising attorneys from the Fraud Section of the Justice Department’s Criminal Division and from the U.S. Attorneys’ Offices for the Southern District of Florida, the Southern District of Texas, the Northern District of Texas, the Central District of California, the Middle District of Louisiana, the Northern District of Illinois, and the Eastern District of New York, and agents from the FBI, HHS-OIG and state Medicaid Fraud Control Units, with assistance from the Justice Department’s Civil Division and the IRS.The charges and allegations contained in the indictments are merely accusations and the defendants are presumed innocent unless and until proven guilty.
To learn more about HEAT, go to: www.stopmedicarefraud.gov.
Related Materials:
Assistant Attorney General Lanny A. Breuer Speaks at the Health Care Fraud Takedown Press Conference
Attorney General Eric Holder Speaks at the Health Care Fraud Takedown Press ConferenceFederal Court in New York Enters Consent DecreeBetween United States and Fan Club Website CompanyRead the Press Release
The U.S. District Court for the Southern District of New York entered a consent decree between the United States and a company that operates fan club websites for popular recording artists such as Justin Bieber and Selena Gomez, the Justice Department announced today. The government’s complaint, filed in connection with the decree, charges the company with violating both the Federal Trade Commission (FTC) Act and the Children’s Online Privacy Protection Rule. The company has agreed to pay a $1 million penalty to settle these charges.
In a complaint filed on Oct. 2, 2012, the government alleged that Artist Arena LLC, a company based in New York City, violated the Children’s Online Privacy Protection Rule by collecting email addresses, street addresses, birth dates, phone numbers and other information from children under the age of 13 without obtaining parental consent. According to the complaint, some of the company’s fan club websites made no attempt to obtain parental consent, while others made attempts that fell far short of the rule’s requirements. The complaint alleged that in some cases, Artist Arena sent parents emails stating that the company would not collect personal information from children without prior parental consent when in fact it already had done so.
Additionally, the complaint alleges that Artist Arena also violated the FTC Act by making these false and misleading statements in emails to parents. Along with the civil penalty, the defendant agreed to injunctions barring future violations of the FTC Act and the Children’s Online Privacy Protection Rule and also agreed to delete all information previously collected from children under age 13.
The Federal Trade Commission, which oversees the Children’s Online Privacy Protection Rule, referred the case to the Justice Department. The lawsuit, United States v. Artist Arena LLC, was filed in the Southern District of New York.
“As more and more kids get online, the rules established by the Children’s Online Privacy Protection Act play an important role in helping parents to keep their kids safe,” said Stuart Delery, Acting Assistant Attorney General for the Civil Division. “Companies that collect personal information from children must follow the law, and the Justice Department will work with the FTC to ensure that they do.”
Acting Assistant Attorney General Delery thanked the Federal Trade Commission for referring this matter to the Justice Department. The Consumer Protection Branch of the Justice Department’s Civil Division and the U.S. Attorney’s Office for the Southern District of New York brought the case on behalf of the United States.
Customs and Border Protection Officer Sentenced <br /> for Sexual Assault of Women at Miami International AirportRead the Press Release
Paulo Morales, 48, of Miami, was sentenced today by U.S. District Judge Robin S. Rosenbaum to 33 months in prison along with one year supervised release, the Justice Department announced. In July, Morales , a former Customs and Border Protection (CBP) officer, pleaded guilty to three misdemeanor counts of deprivation of rights under color of law.
During the plea proceedings, Morales admitted that on various dates in January 2011, while working as an officer with CBP at the Miami International Airport, he groped the breasts of three separate women without their consent and while they were in the custody of CBP.
“This officer abandoned his commitment to legitimate law enforcement and used his power to abuse women in his custody,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Justice Department is committed to holding officers who engage in such conduct accountable.”
“ My office and the Department of Justice are fully committed to protecting the civil rights of our citizens from all types of abuses,” said Wifredo A. Ferrar, U.S. Attorney for the Southern District of Florida. “In this case, the harm to the victims and the general public cut deep because it came at the very hands of someone who was sworn to serve and protect the public, and instead breached that trust. ”
This case was investigated by Immigration and Customs Enforcement, Office of Professional Responsibility and CBP Internal Affairs and prosecuted by Assistant U.S. Attorney William White of the U.S. Attorney's Office for the Southern District of Florida and Trial Attorney Henry Leventis of the Civil Rights Division.
Canadian Citizen Pleads Guilty in Scheme to Defraud Consumers Purchasing Pharmaceuticals OnlineRead the Press Release
Andrew Strempler, a Canadian citizen, pleaded guilty today in the Southern District of Florida for his role in a scheme to defraud consumers purchasing pharmaceuticals online, the Justice Department announced. Strempler faces up to five years in prison, a forfeiture of $300,000, a fine and restitution.
Strempler pleaded guilty to conspiracy to commit mail fraud in connection with his role as owner and president of Mediplan Health Consulting Inc., a Canadian company, that also operated under the name RxNorth.com. RxNorth was an Internet, mail and telephone order pharmacy, through which Strempler and others marketed and sold prescription drugs to residents of the United States.
According to court documents, the FDA advised Strempler in a 2001 letter that his prescription drug sales would be illegal in the United States if the drugs were not FDA approved. The FDA letter explained that the FDA approves drugs based on evidence that they are safe and effective, and that the quality of drugs from foreign sources could not be assured.
Strempler and his co-conspirators unlawfully enriched themselves by selling prescription drugs to individuals in the United States, falsely representing that RxNorth was selling safe prescription drugs in compliance with regulations in Canada, the United Kingdom and the United States. The information further alleges that Strempler obtained the prescription drugs from various other source countries without properly ensuring the safety or authenticity of the drugs. In fact, the information alleges that some of the drugs sold by Strempler included counterfeit drugs.
Strempler caused prescription drugs from foreign countries to be shipped to a facility that Strempler operated in the Bahamas. Prescription orders made through RxNorth were then filled at the Bahamas facility, with labels on the vials and drug cartons stating they had been filled by RxNorth in Canada. Strempler then used indirect routes involving multiple countries to ship packages with prescription drugs from the Bahamas to individuals in the United States. The information states that shipments mailed from the Bahamas, containing packages addressed to individuals in the Southern District of Florida, included counterfeit prescription drugs.
“Although many Internet websites appear to offer good deals on pharmaceuticals, consumers can never be certain that drug products ordered online are the same products approved by the FDA as safe and effective,” said Acting Assistant Attorney General Stuart F. Delery. “Today’s guilty plea represents an important step in our continued fight against counterfeit pharmaceuticals—particularly those trafficked over the Internet.”
“Strempler and his co-conspirators sold prescription drugs to customers in the United States falsely representing that the drugs were in compliance with regulations in Canada, the United Kingdom and the United States,” said Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida. “In fact, however, Strempler sold these drugs without properly ensuring the safety or authenticity of the drugs. Indeed, some of the drugs sold by Strempler included counterfeit drugs.”
U.S. District Judge Jose E. Martinez presided over the change of plea hearing.
This case was prosecuted by Assistant U.S. Attorney Ana Maria Martinez of the U.S. Attorney’s Office for the Southern District of Florida, and Roger J. Gural of the Justice Department’s Consumer Protection Branch.
Army National Guard Soldier Pleads Guilty in Connection with <br /> Fraudulent Recruiting Referral Bonus SchemeRead the Press Release
WASHINGTON – An Army National Guard soldier pleaded guilty today in the Western District of Texas for her role in a bribery and fraud scheme that caused approximately $54,000 in losses to the Army National Guard Bureau, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.
Specialist Stephanie Heller, 37, of Wharton, Texas, pleaded guilty to a two-count criminal information charging her with one count of bribery and one count of conspiracy to commit bribery and wire fraud. The criminal information was filed on Sept. 26, 2012, in U.S. District Court for the Western District of Texas.The case against Heller 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 against nine individuals, all of whom have pleaded guilty, including Heller.
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 the Army National Guard. 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, Heller enlisted in the Army National Guard in approximately July 2008. Heller admitted that, between approximately August 2009 and April 2011, she agreed to pay two Army National Guard recruiters for the names and Social Security numbers of at least 28 potential Army National Guard soldiers. Heller further admitted that she used the personal identifying information for these potential soldiers to claim that she was responsible for referring these potential soldiers to join the Army National Guard, when in fact she had not referred them.
As a result of these fraudulent representations, Heller collected at least approximately $44,500 in fraudulent recruiting bonus payments, approximately $21,000 of which she gave to the two Army National Guard recruiters who facilitated the fraudulent scheme.
The charge of bribery carries a maximum penalty of 15 years in prison and a maximum fine of $250,000, or twice the monetary gain or loss. The charge of conspiracy carries a maximum penalty of five years in prison and a maximum fine of $250,000, or twice the pecuniary gain or loss.Heller’s sentencing has been scheduled for March 1, 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.
3 October 2012
Two Men Sentenced to Prison for Participation in Online Conspiracy to Trade Child PornographyRead the Press Release
WASHINGTON – An Oregon man and a Virginia man were sentenced to prison for their role in a conspiracy to advertise, distribute and possess child pornography, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney for the Western District of North Carolina Anne M. Tompkins.
Michael Engelking, 37, of Alexandria, Va., was sentenced today by U.S. District Judge Richard L. Voorhees in the Western District of North Carolina to serve 210 months in prison and lifetime supervised release.
David Large, 50, of Salem, Ore., was sentenced yesterday by Judge Voorhees to serve 70 months in prison and 10 years of supervised release.
Following their release, both Engelking and Large must register as sex offenders.
In November 2010, a grand jury charged six individuals, including Engelking and Large, with conspiracy to advertise, distribute and possess child pornography. Both Engelking and Large pleaded guilty to the charges in July 2011. According to filed court documents and court proceedings, Engelking and Large engaged in a conspiracy with others to share child pornography on Facebook. Court records indicate that both Engelking and Large were members of several Facebook groups dedicated to sharing child pornography and child erotica, including groups called “girls girls girls :)” and “little girls love to play to :)”. These groups contained over 10,000 images of child pornography and child erotica. According to filed documents and statements made in court, Engelking uploaded images of child pornography to the “girls girls girls :)” group. In August 2010, agents with the FBI executed a search warrant at Engelking and Larges’s residences and seized multiple computers and storage media. Hundreds of images of child pornography were located on these items. Court records show that the images on Engelking’s laptop included violent depictions of children being raped and abused.James Byrd, another co-conspirator, was sentenced in August 2012 to serve 87 months in prison. The remaining three co-conspirators are scheduled to be sentenced in December 2012.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse, launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ offices and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
The investigation was conducted by the FBI’s Violent Crimes Against Children Unit headquartered in Maryland. The case was prosecuted by Assistant U.S. Attorney Cortney S. Escaravage of the U.S. Attorney’s Office for the Western District of North Carolina and Trial Attorney LisaMarie Freitas of CEOS.
Latin Kings Member Pleads Guilty in North Carolina for Role in Racketeering EnterpriseRead the Press Release
WASHINGTON – A member of the North Carolina Almighty Latin King and Queen Nation (Latin Kings) pleaded guilty to racketeering-related charges, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U. S. Attorney for the Middle District of North Carolina Ripley Rand.
Wesley Anderson Williams, aka “King Bam,” pleaded guilty on Monday, Oct. 1, 2012, in U.S. District Court in Winston-Salem, N.C. to one count of conspiracy to participate in a racketeering enterprise.
During his plea hearing, Williams admitted to his criminal conduct and membership in the Latin Kings. Specifically, Williams admitted to committing home invasion, burglary, assault, arson and check kiting on behalf of the racketeering enterprise.
Williams faces up to 20 years in prison and a fine of up to $250,000 at sentencing, which has not yet been scheduled.
In February 2012, Williams and 13 others were charged in a superseding indictment returned by a federal grand jury in Greensboro. The superseding indictment alleges the defendants participated in a violent racketeering conspiracy involving Hobbs Act (commercial) robberies, kidnapping, robbery, arson and extortion involving several businesses and individuals in the Greensboro/Winston-Salem area.
Luis Alberto Rosa, aka “King Speechless”; Marcelo Ysrael Perez, aka “King Lyrix”; Charles Lawrence Moore, aka “King Toasty”; Richard Lee Robinson, aka “King Focus”; and Steaphan Acencio-Vasquez, aka “King Leo,” also named in the superseding indictment and identified as members and/or associates of the Latin Kings in North Carolina, have previously pleaded guilty and admitted to their criminal conduct.
The dates for sentencing of these defendants have not been determined.Carlos Coleman, aka “King Spanky”; Jorge Peter Cornell, aka “King J”; Russell Lloyd Kilfoil, aka “King Peaceful”; Randolph Leif Kilfoil, aka “King Paul”; Jason Paul Yates, aka “King Squirrel”; Samuel Isaac Velasquez, aka “King Hype”; Irvin Vasquez, aka “King Dice”; and Ernesto Wilson, aka “King Yayo,” also named in the superseding indictment and identified as alleged members and associates of the Latin Kings in North Carolina, are scheduled for trial on Oct. 15, 2012.
An indictment is merely an allegation and is not evidence of guilt. A defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
The cases are being prosecuted by Trial Attorney Leshia M. Lee-Dixon of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorney Robert A. J. Lang for the Middle District of North Carolina. The matter was investigated by the FBI Charlotte Field Office, Greensboro Resident Agency; Greensboro Police Department; and the Guilford County Sheriff’s Office.
Former New Mexico Corrections Officer Pleads Guilty to Criminal Civil Rights ChargeRead the Press Release
Demetrio Juan Gonzales, 40, a former corrections officer at the Bernalillo County Metropolitan Detention Center (MDC) in Albuquerque, N.M., pleaded guilty today to one count of violating the civil rights of an individual in his custody when he struck and choked the victim in the shower room/dress out area of MDC.
According to court documents, during the early morning hours of Dec. 21, 2011, Gonzales was assigned to the Receiving-Discharge-Transfer (RDT) Unit at MDC where individuals are brought to be booked soon after they are arrested. Gonzales’ job was to photograph and fingerprint those who are brought to RDT for booking. The victim, who had been arrested for Driving While Intoxicated, was verbally uncooperative during the booking process, but was not a physical threat to anyone. Nonetheless, Gonzales became angry at the victim and walked him to the shower room/dress out area where he knew there were no surveillance cameras. Several other corrections officers followed Gonzales to the shower room/dress out area. There, Gonzales physically assaulted the victim, striking him multiple times, and choking him, as evidenced by the marks on the victim’s neck that witnesses observed the next morning. As a result of Gonzales’ actions, the victim started bleeding. Gonzales acknowledged that the victim did not do anything to justify the beating, and as a corrections officer, he is not permitted to assault inmates just because they anger him.
Gonzales is facing a maximum of ten years in federal prison. He remains on conditions of release and under pretrial supervision pending his sentencing hearing, which has yet to be scheduled.
Fellow former MDC corrections officers Kevin Casaus, 23, and Matthew Pendley, 25, were indicted by a federal grand jury in June 2012, and are pending trial on charges related to this assault. Casaus is charged with violating the victim’s civil right rights when he shoved and struck the victim while in the shower area/dress out area. Casaus is further charged with obstruction of justice and falsification of records, first for making false statements to detectives of the Bernalillo County Sheriff’s Office (BCSO) and then for falsifying his incident report. Similarly, Matthew Pendley is also charged with obstruction of justice for making false statements to BCSO detectives, and also for tampering with evidence by cleaning up blood from the shower room/dress out area. Casaus and Pendley are presumed innocent unless proven guilty.
This case is being investigated by the Albuquerque Division of the FBI, and is being prosecuted by Assistant U.S. Attorney Mark T. Baker for the District of New Mexico and Trial Attorney Fara Gold of the Civil Rights Division of the U.S. Department of Justice.
Attorney General Eric Holder and Justice Department Officials Announce More Than $2.4 Million in Grants to Combat Intellectual Property TheftRead the Press Release
Attorney General Eric Holder, Deputy Attorney General James Cole, U.S. Attorney for the District of Maryland Rod Rosenstein, and Bureau of Justice Assistance (BJA) Deputy Director, Kristen Mahoney, today announced more than $2.4 million in grants to 13 jurisdictions to combat the purchase and sale of counterfeit and pirated products. Intellectual Property (IP) theft refers to the violation of criminal laws that protect copyrights, patents, trademarks, other forms of intellectual property and trade secrets, both in the United States and abroad. IP crimes can destroy jobs and suppress innovation in the United States. Faulty products and improperly prepared counterfeit drugs can jeopardize the health and safety of consumers. In some cases, these activities are used to fund dangerous or even violent criminal enterprises and organized crime networks.
“IP theft is not a victimless crime. It can devastate lives and businesses as well as undermine our nation’s financial stability, jeopardize the health of our citizens, and even threaten our national security,” said Attorney General Eric Holder. “That's why the Justice Department is fighting back with these new investments to prevent and combat IP theft by enabling some of our key state and local partners to build on their records of success.”
The Attorney General and Deputy Attorney General made the announcement in Towson, Md., today with Baltimore County Executive Kevin Kamenetz and Baltimore County Police Chief James W. Johnson. Baltimore County will receive $123,971 in grant funds that will support additional training, community outreach efforts and investigative resources to combat intellectual property theft. This grant award will support the Baltimore County Police Department’s efforts to enforce criminal laws protecting foreign and domestic copyrights, patents, trademarks and other forms of intellectual property and trade secrets. U.S. Attorney Ronald C. Machen Jr. for the District of Columbia, U.S. Attorney Neil H. MacBride for the Eastern District of Virginia and Lt. Colonel H.C. Davis of the Virginia State Police also participated in today’s grant announcement.
“Preventing and combating intellectual property crimes constitutes a top priority for our nation’s Department of Justice,” said Deputy Attorney General James M. Cole. “With the grants we announce today, we make good on our firm commitment to work closely with a variety of federal, state, local, and international partners to more effectively fight IP crime, provide direct support to critical law enforcement allies, and strengthen our ability to protect American innovation.”
The grants are provided through the department’s BJA, and will assist 13 jurisdictions in enforcing criminal laws related to IP theft, through improving their ability to enforce, investigate, prosecute and implement prevention initiatives that address IP crimes. The grants include providing reimbursement of expenses incurred in performing criminal enforcement operations, such as overtime payments, storage fees for seized evidence, training and technical assistance.
Other jurisdictions receiving grants today include: Austin, Texas; Central Point, Ore.; Cook County, Ill.; Orlando, Fla.; Riverside County, Calif.; Los Angeles City Attorney’s Office; New York County District Attorney’s Office; Sacramento County, Calif.; San Antonio; the California Department of Justice; St. Louis Metropolitan Police Department; and the Virginia State Police.
The Justice Department, through the Deputy Attorney General’s IP Task Force, has made preventing IP theft a top priority. In the past three years, the department’s Bureau of Justice Assistance has awarded $10,108,800 in grants to 34 law enforcement agencies to tackle the problem. BJA has awarded a total of $13,383,002 in grants to fight IP theft.
The Justice Department is also working with the National White Collar Crime Center and the National Association of Attorneys General to provide training and technical assistance to law enforcement on the topic of IP crime investigation. In addition, the department has partnered with the National Crime Prevention Council to educate American consumers about the dangers of purchasing and using counterfeit goods. For more information on the NCPC’s efforts on this issue, please visit: www.ncpc.org/topics/intellectual-property-theft.
For more information on the jurisdictions receiving grants, please visit: www.ojp.gov/funding/funding.htm.
For more information on the department’s Bureau of Justice Assistance, please visit: www.bja.gov.
For more information on the Justice Department’s continuing efforts to stop IP theft, please visit: www.justice.gov/dag/iptaskforce.
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Photo Gallery from the Announcement
Attorney General Eric Holder Speaks at the Intellectual Property Law Enforcement Grant Award Event
Deputy Attorney General James M. Cole Speaks at the Intellectual Property Law Enforcement Grant Award Event
2 October 2012
Residential Mortgage-Backed Securities Working Group Members Announce First Legal ActionRead the Press Release
The Residential Mortgage Backed Securities (RMBS) Working Group members today announced their first legal action since the working group formation earlier this year. In his role as a co-chair of the RMBS Working Group, New York Attorney General Eric T. Schneiderman has filed a Martin Act lawsuit against J.P. Morgan Securities LLC (formerly known as Bear Stearns & Co. Inc.), JP Morgan Chase Bank N.A., and EMC Mortgage LLC (formerly known as EMC Mortgage Corporation) for making fraudulent misrepresentations and omissions to promote the sale of residential mortgage-backed securities (RMBS) to investors. According to Attorney General Schneiderman’s lawsuit, these defendants deceived investors as to the care with which they evaluated the quality of mortgage loans packaged into residential mortgage-backed securities prior to Bear Stearns & Co’s collapse in early 2008, incurring losses that have totaled approximately $22.5 billion to date
This lawsuit is the first legal action from the RMBS Working Group, a state-federal task force created by President Obama earlier this year to investigate those responsible for misconduct contributing to the financial crisis through the pooling and sale of residential mortgage-backed securities. New York Attorney General Schneiderman was joined in the announcement by RMBS Working Group Co-Chairs: U.S. Attorney for the District of Colorado John Walsh, Assistant Attorney General for the Criminal Division Lanny Breuer, Acting Assistant Attorney General for the Civil Division Stuart Delery and Director of the U.S. Securities and Exchange Commissions’ (SEC) Enforcement Division Robert Khuzami as well as RMBS Working Group Members Acting Associate Attorney General Tony West, Housing and Urban Development (HUD) Secretary Shaun Donovan and Federal Housing Finance Agency (FHFA) Inspector General Steve Linick.
“This lawsuit will bring accountability for the misconduct that led to the crash of the housing market and the collapse of the American economy,” said Attorney General Schneiderman. “Our lawsuit demonstrates that there is one set of rules for all – no matter how big or powerful the institution may be – and that those rules will be enforced vigorously. We believe that this is a workable template for future actions against issuers of residential mortgage-backed securities that defrauded investors and cost millions of Americans their homes. We need real accountability for the illegal and deceptive conduct in the creation of the housing bubble in order to bring justice for New York’s homeowners and investors.”
RMBS Working Group members contributed significantly to this effort. The Federal Housing Finance Agency Inspector General played a key role, providing investigators and lawyers who reviewed countless documents and interviewed many witnesses. the SEC made crucial contributions, both in sharing its expertise with working group members and in giving members access to substantial evidence in its investigations.
The Department of Justice provided 11 Assistant U.S. Attorneys from offices all over the United States who interviewed more than 40 significant market participants. Three civil attorneys and a financial analyst from the department’s Civil Division, two financial analysts from the RMBS Working Group’s Coordination Team, and a paralegal from the U.S. Attorney’s office in the Eastern District of Texas reviewed more than 50 deposition transcripts taken in other litigation for significant evidence. In addition, the Department of Justice provided 12 investigative analysts to review millions of pages of documents and the department’s Civil Division conducted additional interviews of critical witnesses in support of New York’s investigation.
“This announcement demonstrates that the RMBS Working Group model works,” said RMBS Co-Chair and U.S. Attorney for the District of Colorado John Walsh. “The Department of Justice, including U.S. Attorney's Offices across the country, the Office of the Inspector General for the Federal Housing Finance Agency and the SEC were proud to offer their extensive expertise and commit substantial resources in order to assist the New York Attorney General’s efforts. This filing is a testament to the unity of purpose brought to bear by the RMBS Working Group and what is possible when we work together to achieve justice for all Americans.”
“Fannie Mae and Freddie Mac purchased residential mortgage-backed securities from the defendants and were allegedly misled about the quality of the loans supporting those securities. Actions like this contributed to the financial crisis and those who engaged in such activities should be held accountable,” said FHFA Inspector General Steve Linick. “My office has worked and continues to work very closely with the RMBS Working Group and the New York Attorney General’s Office in support of the investigation and prosecution of RMBS fraud cases.”
The RMBS Working Group is one of eight working groups within 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. The FFETF is chaired by U.S. Attorney General Eric Holder and with its 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.More than 200 RMBS Working Group members are on the job, devoting significant resources to investigate and prosecute misconduct by financial institutions in the origination and securitization of mortgages. Work is being done right now by state and federal working group members across the country on active investigations. The RMBS Working Group Coordinator is Matt Stegman. For more information about the RMBS Working Group and the Financial Fraud Enforcement Task Force, please visit: www.stopfraud.gov .
Related Materials:
Press Release from the Office of New York Attorney General Schneiderman
Complaint (PDF)
Photo Gallery
Acting Associate Attorney General Tony West Speaks at the Residential Mortgage-Backed Securities Working Group Press Conference
U.S. Attorney for the District of Colorado John Walsh Speaks at the Residential Mortgage-Backed Securities Working Group Press ConferenceJustice Department Obtains Comprehensive Agreement to Resolve Racial Harassment in Ohio School DistrictRead the Press Release
The Justice Department announced that it has entered into a settlement agreement with the Northeastern Local School District in Springfield and South Vienna, Ohio, to resolve allegations of racial harassment of African-American students in the district. The district serves approximately 3,700 students, less than two percent of whom are African-American.
In December 2011, the department received a complaint alleging incidents of racial harassment directed at an African-American student enrolled at Kenton Ridge High School (KRHS) in the district. The department’s investigation revealed that the student had been subjected to significant harassment based on race and retaliation for reporting the harassment. Despite having knowledge of this harassment, the district failed to investigate the alleged harassment adequately, address it effectively and prevent it from recurring. Because of the alleged harassment and retaliation, the student reported being afraid to go to school and eventually left the district out of fear for the student’s own safety. The department’s investigation also revealed that other African-American students in the district had experienced racial harassment and retaliation for reporting racial harassment.
“No student should endure the racial harassment that students in this district have experienced,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “It is a violation of our nation’s civil rights laws for students to be subjected to severe or pervasive harassment on a prohibited basis. I commend the Northeastern Local School District for working collaboratively with the department and for taking the steps necessary to serve all of its students in a safe environment free of discrimination and harassment.”
Under the agreement, the district will adopt a comprehensive strategy to address and prevent racial harassment in district schools consistent with its obligations under Title IV of the Civil Rights Act of 1964, which prohibits discrimination on the basis of race in public schools. Among other things, the district will revise its policies and procedures related to racial harassment; hire a consultant to develop training for students, parents and employees within the district; and retain a mental health consultant to evaluate and improve the district’s practices in assisting students who are targets of harassment.
The enforcement of Title IV is a top priority of the Justice Department’s Civil Rights Division. Additional information about the Civil Rights Division is available on its website at www.justice.gov/crt.
Idaho Woman Pleads Guilty to Conspiracy and Filing False Tax ReturnsRead the Press Release
Penny Jones of Rigby, Idaho, pleaded guilty before U.S. District Judge William Dimitrouleas in Fort Lauderdale, Fla., to forty-one counts of causing the filing of false claims for income tax refunds and one count of conspiracy to file false claims for tax refunds income tax returns, the Justice Department and the Internal Revenue Service (IRS) announced. Jones entered her guilty plea without the benefit of a plea agreement with the government. Jones faces a maximum potential sentence of 215 years in prison and a fine of up to $10.5 million plus restitution to the IRS.
Jones’s co-defendant, John Michael Smith Jr., also pleaded guilty yesterday before U.S. District Judge William P. Dimitrouleas in Fort Lauderdale to one count of filing a false claim for a tax refund. Smith faces a maximum potential sentence of 5 years in prison and a $250,000 fine plus restitution to the IRS .
According to the indictment, which was returned Nov. 10, 2011, and which Ms. Jones does not contest, she was part of a false tax refund scheme that was national in scope, causing the filing of tax returns for at least 180 clients from 30 different states, requesting more than $120 million worth of fraudulent tax refunds. Clients of the scheme collectively filed more than 380 tax returns, mostly from tax year 2008 but also for other tax years, falsely reporting the amount of their personal debt obligations as both income and as federal tax withholding. They falsely reported this information on IRS Forms 1099-OID, which were filed by Jones based on information provided by the clients. Jones operated her tax return preparation business under the names PMDD Services LLC and Forever Grace LLC.
Smith, a resident of Hidden Hills, Calif., and a former resident of Cincinnati, has admitted that he filed a false 2007 individual income tax return prepared by Jones. He sought a fraudulent tax refund of $208,312, which the IRS mistakenly paid. Previously, another PMDD Services client, Philip Butcher, formerly of Rogers, Ark., pleaded guilty to one count of filing a false claim for a refund. According to court documents in that case, Butcher filed two tax returns reporting his loans as OID income and tax withholding, claiming tax refunds totaling $1,456,696.
The case was investigated by special agents of IRS-Criminal Investigation and is being prosecuted by Trial Attorneys Jonathan Marx and Jed Silversmith of the Justice Department's Tax Division and by Assistant U.S. Attorney Bertha Mitrani of the Southern District of Florida.
Federal and Tribal Officials Mark Domestic Violence Awareness Month at Annual Violence Against Women Tribal Consultation in OklahomaRead the Press Release
Federal and tribal officials joined together in Tulsa, Okla., today in commemorating October as Domestic Violence Awareness Month at opening ceremonies before the department’s annual tribal consultation on Violence Against Native Women, held this year in Tulsa.
Acting Director of the Office on Violence Against Women (OVW) Bea Hanson joined the U.S. Attorney for the Northern District of Oklahoma Danny C. Williams Sr., and more than 200 tribal leaders, public safety and health officials to reaffirm a shared commitment to reduce and end violence against American Indian and Alaska Native women, which has reached epidemic proportions.
Participants viewed a new training DVD entitled “Using Federal Law to Prosecute Domestic Violence Crimes in Indian County”. The new training video, funded through a grant from the Justice Department’s Office on Victims of Crime and developed by the Office on Legal Education and the National Indian Country Training Program, is designed to highlight all tools available to federal and tribal law enforcement, prosecutors, and victim specialists to address domestic violence crimes.
The training DVD is now publicly available for those with a specific training or public education purpose. The DVD can be obtained by contacting the National Indian Country Training Coordinator Leslie Hagen at [email protected] .
“In this video, we hear incredible stories of suffering and survival from victims, and we explore the tools that law enforcement can use to keep victims safe and hold domestic violence perpetrators fully accountable under federal law,” said OVW Acting Director Hanson. “As we mark October as domestic violence awareness month, we re-commit ourselves to using every available tool we can to work in partnership with tribal governments to address the deplorable rates of violence against women in Indian country. We ask for all of your help to make the approaches detailed in this video as widely known and utilized as possible.”
The video uses case studies and play by play accounts from tribal police, federal prosecutors, judges, victims, and victim specialists, to show a comprehensive approach to obtaining justice for victims, including the use of relatively new federal laws. One of these laws is the Domestic Assault by an Habitual Offender (18 USC, Section 117), which punishes any person who commits a domestic assault and has two prior federal, state, or tribal convictions with up to five years in federal prison. The law was created with the Violence Against Women Act reauthorization in 2005. It was used to convict and sentence Roman Cavanaugh, a Fort Totten, N.D., man who had several previous convictions in tribal court for domestic violence. Cavanaugh was sentenced by a federal judge on Sep. 17, 2012, to five years in prison as a habitual domestic violence offender.
The video also explores several other federal statutes, and also includes discussion of changes ushered in by the passage of the Tribal Law and Order Act of 2010, which has made it possible for tribal courts to sentence a person to up to three years for a single offense provided certain due process protections are in place.
Domestic Violence Awareness Month is a time to reflect on tremendous achievements made since the passage of the Violence Against Women Act (VAWA) 18 years ago, while reminding ourselves that much is still to be done to ensure that our children and grandchildren grow up in an America free of domestic violence.
Bureau of Justice Statistics and FBI data show that, between the time VAWA was first enacted in 1994 and 2010, the annual incidence of domestic violence has dropped by 67 percent nationwide. Between 1993 and 2007, the number of individuals killed by an intimate partner declined 35 percent for women and 46 percent for men.
Rates of domestic violence against Native women in Indian country are now among the highest in the entire United States. Half of all Native American women -- 46 percent -- have experienced rape, physical violence, or stalking by an intimate partner, according to a recent nationwide survey by the Centers for Disease Control and Prevention.
Related Materials:
www.justice.gov/tribal
Abbott Laboratories Sentenced for Misbranding DrugRead the Press Release
Pharmaceutical manufacturer Abbott Laboratories Inc. was sentenced by U.S. District Court Judge Samuel G. Wilson of the Western District of Virginia in connection with its guilty plea related to its unlawful promotion of the prescription drug Depakote for uses not approved as safe and effective by the Food and Drug Administration (FDA) the Justice Department announced today. Abbott, which was ordered to pay a criminal fine in the amount of $500 million, plus a forfeiture of $198.5 million, and $1.5 million to the Virginia Medicaid Fraud Control Unit, will also be subject to a five-year term of probation.
In May 2012, Abbott pleaded guilty to a criminal misdemeanor for misbranding Depakote in violation of the Federal Food, Drug and Cosmetic Act (FDCA). Abbott’s criminal plea related to the misbranding of Depakote by promoting the drug to control behavioral disturbances in dementia patients and to treat schizophrenia when neither of these uses was approved by the FDA. Under the provisions of the FDCA, a company is required to specify the intended uses of a product in its new drug application to FDA. Once approved, the drug may not be marketed or promoted for “off-label” uses – unless the company applies to the FDA for approval of the additional use. In an agreed statement of facts, Abbott admitted that from January 1998 to December 2006 it marketed Depakote off-label to treat behavioral disturbances in dementia patients, and from January 2002 to December 2006, Abbott marketed Depakote off-label to treat schizophrenia.
Under the terms of the plea agreement, Abbott agreed to pay the second-largest criminal fine for a single drug, executed a fulsome statement of facts (with exhibits) revealing the extent of its unlawful conduct, admitted that it engaged in misleading statements, and submitted to a five-year term of probation. Under the terms of its probation, on an annual basis, Abbott’s CEO and board of directors will need to personally certify that the company is complying with the law.
Abbott’s guilty plea was part of a global resolution involving its illegal promotional activity. Abbott also entered into a civil settlement agreement under which it agreed to pay $800 million to the federal government and the states to resolve claims that its unlawful marketing and illegal remuneration practices caused false claims to be submitted to government healthcare programs. The parallel civil settlement covered a broader range of conduct by Abbott. The settlement resolved allegations that in addition to off-label marketing for dementia and schizophrenia, Abbott also marketed Depakote for other psychiatric conditions in adults, including depression, anxiety, obsessive-compulsive disorder, post-traumatic stress disorder, alcohol and drug withdrawal and psychiatric conditions in children, including conduct disorders, attention deficit disorder and autism.
In addition to the criminal and civil resolutions, Abbott also agreed to enter into an expansive 5-year corporate integrity agreement with the Office of Inspector General of the Department of Health and Human Services (HHS-OIG) that requires enhanced accountability, increased transparency, and wide-ranging monitoring activities conducted by both internal and independent external reviewers.
“Today’s sentencing confirms that the resolution we reached with Abbott in May is the right result. And it emphasizes the importance of the U.S. government’s coordinated efforts to combat health care fraud. We expect companies to make honest, lawful claims about the drugs they sell, we will be vigorous in our enforcement efforts when they break the law, and the courts will hold them accountable.” said Stuart F. Delery, Acting Assistant Attorney General for the Justice Department’s Civil Division.
“Abbott unlawfully targeted a vulnerable population, the elderly, through its off-label promotion. The court’s sentence makes clear that those who engage in such conduct will be prosecuted and held accountable,” said Timothy Heaphy, U.S. Attorney for the Western District of Virginia.
This case was handled by the U.S. Attorney’s Office for the Western District of Virginia and the Justice Department’s Civil Division. The investigation was conducted by the Virginia Attorney General’s Medicaid Fraud Control Unit; the Internal Revenue Service - Criminal Investigation; the FDA - Office of Criminal Investigation; the Defense Criminal Investigative Service; the Health and Human Services - Office of Inspector General; the West Virginia State Police; the Office of Personnel Management - Office of Inspector General; the Department of Veterans’ Affairs Office of Inspector General; the Department of Labor - Office of Inspector General; and TRICARE Program Integrity.
1 October 2012
Two Miami-Area Doctors Sentenced to 10 Years in Prison <br /> for Participating in $205 Million Medicare Fraud SchemeRead the Press Release
WASHINGTON – Miami-area residents Dr. Mark Willner and Dr. Alberto Ayala, former medical directors at the mental health care company American Therapeutic Corporation (ATC), were each sentenced today to 10 years in prison for participating in a $205 million Medicare fraud scheme, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; Special Agent-in-Charge Michael B. Steinbach of the FBI’s Miami Field Office; and Special Agent-in-Charge Christopher Dennis of the HHS Office of Inspector General (HHS-OIG), Office of Investigations Miami office.
Willner, 56, and Ayala, 68, were sentenced by U.S. District Judge Patricia A. Seitz in the Southern District of Florida. Judge Seitz ordered Willner to pay more than $57 million in restitution and Ayala to pay more than $87 million in restitution, both jointly and severally with their co-defendants. Willner and Ayala were also both sentenced to three years of supervised release following their prison terms.
On June 1, 2012, after a seven week trial, a federal jury in the Southern District of Florida found Willner and Ayala each guilty of one count of conspiracy to commit health care fraud.
Evidence at trial demonstrated that the defendants and their co-conspirators caused the submission of false and fraudulent claims to Medicare through ATC, a Florida corporation headquartered in Miami that operated purported partial hospitalization programs (PHPs) in seven different locations throughout South Florida and Orlando. A PHP is a form of intensive treatment for severe mental illness. The defendants and their co-conspirators also used a related company, American Sleep Institute (ASI), to submit fraudulent Medicare claims.
Evidence at trial revealed that ATC secured patients by paying kickbacks to assisted living facility owners and halfway house owners who would then steer patients to ATC. These patients attended ATC, where they were ineligible for the treatment ATC billed to Medicare and where they did not receive the treatment that was billed to Medicare. After Medicare paid the claims, some of the co-conspirators then laundered the Medicare money in order to create cash to pay the patient kickbacks.
The defendants were charged in an indictment returned on Feb. 8, 2011. ATC, the management company associated with ATC, and 20 individuals, including the ATC owners, have all previously pleaded guilty or have been convicted at trial.
Evidence at trial revealed that doctors at ATC, including Willner and Ayala, signed patient files without reading them or seeing the patients. Evidence further revealed that ATC then billed Medicare for more than $100 million in PHP treatment for these patients under the names of Willner and Ayala. Included in these false and fraudulent submissions to Medicare were claims for patients in neuro-vegetative states, along with patients who were in the late stages of diseases causing permanent cognitive memory loss, and patients who had substance abuse issues and were living in halfway houses. These patients were ineligible for PHP treatment, and because they were forced by their assisted living facility owners and halfway house owners to attend ATC, they were not receiving treatment for the diseases they actually had.
Willner and Ayala have been in federal custody since their convictions.
ATC executives Lawrence Duran, Marianella Valera, Judith Negron and Margarita Acevedo were sentenced to 50 years, 35 years, 35 years and 91 months in prison, respectively, for their roles in the fraud scheme. The 50- and 35-year sentences represent the longest sentences for health care fraud ordered to date. Acevedo, who pleaded guilty early on and has been cooperating with the government since November 2010, testified at the doctors’ trial.
ATC and Medlink pleaded guilty in May 2011 to conspiracy to commit health care fraud. ATC also pleaded guilty to conspiracy to defraud the United States and to pay and receive illegal health care kickbacks. On Sept. 16, 2011, the two corporations were sentenced to five years of probation per count and ordered to pay restitution of $87 million. Both corporations have been defunct since their owners were arrested in October 2010.
The case was prosecuted by Trial Attorneys Jennifer L. Saulino, Robert A. Zink and James V. Hayes 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 1,330 defendants who have collectively billed the Medicare program for more than $4 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.
Three Men and One Company Sentenced in Tennessee for Environmental CrimesRead the Press Release
Three men who conspired to violate Clean Air Act workplace safety standards when they demolished a Chattanooga, Tenn., factory containing large amounts of asbestos were sentenced today in federal court, announced Ignacia S. Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resource Division, and William C. Killian, U.S. Attorney for the Eastern District of Tennessee. U.S. District Judge Curtis Collier sentenced David Wood, James Mathis and Donald Fillers, and the Watkins Street Project LLC for their roles in the conspiracy.
Fillers was sentenced to serve 48 months in federal prison, pay a $20,000 fine and serve three years of supervised release; Mathis was sentenced to serve 18 months in federal prison and three years of supervised release; Wood was sentenced to serve 20 months in federal prison and three years of supervised release; and Watkins Street Project was ordered to pay a $30,000 fine. In addition, the defendants were ordered to pay $27,899 in restitution to the U.S. Environmental Protection Agency (EPA), the Chattanooga Department of Public Works and the Chattanooga Hamilton County Air Pollution Control Board for expenditures associated with the emergency response and clean-up of the former Standard Coosa Thatcher plant in Chattanooga.
A jury convicted these defendants on Jan. 27, 2012, of conspiracy and criminal violations of the Clean Air Act, as well as obstruction of justice in relation to salvage and demolition activities at the former Standard Coosa Thatcher plant. More specifically, the evidence proved that the defendants entered into a year-long scheme in which the plant was illegally demolished while still containing extensive amounts of asbestos. Additionally, the defendants hired day laborers and paid them low wages to improperly remove asbestos-containing materials without following federal regulations that were intended to keep the asbestos, a known carcinogen, from becoming airborne where it could be inhaled.“These sentences send a strong message that criminal violations of environmental laws designed to protect human health from exposure to hazardous substances, such as asbestos, will not be tolerated,” said U.S. Attorney Killian. “Those individuals who choose to place profit over compliance with our nation’s environmental laws will be vigorously prosecuted and brought to justice.”
“Exposure to asbestos can cause serious, even fatal, illnesses so it must be removed safely and in accordance with the law,” said Maureen O’Mara, Special Agent in Charge of EPA’s criminal enforcement program in Tennessee. “The defendants in this case not only lied to authorities and tried to cover up their actions, but they also hired homeless and untrained workers to perform the illegal asbestos removal activities, endangering both the employees and the greater community. Today’s sentences show that those who break the law and put the public at risk to make illegal profits will face serious consequences.”
Witness testimony established that dust from the salvage and demolition activities frequently wafted onto neighboring properties. The evidence also showed the defendants attempted to cover up their illegal activities by falsifying documents and Wood lied to federal authorities investigating the case.
This case was investigated by Special Agents of the EPA’s Criminal Investigation Division and investigators with Chattanooga-Hamilton County Air Pollution Control Bureau. The case was prosecuted by Assistant U.S. Attorney Matthew T. Morris and Todd W. Gleason, Trial Attorney with the Environmental Crimes Section of the Justice Department’s Environment and Natural Resources Division.Settlement with Suiza Dairy Corporation for Violations at Facilities in Puerto Rico Will Make Facilities Safer, Benefit Nearby CommunitiesRead the Press Release
WASHINGTON – Suiza Dairy has agreed to pay a penalty and make significant upgrades to settle Clean Air Act violations, the Department of Justice and the U.S. Environmental Protection Agency (EPA) announced today. The case stems from violations at two Suiza Dairy Corporation dairies located in Rio Piedras and Aguadilla, Puerto Rico, including two major releases of anhydrous ammonia from the Rio Piedras facility.
The Clean Air Act violations stem from Suiza’s failure of its general duty of care to identify hazards and to maintain safe facilities and its failure to comply with regulatory requirements for process safety management under the Clean Air Act, as well as Suiza’s failure to comply with administrative orders at both facilities.
“This settlement penalizes Suiza for violations of the Clean Air Act that resulted in two illegal releases of poisonous gas that put the community at risk, including one release that caused the hospitalization of several residents,” said Ignacia S. Moreno, Assistant Attorney General of the Environment and Natural Resources Division at the Department of Justice. “Today’s agreement will prevent future violations of the Clean Air Act safety standards by requiring Suiza to upgrade its refrigeration technology and emergency notification system.”
“Reducing toxics in the air is a priority for the EPA. These facilities were very poorly run and the communities around them suffered as a result, with some people being sickened by a major release of ammonia into the air,” said Judith A. Enck, EPA Regional Administrator. “This settlement requires the company to comply with the law and not jeopardize people’s health.”
As part of the consent decree announced today, Suiza will pay a penalty of $275,000. Suiza will also spend approximately $3.75 million on projects that will significantly improve the refrigeration systems at both facilities, considerably reduce the amount of anhydrous ammonia in the systems at both facilities, improve alarm and ammonia release notification procedures, and provide medical training and/or equipment to medical personnel to treat persons affected by exposure to anhydrous ammonia. Suiza will also conduct community emergency drills in the communities located adjacent to the facilities, to train community members on what to do in the event of an accidental release of anhydrous ammonia.
Suiza’s first accidental ammonia release from the Rio Piedras facility was in July 2005. Then in May 2007, approximately 1,146 pounds of anhydrous ammonia was released into the atmosphere causing at least 14 residents from the community located near the Rio Piedras Facility to require medical attention. At least nine of the people requiring medical attention also required an overnight stay in the local hospital.
Following these releases, and complaints from residents near the Aguadilla facility, EPA submitted information requests to Suiza and conducted multiple inspections at both facilities. In September 2007, EPA issued Suiza administrative orders for both facilities, ordering Suiza to bring the facilities into compliance. Suiza failed to comply with both orders.
As a result of Suiza’s failure to comply with the orders and the substantive violations at both facilities, EPA reinspected both facilities in May and October 2009. Over 40 violations were identified at each facility; violations included, for example: corrosion to anhydrous ammonia transfer lines, failure to implement an adequate alarm system, improper labeling of valves and equipment, and improper ventilation.
The settlement requires Suiza to implement over 40 compliance measures at each facility to address the violations. In addition, the company has agreed to spend at least $3 million to reduce the amount of anhydrous ammonia used in the refrigeration process at the facilities, from approximately 18,000 pounds to less than 8,400 pounds at the Rio Piedras facility (54 percent reduction) and from 4,700 pounds to less than 3,300 pounds at the Aguadilla facility (30 percent reduction). Suiza will also install an enhanced alarm system at the Aguadilla facility that will continuously monitor anhydrous ammonia operating pressures, temperatures and levels, as well as automatically alert operators to conditions not within normal operational ranges for these parameters.
Justice Department and the EPA conducted community meetings near both facilities in August 2011. Partly as a result of that outreach, and the suggestions made by community members at those meetings, Suiza has agreed to conduct community emergency drills in the communities located adjacent to the facilities. Suiza will coordinate with first responders and EPA to simulate an accidental anhydrous ammonia release and train community members on what to do in the event of such a release.
Enforcement of the general duty of care and of the regulatory requirements under Section 112(r)(1) and (7) of the Clean Air Act is critical to ensuring that industry focuses on the safety of the public and the environment.
The proposed consent decree is subject to a 30 day public comment period and final court approval. The consent decree may be viewed on the Department of Justice website: www.justice.gov/enrd/Consent_Decrees.html.
New Jersey Glass Manufacturer to Install State-of-the-Art Emissions Controls to Resolve Violations of the Clean Air ActRead the Press Release
WASHINGTON – Under a settlement announced today by the Department of Justice and the U.S. Environmental Protection Agency (EPA), Durand Glass Manufacturing Company Inc. has agreed to install emissions controls on its three glass furnaces that will reduce more than 173 tons of nitrogen oxides (NOx) and 23 tons of particulate matter (PM) per year. Emissions of these pollutants can cause serious respiratory illnesses, aggravate asthma and contribute to the formation of ground level ozone or smog. Durand also installed monitoring systems that will allow it to continuously measure its NOx emissions and agreed to pay a $300,000 civil penalty to resolve violations of the Clean Air Act.
“This agreement includes the lowest limit for nitrogen oxide emissions in the glass industry, designed to reduce emissions of nitrogen oxides by 90 percent,” said Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division of the Department of Justice. “Through this agreement, a significant source of harmful air pollution will be reduced at its source and serve as an example of how compliance with the nation’s environmental laws and employing the latest science and technology can result in long-term benefits for the public’s health and the environment.”
“Today’s settlement requires Durand to install state-of-the-art emissions controls,” said Cynthia Giles, Assistant Administrator for the EPA’s Office of Enforcement and Compliance Assurance. “These pollution controls set a new bar for controlling pollution in the glass industry and will protect communities in southern New Jersey by reducing emissions that can cause serious respiratory illnesses.”
The complaint alleges that Durand constructed a new glass melting furnace at its facility in Millville, N.J., resulting in increased emissions of NOx and PM, without first obtaining pre-construction permits or installing the required pollution control equipment.
The consent decree requires Durand to operate the emissions controls to reduce NOx and PM pollution, including the first Selective Catalytic Reduction (SCR) device on a tableware glass furnace in the United States. The SCR pollution controls are designed to reduce Durand’s NOx emissions by at least 90 percent from previous levels, to 1.2 pounds of NOx per ton of glass produced on a 30-day average basis, and 1.0 pound of NOx per ton of glass produced on a long-term, 365-day average basis. Durand must also operate continuous emission rate monitoring systems that will allow it to monitor NOx emissions on an hourly basis and the company has already installed particulate filters to reduce its PM emissions. The pollution controls and monitoring systems are now fully operational.
The state of New Jersey was an active partner in the settlement.
Reducing air pollution from the largest sources of emissions, including glass manufacturing plants, is one of the EPA’s National Enforcement Initiatives for 2011-2013. NOx and PM, two key pollutants emitted from glass plants, have numerous adverse effects on human health. Reducing these harmful air pollutants will benefit the communities located near the facility, particularly those disproportionately impacted by environmental risks and vulnerable populations, including children.
The proposed consent decree, lodged in U.S. District Court for the District of New Jersey, is subject to a 30-day public comment period and final court approval before becoming effective. A copy of the consent decree lodged today is available on the Department of Justice website at www.justice.gov/enrd/Consent_Decrees.html.
More about the settlement is available at www.epa.gov/enforcement/air/cases/durandglass.html.
More information on EPA’s national enforcement initiative is available at www.epa.gov/compliance/data/planning/initiatives/2011airpollution.html.
Justice Department Seeks Court Approval of Plan to Provide Comprehensive Services to ELL Students in Denver Public SchoolsRead the Press Release
The Department of Justice, the Congress of Hispanic Educators (CHE) and the Denver Public Schools (DPS) have jointly requested court approval of a consent decree that requires that the more than 20,000 English Language Learner (ELL) students enrolled in DPS receive the services they need to overcome language barriers and meaningfully participate in school. The proposed consent decree will benefit all ELLs and LEP parents in the district, including not only the 87 percent of ELL students who are native Spanish speakers, but those who speak one of the 137 other languages spoken in the district as well.
The proposed consent decree requires the district to implement comprehensive measures to ensure that its ELL students are properly identified, served, exited from services upon demonstrating proficiency in English and monitored after they exit. The proposed consent decree also requires translation and interpretation services for thousands of Limited English Proficient parents and tailored services for ELL students who face unique challenges, including refugee students and students with disabilities. In addition, ELL students must have access to English language acquisition services in the district’s 30 charter schools. DPS is required to evaluate the effect of the required changes on student achievement over time through disaggregated data analyses and robust reporting requirements.
If approved, the consent decree would replace a 1999 court order and provide a detailed roadmap for the district to comply with its obligations under the Equal Educational Opportunities Act of 1974 and Title VI of the Civil Rights Act of 1964 within a three-year period. The Equal Educational Opportunities Act requires state and local education agencies to take appropriate action to overcome language barriers that impede students’ equal participation in instructional programs, and Title VI of the Civil Rights Act of 1964 bars discrimination on the basis of race and national origin by state education agencies and schools that receive federal funds.
“We recognize the efforts of the Denver Public Schools to develop and implement a comprehensive and multifaceted plan to serve the thousands of DPS students who are not proficient in English,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Congress of Hispanic Educators and the department have advocated relief to ensure that DPS meets the requirements of federal law, establishes a culture of high expectations and provides a solid foundation for the future success of all students.”
The enforcement of the Equal Educational Opportunities Act and Title VI are top priorities of the Justice Department’s Civil Rights Division. Additional information about the Civil Rights Division of the Justice Department is available on its website at www.justice.gov/crt .
Justice Department Announces $58 Million to Improve Reentry OutcomesRead the Press Release
Attorney General Eric Holder today announced $58 million in Second Chance Act grant funding to reduce recidivism, provide reentry services, conduct research and evaluate the impact of reentry programs. Attorney General Holder also highlighted the department’s efforts to support research and evidence-based practices and its work with state departments of correction to set recidivism reduction goals .
“Thanks to the collaborative efforts of law enforcement leaders, community-based organizations, and departments of corrections – as well as a variety of groundbreaking projects that have been funded through Second Chance Act grant awards – a number of states have shown significant reductions in the three-year recidivism rate,” said Attorney General Holder.
The Second Chance Act (SCA) programs, administered through the department’s Office of Justice Programs, are designed to help communities develop and implement comprehensive strategies to address the challenges faced by incarcerated adults and youth when they return to their communities following release from confinement.
“R eentry efforts can result in less crime, lower recidivism, fewer victims and improved public safety,” said Acting Assistant Attorney General for the Office of Justice Programs (OJP) Mary Lou Leary. “These are critical goals of the criminal justice field, and we are working to give communities the tools, support and guidance to achieve these goals.”
Of the $58.5 million (98 awards) announced, more than $47 million (94 awards) are for family-based substance abuse treatment; treatment of returning prisoners with co-occurring substance abuse and mental health disorders; adult and juvenile reentry demonstration projects; state, local, and tribal reentry courts; adult mentoring programs; and technology career training projects for incarcerated adults and juveniles. The remaining $10.5 million support evaluation, training and technical assistance for grantees and the reentry field at large.
OJP’s Bureau of Justice Assistance (BJA) awards support jurisdictions which propose to plan or implement a “Pay for Success” model into their reentry initiative. Pay for Success represents a new way to achieve positive outcomes for the criminal justice population with external financing and at a lower risk and cost to governments. BJA is making two Pay for Success awards: an implementation award to Cuyahoga County, Ohio, and a planning award to Lowell, Mass., and is funding the Urban Institute’s efforts to develop a blueprint for municipal, state and federal governments to use to pay for evidence-based anti-crime programs. BJA is also funding three new programs this year:
· The Adult Offender Comprehensive Statewide Recidivism Reduction Demonstration Program awards $6.1 million to seven states for programs aimed at achieving reductions in baseline recidivism rates through planning, capacity-building, and implementing effective and evidence-based interventions.
· Smart Probation: Reducing Prison Populations, Saving Money and Creating Safer Communities includes nine awards totaling $3.7 million to states and local communities to develop and implement evidenced-based probation practices aimed at improving probationer outcomes and specifically reducing recidivism rates.
“Second Chance Act funding enables states, localities and tribes to identify, target and serve moderate and high risk individuals reentering communities.” said BJA Director Denise E. O’Donnell. “The reentry process begins when an individual enters incarceration and ends upon successful reintegration in the community. Using these evidence –based interventions results in safer and healthier communities.”
OJP’s Office of Juvenile Justice and Delinquency Prevention announced nearly $1.8 million to support four new juvenile reentry demonstration projects and more than $3.4 million to continue to fund six existing juvenile reentry programs across the country. With approximately 100,000 youth released from confinement each year, these programs aim to promote public safety by helping youth successfully transition from juvenile residential facilities to their communities.
OJP’s National Institute of Justice (NIJ) will fund evaluations of the SCA Adult Offender Reentry Demonstration projects and the SCA Juvenile Reentry Demonstration Projects. In addition, NIJ will seek to expand knowledge about reentry and recidivism through a number of research projects, including the following:
· Desistence from Crime over the Life Course ($998,221), Research Triangle Institute.
· Executive Session on Community Corrections ($993,386), President and Fellows of Harvard College.
· State-Mandated Criminal Background Employment Screening: A High Stakes Window into the Desistance Process ($706,943), State University of New York, Albany, N.Y.
· “The Impact of Video Visitation on Corrections Staff, Inmates and their Families” ($355,296), Vera Institute of Justice.
· Ph.D. Graduate Research Fellowship, “The Effect of Collateral Consequence Laws on State Rates of Returns to Prison” ($25,000), University of Maryland, College Park, Md.
Through a cooperative agreement to the Council of State Governments Justice Center OJP operates the National Reentry Resource Center (NRRC). The NRRC offers training and technical assistance for Second Chance Act grantees, provides distance learning and other reentry resources to the field, and administers the “What Works in Reentry Clearinghouse.” NRRC collaborates with other federal agencies focused on reentry activities and with the Attorney General’s Federal Interagency Reentry Council and its staff working group.
A list of all OJP grant awards is available at: www.ojp.gov/funding/funding.htm .
For more information on the NRRC: www.nationalreentryresourcecenter.org
For more information on the Reentry Council: www.nationalreentryresourcecenter.org/reentry-council
Investor Fraud Summits Across the Country Arm Consumers with Information to Protect Retirement Funds and Life SavingsRead the Press Release
Attorney General Eric Holder and the Department of Justice’s U.S. Attorneys’ offices together, with the department’s Criminal and Civil Divisions, representatives from the FBI, Securities and Exchange Commission (SEC), the Federal Trade Commission (FTC), the Department of Treasury’s Financial Crimes Enforcement Network (FinCEN), the Commodity Futures Trading Commission, the Bankruptcy Trustees, the Financial Industry Regulatory Authority (FINRA), AARP and the Better Business Bureau are holding investor fraud summits across the country to help consumers protect their hard-earned money from fraud. These summits will take place in Stamford, Conn.; Nashville, Tenn.; San Francisco; Denver; Cleveland and Miami and are a part of the ongoing efforts of President Obama’s Financial Fraud Enforcement Task Force’s (FFETF) Securities and Commodities Fraud Working Group.
The FBI reports an unprecedented rise in investment fraud schemes, involving thousands of victims and staggering losses. Since 2011, the Justice Department’s Criminal Division and 85 U.S. Attorneys’ offices have reported that approximately 800 defendants have been charged, tried, pleaded or sentenced in approximately 500 federal prosecutions involving investor fraud. The total reported amount cheated from victims for this time period tops more than $20 billion. This staggering number includes cases where the total amount victims lost range from tens of thousands of dollars to hundreds of millions, and, in some cases, billions in hard-earned savings.
“Investor fraud crimes can erode faith in our financial markets, threaten our nation’s ongoing economic recovery, and undermine the fabric of our communities,” said Attorney General Eric Holder. “That’s why protecting the American people from fraud is a top priority for today’s Justice Department. And through the Investor Fraud Summits we announce today, we’ll take our anti-fraud efforts to a new level - by raising awareness about these devastating offenses, educating consumers on how to report suspected fraud schemes and empowering members of the public to fight back.”
Although the defendants in these federal prosecutions used a variety of tactics and schemes, they often took the same approach, guaranteeing high returns and, in many instances, providing falsified investment documents to victims. As a result, those victims lost retirement savings, military survivor benefits, family death settlements and money set aside for college tuition and mortgage payments. While the Justice Department has already obtained prison sentences for many of these scammers, including one sentence of up to 50 years, for many of the more 100,000 victims the damage to their families is irreparable.
Since 2011, the SEC, a FFETF partner agency, has charged 887 individuals and entities in 359 actions involving retail investor fraud. Nearly $9.7 billion have been alleged lost by over 1.2 million investors in those cases.
“Whether a cold-call, polished website, or email solicitation, fraudsters will use every means at their disposal to convince investors to part with their money,” said SEC Director of Enforcement Robert Khuzami. “That is why investor education is so critical -- in maintaining financial health as much as physical health, an ounce of prevention is worth a pound of cure.”
In addition to the investor fraud summits across the country, in the coming weeks the Victims’ Rights Committee of the Financial Fraud Enforcement Task Force will host an unprecedented event, in partnership with the Justice Department, the Certified Financial Planner Board and the Foundation for Financial Planning, to offer free financial consulting services to 8,000 victims of an investment fraud scheme that was indicted in Chicago. In this case, the defendant falsely guaranteed high rates of return in a Ponzi scheme that caused the loss of more than $300 million of investors’ funds. Many of the victims were retirees who found the promised high rates of return, coupled with other false promises, an attractive investment alternative for their individual retirement account (IRA) and other retirement-type investments.
The first investor fraud summit is taking place today in Stamford, from 9:00 a.m. to 1:00 p.m. EDT at the University of Connecticut - Stamford Campus. The summit is hosted by U.S. Attorney for the District of Connecticut David Fein, who is joined by Deputy Assistant Attorney General John Buretta, U.S. Attorney for the District of New Jersey Paul Fishman, U.S. Attorney for the Eastern District of New York Loretta Lynch, U.S. Attorney for the District of Massachusetts Carmen Ortiz, U.S. Attorney for the Middle District of Pennsylvania Peter Smith, U.S. Attorney for the District of Delaware Charles Oberly and U.S. Attorney for the District of Maine Thomas Edward Delahanty II, as well as Deputy Director of the SEC Division of Enforcement George Canellos. Several additional federal, state and local law enforcement and regulatory officials, as well as consumer protection experts, are on hand to educate members of the community to help identify instances of fraud or abuse and help them protect their investments. For more information on the summit in Stamford, please contact Thomas Carson at 203-821-3722 or [email protected].
The second investor fraud summit will take place in Nashville, on Thursday, Oct. 4, 2012, from 8:45 a.m. to 12:30 p.m. EDT at Vanderbilt University Law School’s Flynn Auditorium located at 131 21st Avenue South. The summit will be hosted by U.S. Attorney for the Middle District of Tennessee Jerry E. Martin. Guest speakers include FFETF Executive Director Michael Bresnick, U.S. Attorney for the Western District of Virginia Timothy Heaphy, U.S. Attorney for the Northern District of Georgia Sally Yates, U.S. Attorney for the Western District of North Carolina Anne Tompkins, U.S. Attorney for the District of South Carolina Bill Nettles and Assistant Director for the Office of Legal & Victim Programs in the Executive Office of U. S. Attorneys Kristina Neal. These speakers will be joined by other U.S. Attorneys from neighboring states, Enforcement Attorney for the SEC Atlanta Regional Office William Dixon as well as representatives from the Financial Crimes Division of the FBI, the SEC and the Better Business Bureau. The summit will focus on educating the investing public on how to avoid falling prey to investment fraud schemes. For more information on the summit in Nashville, please contact David Boling at 615-736-5956 or [email protected].
The third investor fraud summit will take place Tuesday, Oct. 9, 2012, in Walnut Creek, Calif., from 9:00 a.m. to 1:00 p.m. PDT at the Rossmoor Retirement Community - Gateway Complex located at 1001 Rain Road. The event will be hosted by U.S. Attorney for the Northern District of California Melinda Haag. Guest speakers include U.S. Attorney for the Eastern District of California Ben Wagner, U.S. Attorney for the Central District of California André Birotte, U.S. Attorney for the Southern District of California Laura Duffy and Director of the SEC San Francisco Regional Office Marc Fagel. Other U.S. Attorneys who will be present include U.S. Attorney for the District of Oregon Amanda Marshall, U.S. Attorney for the District of Alaska Karen L. Loeffler and U.S. Attorney for the District of Hawaii Florence T. Nakakuni. Representatives from FinCEN, FBI, Google and CNBC will also participate in informative panels highlighting the rise in investment fraud schemes in the United States; useful strategies to identify fraudsters; and new, proactive approaches to help protect your savings and investment. This event is open to residents of the Rossmoor Retirement Community and the media only. For more information on the summit in Walnut Creek, please contact Jack Gillund at 415-436-6599 or [email protected].
The fourth investor fraud summit will take place in Denver on Wednesday, Oct. 10, 2012, from 8:00 a.m. to 12:00 p.m. MDT at the Tivoli Building - Turnhalle Auditorium located at 900 Auraria Parkway, Suite 150. The summit, lead by U.S. Attorney for the District of Colorado John Walsh, will feature U.S. Attorney for the District of Utah David Barlow, U.S. Attorney for the District of Montana Michael Cotter, U.S. Attorney for the Western District of Oklahoma Sanford Coats, U.S. Attorney for the District of New Mexico Kenneth Gonzalez, U.S. Attorney for the District of Kansas Barry Grissom and Colorado Attorney General John Suthers. Multiple federal, state and local officials, including Director of the SEC’s Denver Regional Office Donald Hoerl, as well as representatives from consumer and business groups will be on hand for informative and interactive panels. Participants will learn what steps are being taken by law enforcement to help protect them from fraud, warning signs and how to outsmart scams and protect their hard-earned money. For more information on the summit in Denver, please contact Matt Kirsch at [email protected] or 303-454-0100.
The fifth investor fraud summit will take place Thursday, Oct. 11, 2012, in Beachwood, Ohio, from 8:30 a.m. to 12:30 p.m. EDT at the Montefiore Senior Living Center located at 1 David Myers Parkway. The summit will be hosted by U.S. Attorney for the Northern District of Ohio Steven Dettelbach and attendees will include U.S. Attorney for the Eastern District of Michigan Barbara McQuade, U.S. Attorney for the Southern District of Ohio Carter Stewart and U.S. Attorney for the Western District of Pennsylvania David Hickton. Federal, state and local law enforcement officials, including Director of the SEC’s Chicago Regional Office Merri Jo Gillette, along with representatives from consumer groups will discuss investor and consumer fraud, with a particular focus on scams that target senior citizens and the elderly. These experts will offer advice, discuss fraud trends and detail the best ways to protect yourself and your savings. For more information on the summit in Beachwood, please contact Jena Suhadolnik at 216-622-3695.
The sixth and final investor fraud summit will take place in Miami on Friday, Oct. 12, 2012, from 9:00 a.m. to 1:00 p.m. EDT at the Miami Dade College – in the Chapman Conference Center, located at 245 N.E. Fourth Street, Bldg. 3, Room 3210. U.S. Attorney for the Southern District of Florida Wifredo Ferrer will host the summit that will feature Attorney General Eric Holder. They will be joined by U.S. Attorney for the Middle District of Florida Robert O’Neill, U.S. Attorney for the Northern District of Florida Pamela Marsh, U.S. Attorney for the Northern District of Alabama Joyce Vance, Director of the SEC’s Miami Regional Office Eric Bustillo and representatives from the Florida Office of Financial Regulation, FBI, FTC, the Better Business Bureau, AARP, FINRA and others to discuss issues associated with investment fraud schemes and help educate investors on how to avoid falling victim to such schemes. The summit will focus on recent investment fraud prosecutions, fraud trends and will include testimonies from victims of investment fraud and a discussion of preventive measures. For more information on the summit in Miami, please contact Lilian Cruz at 305-961-9393.
If you think you may be a victim of investor fraud, please call your local FBI office for assistance. To find your local office, please visit: www.fbi.gov/contact-us/field.For tips on how to spot investor scams and for more information on investor fraud in general, please visit: www.stopfraud.gov.
President Obama established the interagency Financial Fraud Enforcement Task Force (FFETF) to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force, chaired by Attorney General Eric Holder, includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets and recover proceeds for victims of financial crimes. For more information about the FFETF, please visit: www.stopfraud.gov.
El Paso-Based ReadyOne Industries to Pay $5 Million <br /> to Resolve False Claims Act AllegationsRead the Press Release
ReadyOne Industries Inc. has agreed to pay $5 million to resolve allegations that it violated the False Claims Act by knowingly submitting false certific ations regarding the annual percentages of dir ect labor hou rs per formed by people with sev ere disabilities, the Justice Department announced today. ReadyOne, previously known as the National Center for Employment of the Disabled (NCED), is headquartered in El Paso, Texas, and is a manufacturer of apparel, boxes and other products.
NCED was a participant in the AbilityOne® Program, which creates employment opportunities for people who are blind or have other significant disabilities in the manufacture and delivery of products and services to the federal government. The program uses the purchasing power of the federal government to buy approved products and services from participating, community-based nonprofit agencies nationwide. These community-based nonprofit agencies, like NCED, must ensure that 75 percent of all annual direct labor hours on certain government contracts are performed by employees who are blind or severely disabled. The program is managed by the Committee for Purchase From People Who Are Blind or Severely Disabled, which is a federal agency. The United States alleges that, between 2000 and 2006, NCED employed a large number of non-disabled employees to work on contracts for the manufacture of archival boxes, apparel and other items, and did not appropriately account for their hours as part of the overall ratios it certified and submitted to the committee.
“The AbilityOne program is an important source of employment for people who are blind or have other significant disabilities,” said Stuart Delery, Acting Assistant Attorney General for the Civil Division of the Department of Justice. “False certifications undermine that program and will not be tolerated.”
“This settlement is particularly important because it protects the integrity of a program that ensures disabled individuals are able to reach their maximum employment potential,” said U.S. Attorney Neil H. MacBride for the Eastern District of Virginia.
“AbilityOne Program integrity is paramount. We will continue to monitor and ensure that the people the AbilityOne Program was designed to employ are, in fact, the ones benefitting from this program. We appreciate the Department of Justice’s persistence and professionalism in resolving this matter,” said Tina Ballard, Executive Director and CEO, Committee for Purchase From People Who Are Blind or Severely Disabled.
The settlement arises from a qui tam, or whistleblower, lawsuit filed in the Eastern District of Virginia under the False Claims Act by Michael Ahumada, a former employee of NCED. Under the qui tam provisions of the False Claims Act a private citizens may file actions for false claims on behalf of the United States and share in any recovery.
The government’s investigation was conducted by the U.S. Attorney’s Office for the Eastern District of Virginia, the Civil Division of the U.S. Department of Justice, the General Services Administration and the Committee for Purchase from People Who Are Blind or Severely Disabled. The claims settled by this a gre ement are alle gations onl y, and the re has b een no det ermination of liabilit y.
The lawsuit is captioned as United States ex rel. Mike Ahumada v. National Center for Employment of the Disabled, et al., No. 1:06-cv-713 (E.D. Va.).