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15 August 2012
Federal Court in Kansas City, Kansas, Shuts Down Tax-return PreparerRead the Press Release
A federal court in Kansas City, Kan., has permanently barred Ahferom Goitom from preparing federal tax returns for others, the Justice Department announced today. The civil injunction order, to which Goitom consented without admitting the allegations against him, was signed by Judge John W. Lungstrum of the U.S. District Court for the District of Kansas. The case is one of five similar lawsuits (the others were filed in Indianapolis; Las Vegas; Chicago; and Dayton, Ohio) to shut down four of the largest Instant Tax Service franchise owners, as well as the Dayton-based corporate franchisor of the Instant Tax Service brand—ITS Financial LLC.
The government complaint in the Kansas case alleges that Goitom managed an Instant Tax Service store in Kansas City, Kan., where he prepared false and fraudulent income tax returns for others. The United States accused Goitom of forging forms W-2, filing returns improperly based on paycheck stubs rather than W-2 wage statements, fabricating income for phony businesses to obtain larger tax credits, claiming false education tax credits and filing tax returns without customer authorization. The complaint also alleges that Goitom sold false and deceptive loan products to Instant Tax Service customers.
According to the government complaint, the Instant Tax Service store Goitom managed in Kansas City is owned by his brother and co-defendant, Semere Tsehaye. The suit against Tsehaye is still pending.
In the past decade the Justice Department’s Tax Division has obtained hundreds of injunctions to stop the promotion of tax fraud schemes and the preparation of fraudulent returns. More information about these cases is available on the Justice Department website .
Related Document:
United States v. Semere Tsehaye, et al.
Stipulated Order for Permanent Injunction Against Ahferom Goitom (PDF)
Delaware Company Fined for Unlawful Discharges of Oil in Jefferson Parish, LouisianaRead the Press Release
WASHINGTON – A Delaware company was fined $557,000 for negligently discharging oil into the bayous of Jefferson Parish, La., the Department of Justice announced.
Cedyco Corporation, headquartered in Houston, was sentenced today in federal court in the Eastern District of Louisiana.
On May 23, 2012, Cedyco pleaded guilty to three counts of violating the Federal Water Pollution Control Act (Clean Water Act). The Clean Water Act makes it a misdemeanor to negligently discharge harmful quantities of oil into navigable waters of the United States.
All of the fine money will be directed to the Oil Spill Liability Trust Fund to aid the U.S. Coast Guard in responding to future oil spills. Additionally, Cedyco also agreed to cease operations and divest itself of all hydrocarbon business interests in the state of Louisiana.“We owe a debt of gratitude to the men and women of the U.S. Coast Guard along with EPA-CID and Louisiana DEQ for their continued vigilance in protecting our precious environment and water resources from companies and individuals who discharge oily waste into our waters,” said Jim Letten, U.S. Attorney for the Eastern District of Louisiana. “We will remain committed to the apprehension and punishment of these violators in defense of our environment. The protection of our precious environment is a critical mission which we take very seriously. Simply stated, we will not tolerate the negligent contamination of our waterways.”
“It’s important that we hold polluters accountable for their actions, and today's sentence does this,” said Captain Peter Gautier, Commander of Coast Guard Sector New Orleans. “I applaud the efforts of our partner agencies and internal investigators for their tireless efforts in prosecuting this case. The Coast Guard, EPA, LDEQ and Department of Justice will continue to hold polluters responsible for their actions.”
“Our nation’s environmental laws are designed to protect oceans and inland waterways from illegal and harmful pollutant discharges,” said Ivan Vikin, Special Agent in Charge of EPA’s criminal enforcement program in Louisiana. “Today’s sentence sends a clear message that companies that refuse to operate lawfully and pollute our waters, threatening people's health and the environment, will be vigorously prosecuted.”
Cedyco owned and operated several hydrocarbon facilities, including fixed barges, platforms and wells, in the brackish bayous of South Louisiana. As a general matter, Cedyco’s facilities were poorly maintained and operated without plans and permits required by regulations issued by the Louisiana Department of Environmental Quality (LDEQ) as administrator of the federal Clean Water Act. Cedyco’s negligent operation and poor maintenance of three of its facilities in Jefferson Parish led to harmful discharges of oil into the navigable waters of the United States. The three facilities are the tank battery known as the “Bayou St. Denis facility,” the production and storage facility known as the “Bayou Dupont facility,” and the production well adjacent to the Bayou Dupont facility known as “Well #10.” Each facility will be addressed in turn.“DEQ and its partners are dedicated to policing and enforcing environmental laws. Today’s sentence further illustrates that commitment,” said LDEQ Secretary Peggy Hatch.
Cedyco’s Bayou St. Denis facility was a tank battery located south of the Barataria Waterway. A May 29, 2008, joint inspection by the U.S. Coast Guard (USCG) and LDEQ revealed that the facility was storing oil without the required Facility Response Plan, Spill Prevention and Control Plan, and LDEQ permit as required under Clean Water Act regulations. The condition of the facility was extremely poor with corroded pipes and spilled oil on the deck. On June 15, 2008, enough oil was leaking from the facility that a sheen was visible on the surface of the water. A fisherman reported this sheen to the USCG, and a subsequent site visit by LDEQ on June 20, 2008, confirmed that oil was leaking into the adjacent waterway from the facility’s outfalls.
Cedyco’s Bayou Dupont facility is an oil storage and production platform located to the northeast of Bayou St. Denis, close to the Plaquemines Parish line. From Feb. 18, 2008, to May 19, 2008, Cedyco operated this facility without a Facility Response Plan, Spill Prevention and Control Plan and LDEQ permit. A joint USCG and LDEQ inspection on Feb. 19, 2008, revealed that the facility was in extremely poor condition with pools of oily water and emulsified oil on the deck, as well as ample evidence of extensive corrosion and leaks. The required spill response equipment was either missing or defective. For example, an absorbent boom meant to soak up oil spills had a plant growing out of it. During rain events that took place from Feb. 19, 2008, through May 18, 2008, the deck oil made its way unimpeded into the bayou through unfiltered outfalls and cracks in the deck and containment structures. The sources of this oil were not only chronic leaks and occasional spills, but at times resulted from acute events such as the leak from the slop oil tank that occurred on May 18, 2008. The May 18 slop oil tank spill was observed by an LDEQ inspector who took photographs at the scene. During the charged period, the quantity of oil that was present on the deck of Bayou Dupont facility was sufficient to cause a sheen when rain caused the oil to wash into the adjacent waterway.
Cedyco’s Well #10 is located in an area of bayou adjacent to the Bayou Dupont facility. Cedyco did not properly maintain Well #10, and as a result of that negligence, the well began to leak on or about May 17, 2008. The leak continued for at least two days. Before it was contained with boom, the leak resulted in an oily sheen that was detected as far as two miles downstream from the well. The leaking oil also resulted in an emulsion being deposited on the adjacent shoreline.
The case was investigated by agents of CGIS and Environmental Protection Agency-Criminal Investigation Division (EPA-CID) and by USCG and LDEQ inspectors. The case is being prosecuted by Christopher L. Hale of the Justice Department’s Environmental Crimes Section and Dorothy “Dee” Taylor of the U.S. Attorney’s Office for the Eastern District of Louisiana.Filed photo exhibits are available at the U.S Coast Guard website: http://cgvi.uscg.mil/media/main.php?g2_itemId=1627304.
Alabama Women Indicted in $2.8 Million Conspiracy<br /> <br /> to Use Stolen Identities to Obtain Tax RefundsRead the Press Release
A federal grand jury in Montgomery, Ala., returned a 25-count indictment charging Larreka Jackson for conspiring to file false tax returns using stolen identities, filing false claims, wire fraud and aggravated identity theft, the Justice Department and the Internal Revenue Service (IRS) announced today.
According to the indictment, Jackson operated a tax preparation business called It’s Tax Time in Montgomery, Ala. Jackson used It’s Tax Time as a front to file false tax returns using stolen identities. Jackson unlawfully obtained the names and Social Security numbers of actual persons and filed false tax returns using those names. Jackson directed the fraudulent tax refund to bank accounts controlled by her and her co-conspirators. In total, Jackson filed over 500 tax returns claiming over $2.8 million in fraudulent tax refunds.
An indictment merely alleges that crimes have been committed, and the defendant is presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Jackson faces a maximum potential penalty of 10 years in prison for the conspiracy to file false claims, 5 years for each false claim count, 20 years for each wire fraud count and a mandatory 2-year sentence for the aggravated identity theft counts. Jackson is also subject to fines and mandatory restitution if convicted.
The case was investigated by special agents of IRS - Criminal Investigation. Trial Attorneys Jason H. Poole and Michael Boteler of the Justice Department’s Tax Division and Assistant U.S. Attorney Todd Brown are prosecuting the case.
Additional information about the Tax Division and its enforcement efforts may be found at www.justice.gov/tax.
14 August 2012
Owner of Miami Home Health CompanyPleads Guilty in $60 Million Health Care Fraud SchemeRead the Press Release
WASHINGTON – The owner of a Miami health care agency pleaded guilty today for his participation in a $60 million home health Medicare fraud scheme, announced the Department of Justice, the FBI and the Department of Health and Human Services (HHS).
Rodolfo Nieto Jr., 40, of Miami, pleaded guilty before U.S. District Judge Cecilia M. Altonaga in the Southern District of Florida to one count of conspiracy to defraud the United States and to receive health care kickbacks.
According to the court documents, Nieto was the owner and operator of Ronat Home Health Care Inc. According to court documents, during the time of the conspiracy, Ronat was a Florida home health “staffing agency” that purported to provide home health care and physical therapy services to eligible Medicare beneficiaries. Ronat subsequently became a home health agency.According to court documents, from approximately January 2006 to approximately November 2009, Nieto accepted kickbacks in return for recruiting Medicare beneficiaries to be placed at Nany Home Health Inc., a Miami home health agency that purported to provide home health care and physical therapy services to eligible Medicare beneficiaries. The owners and operators of Nany paid Nieto kickbacks in return for allowing Nany to bill the Medicare program on behalf of the patients Nieto had recruited through Ronat. Specifically, as part of the scheme, Nany billed Medicare for home health services purportedly provided by Ronat.
In a related case, on April 25, 2012, Roberto Gonzalez and Olga Gonzalez, president and vice president of Nany, and their son, Fabian Gonzalez, all of whom operated Nany, were sentenced to 120, 87 and 87 months in prison, respectively, following their Dec. 19, 2011, guilty pleas to one count each of conspiracy to commit health care fraud. From approximately January 2006 through November 2009, Roberto, Olga and Fabian Gonzalez and their co-conspirators submitted approximately $60 million in false and fraudulent claims to Medicare, and Medicare paid approximately $40 million on those claims.
At sentencing, scheduled for Oct. 23, 2012, Nieto faces a maximum penalty of five years in prison and a fine of $250,000 or twice the pecuniary gain or loss.
The plea was announced by 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; Jeffrey C. Mazanec, Acting Special Agent-in-Charge of the FBI’s Miami Field Office; and Special Agent-in-Charge Christopher B. Dennis of the HHS Office of Inspector General (HHS-OIG), Office of Investigations Miami Office.
This case is being prosecuted by Senior Trial Attorney Joseph S. Beemsterboer of the Criminal Division’s Fraud Section. The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,330 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.
Justice Department Settles Lawsuit Against South Carolina Landlord for Discriminating Against Families with ChildrenRead the Press Release
The Justice Department announced today that John Wingard Altman has agreed to pay $25,000 to settle a lawsuit involving violations of the Fair Housing Act at Altman Apartments, a 16-unit apartment complex he owns in Summerville, S.C. In July 2012, the court, ruling on a motion filed by the government, found that the defendant had violated the Fair Housing Act by discriminating against families with children.
Under the consent order, which was approved today by the U.S. District Court for the District of South Carolina, the defendant must pay $15,000 to two people who were harmed by the defendant’s discriminatory practices and $10,000 to the United States as a civil penalty. In addition, the order prohibits the defendant from engaging in discrimination against families with children in the future and requires that he adopt a non-discrimination policy in addition to receiving training on the Fair Housing Act.
“The Fair Housing Act protects families with children against housing discrimination,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “Providing an equal opportunity for families with children to access housing without discrimination is required by law critical and we will vigorously enforce the law to ensure all families have access to housing.”
“This office follows the lead of the Department of Justice’s strong stance to ensure that access to one of the most basic of human needs, shelter, is not impeded by prejudice,” said William M. Nettles, U.S. Attorney for the District of South Carolina.
Filed in September 2011, the lawsuit alleged that Mr. Altman, through published advertisements and statements to testers, maintained a policy or practice of discouraging families with children from living in the apartment complex. Testers are individuals who pose as renters to gather information about possible discriminatory practices; the evidence in this case was obtained by the department’s Fair Housing Testing Program.
The federal Fair Housing Act prohibits discrimination in housing based on race, color, religion, national origin, sex, disability and familial status. Fair housing enforcement is a priority of the Civil Rights Division. More information about the Civil Rights Division and the laws it enforces is available at www.justice.gov/crt . Individuals who believe that they may have been victims of housing discrimination can call the Housing Discrimination Tip Line at 1-800-896-7743, email the Justice Department at [email protected] , or contact the U.S. Department of Housing and Urban Development at 1-800-669-9777.
Justice Department Settles Claims of Discrimination Against Philadelphia Employment AgencyRead the Press Release
The Justice Department announced today that it reached a settlement agreement with Best Packing Services Employment Agency Inc., which is based in Philadelphia, resolving allegations that the company discriminated under the anti-discrimination provision of the Immigration and Nationality Act (INA), when it impermissibly delayed the start date of two refugees after requiring them to provide specific Form I-9 documentation.
In two charges filed with the department, the refugees alleged that they were not allowed to begin employment until they produced unexpired, Department of Homeland Security-issued employment authorization documents, despite the fact that they initially presented sufficient documentation for employment eligibility verification purposes. The charging parties had presented unexpired state identification cards and unrestricted Social Security cards at the time of hire. Both were permanently work-authorized but lost several weeks’ worth of wages as a result of Best Packing’s practices. The department’s investigation revealed that Best Packing did not demand specific Form I-9 documentation from U.S. citizens, but allowed them to provide state identification cards and unrestricted Social Security cards. The anti-discrimination provision prohibits treating employees differently in the employment eligibility verification and reverification processes based on citizenship status or national origin.
As part of the settlement, Best Packing will undertake immediate corrective action to address and rectify its employment eligibility verification policies and practices. As part of its corrective action, Best Packing will provide full back pay to both victims. Under the settlement agreement, the company agrees to pay $4,379 in back pay, to conform all of its actions to ensure compliance with the INA’s anti-discrimination provision and to train its human resources personnel about the company’s responsibility to avoid discrimination in the employment eligibility verification process.
“The Civil Rights Division is pleased that Best Packing has prioritized compliance with the Immigration and Nationality Act,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “We encourage all employers to evaluate their policies and practices to ensure compliance with the INA’s anti-discrimination provision.”
The Office of Special Counsel (OSC) for Immigration-Related Unfair Employment Practices is responsible for enforcing the anti-discrimination provision of the INA, which protects work-authorized individuals from employment discrimination on the basis of citizenship status or national origin discrimination, including discrimination in hiring and the employment eligibility verification process.
For more information about protections against employment discrimination under the immigration laws, call the OSC’s worker hotline at 1-800-255-7688 (1-800-237-2525, TDD for hearing impaired), call the OSC’s employer hotline at 1-800-255-8155 (1-800-362-2735, TDD for hearing impaired), sign up for a no-cost webinar at www.justice.gov/crt/osc/webinars.php , email [email protected] or visit the website at www.justice.gov/crt/about/osc .
13 August 2012
Residents of California and Utah Sentenced for Tax FraudRead the Press Release
David L. Johnson and Michael L. Putnam were sentenced today following their convictions for tax crimes related to their involvement in the Genesis Fund, the Justice Department and Internal Revenue Service (IRS) announced. Both Johnson and Putnam had previously pleaded guilty before U.S. District Judge Dale S. Fischer in the Central District of California. According to the original indictment filed in this case, the Genesis Fund was a private investment fund that was marketed as investing in foreign currency trading, but that operated as a Ponzi scheme.
Johnson, 73, of Loma Linda, Calif., was sentenced to 30 months in prison for filing two false tax returns in which he failed to disclose his bank account in Costa Rica to the IRS. According to the plea agreement, Johnson used this bank account to conceal Genesis Fund distributions from the IRS. Judge Fischer also ordered Johnson to pay restitution of $2.3 million: approximately $1.9 million to investors in the Genesis Fund and $400,000 to the IRS.
Putnam, 68, of St. George, Utah, formerly of Huntington Beach, Calif., was sentenced to 12 months and a day in prison for conspiracy and tax fraud and ordered to pay over $13 million in restitution: approximately $10 million to investors in the Genesis Fund and $3 million to the IRS. According to court documents, Putnam had cooperated with the government in the prosecution of other defendants charged for their involvement in the Genesis Fund.
According to court documents, Johnson and Putnam received significant distributions that they hid in foreign bank accounts and did not report to the IRS. Johnson received over $2.4 million while Putnam received over $1.5 million.
Johnson and Putnam are the 10th and 11th defendants to be sentenced for crimes related to the promotion of the Genesis Fund.
Kathryn Keneally, Assistant Attorney General for the Justice Department’s Tax Division, commended the efforts of special agents of IRS - Criminal Investigation in Laguna Niguel, Calif., for investigating the case, and Tax Division Trial Attorneys Lori A. Hendrickson, Matthew J. Kluge, Ellen M. Quattrucci and Danny N. Roetzel for prosecuting the case, with the assistance of the U.S. Attorney’s office in Los Angeles.
Miami-Area Patient Broker Sentenced to 18 Months in Prison for Role in $200 Million Medicare Fraud SchemeRead the Press Release
WASHINGTON – A Miami-area patient broker was sentenced today to 18 months in prison for recruiting Medicare beneficiaries as part of a $200 million Medicare fraud scheme, the Department of Justice, FBI and Department of Health and Human Services announced.
Jean-Luc Veraguas, 51, of Plantation, Fla., was sentenced by U.S. District Judge Frederico A. Moreno in the Southern District of Florida. In addition to his prison term, Veraguas was ordered to pay $1.8 million in restitution, jointly and severally with other co-conspirators.
On May 30, 2012, Veraguas pleaded guilty to one count of conspiracy to commit health care fraud. Veraguas admitted to serving as a patient broker for American Therapeutic Corporation (ATC) and other health care agencies. ATC 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.
According to court documents, Veraguas recruited patients to attend ATC’s PHP program, among others, in exchange for illegal kickbacks. Veraguas admitted that based on his recruiting efforts, he caused $3.8 million in fraudulent bills to Medicare. Veraguas admitted he knew many of the individuals he recruited did not need the treatment they purported to have received.
According to court filings, ATC’s owners and operators paid millions of dollars in kickbacks to owners and operators of assisted living facilities and halfway houses and to patient brokers in exchange for delivering ineligible patients to ATC. According to court filings, co-conspirators fabricated documents in patient files to hide the fact that the patients did not, in the first instance, qualify for treatment and did not ultimately receive the treatment for which Medicare was billed.
ATC, its management company, Medlink Professional Management Group Inc., and various owners, managers, doctors, therapists, patient brokers and marketers of ATC, were charged with various health care fraud, kickback, money laundering and other offenses in two indictments unsealed on Feb. 15, 2011. ATC, Medlink and more than 20 of the individual defendants charged in these cases have pleaded guilty or have been convicted at trial.
The sentence was announced by 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; Jeffrey C. Mazanec, Acting Special Agent-in-Charge of the FBI’s Miami Field Office; and Special Agent-in-Charge Christopher Dennis of the HHS Office of Inspector General (HHS-OIG), Office of Investigations Miami office.
The criminal case is being prosecuted by Trial Attorneys Steven Kim, Robert Zink and Alan Medina of the Criminal Division’s Fraud Section. A related civil action is being handled by Vanessa I. Reed and Carolyn B. Tapie of the Civil Division. 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.
Justice Department to Monitor Elections <br /> <br /> in Florida and WisconsinRead the Press Release
The Justice Department announced today that it will monitor elections on Aug. 14, 2012, in the following jurisdictions to ensure compliance with the Voting Rights Act of 1965 and other federal voting rights statutes: Collier, Hendry, Lee, Osceola and Polk Counties, Fla.; and the city of Milwaukee, Wis.
The Voting Rights Act prohibits discrimination in the election process on the basis of race, color or membership in a minority language group. In addition, the act requires certain covered jurisdictions to provide language assistance during the election process. Collier, Hendry, Lee, Osceola and Polk Counties, as well as the city of Milwaukee, are required to provide language assistance in Spanish.
Civil Rights Division personnel will monitor polling place activities in these jurisdictions. Civil Rights Division attorneys will coordinate federal activities and maintain contact with local election officials.
Each year, the Justice Department deploys hundreds of federal observers from Office of Personnel Management, as well as departmental staff, to monitor elections across the country. To file complaints about discriminatory voting practices, including acts of harassment or intimidation, voters may call the Voting Section of the Justice Department’s Civil Rights Division at 1-800-253-3931.
Visit www.justice.gov/crt/voting/index.php for more information about the Voting Rights Act and other federal voting laws.
10 August 2012
Tennessee-Based Home Health Care Provider & Related Entities<br /> <br /> Agree to Pay More Than $9 M to Resolve False Claims Act LawsuitRead the Press Release
James W. Carell, CareAll Management LLC (formerly known as Diversifi ed He alth Mana gement Inc.), C are All Inc., the James W. Car ell Family Trust, V IP Home Nursing and Reh abilitation Servi ces L LC, Professional Home He alth Care L LC, University Home H ealth, LLC and Elizabeth Vining (as representative of the Estate of Robert Vining) have agreed to pay $9.375 million to the federal government. This payment is to resolve the lawsuit that the United States filed in 2009 alleging that they violated the False Claims Act, caused Medicare to pay out money through mistake of fact, and were unjustly enriched by falsely concealing the home health agencies’ relationship with their management company, the Justice Department announced today.
VIP, Professional and University now operate under the name CareAll. James W. Carell and the related CareAll entities named above also agreed to be bound by the terms of a Corporate Integrity Agreement with the Department of Health and Human Services – Office of Inspector General (HHS-OIG).
CareAll and its related entities are one of the largest home health providers in Tennessee. This settlement resolves the United States’ lawsuit alleging that the CareAll entities fraudulently submitted eight cost reports for fiscal years 1999, 2000 and 2001 to support their Medicare billings. The United States alleged that these cost reports were false because they knowingly hid the relationship between the management company and the home health agencies. According to the complaint the United States filed in this case, the cost reports should have disclosed that the management company was related to the home health agencies, which would have lowered the Medicare reimbursement for the management company’s services. During the relevant years, the United States alleged that James W. Carell owned the management company, and his friend Robert Vining – an attorney who lived in Missouri – served as the nominee or “sham” owner of the home health agencies.
The United States further alleged in court filings that the management company exerted significant control over the home health agencies in a myriad of ways, including: James. W. Carell’s key role in facilitating Robert Vining’s purchase of the home health agencies; loans worth millions of dollars from companies owned by James W. Carell to the home health agencies; cash transfers for millions of dollars from the management company to the home health agencies; the management company’s day to day control over the home health agencies’ operations; and Robert Vining’s role as a mere figurehead owner. The United States also alleged in court filings that James W. Carell profited greatly from this “sham” owner relationship and that he monetarily rewarded Robert Vining for his participation in this scheme.
“The false reporting scheme alleged in this case robbed the Medicare Trust Fund of millions of taxpayer dollars,” said Stuart Delery, Acting Assistant Attorney General for the Civil Division of the Department of Justice. “Settlements like this one make sure that our federal health care dollars are spent appropriately – on maintaining critical health care programs.”
“This settlement is yet another example of this office’s commitment to enforcing the False Claims Act in health care cases and protecting the taxpayer’s interests,” said Jerry E. Martin, U.S. Attorney for the Middle District of Tennessee. “The U.S. Attorney’s Office will continue to return money to the federal treasury by aggressively pursuing cases where, based on false reporting and concealment, health care companies are unjustly enriched.”
“This settlement represents a significant victory in our fight against fraud in the Medicare system,” said Derrick L. Jackson, Special Agent in Charge of the U.S. Department of Health and Human Services, Office of Inspector General in Atlanta. “The OIG is committed to protecting the integrity of federal health care programs by aggressively pursuing entities that increase their revenue through deceitful schemes and trickery.”
The United States’ investigation was conducted by the U.S. Attorney’s Office for the Middle District of Tennessee, the Justice Department’s Civil Division and HHS-OIG.
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 more than $9.3 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 $12.9 billion.
The case is docketed as United States v. James W. Carell, et al., No. 3:09-0445 (M.D. Tenn.). 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.
South Carolina Pharmaceutical Distribution Company Pleads Guilty in Multi-Million Dollar Scheme to Purchase and Sell Drugs in the Grey MarketRead the Press Release
The Department of Justice announced the guilty plea and sentencing of Easley, S.C.-based Altec Medical for engaging in a multi-million dollar prescription drug scheme. Altec Medical pleaded guilty in U.S. District Court in Miami to one count of conspiring to defraud the U.S. Food and Drug Administration (FDA) and to commit federal offenses in connection with a drug-diversion scheme that lasted from 2007 to 2009.
In the sentencing, U.S. District Judge Robert N. Scola, Jr. ordered Altec to pay a $2 million fine and to forfeit $1 million. The judge also ordered the company to be on probation for one year.
In a criminal information filed with the court, the government charged that Altec paid its supplier and co-conspirator William D. Rodriguez, approximately $55 million for prescription drugs that it knew had been diverted from lawful channels of drug wholesale distribution. “Drug Diversion” refers to various ways in which prescription drugs are removed from lawful channels of distribution and then reintroduced into the marketplace for sale to consumers. In drug diversion schemes, prescription drugs at issue are often stolen from warehouses or cargo trucks; torn from boxes of free samples, repackaged and resold; or bought from individual patients looking to make extra money.
“Drug diversion undermines the safety and effectiveness of our prescription drug system,” said Stuart F. Delery, Acting Assistant Attorney General for the Justice Department’s Civil Division. “When individuals divert drugs from lawful channels, we cannot be sure that the drugs are properly handled and stored. As a result, diverted drugs could be expired, become contaminated, or have their mechanisms of action altered. Diversion is a serious crime that puts consumers at risk; we will continue to prosecute those who engage in it aggressively.”
The Justice Department advises consumers who have concerns about a drug to check the lot numbers on the manufacturer’s web site to see if there are any warnings about it.
According to a plea agreement that was filed with the court, Altec became aware that Rodriguez had bought these drugs from individuals who had acquired them illegally and who were not properly licensed to sell prescription drugs on a wholesale basis. The government further charged that Altec and Rodriguez orchestrated the reentry of these drugs into the lawful channels of distribution. According to the government, Rodriguez first sent the diverted drugs to companies he controlled in South Carolina. His companies, in turn, resold the drugs to Altec, which, in turn, resold the drugs to various purchasers throughout the United States, including drug distributors with valid drug distribution licenses. This process caused reentry of the diverted drugs into the ordinary, lawful channels of distribution. Eventually, the diverted drugs were bought by retail pharmacies, which dispensed the drugs by filling prescriptions for individual consumers.
Finally, the government charged that Altec and Rodriguez attempted to conceal their scheme by falsifying a variety of business records. In particular, Altec and Rodriguez falsified documents known as “drug pedigrees.” Drug pedigrees are statements required by the FDA of all those who sell wholesale quantities of prescription drugs. The drug pedigrees are supposed to accurately identify all prior sales and transactions so that it is clear that the drugs have been acquired lawfully, and properly stored and held along the way. Despite knowing that the law required accurate pedigrees, Altec admitted that it created pedigrees that falsified prior transactions to make it appear as though the drugs had originally been acquired lawfully.
Use of diverted drugs can cause unpredictable adverse side effects and may fail to treat the condition for which a consumer is taking the drugs. According to the government, neither purchasers who bought from Altec nor consumers who later bought the drugs at retail pharmacies would have purchased the drugs had they known that the drugs had been diverted.
In June 2012, in U.S. District Court in Miami, Rodriguez pleaded guilty to conspiracy and money laundering in a separate case charging him with, among other things, his role in this drug diversion scheme. He has not yet been sentenced.
The case was prosecuted by Assistant U.S. Attorney Jon M. Juenger, of the U.S. Attorney’s Office for the Southern District of Florida, and David A. Frank, of the Justice Department’s Consumer Protection Branch. Additional assistance was provided by Joshua Eizen, of the FDA’s Office of Chief Counsel for Enforcement. The case was investigated by the FDA’s Office of Criminal Investigations.
New York Federal Court Bars Womanfrom Preparing Tax ReturnsRead the Press Release
A federal court in Central Islip, N.Y., has permanently barred Diana D. Bertocci-Aliffi from preparing federal tax returns for others, the Justice Department announced today. The civil injunction order, to which Aliffi agreed without admitting the government’s allegations, was signed by Judge Joanna Seybert of the U.S. District Court of the Eastern District of New York.
The government complaint in the case alleged that Aliffi, of East Rockaway, claimed false Indian Employment Tax Credits (IETCs) for customers who were not eligible for the credits. The IETC is a credit for employers of certain qualified employees who are or whose spouses are members of an enrolled Indian tribe. It is not a credit for Native Americans who have no qualified employees. According to the complaint, Aliffi falsely told her customers, many of whom lived on or near the Shinnecock Indian Reservation in Southampton, N.Y., that they were eligible for the credit simply because they were Native Americans and lived on or near a reservation. Aliffi allegedly prepared federal income tax returns for these customers and improperly claimed the IETC on the returns. Aliffi also allegedly fabricated wage income and tax withholding on other customers’ tax returns in order to obtain larger tax refunds.
The government complaint alleged that Aliffi was incarcerated from February to August 2009 after pleading guilty in a New York state court to 76 counts of grand larceny, identity theft and forgery related to her tax preparation activities. According to the complaint she had stolen her customers’ personal information to file false federal and New York State tax returns, applied for refund anticipation loans using the false returns, and then diverted part of those loans to her own bank accounts.
In the past decade the Justice Department’s Tax Division has obtained injunctions against hundreds of tax return preparers and tax fraud promoters. Information about these cases is available on the Justice Department website .
Related Documents: Complaint for Permanent Injunction
Stipulated Final Judgment of Permanent InjunctionJustice Department Releases Investigative Findings Showing Constitutional Rights of Children in Mississippi Being ViolatedRead the Press Release
The Justice Department released a letter of findings today determining that the Lauderdale County Youth Court, the Meridian Police Department (MPD), and the Mississippi Division of Youth Services (DYS) are violating the constitutional rights of juveniles in Meridian, Miss. The department’s investigation found reasonable cause to believe that these agencies have violated the constitutional due process rights of children in the city of Meridian and the county of Lauderdale under the Fourth, Fifth, and Fourteenth Amendments of the U.S. Constitution.
The department initiated a comprehensive investigation in December 2011 under Section 14141 of the Violent Crime Control and Law Enforcement Act of 1994, which prohibits a pattern or practice of deprivation of civil rights for juveniles in the administration of juvenile justice, and Title VI of the Civil Rights Act of 1964, which prohibits discrimination on the basis of race, color or national origin by recipients of federal financial assistance. The Justice Department continues to investigate whether any of the agencies are violating children's rights under Title VI or the Equal Protection Clause of the Fourteenth Amendment.
The department’s investigation showed that the agencies have helped to operate a school-to-prison pipeline whereby children arrested in local schools become entangled in a cycle of incarceration without substantive and procedural protections required by the U.S. Constitution. The department’s findings show that children in Lauderdale County have been routinely and repeatedly incarcerated for allegedly committing school disciplinary infractions and are punished disproportionately, without constitutionally required procedural safeguards. Children have also been arrested at school for offenses as minor as defiance. Furthermore, children on probation are routinely arrested and incarcerated for allegedly violating their probation by committing minor school infractions, such as dress code violations, which result in suspensions. The department’s investigation showed that students most affected by this system are African-American children and children with disabilities.
“The systematic disregard for children’s basic constitutional rights by agencies with a duty to protect and serve these children betrays the public trust,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “We hope to resolve the concerns outlined in our findings in a collaborative fashion, but we will not hesitate to take appropriate legal action if necessary.”
In its investigation, the Justice Department found a pattern or practice of unconstitutional conduct in several areas, including:
- Failure by MPD to adequately assess probable cause that an unlawful offense has been committed prior to arresting children at local schools;
- Failure by the Lauderdale County Youth Court to provide children with proper procedural due process, including by making untimely and inadequate probable cause determinations;
- Failure by the Lauderdale County Youth Court and the Mississippi DYS to provide children procedural due process rights in the probationary process, especially with regard to alleged probation violations; and
- Failure by all entities to ensure substantive due process for children on probation by incarcerating children for school disciplinary offenses without any procedural safeguards.
“The U.S. Attorney’s Office is committed to seeing the rule of law applied to all citizens fairly and equally,” said Gregory Davis, U.S. Attorney for the Southern District of Mississippi. “We hope to be able to resolve the civil rights violations found by the Justice Department in a way that benefits all the people of Meridian and Lauderdale County, including those children who are being treated unfairly by the juvenile justice system.”
This investigation was conducted by the Civil Rights Division’s Special Litigation Section, working in conjunction with the Educational Opportunities Section, which has a long-standing school desegregation case against the Meridian Public School District, and the U.S. Attorney’s Office for the Southern District of Mississippi. For more information on the Justice Department’s Civil Rights Division, please visit www.justice.gov/crt.
Related Materials:
Letter of Findings
Indiana Online Identity Thief Sentenced to 48 Months in Prison for Counterfeit Credit Card Conspiracy Involving More Than $3 Million in LossesRead the Press Release
WASHINGTON – A Munster, Ind., man was sentenced today in U.S. District Court in Alexandria, Va., to serve 48 months in prison for his role in a conspiracy that involved operation of an online identity theft business that sold counterfeit credit cards encoded with stolen account information, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Neil H. MacBride for the Eastern District of Virginia.
Peter Borgia Jr., 22, was sentenced by U.S. District Judge Leonie M. Brinkema. In addition to his prison term, Borgia was ordered to pay $3,138,678.05 in forfeiture and to serve three years of supervised release. Borgia pleaded guilty on May 18, 2012, to one count of conspiracy to commit wire fraud and one count of aggravated identity theft.
In his plea, Borgia admitted he was part of a conspiracy that ran an online business selling counterfeit credit cards encoded with stolen account information. According to court documents, the conspiracy utilized multiple online personas in criminal “carding forums,” Internet discussion groups set up to facilitate buying and selling stolen financial account information and other goods and services to promote credit card fraud. In these forums and in other Internet communications, the conspiracy regularly purchased or received stolen credit card account information, which was then used to make counterfeit credit cards for sale to others.
In June 2010, U.S. Secret Service special agents executed a search warrant at Borgia’s co-conspirator’s apartment and found a counterfeit credit card manufacturing operation and nearly 21,000 stolen credit card numbers and related information in computers and email accounts. According to court documents, credit card companies have identified thousands of fraudulent transactions using the card numbers found in the co-conspirator’s possession, totaling more than $3 million.
The case was investigated by the U.S. Secret Service Criminal Investigative Division and Chicago Field Office, with assistance from the U.S. Marshals Service from the Northern District of Illinois and the Northern District of Indiana, and the Oak Brook, Ill., Police Department. The case was prosecuted by Michael J. Stawasz, a Senior Counsel for the Computer Crime and Intellectual Property Section of the Justice Department’s Criminal Division and a Special Assistant U.S. Attorney for the Eastern District of Virginia.
Federal Court Permanently Bars Detroit Husband and Wife from Promoting Alleged Tax-fraud Schemeand from Preparing Federal Tax ReturnsRead the Press Release
A federal court has permanently barred a Michigan couple, Damian and Holly Jackson, of Detroit, from preparing federal tax returns for others, preparing their own federal tax returns using false 1099 forms, and promoting an alleged tax-fraud scheme based on the frivolous “redemption” theory, the Justice Department announced today. The civil injunction order, to which the Jacksons consented without admitting the allegations against them, was signed by Judge Paul D. Borman of the U.S. District Court for the Eastern District of Michigan.
The government complaint in the civil case alleged that the Jacksons and their business, Diamond & Associates Enterprises, operated Diamond Tax Services and promoted a scheme involving the preparation of fraudulent federal income tax returns for customers seeking large tax refunds based on a frivolous tax-defier theory called “redemption” or “commercial redemption.”
The complaint alleged that Damian Jackson, a minister at the Perfecting Church in Detroit, prepared tax returns that claimed huge fraudulent refunds based on fabricated income-tax withholding reported on false IRS 1099 forms. According to the complaint, Holly Jackson transmitted the false 1099 forms to the Internal Revenue Service (IRS). The suit alleged that federal tax returns prepared for at least 182 customers under the auspices of Diamond Tax Services sought over $29 million in fraudulent refunds, and that the Jacksons’ own federal income tax returns have requested more than $2.5 million in bogus refunds. While most of these frivolous refund claims are intercepted by the IRS before refunds are issued, the complaint alleges that the defendants’ scheme has caused the IRS to issue at least $1.6 million in erroneous refunds to the defendants’ customers. According to the complaint, the Jacksons solicited up-front fees of $500 to $995 from customers, and received a 10 percent cut of any refund issued by the IRS.
The injunction suit remains pending against a third defendant.
Return-preparer fraud and false claims for refund using fake information returns, such as Form 1099, are among the IRS’s Dirty Dozen Tax Scams for 2012.
In the past ten years the Justice Department’s Tax Division has obtained injunctions against hundreds of tax-return preparers and tax-fraud promoters. Information about these cases is available on the Justice Department website .
Related Documents: United States v. Damian Jackson, et al., Order of Permanent Injunction Against Damian Jackson and Holly Jackson (PDF)
Arizona Tax Defier Sentenced to Nine Years in Prison for Fraud and Tax ConspiracyRead the Press Release
Richard Kellogg Armstrong, 77, of Prescott, Ariz., was sentenced today by U.S. District Court Judge Robert E. Blackburn to 108 months in prison followed by three years of supervised release. Judge Blackburn ordered the sentence to run con secutively to the 660 day prison term and $1,021,500 of fines cumulatively imposed upon Armstrong as punitive sanctions for 10 acts of contempt of court. He also ordered Armstrong to pay restitution to the Internal Revenue Service (IRS) in the amount of $1,678,834 and to forfeit two residences and a personal aircraft. The sentence was announced by the Justice Department’s Tax Division, the U.S. Attorney’s Office for the District of Colorado and the IRS Criminal Investigation Denver Field Office. Codefendant Curtis L. Morris, age 43, of Elizabeth, Colo., is scheduled to be sentenced on Nov. 6, 2012.
Armstrong was found guilty on April 30, 2012, after a three week jury trial, of one count of mail fraud, eight counts of filing false claims against the United States, three counts of engaging in monetary transactions in property derived from mail fraud, and one count of conspiracy to defraud the United States. According to the testimony at trial, Armstrong, Morris and others conspired to file false tax returns claiming large tax refunds based upon fictitious federal income tax withholdings taken from bogus IRS Forms 1099-OID for themselves and others. Armstrong personally received over $1.6 million in fraudulent tax refunds and, according to the testimony at trial, quickly moved most of this money into accounts in the names of shell entities and offshore bank accounts.
“The sentence in this case demonstrates that those who defy the tax laws by preparing or filing false and frivolous tax returns will be prosecuted and punished for their conduct,” said Kathryn Keneally, Assistant Attorney General for the Justice Department’s Tax Division. “The Tax Division remains committed to prosecuting conduct that attempts to defy our nation’s tax laws.”
“The intent of this refund fraud scheme was to swindle the government and the taxpaying public” said Richard Weber, Chief, IRS-Criminal Investigation. “Today's sentencing of Mr. Armstrong again emphasizes that the Internal Revenue Service and Department of Justice will continue their aggressive pursuit of those who would attempt to defraud America's tax system.”
Assistant Attorney General Keneally commended the efforts of IRS-Criminal Investigation special agents, who investigated the case, and Assistant U.S. Attorney Kenneth Harmon and Special Assistant U.S. Attorney Kevin F. Sweeney, who prosecuted the case. Kevin Sweeney is a trial attorney from the Tax Division, currently on detail to the U.S. Attorney’s Office.
9 August 2012
Former Co-Owner of Contracting Company Pleads Guilty to Defrauding U.S. GovernmentRead the Press Release
WASHINGTON – A former co-owner of a U.S. civilian contractor company pleaded guilty today to falsifying official documents in connection with Iraq reconstruction government contracts, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Robert Pitman for the Western District of Texas.
Jill Ann Charpia, 33, formerly of San Antonio and currently of Colorado, pleaded guilty today before U.S. Magistrate Judge Henry J. Bemporad in San Antonio to a criminal information charging her with one-count of false statements to a government agency.
According to court documents, from 2008 through 2009, Charpia was the co-owner of Sourcing Specialist LLC, a privately owned company that contracted with the United States government to provide services in Iraq. In September 2008, she contracted to provide a turn-key housing facility located outside Iraq’s International Zone to facilitate the introduction of multi-national firms desiring to develop business opportunities in Iraq. That same month, Charpia signed and submitted to the Department of Defense (DOD) Joint Contracting Command Iraq/Afghanistan, for payment through the contract, a false invoice in the amount of $1,270,075.40 purportedly for mobilization costs. She followed up with two invoices, one representing that she had paid $700,000 for the rental of two villas in Baghdad, and the other representing that she had paid $570,075.50 on the purchase of three armored vehicles from an Iraqi company. In October 2008, as a result of her false and fraudulent statements, DOD caused $1,270,075.50 to be wired to Charpia’s bank account. Charpia admitted that she fabricated both invoices and forged the signatures on the documents. She also admitted that she did not purchase any armored vehicles and paid only half the submitted cost for the villas.
At sentencing, scheduled for Nov. 15, 2012, Charpia faces a maximum penalty of five years in prison, a maximum fine of $250,000, or twice the pecuniary gain or loss, and up to three years of supervised release. As part of her plea agreement, Charpia agreed to pay $920,000 plus interest in restitution to the United States.
This case is being prosecuted by Special Trial Attorney Mark Grider of the Criminal Division’s Fraud Section, on detail from the Special Inspector General for Iraq Reconstruction (SIGIR), and by Assistant U.S. Attorney Judith A. Patton of the Western District of Texas. The case is being investigated by SIGIR, Internal Revenue Service-Criminal Investigation and the Major Procurement Fraud Unit of the U.S. Army Criminal Investigation Command.
Federal Court Shuts Down Florida Tax Return PreparersRead the Press Release
A federal court in Miami has permanently barred Sharon Angulo and Claudia Zuloaga, both of Miami, from preparing federal tax returns for others, the Justice Department announced today. The injunction order was signed by Judge Joan A. Lenard of the U.S. District Court for the Southern District of Florida.
According to the government complaint in the civil case, Angulo and Zuloaga help customers use Internal Revenue Service (IRS) Forms 1099-OID to report fictitious income tax withholding. The complaint alleges that Angulo and Zuloaga’s customers file federal tax returns claiming tax refunds based on the fake withholding. The complaint states that the defendants have prepared or assisted in the preparation of at least 19 tax returns reporting false withholding and claiming fraudulent tax refunds totaling more than $3 million.
The court ordered Angulo and Zuloaga to pay to the U.S. Treasury the funds they received from customers who paid them a percentage of the tax refunds received through the scheme. The court also ordered the defendants to provide the government with a list of all persons for whom they prepared federal tax returns or forms since 2008.
The IRS lists return preparer fraud as one of the Dirty Dozen Tax Scams for 2012 . In the past decade the Justice Department’s Tax Division has obtained hundreds of injunctions to stop the promotion of tax-fraud schemes and the preparation of fraudulent returns. More information about these cases is available on the Justice Department website .
Related Documents: United States v. Sharon Angulo, et al
Complaint for Permanent Injunction and Other Equitable Relief (PDF)
Order of Default Judgment and Permanent Injunction Against Sharon Angulo and Claudia Zuloaga (PDF)
8 August 2012
Philadelphia La Cosa Nostra Capo Pleads Guilty to Racketeering ConspiracyRead the Press Release
WASHINGTON – Martin Angelina, 50, of Philadelphia, pleaded guilty today to participating in a racketeering conspiracy involving loan sharking and illegal gambling, 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, Angelina 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 to the court that he attempted to collect payments related to usurious loans by using extortionate means and operated an illegal video poker machine business in furtherance of the racketeering conspiracy. His sentencing is scheduled for Dec. 3, 2012.
Angelina 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, Gaeton Lucibello, Anthony Staino Jr., Damion Canalichio, Louis Barretta, Gary Battaglini, Robert Verrecchia, Eric Esposito, Robert Ranieri, Joseph Licata and Louis Fazzini.
Gaeton Lucibello pleaded guilty to racketeering conspiracy charges on Aug. 2, 2012, and is scheduled to be sentenced on Nov. 26, 2012.
The trial for Ligambi, Massimino, Borgesi, Staino, Canalichio, Barretta, Battaglini, Licata and Fazzini is scheduled for Oct. 9, 2012. The trial for Verrecchia, Esposito and Ranieri has not yet been scheduled. Ligambi, Massimino, Borgesi, Canalichio, Licata and Fazzini are detained while awaiting trial. Staino, Barretta, 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 Division, the Pennsylvania State Police, the New Jersey State Police, the Philadelphia Police Department, and the U.S. Department of Labor’s Office of Inspector General Office of Labor Racketeering and Fraud Investigations, and Employee Benefits Security Administration. Additional assistance was provided by the New Jersey Department of Corrections.
Employment Screening Services Provider Settles Chargesof Violating Fair Credit Reporting ActRead the Press Release
A company that marketed public records about consumers to employers making hiring decisions agreed to settle charges that it violated the Fair Credit Reporting Act and pay $2.6 million in civil penalties , the Justice Department announced.
In a complaint filed today, the United States alleged that HireRight Solutions Inc., an Oklahoma corporation based in Tulsa, Okla., violated the Fair Credit Reporting Act (FCRA) by failing to comply with FCRA provisions designed to ensure the accuracy of background reports about potential employees. HireRight combined public information, including court records, into profiles provided to thousands of employers considering consumers for jobs, primarily in the trucking industry. The complaint alleges that poor quality control led HireRight to include erroneous and duplicate information in its reports. The complaint also alleges that HireRight failed to provide consumers timely access to the information in their own files and did not appropriately conduct investigations of disputed items when requested.
“Inaccurate consumer reports can keep qualified applicants from finding work and keep employers from finding good employees,” said Stuart Delery, Acting Assistant Attorney General for the Civil Division. “In this age of increased collection and distribution of consumer information, aggressive enforcement of the FCRA ensures that these reports contain facts, not mistakes.”
Along with the $2.6 million civil penalty, HireRight agreed to injunctions against future FCRA and Federal Trade Commission (FTC) Act violations in a proposed consent decree filed with the complaint. The consent decree also requires HireRight to maintain reasonable procedures to ensure the accuracy of reports and, upon request, to provide consumers the information in their files, such as criminal history reports. Access to these reports ensures that the consumers can dispute erroneous criminal history information that would substantially interfere with their ability to obtain a job.
The FTC, which oversees the FCRA, referred the case to the Justice Department. The lawsuit, United States v. HireRight Solutions Inc., was filed in the District of the District of Columbia.
Acting Assistant Attorney General Delery thanked the Federal Trade Commission 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. Acting Assistant Attorney General Delery reminded consumers that they have a right to review the information collected by consumer reporting agencies and dispute incorrect entries. Consumers can report complaints to the FTC through the agency’s website at www.ftccomplaintassistant.gov.
Cleanup and Natural Resources Improvement Agreement Reached at Ashland Lakefront Superfund Site in WisconsinRead the Press Release
WASHINGTON – Northern States Power Co. will begin cleanup of the Ashland/Northern States Power Lakefront Superfund Site in Northwestern Wisconsin under a settlement the Department of Justice and the Environmental Protection Agency (EPA) announced today. The 40-acre site is located on the shore of Chequamegon Bay in Lake Superior and was used for various industrial purposes for more than a century, resulting in the release of volatile organic compounds, such as benzene, and semivolatile organic compounds, such as naphthalene, at the site.
Under the agreement, filed today with the U.S. District Court for the Western District of Wisconsin in Madison, Wis., Northern States Power will design, construct and implement the cleanup plan for the on-land portion of the site. The on-land cleanup is expected to cost approximately $40 million. The United States will also require additional cleanup of sediments in Chequamegon Bay, and expects that Northern States Power and any other responsible parties will perform the rest of the cleanup. That work is not part of the agreement filed with the Court today.
Today’s agreement also requires Northern States Power to transfer approximately 990 acres of land along the Iron River to the Wisconsin Department of Natural Resources and 400 acres within the reservation of the Bad River Band of the Lake Superior Chippewa Indians to the Bad River tribe. These parcels, worth about $1.9 million, will be preserved by the state and the Bad River tribe to enhance natural resources in the area that have been harmed by pollution from the site, such as fisheries in Chequamegon Bay and its rivers. In addition, the state of Wisconsin will transfer 114 acres of land to the Red Cliff Band of the Lake Superior Chippewa Indians. That land will also be managed to preserve natural resources. The National Oceanic and Atmospheric Administration and the U.S. Fish and Wildlife Service also serve as trustees for natural resources in the area and joined the settlement on behalf of the United States.
“This agreement will begin the long-awaited cleanup of contamination at the Ashland Lakefront site,” said Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division. “The agreement will result in the preservation of land in the Chequamegon Bay watershed, including tribal lands, to conserve and enhance natural resources and aquatic habitat that have been harmed by more than a century of pollution at the site.”“Chequamegon Bay and Lake Superior will be better protected as a result of this agreement,” said EPA Region 5 Regional Administrator Susan Hedman. “Removing the most highly contaminated soil from the site and controlling the flow of contaminated groundwater will prevent polluted water from entering the bay and harming fisheries.”
For more than a century, the Ashland site has been home to various industrial uses, including sawmills, railroads, and a city wastewater treatment plant. The primary source of pollution at the site was the manufactured gas plant operated by Northern States Power’s predecessor company between 1885 and 1947. Pollution from the manufactured gas plant contaminated both the on-land portion of the site and the sediment in the bay.
The on-land cleanup will include removal of source material and impacted soil in Kreher Park and the adjacent bluff area and recovery wells designed to remove pollution from the Copper Falls aquifer. The work Northern States Power will perform under this agreement is expected to take approximately two to three years.
EPA will oversee the work to ensure that it follows the cleanup plan and complies with the agreement signed by the parties. The state of Wisconsin will support EPA in overseeing the work.
The proposed consent decree will be subject to public comment for 30 days prior to entry in federal court. The consent decree will be available at www.justice.gov/enrd/Consent_Decrees.html.
Alabama Return Preparer Sentenced to Federal Prison for Tax Conspiracy Involving Stolen Identity Refund FraudRead the Press Release
Yumeitrius Manuel, a resident of Montgomery, Ala., was sentenced today in the Middle District of Alabama to 81 months in federal prison for filing false tax returns using stolen identities, the Justice Department and Internal Revenue Service (IRS) announced.
On Jan. 11, 2012, Manuel pleaded guilty to charges of conspiracy to defraud the government and aggravated identity theft. He was indicted by a federal grand jury on July 27, 2011, on charges of conspiracy, aggravated identity theft, wire fraud and false claims.
According to court documents, Manuel and his co-conspirator, Margaret Kirksey, each owned and operated a tax preparation business in Montgomery, located in the same physical place. The two fraudulently inflated tax refunds by placing false information on their clients’ tax returns. They also filed tax returns in the names and Social Security numbers of individuals who did not know about, and did not authorize, the filing of tax returns on their behalf. Both Manuel and Kirksey admitted that their respective crimes involved over $1 million in tax loss and more than 50 victims of identity theft. Kirksey also pleaded guilty to the conspiracy and to aggravated identity theft, and was sentenced on May 8, 2012, to 81 months in federal prison.
U.S. District Judge Mark E. Fuller also ordered Manuel to pay $52,242 in restitution to the IRS.
Kathryn Keneally, Assistant Attorney General for the Justice Department’s Tax Division, commended the investigative efforts of IRS ‑ Criminal Investigation special agents, who investigated the case, and Tax Division Trial Attorneys Justin Gelfand and Jason Poole, who prosecuted the case.
7 August 2012
United States Joins Lawsuit Against San Francisco Area’s<br /> <br /> North East Medical ServicesRead the Press Release
The United States has joined a whistleblower action pending in the Northern District of California against the federally-qualified health center (FQHC), North East Medical Services (NEMS), alleging that the center under-reported income it received from a managed care organization in order to artificially inflate reimbursements it received from the California Medicaid program, the Justice Department announced today. North East serves the San Francisco Bay area.
FQHCs are “safety net” community clinics certified under federal law and licensed under state law to provide medical care to poor and under-served populations. As such a health center, North East Medical Services is entitled to special payments from the California Medicaid program (Medi-Cal) that are significantly more generous than typical Medicaid payments. However, in order to receive these additional payments, NEMS must submit annual reports to Medi-Cal stating the total amount it actually received during the preceding year from any source for treating Medi-Cal enrollees. Medi-Cal then subtracts that amount from the amount that NEMS is entitled to receive as an FQHC and pays NEMS the difference. The government alleges that NEMS significantly under-reported payments it received from a managed care organization for treating Medi-Cal beneficiaries in order to artificially inflate the payments it received from Medi-Cal.
“As health care costs continue to rise, it is more important than ever that health care providers report accurate information to federal and state health care programs,” said Stuart Delery, Acting Assistant Attorney General for the Justice Department’s Civil Division. “The Department of Justice is committed to cracking down on improper accounting practices such as those alleged in this case, which undermine the integrity of these health care programs and increase the costs of health care for the rest of us.”
“Filing claims that imp roperly inflate reimbursement amounts means there are less funds available for people in need,” said Melinda Haag, U.S. Attorney for the Northern District of California. “My office views the actions this defendant allegedly committed as a serious breach of the responsibilities healthcare organizations owe to people in need of medical care and also to the taxpayers who fund these programs. We are committed to doing everything in our power to protect the integrity of the healthcare system.”
The whistleblower action, captioned United States ex rel. Trinh v. North East Medical Services, Inc. Civil Action No. 10-1904 (N.D. Cal.), was filed under the qui tam provisions of the False Claims Act. The False Claims Act allows for private persons to file actions to provide the government information about wrongdoing. Under the statute, if it is established that a person has submitted or caused others to submit false or fraudulent claims to the United States, the government can recover treble damages and $5,500 to $11,000 for each false or fraudulent claim filed. If the government is successful in resolving or litigating its claims, the whistleblower who initiated the action can receive a share of between 15 percent to 25 percent of the amount recovered.
The whistleblower action contained additional allegations. However, the United States is intervening only with regard to allegations that NEMS failed to report certain income on annual reports to Medi-Cal.
The investigation was conducted by the Civil Division of the U.S. Department of Justice, the U.S. Attorney’s Office for the Northern District of California, the Office of Inspector General of the Department of Health and Human Services, and the California Attorney General’s Office.
The claims asserted in the complaint against NEMS are allegations only, and there has been no determination of liability.
Pfizer H.C.P. Corp. Agrees to Pay $15 Million Penalty to Resolve<br /> Foreign Bribery InvestigationRead the Press Release
WASHINGTON – Pfizer H.C.P. Corporation, an indirect wholly owned subsidiary of Pfizer Inc., has agreed to pay a $15 million penalty to resolve an investigation of Foreign Corrupt Practices Act (FCPA) violations, Principal Deputy Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and Assistant Director James W. McJunkin in charge of the FBI’s Washington Field Office announced today. In a related matter, Pfizer Inc. and Wyeth LLC reached settlements today with the Securities and Exchange Commission (SEC) under which Pfizer Inc. agreed to pay more than $26.3 million in disgorgement of profits, including pre-judgment interest, to resolve concerns involving the conduct of its subsidiaries. Wyeth, which had been acquired by Pfizer Inc. in 2009, agreed to pay $18.8 million in disgorgement of profits, including pre-judgment interest, to resolve concerns involving the conduct of Wyeth subsidiaries.
As part of the resolution, the department today filed a two-count criminal information charging Pfizer H.C.P. with conspiracy and violations of the FCPA in connection with improper payments made to government officials, including publicly-employed regulators and health care professionals in Bulgaria, Croatia, Kazakhstan and Russia. The department and Pfizer H.C.P. agreed to resolve the investigation by entering into a deferred prosecution agreement. Both the information and the deferred prosecution agreement were filed today in the U.S. District Court in the District of Columbia.
Pfizer H.C.P. is incorporated under the laws of the State of New York, and its parent company, Pfizer Inc., is a global pharmaceutical, animal health and consumer product company headquartered in New York City.
“Pfizer took short cuts to boost its business in several Eurasian countries, bribing government officials in Bulgaria, Croatia, Kazakhstan and Russia to the tune of millions of dollars,” said Principal Deputy Assistant Attorney General Raman. “The Department of Justice recognizes the significant efforts the company made to eliminate such improper practices, not only by implementing compliance reforms, but also by assisting U.S. authorities in our ongoing FCPA investigations of other companies and individuals.”“Corrupt pay-offs to foreign officials in order to secure lucrative contracts creates an inherently uneven marketplace and puts honest companies at a disadvantage,” said Assistant Director McJunkin. “Those that attempt to make these illegal backroom deals to influence contract procurement can expect to be investigated by the FBI and appropriately held responsible for their actions.”
According to court documents, Pfizer H.C.P. made a broad range of improper payments to numerous government officials in Bulgaria, Croatia, Kazakhstan and Russia – including hospital administrators, members of regulatory and purchasing committees and other health care professionals – and sought to improperly influence government decisions in these countries regarding the approval and registration of Pfizer Inc. products, the award of pharmaceutical tenders and the level of sales of Pfizer Inc. products. According to court documents, Pfizer H.C.P. used numerous mechanisms to improperly influence government officials, including sham consulting contracts, an exclusive distributorship and improper travel and cash payments.
Pfizer H.C.P. admitted that between 1997 and 2006, it paid more than $2 million of bribes to government officials in Bulgaria, Croatia, Kazakhstan and Russia. Pfizer H.C.P. also admitted that it made more than $7 million in profits as a result of the bribes.
The agreement recognizes the timely voluntary disclosure by Pfizer H.C.P.’s parent company, Pfizer Inc.; the thorough and wide-reaching self-investigation of the underlying and related conduct; the significant cooperation provided by the company to the department and the SEC; and the early and extensive remedial efforts and the substantial and continuing improvements Pfizer Inc. has made to its global anti-corruption compliance procedures.
Pfizer H.C.P. received a reduction in its penalty as a result of Pfizer Inc.’s cooperation in the ongoing investigation of other companies and individuals. In addition to the $15 million penalty, the agreement requires Pfizer Inc. to continue to implement rigorous internal controls and to cooperate fully with the department.
Due to Pfizer Inc.’s extensive remediation and improvement of its compliance systems and internal controls, as well as the enhanced compliance undertakings included in the agreement, Pfizer H.C.P. is not required to retain a corporate monitor, but Pfizer Inc. must periodically report to the department on implementation of its remediation and enhanced compliance efforts for the duration of the agreement.
In the 18 months following its acquisition of Wyeth, Pfizer Inc., in consultation with the department, conducted a due diligence and investigative review of the Wyeth business operations and integrated Pfizer Inc.’s internal controls system into the former Wyeth business entities. The department considered these extensive efforts and the SEC resolution in its determination not to pursue a criminal resolution for the pre-acquisition improper conduct of Wyeth subsidiaries.
This case is being prosecuted by Assistant Chief Nathaniel B. Edmonds and Trial Attorney Andrew Gentin of the Criminal Division’s Fraud Section. The case was investigated by the FBI’s Washington Field Office’s team of special agents dedicated to the investigation of foreign bribery cases.
The Justice Department acknowledges and expresses its appreciation for the significant assistance provided by the SEC’s Division of Enforcement.
Justice Department Settles Lawsuit Against Baltimore County, Maryland, Alleging Disability DiscriminationRead the Press Release
WASHINGTON – The Justice Department today announced it has filed a complaint in the U.S. District Court for the District of Maryland against Baltimore County, Md., alleging that the county engaged in unlawful employment practices. The department simultaneously filed a consent decree to resolve these allegations. In its complaint, the department alleges that the county violated the Americans with Disabilities Act (ADA) by requiring employees to submit to medical examinations and disability-related inquiries without a proper reason, and by excluding applicants from emergency medical technician (EMT) positions because of their diabetes.
The complaint identifies 10 current and former police officers, firefighters, EMTs, civilian employees and applicants who were allegedly subjected to inappropriate and intrusive medical examinations and/or other disability-based discrimination. Some employees were allegedly required to undergo medical examinations or respond to medical inquiries that were unrelated to their ability to perform the functions of their jobs. The complaint also alleges that the county required employees to submit to medical examinations that were improperly timed, such as requiring an employee who was on medical leave and undergoing medical treatment to submit to a medical exam even though the employee was not attempting to return to work yet.
According to the complaint, numerous affected employees – some of whom had worked for the county for decades – submitted to the improper medical exams for fear of discipline or termination if they refused. The complaint also alleges that the county retaliated against an employee who tried to caution against the unlawful medical exams. Additionally, the complaint alleges that the county refused to hire two qualified applicants for EMT positions because they had diabetes.
“The result of the county’s discriminatory policies and practices was to force employees, including veteran police officers and firefighters, to submit to invasive and unjustified medical examinations and inquiries,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The ADA does not tolerate this type of conduct and neither does the Justice Department.”
The consent decree, which must be approved by the court, requires the county to: pay $475,000 to the complainants and provide additional work-related benefits (including retirement benefits and back pay, plus interest); adopt new policies and procedures regarding the administration of medical examinations and inquiries; refrain from using the services of the medical examiner who conducted the overbroad medical examinations in question; cease the automatic exclusion of job applicants who have insulin-dependent diabetes mellitus; and provide training on the ADA to all current supervisory employees and all employees who participate in making personnel decisions.
Title I of the ADA prohibits employers, such as Baltimore County, from discriminating against individuals on the basis of disability in various aspects of employment. The ADA’s provisions concerning disability-related inquiries and medical examinations reflect Congress’s intent to protect the rights of applicants and employees to be assessed on merit alone, while protecting the rights of employers to ensure that individuals in the workplace can efficiently perform the essential functions of their jobs. An employer violates the ADA if it requires its employees to undergo medical examinations or submit to disability-related inquiries that are not related to how the employee performs his or her job duties, or if it requires its employees to disclose overbroad medical history or medical records. Employers are also prohibited from excluding individuals with disabilities unless they show that the exclusion is consistent with business necessity and they are prohibited from retaliating against employees for opposing practices contrary to the ADA.
Those interested in finding out more about the ADA may call the Justice Department’s toll-free ADA information line at 800-514-0301 (TDD 800-514-0383) or visit www.ada.gov.
Justice Department Seeks to Shut Down Chicago Tax PreparerRead the Press Release
The Justice Department announced that it has asked a federal court in Chicago to bar Bruce E. Grant and his business, Quick Check Limited, from preparing tax returns. The civil injunction suit alleges that Grant falsifies customers’ income on their tax returns, frequently by fabricating business income and expenses, in order to claim the maximum earned income tax credit (EITC) for them.
The EITC is a refundable credit available to certain low-income people. The maximum credit in 2010 was $5,666. Due to the method used to calculate the EITC, individuals with higher annual incomes may be entitled to a larger credit. Some tax preparers refer to the range of earned income generating a maximum EITC as the “sweet spot.” According to the complaint, Grant fabricated businesses and reported fake business income and expenses on his customers’ tax returns to achieve reported income in the EITC sweet spot.
The complaint alleges that Grant pleaded guilty in 2006 to one count of conspiracy to defraud the United States, based on allegations that Grant charged customers a fee for listing a false dependent on the customers’ tax returns. The government now seeks to bar Grant permanently from preparing federal tax returns altogether. According to the complaint, Grant’s Social Security number identified him as the paid preparer on 2,555 individual income tax returns prepared in 2011. Of these returns, 2,543 request a refund, an extraordinarily high refund rate of 99.5 percent.
In the past decade the Justice Department’s Tax Division has obtained injunctions against hundreds of tax-return preparers and tax-fraud promoters. Information about these cases is available on the Justice Department website .
Related Documents: United States v. Bruce E. Grant, etc., Complaint for Permanent Injunction and Other Relief (PDF)
Jared Lee Loughner Pleads Guilty to Federal Charges in Tucson ShootingRead the Press Release
Jared Lee Loughner, 23, of Tucson, Ariz., pleaded guilty today in federal district court to charges stemming from the January 8, 2011 shooting outside a supermarket that killed six people and wounded 13 others. Under the terms of the plea agreement, Loughner will be sentenced to life in prison with no eligibility for parole.
“It is my hope that this decision will allow the Tucson community, and the nation, to continue the healing process free of what would likely be extended trial and pre-trial proceedings that would not have a certain outcome. The prosecutors and agents assigned to this matter have done an outstanding job and have ensured that justice has been done,” said Attorney General Eric Holder. “In making the determination not to seek the death penalty, I took into consideration the views of the victims and survivor families, the recommendations of the prosecutors assigned to the case, and the applicable law.”
“Given the defendant’s history of significant mental illness, this plea agreement, which requires the defendant to spend the remainder of his natural life in prison, with no possibility of parole, is a just and appropriate resolution of this case,” said U.S. Attorney John S. Leonardo. “I hope that today’s resolution of this case will help the victims, their families, and the entire Tucson community take another step forward in the process of healing and recovering from this sad and tragic event.”
“Today, we remember the victims and their families who tragically lost their lives on January 8, 2011, as well as those in the Tucson community who were greatly affected by this senseless tragedy,” stated FBI Special Agent in Charge James L. Turgal Jr., Phoenix Division. “I would like to thank the Pima County Sheriff’s Office and the United States Attorney’s Office who we worked side-by-side with on every aspect of this joint investigation. I would also like to thank all of our federal, state and local law enforcement partners for their tireless efforts in this case. The partnerships that we have throughout Arizona enabled the FBI to have a coordinated response which resulted in a comprehensive and thorough investigation—all which has led up to today’s plea agreement.”
According to the plea agreement, on Jan. 8, 2011, Loughner showed up at Congresswoman Gabrielle Giffords’ “Congress on Your Corner” event outside the Safeway grocery store in Tucson armed with a loaded semi-automatic pistol and carrying three additional magazines containing 60 rounds of ammunition with the intent of killing Congresswoman Giffords and others attending her community event.
Shortly after arriving at the event that Saturday morning, Loughner shot Congresswoman Giffords in the head, and then shot several other people who were in attendance. As a result of the shooting, six individuals were killed and 13 people, including Congresswoman Giffords were injured, some seriously.
Through a plea agreement, Loughner pleaded guilty to 19 counts of the superseding indictment handed down March 3, 2011, consisting of the following crimes:
· The attempted assassination of U.S. Congresswoman Gabrielle D. Giffords;
· The murders of federal employees U.S. District Court Chief Judge John M. Roll and Congressional Aide Gabriel M. Zimmerman;
· The attempted murders of federal employees and Congressional Aides Ronald S. Barber and Pamela K. Simon;
· Causing the deaths of Christina-Taylor Green, Dorothy J. Morris, Phyllis C. Schneck, and Dorwan C. Stoddard, all of whom were participants at an activity provided by the United States;
· Injuring through the use of a Glock pistol Bill D. Badger, Kenneth W. Dorushka, James E. Fuller, Randy W. Gardner, Susan A. Hileman, George S. Morris, Mary C. Reed, Mavanell Stoddard, James L. Tucker, and Kenneth L. Veeder, Sr., all of whom were participants at an activity provided by the United States;
Loughner also admitted that in committing these offenses, he knowingly created a grave risk of death to Carol A. Dorushka, Robert C. Gawlick, Daniel Hernandez, Mark S. Kimble, Patricia R. Maisch, Emma E. McMahon, Owen A. McMahon, Thomas J. McMahon, Sara M. Rajca, Faith M. Salzgeber, Roger D. Salzgeber, Doris Tucker and Alexander J. Villec.
Under the terms of the plea agreement, Loughner will be sentenced to seven consecutive life sentences, followed by 140 years in prison, as follows:
Loughner will be sentenced to a term of life in prison for each of the following crimes:
· The attempted assassination of Congresswoman Gabrielle D. Giffords;
· The murders of federal employees U.S. District Court Chief Judge John M. Roll and Congressional Aide Gabriel M. Zimmerman; and
· Causing the deaths of Christina-Taylor Green, Dorothy J. Morris, Phyllis C. Shneck, and Dorwan C. Stoddard, all of whom were participants at an activity provided by the United States.
Loughner will also be sentenced to the maximum term of 20 years in prison for each of the attempted murders of Congressional Aides Ronald S. Barber and Pamela K. Simon.
Finally, Loughner will be sentenced to the maximum term of 10 years in prison for injuring through the use of a Glock pistol each of the following:
· Bill D. Badger;
· Kenneth W. Dorushka;
· James E. Fuller;
· Randy W. Gardner;
· Susan A. Hileman;
· George S. Morris;
· Mary C. Reed;
· Mavanell Stoddard;
· James L. Tucker; and
· Kenneth L. Veeder, Sr.
Convictions for the attempted assassination of a member of Congress, the murder of a federal employee, and causing the death of a participant in a federally-provided activity each carry a maximum sentence of life in prison or death in the case of murder), a $250,000 fine or both. A conviction for the attempted murder of a federal employee carries a maximum penalty of 20 years in prison, a $250,000 fine or both. A conviction for injuring a participant in a federally-provided activity carries a maximum penalty of 10 years in prison, a $250,000 fine or both. In determining an actual sentence, U.S. District Judge Larry A. Burns will consult the U.S. Sentencing Guidelines, which provide appropriate sentencing ranges. The judge, however, is not bound by those guidelines in determining a sentence.
Sentencing is set before Judge Burns on November 15, 2012, at 10:00 am in Tucson.
The investigation in this case was conducted by the FBI and the Pima County, Ariz., Sheriff’s Office. The prosecution is being handled by Wallace H. Kleindenst and Mary Sue Feldmeier, Assistant U.S. Attorneys, District of Arizona, Tucson, with the assistance of C.J. Williams, who served as trial attorney with the Department of Justice’s Criminal Division, Christina M. Cabanillas, Appellate Chief, and Bruce Ferg, Assistant U.S. Attorney (Appellate), District of Arizona, Tucson.
Former Chief of Party in Baghdad for the United States Institute of Peace Pleads Guilty to Wire Fraud ConspiracyRead the Press Release
WASHINGTON – The former chief of party in Baghdad for the United States Institute of Peace (USIP), Robert Nathan Boorda, pleaded guilty to an information unsealed today in the U.S. District Court for the District of Columbia for conspiring to enrich himself by having USIP award a security contract at a fraudulently inflated price in exchange for a purported monthly consulting fee of $20,000 paid by the contractor, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.
Boorda was charged by information on Sept. 19, 2011, with one count of conspiring to commit wire fraud, and he pleaded guilty to the charge on Oct. 7, 2011. According to plea documents, Boorda admitted that, from about April 2009 through about June 2009, he and the owner of a security services contracting firm conspired to enrich themselves through Boorda’s recommendation that USIP award a $1.165 million contract for the lease of a villa in Baghdad and security services to that security services company at a fraudulently inflated price, in exchange for Boorda’s receipt of a purported consulting and marketing agreement with the company for a monthly fee of $20,000 for the term of the USIP contract. Boorda admitted that he concealed this agreement from USIP. According to plea documents, the contract was inflated so that Boorda could receive his payment by representing to USIP headquarters that the villa owner would not agree to a monthly rental payment of less than $22,000, when in fact the owner had agreed to $13,000.
The case was investigated by the Special Inspector General for Iraq Reconstruction and the Inspector General for the Department of State. It is being prosecuted by Fraud Section Special Trial Attorney Catherine Votaw of the Justice Department’s Criminal Division, on detail from the Special Inspector General for Iraq Reconstruction.
6 August 2012
Gibson Guitar Corp. Agrees to Resolve Investigation into Lacey Act ViolationsRead the Press Release
Gibson Guitar Corp. entered into a criminal enforcement agreement with the United States today resolving a criminal investigation into allegations that the company violated the Lacey Act by illegally purchasing and importing ebony wood from Madagascar and rosewood and ebony from India.
The agreement was announced today by Assistant Attorney General Ignacia S. Moreno of the Justice Department’s Environment and Natural Resources Division, Jerry Martin, U.S. Attorney for the Middle District of Tennessee and Dan Ashe, Director of the Department of the Interior’s U.S. Fish & Wildlife Service.
The criminal enforcement agreement defers prosecution for criminal violations of the Lacey Act and requires Gibson to pay a penalty amount of $300,000. The agreement further provides for a community service payment of $50,000 to the National Fish and Wildlife Foundation to be used to promote the conservation, identification and propagation of protected tree species used in the musical instrument industry and the forests where those species are found. Gibson will also implement a compliance program designed to strengthen its compliance controls and procedures. In related civil forfeiture actions, Gibson will withdraw its claims to the wood seized in the course of the criminal investigation, including Madagascar ebony from shipments with a total invoice value of $261,844.
In light of Gibson’s acknowledgement of its conduct, its duties under the Lacey Act and its promised cooperation and remedial actions, the government will decline charging Gibson criminally in connection with Gibson’s order, purchase or importation of ebony from Madagascar and ebony and rosewood from India, provided that Gibson fully carries out its obligations under the agreement, and commits no future violations of law, including Lacey Act violations.
“As a result of this investigation and criminal enforcement agreement, Gibson has acknowledged that it failed to act on information that the Madagascar ebony it was purchasing may have violated laws intended to limit overharvesting and conserve valuable wood species from Madagascar, a country which has been severely impacted by deforestation,” said Assistant Attorney General Moreno. “Gibson has ceased acquisitions of wood species from Madagascar and recognizes its duty under the U.S. Lacey Act to guard against the acquisition of wood of illegal origin by verifying the circumstances of its harvest and export, which is good for American business and American consumers.”
“The Department of Justice is committed to enforcing the laws enacted by Congress,” said U.S. Attorney Martin. “Failure to do so harms those who play by the rules and follow the law. This criminal enforcement agreement goes a long way in demonstrating the government’s commitment to protecting the world’s natural resources. The agreement is fair and just in that it assesses serious penalties for Gibson’s behavior while allowing Gibson to continue to focus on the business of making guitars.”
“The Lacey Act’s illegal logging provisions were enacted with bipartisan support in Congress to protect vanishing foreign species and forest ecosystems, while ensuring a level playing field for America’s forest products industry and the people and communities who depend on it,” said U.S. Fish and Wildlife Service Director Ashe. “We’re pleased that Gibson Guitar Corp. has recognized its duties under the Lacey Act to guard against the acquisition of wood of illegal origin from threatened forests and has taken responsibility for actions that may have contributed to the unlawful export and exploitation of wood from some of the world’s most threatened forests.”
Since May 2008, it has been illegal under the Lacey Act to import into the United States plants and plant products (including wood) that have been harvested and exported in violation of the laws of another country. Congress extended the protections of the Lacey Act, the nation’s oldest resource protection law, to these products in an effort to address the environmental and economic impact of illegal logging around the world.
The criminal enforcement agreement includes a detailed statement of facts describing the conduct for which Gibson accepts and acknowledges responsibility. The facts establish the following:
Madagascar Ebony is a slow-growing tree species and supplies are considered threatened in its native environment due to over-exploitation. Both legal and illegal logging of Madagascar Ebony and other tree species have significantly reduced Madagascar’s forest cover. Madagascar’s forests are home to many rare endemic species of plants and animals . The harvest of ebony in and export of unfinished ebony from, Madagascar has been banned since 2006.
Gibson purchased “fingerboard blanks,” consisting of sawn boards of Madagascar ebony, for use in manufacturing guitars. The Madagascar ebony fingerboard blanks were ordered from a supplier who obtained them from an exporter in Madagascar. Gibson’s supplier continued to receive Madagascar ebony fingerboard blanks from its Madagascar exporter after the 2006 ban. The Madagascar exporter did not have authority to export ebony fingerboard blanks after the law issued in Madagascar in 2006.
In 2008, an employee of Gibson participated in a trip to Madagascar, sponsored by a non-profit organization. Participants on the trip, including the Gibson employee, were told that a law passed in 2006 in Madagascar banned the harvest of ebony and the export of any ebony products that were not in finished form. They were further told by trip organizers that instrument parts, such as fingerboard blanks, would be considered unfinished and therefore illegal to export under the 2006 law. Participants also visited the facility of the exporter in Madagascar, from which Gibson’s supplier sourced its Madagascar ebony, and were informed that the wood at the facility was under seizure at that time and could not be moved.
After the Gibson employee returned from Madagascar with this information, he conveyed the information to superiors and others at Gibson. The information received by the Gibson employee during the June 2008 trip, and sent to company management by the employee and others following the June 2008 trip, was not further investigated or acted upon prior to Gibson continuing to place orders with its supplier. Gibson received four shipments of Madagascar ebony fingerboard blanks from its supplier between October 2008 and September 2009.
This case was investigated by the U.S. Fish and Wildlife Service with assistance from U.S. Immigration and Customs Enforcement. The case was handled by the Environmental Crimes Section of the U.S. Department of Justice and the U.S. Attorney’s Office for the Middle District of Tennessee.
District of Columbia Return Preparer Convicted of Preparing False Tax ReturnsRead the Press Release
Following a jury trial that began on Aug. 1, 2012, a federal jury convicted Enyinnaya Udo on all 25 counts of an indictment charging him with aiding and assisting in the preparation of false individual income tax returns, the Justice Department and Internal Revenue Service (IRS) announced.
According to the indictment and evidence presented at trial, Udo operated a tax preparation business called Anic and Associates, located in Washington, D.C. Udo prepared false 2005 through 2008 individual income tax returns for seven taxpayers, falsely reporting that the taxpayers had unreimbursed employee expenses.
U.S. District Judge Barbara J. Rothstein scheduled sentencing for Nov. 1, 2012. Udo faces a potential maximum sentence of three years in prison and a fine of up to $250,000 on each count.
Kathryn Keneally, Assistant Attorney General for the Justice Department’s Tax Division, commended the IRS Criminal Investigation special agents who investigated the case and Tax Division Trial Attorneys Jessica Moran and Erin Pulice, who prosecuted the case. Jason Scheff and Schylon Lane assisted with the prosecution.
3 August 2012
Justice Department Reaches Agreement with Alabama School District to End the Use of Race in Extracurricular ActivitiesRead the Press Release
The Justice Department announced today that it reached an out-of-court agreement with the Escambia County School District in Alabama to end the use of race-based selection criteria for homecoming courts and other student activities in two of the district’s high schools.
In response to the department’s inquiry earlier this year, the district indicated that two of its high schools considered race in certain student elections. Escambia County High School permitted students to elect two homecoming queens and two homecoming attendants, one African-American and one not. Another school, W.S. Neal High School, had a similar longstanding practice of using race-based criteria for election of students to its Valentine’s Day courts.
To resolve the department’s concerns over these practices, the Escambia County Board of Education voluntarily adopted a district-wide non-discrimination policy for extracurricular activities. The policy will end the use of race-based election and selection criteria in all student activities. The agreement requires the district to fully implement and enforce its new non-discrimination policy, to notify parents and students of changes to student election practices and to provide compliance reports to the department for at least one year.
“We commend the Escambia County Board of Education for acting swiftly to abolish the use of race in student activities and to ensure that no student is denied participation in any extracurricular activity based on race,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “It is time for the once common practice of segregating students by race in school activities to come to an end.”
The use of race-based selection and election criteria in public schools’ extracurricular activities, including homecoming courts, proms and similar activities is prohibited by Title IV of the Civil Rights Act of 1964, which bars public school districts, colleges and universities from discriminating against students on the basis of race, color, national origin, sex and religion. The department has challenged such practices in a number of school districts over the years, including, most recently, settling with the Nettleton School District in Mississippi in 2011 to abolish race-based selection and election procedures for class officers, homecoming courts and student superlatives.
The enforcement of Title IV of the Civil Rights Act of 1964 in school districts is a top priority of the Justice Department’s Civil Rights Division. Additional information about the Civil Rights Division of the Justice Department is available on its Web site at www.justice.gov/crt .
Former Alabama Governor Don Siegelman Re-Sentenced on<br /> Bribery, Conspiracy, Fraud and Obstruction of Justice ChargesRead the Press Release
WASHINGTON – Former Alabama Governor Don Siegelman was resentenced today to serve 78 months in prison for his role in bribery, conspiracy, fraud and obstruction of justice charges involving former HealthSouth CEO Richard M. Scrushy, announced Assistant Attorney General Lanny A. Breuer of the Department of Justice’s Criminal Division and Acting U.S. Attorney Louis V. Franklin Sr. of the Middle District of Alabama.
At a hearing today in Montgomery, Ala., in addition to the prison term, U.S. District Judge Mark Fuller ordered Siegelman to serve three years of supervised release and to pay a $50,000 fine. Siegelman was originally convicted by a federal jury in June 2006 of seven counts of an indictment, involving bribery, conspiracy to commit honest services mail fraud, honest services mail fraud and obstruction of justice.
In June 2007, Siegelman began serving a prison term on those convictions, but was released on bond in March 2008, pending an appeal in which two honest services mail fraud counts were reversed. All of the five remaining counts were upheld in two opinions of the Eleventh Circuit Court of Appeals, and the U.S. Supreme Court denied further appellate review. The district court reviewed and denied all of Siegelman’s various claims for a new trial prior to his re-sentencing today.
Siegelman stands convicted of bribery, conspiracy and honest services mail fraud arising from a scheme in which Scrushy paid $500,000 to control a seat on the state regulatory board governing HealthSouth. Siegelman further stands convicted of obstruction of justice arising from a federal investigation of an alleged pay-to-play scheme with Alabama businessman Clayton “Lanny” Young.
“The outcome of this case reflects the unflagging commitment of the Department of Justice to hold public officials accountable for corruption,” said Assistant Attorney General Breuer. “The Criminal Division’s Public Integrity Section is determined to continue to vigorously pursue bribery cases involving federal, state and local officials.”
“Today’s sentence is another welcomed step toward closure to a dark chapter in Alabama politics. Six years after the trial jury rendered its verdict, and the appellate courts reviewed the evidence, former Governor Don Siegelman remains convicted for the serious felonious crimes he committed while serving as governor of Alabama. The verdict, the appellate review and the sentence have energized my faith in our legal system and renewed my commitment to prosecute politicians who commit bribery, honest services mail fraud, conspiracy and obstruction of justice. I am very proud of the courage displayed by everyone who assisted in the prosecution of this very significant and important case,” said Acting U.S. Attorney Franklin.
The case is currently being prosecuted by Acting U.S. Attorney for the Middle District of Alabama Louis V. Franklin Sr., a senior career prosecutor in the U.S. Attorney’s Office, and Richard C. Pilger, Director of the Election Crimes Branch of the Criminal Division’s Public Integrity Section.
2 August 2012
United States Settles Fair Housing Act Lawsuit Against Wisconsin Housing ProviderRead the Press Release
The Justice Department announced today that the owner and former manager of the Lowrey Hotel and Café in New Richmond, Wis., has agreed to pay $50,000 to settle a lawsuit alleging they had sexually harassed a homeless woman who sought shelter at the hotel.
The lawsuit, filed in the U.S. District Court in Madison, Wis., on Nov. 23, 2011, involved the Lowrey Hotel & Café, a residential hotel that often provides housing to homeless people, who have been referred by local social services agencies. According to the complaint, Gerald Hoglund, of McClusky, N.D., formerly one of the hotel’s managers, sexually harassed a female tenant, who had been referred to the hotel by a social service agency, by making unwelcome requests to her for sexual favors. The complaint also alleged that Stacy Wright, co-manager and owner of the Lowrey Hotel & Café LLC, warned the tenant that Hoglund might ask for sexual favors but failed to take reasonable steps to prevent it.
“It is unacceptable that a woman looking for shelter should be subject to sexual harassment at the very place where she has sought refuge,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Justice Department has zero tolerance for this conduct and will take aggressive action against housing providers who sexually harass tenants.”
“A person’s home should be a place of complete safety and security – no one should be subjected to unwanted sexual advances from any landlord,” said John W. Vaudreuil, U.S. Attorney for the Western District of Wisconsin. “This settlement reflects the United States’ commitment to ensuring that citizens in the Western District of Wisconsin have access to housing that is free from discrimination and sexual harassment.”
“Harassment victims are not alone in the fight to protect their housing rights,” said John Trasviña, HUD Assistant Secretary for Fair Housing and Equal Opportunity. “ HUD and DOJ work vigorously to enforce their right to live free from discrimination.”
The federal lawsuit arose when the tenant filed a complaint with the Chicago Regional Office of the Department of Housing and Urban Development (HUD), which conducted an investigation and, after issuing a charge of discrimination, referred the matter to the Department of Justice.
Under the terms of the settlement, which is subject to approval by the U.S. District Court, the defendants will pay the complainant $50,000 in damages. Defendants Stacy Wright and the Lowrey Hotel & Café LLC will also develop and maintain non-discrimination housing policies and attend fair housing training. As part of the consent decree, Gerald Hoglund is permanently enjoined from entering the premises at the Lowrey Hotel & Café and is permanently enjoined from having any involvement in the management, rental or maintenance of any rental property.
The federal Fair Housing Act prohibits discrimination in housing on the basis of race, color, religion, sex, familial status, national origin and disability. Individuals who believe that they may have been victims of housing discrimination should call the Justice Department’s Housing Discrimination Tip Line at 1-800-896-7743, email [email protected] or contact the U.S. Department of Housing and Urban Development at 1-800-669-9777.
Two Individuals Convicted in Florida in Foresclosure Rescue SchemeRead the Press Release
WASHINGTON - The Department of Justice today convicted two defendants for their roles in a South Florida mortgage fraud scheme that took advantage of homeowners on the brink of foreclosure and left many without their homes.
Cathy Saffer of Pompano Beach, Fla., and Barrington Coombs, a certified public accountant of Weston, Fla., were convicted today by a jury in West Palm Beach, Fla. on conspiracy and fraud charges in connection with a so-called “foreclosure rescue scheme,” in which the defendants promised to help distressed homeowners but instead swindled them out of the remaining equity in their houses.
The jury convicted Saffer of one count of conspiracy, three counts of mail fraud and two counts of wire fraud. Coombs was convicted of one count of conspiracy and one count of wire fraud. Lisa Wright of Pompano Beach, Fla., pleaded guilty to her participation in the same foreclosure rescue scheme in March 2012.
At trial, evidence revealed that Saffer and Wright operated a business called Foreclosure Solution Specialists (FSS) from 2006 to 2009. Through FSS, Wright and Saffer targeted homeowners facing foreclosure, advertising that FSS could assist those homeowners in remaining in their homes. When contacted by distressed homeowners seeking assistance, Wright and Saffer misrepresented to those homeowners that their homes would be sold to investors. According to witnesses at trial, Wright and Saffer also claimed that customers could remain in their homes after the sales and promised them an opportunity to repurchase the homes at a later date. Rather than selling the homes to legitimate investors, Wright and Saffer designed sham sales to straw purchasers whom they paid to participate in the scheme.
Witnesses and documents admitted at trial further revealed that Wright and Saffer made numerous misrepresentations on loan applications regarding the straw purchasers’ net worths, incomes and employment histories in order to induce lenders to fund loans. As part of the scheme, Wright and Saffer paid Coombs to sign a letter which falsely vouched for the fraudulent information on various loan applications.
These sham sales drew equity out of the homes, which Wright and Saffer pocketed for their own purposes. After doing so, Wright and Saffer allowed the loans to go into foreclosure. Homeowners ultimately lost all of the equity in their homes, and most of the victims were forced to move out of their homes.
“Foreclosure rescue schemes victimize Americans in dire straits at risk of losing their most prized possession – the roof over their heads,” said Acting Assistant Attorney General Stuart Delery of the Justice Department’s Civil Division. “These convictions demonstrate that we will aggressively prosecute individuals who prey on homeowners struggling in these tough financial times.” This investigation is part of the Department of Justice’s continued nationwide focus on mortgage fraud.
USA Wifredo A. Ferrer stated, “These individuals engaged in a foreclosure rescue scheme that defrauded homeowners who were having difficulty making their mortgage payments. Instead of selling the properties as promised, the defendants sold the homes to straw buyers whom they controlled and then allowed the loans to go into foreclosure. As a result, many victims lost their homes. Today’s conviction reaffirms our commitment to prosecuting mortgage fraudsters.”
The case was investigated by the FBI. The case is being prosecuted by Christopher E. Parisi and John Claud, Trial Attorneys at the Civil Division’s Consumer Protection Branch.
Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov
Miami Home Health Care Agency Owner Pleads Guilty in $42 Million Medicare Fraud SchemeRead the Press Release
The owner and operator of a Miami health care agency pleaded guilty today for his participation in a $42 million home health Medicare fraud scheme, announced the Department of Justice, the FBI and the Department of Health and Human Services (HHS).
Eulises Escalona, 43, pleaded guilty before U.S. District Judge Joan A. Lenard to one count of conspiracy to commit health care fraud. In addition, as part of his plea agreement, Escalona agreed to forfeit to the government two residential properties and cash proceeds of the fraud contained in several bank accounts.
According to the court documents, Escalona was the owner of Willsand Home Health Inc., a Florida home health agency that purported to provide home health care and physical therapy services to eligible Medicare beneficiaries.
According to plea documents, Escalona conspired with patient recruiters for the purpose of billing the Medicare program for unnecessary home health care and therapy services. Escalona and his co-conspirators paid kickbacks and bribes to patient recruiters in return for these recruiters providing patients to Willsand Home Health, as well as prescriptions, Plans of Care (POCs) and certifications for medically unnecessary therapy and home health services for Medicare beneficiaries.Escalona and his co-conspirators would pay kickbacks and bribes directly to physicians in exchange for those physicians providing home health and therapy prescriptions, POCs and medical certifications to Escalona and his co-conspirators. Escalona used these prescriptions, POCs and medical certifications to fraudulently bill the Medicare program for home health care services, which Escalona knew was in violation of federal criminal laws.
According to plea documents, at Willsand Home Health, patient files for Medicare beneficiaries were falsified to make it appear that such beneficiaries qualified for home health care and therapy services when, in fact, many of the beneficiaries did not actually qualify for such services. Escalona knew that in many cases the patient files at Willsand Home Health were falsified.
From approximately January 2006 through November 2009, Escalona and his co-conspirators submitted approximately $42 million in false and fraudulent claims to Medicare and Medicare paid approximately $27 million on those claims.
The plea was announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; Jeffrey C. Mazanec, Acting Special Agent-in-Charge of the FBI?s Miami Field Office; and Special Agent-in-Charge Christopher Dennis of the HHS Office of Inspector General (HHS-OIG), Office of Investigations Miami Office.
This case is being prosecuted by Senior Trial Attorney Joseph S. Beemsterboer of the Criminal Division?s Fraud Section. The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division?s Fraud Section and the U.S. Attorney?s Office for the Southern District of Florida.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,330 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.
Member of the Philadelphia La Cosa Nostra Family Pleads Guilty to Racketeering ConspiracyRead the Press Release
WASHINGTON – Gaeton Lucibello, 59, of Philadelphia, pleaded guilty today to participating in a racketeering conspiracy involving extortion and illegal gambling, 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 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, Lucibello 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 to the court that he assisted in shaking down a bookmaker for “street tax” payments and operated two illegal video poker machine businesses in furtherance of the racketeering conspiracy. His sentencing is scheduled for Nov. 26, 2012.
Lucibello 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 Jr., Damion Canalichio, Louis Barretta, Gary Battaglini, Robert Verrecchia, Eric Esposito, Robert Ranieri, Joseph Licata and Louis Fazzini.
The trial for Ligambi, Massimino, Borgesi, Angelina, Staino Jr., Canalichio, Barretta, Battaglini, Licata and Fazzini is scheduled for Oct. 9, 2012. The trial for Verrecchia, Esposito and Ranieri has not yet been scheduled. Ligambi, Massimino, Borgesi, Angelina, Canalichio, Licata and Fazzini are detained while awaiting trial. Staino Jr., Barretta, 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 Division, the Pennsylvania State Police, the New Jersey State Police, the Philadelphia Police Department, and the U.S. Department of Labor’s Office of Inspector General Office of Labor Racketeering and Fraud Investigations, and Employee Benefits Security Administration. Additional assistance was provided by the New Jersey Department of Corrections.
Former Georgia Police Chief Convicted on Federal Civil Rights ViolationRead the Press Release
A federal jury in Valdosta, Ga., convicted defendant Walter Young, 54, the former chief of the Omega Police Department in Omega, Ga., for physically abusing a man in his custody, the Justice Department announced.
On March 24, 2011, Young, while acting in his capacity as the chief of police, assaulted Alfonso Moreno, a pretrial detainee, by repeatedly slapping and punching him in the head and face while he was fully restrained in a restraint chair, violating the civil rights of the detainee. The defendant struck the victim eight times, causing him to bleed. X-rays the next day showed the victim had a broken nose. The assault was captured on the jail's video surveillance system. The jury further found that Alfonso Moreno suffered bodily injury as a result of Young’s use of excessive force.
“Most officers do their job with honor, but this officer abused the authority entrusted to him by his community,” said Assistant Attorney General for Civil Rights Thomas Perez. “The federal government will continue to vigorously prosecute individuals who violate the Constitutional rights of others.”
The defendant faces a maximum penalty of 10 years in prison and a $250,000 fine. Sentencing is scheduled for Oct. 29, 2012, before Judge Hugh Lawson, U.S. District Judge for the Middle District of Georgia.
This case was investigated by the FBI, and is being prosecuted by Special Litigation Counsel Forrest Christian and Trial Attorney Tona Boyd of the Civil Rights Division of the U.S. Department of Justice, with the assistance of the U.S. Attorney’s Office for the Middle District of Georgia.
Final Missouri Defendant Sentenced to 30 Months in Prison for Vandalism and Arson of Biracial Man’s HomeRead the Press Release
WASHINGTON – A Missouri man was sentenced today to 30 months in prison for his role in the vandalism and arson of a biracial man's home in Independence, Mo., the Department of Justice announced.
David Martin, 24, of Independence, was sentenced in the Western District of Missouri by U.S. District Judge Dean Whipple.
On March 7, 2012, Martin pleaded guilty to one count of conspiracy and one count of violating the Fair Housing Act. Martin's co-conspirators, Teresa Witthar and Charles Wilhelm, pleaded guilty on Feb. 2, 2012, and March 8, 2012, respectively, for their roles in vandalizing and burning down Nathaniel Reed's home in Independence.
According to the plea agreement filed with the court, Martin, Witthar and Wilhelm conspired to intimidate and scare Reed, a biracial man, into moving out of the Highland Manor Mobile Home Park in Independence, in part because of his race. On or about June 6, 2006, Martin, along with Witthar and Wilhelm, entered Reed's mobile home, without his permission, and vandalized it by writing at least 15 racially derogatory slurs on the walls of his trailer.
Two days later, on or about June 8, 2006, Witthar drove Martin and Wilhelm to a neighborhood behind Reed's home so that they could set fire to his home without being detected. Witthar waited in her vehicle for Martin and Wilhelm to set the fire and then provided them a ride back to the Highland Manor Mobile Home Park.
"Every American has the right to live in their homes without fear of racially-motivated violence," said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. "The Department of Justice will continue to vigorously enforce the Fair Housing Laws that prohibit these heinous acts."
Witthar was sentenced to 63 months in prison on June 18, 2012. Wilhelm was sentenced to 42 months in prison on July 24, 2012.
These guilty pleas were the result of a cooperative effort between the U.S. Attorney's Office for the Western District of Missouri and the Justice Department's Civil Rights Division. This case was investigated by the Kansas City Division of the FBI. It is being prosecuted by Acting U.S. Attorney David Ketchmark for the Western District of Missouri and Trial Attorney Sheldon L. Beer of the Civil Rights Division.
Detroit-Area Adult Day Care Center Owner Pleads Guilty to $10 Million Psychotherapy Fraud SchemeRead the Press Release
WASHINGTON – A Detroit-area adult day care center owner pleaded guilty today for her role in a $10 million psychotherapy fraud scheme, announced the Departments of Justice and Health and Human Services (HHS) and the FBI.
Checarol Robinson, 41, pleaded guilty today before U.S. District Judge Nancy D. Edmunds in the Eastern District of Michigan in Detroit, to an indictment charging her with one count of conspiracy to commit health care fraud and three counts of health care fraud. At her sentencing, scheduled for Dec. 4, 2012, Robinson faces a maximum penalty of 10 years in prison and a $250,000 fine for each count.
According to the indictment, Robinson owned group homes inhabited by Medicare beneficiaries. In return for payments, Robinson allegedly provided these Medicare beneficiaries’ information to a fraudulent psychotherapy company owned by a co-conspirator–Caldwell Thompson Manor Inc.–to be used to bill Medicare for psychotherapy services that were not provided and/or not medically necessary.
According to the indictment, Robinson later owned and operated P&C Adult Day Center (P&C), which was incorporated in May 2010. P&C purported to provide psychotherapy services. Robinson allegedly falsely billed Medicare for individual and group therapy services that were not provided by P&C and/or not medically necessary using the Medicare beneficiaries from her group homes. Robinson’s alleged co-conspirator from the scheme at Caldwell Thompson, who was also a licensed social worker, would sign patient charts for psychotherapy services purportedly performed at P&C that were medically unnecessary and never performed.
Caldwell Thompson and P&C allegedly submitted more than $10 million of false claims to Medicare in the course of the conspiracy.
The guilty plea was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade; Acting Special Agent in Charge of the FBI’s Detroit Field Office Edward J. Hanko; and Special Agent in Charge Lamont Pugh III of the HHS Office of Inspector General’s (HHS-OIG), Chicago Regional Office.
The case is being prosecuted by Assistant Chief Gejaa T. Gobena and Trial Attorney Catherine K. Dick of the Criminal Division’s Fraud Section and Assistant U.S. Attorney for the Eastern District of Michigan Philip A. Ross. 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 Eastern District of Michigan.
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.
Department of Justice and Partner Agencies Announce Neighborhoods to Receive Innovative Support Through the Building Neighborhood Capacity ProgramRead the Press Release
The Department of Justice’s Bureau of Justice Assistance (BJA), on behalf of the White House Neighborhood Revitalization Initiative (NRI), today announced the eight neighborhoods that will receive training and technical assistance through the groundbreaking Building Neighborhood Capacity Program (BNCP). These competitively selected neighborhoods are located in Flint, Mich.; Fresno, Calif.; Memphis, Tenn.; and Milwaukee.
BNCP, a core component of NRI, is designed to help distressed neighborhoods transform themselves into neighborhoods of opportunity by building capacity around critical elements such as public safety, education, housing, human services and health. Funded through an interagency agreement among the Departments of Justice, Education, and Housing and Urban Development, BNCP will provide intensive training and technical assistance to faith based, nonprofit and community organizations over a period of at least 20 months to help these neighborhoods design and begin pursuing results-driven, sustainable revitalization plans.
“As we’ve seen in too many communities across the country, neighborhoods that have experienced persistent distress often lack the tools to overcome the challenges to revitalization,” said Attorney General Eric Holder. “ The Building Neighborhood Capacity Program helps these neighborhoods build the infrastructure and tap into the resources necessary to establish and sustain successful renewal efforts.”
The selected neighborhoods within the four chosen cities are Flint’s Ward 1 and Ward 3 neighborhoods, Memphis’s Binghampton and Frayser neighborhoods, Milwaukee’s Amani and Metcalfe Park neighborhoods, and Fresno’s El Dorado and Southwest neighborhoods. These communities demonstrated a high need as well as the drive, citizen engagement, and commitment to success necessary to develop capacity around the essential elements of healthy neighborhoods.
The Center for the Study of Social Policy, a nonprofit public policy, research and technical assistance organization with nearly 30 years of experience, was competitively selected to provide training and technical assistance to these neighborhoods and to establish and manage an on-line resource center for anyone interested in sustainable revitalization.
“Poverty should never be destiny,” said U.S. Secretary of Education Arne Duncan. “Through programs like BNCP that offer targeted support to distressed communities for safety, health services, and particularly greater access to a high-quality education, more children and families will have the tools necessary to be successful.”
“HUD is proud to stand with our partners at Justice and Education to provide these cities the tools they need to revitalize neighborhoods,” said HUD Secretary Shaun Donovan. “Through collaborations like this one, we are better aligning federal resources to execute place-based strategies to transform distressed, high-poverty neighborhoods into places that offer hope and opportunity to current families and future generations.”
“The Building Neighborhood Capacity Program focuses on the nation’s neediest neighborhoods. BNCP blends the latest research on effective placed-based policing strategies, efforts on building community efficiency and lessons learned from BJA’s smart policing program into one innovative approach to community revitalization,” said BJA Director Denise E. O’Donnell. “BJA is proud to lead the Department of Justice’s effort, in collaboration with our federal partners, on this innovative cross-funded program.”
More information about the Neighborhood Revitalization Initiative is available at www.whitehouse.gov/sites/default/files/nri_description.pdf .
The Office of Justice Programs (OJP), headed by Acting Assistant Attorney General Mary Lou Leary, provides federal leadership in developing the nation’s capacity to prevent and control crime, administer justice, and assist victims. OJP has six bureaus and offices: the Bureau of Justice Assistance; the Bureau of Justice Statistics; the National Institute of Justice; the Office of Juvenile Justice and Delinquency Prevention; the Office for Victims of Crime; and the Office of Sex Offender Sentencing, Monitoring, Apprehending, Registering, and Tracking (SMART). More information about OJP and its components can be found at www.ojp.gov .
Chicago Police Officer and Three Members of the Almighty Latin Kings Nation Plead Guilty to a Racketeering Conspiracy and Other Related ChargesRead the Press Release
WASHINGTON – A Chicago police officer and three members of the Almighty Latin Kings Nation pleaded guilty to a racketeering conspiracy and other related charges in a superseding indictment involving alleged members or associates of the Latin Kings, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney David Capp of the Northern District of Indiana.
Chicago police officer Alex Guerrero, 42, pleaded guilty today before Judge Rudy Lozano of the U.S. District Court for the Northern District of Indiana, in Hammond, Ind. Guerrero pleaded guilty to counts one, two, 14 and 15 of the third superseding indictment charging him with conspiracy to participate in racketeering activity; conspiracy to possess with intent to distribute and distribute five kilograms or more of cocaine and 1,000 kilograms or more of marijuana; interference with commerce by threats or violence; and use and carrying of a firearm during and in relation to crimes of violence and drug trafficking. As part of his plea agreement, Guerrero acknowledges that a 19-year prison sentence is appropriate.
The third superseding indictment, which charged 21 defendants, was returned by a federal grand jury in the Northern District of Indiana on Nov. 16, 2011, and was unsealed on Nov. 18, 2011.
According to the third superseding indictment, the Latin Kings is a nationwide gang that originated in Chicago and has branched out throughout the United States, including to Texas. The Latin Kings is a well organized street gang that has specific leadership and is comprised of regions that include multiple chapters.
On July 31, 2012, Brandon Clay, 26, of Chicago, and Antonio Gudino, 30, of East Chicago, each pleaded guilty before Judge Lozano to count one of the third superseding indictment charging them with conspiracy to participate in racketeering activity. As part of their plea agreements, Clay and Gudino have each acknowledged that a prison sentence is appropriate – 30 years for Clay and 10 years for Gudino. On July 30, 2012, Jason Ortiz, 30, of Chicago pleaded guilty before the same judge and to the same count as Clay and Gudino. As part of his plea agreement, Ortiz acknowledges that a 25-year prison sentence is appropriate.
Guerrero admitted in the plea agreement that he is responsible for possession of and distribution of 150 kilograms or more of cocaine as alleged in count two. He also admitted in the plea agreement that he physically restrained the victim in the course of the offense alleged in count 14. Guerrero admitted that he abused a position of public trust in a manner that significantly facilitated the commission or concealment of the offense.
The following defendants were charged in the third superseding indictment:
- Alexander Vargas, 34, aka “Pacman,” of Highland, Ind.;
- Sisto Bernal, 46, aka “Cisco” and “Shug,” of Chicago;
- Jason Ortiz, 30, aka “Creeper,” of Chicago;
- Brandon Clay, 26, aka “Cheddar,” “Swiss,” “Slick,” of Chicago;
- Martin Anaya, 41, aka “Left,” of Chicago;
- Ivan Quiroz, 30, of Posen, Ill.;
- Hiluterio Chavez, 41, aka “Tails,” and “Zeus,” of Chicago;
- Dante Reyes, 35, aka “DK,” of Mission, Texas;
- Sergio Robles, 24, aka “Checko,” of Hammond, Ind.;
- Emiliano Esparza, 40, aka “Ken Milleano,” “Kent,” and “Double G,” of Chicago;
- Paulino Salazar, 30, aka “Chino,” of Chicago;
- Santiago Gudino, 28, aka “Creeper,” of Hammond;
- Gabriel Jalomos, 25, aka “Sneaky,” of Chicago;
- Oscar Gonzalez, 22, aka “Puppet,” of Hammond;
- David Lira, 38, aka “Flaco,” of Lansing, Ill.;
- Victor Meza Jr., 23, aka “Shadow,” of Hammond;
- Antonio Gudino, 30, aka “Chronic,” of Indiana, Ind.;
- Bianca Fernandez, 23, of Chicago;
- Serina Arambula, 23 of Chicago;
- Alex Guerrero, 42, of Chicago; and
- Antonio C. Martinez Jr., 41, of Chicago.
Jose Zambrano, 32, aka “Speedy,” aka “Bird,” aka “Big Greasy,” of Sauk Village, Ill., and Jermaine Ellis, 23, aka “J-Dub,” “Donnie Brosco,” “Shorty” of Chicago, were both charged in the first indictment returned on June 17, 2010, and unsealed on June 29, 2010.
As alleged in the third superseding indictment, the Latin Kings enforces its rules and promotes discipline among its members, prospects and associates through murder, attempted murder, conspiracy to murder, assault and threats against those who violate the rules or pose a threat to the Latin Kings. Members are required to follow the orders of higher-ranking members, including taking on assignments often referred to as “missions.”
A total of 23 members and associates have been indicted in this case. Of these defendants, 17 have pleaded guilty and are awaiting sentencing. There are three defendants scheduled for trial on Sept. 10, 2012, before Judge Lozano.
There remains one fugitive in this case, Paulino Salizar, 30, aka “Chino,” from Chicago.
This case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives; the Chicago Police Department; the East Chicago Police Department; the Drug Enforcement Administration; the FBI; the Griffith Police Department; the Hammond Police Department; the Highland Police Department; the Houston Police Department; Immigration and Customs Enforcement-Department of Homeland Security; and the National Gang Intelligence Center.
The case is being prosecuted by Joseph A. Cooley of the Criminal Division’s Organized Crime and Gang Section and David J. Nozick of the U.S. Attorney’s Office for the Northern District of Indiana. Andrew Porter of the U.S. Attorney’s Office for the Northern District of Illinois provided significant assistance.
The third superseding indictment is not evidence of guilt. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
1 August 2012
Florida-Based Crowley Liner Services Inc. Pleads Guilty to Price <br /> Fixing on Freight Services Between U.S. and Puerto RicoRead the Press Release
WASHINGTON – Jacksonville, Fla.-based Crowley Liner Services Inc. pleaded guilty and was sentenced to pay a $17 million criminal fine for its role in a conspiracy to fix prices in the coastal water freight transportation industry, the Department of Justice announced today.
According to a one-count felony charge filed yesterday in the U.S. District Court for the District of Puerto Rico, Crowley Liner Services engaged in a conspiracy to fix base rates for water transportation of certain freight between the continental United States and Puerto Rico from as early as January 2006 until at least April 2008.
Crowley Liner Services transports a variety of cargo shipments, such as heavy equipment, cargo that would not fit into containers, used cars and liquids capable of being transported only in tanker containers, on scheduled ocean voyages between the United States and Puerto Rico.
According to the charges, Crowley Liner Services and co-conspirators carried out the conspiracy by agreeing during meetings and discussions to fix the base rates to be charged to non-government purchasers of water transportation of certain freight between the continental United States and Puerto Rico. The department said that Crowley Liner Services and co-conspirators also engaged in meetings for the purpose of monitoring and enforcing adherence to the agreed-upon rates and sold Puerto Rico freight services at collusive and noncompetitive rates.
“Including this sentencing, as a result of the Antitrust Division’s ongoing investigation, three freight companies have been sentenced to pay criminal fines totaling more than $45 million and five executives have been sentenced to serve prison time totaling more than 11 years,” said Scott D. Hammond, Deputy Assistant Attorney General of the Antitrust Division’s Criminal Enforcement Program. “By agreeing to fix prices for coastal shipping services to and from Puerto Rico, Crowley Liner Services and its co-conspirators thwarted the competitive process by forcing consumers to pay inflated rates for these services.”
On Dec. 20, 2011, Sea Star Line LLC was sentenced to pay a $14.2 million criminal fine. On March 22, 2011, Horizon Lines LLC was sentenced to pay a $15 million criminal fine. Additionally, five shipping company executives—Gabriel Serra, Peter Baci, R. Kevin Gill, Gregory Glova and Alex G. Chisholm—have pleaded guilty. Frank Peake, the former president of Sea Star Line, was charged on Nov. 17, 2011, and is scheduled to stand trial on Jan. 14, 2013.Crowley Liner Services pleaded guilty to price fixing in violation of the Sherman Act, which carries a maximum fine of $100 million for corporations. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
This case arose from an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the coastal water freight transportation industry, which is being conducted by the Antitrust Division’s National Criminal Enforcement Section; the Baltimore Resident Agency of the Department of Defense’s Office of the Inspector General, Defense Criminal Investigative Service (DCIS); and the Miami Field Office of the Department of Transportation’s Office of Inspector General (DOT-OIG). Anyone with information concerning this investigation is urged to call the Antitrust Division’s National Criminal Enforcement Section at 202-307-6694, visit www.justice.gov/atr/contact/newcase.htm or contact DCIS’s Baltimore Resident Agency at 410-347-1620.
City of Woodlake, Calif., Settles with Justice Department over Practice of Unlawful Pre-employment Medical ExaminationsRead the Press Release
The Justice Department announced today that it has reached a settlement with the city of Woodlake, Calif., to resolve allegations that the city engaged in a pattern or practice of discrimination against people with disabilities by requiring applicants for job vacancies to undergo unlawful pre-employment medical examinations before receiving an offer of employment, in violation of the Americans with Disabilities Act (ADA).
The settlement concludes a pattern or practice investigation by the Justice Department based on information that the city of Woodlake was requiring all job applicants to undergo a medical examination as part of the application process, before making an offer of employment. Such pre-offer medical examinations are illegal under the ADA, as they make it easier for employers to discriminate against qualified individuals on the basis of disability in the hiring process. The settlement agreement requires the city to eliminate its current discriminatory policy, to develop and implement a non-discrimination policy and to train staff on the requirements of the ADA.
“This settlement is an important step towards eliminating discrimination against people with disabilities in employment,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “We commend the city of Woodlake for working cooperatively with the Justice Department to ensure that their policies and practices comply with federal law and for their commitment to ensuring that people with disabilities are treated equally and fairly in the hiring process.”
"We are pleased that the city of Woodlake and the U.S. Department of Justice agreed so quickly on measures that will protect the rights of individuals with disabilities,” said U.S. Attorney for the Eastern District of California Benjamin B. Wagner.
The ADA requires that employers, including state and local government entities, not conduct any pre-employment medical examination or inquiry before making an offer of employment. Once a conditional job offer is made, employers may make disability-related inquiries or conduct medical examinations of an applicant if this is done for all entering employees in that job category regardless of disability. Once an employee is hired, employers may only make disability-related inquiries or require medical examinations of an employee if such examination or inquiry is shown to be job-related and consistent with business necessity. The ADA also requires employers not to discriminate against individuals with disabilities in making personnel decisions, including hiring or promoting employees.
More information about this settlement and the obligations of employers under the ADA is available through the Justice Department’s toll-free ADA information line at 800-514-0301 (TDD 800-514-0383) and on the ADA website at www.ada.gov . ADA complaints may be filed by email to [email protected] .
31 July 2012
Two Former Hospital Employees Plead Guilty to Participating in <br /> Kickback Scheme at New York City HospitalRead the Press Release
WASHINGTON – Two former high-ranking employees of facilities operations at New York Presbyterian Hospital (NYPH) pleaded guilty today to an indictment charging them with conspiring to defraud NYPH, the Department of Justice announced.Former vice president of facilities operations, Santo Saglimbeni, and former director of facilities operations, Emilio “Tony” Figueroa, were charged in a four-count superseding indictment filed on June 16, 2011. Saglimbeni, who was charged on all four counts, was convicted of counts one and two on Feb. 2, 2012. Figueroa, who was charged on counts one, three and four, was convicted on count one on Feb. 2, 2012. Counts three and four were severed from that indictment, and Saglimbeni and Figueroa pleaded guilty in the U.S. District Court in Manhattan to those counts today.
Saglimbeni and Figueroa pleaded guilty today for their participation in a mail fraud conspiracy, which lasted from as early as June 2001 and continued through June 2006. The scheme to defraud NYPH centered on Saglimbeni, who with the assistance of Figueroa, awarded contracts for the installation and repair of heating, ventilation and air conditioning systems (HVAC), to a co-conspirator’s company in return for kickbacks given to Saglimbeni and Figueroa in the form of cash, goods and services from that co-conspirator. Saglimbeni and Figueroa also pleaded guilty to a substantive mail fraud offense based upon a payment made to the co-conspirator by NYPH on an HVAC contract awarded in furtherance of the HVAC conspiracy.
“By awarding contracts in return for kickbacks, Saglimbeni and Figueroa used their positions to subvert the competitive bidding process for essential services at NYPH,” said Joseph Wayland, Acting Assistant Attorney General in charge of the Justice Department’s Antitrust Division. “Today’s guilty pleas demonstrate the Antitrust Division’s commitment to holding purchasing officials accountable for this type of illegal conduct.”
On Feb. 2, 2012, after a four week trial, Saglimbeni and Figueroa were convicted of the first two counts of the indictment. At the trial, Michael Yaron and two companies owned by him, Cambridge Environmental & Construction Corp., which does business as National Environmental Associates (Cambridge/NEA), an asbestos abatement company, and Oxford Construction & Development Corp., a construction company; Moshe Buchnik, the president of two asbestos abatement companies; and Artech Corporation, a company owned by a relative of Saglimbeni, were also convicted of conspiracy to defraud NYPH. Yaron, his companies, Buchnik, Saglimbeni and Artech were also convicted of a substantive wire fraud violation.These convictions centered on a scheme to defraud NYPH, whereby Saglimbeni, who with the assistance of Figueroa, awarded asbestos abatement, air monitoring and general construction contracts to Yaron, Buchnik and their companies in return for more than $2.3 million in kickbacks paid to Saglimbeni. Those kickbacks were funneled by Yaron to Saglimbeni through Artech, a sham company Saglimbeni created in the name of his mother.
Each count of conspiracy to commit mail fraud carries a maximum penalty of 20 years in prison and a fine of $250,000 for individuals. The fine may be increased to twice the gross gain the conspirators derived from the crime or twice the gross loss caused to the victims of the crime by the conspirators.
Including today’s pleas, 15 individuals and six companies have been convicted or pleaded guilty to charges arising out of this federal antitrust investigation. On July 10, 2012, Yaron was sentenced to serve 60 months in jail and Buchnik was sentenced to serve 48 months. Each was sentenced to pay a $500,000 criminal fine. Cambridge/NEA, Oxford and Artech, were each sentenced to pay a $1 million criminal fine.
The investigation was conducted by the Antitrust Division’s New York Field Office with the assistance of the FBI and the Internal Revenue Service - Criminal Investigation’s New York Field Office. The Office of the International Affairs in the Justice Department’s Criminal Division also provided assistance. Anyone with information concerning bid rigging, bribery, tax offenses or fraud related to NYPH should contact the Antitrust Division’s New York Field Office at 212-335-8000, visit www.justice.gov/atr/contact/newcase.htm, or call the FBI’s New York Division at 212-384-1000.
Three Individuals in Oklahoma to Pay $5.3 Million for Allegedly Making False Statements in Refinance SchemeRead the Press Release
Three individuals have agreed to pay $5.325 million to resolve allegations that they knowingly made false statements in connection with a mortgage refinance scheme, the Justice Department announced today. The three individuals are Philip M. Green and Jerry Max Jiles, the owners of Bartlesville Health Care Center Inc., a nursing home in Bartlesville, Okla., and Virgil M. Harry, Jr., the former president of the Harry Mortgage Company.
The United States alleged that Green, Jiles and Harry knowingly made false statements in applications to the U.S. Department of Housing and Urban Development (HUD) for HUD-insured mortgage refinancing for three nursing homes in Oklahoma, including the Bartlesville home. The United States alleged that these individuals made false statements regarding the eligible existing indebtedness of the three nursing homes for the purpose of receiving cash from the HUD-insured mortgage refinancings, in violation of HUD rules and requirements. In 2008, the mortgage loan for the Bartlesville home defaulted, resulting in a loss to HUD and the closure of the nursing home.
"Mortgage lenders and borrowers must deal fairly and honestly when public money is on the line," said Stuart F. Delery, Acting Assistant Attorney General for the Department's Civil Division. "The Department of Justice will tirelessly pursue mortgage lenders and borrowers who make false representations to enrich themselves at the public's expense."
"When the combined efforts and attention of the Department of Justice, HUD, and HUD OIG are focused upon those who fail to exercise integrity in connection with HUD programs, the end result will be both unpleasant and costly to the offending party," said David A. Montoya, the Inspector General for HUD.
The allegations arise from audit work conducted by HUD's Office of Inspector General. This case was handled by the Justice Department's Civil Division and the U.S. Attorney's Office for the Northern District of Oklahoma, with the assistance of HUD's Office of General Counsel, Program Enforcement Branch. The claims settled by this agreement are allegations only, and there has been no determination of liability.
This law enforcement action is a part of the interagency Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. It includes representatives from a broad range of federal agencies, including 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, 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.
The Justice Department's total recoveries in False Claims Act cases since January 2009 are over $11 billion.
Justice Department Announces Lawsuit to Protect Rights of Military and Overseas Voters in MichiganRead the Press Release
WASHINGTON – The Justice Department announced today that it has filed a lawsuit against the state of Michigan and its chief elections officials to help ensure that military service members, their family members and U.S. citizens living overseas have the opportunity to participate fully in Michigan’s Aug. 7, 2012, federal primary election and Sept. 5, 2012, federal special primary election.
The lawsuit, brought under the Uniformed and Overseas Citizens Absentee Voting Act (UOCAVA), was filed in federal district court in the Western District of Michigan. The department brought this enforcement action in response to the state’s failure to send absentee ballots to hundreds of Michigan’s eligible military and overseas voters for the Aug. 7, 2012, federal primary election and the Sept. 5, 2012, federal special primary election by the 45th day prior to those elections, as required by UOCAVA.The United States seeks an order requiring the state of Michigan 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 for the receipt of ballots from affected UOCAVA voters. For the Aug. 7, 2012, federal primary election, the suit also requests an order requiring Michigan to provide affected voters who have not received their ballots alternative options for expedited delivery of their ballots.
“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. “This suit seeks relief to ensure that Michigan’s military and overseas voters will be provided the opportunity guaranteed by UOCAVA to receive, mark and return their ballots in the upcoming August and September elections.”
U.S. Attorney for the Western District of Michigan Patrick Miles said, “This office will vigorously enforce federal laws that protect the rights of eligible Michigan voters to participate in federal elections. Americans have fought and died for the right to vote. We must ensure eligible voters have the opportunity to cast their vote and for it to count.”
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.
The lawsuit also seeks relief requiring Michigan to closely monitor and certify its cities’ and townships’ transmission of UOCAVA ballots and to provide reports to the United States about its UOCAVA compliance, including the transmission of ballots for the upcoming Nov. 6, 2012, federal general election. In addition, the lawsuit requests that Michigan take the actions necessary to ensure it fully complies with UOCAVA in future 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.
Antiques Dealer Pleads Guilty in Manhattan Federal Court to Crimes Relating to Illegal Trafficking of Endangered Rhinoceros HornsRead the Press Release
WASHINGTON – David Hausman, an antiques dealer in Manhattan, pleaded guilty today in Manhattan federal court to obstruction of justice and creating false records, in relation to illegal rhinoceros horn trafficking, announced Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division of the Department of Justice, and Preet Bharara, U.S. Attorney for the Southern District of New York.
In the plea agreement, Hausman admitted that he committed these wildlife offenses while holding himself out to the U.S. Fish & Wildlife Service (FWS) as an antiques expert who purportedly wanted to help FWS investigate rhinoceros horn trafficking; in reality, he was covertly engaging in illegal activity himself. Hausman was arrested in February 2012 as part of “Operation Crash,” a nationwide, multi-agency crackdown on those involved in the black market trade of endangered rhinoceros horn.
“Trafficking in endangered species like the black rhinoceros is an egregious violation of the laws enacted by Congress to protect endangered species from extinction,” said Assistant Attorney General Moreno. “Mr. Hausman misled officers in a federal government investigation, falsified records and concealed his own purchase, sale and profit from illegal trade in black rhinoceros horns. This prosecution should send a strong message that we will vigorously prosecute those who deliberately violate wildlife protection laws.”“David Hausman pretended he was helping law enforcement protect a species from being wiped out but instead he was contributing to the very problem,” said U.S. Attorney Bharara. “The laws that protect animals are not optional and will be enforced by this office vigorously since an important, even if less recognized, measure of justice is how we enforce the laws that protect endangered species. Thanks to the outstanding investigative work conducted by law enforcement in this case, Hausman’s deceptions were unsuccessful and he will now be held to account for his crimes.”
Rhinoceros are an herbivore species of prehistoric origin and one of the largest remaining mega-fauna on earth. They have no known predators other than humans. All species of rhinoceros are protected under United States and international law, and all black rhinoceros species are endangered.Since 1976, trade in rhinoceros horn has been regulated under the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), a treaty signed by over 170 countries around the world to protect fish, wildlife and plants that are or may become imperiled due to the demands of international markets. Nevertheless, the demand for Rhinoceros horn and black market prices have skyrocketed in recent years due to the value that some cultures have placed on ornamental carvings, good luck charms or alleged medicinal purposes, leading to a decimation of the global rhinoceros population.
Operation Crash is a continuing investigation being conducted by the Department of the Interior’s FWS in coordination with other federal and local law enforcement agencies including U.S. Immigration and Customs Enforcement’s Homeland Security Investigations. A “crash” is the term for a herd of rhinoceros. Operation Crash is an ongoing effort to detect, deter and prosecute those engaged in the illegal killing of rhinoceros and the unlawful trafficking of rhinoceros horns. The investigation is being led by the Special Investigations Unit of the FWS Office of Law Enforcement and involves a nationwide task force of agents focused on rhino trafficking.
According to the information, plea agreement and statements made during court proceedings:In December 2010, Hausman – while purporting to help the government crack down on illegal rhinoceros trading – advised FWS that the taxidermied head of a black rhinoceros containing two horns had been illegally sold by a Pennsylvania auction house. Upon learning that the sale was not finalized, Hausman covertly purchased the rhinoceros mount himself, using a “straw buyer” to conceal that he was the true purchaser because federal law prohibits interstate trafficking in endangered species. Hausman instructed the straw buyer not to communicate with him about the matter by email to avoid creating a paper trail that could be followed by law enforcement. After the purchase was completed, Hausman directed the straw buyer to remove the horns and mail them to him. He then made a realistic set of fake horns using synthetic materials and directed the straw buyer to attach them on the rhinoceros head in order to deceive law enforcement in the event that they conducted an investigation. After his arrest in February 2012, Hausman contacted the straw buyer and they agreed that the rhinoceros mount should be burned or concealed.
In a second incident, in September 2011, Hausman responded to an Internet offer to sell a (different) taxidermied head of a black rhinoceros containing two horns. Unbeknownst to Hausman, the on-line seller was an undercover federal agent. Before purchasing the horns on Nov. 15, 2011, Hausman directed the undercover agent to send him an email falsely stating that the mounted rhinoceros was over 100 years old, even though the agent had told Hausman that the rhinoceros mount was only 20 to 30 years old. There is an antique exception for certain trade in rhinoceros horns that are over 100 years old. By creating the false record as to the age of the horns, Hausman sought to conceal his illegal conduct. Hausman also insisted on a cash transaction and told the undercover agent not to send additional emails so there would be no written record. After buying the black rhinoceros mount at a truck stop in Princeton, Ill., agents followed Hausman and observed him sawing off the horns in a motel parking lot.
In February 2012 at the time of his arrest, FWS agents seized four rhinoceros heads from Hausman’s apartment as well as six black rhinoceros horns – two of which were the very horns he was seen sawing off in the parking lot – numerous carved and partially carved rhinoceros horns, fake rhinoceros horns and $28,000 in cash.
Hausman, 67, of New York, N.Y., pleaded guilty to one count of obstruction of justice, which carries a maximum penalty of 20 years in prison, and one count of creating a false record in violation of the Lacey Act, a federal wildlife protection statute, which carries a maximum penalty of five years in prison. Hausman faces a maximum sentence of 25 years in prison for these offenses. Under the terms of the plea agreement, almost all of the items recovered from Hausman’s apartment at the time of his arrest will be forfeited or put toward the criminal fine, except for three items for which Hausman established legal purchase and antique status. He is scheduled to be sentenced by U.S. District Judge J. Paul Oetken on Dec. 5, 2012, at 2:00 p.m.
U.S. Attorney Bharara and Assistant Attorney General Moreno commended FWS and the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations in Newark for their outstanding work in this investigation.
The case is being handled by the U.S. Attorney’s Complex Frauds Unit and the Environmental Crimes Section of the U.S. Department of Justice’s Environment and Natural Resources Division. Assistant U.S. Attorney Janis M. Echenberg and Richard A. Udell, a Senior Trial Attorney with the Environmental Crimes Section, are in charge of the prosecution.
30 July 2012
Kazakhstani National Sentenced to 27 Months in Prison for Money LaunderingRead the Press Release
WASHINGTON – Daniyar Zhaxalyk, 26, a citizen of Kazakhstan who entered the United States on a student visa, was sentenced today to 27 months in prison for his role in a sophisticated stock fraud scheme that caused more than $400,000 in losses, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney for the Southern District of Texas Kenneth Magidson.
Zhaxalyk was sentenced by U.S. District Judge Ewing Werlein Jr. in the Southern District of Texas. In addition to his prison term, Zhaxalyk was ordered to pay $221,925 in restitution. Zhaxalyk will be deported from the United States upon the completion of his sentence.
According to court documents, Zhaxalyk agreed to launder funds generated in a sophisticated “hack and dump” stock scheme that caused more than $400,000 in losses. The indictment charges that Zhaxalyk’s co-conspirators illegally accessed brokerage accounts to engage in a stock fraud scheme in which the compromised accounts were used to purchase borrowed shares of stock at above-market prices from the defendants’ personal brokerage accounts. Zhaxalyk’s co-conspirators then repurchased the borrowed shares at the considerably lower market price, returned the borrowed shares to the stock lender, and claimed as profit the difference between the market price and the inflated price paid by the compromised victim accounts.
A co-defendant, Alexey Li, also a citizen of Kazakhstan who entered the United States on a student visa, previously pleaded guilty in Houston on March 2, 2012, and was sentenced to three months in prison and ordered to pay $40,000 in restitution. Two other defendants remain at large.
This case was investigated by the St. Louis, San Francisco and Houston offices of the FBI. The case is being prosecuted by Trial Attorney Ethan Arenson of the Computer Crime and Intellectual Property Section in the Justice Department’s Criminal Division and Assistant U.S. Attorney Mark McIntyre of the Southern District of Texas.
Justice Department to Monitor Elections in GeorgiaRead the Press Release
The Justice Department announced today that it will monitor the elections on July 31, 2012, in Randolph and Washington Counties, Ga., to ensure compliance with the Voting Rights Act of 1965. The Voting Rights Act prohibits discrimination in the election process on the basis of race, color or membership in a minority language group.
Under the Voting Rights Act, the Justice Department is authorized to ask the U.S. Office of Personnel Management (OPM) to send federal observers to jurisdictions that are certified by the attorney general or by a federal court order. Federal observers will be assigned to monitor polling place activities in Randolph County based on the attorney general’s certification. The observers will watch and record activities during voting hours at polling locations in these counties, and Civil Rights Division attorneys will coordinate the federal activities and maintain contact with local election officials.
In addition, Justice Department personnel will monitor polling place activities in Washington County. Civil Rights Division attorneys will coordinate federal activities and maintain contact with local election officials.
Each year, the Justice Department deploys hundreds of federal observers from OPM, as well as departmental staff, to monitor elections across the country. To file complaints about discriminatory voting practices, including acts of harassment or intimidation, voters may call the Voting Section of the Justice Department’s Civil Rights Division at 1-800-253-3931.
Visit www.justice.gov/crt/voting/index.php for more information about the Voting Rights Act and other federal voting laws.
Justice Department Reaches Agreement with Merced County, Calif., on Bailout from the Voting Rights ActRead the Press Release
The Justice Department announced that it has reached an agreement with Merced County, Calif., that will allow for the county and some 84 political subdivisions in the county that conduct elections to bail out from their status as “covered jurisdictions” under the special provisions of the Voting Rights Act, and thereby exempt these jurisdictions from the preclearance requirements of Section 5 of the Voting Rights Act. The agreement is in the form of a consent decree filed today in the U.S. District Court for the District of Columbia and must be approved by the court.
Under Section 5 of the Voting Rights Act, certain covered jurisdictions, determined according to Section 4 of the act, are required to seek preclearance for any changes in voting qualifications, standards, practices or procedures from the U.S. District Court for the District of Columbia or from the U.S. Attorney General, prior to their implementation. Section 4 of the act provides that a covered jurisdiction may seek to “bail out,” or remove itself from such coverage, and therefore be exempted from the preclearance requirements, by seeking a declaratory judgment before a three-judge panel in U.S. District Court for the District of Columbia. A bailout judgment can be issued only if the court determines that the jurisdiction meets certain eligibility requirements for bailout contained in the statute, including a 10-year record of nondiscrimination in voting-related actions. The act also provides that the attorney general can consent to entry of a judgment of bailout only if, based upon investigation, the attorney general is satisfied that the jurisdiction meets the eligibility requirements.
Merced County filed its bailout action in the U.S. District Court for the District of Columbia on March 6, 2012. Counsel for the county contacted the attorney general prior to filing the action, indicating that the county was interested in seeking a bailout. The county provided the Justice Department with substantial information, and the department conducted an investigation to determine the county’s eligibility. Based on that investigation, the department is satisfied that the county meets the Voting Rights Act’s requirements for bailout.
“In the department’s view, the county has met the requirements necessary for bailout. We reached this conclusion after thoroughly reviewing information provided by the county and gathered during the department’s independent investigation,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “I commend the county on their cooperation to ensure resolution of this matter.”
The consent decree details the legal and factual basis for a bailout determination and, if approved by the court, the county’s request will be granted. The court will retain jurisdiction of the action for 10 years and can reopen the action upon the motion of the attorney general or any aggrieved person alleging conduct by the county that would have originally precluded the county from bailing out if it had occurred during the 10-year period preceding entry of the consent decree.
Information about bailout, the Voting Rights Act and other federal voting laws is available on the Department of Justice website at www.justice.gov/crt/voting. Complaints may be reported to the Voting Section of the Justice Department’s Civil Rights Division at 1-800-253-3931.