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Tuesday 14 December 2010
Patrick S. Layng Appointed United States Trustee for Northern Illinois, WisconsinRead the Press Release
WASHINGTON - Patrick S. Layng has been appointed by Attorney General Eric Holder as U.S. Trustee for the Northern District of Illinois and the Eastern and Western Districts of Wisconsin (Region 11), and will assume his duties today, the Executive Office for U.S. Trustees announced. Mr. Layng replaces William T. Neary, the U.S. Trustee for the Northern and Eastern Districts of Texas (Region 6), who has also served as U.S. Trustee for Region 11.
For the past six years, Mr. Layng was a Regional Criminal Coordinator for the U.S. Trustee Program (USTP) with responsibility for prosecuting bankruptcy-related cases as a Special Assistant U.S. Attorney, providing consultation and guidance for law enforcement and USTP personnel on criminal bankruptcy fraud issues, and lecturing extensively on bankruptcy crimes, mortgage fraud, and related topics. Prior to that, he was an Assistant U.S. Attorney in the Northern District of Illinois for more than 14 years. From 1987 to 1989, Mr. Layng was law clerk to the Honorable Stanley J. Roszkowski, U.S. District Court, Northern District of Illinois (retired).
Mr. Layng has tried nearly 40 federal criminal trials and argued 14 cases before the U.S. Court of Appeals for the Seventh Circuit. He received his law degree cum laude from the University of Illinois Urbana-Champaign Law School and his undergraduate degree magna cum laude from the University of Illinois Urbana-Champaign College of Commerce.
The USTP is the component of the Justice Department that protects the integrity of the bankruptcy system by overseeing case administration and litigating to enforce the bankruptcy laws. The USTP has 21 regions and 95 field offices. Region 11 is headquartered in Chicago with additional offices in Milwaukee and Madison, Wisconsin.
Contact:Jane Limprecht, Public Information Officer
Executive Office for U.S. Trustees
(202) 305-7411Owner of Detroit-area Medical Clinic Sentenced to 151 Months in Prison for $23 Million Medicare Fraud SchemeRead the Press Release
WASHINGTON – The owner and the vice president of a Detroit-area physical therapy clinic were sentenced to 151 months and 108 months in prison, respectively, for their leading roles in a $23 million Medicare fraud scheme, the Departments of Justice and Health and Human Services (HHS) announced.
Bernice Brown, 56, the owner of Wayne County Therapeutic Inc. (WCT), and Daniel Smorynski, 63, the vice president of WCT, were sentenced by U.S. District Court Judge Arthur Tarnow in the Eastern District of Michigan. In addition to their prison terms, Brown and Smorynski were sentenced to three years of supervised release and were ordered to pay jointly and severally $6.5 million in restitution.
Brown and Smorynski were convicted by a federal jury earlier this year, after a six-day trial. Brown was convicted of one count of conspiracy to commit health care fraud and nine counts of health care fraud. Smorynski was convicted of one count of conspiracy to commit health care fraud and five counts of health care fraud. Smorynski was acquitted on four counts of health care fraud.
According to evidence presented at trial, WCT, which operated in Livonia, Mich., purported to specialize in physical and occupational therapy. Evidence at trial established that Brown purchased from certain third-party contractors fake physical and occupational therapy files that were created by non-enrolled, and in many cases, non-licensed contractor therapists. Rather than provide therapy, the contractor therapists paid Medicare beneficiaries cash kickbacks to induce the Medicare beneficiaries to provide their Medicare numbers and to sign false documentation to make it appear as if they received therapy. Most, if not all, of the therapy was completely fictitious. Brown and Smorynski billed the services reflected in the fictitious files to Medicare as if WCT therapists had provided the services. Brown instructed her staff to create false documents to add to the fictitious medical files to make it appear that WCT therapists, who were licensed in the state and enrolled with Medicare, had performed the services, when she knew they had not. Smorynski was in charge of billing at WCT and aided in the submission of claims for services he knew WCT did not provide. Between approximately October 2002 and September 2006, Brown and Smorynski submitted approximately $23.2 million in claims to Medicare for physical and occupational therapy services that were never provided. Medicare paid approximately $6.5 million of those claims.
Evidence at trial showed that Brown and Smorynski, in addition to submitting claims for non-existent physical and occupational therapy, caused WCT to submit fraudulent claims for psychotherapy services. In January 2006, when Congress enacted a cap on physical and occupational therapy services to control costs, Brown and Smorynski devised a scheme to avoid the cap by billing for psychotherapy services. Evidence at trial showed that Brown and Smorynski launched a lobbying effort to repeal the cap, which included WCT staff drafting letters and petitions to Congress purportedly on behalf of Medicare patients. Brown and Smorynski then instructed WCT staff to bill Medicare for their lobbying efforts as psychotherapy evaluations and visits. In 2006, WCT billed $493,200 to Medicare for psychotherapy services that were not necessary and not provided, and Medicare paid approximately $121,921 of those claims.
Today’s sentences were announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade; Special Agent in Charge Andrew G. Arena of the FBI’s Detroit Field Office; and Special Agent in Charge Lamont Pugh III of the HHS Office of Inspector General’s (HHS-OIG) Chicago Regional Office.
These cases were prosecuted by Trial Attorneys Benjamin Singer and Gejaa T. Gobena of the Criminal Division’s Fraud Section. The cases were investigated by the FBI and HHS-OIG, and were 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, Medicare Fraud Strike Force operations in seven districts have obtained indictments of more than 825 individuals and organizations that collectively have billed the Medicare program for more than $2 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov .
Justice Department Requires Divestiture in Order for L.B. Foster Co. to Proceed with its Acquisition of Portec Rail Products IncRead the Press Release
WASHINGTON — The Department of Justice announced today that it has reached a settlement that will require Pittsburgh-based L.B. Foster Company to divest a West Virginia plant used in the development, manufacture and sale of certain railroad joints to Koppers Inc., in order to proceed with Foster’s acquisition of Portec Rail Products Inc. The department said that the acquisition as originally proposed would combine the two primary U.S. manufacturers of bonded insulated rail joints and two of only three U.S. manufacturers of polyurethane-coated insulated rail joints. Without the divestiture, the department said the acquisition would lead to higher prices, lower quality, less customer service and less innovation.
The Department of Justice’s Antitrust Division filed a civil antitrust lawsuit today in U.S. District Court for the District of Columbia to block the proposed acquisition. At the same time, the department filed a proposed settlement that, if approved by the court, would resolve the competitive concerns alleged in the lawsuit.
Rail joints are steel bars that are bolted onto the ends of two pieces of rail and used to connect the abutting ends of the rails. Insulated rail joints are rail joints that are used to break the electric current flowing through the rail, using a material placed on the steel bars and between the two abutting pieces of rail. Bonded joints use epoxy in addition to bolts to bind the steel bars to the rails. The epoxy makes the joints stronger and, as a result, able to withstand the heaviest loads for extended periods of time. Because of their strength, bonded joints are necessary for the main track lines on the largest U.S. railroads, called Class 1 railroads, which handle most of the heavy freight rail traffic in the United States. Polyurethane-coated insulated rail joints provide electrical insulation through a polyurethane-covered bar that is bolted to the rail. Poly joints are generally used in areas where the weight and traffic is less than on the Class 1 railroads’ main track lines.
The department’s complaint alleges that the proposed acquisition would eliminate the significant competition between L.B. Foster and Portec in the already highly concentrated U.S. markets for bonded insulated rail joints and polyurethane-coated insulated rail joints.
The proposed settlement requires the companies to divest Portec’s Huntington, W.Va., plant, which manufactures all of Portec’s bonded insulated rail joints and polyurethane-coated insulated rail joints. The department has concluded that Koppers will integrate the divestiture assets into its current operations to create a viable business involved in the development, manufacture and sale of bonded insulated rail joints and polyurethane-coated insulated rail joints and that the divestiture to Koppers will remedy the competitive concerns alleged in the lawsuit.
Foster is a Pittsburgh-based company that manufactures and distributes products and services for the rail, construction, energy and utility industries. Foster had total revenues of approximately $382 million in 2009.
Portec is a Pittsburgh-based company that manufactures and distributes products and services for the rail industry and other industries. Portec had total revenues of approximately $92.2 million in 2009.
Koppers is a Pittsburgh-based company that produces carbon compounds and wood products and services for use in a variety of markets, including the rail industry. Koppers had total revenues of approximately $1.12 billion in 2009.
As required by the Tunney Act, the proposed settlement, along with a competitive impact statement, will be published in the Federal Register. Any person may submit written comments concerning the proposed settlement during a 60-day comment period to Maribeth Petrizzi, Chief, Litigation II Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street, N.W., Suite 8700, Washington, D.C. 20530. At the conclusion of the 60-day comment period, the U.S. District Court for the District of Columbia may approve the proposed settlement upon finding it is in the public interest.
Illinois Woman Pleads Guilty to Illegally Accessing Confidential Student Loan FilesRead the Press Release
WASHINGTON – An Illinois woman pleaded guilty today to illegally accessing numerous confidential student loan files, Assistant Attorney General Lanny A. Breuer of the Criminal Division announced. Charlotte M. Robinson, 46, of Dolton, Ill., pleaded guilty before U.S. Magistrate Judge Susan E. Cox in the Northern District of Illinois to a one-count criminal information charging her with unauthorized computer access. Robinson is scheduled to be sentenced on Feb. 22, 2011.
According to court documents, Robinson worked as a full-time employee in the Federal Student Aid (FSA) Division of the Department of Education, where her responsibilities included reviewing and processing student loan complaints within the FSA Office of the Ombudsman. In pleading guilty, Robinson admitted that she had access to the National Student Loan Database System (NSLDS), which contained confidential federal student loan records maintained by the Department of Education. These student loan records included, among other information, the borrower’s full name, date of birth, Social Security number, type of federal loan, loan balances, place of enrollment and loan servicer. Confidential records maintained in NSLDS are protected by the Privacy Act of 1974, and access by Department of Education employees is strictly limited to official government duties.
Robinson admitted that between April 2006 and May 2009, she logged into NSLDS, which became fully automated in approximately 2006, and repeatedly searched for and viewed the confidential student loan records of several hundred people, including musicians, actors, family members, friends and other individuals. Robinson admitted that she had no official government reason to access and to view these student loan records applications, and that her sole purpose in accessing and viewing these records was idle curiosity.
This case is being prosecuted by Trial Attorney Eric G. Olshan of the Criminal Division’s Public Integrity Section. This case was investigated by the Department of Education Office of Inspector General.
Georgia Man Pleads Guilty to Participating in International Child Pornography Ring Dismantled by International Law Enforcement EffortRead the Press Release
WASHINGTON – A Georgia man pleaded guilty yesterday in Los Angeles to transporting child pornography using a secret Internet bulletin board that allowed approximately three dozen members to trade thousands of images and videos of child pornography depicting young boys in sexually explicit situations, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney André Birotte Jr. and Assistant Director in Charge Steve Martinez of the FBI’s Los Angeles Field Office.
Yesterday’s guilty plea by David Michael Fagerness is the result of an international investigation into the "Lost Boy" online bulletin board. Federal authorities, working in conjunction with a coalition of international law enforcement agencies, shut down the Lost Boy bulletin board approximately two years ago.
As a result of the investigation, 16 named defendants have been charged in the United States for their roles in the ring. To date, five defendants have pleaded guilty for their roles, and an additional two defendants have agreed to plead guilty. An additional eight defendants who are alleged to be Lost Boy members currently face federal charges, including engaging in a child exploitation enterprise, a crime that carries a mandatory minimum sentence of 20 years in prison. Trial for these remaining defendants is currently set for April 26, 2011. The original indictment in the case was returned on Jan. 23, 2009. The first superseding indictment was returned on Sept. 22, 2009, and on Aug. 31, 2010, a grand jury returned a second superseding indictment.
"Through unprecedented cooperation with foreign law enforcement partners, we have brought down a global online group whose principal purpose was to victimize children," said Assistant Attorney General Breuer. "The members of the ‘Lost Boy’ bulletin board used sophisticated vetting procedures to facilitate the sexual abuse of children and enable its users to produce and share child pornography, while also developing a handbook on how to groom potential victims. We are committed to pursuing these perpetrators wherever they are through international investigations and prosecutions like the one we are highlighting today."
"The Lost Boy bulletin board allowed members to access pornographic images of hundreds of boys who were victimized for sexual purposes," said United States Attorney André Birotte Jr. "The investigation by officials here in the United States, working in conjunction with their law enforcement counterparts around the globe, shut down an international child pornography ring and will hopefully bring some justice to the numerous victims. As a result of this investigation, authorities also discovered individuals who abused children, made their own child pornography and shared their disturbing product with others on the Internet."
"The Lost Boy case represents a global subculture that exists for the purpose of trading of child pornography and other tools used to sexually exploit children," said Steven Martinez, Assistant Director in Charge of the FBI in Los Angeles. "The FBI and our partners in Los Angeles and globally will continue to work together to identify these networks and to pursue charges against those who abuse children."
Fagerness, 44, pleaded guilty yesterday in U.S. District Court in Los Angeles to conspiracy to transport child pornography. Fagerness, of the Atlanta area, relocated to the Czech Republic after being convicted of possessing child pornography in Florida state court in 2005. Fagerness faces a 15-year mandatory minimum sentence. Sentencing is scheduled for June 6, 2011.
In addition to Fagerness, four individuals have previously pleaded guilty for their roles in Lost Boy. Andrew Neil Scott, 30, of Flint, Mich., pleaded guilty on Dec. 2, 2010, to one count of participating in a child pornography enterprise and two counts of producing child pornography. According to court documents, Scott admitted to participating in Lost Boy, as well as to molesting two boys and producing child pornography. In his plea agreement, Scott agreed to be sentenced to at least 25 years in prison and to a maximum of 30 years in prison. Anthony Jasso, 46, of Laguna Beach and Redlands, Calif., pleaded guilty in May 2010 to conspiracy to advertise child pornography, a charge that carries a 15-year mandatory minimum sentence. Court documents describe Jasso as belonging to a southern California club called "Boy Lovers," whose members gathered to watch child erotica and to attend events involving children. Justin Lee, 33, of Phoenix, pleaded guilty in September 2010 to transporting child pornography, which carries a mandatory minimum penalty of five years in prison. Woodrow Tracy, 65, of Sun Valley, Calif., pleaded guilty in September 2010.
According to court documents, law enforcement authorities discovered the Lost Boy bulletin board after receiving information from Eurojust, the judicial cooperation arm of the European Union. Eurojust provided U.S. law enforcement with leads obtained from Norwegian and Italian authorities indicating that a North Hollywood, Calif., man was communicating with an Italian national about child pornography and how to engage in child sex tourism in Romania. Acting on the information from Europe, the FBI executed search warrants that led to the discovery of the Lost Boy network. According to court documents, further investigation revealed that Lost Boy had 35 members, 15 of whom were U.S. nationals. Other members of the network were located in countries around the world, including Belgium, Brazil, Canada, France, Germany and New Zealand.
The Lost Boy bulletin board, according to court documents, was dedicated to men who have a sexual interest in young boys and was established to provide a forum to trade child pornography. Lost Boy is alleged to have had a thorough vetting process for new members, most of whom had to post child pornography to join the organization. Once accepted, members had to continue to post child pornography to remain in good standing and not be removed from the board. According to court documents, Lost Boy members advised each other on techniques to evade detection by law enforcement, which included using screen names to mask identities.
Court documents show that the Lost Boy bulletin board had a forum called the "Handbook Project," where members read and contributed to a grooming handbook, which was a guide for adult men on how to find and groom boys into engaging in sex, how to deal with physical aspects of sexual contact, and how to move on to other victims when the current victim grows too old to be attractive.
Through the Lost Boy investigation and related investigations, law enforcement authorities in the United States identified and arrested 15 alleged Lost Boy members, as well as approximately six more men who have been charged with child molestation. The investigation also led to the identification of 27 domestic victims of child abuse, some of whom were portrayed in images posted to the Lost Boy bulletin board.
International law enforcement efforts involving European law enforcement, the Brazilian Federal Police and other agencies have identified child molestation suspects in South America, Europe and New Zealand. Three suspects in Romania, one in France, and another in Brazil have been charged, and offenders have been convicted in Norway and the United Kingdom. Law enforcement efforts have also identified dozens of child victims located in Norway, Romania, Brazil and other nations.
The investigation into the Lost Boy bulletin board is an ongoing effort by the FBI and the U.S. Postal Inspection Service, in conjunction with the Los Angeles-based Sexual Assault Felony Enforcement (SAFE) Team. The High Technology Investigative Unit of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), along with Eurojust, have provided invaluable assistance during the investigation. The SAFE Team in Los Angeles is comprised of the FBI, the U.S. Attorney’s Office, the Los Angeles County District Attorney’s Office, the California Highway Patrol, the U.S. Postal Inspection Service, the California Department of Justice, the Los Angeles County Sheriff’s Department and the Los Angeles Police Department.
The case is being prosecuted by Assistant U.S. Attorneys Joey L. Blanch and Yvonne Garcia, and CEOS Trial Attorney Andrew McCormack.
Fifteen Individuals Extradited from Mexico to the United StatesRead the Press Release
WASHINGTON - Fifteen individuals have been extradited over the past week from Mexico to the United States to stand trial, to be sentenced or to serve sentences, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division. Twelve of the 15 defendants are charged with federal narcotics-related offenses and the remaining three are accused of violent crimes in state-prosecuted cases.
“Extraditions are an important tool we have to ensure that criminals are brought to justice in this country,” said Assistant Attorney General Breuer. “Over the past decade, the Department of Justice has established stronger partnerships with Mexico in many areas of law enforcement, including extraditions to and from each country. With these extraditions of individuals who committed or stand charged with violent and dangerous crimes, we look forward to seeing those partnerships continue to strengthen.”
Three defendants charged in the Northern District of Illinois are arriving today in Chicago. Nine of the defendants departed Mexico and arrived in Houston Saturday morning, while the remaining three arrived in the United States over the course of the past week, beginning on Dec. 8, 2010. The U.S. Marshals Service and the FBI will transport the defendants to the jurisdictions in which they are charged. The extradited defendants are the following:
Oscar Jacobo Rivera Peralta Ricardo Valdez Torres and Alfredo Molina Garcia: Northern District of Illinois; According to court documents, from approximately 2001 until 2006, Peralta, Torres and Garcia were members of a drug trafficking organization responsible for the importation of cocaine, heroin and synthetic heroin into the United States for distribution. The defendants are charged with narcotics trafficking-related offenses.
Rigoberto Yanez: Southern District of California; According to court documents, Yanez was a high-ranking member of the Tijuana Cartel/Arellano Felix Organization (AFO). During the 1990s, Yanez allegedlyacted as a primary representative of the AFO in Mexico City, allegedly handling both the receipt of drug shipments and the transmission of money to drug suppliers, as well as enforcement activities, which included the kidnapping and killing of rival narcotics traffickers. Yanez is charged with narcotics trafficking, money laundering and organized crime-related offenses.
Jose Manuel Escobedo: Eastern District of Texas; In May 2004, Escobedo was found guilty of narcotics offenses, and in February 2005 he was sentenced to serve 10 years in prison. Escobedo escaped from prison in March 2006 and fled to Mexico after serving approximately half of his sentence.
Cantalicia Garza: Southern District of Texas; Garza is accused of participating in a narcotics transportation and distribution organization between 2005 and 2007. Garza is charged with narcotics trafficking-related and money laundering offenses.
Louis Damian Barrientos Barba: Webb County, Texas; According to court documents, on Oct. 21, 2007, Barrientos Barba allegedly shot an individual who was sitting in his truck parked at his home. Barrientos Barba was arrested, but fled to Mexico after being released on bail. Barrientos Barba is charged with aggravated assault.
Jose Maria Cuevas Gonzalez: Clarke County, Va .; According to court documents, on July 9, 2008, Cuevas Gonzalez and an individual had several angry telephone conversations about an old debt Cuevas Gonzalez owed the individual. Later that afternoon, Cuevas Gonzalez allegedly met the individual and one of the individual’s friends. Cuevas Gonzalez allegedly shot and severely injured the two individuals. One of the victims died at the scene. Cuevas Gonzalez is charged with murder and related offenses.
Sergio Humberto Lujan and Marco Antonio Lujan: Western District of Texas; In July 2007, U.S. law enforcement authorities arrested Sergio Humberto and Marco Antonio Lujan after, according to court documents, intercepting telephone calls in which both men, along with other co-conspirators, discussed selling cocaine and the amount of money made in a drug deal conducted in El Paso, Texas. In January 2009, both defendants pleaded guilty to narcotics charges in the Western District of Texas, but fled to Mexico prior to sentencing.
Timoteo Rios: Harris County, Texas; On April 16, 2008, Rios and another man allegedly attacked an individual and grabbed her car keys as she left a store in Houston. According to court documents, as Rios approached the victim’s car, she screamed and attempted to prevent him from taking the car, which had the victim’s baby in the back seat. Rios then allegedly stabbed the victim and fled from the scene. The victim later died at a local hospital. Rios is charged with murder.
Jose Rodolfo Escajeda: Western District of Texas; Between January 2000 and November 2006, Escajeda was allegedly a high-ranking member of a narcotics trafficking organization which imported marijuana and cocaine into the United States from Mexico. According to court documents, this organization also distributed narcotics throughout the United States and transported narcotics proceeds to Mexico. Escajeda and a co-defendant allegedly directed the illegal importation of approximately 188,000 kilograms of marijuana and approximately 25 kilograms of cocaine from Mexico into the United States.
David Plata Segovia: Western District of Texas and Southern District of Alabama; Beginning as early as 1997 and continuing until at least 2008, Segovia was allegedly a leader of a cocaine trafficking organization based out of McAllen, Texas, which transported large shipments of cocaine to other cities in Texas as well as to Alabama, Michigan and Delaware. Segovia is charged with narcotics trafficking-related offenses.
Victor Flores: District of Arizona; Flores, according to court documents, allegedly took part in a drug trafficking organization that imported more than 20 tons of cocaine from Mexico into the United States between February 1995 and April 1999. The organization used a tunnel connecting Naco, Sonora, Mexico, and Naco, Arizona, to import the cocaine, and Flores used his residence in Naco, Arizona, to store approximately one ton of cocaine. Flores is accused of narcotics trafficking conspiracy charges and related weapons offenses.
Bernardo Nava: Southern District of California; During 2006 and 2007, Nava was purportedly a member of a methamphetamine trafficking organization operating in San Diego, California. Nava was responsible for coordinating the transportation of shipments of methamphetamine from Tijuana, Mexico to the United States. Nava is charged with narcotics trafficking conspiracy charges.
Charges are merely allegations and defendants are presumed innocent unless and until proven guilty in a court of law.
The Criminal Division’s Office of International Affairs (OIA) worked with law enforcement colleagues in the United States and Mexico to affect the extraditions. Individuals pending trial will be prosecuted by attorneys from the jurisdictions in which they are charged.
Federal Court Permanently Bars Texas Woman from Preparing Federal Tax Returns for OthersRead the Press Release
WASHINGTON – A federal court has permanently barred Maritza Villanueva of Irving, Texas, from preparing federal income tax returns for others, the Justice Department announced today. The permanent injunction order, to which Villanueva consented, was entered by Judge Jane J. Boyle of the U.S. District Court for the Northern District of Texas.
The government complaint in the case alleged that Villanueva works for Action E-File Services in Irving, and claims false tax credits and deductions for her customers, including false earned income tax credits. According to the complaint, the Internal Revenue Service estimated that Villanueva’s customers underpaid their taxes, or received tax credits to which they were not entitled, in an amount exceeding $3 million.
The court also ordered Villanueva to give government attorneys any lists she possessed identifying individuals for whom she prepared any tax-related documents since Jan. 1, 2007.
Since 2001, the Justice Department’s Tax Division has obtained hundreds of injunctions to stop the promotion of tax fraud schemes and the preparation of fraudulent returns. Information about these cases is available on the Justice Department website.
Dutch Woman and 17 Other Members of FARC Terrorist Organization Indicted on Hostage-taking and Weapons ChargesRead the Press Release
WASHINGTON - Tanja Anamary Nijmeijer, a Dutch national who moved to Colombia and joined the Revolutionary Armed Forces of Colombia (FARC) in 2002, and 17 other members of the FARC designated foreign terrorist organization were indicted by a federal grand jury in Washington, D.C., today on seven counts of terrorism and weapons charges arising out of their participation in the hostage-taking of three American citizens in the Republic of Colombia.
The indictment, returned by a grand jury in U.S. District Court for the District of Columbia, was announced by David Kris, Assistant Attorney General for National Security; Ronald C. Machen Jr., U.S. Attorney for the District of Columbia; and John V. Gillies, Special Agent in Charge, of the FBI’s Miami Division.
The three former hostages – Marc Gonsalves, Keith Stansell and Thomas Howes – were held in the Colombian jungle by members of the FARC for more than five years, until their rescue by Colombian military forces on July 2, 2008.
The indictment charges Nijmeijer, 32, and the other 17 defendants with one count of conspiracy to commit hostage taking, three substantive counts of hostage taking, one count of using and carrying a firearm during a crime of violence and two counts of conspiracy to provide material support to terrorists and a designated foreign terrorist organization.
Sixteen of the defendants are being charged for the first time; two others, charged earlier, face new counts in today’s indictment. If convicted of these charges, each defendant would face a maximum term of up to 60 years of incarceration, the maximum sentence permitted under Colombian law for Colombian nationals extradited to the United States for prosecution. The weapons charge carries a statutory mandatory minimum penalty of 30 years incarceration. Four of the 18 defendants are also charged in count two of the indictment with an eighth count, the premeditated murder of a U.S. national outside the United States, done during the perpetration of, and attempt to perpetrate, a kidnapping, which also carries a maximum sentence of up to 60 years incarceration in this case.
Marc Gonsalves, Keith Stansell, Thomas Howes, Thomas Janis and a Colombian national, Sgt. Luis Alcides Cruz, were conducting counter-drug aerial surveillance in southern Colombia on Feb. 13, 2003, when their Cessna aircraft experienced engine failure and was forced to make an emergency landing on a remote mountainside where a large contingent of FARC guerrillas were gathered. All five occupants of the plane survived the crash, but were immediately taken captive by the FARC guerrillas. The pilot of the plane, Thomas Janis, and the Colombian national, Sgt. Cruz, were both immediately executed by the FARC, and their bodies were left near the crash site. The other three, Mr. Gonsalves, Mr. Stansell and Mr. Howes, were held under barbaric conditions in the jungle for more than five years.
The indictment alleges that the defendants used choke harnesses, chains, padlocks and wires to bind the necks and wrists of the American hostages to prevent their escape, and constructed a large barbed-wire concentration camp to hold dozens of civilian hostages in the jungle for more than a year, including the three Americans.
As Colombian rescue efforts intensified in later years, the indictment alleges that the defendants forced the hostages to move long distances, from camp to camp, including a grueling 40-day march while carrying heavy backpacks through dense jungle to outrun Colombian military forces. The defendants are also charged with forging an agreement to kill the hostages, if necessary, to prevent their escape or rescue.
"We will not tire in our pursuit of all those responsible for this crime. I applaud the many prosecutors, agents and analysts who have worked tirelessly to bring about these charges as we seek justice for the victims of these hostage-takings," said Assistant Attorney General Kris.
"Today's indictment demonstrates our firm resolve to bring to justice every last FARC commander who played any part in this brutal act of terrorism," U.S. Attorney Machen stated.
"The FARC has authorized the use of violence and attacks against American citizens to forward their mission of terrorism. Today's indictment represents the continuing commitment of the FBI to fully investigate and to bring to justice terrorists throughout the world who harm citizens of the United States," said Special Agent in Charge Gillies.
The indictment sheds new light on the international aspect of the FARC’s hostage-taking enterprise, and this crime in particular. For example, it alleges that the hostages were taken to a meeting in 2003 with several senior members of the FARC’s Estado Mayor Central, who told the Americans that their continued detention as U.S. citizens would assist the FARC’s goals by increasing international pressure on the government of Colombia to capitulate to the FARC’s demands. The FARC published communiques articulating their political demands on the Internet, in Spanish and English, to be read in the United States and, in 2003, released a proof of life video articulating their demands to Colombian and American media outlets.
The indictment also alleges that the defendants transported the hostages, at times, outside Colombia and into the Republic of Venezuela, in order to prevent the Colombian police and military from rescuing the hostages.
Four of the defendants in today’s indictment, Carlos Alberto Garcia, also known as "Oscar Montero" and "El Paisa," Juan Carlos Reina Chica, also known as "Farid," Jaime Cortes Mejia, also known as "Davison," and Carlos Arturo Cespedes Tovar, also known as "Uriel,"are charged with murder of a U.S. national outside the United States, for their involvement in the kidnapping when Thomas Janis was shot in the back of the head with an assault rifle by FARC guerrillas. The indictment also alleges that "El Paisa" gave the order to shoot at the disabled plane as it was attempting to land.
Defendant Tanja Nijmeijer gained notoriety in recent years in Colombia, after her personal journal was recovered in a Colombian military raid in 2007, and excerpts of a video interview of her were released to the international press in 2010. On the recently-released video, Nijmeijer describes how she first learned about Colombia’s guerrilla war when she was still a student at the University of Groningen in the Netherlands. She describes how she helped the FARC as an operative in Bogota before eventually joining the group as an armed insurgent in November, 2002. Nijmeijer states on the video that she will be a "guerrilla until we are victorious or until we die, and there’s no turning back."
Today’s charging document represents the fifth indictment issued in the District of Columbia against various FARC members involved in the kidnappings.
In 2005, the Republic of Colombia extradited Juvenal Ovidio Ricardo Palmera Pineda, also known as Simon Trinidad, to the United States in this case. He was subsequently convicted at a jury trial of conspiracy to commit hostage taking, and is now serving a 60-year sentence in federal prison. Chief Judge Royce C. Lamberth, who sentenced defendant Trinidad in 2008, called the crime an act of terrorism that was heinous, barbaric, and "against the law of all civilized nations." The Colombian Supreme Court declined to extradite three other conspirators who were charged with this hostage-taking case in 2007 and 2008, and four other conspirators who were charged in 2003 have been killed or died in Colombian military operations in recent years.
Two of the defendants in today’s indictment - Carlos Alberto Garcia, aka El Paisa, and Jose Ignacio Gonzalez Perdomo, aka Alfredo Arenas - were charged previously in an indictment returned in the District of Columbia in 2003, shortly after the three Americans were taken hostage. Today’s indictment re-files each of those charges and adds a new homicide count against El Paisa. Today’s indictment also adds a new weapons charge and an additional material support charge against both men.
The U.S. government, through the Rewards for Justice Program of the Department of State, is offering a reward of up to $5 million for information leading to the apprehension or conviction of any FARC commanders involved in the hostage taking of Keith Stansell, Thomas Howes and Marc Gonsalves, and the murder of Thomas Janis. The Department of State’s Rewards for Justice Program has been employed worldwide to fight terrorism. Since the program’s inception in 1984, the United States has paid more than $77 million to more than 50 persons who provided credible information that led to the apprehension of individuals or prevented acts of international terrorism.
The newest charges were the result of an investigation led by the FBI’s Miami Field Office and are being prosecuted by Assistant U.S. Attorney Kenneth Kohl of the U.S. Attorney’s Office for the District of Columbia, with the support of David Cora and Brian Murtagh in the Counterterrorism Section of the National Security Division of the Department of Justice. Assistance also was provided by the Directorate of Intelligence and the Anti-Kidnapping Unit of the Colombian National Police, as well as the FBI Office of the Legal Attaché in Bogota, Colombia.
An indictment is merely a formal charge that a defendant has committed a violation of criminal laws. Every defendant is presumed innocent until and unless found guilty.
Monday 13 December 2010
Justice Department Files Religious Discrimination Lawsuit Against Berkeley School District in IllinoisRead the Press Release
WASHINGTON -- The Justice Department today announced it has filed a lawsuit against Berkeley School District, Berkeley, Ill., alleging that the school district violated Title VII of the Civil Rights Act of 1964 by failing to reasonably accommodate the religious practices of Safoorah Khan, a Muslim teacher at McArthur Middle School.
The government’s complaint, filed in the U.S. District Court for the Northern District of Illinois in Chicago, alleges that Ms. Khan requested an unpaid leave of absence in December 2008 to perform Hajj, a pilgrimage required by her religion. According to the complaint, Berkeley School District denied Ms. Khan’s request because the purpose of her leave was not related to her professional duties nor was it leave for any of the specific purposes set forth in the Professional Negotiations Agreement between the district and the teachers’ union. The United States further alleges that, because Berkeley School District denied her a religious accommodation, the district compelled Ms. Khan to choose between her job and her religious beliefs, and thus forced her discharge.
The lawsuit is based on a charge of discrimination filed by Ms. Khan with the Chicago District Office of the Equal Employment Opportunity Commission (EEOC). After investigating Ms. Khan’s charge, finding reasonable cause to believe that Berkeley School District had discriminated against Ms. Khan, and unsuccessfully attempting to conciliate the matter, the EEOC referred the charge to the Department of Justice. More information about the EEOC is available on its website at www.eeoc.gov.
In the lawsuit, the United States seeks an order requiring Berkeley School District to adopt a policy designed to reasonably accommodate the religious observances, practices and beliefs of employees and prospective employees. In addition, the United States seeks back pay, compensatory damages and reinstatement for Ms. Khan.
"Employees should not have to choose between their religious practice and their livelihood," said Thomas Perez, Assistant Attorney General for the Civil Rights Division. "Federal law prohibits employers from treating employees and applicants less favorably because of their religion, and requires employers to make reasonable accommodations for the religious beliefs and practices of their employees."
"The EEOC is committed to ensuring that individuals are protected from religious discrimination at work," said Jacqueline A. Berrien, Chair of the EEOC. "We are pleased to foster this important collaboration with the Department of Justice to enforce the laws that ensure our workplaces are free of bias."
This is the first lawsuit brought by the Department of Justice as a result of a pilot project designed to ensure vigorous enforcement of Title VII against state and local governmental employers by enhancing cooperation between the EEOC and the Civil Rights Division.
The filing of the lawsuit reflects the Civil Right’s Divisions ongoing commitment to actively enforce federal employment discrimination laws. Additional information about the Civil Rights Division of the Department of Justice is available on its website at www.usdoj.gov/crt.
Florida Man and Two U.K. Nationals Plead Guilty in Relation to Immigration Fraud Scheme Involving Florida Property Development CompanyRead the Press Release
WASHINGTON – A Florida man and two U.K. nationals pleaded guilty Dec.10, 2010, to immigration fraud charges for their roles in a scheme to fraudulently procure visas from the U.S. Embassy in London through a Florida property development company called Royal Development. The guilty pleas were announced today by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Robert E. O’Neill of the Middle District of Florida; Eric J. Boswell, Assistant Secretary of State for Diplomatic Security; and Special Agent in Charge Linda J. Osuna of the Internal Revenue Service (IRS) Criminal Investigation Division.
Richard A. Murdoch, 54, of Florida, pleaded guilty to visa fraud and tax evasion in relation to the immigration fraud scheme. Hugh Morgan, 68, a U.K. national residing in Ontario, Canada, and Christopher A. Barrett, 49, a U.K. national residing in Florida, pleaded guilty to conspiracy to commit immigration fraud. Murdoch and Barrett pleaded guilty before U.S. Magistrate Judge David A. Baker. Morgan also pleaded guilty to conspiracy to commit immigration fraud in a separate but related case involving immigration benefit applications submitted to U.S. immigration authorities for a U.K. national named Michael J. Leggett. Leggett previously pleaded guilty to two counts of immigration fraud in relation to Royal Development and his own immigration benefit applications in the Middle District of Florida on Aug. 24, 2007. Morgan’s pleas took place before U.S. Magistrate Judge Gregory J. Kelly.
At sentencing, Murdoch faces a maximum sentence of 10 years in prison for visa fraud and five years for tax evasion; Morgan faces a maximum sentence of five years in prison for each conspiracy charge; and Barrett faces a maximum sentence of five years in prison for conspiracy to commit immigration fraud. Each defendant is also subject to a maximum fine of $250,000 for each charge. Morgan is scheduled to be sentenced on March 9, 2011, and Murdoch and Barrett are scheduled to be sentenced on March 10, 2011.
On April 7, 2010, Murdoch, Morgan and Barrett were indicted for one count of conspiracy to commit immigration fraud and four counts of immigration fraud in relation to Royal Development. The indictment also charged Murdoch with three counts of tax evasion. Murdoch and Barrett were arrested on April 26, 2010, in Florida and Morgan was arrested on the same day in Ontario, Canada, in response to a U.S. government extradition request related to the Nov. 4, 2009, indictment in the separate but related case.
According to court documents, from approximately June 2003 to November 2006, the defendants conspired to commit immigration fraud through Royal Development, which purportedly sold Florida-based home construction companies to foreign nationals. The conspirators represented that the purchase of a company would enable foreign nationals to qualify for and obtain either a treaty investor (E-2) visa or intracompany transferee (L-1A) visa. Along with the sale of the companies, the conspirators generally represented that they would submit the required visa paperwork to U.S. authorities, help the foreign nationals run the company, and help the foreign nationals adjust to life in the United States. According to court documents, the conspirators required a payment of between $65,000 to $165,000 for the purchase of the company and the visa services. During the course of this conspiracy, Royal Development obtained over $2.4 million from the U.K. investors.
According to plea documents, Murdoch admitted that he knowingly presented required applications, affidavits and other documents that contained materially false statements to U.S. immigration authorities. In addition, Murdoch admitted that from approximately June 2003 to April 2006, Murdoch received approximately $536,593 in income from Royal Development for which he should have paid income taxes and that he intentionally failed to file his federal income tax returns for 2003, 2004, and 2005, by the respective due dates, because he was concealing his income from the IRS. The total tax due and owing on this taxable income to the U.S. government is $189,852. Murdoch also admitted that he used the taxable income from Royal Development for personal expenses such as hang gliding, cigars, and the purchase of a 1987 Porsche.
According to plea documents, Morgan and Barrett admitted that they knowingly presented required applications, affidavits and other documents that contained materially false statements to U.S. immigration authorities. In particular, Morgan and Barrett admitted that they knowingly prepared and submitted fraudulent immigration benefit applications for Barrett as well as Barrett’s adult daughter, enabling both Barrett and his daughter to fraudulently procure L-1A visas and come to and work in the United States.
The case was investigated by the Diplomatic Security Service - Criminal Investigations Division in Washington, D.C., and the IRS Criminal Investigation Division in Maitland, Florida. The Fraud Prevention Unit at the U.S. Embassy in London, United Kingdom provided significant assistance. The Diplomatic Security Service - Regional Security Offices in Toronto, Canada, and London, United Kingdom, and the Diplomatic Security Service Miami Field Office provided invaluable support.
In addition, the government of Canada, including Canadian prosecutors and the Toronto Fugitive Squad, provided significant assistance. The Criminal Division’s Office of International Affairs provided valuable assistance.
The case is being prosecuted by Senior Trial Attorney James S. Yoon of the Criminal Division’s Human Rights and Special Prosecutions Section and Assistant U.S. Attorney Karen L. Gable of the U.S. Attorney’s Office for the Middle District of Florida.
Dekalb County, Ga., Agrees to Major Sanitary Sewer System UpgradesRead the Press Release
WASHINGTON – DeKalb County, Ga. has agreed to make major improvements to its sanitary sewer systems in an effort to eliminate unauthorized overflows of untreated sewage, the U.S. Justice Department and the U.S. Environmental Protection Agency (EPA), announced today.
In addition, DeKalb will pay a civil penalty of $453,000, to be split evenly between the United States and the state of Georgia, and implement a supplemental environmental project valued at $600,000 that will provide additional environmental benefits to the local community. The consent decree, lodged in the U.S. District Court for the Northern District of Georgia in Atlanta today, resolves the joint federal and state complaint filed at the same time alleging violations of the Clean Water Act and the Georgia Water Quality Control Act.
“This settlement will mean a healthier, safer environment for communities in DeKalb County,” said Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division of the Department of Justice. “Like other aging sanitation systems across the country where we have reached clean water settlements, upgrading this aging infrastructure and conducting community-based cleanups will result in cleaner streams and waterways for families and children.”
“Sewage overflows are a significant problem in the Southeast because of inadequate and aging infrastructure,” said Stan Meiburg, Deputy Regional Administrator of EPA’s Southeastern office. “This agreement demonstrates DeKalb County’s commitment to address long-standing sewage problems. Ultimately, this will benefit the local community and improve water quality in the Upper Ocmulgee and Chattahoochee watersheds."
DeKalb’s sanitary sewer system serves over 500,000 people. The wastewater collection and transmission system which DeKalb owns and operates includes approximately 2,600 miles of sewer lines, 55,000 manholes, and 66 lift stations. This is a sanitary sewer system designed to convey only municipal sewage, not stormwater.
Overflows pose a significant threat to public health because raw sewage can have high concentrations of bacteria from fecal contamination, as well as disease-causing pathogens and viruses. These overflows can occur in backyards, city streets, and directly into streams and rivers.
“This proposed consent decree negotiated with DeKalb County will result in targeted cleanups of DeKalb County streams and major long term improvements to the DeKalb County sanitary sewer systems,” said U.S. Attorney for the Northern District of Georgia Sally Quillian Yates. “The agreement reflects the strong commitment of the Justice Department to enforce the mandate of the Clean Water Act through working with our colleagues in state and local governments.”
The consent decree provides for targeted injunctive relief for priority areas, consisting primarily of the most aged sewer pipes. The major features of the consent decree relating to the sanitary sewer system will require DeKalb to identify and quantify overflows of untreated sewage and their causes; to identify, delineate, assess and rehabilitate all priority areas within 8 ½ years; and improve its management, operation and maintenance programs to prevent future overflows and respond to overflows when they occur. DeKalb has estimated that the injunctive relief and other related improvements may cost approximately $700 million.
As part of the settlement, DeKalb has agreed to conduct a stream cleanup project at an estimated cost of $600,000. The cleanup will focus on removal of trash and debris from segments of the South River, South Fork Peachtree Creek and Snapfinger Creek. DeKalb will encourage the public to join in the stream cleanup project.
The Justice Department and EPA, often joined by the states, are taking an active lead in municipal Clean Water Act enforcement and have already entered into settlements with numerous municipalities including Atlanta; Baltimore; Hamilton County (Cincinnati), Ohio; Jefferson County (Birmingham), and Mobile, Ala.; Knoxville and Nashville, Tenn.; Louisville, Ky.; Miami.; New Orleans; and Sanitation District Number 1 of Northern Kentucky.
The proposed consent decree with DeKalb County is subject to a 30-day public comment period and final court approval. A copy of the consent decree lodged today is available on the Department of Justice website at www.justice.gov/enrd/Consent_Decrees.html .
Friday 10 December 2010
Restitution Trust Funds Implemented for Foreign Victims of Sex TourismRead the Press Release
WASHINGTON – Restitution trust funds for the benefit of two minor victims of sex tourism in the Philippines were executed and implemented yesterday through the signing of trust documents by Filipino social welfare authorities and a U.S. based trustee, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida.
The trusts were established as a result of an order of restitution against Donald Mathias of Davie, Fla., in the criminal case against him. Mathias, 64, was sentenced on March 3, 2010, to 20 years in prison for engaging in sex tourism in the Philippines, and also ordered to pay $200,000 inrestitution to his victims.
The trusts serve to ensure that restitution money obtained for the victims of Mathias’ crimes is used for appropriate purposes and for the benefit of the victims. The trustee role is served by the Center for Special Needs Trusts (CSNT), a Clearwater, Fla., based non-governmental organization offering specialized administrative services for unique trust situations. CSNT will oversee and manage disbursements of money from the trusts to ensure that restitution money is properly used. This is believed to be the first case in which restitution trusts have been set up for the benefit of foreign victims of sex tourism. The trusts are being initially funded with proceeds from the sale of property Mathias transferred to the custody of the United States as part of his plea agreement. The proceeds of the sales are currently deposited with the U.S. District Court for the Southern District of Florida, and will now be transferred to an account set up by the trustee, for the benefits of the victims.
Mathias pleaded guilty in U.S. District Court in Ft. Lauderdale, Fla., on Dec. 22, 2009, to four counts of traveling in foreign commerce and engaging in illicit sexual conduct. He was indicted on those charges on Oct. 27, 2009. As part of his plea agreement, Mathias admitted that from 2005 until December 2008, he communicated and arranged with the mother of two minor females to travel to the Philippines, where they were located, and engaged in sexual conduct with the minors. During this time, Mathias and the mother exchanged hundreds of e-mails regarding sexual activity between Mathias and the minors.
Mathias admitted that he traveled to the Philippines in April 2007 and again in December 2007, engaged in sexual conduct with the minors on those trips and recorded those acts with a video camera. Mathias also admitted that he made the minors sign a contract in December 2007, requiring the minors to be his sex slaves. According to court documents, money transfer and email records showed that Mathias sent thousands of dollars to the mother between 2005 and December 2008. Mathias also admitted that he traveled to the Philippines in December 2008 to engage in sexual conduct with the minors again. However, Filipino law enforcement officials detained Mathias and he was not successful in meeting the minors. On Oct. 14, 2009, Mathias was arrested by U.S. law enforcement officers in Miami. The mother of the minors is in custody in the Philippines and is being prosecuted by Filipino authorities.
The trusts were developed through the work of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), U.S. Attorney’s Office for the Southern District of Florida and the Criminal Division’s Office of International Affairs, with assistance from the U.S. Embassy in Manila. These components worked in consultation with a trust attorney to develop suitable trust agreements and identify an appropriate trustee, and also worked with authorities in the Philippines to determine how the trusts would be implemented.
This case was prosecuted by Trial Attorney Anitha Ibrahim of CEOS and Assistant U.S. Attorney Marlene Rodriguez of the Southern District of Florida. This case was investigated by Homeland Security agents in Miami and Manila, Philippines, with assistance from the Philippines Department of Justice.
RAE Systems Agrees to Pay $1.7 Million Criminal Penalty to Resolve Violations of the Foreign Corrupt Practices ActRead the Press Release
WASHINGTON – RAE Systems Inc., a publicly-traded U.S. corporation headquartered in San Jose, Calif., has entered into an agreement with the Department of Justice to pay a $1.7 million penalty for violations of the Foreign Corrupt Practices Act (FCPA), announced Assistant Attorney General Lanny A. Breuer for the Criminal Division and U.S. Attorney Melinda Haag for the Northern District of California.
According to information contained in the non-prosecution agreement, RAE Systems developed and manufactured rapidly deployable, multi-sensor chemical and radiation detection monitors and networks. From 2005 to 2008, the company had significant operations in the People’s Republic of China (PRC), and sold its products and services primarily through two subsidiaries organized as joint ventures with local Chinese entities: RAE-KLH (Beijing) Co. Limited (RAE-KLH) and RAE Coal Mine Safety Instruments (Fushun) Co. Ltd. (RAE Fushun). A significant number of RAE-KLH’s and RAE Fushun’s customers were PRC government departments and bureaus, and large state-owned agencies and instrumentalities, including regional fire departments, emergency response departments and entities under the supervision of the provincial environmental agency.
As described in the agreement, RAE Systems accepted responsibility for violating the internal controls and books and records provisions of the FCPA arising from and related to improper benefits corruptly paid by employees of RAE-KLH and RAE Fushun to foreign officials in the PRC. As a result of due diligence conducted by RAE Systems before acquiring the majority of the joint venture that became known as RAE-KLH, RAE Systems was aware of improper commissions, kickbacks and “under table greasing to get deals” by employees. Yet, according to information contained in the agreement, the company chose to implement internal controls only “halfway” so as not to “choke the sales engine and cause a distraction for the sales guys.” As a result, improper payments continued at RAE-KLH. In acquiring the majority of RAE Fushun, RAE Systems did not conduct any pre-acquisition corruption due diligence in spite of a number of red flags. It was later confirmed that corrupt benefits were also being provided by RAE Fushun. In both instances, RAE Systems learned of corrupt practices at RAE-KLH and RAE Fushun and knowingly failed to implement effective systems of internal controls and failed to properly classify the improper payments in its books and records.
According to the agreement, RAE Systems voluntarily disclosed this conduct to the department, conducted a thorough and credible internal investigation, and undertook extensive remediation. In reaching this agreement, the department applied the Principles of Federal Prosecution of Business Organizations, including consideration of the corporation’s timely and voluntary disclosure of wrongdoing, its willingness to cooperate in the investigation of its agents and the corporation’s remedial actions.
As outlined in the agreement, RAE Systems agreed to fully cooperate with investigations by law enforcement authorities of the company’s corrupt payments, to adhere to a set of enhanced corporate compliance and reporting obligations, and to submit periodic reports to the department regarding RAE Systems’ compliance with its obligations under the agreement.
FCPA enforcement action documents can be found at www.justice.gov/criminal/fraud/fcpa.
In a related matter, RAE Systems reached a settlement with the U.S. Securities and Exchange Commission (SEC) filed today in which RAE consented to the entry of a permanent injunction against FCPA violations and agreed to pay $1,147,800 in disgorgement and $109,212 in prejudgment interest. RAE also agreed to comply with certain undertakings regarding its FCPA compliance program.
The case is being prosecuted by Deputy Chief Charles E. Duross of the Fraud Section, and Assistant U.S. Attorneys Adam A. Reeves and Thomas E. Stevens of the U.S. Attorney’s Office for the Northern District of California. The department acknowledges and expresses its appreciation for the significant assistance provided by the staff of the SEC during the course of this investigation
Justice Department Reaches Agreement with Virginia to Protect Rights of Military and Overseas VotersRead the Press Release
WASHINGTON – The Justice Department today announced that it has reached an agreement with Virginia officials to help ensure that military service members and U.S. citizens living overseas have an opportunity to participate fully in future federal general elections.
The agreement, which was filed in federal court and concludes extensive litigation that began in November of 2008, provides for training, monitoring, reporting and backup procedures in the commonwealth to ensure that absentee ballots are transmitted to eligible military and overseas voters no later than 45 days before a federal election, the deadline required by amendments to federal law made by the 2009 Military and Overseas Voter Empowerment Act.
Under the agreement, Virginia will begin monitoring local election official progress in preparing to transmit absentee ballots to military and overseas voters prior to the 45-day mailing deadline, and will identify and work to prevent late mailings. Commonwealth officials will also monitor local election official progress in transmitting these ballots, and will report this information to the department. Further, the commonwealth will conduct procedural audits of local election offices that transmitted ballots late in prior general federal elections, to identify the source of their delays and correct it through appropriately-tailored training.
The lawsuit was brought under the Uniformed and Overseas Citizens Absentee Voting Act of 1986 (UOCAVA). UOCAVA requires states to allow uniformed services voters (serving both overseas and within the United States) and overseas citizens to register to vote and to vote absentee for all elections for federal office. A federal court in Richmond, Va., ruled in October 2009 that Virginia’s late mailing of ballots in the 2008 general election violated UOCAVA, and ordered the parties to negotiate an appropriate permanent remedy to that violation. Those negotiations resulted in today’s filing, which still must be approved by the federal district court in Richmond.
"The Justice Department is committed to vigorous enforcement of UOCAVA so that members of the uniformed services, their families, and other citizens living overseas are able to exercise their right to vote and be confident their votes will be counted," said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. "I am pleased that officials in Virginia worked cooperatively with the department at this critical stage to help ensure that the commonwealth’s military and overseas voters can participate fully in future federal elections."
More information about UOCAVA and other federal voting laws is available on the Department of Justice website at www.usdoj.gov/crt/voting/misc/activ_uoc.htm. Complaints may be reported to the Voting Section of the Justice Department’s Civil Rights Division at 1-800-253-3931.
Justice Department Charges Seventh Individual for Allegedly Filing Fraudulent Claims for Oil Spill CompensationRead the Press Release
WASHINGTON – A woman was indicted today in the Eastern District of Louisiana for allegedly filing fraudulent claims for compensation due to the Deepwater Horizon oil spill. Four other individuals were charged this week in Alabama, Michigan and Mississippi for fraud related to oil spill compensation claims, in addition to two defendants previously indicted on Nov. 22 and Nov. 24, 2010, in Texas and North Carolina.
These charges were announced today by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorneys Kenyen Ray Brown of the Southern District of Alabama, Jim Letten of the Eastern District of Louisiana, Barbara L. McQuade of the Eastern District of Michigan, Don Burkhalter of the Southern District of Mississippi, George E.B. Holding of the Eastern District of North Carolina, José Angel Moreno of the Southern District of Texas; FBI Assistant Director for the Criminal Investigative Division Kevin L. Perkins; U.S. Secret Service Assistant Director for Investigations A.T. Smith; and Chief Postal Inspector Guy Cottrell of the U.S. Postal Inspection Service.
"The charges announced today send a strong message that we will not tolerate any fraudulent activity designed to profit from this tragic oil spill," said Assistant Attorney General Breuer. "The Department of Justice and federal law enforcement agencies are placing a high priority on the prompt investigation and prosecution of all forms of fraud related to this disaster."
The indictment filed today charges Cam T. Hang with one count of mail fraud. The indictment alleges that Hang filed a claim with the Gulf Coast Claims Facility (GCCF) for $42,000 for business losses resulting from the oil spill. According to the indictment, Hang falsely stated she was doing business as C.H. Food Mart Inc., a seafood restaurant, and submitted fraudulent information claiming that her business experienced loss of income as a result of the oil spill, when in fact it did not.
Yesterday, in the Southern District of Alabama, two individuals were charged in separate criminal complaints. Travis P. Sigler was charged with wire fraud for allegedly submitting fraudulent pay stubs in support of a $13,000 claim made to the GCCF for lost income due to the oil spill. According to the complaint, the fraudulent pay stubs exaggerated the amount of his income for the purpose of increasing the amount received from his claim. Maria Wright was charged with mail fraud for allegedly filing fraudulent documents in support of her claim to the GCCF for $20,000 in lost income due to the oil spill.
Four other individuals have been charged with crimes related to fraudulent claims of compensation. In the Eastern District of Michigan, Kevin Hall was charged in a criminal complaint unsealed on Dec. 8, 2010, with one count of wire fraud. Hall allegedly falsely claimed to BP that he suffered $9,000 in lost business revenue as a result of the oil spill. On Dec. 7, 2010, an indictment was filed in the Southern District of Mississippi, charging Dennis L. Moore with wire and mail fraud. According to the indictment, Moore allegedly submitted false documents – including a false Mississippi tax identification number, false state tax returns, a false Mississippi Department of Revenue Business Permit, false federal tax returns and false sales receipts – in support of claims totaling $180,000 to the GCCF and to BP for compensation relating to the oil spill.
An indictment filed in the Southern District of Texas on Nov. 22, 2010, charged Sergio Corona with wire fraud. The indictment alleges that the defendant filed a claim with BP for $28,434, asserting that he had lost income because of the oil spill, but submitted false and fraudulent receipts and invoices in support of his claim.
Charlette Dufray Johnson was charged in a superseding indictment filed in the Eastern District of North Carolina on Nov. 24, 2010, with wire fraud and aggravated identity theft in connection with her claim to the GCCF. According to the superseding indictment, Johnson allegedly submitted a claim under the name and identity of her deceased sister, falsely claiming to have worked for and been terminated by a company in New Orleans. The indictment also charged her with false claims to the Federal Emergency Management Agency in connection with her previously filing 12 false claims for disaster assistance, totaling $76,666, relating to Hurricane Katrina, a California wildfire, and Tennessee and Georgia storms.
"The FBI is committed to seeking out and prosecuting individuals who commit fraud to obtain compensation intended for those who suffered losses as a result of the spill," said FBI Assistant Director Perkins. "We will continue to pursue disaster fraud whenever it occurs."
"The U.S. Secret Service is proud to partner with the National Center for Disaster Fraud to pursue criminals seeking to commit fraud related to the Deepwater Horizon oil spill," Secret Service Assistant Director Smith said. "Cooperation and partnerships such as this have allowed us to focus our resources to uncover and prevent fraud more efficiently than ever."
"Protecting the mail, as well as those members of the public who are legitimately entitled to compensation after the oil spill, is a key concern for the Postal Inspection Service," stated Chief Postal Inspector Cottrell. "The Postal Inspection Service is pleased to have played an integral role since Hurricane Katrina in 2005 in investigating cases of disaster fraud and ensuring that disaster assistance goes only to those who need it."
The cases announced today are a result of coordination between the Criminal Division’s Fraud Section, the U.S. Attorneys’ Offices, and the National Center for Disaster Fraud (NCDF). The Criminal Division’s Fraud Section, U.S. Attorney’s Offices, and law enforcement agencies are working in coordination to ensure expeditious handling of oil spill-related fraud cases. The NCDF provides a nationwide process for receiving, screening, de-conflicting, and referring cases of disaster fraud, including fraud stemming from the Deepwater Horizon oil spill.
In response to a significant amount of fraud associated with federal disaster relief programs that went into effect following Hurricanes Katrina, Rita and Wilma, a Joint Command Center was established in Baton Rouge in 2005. The command center, now known as the NCDF, has received and screened more than 41,000 complaints of disaster fraud and referred nearly 26,000 of those to law enforcement for investigation. The NCDF – based on its extensive expertise and established infrastructure – has helped victims of fraud related to Hurricanes Katrina, Rita, Wilma, Ike and Gustav, as well as those affected by severe storms in more than 20 different states, earthquakes, tsunamis and wildfires.
Members of the public can report fraud involving the Deepwater Horizon oil spill through the National Center for Disaster Fraud (NCDF) Disaster Fraud Hotline at 877-NCDF-GCF (623-3423), the Disaster Fraud Fax at 225-334-4707 or the Disaster Fraud e-mail at [email protected]. Individuals can also report criminal activity to the FBI at 1-800-CALL-FBI.
Former CEO of the Morgan Crucible Co. Sentenced to Serve 18 Months in Prison for Role in Conspiracy to Obstruct JusticeRead the Press Release
WASHINGTON – The former CEO of The Morgan Crucible Company plc, a United Kingdom corporation, was sentenced to serve 18 months in prison for his role in a conspiracy to obstruct a federal grand jury investigation into price fixing of carbon brushes and other carbon products sold in the United States and elsewhere, the Department of Justice announced.
Ian P. Norris was sentenced today in U.S. District Court in Philadelphia by Judge Eduardo Robreno. Norris was also sentenced to pay a $25,000 criminal fine. The department said that Norris orchestrated an elaborate conspiracy with his subordinates to obstruct the grand jury’s investigation by creating a false script that employees of both Morgan Crucible and its competitor were to follow when questioned during the investigation. The conspiracy also included the formation of a document destruction task force to collect and destroy or conceal documents from the grand jury, the department said.
"The Antitrust Division uncovered and prosecuted an elaborate scheme to obstruct justice," said Christine Varney, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. "The defendant, the CEO of a major international, publicly traded company, enlisted and led his subordinates in a sophisticated conspiracy that was designed to undermine and obstruct the Antitrust Division’s grand jury investigation. Today’s sentence sends a clear message that those who subvert the integrity of our justice system will face serious consequences."
Carbon products are used to transfer electrical current in automobiles, trains, public transit vehicles and consumer products and are used in pumps and compressors to contain liquids and gases.
Norris has been incarcerated in the federal detention center in Philadelphia since July 27, 2010, the date on which he was convicted by a federal jury of conspiring to obstruct justice. Norris, a citizen of the United Kingdom, was extradited to the United States in March 2010 on the conspiracy charge.
As a result of the department’s investigation into anticompetitive conduct in the carbon products industry, more than $11 million in criminal fines have been obtained, and four executives and two companies have pleaded guilty or have been convicted. The Morgan Crucible Company plc, based in Windsor, England, pleaded guilty in 2002 to two counts of obstruction of justice and paid the statutory maximum fine of $1 million for those offenses. Additionally, a former subsidiary of the company, Morganite Inc., based in Dunn, N.C., pleaded guilty in 2002 to fixing prices of carbon brushes and other carbon products and paid the then statutory maximum fine of $10 million for that illegal conduct.
Three of Norris’s subordinates previously pleaded guilty to obstruction charges and served jail time. Jacobus Johan Anton Kroef, the former chairman of the industrial and traction division of Morgan Crucible, pleaded guilty in 2003 to witness tampering. Robin D. Emerson, former pricing coordinator at Morganite Electrical Carbon Ltd. of Swansea, U.K., pleaded guilty in 2003 to corruptly persuading another individual to destroy or conceal documents in connection with the investigation. F. Scott Brown, the former global president and a member of the board of directors of Morgan Advanced Materials and Technology Inc. (MAMAT), now headquartered in Greenville, S.C., pleaded guilty in 2003 to aiding and abetting document destruction in connection with the investigation. Morganite Electrical Carbon Ltd. and MAMAT are subsidiaries of Morgan Crucible.
Anyone with information concerning price fixing in the carbon brushes industry should contact the Antitrust Division’s Philadelphia Field Office at 215-597-7405 or visit www.justice.gov/atr/contact/newcase.htm.
Florida Couple Sentenced in Forced Labor Conspiracy to Exploit Filipino Guest WorkersRead the Press Release
WASHINGTON - The Justice Department announced today that Sophia Manuel and Alfonso Baldonado Jr., owners of Quality Staffing Services Corporation, a labor contracting service, were sentenced for conspiring to hold approximately 39 Filipino nationals in forced service to work in country clubs and hotels in Southeast Florida. Manuel also was sentenced for making false statements on an application she filed with the U.S. Department of Labor to obtain foreign labor certifications and visas under the federal H2B guest worker program. Manuel was sentenced to 78 months in federal prison and Baldonado to 51 months.
Manuel and Baldonado previously pleaded guilty to conspiring to obtain a cheap, compliant and readily available labor pool by making false promises to entice the victims to incur debts to pay up front recruitment fees. Defendants then compelled the victims’ labor and services through threats to have the workers arrested and deported knowing the workers faced serious economic harm and possible incarceration for nonpayment of debts in the Philippines.
"These defendants exploited vulnerable individuals for their own financial gain, depriving the victims of their civil rights," said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. "The Department of Justice will continue to vigorously prosecute cases of forced labor where victims have been robbed of their freedom and dignity."
U.S. Attorney Wifredo Ferrer stated, "Today’s sentencing reminds us that America remains a land of freedom and opportunity for immigrants, not of servitude and fear. Forced labor is illegal and we will enforce the laws that protect our immigrant communities from abuse."
"Human traffickers target vulnerable victims, including minors, who desire a better life and end up being lured into a situation where they are deprived of their basic human rights," said ICE Director John Morton. "These deplorable conditions will not be tolerated in this country and ICE will continue its commitment to rescue victims of this form of modern day slavery and arrest the traffickers that exploit them."
This case was investigated by U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations in Miami, Federal Bureau of Investigation; the U.S. Department of Labor - Office of Inspector General; the FBI; the U.S. Department of State - Bureau of Diplomatic Security; the Florida Department of Law Enforcement; and the Florida Office of the Attorney General.
This case is being prosecuted by trial attorney Susan French of the Human Trafficking Prosecution Unit, Criminal Section of the Civil Rights Division and Assistant United States Attorney Shaniek Maynard.
Attorney General Eric Holder Speaks at National Indian Nations Conference During Week of Justice Department Events with Tribal CountryRead the Press Release
PALM SPRINGS, Calif. – Attorney General Eric Holder served as the keynote speaker at the 12th National Indian Nations Conference in Palm Springs, Calif., during a week of outreach events organized by the Department of Justice that brought together tribal leaders and youth, law enforcement officers, lawyers and judges, policy experts and health and social services providers, and representatives from federal, state, local and tribal governments.
The week commenced with the Justice Department’s Interdepartmental Tribal Justice, Safety and Wellness Session from Monday, Dec. 6 through Wednesday, Dec. 8, 2010, followed by the National Indian Nations Conference sponsored by Department of Justice’s Office for Victims of Crimes (OVC) from Dec. 9 through Dec. 11, 2010.
“With the passage of the Tribal Law and Order Act, we are witnessing tangible progress toward a healthier, brighter future for Native Americans,” said Attorney General Eric Holder. “ I want to reaffirm the Justice Department’s commitment – and my own commitment – to building and sustaining healthy and safe native communities; to renewing our nation’s enduring promise to American Indians and Alaska Natives; to respecting the sovereignty and self-determination of tribal governments; and to ensuring that the progress we have achieved in recent years is not derailed.”
The Justice Department’s Interdepartmental Tribal Justice, Safety and Wellness Session included workshops and plenary sessions that focused on Native American wellness, examining topics such as tribal youth programs; victim’s assistance; suicide prevention; alcohol and substance abuse; community-based partnerships; domestic violence and sexual assault; and data reporting and information sharing. The session also featured a consultation on implementation of the Tribal Law and Order Act with t ribal leaders and top Department of Justice officials. The session was co-sponsored by the Departments of Health and Human Services, Interior, Housing and Urban Development, the Small Business Administration and the Corporation for National and Community Service.
The 12th National Indian Nations Conference, which runs until Saturday, is coordinated by the Tribal Law and Policy Institute under a grant from OVC. The conference is focused on bringing together Native American victims, victim advocates, as well as federal and state agency representatives, to share their knowledge, experiences and ideas for developing programs that serve the unique needs of crime victims in Indian Country.
The roots of this conference stretch back more than two decades: the OVC organized the very first National Indian Nations Conference in 1988.
“In this time of growing demands and limited resources, the fact that a record number of attendees – more than 900 – have gathered for this conference is evidence of your commitment to meeting the challenges we face,” said Attorney General Holder. “It also speaks volumes about the impact and importance of this biennial meeting.”
The Interdepartmental Tribal Justice, Safety and Wellness Session and the 12th National Indian Nations Conference are part of the Justice Department’s ongoing efforts to create better communication and coordination to fight crime and promote justice in tribal communities. More information on the Interdepartmental Tribal Justice, Safety and Wellness Session is available at: www.cvent.com/EVENTS/Info/Summary. More information on the 12th National Indian Nations Conference is available at: www.ovcinc.org/agenda .
Thursday 9 December 2010
Two Engineers Found Guilty of Stealing Goodyear Trade SecretsRead the Press Release
WASHINGTON – A federal jury convicted Clark Alan Roberts, 47, and Sean Edward Howley, 39, both former engineers with Wyko Tire Technology Incorporated, located in Greenback, Tenn., of stealing trade secrets from the Goodyear Tire and Rubber Company, Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney William C. Killian for the Eastern District of Tennessee announced today.
After a one-week trial, the jury found Roberts and Howley guilty of one count of conspiracy to commit trade secret theft, one count of trade secret theft, one count of unlawful photographing of trade secrets, three counts of transmittal of trade secrets, one count of possession of trade secrets, two counts of wire fraud and one count of conspiracy to commit wire fraud.
"Unable to create an effective design on their own, these engineers stole trade secrets from a competitor in order to fulfill a contract," said Assistant Attorney General Breuer. "We will not allow the hard work and resources businesses put into product development to be compromised by individuals who unlawfully obtain protected secrets."
"The ruling in this case will send a message that complicated trade secret violations will be aggressively investigated and prosecuted by U.S. Attorney’s Offices and the Department," said U.S. Attorney Killian.
According to the evidence presented in court, Wyko secured a $1.2 million contract in early 2007 with the Haohua South China Guilin Rubber Company Limited (HHSC), a Chinese tire manufacturing company located in Guilin, Peoples Republic of China, to supply tire building equipment for use in producing radial "off the road" (OTR) tires, which are used on very large earth moving and mining equipment. Wyko was in the business of making tire building equipment for Goodyear and other tire manufacturers. One of the pieces of equipment that Wyko agreed to sell to HHSC was called a swab down device, which is used during the manufacture of a giant OTR tire. However, Wyko had never built a swab down device before and was having difficulty in the spring of 2007 completing their design of the swab down device.
On May 30 and 31, 2007, Roberts and Howley, traveled to a Goodyear tire manufacturing facility located in Topeka, Kan., to service Wyko equipment located in the Goodyear plant with the intention of taking photographs of Goodyear’s swab down device to assist them with completing their design even though they knew Goodyear protected the swab down device as a trade secret. On May 31, 2007, the defendants used a cell phone camera to surreptitiously take seven unauthorized photographs of a Goodyear swab down device, without the knowledge or permission of Goodyear. The defendants then emailed the unauthorized photographs to employees at a Wyko subsidiary located in Dudley, England, who used the trade secret information contained in the photographs to complete a similar piece of tire building equipment for the HHSC contract.
The defendants are scheduled to be sentenced on the 10 felony counts by U.S. District Court Judge Thomas Phillips on April 14, 2011. The defendants face a maximum of 10 years in prison for each trade secret count, 20 years in prison for each wire fraud count and $2.5 million in fines.
The case was prosecuted by Trial Attorney Thomas S. Dougherty of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney D. Gregory Weddle of the U.S. Attorney’s Office for the Eastern District of Tennessee. The case was investigated by the FBI’s Knoxville Division.
Three New Orleans Police Officers Found Guilty in the Post-Katrina Shooting and Burning of Henry GloverRead the Press Release
WASHINGTON- A federal jury in New Orleans convicted three current and former New Orleans Police Department (NOPD) officers, David Warren, Greg McRae and Lt. Travis McCabe, in relation to the post-Katrina shooting death of Henry Glover, and the subsequent burning of Glover’s remains and obstruction of justice.
The jury found former NOPD Officer David Warren guilty of a civil rights violation, resulting in death, for the Sept. 2, 2005, shooting of civilian Henry Glover, as well as use of a firearm during a crime of manslaughter. The jury heard evidence that defendant Warren shot Glover in the back as Glover was running away from him. In a separate charge, the jury found Warren guilty of using a firearm in the commission of a crime of violence. Warren faces a possible life sentence for the civil rights shooting crimes, and up to 15 years imprisonment for the firearms manslaughter.
Evidence presented at trial established that Officer Warren, while stationed on a second floor lookout, shot Henry Glover, who was a floor below him and running away. Glover’s brother and a friend flagged down a passing motorist, "Good Samaritan" William Tanner, who put the wounded Glover in his car to try to get medical attention for him. However, when the group of men drove up to a makeshift police station seeking help for Glover, police officers surrounded the men at gunpoint, handcuffed them, and let Henry Glover die in the back seat of the car. McRae then drove off with Tanner’s car, with Glover’s body inside, and burned both the body and the car with traffic flare.
The jury convicted current Officer McRae, who was one of the officers at the makeshift station, on two counts of civil rights violations. One of the civil rights counts charged that he willfully used fire to destroy a civilian’s property by burning and destroying Tanner’s car, and the other civil rights count charged that he willfully deprived Glover’s family members of their right to seek redress in the courts for his death. The jury also convicted McRae on one count of obstruction of justice and one count of using fire in the commission of a felony. McRae faces a possible sentence of 50 years in prison.
The jury also convicted NOPD Lt. Travis McCabe, who obstructed justice by writing and submitting a false report about the shooting of Henry Glover. McCabe was also convicted for lying to the FBI and committing perjury by lying to a federal grand jury convened to investigate Glover’s death. McCabe faces a maximum sentence of 30 years in prison.
The jury acquitted Lt. Dwayne Scheuermann, who was accused of aiding and abetting the burning of the car, and Lt. Robert Italiano, who was accused of participating in the cover up.
"Instead of upholding their oath to protect and serve the people of New Orleans in the days after Hurricane Katrina, these officers violated the law and the public trust," said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. "And while some officers broke through the thin blue line and told the truth under oath, others were rightly convicted for obstructing justice. Today's verdict brought a measure of justice to the Glover family and to the entire city."
"Today’s verdicts send a powerful message that no one is above the law, and that those who are sworn to protect our citizens are never, under any circumstances, relieved of their sacred responsibilities under our constitution. We will continue to do everything in our power—and use every law and weapon in our arsenal of justice to make certain that our police never abuse power they wield. Today is an important step forward for the courageous Glover family and the people of New Orleans, and an important move toward the city’s healing and rebuilding," said Jim Letten, U.S. Attorney for the Eastern District of Louisiana.
David Welker, FBI Special Agent In Charge for Louisiana, said, "Today’s verdict demonstrates the continued diligence and commitment of the FBI to aggressively and fairly pursue civil rights violations, with the goal of bringing to justice those who abuse the very citizens they are entrusted to protect and serve."
During the course of the month-long trial, jurors heard from 65 witnesses, including all five of the defendants. Jurors deliberated for three days before returning their verdict.
This case was investigated by the New Orleans Field Office of the FBI, and was prosecuted by Trial Attorney Jared Fishman of the Justice Department’s Civil Rights Division, and Assistant U.S. Attorneys Tracey Knight and Michael Magner for the Eastern District of Louisiana.
Three Former Financial Services Executives Indicted for Fraudulent Conduct Affecting Contracts Related to Municipal BondsRead the Press Release
Three former executives of a financial services company were indicted today for their participation in fraud schemes and conspiracies related to bidding for contracts for the investment of municipal bond proceeds and other municipal finance contracts, the Department of Justice announced. One executive was also indicted for witness tampering in connection with the department’s ongoing investigation into anticompetitive and fraudulent conduct in the municipal bond industry.
The six-count indictment was filed today in U.S. District Court in New York City. The indictment charges Peter Ghavami, Gary Heinz and Michael Welty with participating in separate fraud schemes at various time periods from as early as 2001 until 2006. Ghavami, a Belgian national who was residing in Moscow, was originally charged by criminal complaint and was arrested last week at John F. Kennedy International Airport in New York.
"The individuals charged today allegedly participated in complex fraud schemes and conspiracies that subverted competition in the market for municipal finance contracts and deprived municipal bond issuers of the benefits of their investments to the detriment of the public," said Christine Varney, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. "This type of anticompetitive activity in our financial markets will not be tolerated and the Antitrust Division will continue to prosecute those who engage in this illegal conduct. This includes individuals who purposely seek to obstruct the government’s investigation."
The charged conspiracies and schemes all relate to a type of contract, known as an investment agreement, and other municipal finance contracts provided to public entities, such as state, county and local governments and agencies throughout the United States. Major financial institutions, including banks, investment banks, insurance companies and financial services companies, are among the providers of investment agreements and other related municipal finance contracts. Public entities typically hire a broker to conduct a competitive bidding process among various providers prior to awarding these agreements and contracts. Competitive bidding for these agreements is the subject of regulations issued by the U.S. Department of the Treasury and is related to the tax-exempt status of the bonds.
According to the indictment, the financial services company where Ghavami, Heinz and Welty worked was a wholly-owned subsidiary of a foreign-based financial institution that had its principal place of business in New York City. The financial services company marketed financial products and services to various municipalities, acted as a provider for investment agreements and other municipal finance contracts, and in some instances, acted as a broker for such agreements and contracts.
According to the indictment, Ghavami, Heinz and Welty conspired with employees of various financial institutions to manipulate the bidding process for these agreements and contracts, by discussing with co-conspirators the price or price level their employers intended to bid and determining with their co-conspirators which financial institution would win a particular investment agreement or municipal finance contract.
The indictment also alleges that Ghavami, Heinz and Welty and their co-conspirators falsely certified that the bidding process on rigged deals was competitive and in compliance with U.S. Treasury regulations. This caused the municipal issuers to award investment agreements and other municipal finance contracts to providers that otherwise would not have been awarded the contracts, and in some instances, deprived the Internal Revenue Service and U.S. Treasury of money to which they were entitled.
The indictment further alleges that Ghavami, Heinz and Welty conspired with Beverly Hills, Calif.-based Rubin/Chambers, Dunhill Insurance Services Inc. (CDR) and others in order to obtain from CDR information about the prices and other information related to competing bids and then used that information to determine their employer’s bid. In some cases, they submitted intentionally losing bids for agreements or contracts brokered by CDR to make it appear that their employer and parent company had legitimately competed for those agreements or contracts. They also allegedly agreed to pay and arranged for kickback payments to be made to CDR in the form of fees that were inflated, relative to the services performed, for CDR’s assistance in controlling and manipulating the competitive bidding process in their employer’s favor.
Ghavami, Heinz and Welty are also charged with participating in a conspiracy and fraud schemes in their capacity as brokers and advisors to municipal bond issuers. According to the indictment, in different instances, Ghavami, Heinz and Welty, acting as brokers, accepted various kickbacks on behalf of their employer in exchange for manipulating the bidding process and steering investment agreements and other municipal finance contracts to certain financial institutions and entities. According to the indictment, their conduct caused investment agreements to be awarded at artificially determined price levels and deprived the municipal issuers or the U.S. Treasury of money to which they otherwise would have been entitled.
The indictment also charges Heinz with witness tampering in November 2006, when after learning of the department’s investigation, he is alleged to have told another individual, among other things, to meet with a second individual for the purpose of coordinating their stories about a rigged deal.
"Some criminals may believe that the more complex the financing arrangements are, the easier it will be to avoid detection and financial investigation by the authorities," IRS Criminal Investigation Special Agent in Charge, Charles R. Pine stated. "As the agency responsible for ensuring compliance in the municipal bond industry, we will continue to investigative fraudulent schemes and recommend prosecution of those who seek to illegally benefit at the expense of taxpayers."
"The distinction between the conduct of these defendants and crooks who engage in traditional bid-rigging is a distinction without a difference," said FBI Assistant Director-in-Charge Janice K. Fedarcyk. "Whether the collusive scheme involves contracts for street paving or trash collection or municipal bonds, fixing prices and colluding on bids is anticompetitive, harms the public, and is therefore in the crosshairs of the FBI."
One of the charged fraud conspiracies carries a maximum penalty of five years in prison and a $250,000 fine. The other two fraud conspiracies carry a maximum penalty per count of 20 years in prison and a $1 million fine. The two wire fraud charges also carry a maximum penalty per count of 20 years in prison and a $1 million fine. In addition, Heinz faces a maximum penalty of 20 years in prison and a $250,000 fine for the witness tampering charge. These maximum fines per count may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either amount is greater than the statutory maximum fine.
At a hearing yesterday, U.S. Magistrate Judge Dollinger refused to allow Ghavami to return to Russia and ordered that he be released on bail, pending satisfaction of a $10 million bond, that his travel be limited to the Southern and Eastern Districts of New York, and other conditions.
The charges announced today resulted from an ongoing investigation conducted by the Antitrust Division’s New York Field Office and Chicago Field Office, the FBI and IRS Criminal Investigation. The division is coordinating its investigation with the U.S. Securities and Exchange Commission, the Office of the Comptroller of the Currency and the Federal Reserve Bank of New York. As part of this investigation, three former employees of CDR have pleaded guilty to bid-rigging and fraud conspiracies in relation to the ongoing investigation. Five other individuals have pleaded guilty to charges related to the ongoing investigation. In addition, three former financial services executives were indicted on July 27, 2010, for participating in fraud schemes and conspiracies related to the bidding for investment agreements. In October 2009, CDR, two of its employees and one former employee were charged for participating in bid-rigging and fraud conspiracies and related crimes. The CDR trial is scheduled to begin on Sept. 12, 2011.
Today’s charges are part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit www.StopFraud.gov.
Anyone with information concerning bid rigging and related offenses in any financial markets should contact the Antitrust Division’s New York Field Office at 212-264-0390 or the FBI at 212-384-5000.
Professional Duck Hunter Charged with Guiding Illegal Waterfowl Hunts in Central IllinoisRead the Press Release
WASHINGTON – A federal grand jury in Springfield, Ill., returned a 23-count felony indictment today charging Jeffrey B. Foiles with conspiracy, wildlife trafficking, and making false writings in connection with the illegal sale of guided waterfowl hunts, the Department of Justice announced today.
The indictment charges Foiles, 53, of Pleasant Hill, Ill., with conspiracy to violate the Lacey Act and the federal false writings statute, 12 substantive violations of the Lacey Act, and ten counts of making false writings in a matter within the jurisdiction of the U.S. Fish and Wildlife Service.
The Lacey Act is a federal law that makes it illegal to knowingly transport or sell wildlife taken in violation of federal law or regulation. The act defines the sale of wildlife to include the sale of guiding services for the illegal taking of wildlife.
The indictment alleges that from 2003 to 2007, Foiles conspired with others to knowingly transport and sell ducks and geese that had been hunted and killed in violation of federal laws protecting migratory birds. In particular, Foiles is alleged to have sold guided waterfowl hunts at the Fallin’ Skies Strait Meat Duck Club in Pike County, Ill., for the purpose of illegally hunting and killing ducks and geese in excess of hunters’ individual daily bag limits. Foiles and his associates are also alleged to have falsified hunting records at the club in order to conceal the excesses, and to have filmed the illegal hunts for inclusion in commercial hunting videos.
An indictment is merely an accusation, and a defendant is presumed innocent unless and until proven guilty in a court of law.
The maximum penalty for a felony violation of the Lacey Act or the federal false writing statute includes up to five years in prison and a $250,000 fine.
The case was investigated by the U.S. Fish & Wildlife Service, in cooperation with the Illinois Department of Natural Resources, the Iowa Department of Natural Resources, and the government of Canada. The case is being prosecuted by the U.S. Attorney’s Office for the Central District of Illinois and the Justice Department’s Environmental Crimes Section.
Maryland Man Indicted for Operating a Child Pornography Online Bulletin BoardRead the Press Release
WASHINGTON - A federal grand jury in Greenbelt, Md., has indicted George Sell, 68, of Cumberland, Md., for advertising, transporting, receiving and possessing child pornography in connection with his operation of an online bulletin board in which members circulated images of child pornography and links to other child pornography websites.
The indictment, returned on Aug. 30, 2010, and unsealed today, was announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Rod J. Rosenstein for the District of Maryland; Acting Postal Inspector in Charge Keith A. Fixel of the U.S. Postal Inspection Service (USPIS) - Washington Division; and Special Agent in Charge William Winter of U.S. Immigration and Customs Enforcement (ICE), Office of Homeland Security Investigations.
According to the 10-count indictment, Country Lounge is a secure web-based bulletin board that at various times during the conspiracy was located on servers in Virginia and Texas, which advertised and offered for dissemination pictures and Internet web addresses directing members to secure websites depicting the sexual abuse of minors. A member could join this group only upon invitation and after approval by the group’s administrators. To obtain access to Country Lounge, a member had to have a log-in username and password. Members were instructed by a specific set of rules and guidelines on how to post images using Country Lounge in order to avoid detection from law enforcement. As of August 2008, 142 members belonged to Country Lounge.
The indictment alleges that Sell managed the day-to-day operations of Country Lounge. From December 2006 to August 2008, Sell allegedly conspired with others to publish notices and advertisements on Country Lounge, seeking and offering to trade and distribute Internet web addresses directing members to websites depicting the sexual abuse of minors. Sell, along with other co-conspirators, allegedly arranged for and obtained different web host companies to host County Lounge on computer servers maintained by members of the conspiracy, and decided and assigned a hierarchy of administrators and membership levels to Country Lounge members. Each level of membership contained different duties and responsibilities.
The indictment seeks forfeiture of Sell’s home and any other property used to commit the alleged crimes.
Sell faces a maximum sentence of 30 years in prison for conspiracy to advertise child pornography; 20 years in prison for conspiracy to transport child pornography; 20 years in prison on each of the seven counts of receiving child pornography; and 10 years in prison on each of the two counts for possession of child pornography.
The charges announced today are merely accusations, and a defendant is presumed innocent until and unless proven guilty in a court of law.The charges against Sell are a result of “Operation Nest Egg,” an ongoing and joint international investigation led by the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), the U.S. Attorney’s Office for the Southern District of Indiana, USPIS and ICE. To date, as a result of Operation Nest Egg, more than 80 searches have been conducted in the United States. In total, more than 50 individuals have been arrested and 40 individuals have been convicted. The investigation is ongoing.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and CEOS, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
The case is being prosecuted by Assistant U.S. Attorney Stacy Belf, and CEOS Trial Attorneys Darcy Katzin and Jennifer Toritto Leonardo. The case was investigated by the USPIS and ICE.
Líder de organización de narcotráfico colombiana y un asociado fueron encontrados culpables de conspirar para importar múltiples toneladas de cocaína a los Estados UnidosRead the Press Release
WASHINGTON – Christian Fernando Borda y Álvaro Alvaràn-Vélez, dos narcotraficantes alineados con las Autodefensas Unidas de Colombia (AUC), fueron encontrados culpables hoy en el Tribunal Federal de Distrito de conspirar para importar múltiples toneladas de cocaína a los Estados Unidos, anunció el Secretario de Justicia Auxiliar Lanny A. Breuer de la División Criminal. La AUC es un grupo paramilitar colombiano designado por el Departamento de Estado de EE.UU. como organización terrorista extranjera.
Los veredictos de culpable emitidos hoy ocurren después de un enjuiciamiento de siete semanas de duración ante la Juez Federal de Distrito Gladys Kessler en el Distrito de Columbia. Borda, 46, y Alvaràn-Vélez, 56, ciudadanos colombianos, fueron extraditados de Colombia a los Estados Unidos el 29 de octubre de 2009, y el juicio comenzó con la selección del jurado el 21 de octubre de 2010. Después de dos días de deliberaciones, el jurado encontró a Borda y Alvaràn-Vélez culpables de un cargo de conspiración para distribuir cocaína con el conocimiento y la intención de que fuera importada a los Estados Unidos.
"Estos narcotraficantes fueron responsables por facilitar el envío de toneladas de cocaína de Colombia a los Estados Unidos, y hoy 12 miembros del jurado estadounidenses los encontraron culpables", dijo el Secretario de Justicia Auxiliar Breuer. "A lo largo de muchos años, los Estados Unidos y Colombia han trabajado juntos para enjuiciar en ambos países a los líderes y asociados de estas organizaciones peligrosas, y hoy representa otro acontecimiento importante en dicha labor continua".
De acuerdo con el expediente judicial y pruebas presentadas en el juicio, entre febrero de 2005 y el 16 de marzo de 2007, Borda y Alvaràn-Vélez eran miembros de una organización de narcotráfico importante con sede en Colombia que transportó múltiples toneladas de cocaína de Colombia a los Estados Unidos vía México.
Borda, como líder de dicha organización de narcotráfico, obtuvo grandes cantidades de cocaína de fuentes paramilitares colombianas e instruyó a otros en sus actividades de narcotráfico. Alvaràn-Vélez, un asociado de Borda, coordinó y facilitó envíos de cocaína a través de sus contactos en México.
De acuerdo con el expediente judicial y pruebas presentadas en el enjuiciamiento, uno de los envíos de cocaína en 2005 fue por aproximadamente 1,500 kilogramos de cocaína que fue contrabandeada en tambores de aceite de palma en un barco que partió de la costa norte de Colombia. Embarques adicionales de cocaína en 2005 y 2006 fueron por cantidades superiores a 3,000 kilos por embarque.
Las pruebas presentadas en el juicio incluyeron numerosas conversaciones grabadas de reuniones en persona y llamadas telefónicas, así como vigilancia efectuada por la Administración de Control de Drogas [Drug Enforcement Administration (DEA)], incluidos videos y fotos. Pruebas adicionales revelaron envíos de millones de dólares de producto del narcotráfico, todo en moneda estadounidense, a Borda en Colombia vía Monterrey, México y Ciudad de México.
La emisión de las sentencias de Borda y Alvaràn-Vélez está programada para el 28 de abril de 2011. El cargo de conspiración conlleva una sentencia en prisión mínima obligatoria de 10 años y una sentencia máxima de prisión perpetua, así como una multa de hasta $4 millones de dólares. Borda tiene una condena anterior por delito mayor de narcotráfico y, por lo tanto, enfrenta una sentencia mínima obligatoria de 20 años en prisión. Como parte de sus pedidos de extradición, los Estados Unidos han asegurado que no buscarán obtener una sentencia de prisión perpetua para los demandados, sino que solicitarán una sentencia de años en prisión.
Este caso fue investigado por las Divisiones Locales de Miami y Houston de la DEA, con la asistencia de las oficinas de la DEA en Cartagena y Bogotá, Colombia, y Ciudad de México y Guadalajara, México. La Guardia Costera de EE.UU. proporcionó asistencia valiosa adicional en la investigación. La investigación también contó con la cooperación estrecha de la Policía Nacional Colombiana y la Fiscalía Colombiana.
Están a cargo de la acusación en el caso los Abogados Litigantes Paul W. Laymon, Robert J. Raymond y Charles D. Griffith Jr., de la Sección de Narcóticos y Drogas Peligrosas de la División Criminal. La Oficina de Asuntos Internacionales de la División Criminal brindó importante asistencia en la extradición de estos demandados.
Leader of Colombian Drug Trafficking Organization and Associate Found Guilty of Conspiring to Import Multiple Tons of Cocaine into the United StatesRead the Press Release
WASHINGTON – Christian Fernando Borda and Alvaro Alvaran-Velez, two narcotics traffickers aligned with the Autodefenses Unidas de Colombia (AUC), were found guilty today in U.S. District Court of conspiring to import ton-quantities of cocaine into the United States, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division. The AUC is a Colombian paramilitary group designated by the U.S. Department of State as a
foreign terrorist organization.
The guilty verdicts returned today follow a seven-week trial before U.S. District Judge Gladys Kessler in the District of Columbia. Borda, 46, and Alvaran-Velez, 56, who are Colombian nationals, were extradited from Colombia to the United States on Oct. 29, 2009, and trial began with jury selection on Oct. 21, 2010. Following two days of deliberations, the jury found Borda and Alvaran-Velez guilty of one count of conspiring to distribute cocaine with the knowledge and intent that it would be imported into the United States.
"These drug traffickers were responsible for facilitating the delivery of tons of cocaine from Colombia into the United States, and today 12 U.S. jurors found them guilty," said Assistant Attorney General Breuer. "Over the course of many years, the United States and Colombia have worked together to bring to justice in both countries the leaders and associates of these dangerous organizations, and today marks another milestone in that continued effort."
According to court documents and evidence presented at trial, between February 2005 and March 16, 2007, Borda and Alvaran-Velez were members of a major narcotics trafficking organization based in Colombia that transported multi-ton quantities of cocaine from Colombia to the United States via Mexico.
Borda, as the leader of this drug trafficking organization, obtained large amounts of cocaine from Colombian paramilitary sources and directed others in their drug trafficking activities. Alvaran-Velez, an associate of Borda, coordinated and facilitated shipments of cocaine through his Mexico contacts.
According to court documents and trial evidence, one of their shipments of cocaine in 2005 involved approximately 1,500 kilograms of cocaine that was smuggled in drums of palm oil on a ship departing from the north coast of Colombia. Additional cocaine shipments in 2005 and 2006 involved quantities of more than 3,000 kilograms per shipment.
The evidence at trial included numerous recorded conversations from in-person meetings and telephone calls, as well as surveillance by the Drug Enforcement Administration (DEA), including photos and videos. Additional evidence revealed shipments of millions of dollars of narcotics-related proceeds, all in U.S. currency, to Borda in Colombia via Monterrey, Mexico, and Mexico City.
Borda and Alvaran-Velez are scheduled to be sentenced on April 28, 2011. The conspiracy charge carries a mandatory minimum prison sentence of 10 years and a maximum penalty of life in prison, as well as a fine of up to $4 million. Borda has a prior felony narcotics conviction and thus faces a mandatory minimum sentence of 20 years in prison. As part of its extradition requests, the United States provided assurances that it will not seek a life sentence for the defendants, but instead will ask for a prison term of years.
This case was investigated by the DEA’s Miami and Houston Field Divisions, with assistance from DEA’s Cartagena and Bogota, Colombia, and Mexico City and Guadalajara, Mexico, country offices. The U.S. Coast Guard provided valuable additional investigative assistance. The investigation also involved close cooperation with the Colombian National Police and the Colombian Fiscalia.
This case is being prosecuted by Trial Attorneys Paul W. Laymon, Robert J. Raymond and Charles D. Griffith Jr., of the Criminal Division’s Narcotic and Dangerous Drug Section. The Criminal Division’s Office of International Affairs provided substantial assistance in affecting the extradition of these defendants.
Florida Physician Pleads Guilty to Conspiracy in Fraudulent Lobbying and Fund Raising SchemeRead the Press Release
WASHINGTON — A Florida physician pleaded guilty today in U.S. District Court in Fort Lauderdale, Fla., for his role in a fraud scheme involving lobbying and fund raising for political candidates and organizations, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division.
Alan D. Mendelsohn, 52, of Broward County, Fla., pleaded guilty today before U.S. District Judge William J. Zloch, to a one-count criminal information, charging him with conspiracy to commit mail fraud, to make false statements and to file false tax returns. Mendelsohn faces up to five years in prison and a $250,000 fine. Sentencing has been set for Feb. 17, 2011.
According to plea documents, Mendelsohn entered into an agreement with a lobbyist and campaign consultant to create political entities for the purpose of raising money in support of political parties and candidates for political office in Florida. Between 2002 and 2007, Mendelsohn engaged in various lobbying activities that raised several million dollars in contributions for these political organizations, as well as for a pre-existing political entity of which Mendelsohn was an officer.
Mendelsohn admitted that from 2003 through 2008, he and his co-conspirator agreed to siphon approximately $330,000 from the political entities in direct and third party payments for Mendelsohn’s benefit. Mendelsohn also admitted that from 2003 through 2005 he caused certain lobbyists and in some cases their clients to make contributions totaling $50,000 to a private school his children attended in exchange for lobbying services. The funds were then used to pay tuition for Mendelsohn’s children. Mendelsohn caused another client to send a $75,000 wire transfer to a car dealer to purchase a car for Mendelsohn’s personal use, in exchange for his lobbying services. As Mendelsohn admitted, none of this income was reported to the Internal Revenue Service (IRS) as required.
From 2003 through mid-2006, Mendelsohn also admitted that he knowingly mischaracterized personal expenses totaling approximately $163,770 as business deductions, which had the result of illegally reducing the amount of income paid to Mendelsohn that his medical practice reported to the IRS in each of those years.
In total, Mendelsohn underreported his taxable income by more than $600,000 based on the various schemes. Moreover, Mendelsohn admitted that he caused the political entities, as well as certain corporations used to facilitate the conspiracy, to file false federal tax returns and information, and required state disclosure reports that mischaracterized these payments.
As part of the scheme, Mendelsohn also admitted that from 2003 through 2005 he and his co-conspirator used $82,000 from the political entities to make multiple payments to a person associated with a Florida state senator. Mendelsohn admitted that he knew some or all of the payments were benefitting the public official by allowing the public official to receive money without paying taxes on the money.
In addition, Mendelsohn admitted that beginning in late April and early May 2007, Mendelsohn contacted a Florida businessman, who previously had made large contributions to the political entities at Mendelsohn’s request, to solicit additional contributions that would be used by one of the entities to support a candidate for the Florida legislature. According to court documents, in order to persuade the contributor to make the payments, Mendelsohn told the contributor that he had reached an agreement with a senior public official in the Florida state government to use his office to have federal authorities close an investigation of the contributor and his businesses. Mendelsohn admitted that his representation to the contributor was false, and that at various times he falsely told the contributor that the official and an intermediary were taking action on the contributor’s behalf. Ultimately, the contributor provided Mendelsohn with two checks totaling $150,000, made payable to one of the political entities.
Finally, Mendelsohn admitted that he falsely told FBI agents that the $75,000 payment for the car was a gift and not income from lobbying services. Similarly, Mendelsohn admitted that he lied to FBI agents when he claimed that he had never received any personal benefits from the political entities for which he raised money.
This case is being prosecuted by Senior Trial Attorney Mary K. Butler and Trial Attorney Eric G. Olshan of the Criminal Division’s Public Integrity Section. This case was investigated by the Miami Division of the FBI and the Criminal Investigation Division of the Internal Revenue Service in Deerfield, Fla.
El Secretario de Justicia de los Estados Unidos expresa oposición a legislación que obstaculiza el traslado de detenidos de GuantánamoRead the Press Release
WASHINGTON—El Secretario de Justicia de los Estados Unidos Eric Holder le escribió al Líder Mayoritario del Senado Harry Reid y el Líder Minoritario del Senado Mitch McConnell hoy oponiéndose al texto de la Ley de Asignaciones Continuas para el Año 2011 Entero propuesta, la que prohibiría el traslado de detenidos de las instalaciones de detención de la Bahía de Guantánamo, Cuba, a los Estados Unidos por cualquier motivo, incluido para ser juzgados.
El texto de la carta se encuentra a continuación.
9 de diciembre de 2010
Al Honorable Harry Reid
Líder Mayoritario
Senado de los Estados Unidos
Washington, DC 20510
Al Honorable Mitch McConnell
Líder Minoritario
Senado de los Estados Unidos
Washington, DC 20510
Estimados Senadores Reid y McConnell:
Les escribo para oponerme a la Sección 1116 de la Ley de Asignaciones Continuas para el Año 2011 Entero propuesta, la que prohibiría el uso de fondos para trasladar a detenidos de las instalaciones de detención de la Bahía de Guantánamo a los Estados Unidos, por el motivo que fuera. Esta disposición va mucho más allá de la ley existente y limitaría imprudentemente la capacidad del Poder Ejecutivo de enjuiciar a supuestos terroristas en tribunales federales o comisiones militares en los Estados Unidos, así como su capacidad de encarcelar a las personas condenadas en dichos tribunales.
A fin de proteger al pueblo estadounidense de la manera más efectiva posible, debemos estar en posición de utilizar todo instrumento lícito de poder nacional para asegurar que los terroristas sean enjuiciados y ya no puedan poner en peligro las vidas de ciudadanos estadounidenses. Como refleja el discurso de Archivos Nacionales del Presidente en mayo de 2009, como Comandante en Jefe, el Presidente ha determinado que los enjuiciamientos de supuestos terroristas en tribunales del Artículo III por delitos penales de terrorismo promulgados por el Congreso—una herramienta poderosa y bien establecida que ha sido utilizada con éxito en centenas de casos—deben ser posibles a fin de proteger a la nación.
La Sección 1116 es una limitación extrema y arriesgada de la autoridad del Poder Ejecutivo de determinar cuándo y dónde enjuiciar a sospechosos de terrorismo. Dichas decisiones deben basarse en los hechos y circunstancias de cada caso y los intereses generales de seguridad nacional de los Estados Unidos. La Sección 1116 debilitaría mi capacidad como Secretario de Justicia de los Estados Unidos de enjuiciar casos en tribunales del Artículo III, quitándome una de las armas más potentes en la lucha contra el terrorismo.
Sería imprudente, por lo tanto, y establecería un precedente peligroso con implicaciones graves para la administración imparcial de la justicia, que el Congreso limitara la discreción del Poder Ejecutivo de enjuiciar a terroristas en estas jurisdicciones. El ejercicio de la discreción con respecto al proceso judicial siempre ha sido y debe seguir siendo una función del Poder Ejecutivo.
No hemos logrado identificar ningún paralelo a la Sección 1116 en la historia de nuestra nación en la que el Congreso haya intervenido para prohibir el enjuiciamiento de determinadas personas o delitos. Sería un error atar las manos del Presidente y de sus asesores en seguridad nacional ahora.
Por estos motivos, les ruego que eliminen la Sección 1116 del proyecto de ley o de cualquier otro proyecto de ley de asignaciones presupuestarias que el Senado pueda considerar.
Atentamente,
Eric H. Holder, Jr.
Secretario de Justicia de los Estados Unidos
Columbus, Ohio, Real Estate Agent Sentenced to 18 Months in Prison for Mortgage Fraud and Obstruction of JusticeRead the Press Release
WASHINGTON - Bonnie Helt of Columbus, Ohio, was sentenced to 18 months in prison by U.S. District Court Judge Michael H. Watson in Columbus for conspiring to commit mortgage fraud and obstruction of justice, the Justice Department and Internal Revenue Service (IRS) announced today.
According to court testimony and documents, Helt was the real estate agent for convicted Columbus-area home builder, Thomas Parenteau. Helt conspired with Parenteau to commit bank and wire fraud schemes through which the pair defrauded banks and financial institutions of more than $7 million by falsely inflating the purchase prices of the homes that Parenteau built and sold in exchange for the payment of large undisclosed or disguised kickbacks to the buyers after their purchases. After learning of the IRS investigation into their schemes, Parenteau, Helt and others engaged in a scheme to obstruct justice by destroying documents and lying to federal and local investigators. A jury convicted Parenteau for his role in these crimes in July of this year after a two-month trial. Helt pleaded guilty to these crimes in January of this year.
In addition to the prison term, Judge Watson ordered Helt to serve a five-year term of supervised release after her term of imprisonment, and to pay restitution to the victim financial institutions in an amount to be determined by the court within 90 days. Finally, the court ordered Helt to forfeit to the United States government $124,544, which represented the amount of commissions she earned on the fraudulent real estate deals in which she participated.
Helt's co-conspirators, Marsha K. Parenteau and Pamela A. McCarty, are scheduled to be sentenced for their respective roles in these schemes on January 5, 2011. The sentencing for Mr. Parenteau is not yet scheduled.
John A. DiCicco, Acting Assistant Attorney General for the Justice Department's Tax Division, commended the IRS Criminal Investigation special agents who investigated the case, as well as Tax Division trial attorneys Richard Rolwing and Sean O'Connell, who prosecuted the case.
Attorney General Expresses Opposition to Legislation Blocking Transfer of Guantanamo DetaineesRead the Press Release
WASHINGTON—Attorney General Eric Holder wrote to Senate Majority Leader Harry Reid and Senate Minority Leader Mitch McConnell today in opposition to language in the proposed 2011 Full-Year Continuing Appropriations Act that would prohibit the transfer of detainees from the detention facility in Guantanamo Bay, Cuba, to the United States for any purpose, including to stand trial.
The text of the letter is below.
December 9, 2010
The Honorable Harry Reid
Majority Leader
United States Senate
Washington, DC 20510
The Honorable Mitch McConnell
Minority Leader
United States Senate
Washington, DC 20510
Dear Senators Reid and McConnell:
I write in opposition to Section 1116 of the proposed 2011 Full-Year Continuing Appropriations Act, which would prohibit the use of any funds to transfer detainees from the detention facility in Guantanamo Bay, Cuba, to the United States for any purpose. This provision goes well beyond existing law and would unwisely restrict the ability of the Executive branch to prosecute alleged terrorists in Federal courts or military commissions in the United States as well as its ability to incarcerate those convicted in such tribunals.
In order to protect the American people as effectively as possible, we must be in a position to use every lawful instrument of national power to ensure that terrorists are brought to justice and can no longer threaten American lives. As reflected in the President’s National Archives speech in May 2009, he, as Commander-in-Chief, has determined that prosecutions of alleged terrorists in Article III courts for the criminal terrorism offenses Congress has enacted—a powerful and well-established tool that has been used successfully in hundreds of cases—should be available in this effort to protect the nation.
Section 1116 is an extreme and risky encroachment on the authority of the Executive branch to determine when and where to prosecute terrorist suspects. Such decisions should be based on the facts and circumstances of each case and the overall national security interests of the United States. Section 1116 would undermine my ability as Attorney General to prosecute cases in Article III courts, thereby taking away one of our most potent weapons in the fight against terrorism.
It would therefore be unwise, and would set a dangerous precedent with serious implications for the impartial administration of justice, for Congress to restrict the discretion of the Executive branch to prosecute terrorists in these venues. The exercise of prosecutorial discretion has always been and must remain an Executive branch function.
We have been unable to identify any parallel to Section 1116 in the history of our nation in which Congress has intervened to prohibit the prosecution of particular persons or crimes. It would be a mistake to tie the hands of the President and his national security advisers now.
For these reasons, I urge you to remove Section 1116 from the bill or from any other appropriations bill that the Senate may consider.
Sincerely,
Eric H. Holder, Jr.
Attorney General
Wednesday 8 December 2010
Justice Department Reaches Settlement with National Mortgage Lender to Resolve Allegations of Lending DiscriminationRead the Press Release
WASHINGTON – PrimeLending, a national mortgage lender with 168 offices in 32 states at the end of 2009, has agreed to pay $2 million to resolve allegations that it engaged in a pattern or practice of discrimination against African-American borrowers between 2006 and 2009.
The settlement was filed today in conjunction with a complaint made by the Justice Department in federal court in Dallas, where PrimeLending is headquartered. Brought under the federal Fair Housing Act and Equal Credit Opportunity Act, the complaint alleges African-American borrowers nationwide were charged higher prices on retail loans made through PrimeLending’s branch offices.
“Charging borrowers more to obtain a home loan based on their race is absolutely intolerable, but it is a practice that occurred all too often during the past decade and stripped a vast amount of wealth from communities of color,” said Thomas E. Perez, Assistant Attorney General in charge of the Justice Department’s Civil Rights Division. “We will be vigilant to ensure that this type of discriminatory practice does not continue in the current credit market. Vigorous enforcement of fair lending laws is a top priority, and we will continue aggressively to pursue compensation for the victims of such discrimination.”
“Illegal and unfair lending takes an immediate toll on families and communities. Moreover, its harm, if unchecked, damages economic opportunities for the next generation,” said John Trasviña, Assistant Secretary for Fair Housing and Equal Opportunity. “HUD joins the Department of Justice to take every step to ensure that all people are fairly served by lending institutions.”
“The Federal Reserve rigorously enforces the fair lending laws. There is no place for racial or other illegal discrimination in our credit markets,” said Elizabeth A. Duke, Member, Board of Governors of the Federal Reserve System. “We expect lenders that we supervise to be fully committed to fair lending and to have controls in place to prevent illegal discrimination.”
Between 2006 and 2009, PrimeLending charged African-American borrowers higher annual percentage rates of interest for prime fixed-rate home loans and for home loans guaranteed by the Federal Housing Administration and Department of Veterans Affairs than it charged to similarly-situated white borrowers. PrimeLending gave its employees wide discretion to increase their commissions by adding “overages” to loans, which increased the interest rates paid by borrowers. This policy had a disparate impact on African-American borrowers. The Justice Department for more than a decade has identified the charging of overages as a means by which lending discrimination can occur.
During the period when the discrimination occurred, PrimeLending was rapidly increasing its lending operations, becoming one of the nation’s 20 largest FHA lenders by 2009. PrimeLending did not have monitoring in place to ensure that it complied with the fair lending laws, even as it grew to originate more than $5.5 billion in loans per year.
This case resulted from a referral by the Board of Governors of the Federal Reserve to the Justice Department’s Civil Rights Division in 2009. PrimeLending’s owner, PlainsCapital Bank of Lubbock, Texas, is a member of the Federal Reserve System. PrimeLending cooperated fully with the Justice Department’s investigation into its lending practices and agreed to settle this matter without contested litigation.
In addition to paying $2 million to the victims of discrimination, the settlement requires PrimeLending to have in place loan pricing policies, monitoring and employee training that ensure discrimination does not occur in the future. It also incorporates provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act and regulations recently enacted by the Federal Reserve that restrict loan officer compensation based on the terms or conditions of a particular transaction. PrimeLending began at the start of this year to implement policies to prevent discrimination, which include requiring employees to provide legitimate non-discriminatory reasons in order to adjust loan prices. These policies will be strengthened by generally banning overages beginning next spring.
The Civil Rights Division and other agencies involved in this matter are part of the Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. One of the task force’s key initiatives, led by the Department of Housing and Urban Development, the Department of Justice and the Federal Reserve Board, is to ensure that discrimination does not occur when borrowers receive FHA loans. For more information on the task force, visit www.stopfraud.gov.
A copy of the complaint and settlement order with PrimeLending, as well as additional information about fair lending enforcement by the Justice Department, can be obtained from the Justice Department website at www.justice.gov/fairhousing .
Gary, Indiana, Wastewater Treatment Operator and Managers Charged with Conspiracy and Violating the Clean Water ActRead the Press Release
WASHINGTON – United Water Services Inc., the former contract operator of the Gary Sanitary District wastewater treatment works in Gary, Ind., and two of its employees, were charged today with conspiracy and felony violations of the Clean Water Act in a 26-count indictment returned by a federal grand jury, the Justice Department announced today.
United Water Services Inc., and employees Dwain L. Bowie, and Gregory A. Ciaccio, have been charged with manipulating daily wastewater sampling methods by turning up disinfectant treatment levels shortly before sampling, then turning them down shortly after sampling.
United Water Services entered into a 10-year contract to operate the Gary Sanitary District wastewater treatment works in 1998, in exchange for $9 million annually. United Water’s contract was renewed in May 2008. As contract operator, United Water handled the operation and maintenance of the treatment works, and was responsible for environmental compliance. To ensure compliance with the discharge permit, United Water was required to take periodic representative wastewater samples, including a daily sample to determine the concentration of E. coli bacteria in the wastewater.
According to the indictment, the defendants conspired to tamper with E. coli monitoring methods by turning up levels of disinfectant dosing prior to E. coli sampling. The indictment states that the defendants would avoid taking E. coli samples until disinfectants had reached elevated levels, which in turn were expected to lead to reduced E. coli levels. Immediately after sampling, the indictment alleges, the defendants turned down disinfectant levels, thus reducing the amount of treatment chemicals they used.
Dwain Bowie was United Water’s Project Manager for the Gary facility beginning in 2002, and was in charge of the Gary operation. Gregory Ciaccio joined Bowie’s staff in July 2003, and eventually was made the Plant Superintendent, in charge of day-to-day operations.
The Clean Water Act makes it a felony to tamper with required monitoring methods at a permitted facility like the Gary Sanitary District. If convicted, Bowie and Ciaccio face up to five years in prison on the conspiracy count and two years on each of the Clean Water Act counts, as well as a criminal fine of up to $250,000 for each count. The company may also face fines and/or probation.
The allegations in the indictment are mere accusations and all persons are presumed innocent until and unless proven guilty beyond a reasonable doubt in a court of law.
The case was investigated by the Northern District of Indiana Environmental Crimes Task Force, including agents from the Criminal Investigation Division of the U.S. Environmental Protection Agency, the FBI and the Indiana State Police. The case is being prosecuted by the U.S. Attorney’s Office for the Northern District of Indiana and the Justice Department’s Environmental Crimes Section.
EPA and the Commonwealth of Kentucky Reach Agreement with Logan Aluminum Inc. to Resolve Allegations of Clean Air Act ViolationsRead the Press Release
WASHINGTON – The Department of Justice on behalf of the U.S. Environmental Protection Agency, along with the Commonwealth of Kentucky, have filed a complaint and entered into a consent decree with Logan Aluminum Inc. to settle alleged violations of the Clean Air Act’s National Emission Standards for Hazardous Air Pollutants for Secondary Aluminum Production occurring at Logan Aluminum’s Russellville, Ky., secondary aluminum facility.
The proposed consent decree resolves claims of the United States and the commonwealth under the Clean Air Act and related provisions of the laws of the commonwealth. Under the terms of the decree, Logan Aluminum will pay a civil penalty of $285,000 and install a pollution control device called a baghouse for one of its furnace’s capture/collection systems. The civil penalty is the second highest to be negotiated in dealing with a single facility for violations of the Clean Air Act’s secondary aluminum production regulations.
Logan Aluminum manufactures aluminum coils which are used in the beverage industry. Part of the production process for these coils causes emissions of potential pollutants such as dioxins and furans, hydrogen chloride and particulate matter.
The complaint was filed and the consent decree lodged contemporaneously in the U.S. District Court for the Western District of Kentucky on Dec. 8, 2010. Notice of the lodging of the consent decree will appear in the Federal Register allowing for a 30-day public comment period before the consent decree can be entered by the court as final judgment.
Department of Justice and USDA Hold Competition Workshop Focused on Margins in the Agriculture Supply ChainRead the Press Release
WASHINGTON — The Department of Justice and the U.S. Department of Agriculture (USDA) today held the fifth of five joint public workshops to explore the appropriate role for antitrust and regulatory enforcement in American agriculture. The workshop, led by Agriculture Secretary Tom Vilsack and U.S. Attorney General Eric Holder, examined margins at various levels of the agricultural supply chain. The workshop also included opportunities for public comments.
"These workshops have marked an important and unprecedented chapter in public-private collaboration, and although this is the last workshop, it is not the final chapter. Vigorous and appropriate enforcement is an essential component of our commitment to ensuring market fairness and robust competition," said Attorney General Holder. "The Departments of Justice and Agriculture will continue working in close coordination to ensure fairness and opportunity for America’s farmers, producers and agriculture industry."
"Today’s open and transparent dialogue with farmers, ranchers, industry and academics is resulting in a clearer understanding of the complex competitive issues facing American agriculture," said Secretary Vilsack. "A fair and competitive marketplace is important not only for producers, but also for consumers."
These joint workshops are the first-ever to be held by the Department of Justice and USDA to discuss competition and regulatory issues in the agriculture industry. The goals of the workshops are to promote dialogue and foster learning with a diverse group of stakeholders regarding the agricultural marketplace. Additional information about the workshops can be found at www.justice.gov/atr/public/workshops/ag2010/index.htm#overview.
Secretary Vilsack and Attorney General Holder began the workshop with opening remarks before moderating a discussion with participants representing each level of the agricultural supply chain, followed by a panel consisting of dairy farmers, academics and industry representatives to discuss dairy margins. In the afternoon a third panel looked at issues in the retail sector, examining concentration, margins and similar trends. The final panel discussed margins in the livestock and poultry industries. Assistant Attorney General for the Antitrust Division Christine Varney gave closing remarks. Officials also received public testimony from audience members.
Videos and transcripts from today’s workshop will be available for review at a later date on the Antitrust Division’s website at www.justice.gov/atr/public/workshops/ag2010/index.htm#dates. Individuals seeking more information on the workshops should contact [email protected].
Tuesday 7 December 2010
President of Iowa Ready-Mix Concrete Company Pleads Guilty to Price FixingRead the Press Release
WASHINGTON — The president of an Iowa ready-mix concrete company pleaded guilty yesterday to participating in a conspiracy to fix prices for sales of ready-mix concrete, the Department of Justice announced today.
According to a one-count felony charge filed on Nov. 30, 2010, in U.S. District Court in Sioux City, Iowa, Chad Van Zee, the president of a ready-mix concrete company located in Rock Valley, Iowa, participated in a conspiracy to fix prices for sales of ready-mix concrete in the Northern District of Iowa beginning as early as January 2006 and continuing until as late as August 2009.
According to the charge, Van Zee participated in a conspiracy in which he and Steven Keith VandeBrake, a former executive of another ready-mix concrete company, discussed and reached agreements regarding annual price increases for ready-mix concrete, sold ready-mix concrete at collusive and noncompetitive prices, and accepted payment for those sales. Under the plea agreement filed today, Van Zee has agreed to cooperate with the department’s ongoing antitrust investigation. In May 2010, VandeBrake pleaded guilty and agreed to serve 19 months in prison for participating in three separate conspiracies to fix prices and rig bids for sales of ready-mix concrete.
Ready-mix concrete is a product whose ingredients include cement, aggregate (sand and gravel), water and other additives. The concrete generally is produced in a concrete plant and is transported by concrete-mixer trucks to work sites, where it is used in various types of construction projects, including buildings and roads.
Van Zee is charged with violating the Sherman Act, which carries a maximum penalty for individuals of 10 years in prison and a $1 million fine. 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.
Van Zee is the third individual to plead guilty in an ongoing federal antitrust investigation of the ready-mix concrete industry in Iowa and its surrounding states. The investigation is being conducted by the Department of Justice Antitrust Division’s Chicago Field Office, the FBI’s Sioux City Resident Agency and the U.S. Department of Transportation’s Office of Inspector General, with the assistance of the U.S. Attorney’s Office in Sioux City, Iowa.
Anyone with information concerning bid rigging, price fixing or territorial allocation related to the ready-mix concrete industry in Iowa and its surrounding states should contact the Antitrust Division’s Chicago Field Office at 312-353-7530 or visit www.justice.gov/atr/contact/newcase.htm.
Pharmaceutical Manufacturers to Pay $421.2 Million to Settle False Claims Act CasesRead the Press Release
WASHINGTON — Abbott Laboratories Inc., B. Braun Medical Inc. and Roxane Laboratories Inc. n/k/a Boehringer Ingelheim Roxane Inc. and affiliated entities have agreed to pay $421 million to settle False Claims Act allegations, the Justice Department announced today. These settlements resolve claims by the United States that the defendants engaged in a scheme to report false and inflated prices for numerous pharmaceutical products knowing that federal healthcare programs relied on those reported prices to set payment rates. The actual sales prices for the products were far less than what defendants reported.
The difference between the resulting inflated government payments and the actual price paid by healthcare providers for a drug is referred to as the “spread.” The larger the spread on a drug, the larger the profit for the health care provider or pharmacist who gets reimbursed by the government. The government alleges that Abbott, Roxane and Braun created artificially inflated spreads to market, promote and sell the drugs to existing and potential customers. Because payment from the Medicare and Medicaid programs was based on the false inflated prices, the government alleged that the defendants caused false claims to be submitted to federal healthcare programs, and as a result, the government paid millions of claims for far greater amounts than it would have if Abbott, B. Braun and Roxane had reported truthful prices.
These significant settlements are a part of the Attorney General’s aggressive effort to combat fraud on the federal treasury, said Assistant Attorney General for the Civil Division Tony West. Since January of 2009, the Justice Department’s Civil Division and the U.S. Attorneys around the nation have recovered more than $9 billion in cases alleging false claims, fraud against the government, and violations of the Food, Drug and Cosmetic Act. Cases alleging fraud or false claims against government health care programs are the largest portion of these recoveries, and during this period the Justice Department has opened more health care fraud cases, secured larger fines and judgments, and recovered more dollars lost to health care fraud than in any other period: more than $5 billion. Criminal fines, forfeitures, restitution and disgorgement under the Food, Drug and Cosmetic Act have yielded another $3 billion, again a record number.
Roxane is paying $280 million to resolve claims against it and related entities (Roxane Laboratories Inc., Boehringer Ingelheim Corp. and Boehringer Ingelheim Pharmaceuticals Inc.). The United States intervened and filed suit against Roxane on Jan. 18, 2007. The United States alleged that Roxane reported false prices for the following drugs: Azathioprine, Diclofenac Sodium, Furosemide, Hydromorphone, Ipratropium Bromide, Oramorph SR, Roxanol, Roxicodone and Sodium Polystyrene Sulfonate.
Abbott is paying $126.5 million to resolve the claims against it in two qui tam cases. In the first, the United States intervened and filed suit against Abbott in May 2006. This case initially was filed in the Southern District of Florida before being transferred for pre-trial proceedings to pending multi-district litigation in the District of Massachusetts. In this case, the United States alleged violations by Abbott of the False Claims Act with respect to its pricing of dextrose solutions, sodium chloride solutions, sterile water and vancomycin. Dextrose solutions, sodium chloride solutions and sterile water are generic, water-based solutions primarily used to facilitate the intravenous infusion or injection of other drugs. Vancomycin is a powerful, intravenous antibiotic. The second lawsuit was filed by a whistleblower, and involved Abbott’s pricing of the drug erythromycin, an oral antibiotic.
B. Braun Medical Inc., a U.S. subsidiary of German pharmaceutical company, B. Braun Melsungen AG, has agreed to pay $14,744,000 to resolve allegations that it caused the Medicaid program to pay inflated amounts for 49 of its drug products. These products included water-based solutions used to facilitate the intravenous infusion of other drugs and for fluid replacement, including dextrose solutions, sodium chloride solutions, sterile water and lactated ringers solution. They also included intravenously administered nutritional solutions and a variety of other intravenously administered drugs.
“With these settlements, the Department of Justice has now recovered more than $1.8 billion from pharmaceutical manufacturers arising from similar unlawful drug pricing schemes. By offering their customers one price and then falsely reporting a greatly inflated price to the lists the government uses when determining how much to pay for the drugs, we believe pharmaceutical companies created an incentive for the purchase of their drugs, since buyers could obtain government payment at the inflated price and pocket the difference,” said Tony West, Assistant Attorney General for the Justice Department’s Civil Division. “Taxpayer-funded kickback schemes like this not only cost federal healthcare programs millions of dollars, they threaten to undermine the integrity of the choices health care providers make for their patients.”
“Some pharmaceutical manufacturers have asserted that a culture within the industry gave them license to manipulate the system to suit their interests. This is not the case,” said Carmen M. Ortiz, U.S. Attorney for the District of Massachusetts. “When manufacturers report drug pricing information that they know will be relied upon by government health care programs, they are obliged to report honest prices. It is unlawful to do otherwise.”“Abbott, B. Braun and Roxane have agreed to pay more than $421 million to the United States to settle allegations that they engaged in a scheme to artificially inflate prices for numerous pharmaceutical products,” said Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida. “This practice came to light thanks to an alert South Florida whistleblower. As a result, hundreds of millions of dollars that were being siphoned off have now been recovered and will be used to provide services as intended – to the sick and elderly who need them. We encourage other whistleblowers who have information about potential wrongdoing to come forward and help us stop fraud and abuse in our health care industries.”
“The Office of Inspector General (OIG) has played a significant role in identifying the shortcomings of reported drug prices including ‘Average Wholesale Price’. In dozens of reports over many years, OIG has monitored drug price reporting practices and identified excessive Medicare and Medicaid payments resulting from these practices,” said Daniel R. Levinson, Inspector General of the Department of Health and Human Services. “These settlements with Abbott, B. Braun and Roxane underscore OIG’s longstanding commitment to protect patients and taxpayers against artificially inflated drug prices.”
The settlements resolve allegations brought by a whistleblower under the qui tam provisions of the False Claims Act. The False Claims Act suits were filed by a Florida home infusion company, Ven-A-Care of the Florida Keys Inc., and its principals. The False Claims Act allows for private persons to file suits to provide the government information about wrongdoing. Under the statute, if it is established that a person has knowingly 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 violation of the statute. If the government is successful in resolving or litigating its claims, the whistle blower who initiated the action can receive a share of between 15 percent to 25 percent of the amount recovered. As part of these settlements, the Ven-A-Care whistleblowers will receive approximately $88.4 million.
The cases were handled by the Justice Department’s Civil Division, the U.S. Attorneys’ Offices for the District of Massachusetts and the Southern District of Florida and the Office of Inspector General of the Department of Health and Human Services.
These settlements are part of the government’s emphasis on combating health care fraud. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover approximately $4.6 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 have topped $5.8 billion.
Kos Pharmaceuticals to Pay More Than $41 Million to Resolve Kickback and Off-Label Promotion AllegationsRead the Press Release
WASHINGTON -- Kos Pharmaceuticals, a subsidiary of Abbott Laboratories, has agreed to pay more than $41 million to resolve criminal and civil liability arising from conduct relating to its drugs Advicor and Niaspan, the Justice Department announced today.
According to the agreement reached with the government, the Delaware-based company will pay more than $38 million to settle civil allegations under the False Claims Act. Specifically, the civil settlement resolves allegations that Kos offered and paid doctors, other medical professionals, physician groups and managed care organizations, illegal kickbacks in the form of money, free travel, grants, honoraria and other valuable goods and services, in violation of the Anti-Kickback Statute to get them to prescribe or recommend Niaspan and Advicor.
In addition, the United States contends that Kos promoted the sale and use of Advicor for use as first-line therapy for management of mixed dyslipidemias (a disruption of the lipids in the blood). Such an off-label use was not approved by the Food and Drug Administration nor was it a medically-accepted indication for which the United States and state Medicaid programs provided coverage for Advicor. The federal share of the civil settlement is $33,705,310 and the state Medicaid share is $4,454,432.
As part of today’s resolution, Kos also has entered into a deferred prosecution agreement and agreed to the filing of a criminal information in U.S. District Court for the Middle District of Louisiana charging the company with one count of conspiracy to violate the Anti-Kickback Statute. According to the criminal information, Kos conspired to violate the statute by agreeing to pay physicians kickbacks in exchange for their writing prescriptions for Kos drugs.
Specifically, two doctors proposed that they would endorse the use of Kos products, including Advicor, for the treatment of cholesterol in exchange for a series of payments. Between January 2002 and June 2006, one of the doctors wrote 4,130 prescriptions for Kos products. According to the court documents, some of those prescriptions were paid for by Medicare and Medicaid. From 2002 to 2004, Kos made a series of payments to the two doctors or a third party intermediary in the form of “sponsorship” of continuing medical education classes conducted by the doctors and purported speakers’ fees. Kos has agreed to pay a $3.36 million criminal fine as a condition of the deferred prosecution agreement.
The department agreed to enter into a deferred prosecution agreement with Kos based in part on the company’s undertaking of a thorough internal investigation of misconduct; its reporting of information from the investigation to the department on a regular basis; its continued and ongoing cooperation with the department’s investigation of the matter; and in recognition of the remedial measures undertaken by the company.
“Pharmaceutical companies that pay kickbacks to medical professionals take from the taxpayers and undermine the integrity of choices that doctors make for their patients,” said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. “We will work with our federal partners to ensure that important health care decisions are based on sound medicine, not illegal payments.”
“Today’s resolution exemplifies the strong commitment of the Criminal Division, the Civil Division, and the U.S. Attorneys’ Offices to work collaboratively to ensure that kickbacks and off-label drug promotions are prosecuted to the fullest extent of the law,” said Assistant Attorney General Lanny A. Breuer of the Criminal Division. “As this case shows, pharmaceutical companies that don’t play by the rules will face serious criminal and civil consequences.”
The civil settlement resolves two lawsuits filed under the qui tam, or whistleblower, provisions of the False Claims Act, which allow private citizens with knowledge of fraud to bring civil actions on behalf of the United States and share in any recovery. As a part of today’s resolution, the whistleblowers, all former employees of Kos, will receive payments totaling more than $6.4 million from the federal share of the civil recovery.
“Today’s resolution of claims against Kos underscores one of the key purposes of the Anti-Kickback law–that is, to ensure that the judgment exercised by health care providers in treating Medicare and Medicaid patients is not influenced by illegal payments,” said James L. Santelle, U.S. Attorney for Eastern District of Wisconsin.
“Kos Pharmaceuticals made illegal payments to physicians and participated in an unlawful marketing scheme,” said Stephanie A. Finley, U.S. Attorney of the Western District of Louisiana. “This settlement reflects the commitment of the U.S. Attorney's Office to aggressively investigate and pursue healthcare providers who seek public funds through unlawful methods.”
“This resolution reflects our office’s continued commitment to combat health care fraud at all levels,” said Donald J. Cazayoux Jr., U.S. Attorney for the Middle District of Louisiana. “We greatly appreciate our partners in the Criminal Division who led the effort on the criminal side.”
“Paying kickbacks to doctors and marketing drugs for off-label purposes will simply not be tolerated," said Daniel R. Levinson, Inspector General of the Department of Health and Human Services. "Kos, which currently does not sell any products that are reimbursed by federal health care programs, has agreed that, should it seek to sell such products anytime in the next five years, the company will enter into a formal compliance program with OIG.”
The criminal case was handled by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Middle District of Louisiana. The Justice Department’s Civil Division, the U.S. Attorney for the Eastern District of Wisconsin and the U.S. Attorney’s Office for the Western District of Louisiana handled the civil lawsuits, with assistance from the Office of Inspector General for Health and Human Services and the National Association of Medicaid Fraud Control Units.
This resolution is part of the government’s emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in that effort is the FCA, which the Justice Department has used to recover almost $4.6 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in False Claims Act since January 2009 have topped $5.8 billion.
Four Detroit-Area Residents Arrested in Connection with $14.5 Million Home Health Care Fraud SchemeRead the Press Release
WASHINGTON – Four Detroit-area residents were arrested today by federal agents from the Department of Health and Human Services, Office of the Inspector General (HHS-OIG) and FBI as part of an ongoing investigation into a $14.5 million home health care fraud scheme, announced the Departments of Justice and HHS.
In a two-count second superseding indictment returned on Dec. 2, 2010, and unsealed today, four additional individuals are alleged to have participated in a Medicare fraud scheme operated out of Patient Choice Home Healthcare (Patient Choice) and All American Home Care (All American), two Oakland County, Mich., home health agencies that purported to provide in-home health services. Maira Suleman, 30; John Thomas, 32; Sherry Prescott, 50; and Myra Jones, 50, were each charged with conspiracy to commit health care fraud. Pramod Raval, M.D., 57, who was previously charged with conspiracy to violate the Anti-Kickback Statute, was also charged with conspiracy to commit health care fraud in the indictment unsealed today.
Twenty-one individuals, including the four arrested today, have now been charged for their alleged roles in this health care fraud scheme. The original indictment was returned on Jan. 12, 2010, with the first superseding indictment returned on July 13, 2010. To date, 10 defendants have pleaded guilty for their roles.
According to the superseding indictment unsealed today, the defendants’ co-conspirators owned and operated Patient Choice and All American. The se agencies purported to provide home health therapy services to Medicare beneficiaries that were unnecessary and/or were never performed. Suleman, Thomas and Prescott are alleged to have falsified medical records used to justify and/or bill services to Medicare. In addition, the indictment alleges that Jones and several other individuals recruited Medicare beneficiaries for the owners of Patient Choice and All American, paying the beneficiaries kickbacks for their Medicare information and their signatures on documents that detailed physical therapy services that were either never rendered or not medically necessary.
In addition, the indictment alleges that Dr. Raval and the owner and operator of Patient choice, Muhammad Shahab, engaged in a conspiracy where Shahab would pay kickbacks to Raval in exchange for patient referrals and access to Medicare beneficiaries under Dr. Raval’s care. Shahab was charged in the original indictment and he pleaded guilty on Feb. 25, 2010, to conspiracy to commit healthcare fraud. Sentencing in his case has been scheduled for Feb. 11, 2011.
The indictment also alleges that Medicare paid Patient Choice and All American more than $14.5 million for services that were medically unnecessary and/or not provided between August 2007 and September 2009. The charge of health care fraud conspiracy carries a maximum penalty of 10 years in prison and a $250,000 fine. The charge of conspiracy to violate the Anti-Kickback Statute carries a maximum prison sentence of five years and a fine of up to $25,000.
An indictment is merely a charge and defendants are presumed innocent until proven guilty.
Today’s arrests were announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan; Special Agent in Charge Andrew G. Arena of the FBI’s Detroit Field Office; and Special Agent in Charge Lamont Pugh III of the HHS-OIG Chicago Regional Office.
This case is being prosecuted by Assistant Chief John K. Neal and Trial Attorney Gejaa T. Gobena of the Criminal Division’s Fraud Section. The case was investigated by the FBI and HHS-OIG. The case was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan.
Since their inception in March 2007, Strike Force operations in seven districts have obtained indictments of more than 825 individuals who collectively have falsely billed the Medicare program for more than $2 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov .
Bank of America acepta pagar $137.3 millones de dólares en restitución adependencias federales y estatales como condición del Programa deIndulgencia Empresarial Antimonopolios del Departamento de JusticiaRead the Press Release
WASHINGTON – Entidades del Bank of America han acordado pagar un total de $137.3 millones de dólares en restitución a dependencias federales y estatales por su participación en una conspiración para manipular subastas en el mercado de derivados de bonos municipales y como condición de su admisión al Programa de Indulgencia Empresarial Antimonopolios del Departamento de Justicia, anunció hoy el Departamento de Justicia.
El Bank of America realizó acuerdos con la Comisión de Títulos y Valores de EE.UU. [U.S. Securities and Exchange Commission (SEC)], el Servicio de Impuestos Internos [Internal Revenue Service (IRS)], la Oficina del Contralor de la Moneda [Office of the Comptroller of Currency (OCC)] y 20 Secretarios de Justicia Estatales. La resolución global con estas entidades federales y estatales provee el pago de restitución al IRS y a municipalidades perjudicadas por la conducta anticompetitiva del Bank of America en el mercado de derivados de bonos municipales. En un tema asociado, el Bank of America realizó un acuerdo por escrito con la Junta de la Reserva Federal para tratar de ciertas medidas correctivas.
Según los acuerdos anunciados hoy, empleados del Bank of America exhibieron conducta ilegal, incluida la manipulación de subastas y otras prácticas engañosas, en conexión con la comercialización y la venta de contratos de derivados de bonos municipales exentos de impuestos.
El Bank of America fue la primera y única entidad en presentarse espontáneamente e informar su conducta indebida al Departamento de Justicia antes de que el Departamento iniciara su investigación de la conducta anticompetitiva del ramo de los derivados de bonos municipales. La investigación en curso del Departamento ha resultado en cargos contra siete ejecutivos y una entidad empresarial y declaraciones de culpabilidad por parte de ocho ejecutivos asociadas a delitos de violación de las leyes antimonopolios y federales. La investigación sigue en curso y activa.
"El Programa de Indulgencia Empresarial Antimonopolios del Departamento de Justicia es esencial para hacer valer nuestras leyes antimonopolios", dijo Christine Varney, Secretaria de Justicia Auxiliar a cargo de la División Antimonopolios del Departamento de Justicia. "La divulgación por Bank of America de su conducta indebida y su cooperación ha permitido una investigación enérgica en curso conducida por el Departamento de Justicia, asociada a la actividad anticompetitiva en el ramo de los derivados de bonos municipales. La participación del banco en el programa de indulgencia también ha resultado en la resolución de hoy de tratar del perjuicio causado por su conducta indebida. La investigación de este asunto por parte de la División continúa y el enjuiciamiento de conducta anticompetitiva en los mercados financieros sigue siendo nuestra más alta prioridad".
Como condición de su admisión al Programa de Indulgencia Empresarial Antimonopolios del Departamento de Justicia, Bank of America debe ser la primera entidad en autodenunciar su conducta anticompetitiva, reconocer su conducta indebida, proveer cooperación permanente en la investigación y realizar la restitución integral a las víctimas de la conspiración. Bank of America sigue proporcionando importante cooperación a las autoridades federales y estatales de las fuerzas del orden público en sus investigaciones paralelas en curso del ramo de los derivados de bonos municipales.
El Programa de Indulgencia Empresarial Antimonopolios del Departamento de Justicia fue diseñado para disuadir y detectar comportamientos anticompetitivos. A través del Programa de Indulgencia, una sociedad puede evitar condenas y multas criminales, y los individuos pueden evitar una condena criminal, sentencias en prisión y multas, si la empresa o la persona es la primera en informar sobre su participación en una violación criminal antimonopolios y si se satisfacen otras exigencias del programa especificadas. Las exigencias del programa incluyen la autodenuncia, el reconocimiento de la conducta indebida, cooperación plena en la investigación del Departamento de la conducta, y el pago de restitución a las víctimas. Las exigencias proveen a la división información crítica para conducir investigaciones y hacer valer las leyes antimonopolios criminales.
Con los acuerdos anunciados hoy, el Bank of America ha cumplido su obligación, bajo el Programa de Indulgencia, de pagar restitución integral al IRS y a las municipalidades con base en conducta anticompetitiva identificada por dichas dependencias federales y estatales. Los acuerdos del banco con SEC, IRS, OCC y los Secretarios de Justicia Estatales representan los beneficios sustanciales para las víctimas que pueden resultar del Programa de Indulgencia Empresarial Antimonopolios del Departamento de Justicia, y reflejan el compromiso del Bank of America de tratar del daño causado por la conducta que descubrió.
Como resultado de su divulgación voluntaria de su conducta anticompetitiva y su cooperación constante, el Bank of America no tendrá que pagar multas como parte de los acuerdos realizados hoy. Al finalizar la cooperación exitosa y otras exigencias del Programa de Indulgencia, el Bank of America y sus actuales empleados que han cooperado con la investigación en curso no serán enjuiciados por la División Antimonopolios por la conducta informada. La investigación de la División Antimonopolios con respecto a otras entidades y personas continúa.
Para más información sobre el Programa de Indulgencia Empresarial Antimonopolios del Departamento de Justicia, visite: www.justice.gov/atr/public/criminal/leniency.htm.
La División Antimonopolios y otras dependencias que participan en este tema son parte de la
Fuerza de Tarea de Control contra el Fraude Financiero. El Presidente Obama estableció la Fuerza de Tarea interagencia de Control contra el Fraude Financiero para llevar a cabo una iniciativa enérgica, coordinada y proactiva para investigar y enjuiciar los delitos financieros. La fuerza de tarea incluye a representantes de una amplia gama de dependencias federales, autoridades regulatorias, inspectores generales y miembros de las fuerzas del orden público estatales y locales, quienes, trabajando juntos, aprovechan un poderoso espectro de recursos de aplicación legal criminal y civil. La fuerza de tarea está trabajando para mejorar la labor en todo el poder ejecutivo federal, y con asociados estatales y locales, para investigar y enjuiciar los delitos financieros importantes, asegurar un castigo justo y eficaz para quienes cometan delitos financieros, combatir la discriminación en los mercados de préstamos y financieros, y recuperar fondos para las víctimas de delitos financieros. Para obtener más información sobre la fuerza de tarea, visite www.StopFraud.gov. 10-1400 AntimonopoliosBank of America Agrees to Pay $137.3 Million in Restitution to Federal and State Agencies as a Condition of the Justice Department’s Antitrust Corporate Leniency ProgramRead the Press Release
Bank of America entities have agreed to pay a total of $137.3 million in restitution to federal and state agencies for its participation in a conspiracy to rig bids in the municipal bond derivatives market and as a condition of its admission into the Department of Justice’s Antitrust Corporate Leniency Program, the Department of Justice announced today.
Bank of America entered into agreements with the U.S. Securities and Exchange Commission (SEC), the Internal Revenue Service (IRS), the Office of the Comptroller of Currency (OCC), and 20 State Attorneys General. The global resolution with these federal and state entities provides for payment of restitution to the IRS and to municipalities harmed by Bank of America’s anticompetitive conduct in the municipal bond derivatives market. In a related matter, Bank of America entered into a written agreement with the Federal Reserve Board to address certain remedial measures.
According to agreements announced today, Bank of America employees engaged in illegal conduct, including bid rigging and other deceptive practices, in connection with the marketing and sale of tax-exempt municipal bond derivatives contracts.
Bank of America was the first and only entity to come forward and report its wrongdoing to the Department of Justice before the department opened its investigation into anticompetitive conduct in the municipal bond derivatives industry. The department’s ongoing investigation has resulted in charges against seven executives and one corporate entity and guilty pleas by eight executives for antitrust and related federal crimes. The investigation remains active and ongoing.
"The Department of Justice’s Antitrust Corporate Leniency Program is essential to our criminal enforcement of the antitrust laws," said Christine Varney, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. "Bank of America’s disclosure of wrongdoing and cooperation has led to an aggressive, ongoing investigation by the Department of Justice into anticompetitive activity in the municipal bond derivatives industry. The bank’s participation in the leniency program has also resulted in today’s resolution to address the harm caused by its wrongdoing. The Division’s investigation of this matter continues and the prosecution of anticompetitive conduct in the financial markets remains our highest priority."
As a condition of its admission into the Department of Justice’s Antitrust Corporate Leniency Program, Bank of America was required to be the first entity to self report the anticompetitive conduct, acknowledge its wrongdoing, provide ongoing cooperation in the investigation and make full restitution to the victims of the conspiracy. Bank of America continues to provide significant cooperation to the federal and state enforcement officials in their ongoing parallel investigations in the municipal bond derivatives industry.
The Department of Justice’s Antitrust Corporate Leniency Program is designed to deter and detect anticompetitive behavior. Through the Leniency Program, a corporation can avoid criminal conviction and fines, and individuals can avoid criminal conviction, prison terms and fines, if the corporation or individual is the first to report participation in a criminal antitrust violation and if other specified requirements of the program are met. The requirements of the program include self-reporting, acknowledgment of wrongdoing, full cooperation with the department’s investigation into the conduct, and payment of restitution to victims. The requirements provide the division with critical information to conduct investigations and enforce the criminal antitrust laws.
With the agreements announced today, Bank of America has met its obligation, under the Leniency Program, to pay full restitution to the IRS and municipalities based on anticompetitive conduct identified by these federal and state agencies. The bank’s agreements with the SEC, IRS, OCC and State Attorneys General represent the substantial benefits for victims that can result from the Department of Justice’s Antitrust Corporate Leniency Program, and reflect Bank of America’s commitment to address the harm caused by the conduct it discovered.
As a result of its voluntary disclosure of its anticompetitive conduct and its ongoing cooperation, Bank of America will not be required to pay penalties as a part of the agreements reached today. Upon successful completion of cooperation and other requirements of the Leniency Program, Bank of America and its current employees who have cooperated with the ongoing investigation will not be prosecuted by the Antitrust Division for the reported conduct. The Antitrust Division’s investigation regarding other entities and individuals continues.
More information about the Department of Justice’s Antitrust Corporate Leniency Program is available at: www.justice.gov/atr/public/criminal/leniency.htm.
The Antitrust Division and other agencies involved in this matter are part of the
Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit www.StopFraud.gov.
Monday 6 December 2010
UK Citizen Pleads Guilty to Conspiring to Bribe Nigerian Government Officials <br /> to Obtain Lucrative Contracts as Part of KBR Joint Venture SchemeRead the Press Release
WASHINGTON – Wojciech J. Chodan, a former commercial vice president and consultant to a United Kingdom subsidiary of Kellogg, Brown & Root Inc. (KBR), pleaded guilty today to conspiring to violate the Foreign Corrupt Practices Act (FCPA) for his participation in a decade-long scheme to bribe Nigerian government officials to obtain engineering, procurement and construction (EPC) contracts, the Department of Justice announced. The EPC contracts to build liquefied natural gas (LNG) facilities on Bonny Island, Nigeria, were valued at more than $6 billion.
Chodan, 72, a U.K. citizen, was extradited from the United Kingdom to the United States on Dec. 3, 2010, and pleaded guilty today in U.S. District Court in Houston before U.S. District Judge Keith P. Ellison to one count of conspiracy to violate the FCPA. Chodan was originally charged on Feb. 17, 2009. Sentencing has been scheduled for Feb. 22, 2011. Chodan faces a maximum penalty of 60 months in prison on the conspiracy charge. As part of his plea agreement, Chodan agreed to forfeit $726,885.
KBR, Technip S.A. (Technip), Snamprogetti Netherlands B.V. (Snamprogetti) and a Japanese engineering and construction company were part of a four-company joint venture that was awarded four EPC contracts by Nigeria LNG Ltd. (NLNG) between 1995 and 2004 to build LNG facilities on Bonny Island. Chodan admitted that from approximately 1994 through June 2004, he and his co-conspirators agreed to pay bribes to Nigerian government officials, including top-level executive branch officials, in order to obtain and retain the EPC contracts. Chodan recommended and agreed to the joint venture’s hiring of two agents, Jeffrey Tesler and a Japanese trading company, to pay the bribes. During the course of the bribery scheme, the joint venture paid approximately $132 million to a Gibraltar corporation controlled by Tesler and more than $50 million to the Japanese trading company. At crucial junctures preceding the award of EPC contracts, Chodan and his co-conspirators met with successive holders of a top-level office in the executive branch of the Nigerian government to ask the office holders to designate a representative with whom the joint venture should negotiate the bribes to Nigerian government officials.
In related cases, KBR’s former CEO, Albert "Jack" Stanley, pleaded guilty in September 2008 to conspiring to violate the FCPA for his participation in the bribery scheme, while KBR’s successor company, Kellogg Brown & Root LLC, pleaded guilty in February 2009 to FCPA-related charges for its participation in the scheme to bribe Nigerian government officials. Kellogg Brown & Root LLC was ordered to pay a $402 million fine and to retain an independent compliance monitor for a three-year period to review the design and implementation of its compliance program. In addition, Tesler was indicted in February 2009 on FCPA-related charges for his alleged participation in the bribery scheme, and the United States has requested his extradition from the United Kingdom.
In another related criminal case, the department filed a deferred prosecution agreement and criminal information against Technip on June 28, 2010. According to that agreement, Technip agreed to pay a $240 million criminal penalty and to retain an independent compliance monitor for two years. On July 7, 2010, the department filed a deferred prosecution agreement and criminal information against Snamprogetti Netherlands BV, which also agreed to pay a $240 million criminal penalty.
The case is being prosecuted by Assistant Chief William J. Stuckwisch and Deputy Chief Patrick F. Stokes of the Criminal Division’s Fraud Section, with investigative assistance from the FBI-Houston Division. The Criminal Division’s Office of International Affairs provided substantial assistance. Significant assistance was provided by the SEC’s Division of Enforcement and by authorities in France, Italy, Switzerland and the United Kingdom, including in particular the Crown Prosecution Service, the Serious Fraud Office’s International Assistance and Anti-Corruption Units, the London Metropolitan Police and the City of London Police.
Tres ciudadanos extranjeros han sido sentenciados a 23 meses en prisión cada uno por ardid de contrabando de extranjeros y fraude de visasRead the Press Release
WASHINGTON – Tres ciudadanos extranjeros fueron sentenciados cada uno a 23 meses en prisión hoy por sus papeles en una conspiración para realizar contrabando de extranjeros por ganancias monetarias y conspiración para cometer fraude de visa en un ardid de fraude de visas amplio y sofisticado a través del cual obtuvieron visas fraudulentamente en la Embajada de EE.UU. en Bogotá, Colombia.
Las sentencias fueron anunciadas por el Fiscal Federal Auxiliar Lanny A. Breuer de la División Criminal; el Fiscal Federal Ronald C. Machen Jr. del Distrito de Colombia; Eric J. Boswell, Secretario Auxiliar de Seguridad Diplomática y Director de la Oficina de Misiones Extranjeras, Departamento de Estado de EE.UU.; y el Director del Servicio de Inmigración y Control de Aduanas de EE.UU. [U.S. Immigration and Customs Enforcement (ICE)] John Morton.
La Juez Federal de Distrito Ellen S. Huvelle también ordenó a Heliber Toro Mejía, 52; Humberto Toro Mejía, 60; y Luz Elena Acuna Ríos, 53; todos de Bogotá, cumplir tres años de libertad bajo supervisión después de haber cumplido sus sentencias en prisión. La Juez Huvelle también emitió órdenes de expulsión para los demandados.
Los demandados se declararon culpables el 29 de septiembre de 2010 de un cargo de conspiración para cometer contrabando de extranjeros por ganancias monetarias y un cargo de conspiración para cometer fraude de visas. Fueron acusados en una acusación formal compuesta por tres cargos emitida por un gran jurado federal en el Distrito de Columbia el 4 de febrero de 2009. Los demandados fueron arrestados el 2 de junio de 2009 por autoridades colombianas en Bogotá a partir de órdenes provisionales de arresto en respuesta a una solicitud del gobierno de EE.UU. de su arresto, siendo luego extraditados a los Estados Unidos para su enjuiciamiento.
De acuerdo con el expediente judicial, Heliber Toro Mejía, Humberto Toro Mejía y Luz Elena Acuna Ríos admitieron que operaban una red amplia y sofisticada de fraude de visas al ayudar a ciudadanos colombianos que, de lo contrario, no serían admitidos, a conseguir visas fraudulentamente en la Embajada de EE.UU. en Bogotá. De acuerdo con los documentos de la declaración de culpabilidad, para respaldar las solicitudes de visas de solicitantes extranjeros, los demandados y otros conspiradores crearon antecedentes ficticios para los extranjeros y documentación de respaldo fraudulenta, incluidos documentos que parecían ser documentos oficiales emitidos por el gobierno colombiano, tales como declaraciones de impuestos y certificados de nacimiento y casamiento, registros de titularidad de propiedad y documentos de sociedades. De acuerdo con los documentos de la declaración de culpabilidad, los conspiradores instruyeron a los extranjeros con respecto a cómo aprobar la entrevista para la visa en la Embajada de EE.UU. en Bogotá al contestar preguntas de manera engañosa, así también cómo mentirles a las autoridades de inmigración de EE.UU. sobre sus antecedentes al ingresar a los Estados Unidos. Los demandados admitieron haber ayudado a más de 100 extranjeros a obtener o intentar obtener fraudulentamente una visa de EE.UU. durante la conspiración. De acuerdo con los documentos de la declaración de culpabilidad, muchos de dichos extranjeros que lograron obtener una visa de manera fraudulenta utilizaron dicha visa para entrar a los Estados Unidos.
Como parte de sus sentencias, se les ordenó a los demandados entregar activos relacionados con el ardid de contrabando de extranjeros y fraude de visas, incluida una oficina en Bogotá y $234,533 dólares del producto del ardid. Los demandados aceptaron asistir plenamente a los gobiernos de los Estados Unidos y la República de Colombia en la identificación y ubicación de toda propiedad directamente confiscable y activos sustitutos y transferirle el título de propiedad de propiedad directamente confiscable y activos sustitutos a los Estados Unidos. Si el gobierno de EE.UU. así lo solicita, los demandados también entregarán voluntariamente al gobierno de Colombia todo activo sujeto a confiscación como resultado de sus actividades delictivas.
Los cargos fueron el resultado de la "Operación país del café", una investigación internacional coordinada por el Servicio de Seguridad Diplomática - Oficina de Seguridad Regional en Bogotá y la Oficina del Agregado de Investigaciones de Seguridad Nacional [Homeland Security Investigations (HSI)] del ICE en Bogotá. El Servicio de Seguridad Diplomática - División de Investigaciones Criminales y el Agente Especial a Cargo de HSI del ICE en Washington, D.C. brindaron importante asistencia.
El gobierno de Colombia, incluido el Departamento Colombiano de Seguridad Administrativa y fiscales colombianos, brindaron asistencia y apoyo significativos durante la investigación, el arresto y la extradición de los demandados. La Oficina de Asuntos Internacionales de la División Criminal y la Embajada de EE.UU. en Bogotá trabajaron con sus colegas en Colombia para efectuar la extradición.
Están a cargo de la acusación en el caso el Abogado Litigante Principal James S. Yoon de la Sección de Derechos Humanos y Enjuiciamientos Especiales de la División Criminal y el Fiscal Federal Auxiliar Frederick W. Yette de la Fiscalía Federal para el Distrito de Columbia. La Abogada Litigante Nicolette Romano de la Oficina de Asuntos Internacionales de la División Criminal brindó significativa ayuda. La Abogada Litigante Principal Jean Weld de la Sección de Confiscación de Activos y Lavado de Dinero de la División Criminal y la Secretaria de Justicia Auxiliar Diane Lucas también brindaron asistencia.
Three Foreign Nationals Each Sentenced to 23 Months in Prison for Alien Smuggling and Visa Fraud SchemeRead the Press Release
WASHINGTON – Three foreign nationals each were sentenced today to 23 months in prison for their roles in a conspiracy to smuggle aliens for profit and conspiracy to commit visa fraud in an extensive and sophisticated visa fraud scheme through which they fraudulently procured visas from the U.S. Embassy in Bogotá, Colombia.
The sentences were announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Ronald C. Machen Jr. of the District of Columbia; Eric J. Boswell, Assistant Secretary for Diplomatic Security and Director of the Office of Foreign Missions, U.S. State Department; and Director John Morton of U.S. Immigration and Customs Enforcement (ICE).
U.S. District Judge Ellen S. Huvelle also ordered Heliber Toro Mejia, 52; Humberto Toro Mejia, 60; and Luz Elena Acuna Rios, 53; all of Bogotá, to serve three years of supervised release following their prison terms. Judge Huvelle also entered removal orders for the defendants.
The defendants pleaded guilty on Sept. 29, 2010, to one count of conspiracy to commit alien smuggling for profit and one count of conspiracy to commit visa fraud. They were charged in a three-count indictment returned by a federal grand jury in the District of Columbia on Feb. 4, 2009. The defendants were arrested on June 2, 2009, by Colombian authorities in Bogotá on provisional arrest warrants in response to a U.S. government request for their arrest and were subsequently extradited to the United States for prosecution.
According to court documents, Heliber Toro Mejia, Humberto Toro Mejia and Luz Elena Acuna Rios admitted that they operated an extensive and sophisticated visa fraud ring that profited by assisting otherwise inadmissible Colombian nationals in fraudulently procuring visas from the U.S. Embassy in Bogotá. According to plea documents, to support the visa applications of alien applicants, the defendants and other conspirators created fictitious backgrounds for the aliens and fraudulent supporting documentation, including paperwork that appeared to be official Colombian government-issued documents such as tax filings and birth and marriage certificates, property ownership records, and corporation documents. According to plea documents, the conspirators coached the aliens on how to pass the visa interview at the U.S. Embassy in Bogotá by answering questions untruthfully as well as how to lie to U.S. immigration authorities about their backgrounds when entering the United States. The defendants admitted to assisting more than 100 aliens in fraudulently obtaining or attempting to fraudulently obtain a U.S. visa during the course of the conspiracy. According to plea documents, many of those aliens who did obtain a fraudulently-procured visa used that visa to enter the United States.
As part of their sentences, the defendants were ordered to forfeit assets related to the alien smuggling and visa fraud scheme, including an office in Bogotá and $234,533 in proceeds. The defendants agreed to fully assist the governments of the United States and the Republic of Colombia in the identification and location of all directly forfeitable property and substitute assets and to pass clear title to directly forfeitable property and substitute assets to the United States. If requested by the U.S. government, the defendants also agreed to voluntarily forfeit to the government of Colombia any and all assets which are subject to forfeiture as the result of their criminal activities.
The charges were a result of "Operation Coffee Country," a coordinated international investigation by the Diplomatic Security Service - Regional Security Office in Bogotá and ICE Homeland Security Investigations (HSI) Attaché’s Office in Bogotá. The Diplomatic Security Service - Criminal Investigations Division and the ICE HSI Special Agent in Charge for in Washington, D.C. provided substantial assistance.
The government of Colombia, including the Colombian Department of Administrative Security and Colombian prosecutors, provided significant assistance and support during the investigation, arrest, and extradition of the defendants. The Criminal Division’s Office of International Affairs and the U.S. Embassy in Bogotá worked with their counterparts in Colombia to effect the extradition.
The case is being prosecuted by Senior Trial Attorney James S. Yoon of the Criminal Division’s Human Rights and Special Prosecutions Section and Assistant U.S. Attorney Frederick W. Yette of the U.S. Attorney’s Office for the District of Columbia. Significant assistance from the Criminal Division’s Office of International Affairs was provided by Trial Attorney Nicolette Romano. Senior Trial Attorney Jean Weld from the Criminal Division’s Asset Forfeiture and Money Laundering Section and Assistant U.S. Attorney Diane Lucas also provided assistance.
Financial Fraud Enforcement Task Force Announces Results of Largest-Ever Nationwide Operation Targeting Investment FraudRead the Press Release
WASHINGTON – Attorney General Eric Holder announced today the results of Operation Broken Trust, a nationwide operation organized by the Financial Fraud Enforcement Task Force to target investment fraud. To date, the operation has involved enforcement actions against 310 criminal defendants and 189 civil defendants for fraud schemes that harmed more than 120,000victims throughout the country. The operation’s criminal cases involved approximately $8.3 billion in estimated losses and the civil cases involved estimated losses of more than $2.1 billion. Operation Broken Trust is the first national operation of its kind to target a broad array of investment fraud schemes that directly prey upon the investing public.*
In announcing the results of Operation Broken Trust, Attorney General Holder was joined by FBI Executive Assistant Director Shawn Henry, U.S. Securities and Exchange Commission (SEC) Director of Enforcement Robert Khuzami, U.S. Postal Inspection Service (USPIS) Chief Postal Inspector Guy Cottrell, Deputy Chief Rick Raven of the Internal Revenue Service Criminal Investigation (IRS-CI), Acting Director of Enforcement Vince McGonagle of the U.S. Commodity Futures Trading Commission (CFTC), and other members of the Financial Fraud Enforcement Task Force.
The interagency Financial Fraud Enforcement Task Force was established by President Obama to lead an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. Starting on Aug. 16, 2010, within a three-and-a-half month period, Operation Broken Trust involved 211criminal cases and 60 civil enforcement actions. Ninety-onedefendants have been sentenced, including several sentences of more than 20 years in prison.
“With this operation, the Financial Fraud Enforcement Task Force is sending a strong message,” said Attorney General Holder. “To the public: be alert for these frauds, take appropriate measures to protect yourself, and report such schemes to proper authorities when they occur. And to anyone operating or attempting to operate an investment scam: cheating investors out of their earnings and savings is no longer a safe business plan - we will use every tool at our disposal to find you, to stop you, and to bring you to justice.”
“This operation highlights the scope of this problem, and its impact on individuals from all walks of life,” said FBI Executive Assistant Director Henry. “This one sweep alone involves fraud schemes that harmed more than 120,000 victims. The schemes may change, but the underlying greed does not. Working with our partners, we in the FBI will use all the investigative techniques in our arsenal, including undercover operations, to bring those responsible to justice.”
“Fraud by well-known companies or high-profile executives gets the biggest headlines, but other scams are equally devastating to hard working families and retirees,” said Robert Khuzami, Director of the SEC’s Division of Enforcement. “Victims want justice and don’t much care who the fraudster is or how unique the fraud. Today’s actions underscore that law enforcement agrees and will pursue fraud in whatever form.”
Enforcement actions taken as a result of Operation Broken Trust involve a range of different investment fraud schemes, all of which prey directly on the investing public. The operators of these schemes often promise high returns to investors, but engage in little to no legitimate investment activity. Such schemes include Ponzi schemes, affinity fraud, prime bank/high-yield investment scams, foreign exchange (FOREX) frauds, business opportunity fraud and other similar schemes. In some instances, operators of these schemes filed for bankruptcy in an attempt to avoid claims by victim-investors.
“The U.S. Postal Inspection Service has a long tradition of protecting postal customers from these types of investment and Ponzi scams and bringing those responsible to justice,” said USPIS Chief Postal Inspector Cottrell. “The Postal Inspection Service constantly strives to protect our customers and the general public from falling victim to these scams that claim millions of dollars every year.”
“The results announced today demonstrate the effectiveness of federal civil and criminal law enforcement in bringing to justice those who have engaged in financial fraud schemes,” said Acting Director McGonagle of the Division of Enforcement for CFTC. “The CFTC continues to devote substantial enforcement resources to combat financial fraud. We appreciate the partnership with the other members of the President’s Financial Fraud Enforcement Task Force to protect the public from financial fraudsters.”
“Securities and investment frauds are serious offenses which have brought financial ruin to many citizens. Promoters of Ponzi schemes prey upon trusting investors and then steal their hard earned money,” said Rick Raven, Deputy Chief, IRS Criminal Investigation. “IRS Criminal Investigation is proud to bring our forensic accounting skills to this joint venture with our law enforcement partners to put a stop to this and other types of white collar fraud.”
Operation Broken Trust was conducted in conjunction with various Department of Justice components – including the U.S. Attorney Offices, the FBI, the Criminal and Civil Divisions and the U.S. Trustee Program – as well as the SEC, USPIS, the CFTC, IRS-CI, the Federal Trade Commission, the U.S. Secret Service and the National Association of Attorneys General.
As a part of Operation Broken Trust, the task force is making the public aware of resources available to protect against these types of fraud and how to report fraud when it occurs. To learn more about investment scams, how to take steps to protect yourself from scams, or how to report investment fraud if you believe you have been victimized, go to StopFraud.gov. The website includes links to a wide array of task force member resources.
The President’s Financial Fraud Enforcement Task Force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit www.StopFraud.gov.
*Numbers updated as of Dec. 14, 2010.
Friday 3 December 2010
Tres ejecutivos de Florida West International Airways Inc. fueron acusados formalmente enconspiración para fijar tarifas en envíos de cargaaéreaRead the Press Release
WASHINGTON — Se emitió una acusación formal de un cargo tarde ayer en el Tribunal Federal de Miami acusando a la empresa con sede en Miami Florida West International Airways Inc., uno de sus ex ejecutivos y dos ejecutivos de una transportadora de carga aérea de la competencia de participación en una conspiración para fijar y coordinar ciertos componentes de envíos de carga aérea de Colombia a Miami, anunció hoy el Departamento de Justicia. Entre los componentes fijados estaban los sobreprecios cobrados en temporada alta antes del Día de San Valentín y el Día de las Madres, cuando aumentan las importaciones de flores frescas, así como sobreprecios de seguridad y combustible.
La acusación formal compuesta por un cargo acusa a Luis Augusto Afanador, Rodrigo Hernàn Hidalgo y Jaime Lara Rueda Sr. de conspiración para contener y eliminar a la competencia al fijar y coordinar ciertos componentes de tarifas de carga, incluidos temporadas altas, sobrecargos para seguridad y combustible para envíos aéreos internacionales de Colombia a Miami. El Departamento indicó que la conspiración comenzó por lo menos en enero de 2002 y siguió hasta por lo menos el 14 de febrero de 2006. Se acusa a Florida West de unirse a la conspiración y participar en la misma desde al menos agosto de 2002 y hasta al menos el 14 de febrero de 2006.
Las transportadoras de carga aérea transportan una variedad de carga, incluidas flores frescas, bienes de consumo y productos electrónicos en vuelos internacionales programados.
De acuerdo con la acusación formal, Florida West, Afanador, Hidalgo, Lara y coconspiradores participaron en reuniones, conversaciones y comunicaciones para discutir y acordar ciertos componentes de tarifas de carga y la eliminación de descuentos de Bogotá a Miami. Para facilitar los acuerdos realizados, Florida West, Afanador, Hidalgo, Lara y los coconspiradores estimularon a proveedores de carga aérea a que mantuvieran y aumentaran ciertos componentes de las tarifas de carga aérea para envíos de Miami a Bogotá. A fin de ampliar los acuerdos logrados, Florida West, Afanador, Hidalgo, Lara y los coconspiradores acordaron no competir para ciertos clientes de Medellín, Colombia, a Miami, a partir del verano de 2005. Como parte de la conspiración, Florida West, Afanador, Hidalgo, Lara y coconspiradores implementaron y observaron los acuerdos alcanzados, y aceptaron pagos por envíos a tarifas no competitivas e ilegales.
Afanador y Lara son ejecutivos principales de una transportadora de carga aérea colombiana en Bogotá. Hidalgo es un ex vicepresidente de ventas y publicidad de Florida West. Hidalgo fue acusado formalmente el 28 de octubre de 2010 por un gran jurado en Miami de participar en una conspiración separada para fijar sobrecargos en envíos de carga aérea de los Estados Unidos a América del Sur y Central después de los Huracanes Katrina y Rita en 2005. Dicho cargo está pendiente.
Florida West, Afanador, Hidalgo y Lara han sido acusados de fijar precios en violación de la Ley Sherman, lo que conlleva una multa máxima criminal de $100 millones de dólares para una empresa y una sentencia máxima de 10 años en prisión y una multa criminal de $1 millón de dólares para cada persona. La multa máxima puede aumentar al doble de las ganancias originadas en el delito o el doble de las pérdidas sufridas por las víctimas del delito, si cualquiera de dichas sumas es superior a la multa máxima legal.
Incluidos Florida West, Afanador, Hidalgo y Lara, como resultado de esta investigación, un total de 21 líneas aéreas y 19 ejecutivos han sido acusados en la investigación en curso del Departamento de Justicia de la fijación de precios en el ramo del transporte aéreo. Hasta la fecha, se han impuesto más de $1.7 billones de dólares en multas criminales y cuatro ejecutivos han sido sentenciados a sentencias en prisión. Los cargos contra los 15 restantes ejecutivos están pendientes.
La investigación conjunta del ramo del transporte aéreo está siendo realizada por la Sección Nacional de Control Criminal de la División Antimonopolios y la Oficina Local de Chicago, las oficinas locales del FBI en Miami y Washington, la Oficina del Inspector General del Departamento de Transportación de E.U. y la Oficina del Inspector General del Servicio Postal de EE.UU. Se insta a cualquier persona con información sobre fijación de precios o cualquier otra conducta anticompetitiva en el ramo del transporte aéreo que llame a la Sección Nacional de Control Criminal de la División Antimonopolios al (202) 307-6694 o la Oficina Local de Chicago al (312) 353-7530, visite www.justice.gov/atr/contact/newcase.htm, o llame a la Oficina Local de Miami el FBI al (305) 654-1918.
President Barack Obama Grants PardonsRead the Press Release
WASHINGTON – Today President Barack Obama granted pardons to the following nine individuals:
- James Bernard Banks - Liberty, Utah
Offense: Illegal possession of government property; 18 U.S.C. § 641.
Sentence: Oct. 31, 1972; District of Utah; two years of probation.- Russell James Dixon - Clayton, Ga.
Offense: Felony liquor law violation; 26 U.S.C. § 5604(a)(1).
Sentence: June 23, 1960; Northern District of Georgia; two years of probation.- Laurens Dorsey - Syracuse, N.Y.
Offense: Conspiracy to defraud the United States by making false statements to the U.S. Food and Drug Administration; 18 U.S.C. §§ 371, 1001.
Sentence: Aug. 31, 1998; District of New Jersey; five years of probation and $71,000 restitution.
- Ronald Lee Foster - Beaver Falls, Penn.
Offense: Mutilation of coins; 18 U.S.C. § 331.
Sentence: Oct. 4, 1963; Eastern District of North Carolina; one year of probation and $20 fine.- Timothy James Gallagher - Navasota, Texas
Offense: Conspiracy to distribute and possess with intent to distribute cocaine; 21 U.S.C. § 846.
Sentence: Oct. 18, 1982; District of Arizona; three years of probation.- Roxane Kay Hettinger - Powder Springs, Ga.
Offense: Conspiracy to distribute cocaine; 21 U.S.C. §§ 841(a)(1) and 846.
Sentence: March 31, 1986; Northern District of Iowa; 30 days in jail followed by three years of probation.- Edgar Leopold Kranz Jr. - Minot, N.D.
Offense: Wrongful use of cocaine, adultery and writing three insufficient fund checks; Articles 112a and 134, Uniform Code of Military Justice.
Sentence: Sept. 14, 1994, as approved Nov. 4, 1994; General court-martial convened at Hickam Air Force Base, Hawaii; bad conduct discharge (suspended), 24 months of confinement and reduction to pay grade E-1.
- Floretta Leavy - Rockford, Ill.
Offense: Distribution of cocaine, conspiracy to distribute cocaine, possession of marijuana with intent to distribute, and possession of cocaine with intent to distribute; 21 U.S. C. §§ 841(a)(1), (a)(2) and 846, 18 U.S.C. § 2.
Sentence: Oct. 19, 1984; District of Kansas; one year and one day in prison and three years of special parole.
- Scoey Lathaniel Morris - Crosby, Texas
Offense: Passing counterfeit obligations or securities; 18 U.S.C. §§ 472 and 2.
Sentence: May 21, 1999; Western District of Texas; three years of probation and $1,200 restitution, jointly and severally.Justice Department Reaches Agreement to Correct Conditions at Lake County JailRead the Press Release
WASHINGTON – The Justice Department today announced that it has entered into an agreement with Lake County, Ind., and the Lake County Sheriff to resolve its complaint concerning conditions of confinement at the Lake County Jail (LCJ). LCJ is located in Crown Point, Ind., and houses approximately 1,050 adult male and female inmates.
Under the terms of the settlement agreement, Lake County will implement remedial measures to ensure that inmates at LCJ are safe and receive the services necessary to meet their constitutional rights. Some of these measures include provisions to protect inmates from harm due to suicide and the excessive use of force, and comprehensive relief in a wide range of important areas, including medical care, mental health care, fire and life safety and sanitation. The agreement also provides for improved training for staff and reform of policies, procedures and practices. The department will monitor compliance with the settlement agreement.
"It is a jurisdiction’s basic responsibility to protect those persons in its custody from harm and to uphold their constitutional rights," said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. "We commend county officials for their willingness to work aggressively to remedy these problems."
The Civil Rights of Institutionalized Persons Act (CRIPA) authorizes the department to investigate conditions of confinement in certain institutions owned or operated by, or on behalf of, state and local governments. In addition to psychiatric hospitals, these institutions include nursing homes, residential facilities serving persons with developmental disabilities, jails, prisons and juvenile correctional facilities. CRIPA’s focus is on systemic deficiencies rather than individual, isolated problems. Please visit www.justice.gov/crt to learn more about CRIPA and other laws enforced by the Justice Department’s Civil Rights Division.
Former Federal Correctional Officer Pleads Guilty to Civil Rights Violation and Obstruction of JusticeRead the Press Release
WASHINGTON – Benjamin Montgomery, a former correctional officer at the U.S. Penitentiary in Atlanta pleaded guilty today to a two-count information charging him with civil rights crimes for assaulting an inmate and for subsequently writing a false report about the incident.
According to the charging document and information presented in court, on June 2, 2010, Montgomery, while working as a correctional officer in the penitentiary, physically assaulted an inmate without legal justification and thereby violated the inmate’s constitutional right to be free from cruel and unusual punishment. Additionally, Montgomery admitted that following the incident, he wrote a memorandum to his supervisor about his use of force in which he falsely accused the inmate of making aggressive movements toward Montgomery. Montgomery agreed he wrote the false memorandum in an attempt to impede the investigation of the inmate’s complaint.
“Correctional officers are entrusted to perform their critical public safety duties and not to abuse the civil and constitutional rights of inmates under their supervision,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “Those officers who abuse their power and public trust will be prosecuted to the fullest extent of the law.”
U.S. Attorney Sally Quillian Yates said, "We recognize that correctional officers have a difficult job as they guard and protect inmates in our federal prisons. But under no circumstances can we allow an officer to abuse his power to commit violent and unnecessary assaults on an inmate, nor can we stand by and allow that officer to obstruct our investigations. The U.S. Attorney’s Office is committed to vigorously investigating and prosecuting any law enforcement officer who engages in such conduct.”
Montgomery is scheduled to be sentenced on Feb. 24, 2011. The defendant faces a maximum sentence of 10 years in prison on the deprivation of rights charge and 20 years in prison on the obstruction of justice charge. Each count also carries a maximum fine of $250,000.
This case was investigated by the Department of Justice’s Office of Inspector General. It is being prosecuted by Assistant U.S. Attorney Brent Gray and Trial Attorney Nicole Lee Ndumele of the Department of Justice’s Civil Rights Division.
Former Employee of Florida Property Management Company Pleads Guilty to Wire FraudRead the Press Release
WASHINGTON — A former residential sales manager at a Florida property management company pleaded guilty to wire fraud in connection with housing repair contracts for the U.S. Department of Veterans Affairs (VA), the Department of Justice announced today.
Benjamin K. Graves, formerly a residential sales manager at West Palm Beach, Fla.-based Ocwen Loan Servicing LLC, pleaded guilty today in U.S. District Court in Orlando, Fla., to wire fraud. According to the one-count felony charge filed on Nov. 12, 2010, in the Middle District of Florida, Ocwen managed foreclosed properties under contract with the VA, which guaranteed qualifying residential mortgages for veterans. Under the contract between the VA and Ocwen, if a veteran defaulted, Ocwen completed necessary repairs and re-sold the property.
According to the court document, Graves engaged in fraud by steering the repair contracts to companies affiliated with a particular contractor, in exchange for cash payments, from at least as early as January 2006 and continuing until at least as late as March 2007. The department said, in order to execute the scheme, Graves sent competitive bid information to the contractor and transmitted sham bids to Ocwen via wire communication.
The wire fraud charge carries a maximum penalty of 20 years in prison and a maximum fine of $250,000. 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.
Graves’s guilty plea is the first to arise from an ongoing federal investigation of housing repair contracts performed under contract with the VA. The investigation is being conducted by the Antitrust Division’s Chicago Field Office and the Central Field Office of the U.S. Department of Veterans Affairs, Office of Inspector General, Criminal Investigations Division, located in Hines, Ill. Anyone with information concerning suspicious activity relating to housing repairs performed under a contract with the VA should contact the Antitrust Division’s Chicago Field Office at 312-353-7530 or visit www.justice.gov/atr/contact/newcase.htm.
Florida West International Airways Inc., Three Executives Indicted in Conspiracy to Fix Rates on Air Cargo ShipmentsRead the Press Release
WASHINGTON — A one-count indictment was returned late yesterday in U.S. District Court in Miami charging Miami-based Florida West International Airways Inc., one of its former executives and two executives of a competing air cargo carrier with participating in a conspiracy to fix and coordinate certain components of air cargo shipments from Colombia to Miami, the Department of Justice announced today. Among the components fixed were peak season surcharges imposed before Valentine’s Day and Mother’s Day, when imports of fresh-flowers increase, as well as security and fuel surcharges.
The one-count indictment charges Luis Augusto Afanador, Rodrigo Hernan Hidalgo and Jaime Lara Rueda Sr. with conspiring to suppress and eliminate competition by fixing and coordinating certain components of cargo rates, including peak season, security and fuel surcharges for international air shipments from Colombia to Miami. The department said the conspiracy began at least as early as January 2002 and continued until at least Feb. 14, 2006. Florida West is charged with joining and participating in the conspiracy from at least as early as August 2002 and continuing until at least Feb. 14, 2006.
Air cargo carriers transport a variety of cargo, including fresh flowers, consumer goods, and electronics, on scheduled international flights.
According to the indictment, Florida West, Afanador, Hidalgo, Lara and co-conspirators participated in meetings, conversations and communications to discuss and agree on certain components of cargo rates and the elimination of discounts from Bogota to Miami. To facilitate the agreements reached, Florida West, Afanador, Hidalgo, Lara and co-conspirators discussed encouraging air cargo providers to maintain and increase certain components of air cargo rates for shipments from Miami to Bogota. In order to expand the agreements reached, Florida West, Afanador, Hidalgo, Lara and co-conspirators agreed not to compete for certain customers from Medellin, Colombia, to Miami beginning in the summer of 2005. As part of the conspiracy, Florida West, Afanador, Hidalgo, Lara and co-conspirators implemented and monitored the agreements reached, and accepted payments for shipments at collusive and noncompetitive rates.
Afanador and Lara are senior executives of a Colombian air cargo carrier based in Bogota. Hidalgo is a former vice president of sales and marketing for Florida West. Hidalgo was indicted on Oct. 28, 2010, by a Miami grand jury for participating in a separate conspiracy to fix surcharges on air cargo shipments from the United States to South and Central America following Hurricanes Katrina and Rita in 2005. That charge is pending.
Florida West, Afanador, Hidalgo and Lara are charged with price fixing in violation of the Sherman Act, which carries a maximum $100 million criminal fine for a corporation and a maximum penalty for each individual of 10 years in prison and a $1 million criminal fine. 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.
Including Florida West, Afanador, Hidalgo and Lara, as a result of this investigation, a total of 21 airlines and 19 executives have been charged in the Justice Department’s ongoing investigation into price fixing in the air transportation industry. To date, more than $1.7 billion in criminal fines have been imposed and four executives have been sentenced to serve prison time. Charges are pending against the remaining 15 executives.
The joint investigation into the air transportation industry is being conducted by the Antitrust Division’s National Criminal Enforcement Section and Chicago Field Office, the FBI’s field offices in Miami and Washington, the Department of Transportation’s Office of Inspector General and the U.S. Postal Service’s Office of Inspector General. Anyone with information concerning price fixing or other anticompetitive conduct in the air transportation industry is urged to call the Antitrust Division’s National Criminal Enforcement Section at 202-307-6694 or the Chicago Field Office at 312-353-7530, visit www.justice.gov/atr/contact/newcase.htm or call the FBI’s Miami Field Office at 305-654-1918.
Department of Justice and USDA Announce Agenda for December 8 Margins WorkshopRead the Press Release
WASHINGTON — The Department of Justice and the U.S. Department of Agriculture (USDA) announced today the agenda and panelists for the Dec. 8, 2010, joint public workshop on margins in agriculture. This workshop, the last in a series of five, is focused on the margins at various levels of the agricultural supply chain.
The workshop will be held in the Jefferson Auditorium of USDA’s South Building, 1400 Independence Avenue S.W., Washington, D.C. Attendance is free and open to the public. The general public and media interested in attending the workshop should register at www.surveymonkey.com/s/marginsworkshop.
The workshop will begin with opening remarks by U.S. Attorney General Eric Holder and U.S. Agriculture Secretary Tom Vilsack. Following the introduction, there will be four panels composed of producers, academics and other industry stakeholders. First, Secretary Vilsack, Attorney General Holder and Assistant Attorney General for the Justice Department’s Antitrust Division Christine Varney, will moderate a discussion that includes participants at each level of the agricultural supply chain. Second, a panel on margins in the dairy industry will look at the costs and profits from farmers to retailers. The third panel of the day will look at issues in the retail sector, examining concentration, margins and similar trends. The final panel will discuss margins in the livestock and poultry industries. The workshop will conclude with remarks from Assistant Attorney General Varney.
Additionally, there will be two hours dedicated to public testimony. This will be split into two sessions, one at mid-day and the other after the final panel.
The schedule for the day is as follows:
8:30 a.m - 8:45 a.m. EST Opening Remarks
Eric Holder, Attorney General, U.S. Department of Justice
Tom Vilsack, Secretary of Agriculture, U.S. Department of Agriculture
Christine Varney, Assistant Attorney General, Antitrust Division, U.S. Department of Justice8:45 a.m. - 10:00 a.m. EST Panel I - Industry Dynamics from Farm to Consumers
Panelists will offer their perspective on supply chain issues that impact producers, processors, retailers and consumers.
Moderators: Eric Holder, Attorney General, U.S. Department of Justice
Tom Vilsack, Secretary of Agriculture, U.S. Department of Agriculture
Christine Varney, Assistant Attorney General, Antitrust Division, U.S. Department of JusticeBen Burkett, producer and local distributor, Mississippi Association of Cooperatives
Barry Carpenter, chief executive officer, National Meat Association
Erik Lieberman, regulatory counsel, Food Marketing Institute
Vaughn Meyer, cattle producer, South Dakota
Dan Vincent, president and chief executive officer, Pacific Coast Producers
Christopher Waldrop, director, Food Policy Institute, Consumer Federation of America10:00 a.m. - 10:30 a.m. EST Coffee Break
10:30 a.m. - 11:30 a.m. EST Panel II - Margins in the Dairy IndustryThis panel will discuss the various levels of the dairy supply chain, offering explanations for recent trends and the effects of these trends.
Moderator: Mark Tobey, Special Counsel for Agriculture and State Relations, Antitrust Division, U.S. Department of Justice
Eunice Biel, dairy producer, Minnesota
David DeSantis, chief of enforcement and accounting, Pennsylvania Milk Marketing Board
Buster Goff, dairy producer, New Mexico
Rigoberto Lopez, professor of economics, University of Connecticut
Chuck Nicholson, professor of agribusiness, California Polytechnic State University
11:30 a.m. - 12:30 p.m. EST Public Testimony12:30 p.m. - 1:15 p.m. EST Lunch
1:15 p.m. - 2:45 p.m. EST Panel III – Issues in Food Retailing
This panel will examine retailing sector trends and incentives relating to supply arrangements, product placement and consumer choice, and possible explanations on how they have occurred and the impact on all levels of the supply chain.
Moderator: Sharis Arnold Pozen, Chief of Staff, Antitrust Division, U.S. Department of Justice
Albert A. Foer, president, American Antitrust Institute
Wenonah Hauter, executive director, Food & Water Watch
Mary Hendrickson, extension associate professor of rural sociology, University of Missouri
Erik Lieberman, regulatory counsel, Food Marketing Institute
Howard Shelanski, deputy director for antitrust, Bureau of Economics, Federal Trade Commission
Kyle Stiegert, professor of economics, University of Wisconsin
Alvin Vincent, Jr., region 2 director, United Food & Commercial Workers International Union
Tom Wenning, executive vice president and general counsel, National Grocers Association
Bob Young, chief economist, American Farm Bureau Federation2:45 p.m. - 3:00 p.m. EST Break
3:00 p.m. - 4:00 p.m. EST Panel IV - Margins in the Livestock and Poultry Industries
This panel will look at trends in the beef, pork and poultry industries. Panelists will discuss the division of the retail dollar, possible explanations for changes and the margins in which the market participants operate in general.
Moderator: James MacDonald, Chief, Agricultural Structure and Productivity Branch, Economic Research Service, U.S. Department of Agriculture
John Crespi, professor of economics, Kansas State University
Allen Lund, cattle producer, North Dakota
Valerie Ruddle, poultry grower, West Virginia
C. Robert Taylor, professor of economics, Auburn University
Eugene Versteeg, pork producer, Iowa
Michael Wohlgenant, professor of economics, North Carolina State University4:00 p.m. - 4:05 p.m. EST Introduction of Public Testimony and Concluding Remarks
Christine Varney, Assistant Attorney General, Antitrust Division, U.S. Department of Justice
4:05 p.m. - 5:00 p.m. EST Public Testimony
Additional information, including submitted public comments and transcripts for past workshops can be found at the Antitrust Division’s agriculture workshop website at www.justice.gov/atr/public/workshops/ag2010/index.htm. While no streaming webcast will be available, transcripts and video will be available for this workshop at a later date on the Antitrust Division’s website. Individuals seeking more information on the workshops should contact [email protected].
Media who wish to attend the workshop may begin arriving at 7:00 a.m. EST and cameras must be pre-set by 7:30 a.m. EST. The closest Metro station to the Jefferson Auditorium of USDA’s South Building is Smithsonian.