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23 July 2012
U.S. Restrains More Than $3 Million in Corruption Proceeds Related to Former Governor of NigeriaRead the Press Release
WASHINGTON – Through an application to register and enforce two orders from United Kingdom courts, the Department of Justice has secured a restraining order against more than $3 million in corruption proceeds located in the United States related to James Onanefe Ibori, the former governor of Nigeria’s oil-rich Delta State, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Immigration and Customs Enforcement (ICE) Director John Morton.
The application, which was filed under seal on May 16, 2012, in U.S. District Court in the District of Columbia, seeks to restrain assets belonging to Governor Ibori and Bhadresh Gohil, Ibori’s former English solicitor, that are proceeds of corruption. Specifically, it seeks to restrain a mansion in Houston and two Merrill Lynch brokerage accounts. U.S. District Judge Lamberth granted the application and issued a restraining order under seal on May 21, 2012. The department was notified today that its application to unseal the restraining order was granted.The United States is working with the United Kingdom’s Crown Prosecution Service and the Metropolitan Police Service to forfeit these corruption proceeds.
According to the application, Governor Ibori served as the governor of Nigeria’s oil-rich Delta State from 1999 to 2007, and misappropriated millions of dollars in Delta State funds. He laundered those proceeds through a myriad of shell companies, intermediaries and nominees in several jurisdictions, including the United Kingdom, with the help of Gohil. Although Nigeria’s Constitution prohibits state governors from maintaining foreign bank accounts and serving as directors of private companies, Governor Ibori and his associates accumulated millions of dollars in assets in the United Kingdom and the United States, according to the application.
Governor Ibori was convicted in the United Kingdom of money laundering and conspiracy to defraud and was sentenced by a British court on April 18, 2012, to 13 years in prison. Gohil was also convicted in November 2010 of money laundering and prejudicing a money laundering investigation and was sentenced by a British court to 10 years in prison.
“Instead of working to benefit the people of the Nigerian Delta, Governor Ibori pilfered state funds and accumulated immense wealth in the process,” said Assistant Attorney General Breuer. “He conspired with Mr. Gohil to funnel millions of dollars in corruption proceeds out of Nigeria and into bank accounts and assets maintained in the names of shell companies and nominees. Through the Criminal Division’s Kleptocracy Asset Recovery Initiative, our message is clear: the United States will not be used as a safe haven for the ill-gotten gains of corrupt foreign officials.”
“This serves as a warning to those corrupt foreign officials who abuse their power for personal financial gain and then attempt to place those funds in the U.S. financial system,” said ICE Director Morton. “ICE’s Homeland Security Investigations (HSI) special agents will continue to work with our law enforcement partners at the Department of Justice Criminal Division’s Asset Forfeiture and Money Laundering Section to investigate and prosecute those involved in such illicit activities and hold corrupt foreign officials accountable by denying them the satisfaction of their illegal earnings.”
The case is being prosecuted by trial attorneys Woo S. Lee and Elizabeth Aloi of the Criminal Division’s Asset Forfeiture and Money Laundering Section. The case was investigated by ICE HSI’s Foreign Corruption Investigations Group, HSI Asset Identification and Removal Group in Miami and HSI Attaché London.
This case is part of the Justice Department’s Kleptocracy Asset Recovery Initiative. This initiative is carried out by a dedicated team of prosecutors in the Criminal Division’s Asset Forfeiture and Money Laundering Section, working in partnership with federal law enforcement agencies to forfeit the proceeds of foreign official corruption and where appropriate return those proceeds to benefit those harmed.
Individuals with information about possible proceeds of foreign corruption located in or laundered through institutions in the United States should contact federal law enforcement or send an email to [email protected].
ICE HSI’s Foreign Corruption Investigations Group in Miami targets corrupt foreign officials around the world that attempt to utilize U.S. financial institutions to launder illicit funds. The group conducts investigations into the laundering of proceeds emanating from foreign public corruption, bribery or embezzlement. The objective is to prevent foreign derived ill-gotten gains from entering the U.S. financial infrastructure, to seize identified assets in the United States and repatriate these funds on behalf of those affected by foreign official corruption.
Three Men Sentenced in Houston for Federal Hate Crimes Related to the Assault of African-American ManRead the Press Release
WASHINGTON – The Justice Department announced that Charles Cannon, 26, Michael McLaughlin, 41, and Brian Kerstetter, 33, were sentenced today by U.S. District Judge Kenneth Hoyt in Houston for their racially motivated assault of a 29-year-old African-American man.
Kerstetter was sentenced to 77 months in prison followed by three years of supervised release. Cannon was sentenced to 37 months in prison followed by three years of supervised release. And McLaughlin was sentenced to 30 months in prison followed by three years of supervised release.
On April 16, 2012, a federal jury found the defendants guilty of violating the Matthew Shepard and James Byrd Jr. Hate Crimes Prevention Act, which was enacted in October 2009. The evidence at trial established that on Aug. 13, 2011, the defendants approached the victim, who was waiting at a bus stop in downtown Houston. All three defendants were shirtless to display their tattoos known to reflect white supremacist beliefs. To further antagonize the victim, at least one defendant referred to the victim using a racial slur, and the defendants then surrounded and attacked the victim by punching and kicking him in the face, head and body. The defendants were arrested at the scene after a passerby called 911.
“James Byrd was murdered 14 years ago not far from Houston because he was African American, and today these defendants have been sentenced under the critical new law enacted in his name for viciously attacking an African-American because of the color of his skin,” said Thomas E. Perez, Assistant Attorney General of the Civil Rights Division. “It is a sad reality that violent acts of hate committed because of someone’s race are not a thing of the past, and the department will continue to use every available tool to identify and prosecute hate crimes whenever and wherever they occur.”
“The passage of the Matthew Shepard and James Byrd Jr. Hate Crimes Prevention Act of 2009 provided a powerful tool to law enforcement,” said Special Agent in Charge Stephen L. Morris of the FBI’s Houston Field Office. “With today’s sentencing, the message is clear. Our communities will not tolerate hate, and individuals who commit such despicable bias-motivated crimes have been put on notice. They will be brought to justice and prosecuted to the full extent of the law.”
This case was investigated by the Houston Division of the FBI in cooperation with the Houston Police Department. Assistance was also provided by the Harris County, Texas, District Attorney’s Office. The case was prosecuted by Trial Attorney Saeed Mody and Special Litigation Counsel Gerard Hogan of the Civil Rights Division of the Department of Justice.
Las Vegas Lawyer Pleads Guilty to Tax EvasionRead the Press Release
Charles C. LoBello, a Nevada-licensed attorney who practices business and personal injury law in Las Vegas, pleaded guilty in federal court to one count of tax evasion, the Justice Department and Internal Revenue Service (IRS) announced today. U.S. District Court Judge James Mahan presided over the plea hearing.
On June 22, 2010, a federal grand jury returned an indictment against LoBello, charging him with five counts of tax evasion and five counts of filing false personal income tax returns, for the tax years 2001 through 2005.
According to court documents, LoBello concealed over $900,000 in income from the United States, intentionally gave incomplete information to his bookkeeper and tax return preparer, and used personal checking accounts to hide large checks he received as legal fees. In the plea agreement, LoBello admitted that for the years 2001 through 2005 he owed an additional $260,625 in income taxes.
Sentencing is scheduled for Oct. 23, 2012. LoBello faces a maximum potential sentence of five years in prison and a fine of up to $250,000. According to the plea agreement, LoBello has agreed to pay restitution in the amount of $260,625 to the IRS, which represents his unpaid personal income tax liability for 2001 through 2005. He also agreed to pay all applicable interest and penalties on that tax liability.
Kathryn Keneally, Assistant Attorney General for the Justice Department’s Tax Division, thanked special agentsof IRS – Criminal Investigation, who investigated the case, assisting IRS revenue agents, and Tax Division Trial Attorneys Thomas W. Flynn, John P. Scully and Dennis R. Kihm, who prosecuted the case.
Florida Tax Preparer Sentenced to Federal Prison<br /> <br /> for Stolen Identity Refund FraudRead the Press Release
Ernst Pierre, a Port St. Lucie, Fla., tax preparer, was sentenced today to 51 months in federal prison for wire fraud and aggravated identity theft, the Justice Department and Internal Revenue Service – Criminal Investigation (IRS-CI) announced. Pierre was charged with a scheme to file false federal income tax returns using stolen identity information. Pierre was also ordered to pay over $266,000 in restitution to the IRS.
According to the indictment and Pierre’s admissions as part of his guilty plea, from October 2009 through May 2011, Pierre filed false tax returns for clients of Tax Max, a Port St. Lucie tax return preparation business he owned and operated. Pierre obtained the names and Social Security numbers of relatives of clients for whom he had prepared and submitted federal income tax returns and then fraudulently used those names and Social Security numbers as “dependents” on other client tax returns and on his own tax return. Pierre used these dependents to fraudulently inflate tax refunds.
Kathryn Keneally, Assistant Attorney General for the Justice Department’s Tax Division, thanked special agents of IRS-CI, who investigated the case, and Tax Division Trial Attorneys Justin K. Gelfand and Thomas J. Krepp, who prosecuted the case.
Attorney General Eric Holder and Philadelphia Mayor Michael Nutter Announce Partnership to Combat Violent CrimeRead the Press Release
Attorney General Eric Holder and Philadelphia Mayor Michael Nutter today announced the Department of Justice (DOJ) and city of Philadelphia’s Violent Crime Reduction Partnership (VCRP), which directs additional federal agents and technological resources to assist local law enforcement in combating violent crime. Attorney General Holder and Mayor Nutter were joined by VCRP participating agency leaders: U.S. Attorney for the Eastern District of Pennsylvania Zane David Memeger, Philadelphia Police Commissioner Charles Ramsey, Philadelphia District Attorney Seth Williams, Special Agents-in-Charge for the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), FBI, the Drug Enforcement Administration (DEA) and the U.S. Marshal for the Eastern District of Pennsylvania.
The VCRP, which was formed on June 4, 2012, is made up of more than 50 federal law enforcement officials, including agents, investigators and intelligence analysts and representatives of the Justice Department’s Criminal Division. These federal agents are working in close collaboration with the Philadelphia Police Department and Philadelphia District Attorney’s Office to prevent and combat violent and drug-related crime across the Philadelphia metropolitan area. During this four-month “surge” of federal law enforcement resources, these federal agencies are helping to build capacity, enhance training, coordinate community outreach efforts, bolster intelligence analysis capabilities and helping plan and execute sophisticated criminal investigations and prosecutions. Additionally, federal funding for the VCRP initiative provides new, state-of-the-art equipment designed to support ballistics identification in gun-related crimes. One such device is called the Integrated Ballistics Identification System which has the latest automation features and 3-D imaging technology, allowing firearms examiners to capture higher quality images of cartridge cases enhancing the ability of the Philadelphia Police Department and its partners to solve violent gun-related crimes.
In just the past six weeks, the partnership is already producing results. To date, VCRP has seized more than 80 firearms and netted more than 300 arrests for violent crime, drug, firearm and other offenses. As federal agencies are working closely with the Philadelphia Police Department in the target neighborhoods, the majority of those cases are being prosecuted in the local court system. The most recent federal case resulting from the ongoing VCRP arose on July 18, 2012, when ATF agents and Philadelphia police officers arrested eight suspects who were allegedly planning an armed robbery of drug traffickers. Each of the eight defendants in U.S. v. Whitfield was charged by criminal complaint.
“In these times of budgetary challenges - when police departments and other agencies are confronting growing demands with increasingly limited resources – the need for coordination among all relevant authorities has never been more critical,” said Attorney General Holder. “This surge of federal resources in Philadelphia – as well as others going on in certain cities -- will enhance our ability to work with local law enforcement by targeting federal agents and others to the areas where they're most needed so that we can better protect these communities.”
“The Violent Crime Reduction Partnership is the next stage in efforts by the Philadelphia Police Department, federal law enforcement partners like ATF, DEA, FBI and U.S. Marshals, and prosecutorial agencies like the District and U.S. Attorney's Offices, to target the most violent offenders in the City of Philadelphia and bring them to justice,” said Mayor Nutter. “We are grateful for the partnership and support of Attorney General Eric Holder and the entire Department of Justice as we work together to make the streets of our city safer.”
“The Violent Crime Reduction Partnership is already proving to be an effective tool for investigating and prosecuting serious violent offenders in Philadelphia’s highest crime neighborhoods,” said U.S. Attorney Memeger. “As U.S. Attorney, I remain committed to improving the quality of life for the citizens of my district, particularly for those who should not have to live with rampant violence and drug trafficking in their neighborhoods. My office will continue to support Police Commissioner Ramsey and the city of Philadelphia to combat the violence and other crimes that plague the city. I would like to commend the tireless efforts of the agents working for ATF, FBI, DEA and the Marshals Service who are making this initiative a success.”
“ATF, along with the Philadelphia Police Department and our DOJ partners, will focus on those who have no qualms about diminishing the quality of life in Philadelphia,” said ATF Special Agent-in-Charge Sheree L. Mixell. “Those violent career criminals who illegally possess, purchase and use firearms to carry out their criminal activities, will be identified and targeted for federal prosecution through this very important initiative.”
“The FBI, in this joint and coordinated effort to attack violent crime in Philadelphia, will work with our partners to disrupt and dismantle the criminal enterprises and organizations that seek to profit from violent crimes,” said FBI Special Agent-in-Charge of the Philadelphia Division George C. Venizelos. “This joint initiative not only rids our communities of criminal predators, but also sends the clear message that federal, state, county and local law enforcement agencies are working together to aggressively address the violent crime and drug problems that plague our communities.”
“Gun violence in Philadelphia has taken the lives of many people and brought pain and suffering to many families,” said Acting Special Agent-in-Charge of the DEA Philadelphia Division Vito S. Guarino. “Guns are frequently used by drug traffickers and organizations to protect their drugs, cash, territory, and also to intimidate citizens from providing information to police and to deter them from testifying in court. The DEA has committed its investigative resources to the Philadelphia Police Department and is working cooperatively along with other federal partners to confront gun violence and make Philadelphia the safe city that its citizens deserve.”
“The U.S. Marshals Service is committed to supporting the surge and improving the safety of the citizens of Philadelphia by continually targeting and apprehending the most dangerous fugitive felons, particularly those wanted for violent gun crimes,” said U.S. Marshal for the Eastern District of Pennsylvania David B. Webb.
“It is my hope that the Violent Crime Reduction Partnership will help us reduce the senseless acts of violence that currently plague the city of Philadelphia. By continuing to combine our resources and working together locally and nationally, I truly believe we will improve the safety and quality of life for all of our citizens,” said Philadelphia District Attorney Seth Williams.
Earlier this year, ATF personnel completed a similar four-month “surge” in Oakland, Calif., which Oakland Police Department officials have credited with contributing to a significant reduction in crime. The Justice Department is currently examining ways to provide this type of targeted assistance and relief to other metropolitan areas, as needed.
Copies of press releases and related documents can be found at www.justic.gov/usao/pae
A complaint is merely an accusation. All defendants are presumed innocent until and unless proven guilty in a court of law.
20 July 2012
Virginia Man Sentenced to 18 Months in Prisonfor Acting as Unregistered Agent for Syrian GovernmentRead the Press Release
Mohamad Anas Haitham Soueid, 48, a resident of Leesburg, Va., was sentenced today to 18 months in prison, followed by three years of supervised release, for collecting video and audio recordings and other information about individuals in the United States and Syria who were protesting the government of Syria and to providing these materials to Syrian intelligence agencies in order to silence, intimidate and potentially harm the protestors.
Lisa Monaco, Assistant Attorney General for National Security; Neil MacBride, U.S. Attorney for the Eastern District of Virginia; and James McJunkin, Assistant Director in Charge of the FBI Washington Field Office, made the announcement following sentencing by United States District Judge Claude M. Hilton.
Soueid, aka “Alex Soueid” or “Anas Alswaid,” a Syrian-born naturalized U.S. citizen, was charged by a federal grand jury on Oct. 5, 2011, in a six-count indictment in the Eastern District of Virginia. He was convicted of unlawfully acting as an agent of a foreign government on March 26, 2012.
“Mohamad Soueid acted as an unregistered agent of the Syrian government as part of an effort to collect information on people in this country protesting the Syrian government crack-down. I applaud the many agents, analysts and prosecutors who helped bring about this important case,” said Assistant Attorney General Monaco.
“Mr. Soueid betrayed this country to work on behalf of a state sponsor of terror,” said U.S. Attorney MacBride. “While the autocratic Syrian regime killed, kidnapped, intimidated and silenced thousands of its own citizens, Mr. Soueid spearheaded efforts to identify and intimidate those protesting against the Syrian government in the United States.”
“By illegally acting as an agent of Syria, Mr. Souied deceived his adopted country of the United States in support of a violent and repressive despotic government,” said Assistant Director in Charge McJunkin. “Through today’s sentencing, he will now be held accountable for his actions.”
According to court records, from March to October 2011, Soueid acted in the United States as an agent of the Syrian Mukhabarat, which refers to the intelligence agencies for the Government of Syria, including the Syrian Military Intelligence and General Intelligence Directorate. At no time while acting as an agent of the government of Syria in this country did Soueid provide prior notification to the Attorney General as required by law. The U.S. government has designated the Syrian government a state sponsor of terrorism since 1979.
Under the direction and control of Syrian officials, Soueid recruited individuals living in the United States to make dozens of audio and video recordings of protests against the Syrian regime – including recordings of conversations with individual protestors – in the United States and Syria, which he provided to the Syrian government. He also supplied the Syrian government with contact information for key dissident figures in the United States, details about the financiers of the dissident movement, logistics for protests and meetings, internal conflicts within the movement, and the movement’s future plans.
In a handwritten letter to a Syrian official in April 2011, Soueid outlined his support for the Syrian government’s repressions of its citizens, stating that disposing of dissension must be decisive and prompt and that violence, home invasions, and arrests against dissidents is justified.
The Syrian government provided Soueid with a laptop to further their ability to surreptitiously communicate, which he later destroyed. In late June 2011, the Syrian government paid for Soueid to travel to Syria, where he met with intelligence officials and spoke with President Bashar al-Assad in private.
To thwart detection of his activities by U.S. law enforcement, Soueid lied to a Customs and Border Patrol agent upon his return from meeting with President al-Assad in Syria, and he also lied repeatedly to FBI agents when they questioned him in August 2011. Following the FBI interview, Soueid destroyed documents in his backyard and informed the Mukhbarat about his FBI interview.
This investigation is being conducted by the FBI’s Washington Field Office with assistance from the Loudon County, Va., Sheriff’s Office. The prosecution is being handled by Assistant U.S. Attorneys Dennis Fitzpatrick and Neil Hammerstrom of the U.S. Attorney’s Office for the Eastern District of Virginia and Trial Attorney Brandon L. Van Grack of the Counterespionage Section of the Justice Department’s National Security Division.
Starr County, Texas, Sheriff’s Deputy Arrested and Detained on Bribery, Extortion and Drug ChargesRead the Press Release
A Deputy Sheriff for the Starr County, Texas, Sheriff’s Office has been ordered detained by a federal magistrate judge in the Southern District of Texas on charges of conspiracy, federal programs bribery, extortion and drug possession with intent to distribute, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.
Nazario Solis III, 34, of Rio Grande City, Texas, was ordered detained yesterday by U.S. Magistrate Judge Dorina Ramos in McAllen, Texas. Solis was arrested on July 12, 2012, on charges contained in an indictment filed in the Southern District of Texas.
The indictment charges Solis with one count of conspiracy to commit federal programs bribery and extortion, one count of federal programs bribery, one count of extortion, one count of conspiracy to possess with the intent to distribute marijuana, one count of possession with intent to distribute marijuana and one count of attempt to possess with intent to distribute cocaine. The indictment also charges Jason Michael Munsell, a Deputy Sheriff with the Starr County Sheriff’s Office, with conspiracy to commit federal programs bribery and extortion, one count of federal programs bribery and one count of extortion. Munsell, 26, surrendered to the FBI in McAllen on July 17, 2012, and was released on bond the following day.
According to the indictment, from approximately March 2011 to approximately April 2011, Solis and Munsell accepted approximately $1,500 total in cash payments from the operator of a gambling business in Starr County in exchange for providing warning of law enforcement activity involving the gambling business. The indictment further alleges that Solis and Munsell were recorded confirming that they had provided such notice about a law enforcement raid on at least one occasion in March 2011, allowing the business to remove money and employees that might otherwise have been arrested.
Solis is also charged with conspiracy to possess with the intent to distribute and possession with the intent to distribute less than fifty kilograms of marijuana in approximately April 2011.
The indictment also charges Solis with attempting to distribute three kilograms of cocaine and cash in exchange for semi-automatic and fully-automatic firearms. The indictment alleges that Solis engaged in extensive negotiations with another individual to obtain the firearms, which Solis intended to send to his “boss” in Mexico. However, the individual with whom Solis engaged in negotiations was an undercover law enforcement agent, and no actual firearms were sent to Solis. The indictment alleges that Solis was recorded stating, “My boss likes the 308 [rifle] … he likes the M-4s [rifle] and the 223 [rifle].” The indictment further alleges that Solis preferred semi-automatic rifles, complaining that fully-automatic rifles used “too much ammo.” Solis allegedly stated, “We kill one bird and we shoot seven times. That’s not, that’s not very good mathematics.”
Solis faces a maximum penalty of up to five years in prison, a fine of $250,000 and supervised release for each conspiracy charge; 10 years in prison, a fine of $250,000 and supervised release for each charge of extortion and federal programs bribery; five years in prison, a fine of $250,000 and supervised release for the marijuana distribution charge; and five to 40 years in prison, a fine of $250,000 and supervised release for the attempted cocaine distribution charge.
Munsell faces a maximum penalty of five years in prison, a fine of $250,000 and supervised release for the conspiracy charge and 10 years in prison, a fine of $250,000 and supervised release for each charge of extortion and federal programs bribery.
An indictment is merely an accusation, and a defendant is presumed innocent unless proven guilty in a court of law.
This case is being prosecuted by Trial Attorneys Peter Mason and Anthony J. Phillips of the Public Integrity Section in the Justice Department’s Criminal Division. The case is being investigated by the FBI’s Public Corruption Task Force in McAllen, which is comprised of U.S. Customs and Border Protection-Internal Affairs, U.S. Immigration and Customs Enforcement-Office of Professional Responsibility, Department of Homeland Security-Office of Inspector General and the Texas Rangers. The Drug Enforcement Administration Houston Division and the Bureau of Alcohol, Tobacco, Firearms and Explosives also participated in the investigation.
Justice Department Settled Claims of Discrimination Against United Natural Foods Inc.Read the Press Release
The Justice Department announced today that it reached a settlement agreement with United Natural Foods Inc. (UNFI), resolving allegations that the company discriminated under the anti-discrimination provision of the Immigration and Nationality Act (INA), when it impermissibly “reverified” the work authority of lawful permanent residents and required some non-citizen workers to provide specific Form I-9 documentation.
In a charge filed with the department, the charging party, a lawful permanent resident, alleged that UNFI improperly terminated him after he failed to produce an unexpired lawful permanent resident card (also known as a “green card”) in connection with an erroneous reverification of his employment eligibility. The charging party had presented proper work authorization documentation at the time of hire, and UNFI had no reason to suspect that his documentation was not genuine. The employee was permanently work-authorized, but lost three weeks’ worth of wages as a result of UNFI’s practice. The department’s investigation revealed that UNFI reverified the documentation of similarly situated lawful permanent residents when their documentation expired but did not reverify expired documentation of U.S. citizens. The anti-discrimination provision prohibits treating employees differently in the employment eligibility verification and reverification processes based on citizenship or national origin.
In response to the department’s investigation, UNFI conducted an internal audit and undertook immediate corrective action to address and rectify its employment eligibility verification policies and practices. As part of its corrective action, UNFI rehired the charging party and gave him full back pay several months before the department had made its finding of discrimination. Under the settlement agreement, the company agrees to pay $3,190 in civil penalties to the United States, to conform all of its actions to ensure compliance with the INA’s anti-discrimination provision and to train its human resources personnel about the company’s responsibility to avoid discrimination in the employment eligibility verification process.
“The Civil Rights Division is pleased that UNFI has prioritized compliance with the Immigration and Nationality Act’s (INA), and we encourage all employers to evaluate their policies and practices to ensure compliance with the INA’s anti-discrimination provision,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division.
The Office of Special Counsel (OSC) for Immigration-Related Unfair Employment Practices is responsible for enforcing the anti-discrimination provision of the INA, which protects work authorized individuals from employment discrimination on the basis of citizenship status or national origin discrimination, including discrimination in hiring and the employment eligibility verification process.
For more information about protections against employment discrimination under the immigration law, visit OSC’s website at www.justice.gov/crt/about/osc or email [email protected].
For more information about protections against employment discrimination under the immigration laws, call the OSC’s worker hotline at 1-800-255-7688 (1-800-237-2525, TDD for hearing impaired), call the OSC’s employer hotline at 1-800-255-8155 (1-800-362-2735, TDD for hearing impaired), sign up for a no-cost webinar at www.justice.gov/crt/osc/webinars.php, email [email protected] or visit the website at www.justice.gov/crt/about/osc.
Former Financial Services Executive Indicted for His Participation in a Far-Reaching Conspiracy and Scheme to Defraud Involving Investment Contracts for the Proceeds of Municipal BondsRead the Press Release
A former financial services executive was indicted yesterday for his participation in a far-reaching conspiracy and scheme to defraud related to bidding for contracts for the investment of municipal bond proceeds and other municipal finance contracts, the Department of Justice announced.
The three-count indictment was filed yesterday in the U.S. District Court in Charlotte, N.C. The indictment charges Phillip D. Murphy, a former executive for a financial institution, with participating in a wire fraud scheme and separate fraud conspiracies from as early as 1998 until 2006.
The charged conspiracies and scheme to defraud relate to the provision of a type of contract, known as an investment agreement, 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 seek to invest money from a variety of sources, primarily the proceeds of municipal bonds that they issue to raise money for, among other things, public projects. Public entities typically hire a broker to conduct a competitive bidding process among various providers for the award of an investment agreement to invest such money. 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. The company that employed Murphy marketed financial products and services, including services as a provider of investment agreements.
“The individual charged yesterday allegedly participated in a complex fraud scheme and conspiracies to manipulate what was supposed to be a competitive process,” said Scott D. Hammond, Deputy Assistant Attorney General of the Antitrust Division’s Criminal Enforcement Program. “The division recently convicted at trial several individuals in this investigation, which is ongoing. We will continue to prosecute those who engage in such illegal and anticompetitive behavior.
The indictment charges that Murphy conspired with Rubin/Chambers, Dunhill Insurance Services Inc., also known as CDR Financial Products (CDR), a broker of municipal finance contracts, and others to increase the number and profitability of investment agreements and other municipal finance contracts awarded to the provider company where Murphy was employed. Murphy won investment agreements through CDR’s manipulation of the bidding process in obtaining losing bids from other providers, which is explicitly prohibited by U.S. Treasury regulations. As a result of the information, various providers won investment agreements and other municipal finance contracts at artificially determined prices. In exchange for this information, Murphy submitted intentionally losing bids for certain investment agreements and other contracts when requested, and, on occasion, agreed to pay or arranged for kickbacks to be paid to CDR and other co-conspirator brokers.The indictment also alleges that Murphy and co-conspirators misrepresented to municipal issuers or bond counsel that the bidding process was 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 if the issuers had true and accurate information regarding the bidding process. Such conduct placed the tax-exempt status of the underlying bonds in jeopardy.
According to court documents, the efforts by Murphy and his co-conspirators to control and manipulate the bidding for investment contracts, and the execution of a variety of certifications that covered up their scheme, also obstructed the Internal Revenue Service (IRS)’s ability to monitor compliance with U.S. Treasury regulations and impeded the IRS’s ability to determine whether municipal issuers had correctly accounted for any money that was owed to the U.S. Treasury.
In a separate count, the indictment charges that Murphy conspired with others to falsify bank records related to marketing profits so that the co-conspirators could pay the kickbacks to CDR and others.“Yesterday’s charges outline a fraudulent scheme to subvert competition in the marketplace. Those who engage in this type of criminal activity not only stand to defraud public entities, but erode the public’s trust in the competitive bidding process,” said Janice K. Fedarcyk, Assistant Director in Charge of the FBI in New York. “The FBI will continue to work with the Antitrust Division to ensure the integrity of competitive bidding in public finance.”
“This case demonstrates the value of a coordinated approach by multiple agencies and law enforcement authorities,” said Internal Revenue Service-Criminal Investigation (IRS-CI) Chief Richard Weber. “IRS Criminal Investigation contributed to this joint effort by providing financial investigative expertise to uncover this complex and sophisticated scheme. Professionals, including financial service executives, should know we will devote all resources necessary to bring to justice those who commit financial crimes.”
Murphy is charged with two counts of conspiracy and one count of wire fraud. The fraud conspiracy with which Murphy is charged carries a maximum penalty of five years in prison and a $250,000 fine. The wire fraud charge carries a maximum penalty of 30 years in prison and a $1 million fine. The false bank records conspiracy carries a maximum penalty of five years in prison and a $250,000 fine. The maximum fines for each of these offenses may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.The charges announced today resulted from an ongoing investigation conducted by the Antitrust Division’s New York and Cleveland Field Offices, the FBI and IRS-CI. 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.
To date, a total of 13 individuals and one company have pleaded guilty to charges stemming from the ongoing investigation. In May 2012, a federal jury in the Southern District of New York convicted Dominick Carollo, Steven Goldberg and Peter Grimm of multiple counts involving similar fraud conspiracies after a four-week trial. Three other former executives of a financial institution were indicted on Dec. 9, 2010, for participating in fraud schemes and conspiracies related to the bidding for investment agreements, and are awaiting trial, which is scheduled to begin in Manhattan on July 30, 2012.
Yesterday’s indictment is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.
Anyone with information concerning bid rigging and related offenses in any financial markets should contact the Antitrust Division’s New York Field Office at 212-335-8000, the FBI at 212-384-5000 or IRS-CI at 212-436-1761, or visit www.justice.gov/atr/contact/newcase.htm.
Florida Man Pleads Guilty to Transportation <br /> of Child PornographyRead the Press Release
WASHINGTON – Anthony Mangione, 51, of Parkland, Fla., pleaded guilty today to one count of transportation of child pornography, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, Acting Special Agent in Charge Jeffrey C. Mazanec of the FBI’s Miami Field Office and Sheriff Al Lamberti of the Broward County, Fla., Sheriff’s Office.
Mangione pleaded guilty today before U.S. Magistrate Judge James M. Hopkins in U.S. District Court in West Palm Beach, Fla. He was taken into custody pending sentencing.According to court documents, between March 2010 and September 2010, Mangione transported visual depictions of minors engaging in sexually explicit conduct.
Mangione faces a mandatory minimum sentence of five years in prison and a maximum sentence of 20 years in prison. Mangione also faces a term of supervised release of five years to life following his prison sentence, and will be required to register as a sex offender in any jurisdiction in which he lives, works or attends school. Sentencing has been scheduled for Oct. 5, 2012.
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by U.S. Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
This case is being investigated by the Broward County Sheriff’s Office and the FBI’s Miami Field Office. Assistant Deputy Chief Alexandra R. Gelber and Trial Attorney Michael Grant of the Criminal Division’s CEOS are prosecuting the case.
Fishermen and Seafood Wholesaler Convicted of Conspiring to Obstruct Justice, Falsify Food Safety and Oyster Harvest Records, and Traffic in Illegal OystersRead the Press Release
WASHINGTON – After a seven week trial in federal court in Camden, N.J., multiple defendants were convicted on various felony counts of creating false records, trafficking in illegally possessed oysters, obstructing the Food and Drug Administration’s regulation of public health and safety, and conspiring to commit those crimes, announced Ignacia S. Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division, and Paul J. Fishman, U.S. Attorney for the District of New Jersey.
Thomas Reeves, Todd Reeves, and Shellrock LLC, all of Port Norris, N.J., were convicted on multiple felony counts of violating the Lacey Act by creating false records for illegally possessed oysters, trafficking in illegally possessed oysters and falsifying records used by the FDA for tracking the movement of oysters in interstate commerce. These same defendants, as well as Renee Reeves, an employee of Shellrock and the wife of Todd Reeves, were also found guilty of conspiring to commit those crimes and obstruct justice.
Kenneth Bailey, of Heislerville, N.J., was convicted on multiple felony counts of violating the Lacey Act by creating false records and trafficking in illegally possessed oysters, as well as falsifying records used by the FDA for tracking the movement of oysters in interstate commerce.
Mark Bryan, of New Market, Md, and the business he co-owns, Harbor House Seafood Inc., of Seaford, Del., were convicted on multiple felony counts of creating false records relating to their purchase of oysters, trafficking in illegally possessed oysters, as well as conspiring to obstruct justice and falsify records used by the FDA for tracking the movement of oysters in interstate commerce.
“The conspiracy to traffic in unreported and illegally possessed oysters from the Delaware Bay violated laws that protect public health and ensure the sustainability of resources that are vital to the region’s economy. In the course of the conspiracy, defendants falsified FDA records that are used to track oysters in the event of an outbreak of oyster-borne disease,” said Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division of the Department of Justice. “After an extensive trial, today’s conviction by a federal jury sends the message that we will prosecute those who exploit protected resources, deceive law enforcement and deprive honest fisherman of the full measure of their labor.”
The Lacey Act prohibits creating or submitting false records for fish or wildlife moving in interstate commerce and also prohibits trafficking in fish or wildlife known to be illegally taken or possessed. The FDA and state health agencies require that oyster purchasers and sellers maintain accurate records of the amounts and locations of oyster harvest for all oysters they buy and sell in order to protect the public health and minimize the impact of any oyster-borne outbreak of disease.
Starting in at least 2004 and continuing through 2007, Thomas and Todd Reeves, oyster fishermen who owned Shellrock (dba Reeves Brothers), would take a greater amount of oysters from the Delaware Bay than was allowed by New Jersey. The Reeveses would then falsify the records that New Jersey used to track the number of oysters harvested from Delaware Bay and sell those unreported oysters to Mark Bryan at Harbor House in Delaware. Thomas Reeves, Todd Reeves and Renee Reeves, along with Mark Bryan at Harbor House, would also coordinate to cover up their overharvest by falsifying records required by the FDA, records which were used to protect the public health from outbreaks of oyster-borne disease. In addition, the defendants conspired to obstruct the NOAA investigation into their illegal conduct by providing investigators with false records and making false statements that attempted to hide their conduct.Bryan and Harbor House also purchased unreported oysters from Kenneth W. Bailey Sr., another Port Norris oyster fisherman. Like the Reeveses, Bailey would create false records required by the state and the FDA to hide his overharvest.
The fair market retail value of the unreported oysters during this time was in excess of $750,000, and the defendants over-harvested their quota in some years by nearly 60 percent.
The maximum penalty for conspiring to commit offenses and for violations of the Lacey Act is up to five years in prison and a $250,000 fine. The maximum penalty for obstruction of justice counts is up to 20 years in prison and a $250,000 fine. The maximum penalty for the corporations is up to five years of probation and a fine in an amount that is the greater of $500,000 or twice the gross gain, for each count.
The case was investigated by the National Oceanic and Atmospheric Administration, Office of Law Enforcement, and The New Jersey Department of Environmental Protection, Division of Fish and Wildlife. The case was prosecuted by Wayne D. Hettenbach and Patrick M. Duggan of the Environmental Crimes Section of the Justice Department’s Environment and Natural Resources Division, with assistance from Assistant U.S. Attorney Matthew T. Smith of the U.S. Attorney’s Office for the District of New Jersey.
$19 Million Stolen Identity Refund Fraud Conspiracy Charged in AlaskaRead the Press Release
A grand jury sitting in Anchorage, Ala., returned a 90-count superseding indictment yesterday against 11 defendants, the Justice Department announced. The superseding indictment included a conspiracy charge to defraud the United States involving a scheme to use stolen Puerto Rican identities to file tax returns and obtain fraudulent income tax refunds. A number of the defendants had previously been charged with conspiracy to distribute cocaine, cocaine distribution and international money laundering.
To accomplish their tax refund scheme, the indictment alleges that the conspirators fabricated individual income tax returns using stolen personal identification information from residents of the Commonwealth of Puerto Rico. The defendants obtained laptop computers that contained over 2,600 stolen identities. The laptops also identified $19 million in fraudulent refund claims. The addresses used on some of the false tax returns were obtained by stealing mail from mailboxes in and around Anchorage. In other cases, it is alleged that one or more of the defendants contacted conspirators in locations such as New Jersey and Puerto Rico and requested that fraudulently obtained tax refund checks be sent to Anchorage using false names. The indictment further alleges that the conspirators negotiated refund checks in Anchorage with the help of corrupt bank employees. In order to negotiate the tax refund checks, the defendants allegedly used false identification documents. They allegedly obtained these documents by using the names, dates of birth and Social Security numbers of other individuals in applications made to the Alaska Department of Motor Vehicles.
The indictment also charges various defendants with submitting false claims for refund, possessing stolen mail, making false claims of U.S. citizenship, committing passport fraud, making false statements to banks and credit unions, passing forged U.S. Treasury checks, aggravated identity theft and drug charges. The fraud charges each carry maximum potential penalties of between two and 30 years of imprisonment, in addition to the five year mandatory minimum prison term required upon conviction on the drug charges.
The case is being jointly prosecuted by Assistant U.S. Attorneys Thomas C. Bradley and James Barkeley of the U.S. Attorney’s Office for the District of Alaska and Trial Attorney Stephanie Carowan Courter of the Justice Department’s Tax Division. The case was investigated by the Internal Revenue Service Criminal Investigation, U.S. Immigration and Customs Enforcement, which oversees Homeland Security Investigations, the U.S. Postal Inspection Service, the U.S. State Department’s Diplomatic Security Service, and the Drug Enforcement Administration. Additional assistance was provided by the U.S. Attorney’s Offices for the District of New Jersey, the Eastern District of Pennsylvania and the Southern District of New York.
An indictment is merely a formal accusation. Defendants are presumed innocent until proven guilty in a court of law.
19 July 2012
Two Foreign Nationals Plead Guilty to Trafficking <br /> the Identities of Puerto Rican U.S. CitizensRead the Press Release
Two foreign nationals have pleaded guilty for their roles in a scheme to traffic the identities of Puerto Rican U.S. citizens and corresponding identity documents.
The guilty pleas were announced today by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Rosa E. Rodríguez-Vélez for the District of Puerto Rico; Director John Morton of U.S. Immigration and Customs Enforcement (ICE), which oversees Homeland Security Investigations (HSI); Chief Postal Inspector Guy Cottrell of the U.S. Postal Inspection Service (USPIS); Scott P. Bultrowicz, Director of the U.S. State Department’s Diplomatic Security Service (DSS); and Internal Revenue Service-Criminal Investigation (IRS-CI) Chief Richard Weber.
Obdulio Edu Burgos-Dominguez, 35, a Guatemalan national formerly of Seymour, Ind., pleaded guilty today in the District of Puerto Rico to one count of conspiracy to commit identification fraud and one count of conspiracy to commit alien smuggling for profit. Jose Sergio Garcia-Ramirez, 37, a Mexican national formerly of Rockford, Ill., pleaded guilty in the District of Puerto Rico on July 17, 2012, to one count of conspiracy to commit identification fraud and one count of aggravated identity theft. Both pleas took place before U.S. Magistrate Judge Bruce J. McGiverin.
Burgos-Dominguez and Garcia-Ramirez were originally charged in an indictment returned by a federal grand jury in Puerto Rico on Mar. 22, 2012. To date, a total of 53 individuals have been charged for their roles in the identify trafficking scheme.
Court documents allege that individuals located in the Savarona area of Caguas, Puerto Rico (Savarona suppliers) obtained Puerto Rican identities and corresponding identity documents. Other conspirators located in various cities throughout the United States (identity brokers) allegedly solicited customers and sold Social Security cards and corresponding Puerto Rico birth certificates for prices ranging from $700 to $2,500 per set. The superseding indictment alleges that identity brokers ordered the identity documents from Savarona suppliers, on behalf of the customers, by making coded telephone calls. The conspirators used text mail, money transfer services and express, priority or regular U.S. mail to complete their illicit transactions.
Court documents allege that some identity brokers assumed a Puerto Rican identity themselves and used that identity in connection with the trafficking operation. Their customers generally obtained the identity documents to assume the identity of Puerto Rican U.S. citizens and to obtain additional identification documents, such as legitimate state driver’s licenses. Some customers allegedly obtained the documents to commit financial fraud and attempted to obtain a U.S. passport.
Burgos-Dominguez admitted that he operated as an identity broker in Seymour, Ind. Garcia-Ramirez admitted that he operated as an identity broker in Rockford, Ill.
According to court documents, various identity brokers were operating in Rockford; Seymour; Indianapolis; DeKalb, Ill.; Columbus, Ind.; Aurora, Ill.; Hartford, Conn.; Clewiston, Fla.; Lilburn and Norcross, Ga.; Salisbury, Md.; Columbus, Ohio; Fairfield, Ohio; Dorchester, Mass.; Lawrence, Mass.; Salem, Mass.; Worcester, Mass.; Grand Rapids, Mich.; Nebraska City, Neb.; Elizabeth, N.J.; Burlington, N.C.; Hickory, N.C.; Hazelton, Pa.; Philadelphia; Houston; Abingdon, Va.; Albertville, Ala.; and Providence, R.I.
Garcia-Ramirez and Burgos-Dominguez are the seventh and eighth defendants to plead guilty in this case.
At sentencing, scheduled for Nov. 30, 2012, Garcia-Ramirez faces a maximum sentence of 15 years in prison for conspiracy to commit identification fraud and a mandatory consecutive sentence of two years in prison for aggravated identity theft. At sentencing, scheduled for Nov. 13, 2012, Burgos-Dominguez faces a maximum sentence of 15 years in prison for conspiracy to commit identification fraud and 10 years in prison for conspiracy to commit alien smuggling for profit. Both defendants are also subject to a maximum fine of $250,000 for each charge.
The charges are the result of Operation Island Express, an ongoing, nationally-coordinated investigation led by the ICE-HSI Chicago Office and USPIS, DSS and IRS-CI offices in Chicago, in coordination with the ICE-HSI San Juan Office. The Illinois Secretary of State Police; Elgin, Ill., Police Department; Seymour, Ind., Police Department; and Indiana State Police provided substantial assistance. The ICE-HSI Assistant Attaché office in the Dominican Republic, and International Organized Crime Intelligence and Operations Center (IOC-2) as well as various ICE, USPIS, DSS and IRS CI offices around the country provided invaluable assistance.
The case is being prosecuted by the Criminal Division’s Human Rights and Special Prosecutions Section, with the assistance of the Criminal Division’s Asset Forfeiture and Money Laundering Section, and the support of the U.S. Attorney’s Office for the District of Puerto Rico. The U.S. Attorneys’ Offices in the Northern District of Illinois, Southern District of Indiana, District of Connecticut, Western District of Virginia, Southern District of Ohio, and District of Nebraska provided substantial assistance.
Potential victims and the public may obtain information about the case at: www.justice.gov/criminal/vns/caseup/beltrerj.html . Anyone who believes their identity may have been compromised in relation to this investigation may contact the ICE toll-free hotline at 1-866-DHS-2ICE (1-866-347-2423) and its online tip form at www.ice.gov/tipline . Anyone who may have information about particular crimes in this case should also report it to the ICE tip line or website.
Anyone who believes that they have been a victim of identity theft, or wants information about preventing identity theft, may obtain helpful information and complaint forms on various government websites including the Federal Trade Commission ID Theft Website, www.ftc.gov/idtheft . Additional resources regarding identity theft can be found at www.ojp.usdoj.gov/ovc/pubs/ID_theft/idtheft.html ; www.ssa.gov/pubs/10064.html ; www.fbi.gov/about-us/investigate/cyber/identity_theft ; and www.irs.gov/privacy/article/0,,id=186436,00.html .
Oklahoma Inmate Sentenced for Conspiring with Jailer to Assault Another InmateRead the Press Release
Phillip Oliver, 46, an inmate at the Muskogee County Jail (MCJ) was sentenced today in U.S. District Court in Muskogee, Okla., to one year and a day followed by one year of supervised release for one count of conspiracy related to the orchestrated beating of a fellow inmate at the behest of a jailer on duty.
“Excessive force by individuals sworn to uphold the law will not be tolerated,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Justice Department will continue to investigate and prosecute criminal civil rights violations whether committed directly by the hands of law enforcement or by inmates at the behest of law enforcement.”
Oliver pleaded guilty earlier this year and in so doing admitted that on Oct. 6, 2011, he conspired with a jailer on duty to violate the civil rights of the victim, a fellow inmate, by assaulting him. Specifically, Oliver and the jailer agreed to use physical violence to punish the victim because the victim, who was restrained in a separate cell, was making verbal comments. According to court documents, although Oliver was concerned about getting into trouble if he assaulted the victim, the jailer assured Oliver that he would cover for Oliver. Thereafter, the jailer remotely popped open the victim’s locked cell door so that Oliver could gain access. Oliver then punched the victim in the face, all at a time when the victim was not posing a threat to anyone.
This case was investigated by the Muskogee Resident Agency of the Oklahoma City Division of the FBI and was prosecuted by Trial Attorney Fara Gold of the Civil Rights Division of the U.S. Department of Justice and Assistant U.S. Attorney Ryan M. Roberts for the Eastern District of Oklahoma.
Michigan Man Pleads Guilty in Connection with Detroit-Area Medicare Fraud SchemeRead the Press Release
WASHINGTON – A Michigan resident pleaded guilty today for his role in a $13.8 million Detroit-area home health care fraud scheme, announced the Departments of Justice and Health and Human Services (HHS).
Nabeel Shaikh, 30, of Wixom, Mich., pleaded guilty today to one count of conspiracy to commit health care fraud before U.S. District Judge Gerald E. Rosen of the Eastern District of Michigan. At sentencing, Shaikh faces a maximum penalty of 10 years in prison and a $250,000 fine.
According to information contained in plea documents, Shaikh purported to be a physical therapy assistant with a limited license who provided physical therapy services to homebound Medicare beneficiaries. In fact, Shaikh had a forged physical therapy assistant’s degree and no medical license. Beginning in approximately January 2009, Shaikh was paid to falsify medical documentation for two home health agencies, known as Physicians Choice Home Health Care LLC and Quantum Home Care Inc., each of which billed and received payments from Medicare for home health care services that were never rendered.
According to court documents, Shaikh paid kickbacks and bribes to Medicare beneficiaries in order to obtain the beneficiaries’ Medicare information, which was then used to bill Medicare for home health services that were never provided. Shaikh created evaluations, therapy revisit notes and other medical documentation memorializing purported physical therapy for patients he did not see or treat. Shaikh and his co-conspirators had Medicare beneficiaries pre-sign forms and visit sheets that were later falsified to make it appear that the beneficiaries had received home health services when, in fact, they had not. Shaikh knew that the documents that he signed would be used to support false claims to Medicare for home health services.
From approximately January 2009 through September 2011, Medicare paid approximately $900,430 to Physicians Choice and Quantum for fraudulent physical therapy claims based on falsified files and notes signed by Shaikh.
Overall, between approximately July 2008 and September 2011, Physicians Choice, Quantum and two other fraudulent home health care agencies involved in the conspiracy, known as First Care Home Health Care LLC and Moonlite Home Care Inc., were paid approximately $13.8 million in fraudulent home health claims by the Medicare program for services that were medically unnecessary and/or never rendered.
Today’s guilty plea was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade, Acting Special Agent in Charge of the FBI’s Detroit Field Office Edward J. Hanko, and Special Agent in Charge Lamont Pugh III of the HHS Office of Inspector General, Chicago Regional Office.
This case was prosecuted by Trial Attorney Catherine K. Dick of the Criminal Division’s Fraud Section, with assistance from Trial Attorney Niall M. O’Donnell. It was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,330 defendants who have collectively billed the Medicare program for more than $4 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.
Former President of Texas Company Indicted for Employee Deaths and Environmental ViolationsRead the Press Release
Port Arthur Chemical and Environmental Services LLC (PACES) and its former president Matthew L. Bowman have been charged with conspiracy to illegally transport hazardous materials, resulting in the deaths of two employees, in an indictment handed down by a federal grand jury in Beaumont, Texas, yesterday, announced Ignacia S. Moreno, Assistant Attorney General of the Justice Department’s Environment and Natural Resources Division and John M. Bales, U.S. Attorney for the Eastern District of Texas.
The 13-count indictment describes a scheme in which hazardous materials were transported illegally with false documents and without placards, and where workers were not properly protected from exposure to hazardous gases. The exposure resulted in the deaths of two employees, who were truck drivers, at the PACES facility on Dec. 18, 2008, and April 14, 2009. Both deaths are attributed to exposure to hydrogen sulfide.
The defendants were charged with a conspiracy to violate the Hazardous Materials Transportation Uniform Safety Act (HMTUSA) and two counts of failure to implement appropriate controls to protect employees from exposure to hydrogen sulfide in violation of the Occupational Safety and Health Administration Act. The defendants are also charged with transportation of hazardous materials without placards and with false documents in violation of HMTUSA, violations of the Resource Conservation and Recovery Act and making false statements.
According to the indictment, Bowman was president and owner of PACES, located in Port Arthur, Texas, and CES Environmental Services (CES) located in Houston. PACES was in operation from about November 2008 to November 2010 and was in the business of producing and selling caustic materials to paper mills. The production of caustic materials involved hydrogen sulfide. Hydrogen sulfide is classified as a poisonous gas by HMTUSA. According to the National Institute for Occupational Safety and Health, hydrogen sulfide is an acute toxic substance that is the leading cause of sudden death in the workplace. Employers are required by the Occupational Safety and Health Administration (OSHA) to implement engineering and safety controls to prevent employees from exposure above harmful limits.
According to the indictment, Bowman was responsible for, among other duties, approving and directing PACES production operations, the disposal of hydrogen sulfide wastewater, employee safety precautions, directing the transportation of PACES wastewater, and determining what safety equipment could be purchased or maintained.
Both PACES and CES have filed for bankruptcy.
The conspiracy and substantive counts of the indictment each carry a maximum possible sentence of five years in prison and a fine of $250,000, and a $500,000 maximum fine for the corporation.
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.
This case is being investigated by EPA Criminal Investigation Division; the U.S. Department of Transportation Office of Inspector General; the Texas Commission on Environmental Quality - Environmental Crimes Unit; and the Houston Police Department - Major Offenders, Environmental Investigations Unit; with assistance from the Texas Parks & Wildlife Department - Environmental Crimes Unit; the Travis County, Texas, District Attorney’s Office; the Harris County, Texas, District Attorney’s Office; the Houston Fire Department; OSHA; the U.S. Coast Guard; the Port Arthur Police Department; and the Port Arthur Fire Department.
The case is being prosecuted by U.S. Attorney’s Office for the Eastern District of Texas, Beaumont Division, and the Environmental Crimes Section of the Justice Department’s Environment and Natural Resources Division.
Former Employee of Nursing Home Company Operating in North Carolina and Virginia Sentenced to Serve 63 Months in Prison<br /> for Kickback Schemes and Tax EvasionRead the Press Release
WASHINGTON – The former director of corporate maintenance and renovations at Medical Facilities of America Inc. (MFA) was today sentenced to serve 63 months in prison for accepting kickbacks from contractors and evading federal income taxes, the Department of Justice announced. MFA operates health care and nursing home facilities throughout Virginia and North Carolina.
John D. Henderson, of Colonial Heights, Va., was sentenced in U.S. District Court in Roanoke, Va., by Judge Samuel G. Wilson. In addition to his prison sentence, Henderson was ordered to pay a total of $698,088 in restitution and additional taxes, penalties and interest to the Internal Revenue Service for his participation in two separate conspiracies. The conspiracies involved steering contracts for the repair, maintenance and renovation at MFA health care and nursing home facilities. One of the conspiracies took place from about June 1998 until at least December 2006, and the other conspiracy took place from about July 2005 until at least December 2006. Henderson pleaded guilty on March 14, 2012, to two counts of conspiracy to commit mail and honest services fraud for the kickback schemes and to two counts for failing to include the kickbacks and other income he received on his federal income tax returns for years 2005 and 2006.
According to the four-count felony charge, Henderson oversaw the bidding process for repair, maintenance and renovation contracts at MFA facilities. To facilitate the conspiracies, Henderson steered contracts to several venders in return for kickbacks; created fictitious competitor bids that were higher than the quotes submitted by the venders who paid him, in order to create the appearance of competition; and directed subordinates to solicit quotes only from vendors who paid him. Henderson received more than $560,000 in kickbacks and had at least $101,000 more paid to a co-conspirator, and in return steered MFA contracts totaling more than $5 million.
“Through this kickback scheme, Henderson and his co-conspirators deprived MFA of competitive pricing to its financial detriment,” said Acting Assistant Attorney General Joseph Wayland in charge of the Antitrust Division. “Today’s sentencing demonstrates the division’s commitment to holding executives accountable for disrupting the competitive bidding process for service contracts.”
Henderson is the fifth individual to plead guilty in the department's fraud investigation into the award of repair, maintenance and renovation contracts at facilities owned by MFA. On Oct. 18, 2011, both Donald R. Holland and Larry R. Sumpter pleaded guilty in U.S. District Court in Roanoke to participating in the scheme. On Jan. 31, 2012, Holland and Sumpter were each sentenced by Judge Samuel G. Wilson to serve two years of probation and were fined $50,000 and $15,000, respectively. On April 4, 2011, Edward T. Fodrey pleaded guilty in U.S. District Court in Norfolk, Va., and was sentenced by Judge Mark S. Davis on Jan. 31, 2012, to serve 37 months in prison and was ordered to pay $326,799 in restitution. Gary L. Johns pleaded guilty on Dec. 12, 2011, in U.S. District Court in Roanoke and was sentenced by Judge Wilson on March 14, 2012 to serve three years of probation and to pay $169,341 in restitution.
The investigation is being conducted by the Antitrust Division’s Philadelphia Field Office, the U.S. Attorney’s Office for the Western District of Virginia, the FBI in Roanoke and the Internal Revenue Service-Criminal Investigation in Roanoke. Anyone with information concerning fraudulent behavior relating to the award of contracts by MFA should contact the Antitrust Division’s Philadelphia Field Office at 215-597-7405 or visit www.justice.gov/atr/contact/newcase.htm .
18 July 2012
Maine Resident Charged and Arrested for Allegedly Engaging in Cyber “Sextortion” of New Hampshire VictimRead the Press Release
WASHINGTON – A Maine resident was charged in a criminal complaint unsealed today in the District of New Hampshire for allegedly engaging in a type of cyber extortion known as “sextortion,” announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney John P. Kacavas of the District of New Hampshire.
John Bryan Villegas, 21, of Kittery, Maine, was arrested yesterday and made his initial appearance today in federal court in New Hampshire. Villegas is charged with one count of engaging in computer intrusion involving extortion and one count of making extortionate interstate threats.
The complaint affidavit alleges that Villegas attempted to extort the victim, a New Hampshire resident, into providing him with sexually explicit photographs and videos of the victim. He sent the victim interstate e-mail messages in which he threatened to publish on the internet, and distribute to the victim’s neighbors and work and social acquaintances, other sexually explicit photographs of the victim that he obtained from a computer without authorization.
If convicted, Villegas faces a maximum sentence of two years in prison on the interstate threats charge and five years in prison on the computer intrusion charge, to be followed by up to three years of supervised release, a fine of up to $500,000 and restitution.
The case was investigated by the U.S. Secret Service and is being prosecuted by Trial Attorney Mona Sedky of the Computer Crime and Intellectual Property Section in the Justice Department’s Criminal Division and Assistant U.S. Attorney Arnold H. Huftalen of the District of New Hampshire. The Department would like to thank the cooperation of the Dover, N.H., and Kittery, Maine, police departments and the Naval Criminal Investigative Service (NCIS).
The details contained in the complaint are allegations. The defendant is presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Justice Department Obtains $855,000 Judgment Against Cincinnati Landlord for Sexually Harassing His TenantsRead the Press Release
WASHINGTON – Cincinnati landlord Henry E. Bailey agreed to the entry of an $855,000 civil judgment against him, after admitting that he violated the Fair Housing Act as alleged in a complaint filed by the Justice Department in federal court, the department announced today. The department’s complaint alleged that Bailey subjected female tenants and applicants for tenancy to unwanted sexual comments and touching, entered the apartments of female tenants without notice or permission, granted tangible housing benefits in exchange for sexual favors and took adverse actions against female tenants when they refused his sexual advances.
“The women involved were subjected to intimidating and severe acts of unwanted sexual conduct in their homes, where they expected to feel safe,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “This judgment reflects the gravity of the alleged conduct.”
Under the terms of the consent judgment, which was approved by the U.S. District Court for the Southern District of Ohio earlier today, Bailey is obligated to pay $800,000 in damages to 14 women he sexually harassed and $55,000 in a civil penalty to the United States. In addition, the consent judgment enjoins Bailey from further acts of discrimination and requires him to retain an independent management company to manage any currently rented units and any future rental properties he acquires.
“This helps right the wrongs committed against vulnerable individuals,” said U.S. Attorney for the Southern District of Ohio Carter Stewart. “Going forward, the decree sends a message that property owners must respect the rights of their tenants and those who seek safe, secure housing.”
The department began investigating Bailey after Housing Opportunities Made Equal, a Cincinnati-based non-profit fair housing advocacy group, notified the department of sexual harassment complaints it had received about Bailey.
The federal Fair Housing Act prohibits discrimination in housing based on race, color, religion, national origin, sex, disability and familial status. Individuals who believe that they may have been victims of housing discrimination should call the Justice Department’s Housing Discrimination Tip Line at 1-800-896-7743, email [email protected] or contact the U.S. Department of Housing and Urban Development at 1-800-669-9777.
Fair housing enforcement is a priority of the Civil Rights Division. More information about the Civil Rights Division and the laws it enforces is available at www.justice.gov/crt.
Justice Department Files Lawsuit Requiring Rutherford County, <br /> <br /> Tenn., to Allow Mosque to Open in City of MurfreesboroRead the Press Release
The Justice Department announced today that it has filed a federal lawsuit against Rutherford County, Tenn., alleging that the county violated the Religious Land Use and Institutionalized Persons Act of 2000 (RLUIPA) when, in compliance with a state chancery court ruling, it refused to process or issue a certificate of occupancy to the Islamic Center of Murfreesboro for a recently constructed mosque. The department’s complaint states that a certificate of occupancy is needed immediately so that the Islamic Center can hold worship services at the new facility during the Islamic holy month of Ramadan, which begins at sundown on July 19.
The lawsuit, filed today in U.S. District Court for the Middle District of Tennessee, alleges that the county’s refusal came as a result of a recent state chancery court order last month, which, acting in response to a motion brought by individuals opposed to the mosque, enjoined the county from processing or issuing a certificate. The chancery court ruled that the county had provided insufficient public notice prior to the hearing at which the county approved the mosque’s site-plan. The chancery court imposed a heightened notice requirement on the mosque, one not imposed on other religious or secular organizations.
“Our nation was founded on bedrock principles of religious liberty. The Department of Justice will continue to vigorously enforce civil rights laws that protect religious freedom,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “When a faith community follows the rules, as the Islamic Center of Murfreesboro has done in seeking to construct its place of worship, it is impermissible to change the rules in a discriminatory way that prevents people of faith from exercising their fundamental right to worship.”
“The United States Attorney’s Office will zealously protect every citizen’s right to worship and assemble,” said Jerry E. Martin, U.S. Attorney for the Middle District of Tennessee. “If we do not protect the rights of these congregants in Rutherford County, then the rights of all people are endangered and diminished.”
The government’s complaint seeks a court order requiring the county to act promptly on the Islamic Center’s application for a certificate of occupancy despite the chancery court’s injunction.
The case began when the Islamic Center, which has been operating in Rutherford County since 1982, sought to construct a new mosque for its growing congregation. In 2009, it purchased land for that purpose on Veals Road in Rutherford County and, in compliance with the county’s zoning regulation, subsequently applied for site-plan approval. After considering the proposal at a regularly scheduled, advertised meeting, the county approved the site plan. Following the county’s approval, opponents of the mosque filed a lawsuit in state court seeking to stop construction. Ultimately, with the exception of the plaintiffs’ public-notice claim, the chancery court dismissed the plaintiffs’ claims.
RLUIPA prohibits religious discrimination in land use and zoning decisions. Persons who believe that they been subjected to religious discrimination in land use or zoning may contact the Housing and Civil Enforcement Section of the Justice Department’s Civil Rights Division at 1-800-896-7743. Additional information about the Justice Department’s efforts to combat religious discrimination may be found at www.justice.gov/crt/spec_topics/religiousdiscrimination/.
The complaint is an allegation of unlawful conduct. The allegations must be proven in federal court.
Related Materials:
Complaint
Hacker Sentenced to Seven Years in Prison for Role in Two Hacking Schemes Involving a Total of More Than 240,000 Stolen Credit Card NumbersRead the Press Release
WASHINGTON – Aleksandr Suvorov, of Estonia, was sentenced today to seven years in prison for his role in two separate hacking schemes involving a total of more than 240,000 stolen credit card numbers.
The sentence was announced today by Assistant Attorney General Lanny A. Breuer for the Criminal Division, U.S. Attorney for the Eastern District of New York Loretta E. Lynch, U.S. Attorney for the Southern District of California Laura E. Duffy and Director of the U.S. Secret Service Mark Sullivan.
Suvorov, 28, was sentenced by U.S. District Judge Sandra J. Feuerstein in Central Islip, N.Y. Suvorov was an accomplice to Albert Gonzalez, one of the most prolific identity thieves ever prosecuted by the U.S. government.
Suvorov pleaded guilty in May 2009 to a wire fraud conspiracy charge, filed in the Eastern District of New York, for hacking into the national restaurant chain Dave & Buster’s and stealing more than 80,000 credit card numbers. In addition, Suvorov pleaded guilty in November 2011 to a trafficking in unauthorized access devices charge, originally filed in the Southern District of California, related to the sale of more than 160,000 stolen credit card numbers to an undercover agent with the U.S. Secret Service. The cases were consolidated in the Eastern District of New York for sentencing. In addition to his prison term, Suvorov was ordered to pay $675,000 in restitution and to satisfy a $300,000 asset forfeiture judgment stemming from the New York charges.
“Mr. Suvorov participated in a scheme to sell thousands of credit card numbers stolen from unsuspecting consumers,” said Assistant Attorney General Breuer. “Computer hackers like Mr. Suvorov victimize businesses and individuals, posing a serious threat to their financial security. Today’s sentence sends a clear message that cyber criminals operating abroad will suffer severe consequences for their crimes.”
“Suvorov reached across an ocean to victimize thousands of Americans,” said U.S. Attorney Lynch. “That ocean was no protection from the reach of U.S. law enforcement, whose coordinated efforts put a stop to Suvorov and his cohorts’ criminal scheme. He will now serve his sentence in the country of his victims. Computer hackers and identity thieves who prey on innocent American consumers, businesses and financial institutions will find no refuge from U.S. criminal justice in any corner of the globe.”
“This international criminal enterprise thought that they could traffic in stolen credit card information from abroad, but due to the coordinated efforts of the United States Secret Service and the Justice Department, they were wrong,” said U.S. Attorney Duffy. “The agents of the San Diego field office of the United States Secret Service are to be commended for their investigative work in dismantling this organization.”
“This case demonstrates the potential for criminals to inflict significant damage to our nation’s financial sector, but this investigation and the resulting sentences should serve as a warning to cyber criminals that law enforcement will continue to pursue them wherever they are,” said U.S. Secret Service Director Sullivan. “The Secret Service, in conjunction with its many law enforcement partners across the United States and around the world, continues to successfully combat these crimes by adapting our investigative methodologies. We realize our success in this investigation is due to the cooperation of these partners in more than a dozen international law enforcement agencies.”
According to court documents, in the New York case, Suvorov, Albert Gonzalez and a third co-conspirator devised a scheme to gain unauthorized access into the computer systems of Dave & Buster’s Inc. for the purposes of installing malicious software and extracting credit card information of the Dave & Buster’s patrons. Gonzalez, who was in Miami, sent the software, known as a “packet sniffer,” to a co-conspirator in Ukraine. A packet sniffer is malicious software designed, in this case, to collect credit card information. The co-conspirator in Ukraine then provided the packet sniffer to Suvorov in Estonia. Suvorov, working with another individual, gained unauthorized access to 11 Dave & Buster’s restaurants throughout the United States, one of which was in Islandia, N.Y., and installed the packet sniffer. Suvorov and his co-conspirators ultimately obtained data from 81,005 credit cards.
Gonzalez was sentenced in March 2010 to 20 years in prison for his role in the Dave & Buster’s hack, as well as hacks into a major payment processor and several retail networks. The other co-conspirator was arrested in Turkey on related identity theft charges, and was sentenced there to 30 years in prison.
In the California case, Suvorov and an accomplice conspired to sell more than 160,000 stolen credit card numbers to a buyer in San Diego who was an undercover agent with the U.S. Secret Service. Suvorov provided the stolen credit card numbers to an accomplice, who in turn sold them to the undercover agent.
The New York case was prosecuted by Assistant U.S. Attorney William Campos of the Eastern District of New York and Trial Attorneys James Silver and Evan Williams of the Criminal Division’s Computer Crime & Intellectual Property Section (CCIPS) and was investigated by the U.S. Secret Service Criminal Investigative Division Cyber Investigations Branch. Former CCIPS Assistant Deputy Chief Howard Cox and Senior Counsel Kimberly Peretti also contributed significantly to the investigation and prosecution of this case. The California case was prosecuted by Assistant U.S. Attorney Orlando Gutierrez of the Southern District of California and investigated by the U.S. Secret Service San Diego Field Office. The Office of International Affairs in the Criminal Division provided significant assistance.
Former New York Employee of a Financial Institution Pleads Guilty for His Role in Fraud Conspiracy Involving Municipal BondsRead the Press Release
A former financial institution employee pleaded guilty today for his participation in a conspiracy related to municipal bonds, the Department of Justice announced.
According to the plea proceeding held today in the U.S. District Court in Manhattan, Alexander Wright, a resident of New York City, engaged in a fraud conspiracy in the municipal finance industry. According to court documents, the New York-based financial institution that employed Wright as a vice president of the municipal derivatives marketing group was a provider of investment agreements as well as other municipal finance contracts to public entities. Public entities seek to invest money from a variety of sources, primarily the proceeds of municipal bonds that they issue, to raise money for, among other things, public projects. Public entities typically hire a broker to conduct a competitive bidding process for the award of the investment agreements and often for other municipal finance contracts.
The department said in court documents that from approximately June 12, 2002, until approximately June 20, 2002, Wright participated in a fraud conspiracy with former executives from another financial institution, among others. One of the co-conspirators acted as the broker for a municipal finance contract, which was to be competitively bid. The co-conspirator gave Wright information about the prices or price levels of competitors’ bids, a practice known as a “last look.” The co-conspirator signaled Wright to change his bid to a specific number so that Wright’s employer could make more money. Wright and his co-conspirators represented to the municipal issuer that the bidding process was competitive when, in fact, it was not. The department said that, as a result of the bid manipulation, Wright’s employer won the contract at an artificially inflated price, which, since the issuer paid a higher price for the contract, deprived the municipal issuer of money and property.
“By engaging in non-competitive practices, such as sharing confidential bidding information, the co-conspirators undermined the integrity of the municipal bond market and deprived the bond issuer of a fair and competitive price,” said Scott D. Hammond, Deputy Assistant Attorney General of the Antitrust Division’s Criminal Enforcement Program. “Today’s guilty plea demonstrates our continued efforts to hold accountable those who subvert the competitive process in our financial markets.”
The conspiracy to commit wire fraud for which Wright is charged carries a maximum penalty of five years in prison and a $250,000 criminal fine. The maximum fine for this offense may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
“The type of bid-rigging scheme Wright and his co-conspirators participated in not only deprives the municipal issuer of a fair and just bidding process, but weakens the public’s trust in the municipal bond market,” said Janice K. Fedarcyk, Assistant Director in Charge of the FBI in New York. “Today’s guilty plea is proof of our continued determination to root out those whose business practices contribute to the deterioration of healthy competition in the financial markets.”
“This guilty plea is another step in our efforts to clean up the fraudulent practices in the municipal bond market,” said Internal Revenue Service-Criminal Investigation (IRS-CI) Chief Richard Weber. “IRS Criminal Investigation will continue to provide financial investigative assistance to ensure individuals are held accountable for their criminal behavior.”
The charges announced today resulted from an ongoing investigation conducted by the Antitrust Division’s New York and Chicago Field Offices, the FBI and IRS-CI. 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.
To date, 12 individuals and one company have pleaded guilty to charges stemming from the ongoing investigation. In May 2012, a federal jury in the Southern District of New York convicted Dominick Carollo, Steven Goldberg and Peter Grimm of multiple counts involving similar fraud conspiracies after a four-week trial. Three other former executives of a financial institution were indicted on Dec. 9, 2010, for participating in fraud schemes and conspiracies related to the bidding for investment agreements, and are awaiting trial, which is scheduled to begin in Manhattan on July 30, 2012.
Today’s guilty plea is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.
Anyone with information concerning bid rigging and related offenses in any financial markets should contact the Antitrust Division’s New York Field Office at 212-335-8000, the FBI at 212-384-5000 or IRS-CI at 212-436-1761, or visit www.justice.gov/atr/contact/newcase.htm.Former CFO of North Carolina Assisted Living Facility Chain Pleads Guilty to Tax Fraud ConspiracyRead the Press Release
Michael R. Elliott, former chief financial officer of Caremerica Inc., pleaded guilty today to conspiring to defraud the Internal Revenue Service (IRS), the Justice Department and IRS announced.
On Nov. 15, 2011, a grand jury sitting in Raleigh, N.C., returned an indictment charging Elliott with the following tax offenses: one count of conspiring to defraud the IRS, 25 counts of failing to pay over employment taxes, one count of filing a false tax return, and one count of obstructing the due administration of the tax laws.
According to the charging document, Elliott co-owned and operated a chain of assisted living facilities (ALFs) in North Carolina. The ALFs were managed by Caremerica Inc., a company based in Leland, N.C., that Elliott also partly owned and operated. Elliott was the Chief Financial Officer for Caremerica, the Caremerica ALFs, and other related companies (Caremerica companies). As a corporate officer, Elliott was responsible for ensuring that the Caremerica companies collected, reported, and paid over federal employment taxes to the IRS. However, with Elliott as the chief financial officer, the Caremerica companies accrued more than $4.5 million in employment tax liabilities between approximately 2003 and 2006. Elliott failed to comply with his employment tax obligations by filing, and causing to be filed, false IRS forms and failing to pay the employment taxes due.
The indictment further alleges that in 2003, Elliott acquired partial ownership of Partners Pharmacy Services Inc. (PPS), which provided prescription drug and related services to the Caremerica ALFs. In March 2005, Elliott sold PPS to a subsidiary of Omnicare Inc. At the closing, Elliott received $1.4 million, which he directed to be deposited into a bank account in someone else’s name.
At his hearing before Judge James C. Fox, sitting in Wilmington, N.C., Elliott agreed that he should be ordered to pay restitution of $4.8 million. His sentencing is set for the court’s term beginning Nov. 5, 2012.
This case was investigated by IRS-Criminal Investigation. It is being prosecuted by Trial Attorneys Adam Hulbig, Todd Ellinwood and Kevin Lombardi of the Justice Department’s Tax Division.
17 July 2012
U.S. and Tennessee Announce Clean Water Act Agreement with the City of ChattanoogaRead the Press Release
WASHINGTON – The Department of Justice, the U.S. Environmental Protection Agency (EPA), the Tennessee Department of Environment and Conservation and the Office of the Tennessee Attorney General announced today a comprehensive Clean Water Act settlement with the city of Chattanooga, Tenn. Chattanooga has agreed to pay a $476,400 civil penalty and make improvements to its sewer systems, estimated by the city at $250 million, to eliminate unauthorized overflows of untreated raw sewage. Chattanooga also has agreed to implement a green infrastructure plan and perform an $800,000 stream restoration project.
“Chattanooga residents will enjoy public health and environmental benefits for years to come as a result of the improvements required by this settlement agreement. The agreement prioritizes neighborhood sewer rehabilitation projects and utilizes innovative stormwater controls in the urban core, reducing sewer overflows and overall reducing threats to public health posed by untreated sewage,” said Ignacia S. Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. “This is another example of how we are working toward the goal of clean water for all communities through the vigorous enforcement of the Clean Water Act throughout the United States.”
“The EPA is working with communities across the country to address sewage overflows that impact the health of residents and impair local water quality,” said Cynthia Giles, Assistant Administrator for the EPA’s Office of Enforcement and Compliance Assurance. “Today’s agreement with the city of Chattanooga will rehabilitate their aging sewer system and promote innovative green infrastructure efforts to reduce stormwater runoff, while increasing green space in communities.”
A consent decree, filed today in U.S. District Court for the Eastern District of Tennessee in Chattanooga, represents the combined efforts of the United States and the state of Tennessee, co-plaintiffs in this settlement, and of the Tennessee Clean Water Network, a citizens’ plaintiff in this action. The consent decree resolves claims for injunctive relief and civil penalties for Chattanooga’s alleged violations of the Clean Water Act and the Tennessee Water Quality Control Act.
“Sewage overflows are a significant problem affecting water quality and, ultimately, the health of our communities across the Southeast,” said Gwen Keyes Fleming, EPA Region 4 Administrator. “The Chattanooga community will benefit from improved water quality and a cleaner, healthier environment as a result of this settlement.”
The proposed consent decree will require Chattanooga to comprehensively assess and rehabilitate its entire sewer collection system to eliminate overflows of untreated raw sewage. Specifically, Chattanooga will perform rehabilitation projects to address known problems within the collection system; implement programs to ensure proper management, operation and maintenance of its sewer systems; and install additional controls on the Chattanooga Creek combined sewer outfalls to ensure compliance with water quality standards.
Prior to finalizing the proposed consent decree, the city, along with EPA and the Tennessee Department of Environment and Conservation, held two public meetings to provide information regarding the sewer system and to seek community input regarding the impact that sewer overflows were having in the community.
Chattanooga has also agreed to perform a stream restoration supplemental environmental project at a cost of $800,000 in the 3800 Block of Agawela Drive, to restore the stream and stabilize the banks of a tributary of the South Chickamauga Creek and eliminate a significant source of sediment and solids to the creek. Half of the civil penalty will be paid to the United States. At the direction of the state, the other half of the civil penalty will be paid by Chattanooga through the performance of green infrastructure demonstration projects in the historic downtown Highland Park neighborhood to, among other things, improve water quality in the Dobbs Branch stream, which flows into Chattanooga Creek. Green infrastructure involves the use of soils, vegetation and natural processes to store, infiltrate and evaporate storm water to prevent it from getting into the sewer system.
“Today's consent decree sets out a schedule that will ensure the city of Chattanooga moves forward in making the much needed infrastructure changes to its sewer system,” said Tennessee Department of Environment and Conservation Commissioner Bob Martineau. “We’ve been pleased with the city's efforts and cooperative tone during these negotiations and will continue working together to ensure a cleaner, healthier environment for the citizens of Chattanooga.”
“We have seen far too many violations of the Tennessee Water Quality Control Act due to aging infrastructure across the state,” said Tennessee Attorney General Bob Cooper. “We hope this cooperative agreement to improve Chattanooga’s sewer system will improve the quality of our environment and economy.”
Keeping raw sewage and contaminated stormwater out of the waters of the United States is one of the EPA’s national enforcement initiatives for 2011 to 2013. The initiative focuses on reducing sewer overflows, which can present a significant threat to human health and the environment. These reductions are accomplished by obtaining commitments from municipalities to implement timely, affordable solutions to these problems, including the increased use of green infrastructure and other innovative approaches.
The United States has reached similar agreements with municipalities across the country, including the following in the Southeast: Mobile and Jefferson County (Birmingham), Ala.; Atlanta and Dekalb County, Ga.; Knoxville and Nashville, Tenn.; Miami-Dade County, Fla.; and Northern Kentucky Sanitation District #1 and Louisville, Ky.
The proposed consent decree with Chattanooga is subject to a 30-day public comment period and final court approval before becoming effective. A copy will be available on the Department of Justice website at www.justice.gov/enrd/Consent_Decrees.html.More information about the settlement: http://www.epa.gov/compliance/resources/cases/civil/cwa/cityofchattanooga.html.
More about EPA’s national enforcement initiative is available at: http://www.epa.gov/compliance/data/planning/initiatives/2011sewagestormwater.html.
The Nordam Group Inc. Resolves Foreign Corrupt Practices Act Violations and Agrees to Pay $2 Million PenaltyRead the Press Release
WASHINGTON – The NORDAM Group Inc., a provider of aircraft maintenance, repair and overhaul (MRO) services based in Tulsa, Okla., has entered into an agreement with the Department of Justice to pay a $2 million penalty to resolve violations of the Foreign Corrupt Practices Act (FCPA), announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.
According to the agreement, NORDAM, its subsidiaries and affiliates paid bribes to employees of airlines created, controlled and exclusively owned by the People’s Republic of China in order to secure contracts to perform MRO services for those airlines. The bribes were paid both directly and indirectly to the airline employees. In an effort to disguise the bribes, three employees of NORDAM’s affiliate entered into sales representation agreements with fictitious entities and then used the money paid by NORDAM to those entities to pay bribes to the airline employees.
In addition to the monetary penalty, NORDAM agreed to cooperate with the department for the three-year term of the agreement, to report periodically to the department concerning NORDAM’s compliance efforts, and to continue to implement an enhanced compliance program and internal controls designed to prevent and detect FCPA violations.
The department entered into a non-prosecution agreement with NORDAM as a result of NORDAM’s timely, voluntary and complete disclosure of the conduct, its cooperation with the department and its remedial efforts. In addition, the agreement recognizes that a fine below the standard range under the U.S. Sentencing Guidelines is appropriate because NORDAM fully demonstrated to the department, and an independent accounting expert retained by the department verified, that a fine exceeding $2 million would substantially jeopardize the company’s continued viability.
The case is being handled by Trial Attorneys Daniel S. Kahn and Stephen J. Spiegelhalter of the Criminal Division’s Fraud Section. The division’s Office of International Affairs provided assistance. Assistant U.S. Attorney Kevin Leitch from the Northern District of Oklahoma also provided assistance in the case. The case was investigated by the FBI’s Washington Field Office’s team of special agents dedicated to the investigation of foreign bribery cases.
Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.
Readout of Attorney General Eric Holder’s Meeting and MoU Signing with Malaysian Minister for Home AffairsRead the Press Release
Attorney General Eric Holder and Malaysian Minister for Home Affairs Datuk Seri Hishammuddin bin Tun Hussein met today, during the Attorney General’s official visit to Malaysia, to discuss transnational crime, terrorism and other areas of mutual law enforcement cooperation. Attorney General Holder and Minister Hishammuddin also signed a memorandum of understanding (MoU) on assistance in the field of transnational crimes.
“With the signing of this memorandum of understanding, we reaffirm that the United States and Malaysia share a robust commitment to protecting our citizens from criminal activities that transcend jurisdictions, cross international borders and span across the globe,” said Attorney General Eric Holder. “This agreement encourages direct cooperation between key authorities and law enforcement officials, allowing our two nations to more effectively – and more collaboratively – respond to the evolving transnational challenges we must confront. I’m confident that it will strengthen our ability to safeguard our citizens and bring dangerous criminals to justice.”
Under the MoU, law enforcement officials from both countries will be able to share information in order to prevent and investigate transnational crime including human trafficking, drug trafficking, terrorism, money laundering, cybercrimes and organized crime. The MoU encourages expanded direct and informal cooperation among law enforcement officers in both countries to assist in investigations. In addition, the MoU will enhance capacity-building efforts through training, consultations and exchanges. Information will not be shared where it is not legally permitted by either country.
The MoU is also part of a larger picture of growing cooperation between the U.S. and Malaysia in a range of areas from law enforcement to trade, from educational and cultural exchanges to bilateral dialogue.
After the MoU signing ceremony, Attorney General Holder met with the Prime Minister of Malaysia Dato’ Sri Najib Tun Abdul Razak.
Earlier today, Attorney General Holder met with with U.S. embassy personnel and then spoke to sessions and magistrate court judges, prosecutors, government officials and the Malaysian Bar Council about their ongoing efforts to hold criminals accountable and protect the civil liberties of all citizens. Attorney General Holder will meet with local law enforcement before travelling to Singapore for meetings with the U.S. Ambassador to the Republic of Singapore David Adelman and local law enforcement counterparts.
For photos of Attorney General Holder’s official visit, please visit http://blogs.justice.gov/main/archives/2373 .
Justice Department Settles with State of Nevada<br /> to Enforce Employment Rights of Returning Army ReservistRead the Press Release
WASHINGTON – The Justice Department today announced a settlement with the state of Nevada and its Office of the State Controller to resolve allegations that they willfully violated the employment rights of Army reservist Col. Arthur Ingram when he returned from military service. The settlement in this case represents the largest recovery the Civil Rights Division has obtained on behalf of a returning service member since 2004, when it assumed jurisdiction for the enforcement of the Uniformed Services Employment and Reemployment Rights Act (USERRA).
On July 13, 2012, the state of Nevada Board of Examiners ratified a settlement agreement previously filed by the parties and approved by the federal court in the U.S. District Court for the District of Nevada. The settlement requires the defendants to pay Ingram $262,000 in back pay and $211,000 to fully fund his pension benefits for a nine-year time period from when Ingram started his active duty military service through settlement.
The Justice Department’s complaint alleges that the defendants willfully violated USERRA by failing to reemploy Ingram in his prior position as chief deputy controller when he returned from military service in June 2008. According to the Justice Department’s complaint, after Ingram filed an initial complaint with the Labor Department’s Veterans’ Employment and Training Service to attempt to obtain reemployment, the defendants then willfully retaliated against him by withdrawing an offer to reemploy him in a lower paying position as a chief accountant, terminating his employment and backdating the termination to January 2007 to punitively prohibit his vesting in the Nevada state pension system.
USERRA requires all employers to promptly reemploy service members returning from military service in their pre-service position or a position of like seniority, status and pay. USERRA also prohibits employers from retaliating against service members for asserting their reemployment rights under the statute.“Men and women called to active duty need to know they do not have to sacrifice their civilian jobs at home in order to serve our country,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Civil Rights Division is committed to aggressive enforcement of USERRA to protect the rights of those who, through their bravery and sacrifice, secure the rights of all Americans.”
“The United States Attorney’s Office for the District of Nevada remains committed to protecting the employment rights of military reservists when they return home from active duty following service on behalf of the United States,” said U.S. Attorney for the District of Nevada Daniel G. Bogden.
Additional information about USERRA can be found on the Justice Department websites www.usdoj.gov/crt/emp and www.servicemembers.gov, as well as the Labor Department website www.dol.gov/vets/programs/userra/main.htm.
16 July 2012
Rehabilitation Agency Owner in Detroit Sentenced to 84 Months in Prison for Role in $3 Million Therapy Fraud SchemeRead the Press Release
WASHINGTON – The owner of a Detroit-area rehabilitation agency was sentenced today to 84 months in prison for his leading role in a $3 million Medicare fraud scheme, the Departments of Justice and Health and Human Services (HHS) announced.
Detroit-area resident Tariq Mahmud, 54, was sentenced by U.S. District Judge Avern Cohn in the Eastern District of Michigan. In addition to his prison term, Mahmud was sentenced to three years of supervised release and was ordered to pay $1.8 million in restitution, joint and several with his co-defendants.
Mahmud was convicted by a federal jury on Feb. 2, 2012, after a four-day trial, of one count of conspiracy to commit health care fraud and six counts of health care fraud. Mahmud was charged along with four other defendants in an indictment unsealed on Feb. 17, 2011, as part of a nationwide Medicare fraud takedown, and subsequently in a superseding indictment on Dec. 28, 2011. The four other defendants have pleaded guilty and have been sentenced.
According to evidence presented during the trial, Mahmud was the owner of Comprehensive Rehabilitation Services Inc. (CRS), a fraudulent rehabilitation agency located in Dearborn, Mich. Between January 2003 and February 2007, CRS purchased falsified physical and occupational therapy files from more than 30 therapy and rehabilitation companies and used them to fraudulently bill Medicare for more than $3 million.
As part of the scheme, Medicare beneficiaries were paid cash kickbacks and given prescription drugs to sign forms and visit sheets that were later falsified to indicate that they received therapy services that were never provided. Physical and occupational therapists created false evaluations, progress notes and discharge papers indicating that the therapy services were given, when in fact they never were. Evidence at trial showed that the therapists never met the beneficiaries and Mahmud never provided or supervised the therapy billed to Medicare.
In addition to submitting more than $3 million in false therapy claims, Mahmud made additional false statements to Medicare regarding services that were never rendered. For instance, when Medicare inquired regarding a beneficiary who complained that he had not received the services for which CRS billed Medicare, Mahmud returned the payment and told Medicare that he consulted with his professional staff and the beneficiary had not been satisfied with services. In fact, CRS had no professional staff; the therapists who signed the beneficiary’s file never rendered any services; and the beneficiary never received services. Evidence at trial established that the beneficiary’s identity was stolen and used by CRS and a fraudulent file-making company to bill Medicare.
Today’s sentence was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade; Acting Special Agent in Charge of the FBI’s Detroit Field Office Edward J. Hanko; and Special Agent in Charge Lamont Pugh III of the HHS Office of Inspector General’s (OIG) Chicago Regional Office.
This case was prosecuted by Trial Attorney Catherine K. Dick and Assistant Chief Benjamin S. Singer of the Criminal Division’s Fraud Section. It was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,330 defendants who collectively have falsely billed the Medicare program for more than $4 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.
Alabama Businessman, Lobbyist and Legislator Sentenced to Prison for Roles in Wide-Ranging Conspiracy to Influence and Corrupt Activities of Alabama State LegislatureRead the Press Release
WASHINGTON – Three individuals, including Alabama businessman Ronald Gilley, lobbyist Jarrod Massey and former Alabama state representative Terry Spicer were sentenced to prison today in Montgomery, Ala., for bribery-related offenses, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and FBI Special Agent in Charge Stephen Richardson.
U.S. District Judge Myron H. Thompson of the Middle District of Alabama sentenced Gilley to 80 months in prison, Massey to 65 months in prison and Spicer to 57 months in prison. Each defendant also was sentenced to a term of supervised release following his prison term.
Gilley, 47, of Dothan, Ala., and Massey, 41, of Troy, Ala., both pleaded guilty to a wide-ranging conspiracy to bribe multiple members of the Alabama legislature, as well as individual instances of federal program bribery involving legislators. According to court documents and previous testimony, Gilley owned a controlling interest in the Country Crossing real estate, entertainment and gambling development in Houston County, Ala. Country Crossing sought to offer electronic bingo gambling machines to the public. Massey owned a lobbying business, Mantra Governmental, and Gilley was one of Massey’s largest clients.
During the 2009 and 2010 Alabama legislative session, Gilley and Massey promoted the passage of pro-gambling legislation that would have been favorable to operating electronic bingo facilities. Specifically, Gilley and Massey corruptly gave, offered and agreed to give money and other things of value to Alabama state legislators with the intent to influence and reward them in connection with pro-gambling legislation. Gilley also pleaded guilty to money laundering for attempting to launder $200,000 in bribe payments to a state senator in order to disguise the illicit purpose of the money. Gilley and Massey both assisted in the government’s investigation, and the government recommended that each receive a reduction in his sentence as a result.
In a separate bribery conspiracy, Spicer, 46, of Elba, Ala., pleaded guilty to a single count of federal program bribery for his solicitation and receipt of multiple things of value from Gilley and Massey, including cash payments ranging from $1,000 to $3,000 per month during a period of more than four years; an all-expenses-paid ski trip for his family valued at $10,000; a one-time payment of $9,000; a $20,000 campaign contribution; and more than $22,500 in free concert tickets. In exchange, Spicer repeatedly offered official assistance, including by encouraging others to hire Massey as their lobbyist and by aiding Gilley as specific opportunities arose.
The case is being prosecuted by Deputy Chief M. Kendall Day and Trial Attorneys Emily Rae Woods and Marquest J. Meeks of the Public Integrity Section in the Justice Department’s Criminal Division. The case is being investigated by the FBI’s Montgomery Field Office.
13 July 2012
Two Indicted for Alleged Efforts to Supply Iran with <br /> U.S.-Materials for Gas Centrifuges to Enrich UraniumRead the Press Release
WASHINGTON – A federal grand jury in the District of Columbia has returned a superseding indictment charging Parviz Khaki, a citizen of Iran, and Zongcheng Yi, a resident of China, for their alleged efforts to obtain and illegally export to Iran U.S.-origin materials that can be used to construct, operate and maintain gas centrifuges to enrich uranium, including maraging steel, aluminum alloys, mass spectrometers, vacuum pumps and other items. Khaki is also accused of conspiring to procure radioactive source materials from the United States for customers in Iran.
The superseding indictment, which was returned late yesterday, was announced by Lisa Monaco, Assistant Attorney General for National Security; Ronald C. Machen Jr., U.S. Attorney for the District of Columbia; and John Morton, Director of U.S. Immigration and Customs Enforcement (ICE).
The superseding indictment charges Khaki, age 43, aka “Martin,” and Yi, aka “Yi Cheng,” aka “Kohler,” aka “Kohler Yi,” each with one count of conspiracy to violate the International Emergency Economic Powers Act (IEEPA) by conspiring with others to cause the export of U.S. goods to Iran without the required U.S. Treasury Department license. Both defendants are also charged with one count of conspiracy to defraud the United States; two counts of smuggling; two counts of illegally exporting U.S. goods to Iran in violation of IEEPA; and one count of conspiracy to commit money laundering.
Khaki was arrested on May 24, 2012, by authorities in the Philippines in connection with a U.S. provisional arrest request stemming from a March 8, 2012 indictment in the District of Columbia. Yi, who is purported to be the managing director of Monalila Co. LTD, a company in Guangzhou City, China, remains at large.
Both defendants face a maximum potential sentence of 20 years in prison for conspiring to violate IEEPA; five years in prison for conspiring to defraud the United States; ten years in prison for each smuggling count; 20 years in prison for each IEEPA count and 20 years in prison for conspiracy to commit money laundering.
“Today’s indictment sheds light on the reach of Iran’s illegal procurement networks and the importance of keeping U.S. nuclear-related materials from being exploited by Iran. Iranian procurement networks continue to target U.S. and Western companies for technology acquisition by using fraud, front companies and middlemen in nations around the globe. I applaud the authorities in the Philippines and the many U.S. agents, analysts and prosecutors who worked on this important case,” said Lisa Monaco, Assistant Attorney General for National Security.
“This new indictment shows that we have no tolerance for those who try to traffic in commodities that can be used to support Iran’s nuclear program,” said U.S. Attorney Ronald C. Machen Jr. “It also underscores our commitment to aggressively enforcing export laws."
“By dismantling this complex conspiracy to deliver nuclear-related materials from the United States to Iran, we have disrupted a significant threat to national security,” said ICE Director John Morton. “Homeland Security Investigations will continue to pursue those who exploit U.S. businesses to illegally supply foreign governments with sensitive materials and technology that pose a serious risk to America and its allies.”According to the indictment, from around October 2008 through January 2011, Khaki, Yi and others conspired to cause the export of goods from the United States to Iran in violation of the embargo. At no time during this period did the defendants have a license or authorization from the Treasury Department to export any U.S. goods to Iran.
In carrying out the conspiracy, the indictment alleges that Khaki directed Yi and others to contact U.S. companies about purchasing U.S.-origin goods. Yi and other conspirators then placed orders and purchased goods from various U.S. companies and had the goods exported from the United States through China and Hong Kong to Khaki and others in Iran. Yi and others allegedly made a variety of false statements to U.S. companies on behalf of Khaki to conceal that Iran was the final destination and end-user of the goods and to convince U.S. companies to export these items to a third country.
Efforts to Export to Iran U.S. Materials for Gas Centrifuges to Enrich Uranium
For example, the indictment alleges that on Dec. 6, 2008, Khaki asked an individual in China to obtain 20 tons of C-350 maraging steel from the United States for Khaki’s customer in Iran. In the months that followed, Khaki also had communications with Yi about purchasing 20 tons of maraging steel from a U.S. company with which Yi was in contact. Maraging steel is a special class of high-strength steel known for possessing superior strength without losing malleability. The enhanced strength of maraging steel makes it particularly suited for use in gas centrifuges for uranium enrichment.
In March 2009, Khaki allegedly began communicating with an undercover U.S. federal agent posing as an illegal exporter of U.S. goods. The agent told Khaki that the U.S. company (referenced above) could not sell Khaki the maraging steel because doing so was illegal, but that he (the undercover agent) could potentially help export the steel for a fee. Khaki allegedly replied to the agent with questions about price and payment. In the months that followed, Khaki continued to communicate with the agent in an effort to acquire and export the maraging steel to Iran, noting in one instance, “you know and I know this material are [sic] limited material and danger goods…” Khaki also discussed his desire to make money from the transaction.
The indictment also alleges that in late 2008, Khaki reached out to an individual in China about procuring 20 tons of 7075-O aluminum alloy 80mm rods and 20 tons of 7075-T6 aluminum alloy 150 mm rods from the United States or Europe. In one communication, Khaki explained to the individual that the aluminum alloy had to be American made because his Iranian customer had previously found that Chinese aluminum alloy was of poor quality.
Khaki also allegedly sought to obtain mass spectrometers from the United States. In a May 2009 email request to the undercover federal agent, Khaki specified that one magnetic mass spectrometer he sought was for the isotopic analysis of gaseous uranium hexafluoride. Uranium hexafluoride is the chemical compound used in the gas centrifuge process to enrich uranium. Khaki and Yi also conspired to obtain other items from U.S. companies that can be used for gas centrifuges, including measuring instruments, pressure transducers, vacuum pumps and other accessories, according to the charges.
Efforts to Export to Iran Radioactive Materials
The indictment further alleges that Khaki sought to obtain radioactive source materials from the United States. In May 2009, for instance, Khaki sent an email to the undercover agent asking the agent to purchase radioactive sources and test materials from a U.S. company. Attached to the email was a list of products, including barium-133 source and europium-152 source, as well as contact information for the U.S. company.
In January 2011, Khaki contacted the undercover agent again requesting that he purchase various radioactive sources. In one email to the agent, Khaki allegedly sent a product catalogue for radioactive sources, including cobalt-57 source, and in another email he requested the agent purchase cadmium-109 source.
Exports to Iran of Lathes and Nickel Alloy Wire through Hong Kong, China
The indictment alleges the defendants caused the illegal export of lathes and nickel alloy 120 wire from the United States through China to Iran. In February 2009, Khaki asked Yi to contact a U.S. company about procuring two Twister Speed Lathes. Yi allegedly purchased these items and arranged for them to be shipped from the United States to Hong Kong and ultimately to Iran in June 2009.
In another transaction, on Jan. 26, 2009, Khaki allegedly asked a conspirator to contact a U.S. company about purchasing nickel alloy 120. At Khaki’s request, the conspirator sent a U.S. company an order for nickel alloy, falsely stating that a company in China was the purchaser. In June 2009, the U.S. company shipped the nickel alloy to Yi in Hong Kong, who shipped it on to Iran, according to the charges.
This investigation was conducted by U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigation (HSI) agents. Assistance was provided by authorities in the Philippines. The prosecution is being handled by the U.S. Attorney’s Office for the District of Columbia and Trial Attorney Brandon L. Van Grack of the Counterespionage Section of the Justice Department’s National Security Division. The Office of International Affairs in the Justice Department’s Criminal Division also provided assistance.
The public is reminded that an indictment contains mere allegations. Defendants are presumed innocent unless and until proven guilty in a court of law.
National President, National Vice President and 39 Members and Associates of the Devils Diciples Motorcycle Gang IndictedRead the Press Release
An indictment unsealed today in the Eastern District of Michigan charges 41 members and associates of the Devils Diciples Motorcycle Gang, including National President Jeff Garvin Smith and National Vice President Paul Anthony Darrah, for their alleged participation in a variety of criminal offenses, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Barbara McQuade for the Eastern District of Michigan and FBI Acting Assistant Director Valerie Parlave.
Thirty-one defendants were arrested today in Michigan and Alabama and five defendants were previously in custody. More than 60 firearms and more than 6,000 rounds of ammunition were seized during this investigation. In addition, eight methamphetamine manufacturing laboratories were dismantled during the investigation.
The indictment alleges that the 41 Devils Diciples members and associates, including Smith and Darrah, participated in various criminal acts, including violent crimes in aid of racketeering, drug trafficking, illegal firearms offenses, obstruction of justice, illegal gambling and other federal offenses. Eighteen of the defendants, including Smith and Darrah, are charged with violations of the Racketeer Influenced and Corrupt Organizations (RICO) Act by conducting their illegal enterprise through a pattern of racketeering activity which included murder, robbery, extortion, drug trafficking, obstruction of justice and other federal and state offenses.
“For years, according to the indictment, the Devils Diciples have spread fear in cities throughout Michigan and around the country,” said Assistant Attorney General Breuer. “This violent criminal enterprise allegedly profits from drug trafficking and illegal gambling, and uses intimidation and violence to silence its adversaries and maintain control over its members. Today’s arrests of the Devils Diciples’ top leaders and 39 of the gang’s members and associates are an important step in our efforts to dismantle violent criminal enterprises across the country.”
“Removing violent criminal organizations from our community is essential to attaining the quality of life we expect and deserve,” said U.S. Attorney McQuade. “Federal law enforcement is using all legal tools available to prosecute violent criminal enterprises like this one.”
“Today’s law enforcement action takes violence off the streets,” said FBI Acting Assistant Director Valerie Parlave. “The FBI appreciates the strong law enforcement partnerships leading to this activity and will continue its commitment to state and local communities to address this violent, and often brutal, criminal threat across the U.S.”
According to the indictment, the Devils Diciples is a criminal enterprise with its national headquarters in Clinton Township, Mich. The Devils Diciples operates regional chapters located in cities throughout Michigan, Alabama, Arizona, California, Illinois, Indiana, Ohio and elsewhere. The Devils Diciples engage in criminal activities for financial gain, including distribution of narcotics, theft, transportation and sale of stolen motorcycles, conducting illegal gambling businesses, robbery, extortion and acts of violence.
According to the indictment, membership in the Devils Diciples is based in part on successfully completing a probationary period, followed by formal approval by one or more members or leaders. Members are required to own Harley Davidson motorcycles and are commonly referred to as “full patched members.” Full patched members are identified by a club name or nickname for the express purpose of concealing their identity and thwarting identification by law enforcement. Members are required to follow orders from leadership, including orders to assault or use threats and intimidation against others, to transport or distribute drugs, to lie to law enforcement or to hide or destroy evidence. Members are also required to follow the Devils Diciples by-laws and attend regular meetings referred to as “church.”
The indictment alleges that the Devils Diciples committed acts involving attempted murder, robbery, extortion, assault and threats of violence to maintain the territory of the organization and to protect the organization and its members from detection and prosecution by law enforcement authorities.
The indictment charges the 41 Devils Diciples members and associates with a variety of criminal offenses including violent crimes in aid of racketeering, drug trafficking, illegal firearms offenses, obstruction of justice and other federal offenses.
Specifically, the indictment alleges that in August 2003, Vincent John Witort and multiple other Devils Diciples members robbed, kidnapped and attempted to murder other members of the Arizona Chapter for violating Devils Diciples rules.
The indictment alleges that in 2004, Smith possessed state and federal law enforcement manuals regarding outlaw motorcycle gangs marked “For Official Use Only” and “Law Enforcement Sensitive” and numerous documents related to criminal matters involving members of the Devils Diciples, including police reports, search warrants, affidavits, indictments and witness interview transcripts.
Smith allegedly assaulted another individual in August 2008, for the purpose of maintaining and increasing position in the Devils Diciples enterprise. The indictment also alleges that in late 2008, Smith, Paul Anthony Darrah and Cary Dale Vandiver assaulted Scott Thomas Perkins with a metal pipe.
According to the indictment, in February 2009, Ronald Raymond Roberts, Christopher Raymond Cook and Wayne Russell Werth allegedly assaulted Danny Russell Burby Jr. with a box cutter and a bottle, after various Devils Diciples members circulated flyers containing a photograph of Burby and stating that Burby was a “snitch.”
The indictment also alleges that in January 2012, David Randy Drozdowski and Smiley Villa assaulted an individual they believed was a member of a rival motorcycle club for being present in Devils Diciples territory.
Sixteen of the members and associates named in the indictment are charged with conspiracy to conduct an illegal gambling business. The defendants operated slot machines located in several Devils Diciples clubhouses in Michigan, Arizona and Alabama to generate income for the criminal enterprise and its members.
The 41 defendants charged are:
1. Scott William Sutherland, aka “Scotty Z”
2. Ronald Raymond Roberts, aka “Rockin’ Ronnie”
3. David Thomas Roberts, aka “Detroit Dave”
4. Patrick Michael McKeoun, aka “Magoo”
5. Jeff Garvin Smith, aka “Fat Dog”
6. Paul Anthony Darrah, aka “Pauli”
7. Cary Dale Vandiver, aka “Gun Control”
8. Vincent John Witort, aka “Holiday”
9. Michael William Mastromatteo, aka “Iron Mike”
10. Vernon Nelson Rich, aka “Vern”
11. John Renny Riede, aka “Bear”
12. Victor Carlos Castano
13. Gary Lee Nelson
14. Michael Kenneth Rich, aka “Tatu”
15. Raymond Charles Melioli, aka “Romeo”
16. Timothy Paul Downs, aka “Space”
17. David Randy Drozdowski, aka “D”
18. Smiley Villa, aka “SA”
19. Dean Edward Jakiel, aka “Jesus”
20. Tony Wayne Kitchens, aka “Trouble”
21. Sylvester Gerard Wesaw, aka “Sly Dog”
22. Ronald Nick Preletz, aka “Polar Bear”
23. Howard Joseph Quant, aka “44”
24. Scott Thomas Perkins, aka “Scotty P”
25. Clifford Chansel Rhodes, II
26. David Roy Delong, aka “Reverend”
27. Christopher Raymond Cook, aka “Damien”
28. Michael John Palazzola, aka “Utica Mike”
29. Danny Russell Burby, Jr., aka “Thumbs”
30. Ronald Leon Lambert, aka “Crow”
31. Jason Joseph Cook, aka “Cookie”
32. Edward Allen Taylor, aka “Big Ed”
33. Salvatore Battaglia, aka Bando”
34. William Scott Lonsby, aka “Buckwheat”
35. Wayne Russell Werth
36. Lauri Ann Ledford
37. Jennifer Lee Cicola
38. Dean Anthony Tagliavia
39. Alexis Catherine May
40. Paula Mileha Friscioni
41. John Charles Scudder
An indictment is only a charge and is not evidence of guilt. Each defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
The case was investigated by the FBI, the Michigan State Police, the Macomb County Sheriff’s Office, and the County of Macomb Enforcement Team (COMET), with assistance from the Bureau of Alcohol, Tobacco, Firearms and Explosives, and the St. Clair County Sheriff’s Office. The case is being prosecuted by the Organized Crime and Gang Section of the Justice Department’s Criminal Division and the U.S. Attorney’s Office for the Eastern District of Michigan.
Hazardous Waste Generators Agree to $56.4 Million Cleanup of Former Texas City, Texas, Waste Disposal SiteRead the Press Release
WASHINGTON – The Department of Justice and the U.S. Environmental Protection Agency (EPA) announced today an agreement with over three dozen companies and government agencies that will result in a $56.4 million cleanup of the “Malone Services Company” Superfund Site in Texas City, Texas, a former waste-disposal site near the shore of Galveston Bay.
“Cleanup under today’s settlement will address the threat from more than a quarter of a million cubic yards of contamination left behind by the site operators in tanks and in a large unlined earthen basin,” said Robert Dreher, Principal Deputy Assistant Attorney General of the Justice Department’s Environment and Natural Resources Division. “Through this agreement, the parties have avoided costly and time-consuming litigation and expedited a cleanup that will protect the health and safety of citizens of Texas City and the coastal environment along Swan Lake.”
The settlement, which is subject to court approval, requires a group of 27 companies to clean up the site, pay EPA $900,000 towards past and future costs, and reimburse the state of Texas for $796,726 in past costs. Among the companies doing the clean-up work are BP Products North America Inc., Pharmacia (formerly Monsanto), Marathon Oil Company, Exxon Mobil Corporation and BASF Corporation. Seventy-six entities, including the United States and the Texas Commission on Environmental Quality (TCEQ) are resolving their liability by paying cash to the group of 27. The United States, which shipped 1.62 percent of the waste, will pay $1,490,029. TCEQ, which shipped 0.00545 percent of the waste, will contribute $6,766. (EPA previously completed four rounds of administrative settlements with approximately 230 relatively small contributors of waste, so-called “de minimis” parties, collecting approximately $8.4 million. EPA will make at least $4.5 million from these and other recoveries available to the group of 27 companies carrying out the cleanup.)
“Once approved by the court, this settlement will reinforce the 'polluter pays' principle that is central to the Superfund program by obtaining a commitment for funds for cleanup work from the responsible parties at this site,” said EPA Acting Regional Administrator Sam Coleman. “This settlement ensures the cleanup of this site will continue, further protecting public health and the environment.”
The federal and state natural resource trustees for the site — the National Oceanic and Atmospheric Administration, the U.S. Department of the Interior represented by the U.S. Fish and Wildlife Service, TCEQ, the Texas Parks and Wildlife Department and the Texas General Land Office — determined that natural resources associated with upland-woodlands habitat, freshwater-marsh habitat and saltwater-marsh habitat, were injured by contamination. The parties that shipped waste to the site will pay the trustees a total of $3,109,000 to implement environmental restoration projects, which will be selected in the future by the trustees and described in a restoration plan on which public comment will be solicited.
The Malone Service Company operated a disposal facility for waste oil and waste chemicals between approximately 1964 and 1996. Hundreds of entities sent a total of approximately 481 million gallons of waste to the Site. Approximately 260,000 cubic yards of contaminated oily sludge is present in above-ground storage tanks and a multi-acre earthen impoundment. The consent decree requires that the oily sludge be solidified and placed into an on-site RCRA-Subtitle C-equivalent cell, along with contaminated soil. The groundwater will be monitored to confirm that the remedial action is preventing offsite migration.
The proposed settlement was lodged today in the U.S. District Court for the Southern District of Texas. The settlement is subject to a 30-day public comment period and final court approval. A copy of the proposed consent decree is available on the Justice Department web site at www.usdoj.gov/enrd/Consent_Decrees.html
12 July 2012
Justice Department Reaches Settlement with Wells Fargo Resulting in More Than $175 Million in Relief for Homeowners to Resolve Fair Lending ClaimsRead the Press Release
The Department of Justice today filed the second largest fair lending settlement in the department’s history to resolve allegations that Wells Fargo Bank, the largest residential home mortgage originator in the United States, engaged in a pattern or practice of discrimination against qualified African-American and Hispanic borrowers in its mortgage lending from 2004 through 2009.
The settlement provides $184.3 million in compensation for wholesale borrowers who were steered into subprime mortgages or who paid higher fees and rates than white borrowers because of their race or national origin. Wells Fargo will also provide $50 million in direct down payment assistance to borrowers in communities around the country where the department identified large numbers of discrimination victims and which were hard hit by the housing crisis.
Additionally, Wells Fargo has agreed to conduct an internal review of its retail mortgage lending and will compensate African-American and Hispanic retail borrowers who were placed into subprime loans when similarly qualified white retail borrowers received prime loans. Compensation paid to any retail borrowers identified in the review process will be in addition to the $184.3 million to compensate wholesale borrowers who were victims of discrimination .
“The department’s action makes clear that we will hold financial institutions accountable, including some of the nation’s largest, for lending discrimination,” said Deputy Attorney General James M. Cole. “An applicant’s creditworthiness, and not the color of his or her skin, should determine what loans a borrower qualifies for. With today’s settlement, the federal government will ensure that African-American and Hispanic borrowers who were discriminated against will be entitled to compensation and borrowers in communities hit hard by this housing crisis will have an opportunity to access homeownership.”
The settlement, which is subject to court approval, was filed today in the U.S. District Court for the District of Columbia in conjunction with the department’s complaint, which alleges that between 2004 and 2008, Wells Fargo discriminated by steering approximately 4,000 African-American and Hispanic wholesale borrowers, as well as additional retail borrowers, into subprime mortgages when non-Hispanic white borrowers with similar credit profiles received prime loans. All the borrowers who were allegedly discriminated against were qualified for Wells Fargo mortgage loans according to Well Fargo’s own underwriting criteria.
The United States also alleges that, between 2004 and 2009, Wells Fargo discriminated by charging approximately 30,000 African-American and Hispanic wholesale borrowers higher fees and rates than non-Hispanic white borrowers because of their race or national origin rather than the borrowers’ credit worthiness or other objective criteria related to borrower risk.
“By reaching a settlement in this case, African-American and Hispanic wholesale borrowers who received subprime loans when they should have received prime loans or who paid more for their loans will get swift and meaningful relief,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “As one of the largest mortgage lenders in the country, Wells Fargo’s commitment to conduct an internal review of its retail lending and compensate African American and Hispanic retail borrowers who may have been improperly placed in subprime loans is significant. We will continue to work aggressively to ensure that all qualified borrowers have access to credit on an equal basis.”
The United States’ complaint alleges that African-American and Hispanic wholesale borrowers paid more than non-Hispanic white wholesale borrowers, not based on borrower risk, but because of their race or national origin. Wells Fargo’s business practice allowed its loan officers and mortgage brokers to vary a loan’s interest rate and other fees from the price it set based on the borrower’s objective credit-related factors . This subjective and unguided pricing discretion resulted in African-American and Hispanic borrowers paying more. The complaint alleges that Wells Fargo was aware the fees and interest rates it was charging discriminated against African-American and Hispanic borrowers, but the actions it took were insufficient and ineffective in stopping it.
The United States’ complaint also alleges that, as a result of Wells Fargo’s policies and practices, qualified African-American and Hispanic wholesale borrowers were placed in subprime loans rather than prime loans even when similarly-qualified non-Hispanic white borrowers were placed in prime loans. The discriminatory placement of wholesale borrowers in subprime loans, also known as “steering,” occurred because it was the bank’s business practice to allow mortgage brokers and employees to place a loan applicant in a subprime loan even when the applicant qualified for a prime loan . In addition, Wells Fargo gave mortgage brokers discretion to request exceptions to the underwriting guidelines, and Wells Fargo’s employees had discretion to grant these exceptions.
This is the second time that the Justice Department has alleged and obtained relief for borrowers who were steered into loans based on race or national origin, a practice that systematically placed borrowers of color into subprime mortgage loan products while placing non-Hispanic white borrowers with similar creditworthiness in prime loans. By steering borrowers into subprime loans from 2004 to 2008, the complaint alleges, Wells Fargo harmed those qualified African-American and Hispanic borrowers. Subprime loans generally carried higher-cost terms, such as prepayment penalties and adjustable interest rates that started with low initial teaser rates, and then increased significantly after two or three years, often making the payments unaffordable and leaving the borrowers at a much higher risk of default or foreclosure.
The department began its investigation into Wells Fargo’s lending practices in 2009 and received a referral in 2010 from the Office of the Comptroller of the Currency (OCC) which conducted its own parallel investigation of Wells Fargo’s lending practices in the Baltimore and Washington, D.C. metropolitan areas. The OCC found that there was reason to believe that Wells Fargo engaged in a pattern or practice of discrimination in these metro areas on the basis of race or color, in violation of the FHA and ECOA.
This case was prosecuted by the Fair Lending Unit in the Civil Rights Division’s Housing and Civil Enforcement Section in conjunction with the U.S. Attorney’s Office for the District of Columbia. Since the attorney general established the unit in early 2010, it has filed a complaint in or resolved 19 matters. By way of contrast, from 1993 to 2008, the department filed or resolved 37 lending matters, an average of a little more than two cases per year.
Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF). President Obama established the interagency FFETF 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 .
A copy of the complaint and proposed settlement order, 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 .
The proposed settlement provides for an independent administrator to contact and distribute payments of compensation at no cost to borrowers whom the Justice Department identifies as victims of Wells Fargo’s discrimination. The department will make a public announcement and post contact information on its website once an administrator is chosen.
Updated January 17, 2013
The settlement provides for an independent administrator to contact and distribute payments of compensation at no cost to borrowers whom the Justice Department identifies as victims of Wells Fargo’s discrimination. The Department has approved Wells Fargo’s choice of Epiq Class Action & Claims Solutions, Inc. to administer the settlement on the parties’ behalf. Over the next few months, Epiq will contact borrowers who are eligible for compensation from the settlement. African-American and Hispanic borrowers who received loans originated by Wells Fargo between 2004 and 2009 and who believe that they may have been victims of lending discrimination by Wells Fargo and have questions about the settlement may contact Epiq, in English or Spanish, at 1-866-329-5282 or via email at [email protected]. The Department of Justice is in the process of providing Epiq information about borrowers who have contacted the Department since it announced the settlement, and Epiq will follow-up with those borrowers as appropriate.
Updated December 4, 2013
On November 25, 2013, the participation period ended for eligible victims to choose to participate in the settlement. In early 2014, the Settlement Administrator plans to mail a letter with the exact payment amount and a release form to those who returned the response form by the deadline. The Independent Settlement Administrator will mail checks on a rolling basis, upon receipt of a signed release form.
Updated March 28, 2014
In early 2014, the Settlement Administrator mailed a letter with the exact payment amount and a release form to those who returned the participation form by the deadline. The Independent Settlement Administrator will mail checks on a rolling basis, upon receipt of a valid, signed release form.
Related Materials:
Complaint
Borrower Letter Mailing Notice
Proposed Consent Decree
Settlement Administrator Selection Notice
Notice of Additional Monetary ReliefFormer Police Officer of Puerto Rico Sentenced to 40 Years in Prison for Role in Providing Security for Drug TransactionsRead the Press Release
A former police officer of Puerto Rico was sentenced today in San Juan to 40 years in prison for his role in providing security for drug transactions, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and Special Agent in Charge Joseph S. Campbell of the FBI’s San Juan Division.
Javier A. Diaz Castro, 30, was sentenced by U.S. District Judge Gustavo A. Gelpi for the District of Puerto Rico.
Diaz was convicted on Dec. 12, 2011, of two counts of conspiracy to possess with intent to distribute more than five kilograms of cocaine, two counts of attempting to possess with the intent to distribute more than five kilograms of cocaine, and two counts of possession of a firearm in furtherance of a drug transaction. Diaz was charged in an indictment unsealed on Oct. 6, 2010, along with 88 other law enforcement officers in Puerto Rico and 44 other individuals, as part of the FBI undercover operation known as Guard Shack. To date, 128 of the charged defendants have pleaded guilty or have been convicted at trial, including Diaz.
According to the evidence presented in court, on at least two occasions in 2010, Diaz provided security for what he believed were a series of illegal drug deals, but which in fact were part of the undercover FBI operation. Diaz, a 10-year veteran of the police force, was assigned to the frauds unit at the time of the transactions. According to information presented at trial, Diaz was brought into the scheme by another police officer of Puerto Rico.
In return for the security he provided, based on his departmental training and using his service weapon, Diaz received cash payments of $2,000 per transaction.
The case was prosecuted by Trial Attorneys Eric L. Gibson and Barak Cohen of the Public Integrity Section in the Justice Department’s Criminal Division. The case was investigated by the FBI. The U.S. Attorney’s Office for the District of Puerto Rico also participated in the investigation and prosecution of this case.
Former New Mexico Corrections Officer Pleads Guilty to Civil Rights Violations of InmateRead the Press Release
Sylvester Bruce, 44, a former corrections officer with Navajo Nation’s Shiprock Detention Center (SDC) in Shiprock, N.M., pleaded guilty today in federal court on charges related to the sexual abuse of an inmate during the summer and fall of 2010. Specifically, Bruce pleaded guilty to one count of violating the civil rights of the victim when he touched her breasts against her will. Bruce also pleaded guilty to making material false statements to the FBI when he denied taking pictures of inmates inside the cells of the SDC.
According to court documents, while the victim was incarcerated at SDC , Bruce repeatedly placed his hands under the victim’s shirt and bra, and grabbed her breasts, knowing that she did not consent to his actions. Bruce did so in areas of the jail that did not have surveillance cameras. Bruce further admitted that he lied to the FBI when he denied taking pictures of inmates in their cells, acknowledging that he had, in fact, photographed two female inmates asleep on a bed in their cell.
"Sexual assaults by corrections officers on those they are charged with keeping safe undermine the very foundation of our judicial system,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Justice Department will vigorously prosecute these crimes and work to vindicate the rights of the courageous victims who report them."
Under the terms of the plea agreement, Bruce will be sentenced to a term of imprisonment of 12 months and a day. Bruce will also not be able to serve in a law enforcement capacity again and will submit to federal and state sex offender registration requirements.
“Our system of justice is clear and unequivocal - every law enforcement officer must follow the laws they are sworn to enforce. While the vast majority of officers perform their duties to protect the public with professionalism and integrity often under very dangerous conditions, there are an unscrupulous few who do not,” said Kenneth J. Gonzales, U.S. Attorney for the District of New Mexico. “Every person in lock-up, regardless of the charge or crime of conviction, is entitled to be safe and certainly should never be victimized by those responsible for guarding them. I commend the victim in this case for having the courage to step forward and assert her right to be free of sexual abuse, and for trusting the Department of Justice to protect her.”
“The FBI, as the lead agency for enforcing federal civil rights laws, will continue to vigorously investigate and bring to justice corrections officers who betray the great trust placed in them when they abuse the individuals in their custody,” said Carol K.O. Lee, Special Agent in Charge of the Albuquerque Division of the FBI. “I am proud of the fine work done by the FBI Special Agents in this case, and would like to express my gratitude for the assistance of the U.S. Justice Department's Civil Rights Division, the U.S. Attorney's Office, and the Navajo Department of Criminal Investigations.”
This case was investigated by the Farmington Resident Agency of the Albuquerque Division of the FBI and the Shiprock Division of the Navajo Nation Department of Public Safety, and was prosecuted by Assistant U.S. Attorney Mark Baker for the District of New Mexico and Fara Gold of the Justice Department’s Civil Rights Division.
El Departamento de Justicia Realiza Acuerdo Conciliatorio con Wells Fargo, de Más de 175 Millones de Dólares en Reparación para Propietarios de Vivienda, en Resolución de Reclamos de Otorgamiento Justo de Cr...Read the Press Release
WASHINGTON – El Departamento de Justicia presentó hoy el segundo mayor acuerdo conciliatorio de otorgamiento justo de préstamos de la historia del departamento, en resolución de alegatos de que Wells Fargo Bank, el mayor originador de hipotecas para vivienda de los Estados Unidos, exhibió un patrón o práctica de discriminación de prestatarios afroestadounidenses e hispanos en su otorgamiento de préstamos entre el 2004 y el 2009.
El acuerdo conciliatorio dispone una compensación de 125 millones de dólares para prestatarios mayoristas que fueron orientados hacia hipotecas del tipo subpreferenciales ("subprime") o pagaron cargos y tasas más altos que prestatarios de raza blanca, debido a su raza u origen nacional. Wells Fargo también proveerá 50 millones de dólares en asistencia directa para pagos iniciales a prestatarios en comunidades de todo el país, en lugares donde el departamento identificó grandes cantidades de víctimas de discriminación y que fueron fuertemente golpeados por la crisis de la vivienda.
Asimismo, Wells Fargo ha acordado llevar a cabo una revisión interna de su otorgamiento de préstamos minoristas y compensará a los prestatarios minoristas afroestadounidenses e hispanos que recibieron préstamos subpreferenciales ("subprime"), cuando prestatarios de raza blanca con calificaciones similares recibieron préstamos del tipo preferenciales ("prime"). La compensación pagada a cualquier prestatario minorista identificado en el proceso de revisión será por encima de los 125 millones de dólares para compensar a prestatarios mayoristas quienes fueron víctimas de discriminación.
“La acción del departamento deja claro que las instituciones financieras, incluyendo algunas de las más grandes de la nación, responderán por discriminar en el otorgamiento de préstamos”, dijo el Secretario de Justicia Adjunto James M. Cole. “La solvencia del solicitante, y no el color de su piel, debe ser el factor determinante del tipo de préstamo que le será otorgado. Con el acuerdo conciliatorio de hoy, el gobierno federal asegurará que los prestatarios afroestadounidenses e hispanos discriminados tendrán derecho a compensación y que los prestatarios de comunidades fuertemente golpeadas por esta crisis de vivienda tengan una oportunidad de ser propietarios”.
El acuerdo conciliatorio,el cual es sujeto a aprobación judicial, fue presentado hoy en el Tribunal Federal de Distrito para el Distrito de Columbia en conjunto con la demanda del departamento, la cual alega que entre el 2004 y el 2008, Wells Fargo discriminó al orientar a aproximadamente 4,000 prestatarios mayoristas afroestadounidenses e hispanos, así como prestatarios minoristas adicionales, hacia hipotecas subpreferenciales, cuando prestatarios de raza blanca no hispanos con perfiles de crédito similares recibieron préstamos preferenciales. Todos los prestatarios objeto de la discriminación alegada cumplían los requisitos para hipotecas de Wells Fargo, de acuerdo con los propios criterios de suscripción de Wells Fargo.
Asimismo, Estados Unidos alega que, entre el 2004 y el 2009, Wells Fargo cometió un acto de discriminación al cobrarles a aproximadamente 30,000 prestatarios mayoristas afroestadounidenses e hispanos cargos y tasas más altos que a prestatarios blancos no hispanos debido a su raza u origen nacional, en lugar de la solvencia de los prestatarios y otros criterios objetivos asociados al riesgo crediticio del prestatario.
“Al lograr un acuerdo conciliatorio en este caso, los prestatarios mayoristas afroestadounidenses e hispanos que recibieron préstamos subpreferenciales, cuando deberían haber recibido préstamos preferenciales, o que pagaron más por sus préstamos, recibirán compensación rápida y significativa”, dijo Thomas E. Perez, Secretario Auxiliar de la División de Derechos Civiles. “Como uno de los principales prestamistas hipotecarios del país, el compromiso de Wells Fargo de realizar una revisión interna de su otorgamiento de préstamos minoristas y compensar a prestatarios minoristas afroestadounidenses e hispanos a los que se les haya otorgado préstamos subpreferenciales indebidamente es importante. Seguiremos trabajando activamente para asegurar que todos los prestatarios aptos tengan acceso parajo al crédito”.
La demanda de los Estados Unidos alega que prestatarios mayoristas afroestadounidenses e hispanos pagaron más que prestatarios mayoristas blancos no hispanos, no basado en el riesgo financiero que presentaban, sino debido a su raza u origen nacional. La práctica comercial de Wells Fargo permitió que sus oficiales de préstamos y corredores hipotecarios variaran la tasa de interés de un préstamo y otros cargos respecto al precio que estableció basándose con base en factores crediticios objetivos del prestatario. Debido a esta libertad subjetiva y sin orientación, los prestatarios afroestadounidenses e hispanos pagaron más. La demanda alega que Wells Fargo sabía que los cargos y las tasas de interés que estaba cobrando discriminaban contra prestatarios afroestadounidenses e hispanos, pero que las acciones que tomó fueron insuficientes e ineficaces para poner fin al hecho.
La demanda entablada por los Estados Unidos también alega que, como resultado de las políticas y prácticas de Wells Fargo, se les otorgaron a prestatarios mayoristas afroestadounidenses e hispanos que reunían los requisitos necesarios, préstamos subpreferenciales en lugar de préstamos preferenciales, aunque se les otorgaron a prestatarios blancos no hispanos con calificaciónes similares préstamos preferenciales. El otorgamiento discriminatorio de los préstamos subpreferenciales, también conocido como “direccionamiento” [“steering”], contra prestatarios mayoristas ocurrió porque era la práctica comercial de Wells Fargo permitir que los corredores y empleados hipotecarios otorgaran un préstamo subpreferencial a un prestatario, aunque el prestatario cumpliera con los requisitos para un préstamo preferencial. Además, Wells Fargo les otorgó a los corredores hipotecarios la libertad de solicitar excepciones a las directrices de suscripción, y los empleados de Wells Fargo tenían la libertad de otorgar estas excepciones.
Esta es la segunda vez que el Departamento de Justicia alega y obtiene reparación para prestatarios que fueron direccionados a los que se les otorgaron préstamos basados en su raza u origen nacional, una práctica que sistemáticamente otorgó a prestatarios de color productos hipotecarios subpreferenciales ("subprime"), y otorgó a prestatarios blancos no hispanos con solvencia similar préstamos del tipo preferenciales ("prime"). Al orientar a prestamistas hacia préstamos subpreferenciales del 2004 al 2008, alega la demanda, Wells Fargo perjudicó a dichos prestamistas afroestadounidenses e hispanos calificados. Los préstamos subpreferenciales tenían, en general, costos más altos, tales como penalidades de pago prematuro y tasas de interés ajustables que comenzaban con tasas de interés iniciales bajas, y luego aumentaban repentinamente después de dos o tres años, haciendo, muchas veces, impagables las cuotas y colocando a los prestatarios bajo un riesgo mucho más alto de incumplimiento o ejecución hipotecaria.
El departamento inició su investigación de las prácticas de otorgamiento de préstamos de Wells Fargo en el 2009 y en el 2010 recibió una remisión de la Oficina del Controlador de la Moneda [Office of the Comptroller of the Currency (OCC, por sus siglas en inglés)] que realizó su propia investigación paralela de las prácticas de otorgamiento de préstamos de Wells Fargo en las áreas metropolitanas de Baltimore y Washington, D.C. La OCC encontró que había motivos para creer que Wells Fargo exhibió un patrón o una práctica de discriminación en estas áreas metropolitanas basándose en raza o color, violando las disposiciones de la la Ley de Vivienda Justa (FHA, por sus siglas en inglés) y la Ley de Igualdades de Oportunidad al Crédito (ECOA, por sus siglas en inglés).
Este caso fue enjuiciado por la Unidad de Otorgamiento Justo de Préstamos de la Sección de Vivienda y Cumplimiento de la Ley Civil de la División de Derechos Civiles, en conjunto con la Fiscalía Federal del Distrito de Columbia. Desde que el Secretario de Justicia de los Estados Unidos estableció la unidad a principios del 2010, la misma ha entablado demandas o resuelto 19 casos. En contraste, entre el 1993 y el 2008, el departamento entabló o resolvió 37 casos asociados a préstamos, un promedio de un poco más de dos casos por año.
El anuncio del día de hoy es parte de un esfuerzo en marcha de la Fuerza de Tarea Interagencia de Coacción contra el Fraude Financiero del Presidente Obama (Financial Fraud Enforcement Task Force, FFETF, por sus siglas en inglés). El Presidente Obama estableció la Fuerza de Tarea Interagencia de Coacción contra el Fraude Financiero para llevar a cabo una iniciativa enérgica, coordinada y proactiva para investigar y enjuiciar 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 coacción penal 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.
Para obtener una copia de la demanda y de la orden de acuerdo conciliatorio propuesto, así como información adicional sobre la labor del Departamento de Justicia para hacer valer las leyes de otorgamiento justo de préstamos, visite el portal del Departamento de Justicia en www.justice.gov/fairhousing.
El acuerdo conciliatorio propuesto dispone que un administrador independiente se comunique con prestatarios identificados por el Departamento de Justicia como víctimas de discriminación por parte de Wells Fargo y distribuya sin ningún costo a los mismos pagos de compensación. El departamento realizará un anuncio público y publicará información de contacto en su portal en Internet una vez que se haya elegido el administrador. Los prestatarios elegibles para recibir indemnizaciones provenientes del acuerdo conciliatorio serán luego contactados por el administrador. Las personas que crean que pueden haber sido víctimas de discriminación en el otorgamiento de préstamos por parte de Wells Fargo y tengan preguntas sobre el acuerdo conciliatorio pueden enviar un mensaje de correo electrónico al departamento a [email protected].
11 July 2012
Owner of Insulation Service Company Pleads Guilty to Million Dollar Bid-Rigging and Fraud <br /> Conspiracies at New York City HospitalRead the Press Release
WASHINGTON — The owner of a former New York City insulation service company pleaded guilty today to a three-count indictment charging him with conspiring to rig bids on contracts for re-insulation services to New York Presbyterian Hospital (NYPH), conspiring to defraud the Internal Revenue Service (IRS) and filing a false tax return, the Department of Justice announced.
David Porath pleaded guilty in the U.S. District Court in Manhattan to charges originally filed under seal on Feb. 18, 2010. At the time of the indictment, Porath was living in Israel. He was extradited and returned to the United States on Feb. 16, 2012. According to the indictment, between early 2000 and March 2005, Porath and his co-conspirators engaged in a bid-rigging conspiracy whereby they created the illusion of a competitive bidding process at NYPH by preparing and submitting fictitious, intentionally high bids so that Porath’s company would be awarded the contracts for re-insulation services for having the “low” bid.
“By submitting intentionally high, non-competitive bids, the co-conspirators deceived NYPH and distorted the competitive market,” said Acting Assistant Attorney General Joseph Wayland in charge of the Department of Justice’s Antitrust Division. “The division will continue to apprehend and bring to justice those who rig bids and thereby deprive the public of the benefits afforded by a truly competitive bidding process.”
The indictment further charged that between October 2000 and February 2005, Porath conspired with Andrzej Gosek, the owner of a Pennsylvania-based asbestos abatement company, and others, to defraud the IRS and to subscribe to false tax returns. Porath gave Gosek checks made out to companies in Brooklyn, purportedly for work done at NYPH by the Brooklyn companies as sub-contractors to Porath’s company. However, the companies had not performed the work. The checks totaled approximately $229,100 in 2000; $1.19 million in 2001; $760,000 in 2002; $50,000 in 2003; and $125,000 in 2004.
The Brooklyn companies cashed the checks and Gosek delivered the cash, less approximately five percent, back to Porath. Based upon these checks to the Brooklyn companies, Porath took false deductions on his company’s and his personal federal tax returns, allowing Porath to fraudulently reduce his taxable income. The indictment also charged Porath with filing a false federal tax return on or about Feb. 17, 2005, which substantially understated his income.
The bid-rigging charge carries a maximum penalty of 10 years in prison and a $1 million fine. The tax fraud conspiracy charge carries a maximum penalty of five years in prison and a $250,000 fine. The false subscription charge carries a maximum penalty of three years in prison and a $100,000 fine. The maximum fine for each of these charges may be increased to twice the gain derived from the crimes or twice the loss suffered by the victims of the crimes, if either of those amounts is greater than the statutory maximum fine.
Including Porath and Gosek, who pleaded guilty in November 2010, 15 individuals and six companies have been convicted of or pleaded guilty to charges arising out of this federal antitrust investigation of bid rigging, fraud, bribery and tax-related offenses relating to the award of contracts by the facilities operations department of NYPH.
The investigation was conducted by the Antitrust Division’s New York Field Office with the assistance of the FBI and the Internal Revenue Service - Criminal Investigation’s New York Field Office. The Office of International Affairs in the Justice Department’s Criminal Division also provided assistance. Anyone with information concerning bid rigging, bribery, tax offenses or fraud related at NYPH should contact the Antitrust Division’s New York Field Office of the at 212-335-8000, visit www.justice.gov/atr/contact/newcase.htm , or call the FBI’s New York Division at 212-384-1000.
New York Member of the Internet Piracy Group “IMAGiNE”<br /> Pleads Guilty to Copyright Infringement ConspiracyRead the Press Release
A New York man pleaded guilty today to conspiring to willfully reproduce and distribute tens of thousands of infringing copies of copyrighted works without permission, including infringing copies of movies before they were commercially released on DVD. The plea was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney for the Eastern District of Virginia Neil H. MacBride and Special Agent in Charge John P. Torres of U.S. Immigration and Customs Enforcement Homeland Security Investigations (ICE-HSI) in Washington, D.C.
Gregory A. Cherwonik, 53, of Canandaigua, N.Y., pleaded guilty to one count of conspiracy to commit criminal copyright infringement. The plea was entered before U.S. District Judge Arenda L. Wright Allen in the Eastern District of Virginia. Cherwonik faces up to five years in prison, a fine of $250,000 and three years of supervised release.
Cherwonik was indicted on April 18, 2012, along with three other leading members of the IMAGiNE Group, an organized online piracy group seeking to become the premier group to first release Internet copies of new movies only showing in theaters.
According to court documents, Cherwonik and his co-conspirators sought to illegally obtain and disseminate digital copies of copyrighted motion pictures showing in theaters. Cherwonik admitted that he helped to create a new website for the IMAGiNE Group hosted on a computer server located in France. Cherwonik ordered receivers and recording devices for the purpose of secretly using them in movie theaters to capture the audio sound tracks of copyrighted movies (referred to as “capping”). After obtaining, editing and filtering audio sound tracks and uploading them to servers utilized by the IMAGiNE Group, his co-conspirators used software to synchronize the audio file with an illegally obtained video file of a movie to create a completed movie file suitable for sharing over the Internet among members of the IMAGiNE Group and others. Mr. Cherwonik also admitted that the IMAGiNE Group’s conduct resulted in a readily provable and reasonably foreseeable infringement amount of more than $400,000.
A co-defendant, Sean Lovelady, pleaded guilty on May 8, 2012, to one count of conspiracy to commit criminal copyright infringement. Another co-defendant, Willie Lambert, pleaded guilty to the same charge on June 22, 2012. Charges remain pending against co-defendant Jeramiah Perkins. He is innocent until proven guilty beyond a reasonable doubt in a court of law.
The investigation of the case and the arrests were conducted by agents with ICE-HSI. Assistant U.S. Attorney Robert J. Krask of the Eastern District of Virginia and Senior Counsel John H. Zacharia of the Computer Crime and Intellectual Property Section (CCIPS) in the Justice Department’s Criminal Division are prosecuting the case. Significant assistance was provided by the CCIPS Cyber Crime Laboratory and the Office of International Affairs in the Justice Department’s Criminal Division.
This case is part of efforts being undertaken by the Department of Justice Task Force on Intellectual Property (IP Task Force) to stop the theft of intellectual property. Attorney General Eric Holder created the IP Task Force to combat the growing number of domestic and international intellectual property crimes, protect the health and safety of American consumers, and safeguard the nation’s economic security against those who seek to profit illegally from American creativity, innovation and hard work. The IP Task Force seeks to strengthen intellectual property rights protection through heightened criminal and civil enforcement, greater coordination among federal, state and local law enforcement partners, and increased focus on international enforcement efforts, including reinforcing relationships with key foreign partners and U.S. industry leaders. To learn more about the IP Task Force, go to www.justice.gov/dag/iptaskforce .
This investigation was supported by the HSI-led National Intellectual Property Rights Coordination Center (IPR Center) in Washington. The IPR Center is one of the U.S. government’s key weapons in the fight against criminal counterfeiting and piracy. As a task force, the IPR Center uses the expertise of its 20 member agencies to share information, develop initiatives, coordinate enforcement actions and conduct investigations related to IP theft. Through this strategic interagency partnership, the IPR Center protects the public's health and safety, the U.S. economy and our war fighters.
Justice Department Files Complaint Alleging Retaliation by Robertson Fire Protection District in MissouriRead the Press Release
The Justice Department today filed a lawsuit against the Robertson Fire Protection District (RFPD) in North Saint Louis County, Mo., for unfairly retaliating against a firefighter who provided testimony against the RFPD, in violation of Title VII of the Civil Rights Act of 1964, as amended. Title VII is a federal statute which prohibits retaliation for opposing instances of employment discrimination.
According to the complaint, filed in the U.S. District Court for the Eastern District of Missouri, Steve Wilson, who is a firefighter, was subjected to acts of retaliation by RFPD after he provided testimony in support of a Title VII case brought by the department in 2007 on behalf of two former African-American firefighters. Wilson's deposition testimony in 2008 described how RFPD Chief David Tilley asked Wilson to participate in discriminatory conduct and how Wilson refused to do so. The lawsuit alleges that RFPD retaliated against Wilson after he provided the testimony about the discriminatory conduct that occurred in RFPD.
“Employees who refuse to participate in discriminatory activity and provide testimony against their employers’ unlawful discrimination should be applauded, not punished,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “Title VII not only protects those who have suffered discrimination, it also protects those who oppose discrimination in the workplace. We will not tolerate public employers retaliating against their employees who participate in the investigations and lawsuits necessary to combat unlawful discrimination.”
The continued enforcement of Title VII has been a priority of the Justice Department’s Civil Rights Division. Additional information about the Civil Rights Division of the Justice Department is available on its website at www.usdoj.gov/crt/.
Related Materials:
Robertson Complaint
Justice Department Files Complaint Against Two Texas State Agencies for Pay DiscriminationRead the Press Release
The Justice Department today filed a lawsuit against the Texas Department of Agriculture (TDA) and Texas General Land Office (GLO) alleging that both state agencies are liable for discrimination against three female employees on the basis of sex, in violation of Title VII of the Civil Rights Act of 1964, as amended, which occurred at Texas Department of Rural Affairs (TDRA). Title VII is a federal statute which prohibits employment discrimination on the basis of sex, race, color, national origin or religion.
The lawsuit, filed in U.S. District Court in the Western District of Texas, alleges that the TDA and GLO, both of which assumed responsibilities of the now defunct TDRA, discriminated against three women in Program Specialist VII positions by paying them significantly less than their male colleagues for performing substantially the same work.
According to the complaint, the TDRA analyzed the salaries of all Program Specialist VIIs in the Disaster Recovery Division, found that the salaries of the women fell significantly short of those of men in comparable positions, and raised the women’s salaries. However, after the TDRA concluded that pay disparities existed between men and women, it did not raise women’s salaries to be comparable to the wages made by their male counterparts, nor did it compensate the women for the substantial amount of time their salaries were undervalued.
The suit also alleges that the women were subject to retaliation through the agency’s termination of their employment as an outgrowth of their claims of sex discrimination in compensation.
The complaint seeks declaratory and injunctive relief requiring the TDA and GLO to ensure that policies are in place to prevent their employees from being subjected to discrimination and retaliation, as well as monetary damages for the total time the women's salaries were undervalued, both after the raise and throughout the entire time of the women's employment in the Program Specialist VII position. The U.S. Equal Employment Opportunity Commission (EEOC) has also filed a lawsuit against the TDA and GLO alleging violations of the Equal Pay Act. The department will collaborate with the EEOC in seeking remedies.
“This lawsuit highlights the critical need for continued attention to equal pay issues in this country,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The wage gap between women and men persists, and the Civil Rights Division is committed to using all the tools available under this nation’s employment discrimination laws to ensure equal pay for equal work. We are pleased to collaborate with the EEOC in this critical enforcement effort.”
The continued enforcement of Title VII has been a priority of the Justice Department’s Civil Rights Division. Additional information about the Civil Rights Division of the Justice Department is available on its website at www.usdoj.gov/crt .
Related Materials:
U.S. v. Texas Department of Agriculture and Texas General Land Office Complaint
10 July 2012
Virginia Man Charged with Tax CrimesRead the Press Release
A Newport News, Va., federal grand jury has indicted Jeffrey Charles for conspiring with his daughter and son-in-law to defraud the United States, the Justice Department and the Internal Revenue Service (IRS) announced today. Charles is charged with one count of conspiracy, three counts of aiding and assisting in the preparation of false tax returns and one count of filing a false tax return. The court has not yet set a trial date.
According to the indictment, Charles conspired with his daughter and son-in-law to impair and impede the IRS in ascertaining, computing, assessing and collecting federal income taxes. The indictment also alleges that Charles aided and assisted in the preparation of three false tax returns in his daughter’s name for tax years 2000, 2001 and 2005, and attached false documents to each tax return. As alleged in the indictment, Charles also filed a false tax return in his own name for tax year 2006 in which he allegedly falsely reported earning $0.00 income.
An indictment merely alleges that a crime has been committed, and a defendant is presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Charles faces a maximum of 17 years in federal prison and a maximum fine of $1.25 million.
The case is being investigated by IRS Criminal Investigation and is being prosecuted by Assistant U.S. Attorney Brian Samuels of the Eastern District of Virginia and Trial Attorney Justin K. Gelfand of the Justice Department’s Tax Division.
Two Individuals Sentenced to Prison for Participating in Kickback Scheme at New York Presbyterian HospitalRead the Press Release
WASHINGTON — Two individuals and three corporations were sentenced in the U.S. District Court in Manhattan by Judge George B. Daniels today to serve time in prison and to pay criminal fines for their participation in an eight-year conspiracy involving kickbacks in excess of $2.3 million to defraud New York Presbyterian Hospital (NYPH), the Department of Justice announced. The individuals and the corporations were convicted after a four-week trial in February 2012.
Michael Yaron, the owner of two of the companies convicted for their roles in the conspiracy—Cambridge Environmental & Construction Corp, doing business as National Environmental Associates (Cambridge/NEA) and Oxford Construction & Development Corp.—was sentenced to serve 60 months in jail, and to pay a $500,000 criminal fine. Cambridge/NEA and Oxford Construction were each sentenced to pay a $1 million criminal fine.
Moshe Buchnik, the president of an asbestos abatement company that also did business at NYPH, was sentenced to serve 48 months in jail, and to pay a $500,000 criminal fine for his role in the conspiracy.Artech Corp., a company owned by a relative of Santo Saglimbeni, a former vice president of facilities operations at NYPH, was also sentenced to pay a $1 million criminal fine.
Two additional charged co-conspirators, Saglimbeni and Emilio “Tony” Figueroa, a former director of facilities operations at NYPH, who were convicted along with Yaron, Buchnick, Cambridge/NEA, Oxford Construction and Artech, are scheduled to appear in court on July 31, 2012.
“The sentences imposed today are consistent with the seriousness of the crimes for which the individuals and companies were found guilty,” said Acting Assistant Attorney General Joseph Wayland in charge of the Department of Justice’s Antitrust Division. “Today’s sentences hold accountable the unlawful conduct of those involved in illegal kickback conspiracies.”The department said the scheme to defraud NYPH centered on Saglimbeni, who with the assistance of Figueroa, awarded asbestos abatement, air monitoring and general construction contracts to Yaron, Buchnik and their companies in return for more than $2.3 million in kickbacks. The kickbacks were funneled by Yaron to Saglimbeni through Artech Corp., a sham company Saglimbeni created in his mother’s name in order to conceal the kickbacks.
Yaron, Buchnik, Saglimbeni, Figueroa, Cambridge/NEA, Oxford Construction and Artech, were each convicted of conspiracy to defraud NYPH. Additionally, Yaron, his companies, Buchnik, Saglimbeni and Artech were also convicted of a substantive wire fraud violation.
The sentences announced today resulted from a federal antitrust investigation of bid rigging, fraud, bribery and tax-related offenses in the award of construction, maintenance and service contracts to the facilities operations department of NYPH. Including today’s sentencings, 14 individuals and six companies have been convicted of or pleaded guilty to charges arising out of this investigation.
The investigation was conducted by the Antitrust Division’s New York Field Office with the assistance of the FBI and the Internal Revenue Service - Criminal Investigation’s New York Field Office. Anyone with information concerning bid rigging, bribery, tax offenses, or fraud at NYPH should contact the Antitrust Division’s New York Field Office of the at 212-335-8000, visit www.justice.gov/atr/contact/newcase.htm or the FBI’s New York Division at 212-384-1000.
9 July 2012
Telecommunications Firm to Pay Us $1 Million<br /> <br /> to Settle Alleged Violations of the Trade Agreements ActRead the Press Release
ADC Telecommunications Inc. will pay the United States $1 million to resolve allegations that the company submitted false claims to federal agencies when it sold telecommunications goods manufactured in countries prohibited by the Trade Agreements Act (TAA).
From October 2005 through December 2008, ADC manufactured and sold telecommunications hardware, such as communication modems, extender modules and shelf adapters to various federal agencies through its General Services Administration (GSA) Multiple Award Schedule contract. This settlement resolves allegations disclosed by the company that it knowingly manufactured and sold products from countries such as China that do not have reciprocal trade agreements with the United States and are not on the list of designated countries. The client government agencies included a number of federal agencies, including the Departments of Defense, Homeland Security and Interior.
Compliance with the TAA is required by GSA Multiple Award Schedule contracts. Goods purchased under these contracts must be manufactured in one of a list of designated countries deemed to trade fairly with the United States.
“Protecting the federal procurement process is central to the mission of the Department of Justice,” said Stuart Delery, Acting Assistant Attorney General for the Department of Justice’s Civil Division. “It is incumbent upon contractors that supply products to federal agencies to abide by the legal requirements designed to protect U.S. trade interests.”
“This settlement demonstrates this office’s commitment to ensure that products sold to the government are made in countries that respect and adhere to our nation’s trade policies,” said Ronald C. Machen Jr., the U.S. Attorney for the District of Columbia. “We expect all companies who do business with the United States to understand and comply with the laws that govern their transactions.”
GSA Inspector General Brian Miller stated “We appreciate ADC's cooperation in the OIG’s investigation of this matter.”
This matter was jointly handled by the GSA Office of the Inspector General, the Justice Department’s Civil Division and the U.S. Attorney’s Office for the District of Columbia.
Justice Department Settles Lawsuit Against Pennsylvania Department of Corrections Regarding Alleged Violation of Us Army Reservist’s Reemployment RightsRead the Press Release
The Justice Department announced today that it has reached a settlement in its lawsuit against the Pennsylvania Department of Corrections (PDOC). The settlement, filed with the U.S. District Court for the Middle District of Pennsylvania, resolves allegations that PDOC violated the reemployment rights of U.S. Army Reservist David C. Fyock under the Uniformed Services Employment and Reemployment Rights Act (USERRA).
The department’s complaint, which was filed on Oct. 27, 2011, alleges PDOC violated USERRA by failing to retroactively promote Fyock from a corrections officer 1 to a corrections officer 2 position at the State Correctional Institution Mercer in Mercer, Pa., based on his successful performance on a make-up promotional examination after returning from a military deployment. According to the complaint, Fyock’s score on the make-up examination was higher than the score of any person promoted to any of the 13 vacant corrections officer 2 positions filled based on the May 2007 promotional test he missed.
Under the terms of the settlement, Fyock will receive a promotion to corrections officer 2 (sergeant), as well as back pay and other benefits.
Subject to certain conditions, USERRA requires employers to promptly reemploy returning service members in the positions they would have held had their employment not been interrupted by military service, or in positions of like seniority, status and pay.
“The Civil Rights Division is committed to protecting the reemployment rights of the men and women who serve our country in uniform,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “No service member should have to forego an opportunity for advancement in his or her civilian career due to military service.”
“This office strongly supports the rights of service members and the objective of the statute which is to help veterans reclaim their rightful positions in the workforce after they complete their military service,” said Peter J. Smith, U.S. Attorney for the Middle District of Pennsylvania.
This matter was litigated by Assistant U.S. Attorneys Melissa Swauger and Timothy Judge of the Civil Division of the U.S. Attorney’s Office for the Middle District of Pennsylvania in collaboration with attorneys from the Justice Department’s Civil Rights Division. The case stems from a referral from the U.S. Labor Department's Veterans' Employment and Training Service.
The Justice Department's Civil Rights Division has given a high priority to the enforcement of service members' rights under USERRA. Additional information about USERRA can be found at www.servicemembers.gov.
Former Civilian Contractor Sentenced to 24 Months in Prison<br /> for Role in Scheme to Steal and Sell Military Equipment in IraqRead the Press Release
A former U.S. civilian contractor was sentenced today to 24 months in prison for conspiring to steal military generators in Iraq and selling them on the black market, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Thomas G. Walker for the Eastern District of North Carolina.
David John Welch, 36, of Hope Mills, N.C., was sentenced by U.S. District Judge W. Earl Britt in the Eastern District of North Carolina. Welch was also sentenced to three years of supervised release following his prison term and was ordered to pay $160,000 in restitution to the Department of Defense. Welch pleaded guilty on April 2, 2012, to a criminal information charging him with conspiracy to steal property under the control of a government contractor.
According to court documents and information presented at his plea hearing, Welch was the operations and maintenance manager of a U.S. government contractor on Victory Base Complex in Baghdad. In this capacity, Welch had the ability to influence the distribution and movement of military equipment as well as U.S. government equipment. In addition, Welch was in charge of overseeing the movement of generators from the compound to the Defense Reutilization & Marketing Office (DRMO). In October 2011, Welch and a co-conspirator entered into a scheme to steal and later sell approximately 38 generators on the black market in Iraq to unknown co-conspirators by diverting these generators from the DRMO to an undisclosed location off-base in Iraq. After the generators were stolen from the compound, Welch’s co-conspirator provided him with four stacks of $100 bills, totaling approximately $38,600.
This case is being prosecuted by Special Trial Attorney Mark Grider of the Criminal Division’s Fraud Section, on detail from Special Inspector General for Iraq Reconstruction (SIGIR), with assistance from Assistant U.S. Attorney Banumathi Rangarajan of the U.S. Attorney’s Office for the Eastern District of North Carolina. The case is being investigated by the FBI, SIGIR and the Major Procurement Fraud Unit of the U.S. Army Criminal Investigation Command.
Five Individuals Charged in Connection with Death of a Customs and Border Protection Border Patrol Agent, <br /> $1 Million FBI Reward AnnouncedRead the Press Release
An indictment charging five individuals involved in the death of U.S. Border Patrol Agent Brian Terry was unsealed today in Tucson, and a reward of up to $1 million from the FBI for information leading to the arrest of four fugitives, was announced by Department of Justice officials.
According to the indictment, Manuel Osorio-Arellanes, Jesus Rosario Favela-Astorga, Ivan Soto-Barraza, Heraclio Osorio-Arellanes and Lionel Portillo-Meza are charged with crimes including first degree murder, second degree murder, conspiracy to interfere with commerce by robbery, attempted interference with commerce by robbery, use and carrying a firearm during a crime of violence, assault on a federal officer and possession of a firearm by a prohibited person. A sixth defendant, Rito Osorio-Arellanes, is charged only with conspiracy to interfere with commerce by robbery.
The 11-count third superseding indictment, which was handed up by a federal grand jury in the District of Arizona on Nov. 7, 2011, alleges that on Dec. 14, 2010, five of the defendants (Manuel Osorio-Arellanes, Jesus Rosario Favela-Astorga, Ivan Soto-Barraza, Heraclio Osorio-Arellanes and Lionel Portillo-Meza) engaged in a firefight with Border Patrol agents. During the exchange of gunfire, Agent Terry was shot and killed. The indictment alleges that the defendants had illegally entered the United States from Mexico for the purpose of robbing drug traffickers of their contraband. In addition to the murder of Agent Terry, the indictment also alleges that the five defendants assaulted Border Patrol Agents William Castano, Gabriel Fragoza and Timothy Keller, who were with Agent Terry during the firefight.
“Agent Terry served his country honorably and made the ultimate sacrifice in trying to protect it from harm, and we will stop at nothing to bring those responsible for his murder to justice,” said Attorney General Eric Holder. “This investigation has previously resulted in one defendant being charged with Agent Terry’s murder and taken into custody, and today’s announcement reflects the department’s unrelenting commitment to finding and arresting the other individuals responsible for this horrific tragedy so that Agent Terry’s family, friends and fellow law enforcement agents receive the justice they deserve.”
U.S. Attorney for the Southern District of California Laura E. Duffy said, “ Agent Terry died in the line of duty while protecting his country. But he was more than a federal agent – he was a son, a brother, a co-worker and a friend to many. The indictment unsealed today reflects the progress our dedicated law enforcement team has made piecing together this complex murder case. But there is more work to be done and we will not rest until we bring justice to the family of Brian Terry.”
“U.S. Border Patrol Agent Brian Terry made the ultimate sacrifice in December of 2010, while protecting our border,” stated James L. Turgal Jr., FBI Special Agent in Charge, Phoenix Division. “Today’s announcement is an important step forward in the pursuit of justice for Border Patrol Agent Terry and his family. It is our hope that the publicity surrounding this case will lead to information concerning the whereabouts of the remaining four fugitives. The FBI and our law enforcement partners will continue to pursue those individuals responsible for the murder of Border Patrol Agent Brian Terry.”
Manuel Osorio-Arellanes has been in custody since his arrest the night of the shooting. Rito Osorio-Arellanes has been in custody since Dec. 12, 2010, when he was arrested by Border Patrol agents on immigration charges. The indictment is being unsealed today in order to seek the public’s assistance in locating the fugitive defendants.
This case is being prosecuted in federal court in Tucson by attorneys from the Southern District of California, Special Attorneys Todd W. Robinson, David D. Leshner, and Fred A. Sheppard. The U.S. Attorney’s Office for the District of Arizona is recused. This case is being investigated by the FBI.
An indictment is a formal charging document and defendants are presumed innocent until the government meets its burden in court of proving guilt beyond a reasonable doubt.
Anyone with information concerning the whereabouts of the fugitives should contact the FBI's Phoenix field office at (623) 466-1999. You may also contact your local FBI office or the nearest American Embassy or Consulate.
5 July 2012
CEO of Axius Inc. and Finance Professional Indicted for Alleged Roles in Scheme to Bribe Stock Brokers and Manipulate Stock PricesRead the Press Release
WASHINGTON – The chief executive officer (CEO) of Axius Inc., a Nevada corporation, and a finance professional were indicted today on multiple charges for their alleged roles in a scheme to bribe stock brokers and manipulate the share price of Axius stock, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Loretta E. Lynch for the Eastern District of New York.
Roland Kaufmann, a Swiss citizen and the CEO of Axius, and Jean-Pierre Neuhaus, a Swiss citizen and finance professional, were each charged in an indictment filed today in the Eastern District of New York with one count of conspiracy to commit securities fraud and to violate the Travel Act, one count of securities fraud, one count of wire fraud, one count of violating the Travel Act, one count of conspiracy to commit money laundering and one count of money laundering. According to court documents, Axius is incorporated in Nevada and its principal offices are in Dubai, United Arab Emirates. Axius is a “holding company and business incubator” that develops other businesses.
“As CEO of Axius, Mr. Kaufmann allegedly conspired with Mr. Neuhaus to fraudulently manipulate the value of his company’s stock,” said Assistant Attorney General Breuer. “According to today’s indictment, he attempted to bribe stock brokers into artificially propping up the value of Axius stock. With our partners in the U.S. Attorneys’ Offices, the Criminal Division’s Fraud Section is pursuing a nationwide effort to investigate and prosecute fraudulent conduct in our securities markets.”
“Rather than rely on the market to set the true value of Axius’ stock, the defendants allegedly sought to buy the best price possible through bribery and deception,” said U.S. Attorney Lynch. “Their scheme stood to enrich themselves at the expense of the investing public. We will vigorously investigate and prosecute any such corruption in the securities markets.”
“Conspiring to inflate the price of Axius shares artificially was likely to result in unjust enrichment for the defendants and undeserved losses for investors,” said Assistant Director-in-Charge Janice K. Fedarcyk of the FBI in New York. “Market-driven fluctuations in share prices are risks investors have to accept. Illegal manipulations become the subject of FBI investigations.”
The indictment alleges that Kaufmann, 60, agreed with Neuhaus, 55, to defraud investors in Axius common stock by bribing stock brokers and manipulating the share price. As part of the scheme, they enlisted the assistance of an individual they believed to have access to a group of corrupt stock brokers; this individual was in fact an undercover law enforcement agent. Kaufmann and Neuhaus believed that the undercover agent controlled a network of stockbrokers in the United States with discretionary authority to trade stocks on behalf of their clients.
The indictment alleges that Kaufmann and Neuhaus instructed the undercover agent to direct brokers to purchase Axius shares that were owned or controlled by Kaufmann in return for a secret kickback of approximately 26 to 28 percent of the share price. Kaufmann and Neuhaus allegedly instructed the undercover agent as to the price the brokers should pay for the stock, and Kaufmann specifically instructed the undercover agent that the brokers would have to pay gradually higher prices for the shares they were buying. The indictment alleges that Kaufmann and Neuhaus directed the undercover agent that the brokers were to refrain from selling the Axius shares they purchased on behalf of their clients for a one-year period. By preventing sales of Axius stock, Kaufmann and Neuhaus allegedly intended to maintain the fraudulently inflated share price for Axius stock.
Kaufmann and Neuhaus were originally charged in a criminal complaint filed in the Eastern District of New York on March 8, 2012. They were arrested on March 8, 2012. No investors were actually defrauded in the undercover operation.
In a related action, the Securities and Exchange Commission (SEC) today filed a civil enforcement action against Kaufmann and Neuhaus in the Eastern District of New York. The department thanks the SEC for its cooperation in this matter.
This case is being prosecuted by Trial Attorney Justin Goodyear of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Shannon Jones of the Eastern District of New York. The case was investigated by the FBI and the Internal Revenue Service.
This prosecution is part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information about the task force visit: www.stopfraud.gov.
Alabama Woman Pleads Guilty in Stolen Identity<br /> Tax Refund Fraud CaseRead the Press Release
Jacqueline Slaton pleaded guilty today in the Middle District of Alabama to one count of filing a false tax return and one count of aggravated identity theft, the Department of Justice and the Internal Revenue Service (IRS) announced. Slaton was indicted in April 2012.
According to her plea agreement, between December 2011 and March 2012, Slaton filed at least 102 fraudulent federal and state income tax returns using stolen identities, claiming a total of $154,904 in fraudulent income tax refunds. Slaton had the tax refunds directed to prepaid debit cards and had the cards mailed to various addresses on a U.S. carrier’s route. A postal employee agreed to collect the prepaid debit cards for a fee.
Sentencing has not yet been scheduled. Slaton faces a mandatory minimum of two years in prison, and a maximum potential sentence of seven years in prison, up to three years of supervised release, mandatory restitution and a fine of up to $500,000 or twice the loss caused by her offenses.
Kathryn Keneally, Assistant Attorney General for the Justice Department’s Tax Division, thanked special agents of IRS - Criminal Investigation, who investigated the case, and Tax Division Trial Attorneys Jason H. Poole and Michael Boteler and Assistant United States Attorney Jared Morris, who prosecuted the case.
Additional information about the Tax Division and its enforcement efforts may be found at www.justice.gov/tax.
3 July 2012
Louis Dreyfus Energy Services Pays $4 Million to Resolve Allegations That It Violated the False Claims ActRead the Press Release
Louis Dreyfus Energy Services has paid the United States $4,084,000 to settle allegations that it violated the False Claims Act by failing to pay money owed on natural gas acquired from the Department of the Interior, the Justice Department announced today. Louis Dreyfus, which is based in Connecticut, is an energy company that is involved in merchandising, transportation, trading and storage of natural gas.
The settlement agreement resolves contentions by the United States that from December 2004 to March 2008, Louis Dreyfus Energy Services made false claims or misleading statements to the Department of the Interior involving contracts to buy natural gas produced from federal oil and gas leases in the Gulf of Mexico. Starting in 2004, Louis Dreyfus agreed to pay the Interior Department for natural gas based on a price associated with the delivery of the gas at a fixed point along a natural gas pipeline. After its contracts with the Interior Department were executed, the company requested and received a discount in the price it would pay the Interior Department for the natural gas obtained under the contracts. The United States contends that this price discount applied only when there was a complete or near-complete constraint in the natural gas pipeline such that Louis Dreyfus was unable to transport natural gas along the pipeline. However, the energy services company claimed and obtained the price discounts even on days when it was able to ship natural gas along the pipeline. Thus, the United States contends that Louis Dreyfus was not entitled to the price discounts that it sought and received from the Department of the Interior.
“Companies that deal with the United States have to live up to their commitments, whether they relate to the use of the nation’s natural resources or to other government programs or benefits,” said Stuart F. Delery, Acting Assistant Attorney General for the Justice Department’s Civil Division. “The American taxpayers will not tolerate those that claim price discounts from the United States to which they are not entitled.”
“Oil and natural gas companies must understand that using false or misleading claims to get a better price is unfair and unlawful. For companies that make such claims, there are significant consequences,” said John Walsh, U.S. Attorney for the District of Colorado.
“This settlement is a message to industry and the public that federal government agencies, working together, are focused on the promise that the American taxpayers will get their fair share of all monies owed from public resources,” said Mary L. Kendall, Acting Inspector General of the Department of the Interior.
“Energy companies have a responsibility to respect the public trust in their efforts to help fuel this nation’s energy needs,” said Paul Mussenden, the Department of the Interior’s Deputy Assistant Secretary for Natural Resources Revenue Management. “It is imperative they honor that trust and pay the appropriate revenues that are due to American taxpayers for these precious natural resources.” Mussenden added that “ONRR will remain diligent in its efforts to collect every dollar due to the public and the U.S. Government.”
In addition to resolving the company’s False Claims Act liability, the settlement today also resolves certain administrative claims between the Interior Department’s Office of Natural Resources Revenue and Louis Dreyfus.
The investigation and settlement of this matter were jointly handled by the U.S. Attorney for the District of Colorado, the Justice Department’s Civil Division, the Office of Natural Resources Revenue, the Department of the Interior’s Office of the Solicitor and the Energy Investigations Unit of the Department of the Interior’s Office of Inspector General. The claims settled by this agreement are allegations only. There has been no determination of liability.
Justice Department Files Lawsuit Against Corpus Christi, Texas, Police Department for Sex DiscriminationRead the Press Release
WASHINGTON – The Justice Department today filed a lawsuit against the city of Corpus Christi, Texas, alleging that the city’s police department engaged in a pattern or practice of employment discrimination against women in violation of Title VII of the Civil Rights Act of 1964. The lawsuit challenges the police department’s use of a physical ability test for the hiring of entry-level police officers. According to the complaint, the physical test used by the city between 2005 and 2011 had the effect of excluding qualified women from consideration for hire as entry-level police officers and did not screen candidates for job-related skills.
Title VII prohibits employment practices that result in a disparate impact on various bases, including sex, unless the employer can prove that such practices really test for what the job requires. The complaint alleges that the challenged physical ability test does not meet this standard and, thus, qualified women have been unnecessarily kept out of entry-level police officer jobs.
“This complaint demonstrates that employment practices that unnecessarily exclude qualified candidates on account of sex are unacceptable,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Justice Department is looking forward to working with the city to resolve this matter in a way that eliminates the use of the unlawful physical ability test and gives women who were screened out of the process an opportunity to become Corpus Christi police officers.”
In the lawsuit, the Justice Department seeks a court order that would require the city to stop using the challenged physical ability test, develop hiring procedures that comply with Title VII and provide relief that makes victims whole, including offers of hire, retroactive seniority and back pay to individual women who have been harmed as a result of the city’s use of the test.
Additional information about Title VII and other federal employment laws is available on the Civil Rights Division’s website at www.justice.gov/crt/.