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28 June 2012
United Technologies Subsidiary Pleads Guilty to Criminal Charges for Helping China Develop New Attack HelicopterRead the Press Release
BRIDGEPORT, Conn. – Pratt & Whitney Canada Corp. (PWC), a Canadian subsidiary of the Connecticut-based defense contractor United Technologies Corporation (UTC), today pleaded guilty to violating the Arms Export Control Act and making false statements in connection with its illegal export to China of U.S.-origin military software used in the development of China’s first modern military attack helicopter, the Z-10.
In addition, UTC, its U.S.-based subsidiary Hamilton Sundstrand Corporation (HSC) and PWC have all agreed to pay more than $75 million as part of a global settlement with the Justice Department and State Department in connection with the China arms export violations and for making false and belated disclosures to the U.S. government about these illegal exports. Roughly $20.7 million of this sum is to be paid to the Justice Department. The remaining $55 million is payable to the State Department as part of a separate consent agreement to resolve outstanding export issues, including those related to the Z-10. Up to $20 million of this penalty can be suspended if applied by UTC to remedial compliance measures. As part of the settlement, the companies admitted conduct set forth in a stipulated and publicly filed statement of facts.
Today’s actions were announced by David B. Fein, U.S. Attorney for the District of Connecticut; Lisa Monaco, Assistant Attorney General for National Security; John Morton, Director of U.S. Immigration and Customs Enforcement (ICE); Ed Bradley, Special Agent in Charge of the Northeast Field Office of the Defense Criminal Investigative Service (DCIS); Kimberly K. Mertz, Special Agent in Charge of the FBI New Haven Division; David Mills, Department of Commerce Assistant Secretary for Export Enforcement; and Andrew J. Shapiro, Assistant Secretary of State for Political-Military Affairs.The Charges
Today in the District of Connecticut, the Justice Department filed a three-count criminal information charging UTC, PWC and HSC. Count One charges PWC with violating the Arms Export Control Act in connection with the illegal export of defense articles to China for the Z-10 helicopter. Count Two charges PWC, UTC and HSC with making false statements to the U.S. government in their belated disclosures relating to the illegal exports. Count Three charges PWC and HSC with failure to timely inform the U.S. government of exports of defense articles to China.
While PWC has pleaded guilty to Counts One and Two, the Justice Department has recommended that prosecution of UTC and HSC on Count Two, and PWC and HSC on Count Three be deferred for two years, provided the companies abide by the terms of a deferred prosecution agreement with the Justice Department. As part of the agreement, the companies must pay $75 million and retain an Independent Monitor to monitor and assess their compliance with export laws for the next two years.
The Export Scheme
Since 1989, the United States has imposed a prohibition upon the export to China of all U.S. defense articles and associated technical data as a result of the conduct in June 1989 at Tiananmen Square by the military of the People’s Republic of China. In February 1990, the U.S. Congress imposed a prohibition upon licenses or approvals for the export of defense articles to the People’s Republic of China. In codifying the embargo, Congress specifically named helicopters for inclusion in the ban.
Dating back to the 1980s, China sought to develop a military attack helicopter. Beginning in the 1990s, after Congress had imposed the prohibition on exports to China, China sought to develop its attack helicopter under the guise of a civilian medium helicopter program in order to secure Western assistance. The Z-10, developed with assistance from Western suppliers, is China’s first modern military attack helicopter.
During the development phases of China’s Z-10 program, each Z-10 helicopter was powered by engines supplied by PWC. PWC delivered 10 of these development engines to China in 2001 and 2002. Despite the military nature of the Z-10 helicopter, PWC determined on its own that these development engines for the Z-10 did not constitute “defense articles,” requiring a U.S. export license, because they were identical to those engines PWC was already supplying China for a commercial helicopter.
Because the Electronic Engine Control software, made by HSC in the United States to test and operate the PWC engines, was modified for a military helicopter application, it was a defense article and required a U.S. export license. Still, PWC knowingly and willfully caused this software to be exported to China for the Z-10 without any U.S. export license. In 2002 and 2003, PWC caused six versions of the military software to be illegally exported from HSC in the United States to PWC in Canada, and then to China, where it was used in the PWC engines for the Z-10.
According to court documents, PWC knew from the start of the Z-10 project in 2000 that the Chinese were developing an attack helicopter and that supplying it with U.S.-origin components would be illegal. When the Chinese claimed that a civil version of the helicopter would be developed in parallel, PWC marketing personnel expressed skepticism internally about the “sudden appearance” of the civil program, the timing of which they questioned as “real or imagined.” PWC nevertheless saw an opening for PWC “to insist on exclusivity in [the] civil version of this helicopter,” and stated that the Chinese would “no longer make reference to the military program.” PWC failed to notify UTC or HSC about the attack helicopter until years later and purposely turned a blind eye to the helicopter’s military application.
HSC in the United States had believed it was providing its software to PWC for a civilian helicopter in China, based on claims from PWC. By early 2004, HSC learned there might an export problem and stopped working on the Z-10 project. UTC also began to ask PWC about the exports to China for the Z-10. Regardless, PWC on its own modified the software and continued to export it to China through June 2005.
According to court documents, PWC’s illegal conduct was driven by profit. PWC anticipated that its work on the Z-10 military attack helicopter in China would open the door to a far more lucrative civilian helicopter market in China, which according to PWC estimates, was potentially worth as much as $2 billion to PWC.
Belated and False Disclosures to U.S. Government
These companies failed to disclose to the U.S. government the illegal exports to China for several years and only did so after an investor group queried UTC in early 2006 about whether PWC’s role in China’s Z-10 attack helicopter might violate U.S. laws. The companies then made an initial disclosure to the State Department in July 2006, with follow-up submissions in August and September 2006.
The 2006 disclosures contained numerous false statements. Among other things, the companies falsely asserted that they were unaware until 2003 or 2004 that the Z-10 program involved a military helicopter. In fact, by the time of the disclosures, all three companies were aware that PWC officials knew at the project’s inception in 2000 that the Z-10 program involved an attack helicopter.
Today, the Z-10 helicopter is in production and initial batches were delivered to the People’s Liberation Army of China in 2009 and 2010. The primary mission of the Z-10 is anti-armor and battlefield interdiction. Weapons of the Z-10 have included 30 mm cannons, anti-tank guided missiles, air-to-air missiles and unguided rockets.
“PWC exported controlled U.S. technology to China, knowing it would be used in the development of a military attack helicopter in violation of the U.S. arms embargo with China,” said U.S. Attorney Fein. “PWC took what it described internally as a ‘calculated risk,’ because it wanted to become the exclusive supplier for a civil helicopter market in China with projected revenues of up to two billion dollars. Several years after the violations were known, UTC, HSC and PWC disclosed the violations to the government and made false statements in doing so. The guilty pleas by PWC and the agreement reached with all three companies should send a clear message that any corporation that willfully sends export controlled material to an embargoed nation will be prosecuted and punished, as will those who know about it and fail to make a timely and truthful disclosure.”“Due in part to the efforts of these companies, China was able to develop its first modern military attack helicopter with restricted U.S. defense technology. As today’s case demonstrates, the Justice Department will spare no effort to hold accountable those who compromise U.S. national security for the sake of profits and then lie about it to the government,” said Assistant Attorney General Monaco. “I thank the agents, analysts and prosecutors who helped bring about this important case.”
“This case is a clear example of how the illegal export of sensitive technology reduces the advantages our military currently possesses,” said ICE Director Morton. “I am hopeful that the conviction of Pratt & Whitney Canada and the substantial penalty levied against United Technologies and its subsidiaries will deter other companies from considering similarly ill-conceived business practices in the future. American military prowess depends on lawful, controlled exports of sensitive technology by U.S. industries and their subsidiaries, which is why ICE will continue its present campaign to aggressively investigate and prosecute criminal violations of U.S. export laws relating to national security.”
“Today’s charges and settlement demonstrate the continued commitment of the Defense Criminal Investigative Service (DCIS) and fellow agencies to protect sensitive U.S. defense technology from being illegally exported,” said DCIS Special Agent in Charge Bradley. “Safeguarding our military technology is vital to our nation’s defense and the protection of our war fighters both home and abroad. We know that foreign governments are actively seeking U.S. defense technology for their own development. Thwarting these efforts is a top priority for DCIS. I applaud the agents and prosecutors who worked tirelessly to bring about this result.”
“Preventing the loss of critical U.S. information and technologies is one of the most important investigative priorities of the FBI,” said FBI Special Agent in Charge Mertz. “Our adversaries routinely target sensitive research and development data and intellectual property from universities, government agencies, manufacturers, and defense contractors. While the thefts associated with economic espionage and illegal technology transfers may not capture the same level of attention as a terrorist incident, the costs to the U.S. economy and our national security are substantial. Violations of the Arms Export Control Act put our nation at risk and the FBI, along with all of our federal agency partners, are committed to ensuring that embargoed technologies do not fall into the wrong hands. Those who violate these laws should expect to be held accountable. An important part of the FBI’s strategy in this area involves the development of strategic partnerships. In that regard, the FBI looks forward to future coordination with UTC and its subsidiaries to strengthen information sharing and counterintelligence awareness.”
“Protecting national security is our top priority,” said Assistant Secretary of Commerce for Export Enforcement Mills. “Today’s action sends a clear signal that federal law enforcement agencies will work together diligently to prevent U.S. technology from falling into the wrong hands.”
Assistant Secretary Shapiro, of the State Department’s Bureau of Political and Military Affairs, said, “Today’s $75 million settlement with United Technologies Corporation sends a clear message: willful violators of U.S. arms export control regulations will be pursued and punished. The successful resolution of this case is the byproduct of the tireless work of our compliance officers and highlights the relentless commitment of the State Department to protect sensitive American technologies from being illegally transferred.”
U.S. Attorney Fein commended the many agencies involved in this investigation, including ICE’s Homeland Security Investigations (HSI) in New Haven; the DCIS in New Haven; the New Haven Division of the FBI; the Department of Commerce’s Boston Office of Export Enforcement. He also praised the Office of the HSI Attaché in Toronto, which was essential to the initiation and investigation of this matter, and the State Department’s Office of Defense Trade Controls Compliance in the Bureau of Political-Military Affairs, for its critical role in the global resolution of this matter.
The prosecution is being handled by Assistant U.S. Attorneys Stephen B. Reynolds and Michael J. Gustafson from the U.S. Attorney’s Office for the District of Connecticut, with assistance from Steven Pelak and Ryan Fayhee of the Counterespionage Section of the Justice Department’s National Security Division.
U.S. and Canada Announce the Release of the Beyond the Border: Statement of Privacy PrinciplesRead the Press Release
WASHINGTON—The United States and Canada today announced they are delivering on key commitments under the U.S.-Canada Beyond the Border Action Plan by releasing a joint Statement of Privacy Principles. These principles reflect the commitment of the United States and Canada to protecting privacy, and underscore the importance of information sharing to the security of both nations.“These privacy principles reflect the shared commitment of the United States and Canada to implement our Beyond the Border Action Plan,” said Attorney General Eric Holder. “Timely and efficient information sharing between the United States and Canada is critical to the national security of both nations. These principles reflect our two nations’ continued shared commitment to protecting our collective security without sacrificing the fundamental rights and civil liberties that both our countries value.”
“The release of these principles is an important milestone in the implementation of the Beyond the Border Action Plan,” said Secretary of Homeland Security Janet Napolitano. “They represent both the United States’ and Canada’s commitment to sharing information, while simultaneously protecting the fundamental privacy principles upon which both our nations were built ”
The Statement of Privacy Principles concerning the provision, receipt and use of personal information exchanged between the U.S. and Canada will inform and guide all information sharing arrangements and initiatives under Beyond the Border Action Plan. Implementing the privacy principles will promote the flow of accurate, relevant and necessary information to address shared threats to national security.
Developed collaboratively by privacy officials from the Department of Homeland Security, the Department of Justice, Public Safety Canada and Justice Canada, the privacy principles are based on commonly understood privacy protections and fair information practices; and are consistent with the laws of each country
The United States and Canada will collaborate regularly, through the Beyond the Border Executive Steering Committee and other avenues, on the application of the Statement of Privacy Principles.
On Feb. 4, 2011, President Obama and Prime Minister Harper announced the U.S.-Canada joint declaration, Beyond the Border: A Shared Vision for Perimeter Security and Economic Competitiveness. It articulates a shared vision where both our countries work together to address threats at the earliest point possible, while facilitating the legitimate movement of people, goods and services into our countries and across our shared border.
The Beyond the Border Action Plan consists of 32 separate initiatives. It calls for enhancements to programs that help trusted businesses and travelers move efficiently across the border; introduces new measures to facilitate movement and trade across the border while reducing the administrative burden for business; and invests in improvements to our shared border infrastructure and technology. By expediting lawful trade and commerce into and across our shared border, the United States and Canada seek to enhance our economic competitiveness, create jobs and support economic growth.
For more information, please visit www.dhs.gov or www.justice.gov.
Two Alabama Real Estate Investors and Their Company Indicted for Conspiracies to Rig Bids and Commit Mail Fraud for thePurchase of Real Estate at Public Foreclosure AuctionsRead the Press Release
A federal grand jury in Mobile, Ala., returned an indictment today against two real estate investors and their company, charging them with participating in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions held in southern Alabama, the Department of Justice announced today.
The department said the father and son real estate investors, Robert M. Brannon of Laurel, Miss., and Jason R. Brannon of Mobile, respectively, and their Mobile-based company, J & R Properties LLC, conspired with others not to bid against one another at public real estate foreclosure auctions in southern Alabama. The indictment, returned in the U.S. District Court for the Southern District of Alabama, charges that after a designated bidder bought a property at a public auction, which typically takes place at the county courthouse, the conspirators would generally hold a secret, second auction, at which each participant would bid the amount above the public auction price he or she was willing to pay. The highest bidder at the secret, second auction won the property.
The Brannons and J & R Properties were also charged with conspiring to use the U.S. mail to carry out a scheme to acquire title to rigged foreclosure properties sold at public auctions at artificially suppressed prices, to make and receive payoffs to co-conspirators, and to cause financial institutions, homeowners and others with a legal interest in rigged foreclosure properties to receive less than the competitive price for the properties. Jason Brannon, Robert Brannon and J & R Properties are charged with participating in the bid-rigging and mail fraud schemes from as early as October 2004 until at least August 2007.
“Today’s indictment underscores the commitment of the Antitrust Division to prosecute those who illegally profit on the real estate market at the expense of distressed homeowners,” said Scott D. Hammond, Deputy Assistant Attorney General of the Antitrust Division’s Criminal Enforcement Program. “The division will pursue vigorously those who engage in collusive schemes to eliminate competition in the marketplace.”
FBI Acting Special Agent in Charge Patrick Kiernan reaffirmed his commitment to pursuing these complex economic investigations stating, “This investigation has sent a strong message to the community at large, and the real estate community specifically, that abuses within the real estate industry will not be tolerated. Fraud related to home mortgage investments can have financial implications both locally and nationally, and the integrity of the system must be vigilantly maintained.”
Each violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals, and a $100 million fine for companies. The maximum fine for a Sherman Act charge may be increased to twice the gain derived from the crime or twice the loss suffered by the victim if either amount is greater than the statutory maximum fine. Each count of conspiracy to commit mail fraud carries a maximum penalty of 20 years in prison and a fine of $250,000 for individuals, and a fine of $500,000 for companies. The fine may be increased to twice the gross gain the conspirators derived from the crime or twice the gross loss caused to the victims of the crime by the conspirators.
The investigation into fraud and bid rigging at certain real estate foreclosure auctions in southern Alabama is being conducted by the Antitrust Division’s Atlanta Field Office and the FBI’s Mobile Office, with the assistance of the U.S. Attorney’s Office for the Southern District of Alabama. To date, five individuals—Harold H. Buchman, Allen K. French, Bobby Threlkeld Jr., Steven J. Cox and Lawrence B. Stacy—and one company—M & B Builders LLC— have pleaded guilty in the U.S. District Court for the Southern District of Alabama in connection with the investigation. Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Antitrust Division’s Atlanta Field Office at 404-331-7100 or visit www.justice.gov/atr/contact/newcase.htm.
Today’s charges are part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency task force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets and recover proceeds for victims of financial crimes. For more information on the task force, visit www.StopFraud.gov.
Statement of Attorney General Eric Holder<br /> on the U.S. House of Representatives VoteRead the Press Release
Attorney General Eric Holder issued the following statement today:
“Today’s vote is the regrettable culmination of what became a misguided – and politically motivated – investigation during an election year. By advancing it over the past year and a half, Congressman Issa and others have focused on politics over public safety. Instead of trying to correct the problems that led to a series of flawed law enforcement operations, and instead of helping us find ways to better protect the brave law enforcement officers, like Agent Brian Terry, who keep us safe – they have led us to this unnecessary and unwarranted outcome.
“During this time, the men and women of the Department of Justice – and I – have remained focused on what should and must be our government’s top priority: protecting the American people.
“When concerns about Operation Fast and Furious first came to light, I took action – and ordered an independent investigation into what happened. We learned that the flawed tactics used in this operation began in the previous administration – but I made sure that they ended under this one. I also made sure that agents and prosecutors around the country knew that such tactics must never be used again. I put in place new policies, new safeguards, and new leadership to make certain of this – and took extraordinary steps to facilitate robust congressional oversight. Let me be very clear – that was my response to Operation Fast and Furious. Any suggestion to the contrary simply ignores the facts.
“I had hoped that Congressional leaders would be good-faith partners in this work. Some have. Others, however, have devoted their time and attention to making reckless charges – unsupported by fact – and to advancing truly absurd conspiracy theories. Unfortunately, these same members of Congress were nowhere to be found when the Justice Department and others invited them to help look for real solutions to the terrible problem of violence on both sides of our Southwest Border. That’s tragic, and it’s irresponsible. The problem of drugs and weapons trafficking across this border is a real and significant public safety threat – and it deserves the attention of every leader in Washington.
“In the face of these and other challenges, the Justice Department has continued to move forward in fulfilling its critical law enforcement responsibilities. Whether it is with regard to prosecuting financial and health care fraud, achieving a record mortgage settlement, taking aggressive action in protecting the most vulnerable among us, or challenging proposed voting changes and redistricting maps that could disenfranchise millions of voters – this Department of Justice has not been afraid to act.
“Some of these enforcement decisions were not politically popular and help to explain the action taken today by the House. As Attorney General, I do not look to do that which is politically expedient – on behalf of the American people whom I am privileged to serve, I seek justice.
“In recent weeks, the Justice Department secured its seventh conviction in the most serious terrorist plot our nation has faced since 9/11. And just two days ago, the Department awarded more than $100 million in grants to save or create law enforcement jobs, including more than 600 jobs for recent veterans.
“This is the kind of work that leaders in Washington should be striving together to advance. At a time when so many Americans are in need of our help, I refuse to be deterred from it. And I will not let election-year politics and gamesmanship stand in the way of continued progress.
“Today’s vote may make for good political theater in the minds of some, but it is – at base – both a crass effort and a grave disservice to the American people. They expect – and deserve – far better.
“As a result of the action taken today by the House, an unnecessary court conflict will ensue. My efforts to resolve this matter short of such a battle were rebuffed by Congressman Issa and his supporters. It’s clear that they were not interested in bringing an end to this dispute or obtaining the information they claimed to seek. Ultimately, their goal was the vote that – with the help of special interests – they now have engineered.
“Whatever the path that this matter will now follow, it will not distract me or the men and women of the Department of Justice from the important tasks that are our responsibility. A great deal of work for the American people remains to be done – I’m getting back to it. I suggest that those who orchestrated today’s vote do the same."
Miami-Area Patient Recruiters Sentenced to Prison for Roles in $200 Million Medicare Fraud SchemeRead the Press Release
Two Miami-area patient recruiters were sentenced to 84 months and 63 months in prison, respectively, for recruiting Medicare beneficiaries as part of a $200 million Medicare fraud scheme, the Department of Justice, the FBI and the Department of Health and Human Services announced today.
James Edwards was sentenced today to 84 months in prison and three years of supervised release and Nelson Fernandez was sentenced yesterday to 63 months in prison and three years of supervised release. In addition, Fernandez was sentenced to pay $13.1 million in restitution, joint and several with co-conspirators, and Edwards was sentenced to pay $4.1 million in restitution, joint and several with co-conspirators. Edwards and Fernandez were both sentenced by U.S. District Judge Patricia A. Seitz.
Fernandez, 43, pleaded guilty to the scheme on Aug. 2, 2011, and Edwards, 65, pleaded guilty on July 13, 2011. Both admitted to serving as patient brokers for American Therapeutic Corporation (ATC). ATC, its management company, Medlink Professional Management Group Inc., and a related company, the American Sleep Institute (ASI), were Florida corporations headquartered in Miami. ATC operated purported partial hospitalization programs (PHPs) in seven different locations throughout South Florida and Orlando. A PHP is a form of intensive treatment for severe mental illness. ASI purported to provide diagnostic sleep disorder testing.According to court documents, Fernandez and Edwards recruited patients to attend ATC’s PHP program in exchange for per patient, per day kickbacks. Based on their recruiting, Fernandez admitted to causing $8 million in fraudulent submissions to Medicare and Edwards admitted to causing $8.16 in fraudulent bills to Medicare. Both Fernandez and Edwards admitted that they knew the patients they recruited for ATC were not qualified to receive PHP treatment. Both men also admitted to recruiting ineligible patients for ASI’s sleep studies. Fernandez additionally admitted to causing $14.7 million in fraudulent bills to Medicare in a separate home health services scheme in which he used some of the same patients that he brokered to ATC. Edwards additionally admitted to causing $4.1 million in fraudulent bills to Medicare in a separate PHP scheme.
According to court filings, ATC’s owners and operators paid millions of dollars in kickbacks to owners and operators of assisted living facilities and halfway houses and to patient brokers in exchange for delivering ineligible patients to ATC and ASI. In some cases, the patients received a portion of those kickbacks. According to court filings, to obtain the cash required to support the kickbacks, the co-conspirators laundered millions of dollars of payments from Medicare. According to court filings and evidence admitted at trials of co-defendants, ATC and ASI also did not provide the treatment billed to Medicare and co-conspirators fabricated documents in patient files to hide the ineligible patients and inappropriate treatment.
ATC, Medlink, and various owners, managers, doctors, therapists, patient brokers and marketers of ATC, Medlink and ASI, were charged with various health care fraud, kickback, money laundering and other offenses in two indictments unsealed on Feb. 15, 2011. ATC, Medlink and 19 of the individual defendants have pleaded guilty or have been convicted at trial. Other defendants are scheduled for trial on Oct. 22, 2012, before Judge Seitz. A defendant is presumed innocent unless proven guilty beyond a reasonable doubt in a court of law.
The sentences were announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; Xanthi C. Mangum, Acting Special Agent-in-Charge of the FBI’s Miami Field Office; and Special Agent-in-Charge Christopher Dennis of the HHS Office of Inspector General (HHS-OIG), Office of Investigations Miami office.
The criminal case is being prosecuted by Trial Attorneys Jennifer L. Saulino, Robert Zink, and James Hayes of the Criminal Division’s Fraud Section. A related civil action is being handled by Vanessa I. Reed and Carolyn B. Tapie of the Civil Division. The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.
Since their inception in March 2007, Medicare Fraud Strike Force operations in nine locations have charged more than 1,330 defendants who collectively have falsely billed the Medicare program for more than $4 billion. In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.Department of Justice Forfeits More Than $400,000 <br /> in Corruption Proceeds Linked to Former Nigerian GovernorRead the Press Release
WASHINGTON – The Department of Justice has forfeited $401,931 in assets traceable to Diepreye Solomon Peter Alamieyeseigha, a former Governor of Bayelsa State, Nigeria, Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Immigration and Customs Enforcement (ICE) Director John Morton announced today.Alamieyeseigha was the elected governor of the oil-producing Bayelsa State in Nigeria from 1999 until his impeachment in 2005. As alleged in the U.S. forfeiture complaint, Alamieyeseigha’s official salary for this entire period was approximately $81,000, and his declared income from all sources during the period was approximately $248,000. However, while governor, Alamieyeseigha accumulated millions of dollars worth of property located around the world through corruption and other illegal activities. After his impeachment in Nigeria, Alamieyeseigha pleaded guilty in Nigeria for, among other things, failure to disclose a bank account in Florida and also pleaded guilty on behalf of his shell companies to money laundering violations. As further alleged in the complaint, the funds forfeited were held in an investment account in Boston that was fraudulently opened in the name of Nicholas Aiyegbemi and were traceable to the undisclosed Alamieyeseigha account in Florida.
On June 13, 2012, U.S. District Court Judge Rya W. Zobel of the District of Massachusetts granted a motion for a default judgment and forfeiture order filed by the Criminal Division’s Asset Forfeiture and Money Laundering Section. This forfeiture order was executed today and allows the United States to dispose of the forfeited funds in accordance with federal law.
“With a declared income of less than $250,000, Mr. Alamieyeseigha accumulated millions of dollars worth of property over a six-year period,” said Assistant Attorney General Breuer. “Today’s announcement – the first forfeiture judgment obtained under our Kleptocracy Asset Recovery Initiative – sends a powerful message about the United States’ commitment to rooting out corruption far and wide. Foreign corrupt officials are on notice that we will not permit them to stash their corruption proceeds on American soil.”
“This investigation was initiated by ICE’s Homeland Security Investigations (HSI) Asset Identification & Removal Group (AIRG) in Baltimore, in an effort to recover Diepreye Solomon Peter Alamieyeseigha’s assets after he was convicted of money laundering offenses in Nigeria,” said ICE Director Morton. “HSI’s AIRG will continue working with the Department of Justice to aggressively seek to recover illicit proceeds gained through foreign corruption and to protect the U.S. financial system from being utilized by criminals.”
This is the first forfeiture judgment obtained under 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.
In a separate pending civil forfeiture case filed in the District of Maryland, the Justice Department is seeking forfeiture of additional property traceable to Alamieyeseigha, a private residence worth more than $600,000 in Rockville, Md. The complaint alleges that the property was involved in money laundering.
The case was prosecuted by Assistant Deputy Chief Daniel H. Claman and Trial Attorney Tracy Mann of the Criminal Division’s Asset Forfeiture and Money Laundering Section. Additional assistance was provided by the Assistant U.S. Attorney Mary Murrane of the District of Massachusetts. The case was investigated by ICE’s HSI AIRG in Baltimore.
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].
27 June 2012
Texas Resident Convicted on Charge of Attempted Use of <br /> Weapon of Mass DestructionRead the Press Release
Khalid Ali-M Aldawsari, 22, a citizen of Saudi Arabia and resident of Lubbock, Texas, was convicted by a federal jury today on an indictment charging one count of attempted use of a weapon of mass destruction in connection with his purchase of chemicals and equipment necessary to make an improvised explosive device (IED) and his research of potential U.S. targets, including persons and infrastructure.
The verdict, which was reached in the Northern District of Texas, was announced by Sarah R. Saldaña , U.S. Attorney for the Northern District of Texas; Lisa Monaco, Assistant Attorney General for National Security; and Diego G. Rodriguez, Special Agent in Charge of the FBI Dallas Field Division.
Sentencing has been scheduled for October 9, 2012, in Amarillo. Aldawsari, who was lawfully admitted into the United States in 2008 on a student visa and was enrolled at South Plains College near Lubbock, faces a maximum sentence of life in prison and a $250,000 fine. He was arrested on Feb. 23, 2011 on a criminal complaint and later charged in a March 9, 2011 federal indictment with attempting to use a weapon of mass destruction.
According to court documents and evidence presented during trial, at the time of his arrest last year, Aldawsari had been researching online how to construct an IED using several chemicals as ingredients. He had also acquired or taken a substantial step toward acquiring most of the ingredients and equipment necessary to construct an IED and he had conducted online research of several potential U.S. targets, the affidavit alleges. In addition, he had allegedly described his desire for violent jihad and martyrdom in blog postings and a personal journal.
“While many people are responsible for thwarting Aldawsari’s threat and bringing him to justice, we owe a debt of gratitude to all the members of the North Texas Joint Terrorism Task Force, and especially to the hundreds of hard-working and dedicated FBI agents, analysts, linguists and others,” said U.S. Attorney Saldaña. “Their efforts, coupled with the hard work and excellent cooperation from the Lubbock Police Department and the Texas Tech Police Department, are the reason we were able to stop this defendant from carrying out a catastrophic act of terrorism.”
“As this trial demonstrated, Aldawsari purchased ingredients to construct an explosive device and was actively researching potential targets in the United States. Thanks to the efforts of many agents, analysts and prosecutors, this plot was thwarted before it could advance further,” said Assistant Attorney General Monaco. “This case serves as another reminder of the need for continued vigilance both at home and abroad.”
“ Today’s guilty verdict shows how individuals in the United States with the intent to do harm can acquire the knowledge and materials necessary to carry out an attack,” said SAC Rodriguez. “Our success in locating and preventing Mr. Aldawsari from carrying out an attack is a result of cooperation within the law enforcement and intelligence communities, particularly, the North Texas Joint Terrorism Task Force, the Texas Tech Police Department, the Lubbock Police Department, and the Lubbock County Sheriff’s Office, but also a demonstration of information sharing across FBI divisions, as well as assistance from the community. I want to thank the dedicated agents, officers and analysts, the computer forensics team and linguists that worked diligently on this investigation as well as prosecutors serving in the U.S. Attorney’s Office in the Northern District.”
The government presented evidence that on Feb. 1, 2011, a chemical supplier reported to the FBI a suspicious attempted purchase of concentrated phenol by a man identifying himself as Khalid Aldawsari. Phenol is a toxic chemical with legitimate uses, but can also be used to make the explosive trinitrophenol, also known as T.N.P., or picric acid. Ingredients typically used with phenol to make picric acid, or T.N.P., are concentrated sulfuric and nitric acids.
Aldawsari attempted to have the phenol order shipped to a freight company so it could be held for him there, but the freight company told Aldawsari that the order had been returned to the supplier and called the police. Later, Aldawsari falsely told the supplier he was associated with a university and wanted the phenol for “off-campus, personal research.” Frustrated by questions being asked over his phenol order, Aldawsari cancelled his order, placed an order with another company, and later emailed himself instructions for producing phenol. In December 2010, he had successfully purchased concentrated nitric and sulfuric acids.
Aldawsari used various email accounts in researching explosives and targets, and often sent emails to himself as part of this process. He emailed himself a recipe for picric acid, which was described in the email as a “military explosive” and also emailed himself instructions on how to convert a cell phone into a remote detonator and how to prepare a booby-trapped vehicle using household items. Aldawsari also purchased many other items, including a Hazmat suit, a soldering iron kit, glass beakers and flasks, a stun gun, clocks and a battery tester.
Excerpts from a journal found at Aldawsari’s residence indicated that he had been planning to commit a terrorist attack in the United States for years. One entry describes how Aldawsari sought and obtained a particular scholarship because it allowed him to come directly to the United States and helped him financially, which he said “will help tremendously in providing me with the support I need for Jihad.” The entry continues: “And now, after mastering the English language, learning how to build explosives and continuous planning to target the infidel Americans, it is time for Jihad.”
In another entry, Aldawsari wrote that he was near to reaching his goal and near to getting weapons to use against infidels and their helpers. He also listed a “synopsis of important steps” that included obtaining a forged U.S. birth certificate; renting a car; using different driver’s licenses for each car rented; putting bombs in cars and taking them to different places during rush hour; and leaving the city for a safe place.
Aldawsari conducted research on various targets and e-mailed himself information on these locations and people. One of the documents he sent himself, with the subject line listed as “Targets,” contained the names and home addresses of three American citizens who had previously served in the U.S. military and had been stationed for a time at Abu Ghraib prison in Iraq. In others, Aldawsari sent himself the names of 12 reservoir dams in Colorado and California and listed two categories of targets: hydroelectric dams and nuclear power plants. He also sent himself an email titled “Tyrant’s House,” in which he listed the Dallas address for former President George W. Bush. Aldawsari also conducted research that indicated he considered using infant dolls to conceal explosives and the possible targeting of a nightclub with an explosive concealed in a backpack.
This case was investigated by the FBI’s Dallas Joint Terrorism Task Force, with assistance from the Lubbock Police Department and the Texas Tech Police Department. The prosecution is being handled by Assistant U.S. Attorneys Jeffrey R. Haag, Denise Williams, James T. Jacks and Matthew J. Kacsmaryk and Trial Attorney David Cora from the Counterterrorism Section of the Justice Department’s National Security Division.
Oregon Man Sentenced in Boston to 36 Months in Prison for<br /> Helping Thousands Steal Internet ServiceRead the Press Release
WASHINGTON – A Redmond, Ore., man was sentenced today to 36 months in prison for his participation in a scheme to help thousands steal internet service, Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Carmen Ortiz of the District of Massachusetts announced.
Ryan Harris, 29, was sentenced by Chief U.S. District Judge Mark L. Wolf in the District of Massachusetts. In addition to his prison term, Harris was sentenced to three years of supervised release. He was also ordered to pay a $50,000 fine and $152,370 in restitution. Harris was convicted by a jury on March 1, 2012, of seven counts of wire fraud.
The evidence presented at trial established that Harris was the owner of TCNISO, a company that distributed products enabling users to steal Internet service. From 2003 through 2009, Harris developed and distributed hardware and software tools that allowed his customers to modify their cable modems so that they could disguise themselves as paying subscribers and obtain Internet service without paying. The products included a “packet sniffer,” which Harris dubbed “Coax Thief.” “Coax Thief” surreptitiously intercepted (or “sniffed”) Internet traffic so that the user obtained the media access control addresses and configuration files of surrounding modems. TCNISO and Harris also offered ongoing customer support, primarily through forums hosted on the TCNISO website, to assist customers in their cable modem hacking activities. Harris gained $400,000 to $1 million in sales revenue.
The case was investigated by the Boston Field Offices of the FBI and the Internal Revenue Service-Criminal Investigation and was prosecuted by Trial Attorney Mona Sedky of the Computer Crime & Intellectual Property Section in the Justice Department’s Criminal Division and Assistant U.S. Attorney Adam J. Bookbinder of the District of Massachusetts’s Computer Crimes Unit.
Operator of Payroll Companies Charged in North Carolina<br /> <br /> with Federal Fraud and Money Laundering CrimesRead the Press Release
Arthur S. Weiss was indicted by a grand jury for tax fraud, wire fraud, mail fraud, bank loan fraud, money laundering and bankruptcy fraud, the Justice Department and Internal Revenue Service (IRS) announced today. The indictment was returned yesterday in the Middle District of North Carolina.
According to the indictment, Weiss operated professional employer organizations (PEOs), which provided payroll-related services to client companies. For his client companies, Weiss agreed to pay the employees, withhold and remit federal and state taxes, prepare and file the federal and state employment tax returns, and provide workers compensation insurance (WCI). Weiss did pay the employees and withhold the employment taxes, but he failed to remit the employment taxes, keeping them for his personal use.
From 2004 to 2011, Weiss failed to file employment tax returns and failed to pay over to the IRS employment taxes of over $4 million. In addition, Weiss collected WCI premiums from his clients but failed to obtain adequate WCI protection, and diverted WCI premiums for his personal use.
The indictment also alleges that Weiss used a portion of his fraud proceeds to purchase expensive jewelry. During a trip to Europe, Weiss fraudulently reported four pieces of jewelry lost or stolen, and received $177,480 from his insurance company. The jewelry was later seized during a search at his former residence in Marion, N.C.
According to the indictment, Weiss also committed bank loan fraud. In order to receive four loans from a bank, Weiss provided numerous personal income tax returns to the bank. Each of the returns Weiss provided to the bank included significantly greater income than the returns actually filed with the IRS. The indictment also alleges that Weiss filed two false personal income tax returns, and lied under oath in his bankruptcy proceeding.
Each of the 13 wire fraud, 10 mail fraud and four bank loan fraud counts against Weiss carries a maximum of 30 years in prison upon conviction. Weiss faces a maximum potential prison sentence of 10 years upon conviction for each of the two money-laundering counts. The bankruptcy fraud count carries a maximum sentence of five years. As to the tax charges, the count of corrupt interference with the Internal Revenue laws and each count of filing a false tax return carry a maximum of three years imprisonment upon conviction. Each of the 33 charges alleged in the indictment also carries a maximum $250,000 fine upon conviction.
The case was investigated by IRS-Criminal Investigation, the FBI and the North Carolina Industrial Commission’s Fraud Unit. The case is being prosecuted by Assistant U.S. Attorney Clifton Barrett and Trial Attorney Todd Ellinwood of the Justice Department’s Tax Division.
An indictment is a formal accusation of criminal conduct, not evidence. A defendant is presumed innocent unless convicted through due process of law.
Miami-Area Resident Pleads Guilty toParticipating in $63 Million Medicare Fraud SchemeRead the Press Release
WASHINGTON – A Miami-area resident pleaded guilty today in U.S. District Court in Miami for her role in a health care fraud scheme that resulted in the submission of more than $63 million in fraudulent claims to Medicare and Medicaid, announced the Department of Justice, the FBI and the Department of Health and Human Services (HHS).
Sarah Da Silva Keller, 27, pleaded guilty before U.S. District Judge Marcia G. Cooke in Miami to one count of conspiracy to commit health care fraud. Keller admitted to participating in a fraud scheme that was orchestrated by the owner and operators of Health Care Solutions Network (HCSN), which operated purported partial hospitalization programs (PHPs), a form of intensive mental health treatment for severe mental illness.
According to an indictment unsealed on May 2, 2012, HCSN paid kickbacks to owners and operators of assisted living facilities in exchange for referring Medicare beneficiaries to HCSN for PHP treatment that was unnecessary and, in many instances, not provided. According to court documents, Keller admitted that she falsified records at the direction of others so that HCSN could bill Medicare for patients who did not receive the services from HCSN. Keller knew that the falsification of these records was part of a plan for HCSN to commit health care fraud.
At sentencing, scheduled for Oct. 17, 2012, Keller faces a maximum of 10 years in prison and a $250,000 fine for each count.
Nine other charged defendants, including the owner and operators of HCSN, await trial before U.S. District Judge Cecilia M. Altonaga. Defendants are presumed innocent until proven guilty at trial.
Today’s guilty plea was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; Xanthi C. Mangum, Acting Special Agent-in-Charge of the FBI’s Miami Field Office; and Special Agent-in-Charge Christopher B. Dennis of the HHS Office of Inspector General (HHS-OIG), Office of Investigations Miami office.
The case is being prosecuted by Trial Attorneys Steven Kim, William Parente and Allan Medina of the Criminal Division’s Fraud Section. The case was investigated by the FBI, HHS-OIG and Medicaid Fraud Control Unit and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.
Since their inception in March 2007, Medicare Fraud Strike Force operations in nine locations have 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, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.
Justice Department Announces Lawsuit to Protect Rights of Military and Overseas Voters in GeorgiaRead the Press Release
The Justice Department announced today that it has filed a lawsuit against the state of Georgia and its chief election official seeking relief to help ensure that military service members, their family members and U.S. citizens living overseas have the opportunity to participate fully in Georgia’s Aug. 21, 2012, federal primary runoff election and all future federal runoff elections.
The lawsuit, brought under the Uniformed and Overseas Citizens Absentee Voting Act (UOCAVA), was filed in federal district court in Atlanta. The lawsuit alleges that Georgia’s procedures are inadequate to ensure that its eligible military and overseas voters can participate fully in the state’s Aug. 21, 2012, federal primary runoff election, should one be necessary. The lawsuit seeks an order requiring Georgia to take all steps necessary to ensure that all affected UOCAVA voters are afforded a full opportunity to participate in the upcoming federal primary runoff election and all future federal elections.
“Our uniformed service members and overseas citizens deserve a full opportunity to participate in all elections of our nation’s leaders including runoff elections for federal office in states where they are held” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “This suit seeks relief to ensure that Georgia’s military and overseas voters, many of whom are members of our armed forces and their families serving our country around the world, will be provided the opportunity guaranteed by UOCAVA to receive, mark and return their ballots in the upcoming primary runoff election, as well as all future federal runoff elections.”
“We are committed to protecting the right of Georgia service members, including those serving our country overseas, to vote in our elections,” said Sally Quillian Yates, U.S. Attorney for the Northern District of Georgia.
UOCAVA requires states to allow uniformed services voters (serving both overseas and within the United States) and their families and overseas citizens to register to vote and to vote absentee for all elections for federal office. In 2009, Congress enacted the Military and Overseas Voter Empowerment (MOVE) Act, which made broad amendments to UOCAVA. Among those changes was a requirement that states transmit absentee ballots to voters covered under UOCAVA, by mail or electronically at the voter’s option, no later than 45 days before federal elections.
The action was necessary because under Georgia’s election calendar official runoff election ballots will not be available to be sent until after UOCAVA’s deadline of July 7, 2012, the 45th day before this year’s primary runoff election. The requested relief will help ensure that Georgia’s service members and overseas voters will be able to have their votes counted in the upcoming primary runoff election, and that the right UOCAVA provides to be sent a ballot 45 days in advance of an election is guaranteed in all future runoff elections for federal office.
More information about UOCAVA and other federal voting laws is available on the Department of Justice website at www.justice.gov/crt/about/vot/misc/activ_uoc.php. Complaints may be reported to the Voting Section of the Justice Department’s Civil Rights Division at 1-800-253-3931.
Related Materials:
Complaint
PI MotionFormer Peace Corps Volunteer Pleads Guilty in Connecticut to Sexually Abusing Children in South AfricaRead the Press Release
WASHINGTON – A Milford, Conn., man pleaded guilty today in Hartford to sexually abusing four minor girls while he was a volunteer with the U.S. Peace Corps in South Africa, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney David B. Fein of the District of Connecticut, Peace Corps Director Aaron S. Williams and Special Agent in Charge Bruce M. Foucart of the U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI) in New England.
Jesse Osmun, 32, pleaded guilty before Chief U.S. District Judge Alvin W. Thompson to one count of traveling from the United States to South Africa and engaging in illicit sexual conduct with children.
“While serving as a Peace Corps volunteer in South Africa, Mr. Osmun committed horrific, unforgivable crimes,” said Assistant Attorney General Breuer. “He was supposed to be helping young children in need, many of whom were orphans, but instead, he preyed upon them, sexually abusing several young girls under the age of six. He betrayed the Peace Corps and the children he had traveled to South Africa to help. For his predatory conduct, he faces up to 30 years in prison.”
“Our investigation demonstrated that this defendant sexually abused young girls while he served as a Peace Corps volunteer in South Africa,” said U.S. Attorney Fein. “This was a reprehensible crime, an extraordinary abuse of trust and an unconscionable violation of the Peace Corps mission. I commend the Peace Corps Office of Inspector General (OIG), ICE Homeland Security Investigations and the South African Police Service for their prompt and thorough investigation of child sexual abuse. Their efforts undoubtedly protected children from future harm and removed a dangerous child predator from society.”
“The crimes of this former volunteer are reprehensible,” said Peace Corps Director Williams. “The Peace Corps has no tolerance for abuse of any kind, and our deepest sympathies are with all the victims involved. I am thankful to the Peace Corps OIG, the Department of Justice, ICE Homeland Security Investigations and the South African Police Service for conducting a well coordinated investigation that brought about swift justice in this case. The Peace Corps is committed to ensuring that the children affected by these crimes receive proper care and treatment.”
“This investigation represents the very essence of the determination of federal, state and local law enforcement authorities to capture and prosecute an individual whose primary objective was to sexually abuse vulnerable children,” said HSI Special Agent in Charge Foucart. “I hope that this guilty plea sends a clear message that we will continue to aggressively pursue individuals who engage in this behavior to ensure that there is no place to hide here in the United States or anywhere in the world. I want to thank our partners at the U.S. attorney's office for their tireless efforts and collaboration in this investigation.”
According to court documents and statements made in court, Osmun was sworn in as a Peace Corps volunteer in March 2009 and began his service at a non-governmental organization (NGO) in South Africa that provides education, food and other services to children, many of whom are orphans. In May 2011, Osmun resigned from the Peace Corps after being confronted by the program director of the NGO with allegations of sexual abuse. He returned to the United States on June 2, 2011. Shortly thereafter, Peace Corps OIG and ICE HSI agents, working with members of the South African Police Services, began investigating the allegations of abuse.
According to court documents, the investigation revealed that, while volunteering at the NGO, Osmun enticed four young girls, all of whom were under the age of six, to engage in illicit sexual conduct with him. Osmun persuaded the children to engage in this conduct by playing games with them and providing them with candy. Osmun sexually abused one of the victims approximately two times a week over the course of approximately five months.
On Aug. 4, 2011, Osmun was arrested at his home in Milford. He has been detained since his arrest.
Judge Thompson scheduled sentencing for Sept. 19, 2012. Osmun faces a maximum sentence of 30 years in prison and a fine of up to $250,000.
U.S. Attorney Fein noted that the government is seeking restitution from the defendant, and that the Department of Justice, the Peace Corps and the U.S. Embassy in South Africa are working together to ensure that a fund will be available to provide assistance to the victims in this case.
“Supporting victims of child exploitation is a priority for this United States Attorney’s Office and for the Department of Justice,” said U.S. Attorney Fein. “Our work does not end with the apprehension and conviction of those who sexually exploit children but extends appropriately to the welfare of the child victims.”
This case is being investigated by the Peace Corps OIG and ICE HSI. Investigative assistance has been provided by members of the South African Police Service Directorate for Priority Crime Investigations; ICE’s attaché office in Pretoria, South Africa; the ICE Cybercrimes Center in Fairfax, Va.; the U.S. Department of State’s regional security office in Durban, South Africa; and the South Africa National Prosecuting Authority. The case is being prosecuted by U.S. Attorney David B. Fein, Assistant U.S. Attorney Krishna R. Patel and Trial Attorney Bonnie Kane of the Child Exploitation and Obscenity Section in the Justice Department’s Criminal Division.
Federal Court Shuts Down South Florida Tax Return PreparerRead the Press Release
A federal court in Miami has permanently barred Kenia Marrero of Miami, and her company, Kenia Immigration Services, from preparing federal tax returns for others, the Justice Department announced today. The civil injunction order, to which Marrero consented without admitting the allegations against her, was signed by Judge José E. Martinez of the U.S. District Court for the Southern District of Florida.
The government complaint in the case alleged that Marrero prepared federal income tax returns for customers that fraudulently understated their tax liabilities by using fabricated deductions, business expenses, and first-time-homebuyer credits. The complaint alleged that Marrero offered immigration services, including obtaining work permits and visas, and used that customer base to obtain tax-preparation customers. According to the complaint, the harm to the United States from Marrero’s misconduct could be as much as $1.4 million.
The Internal Revenue Service lists return preparer fraud as one of the Dirty Dozen Tax Scams for 2012 . In the past decade the Justice Department’s Tax Division has obtained hundreds of injunctions to stop the promotion of tax-fraud schemes and the preparation of fraudulent returns. More information about these cases is available on the Justice Department website .
Barclays Bank PLC Admits Misconduct Related to Submissions for the London Interbank Offered Rate and the Euro Interbank Offered Rate and Agrees to Pay $160 Million PenaltyRead the Press Release
WASHINGTON – Barclays Bank PLC, a financial institution headquartered in London, has entered into an agreement with the Department of Justice to pay a $160 million penalty to resolve violations arising from Barclays’s submissions for the London InterBank Offered Rate (LIBOR) and the Euro Interbank Offered Rate (EURIBOR), which are benchmark interest rates used in financial markets around the world, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and Assistant Director in Charge James W. McJunkin of the FBI’s Washington Field Office.
As part of the agreement with the Department of Justice, Barclays has admitted and accepted responsibility for its misconduct set forth in a statement of facts that is incorporated into the agreement. According to the agreement, Barclays provided LIBOR and EURIBOR submissions that, at various times, were false because they improperly took into account the trading positions of its derivative traders, or reputational concerns about negative media attention relating to its LIBOR submissions. The Justice Department’s criminal investigation into the manipulation of LIBOR and EURIBOR by other financial institutions and individuals is ongoing. The agreement requires Barclays to continue cooperating with the department in its ongoing investigation.
“LIBOR and EURIBOR are critically important benchmark interest rates,” said Assistant Attorney General Breuer. “Because mortgages, student loans, financial derivatives, and other financial products rely on LIBOR and EURIBOR as reference rates, the manipulation of submissions used to calculate those rates can have significant negative effects on consumers and financial markets worldwide. For years, traders at Barclays encouraged the manipulation of LIBOR and EURIBOR submissions in order to benefit their financial positions; and, in the midst of the financial crisis, Barclays management directed that U.S. Dollar LIBOR submissions be artificially lowered. For this illegal conduct, Barclays is paying a significant price. To the bank’s credit, Barclays also took a significant step toward accepting responsibility for its conduct by being the first institution to provide extensive and meaningful cooperation to the government. Its efforts have substantially assisted the Criminal Division in our ongoing investigation of individuals and other financial institutions in this matter.”
“Barclays Bank’s illegal activity involved manipulating its submissions for benchmark interest rates in order to benefit its trading positions and the media’s perception of the bank’s financial health,” said Assistant Director in Charge McJunkin. “Today’s announcement is the result of the hard work of the FBI Special Agents, financial analysts and forensic accountants as well as the prosecutors who dedicated significant time and resources to investigating this case.”
Barclays was one of the financial institutions that contributed rates used in the calculation of LIBOR and EURIBOR. The contributed rates are generally meant to reflect each bank’s assessment of the rates at which it could borrow unsecured interbank funds. For LIBOR, the highest and lowest 25% of contributed rates are excluded from the calculation and the remaining rates are averaged to calculate the fixed rates. For EURIBOR, the highest and lowest 15% are excluded and the remaining 70% are averaged to calculate the fixed rates.
Futures, options, swaps, and other derivative financial instruments traded in the over-the-counter market and on exchanges worldwide are settled based on LIBOR. Further, mortgages, credit cards, student loans and other consumer lending products often use LIBOR as a reference rate. According to the agreement, an individual bank’s LIBOR or EURIBOR submission cannot appropriately be influenced by the financial positions of its derivatives traders or the bank’s concerns about public perception of its financial health due to its LIBOR submissions.
According to the agreement, between 2005 and 2007, and then occasionally thereafter through 2009, certain Barclays traders requested that the Barclays LIBOR and EURIBOR submitters contribute rates that would benefit the financial positions held by those traders. The requests were made by traders in New York and London, via electronic messages, telephone conversations and in-person conversations. The employees responsible for the LIBOR and EURIBOR submissions accommodated those requests on numerous occasions in submitting the bank’s contributions. On some occasions, Barclays’s submissions affected the fixed rates.
In addition, between August 2005 and May 2008, certain Barclays traders communicated with traders at other financial institutions, including other banks on the LIBOR and EURIBOR panels, to request LIBOR and EURIBOR submissions that would be favorable to their or their counterparts’ trading positions, according to the agreement.
When the requests of traders for favorable LIBOR and EURIBOR submissions were taken into account by the rate submitters, Barclays’s rate submissions were false and misleading.
Further, according to the agreement, between approximately August 2007 and January 2009, in response to initial and ongoing press speculation that Barclays’s high U.S. Dollar LIBOR submissions at the time might reflect liquidity problems at Barclays, members of Barclays management directed that Barclays’s Dollar LIBOR submissions be lowered. This management instruction often resulted in Barclays’s submission of false rates that did not reflect its perceived cost of obtaining interbank funds. While the purpose of this particular conduct was to influence Barclays’s rate submissions, as opposed to the resulting fixes, there were some occasions when Barclays’s submissions affected the fixed rates.
The agreement and monetary penalty recognize Barclays’s extraordinary cooperation. Barclays made timely, voluntary and complete disclosure of its misconduct. After government authorities began investigating allegations that banks had engaged in manipulation of benchmark interest rates, Barclays was the first bank to cooperate in a meaningful way in disclosing its conduct relating to LIBOR and EURIBOR. Barclays’s disclosure included relevant facts that at the time were not known to the government. Barclays’s cooperation has been extensive, in terms of the quality and type of information and assistance provided, and has been of substantial value in furthering the department’s ongoing criminal investigation. Barclays has made a commitment to future cooperation with the department and other government authorities in the United States and the United Kingdom.
Assistant Attorney General Breuer further stated, “As today’s agreement reflects, we are committed to holding companies accountable for their misconduct while, at the same time, giving meaningful credit to companies that provide full and valuable cooperation in our investigations.”
In addition, Barclays has implemented a series of compliance measures and will implement additional internal controls regarding its submission of LIBOR and EURIBOR contributions, as required by the Commodity Futures Trading Commission (CFTC). Barclays will also continue to be supervised and monitored by the FSA.
The agreement and monetary penalty further recognize certain mitigating factors to Barclays’s misconduct. At times, Barclays employees raised concerns with the British Bankers’ Association, the United Kingdom Financial Services Authority (FSA), the Bank of England, and the Federal Reserve Bank of New York in late 2007 and in 2008 that the Dollar LIBOR rates submitted by contributing banks, including Barclays, were too low and did not accurately reflect the market. Further, during this time, notwithstanding Barclays’s improperly low Dollar LIBOR submissions, those submissions were often higher than the contributions used in the calculation of the fixed rates.
As a result of Barclays’s admission of its misconduct, its extraordinary cooperation, its remediation efforts and certain mitigating and other factors, the department agreed not to prosecute Barclays for providing false LIBOR and EURIBOR contributions, provided that Barclays satisfies its ongoing obligations under the agreement for a period of two years. The non-prosecution agreement applies only to Barclays and not to any employees or officers of Barclays or any other individuals.
In a related matter, the CFTC brought attempted manipulation and false reporting charges against Barclays, which the bank agreed to settle. The CFTC imposed a $200 million penalty and required Barclays to implement detailed measures designed to ensure the integrity and reliability of its benchmark interest rate submissions.
The FSA issued a Final Notice regarding its enforcement action against Barclays, and has imposed a penalty of £59.5 million against it.
The case is being handled by Deputy Chief Daniel Braun, Assistant Chiefs Rebecca Rohr and Robertson Park, Trial Attorney Alexander Berlin, and Special Trial Attorney Luke Marsh of the Criminal Division’s Fraud Section. The investigation is being conducted by the FBI’s Washington Field Office, jointly with the Antitrust Division of the Department of Justice.
The Department acknowledges and expresses its appreciation for the significant assistance provided by the CFTC’s Division of Enforcement, which referred the conduct to the Department, as well as the FSA’s Enforcement and Financial Crime Division.
This agreement 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.
Related Materials:
Agreement
Statement of Facts
26 June 2012
US Settles Complaint Against Wisconsin Livestock Companyfor Improper Medication PracticesRead the Press Release
The United States has filed suit in the U.S. District Court for the Eastern District of Wisconsin against Dan Nolan Livestock LLC. and its owner Daniel W. Nolan to block them from violating the Food, Drug and Cosmetic Act (FDCA) in connection with their alleged unlawful use of new animal drugs in cows slaughtered for food. The Justice Department filed the suit on behalf of the Food and Drug Administration (FDA).
The defendants have agreed to settle the litigation and be bound by a Consent Decree of Permanent Injunction that enjoins them from committing violations of the FDCA. The proposed consent decree has been filed with the court and is awaiting judicial approval.
The government’s action results from a series of inspections of the Bonduel, Wis.-based livestock company, which revealed, according to the FDA, that the defendants failed to maintain treatment and sales records for their animals and that, in the previous year, they sold an animal for slaughter containing excessive and illegal antibiotic drug residues in its edible tissues. The complaint also alleges that the defendants have dispensed prescription new animal drugs on more than one occasion without a lawful order from a veterinarian.
The complaint states that excess drug residues in animal tissues can harm consumers by causing allergic reactions and by contributing to the spread of antibiotic-resistant bacteria. Both FDA and the U.S. Department of Agriculture (USDA) have warned the defendants that their conduct violates the FDCA. Nonetheless, according to the complaint, the most recent FDA inspection, concluded in November 2011, documented the continuing nature of the defendants’ violations, and established their responsibility for the illegal drug residues found in edible tissue sampled by the USDA in January 2011.
The government’s complaint asserts that the defendants have introduced adulterated food into interstate commerce, caused new animal drugs to become misbranded and adulterated while held for sale after shipment in interstate commerce, and failed to comply with statutory and regulatory requirements concerning the extra-label use of new animal drugs. The consent decree, to which the defendants agreed, requires that Dan Nolan Livestock cease operations and be allowed to resume its business only after it has documented to the FDA’s satisfaction that it has corrected all of the problems observed by the agency’s inspections and has instituted procedures to ensure that there will be no recurrence of those or any other violations that could present a threat to the consuming public.
“When farms fail to maintain appropriate controls concerning the medication of food-producing animals, they jeopardize the public health,” said Stuart F. Delery, Acting Assistant Attorney General for the Justice Department’s Civil Division. “Today’s filing is intended to make certain that Dan Nolan Livestock will put in place the procedures and documentation necessary to help ensure that consumers receive safe foods for their family table.”
Mr. Delery thanked the FDA for referring the case to the Department of Justice. Andrew Clark, of the Consumer Protection Branch, prosecuted the case together with Sonia Nath of FDA’s Office of the General Counsel. The U.S. Attorney’s Office for the Eastern District of Wisconsin joined in the prosecution of the matter.
A complaint is merely a set of allegations that, if the case were to proceed to trial, the government would need to prove by a preponderance of the evidence.
Two Women Plead Guilty in Maryland to Civil Rights ViolationsRead the Press Release
Two Baltimore women pleaded guilty today for their involvement in a racially-motivated conspiracy to interfere with an African family’s housing rights by hanging a dead raccoon on the family’s porch, the Justice Department announced.
Dena Whedbee, 42, and her daughter Brittany Whedbee, 20, each pleaded guilty in the District of Maryland to one count of conspiracy to deprive a person of civil rights and one count of violating the Fair Housing Act.
According to their plea agreement, in April 2010, Dena Whedbee and Brittany Whedbee conspired with Joshua Wall, Billy Pratt and another co-conspirator to hang a dead raccoon from a noose on the porch of a family from Africa, in order to frighten the family and interfere with their housing rights. Dena Whedbee admitted that she and another co-conspirator found the dead raccoon, and that Wall, Pratt and the other conspirator used the raccoon to carry out their plan on the night of April 29, 2010. Both Dena and Brittany Whedbee also admitted that they encouraged their co-conspirators to hang the raccoon on the family’s porch.
The defendants face a maximum penalty of 10 years in prison and a $250,000 fine for conspiracy to deprive a person of civil rights and one year in prison and a $100,000 fine for violating the Fair Housing Act. U.S. District Judge Ellen L. Hollander has scheduled sentencing for Dec. 14, 2012.
Billy Pratt, 24, of Baltimore, and Joshua Wall, 20, of Essex, Md., previously pleaded guilty for their involvement in the conspiracy. Their sentencings are scheduled for Aug. 17, 2012.
This case was investigated by Special Agent Mia Winkley of the FBI, and is being prosecuted by Trial Attorney Angie Cha of the Justice Department’s Civil Rights Division and Assistant U.S. Attorney P. Michael Cunningham.
New York-based GSA Contractor Ward Diesel Filter Systems<br /> <br /> Pays US $628,000 to Resolve False Claims Act LiabilityRead the Press Release
Ward Diesel Filter Systems Inc. has agreed to pay the United States $628,000 to resolve allegations that it knowingly submitted false claims to federal agencies under a contract to provide diesel exhaust filtering systems for fire engines through the General Services Administration’s (GSA) Multiple Award Schedule program, the Justice Department announced today.
Ward Diesel, which is headquartered in Elmira, N.Y., manufactures filtering systems for diesel engines on fire trucks. The company had provided the systems to the Department of the Army, Department of the Navy, Department of Interior, as well as the Air Force, Marine Corps and Department of Energy.
Ward Diesel’s contract required it to truthfully provide its commercial pricing information to GSA during the contracting process. The contract required Ward Diesel to identify a group of most-favored customers, and to provide more favorable prices to GSA than it offered to those most-favored customers. In addition, Ward Diesel’s contract with GSA required Ward Diesel to notify GSA of any additional discounts to the most-favored customers during the life of the contract. The United States alleged that Ward Diesel failed to fulfill these obligations, thereby routinely overcharging government agencies that purchased diesel filter systems from Ward Diesel though its GSA contract.
“In these tight times of fiscal responsibility, knowingly overcharging government agencies that are trying to do more with less is particularly inappropriate and harmful to the agencies’ missions,” said Acting Assistant Attorney General Stuart F. Delery. “This resolution demonstrates that the department will vigorously pursue government contractors who overprice their products at the expense of the American taxpayers.”
“This is another example of our commitment to rooting out those who attempt to defraud the government. Companies that choose to do business with the United States must play by the rules. When they fail to do so, this office will do its utmost to enforce the law and protect taxpayers’ money,” said John P. Kacavas, U.S. Attorney for the District of New Hampshire.
The government’s investigation of Ward Diesel was initiated by a lawsuit, U.S. ex rel. Siska v. Ward Diesel Filter Systems, Inc., No. 10-0111-JL (D. NH), filed under the False Claims Act’s qui tam or whistleblower provisions, which permit private parties to sue for false claims on behalf of the United States and to share in any recovery. The whistleblower in this case, Ted Siska, will receive $94,200 of the settlement.
Acting Assistant Attorney General Stuart F. Delery and U.S. Attorney John P. Kacavas commended the many agencies that participated in the government’s investigation, including the Civil Division of the U.S. Department of Justice, the U.S. Attorney’s Office for the District of New Hampshire, the Inspector General of the GSA, the Defense Criminal Investigative Service, the Defense Contract Audit Agency, Air Force Criminal Investigation Division, Air Force Office of Special Investigations and Navy Criminal Investigative Service. The claims settled by this agreement are allegations only, and there has been no determination of liability.
Mortgage Fraud Summits Arm Distressed Homeowners with Information to Protect Them from ScamsRead the Press Release
The Department of Justice, the Department of Housing and Urban Development’s (HUD) Office of Inspector General and the Federal Housing Finance Agency’s Office of Inspector General, among other federal and state partners, are holding mortgage fraud summits in Las Vegas and Los Angeles today to help protect homeowners in areas hit hardest by these scams. The summit originally planned to be held in Tallahassee, Fla., will be rescheduled due to severe weather in the area. The summits, organized by President Obama’s Financial Fraud Enforcement Task Force’s (FFETF) Mortgage Fraud Working Group, are an opportunity for homeowners to learn about common mortgage fraud schemes and how to avoid becoming a victim.
Additionally today, the Treasury Department’s Financial Crimes Enforcement Network (FinCEN), an active member of the FFTEF, issued its first quarter 2012 update of mortgage loan fraud suspicious activity reports that shows California, Florida and Nevada leading the nation in the number of mortgage fraud suspicious activity report subjects per person. Financial institutions report suspected illegal activity to FinCEN, which then collects, analyzes and makes the information available to state, federal and local law enforcement investigators. For more information on FinCEN’s first quarter 2012 update of mortgage loan fraud suspicious activity reports, visit: www.fincen.gov/news_room/rp/files/MLF_Update_Q1_2012_508.pdf
California, Florida and Nevada have consistently ranked among the highest in mortgage fraud cases and suspected mortgage fraud according to data collected by the FBI in its “2010 Mortgage Fraud Report Year in Review.” The Department of Justice has remained vigilant in seeking and prosecuting mortgage fraud, resulting in a 92 percent increase in mortgage fraud prosecutions across the nation since fiscal year 2009. In fiscal years 2010 and 2011, alone, the department indicted more than 2,100 individuals for mortgage-fraud related crimes.
“Preventing, detecting and prosecuting mortgage fraud is a top priority of the Financial Fraud Enforcement Task Force and its Mortgage Fraud Working Group members,” said FFETF Executive Director Michael Bresnick. “It’s more important than ever that we arm homeowners with the information they need to recognize the predators up front and empower them to avoid falling victim to these devastating scams. That’s why the task force is holding these summits in states hit hardest by the foreclosure crisis.”
The Nevada Mortgage Fraud Summit will take place today from 12:30 p.m. to 5:30 p.m. PDT in the Lloyd George Federal Courthouse located at 333 Las Vegas Boulevard South in Las Vegas. Multiple federal, state and local officials, including Nevada Attorney General Catherine Cortez-Masto, will discuss mortgage fraud trends and schemes in southern Nevada, the impact of mortgage fraud on the community and ways in which people can avoid becoming a victim of a mortgage fraud offense.
“We are continuing to work with our federal, state and local law enforcement partners to investigate and bring to justice the persons who are taking advantage of the housing crisis in Nevada to defraud financial institutions, distressed homeowners and homebuyers,” said U.S. Attorney for the District of Nevada Daniel G. Bogden.
For more information on the Las Vegas summit, visit: www.justice.gov/usao/nv/
The California Mortgage Fraud Summit is taking place today from 9:00 a.m. to 1:00 p.m. PDT in the 300 N. Los Angeles Street Federal Building in downtown Los Angeles. The summit involves a wide variety of officials and practitioners dedicated to mortgage fraud enforcement and prevention from the FBI, HUD, Federal Trade Commission, California Attorney General’s Office, California State Bar, California Department of Real Estate and other federal, state, county and local agencies, including the Los Angeles County Department of Consumer Affairs.
“The Central District of California’s Mortgage Fraud Summit is focused on bringing together resources at every level of both the public and private sectors and at developing a seamless integration of dedicated federal, state and local resources to fight mortgage fraud, raise fraud awareness and ultimately protect homeowners and their families,” said U.S. Attorney for the Central District of California André Birotte Jr.
For more information on the summit in Los Angeles, please contact Bruce Riordan at 213-894-0480.
The summit being rescheduled in Tallahassee will cover recent trends in mortgage fraud and the impact of mortgage fraud on victims. A broad range of representatives from federal and state law enforcement, consumer groups and financial institutions are expected to participate in this conference.
“Mortgage fraud, indeed any fraud against consumers, weakens our economy not only by the loss it causes but also by decreasing consumer confidence in our economy. That, in turn, hurts our country,” said U.S. Attorney for the Northern District of Florida Pamela Marsh.
For more information on the summit in Tallahasse, please contact Ginger Golden-Bouk at 850-444-4000.
Struggling homeowners can become the targets of fraudsters posing as foreclosure rescue or loan modification experts. Typically these con artists claim they can help struggling homeowners save their home from foreclosure for an upfront fee, even though advance fees are generally prohibited by law and loan counseling and modification services are generally provided free from the lender or from a HUD counseling center. The scams take many forms. Some scammers ask the homeowners to transfer title to their property, make mortgage payments to someone other than the lender, or stop making mortgage payments altogether. Others use false filings in the U.S. Bankruptcy Courts to temporarily stop the foreclosure process, while still others create websites containing false government logos and bold promises to avoid foreclosure in order to deceive the at-risk homeowner. Unfortunately, these fraudsters take the homeowner’s money and any remaining equity in the house and run, leaving the homeowner penniless and more likely to be foreclosed.
If you are behind on your mortgage and seeking assistance, please call toll-free, 888-995-HOPE (4673) for free, comprehensive foreclosure assistance and housing counseling services.
For more information on protecting yourself from mortgage, loan, lending and related fraud, visit: www.stopfraud.gov/protect-mortgage.html
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, chaired by Attorney General Eric Holder, includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information about the FFETF, visit www.stopfraud.gov
Justice Department Reaches Settlement Agreement in Longstanding Alabama Desegregation CaseRead the Press Release
The Justice Department announced today that it reached a settlement agreement with the Fort Payne City School District in Alabama and private plaintiffs in a longstanding school desegregation case. The parties filed a proposed consent order in the federal district court in Birmingham, Ala.
If approved by the court, the proposed order would declare the 3,100-student school district partially unitary in the areas of extracurricular activities, school facilities and transportation, and would dismiss the case in those areas. The order would require the district to take additional steps to reach full compliance, including ensuring that its student transfer practices do not impede desegregation and taking measures to promote racial diversity in its faculty and staff. The district may seek full dismissal of the case upon compliance with the terms of the two-year agreement. If approved, the U.S. will monitor and enforce the district’s compliance with the order.
“We are pleased that the Fort Payne City school district has demonstrated significant progress in complying with its desegregation obligations and a willingness to take additional measures to reach our mutual goal of ensuring equal educational opportunities for all students,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “We look forward to working with the district over the next two years to implement the measures required by this order and bring this case to a close after so many years.”
This case is part of a statewide desegregation lawsuit, Lee v. Macon County Board of Education, which was filed in 1963.
The enforcement of the Equal Protection Clause of the U.S. Constitution and Title IV of the Civil Rights Act of 1964 that bars race discrimination in public schools is a top priority of the Justice Department’s Civil Rights Division. Additional information about the Civil Rights Division of the Justice Department is available on its website at www.justice.gov/crt.
Related Materials:
Consent Order
Joint Motion to Approve Consent OrderArmy Sergeant and Associate Convicted on All Counts for Roles in Bribery and Money Laundering Scheme Related to Defense Contracts to Support Iraq WarRead the Press Release
WASHINGTON – A federal jury in Elkins, W. Va., convicted Richard Evick, a U.S. Army Sergeant First Class and Non-Commissioned Officer in charge of contracting at a U.S. military base in Kuwait, and his associate, Crystal Martin, of all counts with which they were charged in connection with a bribery and money laundering scheme related to defense contracts awarded in support of Operation Iraqi Freedom, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney William J. Ihlenfeld II for the Northern District of West Virginia.
Evick was found guilty yesterday of one count of bribery conspiracy, two counts of bribery, one count of money laundering conspiracy, six counts of money laundering and one count of obstructing an agency proceeding. Martin was found guilty of one count of bribery conspiracy, one count of money laundering conspiracy and four counts of money laundering.
“As the highest ranking enlisted officer in the U.S. Army’s contracting office at Camp Arifjan in Kuwait, Mr. Evick had a special duty to strike deals in the best interests of the American people,” said Assistant Attorney General Breuer. “Instead, he steered business to dirty contractors in exchange for tens of thousands of dollars in cash and other items. Mr. Evick, Ms. Martin and their co-conspirators defrauded the government they had sworn to serve. To date, our investigation has led to the convictions of 19 individuals, and we will continue aggressively to pursue corruption and procurement fraud wherever we find it.”
“The investigation and prosecution of public corruption cases continues to be a top priority for the Department of Justice in West Virginia and throughout the country,” said U.S. Attorney Ihlenfeld. “Fortunately the vast majority of our public officials are honest and trustworthy, but those who are not will be held accountable.”
Evick served as the U.S. Army’s Non-Commission Officer in charge of contracting at Camp Arifjan between 2005 and 2006. In that capacity, Evick had the authority to arrange for the award of valuable contracts to supply the U.S. military with bottled water and catering services, maintain Army barracks and install security barriers, among other things.
Evidence presented at trial demonstrated that Evick and his co-conspirators manipulated the contracting process in several ways, including disclosing confidential information about the U.S. military’s plans to procure goods and services and accepting fake bids. In this manner, Evick and two of his fellow contacting officials, former Army Majors James Momon and Chris Murray, steered nearly $24 million worth of contracting business to certain contractors. In exchange, these contractors paid Evick more than $170,000 in bribes, a free New Year’s Eve trip to Dubai and parties.
Among the persons who paid Evick these bribes was Wajdi Birjas, a civilian U.S. government employee at Camp Arifjan who had a secret interest in a military contractor operating in Kuwait. Birjas testified that he provided phony bids to Evick from purportedly independent contractors who were, in reality, controlled by the same individuals. The evidence showed that Evick used these bids to create the false impression that the contracts were awarded according to Army contracting rules providing for a competitive bidding process. Birjas also testified that he had a hidden safe at his villa where Momon stored more than $800,000 in bribe money and which Evick used to exchange a large amount of Kuwaiti currency for U.S. dollars.
According to the evidence, Evick gave much of his bribe money to Martin, who had a concession from the Army and Air force Exchange Service to sell merchandise at Camp Arifjan, which was primarily a cash business. Evick and Martin then transferred tens of thousands of dollars worth of Evick’s bribe money to the U.S. into the hands of Evick’s wife and his girlfriend. The evidence showed that, in order to conceal the fact that this was bribe money, Evick and Martin converted the money into Western Union wires, money orders, cashiers checks and personal checks. Evick and Martin also smuggled cash into the U.S. on their persons, Martin often taking military transport flights to avoid customs screening. Evick used his bribe money, among other things, to purchase and construct a residence on three and one half acres in Parsons, W. Va., and to buy a pickup truck.
The evidence showed that Evick and Martin also participated in a scheme to smuggle $250,000 of bribe money belonging to Momon into the U.S. Momon testified about a summer 2006 meeting at Kuwait international airport with Evick and Martin, at which Martin described how she was laundering Evick’s bribe money and offered to provide the same service for Momon. According to evidence presented at trial, Evick offered to bury Momon’s money on Evick’s West Virginia property. When law enforcement agents interviewed Evick several months later about corruption at Camp Arifjan, Evick falsely stated that he did not know the contractor from whom evidence showed he had received a $150,000 bribe, among other things.
“Contingency contracting provides an opportunity for honest contractors to excel but still runs the inherent risk of fraudulent activity that plagues all government contracting,” said Special Agent in Charge Robert Craig of the Defense Criminal Investigative Service. “While our service members and defense civilians expect the best from their supporting contracts, we root out the worst and, working alongside our law enforcement partners, continue to aggressively bring those who defraud our nation’s warfighters to justice.”
“We are very pleased with the guilty verdicts in this case,” said Frank Robey, the director of the U.S. Army Criminal Investigation Command’s Major Procurement Fraud Unit. “It is a warning to anyone, in or out of uniform, who attempts to defraud the Army or the government that we will investigate credible allegations and bring those responsible to justice. Our agents have done a remarkable job investigating this case along with our fellow law enforcement partners and the DOJ.”
“The fact that a jury convicted these two individuals on all 11 counts stands as a powerful reminder that those who break the public trust to engage in bribery and money laundering with funds meant for the reconstruction of Iraq will face the full force of the law,” said Stuart W. Bowen, Special Inspector General for Iraq Reconstruction (SIGIR). “SIGIR and those who work with us will continue work on those cases still open against those involved in illegal acts.”
Evick and Martin face a maximum sentence of five years in prison for bribery conspiracy, 20 years in prison for money laundering conspiracy and 20 years in prison for each count of money laundering. Evick also faces a maximum of 15 years in prison for each count of bribery, five years for obstructing an agency proceeding and the forfeiture of the proceeds of his bribe scheme, which includes his West Virginia residence. They also face maximum fines of $250,000 per count. They will be sentenced by Chief U.S. District Judge John Preston Bailey. Their sentencing date has not yet been scheduled.
The case against Evick and Martin arose from a corruption probe focusing on the contracting office at Camp Arifjan, a U.S. military base in Kuwait. As a result of this investigation, 19 individuals, including Evick and Martin, have pleaded guilty or been found guilty at trial for their roles in the scheme. Momon pleaded guilty in August 2009 to receiving approximately $1.6 million in bribes and agreed to pay $5.7 million in restitution, and he is awaiting sentencing. Murray pleaded guilty in January 2009 for his role in the scheme and was sentenced in December 2009 to 57 months in prison. Birjas pleaded guilty in September 2010 and he is awaiting sentencing.
The case is being prosecuted by Trial Attorneys Peter C. Sprung, Eric G. Olshan, Timothy J. Kelly and Edward J. Loya Jr. of the Criminal Division’s Public Integrity Section, and Assistant U.S. Attorney Andrew R. Cogar of the U.S. Attorney’s Office for the Northern District of West Virginia. The case is being investigated by special agents of the Defense Criminal Investigative Service, the Army Criminal Investigation Command Division, Internal Revenue Service-Criminal Investigation, the FBI and SIGIR.
25 June 2012
White House, Justice Department Announce Law Enforcement Grants for Hiring of VeteransRead the Press Release
The U.S. Department of Justice Office of Community Oriented Policing Services (COPS) today announced funding awards to over 220 cities and counties, aimed at creating or saving approximately 800 law enforcement positions. The grants will fund over 600 new law enforcement positions and save an additional 200 positions recently lost or in jeopardy of being cut due to local budget cuts. All new law enforcement positions funded in the COPS 2012 Hiring Program must be filled by recent military veterans who have served at least 180 days since Sept. 11, 2001. In his State of the Union address, President Barack Obama called for a new Veterans Jobs Corps initiative to help put veterans back to work on a range of projects that leverage skills developed in the military, including first responder jobs. In February, the president announced that preference for this year’s COPS and Staffing for Adequate Fire and Emergency Response (SAFER) grants would be given to communities that recruit and hire post-9/11 veterans to serve as police officers and firefighters.
More than $111 million is being awarded to local public safety agencies across the country. The list of this year’s grantees includes Philadelphia and Pittsburgh; Chicago; Boston; Atlanta; Trenton, N.J.; Alameda County, Calif. and Los Angeles; Akron, Ohio; and Tacoma, Wash. The COPS Office will work with transition centers across the country to connect veterans with the new grant-funded law enforcement opportunities. For the entire list of grantees and additional information about the 2012 COPS Hiring Program, visit the COPS website at www.cops.usdoj.gov .
“Today, we step up our support for recent veterans by offering them the chance to pursue meaningful careers in law enforcement,” said Attorney General Eric Holder. “At a time of budget shortfalls, these grants will provide opportunities for much-needed, highly-trained professionals – with a proven commitment to service - to continue their careers in communities all across the country.”
“This new opportunity for veterans is a commitment to support those who are coming home from their tour of duty,” said COPS Director Bernard K. Melekian. “We sincerely hope this effort encourages our veterans to continue to protect and serve the United States through new law enforcement careers.”
The COPS Hiring Program makes grants to state, local and tribal law enforcement agencies to hire or rehire community policing officers. The program provides the salary and benefits for officer and deputy hires for three years. Along with the pledge to hire military veterans, grantees for the 2012 hiring program were selected based on fiscal need and local crime rates. An additional factor in the selection process was each agency’s strategy to address specific problems such as increased homicide rates and gun violence.
Today’s announcement builds on several steps President Obama has taken to support veterans in developing skills and finding work, including by: creating new tax credits for businesses that hire veterans; challenging the private sector to hire or train 100,000 veterans and their spouses by 2013; helping veterans obtain industry-recognized credentials and licenses; increasing access to intensive reemployment services; developing online tools to boost veteran employment; and increasing hiring of veterans in healthcare-related fields.
Statement of Attorney General Eric Holder on <br /> the Supreme Court’s Ruling on Arizona v. the United StatesRead the Press Release
Attorney General Eric Holder issued the following statement today:
“I welcome the Supreme Court’s decision to strike down major provisions of Arizona’s S.B. 1070 on federal preemption grounds. Today’s ruling appropriately bars the State of Arizona from effectively criminalizing unlawful status in the state and confirms the federal government’s exclusive authority to regulate in the area of immigration.
“While I am pleased the Court confirmed the serious constitutional questions the government raised regarding Section 2, I remain concerned about the impact of Section 2, which requires law enforcement officials to verify the immigration status of any person lawfully stopped or detained when they have reason to suspect that the person is here unlawfully. As the Court itself recognized, Section 2 is not a license to engage in racial profiling and I want to assure communities around this country that the Department of Justice will continue to vigorously enforce federal prohibitions against racial and ethnic discrimination. We will closely monitor the impact of S.B. 1070 to ensure compliance with federal immigration law and with applicable civil rights laws, including ensuring that law enforcement agencies and others do not implement the law in a manner that has the purpose or effect of discriminating against the Latino or any other community.
“We will also work to ensure that the verification provision does not divert police officers away from traditional law enforcement efforts in order to enforce federal immigration law, potentially impairing local policing efforts and discouraging crime victims, including children of non-citizens, victims of domestic violence, and asylum seekers, from reporting abuses and crimes out of fear of detention or deportation. We will continue to use every federal resource to protect the safety and civil rights of all Americans.”
Owner of Miami-Area Assisted Living Facility Sentenced to37 Months in Prison for Role in Medicare Fraud SchemeRead the Press Release
WASHINGTON – The owner of a Miami-area assisted living facility was sentenced today to 37 months in prison for her role in a kickback scheme that funneled patients to a fraudulent mental health provider, American Therapeutic Corporation (ATC), the Department of Justice, the FBI and the Department of Health and Human Services announced today.
Billy Denica, 50, was sentenced by U.S. District Judge Joan A. Lenard in Miami. In addition to her prison term, Denica was sentenced to two years of supervised release and was ordered to pay $538,875 in restitution. Denica pleaded guilty on April 2, 2012, to one count of conspiracy to commit health care fraud.
Denica was the owner of an assisted living facility called Robyll Care Assisted Living Facility. According to court documents, Denica agreed to send Robyll residents to ATC in exchange for illegal health care kickbacks. ATC purported to operate partial hospitalization programs, a form of intensive treatment for severe mental illness, in seven different locations throughout south Florida and Orlando. According to court documents, Denica admitted that she knew ATC falsely billed Medicare for PHP treatment based on her fraudulent referrals. Denica was aware that some of the Robyll residents would be offered gifts such as money, cigarettes and candy, so that they would agree to be admitted to a hospital for purposes of later attending ATC. She also admitted that she referred her residents to ATC because they had Medicare, because she would receive a cash kickback and because they were willing to go. According to the plea agreement, Denica’s participation in the fraud resulted in more than $1.1 million in fraudulent billing to the Medicare program.
ATC, its management company Medlink Professional Management Group Inc., and more than 20 individual defendants charged for their participation in the scheme have pleaded guilty or have been convicted at trial.
The sentencing was announced today by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; Xanthi C. Mangum, Acting Special Agent-in-Charge of the FBI’s Miami Field Office; and Special Agent-in-Charge Christopher B. Dennis of the HHS Office of Inspector General (HHS-OIG), Office of Investigations Miami Office.
The case was prosecuted by Trial Attorneys Allan J. Medina, Steven Kim and William Parente of the Criminal Division’s Fraud Section. The case was investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.
Since their inception in March 2007, Medicare Fraud Strike Force operations in nine locations have charged more than 1,330 defendants who collectively have falsely billed the Medicare program for more than $4 billion. In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.Ohio Insurance Salesman Indicted for<br /> <br /> Impairing and Impeding the IRSRead the Press Release
William R. Herder of Bellville, Ohio, was arrested today on federal tax charges, Assistant Attorney General of the Justice Department’s Tax Division Kathryn Keneally, U.S. Attorney for the Northern District of Ohio Stephen M. Dettelbach and Special Agent in Charge, Internal Revenue Service (IRS) Criminal Investigation, Cincinnati Field Office, Darryl K. Williams announced. On June 19, 2012, a federal grand jury sitting in Cleveland returned an indictment against Herder, charging him with corruptly endeavoring to impair and impede the due administration of the Internal Revenue laws, failure to file tax returns, failure to pay taxes, and structuring transactions to evade currency reporting requirements.
According to the indictment, Herder, an insurance salesman, failed to file timely and accurate income tax returns for the years 2000-2009 despite earning substantial insurance commissions and receiving warnings and notices from the IRS. Herder filed returns for the years 2010 and 2011 on which he reported that he owed taxes to the government, but failed to pay the almost $50,000 in taxes that he owed for those years.
The indictment further alleges that, to prevent the IRS from collecting his unpaid taxes, Herder attempted to conceal his assets and income. In 2004, Herder formed two entities in Nevada--one for the purpose of hiding his automobiles and another for the purpose of hiding his insurance business. Herder also began converting his insurance commission checks to cash and paying his expenses in cash to prevent the IRS from collecting his taxes from his bank account.
In addition to failing to file valid tax returns and hiding his assets from the IRS, the indictment alleges that Herder submitted numerous obstructive letters and documents to the IRS and the company for whom he sold insurance in an effort to prevent the IRS from assessing and collecting his taxes. In these letters, Herder falsely claimed, among other things, that the tax laws were not applicable to him. In 2005, Herder also attempted to pay his taxes with a fake financial instrument called an “International Bill of Exchange.”
The case was investigated by special agents of IRS – Criminal Investigation and is being prosecuted by Tax Division Trial Attorneys Melissa S. Siskind and Jeffrey A. McLellan.
Loan Officer Sentenced to 54 Months in Prison for Role in Mortgage Fraud Scheme That Resulted in More Than $9.2 Million in LossesRead the Press Release
WASHINGTON – A loan officer for a Florida mortgage company was sentenced today in Miami to 54 months in prison for his role in a mortgage fraud scheme, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida, and Department of Housing and Urban Development (HUD) Inspector General David A. Montoya.
Alejandro aka “Alex” Curbelo, 32, of Miami was sentenced before U.S. District Judge Joan Lenard. In addition to his prison term, Curbelo was sentenced to three years of supervised release and was ordered to pay $9.2 million in restitution to HUD. Curbelo was indicted and arrested on Jan. 24, 2012, and pleaded guilty on April 16, 2012, to one count of conspiracy to commit wire fraud.
According to court documents, from approximately February 2006 through July 2008, Curbelo was employed as a loan officer for Great Country Mortgage Bankers. In this role, he assisted in the sales and financing of condominium units at two complexes in Florida – Dadeland Place and Pelican Cove on the Bay. The borrowers who Curbelo assisted at these two complexes were unqualified to obtain mortgage loans due to insufficient income, high levels of debts and outstanding collections.
Curbelo admitted that he conspired with others to create and submit false and fraudulent Federal Housing Administration (FHA) mortgage loan applications and accompanying documents to the lender on behalf of the unqualified borrowers. Curbelo and others offered the borrowers cash back after closing as an incentive for them to purchase the units. These payments were not disclosed properly during the loan application process. According to court documents, the closing costs were paid on behalf of the borrowers by interstate wire. After the loans closed, the unqualified borrowers failed to meet their monthly mortgage obligations and defaulted on their loans.
According to court documents, when the loans went into foreclosure, HUD, which insured the loans, was required to take title to the units and pay the outstanding loan balances to the lenders. As of the date of the sentencing hearing, HUD paid more than $9.2 million for losses related to Curbelo’s conduct.
This case was investigated by the HUD Office of Inspector General, as participants in the Miami Mortgage Fraud Strike Force. Trial Attorney Mary Ann McCarthy of the Fraud Section in the Justice Department’s Criminal Division is prosecuting the case with assistance from the U.S. Attorney’s Office for the Southern District of Florida.
This prosecution is part of efforts under way by the Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets and recover proceeds for victims of financial crimes.Justice Department to Monitor Elections in New YorkRead the Press Release
The Justice Department announced today that it will monitor primary elections on June 26, 2012, in Orange County and Queens, N.Y., to ensure compliance with the Voting Rights Act of 1965. The Voting Rights Act prohibits discrimination in the election process on the basis of race, color or membership in a minority language group.
Under the Voting Rights Act, the Justice Department is authorized to ask the U.S. Office of Personnel Management (OPM) to send federal observers to jurisdictions that are certified by the attorney general or by a federal court order. Federal observers will be assigned to monitor polling place activities in Orange County based on a federal court order entered in 2012. The observers will watch and record activities during voting hours at polling locations in these counties, and a Civil Rights Division attorney will coordinate the federal activities and maintain contact with local election officials.
In addition, Justice Department personnel will monitor polling place activities in Queens. A Civil Rights Division attorney will coordinate federal activities and maintain contact with local election officials.
Each year, the Justice Department deploys hundreds of federal observers from OPM, as well as departmental staff, to monitor elections across the country. To file complaints about discriminatory voting practices, including acts of harassment or intimidation, voters may call the Voting Section of the Justice Department’s Civil Rights Division at 1-800-253-3931.
Visit www.justice.gov/crt/voting/index.php for more information about the Voting Rights Act and other federal voting laws.
Justice Department Obtains Landmark $10.5 Million Settlement to Resolve Disability-Based Housing Discrimination LawsuitRead the Press Release
WASHINGTON – The Justice Department today announced its largest-ever disability-based housing discrimination settlement fund to resolve allegations that JPI Construction L.P. and six other JPI entities (collectively “JPI”) based in Irving, Texas, discriminated on the basis of disability in the design and construction of multifamily housing complexes throughout the United States.
Under the settlement, which was approved today by the U.S. District Court for the Northern District of Texas, JPI will pay $10,250,000 into an accessibility fund to provide retrofits at properties built by JPI and to increase the stock of accessible housing in the communities where these properties are located. The settlement also requires JPI to pay a $250,000 civil penalty. This is the largest civil penalty the Justice Department has obtained in any Fair Housing Act case.
“Today’s historic settlement demonstrates the Justice Department’s commitment to protecting the fair housing rights of persons with disabilities,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “Builders of multifamily housing must consider accessibility at the outset, or they risk significantly greater expense to retrofit properties. As a result of this settlement, multifamily housing complexes will be retrofitted to comply with the Fair Housing Act and the Americans with Disabilities Act, and persons with physical disabilities will be afforded an equal opportunity to live in and visit these properties.”
“Equal access to housing for persons with disabilities is an important right protected by federal law,” said U.S. Attorney for the Northern District of Texas Sarah R. Saldaña. “This settlement will help eliminate barriers and send a clear message that disability discrimination will not be tolerated. Disabled residents should know that this district remains committed to protecting their fair housing rights.”
The lawsuit was filed in March 2009, after the Justice Department conducted an investigation and found accessibility barriers at various JPI properties. Since 1991, JPI and its affiliates built 210 multifamily properties in 26 states and the District of Columbia; trial involving 32 of JPI’s properties was scheduled to begin July 9, 2012.
In addition to the $10.5 million payment, the consent order prohibits JPI from discriminating on the basis of disability in the future and from interfering with or preventing the retrofitting that will take place at the JPI properties. Although JPI is no longer in the multifamily development and construction business, if JPI reenters the business, it is required to design and construct covered multifamily dwellings to fully comply with the requirements of the Fair Housing Act and the Americans with Disabilities Act.
The JPI entities that are responsible for paying the settlement amount are: JPI Construction L.P.; Multifamily Construction L.L.C.; JPI Apartment Development L.P., dba JPI Campus Quarters; Lifestyle Apartment Development Service L.L.C.; Jefferson Bend L.P., dba Jefferson at Mission Gate Apartments; Jefferson Lake Creek L.P., dba Jefferson Center Apartments; and Apartment Community Realty L.L.C.
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 Housing Discrimination Tip Line (1-800-896-7743) or email the Justice Department at [email protected]. Such persons may also 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.
22 June 2012
Virginia Man Pleads Guilty in Plot to Carry out <br /> <br /> Suicide Bomb Attack on U.S. CapitolRead the Press Release
Amine El Khalifi, a 29-year-old resident of Alexandria, Va., pleaded guilty today in federal court in the Eastern District of Virginia in connection with his efforts to carry out a suicide bomb attack on the U.S. Capitol Building in February 2012 as part of what he intended to be a terrorist operation.
The guilty plea was announced by Neil H. MacBride, U.S. Attorney for the Eastern District of Virginia; Lisa Monaco, Assistant Attorney General for National Security; and James W. McJunkin, Assistant Director in Charge of the FBI Washington Field Office.
At a hearing today before U.S. District Court Judge James C. Cacheris, El Khalifi pleaded guilty to one count of attempted use of a weapon of mass destruction (specifically, a destructive device consisting of an improvised explosive device) against U.S. property, namely the U.S. Capitol Building in Washington, D.C. As part of the plea agreement, the United States and El Khalifi agree that a sentence within a range of 25 years to 30 years incarceration is the appropriate disposition of this case. Sentencing has been scheduled for Sept. 14, 2012.
El Khalifi, an illegal immigrant from Morocco, was arrested and charged by criminal complaint on Feb. 17, 2012. His arrest was the culmination of an undercover operation during which he was closely monitored by the FBI Washington Field Office’s Joint Terrorism Task Force (JTTF). The explosives and firearm that he allegedly sought and attempted to use had been rendered inoperable by law enforcement and posed no threat to the public.
“Amine El Khalifi sought to bring down the U.S. Capitol and kill as many people as possible,” said U.S. Attorney MacBride. “He admitted today that he picked the targets, weapons, and means of the suicide attack while working with someone he believed was an Al Qaeda operative.”
“Amine El-Khalifi today admitted that he attempted to carry out a suicide attack on the U.S. Capitol as part of what he believed would be a terrorist operation,” said Assistant Attorney General Monaco. “I thank all those responsible for ensuring that El Khalifi’s violent plans never came to fruition.”
“The FBI’s top priority is stopping terrorism, and we remain vigilant against those who attempt to commit violence against the United States,” said Assistant Director in Charge McJunkin. “Today’s plea is the result of the hard work of dedicated Special Agents, analysts and prosecutors as well as officers from our partner law enforcement agencies that make up the Joint Terrorism Task Force.”
According to the statement of facts and other court documents filed in the case, in January 2011, a confidential human source reported to the FBI that El Khalifi met with other individuals at a residence in Arlington, Va., on Jan. 11, 2011. During this meeting, one individual produced what appeared to be an AK-47, two revolvers and ammunition. El Khalifi allegedly expressed agreement with a statement by this individual that the “war on terrorism” was a “war on Muslims” and said that the group needed to be ready for war.
According to court documents, El Khalifi sought to be associated with an armed extremist group, and on Dec 1, 2011, he was introduced by a man he knew as “Hussien” to an individual named “Yusuf,” who was, in reality, an undercover law enforcement officer. Throughout December 2011 and January 2012, El Khalifi proposed to carry out a bombing attack. His proposed targets included a building that contained U.S. military offices, as well as a synagogue, U.S. Army generals and a restaurant frequented by military officials.
During meetings with the undercover officer, El Khalifi handled an AK-47and indicated his desire to conduct an operation in which he would use a gun and kill people face-to-face. He also selected a restaurant in Washington, D.C., for a bombing attack; handled an explosive as an example of what could be used in the attack; conducted surveillance to determine the best place and time for the bombing and purchased materials as part of the planned operation.
On Jan. 7, 2012, “Hussien” informed El Khalifi that he was an al-Qaeda operative. El Khalifi discussed the possibility that his planned bombing of the restaurant would be followed by a second attack against a military installation to be conducted by others who El Khalifi believed to be associated with al-Qaeda.
On Jan. 15, 2012, El Khalifi stated that he had modified his plans for his attack. Rather than conduct an attack on a restaurant, he wanted to conduct a suicide attack at the U.S. Capitol Building. That same day at a quarry in West Virginia, as a demonstration of the effects of the proposed bomb operation, El Khalifi dialed a cell phone number that he believed would detonate a bomb placed in the quarry. The test bomb detonated, and El Khalifi expressed a desire for a larger explosion in his attack. He also selected Feb. 17, 2012, as the day of the operation.
Over the next month, El Khalifi traveled to the U.S. Capitol Building several times to conduct surveillance, choosing the spot where he would be dropped off to enter the building, the specific time for the attack and the method he would use to avoid law enforcement attention. El Khalifi also asked Hussien to remotely detonate the bomb he would be wearing on the day of the attack if El Khalifi encountered problems with security officers, and to provide El Khalifi with a gun that he could use during the attack to shoot any officers who might attempt to stop him.
On Feb. 17, 2012, El Khalifi traveled to a parking garage near the U.S. Capitol Building. El Khalifi took possession of a MAC-10 automatic weapon and put on a vest containing what he believed to be a functioning bomb. Unbeknownst to El Khalifi, both the weapon and the bomb had been rendered inoperable by law enforcement. El Khalifi walked alone from the vehicle toward the U.S. Capitol, where he intended to shoot people and detonate the bomb. El Khalifi was arrested and taken into custody before exiting the parking garage.
This investigation is being conducted by the FBI’s Washington Field Office. The prosecution is being handled by Assistant U.S. Attorneys Gordon Kromberg and Michael Ben’Ary of the U.S. Attorney’s Office for the Eastern District of Virginia, as well as Trial Attorneys Joseph Kaster and Courtney Sullivan from the Counterterrorism Section of the Justice Department’s National Security Division.
Veteran D.C. Defense Attorney Charles F. Daum<br /> <br /> and Two Investigators Found Guilty of Obstruction of Justice ChargesRead the Press Release
Veteran District of Columbia defense attorney Charles F. Daum, 66, of Arnold, Md., was found guilty today of one count of conspiracy to obstruct justice, three counts of obstruction of justice and two counts of subornation of perjury, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; Chief Cathy L. Lanier of the Washington, D.C., Metropolitan Police Department; and James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office.
Daum’s co-defendants, private investigators Daaiyah Pasha, 62, of Washington, D.C., and Iman Pasha, 32, of Springfield, Va., were also found guilty today on one count of conspiracy to obstruct justice.
After a six-week bench trial, Senior U.S District Judge Gladys Kessler of the U.S. District Court for the District of Columbia issued her verdict today. Daum was acquitted on one charge of witness tampering.
The charges resulted from Daum’s representation of Delante White, who was indicted in March 2008 by the U.S. Attorney’s Office for the District of Columbia on federal drug trafficking charges following the execution of a search warrant on Feb. 23, 2008.
“In his zeal to defend his client, Mr. Daum betrayed his profession and obstructed justice,” said Assistant Attorney General Breuer. “He and his co-conspirators fabricated evidence to submit in his client’s criminal trial, and he further suborned perjury from two defense witnesses. It’s astounding that a lawyer could commit these crimes, which undermine the integrity of our criminal justice system. The court found Mr. Daum guilty beyond a reasonable doubt, and he now faces prison time as a result.”
Judge Kessler found beyond a reasonable doubt that Daum, after entering his notice of appearance in the White case, devised a plan to obtain and produce false evidence designed to convince the jury that the drugs seized by the police on Feb. 23, 2008, did not belong to White. Daum enlisted the help of Daaiyah and Iman Pasha, whom Daum had hired as investigators, and others to help carry out his scheme. Following Daum’s directions, the co-conspirators obtained duplicates of several items that were seized as evidence during the execution of the search warrant, including a digital scale, a razor blade, plates, an Adidas shoe box and a pair of Gucci boots. Once those items were obtained, Daaiyah and Iman Pasha made arrangements to take staged photographs of another individual depicted with the items, while apparently “cutting” “rock cocaine” in order to make it appear as though the seized drugs actually belonged to the other individual. Daum later submitted the staged photographs, as well as other fabricated items, as evidence during White’s criminal trial.
Judge Kessler also found that Daum solicited and presented the perjured testimony of two witnesses, to further obstruct and impede the administration of justice.
The defendants face a maximum penalty of five years in prison and a $250,000 fine on the conspiracy charge. Daum faces an additional maximum penalty of 10 years in prison and a $250,000 fine for each count of obstruction. Daum also faces a maximum penalty of five years in prison and a $250,000 fine for each charge of subornation of perjury. Sentencing is scheduled for Nov. 19, 2012.
The case was prosecuted by Trial Attorneys Donnell Turner, Darrin L. McCullough and Tritia Yuen of the Narcotic and Dangerous Drug Section in the Justice Department’s Criminal Division. The case was investigated by the Washington, D.C., Metropolitan Police Department, the FBI’s Washington Field Office and the U.S. Attorney’s Office for the District of Columbia.
Pennsylvania Member of the Internet Piracy Group “Imagine”<br /> Pleads Guilty to Copyright Infringement ConspiracyRead the Press Release
A Pennsylvania 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, 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., announced today.
Willie O. Lambert, 57, of Pittston, Pa., 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. Lambert faces up to five years in prison, a fine of $250,000 and three years of supervised release.
Lambert 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. A co-defendant, Sean M. Lovelady, entered a guilty plea to the same charge on May 8, 2012.
According to court documents, Lambert and his co-conspirators sought to illegally obtain and disseminate digital copies of copyrighted motion pictures showing in theaters. Lambert admitted that he went to movie theaters and secretly used receivers and recording devices to capture the audio sound tracks of copyrighted movies (referred to as “capping”). After obtaining, editing and filtering audio sound tracks and uploading them to servers utilized by the IMAGiNE Group, Lambert used and attempted to use 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. Lambert also admitted that the IMAGiNE group’s conduct resulted in a readily provable and reasonably foreseeable infringement amount of more than $400,000.
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 Criminal Division’s Computer Crime and Intellectual Property Section are prosecuting the case on behalf of the United States. Significant assistance was provided by the CCIPS Cyber Crime Lab 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.
Louisiana Hunting Outfitter Sentenced to Prison for First Felony Conviction for Illegally Hunting Protected AlligatorsRead the Press Release
WASHINGTON – Gregory K. Dupont, 38, of Plaquemine, La., was sentenced in U.S. District Court in Baton Rouge, La., to serve six months in prison, to be followed by four months in a half-way house and two years of supervised release. Dupont was also ordered to pay a $3,000 fine. Dupont’s sentencing, handed down by U.S. District Judge Brian Jackson late Thursday, was the first ever felony conviction and prison sentence resulting from the illegal hunting of American alligators (Alligator mississippiensis), in violation of the Lacey Act, the Endangered Species Act, and Louisiana law.
Dupont has owned and operated Louisiana Hunters Inc., a hunting outfitting company, since 2001. His clients hired him to take them on alligator hunts in Louisiana, and they included out-of-state residents who were required to hunt with a licensed resident alligator hunter. Dupont took some of the out-of-state clients to hunt alligators on property where he was not authorized to hunt. On Feb.10, 2012, Dupont pleaded guilty to selling American alligators by providing outfitting and guiding services, knowing the alligators to have been taken illegally, on a hunt in September 2006.
In 1967, American alligators were listed as an endangered species because the total population size in the United States reached drastically low numbers due to severe poaching and overharvesting. The conservation effect of this protected status and of the Lacey Act, the Endangered Species Act, and regulations promulgated by the U.S. Fish and Wildlife Service and the state of Louisiana led to the recovery of the size of the American alligator population in the United States, and American alligators were down-listed to threatened status in 1987. The success of the American alligator conservation program is second only to that of the Bald Eagle.
Because American alligators remain federally protected, alligator hunting is regulated by federal and state rules and regulations, which require, among other things, the tagging of all harvested alligators. The integrity of the tagging system is crucial to Louisiana’s alligator management program because it enables the Louisiana Department of Wildlife and Fisheries to monitor harvest areas, alligator size and the number of alligators taken. This system depends in significant part upon the honesty and self-regulation of Louisiana’s licensed hunters for its continued success.
In Louisiana, an allotted number of alligator hide tags are issued to licensed hunters. Each tag may be used for one alligator only, and Louisiana law requires alligator hunters to hunt only on property for which hide tags are issued. The areas where alligator hunting is permitted are determined on a yearly basis by wildlife biologists, whose decisions are based on the need to maintain a healthy alligator population. If hunters poach alligators from areas for which they do not have tags, then the integrity of the entire alligator management system is undermined, thereby threatening Louisiana’s alligator population and alligator industry, which is a significant component of Louisiana’s economy.
According to court documents, Dupont, in violation of law, guided his clients to places in Louisiana, regardless of whether he had tags for the areas, where he hoped his clients would kill trophy-sized alligators so that they would pay him a trophy fee in addition to the guiding fees.
The case was prosecuted by Shennie Patel and Susan L. Park of the Environmental Crimes Section of the Environment and Natural Resources Division of the Department of Justice, with assistance from the U.S. Attorney’s Office for the Middle District of Louisiana. The case was investigated by the Louisiana Department of Wildlife and Fisheries Law Enforcement Division and by the U. S. Fish and Wildlife Service Office of Law Enforcement.Former State Department Employee Sentenced to 12 Months in Prison for Assaulting His Wife with a Dangerous WeaponRead the Press Release
Michael Makalou, 41, a former State Department employee, was sentenced today to 12 months in prison for assaulting his wife with a dangerous weapon with intent to do bodily harm, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney for the Eastern District of Virginia Neil H. MacBride.
Makalou was sentenced today by U.S. District Judge James C. Cacheris in the Eastern District of Virginia. Makalou was indicted in October 2011 and was found guilty on Feb. 8, 2012, following a two-day bench trial.
According to court documents, Makalou resided with his wife and children in Dakar, Senegal, and worked as a political officer at the U.S. Embassy in Dakar. A s determined by the court in its finding of guilt, on Aug. 13, 2011, Makalou attacked his wife. Without provocation, Makalou repeatedly punched, choked, kicked and dragged his wife in their home, ultimately striking her in the head with a large plastic dollhouse weighing approximately 10 pounds, causing his wife to lose consciousness. This assault lasted approximately 6 hours. The victim suffered multiple injuries, including contusions, lacerations and a concussion.
The case was prosecuted by Trial Attorney Sarah Chang of the Criminal Division’s Human Rights and Special Prosecutions Section and Assistant U.S. Attorney Rebeca H. Bellows of the Eastern District of Virginia. The case was investigated by the Bureau of Diplomatic Security of the U.S. Department of State.
21 June 2012
Two Owners of Miami Home Health Company Each Sentenced to More Than Six Years in Prison for $20 Million Health Care Fraud SchemeRead the Press Release
WASHINGTON – Two owners of a Miami home health care agency were sentenced to 73 and 74 months in prison, respectively, for their participation in a $20 million home health Medicare fraud scheme, announced the Department of Justice, the FBI and the Department of Health and Human Services (HHS).
U.S. District Judge Marcia G. Cooke in the Southern District of Florida sentenced Ariel Rodriguez to 73 months in prison and three years of supervised release and Reynaldo Navarro to 74 months in prison and three years of supervised release. Rodriguez and Navarro were each ordered to pay $14 million in restitution, joint and several with co-defendants.
Two co-defendants, Melissa Rodriguez and Ysel Salado were also sentenced today by Judge Cooke to four years of probation.
Ariel and Melissa Rodriguez, Navarro and Salado each pleaded guilty last year to one count of conspiracy to commit health care fraud. Ariel Rodriguez, 41, and Navarro, 37, were the owners of Serendipity Home Health Inc., a Florida home health agency that purported to provide home health care and physical therapy services to eligible Medicare beneficiaries. Melissa Rodriguez, 24, and Salado, 26, were office workers for Serendipity.
According to plea documents, Ariel Rodriguez and Navarro conspired with patient recruiters to bill the Medicare program for unnecessary home health care and therapy services. Ariel Rodriguez, Navarro and their co-conspirators paid kickbacks and bribes to patient recruiters in return for the recruiters providing patients to Serendipity, as well as prescriptions, plans of care (POCs) and certifications for medically unnecessary therapy and home health services for Medicare beneficiaries. Ariel Rodriguez and Navarro used these prescriptions, POCs and medical certifications to fraudulently bill Medicare for home health care services, which Ariel Rodriguez and Navarro knew was in violation of federal criminal laws. Melissa Rodriguez and Salado cashed checks from Serendipity and provided this cash to Ariel Rodriguez and Navarro knowing it would be used to pay the kickbacks and bribes to the patient recruiters.
According to plea documents, at Serendipity, nurses and office staff falsified patient files for Medicare beneficiaries to make it appear that the beneficiaries qualified for home health care and therapy services from Serendipity when, in fact, Ariel Rodriguez and Navarro knew that the beneficiaries did not actually qualify for and did not receive such services. Ariel Rodriguez and Navarro knew that these files were falsified so that Medicare could be billed for medically unnecessary therapy and home health related services.
From approximately April 2007 through March 2009, Ariel Rodriguez, Navarro and their co-conspirators submitted approximately $20 million in false and fraudulent claims to Medicare. Medicare paid approximately $14 million on those claims.
Today’s sentences were announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; John V. Gillies, Special Agent-in-Charge of the FBI’s Miami Field Office; and Special Agent-in-Charge Christopher Dennis of the HHS Office of Inspector General (HHS-OIG), Office of Investigations Miami Office.
This case is being prosecuted by Senior Trial Attorney Joseph S. Beemsterboer of the Criminal Division’s Fraud Section. The case was investigated by the FBI and HHS-OIG, and was brought as a part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.
Since their inception in March 2007, Medicare Fraud Strike Force operations in nine locations have charged more than 1,330 defendants who collectively have falsely billed the Medicare program for more than $4 billion. In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.Three Former Executives Convicted for Roles in $200 Million Fraud Scheme Involving Fair Financial Company InvestorsRead the Press Release
Three former executives of Fair Financial Company, an Ohio financial services business, were found guilty for their roles in a scheme to defraud approximately 5,000 investors of more than $200 million, Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; Joseph H. Hogsett, U.S. Attorney for the Southern District of Indiana; and Special Agent in Charge Robert Holley of the FBI in Indiana announced today.
Following an eight-day trial, a federal jury in the Southern District of Indiana returned its verdict late yesterday. Timothy S. Durham, 49, the former chief executive officer of Fair, was convicted of one count of conspiracy to commit wire and securities fraud, 10 counts of wire fraud and one count of securities fraud. James F. Cochran, 56, the former chairman of the board of Fair, was convicted of one count of conspiracy to commit wire and securities fraud, one count of securities fraud and six counts of wire fraud. Rick D. Snow, 48, the former chief financial officer of Fair, was convicted of one count of conspiracy to commit wire and securities fraud, one count of securities fraud and three counts of wire fraud.
“Mr. Durham and his co-conspirators used lies and deceit as their business model,” said Assistant Attorney General Breuer. “They duped investors into thinking they were running a legitimate financial services company and misled regulators and others about the health of their failing firm. But all along, they were lining their pockets with other people’s money. The jury held them accountable for their crimes, and they each now face the prospect of significant prison time.”
“No matter who you are, no matter how much money you have, no matter how powerful your friends are, no one is above the law,” U.S. Attorney Hogsett said. “The Office of the United States Attorney will not stand idly by and allow a culture of corruption to exist in this community, this state, or this country. The decision made in this courtroom sends a powerful warning that if you sacrifice the truth in the name of greed, if you steal from another’s American dream to try and make your own, you will be caught.”
“This verdict represents a victory in the pursuit of justice,” said FBI Special Agent in Charge Holley. “I would like to commend the hard work and dedication of the prosecution team and the FBI investigative team, however, we must remember that the victims of this fraud are still suffering. I would also like to thank Indiana State Police Superintendent Paul Whitesell for the contributions of his task force officer in this investigation.”
Durham and Cochran purchased Fair, whose headquarters were in Akron, Ohio, in 2002. According to the evidence presented at trial, between approximately February 2005 through the end of November 2009, Durham, Cochran and Snow executed a scheme to defraud Fair’s investors by making and causing others to make false and misleading statements about Fair’s financial condition and about the manner in which they were using Fair investor money. The evidence also established that Durham, Cochran and Snow executed the scheme to enrich themselves, to obtain millions of dollars of investors’ funds through false representations and promises, and to conceal from the investing public Fair’s true financial condition and the manner in which Fair was using investor money.
When Durham and Cochran purchased Fair in 2002, Fair reported debts to investors from the sale of investment certificates of approximately $37 million and income producing assets in the form of finance receivables of approximately $48 million. By November 2009, after Durham and Cochran had owned the company for seven years, Fair’s debts to investors from the sale of investment certificates had grown to more than $200 million, while Fair’s income producing assets consisted only of the loans to Durham and Cochran, their associates and the businesses they owned or controlled, which they claimed were worth approximately $240 million, and finance receivables of approximately $24 million.
After Durham and Cochran acquired Fair, they changed the manner in which the company operated and used its funds. Rather than using the funds Fair raised from investors primarily for the purpose of purchasing finance receivables, Durham and Cochran caused Fair to extend loans to themselves, their associates and businesses they owned or controlled, which caused a steady and substantial deterioration in Fair’s financial condition.
Durham, Cochran and Snow terminated Fair’s independent accountants who, at various points during 2005 and 2006, told the defendants that many of Fair’s loans were impaired or did not have sufficient collateral. After firing the accountants, the defendants never released audited financial statements for 2005, and never obtained or released audited financial statements for 2006 through September 2009. With independent accountants no longer auditing Fair’s financial statements, the defendants were able to conceal from investors Fair’s true financial condition.
The evidence presented at trial established that Durham, Cochran and Snow falsely represented, in registration documents and offering circulars submitted to the State of Ohio Division of Securities and in offering circulars distributed to investors, that the loans on Fair’s books were assets that could support Fair’s sale of investment certificates. The defendants knew that in reality, the loans were worthless or grossly overvalued; producing little or no cash proceeds; supported by insufficient or non-existent collateral to assure repayment; and in part advances, salaries, bonuses and lines of credit for Durham and Cochran’s personal expenses.
The defendants engaged in a variety of other fraudulent activities to conceal from the Division of Securities and from investors Fair’s true financial health and cash flow problems, including making false and misleading statements to concerned investors who either had not received principal or interest payments on their certificates from Fair or who were worried about Fair’s financial health, and directing employees of Fair not to pay investors who were owed interest or principal payments on their certificates. Even though Fair’s financial condition had deteriorated and Fair was experiencing severe cash flow problems, Durham and Cochran continued to funnel Fair investor money to themselves for their personal expenses, to their family, friends and acquaintances, and to the struggling businesses that they owned or controlled.
This case was prosecuted by Assistant U.S. Attorneys Winfield D. Ong and NicholasE. Surmacz of the Southern District of Indiana, Trial Attorney Henry P. Van Dyck and Senior Deputy Chief for Litigation Kathleen McGovern of the Fraud Section in the Justice Department’s Criminal Division. The investigation was led by the FBI in Indianapolis.
Durham, Cochran and Snow each face a maximum of five years in prison for the conspiracy count, 20 years in prison for each wire fraud count and 20 years in prison for the securities fraud count. Additionally, each defendant could be fined $250,000 for each count of conviction.
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 .
New Jersey Hospital Pays U.s. $8,999,999 to Settle<br /> <br /> False Claims Act AllegationsRead the Press Release
AHS Hospital Corp., Atlantic Health System Inc., and Overlook Hospital, located in New Jersey, have agreed to pay the United States $8,999,999 to settle allegations that they violated the False Claims Act, the Justice Department announced today.
The settlement resolves allegations that Overlook Hospital, owned and operated by AHS Hospital Corporation, and Atlantic Health Systems Inc., overbilled Medicare for patients who were treated on an inpatient basis when they should have been treated as either observation patients or on an outpatient basis.
This settlement partially resolves a False Claims Act suit filed by former employees of Overlook Hospital. U.S. ex rel. Doe et al. v. AHS Hospital Corp., et al., Civ. No. 08-2042 (D.N.J.). The whistleblower or qui tam provisions of the False Claims Act permit individuals, known as relators, to file these actions and share in a portion of the proceeds recovered by the federal government.
“We expect hospitals that participate in Medicare will bill for their services accurately and honestly,” said Stuart F. Delery, Acting Assistant Attorney General for the Department’s Civil Division. “Hospitals have a responsibility to ensure that the Medicare rules are not abused and patients who should be treated as outpatients are not admitted as inpatients, increasing the hospitals’ reimbursements.”
“Billing Medicare for unnecessary inpatient services steals from taxpayers,” said Daniel R. Levinson, Inspector General for the U.S. Department of Health and Human Services, “Although that’s bad enough, it also requires hospitalizing people who don’t need it, causing inconvenience, discomfort and worse. The size of this settlement underscores the seriousness of the conduct.”
“Proper billing ensures fair compensation and protects Medicare dollars that are much neededfor patient care,” said J. Gilmore Childers , First Assistant U.S. Attorney for the District of New Jersey. “Hospitals taking more than their entitled share of reimbursements, by improperly billing services as more expensive services, subject themselves to federal scrutiny.”
“This resolution is part of the government’s emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover more than $7.7 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in False Claims Act cases since January 2009 are over $11.3 billion.”
The case was handled by the U.S. Attorney’s Office for the District of New Jersey, the Department of Justice’s Civil Division and the Office of Inspector General of the Department of Health and Human Services.
Justice Department Settles Lawsuit Alleging Discrimination Against Pregnant Firefighters by the Town of Davie, FloridaRead the Press Release
The Justice Department today announced it has reached a consent decree with the town of Davie, Fla., to resolve allegations that Davie engaged in a pattern or practice of intentional discrimination against pregnant firefighters employed by Davie’s fire department.
The consent decree was filed in U.S. District Court for the Southern District of Florida along with a complaint alleging that Davie violated Title VII of the Civil Rights Act of 1964. Title VII prohibits discrimination in employment on the basis of race, color, sex, national origin and religion. Under Title VII, discrimination based on sex explicitly includes discrimination based on pregnancy. It requires that women affected by pregnancy be treated the same as other employees who are similar in their ability or inability to perform their job.
According to the department’s complaint, the Davie fire department has operated under a policy or practice of denying a pregnant firefighter light duty until the start of her second trimester regardless of her medical or physical needs. Despite this restriction on a pregnant firefighter’s ability to obtain light duty in her first trimester, the fire chief routinely granted other firefighters’ requests for light duty for non-work related injuries. The fire department also required pregnant firefighters to leave active firefighting duty upon the start of their second trimester regardless of their ability to fulfill the essential functions of their positions. According to the department’s complaint, these policies and practices constituted a pattern or practice of discrimination against pregnant female firefighters based on sex and pregnancy.
Under the terms of the consent decree, which must still be approved by the federal court, Davie must review and adopt appropriate policies to protect its employees from discrimination on the basis of sex, including pregnancy, and conduct training of its fire department personnel to ensure that they properly handle future complaints of discrimination.
“Decisions about how and when to restrict a pregnant woman’s work duties should be made by the woman and her doctor, and employers must make certain that their policies and practices treat pregnant women the same as people who are similarly able or unable to work,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “Title VII’s prohibitions against discrimination in the workplace make clear that discrimination based on pregnancy is a form of discrimination based on sex. We will not tolerate public employers engaging in this type of unlawful discrimination.”
“The policies and practices of the Davie Fire Department regarding the assignment of light duty for pregnant women were sexually discriminatory,” said Wifredo A. Ferrer, U.S. Attorney for the South District of Florida. Discrimination on the basis of sex and pregnancy is illegal. We are hopeful that today’s settlement will lead to the establishment of new policies that will promote and respect the rights of all employees to equal opportunities.”
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:
Complaint - U.S. v. Davie
Consent Decree - U.S. v. DavieJustice Department Files Lawsuit Against the Twin Cities of Colorado City, Arizona, and Hildale, Utah, and Local Utility Companies Alleging Religious DiscriminationRead the Press Release
WASHINGTON - The Justice Department filed a lawsuit today against the town of Colorado City, Ariz.; the city of Hildale, Utah; Twin City Water Authority; and Twin City Power alleging a pattern or practice of police misconduct and violations of federal civil rights laws. The complaint alleges discrimination based on religion in violation of the Fair Housing Act, the Violent Crime Control and Law Enforcement Act and Title III of the Civil Rights Act of 1964. This is the first lawsuit by the Justice Department to include claims under both the Fair Housing Act and the Violent Crime Control and Law Enforcement Act.
The adjoining towns of Colorado City and Hildale are located on the border of Arizona and Utah and are populated primarily by members of the Fundamentalist Church of Jesus Christ of Latter-day Saints (FLDS). The FLDS is not affiliated with the Church of Jesus Christ of Latter-day Saints.
The lawsuit, filed in the U.S. District Court for the District of Arizona, alleges that defendants discriminated against individuals who are not members of the FLDS by engaging in a pattern or practice of violating the First, Fourth and Fourteenth Amendments to the U.S. Constitution and the Fair Housing Act. The complaint contends that the cities, their joint police department and local utility providers under the cities’ control have allowed the FLDS Church to improperly influence the provision of policing services, utility services and access to housing and public facilities, and that this improper influence has led to discriminatory treatment against non-FLDS residents.
Specifically, the complaint alleges that the Colorado City Marshal’s Office (CCMO), the cities’ joint police department, routinely uses its enforcement authority to enforce the edicts and will of the FLDS; fails to protect non-FLDS individuals from victimization by FLDS individuals; refuses to cooperate with other law enforcement agencies’ investigations of FLDS individuals; selectively enforces laws against non-FLDS; and uses its authority to facilitate unlawful evictions of non-FLDS, among other unlawful conduct. The complaint also alleges that Colorado City, Hildale, Twin City Water Authority and Twin City Power have denied or unreasonably delayed providing water and electric service to non-FLDS residents, and that the municipalities refuse to issue building permits and prevent individuals from constructing or occupying existing housing because of the individuals’ religious affiliation.
“Religious freedom is a cherished principle of our democracy. City governments and their police departments may not favor one religious group over another and may not discriminate against individuals because of their religious affiliation,” said Thomas E. Perez, Assistant Attorney General for the Justice Department’s Civil Rights Division. “No individual in the United States should be targeted for discriminatory treatment by a city, its officials or the police because of his or her religion.”
Both Utah and Arizona have decertified CCMO officers. Three of the officers were decertified because they refused to cooperate with state law enforcement efforts. In addition, the sheriff’s offices in both states have been actively addressing the issues in the communities. The United States’ complaint seeks a court order prohibiting future discrimination by the defendants, monetary damages for those harmed by the defendants’ actions and a civil penalty.
This matter was investigated by attorneys from the Housing and Civil Enforcement Section and the Special Litigation Section of the Department of Justice’s Civil Rights Division. More information about the Civil Rights Division and the laws it enforces is available at www.usdoj.gov/crt. If you have any information regarding this matter, please contact the Justice Department at 1-800-896-7743 or email the department at [email protected].
The complaint is an allegation of unlawful conduct. The allegations must still be proved in federal court.
Joint Statement on the Negotiation of a EU-U.S. Data Privacy and Protection Agreement by Attorney General Eric Holder and European Commission Vice-President Viviane RedingRead the Press Release
Attorney General Eric Holder and European Commission Vice-President Viviane Reding issued the following statement following the EU-U.S. Justice and Home Affairs Ministerial meeting in Copenhagen:
"We reiterate our determination to finalize negotiations on a comprehensive EU-U.S. data privacy and protection agreement that provides a high level of privacy protection for all individuals and thereby facilitates the exchange of data needed to fight crime and terrorism, as announced at the November 2011 summit by our Presidents. Such an agreement will allow for even closer transatlantic cooperation in the fight against crime and terrorism, through the mutual recognition of a high level of protection afforded equally to citizens of both the United States and the European Union, and will thus facilitate any subsequent agreements concerning the sharing of a specific set of personal data.
“Negotiations have taken place at a steady rhythm since they began in March 2011 and progress has been achieved on a number of provisions. These include important principles such as data security, transparency of data processing or use, accountability, maintaining the quality and integrity of information and the existence of effective authorities ensuring data protection oversight. We are likewise continuing our work on a number of domains such as purpose limitation, retention of personal data, and effective administrative and judicial redress.
“In view of our common objective to achieve mutual recognition, we will continue to make all efforts to come to a conclusion on these key points. To this end, we agree to take stock of progress during the EU-U.S. Justice and Home Affairs Ministerial meeting in 2013, and to consider next steps to ensure the continued rapid advancement of the negotiations."
Hospice Care of Kansas and Texas-based Parent Company to Pay $6.1 Million to Resolve Allegations of False ClaimsRead the Press Release
Hospice Care of Kansas LLC and its parent company, Ft. Worth, Texas-based Voyager HospiceCare Inc., have agreed to pay $6.1 million to resolve allegations that they violated the False Claims Act by submitting claims to the Medicare program for ineligible hospice services, the Justice Department announced today. Hospice Care of Kansas currently provides hospice services throughout the state of Kansas. Hospice Care of Kansas, which is based in Wichita, Kan., was purchased by Voyager in 2004.
The Medicare hospice benefit is available for patients who elect palliative treatment ( medical care focused on providing patients with relief from the symptoms, pain and stress of a serious illness) for a terminal illness, and have a life expectancy of six months or less if their disease runs its normal course. Today’s settlement resolves allegations that Hospice Care of Kansas and Voyager submitted or caused the submission of false Medicare claims between January 2004 and December 2008 for beneficiaries that did not have a terminal prognosis of six months or less.
The government alleged that Hospice Care of Kansas and Voyager engaged in certain practices that resulted in the submission of false claims, including the provision of compensation to clinical employees based on patient census and admissions, delaying discharges of patients determined not to have a six month or less prognosis, instructions to staff to document patient conditions in a misleading manner, and implementation of an inadequate compliance program.
“The Medicare hospice benefit is intended to provide comfort and care to terminally ill persons in the final stages of their disease,” said Stuart F. Delery, Acting Assistant Attorney General for the Department of Justice’s Civil Division. “This settlement shows that the Department of Justice will not tolerate hospice providers that attempt to maximize their profits at the expense of their legal and ethical obligations to the Medicare program, taxpayers, and beneficiaries.”
“Our goals are to protect taxpayer dollars, ensure the viability of government health care programs and strengthen our national health care system,” said Barry Grissom, U.S. Attorney for the District of Kansas. “This case is a step in that direction.”
“We expect providers of Medicare services to operate with the utmost integrity and with the best interests of our beneficiaries in mind. Working with our partners at the Department of Justice, we will hold those accountable who do not operate in this manner,” said Gerald Roy, Special Agent in Charge, U.S. Department of Health and Human Services, Office of Inspector General.
The allegations that are the subject of today’s settlement were originally raised in a lawsuit filed by a former Hospice Care of Kansas nurse, Beverly Landis, under the qui tam, or whistleblower, provisions of the False Claims Act. The act allows private citizens with knowledge of fraud to bring an action on behalf of the United States and share in any recovery. As a part of today’s resolution, Ms. Landis will receive payments totaling $1.342 million.
This resolution is part of the government’s emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover more than $7.7 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in False Claims Act cases since January 2009 are over $11.3 billion.
The investigation was jointly handled by the Justice Department’s Civil Division, the FBI, the Office of the Inspector General of the Department of Health and Human Services and the U.S. Attorney’s Office for the District of Kansas. The claims settled by this agreement are allegations only, and there has been no determination of liability.
Global Alliance Against Child Sexual Abuse Online<br /> Joint StatementRead the Press Release
The EU and the U.S., at the EU-U.S. Justice and Home Affairs Ministerial Meeting attended by Attorney General Eric Holder, Department of Homeland Security Secretary Janet Napolitano, Denmark Minister of Justice Morten Bodskov, European Commission Vice-President Viviane Reding , EU Commissioner of Home Affairs Cecilia Malmstrom and Cyprus Minister of Justice and Public Order Loucas Louca today, have agreed to enhance efforts against child sexual abuse online. Such abuse includes the distribution and trade of child pornography via the Internet, and the resulting, continuing harm to the victims depicted. We call upon governments around the world to participate in building a Global Alliance against Child Sexual Abuse Online.
Child sexual abuse online, a substantial problem worldwide, is a crime that is ubiquitous and knows no borders. Child pornography images circulate easily across jurisdictions, and efforts to reduce such circulation have failed to produce satisfactory results to date. Child pornography offenders are increasingly operating in international online groups that use sophisticated technologies and security protocols to frustrate the efforts of law enforcement to investigate their crimes. Different laws and policies across jurisdictions also have created law enforcement vulnerabilities that these international offenders are exploiting. Therefore, we need to act together to successfully confront the problem.
The Global Alliance will seek to unite countries around the world behind a set of shared goals:
- Enhancing efforts to identify victims, whose sexual abuse is depicted in child pornography, and ensuring their assistance, support and protection;
- Reducing the availability of child pornography online and the re-victimization of children;
- Enhancing efforts to investigate cases of child sexual abuse online and to identify and prosecute offenders;
- Increasing public awareness of the risks posed by children’s activities online, including the self-production of images, in order to reduce the production of new child pornography.
We invite partners from around the world to join the Global Alliance against Child Sexual Abuse Online.
Former Las Vegas Nightclub Vip Host Pleads Guilty<br /> <br /> to Filing False Tax ReturnRead the Press Release
Kelly Doll, formerly a VIP host at the Pure Nightclub located within the Caesars Palace Hotel and Casino in Las Vegas, pleaded guilty in federal court Thursday to one count of filing a false federal income tax return for the 2006 tax year, the Justice Department and Internal Revenue Service (IRS) announced today. U.S. District Court Judge Miranda Du presided over the plea hearing.
According to information disclosed at the plea hearing, during the years 2005, 2006 and 2007, some of Pure’s patrons made cash payments to Pure door personnel and “VIP hosts” to bypass the general admissions line and to obtain more desirable seating. This money was collected, pooled and generally distributed on a weekly basis to the door personnel and VIP hosts, as well as to managers of Pure. Distributions from this “tip pool” comprised the bulk of Doll’s compensation during the time he worked at the nightclub. Doll concealed large amounts of this income from the IRS.
Pure’s former managing owner, Steve Davidovici, has also pleaded guilty to tax fraud for failing to report income earned at Pure, as have Doll’s former co-workers, Mikel Hasen, Ali (Sean) Olyaie and Richard Chu. Each of these individuals likewise admitted filing false federal income tax returns for 2006. Doll’s sentencing is set for Sept. 24, 2012.
Kathryn Keneally, Assistant Attorney General for the Justice Department’s Tax Division, commended the efforts of special agents of IRS – Criminal Investigation, who investigated the case, and Tax Division Trial Attorneys Christopher J. Maietta and Joseph A. Rillotta, who prosecuted the case.
More information about the Tax Division and its enforcement efforts is available at www.usdoj.gov/tax/.
Former Chief Investment Officer of Stanford Financial Group Pleads Guilty to Obstruction of JusticeRead the Press Release
WASHINGTON ? Laura Pendergest-Holt, 38, the former chief investment officer of Houston-based Stanford Financial Group, pleaded guilty today to obstructing a U.S. Securities and Exchange Commission (SEC) investigation into Stanford International Bank (SIB), the Antiguan offshore bank owned by convicted financier Robert Allen Stanford.
The plea was announced today by Assistant Attorney General Lanny A. Breuer of the Justice Department?s Criminal Division; U.S. Attorney Kenneth Magidson of the Southern District of Texas; FBI Assistant Director Kevin Perkins of the Criminal Investigative Division; Assistant Secretary of Labor for the Employee Benefits Security Administration Phyllis C. Borzi; Chief Postal Inspector Guy J. Cottrell of the U.S. Postal Inspection Service; and Chief Richard Weber, Internal Revenue Service-Criminal Investigation (IRS-CI).
Holt entered her guilty plea this morning before U.S. District Judge David Hittner. A plea agreement was also filed with the court. If the agreement is accepted by the court at Holt?s Sept. 13, 2012, sentencing, it will result in a sentence of 36 months in prison followed by three years of supervised release. Holt will also be subject to a fine of up to $250,000.
In January 2009, the SEC sought testimony and documents related to SIB?s entire investment portfolio. During her guilty plea, Holt admitted that despite knowing that she was incapable of testifying about the vast majority of that portfolio, Holt agreed to testify before the SEC. Holt acknowledged that her eventual appearance and sworn testimony before the SEC was a stall tactic designed to frustrate the SEC?s efforts to obtain important information about SIB?s investment portfolio, and Holt admitted that she took this action intentionally and corruptly, knowing that her testimony would impede the SEC?s investigation and help SIB continue operating.
In addition to Stanford and Holt, a grand jury in the Southern District of Texas previously indicted additional co-conspirators: Stanford Financial Group Chief Financial Officer James Davis, Stanford Financial Group former Chief Accounting Officer Gilberto Lopez, former Controller Mark Kuhrt, and former head of the Antiguan Financial Services Regulatory Commission Leroy King. Stanford was sentenced last week to 110 years in prison. Davis previously pleaded guilty and faces up to 30 years in prison. The cases against the remaining defendants are still pending. They are presumed innocent unless and until convicted through due process of law.
The investigation was conducted by the FBI?s Houston Field Office, the U.S. Postal Inspection Service, IRS-CI and the U.S. Department of Labor, Employee Benefits Security Administration. The case against Holt is being prosecuted by Assistant U.S. Attorney Jason Varnado of the Southern District of Texas, Deputy Chief Jeffrey Goldberg of the Criminal Division?s Fraud Section, and Fraud Section Trial Attorney Andrew Warren. Former Assistant U.S. Attorney Gregg Costa and Fraud Section Deputy Chief William Stellmach were also involved in this case.
The Justice Department thanks the SEC for their assistance and cooperation in this matter.
20 June 2012
Statement of Attorney General Eric Holder on <br /> the House Oversight and Government Reform Committee VoteRead the Press Release
Attorney General Eric Holder issued the following statement today:
“In recent months, the Justice Department has made unprecedented accommodations to respond to information requests by Chairman Issa about misguided law enforcement tactics that began in the previous administration and allowed illegal guns to be taken into Mexico. Department professionals have spent countless hours compiling and providing thousands of documents -- nearly 8,000 -- to Chairman Issa and his committee. My staff has had numerous meetings with congressional staff to try and accommodate these requests and yesterday, I met with Chairman Issa to offer additional internal Department documents and information that would satisfy what he identified as the Committee’s single outstanding question.
“Unfortunately, Chairman Issa has rejected all of these efforts to reach a reasonable accommodation. Instead, he has chosen to use his authority to take an extraordinary, unprecedented and entirely unnecessary action, intended to provoke an avoidable conflict between Congress and the Executive Branch. This divisive action does not help us fix the problems that led to this operation or previous ones and it does nothing to make any of our law enforcement agents safer. It's an election-year tactic intended to distract attention -- and, as a result -- has deflected critical resources from fulfilling what remains my top priority at the Department of Justice: Protecting the American people.
“Simply put, any claims that the Justice Department has been unresponsive to requests for information are untrue. From the beginning, Chairman Issa and certain members of the Committee have made unsubstantiated allegations first, then scrambled for facts to try to justify them later. That might make for good political theater, but it does little to uncover the truth or address the problems associated with this operation and prior ones dating back to the previous Administration.
“I have spent most of my career in law enforcement and worked closely with brave agents who put their lives on the line every day. I know the sacrifices they make, so as soon as allegations of gunwalking came to my attention – and well before Chairman Issa expressed any interest in this issue -- I ordered the practice stopped. I made necessary personnel changes in the Department's leadership and instituted policy changes to ensure better oversight of significant investigations. And, I directed the Department's Inspector General to open a comprehensive investigation. That investigation is ongoing, and the American people and Congress can count on it to produce a tough, independent review of the facts.
“When Chairman Issa later began his own investigation, I made it clear that the Department would cooperate with all appropriate oversight requests, while still adhering to our legal obligations to protect information involving ongoing law enforcement investigations, legally-protected grand jury material and other sensitive information whose disclosure would endanger the American people or our agents investigating open cases.
“The American people deserve better. That is why, I will remain focused on, and committed to, the Justice Department’s mission to protect the rights, safety, and best interests of my fellow citizens and to stand by my brave colleagues in law enforcement.”
South Carolina Man Pleads Guilty to Committing Federal Hate Crime Against African-American TeenagerRead the Press Release
Chase McClary, 23, of Johnsonville, S.C., pleaded guilty today in federal court in the District of South Carolina to violating the Matthew Shepard-James Byrd Jr. Hate Crimes Prevention Act in his violent assault of an African-American teenager.
During his guilty plea, McClary admitted that in August 2010, he approached a 16-year-old African-American male and struck him numerous times with the jagged end of a broken coffee mug because of the victim’s race. The attack resulted in severe injuries to the victim’s head, face and neck.
Sentencing will be set at a later date. The plea agreement calls for a sentence of 48 months in prison.
“Motivated by hate, the defendant attacked a teenager and scarred him for life. No one should have to endure such an abhorrent act of criminal violence,” said Thomas E. Perez, Assistant Attorney for the Civil Rights Division. “The Justice Department will vigorously prosecute cases of bias motivated violence to the full extent of the law.”
“Prosecution of hate-based crime – whether the motive is the color of skin, sexua l orientation, religion, gender or national origin – is critical to the American way of life and the justice system,” said U.S. Attorney Bill Nettles for the District of South Carolina. I want to thank the Federal Bureau of Investigation, the F lorence County Sheriff’s Office and Ed Clements, the Thirteenth Circuit Solicitor, for their work on this civil rights case.”
This case was investigated by Special Agent Steven Stokes of the FBI, with assistance from the Florence County Sheriff’s Investigator Alvin Powell, and is being prosecuted by Assistant U.S. Attorney Brad Parham and Civil Rights Division Trial Attorney Christopher Lomax.
Jury Convicts Louisiana Tax DefierRead the Press Release
Jack Ray Carr, of Baton Rouge, La., was convicted today after a three-day jury trial of one count of corruptly interfering with the due administration of the Internal Revenue laws, four counts of filing false income tax returns and one count of aiding and assisting in the preparation of a false income tax return, the Justice Department, Internal Revenue Service (IRS) and Treasury Inspector General for Tax Administration (TIGTA) announced.
The evidence at trial established that Carr threatened violence against a federal agent, filed false documents and tax returns with the IRS, and attempted to pay his tax debt with fraudulent bonds, fictitious money orders and a fake check. On three successive personal income tax returns, Carr falsely reported that his and his wife’s income was “$0.00,” despite earning hundreds of thousands of dollars in total during the 2001, 2002 and 2003 tax years. In 2009, on two tax returns, Carr falsely reported more than $100,000 of federal income tax withholdings based on fictitious IRS Forms 1099-OID attached to the tax returns that Carr filed in his own name and in the name of his wife. In doing so, Carr claimed more than $150,000 of fraudulent tax refunds from the U.S. government.
Carr faces a potential maximum sentence of 18 years in federal prison and a fine of up to $1.5 million.
Kathryn Keneally, Assistant Attorney General of the Justice Department’s Tax Division, thanked the special agents of the IRS - Criminal Investigation and TIGTA, who investigated this case. Assistant Attorney General Keneally also thanked Tax Division Trial Attorneys Justin Gelfand, Jason Poole and Gregory Bailey, and former Tax Division Trial Attorney Matthew Mueller, all of whom prosecuted the case at various stages. Finally, Ms. Keneally thanked Donald J. Cazayoux Jr., U.S. Attorney for the Middle District of Louisiana, and his entire office for their assistance.
1099-OID schemes are one of the IRS’s “Dirty Dozen” tax scams for 2012. Additional information about the Tax Division and its enforcement efforts may be found at www.justice.gov/tax.
Homebuilder Toll Brothers Inc. to Pay $741,000 Clean Water Act Penalty and Implement Company-Wide Stormwater ControlsRead the Press Release
WASHINGTON – Toll Brothers Inc., one of the nation’s largest homebuilders, will pay a civil penalty of $741,000 to resolve alleged Clean Water Act violations at its construction sites, including sites located in the Chesapeake Bay Watershed, the Department of Justice and the U.S. Environmental Protection Agency (EPA) announced today. Toll Brothers will also invest in a company-wide stormwater compliance program to improve employee training and increase management oversight at all current and future residential construction sites across the nation. The company is required to inspect its current and future construction sites routinely to minimize stormwater runoff from sites. Polluted stormwater runoff and sediment from construction sites can flow directly into the nearest waterway, affecting drinking water quality and damaging valuable aquatic habitats.
“This settlement will help protect the nation’s waters from the harmful pollutants contained in stormwater runoff from construction sites,” said Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division of the Department of Justice. “The settlement requires Toll Brothers to implement system-wide management controls and training that will help prevent polluted stormwater runoff from contaminating rivers, lakes and sources of drinking water.”
“Keeping contaminated stormwater runoff out of the nation’s waterways, like the Chesapeake Bay, is one of EPA’s top priorities,” said Cynthia Giles, Assistant Administrator for EPA’s Office of Enforcement and Compliance and Assurance. “Today’s settlement will improve oversight of stormwater runoff at construction sites across the country and protect America’s waters.”
EPA estimates the settlement will prevent millions of pounds of sediment from entering U.S. waterways every year, including sediment that would otherwise enter the Chesapeake Bay, North America’s largest and most biologically diverse estuary. The bay and its tidal tributaries are threatened by pollution from a variety of sources and are overburdened with nitrogen, phosphorus and sediment that can be carried by stormwater.
The complaint, filed simultaneously with the settlement agreement, alleges over 600 stormwater violations that were discovered through site inspections and by reviewing documentation submitted by Toll Brothers. The majority of the alleged violations involve Toll Brothers’ repeated failures to comply with permit requirements at its construction sites, including requirements to install and maintain adequate stormwater pollution controls.
The Clean Water Act requires permits for the discharge of stormwater runoff. In general, Toll Brothers’ permits require that construction sites have controls in place to prevent pollution from being discharged with stormwater into nearby waterways. These controls include common-sense safeguards such as silt fences, phased site grading and sediment basins to prevent construction contaminants from entering the nation’s waterways.
The settlement requires Toll Brothers to obtain all required permits, develop site-specific pollution prevention plans for each construction site, conduct additional site inspections beyond those required by stormwater regulations, and document and promptly correct any problems. The company must properly train construction managers and contractors on stormwater requirements and designate trained staff for each site. Toll Brothers must also submit national compliance summary reports to EPA based on management oversight inspections and reviews.
This settlement is the latest in a series of enforcement actions to address stormwater violations from residential construction sites around the country. Construction projects have a high potential for environmental harm because they disturb large areas of land and significantly increase the potential for erosion, and stormwater runoff from sites can pick up other pollutants, including concrete washout, paint, used oil, solvents and trash.
The state of Maryland and the commonwealth of Virginia have joined the settlement and will receive a portion of the $741,000 penalty. The settlement includes Toll Brothers sites in
Arizona, California, Colorado, Connecticut, Delaware, Florida, Georgia, Illinois, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Carolina, Nevada, Ohio, Pennsylvania, Rhode Island, South Carolina, Texas, Virginia and West Virginia.The consent decree, lodged in the U.S. District Court for the Eastern District of Pennsylvania, is subject to a 30-day public comment period and approval by the federal court. Once notice is published in the Federal Register, a copy of the consent decree will be available on the Justice Department website at www.justice.gov/enrd/Consent_Decrees.html.
More information about this settlement is available at: www.epa.gov/compliance/resources/cases/civil/cwa/tollbrothers.html.
More information about EPA’s stormwater enforcement is available at www.epa.gov/oecaerth/data/planning/priorities/cwastorm.html.
Former Executive Director of the American Samoa Special Services Commission Sentenced to 14 Months in Prison for Conspiracy to Steal More Than $325,000 in AmeriCorps Grant FundsRead the Press Release
WASHINGTON – The former executive director of the American Samoa Special Services Commission (the Commission) was sentenced today in Washington, D.C., to 14 months in prison for conspiracy to steal more than $325,000 in AmeriCorps grant funds, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.
U.S. District Judge Reggie B. Walton for the District of Columbia sentenced Mine S. Pase to 14 months in prison, to be followed by three years of supervised release. Judge Walton also ordered Pase to pay $325,408 in restitution.
On Nov. 18, 2011, Pase pleaded guilty to a one-count criminal information charging her with conspiracy to commit theft of federal funds.
According to court documents, between March 2001 and October 2010, Pase served as the Commission’s executive director. As an agency of the American Samoa Government, the Commission established and administered four community-based programs that provided services for American Samoans, including youth literacy programs, youth computer training, environmental conservation activities and family counseling services. The Commission and its programs relied exclusively on AmeriCorps grants from the Corporation for National and Community Service. From approximately January 2007 through October 2010, the Corporation for National and Community Service awarded the Commission and its programs a total of $9.4 million in federal grant funds.
Pase admitted that she arranged for herself, her relatives, commissioners, and Commission staff to receive a total of $325,408 in federal funds to which they were not lawfully entitled. These unlawful payments took the form of $109,532 in unlawful payments for purported business trips that Pase and others did not take; $78,889 in unlawful payments for vacation trips to Apia, Western Samoa; $89,313 in unlawful payments for meals; $19,665 in unlawful payments to Pase’s daughter under a bogus car lease agreement; and $28,009 in unlawful payments to Pase and her relatives for the use of damaged office space in which two of the Commission’s programs were housed.
According to court documents, Pase and her relatives personally received at least $123,236 of the $325,408 in stolen federal funds.
The case against Pase arose from the Corporation for National and Community Service’s Office of Inspector General (OIG) audit and investigation of the Commission. As a result of the OIG’s audit and investigation, the Commission’s federal funding was terminated and the Commission shut down.
The case is being prosecuted by Trial Attorney Edward J. Loya Jr. of the Criminal Division’s Public Integrity Section. The case is being investigated by special agents of the Corporation for National and Community Service OIG, with assistance from special agents of the FBI-Honolulu Division, American Samoa Resident Agency.
Detroit-Area Clinic Owner Pleads Guilty to $16 Million Psychotherapy Fraud SchemeRead the Press Release
WASHINGTON – Detroit-area resident Louisa Thompson pleaded guilty today for her role in a $16 million fraud scheme, announced the Department of Justice, the FBI and the Department of Health and Human Services (HHS).
Thompson, 63, pleaded guilty today before U.S. District Judge Nancy D. Edmunds in the Eastern District of Michigan to one count of conspiracy to commit health care fraud. At sentencing, scheduled for Oct. 18, 2012, Thompson faces a maximum penalty of 10 years in prison and a $250,000 fine.
According to the plea documents, in approximately January 2006, Thompson began billing Medicare for psychotherapy services through two companies, TGW Medical Inc. and Caldwell Thompson Manor Inc. The services billed by Thompson at TGW and Caldwell Thompson were never performed or were performed by unlicensed staff who were not authorized to perform services reimbursed by Medicare. The unlicensed staff members also fabricated therapy notes for patients that were never seen and billed Medicare using document templates created by Thompson.
According to court documents, Thompson also received payments from the owner of P&C Adult Day Care Inc., a psychotherapy clinic. Those payments to Thompson were, in part, for the use of Thompson’s provider number by P&C. Thompson also admitted signing therapy documents for P&C patients she never saw or treated. P&C, like TGW and Caldwell Thompson, billed for psychotherapy services that were either not performed or performed by unlicensed staff. Caldwell Thompson and P&C shared Medicare beneficiaries and/or beneficiary information.
Thompson admitted to submitting or causing to be submitted approximately $15.9 million in fraudulent psychotherapy claims on behalf of TGW, Caldwell Thompson and P&C. Medicare paid approximately $4.9 million of those claims.
The guilty plea was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade; Acting Special Agent in Charge of the FBI’s Detroit Field Office Edward J. Hanko; and Special Agent in Charge Lamont Pugh III of the HHS Office of Inspector General’s (HHS-OIG), Chicago Regional Office.
The case is being prosecuted by Trial Attorney Gejaa T. Gobena of the Criminal Division’s Fraud Section and Assistant U.S. Attorney for the Eastern District of Michigan Philip A. Ross. The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan.Since its inception in March 2007, Medicare Fraud Strike Force operations in nine locations have charged more than 1,330 individuals and organizations that collectively have 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, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.
19 June 2012
Owner and Employee of Miami Home Health Company Sentenced to Prison in $22 Million Medicare Fraud SchemeRead the Press Release
WASHINGTON – The owner and an employee of a Miami home health care agency were sentenced today to 108 months and 46 months in prison, respectively, for their participation in a $22 million Medicare fraud scheme, announced the Department of Justice, the FBI and the Department of Health and Human Services (HHS).
U.S. District Judge Patricia A. Seitz in Miami sentenced Marietha Morales, 38, to 108 months in prison and Eduardo Saborit-Dominguez, 48, to 46 months in prison. Both defendants were each sentenced to three years of supervised release. In addition, Morales was ordered to pay $14 million in restitution and Dominugez was ordered to pay $2 million in restitution, jointly and severally with each other.
Last year, Morales pleaded guilty to one count of conspiracy to commit health care fraud, and Dominguez pleaded guilty to one count of conspiracy to defraud the United States and to receive and pay health care kickbacks.
Morales was the president and Dominguez was an employee of Prime Home Health Services Inc., a Florida home health agency that purported to provide home health care and physical therapy services to eligible Medicare beneficiaries.
According to plea documents, Morales conspired with patient recruiters for the purpose of billing the Medicare program for unnecessary home health care and therapy services. Morales and her co-conspirators paid kickbacks and bribes to patient recruiters in return for the recruiters providing patients to Prime Home Health, as well as prescriptions, plans of care (POCs) and certifications for medically unnecessary therapy and home health services for Medicare beneficiaries. Dominguez distributed the kickbacks and bribes to co-conspirator patient recruiters and knew that the payment of kickbacks and bribes was in violation of federal criminal laws. Morales used these prescriptions, POCs and medical certifications to fraudulently bill Medicare for home health care services, which Morales knew was in violation of federal criminal laws.According to plea documents, nurses and office staff at Prime Home Health falsified patient files for Medicare beneficiaries to make it appear that such beneficiaries qualified for home health care and therapy services. Morales admitted that she knew the beneficiaries did not actually qualify for and did not receive such services. Morales knew that these files were falsified so that Medicare could be billed for medically unnecessary therapy and home health related services.
From approximately February 2005 through April 2011, Morales and her co-conspirators submitted approximately $22 million in false and fraudulent claims to Medicare. Medicare actually paid approximately $14 million on those claims.The sentences were announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; John V. Gillies, Special Agent-in-Charge of the FBI’s Miami Field Office; and Special Agent-in-Charge Christopher Dennis of the HHS Office of Inspector General (HHS-OIG), Office of Investigations Miami Office.
This case is being prosecuted by Senior Trial Attorney Joseph S. Beemsterboer of the Criminal Division’s Fraud Section. The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.Since their inception in March 2007, Medicare Fraud Strike Force operations in nine locations have charged more than 1,330 defendants who collectively have falsely billed the Medicare program for more than $4 billion. In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.Justice Department to Monitor Election in MarylandRead the Press Release
The Justice Department announced today that the Civil Rights Division will monitor the municipal election on June 20, 2012, in Crisfield, Md. The monitoring will ensure compliance with the Voting Rights Act of 1965. The Voting Rights Act prohibits discrimination in the election process on the basis of race, color or membership in a minority language group.
Justice Department personnel will monitor polling place activities in Crisfield. A Civil Rights Division attorney will coordinate federal activities and maintain contact with local election officials.
Each year, the Justice Department deploys hundreds of federal observers from the Office of Personnel Management, as well as departmental staff, to monitor elections across the country. To file complaints about discriminatory voting practices, including acts of harassment or intimidation, voters may call the Voting Section of the Justice Department’s Civil Rights Division at 1-800-253-3931.
Visit www.justice.gov/crt/voting/index.php for more information about the Voting Rights Act and other federal voting laws.