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19 June 2012
Justice Department Files Lawsuit Against Rose Acre Farms in Indiana Alleging Discrimination Against Work-Authorized Non-CitizensRead the Press Release
WASHINGTON – The Justice Department announced today the filing of a lawsuit against Rose Acre Farms Inc., a major U.S. egg producer based in Seymour, Ind., alleging that Rose Acre engaged in a pattern or practice of discrimination against work-authorized non-citizens in the employment eligibility verification process. Rose Acre operates in more than 40 locations in six states.
The complaint alleges that Rose Acre had a standard practice of subjecting newly hired non-U.S. citizens to unauthorized demands for more, different or specific documents issued by the U.S. Department of Homeland Security in order to verify their employment eligibility, while U.S. citizens were permitted to present their choice of documentation. The Immigration and Nationality Act’s (INA) anti-discrimination provision prohibits employers from placing additional documentary burdens on work-authorized employees during the hiring and employment eligibility verification process based on their citizenship status or national origin. According to the complaint, Rose Acre purchased an electronic employment eligibility verification software system in June 2009 that may have prompted human resource officials to demand certain documents from non-U.S. citizens. The complaint seeks a court order prohibiting future discrimination by Rose Acre, changes in Rose Acre's policies and procedures for verifying employment eligibility, monetary damages for those harmed by the Rose Acre’s actions, and civil penalties.“The INA’s anti-discrimination provision requires employers to treat employees equally in the employment eligibility verification process, regardless of citizenship status or national origin,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The department is committed to removing discriminatory hurdles to employment through the enforcement of the anti-discrimination provision.”
The Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC) is responsible for enforcing the anti-discrimination provision of the INA, which protects work authorized individuals against discrimination in hiring, firing and recruitment or referral for a fee on the basis of citizenship status and national origin. The INA also protects all work-authorized individuals from discrimination in the employment eligibility verification process and from retaliation. The U.S. is represented in this matter by Luz V. Lopez-Ortiz and Linda White Andrews, OSC Trial Attorneys.
For more information about protections against employment discrimination under federal immigration law, call OSC’s worker hotline at 1-800-255-7688 (TDD 1-800-237-2515), OSC’s employer hotline at 1-800-255-8155 (TDD 1-800-237-2515), sign up for a no-cost webinar at www.justice.gov/crt/about/osc/webinars.php, or visit OSC’s website at www.justice.gov/crt/about/osc.
18 June 2012
Owner of Southern California-Based Mesquite Charcoal Distributor <br /> Pleads Guilty to Customer Allocation and Bid-Rigging ConspiracyRead the Press Release
WASHINGTON – The owner of a southern California-based mesquite charcoal distributor pleaded guilty for his role in a customer allocation and bid-rigging conspiracy for the sale of mesquite charcoal, the Department of Justice announced today.According to a one-count felony charge filed on May 7, 2012, in the U.S. District Court in San Francisco, William W. Lord, the owner of Carpinteria, Calif.-based Chef’s Choice Mesquite Charcoal, participated in a conspiracy with competitors to refrain from competing for each other’s customers and to submit noncompetitive bids for the sale of mesquite charcoal. According to the plea agreement, Lord has agreed to cooperate with the department’s ongoing investigation.
“Today’s charge demonstrates the Antitrust Division’s commitment to prosecute bid-rigging conspiracies that involve products used in the everyday lives of consumers and businesses ’ daily operations,” said Acting Assistant Attorney General Joseph Wayland in charge of the Department of Justice’s Antitrust Division.
Chef’s Choice distributes and sells mesquite charcoal throughout the United States. Mesquite charcoal, which is typically used by restaurants and individuals to grill meat, fish and poultry, is primarily produced in Mexico and then sold to distributors in the United States for eventual resale to restaurants and consumers.
According to court documents, the charged conspiracy began as early as January 2000 and lasted until about September 2010. Lord and his competitors, a Los Angeles-area mesquite charcoal distributor and a San Francisco-area mesquite charcoal distributor, entered into an agreement to refrain from competing for the sale of mesquite charcoal to each other’s customers. The purpose of this agreement was to ensure that Lord and his competitors would not have to reduce mesquite charcoal prices in the face of competition in order to retain their customers. Lord and his competitors carried out the conspiracy in various ways, including: refraining from submitting bids for the sale of mesquite charcoal to each other’s customers; submitting intentionally noncompetitive bids to each other’s customers; and communicating with each other regarding what price to bid and then submitting agreed-upon, noncompetitive bids to each other’s customers.
Lord is charged with violating the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victim of the crime if either of those amounts is greater than the statutory maximum fine.
Today’s guilty plea arose from an ongoing federal investigation of the mesquite charcoal industry in the United States. The investigation is being conducted by the Department of Justice Antitrust Division’s Chicago Field Office and the FBI’s San Francisco Office. Anyone with information concerning customer allocation, bid rigging or price fixing related to the mesquite charcoal industry in the United States should contact the Antitrust Division’s Chicago Field Office at 312-353-7530 or visit www.justice.gov/atr/contact/newcase.htm.
Missouri Woman Sentenced to 63 Months in Prison for Vandalism and Arson of Biracial Man’s HomeRead the Press Release
A Missouri woman was sentenced today to 63 months in prison for her role in the vandalism and arson of a biracial man’s home in Independence, Mo., the Department of Justice announced
Teresa Witthar, 43, of Independence, was sentenced in the Western District of Missouri by U.S. District Judge Dean Whipple.
On Feb. 2, 2012, Witthar pleaded guilty to one count of conspiracy, one count of violating the Fair Housing Act and one count of obstruction of justice. Witthar’s co-conspirators, Charles Wilhelm and David Martin, pleaded guilty on March 8, 2012, and March 7, 2012, respectively, to one count of conspiracy to violate the civil rights of the victim and one count of violating the Fair Housing Act for their roles in vandalizing and burning down Nathaniel Reed’s home in Independence.
According to the plea agreement filed with the court, Witthar, Wilhelm and Martin conspired to intimidate and scare Reed, a biracial man, into moving out of the Highland Manor Mobile Home Park in Independence, in part because of his race. On or about June 6, 2006, Witthar, along with Wilhelm and Martin, entered Reed’s mobile home, without his permission, and vandalized it by writing at least 15 racially derogatory slurs on the walls of his trailer.
Two days later, on or about June 8, 2006, Witthar drove Martin and Wilhelm to a neighborhood behind Reed’s home so that they could set fire to his home without being detected. Witthar waited in her vehicle for Wilhelm and Martin to set the fire and then provided them a ride back to the Highland Manor Mobile Home Park.
The investigation further revealed that in the spring of 2011, Witthar unsuccessfully attempted to persuade another individual to testify falsely in front of a grand jury about her role in the vandalism and fire.
“Violent and destructive acts such as the arson of this man’s home seek to undermine the guarantees of equal justice and equal opportunity that are central to our laws,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Department of Justice will continue to act aggressively to ensure that every American enjoys the right to occupy a home free of racially motivated intimidation and violence.”
“Today's tough sentence makes it clear that our community will not tolerate racially-motivated violence and intimidation,” said Acting U.S. Attorney for the Western District of Missouri David M. Ketchmark. “We are satisfied that this defendant is being held accountable for the arson, vandalism and threats that violated Mr. Reed's civil rights. By defending one victim’s right to live freely in his own home, we are upholding Constitutional freedoms for all citizens.”
Sentencing for Wilhelm is scheduled for July 24, 2012. Sentencing for Martin is scheduled for July 26, 2012.
These guilty pleas were the result of a cooperative effort between the U.S. Attorney’s Office for the Western District of Missouri and the Justice Department’s Civil Rights Division. This case was investigated by the Kansas City Division of the FBI. It is being prosecuted by Acting U.S. Attorney David Ketchmark for the Western District of Missouri and Trial Attorney Sheldon L. Beer of the Civil Rights Division.
Data Systems & Solutions LLC Resolves <br /> Foreign Corrupt Practices Act Violations <br /> and Agrees to Pay $8.82 Million Criminal PenaltyRead the Press Release
Data Systems & Solutions LLC (DS&S), a company based in Reston, Va., that provides design, installation, maintenance and other services at nuclear and fossil fuel power plants, has agreed to pay an $8.82 million criminal penalty to resolve violations of the Foreign Corrupt Practices Act (FCPA), announced Principal Deputy Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney for the Eastern District of Virginia Neil H. MacBride.
The department filed a two-count criminal information today in the Eastern District of Virginia charging DS&S with conspiring to violate, and violating, the FCPA’s anti-bribery provisions.
According to court documents, DS&S paid bribes to officials employed by the Ignalina Nuclear Power Plant, a state-owned nuclear power plant in Lithuania, to secure contracts to perform services for the plant. To disguise the scheme, the bribes were funneled through several subcontractors located in the United States and abroad. The subcontractors, in turn, made repeated payments to high-level officials at Ignalina via check or wire transfer.
The department also filed today a deferred prosecution agreement with DS&S. Under the terms of the agreement, the department will defer prosecution of DS&S for two years. In addition to the monetary penalty, DS&S agreed to cooperate with the department, to report periodically to the department concerning DS&S’s compliance efforts, and to continue to implement an enhanced compliance program and internal controls designed to prevent and detect FCPA violations. If DS&S abides by the terms of the deferred prosecution agreement, the department will dismiss the criminal information when the agreement’s term expires.
The agreement acknowledges DS&S’s extraordinary cooperation, including conducting an extensive, thorough and swift internal investigation; providing to the department extensive information and evidence; and responding promptly and fully to the department’s requests. In addition, DS&S has engaged in extensive remediation, including terminating the officers and employees responsible for the corrupt payments; instituting a more rigorous compliance program; enhancing its due diligence protocol for third-party agents and subcontractors; strengthening its ethics policies; providing FCPA training for all agents and subcontractors; and establishing heightened review of most foreign transactions.
The case is being prosecuted by Trial Attorney Daniel S. Kahn of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Charles Connolly from the Eastern District of Virginia. The case was investigated by the FBI’s Washington Field Office, the Department of Energy Office of Inspector General, and the Internal Revenue Service Criminal Investigation’s Washington D.C. Field Office. The Criminal Division’s Office of International Affairs provided assistance.
Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa
15 June 2012
Three Tax Return Preparers Charged with Helping Clients Evade Taxes by Hiding Millions in Secret Accounts at Two Israeli BanksRead the Press Release
David Kalai, Nadav Kalai and David Almog were indicted by a federal grand jury in the Central District of California and charged with conspiring to defraud the United States, the Justice Department and Internal Revenue Service (IRS) announced today. The superseding indictment, which was returned late yesterday, was unsealed following the defendants’ arrests.
According to the superseding indictment, David Kalai and Nadav Kalai were principals of United Revenue Service Inc. (URS), a tax preparation business with 12 offices located throughout the United States. David Kalai worked primarily at URS’s former headquarters in Newport Beach, Calif., and later at URS’s location in Costa Mesa, Calif. Nadav Kalai, who is David Kalai’s son, worked out of URS’s headquarters in Bethesda, Md., as well as URS locations in Newport Beach and Costa Mesa, Calif. David Almog was the branch manager of the New York office of URS and supervised tax return preparers for URS’s East Coast locations.
As alleged in the superseding indictment, U.S. citizens, resident aliens and legal permanent residents have an obligation to report to the IRS on Schedule B of the U.S. Individual Income Tax Return, Form 1040, whether they had a financial interest in, or signature authority over, a financial account in a foreign country in a particular year by checking “Yes” or “No” in the appropriate box and identifying the country where the account was maintained. They further have an obligation to report all income earned from the foreign financial account on the tax returns. Separately, U.S. citizens, resident aliens and permanent legal residents with a foreign financial interest in, or signatory authority over, a foreign financial account worth more than $10,000 in a particular year, must also file a Report of Foreign Bank and Financial Accounts (FBAR) with the Treasury disclosing such an account by June 30 of the following year.
The superseding indictment alleges that the co-conspirators prepared false individual income tax returns which did not disclose the clients’ foreign financial accounts nor report the income earned from those accounts. In order to conceal the clients’ ownership and control of assets and conceal the clients’ income from the IRS, the co-conspirators incorporated offshore companies in Belize and elsewhere and helped clients open secret bank accounts at the Luxembourg locations of two Israeli banks, Bank A and Bank B. Bank A is a large financial institution headquartered in Tel-Aviv, Israel, with more than 300 branches across 18 countries worldwide. Bank B is a mid-size financial institution also headquartered in Tel-Aviv, with a worldwide presence on four continents.
As further alleged in the superseding indictment, the co-conspirators incorporated offshore companies in Belize and elsewhere to act as named account holders on the secret accounts at the Israeli banks. The co-conspirators then facilitated the transfer of client funds to the secret accounts and prepared and filed tax returns that falsely reported the money sent offshore as a false investment loss or a false business expense. The co-conspirators also failed to disclose the existence of, and the clients’ financial interest in, and authority over, the clients’ secret accounts and caused the clients to fail to file FBARs with the Department of the Treasury.
If convicted, each defendant faces a maximum of five years in prison and a maximum fine of $250,000. The charges contained in the indictment are only allegations. The defendants are presumed innocent and it is the government’s burden to prove guilt beyond a reasonable doubt.
Kathryn Keneally, Assistant Attorney General of the Justice Department’s Tax Division, thanked Tax Division Trial Attorneys Christopher S. Strauss and Ellen M. Quattrucci, who prosecuted the case, and Assistant U.S. Attorney Sandra A. Brown of the U.S. Attorney’s Office for the Central District of California, who assisted with the prosecution. The case was investigated by special agents of IRS – Criminal Investigation.
Former Vice President at California Valve <br /> Company Pleads Guilty to Foreign Bribery OffenseRead the Press Release
WASHINGTON – David Edmonds, the former vice president of worldwide customer service at Rancho Santa Margarita, Calif.-based valve company Control Components Inc. (CCI), pleaded guilty today to violating the Foreign Corrupt Practices Act (FCPA), announced the Justice Department’s Criminal Division, the U.S. Attorney’s Office for the Central District of California and the FBI’s Washington Field Office.
Edmonds, who resides in San Clemente, Calif., pleaded guilty today before U.S. District Judge James V. Selna in Santa Ana, Calif., to a one-count superseding information charging him with making a corrupt payment to a foreign government official in Greece in violation of the FCPA. According to court documents, CCI designed and manufactured service control valves for use in the nuclear, oil and gas, and power generation industries worldwide.
At sentencing, Edmonds, 59, faces up to 15 months in prison. Sentencing is scheduled for Nov. 19, 2012.
Edmonds is the seventh former CCI executive to plead guilty to FCPA charges in connection with the company’s bribery scheme:
On May 29, 2012, Paul Cosgrove, CCI’s former head of worldwide sales, pleaded guilty to one count of making a corrupt payment to a foreign government official.
On April 17, 2012, Stuart Carson, CCI’s former president, and Hong “Rose” Carson, CCI’s former director of sales for China and Taiwan, each pleaded guilty to one count of making a corrupt payment to a foreign government official.
On April 28, 2011, Flavio Ricotti, CCI’s former vice president of sales for Europe, Africa, and the Middle East, pleaded guilty to one count of conspiring to violate the FCPA.
On Feb. 3, 2009, Richard Morlok, the former CCI finance director, pleaded guilty to one count of conspiracy to violate the FCPA.
On Jan. 8, 2009, Mario Covino, the former director of worldwide factory sales for CCI, pleaded guilty to one count of conspiracy to violate the FCPA.
Stuart and Rose Carson, Cosgrove, Covino, Morlok and Ricotti are scheduled to be sentenced later this year. FCPA charges brought in April 2009 against Han Yong Kim, the former president of CCI’s Korean office, are pending. An indictment merely contains allegations and defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
On July 31, 2009, CCI pleaded guilty to a three-count criminal information charging the company with conspiracy to violate the FCPA and the Travel Act, and two substantive violations of the FCPA. CCI was ordered to pay an $18.2 million criminal fine, placed on organizational probation for three years, and ordered to create and implement a compliance program and retain an independent compliance monitor for three years. CCI admitted that from 2003 through 2007, it made corrupt payments in more than 30 countries, which resulted in net profits to the company of approximately $46.5 million from sales related to those corrupt payments.
The case is being prosecuted by Deputy Chief Charles G. La Bella and Trial Attorney Andrew Gentin of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Douglas McCormick and Gregory Staples of the U.S. Attorney’s Office for the Central District of California. The case was investigated by the FBI’s Washington Field Office and its team of special agents dedicated to the investigation of foreign bribery cases.
Related Materials:
Plea Agreement (PDF)
Former Chief Financial Officer of Taylor, Bean & Whitaker Sentenced to 60 Months in Prison for Fraud SchemeRead the Press Release
WASHINGTON – Delton de Armas, a former chief financial officer (CFO) of Taylor, Bean & Whitaker Mortgage Corp. (TBW), was sentenced today to 60 months in prison for his role in a more than $2.9 billion fraud scheme that contributed to the failure of TBW.
De Armas was sentenced today by U.S. District Judge Leonie M. Brinkema in the Eastern District of Virginia. The sentence was announced today by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Neil H. MacBride for the Eastern District of Virginia; Christy Romero, Special Inspector General, Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP); Assistant Director in Charge James W. McJunkin of the FBI’s Washington Field Office; David A. Montoya, Inspector General of the Department of Housing and Urban Development (HUD-OIG); Jon T. Rymer, Inspector General of the Federal Deposit Insurance Corporation (FDIC-OIG); Steve A. Linick, Inspector General of the Federal Housing Finance Agency (FHFA-OIG); and Richard Weber, Chief of the Internal Revenue Service Criminal Investigation (IRS-CI).
De Armas, 41, of Carrollton, Texas, pleaded guilty in March to one count of conspiracy to commit bank and wire fraud and one count of making false statements.
“For years, Mr. de Armas, the CFO of one of the country’s largest private mortgage companies, helped defraud financial institutions by concealing from them billions of dollars in losses,” said Assistant Attorney General Breuer. “His lies and deceits contributed to the devastating losses suffered by major institutional investors. As a consequence for his crimes, he will now spend the next five years of his life behind bars.”
“As CFO, Mr. de Armas could have – and should have – put a stop to the massive fraud at TBW the moment he discovered it,” said U.S. Attorney MacBride. “Instead, he and others lied for years on end to investors, banks, regulators and auditors and caused more than $2.4 billion in losses to major financial institutions.”
“Rather than blow the whistle on billions of dollars in fraud, de Armas chose to help conceal it,” said Special Inspector General Romero. “This CFO lied to investors, banks, regulators and auditors to cover up the massive fraud scheme which resulted in the failure of both TBW and Colonial Bank. The court’s decision to sentence de Armas to five years in prison reflects the seriousness of his role as a gatekeeper within TBW and the contribution of his crime to our nation’s financial crisis.”
“The actions of Mr. De Armas and others resulted in the loss of billions of dollars to major financial institutions,” said Assistant Director in Charge McJunkin. “Today’s sentence serves as a warning to anyone who attempts to take advantage of investors and our banking system. Together with our law enforcement partners, the FBI will pursue justice for anyone involved in such fraudulent schemes.”
According to court documents, de Armas joined TBW in 2000 as its CFO and reported directly to its chairman, Lee Bentley Farkas, and later to its CEO, Paul Allen. He previously admitted in court that from 2005 through August 2009, he and other co-conspirators engaged in a scheme to defraud financial institutions that had invested in a wholly-owned lending facility called Ocala Funding. Ocala Funding obtained funds for mortgage lending for TBW from the sale of asset-backed commercial paper to financial institutions, including Deutsche Bank and BNP Paribas. The facility was managed by TBW and had no employees of its own.
According to court records, shortly after Ocala Funding was established, de Armas learned there were inadequate assets backing its commercial paper, a deficiency referred to internally at TBW as a “hole” in Ocala Funding. De Armas knew that the hole grew over time to more than $700 million. He learned from the CEO that the hole was more than $1.5 billion at the time of TBW’s collapse. De Armas admitted he was aware that, in an effort to cover up the hole and mislead investors, a subordinate who reported to him had falsified Ocala Funding collateral reports and periodically sent the falsified reports to financial institution investors in Ocala Funding and to other third parties. De Armas acknowledged that he and the CEO also deceived investors by providing them with a false explanation for the hole in Ocala Funding.
De Armas also previously admitted in court that he directed a subordinate to inflate an account receivable balance for loan participations in TBW’s financial statements. De Armas acknowledged that he knew that the falsified financial statements were subsequently provided to Ginnie Mae and Freddie Mac for their determination on the renewal of TBW’s authority to sell and service securities issued by them.
In addition, de Armas admitted in court to aiding and abetting false statements in a letter the CEO sent to the U.S. Department of Housing and Urban Development, through Ginnie Mae, regarding TBW’s audited financial statements for the fiscal year ending on March 31, 2009. De Armas reviewed and edited the letter, knowing it contained material omissions. The letter omitted that the delay in submitting the financial data was caused by concerns its independent auditor had raised about the financing relationship between TBW and Colonial Bank and its request that TBW retain a law firm to conduct an internal investigation. Instead, the letter falsely attributed the delay to a new acquisition and TBW’s switch to a compressed 11-month fiscal year.
“We are pleased to have joined our law enforcement colleagues in bringing Mr. de Armas to justice,” said Inspector General Rymer. “The former Chief Financial Officer’s actions contributed to one of the largest bank frauds in the country and led to the demise of TBW. His punishment, along with the earlier sentencings of other co-conspirators involved in the Colonial Bank and TBW scheme, sends a clear message that those who abuse their positions of trust and seek to undermine the integrity of the financial services industry will be held accountable. We will continue to pursue such cases in the interest of ensuring the safety and soundness of our Nation’s banks and the strength of the financial services industry as a whole.”
“Delton de Armas was a key player in the TBW fraud; the significant sentence of 60 months handed down today appropriately takes that role into account,” said Inspector General Linick.
In April 2011, a jury in the Eastern District of Virginia found Lee Bentley Farkas, the chairman of TBW, guilty of 14 counts of conspiracy, bank, securities and wire fraud. On June 30, 2011, Judge Brinkema sentenced Farkas to 30 years in prison. In addition, six individuals have pleaded guilty for their roles in the fraud scheme, including: Paul Allen, former chief executive officer of TBW, who was sentenced to 40 months in prison; Raymond Bowman, former president of TBW, who was sentenced to 30 months in prison; Desiree Brown, former treasurer of TBW, who was sentenced to six years in prison; Catherine Kissick, former senior vice president of Colonial Bank and head of its Mortgage Warehouse Lending Division (MWLD), who was sentenced to eight years in prison; Teresa Kelly, former operations supervisor for Colonial Bank’s MWLD, who was sentenced to three months in prison; and Sean Ragland, a former senior financial analyst at TBW, who was sentenced to three months in prison.
The case is being prosecuted by Deputy Chief Patrick Stokes and Trial Attorney Robert Zink of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Charles Connolly and Paul Nathanson of the Eastern District of Virginia. This case was investigated by SIGTARP, FBI’s Washington Field Office, FDIC OIG, HUD OIG, FHFA OIG and the IRS Criminal Investigation. The Financial Crimes Enforcement Network (FinCEN) of the Department of the Treasury also provided support in the investigation. The Department would also like to acknowledge the substantial assistance of the SEC in the investigation of the fraud scheme.
This prosecution was brought in coordination with 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.
Brooklyn Doctor Convicted for Role in Medicare and Private Insurance Fraud SchemeRead the Press Release
WASHINGTON – A Brooklyn board-certified colorectal surgeon, who owned and operated a New York medical clinic, was convicted for his role in a fraud scheme that billed Medicare and numerous private insurance companies for surgeries and other complex medical procedures that were never performed, the Department of Justice, FBI and Department of Health and Human Services (HHS) announced today.
On Wednesday, June 13, 2012, after a two-week trial in federal court in Brooklyn, a jury found Boris Sachakov, M.D., 43, guilty of one count of health care fraud and five counts of health care false statements.
The trial evidence showed that from January 2008 to January 2010, Sachakov, who owned and operated a clinic called Colon and Rectal Care of New York P.C., defrauded Medicare and private insurance companies by billing for surgeries and medical services that he never provided. According to trial testimony, several private insurance companies began investigating Sachakov after receiving complaints from patients that Sachakov had submitted claims for surgeries, including hemorrhoidectomies, that he never performed.
At trial, 11 of Dr. Sachakov’s patients testified that they had not received the surgeries and other medical services for which Sachakov had billed their insurance companies. The evidence presented at trial showed that the medical records Dr. Sachakov created and maintained on these patients, including letters to the patient’s referring doctors, did not support the extensive billings he submitted. After Dr. Sachakov was confronted by two insurance companies about complaints of billings for surgeries that did not happen, the evidence at trial showed that Dr. Sachakov sent letters to his patients, asking them to falsely certify in writing that they had received the phony surgeries.
The indictment alleged that Sachakov submitted and caused the submission of over $22.6 million in false and fraudulent claims to Medicare and private insurance companies, and received more than $9 million on those claims.
At sentencing, scheduled for Sept. 24, 2012, Sachakov faces a maximum penalty of 35 years in prison and an $18 million fine.
The charges were announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; Assistant Director-in-Charge Janice K. Fedarcyk of the FBI’s New York field office; and Special Agent-in-Charge Thomas O’Donnell of the HHS Office of Inspector General (HHS-OIG).
The case is being prosecuted by Trial Attorney Sarah M. Hall and Assistant Chief William Pericak of the Criminal Division’s Fraud Section. The case was investigated by the FBI, HHS, the New York State Office of Medicaid Inspector General and the New York State Department of Financial Services, Criminal Investigative Division.
The case was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section. The Medicare Fraud Strike Force operations are part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT), a joint initiative announced in May 2009 between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country.
Since their inception in March 2007, strike force operations in nine districts have charged 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 HEAT, visit: www.stopmedicarefraud.gov .
Alleged International Credit Card Trafficker “Badb” Extradited from France to the United StatesRead the Press Release
WASHINGTON – Vladislav Anatolievich Horohorin, aka “BadB” of Moscow, an alleged international credit card trafficker thought to be one of the most prolific sellers of stolen credit card data, has been extradited from France to the United States to face criminal charges filed in the District of Columbia and in the Northern District of Georgia.
The extradition was announced today by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Ronald C. Machen Jr. for the District of Columbia, U.S. Attorney Sally Quillian Yates of the Northern District of Georgia, U.S. Secret Service (USSS) Assistant Director for Investigations David J. O’Connor, and Special Agent in Charge Brian D. Lamkin of the FBI’s Atlanta Field Office.
Horohorin, 29, made his first appearance before U.S. District Judge Ellen Segal Huvelle in the District of Columbia yesterday. He was extradited to the United States on June 6, 2012, and was arraigned before U.S. Magistrate Judge Alan Kay in the District of Columbia on June 7, 2012. He was ordered detained pending trial.
“According to the indictment, Mr. Horohorin was one of the most notorious credit card traffickers in the world, transacting in stolen credit information across the globe,” said Assistant Attorney General Breuer. “Due to our strong relationships with our international law enforcement partners, we secured his extradition to the United States, where he now faces multiple criminal counts in two separate indictments. We will continue to do everything we can to bring cybercriminals to justice, including those who operate beyond our borders.”
“Our indictment alleges that this young man used his technological savvy to profit by selling stolen credit card information over the Internet on a massive scale,” said U.S. Attorney Machen. “We are pleased that he has been extradited to the United States to face these criminal charges in a District of Columbia courtroom. This prosecution demonstrates that those who try to rip off Americans from behind a computer screen across an ocean will not escape American justice.”
“The Secret Service is committed to identifying and apprehending those individuals that continue to attack American financial institutions and we will continue to work through our international and domestic law enforcement partners in order to accomplish this,” said USSS Assistant Director O’Connor.
“International cyber criminals who target American citizens and businesses often believe they are untouchable because they are overseas,” said U.S. Attorney Yates. “But as this case demonstrates, we will work relentlessly with our law enforcement partners around the world to charge, find and bring those criminals to justice.”
“Horohorin’s extradition to the United States demonstrates the FBI’s expertise in conducting long-term investigations into complex criminal computer intrusions, resulting in bringing the most egregious cyber criminals to justice, even from foreign shores,” said Special Agent in Charge Lamkin. “The combined efforts of law enforcement agencies to include our international partners around the world will ensure this trend continues.”
Horohorin was indicted by a federal grand jury in the District of Columbia in November 2009 on charges of access device fraud and aggravated identity theft. In a separate investigation, a federal grand jury in the Northern District of Georgia returned a superseding indictment against Horohorin in August 2010, charging him with conspiracy to commit wire fraud, wire fraud and access device fraud. In August 2010, French law enforcement authorities, working with the U.S. Secret Service, identified Horohorin in Nice, France, and arrested him as he was attempting to board a flight to return to Moscow.
According to the indictment filed in the District of Columbia, Horohorin was the subject of an undercover investigation by USSS agents. Horohorin, who is a citizen of Israel, Russia and Ukraine, allegedly used online criminal forums such as “CarderPlanet” and “carder.su” to sell stolen credit card information, known as “dumps,” to online purchasers around the world. According to the indictment, Horohorin, using the online name “BadB,” advertised the availability of stolen credit card information through these web forums and directed purchasers to create accounts at “dumps.name,” a fully-automated dumps vending website operated by Horohorin and hosted outside the United States. The website was designed to assist in the exchange of funds for the stolen credit card information. Horohorin allegedly directed buyers to fund their “dumps.name” account using funds transferred by services including “Webmoney,” an online currency service hosted in Russia. The purchaser would then access the “dumps.name” website and select the desired stolen credit card data. Using an online undercover identity, USSS agents negotiated the sale of numerous stolen credit card dumps.
According to the indictment filed in the Northern District of Georgia, Horohorin was one of the lead cashers in an elaborate scheme in which 44 counterfeit payroll debit cards were used to withdraw more than $9 million from over 2,100 ATMs in at least 280 cities worldwide in a span of less than 12 hours. Computer hackers broke into a credit card processor located in the Atlanta area, stole debit card account numbers, and raised the balances and withdrawal limits on those accounts while distributing the account numbers and PIN codes to lead cashers, like Hororhorin, around the world.
Horohorin faces a maximum penalty of 10 years in prison for each count of access device fraud, 20 years in prison for each count of conspiracy to commit wire fraud and wire fraud and a statutory consecutive penalty of two years in prison for the aggravated identity theft count.
The charges in the indictments are merely allegations and a defendant is presumed innocent until proven guilty.
The District of Columbia case is being prosecuted by Trial Attorneys Carol Sipperly, Ethan Arenson and Corbin Weiss of the Computer Crime and Intellectual Property Section (CCIPS) in the Justice Department’s Criminal Division. Weiss also serves as a Special Assistant U.S. Attorney for the District of Columbia. The District of Columbia case is being investigated by USSS. Key assistance was provided by the French Police Nationale Aux Frontiers and the Netherlands Police Agency National Crime Squad High Tech Crime Unit. The FBI Atlanta field office provided information helpful to the investigation.
The Northern District of Georgia case is being prosecuted by Assistant U.S. Attorneys Nick Oldham and Lawrence R. Sommerfeld and Trial Attorney Sipperly of CCIPS. The Atlanta case is being investigated by the FBI. Assistance was provided by numerous law enforcement partners. U.S. Secret Service provided information helpful to the investigation.
The Office of International Affairs in the Justice Department’s Criminal Division provided invaluable assistance.
14 June 2012
U.S. Parole Commission to Hold its First Reentry and Service Awards Ceremony<br>Thursday, June 21, 2012, 6:00 – 8:00 p.m.Read the Press Release
Washington, DC – Every year, hundreds of thousands of people are released from prison. Recognizing that the more released offenders are able to find homes and jobs, the less likely they are to commit new crimes and return to prison, the federal government, together with state and local governments, is working to assist those returning from prison and jail to become productive citizens.
"Reentry provides a major opportunity to reduce recidivism, save taxpayer dollars, and make our communities safer," said Attorney General Eric Holder. "When reentry fails, the costs – both societal are economic – are high."
On June 21, the U.S. Parole Commission will hold its first Reentry and Service Awards Ceremony. The event is designed to recognize those members of the reentering population who have successfully returned to the community and completed supervision while rebuilding their lives, reconnecting to their families and communities, and supporting and assisting others. The Commission will also recognize others who have significantly aided the reentry population through training, work development, and social and civic engagement.
The event is free and open to the public. The ceremony will begin at 6:00 p.m. Light refreshments will be served.
Parole Commission offices are located on the third floor of 90 K Street, NE, Washington, DC, on the corner of 1st and K Streets. To get there by Metro, take the Red Line to Union Station or New York Avenue. Parking is available in the building and is free after 5:30 p.m.
For more information, please call Jordana Randall at (202) 346-7073.
Two Members of the U.S. Army Plead Guilty to Bribery Charges Related to Fuel Theft in AfghanistanRead the Press Release
WASHINGTON – Two members of the U.S. Army have each pleaded guilty to a bribery charge for their roles in a scheme to steal jet fuel at Forward Operating Base (FOB) Fenty near Jalalabad, Afghanistan, Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division announced today.
Sergeant Regionald Dixon, 30, pleaded guilty yesterday in the District of Hawaii to one count of bribery and Specialist Larry Emmons, 25, pleaded guilty to one count of bribery on June 8, 2012. Dixon and Emmons, both of Schofield Barracks, Hawaii, pleaded guilty before U.S. District Judge Leslie Kobayashi.
According to court documents, on or about Jan. 1, 2012, Dixon and another co-conspirator sergeant in the U.S. Army, agreed to participate in a scheme to steal JP8 jet fuel from FOB Fenty. Specialist Emmons joined the scheme when he returned to FOB Fenty from midtour leave on or about Jan. 22, 2012.
According to court documents, Dixon, Emmons and others surreptitiously filled 3,000-gallon trucks with JP8 jet fuel. The trucks were owned by an Afghan military trucking contractor and were termed “jingle trucks” for their bright adornments. When filling the jingle trucks, the defendants and their co-conspirators took steps to conceal their activities, including filling the trucks in clandestine locations and at times of day least likely to arouse suspicion.
Court documents state that Emmons or a co-conspirator created fraudulent transportation movement requests (TMR), military documents that officially authorize the movement of fuel from FOB Fenty to another location, usually another military base in that geographic area. Emmons and his co-conspirator gave the fraudulent TMRs to the drivers of the jingle trucks, who presented the fraudulent TMRs at the secure departure checkpoint at FOB Fenty to justify their departure with a truckload of JP8 jet fuel.
In return for their official acts in facilitating the theft of fuel from FOB Fenty, Dixon, Emmons and a co-conspirator were paid $6,000 per 3,000-gallon truckload of JP8 jet fuel.
As part of their plea agreements, Dixon and Emmons agreed to forfeit various amounts of cash seized from them or their residences or voluntarily surrendered to federal agents.
At sentencing, scheduled for Oct. 4, 2012, Dixon and Emmons each face up to 15 years in prison.
These cases are being prosecuted by Trial Attorney Mark W. Pletcher of the Fraud Section in the Justice Department’s Criminal Division. The cases were investigated by the Special Inspector General for Afghanistan Reconstruction; the Department of the Army, Criminal Investigations Division; the Defense Criminal Investigative Service; the FBI; and the Department of the Air Force, Office of Special Investigations. Valuable assistance was also provided by the Justice Department’s Office of International Affairs.
Retired U.S. Army Lieutenant Colonel Sentenced to 41 Months in Prison for Bribery Related to Contracting in Support of Iraq WarRead the Press Release
WASHINGTON – A retired lieutenant colonel in the U.S. Army was sentenced yesterday to 41 months in prison for engaging in bribery related to his work as a contracting officer’s representative in Kuwait from 2004 to 2006, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.
Derrick L. Shoemake, 50, of Moreno Valley, Calif., was sentenced by U.S. District Court Judge Dolly M. Gee in the Central District of California. In addition to his prison term, Shoemake was sentenced to two years of supervised release and was ordered to pay $181,900 in restitution and forfeit $68,100.
Shoemake pleaded guilty in June 2011 to two counts of bribery. According to court documents, Shoemake was deployed to Camp Arifjan, Kuwait, as a contracting officer’s representative in charge of coordinating and accepting delivery of bottled water in support of our troops in Iraq. While serving in Kuwait, Shoemake agreed to assist a contractor with his delivery of bottled water. In return, the contractor paid Shoemake a total of approximately $215,000, most of which was delivered to Shoemake’s designee in Los Angeles. Shoemake received an additional $35,000 from a second contractor for his perceived influence over the award of bottled water contracts in Afghanistan. All told, Shoemake admitted receiving approximately $250,000 from these two government contractors in 2005 and 2006.
This case is being prosecuted by Trial Attorney Richard B. Evans of the Criminal Division’s Public Integrity Section and Trial Attorney Mark W. Pletcher of the Criminal Division’s Fraud Section. The case is being investigated by the Army Criminal Investigations Division, the Defense Criminal Investigative Service, the FBI, the Special Inspector General for Iraq Reconstruction, the Internal Revenue Service, U.S. Immigration and Customs Enforcement at the Department of Homeland Security and members of the National Procurement Fraud Task Force and the International Contract Corruption Task Force (ICCTF).
Pennsylvania Man Arrested on Computer Hacking ChargesRead the Press Release
WASHINGTON – Charges were unsealed this morning against a Pennsylvania man, alleging that he hacked into computer networks in Massachusetts and around the country and then sold unauthorized access to those networks.
The charges were announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Carmen M. Ortiz of the District of Massachusetts and Special Agent in Charge Richard DesLauriers of the FBI in Boston.
Andrew James Miller, 23, of Devon, Penn., was arrested this morning on charges contained in a four-count indictment filed in the District of Massachusetts. He is charged with one count of conspiracy, two counts of computer fraud and one count of access device fraud.
According to the indictment, between 2008 and 2011, Miller and others allegedly remotely hacked into computer networks belonging to RNK Telecommunications Inc., a Massachusetts company; Crispin Porter and Bogusky Inc., a Colorado advertising agency; the University of Massachusetts; the U.S. Department of Energy; and other institutions and companies. The indictment alleges that when Miller hacked into the computers, he obtained other users’ access credentials to the compromised computers. He and his co-conspirators then allegedly sold access to these computer networks as well as other access credentials.
If convicted, Miller faces up to five years in prison for the conspiracy count and one of the computer fraud counts, and up to 10 years in prison on one of the computer fraud counts and the access device fraud count, to be followed by three years of supervised release, a $250,000 fine and restitution.
The case was investigated by the FBI and is being 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 U.S. Attorney Ortiz’s Cybercrime Unit.
The details contained in the indictment are allegations. The defendant is presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.Owner and Operator of Halfway House Company Pleads Guilty for Role in Medicare Fraud SchemeRead the Press Release
WASHINGTON – The owner and operator of New Way Recovery Inc., a Florida corporation that operated several halfway houses, pleaded guilty today in Miami to a criminal charge related to a $205 million Medicare fraud scheme involving fraudulent claims for purported partial hospitalization program (PHP) services, the Justice Department, the FBI and the Department of Health and Human Services announced today.
Hassan Collins, 41, pleaded guilty to one count of conspiracy to receive and pay health care fraud kickbacks before U.S. Magistrate Judge Edwin G. Torres.
According to court documents, from in or about April 2004 through September 2010, Collins received kickback payments in exchange for referring Medicare beneficiaries to American Therapeutic Corporation (ATC), a Florida corporation that operated several purported Partial Hospitalization Programs (PHP) throughout Florida. He and his co-conspirators caused false and fraudulent claims to be submitted to Medicare for PHP services purportedly provided at ATC’s locations, when, in fact, the services were never provided.
According to the plea agreement, Collins’s participation in the fraud resulted in more than $2.4 million in fraudulent billing to the Medicare program. At sentencing, scheduled for Sept. 6, 2012, Collins faces a maximum sentence of five years in prison.
In related cases, more than 20 individuals have been convicted for their roles in the ATC fraud scheme. In 2011, ATC executives Lawrence Duran, Marianella Valera and Judith Negron, were sentenced to 50 years, 35 years and 35 years, respectively, for their roles in the scheme. These sentences are the three longest prison sentences ever imposed in a Medicare Fraud Strike Force case. ATC and Medlink pleaded guilty to conspiracy to commit health care fraud. ATC also pleaded guilty to conspiracy to defraud the United States and to pay and receive illegal health care kickbacks. The corporations were sentenced to five years of probation per count and ordered to pay restitution of $87 million. Both corporations have been defunct since their owners were arrested in October 2010. Acevedo, a marketer for ATC, was sentenced to 91 months in prison.
This case is being 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 Office of Inspector General (HHS-OIG) and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.
Since its inception in March 2007, the Medicare Fraud Strike Force operations in nine locations have charged more than 1,330 defendants 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.
North Carolina Resident Found Guilty<br /> of Terrorism ViolationsRead the Press Release
Today in federal court in the Eastern District of North Carolina, a jury found Anes Subasic, 35, guilty of conspiring to provide material support to terrorists and conspiring to murder, kidnap, maim and injure persons abroad, announced Thomas G. Walker, U.S. Attorney for the Eastern District of North Carolina; Lisa Monaco, Assistant Attorney General for National Security; M. Chris Briese, Special Agent-in-Charge of the FBI, Charlotte Division; and John F. Khin, Special Agent-in-Charge, Southeast Field Office, Defense Criminal Investigative Service (DCIS).
Subasic was charged along with seven other defendants in a federal indictment returned on July 22, 2009. In a separate trial in September 2011, Subasic was found guilty of two counts of unlawful procurement of citizenship.
“We must be ever vigilant in our prosecution of those who seek to visit terror on our way of life,” stated U.S. Attorney Walker. “This prosecution demonstrates that commitment.”
“Anes Subasic is the seventh individual to be convicted in connection with this multi-year conspiracy to kill persons abroad and provide material support to terrorism. I applaud the many agents, analysts and prosecutors who helped bring about this successful outcome,” said Assistant Attorney General Monaco.
“Subasic was part of a group of terrorists; some viewed their own country as the enemy. This verdict is the culmination of years of hard work by our Raleigh-Durham Joint Terrorism Task Force, which is composed of our vital law enforcement partners. The JTTF will continue its relentless effort to thwart terrorism in North Carolina,” said FBI Special Agent in Charge Briese.
“The Defense Criminal Investigative Service is proud to have worked jointly with the Raleigh FBI JTTF in the investigation of Anes Subasic and others indicted of terrorism-related charges,” stated DCIS Special Agent in Charge Khin. “Subasic was part of a conspiracy to commit violent acts against U.S. service members and others abroad. The DCIS remains steadfast in its commitment to protect the warfighter and to thwart efforts of individuals like Subasic.”
According to the superseding indictment, from roughly November 2006 through at least July 2009, Subasic and the other defendants conspired to provide material support and resources to terrorists, including currency, training, transportation and personnel. Subasic also conspired to murder, kidnap, maim and injure persons abroad during this period. The object of the conspiracy, according to the indictment, was to advance violent jihad, including supporting and participating in terrorist activities abroad and committing acts of murder, kidnapping or maiming persons abroad.
The defendants allegedly offered training in weapons and financing, and helped arrange overseas travel and contacts so others could wage violent jihad overseas.
The defendants raised money to support training efforts, disguised the destination of such monies from the donors, and obtained assault weapons to develop skills with the weapons. Some defendants also allegedly radicalized others to believe that violent jihad was a personal religious obligation.
In February, 2011, Daniel Boyd, the leader, pleaded guilty to conspiring to provide material support to terrorists and conspiring to murder, kidnap, maim, and injure persons in a foreign country and is currently awaiting sentencing. Boyd’s two sons, Zakariya and Dylan Boyd, have also pleaded guilty. Zakariya Boyd pleaded guilty on June 27, 2011, to conspiring to provide material support to terrorists, and was sentenced to 108 months in prison. Dylan Boyd pleaded guilty on Sept. 14, 2011, to aiding and abetting a conspiracy to provide material support to terrorists and received a 96-month prison sentence.
On Oct. 13, 2011, following a 17-day trial, a jury found Hysen Sherifi, Mohammad Omar Aly Hassan and Ziyad Yaghi guilty. Sherifi was found guilty of conspiring to provide material support to terrorists; conspiring to murder, kidnap, maim and injure persons in a foreign country; two counts of possessing a firearm in furtherance of a crime of violence; and conspiring to kill a federal officer or employee and was sentenced to 540 months in prison. Hassan and Yaghi were found guilty of conspiring to provide material support to terrorists and conspiring to murder, kidnap, maim and injure persons in a foreign country. Hassan received a 180-month prison term and Yaghi received 380 months in prison.
At sentencing, Subasic faces up to 15 years in prison, followed by up to three years supervised release for conspiring to provide material support to terrorists, and up to a term of life in prison followed by up to five years of supervised release for conspiring to murder, kidnap, maim, and injure persons in a foreign country.
The investigation was conducted by the FBI Raleigh-Durham Joint Terrorism Task Force, which includes the FBI, the DCIS, the North Carolina Alcohol Law Enforcement, the Raleigh Police Department, the Durham Police Department and the North Carolina Information Sharing and Analysis Center.
The prosecution was handled by Assistant U.S. Attorney John Bowler of the U.S. Attorney’s Office for the Eastern District of North Carolina and Trial Attorney Jason Kellhofer of the Counterterrorism Section in the Justice Department’s National Security Division.
Justice Department Reaches Agreement with Grayson County, Virginia, on Bailout from the Voting Rights ActRead the Press Release
The Justice Department announced that it has reached an agreement with Grayson County, Va., that will allow for the county and its four political subdivisions, the Grayson County School District and the towns of Independence, Fries and Troutdale, Va., to bail out from their status as “covered jurisdictions” under the special provisions of the Voting Rights Act, and thereby exempt these jurisdictions from the preclearance requirements of Section 5 of the Voting Rights Act. The agreement is in the form of a consent decree filed today in the U.S. District Court for the District of Columbia and must be approved by the court.
Under Section 5 of the Voting Rights Act, certain covered jurisdictions, determined according to Section 4 of the act, are required to seek preclearance for any changes in voting qualifications, standards, practices or procedures from the U.S. District Court for the District of Columbia or from the U.S. Attorney General, prior to their implementation. Section 4 of the act provides that a covered jurisdiction may seek to “bail out,” or remove itself from such coverage, and therefore be exempted from the preclearance requirements, by seeking a declaratory judgment before a three-judge panel in U.S. District Court for the District of Columbia. A bailout judgment can be issued only if the court determines that the jurisdiction meets certain eligibility requirements for bailout contained in the statute, including a 10-year record of nondiscrimination in voting-related actions. The act also provides that the attorney general can consent to entry of a judgment of bailout only if, based upon investigation, the attorney general is satisfied that the jurisdiction meets the eligibility requirements.
Grayson County filed its bailout action in the U.S. District Court for the District of Columbia on May 3, 2012. Counsel for the county contacted the attorney general prior to filing the action, indicating that the county was interested in seeking a bailout. The county provided the Justice Department with substantial information, and the department conducted an investigation to determine the county’s eligibility. Based on that investigation, the department is satisfied that the county meets the Voting Rights Act’s requirements for bailout.
“In the department’s view, the county has met the requirements necessary for bailout. We reached this conclusion after thoroughly reviewing information provided by the county and gathered during the department’s independent investigation,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “I commend the county on their cooperation to ensure resolution of this matter.”
The consent decree details the legal and factual basis for a bailout determination and, if approved by the court, the county’s request will be granted. The court will retain jurisdiction of the action for 10 years and can reopen the action upon the motion of the attorney general or any aggrieved person alleging conduct by the county that would have originally precluded the county from bailing out if it had occurred during the 10-year period preceding entry of the consent decree.
Information about bailout, the Voting Rights Act and other federal voting laws is available on the Department of Justice website at www.justice.gov/crt/voting/. Complaints may be reported to the Voting Section of the Justice Department’s Civil Rights Division at 1-800-253-3931.
Related Materials:
Consent Judgment and Decree
Check Cashers in Brooklyn, Philadelphia and Los Angeles Charged for Alleged Violations of Anti-Money Laundering LawsRead the Press Release
WASHINGTON – Seven individuals and four check cashing businesses were charged today in the Eastern District of New York and the Central District of California for their alleged roles in separate schemes to violate the Bank Secrecy Act (BSA). The defendants allegedly failed to follow reporting and anti-money laundering requirements for transactions totaling more than $50 million.
The enforcement actions were announced today by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Loretta E. Lynch of the Eastern District of New York; U.S. Attorney André Birotte of the Central District of California; U.S. Immigration and Customs Enforcement (ICE) Director John Morton; FBI Assistant Directors in Charge Janice K. Fedarcyk and Steven Martinez; Richard Weber, Chief of the Internal Revenue Service Criminal Investigation (IRS-CI); Daniel R. Levinson, Inspector General of the Department of Health and Human Services (HHS); and Benjamin M. Lawsky, Superintendent of the New York State Department of Financial Services.
Four indictments filed under seal on June 12, 2012, and unsealed today, charge the defendants with failure to file currency transaction reports (CTRs) or falsely filing CTRs, as well as failure to have an effective anti-money laundering program, all violations under the BSA.
Two of the indictments, charging three individuals and two check cashing businesses, were returned in Los Angeles and two indictments, charging four individuals and two check cashing businesses were returned in Brooklyn, N.Y. All seven individual defendants were arrested or surrendered to authorities today.
The BSA is a set of laws and regulations enacted by Congress to address an increase in criminal money laundering through financial institutions, which includes check cashing businesses. Check cashers enable people to cash checks without having to go to a bank or maintain a bank account. A check casher will typically charge a fee for this service.
Under the BSA, financial institutions, including check cashers, are required to file a CTR with the Department of Treasury for any transaction involving more than $10,000 in currency. As part of the CTR, the check casher is required to verify and accurately record the name and address of the individual who conducted the currency transaction, the individual on whose behalf the transaction was conducted, as well as the amount and date of the transaction. CTRs are important law enforcement tools for uncovering criminal activity.
The BSA also requires financial institutions, including check cashing businesses, to maintain an effective anti-money laundering (AML) program. The purpose of an AML program is to effectively detect and prevent attempts to facilitate money laundering. Check-cashing businesses are therefore required to have written policies and procedures regarding CTR filings, records maintenance and responses to law enforcement.
According to the indictments, despite these regulations, check-cashing businesses are a common venue for individuals who want to anonymously cash large numbers of checks to facilitate fraud and money laundering schemes. According to the indictments, the use of check cashers to launder money is particularly prevalent in the area of health care fraud, where fraudulent health care businesses commonly convert the proceeds of their fraud into cash by presenting checks to check cashers who they know will not ask for proof of the payee’s identity and will either not file CTRs or file false CTRs.
“Today’s indictments put unscrupulous check cashers on notice that we are scrutinizing their conduct,” said Assistant Attorney General Breuer. “They may think that they are flying under the radar, but they are not. These defendants are charged with filing false currency transaction reports, or not filing them at all, and other serious violations of the Bank Secrecy Act. We will not tolerate check cashing businesses evading anti-money laundering laws.”
“These indictments send a clear message that we will not tolerate the willful failure of check-cashing businesses to take all steps under the law to prevent their businesses from being used to launder the proceeds of crime,” said U.S. Attorney Lynch. “We are pleased to be working closely with the Asset Forfeiture and Money Laundering Section of the Department of Justice and our federal law enforcement partners in the investigation and prosecution of these important cases.”
“The Bank Secrecy Act provides law enforcement with a powerful tool to detect and prevent crime by requiring financial institutions to document and submit reports on certain currency transactions,” said U.S. Attorney Birotte. “Those who seek to evade the restrictions of the Bank Secrecy Act – both individuals and financial institutions – will be aggressively pursued by the Department of Justice and its partners in federal, state and local law enforcement.”
According to a superseding indictment filed in the Eastern District of New York, Belair Payroll Services, a check cashing store in Flushing, N.Y.; its owner, Craig Panzera; and two other individuals, Lasha Goletiani and Zhan Petrosyants, are charged for their alleged roles in a scheme to violate the BSA. Specifically, Goletiani and Petrosyants allegedly caused Belair to file false CTRs and Panzera allegedly caused Belair to fail to have an effective AML program. In addition, Panzera has been charged with conspiring to commit tax violations with respect to the fees Belair received in connection with the scheme.As part of the scheme, which lasted from June 2009 through June 2011, Goletiani, 32, and Petrosyants, 30, presented to Belair’s manager and other employees, checks to be cashed at Belair. The checks were written on accounts of shell corporations that appeared to be health care related, but in fact, the corporations did no legitimate business. The shell corporations and their corresponding bank accounts on which the checks were written, were established in the names of foreign nationals, many of whom were no longer in the United States.
The indictment alleges that employees at Belair accepted these checks and provided cash in excess of $10,000 to Goletiani or Petrosyants. Panzera, 46, and others at Belair never obtained any identification documents or information from Goletiani or Petrosyants. Belair allegedly filed CTRs that falsely stated the checks were cashed by the foreign nationals who set up the shell corporations, and in certain CTRs, Belair allegedly failed to indicate the full amount of cash provided to Goletiani or Petrosyants. Goletiani and Petrosyants cashed more than $19 million through Belair during the course of the scheme. The indictment unsealed today supersedes an indictment returned against Goletiani in July 2011, for conspiring to cause Belair to file false CTRs. Approximately $3.2 million has been seized from Belair’s bank accounts in connection with this conduct.
A second indictment filed in the Eastern District of New York charges Bargain Island, a check cashing business in Philadelphia, and its owner and operator, George Gonchar, 51, with failure to file CTRs and failure to have an effective AML program. According to the indictment, from October 2009 through October 2010, individuals acting as check couriers brought multiple checks from Brooklyn made payable to various medical services companies, to Bargain Island and presented them to Gonchar for cashing. On almost all occasions, the checks exceeded, in the aggregate, $10,000. As alleged in the indictment, Gonchar knew that the check couriers presenting the checks to Bargain Island had no connection to the checks other than acting as couriers. Despite this knowledge, Gonchar falsely indicated in CTR filings that the checks were cashed on behalf of the couriers themselves or for companies associated with the couriers. Bargain Island cashed more than $5.8 million in checks from couriers in this manner.
A third indictment filed in the Central District of California charges G&A Check Cashing, a check cashing business in Los Angeles; its general manager, Karen Gasparian, 31; and an employee and designated compliance officer, Humberto Sanchez, 53, with BSA violations. The indictment alleges that two separate cooperating witnesses presented bundles of checks totaling more than $10,000 to Gasparian and Sanchez at G&A. The checks were written on accounts for businesses that purported to be health care businesses. G&A deposited the checks into its operating accounts over a period of several days, and then provided cash, in excess of $10,000 to the cooperating witnesses. Neither Gasparian nor Sanchez filed CTRs on these transactions even though they were well aware of the requirement to do so. More than $100,000 in checks were cashed in this manner over the course of 10 transactions, yet no CTRs were ever filed. This practice extended beyond the cooperating witnesses. From 2006 through 2012, G&A conducted approximately 800 transactions that were each in excess of $10,000 and paid out more than $20 million in cash on those transactions without ever filing a CTR.
A fourth indictment filed in the Central District of California charges AAA Cash Advance, a check cashing business in Los Angeles, and its manager, Diana Brigitt, 35, with violations of the BSA. From August 2010 through February 2012, Brigitt, on behalf of AAA, allegedly repeatedly cashed bundles of checks totaling more than $10,000 without filing any CTRs. The checks were presented by a cooperating witness and were written on accounts that appeared to be for health care businesses. More than $100,000 in checks were cashed in this manner over eight transactions, yet no CTRs were ever filed. From January 2008 through February 2012, AAA’s banks reported that AAA had withdrawn approximately $5 million in cash, yet during this same time period, AAA filed only seven CTRs on transactions greater than $10,000.
“This complex financial investigation, conducted by Homeland Security Investigation’s (HSI) El Dorado Task Force and our law enforcement partners, is indicative of the lengths that criminal enterprises go in an effort to conceal their illicit conduct,” said ICE Director John Morton. “These individuals permitted the cashing of over $19 million in checks with a blatant disregard for the legal safeguards intended to prevent criminals access to our financial system. HSI is determined to expose these vulnerabilities and to shutdown money laundering operations that threaten our nation’s security.”
“Money laundering is at the foundation of so many criminal schemes, which is why the FBI and our partners place a high priority on policing it,” said FBI Assistant Director Fedarcyk. “By cracking down on money laundering, we put teeth in the truism that crime doesn’t pay.”
“The charges exemplify the increasingly complex schemes devised to evade anti-money laundering laws,” said FBI Assistant Director Martinez. “The FBI and our trusted partners are resolute in our commitment to match and counter those efforts with the resources and long-term focus necessary to decipher these schemes that cost taxpayers hundreds of millions annually in the Los Angeles area.”
“From coast to coast the IRS will take every step necessary to ferret out those who attempt to avoid their reporting obligations under the law,” Chief Weber of IRS-CI. “This joint effort continues to demonstrate our efforts to ensure that the financial services industry will not be used for personal financial gain and will be operated in a fair and honest manner to promote the public interest.”
“Anti-money laundering laws are an important tool in the fight against health care fraud, as check cashers are often used to convert ill-gotten Medicare proceeds,” said Inspector General Levinson.
“These vital investigations show the need for constant vigilance against dirty check cashers,” said Superintendent Lawsky. “We will use all our enforcement tools to stamp out the use of check cashers to facilitate crime such as health care fraud. We will continue to work with all our law enforcement partners on these important investigations.”
The cases announced today are being prosecuted by Money Laundering and Bank Integrity Unit Trial Attorneys Matthew Haslinger, Matthew Klecka and Claiborne Porter and Forfeiture Unit Trial Attorney Jeanette Gunderson from the Asset Forfeiture and Money Laundering Section of the Justice Department’s Criminal Division and Assistant U.S. Attorney Charles Kleinberg of the Eastern District of New York and Assistant U.S. Attorney David Kirman of the Central District of California. The department acknowledges the invaluable assistance of the Department of Treasury’s Financial Crimes Enforcement Network (FinCEN).
The Money Laundering and Bank Integrity Unit investigates and prosecutes complex, multi-district and international criminal cases involving financial institutions and individuals who violate the money laundering statutes, the Bank Secrecy Act and other related statutes. The unit’s prosecutions generally focus on three types of violators: financial institutions, including their officers, managers and employees, whose actions threaten the integrity of the individual institution or the wider financial system; professional money launderers and gatekeepers who provide their services to serious criminal organizations; and individuals and entities engaged in using the latest and most sophisticated money laundering techniques and tools.
The cases are being investigated by agents from the ICE-HSI, FBI, IRS-CI, HHS-OIG and the New York State Department of Financial Services.
An indictment is merely a charge and defendants are presumed innocent until proven guilty.
Allen Stanford Sentenced to 110 Years in Prison for Orchestrating $7 Billion Investment Fraud SchemeRead the Press Release
WASHINGTON – R. Allen Stanford, the former board of directors chairman of Stanford International Bank (SIB), was sentenced today in Houston to a total of 110 years in prison for orchestrating a 20-year investment fraud scheme in which he misappropriated $7 billion from SIB to finance his personal businesses.
The sentencing was announced 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; and Richard Weber, Chief of Internal Revenue Service Criminal Investigation (IRS-CI).
On March 6, 2012, Stanford, 62, was convicted on 13 of 14 counts by a federal jury following a six-week trial and approximately three days of deliberation. The jury also found that 29 financial accounts located abroad and worth approximately $330 million were proceeds of Stanford’s fraud and should be forfeited.
Stanford was sentenced by U.S. District Judge David Hittner. After considering all the evidence, including more than 350 victim impact letters that were sent to the court, Judge Hittner sentenced Stanford to 20 years for conspiracy to commit wire and mail fraud, 20 years on each of the four counts of wire fraud as well as five years for conspiring to obstruct a U.S. Securities and Exchange Commission (SEC) investigation and five years for obstruction of an SEC investigation. Those sentences will all run consecutively. He also received 20 years for each of the five counts of mail fraud and 20 years for conspiracy to commit money laundering which will run concurrent to the other sentences imposed today for a total sentence of 110 years.
As part of Stanford’s sentence, the court also imposed a personal money judgment of $5.9 billion, which is an ongoing obligation for Stanford to pay back the criminal proceeds. The court found that it would be impracticable to issue a restitution order at this time. However, all forfeited funds recovered by the United States will be returned to the fraud victims and credited against Stanford’s money judgment.
According to court documents and evidence presented at trial, the vehicle for Stanford’s fraud was SIB, an offshore bank owned by Stanford and based in Antigua and Barbuda that sold certificates of deposit (CDs) to depositors. Stanford began operating the bank in 1985 in Montserrat, the British West Indies, under the name Guardian International Bank. He moved the bank to Antigua in 1990 and changed its name to Stanford International Bank in 1994. SIB issued CDs that typically paid a premium over interest rates on CDs issued by U.S. banks. By 2008, the bank owed its CD depositors more than $8 billion.
According to SIB’s annual reports and marketing brochures, the bank purportedly invested CD proceeds in highly conservative, marketable securities that were also highly liquid, meaning the bank could sell its assets and repay depositors very quickly. The bank also represented that all of its assets were globally diversified and overseen by money managers at top-tier financial institutions, with an additional level of oversight by SIB analysts based in Memphis, Tenn.
As shown at trial, this purported investment strategy and management of the bank’s assets was followed for only about 10-15 percent of the bank’s assets. Stanford diverted billions in depositor funds into various companies that he owned personally, in the form of undisclosed “loans.” Stanford was thus able to continue the operations of his personal businesses, which ran at a net loss each year totaling hundreds of millions of dollars, at the expense of depositors. These businesses were concentrated primarily in the Caribbean and included restaurants, a cricket tournament and various real estate projects. Evidence at trial established Stanford also used the misappropriated CD money to finance a lavish lifestyle, which included a 112-foot yacht and support vessels, six private planes and gambling trips to Las Vegas.
According to evidence presented at trial, Stanford continued the scheme by using sales from new CDs to pay existing depositors who redeemed their CDs. In 2008, when the financial crisis caused a slump in new CD sales and record redemptions, Stanford lied about personally investing $741 million in additional funds into the bank to strengthen its capital base. To support that false announcement, Stanford’s internal accountants inflated on paper the value of a piece of real estate SIB had purchased for $63.5 million earlier in 2008 by 5,000 percent to $3.1 billion, despite the fact there were no independent appraisals or improvements to the property.
The trial evidence also showed that Stanford perpetuated his fraud by paying bribes from a Swiss slush fund at Societe Generale to C.A.S. Hewlett, SIB’s auditor (now deceased), and Leroy King, the then-head of the Antiguan Financial Services Regulatory Commission.
In addition to Stanford, a grand jury in the Southern District of Texas previously indicted several of his alleged co-conspirators, including: James Davis, the former chief financial officer; Laura Holt, the former chief investment officer; Gil Lopez, the former chief accounting officer; Mark Kuhrt, the former controller; and King. Davis has pleaded guilty and faces up to 30 years in prison under the terms of his plea agreement. The trial of Holt, Kuhrt and Lopez, which was severed from Stanford’s trial, is scheduled to begin before Judge Hittner on Sept. 10, 2012. 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 was prosecuted by Deputy Chief William Stellmach and Trial Attorney Andrew Warren of the Criminal Division’s Fraud Section and former Assistant U.S. Attorney (AUSA) Gregg Costa of the Southern District of Texas. AUSA Kristine Rollinson of the Southern District of Texas and Trial Attorney Kondi Kleinman of the Asset Forfeiture and Money Laundering Section in the Justice Department’s Criminal Division assisted with the forfeiture proceeding, and AUSA Jason Varnado and Fraud Section Deputy Chief Jeffrey Goldberg assisted with the sentencing proceeding.
The Justice Department also wishes to thank several countries for their ongoing cooperation during the investigation and prosecution of Stanford and his co-conspirators, including the Governments of Antigua and Barbuda, Switzerland, the Cook Islands, the United Kingdom and the Isle of Man.
13 June 2012
Justice Department Transfers 1,000 Acres of Land <br /> in Cannon County, Tenn., to State of TennesseeRead the Press Release
WASHINGTON – The U.S. Department of Justice has transferred to the state of Tennessee approximately 1,000 acres of undeveloped land in Cannon County, Tenn., as a result of a federal criminal conviction of two individuals for distribution of marijuana.
The transfer was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney William C. Killian for the Eastern District of Tennessee, Special Agent in Charge Harry S. Sommers of the Atlanta Division of the Drug Enforcement Administration (DEA) and U.S. Marshal Denny W. King for the Middle District of Tennessee.
The land, located on Short Mountain in Woodbury, Tenn., will be managed by the Tennessee Wildlife Resources Agency and will be known as the Headwaters Wildlife Management Area. Short Mountain is a critical habitat for plant and animal species, and contains the headwaters for three Tennessee watersheds. The property will be open to the public for small game hunting, hiking and wildlife viewing.
The land was forfeited to the United States as part of the 2007 federal criminal convictions of Morris Roller and Jeffory Carl Young for distribution of marijuana. Roller and Young are currently serving federal sentences of 200 and 224 months, respectively. The transfer was made under a law that allows the Justice Department to convey forfeited property to states for public use for recreation or conservation purposes upon request by the governor or chief executive officer of the state.
The Asset Forfeiture and Money Laundering Section of the Justice Department’s Criminal Division coordinated the transfer. The federal criminal investigation was assisted by the Tennessee Bureau of Investigation; Tennessee Alcohol Control Board; Warren County, Tenn., Sheriff’s Department; Hamilton County, Tenn., Sheriff’s Department; and Chattanooga, Tenn., Police Department.
“This land transfer highlights the benefits of asset forfeiture as a crime-fighting tool,” said Assistant Attorney General Breuer. “Our law enforcement efforts put an end to illegal drug production on this land and secured its preservation for years to come.”“The transfer of this property was accomplished through the cooperative efforts of local, state and federal government agencies,” said U.S. Attorney Killian. “This historic conveyance of forfeited property, which is the largest transfer for conservation purposes in the past 15 years by the federal government to a governmental entity, will leave a lasting legacy of this wildlife management area for the state of Tennessee and its citizens. Now, rather than being used for growing marijuana or violating other laws, it will be used for recreational activities such as hiking, fishing and hunting. Russ Dedrick, my predecessor as U.S. Attorney, is to be congratulated for arranging this donation of land.”
A dedication ceremony was held today on the land.
The Department of Justice Asset Forfeiture Program allows for the transfer of federally forfeited real property to serve various purposes including: supporting state recreational, preservation or historic purposes; supporting a continuing federal purpose; and assisting a state or local government, or a non-profit entity, in carrying out educational, drug treatment, rehabilitation, housing and other community-based initiatives. Through these real property transfers the Asset Forfeiture Program contributes to our communities nationwide.
Co-Owner of Houston-Area Home Health Care Agency Sentenced to 108 Months in Prison for Role in $5.2 Million Medicare FraudRead the Press Release
WASHINGTON – The former co-owner of a Houston-area home health care company was sentenced today in Houston to 108 months in prison for his participation in a $5.2 million Medicare fraud scheme, announced the Department of Justice, the FBI and the Department of Health and Human Services (HHS).
Clifford Ubani, a former co-owner and chief financial officer at Family Healthcare Group, was sentenced by U.S. District Judge Nancy Atlas in the Southern District of Texas. In addition to his prison term, Ubani was sentenced to three years of supervised release and was ordered to pay $4.2 million in restitution jointly and severally with his co-defendants. In January 2011, Ubani pleaded guilty to one count of conspiracy to commit health care fraud, one count of conspiracy to pay illegal kickbacks to patient recruiters and 16 counts of paying such illegal kickbacks.
According to court documents and other evidence presented to the court, Family Healthcare Group, a Houston home health care company, purported to provide skilled nursing to Medicare beneficiaries. According to court documents and other evidence, Clifford Ubani paid co-conspirators to recruit Medicare beneficiaries for the purpose of Family Healthcare Group filing claims with Medicare for skilled nursing that was medically unnecessary or not provided. Ubani’s co-conspirators would then falsify documents to support the fraudulent payments from Medicare. Ubani also paid co-conspirators to sign fraudulent plans of care stating that the beneficiaries needed home health care when in fact they knew the beneficiaries were not home-bound and not in need of skilled nursing.
Ubani is the eighth defendant sentenced in connection with this scheme. Two other defendants, co-owner Princewill Njoku and patient recruiter Cynthia Garza Williams, await sentencing.
The sentences were announced 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; Special Agent-In-Charge Stephen L. Morris of the FBI’s Houston Field Office; Special Agent-in-Charge Mike Fields of the Dallas Regional Office of HHS’s Office of the Inspector General (HHS-OIG); and the Texas Attorney General’s Medicaid Fraud Control Unit (OAG-MFCU).
This case is being prosecuted by Trial Attorney Charles D. Reed and Deputy Chief Sam S. Sheldon of the Criminal Division’s Fraud Section. The case was investigated by the FBI, HHS-OIG, Texas OAG-MFCU and the Federal Railroad Retirement Board-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 Texas.
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.
Assistant Attorney General Ronald Weich Announces Departure from Department of JusticeRead the Press Release
The Justice Department announced today that Assistant Attorney General for Legislative Affairs Ronald Weich will be leaving the department to join the University of Baltimore School of Law as its new dean. Assistant Attorney General Weich was appointed by President Obama and confirmed by the Senate in April, 2009.
Judith C. Appelbaum, who has served as a deputy assistant attorney general in the Office of Legislative Affairs (OLA), will serve as acting assistant attorney general following Weich’s departure.
“Ron’s leadership has been instrumental in realizing crucial legislative achievements, and I thank him for his tireless advocacy of department priorities,” said Attorney General Eric Holder. “I am proud of the work done by the Office of Legislative Affairs under Ron’s watch to advance legislation vital to ensuring justice.”
“Serving the department has been a tremendous privilege, and I’m pleased with OLA’s accomplishments over the last three years,” said Assistant Attorney General Weich. “We have worked effectively with Congress to advance the mission and goals of the Justice Department.”
Under the leadership of Assistant Attorney General Weich, the Office of Legislative Affairs has worked to strengthen the department’s relationship with Congress. The office has represented the department in connection with numerous legislative achievements on issues of central importance to the department, including the Fraud Enforcement and Recovery Act; the Matthew Shepard and James Byrd, Jr. Hate Crimes Prevention Act and the Tribal Law and Order Act.
The office also has worked to advance measures that have not yet been enacted, including the Violence Against Women Reauthorization Act of 2012, the FISA Amendments Extension Act and the Nuclear Terrorism Conventions Implementation Act.
Assistant Attorney General Weich also managed the department’s efforts to obtain Senate confirmation of numerous senior department officials, including the deputy attorney general, assistant attorneys general, law enforcement component heads, U.S. attorneys and U.S. marshals.
Prior to joining the Justice Department, Assistant Attorney General Weich served as chief counsel to Senate Majority Leader Harry Reid. He earlier served as counsel to Senators Edward M. Kennedy and Arlen Specter, and as a partner in the law firm of Zuckerman Spaeder LLP.
Additional information about the Office of Legislative Affairs is available at www.justice.gov/ola/ .
Admitted New England La Cosa Nostra Leader <br /> Sentenced to 108 Months in Federal PrisonRead the Press Release
WASHINGTON – Edward “Eddy” Lato, 65, of Providence, R.I., an admitted capo regime in the New England La Cosa Nostra (NELCN), was sentenced in U.S. District Court in Providence today to 108 months in federal prison for participating in racketeering extortion conspiracies of several Rhode Island adult entertainment businesses and of a car salesman and his wife.
U.S. District Court Judge William E. Smith also ordered Lato to serve three years of supervised release upon completion of his prison term. Lato pleaded guilty on March 13, 2012, to conspiracy to participate in a racketeering enterprise.
Lato’s sentence was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; Peter F. Neronha, U.S. Attorney for the District of Rhode Island; Richard DesLauriers, Special Agent in Charge of the FBI’s Boston Field Office; Colonel Steven G. O’Donnell, Superintendent of the Rhode Island State Police; and Providence Public Safety Commissioner Steven M. Pare.
At the time of his guilty plea, Lato admitted to the court that he participated in a racketeering and extortion conspiracy that demanded and received between $800,000 and $1.5 million in “protection” payments from several adult entertainment businesses in Rhode Island from 1995 to 2009. He also admitted his participation in a conspiracy to extort $25,000 from a Rhode Island car salesman and his wife by using implied threats of violence. The wife ultimately withdrew $25,000 from a retirement account to satisfy the demand for payment.
Seven of the nine defendants named in superseding indictments and charged with participating in the racketeering and extortion conspiracy, including admitted longtime former NELCN underboss and boss Luigi Manocchio, have pleaded guilty. Manocchio was sentenced on May 11, 2012, to 66 months in federal prison.
The cases are being prosecuted by Assistant U.S. Attorney William J. Ferland for the District of Rhode Island and Trial Attorney Sam Nazzaro of the Criminal Division’s Organized Crime and Gang Section.
The matter was investigated by the FBI, Rhode Island State Police and the Providence Police Department.
12 June 2012
New York Certified Public Accountant Who Failed to Pay Employment Taxes Sentenced to Two Years in PrisonRead the Press Release
Silford Warren, a resident of Queens, N.Y., was sentenced today to 24 months in prison for failure to pay over employment taxes in connection with his ownership of Silford Warren, CPA PC., the Justice Department and Internal Revenue Service (IRS) announced today. Judge William F. Kuntz II of the U.S. District Court for the Eastern District of New York also ordered Warren to pay $184,263 in restitution to the IRS.
Warren, a Certified Public Accountant, pleaded guilty on Dec. 9, 2011 to a one-count information charging him with willful failure to pay over employment taxes on behalf of his accounting business. According to the criminal information and court filings, from 2006 through 2008, Warren under-reported his employees’ salaries on tax filings with the IRS. The restitution amount ordered by the court included the employment taxes that he failed to pay over from his employees and his obligation, as an employer, to pay over a matching portion of those employment taxes, as well as the tax loss resulting from his filing false corporate income tax returns for 2005 through 2008.
Kathryn Keneally, Assistant Attorney General of the Justice Department’s Tax Division, thanked special agents of IRS-Criminal Investigation, who investigated the case, and Tax Division Trial Attorneys Tino M. Lisella and Sean Delaney, who are currently on detail to U.S. Attorneys’ offices, and Assistant Chief Karen E. Kelly, who prosecuted the case.
Justice Department Files Lawsuit Against Florida Alleging Violations of the National Voter Registration ActRead the Press Release
WASHINGTON – The Department of Justice announced today that it has filed a lawsuit against the state of Florida and the Florida Secretary of State in his official capacity alleging that the state has violated its obligations under Section 8 of the National Voter Registration Act of 1993 (NVRA).
The complaint, filed today in the U.S. District Court for the Northern District of Florida, alleges that Florida has violated the NVRA by conducting a systematic program to purge voters from its voter registration rolls within the 90-day quiet period before an election for federal office established by the law. In addition, the complaint alleges that Florida’s use of inaccurate and unreliable voter verification procedures violates the requirement in Section 8 of the NVRA that any such program be uniform and nondiscriminatory.
“The Department of Justice has an overriding interest in protecting the rights of eligible citizens to register and vote free from unlawful burdens, while at the same time ensuring that ineligible persons do not register and vote in federal elections in violation of the law,” said Thomas E. Perez, Assistant Attorney General for the Justice Department’s Civil Rights Division. “The department is committed to enforcing the National Voter Registration Act so that these objectives are met.”
The lawsuit seeks a court order declaring that the defendants have failed to comply with the requirements of Section 8 of the NVRA, and enjoining Florida from taking any further steps in connection with this list purge program.“Congress enacted the NVRA against a historical backdrop in this country in which purge programs initiated close to elections prevented and deterred eligible citizens from casting ballots,” said Assistant Attorney General Perez. “The 90-day quiet period in the NVRA protects eligible voters from being dropped from the rolls right before an election. It appears that Florida has undertaken a new program for voter removal within this 90-day period that has critical imperfections, which lead to errors that harm and confuse eligible voters.”
More information about the NVRA and other federal voting laws is available on the Department of Justice website at www.justice.gov/crt/about/vot/. Complaints about discriminatory voting practices may be reported to the Voting Section of the Justice Department’s Civil Rights Division at 1-800-253-3931.
Related Materials:
Complaint (PDF)
ING Bank N.V. Agrees to Forfeit $619 Million for Illegal Transactions with Cuban and Iranian EntitiesRead the Press Release
WASHINGTON – ING Bank N.V., a financial institution headquartered in Amsterdam, has agreed to forfeit $619 million to the Justice Department and the New York County District Attorney’s Office for conspiring to violate the International Emergency Economic Powers Act (IEEPA) and the Trading with the Enemy Act (TWEA) and for violating New York state laws by illegally moving billions of dollars through the U.S. financial system on behalf of sanctioned Cuban and Iranian entities. The bank has also entered into a parallel settlement agreement with the Treasury Department’s Office of Foreign Assets Control (OFAC).
The announcement was made by Lisa Monaco, Assistant Attorney General for National Security; Ronald C. Machen, U.S. Attorney for the District of Columbia; Assistant Attorney General Lanny A. Breuer of the Criminal Division; District Attorney Cyrus R. Vance Jr., of the New York County District Attorney’s Office; James W. McJunkin, Assistant Director in Charge of the FBI Washington Field Office; Richard Weber, Chief, Internal Revenue Service (IRS) Criminal Investigation; and Adam J. Szubin, Director of the Office of Foreign Assets Control.
A criminal information was filed today in federal court in the District of Columbia charging ING Bank N.V. with one count of knowingly and willfully conspiring to violate the IEEPA and TWEA. ING Bank waived the federal indictment, agreed to the filing of the information and has accepted responsibility for its criminal conduct and that of its employees. ING Bank agreed to forfeit $619 million as part of the deferred prosecution agreements reached with the Justice Department and the New York County District Attorney’s Office.
According to court documents, starting in the early 1990s and continuing until 2007, ING Bank violated U.S. and New York state laws by moving more than $2 billion illegally through the U.S. financial system – via more than 20,000 transactions – on behalf of Cuban and Iranian entities subject to U.S. economic sanctions. ING Bank knowingly and willfully engaged in this criminal conduct, which caused unaffiliated U.S. financial institutions to process transactions that otherwise should have been rejected, blocked or stopped for investigation under regulations by OFAC relating to transactions involving sanctioned countries and parties.
“The fine announced today is the largest ever against a bank in connection with an investigation into U.S. sanctions violations and related offenses and underscores the national security implications of ING Bank’s criminal conduct. For more than a decade, ING Bank helped provide state sponsors of terror and other sanctioned entities with access to the U.S. financial system, allowing them to move billions of dollars through U.S. banks for illicit purchases and other activities,” said Assistant Attorney General Monaco. “I applaud the agents, analysts and prosecutors who for years pursued this case.”“Banks that try to skirt U.S. sanctions laws undermine the integrity of our financial system and threaten our national security,” said U.S. Attorney Machen. “When banks place their loyalty to sanctioned clients above their obligation to follow the law, we will hold them accountable. On more than 20,000 occasions, ING intentionally manipulated financial and trade transactions to remove references to Iran, Cuba and other sanctioned countries and entities. Today’s $619 million forfeiture – the largest ever – holds ING accountable for its wrongdoing.”
“For years, ING Bank blatantly violated U.S. laws governing transactions involving Cuba and Iran, and then used shell companies and other deceptive measures to cover up its criminal conduct,” said Assistant Attorney General Breuer. “Today’s resolution reflects a strong collaboration among federal and state law enforcement partners to hold ING accountable.”
“Investigations of financial institutions, businesses and individuals who violate U.S. sanctions by misusing banks in New York are vitally important to national security and the integrity of our banking system,” said New York County District Attorney Vance. “These cases give teeth to sanctions enforcement, send a strong message about the need for transparency in international banking and ultimately contribute to the fight against money laundering and terror financing. I thank our federal partners for their cooperation and assistance in pursuing this investigation.”
“Today, ING Bank was held accountable for their illegal actions involving the movement of more than $2 billion through the U.S. financial system on behalf of Cuban and Iranian entities subject to U.S. economic sanctions,” said FBI Assistant Director in Charge McJunkin. “Investigations of this type are complicated and demand significant time and dedication from agents, analysts and prosecutors. In this case, their steadfast tenacity brought this case through to today’s result, and we will continue to pursue these matters in diligent fashion.”
“In today’s environment of increasingly sophisticated financial markets, it’s critical that global institutions follow U.S. law, including sanctions against other countries,” said IRS Criminal Investigation Chief Weber. “The IRS is proud to share its world-renowned financial investigative expertise in this and other complex financial investigations. Creating new strategies and models of cooperation among our law enforcement partners to ensure international financial compliance is a top-priority of the IRS.”
“Our sanctions laws reflect core U.S. national security and foreign policy interests and OFAC polices them aggressively. Today's historic settlement should serve as a clear warning to anyone who would consider profiting by evading U.S. sanctions,” said OFAC Director Szubin. “We commend our federal and state colleagues for their work on this important investigation.”
The Scheme
According to court documents, ING Bank committed its criminal conduct by, among other things, processing payments for ING Bank’s Cuban banking operations through its branch in Curaçao on behalf of Cuban customers without reference to the payments’ origin, and by providing U.S. dollar trade finance services to sanctioned entities through misleading payment messages, shell companies and the misuse of ING Bank’s internal suspense account.
Furthermore, ING Bank eliminated payment data that would have revealed the involvement of sanctioned countries and entities, including Cuba and Iran; advised sanctioned clients on how to conceal their involvement in U.S. dollar transactions; fabricated ING Bank endorsement stamps for two Cuban banks to fraudulently process U.S. dollar travelers’ checks; and threatened to punish certain employees if they failed to take specified steps to remove references to sanctioned entities in payment messages.
According to court documents, this conduct occurred in various business units in ING Bank’s wholesale banking division and in locations around the world with the knowledge, approval and encouragement of senior corporate managers and legal and compliance departments. Over the years, several ING Bank employees raised concerns to management about the bank’s sanctions violations. However, no action was taken.
For decades, the United States has employed sanctions and embargoes on Iran and Cuba. Financial transactions conducted by wire on behalf of Iranian or Cuban financial institutions have been subject to these U.S. sanctions. The TWEA prohibits U.S. persons from engaging in financial transactions involving or benefiting Cuba or Cuban nationals and prohibits attempts to evade or avoid these restrictions. IEEPA makes it a crime to willfully attempt to commit, conspire to commit, or aid and abet in the commission of any violations of the Iranian Transaction Regulations, which prohibit the exportation of any services from the United States to Iran and any attempts to evade or avoid these restrictions. IEEPA and TWEA regulations are administered by OFAC.
The Investigation
The Justice Department’s investigation into ING Bank arose out of ongoing investigations into the illegal export of goods from the United States to sanctioned countries, including Iran. For instance, ING processed payments on behalf of one customer, Aviation Services International B.V. (ASI), a Dutch aviation company which was the subject of a U.S. Commerce Department-initiated criminal investigation, through the United States for trade services relating to the procurement by ASI of dual-use U.S. aviation parts for ASI’s Iranian clients. The ING Bank investigation also resulted in part from a criminal referral from OFAC, which was conducting its own probe of ING Bank.
ING Bank’s forfeiture of $309.5 million to the United States and $309.5 million to the New York County District Attorney’s Office will settle forfeiture claims by the Department of Justice and the state of New York. In light of the bank’s remedial actions to date and its willingness to acknowledge responsibility for its actions, the Department will recommend the dismissal of the information in 18 months, provided ING Bank fully cooperates with, and abides by, the terms of the deferred prosecution agreement.
OFAC’s settlement agreement with ING deems the bank’s obligations to pay a civil settlement amount of $619 million to be satisfied by its payment of an equal amount to the Justice Department and the state of New York. OFAC’s settlement agreement further requires the bank to conduct a review of its policies and procedures and their implementation, taking a risk-based sampling of U.S. dollar payments, to ensure that its OFAC compliance program is functioning effectively to detect, correct and report apparent sanctions violations to OFAC.
The case was prosecuted by Trial Attorney Jonathan C. Poling of the Justice Department’s National Security Division; Assistant U.S. Attorneys Ann H. Petalas and George P. Varghese, of the National Security Section of the U.S. Attorney’s Office for the District of Columbia; and Trial Attorney Matthew Klecka of the Criminal Division’s Asset Forfeiture and Money Laundering Section.
The case was investigated by the FBI’s Washington Field Office and the IRS-Criminal Investigation’s Washington Field Division, with assistance from the Treasury Department’s OFAC and the Commerce Department’s Bureau of Industry and Security.
The Department of Justice expressed its gratitude to Executive Assistant District Attorney, Chief of Investigation Division Adam Kaufmann; and Assistant District Attorneys Sally Pritchard and Garrett Lynch of the New York County District Attorney’s Office, Major Economic Crimes Bureau.
ING Bank N.V. Agrees to Forfeit $619 Million for Illegal Transactions with Cuban and Iranian EntitiesRead the Press Release
WASHINGTON – ING Bank N.V., a financial institution headquartered in Amsterdam, has agreed to forfeit $619 million to the Justice Department and the New York County District Attorney’s Office for conspiring to violate the International Emergency Economic Powers Act (IEEPA) and the Trading with the Enemy Act (TWEA) and for violating New York state laws by illegally moving billions of dollars through the U.S. financial system on behalf of sanctioned Cuban and Iranian entities. The bank has also entered into a parallel settlement agreement with the Treasury Department’s Office of Foreign Assets Control (OFAC).
The announcement was made by Lisa Monaco, Assistant Attorney General for National Security; Ronald C. Machen, U.S. Attorney for the District of Columbia; Assistant Attorney General Lanny A. Breuer of the Criminal Division; District Attorney Cyrus R. Vance Jr., of the New York County District Attorney’s Office; James W. McJunkin, Assistant Director in Charge of the FBI Washington Field Office; Richard Weber, Chief, Internal Revenue Service (IRS) Criminal Investigation; and Adam J. Szubin, Director of the Office of Foreign Assets Control.
A criminal information was filed today in federal court in the District of Columbia charging ING Bank N.V. with one count of knowingly and willfully conspiring to violate the IEEPA and TWEA. ING Bank waived the federal indictment, agreed to the filing of the information and has accepted responsibility for its criminal conduct and that of its employees. ING Bank agreed to forfeit $619 million as part of the deferred prosecution agreements reached with the Justice Department and the New York County District Attorney’s Office.
According to court documents, starting in the early 1990s and continuing until 2007, ING Bank violated U.S. and New York state laws by moving more than $2 billion illegally through the U.S. financial system – via more than 20,000 transactions – on behalf of Cuban and Iranian entities subject to U.S. economic sanctions. ING Bank knowingly and willfully engaged in this criminal conduct, which caused unaffiliated U.S. financial institutions to process transactions that otherwise should have been rejected, blocked or stopped for investigation under regulations by OFAC relating to transactions involving sanctioned countries and parties.
“The fine announced today is the largest ever against a bank in connection with an investigation into U.S. sanctions violations and related offenses and underscores the national security implications of ING Bank’s criminal conduct. For more than a decade, ING Bank helped provide state sponsors of terror and other sanctioned entities with access to the U.S. financial system, allowing them to move billions of dollars through U.S. banks for illicit purchases and other activities,” said Assistant Attorney General Monaco. “I applaud the agents, analysts and prosecutors who for years pursued this case.”“Banks that try to skirt U.S. sanctions laws undermine the integrity of our financial system and threaten our national security,” said U.S. Attorney Machen. “When banks place their loyalty to sanctioned clients above their obligation to follow the law, we will hold them accountable. On more than 20,000 occasions, ING intentionally manipulated financial and trade transactions to remove references to Iran, Cuba and other sanctioned countries and entities. Today’s $619 million forfeiture – the largest ever – holds ING accountable for its wrongdoing.”
“For years, ING Bank blatantly violated U.S. laws governing transactions involving Cuba and Iran, and then used shell companies and other deceptive measures to cover up its criminal conduct,” said Assistant Attorney General Breuer. “Today’s resolution reflects a strong collaboration among federal and state law enforcement partners to hold ING accountable.”
“Investigations of financial institutions, businesses and individuals who violate U.S. sanctions by misusing banks in New York are vitally important to national security and the integrity of our banking system,” said New York County District Attorney Vance. “These cases give teeth to sanctions enforcement, send a strong message about the need for transparency in international banking and ultimately contribute to the fight against money laundering and terror financing. I thank our federal partners for their cooperation and assistance in pursuing this investigation.”
“Today, ING Bank was held accountable for their illegal actions involving the movement of more than $2 billion through the U.S. financial system on behalf of Cuban and Iranian entities subject to U.S. economic sanctions,” said FBI Assistant Director in Charge McJunkin. “Investigations of this type are complicated and demand significant time and dedication from agents, analysts and prosecutors. In this case, their steadfast tenacity brought this case through to today’s result, and we will continue to pursue these matters in diligent fashion.”
“In today’s environment of increasingly sophisticated financial markets, it’s critical that global institutions follow U.S. law, including sanctions against other countries,” said IRS Criminal Investigation Chief Weber. “The IRS is proud to share its world-renowned financial investigative expertise in this and other complex financial investigations. Creating new strategies and models of cooperation among our law enforcement partners to ensure international financial compliance is a top-priority of the IRS.”
“Our sanctions laws reflect core U.S. national security and foreign policy interests and OFAC polices them aggressively. Today's historic settlement should serve as a clear warning to anyone who would consider profiting by evading U.S. sanctions,” said OFAC Director Szubin. “We commend our federal and state colleagues for their work on this important investigation.”
The Scheme
According to court documents, ING Bank committed its criminal conduct by, among other things, processing payments for ING Bank’s Cuban banking operations through its branch in Curaçao on behalf of Cuban customers without reference to the payments’ origin, and by providing U.S. dollar trade finance services to sanctioned entities through misleading payment messages, shell companies and the misuse of ING Bank’s internal suspense account.
Furthermore, ING Bank eliminated payment data that would have revealed the involvement of sanctioned countries and entities, including Cuba and Iran; advised sanctioned clients on how to conceal their involvement in U.S. dollar transactions; fabricated ING Bank endorsement stamps for two Cuban banks to fraudulently process U.S. dollar travelers’ checks; and threatened to punish certain employees if they failed to take specified steps to remove references to sanctioned entities in payment messages.
According to court documents, this conduct occurred in various business units in ING Bank’s wholesale banking division and in locations around the world with the knowledge, approval and encouragement of senior corporate managers and legal and compliance departments. Over the years, several ING Bank employees raised concerns to management about the bank’s sanctions violations. However, no action was taken.
For decades, the United States has employed sanctions and embargoes on Iran and Cuba. Financial transactions conducted by wire on behalf of Iranian or Cuban financial institutions have been subject to these U.S. sanctions. The TWEA prohibits U.S. persons from engaging in financial transactions involving or benefiting Cuba or Cuban nationals and prohibits attempts to evade or avoid these restrictions. IEEPA makes it a crime to willfully attempt to commit, conspire to commit, or aid and abet in the commission of any violations of the Iranian Transaction Regulations, which prohibit the exportation of any services from the United States to Iran and any attempts to evade or avoid these restrictions. IEEPA and TWEA regulations are administered by OFAC.
The Investigation
The Justice Department’s investigation into ING Bank arose out of ongoing investigations into the illegal export of goods from the United States to sanctioned countries, including Iran. For instance, ING processed payments on behalf of one customer, Aviation Services International B.V. (ASI), a Dutch aviation company which was the subject of a U.S. Commerce Department-initiated criminal investigation, through the United States for trade services relating to the procurement by ASI of dual-use U.S. aviation parts for ASI’s Iranian clients. The ING Bank investigation also resulted in part from a criminal referral from OFAC, which was conducting its own probe of ING Bank.
ING Bank’s forfeiture of $309.5 million to the United States and $309.5 million to the New York County District Attorney’s Office will settle forfeiture claims by the Department of Justice and the state of New York. In light of the bank’s remedial actions to date and its willingness to acknowledge responsibility for its actions, the Department will recommend the dismissal of the information in 18 months, provided ING Bank fully cooperates with, and abides by, the terms of the deferred prosecution agreement.
OFAC’s settlement agreement with ING deems the bank’s obligations to pay a civil settlement amount of $619 million to be satisfied by its payment of an equal amount to the Justice Department and the state of New York. OFAC’s settlement agreement further requires the bank to conduct a review of its policies and procedures and their implementation, taking a risk-based sampling of U.S. dollar payments, to ensure that its OFAC compliance program is functioning effectively to detect, correct and report apparent sanctions violations to OFAC.
The case was prosecuted by Trial Attorney Jonathan C. Poling of the Justice Department’s National Security Division; Assistant U.S. Attorneys Ann H. Petalas and George P. Varghese, of the National Security Section of the U.S. Attorney’s Office for the District of Columbia; and Trial Attorney Matthew Klecka of the Criminal Division’s Asset Forfeiture and Money Laundering Section.
The case was investigated by the FBI’s Washington Field Office and the IRS-Criminal Investigation’s Washington Field Division, with assistance from the Treasury Department’s OFAC and the Commerce Department’s Bureau of Industry and Security.
The Department of Justice expressed its gratitude to Executive Assistant District Attorney, Chief of Investigation Division Adam Kaufmann; and Assistant District Attorneys Sally Pritchard and Garrett Lynch of the New York County District Attorney’s Office, Major Economic Crimes Bureau.
Haji Bagcho Sentenced to Life in Prison on Drug<br /> Trafficking and Narco-Terrorism ChargesRead the Press Release
WASHINGTON – An Afghan national with ties to the Taliban was sentenced to life in prison today for conspiring to distribute heroin to the United States and for using drug proceeds to fund, arm and supply the Taliban, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and Administrator Michele M. Leonhart of the Drug Enforcement Administration (DEA).
Haji Bagcho, an Afghan national and large scale drug trafficker, was sentenced by U.S. District Judge Ellen S. Huvelle in the District of Columbia. In addition to his prison term, Bagcho was ordered to forfeit $254,203,032 in drug proceeds along with his property in Afghanistan.
“Haji Bagcho led a massive drug production and trafficking operation that supplied heroin in more than 20 countries, including the United States,” said Assistant Attorney General Breuer. “In 2006 alone, he conducted heroin transactions worth more than $250 million. Bagcho used the profits of his narcotics trafficking operation to support high-level Taliban commanders in Afghanistan. Today’s life sentence is an appropriate punishment for one of the most notorious heroin traffickers in the world.”
“This is DEA at its finest, working in close collaboration with our Afghan partners to end the long reign of this Afghan drug lord whose drug proceeds financed terror,” said DEA Administrator Leonhart. “One of the world’s most prolific drug traffickers who helped fund the Taliban will spend his remaining days behind bars in a U.S. prison due to the relentless efforts of DEA, our Afghan counterparts and our prosecuting partners.”
Bagcho was convicted by a jury on March 13, 2012, after a three week trial, of one count of conspiracy to distribute one kilogram or more of heroin, knowing and intending that it would be unlawfully imported into the United States; one count of distribution of one kilogram or more of heroin knowing and intending that it would be unlawfully imported into the United States; and one count of narco-terrorism. The trial, before Judge Huvelle, was only the second under the narco-terrorism statute since its enactment in 2006.
Bagcho was charged in a superseding indictment on Jan. 28, 2010, after his arrest and extradition to the United States from Afghanistan in May 2009.
The DEA, in cooperation with their Afghan counterparts, conducted the investigation, which revealed that Bagcho was one of the largest heroin traffickers in the world and manufactured the drug in clandestine laboratories along Afghanistan’s border region with Pakistan. According to information presented at trial, Bagcho, who had been operating his heroin business since at least the 1990s, sent the drug to more than 20 countries, including the United States. Proceeds from his heroin trafficking were then used to support high-level members of the Taliban in furtherance of their insurgency in Afghanistan.
With the help of cooperating witnesses, evidence showed that the DEA purchased heroin directly from Bagcho’s organization on two occasions, which Bagcho understood was destined for the United States. They also conducted several searches of residences belonging to Bagcho and his associates, recovering evidence consistent with drug trafficking. During one search, ledgers belonging to the defendant were found and were later introduced at trial. One ledger, cataloguing Bagcho’s activities during 2006 alone, reflected heroin transactions totaling more than 123,000 kilograms, worth more than $250 million. Based on heroin production statistics compiled by the United Nations Office of Drugs and Crime for 2006, the defendant’s trafficking accounted for approximately 20 percent of the total amount of heroin produced worldwide that year.
Over several years, evidence at trial established that Bagcho used a portion of his drug proceeds to provide cash, weapons and other supplies to the former Taliban governor of Nangarhar Province and two Taliban commanders responsible for insurgent activity in eastern Afghanistan, so that they could continue their “jihad” against western troops and the Afghan government.
The case was prosecuted by Trial Attorneys Matthew Stiglitz and Marlon Cobar of the Criminal Division’s Narcotic and Dangerous Drug Section. The case was investigated by the DEA Special Operations Division in the United States, with assistance from the DEA’s Foreign Deployed Advisory Support Team and Kabul Country Office in Afghanistan, the U.S. Embassy in Kabul, and in close cooperation with Afghan law enforcement. The Criminal Division’s Office of International Affairs and Asset Forfeiture and Money Laundering Section provided invaluable support.
Former Fort Deposit, Alabama, Police Officer Arrested for Stealing Money from Motorists and Obstructing JusticeRead the Press Release
Former Fort Deposit, Ala., Police Officer Carlos Tyson Bennett was arrested today on charges of stealing money from motorists on Interstate 65 in central Alabama and subsequently trying to conceal his criminal activity, announced the Justice Department.
Bennett, 36, of Greenville, Ala., was charged in an eight-count indictment returned by a federal grand jury in the Middle District of Alabama and unsealed today. He is charged with one count of conspiracy against rights, four counts of deprivation of rights under color of law, and three counts of obstruction of justice.
The indictment alleges that between April 2009 and July 1, 2009, Bennett conspired with a fellow officer to stop vehicles under the guise of legitimate law enforcement activity and to steal cash from drivers and passengers in violation of their constitutional right to be free from unreasonable seizures of property. The indictment further alleges four specific thefts in which Bennett, aided and abetted by the other officer, stole between $100 and $200 per victim. In addition, Bennett is charged with obstructing justice on three separate occasions. According to the indictment, Bennett also provided a fabricated story to a law enforcement official and sought to prevent the communication of information relating to these offenses to law enforcement officers.
If convicted, Bennett could face a maximum sentence of 10 years in prison and a fine of $250,000 on the conspiracy charge; one year in prison and a fine of $100,000 on each of the deprivation of rights charges; and 20 years in prison and a fine of $250,000 on each of the obstruction charges.
This case is being investigated by the Alabama Bureau of Investigation; the Butler County, Ala., Sheriff’s Office; and the Lowndes County, Ala., Sheriff’s Office. The case is being prosecuted by Assistant U.S. Attorney Monica Stump for the Middle District of Alabama and Trial Attorney Chiraag Bains from the Justice Department’s Civil Rights Division.
An indictment is merely an accusation, and the defendant is presumed innocent unless proven guilty.
11 June 2012
Minnesota Business Owner Pleads Guilty to Federal Excise Tax Crimes and Tax FraudRead the Press Release
Jason W. Leas, a resident of Crookston, Minn., and co-founder of Best Used Trucks of Minnesota Inc., pleaded guilty today to one count of failing to pay federal excise taxes, one count of failing to file a federal excise tax return and one count of filing a false individual federal income tax return for tax year 2007, the Justice Department and Internal Revenue Service (IRS) announced. Leas was charged by information filed on May 29, 2012. He entered his plea of guilty before U.S. District Court Senior Judge Richard H. Kyle in Duluth, Minn.
As alleged in the plea agreement, from 2004 through 2007, Best Used Trucks, which is located in Crookston, was a farm truck dealership that bought and sold used trucks, new trailers, new grain boxes and other heavy farm equipment, primarily to farmers throughout the Red River Valley of Minnesota and North Dakota. Beginning in 2004 and continuing through 2007, Leas and Best Used Trucks purchased and imported new end dump trailers, grain boxes, and gravel boxes from a Canadian manufacturer, which subjected the company to federal excise taxes upon selling them afterward. Leas admitted that he knew of his responsibility for paying the 12 percent federal excise tax on the sale of these trailers and related equipment, and his responsibility to file federal excise tax returns. Leas pleaded guilty to failing to file an IRS Form 720, Quarterly Federal Excise Tax Return for the third quarter of 2005, and failing to pay federal excise taxes of $9,636 for the first quarter of 2006. Leas admitted that he failed to pay over at least $80,088 in total federal excise taxes for ten quarters from 2004 through 2006.
Leas also pleaded guilty to willfully filing a false individual federal income tax return for the tax year 2007, which failed to report at least $120,151 in additional income with an additional tax due and owing of at least $36,872. The plea agreement alleged that from 2004 to 2007 Leas controlled two checking accounts in the name of Best Used Trucks of Minnesota. Leas used one of these accounts to both divert corporate receipts from Best Used Trucks, and to buy and sell equipment that was not part of Best Used Trucks’s ordinary business sales. Leas failed to report this income on his personal tax returns for four years, resulting in a total tax loss of at least $73,361.
“To build faith in our nation’s tax system, honest taxpayers need to be reassured that everyone is paying their fair share of taxes, whether it is in the form of income taxes or excise taxes,” said Kelly R. Jackson, Special Agent in Charge of the IRS Criminal Investigation Division, St. Paul Field Office. “The IRS-Criminal Investigation Division, together with the Department of Justice, will continue to investigate and prosecute those who violate our tax system.”
Leas is facing a potential maximum penalty of five years in prison for all three charges; three years for willfully filing a false income tax return, and one year each for the failure to file and failure to pay charges.
Kathryn Keneally, Assistant Attorney General for the Justice Department’s Tax Division, thanked Special Agents and Revenue Agents of IRS – Criminal Investigation, who investigated the case, and Tax Division Trial Attorneys Thomas W. Flynn and Dennis R. Kihm, who prosecuted the case.
Miami-Area Resident Sentenced to 46 Months in Prison for Participating in Medicare Fraud SchemeRead the Press Release
WASHINGTON – A Miami-area resident who helped pay illegal kickbacks and transported ineligible patients to a fraudulent mental health company was sentenced today to 46 months in prison for her role in a scheme to falsely bill Medicare, announced the Department of Justice, the FBI and the Department of Health and Human Services (HHS).
Leyanes Placeres, 32, was sentenced by U.S. District Judge Patricia A. Seitz in the Southern District of Florida. In addition to her prison term, Placeres was sentenced to three years of supervised release and was ordered to pay $2.7 million in restitution. Placeres pleaded guilty in March 2012 to one count of conspiracy to commit health care fraud and one count of conspiracy to pay and receive illegal kickbacks.
According to court documents, for more than one year, Placeres transported patients to American Therapeutic Corporation (ATC), a corporation that purported to operate partial hospitalization programs (PHPs) in seven different locations throughout south Florida and Orlando. A PHP is a form of intensive treatment for severe mental illness. The patients Placeres transported did not qualify for the services purportedly rendered by ATC. ATC then billed Medicare for false, fake and fictitious services for the patients transported by Placeres and others.
According to court documents, Placeres also facilitated on behalf of ATC the payment of hundreds of thousands of dollars in illegal kickbacks to owners and operators of assisted living facilities and halfway houses in order to obtain patients for ATC.
According to court filings, ATC’s owners and operators paid kickbacks to owners and operators of assisted living facilities and halfway houses and to patient brokers in exchange for delivering ineligible patients to ATC. Throughout the course of the fraud conspiracy, millions of dollars in kickbacks were paid in exchange for Medicare beneficiaries who did not qualify for PHP services. The ineligible beneficiaries attended treatment programs that were not legitimate so that ATC could bill Medicare for nearly $200 million in medically unnecessary services.
According to the plea agreement, Placeres’s participation in the fraud resulted in approximately $6.5 million in fraudulent billing to the Medicare program.
ATC, its management company, Medlink Professional Management Group Inc., and various owners, managers, doctors, therapists, patient brokers and marketers of ATC, were charged with various health care fraud, kickback, money laundering and other offenses in two indictments unsealed on Feb. 15, 2011. ATC, Medlink and more than 20 of the individual defendants charged in these cases have pleaded guilty or have been convicted at trial.
Today’s sentence was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; 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.The criminal case is being prosecuted by Trial Attorneys Jennifer L. Saulino, Robert A. Zink and James V. Hayes of the Fraud Section in the Justice Department’s Criminal Division. A related civil action is being handled by Vanessa I. Reed and Carolyn B. Tapie of the Civil Division and Assistant U.S. Attorney Ted L. Radway of the Southern District of Florida. The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.
Since its inception in March 2007, the Medicare Fraud Strike Force operations in nine locations have charged more than 1,330 defendants who 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.
Justice Department to Monitor Elections in South CarolinaRead the Press Release
WASHINGTON – The Justice Department announced today that it will monitor primary elections on June 12, 2012, in Fairfield and Williamsburg Counties in South Carolina 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 Williamsburg County based on the attorney general’s certification. The observers will watch and record activities during voting hours at polling locations in these counties, and 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 Fairfield County. 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.
8 June 2012
Statement of Attorney General Eric Holder on the Assignment of U.S. Attorneys to Lead Investigations of Possible Unauthorized Disclosures of Classified InformationRead the Press Release
Attorney General Eric Holder issued the following statement today on the assignment of U.S. Attorneys to lead investigations of possible unauthorized disclosures of classified information:
“Today, I assigned U.S. Attorney for the District of Columbia Ronald C. Machen Jr. and U.S. Attorney for the District of Maryland Rod J. Rosenstein to lead criminal investigations into recent instances of possible unauthorized disclosures of classified information.
“These two highly-respected and experienced prosecutors will be directing separate investigations currently being conducted by the FBI. I have every confidence in their abilities to doggedly follow the facts and the evidence in the pursuit of justice wherever it leads.
“In carrying out their assignments, U.S. Attorneys Machen and Rosenstein are fully authorized to prosecute criminal violations discovered as a result of their investigations and matters related to those violations, consult with members of the Intelligence Community and follow all appropriate investigative leads within the Executive and Legislative branches of government.
“I have notified members of Congress and plan to provide more information, as appropriate, to members of the Judiciary and Intelligence Committees.
“The unauthorized disclosure of classified information can compromise the security of this country and all Americans, and it will not be tolerated. The Justice Department takes seriously cases in which government employees and contractors entrusted with classified information are suspected of willfully disclosing such classified information to those not entitled to it, and we will do so in these cases as well.”
Justice Department Settles Lawsuit with United Airlines<br /> <br /> to Enforce Employment Rights of Air National GuardsmanRead the Press Release
The Justice Department announced today that it has reached a settlement with United Airlines Inc., resolving TenEyck LaTourrette’s allegation that the airline violated the Uniformed Services Employment and Reemployment Rights Act (USERRA) by under compensating his retirement plan during his military service. LaTourrette is currently a major serving in the Colorado Air National Guard and a first officer for United Airlines.
LaTourrette alleged that United Airlines based its pension contributions on a minimum monthly schedule, rather than using LaTourrette’s actual schedule during the 12 months preceding his military obligations, as required by USERRA. Among the protections provided by USERRA are provisions related to the pension benefits a service member receives from his civilian employer. As a general matter, Section 4318 under USERRA provides that a service member’s pension benefits will continue to accrue while he is on active duty. To that end, USERRA requires an employer to make contributions to the pension fund of a deployed reservist “in the same manner and to the same extent the allocation occurs for other employees during the period of service.”
“This nation relies on the members of our National Guard and reserve, and this settlement exemplifies our efforts to ensure that they can serve their nation without penalty from their employers,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division.
Under the terms of the settlement, United Airlines will fully compensate LaTourrette for all deficient pension payments, plus any associated earnings, in full satisfaction of any and all claims. The settlement, if approved by the court, would resolve all of the allegations that United Airlines violated USERRA with respect to LaTourrette’s pension claim.
The lawsuit was initially filed after the Veterans’ Employment and Training Service (VETS) of the Department of Labor referred LaTourrette’s complaint to the Justice Department upon completion of its investigation and failed settlement efforts. The Department of Labor and Justice Department work cooperatively together to protect the jobs and benefits of National Guard and Reserve service members upon their return to civilian life. More information about USERRA is available at www.dol.gov/vets/programs/userra/main.htm.
Related Materials:
LaTourrette v. United Airlines - Consent Decree
Former Alabama Resident Sentenced to 53 Months in Prison<br /> <br /> for Tax EvasionRead the Press Release
William Paul, a self-described “bishop,” was sentenced yesterday to 53 months in federal prison for tax evasion, the Justice Department and Internal Revenue Service (IRS) announced. Paul was convicted on Dec. 1, 2011, after a four-day jury trial, of four counts of evasion of his wife’s 2004 through 2007 individual income taxes and of one count of failing to file a tax return. On Nov. 16, 2011, his wife, Donna Paul, a board-certified physician, pleaded guilty to one count of tax evasion and one count of filing a false individual income tax return. She was also sentenced yesterday to three years of probation, including six months of home confinement and 200 hours of community service. U.S. District Judge Mark E. Fuller also ordered the Pauls to pay $85,396 in restitution to the IRS. Both William Paul and Donna Paul are former residents of Montgomery, Ala.
According to evidence introduced at trial and documents filed with Donna Paul’s plea agreement, Donna and William Paul owned and operated a medical practice in Montgomery, which was registered as a non-profit organization. The Pauls attempted to evade the assessment and payment of Donna Paul’s income by falsely characterizing her income as loans, by making false statements to IRS employees, and by deliberately causing the non-profit organizations to not file tax returns.
Evidence at trial further showed that Donna Paul did not timely file federal individual income tax returns for the years 2004 through 2007. On April 5, 2011, the day special agents from IRS-Criminal Investigation arrested her, Donna Paul filed four false individual income tax returns for tax years 2004 through 2007. She testified at trial that none of these tax returns included money she earned from her medical practice.
Based on testimony at trial, William Paul had not filed a federal income tax return since the 1980s. Donna Paul also testified that William Paul ran the business side of the medical practice, initially called “Rheumatology Specialists of Central Alabama,” then “Rheumatology Specialists Arthritis and Osteoporosis Center,” then “Children and Adult Arthritis and Osteoporosis Center.”
Kathryn Keneally, Assistant Attorney General of the Justice Department’s Tax Division, thanked special agents of IRS-Criminal Investigation, who investigated the case, Tax Division Trial Attorneys Justin Gelfand and Michael Boteler, who prosecuted the case, and George L. Beck Jr., U.S. Attorney for the Middle District of Alabama, and his entire office for their assistance in the prosecution.
American Samoa Department of Education Official Sentenced to 35 Months in Prison for Witness Tampering and Obstruction of JusticeRead the Press Release
WASHINGTON – Paul Solofa, the former chief financial officer for the Department of Education for the government of the U.S. Territory of American Samoa was sentenced today to 35 months in prison following his conviction earlier this year for his efforts to obstruct a federal grand jury and law enforcement investigation into a bribery scheme, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.
The sentence was imposed by U.S. District Court Judge Reggie B. Walton in the District of Columbia. After a four-day trial in January 2012, a federal jury in the District of Columbia found Solofa, 50, guilty of one count of witness tampering and one count of obstruction of justice.
According to evidence presented at trial, in approximately early 2008, federal authorities began conducting an investigation into allegations of cash bribes and kickbacks paid by vendors to officials of the American Samoa Government in connection with the government’s purchase of school bus parts and services.
According to the trial evidence, Solofa met on April 3, 2009, with a school bus parts vendor who told Solofa that the FBI was interested in interviewing the vendor regarding the bus parts investigation. Solofa, in a recorded meeting, allegedly told the vendor that, “They cannot do anything with cash. Nothing. They cannot do anything with cash. They cannot track down you on cash. Because even if you say you gave me cash I'll tell them ‘no.’ They cannot take your word on cash. Because that’s hearsay. So you know, but the best thing for you to do is ‘nope, I never give them any cash, I never’ – because that will open up the whole operation . . . You get what I am saying. All you do is just tell them ‘no, yes, no, yes,’ period.”
In addition, according to the evidence presented at trial, Solofa met on April 14, 2009, with the same bus parts vendor, who told Solofa that a grand jury subpoena requiring production of specific documents and records, some of which related to Solofa and to the bus parts kickback scheme, would be issued shortly. After discussing how to respond, Solofa told the vendor that, as for documents he did not want to produce, “[t]he only way to do it with those copies is burn it. That way, they won’t see it, and you won’t worry that they might see it, you know. . . . Just burn it, and nobody has a copy.”
The head of the School Bus Division for the American Samoa Department of Education, Gustav Nauer, 47, was also convicted for his role in the bribery scheme. On June 4, 2012, Nauer was sentenced to 25 months in prison.
This case was prosecuted by Principal Deputy Chief Raymond N. Hulser and Trial Attorney Tim Kelly of the Public Integrity Section in the Justice Department’s Criminal Division. The case was investigated by the FBI; the Office of the Inspector General for the U.S. Department of Education; and the Office of the Inspector General for the U.S. Department of the Interior.
7 June 2012
Two Northern California Real Estate Investors Agree to Plead Guilty to Bid Rigging at Public Foreclosure AuctionsRead the Press Release
Two Northern California real estate investors have agreed to plead guilty for their roles in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in Northern California, the Department of Justice announced.
Felony charges were filed today in the U.S. District Court for the Northern District of California in Oakland, Calif., against Douglas Ditmer of San Ramon, Calif. and Keith Slipper of Oakland.
To date, as a result of the department’s ongoing antitrust investigation into bid rigging and fraud at public real estate foreclosure auctions in Northern California, 24 individuals, including Ditmer and Slipper, have agreed to plead or have pleaded guilty.
“By agreeing not to compete with one another in the bidding process, these investors illegally profited and undermined the integrity of the real estate market,” said Scott D. Hammond, Deputy Assistant Attorney General of the Antitrust Division’s criminal enforcement program. “The conspiracy eliminated competition and prevented lenders and distressed homeowners from getting fair market prices for their property.”According to court documents, Ditmer and Slipper participated in conspiracies to rig bids and commit mail fraud by agreeing to stop bidding or to refrain from bidding for properties at public foreclosure auctions in Contra Costa and Alameda counties, Calif., negotiating payoffs with other conspirators not to compete, purchasing selected properties at public auctions at suppressed prices, and participating in second, private auctions open only to members of the conspiracy, where the property was awarded to the conspirator who submitted the highest bid.
The department said Ditmer conspired with others to rig bids and commit mail fraud at public real estate foreclosure auctions in Contra Costa County beginning as early as July 2008 and continuing until about January 2011, and in Alameda County beginning as early as June 2007 and continuing until about January 2011. Slipper conspired with others to rig bids and commit mail fraud at public foreclosure auctions in Contra Costa County beginning as early as June 2008 and continuing until about December 2010, and in Alameda County beginning as early as March 2009 and continuing until about May 2009
“The FBI continues to work closely with the Antitrust Division to target those individuals who engage in fraudulent bid rigging and other anticompetitive activities at foreclosure auctions,” said FBI Special Agent in Charge Stephanie Douglas of the San Francisco Field Office. “We are committed to bringing to justice those who engage in illegal and unfair practices that adversely impact legitimate home buyers and sellers.”
The department said that the primary purpose of the conspiracies was to suppress and restrain competition in order to obtain selected real estate offered at Contra Costa and Alameda county public foreclosure auctions at non-competitive prices. When real estate properties are sold at these auctions, the proceeds are used to pay off the mortgage and other debt attached to the property, with remaining proceeds, if any, paid to the homeowner. According to court documents, these conspirators paid and received money that otherwise would have gone to pay off the mortgage and other holders of debt secured by the properties, and, in some cases, the defaulting homeowner.
Each violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. The maximum fine for the Sherman Act charges 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 $1 million. Each count of conspiracy to commit mail fraud carries a maximum sentence of 30 years in prison and a $1 million fine. The government can also seek to forfeit the proceeds earned from participating in the conspiracy to commit mail fraud.
The charges today are the latest cases filed by the department in its ongoing investigation into bid rigging and fraud at public real estate foreclosure auctions in San Francisco, San Mateo, Contra Costa and Alameda counties, Calif.
The ongoing investigation into fraud and bid rigging at certain real estate foreclosure auctions in Northern California is being conducted by the Antitrust Division’s San Francisco Office and the FBI’s San Francisco office. Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Antitrust Division’s San Francisco Office at 415-436-6660, visit www.justice.gov/atr/contact/newcase.htm or call the FBI tip line at 415-553-7400.
Today’s charges are part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets and recover proceeds for victims of financial crimes. For more information on the task force, visit www.StopFraud.gov.**The fraud charge(s) referenced in this press release were subsequently dismissed on the government’s motion.**
Texas-based Medical Device Manufacturer Pays U.S. $34 Million<br /> to Settle False Claims Act AllegationsRead the Press Release
Orthofix Inc., a Texas-based manufacturer of medical devices, has agreed to pay the United States $34,234,263 to settle allegations under the civil False Claims Act relating to the company’s sale of bone growth stimulator devices, the Justice Department announced today. The company has also agreed to plead guilty to a felony of obstruction of a federal audit, and to pay a $7,765,737 criminal fine.
The civil settlement announced today resolves a whistleblower lawsuit that was filed by Jeffrey Bierman. That lawsuit alleged that the McKinney, Texas-based company improperly waived patient co-payments, thus misstating their true cost and resulting in overpayments by federal programs; paid kickbacks to physicians and their staffs in the form of “fitter fees,” referral fees and other comparable fees, to induce the use of Orthofix products; caused the submission of falsified certificates of medical necessity; and failed to advise patients of their right to rent rather than purchase Orthofix products.
“The Justice Department has longstanding concerns about kickbacks and the routine waiver of co-payments, because they can impose significant costs on federal health programs that are not medically justified,” said Stuart F. Delery, Acting Assistant Attorney General for the Civil Division. “The resolution of this matter yielded a substantial recovery for taxpayers, and should deter other companies from engaging in such conduct in the future.”
The company’s criminal guilty plea involved its failure to disclose information concerning its practices regarding certificates of medical necessity to a Medicare contractor during a June 2008 audit. Five individual Orthofix employees had previously pleaded guilty to criminal charges in connection with this matter.
“This resolution, and the entire investigation, which has involved prosecution of a number of individuals, including a high level executive, demonstrates the government's unflagging commitment to prosecuting corporate and individual medical device fraud, and particularly to protecting Medicare from those who prey on it by fraudulent means," said Carmen M. Ortiz, U.S. Attorney for the District of Massachusetts.
As part of the settlement, Orthofix also agreed to enter into a corporate integrity agreement with the Office of Inspector General of the Department of Health and Human Services, which provides for procedures and reviews to be put in place to avoid and promptly detect conduct similar to that which gave rise to this matter.
“Criminals intent on placing profits from federal health programs over and above compliance should expect to tangle with authorities,” said Susan J. Waddell, Special Agent in Charge of the Office of Inspector General of the U.S. Department of Health and Human Services New England region. “Orthofix blatantly ordered sales staff to disregard Medicare rules, and conveniently looked away when medical records were altered and even forged.”
Under the False Claims Act, private citizens can bring suit on behalf of the government and share in any amounts that are obtained through that legal action. Mr. Bierman will receive $9,243,251 as his share of the civil settlement amount.
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 $7.5 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 $11.1 billion.
The case was handled by the Justice Department’s Civil Division, the U.S. Attorney’s Office for the District of Massachusetts and the Office of Inspector General of the Department of Health and Human Services. The claims settled by this agreement are allegations only, and there has been no determination of liability.
Justice Department Seeks to Intervene in Lawsuit Alleging Sex Discrimination Against Summit County, Ohio, and Summit County SheriffRead the Press Release
The Justice Department announced today that it has moved to intervene in Hawkins, et al. v. Summit County, Ohio, et al., a private lawsuit alleging sex discrimination by Summit County, Ohio, and the Summit County Sheriff, as well as other defendants. The United States’ complaint in intervention alleges that the county and sheriff discriminated against twenty female deputy sheriffs who filed charges of discrimination with the Equal Employment Opportunity Commission (EEOC) and other similarly-situated female deputies because of their sex and engaged in a pattern or practice of sex discrimination in violation of Title VII of the Civil Rights Act of 1964.
The complaint alleges that in January 2012, the county and sheriff implemented a sex-segregated job assignment system at the Summit County Jail in Akron, Ohio. Prior to January 2012, female deputies at the jail were allowed to hold job assignments performing intake and security-related functions regardless of the gender of the inmates being supervised. Under the new job assignment system, female deputies are limited to performing intake and security-related functions involving female inmate supervision only. As a result of the implementation of this new job assignment system, many female deputies lost their previous job assignments, previous shifts, were unable to pick their preferred job assignments or were unable to pick their preferred shifts. The complaint in intervention seeks a court order that would require the county and sheriff to utilize a lawful job assignment system and to develop and institute policies that would prevent its employees from being subjected to discrimination based upon sex. The relief sought would also include monetary relief for the 20 charging parties and other similarly situated female deputies as compensation for damages sustained as a result of the alleged discrimination.
“The Department of Justice will not tolerate discrimination in employment on the basis of sex,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “Through our partnership with the EEOC, the department continues its commitment to vigorously enforcing the right of employees to be free from sex discrimination in the work place.”
Twenty female deputies filed charges of sex discrimination with the Cleveland District Office of the EEOC. After investigating these charges, finding reasonable cause to believe that the charging parties were discriminated against because of their sex, and unsuccessfully attempting to conciliate the matter, the EEOC referred the charges to the Department of Justice. This lawsuit is brought by the Department of Justice as a result of a project designed to ensure vigorous enforcement of Title VII against state and local governmental employers by enhancing cooperation between the EEOC and the Civil Rights Division.
“The work of the commission is made more effective and efficient with interagency coordination,” said Jacqueline A. Berrien, chair of the Equal Employment Opportunity Commission. “Our ongoing project with the Justice Department helps to ensure that employees receive the full protection of the laws prohibiting workplace discrimination.”
“We are committed to working for equal opportunity for all,” said Steven M. Dettelbach, U.S. Attorney for the Northern District of Ohio. “Female deputies are capable of performing jobs they’re restricted from under Summit County’s current system, and this lawsuit is designed to end that discriminatory practice.”
Title VII prohibits discrimination in employment on the basis of sex, race, color, national origin or religion, and prohibits retaliation against an employee who opposes an unlawful employment practice, or because the employee has made a charge or participated in an investigation, proceeding or hearing under the Act. More information about Title VII and other federal employment laws is available at www.usdoj.gov/crt/emp/index.html.
The EEOC enforces federal laws prohibiting employment discrimination. Further information about the EEOC is available on its website at www.eeoc.gov.
Related Materials:
Summit County, Ohio, et al. - Memorandum in Support
Summit County, Ohio, et al. - Motion to InterveneJustice Department Files Complaint Against Forsyth County, North Carolina, Sheriff for Violating the Employment Rights of Army National Guard SoldierRead the Press Release
WASHINGTON – The Justice Department announced today the filing of a complaint in U.S. District Court for the Middle District of North Carolina against Forsyth County, N.C., and the county sheriff, William T. Schatzman, for violating the employment rights of North Carolina Army National Guard soldier Michael Russell under the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA).
The department’s complaint alleges that Sheriff Schatzman and Forsyth County violated USERRA by terminating Russell’s employment with the Forsyth County Sheriff’s Office (FCSO) without cause and without notice within one year after his reemployment following his return from active military duty. Russell, an Iraq War veteran who is currently serving with the Army National Guard in Afghanistan, had worked as a deputy sheriff and sergeant deputy sheriff with FCSO since 1989. In February 2010, Russell completed a one-year deployment to Iraq with the North Carolina Army National Guard and returned to his position with Forsyth County as a sergeant deputy sheriff. On Nov. 29, 2010, less than one year following Russell’s reinstatement to his position, Sheriff Schatzman and Forsyth County discharged Russell from his employment without cause.
According to the Justice Department’s complaint, Russell’s employment was terminated because of Sheriff Schatzman’s belief that Russell had supported the election campaign of another candidate for Forsyth County sheriff, Dave Griffith. Russell did not support Griffith’s campaign for Forsyth County Sheriff. With the objective of winning a motorcycle rather than the purpose of supporting Griffith’s campaign, Russell purchased raffle tickets, at total cost of $100, for a motorcycle raffle whose proceeds went to Griffith’s campaign. Sheriff Schatzman and Forsyth County failed to provide notice to Russell that purchase of tickets for a raffle sponsored by a campaign would constitute cause for discharge.
“The men and women who wear our nation’s uniform need to know that they will be protected from unjust terminations when they return from significant periods of military service,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Civil Rights Division is committed to aggressive enforcement of USERRA to protect our brave service members, whose rights do not end with their first day back on the job.”
Russell initially filed a complaint with the Labor Department’s Veterans’ Employment and Training Service, which investigated the matter, determined that the complaint had merit and referred the matter to the Justice Department. The Justice Department’s Civil Rights Division subsequently decided to represent Russell in this matter and filed this lawsuit on his behalf.
USERRA prohibits employers from discriminating against service members with respect to employment opportunities based on their past, current or future uniformed service obligations. USERRA also provides service members, such as Russell, special protection from discharge from civilian employment after returning from uniformed service, such as a deployment. Under USERRA, if an individual served over 180 days before returning to civilian employment, then he or she may not be discharged from the civilian employment position within one year, except for cause. In order to discharge an individual for conduct during this protected period, an employer must show that it was reasonable to discharge the employee for that conduct, and that the employee had notice that the conduct would constitute cause for discharge.
Among other things, the suit seeks compensation for Russell’s lost wages and benefits and reinstatement of Russell’s employment with FCSO.
This case is being handled by the Employment Litigation Section of the Justice Department’s Civil Rights Division.
Additional information about USERRA can be found on the Justice Department websites www.usdoj.gov/crt/emp and www.servicemembers.gov, as well as the Labor Department website www.dol.gov/vets/programs/userra/main.htm.
Related Materials:
Complaint (PDF)
Four More Defendants Plead Guilty in Indiana to Participating in International Child Pornography Distribution RingRead the Press Release
WASHINGTON – Four men have pleaded guilty in the Southern District of Indiana for their participation in an international child pornography distribution ring, Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and First Assistant U.S. Attorney Josh Minkler of the Southern District of Indiana announced today.
The guilty pleas were entered yesterday in U.S. District Court in Indianapolis and are the result of “Operation Bulldog,” a multi-jurisdictional effort to dismantle and prosecute the members of the international child pornography distribution ring. A total of nine defendants have been prosecuted in the Southern District of Indiana for their participation in the group.
“This operation uncovered a dangerous and depraved group of criminals who were devoted to trading sexually explicit images of children under the age of five,” said Assistant Attorney General Breuer. “As a result of our investigation and prosecution, seven members of the group – including three of the four men who pleaded guilty yesterday – are now serving lengthy prison terms, and two others are awaiting sentencing. Child pornography rings pose a threat to children around the world, and we will continue to aggressively pursue those who participate in such groups.”“I applaud the work of the investigators and prosecutors on this case, who took a search warrant in Bloomington and successfully brought to justice defendants from all over the world,” said First Assistant U.S. Attorney Minkler. “More importantly, as a result of this 18 month operation, more than two dozen children here in Indiana and across the globe have been rescued from their tormentors.”
Shaun Kuykendall, 32, of South Carolina; Richard Szulborski, 21, of Pennsylvania; Javahn Algere, 23, of Louisiana; and Jeremy Labrec, 22, of Texas, pleaded guilty yesterday before U.S. Judge Jane Magnus-Stinson. In addition, Kuykendall was sentenced to 25 years in prison, Szulborski was sentenced to 15 years in prison and Algere was sentenced to 12 years in prison. Labrec will be sentenced at a later date.
On Nov. 17, 2010, the FBI and state and local law enforcement partners executed a federal search warrant at David Bostic’s residence in Bloomington, Ind. Investigators determined that Bostic, 26, possessed hundreds of images and videos depicting children engaged in sexually explicit acts, and that he had actively distributed this child pornography to other individuals through various means. According to court documents, investigators also discovered that Bostic had produced child pornography on multiple occasions over the previous two years, creating sexually explicit images of four minor females, all of whom were between the ages of two months and three years, as well as a minor male who was four years old. Evidence gathered at the scene demonstrated that Bostic had distributed the images of child pornography he produced to multiple individuals.
Bostic was arrested Nov. 17, 2010, and pleaded guilty to multiple charges in June 2011. He was sentenced on Nov. 22, 2011, to 315 years in prison, one of the longest sentences in Southern District of Indiana.
Following Bostic’s arrest, a review of the evidence determined that Bostic was a member of a large group of individuals trading sexually explicit images of children, primarily focused on child pornography depicting children under five years of age.
According to court documents, some of the images produced by Bostic depicting Indiana children were distributed among the members of the group. Within days of Bostic’s arrest, Operation Bulldog was launched to identify and apprehend the members of the group. Since then, more than 20 members of the group have been apprehended in the United States and abroad. WASHINGTON – Four men have pleaded guilty in the Southern District of Indiana for their participation in an international child pornography distribution ring, Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and First Assistant U.S. Attorney Josh Minkler of the Southern District of Indiana announced today.
The guilty pleas were entered yesterday in U.S. District Court in Indianapolis and are the result of “Operation Bulldog,” a multi-jurisdictional effort to dismantle and prosecute the members of the international child pornography distribution ring. A total of nine defendants have been prosecuted in the Southern District of Indiana for their participation in the group.
“This operation uncovered a dangerous and depraved group of criminals who were devoted to trading sexually explicit images of children under the age of five,” said Assistant Attorney General Breuer. “As a result of our investigation and prosecution, seven members of the group – including three of the four men who pleaded guilty yesterday – are now serving lengthy prison terms, and two others are awaiting sentencing. Child pornography rings pose a threat to children around the world, and we will continue to aggressively pursue those who participate in such groups.”“I applaud the work of the investigators and prosecutors on this case, who took a search warrant in Bloomington and successfully brought to justice defendants from all over the world,” said First Assistant U.S. Attorney Minkler. “More importantly, as a result of this 18 month operation, more than two dozen children here in Indiana and across the globe have been rescued from their tormentors.”
Shaun Kuykendall, 32, of South Carolina; Richard Szulborski, 21, of Pennsylvania; Javahn Algere, 23, of Louisiana; and Jeremy Labrec, 22, of Texas, pleaded guilty yesterday before U.S. Judge Jane Magnus-Stinson. In addition, Kuykendall was sentenced to 25 years in prison, Szulborski was sentenced to 15 years in prison and Algere was sentenced to 12 years in prison. Labrec will be sentenced at a later date.
On Nov. 17, 2010, the FBI and state and local law enforcement partners executed a federal search warrant at David Bostic’s residence in Bloomington, Ind. Investigators determined that Bostic, 26, possessed hundreds of images and videos depicting children engaged in sexually explicit acts, and that he had actively distributed this child pornography to other individuals through various means. According to court documents, investigators also discovered that Bostic had produced child pornography on multiple occasions over the previous two years, creating sexually explicit images of four minor females, all of whom were between the ages of two months and three years, as well as a minor male who was four years old. Evidence gathered at the scene demonstrated that Bostic had distributed the images of child pornography he produced to multiple individuals.
Bostic was arrested Nov. 17, 2010, and pleaded guilty to multiple charges in June 2011. He was sentenced on Nov. 22, 2011, to 315 years in prison, one of the longest sentences in Southern District of Indiana.
Following Bostic’s arrest, a review of the evidence determined that Bostic was a member of a large group of individuals trading sexually explicit images of children, primarily focused on child pornography depicting children under five years of age.
According to court documents, some of the images produced by Bostic depicting Indiana children were distributed among the members of the group. Within days of Bostic’s arrest, Operation Bulldog was launched to identify and apprehend the members of the group. Since then, more than 20 members of the group have been apprehended in the United States and abroad.
In addition to Bostic, Kuykendall, Szulborski, Algere and Labrec, the following defendants have pleaded guilty in the Southern District of Indiana: Danny L. Druck, 58, of Kentucky; Chris Reid, 37, of Michigan; Todd King, 41, of California. Reid was sentenced to 35 years in prison and Druck and King were each sentenced to eight years in prison. A plea agreement for another charged defendant, Nicholas King, 28, of Washington, has been filed in the Southern District of Indiana.
Additional defendants were identified in the course of this investigation and have been referred to federal prosecutors and law enforcement agencies in other districts across the country and around the world, including Sweden, Serbia, the Netherlands and the United Kingdom.
A total of more than two dozen children have been rescued as a result of Operation Bulldog. Efforts to identify additional defendants and victims in the United States and abroad are active and ongoing.
This case was investigated by the FBI, with local assistance from the Indiana State Police, the Kokomo, Ind., Police Department and the Brownsburg, Ind., Police Department.
The case was prosecuted by Assistant U.S. Attorney A. Brant Cook of the Southern District of Indiana and Trial Attorney Michael Grant of the Child Exploitation and Obscenity Section in the Justice Department’s Criminal Division.
The defendants sentenced were ordered to register as sex offenders and were sentenced to supervised release at the end of their prison term.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.Co-Owner of Detroit-Area Therapy Company Sentenced to 30 Months for Medicare Fraud SchemeRead the Press Release
WASHINGTON – The co-owner of a Detroit-area physical and occupational therapy company was sentenced today to 30 months in prison for his leading role in a more than $1.9 million Medicare fraud scheme, announced the Department of Justice, the FBI and the Department of Health and Human Services (HHS).
Victor Jayasundera, 59, was sentenced by U.S. District Judge Avern Cohn in the Eastern District of Michigan. In addition to his prison term, Jayasundera was sentenced to three years of supervised release and was ordered to pay $855,484 in restitution, joint and several with his co-defendants.
Jayasundera pleaded guilty on Jan. 18, 2012, to the charges against him in a superseding indictment: one count of conspiracy to commit health care fraud and six counts of health care fraud. According to the superseding indictment, Jayausundera co-owned a company known as Jos Campau Physical Therapy with co-defendant Fatima Hassan. Jos Campau Physical Therapy did not have a Medicare provider number and was not entitled to bill Medicare for therapy services.
According to the superseding indictment and evidence presented at the trial of a co-defendant, Jos Campau paid kickbacks to recruiters who obtained Medicare beneficiary information and signatures needed to create fictitious physical and occupational therapy files. The Medicare beneficiaries pre-signed forms and visit sheets that were later falsified to indicate that they received therapy services that were never provided.
Jayasundera, a physical therapist, falsified patient evaluation forms and fictitious patient notes for physical therapy services that were never rendered. Jayasundera and his co-owner also hired and paid an occupational therapist and an uncertified occupational therapy assistant to falsify medical files. The occupational therapist created patient evaluation forms for beneficiaries whom she had never met, seen or evaluated. The uncertified therapy assistant fabricated and signed patient notes for occupational therapy visits. The uncertified therapy assistant did not provide the services reflected in the fictitious patient notes.
Jayasundera and his co-owner sold the fictitious physical and occupational therapy files to multiple fraudulent therapy companies that had obtained Medicare provider numbers. Those companies billed the fictitious files created by Jos Campau Physical Therapy to Medicare and paid kickbacks to Jos Campau Physical Therapy based on these billings. Jayasundera and his co-owner split the profits from the sale of the falsified files.
Between approximately June 2005 and May 2007, the false files created and sold by Jos Campau Physical Therapy resulted in the submission of approximately $1.9 million in fraudulent claims to the Medicare program for physical and occupational therapy services that were never rendered.
Jayasundera’s co-owner, Fatima Hassan, pleaded guilty on Aug. 25, 2011, for her role in the scheme, and on May 17, 2012, was sentenced to 48 months in prison. Carol Gant, the occupational therapist, and Vanessa Dowell, the uncertified occupational therapy assistant, also pleaded guilty in 2011. Tariq Mahmud, the owner of a Medicare provider company that bought and billed Jos Campau Physical Therapy’s fake files, was convicted at trial on Feb. 2, 2012, for his role in the scheme and is scheduled to be sentenced on July 19, 2012.
Today’s sentence was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade; Special Agent in Charge Andrew G. Arena of the FBI’s Detroit Field Office; and Special Agent in Charge Lamont Pugh III of the HHS Office of Inspector General’s (OIG) Chicago Regional Office.
This case was prosecuted by Trial Attorney Catherine K. Dick and Assistant Chief Benjamin D. Singer of the Criminal Division’s Fraud Section. It was investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan.
Since their inception in March 2007, the Medicare Fraud Strike Force operations in nine districts have charged more than 1,330 individuals who collectively have falsely billed the Medicare program for more than $4 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.
6 June 2012
Perth Amboy, New Jersey, to Upgrade Sewer System to Resolve Clean Water Act ViolationsRead the Press Release
WASHINGTON – The city of Perth Amboy, N.J., has agreed to make major improvements in its combined sewer system to protect people’s health and water quality under a legal agreement with the U.S. Environmental Protection Agency (EPA). Under the agreement, which was lodged by the Department of Justice in federal court today, the city will reduce the amount of sewage and other pollutants that flow out of 16 combined sewer points into the Raritan River and Arthur Kill. Combined sewer systems are sewers that are designed to collect rainwater runoff, domestic sewage and industrial wastewater in the same pipe.
Perth Amboy violated the Clean Water Act and its New Jersey Department of Environmental Protection discharge permit by failing to properly maintain and operate its sewer system, conduct regular inspections and have a pollution prevention plan in place. The city also violated a previously issued EPA order to address Clean Water Act violations.
“This settlement will require vital investments in sewer infrastructure that will help the city of Perth Amboy achieve compliance with the nation’s Clean Water Act. More than 70 percent of these repairs will take place in and benefit lower-income areas of the city,” said Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division of the Department of Justice. “This agreement will ensure that Perth Amboy’s combined sewer system is properly operated and maintained to minimize the number of untreated discharges to the Raritan River and the Arthur Kill.”
“Combined sewer overflows are a very serious public health and environmental problem in a number of New Jersey communities,” said Judith A. Enck, EPA Regional Administrator. “The improvements that Perth Amboy will make under the agreement with the EPA will improve water quality and protect community residents from exposure to raw sewage. Sewer upgrades made pursuant to this settlement are a long-term investment in public health and clean water.”
During periods of heavy rainfall or snow melt, the volume of wastewater in a combined sewer system can exceed the capacity of the sewer system or wastewater treatment plant. When this happens, combined sewer systems overflow and discharge sewage directly to nearby water bodies. These overflows can contain not only storm water, but also untreated human and industrial waste, toxic materials and debris. It is estimated that almost 370 million gallons of sewage flow into the Raritan River and Arthur Kill through Perth Amboy’s combined sewer system each year. Across New Jersey, 30 combined sewer systems discharge 23 billion gallons of sewage and other pollutants each year into all of New Jersey’s major water bodies.
Under the agreement, Perth Amboy will spend about $5.4 million for the repair, upgrade and expansion of the city's combined sewer system and will additionally pay a $17,000 penalty. The city has agreed to increase the amount of wastewater that reaches the treatment plant and reduce its combined sewer overflows into the Raritan River and Arthur Kill. In addition, under the agreement, Perth Amboy will conduct annual inspections of all of its combined sewer system control facilities and will develop and implement a combined sewer overflow pollution prevention plan.
In response to the EPA’s earlier enforcement efforts, Perth Amboy has already completed a thorough inspection and engineering assessment of its sewer system. As a result of that study, the city will develop a plan to fix problems identified and do further work to separate the pipes so that some pipes will only carry wastewater from buildings to the wastewater treatment plant instead of a combination of domestic wastewater and stormwater. Work already underway and work that will be conducted under today’s agreement will be completed by Dec. 31, 2016.
The consent decree is subject to a 30-day public comment period and final court approval. It can be viewed at www.justice.gov/enrd/Consent_Decrees.html.
For more information about the combined sewer overflow problem in New Jersey, visit www.epa.gov/region2/water/sewer-report-3-2011.pdf.
For more information about combined sewer overflow systems, visit http://estuaries.noaa.gov/Estuarylive/VideoGallery.aspx?ID=43.
Nevada Lobbyist Harvey Whittemore Indicted for Making Unlawful Campaign Contributions and Lying to InvestigatorsRead the Press Release
WASHINGTON – Nevada lobbyist and lawyer Harvey Whittemore was indicted today in the District of Nevada by a federal grand jury on charges that he made unlawful campaign contributions to an elected member of Congress, caused false statements to be made to the Federal Election Commission (FEC) and lied to the FBI, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and Daniel G. Bogden, U.S. Attorney for the District of Nevada.
F. Harvey Whittemore, 55, of Reno, Nevada, was charged with one count of making excessive campaign contributions, one count of making contributions in the name of others and two counts of making a false statement to a federal agency. Whittemore is scheduled to appear before a U.S. Magistrate Judge in Reno, Nevada, on June 7, 2012, at 3:00 p.m. PDT for arraignment. If convicted, Whittemore faces up to five years in prison and a $250,000 fine on each count.
“Mr. Whittemore allegedly used his family members and employees as conduits to make illegal contributions to the campaign committee of an elected member of Congress,” said Assistant Attorney General Breuer. “Furthermore, according to today’s indictment, he attempted to conceal his crimes by lying to the FBI. Our campaign finance laws establish maximum limits on individual contributions, and failure to adhere to those rules jeopardizes the integrity of our elections. We will continue to pursue those who engage in such conduct.”
“We remain committed to investigating and prosecuting illegal behavior that jeopardizes the integrity of our elections and corrupts our political process,” said U.S. Attorney Bogden. “Campaign finance laws exist to protect that process and criminal violations of those laws will be vigorously prosecuted by this office.”
Under federal law, it is illegal to contribute to a federal political campaign using a conduit in order to hide the identity of the true contributor. Federal law also sets limits on the amount that an individual can contribute to a campaign. In 2007, the maximum individual contribution was $2,300 for a primary election and $2,300 for a general election; thus, the maximum for one candidate was $4,600.
The indictment states that Whittemore was the chief executive of Company A. On about Feb. 21, 2007, Whittemore allegedly met with an elected member of Congress (identified in the indictment as Federal Elected Official 1), and agreed to try to collect $150,000 in contributions for the elected official’s campaign committee by March 31, 2007, which marked the end of a legally required quarterly reporting period. Aware of the strict limits on individual federal campaign contributions, Whittemore allegedly devised a scheme and plan whereby he used family members, employees of Company A, and their respective spouses, as prohibited conduits through which to funnel his own money to the federal elected official’s campaign committee under the guise of lawful campaign contributions. This scheme allowed Whittemore to make an individual campaign donation to the federal elected official in excess of the limits established by federal law. Whittemore allegedly concealed the scheme from the FEC, the elected official and the elected official’s campaign committee.
In March 2007, Whittemore allegedly solicited the employees, family members and their respective spouses to make the maximum campaign donations to the federal elected official and reimbursed the contributors with personal checks and wire transfers. The indictment alleges that Whittemore attempted to conceal some of the reimbursements he made to the contributors by telling the employees that they were bonuses. Whittemore also allegedly paid the contributors additional money on top of the reimbursements. If a conduit contributed $4,600, Whittemore reimbursed the individual $5,000; likewise if a couple contributed $9,200, he paid the couple $10,000.
On about March 28, 2007, Whittemore allegedly caused a Company A employee to transmit $138,000 in contributions to the federal elected official’s campaign committee, the vast majority of which were conduit contributions that Whittemore had personally funded in order to satisfy his pledge to the federal elected official. On April 15, 2007, the campaign committee then unknowingly filed false reports with the FEC stating that the conduits had made the contributions, when in fact, Whittemore had made them.
On about Feb. 9, 2012, Whittemore allegedly made false statements during an interview with FBI agents by claiming that he never made a request for campaign contributions; never asked employees of company A to contribute to the elected official’s campaign; never provided payments to anyone with the expectation that they would serve as reimbursements for campaign contributions; never spoke to any candidate about raising money for the candidate; and never gave money to family members to make political contributions.
The case is being investigated by the FBI and is being prosecuted by First Assistant U.S. Attorney Steven W. Myhre, Assistant U.S. Attorney Sue Fahami and Trial Attorney Eric G. Olshan of the Public Integrity Section in the Justice Department’s Criminal Division.
An indictment contains only charges and is not evidence of guilt. The defendant is presumed innocent and is entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
Home Health Agency Owner Pleads Guilty in Connection with Detroit Fraud SchemeRead the Press Release
WASHINGTON – Detroit-area resident Muhammad “Sib” Ahmad pleaded guilty today for his role in organizing a more than $13 million home health care fraud and money laundering scheme, announced the Department of Justice, the FBI and the Department of Health and Human Services (HHS).
Ahmad, 33, pleaded guilty today before U.S. District Judge Gerald E. Rosen of the Eastern District of Michigan to one count of conspiracy to commit health care fraud and one count of money laundering.
According to court documents, beginning in July 2008, Ahmad and his co-conspirators acquired ownership and control of three Detroit-area home health agencies: Physicians Choice Home Health Care LLC, First Care Home Health Care LLC and Quantum Home Care Inc. Ahmad admitted that these home health agencies billed Medicare for visits that never occurred. Between July 2008 and September 2011, Ahmad and his co-conspirators submitted or caused the submission of more than $13 million in fraudulent home health claims to the Medicare program by Physicians Choice, First Care, Quantum and a fourth home health agency owned by co-conspirators, Moonlite Home Care Inc. Medicare paid more than $12 million to the companies that Ahmad beneficially owned in whole or in part.
Ahmad admitted that he and his co-conspirators directed the payment of non-licensed individuals who represented themselves as doctors to Medicare beneficiaries. In addition, Ahmad admitted to paying and directing various medical professionals, including nurses, physical therapists and physical therapy assistants, to create fictitious patient files to document purported home health services that were never rendered.
Ahmad also admitted that he and his co-conspirators paid and directed the payment of kickbacks to beneficiary recruiters who obtained Medicare beneficiaries’ information needed to bill Medicare for home health services, including physical therapy and skilled nursing, which were never rendered. The Medicare beneficiaries sometimes pre-signed forms and visit sheets that were later falsified to indicate that they received home health services that they had never received. Other times, the Medicare beneficiaries’ signatures were forged on forms and visit sheets to indicate that they received home health services that, in fact, were never provided.
Additionally, Ahmad admitted that he incorporated a shell company known as Century Home Care for the purpose of laundering the proceeds of the health care fraud scheme.
Today’s guilty plea was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade; Special Agent in Charge Andrew G. Arena of the FBI’s Detroit Field Office; and Special Agent in Charge Lamont Pugh III of the HHS Office of Inspector General’s (OIG) Chicago Regional Office.
This case was prosecuted by Trial Attorney Catherine K. Dick of the Criminal Division’s Fraud Section. It was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S.
Attorney’s Office for the Eastern District of Michigan.Since 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.
Autoliv Inc. and a Yazaki Corp. Executive Agree to Plead Guilty to <br /> Price Fixing on Automobile Parts Installed in U.S. CarsRead the Press Release
WASHINGTON – Stockholm-based Autoliv Inc. has agreed to plead guilty for its role in a conspiracy to fix prices of seatbelts, airbags and steering wheels installed in U.S. cars to one automobile manufacturer and a separate conspiracy to fix prices of seatbelts to another, the Department of Justice announced today. This is the first case filed relating to occupant safety systems sold to auto manufacturers as part of the department’s ongoing antitrust auto parts investigation. An executive of Japan-based Yazaki Corporation has also agreed to plead guilty for his role in a separate conspiracy to fix prices of automotive wire harnesses and related products installed in U.S. cars.Autoliv has agreed to pay a $14.5 million criminal fine and to cooperate with the department’s ongoing investigation. Kazuhiko Kashimoto, a Yazaki executive, has agreed to serve 14 months in a U.S. prison, to pay a $20,000 criminal fine and to cooperate with the department’s ongoing investigation. The plea agreements for both Autoliv and Kashimoto are subject to court approval.
“By meeting in secret and agreeing to allocate the supply of various automotive parts, the conspirators colluded to rip off automotive manufacturers in the United States and abroad,” said Scott D. Hammond, Deputy Assistant Attorney General of the Antitrust Division’s criminal enforcement program. “These conspiracies eliminated competition and resulted in inflated prices to automotive manufacturers for parts in cars sold to U.S. consumers.”
According to a two-count felony charge filed today in the U.S. District Court for the Eastern District of Michigan in Detroit, Autoliv engaged in conspiracies to rig bids for, and to fix, stabilize and maintain the prices of seatbelts, airbags and steering wheels sold to automakers in the United States and elsewhere.
According to court documents, Autoliv’s involvement in the conspiracy to fix prices of seatbelts, airbags and steering wheels lasted from at least as early as March 2006 until at least February 2011, and its involvement in the second conspiracy to fix prices of seatbelts lasted from at least as early as May 2008 to at least February 2011. Autoliv and its co-conspirators carried out the conspiracies by agreeing, during meetings and conversations, to allocate the supply of seatbelts, airbags and steering wheels on a model-by-model basis. The department said that Autoliv and the co-conspirators sold the occupant safety parts at noncompetitive prices to automakers in the United States and elsewhere.
According to a one-count felony charge also filed today in the U.S. District Court in Detroit, Kashimoto, along with co-conspirators, engaged in a conspiracy to rig bids for, and to fix, stabilize and maintain the prices of automotive wire harnesses and related products sold to a customer in the United States and elsewhere. Automotive wire harnesses are automotive electrical distribution systems used to direct and control electronic components, wiring and circuit boards. Related products include automotive electrical wiring, lead wire assemblies, cable bond, automotive wiring connectors, automotive wiring terminals, electronic control units, fuse boxes, relay boxes and junction blocks.
According to court documents, Kashimoto’s involvement in the automotive wire harness conspiracy lasted from on or about January 2000 until at least September 2007. During the time of the conspiracy, Kashimoto held various management positions in Columbus, Ohio, and Japan for the Honda Sales and Honda Business Unit of Yazaki. Kashimoto and his co-conspirators carried out the conspiracy by agreeing, during meetings and conversations, to allocate the supply of automotive wire harnesses on a model-by-model basis and to coordinate price adjustments requested by an automobile manufacturer in the United States and elsewhere. The department said that Kashimoto and the co-conspirators sold automotive wire harnesses at non-competitive prices and engaged in meetings and conversations for the purpose of monitoring and enforcing adherence to the agreed-upon bid-rigging and price-fixing scheme. In order to keep their conduct secret, Kashimoto and his co-conspirators used code names and met at private residences and remote locations, the department said in court documents.
Including Autoliv and Kashimoto, six companies and 10 individuals have been charged in the department’s ongoing investigation into price fixing and bid rigging in the auto parts industry. Furukawa Electric Co. Ltd, DENSO Corporation, Yazaki Corporation and G.S. Electech Inc. pleaded guilty and were sentenced to pay a total of more than $750 million in criminal fines. Fujikura Ltd has agreed to plead guilty. Additionally, seven of the individuals–Junichi Funo, Hirotsugu Nagata, Tetsuya Ukai, Tsuneaki Hanamura, Ryoji Kawai, Shigeru Ogawa and Hisamitsu Takada–have been sentenced to pay criminal fines and to serve jail sentences ranging from a year and a day to two years each. Makoto Hattori has agreed to plead guilty and Norihiro Imai has pleaded guilty and awaits sentencing.
Both Autoliv and Kashimoto are charged with price fixing in violation of the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million fine for individuals and maximum penalty of a $100 million criminal fine for corporations. The maximum fine for both a company and an individual may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
Today’s prosecution arose from an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the automotive parts industry, which is being conducted by the Antitrust Division’s National Criminal Enforcement Section and the FBI’s Detroit Field Office with the assistance of the FBI headquarters’ International Corruption Unit. Anyone with information concerning the focus of this investigation is urged to call the Antitrust Division’s National Criminal Enforcement Section at 202-307-6694 visit www.justice.gov/atr/contact/newcase.htm, or call the FBI’s Detroit Field Office at 313-965-2323.
Acting Associate Attorney General Tony West and U.S. Attorney Michael W. Cotter Announce Pilot Initiative to Address Sexual Assault on Montana ReservationsRead the Press Release
CROW AGENCY, Mont. – Acting Associate Attorney General Tony West today joined U.S. Attorney Michael W. Cotter and Vice-Chairman of the Crow Nation Calvin Coolidge Jefferson to announce a multi-agency collaboration with tribal governments to establish sexual assault response teams (SARTs) in the six Montana reservations under federal jurisdiction.
The SART initiative in Montana is a pilot initiative stemming from the Justice Department’s commitment to build safe and healthy communities in American Indian and Alaska Native communities. SART teams, which could include federal and tribal prosecutors, victim specialists, advocates, tribal agencies and programs, local and federal law enforcement, and health care representatives will meet at least once monthly to address incidences of sexual assault that arise on each reservation and determine the best way to address each one. Each community will compose a team that reflects individual community needs.
Teams will be established on the six reservations under federal jurisdiction within the next six months. The teams will meet monthly to address incidences of sexual assault that arise on each reservation and determine the best way to address each one. The SART team will exist to provide culturally appropriate, timely, coordinated and thorough care to victims of sexual assault.
“Sexual violence against native women is one of the most devastating threats to native communities,” said Acting Associate Attorney General West. “It’s also an underreported crime. We hope this effort to establish SART teams in each Montana reservation will bring the kind of help, healing and justice to victims of sexual violence that will also strengthen the faith and confidence that native women have in their criminal justice system.”
“I commend the efforts of those who have worked to develop a culturally appropriate sexual assault response team, or SART, that meets the unique needs of the Crow people,” said Crow Tribe Vice-Chairman Jefferson. “My hope is that with a formalized SART on the Crow Reservation, our mothers and sisters will have access to justice and to recovery from being victims of these types of deplorable crimes. I want to encourage victims, survivors and their family members to come forward, to offer support to each other in the pursuit of justice and healing.”
“Together we can provide compassionate and innovative care to sexual assault survivors,” said U.S. Attorney Cotter. “I challenge the SARTs to not merely be reactive but also consider ways to intervene before the sexual assault occurs – through education and outreach. I am hopeful that the presence of SARTs on Montana reservations will provide another tool to improve intervention and care for sexual assault victims.”
American Indian and Alaska Native women are raped at rates higher than any other race. Despite the alarming rates, sexual assault is still the most underreported crime. Under the pilot project in Montana, the U.S. Attorney’s Office will work with tribal nations to develop culturally appropriate programs and adapt existing response models to create appropriate responses to sexual assault. SART establishes a multidisciplinary team that collaborates on the response to sexual assault cases. The team also adopts coordinated policies and procedures for the investigation, prosecution and provision of services in sexual assault cases. The U.S. Attorney’s Office for the District of Montana will be a resource for specific protocols, training opportunities and model memorandums of understanding (MOUs).
The SART initiative includes collaboration between the Department of Justice, Indian Health Service (IHS), the Bureau of Indian Affairs (BIA), and other federal agencies in partnership with tribes to increase services to victims of sexual assault in Montana by providing training opportunities for first responders. In April 2012, IHS sponsored a regional SART training in Billings, Mont., with participation from the Crow/Northern Cheyenne Hospital, Rocky Boy Health Clinic, Browning Hospital, Fort Peck IHS Service Unit and Crow Tribal Domestic Violence Program. IHS will host Sexual Assault Examiner training in Billings in July 2012, and will also make forensic equipment, such as digital cameras, available to all IHS and Tribal hospitals in 2012. The Department of Justice and IHS are collaborating on training for evidence collection and with the Department of the Interior on implementation of the Tribal Law and Order Act.
Participating reservations include the Blackfeet, Rocky Boy’s, Fort Belknap, Fort Peck, Crow and Northern Cheyenne.
5 June 2012
Texas Resident Sentenced to 15 Months in Prison for Scheme to Defraud the U.S. Export-import BankRead the Press Release
WASHINGTON – A Fabens, Texas, resident was sentenced today to 15 months in prison for his role in a scheme to defraud the Export-Import Bank of the United States (Ex-Im Bank) of more than $690,624.
The sentence was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Robert Pitman of the Western District of Texas; Osvaldo L. Gratacos, Inspector General of the Ex-Im Bank; and Acting Special Agent in Charge Dennis A. Ulrich of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE-HSI) in El Paso, Texas.
Hector Cuevas, 42, was also sentenced by Judge Kathleen Cardone in U.S. District Court in El Paso to three years of supervised release and was ordered to pay $553,148 in restitution and $690,624 in forfeiture. Cuevas pleaded guilty on Oct. 13, 2011, to conspiracy to commit wire fraud, wire fraud and money laundering conspiracy. Cuevas admitted that he participated in a scheme to defraud the Ex-Im Bank of more than $690,624.
According to court documents, Cuevas was the owner of CT Implement Inc., a farm equipment sales company in Fabens that purported to be in the business of exporting U.S. agricultural equipment to Mexico. During his plea hearing, Cuevas admitted that he helped others prepare and submit false applications, financial records and export documents to two lending banks to assist co-conspirators in Mexico in obtaining two Ex-Im insured loans purportedly for the purchase of equipment from Cuevas’ company. Once the loans were approved, Cuevas admitted that he acted as a money launderer by illegally transferring Ex-Im Bank insured proceeds to both borrowers and others in Mexico. Both loans defaulted and caused Ex-Im Bank to pay claims totaling $583,430 to the lending banks.
Ex-Im Bank is an independent federal agency that helps create and maintain U.S. jobs by filling gaps in private export financing. Ex-Im Bank provides a variety of financing mechanisms to help foreign buyers purchase U.S. goods and services.
The case is being prosecuted by Trial Attorneys Patrick Donley and William Bowne of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Steven Spitzer of the Western District of Texas, El Paso Office. The case was investigated by the Ex-Im Bank Office of Inspector General and ICE-HSI El Paso. The Financial Crimes Enforcement Network (FinCEN) also provided valuable assistance and financial analysis in this investigation.
Office on Violence Against Women Announces Agreements to Cross-Designate Tribal Prosecutors in Nebraska, New Mexico, Montana, North Dakota and South DakotaRead the Press Release
WASHINGTON – The Justice Department’s Office on Violence Against Women (OVW) announced today that four tribes in Nebraska, New Mexico, Montana, North Dakota and South Dakota will be awarded cooperative agreements to cross-designate tribal prosecutors to pursue violence against women cases in both tribal and federal courts.
The goal of the Tribal Special U.S. Attorney (SAUSA) program is to train eligible tribal prosecutors in federal law, procedure and investigative techniques to increase the likelihood that every viable criminal offense is prosecuted in tribal court, federal court or both. The program enables tribal prosecutors to bring violence against women cases in federal court and to serve as co-counsel with federal prosecutors on felony investigations and prosecutions of offenses arising out of their respective tribal communities.
“We know that violence against Native women has reached epidemic proportions,” said OVW Director Bea Hanson. “Restoring safety for Native women requires the type of sustained cooperation between the federal and tribal justice systems that we see in the jurisdictions participating in our Tribal SAUSA project.”
Through this special initiative, OVW will support salary, travel and training costs of four tribal SAUSAs, who will work in collaboration with the U.S. Attorneys Offices in the Districts of Nebraska, New Mexico, Montana, North Dakota and South Dakota. Specifically, OVW will award cooperative agreements to four federally recognized tribes to select qualified applicants in cooperation with the U.S. Attorney Offices to serve as cross-designated prosecutors. These prosecutors will maintain an active violence against women crimes caseload, in tribal and/or federal court, while also helping to promote higher quality investigations, improved training and better inter-governmental communication.
Tailored to meet the particular needs of the participating jurisdiction, these pilot programs are designed to improve the quality of cases, the coordination of resources and the communication of priorities both within and between the various law enforcement agencies working in this area.
The Tribal SAUSA Pilot Project was largely driven by input gathered from the Justice Department's 2009 Tribal Nation Listening Session on Public Safety and Law Enforcement, and its annual tribal consultation on violence against women. The Tribal SAUSA initiative is another step in the Justice Department's on-going efforts to increase engagement, coordination and action on public safety in tribal communities, and represents a partnership between OVW, the Executive Office of US Attorney's and the US Attorney's Offices in Montana, Nebraska, New Mexico, North Dakota and South Dakota.
The recipients of these awards are:
- Pueblo of Laguna in New Mexico
- Fort Belknap Tribe in Montana
- Winnebago Tribe in Nebraska
- Standing Rock Sioux Tribe, in North Dakota and South Dakota
4 June 2012
Los Angeles Physician Assistant Found Guilty for Role in $18.9 Million Medicare Fraud SchemeRead the Press Release
WASHINGTON – A Los Angeles physician assistant who worked at fraudulent medical clinics where he used the stolen identities of doctors to write prescriptions for medically-unnecessary durable medical equipment (DME) and diagnostic tests has been convicted of conspiracy, health care fraud and aggravated identity theft charges in connection with a $18.9 million Medicare fraud scheme, announced the Department of Justice, FBI and U.S. Department Health and Human Services (HHS).
On June 1, 2012, after a two-week trial in federal court in Los Angeles, a jury found David James Garrison, 50, guilty of one count of conspiracy to commit health care fraud, six counts of health care fraud and one count of aggravated identity theft. The trial evidence showed that Garrison worked at fraudulent medical clinics that operated as prescriptions mills and trafficked in fraudulent prescriptions and orders for medically-unnecessary power wheelchairs, DME and diagnostic tests that were used by fraudulent DME supply companies and medical testing facilities to defraud Medicare. Garrison wrote the prescriptions and ordered the tests on behalf of doctors whom he never met and who did not authorize him to write prescriptions and order tests on their behalf.The trial evidence showed that between March 2007 and September 2008, Garrison’s co-conspirator, Edward Aslanyan, and others owned and operated several Los Angeles medical clinics established for the sole purpose of defrauding Medicare. Aslanyan and others hired street-level patient recruiters to find Medicare beneficiaries willing to provide the recruiters with their Medicare billing information in exchange for expensive, high-end power wheelchairs and other DME, which the patient recruiters told the beneficiaries they would receive for free. Often, the solicited Medicare beneficiaries did not have a legitimate medical need for the power wheelchairs and equipment. The patient recruiters then provided the beneficiaries’ Medicare billing information to Aslanyan and others or brought the beneficiaries to the fraudulent medical clinics. In exchange for recruiting the Medicare beneficiaries, Aslanyan and others paid the recruiters a cash kickback for every beneficiary they recruited.
Many of the beneficiaries whose Medicare billing information was used at the medical clinics lived hundreds of miles from the clinics, including some beneficiaries who lived over 300 miles from the clinics. One witness testified that the clinics used beneficiaries who lived such long distances from the clinics because the Medicare billing numbers of Medicare beneficiaries who lived in and around Los Angeles had been used in other Medicare fraud schemes and, therefore, could no longer be used to bill Medicare.The evidence presented at trial showed that Garrison wrote prescriptions for power wheelchairs, which the beneficiaries did not need and did not use. In some cases, Garrison wrote power wheelchair prescriptions for beneficiaries he never examined and who never visited the clinics and, in one instance, prescribed a power wheelchair to a beneficiary who the evidence showed suffered from a mental defect and did not have the mental capacity to operate a power wheelchair. Several Medicare beneficiaries testified that they were approached by patient recruiters who convinced them to accept free power wheelchairs, but that they never went to the medical clinics and were never examined by Garrison.
Once Garrison wrote the power wheelchair prescriptions, Aslanyan and others sold them from $1,000 to $1,500 to the owners and operators of approximately 50 different fraudulent DME supply companies, which used the prescriptions to submit fraudulent power wheelchair claims to Medicare. The DME supply companies purchased the power wheelchairs wholesale for approximately $900 per wheelchair but billed the wheelchairs to Medicare at a rate of approximately $5,000 per wheelchair. Aslanyan also used the prescriptions Garrison wrote at Vila Medical and Blanc Medical Supply, another fraudulent DME supply company that Aslanyan owned and operated. When the owners and operators of the DME supply companies complained to Aslanyan and others about Garrison’s prescriptions looking the same, witness testimony established that Garrison changed the signature he used on the prescriptions.
In addition, the trial evidence showed that Garrison ordered the same medically-unnecessary diagnostic tests for every Medicare beneficiary, including tests for sleep studies, ultrasounds and nerve conduction. These tests were then billed to Medicare by fraudulent diagnostic testing companies that paid Aslanyan kickbacks to operate from the medical clinics.
Throughout the trial, evidence was introduced that showed that Garrison had admitted to writing prescriptions for power wheelchairs and ordered diagnostic tests on behalf of approximately six different doctors, and that he did not have a Delegation of Services Agreement with at least two of these doctors, as required by law.
As a result of this fraud scheme, Garrison, Aslanyan, and their co-conspirators submitted and caused the submission of over $18 million in false and fraudulent claims to Medicare, and received $10.7 million on those claims.
At sentencing, scheduled for Sept. 17, 2012, Garrison faces a maximum penalty of 72 years in prison and a $2 million fine. The aggravated identity theft conviction carries a mandatory two year prison sentence. In 2009 and 2010, Garrison was convicted on state charges of tax evasion and felonious possession of a firearm. Currently, Garrison is facing federal drug charges as a result of his alleged involvement with another medical clinic where medically-unnecessary prescriptions for Oxycontin were distributed. Garrison is scheduled for trial on the federal drug charges on Nov. 6, 2012. He is presumed innocent of the charges against him.
The jury’s verdict was announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney André Birotte Jr. for the Central District of California; Tony Sidley, Assistant Chief of the California Department of Justice, Bureau of Medi-Cal Fraud and Elder Abuse; Glenn R. Ferry, Special Agent-in-Charge for the Los Angeles Region of the HHS Office of Inspector General (HHS-OIG); and Steven Martinez, Assistant Director in Charge of the FBI’s Los Angeles Field Office.
The case is being prosecuted by Trial Attorney Jonathan T. Baum of the Criminal Division’s Fraud Section and Assistant U.S. Attorney David Kirman of the Central District of California. The case is being investigated by the FBI.
The case was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Central District of California. The Medicare Fraud Strike Force operations are part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT), a joint initiative announced in May 2009 between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country.
Since their inception in March 2007, strike force operations in nine districts have charged 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 HEAT, go to: www.stopmedicarefraud.gov.
Justice Department to Monitor Elections in California, New Mexico, South Dakota and WisconsinRead the Press Release
WASHINGTON – The Justice Department announced today that it will monitor elections on June 5, 2012, in the following jurisdictions to ensure compliance with the Voting Rights Act of 1965 and other federal voting rights statutes: Alameda, Fresno and Riverside Counties, Calif.; Cibola and Sandoval Counties, N.M.; Shannon County, S.D.; and the city of Milwaukee.
The Voting Rights Act prohibits discrimination in the election process on the basis of race, color or membership in a minority language group. In addition, the act requires certain covered jurisdictions to provide language assistance during the election process. Fresno County, Riverside County and the city of Milwaukee are required to provide assistance in Spanish. Cibola, Sandoval and Shannon Counties are required to provide language assistance to Native American voters. Alameda County is required to provide language assistance to Hispanic, Chinese, Vietnamese and Filipino voters.
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 Shannon County based on the attorney general’s certification and in Alameda, Riverside and Sandoval Counties based on court orders. The observers will watch and record activities during voting hours at polling locations in these jurisdictions, and Civil Rights Division attorneys will coordinate the federal activities and maintain contact with local election officials.
In addition, Justice Department personnel will monitor polling place activities in Fresno County, Cibola County and the city of Milwaukee. Civil Rights Division attorneys will coordinate federal activities and maintain contact with local election officials.
Each year, the Justice Department deploys hundreds of federal observers from OPM, as well as departmental staff, to monitor elections across the country. To file complaints about discriminatory voting practices, including acts of harassment or intimidation, voters may call the Voting Section of the Justice Department’s Civil Rights Division at 1-800-253-3931.
Visit www.justice.gov/crt/voting/index.php for more information about the Voting Rights Act and other federal voting laws.