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26 April 2012
Former Tuscaloosa County, Alabama, Sheriff’s Sergeant Sentenced for Criminal Civil Rights ViolationsRead the Press Release
Former Tuscaloosa County Sheriff’s sergeant, Althea Mallisham, 52, has been sentenced to 61 months in prison for civil rights convictions for wrongfully using a Taser against three detainees during separate incidents over a four month period in 2008.
On Nov. 16, 2011, Mallisham pleaded guilty to three felony civil rights offenses at which time she admitted that on separate occasions while she was on duty as a Tuscaloosa Sheriff's sergeant and acting under color of state law, she used an X26 Taser to electro-shock three pre-trial detainees as a means of punishment. In each instance, the pre-trial detainees were either restrained in handcuffs or securely locked in a jail cell. None of the three detainees posed a physical threat to any officers or other detainees when they were electro-shocked. In each instance, Mallisham willfully exceeded and abused her authority under state law.
“Law enforcement officers who abuse their power to maliciously subject those in their custody to extreme pain will be held accountable,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Justice Department will continue to vigorously prosecute those who cross the line to engage in acts of criminal misconduct.”
“Officer Mallisham took an oath to uphold the law. Virtually all of our law enforcement officers respect their oaths and the power they are entrusted with to enforce the law, and they perform their duties with honor and integrity,” said Joyce White Vance, U.S. Attorney for the Northern District of Alabama. “Mallisham, however, violated her oath and broke the law. Today, she has been held accountable and sentenced to five years in prison.”
This case was investigated by the Tuscaloosa resident agency of the FBI’s Birmingham Field Office. The case was prosecuted by Trial Attorney D.W. Tunnage of the Justice Department’s Civil Rights Division and Assistant U.S. Attorney Tamarra Matthews-Johnson for the Northern District of Alabama.
Former District of Columbia Department of Corrections Officer Pleads Guilty to Criminal Civil Rights ChargeRead the Press Release
Former District of Columbia Department of Corrections Officer Victor Bell, 25, pleaded guilty today to a criminal civil rights charge for assaulting an inmate in the District of Columbia Central Detention Facility (D.C. jail).
During the plea proceedings, Bell admitted that on Jan. 4, 2012, he became upset with an inmate who was expressing his disapproval of a pat-down search that Bell was conducting of another inmate in a third-floor corridor. Bell then began following the disapproving inmate as he started to walk away. Bell confronted him chest-to-chest, and the inmate again attempted to walk away. After handing off his eyeglasses to another D.C. jail employee, Bell once again followed the inmate, and with both hands, pushed him in the back.
As the confrontation continued, Bell grabbed the inmate by the shoulder, pushed him into a corner of the corridor, and began punching him repeatedly in the head. In addition, Bell grabbed the inmate’s dreadlocks, pulling one out. Even after another corrections officer called for assistance, Bell continued punching the inmate until other officers pulled him away.
At no point during the incident did the inmate physically fight the defendant. The inmate, who was disoriented, was taken to the infirmary, where a cut to his right eye was sutured.
“While the vast majority of law enforcement officers perform their duties with great care and honor, those who seek to violate the civil rights of those in their custody will be held accountable,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Justice Department will continue to vigorously prosecute officers who cross the line to engage in acts of criminal conduct.”
“No one is above the law, and no one is undeserving of the law’s protection,” said U.S. Attorney Ronald C. Machen Jr. “In the District of Columbia, we expect corrections officers to perform their duties as professionals, which the vast majority do under challenging circumstances every day. This prosecution illustrates the strength of our commitment to vindicating the civil rights of all people.”
“Today, Victor Bell admitted to abusing the power afforded to him as a corrections officer,” said FBI Assistant Director in Charge James W. McJunkin. “This investigation and guilty plea demonstrate that the FBI and our law enforcement partners will pursue justice against anyone who deprives another individual of their civil rights.”
Bell faces a maximum sentence of one year in prison and a $100,000 fine. Sentencing has been set for July 11, 2012.
As part of the plea agreement, Bell agreed to resign from the Department of Corrections and to never again seek employment as a law enforcement officer, in any capacity and in any jurisdiction. In addition, he has agreed to perform 150 hours of community service.
This case was investigated by the FBI and the Office of Internal Affairs of the District of Columbia Department of Corrections and was prosecuted by Assistant U.S. Attorney Jean Sexton of the U.S. Attorney’s Office for District of Columbia and Trial Attorney William Nolan of the Civil Rights Division.
Federal Courts Order Seizure of 36 Website Domains<br /> Involved in Selling Stolen Credit Card NumbersRead the Press Release
WASHINGTON – Seizure orders have been executed against 36 domain names of websites engaged in the illegal sale and distribution of stolen credit card numbers, Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Neil H. MacBride of the Eastern District of Virginia and Acting Executive Assistant Director Kevin Perkins of the FBI’s Criminal, Cyber, Response and Services Branch, announced today.
The seizures are the result of Operation Wreaking hAVoC, an FBI and Justice Department operation targeting the sale of stolen credit card numbers via the Internet. The operation was coordinated with international law enforcement, including the United Kingdom’s Serious Organised Crime Agency (SOCA).
The 36 seized domains are in the custody of the federal government. Visitors to the sites will now find a seizure banner that notifies them that the domain name has been seized by federal authorities.
“The websites we are targeting today were commercial outlets for stolen credit card information,” said Assistant Attorney General Breuer. “By making this information available on the Internet, these websites facilitated fraud on credit card holders around the world. The actions announced today are the result of extraordinary coordination with our international law enforcement partners, and reflect our commitment to use every tool at our disposal to shut down fraudulent, criminal enterprises.”
“Countless lives are thrown into financial turmoil because of these websites,” said U.S. Attorney MacBride. “With a few simple clicks, thousands of stolen credit card numbers can be bought or sold to fraudsters anywhere in the world. Today’s seizures are part of an ongoing campaign to disrupt this online market regardless of where it operates.”
“By seizing the websites the criminal underground uses to blatantly sell stolen personal information, Operation Wreaking hAVoC shows that we are committed to protecting individuals online and preventing criminals from using the Internet to line their pockets,” said FBI Acting Executive Assistant Director Perkins. “The FBI and our partners around the world are committed to disabling these criminal networks. No single law enforcement agency can fight cyber crime on its own, and the FBI is proud to be a part of such an outstanding effort by all of the participating agencies.”
The websites of the seized domain names are commonly referred to as Automated Vending Carts (AVCs). An AVC is a website that functions as an open-ended invitation to any visitor to purchase stolen credit card numbers. AVCs allow a user to buy stolen credit card data over the Web, even using an online “shopping cart,” just like a traditional online retailer. Some AVC sites allow a buyer to select which type of credit card number to purchase, the account’s country of origin, and, in some cases, the state in which the account holder lives. AVCs allow sellers to traffic stolen credit card data without communicating directly with buyers.
During this operation, law enforcement officials made undercover purchases of credit card numbers, including credit card numbers issued by Bank of America, Sun Trust and Capital One. The banks confirmed that the sites were not authorized to sell the credit card numbers. Seizure orders were obtained from a federal magistrate judge in the Eastern District of Virginia.
This U.S. operation was led by FBI’s Washington Field Office, the Computer Crime and Intellectual Property and Asset Forfeiture and Money Laundering Sections of the Justice Department’s Criminal Division and the U.S. Attorney’s Office for the Eastern District of Virginia. The FBI’s Pittsburgh Field Office and the U.S. Attorney’s Office for the Western District of Pennsylvania also assisted in the investigation.
The international operation was led by the United Kingdom’s SOCA. The Australian Federal Police (AFP); German Bundeskriminalamt (BKA); United Kingdom’s Dedicated Cheque and Plastic Crime Unit (DCPCU); Macedonian Ministry of Interior Cyber Crime Unit (MOI); Ukraine Ministry of Internal Affairs; Romanian Ministry of Interior; and the Dutch High-Tech Crimes Unit (KLPD) provided assistance. Activities conducted by these international law enforcement agencies included arrests of AVC operators and purchasers, additional domain seizures and data seizures.
Department of Justice Releases Investigative Findings on the Juvenile Court of Memphis and Shelby County, TennesseeRead the Press Release
Following a comprehensive investigation, the Justice Department today announced its findings regarding the Juvenile Court of Memphis and Shelby County (JCMSC), and the Shelby County Juvenile Detention Center in Tennessee. The Justice Department found that the juvenile court fails to provide constitutionally required due process to all children appearing for delinquency proceedings, that the court’s administration of juvenile justice discriminates against African-American children, and that its detention center violates the substantive due process rights of detained youth by not providing them with reasonably safe conditions of confinement. The investigation, opened in August 2009, was conducted under provision of the Violent Crime Control and Law Enforcement Act of 1994 and Title VI of the Civil Rights Act of 1964.
“This report is a step toward our goal of improving the juvenile court, increasing the public’s confidence in the juvenile justice system, and maintaining public safety,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “Upholding the constitutional rights of children appearing before the court is necessary to achieve these ends. The department will work with Memphis leadership to create a comprehensive blueprint that will create sustainable reforms in the juvenile justice system.”
“While the Civil Rights Division findings are serious and compelling, I am encouraged that the leadership and staff of the Juvenile Court of Memphis, Shelby County and the Shelby Juvenile Detention Center have demonstrated that they intend to take immediate action to remedy the various constitutional deficiencies identified,” said Edward L. Stanton III, U.S. Attorney for the Western District of Tennessee. “Our central objective is to ensure that our juvenile justice system works and adequately protects the rights of all youths who come before juvenile court. We look forward to working together to reach this goal, and ultimately establishing a model juvenile court.”
In January 2010 and 2011, with the full cooperation of JCSMC Judge Curtis S. Person, Justice Department attorneys visited the court and detention center with consultants in the fields of juvenile representation, statistical analysis and juvenile protection from harm. The Justice Department and consultants interviewed magistrates, probation counselors, attorneys, administrators and children appearing before the court on delinquency matters. As part of the investigation, the department’s attorneys and consultants conducted an in-depth analysis of over 60,000 youth files and reviewed policies and procedures, recordings of hearings, court documents, case files, detention material and statistical data.
The Justice Department found a pattern or practice of unconstitutional conduct in several areas, including:
- Failure to provide timely and adequate notice of charges to children appearing on delinquency proceedings;
- Failure to protect youth from self-incrimination during probation conferences;
- Failure to hold timely probable cause hearings for youth arrested without a warrant;
- Failure to provide adequate due process protections for children before transferring them to the adult criminal court;
- The disparate treatment of African-American children; and
- Failure to adequately protect detained youth from self-harm and unnecessary and excessive restraints.
The Justice Department has received extensive cooperation from Judge Person who encouraged court personnel to provide full access to the information necessary for our review. Judge Person and his staff have made improvements since the department began its investigation and demonstrated a desire to continue in a collaborative manner to remedy the deficiencies within the juvenile court and its detention center. The department welcomes this opportunity to continue working with Judge Person and the other stakeholders to improve the court’s services to those children appearing before it and housed in the detention center.
This investigation was conducted by the Special Litigation Section of the Civil Rights Division.
The full report can be found here. For more information on the Justice Department’s Civil Rights Division, please visit www.justice.gov/crt.
DENSO Corporation Executive Agrees to Plead Guilty to<br /> Automobile Parts Price-Fixing and Bid-Rigging ConspiracyRead the Press Release
WASHINGTON – An executive of Japanese-based DENSO Corporation has agreed to plead guilty and to serve 14 months in a U.S. prison for his role in a conspiracy to fix prices and rig bids for heater control panels (HCPs) installed in U.S. cars, the Department of Justice announced today.
According to the one-count felony charge filed today in the U.S. District Court for the Eastern District of Michigan in Detroit, Makoto Hattori, along with co-conspirators, engaged in a conspiracy to rig bids for and to fix, stabilize and maintain the prices of HCPs sold to a customer in the United States and elsewhere. HCPs are located in the center console of an automobile and control the temperature of the interior environment of a vehicle.
According to the charge, Hattori participated in the conspiracy from at least as early as July 2005, until at least July 2008. During the conspiracy, Hattori was an assistant manager in the Toyota Sales Division at DENSO from July 2005 until December 2006, and a manager in the Toyota Sales Division from December 2006 until at least July 2008. According to the plea agreement, which is subject to court approval, Hattori 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 Antitrust Division remains committed to holding executives accountable for engaging in illegal conduct that directly impacts the pocketbooks of American consumers and businesses,” said Acting Assistant Attorney General Sharis A. Pozen in charge of the Department of Justice’s Antitrust Division. “Criminal antitrust enforcement remains a top priority and the division will continue to work with the FBI and our law enforcement counterparts to root out this kind of cartel conduct that results in higher, non-competitive prices.”
According to court documents, Hattori and co-conspirators carried out the conspiracy by agreeing, during meetings and conversations, to allocate the supply of HCPs 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 Hattori and the co-conspirators sold HCPs 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.
Including Hattori, nine individuals and five companies 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 and Yazaki Corporation have pleaded guilty and been sentenced to pay a total of more than $748 million in criminal fines. G.S. Electech Inc. and Fujikura Ltd have agreed to plead guilty and await sentencing. 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. The remaining two individuals, Hattori and Norihiro Imai, have agreed to plead guilty and await sentencing.Hattori is charged with price fixing in violation of the Sherman Act, which carries a maximum sentence of 10 years in prison and a $1 million criminal fine for individuals. The maximum fine for 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 charge arose from an ongoing federal antitrust investigation into bid rigging, price fixing 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 the FBI’s Detroit Field Office at 313-965-2323.
25 April 2012
Three Operators of Miami Home Health CompanySentenced in $60 Million Health Care Fraud SchemeRead the Press Release
WASHINGTON – Three operators of a Miami health care agency were sentenced today to 120, 87 and 87 months in prison, respectively, for their participation in a $60 million home health Medicare fraud scheme, announced the Department of Justice, the FBI and the Department of Health and Human Services (HHS).
U.S. District Judge Ursula Ungaro in Miami sentenced Roberto Gonzalez to 120 months in prison, Olga Gonzalez to 87 months in prison and Fabian Gonzalez to 87 months in prison. Each defendant was also sentenced to three years of supervised release and was ordered to pay $40 million in restitution, jointly and severally with co-defendants.
Roberto, Olga and Fabian Gonzalez each pleaded guilty last year to one count of conspiracy to commit health care fraud.According to the court documents, Roberto Gonzalez, 61, was the president and Olga Gonzalez, 57, was the vice president of Nany Home Health Inc., a Florida home health agency that purported to provide home health care and physical therapy services to eligible Medicare beneficiaries. Fabian Gonzalez, 39, was head of the Quality and Assurance Department for Nany.
According to plea documents, the defendants conspired with patient recruiters, including Miami-area staffing agencies, for the purpose of billing the Medicare program for unnecessary home health care and therapy services. The staffing agencies functioned as patient recruiters and provided patients to Nany. The Gonzalezes and their co-conspirators paid kickbacks and bribes to patient recruiters and the staffing agencies in return for providing patients to Nany, as well as prescriptions, plans of care (POCs) and certifications for medically unnecessary therapy and home health services for Medicare beneficiaries.
The Gonzalezes used the prescriptions, POCs and medical certifications to fraudulently bill Medicare for home health care services, which the Gonzalezes knew was in violation of federal criminal laws.
According to court documents, Nany nurses and office staff falsified patient files for Medicare beneficiaries to make it appear that the beneficiaries qualified for home health care and therapy services from Nany when, in fact, the Gonzalezes knew that the beneficiaries did not qualify for and did not receive such services. The nurses and office staff at Nany described in the nursing notes and patient files symptoms that were non-existent. The Gonzalezes knew that these files were falsified so that Medicare could be billed for medically unnecessary services.
From approximately January 2006 through November 2009, Roberto, Olga and Fabian Gonzalez, and their co-conspirators submitted approximately $60 million in false and fraudulent claims to Medicare, and Medicare paid approximately $40 million on those claims.
The pleas were announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; John V. Gillies, Special Agent-in-Charge of the FBI’s Miami Field Office; and Special Agent-in-Charge Christopher Dennis of the HHS Office of Inspector General (HHS-OIG), Office of Investigations Miami Office.
This case is being prosecuted by Trial Attorney Joseph S. Beemsterboer of the Criminal Division’s Fraud Section. The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Miami.
Since their inception in March 2007, Medicare Fraud Strike Force operations in nine locations have charged more than 1,190 defendants who collectively have falsely billed the Medicare program for more than $3.6 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.
Hess Corporation to Install $45 Million in Pollution Controls and Pay $850,000 Penalty to Resolve Clean Air Act Violations at New Jersey RefineryRead the Press Release
WASHINGTON – Hess Corporation has agreed to pay an $850,000 civil penalty and spend more than $45 million in new pollution controls to resolve Clean Air Act violations at its Port Reading, N.J., refinery, the Department of Justice and the U.S. Environmental Protection Agency (EPA) announced today. Once fully implemented, the controls required by the settlement are estimated to reduce emissions of nitrogen oxide (NOx) by 181 tons per year and result in additional reductions of volatile organic compounds (VOCs). High concentrations of NOx and VOCs, key pollutants emitted from refineries, can have adverse impacts on human health, including contributing to childhood asthma, and are significant contributors to smog.
“This settlement is the 31st such agreement with petroleum refineries across the nation. Hess joins a growing list of corporations who have entered into comprehensive and innovative agreements with the United States that will result in cleaner, healthier air for communities across the nation,” said Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division of the Department of Justice. “For example, this agreement will improve air quality for New Jersey residents by requiring Hess to install advanced pollution control and monitoring technology and adopt more stringent emissions limits.”
“EPA is committed to protecting communities by reducing air pollution from the largest sources,” said Cynthia Giles, Assistant Administrator for EPA’s Office of Enforcement and Compliance Assurance. “This settlement will reduce harmful emissions that impact air quality, protecting the residents of Port Reading and New Jersey.”
The settlement requires new and upgraded pollution controls, more stringent emission limits, and aggressive monitoring, leak-detection and repair practices to reduce emissions from refinery equipment and processing units.
The government’s complaint, filed on April 19, 2012, alleged that the company made modifications to its refinery that increased emissions without first obtaining pre-construction permits and installing required pollution control equipment. The Clean Air Act requires major sources of air pollution to obtain such permits before making changes that would result in a significant emissions increase of any pollutant.
The state of New Jersey actively participated in the settlement with Hess and will receive half of the civil penalty.
The settlement with Hess is the 31st under an EPA initiative to improve compliance among petroleum refiners and to reduce significant amounts of air pollution from refineries nationwide through comprehensive, company-wide enforcement settlements. The first of these settlements was reached in 2000. With today’s settlement, 108 refineries operating in 32 states and territories – more than 90 percent of the total refining capacity in the United States – are under judicially enforceable agreements to significantly reduce emissions of pollutants. As a result of the settlement agreements, refiners have agreed to invest more than $6 billion in new pollution controls designed to reduce emissions of sulfur dioxide, nitrogen dioxide and other pollutants by over 360,000 tons per year.
The consent decree, lodged in the District of New Jersey, is subject to a 30-day public comment period and court approval. A copy of the consent decree is available at www.justice.gov/enrd/Consent_Decrees.html.
More information on the Hess settlement is available at www.epa.gov/compliance/resources/cases/civil/caa/hesscorp.html.
For more information on EPA’s Petroleum Refinery Initiative, visit: www.epa.gov/compliance/resources/cases/civil/caa/oil/index.html.
Former Morgan Stanley Managing Director Pleads Guilty for Role in Evading Internal Controls Required by FCPARead the Press Release
WASHINGTON – A former managing director for Morgan Stanley’s real estate business in China pleaded guilty today for his role in a conspiracy to evade the company’s internal accounting controls, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Loretta E. Lynch for the Eastern District of New York; and Janice Fedarcyk, Assistant Director in Charge of the FBI’s New York Field Office.
Garth Peterson, 42, an American citizen living in Singapore, pleaded guilty to one-count criminal information charging him with conspiring to evade internal accounting controls that Morgan Stanley was required to maintain under the Foreign Corrupt Practices Act (FCPA). Peterson pleaded guilty in Brooklyn, N.Y., before Senior U.S. District Judge Jack B. Weinstein.
“Mr. Peterson admitted today that he actively sought to evade Morgan Stanley’s internal controls in an effort to enrich himself and a Chinese government official,” said Assistant Attorney General Breuer. “As a managing director for Morgan Stanley, he had an obligation to adhere to the company’s internal controls; instead, he lied and cheated his way to personal profit. Because of his corrupt conduct, he now faces the prospect of prison time.”
“This defendant used a web of deceit to thwart Morgan Stanley’s efforts to maintain adequate controls designed to prevent corruption. Despite years of training, he circumvented those controls for personal enrichment. We take seriously our role in detecting and prosecuting efforts to evade those controls,” said U.S. Attorney Lynch.
“The defendant engaged in a pattern of self-dealing and deception that perpetuated his unjust enrichment,” said FBI Assistant Director Fedarcyk. “He not only circumvented his employer’s internal controls; he violated the law.”
According to court documents, Morgan Stanley maintained a system of internal controls meant to ensure accountability for its assets and to prevent employees from offering, promising or paying anything of value to foreign government officials. Morgan Stanley’s internal policies, which were updated regularly to reflect regulatory developments and specific risks, prohibited bribery and addressed corruption risks associated with the giving of gifts, business entertainment, travel, lodging, meals, charitable contributions and employment. Morgan Stanley frequently trained its employees on its internal policies, the FCPA and other anti-corruption laws. Between 2002 and 2008, Morgan Stanley trained various groups of Asia-based personnel on anti-corruption policies 54 times. During the same period, Morgan Stanley trained Peterson on the FCPA seven times and reminded him to comply with the FCPA at least 35 times. Morgan Stanley’s compliance personnel regularly monitored transactions, randomly audited particular employees, transactions and business units, and tested to identify illicit payments. Moreover, Morgan Stanley conducted extensive due diligence on all new business partners and imposed stringent controls on payments made to business partners.
According to court documents, Peterson conspired with others to circumvent Morgan Stanley’s internal controls in order to transfer a multi-million dollar ownership interest in a Shanghai building to himself and a Chinese public official with whom he had a personal friendship. The corruption scheme began when Peterson encouraged Morgan Stanley to sell an interest in a Shanghai real-estate deal to Shanghai Yongye Enterprise (Group) Co. Ltd., a state-owned and state-controlled entity through which Shanghai’s Luwan District managed its own property and facilitated outside investment in the district. Peterson falsely represented to others within Morgan Stanley that Yongye was purchasing the real-estate interest, when in fact Peterson knew the interest would be conveyed to a shell company controlled by him, a Chinese public official associated with Yongye and a Canadian attorney. After Peterson and his co-conspirators falsely represented to Morgan Stanley that Yongye owned the shell company, Morgan Stanley sold the real-estate interest in 2006 to the shell company at a discount to the interest’s actual 2006 market value. As a result, the conspirators realized an immediate paper profit of more than $2.5 million. Even after the sale, Peterson and his co-conspirators continued to claim falsely that Yongye owned the shell company, which in reality they owned. In the years since Peterson and his co-conspirators gained control of the real-estate interest, they have periodically accepted equity distributions and the real-estate interest has appreciated in value.
At sentencing, scheduled for July 17, 2012, Peterson faces a maximum penalty of five years in prison and a maximum fine of $250,000 or twice his gross gain from the offense. After considering all the available facts and circumstances, including that Morgan Stanley constructed and maintained a system of internal controls, which provided reasonable assurances that its employees were not bribing government officials, the Department of Justice declined to bring any enforcement action against Morgan Stanley related to Peterson’s conduct. The company voluntarily disclosed this matter and has cooperated throughout the department’s investigation.The Securities and Exchange Commission today announced civil charges and a settlement with Peterson.
The criminal case is being prosecuted by Trial Attorney Stephen J. Spiegelhalter of the Criminal Division’s Fraud Section and Assistant U.S. Attorney John Nowak of the Eastern District of New York. The Criminal Division’s Office of International Affairs also provided assistance in this matter. The case was investigated by the FBI’s New York Field Office.
Federal Court Bars Two Louisiana Women from Preparing Tax ReturnsRead the Press Release
A federal court in New Orleans has permanently barred Cathy and Lashanda Vinnett from preparing federal tax returns for others, the Justice Department announced today. The civil injunction order, to which the Vinnetts agreed without admitting the government’s allegations, was signed by Judge Helen G. Berrigan of the U.S. District Court for the Eastern District of Louisiana.
The government’s complaint alleged that Cathy Vinnett and her daughter Lashanda, both from Destrehan, La., and their companies – M&C Tax Service, D&C Tax Service, River Parish Tax Professionals and Remarkable Tax Services – prepared federal tax returns for customers claiming fraudulent tax refunds based on fabricated telephone excise tax refund claims, earned-income tax credits and first-time homebuyer tax credits. After claiming these improper refunds, the lawsuit alleged, the Vinnetts kept most of the resulting money for themselves, without telling their customers. The lawsuit alleges that the defendants’ misconduct caused as much as $2.2 million in harm to the government.
The court order also requires the Vinnetts to inform their customers of the order and to provide the government with a list of their customers since Jan. 1, 2007.
In the past decade, the Justice Department’s Tax Division has obtained injunctions against hundreds of tax fraud promoters and unscrupulous tax return preparers. Information about these cases is available on the Justice Department website.
Related Documents: United States v. Cathy R. Vinnett, et al
Order for Permanent Injunction by Consent
Alleged Acting New England Crime Boss Anthony Dinunzio Charged in Racketeering and Extortion ConspiracyRead the Press Release
Anthony L. Dinunzio, 53, of East Boston, Mass., the alleged leader of the New England organized crime family of La Cosa Nostra (NELCN), was arrested today on racketeering and extortion charges.
The arrest and charges were 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’DonnellSuperintendent of the Rhode Island State Police; and Providence Public Safety Commissioner Steven M. Pare.
Dinunzio was ordered detained following an initial appearance in U.S. District Court in Providence, R.I. A third superseding indictment returned on April 24, 2012, and unsealed today in the District of Rhode Island, alleges, among other things, that Dinunzio and other leaders, members and associates of the NELCN extorted protection payments from adult entertainment businesses in Rhode Island.
“According to the indictment unsealed today, as the leader of the New England LCN for more than two years, Mr. Dinunzio used fear and intimidation to control the corrupt activities of his criminal enterprise,” said Assistant Attorney General Breuer. “Among other charged criminal conduct, he allegedly asked an LCN member to extort a businessman in the adult entertainment industry and told others he would use violence against insubordinates. These charges are another step in our unrelenting efforts to stamp out the mafia.”
“This superseding indictment is the latest in a step by step, block by block, effort by this office, our partners in the Department of Justice’s Criminal Division, the FBI, the Rhode Island State Police and the Providence Police Department to charge, prosecute and send to federal prison long-time members of, and in particular, the leadership of, organized crime,” said U.S. Attorney Neronha.
“The FBI and its law enforcement partners have shattered Omerta, the New England LCN’s code of silence. In doing so , we have severely disrupted their criminal activity,” said FBI SAC DesLauriers. “Our persistent, methodical, and unyielding investigation of those who are part of the LCN and other groups will not stop. Looking forward, organized crime groups and transnational criminal enterprises are emerging from every corner of the globe. Through our task-force and intelligence based model, our joint efforts will continue to disrupt and dismantle emerging organized crime syndicates to prevent their entrenchment in our communities.”
Dinunzio is charged with one count each of racketeering and extortion, and five counts of travel in aid of racketeering. Since January 2011, he is the ninth alleged leader, underboss, member or associate of the NELCN to be indicted by a federal grand jury in Providence on federal racketeering and related charges. Five of the defendants, including admitted longtime former NELCN underboss and boss Luigi Manocchio and admitted capo regime Edward Lato, have pleaded guilty and are detained while awaiting sentencing. A sixth defendant pleaded guilty and was sentenced on Dec. 12, 2011, to 30 months in prison.
The third superseding indictment alleges that Anthony Dinunzio, a member and capo of the NELCN, assumed a leadership role of the NELCN in late 2009 and early 2010, and ultimately became the acting boss. This superseding indictment alleges that Dinunzio participated with other NELCN members and associates in a racketeering conspiracy in which monthly cash payments for protection of $2,000 to $6,000 were demanded from the owners and operators of several adult entertainment businesses in Rhode Island. Several of those NELCN members and associates have previously pleaded guilty to racketeering charges. This superseding indictment also alleges that on several occasions, at Dinunzio’s direction, crime family members from New England, New York and New Jersey were consulted with and/or traveled to Massachusetts to discuss various criminal activities and crime family matters. Dinunzio also allegedly directed NELCN members to travel to various locations, including New York, for meetings to discuss various criminal activities and crime family matters.
According to this indictment, it is alleged that one such meeting occurred on Nov. 3, 2009, in Boston, at a wake of an NELCN member’s mother, and later that same evening at a local restaurant. During these meetings, Dinunzio and another NELCN member allegedly discussed, among other things, the distribution of proceeds from the extortion of the Rhode Island adult entertainment businesses. Dinunzio allegedly indicated that a portion of those extorted monies would now be coming to him and to the NELCN leadership in Boston. Previously, as alleged, the money had been going to former Rhode Island NELCN boss Luigi Manocchio who had stepped down as boss in 2009.
In addition, this indictment alleges that in late 2009 or early 2010, Dinunzio asked another NELCN member to extort money from a prominent businessman in the adult entertainment industry in Rhode Island, who had paid protection money to the Gambino crime family from New York over the years. Dinunzio allegedly dispatched an NELCN member to New York to meet with Gambino crime family members on several occasions to receive Gambino family permission to extort money from the businessman for businesses he was operating in New England.
According to this indictment, it is alleged that on June 22, 2011, Dinunzio met with a senior made member of the Gambino crime family at a restaurant in Malden, Mass. Dinunzio allegedly discussed the extortion of the Rhode Island strip clubs, indicating that “it is still going.” Dinunzio also discussed a May 5, 2011, FBI search of his person and the seizure of $5,000 cash in alleged protection money paid by Rhode Island businesses and brought to him by a NELCN leader from Rhode Island.
In this June 22, 2011, meeting with a senior Gambino crime family member, Dinunzio allegedly discussed the rules for joining the NELCN. In discussing a fellow LCN member, Dinunzio allegedly stated, “You know what I can’t understand? How the hell did he get made, because he’s half Irish…I don’t understand that...that’s not the rules…you gotta do one hundred percent (Italian).” Referring to a person sponsored for membership, Dinunzio allegedly stated, ‘I said he’s good.’ For ten years he waited. Then he come and see me and said ‘Thank you Anthony. You know I’m with you all the way.’ He deserved it though.”
According to this indictment, at the same June 22, 2010, meeting with a senior Gambino crime family member, Dinunzio allegedly discussed his NELCN leadership style stating, “As soon as I took over I changed everything. One guy… ‘What if nobody wants to listen to you?’ ‘I said you’re shelved.’ He said ‘What if they don’t wanna get shelved?’ ‘Well then you and I get to watch you die in the ground….I’ll bury you right in the [expletive] ground puts all the dirt. You’re alive. They stay there. I’ll stay there [expletive] 10 hours until you’re dead. And I’ll dig you back up and make sure you’re dead.’”
The indictment alleges that Dinunzio continued to be concerned about the investigation, arrests of other members and possible government cooperators in the case. The third superseding indictment alleges that despite these concerns, he continued to try to get other members to assist in running the Rhode Island part of the criminal enterprise. At one point, during a Dec. 7, 2011, meeting with a senior Gambino made member, Dinunzio allegedly commented, “If I go to the can. I’m still the boss…no matter what.”
An indictmentis merely an allegation and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
The cases are being prosecuted by Trial Attorney Sam Nazzaro of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorney William J. Ferland for the District of Rhode Island. The matter is being investigated by the FBI, Rhode Island State Police and the Providence Police Department.
24 April 2012
U.S. Intervenes in False Claims Lawsuit Alleging Knowing Failure to Pay Import Duties by Japanese and U.S. CompaniesRead the Press Release
The United States has intervened in a lawsuit against Japanese company, Toyo Ink Manufacturing Co. Ltd. and its U.S. subsidiaries: Toyo Ink International Corp., located in New York; Toyo Ink America LLC, located in Illinois; and Toyo Ink Manufacturing America LLC, located in New Jersey, the Justice Department announced today. Toyo Ink, which has operations worldwide, is a leading provider of printing inks.
The suit alleges that the Toyo Ink companies knowingly misrepresented the country of origin on documents presented to U.S. Customs and Border Protection to avoid paying antidumping and countervailing duties on imports of the colorant carbazole violet pigment number 23 (CVP-23). The Department of Commerce assesses antidumping and countervailing duties, which are collected by U.S. Customs, to protect U.S. businesses by offsetting unfair foreign pricing and government subsidies. Imports of CVP-23 from China and India have been subject to these duties since 2004.
The suit alleges that Toyo misrepresented Japan and Mexico as the countries of origin for its CVP-23 imports to avoid these duties. Although Toyo’s CVP-23 imports from China and India underwent a finishing process in Japan and Mexico, the complaint alleges that this process was insufficient to change the country of origin.
“Companies taking advantage of United States markets must comply with the law, including the payment of import duties levied to protect domestic manufacturers and producers from unfair competition abroad,” said Stuart F. Delery, Acting Assistant Attorney General for the Civil Division of the Department of Justice. “As we have done today, the Department of Justice will take action against those we believe have inappropriately avoided paying money owed to the United States.”
The lawsuit was filed in the U.S. District Court for the Western District of North Carolina by whistle blower John Dickson under the qui tam, or whistleblower, provisions of the False Claims Act. The act permits private parties to sue companies and individuals on behalf of the United States that they believe have falsely claimed federal funds or, as in this case, made misrepresentations to avoid paying funds owed to the government. The government may intervene and take over the action, as it has done here. The act allows the government to recover three times its damages plus civil penalties to ensure that the public treasury is made whole for the loss and for the costs of investigating and prosecuting false claims. The whistle blower is entitled to a share of any funds recovered through the lawsuit.
The claims asserted in the complaint against Toyo are allegations only, and there has been no determination of liability.
Massachusetts Financial Advisor Sentenced to 60 Months in Prison for Tax Crimes and ContemptRead the Press Release
Kevin P. Mahoney of Attleboro, Mass., was sentenced today to 60 months in prison, following trial convictions on corruptly endeavoring to obstruct the administration of the Internal Revenue laws, filing false tax returns with the Internal Revenue Service (IRS) and criminal contempt of court, the Justice Department and the IRS announced. U.S. District Judge Joseph L. Tauro presided over the trial and imposed the sentence. A Boston jury convicted licensed stockbroker, insurance agent and financial advisor Mahoney on Jan. 25, 2012. Mahoney was charged with one count of corruptly endeavoring to obstruct the administration of the Internal Revenue laws, eight counts of contempt of court and eight counts of filing false tax returns. He was convicted on all counts. Judge Tauro also ordered Mahoney to pay $367,000 in restitution to the IRS. Mahoney was remanded to prison immediately following the sentencing hearing.
The evidence at trial showed that Mahoney had failed to pay all of his taxes for the years 1996 through 2001 but had attempted to pay tax-related debts by submitting to the IRS more than $2.2 million in fictitious financial instruments, called Bills of Exchange, and checks drawn on a closed bank account. The evidence further showed that Mahoney obtained fake Bills of Exchange from American Rights Litigators (ARL), a now-defunct Florida-based organization that was permanently enjoined from promoting and selling certain fraudulent tax schemes based on its prior promotion and sale of the same. ARL was also used by imprisoned actor Wesley Snipes . After filing for bankruptcy, Mahoney caused a worthless promissory note made by now-deceased “sovereign citizen” Jerry Ralph Kane to be submitted to the IRS as purported payment for approximately $805,000 in taxes that Mahoney owed at that time.
The evidence also showed that Mahoney submitted to the IRS false individual income tax returns for the years 2000 through 2006 that he knew failed to report more than $1.3 million in taxable income received from various financial institutions. Along with his tax returns, Mahoney had submitted altered IRS Forms 1099-MISC on which he changed to zero the amount of non-employee compensation that the financial institutions had reported paying him. For instance, Mahoney attached to his 2006 tax return an altered Form 1099-MISC in which he claimed that a life insurance company paid him non-employee compensation of zero when it had actually paid him approximately $73,000. Mahoney also filed a false 2007 Nonresident Alien Tax Return in which he falsely claimed a refund of almost $389,000.
According to evidence at trial, the U.S. District Court for the District of Massachusetts had permanently enjoined Mahoney in July 2002 from, among other things, engaging in conduct that interfered with the administration of the Internal Revenue laws. The injunction proceedings were brought against Mahoney in accordance with a lawsuit filed by the Justice Department’s Tax Division. Mahoney committed criminal contempt by violating the permanent injunction in that he assisted in the preparation and submission to the IRS of income tax returns for other people that falsely claimed more than $50 million dollars in refunds based on false IRS Forms 1099-OID and an IRS Form 1099-C falsely reporting $300 million in debt purportedly owed to a third party by an IRS employee.
The case was investigated by Special Agents from IRS - Criminal Investigation and was prosecuted by Trial Attorneys Jeffrey McLellan and Kenneth Vert of the Justice Department’s Tax Division. Assistant Attorney General Kathryn Keneally of the Tax Division commended the special agents and thanked U.S. Attorney Carmen M. Ortiz and her entire office for their assistance.
Additional information about the Tax Division and its enforcement efforts may be found at www.justice.gov/tax .
Individual Indicted in Connection with Machine Gun<br /> Attack on U.S. Embassy in Bosnia-Herzegovina in 2011Read the Press Release
WASHINGTON – Mevlid Jasarevic, 23, a citizen of Serbia, was indicted today by a federal grand jury in the District of Columbia on charges of attempted murder and other violations in connection with his alleged machine gun attack on the U.S. Embassy in Sarajevo, Bosnia-Herzegovina, on Oct. 28, 2011.
The indictment was announced by Lisa Monaco, Assistant Attorney General for National Security; Ronald C. Machen Jr., U.S. Attorney for the District of Columbia; and James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Division.
The 10-count indictment charges Jasarevic with one count of attempt to murder U.S. officers or employees; one count of attempt to murder U.S. nationals within the special maritime and territorial jurisdiction of the United States (the U.S. Embassy); one count of assault with a dangerous weapon with intent to do bodily harm within the special maritime and territorial jurisdiction of the United States; one count of assaulting U.S. officers or employees with a deadly weapon; one count of destruction of property within the special maritime and territorial jurisdiction of the United States; and five counts of use of a firearm during a crime of violence.
Yesterday, authorities in Bosnia-Herzegovina brought charges against Jasaveric and two others in connection with the alleged attack on the U.S. Embassy. Jasaveric is in the custody of Bosnia-Herzegovina authorities. The United States has closely cooperated with Bosnia-Herzegovina authorities in their investigation of the U.S. Embassy attack and strongly supports their decision to charge and prosecute those allegedly involved. The United States will continue to cooperate fully with authorities in Bosnia-Herzegovina to bring to justice those involved.
The case is being investigated by the FBI Washington Field Office. The case is being prosecuted by Assistant U.S. Attorney Robert Bowman of the U.S. Attorney’s Office for the District of Columbia and Trial Attorney Joshua Larocca of the Counterterrorism Section of the Justice Department’s National Security Division. The Office of International Affairs in the Justice Department’s Criminal Division also provided assistance.
The attempted murder charges against Jasarevic, as well as the charges of assaulting U.S. officers and employees with a deadly weapon, and destruction of property each carry a maximum sentence of 20 years. Each charge of using a firearm during a crime of violence carries a mandatory minimum sentence of 30 years for use of a machinegun. The charge of assault with a dangerous weapon with intent to do bodily harm within the special maritime and territorial jurisdiction of the United States carries a maximum sentence of 10 years.
The public is reminded that an indictment contains mere allegations. Defendants are presumed innocent unless and until proven guilty in a court of law.
Related Materials:
Jasarevic Indictment (PDF)
Freeport-McMoRan Corp. and Freeport-McMoRan Morenci Inc. Will Pay $6.8 Million in Damages for Injuries to Natural Resources from the Morenci Copper Mine in ArizonaRead the Press Release
WASHINGTON – The Department of Justice and the Department of the Interior announced today that Freeport-McMoRan Corporation and Freeport-McMoRan Morenci Inc. (Freeport-McMoRan) have agreed to pay $6.8 million to settle federal and state natural resource damages claims related to the Morenci copper mine in southeastern Arizona.
The complaint, which was filed jointly by the United States and the state of Arizona on April 24, 2012, in the U.S. District Court for the District of Arizona, alleges that Freeport-McMoRan is civilly liable for injuries to natural resources that resulted from hazardous substance releases at and from Freeport-McMoRan’s Morenci Mine site. The complaint further alleges that surface waters, terrestrial habitat and wildlife, and migratory birds have been injured, destroyed or lost as a result of releases of hazardous substances at and from the mine site. The hazardous substances that have been released include sulfuric acid and metals. The cause of action for natural resource damages is based on Section 107(a) of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended (CERCLA). Historically, the Morenci Mine was owned and operated by Phelps Dodge Corporation until that company was acquired by Freeport-McMoRan entities in 2007.
Under the consent decree lodged today in federal court, Freeport-McMoRan will pay $6.8 million to the U.S. Department of the Interior’s Natural Resource Damage Assessment and Restoration Fund. This money will be used by the federal and state natural resources trustees to plan and implement projects designed to restore, replace or acquire the equivalent of wildlife and wildlife habitat in the vicinity of the impacted area. Of this amount, $98,000 is designated for payment to the Department of the Interior for its remaining unpaid past damage assessment costs. Freeport-McMoran has already repaid over $842,000 in injury assessment costs.
“Today’s settlement will help compensate the people of Arizona for the loss of habitat and wildlife, and the injuries to the overall quality of the local environment caused by open-pit mining at the Morenci Mine,” said Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division. “This agreement also fosters federal and state efforts to restore and protect important wildlife habitat in injured areas.”
“Mining has long been, and continues to be, an important part of Arizona’s history and economy,” said Ann Birmingham Scheel, Acting U.S. Attorney for the District of Arizona. “Likewise, protecting Arizona’s environment has long been, and continues to be, a priority for the U.S. Attorney’s Office and the Department of Justice. This settlement strikes a balance between mining and protecting the environment and will allow the natural resources trustees to focus on restoration efforts rather than on litigation.”
The designated natural resources trustees for the Morenci Mine area include the Department of the Interior’s Fish and Wildlife Service and the Trustee for Natural Resources for the State of Arizona.This is the second settlement with Freeport-McMoRan Corporation and its mining subsidiaries in as many months. On Feb. 21, 2012, the federal district court in New Mexico approved a consent decree between the United States, the state of New Mexico and Freeport-McMoRan entities that resolved natural resource damages claims at three Freeport-McMoRan mining sites in southwestern New Mexico.
The proposed consent decree, lodged in the District of Arizona, is subject to a 30-day public comment period and court review and approval. A copy of the consent decree is available at www.usdoj.gov/enrd/Consent_Decrees.html.
Related Materials:
Freeport-McMoRan Consent Decree (PDF)
Four Alleged Members of the Internet Piracy Group “IMAGiNE” <br /> Indicted in VirginiaRead the Press Release
WASHINGTON – Four individuals have been charged in the Eastern District of Virginia for their alleged roles in an Internet piracy group that distributed via the Internet copies of movies showing only in theaters, Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney for the Eastern District of Virginia Neil H. MacBride and U.S. Immigration and Customs Enforcement (ICE) Director John Morton announced today.
An indictment returned on April 18, 2012, and unsealed yesterday charges Jeramiah Perkins, 39, of Portsmouth, Va.; Gregory Cherwonik, 53, of New York; Willie Lambert, 57, of Pennsylvania; and Sean Lovelady, 27, of California; with one count of conspiracy to commit criminal copyright infringement and two counts of criminal copyright infringement. Perkins, Cherwonik and Lambert are charged with two additional counts of criminal copyright infringement, and Perkins and Cherwonik are charged with a sixth count of criminal copyright infringement of a work being prepared for commercial distribution.
Perkins, Cherwonik and Lambert were arrested yesterday and Lovelady reported to authorities today. The defendants are scheduled to be arraigned on May 9, 2012.
“These four defendants are charged with serious intellectual property crimes,” said Assistant Attorney General Breuer. “Through IMAGiNE, they allegedly sought to become the leading source of pirated movies on the Internet. This Justice Department, working with our partners at ICE, has made fighting intellectual property crime a top priority, and we will continue to bring cases against individuals and entities devoted to cheating consumers and undermining artistic pursuits.”
“Piracy is outright theft, regardless of the technology or business model used,” said U.S. Attorney MacBride. “Large-scale copyright infringement is a serious crime that hurts not only those in the entertainment industry but also those who legally pay for that entertainment.”
“The indictment in this case demonstrates ICE Homeland Security Investigations’ commitment to identifying and dismantling pirates that are weakening our economy through their illegal acts,” said ICE Director Morton. “Criminals engaged in piracy are stealing from the 2.4 million Americans employed by the entertainment industry. ICE, along with our partners at the Justice Department, will continue to vigorously investigate and prosecute cases involving piracy and counterfeiting.”
According to the indictment, the defendants and their co-conspirators identified themselves as the IMAGiNE Group and sought to become the premier group to first release Internet copies of new movies only showing in theaters. From September 2009 until September 2011, they allegedly reproduced and distributed over the Internet tens of thousands of illegal copies of copyrighted works. The indictment charges that the group regularly and illicitly obtained copies of the video and audio components of motion pictures showing in theaters and then edited and combined them into one infringing movie file, which thousands of members of the group shared with one another by use of BitTorrent file sharing technology and then released to the Internet.
The indictment alleges that the IMAGiNE Group rented computer servers to host websites that included member profiles, a server called a torrent tracker that assists in communications among members using BitTorrent file sharing technology, discussion forums, a message board and news, rules and other information about making donations to and using the website.
The maximum prison sentence for the charge of conspiracy to commit criminal copyright infringement and for each count of criminal copyright infringement is five years in prison.
Charges contained in an indictment are merely allegations, and the defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
The investigation of the case and the arrests were conducted by agents with ICE Homeland Security Investigations. Assistant U.S. Attorney Robert J. Krask of the Eastern District of Virginia and Senior Counsel John H. Zacharia of the Criminal Division’s Computer Crime and Intellectual Property Section are prosecuting the case on behalf of the United States.
This case is part of efforts being undertaken by the Department of Justice Task Force on Intellectual Property (IP Task Force) to stop the theft of intellectual property. Attorney General Eric Holder created the IP Task Force to combat the growing number of domestic and international intellectual property crimes, protect the health and safety of American consumers, and safeguard the nation’s economic security against those who seek to profit illegally from American creativity, innovation and hard work. The IP Task Force seeks to strengthen intellectual property rights protection through heightened criminal and civil enforcement, greater coordination among federal, state and local law enforcement partners, and increased focus on international enforcement efforts, including reinforcing relationships with key foreign partners and U.S. industry leaders. To learn more about the IP Task Force, go to www.justice.gov/dag/iptaskforce.
Former BP Engineer Arrested for Obstruction of Justice in Connection with the Deepwater Horizon Criminal InvestigationRead the Press Release
WASHINGTON – Kurt Mix, a former engineer for BP plc, was arrested today on charges of intentionally destroying evidence requested by federal criminal authorities investigating the April 20, 2010, Deepwater Horizon disaster, announced Attorney General Eric Holder, Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Jim Letten of the Eastern District of Louisiana and Kevin Perkins, Acting Executive Assistant Director for the FBI’s Criminal Cyber Response and Services Branch.
Mix, 50, of Katy, Texas, was charged with two counts of obstruction of justice in a criminal complaint filed in the Eastern District of Louisiana and unsealed today.
“The department has filed initial charges in its investigation into the Deepwater Horizon disaster against an individual for allegedly deleting records relating to the amount of oil flowing from the Macondo well after the explosion that led to the devastating tragedy in the Gulf of Mexico,” said Attorney General Holder. “The Deepwater Horizon Task Force is continuing its investigation into the explosion and will hold accountable those who violated the law in connection with the largest environmental disaster in U.S. history.”
According to the affidavit in support of a criminal complaint and arrest warrant, on April 20, 2010, the Deepwater Horizon rig experienced an uncontrolled blowout and related explosions while finishing the Macondo well. The catastrophe killed 11 men on board and resulted in the largest environmental disaster in U.S. history.
According to court documents, Mix was a drilling and completions project engineer for BP. Following the blowout, Mix worked on internal BP efforts to estimate the amount of oil leaking from the well and was involved in various efforts to stop the leak. Those efforts included, among others, Top Kill, the failed BP effort to pump heavy mud into the blown out wellhead to try to stop the oil flow. BP sent numerous notices to Mix requiring him to retain all information concerning Macondo, including his text messages.
On or about Oct. 4, 2010, after Mix learned that his electronic files were to be collected by a vendor working for BP’s lawyers, Mix allegedly deleted on his iPhone a text string containing more than 200 text messages with a BP supervisor. The deleted texts, some of which were recovered forensically, included sensitive internal BP information collected in real-time as the Top Kill operation was occurring, which indicated that Top Kill was failing. Court documents allege that, among other things, Mix deleted a text he had sent on the evening of May 26, 2010, at the end of the first day of Top Kill. In the text, Mix stated, among other things, “Too much flowrate – over 15,000.” Before Top Kill commenced, Mix and other engineers had concluded internally that Top Kill was unlikely to succeed if the flow rate was greater than 15,000 barrels of oil per day (BOPD). At the time, BP’s public estimate of the flow rate was 5,000 BOPD – three times lower than the minimum flow rate indicated in Mix’s text.
In addition, on or about Aug. 19, 2011, after learning that his iPhone was about to be imaged by a vendor working for BP’s outside counsel, Mix allegedly deleted a text string containing more than 100 text messages with a BP contractor with whom Mix had worked on various issues concerning how much oil was flowing from the Macondo well after the blowout. By the time Mix deleted those texts, he had received numerous legal hold notices requiring him to preserve such data and had been communicating with a criminal defense lawyer in connection with the pending grand jury investigation of the Deepwater Horizon disaster.
A complaint is merely a charge and a defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt.
If convicted, Mix faces a maximum penalty of 20 years in prison and a fine of up to $250,000 as to each count.
The Deepwater Horizon Task Force, based in New Orleans, is supervised by Assistant Attorney General Breuer and led by Deputy Assistant Attorney General John D. Buretta, who serves as the Director of the task force. The task force includes prosecutors from the Criminal Division and the Environment and Natural Resources Division of the Department of Justice, the U.S. Attorney’s Office for the Eastern District of Louisiana and other U.S. Attorney’s Offices, and investigating agents from the FBI, Environmental Protection Agency, Department of Interior, U.S. Coast Guard, U.S. Fish and Wildlife Service and other federal law enforcement agencies.
The task force’s investigation of this and other matters concerning the Deepwater Horizon disaster is ongoing.
The case is being prosecuted by task force Deputy Directors Derek Cohen and Avi Gesser of the Justice Department’s Criminal Division, and task force prosecutors Assistant U.S. Attorney Richard Pickens II of the Eastern District of Louisiana and Assistant U.S. Attorney Scott Cullen of the Eastern District of Pennsylvania.
Related Materials:
Mix Complaint (PDF)
Mix Affidavit (PDF)Florida Tax Preparer Pleads Guilty to Identity Theft and Wire FraudRead the Press Release
Ernst Pierre, a Port St. Lucie, Fla., tax preparer, pleaded guilty today to wire fraud and aggravated identity theft, the Justice Department and Internal Revenue Service (IRS) announced. Pierre was charged with a scheme to file false federal income tax returns using stolen identity information.
According to the indictment and Pierre’s admissions in his plea, from October 2009 through May 2011, Pierre filed false tax returns for clients of Tax Max, a Port St. Lucie tax return preparation business he owned and operated. Pierre obtained the names and Social Security numbers of relatives of clients for whom he had prepared and submitted federal income tax returns and then fraudulently used those names and Social Security numbers as “dependents” on other client tax returns and on his own tax return. Inclusion of a dependent on a federal income tax return can result in a higher tax refund.
Sentencing has been set for July 2, 2012, before the Judge Donald L. Graham of the Southern District of Florida. Pierre faces a maximum potential sentence of 20 years in prison for the wire fraud count and a mandatory two-year sentence for the aggravated identity theft count. Pierre also faces up to $500,000 in fines and an order of mandatory restitution.
This case was investigated by IRS - Criminal Investigation special agents. Trial Attorneys Justin K. Gelfand and Thomas J. Krepp of the Justice Department’s Tax Division are prosecuting the case with the assistance of the U.S. Attorney’s Office in the Southern District of Florida.
Additional information about the Tax Division and its enforcement efforts may be found at www.justice.gov/tax.
Dallas Compounding Pharmacy Owner Pleads Guiltyin Connection with Misbranded Drug ShipmentRead the Press Release
Gary D. Osborn and his corporation, ApothéCure Inc., pleaded guilty today in the U.S. District Court for the Northern District of Texas to two misdemeanor criminal violations of the Food, Drug and Cosmetic Act (FDCA). The pleas are in connection with ApothéCure’s interstate shipment of two lots of misbranded colchicine injectable solution that led to the deaths of three people in the Pacific Northwest.
ApothéCure, which is located in Dallas, is a compounding pharmacy. Compounding Pharmacies create particular pharmaceutical products to fit the unique needs of patients by combining appropriate ingredients.
Colchicine is used to prevent gout attacks (sudden, severe pain in one or more joints caused by abnormally high levels of a substance called uric acid in the blood) in adults, and to relieve the pain of gout attacks when they occur.
The government’s charges were based on ApothéCure’s February 2007 shipment of 72 vials of compounded colchicine to a now-defunct medical center in Portland, Ore. On March 19, 2007, a patient in Yakima, Wash., who received colchicine from this shipment, died after receiving the infusion. The medical examiner determined that the cause of death was multiple organ failure and acute colchicine toxicity.
On March 30, 2007, colchicine from ApothéCure was administered to two other patients who were suffering from back pain. Within hours of receiving the colchicine injections, both patients became seriously ill, were taken to local hospitals, and died shortly thereafter. The medical examiner in Oregon determined colchicine toxicity to be the cause of death for both patients.
FDA testing of vials selected from the lethal shipment revealed that some of the vials were super-potent, containing 640 percent of the level of colchicine declared on the label. Other vials were determined to be sub-potent, and contained less than 62 percent of the declared levels on the labels.
“This plea shows that the Department of Justice will enforce the Food, Drug and Cosmetic Act against responsible corporate officers of companies that fail to control the quality of their products,” said Stuart F. Delery, Acting Assistant Attorney General of the Civil Division of the Department of Justice. “The drugs mixed by Mr. Osborn’s company were not merely misbranded, but lethal. Drug makers of all sizes, from large corporations to small compounding pharmacies, have a duty to ensure their products are safe.”
Sentencing is scheduled for July 27, 2012.
This case was investigated by Food and Drug Administration’s Office of Criminal Investigations, which referred this matter to the Justice Department. The case is being prosecuted by Trial Attorneys John Claud and Patrick Runkle of the Civil Division’s Consumer Protection Branch.
Attorney General Eric Holder’s Task Force on Children Exposed to Violence Holds Final Public Hearing in DetroitRead the Press Release
At the final hearing of Attorney General Eric Holder’s National Task Force on Children Exposed to Violence in Detroit, officials from the Justice Department and the city of Detroit underscored efforts to keep kids safe and prevent youth violence. The task force is a key part of Attorney General Holder’s Defending Childhood Initiative to prevent and reduce children’s exposure to violence.
At the hearing, Acting Associate Attorney General Tony West announced the release of a new Justice Department research bulletin showing that 46 percent of victimized children were known to school, police or medical authorities. The bulletin, Child and Youth Victimization Known to Police, School, and Medical Authorities draws from the National Survey of Children’s Exposure to Violence sponsored by the Office of Justice Programs’ Office of Juvenile Justice and Delinquency Prevention with support from the Centers for Disease Control and Prevention.
“While more children are reporting violence to authorities, many continue to endure the pain of victimization in silence,” said Acting Associate Attorney General West. “Through the work of the Attorney General’s task force, we hope to find more ways to identify those children in need and make sure they have access to effective prevention and treatment options.”
The task force is co-chaired by Joe Torre, chairman of the board of the Joe Torre Safe At Home Foundation, and Robert Listenbee, Jr., chief of the Juvenile Unit of the Defender Association of Philadelphia. Co-chair Listenbee, a Detroit-area native, highlighted the urgency and opportunity of the task force’s work.
“I grew up just 20 miles outside of Detroit in Mt. Clemens, Michigan. During my high school years, violence was commonplace,” said Listenbee. “Similar violence still occurs in cities and towns across the country, but today we know so much more about how to address it. The resounding message this task force has heard is that we can – and must – change the norm of violence in children’s lives.”
During the opening session, Detroit Police Chief Ralph Godbee discussed the police department’s work with youth. He was joined by Lawnya Sherrod, a former Detroit gang member turned community organizer, who highlighted her work to get youth out of gangs and to help them graduate from high school and become productive, successful members of the community.
In a panel discussion about successful programs, Wayne County Child and Family Services Director Tadarial Sturdivant described his agency’s efforts to reform the juvenile justice system through a program called First Contact.
“[The program] creates an opportunity to collaborate with the Detroit Police Department and offer services at the street level to support the patrol officer who has first contact with the juvenile,” said Sturdivant. “As an alternative to arrest and detention, [the department] will convey youth to the Juvenile Assessment Center for stabilization, parental contact, brief assessment, transportation home, and referral for voluntary services.”
In a panel about public-private partnerships, Dr. William Bell, President and CEO of Casey Family Programs, discussed the need to meet the “overwhelming circumstances” of violence against children “with deliberate and intentional action.” Bell outlined concrete steps that every city in America could take to build “communities of hope” to reverse these violent trends.
Mary Lee, Deputy Director of PolicyLink, described how place influences many child outcomes. “ Just by knowing his or her zip code, a young person’s health, life expectancy, success in school, adult income¯all of these can be predicted,” noted Lee in her testimony, which described ways to improve the places children live to improve long-term outcomes.
The task force is composed of 13 leading experts, including practitioners, child and family advocates, academic experts and licensed clinicians, who will identify promising practices, programming and community strategies to prevent and respond to children’s exposure to violence. Their findings will inform their final report to the Attorney General in late 2012, which will present policy recommendations and serve as a blueprint for preventing and reducing the negative effects of such violence across the United States.
For more information about Attorney General Holder’s Defending Childhood Initiative and the task force, please visit: www.justice.gov/defendingchildhood.
Related Materials:
Bulletin: Child and Youth Victimization Known to Police, School, and Medical Authorities
Acting Associate Attorney General Tony West Speaks at the Defending Childhood Task Force Meeting
Acting Assistant Attorney General for the Office of Justice Programs Mary Lou Leary Speaks at the Defending Childhood Task Force Meeting
23 April 2012
Two Aryan Brotherhood of Texas Gang Members Sentenced in Houston for Violent Crimes in Aid of RacketeeringRead the Press Release
WASHINGTON – Two members of the Aryan Brotherhood of Texas (ABT) have been sentenced to federal prison for their role in an aggravated assault that took place in Tomball, Texas, in September 2008, Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Kenneth Magidson of the Southern District of Texas announced today.
On April 20, 2012, U.S. District Court Senior Judge Ewing Werlein Jr. sentenced Michael Burkett, 34, aka “Redneck,” to 27 months in prison and Shane Dallmeyer, 31, aka “Lock Jaw,” to 33 months in prison.
Burkett and Dallmeyer, both of the greater Houston area, pleaded guilty to racketeering aggravated assault for their role in the beating of an ABT prospect member.
According to court documents, the defendants were members of the ABT, a powerful race-based, state-wide organization that operated inside and outside of state and federal prisons throughout the United States. The ABT was established in the early 1980s within the Texas prison system. The gang modeled itself after and adopted many of the precepts and writings of the Aryan Brotherhood, a California-based prison gang that was formed in the California prison system during the 1960s. According to court documents, previously, the ABT was primarily concerned with the protection of white inmates and white supremacy/separatism. Over time, the ABT has expanded its criminal enterprise to include illegal activities for profit.
According to court documents, the ABT enforces its rules and promotes discipline among its members, prospects and associates through murder, attempted murder, conspiracy to murder, assault, robbery and threats against those who violate the rules or pose a threat to the enterprise. Members, and oftentimes associates, are required to follow the orders of higher-ranking members, often referred to as “direct orders.”
According to court documents, Burkett and Dallmeyer, along with nine fellow ABT gang members, participated in the beating of an ABT prospect member at the home of another ABT gang leader, Steven Walter Cooke, 48, aka “Stainless,” in Tomball, on Sept. 22, 2008. The ABT prospect, who sustained serious bodily injury, was beaten by ABT gang members because he violated ABT rules of conduct.
Eleven of the 12 co-defendants have pleaded guilty for their roles in the assault. The 12th ABT gang member, David Harlow, 43, aka, “Bam Bam,” was found guilty by Senior Judge Werlein on March 21, 2012, at trial in the Southern District of Texas.
This case is being investigated by a multi-agency task force consisting of the Bureau of Alcohol, Tobacco, Firearms and Explosives; the Drug Enforcement Administration; the FBI; the U.S. Marshals Service; the Bureau of Prisons; the Texas Ranger Division – Texas Department of Public Safety; the Montgomery County, Texas, Sheriff’s Department; the Houston Police Department-Gang Division; the Tomball Police Department; the Texas Department of Criminal Justice – Inspector General; and the Harris County, Texas, Sheriff’s Office.
The case is being prosecuted by David Karpel of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorney Jay Hileman of the Southern District of Texas.
Philadelphia Man Sentenced to 400 Months in Prison for Role in Violent Home Invasion Robberies of Business Owners in Four StatesRead the Press Release
WASHINGTON – Tahn Le, 44, of Philadelphia, was sentenced today to 400 months in prison for his participation in a conspiracy to commit violent home invasion robberies of successful Asian business owners in Pennsylvania, New Jersey, Maryland and Virginia, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Zane David Memeger of the Eastern District of Pennsylvania.
U.S. District Court Judge Legrome D. Davis also ordered Le to serve five years of supervised release following his prison term and to pay $112,689 in restitution. After a four-day trial, a federal jury in the Eastern District of Pennsylvania found Tahn Le guilty on Jan. 20, 2012, of conspiracy to interfere with interstate commerce through multiple home invasion robberies and related firearms violations. To date, seven co-defendants have pleaded guilty for their roles in the conspiracy and are awaiting sentencing: Teo Van Bui, Buu Huu Truong, Thach Van Nguyen, Den Van Nguyen, Denise Novelli, Sidney Biggs and Hung T. Ngo.
According to evidence presented at trial, Le and his co-defendants targeted successful Asian business owners in Pennsylvania, New Jersey, Maryland and Virginia for home invasion robberies because they believed that the owners stored significant amounts of business proceeds in their homes. In carrying out the robberies, the defendants brandished handguns, tied up, and in some instances, beat their victims, and stole business proceeds as well as expensive jewelry.
The case was prosecuted by Trial Attorneys John S. Han and Robert Livermore of the Criminal Division’s Organized Crime and Gang Section.
The case was investigated by the FBI; the Poconos Township, Penn., Police Department; the Freehold Borough, N.J., Police Department; the Monroe Township, N.J., Police Department; and the Fairfax County, Va., Police Department. Additional assistance was provided by the Bureau of Alcohol, Tobacco, Firearms and Explosives.
Ohio Construction Firm Agrees to Pay $500,000 to Resolve False Claims Act AllegationsRead the Press Release
Anthony Allega Cement Contractor Inc., a Cleveland construction firm, has agreed to pay the United States $500,000 to resolve allegations that it knowingly submitted false claims related to a federally-funded construction project, the Justice Department announced today. The United States alleged that Allega submitted false claims that made it appear that the company was in compliance with the U.S. Department of Transportation’s (DOT) Disadvantaged Business Enterprise (DBE) program, as required in order to obtain and maintain Allega’s contract with the government. The DBE program provides opportunities to businesses owned by minorities and women, as well as socially and economically disadvantaged individuals, to participate in federally-funded construction and design projects.
Allega was the prime contractor on a project to construct and pave a new runway at Cleveland’s Hopkins International Airport between 2001 and 2006. To obtain and maintain its contract, Allega was required to comply with DOT DBE regulations and to accurately report DBE participation on the project. The United States alleged that Allega claimed that materials and services for the project were provided by a company known as Chem-Ty Environmental, when in fact Chem-Ty was merely a “pass-through” entity used to make it appear as if a DBE had performed the work.
“The Disadvantaged Business Enterprises program helps businesses owned by minorities and women work on federal construction projects,” said Stuart F. Delery, Acting Assistant Attorney General for the Justice Department’s Civil Division. “Those who falsely claim credits under the program in order to obtain federal funds take advantage both of the taxpayers and the businesses that the program is designed to assist.”
The government’s claims were based upon an investigation conducted by the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Northern District of Ohio, DOT’s Office of Inspector General (OIG) and the Federal Aviation Administration.
“When businesses misrepresent those working with them to obtain government contracts, they violate the law and economically harm subcontractors who already face numerous disadvantages in the workplace,” added Steven M. Dettelbach, U.S. Attorney for the Northern District of Ohio. “This resolution helps to correct that injustice in this instance.”
“Preventing and detecting DBE fraud are priorities for the Secretary of Transportation and the USDOT-OIG,” said Michelle McVicker, OIG regional Special Agent in Charge. “Prime contractors and subcontractors are cautioned not to engage in fraudulent DBE activity and are encouraged to report any suspected DBE fraud to the USDOT-OIG. Our agents will continue to work with the Secretary of Transportation, the Federal Aviation Administrator, and our law enforcement and prosecutorial colleagues to expose and shut down DBE fraud schemes throughout Ohio and the United States.”
The claims settled by this agreement are allegations only, and there has been no determination of liability.
The Justice Department’s total recoveries in False Claims Act cases since January 2009 have topped $9.2 billion.
New Jersey Financial Investor and His Company Plead Guilty to Bid Rigging at Municipal Tax Lien AuctionsRead the Press Release
A financial investor who purchased municipal tax liens at auctions in New Jersey, as well as a company in which he was a partner, pleaded guilty today for their roles in a conspiracy to rig bids for the sale of tax liens auctioned by municipalities throughout the state, the Department of Justice announced.
A felony charge was filed today in the U.S. District Court for the District of New Jersey in Newark, N.J., against David Butler of Cherry Hill, N.J. A charge was also filed against DSBD LLC, a New Jersey company responsible for managing tax lien investments in which Butler had a partnership interest. Under the plea agreements, which are subject to court approval, Butler and DSBD have each agreed to cooperate with the department’s ongoing investigation.
According to the felony charges, from at least as early as the beginning of 2005 until approximately February 2009, Butler and his company participated in a conspiracy to rig bids at auctions for the sale of municipal tax liens in New Jersey by agreeing to allocate among certain bidders on which liens to bid. The department said that both Butler and DSBD proceeded to submit bids in accordance with their agreements and purchased tax liens at collusive and non-competitive interest rates.
“The Antitrust Division is committed to holding accountable those who seek to exploit and undermine the competitive process at municipal tax lien auctions,” said Acting Assistant Attorney General Sharis A. Pozen in charge of the Department of Justice’s Antitrust Division. “The division will continue to work with its law enforcement partners to prosecute those who harm our local communities by engaging in this kind of anticompetitive conduct in municipal tax lien auctions.”
The department said that the primary purpose of the conspiracy was to suppress and restrain competition to obtain selected municipal tax liens offered at public auctions at non-competitive interest rates. When the owner of real property fails to pay taxes on that property, the municipality in which the property is located may attach a lien for the amount of the unpaid taxes. If the taxes remain unpaid after a waiting period, the lien may be sold at auction. State law requires that investors bid on the interest rate delinquent homeowners will pay upon redemption. By law, the bid opens at 18 percent interest and, through a competitive bidding process, can be driven down to zero percent. If a lien remains unpaid after a certain period of time, the investor who purchased the lien may begin foreclosure proceedings against the property to which the lien is attached.
According to the court documents, Butler and DSBD conspired with others not to bid against one another at municipal tax lien auctions in New Jersey. Since the conspiracy permitted the conspirators to purchase tax liens with limited competition, each conspirator was able to obtain liens which earned a higher interest rate. Property owners were therefore made to pay higher interest on their tax debts than they would have paid had their liens been purchased in open and honest competition.
Each violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. The maximum penalty for a corporation is a $100 million criminal fine. The maximum fine for a Sherman Act violation may be increased to twice the gain derived from the crime or twice the loss suffered by the victim if either amount is greater than the statutory maximum.
Today’s guilty pleas are the eighth and ninth pleas resulting from an ongoing investigation into bid rigging or fraud related to municipal tax lien auctions. On Aug. 24, 2011, Isadore H. May, Richard J. Pisciotta Jr. and William A. Collins each pleaded guilty to one count of bid rigging in connection with their participation in a conspiracy to allocate liens at New Jersey auctions. On Feb. 23, 2012, Robert W. Stein and David M. Farber also pleaded guilty to conspiring to allocate liens at municipal tax lien auctions in New Jersey. On March 27, 2012, Robert E. Rothman pleaded guilty for his role in a conspiracy to rig bids for the sales of tax liens auctioned by municipalities throughout New Jersey. On April 17, 2012, Stephen E. Hruby also pleaded guilty for his role in a conspiracy to rig bids for the sale of tax liens auctioned by municipalities throughout New Jersey.
Today’s charges are part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force (FFETF). President Obama established the interagency FFETF to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit www.StopFraud.gov.
The ongoing investigation is being conducted by the Antitrust Division’s New York Field Office and the FBI’s Atlantic City, N.J., office. Anyone with information concerning bid rigging or fraud related to municipal tax lien auctions should contact the Antitrust Division’s New York Field Office at 212-335-8000, visit www.justice.gov/atr/contact/newcase.htm or contact the FBI’s Atlantic City Resident Agency at 609-677-6400.Justice Department Settles Lawsuit Against City of Pittsfield, Mass., to Enforce the Employment Rights of a U.S. Navy ReservistRead the Press Release
The Justice Department announced today that it has reached a settlement with the city of Pittsfield, Mass., to resolve allegations that the city violated the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) by failing to promote a navy reservist and Pittsfield firefighter, and by retaliating against him after he invoked his rights.
The Justice Department’s complaint, filed in the U.S. District Court for the District of Massachusetts, alleges that the city violated Pittsfield firefighter Jeffrey Rawson’s rights by passing him over for promotion to lieutenant in the Pittsfield Fire Department because of his military service obligations. In 2009, Rawson took a promotional exam for lieutenant. Based on the results of the examination, Rawson was ranked second on the promotional list. In July 2010, the city informed Rawson that he was being skipped for promotion and that a firefighter ranked lower on the promotional list was instead being promoted to lieutenant. The lower ranked firefighter was promoted in September 2010.
The lawsuit further alleges that, after Rawson filed a USERRA complaint with the U.S. Department of Labor’s Veterans’ Employment and Training Service, the city retaliated against him by refusing to reinstate him to the list of firefighters eligible to serve as an acting lieutenant.
Under the terms of the settlement, embodied in a consent decree that has been submitted for approval to the federal district court, the city will promote Rawson to lieutenant retroactive to September 2010. The settlement also requires the city to provide Rawson with over $22,000 in back pay, pension contributions and interest. The settlement further mandates the city to provide USERRA training to city department heads and supervisors on the rights and obligations of covered employees and their employers.
“Our military servicemembers sacrifice tremendously to serve our country,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “This settlement demonstrates our vigilant protection of the employment opportunities of our servicemembers, and our commitment to vigorous enforcement of the laws that protect them.”
“Employers face incredible challenges when an employee leaves his position temporarily to serve our country. However, our servicemembers endure much greater challenges to protect our precious freedom,” said U.S. Attorney Carmen M. Ortiz for the District of Massachusetts. “We are pleased that the city of Pittsfield agreed to restore Mr. Rawson’s rights and provide him with the promotion to which he was entitled.”
This case was litigated by the Employment Litigation Section of the Justice Department’s Civil Rights Division and the Civil Division of the U.S. Attorney’s Office for the District of Massachusetts.
Civil rights enforcement is a priority of the Department of Justice and District of Massachusetts. The rights of our servicemembers are protected under USERRA, which prohibits civilian employers from discriminating against members of the military, including reservists, with respect to employment opportunities, including promotions, based on their past, current, or future uniformed service obligations. The federal law also prohibits employers from retaliating against service members for exercising their rights under USERRA, including by filing a complaint. Additional information about USERRA can be found on the Justice Department’s websites, www.usdoj.gov/crt/emp and www.servicemembers.gov , as well as the Labor Department’s website at www.dol.gov/vets/programs/userra/main.htm .
Justice Department Files Lawsuit Against the City of Jacksonville, Florida’s Fire and Rescue Department for Race DiscriminationRead the Press Release
The Justice Department today filed a lawsuit against the city of Jacksonville, Fla., alleging that the city is engaged in a pattern or practice of employment discrimination against African-Americans in its fire and rescue department in violation of Title VII of the Civil Rights Act of 1964. The lawsuit challenges the fire department’s use of written examinations for the promotion of firefighters to four ranks – Lieutenant, Captain, and District Chief, all in the suppression line, and Engineer.
“This complaint should send a clear message to all public employers that employment practices that have the effect of excluding qualified candidates on account of race will not be tolerated,” said Thomas Perez, Assistant Attorney General for the Civil Rights Division. “At best, these tests measure only a slice of what is necessary to be a supervisor, but they stand in the way of qualified African-Americans advancing in the fire department. The Justice Department will take all necessary action to ensure that such discriminatory practices are eliminated and that the victims of such practices are made whole.”
The United States’ complaint alleges that the examinations impact African-American candidates in two ways. First, African-American candidates for promotion to the four positions pass the examinations at significantly lower rates than white candidates. Second, even those African-Americans who pass the examinations are rarely promoted because the fire department selects candidates for promotion in descending rank-order based primarily upon each candidate’s written examination score and African-American candidates score significantly lower than whites.
Title VII prohibits employment practices that result in a disparate impact on the basis of race unless the employer can prove that such practices really test for what the job requires--are “job related and consistent with business necessity.” The complaint alleges that the City’s examinations do not meet this standard and, thus, qualified African-Americans have been kept out of the promotional ranks unnecessarily.
The Justice Department seeks a court order that would require the city to stop using the challenged examinations, develop selection procedures for promotions that comply with Title VII and provide make-whole relief, including offers of promotion, back pay and retroactive seniority, to individual African-Americans who have been harmed as a result of the city’s use of the examinations.
Additional information about Title VII and other federal employment laws is available on the Civil Rights Division’s Web site at www.justice.gov/crt/ .
Fujikura Ltd. Agrees to Plead Guilty to Price Fixing on<br /> Auto Parts Installed in U.S. CarsRead the Press Release
WASHINGTON – Tokyo-based Fujikura Ltd. has agreed to plead guilty and to pay a $20 million criminal fine for its role in a conspiracy to fix prices of automotive wire harnesses and related products installed in U.S. cars, the Department of Justice announced today.
According to a one-count felony charge filed today in the U.S. District Court for the Eastern District of Michigan in Detroit, Fujikura 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 an automaker in the United States and elsewhere. According to the charge, Fujikura’s involvement in the conspiracy lasted from at least as early as January 2006 until at least February 2010. According to the plea agreement, which is subject to court approval, Fujikura has agreed to pay a criminal fine and to cooperate with the department’s ongoing investigation.
“The Antitrust Division will remain vigilant in its efforts to detect and prosecute anticompetitive conduct in this important industry, which affects virtually every American consumer,” said Acting Assistant Attorney General Sharis A. Pozen in charge of the Department of Justice’s Antitrust Division. “The division has focused its enforcement efforts in industries essential to consumers’ everyday lives, and we, along with our law enforcement partners, have been successful in bringing to justice companies and executives engaged in illegal price fixing conspiracies.”
To date, including Fujikura, eight executives and five companies have been charged and have agreed to plead guilty in the department’s ongoing antitrust investigation into the auto parts industry. Three of the companies have pleaded guilty and have been sentenced to pay criminal fines totaling more than $748 million. Seven of the executives have pleaded guilty and have been sentenced to serve a total of more than 122 months in jail.
Fujikura manufactures and sells automotive wire harnesses, which are automotive electrical distribution systems used to direct and control electronic components, wiring and circuit boards in cars.
According to the charge, Fujikura and its co-conspirators carried out the conspiracy by agreeing, during meetings and conversations in Japan, to allocate the supply of automotive wire harnesses and related products on a model-by-model basis and sold the parts at non-competitive prices to an automaker in the United States and elsewhere.
Fujikura is charged with price fixing in violation of the Sherman Act, which carries a maximum fine of $100 million for corporations. The maximum fine for the company may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
The current 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.
Departments of Justice and Education Reach Settlement with Boston Public Schools to Ensure Equal Opportunites for ELL StudentsRead the Press Release
The Department of Justice and the Department of Education reached agreement with the Boston Public Schools (the district) and its superintendent today to ensure that English Language Learner (ELL) students in Boston receive the services and supports they need to overcome language barriers, as required by the Equal Educational Opportunities Act of 1974 and Title VI of the Civil Rights Act of 1964. This agreement replaces an interim settlement agreement entered on Oct. 1, 2010, which required the district to implement short-term remedies to ensure that thousands of students improperly excluded from the district’s ELL programs were promptly assessed and provided services.
The agreement reached today governs the district’s transition from these short-term remedies to longer-term policies and programs that expand the coverage of Boston’s ELL program and are designed to ensure that the services provided to ELL students are of high quality, delivered by qualified teachers and tailored to the specific needs of each individual student. The agreement requires the district to continue its efforts to accurately identify and place ELL students, and further ensures that ELL students, who face unique challenges, including students with interrupted former education and students with disabilities, receive assessments and services that are specially designed to address and ameliorate those challenges. The agreement also affords ELL students greater access to the higher-level learning opportunities in the district. To ensure these programmatic changes are effective, the agreement further requires the district to evaluate the effect of these changes on student achievement over time through robust, disaggregated data analyses.
“We applaud the Boston Public Schools for working collaboratively with the United States to develop a comprehensive plan to effectively serve all students who are not proficient in English,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “We believe this plan can guide other school districts seeking to ensure that its English Language Learner programs not only meet the requirements of federal law, but also empower English Language Learner students to strive for success in their education and lives.”
“A key to success is access to a high quality education and today, the Boston Public Schools is promising to provide limited English proficient students an equal opportunity for success by giving them access to programs and services tailored to meet their needs, including access to accelerated programs,” said Russlynn Ali, Assistant Secretary for the Office for Civil Rights at the Department of Education. “The Department of Education is committed to working with the Boston School Committee as it implements this comprehensive plan.”
“ Our education system must provide our children with opportunities to develop into productive citizens regardless of their proficiency in English. When English language learners lack properly trained teachers, those opportunities are curtailed,” said U.S. Attorney Carmen M. Ortiz of the District of Massachusetts. “We share the goal of continued improvement to Massachusetts schools and look forward to the progress of this collaborative effort.”
The enforcement of the Equal Educational Opportunities Act and Title VI are top priorities of the Justice Department’s Civil Rights Division. Additional information about the Civil Rights Division of the Justice Department is available on its website at www.justice.gov/crt . Enforcement of Title VI is also a top priority of Department of Education’s Office for Civil Rights. Additional information about the Department of Education’s Office for Civil Rights is available on its website at www2.ed.gov/about/offices/list/ocr/index.html .
ATK Launch Systems Inc. Settles False Claims Product Substitution Case for Nearly $37 MillionRead the Press Release
ATK Launch Systems Inc. has agreed to a $36,967,160 settlement with the United States to resolve allegations that ATK sold dangerous and defective illumination flares to the Army and the Air Force. According to the government’s allegations, from 2000 to 2006, ATK delivered LUU-2 and LUU-19 illuminating para-flares to the Defense Department. These flares, which burn in excess of 3,000 degrees Fahrenheit for over five minutes, are used for nighttime combat, covert and search and rescue operations and have been used extensively by American forces in Iraq and Afghanistan in the global war on terror. The government alleged that the flares delivered by ATK were incapable of withstanding a 10-foot drop test without exploding or igniting, as required by specifications, and that ATK was aware of this when it submitted claims for payment.
ATK has agreed to pay the United States $21 million in cash and provide necessary in-kind services worth $15,967,160 to fix the 76,000 unsafe para-flares remaining in the government’s inventory. The settlement resolves a False Claims Act suit filed in the U.S. District Court for the District of Utah.
The lawsuit was initially filed by an ATK employee under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private individuals, called “relators” to bring lawsuits on behalf of the United States and receiv e a portion of the proceeds of a settlement or judgment awarded against a defendant.
“Our men and women in combat deserve equipment that meets critical safety and performance requirements,” said Stuart F. Delery, Acting Assistant Attorney General for the Civil Division. “This case demonstrates that the Department of Justice will pursue cases where contractors knowingly provide defective equipment that puts the safety of American military service members at risk.”
“This settlement demonstrates our commitment to aggressively go after contractors who recklessly disregard and deliberately ignore critical safety defects in munitions used by America’s uniformed fighting men and women on the front lines of the war on terror,” said David B. Barlow, U.S. Attorney for the District of Utah. “This office fully supported the federal investigators in their efforts to uncover these fraudulent claims and recover the ill-gotten gains for the American taxpayers.”
The investigation team, which was led by the Defense Criminal Investigative Service, included the Air Force Office of Special Investigation, the Navy Naval Criminal Investigative Service, the Army Criminal Investigative Command and auditors from the Defense Contract Audit Agency and the Defense Contract Management Agency. Additional technical support was provided by the Army Research Laboratory in Aberdeen, Md., the Army Aviation and Missile Command in Huntsville, Ala., the Naval Sea Systems Command at Crane, Ind. and Portsmouth, R.I., the Defense Standardization Program Office at Fort Belvoir, Va., the Air Force Materiel Command at Wright Patterson Air Force Base, Ohio and Hill Air Force Base, Utah, and the Army Materiel Command at Rock Island Arsenal, Ill.
20 April 2012
Walgreens Pharmacy Chain Pays $7.9 Million<br /> <br /> to Resolve False Prescription Billing CaseRead the Press Release
Walgreens, an Illinois-based corporation operating a national retail pharmacy chain, has paid the United States and participating states $7.9 million to resolve allegations that Walgreens violated the False Claims Act, the Justice Department announced today.
The settlement resolves allegations that Walgreens offered illegal inducements to beneficiaries of government health care programs, including Medicare, Medicaid, TRICARE and the Federal Employees Health Benefits Program (FEHBP), in the form of gift cards, gift checks and other similar promotions that are prohibited by law, to transfer their prescriptions to Walgreens pharmacies. The government investigation alleged that Walgreens had offered government health beneficiaries $25 gift cards when they transferred a prescription from another pharmacy to Walgreens. The company’s advertisements that promoted gift cards and gift checks for transferred prescriptions typically acknowledged that the offer was not valid with Medicaid, Medicare or any other government program. Nevertheless, the government alleged that Walgreens employees frequently ignored the stated exemptions on the face of the coupons and handed gift cards to customers who were beneficiaries of government health programs, in violation of federal law.
“This case represents the government's strong commitment to pursuing improper practices in the retail pharmacy industry that have the effect of manipulating patient decisions,” said Stuart F. Delery, Acting Assistant Attorney General for the Civil Division of the Department of Justice.
The allegations were brought to the government by two whistleblowers, known as relators, in two separate whistleblower lawsuits filed under the qui tam, or whistleblower, provisions of the False Claims Act and state False Claims Act statutes. The relators, Cassie Bass, a pharmacy technician formerly employed by Walgreens, and Jack Chin, an independent pharmacist, will receive $1,277,172 from the United States for their role in filing the qui tam actions. The federal share of the settlement is $7,298,124.
“This case vindicates and protects the interests of consumers throughout the nation by ensuring that they remain free from undue influence by large retail chains when making decisions about which pharmacies to entrust their own individual health care,” said André Birotte Jr, U.S. Attorney for Central District of California.
“The law prohibits pharmacies from using their retail clout to lure patients whose prescriptions are subsidized by the government,” said Barbara L. McQuade, U.S. Attorney for the Eastern District of Michigan. “Continuity with a pharmacist is important to detect problems with dosages and drug interactions. Patients should make decisions based on legitimate health care needs, not on inducements like gift cards.”
“This settlement makes clear that corporations seeking increased profits over their patients' needs will pay a substantial price,” said Daniel R. Levinson, Inspector General for the Department of Health and Human Services. “Violating Federal health care laws, as Walgreens allegedly did by offering incentives for new business, cannot be tolerated.”
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 Secretary of the Department of Health and Human Services Kathleen Sebelius 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 $6.7 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department's total recoveries in False Claims Act cases since January 2009 are over $9 billion.
This case was investigated jointly by the Commercial Litigation Branch of the Justice Department’s Civil Division, the U.S. Attorney’s Offices for the Central District of California and the Eastern District of Michigan, the National Association of Medicaid Fraud Control Units and the Department of Health and Human Services, Office of Inspector General.
The claims settled by today’s agreement are allegations only; there has been no determination of liability.
Ohio Attorney Convicted of Tax Fraud and Obstruction of Justice CrimesRead the Press Release
The Justice Department and Internal Revenue Service (IRS) announced today that attorney Aristotle “Rick” R. Matsa, of Worthington, Ohio, was convicted of numerous tax fraud and obstruction of justice related offenses, including witness tampering and making a false statement. In addition, Rick Matsa and his mother, Loula Z. Matsa, were convicted of conspiracy to obstruct justice, commit perjury, and make false statements, following a five-week trial in Columbus, Ohio, before the Honorable Edmund A. Sargus Jr.
Rick Matsa individually was convicted of one count of a corrupt endeavor to obstruct and impede the IRS, 15 counts of aiding and assisting in the preparation of false and fraudulent tax returns, that related to five different trusts; one count of willfully failing to file a Report of Foreign Bank and Financial Accounts (FBAR); one count of conspiracy to obstruct justice, commit perjury, and make false statements; two counts of witness tampering; one count of submitting a false statement; and one count of obstruction of justice.
According to the indictment, which was returned on June 23, 2010, and the evidence admitted at trial, Rick Matsa, who in addition to being an attorney was also an architect, a real estate broker, and a licensed minister in Ohio, created and operated several nominee entities in order to disguise and conceal his income and assets from the IRS. The false trust return charges relate to filings for at least five separate trust entities during the tax years 2003 to 2005. In fact, the evidence at trial showed that the trusts had been filing similar returns dating back to 1990. Each of the trusts reported receiving significant amounts of interest income each year, generated from funds held in numerous bank accounts, yet no income tax was reported due as a result of fraudulently claimed deductions for distributions on the trust returns that were purportedly paid to a foreign beneficiary each year. However, the evidence at trial showed, instead, that Rick Matsa used funds from those trusts to purchase a 150-acre farm in Hocking County and a home in Worthington, both of which he used as a personal residence.
The evidence at trial also showed that Rick Matsa violated FBAR, the foreign bank account reporting requirements, by failing to disclose his ownership and control over a foreign bank account held in The Netherlands. The evidence at trial was that Rick Matsa maintained more than $300,000 in funds in that undisclosed foreign bank during 2003.
The evidence at trial further showed that after learning of the federal grand jury investigation into his business activities in May of 2006, Rick Matsa, together with Loula Matsa and others, conspired to obstruct the investigation by misleading and concealing evidence from the grand jury, making false statements to the grand jury, creating false documents, tampering with witnesses, and lying to federal investigators.
George Pappas, formerly an attorney in Urbana, Ohio, who previously pleaded guilty to making false statements to federal agents and during the grand jury investigation, testified at trial. Pappas testified that he falsely claimed ownership of Rick Matsa’s law firm, located in the Short North area of Columbus, in their efforts to withhold records from the grand jury.
Rick Matsa’s tenant, P. Maria Galloway, the owner of an art gallery next door to Rick Matsa’s law firm, also testified after pleading guilty to conspiracy to obstruct justice. Galloway testified that she signed numerous documents at Rick Matsa’s direction, including federal income tax returns for Rick Matsa’s law firm and a number of his nominee entities, which Rick Matsa used as part of his scheme to obstruct the IRS.
“Today’s verdict shows that attorneys and other professionals who violate the tax laws or who attempt to obstruct justice will be held accountable for their actions,” said Assistant Attorney General for the Tax Division Kathryn Keneally. “Those who illegally attempt to hide their income and assets from the IRS through fraudulent trusts or offshore bank accounts will be prosecuted and punished.”
“The government will not tolerate abusive tax schemes that use offshore accounts to illegally escape taxes,” said Rick A. Raven, Acting Chief, IRS Criminal Investigation. “Those Americans who file accurate, honest and timely tax returns can be assured that the government will hold accountable those who don’t.”
Rick Matsa faces a maximum potential sentence of 108 years imprisonment, a fine of up to $3.25 million, and five years of supervised release. Loula Matsa faces a maximum potential sentence of five years imprisonment, a fine of $250,000, and three years of supervised release. No sentencing date has yet been scheduled.
Assistant Attorney General Kathryn Keneally, and Mark D’Alessandro, Acting U.S. Attorney for the Southern District of Ohio on this matter, commended the IRS-Criminal Investigation Special Agents who investigated the case, as well as Tax Division Trial Attorneys Richard M. Rolwing, Jorge Almonte, and Steve Descano who prosecuted the case.
More information about the Justice Department’s Tax Division and its enforcement efforts is available at www.justice.gov/tax .
Kazakhstani National Pleads Guilty to Money Laundering for “Hack and Dump” SchemeRead the Press Release
WASHINGTON – Daniyar Zhaxalyk, 25, a citizen of Kazakhstan who entered the United States on a student visa, pleaded guilty today in Houston to one count of money laundering, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Kenneth Magidson for the Southern District of Texas.
Zhaxalyk pleaded guilty before U.S. District Judge Ewing Werlein Jr. in the Southern District of Texas. Zhaxalyk and three co-conspirators were charged in an indictment filed in the Southern District of Texas and unsealed in December 2011.
Zhaxalyk admitted to laundering funds generated in a sophisticated “hack and dump” stock scheme that caused more than $400,000 in losses. The indictment charged that Zhaxalyk’s co-conspirators illegally accessed brokerage accounts to engage in a stock fraud scheme in which the compromised accounts were used to purchase borrowed shares of stock at above-market prices from the defendants’ personal brokerage accounts. Zhaxalyk’s co-conspirators then allegedly repurchased the borrowed shares at the considerably lower market price, returned the borrowed shares to the stock lender and claimed as profit the difference between the market price and the inflated price paid by the compromised victim accounts. Zhaxalyk admitted that he received and made wire transfers and withdrawals of the funds generated from the fraudulent stock sales and supervised other Houston-based students recruited into the scheme to launder funds.
A co-defendant, Alexey Li, also a citizen of Kazakhstan who entered the United States on a student visa, previously pleaded guilty in Houston on March 2, 2012, and is awaiting sentencing. Two other defendants remain at large.
At sentencing, Zhaxalyk will face a maximum penalty of 10 years in prison and a $250,000 fine.
This case was investigated by the St. Louis, San Francisco and Houston offices of the FBI. The case is being prosecuted by Trial Attorney Ethan Arenson of the Computer Crime and Intellectual Property Section in the Justice Department’s Criminal Division and Assistant U.S. Attorney Mark McIntyre of the Southern District of Texas.
International Competition Network Launches New Initiatives onEnforcement Cooperation, Investigative Process and Working with the CourtsRead the Press Release
WASHINGTON - The International Competition Network (ICN) launched and approved three new initiatives on international enforcement cooperation, the investigative process in competition cases and working with the courts, the Department of Justice announced today. The ICN also adopted new materials on unilateral conduct investigations, raising anti-cartel awareness and explaining the benefits of competition.
The 11th annual ICN conference, hosted by the Brazilian Competition Policy System, was held on April18-20, 2012, in Rio de Janeiro. More than 450 delegates participated, representing more than 80 antitrust agencies from around the world, and included competition experts from international organizations and the legal, business, consumer and academic communities. Acting Assistant Attorney General Sharis A. Pozen of the Department of Justice’s Antitrust Division and Federal Trade Commission (FTC) Commissioner Edith Ramirez led the U.S. delegates at the conference. The conference showcased the achievements of ICN working groups on mergers, unilateral conduct, cartels, competition advocacy and competition agency effectiveness.
“The ICN has become a central forum for dialogue within the global antitrust community to share experiences and develop practical recommendations,” said Acting Assistant Attorney General Pozen. “Its work is enabling more effective and efficient antitrust enforcement worldwide, to the benefit of competition agencies and, ultimately, consumers.”The ICN Steering Group introduced and members approved three new initiatives. The Department of Justice and the Turkish Competition Authority co-chaired the international competition enforcement cooperation initiative, which was presented by the Acting Assistant Attorney General Pozen. The FTC and the European Commission’s Competition Directorate co-chaired the investigative process initiative, which was presented by the Competition Directorate’s Director General Alexander Italianer. The working with courts and judges initiative, co-chaired by the Chilean Competition Tribunal and Poland’s Office of Competition and Consumer Protection,was presented by Malgorzata Krasnodebska-Tomkiel, President of the Polish authority.
The ICN’s working groups also presented their work to the conference. The Merger Working Group, co-chaired by the Department of Justice, the Irish Competition Authority and the Italian Competition Authority, aims to promote best practices in the design and operation of merger review regimes. Acting Assistant Attorney General Pozen led the conference discussion of current trends and developments in merger enforcement, including developments in economic analysis and effective merger remedies.The Cartel Working Group produced a paper on cartel awareness and outreach efforts and compiled comparative information on information exchanges in cartel cases. Deputy Assistant Attorney General of the Department of Justice’s Antitrust Division Scott D. Hammond, led a panel discussion focused on the challenges of bid-rigging enforcement.
The ICN’s Unilateral Conduct Working Group, co-chaired by the FTC, Germany’s Bundeskartellamt and the Swedish Competition Authority, promotes convergence and sound enforcement of laws governing conduct by firms with substantial market power. The working group drafted chapters on the objectives of unilateral conduct laws and on predatory pricing for its workbook for agency investigators. FTC Counsel Cynthia Lagdameo led a panel discussion on predatory pricing by dominant firms.
The Advocacy Working Group finalized a competition advocacy toolkit with guidance tools for agencies and a handbook on conducting market studies. In addition, the group issued a report on raising awareness of the benefits of competition.
The conference also highlighted the work of the Agency Effectiveness Working Group, which is developing a competition agency manual as a resource to enhance agencies’ effectiveness and presented new material on knowledge management and human resources management. Former FTC Chairman William E. Kovacic participated in a discussion on resource management for competition authorities.
The conference’s Brazilian host agencies conducted a special project devoted to effective settlements in competition cases, including cartel, merger and unilateral conduct enforcement areas. FTC Commissioner Ramirez presented remarks and participated in the discussion focusing on settlements of unilateral conduct cases.
“Designing and implementing effective remedies in unilateral conduct cases presents one of the most important, yet daunting challenges competition authorities face,” stated FTC Commissioner Ramirez. “While the right remedy can restore much needed competition in a market, an ill-advised remedy can turn what could be a big victory for consumers into little more than a Pyrrhic victory.”
The conference showcased the ICN Curriculum Project, a project led by the FTC to create a “virtual university” of training materials on competition law and practice. Randolph W. Tritell, Director of the FTC’s Office of International Affairs, presented the curriculum project at the conference.
The ICN also approved new leadership positions. Chairman Eduardo Pérez Motta of the Mexican Federal Competition Commission was selected as the new chair of the ICN Steering Group. He succeeds outgoing chair Chief Executive John Fingleton of the United Kingdom’s Office of Fair Trading. The Department of Justice will co-chair the Cartel Working Group and the FTC will co-chair the Agency Effectiveness Working Group.
The ICN was created in October 2001, when the Department of Justice and the FTC joined antitrust agencies from 13 other jurisdictions to increase understanding of competition policy and promote convergence toward best practices around the world. The ICN now includes 123 member agencies from 108 jurisdictions.
ICN documents are available at www.internationalcompetitionnetwork.org.
Department of Justice Volunteers Mark Earth Day with Community Service at Marvin Gaye ParkRead the Press Release
Marking the ninth annual Earth Day Service Celebration today, Acting Associate Attorney General Tony West and Assistant Attorney General Ignacia S. Moreno marked a day of service, commending volunteers from the Justice Department’s Environment and Natural Resources Division (ENRD), Washington Parks & People and the DC Green Corps as they continue work on environmental restoration projects near the Community Greening Center in Marvin Gaye Park in Northeast Washington, D.C.
“As a nation, we have taken great strides since the first Earth Day more than 40 years ago, from the landmark environmental legislation of the 1970s to recent efforts to address greenhouse gas emissions,” said Acting Associate Attorney General Tony West. “The story of Marvin Gaye Park’s renewal is an inspiration. Over the past decade, volunteers have removed countless tires and bags of garbage from this area, cleared and reopened miles of trail and streams, and planted thousands of native trees and shrubs. Earth Day provides an opportunity for us to reflect on and celebrate this progress, but it also reminds us that there is much left to be done.”
In her remarks, Assistant Attorney General Moreno said: “Today, on the second anniversary of the Deepwater Horizon explosion and resulting massive oil spill in the Gulf of Mexico, we remember the 11 lives that were tragically lost. We also are reminded that our natural resources are precious and that we must continue to protect these resources and the communities across the nation who rely on them for their livelihood. The Department of Justice will continue to vigorously enforce the federal civil and criminal environmental and natural resources laws that protect our air, land and water from pollution and that preserve our natural resources for the use and enjoyment of generations to come.”
Assistant Attorney General Moreno also announced this morning the publication of ENRD’s Fiscal Year 2011 Accomplishments Report. The full report, which details the division’s work across the nation during FY2011, is posted at www.justice.gov/enrd/Current_topics.html . Among other things, the report details the civil and criminal enforcement of the nation’s environmental laws, resulting in immeasurable benefits for human health and the environment derived from significant reductions in emissions and discharges of harmful pollutants. Other results detailed in the report show:
· Over $625 million in civil and stipulated penalties, cost recoveries, natural resource damages and other civil monetary relief, including almost $420 million recovered for the Superfund.
· More than $10.9 billion in corrective measures through civil court orders and settlements – the highest injunctive relief in any fiscal year to date.
· 52 criminal cases against 77 defendants, obtaining nearly 53 years in confinement and over $31.2 million in criminal fines, restitution, community service funds and special assessments.
A core mission of the division is the strong enforcement of civil and criminal environmental laws to protect our nation’s air, land, water and natural resources. The division’s mission also includes vigorous defense of environmental, wildlife and natural resources laws and agency actions; effective stewardship of our public lands and natural resources; and careful and respectful management of the United States’ obligations to American Indian tribes and their members, including litigation to protect tribal sovereignty, rights and resources. Also in 2011, with colleagues in the Civil Division, ENRD attorneys continued to play an instrumental role in the litigation that followed the catastrophic oil spill in the Gulf of Mexico.
2012 will mark the ninth consecutive Earth Day service celebration at Marvin Gaye Park. ENRD has devoted over 5,500 hours of employee time to planting trees, removing trash, laying sod and gardening.
“It's a real honor to have ENRD staff back again this year,” said Washington Parks & People Director Steve Coleman. “Their inspiring dedication and hard work have helped these communities to create a beautiful lasting legacy of environmental reclamation, justice and opportunity for all in this stream valley.
The Community Greening Center is a neighborhood-based nursery for plants and trees as well as an environmental education resource center located near the intersection of 51st Street and Nannie Helen Burroughs Ave., N.E. ENRD volunteers broke ground on the Greening Center last year together with Washington Parks & People and volunteers from the DC Green Corps. This is the first native plant tree staging area in the city.
This year, ENRD volunteers were joined by graduates from the DC Green Corps urban forestry job training program. Tree planting will take place at a nearby public housing complex and on a hillside in the stream valley. Planting trees will provide shade for green space for residents and children who play in the area and more stormwater capture for the stream valley, which is part of the sub-watershed of the Anacostia River. Volunteers will also be adding irrigation systems to the Community Greening Center.
The DC Green Corps, based at the Marvin Gaye Community Greening Center in the Watts Branch sub-watershed of the Anacostia River, will provide a city-wide gateway to 50 different green career tracks in urban and community forestry and forest-based ecosystem and watershed restoration. Helping under-served sub-watershed communities across the city, the Green Corps job program will focus on environmental justice, sustainable native reforestation, riparian buffer planting, invasive removal and green controls of urban systems, such as storm and sewer flows. The Green Corps and Center will develop a referral system to help participants connect to jobs through a wide range of agencies, professional and trade associations, trades, professions and industries.
For more information about Washington Parks & People and Marvin Gaye Park, visit http://www.washingtonparks.net/ .
For more information about Environmental Justice efforts at the Department of Justice, visit http://www.justice.gov/ej/ .
Attorney General Eric Holder Honors Individuals and Organizations for Service to Crime VictimsRead the Press Release
Attorney General Eric Holder today honored award recipients as part of the 29th observance of National Crime Victims’ Rights Week (NCVRW), April 22-28. This year’s theme, “Extending the Vision: Reaching Every Victim” highlights the importance of ensuring services and support to all victims, their families and communities as they heal and seek a successful future. National Crime Victims’ Service Awards honor those working on behalf of crime victims who have earned the esteem of their colleagues in the victim service and criminal justice fields.
“This year’s 12 awardees have touched, improved and even saved lives. Perhaps most impressively, many of today’s award recipients have achieved these results by transforming their own experiences into a positive force for sweeping change,” said Attorney General Holder. “Every one of them deserves the commendation that is being bestowed today – not only for their remarkable contributions in responding to protecting and defending crime victims and their loved ones but also for the examples they have set for others to follow.”
Among those honored today is Hollywood icon Mickey Rooney, who in March 2011, testified before the U.S. Senate at a hearing entitled, “Justice for All: Ending Elder Abuse, Neglect and Financial Exploitation” regarding his emotional, verbal and financial abuse at the hands of his stepchildren. Also honored is Julia Dunkins who turned her own personal tragedy into support for survivors of homicide.
The awards and their recipients, who are nominated by their colleagues and approved by the Attorney General, are:
Allied Professional Award: Recognizes an individual or organization outside the victim assistance field for services or contributions to the victims’ field. Recipient: Dr. Dora Schriro, East Elmhurst, N.Y.; Commissioner, New York City Department of Correction.
Crime Victims Financial Restoration Award: Recognizes individuals, programs, organizations or teams that have developed innovative ways of funding services for crime victims or have instituted innovative approaches for securing financial restoration for crime victims. Recipients: Maricopa County Adult Probation Department’s Financial Compliance Program, (FINCOM) Scottsdale, Ariz. Accepting the award on behalf of FINCOM are Michael Cimino, Barbara Broderick, Stephen Hartley and Kendra Neal. Also receiving the Financial Restoration Award is Wingate Grant, Assistant U.S. Attorney, Eastern District of Virginia, Richmond, Va.
Federal Service Award: Honors exceptional contributions and extraordinary impact on behalf of victims in Indian Country, on military installations, in national parks or other areas governed by federal jurisdiction. Recipients: Roi Holt, Victim Assistance Coordinator, Department of Interior, Washington, D.C. and Michelle Scott, U.S. Attorney’s Office, Eastern District of North Carolina, Raleigh, N.C.
National Crime Victim Service Award: Honors extraordinary efforts in direct service to crime victims. Recipients: Dr. Linda Ledray, Director, Sexual Assault Nurse Examiner – Sexual Assault Rape Team (SANE-SART) Resource Service, Minneapolis; Victoria Cruz, Senior Domestic Violence Counselor/Advocate, Anti-Violence Project, Brooklyn, N.Y.; and the Girls Educational & Mentoring Services (GEMS), New York, N.Y. Accepting the award on behalf of GEMS is Rachel Lloyd.
Professional Innovation in Victim Service Award: Recognizes the development of effective methods for expanding the reach of victims’ rights and services. Recipient: Common Justice, Brooklyn, N.Y. Accepting the award on behalf of the organization are Danielle Sered and Shameeka Mattis.
Special Courage Award: Recognizes extraordinary bravery in the aftermath of a crime or courageous act on behalf of a victim or potential victim. Recipients: Actor Mickey Rooney, Alhambra, Calif. Accepting on behalf of Mr. Rooney is Bruce Ross. Other award recipients are Julia Dunkins, Executive Director of Survivors of Homicide, Inc. and Justin Fennell, a crime victim and survivor, both from Washington, D.C.
The Department of Justice’s Office of Justice Programs’ Office for Victims of Crime (OVC) organized the awards presentation. The Attorney General was joined by Acting Assistant General for the Office of Justice Programs Mary Lou Leary and Acting Director for the Office of Victims of Crime Joye Frost at the award ceremony. Descriptive narratives of the contributions of all recipients are available at OVC’s Gallery.
The Office of Justice Programs (OJP), headed by Acting Assistant Attorney General Mary Lou Leary, provides federal leadership in developing the nation’s capacity to prevent and control crime, administer justice, and assist victims. OJP has six components: the Bureau of Justice Assistance; the Bureau of Justice Statistics; the National Institute of Justice; the Office of Juvenile Justice and Delinquency Prevention; the Office for Victims of Crime; and the Office of Sex Offender Sentencing, Monitoring, Apprehending, Registering, and Tracking. More information about OJP can be found at www.ojp.gov
Alabama Real Estate Investor Agrees to Plead Guilty to Conspiracies to Rig Bids and Commit Mail Fraud for the Purchase of Real Estate at Public Foreclosure AuctionsRead the Press Release
An Alabama real estate investor has agreed to plead guilty and to serve prison time for his role in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in southern Alabama, the Department of Justice announced today. To date, as a result of the ongoing investigation, three individuals and one company have pleaded guilty.
Charges were filed today in the U.S. District Court for the Southern District of Alabama in Mobile, Ala., against Lawrence B. Stacy of Mobile. Stacy was charged with one count of bid rigging and one count of conspiracy to commit mail fraud. According to the plea agreement, which is subject to court approval, Stacy has agreed to serve six months in prison. Additionally, Stacy has agreed to pay a $10,000 criminal fine and to cooperate with the department’s ongoing investigation.
According to court documents, Stacy conspired with others not to bid against one another at public real estate foreclosure auctions in southern Alabama. After a designated bidder bought a property at the public auctions, which typically take place at the county courthouse, the conspirators would generally hold a secret, second auction, at which each participant would bid the amount above the public auction price he or she was willing to pay. The highest bidder at the secret, second auction won the property.
Stacy was also charged with conspiring to use the U.S. mail to carry out a scheme to acquire title to rigged foreclosure properties sold at public auctions at artificially suppressed prices, to make and receive payoffs to co-conspirators and to cause financial institutions, homeowners and others with a legal interest in rigged foreclosure properties to receive less than the competitive price for the properties. Stacy participated in the bid-rigging and mail fraud conspiracies from at least as early as May 2002 until at least January 2007.
The Antitrust Division will continue to pursue vigorously the perpetrators involved in these real estate foreclosure auction schemes,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “Those who eliminate competition from the marketplace and prey on the misfortune of others will be held accountable for their actions.”
FBI Special Agent in Charge of the Mobile FBI office, Lewis M. Chapman recognized the perseverance of agents and prosecutors in this complex investigation. Chapman stated, “This investigation sends the message that real estate fraud including antitrust violations will continue to be pursued in these tough economic times, no matter how intricate the scheme.”
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 a Sherman Act charge may be increased to twice the gain derived from the crime or twice the loss suffered by the victim if either amount is greater than the statutory maximum fine. Each count of conspiracy to commit mail fraud carries a maximum penalty of 20 years in prison and a fine in an amount equal to the greatest of $250,000, twice the gross gain the conspirators derived from the crime or twice the gross loss caused to the victims of the crime by the conspirators.
The investigation into fraud and bid rigging at certain real estate foreclosure auctions in southern Alabama is being conducted by the Antitrust Division’s Atlanta Field Office and the FBI’s Mobile Office, with the assistance of the U.S. Attorney’s Office for the Southern District of Alabama. Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Antitrust Division’s Atlanta Field Office at 404-331-7100 or visit www.justice.gov/atr/contact/newcase.htm.
Today’s charges are part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency task force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets and recover proceeds for victims of financial crimes. For more information on the task force, visit www.StopFraud.gov.
19 April 2012
Utah Tax Defier Pleads Guilty in Nine-year Scam to Defraud the United States, Is Sentenced to Two-year Prison TermRead the Press Release
Stephen Murphy, a Utah resident, pleaded guilty in federal court in Salt Lake City to one count of conspiracy to defraud the United States, and was sentenced the same day to 24 months in prison, the Justice Department and Internal Revenue Service (IRS) announced today. U.S. District Court Judge Dee Benson presided over the plea hearing and sentencing, which took place yesterday.
According to information disclosed at the hearing, Murphy, with the assistance of several tax defier promoters, filed numerous false income tax returns for the years 2002 through 2009, espousing various false and frivolous tax positions. For example, he filed a false return for 2002 reporting zero income and zero tax due, on the ground that he was “not a U.S. person” subject to tax. He filed several subsequent false returns fraudulently claiming income tax refunds, including a false return for 2008 based on fictitious Forms 1099-OID. Also disclosed at the hearing, Murphy established two fake charities, which were actually just names attached to certain of his personal bank accounts. He fraudulently claimed “charitable contribution” tax deductions for funds siphoned to these accounts. As part of his scheme, Murphy submitted Forms W-4 to his employers vastly overstating his withholding allowances, so as to minimize or eliminate tax withholdings from his wages. Murphy admitted that he intended to cause the U.S. Treasury a loss exceeding $200,000.
After accepting the plea, Judge Benson sentenced Stephen Murphy to two years imprisonment and one year of supervised release. Murphy was also ordered to pay restitution to the IRS in the amount of $83,831.
This case was investigated by IRS - Criminal Investigation and was prosecuted by Assistant U.S. Attorney Stewart Waltz in the Utah U.S. Attorney’s Office and Trial Attorneys Joseph A. Rillotta and Christopher P. O’Donnell of the Justice Department’s Tax Division.
More information about the Tax Division and its enforcement efforts is available at www.usdoj.gov/tax/.
U.S. Pharmaceutical Company Merck Sharp & Dohme<br /> Sentenced in Connection with Unlawful Promotion of VioxxRead the Press Release
American pharmaceutical company Merck, Sharp & Dohme was sentenced by U.S. District Court Judge Patti B. Saris in Boston to pay a criminal fine in the amount of $321,636,000 in connection with its guilty plea related to its promotion and marketing of the painkiller Vioxx (rofecoxib), the Justice Department announced today. In December 2011, Merck pleaded guilty to violating the Food, Drug and Cosmetic Act (FDCA) for introducing a misbranded drug, Vioxx, into interstate commerce.
Merck’s guilty plea was part of a global resolution involving its illegal promotional activity. In November 2011, Merck entered into a civil settlement agreement under which it will pay $628,364,000 to resolve additional allegations regarding off-label marketing of Vioxx and false statements about the drug’s cardiovascular safety. Of the total civil settlement, $426,389,000 will be recovered by the United States, and the remaining share of $201,975,000 will be distributed to the participating Medicaid states. The settlement and today’s sentencing conclude a long-running investigation of Merck’s promotion of Vioxx, which was withdrawn from the marketplace in September 2004.
Merck’s criminal plea related to the misbranding of Vioxx by promoting the drug for treating rheumatoid arthritis, before that use was approved by the Food and Drug Administration (FDA). Under the provisions of the FDCA, a company is required to specify the intended uses of a product in its new drug application to FDA. Once approved, the drug may not be marketed or promoted for so-called “off-label” uses – any use not specified in an application and approved by FDA – unless the company applies to the FDA for approval of the additional use. The FDA approved Vioxx for three indications in May 1999, but did not approve its use for rheumatoid arthritis until April 2002. In the interim, for nearly three years, Merck promoted Vioxx for rheumatoid arthritis, conduct for which it was admonished in an FDA warning letter issued in September 2001.
At today’s sentencing, Judge Saris said in substance that off label promotion has been a big problem, she has seen a barrage of off-label marketing cases, and that she hoped that the size of today’s settlement and the fact that the government continues to press these cases will send a signal to the industry that this is not acceptable conduct.
The parallel civil settlement covered a broader range of allegedly illegal conduct by Merck. The settlement resolved allegations that Merck representatives made inaccurate, unsupported, or misleading statements about Vioxx’s cardiovascular safety in order to increase sales of the drug, resulting in payments by the federal government. It also resolved allegations that Merck made false statements to state Medicaid agencies about the cardiovascular safety of Vioxx, and that those agencies relied on Merck’s false claims in making payment decisions about the drug. Finally, like the criminal plea, the civil settlement also recovered damages for allegedly false claims caused by Merck’s unlawful promotion of Vioxx for rheumatoid arthritis.
"The United States will not tolerate unlawful conduct by pharmaceutical companies," said Stuart F. Delery, Acting Assistant Attorney General for the Justice Department's Civil Division. "As the court's sentence makes clear, those who put profits before patient safety by promoting their products for unapproved uses will be prosecuted and held accountable."
“We are pleased to see this case brought to a conclusion with the recovery of over three hundred million dollars in criminal fines, and a total of almost a billion dollars in combined civil and criminal penalties. The severity of these criminal and civil sanctions should serve as a reminder of this Office, and this department’s unwavering commitment to holding drug companies fully accountable for failures to comply with their public safety and marketing obligations, and to recovering taxpayer funds that have gone towards the purchase of illegally marketed products,” announced Carmen M. Ortiz, U.S. Attorney for the District of Massachusetts. “Any marketing activity that ignores the importance of FDA approval, or that makes unsupported safety claims about a drug is unacceptable, and will be pursued vigorously in both the criminal and civil arena.”
As part of the settlement, Merck also agreed to enter into an expansive corporate integrity agreement with the Office of Inspector General of the Department of Health and
Human Services (HHS-OIG), which will strengthen the system of reviews and oversight procedures imposed on the company. Although Vioxx is no longer on the market, this ongoing monitoring of Merck’s conduct is aimed to deter and detect similar conduct in the future.
“If all pharmaceutical manufacturers complied with the law, there would be no need for law enforcement actions,” said Susan Waddell, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services. “But until they stop abusing the health care system and putting profits ahead of patient safety, OIG will continue to vigorously pursue corporations that flout the law.”
“Today’s announcement demonstrates the commitment of FDA's Office of Criminal Investigations to pursue investigations of companies that disregard their regulatory obligations and place profits over the public’s health,” said Mark Dragonetti, Special Agent in Charge for the New York Field Office. “We commend the hard work of the U.S. Attorney's Office and our law enforcement counterparts in bringing about this result.”
“In 2004, the FBI began participating in a seven year investigation that led to Merck's decision to plead guilty to a criminal violation of federal law related to its promotion and marketing of Vioxx and to pay nearly a billion dollars in a criminal fine and civil damages,” said Richard DesLauriers, Special Agent in Charge of the FBI in Boston. “Merck now knows that no corporation is immune from being held accountable for criminal and civil violations of law and also knows why the FBI, its federal law enforcement partners, and the U.S. Attorney's Office have earned a national reputation for leading the government’s effort to detect, deter and prevent health care fraud.”
This case was handled by the Justice Department’s Civil Division and the U.S. Attorney’s Office for the District of Massachusetts. The investigation was conducted by Office of Inspector General of the Deapartment of Health and Human Services, the FBI, the Office of Criminal Investigations for the FDA, the Veterans Administration’s Office of Criminal Investigations, the Office of the Inspector General for the Office of Personnel Management, the National Association of Medicaid Fraud Control Units, and the offices of various state attorneys general.
U.S. Attorney General Holder and Dominican Prosecutor General Jiménez Pena Sign Permanent Agreement to Share Forfeited AssetsRead the Press Release
Attorney General Eric Holder and Dominican Prosecutor General Radhamés Jiménez Peña met today in Washington, D.C., to sign a permanent agreement to share forfeited assets between the governments of the United States and the Dominican Republic. The permanent sharing agreement acknowledges the consistent forfeiture-related cooperation that United States authorities have received from the Dominican Republic and creates a more efficient process for sharing assets with the Dominican Republic.
“The steady stream of forfeiture cooperation we receive from our Dominican law enforcement counterparts has been indispensible to our efforts to recover millions of dollars in criminal assets located abroad,” Attorney General Holder said. “In a world where criminals increasingly operate across borders, strengthening international partnerships is critical. Today’s agreement will serve as a highly beneficial and useful tool for asset sharing in the future.”
The permanent agreement requires the United States and the Dominican Republic to return all fraud and theft proceeds for purposes of making victims whole. It also streamlines the asset sharing process by eliminating the need for individual agreements each time assets are shared in recognition of forfeiture assistance provided by the Dominican authorities. In addition, the agreement is reciprocal, allowing for Dominican sharing with the United States.
Assets shared under the agreement must be used by the recipient country in accordance with domestic laws governing the use of forfeited assets. Dominican law provides that forfeited assets be disbursed to the Office of the Prosecutor General; the National Drug Council; the National Counter Drug Directorate; the National Police; and non-government organizations engaged in efforts to prevent drug abuse.
To date, the Department of Justice has shared a total of $8.67 million in forfeited assets with Dominican authorities on four prior occasions since 2002. This includes a case-specific sharing agreement that was signed on Nov. 14, 2011, to share approximately $7.5 million in forfeited assets with the Dominican Office of the Prosecutor General. The November 2011 agreement represents approximately 20 percent of the estimated $37.5 million in forfeited assets located in the Dominican Republic that stem from a conspiracy led by brothers Carlos, Luis and Jose Benitez, who allegedly defrauded the U.S. Medicare program of approximately $80 million.
The permanent agreement was negotiated on behalf of the United States by the Asset Forfeiture and Money Laundering Section’s International Unit in the Justice
Department’s Criminal Division and the Office of International Affairs in the Justice Department’s Criminal Division, in cooperation with the FBI’s Attaché in the Dominican Republic and the Department of State.
Justice Department Asks Federal Court to Shut Down Three Philadelphia-area Tax PreparersRead the Press Release
The United States has asked a federal court to bar three Philadelphia-area tax preparers from preparing federal tax returns for others, the Justice Department announced today. According to the government complaint in the civil injunction suit, defendants Deron Joe, Edmund Dassin and James Tokpawhiea are Liberian nationals who are legal permanent residents of the United States. The suit alleges that most of the customers of their business, Urban Tax Professionals, are also from Liberia and were referred to the defendants by family or friends.
According to the complaint, the defendants have repeatedly prepared fraudulent federal income tax returns that intentionally understate their customers’ tax liabilities. They are alleged to have falsely claimed the first-time-homebuyer credit and the earned-income tax credit in order to claim large tax refunds. According to the complaint, Joe and Dassin told one of their employees to claim the first-time-homebuyer credit on every return he prepared. The complaint also alleges that the defendants claimed false dependents and fabricated deductions for employee business expenses.
The complaint states that the Internal Revenue Service (IRS) has disallowed at least $1.4 million in tax credits claimed by the defendants on customer returns.
Claiming bogus tax refunds is one of the IRS’s “Dirty Dozen” tax scams for 2012. In the past decade, the Justice Department’s Tax Division has obtained injunctions against hundreds of tax-fraud promoters and unscrupulous tax return preparers. Information about these cases is available on the Justice Department website.
Related Documents: United States v. Deron O. Joe, et al. Complaint for Permanent Injunction and Other Relief
Justice Department Announces Agreement with Orange County, New York, to Protect the Rights of Spanish-speaking Puerto Rican VotersRead the Press Release
The Justice Department announced a settlement today with Orange County, N.Y., to protect the rights of Spanish-speaking Puerto Rican voters under Section 4(e) of the Voting Rights Act. Today’s consent decree is intended to resolve concerns that limited-English proficient Puerto Rican voters were being denied their full voting rights because the county failed to provide bilingual ballots and Spanish-language assistance as required by law.
Orange County has agreed that, starting with the April 24, 2012 presidential primary election, it will provide county-wide bilingual ballots at the polls. The consent decree includes additional steps that the county will take to achieve full compliance with Section 4(e) by the next election held in 2012. For example, the county will provide bilingual poll workers and the consent decree would also create a community-based Spanish-language advisory committee, which would allow the local Puerto Rican community to help shape the county’s bilingual election program.
“Puerto Rican voters in Orange County were denied the right to vote when election officials denied language assistance to eligible voters,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “Today’s agreement will ensure that Spanish-speaking voters have equal access to the ballot box and receive critical language assistance as the law requires so their votes will count. I greatly appreciate the cooperation of county officials in working closely with us to reach this resolution.”
U.S. Attorney for the Southern District of New York Preet Bharara said: “The ability of citizens to participate effectively in the electoral process is the cornerstone of our democracy. For many years, Orange County denied Puerto Rican voters their right to meaningfully participate in the electoral process by conducting English-only elections in violation of the Voting Rights Act. The settlement announced today ensures that these citizens have an equal ability to participate in our democracy.”
The consent decree along with a complaint alleging violations of Section 4(e) of the Voting Rights Act was filed with the federal court in the Southern District of New York. The Civil Rights Division brought this action in conjunction with the United States Attorney’s Office for the Southern District of New York.
Section 4(e) prohibits jurisdictions from conditioning the voting rights of citizens educated in American-flag schools where the predominant classroom language is other than English, on their ability to read, write, understand, or interpret election-related information in English. Orange County has a significant Puerto Rican population which is protected by Section 4(e) because the primary language in schools in Puerto Rico is Spanish. The 2010 Census data shows that the Puerto Rican population in Orange County has increased by 52.5 percent in the last decade, and there are now more than 29,210 Puerto Ricans in Orange County, constituting 7.8 percent of its total population.
To file complaints about discriminatory voting practices, voters may call the Voting Section of the Civil Rights Division at 1-800-253-3931. More information about the Voting Rights Act and other federal voting rights laws is available on the Justice Department website at www.justice.gov/crt/voting/index.php .
Audit of Gulf Coast Claims Facility Results in $64 Million in Additional PaymentsRead the Press Release
WASHINGTON – The Department of Justice today released the executive summary of the report by an independent auditor of the Gulf Coast Claims Facility (GCCF), the facility set up to process claims in the wake of the April 20, 2010, Deepwater Horizon oil spill. The audit found that the GCCF claims process constituted a significant advance in disaster response. But the audit also identified significant errors that are now being corrected by sending more than $64 million in additional payments to approximately 7,300 individuals and businesses throughout the Gulf region.
“When the Attorney General visited the Gulf last summer, he heard concerns about the GCCF and ordered an independent auditor to evaluate it,” said Acting Associate Attorney General Tony West. “Approximately 7,300 individuals and businesses throughout the Gulf region will now see the benefits of that action, to the tune of over $64 million in additional payments. While there’s no question that the independent GCCF labored under extremely challenging circumstances to get a huge number of payments processed successfully, the fact that this audit has resulted in tens of millions of dollars being made available to claimants who were wrongfully denied or shortchanged underscores the importance of the audit.”
Last summer, the Attorney General visited the Gulf and met with individuals and small business owners whose lives were affected by the Deepwater Horizon oil spill. He acted on those concerns and ordered an independent auditor to evaluate the Gulf Coast Claims Facility. The evaluation is now complete, and the Department of Justice has released the Executive Summary of the auditor’s report.
As a result of the Attorney General’s acting on those concerns, checks totaling approximately $64 million are now being sent to approximately 7,300 claimants who received less than they were entitled to under the GCCF’s procedures.
The auditor also found claimants who were overpaid as a result of errors applying the GCCF’s procedures, but did not attempt to identify all the claimants who were overpaid or quantify those overpayments. The GCCF is not making any effort to recover those overpayments.
The report also noted the unprecedented nature of the spill and the context that surrounded the GCCF’s operations: intense pressure to pay claims quickly, a claimant community that was experiencing significant economic pressures after a very difficult post-spill tourist season, and over a million claims that included many with very complex economic losses. The GCCF paid out $6.2 billion to more than 220,000 claimants before it closed its doors as a result of the settlement between BP and the private plaintiffs.
The evaluation was conducted by BDO Consulting. BDO’s team was selected after interviews with the Department of Justice and the attorneys general from the five Gulf states, and drew on previous experience in the Gulf Coast area assisting clients with claims related to Hurricane Katrina, including in the hospitality, retail, commercial and residential properties, seafood processing, consumer products and transportation industries. As part of this evaluation, BDO evaluated tens of thousands of claims files and searched the GCCF’s entire database of over one million claims to identify other claims that may have suffered from the same errors. BDO is preparing a full report of its findings that will be published later this spring.
Related Materials:
Independent Evaluation of the Gulf Coast Claims Facility Executive Summary (PDF)
Independent Evaluation of the Gulf Coast Claims Facility Report of Findings & Observations (PDF)
18 April 2012
Tennessee Engineering Consultant and Wife Charged with Tax CrimesRead the Press Release
On April 17, 2012, a federal grand jury returned a four count indictment charging Beverly S. Beavers and James E. Beavers of Knoxville, Tenn., with conspiracy to defraud the United States and filing false claims for tax refunds, the Justice Department and the Internal Revenue Service (IRS) announced today.
According to the indictment, Beverly and James Beavers filed a false 2008 personal tax return that was prepared by Penny Jones, a partner in PMDD Services LLC, an Idaho-based tax return preparation firm. Their 2008 return claimed a tax refund of $591,123 to which they were not entitled. Upon receiving the fraudulent refund, the indictment alleges that the Beavers paid $59,405 to Jones and the other principals of PMDD Services. Later, the Beavers allegedly filed amended tax returns for 2006 and 2007, seeking fraudulent tax refunds of $193,056 and $202,625, respectively, for those years.
The Beavers are also alleged to have taken steps to hide their assets from possible IRS collection efforts, including transferring the real estate title to their personal residence and Beverly Beavers’ store to nominee trusts.
Jones, other alleged principals of PMDD Services, and several other persons were charged in the Southern District of Florida in November 2011 with tax crimes, including conspiracy to defraud the United States and filing false claims. That case is scheduled for trial in October 2012. In July 2011, a federal court in Idaho permanently enjoined Penny Jones from filing federal tax returns on behalf of others.
The indictment alleges that Beverly Beavers owned a formalwear store in Knoxville and that James Beavers was previously employed as the research director of an academic engineering institute at the University of Tennessee, and as a private engineering consultant.
If convicted, the defendants each face a maximum potential sentence of 20 years imprisonment and a criminal fine up to $1 million. Both defendants may also be required to pay restitution to the IRS.
An indictment is merely a formal accusation of a crime. The defendants are presumed innocent unless and until their guilt is proved beyond a reasonable doubt.
The case was investigated by Special Agents of IRS - Criminal Investigation, and is being prosecuted by Trial Attorneys Jonathan Marx and Jed Silversmith of the Justice Department’s Tax Division, with the assistance of Assistant United States Attorney Charles E. Atchley Jr. of the Eastern District of Tennessee.
Justice Department Seeks to Shut Down Five South Florida Tax Return PreparersRead the Press Release
The United States has sued to shut down five Florida tax return preparers, the Justice Department announced today. In the civil injunction complaint, filed in the U.S. District Court for the Southern District of Florida in Fort Lauderdale, Fla., the government alleges that since at least 2008, Jayvon Copeland, Kisha Andrews, James Daniels, Aundrea Luc and Brandon Johnson have knowingly understated their customers’ federal income tax liabilities and claimed improper tax refunds. The complaint states that the defendants reside in Broward and Miami-Dade County, Fla.
According to the complaint, the defendants fraudulently boosted tax refunds through false claims for the first-time-homebuyer tax credit, phony business expenses, false education expenses and fabricated income or withholdings that inflate a customer’s earned income tax credit. The lawsuit alleges that the defendants inflated customers’ tax refunds in order to extract exorbitant fees from the refunds.
The complaint also alleges that the defendants used stolen identities to prepare and file tax returns claiming fraudulent tax refunds, which the defendants kept. The complaint describes one instance involving a tax return prepared in the name of a man serving a life sentence in prison. According to the complaint, the return claimed a refund based on bogus education expenses and a fraudulent first-time-homebuyer credit. The prisoner allegedly did not know that a tax return was filed in his name.
The lawsuit also accuses the defendants of attempting to conceal their fraud by jumbling or falsifying various identification numbers that the Internal Revenue Service (IRS) requires tax return preparers to disclose on the returns they prepare. The defendants also allegedly established and operated a web of tax-preparation entities to perpetrate this fraud.
Claiming bogus tax refunds is one of the IRS’s “Dirty Dozen” tax scams for 2012. In the past decade, the Justice Department’s Tax Division has obtained injunctions against hundreds of tax-fraud promoters and unscrupulous tax return preparers. Information about these cases is available at www.justice.gov/tax/taxpress2012.htm .
Related Documents: United States v. Jayvon Copeland, et al. Complaint for Permanent Injunction and Other Relief (PDF)
Detroit-Area Patient Recruiter Pleads Guilty to Medicare FraudRead the Press Release
WASHINGTON – A Detroit-area patient recruiter pleaded guilty today for his participation in a Medicare fraud scheme, announced the Department of Justice, the FBI and the Department of Health and Human Services (HHS).
Daron Elder, 28, of Southfield, Mich., pleaded guilty before U.S. District Judge Arthur J. Tarnow in the Eastern District of Michigan to one count of conspiracy to commit health care fraud. At sentencing, he faces a maximum penalty of 10 years in prison and a $250,000 fine.
According to the plea documents, Elder was a patient recruiter for a medical clinic in the Detroit area, Blessed Medical Clinic. Elder paid indigent Medicare beneficiaries cash kickbacks to receive diagnostic tests that he knew were medically unnecessary. In return for the cash kickbacks, the Medicare beneficiaries allowed their identification to be used in the submission of fraudulent claims. The government will argue at sentencing that Elder’s conduct caused the submission of approximately $2.5 million dollars in fraudulent claims to Medicare.
Today’s guilty plea was announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade; Special Agent in Charge Andrew G. Arena of the FBI’s Detroit Field Office; and Special Agent in Charge Lamont Pugh III of the HHS Office of Inspector General’s (OIG) Chicago Regional Office.
This case is being prosecuted by Assistant U.S. Attorneys Frances Lee Carlson and Philip A. Ross of the Eastern District of Michigan, with assistance from Assistant Chief Gejaa T. Gobena of the Criminal Division’s Fraud Section. The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan.
Since their inception in March 2007, the Medicare Fraud Strike Force operations in nine districts have charged more than 1,190 individuals who collectively have falsely billed the Medicare program for more than $3.6 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.
17 April 2012
Two Former Executives of California Valve Company Plead <br /> Guilty to Foreign Bribery OffensesRead the Press Release
WASHINGTON – Stuart Carson, the former president of Rancho Santa Margarita, Calif.-based valve company Control Components Inc. (CCI), and Hong “Rose” Carson, the former CCI director of sales for China and Taiwan, have pleaded guilty to violating the Foreign Corrupt Practices Act (FCPA), announced the Justice Department’s Criminal Division and the U.S. Attorney’s Office for the Central District of California.The Carsons, who are married and reside in San Clemente, Calif., each pleaded guilty late yesterday before U.S. District Judge James V. Selna in Santa Ana, Calif., to separate one-count superseding informations charging them with making a corrupt payment to a foreign government official 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, Stuart Carson, 73, faces up to 10 months in prison. Rose Carson, 48, faces a sentence of three years probation, which may include up to six months of home confinement. Sentencing is scheduled for Oct. 15, 2012.
On Apr. 8, 2009, the Carsons and four other former executives of CCI were charged in a 16-count indictment for their roles in the foreign bribery scheme. The four former CCI executives charged include Paul Cosgrove, CCI’s former director of worldwide sales; David Edmonds, CCI’s former vice president of worldwide customer service; Flavio Ricotti, the former CCI vice president of sales for Europe, Africa and the Middle East; and Han Yong Kim, the former president of CCI’s Korean office. On Apr. 28, 2011, Ricotti pleaded guilty to one count of conspiracy to violate the FCPA. The trial of Cosgrove and Edmonds is scheduled for Jun. 5, 2012. The charges against Kim are pending as well. An indictment merely contains allegations and defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
In related cases, two defendants previously pleaded guilty to conspiring to bribe officers and employees of foreign state-owned companies on behalf of CCI. 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. On Feb. 3, 2009, Richard Morlok, the former CCI finance director, also pleaded guilty to one count of conspiracy to violate the FCPA. Covino, Morlok and Ricotti are scheduled to be sentenced in November and December 2012.
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.
Loan Officer Pleads Guilty for Role in Mortgage Fraud Scheme That Resulted in More Than $6.5 Million in LossesRead the Press Release
WASHINGTON – A loan officer for a Florida mortgage company pleaded guilty late yesterday in the Southern District of Florida to one count of conspiracy to commit wire fraud for his role in a mortgage fraud scheme, Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida and Department of Housing and Urban Development (HUD) Inspector General David A. Montoya announced today.
Alejandro Curbelo, 32, aka Alex Curbelo, of Miami, pleaded guilty before U.S. District Judge Joan Lenard. Curbelo was indicted and arrested on Jan. 24, 2012.According to court documents, from approximately February 2006 through July 2008, Curbelo was employed as a loan officer for Great Country Mortgage Bankers. In this role, he assisted in the sales and financing of condominium units at two complexes in Florida – Dadeland Place and Pelican Cove on the Bay. The borrowers Curbelo assisted at these two complexes were unqualified to obtain mortgage loans due to insufficient income, high levels of debts and outstanding collections.
Curbelo admitted that he conspired with others to create and submit false and fraudulent Federal Housing Administration (FHA) mortgage loan applications and accompanying documents to a lender on behalf of the unqualified borrowers. Curbelo and others offered the borrowers cash back after closing as an incentive for them to purchase the units. These payments were not disclosed properly during the loan application process. According to court documents, the closing costs were paid on behalf of the borrowers by interstate wire. After the loans closed, the unqualified borrowers failed to meet their monthly mortgage obligations and defaulted on their loans.
According to court documents, when the loans went into foreclosure, HUD, which insured the loans, was required to take title to the units and pay the outstanding loan balances to the lenders. As of the date of the plea agreement, the actual loss related to Curbelo’s conduct that was paid by HUD was more than $6.5 million.
Curbelo is scheduled to be sentenced on June 25, 2012. He faces a maximum prison sentence of 20 years.
This case was investigated by the HUD Office of Inspector General, as participants in the Miami Mortgage Fraud Strike Force. Trial Attorney Mary Ann McCarthy of the Fraud Section in the Justice Department’s Criminal Division is prosecuting the case with assistance from the U.S. Attorney’s Office for the Southern District of Florida.
This prosecution is part of efforts under way by the Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets and recover proceeds for victims of financial crimes.For more information on the task force, visit www.StopFraud.gov.
Former Executive of New York-Based Tax Liens Company Pleads Guilty to Bid Rigging at Municipal Tax Lien Auctions in New JerseyRead the Press Release
A former executive of a New York-based tax liens company who supervised the purchasing of municipal tax liens at auctions in New Jersey pleaded guilty today for his role in a conspiracy to rig bids for the sale of tax liens auctioned by municipalities throughout the state, the Department of Justice announced.
A felony charge was filed today in the U.S. District Court for the District of New Jersey in Newark, N.J., against former Vice President Stephen E. Hruby, of Hainesport, N.J. Under the plea agreement, which is subject to court approval, Hruby has agreed to cooperate with the department’s ongoing investigation.
According to the felony charge, from at least as early as December 2002 until approximately February 2009, Hruby participated in a conspiracy to rig bids at auctions for the sale of municipal tax liens in New Jersey by agreeing to, and directing others to, allocate among certain bidders which liens each would bid on. Hruby, and those under his supervision, proceeded to submit bids in accordance with their agreements and purchased tax liens at collusive and non-competitive interest rates.
“Today’s guilty plea demonstrates that the Antitrust Division will not tolerate illegal conduct that harms distressed homeowners,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “The division will continue to prosecute the perpetrators of anticompetitive bid rigging schemes at municipal tax lien auctions in New Jersey and elsewhere.”
The department said that the primary purpose of the conspiracy was to suppress and restrain competition, in order to obtain selected municipal tax liens offered at public auctions at non-competitive interest rates. When the owner of real property fails to pay taxes on that property, the municipality in which the property is located may attach a lien for the amount of the unpaid taxes. If the taxes remain unpaid after a waiting period, the lien may be sold at auction. State law requires that investors bid on the interest rate delinquent homeowners will pay upon redemption. By law, the bid opens at 18 percent interest and, through a competitive bidding process, can be driven down to zero percent. If a lien remains unpaid after a certain period of time, the investor who purchased the lien may begin foreclosure proceedings against the property to which the lien is attached.According to the court documents, Hruby conspired with others not to bid against one another at municipal tax lien auctions in New Jersey. Because the conspiracy permitted the conspirators to purchase tax liens with limited competition, each conspirator was able to obtain liens which earned a higher interest rate. Property owners were therefore made to pay higher interest on their tax debts than they would have paid had their liens been purchased in open and honest competition.
A 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 a Sherman Act violation may be increased to twice the gain derived from the crime or twice the loss suffered by the victim if either amount is greater than the statutory maximum.
Today’s plea is the seventh guilty plea resulting from an ongoing investigation into bid rigging or fraud related to municipal tax lien auctions. On Aug. 24, 2011, Isadore H. May, Richard J. Pisciotta Jr. and William A. Collins each pleaded guilty to one count of bid rigging in connection with their participation in a conspiracy to allocate liens at New Jersey auctions. On Feb. 23, 2012, Robert W. Stein and David M. Farber each pleaded guilty to one count of bid rigging. On March 27, 2012, Robert E. Rothman pleaded guilty to one count of bid rigging in connection with his participation in this conspiracy.
Today’s charge is part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force (FFETF). President Obama established the interagency FFETF to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets and recover proceeds for victims of financial crimes. For more information on the task force, visit www.StopFraud.gov.
The ongoing investigation is being conducted by the Antitrust Division’s New York Field Office and the FBI’s Atlantic City, N.J., office. Anyone with information concerning bid rigging or fraud related to municipal tax lien auctions should contact the Antitrust Division’s New York Field Office at 212-335-8000, visit www.justice.gov/atr/contact/newcase.htm or contact the Atlantic City Resident Agency of the FBI at 609-677-6400.Former Chief Engineer of South Pacific Tuna Vessel Pleads Guilty to Covering up Environmental CrimesRead the Press Release
WASHINGTON – A former chief engineer from the tuna fishing vessel San Nikunau pleaded guilty today in federal court to violating the Act to Prevent Pollution from Ships (APPS), announced Assistant Attorney General Ignacia S. Moreno and U.S. Attorney Ronald C. Machen Jr.
Rolando Ong Vano served as the chief engineer on the vessel, which was owned and operated by Sanford Ltd., a New Zealand company, during several fishing trips in the South Pacific between March 2006 and July 2011. Sanford Ltd. and another prior chief engineer from the vessel have been charged with obstruction of justice and APPS violations, and are currently awaiting trial.
According to the plea agreement, it was routine practice onboard the vessel to discharge directly into the sea oily bilge waste from the engine room and other areas of the vessel without using required pollution prevention equipment. Before such waste can be discharged into the sea, it must first pass through an oil water separator, and the operation must be recorded in the vessel’s oil record book.
Vano admitted to falsifying the oil record book and lying to U.S. Coast Guard inspectors that the oil water separator was used on the vessel when in fact it was not. The Coast Guard discovered the violations during an inspection of the vessel in American Samoa in July 2011. Sentencing in this matter is currently scheduled for September 2012.
This case was investigated by the U.S. Coast Guard. The case is being prosecuted by the U.S. Attorney's Office for the District of Columbia and by the Environmental Crimes Section of the Environment and Natural Resources Division of the Department of Justice.
16 April 2012
U.S. and Tennessee Announce Clean Water Act Agreement with the City of MemphisRead the Press Release
The Department of Justice, the U.S. Environmental Protection Agency (EPA), the Tennessee Department of Environment and Conservation and the Office of the Tennessee Attorney General announced today a comprehensive Clean Water Act settlement with the city of Memphis, Tenn. Memphis has agreed to make improvements to its sewer systems to eliminate unauthorized overflows of untreated raw sewage. Memphis estimates such work will cost approximately $250 million.
“The improvements required by this settlement agreement will bring lasting public health and environmental benefits to Memphis residents,” said Ignacia S. Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. “We will continue to work in partnership with the EPA to enforce the Clean Water Act and will work with municipalities across the country to advance the goal of clean water for all communities.”
“The EPA is working with communities across the country to address sewage overflows that negatively impact the health of residents and impair local water quality,” said Cynthia Giles, Assistant Administrator for the EPA’s Office of Enforcement and Compliance Assurance. “This collaborative agreement with the city of Memphis will reduce raw sewage overflows, protecting area waterways now and into the future.”
A consent decree, filed today in U.S. District Court for the Western District of Tennessee in Memphis, represents the combined efforts of the United States and the state of Tennessee, co-plaintiffs in this settlement, and of the Tennessee Clean Water Network, an intervening plaintiff in this action. The United States and Tennessee previously filed a complaint against Memphis on Feb. 5, 2010, seeking injunctive relief and civil penalties for Memphis’ alleged violations of the Clean Water Act and the Tennessee Water Quality Control Act.
“Sewage overflows are a significant problem that affect water quality in the Southeast and across the entire country,” said Gwen Keyes Fleming, EPA Region 4 Administrator. “This settlement is a collaborative agreement that will result in significant improvements to water quality and provide the Memphis community with a cleaner and healthier environment.”
The major features of the consent decree will require Memphis to implement specific programs designed to ensure proper management, operation and maintenance of its sewer systems to eliminate unauthorized overflows of untreated raw sewage. In order to address the problem of grease buildup within the sewer lines, Memphis developed and will be required to implement a comprehensive fats, oil and grease (FOG) program. Furthermore, the consent decree will require Memphis to develop and implement a continuing sewer assessment and rehabilitation program to ensure that the integrity of sewer infrastructure is appropriately maintained to prevent system failures that would likely result in unauthorized overflows. The consent decree will also require Memphis to perform corrective measures in certain specifically identified priority areas.
In addition to the control requirements, the consent decree will also require Memphis to pay a civil penalty of $1.29 million. Half of this amount will be paid to the United States. At the direction of the state, the other half of the civil penalty will be paid by Memphis through the performance of certain state projects. These projects include implementation of improvements to Memphis’ Geographic Information System (GIS) and implementation of an effluent color study to better delineate limits for the color of Memphis’ permitted discharges to the Mississippi River.
“Today's consent decree sets out a schedule that will ensure the city of Memphis moves forward in making the much needed infrastructure changes to its sewer system,” said Tennessee Department of Environment and Conservation Commissioner Bob Martineau. “We’ve been pleased with the city's cooperative tone during these negotiations, while working together to ensure a cleaner, healthier environment for the citizens of Memphis.”
“Violations of the Tennessee Water Quality Control Act due to aging infrastructure have become an all-too-familiar occurrence in various parts of Tennessee,” Tennessee Attorney General Bob Cooper said. “We hope today’s cooperative agreement to improve the Memphis sanitary sewer system will help the overall health of our community, environment and economy.”
Keeping raw sewage and contaminated stormwater out of the waters of the United States is one of the EPA’s national enforcement initiatives for 2011 to 2013. The initiative focuses on reducing sewer overflows, which can present a significant threat to human health and the environment. These reductions are accomplished by obtaining cities’ commitments to implement timely, affordable solutions to these problems, including the increased use of green infrastructure and other innovative approaches.
The United States has reached similar agreements in the past with numerous municipal entities across the country including Mobile and Jefferson County, Ala. (Birmingham); Atlanta and Dekalb County, Ga.; Knoxville and Nashville, Tenn.; Miami-Dade County, Fla.; New Orleans; Hamilton County (Cincinnati), Ohio; Northern Kentucky Sanitation District #1; and Louisville, Ky.
The proposed consent decree with Memphis is subject to a 30-day public comment period and final court approval before becoming effective. A copy of the consent decree lodged today is available on the Department of Justice website at www.justice.gov/enrd/Consent_Decrees.html .
More information about the settlement is available at www.epa.gov/compliance/resources/cases/civil/cwa/memphis.html .
More information on EPA’s national enforcement initiative is available at www.epa.gov/compliance/data/planning/initiatives/2011sewagestormwater.html .
Three Men Found Guilty of Federal Hate Crime Charge Related to the Assault of African-american ManRead the Press Release
A federal jury today convicted Charles Cannon, 26, Michael McLaughlin, 41, and Brian Kerstetter, 32, of a federal hate crime charge related to a racially motivated assault of a 29-year-old African-American man.
The defendants were found guilty of violating the Matthew Shepard and James Byrd, Jr. Hate Crimes Prevention Act, which was enacted in October 2009. The evidence at trial established that on Aug. 13, 2011, the defendants approached the victim, who was waiting at a bus stop in downtown Houston. At least one defendant referred to the victim using a racial slur, and the defendants then surrounded and attacked the victim by punching and kicking his face, head and body. The defendants were arrested at the scene after a passerby called 911. All three defendants had tattoos known to reflect an affiliation with white supremacist groups.
“Today’s convictions under the Matthew Shepard and James Byrd Jr. Hate Crimes Prevention Act show that hate crimes are all too common in this country,” said Thomas E. Perez, Assistant Attorney General of the Civil Rights Division. “The department will continue to use every available tool to identify and prosecute hate crimes whenever and wherever they occur.
“We hope today’s convictions send a powerful public message,” said FBI Special Agent in Charge Stephen L. Morris. “The Matthew Shepherd and James Byrd Jr. Hate Crimes Prevention Act is a tool the FBI will use to aggressively investigate and prosecute hate crimes as felony offenses.”
The defendants face a maximum penalty of 10 years in prison. The sentencing is scheduled for July 16, 2012, before the Honorable Kenneth Hoyt, U.S. District Judge for the Southern District of Texas.
This case was investigated by the Houston Division of the FBI in cooperation with the Houston Police Department. Assistance was also provided by the Harris County District Attorney’s Office. It is being prosecuted by Trial Attorney Saeed Mody and Special Litigation Counsel Gerard Hogan of the Civil Rights Division of the Department of Justice.