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22 March 2012
Three Brandon, Miss., Men Plead Guilty for Their Roles in the Racially Motivated Assault and Murder of an African-American ManRead the Press Release
WASHINGTON – The Justice Department announced today that Deryl Paul Dedmon, 19, John Aaron Rice, 19, and Dylan Wade Butler, 20, all from Brandon, Miss., pleaded guilty today in U.S. District Court in Jackson to federal hate crime charges in connection with an assault culminating in the death of James Craig Anderson, an African-American man, in the summer of 2011.
Dedmon, Rice and Butler were each charged with one count of conspiracy and one count of violating the Matthew Shepard and James Byrd, Jr. Hate Crimes Prevention Act, for their roles in the death-resulting assault of Anderson, 47, of Jackson, Miss. Dedmon, Rice and Butler entered guilty pleas to both counts. The maximum penalty for these charges is life in prison and a $250,000 fine.
“We hope that today’s guilty pleas provide some closure to the victim’s family and to the grievously wounded community that has mourned Mr. Anderson’s death,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “Today’s historic pleas mark the first time that the Matthew Shepard and James Byrd, Jr. Hate Crimes Prevention Act has been used in a case where the defendants’ actions resulted in a victim’s death. The Department of Justice will vigorously pursue those who commit racially motivated assaults and will use every tool at our disposal to ensure that those who commit such acts are brought to justice. And I note that our investigation in this matter is ongoing.”
“The actions of these defendants who have pled guilty do not represent the values of Mississippi in 2012,” said John Dowdy Jr., U.S. Attorney for the Southern District of Mississippi. “The swift and certain investigation by the Jackson Police Department and especially the FBI shows that crimes committed because of a person’s race will not be tolerated. Justice will be color-blind, and hopefully this pursuit of justice in Mr. Anderson's death will help the family in their healing process.”
“ Hate itself is not a crime, and the FBI is mindful of protecting freedom of speech and other civil liberties. The investigation into the murder of James Craig Anderson was not simply an effort to identify who was responsible, it was incumbent upon the FBI to uncover and prove the motivation behind the crime,” said Dan McMullen, Special Agent in Charge of the FBI. “The answer we discovered, put simply, was that James Craig Anderson was killed because of the color of his skin. Hate crimes have a devastating impact on families and communities, and every sector of our community has a role to play in helping to ensure that no person is targeted for violence because of who they are, what they look like or what they believe.”
Today in court, Dedmon, Rice and Butler admitted that beginning in the spring of 2011, they and others conspired with one another to harass and assault African-Americans in and around west Jackson. On numerous occasions, the co-conspirators used dangerous weapons, including beer bottles, sling shots and motor vehicles, to cause, and attempt to cause, bodily injury to African-Americans. They would specifically target African-Americans they believed to be homeless or under the influence of alcohol because they believed that such individuals would be less likely to report an assault. The co-conspirators would often boast about these racially motivated assaults.
The defendants further admitted that on June 25, 2011, they and others attended a birthday party in Puckett, Miss., for a mutual friend. During the party, the defendants and others talked about going to Jackson to harass and assault African-Americans. By the early morning hours of June 26, 2011, the defendants and four other co-conspirators agreed to carry out their plan to find, harass and assault African-Americans.
At around 4:15 a.m., Rice, Butler and two co-conspirators drove to west Jackson in a white Jeep with the understanding that Dedmon and two other co-conspirators would join them a short time later. Rice, Butler and the other two occupants of the Jeep then drove around west Jackson and threw beer bottles from the moving vehicle at African-American pedestrians they encountered. At approximately 5:00 a.m., Rice, Butler and the other two occupants of the Jeep spotted Anderson in a motel parking lot off Ellis Avenue. The occupants of the Jeep decided that Anderson would be a good target for an assault because he was African-American and appeared to be intoxicated. Rice and another co-conspirator decided to get out of the Jeep to distract Anderson while they waited for Dedmon and the other co-conspirators to arrive.
After Dedmon and the other two co-conspirators arrived in Dedmon’s Ford F250 truck, Dedmon and Rice physically assaulted Anderson. Rice first punched Anderson in the face with sufficient force to knock Anderson to the ground, and then Dedmon punched Anderson in the face multiple times while he was on the ground. After the assault, Rice, Butler and two co-conspirators left the motel parking lot in the Jeep. As they left, one of the occupants of the Jeep yelled, “White Power!” Prior to getting back into his truck, Dedmon responded by also yelling “White Power!” Once back in his truck, Dedmon deliberately used his truck to run over Anderson, causing injuries which resulted in Anderson’s death.
After Anderson’s death, a number of the co-conspirators including Rice and Butler agreed to, and did, give false statements to law enforcement officials about the nature of their interactions with Anderson.
These guilty pleas were the result of a cooperative effort among the Justice Department’s Civil Rights Division, the U.S. Attorney’s Office for the Southern District of Mississippi and the Hinds County, Miss., District Attorney’s Office. This case was investigated by the Jackson Division of the FBI and the Jackson Police Department. It is being prosecuted by Trial Attorney Sheldon L. Beer and Deputy Chief Paige M. Fitzgerald of the Civil Rights Division of the Department of Justice, and Glenda R. Haynes of the U.S. Attorney’s Office for the Southern District of Mississippi.
Louisiana Jury Convicts General Manager/Former Owner of Arkla Disposal Services of Violations of Clean Water Act and Obstructing an EPA InvestigationRead the Press Release
WASHINGTON – A federal jury in Shreveport, La., has convicted John Tuma, 54, of Centerville, Texas, of discharging untreated wastewater directly into the Red River without a permit, discharging untreated wastewater into the city of Shreveport sewer system in violation of its permit and obstructing an Environmental Protection Agency (EPA) inspection, announced Assistant Attorney General Ignacia S. Moreno and Western District of Louisiana U.S. Attorney Stephanie A. Finley.
Father and son, John Tuma and Cody Tuma, 28, of Shreveport, were both charged in a five-count indictment with violations of the Clean Water Act, conspiracy and obstruction of justice related to illegal discharges coming from the Arkla Disposal Services Inc., a facility in Shreveport. The Arkla facility received off-site wastewater from industrial processes and from oilfield exploration and production facilities for treatment at the Arkla facility.
“It was irresponsible, illegal and potentially harmful to the health of city residents and their environment for Mr. Tuma to conspire to dump untreated industrial wastewater into Shreveport’s sewer system,” said Assistant Attorney General Ignacia S. Moreno of the Environment and Natural Resources Division of the Department of Justice. “This case is an example of how the Clean Water Act protects the health and safety of the American people.”
“This case was about a defendant who had no concern about the effects of discharging untreated wastewater into the Red River or the people that his actions harmed,” said U.S. Attorney Finley. “The verdict of this jury should send a message that disregarding laws designed to protect citizens will not be taken lightly. Louisiana is a state with precious natural resources, which our office, along with the Environmental Protection Agency, will continue to protect.”
“The defendant dumped thousands of gallons of untreated wastewater directly into the Red River,” said Ivan Vikin, Special Agent in Charge of EPA’s criminal enforcement program in Louisiana. “Improperly discharged wastewater can sicken or injure people, fish and wildlife. Today’s guilty verdict shows that those who try to save money by cutting corners will be vigorously prosecuted.”
Cody Tuma pleaded guilty in February 2012 to one count of negligently discharging pollutants into the Red River without a permit. He faces a maximum penalty of one year in prison or a fine of not more than $100,000, or twice the gross gain or loss resulting from the unlawful conduct, or both. Sentencing for Cody Tuma has been set for June 20, 2012.
John Tuma will be sentenced July 25, 2012. He faces a maximum penalty of five years in prison on the conspiracy charge, three years in prison on each of the Clean Water Act violations and five years in prison on the obstruction of justice charge. He also faces a fine of not more than $250,000, or twice the gross gain or loss resulting from the unlawful conduct, or both, per count.
The case is being investigated by EPA’s Criminal Investigation Division and is being prosecuted by Assistant U.S. Attorney C. Mignonne Griffing and Trial Attorney Leslie E. Lehnert of the Environmental Crimes Section of the Justice Department’s Environment and Natural Resources Division.
Justice Department Settles Document Abuse Claim Against Ross Stores Inc.Read the Press Release
WASHINGTON – The Justice Department announced today that it reached an agreement with Ross Stores Inc., resolving allegations that the company had engaged in a pattern or practice of discrimination based on citizenship status while verifying employment eligibility at its store in San Ysidro, Calif. The department also alleged that Ross Stores discriminated against a work-authorized individual when it refused to honor a genuine work authorization document and requested that she produce a green card, despite the fact that the company did not require U.S. citizens to show specific work authorization documents.
The department’s investigation began in response to a charge of discrimination filed by a work-authorized, non-U.S. citizen, who was not permitted to work at the San Ysidro store after showing a valid employment authorization document (EAD) for the Form I-9. The charging party alleged that Ross Stores refused to allow her to work after presenting her EAD, requested more or different documents for the Form I-9 and eventually withdrew her job offer. The charging party had already produced sufficient documentation establishing her work authorization. The department also alleged that Ross Stores subjected newly hired non-U.S. citizens to excessive demands for documents issued by the Department of Homeland Security, in order to verify their employment eligibility, but did not require the same of U.S. citizens. The Immigration and Nationality Act (INA) requires employers to treat all authorized workers equally during the employment eligibility verification process, regardless of their national origin or citizenship status.
“Employers must not treat authorized workers differently during the employment eligibility verification process based on their citizenship status or national origin,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The department is committed to ensuring authorized workers are treated fairly during the employment eligibility verification process.”
Under the settlement agreement, Ross Stores agrees to reinstate the charging party and pay $6,384 in back pay plus interest to the charging party and $10,825 in civil penalties to the United States. Ross Stores also agrees to comply with the law, to train its human resources personnel about employers’ responsibilities to avoid discrimination in the employment eligibility verification process and to be subject to reporting and compliance monitory requirements for 18 months.
The Office of Special Counsel (OSC) for Immigration-Related Unfair Employment Practices is responsible for enforcing the anti-discrimination provision of the INA, which protects work authorized individuals from employment discrimination on the basis of citizenship status or national origin discrimination, including discrimination in hiring and the employment eligibility verification (Form I-9) process. For more information about protections against employment discrimination under the immigration law, call 1-800-255-7688 (OSC’s worker hotline) (1-800-237-2525, TDD for hearing impaired), 1-800-255-8155 (OSC’s employer hotline) (1-800-362-2735, TDD for hearing impaired) or 202-616-5594; email [email protected]; or visit OSC’s website at www.justice.gov/crt/about/osc.
Former San Juan, Puerto Rico, Police Department Officer Convicted for Role in Providing Security for Drug TransactionsRead the Press Release
WASHINGTON – A former officer with the San Juan, Puerto Rico, Municipal Police Department was convicted by a federal jury yesterday for his role in providing security for drug transactions, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Rosa E. Rodriguez-Velez of the District of Puerto Rico and Special Agent in Charge Joseph S. Campbell of the FBI’s San Juan Field Office.
Arcadio Hernandez-Soto, 35, was convicted in San Juan of three counts of conspiracy to possess with intent to distribute more than five kilograms of cocaine, four counts of attempting to possess with the intent to distribute more than five kilograms of cocaine and four counts of possession of a firearm in furtherance of a drug transaction. Hernandez-Soto was charged in an indictment unsealed on Oct. 6, 2010, along with 89 law enforcement officers in Puerto Rico and 44 other individuals, as part of the FBI undercover operation known as Guard Shack.
According to the evidence presented in court, Hernandez-Soto provided security for what he believed were illegal cocaine deals on May 8, 2009; June 4, 2009; July 23, 2009; and July 13, 2010, but which in fact were part of the undercover FBI operation. According to information presented at trial, Hernandez-Soto was employed as a member of the San Juan Police Department but acted as a security guard for what he believed were cocaine deals by frisking the buyer, providing protection for the deal and escorting the buyer in and out of the transaction. Information presented at trial also showed that Hernandez-Soto recruited other police officers to participate in the second, third and fourth deals.
In return for the security he provided, Hernandez-Soto received a cash payment of between $2,000 and $3,000 for each transaction.
U.S. District Judge Carmen C. Cerezo did not schedule a sentencing date. At sentencing, Diaz faces a mandatory minimum sentence of 90 years in prison and a maximum penalty of life in prison.
The case was prosecuted by Trial Attorneys John P. Pearson and Richard B. Evans of the Criminal Division’s Public Integrity Section. The case was investigated by the FBI. The U.S. Attorney’s Office for the District of Puerto Rico also participated in the investigation and prosecution of this case.
Federal Prisoner Charged in California for Murder of CellmateRead the Press Release
WASHINGTON – A federal grand jury returned a two-count indictment today charging Samuel Stone, 32, with first degree murder and murder by a federal prisoner serving a life sentence, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Benjamin B. Wagner for the Eastern District of California.
The indictment alleges that on July 30, 2003, Stone murdered his cellmate, Michael Anita, while the two were being housed in the Special Housing Unit at U.S. Penitentiary Atwater. At the time of the murder, Stone was serving a life sentence for two separate homicides that took place in 1999.
The maximum statutory penalties are life in prison or death. The government has filed a notice of intent to seek the death penalty in this case.
The charges are only allegations and the defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
This case is the product of an extensive investigation by the FBI. The case is being prosecuted by Assistant U.S. Attorney Elana S. Landau for the Eastern District of California and Trial Attorney Jacabed Rodriguez-Coss of the Criminal Division’s Capital Case Unit.
Baton Rouge, La.-area Residents Sentenced in Medicare Fraud SchemeRead the Press Release
Two patient recruiters for several Louisiana durable medical equipment (DME) companies were sentenced today for their roles in Medicare fraud schemes involving fraudulent claims and illegal kickback payments for unnecessary DME, announced the Department of Justice, the Department of Health and Human Services (HHS), the FBI and the Louisiana State Attorney General’s Office.
Stephanie B. Williams and Mary H. Griffin were sentenced by U.S. District Judge James J. Brady of the Middle District of Louisiana to 48 months and 21 months in prison, respectively. Williams was ordered to pay $4 million in restitution, and Griffin was ordered to pay $3.6 million in restitution. In addition, Judge Brady sentenced the defendants to two years of supervised release following their prison terms. Williams pleaded guilty on Dec. 13, 2011, and Griffin pleaded guilty on Oct. 31, 2011.
Williams and Griffin worked as recruiters for Healthcare 1 LLC, Medical 1 Patient Services LLC and Lifeline Healthcare Services Inc., Louisiana-based companies that fraudulently billed medical equipment to the Medicare program from 2004 to 2009. They and other recruiters were hired to obtain prescriptions for medical equipment such as leg braces, arm braces, power wheel chairs and wheel chair accessories. Williams and Griffin obtained information from Medicare beneficiaries as well as prescriptions for medical equipment from the beneficiaries’ physicians. These prescriptions were then used to submit fraudulent claims to the Medicare program. In addition, Griffin participated in a similar scheme at McKenzie Healthcare Solutions Inc., where she was paid kickbacks and caused the submission of fraudulent claims for medically unnecessary DME from 2005 to 2010.
According to court documents, from 2004 to 2010, the companies involved in these schemes submitted more than $30 million in fraudulent billing.
Today’s sentences were announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Donald J. Cazayoux Jr. of the Middle District of Louisiana; Mike Fields, Special Agent-in-Charge of the Dallas Region for the HHS Office of the Inspector General (HHS-OIG); David Welker, Special Agent-in-Charge of the FBI’s New Orleans Division; and James Buddy Caldwell, Louisiana State Attorney General.
The cases were prosecuted by Assistant Chief William Pericak, Trial Attorneys David Maria, Abigail Taylor and Alexander Berlin and former Assistant Chief Ben Curtis of the Criminal Division’s Fraud Section. The cases were investigated by the FBI, HHS-OIG and the Medicaid Fraud Control Unit of the Louisiana State Attorney General’s Office (MFCU), and were brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division's Fraud Section and the U.S. Attorney's Office for the Middle District of Louisiana.
Since its inception in March 2007, the Medicare Fraud Strike Force operations in nine locations have charged more than 1,190 defendants that collectively have 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, 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 .
Armenian Power Member and Three Armenian Power Associates Convicted in Los Angeles for Roles in Identity Theft RingRead the Press Release
WASHINGTON – After a five week trial, four defendants have been convicted for their roles in one of the largest bank fraud and identity theft schemes in California history, with dozens of victims in four states and millions of dollars in losses.
The convictions were announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Andre Birotte Jr. of the Central District of California, Assistant Director in Charge of the FBI’s Los Angeles Field Office Steven Martinez and Special Agent in Charge of the U.S. Secret Service (USSS) Joseph Beaty.
Arman Sharopetrosian, Karen Markosian, Artush Margaryan and Kristine Ogandzhanyan were found guilty of conspiring to commit bank fraud, attempted bank fraud and various counts of aggravated identity theft. Sharopetrosian, Markosian and Ogandzhanyan waived a jury trial and consented to trial by the judge, and Margaryan proceeded with a jury trial.
Yesterday, U.S. District Judge David O. Carter found Ogandzhanyan, 28, of Burbank, Calif., guilty of one count of bank fraud conspiracy, two counts of attempted bank fraud and four counts of aggravated identity theft. On March 16, 2012, the judge found Sharopetrosian, 33, of Burbank, guilty of one count of bank fraud conspiracy, four counts of bank fraud and seven counts of aggravated identify theft. On March 16, 2012, the judge also found Markosian, 39, of Glendale, Calif., guilty of one count of bank fraud conspiracy, one count of attempted bank fraud and two counts of aggravated identity theft. A jury convicted the fourth defendant, Artush Margaryan, 28, of Van Nuys, Calif., on March 16, 2012, of one count of bank fraud conspiracy, one count of attempted bank fraud and three counts of aggravated identity theft.
Evidence was presented at trial that Sharopetrosian is a member of the Armenian Power organized crime group, and Margaryan, Markosian and Ogandzhanyan are Armenian Power associates.
According to evidence presented at trial, Sharopetrosian directed the massive fraud scheme along with co-defendant Angus Brown, while the two were incarcerated at Avenal State Prison. Using cellular telephones that were smuggled into the prison, Sharopetrosian and Brown worked from behind bars to coordinate with others, including Ogandzhanyn, Markosian and Margaryan, to obtain confidential bank profile information and steal money from victim account holders. Often targeting high-value bank accounts, the defendants used account holders’ personal identifying information – including names, Social Security numbers and dates of birth – to impersonate victims in phone calls to the bank. The defendants gathered account information, transferred funds between victims’ accounts and placed unauthorized check orders for the accounts. They then stole the checks, obtained the victims’ signatures from public documents and paid conspirators to cash the forged checks. Over the course of the six-year conspiracy, the defendants and their co-conspirators caused more than $10 million dollars in losses to victims in Southern California, Nevada, Arizona and Texas.
“These defendants, including two individuals who were operating from a prison cell, perpetrated a massive fraudulent scheme on behalf of a dangerous criminal enterprise,” said Assistant Attorney General Breuer. “As members and associates of Armenian Power, they stole sensitive personal and financial information from innocent consumers and caused millions of dollars in losses. Whether organized criminal groups traffic in drugs, commit financial fraud or wreak other havoc to keep themselves going, they must be stopped. We are doing everything possible to shut down dangerous gangs like Armenian Power.”
“The safety and sanctity of confidential financial information is paramount in today’s society,” said U.S. Attorney Birotte. “Identity theft is a fundamental invasion of consumer privacy that cannot be tolerated. These convictions demonstrate that violators, whoever and wherever they may be, will be caught and will be prosecuted to the fullest extent of the federal law.”
“The defendants were convicted in a trial that uncovered a sophisticated and lengthy scheme that targeted victims in multiple states, and included disturbing details, such as orders made from within prison walls and assistance from bank insiders enlisted by the defendants,” said FBI Assistant Director Martinez. “This case is also indicative of the growing trend of gang or organized crime-affiliated groups now engaging in identity theft and other financial crimes in furtherance of their enterprise.”
These defendants are four of 20 defendants who were charged with operating the bank fraud and identity theft scheme in one of a series of federal indictments unsealed on Feb. 16, 2011. The indictments allege various federal crimes against members and associates of the Armenian Power criminal organization. To date, 19 of the 20 defendants charged in the bank fraud indictment have been convicted, including Brown. One defendant, Faye Bell, was arrested earlier this year and is still awaiting trial.
Sharopetrosian, Margaryan, Markosian and Ogandzhanyan face maximum sentences of 30 years in federal prison for each count of bank fraud, 30 years for each count of conspiracy to commit bank fraud and additional mandatory two year sentences for each count of aggravated identity theft.
Sentencing for all four defendants is scheduled for Aug. 6, 2012, before Judge Carter.
The case is being prosecuted by Assistant U.S. Attorneys Martin Estrada and Joseph McNally of the Central District of California and Trial Attorney Cristina Moreno of the Organized Crime and Gang Section in the Justice Department’s Criminal Division. The case was investigated by the Eurasian Organized Crime Task Force, which includes the FBI, the USSS, the Los Angeles Police Department, the Glendale Police Department, the Burbank Police Department, the Internal Revenue Service and the U.S. Immigration and Customs Enforcement.
21 March 2012
Noted Scientist Sentenced to 13-Year Prison Term for Attempted Espionage, Fraud and Tax ChargesRead the Press Release
WASHINGTON – Stewart David Nozette, 54, a scientist who once worked for the Department of Energy, the Department of Defense, the National Aeronautics and Space Administration and the White House’s National Space Council, was sentenced today to 13 years in prison for attempted espionage, conspiracy to defraud the United States and tax evasion.
The sentence covered charges in two cases. In one, Nozette pleaded guilty in September 2011 to attempted espionage for providing classified information to a person he believed to be an Israeli intelligence officer. In the other, he pleaded guilty in January 2009 to fraud and tax charges stemming from more than $265,000 in false claims he submitted to the government.
The sentencing, which took place this morning in the U.S. District Court for the District of Columbia, was announced by Ronald C. Machen Jr., U.S. Attorney for the District of Columbia; Lisa Monaco, Assistant Attorney General for National Security; and Principal Deputy Assistant Attorney General John A. DiCicco of the Tax Division.
Joining in the announcement were James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office; Paul K. Martin, Inspector General for the National Aeronautics and Space Administration (NASA OIG); Eric Hylton, Acting Special Agent in Charge of the Washington Field Office of the Internal Revenue Service-Criminal Investigation (IRS-CI); and John Wagner, Special Agent in Charge of the Washington, D.C., Office of the Naval Criminal Investigative Service (NCIS).
In addition to the prison term, the Honorable Paul L. Friedman ordered that Nozette pay more than $217,000 in restitution to the government agencies he defrauded.
Nozette has been in custody since his arrest for attempted espionage on Oct. 19, 2009. At the time, he was awaiting sentencing on the fraud and tax evasion charges. FBI agents arrested Nozette following an undercover operation in which he provided classified materials on three occasions, including one that formed the basis for his guilty plea. He was subsequently indicted by a federal grand jury. The indictment does not allege that the government of Israel or anyone acting on its behalf committed any offense under U.S. laws in this case.
“Stewart Nozette's greed exceeded his loyalty to our country” said U.S. Attorney Machen. “He wasted his talent and ruined his reputation by agreeing to sell national secrets to someone he believed was a foreign agent. His time in prison will provide him ample opportunity to reflect on his decision to betray the United States.”
“Stewart Nozette betrayed his country and the trust that was placed in him by attempting to sell some of America’s most closely-guarded secrets for profit. Today, he received the justice he deserves. As this case demonstrates, we remain vigilant in protecting America’s secrets and in bringing to justice those who compromise them,” said Assistant Attorney General Monaco. “I thank the many agents, analysts and prosecutors who worked on this important case.”
“As this case demonstrates, those who attempt to evade their taxes by abusing the tax-exempt status of non-profit entities will be investigated, prosecuted and punished,” said Principal Deputy Assistant Attorney General DiCicco.
“Today’s sentencing demonstrates that espionage remains a serious threat to our national security,” said Assistant Director in Charge McJunkin. “The FBI and our partners in the defense and intelligence communities work every day to prevent sensitive information from getting into the wrong hands, and I commend the hard work of the dedicated agents, analysts and prosecutors who spent a significant amount of time bringing this case to resolution.”
“We are particularly proud that NASA OIG’s fraud investigation of Nozette, which began in 2006, served as the catalyst for further investigation and today's outcome,” said NASA Inspector General Martin.
“IRS-Criminal Investigation provides financial investigative expertise in our work with our law enforcement partners,” said Acting Special Agent in Charge Hylton. “Pooling the skills of each agency makes a formidable team as we investigate allegations of wrongdoing. Mr. Nozette decided to betray his country to line his own pockets rather than play by the rules. He now is being held accountable for his actions.”
“Federal agents take an oath to protect our nation ‘against all enemies, foreign and domestic.’ That would include ‘insider threats’ like Stewart Nozette,” said Special Agent in Charge Wagner. “NCIS is committed to working with our law enforcement partners and prosecutors to find and hold accountable those like Nozette who put personal gain above national security.”
Nozette received a Ph.D. in Planetary Sciences from the Massachusetts Institute of Technology. Beginning in at least 1989, he held sensitive and high-profile positions within the U.S. government. He worked in various capacities on behalf of the government in the development of state-of-the-art programs in defense and space. During his career, for example, Nozette worked at the White House on the National Space Council, Executive Office of the President. He also worked as a physicist for the U.S. Department of Energy’s Lawrence Livermore National Laboratory, where he designed highly advanced technology.
Nozette was the president, treasurer and director of the Alliance for Competitive Technology (ACT), a non-profit organization that he organized in March 1990. Between January 2000 and February 2006, Nozette, through his company, ACT, entered into agreements with several government agencies to develop highly advanced technology. Nozette performed some of this research and development at the U.S. Naval Research Laboratory (NRL) in Washington, D.C., the Defense Advanced Research Projects Agency (DARPA) in Arlington, Va., and NASA’s Goddard Space Flight Center in Greenbelt, Md.
In connection with the fraud and tax case, Nozette admitted that, from 2000 through 2006, he used ACT to defraud the NRL, DARPA and NASA by making and presenting more than $265,000 in fraudulent reimbursement claims, most of which were paid. He also admitted that, from 2001 through 2005, he willfully evaded more than $200,000 in federal taxes. In addition, he admitted using ACT, an entity exempt from taxation because of its non-profit status, to receive income and to pay personal expenses, such as mortgages, automobile loans, sedan services and other items.
The investigation concerning ACT led investigators to suspect that Nozette had misused government information. From 1989 through 2006, Nozette held security clearances as high as TOP SECRET and had regular, frequent access to classified information and documents related to the national defense of the United States.
On Sept. 3, 2009, Nozette was contacted via telephone by an individual purporting to be an Israeli intelligence officer from the Mossad, but who was, in fact, an undercover employee of the FBI. That same day, Nozette informed the undercover employee that he had clearances “all the way to Top Secret SCI” and that anything “that the U.S. has done in space I’ve seen.” He stated that he would provide classified information for money and a foreign passport to a country without extradition to the United States.
A series of contacts followed over the next several weeks, including meetings and exchanges in which Nozette took $10,000 in cash left by the FBI at pre-arranged drop-off sites. Nozette provided information classified as SECRET/SCI and TOP SECRET/SCI that related to the national defense. Some of this information directly concerned satellites, early warning systems, means of defense or retaliation against large-scale attack, communications intelligence information and major elements of defense strategy.
Nozette and the undercover employee met for the final time on Oct. 19, 2009, at the Mayflower Hotel. During that meeting, Nozette pushed to receive larger payments for the secrets he was disclosing, declaring that, “I gave you even in this first run, some of the most classified information that there is. . . . I’ve sort of crossed the Rubicon.”
Nozette was arrested soon after he made these statements.
The investigation of the fraud and tax evasion case was conducted by NASA-OIG, NCIS, the Defense Criminal Investigative Service (DCIS), IRS-CI, the IRS Tax Exempt & Government Entities Group, the Naval Audit Service, the Defense Contract Audit Agency and the FBI’s Washington Field Office.
The prosecution of the fraud and tax evasion case was handled by Assistant U.S. Attorney Michael K. Atkinson from the Fraud and Public Corruption Section of the U.S. Attorney’s Office for the District of Columbia and Trial Attorney Kenneth C. Vert from the Department of Justice’s Tax Division.
The investigation of the attempted espionage case was conducted by the FBI’s Washington Field Office, with assistance from NCIS; Naval Audit Service; National Reconnaissance Office; Air Force Office of Special Investigations; Defense Computer Forensics Laboratory; Defense Advanced Research Projects Agency; DCIS; Defense Contract Audit Agency; U.S. Army 902nd Military Intelligence Group; NASA Office of Counterintelligence; NASA-OIG; Department of Energy Office of Intelligence and Counterintelligence; IRS-CI; IRS Tax Exempt & Government Entities group; U.S. Customs and Border Protection; and the U.S. Postal Inspection Service, as well as other partners in the U.S. intelligence community.
The prosecution of that case was handled by Assistant U.S. Attorney Anthony Asuncion, from the National Security Section of the U.S. Attorney’s Office for the District of Columbia, and Trial Attorneys Deborah A. Curtis and Heather M. Schmidt, from the Counterespionage Section of the Justice Department’s National Security Division.
La Fuerza de Tarea del Secretario de Justicia de EE.UU. sobre la Exposición Infantil a la Violencia realiza una audiencia pública en MiamiRead the Press Release
La Fuerza de Tarea Nacional del Secretario de Justicia de EE.UU. Eric Holder sobre Niños Expuestos a la Violencia concluyó una audiencia pública de tres días de duración en Miami hoy, acerca de los desafíos que representa prevenir la exposición de los menores a la violencia en la comunidad. En la audiencia, panelistas expertos sobre el sistema de bienestar infantil prestaron testimonio sobre cómo los jóvenes inmigrantes y en riesgo están expuestos a la violencia, y cómo alcaldes de todo el país están interrumpiendo el ciclo de la violencia en sus ciudades, entre otros problemas.
La fuerza de tarea es una parte clave de la Iniciativa Defensa de la Niñez del Secretario de Justicia de EE.UU. Holder para prevenir y reducir la exposición de los menores a la violencia. Lo acompañan en liderar la fuerza de tarea Joe Torre, presidente del consejo de la Joe Torre Safe At Home Foundation, y Robert Listenbee Jr., jefe de la Unidad Juvenil de la Defender Association of Philadelphia. La fuerza de tarea está compuesta por 13 importantes expertos, incluidos profesionales, defensores de menores y familias, expertos académicos y profesionales clínicos habilitados.
Durante la audiencia en Miami, los miembros de la fuerza de tarea escucharon los testimonios de testigos como Roy Martin, Gerente de Programa de Partnership Advancing Community Together (PACT), el cual es parte de la Comisión de Salud de Boston. Martin le dijo a la fuerza de tarea, "Vengo de una familia en la que cada pariente del sexo masculino con edad suficiente para ir a la cárcel o la prisión, lo ha hecho, incluido yo mismo". Martin observó que fue un miembro de la población que atiende, lo que ofrece ventajas singulares para sentirse identificado con las necesidades de la comunidad. Además, el Alcalde Dwight C. Jones de Richmond, Va., describió a la comunidad religiosa como "un recurso que tendría que utilizarse más y una franquicia con un establecimiento en cada esquina". También observó que, en Richmond, la ciudad se está concentrando en iniciativas que destaquen y fortalezcan las relaciones saludables entre padres e hijos y el sentido de autoestima y las capacidades de los niños.
"El proteger a los niños y jóvenes de nuestra nación contra la violencia es una prioridad urgente para nosotros, aquí en Florida, y en todo el país", dijo Wifredo A. Ferrer, Fiscal Federal para el Distrito Sur de Florida. "Ya sea como víctimas o como testigos, la exposición infantil a la violencia suele provocar daños físicos, psicológicos y emocionales de largo plazo, así como un riesgo más alto de exhibir un comportamiento delictivo más adelante en la vida. Al trabajar juntos para prevenir, mitigar y tratar la exposición a la violencia, podemos romper este ciclo, lo cual es en el mejor interés de nuestros niños y nuestras comunidades".
"Los testimonios de los sobrevivientes y expertos destacaron la urgencia y gravedad de ese problema para los niños en vecindarios urbanos de bajos recursos", dijo el codirector de la fuerza de tarea Listenbee. "Nuestros niños merecen sentirse seguros y protegidos en sus hogares y comunidades. Me complacerá trabajar con mis compañeros de la fuerza de tarea en destacar soluciones prácticas y creativas".
La fuerza de tarea identificará prácticas, programación y estrategias comunitarias prometedoras para prevenir y responder a la exposición infantil a la violencia, y presentará un informe final al Secretario de Justicia de EE.UU. en diciembre de 2012. El informe presentará recomendaciones de política y servirá de guía para prevenir y reducir los efectos negativos de dicha violencia en todos los Estados Unidos.
Un estudio de 2009 realizado por la Oficina de Justicia Juvenil y Prevención de la Delincuencia encontró que casi la mitad de los niños y adolescentes encuestados fueron agredidos al menos una vez el año pasado, y que más de uno de cada 10 sufrió lesiones en un ataque. Los adolescentes de más edad (14 a 17 años) resultaron tener mayores probabilidades de ser víctimas de agresiones que acabaron en lesiones, ataques por pandillas, victimizaciones sexuales y abuso físico y emocional, y de ser testigos de violencia en la comunidad.
Para obtener más información sobre la Iniciativa de Defensa de la Niñez del Secretario de Justicia de EE.UU. Holder, su fuerza de tarea y audiencias públicas, visite: www.justice.gov/defendingchildhood.
Para leer el artículo de opinión del codirector de la fuerza de tarea, Joe Torre, sobre niños expuestos a la violencia, publicado en el Miami Herald, visite: http://blogs.usdoj.gov/blog/archives/1926
Justice and Interior Departments Launch National Criminal Justice Training Initiative in Cherokee NationRead the Press Release
CATOOSA, Okla. – The Justice and Interior Departments today completed the first in a series of national level training courses, “Criminal Jurisdiction in Indian Country” (CJIC), designed to strengthen the ability of tribal and local law enforcement to participate in the investigation and enforcement of federal crimes in Indian country and fulfill a key training requirement under the Tribal Law and Order Act of 2010 (TLOA).
Thirty-five class participants representing seven tribes from the surrounding region and one county sheriff’s office took part in the three-day CJIC training, which began on Monday. Topics included training in federal Indian law criminal jurisdiction, how to best serve sexual assault and domestic violence victims, as well as the investigation and enforcement of drug and firearm offenses.
The course, taught by the Justice Department’s National Indian Country Training Coordinator with Assistant U.S. Attorneys, fulfills one of the requirements for participating officers to receive a Special Law Enforcement Commission (SLEC) from the Bureau of Indian Affairs.
“The special law enforcement commission gives tribal police the ability to investigate and make arrests in federal cases,” said Leslie A. Hagen, National Indian Country Training Coordinator for the Justice Department’s Executive Office for U.S. Attorneys. “This authority, and the protections that go along with it, helps build the capacity of tribal law enforcement to keep their communities safe and strengthens federal and tribal partnerships for public safety.”
“TLOA paves the road for more tribal and federal collaboration to address federal crimes in Indian Country,” said Darren Cruzan, Deputy Director of the BIA’s Office of Justice Services. “Pivotal trainings like the SLEC demonstrate this administration’s commitment to strengthening the capabilities and partnerships of tribal and local law enforcement to fight crime across jurisdictional lines.”
An SLEC allows those officers to enforce federal criminal statutes and federal hunting and fishing regulations in Indian Country. With the passage of the TLOA, primary responsibility for delivery of CJIC training shifted to the Department of Justice. Over the last several years, U.S. Attorney’s Offices across the country have begun to host regionally-based CJIC training in addition to the sessions hosted by BIA at its training academy. While the SLEC is still issued by BIA, Section 213 of TLOA states that tribal liaison duties shall include providing technical assistance and training regarding evidence gathering techniques and strategies to address victim and witness protection and conducting training sessions and seminars to certify special law enforcement commissions to tribal justice officials and other individuals and entities responsible for responding to Indian country crimes.
The BIA and Justice Department officials have been working together over the past year to create a new U.S. Attorney Office-led CJIC training curriculum. The National Indian Country Training Coordinator, together with tribal liaisons and Assistant U.S. Attorneys Kerry Jacobson of the District of Wyoming, John Tuchi of the District of Arizona, Glynette Carson-McNabb of the District of New Mexico and Sarah Collins of the District of South Dakota, developed the CJIC curriculum and are also assisting with the training sessions.
Participants in this week’s training include: The Cherokee Nation Marshal Service, Quapaw Tribal Marshal Service, Comanche Nation Police Department, Wyandotte Nation Police Department, Eastern Shawnee Police Department, the Osage Nation Police Department, the Chickasaw Nation Lighthorse Police Department and the Delaware County Sheriff’s Office. In addition to this week’s training hosted by the Cherokee Nation in Oklahoma, future training is scheduled for April 4-6 at the Hopland Band of Pomo Indians in California. For more information on the national CJIC training program, contact Mark Decoteau, Deputy Chief of Training at the Indian Police Academy, at [email protected].
This week’s training was also completed with the support and/or participation of the U.S. Attorney’s Offices in the Eastern, Western and Northern Districts of Oklahoma.
“We’re proud to host this first national training mandated by the Tribal Law and Order Act,” said Thomas Scott Woodward, U.S. Attorney for the Northern District of Oklahoma. “It is another excellent example of how the Departments of Justice and Interior are working more closely than ever with each other and with tribal governments to close jurisdictional gaps and strengthen the law enforcement partnerships that make communities safer.”
Georgia Man Sentenced to 17 Years in Prison for Sex Trafficking of a MinorRead the Press Release
WASHINGTON – An Atlanta man was sentenced today to 17 years in prison and 10 years of supervised release for sex trafficking of a minor, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney for the Northern District of Georgia Sally Quillian Yates.
Marcelo Alejo Desautu, 39, was sentenced by U.S. District Judge Orinda D. Evans in Atlanta. He pleaded guilty to the charge on Jan. 10, 2012.
“Mr. Desautu gave drugs and alcohol to a 12-year-old girl and then prostituted her to adult men,” said Assistant Attorney General Breuer. “He will now, appropriately, spend the next 17 years of his life paying for his horrific crimes. While no prison sentence can repair the harm caused by such appalling conduct, today’s sentence sends a strong message that we will pursue child sex traffickers to the fullest extent of the law.”
“This defendant earned a substantial sentence in federal prison when he drugged and sexually exploited a 12-year-old girl, forever altering the course of her life,” said U.S. Attorney Yates. “It is unfathomable that there is even a market for the sale of such a young child for sex. This lengthy sentence should deter others who would consider engaging in similar heinous acts.”
According to court documents and proceedings, between December 2007 and March 2008, Desautu agreed to care for a 12-year-old girl. Desautu instead gave the girl alcohol and drugs and then arranged for her to engage in sex acts with adult males for money. Desautu took the money the men paid to the young victim and used it to buy drugs for himself and the victim. Desautu also had sex with the young girl. One of the men who paid to have sex with the 12-year-old was Gwinnett County businessman Peter Privateer. Privateer has been charged in both Cobb and Gwinnett Counties, in Georgia, and has entered a guilty plea in Cobb County.
This case was investigated by the Cobb County Police Department and the FBI. This case was prosecuted by Assistant U.S. Attorney Jill Steinberg of the Northern District of Georgia and Trial Attorney Andrew McCormack of the Child Exploitation and Obscenity Section (CEOS) in the Justice Department’s Criminal Division.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and CEOS, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
Federal Court Bars Former Owner of Brooklyn Tax Firm from Operating Tax Preparation BusinessesRead the Press Release
A federal court has permanently barred Annie P. Williams, the former proprietor of PPH Tax & Realty Inc. in Brooklyn, N.Y., from preparing federal tax returns for others and from having any ownership or financial interest in any tax preparation business, the Justice Department announced today. The civil injunction order, to which Williams consented without admitting the allegations against her, was entered by Judge Dora L. Irizarry of the U.S. District Court for the Eastern District of New York.
According to the government complaint in the case, Williams fostered an environment at PPH in which her part-time tax preparers, who had little or no tax experience, were encouraged to prepare fraudulent tax returns. The improper conduct alleged in the complaint included preparing federal tax returns that claimed false expense and charitable contribution deductions, bogus dependents and unallowable child and childcare tax credits.
The complaint also alleged that, during the time that Williams owned PPH, her employees sold other persons’ names and Social Security numbers to customers so that the customers could falsely report that those other persons were their childcare providers for purposes of falsely claiming the childcare tax credit. Employees also allegedly sold fake charitable contribution letters to customers to present to the Internal Revenue Service (IRS) during audits to substantiate false deductions.The IRS has listed return preparer fraud as one of the “Dirty Dozen” tax scams for 2012. The Justice Department’s Tax Division has obtained injunctions against hundreds of unscrupulous return preparers and tax-fraud promoters in the past decade. Information about these cases is available on the Justice Department website .
Stipulated Order of Permanent Injunction (PDF)
Department of Justice Releases Investigative Findings on the Walnut Grove Youth Correctional Facility in MississippiRead the Press Release
WASHINGTON – Following a comprehensive investigation, the Justice Department announced today its findings that the state of Mississippi violated the constitutional rights of youth detained at the Walnut Grove Youth Correctional Facility (WGYCF). WGYCF is a 1,500-bed prison that houses young men aged 13-22 who were convicted as adults and are in the custody of the Mississippi Department of Corrections. WGYCF is run by the GEO group, a private prison company, under contract with the state.
The investigation, announced on Oct. 25, 2010, was in accordance with the Civil Rights of Institutionalized Persons Act (CRIPA), and the Violent Crime Control and Law Enforcement Act of 1994. CRIPA gives the Justice Department authority to seek a remedy for a pattern or practice of conduct that violates the constitutional rights of prisoners in adult detention and corrections facilities. The Violent Crime Control and Law Enforcement Act of 1994 authorizes the Department of Justice to seek a remedy for a pattern or practice of conduct that violates the constitutional or federal statutory rights of youth in juvenile justice institutions.
The United States conducted an in-depth investigation, including an on-site inspection of WGYCF, accompanied by expert consultants in the areas of corrections, medical care and mental health care. Evidence reveals systematic, egregious and dangerous practices at WGYCF exacerbated by a lack of accountability and controls. The Justice Department found reasonable cause to believe that a pattern or practice of unconstitutional conduct exists in several areas, including:
- Deliberate indifference to staff sexual misconduct and inappropriate behavior with youth;
- Use of excessive use of force by WGYCF staff on youth;
- Inadequate protection of youth from youth-on-youth violence;
- Deliberate indifference to youth at risk of self-injurious and suicidal behaviors; and
- Deliberate indifference to the medical needs of youth.
“Our findings show that due to the unconstitutional operation of WGYCF, youth were sexually preyed upon by staff and all too frequently suffered grievous harm, including death,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The widespread and significant deficiencies at the facility violate the Eighth Amendment’s mandate that imprisoned youth be protected from harm and provided with adequate medical and mental health care. The department looks forward to working with the state and its officials to address the constitutional violations by developing and implementing comprehensive remedial measures.”
This investigation was conducted by the Special Litigation Section of the Civil Rights Division. The full report can be found at www.justice.gov/crt/about/spl/findsettle.php. For more information on the Justice Department’s Civil Rights Division, please visit www.justice.gov/crt.
Attorney General’s Task Force on Children’s Exposure to Violence Holds Public Hearing in MiamiRead the Press Release
Attorney General Eric Holder’s National Task Force on Children Exposed to Violence concluded a three-day public hearing in Miami today on the challenges of preventing children’s exposure to violence in the community. At the hearing, expert panelists on the child welfare system testified about how immigrant and at-risk youth are exposed to violence and how mayors across the country are interrupting the cycle of violence in their cities, among other issues.
The task force is a key part of Attorney General Holder’s Defending Childhood Initiative to prevent and reduce children’s exposure to violence and 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. The task force is composed of 13 leading experts, including practitioners, child and family advocates, academic experts and licensed clinicians.
During the Miami hearing, task force members heard testimony from witnesses including Roy Martin, Program Manager for the Partnership Advancing Community Together (PACT), which is part of the Boston Health Commission. Martin told the task force that “I come from a family where every male relative old enough to go to jail or prison has gone, including me.” Martin noted that he was once a member of the population he serves, which offers unique strengths in relating to the needs of the community. In addition, Mayor Dwight C. Jones of Richmond, Va., described the faith community as “an underutilized resource – a franchise with a location on every corner.” He also noted that in Richmond, the city is focusing on efforts that emphasize and strengthen healthy parent-child relationships and children’s sense of self-esteem and abilities.
“Protecting our nation’s children and youth from violence is an urgent priority for us here in Florida and across the country,” said Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida. “Whether as victims or witnesses, children’s exposure to violence often leads to long-term physical, psychological and emotional harm – as well as higher risk of engaging in criminal behavior later in life. By working together to prevent, mitigate and treat exposure to violence, we can break this cycle, which is in the best interest of our children and our communities.”
“Testimony from survivors and experts stressed the urgency and seriousness of this problem for children in poor urban neighborhoods,” said task force co-chair Listenbee. “Our children deserve to feel safe and secure in their homes and in their communities. I look forward to working with my fellow task force members to highlight practical and creative solutions.”
The task force will identify promising practices, programming and community strategies to prevent and respond to children’s exposure to violence, which will inform a final report to the Attorney General in December 2012. The report will present policy recommendations and serve as a blueprint for preventing and reducing the negative effects of such violence across the United States.
A 2009 study by the Office of Juvenile Justice and Delinquency Prevention found that n early one-half of the children and adolescents surveyed were assaulted at least once in the past year, and more than one in 10 were injured in an assault. Older adolescents ages 14 to 17 were the most likely to be victims of assaults that ended in injury, gang assaults, sexual victimizations and physical and emotional abuse, and to witness violence in the community.
For more information about Attorney General Holder’s Defending Childhood Initiative, its task force and public hearings, please visit: www.justice.gov/defendingchildhood
To read task force co-chair Joe Torre’s op-ed on children exposed to violence, which was published in the Miami Herald, please visit: http://blogs.usdoj.gov/blog/archives/1926
Aryan Brotherhood of Texas Gang Member Convicted in Houston of Racketeering ChargesRead the Press Release
WASHINGTON - Aryan Brotherhood of Texas (ABT) gang member David Harlow was found guilty today by Senior U.S. District Judge Ewing Werlein Jr. in Houston of racketeering aggravated assault and conspiracy to commit racketeering aggravated assault for his role in the 2008 beating of a gang prospect.
The guilty verdict was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Kenneth Magidson for the Southern District of Texas.
According to evidence presented at trial, Harlow, 43, aka “Bam Bam,” was a member of the ABT, a powerful race-based, state-wide organization that operated inside and outside of state and federal prisons and elsewhere in the United States. The evidence showed that the ABT was established in the early 1980s within the Texas prison system and modeled itself after and adopted many of the teachings 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 filings, the ABT was primarily concerned with the protection of white inmates and white supremacy/separatism. Over time, however, the ABT expanded its criminal enterprise to include illegal activities for profit.
The evidence presented at trial also showed that the ABT enforced its rules and promoted 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.”
All of Harlow’s 11 co-defendants, including Cooke, previously pleaded guilty to violent crimes in aid of racketeering.
Harlow faces a maximum sentence of 20 years in prison. Sentencing for Harlow is scheduled for June 15, 2012, before Judge Werlein.
This case is being investigated by FBI’s Multi-Agency Gang Task Force consisting of the Bureau of Alcohol, Tobacco, Firearms and Explosives; the Drug Enforcement Administration; the FBI; the U.S. Marshals Service; the Texas Rangers, the Texas Department of Public Safety; the Montgomery County, Texas, Precinct 4 Constables Office; the Montgomery County Sheriff’s Department; the Houston Police Department-Gang Division; 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 U.S. Attorney’s Office for the Southern District of Texas.
Alleged Members of Jewelry Theft Ring ArrestedRead the Press Release
WASHINGTON – Seven alleged members of a jewelry theft ring were arrested yesterday on charges related to their alleged roles in a highly sophisticated and violent organization that has stolen more than $4.6 million worth of jewelry from traveling jewelry sales representatives throughout Virginia and at least six other states. Charges against the individuals were unsealed today after the defendants made initial court appearances in Newport News, Va.
The arrests and charges were announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Neil H. MacBride for the Eastern District of Virginia; and Daniel Kumor, Acting Special Agent in Charge of the Bureau of Alcohol, Tobacco, Firearms and Explosives’ (ATF) Washington Field Division.
“According to the charges unsealed today, members of this organized criminal group stole more than $4.6 million in jewelry from victims in Virginia and at least six other states,” said Assistant Attorney General Breuer. “The defendants allegedly operated their sophisticated scheme for more than two years, using intimidation and violence to carry it out. Organized criminal groups pose a serious threat to the safety and security of our communities, and we will continue to do everything in our power to bring them to justice.”
“This tight-knit group is accused of violently attacking traveling salesmen to rob them of more than $4.6 million in jewelry,” said U.S. Attorney MacBride. “This group did their homework. We allege they were dangerous, patient, extremely mobile and struck swiftly. We are grateful that the ATF and our law enforcement partners were just as patient, mobile and able to strike swiftly once we had identified those believed to be involved.”
“These arrests highlight the outstanding work that dedicated ATF agents and our law enforcement partners do to keep our streets safe,” said Acting Special Agent in Charge Kumor. “This investigation required a lot of long hours and excellent coordination among investigators, prosecutors and agencies throughout the region, and epitomizes the fine work law enforcement does every day.”
According to court records, Alexander Cuadros-Garcia, aka “Alex,” “Brujo,” “Aleto” and “Manuel Gonzalez”, 37, of Richmond, Va., is accused of leading a team of individuals who specialized in conducting surveillance on jewelry stores to identify and then rob jewelry sales representatives and couriers. The ring is believed to have committed and attempted robberies since March 2010 in Prince William County, Henrico County, Virginia Beach, Williamsburg, McLean, Charlottesville, Harrisonburg and Roanoke in Virginia, as well as locations in New York, New Jersey, North Carolina, Maryland, Tennessee and California.
Court documents allege the ring has ties to South American theft groups, which are transnational criminal groups typically of Colombian nationality that work in teams to steal jewelry, gems and precious metals from individuals carrying hundreds of thousands of dollars in merchandise at one time.
The alleged members of the Richmond-based ring regularly conducted lengthy surveillance on jewelry stores to identify vulnerable individuals and then follow their targets back to the individuals’ hotel or home. In most of the alleged robberies, several men would suddenly appear as the victims approached or entered their car, punch out the car’s windows, threaten the victims at knife-point and steal the victims’ merchandise. In addition, the thieves would puncture the victims’ car tires and steal their cell phone to reduce the chance of pursuit or apprehension.
After a successful robbery, members of the ring allegedly traveled to New York to sell the merchandise to businessmen, who acted as “fences” and coordinated re-selling the stolen property or melting it down for future use.
In addition to Cuadros-Garcia, those arrested yesterday include the following:
- Leonardo Ortiz, 41, aka “Luis Angel Arana-Garcia,” of North Chesterfield, Va., who allegedly participated in most of the robberies, conducted surveillance, structured cash and made numerous trips to New York to meet with the “fences.”
- Lucesita Argueta, 32, aka “Lucy,” of Richmond, who allegedly participated in several robberies, conducted surveillance and coordinating with the “fences.”
- Francisco Javier Montesrein-Rodriguez, 32, aka “Lois K,” “Lex” and “Luis Rodriguez,” of Henrico, Va., who allegedly participated in several robberies and heavily assisted with the surveillance activities of the theft ring.
- Raul Antonio Escobar-Martinez, 37, aka “Tony,” of Richmond, who allegedly assisted with surveillance of theft victims and potential victims.
- Jose Alfredo Rivero-Garcia, 51, aka “Alfredo” and “Jose Ribero,” of Richmond, who allegedly participated in the surveillance of prospective robbery victims.
- Juanita Diaz, 42, of Henrico, Va., the ex-wife of Cuadros-Garcia, who allegedly assisted in structuring proceeds from the sale of the stolen property, registered cars used by conspirators and provided other assistance to the theft ring.
Cuadros Garcia, Ortiz, Argueta, Montesrein-Rodriguez and Rivero were arrested yesterday in the Fredericksburg, Va.,- area, while Diaz was arrested in Richmond and Escobar-Martinez was arrested in Texas.
Diaz was charged in the criminal complaint with conspiracy to commit money laundering, which carries a maximum penalty of 20 years in prison. The remaining defendants were charged with conspiracy to obstruct, delay and affect commerce by robbery and face a maximum penalty of 20 years in prison, if convicted.
The investigation of this case was led by the ATF’s Washington Field Division, with the assistance of the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations; the police departments in Williamsburg, Virginia Beach, Henrico County, Chesterfield, Prince William County and Fairfax County in Virginia, along with the Virginia State Police; the Baltimore County, Md., Police Department; the Port Authority of New York and New Jersey; the New York City Police Department; and the police departments in Rutherford, N.J., and Gwinnett County, Ga.; and the Morris County, N.J. Prosecutor’s Office.
Assistant U.S. Attorney Eric M. Hurt, Managing Assistant U.S. Attorney Howard Zlotnick and Trial Attorney Jerome Maiatico of the Organized Crime and Gang Section in the Justice Department’s Criminal Division are prosecuting the case on behalf of the United States.
Criminal complaints are only charges and not evidence of guilt. Defendants are presumed to be innocent until and unless proven guilty.
20 March 2012
Two Southern California Men Plead Guilty for Their Roles in a Nationwide Breach of Credit and Debit Card Terminals at Michaels Stores Inc.Read the Press Release
WASHINGTON – Two southern California men pleaded guilty today in the Northern District of California for their roles in a scheme to defraud nearly 1,000 debit card holders by using stolen bank account information to withdraw money from ATMs, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Melinda Haag of the Northern District of California; and Andrew C. Adelmann, Special Agent in Charge for the U.S. Secret Service (USSS) San Francisco Field Office.
Edward Arakelyan, 21, and Arman Vardanyan, 22, were each charged in a criminal information filed on March 5, 2012, in U.S. District Court in Oakland, Calif., with one count of conspiracy to commit bank fraud, one count of bank fraud, and one count of aggravated identity theft.
“Mr. Arakelyan and Mr. Vardanyan used stolen bank account information to withdraw tens of thousands of dollars in consumer funds from ATMs across northern California,” said Assistant Attorney General Breuer. “With the personal information of nearly 1,000 debit card holders in hand, they stuffed their pockets with other people’s money. This easy cash has now come at a high price. As the defendants have learned the hard way, this Justice Department is aggressively pursuing consumer fraud schemes from coast to coast.”
“This case demonstrates the extent perpetrators of identity theft go to to gain access to another person’s bank account,” U.S. Attorney Haag said. “These are crimes that my office takes very seriously. We will continue to work with our partners in law enforcement to investigate and prosecute the criminals who attempt to lay claim to other peoples’ hard-earned money. It is our hope that the efforts of law enforcement will help bring an end to these types of crimes and will help restore consumer confidence.”
“This case clearly represents the importance of effective interagency collaboration at the local, state and federal level,” stated USSS Special Agent in Charge Adelmann. “The U.S. Secret Service through our law enforcement partnerships continue our commitment to aggressively investigate and hold accountable those criminal groups who prey on America’s financial institutions and their customers.”Arakelyan and Vardanyan admitted that in about July 2011 they participated in a scheme to defraud bank account holders and financial institutions by obtaining 952 stolen bank cards and traveling to northern California to withdraw from ATMs as much money as possible using these stolen bank accounts. According to court documents, Arakelyan and Vardanyan possessed two loaded firearms, a GPS device pre-programmed with ATM locations and eight mobile telephones, all to further their scheme.
The information charges that these stolen cards were linked to a 2011 theft of a reported 94,000 debit and credit card account numbers from customers buying goods at 84 Michaels Stores Inc. across the United States. The perpetrators of that security breach replaced about 84 authentic personal identification number pads, used by the stores to process debit and credit card purchases, with fraudulent pads from which they downloaded customers’ banking information. After this breach, financial institutions reported tens of thousands of incidents of fraudulent activity linked to customers who had visited the affected Michaels stores. Arakelyan and Vardanyan are among those who executed one aspect of this scheme.
The conspiracy to commit bank fraud charge and the bank fraud charge each carry a statutory maximum sentence of 30 years in federal prison. The aggravated identity theft charge carries a mandatory additional sentence of two years. The sentencing of Arakelyan and Vardanyan is scheduled for July 24, 2012, before U.S. District Judge Claudia Wilken in Oakland.
This case is being prosecuted by Trial Attorney Paul Rosen of the Fraud Section in the Justice Department’s Criminal Division, and Special Assistant U.S. Attorney Tamara Weber for the Northern District of California. The investigation was conducted by the USSS San Francisco Field Office with substantial support from the USSS Chicago and Los Angeles Field Offices, and from the Glendale and Pleasant Hill, Calif., Police Departments.
This prosecution is part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information about the task force visit: www.stopfraud.gov.
Justice Department Settles with Mountain Valley, Pa., Midget Football League Under the Americans with Disabilities ActRead the Press Release
WASHINGTON – The Justice Department announced it has reached a settlement with the Mountain Valley, Pa., Midget Football League to ensure that children with disabilities are offered an equal opportunity to play youth football.
The settlement resolves a complaint under the Americans with Disabilities Act (ADA) filed by the mother of a seven-year-old boy with ocular albinism, a condition that results in having little or no pigment in the eyes and often causes extreme sensitivity to sunlight. According to the complaint, the league refused the mother’s requests to allow the boy to play football with a helmet that has a tinted visor, which would help to block sunlight. The Justice Department determined that the league violated the ADA by failing to make a reasonable modification of its policies, practices and procedures to permit the boy to use a tinted visor when playing football.
“People with disabilities cannot be denied the full and equal enjoyment of services, privileges and public accommodations, including youth football leagues,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “This settlement is another example of the Justice Department’s commitment to ensure equal access for people with disabilities.”
The settlement agreement requires the league to develop and implement a disability rights policy, to train league officials on the requirements of the ADA and to grant requests for reasonable modifications, like the one at issue here. The league is also required to pay $1,000.00 to the complainant’s family.
The ADA requires public accommodations, like the league, to provide individuals with disabilities equal access to goods, services, privileges, accommodations, facilities, advantages and accommodations. Public accommodations must also make reasonable modifications to their policies, practices or procedures when the modifications are necessary to afford goods, services, facilities, privileges, advantages or accommodations to individuals with disabilities, unless making the modification would cause a fundamental alternation.
Those interested in finding out more about this settlement or the obligations of public accommodations under the ADA may call the Justice Department’s toll-free ADA information Line at 800-514-0301 or 800-514-0383 (TDD), or access its ADA website at www.ada.gov. ADA complaints may be filed by email to [email protected].
Justice Department Seeks to Shut Down Mississippi Tax Return PreparerRead the Press Release
The United States has asked a federal court to bar Cynthia H. Carter from preparing federal tax returns for others, the Justice Department announced today. The civil injunction suit alleges that Carter, who does business as Cynthia’s Tax Service in Columbus, Miss., prepares returns for customers that report false income and expense amounts and falsely claim several tax credits, including the first-time-homebuyer credit.
Congress enacted the first-time-homebuyer credit in 2008 to strengthen the real estate market and help the economy. Persons who had not owned a home in the previous three years could claim a credit of up to $8,000 against their federal income taxes if they bought a home after April 8, 2008. Congress later expanded the program to allow current homeowners to claim the credit for a purchase of a new home, under certain conditions. The credit has since expired.
The government complaint alleges that Carter claimed the first-time-homebuyer credit on her customers’ returns even though the customers had not bought new homes in those tax years and were ineligible for the credit. The complaint also alleges that Carter claimed fabricated deductions for employee business expenses and inflated earned income tax credits on her customers’ returns. According to the complaint, the Internal Revenue Service (IRS) estimates that Carter’s tax return preparation could have resulted in over $4.25 million in lost revenue to the United States.
The IRS lists return preparer fraud and claiming false income and expenses as two of the “Dirty Dozen” tax scams for 2012. The Justice Department’s Tax Division has obtained injunctions against hundreds of unscrupulous return preparers and tax-fraud promoters in the past decade. Information about these cases is available on the Justice Department website .
Complaint for Permanent Injunction and Other Relief (PDF)
Justice Department Seeks to Bar Las Vegas Couple from Preparing Federal Tax ReturnsRead the Press Release
The United States has sued Marge L. Cellini and Harry Portnoy of Las Vegas seeking to bar them from preparing federal tax returns for others, the Justice Department announced today. According to the government complaint, Cellini and Portnoy, who are married and do business as Tax Factory Inc. and/or Myst Inc., repeatedly prepare tax returns that include false or inflated deductions for personal or business expenses in order to reduce their customers’ federal income tax liabilities fraudulently.
Among the allegations cited in the complaint, Cellini and Portnoy advise their customers to form corporations and then claim false or grossly exaggerated deductions for purported business expenses on the corporate tax returns they prepare. The government alleges that the bogus deductions create phony business losses or reductions in corporate income that carry over to the customers’ personal income tax returns, thereby fraudulently reducing the customers’ taxable income.
According to the complaint, an Internal Revenue Service (IRS) investigation revealed that Cellini and Portnoy claimed refunds for their customers on nearly 90 percent of the returns they prepared. The suit alleges that Cellini and Portnoy attempted to hide their improper return-preparation activity by repeatedly failing to identify themselves as the preparers of tax returns – sometimes fraudulently using Cellini’s ex-husband’s social security number as their preparer identification number. Despite this, the IRS was able to identify nearly 1,000 federal tax returns allegedly prepared by Cellini and Portnoy since 2001. The complaint alleges that the defendants’ misconduct may have cost the U.S. Treasury tens of millions of dollars.
The IRS lists return preparer fraud as one of its “Dirty Dozen” tax scams for 2012. In the past ten years, the Justice Department’s Tax Division has obtained hundreds of injunctions to stop the promotion of tax-fraud schemes and the preparation of fraudulent tax returns. Information about these cases is available on the Justice Department website .
Complaint for Permanent Injunction and Other Relief (PDF)
Harbert Companies Agree to Pay $47 Million to Resolve False Claims Act AllegationsRead the Press Release
Harbert Corporation, Harbert International, Inc., Bill Harbert International Constructions Inc., Harbert Construction Services (U.K.) Ltd. and Bilhar International Establishment have agreed to pay the United States $47 million to settle claims that they submitted false claims, and caused others to submit false claims, to the U.S. Agency for International Development (USAID), the Justice Department announced today.
The settlement resolves claims under the False Claims Act that the Harbert entities conspired to rig the bids on a USAID-funded construction contract that was bid and performed in Cairo, Egypt, in the late 1980s and early 1990s. Harbert International Inc. was part of a joint venture that bid on, and was ultimately awarded, Contract 20A to build a sewer system. The United States alleges that various Harbert entities entered into agreements with other potential bidders on Contract 20A to ensure that the joint venture would win the bid. The United States contends that other potential bidders agreed to either not bid or bid intentionally high in return for a payoff. The United States previously obtained a judgment against Harbert Construction Services (U.K.) Ltd. and Bilhar International Establishment on these claims.
“Attempts to collude or rig bids undermine the integrity of the government contracting process,” said Stuart F. Delery, Acting Assistant Attorney General for the Civil Division. “As this case demonstrates, we will take action against those who seek to abuse that process and pad their profits at taxpayer expense.”
"This case demonstrates our endurance in the fight against corporations that attempt to defraud the government," said Vincent H. Cohen, Jr., Principal Assistant U.S. Attorney of the District of Columbia "Two decades after a bid-rigging conspiracy corrupted a massive construction project in Egypt, we have obtained a $47 million settlement on behalf of the American taxpayer. Our resolve in this matter should serve as a warning to other contractors who are thinking about abusing the contracting process."
The allegations that the Harbert entities conspired to rig the bidding on the contract were first made in a lawsuit that whistleblower Richard F. Miller filed in the U.S. District Court for the District of Columbia in 1995. Under the qui tam provisions of the False Claims Act, private citizens may file actions on behalf of the United States alleging the submission of false claims and share in any recovery. The claims settled by this agreement against Harbert Corporation, Harbert International Inc., and Bill Harbert International Constructions Inc. are allegations only, and there has been no determination of liability.
“It’s been a very long road to justice in this case. We are pleased that it has ended with this significant recovery of taxpayer funds,” said Michael G. Carroll, Acting Inspector General, USAID.
This matter was handled by the Commercial Litigation Branch of the Civil Division, the U.S. Attorney’s Office for the District of Columbia and USAID’s Office of Inspector General.
Former Chief Financial Officer of Taylor, Bean & Whitaker Pleads Guilty to Fraud SchemeRead the Press Release
WASHINGTON – Delton de Armas, a former chief financial officer (CFO) of Taylor, Bean & Whitaker Mortgage Corp. (TBW), pleaded guilty today to making false statements and conspiring to commit bank and wire fraud for his role in a more than $2.9 billion fraud scheme that contributed to the failures of TBW and Colonial Bank.
The guilty plea was announced today by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Neil H. MacBride for the Eastern District of Virginia; Christy Romero, Deputy Special Inspector General, Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP); Assistant Director in Charge James W. McJunkin of the FBI’s Washington Field Office; David A. Montoya, Inspector General of the Department of Housing and Urban Development (HUD-OIG); Jon T. Rymer, Inspector General of the Federal Deposit Insurance Corporation (FDIC-OIG); Steve A. Linick, Inspector General of the Federal Housing Finance Agency (FHFA-OIG); and Rick A. Raven, Acting Chief of the Internal Revenue Service Criminal Investigation (IRS-CI).
De Armas, 41, of Carrollton, Texas, pleaded guilty before U.S. District Judge Leonie M. Brinkema in the Eastern District of Virginia. De Armas faces a maximum penalty of 10 years in prison when he is sentenced on June 15, 2012.
“As TBW’s chief financial officer, Mr. de Armas concealed a massive $1.5 billion deficit in TBW’s funding facility and another large deficit on TBW’s books,” said Assistant Attorney General Breuer. “He tried to conceal the gaping holes by falsifying financial statements and lying to investors as well as the government. Ultimately, Mr. de Armas’ criminal conduct, along with that of his co-conspirators, contributed to the collapse of TBW and Colonial Bank. With today’s guilty plea, Mr. de Armas joins seven other defendants – including the former chairman of TBW Lee Bentley Farkas – who have been convicted of participating in this massive fraudulent scheme.”
“When Mr. de Armas learned of a hole in Ocala Funding’s assets, he used his position as CFO to cover it up and mislead investors,” said U.S. Attorney MacBride. “Today’s plea is the eighth conviction in one of the nation’s largest bank frauds in history. As CFO, Mr. de Armas could have put a stop to the fraud the moment he discovered it. Instead, the hole in Ocala Funding grew to $1.5 billion on his watch, and as it grew, so did his lies to investors and the government.”
According to court documents, de Armas joined TBW in 2000 as its CFO and reported directly to its chairman, Lee Bentley Farkas, and later to its CEO, Paul Allen. He admitted in court that from 2005 through August 2009, he and other co-conspirators engaged in a scheme to defraud financial institutions that had invested in a wholly-owned lending facility called Ocala Funding. Ocala Funding obtained funds for mortgage lending for TBW from the sale of asset-backed commercial paper to financial institutions, including Deutsche Bank and BNP Paribas. The facility was managed by TBW and had no employees of its own.
According to court records, shortly after Ocala Funding was established, de Armas learned there were inadequate assets backing its commercial paper, a deficiency referred to internally at TBW as a “hole” in Ocala Funding. De Armas knew that the hole grew over time to more than $700 million. He learned from the CEO that the hole was more than $1.5 billion at the time of TBW’s collapse. De Armas admitted he was aware that, in an effort to cover up the hole and mislead investors, a subordinate who reported to him had falsified Ocala Funding collateral reports and periodically sent the falsified reports to financial institution investors in Ocala Funding and to other third parties. De Armas acknowledged that he and the CEO also deceived investors by providing them with a false explanation for the hole in Ocala Funding.
De Armas also admitted in court that he directed a subordinate to inflate an account receivable balance for loan participations in TBW’s financial statements. De Armas acknowledged that he knew that the falsified financial statements were subsequently provided to Ginnie Mae and Freddie Mac for their determination on the renewal of TBW’s authority to sell and service securities issued by them.
In addition, de Armas admitted in court to aiding and abetting false statements in a letter the CEO sent to the U.S. Department of Housing and Urban Development, through Ginnie Mae, regarding TBW’s audited financial statements for the fiscal year ending on March 31, 2009. De Armas reviewed and edited the letter, knowing it contained material omissions. The letter omitted that the delay in submitting the financial data was caused by concerns its independent auditor had raised about the financing relationship between TBW and Colonial Bank and its request that TBW retain a law firm to conduct an internal investigation. Instead, the letter falsely attributed the delay to a new acquisition and TBW’s switch to a compressed 11-month fiscal year.
“With our nation in a housing crisis, de Armas, as chief financial officer of TBW, one of the country’s largest mortgage lenders, papered over a gaping hole in the balance sheet of TBW subsidiary Ocala Funding and lied to regulators and investors to cover it up,” said Deputy Special Inspector General Romero for SIGTARP. “The fraud provided cover to others at TBW to misappropriate more than $1 billion in Ocala funds and sell fraudulent, worthless securities to conspirators at Colonial BancGroup. SIGTARP and its law enforcement partners stopped $553 million in TARP funds from being lost to this fraud and brought accountability and justice that the American taxpayers deserve.”
“Mr. de Armas has admitted that, during his tenure at TBW, he purposefully misled investors in a massive scheme to defraud financial institutions,” said FBI Assistant Director in Charge McJunkin. “The actions of Mr. de Armas and his co-conspirators contributed to the financial crisis and led to the collapse of one of the country’s largest commercial banks. The FBI and our partners remain vigilant in investigating such fraudulent activity in our banking and mortgage industries.”
“The guilty plea of Mr. de Armas is one small measure in our continued efforts to restore the trust and confidence of the general public and of investors in our financial system,” said HUD Inspector General Montoya. “In response to the many recent articles of mortgage fraud and misconduct, the mortgage industry needs to do much to rethink their values and their idea of client service in order to help rebuild a stronger economy and to restore the confidence of American homeowners.”
“The Federal Deposit Insurance Corporation Office of Inspector General is pleased to have played a role in bringing to justice yet another senior official in a position of trust who was involved in one of the biggest and most complex bank fraud schemes of our time,” said FDIC Inspector General Rymer. “The former chief financial officer of Taylor, Bean & Whitaker is the latest participant who will be held accountable for seeking to undermine the integrity of the financial services industry. Even as the financial and economic crisis seems to be easing, we reaffirm our commitment to ensuring that those contributing to the failures of financial institutions and corresponding losses to the Deposit Insurance Fund will be punished to the fullest extent of the law.”
“Mr. de Armas and his colleagues committed an egregious crime,” said FHFA Inspector General Linick. “FHFA-OIG is proud to be part of the team that continues to protect American taxpayers.”
In April 2011, a jury in the Eastern District of Virginia found Lee Bentley Farkas, the chairman of TBW, guilty of 14 counts of conspiracy, bank, securities and wire fraud. On June 30, 2011, Judge Brinkema sentenced Farkas to 30 years in prison. In addition, six individuals have pleaded guilty for their roles in the fraud scheme, including: Paul Allen, former chief executive officer of TBW, who was sentenced to 40 months in prison; Raymond Bowman, former president of TBW, who was sentenced to 30 months in prison; Desiree Brown, former treasurer of TBW, who was sentenced to six years in prison; Catherine Kissick, former senior vice president of Colonial Bank and head of its Mortgage Warehouse Lending Division (MWLD), who was sentenced to eight years in prison; Teresa Kelly, former operations supervisor for Colonial Bank’s MWLD, who was sentenced to three months in prison; and Sean Ragland, a former senior financial analyst at TBW, who was sentenced to three months in prison.
The case is being prosecuted by Deputy Chief Patrick Stokes and Trial Attorney Robert Zink of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Charles Connolly and Paul Nathanson of the Eastern District of Virginia. This case was investigated by SIGTARP, FBI’s Washington Field Office, FDIC-OIG, HUD-OIG, FHFA-OIG and IRS-CI. The Financial Crimes Enforcement Network (FinCEN) of the Department of the Treasury also provided support in the investigation. The Department would also like to acknowledge the substantial assistance of the U.S. Securities and Exchange Commission in the investigation of the fraud scheme.
This prosecution was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit: www.stopfraud.gov.
Former Army Contractor Sentenced to 39 Months in Prison for Role in Bribery and Money Laundering Scheme Related to DoD ContractsRead the Press Release
WASHINGTON –Terry Hall, 46, was sentenced today in Birmingham, Ala., to 39 months in prison for his participation in a bribery and money laundering scheme related to bribes paid for contracts awarded in support of the Iraq war, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division.
U.S. District Court Judge Virginia Emerson Hopkins for the Northern District of Alabama also ordered Hall to serve one year of supervised release following the prison term. Hall has agreed to forfeit $15,757,000 as well as real estate and a Harley Davidson motorcycle.
Hall pleaded guilty on Feb. 18, 2010, to bribery conspiracy and money laundering and agreed to testify against his co-defendants, former U.S. Army Major Eddie Pressley and his wife, Eurica Pressley. The Pressleys were convicted on March 1, 2011, of bribery, conspiracy to commit bribery, honest services fraud, money laundering conspiracy and engaging in monetary transactions with criminal proceeds.
The case against Hall and the Pressleys arose from a corruption probe focusing on Camp Arifjan, a U.S. military base in Kuwait. As a result of this investigation, 17 individuals, including Hall, have pleaded guilty or been found guilty at trial for their roles in the scheme.
According to evidence presented at the Pressleys’ trial, from spring 2004 through fall 2007, Hall operated and had an interest in several companies, including Freedom Consulting and Catering Co. and Total Government Allegiance. The companies received more than $20 million from contracts and blanket purchase agreements (BPAs) – a contract that allows the U.S. Department of Defense (DoD) to order supplies on an as-needed basis at a pre-negotiated price – to deliver bottled water and erect security fences for the U.S. military in Kuwait and Iraq.
Hall testified that, to obtain the contracting business and facilitate unlawful payments by other contractors, he made more than $3 million in unlawful payments and provided other valuable items and services to U.S. Army contracting officials stationed at Camp Arifjan, including to Eddie Pressley and former U.S. Army Majors John Cockerham, James Momon, Christopher Murray and Derrick Shoemake.
According to Hall’s testimony and other evidence presented at the Pressley trial, Eddie Pressley demanded a $50,000 bribe before he would issue bottled water orders or “calls” to Hall. Hall testified that in April 2005, he and his associates arranged for Pressley to receive the money in a bank account established in the name of a shell company, EGP Business Solutions Inc., which was controlled by Eurica Pressley.
Hall testified that soon after the $50,000 bribe was paid, Pressley and Cockerham, another U.S. Army contracting official, increased the bribe demand to $1.6 million, which consisted of $800,000 for Pressley and $800,000 for Cockerham. After Hall and others agreed to pay the money, Pressley and Cockerham issued calls for bottled water and fencing, arranged for Hall to receive a fence contract and modified Hall’s agreement to remove the upper limit of the money Hall could receive from the DoD under the bottled water BPA.
Evidence at trial also showed that Eddie Pressley enlisted the help of his wife, Eurica, to receive the bribes. Eurica Pressley traveled to Dubai with Hall in May 2005 and to the Cayman Islands in June 2005 to open bank accounts to receive the bribe money. Hall testified that he and the Pressleys attempted to conceal the true nature of their corrupt scheme by having Eurica Pressley execute bogus “consulting agreements.” They also prepared false invoices that were designed to justify the bribe payments as payment for non-existent “consulting services.”
Hall testified that, in total, he transferred approximately $2.9 million in bribe payments to the Pressleys, approximately $1.6 million of which consisted of payments from other contractors that Hall facilitated for Eddie Pressley. Bank statements, wire transfer reports and other records presented at trial showed that the Hall and Eddie Pressley used approximately $2.9 million of the money to purchase commercial real estate in Muscle Shoals, Ala.
In addition, Hall testified that, after Eddie Pressley and Cockerham left Kuwait, he paid Momon more than $300,000, approximately $100,000 of which consisted of unlawful payments from another corrupt military contractor, which Hall facilitated by routing the money through bank accounts in Kuwait controlled on Hall’s behalf. In exchange, Momon issued calls under Hall’s bottled water BPA worth more than $6.4 million. Hall also testified that he paid Murray approximately $30,000 in exchange for official acts that benefited Hall and his companies.
On Jan. 5, 2012, Eddie Pressley was sentenced to 144 months in prison, and on Feb. 23, 2012, Eurica Pressley was sentenced to 72 months in prison.
On Aug. 13, 2009, Momon pleaded guilty to receiving approximately $1.6 million in bribes and agreed to pay $5.7 million in restitution. Momon’s sentencing has not yet been scheduled. On Jan. 8, 2009, Murray pleaded guilty to charges of bribery and making a false statement. He was sentenced on Dec. 17, 2009, to 57 months in prison and ordered to pay $245,000 in restitution. On Jan. 31, 2008, Cockerham pleaded guilty to participating in a bribery and money laundering scheme at Camp Arifjan. He was sentenced on Dec. 2, 2009, to 210 months in prison and ordered to pay $9.6 million in restitution. On June 9, 2011, Shoemake pleaded guilty to two counts of bribery, including receiving $215,000 from Hall. He is scheduled to be sentenced on April 18, 2012.
The case is being prosecuted by Trial Attorneys Peter C. Sprung and Edward J. Loya Jr. of the Criminal Division’s Public Integrity Section. Assistance was also provided by the Criminal Division’s Office of International Affairs. The cases are being investigated by the U.S. Army Criminal Investigation Command, Defense Criminal Investigative Service, U.S. Immigration and Customs Enforcement, FBI, Internal Revenue Service - Criminal Investigation, Special Inspector General for Iraq Reconstruction and the International Contract Corruption Task Force (ICCTF). The ICCTF is a joint law enforcement agency task force that seeks to detect, investigate and dismantle corruption and contract fraud resulting from U.S. Overseas Contingency Operations worldwide, including in Kuwait, Afghanistan and Iraq.
19 March 2012
Police Chief in Omega, Georgia, Indicted on Federal Civil Rights ChargesRead the Press Release
WASHINGTON – The Justice Department announced today that a federal grand jury in Macon, Ga., returned a one-count indictment against Walter Young, 54, police chief of the Omega Police Department, for physically abusing a man in his custody.
The indictment alleges that, on March 24, 2011, Young, while acting in his capacity as the chief of police, assaulted “A.M.”, a pretrial detainee, thereby violating the civil rights of the detainee. The indictment further charges that A.M. suffered bodily injury as a result of Young’s use of excessive force.
If convicted, the defendant faces a maximum penalty of 10 years in prison and a $250,000 fine. An indictment is merely an accusation, and the defendant is presumed innocent unless proven guilty.
This case is being investigated by the FBI, and is being prosecuted by Special Litigation Counsel Forrest Christian and Trial Attorney Tona Boyd of the Civil Rights Division of the U.S. Department of Justice, and Assistant U.S. Attorney Robert McCullers of the U.S. Attorney’s Office for the Middle District of Georgia.
Justice Department to Monitor Elections in IllinoisRead the Press Release
WASHINGTON – The Justice Department announced today that the Civil Rights Division will monitor elections on March 20, 2012, in Cook and Lake Counties, Ill. The monitoring will ensure compliance with the Voting Rights Act of 1965 and other federal voting rights statutes. The Voting Rights Act prohibits discrimination in the election process on the basis of race, color or membership in a minority language group.
Justice Department personnel will monitor polling place activities in Cook and Lake Counties. Civil Rights Division attorneys will coordinate federal activities and maintain contact with local election officials.
Each year, the Justice Department deploys hundreds of federal observers from the Office of Personnel Management, as well as departmental staff, to monitor elections across the country. To file complaints about discriminatory voting practices, including acts of harassment or intimidation, voters may call the Voting Section of the Justice Department’s Civil Rights Division at 1-800-253-3931.
Visit www.justice.gov/crt/voting/index.php for more information about the Voting Rights Act and other federal voting laws.
Fort Worth, Texas, Man Sentenced for Sex Trafficking and Related Federal ChargesRead the Press Release
WASHINGTON — Marcus Choice Williams, 36, of Fort Worth, Texas, was sentenced this morning by U.S. District Judge David C. Godbey to 30 years in prison followed by 30 years of supervised release for various felony offenses related to a conspiracy to traffic women for prostitution, the Department of Justice announced. Williams was also ordered to pay $1,100 special assessment fee.
In March 2011, Williams, also known as “Cross Country Redd,” “Redd” and “Marcus Choice,” pleaded guilty to one count of conspiracy to transport individuals for prostitution; six counts of transporting individuals for prostitution; one count of sex trafficking by force, fraud or coercion; two counts of attempted sex trafficking by force; and one count of money laundering. Co-defendants Kenya Thomas, 32, of Plano, Texas, and, Preston Petitt, 45, of Houston, were sentenced in April 2011, to 37 months in prison and 2 years supervised release for their roles in the conspiracy.
Court documents showed that Williams operated an interstate prostitution ring, including adult escort web sites, headquartered in the Dallas-Fort Worth area and operating in Boston and the Washington, D.C. metro area. Williams recruited vulnerable women, specifically single mothers from troubled backgrounds, and, in some cases used a combination of deception, fraud, coercion, threats and physical violence to compel the women to engage in prostitution, requiring each young woman to secure a daily quota of money, and if operating out of town, to wire the funds to him. Williams made thousands of dollars in profits, while the victims received next to nothing.
“The court’s sentence clearly reflects the seriousness of these awful sex trafficking crimes,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The victims suffered physical assaults, sexual abuse and daily degradation all because of this defendant’s greed and callous disregard for them as individuals. We are committed to prosecuting sex traffickers and vindicating victims’ rights, as they were vindicated today.”
“The idea that an individual can be held in captivity by another person and forced to work in the world of prostitution is shocking to most people, and today’s sentence of 30 years in federal prison, shows the seriousness of the defendant’s crimes,” said Sarah R. Saldaña, U.S. Attorney for the Northern District of Texas. “This office calls upon the public to report any and all suspicious activity which may lead to apprehending and prosecuting those persons engaged in this activity and giving freedom to their victims.”
The case was investigated by the FBI and was prosecuted by Assistant U.S. Attorney Errin Martin and Civil Rights Division Trial Attorney Myesha Braden.
16 March 2012
Miami-Area Resident Pleads Guilty to Participating in $200 Million Medicare Fraud SchemeRead the Press Release
WASHINGTON – A Miami-area resident pleaded guilty yesterday for his role in a fraud scheme that resulted in the submission of more than $200 million in fraudulent claims to Medicare, announced the Department of Justice, the FBI and the Department of Health and Human Services (HHS).
Frank Criado, 33, pleaded guilty before U.S. Magistrate Judge Barry L. Garber in Miami to one count of conspiracy to commit health care fraud and one count of conspiracy to defraud the United States and to pay and receive illegal health care kickbacks. Criado was charged in an indictment unsealed on Feb. 15, 2011, in the Southern District of Florida.Criado admitted to participating in a fraud scheme that was orchestrated by the owners and operators of American Therapeutic Corporation (ATC); its management company, Medlink Professional Management Group Inc.; and the American Sleep Institute (ASI). ATC, Medlink and ASI were Florida corporations headquartered in Miami. ATC operated purported partial hospitalization programs (PHPs), a form of intensive treatment for severe mental illness, in seven different locations throughout South Florida and Orlando. ASI purported to provide diagnostic sleep disorder testing.
According to court filings, ATC’s owners and operators paid kickbacks to owners and operators of assisted living facilities and halfway houses and to patient brokers in exchange for delivering ineligible patients to ATC and ASI. In some cases, the patients received a portion of those kickbacks. Throughout the course of the ATC and ASI conspiracy, millions of dollars in kickbacks were paid in exchange for Medicare beneficiaries who did not qualify for PHP services to attend treatment programs that were not legitimate PHPs so that ATC and ASI could bill Medicare for the medically unnecessary services. According to court filings, to obtain the cash required to support the kickbacks, the co-conspirators laundered millions of dollars of payments from Medicare.
Criado admitted to serving as a patient broker who provided patients for ATC and ASI in exchange for kickbacks in the form of checks and cash. The amount of the kickback was based on the number of days each patient spent at ATC.
According to his plea agreement, Criado’s participation in the ATC fraud resulted in $7.3 million in fraudulent billings to the Medicare program.Sentencing for Criado is scheduled for May 31, 2012, at 8:30 a.m. He faces a maximum penalty of 15 years in prison and a $250,000 fine.
ATC, Medlink, and various owners, managers, doctors, therapists, patient brokers and marketers of ATC, Medlink and ASI, were charged with various health care fraud, kickback, money laundering and other offenses in two indictments unsealed on Feb. 15, 2011. ATC, Medlink and 11 of the individual defendants have pleaded guilty or have been convicted at trial. Other defendants are scheduled for trial April 9, 2012, before U.S. District Judge Patricia A. Seitz. A defendant is presumed innocent unless proven guilty beyond a reasonable doubt in a court of law.The guilty plea was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; John V. Gillies, Special Agent-in-Charge of the FBI’s Miami field office; and Special Agent-in-Charge Christopher B. Dennis of the HHS Office of Inspector General (HHS-OIG), Office of Investigations Miami office.
The criminal case is being prosecuted by Trial Attorneys Jennifer L. Saulino, Steven Kim and Robert Zink of the Criminal Division’s Fraud Section. A related civil action is being handled by Vanessa I. Reed and Carolyn B. Tapie of the Civil Division and Assistant U.S. Attorney Ted L. Radway of the Southern District of Florida. The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.
Since its inception in March 2007, the Medicare Fraud Strike Force operations in nine locations have charged more than 1,190 defendants that collectively have 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.Justice Department Settles Charge of Employment Discrimination by Puerto Rico Security CompanyRead the Press Release
WASHINGTON – The Justice Department and Puerto Rico-based Indrescom Security Technology Inc. have agreed to settle allegations that the company discriminated against a work-authorized individual during the Employment Eligibility Verification Form I-9 process by requiring him to present a lawful permanent resident card, despite the fact that the employee had already produced documents establishing his identity and authority to work in the United States, and not allowing him to work when he did not produce the card. Indrescom Security Technology Inc. is a for-profit corporation which provides security personnel to hotels and other establishments in Puerto Rico.
The charging party, a lawful permanent resident of Venezuelan descent, alleged that in early 2011 he presented a valid Puerto Rican driver’s license and an unrestricted Social Security card during the Employment Eligibility Verification Form I-9 process, which together are sufficient to establish identity and work authorization. His charge further alleged that Indrescom rejected his valid documentation and told him that he needed to present an unexpired lawful permanent resident card. The man alleges he was denied employment when he failed to produce the additional documentation. The department’s investigation revealed that Indrescom did not reject driver’s licenses and unrestricted Social Security cards presented by U.S. citizens. The Immigration and Nationality Act (INA) prohibits employers, both private and public, from imposing different or greater employment eligibility verification standards based on citizenship status or national origin.“The anti-discrimination provision of the Immigration and Nationality Act (INA) demands that employers not place additional barriers in front of work-authorized, non-U.S. citizens before allowing them to work,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “This resolution is further evidence that the Civil Rights Division is committed to making that demand of equal treatment a reality in America’s worksites.”
Under the terms of the settlement agreement, Indrescom agrees to pay $7,000 in back pay to the charging party, train its human resources personnel about employers’ responsibilities to avoid discrimination in the employment eligibility verification process and be subject to reporting and compliance monitoring requirements for three years.
The Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC) is responsible for enforcing the anti-discrimination provisions of the INA, which protect U.S. citizens and certain work-authorized individuals from citizenship status discrimination. The INA also protects all work-authorized individuals from national origin discrimination, over-documentation in the employment eligibility verification process and retaliation.
For more information about protections against employment discrimination under the immigration laws, call 1-800-255-7688 (OSC’s worker hotline) (1-800-237-2525, TDD for hearing impaired), 1-800-255-8155 (OSC’s employer hotline) (1-800-362-2735, TDD for hearing impaired), or 202-616-5594. Email [email protected], or visit the website at www.justice.gov/crt/osc.
Georgia Couple Convicted of Conspiring to Defraud Irs and Filing False Returns in South Florida Refund SchemeRead the Press Release
Elmo Antonio George and Nasheba Necia Hunte, formerly from the U.S. Virgin Islands and currently residents of Villa Rica, Ga., were found guilty today by a federal jury in Ft. Lauderdale, Fla., of conspiring to defraud the Internal Revenue Service (IRS) and filing false individual income tax returns for 2005 and 2006, the Justice Department and the IRS announced.
According to the evidence introduced at trial, George and Hunte created shell corporate entities, Winco Holdings Inc., Dikingdom Inc. and Ministry of Dikingdom Inc., in the state of Florida. They also opened business checking and credit card accounts in the names of the entities. They used an internet payroll service, Paycycle Inc., to create false documents and returns that they filed with the IRS containing fictitious salaries, losses and tax withholdings from Winco Holdings Inc. claiming that they were the only officers and employees of the company.
The evidence also showed that in their tax filings, the defendants reported that they earned over $4 million dollars in income from Winco and paid over $1.6 million in withholdings to the IRS. No tax withholdings were ever paid over to the IRS and the defendants submitted a fictitious promissory note and a $1.6 million fraudulent check in an attempt to continue their scheme. For 2005, George received a refund totaling $229,305 to which he was not entitled. George deposited the refund into the defendants’ joint bank account in the name of Dikingdom Inc. which they used to purchase, among other things, a house, furniture, car, jewelry and airline tickets. To conceal the scheme, Hunte purchased the house in Villa Rica on March 21, 2006, and deeded it to George on the same day. On Sept. 26, 2006, George transferred the house to the Overseer of Dikingdom, a name associated with his purported ministry, and thereafter claimed the house was a church.
According to the evidence presented at trial, less than one week after IRS-Criminal Investigation tried to contact the defendants, Hunte changed her home address in her employment contact documents from Villa Rica to a non-existent address. When IRS-Criminal Investigation special agents attempted contact with Hunte, she affirmatively denied who she was to the agents.
George and Hunte each face a potential maximum prison sentence of 11 years and a fine of up to $750,000 when they are sentenced.
This case was investigated by the IRS-Criminal Investigation’s Atlanta Field Office. Trial Attorneys Rebecca Perlmutter and Chad Edgar of the Justice Department’s Tax Division, who prosecuted the case, thanked Wilfredo A. Ferrer, U.S. Attorney for the Southern District of Florida, for his office’s assistance.
Former Georgia Sheriff’s Deputy Pleads Guilty to Assaulting DetaineeRead the Press Release
The Justice Department announced today that former Thomas County Sheriff’s Deputy Julian Scott Law pleaded guilty today to assaulting a detainee inside of the Thomas County Jail in Thomasville, Georgia, thereby depriving the detainee of his civil rights.
During the plea hearing, Law admitted that on Aug. 20, 2010, while he was working as a deputy, he punched a detainee and knocked him into a wall, causing the detainee to suffer a bloody nose, swelling, bruising, and pain. Law admitted that he punched the detainee because the detainee had thrown a cell phone case onto the floor.
Sentencing for Law is set for July 16, 2012. At sentencing, Law faces a maximum penalty of ten years in jail.
“The Department of Justice will continue to vigorously prosecute officers who betray their oath to society by abusing their official authority,” said Thomas E. Perez, Assistant Attorney General of the Civil Rights Division.
“We count on our law enforcement officers to protect and serve, and to honor the badge they wear. When they betray their oath, they dishonor the public trust and their fellow officers who uphold the law, rather than break it,” said U.S. Attorney for the Middle District of Georgia Michael J. Moore.
This case was investigated by the FBI and was prosecuted by Trial Attorney Christine M. Siscaretti of the Justice Department’s Civil Rights Division and Assistant U.S. Attorneys Sharon Ratley and Paul C. McCommon III of the U.S. Attorney’s Office for the Middle District of Georgia.
Delaware Man Pleads Guilty to Transportation of Child PornographyRead the Press Release
A New Castle, Del., man pleaded guilty today to one count of transportation of child pornography, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Charles M. Oberly III of the District of Delaware and Special Agent in Charge Richard A. McFeely of the FBI’s Baltimore Division.
David Osborn, 40, pleaded guilty before U.S. District Judge Richard G. Andrews in the District of Delaware.
According to statements made at today’s hearing and documents filed in court, Osborn was identified by the FBI through reports of child pornography trafficking provided by AOL LLC to the National Center for Missing and Exploited Children (NCMEC). Under federal law, internet service providers, such as AOL, are required to report suspected child pornography being transmitted over their servers to NCMEC, which then directs these “cybertips” to the appropriate law enforcement agency. AOL reported that a particular online username, later linked to Osborn, had been used to trade images of child pornography with another computer user in South Florida.
On May 26, 2011, federal agents executed a search warrant at Osborn’s New Castle residence and arrested Osborn after finding more than 700 images of child pornography on his computer equipment. Law enforcement agents also searched Osborn’s email account, which was found to contain numerous images of child pornography. Osborn’s child pornography collection included images of girls, ranging from prepubescence to mid-teen age, engaged in various sexual acts or posing lasciviously. Forensic data found on the equipment indicated that Osborn had been receiving and distributing images of child pornography for a number of years. Also found on Osborn’s computer equipment were more than 500 internet chat logs between Osborn and others regarding child sexual exploitation.
According to information provided at court hearings, in the past, Osborn worked as a school bus driver, substitute teacher and with the Newport, Del., chapter of Job’s Daughters, a youth organization for girls.
At sentencing, Osborn faces a mandatory minimum sentence of five years in prison and a maximum sentence of 20 years in prison. Osborn also faces a term of supervised release following his prison sentence of five years to life, and will be required to register as a sex offender in any jurisdiction in which he lives, works, or attends school. Osborn has been detained since his May 26, 2011, arrest.
This case is being investigated by the FBI and prosecuted by Assistant U.S. Attorney Edward J. McAndrew of the District of Delaware and Trial Attorney Andrew McCormack of the Child Exploitation and Obscenity Section in the Justice Department’s Criminal Division.
For more information about reporting online child exploitation to the national CyberTipline, visit the NCMEC’s website at: www.missingkids.com. For more information about the Department of Justice’s Project Safe Childhood program, visit www.justice.gov/psc.
15 March 2012
New Orleans Man Charged for Alleged Role in Five MurdersRead the Press Release
WASHINGTON – A New Orleans man was charged today by a federal grand jury in the Eastern District of Louisiana in a 17-count superseding indictment for his alleged role in five murders, announced U. S. Attorney Jim Letten in the Eastern District of Louisiana and Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.
The superseding indictment charges Steven Earl Hardrick, 27, with violations of the federal controlled substances act and federal firearms laws, carjacking, witness tampering and murder. The superseding indictment alleges that Hardrick allegedly carried out the Oct. 1, 2007, murder of Dwayne Landry; the Oct. 13, 2007, home invasion, shooting and killing of off-duty New Orleans Police Officer Thelonius Dukes; and the Oct. 24, 2007, carjacking and murder of Brett Jacobs, David Alford and Howard Pickens.
According to the superseding indictment, Hardrick conspired to possess with intent to distribute drugs. He did so by obtaining drugs through force and violence, as well as firearms, which he then used to facilitate the theft or robbery of the drugs. The superseding indictment alleges that Hardrick obtained firearms in all three incidents, and in two of the incidents, he attempted to obtain drugs. The superseding indictment alleges that Howard Pickens was killed in the Oct. 24, 2007, murders to prevent him from reporting information about the carjacking that resulted in the murders of Brett Jacobs and David Alford.
An indictment is merely a charge and a defendant must be proven guilty beyond a reasonable doubt.
The superseding indictment includes offenses with a maximum penalty of death.
The case is being investigated by the FBI Violent Crime Task Force, Jefferson Parish Sheriff’s Office and the New Orleans Police Department. The case is being prosecuted by Assistant U.S. Attorneys Duane A. Evans and Elizabeth Privitera of the Eastern District of Louisiana and Trial Attorney Laura Gwinn of the Organized Crime and Gang Section of the Justice Department’s Criminal Division.
Justice Department’s 2010 ADA Standards for Accessible Design Go into EffectRead the Press Release
WASHINGTON – The Justice Department announced that the 2010 ADA Standards for Accessible Design go into effect today. On July 26, 2010, the 20th anniversary of the Americans with Disabilities Act (ADA), President Obama announced newly revised ADA regulations. These regulations reflect the fundamental principle that all Americans with disabilities should have equal access and an equal right to participate fully in our society.
“People with disabilities should have the opportunity to participate in American society as fully and equally as those without disabilities,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The department encourages businesses and governments around the country to help break down barriers for people with disabilities so that we give every individual access to equal opportunity and equal justice.”
These standards were adopted as part of the revised regulations for Title II and Title III of the Americans with Disabilities Act of 1990 (ADA) and will make buildings and facilities accessible to more than 54 million Americans with disabilities. The standards can be found at www.ada.gov/2010ADAstandards_index.htm.
The 2010 Standards will set new requirements for fixed or built-in elements in facilities such as detention facilities and courtrooms, amusement rides, boating facilities, golf and miniature golf facilities, swimming pools and play areas. These rules also clarify and refine issues that have arisen over the past 20 years, including reach ranges, toilet room dimensions and accessible routes. The 2010 Standards provide clarified requirements for dispersal and lines of sight for accessible seating and companion seating in assembly areas such as stadiums. The 2010 Standards also address dispersion of accessible hotel rooms among the different classes of rooms provided, as well as the overlap between wheelchair accessible rooms and rooms with communication features.
The final regulations were published in the Federal Register on Sept. 15, 2010. The 2010 Standards, which were adopted as part of the revised regulations, consist of regulatory text and the 2004 ADA Accessibility Guidelines, originally published in the Federal Register as 36 CFR Part 1191, Appendices B and D.
Title II of the ADA protects people with disabilities from discrimination on the basis of disability in services, programs and activities provided by state and local government entities.
Title III prohibits discrimination on the basis of disability by places of public accommodation (businesses that are generally open to the public and that fall into one of 12 categories listed in the ADA, such as restaurants, movie theaters, schools, day care facilities, recreational facilities and doctors’ offices).
Newly constructed or altered places of public accommodation, commercial facilities and state and local government facilities are required to comply with the ADA Standards. Places of public accommodation in existing facilities are required to remove accessibility barriers to the extent it is readily achievable – meaning easy to accomplish without much difficulty or expense. State and local governments using existing facilities are required to ensure their programs, services and activities, when viewed in their entirety, are accessible.
Requirements for existing swimming pools will be extended for 60 days. The department will also publish a Notice of Proposed Rulemaking with a 15-day comment period on a possible six-month extension in order to allow additional time to address misunderstandings regarding compliance with these ADA requirements. More information on pool requirements can be found at http://www.ada.gov/pools_2010.htm.
People interested in finding out more about the ADA or the 2010 ADA Standards for Accessible Design can call the toll-free ADA Information Line at 800-514-0301 (Voice) or 800-514-0383 (TTY), or access the ADA website at www.ada.gov.
Justice Department Reaches Agreement with Pinson, Alabama, on Bailout from Preclearance Requirements of the Voting Rights ActRead the Press Release
WASHINGTON – The Justice Department announced that it has reached an agreement with Pinson, Ala., that, if approved by the court, will allow for the city to bail out from its status as a “covered jurisdiction” under the special provisions of the Voting Rights Act, and thereby exempt the city from the preclearance requirements of Section 5 of the Voting Rights Act. If granted, this would be the first such bailout for a covered jurisdiction in Alabama. The agreement is in the form of a consent decree filed today in the U.S. District Court for the District of Columbia.
Under Section 5 of the Voting Rights Act, certain covered jurisdictions, determined according to Section 4 of the act, are required to seek preclearance for any changes in voting qualifications, standards, practices or procedures from the U.S. District Court for the District of Columbia, or from the U.S. attorney general, prior to their implementation. Section 4 of the act provides that a covered jurisdiction may seek to “bail out,” or remove itself from such coverage, and therefore be exempted from the preclearance requirements, by seeking a declaratory judgment before a three-judge panel in U.S. District Court for the District of Columbia. A bailout judgment can be issued only if the court determines that the jurisdiction meets certain eligibility requirements for bailout contained in the statute, including a 10-year record of nondiscrimination in voting-related actions. The act also provides that the attorney general can consent to entry of a judgment of bailout only if, based upon investigation, the attorney general is satisfied that the jurisdiction meets the eligibility requirements.
Pinson filed its bailout action in the U.S. District Court for the District of Columbia on Feb. 15, 2012. City officials had contacted the attorney general prior to filing its action, indicating that the city was interested in seeking to bail out. The city provided the Justice Department with substantial information, and the department conducted an investigation to determine the city’s eligibility. Based on that investigation, the department is satisfied that the city meets the Voting Rights Act’s requirements for bailout.
“In this case, the department carefully evaluated the information provided by the city and conducted its own investigation, which has satisfied us that the city is eligible for a bailout,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “I appreciate the cooperation of city officials in providing the department with information that we have requested and in moving toward a resolution of this matter in the way envisioned by the Voting Rights Act.”The consent decree details the legal and factual basis for a bailout determination and, if approved, will grant the city’s request. The court will retain jurisdiction of the action for 10 years and can reopen the action upon the motion of the attorney general or any aggrieved person alleging conduct by the city that would have originally precluded the city from bailing out if it had occurred during the 10 year period preceding entry of the consent decree.
Information about bailout, the Voting Rights Act and other federal voting laws is available on the Department of Justice website at www.justice.gov/crt/voting/. Complaints may be reported to the Voting Section of the Justice Department’s Civil Rights Division at 1-800-253-3931.Former Humphreys County, Tennessee, Sheriff’s Deputies Indicted for Federal Civil Rights OffensesRead the Press Release
WASHINGTON – The Justice Department announced today that a federal grand jury in Nashville, Tenn., returned a one count indictment charging former Humphreys County, Tenn., Sheriff’s Deputies Timothy Wayne Hedge, 50, and James Benjamin Lee, 32, for violating the civil rights of an individual on Jan. 23, 2011, in Humphreys County.
The indictment alleges that on Jan. 23, 2011, Hedge and Lee, while acting under color of law and while aiding and abetting each other, violated an individual’s right to be free from unreasonable seizures by kicking and striking an individual with a collapsible baton during the course of arresting the individual, resulting in bodily injury.
An indictment is only an accusation of a crime, and a defendant should be presumed innocent unless and until proven guilty. If convicted, Hedge and Lee could face a maximum sentence of 10 years in prison and a $250,000 fine plus three years of supervised release.
This case was investigated by the Clarksville, Tenn., Office of the FBI’s Memphis Division and the Tennessee Bureau of Investigation, and is being prosecuted by Assistant U.S. Attorney Harold B. McDonough and Civil Rights Division Trial Attorney Adriana Vieco.
14 March 2012
Three Detroit-Area Clinic Owners Plead Guilty for Their Roles in $5.4 Million Medicare Fraud SchemeRead the Press Release
WASHINGTON – Three Detroit-area clinic owners pleaded guilty today for their participation in a Medicare fraud scheme, announced the Department of Justice, the FBI and the Department of Health and Human Services (HHS).
Karina Hernandez, 28, Marieva Briceno, 46, and Henry Briceno, 58, all of Miami, 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, each defendant faces a maximum penalty of 10 years in prison and a $250,000 fine.
According to the plea documents, Hernandez managed the daily operations of three Livonia, Mich., clinics: Blessed Medical Clinic, Alpha & Omega Medical Clinic and Manuel Medical Clinic. Marieva Briceno contributed capital to fund the opening of one clinic, and assisted her daughter, Hernandez, in the daily management of the clinics. At each clinic, Hernandez and Marieva Briceno hired recruiters, who paid cash bribes to Medicare beneficiaries to attend the clinics and provide their Medicare numbers and other information. Hernandez and Marieva Briceno admitted that they used the beneficiary information to bill for medically unnecessary diagnostic tests and treatments. Henry Briceno admitted that he incorporated Manuel Medical Clinic and opened a bank account to conceal the actual ownership of the clinic. According to court documents, Blessed Medical Clinic, Alpha & Omega Medical Clinic and Manuel Medical Clinic fraudulently billed Medicare for $5.4 million during the course of the scheme.
Today’s guilty pleas were announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade; Special Agent in Charge Andrew G. Arena of the FBI’s Detroit Field Office; and Special Agent in Charge Lamont Pugh III of the HHS Office of Inspector General’s (OIG) Chicago Regional Office.
This case 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.Former Employee of Nursing Home Company Operating in North Carolina and Virginia Pleads Guilty to Kickback Schemes and Tax EvasionRead the Press Release
WASHINGTON – The former director of corporate maintenance and renovations at Medical Facilities of America Inc. (MFA) pleaded guilty today to accepting kickbacks and evading taxes, the Department of Justice announced. MFA operates healthcare and nursing home facilities throughout Virginia and North Carolina.
According to a four-count charge filed today in U.S. District Court in Roanoke, Va., John D. Henderson, a resident of Colonial Heights, Va., conspired with others to steer contracts for repair, maintenance and renovations at MFA facilities to co-conspirator contractors in return for kickbacks beginning as early as June 1998 through December 2006. Henderson was also charged with evading taxes on his 2005 and 2006 federal tax returns. According to the plea agreement, which is subject to court approval, Henderson has agreed to cooperate with the department’s ongoing investigation.
According to court documents, as the director of corporate maintenance and renovations at MFA, Henderson was responsible for overseeing maintenance, repairs and renovations of the various MFA locations throughout Virginia and obtaining quotes from contractors for capital improvements and equipment purchases. Henderson participated in a conspiracy with contractors Donald R. Holland and Larry R. Sumpter to defraud MFA by circumventing MFA’s competitive procurement process and steering contracts to Hardy Plumbing & Heating Corp., formerly owned by Holland and Sumpter, in return for monetary payments. The department said that Henderson created fictitious competitor bids that were higher than the quotes submitted by Hardy Plumbing, and directed subordinates to solicit quotes only from Hardy Plumbing. As a result of the conspiracy, Henderson received payments from Holland and Sumpter totaling more than $250,000.
According to court documents, Henderson also participated in a separate conspiracy with contractors Edward T. Fodrey, Gary L. Johns and others to defraud MFA by circumventing MFA’s competitive procurement process and steering contracts to the contractors’ companies in return for monetary payments to himself and a co-conspirator. The department said that Henderson created fictitious competitor bids that were higher than the quotes submitted by co-conspirators’ companies, and directed subordinates to solicit quotes only from the conspiring vendors. As a result of the conspiracy, Henderson received more than $400,000 in kickbacks from Fodrey, Johns and other co-conspirators.
Henderson is charged with two counts of conspiracy to commit mail and honest services fraud for the two separate kickback schemes, each of which carries a maximum penalty of 20 years in prison and a $250,000 criminal fine. Henderson is also charged with two counts of tax evasion, each of which carries a maximum penalty of five years in prison and a $250,000 criminal fine, together with the cost of prosecution. The maximum fines for each of these charges 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 maximums.
Henderson is the fifth individual to plead guilty in the department’s fraud investigation into the award of repair, maintenance and renovation contracts at facilities owned by MFA. On Oct. 18, 2011, both Holland and Sumpter pleaded guilty in the U.S. District Court in Roanoke to participating in the scheme. On Jan. 31, 2012, Holland and Sumpter were each sentenced by Judge Samuel G. Wilson to two years of probation and fined $50,000 and $15,000, respectively. On April 4, 2011, Fodrey pleaded guilty in the U.S. District Court in Norfolk,Va., and was sentenced by Judge Mark S. Davis on Jan. 31, 2012, to serve 37 months in prison and was ordered to pay $326,799 in restitution. Johns pleaded guilty on Dec. 12, 2011, in the U.S. District Court in Roanoke and was sentenced today by Judge Wilson to serve three years of probation and to pay $169,341 in restitution.
The investigation is being conducted by the Antitrust Division’s Philadelphia Field Office, the U.S. Attorney’s Office for the Western District of Virginia, the FBI in Roanoke and the Internal Revenue Service-Criminal Investigation in Roanoke. Anyone with information concerning fraudulent behavior relating to the award of contracts by MFA should contact the Antitrust Division’s Philadelphia Field Office at 215-597-7405 or visit www.justice.gov/atr/contact/newcase.htm.
Former Arizona State Representative Pleads Guilty to Wire Fraud and Tax Evasion Related to the Misuse of More Than $140,000 in Charity FundsRead the Press Release
WASHINGTON – Richard David Miranda, a former Arizona state representative, pleaded guilty today in the U.S. District Court for the District of Arizona to a two-count information charging him with defrauding a charity of more than $140,000 and evading income tax related to those unlawfully obtained funds.
The guilty plea was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; Special Agent in Charge James L. Turgal of the FBI’s Phoenix Field Office; and Special Agent in Charge Dawn Mertz of the Internal Revenue Service-Criminal Investigation (IRS-CI) Phoenix office.
“Mr. Miranda, a former member of the Arizona legislature and executive director of a non-profit organization, pleaded guilty today to using over $140,000 of the charity’s funds for his personal expenses, and then failing to disclose the extra income on his tax return,” said Assistant Attorney General Breuer. “Having admitted this illegal conduct, Miranda will now face the consequences of his actions. This Justice Department will continue to hold elected officials, just like ordinary citizens, accountable for their crimes.”
“The Federal Bureau of Investigation, the Internal Revenue Service and the Department of Justice remain steadfast in our efforts to combat public corruption at all levels of government by investigating and prosecuting those who deliberately abuse the public’s trust by using their office for personal gain stated,” said FBI Special Agent in Charge James L. Turgal Jr. “The FBI and our law enforcement partners are committed to holding our elected officials accountable from intentionally engaging in schemes to profit from fraudulent activity and exploiting the faith placed in them by the American public.”
“It is an embarrassment to the state and its people when a state representative deceives those he was elected to represent,” said IRS Special Agent in Charge Mertz. “Former Representative Miranda selfishly defrauded a charity that was established to assist disadvantaged members of the community and used the profits for his own benefit. Those in public office should be held to a higher standard and are not exempt from criminal prosecution.”
Miranda, 55, of Tolleson, Ariz., served as a member of the Arizona House of Representatives for the 13th District from 2011 until his resignation, effective Feb. 20, 2012. Miranda previously served as a member of the Arizona State Senate from 2002 until 2011, and the Arizona House of Representatives from 1999 until 2002. According to court documents, since July 2002, Miranda also served as executive director of Centro Adelante Campesino Inc. (Centro), a non-profit charitable organization that provided food, clothing and educational assistance to persons in need, including migrant farm workers, in and around Maricopa County, Ariz.
According to court documents, in May 2005, Miranda initiated a scheme to wind down Centro, sell Centro’s sole remaining asset (a building), and use the proceeds of the sale for personal expenses. To do so, Miranda removed the charity’s longstanding volunteer accountant as an authorized signer on the charity’s bank and credit union accounts, and assumed sole control of the charity’s accounts and financial records. He also told the volunteer accountant that the proceeds of the sale would be used to fund scholarships. In March 2007, the building was sold for $250,000, and on March 7, 2007, a significant portion of the profits of that sale – $144,576 – were wired across state lines into Centro’s credit union account.
According to court documents, within one week of the wire transfer, Miranda began to withdraw the proceeds from Centro’s credit union account without the authorization or knowledge of Centro’s board of directors. For example, Miranda obtained two checks payable to himself totaling $37,000, and paid off personal credit card debts totaling more than $60,000. By Dec. 31, 2007, Miranda had withdrawn the remaining proceeds (approximately $46,836) using checks, withdrawals and electronic funds transfers, and used the funds to pay off additional personal debts and make numerous purchases for personal travel, services, clothing, food and household items. Miranda also failed to report the proceeds of the sale as income on his IRS Form 1040 for calendar year 2007.
The charge of wire fraud carries a maximum penalty of 20 years in prison and a $250,000 fine, or twice the amount gained or lost in the scheme. The charge of attempt to evade or defeat tax carries a maximum penalty of five years in prison and a $100,000 fine. Sentencing has been scheduled for June 5, 2012.
The case is being prosecuted by Trial Attorneys Edward T. Kang, Monique T. Abrishami and Brian A. Lichter of the Criminal Division’s Public Integrity Section, and Assistant U.S. Attorney Frederick A. Battista of the District of Arizona. The case is being investigated by agents from the FBI Phoenix Field Office and IRS-CI Phoenix Office.
Bizjet International Sales and Support Inc., Resolves Foreign Corrupt Practices Act Investigation and Agrees to Pay $11.8 Million Criminal PenaltyRead the Press Release
WASHINGTON – BizJet International Sales and Support Inc., a provider of aircraft maintenance, repair and overhaul (MRO) services based in Tulsa, Okla., has agreed to pay an $11.8 million criminal penalty to resolve charges related to the Foreign Corrupt Practices Act (FCPA) for bribing government officials in Latin America to secure contracts to perform aircraft MRO services for government agencies, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division.
The department filed a one-count criminal information today charging BizJet with conspiring to violate the FCPA’s anti-bribery provisions and a deferred prosecution agreement in U.S. District Court for the Northern District of Oklahoma.
According to court documents, BizJet paid bribes to officials employed by the Mexican Policia Federal Preventiva, the Mexican Coordinacion General de Transportes Aereos Presidenciales, the air fleet for the Gobierno del Estado de Sinaloa, the air fleet for the Gobierno del Estado de Sonora and the Republica de Panama Autoridad Aeronautica Civil. In many instances, BizJet paid the bribes directly to the foreign officials. In other instances, BizJet funneled the bribes through a shell company owned and operated by a BizJet sales manager. BizJet executives orchestrated, authorized and approved the unlawful payments.Under the terms of the department’s agreement with BizJet, the department agreed to defer prosecution of BizJet for three years. In addition to the monetary penalty, BizJet agreed to cooperate with the department in ongoing investigations, to report periodically to the department concerning BizJet’s compliance efforts, and to continue to implement an enhanced compliance program and internal controls designed to prevent and detect FCPA violations. If BizJet abides by the terms of the deferred prosecution agreement, the department will dismiss the criminal information when the agreement’s term expires.
In addition, BizJet’s indirect parent company, Lufthansa Technik AG, itself a German provider of aircraft-related services, entered into an agreement with the department in connection with the unlawful payments by BizJet and its directors, officers, employees and agents. The department has agreed not to prosecute Lufthansa Technik provided that Lufthansa Technik satisfies its obligations under the agreement for a period of three years. Those obligations include ongoing cooperation and the continued implementation of rigorous internal controls.
The agreements acknowledge BizJet’s and Lufthansa Technik’s voluntary disclosure of the FCPA violations to the department and their extraordinary cooperation, including conducting an extensive internal investigation, voluntarily making U.S. and foreign employees available for interviews, and collecting, analyzing and organizing voluminous evidence and information for the department. In addition, BizJet and Lufthansa Technik engaged in extensive remediation, including terminating the officers and employees responsible for the corrupt payments, enhancing their due-diligence protocol for third-party agents and consultants, and heightening review of proposals and other transactional documents for all BizJet contracts.
The case is being prosecuted by Trial Attorneys Daniel S. Kahn and Stephen J. Spiegelhalter of the Criminal Division’s Fraud Section. Assistant U.S. Attorney Kevin Leitch from the Northern District of Oklahoma has provided assistance in the case. The department has also worked closely with its law-enforcement counterparts in Mexico and Panama in this matter and is grateful for their assistance. The ongoing investigation is being assisted by the FBI’s Washington Field Office.
Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.
13 March 2012
United Kingdom Citizen and Two Americans Charged in Alabama for Allegedly Conspiring to Defraud United States GovernmentRead the Press Release
WASHINGTON – United Kingdom citizen Ahmed Sarchil Kazzaz and his company, Leadstay Company, were charged in an indictment unsealed today in the Northern District of Alabama for their roles in a conspiracy to defraud the United States and pay kickbacks in exchange for receiving subcontracts for a Department of Defense program in Iraq, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Joyce White Vance of the Northern District of Alabama.
Kazzaz, 45, and Leadstay were charged with one count of conspiracy to defraud and commit offenses against the United States; six counts of unlawful kickbacks; one count of wire fraud; and three counts of mail fraud. Kazzaz was arrested on Feb. 14, 2012, in Los Angeles. In addition, two informations filed in the Northern District of Alabama were unsealed today, charging Gaines R. Newell Jr., 52, and Billy Joe Hunt, 57, with conspiracy to commit the federal offenses of kickbacks, wire fraud and mail fraud, and with filing false tax returns.
According to the indictment, Kazzaz paid more than $947,500 in unlawful kickbacks to two employees of a prime contractor to the United States government in order to obtain lucrative subcontracts for himself and Leadstay, in connection with the Coalition Munitions Clearance Program (CMCP). CMCP is operated in Iraq by the U.S. Army Corps of Engineers, Huntsville Engineering and Support Center (HESC). HESC, located in the Northern District of Alabama, operated the CMCP to clear out, store and dispose of weapons that were seized or abandoned in Iraq since the 2003 invasion. HESC awarded a contract to perform this work to an international engineering and construction firm headquartered in Pasadena, Calif.
The indictment alleges that beginning in about March 2006, Kazzaz entered into a kickback agreement with the California prime contractor’s program manager and deputy program manager, who arranged for the award of subcontracts to Kazzaz and Leadstay to provide materials, heavy equipment and operators for equipment for the CMCP. Kazzaz also allegedly obtained multiple funding increases to those subcontracts. From April 2006 through August 2008, Kazzaz and Leadstay received more than $23 million in U.S. funds for services under the CMCP.
According to the two informations unsealed today, Newell was the program manager in Iraq for the California-based prime contractor to HESC, and Hunt was the deputy program manager. Both are charged with conspiring to solicit and accept kickbacks to award subcontracts under the CMCP program and to commit mail and wire fraud by knowingly and intentionally devising a scheme to defraud the United States. In addition, both are charged with failing to report the kickback income on their federal tax returns.
“Mr. Kazzaz allegedly paid kickbacks to two employees of a California-based contractor in order to secure subcontracts for Department of Defense programs in Iraq,” said Assistant Attorney General Breuer. “Federal contracts must be won or lost based on the merits of the bid, and we will continue to take aggressive steps to hold accountable anyone who tries to play by their own set of rules instead.”
“Government contracts fraud is an insult to all law-abiding taxpayers,” said U.S. Attorney Vance. “These defendants’ conduct was even worse in that they tried to illegally profit from defense contracts in Iraq, where American men and women were willing to put their lives on the line for freedom.”
“These charges clearly demonstrate that we will take firm action against those who make illegal payments while engaged in wartime contracting,” said Stuart W. Bowen, Special Inspector General for Iraq Reconstruction (SIGIR). “SIGIR and its investigative partners will continue our vigorous pursuit of those whose illegal acts undermined the U.S. government’s management of the stabilization and reconstruction effort in Iraq.”
“Individuals and businesses that illegally enrich themselves at the expense of the U.S. taxpayer, especially as wartime profiteers, or those who diminish the combat readiness or effectiveness of the U.S. military, will be aggressively investigated by DCIS and our investigative partners,” said Defense Criminal Investigative Service (DCIS) Special Agent in Charge Chris D. Hendrickson. “The combined investigative effort, the Department of Justice and the U.S. Attorney’s Office’s work demonstrate the combined federal commitment to combating fraud, waste and abuse.”
“IRS Criminal Investigation provides financial expertise with our law enforcement partners,” said Special Agent in Charge Leslie P. DeMarco of the Internal Revenue Service Criminal Investigations (IRS-CI) Los Angeles Field Office. “Today’s unsealing of these charges demonstrates our collective efforts in tracing illicit funds internationally to enforce the laws and ensure public trust.”
Kazzaz, Newell and Hunt are also facing criminal forfeiture proceedings.
The cases were investigated by the DCIS, IRS-CI, SIGIR, the FBI, and the U.S. Army Criminal Investigations Division. The cases are being prosecuted by Trial Attorney Catherine Votaw, on detail from SIGIR to the Fraud Section of the Justice Department’s Criminal Division, and Assistant U.S. Attorney David Estes of the Northern District of Alabama.
An indictment and information contain charges, and defendants are innocent until proven guilty.
U.S. Orders Pennylvania Diet Supplement Company to Cease Operations Pending Reinspection by FDARead the Press Release
The United States has entered a consent decree against ATF Fitness Products Inc., Manufacturing ATF Dedicated Excellence Inc. (MADE), and the owner and president of both companies, James G. Vercellotti, the Justice Department announced today. The decree, filed in the Western District of Pennsylvania on March 9, 2012, enjoins the firms and Mr. Vercellotti from violating the Food, Drug and Cosmetic Act (FDCA) in connection with their business of manufacturing, packing and distributing over 400 dietary supplements.
The decree orders the defendants to cease operations unless and until the FDA re-inspects the businesses and determines they no longer violate the FDCA. Additionally, the decree requires the defendants to retain an independent expert to review their production and distribution of supplements to ensure their continued compliance with the law.
“Almost by definition, consumers purchase dietary supplements to enhance and improve their health,” said Stuart F. Delery, Acting Assistant Attorney General for the Civil Division. “The Department of Justice took this action because consumers must, at the very least, be assured that they are buying what they think they are buying, and that the products are safe.”
During an inspection last year by the Food and Drug Administration (FDA), FDA inspectors found numerous current good manufacturing practice (“cGMP”) violations. Inspectors determined that the defendants failed to clean manufacturing equipment, failed to maintain proper records concerning the ingredients of the supplements, and failed to label their products correctly. Additionally, the FDA determined that defendants failed to notify the FDA of possible adverse events involving consumers who used the defendants’ supplements.
“Through this consent decree, we will ensure that the public is protected from purchasing and consuming tainted supplements and misbranded products,” said David J. Hickton, U.S. Attorney for the Western District of Pennsylvania.
The FDA previously inspected the defendant’s facilities, and noted a history of violations and warnings dating to 2001. As a result of the FDA’s findings of recent violations, as well as its findings of a history of unheeded warnings, the Justice Department filed suit, seeking this permanent injunction.
Acting Assistant Attorney General Delery thanked the FDA for referring this matter for litigation, as well as U.S. Attorney Hickton for his office’s assistance with the litigation.
Taiwan-Based AU Optronics Corporation, Its Houston-Based Subsidiary and Former Top Executives Convicted for Role in LCD Price-Fixing ConspiracyRead the Press Release
WASHINGON – Following an eight-week trial, a federal jury in San Francisco today convicted the largest Taiwan liquid crystal display (LCD) producer, its Houston-based subsidiary and their two former top executives for their participation in a five-year conspiracy to fix the prices of thin-film transistor-liquid crystal display (TFT-LCD) panels sold worldwide, the Department of Justice announced. The jury also found that the ill-gotten gain to the conspirators as a result of the fixed sales in the United States was at least $500 million.
AU Optronics Corporation and its American subsidiary, AU Optronics Corporation America, were found guilty today in the U.S. District Court in San Francisco. The trial began on Jan. 9, 2012. AU Optronics Corporation is based in Hsinchu, Taiwan. AU Optronics Corporation America is headquartered in Houston. The companies and individuals were indicted on June 9, 2010. The indictment charged that AU Optronics Corporation participated in the worldwide price-fixing conspiracy from Sept. 14, 2001, to Dec. 1, 2006, and that its subsidiary participated at various times during the conspiracy.
Former AU Optronics Corporation president Hsuan Bin Chen and former AU Optronics Corporation executive vice president Hui Hsiung were also found guilty. The department said that both executives participated in the conspiracy from Oct. 19, 2001, to Dec.1, 2006.
In addition to today’s convictions, seven companies have pleaded guilty to date to charges arising out of the department’s ongoing investigation and have been sentenced to pay criminal fines totaling more than $890 million. In addition to the individuals convicted today, 17 executives have been charged. Ten of the executives have pleaded guilty and have been sentenced to serve a combined total of 2,681 days in prison.
“The jury finding $500 million in ill-gotten gains by members of the cartel demonstrates the harmful effect of this price-fixing conspiracy on American businesses and consumers,” said Acting Assistant Attorney General Sharis A. Pozen in charge of the Department of Justice’s Antitrust Division. “The jury’s decision to hold not only the companies but also their top executives accountable for their anticompetitive actions should send a strong deterrent message to board rooms around the world.”
TFT-LCD panels are used in computer monitors and notebooks, televisions, mobile phones and other electronic devices. By the end of the conspiracy period, the worldwide market for TFT-LCD panels was valued at $70 billion annually. Companies directly affected by the LCD price-fixing conspiracy include some of the largest computer manufacturers in the world, including Apple, Dell and Hewlett Packard.
At trial, the department said that the convicted companies and former executives fixed the prices of LCD panels sold into the United States. The prices were fixed during monthly meetings with their competitors secretly held in hotel conference rooms, karaoke bars and tea rooms around Taiwan. The indictment alleged that the conspiracy lasted for more than five years before it was detected.
Also today, the jury found two AU Optronics Corporation employees not guilty--Lai-Juh Chen, former director of the Desktop Display Business Group, and Tsannrong Lee, former senior manager of the Notebooks Business Group. A mistrial was declared against Hsiu Lung Leung, former AU Optronics Corporation senior manager of Desktop Display Business Group.
The maximum penalty for a Sherman Act violation for an individual is 10 years in prison and a $1 million fine. Since the jury found that the gain derived from the conspiracy was at least $500 million, the maximum fine for the corporations is $1 billion.
Today’s charges are the result of a joint investigation by the Department of Justice Antitrust Division’s San Francisco Field Office and the FBI in San Francisco.
Anyone with information concerning illegal conduct in the TFT-LCD industry is urged to call the Antitrust Division’s San Francisco Field Office at 415-436-6660 or visit www.justice.gov/atr/contact/newcase.htm
Six Plead Guilty in Ohio to Tax and Mail Fraud Conspiracies Involving I.D. Theft of DeceasedRead the Press Release
Muaad Salem, Hanan Widdi, Najeh Widdi, Hazem Woodi, Daxesj Patel and Fahim Suleiman each entered guilty pleas before the Honorable James S. Gwin today to charges arising from a scheme to obtain false and fraudulent U.S. Treasury tax refund checks, the Justice Department, the U.S. Attorney’s Office for the Northern District of Ohio and the Internal Revenue Service (IRS) announced. Specifically, Salem, Najeh Widdi and Woodi entered guilty pleas to conspiracy to defraud the United States, conspiracy to commit mail fraud and mail fraud; Hanan Widdi entered a guilty plea to conspiracy to defraud the United States and conspiracy to commit mail fraud; Patel entered a guilty plea to two counts of submitting false claims and one count of false statements; and Suleiman entered a guilty plea to conspiracy to defraud the United States, conspiracy to commit mail fraud; mail fraud and aggravated identity theft.
According to the indictment, between April 15, 2009 to at least August 2011, Salem, Suleiman, Najeh Widdi, Hanan Widdi, Woodi, Patel and other unknown co-conspirators defrauded the United States by filing false and fraudulent tax returns, many in the names of recently deceased taxpayers, and directing refunds to controlled locations in the state of Florida. The U.S. Treasury checks generated by the false and fraudulent returns were then sent by the U.S. mail to co-conspirators in Ohio who sold and distributed the checks for negotiation at various businesses and banking institutions. As part of their plea agreements, the defendants admitted that the fraud loss caused by their conduct was between $1 and 2.5 million and that the offenses involved more than ten victims.
Sentencing is scheduled on May 29, 2012, for Najeh Widdi and Patel; on May 30, 2012, for Hanan Widdi and Woodi; and on June 1, 2012, for Salem and Suleiman. Mail fraud is punishable by a maximum potential sentence of 20 years in prison; conspiracy to defraud the United States is punishable by a maximum potential sentence of 10 years; conspiracy to commit mail fraud, making a false claim against the United States and making a false statement are each punishable by a maximum potential sentence of five years in prison; aggravated identity theft is punishable by a mandatory minimum prison sentence of two years to follow conviction on any other offense. All of the above sentences are also punishable by a fine of $250,000 for each count of conviction.
The case was prosecuted by Assistant U.S. Attorney Gary D. Arbeznik of the Northern District of Ohio and Trial Attorney Jessica W. Knight of the Justice Department’s Tax Division following investigation by the Cleveland Division of the Federal Bureau of Investigation, the IRS-Criminal Investigation, and the United States Postal Service.
Riverton, Illinois, Man Sentenced to 216 Months in Prison for Production and Possession of Child PornographyRead the Press Release
WASHINGTON – A Riverton, Ill., man was sentenced yesterday to 216 months in prison and lifetime supervised release for production and possession of child pornography, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney James A. Lewis for the Central District of Illinois.
Jeffrey Price, 47, was sentenced by U.S. District Judge Sue E. Myerscough in Springfield, Ill. Price was convicted on Nov. 4, 2011, of one count of production and one count of possession of child pornography, following a four-day jury trial.
According to evidence presented at trial, on several occasions between October 2002 and October 2004, Price produced sexually explicit photographs of an eleven-year-old girl. Trial evidence also showed that Price possessed more than 900 images and 20 movies that depict children engaged in sexually explicit activity.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
The case was prosecuted by Assistant U.S. Attorneys Greggory R. Walters and Elly Peirson of the Central District of Illinois and Assistant Deputy Chief Alexandra Gelber with the Criminal Division’s CEOS. The charges were investigated by the U.S. Immigration and Customs Enforcement Office of Homeland Security Investigations and the Springfield Police Department with assistance provided by the Illinois Department of Children and Family Services and the Sangamon County Child Advocacy Center.Miami-Area Resident Pleads Guilty to Participating in $200 Million Medicare Fraud SchemeRead the Press Release
WASHINGTON – A Miami-area resident pleaded guilty today for his role in a fraud scheme that resulted in the submission of more than $200 million in fraudulent claims to Medicare, announced the Department of Justice, the FBI and the Department of Health and Human Services (HHS).
Mathis Moore, 56, pleaded guilty before U.S. Magistrate Judge Barry L. Garber in Miami to one count of conspiracy to commit health care fraud and one count of conspiracy to defraud the United States and to pay and receive illegal health care kickbacks. Moore was charged in an indictment unsealed on Feb. 15, 2011, in the Southern District of Florida.Moore admitted to participating in a fraud scheme that was orchestrated by the owners and operators of American Therapeutic Corporation (ATC); its management company, Medlink Professional Management Group Inc.; and the American Sleep Institute (ASI). ATC, Medlink and ASI were Florida corporations headquartered in Miami. ATC operated purported partial hospitalization programs (PHPs), a form of intensive treatment for severe mental illness, in seven different locations throughout South Florida and Orlando. ASI purported to provide diagnostic sleep disorder testing.
According to court filings, ATC’s owners and operators paid kickbacks to owners and operators of assisted living facilities and halfway houses and to patient brokers in exchange for delivering ineligible patients to ATC and ASI. In some cases, the patients received a portion of those kickbacks. Throughout the course of the ATC and ASI conspiracy, millions of dollars in kickbacks were paid in exchange for Medicare beneficiaries who did not qualify for PHP services to attend treatment programs that were not legitimate PHPs so that ATC and ASI could bill Medicare for the medically unnecessary services. According to court filings, to obtain the cash required to support the kickbacks, the co-conspirators laundered millions of dollars of payments from Medicare.
Moore admitted to serving as a patient broker who provided patients for ATC and ASI in exchange for kickbacks in the form of checks and cash. The amount of the kickback was based on the number of days each patient spent at ATC.
According to his plea agreement, Moore’s participation in the ATC fraud resulted in $17 million in fraudulent billings to the Medicare program.Sentencing for Moore is scheduled for May 29, 2012, at 9:30 a.m. He faces a maximum penalty of 15 years in prison and a $250,000 fine.
ATC, Medlink, and various owners, managers, doctors, therapists, patient brokers and marketers of ATC, Medlink and ASI, were charged with various health care fraud, kickback, money laundering and other offenses in two indictments unsealed on Feb. 15, 2011. ATC, Medlink and 10 of the individual defendants have pleaded guilty or have been convicted at trial. Other defendants are scheduled for trial April 9, 2012, before U.S. District Judge Patricia A. Seitz. A defendant is presumed innocent unless proven guilty beyond a reasonable doubt in a court of law.
Today’s guilty plea was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; John V. Gillies, Special Agent-in-Charge of the FBI’s Miami field office; and Special Agent-in-Charge Christopher B. Dennis of the HHS Office of Inspector General (HHS-OIG), Office of Investigations Miami office.
The criminal case is being prosecuted by Trial Attorneys Jennifer L. Saulino, Steven Kim and Robert Zink of the Criminal Division’s Fraud Section. A related civil action is being handled by Vanessa I. Reed and Carolyn B. Tapie of the Civil Division and Assistant U.S. Attorney Ted L. Radway of the Southern District of Florida. The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.
Since its inception in March 2007, the Medicare Fraud Strike Force operations in nine locations have charged more than 1,190 defendants that collectively have 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, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.Justice Department Files Lawsuit Against United Airlines for USERRA ViolationRead the Press Release
WASHINGTON - The Justice Department filed a lawsuit against United Airlines Inc., alleging violations of the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA).
The complaint, filed in the U.S. District Court in Denver, alleges that United Airlines violated USERRA by denying pilot TenEyck LaTourrette employment benefits during his military service. LaTourrette is currently a major serving in the Colorado Air National Guard and a first officer for United Airlines.
The complaint alleges that United Airlines violated USERRA by under compensating LaTourrette’s pension during his military service. Specifically, United based its pension contributions on a minimum monthly schedule, rather than using LaTourrette’s actual schedule during the 12 months preceding his military obligations, as required by USERRA.
Because most pilots work beyond a minimum schedule, United’s actions resulted in an underpayment to LaTourrette and other military reservists’ pensions until United changed its policy to comply with USERRA in November 2010.
“This nation depends upon our reservists to faithfully carry out their military obligations. No members of our armed forces should ever be penalized for answering the call of duty,” said Thomas Perez, Assistant Attorney General for the Civil Rights Division. “The filing of this lawsuit reflects the Civil Rights Division’s continuing commitment to fully protect our uniformed servicemembers’ employment rights under USERRA.”
“We ask the men and women of our armed forces to fight for our country’s freedom and to be willing to risk their lives for that cause,” said John Walsh, U.S. Attorney for the District of Colorado. “When they return home they should not have to fight to be properly compensated. I would like to recognize the outstanding efforts of the Civil Rights Division for their work to protect the benefits of this service member.”
The Justice Department’s lawsuit was filed after the Veterans’ Employment and Training Service (VETS) of the Department of Labor referred Major LaTourrette’s complaint to the Justice Department upon completion of its investigation and failed settlement efforts. The Labor Department and Justice Department work cooperatively together to protect the jobs and benefits of National Guard and Reserve servicemembers upon their return to civilian life.
More information about USERRA is available at www.dol.gov/vets/programs/userra/main.htm.
Haji Bagcho Convicted by Federal Jury in Washington, D.C., on Drug Trafficking and Narco-terrorism ChargesRead the Press Release
WASHINGTON – An Afghan national with ties to the Taliban was convicted today by a jury in U.S. District Court for the District of Columbia of conspiracy, distribution of heroin for importation into the United States and narco-terrorism, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and Administrator Michele M. Leonhart of the Drug Enforcement Administration (DEA).
Haji Bagcho, from Nangarhar Province, Afghanistan, was investigated by the DEA for narcotics offenses. The investigation revealed that Bagcho was one of the largest heroin traffickers in the world and manufactured the drug in clandestine laboratories along Afghanistan’s border region with Pakistan. Bagcho sent heroin to more than 20 countries, including the United States. Proceeds from his heroin trafficking were then used to support high-level members of the Taliban to further their insurgency in Afghanistan.Beginning in 2005 and continuing for the next five years, the DEA, in cooperation with Afghan authorities, conducted an investigation of Bagcho’s organization. With the help of cooperating witnesses, the DEA purchased heroin directly from the organization on two occasions, which Bagcho understood was destined for the United States. They also conducted several searches of residences belonging to Bagcho and his associates, recovering evidence consistent with drug trafficking. During one search, ledgers belonging to the defendant were found. One ledger, cataloguing Bagcho’s activities during 2006, reflected heroin transactions of more than 123,000 kilograms, worth more than $250 million, according to Bagcho’s ledger. Based on heroin production statistics compiled by the United Nations Office of Drugs and Crime for 2006, the defendant’s trafficking accounted for approximately 20% of the world’s total production for that year.
The investigation also obtained evidence that over several years, Bagcho used a portion of his drug proceeds to provide the former Taliban governor of Nangarhar Province and two Taliban commanders responsible for insurgent activity in eastern Afghanistan with cash, weapons and other supplies so that they could continue their “jihad” against western troops and the Afghan government.
“Haji Bagcho was a prolific and dangerous heroin manufacturer, trafficking in over 123,000 kilograms of the drug in 2006 alone,” said Assistant Attorney General Breuer. “Moreover, he used proceeds from his crimes to fund Taliban insurgents and fuel their ongoing ‘jihad’ against the United States and others. The effects of Bagcho’s criminal activity were felt all over the world, and today’s guilty verdict ensures that he will serve a lengthy prison term.”
“One of the world’s most prolific drug trafficker’s reign has come to an end,” said DEA Administrator Leonhart. “Now Haji Bagcho will serve time behind bars on the same soil he sought to destroy with his drugs, and whose troops he sought to kill through his support to the Taliban. DEA stands committed to stopping narco-traffickers, like Bagcho, and their funding of terror.”
A grand jury returned an indictment against Bagcho on Nov. 8, 2006, charging him with distributing heroin, knowing that it would be imported into the United States. A superseding indictment returned on Jan. 28, 2010, added additional charges of conspiracy to distribute and distribution of heroin, knowing or intending that it would be imported in the United States, as well as engaging in drug trafficking knowing or intending to provide something of pecuniary value to a terrorist or terrorist organization. Bagcho was brought to the United States on June 24, 2009. He faces a mandatory minimum sentence of 20 years and a maximum of life in prison. A sentencing hearing is scheduled before the Honorable Ellen S. Huvelle on June 12, 2012.
The case was prosecuted by Trial Attorneys Matthew Stiglitz and Marlon Cobar of the Criminal Division’s Narcotic and Dangerous Drug Section. The case was investigated by the DEA Special Operations Division in the United States, with assistance from the DEA’s Foreign Deployed Advisory Support Team and Kabul Country Office in Afghanistan, the U.S. Embassy in Kabul, and in close cooperation with Afghan law enforcement. The Criminal Division’s Office of International Affairs provided invaluable support.
Former Haitian Government Official Convicted in Miami for Role in Scheme to Launder Bribes Paid by Telecommunications CompaniesRead the Press Release
WASHINGTON – Jean Rene Duperval, a former director of international relations for Telecommunications D’Haiti S.A.M. (Haiti Teleco), a Haitian state-owned telecommunications company, has been convicted by a federal jury on all counts for his role in a scheme to launder bribes paid to him by two Miami-based telecommunications companies. The jury reached its verdict late yesterday after less than three hours of deliberations, following a week-long trial.
The conviction was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer for the Southern District of Florida; and Special Agent in Charge Jose A. Gonzalez of Internal Revenue Service, Criminal Investigation (IRS-CI), Miami Field Office.
“Mr. Duperval was convicted by a Miami jury of laundering $500,000 paid to him as part of an elaborate bribery scheme,” said Assistant Attorney General Breuer. “As the director of international relations for Haiti’s state-owned telecommunications company, Duperval doled out business in exchange for bribes and then used South Florida shell companies to conceal his crimes. This Justice Department is committed to stamping out corruption wherever we find it.”
“To conceal the payment and receipt of bribes, Duperval participated in a money laundering scheme to funnel about half a million dollars to two shell companies under his control,” said U.S. Attorney Ferrer. “This verdict confirms that American taxpayers will not tolerate bribery, either at home or abroad, to obtain unfair business advantages.”
“Today’s announcement sends a strong message to those hiding monies in bogus business entities: no matter how elaborate or complex the scheme, you will get caught,” said IRS Special Agent in Charge Gonzalez. “IRS criminal investigators will continue to aggressively investigate bribery schemes to ensure that honest businesses have the benefit of a competitive market.”
Duperval, 45, of Miramar, Fla., was convicted of two counts of conspiracy to commit money laundering and 19 counts of money laundering. According to the charges, the funds that were laundered were the proceeds of violations of the Foreign Corrupt Practices Act (FCPA), Haitian bribery law and the wire fraud statute.
Duperval was the director of international relations for Haiti Teleco, the sole provider of land line telephone service in Haiti. According to the evidence presented at trial, two Miami-based telecommunications companies had a series of contracts with Haiti Teleco that allowed the companies’ customers to place telephone calls to Haiti.
Duperval was convicted for participating in a scheme to commit money laundering from 2003 to 2006, during which time the telecommunications companies collectively paid $500,000 to two shell companies to funnel the bribes to Duperval.
The purpose of these bribes, according to the evidence presented at trial, was to obtain various business advantages from Duperval, including the issuance of preferred telecommunications rates, a continued telecommunications connection with Haiti and the continuation of a particularly favorable contract with Haiti Teleco. To conceal the bribe payments, Duperval instructed the companies to forward the payments to the shell companies. To support these payments, the companies and their executives created false documents claiming that the payments were for “consulting services” or for “international minutes from USA to Haiti.” No actual services were performed. The funds were then disbursed from the shell companies for the benefit of Duperval and his family. To conceal the nature of these funds, Duperval falsely characterized these payments as “commissions” and “payroll.”Duperval was remanded to the custody of the U.S. Marshals. Sentencing is scheduled for May 21, 2012. The conspiracy to commit money laundering count carries a maximum penalty of 20 years in prison and a fine of the greater of $500,000 or twice the value of the property involved in the transaction. The money laundering counts each carry a maximum penalty of 20 years in prison and a fine of the greater of $500,000 or twice the value of the property involved in the transaction. The indictment also seeks forfeiture, which will be determined by the court at a later date.
Duperval was the eighth defendant involved in the corruption scheme to be convicted, which includes the following individuals:
- On April 27, 2009, Antonio Perez, a former controller at one of the Miami-based telecommunications companies, pleaded guilty to one count of conspiracy to violate the FCPA and money laundering. On Jan. 12, 2010, he was sentenced to 24 months in prison, which he is currently serving.
- On May 15, 2009, Juan Diaz, the president of J.D. Locator Services, pleaded guilty to one count of conspiracy to violate the FCPA and money laundering. He admitted to receiving more than $1 million in bribe money from telecommunications companies. On July 30, 2010, he was sentenced to 57 months in prison, which he is currently serving.
- On Feb. 19, 2010, Jean Fourcand, the president and director of Fourcand Enterprises Inc., pleaded guilty to one count of money laundering for receiving and transmitting bribe monies in the scheme. On May 5, 2010, he was sentenced to six months in prison.
- On March 12, 2010, Robert Antoine, a former director of international affairs for Haiti Teleco, pleaded guilty to one count of conspiracy to commit money laundering. He admitted to receiving more than $1 million in bribes from Miami-based telecommunications companies. On June 2, 2010, he was sentenced to 48 months in prison, which he is currently serving.
- On Aug. 4, 2011, Joel Esquenazi and Carlos Rodriguez, who were the former president and vice-president, respectively, of one of the telecommunications companies, were convicted by a federal jury of one count of conspiracy to violate the FCPA and wire fraud, seven counts of FCPA violations, one count of money laundering conspiracy and 12 counts of money laundering. On Oct. 25, 2011, Esquenazi was sentenced to 15 years in prison, the longest sentence ever imposed in a case involving the FCPA. On the same day, Rodriguez was sentenced to 84 months in prison for his role in the bribery scheme. Both are currently serving their sentences.
In a second superseding indictment, Washington Vasconez Cruz, Amadeus Richers and Cecilia Zurita were charged in a related scheme to commit foreign bribery and money laundering from December 2001 through January 2006. The defendants are fugitives. An indictment is merely an accusation, and defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.
The Department of Justice is grateful to the government of Haiti for continuing to provide substantial assistance in gathering evidence during this investigation. In particular, Haiti’s financial intelligence unit, the Unité Centrale de Renseignements Financiers (UCREF), the Bureau des Affaires Financières et Economiques (BAFE), which is a specialized component of the Haitian National Police, and the Ministry of Justice and Public Security provided significant cooperation and coordination in this ongoing investigation.
To learn more about the government’s FCPA enforcement efforts, go to www.justice.gov/criminal/fraud/fcpa.
The case is being prosecuted by Senior Trial Attorney James M. Koukios and Trial Attorney Daniel S. Kahn of the Criminal Division’s Fraud Section. The Criminal Division’s Office of International Affairs also provided assistance in this matter. These cases were investigated by the IRS-CI Miami Field Office.
Alabama Woman Sentenced to More Than Five Years in Prison for Identity Theft and Tax Fraud SchemeRead the Press Release
Melinda Clayton of Montgomery, Ala., was sentenced today to 61 months in prison, following a guilty plea to conspiracy to make false claims, wire fraud and aggravated identity theft, the Justice Department and the Internal Revenue Service (IRS) announced. U.S. District Judge Mark Fuller also ordered Clayton to pay $494,424 in restitution.
Court records indicate that on April 8, 2011, Clayton was arrested on a criminal complaint following the execution of a search warrant at her house that same day. Clayton and Alchico Grant were both named in the original indictment which was returned in April 2011. On Aug. 31, 2011, Clayton, along with Veronica Dale and Alchico Grant, was charged in a 43-count superseding indictment with conspiring to defraud the United States by filing false claims, filing false claims, wire fraud and aggravated identity theft. That indictment also charged Stephanie Adams with conspiracy and with theft of government funds, and named Valerie Byrd as an unindicted co-conspirator. According to the indictment, the conspiracy involved using stolen identities to file false tax returns. Veronica Dale, Alchico Grant, Stephanie Adams and Valerie Byrd have all pleaded guilty to federal crimes.
According to the indictment and plea agreement, Clayton stored tens of thousands of stolen means of identification (names and Social Security numbers) at her house, which came from numerous sources, including private companies, health clinics and prisons. Dale and Clayton used the stolen identities to file false returns that fraudulently claimed tax refunds. They directed the refunds to bank accounts and debit cards. Grant and Dale would buy debit cards to use in the scheme, while Clayton, Adams and Byrd all provided bank accounts to receive fraudulent refunds. Between January and up to the day of the search warrant, April 8, 2011, the conspirators filed returns claiming almost $500,000 in fraudulent refunds.
The case was investigated by Special Agents of the IRS - Criminal Investigation. Trial attorneys Jason H. Poole and Michael Boteler of the Justice Department’s Tax Division, and Assistant U.S. Attorney Todd Brown of the Middle District of Alabama are prosecuting the case.
Additional information about the Tax Division and its enforcement efforts may be found at www.justice.gov/tax.
12 March 2012
Three Former Corrections Officers Charged with Federal Civil Rights Offenses for Role in Beating Death of an Inmate at Ventress Correctional Facility in AlabamaRead the Press Release
WASHINGTON – The Justice Department announced today that a federal grand jury has charged Michael Smith, 37, Matthew Davidson, 43, and Joseph Sanders, 31 – former corrections officers of the Alabama Department of Corrections – in a 17-count indictment. The indictment alleges that the officers participated in the beating of an inmate that resulted in bodily injury and the inmate’s death, and that the officers conspired with each other and other officers to cover up the incident.
The indictment charges all three former officers with felony civil rights violations, with obstruction of justice-related violations, and with making false statements to the FBI. Defendants Davidson and Sanders are charged with assaulting the victim, which resulted in bodily injury to the victim. Smith is also charged with assaulting the victim, which resulted in bodily injury to, and the death of, the victim. Agents of the FBI and the Alabama Bureau of Investigation arrested all three defendants earlier this morning.
The charges stem from an incident that occurred at Ventress Correctional Facility in Clayton, Ala., on Aug.4, 2010, when inmate Rocrast Mack, was severely beaten, suffered significant injuries, and died the following day in a Montgomery, Ala., hospital. As set forth in the indictment, at the time of the incident, Michael Smith was a lieutenant with supervisory authority over other officers on his shift. Davidson and Sanders were corrections officers on the same shift with Smith.
Scottie Glenn, another former corrections officer at Ventress, pleaded guilty on Nov.18, 2011, in U.S. District Court in Montgomery to one count of violating the civil rights of Rocrast Mack for his role in the incident and to one count of conspiring with other corrections officers to cover up the incident. In court, Glenn admitted that he escorted Rocrast Mack in handcuffs to an office at the prison, knowing that Rocrast Mack would be beaten in retaliation for a prior incident. Glenn also admitted that he and other officers, at the direction of another officer, identified in court documents as Officer A, lied in written reports and lied to investigators to cover up the incident.
If convicted, Smith faces a maximum potential penalty of life in prison or the death penalty. Davidson faces a maximum sentence of 105 years in prison. Sanders faces a maximum sentence of 75 years in prison.
This case is being investigated by the Mobile, Ala., Division of the FBI, in partnership with the Alabama Bureau of Investigation, and is being prosecuted by Trial Attorney Patricia Sumner of the U.S. Department of Justice Department’s Civil Rights Division and Assistant U.S. Attorney Jerusha Adams of the U.S. Attorney’s Office for the Middle District of Alabama.
An indictment is merely an accusation, and the defendant is presumed innocent unless proven guilty.