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24 February 2012
Houston Patient Recruiter Convicted in $1.1 Million Medicare Fraud SchemeRead the Press Release
WASHINGTON – A patient recruiter for a Houston durable medical equipment (DME) company was convicted today by a federal jury in Houston of health care fraud related to an “arthritis kit” fraud scheme, the Department of Justice, FBI and Department of Health and Human Services (HHS) announced.
After a four-day trial, Michelle Turner, 44, of Spring, Texas, was convicted of one count of conspiracy to commit health care fraud, one count of conspiring to receive illegal kickbacks for referring Medicare beneficiaries and two counts of receiving illegal kickbacks for referring Medicare beneficiaries.
According to evidence presented at trial, Clifford Ubani and Princewill Njoku were the owners of Family Healthcare Services. Family Healthcare maintained a valid Medicare provider number in order to submit Medicare claims for the costs of DME and purported to provide orthotics and other DME to Medicare beneficiaries. Ubani and Njoku hired co-conspirators Turner, Ana Quinteros and others to recruit beneficiaries for the purposes of filing claims with Medicare for DME. Once Ubani and Njoku obtained Medicare beneficiary numbers, Family Healthcare submitted claims to Medicare for DME, including orthotic devices, which were medically unnecessary and/or not provided. Co-conspirator Rolondae Mitchell-Straughter was the office manager and was responsible for processing the fraudulent claims. Many of the orthotic devices were components of what was referred to as an “arthritis kit” and were purported to be for the treatment of arthritis-related conditions, but the devices were not medically necessary or appropriate for such conditions. The arthritis kit generally contained a number of orthotic devices, including braces for both sides of the body and related accessories, such as heat pads. Ubani and Njoku paid kickbacks to the recruiters for their referrals. In total, Family Healthcare submitted approximately $1.1 million in fraudulent claims to Medicare.
Evidence at trial showed that Turner operated a “boiler room” and hired teenagers to make unsolicited telephone calls to elderly Medicare beneficiaries asking them if they wanted a free arthritis kit. The arthritis kit was billed to Medicare at more than $3,000. Under Medicare rules, unsolicited telephone calls are prohibited. Additionally, a Medicare beneficiary is responsible for paying a 20 percent co-pay for all DME. Beneficiaries’ doctors further testified at trial that the beneficiaries did not need the arthritis kit.
Ubani and Njoku previously pleaded guilty to conspiracy to commit health care fraud and await sentencing. Mitchell-Straughter pleaded guilty to conspiracy to commit health care fraud and was sentenced to 18 months in prison. Quinteros previously pleaded guilty to conspiracy to commit health care fraud and was sentenced to probation. A sixth defendant, Mary Ellis, was acquitted in this case by a jury in December 2010, but was later convicted of conspiracy to commit health care fraud in May 2011 in a separate case and was sentenced to 63 months in prison.
At sentencing, Turner faces maximum penalties of 10 years in prison for the health care fraud conspiracy count; five years in prison for conspiring to receive illegal kickbacks for referring Medicare beneficiaries; and five years in prison for each count of receiving an illegal kickback for referring a Medicare beneficiary.
Today’s guilty verdict was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Ken Magidson of the Southern District of Texas; Special Agent in Charge Stephen L. Morris of the FBI’s Houston Field Office; Special Agent in Charge Mike Fields of the Dallas Regional Office of the HHS Office of the Inspector General (HHS-OIG), Office of Investigations; and the Texas Attorney General’s Medicaid Fraud Control Unit (MFCU).
The case was prosecuted by Trial Attorney Charles D. Reed and Deputy Chief Sam S. Sheldon of the Criminal Division’s Fraud Section. The case was investigated by the FBI, HHS-OIG, Texas OAG-MFCU and the Federal Railroad Retirement Board-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the U.S. Attorney’s Office for the Southern District of Texas and the Criminal Division’s Fraud Section.
Since their inception in March 2007, Strike Force operations in nine locations have obtained indictments of 1,190 individuals who collectively have falsely billed the Medicare program for more than $3.2 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 .
Former Ohio Wildlife Officer Convicted of Trafficking in White-Tailed DeerRead the Press Release
WASHINGTON – Allan Wright, 45, of Russellville, Ohio, pleaded guilty today in federal court in Cincinnati to violating the Lacey Act by trafficking in and making false records for illegally harvested white-tailed deer, the Department of Justice announced. Wright committed the Lacey Act crimes while he was employed as a wildlife officer for the Ohio Department of Natural Resources. Wright’s employment as a wildlife officer was terminated after he was indicted in August 2011. As part of his plea agreement, Wright has agreed not to appeal his termination.
Among other things, t he Lacey Act makes it a crime for a person to knowingly transport or sell wildlife in interstate commerce when the wildlife was taken or possessed in violation of state law. The Lacey Act also makes it a crime for a person to knowingly make or submit a false record, account or label for wildlife that has been transported in interstate commerce. Wright pleaded guilty to a total of four Lacey Act crimes based on his conduct between 2006 and 2010.
As part his plea, Wright admitted that, using his authority as a wildlife officer, he sold a resident Ohio hunting license to a non-resident hunter in 2006. That hunter used the illegal Ohio resident hunting license to kill three white-tailed deer. As part of his plea, Wright admitted that he “checked in” those deer by providing a false Ohio residence address for the non-resident hunter in order to make it appear that the deer were killed by an Ohio resident. After the deer were checked in, the non-resident hunter transported them in interstate commerce from Ohio to South Carolina.
Also as part of his plea, Wright admitted that, using his authority as a wildlife officer, he seized white-tailed deer antlers from a hunter who had killed a deer illegally in 2009. Wright admitted that, rather than disposing of the antlers through court proceedings, as required by Ohio law, he knowingly supplied them to another individual who transported them from Ohio to Michigan. As part of his plea, Wright admitted that he filed an official state form, which falsely reported that he had personally destroyed those antlers.
Wright faces a maximum penalty of one year in prison and a $100,000 fine per count. A date has not yet been set for Wright’s sentencing.
This case was investigated by the U.S. Fish & Wildlife Service, Office of Law Enforcement. This case was prosecuted by Trial Attorney James B. Nelson of the Department of Justice’s Environmental Crimes Section of the Environment and Natural Resources Division.
Former Chairman of Taiwan Aftermarket Auto Lights Manufacturer Agrees to Plead Guilty in Price-Fixing ConspiracyRead the Press Release
WASHINGTON – The former chairman of a Taiwan aftermarket auto lights manufacturer has agreed to plead guilty for his participation in an international conspiracy to fix the prices of aftermarket auto lights, the Department of Justice today announced. Aftermarket auto lights are incorporated into an automobile after its original sale, often as repairs following a collision or as accessories and upgrades.
According to a one-count felony charge filed today in U.S. District Court in San Francisco, Shiu-Min Hsu conspired with others to suppress and eliminate competition by fixing the prices of aftermarket auto lights. The department said that Hsu, former chairman of Depo Auto Parts Industrial Co. Ltd., a Taiwan manufacturer of aftermarket auto lights, participated in the conspiracy from as early as April 2000 until about Sept. 3, 2008. According to the plea agreement, which is subject to court approval, Hsu has agreed to cooperate with the department’s investigation.
“The international price-fixing conspiracy in the aftermarket auto lights industry caused harm to businesses and consumers,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “Including today’s filing, five individuals and four corporations have been charged as a result of the Antitrust Division’s efforts to thwart this type of anticompetitive activity.”
According to the charge, Hsu and co-conspirators participated in a conspiracy in which the participants met and agreed to charge prices of aftermarket auto lights at certain predetermined levels. According to the court document, the participants in the conspiracy issued price announcements and price lists in accordance with the agreements reached, and collected and exchanged information on prices and sales of aftermarket auto lights for the purpose of monitoring and enforcing adherence to the agreed-upon prices. The department said that the conspirators met in Taiwan and the United States for their discussions.
On March 29, 2011, Polo Shu-Sheng Hsu, the former president and CEO of Maxzone Vehicle Lighting Corp., a U.S. distributor of aftermarket auto lights, was sentenced to serve 180 days in prison and to pay a $25,000 criminal fine for his role in the conspiracy. Chien Chung Chen, aka Andrew Chen, the former executive vice president of Sabry Lee (U.S.A.) Inc., another U.S. distributor of aftermarket auto lights, pleaded guilty for his participation in the conspiracy on June 7, 2011. He is currently scheduled to be sentenced on Oct. 16, 2012. In addition, two corporations have pleaded guilty. On Oct. 4, 2011, Sabry Lee pleaded guilty and was sentenced to pay a $200,000 criminal fine. On Nov. 15, 2011, Maxzone pleaded guilty and was sentenced to pay a $43 million criminal fine.
On Nov. 29, 2011, a federal grand jury returned a superseding indictment charging Eagle Eyes Traffic Industrial Co. Ltd. and its U.S. subsidiary E-Lite Automotive Inc., as well as Eagle Eyes’s two highest-ranking officers, chairman Yu-Chu Lin, aka David Lin, and vice chairman Homy Hong-Ming Hsu. Trial is set for June 18, 2012, in U.S. District Court in San Francisco.
This case is part of an investigation being conducted by the Department of Justice Antitrust Division’s San Francisco Field Office and the FBI in San Francisco. Anyone with information concerning illegal or anticompetitive conduct in the aftermarket auto lights 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.
23 February 2012
Wife of Former Army Major Sentenced to 72 Months in Prison for Role in Bribery and Money Laundering Scheme Related to Dod ContractsRead the Press Release
WASHINGTON – Eurica Pressley, 39, was sentenced today in Birmingham, Ala., to 72 months in prison for her 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 Justice Department’s Criminal Division.
U.S. District Court Judge Virginia Emerson Hopkins for the Northern District of Alabama also ordered Pressley to serve three years of supervised release following the prison term and to forfeit $21 million as well as real estate and several automobiles, jointly with her husband, Eddie Pressley. On Jan. 5, 2012, Eddie Pressley, was sentenced to 144 months in prison. He also was ordered to serve three years of supervised release.
“Eurica Pressley helped her husband and others facilitate a wide-ranging bribery and money laundering scheme by hiding ill-gotten gains and creating phony paperwork to help conceal the conspirators’ crimes,” said Assistant Attorney General Breuer. “Through the determined efforts of our agents and prosecutors, 17 individuals have now been brought to justice for their role in this multi-million dollar bribery scheme.”
“While our military was working to set up government contracts to support U.S. efforts in Iraq, Eurica Pressley and her husband set up shell companies to hide illegal proceeds of a scheme that defrauded the U.S. government,” said James McJunkin, Assistant Director of the FBI’s Washington Field Office. “Today’s sentencing demonstrates that those who commit fraud, no matter where it occurs, will be held accountable for their actions.”
“The American public places special trust and confidence in our service members and those who provide them with vital supplies to carry out their mission,” said Special Agent in Charge Robert E. Craig for the Defense Criminal Investigative Service (DCIS), Mid-Atlantic Field Office. “It is an affront to our hard working military members, civilians and contractors when a member of this department and his associates allow personal gain to criminally subvert the best interests of our troops. DCIS, working with our law enforcement partners, will continue to aggressively seek out such criminal behavior and bring those responsible to justice.”
“This sentencing demonstrates our firm commitment to hold accountable those who commit fraud against our government,” said Major General David E. Quantock, Commanding General of the U.S. Army Criminal Investigation Command (CID). “Special agents from our Major Procurement Fraud Unit, along with those from other federal law enforcement agencies, are unwavering in their commitment to seek out and hold responsible all those who attempt to defraud the U.S. Army and the American taxpayer. During the last 10 years alone, Army CID special agents have been instrumental in recovering and returning $2.1 billion to the U.S. Treasury.”
“Eurica Pressley’s sentencing underscores once again that those who engage in bribery and money laundering involving Iraq reconstruction funds will face severe consequences,” said Stuart W. Bowen Jr., Special Inspector General for Iraq Reconstruction (SIGIR). “SIGIR and its investigative partners continue to pursue about 90 open cases involving allegations similar to those adjudicated in this case.”
The Pressleys were found guilty on March 1, 2011, of one count of bribery, one count of conspiracy to commit bribery, eight counts of honest services fraud, one count of money laundering conspiracy and 11 counts of engaging in monetary transactions with criminal proceeds.
The case against 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 the Pressleys, have pleaded guilty or have been found guilty at trial for their roles in the scheme.
Evidence presented at trial demonstrated that Eddie Pressley took various contracting actions to benefit certain contractors who paid him bribes, including Terry Hall. Pressley served as a U.S. Army contracting official at Camp Arifjan between 2004 and 2005. 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. In February 2005, Eddie Pressley arranged for Hall to obtain a blanket purchase agreement (BPA) – 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 goods and services to DoD and its components in Kuwait and elsewhere.
According to Hall’s testimony and other evidence presented at trial, 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.
Hall’s testimony and other evidence at trial showed that soon after the $50,000 bribe was paid, Pressley and John 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 took various official acts to benefit Hall, including, among other things, issuing calls for bottled water and fencing, arranging for Hall to receive a fence contract and modifying Hall’s BPA 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. On March 9, 2005, he sent his wife an e-mail in which he told her, among other things, “You will be getting some paperwork with your maiden name on it”; “I need you to sign it and mail to whatevery (sic) address on it”; “I am doing some consulting”; and “Of course I am not going to turn down any money, but I can’t have anyone paying me in my name because I am in the military so I had them put everything in your maiden name.”
According to evidence presented at trial, Eurica Pressley traveled to Dubai in May 2005 and to the Cayman Islands in June 2005 to open bank accounts to receive the bribe money. She also took control of the U.S.-based account in the name of EGP Business Solutions Inc. A law enforcement agent testified at the trial about various false and misleading statements Eurica Pressley made to him during a voluntary interview at her home, including her denial that she had any foreign bank accounts. In addition, the evidence presented at trial demonstrated that Eddie and Eurica Pressley, Hall and others 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.”
Bank statements and wire transfer reports demonstrated that, in total, the Pressleys received approximately $2.9 million in bribe payments, 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 Pressleys used the money to purchase real estate, expensive automobiles and home decorating services, among other things.
Former U.S. Army Major James Momon also testified at trial that Pressley and Cockerham recruited him to join the bribe scheme and that he took various official acts to receive bribes from some of the same contractors who paid Pressley and Cockerham, including Hall. Additionally, he testified that Pressley told him that if they got caught they would spend “six years in jail” and that Cockerham and Pressley warned him to be careful.
Hall is scheduled to be sentenced on March 20, 2012.
On Aug. 13, 2009, Momon pleaded guilty to receiving approximately $1.6 million in bribes and agreed to pay $5.7 million in restitution. 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. Momon’s sentencing has not yet been scheduled.
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.
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 Army CID, DCIS, U.S. Immigration and Customs Enforcement, FBI, Internal Revenue Service - Criminal Investigation, SIGIR 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.
Two Financial Investors Plead Guilty to Bid Rigging at Municipal Tax Lien Auctions in New JerseyRead the Press Release
Two financial investors who purchased municipal tax liens at auctions in New Jersey pleaded guilty today for conspiring to rig bids for the sale of tax liens auctioned by municipalities throughout the state, the Department of Justice announced.
A felony charge was filed today in U.S. District Court for the District of New Jersey in Newark, N.J., against Robert W. Stein of Huntington Valley, Pa., and David M. Farber of Cherry Hill, N.J. Under the plea agreements, which are subject to court approval, Stein and Farber have both agreed to cooperate with the department’s ongoing investigation.
According to the felony charge against Stein, from as early as 1998 until approximately spring 2009, Stein participated in a conspiracy to rig bids at auctions for the sale of municipal tax liens in New Jersey by agreeing to allocate among certain bidders on which liens to bid. According to the felony charge against Farber, from as early as the beginning of 2005 through approximately February 2009, Farber also participated in a conspiracy to rig bids at auctions for the sale of municipal tax liens in New Jersey. The department said that both Stein and Farber proceeded to submit bids in accordance with their agreements and purchased tax liens at collusive and non-competitive interest rates.
“Today’s guilty pleas demonstrate that the Antitrust Division will not tolerate those who manipulate the competitive process in order to harm home and property owners,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.
The department said that the primary purpose of the conspiracies was to suppress and restrain competition to obtain selected municipal tax liens offered at public auctions at non-competitive interest rates. When the owner of real property fails to pay taxes on that property, the municipality in which the property is located may attach a lien for the amount of the unpaid taxes. If the taxes remain unpaid after a waiting period, the lien may be sold at auction. State law requires that investors bid on the interest rate delinquent homeowners will pay upon redemption. By law, the bid opens at 18 percent interest and, through a competitive bidding process, can be driven down to zero percent. If a lien remains unpaid after a certain period of time, the investor who purchased the lien may begin foreclosure proceedings against the property to which the lien is attached.
According to the court documents, Stein conspired with others not to bid against one another at municipal tax lien auctions in New Jersey. Farber also agreed not bid against certain bidders at tax lien auctions. Because the conspiracies permitted the conspirators to purchase tax liens with limited competition, each conspirator was able to obtain liens which earned a higher interest rate. Property owners were therefore made to pay higher interest on their tax debts than they would have paid had their liens been purchased in open and honest competition.
Each violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. The maximum fine for a Sherman Act violation may be increased to twice the gain derived from the crime or twice the loss suffered by the victim if either amount is greater than the $1 million statutory maximum.
Today’s pleas are the result of an ongoing investigation into bid rigging or fraud related to municipal tax lien auctions. On Aug. 24, 2011, Isadore H. May, Richard J. Pisciotta Jr. and William A. Collins each pleaded guilty to one count of bid rigging in connection with their participation in a conspiracy to allocate liens at New Jersey municipal tax lien auctions.
Today’s charges are part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force (FFETF). President Obama established the interagency FFETF to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit www.StopFraud.gov.
The ongoing investigation is being conducted by the Antitrust Division’s New York Field Office and the FBI’s Atlantic City, N.J., office. Anyone with information concerning bid rigging or fraud related to municipal tax lien auctions should contact the Antitrust Division’s New York Field Office at 212-335-8000, visit www.justice.gov/atr/contact/newcase.htm or contact the Atlantic City Resident Agency of the FBI at 609-677-6400.
Pensacola, Florida, Man Indicted for Arson at American Family Planning ClinicRead the Press Release
WASHINGTON– Bobby Joe Rogers, 41, of Pensacola, Fla., has been indicted by a federal grand jury in connection with the fire that destroyed the American Family Planning Clinic in Pensacola on Jan. 1, 2012, the Justice Department announced today. The two-count indictment charges Rogers with arson and damaging a reproductive health facility.
Rogers remains in federal custody following his arrest on Jan. 5, 2012. If convicted at trial, the defendant faces a sentence of five to twenty years in prison for the arson count and up to one year in prison for damaging a reproductive health clinic.
An indictment is merely an allegation by a grand jury that a defendant has committed a violation of federal criminal law and is not evidence of guilt. All defendants are presumed innocent and are entitled to a fair trial, during which it will be the government's burden to prove guilt beyond a reasonable doubt in a court of law.
The indictment is a result of the investigative work of the Bureau of Alcohol, Tobacco and Firearms, the Pensacola Police Department, the Florida State Fire Marshal’s Office and the FBI. The case is being prosecuted by Assistant U.S. Attorney Edwin Knight and Chiraag Bains, Trial Attorney with the Department of Justice’s Civil Rights Division.
Justice Department Settles with Arizona Department of Corrections Resolving Sexual Harassment AllegationsRead the Press Release
WASHINGTON - The Justice Department announced today that it has entered into a consent decree with the Arizona Department of Corrections (ADC) that, if approved by the U.S. District Court for the District of Arizona, will resolve allegations that the ADC discriminated against a female employee, based upon her sex, in violation of Title VII of the Civil Rights Act of 1964, as amended.
The department’s complaint, filed today along with the consent decree, alleges that Susan Peterson, a female correctional officer at the Arizona State Prison Complex in Tucson, Ariz., was regularly subjected to verbal and physical sexual harassment by several of her male supervisors and coworkers from early 2005 through November 2008. That conduct included unwelcome grabbing, touching, hugging and kissing, as well as exposure to sexually explicit comments and pornography. The complaint alleges that despite Peterson’s timely and repeated complaints to ADC management about the harassment over a nearly three year period, ADC did not investigate her complaints or take any corrective action until November 2008. The department’s complaint was based on a charge of discrimination filed by Peterson with the Equal Employment Opportunity Commission (EEOC) that was forwarded to the department by the EEOC’s Phoenix District Office.
Under the terms of the consent decree, which must still be approved by the federal district court, ADC is required to review and revise its sexual harassment policies to protect its employees from sexual harassment and must provide training on equal employment opportunity law and its sexual harassment policies to all employees at its Tucson complex. The consent decree also requires the ADC to pay Peterson a monetary award of $182,500.
“All Americans are guaranteed the right to work in an environment free from unlawful harassment and retaliation,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The department is pleased that we were able to work cooperatively with the Arizona Department of Corrections to resolve this matter without the need for contested litigation.”
The enforcement of Title VII is a priority of the Justice Department’s Civil Rights Division. Additional information about the Civil Rights Division is available at www.justice.gov/crt/ and www.justice.gov/crt/emp/.
Former Chairman and CEO of Kellogg, Brown & Root Inc. Sentenced to 30 Months in Prison for Foreign Bribery and Kickback SchemesRead the Press Release
WASHINGTON – Albert “Jack” Stanley, a former chairman and chief executive officer of Kellogg, Brown & Root Inc. (KBR), was sentenced today to 30 months in prison for conspiring to violate the Foreign Corrupt Practices Act (FCPA) by participating in a decade-long scheme to bribe Nigerian government officials to obtain engineering, procurement and construction (EPC) contracts and for conspiring to commit mail and wire fraud as part of a separate kickback scheme, the Justice Department’s Criminal Division today announced.
U.S. District Judge Keith P. Ellison for the Southern District of Texas also ordered Stanley to serve three years of supervised release following the prison term and to pay $10.8 million in restitution to KBR, the victim of the separate kickback scheme. Stanley, 69, pleaded guilty on Sept. 3, 2008, to a two-count criminal information charging him with one count of conspiracy to violate the FCPA and one count of conspiracy to commit mail and wire fraud.
Two of Stanley’s co-conspirators also were sentenced by Judge Ellison. Today, Jeffrey Tesler, 63, a United Kingdom citizen and licensed solicitor, was sentenced to 21 months in prison, followed by two years of supervised release. Tesler also was ordered to pay a $25,000 fine and previously was ordered to forfeit $148,964,568. Yesterday, Wojciech J. Chodan, 74, a United Kingdom citizen and former salesman at KBR’s U.K. subsidiary, was sentenced to one year of probation and ordered to pay a $20,000 fine. Chodan previously was ordered to forfeit $726,885.
Tesler and Chodan were indicted on Feb. 17, 2009, and subsequently extradited to the United States from the United Kingdom. On Dec. 6, 2011, Chodan pleaded guilty to count one of the indictment charging him with conspiring to violate the FCPA. On March 11, 2011, Tesler pleaded guilty to one count of conspiracy to violate the FCPA and one count of violating the FCPA.
All three defendants fully cooperated with the department’s investigation, which resulted in more than $1.7 billion in penalties, disgorgement and forfeitures. The defendants’ substantial assistance in the investigation and prosecution of other defendants was reflected in the sentences the court imposed.
“Today’s prison sentences for Mr. Stanley and Mr. Tesler mark another important step in our prosecution of those responsible for a massive bribery scheme involving engineering, procurement and construction contracts in Nigeria,” said Mythili Raman, Principal Deputy Assistant Attorney General for the Criminal Division. “These sentences reflect not only the defendants’ illegal acts, but also their substantial cooperation with the government. As a result of this investigation, three individuals have been convicted of FCPA-related crimes, and five companies in four countries have paid substantial penalties and undertaken significant efforts to enhance their compliance programs. This case shows the importance the department places on putting an end to foreign bribery.”
According to court documents, KBR was a member of the TSKJ joint venture (named for the first letters of the names of the companies involved), along with Technip S.A., Snamprogetti Netherlands B.V., and JGC Corporation. Between 1995 and 2004, TSKJ was awarded four EPC contracts, valued at more than $6 billion, by Nigeria Liquefied Natural Gas (LNG) Ltd. to build the LNG facilities on Bonny Island. The government-owned Nigerian National Petroleum Corporation was the largest shareholder of NLNG, owning 49 percent of the company.
From approximately 1994 through June 2004, the joint venture companies, Stanley, Tesler, Chodan and others agreed to pay bribes to a wide range of Nigerian government officials in order to obtain and retain the EPC contracts. To pay the bribes, the joint venture hired two agents – Tesler and Marubeni Corporation, a Japanese trading company headquartered in Tokyo. The joint venture hired Tesler as a consultant to pay bribes to high-level Nigerian government officials, including top-level executive branch officials, and hired Marubeni to pay bribes to lower-level Nigerian government officials. At crucial junctures preceding the award of the EPC contracts, Stanley and other co-conspirators met with successive holders of a top-level office in the executive branch of the Nigerian government to ask the office holders to designate a representative with whom TSKJ should negotiate bribes to Nigerian government officials. TSKJ paid approximately $132 million to a Gibraltar corporation controlled by Tesler and $51 million to Marubeni during the course of the bribery scheme for use, in part, to pay bribes to Nigerian government officials.
In a related criminal case, KBR’s successor company, Kellogg Brown & Root LLC, pleaded guilty in February 2009 to FCPA-related charges for its participation in the scheme to bribe Nigerian government officials. Kellogg Brown & Root LLC was ordered to pay a $402 million fine and to retain an independent compliance monitor for a three-year period to review the design and implementation of its compliance program.
In another related criminal case, the department filed a deferred prosecution agreement and criminal information against Technip in June 2010. According to that agreement, Technip agreed to pay a $240 million criminal penalty and to retain an independent compliance monitor for two years. In July 2010, the department filed a deferred prosecution agreement and criminal information against Snamprogetti, which also agreed to pay a $240 million criminal penalty. In April 2011, the department filed a deferred prosecution agreement and criminal information against JGC, in which JGC agreed to pay a $218.8 million criminal penalty and to retain an independent compliance consultant for two years. In January 2012, the department filed a deferred prosecution agreement and criminal information against Marubeni, in which Marubeni agreed to pay a $54.6 million criminal penalty and to retain a corporate compliance consultant for two years
The criminal cases were prosecuted by Assistant Chief William J. Stuckwisch and Deputy Chief Patrick F. Stokes of the Criminal Division’s Fraud Section, with investigative assistance from the FBI-Houston Division. The Criminal Division’s Office of International Affairs and the SEC’s Division of Enforcement provided substantial assistance. Significant assistance was provided by authorities in France, Italy, Switzerland and the United Kingdom. Investigative assistance with the prosecution of Stanley was also provided by the Internal Revenue Service’s Criminal Investigations Division in Houston.
Federal Officials Announce Nationwide Crackdown on Black Market Rhino TradeRead the Press Release
WASHINGTON – Seven people have been arrested on charges of trafficking in endangered black rhinoceros horn over the past week in Los Angeles, Newark, N.J., and New York, the Department of Justice and Department of the Interior today announced. Special agents of the U.S. Fish and Wildlife Service (FWS) and U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI) made the arrests and have executed search warrants in five different states as part of “Operation Crash,” a multi-agency effort to investigate and prosecute those involved in the black market trade of endangered rhinoceros horn.
In Los Angeles, Jin Zhao Feng, a Chinese national who allegedly oversaw the shipment of at least dozens of rhino horns from the United States to China, was arrested last night. Last weekend, members of an alleged U.S.-based trafficking ring that supplied rhino horns to Feng were arrested after being charged with conspiracy and violations of the Lacey Act and the Endangered Species Act for purchasing rhino horns from various suppliers in the U.S. Charges were filed against Jimmy Kha, the owner of Win Lee Corporation; his son Felix Kha; and Mai Nguyen, the owner of a nail salon where packages containing rhinoceros horns were being mailed. One of the alleged suppliers, Wade Steffen, was arrested in Hico, Texas, and charged in Los Angeles. According to a criminal complaint filed in U.S. District Court in Los Angeles, the Khas began receiving packages from Steffen and another supplier in 2010. Seventeen packages were opened under federal search warrants and 37 rhinoceros horns were found.
A search of Steffen’s luggage at the Long Beach Airport in California on Feb. 9, 2012, turned up $337,000 in cash. In additional searches conducted by FWS and ICE, agents found rhinoceros horns, cash, bars of gold, diamonds and Rolex watches. Approximately $1 million in cash was seized and another $1 million seized in gold ingots.
“The rhino is an animal of prehistoric origin that is facing possible extinction because of an illegal trade for its horns on the black market that is driven by greed,” said Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division of the Department of Justice. “The rhino is protected under both U.S. and international law, and we are taking aggressive action to protect the rhino by investigating and vigorously prosecuting those who are engaged in this brutal trade.”
In New Jersey, Amir Even-Ezra was arrested Saturday, Feb. 18, 2012, on a felony trafficking charge in violation of the Lacey Act after purchasing rhino horns from an individual from New York at a service station off of the New Jersey Turnpike. Even-Ezra allegedly brought a scale for weighing the horns and envelopes of cash to the meeting, which was brokered by an individual outside of the United States.
In U.S. District Court in Manhattan, antiques expert David Hausman was also charged with illegally trafficking rhinoceros horns and with creating false documents to conceal the illegal nature of the transaction, both in violation of the Lacey Act. Hausman allegedly purchased a black rhinoceros mount (a taxidermied head of a rhinoceros) from an undercover officer in Illinois and was later observed sawing off the horns in a motel parking lot. Rhino horns were found in a search conducted on Saturday, Feb. 18, 2012, following his arrest.
“Rhino horn traffickers continue to fuel the illegal demand for horn, demand that has led to hundreds of rhino deaths and put the white and black rhino in danger of extinction in the wild,” said U.S. Fish and Wildlife Service Director Dan Ashe. “These arrests have dealt a serious blow to rhino horn smuggling, but represent only the beginning of a significant crackdown on this illegal trade.”
“The illegal trade in endangered wildlife robs the world of these magnificent creatures in their natural habitat,” said ICE Director John Morton. “This case is a reflection of our commitment to ensuring that our children and grandchildren are not deprived by criminals whose only goal is to make a quick buck at the expense of these innocent creatures.”
Rhinoceros are an herbivore species of prehistoric origin and one of the largest remaining mega-fauna on earth. All species of rhinoceros are protected under U.S. and international law. All black rhinoceros species are endangered. Rhino horns are composed of keratin, the same type of protein that makes up hair and fingernails. Rhinoceros horn is a highly valued and sought-after commodity despite the fact that international trade has been largely banned since 1976. The demand for rhinoceros horn, which is used by some cultures for ornamental carvings, good luck charms or alleged medicinal purposes, has resulted in a thriving black market – a market that has escalated in recent years in both volume and per-unit profit.
If convicted, maximum penalties under these charges are up to five years in prison and a $250,000 fine for conspiracy; five years in prison and a $250,000 fine for Lacey Act violations; and up to one year in prison and a $100,000 fine for violations of the Endangered Species Act.
Operation Crash (a “crash” is the term for a herd of rhinoceros) is a continuing investigation by the Department of Justice and the Department of the Interior FWS, with assistance from other federal and local law enforcement agencies including ICE and the Internal Revenue Service. The investigation is being led by the Special Investigations Unit of the FWS Office of Law Enforcement and involves a task force of agents focused on rhino trafficking.
A criminal complaint is a charge based on probable cause allegations. A defendant is presumed innocent unless and until convicted.
The criminal prosecution is being handled by the U.S. Attorney’s Office for the Central District of California, the U.S. Attorney’s Office for the District of New Jersey, the U.S. Attorney’s Office for the Southern District of New York and the Environmental Crimes Section of the U.S. Department of Justice’s Environment and Natural Resources Division, with assistance from the U.S. Attorney’s Office for the Western District of Missouri.
22 February 2012
Total Companies to Pay U.S. $15 Million to Resolve Allegations of Royalty Underpayments from Federal and Indian LandsRead the Press Release
Total Fina S.A., Total Minatome Corporation, Total Exploration Production USA Inc., Fina Oil and Chemical Company, Elf Exploration Inc., Total E&P USA I nc. and their affiliates have agreed to pay the United States $15 million to resolve claims that the companies violated the False Claims Act by knowingly underpaying royalties owed on natural gas produced from federal and Indian leases, the Justice Department announced today.
Congress has authorized federal and Indian lands to be leased for the production of natural gas in exchange for the payment of royalties on the value of the gas that is produced. Each month, companies are required to report and pay to the U.S. Department of the Interior the amount of royalty that is due. This settlement resolves claims by the United States under the False Claims Act that the Total defendants improperly deducted from royalty values the cost of boosting gas up to pipeline pressures, improperly reported processed gas as unprocessed gas to reduce royalty payments, and engaged in a variety of other under-reporting of royalties that had been the subject of a series of outstanding administrative actions.
“ When companies are permitted to remove natural gas and other non-renewable resources from public lands, we must require them to keep their end of the bargain and pay their fair share of royalties,” said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. “Through this case and others like it, we are demonstrating our commitment to protect natural resources and support important federal programs from which we all benefit.”
Total, the fifth largest publicly-traded integrated international oil and gas company in the world, has operations in more than 130 countries, and engages in all aspects of the petroleum industry, including oil and gas exploration, development and production, refining, marketing, trading and shipping. The Total and Fina corporate families merged in 1999, and became known as Total Fina. In 2000, the company acquired Elf Aquitaine.
“The Department of the Interior and ONRR remain committed to ensuring that energy companies accurately report production and pay the required royalties,” said Greg Gould, Interior’s Acting Deputy Assistant Secretary for Natural Resources Revenue. “We will continue to pursue every dollar due to taxpayers, Indian landowners, and the Federal Government from extracting these precious natural resources from Federal and American Indian lands.”
Today’s settlement arises from a lawsuit filed by Harrold Wright under the False Claims Act, and from a series of administrative actions separately initiated and pursued by the Department of the Interior’s Office of Natural Resources Revenue (and its predecessor, the Minerals Management Service). Under the qui tam, or whistleblower, provisions of the False Claims Act, private citizens may file actions on behalf of the United States and share in any recovery. Because Mr. Wright is deceased, his heirs will receive $23,000 plus interest as their share of the settlement. This represents a 25 percent share of the $92,000 in the settlement that is allocated to claims pursued by Mr. Wright. The United States will intervene against the Total defendants for the purpose of completing this settlement. The Department of Justice previously intervened against several other defendants in the Wright lawsuit. Settlements in the case to date exceed $280 million.
The investigation and settlement of this matter was jointly handled by the Justice Department’s Civil Division, the U.S. Attorney for the Eastern District of Texas, and the Department of the Interior’s Office of Natural Resource Revenue, Office of the Solicitor and Office of the Inspector General.
The case is U.S. ex rel. Wright v. Chevron USA, Inc. et al., 5:03-CV-264 (E.D. Tex.). The allegations contained in the complaint against the Total companies are merely accusations and do not constitute a determination of liability.
Tennessee Couple Plead Guilty to Tax CrimesRead the Press Release
Angela Palmer and her husband, Warren Palmer, both of Knoxville, Tenn., each pleaded guilty today to two counts of willful failure to file tax returns, the Justice Department and Internal Revenue Service (IRS) announced.
According to documents filed as part of their guilty pleas, during tax year 2005, Angela Palmer earned income as a mortgage broker and in tax years 2005 and 2006, she also earned income teaching music lessons. Warren Palmer earned income, during tax years 2004 and 2006, doing construction and other jobs. Additionally, during the years in question, the Palmers maintained funds in an offshore bank account in the name of The Liahona LLC, an entity of which they were the sole members and managers. Due to the income they received during the prosecution years, the Palmers were required to file tax returns, however, they failed to do so.
In accordance with their plea agreements, Angela Palmer has agreed to pay restitution in the amount of $58,646.85, and Warren Palmer has agreed to pay restitution in the amount of $70,887.45, to the IRS.
Sentencing is scheduled for June 14, 2012. The Palmers each face a maximum potential sentence of up to one year in jail and a maximum fine of $100,000 for each of the counts to which they pleaded guilty.
The cases were investigated by the IRS - Criminal Investigation and prosecuted by Trial Attorney Tracy Gostyla of the Justice Department’s Tax Division.
More information about the Tax Division and its enforcement efforts is available at http://www.usdoj.gov/tax/.
South Florida Corrections Officer Sentenced on Federal Civil Rights ChargeRead the Press Release
MIAMI – A corrections officer was sentenced to prison today in federal court for a civil rights charge stemming from prisoner abuse that took place at the South Florida Reception Center (SFRC), a state prison in Doral, Fla., the Justice Department announced. Florida Department of Corrections (FDOC) officer Guruba Griffin, 32, was sentenced by District Judge Cecilia Altonaga to serve one year in prison, followed by one year of supervised release.
On Dec. 13, 2011, Griffin entered a guilty plea to one count of deprivation of rights under color of law. Griffin’s plea followed a trial in October 2011 where a jury was unable to reach a verdict as to his involvement in a civil rights conspiracy against inmates at SFRC. Griffin’s co-defendant, Scott Butler, was acquitted by the same jury, while a second jury found Sergeant Alexander McQueen guilty of conspiracy against civil rights and obstruction of justice and convicted Officer Steven Dawkins for obstruction of justice. McQueen and Dawkins were sentenced to twelve months in prison and one month in prison, respectively, in January of this year.
According to evidence presented at trial, on Feb. 25, 2009, SFRC corrections officers physically abused inmates by choking, punching and striking them with wooden broom handles. The officers further forced the inmates to fight one another. Additionally, McQueen and Dawkins falsified reports relating to these incidents.
“Abuse of power by corrections officers who violate the civil rights of those in their custody will not be tolerated,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Justice Department will continue to vigorously prosecute those who cross the line to engage in acts of criminal violence.”“When individuals sworn to uphold the law instead abuse their power and infringe upon the civil rights of others, the public’s confidence in our system of justice suffers,” said Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida. “The U.S. Attorney’s Office remains committed to protecting everyone’s civil rights and promoting confidence in our system.”
“Officer Guruba Griffin violated the civil rights of prisoners under his control at a Florida Department of Corrections facility,” said Special Agent in Charge John V. Gillies of FBI Miami Division. “His abusive treatment of these prisoners damaged the public’s trust in law enforcement. The message to corrupt corrections officers is clear; engage in criminal misconduct and the FBI and our partners will bring you to justice.”
This case was investigated by the FBI and the Inspector General’s Office, Florida Department of Corrections, and was prosecuted by Assistant U.S. Attorney Susan Rhee Osborne of the U.S. Attorney’s Office for the Southern District of Florida and Senior Litigation Counsel Gerard Hogan and Trial Attorney Henry Leventis of the Civil Rights Division.
Assistant Administrator of Houston Hospital Pleads Guilty to Participating in $116 Million Medicare Fraud SchemeRead the Press Release
WASHINGTON – An assistant administrator of a Houston hospital pleaded guilty today for his role in a $116 million Medicare fraud scheme involving false claims for mental health treatment, announced the Department of Justice, the FBI and the Department of Health and Human Services (HHS).
Mohammad Khan, 62, of Houston, pleaded guilty before U.S. District Judge Sim Lake in the Southern District of Texas to one count of conspiracy to commit health care fraud, one count of conspiracy to defraud the United States and to pay and receive illegal health care kickbacks, and five counts of paying or offering to pay health care kickbacks. Khan was arrested on Feb. 8, 2012. In his plea, Khan admitted that, from January 2008 until the time of his arrest, he caused the submission of $116 million worth of fraudulent claims to Medicare for partial hospitalization program (PHP) services purportedly provided by the hospital. A PHP is a form of intensive outpatient treatment for severe mental illness.
“As an assistant administrator at a Houston hospital, Mr. Kahn participated in a $116 million fraud against the government,” said Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division. “For years, he operated a scheme to bill Medicare for partial hospitalization services that were medically unnecessary or never provided. With our Medicare Fraud Strike Force teams in nine cities, we are holding accountable people across the country who have calculated – incorrectly – that they can get away with trying to bilk the Medicare program.”
According to court documents, Khan was the assistant administrator of Riverside General Hospital and controlled the day-to-day operations of Riverside’s PHPs. Riverside maintained a valid Medicare provider number that was used to submit claims to Medicare for PHP services that were not medically necessary, and in some cases, never provided. Many of the beneficiaries for whom Riverside submitted claims to Medicare for PHP services did not have severe mental illness and did not need the treatment provided in a PHP. In his plea, Khan admitted that he paid and caused the payment of kickbacks to patient recruiters and owners of assisted living facilities and group care homes in exchange for the recruiters and owners sending Medicare beneficiaries to Riverside’s PHPs. Khan also paid Medicare beneficiaries in the form of cigarettes, food and coupons redeemable for items available at Riverside’s “country stores,” in exchange for those beneficiaries attending Riverside’s PHPs.
In his plea, Khan admitted that he and his co-conspirators submitted approximately $116 million in claims to Medicare for PHP services purportedly provided by the hospital to the recruited beneficiaries, when in fact, the PHP services were medically unnecessary or never provided.
Khan is scheduled to be sentenced on May 25, 2012. Khan faces a maximum sentence of 10 years in prison for the conspiracy to commit health care fraud count, five years in prison for the conspiracy to defraud the United States count and five years in prison for each health care kickbacks count.
Today’s guilty plea was announced by Assistant Attorney General Breuer of the Justice Department’s Criminal Division; U.S. Attorney Kenneth Magidson of the Southern District of Texas; Special Agent in Charge Stephen L. Morris of the FBI’s Houston Field Office; Special Agent in Charge Mike Fields of the Dallas Regional Office of HHS’s Office of the Inspector General (HHS-OIG); the Texas Attorney General’s Medicaid Fraud Control Unit (MFCU); Special Agent in Charge Lucy R. Cruz of the IRS Houston Field Office; Joseph J. Del Favero, Special Agent in Charge of the Chicago Field Office of the Railroad Retirement Board, Office of Inspector General (RRB-OIG); and Scott Rezendes, Special Agent in Charge of Field Operations of the Office of Personnel Management, Office of Inspector General (OPM-OIG).
The case is being prosecuted by Trial Attorney Laura M.K. Cordova, Attorney Allan Medina, Assistant Chief William Pericak and Deputy Chief Sam S. Sheldon of the Criminal Division’s Fraud Section. The case was investigated by the FBI, HHS-OIG, MFCU, IRS, RRB-OIG and OPM-OIG and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Texas.
Since their inception in March 2007, Medicare Fraud Strike Force operations in nine locations have charged more than 1,190 defendants who collectively have falsely billed the Medicare program for more than $3.2 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.
21 February 2012
Fort Lauderdale, Florida-Area Halfway House Operator Sentenced to 33 Months in Prison for Participating in Fraud and Kickback SchemeRead the Press Release
WASHINGTON – The manager and operator of a Fort Lauderdale, Fla.-area halfway house was sentenced today to 33 months in prison for his role in a Medicare fraud kickback scheme that funneled patients to a fraudulent mental health provider, American Therapeutic Corporation (ATC), announced the Department of Justice, FBI and Department of Health and Human Services (HHS).
Butler Moultrie, 46, was sentenced by U.S. District Judge Donald M. Middlebrooks in the Southern District of Florida. In addition to his prison term, Moultrie was sentenced to three years of supervised release and was ordered to pay $801,000 in restitution.
Moultrie pleaded guilty in December 2011 to one count of conspiracy to commit health care fraud.
According to court documents, most of the residents at Moultrie’s halfway house were recovering from drug and/or alcohol addictions. Moultrie agreed to refer Medicare beneficiaries who resided at his halfway house to ATC to purportedly receive intensive mental health services called partial hospitalization program (PHP) treatment in exchange for illegal health care kickbacks. Moultrie admitted that he knew the kickbacks were illegal and that ATC fraudulently billed the Medicare program for the PHP services. Moultrie also knew that no doctor had prescribed PHP treatment for his patient referrals and that his residents required drug and/or alcohol addiction treatment rather than mental health services.
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 its related company, the American Sleep Institute (ASI). In some cases, the patients received a portion of those kickbacks. Throughout the course of the ATC conspiracy, millions of dollars in kickbacks were paid in exchange for Medicare beneficiaries who did not qualify for PHP services. The ineligible beneficiaries attended treatment programs that were not legitimate so that ATC and ASI could bill Medicare more than $200 million in medically unnecessary services.
According to the plea agreement, Moultrie’s participation in the fraud resulted in approximately $1.9 million in fraudulent billing to the Medicare program.
ATC, its management company Medlink Professional Management Group Inc., and various owners, managers, doctors, therapists, patient brokers and marketers of ATC, 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 ten 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. In addition to Moultrie, 11 other assisted living facility and halfway house owners and operators and patient recruiters have been convicted for their roles in the fraud scheme. Eight of these defendants, including Moultrie, have been sentenced to prison.
Today’s sentencing 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 case is being prosecuted by Trial Attorneys Steven Kim and Jennifer L. Saulino of the Criminal Division’s Fraud Section. The case was investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.
Since 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 $3.2 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.
Florida Physician Pleads Guilty to Conspiracy to Commit Mail and Wire FraudRead the Press Release
Michael Schoenwald of Hollywood, Fla., has pleaded guilty before Judge Herman Weber in Cincinnati to one count of conspiracy to commit mail and wire fraud in connection with a drug diversion scheme in which he was involved, the Justice Department announced.
The government information alleged that Dr. Schoenwald purchased prescription Lupron, an injectable drug used to treat prostate cancer, at discount rates due to his status as a health care provider. Governing law prohibited Schoenwald from re-selling the drugs, and his agreement with the manufacturer provided that he would not do so.
Nevertheless, Schoenwald sold the Lupron to Gregory Pfizenmayer, who, in turn, sold the drugs to legitimate wholesalers in Ohio and elsewhere. Pfizenmayer sold the drugs accompanied by documents, required by law, that contained false information about the source of the drugs. A co-conspirator arranged the transactions between Schoenwald and Pfizenmayer. Pfizenmayer pleaded guilty to one charge of conspiracy to commit mail and wire fraud in February 2011 and awaits sentencing.
Schoenwald received compensation from Pfizenmayer for the prescription drugs through wire transfers, and in turn paid his co-conspirator a share of the profits. All told, Schoenwald, Pfizenm ayer and their co-conspirator sold over $1 million dollars worth of prescription drugs through this scheme.
“Diversion of prescription drugs casts doubt on the safety and quality of the medicines people rely on every day,” said Tony West, Assistant Attorney General for the Justice Department’s Civil Division. “As this criminal prosecution demonstrates, we are committed to fighting these diversion schemes so that our prescription drugs in the United States remain the safest in the world.”
The case is being prosecuted by Assistant U.S. Attorney Anne Porter of the Southern District of Ohio and Assistant Director Mark Josephs of the Justice Department’s Consumer Protection Branch. The investigation was conducted by the Food and Drug Administration, Office of Criminal Investigations and the U.S. Postal Inspection Service.
17 February 2012
Wilcox County, Georgia, Sheriff and Three Men Charged with Federal Civil Rights ViolationsRead the Press Release
WASHINGTON – The Justice Department announced today a 14-count indictment charging Wilcox County, Ga., Sheriff Stacy Bloodsworth; his son, Austin Bloodsworth; former Wilcox County Jailer Casey Owens; and former inmate Willie James Caruthers, for violating the rights of an inmate.
The indictment charges that the Sheriff, Austin Bloodsworth, and Caruthers assaulted two inmates, while they and Owens assaulted a third inmate inside of the Wilcox County Jail on July 23, 2009, therefore violating the inmates’ civil rights. As a result of the assaults, one inmate suffered a broken jaw and two inmates sustained bruises and scratches. The indictment also charges the defendants with conspiring to cover up the assaults. In addition, Sheriff Bloodsworth, Austin Bloodsworth and Caruthers were charged with lying to the FBI, and Caruthers and Owens were charged with obstructing justice by writing false reports. Sheriff Bloodsworth was charged with tampering with one of the victims and with two witnesses.
The civil rights charges carry a maximum penalty of 10 years for each count, and the conspiracy and false statements charges carry a maximum penalty of up to five years. Additionally, Sheriff Bloodsworth faces a maximum penalty of 20 years for each count of witness-tampering, and Caruthers and Owens face maximum penalties of 20 years for their falsification of reports.
This case was investigated by the FBI and is being prosecuted by Trial Attorney Christine M. Siscaretti of the Justice Department’s Civil Rights Division and Assistant U.S. Attorney Paul C. McCommon III of the U.S. Attorney’s Office for the Middle District of Georgia.
An indictment is a formal accusation of criminal conduct, not evidence of guilt. The defendants are presumed innocent unless and until proven guilty.
Virginia Man Accused of Attempting to <br /> Bomb U.S. Capitol in Suicide AttackRead the Press Release
WASHINGTON – A 29-year-old man residing in Alexandria, Va., was arrested today for allegedly attempting to detonate a bomb in a suicide attack on the U.S. Capitol Building as part of what he intended to be a terrorist operation.
The charges were announced by Neil MacBride, U.S. Attorney for the Eastern District of Virginia; Lisa Monaco, Assistant Attorney General for National Security; and James W. McJunkin, Assistant Director in Charge of the FBI Washington Field Office.
Amine El Khalifi, an immigrant from Morocco who is illegally present in the United States, was charged today by criminal complaint with attempting to use a weapon of mass destruction against property that is owned and used by the United States. He made his initial appearance today at 4:15 p.m. before Judge T. Rawles Jones Jr. If convicted, El Khalifi faces a maximum penalty of life in prison.
The arrest of El Khalifi was the culmination of an undercover operation during which he was closely monitored by the FBI Washington Field Office’s Joint Terrorism Task Force (JTTF). The explosives and firearm that he allegedly sought and attempted to use had been rendered inoperable by law enforcement and posed no threat to the public.
“The complaint filed today alleges that Amine El Khalifi sought to blow himself up in the U.S. Capitol Building,” said U.S. Attorney MacBride. “El Khalifi allegedly believed he was working with al-Qaeda and devised the plot, the targets and the methods on his own.”
“Today’s case underscores the continuing threat we face from homegrown violent extremists,” said Assistant Attorney General Monaco. “Thanks to a coordinated law enforcement effort, El Khalifi’s alleged plot was thwarted before anyone was harmed.”
“This individual allegedly followed a twisted, radical ideology that is not representative of the Muslim community in the United States,” said FBI Assistant Director in Charge McJunkin. “He became known to the JTTF because of his stated desire to carry out attacks in the U.S., specifically, the U.S. Capitol building. This arrest is the result of dedicated special agents, task force officers and intelligence analysts from the FBI and our partner law enforcement agencies that make up the JTTF.”
According to the criminal complaint affidavit, in January 2011, a confidential human source reported to the FBI that El Khalifi met with other individuals at a residence in Arlington, Va., on Jan. 11, 2011. During this meeting, one individual produced what appeared to be an AK-47, two revolvers and ammunition. El Khalifi allegedly expressed agreement with a statement by this individual that the “war on terrorism” was a “war on Muslims” and said that the group needed to be ready for war.
The affidavit alleges that El Khalifi sought to be associated with an armed extremist group, and on Dec 1, 2011, he was introduced by a man he knew as “Hussien” to an individual named “Yusuf,” who was, in reality, an undercover law enforcement officer. Throughout December 2011 and January 2012, El Khalifi allegedly proposed to carry out a bombing attack. His proposed targets included a building that contained U.S. military offices, as well as a synagogue, U.S. Army generals and a restaurant frequented by military officials.
During meetings with the undercover officer, El Khalifi allegedly handled an AK-47and indicated his desire to conduct an operation in which he would use a gun and kill people face-to-face. He also allegedly selected a restaurant in Washington, D.C., for a bombing attack; handled an explosive as an example of what could be used in the attack; conducted surveillance to determine the best place and time for the bombing and purchased materials as part of the planned operation.
On Jan. 7, 2012, “Hussien” informed El Khalifi that he was an al-Qaeda operative. El Khalifi allegedly discussed the possibility that his planned bombing of the restaurant would be followed by a second attack against a military installation to be conducted by others who El Khalifi believed to be associated with al-Qaeda. The affidavit alleges that El Khalifi understood that his attack on the restaurant would be part of an al-Qaeda operation that would include both his restaurant bombing and the attack against a military installation.
The affidavit alleges that on Jan. 15, 2012, El Khalifi stated that he had modified his plans for his attack. Rather than conduct an attack on a restaurant, he wanted to conduct a suicide attack at the U.S. Capitol Building. That same day at a quarry in West Virginia, as a demonstration of the effects of the proposed suicide bomb operation, El Khalifi dialed a cell phone number that he believed would detonate a bomb placed in the quarry. The test bomb detonated, and El Khalifi expressed a desire for a larger explosion in his attack. He also selected Feb. 17, 2012, as the day of the operation, according to the affidavit.
The affidavit alleges that over the next month, El Khalifi traveled to the U.S. Capitol Building on multiple occasions to conduct surveillance, choosing the spot where he would be dropped off to enter the building for the martyrdom operation, the specific time for the attack and the method he would use to avoid attracting the attention of law enforcement. El Khalifi also asked Hussien to remotely detonate the bomb he would be wearing on the day of the attack if El Khalifi encountered problems with security officers, and to provide El Khalifi with a gun that he could use during the attack to shoot any officers who might attempt to stop him.
On February 17, 2012, El Khalifi allegedly traveled to a parking garage near the U.S. Capitol Building. El Khalifi took possession of a MAC-10 automatic weapon and put on a vest containing what he believed to be a functioning bomb. Unbeknownst to El Khalifi, both the weapon and the bomb had been rendered inoperable by law enforcement. El Khalifi walked alone from the vehicle toward the United States Capitol, where he intended to shoot people and detonate the bomb. El Khalifi was arrested and taken into custody before exiting the parking garage.
This investigation is being conducted by the FBI’s Washington Field Office. The prosecution is being handled by Assistant U.S. Attorneys Gordon Kromberg and Michael Ben’Ary of the U.S. Attorney’s Office for the Eastern District of Virginia, as well as Trial Attorneys Joseph Kaster and Courtney Sullivan from the Counterterrorism Section of the Justice Department’s National Security Division.
The charges contained in the criminal complaint are mere allegations. As in any criminal case, the defendant is presumed innocent until proven guilty in a court of law.
New York Resident and His Company Sentenced for Conspiracy to Export Computer-Related Equipment to IranRead the Press Release
WASHINGTON – Jeng “Jay” Shih, 54, a U.S. citizen, was sentenced today in the District of Columbia to 18 months in prison, while his Queens, N.Y., company, Sunrise Technologies and Trading Corporation, was sentenced to 24 months corporate probation for conspiracy to illegally export U.S.-origin computers from the United States to Iran through the United Arab Emirates (UAE). Both Shih and his company were also sentenced to forfeiture in the amount of $1.25 million, for which they are jointly liable.
The sentences were announced by Lisa Monaco, Assistant Attorney General for National Security; Ronald C. Machen Jr., U.S. Attorney for the District of Columbia; John Morton, Director of U.S. Immigration and Customs Enforcement (ICE); David W. Mills, Assistant Secretary for Export Enforcement, Department of Commerce; and Adam Szubin, Director of the Office of Foreign Assets Control (OFAC), Department of the Treasury.
On Oct. 7, 2011, Shih and his company each pleaded guilty to conspiracy to violate the International Emergency Economic Powers Act (IEEPA) and to defraud the United States. Under the terms of the plea and related civil settlements with the U.S. Department of Commerce’s Bureau of Industry and Security and OFAC, Shih and his company agreed to forfeiture in the amount of $1.25 million. In addition, Shih and Sunrise are denied export privileges for 10 years; although, this penalty will be suspended provided that neither Shih nor Sunrise commits any export violations.
Shih was arrested on a criminal complaint on April 6, 2011. He and his company were later indicted on April 21, 2011. According to court documents filed in the case, beginning as early as about 2007, Shih conspired with a company operating in Dubai, UAE, and Tehran, Iran, to procure U.S.-origin computers through Sunrise and export those computers from the United States to Iran, through Dubai, without first obtaining a license or authorization from OFAC.
Specifically, in April 2010, the defendants caused the illegal export of 368 units of computer-related goods to Dubai, which were later sent to Iran. Later that month, the defendants caused the illegal export of 158 additional units of computer-related goods to Dubai, which were later sent to Iran. The defendants subsequently caused an additional 185 units of computer-related goods to be illegally exported to Iran via Dubai.
This investigation was conducted by the ICE’s Homeland Security Investigations (HSI) field offices New York and San Diego, and the Department of Commerce Office of Export Enforcement field offices in New York and Los Angeles, with assistance from ICE-HSI offices in Chicago, Newark, N.J., Los Angeles and Orange County, Calif. The Department of Homeland Security’s U.S. Customs and Border Protection and OFAC’s Office of Enforcement also assisted in the investigation.
Chief Counsel Attorney Gregory Michelsen and Attorney-Advisor Elizabeth Abraham from the U.S. Department of Commerce, and Assistant Director of Enforcement Michael Geffroy and Enforcement Officer Elizabeth Fruzynski of the U.S. Department of Treasury handled the civil settlements for their respective agencies.
The prosecution was handled by Assistant U.S. Attorneys T. Patrick Martin and Anthony Asuncion, from the U.S. Attorney’s Office for the District of Columbia, and Trial Attorney Jonathan C. Poling from the Counterespionage Section of the Justice Department’s National Security Division.
Moex Offshore Agrees to $90 Million Partial Settlement of Liability in Deepwater Horizon Oil SpillRead the Press Release
WASHINGTON – MOEX Offshore 2007 LLC has agreed to settle its liability in the Deepwater Horizon oil spill in a settlement with the United States valued at $90 million, announced the Department of Justice, the U.S. Coast Guard and the U.S. Environmental Protection Agency (EPA) today. Approximately $45 million of the $90 million settlement is going directly to the Gulf in the form of penalties or expedited environmental projects.
According to the terms of the settlement, MOEX will pay $70 million in civil penalties to resolve alleged violations of the Clean Water Act resulting from the spill and agreed to spend $20 million to facilitate land acquisition projects in several Gulf states that will preserve and protect in perpetuity habitat and resources important to water quality and other environmental features of the Gulf of Mexico region. At the time of the spill, MOEX was a minority investor in the lease for the Macondo well. It no longer owns any share of the lease.
The terms of today’s settlement do not affect the potential liability of – or recoveries from – other parties involved in the Deepwater Horizon oil spill.
Beginning with a well blowout and explosion on April 20, 2010, the owners and operators of the Macondo Well and the drilling rig Deepwater Horizon allowed millions of barrels of oil to escape into the Gulf of Mexico, affecting the entire region. Oil spills can cause both immediate and long-term harm to people’s health and the environment. The Clean Water Act provides for civil penalties for such discharges. This is the largest civil penalty ever recovered under the Clean Water Act.“The Department of Justice has not wavered in its commitment to hold all responsible parties fully accountable for what stands as the largest oil spill in U.S. history,” said Attorney General Eric Holder. “This landmark settlement is an important step – but only a first step – toward achieving accountability and protecting the future of the Gulf ecosystem by funding critical habitat preservation projects.”
“This will move the Gulf Coast along in its recovery as it continues to rebound from the largest spill in U.S. history,” said Coast Guard Commandant Adm. Bob Papp. “The settlement demonstrates our firm commitment to hold accountable those who pollute our environment.”“This is good news for the Gulf Coast communities that are continuing to rebuild their economy and restore their ecosystem. This administration is going to stand with the people here to ensure a full recovery from the Deepwater Horizon oil spill,” said EPA Administrator Lisa P. Jackson. “Dedicating funds to actions that restore the local waters is a vital part of restoring these communities. As someone who grew up on the Gulf Coast, I know how important clean water is to the lives and livelihoods of the people here, and I know we need to take every possible action to get the ecosystem here on a path to long-term restoration.”
As part of the settlement, MOEX Offshore has agreed to pay $70 million in civil penalties, of which, $45 million will go to the United States. The money will go toward replenishing the Oil Spill Liability Trust Fund, where by law it will be available to pay for response actions, cleanup and damages caused by future spills. The remaining penalty will go to Gulf states that participate in the settlement. Those states will receive penalty payments as follows: $6.75 million to Louisiana, $5 million each to Alabama, Florida and Mississippi, and $3.25 million to Texas.
MOEX Offshore has also agreed to secure and protect properties of ecological significance for the Gulf habitats. MOEX Offshore will ensure that properties within the states of Louisiana, Texas, Mississippi and Florida are transferred to – or acquired by – state governments, non-profit groups, land trusts or other appropriate entities, to protect those properties from development. In all, these projects are expected to cost at least $20 million. The negotiation process with MOEX included numerous discussions with the Gulf states, who have been indispensible in reaching this important agreement.
This settlement does not affect the government’s claims against any other defendant in the Deepwater Horizon lawsuit that was filed on Dec. 15, 2010. The trial of the first phase of the case is set to begin in federal district court in New Orleans on Feb. 27, 2012.MOEX Offshore is a wholly-owned subsidiary of the MOEX USA Corporation. Mitsui Oil Exploration Co. Ltd. is the corporate parent of MOEX USA, which in turn is owned by Mitsui & Co. Ltd. of Japan.
The proposed settlement, lodged in the U.S. District Court for the Eastern District of Louisiana, is subject to a 30-day comment period and final court approval. Information on submitting comment is available at www.justice.gov/enrd/Consent_Decrees.html.
For more information on the settlement, visit: www.epa.gov/compliance/resources/cases/civil/caa/moex.html.
Man Pleads Guilty to Illegal Dumping in Upstate New YorkRead the Press Release
WASHINGTON – Julius DeSimone of Rome, N.Y., pleaded guilty today in federal court in Utica, N.Y., for conspiring to violate the Clean Water Act and to defraud the United States, and to making false statements to federal law enforcement, the U.S. Attorney’s Office for the Northern District of New York and the U.S. Department of Justice Environment and Natural Resources Division announced today.
DeSimone pleaded guilty before U.S. District Judge Hurd for the Northern District of New York to two criminal felony counts for conspiring to violate the Clean Water Act’s prohibition on filling wetlands and then lying to federal agents in an attempt to conceal his crimes. According to the charges, DeSimone and other co-conspirators engaged in a multi-year scheme to illegally dump 8,100 tons of pulverized construction and demolition debris that was processed at New York and New Jersey solid waste management facilities and then transported to a farmer’s property in Frankfort, N.Y.
According to court documents, DeSimone and other conspirators concealed the illegal dumping by fabricating a New York State Department of Environmental Conservation (DEC) permit and forging the name of a DEC official on the fraudulent permit. DeSimone admitted in the plea agreement that once DEC and the U.S. Environmental Protection Agency (EPA) learned of the illegal dumping, he lied to federal agents in an effort to conceal the crimes.
DeSimone faces up to five years in prison and a $250,000 fine for each felony count and may be ordered to pay for portions of the cleanup at the site.
Today’s plea is related to the pleas of Eagle Recycling and Jonathan Deck who pleaded guilty to similar conspiracy charges in 2009 and 2011.
This case was investigated by the New York State Environmental Conservation Police, Bureau of Environmental Crimes, EPA’s Criminal Investigation Division and the Internal Revenue Service, investigators from the New Jersey State Police Office of Business Integrity Unit, the New Jersey Department of Environmental Protection and the Ohio Department of Environmental Protection. The case is being prosecuted by Assistant U.S. Attorney Craig A. Benedict, of the Northern District of New York, and Todd W. Gleason of the Environmental Crimes Section of the Environment and Natural Resources Division of the U.S. Department of Justice.
16 February 2012
Utah Man Charged with Filing False Claims for Tax RefundsRead the Press Release
Stanley Wardle of Spanish Fork, Utah, was indicted Wednesday by a federal grand jury in Salt Lake City with nine counts of filing false claims for income tax refunds, the Justice Department and Internal Revenue Service (IRS) announced today. According to the indictment, Wardle prepared one such false claim on his own behalf, through an individual income tax return for 2008, and prepared eight other such false claims on behalf of others. In total Wardle sought false federal income tax refunds of $875,218.
If convicted, Wardle faces a maximum of five years in prison and a maximum $250,000 fine for each count.
An indictment is only an allegation of criminal conduct and is not evidence of guilt. A person is presumed innocent until and unless proven guilty beyond a reasonable doubt in a court of law.
This case was investigated by IRS Criminal Investigation and is being prosecuted by Trial Attorneys Michael Romano and Stuart Wexler of the Justice Department’s Tax Division. More information about the Tax Division and its enforcement efforts can be found at www.justice.gov/tax .
Umar Farouk Abdulmutallab Sentenced to Life in Prison for Attempted Bombing of Flight 253 on Christmas Day 2009Read the Press Release
WASHINGTON – Umar Farouk Abdulmutallab, the so-called “underwear bomber,” was sentenced today to life in prison as a result of his guilty plea to all eight counts of a federal indictment charging him for his role in the attempted Christmas Day 2009 bombing of Northwest Airlines flight 253.
The sentence, handed down by U.S. District Court Judge Nancy G. Edmunds in Detroit, was announced by Attorney General Eric Holder; Barbara L. McQuade, U.S. Attorney for the Eastern District of Michigan; Andrew G. Arena, Special Agent in Charge of the FBI’s Detroit Field Office; and Brian M. Moskowitz, Special Agent in Charge of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) in Detroit.
Abdulmutallab, 25, of Kaduna, Nigeria, pleaded guilty on Oct. 12, 2011, to conspiracy to commit an act of terrorism transcending national boundaries; attempted murder within the special aircraft jurisdiction of the United States; willfully placing a destructive device on an aircraft, which was likely to have endangered the safety of the aircraft; attempted use of a weapon of mass destruction; willfully attempting to destroy and wreck a civil aircraft; and three counts of possession of a destructive device in furtherance of a crime of violence.
“As this investigation and prosecution have shown, Umar Farouk Abdulmutallab is a remorseless terrorist who believes it is his duty to kill Americans. For attempting to take the lives of 289 innocent people, he has been appropriately sentenced to serve every day of the rest of his life in prison,” said Attorney General Holder. “Today’s sentence once again underscores the effectiveness of the criminal justice system in both incapacitating terrorists and gathering valuable intelligence from them.”
“On behalf of the victims, we are gratified that this al-Qaeda terrorist has been defeated and will spend the rest of his life in prison, where he can never hurt innocent civilians again,” U.S. Attorney McQuade said. “I am very proud of the work of our prosecutors and agents in Detroit. Their work shows that the civilian court system is a valuable mechanism for obtaining intelligence and convicting terrorists with the legal certainty and transparency that instills public confidence in American justice.”
“The case against Abdulmutallab was a combination of the hard work and dedication of FBI personnel as well as multiple federal, state and local agencies. Those individuals who experienced Christmas Day 2009 first hand should be rest assured that justice has been done.” said FBI Special Agent in Charge Arena.
“When it counted most, under pressure and in the heat of the moment, the metro Detroit law enforcement community responded as one and acted decisively,” said HSI Special Agent in Charge Moskowitz. “Their collective actions epitomized the concept of ‘one team, one fight’ and showed the power of collaboration in the protection of our homeland.”
According to the indictment filed in this case, in August 2009, Abdulmutallab traveled to Yemen for the purpose of becoming involved in violent “jihad” on behalf of al-Qaeda. There, he conspired with other al-Qaeda members to bomb a U.S. aircraft over U.S. soil and received an explosive device for that purpose. Abdulmutallab traveled with the bomb concealed in his underwear from Yemen to Africa and then to Amsterdam, the Netherlands, where he boarded Flight 253 on Christmas Day 2009. The bomb contained PETN and TATP, two high explosives, and was designed to be detonated with a syringe containing other chemicals.
Abdulmutallab’s purpose in taking the bomb on board Flight 253 was to detonate it during flight, causing the plane to crash and killing the 290 passengers and crew members on board. As Flight 253 was on descent into Detroit Metropolitan Airport, the defendant detonated the bomb, which resulted in a fire, but otherwise did not fully explode. Passengers and flight attendants tackled the defendant and extinguished the fire.
This investigation was conducted by the Detroit Joint Terrorism Task Force, which is led by the FBI and includes U.S. Customs and Border Protection, HSI, the Federal Air Marshal Service and other law enforcement agencies. Additional assistance has been provided by the Transportation Security Administration, the State Department’s Bureau of Diplomatic Security, the Wayne County Airport police, as well as international law enforcement partners.
This case is being prosecuted by Assistant U.S. Attorneys Jonathan Tukel, Cathleen M. Corken and Michael C. Martin of the U.S. Attorney’s Office for the Eastern District of Michigan, with assistance from the Counterterrorism Section of the Justice Department’s National Security Division.
To view or download the government video exhibit introduced in court during today’s sentencing hearing, visit: http://www.justice.gov/usvabdulmutallab-200.html .
Maryland Tax Defier Sentenced to 65 Months in PrisonRead the Press Release
Andrew Isaac Chance of Clinton, Md., was sentenced Wednesday to 65 months in prison for filing false claims for tax refunds and for filing a false retaliatory lien against a federal prosecutor. The sentencing was announced today by the Justice Department, Internal Revenue Service Criminal Investigation (IRS-CI) and Treasury Inspector General for Tax Administration (TIGTA).
Chance was convicted by a federal jury in Greenbelt, Md., on Nov. 18, 2011. At the time the defendant filed the false retaliatory lien and false claims for tax refunds, he was on federal supervised release for a 2007 tax conviction.
According to evidence presented at trial, Chance was convicted and sentenced to 27 months in prison in 2007, for filing a false claim for an income tax refund for the tax year 2005. Shortly after he was released from prison for that crime, he filed a UCC Financing Statement with the Maryland Department of Assessments and Taxation, falsely claiming that the federal prosecutor, who prosecuted the 2007 case, owed him $1.313 billion. The evidence showed that Chance filed a similar lien against a Maryland state prosecutor for her role in prosecuting him for crimes relating to his attempts to cash the fraudulently obtained U.S. Treasury check for the 2005 tax return. According to the evidence, when arrested in December 2010, Chance admitted to a federal agent that he had filed the liens because the prosecutors had “done him wrong.”
The evidence at trial established that a year after filing the false lien, Chance filed three false claims for tax refunds for tax years 2007, 2008 and 2009, seeking a total of $900,000. These three false tax returns were almost identical to the 2005 return for which he was previously convicted. On the 2005 tax return, Chance claimed he was the Andrew Chance Trust. On the 2007-2009 returns, he claimed he was the Andrew I Chance Trust.
On each return in the current case, Chance claimed $300,000 in refunds based on completely false income and withholding amounts. The government introduced evidence that, despite having claimed withholdings on the false returns, Chance had no withholdings and, in fact, had demanded that the Washington, D.C., Metropolitan Area Transit Authority, from which he retired as a station manager in 1999, not withhold taxes from his retirement pay.
“ Those who file false tax returns cheat not only the government but also their fellow taxpayers. This sentence shows that filing false tax returns and retaliating against federal prosecutors and other government officials, who are simply doing their jobs, will not be tolerated,” said Principal Deputy Assistant Attorney General John A. DiCicco of the Justice Department’s Tax Division.
Chance still faces a federal violation of supervised release hearing as well as a state court action for a violation of probation related to his use of false identification in an attempt to cash the fraudulent refund check he received for the 2005 tax return.
The case was prosecuted by Tax Division Trial Attorneys Jen E. Ihlo and Erin Pulice and investigated by the Internal Revenue Service Criminal Investigation and the Treasury Inspector General for Tax Administration (TIGTA).
More information about the Tax Division and its tax defier enforcement efforts can be found at www.justice.gov.tax.
MS-13 Gang Leader in San Francisco Sentenced to Life in PrisonRead the Press Release
WASHINGTON –Danilo Velasquez, aka “Triste,” a local leader of La Mara Salvatrucha, or MS-13, was sentenced yesterday in federal court in San Francisco by U.S. District Judge William H. Alsup to life in prison, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Melinda Haag for the Northern District of California and Director John Morton of U.S. Immigration and Customs Enforcement (ICE). Velasquez was convicted in November 2011 by a federal jury of racketeering-related charges. At sentencing, Judge Alsup described the defendant as a “vicious murderer.”
Velasquez was part of the violent, transnational gang known as MS-13, which claimed part of the Mission District of San Francisco as its territory and operated in the Bay Area since the 1990s. Velasquez joined the “20th Street” clique, or local MS-13 chapter, in 2004. Since its inception, MS-13 members have warred with rival gang members and sought to extort payments from other criminals in its territory. When the federal government indicted the majority of the 20th Street clique members on Oct. 22, 2008, Velasquez assumed leadership on the streets. T he evidence presented at trial showed how Velasquez, with others, conspired to commit a variety of crimes to further the goals of the gang, including attacking and killing rival gang members and others who defied or challenged MS-13.
During Velasquez’s trial, the government presented evidence of multiple murders committed by MS-13 members in 2008. Several of the victims were not involved in gangs or any illegal activity, including a 14-year-old, but were mistaken to be rival gang members by MS-13 members.
The evidence at trial showed that on Feb. 19, 2009, Velasquez and fellow gang members Luis Herrera, aka “Killer” and Jaime Balam, aka “Tweety,” went looking to kill rival gang members in the San Francisco Bay area. In the Excelsior District of San Francisco, they spotted a car of young Latino professionals – two were college graduates of UC Berkeley, one a law student at UC Hastings, one a bank employee and another a student at City College in San Francisco who was working his way through school at the time. According to evidence presented at trial, these victims were targeted because some of the men wore baseball caps in colors associated with rival gang members. None of the victims were gang members themselves.
Herrera, Velasquez and Balam followed the victims’ car into Daly City, Calif., boxed the car in at a red light, whereupon Velasquez and Balam flanked the victims’ car carrying semi-automatic handguns and began shooting. By the time they finished firing, they had severely wounded two of the passengers and murdered a third passenger, Moises Frias Jr. Frias, who was 21-years-old, suffered nine gunshot wounds, including several to the head. He died en route to the hospital.
Herrera pleaded guilty mid-trial to seven racketeering-related counts, including use of a firearm causing the death of Frias. As part of his plea, Herrera admitted that he was part of the MS-13 hunting party that followed the victims’ car and murdered Frias. Herrera was sentenced on Jan. 24, 2012, to 35 years in prison. Balam remains a fugitive.
Velasquez’s trial was the second of three consecutive federal trials of members of the 20th Street clique of MS-13. Six of Velasquez’s fellow MS-13 gang members were convicted in August 2011 after a five-month trial that involved more than 150 witnesses. The six gang members – Marvin Carcamo, aka “Psycho”; Angel Noel Guevara, aka “Peloncito”; Erick Lopez, aka “Spooky”; Moris Flores, aka “Slow Pain”; Jonathan Cruz-Ramirez, aka “Soldado”; and Luis Herrera’s brother Guillermo Herrera, aka “Sparky” – were each sentenced to life in prison in December 2011.
Today, a federal jury convicted the sole defendant in the third trial, Manuel Franco, aka “Dreamer,” on one count of violent crime in aid of racketeering (VICAR) conspiracy.
These cases were prosecuted by Assistant U.S. Attorneys Wilson Leung, Wil Frentzen, Derek Owens, Andrew Scoble and David Hall of the Organized Crime Strike Force of the U.S. Attorney’s Office for the Northern District of California, and Trial Attorney Theryn G. Gibbons of the Criminal Division’s Organized Crime and Gang Section. These cases were investigated by Daly City Police Department, San Francisco Police Department and ICE Homeland Security Investigations.
Former New England La Cosa Nostra Mob Boss, Capo and Associates to Plead Guilty in Rhode Island for Racketeering ActivityRead the Press Release
WASHINGTON – Five Rhode Island men previously identified as leaders or associates of the New England organized crime family of the La Cosa Nostra (NELCN) have agreed to plead guilty to racketeering-related charges, according to documents filed today with the U.S. district court in Providence, R.I.
The announcement was made by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Peter F. Neronha for the District of Rhode Island; Richard DesLauriers, Special Agent in Charge of the FBI’s Boston Field Office; Colonel Steven G. O’DonnellSuperintendent of the Rhode Island State Police; and Providence Public Safety Commissioner Steven M. Pare.
The defendants were charged in a second superseding indictment returned by a federal grand jury in Providence in September 2011, which alleges their participation in an extortion and racketeering conspiracy involving “protection” payments from several Rhode Island businesses. The defendants face sentences of up to 20 years in prison and fines of up to $250,000.
According to plea agreements signed by the defendants and filed with the court, Luigi “Baby Shacks” Manocchio; Edward “Eddy” Lato; Alfred “Chippy” Scivola; and Richard Bonafiglia will plead guilty to one count of conspiracy to participate in a racketeering enterprise. Raymond R. Jenkins will plead guilty to one count of conspiracy to participate in a Hobbs Act extortion.
According to the plea agreements, in addition to admitting to their criminal conduct, Manocchio, Lato and Scivola admit to their membership in the enterprise charged in the second superseding indictment, which is the NELCN. In addition, in their signed plea agreements, Manocchio and Lato admit to being organizers and leaders of the enterprise’s criminal activity. As alleged in the indictment, Manocchio was an underboss and boss of the NELCN and Lato was an NELCN capo, primarily responsible for Rhode Island. Lato also admitted in his plea agreement to related extortion activity charged in the indictment.
Theodore Cardillo and Albino “Albie” Folcarelli, also named in the second superseding indictment and identified as alleged associates of the NELCN, are scheduled for trial on April 23, 2012.
An indictmentis merely an allegation and is not evidence of guilt. A defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
An eighth defendant named in a previous superseding indictment in this matter, Thomas Iafrate, of Johnston, R.I., pleaded guilty on July 21, 2011, to one count of conspiracy to participate in a racketeering enterprise. He also admitted that he was an associate of the NELCN. Iafrate was sentenced in December 2011 to 30 months in federal prison, to be followed by three years of supervised release.
The cases are being prosecuted by Assistant U.S. Attorney William J. Ferland for the District of Rhode Island and Trial Attorney Sam Nazzaro of the Criminal Division’s Organized Crime and Gang Section. The matter was investigated by the FBI, Rhode Island State Police, Providence Police and Internal Revenue Service – Criminal Investigation.
Federal Court Bars California Woman from Preparing Federal Tax ReturnsRead the Press Release
A federal court has permanently barred Maria Teresita Viray from preparing federal tax returns for others, the Justice Department announced today. The civil injunction order, to which Viray consented, was signed by Judge George Wu of the U.S. District Court for the Central District of California.
According to the government complaint in the case, Viray, of Reseda, Los Angeles County, Calif., operates businesses called TVDM Tax Services, MTV Tax Services and New Horizon Tax Services, and has prepared thousands of federal tax returns since 2008. The complaint alleges that Viray reported bogus deductions for charitable contributions and business expenses on her customers’ tax returns and that she fabricated documents to provide to the Internal Revenue Service (IRS) to substantiate the false claims she made on the returns. The complaint states that Viray told one customer that she had a special printer that allowed her to change the dates and amounts on charitable contribution receipts.
According to the complaint, Viray’s tax return preparation resulted in an estimated loss of over $45 million in tax revenue to the United States from 2008 to 2010, in addition to IRS resources devoted to recovering erroneous refunds and collecting unpaid taxes and penalties from her customers. The injunction order requires Viray to provide the government with a list of all persons for whom she prepared federal tax returns for tax years 2007 through 2010.
The Justice Department’s Tax Division has obtained injunctions against hundreds of unscrupulous tax-return preparers and tax-fraud promoters in the past decade. Information about these cases is available on the Justice Department www.justice.gov/tax .
Complaint for Permanent Injunction and Other Relief (PDF)
Final Order of Permanent Injunction (PDF)Detroit Man Sentenced for Mailing Noose to Threaten CoupleRead the Press Release
WASHINGTON – Glenn E. Morgan Jr., 41, of Detroit, was sentenced by U.S. District Judge Robert H. Cleland to three months in prison followed by two years supervised release after pleading guilty to sending a threatening communication through the mail to a Detroit couple, the Justice Department announced today.
In November 2008, Morgan mailed a noose, photographs of black men being lynched and a photograph of the murdered body of Nicole Brown Simpson to the couple because of their race. The envelope Morgan sent to the couple also contained threatening written messages indicating that black men who marry white women should be lynched and that white women who marry black men will share Nicole Brown Simpson's fate.
U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade said, "The law protects people from threats and harassment based on their race, and we will prosecute anyone who seeks to racially intimidate members of our community."
“Threats based on race have no place in our country,” Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The department will aggressively prosecute those who threaten any person based on the color of their skin.”
Andrew Arena, Special Agent in Charge of the FBI in Detroit said, "This sentencing should send as a strong message that hate crimes will be investigated vigorously and those responsible for these heinous acts will be brought to justice."
The case was investigated by the FBI. The case was prosecuted by Assistant U.S. Attorney Pamela Thompson from the U.S. Attorney's Office the Eastern District of Michigan, and Trial Attorney Sanjay Patel from the Civil Rights Division.
California Resident and Company Plead Guilty to Conspiracy to Export Computer-Related Equipment to IranRead the Press Release
WASHINGTON – Massoud Habibion, 49, aka “Matt Habibion” and “Matt Habi,” a U.S. citizen and co-owner of a Costa Mesa, Calif., company, Online Micro LLC, pleaded guilty today in the District of Columbia to conspiracy to illegally export computers from the United States to Iran through the United Arab Emirates (UAE). Additionally, Mohsen Motamedian, 44, aka “Max Motamedian” and “Max Ehsan,” a U.S. citizen and co-owner of Online Micro, pleaded guilty to obstruction of justice.
The guilty pleas were announced by Lisa Monaco, Assistant Attorney General for National Security; Ronald C. Machen Jr., U.S. Attorney for the District of Columbia; John Morton, Director of U.S. Immigration and Customs Enforcement (ICE); David W. Mills, Assistant Secretary for Export Enforcement, Department of Commerce; and Adam Szubin, Director of the Office of Foreign Assets Control (OFAC), Department of the Treasury.
At a hearing today before U.S. District Judge Ellen S. Huvelle, Habibion and Online Micro each pleaded guilty to conspiracy to violate the International Emergency Economic Powers Act and to defraud the United States. Motamedian pleaded guilty to obstruction of justice. Judge Huvelle set sentencing for May 16, 2012. The maximum sentence for Habibion and the company is five years in prison and $1 million. The maximum sentence for Motamedian is 20 years in prison.
Under the terms of the plea and related civil settlements with the Department of Commerce’s Bureau of Industry and Security (BIS) and OFAC, Habibion and his company have agreed to forfeiture of a money judgment in the amount of $1.9 million. In addition, Habibion and Online Micro are denied export privileges for 10 years, although the denial order will be suspended provided that neither Habibion nor Online Micro commit any export violations during the 10-year probationary period and comply with the terms of the criminal plea agreements and sentences. Motamedian separately agreed to a $50,000 monetary penalty to settle a civil charge that he solicited a false statement to federal law enforcement agents.
Habibion and Motamedian were arrested on a criminal complaint in California on April 7, 2011. The defendants and their company were later indicted on April 21, 2011.
Habibion and Online Micro today admitted that they willfully conspired with a company operating in Dubai, UAE, and Tehran, Iran, to procure U.S.-origin computers from the United States and export those computers from the United States to Iran through Dubai without first obtaining licenses or authorizations from OFAC.
In or around May 2007, Online Micro purchased 1,000 computer units from Dell Inc. for approximately $500,000. Later that year, Dell began receiving service calls concerning Dell computer units from individuals in Iran, and after conducting an internal investigation, suspended Online Micro from placing further orders with Dell.
Beginning around Nov. 9, 2009, and continuing through December 2010, Habibion and Online Micro conspired with Company X, a firm operating in Dubai and Tehran, to procure U.S.-origin computer-related goods and export those goods to Iran via the UAE. During the scope of the conspiracy, defendants Online Micro and Habibion sold and exported from the United States to Company X numerous shipments of computer-related goods, worth a total of more than $4,904,962, with knowledge that the majority of those goods were destined for Iran.
Online Micro also caused Shipper’s Export Declarations to be filed with U.S. Customs and Border Protection falsely identifying the ultimate destination of the goods as the UAE. During the course of the investigation, Habibion and Motamedian told a government cooperator (Individual A) to lie to U.S. law enforcement officials about the transactions. Specifically, the defendants told Individual A to lie about Iran being the true ultimate destination for the goods and counseled him to tell U.S. law enforcement agents that the computer-related goods remained in Dubai.
Motamedian and Habibion also acknowledged to Individual A that the sanctions “are serious” and “were not a joke.” Yet Motamedian told Individual A to “Say, ‘I sold over there’ and have your guys make up invoices;” and “[d]efinitely delete your communication with [Company X’s agent in Iran] on Yahoo.” Similarly, Habibion stated to Individual A that he should tell U.S. law enforcement agents that the computer-related goods remained in Dubai: “Well, you can say, ‘I kept the goods there.’ How does he know what happened?”
This investigation was conducted by the ICE’s Homeland Security Investigations (HSI) field offices in San Diego and Orange County, Calif. U.S. Customs and Border Protection and the U.S. Department of Commerce’s BIS Los Angeles Field Office also assisted in the investigation.
Senior Attorney Adrienne Frazier from the U.S. Department of Commerce’s BIS, and Assistant Director of Enforcement Michael Geffroy and Enforcement Officer Elizabeth Beam from OFAC handled the civil settlements for their agencies, respectively.
The prosecution is being handled by Assistant U.S. Attorneys T. Patrick Martin and Anthony Asuncion from the U.S. Attorney's Office for the District of Columbia, and Trial Attorney Jonathan C. Poling from the Counterespionage Section of the Justice Department’s National Security Division.
15 February 2012
Pennsylvania Dairy Farmer Operator Found in Violation of Food, Drug and Cosmetic ActRead the Press Release
The U.S. District Court for the Eastern District of Pennsylvania awarded summary judgment to the government on a finding that Daniel Allgyer, dba Rainbow Acres Farm and Rainbow Valley Farms, violated the Food, Drug and Cosmetic Act and the Public Health Services Act, the Justice Department announced today. The court made the ruling on Feb. 3, 2012.
Allgyer is the owner and operator of a dairy farm located in Kinzers, Pa. An investigation conducted by the Food and Drug Administration (FDA) showed that Allgyer was packaging unpasteurized milk (also known as “raw milk”) in unlabeled containers, and was then distributing the milk for human consumption in interstate commerce.
The FDA warned Mr. Allgyer that his conduct violated federal law. Instead of ceasing his illegal operations, Mr. Allgyer attempted to evade federal regulations that prohibit the interstate sale of raw milk by creating a private membership organization that he used to enter into cow-sharing agreements with his customers. In the order granting summary judgment in the government’s favor, the court found that the cow-sharing agreements were “merely a subterfuge” and issued an order enjoining Mr. Allgyer and his associates from distributing unlabeled or unpasteurized milk for human consumption in interstate commerce.
While some states, including Pennsylvania, permit the sale of unpasteurized milk, it is illegal to transport unpasteurized milk across state lines. Unpasteurized milk can contain a wide variety of harmful bacteria, including Listeria, E.coli, Salmonella, Campylobacter, Yersinia and Brucella.
“The FDA has determined that drinking raw milk can cause significant harm,” said Tony West, Assistant Attorney General for the Justice Department’s Civil Division. “Working with our federal partners, we will bring enforcement actions like this one to ensure that the American food supply is safe and consumers are not exposed to such risks. We are pleased that the court has ordered Mr. Allgyer to stop distributing unpasteurized milk across state lines.”
This matter was handled by Department of Justice Trial Attorney Jessica R. Gunder of the Civil Division’s Consumer Protection Branch and Associate Chief Counsel Karen C. Corallo of the FDA’s Office of the General Counsel.
Justice Department Settlement Requires Gunnison Energy and SG Interests to Pay the United States a Total of $550,000 for Antitrust and False Claims Act ViolationsRead the Press Release
WASHINGTON – The Department of Justice today announced that it has reached a settlement with Gunnison Energy Corporation (GEC), SG Interests I Ltd. and SG Interests VII Ltd. (SGI) that requires the companies to pay a total of $550,000 to the United States for antitrust and False Claims Act violations related to an agreement not to compete in bidding for four natural gas leases sold at auction by the U.S. Department of Interior’s Bureau of Land Management (BLM). Today’s action marks the first time the Department of Justice has challenged an anticompetitive bidding agreement for mineral rights leases.
The department’s Antitrust Division today filed a civil antitrust complaint in U.S. District Court for the District of Colorado, and at the same time filed a proposed settlement that, if approved by the court, would resolve the lawsuit. The complaint alleges that the agreement between GEC and SGI restrained trade in violation of Section 1 of the Sherman Act.
“Today’s unprecedented antitrust enforcement action involving illegal bidding at Bureau of Land Management auctions, demonstrates the U.S. government’s resolve to ensure there is vigorous competition for federal oil and gas rights,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “At a time of budgetary constraint, it is crucial that the federal government receive the most competitive prices for these important leases, which ultimately benefits American taxpayers.”
According to the complaint, GEC and SGI were separately developing natural gas resources in Western Colorado. In 2005, GEC and SGI entered into a written agreement under which they agreed that only SGI would bid at the auctions and then assign an interest in the acquired leases to GEC. The department determined that the agreement was not part of any procompetitive or efficiency-enhancing collaboration.
As a result of the agreement between GEC and SGI, the United States received less revenue from the sale of the four leases than it would have had SGI and GEC competed at the auctions. The United States has the legal ability to obtain monetary damages when it has been injured by an antitrust violation. The proposed settlement provides that GEC and SGI each pay $275,000 to the United States to resolve the antitrust violations.
The payments will also resolve civil claims that the United States has under the False Claims Act against GEC and SGI for making false statements to the gover nment in connection with the agreement not to compete. The U.S. Attorney’s Office for the District of Colorado has entered into separate settlement agreements with the companies to resolve these claims.
BLM is responsible for issuing leases for oil and gas exploration and development on lands owned or controlled by the federal government. BLM provides notice of parcels to be leased and then auctions a lease for each parcel. The winning bidder is required to certify that its bid was not the product of collusion with another bidder.
“BLM relies on competition among bidders at onshore oil and gas auctions to ensure that the United States receives a fair and competitive price for its leases,” said BLM Director Bob Abbey. “We are hopeful that the outcome of this case will deter anticompetitive and fraudulent conduct at BLM auctions.”
The United States’ investigation resulted from a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act. Those provisions allow for private parties to sue on behalf of the United States. They also give the United States time to investigate to decide whether to take over prosecution of the allegations or allow the whistleblower to proceed. The whistleblower is entitled to receive a portion of any recovery.
GEC, an affiliate of Oxbow Corporation, is a Delaware corporation with its principal place of business in Denver. SGI is Texas limited partnerships with their headquarters in Houston. The managing partner of both limited partnerships is Gordy Oil Company, a Texas corporation.
The proposed settlement, along with the department’s competitive impact statement, will be published in The Federal Register, as required by the Antitrust Procedures and Penalties Act. Any person may submit written comments concerning the proposed settlement within 60 days of its publication to William H. Stallings, chief, Transportation, Energy and Agriculture Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street, N.W., Suite 8000, Washington, D.C. 20530. At the conclusion of the 60-day comment period, the court may enter the settlement upon a finding that it serves the public interest.
Justice Department Resolves Sexual Harassment Lawsuit Against the Louisiana Department of Public Safety and CorrectionsRead the Press Release
WASHINGTON – The Department of Justice announced today the filing of a consent decree, filed in the U.S. District Court in the Eastern District of Louisiana, with the Louisiana Department of Public Safety and Corrections (LDPSC) that resolves allegations of sexual harassment of an office administrator in violation of Title VII of the Civil Rights Act of 1964, as amended (Title VII).
According to the department’s complaint, Laura Arceneaux, an office administrator, was subjected to a hostile work environment during the period between May 2002 and December 2008, which culminated in two attempts of sexual assault by her supervisor, District Administrator Farrell Veillion. At least four other LDPSC employees, including a part-time internal affairs investigator, were aware of the harassment and did not report it. The complaint alleges that the LDPSC did not have an effective sexual harassment policy in place at the time of the harassment.
The consent decree, if approved by the court, requires the LDPSC to modify its policy designed to prevent harassment in the workplace and provide annual training of LDPSC supervisors and employees about harassment. The decree also awards monetary damages in the amount of $50,000 to Arceneaux as well as other relief.
“Federal law requires employers to maintain a workplace free of harassment and hostility,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “ The d epartment commends the state for agreeing to put effective policies in place to prevent workplace harassment and to provide appropriate relief to Ms. Arceneaux. ”
The filing of this lawsuit and consent decree reflects the Civil Rights Division’s ongoing commitment to actively enforce federal employment discrimination laws such as Title VII. Additional information about the Civil Rights Division is available at www.justice.gov/crt .
Barrio Azteca Gang Leader Sentenced in Texas to Life in PrisonRead the Press Release
WASHINGTON – A Barrio Azteca (BA) gang leader was sentenced to life in prison without parole for his participation in a racketeering conspiracy, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Robert Pitman for the Western District of Texas, FBI Assistant Director of the Criminal Investigative Division Kevin Perkins and Administrator Michele M. Leonhart of the U.S. Drug Enforcement Administration (DEA).
Roberto Angel Cardona, aka “Little Angelillo,” of El Paso, Texas, was sentenced yesterday by U.S. District Judge Kathleen Cardone in the Western District of Texas, El Paso Division. Cardona pleaded guilty on Aug. 2, 2011.
“This sentence reflects the severity of Roberto Cardona’s crimes as a leader of the brutal Barrio Azteca gang, as well as his individual acts of violence and drug trafficking,” said Assistant Attorney General Breuer. “On both sides of the border, Barrio Azteca gang members use violence, intimidation and fear to further their illegal activities. Lengthy prison sentences are an appropriate consequence and should cause would-be gang members to think twice about participating in such destructive activities.”
“The violent activities of Barrio Azteca members are representative of the dangers of drug trafficking,” said U.S. Attorney Pitman. “This sentence represents our response and our continued dedication to fighting senseless acts of violence and organized drug dealing in our communities.”
“This sentence is a powerful step taken against trans-border violence, one that the FBI’s El Paso Field Office has taken with partners at the federal, state and local levels,” said FBI Assistant Director Perkins. “Gangs like the Barrio Azteca represent threats to both Mexico and the United States, and together we have supported each other to investigate and prosecute criminals who affect us on both sides of the border.”
“The sentencing of Barrio Azteca leader Robert o Cardona is a victory for both U.S. and Mexican law enforcement,” said DEA Administrator Leonhart. “Together, we will relentlessly pursue violent drug organizations, their leaders and gang members who brutally destroy lives on both sides of the border.”
According to court documents and testimony, the BA gang began in the late 1980s as a violent prison gang and has expanded into a transnational criminal organization. The BA is primarily based in West Texas; Juarez, Mexico; and throughout state and federal prisons in the United States and Mexico.
According to court documents and testimony, members and associates of the BA have engaged in a host of criminal activity committed since Jan. 1, 2003, including drug trafficking, extortion, money laundering, kidnapping and murder, including the March 13, 2010, murders in Juarez of U.S. consulate employee Leslie Ann Enriquez Catton, her husband Arthur Redelfs and Jorge Alberto Salcido Ceniceros, the husband of a U.S. consulate employee.
The BA profits by importing heroin, cocaine and marijuana into the United States from Mexico. Gang members and associates also charge a “street tax” or “cuota” on businesses and criminals operating in their turf. These profits are used to support gang members in prison by funneling money into prison commissary accounts of gang leaders and to pay for defense lawyers or fines. The “cuota” profits are also allegedly reinvested into the organization to purchase drugs, guns and ammunition.
According to testimony presented at sentencing, Cardona was a leader in the Barrio Azteca gang. Specifically, he was the El Paso BA leader in 2010 until he was arrested on drug charges on April 30, 2010. He also participated in the BA’s activities by distributing narcotics, including heroin and cocaine, and collected extortion funds that were sent to the commissary accounts of fellow BA members in prison. One witness testified that Cardona ordered beatings of fellow BA members and personally assaulted a drug dealer who would not pay extortion money. Witnesses testified that BA members used weapons in the course of violence and regularly carried guns at meetings.
At sentencing, a witness testified about personally attending a meeting where Cardona ordered extortions, assaults and kidnappings. The witness testified that Cardona contacted him for the purposes of kidnapping someone in El Paso and delivering him to Juarez. According to testimony, Cardona arranged for the witness and others to meet with the victim, assault him, drug him, bind him and transport him to Juarez. The court also found that Cardona's offense involved more than 30 kilograms of heroin and 150 kilograms of cocaine. Cardona directly imported large quantities of these drugs and sold them to retail drug dealers.
Thirty-five members and associates of the BA gang, including Cardona and 18 others who have pleaded guilty, were charged in a third superseding indictment unsealed in March 2011 with various counts of racketeering, murder, drug offenses, money laundering and obstruction of justice. Trial is set to begin April 6, 2012.
The case is being prosecuted by Trial Attorney Joseph A. Cooley of the Criminal Division’s Organized Crime and Gang Section, Trial Attorney Brian Skaret of the Criminal Division’s Human Rights and Special Prosecutions Section and the U.S. Attorney’s Office of the Western District of Texas - El Paso Division. The U.S. Attorney’s Office for the District of New Mexico provided significant assistance in this case, including Assistant U.S. Attorney Sarah Davenport. Valuable assistance was provided by the Criminal Division’s Offices of International Affairs and Enforcement Operations.
The investigation in this case was led and conducted by the FBI’s El Paso Field Office. Special assistance was provided by the DEA; the Bureau of Alcohol, Tobacco, Firearms and Explosives; Immigration and Customs Enforcement; the U.S. Marshals Service; U.S. Customs and Border Protection; Federal Bureau of Prisons; U.S. Diplomatic Security Service; the Texas Department of Public Safety; the Texas Department of Criminal Justice; El Paso Police Department; El Paso County Sheriff’s Office; El Paso Independent School District Police Department; Texas Alcohol and Beverage Commission; New Mexico State Police; Dona Ana County, N.M., Sheriff’s Office; Las Cruces, N.M., Police Department; Southern New Mexico Correctional Facility and Otero County Prison Facility New Mexico.
Barren County, Kentucky, Sheriff and Four Deputies Indicted for Federal Civil Rights ViolationsRead the Press Release
WASHINGTON – The Justice Department announced today that a federal grand jury in Kentucky returned a 10-count indictment against Barren County Sheriff Christopher Eaton and Sheriff’s Deputies Danny McCown, Aaron Bennett, Adam Minor and Eric Guffey.
The indictment charges that the defendants used unreasonable force on and injured a man they captured following a vehicle pursuit on Feb. 24, 2011, thereby violating his civil rights. According to the indictment, the defendants assaulted and aided and abetted others in assaulting the victim. Eaton further failed to prevent officers under his command from assaulting the victim.
The indictment also charges each defendant with making false statements to the FBI concerning the assault. In addition, Eaton was charged with falsifying police reports in an effort to cover up the assault, and for tampering with a witness by directing him to create a false report concerning the incident.
The civil rights charges carry a maximum penalty of 10 years in prison for each count, and the false statements charges carry a maximum penalty of up to five years in prison. Additionally, Eaton faces a maximum penalty of 20 years in prison for each count of witness tampering and for falsification of reports.
This case is being investigated by the FBI and prosecuted by Trial Attorneys Roy Conn and Sanjay Patel of the Department of Justice’s Civil Rights Division.
An indictment is merely an accusation, and the defendant is presumed innocent unless proven guilty.
Alabama Man Pleads Guilty to Selling Anhinga FeathersRead the Press Release
WASHINGTON – Alexander D. Alvarez of Atmore, Ala., pleaded guilty in federal court today to violating the Lacey Act and the Migratory Bird Treaty Act (MBTA) for illegally selling and possessing the feathers of anhingas and other migratory birds protected under the MBTA, the Department of Justice Environment and Natural Resources Division and the U.S. Attorney’s Office for the Southern District of Alabama announced.
Alvarez was charged by criminal information on Feb. 1, 2012, with one felony Lacey Act violation, one felony MBTA violation and one misdemeanor MBTA violation. The Lacey Act charge carries a maximum penalty of five years in prison and a fine of $250,000. The felony MBTA charge carries a maximum penalty of two years in prison and a fine of $250,000. The misdemeanor MBTA charge carries a maximum penalty of six months in prison and a fine of $15,000. Sentencing is scheduled for May 22, 2012.
Under the MBTA, the Secretary of the Interior maintains a list of migratory birds which are protected from, among other things, being killed, sold, bartered, transported or possessed, except as otherwise permitted by federal regulation. Enrolled members of federally-recognized American Indian tribes may possess eagle and other migratory bird feathers and parts for religious and ceremonial purposes, but federal law strictly prohibits the sale of migratory birds, feathers or their parts by any person. Alvarez is not an enrolled member of a federally-recognized American Indian tribe. The Lacey Act prohibits, among other things, the sale of wildlife knowing that the wildlife was taken or possessed in violation of any federal wildlife-related regulation or law.
“Mr. Alvarez sought to profit from selling protected bird feathers he had no legal right to possess,” said Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division of the Department of Justice. “Federal law prohibits the sale of migratory birds, feathers or their parts for commercial gain. In enforcing these wildlife laws in partnership with tribal law enforcement, we share a duty to protect the nation’s scarce and precious wildlife resources. In protecting these resources for future generations, we also ensure the ability of federally recognized tribal members to possess eagle and migratory bird feathers for religious and ceremonial practices.”
“Protecting our natural resources, particularly wildlife, from being exploited against the law for personal gain continues to be a significant function of the Department of Justice,” said Kenyen R. Brown, U.S. Attorney for the Southern District of Alabama. “Successful prosecutions of this nature help ensure that the next generation of Americans enjoy the same level of wildlife that we do today.”
According to court documents, Alvarez communicated via email with an individual in Louisiana and eventually exchanged two anhinga tails that Alvarez possessed for a crested caracara tail, a Harris’s hawk tail and $400, which the individual possessed. Alvarez later sent 14 sets of anhinga tail feathers to this individual and asked the individual to photograph and offer the tails for sale via email. Alvarez received payment from the Louisiana individual for the anhinga tail feathers that were sold. A federal search warrant was executed at Alvarez’s home on March 11, 2009, and feathers from several migratory bird species were seized.
This case resulted from an investigation by the U.S. Fish and Wildlife Service’s Office of Law Enforcement into the illegal commercialization of eagles and other migratory birds protected by federal law. The investigation was jointly conducted with the Navajo Nation Department of Fish and Wildlife. The case is being prosecuted by the U.S. Attorney’s Office for the Southern District of Alabama and the Department of Justice’s Environment and Natural Resources Division, Environmental Crimes Section.
14 February 2012
U.S. Army Reserves Sergeant Pleads Guilty to Conspiracy to Defraud the United States Related to Contracting in Support of Iraq WarRead the Press Release
WASHINGTON – A sergeant in the U.S. Army Reserves pleaded guilty today to one count of conspiracy to defraud the United States for receiving money from a local contractor in return for preferentially processing its invoices for payment outside of the proper procedures and protocols, announced Assistant Attorney General Lanny Breuer of the Justice Department’s Criminal Division.
Sergeant Amasha M. King, 33, of Forsyth, Ga., pleaded guilty before U.S. District Judge Marc T. Treadwell in Macon, Ga., to criminal information charging her with one count of conspiracy to defraud the U.S. Department of Defense (DoD).
According to the court documents filed in the Middle District of Georgia, Sergeant King served at Camp Arifjan, Kuwait, from November 2004 to February 2006, in support of Operation Iraqi Freedom as part of the 374th Finance Battalion. While in Kuwait, King was responsible for receiving and processing pay vouchers and invoices from military contractors for various contracts and blanket purchase agreements (BPAs), including BPAs for bottled potable water. A BPA is a type of contract by which the DoD agrees to pay a contractor a specified price for a particular good or service. With King’s approval, the contractors were paid from the finance battalion, and in some instances, King was responsible for the issuance of U.S. government checks to those contractors.
According to the court documents, King agreed to receive money from a military contractor in return for defrauding the United States by preferentially processing the contractor’s invoices outside of the proper procedures and protocols for payment. This allowed the contractor to be paid much faster than usual and ultimately to bid for more contracts than it otherwise could have financed.
Sergeant King admitted that she received four wire transfers totaling approximately $20,500. King admitted that she instructed the contractor to wire the money to designees in the United States and to keep the amounts under $10,000 in order to avoid bank reporting requirements.
King faces up to five years in prison and a fine of $250,000 or twice the amount of the criminally derived property she received. In addition, King has agreed to pay $20,500 in restitution to the United States. A sentencing date has not yet been scheduled by the court.
This case is being prosecuted by Trial Attorney Mark W. Pletcher of the Criminal Division’s Fraud Section. The case is being investigated by the U.S. Army Criminal Investigation Command, the Defense Criminal Investigative Service, the FBI, the Internal Revenue Service, the Special Inspector General for Iraq Reconstruction, and U.S. Immigration and Customs Enforcement’s Homeland Security Investigations.
Two Houston-Area Nurses Sentenced to More Than Five Years in Prison for Roles in $5.2 Million Medicare Fraud SchemeRead the Press Release
WASHINGTON – Two Houston-area nurses and two of their co-conspirators have been sentenced in Houston for their participation in a $5.2 million Medicare fraud scheme, announced the Department of Justice, the FBI and the Department of Health and Human Service (HHS).
- Mary Ellis, 56, a licensed vocational nurse, was sentenced today to 63 months in prison followed by three years of supervised release and was ordered to pay $401,000 in restitution. Ellis was convicted of one count of conspiracy to commit health care fraud, one count of conspiracy to pay kickbacks, three counts of receiving illegal kickbacks and two counts of making false statements following a May 2011 trial.
- Caroline Njoku, 46, also a licensed vocational nurse, was sentenced yesterday to 63 months in prison followed by one year of supervised release and was ordered to pay $631,295 in restitution. Njoku was convicted of one count of conspiracy to commit health care fraud and one count of conspiracy to pay kickbacks following a May 2011 trial.
Terrie Porter, 48, was sentenced yesterday to two years in prison and two years of supervised release and was ordered to pay $482,380 in restitution. Porter was convicted of one count of conspiracy to receive kickbacks and one count of receiving illegal kickbacks following a May 2011 trial. - Florida Holiday Island, 62, was sentenced yesterday to 20 days in prison, five months of home detention and two and a half years of supervised release and was ordered to pay $59,739 in restitution. Island pleaded guilty in March 2011 to one count of conspiracy to receive kickbacks and one count of receiving illegal kickbacks.
The defendants were sentenced by U.S. District Judge Nancy Atlas in the Southern District of Texas. The four defendants were ordered to pay restitution jointly and severally with co-conspirators and defendants in a related case. As part of the sentencing, the court found that Ellis had obstructed justice by testifying untruthfully at trial.
According to the evidence presented at trial and in court documents, Family Healthcare Group, a Houston home health care company, purported to provide skilled nursing to Medicare beneficiaries. Family Healthcare Group paid Ellis, Porter, Island and other co-conspirators to recruit Medicare beneficiaries for the purpose of filing claims with Medicare for skilled nursing that was medically unnecessary and/or not provided. According to evidence presented at trial, Njoku and Ellis falsified documents to support the fraudulent payments. After the Medicare beneficiaries were recruited, other co-conspirators fraudulently signed plans of care stating that the beneficiaries needed home health care when in fact they knew the beneficiaries were not home-bound and not in need of skilled nursing.
Co-defendant Adelma Casas Sevilla, a registered nurse, was previously sentenced to 18 months in prison. A second co-defendant, Sammie Wilson, received three years of probation after pleading guilty to one count of conspiracy to commit health care fraud. Four other defendants involved in the scheme are pending sentencing.
The sentences were announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Kenneth Magidson of the Southern District of Texas; Special Agent-In-Charge Stephen L. Morris of the FBI’s Houston Field Office; Special Agent-in-Charge Mike Fields of the Dallas Regional Office of HHS’s Office of the Inspector General (HHS-OIG) and the Texas Attorney General’s Medicaid Fraud Control Unit (MFCU).
This case is being prosecuted by Trial Attorney Charles D. Reed and Deputy Chief Sam S. Sheldon of the Criminal Division’s Fraud Section. The case was investigated by the FBI, HHS-OIG, Texas OAG-MFCU and the Federal Railroad Retirement Board-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Texas.
Since their inception in March 2007, Medicare Fraud Strike Force operations in nine locations have charged more than 1,190 defendants who collectively have falsely billed the Medicare program for more than $3.2 billion. In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.
Health Care Fraud Prevention and Enforcement Efforts Result in Record-breaking Recoveries Totaling Nearly $4.1 BillionRead the Press Release
Attorney General Eric Holder and Department of Health and Human Services (HHS) Secretary Kathleen Sebelius today released a new report showing that the government’s health care fraud prevention and enforcement efforts recovered nearly $4.1 billion in taxpayer dollars in Fiscal Year (FY) 2011. This is the highest annual amount ever recovered from individuals and companies who attempted to defraud seniors and taxpayers or who sought payments to which they were not entitled.
These findings, released today, in the annual Health Care Fraud and Abuse Control Program (HCFAC) report, are a result of President Obama making the elimination of fraud, waste and abuse a top priority in his administration. The success of this joint Department of Justice and HHS effort would not have been possible without the Health Care Fraud Prevention & Enforcement Action Team (HEAT), created in 2009 to prevent fraud, waste and abuse in the Medicare and Medicaid programs, and to crack down on the fraud perpetrators who are abusing the system and costing American taxpayers billions of dollars. These efforts to reduce fraud will continue to improve with the new tools and resources provided by the Affordable Care Act.
“This report reflects unprecedented successes by the Departments of Justice and Health and Human Services in aggressively preventing and combating health care fraud, safeguarding precious taxpayer dollars and ensuring the strength of our essential health care programs,” said Attorney General Holder. “We can all be proud of what's been achieved in the last fiscal year by the department’s prosecutors, analysts and investigators – and by our partners at HHS. These efforts reflect a strong, ongoing commitment to fiscal accountability and to helping the American people at a time when budgets are tight.”
“Fighting fraud is one of our top priorities and we have recovered an unprecedented number of taxpayer dollars,” said Secretary Sebelius. “Our efforts strengthen the integrity of our health care programs, and meet the President’s call for a return to American values that ensure everyone gets a fair shot, everyone does their fair share, and everyone plays by the same rules.”
Approximately $4.1 billion stolen or otherwise improperly obtained from federal health care programs was recovered and returned to the Medicare Trust Funds, the Treasury and others in FY 2011. This is an unprecedented achievement for HCFAC, a joint effort of the two departments to coordinate federal, state and local law enforcement activities to fight health care fraud and abuse.
The recently-enacted Affordable Care Act provides additional tools and resources to help fight fraud that will help boost these efforts, including an additional $350 million for HCFAC activities. The administration is already using tools authorized by the Affordable Care Act, including enhanced screenings and enrollment requirements, increased data sharing across government, expanded overpayment recovery efforts and greater oversight of private insurance abuses.
Since 2009, the Departments of Justice and HHS have enhanced their coordination through HEAT and have increased the number of Medicare Fraud Strike Force teams. During FY 2011, HEAT and the Medicare Fraud Strike Force expanded local partnerships and helped educate Medicare beneficiaries about how to protect themselves against fraud. The departments hosted a series of regional fraud prevention summits around the country, provided free compliance training for providers and other stakeholders and sent letters to state attorneys general urging them to work with HHS and federal, state and local law enforcement officials to mount a substantial outreach campaign to educate seniors and other Medicare beneficiaries about how to prevent scams and fraud.
In FY 2011, the total number of cities with strike force prosecution teams was increased to nine, all of which have teams of investigators and prosecutors from the Justice Department, the FBI and the HHS Office of Inspector General, dedicated to fighting fraud. The strike force teams use advanced data analysis techniques to identify high-billing levels in health care fraud hot spots so that interagency teams can target emerging or migrating schemes along with chronic fraud by criminals masquerading as health care providers or suppliers. In FY 2011, strike force operations charged a record number of 323 defendants, who allegedly collectively billed the Medicare program more than $1 billion. Strike force teams secured 172 guilty pleas, convicted 26 defendants at trial and sentenced 175 defendants to prison. The average prison sentence in strike force cases in FY 2011 was more than 47 months.
Including strike force matters, federal prosecutors filed criminal charges against a total of 1,430 defendants for health care fraud related crimes. This is the highest number of health care fraud defendants charged in a single year in the department’s history. Including strike force matters, a total of 743 defendants were convicted for health care fraud-related crimes during the year.
In criminal matters involving the pharmaceutical and device manufacturing industry, the department obtained 21 criminal convictions and $1.3 billion in criminal fines, forfeitures, restitution and disgorgement under the Food, Drug and Cosmetic Act. These matters included the illegal marketing of medical devices and pharmaceutical products for uses not approved by the Food and Drug Administration (FDA) or the distribution of products that failed to conform to the strength, purity or quality required by the FDA.
The departments also continued their successes in civil health care fraud enforcement during FY 2011. Approximately $2.4 billion was recovered through civil health care fraud cases brought under the False Claims Act (FCA). These matters included unlawful pricing by pharmaceutical manufacturers, illegal marketing of medical devices and pharmaceutical products for uses not approved by the FDA, Medicare fraud by hospitals and other institutional providers, and violations of laws against self-referrals and kickbacks. This marked the second year in a row that more than $2 billion has been recovered in FCA health care matters and, since January 2009, the department has used the False Claims Act to recover more than $6.6 billion in federal health care dollars.
The fraud prevention and enforcement report announced today coincides with the announcement of a proposed rule from the Centers for Medicare and Medicaid Services aimed at recollecting overpayments in the Medicare program. Before the Affordable Care Act, providers and suppliers did not face a deadline for returning taxpayers’ money. Thanks to the Affordable Care Act, there will be a specific timeframe by which self-identified overpayments must be returned. The Obama Administration has made prevention and recollection of overpayments a government-wide priority. These announcements today are just the latest in a series of steps that the administration is taking to protect taxpayer dollars and keep money in the pockets of Americans.
The HCFAC annual report can be found here, oig.hhs.gov/publications/hcfac.asp. For more information on the joint DOJ-HHS Strike Force activities, visit: www.StopMedicareFraud.gov/
Boca Raton, Florida-based CPA Indicted for Preparing False Tax Returns and Obstructing Internal Revenue LawsRead the Press Release
John P. Miller, a Certified Public Accountant, was indicted by a federal grand jury sitting in the Southern District of Florida with obstructing the Internal Revenue laws and preparing false tax returns the Justice Department and Internal Revenue Service (IRS) announced today.
According to the indictment, Miller, a resident of Boca Raton, created and directed his clients to create Subchapter S corporations and corporate bank accounts into which the clients would deposit personal income. It is alleged that Miller directed his clients to use the corporate bank accounts to pay their personal expenses; Miller, in turn, prepared false individual and corporate tax returns for his clients which falsely claimed personal expenses as business expenses. It is further alleged that Miller made false and misleading statements to special agents from the IRS who were conducting a criminal investigation of his clients.
The indictment returned by the grand jury charges Miller with one count of corruptly endeavoring to obstruct and impede the due administration of the Internal Revenue laws and one count of aiding and assisting in the preparation of false tax returns. If convicted, Miller faces a maximum of three years in prison and a maximum $250,000 fine for each count.
An indictment is only an allegation of criminal conduct and is not evidence of guilt. A person is presumed innocent until and unless proven guilty beyond a reasonable doubt in a court of law.
This case was investigated by IRS-Criminal Investigation and is being prosecuted by Trial Attorneys Matthew J. Mueller and Adam F. Hulbig of the Justice Department’s Tax Division. More information about the Tax Division and its enforcement efforts can be found at www.justice.gov/tax .
100 Women Attend “Lifetime Makeover” Forum Assisting Women Returning from PrisonRead the Press Release
Washington, DC – More than 100 women attended a public symposium last weekend geared toward empowering and motivating women to rebuild their lives after returning home to the District of Columbia from prison or jail.
The Women’s Reentry Forum is an annual event begun several years ago by the Court Services and Offender Supervision Agency (CSOSA). This year’s program was a joint effort co-sponsored by CSOSA, the U.S. Attorney’s Office for the District of Columbia, Our Place, DC, and DC Healthy Start Consortium, Inc., in addition to the U.S. Parole Commission. Numerous other community service organizations also participated.
“We at the Commission were glad to collaborate in the Women’s Reentry Forum, as we did last year,” said Isaac Fulwood, Jr., Chairman of the Parole Commission. “I am firmly of the belief that we are all connected. In this effort to reduce recidivism and effect positive change, the success of the Commission and our partners is inextricably tied to the success of these women as they reenter the community. The tools and the information provided at this forum, along with the close supervision of CSOSA, are just what is needed for the ladies to press forward and be successful. I wish them well.”
Hundreds of women have returned to the community in recent years after serving prison time. In 2009, for example, more than 200 women returned home from prison under CSOSA’s supervision.
“Women returning home face special challenges, and this event was an important opportunity to pull together as a community to help them succeed,” said U.S. Attorney Ronald C. Machen Jr.
“For example,” Parole Commissioner Patricia W. Smoot notes, “besides needing a job when they return from prison, they often have childcare responsibilities too.” Adds Parole Commissioner Patricia K. Cushwa, “They have fewer programming opportunities than male prisoners, and often return with fewer job skills. We are realizing that they often don’t get the programs needed before and after release.”
The reentry program, entitled “Lifetime Makeover: Stepping In, Stepping Out and Stepping Up,” took place on Saturday, February 11, 2012, at Temple of Praise Church, 700 Southern Avenue SE. The forum served a twofold purpose: educating the broader community on the importance of supporting reentry efforts, and providing access to the resources women need to reenter society. Noted U.S. Attorney Machen, “Our public safety depends on giving former offenders the support they need to get back on the right track when they return home from prison.”
The symposium featured panel discussions on housing, employment, life skills/mentoring support, drug treatment/addiction recovery, and building healthy relationships. Speakers included people who supervise and work with female ex-offenders, as well as women who are successfully making the transition. Many panels showcased success stories and first-person accounts from the returnees themselves.
“What was most touching for me, personally, were the stories of these women regarding their initial struggles,” said Cushwa, adding, “When I heard how these smart and savvy women managed to overcome so many reentry obstacles, I wanted to stand up and cheer. They are teaching us what other women need to succeed.”
The day culminated with a “Lifetime Makeover” fashion show in which 24 returning women modeled professional attire and make-up. The show was possible because of a drive at CSOSA and the U.S. Attorney’s Office, as well as the Parole Commission, that garnered hundreds of donated suits and shoes in all sizes and styles. Volunteers from the U.S. Attorney’s Office and CSOSA personally provided styling and make-up application to prepare the women for the show. The make-overs were dramatic, inside and out, as the women were uplifted and encouraged during the process. The women were able to see themselves in a new light after experiencing the transformation. The Lifetime Makeover women walked with a brand new look and outlook on their lives that was evident for all to see.
“We at CSOSA are grateful for the collaboration with our criminal justice and community partners that enabled our Women’s Reentry Program to be a great success,” said Nancy M. Ware, director of CSOSA. “We were able to provide the women in attendance with helpful information about job retention, housing, drug treatment and recovery, and healthy relationships. The women left the event with some of the tools they need to begin their ‘Lifetime Makeover.’ As they go forward in their journey, we will continue to assist and support them in overcoming the challenges they face.”
For more information, please call Johanna Markind at (202) 346-7036.
13 February 2012
Two Individuals Arrested in Connection with Costa Rica-based Business Opportunity Fraud VenturesRead the Press Release
A U.S. citizen and a Canadian citizen were arrested last week in Costa Rica in connection with the operation of a series of fraudulent business opportunities following their indictment by a federal grand jury in Miami on Nov. 29, 2011, the Justice Department and the U.S. Postal Inspection Service announced.
John White, an American, and Kerry Michael Deevy, a Canadian, were arrested based on charges that they and their co-conspirators purported to sell beverage and greeting card business opportunities, including assistance in establishing, maintaining and operating such businesses. The charg es in the indictment form part of the government’s continued nationwide crackdown on business opportunity fraud. Prior to these arrests, eight other individuals were charged and arrested in connection with business opportunity fraud ventures based in Costa Rica. Seven of those eight other individuals have been convicted in the United States. The eighth individual, Jeffrey Pearson, is in custody in Costa Rica.
Beginning in May 2005, White, Deevy and their co-conspirators are alleged to have fraudulently induced purchasers in the United States to buy business opportunities in USA Beverages Inc., Twin Peaks Gourmet Coffee Inc., Cards-R-Us Inc., Premier Cards Inc., The Coffee Man Inc. and Nation West Distribution Company. According to the indictment, the business opportunities the defendants sold cost thousands of dollars each, and most purchasers paid at least $10,000. Each company operated for several months, and after one company closed, the next opened. The various companies used bank accounts, office space and other services in the Southern District of Florida and elsewhere, according to the indictment.
The indictment alleges that the defendants, using aliases, participated in a conspiracy that used various means to make it appear to potential purchasers that the businesses were located entirely in the United States. In reality, according to the indictment, White and Deevy operated out of Costa Rica to fraudulently induce potential purchasers in the United States to buy the purported business opportunities.
According to the indictment, the companies made numerous false statements to potential purchasers of the business opportunities. Among the misrepresentations alleged in the indictment are that purchasers would likely earn substantial profits; that prior purchasers of the business opportunities were earning substantial profits; that purchasers would sell a guaranteed minimum amount of merchandise, such as greeting cards and beverages; and that the business opportunity worked with locators familiar with the potential purchaser’s area who would secure or had already secured high-traffic locations for the potential purchaser’s merchandise stands. Potential purchasers also were falsely told that the profits of some of the companies were based in part on the profits of the business opportunity purchasers, thus creating the false impression that the companies had a stake in the purchasers’ success and in finding good locations, according to the indictment.
The indictment alleges that the companies employed various types of sales representatives, including fronters, closers, and references. A fronter spoke to potential purchasers when the prospective purchasers initially contacted the company in response to an advertisement. A closer subsequently spoke to potential purchasers to close deals. References spoke to potential purchasers about the financial success they purportedly had experienced since purchasing one of the business opportunities.
The indictment alleges that White, using assumed names, was a fronter and reference for USA Beverages, a fronter and reference for Twin Peaks, a fronter and reference for Cards-R-Us, a fronter, closer and reference for Premier Cards, and a fronter, closer and reference for Coffee Man.
The indictment alleges that Deevy, using assumed names, was a fronter and reference for Cards-R-Us, a fronter and reference for Premier Cards, a fronter for Coffee Man, and a fronter and reference for Nation West.
Each of the companies was registered as a corporation and rented office space to make it appear to potential purchasers that its operations were fully in the United States. USA Beverages was registered as a Florida and New Mexico corporation and rented office space in Las Cruces, N.M. Twin Peaks was registered as a Florida and Colorado corporation and rented office space in Fort Collins, Colo., and Cards-R-Us was registered as a Nevada corporation and rented office space in Reno, Nev. Premier Cards was registered as a Colorado and Pennsylvania corporation and rented office space in Philadelphia, and The Coffee Man was registered as a Colorado corporation and rented office space in Denver. Nation West was registered as a Colorado corporation and also rented office space in Denver.
Both defendants were charged with conspiracy to commit mail and wire fraud, and with committing their offenses via telemarketing. In addition, both defendants were charged with five counts of mail fraud and 13 counts of wire fraud. If convicted of conspiracy, White and Deevy face a maximum statutory term of 25 years in prison, a possible fine and mandatory restitution on the conspiracy count. They also face a maximum statutory term of 25 years in prison on each of the mail and wire fraud counts, a possible fine and mandatory restitution.
“Business opportunity fraud is a serious crime. Fraudsters carefully construct legitimate-sounding self-employment opportunities, complete with professional-looking materials and convincing but fake research to back up their claims, then target hardworking individuals who are looking for a chance to make life better for themselves and their families,” said Tony West, Assistant Attorney General for the Justice Department’s Civil Division. “Often, fraudsters use a variety of techniques—U.S.-based postal addresses, reincorporated U.S. businesses that went defunct years before, or U.S.-based toll-free numbers—to make it appear as if the business opportunity they’re offering is legitimate and is based in the U.S. In fact, these schemes are sometimes perpetrated from overseas. That’s why the Justice Department has been vigilant in working with our overseas law enforcement partners so that borders are no barrier to justice being served.”
“Fraudulent business opportunity sellers must realize that all financial fraud will be prosecuted vigorously, even if the schemers operate their fraud from abroad,” said Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida . “Increased international law enforcement cooperation eliminates safe havens for those who cheat American citizens from overseas.”
“This investigation, conducted both here and abroad, shows the Postal Inspection Service’s resolve to protect the American public from business opportunity scams,” said Henry Gutierrez, U. S. Postal Inspector in Charge in Miami.
The United States intends to seek the extradition of White and Deevy from Costa Rica.
Assistant Attorney General West commended the investigative efforts of the Postal Inspection Service. The case is being prosecuted by trial attorneys Jeffrey Steger and Alan Phelps with the U.S. Department of Justice Consumer Protection Branch.
An indictment is merely an allegation, and every defendant is presumed innocent until proven guilty beyond a reasonable doubt.
Statement of the Department of Justice’s Antitrust Division on Its Decision to Close Its Investigations of Google Inc.’s Acquisition of Motorola Mobility Holdings Inc. and the Acquisitions of Certain Patents by Apple Inc., Microsoft Corp. a...Read the Press Release
WASHINGTON – The Department of Justice’s Antitrust Division issued the following statement today after announcing the closing of its investigations into Google Inc.’s acquisition of Motorola Mobility Holdings Inc., the acquisitions by Apple Inc., Microsoft Corp. and Research in Motion Ltd. (RIM) of certain Nortel Networks Corporation patents, and the acquisition by Apple of certain Novell Inc. patents:
“After a thorough review of the proposed transactions, the Antitrust Division has determined that each acquisition is unlikely to substantially lessen competition and has closed these three investigations. In all of the transactions, the division conducted an in-depth analysis into the potential ability and incentives of the acquiring firms to use the patents they proposed acquiring to foreclose competitors. In particular, the division focused on standard essential patents (SEPs) that Motorola Mobility and Nortel had committed to license to industry participants through their participation in standard-setting organizations (SSOs). The division’s investigations focused on whether the acquiring firms could use these patents to raise rivals’ costs or foreclose competition.
“The division concluded that the specific transactions at issue are not likely to significantly change existing market dynamics.
“During the course of the division’s investigation, several of the principal competitors, including Google, Apple and Microsoft, made commitments concerning their SEP licensing policies. The division’s concerns about the potential anticompetitive use of SEPs was lessened by the clear commitments by Apple and Microsoft to license SEPs on fair, reasonable and non-discriminatory terms, as well as their commitments not to seek injunctions in disputes involving SEPs. Google’s commitments were more ambiguous and do not provide the same direct confirmation of its SEP licensing policies.
“In light of the importance of this industry to consumers and the complex issues raised by the intersection of the intellectual property rights and antitrust law at issue here, as well as uncertainty as to the exercise of the acquired rights, the division continues to monitor the use of SEPs in the wireless device industry, particularly in the smartphone and computer tablet markets. The division will not hesitate to take appropriate enforcement action to stop any anticompetitive use of SEP rights.”
BACKGROUND
Google/ Motorola Mobility
On Aug. 25, 2011, Google entered into an agreement to acquire Motorola Mobility, a manufacturer of smartphones and computer tablets and the holder of a portfolio of approximately 17,000 issued patents and 6,800 applications, including hundreds of SEPs relevant to wireless devices that Motorola Mobility committed to license through its participation in SSOs.
Rockstar Bidco
Rockstar Bidco, a partnership that includes, among others, RIM, Microsoft and Apple, was formed to acquire patents at the June 2011 Nortel bankruptcy auction, and to license and distribute them to certain partners. Nortel’s portfolio of approximately 6,000 patents and patent applications includes many SEPs that Nortel committed to license through its participation in SSOs and that are relevant to wireless devices (the Nortel SEPs).
Apple/Novell
Apple also proposes to acquire patents held by CPTN Holdings LLC, formerly owned by Novell, following CPTN’s acquisition in April 2011 of those patents on behalf of Apple, Oracle Corporation and EMC Corporation. As a member of the Open Invention Network (OIN), Novell committed to cross-license its patents on a royalty-free basis for use in the open source “Linux system,” a defined term in the OIN.
Competitive Landscape
Google, Apple, Microsoft and RIM have each developed mobile operating systems for smartphones and tablets. Apple and RIM manufacture and sell the smartphones and tablets that run on their proprietary mobile operating systems. In contrast, Microsoft licenses its proprietary mobile operating systems, Windows Phone 7 and Windows Mobile, to non-affiliated wireless handset original equipment manufacturers (OEMs). Google, in turn, sponsors Android, a mobile operating system that it distributes to OEMs without monetary charge under an open source license. These operating systems provide platforms for a variety of products and services offered by competing handset and tablet manufacturers, as well as, application developers.
At the end of 2011, Google’s Android accounted for approximately 46 percent of the U.S. smartphone operating system platform subscribers and Apple’s iOS was used by about 30 percent of subscribers. RIM and Microsoft accounted for approximately 15 percent and 6 percent of the share of smartphone subscribers, respectively.
Apple’s iPad is the leading tablet in the market, although the recently introduced Android-based tablets are rapidly gaining share. Thus far, tablets running RIM’s and Microsoft’s operating systems have a minimal presence in the marketplace.
The Importance of Standard Setting in the Wireless Industry
Today’s wireless device industry, which includes smartphones and tablets, relies on complex operating systems that allow seamless interaction with wireless communications technologies while providing audio, video and computer functionalities.
To facilitate seamless interoperability, industry participants work through SSOs collectively to develop technical standards that establish precise specifications for essential components of the technology. For example, wireless devices typically implement a significant number of telecommunication and computer standards, including cellular air interface standards (e.g., 3G and 4G LTE standards), wireless broadband technologies (e.g., WiFi and WiMax) and video compression technologies (e.g., H.264). As with other industries, these standards facilitate compatibility among products and provide consumers with a wider range of products and capabilities than would otherwise be available.
Often, many technologies adopted by the SSOs fall within the scope of existing patents or patent applications. Once a patent is included in a standard, it becomes essential to the implementation of that standard, thus the term “Standard Essential Patent.” After industry participants make complementary investments,abandoning the standard can be extremely costly. Thus, after the standard is set, the patent holder could seek to extract a higher payment than was attributable to the value of the patented technology before the standard was set. Such behavior can distort innovation and raise prices to consumers . A comparable harm may also arise in situations outside of the SSO context where a patent holder’s prior actions, such as open source commitments, lead others to make complementary investments (See U.S. Department of Justice and Federal Trade Commission, Antitrust Enforcement & Intellectual Property Rights: Promoting Innovation and Competition, April 17, 2007 at 35-6).
Most SSOs therefore require the owners of patents essential to the proposed standard that are participating in the SSO’s standard-setting activities to make disclosure and licensing commitments with respect to their essential patents. These commitments are intended to reduce the subsequent inappropriate use of the patent rights at issue, and thus prevent disputes that can inhibit innovation and competition. One com mon licensing requirement is to require SSO members to commit to license patented technologies essential to a standard on reasonable and nondiscriminatory (RAND) terms (for SSOs based in the United States) or on fair, reasonable and nondiscriminatory (FRAND) terms (for SSOs based outside the United States) (collectively F/RAND). In practice, however, SSO F/RAND requirements have not prevented significant disputes from arising in connection with the licensing of SEPs, including actions by patent holders seeking injunctive or exclusionary relief that could alter competitive market outcomes.
ANALYSIS
The division’s investigations regarding the acquisitions of the Motorola Mobility and Nortel SEPs focused on whether the acquiring firms would have the incentive and ability to exploit ambiguities in the SSOs’ F/RAND licensing commitments to hold up rivals, thus preventing or inhibiting innovation and competition (The division’s analysis was limited to SEPs encumbered by F/RAND commitments). Such hold up could include raising the costs to rivals by demanding supracompetitive licensing rates, compelling prospective licensees to grant the SEP holder the right to use the licensee’s differentiating intellectual property, charging licensees the entire portfolio royalty rate when licensing only a small subset of the patent holder’s SEPs in its portfolio, or seeking to prevent or exclude products practicing those SEPs from the market altogether. In this analysis, the critical issue is whether the patent holder has the incentive and ability to hold up its competitors, particularly through the threat of an injunction or exclusion order. The division’s analysis focused on how the proposed transactions might change that incentive and ability to do so.
The division concluded that each of the transactions was unlikely to substantially lessen competition for wireless devices. With respect to RIM’s and Microsoft’s acquisition of Nortel patents, their low market shares in mobile platforms would likely make a strategy to harm rivals either through injunctions or supracompetitive royalties based on the acquired Nortel SEPs unprofitable. Because of their low market shares, they are unlikely to attract a sufficient number of new customers to their mobile platforms to compensate for the lost patent royalty revenues. Moreover, Microsoft has cross-license agreements in place with the majority of its Android-based OEM competitors, making such a strategy even less plausible for it.
Apple’s and Google’s substantial share of mobile platforms makes it more likely that as the owners of additional SEPs they could hold up rivals, thus harming competition and innovation. For example, Apple would likely benefit significantly through increased sales of its devices if it could exclude Android-based phones from the market or raise the costs of such phones through IP-licenses or patent litigation. Google could similarly benefit by raising the costs of, or excluding, Apple devices because of the revenues it derives from Android-based devices.
The specific transactions at issue, however, are not likely to substantially lessen competition. The evidence shows that Motorola Mobility has had a long and aggressive history of seeking to capitalize on its intellectual property and has been engaged in extended disputes with Apple, Microsoft and others. As Google’s acquisition of Motorola Mobility is unlikely to materially alter that policy, the division concluded that transferring ownership of the patents would not substantially alter current market dynamics. This conclusion is limited to the transfer of ownership rights and not the exercise of those transferred rights.
With respect to Apple/Novell, the division concluded that the acquisition of the patents from CPTN, formerly owned by Novell, is unlikely to harm competition. While the patents Apple would acquire are important to the open source community and to Linux-based software in particular, the OIN, to which Novell belonged, requires its participating patent holders to offer a perpetual, royalty-free license for use in the “Linux-system.” The division investigated whether the change in ownership would permit Apple to avoid OIN commitments and seek royalties from Linux users. The division concluded it would not, a conclusion made easier by Apple’s commitment to honor Novell’s OIN licensing commitments.
In its analysis of the transactions, the division took into account the fact that during the pendency of these investigations, Apple, Google and Microsoft each made public statements explaining their respective SEP licensing practices. Both Apple and Microsoft made clear that they will not seek to prevent or exclude rivals’ products from the market in exercising their SEP rights.
Apple outlined its view of F/RAND in a letter to the European Telecommunications Standards Institute (ETSI) on Nov. 11, 2011, stating among other things:
“A party who made a FRAND commitment to license its cellular standards essential patents or otherwise acquired assets/rights from a party who made the FRAND commitment must not seek injunctive relief on such patents. Seeking an injunction would be a violation of the party’s commitment to FRAND licensing.” (emphasis supplied)
Microsoft stated publicly on Feb. 8, 2012, among other things:
“This means that Microsoft will not seek an injunction or exclusion order against any firm on the basis of those essential patents.”
If adhered to in practice, these positions could significantly reduce the possibility of a hold up or use of an injunction as a threat to inhibit or preclude innovation and competition.
Google’s commitments have been less clear. In particular, Google has stated to the IEEE and others on Feb. 8, 2012, that its policy is to refrain from seeking injunctive relief for the infringement of SEPs against a counter-party, but apparently only for disputes involving future license revenues, and only if the counterparty: forgoes certain defenses such as challenging the validity of the patent; pays the full disputed amount into escrow; and agrees to a reciprocal process regarding injunctions. Google’s statement therefore does not directly provide the same assurance as the other companies’ statements concerning the exercise of its newly acquired patent rights. Nonetheless, the division determined that the acquisition of the patents by Google did not substantially lessen competition, but how Google may exercise its patents in the future remains a significant concern.
For these reasons the division continues to have concerns about the potential inappropriate use of SEPs to disrupt competition and will continue to monitor the use of SEPs in the wireless device industry, particularly as they relate to smartphones and computer tablets. The division’s continued monitoring of how competitors are exercising their patent rights will ensure that competition and innovation are unfettered in this important industry.
All three of the transactions highlight the complex intersection of intellectual property rights and antitrust law and the need to determine the correct balance between the rightful exercise of patent rights and a patent holder’s incentive and ability to harm competition through the anticompetitive use of those rights.
Agency Cooperation
During the course of its investigation of the Google/Motorola Mobility transaction, the Department of Justice cooperated closely with the European Commission. In addition, the Department of Justice had discussions with the Australian Competition and Consumer Commission, Canadian Competition Bureau, Israeli Antitrust Authority and the Korean Fair Trade Commission. In connection with the investigations relating to the Nortel patent assets, the division worked closely with states of New York and California and with the Canadian Competition Bureau.
The Antitrust Division’s Closing Statement Policy
The division provides this statement under its policy of issuing statements concerning the closing of investigations in appropriate cases. This statement is limited by the division’s obligation to protect the confidentiality of certain information obtained in its investigations. As in most of its investigations, the division’s evaluation has been highly fact-specific, and many of the relevant underlying facts are not public. Consequently, readers should not draw overly broad conclusions regarding how the division is likely in the future to analyze other collaborations or activities, or transactions involving particular firms. Enforcement decisions are made on a case-by-case basis, and the analysis and conclusions discussed in this statement do not bind the division in any future enforcement actions. Guidance on the division’s policy regarding closing statements is available at: www.usdoj.gov/atr/public/guidelines/201888.htm.
North Carolina Corporate Hog Farm and President Sentenced to Pay $1.5 Million for Violating the Clean Water ActRead the Press Release
WASHINGTON – Freedman Farms Inc. was sentenced today in federal court to five years probation and ordered to pay $1.5 million in fines, restitution and community service payments for violating the Clean Water Act when they discharged hog waste into a stream that leads to the Waccamaw River, announced the Department of Justice’s Environment and Natural Resources Division and the U.S. Attorney’s Office for the Eastern District of North Carolina.
William B. Freedman, president of Freedman Farms, was sentenced to six months in prison to be followed by six months of home confinement.
Freedman Farms was sentenced to pay a $500,000 criminal fine and $925,000 in restitution. The judge will hold a status conference in 30 days to determine the scope of restitution to compensate for or repair lost or injured resources that resulted from these violations. In addition, a community service payment of $75,000 will be paid directly to the Southern Environmental Enforcement Network (SEEN), one of four U.S. regional environmental enforcement associations established to train environmental enforcement professionals. SEEN is to use the funds for funding environmental projects designed to preserve and restore waters in the Eastern District of North Carolina.
Freedman Farms also is required to implement a comprehensive environmental compliance program and institute an annual training program.
“William Freedman and Freedman Farms will be held accountable for polluting waterways and wetlands in Columbus County and the Waccamaw River watershed,” said Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division of the Department of Justice. “Owners and operators of concentrated animal feeding operations must comply with the nation’s Clean Water Act for the protection of America’s streams, wetlands and rivers.”
“It is vital to the well-being of our residents to protect our natural resources, including the numerous streams and marshes found in the Eastern part of North Carolina,” said Thomas G. Walker, U.S. Attorney for the Eastern District of North Carolina. “This prosecution reflects our ongoing efforts to protect the environment and resources that we all cherish.”
“Concentrated Animal Feeding Operations (CAFOs), like Freedman Farms, are an EPA enforcement priority because manure, if not properly controlled, can contaminate both surface waters and ground waters that may be used as drinking water sources and harm fish and other aquatic species,” said Maureen O'Mara, Special Agent-in-Charge of EPA's criminal enforcement office in Atlanta. “In this case, hog wastes flowed through sensitive wetlands, posing a risk to water and wildlife. Today's sentences send a clear message to CAFO's and their owners that if you disregard the law, you will be prosecuted.”
According to evidence presented in court, Freedman Farms discharged hog waste into Browder’s Branch, a tributary to the Waccamaw River that flows through the White Marsh, a large wetlands complex. Freedman Farms, located in Columbus County, N.C., is in the business of raising hogs for market, and this particular farm had some 4,800 hogs. The hog waste was supposed to be directed to two lagoons for treatment and disposal. In December 2007, hog waste was discharged from Freedman Farms directly into Browder’s Branch.
The Clean Water Act is a federal law that makes it illegal to knowingly or negligently discharge a pollutant into a water of the United States.
The case was investigated by the U.S. Environmental Protection Agency (EPA) Criminal Investigation Division and the North Carolina State Bureau of Investigation, with assistance from the EPA Science and Ecosystem Support Division. The case was prosecuted by Assistant U.S. Attorney J. Gaston B. Williams of the Eastern District of North Carolina and Trial Attorney Mary Dee Carraway of the Environmental Crimes Section of the Justice Department’s Environment and Natural Resources Division.
New York Man Arrested on Identity Theft and Tax Fraud ChargesRead the Press Release
Gary Rogers, of East Meadow, N.Y., was arrested today after being charged with identity theft and tax fraud after filing more than 200 false tax returns with the Internal Revenue Service (IRS), the Justice Department and IRS announced.
Rogers was named in a federal criminal complaint that alleged he used stolen identification information to make false claims against the U.S. government by filing false tax returns to obtain fraudulent refunds. According to the affidavit in support of the criminal complaint filed in U.S. District Court in Brooklyn, Rogers filed approximately 200 federal income tax returns from 2004 through 2010 using the identification information of others. The complaint alleges that Rogers sought approximately $4,393,356 in fraudulent refunds over the six year period.
“The Justice Department will remain vigilant in protecting Americans’ identities and tax dollars from thieves,” said Principal Deputy Assistant Attorney General John A. DiCicco of the Justice Department’s Tax Division. “Those who steal identities and use them to commit tax refund fraud will be punished to the full extent of the law.”
“The IRS is aggressively pursuing those who steal others’ identities in order to file false returns,” said Steven Miller, IRS Deputy Commissioner for Services and Enforcement. “Our cooperative work with the U.S. Attorney’s Office and the Tax Division will help protect taxpayers in New York from being victimized by identity theft. The IRS is taking additional steps this tax season to further prevent, detect and resolve identity theft cases as soon as possible.”
A criminal complaint is merely an allegation and a defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law. If convicted on these charges, Rogers faces a two year mandatory minimum sentence for aggravated identity theft, a potential maximum sentence of five years in prison for each count of filing a false claim against the United States and mail fraud.
The case was investigated by the IRS - Criminal Investigation and is being prosecuted by Trial Attorneys Mark Kotila and Andrew P. Young of the of Justice Department’s Tax Division.
Additional information about the Tax Division and its enforcement efforts may be found at www.justice.gov/tax.
Massachusetts Man Sentenced to 60 Months in Prison for Participating in International Child Pornography RingRead the Press Release
WASHINGTON – A Massachusetts man was sentenced today in Los Angeles to 60 months in prison, followed by 20 years of supervised release, for conspiracy to distribute child pornography, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney André Birotte Jr. of the Central District of California and Assistant Director in Charge Steve Martinez of the FBI’s Los Angeles Field Office.
Joseph Tierney, 24, of Wellesley, Mass., was sentenced by U.S. District Judge Virginia A. Phillips. Tierney pleaded guilty in August 2011 to one count of conspiracy to distribute child pornography.
Today’s sentencing is the result of an international investigation into the “Lost Boy” online bulletin board. The Lost Boy bulletin board, according to court documents and proceedings, was dedicated to men who have a sexual interest in young boys and was established to provide a forum to trade child pornography.
Federal authorities, working in conjunction with a coalition of international law enforcement agencies, shut down the Lost Boy bulletin board approximately three years ago. As a result of the investigation, 16 named defendants were charged in the United States and arrested for their roles in the bulletin board. To date, 15 defendants have pleaded guilty or have been convicted at trial and one defendant passed away. Six additional men have been charged with child molestation as a result of the investigation, which also led to the identification of 27 domestic victims of child abuse, some of whom were portrayed in images posted to the Lost Boy bulletin board.
According to court documents and proceedings, law enforcement authorities discovered the Lost Boy bulletin board after receiving information from Eurojust, the judicial cooperation arm of the European Union. Eurojust provided U.S. law enforcement with leads obtained from Norwegian and Italian authorities indicating that a North Hollywood, Calif., man was communicating with an Italian national about child pornography and how to engage in child sex tourism in Romania. Acting on the information from Europe, the FBI executed search warrants that led to the discovery of the Lost Boy network. Further investigation revealed that Lost Boy had 35 members, 16 of whom were U.S. nationals. Other members of the network were located in countries around the world, including Belgium, Brazil, Canada, France, Germany, New Zealand and the United Kingdom.
According to court documents, Lost Boy had a thorough vetting process for new members, who were required to post child pornography to join the organization. Once accepted, members were required to continue posting child pornography to remain in good standing and to avoid removal from the board. According to court documents, Lost Boy members advised each other on techniques to evade detection by law enforcement, which included using screen names to mask identities and encrypting computer data.
International law enforcement efforts involving European law enforcement, the Brazilian Federal Police and other agencies have identified child molestation suspects in South America, Europe and New Zealand. Three suspects in Romania, one in France and another in Brazil have been charged, and offenders have been convicted in Norway and the United Kingdom. Law enforcement efforts have also identified dozens of child victims located in Norway, Romania, Brazil and other nations.
The investigation into the Lost Boy bulletin board was led by the FBI and the U.S. Postal Inspection Service, in conjunction with the Los Angeles-based Sexual Assault Felony Enforcement (SAFE) Team. The High Technology Investigative Unit of the Child Exploitation and Obscenity Section (CEOS) in the Justice Department’s Criminal Division, along with Eurojust, have provided invaluable assistance during the investigation.
The case is being prosecuted by Assistant U.S. Attorneys Joey L. Blanch and Yvonne Garcia of the Central District of California and CEOS Trial Attorney Andrew McCormack.
Justice Department Settles with City of Highland Park, Michigan, to Enforce Employment Rights of U.S. Army ReservistRead the Press Release
WASHINGTON – The Justice Department announced today that it has reached a settlement with the city of Highland Park, Mich., to resolve allegations that the city willfully violated the Uniformed Services Employment and Reemployment Rights Act (USERRA) by failing to properly reemploy firefighter and U.S. Army reservist Paul A. Baetz in July 2009 when he returned from military service in Afghanistan in support of Operation Enduring Freedom.
The Justice Department’s complaint, filed in the U.S. District Court for the Eastern District of Michigan in Detroit, alleges that while Mr. Baetz was overseas in military service, the city of Highland Park promoted three auxiliary firefighters with less seniority than Mr. Baetz to full-time firefighter and refused to properly re-employ Mr. Baetz as a full-time firefighter upon his return. Subject to certain conditions, USERRA requires employers to promptly re-employ returning service members in the positions they would have held had their employment not been interrupted by military service, or in a position of like seniority, status and pay.
Under the terms of the settlement, embodied in a consent decree that was approved by the district court, the city of Highland Park must pay Baetz approximately $25,000 in compensation for lost wages, back pension contributions and other damages. Although the city promoted Mr. Baetz after the Justice Department opened its investigation, the consent decree also requires that the city retroactively adjust the date of Mr. Baetz’s promotion back to the time he should have received it in 2009.
“Uniformed service benefits our nation and should not require a service member to lose his or her chance for civilian career advancement,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Justice Department will take the steps necessary to ensure that all employers meet their obligations under USERRA.”“The U.S. Attorney’s Office is committed to enforcing the rights of our soldiers and veterans,” said Barbara L. McQuade, the U.S. Attorney for the Eastern District of Michigan. “We owe it to our service members to protect their civilian career opportunities while they are sacrificing so much to serve our country.”
The case was litigated by Assistant U.S. Attorney Susan K. DeClercq in the U.S. Attorney’s Office for the Eastern District of Washington, in collaboration with Jodi Danis, Special Counsel, in the Civil Rights Division of the Justice Department. The case stems from a referral from the U.S. Labor Department following an investigation by its Veterans’ Employment and Training Service.
The Justice Department’s Civil Rights Division and the U.S. Attorney’s Offices have given a high priority to the enforcement of service members’ rights under USERRA. Additional information about USERRA can be found on the Justice Department’s websites at www.justice.gov/crt/emp and www.servicemembers.gov, as well as on the Labor Department’s website at www.dol.gov/vets/programs/userra/main.htm.Department of Justice FY 2013 Budget RequestRead the Press Release
Attorney General Eric Holder announced today that President Obama’s FY 2013 Budget proposal totaling $27.1 billion for the Department of Justice identifies over $1 billion in efficiencies, savings and rescissions while providing resources to sustain critical national security programs, uphold the department’s traditional missions with an increased focus on financial and mortgage fraud and civil rights enforcement, invest in prisons and detention capacity, and assist our state, local and tribal law enforcement partners. The request represents a 0.4 percent decrease in budget authority from the FY 2012 enacted level.
“The President’s Budget request will provide the department with the resources necessary to continue protecting the American people from terrorism and other urgent threats to our national security. It will enable us to safeguard citizens from violent crime and threats to the most vulnerable among us. And it will strengthen critical efforts to combat financial and mortgage fraud, while recognizing the valuable role of state, local and tribal law enforcement partners in achieving national goals,” said Attorney General Holder. “As in previous years, this budget incorporates department-wide savings and efficiencies while identifying new ways to cut costs without affecting our core missions.”
The $27.1 billion budget request includes program increases for critical administration priorities, including $55 million to investigate and prosecute financial and mortgage crimes; $31.8 million to increase funding for traditional missions, including $5 million in new money to prevent human trafficking, hate crimes and police misconduct; and $141.2 million for prisons and detention to ensure prisoners and detainees are confined in secure facilities. The budget addresses the federal prison population by allowing eligible inmates to earn sentence reductions for good behavior and participation in certain reentry programs, freeing up federal prison space and reducing long-term costs. In addition, the budget provides $4 billion to sustain the department’s critical national security mission and nearly $2 billion in funding to maintain security along the Southwest Border. Finally, the budget continues to foster valued partnerships through state, local and tribal assistance to enhance public safety, protect women and children, and reduce recidivism.
The Department of Justice’s key priorities include:
· $4 billion to sustain national security;
· $55 million increase for investigating and prosecuting financial and mortgage fraud;
· $31.8 million increase to uphold traditional law enforcement, immigration and litigation-related missions;
· $8.6 billion for federal prisons and detention;
· $2 billion to maintain assistance to state, local and tribal law enforcement;
· Over $1 billion in administrative efficiencies, programmatic savings redirections in grant programs and rescissions from balances.
National Security
Defending national security from both internal and external threats remains the Department of Justice’s highest priority. The FY 2013 Budget request provides a total of $4 billion to maintain critical counterterrorism and counterintelligence programs and sustain recent increases for intelligence gathering and surveillance capabilities.
The administration supports critical national security programs within the department, including those led by the Federal Bureau of Investigation (FBI) and the National Security Division (NSD). In FY 2011, the FBI dedicated approximately 4,200 agents to investigate more than 33,000 national security cases. NSD has continued to carry out its primary functions to prevent acts of terrorism and espionage in the United States and to facilitate the collection of information regarding the activities of foreign agents and powers.
Investigating cybercrime and protecting our nation’s critical network infrastructure is a top priority of the department. The President’s FY 2013 Budget request maintains recent increases for the FBI’s cyber terrorism investigations, the National Cyber Investigative Joint Task Force (NCIJTF) and the forensic examination of digital evidence. In addition, other department components have made critical investments to protect U.S. citizens and secure our homeland, and these components will continue their efforts in FY 2013.
For more information, view the National Security Fact Sheet at http://www.justice.gov/jmd/2013factsheets/.
Financial and Mortgage Fraud
The administration and the Department of Justice remain committed to investigating and prosecuting financial fraud that harms the American people and the financial markets. To strengthen our efforts at combating this fraud, we propose a program increase of $55 million for financial and mortgage fraud initiatives to complement ongoing efforts to root out various forms of fraud, including health care fraud, that are supported by existing direct resources and reimbursable funding.
The department plays a crucial role in the federal financial recovery effort through criminal and civil litigation. The FY 2013 Budget requests resources that will strengthen the department’s ability to pursue large-scale financial fraud investigations so Americans’ investments are protected. The department will increase its efforts to help restore confidence in our markets, protect the federal Treasury and defend the interests of the U.S. government.
The department requests program increases for a variety of economic fraud enforcement efforts, including work being done by Department of Justice members of the President’s Financial Fraud Enforcement Task Force. This increase will support additional FBI agents, criminal prosecutors, civil litigators, investigators, forensic accountants and other support positions. The additional resources will support the department’s investigation and prosecution of the broad range of crimes that fall under the definition of financial fraud, including securities and commodities fraud, investment scams and mortgage foreclosure schemes.
For health care fraud enforcement, the department uses funding provided by the Department of Health and Human Services (HHS). The FY 2013 Budget for HHS requests an additional $71.7 million for the department to address health care fraud. This increase will strengthen and expand Department of Justice and HHS’ Medicare Fraud Strike Forces, support the expansion of the department’s civil litigation efforts, specifically in areas such as pharmaceutical fraud and off-label marketing, and provide additional resources in our efforts to eliminate abuse and substandard care in public health care facilities, Medicare and Medicaid funded nursing homes and other long-term care facilities.
For more information, view the Financial and Mortgage Fraud Fact Sheet and the Health Care Fraud Fact Sheet at http://www.justice.gov/jmd/2013factsheets/
Traditional Missions
The budget requests program increases for transnational enforcement of intellectual property law. In addition, it requests increases to address new emerging cyber security threats, including insider threats; provide advanced intrusion detection and response capabilities; and implement cost efficient, scalable enterprise information technology architecture. Budget increases also support operational and administrative expenses in pursuit of the department’s transnational organized crime enforcement activities, and provide additional funding for the Office of Tribal Justice, the Office of the Inspector General and the Office of the Pardon Attorney.
The department also maintains substantial responsibilities with respect to immigration, including, but not limited to, enforcement, detention, judicial functions, administrative hearings and litigation. The FY 2013 Budget requests funds for the Executive Office for Immigration Review (EOIR) to expand the Legal Orientation Program, which educates detained aliens on EOIR immigration proceedings. This allows detained aliens to make more informed decisions early in the adjudication process, reducing overall program costs for both EOIR courts and Department of Homeland Security detention programs.
Finally, the department requests additional resources to provide for the vigorous enforcement of the nation’s civil rights laws. The FY 2013 Budget requests resources for the Civil Rights Division to address areas such as human trafficking, hate crimes, voting rights enforcement and fair lending enforcement. Funds are also requested for the Community Relations Service.
For more information, view the Traditional Missions Fact Sheet at http://www.justice.gov/jmd/2013factsheets/
Prisons and Detention
The department has made strategic investments in law enforcement initiatives that have improved the nation’s security and made communities safer. The result of these important enforcement efforts has been an expansion in the need for prison and detention capacity. The department continues to prioritize the maintenance of secure, controlled detention and prison facilities, as well as investment in programs that can reduce recidivism. The FY 2013 Budget requests a total of $8.6 billion for prisons and detention. The request invests in prisons and detention capacity, providing $223.9 million in prison and detention adjustments and $141.2 million for program increases to maintain current services, improve prisoner reentry and ensure prisoners are confined in secure facilities.
For the Federal Bureau of Prisons (BOP), the budget includes resources to fully activate two prisons: Federal Corrections Institution (FCI) Aliceville, Ala., and FCI Berlin, N.H. These prisons received partial activation funding in FY 2012, which will increase federal prison capacity and alleviate overcrowding and related security issues. BOP also plans to expand the residential drug abuse treatment program (RDAP), in support of Second Chance Act objectives. The requested funding will help BOP reach the goal of providing 12-month sentence credits for completion of the RDAP program to all eligible inmates, resulting in fewer taxpayer resources directed at housing inmates.
Program increases are essential to help BOP keep pace with a growing inmate population and to ensure the secure detention of an increased number of inmates. Increases for BOP include funds to begin activation of two prisons, U.S. Penitentiary Yazoo City, Miss. and FCI Hazleton, W.Va.
For more information, view the Prisons and Detention Fact Sheet at http://www.justice.gov/jmd/2013factsheets/
State, Local and Tribal Law Enforcement
In total, the FY 2013 budget requests $2 billion for state, local and tribal law enforcement assistance. These funds will allow the department to continue to support our state, local and tribal partners who fight violent crime, combat violence against women and support victim programs. The department continues to maintain key partnerships with state, local and tribal community members through programs such as the Community Oriented Policing Services (COPS) grant program.
The FY 2013 Budget request for the Office on Violence Against Women (OVW), a total of $412.5 million ($268 million in direct funding) with the balance funded through receipts from the Crime Victims Fund (CVF), will provide communities with the opportunity to combat sexual assault and violence against women. The request includes an increase of $3.5 million to the Rural Domestic Violence and Child Abuse Enforcement Assistance Program, which will improve the safety of children, youth and adults who are victims of domestic violence, dating violence, sexual assault and stalking by supporting projects uniquely designed to address and prevent these crimes in rural jurisdictions. The department is requesting $1.4 billion for the Office of Justice Programs’ (OJP) grant programs ($1.18 billion in direct funding, with the balance derived through receipts from the CVF). A total of $20 million is requested for the Byrne Criminal Justice Innovation Program, $21 million for Residential Substance Abuse Treatment, $80 million for Second Chance, $70 million for Part B Juvenile Justice Formula Grants and $20 million for a new evidence-based juvenile justice competitive demonstration grant program.
The budget proposes to preserve important OVW and OJP grant programs that directly or indirectly assist victims of crime by funding them through CVF receipts, which continue to surpass historical levels, rather than with discretionary budget authority, which has been declining. Use of these funds will not interfere with formula funding for crime victims, which is fully protected under the proposal.
For more information, view the State, Local and Tribal Law Enforcement Fact Sheet at http://www.justice.gov/jmd/2013factsheets/
Savings and Efficiencies
The FY 2013 Budget streamlines programs and redirects funding to improve the capabilities of the department. As such, the budget proposes over $1 billion in efficiencies, offsets, redirections of grant program funding and rescissions. Excluding the redirection of grant program funding, the budget includes $647 million in savings, program and management offsets and one-time rescissions of prior year balances to support our highest priority missions.
Savings and efficiencies include information technology savings, space reductions, administrative efficiencies, overhead reductions and operational efficiencies. The department also proposes to consolidate and realign components to increase efficiencies, including refocusing and realigning the National Drug Intelligence Center functions into the Drug Enforcement Administration. In addition, the budget proposes to merge the detention functions currently performed by the Office of the Federal Detention Trustee into the U.S. Marshals Service to better align detention resources with operations, simplify the financial process supporting detention housing and reduce administrative costs. In addition to department-wide initiatives, component-unique program savings have been identified, including expanding BOP’s compassionate release to inmates with medical conditions that have served at least two-thirds of their sentence (excluding those sentences for violent or sex offenses) and implementing proposed legislation to make changes in the federal inmate good conduct time credit incentives.
The department has actively pursued savings and efficiencies in other areas consistent with the President’s Campaign to Cut Waste and will continue to do so in FY 2013. We have made significant efforts to limit and reduce spending in the areas of publication, travel, supplies, fleet, advisory contracts, promotional items and information technology devices to meet or exceed a reduction target of $146 million from FY 2010 levels.
For more information, view the Savings and Efficiencies Fact Sheet at http://www.justice.gov/jmd/2013factsheets/
Co-Owner of Two Los Angeles-Area Health Care Companies Sentenced to 96 Months in Prison for Health Care FraudRead the Press Release
WASHINGTON – The co-owner of two Los Angeles-area health care companies was sentenced today to 96 months in prison for his conviction stemming from a nine-year scheme to defraud Medicare, announced the Departments of Justice and Health and Human Services (HHS).
U.S. District Judge Stephen V. Wilson also ordered Evans Oniha, 49, to pay $7 million in restitution and to serve three years of supervised release following his prison term. A federal jury in the Central District of California found Oniha guilty on July 7, 2011, of one count of conspiracy to commit health care fraud, four counts of health care fraud and one count of false statements relating to health care matters.
According to court documents, in 2002, Oniha and co-defendant Camillus Ehigie founded and began operating Prosperity Home Health Services Inc., a home health agency, and Caravan Medical Supplies Inc., a durable medical equipment (DME) company. According to testimony presented at trial, from October 2002 to February 2011, Oniha conspired with Ehigie and others to defraud Medicare by paying “marketers” for Medicare beneficiary information, fraudulent prescriptions and other documents for DME and home health services. Testimony at trial showed that the marketers were individuals who acquired patient Medicare numbers and doctors’ prescriptions and sold them to Oniha. Oniha used these fraudulent documents to submit and cause the submission of false claims to Medicare for DME and home health services that were not medically necessary and that often were not provided to Medicare beneficiaries. According to court documents, Oniha caused Prosperity to submit approximately $8 million in fraudulent claims to Medicare for home health services purportedly provided by Prosperity. Oniha caused Caravan to submit approximately $5.8 million in fraudulent claims to Medicare for DME purportedly provided by Caravan.
On July 5, 2011, Ehigie pleaded guilty to 11 counts of health care fraud, one count of conspiracy to commit health care fraud, one count of making false statements in a federal health care investigation and one count of obstructing a criminal health care investigation. Ehigie is scheduled to be sentenced on July 9, 2012.
The case is being prosecuted by Trial Attorney William G. Kanellis and Deputy Chief Charles La Bella of the Criminal Division’s Fraud Section. The case was investigated by the FBI and HHS Office of Inspector General (HHS-OIG) and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Central District of California.
Since their inception in March 2007, Medicare Fraud Strike Force operations in nine locations have charged more than 1,190 defendants who collectively have falsely billed the Medicare program for more than $3.2 billion. In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov .
10 February 2012
U.S. Files Criminal Charges Against Dallas Company in Connection with Misbranded Drug Shipment That Led to Three DeathsRead the Press Release
The Justice Department, at the request of the Food and Drug Administration’s Office of Criminal Investigations (FDA-OCI), has charged Gary D. Osborn and his corporation, ApothéCure Inc., with two misdemeanor criminal violations of the Federal Food, Drug and Cosmetic Act (FDCA) in connection with their interstate shipment of two lots of misbranded colchicine injectable solution that led to the deaths of three people in the Pacific Northwest. The United States filed the criminal information in the U.S. District Court for the Northern District of Texas. ApothéCure is a compounding pharmacy. The company, founded in 1991, is located in Dallas.
Colchicine is used to prevent gout attacks (sudden, severe pain in one or more joints caused by abnormally high levels of a substance called uric acid in the blood) in adults, and to relieve the pain of gout attacks when they occur.
The government’s charges are based on ApothéCure’s February 2007 shipment of 72 vials of compounded colchicine to a now-defunct medical center in Portland, Ore. On March 19, 2007, a patient in Yakima, Wash., received colchicine from this shipment. That patient died after receiving the infusion. The medical examiner there determined that the cause of death was multiple organ failure and acute colchicine toxicity. On March 30, 2007, colchicine from ApothéCure was administered to two other patients who were suffering from back pain. Within hours of receiving the colchicine injections, both patients became seriously ill and were taken to local hospitals. Both patients died shortly thereafter. The medical examiner in Oregon determined colchicine toxicity to be the cause of death for both patients.
FDA testing of vials selected from the lethal shipment revealed that some of the vials were super-potent, containing 640 percent of the level of colchicine declared on the label. Other vials were determined to be sub-potent, and contained less than 62 percent of the declared levels on the labels.
“The criminal charges we are filing today allege that the drugs mixed by Mr. Osborn’s company were misbranded which led to the tragic deaths of three people,” said Tony West, Assistant Attorney General of the Civil Division of the Department of Justice. “We can’t allow those who fail to take care that their products are safe to escape accountability, and today's enforcement action demonstrates we won’t.”
The criminal information filed today charges that ApothéCure committed two prohibited acts under the FDCA by shipping misbranded drugs in interstate commerce. Mr. Osborn, as the person with responsibility over the firm’s operations, is strictly liable under the FDCA for the firm’s failure to follow federal law. In addition to the federal government’s criminal charges, Attorneys General have pursued civil actions in Texas and Oregon against Mr. Osborn and ApothéCure.
Assistant Attorney General West acknowledged the close partnership with the FDA and OCI, which referred this matter to the Justice Department. The case is being prosecuted by Trial Attorneys John Claud and Patrick Runkle of the Civil Division’s Consumer Protection Branch.
A criminal misdemeanor information is merely an allegation, and every defendant is presumed innocent until proven guilty beyond a reasonable doubt.Pennsylvania-based Lender to Pay U.S. $3.9 Million to Resolve False Claims Liability Related to Two Nursing Home MortgagesRead the Press Release
Capmark Finance LLC in Horsham, Pa., has agreed to pay the United States $3.9 million, to settle a False Claims Act lawsuit, the Justice Department announced today. The lawsuit, filed in the Central District of California, alleges that Capmark made false statements in connection with two nursing home mortgage loans insured by the U.S. Department of Housing and Urban Development (HUD). Shortly after the United States filed its complaint in 2009, Capmark filed for bankruptcy protection.
The United States alleges that Capmark misrepresented material facts critical to the borrowers’ creditworthiness in the two loan applications and that Capmark’s false statements induced HUD to insure the loans, both of which defaulted, causing a loss to the government. The two nursing homes were Canoga Care Center in Canoga Park, Calif., and Hudson Valley Care Center in Ghent, N.Y.
The allegations arise from investigation and audit work conducted by the HUD Office of Inspector General. This case was handled by the Justice Department’s Civil Division with the assistance of HUD’s Office of General Counsel, Program Enforcement Branch.
“Today’s action should be a reminder to all FHA mortgage lenders. Attesting to things you know to be false is not only lying, it is against the law and there will be consequences,” said Helen Kanovsky, HUD’s General Counsel.
This law enforcement action is in part sponsored by the interagency Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. It includes representatives from a broad range of federal agencies, including 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, 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 rimes.
Louisiana Hunting Outfitter Pleads Guilty to Illegally Killing Protected AlligatorRead the Press Release
WASHINGTON - Gregory K. Dupont, 38, of Plaquemine, La., pleaded guilty today in U.S. District Court in Baton Rouge, La., to one felony count of illegally guiding out-of-state sport hunters to unauthorized areas to hunt American alligators (Alligator mississippiensis) in violation of the Lacey Act, the U.S. Endangered Species Act and Louisiana law, the Justice Department announced.
Sentencing in this case has been scheduled for June 20, 2012. Dupont was also ordered to surrender custody of his firearms to pre-trial services.
Gregory K. Dupont was a licensed alligator hunter, who, in September 2006, guided his clients to an area which was unapproved, that is an area for which he did not have the required Convention on International Trade of Endangered Species (CITES) tags. During this illegal hunt, Dupont took his clients to a property in Iberville Parish, La., where one of his clients killed an American alligator. Dupont tagged the alligator illegally with a tag for another property. He did not have tags permitting them to hunt in that area at all.
In 1967, American alligators were listed as an endangered species because the total population size in the United States reached drastically low numbers due to severe poaching and overharvesting. This protected status and of the Lacey Act, the Endangered Species Act and regulations promulgated by the U.S. Fish and Wildlife Service and the state of Louisiana led to the recovery of the American alligator population, and American alligators were down-listed to threatened status in 1987. The American alligator is currently listed on Appendix II of CITES, which is the only treaty that deals with international trade in protected species. There are 175 member countries, including the United States. The success of the American alligator conservation program in the United States is second only to that of the Bald Eagle.
Because American alligators remain federally protected, alligator hunting is regulated by federal and state rules and regulations, which require, among other things, the tagging of all harvested alligators. The integrity of the tagging system is crucial to Louisiana’s alligator management program because it enables the Louisiana Department of Wildlife and Fisheries to monitor harvest areas, alligator size and the number of alligators taken. This system depends in significant part upon the honesty and self-regulation of Louisiana’s licensed hunters for its continued success.
In Louisiana, an allotted number of alligator hide tags are issued to licensed hunters. Each tag may be used for one alligator only, and Louisiana law requires alligator hunters to hunt only on property for which hide tags are issued. The areas where alligator hunting is permitted are determined on a yearly basis by wildlife biologists, whose decisions are based on the need to maintain a healthy alligator population. If hunters poach alligators from areas for which they do not have tags, then the integrity of the entire alligator management system is undermined, thereby threatening Louisiana’s alligator population and alligator industry, which is a significant component of Louisiana’s economy.The case was prosecuted by Shennie Patel and Susan L. Park of the Environmental Crimes Section of the Environment and Natural Resources Division of the Department of Justice. The case was investigated by the Louisiana Department of Wildlife and Fisheries and by the U.S. Fish and Wildlife Service Office of Law Enforcement.