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Thursday 3 June 2010
New York Federal Court Permanently Bars Two Brothers from Preparing Tax Returns & Promoting Tax Evasion SchemesRead the Press Release
WASHINGTON – A federal court in Brooklyn, N.Y., has permanently barred brothers Archie J. Pugh Jr. and Theodore Pugh from promoting tax evasion schemes and preparing federal income tax returns for others, the Justice Department announced today. The court described the Pughs’ fraudulent activity as "pervasive and ongoing." According to the order, Archie Pugh is the sole proprietor of Archie’s Tax and Accounting Service in Jamaica, N.Y., and both he and Theodore Pugh prepared returns at that location.
In the civil injunction order and 71-page decision, Judge Kiyo Matsumoto of the U.S. District Court for the Eastern District of New York found that since at least 1998 the Pughs promoted the bogus "‘claim of right’ tax-evasion scheme," which falsely claims that compensation paid for work is not subject to income tax, and prepared tax returns based on that scheme. The court previously entered a preliminary injunction in April 2008 to stop the Pughs from marketing the scheme and preparing income tax returns, but the Pughs violated that order in 2009 by preparing 93 returns.
According to the court, the Pughs attempted to conceal their preparation of the fraudulent returns by failing to sign them as paid preparers, and refused to recognize the falsity of the scheme when they knew or should have known it was false. According to the order, the Pughs improperly attempted to deduct over $3.8 million in customers’ wage income and claim over $500,000 in tax refunds.
John A. DiCicco, Acting Assistant Attorney General for the Justice Department’s Tax Division, thanked Daniel Applegate, the Tax Division trial attorney who handled the case, and Lori Dixon and Shauna Henline of the Internal Revenue Service’s Small Business/Self Employed Division, who investigated it.
Memorandum and Order (PDF)
Order of Permanent Injunction (PDF)
Illinois and Louisiana Attorneys Convicted of Tax and Bank Fraud in Connection with Tax Shelter Transactions and Referral Fee Kickback SchemeRead the Press Release
Chicago attorney and Certified Public Accountant John B. Ohle III and Louisiana attorney William Bradley were found guilty Wednesday in Manhattan federal court of wire and tax fraud conspiracy charges stemming from a scheme to fraudulently obtain referral fees relating to a tax shelter sold by Ohle’s employer, Bank One, and thereafter failing to accurately report those fees to the IRS and pay the appropriate taxes due, announced Preet Bharara, U.S. Attorney for the Southern District of New York; John A. DiCicco, Acting Assistant Attorney General for the Justice Department’s Tax Division; and Charles R. Pine, Special Agent-in-Charge of the New York Field Office of the Internal Revenue Service, Criminal Investigation Division (IRS). In addition, Ohle was found guilty of two counts of tax evasion which also encompassed failure to report millions of dollars he embezzled from a trust, and fraudulent tax shelter deductions used to offset reported income.
According to the evidence at the three-week trial before U.S. District Judge Jed S. Rakoff: Between 1999 and 2002, Ohle was the supervisor in the Chicago office of Bank One’s "Innovative Strategies Group" (ISG). The ISG provided estate planning and tax shelter strategies for high net worth clients, including a tax shelter called "Hedge Option Monetization of Economic Remainder," or HOMER, which Ohle and others designed, marketed and implemented together with attorneys at the now-defunct Chicago and Texas law firm of Jenkens & Gilchrist.
Ohle and others at Bank One had agreed with attorneys at Jenkens & Gilchrist to pay referral fees to third parties who referred HOMER clients to Bank One, which would be paid out of Bank One’s tax shelter fees. Ohle and Bradley – who had met each other while they both studied for the Louisiana bar exam in the mid-90’s – conspired with others, including Douglas Steger, a Chicago businessman, to create false and fraudulent invoices to obtain referral fees for certain HOMER tax shelter transactions to which they were not entitled. The secret receipt by Ohle and Bradley of the referral fees served to reduce the total tax shelter fees that Bank One was paid as a result of the sales of the HOMER tax shelter.
Ohle, Bradley and Steger carried out the scheme to fraudulently obtain the referral fees through the use of Bradley’s and Steger’s bank accounts, as well as the bank account of another business acquaintance of Ohle’s in San Francisco. Ultimately, Ohle received over $800,000 of these fraudulently obtained referral fees, while Steger and Bradley were paid approximately $215,000 and $25,000, respectively. Steger, who previously pleaded guilty in July 2008 to tax charges related to the scheme, also schemed with Ohle to report on his own tax return fraudulently-obtained fees that should have been reported by Ohle, and then eliminated taxes on those fees and the fees Steger retained himself through the use of a fraudulent tax shelter referred to as "1256" and made available by Ohle.
Ohle directed Bradley to pay a Chicago businessman $184,000 of the false and fraudulent referral fees that Bradley helped generate, which the businessman reported on a corporate return but on which he paid no taxes because he claimed false expenses on that return, at Ohle’s suggestion.
Ohle also obtained by fraud over $4,000,000 from a client for whom he acted as trustee. A portion of those funds were used by Ohle to carry out the fraud on Bank One with respect to the tax shelter referral fees. And Ohle also secretly obtained $500,000 in profits from the HOMER tax shelter transactions through a childhood friend who he had inserted into the transaction, with the agreement to share the profits with Ohle. Ohle failed to report the $500,000 as income on his tax returns, scheming to have his friend report both his and Ohle’s profits, and arranging for a fraudulent "1256" tax shelter to be used to eliminate taxes on all the profits.
In addition to the conspiracy count, Ohle was found guilty of tax evasion for the 2001 and 2002 tax years. With respect to 2001, Ohle fraudulently omitted from his tax return approximately $2.9 million in income, which was comprised of unreported HOMER referral fee income and funds stolen from his trust client. For 2002, Ohle fraudulently omitted from his tax return over $3.1 million in income, which was comprised of over $500,000 in HOMER tax shelter profits and over $2.5 million he embezzled from his trust client. In addition to failing to report income for 2002, Ohle also claimed over $4 million of false tax losses stemming from a fraudulent "1256" tax shelter transaction that he employed on his own tax return.
"These important convictions demonstrate that we simply will not tolerate flagrant abuse of the tax laws. Bankers, accountants, and attorneys should be exemplars of ethical conduct, not architects of tax fraud," said U.S. Attorney Bharara. "Together with our partners at the IRS and the Department of Justice Tax Division, we will continue to pursue tax cheats who abuse and corrupt their positions to steal from the government."
"This conviction serves as yet another reminder that individuals who break our nation's tax laws face serious consequences," said Acting Assistant Attorney General DiCicco. "Citizens who comply with our tax laws can be assured that the United States vigorously prosecutes those who do not."
Ohle, 42, of Wilmette, Ill., and Bradley, 46, of Hammond, La., each face a maximum sentence of five years in prison on the conspiracy charge and a maximum fine of twice the gross gain or loss from the crime. Ohle also faces five years in prison on each of the tax evasion charges and similar fines. Ohle also faces the forfeiture of a multimillion-dollar sports memorabilia collection, which was purchased with funds he obtained through the fraud scheme.
Ohle and Bradley are scheduled to be sentenced by Judge Rakoff on Sept. 9, 2010.
"IRS has made the investigation of abusive tax schemes a national priority. People trust their attorneys and Certified Public Accountants to hold the highest standards when dealing in financial transactions," said IRS Special Agent-in-Charge Pine. "The arrogant behavior of anyone who thinks he is above the law will not be tolerated. No one gets a free pass to get rich on the backs of hard-working American taxpayers. With every prosecution, we will again and again remind the public of our core mission, that is, fostering confidence in the tax system and compliance with the law."
Mr. Bharara praised the work of the IRS and thanked the Department of Justice Tax Division for their assistance in this case.
The case is being prosecuted by the Office’s Complex Frauds Unit. Assistant U.S. Attorney Stanley Okula of the Southern District of New York, and Nanette L. Davis, Assistant Chief with the Northern Criminal Enforcement Section of the Justice Department’s Tax Division, are in charge of the prosecution.
Houston Doctor and Two Delivery Drivers Convicted in Medicare Fraud SchemeRead the Press Release
Houston-area physician Dr. Howard Grant and Houston residents Clinton Lee and Obisike Nwankwo were convicted late Wednesday by a federal jury in connection with their roles in a multi-million dollar Medicare fraud scheme, announced the Departments of Justice and Health and Human Services (HHS).
After a two week trial in the Southern District of Texas, the jury convicted Grant of two counts of health care fraud and one count of conspiracy to commit health care fraud. Lee and Nwankwo were each convicted of one count of conspiracy to commit health care fraud. Each substantive health care fraud charge and the conspiracy charge carry a maximum penalty of 10 years in prison and a $250,000 fine. Lee and Grant are scheduled to be sentenced on Aug. 24, 2010, and Nwankwo is scheduled to be sentenced on Aug. 25, 2010.
Evidence at trial established that Onward Medical Supply, a Houston-area durable medical equipment (DME) company, billed Medicare for fraudulent DME, including power wheelchairs and orthotic devices, beginning in 2003 and continuing until late 2009. In addition to the three defendants convicted Wednesday, seven individuals have pleaded guilty for their participation in various Medicare fraud schemes involving Onward, including Onward’s owner, Doris Vinitski, and its operator for several years, John Lachman.
According to evidence presented at trial, Vinitski worked with Medicare biller and co-defendant John Nasky Okonkwo and others in late 2008 and early 2009 to submit fraudulent claims to Medicare identifying Dr. Howard Grant as the prescribing physician for the DME. The claims were submitted in several groups in November 2008. Evidence presented at trial showed that Grant learned about the fraudulent prescriptions prior to Onward’s submission of the claims to Medicare. Evidence at trial also showed that, upon learning of the prescriptions, Grant asked Vinitski for $10,000 in exchange for allowing the fraud scheme to continue. According to his testimony at trial, Okonkwo has agreed to plead guilty for his participation in the scheme.
Evidence at trial established that Lee and Nwankwo acted as delivery drivers for Onward. According to evidence presented at trial, Lee was fully aware of the fraudulent business practices of Onward and agreed with Vinitski to make DME deliveries for a lower price than her other drivers. Lee admitted in a statement to a government agent that he knew that the DME business was "going to the government trough" and that he did not mind working with Vinitski because he hoped to open his own DME business. According to evidence presented at trial, Nwankwo was a driver for several DME companies and delivered DME such as power wheelchairs and orthotics for Onward to beneficiaries who did not want or need the equipment. One beneficiary testified at trial that when Nwankwo tried to deliver a power wheelchair to her, she told him to get off her front step or she would call the police.
Following the verdict, U.S. District Court Judge Nancy Atlas ordered Grant to surrender his medical license and his Drug Enforcement Administration (DEA) number and to stop all billing to Medicare and Medicaid.
These convictions are announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney José Angel Moreno of the Southern District of Texas; Richard C. Powers, Special Agent-in-Charge of the FBI’s Houston office; Special Agent-in-Charge Mike Fields of the Dallas Regional Office of HHS Office of Inspector General (HHS-OIG), Office of Investigations; and Texas Attorney General Greg Abbott on behalf of the Texas Attorney General’s Medicaid Fraud Control Unit (MFCU).
The case was prosecuted by Trial Attorneys Jennifer L. Saulino, O. Benton Curtis III and Nicola J. Mrazek of the Criminal Division’s Fraud Section and was investigated by the FBI, HHS-OIG and MFCU.
The case 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, Medicare Fraud Strike Force operations in seven districts have obtained indictments of more than 560 individuals who collectively have falsely billed the Medicare program for more than $1.2 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 Man Who Served in Military Unit Linked to Massacres During the Bosnian Conflict of 1992-1995 Leaves United States Following DenaturalizationRead the Press Release
A former member of the Bosnian Serb Army has left the United States to return to Serbia after a federal judge ordered his denaturalization based on concealment during his application for U.S. citizenship that he served in the military during the Bosnian war, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney Brian Albritton of the Middle District of Florida and Assistant Secretary John Morton of U.S. Immigration and Customs Enforcement (ICE).
Jadranko Gostic, 47, a former resident of St. Petersburg, Fla., departed the United States on June 1, 2010. U.S. District Court Judge James Moody in Tampa, Fla., ordered his denaturalization on May 26, 2010.
Gostic was indicted in December 2006 on one count of unlawful procurement of citizenship and one count of making false statements. In January 2010, a civil complaint was filed against Gostic alleging illegal procurement of U.S. citizenship and requesting his denaturalization. Court documents allege that Gostic served in the Zvornik Infantry Brigade of the Bosnian Serb Army from April 1992 until December 1995. According to court documents, international tribunals have found that some units of the Zvornik Brigade engaged in war crimes and crimes against humanity, and that they participated in the July 1995 action against the Srebrenica enclave during which some 8,000 Muslim men and boys were executed.
Gostic entered the United States in 1999, received lawful permanent residence status in 2002 and was naturalized in 2004. According to court documents, at each stage of the immigration and naturalization process Gostic concealed his service in the Zvornik Brigade, even when specifically asked about his prior military service.
Gostic agreed to admit to the allegations against him, to be denaturalized, to surrender his lawful permanent resident status and to depart the United States. Gostic fulfilled the requirements of this agreement and departed the United States. As a result of his cooperation, the criminal charges against Gostic will be dismissed.
This case was investigated by the ICE Tampa Special-Agent-in-Charge Office and was prosecuted by Senior Trial Attorney William Kenety in the Criminal Division’s Human Rights and Special Prosecutions Section (HRSP) and Assistant U.S. Attorney Donald Hansen of the U.S. Attorney’s Office for the Middle District of Florida.
The Criminal Division announced the formation of HRSP on March 30, 2010, as part of the U.S. government’s efforts to bring human rights violators to justice and deny those violators safe haven in the United States. The new section represents a merger of the Criminal Division’s Domestic Security Section (DSS) and the Office of Special Investigations (OSI).
Border Patrol Agent Pleads Guilty to Civil Rights ViolationRead the Press Release
WASHINGTON – U.S. Border Patrol Agent Eduardo Moreno pleaded guilty today in federal court in Tucson, Ariz., to a federal criminal civil rights charge for assaulting a Mexican national who was in his custody, the Justice Department and the U.S. Attorney’s Office for the District of Arizona announced today. Sentencing has been scheduled for Aug. 12, 2010.
The underlying incident occurred on May 10, 2006, while Moreno was on duty at the U.S. Border Patrol Processing Center in Nogales, Ariz. During the plea proceedings and in documents filed in court, Moreno admitted that while escorting the victim at the center, he kicked the victim, struck him in the stomach with a baton, threw him down to ground, and punched him, all without any legitimate law enforcement reason to use force. As a result of the defendant’s actions, the victim suffered bodily injury.
"We place a great deal of trust in federal law enforcement officers, and the Civil Rights Division will aggressively prosecute any officer who violates the rights of others and abuses the power they are given to perform their critical duties," said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division.
Moreno faces a maximum of 10 years in prison and a fine of $250,000. An additional count in the indictment of making a false statement to federal agents will be dismissed under the plea agreement.
This case was investigated by agents of the FBI and the U.S. Immigration and Customs Enforcement’s Office of Professional Responsibility. The case is being jointly prosecuted by Assistant U.S. Attorney Sandra Hansen of the U.S. Attorney’s Office for the District of Arizona and Trial Attorney Edward Chung of the Civil Rights Division.
Wednesday 2 June 2010
Three Pennsylvania Men Charged with Conspiracy to Purchase and Distribute Large Quantities of Illegal Drugs in Undercover OperationRead the Press Release
WASHINGTON - Three Pennsylvania men were charged today with conspiracy to possess and intending to distribute oxycodone, ecstasy and marijuana, announced Assistant Attorney General Lanny A. Breuer and U.S. Attorney Zane David Memeger for the Eastern District of Pennsylvania.
Quynh Nguyen, 35, of Philadelphia; Binh Tong, 38, of Harleysville, Penn.; and Robert Cohen, 23, of Philadelphia were each charged with conspiracy to possess with the intent to distribute and attempted possession with the intent to distribute oxycodone, ecstasy and marijuana. According to the indictment, Nguyen, Tong and Cohen traveled from Philadelphia to Seattle to meet with a person they believed to be a drug dealer, but who was in fact an undercover Immigration and Customs Enforcement (ICE) special agent. During this meeting, Nguyen and Tong allegedly negotiated a deal to buy 11,000 oxycontin pills, 10,000 ecstasy pills and 50 pounds of marijuana, to be delivered to Philadelphia. According to the indictment, the defendants arrived at a hotel in Philadelphia on May 25, 2010, to meet with a person they believed to be a drug courier but who in fact was a second undercover ICE special agent. The defendants allegedly arrived at the hotel with more than $100,000 in cash to purchase the drugs.
The conspiracy to posses with intent to distribute and attempted possession with intent to distribute charges each carry a maximum prison sentence of 20 years and a $1 million fine.
The case is being prosecuted by Trial Attorney Robert J. Livermore of the Organized Crime and Racketeering Section. It is being investigated by ICE special agents.
An indictment is merely an accusation and the defendants are presumed innocent until proven guilty.
Former New Jersey Investment Company Executive Charged <br /> with Embezzling More Than $600,000 from CompanyRead the Press Release
The former managing director of Pamrapo Saving Bank’s investment company was arrested today and charged with allegedly diverting and embezzling more than $600,000.
The charges were announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Paul J. Fishman for the District of New Jersey; Special Agent in Charge William P. Offord of the Internal Revenue Service (IRS) Criminal Investigative Division; and Inspector General Jon T. Rymer of the Federal Deposit Insurance Corporation, Office of Inspector General (FDIC-OIG).
Brian M. Campbell, 41, of Bayonne, N.J., was arrested this morning by IRS agents and will make his initial appearance today at 1:00 P.M. EDT before U.S. Magistrate Judge Madeline Cox Arleo in the District of New Jersey, Newark Division. Campbell is charged with mail fraud and money laundering in a 54-count indictment returned under seal by a federal grand jury on May 27, 2010. The indictment also contains a forfeiture allegation.
According to court documents, Campbell was the managing director and an employee of Pamrapo Service Corporation, headquartered in Bayonne. The now-defunct Service Corporation was the investment subsidiary of Pamrapo Savings Bank, S.L.A., a savings and loan holding company. According to the indictment, the Service Corporation provided securities and investment services, such as the sale of stocks and bonds, mutual funds, annuities, various types of insurance policies and other money management services, to clients for a fee. In addition, the Service Corporation offered insurance products, including variable insurance and annuity products, by and through insurance companies.
According to the indictment, the Service Corporation was required to conduct or “clear” securities transactions, such as the purchase, sale and transfer of stocks, through a registered broker-dealer because it did not possess any securities licenses. The Service Corporation also provided other investment services through a second subsidiary, an accounting company, which was a sister company to the registered broker-dealer. According to the indictment, Campbell was designated as a “registered representative” of these two entities and as such, was authorized to conduct securities transactions and other investment services for customers on behalf of the Service Corporation through the two entities.
According to the indictment, any commissions or fees generated by Campbell as a registered representative of the broker dealer, as a registered investment advisor of the accounting company or through the insurance products, were considered property of the Service Corporation and were to be shared by these two entities and the Service Corporation. After the Service Corporation received its portion of the fees and commissions from the broker-dealer and the accounting company, the Service Corporation paid compensation to Campbell at rates set by the board of directors.
According to the indictment, in approximately August 2006, Campbell’s compensation was modified, resulting in him receiving a significant pay cut. In approximately 2007, according to the indictment, Campbell allegedly created a scheme to divert money belonging to the Service Corporation to himself.
Specifically, the indictment alleges that Campbell sent a letter to the registered broker-dealer, which falsely claimed that Pamrapo Savings Bank wanted commissions owed to the Service Corporation to be paid directly to Campbell. Also without the authorization or knowledge of the board of directors, Campbell allegedly caused a second letter to be signed that directed the registered broker-dealer and the accounting company to pay the vast majority of the fees and commissions owed to the Service Corporation directly to Campbell.
In addition, Campbell allegedly caused various insurance companies to issue fees and commissions owed to the Service Corporation directly to him, without the authorization or knowledge of the board of directors. Campbell then allegedly made false statements to the Pamrapo Savings Bank, its chief financial officer, the board of directors, the Service Corporation and others, to cover up and conceal his scheme, as well as to allow it to continue.
According to the indictment, Campbell allegedly received more than $600,000 in checks from the various entities as a result of his scheme. In addition, the indictment alleges that Campbell laundered portions of the fraud proceeds to pay his credit card bills.
If convicted, Campbell faces a maximum penalty of 20 years in prison and a $250,000 fine on each of the mail fraud charges. He faces a maximum prison sentence of 10 years and a $250,000 fine on each of the money laundering charges.
An indictment is merely a charge and defendants are presumed innocent until proven guilty.
The case is being prosecuted by Senior Trial Attorney John W. Sellers and Trial Attorney Keith Liddle of the Criminal Division’s Asset Forfeiture and Money Laundering Section, and Assistant U.S. Attorney Anthony Moscato of the U.S. Attorney’s Office for the District of New Jersey. The case is being investigated by the IRS Criminal Investigation Division and the FDIC-OIG.
Former Haitian Government Official Sentenced to Prison for His Role in Money Laundering Conspiracy Related to Foreign Bribery SchemeRead the Press Release
A former official of the Republic of Haiti’s state-owned national telecommunications company was sentenced yesterday to 48 months in prison for his part in a money laundering conspiracy in connection with a foreign bribery scheme, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; and Daniel W. Auer, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation (IRS-CI) Miami Field Office.
Robert Antoine, 62, of Miami and Haiti, was also ordered by U.S. District Court Judge Jose E. Martinez to serve three years of supervised release following his prison term. Judge Martinez ordered Antoine to pay $1,852,209 in restitution and to forfeit $1,580,771. Antoine pleaded guilty on March 12, 2010, to conspiracy to commit money laundering.
According to the indictment, filed on Dec. 4, 2009, Antoine was the director of international affairs for Haiti’s state-owned national telecommunications company, Telecommunications D’Haiti (Haiti Teleco) from May 2001 to April 2003. In that position, Antoine had primary responsibility for the relationships between U.S. telecommunications companies and Haiti Teleco. Antoine previously admitted that he accepted bribes from three U.S. telecommunications companies and thereby defrauded Haiti Teleco. To disguise the origin of these funds, Antoine admitted he laundered them through intermediary companies, including J.D. Locator Services. Juan Diaz, the president of J.D. Locator, pleaded guilty on May 15, 2009, to conspiracy to commit violations of the Foreign Corrupt Practices Act (FCPA) and money laundering. Antoine admitted that a portion of the J.D. Locator funds were also laundered by Jean Fourcand of Fourcand Enterprises, who pleaded guilty on Feb. 19, 2010, to money laundering, and who was sentenced to six months in prison for his involvement in the scheme.
Antoine acknowledged that $800,000 of these bribes were intended to be given to him by a U.S. telecommunications company for which Joel Esquenazi was the president and director, Carlos Rodriguez was the executive vice president, and Antonio Perez was, at times, the controller. Perez pleaded guilty on Apr. 27, 2009, to conspiring to commit FCPA violations and money laundering.
Esquenazi and Rodriguez, as well as Jean Rene Duperval, who was director of international relations of Haiti Teleco from June 2003 to April 2004, and Duperval’s sister, Marguerite Grandison, were indicted along with Antoine on Dec. 4, 2009. Trial for these remaining defendants is scheduled to begin July 19, 2010, in U.S. District Court in Miami. An indictment is merely an accusation, and defendants are presumed innocent until proven guilty beyond a reasonable doubt.
The Department of Justice is grateful to the government of Haiti for providing substantial assistance in gathering evidence during this investigation. In particular, Haiti’s financial intelligence unit, the Unité Centrale de Renseignements Financiers, the Bureau des Affaires Financières et Economiques, which is a specialized component of the Haitian National Police, and the Ministry of Justice and Public Security provided significant cooperation and coordination in this ongoing investigation.
The case was prosecuted by Trial Attorney Kevin Gerrity of the Criminal Division’s Asset Forfeiture and Money Laundering Section, Trial Attorney Nicola J. Mrazek of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Aurora Fagan of the U.S. Attorney’s Office for the Southern District of Florida. The Criminal Division’s Office of International Affairs also provided assistance in this matter. The case was investigated by the IRS-CI Miami Field Office.
Former Fayette County, Kentucky, Corrections Officers Sentenced for Civil Rights ChargesRead the Press Release
WASHINGTON – Scott Tyree, 47, a former officer at the Lexington-Fayette County, Ky., Detention Center (FCDC), and Anthony Estep, 35, a former sergeant and supervisor at FCDC, were sentenced in federal court today in Lexington, Ky., for their roles in the systematic abuse of detainees at FCDC, the Justice Department announced. Federal Judge Karen K. Caldwell sentenced Tyree to serve 18 months in prison and two years of supervised release and Estep to serve 12 months and one day in prison and one year of supervised release.
Tyree pleaded guilty on May 14, 2009, to conspiring to deprive detainees of their constitutional rights by physically abusing them and by authoring false and misleading incident reports in order to conceal that abuse. Tyree testified for the government during the trial of two co-defendants, John McQueen, 33, and Clarence McCoy, 31, who were convicted by a federal jury on May 13, 2010, for related charges. Judge Caldwell recognized Tyree’s testimony during the trial and granted him a reduced sentence.
Estep pleaded guilty on May 14, 2009, to a civil rights charge for failing to intervene while another officer assaulted a restrained inmate. He also pleaded guilty to an obstruction of justice charge for bringing false charges against an inmate in order to prevent that inmate from reporting an incident of abuse he had witnessed.
"The power granted to correctional officers so that they can perform their critical public safety duties does not give them free rein to abuse the civil and constitutional rights of inmates under their supervision," said Thomas E. Perez, Assistant Attorney General for the Justice Department’s Civil Rights Division. "Those officers who abuse their power and the public trust in this way will be prosecuted to the fullest extent of the law."
In relation to this case, a fifth defendant, Kristine Lafoe, 44, pleaded guilty on May 14, 2009, to conspiring to obstruct justice by instructing officers under her command to falsify reports to conceal acts of abuse. Lafoe was sentenced on Nov. 18, 2009, to serve 12 months in prison and two years of supervised release.
This case was investigated by the Louisville field office of the FBI, and was prosecuted by Jared Fishman and Benjamin Hawk, Trial Attorneys from the Civil Rights Division of the Department of Justice, with assistance from Assistant U.S. Attorney James Arehart.
Colorado Couple Pleads Guilty to Illegal Trapping and Sale of BobcatsRead the Press Release
A Colorado couple pleaded guilty in a Denver federal court to charges related to the illegal trapping and interstate sale of bobcats, the Justice Department announced today.
Jeffrey M. Bodnar, 37, pleaded guilty Tuesday to one felony count of conspiracy to violate the Lacey Act, and one felony count of possession of a firearm by a felon. His wife, Veronica Anderson-Bodnar, 46, pleaded guilty to one misdemeanor count of Lacey Act trafficking and one misdemeanor count of making false statements in violation of the Lacey Act. Both defendants reside in Hartsel, Colo.
The Lacey Act is a federal law that makes it illegal to transport or sell in interstate commerce any wildlife taken, possessed, transported or sold in violation of state law or regulation. Bobcats, whether alive or dead, including their pelts and other parts, are considered wildlife under the Lacey Act.
In court documents, Jeffrey Bodnar admitted to conspiring with his wife to unlawfully trap and kill bobcats without a license and using prohibited leghold traps in violation of Colorado law, and to sell the bobcat pelts to fur buyers in Montana and Kansas. He also admitted to conspiring with his wife to submit false records to the Colorado Division of Wildlife in order to obtain tags for the pelts. With regard to the firearms charge, Bodnar, who was convicted of a state felony charge in 2000, admitted to possessing at least one firearm. The prosecution indicated in court documents that it will seek at sentencing to prove that Bodnar possessed as many as seven firearms.
Jeffrey Bodnar is scheduled to be sentenced on Oct. 15, 2010. He faces a maximum penalty of five years in prison and a $250,000 fine on the conspiracy charge, and a maximum penalty of ten years in prison and $250,000 fine for the firearms charge.
In separate court documents, Veronica Anderson-Bodnar admitted to selling bobcat pelts to a buyer from Kansas in March 2008, when she should have known that the bobcats were trapped without a license and using prohibited leghold traps. She also admitted to making and submitting false records to the Colorado Division of Wildlife in order to obtain tags for the pelts.
Veronica Anderson-Bodnar is scheduled to be sentenced on Oct. 15, 2010. She faces a maximum penalty of one year in prison and a $100,000 fine on each count. According to court documents, the government will recommend to the court that she be sentenced to five years of probation during which time she will be prohibited from possessing firearms and also prohibited from hunting, trapping, or fishing, or accompanying anyone hunting, trapping, or fishing, anywhere in the United States.
The case was investigated by the U.S. Fish & Wildlife Service and the Colorado Division of Wildlife. The case is being prosecuted the U.S. Attorney’s Office for the District of Colorado and the Justice Department’s Environmental Crimes Section.
Alaska Department of Transportation and Public Facilities to Pay Nearly $1 Million for Alleged Clean Water Act ViolationsRead the Press Release
WASHINGTON—The Alaska Department of Transportation and Public Facilities (ADOT) has agreed to pay nearly $1 million to resolve allegations that it violated the Clean Water Act at numerous sites in Alaska, the Justice Department and U.S. Environmental Protection Agency announced today. Two of ADOT contractors also entered into settlement agreements with the federal government and have agreed to pay more than a quarter million dollars in civil penalties.
Under a settlement agreement filed with the federal court in Anchorage, Alaska, ADOT has agreed to pay $850,000 for acquisition and permanent protection of riverbanks on the Kenai Peninsula. The money will transferred to the Kachemak Heritage Land Trust to protect water quality and salmon habitat in the watersheds where the alleged violations occurred. The ADOT will also pay a $140,000 civil penalty. The settlement also requires both ADOT and its contractors to implement a comprehensive storm water quality training program for its employees.
According to a complaint filed simultaneously with the settlement, in the summer and fall of 2005 and 2006, ADOT through its contractors violated storm water pollution and prevention provisions of the Clean Water Act by failing to implement and maintain best management practices at three sites including the Abbott Loop extension and the C Street extension project in Anchorage as well as the construction of the Kenai Bridge on the Sterling Highway in Soldotna, Alaska.
The complaint also alleges that, in the fall of 2002, ADOT placed fill material into waters at more than ten construction sites on the Kenai Peninsula without a permit as required by the Clean Water Act. The work took place following two large floods.
Additionally, the two ADOT contractors have agreed to pay civil penalties and undertake various remedial actions to resolve the government’s claims. Colaska Inc., formerly Quality Asphalt and Paving (QAP), the contractor for the C Street project in Anchorage, has agreed to pay a $50,000 civil penalty. Granite Construction Company, the successor to Wilder Construction Co., which was the contractor for the Kenai River Bridge project in Soldotna and the Abbott Loop Extension in Anchorage, has agreed to pay a $250,000 civil penalty. Both companies have also agreed to train critical employees, and increase the frequency and quality of inspections at active projects, and ensure compliance with storm water regulations.
The settlement was lodged in the U.S. District Court for the District of Alaska and is subject to a 30-day public comment period and final court approval. A copy of the consent decree will be available on the Justice Department website at www.justice.gov/enrd/Consent_Decrees.html.
Tuesday 1 June 2010
Florida Man Sentenced to 42 Months in Prison on Child Pornography and Obstruction of Justice ChargesRead the Press Release
Brian Thomas Smith, of Gainesville, Fla., was sentenced today to 42 months in prison and a lifetime of supervised release following his prison term for attempted possession of child pornography and obstruction of justice, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Thomas F. Kirwin of the Northern District of Florida.
Smith, 38, pleaded guilty on March 2, 2010, before U.S. District Court Judge Stephan P. Mickle, in Gainesville, to a criminal information charging him with one count of attempted possession of child pornography and one count of obstruction of justice. According to his plea agreement, Smith admitted that he was a member of an Internet bulletin board where child pornography was posted and distributed and that he used a computer to attempt to possess and view images of child pornography as a member of that bulletin board. Smith also admitted in his plea agreement that he physically damaged his computers after being interviewed by law enforcement officers who informed Smith of a pending federal investigation related to the distribution of child pornography through the Internet. Smith admitted that he destroyed the computers with the intent to impede, obstruct or influence a pending investigation by a federal agency.
The case against Smith is a result of "Operation Nest Egg," an ongoing and joint investigation led by the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), the U.S. Attorney’s Office for the Southern District of Indiana, the U.S. Postal Inspection Service (USPIS) and U.S. Immigration and Customs Enforcement (ICE). Operation Nest Egg, launched in February 2008, targeted more than 500 individuals located throughout the world for their involvement in an online group dedicated to trading images of child pornography. To date, as a result of Operation Nest Egg, more than 80 searches have been conducted in the United States. In total, more than 50 individuals have been arrested and 35 individuals have been convicted. Thus far, 16 child victims have been identified through Operation Nest Egg.
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by U.S. Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
The case was prosecuted by Assistant U.S. Attorney Francis T. Williams of the Northern District of Florida and CEOS Trial Attorney Alecia Riewerts Wolak. The investigation was conducted by ICE, with assistance provided by the North Florida Internet Crimes Against Children (ICAC) Taskforce.
Friday 28 May 2010
Justice Department to Monitor Elections in New MexicoRead the Press Release
WASHINGTON – The Justice Department today announced that it will monitor the primary elections on June 1, 2010, in Cibola and Sandoval Counties, N.M., to ensure compliance with the minority language requirements of the Voting Rights Act of 1965 and other federal voting rights statutes. The Voting Rights Act requires these covered jurisdictions to provide language assistance in certain Native American languages during the election process. In addition, jurisdictions must comply with the requirements of the Help America Vote Act during this election for federal office, including requirements regarding provisional ballots, accessible voting equipment, and information provided to voters.
Under the Voting Rights Act, the Justice Department is authorized to ask the U.S. Office of Personnel Management (OPM) to send federal observers to areas that are specially covered in the act itself or by a federal court order. Federal observers will be assigned to monitor polling place activities in these counties based on court orders entered in 2009. The observers will watch and record activities during voting hours at polling locations in these jurisdictions, and Civil Rights Division attorneys will coordinate the federal activities and maintain contact with local election officials.
Each year, the Justice Department deploys hundreds of federal observers from OPM, as well as departmental staff, to monitor elections across the country. To file complaints about discriminatory voting practices, including acts of harassment or intimidation, voters may call the Voting Section of the Justice Department’s Civil Rights Division at 1-800-253-3931. Visit www.usdoj.gov/crt/voting/index.htm for more information about the Voting Rights Act and other federal voting laws.
Internet Seller of Pirated Software Sentenced to 18 Months in Prison for Criminal Copyright InfringementRead the Press Release
Robert Cimino, 60, of Syracuse, N.Y., was sentenced to 18 months in prison by U.S. District Judge Anthony J. Trenga in the Eastern District of Virginia for his sales of more than $250,000 worth of pirated software, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Neil H. MacBride of the Eastern District of Virginia.
Cimino was also ordered to pay $272,655 in restitution to copyright owners and sentenced to three years of supervised release following his prison term.
On Feb. 25, 2010, Cimino pleaded guilty to a single count of criminal copyright infringement for manufacturing and distributing pirated copies of popular business, engineering and graphic design copies of software titles by Adobe, Autodesk, Intuit, Quark and others over a more than three-year period. According to court documents, Cimino operated under the business name "SoftwareSuite" and advertised the sale of discounted popular software programs on a variety of Internet-based advertising forums, including www.buysellcommunity.com , www.adpost.com and www.sell.com . Customers would contact Cimino by email and would typically pay for the products by PayPal. Cimino would then mail pirated copies of the programs he had burned to CD or DVD to the customers, including customers in the Eastern District of Virginia. From February 2006 to September 2009, Cimino received at least $270,035 in gross proceeds from his sales of pirated software products.
The case was prosecuted by Trial Attorney Tyler G. Newby of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney Jay V. Prabhu of the Eastern District of Virginia. The case was investigated by the FBI’s Washington Field Office.
Idaho Orthopedists Charged with Engaging in Group Boycotts<br /> and Denying Medical Care to Injured WorkersRead the Press Release
The Department of Justice reached a settlement today with the Idaho Orthopaedic Society, an orthopedic practice group and five orthopedists that will prohibit them from conspiring with competing physicians in the Boise, Idaho, area to deny medical care to injured workers and to engage in group boycotts to obtain higher fees. The department said that the defendants and other orthopedists conspired to gain more favorable fees and other contractual terms by agreeing to coordinate their actions, including denying medical care to injured workers and threatening to withdraw from healthcare plans offered by Blue Cross of Idaho. The department said that their conduct caused the state of Idaho and other healthcare consumers to pay higher fees for orthopedic services.
The Department of Justice’s Antitrust Division, joined by the Idaho Attorney General’s office, filed a civil antitrust lawsuit in U.S. District Court for the District of Idaho, against the Idaho Orthopaedic Society, Idaho Sports Medicine Institute and five individual orthopedists –Timothy Doerr, Jeffrey Hessing, John Kloss, David Lamey and Troy Watkins. At the same time, the department and the Idaho Attorney General’s office filed a proposed settlement that, if approved by the court, would resolve the lawsuit.
"The orthopedists who participated in these group boycotts denied medical care to Idaho workers and caused higher prices for orthopedic services," said Christine Varney, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. "Today’s action seeks to prevent the recurrence of these illegal acts and protects Idaho consumers by promoting competition in the healthcare industry."
According to the complaint, the conspiring orthopedists engaged in two antitrust conspiracies, which took place from 2006 to 2008. In the first conspiracy, through a series of meetings and other communications, the orthopedists agreed not to treat most patients covered by workers’ compensation insurance. They entered into a group boycott in order to force the Idaho Industrial Commission to increase the rates at which orthopedists were paid for treating injured workers. The Idaho Industrial Commission sets the fee schedule that determines the amount that orthopedists and other healthcare providers usually receive for treating patients covered by workers’ compensation insurance. The boycott resulted in a shortage of orthopedists willing to treat workers’ compensation patients, causing higher rates for orthopedic services.
In the second conspiracy, all of the defendants, except David Lamey, and other conspiring orthopedists agreed to threaten to terminate their contracts with Blue Cross of Idaho. They jointly threatened to terminate their contracts to force Blue Cross of Idaho to offer better contract terms to orthopedists.
The proposed settlement prevents the Idaho Orthopaedic Society and the named orthopedists from agreeing with their competitors on fees and contract terms. The settlement also prohibits them from collectively denying medical care to patients, refusing to deal with any payer or threatening to terminate contracts with any payer.
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 Joshua H. Soven, Chief, Litigation I Section, Antitrust Division, U. S. Department of Justice, 450 Fifth St. N.W., Suite 4100, Washington, D.C. 20530. At the conclusion of the 60-day comment period, the court may enter the final judgment upon a finding that it serves the public interest.
Federal Court Bars Kansas Man<br /> from Preparing Federal Tax ReturnsRead the Press Release
WASHINGTON – A federal judge in Kansas City, Kan., has permanently barred a Garden City, Kan. tax preparer, Jose Lares, from preparing federal tax returns, the Justice Department announced today. The permanent injunction, to which Lares consented, was entered by Kathryn H. Vratil, Chief Judge of the U.S. District Court for the District of Kansas. It makes permanent a ban imposed by a preliminary injunction entered last March.
The government complaint in the case alleged that Lares claims false dependent exemptions and false filing statuses for his customers, many of whom are recent Mexican immigrants with limited English-language skills and little or no knowledge of the complexities of the Internal Revenue Code or of the deductions and credits falsely claimed by Lares on their returns. The complaint also alleged that Internal Revenue Service (IRS) audits of customers of Lares’s former company, Income Tax Dinero Rapido, resulted in customers owing over $2 million. The complaint further states that IRS audits of customers of Lares’s current business, Dinero Rapido Tax Services, has revealed an average tax loss of over $6,000 per return.
The court also ordered Lares to send a copy of the court order to his customers and to provide a complete customer list to the Department of Justice.
Department of Justice Recovers More Than $40 Million in Fraud Proceeds from Foreign Ponzi SchemeRead the Press Release
The Department of Justice has recovered more than $40.2 million in fraud proceeds from a $1 billion Ponzi scheme and is working with the Japanese Ministry of Justice to return the forfeited fraud proceeds to the victims in Japan, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division.
Isamu Kuroiwa, a Japanese citizen, operated World Ocean Farm between February 2005 and until his escape from Japan in May 2007. According to court documents, World Ocean Farm, an unlicensed investment opportunity, was a large Ponzi scheme. Kuroiwa defrauded more than 30,000 Japanese victims out of almost ¥91 billion, or approximately $1 billion U.S. dollars.
Kuroiwa and his accomplices were arrested, prosecuted and convicted in Japan on charges of organized fraud. The $40 million forfeited in this case was laundered by Kuroiwa through several Japanese and U.S. financial institutions to a broker in the United States for investment in a "high yield" investment. The FBI identified the high yield scheme as a fraud and seized the funds.
On March 12, 2010, U.S. District Court Judge Paul L. Friedman for the District of Columbia granted a motion for forfeiture filed by the Criminal Division’s Asset Forfeiture and Money Laundering Section. The judgment became final on May 12, 2010, which clears the way for the department to return the funds for the benefit of the victims of this massive fraud. Individuals who believe that they may be victims of the World Ocean Farm fraud are encouraged to contact the Japanese Bankruptcy Administrator as soon as possible for more information about how to file a claim: http://homepage3.nifty.com/wof-kanzai/.
"This case once again demonstrates our commitment to aiding our foreign law enforcement partners in recovering the proceeds of fraud and returning funds to victims," said Assistant Attorney General Breuer.
"We appreciate the great effort of the United States to help the victims of this case," said Masaki Wada, Director of International Affairs Division, Criminal Affairs Bureau, Ministry of Justice of Japan. "We continue to cooperate with the United States as much as possible in order to maximize the benefit to the victims of Japan."
World Ocean Farm promised its victims a 100 percent annual return on their money. Kuroiwa claimed to operate profitable shrimp farms in the Philippines that sold shrimp throughout Asia. According to court documents, World Ocean Farm actually leased a few ponds to give the company the appearance of legitimacy, raised almost no shrimp, and all of its sales were confined to the Philippines and were at a loss. In fact, when a group of investors from Japan visited the shrimp farms, they were unknowingly fed shrimp purchased at a local market because the ponds could not produce enough shrimp to feed them.
According to court documents, in addition to the shrimp farm investments, investors were also told that World Ocean Farm invested in high-yield investments in the United States. Investors were promised that their money would double every year as a result of the shrimp and other investments.
Rather than investing the money as promised, World Ocean Farm allowed its shrimp farm leases to expire, and Kuroiwa and others used the money to fund a lavish gambling trip to Las Vegas, among other things. The Japanese investigation discovered that other money was disbursed in a variety of ways, including Ponzi payments to victims, lost to another fraud scheme in Japan, embezzled from World Ocean Farm, lost on stock trading, lost on foreign currency trading and through extortion from organized crime
The Department of Justice is working with the Japanese Ministry of Justice and the Japanese Bankruptcy Administrator to ensure that the money will be returned to the victims of the crime under the Attorney General’s remission authority and in accordance with Japanese law. The department worked closely with the Japanese Ministry of Justice to exchange information regarding the underlying fraud and obtain legal assistance to support the U.S. forfeiture action.
The case is being prosecuted by Deputy Chief Linda M. Samuel of the Criminal Division’s Asset Forfeiture and Money Laundering Section. Additional assistance was provided by Attorney Blair Berman of the Criminal Division’s Office of International Affairs. The case was investigated by the FBI’s Los Angeles Field Office, in cooperation with Japanese law enforcement.
Thursday 27 May 2010
Two Securities Broker-Dealers Indicted for <br /> Securities Fraud Scheme in TexasRead the Press Release
WASHINGTON – Two securities broker-dealers were charged in an indictment unsealed today for their alleged roles in a securities fraud scheme involving several publicly traded companies, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division.
A federal grand jury returned an indictment under seal on May 26, 2010, charging Blake Williams, 27, of Dallas, and Derek Lopez, 43, of Torrance, Calif., with one count of conspiracy to commit securities fraud and seven counts of securities fraud. The charges, filed in U.S. District Court for the Northern District of Texas - Dallas Division, were unsealed today. Williams and Lopez were arrested today in Dallas and Torrance, respectively, and are making initial court appearances.
According to the indictment, Williams was a securities broker-dealer and employee of TBeck Capital Inc., a purported investment banking and securities trading firm in Grapevine, Texas. Lopez was a securities broker-dealer who provided services to TBeck Capital. According to the indictment, from June 2006 through December 2008, Williams, Lopez and their co-conspirators engaged in a scheme to manipulate the price and volume of stocks traded in the over-the-counter market.
The indictment alleges that companies owned and controlled by a co-conspirator obtained control of large positions of free-trading stock in various publicly-traded companies. Williams, Lopez and others allegedly would then coordinate trades with each other and with their co-conspirators to create the false appearance that there was greater investor interest in the stock. Williams and Lopez allegedly traded stock in their own names as well as through TBeck Capital and other companies to keep the stock price artificially inflated. These alleged actions allowed the defendants and their co-conspirators to then sell that stock at an artificially high price.
According to the indictment, Lopez allegedly traded in his own name, as well as in the name "Da Big Kahuna," to disguise his trades. Williams allegedly traded in his own name and in the name of several companies to make it appear that there were multiple unrelated entities buying and selling the stock. According to the indictment, Williams allegedly received cash payments and Lopez received free-trading stock and cash payments in return for their assistance in manipulating the stock prices of companies in which TBeck Capital owned and controlled large positions of free-trading stock.
If convicted on the conspiracy charge, the defendants face a maximum penalty of five years in prison and a $250,000 fine, or twice the gross gain or loss, whichever is greater. Each of the securities fraud charges carries a maximum penalty of 20 years in prison and a $5 million fine.
An indictment is merely a charge and defendants are presumed innocent until proven guilty.
The case is being prosecuted by Acting Deputy Chief Hank Bond Walther and Trial Attorney Nicole H. Sprinzen of the Criminal Division’s Fraud Section and is being investigated by the FBI’s Washington Field Office.
These charges are part of President Barack Obama’s Financial Fraud Enforcement Task Force.
President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
Louisiana Man Sentenced for Civil Rights Violation in Connection with Cross-BurningRead the Press Release
WASHINGTON – Daniel Earl Danforth, 31, of Minden, La., was sentenced to four years in prison and three years of supervised release in federal court in Shreveport, La., on federal hate crime and obstruction of justice charges in connection with a cross-burning he carried out with others near the home of an interracial couple in Athens, La., the Justice Department announced today.
Danforth was convicted on Jan. 21, 2010, following a jury trial. At trial, the evidence revealed that on Oct. 23 or 24, 2008, Danforth agreed with his two cousins to build, erect and burn a cross near the homes of a cousin and her African-American boyfriend (now husband), and other relatives who approved of their interracial relationship. Danforth and his co-conspirators built the cross using two pine trees, wire or cable and a large nail. One of Danforth’s cousins then went to get diesel fuel to use to burn the cross. Meanwhile, Danforth and his other cousin transported the cross to an area adjacent to the victims’ homes where, using chainsaw gas, they set the cross on fire in order to intimidate the victims. On Oct. 26, 2008, Danforth telephoned a relative who was living with the victims and directed her to the location of the burned cross.
" Driven only by bigotry and hate, the defendant threatened members of his own family with violence because they associated with persons of another race. Incidents of this kind have no place in this country, and they are a reminder of the civil rights challenges we still face in 2010, " said Thomas E. Perez, Assistant Attorney General of the Civil Rights Division.
"The defendant’s burning cross was designed to send a terrifying message of racial intolerance and intimidation to a couple who desired nothing more than to live in their home in peace," said William J. Flanagan, Acting U.S. Attorney for the Western District of Louisiana.
Evidence also showed that several days later, after the defendant and his co-conspirators learned that the FBI was investigating the crime as a potential civil rights violation, Danforth, his cousin who helped transport and burn the cross, and the cousin’s girlfriend formed a plan to get rid of the burned cross to prevent the FBI from discovering it and using it as evidence. Danforth’s cousin drove Danforth to the woods behind the victims’ homes, where Danforth removed the cross, disassembled it and hid it in the woods in an effort to thwart the FBI investigation into the cross-burning.
On April 28, 2010, a federal grand jury returned an indictment charging Danforth’s cousin, Joshua James Moro, for his participation in the civil rights conspiracy.
The charges set forth in an indictment are merely accusations and the defendant is presumed innocent until proven guilty.
This case is being investigated by the FBI and prosecuted by Assistant U.S. Attorney Mary J. Mudrick for the Western District of Louisiana and Trial Attorney Erin Aslan from the Justice Department’s Civil Rights Division.
Intercare Health Systems (Ex-Owner of City of Angels Medical Center) Agrees to <br /> $10 Million Consent Judgment for Medicare and Medi-Cal Fraud Scheme in Los AngelesRead the Press Release
WASHINGTON – The United States has obtained a $10 million consent judgment against Intercare Health Systems Inc., formerly doing business as City of Angels Medical Center, for a Medicare and Medi-Cal fraud scheme in Los Angeles, the Justice Department announced today. The consent judgment, which the state of California also joined, resolves a civil lawsuit filed against Intercare by the United States and California in the U.S. District Court for the Central District of California. Also named in the lawsuit were the former owners of Intercare, Robert Bourseau and Rudra Sabaratnam, who entered into $10 million consent judgments in January 2010. The United States is entitled to recover a total of $10 million as a result of the three joint and several consent judgments
The government’s complaint alleged that City of Angels paid "recruiters" employed at homeless shelters in the skid row area of Los Angeles to deliver their homeless clients by ambulance to the hospital for medical treatment regardless of whether their clients in fact needed or requested such treatment. City of Angels would then bill the Medicare and Medi-Cal programs for a variety of medical services allegedly rendered to the homeless patients, many of which were not medically necessary. This scheme violated the False Claims Act.
The complaint further alleged that payments City of Angels made to its recruiters constituted illegal inducements, or kickbacks. This scheme violated the federal Anti-Kickback Statute, which prohibits certain types of remuneration intended to induce the referral of patients for health services paid for by the federal government.
"Performing unnecessary medical services on homeless people who are struggling to survive is particularly egregious and will not be tolerated," said Tony West, Assistant Attorney General of the Civil Division of the Department of Justice. "Companies, institutions and individuals will be held accountable for fraudulent conduct that takes money from taxpayers and undermines the integrity of the health care system."
The investigation and civil lawsuit were handled collaboratively by the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Central District of California, the Attorney General’s Office of the State of California and the Office of Inspector General of the U.S. Department of Health and Human Services.
This resolution is part of the government’s emphasis on combating health care fraud. One of the most powerful tools in that effort is the False Claims Act, which the Department of Justice has used to recover more than $2.7 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in False Claims Act cases since January 2009 have topped $3.7 billion.
Wednesday 26 May 2010
Miami Beach Hotel Developers Indicted<br /> and Charged with Tax FraudRead the Press Release
MIAMI – Mauricio Cohen Assor and his son, Leon Cohen-Levy, each with residences in Miami Beach, Fla., have been charged with conspiring to defraud the United States and filing false tax returns, the Justice Department and the Internal Revenue Service (IRS) announced today. Both defendants have been ordered detained pending trial.
According to court documents, the two men and their co-conspirators used nominees and shell companies formed in tax haven jurisdictions, including the Bahamas, the British Virgin Islands, Panama, Liechtenstein and Switzerland to conceal their assets and income from the IRS. In order to further conceal their assets and income from the IRS, court documents state the men also provided false and forged documents to banks, opened bank accounts in the name of nominees, titled their personal residences and luxury vehicles in the name of shell companies, filed false and fraudulent tax returns, failed to file other tax returns, suborned perjury in a civil matter pending before the New York Supreme Court by directing individuals to testify falsely under oath, and induced other individuals to make false statements to federal law enforcement agents.
According to court documents, Mauricio Cohen Assor and Leon Cohen-Levy were the developers and owners of several residential hotels known by the trade name Flatotel International. In 2000, the defendants sold one of their New York hotels and generated proceeds of $33 million. The income earned from the sale of the hotel was never reported on United States tax returns by the Cohens or by any of their related entities.
According to court documents, among the assets and income the Cohens concealed from the IRS are a $45 million investment portfolio, a condominium at Trump World Tower in New York City that was worth as much as $10 million, the personal residence of Mauricio Cohen Assor on Fisher Island in Miami Beach worth approximately $20 million, the personal residence of defendant Leon Cohen Levy in Miami Beach worth approximately $26 million, the personal residence of the daughter of Mauricio Cohen Assor in Bal Harbor, Fla., commercial properties valued in excess of $55 million in Miami Beach, luxury vehicles, including a Rolls Royce Phantom, a Porsche Carrera GT, a Bentley, a Ferrari Testarossa, a BMW Z8, a Dodge Viper, a limousine and a $1.2 million helicopter.
A criminal indictment merely alleges that a crime has been committed, and a defendant is presumed innocent until proven guilty beyond a reasonable doubt. If convicted, the Cohens each face a maximum of 14 years in prison and a maximum fine of $1 million, plus being ordered to pay tax, penalties and interest.
Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida, and Acting Assistant Attorney General John DiCicco commended the investigative efforts of the IRS agents involved in this case, as well as Senior Litigation Counsel Kevin M. Downing and Trial Attorneys Mark F. Daly and John E. Sullivan of the Tax Division, and Assistant U.S. Attorney Jeffrey A. Neiman, who are prosecuting the case.
More information about the Justice Department’s Tax Division and its enforcement efforts is available at www.usdoj.gov/tax/.
Man Admits Attempting to Use a Weapon of Mass Destruction to Bomb Skyscraper in Downtown DallasRead the Press Release
Hosam Maher Husein Smadi pleaded guilty today before U.S. District Judge Barbara M. G. Lynn to a felony offense related to his attempted bombing of a downtown Dallas skyscraper in September 2009, announced David Kris, Assistant Attorney General for National Security, U.S. Attorney James T. Jacks of the Northern District of Texas, and Robert E. Casey Jr., Special Agent in Charge of the FBI Dallas Field Division.
Smadi, 19, pleaded guilty to one count of attempted use of a weapon of mass destruction. He faces a maximum statutory sentence of life in prison and a $250,000 fine. Under the terms of the plea agreement, however, Smadi faces a sentence of 30 years in prison, if the court accepts the plea. Judge Lynn has set a sentencing date of Aug. 20, 2010.
"Today’s guilty plea underscores the continuing threat we face from lone actors who, although not members of any international terrorist organization, are willing to carry out acts of violence in this country to further the terrorist cause. I applaud the many agents, analysts and prosecutors responsible for this successful investigation and prosecution," said Assistant Attorney General Kris.
"I commend the FBI, the lawyers and support staff in the U.S. Attorney’s Office, and the Counterterrorism section at the Department of Justice for their excellent work in bringing this case closer to a successful conclusion," said U.S. Attorney Jacks.
"The facts disclosed today and Smadi’s plea make it clear his intention was to kill American citizens. I want to commend the work of the FBI’s North Texas Joint Terrorism Task Force investigators and the prosecutors in the U.S. Attorney’s Office for the Northern District of Texas, who worked countless hours to bring this investigation closer to its conclusion and to protect the community in their execution of the FBI’s Counterterrorism strategy to detect, penetrate, and disrupt acts of terrorism in the United States," said FBI Special Agent in Charge Casey.
According to documents filed, on Sept. 24, 2009, Smadi knowingly took possession of a truck that contained a weapon of mass destruction, specifically a destructive device or bomb. The truck with the bomb inside was a vehicle borne improvised explosive device. Smadi believed that this was an active weapon of mass destruction, and while it was inert when Smadi took possession of it, it was a readily-convertible weapon of mass destruction.
Smadi knowingly drove the truck containing the bomb to Fountain Place, a 60-story public office building located at 1445 Ross Avenue in Dallas, and parked it in the public parking garage under the building. After parking the truck, Smadi activated a timer connected to the device, locked the truck and walked away. Smadi walked out of the parking garage, crossed the street and got into a car with an undercover law enforcement agent. They drove a safe distance away and prepared to watch the explosion. Smadi, who believed the bomb would explode and cause extensive damage, used a cell phone to remotely activate the device.
The case is being investigated by the FBI in conjunction with members of the FBI-sponsored North Texas Joint Terrorism Task Force. Assistant U.S. Attorney Dayle Elieson and Deputy Criminal Chief Assistant U.S. Attorney Jerri Sims are prosecuting.
Four Florida Promoters of Tax Defier Schemes<br /> Convicted of Tax and Mail FraudRead the Press Release
WASHINGTON -- Four promoters of a Florida-based business that sold fraudulent tax schemes were convicted today of selling worthless "bills of exchange" for the purpose of impeding the Internal Revenue Service (IRS) and promoting other schemes to orchestrate tax fraud, the Justice Department and IRS announced today. The evidence at trial showed that the four and their employees manufactured over $1 billion in fictitious financial instruments purporting to be drawn on the U.S. Treasury.
Eddie Ray Kahn, Stephen C. Hunter, Danny True and Allan J. Tanguay, all of Florida, were found guilty after an 18-day trial. Jerry Williamson, who was charged in the same case, pleaded guilty in April of 2009 to one count of mail fraud for sending a fictitious bill of exchange purporting to be drawn on the U.S. Treasury. Chief Judge Royce Lamberth in Washington, who presided over the trial, set sentencing for August 30, 2010.
All four men were convicted of conspiracy to defraud the United States and to commit mail fraud in the operation of American Rights Litigators/Guiding Light of God Ministries (ARL). In addition, each defendant was convicted of one or more counts of mail fraud. The evidence at trial showed that Kahn founded and ran ARL from 1996 through 2004. During that time, ARL enrolled more than 4,000 customers from all 50 states and the District of Columbia. Hunter, True and Tanguay worked at ARL with Kahn to develop and sell tax defiance schemes based on deliberate misrepresentations of the legal foundation of the tax system.
The evidence at trial showed that the purpose of the tax defiance schemes promoted by the four men was to thwart the IRS in its attempts to assess and collect taxes by various means. These schemes included manufacturing and selling more than one thousand worthless bills of exchange supposedly drawn on the U.S. Treasury for customers to use in purported payment of their taxes, as well as producing false and harassing complaints against IRS employees that were sent to the Treasury Inspector General for Tax Administration in Washington.
The Justice Department filed a lawsuit against ARL which resulted in a December 2003 preliminary injunction ordering ARL to cease selling its schemes. The evidence at trial showed that the defendants continued to prepare fraudulent and obstructive correspondence to the IRS on behalf of ARL customers, even after the entry of that order. ARL injunction: http://www.justice.gov/tax/prtax/txdv03730.htm. Kahn was previously sentenced in connection with the Wesley Snipes case:
www.justice.gov/tax/usaopress/2008/txdv08343.htm. The evidence in that case showed that Snipes was a customer of ARL."Convictions, like the one returned against these defendants today, send a loud and clear message that illegal tax defiers will be investigated, prosecuted, and subjected to the full punishment of the law for their actions," said John A. DiCicco, Acting Assistant Attorney General of the Justice Department Tax Division.
"The defendants in this scheme manufactured and sold worthless "bills of exchange" for use in paying their tax liability. This scheme was nothing more than a sham to disguise their intent to evade the payment of taxes," said Victor S.O. Song, Chief, IRS Criminal Investigation. "These criminal actions will not be tolerated. Individuals who intentionally evade their legal responsibility to pay taxes will be brought to justice."
Acting Assistant Attorney General DiCicco commended the IRS agents who investigated the case, as well as Tax Division Trial Attorneys Jeffrey McLellan, Tino Lisella and Melissa Siskind, who prosecuted the case. Additional information about the Justice Department’s Tax Division and its enforcement efforts is available at www.usdoj.gov/tax.
Final U.S. Defendant to Face Charges Related to International Child Pornography Conspiracy CaseRead the Press Release
The final U.S. defendant arrested in connection with a series of superseding indictments charging 26 individuals for their participation in an online child pornography conspiracy will make his initial appearance today in federal court in Indianapolis, to face charges related to his alleged participation in the conspiracy, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney Timothy M. Morrison of the Southern District of Indiana, Deputy Chief Postal Inspector Guy Cottrell for the U.S. Postal Inspection Service (USPIS), and Assistant Secretary John Morton of U.S. Immigration and Customs Enforcement (ICE).
Edward Oedewaldt, 47, was arrested in Arcadia, La., on April 23, 2010, after an extensive search involving assistance from law enforcement in the United States and abroad. Oedewaldt is charged with one count of conspiracy to advertise child pornography, one count of conspiracy to distribute child pornography, 13 counts of advertising child pornography and two counts of distributing child pornography. An indictment is merely an accusation and a defendant is presumed innocent until and unless proven guilty at trial beyond a reasonable doubt.
The charges against Oedewaldt and his 25 co-defendants are a result of "Operation Nest Egg," an ongoing and joint investigation led by the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), the U.S. Attorney’s Office for the Southern District of Indiana, USPIS and ICE. Operation Nest Egg, launched in February 2008, targeted the 26 defendants charged in the Southern District of Indiana, as well as approximately 500 additional individuals located throughout the world for their involvement in an online group dedicated to trading images of child pornography.
According to court documents filed in the Southern District of Indiana, Oedewaldt and 25 co-conspirators participated in a sophisticated, password-protected Internet bulletin board group, which existed to allow members to meet like-minded individuals with a sexualized interest in children, to discuss that interest and to trade images of child pornography. The defendants are charged with conspiring to advertise and distribute child pornography, along with substantive counts of advertising and distributing child pornography. According to court documents, the defendants allegedly served as administrators and members of the bulletin board and played an active role in decisions that affected its administration. Twenty-two of the 26 defendants charged in the conspiracy have been arrested. Nineteen of the 22 individuals arrested have been convicted or have pleaded guilty.
"The individuals who participated in this Internet-based bulletin board exploited the most innocent and vulnerable in our society," said Assistant Attorney General Breuer. "The Department of Justice is committed to working with law enforcement agencies in the United States and abroad to find and prosecute those responsible for trafficking in images of child sexual exploitation."
"This investigation produced one of the largest number of conspirators charged in a single advertising and distribution case," said U.S. Attorney Morrison. "The fact that four at-large defendants remain identified only by their screen names attests to the great obstacles law enforcement had to overcome."
On April 15, 2010, Roger Lee Loughry Sr., 57, of Baltimore, was convicted by a federal jury in the Southern District of Indiana for his role as an administrator of the online bulletin board. Following a four-day trial, Loughry was found guilty of one count of conspiracy to advertise child pornography, one count of conspiracy to distribute child pornography, 12 counts of advertising child pornography, and two counts of distributing child pornography. Loughry faces a mandatory minimum sentence of 15 years in prison, a maximum sentence of 30 years in prison, a fine of $250,000 and a lifetime term of supervised release following his prison term.
Six of the 19 individuals who have pleaded guilty for their role in the conspiracy have been sentenced to prison. On May 21, 2010, Thomas Lenti, 42, of Brooklyn, N.Y., was sentenced to 20 years in prison for his role as a lead administrator for the bulletin board group. Lenti was previously convicted in 2000 of sexually abusing a minor who was under the age of 11. On May 19, 2010, William Gregory, 56, of Chester, Va., was sentenced to 10 years in prison. Also on May 19, 2010, Jonathan Hans, 37, of Woodstock, Ga., was sentenced to 10 years in prison for his role in the conspiracy.
On Sept. 21, 2009, Charles Werenczak, 47, of Jamestown, N.Y., a convicted sex-offender in the state of New York, was sentenced to 378 months. Kevin Harkless, 53, of Copper Hill, Va., who was previously convicted of child pornography offenses in Pennsylvania, was sentenced on Nov. 30, 2009, to 240 months in prison. Patrick Jansen, 28, of Lockport, N.Y., was sentenced to 15 years in prison on Oct. 30, 2009.
Each defendant also received a lifetime of supervised release following their release from prison as part of their sentence.
"This arrest underlines the fact that there will be no refuge for child sexual predators who believe that they pursue their perverse behavior with impunity online," said Assistant Secretary Morton. "Law enforcement agencies will work tirelessly across jurisdictions and national boundaries to protect children anywhere in the world."
"The Postal Inspection Service is proud to have participated in this multi-agency initiative," said Deputy Chief Postal Inspector Guy Cottrell. "Through Operation Nest Egg, multiple offenders who trafficked in child pornography were identified and arrested and huge amounts of child pornography have been seized. Most importantly, many children have been rescued from further sexual abuse and exploitation."
Four of the 26 individuals charged in the conspiracy remain at large and are known only by their online identities. Efforts to identify and apprehend these four individuals continue.
To date, as a result of Operation Nest Egg, more than 80 searches have been conducted in the United States. In total, more than 50 individuals have been arrested and 35 individuals have been convicted. The investigation is ongoing. Numerous members of the Internet-based bulletin board were found to have been personally sexually abusing children, sometimes producing images of the sexual abuse. For example, lead administrator Delwyn Savigar of the United Kingdom, was identified and arrested in partnership with the U.K.’s Child Exploitation and Online Protection Centre, for his involvement in the conspiracy. After his initial arrest, Savigar was identified through DNA testing as the perpetrator of a previously unsolved sexual assault against a minor female in Great Britain, to which he pleaded guilty. Following this discovery, Savigar was linked to additional incidents of sexual assaults. Ultimately, he pleaded guilty to either abusing or attempting to abuse three minors from 1999 to 2002. He was sentenced to 14 years in prison in the United Kingdom. To date, 16 child victims have been identified through Operation Nest Egg.
Operation Nest Egg is a spinoff investigation from leads developed through "Operation Joint Hammer," the U.S. component of an ongoing global law enforcement operation targeting transnational rings of child pornography trafficked through the Internet and U.S. mail. Operation Joint Hammer was initiated through evidence developed by European law enforcement and shared with U.S. counterparts by Europol and Interpol.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse, launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
The case is being prosecuted by Assistant U.S. Attorney Steven D. DeBrota of the Southern District of Indiana, Assistant U.S. Attorney Elizabeth M. Yusi of the Eastern District of Virginia and CEOS Trial Attorney Alecia Riewerts Wolak. The investigation was conducted jointly by CEOS’ High Technology Investigative Unit, ICE and USPIS, with assistance provided by the Northern Virginia/Washington, D.C. Internet Crimes Against Children (ICAC) Taskforce, the Indiana ICAC Taskforce, Indiana State Police, and numerous local and international law enforcement agencies across the United States and Europe.
Bell Helicopter Textron Inc. to Pay Total of $16.5 Million for Overcharging the United StatesRead the Press Release
WASHINGTON – Bell Helicopter Textron Inc. has agreed to pay the United States an additional $3,718,770, bringing the total paid to resolve civil claims arising from the company’s cost charging practices on some of its contracts with the government to $16,570,018, the Justice Department announced today.
The Army and other government agencies contract with the Ft. Worth, Texas-based company to purchase helicopters and parts, modifications, customization, and related goods and services. In August 2004, Bell notified the Defense Department’s Inspector General that its billing of the costs of certain subcontracts, work transfers, and other transactions with its subsidiaries, divisions, and affiliated companies had resulted in overcharges to the government. The company submitted a report in 2006 describing its conduct and the financial impact on the government and paid the government $12,851,248.
While the government was investigating and analyzing the conduct the company disclosed, Bell submitted additional reports detailing similar intra-company transactions with Bell Helicopter Textron Canada Limited that resulted in overcharges. As part of the settlement announced today, Bell agreed to pay an additional $3.7 million to resolve any claims the United States may have arising out of the newly disclosed conduct.
"We are committed to working with government contractors who self-disclose serious misconduct to reach a just resolution that protects federal procurement programs and the taxpayers," said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. "Those who fully cooperate with the government will be dealt with fairly."
The successful resolution of this matter is the result of a lengthy investigation and analysis by the Justice Department’s Civil Division, the Defense Criminal Investigative Service, the Defense Contract Management Agency and the Defense Contract Audit Agency.
This matter falls under the umbrella of the National Procurement Fraud Initiative. In October 2006, the Deputy Attorney General announced the formation of a National Procurement Fraud Task Force designed to promote the early detection, identification, prevention and prosecution of procurement fraud associated with the increase in government contracting activity for national security and other government programs. The Procurement Fraud Task Force is chaired by the Assistant Attorney General for the Criminal Division and includes U.S. Attorneys’ Offices, the FBI, the U.S. Inspectors General community and a number of other federal law enforcement agencies. The handling and resolution of this matter, as well as others brought by members of the task force, demonstrate the Department of Justice’s commitment to helping ensure the integrity of the government procurement process.
Tuesday 25 May 2010
Massachusetts-Based EMC Corporation Pays U.S. $87.5 Million to Settle False Claims Act CaseRead the Press Release
WASHINGTON - EMC Corporation has paid the United States $87.5 million to settle a lawsuit alleging that the information technology company violated the False Claims Act and the federal Anti-kickback Act, the Justice Department announced today.
The United States alleged that, by misrepresenting its commercial pricing practices, EMC fraudulently induced the General Services Administration (GSA) to enter into a contract with prices that were higher than they would have been had the information technology company not made false misrepresentations. Specifically, the United States alleged that the Hopkinton, Mass.-based company represented during contract negotiations that, for each government order under the contract, EMC would conduct a price comparison to ensure that the government received the lowest price provided to any of the company’s commercial customers making a comparable purchase. According to the government’s complaint, EMC knew that it was not capable of conducting such a comparison, and so EMC’s representations during the negotiations – as well as its subsequent representations to GSA that it was conducting the comparisons – were false or fraudulent.
The United States also alleged that EMC engaged in an illegal kickback scheme designed to influence the government to purchase the company’s products. EMC maintained agreements whereby it paid consulting companies fees each time the companies recommended that a government agency purchase an EMC product. These kickback allegations are part of a larger investigation of government technology vendors that has resulted in settlements to date with three other companies, with several other investigations and actions still pending. The kickback investigation was initiated by a lawsuit filed under the qui tam, or whistleblower, provisions of the False Claims Act, which allow private citizens to sue for fraud on behalf of the United States and share in any recovery.
"Misrepresentations during contract negotiations and the payment of kickbacks or illegal inducements undermine the integrity of the government procurement process," said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. "The Justice Department is acting to ensure that government purchasers of commercial products can be assured that they are getting the prices they are entitled to."
The lawsuit, initially filed in the Eastern District of Arkansas, was transferred to the U.S. District Court for the Eastern District of Virginia where it is captioned United States of America ex rel. Rille and Roberts v. EMC Corporation, Civil Action 1:09-cv-00628 (E.D. Va.).
"Companies should not keep charging higher prices to the Government when costs go down. The American taxpayers deserve a better deal," said GSA Inspector General Brian D. Miller. "This case is another demonstration of the value of OIG audits."
The case was handled by the Justice Department’s Civil Division and the U.S. Attorney for the Eastern District of Virginia, with the assistance of the General Services Administration Office of the Inspector General, the Department of Energy Office of the Inspector General, the U.S. Postal Service Office of the Inspector General, the Defense Criminal Investigative Service, and the Treasury Department’s Inspector General for Tax Administration.
Hawaii Man Pleads Guilty to Sex Trafficking ChargesRead the Press Release
WASHINGTON - The Justice Department announced that Rodney D. King, aka "Shadow," pleaded guilty today to federal sex trafficking charges in the U.S. District Court for the District of Hawaii. King pleaded guilty to one count of knowingly causing a minor to engage in commercial sex; two counts of using force, fraud, or coercion to cause two other women to engage in commercial sex; one count of attempting to cause another woman to engage in commercial sex by force, fraud, or coercion; and one count of conspiring to commit sex trafficking of minors and adults by force, fraud, and coercion.
"For his own benefit, the defendant preyed upon vulnerable women and girls and forced them into prostitution by a variety of deplorable means," said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. "The Department of Justice will continue to devote its full efforts to prosecuting those who commit such exploitative crimes."
Under the terms of the plea agreement, the United States and the defendant agree that the defendant should be sentenced to 25 years in prison. If the court accepts the plea agreement, it will sentence King accordingly. Sentencing before U.S. District Judge David Ezra is scheduled for Sept. 27, 2010.
Assistant Attorney General Perez and U.S. Attorney Nakakuni commended the FBI and the Honolulu Police Department for their work in investigating this case and rescuing some of the defendant’s victims. FBI Special Agents M.K. Itnyre and Kristin Lee investigated this case, and Trial Attorneys Edward Caspar and Kayla Bakshi of the Civil Rights Division and its Human Trafficking Prosecution Unit and Assistant U.S. Attorney Darren Ching prosecuted this case for the United States.
Bulgarian National Extradited from Poland to the United States to Face Charges Related <br /> to Alleged Role in International Money Laundering SchemeRead the Press Release
A Bulgarian man appeared in federal court in the District of Columbia today to face charges related to his alleged role in managing a money laundering network for a transnational criminal group based in Eastern Europe, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division. According to court documents, in less than one year, the criminal conspiracy allegedly netted nearly $1 million from U.S. victims.
Georgi Vasilev Pletnyov, 49, of Svishtov, Bulgaria, was extradited from Poland to the United States on Friday, May 21, 2010. U.S. Magistrate Judge Alan Kay today ordered Pletnyov detained pending a hearing scheduled for May 28, 2010. Pletnyov is charged with one count of conspiracy to commit wire fraud and one count of conspiracy to commit money laundering. If convicted, he faces a maximum sentence of 20 years in prison.
According to the indictment, Pletnyov allegedly participated in a scheme that operated from July 2005 through May 2006, which involved the posting of advertisements on eBay and other websites, fraudulently offering expensive vehicles and boats for sale that the conspirators did not possess. The indictment alleges that when the U.S. victims expressed interest in the merchandise, they were contacted directly by an e-mail from a purported seller. According to the indictment, the victims allegedly were then instructed to wire transfer payments through “eBay Secure Traders”—an entity which has no actual affiliation to eBay but was used as a ruse to persuade the victims that they were sending money into a secure escrow account pending delivery and inspection of their purchases. Instead, the victims’ funds allegedly were wired directly into bank accounts in Hungary, Slovakia, the Czech Republic and Poland that were controlled by co-conspirators.
Pletnyov was originally charged on Jan. 9, 2008, along with five additional defendants: Roman Teodor, Ivaylo Vasilev Pletnyov, Nikolay Georgiev Minchev, Georgi Boychev Georgiev and Antoaneta Angelova Getova. On Dec. 2, 2009, Ivaylo Vasilev Pletnyov and Nikolay Georgiev Minchev were sentenced to four years and 30 months in prison, respectively, for their roles in the money laundering conspiracy. Georgiev pleaded guilty to one count of conspiracy to commit money laundering on May 13, 2010, and is scheduled to be sentenced on July 23, 2010. The United States continues to work with foreign counterparts regarding the remaining defendants.
An indictment is merely an accusation and the defendants are presumed innocent until and unless proven guilty at trial beyond a reasonable doubt.
This investigation was conducted by the FBI – Hungarian National Bureau of Investigation Organized Crime Task Force located in Budapest, Hungary (Budapest Task Force). The Budapest Task Force was established by the FBI in April 2000 to address the increasing threat of Eurasian organized crime groups to the United States.
The case is being prosecuted by Trial Attorney Lisa Page of the Criminal Division’s Organized Crime and Racketeering Section. Senior Trial Attorneys Deborah M. Gaynus and Betsy E. Burke of the Criminal Division’s Office of International Affairs provided significant assistance on this case.
Brothers Charged with Guiding Illegal Deer Hunts in Southwestern KansasRead the Press Release
WASHINGTON – A federal grand jury in Wichita, Kan., returned a 23-count felony indictment charging two brothers with conspiracy and wildlife trafficking stemming from the illegal sale of guided deer hunts, the Justice Department announced.
The indictment charges James Bobby Butler Jr., 41, with conspiracy to violate the Lacey Act, 18 substantive violations of the Lacey Act, and three counts of obstruction of justice. His brother, Marlin Jackson Butler, 35, is charged with conspiracy to violate the Lacey Act and twelve substantive violations of the Lacey Act. Both men are from Martinsville, Texas.
The Lacey Act is a federal law that makes it illegal to knowingly transport or sell in interstate commerce any wildlife taken or possessed in violation of state law or regulation.
The indictment alleges that from 2005 to 2008, James and Marlin Butler conspired together to knowingly transport and sell in interstate commerce deer that had been hunted in violation of Kansas state law. In particular, the brothers are alleged to have operated a guiding service and hunting camp in Comanche County, Kan., at which they sold guiding services to out-of-state hunters for the purpose of illegally hunting and killing white-tailed deer and mule deer.
According to the indictment, hunters guided by the Butler brothers killed deer in excess of annual bag limits, hunted deer without permits or using permits for the wrong deer management unit, killed deer using illegal equipment, and hunted using prohibited methods such as spotlighting. In addition to selling their guiding services, the brothers are further alleged to have arranged for transport of the deer, or parts of the deer, particularly the antlers, from Kansas to Texas.
The indictment alleges that hunters paid approximately $2,500-$3,500 to hunt using archery equipment, and approximately $5,000 to hunt with a rifle.
The indictment further alleges that James Butler instructed others to destroy or conceal evidence and to lie to investigators, and that he himself lied to investigators during the investigation.
An indictment is merely an accusation, and a defendant is presumed innocent unless and until proven guilty in a court of law.
The maximum penalty for a felony violation of the Lacey Act includes up to five years in prison and a $250,000 fine. The maximum penalty for the obstruction charges includes up to 20 years in prison and $250,000 fine.
The case was investigated by the U.S. Fish & Wildlife Service, the Kansas Department of Wildlife and Parks, and the Texas Parks and Wildlife Department. The case is being prosecuted by the U.S. Attorney’s Office for the District of Kansas and the Justice Department’s Environmental Crimes Section.
Briefs Filed in Florida, Illinois and New Jersey to Support the Supreme Court’s Olmstead DecisionRead the Press Release
WASHINGTON – The Justice Department today announced it has filed briefs in three separate cases in Florida, Illinois and New Jersey as part of its continuing effort to enforce civil rights laws that require states to end discrimination against and unnecessary segregation of persons with disabilities. The department’s filings support two private lawsuits seeking relief in Florida and New Jersey, as well as a proposed statewide class action settlement in Illinois.
The briefs allege that the three states are failing to comply with the Americans with Disabilities Act (ADA) and the Supreme Court’s decision in Olmstead v. L.C., a decision that has often been called the Brown v. Board of Education of the disability rights movement. Last year, President Obama issued a proclamation launching the "Year of Community Living," and has directed the Administration to redouble enforcement efforts.
"As the Supreme Court determined in the landmark Olmstead decision, unjustified institutionalization violates the rights of individuals with disabilities and stigmatizes them as unworthy of participation in community life," said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. "Florida, Illinois and New Jersey can provide community-based services to people with disabilities, and the law requires them to do so to prevent unnecessary institutionalization."
The department filed a brief as amicus curiae, or a "friend of the court," to support a motion by New Jersey residents with disabilities for summary judgment against the state on their claims brought under the ADA. According to the brief, New Jersey is failing to serve individuals with disabilities in the most integrated setting appropriate to their needs. New Jersey’s placement from institutions to community-based settings has slowed to a trickle, with new admissions largely being placed in institutions. Thousands of individuals continue to be institutionalized despite meeting ADA and Olmstead criteria for community placement, the brief states.
In Florida, the department filed a statement of interest to support Michele Haddad’s lawsuit against the state for violations of the ADA’s integration mandate as set forth in Olmstead. Haddad’s lawsuit alleges that Florida fails to provide community-based services to Medicaid-eligible individuals with spinal cord injuries who are at risk of institutionalization. Instead, the state will fund those services only after an individual relinquishes his or her ties to the community and enters a nursing home. Haddad has successfully resided in the community since 2007, but is at risk of entry into a nursing home due to changes in her caregiver situation. Haddad, who has been on the waiting list for services for two years, notified the state of her increased need for services, but was told that community services would only be available if she was willing to enter a nursing home for 60 days. The United States’ filing supports Haddad’s complaint and declaration for a preliminary injunction against Florida.
In the Northern District of Illinois, the department filed a statement of interest in support of a proposed settlement, embodied in a consent decree, between the state of Illinois and a group of individuals with mental illness living in large, privately-run institutions. The lawsuit alleges that the state of Illinois relies on these facilities, called Institutions for Mental Disease (IMDs), to provide long-term care services while failing to offer services in community-based settings, in violation of Olmstead. According to the statement, the United States supports the preliminary approval of the consent decree because it advances the important public interest in community integration.
The full and fair enforcement of the ADA and its mandate to integrate individuals with disabilities is a major priority of the Civil Rights Division. The ADA protects individuals with disabilities from discrimination by public entities. People interested in finding out more about the ADA can call the Justice Department’s toll-free ADA Information Line at 1-800-514-0301 or 1-800-514-0383 (TTY), or access its ADA website at www.ada.gov, where all relevant case filings can be found.
Attorney General Holder Honors Child Recovery and Protection Efforts During Missing Children’s Day CeremonyRead the Press Release
WASHINGTON – Attorney General Eric Holder commemorated National Missing Children’s Day in an awards ceremony recognizing the exemplary efforts of law enforcement and citizens nationwide in recovering missing children and combating child exploitation. Held at the Department of Justice’s Great Hall, the event also honored missing children and their families, child advocates and others who assist in protecting children.
“The extraordinary efforts of the men and women we recognize today have awakened family after family from the nightmare of having a missing child, and, when there can be no solace, helped them to recover from unthinkable loss,” said Attorney General Holder. “There is no more important priority that we, as stewards of our nation’s justice system and protectors of our communities, have than bringing our kids home.”
The protection of children is a personal priority of Attorney General Eric Holder. Today he announced a grant award of more than $30 million for the National Center for Missing and Exploited Children. And on March 31, the department announced the availability of more than $5 million to support the Attorney General’s initiative on children exposed to violence. These funds will sponsor planning, outreach, research and best practices for reducing children’s exposure to violence. Additionally, the department supports the ongoing work of the Internet Crimes Against Children Task Force Programs, a national network of 61 coordinated task forces addressing online child exploitation, and the AMBER Alert Program, which has assisted in the recovery of 502 abducted children.
The department released two publications at today’s event: The Crime of Family Abduction: A Child’s and Parent’s Perspective, which offers insights into how an abduction of a child by a family member affects the child and the family, and the fourth edition of When Your Child Is Missing: A Family Survival Guide, which provides advice about what to do when your child is missing and how best to assist law enforcement in the search.
In addition to the remarks by the Attorney General, the ceremony included remarks by Laurie O. Robinson, Assistant Attorney General for the Office of Justice Programs (OJP), followed by presentations of awards in the following categories:
Attorney General’s Special Commendation Award: Recognizes the extraordinary efforts of an Internet Crimes Against Children Task Force (ICAC), an ICAC affiliate agency or an individual assigned to an ICAC Task Force or affiliate agency for making a significant investigative or program contribution to the ICAC Task Force.
- Recipient: Assistant District Attorney Kelly Miller with the Mecklenburg County District Attorney’s Office, an affiliate to the North Carolina ICAC, for her investigative work which led to the prosecution of an adult offender for child sexual abuse. The defendant was sentenced to 115 to 142.5 years in prison. Her outstanding coordination of the case and extraordinary care and attention to the victim were highlighted.
Missing Children’s Law Enforcement Award: Recognizes the extraordinary efforts of a law enforcement officer who has made a significant investigative or program contribution to the safety of a child.
- Recipient: Special Agent Michael J. Conrad from the Federal Bureau of Investigation’s office in Phoenix, who assisted in the recovery of an abducted 2-year-old child.
Missing Children’s Citizen Award: Honors the extraordinary efforts of private citizens for their unselfish acts to safely recover missing or abducted children.
- Recipients: Postmaster James Pantoja, Mail Carrier Tony Palma, and Distributor Associate Denultra Camp from the Tombstone, Ariz., Postal Facility who, upon the receipt of a missing child poster, distributed the information and used it during daily operations to contribute to the safe recovery of a 9-year-old child.
Missing Children’s Child Protection Award: Honors the extraordinary efforts of a law enforcement officer who has made a significant investigative or program contribution to protecting children from abuse or victimization.
- Recipient: Special Agents Catherine Koontz and James T. Lewis of the Federal Bureau of Investigation’s office in Miami, who investigated and coordinated law enforcement operations focused on an Internet case involving thousands of images of child pornography that led to an investigation of sexual abuse of children.
Missing Children’s Day Art Contest:
- Billy Joe Reyes Collado, a fifth grader from Antonio Pagán Public School in Lajas, Puerto Rico, was selected as the 2010 National Missing Children’s Day Art Contest winner for his depiction of a planet in the shape of a heart being held by two hands that can guide children back home.
In 1983, President Ronald W. Reagan proclaimed May 25 as National Missing Children’s Day in memory of Etan Patz, a 6-year-old boy who disappeared from a New York City street corner on that day in 1979. Missing Children’s Day honors his memory and the memory of children who are still missing.
Monday 24 May 2010
President of Iowa Ready-mix Concrete Company Pleads Guilty to Price Fixing and Bid RiggingRead the Press Release
The president of an Iowa ready-mix concrete company pleaded guilty to participating in a conspiracy to fix prices and rig bids for the sale of ready-mix concrete, the Department of Justice announced today.
According to a one-count felony charge filed on May 6, 2010 in U.S. District Court in Sioux City, Iowa, Kent Robert Stewart, aka Kent Stewart, president of a ready-mix concrete company located in Iowa, participated in a conspiracy to fix prices and rig bids for ready-mix concrete sold to various companies in Iowa between approximately January 2008 and August 2009.
According to the charge, Stewart participated in a conspiracy in which he engaged in discussions concerning project bids for sales of ready-mix concrete in Iowa, submitted rigged bids at collusive and noncompetitive prices and accepted payment for sales of ready-mix concrete at collusive and noncompetitive prices.
Ready-mix concrete is a product whose ingredients include cement, aggregate (sand and gravel), water, and other additives. The concrete generally is produced in a concrete plant and is transported to work sites by concrete-mixer trucks where it is used in various types of construction projects, including buildings and roads.
Stewart is charged with violating the Sherman Act, which carries a maximum penalty of 10 years in prison and a fine of $1 million per count for individuals. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
Today’s guilty plea arose from an ongoing federal antitrust investigation of the ready-mix concrete industry in Iowa and its surrounding states. The investigation is being conducted by the Department of Justice Antitrust Division’s Chicago Field Office, the FBI’s Sioux City Resident Agency, and the U.S. Department of Transportation’s Office of Inspector General, with the assistance of the U.S. Attorney’s Office in Sioux City, Iowa.
Anyone with information concerning bid rigging, price fixing or territorial allocation related to the ready-mix concrete industry in Iowa and its surrounding states should contact the Antitrust Division’s Chicago Field Office at 312-353-7530 or visit www.justice.gov/atr/contact/newcase.htm .
Former FBI Contract Linguist Sentenced for <br /> Leaking Classified Information to BloggerRead the Press Release
U.S. District Judge Alexander Williams sentenced former FBI contract linguist, Shamai Kedem Leibowitz, aka Samuel Shamai Leibowitz, age 40 of Silver Spring, Md., today to 20 months in prison followed by three years of supervised release for unlawfully providing classified documents to the host of an Internet blog who then published information from those documents on the blog.
The sentence was announced by David Kris, Assistant Attorney General for National Security; Rod J. Rosenstein, U.S. Attorney for the District of Maryland; and Richard A. McFeely, Special Agent in Charge of the FBI Baltimore Field Office.
"The willful disclosure of classified information to those not entitled to receive it is a serious crime," said David Kris, Assistant Attorney General for National Security. "Today’s sentence should serve as a warning to anyone in government who would consider compromising our nation’s secrets."
"Government employees who are given access to classified information are prohibited from disclosing the information without permission," said U.S. Attorney Rod J. Rosenstein.
"As a trusted member of the FBI ranks, Leibowitz abused the trust of the FBI and the American public by using his access to classified information for his own purposes," said Special Agent in Charge Richard A. McFeely.
According to Liebowitz’s plea agreement, from January through August 2009, Leibowitz was employed by the FBI as a contract linguist in an office in Calverton, Md. Leibowitz held a Top Secret security clearance and had lawful access to classified documents and information relating to the communication intelligence activities of the United States. In April 2009, Leibowitz caused five documents classified as Secret, which contained classified information relating to the communication intelligence activities of the United States, to be furnished to a person not entitled to receive such information.
The recipient was the host of a public blog available to anyone with access to the Internet. The recipient then published on the blog information from the classified documents.
U.S. Attorney Rod J. Rosenstein thanked Assistant U.S. Attorney Steven M. Dunne, of the U.S. Attorney’s Office for the District of Maryland, and Trial Attorney Kathleen M. Kedian, of the Counterespionage Section of the Justice Department’s National Security Division, who prosecuted the case.
California Patient Recruiter Sentenced to 12 Months in Prison for Medicare Fraud in Power Wheelchair ScamRead the Press Release
A Fresno, Calif.-area patient recruiter was sentenced today to one year and one day in prison for her participation in a nearly $1 million power wheelchair fraud scheme, announced the Departments of Justice and Health and Human Services (HHS).
Maria Nela Moreno, 57, was also sentenced by U.S. District Judge John F. Walter of the Central District of California to three years of supervised release and was ordered to pay $110,000 in restitution.
On Feb. 26, 2010, a Los Angeles jury found Moreno guilty of one count of conspiracy to commit health care fraud and six counts of health care fraud. The evidence introduced at trial showed that Moreno solicited Medicare beneficiaries for expensive, high-end power wheelchairs and other medical equipment they did not need by meeting with groups of seniors and going door-to-door at low-income, senior living communities in Sanger and Parlier, Calif., near Fresno. Several Medicare beneficiaries testified that Moreno wore a badge with her picture on it that appeared to resemble a hospital identification badge and told them she was from Medicare or another government agency.
According to the beneficiaries who testified at trial, Moreno convinced them to provide their identification cards and Medicare insurance numbers by telling the beneficiaries that they should take a power wheelchair because Medicare would soon run out of money, and the beneficiaries would not be able to get a chair in the future if they needed one. Moreno copied the beneficiaries’ identification cards and Medicare insurance numbers with a portable scanner she carried with her. The evidence at trial showed that Moreno recruited Medicare beneficiaries for power wheelchairs they did not need at a cost to Medicare of $6,000 per power wheelchair.
Witnesses testified that at the Elderberry Apartments in Sanger, one of the locations where Moreno and her co-conspirators illegally recruited beneficiaries to receive power wheelchairs, many residents left the wheelchairs unused. The former manager of the Elderberry Apartments testified that few, if any, of the residents actually needed the power wheelchairs.
Witnesses testified at trial that they received beneficiary information from Moreno and provided the information to a fraudulent medical clinic in Los Angeles, which used the information to create bogus prescriptions for power wheelchairs. Witnesses testified that they purchased the fraudulent prescriptions and medical documents from the clinic, and then sold them for more than $1,000 per prescription to durable medical equipment (DME) supply companies in and around Los Angeles. Moreno was paid a kickback for each power wheelchair that the DME companies were able to fraudulently bill to Medicare using the beneficiary information Moreno obtained.
Cooper Medical Supply of Canoga Park, Calif., was one of the DME supply companies that billed Medicare using the beneficiary information obtained by Moreno. Evidence presented at trial established that between January 2006 and September 2009, Cooper Medical Supply submitted approximately $946,590 in false and fraudulent claims to Medicare, almost all of which were for power wheelchairs. Evidence at trial also established that additional DME companies across southern California purchased prescriptions that were for the beneficiaries recruited by Moreno. On May 10, 2010, Cooper Medical Supply’s owner, Ajibola Sadiqr, was sentenced to 55 months in prison for his role in this fraud scheme. The owners of other DME supply companies who used the beneficiary information of Moreno’s recruits to submit false claims to Medicare have also been sentenced to prison.
Today’s sentencing was announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney André Birotte Jr. for the Central District of California; Tony Sidley, Assistant Chief of the California Department of Justice, Bureau of Medi-Cal Fraud and Elder Abuse; Glenn R. Ferry, Special Agent-in-Charge for the Los Angeles Region of the Office of Inspector General for HHS (HHS-OIG); and Steven Martinez, Assistant Director in Charge of the FBI’s Los Angeles Field Office
The case was prosecuted by Trial Attorney Jonathan Baum and Senior Trial Attorney Jerrob Duffy of the Criminal Division’s Fraud Section, and was investigated by the California Department of Justice and HHS-OIG. The case was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Central District of California.
Since their inception in March 2007, Medicare Fraud Strike Force operations in seven districts have obtained indictments of more than 560 individuals who collectively have falsely billed the Medicare program for more than $1.2 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.
California Man Sentenced to 78 Months in Jail for Molesting Child While in the People’s Republic of BangladeshRead the Press Release
William Newton Rudd, 67, of Fullerton, Calif., was sentenced today to 78 months in jail after pleading guilty on Oct. 30, 2009, to one count of engaging in illicit sexual conduct in a foreign place, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney André Birotte Jr. for the Central District of California.
U.S. District Court Judge Alicemarie H. Stotler also sentenced Rudd to 10 years of supervised release following his prison term and ordered Rudd to pay $15,000 in restitution to the victims. According to the plea agreement, while working in Bangladesh for a USAID-funded development program, Rudd engaged in inappropriate sexual contact with a boy under the age of sixteen. According to court documents, an investigation of Rudd turned up reports of abuse of additional victims. After a search warrant was executed at Rudd’s Bangladesh hotel room in 2004, Rudd traveled to the country of Togo, where he was arrested and escorted back to the United States.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.The case was prosecuted by Trial Attorney James Silver of CEOS, and Assistant U.S. Attorney Anne Gannon of the Central District of California. The Department of Homeland Security’s Immigration and Customs Enforcement Bureau (ICE), along with the Regional Security Office of the U.S. Embassy in Dhaka, Bangladesh, investigated the case.
Friday 21 May 2010
The Health Alliance of Greater Cincinnati and the Christ Hospital to Pay $108 Million for Violating Anti-Kickback Statute and Defrauding Medicare and MedicaidRead the Press Release
WASHINGTON – The Health Alliance of Greater Cincinnati and one of its former member hospitals, The Christ Hospital, have agreed to pay the United States $108 million to settle claims that they violated the Anti-Kickback Statute and the False Claims Act by paying unlawful remuneration to doctors in exchange for referring cardiac patients to The Christ Hospital in a pay-to-play scheme, the Justice Department announced today.
The United States alleged that The Christ Hospital, a 555-bed acute care hospital located in Mount Auburn, Ohio, limited the opportunity to work at the Heart Station – an outpatient cardiology testing unit that provides non-invasive heart procedures – to those cardiologists who referred cardiac business to The Christ Hospital. The government further alleged that cardiologists whose referrals contributed at least two percent of the hospital’s yearly gross revenues were rewarded with a corresponding percentage of time at the Heart Station, where they had the opportunity to generate additional income by billing for the patients they treated at the unit and for any follow-up procedures that these patients required.
The government asserted that The Christ Hospital’s use of Heart Station panel time to induce lucrative cardiac referrals violated the federal Anti-Kickback Statute, which prohibits a hospital from offering or paying, or a physician from soliciting or receiving, anything of value in return for patient referrals. The United States also alleged that the claims The Christ Hospital submitted to Medicare and Medicaid as a result of this illegal kickback scheme constituted a violation of the False Claims Act.
"Health care providers should make medical decisions based on the needs of their patients, not on the financial interests of physicians or other providers," said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. "We will not allow hospitals to put profits ahead of sound medical decision-making."
The allegations resolved by today’s settlement were initiated by a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act, which allow private parties to file actions on behalf of the United States and share in any recovery. The whistleblower in this suit, Dr. Harry Fry, a cardiologist who formerly worked at The Christ Hospital, will receive $23.5 million.
"The False Claims Act is a valuable tool in deterring fraud, waste, and abuse in government," stated Acting U.S. Attorney for this case William E. Hunt."The law was put to good use in this case as the government was able to recover from those who sought to gain financially by jeopardizing the integrity of the health care system."
Assistant Attorney General West noted that this settlement was the result of a coordinated effort among the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Southern District of Ohio, the Office of the Inspector General of the U.S. Department of Health and Human Services, the Center for Medicare and Medicaid Services, and the FBI.
In joining today’s announcement, Daniel R. Levinson, Inspector General of the Department of Health and Human Services Office of Inspector General stated, "kickbacks can distort clinical decisions, cause overutilization, increase costs, and threaten the quality of care provided to beneficiaries. The OIG, and its law enforcement partners, are committed to protecting the integrity of our federal health care programs and the health and welfare of the beneficiaries of those programs."
Because The Christ Hospital declined to enter into a Corporate Integrity Agreement acceptable to the OIG, the OIG did not provide a release of its administrative exclusion authorities and is further evaluating the matter.
This settlement is part of the government’s emphasis on combating health care fraud. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover approximately $2.8 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in False Claims Act cases since January 2009 have topped $3.7 billion.
Operator of Commercial Ship Inspected in Port of Tampa Fined $725,000 for Oil-Pollution Related CrimeRead the Press Release
WASHINGTON—Aksat Denizcilik Ve Ticaret A.S., a Turkish corporation that operated the commercial ship M/T Kerim, pleaded guilty today in U.S. District Court in Tampa, Fla., to two felony counts for knowingly failing to fully and accurately maintain an oil record book, which tracks pollutant discharge, the Justice Department announced.
During the hearing, U.S. District Court Judge Richard A. Lazzara sentenced the company to pay a $725,000 fine and to serve three years of probation. The court also ordered the company to implement an environmental compliance plan.
Federal and international law requires that all ships comply with pollution regulations requiring the proper disposal of oily waste water and sludge by passing the oily waste through an oil-water separator aboard the vessel or burning the sludge in the ship’s incinerator. Federal law also requires the ship’s crew to record accurately in an oil record book each transfer or disposal of oily waste water and sludge. These laws are designed to prevent pollution of ocean waters.
According to the plea agreement, Aksay operated the Kerim between at least 2006 and 2009. On March 24, 2009, the U.S. Coast Guard, based on information from several of the Kerim’s crew members, boarded and inspected the Kerim at the Port of Tampa and discovered a "magic pipe" used to bypass the ship’s oil pollution prevention equipment. Officers and crew members, acting on behalf of Aksay, had constructed and used the pipe to discharge oil sludge directly into the ocean. The "magic pipe" discharges were not recorded in the Kerim’s oil record book.
This case was investigated by the U.S. Coast Guard and the Environmental Protection Agency. The case was prosecuted by the Justice Department’s Environmental Crimes Section and the U.S. Attorney’s Office for the Middle District of Florida.
Justice Department Requires Divestitures in AMC’s Acquisition of Kerasotes TheatersRead the Press Release
The Department of Justice announced today that it will require AMC Entertainment Group Inc. to divest movie theater assets in Chicago, Denver and Indianapolis in order to proceed with its proposed $275 million acquisition of most of the theaters operated by Kerasotes Showplace Theatres. The department said that the transaction, as originally proposed, would likely substantially lessen competition among movie theaters that show first-run, commercial movies in the Chicago, Denver and Indianapolis metropolitan areas, resulting in higher ticket prices and decreased quality viewing experience for moviegoers.
The Department of Justice’s Antitrust Division filed a civil lawsuit today in U.S. District Court in Washington to block the proposed acquisition. At the same time, the department filed a proposed settlement that, if approved by the court, would resolve the lawsuit and the department’s competitive concerns. The states of Illinois, Colorado and Indiana joined the division’s enforcement action.
Under the terms of the proposed settlement, AMC must divest the following movie theaters: AMC Gardens 13 and Kerasotes Glen 10 (North Suburban Chicago); AMC Cantera 30 (Upper Southwest Suburban Chicago); Kerasotes Showplace 12 Bolingbrook (Lower Southwest Suburban Chicago); Kerasotes Colony Square 12 (Upper Northwest Denver); Kerasotes Olde Town 14 (Lower Northwest Denver); AMC Castleton Square 14 or Kerasotes Showplace 12 Glendale Town (North Indianapolis); and AMC Greenwood 14 (South Indianapolis).
In addition, for the next 10 years, AMC must inform the Antitrust Division if it proposes to acquire movie theatre assets in those markets.
AMC, a Kansas City-based company, operates 304 U.S. theaters housing 4,574 screens, most of which are located in megaplexes (units with more than 14 screens and stadium seating). AMC had U.S. revenues of approximately $2.26 billion in 2009.
Based in Chicago, Kerasotes develops, owns and operates Kerasotes ShowPlace Theatres LLC throughout the United States, with most locations in the Midwest. The privately held company operates 96 movie theaters with 973 screens in the United States and earned revenue of approximately $327.7 million in 2009.
As required by the Tunney Act, the proposed settlement and the department’s competitive impact statement will be published in the Federal Register. Any person may submit written comments concerning the proposed settlement during a 60-day comment period to John R. Read, Chief, Litigation III Section, Antitrust Division, United States Department of Justice, 450 5th Street, N.W., Suite 4000, Washington, D.C. 20530 (telephone: 202-307-0468). At the conclusion of the 60-day comment period, the U.S. District Court for the District of Columbia may enter the proposed settlement upon finding that it serves the public interest.
Fifth Officer Charged in Danziger Bridge CaseRead the Press Release
WASHINGTON – Ignatius Hills, a former officer with the New Orleans Police Department (NOPD), has been charged in connection with the federal investigation of a police-involved shooting on the Danziger Bridge in the days after Hurricane Katrina, the Justice Department announced today. The bill of information against Hills charges him with conspiracy to obstruct justice and misprision of a felony.
The incident on the Danziger Bridge, which occurred on Sept. 4, 2005, involved one shooting on the east side of the bridge that resulted in the death of one civilian and the wounding of four others, and a second shooting on the west side of the bridge that resulted in the death of Ronald Madison, a 40-year-old man with severe mental disabilities. Ronald Madison’s brother, Lance, was arrested on eight counts of attempting to kill police officers, but he was later released without indictment. The police maintained that they fired at the civilians in self-defense after the civilians fired at police. However, in recent months, four former and current NOPD officers have pleaded guilty to federal charges related to a cover up of the shooting incident.
The bill of information filed today alleged that Hills conspired with other police officers to provide false and misleading statements about the shooting. Specifically, the bill of information accuses Hills of writing a "gist," a charging document for NOPD, justifying the arrest of Lance Madison on eight counts of attempted murder of police officers, even though Hills had no first-hand knowledge of any wrongdoing by Madison, and even though he believed that Madison was being framed. The document also charges Hills with providing false statements about the shooting during an audio-taped NOPD interview and in a state grand jury. The bill of information also alleges that Hills knew that fellow police officers had knowingly obstructed justice by falsifying reports, and that he failed to report that crime to federal authorities.
The two-count bill of information is an accusation only. All defendants are innocent until proven guilty.
This case, which is ongoing, is being investigated by the New Orleans Field Office of the FBI, and is being prosecuted by Deputy Chief Bobbi Bernstein and Trial Attorney Forrest Christian of the Justice Department’s Civil Rights Division, along with Assistant U.S. Attorney Julia K. Evans of the Eastern District of Louisiana.
Department of Justice and USDA Hold Competition Workshop<br /> Focused on Competition Issues in the Poultry IndustryRead the Press Release
The Department of Justice and the U.S. Department of Agriculture (USDA) today held the second of five joint public workshops on competition and regulatory issues in the agriculture industry. The workshop, led by U.S. Agriculture Secretary Tom Vilsack and U.S. Attorney General Eric Holder, focused on issues in the poultry industry and featured panel discussions on poultry grower issues and trends in poultry production. It also included opportunities for public comments.
"Secretary Vilasck and I are committed to improving our understanding of how particular agricultural markets function," said Attorney General Holder. "That’s why we decided to hold a series of five workshops across the country to examine the challenges facing America’s farmers, growers and producers. One thing that already is clear is that competition is crucial to ensuring opportunity and fairness in our agricultural markets. The Department of Justice is committed to working jointly with the Department of Agriculture in protecting competition in those markets."
"All players in the poultry industry deserve an honest chance at success, and that requires a fair, viable and competitive marketplace," said Vilsack. "Today’s conversation helped bring a better understanding of the issues impacting growers on a daily basis and provided an opportunity to openly discuss some of the ideas that have been raised to address these concerns."
Today’s meeting was the second in a series of workshops that will be held over the next several months. These workshops are the first-ever to be held by the Department of Justice and USDA to discuss competition and regulatory issues in the agriculture industry. The goals of the workshops are to promote dialogue and foster learning, as well as to listen to and learn from people involved in agriculture. Additional information about the workshops can be found at www.justice.gov/atr/public/workshops/ag2010/index.htm#overview.
Attorney General Holder and Secretary Vilsack opened the workshop with short remarks before leading a roundtable discussion on competition issues in agriculture and the broiler industry, followed by a panel of poultry producers from around the country to discuss what they see in the industry on a daily basis. Later, a panel of academics and growers discussed trends in the industry. Officials also received public testimony between panel discussions.
The workshop was held in Normal, Ala., at the Ernest L. Knight Reception Center at Alabama A & M University, and was attended by several key federal and state leaders, including Congressman Artur Davis, Assistant Attorney General for the Justice Department’s Antitrust Division Christine Varney, Alabama Attorney General Troy King and Alabama Agriculture Commissioner Ron Sparks.
Transcripts from today’s workshop will be available for review at a later date on the Antitrust Division’s website. Individuals seeking more information on the workshops should contact [email protected].
Thursday 20 May 2010
Houston-area Durable Medical Equipment Company Owner Pleads Guilty <br /> to Fraud Scheme Involving Nutrition SuppliesRead the Press Release
The owner and operator of a Houston-area durable medical equipment (DME) company today pleaded guilty to defrauding the Medicare program, announced the Departments of Justice and Health and Human Services (HHS).
William M. Reece Jr., 54, pleaded guilty to conspiracy to commit health care fraud before U.S. District Judge David Hittner in U.S. District Court in Houston. In his plea, Reece admitted that he owned and operated a DME company called Bright Star Medical Equipment Health Services, and that he billed Medicare for equipment and supplies that were medically unnecessary and were never actually provided to Medicare beneficiaries. Sentencing has been scheduled for Aug. 17, 2010.
Reece admitted that beginning in 2005 and continuing through 2009, he conspired with others to submit approximately $600,000 in fraudulent claims to Medicare. Specifically, Reece admitted that he billed Medicare for enteral nutrition products, a type of DME that, according to Medicare regulations, was to be used only for patients who had feeding tubes inserted or surgically implanted in their noses, mouths or stomachs. According to court documents, the beneficiaries for whom Reece submitted the claims did not, in fact, receive enteral nutrition through a feeding tube. Reece also admitted that he delivered only a fraction of these products for which he billed Medicare.
In his plea, Reece admitted that in 2005, he agreed to pay kickbacks to a patient recruiter in exchange for the referral of Medicare beneficiaries for whom he supplied DME. Reece admitted that he then billed Medicare for the DME. He also admitted that the Medicare beneficiaries were recruited for the purpose of filing claims with Medicare for DME that was medically unnecessary and was not provided.
Today’s guilty plea was announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney José Angel Moreno of the Southern District of Texas; Richard C. Powers, Special Agent-in-Charge of the FBI’s Houston office; and Special Agent-in-Charge Mike Fields of the Dallas Regional Office of the HHS Office of Inspector General (HHS-OIG), Office of Investigations.
The case is being prosecuted by Trial Attorney Katherine Houston of the Criminal Division’s Fraud Section, and was investigated by the FBI and HHS-OIG.
This case was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Texas.
Since their inception in March 2007, Medicare Fraud Strike Force operations in seven districts have obtained indictments of more than 560 individuals who collectively have falsely billed the Medicare program for more than $1.2 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.
Former Guatemalan Special Forces Soldier Indicted for Making False Statements <br /> on Immigration Forms Regarding 1982 Massacre of Guatemalan VillagersRead the Press Release
A former Guatemalan special forces soldier was indicted today by a federal grand jury in Palm Beach County, Fla., for lying on his naturalization application about his participation in a 1982 massacre at a Guatemalan village known as Dos Erres, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney Wifredo A. Ferrer for the Southern District of Florida and Assistant Secretary John Morton of U.S. Immigration and Customs Enforcement (ICE).
The one-count indictment charges Gilberto Jordan, 54, of Delray Beach, Fla., with unlawful procurement of U.S. citizenship. Jordan was previously charged via a criminal complaint on May 5, 2010. The indictment alleges that in approximately November 1982, a Guatemalan guerrilla group ambushed a military convoy near Dos Erres, Guatemala, killing soldiers and taking a number of rifles. In response, a patrol of approximately 20 Guatemalan special forces soldiers, known as "Kaibiles," including Jordan, were deployed in approximately December 1982 to the village of Dos Erres to search for the stolen rifles and find suspected guerillas. According to the indictment, members of the special patrol entered Dos Erres on or about Dec. 7, 1982. Another group of approximately 40 Kaibiles allegedly established a perimeter around the town to prevent anyone from entering or escaping. Members of the special patrol allegedly interrogated the villagers, searched their homes, and separated the men from the women and children.
The indictment alleges that the special patrol then proceeded to systematically murder the men, women and children at Dos Erres by, among other things, hitting them in the head with a hammer and then throwing them into the village well. Members of the special patrol also allegedly raped many of the women and girls at Dos Erres before killing them. According to the indictment, Jordan participated in the crimes committed at Dos Erres, including murder.
According to the previously filed criminal complaint, a Guatemalan judge appointed an Argentinean forensic anthropology team approximately 12 years after the Dos Erres massacre to exhume the corpses at the village. According to the complaint, this forensic team uncovered approximately 162 skeletal remains from the village well, whose deaths were presumed to have occurred in December 1982 as a result of traumatic injuries and gunshot wounds.
According to the court documents, Jordan applied to become a U.S. citizen in September 1996. The indictment alleges that in the application, Jordan falsely denied that he had ever served in the military or committed any crimes for which he had not been arrested. In July 1999, Jordan was interviewed by a naturalization examiner, and swore under oath that the statements he had earlier provided on the application were true and correct. Jordan was sworn in as a U.S. citizen on Aug. 25, 1999.
If convicted, Jordan faces a maximum prison sentence of 10 years and revocation of his U.S. citizenship.
The case is being prosecuted by Trial Attorneys Hillary Davidson and Brian Skaret of the Human Rights and Special Prosecutions Section (HRSP) of the Criminal Division, and Assistant U.S. Attorney A. Marie Villafaña of the Southern District of Florida. The case was investigated by ICE’s Office of Investigations in West Palm Beach and ICE’s Human Rights Violators and War Crimes Unit. The Criminal Division's Office of International Affairs as well as ICE’s Offices of International Affairs provided assistance in this matter.
The Criminal Division announced the formation of HRSP on March 30, 2010, as part of the U.S. government’s efforts to bring human rights violators to justice and deny those violators safe haven in the United States. The new section represents a merger of the Criminal Division’s Domestic Security Section (DSS) and the Office of Special Investigations (OSI).
ICE’s Human Rights Violators and War Crimes Unit’s (HRVWCU) mission is to deny human rights violators and war criminals safe haven in the United States using all of its legal authorities. HRVWCU provides programmatic oversight over ICE investigations involving foreign war criminals, human rights violators, and those who within ICE’s jurisdiction, violate laws that fuel widespread overseas human rights abuses and conflicts. These include investigations relating to torture, genocide, war crimes, and the recruitment of child soldiers; and immigration and visa fraud where the underlying offense is based on substantive human rights abuses and war crimes.
Wednesday 19 May 2010
South Florida Resident Pleads Guilty in Connection<br /> with Business Opportunity Fraud VentureRead the Press Release
WASHINGTON – Orlando Moncada entered a guilty plea in Miami federal district court to a charge of conspiracy to commit wire fraud, the Justice Department and the U.S. Postal Inspection Service announced today. Moncada, a resident of south Florida, worked as a reference for American Merchant Technologies Inc. (AMT), a Miami-based company that purportedly sold automated teller machines (ATM), public access internet terminals (PAIT), and point of sale (POS) terminal business opportunities to consumers across the United States as part of a fraud scheme.
AMT was in business from April 2004 until December 2004. According to AMT’s sales pitch, a locating company would place the ATM, PAIT and POS machines of AMT business opportunity buyers in high-traffic locations. The business opportunity buyers would, they were falsely told, earn profits when members of the public bought items from the machines or paid a fee to use them.
According to the indictment, AMT salespeople made materially false statements to potential buyers, including that AMT was a profitable business opportunity, and that a locating company would secure high-traffic locations for the company’s distributors to place their terminals. AMT salespeople provided potential buyers with the names of individuals who were purportedly successful AMT business opportunity owners, including Orlando Moncada, when in fact, such references were not successful AMT business opportunity owners, but were individuals paid by AMT to fraudulently induce potential purchasers to buy an AMT business opportunity. During the time period AMT was in business, these phony references, including Moncada, spoke to a number of potential purchasers of an AMT business opportunity.
"We are committed to vigorously prosecuting financial fraud, especially scams like these that prey on working people who may be down on their luck," said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. "Business opportunity fraud, including the use of phony references, can and does deprive innocent people of funds they have invested to start a business and earn a living."
Moncada faces a maximum sentence of 20 years in prison, a possible fine, and mandatory restitution. He is the fourth defendant convicted who was associated with the AMT scheme. Walter Henderson, a manager at AMT, was convicted in 2007 and sentenced to five years in prison. Two other individuals who acted as phony references for AMT were prosecuted and convicted in connection with another business opportunity scheme in which they were involved.
"Business opportunity scams can be very deceptive even to those who seek to do their own due diligence," said U.S. Postal Inspector in Charge, Henry Gutierrez, based in Miami. "Using phony references like the defendant defrauds potential purchasers even when they think they are doing all they can to make sure a business deal is sound. We are committed to investigating and ending this type of financial wrongdoing."
Assistant Attorney General West commended the investigative efforts of the Postal Inspection Service, as well as the Federal Trade Commission, which previously brought a related civil suit and made a criminal referral. This matter is being prosecuted by trial attorneys in the Justice Department’s Office of Consumer Litigation.
Justice Department Settles Employment Discrimination Suit Against John Jay CollegeRead the Press Release
WASHINGTON – The Justice Department announced today that John Jay College, a New York City public college in the City University of New York (CUNY) system, has agreed to pay $23,260.00 in civil penalties and $10,072.23 in back pay to a former employee in order to settle a lawsuit filed by the Justice Department on April 15, 2010. The lawsuit alleged that John Jay College engaged in a pattern or practice of citizenship status discrimination by requesting documents issued by the Department of Homeland Security (DHS) from non-U.S. citizens, but not from U.S. citizens, during the employment eligibility verification Form I-9 process.
As part of the settlement, John Jay has also agreed to train its recruitment personnel on their responsibilities not to discriminate, implement a policy prohibiting discrimination on the basis of citizenship status, and provide periodic reports to the Department of Justice for three years.
The Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC) in the Civil Rights Division, which conducted the investigation in this matter, will continue to monitor John Jay College to ensure compliance with the settlement agreement. OSC is responsible for enforcing the anti-discrimination provisions of the Immigration and Nationality Act (INA), which protect U.S. citizens and certain work-authorized individuals from citizenship status discrimination. The INA also protects all work-authorized individuals from national origin discrimination, over-documentation in the employment eligibility verification process, and retaliation.
"All workers authorized to work in the United States have the right to look for a job without encountering discrimination because of their immigration status or national origin," said Thomas E. Perez, Assistant Attorney General for Justice Department’s Civil Rights Division. "We are pleased to have reached the settlement with John Jay College, and look forward to continuing to work with all employers, both public and private, to educate them about the protections and obligations under the law."
For more information about protections against employment discrimination under the immigration laws, call 1-800-255-7688 (OSC’s worker hotline) (1-800-237-2525, TDD for hearing impaired), 1-800-255-8255 (OSC’s employer hotline) (1-800-362-2735, TDD for hearing impaired), or 202-616-5594. Email [email protected], or visit the website at http://www.usdoj/gov/crt/osc.
Former Employee of Financial Services Company Pleads Guilty for Role in Bid-rigging and Fraud Conspiracies Involving Proceeds of Municipal BondsRead the Press Release
WASHINGTON — A former employee of a financial services company pleaded guilty today for his participation in bid-rigging and fraud conspiracies related to contracts for the investment of municipal bond proceeds and other related municipal finance contracts, the Department of Justice announced.
According to charges filed today in the U.S. District Court in New York City, Mark Zaino engaged in separate bid-rigging and fraud conspiracies with companies that provide a type of contract, known as an investment agreement, to state, county and local governments and agencies throughout the United States. The public entities were seeking to invest money from a variety of sources, primarily the proceeds of municipal bonds that they had issued to raise money for, among other things, public projects. Zaino also pleaded guilty to one count of wire fraud. According to the plea agreement, Zaino has agreed to cooperate with the ongoing investigation.
The department said in court documents that from March 2001 until late 2006, Zaino was employed on the municipal bond and derivatives desk of a financial services company that was a wholly-owned subsidiary of a financial institution that, among other things, acted as an underwriter for municipal bonds. On behalf of its parent financial institution, the financial services company that employed Zaino was hired by the public entities that issue municipal bonds to act as a broker and conduct what was supposed to be a competitive bidding process for investment agreements. Competitive bidding for those agreements is the subject of regulations issued by the U.S. Department of the Treasury and is related to the tax-exempt status of the bonds. The financial institution was also a provider of investment agreements and other derivative contracts, such as swaps, to municipal issuers and to other financial institutions, including other providers of investment agreements and municipal finance contracts.
According to court documents, Zaino engaged in a bid-rigging conspiracy from at least as early as October 2001 until March 2006. As a part of the bid-rigging conspiracy, Zaino, acting as a broker of investment agreements, and co-conspirator providers designated in advance which co-conspirator provider would be the winning bidder for certain investment agreements brokered by Zaino’s employer. After the winning co-conspirator provider was designated, Zaino caused the other co-conspirator providers to submit intentionally losing bids, giving the false appearance that the investment agreements had been bid competitively in accordance with relevant Treasury regulations. According to the court documents, kickbacks in the form of inflated or unearned fees were paid to Zaino’s employer and its parent financial institution in exchange for assistance in controlling the bidding process and ensuring that certain co-conspirator providers won the bids they were allocated.
According to court documents, Zaino, acting as a provider of investment agreements, also participated in a fraud conspiracy from as early as August 2001 until March 2006. As part of this conspiracy, Rubin/Chambers, Dunhill Insurance Services Inc., also known as CDR Financial Products (CDR), acting as a broker of investment agreements and other municipal finance contracts, agreed to fraudulently steer investment agreements to a certain provider. CDR steered those investment agreements to the provider in exchange for kickbacks from that provider, while giving the false appearance that the investment agreements had been bid in accordance with relevant U.S. Treasury regulations. CDR is a Beverly Hills, Calif.-based financial products and services firm. CDR and the provider also agreed to disguise the kickbacks as fees paid to CDR for acting as a broker in financial transactions, known as swaps, between the provider and other financial institutions, including the parent financial institution of Zaino’s employer. As part of the conspiracy, Zaino agreed to arrange for the financial institution to enter into swaps with the provider in order to pay CDR the kickbacks disguised as fees. Zaino also agreed to submit intentionally losing bids to CDR, frequently on deals that were steered to the provider. As a result of this conduct, the provider won contracts at artificially determined price levels and CDR profited at the expense of the municipal issuers.
The bid-rigging conspiracy for which Zaino is charged carries a maximum penalty of 10 years in prison and a $1 million fine. The fraud conspiracy for which Zaino is charged carries a maximum penalty of five years in prison and a $250,000 fine. The wire fraud charge carries a maximum penalty of 20 years in prison and a $250,000 fine. The maximum fines for each of these offenses may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
Zaino is the fourth individual to plead guilty in relation to an ongoing investigation into the municipal bonds industry, which is being conducted by the Antitrust Division’s New York Field Office, the FBI and IRS Criminal Investigation. Three former employees of CDR have pleaded guilty to bid-rigging and fraud conspiracies in relation to the ongoing investigation.
On Oct. 29, 2009, CDR, two of its employees and one former employee were indicted and charged with participating in bid-rigging and fraud conspiracies and related crimes.
The department is coordinating its investigation with the Securities and Exchange Commission, the Office of the Comptroller of the Currency and the Federal Reserve Bank of New York.
Today’s guilty plea is part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit www.StopFraud.gov.
Anyone with information concerning bid rigging and related offenses in any financial markets should contact the Antitrust Division’s New York Field Office at 212-264-0390 or visit www.justice.gov/atr/contact/newcase.htm, or the FBI at 212-384-5000.
Information
Tuesday 18 May 2010
Pittsburgh-area Man Who Served as Armed Nazi <br /> Concentration Camp Guard Is Ordered Removed to AustriaRead the Press Release
An immigration judge in Philadelphia has ordered the removal of Anton Geiser, a resident of Sharon, Pa., who served as an armed SS guard at three Nazi concentration camps in Germany during World War II, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division.
In a 14-page decision, U.S. Immigration Judge Charles M. Honeyman ordered Geiser, 85, removed to Austria, the country from which he immigrated to the United States after World War II. Judge Honeyman found that Geiser is removable under the 1978 Holtzman Amendment to the Immigration and Nationality Act because he assisted in Nazi-sponsored persecution. The decision noted that, through counsel, Geiser had, "generally admitted all of the factual allegations" in the government’s charging document.
In an earlier civil denaturalization prosecution that resulted in the 2006 revocation of Geiser’s U.S. citizenship by a federal district court judge in Pittsburgh, Geiser admitted under oath that he served as an armed SS Death’s Head guard at Sachsenhausen Concentration Camp, near Berlin, Germany, for most of 1943. Geiser admitted that while on duty at Sachsenhausen, he escorted forced laborers to and from work sites, guarded prisoners from an SS watch tower and was under standing orders to shoot any prisoner attempting to escape. Geiser also admitted that he served as an armed guard at Buchenwald Concentration Camp and its Arolsen subcamp from mid-November 1943 until April 11, 1945. At Buchenwald and Arolsen, Geiser was under orders to shoot anyone attempting to escape. Geiser admitted that he escorted prisoners from Buchenwald to Arolsen and then evacuated prisoners from Arolsen back to Buchenwald when the Nazis abandoned the latter camp near the war’s end.
"As a Nazi concentration camp guard during World War II, Anton Geiser must be held to account for his role in the persecution of countless men, women and children," said Assistant Attorney General Breuer. "The long passage of time will not diminish our resolve to deny refuge to such individuals."
Geiser immigrated to the United States from Austria in October 1956 and was naturalized as a U.S. citizen in March 1962. His citizenship was revoked by federal district court order in 2006 on the basis of the court’s finding that Geiser "clearly assisted in the persecution of people because of race, religion and national origin" and therefore was legally barred from receiving the visa issued to him to come to the United States.
"Without Anton Geiser and other members of the SS Death’s Head guard battalions, the Nazi concentration camp system could not have accomplished its diabolical objectives," said Eli M. Rosenbaum, Director of Human Rights Enforcement Strategy and Policy in the Human Rights and Special Prosecution Section (HRSP).
The Department of Justice’s Criminal Division announced the formation of HRSP on March 30, 2010, as part of the U.S. government’s efforts to bring human rights violators to justice and deny those violators safe haven in the United States. The new section represents a merger of the Criminal Division’s Domestic Security Section (DSS) and Office of Special Investigations (OSI).
The Geiser case is a result of the Justice Department’s continuing efforts to identify, investigate and take legal action against former participants in Nazi crimes of persecution who reside in the United States. Since the 1979 inception of the department’s program to detect and remove Nazi persecutors, it has won cases against 107 individuals. In addition, more than 180 suspected participants in Axis crimes of persecution who sought to enter the United States have been blocked from doing so, through Department of Justice efforts in coordination with the Departments of State and Homeland Security.
The removal case against Geiser was litigated by Senior Litigation Counsel Susan L. Siegal and Senior Trial Attorneys Christina Giffin and Edgar Chen of the Criminal Division’s HRSP. The Philadelphia office of the U.S. Immigration and Customs Enforcement (ICE) provided assistance in this case. The U.S. Attorney’s Office for the Western District of Pennsylvania provided assistance in the denaturalization litigation.
Ohio Utility to Settle Clean Air Act ViolationsRead the Press Release
WASHINGTON – American Municipal Power (AMP), an Ohio non-profit utility, will permanently retire its Richard H. Gorsuch Station coal-fired power plant near Marietta under a settlement to resolve violations of the Clean Air Act, the Justice Department and U.S. Environmental Protection Agency (EPA) announced today. As part of the settlement, AMP will also spend $15 million on an environmental mitigation project and pay a civil penalty of $850,000.
"The Justice Department is committed to strong enforcement of our nation's environmental laws in order to protect human health and the environment," said Ignacia S. Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. "This settlement will remove harmful emissions from this coal-fired power plant by tens of thousands of tons each year and will significantly benefit air quality. We are also pleased that AMP has shown creative leadership to implement a program that encourages efficient energy use."
"Today’s settlement substantially reduces harmful air pollution from coal-fired power plants, and requires a large scale energy efficiency program within the AMP community," said Cynthia Giles, assistant administrator for EPA’s Office of Enforcement and Compliance Assurance. "These pollutants can cause severe respiratory and cardiovascular impacts, and are significant contributors to acid rain, smog, and haze. Coal-fired power plants of all sizes are large sources of air emissions, and EPA is committed to making sure that they all comply with the law. "
The agreement resolves violations of the Clean Air Act’s new source review requirements at the company’s Gorsuch Station, which has a sulfur dioxide emission rate in the highest three percent of coal-fired utility sources in the country.
Under the settlement, AMP will permanently retire the Gorsuch Station by Dec. 31, 2012, and implement interim sulfur dioxide and nitrogen oxide emission limits until that date. AMP made a business decision that shutting down the plant and providing for replacement energy was its preferred option for bringing the plant into compliance. AMP will also enhance pollution controls to reduce particulate matter emissions. The settlement requires AMP to spend $15 million on an energy efficiency project to benefit the environment and mitigate the adverse effects of the alleged violations. The project will provide energy efficiency services in lighting, refrigerator replacement and removal, and installation of building heating and cooling systems to all of the municipalities and their customers served by the Gorsuch Station. The energy efficiency services are designed to achieve a minimum reduction of 70,000 megawatt hours, equivalent to the electricity use of more than 6,000 homes for one year.
The settlement is part of the EPA’s national enforcement initiative to reduce emissions from coal-fired power plants under the Clean Air Act’s New Source Review requirements. Sulfur dioxide and nitrogen oxides, two key pollutants emitted from power plants, have numerous adverse effects on human health and the environment. These pollutants are converted in the air to fine particles of particulate matter that can cause severe respiratory and cardiovascular impacts, and premature death. Sulfur dioxide and nitrogen oxides are also significant contributors to acid rain, smog and haze. In addition, air pollution from power plants can drift significant distances downwind, thereby effecting not only local communities, but also communities in a much broader area.
Today’s settlement will also further EPA’s continuing commitment to reducing nitrogen oxide pollution in the Chesapeake Bay, the largest estuary in North America. The Gorsuch plant is located in the bay airshed, and AMP's commitment to retire the plant will eliminate nitrogen oxide emissions in that area by approximately 3,160 tons per year.
AMP, based in Columbus, Ohio, is a nonprofit organization that provides generation, transmission, and distribution of wholesale electric power to municipal electric systems. AMP is made up of 129 member municipal communities in five states. This settlement applies to the Gorsuch Station, which consists of four 53 megawatt boilers.
The proposed settlement was lodged in the U.S. District Court for the Southern District of Ohio and is subject to a 30-day public comment period and final court approval. A copy of the consent decree is available on the Justice Department website at www.justice.gov/enrd/Consent_Decrees.html.
Kansas City, Missouri, to Spend $2.5 Billion to Eliminate Sewer OverflowsRead the Press Release
WASHINGTON – The city of Kansas City, Mo., has agreed to make extensive improvements to its sewer systems, at a cost estimated to exceed $2.5 billion over 25 years, to eliminate unauthorized overflows of untreated raw sewage and to reduce pollution levels in urban storm water, the Justice Department and U.S. Environmental Protection Agency (EPA) announced today.
The settlement, lodged today in federal court in Kansas City, requires the city to implement the overflow control plan, which is the result of more than four years of public input. The plan is designed to yield significant long-term benefits to public health and the environment, and provide a model for the incorporation of green infrastructure and technology toward solving overflow issues.
When completed, the sanitary sewer system will have adequate infrastructure to capture and convey combined storm water and sewage to treatment plants. This will keep billions of gallons of untreated sewage from reaching surface waters.
"Today’s agreement will have positive, lasting effects on both public health and the environment. The agreement prioritizes neighborhood sewer rehabilitation projects in the urban core, reducing basement and other sewer backups and thereby significantly improving public health," said Ignacia S. Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. "The Justice Department is committed to enforcing our nation’s environmental laws so that the environment and the health of our communities are protected."
"This is a landmark day in the history of Kansas City," said Karl Brooks, EPA Regional Administrator. "This agreement charts a course for the largest infrastructure project in the city’s history, and what we believe to be one of the largest municipal green infrastructure project undertaken anywhere in the nation. These provisions put one of the nation’s largest municipal sewer systems on a steady path toward compliance with the Clean Water Act by committing it to address deficiencies that have harmed the environment and posed risks to public health and safety for decades. Over time, our area streams and rivers should become much cleaner and safer as a result."
Under the agreement, Kansas City will pay a civil penalty of $600,000 to the United States, in addition to the estimated $2.5 billion it will spend to repair, modify and rebuild its sewer system. The plan is also structured to encourage the city to use natural or engineered "green infrastructure," such as green roofs, rain gardens and permeable pavement, to minimize stormwater burdens on the improved system.
As part of the agreement, Kansas City will spend $1.6 million on supplemental environmental projects to implement a voluntary sewer connection and septic tank closure program for income-eligible residential property owners who elect to close their septic tanks and connect to the public sewer.
Kansas City’s sewer system collects and receives domestic, commercial and industrial wastewater from a population of approximately 650,000 people in the city and 27 neighboring satellite communities, including a portion of Johnson County, Kan. The system covers more than 420 square miles, and includes seven wastewater treatment plants, 38 pumping stations and more than 2,800 miles of sewer lines, making it one of the nation’s largest.
Of the 420 square miles covered by the system, 58 square miles mostly within the city’s urban core are presently served by combined sewers, which carry both stormwater and wastewater, and the remainder of the system is served by separated sewers. Under the consent decree, Kansas City has agreed to expedite certain projects that are expected to provide more immediate relief to residences and other properties presently served by combined sewers in the urban core.
Since 2002, Kansas City has experienced approximately 1,294 illegal sewer overflows, including at least 138 unpermitted combined sewer overflows, 390 sanitary sewer overflows, and 766 backups in buildings and private properties. The overflows are in violation of the federal Clean Water Act and the terms of the city’s National Pollution Discharge Elimination System (NPDES) permits for operation of its sewer system.
Untreated sewage from overflows can cause serious water quality problems and health issues from pollutants including harmful bacteria, oxygen-depleting substances, suspended solids, toxic metals and chemicals, and nutrients. As part of today’s settlement, the city has agreed to install disinfection treatment systems at all of its wastewater treatment plants by 2013.
Kansas City’s overflows result in the annual discharge of an estimated 7 billion gallons of raw sewage into local streams and rivers, including the Missouri River, Fishing River, Blue River, Wilkerson Creek, Rocky Branch Creek, Todd Creek, Brush Creek, Penn Valley Lake and their tributaries.
The settlement, lodged today in the U.S. District Court for the Western District of Missouri, is subject to a 30-day public comment period and approval by the federal court. A copy of the consent decree is available on the Justice Department website at www.justice.gov/enrd/Consent_Decrees.html.
Monday 17 May 2010
Two Chinese Nationals Convicted of Illegally Exporting Electronics Components <br /> Used in Military Radar & Electronic WarfareRead the Press Release
Following a five-week trial, a federal jury in Massachusetts found two Chinese nationals, one of whom resided in the United States, guilty of illegally conspiring to violate U.S. export laws and illegally exporting electronic equipment from the United States to China, the Justice Department announced today. Several Chinese military entities were among those receiving the exported equipment.
The jury also convicted a Waltham, Mass., corporation, owned by one of the defendants, which procured the equipment from U.S. suppliers and then exported the goods to China through Hong Kong. The exported equipment is used in electronic warfare, military radar, fire control, military guidance and control equipment and satellite communications, including global positioning systems.
Zhen Zhou Wu aka Alex Wu, Yufeng Wei aka Annie Wei and Chitron Electronics Inc. (Chitron-US), were convicted of unlawfully exporting defense articles and Commerce controlled goods to China on numerous occasions between 2004 and 2007 and conspiring to violate U.S. export laws over a period of ten years. Wu and Wei were also both convicted of filing false shipping documents with the Commerce Department. In addition, Wei was convicted of immigration fraud for presenting a U.S. Permanent Resident Card, which she knew had been procured by making false and fraudulent statements to immigration officials, to enter the country.
"Today’s convictions demonstrate the importance of safeguarding America’s sensitive technology against illicit foreign procurement efforts. They also serve as a warning to those who seek to covertly obtain technological materials from the U.S. in order to advance military systems of their own. I applaud the many agents, analysts and prosecutors who helped bring about this successful outcome," said David Kris, Assistant Attorney General for National Security.
Evidence presented at trial proved that the defendants illegally exported military electronic components, which are designated on the U.S. Munitions List, to mainland China, through Hong Kong, between April 2004 and June 2006. The defense articles the defendants illegally exported are primarily used in military phased array radar, electronic warfare, military guidance systems, and military satellite communications. Since 1990 the U.S. government has maintained an arms embargo against China that prohibits the export, re-export, or re-transfer of any defense article to China.
"For more than 10 years, this corporation and these defendants conspired to procure U.S. military products and other controlled electronic components for use in mainland China – for military radar, military satellite communications, and military guidance systems," said U.S. Attorney Ortiz. "In doing so, these defendants violated U.S. export laws and compromised our national security. The result in this case was achieved through the exemplary investigative efforts of dedicated agents and prosecutors working with various law enforcement and other government agencies."
The defendants also illegally exported Commerce Department-controlled electronics components to China that could be used in military applications in electronic warfare, military radar, satellite communications systems and space applications. These items could make a direct and significant contribution to weapons systems and war-fighting capabilities of U.S. adversaries, and cannot be exported to China without an export license from the U.S. Department of Commerce.
Wufounded and controlled Chitron, including its headquarters in Shenzhen, China, and its U.S. office located in Waltham, Mass. While Wu resided in China, Wei served as the manager of the U.S. office. Using Chitron, Wu targeted Chinese military factories and military research institutes as customers of Chitron, including numerous institutes of the China Electronics Technology Group Corporation, which is responsible for the procurement, development and manufacture of electronics for the Chinese military. Indeed, Wu referred to Chinese military entities as Chitron’s major customer since as early as 2002. Wu hired an engineer at Chitron’s Shenzhen office to work with Chinese military customers. By 2007, 25% of Chitron’s sales were to Chinese military entities.
Correspondence between Wu, Wei and other Chitron employees showed knowledge that U.S. export restricted parts were being shipped overseas to Chinese customers without having first obtained an export license. Wu instructed Wei and employees of Chitron-US on numerous occasions to never tell U.S. companies that parts were going overseas. At WuandWei’s direction, U.S. companies were told to ship all ordered products to the Chitron-US office located in Waltham, Mass.
Upon receipt by Chitron-US of the ordered products, the U.S. commodities were inspected by Chitron-US employees and consolidated into packages, which were then exported to the company’s Shenzhen office (located in Mainland China) using freight forwarders in Hong Kong, without the required export licenses from the Department of State and Department of Commerce.
"Today’s convictions represent an outstanding collaborative investigation and prosecution to bring to justice those who flout our export control laws and endanger our national security," said John McKenna, Special Agent in Charge of the Commerce Department’s Boston Office of Export Enforcement. "Preventing dangerous U.S.-origin items from falling into the wrong hands is one of our top priorities at the Commerce Department," he said.
"Today’s verdicts underscore the importance of ICE’s global investigative efforts aimed at disrupting and dismantling criminal organizations that profit from the illegal exportation of sensitive U.S. technology that threatens our national security," said "Matthew J. Etre, Acting Special Agent in Charge of U.S. Immigration and Customs Enforcement Office of Investigations in Boston.
"This was a significant verdict in a joint investigation with ICE, Commerce, DCIS, and the U.S. Attorney’s Office," said Warren Bamford, Special Agent in Charge of FBI’s Boston Field Office. "The illegal export of U.S. defense technology to foreign countries is harmful to the national security of the United States. These types of violations will continue to be aggressively investigated because this conduct cannot and will not be tolerated."
"The convictions in this case are the end result of a joint investigation conducted by the Defense Criminal Investigative Service and its partner federal law enforcement agencies," said Resident Agent In Charge Leigh-Alistair Barzey. "This investigation demonstrates the commitment DCIS has to ensuring that sensitive military equipment and technology are not illegally exported to restricted countries, which could put America’s war fighters and the Nation at considerable risk."
Wu and Wei both face up to 20 years in prison to be followed by three years supervised release and a $1 million fine. After serving their sentence, both will face deportation to China.
Chitron-US faces up to a $1 million fine for each count in the Indictment charging the company with illegal export of U.S. Munitions List items and $500,000 for each count in the Indictment charging them with illegal export of Commerce Department-controlled electronics. Sentencing is scheduled for August 17, 2010.
Shenzhen Chitron Electronics Company Limited, the Chinese company owned by Wu which received the U.S. electronics and delivered the parts to Chinese end-users, was also indicted for the same crimes. The court has entered a contempt order against Chitron-Shenzhen for refusing to appear for trial and fined the corporation $1.9 million dollars.
Co-defendant Bo Li, aka Eric Lee, previously pleaded guilty to making false statements on shipping documents, and faces five years in prison to be followed by three years supervised release and a $1 million fine. Sentencing is scheduled for July 22, 2010, in Boston.
The case was investigated by the Department of Commerce’s Office of Export Enforcement; Immigration and Customs Enforcement; FBI; and Defense Criminal Investigative Service. It is being prosecuted by Assistant U.S. Attorneys B. Stephanie Siegmann and John A. Capin of Office Anti-Terrorism and National Security Unit for the District of Massachusetts.
Oregon White Supremacist Pleads Guilty for Threatening Lima, Ohio, Civil Rights Leader by Mailing NooseRead the Press Release
WASHINGTON- Daniel Lee Jones, a Portland, Ore., white supremacist, pleaded guilty to using the Postal Service to send a threatening communication to the president of the Lima, Ohio, chapter of the National Association for the Advancement of Colored People, the Justice Department announced today.
In the plea agreement, Jones admits to mailing F.M. Jason Upthegrove a hangman’s noose, which arrived at Mr. Upthegrove’s home on or about Feb. 14, 2008. Jones further states in the plea agreement that he mailed the communication containing the hangman’s noose in order to convey a threat to injure Mr. Upthegrove because he was an African-American who publicly advocated for better police services for African-Americans in Lima, Ohio. The indictment indicates that Mr. Upthegrove also spoke out in the media against Jones’s white supremacist group’s mailing of hate flyers related to the shooting of an African-American woman by a member of the Lima Police Department.
Jones faces a maximum prison sentence of five years and a potential fine of up to $250,000 for his conviction.
"A noose is an unmistakable symbol of hate in our nation, and it was used in this case to intimidate an individual for exercising his right to speak out and advocate on behalf of others," said Thomas E. Perez, Assistant Attorney General of the Civil Rights Division. "The Department of Justice will vigorously prosecute those who resort to violent threats to silence such advocates, especially when that threat is motivated by hate."
"Sending a noose is a threat that harkens back to some of the darkest days of our history. We simply will not tolerate such actions any longer," said U.S. Attorney Steven M. Dettelbach.
The case was investigated by FBI Special Agent Brian Russ, and the prosecution was handled by Assistant U.S. Attorney David Bauer from the U.S. Attorney’s Office, and Special Legal Counsel Barry Kowalski and Trial Attorney Shan Patel from the Civil Rights Division of the Department of Justice.