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31 January 2012
Patient Recruiter Pleads Guilty in Louisiana Health Care Fraud SchemeRead the Press Release
WASHINGTON – An Atlanta resident pleaded guilty today for his role in a Louisiana-based Medicare fraud scheme involving fraudulent claims for unnecessary durable medical equipment (DME), announced the Department of Justice, the FBI, the Department of Health and Human Services (HHS) and the Louisiana State Attorney General’s Office.
Fred D. Belcher, 61, pleaded guilty before U.S. District Judge James J. Brady of the Middle District of Louisiana to one count of conspiracy to commit health care fraud.
Belcher admitted that he worked as a recruiter for Healthcare 1 LLC, Medical 1 Patient Services LLC and Lifeline Healthcare Services Inc., Louisiana-based companies that fraudulently billed DME to the Medicare program from 2004 to 2009. He and other recruiters were hired to obtain prescriptions for DME such as leg braces, arm braces, power wheel chairs and wheel chair accessories. Specifically, Belcher recruited Medicare beneficiaries to attend “health fairs” that he organized at churches and other locations in the beneficiaries’ communities. At these fairs, he obtained information from the beneficiaries and paid a doctor to prescribe medically unnecessary DME for the beneficiaries. Belcher then sold these prescriptions so they could be billed to Medicare by Healthcare 1 LLC, Medical 1 Patient Services LLC and Lifeline Healthcare Services Inc.
According to plea documents, from 2004 to 2009, Medicare was billed approximately $1.15 million for the beneficiaries that Belcher provided as part of this fraudulent scheme.
One of Belcher’s co-defendants, Beulah Renaee Richardson, pleaded guilty before Judge Brady on Jan. 26, 2012, for her role in the fraud scheme. Richardson, 47, admitted that she also served as a recruiter for Healthcare 1 LLC, Medical 1 Patient Services LLC and Lifeline Healthcare Services Inc. In addition, eight other defendants have pleaded guilty for their roles in the fraud scheme.
Belcher and Richardson face a maximum penalty of 10 years in prison and a $250,000 fine. A sentencing date has not yet been set.
Today’s plea was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Donald J. Cazayoux Jr. of the Middle District of Louisiana; Mike Fields, Special Agent-in-Charge of Dallas Region for the HHS Office of the Inspector General (HHS-OIG); David Welker, Special Agent-in-Charge of the FBI’s New Orleans division; and Louisiana State Attorney General James Buddy Caldwell.
The case is being prosecuted by Trial Attorneys David Maria and Abigail Taylor and Assistant Chief William Pericak of the Criminal Division’s Fraud Section. The case was investigated by the FBI, HHS-OIG and the Medicaid Fraud Control Unit of the Louisiana State Attorney General’s Office (MFCU), and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Middle District of Louisiana.
Since its inception in March 2007, the Medicare Fraud Strike Force operations in nine locations have charged more than 1,160 defendants that collectively have billed the Medicare program for more than $2.9 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to www.stopmedicarefraud.gov .
Justice Department Charges St. Bernard Parish, Louisiana for Limited Rental Housing Opportunities for African-AmericansRead the Press Release
WASHINGTON – The Department of Justice today filed a lawsuit against St. Bernard Parish, La., alleging that the parish violated the Fair Housing Act by engaging in a multi-year campaign to limit rental housing opportunities for African-Americans in the parish.
The complaint, filed in the U.S. District Court for the Eastern District of Louisiana, alleges that the parish violated the Fair Housing Act when it took repeated actions to limit the availability of multi-family and rental housing in the parish. These actions include the establishment of an onerous permit-approval process for single-family rentals, the elimination of multi-family housing in large portions of the parish and repeated attempts to block the development of multi-family affordable-housing. The complaint alleges that the parish’s actions both were intended to and had the effect of disproportionately disadvantaging African-Americans seeking to rent housing in St. Bernard Parish.
The parish has been sued previously over housing and land-use decisions since Hurricane Katrina and found in contempt of court orders repeatedly. In October 2011, a federal district court found that the parish had engaged in intentional discrimination in violation of the Fair Housing Act by “doggedly attempt[ing] to preserve the pre-Katrina demographics of St. Bernard Parish.”
“Every person should have the opportunity to choose where they will live. When a local government puts up discriminatory barriers, as St. Bernard Parish has, it violates the law,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “We will use our enforcement tools to break down such barriers and ensure that people have housing choice free of discrimination.”
“The Department of Justice is committed to ensuring that everyone in our community – regardless of race, color or national origin – enjoys the equal protection of our Constitution and our laws, as well as the absolute right to live in any community of their choosing without discrimination,” said James Letten, U.S. Attorney for the Eastern District of Louisiana.
“Today’s action exemplifies how HUD and the Justice Department are working together to eradicate housing discrimination,” stated John Trasviña, HUD Assistant Secretary for Fair Housing and Equal Opportunity. “Our agencies will not allow zoning or other exclusionary means to deny housing because of race.”
The complaint is based in part on referrals from the Department of Housing and Urban Development (HUD). From March 2008 to September 2011, 10 residents and homeowners filed complaints with HUD, alleging that the parish’s actions violated the Fair Housing Act. HUD referred these complaints to the Department of Justice in accordance with a provision in the Fair Housing Act that authorizes the department to enforce allegations of discriminatory zoning or land use practices by a local government.
Assistant Secretary for Fair Housing and Equal Opportunity, John Trasviña, also filed a complaint on behalf of the HUD Secretary alleging that the parish violated the Fair Housing Act by passing an ordinance that restricted new multifamily housing construction to certain areas of the city and prohibited it in others. HUD referred this complaint to the Department of Justice on Jan. 20, 2012.
The department’s lawsuit seeks a court order that would enjoin the parish from making unavailable or denying housing on the basis of race and requires it to take actions to prevent any similar discriminatory conduct in the future. The lawsuit also seeks monetary damages for persons harmed by the parish’s actions and a civil penalty.
The federal Fair Housing Act prohibits discrimination in housing based on race, color, religion, national origin, sex, disability and familial status. Fair housing enforcement is a priority of the Civil Rights Division. More information about the Civil Rights Division and the laws it enforces is available at www.justice.gov/crt. Individuals who believe that they may have been victims of housing discrimination can call the Housing Discrimination Tip Line at 1-800-896-7743, email the Justice Department at [email protected], or contact HUD at 1-800-669-9777.
Justice Department Celebrates 25th Anniversary of False Claims Act Amendments of 1986Read the Press Release
The Justice Department today celebrated the 25th anniversary of the 1986 amendments to the False Claims Act. The False Claims Act has been called the single most important tool that American taxpayers have to recover funds when false claims are made to the federal government, including health care fraud, mortgage fraud, and procurement fraud.
“In the last quarter century, the False Claims Act’s success has been unparalleled with more than $30 billion dollars recovered since it was amended in 1986 and $8.8 billion since January 2009,” said Attorney General Eric Holder. “In these challenging economic times when resources are scarce, government budgets are being tightened and so many Americans are forced to do more with less, the need to act as sound stewards of every taxpayer dollar has never been more clear or more urgent. The Department of Justice has achieved record recoveries in recent years and we will continue to aggressively pursue those who would take advantage of their fellow citizens.”
The False Claims Act was originally passed by Congress during the administration of President Abraham Lincoln in 1863 to help the government recover federal funds stolen through fraud by U.S. government contractors. During the Civil War, the law was used to recover monies from unscrupulous contractors who sold the Union Army decrepit horses and mules in ill health, faulty rifles and ammunition, and rancid rations and provisions.
In 1986, Senator Charles Grassley and Representative Howard Berman led successful efforts in Congress to amend the False Claims Act. The amendment permitted the government to seek treble damages and revised the statute’s qui tam, or whistleblower, provisions to increase the incentives for whistleblowers to come forward with allegations of fraud. Since those changes were enacted, the Justice Department has recovered more than $30 billion under the act.
On this, the 25th anniversary of the 1986 amendments, Tony West, Assistant Attorney General of the Civil Division of the Department of Justice, paid tribute to the bill’s sponsors, thanking them for “their foresight in providing the Department with this powerful tool to fight fraud, waste and abuse.” He also expressed his gratitude to Senator Patrick J. Leahy, Chairman of the Senate Judiciary Committee, and to Senator Grassley and Representative Berman for their support of the Fraud Enforcement and Recovery Act of 2009, which made additional improvements to the False Claims Act and other fraud statutes.
“ One need look no further than the record recoveries this department has obtained in civil fraud cases to demonstrate the tremendous importance and effectiveness of the False Claims Act,” said Assistant Attorney General West. “That framework was put in place in 1986, but our successes would not have been possible without the ongoing efforts and collaboration of career civil servants, private counsel, and, of course, the whistleblowers who come forward to report fraud.”
In FY 2011 alone, the Department of Justice secured more than $3 billion in settlements and judgments in civil cases involving fraud against the government. Since January 2009, the department has recovered $8.8 billion under the False Claims Act – the largest three-year total in the Justice Department’s history, and 28 percent of all recoveries since the False Claims Act was amended in 1986.
Among the top settlements the government has achieved since the passage of the 1986 amendments are the following, which include, in some cases, criminal and state civil recoveries: $2.3 billion – Pfizer Inc. (2010); $1.7 billion – Columbia/HCA I & II (2000 and 2003); $1.415 billion – Eli Lilly and Company (2009); $950 million – Merck Sharp & Dohme (2011); $923 million – Tenet Healthcare Corporation (2006); $875 million – TAP Pharmaceuticals (2002); $750 million – GlaxoSmithKline (2010); $704 million – Serono, S.A. (2005); $650 million – Merck (2008); and $634 million – Purdue Pharma (2007).
Fort Lauderdale, Florida-Area Halfway House Owner Sentenced to 28 Months in Prison for Participating in Medicare Fraud Kickback SchemeRead the Press Release
WASHINGTON – The owner and president of a Fort Lauderdale, Fla.-area halfway house company was sentenced today to 28 months in prison for her role in a kickback scheme that funneled patients to a fraudulent mental health provider, American Therapeutic Corporation (ATC), announced the Department of Justice, the FBI and the Department of Health and Human Services (HHS).
Natalie Evans, 50, was sentenced by U.S. District Judge Jose E. Martinez in the Southern District of Florida. In addition to her prison term, Evans was sentenced to three years of supervised release and was ordered to pay $253,867 in restitution.
Evans pleaded guilty in October 2011 to one count of conspiracy to commit health care fraud. Evans was the president of Vision of Hope Recovery Inc., which operated five halfway houses in Fort Lauderdale.
According to court documents, most of the residents at Evans’s halfway houses were recovering from drug and/or alcohol addictions, and some had recently been released from prison. ATC purported to operate partial hospitalization programs (PHPs) in seven different locations throughout south Florida and Orlando. A PHP is a form of intensive treatment for severe mental illness.
According to court documents, Evans agreed to provide Medicare beneficiaries from Vision of Hope halfway houses to ATC for PHP services. Evans admitted that she knew the beneficiaries at her halfway houses needed day treatment for addiction and not PHP services. Evans also knew that ATC fraudulently billed the Medicare program for the PHP services provided to the beneficiaries she referred to ATC. According to court documents, Evans gave patient information, such as Medicare numbers, to a co-conspirator, and the patients were then transported to and from ATC by ATC employees.
According to court filings, ATC’s owners and operators paid kickbacks to owners and operators of assisted living facilities and halfway houses and to patient brokers in exchange for delivering ineligible patients to ATC and ASI. In some cases, the patients received a portion of those kickbacks. Throughout the course of the ATC and ASI conspiracy, millions of dollars in kickbacks were paid in exchange for Medicare beneficiaries who did not qualify for PHP services. The ineligible beneficiaries attended treatment programs that were not legitimate so that ATC and ASI could bill Medicare for more than $200 million in medically unnecessary services.
According to the plea agreement, Evans’s participation in the fraud resulted in more than $645,975 in fraudulent billing to the Medicare program.
ATC, its management company Medlink Professional Management Group Inc., and various owners, managers, doctors, therapists, patient brokers and marketers of ATC, Medlink and ASI, were charged with various health care fraud, kickback, money laundering and other offenses in two indictments unsealed on Feb. 15, 2011. ATC, Medlink and 10 of the individual defendants have pleaded guilty or have been convicted at trial. Other defendants are scheduled for trial April 9, 2012, before U.S. District Judge Patricia A. Seitz.
Today’s sentence was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; John V. Gillies, Special Agent-in-Charge of the FBI’s Miami field office; and Special Agent-in-Charge Christopher B. Dennis of the HHS Office of Inspector General (HHS-OIG), Office of Investigations Miami office.
The case is being prosecuted by Trial Attorneys Steven Kim and Jennifer L. Saulino of the Criminal Division’s Fraud Section. The case was investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.
Since its inception in March 2007, the Medicare Fraud Strike Force operations in nine locations have charged more than 1,160 defendants that collectively have billed the Medicare program for more than $2.9 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.
Attorney General Eric Holder’s Task Force Examines Children’s Exposure to Violence in Rural and Tribal CommunitiesRead the Press Release
Attorney General Eric Holder’s National Task Force on Children Exposed to Violence today held a public hearing in Albuquerque, N.M., on the challenges rural and tribal communities face in preventing children’s exposure to violence. In a recent survey of youth in New Mexico by the Centers for Disease Control and Prevention, nearly 20 percent reported they were bullied on school property and almost 10 percent experienced dating violence. Nearly 16 percent seriously considered attempting suicide during the 12 months before the survey.
“Protecting our nation’s children and young people from violence is a responsibility that every American shares. For today’s Justice Department, this work is one of our most important, and most urgent, priorities,” said Attorney General Holder. “That’s why this task force represents a powerful and promising step forward. It brings a wealth of experience and talent together to focus on one of the greatest public safety epidemics of our time: children’s exposure to violence.”
“Our children are exposed to far more violence than we realize,” said U.S. Attorney Kenneth J. Gonzales, who delivered opening remarks at today’s hearing. “The task force will enhance how we work together to serve our children in cities and towns, on reservations, and in rural areas throughout the nation.”
Speakers at today’s hearing at the Vincent E. Griego Council Chambers also included task force co-chairs Joe Torre, chairman of the board of the Joe Torre Safe at Home® Foundation, and Robert Listenbee Jr., chief of the Juvenile Unit of the Defender Association of Philadelphia, as well as other task force members and Albuquerque area residents who have experienced or witnessed family, community and other types of violence.
“Rural and tribal communities face unusual challenges, such as lack of resources or access to services, that complicate efforts to reduce the impact of violence on children,” said task force member Sarah Deer, a citizen of the Muscogee (Creek) Nation of Oklahoma and an assistant professor at William Mitchell School of Law in St. Paul Minn. “This hearing in Albuquerque will help the task force understand these unique challenges and guide us toward solutions.”
The task force will identify promising practices, programming and community strategies to prevent and respond to children’s exposure to violence. It also will issue a final report to the attorney general in December 2012 that will present policy recommendations and serve as a blueprint for preventing and reducing the negative effects of such violence across the United States.
“The task force is focused on the well-being of our most precious resource: our children,” said Torre. “I hope that our work will make a significant contribution to solving this urgent problem.”
The task force is comprised of 13 leading experts including practitioners, child and family advocates, academic experts and licensed clinicians. The full list of task force members is located at: www.justice.gov/defendingchildhood/tf-members.html
The task force held its first hearing in Baltimore in November 2011, and will hold two additional hearings this spring in Miami and Detroit. Details on past and future hearings are available on the Defending Childhood website: www.justice.gov/defendingchildhood
The task force is part of the attorney general’s Defending Childhood Initiative and is staffed by the National Council on Crime and Delinquency (NCCD), a nonprofit research and consulting agency.
About the Defending Childhood Initiative and the Task Force
For more information about Attorney General Holder’s Defending Childhood initiative, the Defending Childhood Task Force and upcoming hearings, please visit www.justice.gov/defendingchildhood and www.justice.gov/defendingchildhood/task-force.html
About the National Council on Crime and Delinquency
NCCD promotes just and equitable social systems for individuals, families and communities through research, public policy and practice. For more information about NCCD, please visit www.nccd-crc.org
Alabama Man Pleads Guilty to Production of Child PornographyRead the Press Release
WASHINGTON – An Alabama man who was employed as a security officer in the Birmingham, Ala., City Schools system pleaded guilty today to one count of production of child pornography, announced U.S. Attorney for the Northern District of Alabama Joyce White Vance, Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, Northern District of Alabama FBI Special Agent in Charge Patrick J. Maley and Birmingham Police Chief A.C. Roper.
Michael Wayne Wooten, 60, of Alabaster, Ala., pleaded guilty before U.S. District Judge Inge P. Johnson in the Northern District of Alabama.
According to court documents and proceedings, between August 2009 and April 2010, Wooten, while employed as a security officer for the Birmingham City Schools system, used an office at Dupuy Elementary School to take modeling photos of numerous minor girls. A search of Wooten’s residence yielded multiple computers containing child pornography images, including images produced by Wooten depicting several victims, between four and nine years of age, engaged in sexually explicit conduct.
Wooten faces a mandatory minimum sentence of 15 years in prison and a maximum sentence of 30 years in prison, as well as the possibility of lifetime supervised release. Wooten also faces a fine of $250,000.
This case was investigated by the FBI and the Birmingham Police Department. This case was prosecuted by Assistant U.S. Attorney Daniel Fortune of the Northern District of Alabama and Trial Attorney Jeffrey H. Zeeman of the Child Exploitation and Obscenity Section in the Justice Department’s Criminal Division.
30 January 2012
Yazaki Corp., Denso Corp. and Four Yazaki Executives Agree to Plead Guilty to Automobile Parts Price-Fixing and Bid-Rigging ConspiraciesRead the Press Release
WASHINGTON – Two Japanese suppliers of automotive electrical components–Yazaki Corporation and DENSO Corporation–have agreed to plead guilty and to pay a total of $548 million in criminal fines for their involvement in multiple price-fixing and bid-rigging conspiracies in the sale of parts to automobile manufacturers in the United States, the Department of Justice today announced. Four executives, all Japanese nationals, have also agreed to plead guilty and to serve prison time in the United States.
Yazaki has agreed to pay a $470 million criminal fine–the second largest criminal fine obtained for a Sherman Act antitrust violation–and DENSO has agreed to pay a $78 million criminal fine. The four executives from Yazaki–Tsuneaki Hanamura, Ryoji Kawai, Shigeru Ogawa and Hisamitsu Takada–will serve prison time ranging from 15 months to two years. The two-year sentences would be the longest term of imprisonment imposed on a foreign national voluntarily submitting to U.S. jurisdiction for a Sherman Act antitrust violation. The fine amount and prison sentences are subject to court approval.
“As a result of the Antitrust Division’s ongoing criminal investigation of price fixing and bid rigging in the auto parts industry, more than $748 million in fines have been obtained–which already surpasses the total amount in criminal fines obtained by the division for all of last fiscal year,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “Criminal antitrust enforcement remains a top priority and the Antitrust Division will continue to work with the FBI and our law enforcement counterparts to root out this kind of pernicious cartel conduct that results in higher prices to American consumers and businesses.”
“I would like to commend the employees of the FBI’s Detroit Field Office and the Department of Justice Antitrust Division, for their fine work on this very important antitrust investigation. This team has devoted countless hours to the investigation and I appreciate their devotion to the mission. The companies involved in this case conspired to the price fixing and bid rigging of automotive parts. This criminal activity has a significant impact on the automotive manufacturers in the United States, Canada, Japan and Europe and had been occurring at least a decade. The conduct had also affected commerce on a global scale in almost every market where automobiles are manufactured and/or sold,” said FBI’s Special Agent in Charge Andrew G. Arena.
According to court documents filed today in U.S. District Court for the Eastern District of Michigan in Detroit, Yazaki, DENSO, Hanamura, Kawai, Ogawa, Takada and their co-conspirators carried out the conspiracies by agreeing, during meetings and conversations, to allocate the supply of the named products on a model-by-model basis and to coordinate price adjustments requested by automobile manufacturers in the United States and elsewhere. They sold automotive electrical components to automobile manufacturers at inflated prices and engaged in meetings and conversations for the purpose of monitoring and enforcing adherence to the agreed-upon bid-rigging and price-fixing scheme.
According to a three-count felony charge, Yazaki engaged in three separate conspiracies: to rig bids for and fix, stabilize and maintain the prices of automotive wire harnesses and related products from 2000 through 2010; to rig bids for and fix, stabilize and maintain the prices of instrument panel clusters from 2002 through 2010; and to fix, stabilize and maintain the prices of fuel senders from 2004 through 2010. All three conspiracies involved products sold to customers in the United States and elsewhere. Automotive wire harnesses are automotive electrical distribution systems used to direct and control electronic components, wiring and circuit boards in cars. Instrument panel clusters, also known as meters, are the mounted array of instruments and gauges housed in front of the driver of an automobile. Fuel senders reside in the fuel tank of an automobile and measure the amount of fuel in the tank.
According to a two-count felony charge, DENSO engaged in conspiracies to rig bids for and to fix, stabilize and maintain the prices of electronic control units (ECUs) and heater control panels (HCPs) sold to customers in the United States and elsewhere. An ECU is an embedded system that controls one or more of the electronic systems or subsystems in a motor vehicle. HCPs are located in the center console of an automobile and control the temperature of the interior environment of a vehicle.
According to four separate one-count felony charges, Hanamura, Kawai, Ogawa and Takada each engaged in a conspiracy to rig bids for and to fix, stabilize and maintain the prices of automotive wire harnesses and related products sold to customers in the United States and elsewhere. The department said that the individuals participated in the conspiracies at various times from at least as early as January 2000, until at least February 2010. During the conspiracies, the individuals held the following positions: Hanamura was a branch manager at Yazaki North America in Columbus, Ohio, and a Honda division sales manager in Japan; Kawai was director of Toyota Sales of Yazaki North America in Lexington, Ky., and vice division head of Yazaki’s Toyota Business Unit in Japan; Ogawa was assistant section manager and later section manager in Yazaki’s Honda Business Unit in Japan, and branch manager in Yazaki’s Honda Sales Unit and later director at Yazaki North America in Columbus; Takada was assistant manager in Yazaki’s Toyota Business Unit, director of Yazaki North America in Lexington, and manager of a sales department of Yazaki’s Toyota Business Unit in Japan. According to the plea agreements, which are subject to court approval, Ogawa and Takada have each agreed to serve 15 months in a U.S. prison. Hanamura and Kawai have each agreed to serve two years in a U.S. prison. Each of the four executives has also agreed to pay a $20,000 criminal fine. According to the plea agreements, Yazaki, DENSO, Hanamura, Kawai, Ogawa and Takada have all agreed to assist the department in its ongoing investigation into the automotive parts industry.
On Nov. 14, 2011, Furukawa Electric Co. Ltd. pleaded guilty and was sentenced to pay a $200 million fine for its role in the wire harnesses price-fixing and bid-rigging conspiracy. Three of Furukawa’s executives also pleaded guilty. The court sentenced two of the executives to 15 and 18 month prison sentences, to be served in the United States. Sentencing of the third executive, who agreed to serve a year and a day in prison in the United States, is scheduled for Feb. 28, 2012.
Yazaki and DENSO are charged with price fixing in violation of the Sherman Act, which carries a maximum $100 million criminal fine for a corporation. Hanamura, Kawai, Ogawa and Takada are also charged with a violation of the Sherman Act, which carries a maximum sentence of 10 years in prison and a $1 million criminal fine for an individual. The maximum fine for both a company and an individual may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
Today’s charges arise from an ongoing federal antitrust investigation into bid rigging, price fixing and other anticompetitive conduct in the automotive parts industry, which is being conducted by the Antitrust Division’s National Criminal Enforcement Section and the FBI’s Detroit Field Office with the assistance of the FBI headquarters’ International Corruption Unit. Anyone with information concerning the focus of this investigation is urged to call the Antitrust Division’s National Criminal Enforcement Section at 202-307-6694 or the FBI’s Detroit Field Office at 313-965-2323.
UBS Clients and Tax Attorney Indicted in Phoenix for Hiding Assets in Secret Foreign Bank AccountsRead the Press Release
Phoenix-area businessmen Stephen M. Kerr and Michael Quiel and former San Diego attorney Christopher M. Rusch were charged in Phoenix with conspiracy to defraud the Internal Revenue Service (IRS) for concealing millions of dollars in assets in numerous secret Swiss bank accounts held at UBS and elsewhere, the Justice Department and Internal Revenue Service (IRS) announced. The charges are contained in an indictment returned by a federal grand jury on Dec. 8, 2011, which was unsealed today. Kerr and Quiel were each also charged with filing false individual income tax returns for tax years 2007 and 2008 and failing to file Reports of Foreign Bank and Financial Accounts (FBARs) for those same years. Rusch was arrested yesterday by U.S. law enforcement agents in Miami after being removed from Panama by Panamanian authorities at the request of the United States. Quiel was also arrested yesterday in the Phoenix area.
According to the indictment, Kerr and Quiel separately owned and operated a number of businesses, including two venture capital firms: CCN Worldwide Inc. and Legend Advisory Corporation, respectively. These companies provided financial capital to start-up companies and other services to businesses seeking to become publicly traded through mergers and acquisitions. Rusch was an attorney licensed and practicing in California. Rusch’s law practice focused on international business planning, criminal and civil tax defense, international tax, and creating and maintaining offshore structures.
Beginning in or before 2004, and continuing through at least December 2007, Kerr and Quiel obtained control of shares of stock of publicly traded domestic companies in a way that concealed their ownership of the stock. Kerr and Quiel then deposited the stock, or proceeds from the sale of the stock, to multiple undeclared bank accounts set up with the assistance of Rusch at UBS in Switzerland and at another Swiss bank. These accounts were all held in the names of nominee entities to further conceal Kerr’s and Quiel’s ownership. Kerr and Quiel also used the accounts to conceal income earned from the subsequent sale of this stock from the IRS. In 2007, the combined total net assets in Kerr’s accounts exceeded $5.6 million and Quiel’s accounts exceeded $2.6 million. Rusch maintained signature authority over the secret accounts and, with the assistance of a Swiss account manager and financial intermediary, facilitated transactions on behalf of Kerr and Quiel.
In addition, the indictment alleges that Rusch maintained his own separate secret offshore accounts, including accounts held in the names of nominee entities at UBS and a Panamanian bank. Among other things, Rusch utilized his nominee Panamanian entity to assist Kerr in concealing the purchase of a golf course in Colorado with funds transferred from Kerr’s secret Swiss accounts. In addition, Rusch utilized his client trust account to transfer funds to Kerr’s and Quiel’s undeclared Swiss accounts and to repatriate funds back to the United States for the benefit of Kerr and Quiel. None of the three defendants disclosed the existence of these offshore accounts, or any income earned through these offshore accounts, to the IRS for the years charged in the indictment.
The conspiracy and FBAR charges each carry a maximum potential penalty of five years in prison and a $250,000 fine. The false return charges each carry a maximum potential penalty of three years in prison and a $250,000 fine.
This case is being prosecuted by Trial Attorneys Timothy Stockwell and Monica Edelstein of the Justice Department’s Tax Division and was investigated with the assistance of the IRS.
An indictment is only an allegation of criminal conduct and is not evidence of guilt. A person is presumed innocent until and unless proven guilty beyond a reasonable doubt in a court of law.
Three Men and Company Convicted of Conspiracy to Violate the Clean Air Act During Demolition of Tennessee FactoryRead the Press Release
WASHINGTON – Three men and a demolition company were convicted by a federal jury in Chattanooga, Tenn., of environmental crimes and obstruction of justice charges related to the illegal demolition of a Chattanooga factory containing large amounts of the toxic air pollutant asbestos, announced William C. Killian, U.S. Attorney for the Eastern District of Tennessee, and Ignacia S. Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. David Wood, Donald Fillers, James Mathis and Watkins Street Project LLC, a business formed for the purpose of salvaging and demolishing the facility, were convicted today of conspiracy, Clean Air Act and obstruction-related offenses. James Mathis was found not guilty of one of the Clean Air Act charges, but guilty of conspiracy and three other substantive Clean Air Act counts.
During the course of the three week trial, the evidence proved that the defendants entered into a year-long scheme, from August 2004 to September 2005, in which the former Standard Coosa Thatcher Plant was illegally demolished while still containing large amounts of asbestos. Any asbestos that was removed from the plant prior to demolition was removed illegally, scattered in open debris piles and left exposed to the elements in the vicinity of the 1700 block of Watkins Street in Chattanooga. During the course of these illegal operations, visible emissions engulfed surrounding businesses, residences and a day-care center, potentially exposing the surrounding community to substantial quantities of asbestos – a substance for which the U.S. Environmental Protection Agency (EPA) has determined there is no safe-level given its demonstrated tendency to cause lung cancer, mesothelioma and asbestosis. The evidence also showed the defendants tried to cover up their illegal activities by falsifying documents and lying to federal authorities.
Sentencing is currently set for June 7, 2012. The conspiracy, substantive Clean Air Act and false statements counts of the indictment each carry a maximum possible term of five years in prison and a fine of $250,000, twice the gross gain to the defendants, or twice the gross loss to a victim. The obstruction of justice charge carries a maximum possible term of 20 years in prison and similar fines.
This case was investigated by Special Agents of the EPA’s Criminal Investigation Division and investigators with Chattanooga-Hamilton County Air Pollution Control Bureau. The case is being prosecuted by Assistant U.S. Attorney Matthew T. Morris and Todd W. Gleason, Environmental Crimes Section of the Environment and Natural Resources Division of the U.S. Department of Justice.
South Florida Corrections OfficersSentenced on Federal Civil Rights and Obstruction ChargesRead the Press Release
MIAMI – Two corrections officers were sentenced to prison today for civil rights and obstruction charges stemming from prisoner abuse that took place at the South Florida Reception Center (SFRC), a state prison in Doral, Fla., the Justice Department announced. Florida Department of Corrections (FDOC) Sergeant Alexander McQueen, 31, was sentenced by U.S. District Court Judge Cecilia Altonaga to serve one year in prison, followed by one year of supervised release. Judge Altonaga also sentenced FDOC Officer Steven Dawkins, 31, to serve one month in prison, followed by six months of supervised release.
On Oct. 17, 2011, following a jury trial, McQueen was found guilty of conspiracy against civil rights and obstruction of justice for his involvement in, and attempts to cover up, prisoner abuse at SFRC. The same jury convicted Dawkins of obstruction of justice. A second jury was unable to reach a verdict with regard to co-defendant Guruba Griffin, 31, and acquitted co-defendant Scott Butler, 32.
According to evidence presented at trial, on Feb. 25, 2009, SFRC corrections officers physically abused inmates by choking, punching and striking them with wooden broom handles. The officers further forced the inmates to fight one another. Additionally, McQueen and Dawkins falsified reports relating to these incidents.
“Conduct by corrections officers who abuse their power and violate the civil rights of those in their custody will not be tolerated,” said Thomas E. Perez, Assistant Attorney General for Civil Rights. “The Justice Department will continue to vigorously prosecute those who cross the line to engage in acts of criminal violence and obstruction.”
U.S. Attorney Wifredo A. Ferrer stated, “The U.S. Attorney’s Office is committed to prosecuting civil rights violators, especially when they seek to hide behind color of law or official position.”
“We are pleased with the sentence for McQueen and Dawkins because their actions affected more than those they physically abused, they undermined the public’s trust in law enforcement,” said Special Agent in Charge John V. Gillies of the FBI Miami Division. "Even though they participated in and attempted to cover up prisoner abuse at the Florida Department of Corrections’ South Florida Reception Center, they failed. The FBI will continue to work with our partners to remove those corrections officers who cross the line to engage in criminal misconduct.”
Co-defendant Griffin entered a guilty plea to one count of deprivation of rights under color of law on Dec. 13, 2011, and is scheduled to be sentenced on Feb. 22, 2012.
This case was investigated by the FBI and the Inspector General’s Office, Florida Department of Corrections, and is being prosecuted by Assistant U.S. Attorney Susan Rhee Osborne of the U.S. Attorney’s Office for the Southern District of Florida and Senior Litigation Counsel Gerard Hogan and Trial Attorney Henry Leventis of the Civil Rights Division.
Ohio Man Sentenced to 35 Years in Prison for His Participation in an Online Child Pornography Bulletin BoardRead the Press Release
WASHINGTON – An Ohio man was sentenced today in Riverside, Calif., to 35 years in prison and lifetime supervised release for his participation in an online child pornography bulletin board, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney André Birotte Jr. of the Central District of California and Assistant Director in Charge Steve Martinez of the FBI’s Los Angeles Field Office.
Billy Wade Carroll of Dayton, Ohio, was sentenced by U.S. District Judge Virginia A. Phillips. In October 2011, Carroll, 51, was found guilty of one count of conspiracy to advertise, solicit, transport, distribute, receive and possess child pornography and one count of committing a child pornography offense while being required to register as a sex offender in Ohio.
Today’s sentencing is the result of an international investigation into the “Lost Boy” online bulletin board. The Lost Boy bulletin board, according to court documents and proceedings, was dedicated to men who have a sexual interest in young boys and was established to provide a forum to trade child pornography.
Evidence presented at trial established that from at least September 2007 until January 2009, Carroll was an active member of the bulletin board and made more than 100 posts. He supplied images of child pornography for other members to download and also made requests on the board seeking out particular images to help supplement his child pornography collection.
Federal authorities, working in conjunction with a coalition of international law enforcement agencies, shut down the Lost Boy bulletin board approximately three years ago. As a result of the investigation, 16 named defendants were charged in the United States and arrested for their roles in the bulletin board. To date, 15 defendants have pleaded guilty or have been convicted at trial, and one defendant died in custody. Approximately six more men have been charged with child molestation as a result of the investigation. The investigation also led to the identification of 27 domestic victims of child abuse, some of whom were portrayed in images posted to the Lost Boy bulletin board.
According to court documents and proceedings, law enforcement authorities discovered the Lost Boy bulletin board after receiving information from Eurojust, the judicial cooperation arm of the European Union. Eurojust provided U.S. law enforcement with leads obtained from Norwegian and Italian authorities indicating that a North Hollywood, Calif., man was communicating with an Italian national about child pornography and how to engage in child sex tourism in Romania. Acting on the information from Europe, the FBI executed search warrants that led to the discovery of the Lost Boy network. Further investigation revealed that Lost Boy had 35 members, 16 of whom were U.S. nationals. Other members of the network were located in countries around the world, including Belgium, Brazil, Canada, France, Germany, New Zealand and the United Kingdom.
According to court documents, Lost Boy had a thorough vetting process for new members, who were required to post child pornography to join the organization. Once accepted, members were required to continue posting child pornography to remain in good standing and to avoid removal from the board. According to court documents, Lost Boy members advised one another on techniques to evade detection by law enforcement, which included using screen names to mask identities and encrypting computer data.
International law enforcement efforts involving European law enforcement, the Brazilian Federal Police and other agencies have identified child molestation suspects in South America, Europe and New Zealand. Three suspects in Romania, one in France and another in Brazil have been charged, and offenders have been convicted in Norway and the United Kingdom. Law enforcement have also identified dozens of child victims located in Norway, Romania, Brazil and other nations.
The investigation into the Lost Boy bulletin board was led by the FBI and the U.S. Postal Inspection Service, in conjunction with the Los Angeles-based Sexual Assault Felony Enforcement (SAFE) Team. The High Technology Investigative Unit of the Child Exploitation and Obscenity Section (CEOS) in the Justice Department’s Criminal Division, along with Eurojust, have provided invaluable assistance during the investigation.
The case is being prosecuted by Assistant U.S. Attorneys Joey L. Blanch and Yvonne Garcia of the Central District of California and CEOS Trial Attorney Andrew McCormack.
Memphis Man Sentenced for Interstate Transportation for Purpose of Prostitution in Connection with Sex Trafficking SchemeRead the Press Release
WASHINGTON - Charles Kizer, 53, from Memphis, Tenn., was sentenced late Friday by U.S. District Judge Samuel H. Mays, Jr. to 10 years in prison for violating the Mann Act.
Kizer pleaded guilty in federal court on Aug. 31, 2011, to violating the Mann Act by transporting a woman across state lines for the purpose of having her engage in prostitution. As part of the plea, Kizer admitted that between Aug. 1, 2010, and Sept. 1, 2010, he drove an 18 year-old woman across state lines from Memphis, Tenn., to West Memphis, Ark., to engage in prostitution at a truck stop. Evidence presented at the sentencing showed that Kizer used threats of force and violence to create a climate of fear to cause the woman to engage in prostitution for his financial gain.
“The defendant’s actions robbed this vulnerable young woman of her freedom and dignity,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “We will continue to prosecute those who engage in such reprehensible conduct of coercion and exploitation.”
“Human trafficking is tragically a widespread form of modern-day slavery. This office – in particular, our dedicated Civil Rights Unit - will continue our efforts to rescue victims of trafficking by vigorously pursuing and prosecuting those who seek to exploit them,” said U.S. Attorney Edward L. Stanton, III.
“Sex trafficking is an unconscionable crime and a violation of human rights that the FBI is dedicated to eradicating from our free society ,“ said Aaron T. Ford, Special Agent in Charge of the Memphis Division of the FBI. “ FBI Memphis is proud of the role that it played in bringing this matter to justice, and protecting and defending those who may not be able to evade or escape the grip of sex trafficking .”
The case has been investigated by the FBI and the Memphis Police Department. The case is being prosecuted by Assistant U.S. Attorney Jonathan Skrmetti and Civil Rights Division Trial Attorney Saeed Mody.
Justice Department Settles Case Against One of Nation’sLargest Debt BuyersRead the Press Release
WASHINGTON – Asset Acceptance LLC, a Michigan-based debt buyer, has agreed to a consent decree to settle a civil lawsuit regarding its debt collection activities, the Justice Department announced today. In the decree, Asset agrees to implement a range of new practices to protect consumers and to pay a $2.5 million civil penalty. Asset specializes in purchasing old consumer debts from other companies, and then holding and collecting on these debts over a long period of time. According to the complaint, as of Sept. 30, 2010, Asset held more than 34 million individual accounts with an original value of more than $42 billion, making it one of the nation’s largest debt buyers and a market leader.
If accepted by the court, the proposed consent decree, filed today in the U.S. District Court for the Middle District of Florida in Tampa, will settle charges alleging that Asset violated the Federal Trade Commission Act, the Fair Credit Reporting Act and the Fair Debt Collection Practices Act. The complaint bringing these civil charges was also filed today.
According to the complaint, many of the debts Asset purchased are outside of the statute of limitations and consumers have no enforceable legal obligation to pay that debt. In some states, consumers can reset the statute of limitations if they promise to pay the debt or make a partial payment on the debt. Asset is alleged to have collected on this so-called “zombie” debt without informing consumers that these debts were not legally enforceable, or that in making a partial payment or promise to pay, they may have unwittingly breathed life back into these debts.
The complaint also charges additional violations of federal consumer protection laws, including that Asset systematically failed to conduct a reasonable investigation when a consumer told the company that a debt Asset called about was not the consumer’s debt, that the debt had already been paid or that the consumer had been the victim of identity theft. Similarly, when learning of a consumer dispute from a consumer reporting agency, the company is alleged to have systematically failed to conduct a reasonable investigation of the dispute. Asset also allegedly reported negative information about consumers to credit bureaus, even when the company was aware that a consumer had not received a written notice of that fact because the notice was returned as undelivered mail. According to the complaint, some of these consumers would only learn that Asset had reported them to a credit bureau when applying for a mortgage or auto loan. Even if they believed the debt was invalid, some consumers would pay Asset to avoid losing out on a new loan they needed to get quickly.
The complaint further charges that Asset repeatedly called the wrong person when attempting to collect on a debt, even after being told that the company had reached the wrong number.
“Debt collectors can play a legitimate role in our economy, but only if they follow the law,” said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. “As this resolution demonstrates, those who do not deal fairly and honestly with consumers will be held accountable. The consent decree we are filing today – which requires Asset Acceptance to pay a stiff penalty and change the way it does business – can serve as a model for the entire debt collection industry.”
Under the terms of the settlement, when Asset attempts to collect a debt that may be beyond the statute of limitations, the company must inform the consumer that he or she will not be sued on the debt; further, the company must remind consumers of this promise in any situation where the consumer is likely to have forgotten the disclosure or its effects.
The settlement also requires other changes to Asset’s business practices that create safeguards for consumers. For example, the company must conduct a reasonable investigation into the legitimacy of a debt when it becomes aware of a consumer dispute or if the company who sold a debt to Asset provided unreliable information about the original debt. The company can no longer consider undelivered mail to constitute notice that information about a consumer is being reported to a credit reporting agency or repeatedly contact third parties in a way that violates the Fair Debt Collection Practices Act.
“We are proud to announce this landmark consumer protection settlement in an area that is of great concern to our residents and to this office,” stated Robert E. O'Neill, U.S. Attorney for the Middle District of Florida. “We hope that this consent decree will have the added benefit of deterring other debt collectors from engaging in the sharp practices that we are addressing here.”
The Department of Justice’s Consumer Protection Branch and the U.S. Attorney for the Middle District of Florida filed the complaint and proposed consent decree on behalf of the Federal Trade Commission (FTC), which investigated the violations and referred the case to the Department of Justice. The agreed civil penalty is the second-largest ever in an FTC debt collection case and should deter other debt buyers and debt collectors from engaging in similar misleading practices as those alleged in the complaint.
This matter was investigated by Tracy S. Thorleifson and Julie Mayer of the FTC. The case is being prosecuted by Adrienne Fowler and Sang Lee of the Justice Department’s Consumer Protection Branch.
NOTE : The stipulated final order is for settlement purposes only and does not constitute an admission by the defendant of a law violation. Stipulated orders have the full force of law only when signed by the judge.
Former Suburban Massage Parlor Operator Convictedof Human Trafficking of Four Women in IllinoisRead the Press Release
CHICAGO – A federal jury today convicted Alex Campbell, 45, a northwest Chicago suburban massage parlor owner, of various federal crimes including sex-trafficking, forced labor, harboring illegal aliens, confiscating passports to further forced labor and extortion involving four foreign women whom he mentally and physically abused while forcing them to work for him between July 2008 and January 2010. Campbell was found guilty of three counts each of forced labor, harboring illegal aliens for financial gain, and confiscating passports and other immigration documents to force the victims to work, and one count each of sex trafficking by force and extortion. The jury deliberated approximately two to three hours beginning last Thursday afternoon following a three-week trial in U.S. District Court. The trial showed that Campbell, who formerly operated the Day and Night Spa on Northwest Highway in Mt. Prospect, Ill., used violence and threats of violence to force three women from the Ukraine and one from Belarus to work for him without pay and, at times, little to no subsistence.
Campbell, also known as “Dave” and “Daddy,” formerly of Glenview, Ill., remains in federal custody without bond and faces a mandatory minimum sentence of 15 years in prison and a maximum of life on the sex-trafficking count alone, as well as prison terms ranging from a maximum of 5 to 20 years on each of the remaining counts.
U.S. District Judge Robert Gettleman scheduled a hearing on post-trial motions for April 19, 2012. No date was immediately set for sentencing.
“The Civil Rights Division is committed to bringing human traffickers to justice and to protecting the victims of modern-day slavery,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “These crimes against the individual rights of the most vulnerable members of our society will not be tolerated in the United States.”
“I commend the prosecutors and investigators for their dedication and teamwork in working with the victims to bring this case to trial and achieve a successful result,” said Patrick J. Fitzgerald, U.S. Attorney for the Northern District of Illinois.
“Forced labor and sex trafficking preys upon vulnerable women and is tantamount to modern-day slavery,” said Gary J. Hartwig, Special Agent-in-Charge of ICE Homeland Security Investigations (HSI) in Chicago. “The jury has vindicated the rights of four women who suffered mental and physical abuse, sexual exploitation, extortion and threats of deportation, all so Alex Campbell could make a profit. HSI is at the forefront of the government's fight against human trafficking. We will continue to work with our law enforcement partners to combat this serious crime.”
All four victims testified as government witnesses at trial, as well as co-defendant, Danielle John, 25, who pleaded guilty before trial to two counts of harboring illegal aliens for financial gain and is also awaiting sentencing.
The testimony and evidence showed that Campbell recruited and groomed foreign women without legal status in the United States to become part of his “Family,” which he claimed was an international organization that would provide them with support. He offered them jobs in his massage parlor, a place to live, assistance with immigration and lured each of them to enter into a romantic relationship with him. After gaining their trust, he forced the victims to get tattooed with his moniker, which he said made them his property and allowed him to stop paying them. At the same time, he acquired the women’s passports and visas. The women were forced to work long hours every day and do as Campbell instructed them, and they were beaten and punished if they disobeyed him.
Trial testimony established that Campbell confiscated passports and identity documents from three of the victims, as well as harbored and transported them to ensure their continued labor. Campbell forced one victim to engage in commercial sex acts with customers at various other massage parlors, but not at the Day and Night Spa, which testimony showed he operated “cleanly” to avoid problems with law enforcement. He extorted another victim to pay him more than $25,000 to leave the “Family” by threatening to send a sexually-explicit video recording to her parents in Belarus.
The Cook County State’s Attorney’s Office assisted in the investigation, which was coordinated by the Cook County Human Trafficking Task Force. The task force, together with the Salvation Army Family and Community Services STOP-IT Initiative Against Human Trafficking, operate a toll-free hotline, (877) 606-3158, which victims of trafficking or those with information about human trafficking can call for assistance. The government is represented by Assistant U.S. Attorneys Diane MacArthur and Steven Grimes and Special Litigation Counsel John Richmond of the Civil Rights Division’s Human Trafficking Prosecution Unit.
Former Soldier and Contract Military Recruiter Pleads Guilty<br /> in Texas for Role in Scheme to Illegally Obtain Military Recruiting BonusesRead the Press Release
WASHINGTON – A former soldier who also served as a contract military recruiter pleaded guilty today to conspiracy to obtain more than $200,000 in fraudulent recruiting bonuses from various U.S. military components and their contractor, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.
Former Staff Sergeant Grant E. Bibb, 40, of Eagle Pass, Texas, was indicted on Sept. 13, 2011, along with former Specialist Xavier Aves, 40, of San Antonio; former Corporal Christopher Castro, 30, of San Antonio; Sergeant First Class Jesus Torres-Alvarez, 31, of El Paso, Texas; Specialist Paul Escobar, 31, of San Antonio; and Specialist Richard Garcia Jr., 28, of San Antonio.
According to court documents filed in U.S. District Court for the Western District of Texas, Grant E. Bibb served in the Army National Guard from approximately January 2003 until July 2007. Bibb served in the Army Reserves from approximately October 2007 until November 2010. Bibb also served as a contract military recruiter from December 2007 until April 2009.
According to court documents, between approximately 2005 and 2008, the U.S. Army, the U.S. Army Reserves and the National Guard Bureau entered into contracts with Document and Packaging Broker Inc., to administer recruiting bonus programs designed to offer monetary incentives to U.S. soldiers who referred others to join the U.S. military. In addition, the Army managed its own recruiting programs to offer bonuses to soldiers who referred other individuals to join the Army or the Army Reserves.
Through these recruiting programs, a participating soldier could receive up to $2,000 in bonus payments for every person he referred to join the U.S. military. Based on certain milestones achieved by the referred soldier, a participating soldier would receive payments in the form of direct deposits and pre-paid debit card payments.
Bibb admitted that, between approximately September 2007 and February 2010, he participated with others in a scheme to obtain fraudulent recruiting bonuses. Bibb admitted that he paid certain active duty recruiters and another individual for the names and Social Security numbers of potential soldiers. Bibb also admitted that he used this information to claim that he was responsible for referring certain potential soldiers to join the military, when in fact he did not refer them to join. As a result of his fraudulent representations, Bibb personally received a total of approximately $35,000 in fraudulent recruiting bonuses. In addition, Bibb admitted that he and certain active duty recruiters helped U.S. soldiers establish online accounts to enable the soldiers to participate in the fraudulent bonus scheme.
Bibb admitted that, in total, he and his co-conspirators obtained at least approximately $205,000 in fraudulent recruiting bonuses.
The charge of conspiracy to commit wire fraud carries a maximum penalty of five years in prison and a $250,000 fine. Sentencing has been scheduled for May 25, 2012, before Chief U.S. District Judge Fred Biery in San Antonio.
The case against Bibb arises from an investigation involving allegations that former and current military recruiters and U.S. soldiers in the San Antonio area engaged in a wide-ranging scheme to obtain fraudulent recruiting bonuses. To date, the investigation has led to charges against seven individuals, four of whom have pleaded guilty.
On Jan. 28, 2010, Sergeant Ernest Gonzales, 50, of San Antonio, pleaded guilty before Chief Judge Biery to a one-count criminal information charging him with conspiracy to commit wire fraud for his role in the scheme. Gonzales has not yet been sentenced.
On Nov. 3, 2011, Castro pleaded guilty before Chief Judge Biery to one count of conspiracy to commit wire fraud. According to court documents, Castro admitted that he participated with others in the scheme to defraud the Army’s recruiting bonus programs. Castro has not yet been sentenced.
On Jan. 26, 2012, Torres-Alvarez pleaded guilty before Chief Judge Biery to one count of conspiracy to commit wire fraud. According to court documents, Torres-Alvarez, an active duty recruiter, admitted that he sold the names and Social Security numbers of potential soldiers to others involved in the scheme. Torres-Alvarez has not yet been sentenced.
The case against Bibb’s co-defendants – Aves, Escobar and Garcia – is scheduled for trial on April 23, 2012, in San Antonio. These defendants are presumed innocent until proven guilty in a court of law.
The case is being prosecuted by Trial Attorneys Edward J. Loya Jr. and Brian A. Lichter of the Criminal Division’s Public Integrity Section. The case is being investigated by agents from the San Antonio Fraud Resident Agency of the Major Procurement Fraud Unit, U.S. Army Criminal Investigation Command.
Federal Court Bars Nevada Man from Promoting Tax Fraud SchemeRead the Press Release
A federal court has permanently barred David Champion from promoting a tax fraud scheme designed to assist his customers evade federal taxes, the Justice Department announced today. The civil injunction order was signed by Judge Percy Anderson of the U.S. District Court for the Central District of California.
The court determined that Champion promotes a tax fraud scheme based on the frivolous claim that U.S. citizens can choose to opt out of federal income taxation by declaring themselves to be “non-taxpayers.” The court found that Champion promotes the scheme through websites, a radio program and a self-published work entitled Income Tax: Shattering the Myths. According to the government complaint, Champion, who currently resides in Nevada, repeatedly helped his customers evade taxes by establishing sham “pure trusts” to which they transferred their business and personal assets, and he falsely informed his customers that their purported trusts did not need to file income tax returns or pay taxes.
In granting the permanent injunction, Judge Anderson held that Champion’s theories concerning the government’s taxing authority are wrong. Among other things, the injunction order bars Champion from instructing people that they may become “non-taxpayers,” from offering his services to assist others in taking advantage of this false status, and from forming trusts for others.
The government alleged that Champion’s misconduct led to civil and criminal penalties against his customers. The complaint states that Internal Revenue Service (IRS) inquiries into eight of Champion’s customers revealed that he had assisted them in evading payment of approximately $1.4 million in income taxes.
In the past decade, the Justice Department’s Tax Division has obtained hundreds of injunctions to stop tax-fraud promoters and unscrupulous tax-return preparers. Information about these cases is available on the Justice Department website .
27 January 2012
U.S. Attorney General Holder, State and Federal Officials Announce Collaboration to Investigate Residential Mortgage-backed Securities MarketRead the Press Release
WASHINGTON – Attorney General Eric Holder along with Housing and Urban Development (HUD) Secretary Shaun Donovan, Securities and Exchange Commission (SEC) Director of Enforcement Robert Khuzami and New York Attorney General Eric T. Schneiderman today announced the formation of the Residential Mortgage-Backed Securities Working Group under President Obama’s Financial Fraud Enforcement Task Force (FFETF).
At the direction of the President, this Working Group brings together the Department of Justice (DOJ), several state attorneys general and other federal entities to investigate those responsible for misconduct contributing to the financial crisis through the pooling and sale of residential mortgage-backed securities. This effort will be in coordination with and in addition to the ongoing efforts and investigations by the Justice Department, FFETF members and state and federal law enforcement investigating and prosecuting other types of financial fraud.
Attorney General Holder announced that the new Working Group will consist of at least 55 Department of Justice attorneys, analysts, agents and investigators from around the country. Currently, 15 civil and criminal attorneys are part of the Working Group, along with 10 FBI agents and analysts who will be assigned to the Working Group efforts. An additional 30 attorneys, investigators and other staff around the country will join the Working Group efforts in the coming weeks. This team will join existing state and federal resources investigating similar misconduct under those authorities.
The goals of this collaboration will be: to hold accountable any institutions that violated the law; to compensate victims and help provide relief for homeowners struggling from the collapse of the housing market, caused in part by this wrongdoing; and to help Americans finally turn the page on this destructive period in our nation’s history.
“This Working Group brings together federal and state partners to strengthen current and future efforts to investigate and prosecute instances of wrongdoing in the residential mortgage-backed securities market,” said Attorney General Holder. “With this focus on collaboration – and by bringing our government’s full enforcement resources to bear – I have no doubt that we will improve our ability to recover losses, to prevent fraud, to bring abuses to light, and to hold those who violate the law accountable. That’s what the challenge before us demands, and that’s what the American people deserve.”
The working group will be co-chaired by senior officials at the Department of Justice and SEC, including Lanny Breuer, Assistant Attorney General, Criminal Division, DOJ; Robert Khuzami, Director of Enforcement, SEC; John Walsh, U.S. Attorney, District of Colorado; and Tony West, Assistant Attorney General, Civil Division, DOJ.
The working group will also be co-chaired by New York Attorney General Schneiderman, who will lead the effort from the state level. Other state Attorneys General have been and will be joining this effort.
“I am pleased to co-chair this important effort. Each of us offers different tools and talents, but we are all united by a common and continuing desire to identify misconduct in the mortgage securitization process,” said SEC Enforcement Director Khuzami. “The SEC has issued scores of subpoenas, obtained millions of documents, and interviewed dozens and dozens of key witnesses related to mortgage-backed securities. This collaborative effort will enable us pool our knowledge and leverage our resources.”“Millions of American families have been harmed by the foreclosure crisis,” said HUD Secretary Donovan. “These families deserve justice. They deserve relief. That is why this investigation is so important. With a new Residential Mortgage-Backed Securities Working Group led by Attorney General Holder and state leaders like New York Attorney General Schneiderman, we will build on the work of the President’s Financial Fraud Enforcement Task Force by investigating misconduct we know led directly to the financial crisis. And I’m proud that the Office of the HUD Inspector General David Montoya —which over the past year has been central to uncovering wrongdoing with respect to faulty foreclosure servicing practices—will play a critical role in the mortgage origination component of this review.”
“I would like to thank President Obama and Attorney General Holder for their leadership in combating financial fraud in this country and I look forward to co-chairing this working group that marshals state and federal resources to build on those efforts by bringing justice on behalf the victims of the misconduct that caused the mortgage crisis,” said Attorney General Schneiderman. “In coordination with our federal partners, our office will continue its steadfast commitment to holding those responsible for the mortgage crisis accountable, providing meaningful relief for homeowners commensurate with the scale of the misconduct, and getting our economy moving again. The American people deserve a thorough investigation into the global financial meltdown to ensure nothing like it ever happens again, and today’s announcement is a major step in the right direction.”
The Obama Administration is committed to ensuring that justice and relief are provided for the millions of American families harmed by the financial crisis.
President Obama created the Financial Fraud Enforcement Task Force by executive order in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ Offices and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud and bring to bear a powerful array of criminal and civil enforcement resources.
Since its formation, the Task Force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Task Force members have charged a record number of mortgage fraud cases in the past two years, trained more than 100,000 professionals responsible for awarding and overseeing Recovery Act funds and held regional summits around the country to discuss strategies, resources and initiatives as well as to meet with communities most affected by the financial crisis.
Learn more about the Residential Mortgage-Backed Securities Working Group and the Financial Fraud Enforcement Task Force at www.stopfraud.gov .
Download Attorney General Holder’s memo to the Financial Fraud Enforcement Task Force here: http://www.justice.gov/ag/residential-mortgage-backed-securities.pdf.
Former United Nations Employee Sentenced to 18 Months in PrisonRead the Press Release
WASHINGTON – Jeffery K. Armstrong, 52, of South Riding, Va., was sentenced today to 18 months in prison for obtaining more than $100,000 in salary payments by fraudulently holding concurrent jobs at the United Nations (U.N.) and the National Labor Relations Board (NLRB). He was ordered to serve a three-year term of supervised release following his sentence and to pay $128,153 in restitution.
The sentencing was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Neil H. MacBride for the Eastern District of Virginia; Assistant Director in Charge James W. McJunkin of the FBI’s Washington Field Office; and David P. Berry, Inspector General for the NLRB.
Armstrong was convicted by a federal jury on Oct. 21, 2011, on nine counts of wire fraud. He was indicted on June 28, 2011, by a federal grand jury in the Eastern District of Virginia for his scheme to defraud the U.N., an international organization committed to humanitarian and peace-keeping efforts, and the NLRB, an independent agency of the U.S. government.
According to evidence presented in the trial, in March 2008, Armstrong took a leave of absence from his position as a supervisory security specialist with the Department of the Army to accept a full-time position at the U.N. As an assistant chief of the Security and Safety Service at the U.N., Armstrong was responsible for all physical security of U.N. facilities in New York City, among other functions. According to evidence at trial, Armstrong received an annual salary from the U.N. of approximately $160,000. In February 2009, after working at the U.N. for almost a year, Armstrong applied for a position as chief of the security branch within the Division of the Administration at the NLRB in Washington, D.C. In April of 2009, Armstrong became a full-time employee at the NLRB, with an annual salary of approximately $121,000.
From approximately April to September 2009, Armstrong was an employee of both the U.N. and the NLRB. Armstrong concealed his dual employment from both employers by, among other things, dissuading NLRB personnel from contacting his supervisor at the U.N., submitting incomplete or inaccurate employment forms to the NLRB, and causing to be mailed to the NLRB false correspondence suggesting that he no longer worked at the U.N. In addition, Armstrong submitted medical leave documentation to the U.N., indicating that he was unable to work and was undergoing medical treatment, despite his full-time employment at the NLRB. According to the evidence presented at trial, Armstrong failed to notify his superiors at both entities of his concurrent employment and received more than $100,000 in concurrent salary.
This case was investigated by the FBI’s Washington Field Office and the NLRB Office of Inspector General. Trial Attorney Eric G. Olshan of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Karen L. Dunn of the Eastern District of Virginia prosecuted the case on behalf of the United States.
Former Owner of Florida-Based Airline Services Company Sentenced to Prison for Conspiring to Defraud Illinois-Based Ryan International AirlinesRead the Press Release
WASHINGTON – A former owner and operator of a Florida-based airline services company was sentenced today to serve 24 months in prison and to pay restitution for conspiring to commit wire fraud and honest services fraud in a kickback scheme to defraud Ryan International Airlines, a charter airline company located in Rockford, Ill., the Department of Justice announced.
Robert A. Riddell, the former owner and operator of a Florida aviation security and ground services company, was sentenced to serve 24 months in prison and to pay $131,540 in restitution. On Oct. 17, 2011, Riddell pleaded guilty in U.S. District Court in West Palm Beach, Fla., to participating in a conspiracy to defraud Ryan by making kickback payments to Wayne E. Kepple, a former vice president of ground operations for Ryan, in exchange for Kepple awarding business to Riddell’s company. Riddell and Kepple also split the proceeds of fraudulent invoices submitted to Ryan for payment.
Ryan provides air passenger and cargo services for corporations, private individuals, professional sports teams and the U.S. government, including the U.S. Department of Defense, the U.S. Department of Homeland Security and the U.S. Marshals Service. Riddell’s company provided ground security and other ground services coordination for Ryan flights in Europe.
According to court documents, from March 2006 through at least August 2009, Riddell paid Kepple more than $330,000 in kickbacks, including payments based on fabricated invoices submitted by Riddell’s company to Ryan. Kepple was in charge of contracting with providers of goods and services on behalf of Ryan and approving the invoices submitted by the providers to Ryan for payment. Riddell was charged with one count of conspiracy to commit wire fraud and honest services fraud, and one substantive count of wire fraud.
Including Riddell, four individuals have been charged in conjunction with this investigation. On Nov. 4, 2011, Kepple pleaded guilty to participating in a conspiracy to commit wire fraud and honest services fraud in three separate kickback schemes with co-conspirators to defraud Ryan, including his fraudulent scheme with Riddell. He is awaiting sentencing. On Aug. 12, 2011, David A. Chaisson and James E. Murphy pleaded guilty to participating in different conspiracies to defraud Ryan by making kickback payments to Kepple in exchange for winning contracts for their respective companies. On Oct. 28, 2011, Murphy was sentenced to serve 23 months in prison and to pay $42,500 in restitution and Chaisson was sentenced to serve 16 months in prison and to pay $50,742.48 in restitution.
The investigation is being conducted by the Antitrust Division’s Atlanta Field Office and the U.S. Department of Defense’s Office of Inspector General, with assistance from the U.S. Attorney’s Office for the Southern District of Florida. Anyone with information concerning anticompetitive conduct in the airline charter services industry is urged to call the Antitrust Division’s Atlanta Field Office at 404-331-7100 or visit www.justice.gov/atr/contact/newcase.htm.
Federal Court Shuts Down Alabama Tax PreparerRead the Press Release
A federal court has permanently barred Lakeisha Pearson from preparing federal tax returns for others, the Justice Department announced today. The government’s civil injunction complaint alleged that Pearson, of Birmingham, Ala., operated under the trade names “LGS Tax Service,” “PositiveEndeavors LLC,” and “AGA Tax Service.”
In her memorandum of opinion and permanent injunction order, Judge Karon Bowdre of the U.S. District Court for the Northern District of Alabama adopted a U.S. magistrate judge’s report and recommendation finding that Pearson used several fraudulent schemes to increase her customers’ earned income tax credit (EITC) claims and generate large, erroneous tax refunds for her customers. The court found that Pearson repeatedly and continually prepared tax returns with EITC claims that she knew or should have known were false or inflated. The court further concluded that the erroneous refunds generated by Pearson’s false returns may have cost the United States as much as $8.3 million, in addition to the resources dedicated to investigating Pearson. The court also found that Pearson failed to comply with legal requirements for determining her customers’ eligibility for the EITC and the amount of their EITC claims, even after the Internal Revenue Service assessed over $11,000 in penalties against her for such failures.
The court also ordered Pearson to provide a copy of the injunction order to each person for whom she prepared a federal tax return since Jan. 1, 2008, and to provide the government with a list identifying all of her customers during that period.
The EITC is a refundable federal income tax credit for low-to-moderate-income working individuals and families. When the credit exceeds the amount of taxes owed, it results in a tax refund to those who claim and qualify for the credit. To qualify for the credit, taxpayers must have earned income from employment, self-employment, or another source and meet certain other requirements.
Over the past decade, the Justice Department’s Tax Division has obtained hundreds of injunctions to stop tax fraud promoters and tax return preparers. Information about these cases is available on the Justice Department website .
Final Judgment and Permanent Injunction (PDF)
Memorandum of Opinion (PDF)
Report and Recommendation (PDF)Arkansas Men Sentenced in Cross-Burning CaseRead the Press Release
WASHINGTON – Bradley Branscum, 23, and Tony Branscum, 26, who are first cousins, of Salado, Ark., and Curtis Coffee, 19, of Batesville, Ark., were sentenced for charges relating to their roles in burning a cross in the yard of an African-American resident on Aug. 28, 2010. Tony Branscum was sentenced on Jan. 20, 2012, to 18 months in prison. Bradley Branscum and Curtis Coffee were sentenced today. Bradley Branscum was sentenced to seven months in prison and Curtis Coffee was sentenced today to 18 months in prison.
On Aug. 28, 2010, the three men and a juvenile constructed a cross, placed it in the yard of an African-American resident of Salado and lit it on fire. The defendants then drove away. The resident did not suffer injury, and his home was not damaged. All three men had previously pleaded guilty in this case to interfering with the housing rights of another.
“The defendants acted to instill fear because of the victim’s race,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Department of Justice remains committed to protecting our communities from such violence and will continue to aggressively prosecute these acts.”
This case was investigated by the FBI and prosecuted by AUSA John Ray White, of the U.S. Attorney’s Office and Trial Attorney Cindy Chung of the Civil Rights Division.
Arkansas Man Sentenced for His Role in the Firebombing of Interracial Couple’s HomeRead the Press Release
WASHINGTON – The Department of Justice announced today that Jason Barnwell, 37, of Evening Shade, Ark., was sentenced in Little Rock, Ark., for his involvement in firebombing the residence of an interracial couple. On Aug. 26, 2011, Barnwell pleaded guilty to conspiring to violate the civil rights of a resident of Hardy, Ark., and to using fire in the commission of that offense. Barnwell also pleaded guilty to possessing a firearm as a convicted felon. District Judge Billy Roy Wilson sentenced Barnwell to 20 years in prison for the three counts.
During his plea, Barnwell admitted that on the night of Jan. 14, 2011, he hosted a party where he and three other men, Jake Murphy, Dustin Hammond and Gary Dodson, devised a plan to firebomb the victims’ house. The men then went to the victims’ house in Hardy and when they arrived, Barnwell, Murphy and Hammond constructed three Molotov cocktails and threw them at the house. The Molotov cocktails ignited and damaged the victims’ house; however, the victims fortunately were not injured.
Murphy and Hammond have already pleaded guilty to civil rights violations for their role in this incident. Both defendants received sentences of 54 months incarceration and three years of supervised release. In June 2011, Wendy Treybig, who co-hosted the party on Jan. 14, 2011, with Barnwell, pleaded guilty to obstructing justice. She was sentenced on Dec.13, 2011, to 21 months in prison and three years of supervised release. Gary Dodson pleaded guilty on Dec.7, 2011, and will be sentenced on April 6, 2011.
“This defendant not only committed acts of race-based violence, but recruited others to commit these hate-filled crimes as well. There is no place in our society for criminal acts such as these,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Justice Department will continue to vigorously prosecute individuals who commit such atrocious acts.”
This case was investigated by the Little Rock Office of the FBI and the Little Rock Office of the Bureau of Alcohol, Tobacco, Firearms and Explosives, with assistance from the Arkansas State Police, the Hardy and Waldron Police Departments, and the Scott and Sharp County Sheriff’s Offices. It is being prosecuted by Assistant U.S. Attorney John Ray White of the Eastern District of Arkansas, and Trial Attorneys Henry Leventis and Cindy Chung of the U.S. Department of Justice Civil Rights Division.
26 January 2012
Promoter of Anti-tax Scheme Sentenced in Pennsylvania to Five Years in Prison for Tax ConspiracyRead the Press Release
WASHINGTON – Donald Turner (aka Don Wood) was sentenced to 60 months in prison, the maximum penalty under law for his crime of conviction, the Justice Department and Internal Revenue Service (IRS) announced today. On Sept. 15, 2011, following a jury trial, Turner was found guilty of conspiring to defraud the United States.
U.S. District Court Senior Judge Maurice B. Cohill, sitting in Erie, Pa., also ordered Turner to three years of supervised release and $408,034 in restitution to the IRS. Turner was taken into custody immediately following the sentencing.
According to evidence at trial, Turner sold a book entitled “Tax Free! How the Super Rich Do It,” which introduced readers to his organization, First American Research (FAR). Through FAR, Turner promoted an illegal scheme to reduce or eliminate an individual’s tax liability through the use of purported offshore entities, among other things.
In 1991, Donald Turner had sold the program to Daniel Leveto, a Meadville, Pa., veterinarian. As part of the program, Leveto utilized various methods to conceal his income and assets from the IRS as directed by Turner. One of these methods included the purported sale of Leveto’s veterinary business to an alleged offshore entity called Center Company. Leveto actually retained dominion and control over the veterinary business. In 2005, a jury convicted Leveto of all counts, and he was subsequently sentenced to prison.
The case resulted from an investigation by the IRS - Criminal Investigation. Trial Attorneys Andrew P. Young and Thomas Voracek from the Justice Department’s Tax Division prosecuted the case.
Related Documents:
United States v. Daniel Leveto, et al.
Indictment
(PDF document)Portable Document Format (PDF) files may be viewed with a free copy of Adobe Acrobat Reader
Accessibility InformationPatient Recruiter Sentenced to 30 Months in Prison in Connection with $5.4 Million Medicare Fraud SchemeRead the Press Release
WASHINGTON – A Miami resident was sentenced in Detroit today to 30 months in prison for his participation in a $5.4 million Detroit-area Medicare fraud scheme, announced the Department of Justice, FBI and Department of Health and Human Services (HHS).
Santiago Villa-Restrepo, 34, was sentenced by U.S. District Judge Arthur J. Tarnow of the Eastern District of Michigan. In addition to his prison term, Villa-Restrepo was ordered to pay approximately $2.9 million in restitution, jointly and severally with his co-defendants.
Villa-Restrepo pleaded guilty on Nov. 29, 2011, to one count of health care fraud. According to the plea documents, beginning approximately in 2007, Villa-Restrepo paid Medicare patients to undergo medically unnecessary diagnostic tests at three health care clinics owned by co-conspirators. In exchange for cash and other consideration offered by Villa-Restrepo and his co-conspirators, the Medicare beneficiaries signed documents indicating they had received the services billed to Medicare. Medicare was billed $5.4 million for medically unnecessary diagnostic tests by the clinics associated with the scheme.
The sentencing was announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade; Special Agent in Charge Andrew G. Arena of the FBI’s Detroit Field Office; and Special Agent in Charge Lamont Pugh III of the HHS Office of Inspector General’s (OIG) Chicago Regional Office.
This case is being prosecuted by Assistant U.S. Attorney Philip A. Ross of the Eastern District of Michigan, with assistance from Assistant Chief Benjamin D. Singer of the Criminal Division’s Fraud Section. The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan.
Since their inception in March 2007, the Medicare Fraud Strike Force operations in nine districts have charged more than 1,140 individuals who collectively have falsely billed the Medicare program for more than $2.9 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.
Owner and Employee of Miami Home Health Company Plead Guilty in $22 Million Health Care Fraud SchemeRead the Press Release
WASHINGTON – The owner and an employee of a Miami health care agency pleaded guilty for their participation in a $22 million home health Medicare fraud scheme, the Department of Justice, the FBI and the Department of Health and Human Services (HHS) announced today.
Marietha Morales, 38, pleaded guilty on Jan. 24, 2012, before U.S. District Judge Seitz to one count of conspiracy to commit health care fraud and Eduardo Saborit-Dominguez, 48, pleaded guilty today before Judge Seitz to one count of conspiracy to violate the Anti-Kickback Statute. Sentencing for both defendants is scheduled for May 23, 2012. The charge of conspiracy to commit health care fraud carries a maximum prison sentence of 10 years.
According to the court documents, Morales was the president and Saborit-Dominguez was an employee of Prime Home Health Services Inc., a Florida home health agency that purported to provide home health care and physical therapy services to eligible Medicare beneficiaries.
According to plea documents, Morales conspired with patient recruiters for the purpose of billing the Medicare program for unnecessary home health care and therapy services. Morales and her co-conspirators paid kickbacks and bribes to patient recruiters in return for these recruiters providing patients to Prime Home Health, as well as prescriptions, plans of care and certifications for medically unnecessary therapy and home health services for Medicare beneficiaries. Saborit-Dominguez distributed the kickbacks and bribes to co-conspirator patient recruiters and knew that the payment of kickbacks and bribes was in violation of federal criminal laws. Morales used these prescriptions, plans of care and medical certifications to fraudulently bill the Medicare program for home health care services, which Morales knew was in violation of federal criminal laws.
According to plea documents, at Prime Home Health, nurses and office staff falsified patient files for Medicare beneficiaries to make it appear that such beneficiaries qualified for home health care and therapy services from Prime Home Health. Morales admitted that she knew the beneficiaries did not actually qualify for and did not receive such services. Morales knew that these files were falsified so that the Medicare program could be billed for medically unnecessary therapy and home health related services.
From approximately February 2005 through April 2011, Morales and her co-conspirators submitted approximately $22 million in false and fraudulent claims to Medicare and Medicare paid approximately $14 million on those claims.
The plea was announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; John V. Gillies, Special Agent-in-Charge of the FBI’s Miami Field Office; and Special Agent-in-Charge Christopher Dennis of the HHS Office of Inspector General (HHS-OIG), Office of Investigations Miami Office.
This case is being prosecuted by Trial Attorney Joseph S. Beemsterboer of the Criminal Division’s Fraud Section. The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Miami.
Since their inception in March 2007, Medicare Fraud Strike Force operations in nine locations have charged more than 1,140 defendants who collectively have falsely billed the Medicare program for more than $2.9 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.
Justice Department Obtains Comprehensive ADA Agreement Regarding the Commonwealth of Virginia’s Developmental Disabilities SystemRead the Press Release
WASHINGTON - The Justice Department today announced that it has entered into a comprehensive settlement agreement that will transform the Commonwealth of Virginia’s system for serving people with developmental disabilities, including intellectual disabilities, and will resolve violations of the Americans with Disabilities Act (ADA). Under the ADA and the Supreme Court’s landmark decision in Olmstead v. L.C., individuals with disabilities have the right to receive services in the most integrated settings appropriate to their needs. The ADA and Olmstead require states to provide people with disabilities the opportunity to live and receive services in the community instead of in institutions.
“As affirmed by the Supreme Court over a decade ago, people with disabilities should be given the same opportunities to participate in community life as those without disabilities,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “This agreement will enable people in Virginia who have developmental disabilities to live successfully in their homes and communities. I commend Governor McDonnell for his long-standing leadership on this issue, and we will continue to work with states around the country, as we have with Georgia, Delaware and Virginia, to ensure that people with disabilities are given the choice to live in community-based settings.”
The agreement expands community-based services so that Virginia can serve people with developmental disabilities in their own homes, their family’s homes or other integrated community settings. The agreement will provide relief for more than 5,000 Virginians with developmental disabilities and will have an impact on thousands more individuals receiving developmental disability services. Over the next 10 years, Virginia will expand community services by providing home and community-based Medicaid waivers to nearly 4,200 individuals; providing family supports to 1,000 individuals currently living in the community; and expanding and deepening its crisis services, including a hotline, mobile crisis teams and short term crisis stabilization programs. This expansion will provide individuals the opportunity to transition successfully from its five state-operated training centers to community settings that can meet their needs and prevent new people from being unnecessarily institutionalized.
The agreement will also expand opportunities for individuals with developmental disabilities to live independently through a fund for housing assistance and enhanced coordination of existing rental assistance programs. Virginia will also offer other supports for community living, including supported employment. Finally, Virginia will implement a comprehensive, robust quality and risk management system to ensure that people are safe, receive the supports and services they need, and have opportunities for real community inclusion. The agreement is court enforceable, and compliance will be monitored by an independent reviewer with extensive experience in developmental disability systems.
The settlement follows a Department of Justice investigation of the commonwealth’s developmental disabilities system, from which the department issued a letter of findings on Feb. 10, 2011, that outlines violations of the ADA. During the investigation and while negotiating the settlement, the Justice Department met with a wide range of stakeholders throughout the commonwealth, including individuals living in the training centers and in the community, their families, nonprofit and for-profit service providers, community service boards, researchers and advocacy groups. The commonwealth worked cooperatively with the Justice Department to negotiate a settlement resolving alleged violations of the ADA.
The Civil Rights Division enforces the ADA, which authorizes the attorney general to investigate whether a state is serving individuals in the most integrated settings appropriate to their needs. Please visit www.ada.gov/olmstead to learn more about the division’s ADA Olmstead enforcement efforts and www.justice.gov/crt to learn more about the other laws enforced by the Justice Department’s Civil Rights Division.
The agreement in this case is due to the efforts of the following division staff: Alison Barkoff, Special Counsel for Olmstead Enforcement; Jonathan Smith, Chief; Benjamin Tayloe, Deputy Chief; Aaron Zisser and Jacqueline Cuncannan, Trial Attorneys; Joan Yost, Investigator; and Yvonnie Demmerritte, Paralegal Specialist.
Former Prince George’s County, Maryland, Detention Officer Indicted for Death of Ronnie WhiteRead the Press Release
WASHINGTON – The Justice Department announced today that a federal grand jury in Greenbelt, Md., has indicted Anthony McIntosh, 48, a former corrections officer at the Prince George’s County Detention Center, in Upper Marlboro, Md., on three charges related to the in-custody death of a pretrial detainee, Ronnie White, on June 29, 2008, and McIntosh’s subsequent attempts to cover-up his involvement in White’s death. Earlier today, McIntosh was arrested in New York City by the FBI.
McIntosh is charged with a federal civil rights violation for deprivation of rights under color of law in connection with the death of White. It is alleged in the indictment that McIntosh discovered White in his cell, unresponsive and in apparent need of emergency medical care, and walked away without providing medical care or notifying PGDOC personnel of the emergency, thereby acting with deliberate indifference to a substantial risk of harm to White.
McIntosh also is charged with two counts for destruction, alteration or falsification of records in a federal investigation, specifically for falsifying an incident report and a witness statement regarding White’s in-custody death.
McIntosh faces a maximum penalty of life in prison for the civil rights offense. He faces a maximum penalty of 20 years in prison on each count of falsification of records in a federal investigation. The maximum fine for each count is $250,000.
An indictment is merely an accusation, and the defendant is presumed innocent unless proven guilty.
The case is being investigated by the Baltimore Division of the FBI and is being prosecuted by Special Litigation Counsel Forrest Christian and Trial Attorney Carroll McCabe of the Civil Rights Division of the Department of Justice.
Barrio Azteca Gang Member Pleads Guilty in Texas to Racketeering ConspiracyRead the Press Release
A Barrio Azteca (BA) gang member currently serving a jail sentence on Texas state murder charges pleaded guilty today for his participation in a racketeering conspiracy, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Robert Pitman for the Western District of Texas, FBI Assistant Director of the Criminal Investigative Division Kevin Perkins and Administrator Michele M. Leonhart of the U.S. Drug Enforcement Administration (DEA).
Hector Galindo, 37, aka “Silent,” of El Paso, Texas, pleaded guilty today before U.S. Magistrate Judge Norbert Garney in the Western District of Texas, El Paso Division, to racketeering conspiracy. A sentencing date has not yet been set by the court. At sentencing, Galindo faces a maximum penalty of life in prison.
According to court documents, the Barrio Azteca gang began in the late 1980s as a violent prison gang and has expanded into a transnational criminal organization. The BA is primarily based in West Texas; Juarez, Mexico; and throughout state and federal prisons in the United States and Mexico.
According to court documents, members and associates of the BA have engaged in a host of criminal activity committed since Jan. 1, 2003, including drug trafficking, extortion, money laundering, kidnapping and murder, including the March 13, 2010, murders in Juarez of U.S. consulate employee Leslie Ann Enriquez Catton, her husband Arthur Redelfs and Jorge Alberto Salcido Ceniceros, the husband of a U.S. consulate employee.
The BA profits by importing heroin, cocaine and marijuana into the United States from Mexico. Gang members and associates also allegedly charge a “street tax” or “cuota” on businesses and criminals operating in their turf. These profits are used to support gang members in prison by funneling money into prison commissary accounts of gang leaders and to pay for defense lawyers or fines. The “cuota” profits also are allegedly reinvested into the organization to purchase drugs, guns and ammunition.
According to information presented in court, Galindo was a member of the Barrio Azteca gang. Since 1992, he has been serving a 25-year sentence for murder in the state of Texas. While imprisoned, he participated in the BA’s activities by distributing narcotics, including heroin, into and within the prison system. He also helped direct extortion funds collected by BA members outside of prison to the commissary accounts of fellow BA members in prison.
Thirty-five members and associates of the BA gang, including Galindo and 17 others who have pleaded guilty, were charged in a third superseding indictment unsealed in March 2011 with various counts of racketeering, murder, drug offenses, money laundering and obstruction of justice. Trial is set to begin April 6, 2012.
The case is being prosecuted by Trial Attorney Joseph A. Cooley of the Criminal Division’s Organized Crime and Gang Section, Trial Attorney Brian Skaret of the Criminal Division’s Human Rights and Special Prosecutions Section and the U.S. Attorney’s Office of the Western District of Texas - El Paso Division. The U.S. Attorney’s Office for the District of New Mexico provided significant assistance in this case, including Assistant U.S. Attorney Sarah Davenport. Valuable assistance was provided by the Criminal Division’s Offices of International Affairs and Enforcement Operations.
The case was investigated by the FBI’s El Paso Field Office. Special assistance was provided by the DEA; the Bureau of Alcohol, Tobacco, Firearms and Explosives; Immigration and Customs Enforcement; the U.S. Marshals Service; U.S. Customs and Border Protection; Federal Bureau of Prisons; U.S. Diplomatic Security Service; the Texas Department of Public Safety; the Texas Department of Criminal Justice; El Paso Police Department; El Paso County Sheriff’s Office; El Paso Independent School District Police Department; Texas Alcohol and Beverage Commission; New Mexico State Police; Dona Ana County, N.M., Sheriff’s Office; Las Cruces, N.M., Police Department; Southern New Mexico Correctional Facility and Otero County Prison Facility New Mexico.
American Samoa Department of Education Official Convicted by Federal Jury in District of Columbia of Witness Tampering and Obstruction of JusticeRead the Press Release
WASHINGTON – Paul Solofa, the director of the school lunch program for the government of the U.S. Territory of American Samoa, was convicted today in relation to his efforts to obstruct a federal grand jury and law enforcement investigation into a bribery scheme, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.
After a four-day trial, a federal jury in the District of Columbia found Solofa, 50, guilty of one count of witness tampering and one count of obstruction of justice.
According to evidence presented at trial, in approximately early 2008, federal authorities began conducting an investigation into allegations of cash bribes and kickbacks paid by vendors to officials of the American Samoa government in connection with the government’s purchase of school bus parts and services.
According to the trial evidence, Solofa met on April 3, 2009, with a school bus parts vendor who told Solofa that the FBI was interested in interviewing the vendor regarding the bus parts investigation. Solofa, in a recorded meeting, allegedly told the vendor, “They cannot do anything with cash. Nothing. They cannot do anything with cash. They cannot track down you on cash. Because even if you say you gave me cash I'll tell them ‘no.’ They cannot take your word on cash. Because that’s hearsay. So you know, but the best thing for you to do is ‘nope, I never give them any cash, I never’ – because that will open up the whole operation . . . You get what I am saying. All you do is just tell them ‘no, yes, no, yes,’ period.”
In addition, according to the evidence presented at trial, Solofa met on April 14, 2009, with the same bus parts vendor, who told Solofa that a grand jury subpoena requiring production of specific documents and records, some of which related to Solofa and to the bus parts kickback scheme, would be issued shortly. After discussing how to respond, Solofa told the vendor that, as for documents he did not want to produce, “ [t]he only way to do it with those copies is burn it. That way, they won’t see it, and you won’t worry that they might see it, you know. . . . Just burn it, and nobody has a copy.”
Solofa faces a maximum penatly of 20 years in prison and a $250,000 fine on the witness tampering charge and 10 years in prison and a $250,000 fine on the obstruction of justice charge. Sentencing is scheduled for April 27, 2012.
This case is being prosecuted by Principal Deputy Chief Raymond N. Hulser and Trial Attorneys Timothy J. Kelly and Daniel A. Petalas of the Criminal Division’s Public Integrity Section. The case is being investigated by the FBI in Hawaii; the Office of the Inspector General for the U.S. Department of Education; and the Office of the Inspector General for the U.S. Department of the Interior.
Active Duty Army Recruiter Pleads Guilty in Texas for Role in Scheme to Illegally Obtain Military Recruiting BonusesRead the Press Release
A U.S. military recruiter pleaded guilty today to conspiracy to obtain approximately $190,000 in fraudulent recruiting bonuses from various U.S. military components and their contractor, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.
Sergeant First Class Jesus Torres-Alvarez, 31, of El Paso, Texas, was indicted on Sept. 13, 2011, along with former Specialist Xavier Aves, 40, of San Antonio; former Corporal Christopher Castro, 30, of San Antonio; former Staff Sergeant Grant E. Bibb, 40, of Eagle Pass, Texas; Specialist Paul Escobar, 31, of San Antonio; and Specialist Richard Garcia Jr., 28, of San Antonio.
According to court documents filed in U.S. District Court for the Western District of Texas, between approximately 2005 and 2008, the U.S. Army, the U.S. Army Reserves and the National Guard Bureau entered into contracts with Document and Packaging Broker Inc., to administer recruiting bonus programs designed to offer monetary incentives to U.S. soldiers who referred others to join the U.S. military. In addition, the Army managed its own recruiting programs that offered bonuses to soldiers who referred other individuals to join the Army or the Army Reserves.
Through these recruiting programs, a participating soldier could receive up to $2,000 in bonus payments for every person he referred to join the U.S. military. Based on certain milestones achieved by the referred soldier, a participating soldier would receive payments in the form of direct deposits and pre-paid debit card payments.
According to court documents, Torres-Alvarez has served as an active duty Army recruiter since August 2005. Torres-Alvarez admitted that he provided certain co-conspirators with the names and Social Security numbers of at least 15 potential soldiers in exchange for a total of at least $10,000 in payments. Torres-Alvarez also admitted that he understood at the time that his co-conspirators planned to use this information to obtain recruiting bonuses by falsely claiming credit for referring these potential soldiers to join the U.S. military.
Through the scheme, Torres-Alvarez’s co-conspirators allegedly obtained a total of at least approximately $190,000 in fraudulent recruiting bonuses.
The charge of conspiracy to commit wire fraud carries a maximum penalty of five years in prison and a $250,000 fine. Sentencing has been scheduled for May 25, 2012, before Chief U.S. District Judge Fred Biery in San Antonio.
The case against Torres-Alvarez arises from an investigation involving allegations that former and current military recruiters and U.S. soldiers in the San Antonio area engaged in a wide-ranging scheme to obtain fraudulent recruiting bonuses, which, to date, has led to charges against seven individuals.
On Jan. 28, 2010, Sergeant Ernest Gonzales, 50, of San Antonio, pleaded guilty before Chief Judge Biery to a one-count criminal information charging him with conspiracy to commit wire fraud. According to court documents, Gonzales admitted to participating in the fraudulent bonus scheme. Gonzales has not yet been sentenced.
On Nov. 3, 2011, Castro pleaded guilty before Chief Judge Biery to one count of conspiracy to commit wire fraud. According to court documents, Castro admitted that he participated in the scheme to defraud the Army’s recruiting bonus programs of at least approximately $164,000 in fraudulent recruiting bonuses. Castro has not yet been sentenced.
The case against Aves, Bibb, Escobar and Garcia is scheduled for trial on April 23, 2012, in San Antonio. These defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
The case is being prosecuted by Trial Attorneys Edward J. Loya Jr. and Brian A. Lichter of the Criminal Division’s Public Integrity Section. The case is being investigated by agents from the San Antonio Fraud Resident Agency of the Major Procurement Fraud Unit, U.S. Army Criminal Investigation Command.
25 January 2012
U.S. Files Consent Decree for Permanent Injunction Against Pharmaceutical Ranbaxy LaboratoriesRead the Press Release
The United States has filed a consent decree for permanent injunction against the generic drug manufacturer Ranbaxy Laboratories Ltd., an Indian corporation, in the U.S. District Court for the District of Mar yland, the Department of Justice announced today. The Justice Department filed the consent decree at the request of the Food and Drug Administration (FDA).
Through investigation by the department and the FDA, the government uncovered numerous problems with Ranbaxy’s drug manufacturing and testing in India and at facilities owned by its U.S. subsidiary, Ranbaxy Inc. These problems include failure to keep written records showing that drugs had been manufactured properly; failure to investigate evidence indicating that drugs did not meet their specifications; failure to adequately separate the manufacture of penicillin drugs from non-penicillin drugs in order to prevent cross-contamination; failure to have adequate procedures to prevent contamination of sterile drugs; and inadequate testing of drugs to ensure that they kept their strength and effectiveness until their expiration date.
The government also determined that Ranbaxy submitted false data in drug applications to the FDA, including the backdating of tests and the submitting of test data for which no test samples existed. All of these actions constituted violations of the federal Food, Drug and Cosmetic Act, making many of Ranbaxy’s drugs adulterated, potentially unsafe and illegal to sell in the United States.
“This action against Ranbaxy is groundbreaking in its international reach – it requires the company to make fundamental changes to its plants in both the United States and India,” said Tony West, Assistant Attorney General for the Justice Department’s Civil Division. “Our commitment to ensuring that the drugs the American people rely on are safe, effective and manufactured according to the FDA’s standards extends beyond our borders.”
The consent decree filed today is unprecedented in its scope, and requires Ranbaxy to take a wide range of actions to correct its violations and ensure that they do not happen again. Among other things, the consent decree prevents Ranbaxy from manufacturing drugs for the U.S. market at certain of its facilities until those facilities can do so according to U.S. standards. To remove false data contained in Ranbaxy’s past drug applications and to prevent Ranbaxy from submitting false data to FDA in the future, the consent decree requires Ranbaxy to take actions such as: hire an outside expert to conduct a thorough internal review at the affected facilities and to audit applications containing data from those facilities; withdraw any applications found to contain false data; set up a separate office of data reliability within Ranbaxy; and hire an outside auditor to audit the affected facilities in the future.
Once the consent decree is approved by the court, it becomes a court order with which Ranbaxy must comply or face contempt.
“Submitting false data to the FDA in drug applications will not be tolerated,” said Mr. West. “The Department of Justice, in partnership with the FDA, will use all available tools, including civil injunction actions and consent decrees, to ensure the integrity of drug applications, and to ensure that all drugs sold in the U.S. meet U.S. standards.”
“American consumers rely upon the FDA to regulate pharmaceutical drugs, and the FDA relies upon manufacturers to comply with federal standards and provide truthful information,” said Rod J. Rosenstein, U.S. Attorney for the District of Maryland.
Assistant Attorney General West thanked the FDA for referring this matter to the Department of Justice. Allan Gordus, Trial Attorney, of the Consumer Protection Branch of the Justice Department, in conjunction with the U.S. Attorney’s Office for the District of Maryland and Marci Norton, Senior Counsel at FDA’s Office of the Chief Counsel, brought this case on behalf of the United States.
Two Shipping Corporations Plead Guilty and Are Sentenced in Maryland for Obstruction of Justice and Environmental CrimesRead the Press Release
WASHINGTON – Two corporations pleaded guilty today in separate hearings in Baltimore for their role in managing and owning a ship engaged in deliberate discharges of waste oil and plastic garbage. The companies were each sentenced by U.S. District Judge Marvin Garbis to pay $1.2 million and serve three years of probation during which they will be required to implement a government approved environmental plan that includes audits conducted by an independent firm and review by a court appointed monitor.
Efploia Shipping, a Marshall Islands corporation based in Greece, was the technical manager of the M/V Aquarosa, a 33,005 gross ton newly built cargo ship, constructed in China and registered in Malta. Aquarosa Shipping, a company based in Denmark, was the owner of the vessel. Both corporations pleaded guilty today to four felony counts: obstruction of justice, making material false statements, and the environmental crimes of knowingly failing to maintain an accurate oil record book and knowingly failing to maintain an accurate garbage record book, both in violation of the Act to Prevent Pollution from Ships (APPS).
According to papers filed in court, senior ship engineers started dumping oil contaminated bilge waste on the ship’s very first voyage after it was completed in June 2010 in China. One method involved removing the blocking mechanism inside a valve so that waste could be pumped overboard. Another method involved a so-called “magic pipe” consisting of a long rubber hose and metal flanges welded together onboard to bypass required pollution prevention equipment.
The investigation began after an engineer complained to the U.S. Coast Guard when the ship arrived in Baltimore in February 2011. The crew member provided the Coast Guard with his cell phone containing 300 photographs showing how a magic pipe was being used to discharge sludge and oily waste overboard and to bypass the ship’s oily water separator, a required piece of pollution prevention equipment. Plastic garbage bags containing oil soaked rags were also dumped overboard. Under MARPOL, an international treaty to which the United States is a party and which is enforced by the APPS, ships must maintain an oil record book and a garbage record book in which all such discharges are recorded. Both defendants admitted to deliberately falsifying these required logs.
The ship’s Chief Engineer, Andreas Konstantinidis, is currently incarcerated for his role. He pleaded guilty in December to obstruction of justice charges and was sentenced to three months in prison.
Both Efploia Shipping and Aquarosa Shipping were sentenced to pay a total of $1.2 million. Of that amount, each defendant was ordered to pay $275,000 in organizational community service payments to the National Fish & Wildlife Foundation which will receive a total of $550,000 earmarked for projects involving Chesapeake Bay.
At the hearing today, the United States requested that the court issue an award to the whistleblower whose information led to the conviction of the defendants. The court did not rule on the matter today.
“The Justice Department will continue to vigorously prosecute the intentional dumping of oil and plastic from ships and falsification of ship records because they are serious crimes that threaten our precious ocean resources,” said Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division of the Department of Justice.
“The defendants dumped pollution into the ocean and falsified records to prevent the Coast Guard from learning about it,” said Rod J. Rosenstein, U.S. Attorney for the District of Maryland. “More than $500,000 of the penalty proceeds will fund conservation efforts for the Chesapeake Bay, our nation’s largest and most diverse estuary.”
“The Coast Guard's objective when investigating violations and supporting these prosecutions is to ensure environmental stewardship is not optional and that deliberate violators are held accountable,” said Coast Guard Capt. Mark O'Malley, Captain of the Port of Baltimore. “This sentence includes a requirement that these defendants develop and implement a comprehensive environmental compliance program that will be monitored by third-party auditors. Our inter-agency efforts are not just aimed at punishing misconduct, they are aimed at fostering a safe, environmentally conscious and professional marine industry,”
“This case was resolved through excellent partnership between the regulatory and enforcement divisions of the U.S. Coast Guard, and also the dedicated pursuit of justice by the U.S. Attorney's Office, Department of Justice and EPA-CID” said Otis E. Harris Jr., Special Agent-in-Charge, Coast Guard Investigative Service Chesapeake Region. “The Coast Guard Investigative Service is fully committed to investigating and resolving all criminal allegations of violations of environmental and regulatory statutes.”
“The oceans must be protected from those who circumvent laws by dumping wastes improperly,” said David G. McLeod, Special Agent in Charge of EPA’s criminal enforcement program in Maryland. “The defendants in this case directed the discharge of oily waste and garbage from their vessel into open water, ordered ship records to be falsified and lied to conceal these crimes. Today’s guilty pleas and sentences should send a strong message that we do not tolerate the flagrant violation of environmental laws and will work closely with our partners to vigorously prosecute those who despoil our environment.
This case was investigated by the U.S. Coast Guard Investigative Service and the EPA Criminal Investigation Division, with assistance from Coast Guard Sector Baltimore, and the Fifth Coast Guard District Staff Judge Advocate’s Office. The case was prosecuted by Senior Trial Attorney Richard A. Udell and Trial Attorney David O’Connell of the Environmental Crimes Section of Department of Justice Environment and Natural Resources Division, and Assistant U.S. Attorney Michael Cunningham.
Two Men Sentenced for Racially-Motivated Assault in New MexicoRead the Press Release
WASHINGTON – Paul Beebe and Jesse Sanford of Farmington, N.M., were sentenced today in U.S. District Court in Santa Fe, N.M., on federal hate crime charges related to a racially-motivated assault on a 22-year-old developmentally disabled man of Navajo descent, the Department of Justice announced. Beebe was sentenced to eight and a half years in prison followed by three years supervised release. Sanford was sentenced to five years in prison followed by three years supervised release. A third defendant, William Hatch, of Fruitland, N.M., previously pleaded guilty in June 2011 to conspiracy to commit a federal hate crime. Hatch has not yet been sentenced.
Beebe, Hatch and Sanford were indicted by a federal grand jury in November 2010 on one count of conspiracy and one count of violating the Matthew Shepard and James Byrd Jr. Hate Crimes Prevention Act (Shepard/Byrd Act). They were the first defendants ever to be charged under this law, which was enacted in October 2009. Beebe pleaded guilty to one count of violating the Shepard/Byrd Act, and Sanford pleaded guilty to one count of conspiracy to commit a violation of the Shepard/Byrd Act.
“The sentence imposed today by the court reflects the hateful and heinous nature of the defendants’ actions, and serves as a reminder of courage of the victim who survived those acts and reported these crimes,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Justice Department will not tolerate violent racially-motivated assaults and will continue to work cooperatively with our state and local partners to aggressively enforce the Shepard/Byrd Hate Crimes Prevention Act.”
“Today the court sentenced Paul Beebe and Jesse Sanford to significant terms of imprisonment for the inexcusable crime of assaulting, branding and scarring a young man simply because he happened to be a Native American,” said Kenneth J. Gonzales, U.S. Attorney for the District of New Mexico. “Violence motivated by racial or ethnic hatred exacerbates fear and tears at the fabric of our society. Here in New Mexico, where we celebrate our ethnic, racial and cultural diversity, I will continue to work with the FBI to vigorously investigate and prosecute acts of violence that are motivated by hatred of another’s race or ethnic heritage.”
“Today’s sentencing is the result of the hard work of FBI special agents and our law enforcement partners, who were committed to pursuing justice until the perpetrators of this hate crime answered for their actions. But the fight against acts of hatred and intolerance goes on,” said Carol K.O. Lee, Special Agent in Charge of the Albuquerque Division of the FBI. “The Albuquerque FBI Division will continue to work with our federal, state and local law enforcement colleagues to investigate hate crimes, the number one priority of our Civil Rights Program.”
During their plea hearing in August 2011, Beebe and Sanford admitted that Beebe took the victim to his apartment, which was adorned in racist paraphernalia, including a Nazi flag and a woven dream catcher with a swastika in it. After the victim had fallen asleep, the defendants began defacing the victim’s body by drawing on him with blue, red and black markers. Once the victim awoke, Beebe branded the victim, who sat with a towel in his mouth, by heating a wire hanger on a stove and burning the victim’s flesh, causing a permanent deep impression of a swastika in his skin. The defendants used a cell phone to create a recording of the victim in which they coerced him to agree to be branded.
The defendants also admitted that they defaced the victim’s body with white supremacist and anti-Native American symbols, including shaving a swastika in the back of the victim’s head and using markers to write the words “KKK” and “White Power” within the lines of the swastika. The defendants further mocked the victim’s heritage by drawing an ejaculating penis and testicles on the victim’s back, telling him that they were drawing his “native pride feathers,” all the while recording the incident on a cell phone to later play for law enforcement, as “proof” that the victim consented to their acts.
The prosecution of these defendants was the result of a cooperative effort between the U.S. Attorney’s Office for the District of New Mexico, the U.S. Department of Justice Civil Rights Division and the San Juan, N.M., County District Attorney’s Office. This case was investigated by the Albuquerque Division of the FBI in cooperation with the Farmington Police Department. It is being prosecuted by Assistant U.S. Attorney Roberto Ortega for the District of New Mexico and Special Litigation Counsel Gerard Hogan and Trial Attorney Fara Gold of the Civil Rights Division.
Six Charged in Scheme to Use Identities of Deceased People to Get Tax RefundsRead the Press Release
A 10-count indictment was unsealed today charging six people with various offenses related to a scheme to defraud the Internal Revenue Service (IRS) of at least $1.7 million in fraudulently obtained tax returns, often filed in the names of recently deceased taxpayers, the Justice Department and IRS announced today.
According to the indictment, between April 15, 2009, to at least August 2011, Muaad Salem, Fahim Sulieman, Hanan Widdi, Najeh Widdi, Hazem Woodi and Daxesj Patel and other unknown co-conspirators allegedly defrauded the United States by filing false and fraudulent tax returns, many in the names of recently deceased taxpayers, and directing refunds to controlled locations in the state of Florida.
The indictment further alleges that the U.S. Treasury checks generated by the false and fraudulent returns would then be sent by the U.S. mail to co-conspirators in Ohio who would sell and distribute the checks for negotiation at various businesses and banking institutions.
“The theft of anyone’s identity is a serious offense, but stealing the identities of the recently departed to defraud all the other taxpayers is particularly egregious,” said Steven M. Dettelbach, the U.S. Attorney for the Northern District of Ohio.
“Identity theft that leads to tax fraud threatens both individual U.S. citizens and the U.S. government,” said John A. DiCicco, Principal Deputy Assistant Attorney General of the Justice Department's Tax Division. “The Justice Department and the IRS will continue to cooperate in investigating and prosecuting these crimes to the fullest extent of the law. In our technology-driven society, this simply must be a top priority.”
The following individuals were charged with conspiracies to defraud the United States and to commit mail fraud:
Muaad Salem, age 33, of Akron, Ohio;
Hazem Woodi, age 31, of North Olmsted, Ohio;
Najeh Widdi, age 45, of Cleveland;
Fahim Suleiman, age 46, of Lutz, Fla.;
Daxesj Patel, age 35, of Canton, Ohio; and
Hanan Widdi, age 38, of Cleveland.
The six are also charged with three counts of mail fraud and two counts of aggravated identity theft. In addition to the other charges, Patel is separately charged with two counts of making a false claim against the United States and with making a false statement to law enforcement officials investigating the crimes.
“The IRS is aggressively pursuing those who steal others’ identities in order to file false returns,” said Steven Miller, IRS Deputy Commissioner for Services and Enforcement. “Our cooperative work with the U.S. Attorney’s Office will help protect taxpayers in Northern Ohio from being victimized by identity theft. The IRS is taking additional steps this tax season to further prevent, detect and resolve identity theft cases as soon as possible.”
“This case is an example of the FBI and IRS working together to aggressively pursue and investigate those organized criminal enterprises that commit identity theft and fraudulent activities in the United States costing the taxpayers of this country millions of dollars,” said Stephen D. Anthony, Special Agent in Charge of the FBI’s Cleveland office.
“IRS Criminal Investigation has made investigating refund fraud and identity theft a top priority,” stated Darryl Williams, Special Agent in Charge, IRS-Criminal Investigation, Cincinnati Field Office. “Filing fraudulent tax returns in the names of other individuals may result in significant harm to those individuals whose identities were stolen, as well as a monetary loss against the U.S. Treasury.”
Mail fraud is punishable by a maximum sentence of 20 years in prison; conspiracy to defraud the United States is punishable by a maximum sentence of 10 years; conspiracy to commit mail fraud, making a false claim against the United States and making a false statement are each punishable by a maximum sentence of five years in prison; aggravated identity theft is punishable by a mandatory sentence of two years incarceration to follow conviction on any other offense.
Defendants also face a fine of up to $250,000 for each count of conviction.
The case was presented to the grand jury by Assistant U.S. Attorney Gary D. Arbeznik following investigation by the Cleveland Division of the FBI, the IRS – Criminal Investigation, and the U.S. Postal Service.
An indictment is only a charge and is not evidence of guilt. The defendants are entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
Massachusetts Financial Advisor Convicted of Tax Crimes and ContemptRead the Press Release
A jury convicted Attleboro, Mass., licensed stockbroker, insurance agent and financial advisor Kevin P. Mahoney today on tax and contempt of court charges, the Justice Department and Internal Revenue Service (IRS) announced. Trial began on Jan. 23, 2012, before U.S. District Judge Joseph Tauro, sitting in Boston. Mahoney was charged with one count of corruptly endeavoring to obstruct the administration of the Internal Revenue laws, eight counts of contempt of court and eight counts of filing false tax returns. He was convicted of all counts.
The evidence at trial showed that Mahoney had failed to pay all of his taxes for the years 1996 through 2001, leading the IRS to assess Mahoney for taxes, interest and penalties for some of those years. Mahoney had attempted to pay these tax-related debts by submitting to the IRS more than $2.2 million in fake financial instruments called Bills of Exchange and checks drawn on a closed bank account. In addition, after filing for bankruptcy, Mahoney caused a worthless promissory note made by another individual to be submitted to the IRS as purported payment for approximately $805,000 in taxes that Mahoney owed to the IRS.
The evidence also showed that Mahoney had submitted to the IRS false individual income tax returns for the years 2000 through 2006 that he knew failed to report more than $1.3 million in taxable income received from various financial institutions. Along with his tax returns, Mahoney had submitted altered IRS Forms 1099-MISC on which he changed to zero the amount of non-employee compensation that the financial institutions reported paying him. For instance, Mahoney attached to his 2006 tax return an altered Form 1099-MISC in which he claimed that a life insurance company paid him non-employee compensation of zero when it had actually paid him approximately $73,000. Mahoney also filed a false 2007 Nonresident Alien Tax Return in which he falsely claimed a refund of almost $389,000.
According to evidence at trial, the U.S. District Court for the District of Massachusetts had permanently enjoined Mahoney in July 2002 from, among other things, engaging in conduct that interfered with the administration of the Internal Revenue laws. The injunction proceedings were brought against Mahoney in accordance with a lawsuit filed by the Justice Department’s Tax Division. Mahoney committed criminal contempt by violating the permanent injunction by assisting in the preparation and submission to the IRS of income tax returns for other people that falsely claimed more than $50 million dollars in refunds based on false IRS Forms 1099-OID and an IRS Form 1099-C falsely reporting $300 million in debt purportedly owed to a third party by an IRS employee.
The case was investigated by Special Agents from IRS - Criminal Investigation and was prosecuted by Tax Division Trial Attorneys Jeffrey McLellan and Kenneth Vert.
Additional information about the Tax Division and its enforcement efforts may be found at www.justice.gov/tax.
Lead Administrator and Web Host of Online Child Pornography Bulletin Board Sentenced to PrisonRead the Press Release
WASHINGTON – The lead administrator and the web host of an online child pornography bulletin board were sentenced today to 120 and 97 months in prison, respectively, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge William Winter of U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI) in Baltimore; and Inspector in Charge Daniel S. Cortez of the U.S. Postal Inspection Service (USPIS) – Washington Division.
George Sell, 70, of Cumberland, Md., and Terry Lee Nolley, 47, of Silver Spring, Md., were sentenced by U.S. District Judge Alexander Williams Jr. in Greenbelt, Md. Sell and Nolley also were each ordered to serve lifetime terms of supervised release.
Sell and Nolley previously pleaded guilty to conspiracy to transport child pornography. Nolley also pleaded guilty to destruction of records in a federal investigation.
According to court documents, from December 2006 through August 2008, Sell, Nolley and others conspired to operate “Country Lounge,” a secure web-based bulletin board dedicated to trading images of child pornography. Members could join this group only upon invitation and after approval by the group’s administrators, including Sell. To obtain access to “Country Lounge,” a member was required to have a username and password. Members were instructed by a specific set of rules and guidelines on how to post images via “Country Lounge” to avoid detection from law enforcement. As of August 2008, 142 members belonged to the bulletin board, which was hosted on computer servers in Virginia and Texas. In October 2008, “Country Lounge” was seized by law enforcement authorities.
From December 2006 through July 2008, Sell was the “root administrator” and day-to-day manager of Country Lounge, while Nolley agreed to host the bulletin board on computer servers maintained by him in Silver Spring.
According to court documents, Sell conspired with other individuals to take control of “Country Lounge” from its former owner and administrator, directed the creation and operation of a new “Country Lounge,” and received technical advice and assistance from co-conspirators to obtain his goal of creating and operating the new “Country Lounge.” Sell directed the daily management of “Country Lounge,” including direction over its layout and content, membership and the “rules” of the board. In addition to hosting the board, Nolley assisted Sell with the creation and maintenance of “Country Lounge.” After July 2008, Nolley transferred his web-hosting responsibilities to other co-conspirators, but continued as a “Country Lounge” member.
In November 2009, federal agents from ICE-HSI executed a search warrant on Sell’s residence and removed two computer hard drives. A forensic review of these items found them to contain multiple images of child pornography, many of which were obtained from “Country Lounge.”
In November 2009, federal agents interviewed Nolley and instructed him not to remove anything from his residence. Later that day, agents executed a search warrant at Nolley’s home and recovered several electronic devices. Nolley admitted that between the interview and the execution of the search warrant, he disposed of four additional hard drives believed to contain child pornography. Specifically, Nolley admitted that he left his home with the four hard drives, took steps to evade law enforcement and threw the hard drives into woods at the side of the road in an effort to impede the federal investigation.
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 Child Exploitation and Obscenity Section (CEOS) in the Justice Department’s Criminal Division, 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. Details about Maryland’s program are available at www.justice.gov/usao/md/Safe-Childhood/index.html .
This case is being prosecuted by CEOS Trial Attorneys Jennifer Toritto Leonardo and Darcy Katzin, and Assistant U.S. Attorney Stacy Belf of the District of Maryland. The case was investigated by ICE-HSI, USPIS and the NASA Office of Inspector General.
Former Executive of Miami-Based Ocean Bank Pleads Guilty to Participating in Bribery Scheme and to Filing False Tax ReturnsRead the Press Release
WASHINGTON – A former executive of Miami-based Ocean Bank pleaded guilty today in U.S. District Court in Miami to participating in a scheme to accept bribes and to failing to report the income on federal income tax returns, the Department of Justice announced.
Danilo P. Perez, a former vice president of Ocean Bank, pleaded guilty today to felony charges filed on Jan. 18, 2012, in U.S. District Court in Miami. The charges against Perez stem from his accepting nearly $500,000 in cash and other items from unnamed co-conspirators in connection with his supervision of certain unnamed customer business with the bank.
According to court documents, as vice president, Perez generally oversaw Ocean Bank’s lending relationships with corporate customers of the bank. The department said that beginning in or about February 2001 and continuing thereafter through on or about April 25, 2007, Perez accepted bribes, including payments for expensive watches, Super Bowl Tickets and other items for his personal use, as well as substantial amounts of cash. Perez accepted the payments intending to be rewarded and influenced in connection with his role in approving Ocean Bank’s issuance of letters of credit, loans and overdraft privileges to his co-conspirators. The court documents also show that he failed to report income from the bribes for the tax years 2005, 2006 and 2007, resulting in lost tax revenue of approximately $91,000 to the federal government.
Perez was charged with one count of conspiracy to solicit or demand money and other things of value to influence an employee of a financial institution and three counts of tax offenses. The conspiracy count carries a maximum sentence of five years in prison and a $250,000 criminal fine. The tax charges each carry a maximum sentence of three years in prison and $250,000 fine. The maximum fine for each count may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either amount is greater than the statutory maximum fine.
The investigation is being conducted by the Antitrust Division’s Atlanta Field Office and the Internal Revenue Service-Criminal Investigation in Atlanta and Miami, with assistance from the U.S. Attorney’s Office for the Southern District of Florida. Anyone with information concerning anticompetitive conduct in the banking industry is urged to call the Antitrust Division’s Atlanta Field Office at 404-331-7100 or visit www.justice.gov/atr/contact/newcase.htm.
Employee and Contractor of Florida Property Management Company Plead Guilty to Wire FraudRead the Press Release
WASHINGTON – A former residential sales manager and a former contractor at a Florida property management company pleaded guilty today to wire fraud in connection with housing repair contracts for the U.S. Department of Veterans Affairs (VA), the Department of Justice announced.
Joshua R. Nusbaum, a former residential sales manager at West Palm Beach, Fla.-based Ocwen Loan Servicing LLC, and Andrew J. Nusbaum, a former contractor for Ocwen, pleaded guilty today in U.S. District Court in Orlando, Fla., to wire fraud. According to a one-count felony charge filed on Dec. 27, 2011, in the Middle District of Florida, Ocwen managed foreclosed properties under contract with the VA, which guaranteed qualifying residential mortgages for veterans. Under the contract between the VA and Ocwen, if a veteran defaulted, Ocwen completed necessary repairs and re-sold the property.
Proceeds from the re-sale of VA-acquired properties directly benefit the VA by reducing the cost of guaranteeing residential mortgages to veterans.
According to court documents, the Nusbaums, who are brothers, engaged in fraud by having Joshua Nusbaum steer repair contracts to a company affiliated with Andrew Nusbaum in exchange for cash payments from in or about March 2006 and continuing until in or about April 2007. As a result of the scheme, Joshua Nusbaum received $14,000 in cash from Andrew Nusbaum. The department said, in order to execute the scheme, the Nusbaums sent each other competitive bid information and transmitted bids to Ocwen via wire communication.
A wire fraud charge carries a maximum penalty of 20 years in prison and a maximum fine of $250,000. 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.
The Nusbaums' guilty pleas arise from an ongoing federal investigation of housing repair contracts performed under contract with the VA. On Dec. 3, 2010, Benjamin Graves pleaded guilty in U.S. District Court in Orlando, Fla., to wire fraud in connection with housing repair contracts for the VA. On Jan. 17, 2012, Ryan J. Piana, Ronald B. Hurst and Bryant A. Carbonell were indicted in U.S. District Court in Rockford, Ill., with conspiring to commit bribery and wire fraud, bribery and wire fraud in connection with housing repair contracts for the VA.
The investigation is being conducted by the Antitrust Division' s Chicago Field Office and the Central Field Office of the U.S. Department of Veterans Affairs, Office of Inspector General, Criminal Investigations Division, located in Hines, Ill. Anyone with information concerning suspicious activity relating to housing repairs performed under a contract with the VA should contact the Antitrust Division' s Chicago Field Office at 312-353-7530 or visit www.justice.gov/atr/contact/newcase.htm.
24 January 2012
Witness in Identity Theft and Tax Fraud Trial Indicted in Alabama for PerjuryRead the Press Release
An indictment was unsealed today charging Nacretia Lewis with perjury and lying to a federal agent, the Justice Department and the Internal Revenue Service (IRS) announced. A federal grand jury in Montgomery, Ala., returned the sealed indictment on Jan. 19, 2012. It was unsealed following Lewis’s arrest.
According to the indictment, Lewis is alleged to have testified falsely in a fraud trial that took place in the Middle District of Alabama in September 2011. The defense in that case presented an alibi defense regarding the whereabouts of the defendant on trial, Janika Fernae Bates, on Jan. 20, 2011. Lewis is alleged to have falsely testified that she was with Bates at a place other than their workplace, at precisely the same time other trial witnesses placed Bates at that workplace. The indictment also alleges that, after her testimony, Lewis met with federal agents and again lied about her whereabouts and Bates’ whereabouts on Jan. 20, 2011. After a five-day trial, Bates was convicted of 13 felony counts, including identity theft and tax fraud charges, and sentenced to 94 months in federal prison.
An indictment merely alleges that crimes have been committed, and the defendant is presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Lewis faces a potential maximum sentence of 10 years in prison and a fine of up to $500,000.
The case was investigated by Special Agents of the IRS - Criminal Investigation. Trial Attorneys Justin Gelfand and Jason Poole of the Justice Department’s Tax Division are prosecuting this case.
Additional information about the Tax Division and its enforcement efforts may be found at www.justice.gov/tax.
Owner of Alabama Tax Business Sentenced to More Than 15 Years in Prison for Identity Theft and Tax Fraud SchemeRead the Press Release
Marsha Elmore of Wetumpka, Ala., the owner of a tax preparation business called Community Tax, was sentenced today to 184 months in prison, the Justice Department and the Internal Revenue Service (IRS) announced. Elmore used her business to run a scheme to steal tax refunds by filing false tax returns with stolen identities. She had been indicted by a federal grand jury on Aug. 31, 2011, and pleaded guilty on Nov. 15, 2011, to one count each of filing false claims, wire fraud and aggravated identity theft. Elmore had previously been sentenced to 60 months in prison for a violation of supervised release, which was based on the conduct for which Elmore was sentenced today. Today’s sentence of 184 months is to run consecutively to her previous sentence of 60 months.
According to court documents, Elmore’s fraudulent activity ran from at least 2009 until July 2011, when she was arrested by the IRS on a criminal complaint. She unlawfully obtained the names, Social Security numbers and dates of birth of various individuals and used them to file false tax returns through Community Tax. Those tax returns claimed refunds that were directed to bank accounts and debit cards that Elmore controlled. Elmore also filed false tax returns using online filing websites. All together, Community Tax and Elmore were linked to almost 1,400 tax returns during this time period.
In her plea agreement, Elmore admitted that she personally filed many of the returns, a number of which were false. In sentencing Elmore, the court found that the intended tax loss was just over $2.5 million.
“This case is an example of how criminals use innocent people’s identities for their own financial gain. To steal these victims’ identities and use them to file false tax returns not only makes the U.S. tax payer a victim, but also victimizes the unsuspecting person whose identity has been stolen. We will continue to do everything possible under the law to protect these unsuspecting victims from these criminals,” stated George L. Beck, U.S. Attorney for the Middle District of Alabama.
“The Justice Department will remain vigilant in protecting Americans’ identities and tax dollars from thieves,” said Principal Deputy Assistant Attorney General John A. DiCicco of the Justice Department’s Tax Division. “Those who steal identities and use them to commit tax refund fraud will be punished to the full extent of the law.”
“The IRS is aggressively pursuing those who steal others’ identities in order to file false returns,” said Steven Miller, IRS Deputy Commissioner for Services and Enforcement.“Our cooperative work with the U.S. Attorney’s Office and the Tax Division will help protect taxpayers in Alabama from being victimized by identity theft. The IRS is taking additional steps this tax season to further prevent, detect and resolve identity theft cases as soon as possible.”
U.S. District Judge Mark Fuller also ordered Elmore to pay $1,157,241 in restitution.
The case was investigated by special agents of the IRS - Criminal Investigation and was prosecuted by Tax Division trial attorneys Jason H. Poole and Michael Boteler and Assistant U.S. Attorney Todd Brown.
Additional information about the Tax Division and its enforcement efforts may be found at www.justice.gov/tax.
New Mexico Man Indicted for Using Stolen Identities to Obtain Tax RefundsRead the Press Release
Douglas J. Kuester of Silver City, N.M., was arrested today on identity theft and tax fraud charges, the Justice Department and the Internal Revenue Service (IRS) announced. A federal grand jury in Las Cruces, N.M., returned an indictment under seal on Jan. 18, 2012, charging Kuester with using stolen identities to file false tax returns. The 41-count indictment, which was unsealed after Kuester’s arrest, charges Kuester with filing false claims, wire fraud and aggravated identity theft.
According to the indictment, between 2007 and 2010, Kuester used stolen identities to file false tax returns that fraudulently claimed refunds. Further, Kuester had the fraudulent refunds delivered to him or deposited into accounts that he controlled.
U.S. Attorney for the District of New Mexico Kenneth J. Gonzales said, “Douglas Kuester is charged with using stolen identities to obtain fraudulent income tax refunds. This criminal conduct results not only in a financial loss to the U.S. Treasury, but also causes harm and hardship to the victims of identity theft. While I am committed to working with the IRS to identify, investigate and vigorously prosecute those who are involved in tax refund related identity theft schemes like the one charged in this case, it is important for each of us to take steps to protect ourselves against identity theft by safeguarding personal information such as our social security numbers and dates of birth.”
“The Justice Department is working closely with the IRS to investigate, prosecute, and punish tax refund crimes committed through the theft of identities,” said Principal Deputy Assistant Attorney General John A. DiCicco of the Justice Department’s Tax Division. “Now, more than ever, we must remain vigilant against the unauthorized use of identification information to defraud the U.S. government.”
“The IRS is aggressively pursuing those who steal others’ identities in order to file false returns,” said Steven Miller, IRS Deputy Commissioner for Services and Enforcement. “Our cooperative work with the U.S. Attorney’s Office and the Tax Division will help protect taxpayers in New Mexico from being victimized by identity theft. The IRS is taking additional steps this tax season to further prevent, detect and resolve identity theft cases as soon as possible.”
An indictment merely alleges that crimes have been committed, and the defendant is presumed innocent until proven guilty beyond a reasonable doubt. If convicted, he faces a potential maximum penalty of five years in prison for each false claims count, 20 years in prison for each wire fraud count and a mandatory two-year sentence for each aggravated identity theft count, to run consecutive to any other sentence imposed. He is also subject to fines and mandatory restitution if convicted.
The case was investigated by the IRS - Criminal Investigation. The U.S. Attorney’s Office in Las Cruces, N.M. and Tax Division trial attorneys Jason H. Poole and Gregory P. Bailey are prosecuting the case.
Additional information about the Tax Division and its enforcement efforts may be found at www.justice.gov/tax.
Indictment (PDF)
Miami-Area Nurse Pleads Guilty in $25 Million Health Care Fraud SchemeRead the Press Release
WASHINGTON – A Miami-area nurse pleaded guilty today for his participation in a $25 million home health Medicare fraud scheme, the Department of Justice, the FBI and the Department of Health and Human Services (HHS) announced today.
Jorge Pineiro, 42, pleaded guilty before U.S. District Judge Joan A. Lenard in Miami to one count of conspiracy to commit health care fraud. Pineiro was originally charged in a February 2011 indictment.
According to plea documents, Pineiro was a registered nurse who worked for ABC Home Health Care Inc. and Florida Home Health Care Providers Inc., two Miami home health care agencies that purported to provide home health and therapy services to Medicare beneficiaries. Pineiro and his co-conspirators operated ABC and Florida Home Health for the purpose of billing Medicare for expensive services that were not medically necessary and/or were never provided. The medically unnecessary services were prescribed by doctors, including, but not limited to, Pineiro’s co-defendant, Dr. Jose Nunez.
According to court documents, beginning in approximately June 2008, and continuing until approximately March 2009, Pineiro and his co-defendant nurses falsified patient files for Medicare beneficiaries to make it appear that they qualified for home health care and therapy services. Pineiro knew that the beneficiaries did not actually qualify for and did not receive the services. Pineiro and his co-defendant nurses described in nursing notes and patient files symptoms that were non-existent, such as tremors, impaired vision, weak grip and inability to walk without assistance. They included these symptoms to make it appear that the patients were unable to self-inject insulin and were homebound, thus appearing to qualify for home health care benefits under Medicare.
Pineiro admitted that he knew these files were falsified so that Medicare could be billed for medically unnecessary therapy and home health-related services. As a result of Pineiro’s participation in the illegal scheme, the Medicare program was billed approximately $118,000 for purported home health care services that were not medically necessary and/or were never provided.
Pineiro also recruited Medicare beneficiaries who allowed Florida Home Health to bill Medicare for services that were medically unnecessary and/or never provided. Pineiro solicited and received kickbacks and bribes from the owners and operators of Florida Home Health in return for allowing the agency to bill Medicare on behalf of the patients he recruited. The patients that Pineiro recruited did not qualify for the services that were billed to the Medicare program. Pineiro knew that the patient files for his recruited patients were falsified to make it appear that the patients qualified for services from Florida Home Health.
Eighteen co-defendants, including Nunez, Licet Diaz and Lisandra Alonso have pleaded guilty for their roles in the fraud scheme. Nunez, Diaz and Alonso were sentenced to 40 months, 87 months and 78 months in prison, respectively. Two remaining defendants, Dr. Francisco Gonzalez and Odalys Alvarez-Medina, are scheduled for trial on Feb. 14, 2012. An indictment is merely a charge, and defendants are presumed innocent until proven guilty.
Sentencing for Pineiro has been scheduled for April 9, 2012.
The charge of conspiracy to commit health care fraud carries a maximum prison sentence of 10 years. The defendant also faces fines and supervised release, as well as forfeiture of any property or proceeds derived from his criminal activities.
Today’s guilty plea was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; John V. Gillies, Special Agent-in-Charge of the FBI’s Miami field office; and Special Agent-in-Charge Christopher Dennis of the HHS Office of Inspector General (HHS-OIG), Office of Investigations Miami office.
This case is being prosecuted by Trial Attorney Joseph S. Beemsterboer of the Criminal Division’s Fraud Section. The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Miami.
Since their inception in March 2007, strike force operations in nine locations have obtained indictments of more than 1,160 individuals who collectively have falsely billed the Medicare program for more than $2.9 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.
Louisiana Tax Return Preparer Indicted for Tax Fraud, Wire Fraud and Identity TheftRead the Press Release
WASHINGTON – An indictment was unsealed today charging Angela Myers of Baton Rouge, La., with 11 counts of filing false claims for tax refunds, five counts of wire fraud, five counts of identity theft, two counts of filing a false income tax return and criminal forfeiture, the Justice Department and Internal Revenue Service (IRS) announced.
According to the indictment filed against her, Myers operated Angie’s Tax Service, an income tax preparation business in Baton Rouge. Myers and others electronically filed 11 false claims for refund with the IRS. She and others also used names and Social Security numbers of other individuals without proper authorization to electronically file false tax returns.
“It is a continuing priority of the United States Attorney’s Office to prosecute individuals that seek to defraud the United States using stolen identities,” said U.S. Attorney for the Middle District of Louisiana Donald J. Cazayoux Jr. “Those that attempt to cheat the system by victimizing others will be held accountable for their actions.”
“The Justice Department is working closely with the IRS to investigate, prosecute, and punish tax refund crimes committed through the theft of identities,” said Principal Deputy Assistant Attorney General John A. DiCicco of the Justice Department’s Tax Division. “Now, more than ever, we must remain vigilant against the unauthorized use of identification information to defraud the U.S. government.”
“The IRS is aggressively pursuing those who steal others’ identities in order to file false returns,” said Steven Miller, IRS Deputy Commissioner for Services and Enforcement. “Our cooperative work with the U.S. Attorney's Office and the Tax Division will help protect taxpayers in Louisiana from being victimized by identity theft. The IRS is taking additional steps this tax season to further prevent, detect and resolve identity theft cases as soon as possible.”
An indictment is merely a formal charge by the grand jury. The defendant is presumed innocent unless and until proven guilty in a U.S. District Court.
The case was investigated by the IRS - Criminal Investigation and is being prosecuted by trial attorneys Matthew Mueller and Kevin Lombardi of the Tax Division and Assistant U.S. Attorney Richard L. Bourgeois, Jr.
Additional information about the Tax Division and its enforcement efforts may be found at www.usdoj.gov/tax/. Additional information about tax fraud schemes to watch out for may be found on the IRS Criminal Investigation website.
Justice Department Prevails for a Second Time in Long-running Tax Shelter CaseRead the Press Release
A federal court of appeals has, for the second time, rejected an alleged abusive tax shelter engineered by a subsidiary of General Electric Capital Corporation, the Justice Department announced today. The U.S. Court of Appeals for the Second Circuit, based in New York City, also unanimously held that the Internal Revenue Service properly imposed a monetary penalty against the General Electric subsidiary for substantially understating its income taxes for 1997 and 1998.
Judge Pierre N. Leval wrote the court’s opinion in this case, which involves a 1993 transaction in which two Dutch banks purported to form a partnership with the General Electric subsidiary. The alleged partnership was named Castle Harbour LLC, and it held a fleet of leased commercial aircraft. The court found that, under the complex provisions of the partnership agreement, the General Electric subsidiary received most of the actual leasing income but, for tax purposes only, 98 percent of the taxable income was allocated to the banks, which were not subject to U.S. income taxes. The government alleged that the General Electric subsidiary attempted to shelter over $300 million of its income from taxes in 1993 through 1998. The government claimed that the company actually owed over $62 million more in taxes because the banks were not true partners in Castle Harbour and therefore could not be allocated any of its taxable income.
In 2004, Judge Stefan R. Underhill of the U.S. District Court for the District of Connecticut found that the banks were valid partners, but the court of appeals reversed that decision in 2006 and sent the case back for further consideration. In 2009, the district court relied on a specific provision of the Internal Revenue Code to conclude again that the banks were real partners for tax purposes. The district court also ruled that the IRS could not impose a penalty on the General Electric subsidiary, equal to 20 percent of its alleged tax understatement for 1997 and 1998, because the subsidiary’s treatment of the deal for tax purposes was supported by “substantial authority.”
In reversing the district court once again, the Second Circuit held that the Dutch banks were not valid partners in Castle Harbour under the tax code and that the IRS may impose penalties against the General Electric subsidiary.
“This decision shows that our courts will not allow large corporations to use complex disguises to get improper tax breaks,” said John A. DiCicco, Principal Deputy Assistant Attorney General of the Justice Department’s Tax Division. “In fact, companies that avoid paying their fair share of the tax burden by engaging in these types of games are setting themselves up for substantial penalties in addition to the taxes they should have paid in the first place.”
More information about the Tax Division’s enforcement efforts can be found on the Division’s website .
Opinion (PDF)
Four East Haven, Connecticut, Police Officers Charged with Civil Rights OffensesRead the Press Release
WASHINGTON – The Justice Department announced today that a federal grand jury sitting in Bridgeport, Conn., returned an indictment charging four East Haven Police officers with conspiring to violate, and violating, the civil rights of members of the East Haven community. This morning, Sergeant John Miller and Officers David Cari, Dennis Spaulding and Jason Zullo were arrested without incident. The indictment was unsealed today.
According to allegations contained in the indictment, from approximately 2007 through 2011, Miller, Cari, Spaulding and Zullo, while acting under color of law, conspired to injure, oppress, threaten and intimidate various members of the East Haven community in violation of their constitutional rights.
The indictment alleges that Miller and others maintained and perpetuated an environment in which the use of unreasonable force and unreasonable searches and seizures was tolerated and encouraged. It is alleged that Cari, Spaulding and Zullo engaged in unreasonable searches and seizures, including unlawful searches of premises and arrests of individuals without probable cause or based on false and misleading information, and that Miller, Spaulding, Zullo and another officer used unreasonable force during lawful and unlawful arrests.
It is alleged that this unreasonable force was used when victims were unarmed, neither resisting nor interfering with the police, but rather securely under the control of the police or otherwise cooperative. In some cases, the victims were handcuffed with their hands behind their backs when officers assaulted them. Some of the victims were particularly vulnerable because they were undocumented aliens or otherwise marginalized, having little perceived standing in the community, and thus unlikely to raise objection to the abuse.
The indictment further alleges that Spaulding and Zullo intimidated, harassed and humiliated members of the Latino community and their advocates. Spaulding and Zullo also allegedly conducted unreasonable and illegal searches at Latino-owned businesses, and Spaulding allegedly intimidated and harassed advocates who worked to defend the rights of members of the Latino community.
The indictment alleges more than 30 overt acts by the four defendants and others in furtherance of the conspiracy, including:
A July 2007 incident during which Miller and another officer used unreasonable force against a victim in the vicinity of the Saltonstall Parkway;
A November 2008 incident during which Spaulding used excessive force against an individual in the parking lot of a Latino-owned restaurant and bar. Spaulding then arrested the individual under false pretenses to cover-up the assault and prepared a false report to justify the false arrest;
A January 2009 incident in the same parking lot during which Spaulding and Zullo arrested three individuals under false pretenses and with Miller and Cari present. Zullo then used excessive force against two of the individuals in the EHPD station, and Spaulding prepared a false report to justify the arrests;
A February 2009 incident during which Spaulding, Cari and other officers illegally searched a vehicle parked outside of a Latino-owned grocery store. Inside the store, Cari and Spaulding, under Miller’s supervision, then arrested a religious leader, who is also an advocate for Latinos, on false pretenses. At Miller’s direction, Cari, Spaulding, Zullo and others conducted an illegal search of the back room of the store in an effort to unlawfully seize the store’s video recording equipment. In the days following the arrest, Cari drafted various false versions of an arrest report to cover up the false arrest of the religious leader. In the months following the incident, Spaulding engaged in behavior intended to intimidate the religious leader and others;
A January 2010 incident during which Miller used excessive force against an individual in the vicinity of Thompson Avenue, and then reprimanded a fellow officer who witnessed the assault and reported it to a supervisory sergeant;
Intimidation and harassment of East Haven Police Commissioners who were attempting to investigate the arrest of the religious leader and other alleged misconduct involving Miller;
Intimidation of EHPD personnel, including threatening statements about an EHPD officer who was believed to be cooperating in an investigation of EHPD.
Each of the four defendants are charged with one count of conspiracy against rights, which carries a maximum sentence of 10 years in prison and a fine of up to $250,000. Miller, Spaulding and Zullo are also charged with one count of use of unreasonable force by a law enforcement officer, which carries a maximum sentence of 10 years in prison and a fine of up to $250,000. Additionally, Spaulding is charged with two counts and Cari with one count of deprivation of rights for making arrests without probable cause. Each of these counts carries a maximum sentence of one year in prison and a fine of up to $100,000. Finally, Spaulding is charged with two counts and Cari with one count of obstruction of a federal investigation for preparing false reports to justify the false arrests. Each count carries a maximum sentence of 20 years in prison and a fine of up to $250,000.
An indictment is not evidence of guilt. Charges are only allegations, and each defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt.
This matter is being investigated by the Civil Rights Squad of the FBI’s New York Field Office. New York FBI Special Operation teams, including its SWAT Team, assisted with today’s arrests. Deputy U.S. Attorney Deirdre M. Daly and Assistant U.S. Attorney Krishna R. Patel are prosecuting the case with assistance from the Criminal Section of the Civil Rights Division.
Alabama Return Preparers Plead Guilty to Identity Theft and Tax Fraud SchemeRead the Press Release
Yumeitrius Manuel and Margaret Kirksey, both of Montgomery, Ala., pleaded guilty to charges of conspiracy to defraud the government and aggravated identity theft, the Justice Department and Internal Revenue Service (IRS) announced today. Kirksey pleaded guilty today. Manuel pleaded guilty on Jan. 11, 2012. The two had been indicted by a federal grand jury on July 27, 2011, on charges of conspiracy, aggravated identity theft, wire fraud, false claims and lying to federal agents.
According to court documents, Manuel and Kirksey each owned and operated separate tax preparation businesses out of the same physical location in Montgomery. They fraudulently inflated tax refunds by placing false information on their clients’ tax returns. They also filed tax returns in the names and Social Security numbers of individuals who did not know about, and did not authorize, the filing of tax returns on their behalf. Both Manuel and Kirksey admitted that their offenses involved over $1 million in tax loss and more than 50 victims of identity theft.
“The Justice Department is working closely with the IRS to investigate, prosecute and punish tax refund crimes committed through the theft of identities,” said Principal Deputy Assistant Attorney General John A. DiCicco of the Justice Department’s Tax Division. “Now, more than ever, we must remain vigilant against the unauthorized use of identification information to defraud the U.S. government.”
“The IRS is aggressively pursuing those who steal others’ identities in order to file false returns,” said Steven Miller, IRS Deputy Commissioner for Services and Enforcement. “Our cooperative work with the U.S. Attorney’s Office and the Tax Division will help protect taxpayers in Alabama from being victimized by identity theft. The IRS is taking additional steps this tax season to further prevent, detect and resolve identity theft cases as soon as possible.”
Sentencing for Manuel has been set for April 25, 2012; sentencing for Kirksey has not been set. Manuel and Kirksey each face a minimum of two years in prison and a potential maximum of up to 12 years in prison, as well as fines of up to $500,000, or twice the loss caused by the offense, mandatory restitution and up to three years of supervised release.
This case was investigated by the IRS Criminal Investigation Division and is being prosecuted by Trial Attorneys Justin Gelfand and Jason Poole of the Tax Division.
Additional information about the Tax Division and its enforcement efforts may be found at www.usdoj.gov/tax.
23 January 2012
Three Indicted in Alabama in Conspiracy to Obtain Tax Refunds Using Stolen IdentitiesRead the Press Release
Chiquanta Davis, Terrence Davis and Laurekshia Blakely were charged in a superseding indictment by a federal grand jury in the Middle District of Alabama on multiple counts stemming from an identity theft and tax fraud scheme, the Justice Department and the Internal Revenue Service (IRS) announced today. The 34-count indictment charges all three with conspiring to defraud the United States by filing false claims. Chiquanta Davis is also charged with filing false claims, theft of government funds, wire fraud and aggravated identity theft. Terrence Davis and Laurekshia Blakely are also charged with theft of government funds.
Chiquanta Davis had been charged in the initial indictment in this case, which was returned Aug. 31, 2011. The superseding indictment charges Terrence Davis and Laurekshia Blakely and adds additional charges against Chiquanta Davis.
According to the superseding indictment, the three defendants conspired to fraudulently obtain federal income tax refunds by filing tax returns using stolen identities. Chiquanta Davis obtained the stolen identity information and used the stolen identities to electronically file false tax returns that in total requested over $700,000 in false tax refunds. Chiquanta Davis directed the refunds to be deposited into bank accounts and prepaid debit cards. Chiquanta Davis, Terrence Davis and Laurekshia Blakely made their bank accounts available to receive proceeds.
“These cases are an example of how these criminals use innocent peoples’ identities for their financial gain,” said U.S. Attorney for the Middle District of Alabama George L. Beck. “To steal these victims’ identities and use them to file fraudulent tax returns not only makes the United States a victim, but also victimizes the unsuspecting person whose identity has been stolen. We will continue to do everything possible under the law to protect these unsuspecting victims from these criminals.”
“Identity theft that leads to tax fraud threatens both individual U.S. citizens and the U.S. government,” said John A. DiCicco, Principal Deputy Assistant Attorney General of the Justice Department’s Tax Division. “The Justice Department and the IRS will continue to cooperate in investigating and prosecuting these crimes to the fullest extent of the law. In our technology-driven society, this simply must be a top priority.”
“The IRS is aggressively pursuing those who steal others’ identities in order to file false returns,” said Steven Miller, IRS Deputy Commissioner for Services and Enforcement. “Our cooperative work with the U.S. Attorney’s Office and the Tax Division will help protect taxpayers in Alabama from being victimized by identity theft. The IRS is taking additional steps this tax season to further prevent, detect and resolve identity theft cases as soon as possible.”
An indictment or superseding indictment merely alleges that crimes have been committed, and the defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, all the defendants face a potential maximum of 10 years in prison for the conspiracy charge and five years in prison for each theft of government funds count. Chiquanta Davis faces a potential maximum of five years in prison for each false claims count, 20 years in prison for each wire fraud count and a mandatory two-year jail sentence for each aggravated identity theft count, to run concurrently with any other sentence imposed. All the defendants are also subject to fines and mandatory restitution if convicted.
The case was investigated by Special Agents of the IRS - Criminal Investigation. Trial attorneys Jason H. Poole and Michael Boteler of the Tax Division and Assistant U.S. Attorney Todd Brown are prosecuting the case.
Additional information about the Tax Division and its enforcement efforts may be found at www.justice.gov/tax.
State of Alabama Employee Indicted for Identity Theft and Tax FraudRead the Press Release
Natacia Webster was arrested today as part of a federal crackdown on identity theft and tax refund fraud. A federal grand jury in Montgomery, Ala., returned an indictment on Jan. 19, 2012, charging Webster, an employee of the state of Alabama, with several charges arising out of her theft of identity information from government databases, the Justice Department and the Internal Revenue Service (IRS) announced today. The 15-count indictment charges Webster with conspiracy to defraud the government, wire fraud, computer fraud, and aggravated identity theft.
According to the indictment, in 2011, Webster obtained identity information during her employment with the state of Alabama and provided that information to co-conspirator Melinda Clayton, who used the stolen identities to file false tax returns fraudulently claiming tax refunds. The refunds were directed to bank accounts and debit cards controlled by the conspirators. Clayton and several others were indicted in April 2011. Clayton has since pleaded guilty and is currently awaiting sentencing.
“My office will continue to work with the IRS to vigorously prosecute those people who steal an innocent person identity, just to file a false tax return and steal the tax refunds,” said U.S. Attorney for the Middle District of Alabama George L. Beck. “These criminals need to be punished for the harm they cause to the person whose identity is stolen and the harm they cause to U.S. taxpayer.”
“The Justice Department is committed to working with the IRS to investigate, prosecute, and punish those who commit identity theft to obtain tax refunds illegally,” said Principal Deputy Assistant Attorney General John A. DiCicco of the Justice Department’s Tax Division.
“The IRS is aggressively pursuing those who steal others’ identities in order to file false returns,” said Steven Miller, IRS Deputy Commissioner for Services and Enforcement. “Our cooperative work with the U.S. Attorney’s Office and the Tax Division will help protect taxpayers in Alabama from being victimized by identity theft. The IRS is taking additional steps this tax season to further prevent, detect and resolve identity theft cases as soon as possible.”
An indictment merely alleges that crimes have been committed, and the defendant is presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Webster faces a potential maximum sentence of 10 years in prison for the conspiracy count, 20 years in prison for each wire fraud count, 5 years in prison for each computer fraud count and a mandatory two-year sentence for each aggravated identity theft count. She is also subject to fines and mandatory restitution if convicted.
The case was investigated by special agents of the IRS - Criminal Investigation. Tax Division trial attorneys Jason H. Poole and Michael Boteler and Assistant U.S. Attorney Todd Brown are prosecuting the case.
Additional information about the Tax Division and its enforcement efforts may be found at www.justice.gov/tax.
Philadelphia Man Convicted for Role in Violent Home Invasion Robberies of Business Owners in Four StatesRead the Press Release
WASHINGTON – A Philadelphia man has been convicted for his participation in a conspiracy to commit violent home invasion robberies of successful Asian business owners in Pennsylvania, New Jersey, Maryland and Virginia, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Zane David Memeger of the Eastern District of Pennsylvania and George Venizelos, Special Agent in Charge of the FBI’s Philadelphia Division.
After a four-day trial, a federal jury in the Eastern District of Pennsylvania found Tahn Le, 44, guilty on Jan. 20, 2012, of conspiracy to interfere with interstate commerce through multiple home invasion robberies and related firearms violations. To date, six co-defendants have pleaded guilty for their roles in the conspiracy: Teo Van Bui, Buu Huu Truong, Thach Van Nguyen, Den Van Nguyen, Denise Novelli and Sidney Biggs.
According to evidence presented at trial, Le and his co-defendants targeted successful Asian business owners in Pennsylvania, New Jersey, Maryland and Virginia for home invasion robberies because they believed that the business owners stored significant amounts of business proceeds in their homes. In carrying out the robberies, the defendants brandished handguns, tied up and in some instances beat their victims, and stole business proceeds as well as expensive jewelry.
Le faces a maximum possible sentence of life in prison and a $250,000 fine. Sentencing hearings for him and his co-defendants are scheduled for April 2012.
The case was prosecuted by Trial Attorneys John S. Han and Robert Livermore of the Criminal Division’s Organized Crime and Gang Section.
The case was investigated by the FBI; the Poconos Township, Penn., Police Department; the Freehold Borough, N.J., Police Department; the Monroe Township, N.J., Police Department; and the Fairfax County, Va., Police Department. Additional assistance was provided by the Bureau of Alcohol, Tobacco, Firearms and Explosives.
Michigan Man Sentenced to 25 Years in Prison for Participating in International Child Pornography Ring and Producing Child PornographyRead the Press Release
WASHINGTON – A Michigan man was sentenced today in Los Angeles to 25 years in prison and lifetime supervised release for participating in a child exploitation enterprise and producing child pornography, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney André Birotte Jr. of the Central District of California and Assistant Director in Charge Steve Martinez of the FBI’s Los Angeles Field Office.
Joshua Boras of Lapeer, Mich., was sentenced by U.S. District Judge Virginia A. Phillips. In December 2010, Boras, 34, pleaded guilty to one count of participation in a child exploitation enterprise and one count of production of child pornography.
Today’s sentencing is the result of an international investigation into the “Lost Boy” online bulletin board. The Lost Boy bulletin board, according to court documents and proceedings, was dedicated to men who have a sexual interest in young boys and was established to provide a forum to trade child pornography.
Federal authorities, working in conjunction with a coalition of international law enforcement agencies, shut down the Lost Boy bulletin board approximately three years ago. As a result of the investigation, 16 named defendants were charged in the United States and arrested for their roles in the bulletin board. To date, 15 defendants have pleaded guilty or have been convicted at trial, and one defendant died in custody. Approximately six more men have been charged with child molestation as a result of the investigation. The investigation also led to the identification of 27 domestic victims of child abuse, some of whom were portrayed in images posted to the Lost Boy bulletin board.
According to court documents and proceedings, law enforcement authorities discovered the Lost Boy bulletin board after receiving information from Eurojust, the judicial cooperation arm of the European Union. Eurojust provided U.S. law enforcement with leads obtained from Norwegian and Italian authorities indicating that a North Hollywood, Calif., man was communicating with an Italian national about child pornography and how to engage in child sex tourism in Romania. Acting on the information from Europe, the FBI executed search warrants that led to the discovery of the Lost Boy network. Further investigation revealed that Lost Boy had 35 members, 16 of whom were U.S. nationals. Other members of the network were located in countries around the world, including Belgium, Brazil, Canada, France, Germany, New Zealand and the United Kingdom.
According to court documents, Lost Boy had a thorough vetting process for new members, who were required to post child pornography to join the organization. Once accepted, members were required to continue posting child pornography to remain in good standing and to avoid removal from the board. According to court documents, Lost Boy members advised one another on techniques to evade detection by law enforcement, which included using screen names to mask identities and encrypting computer data.
In addition to his participation in Lost Boy, Boras filmed his sexual abuse of a minor boy and distributed these images to some of the members of the Lost Boy board.
International law enforcement efforts involving European law enforcement, the Brazilian Federal Police and other agencies have identified child molestation suspects in South America, Europe and New Zealand. Three suspects in Romania, one in France, and another in Brazil have been charged, and offenders have been convicted in Norway and the United Kingdom. Law enforcement have also identified dozens of child victims located in Norway, Romania, Brazil and other nations.
The investigation into the Lost Boy bulletin board was led by the FBI and the U.S. Postal Inspection Service, in conjunction with the Los Angeles-based Sexual Assault Felony Enforcement (SAFE) Team. The High Technology Investigative Unit of the Child Exploitation and Obscenity Section (CEOS) in the Justice Department’s Criminal Division, along with Eurojust, have provided invaluable assistance during the investigation.
The case is being prosecuted by Assistant U.S. Attorneys Joey L. Blanch and Yvonne Garcia of the Central District of California and CEOS Trial Attorney Andrew McCormack.