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25 January 2012
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.
Former CIA Officer John Kiriakou Charged with DisclosingCovert Officer’s Identity and Other Classified Informationto Journalists and Lying to CIA’s Publications Review BoardRead the Press Release
ALEXANDRIA, Va. — A former CIA officer, John Kiriakou, was charged today with repeatedly disclosing classified information to journalists, including the name of a covert CIA officer and information revealing the role of another CIA employee in classified activities, Justice Department officials announced.
The charges result from an investigation that was triggered by a classified defense filing in January 2009, which contained classified information the defense had not been given through official government channels, and, in part, by the discovery in the spring of 2009 of photographs of certain government employees and contractors in the materials of high-value detainees at Guantanamo Bay, Cuba. The investigation revealed that on multiple occasions, one of the journalists to whom Kiriakou is alleged to have illegally disclosed classified information, in turn, disclosed that information to a defense team investigator, and that this information was reflected in the classified defense filing and enabled the defense team to take or obtain surveillance photographs of government personnel. There are no allegations of criminal activity by any members of the defense team for the detainees.
Kiriakou, 47, of Arlington, Va., was a CIA intelligence officer between 1990 and 2004, serving at headquarters and in various classified overseas assignments. He is scheduled to appear at 2 p.m. today before U.S. Magistrate Judge John F. Anderson in federal court in Alexandria.
Kiriakou was charged with one count of violating the Intelligence Identities Protection Act for allegedly illegally disclosing the identity of a covert officer and two counts of violating the Espionage Act for allegedly illegally disclosing national defense information to individuals not authorized to receive it. Kiriakou was also charged with one count of making false statements for allegedly lying to the Publications Review Board of the CIA in an unsuccessful attempt to trick the CIA into allowing him to include classified information in a book he was seeking to publish.
The four-count criminal complaint, which was filed today in the Eastern District of Virginia, alleges that Kiriakou made illegal disclosures about two CIA employees and their involvement in classified operations to two journalists on multiple occasions between 2007 and 2009. In one case, revealing the employee’s name as a CIA officer disclosed classified information as the employee was and remains covert (identified in the complaint as “Covert Officer A”). In the second case, Kiriakou allegedly disclosed the name and contact information of an employee, identified in the complaint as “Officer B,” whose participation in an operation to capture and question terrorism subject Abu Zubaydah in 2002 was then classified. Kiriakou’s alleged disclosures occurred prior to a June 2008 front-page story in The New York Times disclosing Officer B’s alleged role in the Abu Zubaydah operation.
“Safeguarding classified information, including the identities of CIA officers involved in sensitive operations, is critical to keeping our intelligence officers safe and protecting our national security,” said Attorney General Eric Holder. “Today’s charges reinforce the Justice Department’s commitment to hold accountable anyone who would violate the solemn duty not to disclose such sensitive information.”
Patrick J. Fitzgerald, U.S. Attorney for the Northern District of Illinois, who was appointed Special Attorney in 2010 to supervise the investigation, said, “I want to thank the Washington Field Office of the FBI and the team of attorneys assigned to this matter for their hard work and dedication to tracing the sources of the leaks of classified information.” Mr. Fitzgerald announced the charges with James W. McJunkin, Assistant Director in Charge of the Washington Field Office of the FBI, and they thanked the CIA for its very substantial assistance in the investigation, as well as the Air Force Office of Special Investigations for its significant assistance.
“Protecting the identities of America’s covert operatives is one of the most important responsibilities of those who are entrusted with roles in our nation’s intelligence community. The FBI and our intelligence community partners work diligently to hold accountable those who violate that special trust,” said Mr. McJunkin.
The CIA filed a crimes report with the Justice Department on March 19, 2009, prior to the discovery of the photographs and after reviewing the Jan. 19, 2009, classified filing by defense counsel for certain detainees with the military commission then responsible for adjudicating charges. The defense filing contained information relating to the identities and activities of covert government personnel, but prior to Jan. 19, 2009, there had been no authorized disclosure to defense counsel of the classified information. The Justice Department’s National Security Division, working with the FBI, began the investigation. To avoid the risk of encountering a conflict of interest because of the pending prosecutions of some of the high-value detainees, Mr. Fitzgerald was assigned to supervise the investigation conducted by a team of attorneys from the Southern District of New York, the Northern District of Illinois and the Counterespionage Section of the National Security Division who were not involved in pending prosecutions of the detainees.
According to the complaint affidavit, the investigation determined that no laws were broken by the defense team as no law prohibited defense counsel from filing a classified document under seal outlining for a court classified information they had learned during the course of their investigation. Regarding the 32 pages of photographs that were taken or obtained by the defense team and provided to the detainees, the investigation found no evidence the defense attorneys transmitting the photographs were aware of, much less disclosed, the identities of the persons depicted in particular photographs and no evidence that the defense team disclosed other classified matters associated with certain of those individuals to the detainees. The defense team did not take photographs of persons known or believed to be current covert officers. Rather, defense counsel, using a technique known as a double-blind photo lineup, provided photograph spreads of unidentified individuals to their clients to determine whether they recognized anyone who may have participated in questioning them. No law or military commission order expressly prohibited defense counsel from providing their clients with these photo spreads.
Further investigation, based in part on emails recovered from judicially-authorized search warrants served on two email accounts associated with Kiriakou, allegedly revealed that:
- Kiriakou disclosed to Journalist A the name of Covert Officer A and the fact that Covert Officer A was involved in a particular classified operation. The journalist then provided the defense investigator with the full name of the covert CIA employee;
- Kiriakou disclosed or confirmed to Journalists A, B and C the then-classified information that Officer B participated in the Abu Zubaydah operation and provided two of those journalists with contact information for Officer B, including a personal email address. One of the journalists subsequently provided the defense investigator with Officer B’s home telephone number, which the investigator used to identify and photograph Officer B; and
- Kiriakou lied to the CIA regarding the existence and use of a classified technique, referred to as a “magic box,” in an unsuccessful effort to trick the CIA into allowing him to publish information about the classified technique in a book.
Upon joining the CIA in 1990 and on multiple occasions in following years, Kiriakou signed secrecy and non-disclosure agreements not to disclose classified information to unauthorized individuals.
Regarding Covert Officer A, the affidavit details a series of email communications between Kiriakou and Journalist A in July and August 2008. In an exchange of emails on July 11, 2008, Kiriakou allegedly illegally confirmed for Journalist A that Covert Officer A, whose first name only was exchanged at that point, was “the team leader on [specific operation].” On Aug. 18, 2008, Journalist A sent Kiriakou an email asking if Kiriakou could pick out Covert Officer A’s last name from a list of names Journalist A provided in the email. On Aug. 19, 2008, Kiriakou allegedly passed the last name of Covert Officer A to Journalist A by email, stating “It came to me last night.” Covert Officer A’s last name had not been on the list provided by Journalist A. Later that same day, approximately two hours later, Journalist A sent an email to the defense investigator that contained Covert Officer A’s full name. Neither Journalist A, nor any other journalist to the government’s knowledge, has published the name of Covert Officer A.
At the time of Kiriakou’s allegedly unauthorized disclosures to Journalist A, the identification of Covert Officer A as “the team leader on [specific operation]” was classified at the Top Secret/Sensitive Compartmented Information (SCI) level because it revealed both Covert Officer A’s identity and his association with the CIA’s Rendition, Detention and Interrogation (RDI) Program relating to the capture, detention and questioning of terrorism subjects. The defense investigator was able to identify Covert Officer A only after receiving the email from Journalist A, and both Covert Officer A’s name and association with the RDI Program were included in the January 2009 classified defense filing. The defense investigator told the government that he understood from the circumstances that Covert Officer A was a covert employee and, accordingly, did not take his photograph. No photograph of Covert Officer A was recovered from the detainees at Guantanamo.
In a recorded interview last Thursday, FBI agents told Kiriakou that Covert Officer A’s name was included in the classified defense filing. The affidavit states Kiriakou said, among other things, “How the heck did they get him? . . . [First name of Covert Officer A] was always undercover. His entire career was undercover.” Kiriakou further stated that he never provided Covert Officer A’s name or any other information about Covert Officer A to any journalist and stated “Once they get the names, I mean this is scary.”
Regarding Officer B, the affidavit states that he worked overseas with Kiriakou on an operation to locate and capture Abu Zubaydah, and Officer B’s association with the RDI Program and the Abu Zubaydah operation in particular were classified until that information was recently declassified to allow the prosecution of Kiriakou to proceed.
In June 2008, The New York Times published an article by Journalist B entitled “Inside the Interrogation of a 9/11 Mastermind,” which publicly identified Officer B and reported his alleged role in the capture and questioning of Abu Zubaydah – facts which were then classified. The article attributed other information to Kiriakou as a source, but did not identify the source(s) who disclosed or confirmed Officer B’s identity. The charges allege that at various times prior to publication of the article, Kiriakou provided Journalist B with personal information regarding Officer B, knowing that Journalist B was seeking to identify and locate Officer B. In doing so, Kiriakou allegedly confirmed classified information that Officer B was involved in the Abu Zubaydah operation. For example, Kiriakou allegedly emailed Officer B’s phone number and personal email address to Journalist B, who attempted to contact Officer B via his personal email in April and May 2008. Officer B had provided his personal email address to Kiriakou, but not to Journalist B or any other journalist. Subsequently, Kiriakou allegedly revealed classified information by confirming for Journalist B additional information that an individual with Officer B’s name, who was associated with particular contact information that Journalist B had found on a website, was located in Pakistan in March 2002, which was where and when the Abu Zubaydah operation took place.
After The New York Times article was published, Kiriakou sent several emails denying that he was the source for information regarding Officer B, while, at the same time, allegedly lying about the number and nature of his contacts with Journalist B. For example, in an email dated June 30, 2008, Kiriakou told Officer B that Kiriakou had spoken to the newspaper’s ombudsman after the article was published and said that the use of Officer B’s name was “despicable and unnecessary” and could put Officer B in danger. Kiriakou also denied that he had cooperated with the article and claimed that he had declined to talk to Journalist B, except to say that he believed the article absolutely should not mention Officer B’s name. “[W]hile it might not be illegal to name you, it would certainly be immoral,” Kiriakou wrote to Officer B, according to the affidavit.
From at least November 2007 through November 2008, Kiriakou allegedly provided Journalist A with Officer B’s personal contact information and disclosed to Journalist A classified information revealing Officer B’s association with the RDI Program. Just as Journalist A had disclosed to the defense investigator classified information that Kiriakou allegedly imparted about Covert Officer A, Journalist A, in turn, provided the defense investigator information that Kiriakou had disclosed about Officer B. For example, in an email dated April 10, 2008, Journalist A provided the defense investigator with Officer B’s home phone number, which, in light of Officer B’s common surname, allowed the investigator to quickly and accurately identify Officer B and photograph him. Both Officer B’s name and his association with the RDI Program were included in the January 2009 classified defense filing, and four photographs of Officer B were among the photos recovered at Guantanamo.
In the same recorded interview with FBI agents last week, Kiriakou said he “absolutely” considered Officer B’s association with the Abu Zubaydah operation classified, the affidavit states. Kiriakou also denied providing any contact information for Officer B or Officer B’s association with the Abu Zubaydah operation to Journalists A and B prior to publication of the June 2008 New York Times article. When specifically asked whether he had anything to do with providing Officer B’s name or other information about Officer B to Journalist B prior to the article, Kiriakou stated “Heavens no.”
As background, the affidavit states that sometime prior to May 22, 2007, Kiriakou disclosed to Journalist C classified information regarding Officer B’s association with Abu Zubaydah operation, apparently while collaborating on a preliminary book proposal. A footnote states that Journalist C is not the coauthor of the book Kiriakou eventually published.
Prior to publication of his book, The Reluctant Spy: My Secret Life in the CIA’s War on Terror, Kiriakou submitted a draft manuscript in July 2008 to the CIA’s Publication Review Board (PRB). In an attempt to trick the CIA into allowing him to publish information regarding a classified investigative technique, Kiriakou allegedly lied to the PRB by falsely claiming that the technique was fictional and that he had never heard of it before. In fact, according to a transcript of a recorded interview conducted in August 2007 to assist Kiriakou’s coauthor in drafting the book, Kiriakou described the technique, which he referred to as the “magic box,” and told his coauthor that the CIA had used the technique in the Abu Zubaydah operation. The technique was also disclosed in the June 2008 New York Times article and referred to as a “magic box.”
In his submission letter to the PRB, Kiriakou flagged the reference to a device called a “magic box,” stating he had read about it in the newspaper article but added that the information was “clearly fabricated,” as he was unaware of and had used no such device. The affidavit contains the contents of an August 2008 email that Kiriakou sent his coauthor admitting that he lied to the PRB in an attempt to include classified information in the book. The PRB subsequently informed Kiriakou that the draft manuscript contained classified information that he could not use, and information regarding the technique that Kiriakou included in the manuscript remained classified until it was recently declassified to allow Kiriakou’s prosecution to proceed.
Upon conviction, the count charging illegal disclosure of Covert Officer A’s identity to a person not authorized to receive classified information carries a maximum penalty of five years in prison, which must be imposed consecutively to any other prison term; the two counts charging violations of the Espionage Act each carry a maximum term of 10 years in prison; and making false statements carries a maximum prison term of five years. Each count carries a maximum fine of $250,000.
A complaint contains only allegations and is not evidence of guilt. The defendant is presumed innocent and is entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
The government is being represented in court by Assistant U.S. Attorneys Iris Lan (Southern District of New York) and Mark E. Schneider (Northern District of Illinois), and Justice Department trial attorney Ryan Fayhee of the Counterespionage Section of the National Security Division. Assistant U.S. Attorney Lisa Owings (Eastern District of Virginia) will assist in the matter under local court rules.
United States of America vs. John Kiriakou: Criminal Complaint, January 23, 2012 (PDF)
Florida Loan Officer Sentenced in Connection with $2.5 Million Reverse Mortgage Fraud and Loan Modification SchemeRead the Press Release
A loan officer was sentenced Friday by U.S. District Court Judge William P. Dimitrouleas in Ft. Lauderdale, Fla., for his participation in a nationwide $2.5 million reverse mortgage fraud scheme, the Justice Department announced.
Louis Gendason, 42, of Delray Beach, Fla., was sentenced to 70 months in prison, five years of supervised release and ordered to pay over $2 million in restitution. Gendason was the mastermind of this complicated reverse mortgage fraud scheme, which was designed to lure financially distressed elderly homeowners into applying for reverse mortgage loans, to create fictitious equity in their homes with fraudulent appraisals, and ultimately to steal that false equity from the seniors and their lenders. Gendason cultivated relationships with each of his co-conspirators and they executed their respective roles in the scheme at his behest. Kimberly Mackey, 47, of Pittsburgh, and Marcos Echevarria, 29, of Palm Beach, Fla., received prison sentences of 60 and 24 months, respectively, on Nov. 3, 2011. A third co-defendant, John Incandela, 25, of Palm Beach, was sentenced to 41 months in prison on Dec. 16, 2011. Gendason was the final defendant in the scheme to be sentenced.
“The stiff sentence the court imposed on the leader of this reverse mortgage fraud scheme sounds a cautionary note to those who prey upon elderly, distressed homeowners,” said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. “We will not waver in our commitment to investigate, prosecute, and hold accountable those who try to victimize our nation’s most vulnerable consumers.”
A reverse mortgage, also known as a Home Equity Conversion Mortgage, allows borrowers who are at least 62 years of age to convert the equity in their homes into a monthly stream of income or a line of credit. Unlike the traditional mortgage loan scenario, in which
borrowers make monthly payments to a mortgage lender in satisfaction of their outstanding loan, in a reverse mortgage loan scenario, the mortgage lender purchases borrowers’ equity and makes installment payments to the borrower.
According to the information and statements made during the August 2011 hearing in the case, from May 2009 through November 2010, the defendants engaged in a reverse mortgage scheme that defrauded unwitting borrowers, Genworth Financial Home Equity Access Inc., and the Federal Housing Administration (FHA). As the scheme’s ring-leader, Gendason, along with loan officers Incandela and Echevarria, solicited seniors to refinance their existing mortgages with a reverse mortgage loan financed by Genworth. To qualify the borrowers for these loans, Gendason altered real estate appraisals to fraudulently inflate the value of the borrowers’ properties. In fact, however, none of the borrowers had sufficient equity in their properties to qualify for a reverse mortgage. The defendants then submitted the fraudulently inflated appraisals to Genworth. Based on the false documentation, Genworth approved and the FHA insured more than $2.5 million in reverse mortgage loans.
“This reverse mortgage loan modification scheme robbed elderly homeowners of more than just their homes,” said Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida. “It also robbed them of the American dream of home ownership, their peace of mind, and in some cases, their life’s savings. Through these prosecutions, these fraudsters have been brought to justice."
As part of the scheme, Mackey, a licensed title agent, fraudulently closed the Genworth loans and did not pay off the borrowers’ existing mortgage loans. Mackey attempted to conceal the fraudulent loan closings by preparing false settlement documents that showed that the existing mortgages had, in fact, been paid off. The defendants divided up the loan proceeds and each used the money for his or her personal benefit, including for such things as gym memberships, vacations, and casino gambling.
The defendants further engaged in a loan modification scheme to conceal the existence of the Genworth reverse mortgage transactions from the original mortgage lenders, whose loans remained unpaid. To this end, Gendason, Incandela and Mackey conspired to create fictitious offers to buy some of the borrowers’ properties in the form of “short sales.” A short sale is a sale of real estate in which the sale proceeds are less than the balance owed on the loan to the mortgage lender, but avoids foreclosure and related costs. In other instances, to hide the existence of the Genworth reverse mortgage loan from the original lenders, the defendants made monthly mortgage payments to the borrowers’ original lenders. Many of the elderly homeowners that trusted the defendants anguished for years over whether they might lose their homes after learning that the defendants had stolen their reverse mortgage loan proceeds.
The case was investigated by agents from the U.S. Department of Housing and Urban Development Office of Inspector General, the Internal Revenue Service’s-Criminal Investigation, the U.S. Postal Inspection Service, the FBI and Florida’s Office of Financial Regulation, with assistance from the U.S. Secret Service and Genworth Financial Home Equity Access. The case was prosecuted by Kevin J. Larsen, a Trial Attorney in the Justice Department’s Consumer Protection Branch, and Assistant U.S. Attorneys Jeffrey H. Kay and Thomas Lanigan of the Southern District of Florida.
Alabama Woman Indicted for Using Stolen Identities to Obtain Tax RefundsRead the Press Release
Crystal Sayles was arrested today on charges stemming from her use of stolen identities to commit federal tax fraud, the Justice Department and the Internal Revenue Service (IRS) announced today. On Jan. 19, 2012, a federal grand jury in Montgomery, Ala., returned a 36-count indictment charging Sayles with filing false claims, wire fraud, access device fraud and aggravated identity theft.
According to the indictment, Sayles used stolen identities to file false tax returns that fraudulently claimed refunds and to obtain refund anticipation loans. Sayles directed some of the false tax refunds to prepaid debit cards and used those cards to withdraw funds.
“This office will continue to vigorously prosecute those criminals who steal others’ identities, file false tax returns using those stolen identities and steal the tax refunds,” said U.S. Attorney for the Middle District of Alabama George L. Beck. “We will continue to do all possible under the law to protect these unsuspecting victims of identity theft.”
“The Tax Division is dedicated to protecting the personal identities of U.S. taxpayers and prosecuting criminals who steal those identities to commit federal crimes, including tax refund fraud,” said Principal Deputy Assistant Attorney General John A. DiCicco of the Justice Department’s Tax Division. “We are working closely with the IRS and the U.S. Attorneys to protect the public from these 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 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, Sayles faces a maximum potential sentence of five years in prison for each false claims count, 20 years in prison for each wire fraud count, 15 years in prison for the access device fraud count, and a mandatory 2-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 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.
Acting Assistant Attorney General Pozen Announces Departure from Antitrust DivisionRead the Press Release
WASHINGTON – Acting Assistant Attorney General Sharis A. Pozen announced her resignation from the Department of Justice today, effective as of April 30, 2012.
“Sharis has helped revitalize the Antitrust Division, and I commend her dedication to protecting consumers from anticompetitive mergers, illegal price fixing cartels and other anticompetitive conduct,” said Attorney General Eric Holder. “During her tenure as acting head of the division, Sharis has provided strong leadership and sound legal judgment on some of the most significant competition matters before the Department of Justice.”
“It has been an honor and privilege to serve in the Antitrust Division and in this administration for the past three years. I have the utmost respect for the dedicated men and women of the division who devote themselves to protecting American consumers from anticompetitive conduct. I want to express my deep gratitude to Attorney General Holder for his leadership and for giving me the opportunity to lead the Antitrust Division.”
Pozen came to the department on Feb. 16, 2009, where she served as chief of staff and counsel. She served as a key deputy to Assistant Attorney General Christine A. Varney, and played a leading role on several enforcement and competition matters, including in the healthcare, technology, energy and agriculture industries.
Attorney General Holder appointed Pozen as Acting Assistant Attorney General of the Antitrust Division on Aug. 4, 2011.
Under her leadership, the division challenged the proposed merger of AT&T Inc. and T-Mobile USA Inc. The department said that the deal would reduce competition in mobile wireless telecommunications services resulting in higher prices, poorer quality services, fewer choices and fewer innovative products for millions of American consumers. Ultimately, the parties abandoned the deal, resulting in a victory for consumers.
During Pozen’s tenure, the division brought its first antitrust charges in the automotive parts industry. On Sept. 29, 2011, Furukawa Electric Co. Ltd. agreed to plead guilty and to pay a $200 million fine for its role in a criminal price-fixing and bid-rigging conspiracy involving the sale of parts to automobile manufacturers. This is an active and ongoing investigation. Also in the criminal enforcement area, the division charged 19 individuals and one corporation in connection with its real estate foreclosure auctions matter in northern and eastern California and in southern Alabama, as well as charged three individuals in connection with its tax lien auctions case in New Jersey.
Previously, Pozen was a partner in private practice in Washington, D.C., for 14 years and worked for five years at the Federal Trade Commission as an attorney advisor to two commissioners and as assistant to the Director of the Bureau of Competition.
20 January 2012
US Army Sergeant Major and Former Sergeant Sentenced to Prison for Bribery Conspiracy at Bagram Airfield, AfghanistanRead the Press Release
WASHINGTON – A former sergeant and a sergeant major in the U.S. Army, who were deployed to Bagram Airfield, Afghanistan, were sentenced to 51 months and 31 months in prison, respectively, for their roles in a bribery scheme involving the award of a Department of Defense (DOD) trucking contract, Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division announced.
Former Sergeant Charles O. Finch, 45, of Milalani, Hawaii, was sentenced yesterday by U.S. District Judge Leslie E. Kobayashi in the District of Hawaii to 51 months in prison and three years of supervised release and was ordered to pay $200,000 in restitution to the DOD. Sergeant Major Gary Canteen, 42, of Delaware, was sentenced today by Judge Kobayashi in the District of Hawaii to 31 months in prison and three years of supervised release and was ordered to pay $50,000 in restitution to the U.S. Department of Defense.
In August 2011, on the day they were scheduled to begin trial, Finch and Canteen pleaded guilty for their roles in conspiring to receive a $50,000 bribe from a military contractor in return for the award of a DOD trucking contract. Finch pleaded guilty to one count of conspiracy to commit bribery and one count of bribery and Canteen pleaded guilty to one count of conspiracy to commit bribery.
According to court documents, Finch and Canteen were deployed to Bagram Airfield from January 2004 until January 2005. Both served on the Army’s 725th Logistical Task Force. Finch was responsible for coordinating trucking or “line haul” services to ensure the distribution of all goods destined for U.S. and coalition soldiers throughout Afghanistan. Finch served under Canteen’s command. Finch also participated in evaluating, recommending and facilitating the award of line haul contracts to various military contractors.
According to court documents, in advance of the award of line haul contracts in October 2004, Canteen and Finch agreed to accept a $50,000 bribe from military contractors John and Tahir Ramin and their company, AZ Corporation, in return for Finch’s recommendation and facilitation of the award of a line haul contract to AZ.
On Sept. 27, 2004, $50,000 was sent by designees of the Ramins via wire transfer into a bank account in the name of Da Spot Inc., a t-shirt and souvenir shop in Pearl City, Hawaii, owned by Canteen. Upon receipt of the money, on Oct. 12, 2004, Finch authored a memorandum recommending that AZ receive a line haul contract and the contract was awarded to AZ on Oct. 15, 2004. According to contract documents, the Ramins and AZ ultimately were paid nearly $20 million for services invoiced under this contract.
After the money was received into the Da Spot account, Canteen withdrew his portion in cash and transferred the remainder via bank check to Finch.
As part of his plea agreement, Finch admitted that in addition to the $50,000 bribe from the Ramins and AZ, he also accepted at least $150,000 in additional bribe money from the Ramins and other line haul contractors at Bagram Airfield.
Canteen was the 12th defendant sentenced in this investigation. Major Christopher West, who was in charge of base operations at Bagram during the time that Finch and Canteen were deployed there, was sentenced to 60 months in prison for receiving bribes from military contractors. West’s co-defendants, Robert Moore and Patrick Boyd, were sentenced to 15 months and 40 months in prison, respectively, for their roles in the bribery scheme. Sergeant Sheryl Ayeni was also sentenced to one year in prison for the receipt of $30,000 in return for her official acts as a vendor pay agent at Bagram during this time. Also arising from this investigation, John Mihalczo was sentenced to 15 months in prison for accepting approximately $115,000 in bribes at Bagram between 2003 and 2004.
These cases are being prosecuted by Trial Attorney Mark W. Pletcher of the Fraud Section in the Justice Department’s Criminal Division. The cases were investigated by the Department of the Army, Criminal Investigations Division; the Defense Criminal Investigative Service; and the Department of the Air Force, Office of Special Investigations. Assistance was provided by the Office of International Affairs in the Justice Department’s Criminal Division and the Special Inspector General for Afghanistan Reconstruction.
Massachusetts Man Pleads Guilty to Conspiracy to Export Military Antennae to Singapore and Hong KongRead the Press Release
WASHINGTON – Rudolf L. Cheung, 57, a resident of Massachusetts, pleaded guilty today in federal court in the District of Columbia to conspiracy to violate the Arms Export Control Act in connection with the unlawful export of 55 military antennae from the United States to Singapore and Hong Kong.
The plea was announced by Lisa Monaco, Assistant Attorney General for National Security; Ronald C. Machen Jr., U.S. Attorney for the District of Columbia; John Morton, Director of the Department of Homeland Security’s U.S. Immigration and Customs Enforcement (ICE); Mark Giuliano, Executive Assistant Director of the FBI’s National Security Branch; and Eric L. Hirschhorn, Under Secretary for Industry and Security at the Commerce Department.
Cheung serves as the head of the Research & Development Department at a private company that manufactures antennae. Over the past 17 years, he has designed or supervised the development of a full library of antennae made by the firm, many of which have military applications and are used by defense contractors. Some of Cheung’s inventions are used in the U.S. space program.
According to court documents filed in the case, in June 2006, a company in Singapore sent an inquiry to the firm that employs Cheung seeking a quotation for two types of antennae that are classified by the U.S. government as defense articles and may not be exported without a license or approval from the State Department. After receiving the query, the export compliance officer at Cheung’s firm advised the firm in Singapore that neither antenna could be exported unless they filled out a U.S. government form attesting that the goods would not be transferred. The firm in Singapore refused, and the order was stopped.
After learning that the export compliance officer at his company had blocked the export, Cheung admitted that he discussed with an individual outside his company (co-conspirator C) a plan to bypass the export controls at his company and arrange for the antennae to be exported to Singapore through co-conspirator C. Under the plan, co-conspirator C, who operated his own company in Massachusetts, would purchase these goods from Cheung’s company and then export them on his own to the firm in Singapore, with Cheung’s knowledge.
Subsequently, co-conspirator C contacted the firm in Singapore and offered to broker the deal with Cheung’s company. Co-conspirator C then negotiated the purchase of the antennae with employees of the firm in Singapore and, later, with another company called Corezing International in Singapore. Between July and September 2007, co-conspirator C purchased 55 military antennae from Cheung’s company, which he then exported to Corezing addresses in both Singapore and Hong Kong.
According to court documents, Cheung was aware that the purchases by Co-conspirator C were intended for export from the United States and that these exports had previously been blocked by his export compliance manager. Yet Cheung took no action to stop the sale of these antennae from his company or their subsequent export from the United States, even though he knew a license was required for such exports. Cheung neither sought nor obtained any license from the State Department to export these items outside the United States.
At sentencing, Cheung faces a maximum potential sentence of five years in prison, a fine of $250,000 and a 3-year term of supervised release.
Corezing, based in Singapore, has been charged in a separate indictment in the District of Columbia in connection with the export of these particular military antennae to Singapore and Hong Kong. Corezing and its principals have also been charged, and the United States is seeking their extradition, in connection with the export of 6,000 radio frequency modules from the United States to Iran via Singapore, some of which were later found in improvised explosive devices in Iraq.
This investigation was jointly conducted by ICE agents in Boston and Los Angeles; FBI agents in Minneapolis; and Department of Commerce, Bureau of Industry and Security agents in Chicago and Boston. Substantial assistance was provided by the U.S. Department of Defense, U.S. Customs and Border Protection and the State Department’s Directorate of Defense Trade Controls.
The prosecution is being handled by Assistant U.S. Attorneys Anthony Asuncion and John W. Borchert of the U.S. Attorney’s Office for the District of Columbia; and Trial Attorneys Jonathan C. Poling and Richard S. Scott of the Counterespionage Section of the Justice Department’s National Security Division.
Individuals Plead Guilty in Two Detroit Medicare Fraud CasesRead the Press Release
WASHINGTON – Four individuals pleaded guilty today in Detroit for their roles in a $14 million Medicare fraud scheme. In a separate case, the owner of a Detroit psychotherapy clinic also pleaded guilty today for his role in a $3 million Medicare fraud scheme.
The guilty pleas were announced by the Department of Justice, the FBI and the Department of Health and Human Services (HHS).
Curtis Mallory, 38, Theodore Haile, 33, Maira Suleman, 31, and John Thomas, 33, each pleaded guilty before U.S. District Judge Denise Page Hood of the Eastern District of Michigan to one count of conspiracy to commit health care fraud. Gerald R. Funderburg Jr., 32, pleaded before U.S. District Judge Stephen Murphy in the Eastern District of Michigan to one count of health care fraud.
According to court documents, Mallory, Haile, Suleman and Thomas participated in a fraud scheme at two Oakland County, Mich., home health agencies, Patient Choice Home Care Inc. and All American Home Care Inc. Mallory and Haile were patient recruiters for the home health agencies and admitted to paying kickbacks to Medicare beneficiaries in exchange for the beneficiaries’ Medicare information and signatures on therapy documents. The owners and operators of Patient Choice and All American paid Mallory and Haile for each patient they recruited, and then billed Medicare for physical therapy services that were medically unnecessary and never provided.
Thomas was a physical therapist for Patient Choice and All American and admitted that he was paid to fabricate therapy documents at the home health agencies for patients who did not receive and/or did not need the services billed by the agencies to Medicare. According to court documents, Suleman was the office manager at Patient Choice. Suleman admitted that she oversaw data entry at Patient Choice and designed various systems to facilitate the entry of false billing data into electronic databases used to bill Medicare. Suleman also admitted that she worked with recruiters and physical therapists to collect and maintain pre-signed visit forms used by the therapists to fabricate false therapy visit documents.
According to court documents in the separate case against Funderberg, from November 2006 to April 2011, Funderberg knowingly used the Medicare information of approximately 476 beneficiaries, without their consent, to bill Medicare for psychotherapy services purportedly rendered by his company, Funderburg Clinical and Community Services Inc. (FCCS). These services were medically unnecessary and/or were never provided. To implement the scheme, Funderburg admitted that he obtained the Medicare information of licensed social workers without their knowledge and used this information at FCCS to claim that these social workers provided individual and group psychotherapy sessions.
Funderburg admitted that he caused FCCS to submit approximately 4,658 claims to Medicare, totaling approximately $3.3 million, for psychotherapy and related services that were not provided and/or were not medically necessary.
Sentencing for Mallory, Haile, Suleman and Thomas is scheduled for April 19, 2012. Sentencing for Funderberg is scheduled for June 8, 2012. Each defendant faces a maximum penalty of 10 years in prison and a $250,000 fine.
Today’s pleas were 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 (HHS-OIG) Chicago Regional Office.
The cases are being prosecuted by Assistant Chief Gejaa T. Gobena and Trial Attorney William Kanellis of the Criminal Division’s Fraud Section. The cases were investigated by the FBI and HHS-OIG, and were brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan.
Since their inception in March 2007, the strike force operations in nine districts have charged more than 1,160 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.
Colorado Resident Pleads Guilty to Defrauding Investors in Texas Real Estate SchemeRead the Press Release
WASHINGTON – The owner and president of Evans Real Estate Group LLC and a property manager and organizer of real estate investment funds pleaded guilty today for his role in defrauding investors in real estate investment funds that invested in the acquisition, renovation and continued operation of existing apartment complexes in Texas, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.
Thomas B. Evans, 47, of Centennial, Colo., pleaded guilty before U.S. District Judge Christine M. Arguello in Denver to one count of conspiracy to commit mail and wire fraud. Evans was charged in a criminal information filed on Nov. 18, 2011.
According to plea documents, from at least April 2005 until April 2007, Evans and his co-conspirator engaged in a scheme to defraud investors in the Garden Stone Apartments LP; Ventana Apartments LP; and Aspen Chase Investments LP real estate investment funds, which were established to acquire, renovate and operate existing apartment complexes in Austin, Dallas and San Antonio, Texas. Upon completion of the renovation of the complexes, they were to be sold for a profit.
According to court documents, Evans and his co-conspirator misappropriated project funds; prepared monthly false financial statements for the projects that were sent to investors and banks and other lending institutions; prepared quarterly letters to investors misrepresenting the progress of apartment renovations and occupancy rates; and prepared falsified rent rolls to banks and lending institutions. When a receiver assumed operation of the properties in April 2007, Evans and his co-conspirator provided access to their electronic accounting system, including falsified financial statements, without informing the receiver of the falsity of the information therein. According to the plea agreement, the government asserts that the fraud perpetrated by Evans and his co-conspirator caused investors to lose approximately $9.7 million.
At sentencing, scheduled for Aug. 14, 2012, Evans faces a maximum prison term of 30 years. In addition, the criminal information seeks forfeiture.
The case is being prosecuted by Trial Attorney Nicole H. Sprinzen of the Criminal Division’s Fraud Section. The case is being investigated by the U.S. Postal Inspection Service.
This prosecution is part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information about the task force visit: www.stopfraud.gov .
Co-Founder of NinjaVideo.net Website Sentenced in Virginia to 14 Months in Prison for Criminal Copyright ConspiracyRead the Press Release
WASHINGTON – Matthew David Howard Smith, 24, of Raleigh, N.C., was sentenced today in Alexandria, Va., to 14 months in prison for his role in founding NinjaVideo.net, a website that provided millions of users with the ability to illegally download high-quality copies of copyright-protected movies and television programs, announced the Department of Justice and U.S. Immigration and Customs Enforcement (ICE).
At sentencing, U.S. District Judge Anthony J. Trenga also ordered Smith to serve two years of supervised release following his prison term, to pay $172,387 and to forfeit to the United States five financial accounts and various computer equipment involved in the crimes. Smith pleaded guilty on Sept. 23, 2011, to conspiracy and criminal copyright infringement.
Smith was one of the founders of the NinjaVideo.net website, which operated from February 2008 until it was shut down by law enforcement in June 2010. NinjaVideo.net provided millions of website visitors with the ability to illegally download infringing copies of copyright-protected movies and television programs in high-quality formats. Many of the movies offered on the website were still playing in theaters, while others had not yet been released. According to court documents, Smith designed many operational elements of the website, including an “applet” that was required to view infringing content on the NinjaVideo.net website. Smith admitted that he made agreements with online advertising entities to generate income for the website, and he and his co-conspirators collected more than $500,000 during the website’s two-and-a-half years of operation. Smith kept $172,387 of the illegal proceeds for himself.
On Sept. 9, 2011, Smith was indicted along with four of the other top administrators of NinjaVideo.net. Co-defendant Hana Amal Beshara was sentenced on Jan. 6, 2012, to 22 months in prison and ordered to repay nearly $210,000 for her role as another co-founder of NinjaVideo.net. Two additional co-defendants are awaiting sentencing. An arrest warrant remains outstanding for the fourth indicted co-defendant, Zoi Mertzanis of Greece. Another co-founder of NinjaVideo.net who was charged separately has also pleaded guilty.
The case was prosecuted by the U.S. Attorney’s Office for the Eastern District of Virginia and the Criminal Division’s Computer Crime & Intellectual Property Section.
The investigation was conducted by the ICE’s Homeland Security Investigations-led National Intellectual Property Rights Coordination Center (IPR Center). The IPR Center is one of the U.S. government’s key weapons in the fight against criminal counterfeiting and piracy. As a task force, the IPR Center uses the expertise of its 19 member agencies to share information, develop initiatives, coordinate enforcement actions and conduct investigations related to IP theft. Through this strategic interagency partnership, the IPR Center protects the public's health and safety, the U.S. economy and the war fighters.
To report IP theft or to learn more about the IPR Center, visit www.IPRCenter.gov.
This case is part of efforts being undertaken by the Department of Justice Task Force on Intellectual Property (IP Task Force) to stop the theft of intellectual property. Attorney General Eric Holder created the IP Task Force to combat the growing number of domestic and international intellectual property crimes, protect the health and safety of American consumers and safeguard the nation’s economic security against those who seek to profit illegally from American creativity, innovation and hard work. The IP Task Force seeks to strengthen intellectual property rights protection through heightened criminal and civil enforcement, greater coordination among federal, state and local law enforcement partners, and increased focus on international enforcement efforts, including reinforcing relationships with key foreign partners and U.S. industry leaders. To learn more about the IP Task Force, go to www.justice.gov/dag/iptaskforce.
19 January 2012
Patient Recruiter Pleads Guilty in Health Care Fraud SchemeRead the Press Release
WASHINGTON – A Baton Rouge, La.-area resident pleaded guilty today for her role in a Medicare fraud scheme involving fraudulent claims for medically unnecessary health care equipment, announced the Department of Justice, the FBI, the Department of Health and Human Services (HHS) and the Louisiana State Attorney General’s Office.
Karen Rayburn, 47, 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.
Rayburn admitted that she worked as a recruiter for Healthcare 1 LLC and Medical 1 Patient Services LLC, Louisiana-based companies that fraudulently billed medical equipment to the Medicare program from 2004 to 2009. She and other recruiters were hired to obtain prescriptions for medical equipment such as leg braces, arm braces, power wheel chairs and wheel chair accessories. Rayburn obtained information from Medicare beneficiaries and approached their physicians to request prescriptions for medical equipment. Rayburn admitted that when patients’ physicians were unwilling to provide medically unnecessary prescriptions, she and other recruiters asked unrelated physicians to write prescriptions based on cursory examinations of the patients. Another technique they used was to generate photocopied forms with reproduced physicians’ signatures. These prescriptions were then used to submit fraudulent claims to the Medicare program.
From 2004 to 2009, Medicare was billed $6.53 million for the beneficiaries that Rayburn provided as part of this fraudulent scheme.
Rayburn faces 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.
Manalapan, N.J., Woman Charged with Allegedly Sexually Abusing Minor Girl and Streaming Assault Live over the InternetRead the Press Release
WASHINGTON – A Manalapan, N.J., woman was charged today for allegedly sexually abusing a five-year-old girl on more than one occasion and streaming footage of a sexual assault over the Internet, Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and New Jersey U.S. Attorney Paul J. Fishman announced.
A complaint filed today in the District of New Jersey charges Jennifer Mahoney, 32, with two counts of sexual exploitation of a child. She is currently in state custody on related charges and will appear in Trenton, N.J., federal court before U.S. Magistrate Judge Bongiovanni on Jan. 30, 2012.
“Ms. Mahoney is charged with committing heinous acts of sexual violence against a young child and then streaming her crimes over the Internet,” said Assistant Attorney General Breuer. “These allegations are shocking in their depravity. When individuals exploit children for any purpose, we must act swiftly and decisively to hold them accountable.”
“According to the complaint, Jennifer Mahoney sexually assaulted a child, cavalierly recording and sharing the girl’s humiliation over video chat,” said U.S. Attorney Fishman. “We cannot forget that for every image or video of what we call ‘child pornography,’ a child will carry the lifelong scars of rape and abuse recorded for others’ gratification. Whether making, distributing or viewing child pornography, the depraved appetites of offenders create a market for the destruction of a child’s innocence.”
“The sexual exploitation of children continues to be a primary law enforcement concern, and this case is among the most egregious in that it involves manufacture and dissemination elements, which is the engine that drives the problem,” said Michael B. Ward, Special Agent in Charge of the FBI’s Newark Field Office. “Conduct like this can forever shatter the innocence of a 5-year-old child, allegedly for the pleasure of Jennifer Mahoney and an Internet partner. The impact on the victim, family and others is immeasurable.”
According to the complaint filed today in Trenton federal court, special agents of the FBI and other law enforcement officials executed a search warrant at Mahoney’s home in Manalapan on Dec. 13, 2011. Law enforcement had previously seized a computer during a search of a man’s Texas home. Subsequent to both searches, law enforcement recovered from the Texas man’s computer three videos of Mahoney having sexual contact with a child.
According to court documents, two of the videos are from a video chat session with the Texas man in which Mahoney allegedly live-streamed an assault of the child. The video shows Mahoney molesting the child while laughing and talking to someone, apparently the party on the other end of the chat session. The complaint alleges that the third video depicts Mahoney sexually abusing the child in a bathtub while filming it with her phone.
Each charge of child sexual exploitation carries a mandatory minimum penalty of
15 years in prison, a maximum potential penalty of 30 years in prison and a $250,000 fine.The case was investigated by FBI Cyber Crimes Task Force in New Jersey under the direction of Special Agent in Charge Michael B. Ward in Newark and agents of the FBI’s San Antonio Division. The Monmouth County, N.J., Prosecutor’s Office, under the direction of Prosecutor Peter E. Warshaw Jr., also assisted in the 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 as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
The case is being prosecuted by Assistant U.S. Attorney John E. Clabby of the U.S. Attorney’s Office Criminal Division in Trenton and CEOS Trial Attorney Keith A. Becker of the Justice Department’s Criminal Division.
The charges and allegations contained in the complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
Justice Department Charges Leaders of Megaupload<br /> with Widespread Online Copyright InfringementRead the Press Release
WASHINGTON – Seven individuals and two corporations have been charged in the United States with running an international organized criminal enterprise allegedly responsible for massive worldwide online piracy of numerous types of copyrighted works, through Megaupload.com and other related sites, generating more than $175 million in criminal proceeds and causing more than half a billion dollars in harm to copyright owners, the U.S. Justice Department and FBI announced today.
This action is among the largest criminal copyright cases ever brought by the United States and directly targets the misuse of a public content storage and distribution site to commit and facilitate intellectual property crime.
The individuals and two corporations – Megaupload Limited and Vestor Limited – were indicted by a grand jury in the Eastern District of Virginia on Jan. 5, 2012, and charged with engaging in a racketeering conspiracy, conspiring to commit copyright infringement, conspiring to commit money laundering and two substantive counts of criminal copyright infringement. The individuals each face a maximum penalty of 20 years in prison on the charge of conspiracy to commit racketeering, five years in prison on the charge of conspiracy to commit copyright infringement, 20 years in prison on the charge of conspiracy to commit money laundering and five years in prison on each of the substantive charges of criminal copyright infringement.
The indictment alleges that the criminal enterprise is led by Kim Dotcom, aka Kim Schmitz and Kim Tim Jim Vestor, 37, a resident of both Hong Kong and New Zealand. Dotcom founded Megaupload Limited and is the director and sole shareholder of Vestor Limited, which has been used to hold his ownership interests in the Mega-affiliated sites.
In addition, the following alleged members of the Mega conspiracy were charged in the indictment:
- Finn Batato, 38, a citizen and resident of Germany, who is the chief marketing officer;
- Julius Bencko, 35, a citizen and resident of Slovakia, who is the graphic designer;
- Sven Echternach, 39, a citizen and resident of Germany, who is the head of business development;
- Mathias Ortmann, 40, a citizen of Germany and resident of both Germany and Hong Kong, who is the chief technical officer, co-founder and director;
- Andrus Nomm, 32, a citizen of Estonia and resident of both Turkey and Estonia, who is a software programmer and head of the development software division;
- Bram van der Kolk, aka Bramos, 29, a Dutch citizen and resident of both the Netherlands and New Zealand, who oversees programming and the underlying network structure for the Mega conspiracy websites.
Dotcom, Batato, Ortmann and van der Kolk were arrested today in Auckland, New Zealand, by New Zealand authorities, who executed provisional arrest warrants requested by the United States. Bencko, Echternach and Nomm remain at large. Today, law enforcement also executed more than 20 search warrants in the United States and eight countries, seized approximately $50 million in assets and targeted sites where Megaupload has servers in Ashburn, Va., Washington, D.C., the Netherlands and Canada. In addition, the U.S. District Court in Alexandria, Va., ordered the seizure of 18 domain names associated with the alleged Mega conspiracy.
According to the indictment, for more than five years the conspiracy has operated websites that unlawfully reproduce and distribute infringing copies of copyrighted works, including movies – often before their theatrical release – music, television programs, electronic books, and business and entertainment software on a massive scale. The conspirators’ content hosting site, Megaupload.com, is advertised as having more than one billion visits to the site, more than 150 million registered users, 50 million daily visitors and accounting for four percent of the total traffic on the Internet. The estimated harm caused by the conspiracy’s criminal conduct to copyright holders is well in excess of $500 million. The conspirators allegedly earned more than $175 million in illegal profits through advertising revenue and selling premium memberships.
The indictment states that the conspirators conducted their illegal operation using a business model expressly designed to promote uploading of the most popular copyrighted works for many millions of users to download. The indictment alleges that the site was structured to discourage the vast majority of its users from using Megaupload for long-term or personal storage by automatically deleting content that was not regularly downloaded. The conspirators further allegedly offered a rewards program that would provide users with financial incentives to upload popular content and drive web traffic to the site, often through user-generated websites known as linking sites. The conspirators allegedly paid users whom they specifically knew uploaded infringing content and publicized their links to users throughout the world.
In addition, by actively supporting the use of third-party linking sites to publicize infringing content, the conspirators did not need to publicize such content on the Megaupload site. Instead, the indictment alleges that the conspirators manipulated the perception of content available on their servers by not providing a public search function on the Megaupload site and by not including popular infringing content on the publicly available lists of top content downloaded by its users.
As alleged in the indictment, the conspirators failed to terminate accounts of users with known copyright infringement, selectively complied with their obligations to remove copyrighted materials from their servers and deliberately misrepresented to copyright holders that they had removed infringing content. For example, when notified by a rights holder that a file contained infringing content, the indictment alleges that the conspirators would disable only a single link to the file, deliberately and deceptively leaving the infringing content in place to make it seamlessly available to millions of users to access through any one of the many duplicate links available for that file.
The indictment charges the defendants with conspiring to launder money by paying users through the sites’ uploader reward program and paying companies to host the infringing content.
The case is being prosecuted by the U.S. Attorney’s Office for the Eastern District of Virginia and the Computer Crime & Intellectual Property Section in the Justice Department’s Criminal Division. The Criminal Division’s Office of International Affairs, Organized Crime and Gang Section, and Asset Forfeiture and Money Laundering Section also assisted with this case.
The investigation was initiated and led by the FBI at the National Intellectual Property Rights Coordination Center (IPR Center), with assistance from U.S. Immigration and Customs Enforcement’s Homeland Security Investigations. Substantial and critical assistance was provided by the New Zealand Police, the Organised and Financial Crime Agency of New Zealand (OFCANZ), the Crown Law Office of New Zealand and the Office of the Solicitor General for New Zealand; Hong Kong Customs and the Hong Kong Department of Justice; the Netherlands Police Agency and the Public Prosecutor’s Office for Serious Fraud and Environmental Crime in Rotterdam; London’s Metropolitan Police Service; Germany’s Bundeskriminalamt and the German Public Prosecutors; and the Royal Canadian Mounted Police – Greater Toronto Area (GTA) Federal Enforcement Section and the Integrated Technological Crime Unit and the Canadian Department of Justice’s International Assistance Group. Authorities in the United Kingdom, Australia and the Philippines also provided assistance.
This case is part of efforts being undertaken by the Department of Justice Task Force on Intellectual Property (IP Task Force) to stop the theft of intellectual property. Attorney General Eric Holder created the IP Task Force to combat the growing number of domestic and international intellectual property crimes, protect the health and safety of American consumers, and safeguard the nation’s economic security against those who seek to profit illegally from American creativity, innovation and hard work. The IP Task Force seeks to strengthen intellectual property rights protection through heightened criminal and civil enforcement, greater coordination among federal, state and local law enforcement partners, and increased focus on international enforcement efforts, including reinforcing relationships with key foreign partners and U.S. industry leaders. To learn more about the IP Task Force, go to www.justice.gov/dag/iptaskforce .
Four Men Indicted in Houston on Federal Hate Crime Charges Related to the Assault of African-American ManRead the Press Release
WASHINGTON – The Justice Department announced today that a federal grand jury in Houston has indicted Charles Cannon, 26; Michael McLaughlin, 40; Brian Kerstetter, 32; and Joseph Staggs, 49, on federal hate crime charges related to a racially motivated assault of a 29-year-old African-American man.
Cannon, McLaughlin, Kerstetter and Staggs have been charged with one count of violating the Matthew Shepard and James Byrd Jr. Hate Crimes Prevention Act that was enacted in October 2009. The indictment alleges that on Aug.13, 2011, the defendants approached and attacked the victim, an African-American male, while he was waiting at a bus stop in downtown Houston. It is alleged that at least one of the defendants used racial slurs and all four defendants surrounded and attacked the victim by punching and kicking him about the face, head and body. Three defendants had tattoos known to reflect an affiliation with white supremacist gangs. All four subjects were arrested at the scene after a 911 call.
If convicted, the defendants face a maximum penalty of 10 years in prison.
This case is being investigated by the Houston Division of the FBI in cooperation with the Houston Police Department and the Harris County Sheriff’s Office. It is being prosecuted by Trial Attorney Saeed Mody and Special Litigation Counsel Gerard Hogan of the Civil Rights Division of the Department of Justice. Assistance was also provided by the Harris County District Attorney’s Office.
An indictment is merely an accusation, and the defendants are presumed innocent unless proven guilty.
18 January 2012
Third Springfield, Massachusetts, Man Sentenced to Prison for Arson of African-American ChurchRead the Press Release
Thomas Gleason, 24, was sentenced today in federal court for his role in the arson of the predominately African-American Macedonia Church of God in Christ just hours after the election of President Barack Obama. Gleason was sentenced by U.S. District Judge Michael A. Ponsor to 54 months in prison to be followed by three years of supervised release. Gleason was also ordered to pay over $1.7 million in restitution, including $123,570 to the Macedonia Church of God in Christ.
In June 2010, Gleason pleaded guilty to conspiracy against civil rights, damage or destruction of religious property, and use of fire to commit a felony. Gleason’s co-conspirators, Benjamin Haskell and Michael Jacques, were previously sentenced to nine years in prison and 14 years in prison, respectively.
According to evidence presented in court, in the early morning hours of Nov. 5, 2008, within hours of President Obama being elected, Gleasonand his co-conspirators burned down the Macedonia Church of God in Christ’s newly-constructed building where religious services were to be held for its predominantly African-American congregation. The building was approximately 75 percent completed at the time of the fire, which destroyed nearly the entire structure, leaving only the metal superstructure and a small portion of the front corner intact.
“Attempting to destroy a place of worship not only hurts those who congregate there, but affects the entire community,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Justice Department will vigorously prosecute acts such as this one that interfere with a person’s right to worship.”
“The parishioners of the Macedonia Church of God in Christ deserve to have some sense of closure to this matter,” said U.S. Attorney Carmen M. Ortiz for the District of Massachusetts.“ I have the utmost respect for Bishop Robinson and his parishioners who have endured so much pain from these crimes, but have managed to maintain unwavering faith and dignity. I truly hope that justice has provided them with a sense of peace as they resume their prayers in their beautiful new church.”
The case was prosecuted by Assistant U.S. Attorneys Paul H. Smyth and Kevin O’Regan of the U.S. Attorney Springfield Office and Nicole Lee Ndumele, Trial Attorney in the Department of Justice’s Civil Rights Division.
Justice Department Asks Federal Court to Shut Down Louisiana Tax PreparerRead the Press Release
The United States has sued Larry Carnell Dixon Sr., seeking to bar him and his business, Dixon’s Tax Service, from preparing federal tax returns for others, the Justice Department announced today.
The civil injunction complaint, filed in the U.S. District Court for the Middle District of Louisiana, alleges that Dixon, of Zachary, La., prepares federal income tax returns for customers claiming fabricated and inflated business expense deductions for existing or fictitious businesses. The lawsuit alleges that Dixon fraudulently uses these fabricated business expenses to decrease his customers’ tax liabilities or increase their refunds, including refunds arising from the earned income tax credit.
According to the complaint, an Internal Revenue Service (IRS) investigation revealed that 194 of the 198 income tax returns prepared by Dixon’s Tax Service and audited by the IRS resulted in tax deficiencies. The lawsuit alleges that the tax harm caused by Dixon’s misconduct could be as much as $39 million.
The complaint also asks the court to require Dixon to provide the government with a list of all customers for whom Dixon’s Tax Service prepared returns after Jan. 1, 2006.
In the past decade, the Justice Department’s Tax Division has obtained hundreds of injunctions to stop the promotion of tax-fraud schemes and the preparation of fraudulent returns. Information about these cases is available on the Justice Department website.
Complaint for Permanent Injunction (PDF)
Justice Department Announces Grant Solicitation for Funding to Federally-Recognized Tribes and Tribal ConsortiaRead the Press Release
WASHINGTON – The U.S. Department of Justice today announced that the comprehensive grant solicitation for funding to support improvements to public safety, victim services and crime prevention in American Indian and Alaska Native communities will be posted at 3:00 p.m. EST today at www.justice.gov/tribal/open-sol.html.
All materials will be accessible today for review. The Community Partnerships Grants Management System will begin accepting electronic applications on Monday, Jan. 23, 2012.
“We are committed to helping strengthen and sustain safe and healthy American Indian and Alaska Native communities with a funding process that is responsive and coordinated,” said Associate Attorney General Tom Perrelli. “This effort to streamline the grant application process, with multiple purpose areas, offers tribes and tribal consortia an opportunity to develop a comprehensive and community-based approach to public safety and support for victims.”
A total of more than $101.4 million is available through the Fiscal Year (FY) 2012 Coordinated Tribal Assistance Solicitation (CTAS) and is administered by the Office of Justice Programs (OJP), the Office of Community Oriented Policing Services (COPS) and the Office on Violence Against Women (OVW). The funding can be used to conduct comprehensive planning, enhance law enforcement, bolster justice systems, support and enhance tribal efforts to prevent and control delinquency and strengthen the juvenile justice system, prevent youth substance abuse, serve victims of crime and support other efforts to combat crimes. To view the fact sheet on the FY 2012 CTAS, visit www.justice.gov//tribal/ctas2012/ctas-factsheet.pdf.
The updated FY 2012 CTAS reflects improvements and refinements from earlier versions. Feedback was provided to the department during tribal consultations and listening sessions, from a specially developed assessment tool about the application experience and from written comments from applicants and grantees.
That feedback was incorporated in the following changes to the FY 2012 CTAS:
- a new strategic planning pilot program;
- a question and answer template option;
- adjustment to purpose areas to allow for greater flexibility in funding requests; and
- a request for data on tribe demographics to better capture and describe the unique characteristics of each tribe.
For the FY2012 CTAS, a tribe or tribal consortium will submit a single application and select from 10 competitive grant programs referred to as purpose areas. This approach allows the department’s grant-making components to consider the totality of a tribal community’s overall public safety needs. The deadline for submitting applications in response to this grant announcement is 9:00 p.m. EST on Wednesday, April 18, 2012.
The 10 purpose areas are:
- Children’s Justice Act Partnerships for Indian Communities
- Comprehensive Planning Demonstration Program
- Comprehensive Tribal Victim Assistance Program
- Corrections and Correctional Alternatives
- Justice Systems and Alcohol and Substance Abuse
- Juvenile Justice
- Public Safety and Community Policing
- Tribal Governments Program
- Tribal Sexual Assault Services Program
- Tribal Youth Program
Tribes or tribal consortia may also be eligible for non-tribal government-specific federal grant programs and are encouraged to explore other funding opportunities for which they may be eligible. Additional funding information may be found at www.grants.gov or the websites of individual agencies.
Today’s announcement is part of the Justice Department’s ongoing initiative to increase engagement, coordination and action on public safety in tribal communities.
Former Oklahoma Detention Officer Indicted for Assaulting an InmateRead the Press Release
A federal grand jury in Muskogee, Okla., has indicted Jerrod Porter Lane, 26, former detention officer at the Muskogee County Jail (MCJ) in Oklahoma, on six charges related to two separate assaults of an inmate housed at MCJ and the subsequent attempts to cover up his behavior, all during October 2011.
Lane is charged with violating the civil rights of the victim for spraying him with Oleoresin Capsicum (OC or pepper spray) on Oct.1, 2011, while the victim was fully restrained. Lane is also charged with falsifying both his own incident report and the report of a fellow jailer when Lane falsely wrote that the victim was physically resisting and that the victim was not restrained at the time Lane dispensed his pepper spray.
Lane is also charged with conspiring with Phillip Oliver, an inmate at MCJ, to assault that same victim on Oct. 6, 2011. Lane is further charged with once again violating the civil rights of the victim when he directed inmate Phillip Oliver to go into the victim’s cell and assault him. Specifically, Lane and Oliver agreed that Oliver would assault the victim because the victim was making verbal comments and noise while restrained inside a cell at MCJ. The indictment further alleges that Lane told Oliver to “go in there and do what you gotta do,” promising to cover for Oliver if he later got into trouble for assaulting the victim. The indictment alleges that thereafter, Lane remotely popped open the victim’s cell door, allowing Oliver to assault the victim, who was not resisting or posing a threat to anyone.
Lane faces a maximum penalty of 10 years in prison for both the conspiracy and civil rights offenses. He faces a maximum penalty of 20 years in prison for falsification of incident reports. Finally, Lane faces a maximum penalty of five years in prison for making materially false statements to the FBI.
An indictment is merely an accusation, and the defendant is presumed innocent unless proven guilty.
Inmate Oliver pleaded guilty last week in U.S. District Court in Muskogee, Okla., to one count of conspiracy for his role in conspiring with Jerrod Lane to assault the victim.
This case is being investigated by the Muskogee Resident Agency of the Oklahoma City Division of the FBI and is being prosecuted by Assistant U.S. Attorney Ryan M. Roberts for the Eastern District of Oklahoma and Trial Attorney Fara Gold of the Civil Rights Division of the U.S. Department of Justice.
Connecticut Resident Admits Role in Decade-long Mortgage Fraud Scheme in BridgeportRead the Press Release
Robert Ilunga, 48, of Naugatuck, Conn., waived his right to indictment and pleaded guilty today before U.S. Magistrate Judge Donna F. Martinez in Hartford, Conn., to one count of conspiracy to commit wire fraud and one count of conspiracy to commit money laundering, announced David B. Fein, U.S. Attorney for the District of Connecticut. The charges stem from Ilunga’s participation in a multimillion-dollar mortgage fraud scheme that involved more than 40 properties located in Bridgeport, Conn.
According to court documents and statements made in court, Ilunga was involved in the operation of Waikele Properties Corp., a real estate company with offices in Garden City, N.Y. From approximately 2001 to August 2011, Ilunga conspired with New York residents Winston Shillingford and Marleen Shillingford, and others, to obtain fraudulent mortgages for the purchase of more than 40 multi-family properties in Bridgeport.
As part of the scheme, Ilunga, the Shillingfords and others purchased existing multi-family houses and vacant parcels of land, and erected new houses on them to sell. The co-conspirators recruited individuals to purchase the properties, acted as the buyers’ real estate agent and assisted the buyers in applying for residential mortgage loans to purchase the houses. Ilunga’s co-conspirators then prepared loan applications for the buyers that included fraudulent information concerning, among other things, the buyers’ employment, income, assets and liabilities, previous property ownership and intention to make the properties their primary residences. The co-conspirators also provided false and fraudulent supporting documentation, including false letters from fictitious employers, false earnings statements and fraudulent bank records. Some of those loan applications were submitted to banks that received funding under the Troubled Asset Relief Program.
After the loans were approved, the illicit proceeds of the scheme were wired into the Waikele Properties bank account and then transferred to Ilunga, the Shillingfords and others. Some of the proceeds also were used to continue the mortgage fraud scheme.
Contrary to the representations made on the loan applications, several straw purchasers never occupied the houses as their primary residences and subsequently defaulted on the loans. As a result of the scheme, mortgage lenders have suffered more than $7 million in losses.
Ilunga is scheduled to be sentenced by U.S. District Judge Robert N. Chatigny on April 5, 2012, at which time Ilunga faces a maximum term of 40 years in prison. The government also is seeking the forfeiture of 20 properties located in Bridgeport and $26,372.32 that was seized from a bank account held by Waikele Properties.
Ilunga is detained pending sentencing.
Winston and Marleen Shillingford have pleaded guilty to the same charges and await sentencing.
This ongoing investigation is being conducted by the Internal Revenue Service – Criminal Investigation (IRS-CI), the FBI, the U.S. Department of Housing and Urban Development’s Office of Inspector General (HUD-OIG) and the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), which investigates fraud, waste and abuse in connection with TARP.
This case is being prosecuted by Assistant U.S. Attorneys Douglas P. Morabito and David T. Huang.
In July 2009, the U.S. Attorney’s Office and the FBI announced the formation of the Connecticut Mortgage Fraud Task Force to investigate and prosecute mortgage fraud cases and related financial crimes occurring in Connecticut. Citizens are encouraged to report any suspected mortgage fraud activity by calling 203-333-3512 and requesting the Connecticut Mortgage Fraud Task Force, or by sending an email to [email protected] .
The Connecticut Mortgage Fraud Task Force includes representatives from the U.S. Attorney’s Office; FBI; IRS-CI; U.S. Postal Inspection Service; HUD-OIG; Federal Deposit Insurance Corporation, Office of Inspector General; SIGTARP; and state of Connecticut Department of Banking.
This case was brought in coordination with the President’s Financial Fraud Enforcement Task Force, which was established to wage an aggressive and coordinated effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
To report financial fraud crimes, and to learn more about the President’s Financial Fraud Enforcement Task Force, please visit www.stopfraud.gov .
To report suspected illicit activity involving TARP, dial the SIGTARP Hotline at 1-877-SIG-2009 (1-877-744-2009).
Barrio Azteca Gang Member Pleads Guilty in Texas to Racketeering ConspiracyRead the Press Release
WASHINGTON – A Barrio Azteca (BA) gang member 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).
Ricardo Gonzalez, 44, aka “Cuate,” of El Paso, Texas, pleaded guilty before U.S. District Magistrate Judge Norbert J. 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, Gonzalez 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. The gang has a militaristic command structure and includes captains, lieutenants, sergeants, soldiers and associates – all with the purpose of maintaining power and enriching its members and associates through drug trafficking, money laundering, extortion, intimidation, violence, threats of violence and murder.
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 are also allegedly reinvested into the organization to purchase drugs, guns and ammunition.
According to information presented in court, Gonzalez was a BA member who distributed cocaine, marijuana and heroin on the west side of El Paso. Additionally, he collected extortion fees from drug dealers operating on BA turf and knew those fees were funnelled to jailed BA leaders.
Thirty-five members and associates of the BA gang, including Gonzalez and 16 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.
Arkansas Man Pleads Guilty to Claiming Fraudulent Tax RefundsRead the Press Release
Philip Butcher pleaded guilty today before U.S. District Judge Patricia Seitz in Miami to filing a false claim for a tax refund, the Justice Department and the Internal Revenue Service (IRS) announced.
Butcher, formerly a resident of Rogers, Ark., admitted that he filed a false 2008 individual income tax return which sought a fraudulent tax refund of $672,781. According to court documents, PMDD Services LLC, an Idaho-based tax preparation firm, prepared the return and filed false IRS Forms 1099-OID with the IRS on Butcher’s behalf. In exchange, Butcher agreed to pay 10 percent of any fraudulent tax refund he received to PMDD Services. Butcher received a fraudulent tax refund of $672,781, paid $67,278 to the principals of PMDD Services, and then filed an amended 2008 individual income tax return, also prepared by PMDD Services, claiming a fraudulent tax refund of $1,456,696.
Butcher faces a maximum potential sentence of 5 years in prison and a $250,000 fine, plus restitution to the Internal Revenue Service.
The indictment against Butcher was originally returned by a grand jury in the Western District of Arkansas. Butcher elected to transfer the case to the Southern District of Florida for his guilty plea and sentencing under Federal Rule of Criminal Procedure 20, which allows a defendant, with the consent of the government, to transfer a case to the district where he is “present” if he states in writing that he intends to plead guilty and be sentenced in that district.
More information about fraud schemes involving Forms 1099-OID is available at the IRS website: www.irs.gov/newsroom/article/0,,id=98129,00.html.
The case was investigated by special agents of IRS-Criminal Investigation and is being prosecuted by Trial Attorneys Jonathan Marx and Jed Silversmith of the Justice Department's Tax Division and by Assistant U.S. Attorney Bertha Mitrani of the Southern District of Florida.Alabama Woman Pleads Guilty to Conspiring to Defraud the United StatesRead the Press Release
The Justice Department and the Internal Revenue Service (IRS) announced that Tracey Fergerson pleaded guilty today before Magistrate Judge Charles S. Coody in Montgomery, Ala., to conspiring to defraud the United States government. Fergerson and a co-defendant were charged by a grand jury in a 22-count indictment that was unsealed on March 30, 2011.
According to the plea agreement, Fergerson participated in a tax fraud scheme that was perpetrated through a tax return preparation business called Fast Tax Cash in Montgomery. From 2005 through 2008, Fergerson recruited customers for Fast Tax Cash and coached them to provide false information in order to fraudulently increase their tax refund amounts. Fergerson also admitted that she improperly obtained personal information, including names and Social Security numbers, and used that personal information to have false tax returns prepared at Fast Tax Cash. Fergerson admitted that she would receive payment for the false refunds that were obtained.
A sentencing date has not yet been set. Fergerson faces a maximum potential sentence of 10 years in prison and fines of up to $250,000.
The case was investigated by the IRS-Criminal Investigation and is being prosecuted by trial attorneys Michael Boteler, Charles M. Edgar Jr. and Michelle M. Petersen of the Justice Department's Tax Division.
Additional information about the Tax Division and its enforcement efforts may be found at www.usdoj.gov/tax .
17 January 2012
Pennsylvania Man Indicted on Child Pornography ChargesRead the Press Release
WASHINGTON – A resident of Washington County, Pa., was indicted today by a federal grand jury in Pittsburgh on charges of possession, production and receipt of materials depicting the sexual exploitation of a minor, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney for the Western District of Pennsylvania David J. Hickton.
Jeffrey W. Herschell, 53, was charged with three counts in a superseding indictment.
According to the superseding indictment, in approximately February 2010, Herschell produced and received files depicting a minor in the Philippines engaging in sexually explicit conduct. Also, on approximately March 14, 2011, Herschell possessed visual depictions of minors engaging in sexually explicit conduct.
Herschell faces a maximum sentence of life in prison and a fine of $750,000.
This case is being prosecuted by Assistant U.S. Attorney Jessica Lieber Smolar of the Western District of Pennsylvania and Trial Attorney Anitha S. Ibrahim of the Child Exploitation and Obscenity Section of the Justice Department’s Criminal Division. Department of Homeland Security, Homeland Security Investigations conducted the investigation leading to the superseding indictment in this case.
An indictment is merely an accusation. A defendant is presumed innocent unless and until proven guilty.
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 United States Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov .
New Jersey Pipe Supply Company and Owner Sentenced for Their Role in Fraud and Bribery Conspiracy in Power Generation IndustryRead the Press Release
WASHINGTON — A New Jersey industrial pipe supply company and its owner were sentenced today for participating in a conspiracy to commit fraud and pay bribes to a purchasing manager at Consolidated Edison of New York (Con Ed) in return for the manager’s efforts to steer contracts to the company, the Department of Justice announced.
Bernard Grobart of New York City was sentenced in U.S. District Court in Manhattan by Judge Paul G. Gardephe to serve 60 months in prison and to pay a $125,000 criminal fine. Teneyck Inc., formerly known as Neill Supply Co. Inc. of Lyndhurst, N.J., was sentenced to pay a $550,000 criminal fine. Grobart and Teneyck were also sentenced to pay $297,000 in restitution, jointly and severally with their co-conspirators, to the victim, Con Ed. The company and its owner pleaded guilty on March 23, 2011, to participating in a conspiracy to defraud Con Ed from approximately November 2003 through approximately August 2008. Grobart also pleaded guilty to an obstruction count for instructing a subordinate employee at the company to delete an electronic document that was subpoenaed by the government.
According to court documents, Grobart and Robert D. Rosenberg, a former sales broker for Neill Supply, paid approximately $297,000 in cash bribes to James M. Woodason, a department manager of the purchasing department at Con Ed. In return, Woodason steered Con Ed industrial pipe supply contracts to Neill Supply by secretly providing Neill Supply with confidential competitor bid information, thereby causing Con Ed to pay higher, non-competitive prices for materials. According to court documents, Grobart also directed an employee of Neill Supply to destroy an electronic document that tallied the bribe payments in order to prevent the production of the document to a federal grand jury.
Con Ed is a regulated utility headquartered in Manhattan. It provides electric service to approximately 3.2 million customers and gas service to approximately 1.1 million customers in New York City and Westchester County, N.Y. Con Ed received more than $10,000 in federal funding each year between 2003 through 2010. Con Ed cooperated with the department’s investigation.
Including Grobart and Neill Supply, a total of four individuals and two companies have been charged as part of this investigation. On Dec. 9, 2011, Woodason was sentenced in U.S. District Court in Manhattan by Judge Denise L. Cote to serve 70 months in prison, to pay a $12,500 criminal fine and to pay approximately $528,000 in restitution, jointly and severally with his co-conspirators, to Con Ed. The remaining defendants are awaiting sentencing.
The charges arose from an ongoing federal antitrust investigation of bid rigging, bribery, fraud and tax-related offenses in the power generation industry. The investigation is being conducted by the Antitrust Division’s New York Field Office, with the assistance of the FBI and the Internal Revenue Service-Criminal Investigation. Anyone with information concerning bid rigging, bribery, tax offenses or fraud in the power generation industry should contact the FBI’s New York Division at 212-384-3720 or the Antitrust Division’s New York Field Office at 212-335-8000, or visit www.justice.gov/atr/contact/newcase.htm.
Miami-Area Resident Pleads Guilty to Participating in $200 Million Medicare Fraud SchemeRead the Press Release
WASHINGTON – A Miami-area resident pleaded guilty today in U.S. District Court in Miami for her role in a Medicare fraud scheme that resulted in the submission of more than $200 million in fraudulent claims to Medicare, announced the Department of Justice, the FBI and the Department of Health and Human Services (HHS).
Sandra Jimenez, 38, admitted to participating in a fraud scheme that was orchestrated by the owners and operators of American Therapeutic Corporation (ATC); its management company, Medlink Professional Management Group Inc.; and the American Sleep Institute (ASI). ATC, Medlink and ASI were all Florida corporations headquartered in Miami. ATC operated purported partial hospitalization programs (PHPs) – a form of intensive treatment for severe mental illness – in seven different locations throughout South Florida and Orlando. ASI purported to provide diagnostic sleep disorder testing.
Jimenez pleaded guilty to one count of conspiracy to commit health care fraud and one count of conspiracy to defraud the United States and to pay and receive illegal health care kickbacks. Jimenez was charged in an indictment unsealed on Feb. 15, 2011, in the Southern District of Florida.
According to court filings, ATC’s owners and operators paid kickbacks to owners and operators of assisted living facilities (ALFs) and halfway houses and to patient brokers in exchange for delivering ineligible patients to ATC and ASI. In some cases, the patients received a portion of those kickbacks. Throughout the course of the ATC and ASI conspiracy, millions of dollars in kickbacks were paid in exchange for Medicare beneficiaries, who did not qualify for PHP services, to attend treatment programs that were not legitimate PHPs. ATC and ASI then billed Medicare for the medically unnecessary services. According to court filings, to obtain the cash required to support the kickbacks, the co-conspirators laundered millions of dollars of payments from Medicare.
In pleading guilty, Jimenez admitted that she served as a marketer for ATC and ASI. In this role, Jimenez solicited beneficiaries and paid kickbacks to assisted living facility owners in exchange for the beneficiaries. The amount of the kickback was based on the number of days each patient spent at ATC.
Jimenez also admitted that she participated in a separate Medicare fraud scheme through Priority Home Health, a Miami home health agency that submitted fraudulent claims to Medicare for home health services . Jimenez and her co-conspirators recruited Medicare beneficiaries to Priority Home Health who did not qualify for home health services.
According to the plea agreement, Jimenez’s participation in the ATC fraud and the Priority Home Health fraud resulted in $46 million in fraudulent billings to the Medicare program.
Sentencing for Jimenez is scheduled for June 27, 2012, at 8:30 a.m. Jimenez faces a maximum penalty of 15 years in prison and a $250,000 fine.
ATC, Medlink, and various owners, managers, doctors, therapists, patient brokers and marketers of ATC, Medlink and ASI, were charged with various health care fraud, kickback, money laundering and other offenses in two indictments unsealed on Feb. 15, 2011. ATC, Medlink and nine of the individual defendants have pleaded guilty or have been convicted at trial. Other defendants are scheduled for trial on April 9, 2012, before U.S. District Judge Patricia A. Seitz. A defendant is presumed innocent unless proven guilty beyond a reasonable doubt in a court of law.
Today’s guilty plea was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; John V. Gillies, Special Agent-in-Charge of the FBI’s Miami field office; and Special Agent-in-Charge Christopher Dennis of the HHS Office of Inspector General (HHS-OIG), Office of Investigations Miami office.
The criminal case is being prosecuted by Trial Attorneys Jennifer L. Saulino and Steven Kim of the Criminal Division’s Fraud Section. A related civil action is being handled by Vanessa I. Reed and Carolyn B. Tapie of the Civil Division and Assistant U.S. Attorney Ted L. Radway of the Southern District of Florida. The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.
Since its inception in March 2007, the Medicare Fraud Strike Force operations in nine locations have charged more than 1,160 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.
Marubeni Corporation Resolves Foreign Corrupt Practices Act Investigation and Agrees to Pay a $54.6 Million Criminal PenaltyRead the Press Release
WASHINGTON – Marubeni Corporation has agreed to pay a $54.6 million criminal penalty to resolve charges related to the Foreign Corrupt Practices Act (FCPA) for its participation in a decade-long scheme to bribe Nigerian government officials to obtain engineering, procurement and construction (EPC) contracts, the Justice Department’s Criminal Division announced today.
The department filed a deferred prosecution agreement and a criminal information today against Marubeni in U.S. District Court for the Southern District of Texas. The two-count information charges Marubeni with one count of conspiracy and one count of aiding and abetting violations of the FCPA. Marubeni is a Japanese trading company headquartered in Tokyo.
According to court documents, Marubeni was hired as an agent by the four-company TSKJ joint venture to help TSKJ obtain and retain EPC contracts to build liquefied natural gas (LNG) facilities on Bonny Island, Nigeria, by offering to pay and paying bribes to Nigerian government officials, among other means. TSKJ was comprised of Technip S.A., Snamprogetti Netherlands B.V., Kellogg Brown & Root Inc. (KBR) and JGC Corporation. Between 1995 and 2004, TSKJ was awarded four EPC contracts, valued at more than $6 billion, by Nigeria LNG Ltd. to build the LNG facilities on Bonny Island. The government-owned Nigerian National Petroleum Corporation was the largest shareholder of NLNG, owning 49 percent of the company.
According to court documents, to assist in obtaining and retaining the EPC contracts, the joint venture hired two agents – Marubeni and Jeffrey Tesler, a U.K. solicitor – to pay bribes to a wide range of Nigerian government officials. The joint venture hired Tesler as a consultant to pay bribes to high-level Nigerian government officials, including top-level executive branch officials, and hired Marubeni to pay bribes to lower-level Nigerian government officials. At crucial junctures preceding the award of EPC contracts, a number of co-conspirators, including on two occasions an employee of Marubeni, met with successive holders of a top-level office in the executive branch of the Nigerian government to ask the office holders to designate a representative with whom TSKJ should negotiate bribes to Nigerian government officials. TSKJ paid approximately $132 million to a Gibraltar corporation controlled by Tesler and $51 million to Marubeni during the course of the bribery scheme and intended for these payments to be used, in part, for bribes to Nigerian government officials.
Under the terms of the deferred prosecution agreement, the department agreed to defer prosecution of Marubeni for two years. Marubeni agreed to retain a corporate compliance consultant for a term of two years to review the design and implementation of its compliance program, to enhance its compliance program to ensure that it satisfies certain standards and to cooperate with the department in ongoing investigations. If Marubeni abides by the terms of the deferred prosecution agreement, the department will dismiss the criminal information when the term of the agreement expires.
“With today’s resolution, the department has held accountable all five of the corporations that participated in the massive, decade-long scheme to bribe Nigerian government officials in connection with the so-called Bonny Island project,” said Mythili Raman, Principal Deputy Assistant Attorney General of the Justice Department’s Criminal Division. “As a result of this extensive investigation, the department and our partners have obtained more than $1.7 billion in penalties and forfeiture orders from the joint venture partners, their agents and individuals who sought illegally to obtain the Bonny Island contracts. Several individuals also have pleaded guilty for their roles in the scheme. Our FCPA enforcement efforts are an essential part of our comprehensive approach to rooting out corruption across the globe.”
In a related criminal case, KBR’s successor company, Kellogg Brown & Root LLC, pleaded guilty in February 2009 to FCPA-related charges for its participation in the scheme to bribe Nigerian government officials. Kellogg Brown & Root LLC was ordered to pay a $402 million fine and to retain an independent compliance monitor for a three-year period to review the design and implementation of its compliance program. In another related criminal case, the department filed a deferred prosecution agreement and criminal information against Technip in June 2010. According to that agreement, Technip agreed to pay a $240 million criminal penalty and to retain an independent compliance monitor for two years. In July 2010, the department filed a deferred prosecution agreement and criminal information against Snamprogetti, which also agreed to pay a $240 million criminal penalty. In April 2011, the department filed a deferred prosecution agreement and criminal information against JGC, in which JGC agreed to pay a $218.8 million criminal penalty and to retain an independent compliance consultant for two years.
In other related criminal cases, KBR’s former CEO, Albert “Jack” Stanley, pleaded guilty in September 2008 to conspiring to violate the FCPA for his participation in the bribery scheme. Tesler and Wojciech J. Chodan, a former salesperson and consultant of a United Kingdom subsidiary of KBR, were indicted in February 2009 on FCPA-related charges for their participation in the bribery scheme. In March 2011, Tesler was extradited from the United Kingdom and subsequently pleaded guilty to conspiring to violate and violating the FCPA and agreed to forfeit $148,964,568. In December 2010, Chodan was extradited from the United Kingdom and subsequently pleaded guilty to conspiring to violate the FCPA and agreed to forfeit $726,885.
The criminal case is being prosecuted by Assistant Chief William J. Stuckwisch and Deputy Chief Patrick F. Stokes of the Criminal Division’s Fraud Section, with investigative assistance from the FBI-Houston Division. The Criminal Division’s Office of International Affairs and the SEC’s Division of Enforcement provided substantial assistance. Significant assistance was provided by authorities in France, Italy, Switzerland and the United Kingdom.
Kentuckians Convicted of Lacey Act Crimes for Illegally Harvesting and Making False Records for Ohio River PaddlefishRead the Press Release
WASHINGTON – Two Kentuckians and their caviar companies pleaded guilty today in the U.S. District Court for the Southern District of Ohio to trafficking in and falsely labeling illegally harvested paddlefish (Polydon spathula). Steve Kinder, along with his wife, Cornelia Joyce Kinder, both of Owenton, Ky., owned and operated Kinder Caviar Inc. and Black Star Caviar Company. Those companies were in the business of exporting paddlefish eggs as caviar to customers in foreign countries.
Paddlefish, whose eggs are marketed as caviar, are protected by both federal and Ohio law. Ohio law prohibits commercial fishing for paddlefish. Ohio law also prohibits the possession or use of gill nets. The Convention on International Trade in Endangered Species of Wild Flora and Fauna (CITES), which is codified in United States law through the Endangered Species Act, regulates international trade in certain species listed on one of three Appendices. Paddlefish are listed on Appendix II of CITES. Appendix II species, or their parts, which were harvested in the United States, may be exported only if they are accompanied by a valid export permit issued by the U.S. Fish & Wildlife Service (USFWS).
Among other things, the Lacey Act makes it a crime to transport or sell fish, or their parts, knowing that the fish were harvested in violation of any state’s law. Among other things, the Lacey Act also makes it a crime to make or submit a false record, account or label for, or false identification of, fish or fish parts which were, or were intended to be, exported, transported or sold.
According to the plea agreement filed in U.S. District Court in Cincinnati, Cornelia Joyce Kinder admitted to making false statements on behalf of Kinder Caviar in a CITES Export Registration Form for paddlefish eggs on or about March 15, 2007. Specifically, Cornelia Joyce Kinder misrepresented the amount of legally-harvested paddlefish eggs that she could provide documentation for, as well as misidentified the fishermen who harvested the paddlefish and the location of harvest.
As part of a plea agreement, Cornelia Joyce Kinder also admitted to making false statements on behalf of Black Star Caviar Company in a CITES Export Registration Form for paddlefish eggs on or about Dec. 18, 2010. Specifically, Cornelia Joyce Kinder completed the form using the name of a subordinate employee and forged that employee’s signature on the form in order to give the impression that she was not the applicant.
According to the plea agreement, both Steve Kinder and Cornelia Joyce Kinder admitted to aiding and abetting one another in harvesting paddlefish in Ohio waters, using gill nets attached to the Ohio shoreline, on or about May 5, 2007, and transporting the paddlefish to Kentucky with the intent to sell them when, in the exercise of due care, they should have known that the fish were harvested in violation of Ohio law.
As part of a plea agreement, both Kinder Caviar and Black Star Caviar Company have each agreed to pay a $5,000 fine and serve a three-year term of probation, during which time those companies will be prohibited from applying for or receiving a CITES Export Permit. In addition, both Steve Kinder and Cornelia Joyce Kinder have agreed to serve a three-year term of probation, during which time they will each perform 100 hours of community service, be prohibited from fishing anywhere in the Ohio River where that river forms the border between Ohio and Kentucky, and be prohibited from applying for or receiving a CITES Export Permit, either on behalf of themselves or anyone else. In accordance with Kentucky law, both Steve Kinder and Cornelia Joyce Kinder face possible suspension of their Kentucky commercial fishing licenses.
Also as part of the plea agreement, the boat and truck that were used in furtherance of the Lacey Act crimes have been forfeited.
The case was investigated by the USFWS Office of Law Enforcement; the Ohio Department of Natural Resources, Division of Wildlife; and the Kentucky Department of Fish & Wildlife Resources. The case was prosecuted by Trial Attorney James B. Nelson of the Department of Justice’s Environmental Crimes Section of the Environment and Natural Resources Division, and Assistant U.S. Attorney Laura I. Clemmens of the Southern District of Ohio.
Former Employee and Contractors of Florida Property Management Company Indicted in Illinois for Conspiracy to Commit Bribery and Wire FraudRead the Press Release
WASHINGTON – A Rockford, Ill., grand jury today indicted a former residential sales manager and two former contractors of a Florida property management company in connection with housing repair contracts for the U.S. Department of Veterans Affairs (VA), the Department of Justice announced.
The 10-count indictment filed today in U.S. District Court in Rockford charged Ryan J. Piana, Ronald B. Hurst and Bryant A. Carbonell with conspiring to commit bribery and wire fraud from beginning at least as early as January 2006 continuing until as late as September 2007. Piana, Hurst and Carbonell are also charged with bribery and wire fraud.
Piana is a former residential sales manager at West Palm Beach, Fla.-based Ocwen Loan Servicing LLC, and Hurst and Carbonell are former contractors for Ocwen. According to court documents, 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 the charges, Hurst and Carbonell paid Piana to steer housing repair work to companies affiliated with Hurst and Carbonell. Piana recruited other Ocwen employees into the scheme and paid them on behalf of himself and the other conspirators. The department said in order to execute the scheme, the conspirators sent, or caused to be sent, various transmissions via wire communication.
This is the second case involving properties managed by Ocwen under contract with the VA. On Dec. 3, 2010, Benjamin K. Graves, also a former Ocwen employee, pleaded guilty in U.S. District Court in Orlando, Fla., to wire fraud in connection with the VA contract.
The wire fraud charges carry a maximum penalty of 20 years in prison; the bribery charges carry a maximum penalty of 15 years in prison; and the conspiracy charge carries a maximum penalty of five years in prison. The maximum fine for each charge is $250,000. For wire fraud and conspiracy, 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. For bribery, the maximum fine may be increased to three times the value of the bribes, if that amount is greater than the statutory maximum fine.
The charges announced today resulted from an ongoing federal investigation of housing repair contracts performed under contract with 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.
13 January 2012
Maryland Man Pleads Guilty to Child Pornography Production Charges in Indiana and Is Sentenced to 33 Years in PrisonRead the Press Release
A Maryland man pleaded guilty today in federal court in Indianapolis to seven counts of child pornography production and was sentenced to 33 years in prison and a lifetime of supervised release, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Joseph H. Hogsett of the Southern District of Indiana.
Trevor J. Shea, 21, of Mechanicsburg, Md., pleaded guilty before U.S. District Judge William T. Lawrence in the Southern District of Indiana.
During today’s plea and sentencing hearing, Shea admitted to using blackmail to coerce 10 minor girls between the ages of 13 and 16 years to produce images and videos of themselves engaging in sadistic and masochistic abuse and other sexually explicit conduct.
According to court documents, the case arose from an investigation by the Brownsburg, Ind., Police Department, which received a complaint in late September 2009 that Jane Doe 1, a 16-year-old girl, was being stalked via the internet. Jane Doe 1 and a family member reported that several months earlier, Jane Doe 1 and two other female minors visited an online webcam site where they exposed their breasts to unknown webcam viewers.
Approximately one week later, Jane Doe 1 began receiving emails and instant messages from Shea, who threatened to post the nude images of Jane Doe 1 and her friends to the internet. Shea told Jane Doe 1 that if she produced more images and/or webcam videos for him, he would not post the photos for others to see. Jane Doe 1 complied with some of these demands, and produced images and videos of herself engaging in sexually explicit conduct. She then transmitted the images and videos to him.
Working with the U.S. Postal Inspection Service (USPIS), the Brownsburg Police Department traced the internet communications and a federal search warrant was obtained and executed at Shea’s Maryland home on March 4, 2010. Evidence was recovered during that search showing that numerous females around the country were victimized by Shea in a manner virtually identical to Jane Doe 1. Five of these other victims were identified as minor girls.
On June 9, 2010, Shea was indicted on four counts of production of child pornography for his conduct against Jane Doe 1. Shea made an initial appearance on these charges and was released to his Maryland home on conditions, including home detention with electronic monitoring and a prohibition on his use of a computer or the Internet.
In early November 2010, while Shea was on pretrial release, the Santa Rosa County, Fla., Sheriff’s Department interviewed “Jane Doe 2,” a 16-year-old girl. Jane Doe 2 reported that in 2009, an individual, later determined to be Shea, threatened her via the internet and coerced her to produce nude images. The search of Shea’s residence in March 2010 recovered images of Jane Doe 2 from Shea’s computer, but she had not yet been identified by law enforcement. Jane Doe 2 reported that in November 2010, she was contacted again by the individual, who threatened to disseminate the nude images that he previously had obtained from her, and demanded new nude images. In response to this threat, Jane Doe 2 made videos that depicted herself engaging in sexually explicit conduct and emailed them to Shea.
Following Jane Doe 2’s report in November 2010, investigators determined that the email account to which Jane Doe 2 had been coerced to send the images and videos of herself was being accessed by an individual at Shea’s residence. Florida law enforcement coordinated with the Brownsburg Police Department and USPIS, and a federal search warrant was executed at Shea’s residence on Dec. 22, 2010. Shea was arrested again that day, detained, and he has since remained in custody.
Investigators determined that in addition to Jane Doe 2, Shea similarly victimized three other minor girls in November and December 2010 while he was on pretrial release. On Sept. 13, 2011, Shea was charged with three additional counts of production of child pornography for his conduct against these four minor girls.
The case against Shea was prosecuted by Assistant U.S. Attorney A. Brant Cook of the Southern District of Indiana and Trial Attorney Bonnie L. Kane of the Child Exploitation and Obscenity Section (CEOS) in the Justice Department’s Criminal Division.
The case was investigated by the Brownsburg Police Department, USPIS, Indiana State Police, Santa Rosa County Sheriff’s Department, and the Indiana Internet Crimes Against Children Task Force . Substantial assistance was provided by the Federal Bureau of Investigation, the Child Exploitation and Obscenity Section’s High Technology Investigative Unit, and Maryland State Police.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and the Criminal Division’s CEOS, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
Louisiana Health Care Company Owner and Recruiter Plead Guilty to Medicare Fraud SchemeRead the Press Release
WASHINGTON – Two Baton Rouge, La., residents have pleaded guilty for their role in a Medicare fraud scheme, which allegedly involved more than $21 million, announced the Department of Justice, the Department of Health and Human Services (HHS), the FBI and the Louisiana State Attorney General’s Office.
Henry Jones, the owner of four medical equipment companies, pleaded guilty yesterday before U.S. District Judge James J. Brady in the Middle District of Louisiana to one count of conspiracy to commit health care fraud and one count of conspiracy to defraud the United States and to pay and receive healthcare kickbacks. Mary Bessie, one of Jones’ co-conspirators, pleaded guilty on Jan. 11, 2012, before Judge Brady to one count of conspiracy to defraud the United States and to pay and receive healthcare kickbacks.
Jones admitted that between 2004 and 2009, he owned and operated four companies that were licensed to supply durable medical equipment (DME) to Medicare beneficiaries. Jones hired patient recruiters to obtain prescriptions for medical equipment that was medically unnecessary. The patient recruiters obtained beneficiary information and then asked the beneficiaries’ primary care physicians for prescriptions for orthotic equipment, power wheelchairs, wheelchair accessories and other medical equipment. When the beneficiaries’ physicians were unwilling to provide medically unnecessary prescriptions, the patient recruiters asked other physicians to write prescriptions based on cursory examinations of the patients. The recruiters then provided the prescriptions to Jones, who billed them to Medicare and paid the recruiters illegal kickbacks for each prescription obtained.
Bessie admitted that from 2004 to 2009, she and her co-conspirators solicited and received kickbacks from Jones in return for medically unnecessary prescriptions for Medicare beneficiaries. From 2004 to 2009, Bessie was paid kickbacks, and Bessie aided and abetted the payment of kickbacks in the form of checks totaling $82,230.
Sentencing dates have not yet been set. The maximum prison sentence for each count of conspiracy to commit health care fraud is 10 years. The maximum prison sentence for each count of conspiracy to defraud the United States and to pay and receive health care kickbacks is five years.
The pleas were announced today 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 Settles with Warren, Ohio, Police DepartmentRead the Press Release
WASHINGTON – Following a comprehensive investigation, the Justice Department today announced that it has resolved its investigation of the city of Warren, Ohio, Police Department (WPD) through a settlement agreement filed with the U.S. District Court.
The investigation focused on whether WPD engages in unconstitutional or unlawful policing through the use of excessive force. WPD cooperated throughout the investigation. The Justice Department found reasonable cause to believe that WPD engages in a pattern or practice of excessive force in violation of the Fourth Amendment of the U.S. Constitution and the Violent Crime Control and Law Enforcement Act of 1994. The Justice Department, WPD and city of Warren officials reached an agreement that, once implemented, will resolve the Justice Department’s investigation. To create sustainable reform, the agreement requires WPD to continue to develop and implement:
- new use of force policies and protocols;
- systems to ensure that uses of force are documented and evaluated;
- systems to track citizen complaints and ensure they are investigated promptly; and
- officer training on conducting effective and constitutional policing.
“Effective policing and constitutional policing go hand in hand. Developing and implementing meaningful reforms through this cooperative agreement will assist in reducing crime, upholding the Constitution and ensuring that the community has confidence in the police department’s commitment to fair and effective law enforcement,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The issues within the Warren Police Department have been present for many years and will take time to fix, but we look forward to continuing our positive partnership with the people of Warren, Mayor Doug Franklin, Police Chief Tim Bowers and his officers to implement sustainable reform.”
“This agreement puts in place a structure in which officers will be trained on appropriate use of force and citizens can register complaints if they feel they’ve been mistreated,” said Steven M. Dettelbach, U.S. Attorney for the Northern District of Ohio. “I am confident that the Justice Department and Warren officials will continue to work cooperatively to insure the safety of the officers and people of Warren.”
The Justice Department’s investigation involved an in-depth review of WPD documents, as well as extensive community engagement. The department reviewed thousands of pages of documents, including written policies and procedures, training materials and internal reports; data; video footage; and investigative files. Justice Department attorneys and investigators also conducted interviews with WPD officers, supervisors, command staff and city officials, and conducted interviews with community members and local advocates. Throughout the investigation, the Justice Department provided feedback and technical assistance to WPD, and in response, WPD has already begun to implement a number of remedial measures.
This investigation was conducted jointly by the Special Litigation Section of the Civil Rights Division and the U.S. Attorney’s Office for the Northern District of Ohio, with the assistance of law enforcement professionals, including former police chiefs. For more information on the Justice Department’s Civil Rights Division, please visit www.justice.gov/crt.
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Former L.A. County Sheriff's Deputy Agrees to Plead Guilty to Federal Corruption ChargeRead the Press Release
WASHINGTON – A former Los Angeles County Sheriff's deputy was charged today with agreeing to accept $20,000 in bribes in exchange for smuggling contraband into the Men's Central Jail, announced Thomas E. Perez, Assistant Attorney General for the Civil Rights Division, and André Birotte Jr., U.S. Attorney for the Central District of California
In a criminal information filed in U.S. District Court in Los Angeles, Gilbert Michel, 38, was charged with one count of bribery of a public official.
In a plea agreement also filed today, Michel agreed to plead guilty to the charge and to cooperate in an ongoing investigation.
Michel, who resigned from the Los Angeles Sheriff's Department (LASD) in September 2011, was assigned to the Men's Central Jail in downtown Los Angeles. The criminal information charges that the LASD is a local organization which receives federal funds and that Michel, as deputy sheriff, was responsible for the care, custody and security of inmates housed at the jail.
In the plea agreement, Michel admits that he agreed to accept $20,000 in cash in exchange for smuggling contraband into the jail for delivery to an inmate. The contraband included a cell phone, cigarettes and a note, which in jail parlance is called a "kite."
The charge of bribery of a public official carries a statutory maximum penalty of 10 years in federal prison.
Michel is expected to make his initial court appearance in this case on Jan. 17, 2012.
The case against Michel is part of an ongoing investigation being conducted by the FBI. The case is being prosecuted by the U.S. Attorney's Office for the Central District of California in conjunction with the Justice Department’s Civil Rights Division.
Former Dow Research Scientist Sentenced to 60 Months in Prison for Stealing Trade Secrets and PerjuryRead the Press Release
WASHINGTON – A former research scientist was sentenced late yesterday to 60 months in prison for stealing trade secrets from Dow Chemical Company and selling them to companies in the People’s Republic of China, as well as committing perjury, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Donald J. Cazayoux Jr. for the Middle District of Louisiana.
U.S. District Court Judge James J. Brady also sentenced Wen Chyu Liu, aka David W. Liou, 75, of Houston, to two years of supervised release and ordered him to forfeit $600,000 and pay a $25,000 fine. A federal jury in Baton Rouge, La., convicted Liu on Feb. 7, 2011, of one count of conspiracy to commit trade secret theft and one count of perjury.
According to the evidence presented in court, Liu came to the United States from China for graduate work. He began working for Dow in 1965 and retired in 1992. Dow is a leading producer of the elastomeric polymer, chlorinated polyethylene (CPE). Dow’s Tyrin CPE is used in a number of applications worldwide, such as automotive and industrial hoses, electrical cable jackets and vinyl siding.
While employed at Dow, Liu worked as a research scientist at the company’s Plaquemine, La., facility on various aspects of the development and manufacture of Dow elastomers, including Tyrin CPE. Liu had access to trade secrets and confidential and proprietary information pertaining to Dow’s Tyrin CPE process and product technology. The evidence at trial established that Liu conspired with at least four current and former employees of Dow’s facilities in Plaquemine and Stade, Germany, who had worked in Tyrin CPE production, to misappropriate those trade secrets in an effort to develop and market CPE process design packages to various Chinese companies.
Liu traveled extensively throughout China to market the stolen information, and evidence introduced at trial showed that he paid current and former Dow employees for Dow’s CPE-related material and information. In one instance, Liu bribed a then-employee at the Plaquemine facility with $50,000 in cash to provide Dow’s process manual and other CPE-related information.
In addition, according to evidence presented at trial related to the perjury charge, Liu falsely denied during a deposition that he made arrangements for a co-conspirator to travel to China to meet with representatives of a Chinese company interested in designing and building a new CPE plant. Liu was under oath at the time of the deposition, which was part of a federal civil suit brought by Dow against Liu.
The case is being prosecuted by Assistant U.S. Attorney Corey R. Amundson, who serves as the Senior Deputy Criminal Chief, and former Assistant U.S. Attorney Ian F. Hipwell for the Middle District of Louisiana, as well as Trial Attorney Kendra Ervin of the Criminal Division’s Computer Crime and Intellectual Property Section. The case was investigated by the FBI’s New Orleans Division.