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Monday 3 May 2010
Court Rules Against Mississippi Businessman’s Tax Shelter Promoted by KPMGRead the Press Release
WASHINGTON - A federal court in Jackson, Miss., has ruled in favor of the United States involving a businessman’s attempt to use a KPMG- marketed tax shelter to avoid paying income tax on approximately $18 million in capital gains. According to the opinion, in 2001, J. Kelley Williams of Jackson became aware that he would have $18 million in capital gains from one of his investments. His KPMG accountant suggested that he use a marketed tax shelter strategy by the name of "Family Office Customized" or "FOCUS" to avoid paying tax on that gain. The tax shelter involved a series of preplanned steps using foreign currency straddles and a three-tiered partnership structure to create sham losses.
Chief Judge Henry T. Wingate disallowed the losses generated by the shelter and upheld the imposition of a 20% penalty. In particular, the court noted that the steps to the shelter "lacked economic substance and served no other purpose than to provide the structure through which Williams could enjoy the reduction of his tax burden." In holding that the FOCUS shelter lacked validity, the court observed that FOCUS was "like BOSS, Son of Boss, OPIS, CARDS, BLIPS and other such plans developed by major accounting firms like KPMG, and structured to create artificial losses for tax purposes."
"This latest victory, for the American people and for the United States, should serve as yet another warning to taxpayers that they cannot get away with tax code manipulations to claim non-economic loses" said John DiCicco, Acting Assistant Attorney General of the Tax Division. "The Justice Department and the Internal Revenue Service will continue to vigorously litigate abusive tax positions."
Mr. DiCicco commended the trial team for their handling of the case, including attorneys Michael Wilcove, Paul Allulis, and Pascale Guerrier and paralegal Meghan Barrett.
Friday 30 April 2010
Two Puerto Rico Police Officers Sentenced for Federal Civil Rights Charges Related to Fatal AssaultRead the Press Release
WASHINGTON – U.S. District Court Judge Daniel R. Dominguez sentenced former San Juan, Puerto Rico,Police Officers, Aaron Vidal Maldonado and Jose Pacheco Cruz today for their roles in the fatal assault by San Juan officers against Jose Rivera Robles, an unarmed civilian, the Justice Department announced.
Vidal Maldonado received a sentence of 200 months in prison and five years of supervised release after conviction at trial for using excessive force, resulting in death, and for committing various obstruction of justice offenses. Pacheco Cruz received a sentence of 57 months in prison and two years supervised release after conviction at trial for obstructing the commonwealth and federal investigations into the circumstances surrounding Rivero Robles’ death.
At trial, the government presented evidence that on July 20, 2003, in the course of arresting the victim at a Citgo gas station, co-defendants Juan Morales Rosado, Carlos Pagan Ferrer, Elias Perocier Morales and Eliezer Rivera Gonzalez repeatedly kicked and otherwise assaulted Rivera Robles when he was lying face down on the ground, in no way resisting or posing a threat to the officers. AaronVidal Maldonado, the senior officer on the scene, pinned Rivero Robles to the ground during the beating and did nothing to discourage the excessive force used by his subordinates.
After this beating, Vidal Maldonado directed officers to transport the badly injured, semiconscious victim to a nearby police station where co-defendant Elias Perocier Morales again brutally assaulted the victim in Vidal Maldonado’s presence. After this second beating, instead of immediately seeking medical attention for the victim, Vidal Maldonado directed his subordinates to dump the victim on the floor of the police station. Soon after, the injuries to the victim caused by the beatings resulted in Rivero Robles’ death.
"Law enforcement officers who use their badges as an excuse to commit egregious acts of violence are an affront to the rule of law," said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. "The Justice Department will continue to aggressively prosecute officers who abuse their power in this manner."
"Our citizens have a right to just, fair and equal treatment from all law enforcement officers and we, as public servants, must never forget that we have sworn an oath to serve and protect them," said U.S. Attorney Rosa Emilia Rodríguez-Vélez for the District of Puerto Rico. "The U.S. Attorney’s Office will continue prosecuting these crimes to the full extent of the law."
The other co-defendants in this case have already been sentenced for their roles in the beating. On Dec. 20, 2009, co-defendants Elias Perocier Morales and Eliezer Rivera Gonzalez were sentenced to ten years in prison and six-and-a-half years in prison, respectively. On March 25, 2010, Juan Morales Rosado and Carlos Pagan Ferrer were both sentenced to ten years in prison.
Special Agent Luis Rivero of the FBI’s San Juan Office investigated this matter. The case was prosecuted by Assistant U.S. Attorney Antonio Bazan, Special Litigation Counsel Gerard Hogan and Trial Attorney Avner Shapiro of the Justice Department’s Civil Rights Division.
Tennessee Man Convicted of Illegally Accessing<br /> Sarah Palin’s E-mail Account and Obstruction of JusticeRead the Press Release
David C. Kernell, 22, was convicted by a federal jury in Knoxville, Tenn., today for intentionally accessing without authorization the e-mail account of former Alaska governor Sarah Palin and obstruction of justice, Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney James R. Dedrick for the Eastern District of Tennessee announced.
After a week-long trial, a jury found Kernell guilty of one count of misdemeanor unauthorized access to obtain information from a computer and one count of obstruction of justice. The jury found Kernell not guilty of wire fraud. The jury could not reach a verdict on the identity theft charge and the judge declared a mistrial as to that charge.
According to evidence presented at trial, on Sept. 16, 2008, Kernell, a resident of Knoxville, obtained unauthorized access to Gov. Palin’s personal e-mail account by resetting the account password. Evidence showed that after answering a series of security questions that allowed him to reset the password and gain access to the e-mail account, Kernell read the contents of the account and made screenshots of the e-mail directory, e-mail content and other personal information. Kernell posted screenshots of the e-mails and other personal information to a public Website. Kernell also posted the new e-mail account password that he had created, thus providing access to the account by others.
Evidence at trial showed that Kernell became aware of a possible FBI investigation on Sept. 16, 2008, following the illegal entry into the e-mail account. The evidence further showed that Kernell began to delete records and documents with the intent to impede an anticipated FBI investigation.
At sentencing, Kernell faces a maximum of one year in prison and a $100,000 fine for unauthorized access and 20 years in prison and a $250,000 fine for obstruction of justice.
The case was prosecuted by Assistant U.S. Attorney Mark Krotoski currently detailed to the Criminal Division’s Computer Crime and Intellectual Property Section (CCIPS) and Assistant U.S. Attorney Greg Weddle of the U.S. Attorney’s Office for the Eastern District of Tennessee. CCIPS Trial Attorney Josh Goldfoot provided significant assistance. The case was investigated by the FBI’s Knoxville field office.
Chi Mei Executive Agrees to Plead Guilty and Serve Jail Time for Participating in Global LCD Price-Fixing ConspiracyRead the Press Release
WASHINGTON — An executive from Chi Mei Optoelectronics Corporation (Chi Mei) has agreed to plead guilty and serve 14 months in a U.S. jail for participating in a global conspiracy to fix prices of Thin-Film Transistor-Liquid Crystal Display (TFT-LCD) panels, and a second executive pleaded guilty and was sentenced for his role in the same conspiracy, the Department of Justice announced today.
According to separate one-count felony charges filed in U.S. District Court in San Francisco, Jau-Yang "J.Y." Ho and Chu-Hsiang "James" Yang conspired with others to suppress and eliminate competition by fixing the prices of TFT-LCD panels. Ho, a resident of Taiwan and the former president of Chi Mei, participated in the conspiracy from on or about Sept. 14, 2001, to on or about Dec. 1, 2006. Yang, a resident of Taiwan and the former director of sales for Chi Mei, participated in the conspiracy from April 1, 2004, to on or about Dec. 1, 2006.
Under his plea agreement, Ho, who was charged today, has agreed to serve 14 months in jail, to pay a $50,000 criminal fine and to assist the department in its ongoing TFT-LCD investigation. Ho's plea agreement is subject to court approval.
Yang pleaded guilty today to charges filed on April 23, 2010. According to the plea agreement, Yang has agreed to assist the department in its ongoing TFT-LCD investigation. Additionally, Judge Susan Illston sentenced Yang today to serve nine months in jail and to pay a $25,000 criminal fine.
Court documents charge that Ho and Yang participated in a conspiracy in which the participants met and agreed to charge prices of TFT-LCD panels at predetermined levels. The participants in that conspiracy also issued price quotations in accordance with the agreements reached and exchanged information on the sales of TFT-LCD panels for the purpose of monitoring adherence to the agreed-upon prices, the department said.
TFT-LCD panels are used in computer monitors and notebooks, televisions, mobile phones and other electronic devices. By the end of the conspiracy period, the worldwide market for TFT-LCD panels was valued at $70 billion. Companies directly affected by the LCD price-fixing conspiracy are some of the largest computer and television manufacturers in the world, including Apple, Dell and Hewlett Packard.
As a result of this investigation, six companies, including Ho and Yang's employer, Chi Mei, have pleaded guilty and have been sentenced to pay criminal fines totaling more than $860 million. Additionally, including today's charges, 11 executives have been charged in the department's ongoing investigation.
Both Ho and Yang are charged with violating the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims if either of those amounts is greater than the statutory maximum fine.
Today's charges are the result of a joint investigation by the Department of Justice Antitrust Division's San Francisco Field Office and the FBI in San Francisco.
Anyone with information concerning illegal conduct in the TFT-LCD industry is urged to call the Antitrust Division's San Francisco Field Office at 415-436-6660 or visit www.justice.gov/atr/contact/newcase.htm.
Attorney General Holder Dispatches Justice Department Team <br /> to Monitor British Petroleum Oil SpillRead the Press Release
Attorney General Eric Holder announced today that he is dispatching a team of attorneys from multiple divisions within the Justice Department to New Orleans to meet with the U.S. Attorney and response teams and to monitor the oil spill in the Gulf of Mexico.
"The British Petroleum oil spill has already cost lives and created a major environmental incident," said Attorney General Holder. "The Justice Department stands ready to make available every resource at our disposal to vigorously enforce the laws that protect the people who work and reside near the Gulf, the wildlife, the environment and the American taxpayers."
The team will be led by Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division, and Tony West, Assistant Attorney General for the Civil Division, and will include relevant United States Attorneys. The combined group from the Department plans to make a site visit and meet with representatives from federal agencies working on the response.
A coordinated response continues with a comprehensive oil well intervention and spill-response plan following the April 22, 2010 sinking of the Transocean Deepwater Horizon drilling rig 130 miles southeast of New Orleans. More than 1,000 personnel from federal, state and local agencies are involved in the response effort both on and offshore, with additional resources being mobilized as needed.
Thursday 29 April 2010
Two Johnson & Johnson Subsidiaries to Pay over $81 Million<br /> to Resolve Allegations of Off-Label Promotion of TopamaxRead the Press Release
WASHINGTON – American pharmaceutical manufacturers Ortho-McNeil Pharmaceutical LLC and Ortho-McNeil-Janssen Pharmaceuticals Inc., both subsidiaries of Johnson & Johnson, have agreed to pay more than $81 million to resolve criminal and civil liability arising from the illegal promotion of the epilepsy drug Topamax, the Justice Department announced today.
According to the agreement reached with the government, Ortho-McNeil Pharmaceutical LLC has agreed to plead guilty to a misdemeanor and pay a $6.14 million criminal fine for the misbranding of Topamax in violation of the Food, Drug and Cosmetic Act. The Food and Drug Administration (FDA) approved Topamax as an anti-epileptic drug, for the treatment of partial onset seizures, but not for any psychiatric use. Once a pharmaceutical is approved by the FDA, a manufacturer may not market or promote it for any use not specified in its new drug application. The unauthorized uses are also known as "unapproved" or "off-label uses."
The government alleged that Ortho-McNeil Pharmaceutical promoted the sale of Topamax for off-label psychiatric uses through a practice known as the "Doctor-for-a-Day" program. Using this program, Ortho-McNeil hired outside physicians to join sales representatives in their visits to the offices of health care providers and to speak at meetings and dinners about prescribing Topamax for unapproved uses and doses.
In addition to the criminal fine, Ortho-McNeil-Janssen Pharmaceuticals will pay $75.37 million to resolve civil allegations under the False Claims Act that they illegally promoted Topamax and caused false claims to be submitted to government health care programs for a variety of psychiatric uses that were not medically accepted indications and therefore not covered by those programs. The federal share of the civil settlement is $50,688,483.52, and the state Medicaid share of the civil settlement is $24,681,516.48.
"Working with our federal and state partners, we will take action against pharmaceutical companies that promote their drugs for off-label uses," said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. "This type of unlawful marketing undermines the FDA’s important role in deciding which drugs are safe and effective for consumers and costs the taxpayers billions of dollars each year."
The civil settlement resolves two lawsuits filed under the qui tam, or whistleblower, provisions of the False Claims Act, which allow private citizens with knowledge of fraud to bring civil actions behalf of the United States and share in any recovery. The two cases, both filed in the District of Massachusetts are United States ex rel. Maher, et al. v. Ortho-McNeil Pharmaceutical, Civil Action No. 03-11445-WGY, and United States ex rel. Spivack v. Johnson & Johnson and Ortho-McNeil Pharmaceutical, Inc., Civil Action No. 04-11886-WGY. As part of today’s resolution, the whistleblowers will receive payments totaling more than $9 million from the federal share of the civil recovery.
Also as part of the settlement, Ortho-McNeil-Janssen Pharmaceuticals has agreed to enter into an expansive corporate integrity agreement with the Office of Inspector General of the Department of Health and Human Services. That agreement provides for procedures and reviews to be put in place to avoid and promptly detect conduct similar to that which gave rise to this matter.
"This resolution underscores the government’s unflagging commitment to combating pharmaceutical fraud in all its forms, and in securing a just and meaningful outcome that deters those who would consider off-label marketing in the future," said Carmen M. Ortiz, U.S. Attorney for the District of Massachusetts.
"This settlement is about more than financial recoveries, it is also about protecting the integrity of health care programs and the health of beneficiaries," said Department of Health and Human Services Inspector General Daniel R. Levinson. "The Corporate Integrity Agreement requires Ortho-McNeil-Janssen-Pharmaceuticals, Inc. to increase transparency and accountability and to make changes designed to avoid illegal drug promotion in the future."
The Justice Department’s Civil Division and the U.S. Attorney’s Office for the District of Massachusetts prosecuted the criminal case and handled the civil lawsuit, with assistance from the National Association of Medicaid Fraud Control Units and the offices of various state Attorneys General. The Office of Inspector General of the Department of Health and Human Services negotiated the Corporate Integrity Agreement.
This settlement is part of the government’s emphasis on combating health care fraud. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover approximately $2.2 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in False Claims Act cases since January 2009 have topped $3 billion.
Schwarz Pharma Pays $22 Million to Settle False Claims Allegations Concerning Reimbursement for Unapproved DrugsRead the Press Release
WASHINGTON – Schwarz Pharma Inc. will pay $22 million to resolve False Claims Act allegations that the company failed to advise the Centers for Medicare and Medicaid Services (CMS) that two unapproved products did not qualify for coverage under federal health care programs, the Justice Department announced today. Schwarz, now a subsidiary of Belgium-based UCB S.A., is alleged to have submitted false quarterly reports to the government related to a pair of drugs, Deponit and Hyoscyamine Sulfate Extended Release (Hyoscyamine Sulfate ER).
Deponit is a nitroglycerin skin patch that has been used to prevent angina. Hyoscyamine Sulfate ER is an antispasmodic medication that has been used to treat various stomach, intestinal, and urinary tract disorders that involve cramps, colic, or other painful muscle contractions. While the active ingredients in Deponit and Hyoscyamine Sulfate ER had been in products on the market for many years, the Food and Drug Administration made determinations in 1997 and 1999 that resulted in the drugs being ineligible for reimbursement by government health care programs such as Medicaid.
The United States alleges that Schwarz misrepresented the regulatory status of both drugs and failed to advise CMS that these unapproved drugs did not qualify for coverage under federal health care programs. As a result, the government contends, Schwarz knowingly caused false claims to be submitted for Deponit and Hyoscyamine Sulfate ER. Ultimately, neither Deponit nor Hyoscyamine Sulfate ER ever received full regulatory approval for safety and effectiveness, and neither product is currently on the market.
"Pharmaceutical companies must provide accurate and complete information to the government about the drugs they manufacture," said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. "There will be consequences for companies who provide false information to obtain taxpayer dollars for their drugs."
The settlement resolves allegations against Schwarz in two separate multi-defendant whistleblower actions captioned United States ex rel. Constance Conrad v. Schwarz Pharma, et al., No. 02-11738-NG (D. Mass.), and United States ex rel. James Conrad v. Schwarz Pharma et al., Civil No. 08-cv-428 (S.D. Tex.). The federal share of the settlement is $12,243,836 and the state Medicaid share is $9,756,164. The lawsuits were brought under the qui tam, or whistleblower, provisions of the False Claims Act, which allow private parties with knowledge of fraud to sue on behalf of the United States and share in any recovery. Under the settlement,
the two whistleblowers will receive a total of $1,836,575 from the federal share and additional amounts from the state share.
"This False Claims Act agreement shows that the Department of Justice will not allow manufacturers to evade the drug approval process and expect the government to pay for less than effective drugs," said Carmen Ortiz, U.S. Attorney for the District of Massachusetts.
"We will continue to pursue companies that submit false information to obtain payment for unapproved drugs that are ineffective or on the market illegally," said Jose Angel Moreno, U.S. Attorney for the Southern District of Texas.
This case was investigated by the Justice Department’s Civil Division, the U.S. Attorneys’ Offices for the District of Massachusetts and the Southern District of Texas, and the Office of Inspector General of the Department of Health and Human Services.
This settlement is part of the government’s emphasis on combating health care fraud. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover approximately $2.38 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in False Claims Act cases since January 2009 have topped $3 billion.
Miami Resident Pleads Guilty to Conspiracy to Defraud<br /> the Export-Import BankRead the Press Release
Miami resident Guillermo Sanchez, 55, pleaded guilty today to charges that he conspired to defraud the Export-Import Bank of the United States (Ex-Im Bank) of approximately $854,000, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and Osvaldo L. Gratacos, Acting Inspector General of the Ex-Im Bank.
Sanchez pleaded guilty in U.S. District Court in Washington, D.C., to one count of conspiracy to defraud the Ex-Im Bank and one count of mail fraud in connection with 10 loans guaranteed by the Ex-Im Bank.
According to court documents and testimony at the plea hearing, from approximately May 2006 through August 2007, Sanchez acted as a purported exporter of construction equipment to South America in 10 different loan transactions. The loans were obtained from a Florida bank and insured by the Ex-Im Bank. Sanchez admitted that he and a co-conspirator prepared and submitted to the Florida bank and the Ex-Im Bank loan documents, including commercial invoices, packing lists and bills of lading falsely reflecting that Sanchez purchased and shipped approximately $854,000 worth of generators manufactured in the United States to South American customers.
According to court documents and testimony, Sanchez’s company, ACE Products, received approximately $853,642 in loan proceeds based on the false representations and Sanchez retained a portion of the money for his own personal benefit and use. In or about August 2007, defaults on the loan transactions caused the Ex-Im Bank to pay the Florida bank’s claim for outstanding principal and accrued interest of approximately $854,161.
The Ex-Im Bank, an independent agency of the United States, is the official export credit agency of the United States and issues loan insurance to U.S. banks on behalf of creditworthy foreign companies for the purpose of purchasing U.S. goods. The Ex-Im Bank issues a loan insurance policy, which provides that if the foreign borrower defaults on its loan repayments to the lending bank, the Ex-Im Bank will reimburse the amount of the outstanding loan principal and interest to the lending bank.
Sentencing for Sanchez is scheduled for Nov. 1, 2010. The conspiracy charge carries a maximum prison sentence of five years and the mail fraud charge carries a maximum prison sentence of 20 years. Each charge also carries a maximum fine of $250,000, or twice the gain or loss, whichever is greater. The defendant also faces a term of supervised release following any prison sentence.
The scheme was investigated by special agents of the Ex-Im Bank, Office of Inspector General, after bank staff referred information concerning the loan defaults. This case was prosecuted by Senior Litigation Counsel Patrick M. Donley of the Criminal Division’s Fraud Section.
Hong Kong Ship Management Company and Two Employees Indicted for Environmental Crimes and ObstructionRead the Press Release
WASHINGTON— A federal grand jury in Corpus Christi, Texas, returned an indictment today charging Fleet Management Limited with obstruction of agency proceedings, making false statements and failing to keep accurate pollution control records, the Justice Department announced today.
Fleet Management Limited of Hong Kong is charged with one count of failing to maintain an accurate oil record book as required by the Act to Prevent Pollution from Ships (APPS), a U.S. law which implements the International Convention for the Prevention of Pollution from Ships, commonly known as "MARPOL;" one count of making false statements to the U.S. Coast Guard; and one count of obstruction. If convicted of all counts, the company may be punished with a fine of up to $3 million.
The two individuals, Prem Kumar, a ship superintendent for Fleet Management Limited and Prasada Reddy Mareddy, the second engineer of the M/V Lowlands Sumida, have both been charged with conspiracy. Kumar was also charged with obstruction of a Coast Guard investigation. If convicted of the conspiracy charge, both face up to five years in prison and a fine of $250,000. If convicted of obstruction of justice, Kumar faces up to 20 years in prison and a $250,000 fine.
On Oct. 6, 2009, the Coast Guard was conducting a routine port state control inspection when an engine room crew member alleged that the vessel was illegally discharging oily wastewater and alerted them to the fact that a center fuel oil tank on the Lowlands Sumida was fitted with a "dummy" or false sounding tube and that oily waste water was being stored in the tank until it could be discharged overboard.. The "dummy" sounding tube would show the tank to be empty. The vessel also kept a tank sounding log that showed the tank as empty. When the Coast Guard removed the "dummy" sounding tube and sounded or measured the contents of the tank they determined the tank was almost half full with oily wastewater.
Large commercial ships, such as the Lowlands Sumida, are required by MARPOL and APPS to maintain a record known as the oil record book to document the movement, tank to tank, and the disposal of, all oil that has originated in the engineering spaces on the ship. Sludges on the ship which are generated by the purification of fuel oil and lubrication oil which are used by the main engine and generators on the ship, must be disposed of properly at a shore-side reception facility or burned in the ship’s incinerator. Oily bilge wastewater, which accumulate in the lower-most part of the ship, can only be discharged overboard if the wastes are processed through a machine known as an "oil water separator" which ensures that the water discharged overboard contains no more than 15 parts per million of oil.
According to the indictment, both Kumar, a shore side manager, and Mareddy, conspired to use the "dummy" sounding tube to conceal the contents of the center fuel oil tank and to obstruct the Coast Guard’s investigation and administration of a matter within the agency’s jurisdiction. In addition to concealing the contents of the tank, Kumar and ship engineers obstructed the Coast Guard investigation by using a false sounding log to conceal the contents of the center fuel oil tank.
An indictment is merely an accusation, and defendants are presumed innocent unless and until proven guilty in a court of law.
On April 21, 2010, John Porunnolil Zacharias, the chief engineer of the Lowlands Sumida, pleaded guilty to an APPS violation for failing to maintain an oil record book and to an obstruction violation for providing inspectors with a false engine room sounding log, and for altering a center fuel oil tank by installing a "dummy" sounding tube to conceal the contents of the tank. Zacharias is scheduled to be sentenced on July 7, 2010.
The case was investigated by the Coast Guard Investigative Service, the Environmental Protection Agency Criminal Investigations Division in Region VI and the Texas Commission on Environmental Quality Environmental Crimes Unit. The case is being prosecuted by the Justice Department’s Environmental Crimes Section and the U.S. Attorney’s Office for the Southern District of Texas.
Wednesday 28 April 2010
North Carolina MS-13 Gang Member Convicted of Racketeering Charges Related to Murder;<br /> First MS-13 Member Sentenced to DeathRead the Press Release
WASHINGTON - A 12-person federal jury in Charlotte, N.C., today voted unanimously to impose the death penalty against Alejandro Enrique Ramirez Umana, aka "Wizard," 25. Umana was convicted by the same jury on April 19, 2010, for the murders of Ruben Garcia Salinas and his brother, Manuel Garcia Salinas, on Dec. 8, 2007, in Guilford County, N.C. The jury also found that Umana was responsible for other murders: on July 27, 2005, in Los Angeles, the defendant killed Jose Herrera and Gustavo Porras; and on Sept. 28, 2005, in Los Angeles, the defendant participated and aided and abetted the killing of Andy Abarca. That sentence will be formally imposed by Chief U.S. District Court Judge Robert J. Conrad Jr., at a later date.
The conviction and sentence were announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney for the Western District of North Carolina Anne M. Tompkins; Special Agent in Charge of the FBI in North Carolina, Owen D. Harris; and Rodney Monroe, Chief of the Charlotte-Mecklenburg Police Department.
On April 19, 2010, the jury found Umana guilty of conspiracy to participate in racketeering; two counts of murder in aid of the racketeering enterprise known as MS-13; two counts of murder resulting from the use of a gun in a violent crime; possession of a firearm by an illegal alien; one count of extortion; and two criminal counts associated with witness tampering or intimidation. The jury reached its guilty verdict after a week-long trial in U.S. District Court in Charlotte, which began on April 12, 2010.
"Today, a jury of North Carolina citizens imposed the most severe punishment available under the law against a defendant who has inflicted violence and pain on numerous communities," said Assistant Attorney General Breuer. "In courtrooms from North Carolina to Texas and Maryland to Tennessee, the Criminal Division’s Gang Unit and our partner U.S. Attorneys’ Offices are targeting the most dangerous gang members and taking these violent offenders off our streets."
"This outcome, a sentence of death, is appropriate because our citizens, represented by this jury, have spoken to their community, particularly to young people who would engage in unlawful gang-related activity," said U.S. Attorney Anne M. Tompkins. "This investigation and prosecution has had a substantial impact on disrupting gang activity in Charlotte. The actions of this defendant have had a devastating effect on the family of his victims and upon our community. We are grateful to those involved in bringing the case to this conclusion, and believe justice has been done."
"Gangs have no place in our communities," said Owen D. Harris, Special Agent in Charge of the Charlotte Division of the FBI. "The jury’s finding today sends a message to those gang members who think they can avoid responsibility for their deeds. We will not stop going after them. The people and agencies that took part in this investigation and prosecution prove perseverance and commitment pay off."
"The decision today shows how willing this community is to punish gang members for wreaking havoc in our city. My Department and our law enforcement partners won’t stop until we round them all up," said Rodney Monroe, Chief of the Charlotte-Mecklenburg Police Department. "This should also send a clear message to any gang member who thinks he can escape justice–we’re not going to stop, and we’re going to always seek the toughest penalties."
According to testimony presented during the trial, Umana, a former resident of Greensboro, N.C., was a member of a Charlotte-based cell of the La Mara Salvatrucha, also known as MS-13. The gang is composed primarily of immigrants, or descendants of immigrants, from El Salvador, with members operating throughout North Carolina, and elsewhere, inside and outside of the United States.
Witnesses testified at trial that Umana was a veteran member of the MS-13 who had illegally traveled from El Salvador, to Los Angeles, New York, and eventually, to Greensboro. Testimony established that in the fall of 2007 he was asked by MS-13 members in prison in San Salvador, El Salvador, to assist in re-organizing the Charlotte MS-13 members so that they could better control the drug trade, as well as extort and attack rival gang members in North Carolina.
Additional testimony revealed that on Dec. 8, 2007, while in a restaurant in Greensboro, Umana used a gun to shoot Ruben Garcia Salinas fatally in the chest and Manuel Garcia Salinas in the head after they "disrespected" his gang signs by calling them "fake." Umana fired three more shots as restaurant patrons scurried for cover, with one witness running to protect her infant child. One other individual was injured by the gunfire.
According to evidence introduced during the trial, Umana later escaped to Charlotte with the assistance of other MS-13 members, where he was arrested on Dec.12, 2007, in possession of a loaded Ruger, later determined to be the murder weapon.
The jury found that, based on the evidence presented at trial and during the penalty phase, Umana shot and killed Ruben Garcia Salinas, a mason, and his brother, Manuel Garcia Salinas, a bricklayer, in aid of the racketeering enterprise known as MS-13. According to testimony and evidence presented at trial, Umana attempted during his term of pre-trial incarceration to kill witnesses and MS-13 members who had become informants. During the first day of jury selection, during a pat down at the jail prior to removing the defendant to the federal courthouse in Charlotte, U.S. Marshals recovered a knife, which Umana had concealed by attaching it to his penis.
Umana was also found by the jury at the sentencing phase to have been responsible for three other murders in Los Angeles. One of these, a double murder, occurred in July 2005 on Fairfax Avenue. The third murder, and injury of two others, occurred at Lemon Grove Park in September 2005.
The case was prosecuted by Assistant U.S. Attorney Jill Westmoreland Rose of the U.S. Attorney’s Office for the Western District of North Carolina, and Trial Attorney Sam Nazzaro from the Criminal Division’s Gang Unit. Assistant U.S. Attorneys Don Gast, Adam Morris and Kevin Zolot, all of the U.S. Attorney’s Office for the Western District of North Carolina, were also members of the government’s trial team.
Evidence presented at trial also showed that the long-term investigation of MS-13 activity in North Carolina was initiated by the FBI’s N.C. "Safe Streets" Gang Task Force. Specifically, a witness came forward through the Charlotte-Mecklenburg Police Department’s "Gang of One" program and explained how the killings were part of the violent operation of a single MS-13 cell operating out of the Charlotte, N.C., area.
The investigation of the wide-sweeping enterprise led to the successful federal prosecution of 26 MS-13 members. In addition to Umana, six defendants were convicted at trial in January 2010, and 18 other co-defendants have pleaded guilty to the racketeering charges related to MS-13 activities in North Carolina. One defendant remains in custody in El Salvador.
The Task Force is composed of the FBI; the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF); U.S. Immigration and Customs Enforcement (ICE); the Charlotte-Mecklenburg Police Department; and the Gastonia, N.C., Police Department. The FBI’s MS-13 National Gang Task Force played a significant role in coordinating the international aspects of the overall investigation, and additional critical assistance was provided by the Transnational Anti-Gang (TAG) Center. Additional law enforcement investigative support was provided by the North Carolina State Bureau of Investigation, as well as the Greensboro Police Department and the Durham Police Department. Substantial assistance has been afforded, especially during the trial, by the U.S. Marshals Service for the Western District of North Carolina.
For further information about FBI’s "Safe Streets Task Force" program, visit www.fbi.gov . For further information about the "Gang of One" program of the Charlotte-Mecklenburg Police Department, contact Fran Cook at 704.432.4264.
Houston Medical Equipment Company Owner, Operator and Patient Recruiter Plead Guilty to Health Care Fraud Scheme and Illegal Health Care KickbacksRead the Press Release
Houston-area residents Doris Vinitski and John Lachman pleaded guilty today in connection with their roles in a durable medical equipment Medicare fraud scheme, the Departments of Justice and Health and Human Services (HHS) announced.
According to court documents, Vinitski, 45, was the owner of Onward Medical Supply, a Houston-area durable medical equipment company. Lachman, 45, operated the day-to-day business for several years, and Vicki Phillips, 53, was a patient recruiter for Onward. Vinitski and Lachman, who is Vinitski’s estranged husband, each pleaded guilty today before U.S. District Court Judge Nancy Atlas of the Southern District of Texas to one count of conspiracy to commit health care fraud. Phillips pleaded guilty on April 21, 2010, to one count of conspiracy to defraud the United States and to paying health care kickbacks.
Onward began billing Medicare for fraudulent durable medical equipment in 2003, according to court documents. Vinitski and Lachman admitted they paid kickbacks, sometimes $1,000 per patient, to recruiters who brought patients to Onward. Lachman and Vinitski then would bill Medicare for durable medical equipment that these patients did not need or never received.
Phillips admitted that she recruited Medicare beneficiaries for the purpose of allowing Onward to submit claims to Medicare for durable medical equipment, including power wheelchairs and orthotic devices. Phillips also admitted she received kickbacks from Onward for each patient she recruited whose claims were reimbursed by Medicare.
Lachman and Phillips are scheduled to be sentenced on Aug. 16, 2010. Vinitski is scheduled to be sentenced on Aug. 17, 2010. Lachman and Vinitski face a maximum penalty of 10 years in prison and a $250,000 fine. Phillips faces a maximum penalty of five years in prison and a $250,000 fine.
Seven additional defendants allegedly involved in the scheme – Dr. Howard Grant, Clinton Lee, Michael Kalu Obasi, Darnell Willis, Ju-Ying Cian, Obisike Nwankwo and John Nasky Okonkwo - are scheduled for trial on May 17, 2010. The charges against these defendants are merely allegations and they are presumed innocent until proven guilty.
The guilty pleas were announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney José Angel Moreno of the Southern District of Texas; Richard C. Powers, Special Agent-in-Charge of the FBI’s Houston office; Special Agent-in-Charge Mike Fields of the Dallas Regional Office of the HHS Office of Inspector General (OIG), Office of Investigations; and Texas Attorney General Greg Abbott on behalf of the Texas Attorney General’s Medicaid Fraud Control Unit (MFCU).
The cases were prosecuted by Assistant Chief John S. (Jay) Darden and Trial Attorneys Jennifer L. Saulino and O. Benton Curtis III of the Criminal Division’s Fraud Section. The cases were investigated by the FBI, HHS-OIG and MFCU.
The case was brought as part of the Medicare Fraud Strike Force, supervised by the U.S. Attorney’s Office for the Southern District of Texas and the Criminal Division’s Fraud Section. Since their inception in March 2007, Strike Force operations in seven districts have obtained indictments of more than 560 individuals who collectively have falsely billed the Medicare program for more than $1.2 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov
Fourth New Orleans Police Officer Pleads Guilty in Danziger Bridge CaseRead the Press Release
WASHINGTON – Former New Orleans Police Department (NOPD) officer Robert Barrios pleaded guilty today in federal court to conspiring with fellow officers to obstruct justice by covering up a police-involved shooting that occurred on the Danziger Bridge in the days after Hurricane Katrina.
Today’s plea was announced by Thomas E. Perez, Assistant Attorney General in charge of the Justice Department’s Civil Rights Division, U.S. Attorney Jim Letten for the Eastern District of Louisiana, and David Welker, the Special Agent in Charge of the New Orleans Field Office of the FBI.
On Sept. 4, 2005, Barrios was one of several officers who rode in a large Budget rental truck to the Danziger Bridge, where officers engaged in two shooting incidents that left two civilians dead and four others seriously injured. According to court documents, officers first arrived on the east side of the bridge, where they fired at the group of civilians who were walking to a supermarket for food and supplies. One of the civilians was killed, and four members of a family were severely wounded. Officers then traveled to the west side of the bridge and encountered Lance and Ronald Madison, who were crossing the bridge on their way to the dentistry office of one of their other brothers. An officer shot and killed Ronald Madison, a 40-year-old man with severe mental and physical disabilities.
Today in court, Barrios admitted that he agreed with other officers to obstruct justice during the investigations that followed the shooting. Specifically, Barrios stated that he and other officers, including a supervisor who had been involved in the shooting, discussed the stories that they would tell about what happened on the bridge. The purpose of the discussions, according to Barrios, was for the officers "to get their stories straight."
Barrios also admitted that, prior to giving a formal, audio-taped statement to NOPD investigators, he and other officers participated in a meeting with two sergeants assigned to investigate the shooting, during which the officers were instructed to get their stories straight before giving their formal statements.
Barrios further admitted that he lied, in a formal NOPD statement, in order to help cover for his fellow officers. Although Barrios had not seen any civilians with guns, and had not fired his weapon on the bridge, he claimed in his formal statement that he had seen two of the civilians using handguns to threaten officers, and that he and other officers had fired back at the civilians. Today in court, Barrios admitted that he lied when he said he saw civilians with handguns, that he lied when he claimed that he shot at the civilians in self-defense, and that he lied when he said he had heard police officers announce "Police!" before opening fire on the civilians.
The defendant admitted today in court that the purpose of the conspiracy he joined was to provide false and misleading information in order to ensure that the shootings on the bridge would appear to be legally justified and that the involved officers would therefore be shielded from liability. The defendant faces a possible maximum sentence of five years in prison and a fine of $250,000.
"In the days following Hurricane Katrina, the people of New Orleans were relying upon law enforcement to protect public safety. Instead, the officers involved in this incident and its cover-up abused their power and violated the public trust. We continue to investigate incidents that occurred in New Orleans after Hurricane Katrina, and we will aggressively prosecute any officer who violates the law either by engaging in misconduct or a conspiracy to deny justice," said Assistant Attorney General Perez.
"Today’s conviction of the fourth New Orleans police officer on federal felony charges arising out of the cover-up of the true events surrounding the unprovoked shooting of innocent citizens on the Danziger Bridge –as well as the earlier guilty plea by a civilian —evidence our commitment to relentlessly pursue justice and hold accountable all of those responsible for the injustices to which the victims were subjected," said U.S. Attorney Letten. "Just as important, we continue to fiercely defend the rights of everyone, including those most vulnerable among us, to enjoy the protection of honest, professional law enforcement. As we begin to enter the second, critical phase of this case, we will do whatever it takes to achieve true justice in the vindication of the precious rights of all citizens."
"Based on the statement of facts, it is apparent that yet another officer decided to play ‘follow the leader’ instead of demonstrating the character to stand up and do what is right and ethical. That failure to exhibit ethical and honorable behavior brings us to the results of today’s guilty plea of Barrios," said Special Agent in Charge Welker.
The charges against Barrios follow guilty pleas from three other former NOPD officers involved in the Danziger Bridge case. Former Lieutenant Michael Lohman, former Detective Jeffrey Lehrmann and former Officer Michael Hunter have pleaded guilty to charges stemming from the shooting and subsequent cover-up. Hunter, in his plea hearing, admitted that he drove the truck to the bridge on the day of the shooting, and that he and other officers opened fire on civilians who did not appear to have any weapons, and who were "casually walking on the roadway" when the police arrived.
Hunter stated that a supervisor on the scene held out his assault rifle and, in a sweeping motion, fired repeatedly at civilians who had, by that time, taken cover behind a concrete barrier. Describing the shooting of Ronald Madison that occurred a few minutes later, Hunter stated that another NOPD officer shot Madison in the back, without warning, as Madison ran away, unarmed, following his brother toward a nearby motel. After Madison was shot, according to Hunter, the supervisor who had shot people earlier on the east side of the bridge, repeatedly kicked or stomped on Madison as he lay wounded and dying.
This case, which is ongoing, is being investigated by the New Orleans Field Office of the FBI, and is being prosecuted by Deputy Chief Bobbi Bernstein and Trial Attorney Forrest Christian of the Justice Department’s Civil Rights Division, along with Assistant U.S. Attorney Julia K. Evans for the Eastern District of Louisiana.
Four Defendants Sentenced in Human Trafficking RingRead the Press Release
WASHINGTON - Juan Cortes-Meza, 33, of Mexico; Raul Cortes-Meza, 22, of Mexico; Edison Wagner Rosa Tort, 71, of Cartersville, Ga.; and Otto Jaime Larios Perez, 27, of Guatemala were sentenced by U.S. District Judge Richard W. Story for participating in sex trafficking in an organization targeting young Mexican women.
Juan Cortes-Meza was sentenced today to 16 years, eight months in prison to be followed by three years of supervised release, and ordered to pay restitution to the victim in the amount of $57,600. Raul Cortes-Meza was sentenced yesterday to 10 years in prison to be followed by three years of supervised release, and ordered to pay restitution to the victim in the amount of $7,000. Edison Wagner Rosa Tort was sentenced yesterday to five years in prison to be followed by three years of supervised release, and ordered to pay restitution to the victim in the amount of $57,000. Otto Jaime Larios Perez was sentenced yesterday to two years, six months in prison to be followed by three years of supervised release, and ordered to pay restitution to the victim in the amount of $3,600.
"These four defendants committed heinous crimes against vulnerable women and girls who dreamed of better lives in the United States," said Thomas E. Perez, Assistant Attorney General in charge of the Civil Rights Division. "Driven by greed, these defendants robbed their victims of basic human rights and dignities. The Department of Justice is committed to holding traffickers accountable and restoring the lives of their victims."
U.S. Attorney Sally Quillian Yates said, "The U.S. Attorney's Office is committed to dismantling sex-trafficking organizations that operate in the Northern District of Georgia. Those who enslave and sell young women for sex, or who profit from it, must be held accountable. Nothing we can do will fully restore these victims from the harm they suffered at the hands of these criminals, but we will do everything in our power to stop others from being abused."
"These traffickers exhibited a callous disregard for the lives of the victims whom they exploited for money," said Kenneth Smith, Special Agent in Charge of the ICE Office of Investigations in Atlanta. "While we cannot undo the terrible experiences that they endured, we hope that today's sentencing gives them some sense of closure."
According to U.S. Attorney Yates and the information presented in court, From Spring 2006 through June 2008, these defendants and others charged in the conspiracy recruited and enticed approximately 10 victims to come to the Atlanta area from Mexico and then forced them into prostitution for the financial benefit of the members of the alleged conspiracy. Often the conspirators, including Juan Cortes-Meza, would lure the women to the U.S. by promising better lives, legitimate employment, or romantic relationships with the defendants. Drivers, such as Larios Perez, Raul Cortes-Meza, and Rosa Tort, collected the victims from the homes where they lived with the defendants in Norcross and drove them to apartments and homes where paying clients waited for commercial sex.
Specifically, Juan Cortes-Meza smuggled the 17-year-old female victim into the United States by falsely promising that he would help her find employment in a restaurant or as a housekeeper. The victim was thereafter compelled to engage in commercial sex acts with numerous men every night, and to give Juan Cortes-Meza the money she collected. Juan Cortes-Meza controlled the victim’s daily life and was physically violent with her.
Raul Cortes-Meza harbored and transported a victim and benefitted financially from causing her to engage in commercial sex acts. While another co-conspirator brought the victim into the United States, Raul Cortes-Meza drove her to apartments to have sex with paying clients. He then collected money and kept some for himself, giving the rest to other co-conspirators.
Rosa Tort took a victim from the Cortes-Meza trafficking ring and kept her in Cartersville, Ga., where he forced her to perform commercial sex acts against her will.
Larios Perez pleaded guilty to making false statements to law enforcement when he was intercepted with a victim in his car. When caught with a victim, Larios Perez lied to investigators about his relationship to the victim, claiming she was a family member, and falsely stated that he had never driven anyone to any location for prostitution. In fact, Larios Perez had driven at least six of the young Mexican women to locations to engage in prostitution.
In order to bring defendants to justice, victims of crime may be eligible for immigration status in the United States to assist in the prosecution. Six of the victims addressed the court about what they suffered at the hands of this sex trafficking ring, telling of physical threats, beatings, and intimidation which caused them to work as prostitutes against their will.
This case was investigated by Special Agents of U.S. Immigration and Customs Enforcement. Assistant U.S. Attorney Susan Coppedge and Trial Attorney Karima Maloney of the Civil Rights Division’s Human Trafficking Prosecution Unit prosecuted the case.
Florida Couple Charged in Forced Labor and Document Servitude ConspiraciesRead the Press Release
WASHINGTON – Sophia Manuel and Alfonso Baldonado Jr. have been indicted by a federal grand jury on charges arising from a human trafficking scheme to hold Filipino nationals in forced labor in country clubs and hotels in Southeast Florida, the Justice Department announced.
According to the indictment, defendants Manuel, 41, and Baldonado, 46, owners of Quality Staffing Services Corporation of Boca Raton, Fla., conspired to obtain a cheap, compliant and readily available labor pool. The indictment details the defendants conspired to hold the workers in their continued service, for little or no pay, and housed them in substandard conditions without adequate food or drinking water.
The indictment alleges that the defendants used false promises to entice the Filipino nationals to incur debts to pay up-front recruitment fees; and then compelled the workers to remain in the defendants’ service, despite inadequate work or income to pay off the debts, using a scheme of threats to have the workers arrested and deported with no way to repay their debts, confiscation of the workers’ passports and rules and controls restricting the workers’ freedom of movement and communications with outsiders.
Sophia Manuel is also charged with visa fraud and making false statements to the government to procure foreign labor certifications and visas under the H2B guestworker program.
This case is being investigated by the U.S. Department of Homeland Security, Immigration and Customs Enforcement (ICE); the Federal Bureau of Investigation; the U.S. Department of Labor - Office of Inspector General; the U.S. Department of State - Bureau of Diplomatic Security; the state of Florida Department of Law Enforcement; and the state of Florida Office of the Attorney General.
This case is being prosecuted by trial attorney Susan French of the Human Trafficking Prosecution Unit of the Justice Department’s Civil Rights Division and Assistant U.S. Attorney Shaniek Maynard of the Southern District of Florida.
Felon Who Impersonated a Police Officer Pleads Guiltyin Danziger Bridge CaseRead the Press Release
WASHINGTON – David Ryder, a convicted felon who was dressed as a police officer on the day of a police-involved shooting on Sept. 4, 2005, in New Orleans, pleaded guilty today in federal court to lying to a federal agent and to illegally possessing a firearm.
Assistant Attorney General Thomas E. Perez of the Justice Department’s Civil Rights Division, U.S. Attorney Jim Letten for the Eastern District of Louisiana, and David Welker, the Special Agent in Charge of the New Orleans Field Office of the FBI, announced the guilty plea in connection with the federal probe into a police-involved shooting on the Danziger Bridge in the days after Hurricane Katrina that left two civilians dead and four others severely wounded.
Ryder admitted in court today that he lied to an FBI agent when he provided a statement about events he had witnessed leading up to the deadly shooting on the bridge. Ryder also admitted that at the time of the shooting, he was carrying a gun, even though he was legally prohibited from doing so because he was a convicted felon.
According to his statement in court today, Ryder was on the I-10 high rise bridge in New Orleans on the morning of Sept. 4, 2005, when he heard what he believed to be bullets hit the underside of the high rise and saw two or more people, down below the bridge, running in the direction of the Danziger Bridge, which runs parallel to the high rise. Ryder ran down an on-ramp and through a trailer park, in search of the people who had run from under the high rise, but he never got closer than a block from the people and he never saw them with a weapon. However, during an interview with the FBI, Ryder claimed that one of the people running away from the high rise bridge had fired at him as he ran after them through trailer park. Ryder admitted today that his statement to the FBI was a lie.
Ryder also admitted today that, after the shooting incident, he returned with NOPD officers to a makeshift police station, where he falsely identified a man in handcuffs as one of the people who had shot at the I-10 bridge. Even though Ryder had never seen anyone shooting at the high rise bridge, and did not know whether the man in handcuffs was one of the people who had run from the high rise, he told an NOPD officer, "It looks like him." Ryder also admitted today that he testified falsely, under oath, to a state grand jury investigating the Danziger Bridge incident.
Ryder faces a possible maximum sentence of 15 years in prison and a fine of $500,000.
This case, which is ongoing, is being investigated by the New Orleans Field Office of the FBI, and is being prosecuted by Deputy Chief Bobbi Bernstein and Trial Attorney Forrest Christian of the Justice Department’s Civil Rights Division, along with Assistant U.S. Attorney Julia K. Evans for the Eastern District of Louisiana.
Tuesday 27 April 2010
Pharmaceutical Giant AstraZeneca to Pay $520 Million<br /> for Off-label Drug MarketingRead the Press Release
AstraZeneca LP and AstraZeneca Pharmaceuticals LP will pay $520 million to resolve allegations that AstraZeneca illegally marketed the anti-psychotic drug Seroquel for uses not approved as safe and effective by the Food and Drug Administration (FDA), the Departments of Justice and Health and Human Services’ Health Care Fraud Enforcement Action Team (HEAT) announced today. Such unapproved uses are also known as "off-label" uses because they are not included in the drug’s FDA approved product label.
The Wilmington, Del.-based company signed a civil settlement to resolve allegations that by marketing Seroquel for unapproved uses, the company caused false claims for payment to be submitted to federal insurance programs including Medicaid, Medicare and TRICARE programs, and to the Department of Veterans Affairs, the Federal Employee Health Benefits Program and the Bureau of Prisons.
Under the terms of the settlement, the federal government will receive $301,907,007 from the civil settlement, and the state Medicaid programs and the District of Columbia will share up to $218,092,993 of the civil settlement, depending on the number of states that participate in the settlement. The allegations were originally brought in a lawsuit under the qui tam or whistleblower provisions of the False Claims Act and various state False Claims Act statutes.
Under the Food, Drug and Cosmetic Act, a company must specify the intended uses of a product in its new drug application to the FDA. Before approving a drug, the FDA must determine that the drug is safe and effective for the use proposed by the company. Once approved, the drug may not be marketed or promoted for off-label uses.
The FDA originally approved Seroquel in September 1997 for the treatment of manifestations of psychotic disorders. In September 2000, FDA proposed narrowing the approval for Seroquel to the short term treatment of schizophrenia only. In January 2004, the FDA approved Seroquel for short term treatment of acute manic episodes associated with bipolar disorder (bipolar mania). In October 2006, the FDA approved Seroquel for bipolar depression.
The United States alleges that AstraZeneca illegally marketed Seroquel for uses never approved by the FDA. Specifically, between January 2001 through December 2006, AstraZeneca promoted Seroquel to psychiatrists and other physicians for certain uses that were not approved by the FDA as safe and effective (including aggression, Alzheimer’s disease, anger management, anxiety, attention deficit hyperactivity disorder, bipolar maintenance, dementia, depression, mood disorder, post-traumatic stress disorder, and sleeplessness). These unapproved uses were not medically accepted indications for which the United States and the state Medicaid programs provided coverage for Seroquel.
According to the settlement agreement, AstraZeneca targeted its illegal marketing of the anti-psychotic Seroquel towards doctors who do not typically treat schizophrenia or bipolar disorder, such as physicians who treat the elderly, primary care physicians, pediatric and adolescent physicians, and in long-term care facilities and prisons.
In March 2006, AstraZeneca brought certain conduct to the attention of the government and then cooperated in the investigation of the allegations being settled today.
The United States contends that AstraZeneca promoted the unapproved uses by improperly and unduly influencing the content of, and speakers, in company-sponsored continuing medical education programs. The company also engaged doctors to give promotional speaker programs on unapproved uses for Seroquel and to conduct studies on unapproved uses of Seroquel. In addition, the company recruited doctors to serve as authors of articles that were ghostwritten by medical literature companies and about studies the doctors in question did not conduct. AstraZeneca then used those studies and articles as the basis for promotional messages about unapproved uses of Seroquel.
"Illegal acts by pharmaceutical companies and false claims against Medicare and Medicaid can put the public health at risk, corrupt medical decisions by health care providers, and take billions of dollars directly out of taxpayers’ pockets," said Attorney General Eric Holder. "This Administration is committed to recovering taxpayer money lost to health care fraud, whether it’s by bringing cases against common criminals operating out of vacant storefronts or executives at some of the nation’s biggest companies."
The United States also contends that AstraZeneca violated the federal Anti-Kickback Statute by offering and paying illegal remuneration to doctors it recruited to serve as authors of articles written by AstraZeneca and its agents about the unapproved uses of Seroquel. AstraZeneca also offered and paid illegal remuneration to doctors to travel to resort locations to "advise" AstraZeneca about marketing messages for unapproved uses of Seroquel, and paid doctors to give promotional lectures to other health care professionals about unapproved and unaccepted uses of Seroquel. The United States contends that these payments were intended to induce the doctors to prescribe Seroquel for unapproved uses in violation of the federal Anti-Kickback Statute.
"Rooting out health care fraud is a top priority for the Obama Administration, said Kathleen Sebelius, Secretary of the Department of Health and Human Services. "Today’s settlement sends a clear warning to any individual or company seeking to defraud our health care system and returns hundreds of millions of dollars of taxpayer money to the Medicare trust fund where they belong. It reflects the unprecedented energy, resources, and new ideas that this administration has devoted to identifying, prosecuting, and ultimately preventing health care fraud. With the new anti-healthcare fraud resources in the Affordable Care Act, there has never been a worse time to try to steal from our health care system."
"Consumers are entitled to rely on the claims pharmaceutical companies make about the drugs they sell," said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. "Working with our federal and state partners, we will protect the integrity of our public health programs by ensuring that kickbacks from drug companies do not taint the medical decisions of health care professionals."
"When pharmaceutical companies interfere with the FDA’s mission to insure that drugs are safe and effective, they undermine the doctor-patient relationship and put the health and safety of patients at risk," said Michael L. Levy, U.S. Attorney for the Eastern District of Pennsylvania. "People have a legal right to know that pharmaceutical companies are marketing their drugs only for uses approved by the FDA and that their doctors’ judgment has not been affected by misinformation from a pharmaceutical company trying to boost revenues."
In addition to the civil settlement agreement, resolution of the matter includes a Corporate Integrity Agreement (CIA) between AstraZeneca and the Office of Inspector General of the Department of Health and Human Services. The five-year CIA requires, among other things, that a board of directors committee annually review the company’s compliance program and certify its effectiveness; that certain managers annually certify that their departments or functional areas are compliant; that AstraZeneca send doctors a letter notifying them about the settlement; and that the company post on its website information about payments to doctors, such as honoraria, travel or lodging. AstraZeneca is subject to exclusion from Federal health care programs, including Medicare and Medicaid, for a material breach of the CIA and subject to monetary penalties for less significant breaches.
"As a result of this Corporate Integrity Agreement, the actions of AstraZeneca will be more transparent, its Board of Directors held more accountable, and the names of physicians receiving payments will be disclosed -- all leading to better protection for patients," said Department of Health and Human Services Inspector General Daniel R. Levinson.
The government’s investigation was triggered by a whistleblower lawsuit filed under the FCA’s qui tam provisions in the Eastern District of Pennsylvania. As part of today’s resolution, James Wetta, the whistleblower in that action, will receive more than $45 million from the federal share of the civil recovery.
This settlement is part of the government’s emphasis on combating health care fraud and another step for the HEAT initiative, which was announced by Attorney General Holder and Secretary Sebelius in May 2009. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid fraud through enhanced cooperation. One of the most powerful tools in that effort is the FCA, which the Justice Department has used to recover almost $2.8 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in FCA cases since January 2009 are over $3.75 billion.
The civil settlement was reached by the U.S. Attorney’s Office for the Eastern District of Pennsylvania and the Commercial Litigation Branch of the Justice Department’s Civil Division. This investigation was conducted by the Department of Health and Human Services Office of Inspector General, U.S. Postal Service’s Office of Inspector General and the FDA’s Office of Criminal Investigations. Assistance was provided by representatives of FDA’s Office of Chief Counsel and the National Association of Medicaid Fraud Control Units.
Minnesota Man Sentenced to 117 Months in Prison for Running Ponzi SchemeRead the Press Release
A Rosemount, Minn., man was sentenced today to 117 months in prison for his role in running a Ponzi scheme involving commodity pools, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney B. Todd Jones for the District of Minnesota.
U.S. District Court Judge Donovan W. Frank also ordered Charles "Chuck" E. Hays, 56, to pay $21,825,090 in restitution and $7,850 in victim attorney’s fees, as well as to serve three years of supervised release following his prison term. Hays pleaded guilty before Judge Frank on April 14, 2009, in St. Paul, Minn., to one count of mail fraud, one count of wire fraud and one count of structuring transactions to avoid financial reporting requirements. Hays was arrested Feb. 5, 2009, and charged in a criminal complaint with mail fraud and wire fraud. Hays has been detained without bond in federal custody since his arrest.
Shortly after Hays’ arrest, the government seized a $3 million yacht Hays purchased with investor funds, as well as two of Hays’ bank accounts, which contain approximately $1 million in funds obtained through the fraudulent scheme. The government estimates in court documents that investors lost more than $20 million in the scheme.
According to the plea agreement, Hays admitted to devising and participating in a scheme in which he solicited individuals to invest money with him and his company, Crossfire Trading LLC, from January 2001 through February 2009. Hays told potential investors he was a day trader in stock index futures and other futures contracts. Hays also admitted that he falsely represented to potential investors that his trading was consistently profitable and earned approximately three percent per month. According to court documents, many people chose to invest money with Hays and Crossfire based on these misrepresentations.
Hays also admitted that once an individual invested money, he provided the investor with a document that outlined the purported terms of the agreement with Crossfire. Hays admitted the investment agreements misrepresented the goal and activities of Crossfire and how investor profits and losses would be handled. According to the investor agreements, Crossfire was falsely presented as a day-trading company whose primary activity was short-term trading of futures. However, instead of using investor funds to trade in the equities listed in the investor agreement, Hays admitted he diverted and converted those funds for his personal use and other unauthorized purposes.
Hays also admitted that he instructed investors to mail him a check or to wire money to Crossfire’s bank account. Hays admitted he then created and sent investors fraudulent monthly summaries purportedly showing investments and any gains clients supposedly realized.
In addition, Hays admitted that when investors asked him for details regarding his trading or investment philosophy, he misrepresented to them that Crossfire traded through an account at a registered brokerage firm in Chicago, where he said investors’ funds were maintained. To support those misrepresentations, Hays admitted he showed several investors a fraudulent statement that reflected a $37 million balance in Crossfire’s account at the registered brokerage firm, when in reality Crossfire did not have an account with the firm. According to court documents, Hays used funds received from new investors to make payments to earlier investors in order to give legitimacy to the scheme.
In a related action, the U.S. Commodity Futures Trading Commission (CFTC) filed a civil enforcement action against Hays and Crossfire on Feb. 5, 2009.
The case was prosecuted by Assistant Chief Robertson Park and Trial Attorney Laura Perkins of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Ann Anaya for the District of Minnesota. Significant assistance was also provided by Assistant U.S. Attorney Jim Alexander for the District of Minnesota. The case was investigated by the U.S. Postal Inspection Service. The Department acknowledges the substantial assistance provided by the CFTC in connection with this investigation.
Today’s sentencing is part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
For more information on the task force, visit www.StopFraud.gov
Justice Department Requires Divestitures in Baker Hughes’ Merger with BJ ServicesRead the Press Release
The Department of Justice announced today that it has reached a settlement that will require Baker Hughes Inc. and BJ Services Company to divest two specially equipped vessels and other assets in order to proceed with their proposed merger. The department said that the transaction as originally proposed would combine two of only four companies that provide specialized pumping services, called stimulation services, necessary for the production of oil and gas from wells in the U.S. Gulf of Mexico. Without the divestitures, the department said the transaction would lead to higher prices and a reduction in service quality.
The Department of Justice’s Antitrust Division filed a civil antitrust lawsuit today in U.S. District Court for the District of Columbia to block the proposed transaction. At the same time, the department filed a proposed settlement that, if approved by the court, would resolve the competitive concerns alleged in the lawsuit.
Stimulation services prevent sand from interfering with the flow of oil and gas from wells in the Gulf. These critical services are performed using specially designed and equipped vessels that are operated by experienced crews and supported by scientists, engineers and other lab technicians who customize the stimulation job for the specific well formation.
The complaint alleges that, as a result of the transaction, customers that viewed Baker Hughes and BJ Services as their first and second choices, based on reputation and service quality among other factors, would lose their next-best alternative. This would give the merged firm the incentive and ability to raise its prices and lead the two other competitors in the Gulf to bid less aggressively. The transaction also would present the merged firm with the opportunity to move a vessel out of the Gulf, reducing the number of stimulation vessels available and likely increasing prices, the department said.
The proposed settlement requires the companies to divest two vessels used for providing stimulation services–BJ’s Blue Ray and Baker Hughes’ HR Hughes–along with certain other assets, including a dock facility in Port Fourchon, La., sand control tool assets and stimulation fluid assets. The proposed settlement also provides the purchaser of the divestiture package with an expansive right to hire personnel from both Baker Hughes and BJ Services.
Baker Hughes is a global oilfield service company with operations in more than 90 countries. It provides advanced products and services to help customers drill, evaluate, complete and produce oil and gas wells. In 2009, Baker Hughes’ revenues were approximately $9.7 billion.
BJ is a leading worldwide provider of completion services and tools to petroleum companies. Completion services and tools are used to prepare a well for production. BJ’s fiscal 2009 revenues were approximately $4.1 billion.
As required by the Tunney Act, the proposed settlement, along with the department’s competitive impact statement, will be published in the Federal Register. Any person may submit written comments concerning the proposed settlement during a 60-day comment period to Donna N. Kooperstein, Chief, Transportation, Energy, and Agriculture Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street, N.W., Suite 8000, Washington, D.C. 20530. At the conclusion of the 60-day comment period, the U.S. District Court for the District of Columbia may enter the proposed settlement upon finding that it is in the public interest.
Four Individuals and Three Corporations Indicted for Roles in <br /> Mail and Wire Fraud Conspiracies at a New York City HospitalRead the Press Release
A New York City federal grand jury returned an indictment against four individuals and three corporations for participating in mail and wire fraud conspiracies related to contracts for work performed at New York Presbyterian Hospital (NYPH), the Department of Justice announced.
The four-count indictment returned today in U.S. District Court in New York City, charges Michael Yaron and two companies owned by him, Cambridge Environmental & Construction Corp., which does business as National Environmental Associates (Cambridge/NEA), an asbestos abatement company, and Oxford Construction & Development Corp., a construction company, with engaging in wire and mail fraud conspiracies to defraud the NYPH. Also indicted on the same charges are Moshe Buchnik, the current president of two asbestos abatement companies; Emilio "Tony" Figueroa, a former Director of Facilities Operations at NYPH, and Santo Saglimbeni, a former Vice President of Facilities Operations at NYPH; and Artech Corp., a company owned by a relative of Saglimbeni.
According to the indictment, from at least as early as 2000 and continuing through at least January 2008, Saglimbeni awarded asbestos abatement contracts, air monitoring contracts and general construction contracts to Yaron, Buchnik, their companies, Cambridge/NEA and Oxford, and to their co-conspirators, at the same time that Saglimbeni was asking for and receiving cash kickbacks from Yaron and Buchnik. A substantial portion of those kickbacks were funneled by Yaron and Buchnik through various intermediary companies, and eventually to Saglimbeni through Artech, a company Saglimbeni created in a family member’s name to conceal kickbacks, the department said.
Yaron, Buchnik, Saglimbeni, Cambridge/NEA, Oxford and Artech are also charged with wire fraud to achieve the objectives of the conspiracy, as they transferred money electronically from the bank account of one co-conspirator to the bank account of Artech on or about May 5, 2005, the department said in court documents.
The indictment further charges that between at least as early as June 2001 and June 2006, Saglimbeni, Figueroa and their co-conspirators engaged in a mail fraud conspiracy, in which Saglimbeni and Figueroa awarded contracts for the installation and repair of the Heating Ventilation and Air Conditioning Systems (HVAC) at NYPH to a co-conspirator’s company in return for cash kickbacks and other valuable gifts given to Saglimbeni and Figueroa by that co-conspirator. Saglimbeni and Figueroa are also charged with mail fraud to achieve the fraudulent objectives of the conspiracy, as they caused NYPH to mail a payment on a fraudulently awarded contract to a co-conspirator’s company on or about May 5, 2005.
The mail and wire fraud violations that the individuals are charged with each carry a maximum penalty of 20 years in prison and a $1 million fine. The maximum fine for the charges may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
The indictment also seeks the forfeiture of certain assets as they relate to the kickbacks received in connection with the mail fraud charges in the indictment.
The charges announced today resulted from an ongoing federal antitrust investigation of bid rigging, fraud, bribery and tax-related offenses relating to construction, maintenance and service contracts administered by the Engineering Department of Mount Sinai Medical Center and School of Medicine (Mount Sinai) and the Facilities Operations Department and the Engineering Department of NYPH. To date, eight individuals and three companies have pleaded guilty to charges arising out of this ongoing investigation.
Additionally, two individuals were charged in a three-count indictment unsealed on March 31, 2010, for participating in bid-rigging and tax fraud conspiracies related to contracts at NYPH, and one individual was charged in a three-count indictment returned by the grand jury on April 6, 2010, for participating in bid-rigging and mail fraud conspiracies related to contracts at Mount Sinai. The investigation is being conducted by the Antitrust Division’s New York Field Office with the FBI and the Internal Revenue Service Criminal Investigation’s New York Field Office.
Anyone with information concerning bid rigging, bribery, tax offenses or fraud related to contracts administered by the Facilities Operation Department at NYPH or the Engineering Departments at Mount Sinai or NYPH should contact the Antitrust Division’s New York Field Office at 212-264-9308 or the FBI’s New York Division at 212-384-1000 or visit www.justice.gov/atr/contact/newcase.htm .
Monday 26 April 2010
Justice Department Announces Agreement Protecting the Rights of Lakota-Speaking Voters in Shannon County, S.D.Read the Press Release
WASHINGTON — The Justice Department announced today an agreement with Shannon County, S.D., to ensure compliance with provisions of the Voting Rights Act that require the county to provide election materials and information in Lakota to Lakota-speaking American Indian voters, and to ensure compliance with certain provisions of the Help America Vote Act.
"The right to vote is the foundation of our democracy, and language barriers should never keep citizens from accessing that right," said Thomas E. Perez, Assistant Attorney General in charge of the Justice Department’s Civil Rights Division. "Today’s agreement ensures that Shannon County’s Lakota-speaking citizens will have access to the election process and will be able to cast an effective ballot. Shannon County should be congratulated for resolving the issue in a cooperative manner."
The chairperson of the Shannon County Board of County Commissioners, Connie Whirlwind Horse, stated that "we have taken this opportunity to work with the federal government and the state to make voting better for the people of Shannon County." Four of the five Shannon County commissioners are members of the Oglala Sioux Tribe.
The agreement with Shannon County provides for a comprehensive Lakota language assistance program for American Indian voters, including trained bilingual election officials to be available at all polling places in the County. Further, the agreement provides that each polling place will have in place an operational voting system that provides accessibility for minority language voters through a Lakota audio ballot as well as accessibility to voters with disabilities, as required by Section 301 of the Help America Vote Act. The agreement also ensures that polling places will consistently post voting information and provide provisional ballots and written information on how a voter can check whether a provisional ballot was counted, as required by Section 302(a) of the Help America Vote Act.
The Voting Rights Act requires that jurisdictions determined by the Census Bureau to have a substantial population of minority-language citizens, such as Shannon County, provide voting materials and assistance in the minority language as well as in English. The Help America Vote Act requires that voting information be publicly posted in polling locations and that otherwise qualified voters whose names do not appear on registration lists are provided a provisional ballot as well as written information on how to determine whether the provisional ballot was counted. The Help America Vote Act further requires that each polling place have an operational voting system that provides minority language accessibility, where required, as well as accessibility for voters with disabilities. Enforcement of the protections of the Voting Rights Act and the Help America Vote Act are a significant priority for the Civil Rights Division.
To file complaints about discriminatory voting practices, voters may call the Voting Section of the Civil Rights Division at 1-800-253-3931. More information about the Voting Rights Act and other federal voting rights laws is available on the Department of Justice website at www.justice.gov/crt/voting/index.htm.
Indian National Sentenced to 81 Months in Prison for Role in International Online Brokerage “Hack, Pump and Dump” SchemeRead the Press Release
An Indian national was sentenced today to 81 months in prison on conspiracy and aggravated identity theft charges arising from an international fraud scheme to "hack" into online brokerage accounts in the United States and use those accounts to manipulate stock prices, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Deborah Gilg of the District of Nebraska.
Jaisankar Marimuthu, 36, a native of Chennai, India, was also ordered to pay $2.4 million in restitution. Marimuthu pleaded guilty on Feb. 5, 2010, to one count of conspiracy to commit wire fraud, securities fraud, computer fraud and aggravated identity theft, and to one count of aggravated identity theft before U.S. District Magistrate Judge F.A. Gossett III in Omaha, Neb. Marimuthu, who was extradited to the United States following his arrest in Hong Kong, was sentenced today before U.S. District Judge Laurie Smith Camp.
According to court documents, Marimuthu was part of a conspiracy that operated out of Thailand and India from February 2006 through December 2006 in which the prices of thinly-traded securities were fraudulently inflated by hacking into brokerage accounts in the United States and then illegally using the accounts to make large, unauthorized purchases of securities in the name of the unsuspecting customers. Marimuthu admitted that after the price of the securities had been artificially increased or "pumped up" through the bogus trading, the conspirators’ own holdings of the securities would be sold at a profit. More than 90 customers and seven brokerage firms in the United States have been identified as victims. Financial losses of close to $2.5 million were sustained by the victims in this case.
Co-defendant Thirugnanam Ramanathan, 37, pleaded guilty on June 2, 2008, to one count of conspiracy to commit wire fraud, securities fraud, computer fraud and aggravated identity theft. Following his arrest in Hong Kong, Ramanathan was extradited on May 25, 2007, to the United States. Ramanathan was sentenced to two years in prison by Judge Camp, and has since been returned to India following completion of his sentence. Co-defendant Chockalingham Ramanathan, 36, was charged with one count of conspiracy, eight counts of computer fraud, six counts of wire fraud, two counts of securities fraud and six counts of aggravated identity theft. Chockalingham Ramanathan remains at large.
This case was prosecuted by Trial Attorney Richard D. Green of the Criminal Division’s Computer Crime and Intellectual Property Section; Trial Attorneys Jack Patrick and Ryan Faulconer of the Criminal Division’s Fraud Section; and Assistant U.S. Attorney Michael Norris of the District of Nebraska. This case was investigated by the FBI in Omaha.
Former Executive of Iowa Ready-mix Concrete Company<br /> Agrees to Plead Guilty to Price Fixing and Bid RiggingRead the Press Release
A former executive of an Iowa ready-mix concrete company has agreed to plead guilty and serve 19 months in jail for participating in three separate conspiracies to fix prices and rig bids for the sales of ready-mix concrete, the Department of Justice announced today.
According to a three-count felony charge filed today in U.S. District Court in Sioux City, Iowa, Steven Keith VandeBrake, a/k/a Steve VandeBrake, former executive of an Iowa ready-mix concrete company, participated in separate conspiracies with three different companies involving agreements to fix prices and/or to rig bids for ready-mix concrete sold to various companies in Iowa. Under the terms of the plea agreement, which is subject to court approval, VandeBrake has also agreed to pay a criminal fine of $100,000. VandeBrake is the first to be charged in the investigation.
According to court documents, VandeBrake participated in conspiracies in which he engaged in discussions concerning project bids for sales of ready-mix concrete, submitted rigged bids at collusive and noncompetitive prices to customers in Iowa and accepted payment for sales of ready-mix concrete at predetermined prices. He also engaged in discussions and reached agreements regarding the prices on the conspirators’ annual price lists for ready-mix concrete sold in Iowa, the department said.
Ready-mix concrete is a product whose ingredients include cement, aggregate (sand and gravel), water and, at times, other additives. The concrete generally is produced in a concrete plant and is transported to work sites by concrete-mixer trucks where it is used in various types of construction projects, including buildings and roads.
VandeBrake is charged with violating the Sherman Act, which carries a maximum penalty of 10 years in prison and a fine of $1 million per count for individuals. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
Today’s charge arose from an ongoing federal antitrust investigation of the ready-mix concrete industry in Iowa and its surrounding states. The investigation is being conducted by the Department of Justice Antitrust Division’s Chicago Field Office, the FBI’s Sioux City Resident Agency and the U.S. Department of Transportation’s Office of Inspector General, with the assistance of the U.S. Attorney’s Office in Sioux City, Iowa.
Anyone with information concerning bid rigging, price fixing or territorial allocation related to the ready-mix concrete industry in Iowa and its surrounding states should contact the Antitrust Division’s Chicago Field Office at 312-353-7530 or visit www.justice.gov/atr/contact/newcase.htm .
Federal Court Shuts Down Miami Tax PreparerRead the Press Release
A federal court has permanently barred David Santiago and his business, Santiago Investment & Consulting Inc., both based in Miami, from preparing federal tax returns for others, the Justice Department announced today. The court in Miami found that Santiago and his company had falsely claimed the first-time homebuyer tax credit on numerous returns they prepared. The civil injunction order, entered by U.S. District Judge James Lawrence King, requires Santiago to notify his customers of the injunction order.
Congress enacted the credit in 2008 to strengthen the real estate market and help the economy. Persons who have not owned a home in the previous three years can claim a credit of up to $8,000 against their federal income taxes if they bought a home after April 8, 2008. The credit has since been expanded to allow, under certain conditions, current homeowners to claim the credit for a purchase of a new home. But in order for a taxpayer to claim the credit a home must have actually been bought.
According to the court’s order, Santiago claimed the credit on customers’ returns even though he knew they had not bought new homes. The court also found that Santiago claimed fabricated business deductions on some customers’ returns and failed to keep adequate customer records or copies of the returns he prepared. A tax preparer’s failure to keep adequate records can subject him to civil penalties and an injunction.
Last October a federal court in Texas permanently barred a woman from preparing returns for others in a case where the Justice Department alleged abuse of the homebuyer credit and other tax law provisions.
Return preparer fraud is identified by the IRS as one of the <2010 "Dirty Dozen" tax scams .
Detroit-Area Doctor Sentenced to 72 Months in Prison for Medicare Fraud SchemeRead the Press Release
Dr. Toe Myint was sentenced today in Detroit to 72 months in prison for participating in a conspiracy to defraud the Medicare program, announced the Departments of Justice and Health and Human Services (HHS). A patient recruiter was also sentenced today in Detroit to 40 months in prison for his role in the conspiracy.
U.S. District Court Chief Judge Gerald E. Rosen ordered Myint, of Bloomfield Hills, Mich., to pay more than $3.1 million in restitution, jointly with co-defendants, and to serve two years of supervised release following his prison term. Chief Judge Rosen also ordered Terrence Hicks, a Jackson, Mich., resident and patient recruiter, to pay more than $4.9 million in restitution, jointly with co-defendants, and to serve three years of supervised release following his prison term.
Myint, 56, was convicted by a Detroit jury on Jan. 22, 2010, of one count of conspiracy to commit health care fraud, following a week-long trial. In the last three months, three Michigan-area doctors have been convicted at trial of separate health care fraud offenses as part of the Medicare Fraud Strike Force operations in Detroit. Hicks, 43, pleaded guilty to one count of conspiracy to commit health care fraud on Dec. 18, 2009.
Between approximately October 2006 and March 2007, Myint, Hicks and their co-conspirators caused more than $4.2 million in false and fraudulent claims to be submitted to the Medicare program for services supposedly provided by Myint at Sacred Hope Center Inc., a purported infusion clinic. Medicare actually paid more than $3.1 million of those claims. Hicks also worked at a second, related infusion clinic, called Xpress Center, Inc., which billed an additional $2.3 million in false and fraudulent claims to Medicare.
Evidence presented during Myint’s trial established that beginning in approximately October 2006 and continuing until March 2007, Myint routinely prescribed medications for patients at Sacred Hope that they did not need, and that in many cases, were never provided to the patients at all. In fact, the clinic existed for the purpose of causing fictitious claims for injection and infusion therapy services to be billed to Medicare. Myint was the only doctor who worked at Sacred Hope, and the owners of the clinic asked him to prescribe particular drugs to patients because they believed that Medicare would reimburse the medications at a high rate. Evidence at trial showed that Myint agreed to prescribe the medications even though he knew the patients did not need them.
According to court documents and evidence presented at trial, Medicare beneficiaries were not referred to Sacred Hope or Xpress Center by their primary care physicians, or for any other legitimate medical purpose, but were recruited by Hicks to come to the clinics in exchange for the payment of cash kickbacks. Hicks recruited the beneficiaries in downtown Detroit and drove them to the suburbs of Southfield and Livonia, Mich., where the clinics were located. Trial evidence showed that in exchange for the cash kickbacks Hicks paid them, the Medicare beneficiaries visited the clinics and signed documents indicating that they had received the services billed to Medicare.
To date, eleven defendants have pleaded guilty or have been convicted at trial for their roles in the two fraudulent clinics. Daisy Martinez, an owner of Sacred Hope and Xpress Center, was sentenced in March 2010 to 96 months in prison.
Today’s sentencings 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 (OIG) Chicago Regional Office.
These cases were prosecuted by Assistant Chief John Neal and Trial Attorney Benjamin D. Singer of the Criminal Division’s Fraud Section. The FBI and HHS Office of Inspector General (HHS-OIG) conducted the investigation. The case was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan.
Since the inception of Medicare Fraud Strike Force operations in March 2007, Strike Force operations in seven districts have obtained indictments of more than 560 individuals who collectively have falsely billed the Medicare program for approximately $1.2 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov
Department of Justice and USDA Announce Poultry Workshop on May 21 in AlabamaRead the Press Release
WASHINGTON – The Department of Justice and the U.S. Department of Agriculture (USDA) announced today additional details regarding the public workshop that will be held on May 21 at Alabama A&M University in Normal, Ala., to explore competition and regulatory issues in the agriculture industry. The focus of the workshop will be consolidation and contracting practices of the poultry sector. The first joint public workshop was held last month in Ankeny, Iowa.
The workshops, which were first announced by Attorney General Eric Holder and Agriculture Secretary Tom Vilsack on Aug. 5, 2009, are the first joint Department of Justice/USDA workshops ever to be held to discuss competition and regulatory issues in the agriculture industry. The goals of the workshops are to promote dialogue among interested parties and foster learning with respect to the appropriate legal and economic analyses of these issues, as well as to listen to and learn from parties with experience in the agriculture sector. Attendance at the workshops is free and open to the public. The general public and media interested in attending the Alabama workshop should register at www.aamu.edu/saes/FAS/DOJ_USDA/ .
U.S. Attorney General Eric Holder, U.S. Agriculture Secretary Tom Vilsack and Assistant Attorney General for the Justice Department’s Antitrust Division Christine Varney will participate in the Alabama workshop.
Additionally, USDA and the Department of Justice are adjusting two previously announced dates for the Madison, Wis., and Fort Collins, Colo., workshops. The current schedule for the workshops is as follows:
May 21, 2010: Poultry Industry (Normal, Ala.)
Specific areas of focus may include production contracts in the poultry industry, concentration and buyer power.
Alabama A&M University
Knight Reception Center
4900 Meridian St.
Normal, Ala.
June 25, 2010: Dairy Industry (Madison, Wis.)
Specific areas of focus may include concentration, marketplace transparency and market dynamics in the dairy industry.
University of Wisconsin
Union Theater in Memorial Union
800 Langdon St.
Madison, Wis.
Aug. 27, 2010: Livestock Industry (Fort Collins, Colo.)
This workshop will address beef, hog and other animal sectors. Likely issues for discussion are concentration in livestock markets, buyer power and enforcement of the Packers and Stockyards Act.
Colorado State University
Fort Collins, Colo.
Dec. 8, 2010: Margins (Washington, D.C.)
This workshop will look at the discrepancies between the prices received by farmers and the prices paid by consumers. As a concluding event, discussions from previous workshops will be incorporated into the analysis of agriculture markets nationally.
U.S. Department of Agriculture
Jefferson Auditorium
1400 Independence Ave., S.W.
Washington, D.C.
Additional details on the upcoming workshops will be provided at a later date.
MEDIA CONTACTS:
U.S. Department of Justice
Office of Public Affairs
Gina Talamona
202-514-2007
U.S. Department of Agriculture
Office of Communications
Jim Brownlee
202-720-4623
Department of Justice Will Not Challenge Hospital Cost<br /> Information Exchange Program in CaliforniaRead the Press Release
The Department of Justice announced today that it will not challenge a proposal by the Hospital Value Initiative (HVI) to establish an information exchange program that will provide data on the relative costs and resource efficiency of more than 300 hospitals in California. The department said the proposed information exchange may reduce health care costs by improving competition among hundreds of hospitals in California and facilitating more informed purchasing decisions by group purchasers of health care services.
Thedepartment’s position was stated in a business review letter, to counsel for the HVI, from Christine Varney, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.
The HVI proposes to collect, analyze and distribute aggregated comparative data on the level of reimbursement received, and the resources used, by California hospitals in providing inpatient and outpatient services. The HVI is a coalition of three organizations – the Pacific Business Group on Health, the California Public Employees’ Retirement System and the California Health Care Coalition – that represent group purchasers of health care services, who purchase health care for more than 7 million people.
"The Hospital Value Initiative will likely provide greater information about the relative costs and utilization rates of hospitals in California and lead payers and employers to make more informed decisions when purchasing hospital services," said Varney.
The department determined that HVI’s proposal was not likely to produce anticompetitive effects because the exchange would involve data that is at least 10 months old and the program would not disclose disaggregated data or any hospitals’ actual service fees. The HVI’s data exchange program could potentially benefit consumers by increasing the transparency of the relative costs and resource efficiency of hundreds of hospitals in California.
Under the department’s business review procedure, an organization may submit a proposed action to the Antitrust Division and receive a statement as to whether the division currently intends to challenge the action under the antitrust laws based on the information provided. The department reserves its right to challenge a proposal under the antitrust laws if the proposal produces anticompetitive effects.
A file containing the business review request and the department’s response may be examined in the Antitrust Documents Group of the Antitrust Division, U.S. Department of Justice, 450 Fifth Street, N.W., Suite 1010, Washington, D.C. 20530. After a 30-day waiting period, the documents supporting the business review will be added to the file, unless a basis for their exclusion for reasons of confidentiality has been established under the Business Review Procedure.
Department of Justice Announces New Assistant United States Attorneys and FBI Agents to Combat Intellectual Property CrimesRead the Press Release
As part of the Department of Justice’s ongoing initiative to confront intellectual property (IP) crimes, Acting Deputy Attorney General Gary G. Grindler announced today the appointment of 15 new Assistant U.S. Attorney (AUSA) positions and 20 FBI Special Agents to be dedicated to combating domestic and international IP crimes.
These new positions – announced on the 10th annual World Intellectual Property Day – are part of the department’s continued commitment to combat the growing number of IP crimes here at home, and abroad. The new AUSA positions will be part of the department’s Computer Hacking and Intellectual Property (CHIP) program.
“Intellectual property law enforcement is central to protecting our nation’s ability to remain at the forefront of technological advancement, business development and job creation,” said Acting Deputy Attorney General Grindler. “The department, along with its federal partners throughout the Administration, will remain ever vigilant in this pursuit as American entrepreneurs and businesses continue to develop, innovate and create.”
The 15 new Assistant U.S. Attorneys will work closely with the Criminal Division’s Computer Crime and Intellectual Property Section (CCIPS) to aggressively pursue high tech crime, including computer crime and intellectual property offenses. The new positions will be located in California, the District of Columbia, Maryland, Massachusetts, Michigan, New Jersey, New York, Pennsylvania, Texas, Virginia and Washington.
The 20 new FBI Special Agents announced today will be deployed to specifically augment four geographic areas with intellectual property squads, and increase investigative capacity in other locations around the country where IP crimes are of particular concern. The four squads will be located in New York, San Francisco, Los Angeles and the District of Columbia. The squads will allow for more focused efforts in particular hot spot areas and increased contact and coordination with our state and local law enforcement partners. The 20 new agents will join the 31 agents devoted to investigating IP crimes who have already been deployed to field offices around the country.
“Theft of intellectual property – from inventions to trademarks and copyrights, to industrial designs and trade secrets – is a worldwide problem. It affects individuals and corporations financially and can threaten public safety. The additional FBI agents will significantly strengthen the efforts of our squads investigating intellectual property rights violations and help bring to justice those who seek to profit from intellectual property theft," said Assistant Director Gordon M. Snow of the FBI Cyber Division.
Acting Deputy Attorney General Grindler serves as chair of the department’s Task Force on Intellectual Property , which was established earlier this year by Attorney General Eric Holder to coordinate the department’s efforts on IP crimes. The task force focuses on strengthening efforts to combat intellectual property crimes through close coordination with state and local law enforcement partners as well as international counterparts. As part of its mission, the task force works together with the Office of the Intellectual Property Enforcement Coordinator (IPEC), housed in the Executive Office of the President, to implement an Administration-wide strategic plan on intellectual property.
The task force includes representatives from the offices of the Attorney General, the Deputy Attorney General, and the Associate Attorney General; the Criminal Division; the Civil Division; the Antitrust Division; the Office of Legal Policy; the Office of Justice Programs; the Attorney General’s Advisory Committee; the Executive Office for U.S. Attorneys and the FBI.
World Intellectual Property Day was established by the World Intellectual Property Organization (WIPO) to recognize the importance of protecting intellectual property rights and enforcing their laws. Each year on April 26th, WIPO and its member states seek to increase public understanding of intellectual property through activities, events and campaigns.
Friday 23 April 2010
Zarein Ahmedzay Pleads Guilty to Terror Violations in Connection with Al-Qaeda New York Subway PlotRead the Press Release
The Justice Department announced that Zarein Ahmedzay, a U.S. citizen and resident of Queens, N.Y., pleaded guilty today in the Eastern District of New York to terrorism violations stemming from, among other activities, his role in an al-Qaeda plot to conduct coordinated suicide bombings on New York’s subway system in September 2009.
At a hearing this afternoon before Chief U.S. Magistrate Judge Steven M. Gold, Ahmedzay, 25, pleaded guilty to the following violations: conspiracy to use a weapon of mass of destruction (explosive bombs) against persons or property in the United States; conspiracy to commit murder in a foreign country; and providing material support to a foreign terrorist organization, namely al-Qaeda. Ahmedzay faces a sentence of up to life in prison.
Ahmedzay was first indicted on Jan. 8, 2010, in the Eastern District of New York on charges of making false statements to the FBI about his travels to Pakistan and Afghanistan. On Feb. 25, 2010, he was charged in a superseding indictment in the Eastern District of New York with conspiracy to use weapons of mass destruction; conspiracy to commit murder in a foreign country; providing material support to al-Qaeda; receiving military-type training from al-Qaeda; and making false statements.
"The facts disclosed today add chilling details to what we know was a deadly plot hatched by al-Qaeda leaders overseas to kill scores of Americans in the New York City subway system in September 2009," said Attorney General Eric Holder. "This plot, as well as others we have encountered, makes clear we face a continued threat from al-Qaeda and its affiliates overseas. With three guilty pleas already and the investigation continuing, this prosecution underscores the importance of using every tool we have available to both disrupt plots against our nation and hold suspected terrorists accountable."
FBI Director Robert S. Mueller said, "Ahmedzay’s plea makes clear that he betrayed his adopted country and its people by providing support to al-Qaeda and planning to bring deadly violence to New York. The FBI and our law enforcement and intelligence partners will continue to investigate this plot and to bring all necessary resources to bear to protect Americans from terrorist attacks."
As Ahmedzay admitted during today’s guilty plea allocution and as reflected in previous government filings and the guilty plea allocution of co-defendant Najibullah Zazi, Ahmedzay, Zazi and a third individual agreed to travel to Afghanistan to join the Taliban and fight against United States and allied forces. In furtherance of their plans, they flew from Newark Liberty International Airport in Newark, N.J., to Peshawar, Pakistan at the end of August 2008. Ahmedzay and the third individual attempted to enter Afghanistan but were turned back at the border and returned to Peshawar.
Within a few days, Ahmedzay, Zazi and the third individual met with an al-Qaeda facilitator in Peshawar and agreed to travel for training in Waziristan. Upon arriving, they met with two al-Qaeda leaders, but did not learn their true identities. As the government represented during today’s guilty plea, the leaders were Saleh al-Somali, the head of international operations for al-Qaeda, and Rashid Rauf, a key al-Qaeda operative. The three Americans said that they wanted to fight in Afghanistan, but the al-Qaeda leaders explained that they would be more useful to al-Qaeda and the jihad if they returned to New York and conducted attacks there.
Ahmedzay and the others received training on several different kinds of weapons. During the training, al-Qaeda leaders continued to encourage them to return to the United States and conduct suicide operations. They agreed, and had further conversations with al-Qaeda about the timing of the attacks and possible target locations in Manhattan. Al-Qaeda leadership emphasized the need to hit well-known structures and maximize the number of casualties.
After the initial training, the three Americans left Waziristan. The plan was for Ahmedzay and Zazi to return to Waziristan a month later to receive explosives training from al-Qaeda. Ahmedzay later changed his mind about attending the training, and Zazi went by himself. Ahmedzay later reviewed Zazi’s bomb-making notes from the training. Ahmedzay and Zazi returned to New York, and Zazi moved to Denver.
Ahmedzay initially had reservations about going forward with the suicide bombing, but resolved to go forward with the plan. Zazi traveled to New York from Colorado and the three Americans met in Queens and agreed to carry out suicide bombings during the month of Ramadan, Aug. 22, 2009 to Sept. 20, 2009. They agreed that Zazi would prepare the explosives, that Zazi and Ahmedzay would assemble the devices in New York, and that all three would conduct suicide attacks. Ahmedzay later evaluated potential bombing targets in Manhattan.
Zazi traveled a second time to New York, and Ahmedzay and Zazi discussed the attack in further detail. By that time, Zazi had begun researching and experimenting with explosives in Colorado. Based on the amount of explosives Zazi anticipated he could produce by Ramadan, Zazi and Ahmedzay decided that they would conduct suicide attacks on subway trains rather than targeting a larger structure such as a building.
Zazi returned to Colorado and constructed the explosives for the detonator components of the bombs. In July and August 2009, Zazi purchased large quantities of components necessary to produce the explosive TATP [Triacetone Triperoxide] and twice checked into a hotel room near Denver, where bomb making residue was later found.
On Sept. 8, 2009, Zazi rented a car and drove from Denver to New York, taking with him the explosives and other materials necessary to build the bombs. Zazi arrived in New York City on Thursday, Sept. 10, 2009. Zazi and Ahmedzay intended to obtain and assemble the remaining components of the bombs over the weekend and the three of them would conduct the attack on Manhattan subway lines on Sept. 14, Sept. 15, or Sept. 16, 2009. However, shortly after arriving in New York, they realized that law enforcement was investigating their activities. Ahmedzay and Zazi discarded the explosives and other bomb-making materials, and Zazi traveled back to Denver.
This case is being prosecuted by the U.S. Attorney’s Office for the Eastern District of New York, with assistance from the U.S. Attorney’s Office for the District of Colorado and the Counterterrorism Section of the Justice Department’s National Security Division. The investigation is being conducted by the New York and Denver FBI Joint Terrorism Task Forces, which combined have investigators from more than 50 federal, state and local law enforcement agencies.
Salt Lake Federal Court Bars CPA from Preparing Tax Returns for OthersRead the Press Release
A federal court in Salt Lake City has permanently barred Dick Jenkins, a CPA from Heber City, Utah, from preparing tax returns for others, the Justice Department announced today. U.S. District Judge Dale A. Kimball entered the civil injunction order, finding that Jenkins requested more than $393 million in fraudulent income tax refunds for customers using "a tax fraud scheme that involves filing fraudulent federal income tax returns and other frivolous documents with the IRS on behalf of his customers." Judge Kimball also said, "[g]iven the sheer brazenness of Jenkins’s conduct, he is essentially stealing (and attempting to steal) from the U.S. Treasury."
The court found that Jenkins requested at least 20 fraudulent refunds using his tax scheme, which is based on the frivolous contention that secret accounts exist that can be accessed to pay these bogus refund claims. For example, court papers filed in the case alleged that Jenkins requested a single $210 million dollar fraudulent refund for one customer, and a $402,920 bogus refund for himself. At least $294,292 in fraudulent refunds were actually issued to Jenkins’s customers. The court permanently barred Jenkins from preparing returns and providing any other tax-related services because "Jenkins’s conduct results in irreparable harm to the United States."
On March 8, 2010, a Los Angeles court permanently shut down tax preparer Nyla McIntyre and her business, Approved Financial Services Inc., for using the same fraudulent scheme to claim over $23 million in bogus refunds for customers. On Jan. 4, 2010, an Idaho court shut down tax preparer Penny Lea Jones for using the scheme to claim $93 million in bogus refunds. And on Sept. 9, 2009, a Sacramento, Calif., court found that preparer Teresa Marty had been using the same scheme to generate bogus refunds for her customers, and permanently barred her from preparing tax returns for others.
John A. DiCicco, Acting Assistant Attorney General for the Justice Department’s Tax Division, thanked Grayson Hoffman, the Justice Department trial attorney who handled the case, Assistant U.S. Attorney John Mangum and Shauna Henline, the IRS senior technical advisor who conducted the investigation.
In the past decade, the Justice Department’s Tax Division has obtained more than 465 injunctions against tax fraud promoters and dishonest tax return preparers. Information about these cases is available on the Justice Department’s website.
New Mexico Farmer Convicted of Tax Fraud,<br /> Fraudulently Collecting Farm SubsidiesRead the Press Release
Bill Melot, a resident of Hobbs, N.M., was convicted today of tax evasion, failure to file tax returns, making false statements to the U.S. Department of Agriculture (USDA), and impeding the Internal Revenue Service (IRS) following a four day jury trial before Judge M. Christina Armijo in Albuquerque, N.M., the Justice Department, IRS and the USDA’s Office of Inspector General announced.
According to the indictment and evidenced presented at trial, Melot owes the IRS more than $18 million in federal taxes and has not filed a personal tax return since 1986. In addition, Melot has improperly collected over $225,000 in federal farm subsidies from USDA by furnishing false information to the agency. Specifically, Melot provided the USDA a false Social Security Number and fictitious Employer Identification Number to collect federal farm aid.
According to the indictment and evidence presented at trial, Melot took a numerous steps to conceal his ownership of the 250 acres in Lea County, N.M., including notarizing forged deeds and titling the property in the name of nominees. The evidence further showed that Melot used false Social Security Numbers and fictitious Employer Identification Numbers to hide his assets from the IRS. Additionally, Melot maintained a bank account with Nordfinanz Zurich, a Swiss financial institution, which he set up in Nassau, Bahamas, in 1992. Melot failed to report the Swiss account to the U.S. Treasury Department as required by law.
Melot faces a maximum term of 49 years in prison and a maximum fine of $2,850,000. He was jailed pending sentencing, which is set for May 20, 2010.
Acting Assistant Attorney General John DiCicco commended the investigative efforts of IRS Criminal Investigation and the USDA’s Office of Inspector General, as well as Tax Division trial attorney Jed Silversmith and Assistant U.S. Attorney George Kraehe, who prosecuted the case. Acting Assistant Attorney General DiCicco also thanked the Criminal Investigation Division of the Texas Comptroller of Public Accounts for its assistance in prosecuting this matter.
More information about the Justice Department’s Tax Division and its enforcement efforts is available at www.usdoj.gov/tax/.
Miami Clinic Owner and Patient Recruiters<br /> Plead Guilty in $5.8 Million Medicare Fraud SchemeRead the Press Release
Maria Volero Marrero, 48, Lawrence Edward Humes, 57, and Keith Earnest Humes, 53, each pleaded guilty to conspiracy to commit health care fraud in connection with a $5.8 million Medicare fraud scheme stemming from their involvement with a Miami-area HIV/AIDS infusion clinic, announced the Departments of Justice and Health and Human Services (HHS) today.
Keith Humes pleaded guilty yesterday and Marrero and Lawrence Humes pleaded guilty April 21, 2010, before U.S. District Judge Ursula Ungaro in the Southern District of Florida.
In connection with her plea, Marrero admitted that she owned and operated Tendercare Medical Center Inc., a purported HIV/AIDS infusion clinic. Marrero admitted that she conspired with Lawrence Humes, Keith Humes and others to defraud Medicare by submitting claims for services that were medically unnecessary and that in most instances were not provided. Marrero also admitted that she paid kickbacks to Lawrence Humes and Keith Humes and to other recruiters to induce Medicare beneficiaries to provide their Medicare numbers and signatures. The beneficiaries’ numbers and signatures were used by Tendercare to submit claims to Medicare for medically unnecessary injection and infusion services.
In connection with their pleas, Lawrence Humes and Keith Humes admitted that they conspired with Marrero, and that they paid kickbacks to Medicare beneficiaries to induce the beneficiaries to participate in the scheme. Lawrence Humes and Keith Humes admitted that they were aware that the injection and infusion treatments were medically unnecessary and were not being provided.
According to court documents, between January 2005 and December 2007, Tendercare submitted approximately $5.8 million in false and fraudulent claims to Medicare for medically unnecessary injection and infusion treatments. Medicare paid Tendercare approximately $2.7 million as a result of those fraudulent claims.
Sentencing for Marrero, Lawrence Humes and Keith Humes is scheduled for July 23, 2010, before U.S. District Judge Ursula Ungaro Jr. in Miami.
Today’s guilty pleas were announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney Jeffrey H. Sloman of the Southern District of Florida and HHS Office of Inspector General.
The case was prosecuted by Section Assistant Chief John S. (Jay) Darden and Special Trial Attorney Martha Talley of the Criminal Division’s Fraud Section. The case was investigated by the FBI.
The case was brought as part of the Medicare Fraud Strike Force, supervised by the U.S. Attorney’s Office for the Southern District of Florida and the Criminal Division’s Fraud Section. Since their inception in March 2007, Strike Force operations in seven districts have obtained indictments of more than 550 individuals who collectively have falsely billed the Medicare program for more than $1.1 billion. In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov
Former UBS Client Sentenced for Hiding $10 Million in Offshore Bank AccountsRead the Press Release
Jack Barouh of Golden Beach, Fla., was sentenced today to 10 months in prison by U.S. District Court Judge Adalberto Jordan in Miami, the Justice Department and Internal Revenue Service (IRS) announced. He was ordered to surrender to the custody of U.S. Marshals by June 25, 2010. Barouh pleaded guilty in February 2010 to filing a false tax return.
According to court documents and statements made in court, Barouh admitted to filing a false tax return for 2007 in which he failed to report that he had an interest in or a signature authority over financial accounts at UBS AG, one of Switzerland’s largest bank. He also failed to report income earned on his UBS Swiss bank accounts. The UBS accounts were opened in the names of Domilou S.A., a nominee Panamanian corporation, and Similen Investments Limited, a nominee British Virgin Island corporation. For years 2002 through 2007, the tax loss associated with the Domilou and Similen accounts at UBS is approximately $736,269.
In addition to the Domilou and Similen accounts, the defendant owned and controlled several additional offshore bank accounts located at banks other than UBS, including accounts in Switzerland and Hong Kong.
According to court documents, the defendant owned and operated several businesses that manufactured and sold watches. Beginning in 1976, the defendant skimmed income from his watch businesses and deposited the proceeds into his undeclared UBS bank accounts. The defendant also deposited unreported sales commissions into the accounts.
According to court documents, beginning in 2007, Barouh attempted to withdraw his funds from Switzerland and repatriate all of the money into the United States. However, a Swiss attorney persuaded the defendant to transfer the money from Switzerland to a newly created bank account in Hong Kong in the name of a nominee Hong Kong corporation. The Swiss attorney then told the defendant to pay himself an annual "consulting fee" until all of the funds were brought into the United States. The Swiss attorney knew the defendant was not going to perform any consulting work.
As part of his plea agreement, Barouh agreed to pay a 50 percent penalty for the one year with the highest balance in his offshore accounts in order to resolve his civil liability for failing to file Reports of Foreign Bank and Financial Accounts, Forms TD F 90-22.1. The highest balance of all of the assets the defendant owned and controlled offshore was approximately $10,017,613. The defendant also must pay any additional taxes, interest and penalties he may owe.
Acting Assistant Attorney General John DiCicco and U.S. Attorney Jeffrey H. Sloman commended the investigative efforts of the IRS agents involved in this case, as well as Senior Litigation Counsel Kevin M. Downing and Trial Attorney Mark F. Daly of the Tax Division, and Assistant U.S. Attorney Jeffrey A. Neiman, who prosecuted the case.
In February 2009, UBS entered into a deferred prosecution agreement under which the bank admitted to helping U.S. taxpayers hide accounts from the IRS. As part of their agreement, UBS provided the United States government with the identities of, and account information for, certain United States customers of UBS’s cross-border business.
United States citizens who have an interest in, or signature or other authority over, a financial account in a foreign country with assets in excess of $10,000 are required to disclose the existence of such account on Schedule B, Part III of their individual income tax return. Additionally, United States citizens much file a Report of Foreign Bank and Financial Accounts (F-Bar) with the U.S. Treasury, disclosing any financial account in a foreign country with assets in excess of $10,000 for which they have a financial interest in or signature authority, or other authority over.
More information about the Justice Department’s Tax Division and its enforcement efforts is available at www.usdoj.gov/tax/.
Financial Fraud Enforcement Task Force Hosts Mortgage Fraud Summit in DetroitRead the Press Release
Representatives of the Financial Fraud Enforcement Task Force met in Detroit today for the third of a series of Mortgage Fraud Summits. The task force, established by President Barack Obama in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes, is composed of representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement.
The greater Detroit metropolitan area is ranked 10th in the nation for the number of local subjects named in Suspicious Activity Reports (SARs) filed by depository institutions concerning suspected mortgage fraud, according to a recent study by the Treasury Department’s Financial Crimes Enforcement Network (FinCEN). And according to FinCEN data, Michigan ranked eighth in the nation for mortgage fraud SARs. According to True Standings Loan Performance, Detroit also ranked 9th in metropolitan areas for serious delinquencies in conventional mortgages.
Today, the task force members met with Detroit community members, banking, mortgage and real estate industry representatives and law enforcement officials to discuss the problem of mortgage fraud from a national, state and local perspective. In the morning panels, attendees discussed the community impact of mortgage fraud and the evolution of the crisis. In the afternoon, task force representatives will meet privately with law enforcement officials involved in the investigation of mortgage fraud.
"Integrity in the mortgage lending business is crucial to protecting home owners, neighborhoods, and lending institutions," said U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade. "Mortgage fraud leads to foreclosures and vacant homes, which harm property values and create havens for criminal activity. Today’s summit shows the commitment of the Department of Justice, along with our local law enforcement agencies and regulatory agencies, to combat the problem of mortgage fraud."
"The president created the Financial Fraud Enforcement Task Force to hold perpetrators of fraud accountable to the fullest extent of the law and to help families protect what they have worked so hard to build," said Assistant Attorney General for the Civil Division Tony West. "In collaboration with our federal and state partners, we will prosecute those responsible for the corporate fraud that helped lead to our current financial crisis and bring to justice those who seek to use this crisis to take advantage of honest Americans for personal gain."
"Mortgage fraud and white collar crimes strike at the economic heart of the American system," said U.S. Department of Housing and Urban Development (HUD) Inspector General Kenneth Donohue. "To the extent that we can uncover and prosecute these activities, it’s to everyone’s benefit. Accordingly, I am happy to lend the HUD Office of Inspector General’s nationwide expertise to this exceptional group of law enforcement agencies."
"Mortgage fraud hurts borrowers, financial institutions, and legitimate homeowners," said FBI Special Agent in Charge Andrew G. Arena. "Working together with our federal, state and local partners on mortgage fraud task forces and working groups across the country, the FBI is committed to combating mortgage fraud to protect the American homeowner and the economy."
Also participating in the summit were U.S. Attorney for the Eastern District of California Benjamin Wagner; Executive Director of the Financial Fraud Enforcement Task Force Robb Adkins; FinCEN Director James H. Freis Jr. and Division Chief David Tanay of the Criminal Division at the Michigan Attorney General’s Office. The Detroit summit is the third of a series of mortgage fraud summits. The task force held its first Mortgage Fraud Summit in Miami on February 14 and the second in Phoenix on March 25.
The Financial Fraud Enforcement Task Force is reaching out to communities through events like today’s, and through efforts like StopFraud.gov , the task force’s one-stop shop for the American people to learn how to protect themselves from fraud and to report it wherever - and however - it occurs.
The task force also partnered with Fannie Mae, Freddie Mac, the Lawyer’s Committee and NeighborWorks America to launch a consumer-friendly website, PreventLoanScams.org,which supports national, state and local law enforcement efforts. The website, launched today, provides an accessible complaint form that can be filled out online and then entered into a nation-wide database and serves as a nationwide clearinghouse and destination for loan modification scam information on complaints filed, laws and regulations, and enforcement actions
Mortgage fraud is a key focus of the Financial Fraud Enforcement Task Force’s efforts. 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 learn more about the task force, visit StopFraud.gov .
City of Tonawanda, N.Y., Police Captain Pleads Guilty to Civil Rights ViolationRead the Press Release
The Department of Justice announced today that James G. Litz, 54, of the city of Tonawanda, N.Y., pleaded guilty before U.S. District Court Judge Richard J. Arcara, to a felony charge of deprivation of civil rights under the color of law. The offense carries a maximum penalty of 10 years in prison, a fine of $250,000, or both.
Litz admitted in an executed plea agreement to assaulting and choking a victim on June 21, 2003, while the victim was in the rear of a city of Tonawanda Police vehicle. The plea agreement further detailed that the government had evidence of other incidents involving different victims occurring in 2009, consisting of the defendant poking one victim in the chest, twisting the defendant’s arm and causing pain, and grabbing and choking for a lengthy period of time another victim who happened to be at the scene of an arrest of a different individual. In both of the 2009 incidents, the plea agreement states that after assaulting the victims in the manner described, the defendant arrested the victims for "resisting arrest" and "disorderly conduct."
Sentencing is scheduled for Aug. 4, 2010, at 12:30 P.M EDT in Buffalo, N.Y., in front of U.S. District Court Judge Richard J. Arcara.
"I have great respect for officers who enforce the law, but any officer who abuses his or her power and crosses the line as this defendant did must be held accountable," Assistant Attorney General for the Civil Rights Division Thomas E. Perez said. "The Department of Justice is committed to aggressively prosecuting any officer who violates the law and the public trust."
U.S. Attorney William J. Hochul, Jr. of the Western District of New York stated that "the nation’s civil rights laws protect people of all race, color and creed. The laws apply to those in positions of power, such as police and jail officials. Those who violate their oaths to protect the public will be found and prosecuted as the facts and the law allow."
FBI Special Agent in Charge James H. Robertson stated, "it is imperative that the Western New York community has full confidence in it police professionals, and that the public understand there are no allegations of systemic corruption within the City of Tonawanda Police Department. The FBI’s Buffalo Office will continue to work closely with its Western New York law enforcement counterparts, including the United States Attorney's Office, to address public corruption at all levels."
The plea was the culmination of an investigation on the part of Special Agents of the FBI, under the direction of James H. Robertson. Assistant U.S. Attorney Trini E. Ross and Department of Justice Civil Rights Trial Attorney Shan Patel handled the case.
Thursday 22 April 2010
Ship Crew Member Pleads Guilty for Obstruction of U.S. Coast Guard Pollution InvestigationRead the Press Release
The chief engineer of a cargo vessel registered in the Republic of Panama pleaded guilty in federal court in Corpus Christi, Texas, for obstructing a U.S. Coast Guard investigation into the illegal overboard discharge of polluted wastewater as well as failing to keep accurate pollution control records, the Justice Department announced today.
John Porunnolil Zacharias, the chief engineer of the M/V Lowlands Sumida, a 37,689 gross ton bulk carrier cargo ship, pleaded guilty yesterday to a violation of the Act to Prevent Pollution (APPS) for failing to maintain an oil record book and to an obstruction violation for providing inspectors with a false engine room sounding log, and for altering a center fuel oil tank by installing a "dummy" sounding tube to conceal the contents of the tank
Zacharias, as the chief engineer, was responsible for the supervision of the engineering officers, the fitter and the motormen working in the engine spaces of the Lowlands Sumida. He was also responsible for assuring that the oil record book accurately recorded the handling of oily waste on the ship including the processing of oily waste water through the ship’s oil-water separator and the operation and maintenance of the oil-water separator.
On Oct. 6, 2009, the U.S. Coast Guard conducted a port inspection of the Lowlands Sumida. During the inspection they received information from one of the crewmen alleging that a chief engineer was using the center fuel tank to store oily waste water and that the waste water was then discharged overboard by tricking the oil content meter on the ship’s oil water separator.
Zacharias admitted to the altering of a center fuel oil tank through the installation of a "dummy" sounding tube. The "dummy" sounding tube would show the tank as empty when measured, even though there was liquid in the tank.
Large commercial ships, such as the Lowlands Sumida, are required by APPS to maintain a record known as the oil record book to document the movement, tank to tank, and the disposal of, all oil that has originated in the engineering spaces on the ship. Oily bilge waste waters, which accumulate in the lower-most part of the ship, can only be discharged overboard if the wastes are processed through a machine known as an "oil water separator" which ensures that the water discharged overboard contains no more than 15 parts per million (ppm) of oil. Zacharias admitted to discharging oily waste water that exceeded the 15 ppm limit from the ship and not recording the discharges in the oil record book.
Zacharias is scheduled to be sentenced on July 7, 2010.
The case is being investigated by the Coast Guard Investigative Service, the Environmental Protection Agency Criminal Investigations Division in Region VI and the Texas Commission on Environmental Quality. The case is being prosecuted by the Environmental Crimes Section of the Department of Justice and the U.S. Attorney’s Office for the Southern District of Texas.
Patient Recruiter Pleads Guilty for Role in Fraudulent Medicare Testing SchemeRead the Press Release
Detroit-area resident Melvin Young pleaded guilty today to engaging in a fraudulent medical testing scheme, announced the Departments of Justice and Health and Human Services (HHS).
Young, 56, pleaded guilty to one count of conspiracy to commit health care fraud before U.S. District Court Judge Patrick J. Duggan in the Eastern District of Michigan. Young faces a maximum penalty of 10 years in prison and a $250,000 fine. A sentencing date has not yet been scheduled.
According to the plea documents, be ginning in approximately September 2007, Young began recruiting and transporting patients to a clinic called Ritecare LLC. Ritecare was owned and operated by co-conspirators and had locations in Detroit and Livonia, Mich. Young admitted that he and a co-conspirator paid kickbacks to Medicare beneficiaries that he recruited and transported to Ritecare. According to the plea documents, the owners and operators of Ritecare were the source of the funds used by Young to pay the Medicare beneficiaries he recruited. Young admitted that he would keep part of the funds he received from the owners and operators of Ritecare to secure patients as a kickback for referring the Medicare beneficiaries he recruited. Typically, the owners of Ritecare would provide Young $100-$150 per patient he recruited, with Young retaining $50-$75 of that amount for the referral.
According to the plea documents, the patients Young recruited had to subject themselves to medically unnecessary tests to receive the money. Per instructions from the owners and operators of Ritecare, Young admitted that he instructed the patients to claim they had certain symptoms to trigger medically unnecessary tests. Consequently, the patients’ medical records contained false symptoms allowing Ritecare to deceive Medicare as to the legitimacy and medical necessity of the tests it performed.
Young admitted that he was responsible for recruiting at least 269 patients to Ritecare. Through his recruitment efforts, Young caused the submission of approximately $940,760 in false or fraudulent billings by Ritecare for the 269 patients he recruited. Medicare paid approximately $533,643 on those claims.
Today’s guilty plea was announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade; Special Agent in Charge Andrew G. Arena of the FBI’s Detroit Field Office; and Special Agent in Charge Lamont Pugh III of the HHS Office of Inspector General’s (OIG) Chicago Regional Office.
This case was prosecuted by Assistant Chief John K. Neal and Trial Attorney Gejaa T. Gobena of the Criminal Division’s Fraud Section. This case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan.
Since their inception in March 2007, Strike Force operations in seven districts have obtained indictments of more than 500 individuals who collectively have falsely billed the Medicare program for approximately $1.1 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.
Owners of Connecticut Bar Indicted on Tax ChargesRead the Press Release
John G. Pinone, Jr., of Glastonbury, Conn., made his initial appearance in district court today on conspiracy and tax charges, the Justice Department and Internal Revenue Service (IRS) announced. In March 2010, a grand jury returned a sealed indictment charging Pinone and Francis B. DelMastro, formerly of Tolland, Conn., with conspiracy and willfully filing false tax returns. DelMastro made his initial appearance on April 9, 2010.
According to the indictment, DelMastro and Pinone were the owners of the Civic Pub, a bar located in Storrs, Conn., and operating under the corporate name, Pindel LLC. From 2003 through 2005, DelMastro and Pinone obtained or skimmed cash from the operations of Pindel and neither reported that cash as gross receipts on the tax returns filed on behalf of the company, nor reported it as income on their individual income tax returns for tax years 2003 and 2004.
The indictment further alleges that DelMastro and Pinone kept a set of books called "Weekly Draw Sheets" that included the Pindel’s actual gross receipts, including both the cash deposited into the company’s bank accounts, as well as the cash not deposited. However, DelMastro and Pinone did not provide the Weekly Draw Sheets to the individuals who prepared the returns for Pindel and their individual income tax returns. The total amount of cash alleged to have been skimmed from 2003 through 2005 was $130,050.
The indictment further alleges that DelMastro hid the cash skimmed from Pindel and not deposited into the business bank account in his home in, among other places, the freezer, cereal boxes, empty pasta boxes, coffee cans and pots. Additionally, DelMastro and Pinone attempted to impede a sales and use tax audit of Pindel for calendar years 2003 through 2005 conducted by the Connecticut Department of Revenue Services (DRS) by failing to provide complete and accurate records regarding Pindel’s gross receipts, including the Weekly Draw Sheets.
According to the indictment, DelMastro also owned the Bar With No Name, a bar located in Hartford, Conn. in 2003 and 2004. DelMastro did not deposit, or caused others not to deposit, substantial amounts of cash earned at the Bar With No Name into business bank accounts. Instead, DelMastro used the cash that was not deposited for his own personal benefit, and failed to provide his return preparer with information regarding a large portion of the cash that he skimmed from the Bar With No Name. Furthermore, DelMastro attempted to impede a sales and use tax audit of Bar With No Name for calendar years 2002 through 2004 conducted by Connecticut DRS by failing to provide complete records regarding business income.
An indictment merely alleges that a crime has been committed and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, both DelMastro and Pinone each face a maximum of 11 years in prison and a maximum fine of $750,000.
The case is being investigated by IRS - Criminal Investigation Division and is being prosecuted by Assistant U.S. Attorney Sarah Karwan and Tax Division trial attorney Mark F. Daly with the assistance of the New Haven U.S. Attorney’s Office.
Massachusetts Couple Charged Found Guilty of Tax CrimesRead the Press Release
Frederick Allen and Kimberlee Allen, both of Harwich, Mass., today were convicted of conspiracy, tax evasion and failure to file tax returns, after a jury trial, the Department of Justice and the Internal Revenue Service (IRS) announced. Judge Joseph Tauro of the District of Massachusetts presided.
The evidence at trial proved that Frederick and Kimberlee Allen, who own a business on Cape Cod that specialized in nutritional and vitamin consulting, have not submitted a tax return to the IRS since 1999 and conspired to conceal their assets and income from the IRS. The evidence showed that Frederick and Kimberlee Allen received unreported income, put their home in a sham trust, assigned their income to third parties, and used only cash for their transactions.
The court scheduled sentencing for Aug. 4, 2010. The defendants each face a maximum sentence of 14 years in prison and maximum fines of $900,000.
Acting Assistant Attorney General John DiCicco commended the investigative efforts of IRS Criminal Investigation and the Massachusetts Department of Revenue, as well as Tax Division Trial Attorneys Karen Kelly and Michelle Petersen, who prosecuted the case.
More information about the Justice Department’s Tax Division and its enforcement efforts is available at www.usdoj.gov/tax/.
Financial Fraud Enforcement Task Force Hosts Fair Lending Forum in ChicagoRead the Press Release
Representatives of the President’s Financial Fraud Enforcement Task Force (FFETF) met in Chicago today with community stakeholders to discuss national, state and local elements of the banking and housing crisis. The meeting was the first of a series of Fair Lending Forums, and task force representatives in attendance included members from the Department of Justice, the Department of Housing and Urban Development (HUD), the Federal Reserve Board and the state of Illinois.
Assistant Attorney General Thomas E. Perez, head of the Justice Department’s Civil Rights Division; FFETF Executive Director Robb Adkins; HUD Deputy General Counsel Michelle Aronowitz; and Timothy R. Burniston from the Federal Reserve Board were hosted by Illinois Attorney General Lisa Madigan at the Federal Reserve Bank of Chicago.
Task force members participated in panel sessions with Chicago community leaders, including representatives of the Chicago Urban League, the Spanish Coalition for Housing and the Interfaith Housing Center of the Northern Suburbs, to discuss the community impact of discriminatory lending practices in housing and banking, and the growing number of foreclosures. In the afternoon, task force representatives will tour a Chicago neighborhood that was affected by these practices.
“Fair lending enforcement is a top priority for Attorney General Eric Holder and for us in the Civil Rights Division, as we continue to grapple with the fallout from the housing boom and subsequent foreclosure crisis,” said Assistant Attorney General Perez. “I know that it is the people on the ground who can provide the best insight into what’s occurring today, and how it’s impacting homeowners, neighborhoods and communities.”
“During the peak of the housing bubble, Chicago’s African American and Latino neighborhoods became ground zero for the worst of the mortgage industry’s toxic loans.” Illinois Attorney General Madigan said. “Unfortunately, many families in these communities continue to struggle today because of the lending industry’s illegal, reckless practices. Today’s forum is critical because it enables us to combine state and federal resources and create partnerships with agencies on the ground that are committed to ending the types of discriminatory lending practices that helped cause the worst economic meltdown of our time.”
“ The Financial Fraud Enforcement Task Force is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud, but one of our best partners in the fight is a vigilant, informed public, ” FFETF Executive Director Adkins said. “ Throughout government there are resources to help hardworking, honest Americans protect themselves from fraud and report fraud.”
The forum was the first in a series of meetings to occur in the coming months in order to inform the investigative and enforcement actions of the task force. For example, the Justice Department’s Civil Rights Division enforces the Fair Housing and Equal Credit Opportunity Acts. Previous enforcement actions like the multi-million dollar settlement with two subsidiaries of American International Group Inc., to resolve allegations they engaged in a pattern or practice of discrimination against African American borrowers, are indicative of the task force’s continuing efforts.
The task force’s Fair Lending Unit, housed in the Civil Rights Division, is investigating major lenders for potential fraudulent practices targeted to minority communities, including practices commonly known as redlining, reverse-redlining and pricing discrimination.
Fair lending is a key focus of the Financial Fraud Enforcement Task Force’s efforts. 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. A dditional forum dates and locations are to be announced in the future.
The task force, established by President Barack Obama in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes, is composed of representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement.
Wednesday 21 April 2010
U.S. Army Contracting Official Pleads Guilty to Bribery and Unlawful Salary Supplementation in Off-Post Housing SchemeRead the Press Release
A U.S. Army contracting official pleaded guilty today to bribery and unlawful salary supplementation in connection with two schemes to solicit more than $17,000 in bribes and other payments from an Egyptian businessman in Kuwait, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Neil H. MacBride of the Eastern District of Virginia.
William Rondell Collins, 46, of Bartlett, Tenn., pleaded guilty today before Judge Liam O’Grady in U.S. District Court in Virginia to one count of bribery and one count of salary supplementation. Collins was originally charged in an indictment filed on Feb. 18, 2010. Collins’ sentencing is set for July 16, 2010.
According to court documents, Collins was employed by the U.S. Army Area Support Group-Kuwait (ASG-KU). ASG-KU is responsible for maintaining Camp Arifjan, a U.S. military installation providing support for operations in Afghanistan, Iraq and other locations in the Southwest Asian Theater. As part of those responsibilities, ASG-KU maintains an off-post housing office, located in downtown Kuwait City, which procures, leases and supervises off-post housing for government employees and military service members stationed at Camp Arifjan. According to court records, Collins worked in ASG-KU’s off-post housing office as a housing specialist responsible for supervising private contractors and procuring off-post apartment rentals.
In his guilty plea, Collins admitted that between July and December 2009 he solicited more than $11,000 in bribes from an Egyptian businessman in exchange for submitting an inflated off-post apartment lease for approval. Collins also admitted that between July and December 2009 he received at least $5,600 from the Egyptian businessman as compensation for Collins’s services in connection with a fixed-price U.S. government contract awarded to the Egyptian businessman’s company. The government contract was for maintenance services for off-post housing managed by Collins and the ASG-KU off-post housing office.
At sentencing, Collins faces a maximum penalty of 20 years in prison and a $500,000 fine.
The case is being prosecuted by Special Assistant U.S. Attorney Steve A. Linick, Deputy Chief of the Criminal Division’s Fraud Section, and Fraud Section Trial Attorneys James J. Graham and Ryan S. Faulconer. The investigation is being conducted by the Defense Criminal Investigative Service, the FBI, the U.S. Army Criminal Investigative Division, and members of the National Procurement Fraud Task Force (NPFTF) and the International Contract Corruption Task Force (ICCTF).
The NPFTF, created in October 2006 by the Department of Justice, was designed to promote the early detection, identification, prevention and prosecution of procurement fraud associated with the increase in government contracting activity for national security and other government programs. The ICCTF is a joint law enforcement agency task force that seeks to detect, investigate, and dismantle corruption and contract fraud resulting from U.S. Overseas Contingency Operations worldwide, including in Kuwait, Afghanistan and Iraq.
Justice Department Settles Lawsuit Against Troy University of Montgomery, Alabama, to Enforce Employment Rights of U.S. Army ReservistRead the Press Release
WASHINGTON – The Justice Department announced today that it has entered into a consent decree with Troy University of Montgomery, Ala., to resolve the department’s complaint alleging violations of the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA).
The department’s complaint, filed today in the U.S. District Court for the Middle District of Alabama, alleges that
Troy University violated USERRA by terminating Cleopatra Jones from her position in the human resources department while she was on military leave, and then by failing to reemploy her at the conclusion of her military leave. The consent decree obtained by the department, if approved by the court, will require that Troy University pay Ms. Jones $36,960.00 in monetary relief, and will enjoin the university from committing future violations of USERRA.
Enacted by Congress in 1994, USERRA prohibits employers from discriminating or retaliating against employees or applicants for employment because of past, current or future military obligations. Subject to certain conditions, USERRA also requires employers to promptly reemploy returning service members in the position they would have held had their employment not been interrupted by military service, or in a position of like status, seniority and pay.
"By enacting USERRA, Congress recognized the importance of protecting the employment rights of the men and women who serve our country in uniform," said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. "
The department commends Troy University for working cooperatively with us to resolve this matter without the need for contested litigation."
The Department of Labor’s Veterans’ Employment and Training Service investigated and attempted to resolve Ms. Jones’ USERRA complaint before referring it to the Department of Justice for litigation.
Additional information about USERRA can be found on the Justice Department’s website at www.servicemembers.gov and www.usdoj.gov/crt/emp , and on the Labor Department’s website as www.dol.gov/vets/programs/userra .
Former Deputy Constable in Indiana Pleads Guilty to Conspiracy <br /> to Commit Bribery; Sentenced to 14 Months in PrisonRead the Press Release
Michael S. Sherfick, a former local law enforcement official, pleaded guilty today in U.S. District Court for the Southern District of Indiana to a criminal information charging him with conspiracy to commit bribery concerning programs receiving federal funds, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division. Sherfick was sentenced today by U.S. District Court Judge William T. Lawrence to 14 months in prison and three years of supervised release following the prison term. Sherfick was also ordered to pay a $35,750 fine.
According to court documents, Sherfick, 37, of Noblesville, Ind., was an employee of the Perry Township Constable’s Office (PTCO), a local law enforcement department in Marion County, Ind. Sherfick held the positions and ranks of honorary deputy constable, deputy constable, executive assistant, captain and major during the relevant period. According to court documents, Perry Township received federal assistance of more than $10,000 under a federal program involving a grant in 2005, among other years.
From June 2005 until his employment was terminated in September 2007, Sherfick admitted that he used his official position to solicit and accept payments of money and other things of value in exchange for PTCO deputy constable badges, identification cards and parking placards. Sherfick admitted that he received bribe payments totaling more than $30,000.
The individuals who paid the requested bribes in return for PTCO law enforcement credentials were not affiliated with the PTCO. According to the court documents, these individuals included a health care company executive, a real estate agent, the president of a construction company, the owner of a software company, a finance manager for a car dealership, the owner of a home theater electronics store, the chief executive officer of a management consulting services firm and two restaurant owners. Sherfick admitted he advised these individuals that they would receive a host of benefits and privileges by displaying the law enforcement credentials, including among others, the ability to park their vehicles in restricted areas, evade traffic tickets, obtain access to sports events without paying admittance fees and receive other discounts for goods and services. Sherfick admitted that he requested the bribe payments be made in cash, however, on several occasions he accepted checks and payments in kind. Sherfick also admitted that he instructed individuals to whom he sold law enforcement credentials to lie to investigators and the grand jury concerning his involvement in the scheme.
This case was prosecuted by Trial Attorney Justin V. Shur of the Criminal Division’s Public Integrity Section. The case was investigated by the FBI and the Indiana State Police.
Christine Varney to Participate in Ninth Annual<br /> International Competition Network Conference<br /> in Istanbul, TurkeyRead the Press Release
WASHINGTON – Christine Varney, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division, will participate in the ninth annual International Competition Network (ICN) conference in Istanbul, Turkey, from April 27-29, 2010. At the conference, senior government antitrust officials, private-sector antitrust experts and representatives of intergovernmental organizations will meet to discuss competition issues.
The ICN conference will focus on the recent accomplishments of its five main working groups, which address: unilateral conduct, mergers, cartels, competition advocacy and agency effectiveness. Conference panels will discuss the role of outside parties in merger review, the analysis of price squeezes, trends in anti-cartel enforcement and the interaction of competition policy with other policies. Members will also approve working group programs for the coming year.
In October 2001, the Department of Justice and the Federal Trade Commission (FTC) joined with antitrust agencies from 13 other jurisdictions around the world (Australia, Canada, the European Union, France, Germany, Israel, Italy, Japan, Korea, Mexico, South Africa, the United Kingdom and Zambia) to create the ICN. The ICN now includes 112 member agencies from 99 jurisdictions. The goal of the ICN is to provide a forum for antitrust agencies to address enforcement and policy issues of common interest, and to propose ways that member governments could more closely align their policies and enforcement.
The following portions of this year’s conference will be open to the press:
TUESDAY, APRIL 27, 2010: 9th ANNUAL ICN CONFERENCE (DAY 1)
8:30 A.M. (Istanbul), 1:30 A.M. (EDT) – Opening Remarks by Turkish and ICN Officials
10:00 A.M. (Istanbul), 3:00 A.M. (EDT) – 2010 ICN Work Product Session
ICN Working Groups will present their work product from this past ICN year, including presentations by the Agency Effectiveness Working Group, Advocacy Working Group, Cartel Working Group, Merger Working Group and Unilateral Conduct Working Group.11:20 A.M. (Istanbul), 4:20 A.M. (EDT) – Vice Chair Session
This session will be moderated by Philip Collins, Chairman, U.K. Office of Fair Trading; and Federal Trade Commissioner William Kovacic, Vice Chair for Outreach, will be a panelist.2:00 P.M. (Istanbul), 7:00 A.M. (EDT) – Planning for the ICN’s Second Decade
John Fingleton, Chair, ICN Steering Group, and CEO of the U.K. Office of Fair Trading will moderate this session.3:55 P.M. (Istanbul), 8:55 A.M. (EDT) – Agency Effectiveness Session
This Plenary Session will focus on “Strategic Planning and Prioritization.” Panelists will include FTC Chairman Jon Leibowitz.
WEDNESDAY, APRIL 28, 2010: 9th ANNUAL ICN CONFERENCE (DAY 2)9:00 A.M. (Istanbul), 2:00 A.M. (EDT) – Merger Session
Christine Varney, Assistant Attorney General of the Department of Justice’s Antitrust Division, will moderate a panel on “The Role and Rights of Third Parties in Merger Review.”10:00 A.M. (Istanbul), 3:00 A.M. (EDT) – Unilateral Conduct Session
Andreas Mundt, President, Bundeskartellamt, will provide opening remarks to the plenary session focusing on “Putting the Squeeze on Competitive Pricing? – Competition Policy Toward Margin Squeezes,” which will be moderated by Randolph W. Tritell, Director of the FTC’s Office of International Affairs.2:00 P.M. (Istanbul), 7:00 A.M. (EDT) – Special Project: The Interface between Competition Policy and other Public Policies
This plenary session will focus on a special project undertaken by the Turkish Competition Authority to study the interface between competition policy and other public policies. Panelists will include Federal Trade Commissioner William Kovacic.5:00 P.M. (Istanbul), 10:00 A.M. (EDT) – Advocacy Session
THURSDAY, APRIL 29, 2010: 9th ANNUAL ICN CONFERENCE (DAY 3)
9:00 A.M. (Istanbul), 2:00 A.M. (EDT) – Cartel Session
Scott D. Hammond, Deputy Assistant Attorney General for Criminal Enforcement of the Department of Justice’s Antitrust Division, will moderate a panel discussion on “Trends in Cartel Enforcement and Policy.”12:15 P.M. (Istanbul), 5:15 A.M. (EDT) - Report Back and Future Work
1:15 P.M. (Istanbul), 6:15 A.M. (EDT) – Closing
Complete information about the conference is available at www.icn-istanbul.org/. The 2010 ICN conference will be held at Swissotel The Bosphorus, Bayildim Cad. No. 2 Macka Besiktas 34357. Phone: +90-212-326-1100; Fax: +90-212-326-1122.
MEDIA CONTACTS: Federal Trade Commission, Mitchell J. Katz, 202-326-2161
Department of Justice, Gina Talamona, 202-514-2007
Attorney General Hosts Meeting with Commissioners <br /> of the African UnionRead the Press Release
Attorney General Eric Holder today met with commissioners of the African Union in an effort to underscore the United States government’s commitment to Africa, particularly efforts to promote rule of law and to combat transnational crime, the Justice Department announced. This marks the first meeting of its kind between a U.S. Attorney General and the African Union.
"Strengthening governance and combating transnational crime, especially in the areas of terrorism and terrorist financing, piracy, narcotics and corruption, are priorities for me and for this administration," said Attorney General Holder. "The African Union can play a critical role as we work with our law enforcement counterparts within specific regions and throughout all of Africa."
The African Union (AU) is an intergovernmental organization comprised of 53 African countries with the goal of fostering political and economic integration throughout Africa. The AU Commission, based in Addis Ababa, Ethiopia, is responsible for the day-to-day administration and coordination of the AU’s activities and meetings. The Commission is composed of the chairperson, the deputy chairperson, and eight commissioners who oversee distinct portfolios: peace and security, political affairs, infrastructure and energy, social affairs, human resources, science and technology, trade and industry, rural economy and agriculture, and economic affairs.
Attorney General Holder met with Commission Chairperson Jean Ping, Deputy Chairperson Erastus Mwencha, and the Commissioners for Peace and Security, Trade and Industry, and Social Affairs. Also present was AU Ambassador to the U.S. Amina Salum Ali, AU Ambassador to the United Nations Tete Antonio and U.S. Ambassador to the Africa Union Mission Michael Battle Jr.
Attorney General Eric Holder Welcomes Christopher H. Schroeder as Assistant Attorney General for the Office of Legal PolicyRead the Press Release
Attorney General Eric Holder today welcomed the confirmation of Christopher H. Schroeder as the new Assistant Attorney General for the Justice Department’s Office of Legal Policy (OLP). Schroeder was confirmed today by the U.S. Senate.
"I am pleased to welcome Chris back to the Department of Justice," said Attorney General Holder. "The Office of Legal Policy serves a crucial role at the department in coordinating some of our most important projects and initiatives. Chris is an experienced and talented attorney, and I look forward to working with him on behalf of the American people."
OLP is responsible for developing policy initiatives of high priority to the Department and the Administration. Assistant Attorney General Schroeder will serve as the primary policy advisor to the Attorney General and the Deputy Attorney General. As the Department’s think tank, OLP provides a space distinct from the Department’s day-to-day work for long-term planning that anticipates and helps to shape the terms of national debate on a wide range of forthcoming legal policy.
Most recently, Schroeder was the Charles S. Murphy Professor of Law and Professor of Public Policy Studies, and director of the Program in Public Law at Duke University Law School. Previously, he served as Acting Assistant Attorney General in the Office of Legal Counsel at the Department of Justice, where he was responsible for legal advice to the attorney general, the executive office of the president and other executive branch agencies on a broad range of issues, including separation of powers, other constitutional issues, and matters of statutory interpretation and administrative law. He has also served as chief counsel to the Senate Judiciary Committee.
Schroeder received his B.A. degree from Princeton University in 1968, a M.Div. from Yale University in 1971, and his J.D. degree from University of California, Berkeley in 1974.
Army Sergeant Pleads Guilty to Accepting $1.4 Million in Illegal Gratuities Related to Military Dining Contracts in KuwaitRead the Press Release
A U.S. Army sergeant pleaded guilty today to accepting approximately $1.4 million in illegal gratuities from private contractors during his deployment to Kuwait in 2002 and 2003, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Jeffrey B. Lang of the Central District of Illinois.
Ray Scott Chase, 42, pleaded guilty today before U.S. Magistrate Judge John A. Gorman in the Central District of Illinois to a criminal information charging him with accepting illegal gratuities, structuring monetary transactions and making false statements.
According to court documents, Chase was a sergeant first class during his deployment to Kuwait from January 2002 through December 2003. Chase served as the contracting officer’s representative and the non-commissioned officer in charge of the military dining facility at U.S. Central Command at Camp Doha, Kuwait. During 2003, Chase also served as the non-commissioned officer in charge for the military dining facility at Camp Arifjan, Kuwait. Chase supervised the food procurement, preparation and service operations at Camp Doha and Camp Arifjan. As a part of his official duties, Chase also coordinated orders for certain blanket purchase agreements the U.S. Army had with various private contractors to provide supplies and services to both of those dining facilities.
During today’s court proceeding and according to court documents, Chase admitted that he received approximately $1.4 million from private contractors for official acts he performed and was going to perform in 2002 through the end of 2003. According to court documents, he was paid by private contractors that included Tamimi Global Company Ltd., LaNouvelle General Trading & Contracting Corp., and another unnamed company.
In addition to accepting the illegal gratuities, Chase admitted that after he returned to the United States in 2004, he structured various financial transactions to avoid currency transaction reporting requirements. Chase also admitted at today’s hearing that he made false statements when interviewed by federal authorities in February 2007.
At sentencing, scheduled for Aug. 6, 2010, before U.S. District Judge Joe B. McDade, Chase faces a maximum sentence of five years in prison. Chase has agreed to forfeit assets traceable to the proceeds of his crimes.
This case is being prosecuted by Assistant U.S. Attorney Matthew J. Cannon of the Central District of Illinois and Trial Attorney Joseph A. Capone of the Criminal Division’s Fraud Section. The case is being investigated by the Army Criminal Investigations Division; the Defense Criminal Investigative Service; the FBI; the Internal Revenue Service, Criminal Investigations Division; and members of the National Procurement Fraud Task Force and the International Contract Corruption Task Force (ICCTF).The U.S. Attorney’s Office for the District of Kansas also provided assistance in the case.
The prosecution represents the Department of Justice’s commitment to protect U.S. taxpayers from procurement fraud through the National Procurement Fraud Task Force. The National Procurement Fraud Initiative, announced in October 2006, is designed to promote the early detection, identification, prevention and prosecution of procurement fraud associated with the increase in contracting activity for national security and other government programs. The ICCTF is a joint law enforcement agency task force that seeks to detect, investigate and dismantle corruption and contract fraud resulting from U.S. Overseas Contingency Operations world wide, including Afghanistan, Iraq and Kuwait.
Tuesday 20 April 2010
Three South Carolina Men Sentenced for Committing Civil Rights Offenses and CarjackingRead the Press Release
WASHINGTON – U.S. District Court Judge R. Bryan Harwell has sentenced three men in Florence, S.C., for their role in terrorizing an African-American man and two Caucasian men and for carjacking, the Justice Department announced today. Judge Harwell sentenced Thomas Howard Blue Sr., 49, to 156 months in prison, while Thomas Howard Blue Jr., 29, received 36 months in prison. A third co-conspirator, Judson Hartley Talbert was sentenced to 108 months in prison.
In December 2009, the three defendants pleaded guilty to conspiring to deprive, and actually depriving the African-American victim of his right to engage in a federally-protected activity, and conspiring to carjack and actually carjacking the victim’s car. Thomas Howard Blue Sr. also pleaded guilty to depriving two other victims of their right to engage in federally-protected activity and using a firearm in relation to a crime of violence against those victims.
The defendants admitted that the elder Blue forcibly escorted the victim, an African-American man, out of an establishment known as the "Stop and Shop" after the victim had entered the store to use the restroom. Once outside, the elder Blue forced the victim to the ground and Blue Jr., threatened the victim with a chainsaw, while a small crowd watched. As the victim was being attacked, Talbert stole his car and drove it to a site along South Carolina’s Great Pee Dee River known as "Blue’s Landing." After realizing that the victim was attempting to call the police, Blue pursued the victim out of the Stop and Shop parking lot to a nearby road, where the victim escaped by seeking refuge in the home of a local family.
The elder Blue then retrieved a pistol and attacked a Caucasian man, whom he believed to be aiding the African-American victim. The elder Blue stuck the pistol against the second victim’s face and threatened to kill him when he denied knowing anything about the African-American victim. When the third victim, a Caucasian man, arrived at the Stop and Shop to retrieve the African-American victim’s car, the elder Blue pointed his pistol at the third victim and threatened to kill him.
"This case is a reminder that violent acts fueled by bigotry and hate continue to happen all too frequently in our nation, even in 2010. All Americans, regardless of their color or race, should feel free to use public facilities without fear of intimidation or violence," said Thomas E. Perez, Assistant Attorney General in charge of the Justice Department’s Civil Rights Division. "The prosecution of this case should send a message to those who engage in such hate-fueled assaults that they will be brought to justice."
"This senseless, terrifying assault was quite simply the product of hate, and I expect others tempted to act out in violent racism to take note of this prosecution and the sentences imposed," said Kevin McDonald, Acting United States Attorney for the District of South Carolina. "This office, along with our partners at the Civil Rights Division at the Department of Justice, stand ready to protect all South Carolinians by prosecuting those whose crimes are fueled by hatred."
The case was investigated by FBI Special Agent Steven Stokes with assistance of Special Agent Jeffrey L. Key of the Bureau of Alcohol, Tobacco, Firearms and Explosives, and Investigator Shawn Feldner of the Marlboro County, S.C., Sheriff’s Department. The case was prosecuted by Michael J. Frank of the Civil Rights Division of the Department of Justice and Assistant U.S. Attorney A. Bradley Parham of the District of South Carolina.
Residential Homebuilder Settles Clean Water Act Violations in 18 States and D.C.Read the Press Release
WASHINGTON — Hovnanian Enterprises Inc., a national residential homebuilder, has agreed today to pay a $1 million civil penalty to resolve alleged Clean Water Act violations at 591 construction sites in 18 states and the District of Columbia, the Justice Department and U.S. Environmental Protection Agency (EPA) announced.
As part of the settlement, Hovnanian will also implement a company-wide stormwater compliance program designed to improve compliance with storm water run-off requirements at existing and future construction sites around the country.
"This settlement will bring positive change to construction sites in 18 states and the District of Columbia, said Ignacia S. Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. "Harmful storm water run-off from construction sites is something that is easily prevented. The construction industry needs to implement required controls or face the possibility of a federal lawsuit."
"If what we have at the end of the day is more development and a damaged environment, that's not progress," said Michael L. Levy, U.S. Attorney for the Eastern District of Pennsylvania. "Following the rules should not be a luxury item on a homebuilder’s list. When the safeguards are respected, it protects not only the environment, but the community's quality of life."
"This case is a result of EPA's effort to protect local waters by vigorously enforcing the nation's environmental laws," said Cynthia Giles, assistant administrator of EPA’s Office of Enforcement and Compliance and Assurance. "Without appropriate onsite pollution controls, sediment-laden runoff from construction sites can pollute local waterways. This enforcement agreement will mean cleaner water for hundreds of communities across the country."
The U.S. government complaint, filed simultaneously with the settlement agreement in federal court in Philadelphia, alleges a pattern of violations that was discovered by reviewing documentation submitted by the company, and through federal and state site inspections. The alleged violations include failure to obtain permits until after construction had begun, or failing to obtain them at all. At sites with permits, violations included failure to prevent or minimize the discharge of pollutants such as silt and debris in storm water runoff.
The settlement requires Hovnanian to develop improved pollution prevention plans for each construction site, conduct additional site inspections and promptly correct any problems detected. The company must properly train construction managers and contractors, and will be required to designate trained staff for each site. Hovnanian must also implement a management and internal reporting system to improve oversight of on-the-ground operations and submit annual reports to EPA.
A portion of the settlement helps EPA efforts to protect the Chesapeake Bay, North America's largest and most biologically diverse estuary. The bay and its tidal tributaries are threatened by pollution from a variety of sources, and overburdened with nitrogen, phosphorus and sediment that can be carried by storm water. A total of 161 Hovnanian construction sites in the District of Columbia, Maryland, Virginia and West Virginia fall within the bay watershed and are covered by this settlement.
The Clean Water Act requires that construction sites have controls in place to prevent pollution from being discharged with storm water into nearby waterways. These controls include simple pollution prevention techniques such as silt fences, phased site grading, and sediment basins to prevent common construction contaminants from entering the nation’s waterways.
Improving compliance at construction sites is one of EPA’s national enforcement initiatives. Construction projects have a high potential for environmental harm because they disturb large areas of land and significantly increase the potential for erosion. Without onsite pollution controls, sediment-laden runoff from construction sites can flow directly to the nearest waterway and degrade water quality. In addition, storm water can pick up other pollutants, including concrete washout, paint, used oil, pesticides, solvents and other debris. Polluted runoff can harm or kill fish and wildlife, degrade aquatic habitat, and affect drinking water quality.
This settlement is the latest in a series of enforcement actions to address storm water violations from construction sites around the country. Similar consent decrees have been reached with multiple national and regional home building companies.
Along with the federal government, the District of Columbia, the states of Maryland and West Virginia and the Commonwealth of Virginia have joined the settlement. The District of Columbia and each of the states will receive a portion of the $1 million penalty.
The consent decree, lodged in the U.S. District Court for the Eastern District of Pennsylvania, is subject to a 30-day public comment period and approval by the federal court. A copy of the consent decree is available on the Justice Department website at www.justice.gov/enrd/Consent_Decrees.html.
Professor Robert Pitofsky Receives the Justice Department’s 2010 John Sherman AwardRead the Press Release
Attorney General Eric Holder presented the 2010 John Sherman Award to Robert Pitofsky for his lifetime contributions to the teaching and enforcement of antitrust law and the development of antitrust policy. Professor Pitofsky is a Joseph and Madeline Sheehy Professor of Trade Regulation Law at the Georgetown University Law Center and is of counsel in the Washington, D.C., office of Arnold & Porter LLP.
On April 20, 2010, Attorney General Holder honored Professor Pitofsky with the department’s highest antitrust award in the Great Hall of the Robert F. Kennedy Department of Justice building. Members of the judiciary, officials of several federal agencies and members of the antitrust bar attended the award ceremony.
"His dedication to the law and the fundamental ideals of antitrust enforcement is unparalleled," said Christine Varney, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. "Having worked with Bob at the Federal Trade Commission (FTC) and known him as a mentor for 15 years, I cannot think of anyone more singularly appropriate upon which to bestow this honor."
Professor Pitofsky collaborated on the American Bar Association Commission’s 1969 Report and wrote a ground-breaking 1977 article, "Beyond Nader: Consumer Protection and the Regulation of Advertising," both of which supplied much of the intellectual framework for today’s FTC. Professor Pitofsky held three posts at the FTC, including Chairman (1995-2001); Commissioner (1978-1981); and Director of the Bureau of Consumer Protection (1970-1973). In 2002, the FTC awarded him the second annual Miles W. Kirkpatrick Award for Lifetime FTC Achievement.
In addition, Professor Pitofsky served as dean of the Georgetown University Law Center (1983-1989), Visiting Professor of Law at Harvard Law School (1975-1976) and a professor at New York University School of Law (1963-1970). He is a principal author of one of the most widely used trade regulation casebooks, "Trade Regulation: Cases and Materials," now in its fifth edition.
Created in 1994, the John Sherman Award is presented by the Department of Justice’s Antitrust Division to a person or persons for outstanding and substantial contributions to the field of antitrust law, the protection of American consumers and the preservation of economic liberty.
The Award is named for the author of the Sherman Act of 1890, the nation’s first and foremost antitrust law. John Sherman, a former congressman and senator, also served as Secretary of the Treasury from 1877 to 1881 and as Secretary of State from 1897 to 1898.
Previous recipients include Herbert Hovenkamp (2008), Robert H. Bork (2005), Richard A. Posner (2003), Milton Handler (1998), Thomas E. Kauper and William F. Baxter (1996), Phillip E. Areeda (1995) and Howard Metzenbaum (1994).
Ohio Man Sentenced to 29 Months in Prison<br /> for Selling Pirated Copies of MoviesRead the Press Release
Richard Humphrey, 22, of North Ridgeville, Ohio, was sentenced today in Cleveland to 29 months in prison by U.S. District Court Judge Lesley Wells for selling counterfeit copies of copyrighted movies through the Internet, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Steven M. Dettelbach for the Northern District of Ohio.
Humphrey was also sentenced to three years of supervised release following his prison term. Judge Wells ordered Humphrey to forfeit multiple computers and associated hardware used in the scheme. Humphrey pleaded guilty in Cleveland on Sept. 21, 2009, to one count of criminal copyright infringement for selling pirated movies prior to their commercial release through an Internet website.
According to court documents, from December 2006 through October 2007, Humphrey operated the subscription-based website USAWAREZ.COM from which he distributed copies of hundreds of copyrighted movies, computer games and software products without authorization from the copyright owners. Humphrey offered paid subscription services for access to the pirated materials on his website and also solicited donations for his operation of the site. FBI agents seized two personal computers and associated hardware from Humphrey while executing a search warrant at his residence. Additionally, the FBI seized Humphrey’s computer server hosted at an internet service provider that was used to host and run the USAWAREZ website.
The case is being prosecuted by Trial Attorneys Tyler Newby and Tara Swaminatha of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney Robert Kern for the Northern District of Ohio as well as Assistant U.S. Attorney Jay V. Prabhu for the Eastern District of Virginia. The case was investigated by the FBI.