Latest Records
Newest first across public DOJ and U.S. Attorney press releases.
15 December 2011
California Building Materials Manufacturer Agrees to Pay $1.4 Million to Settle Clean Air Act ViolationsRead the Press Release
WASHINGTON – The Department of Justice and the U.S. Environmental Protection Agency (EPA) announced today that CalPortland Company (CPC), a major producer of Portland cement and building materials in the United States, has agreed to pay a $1.425 million penalty to resolve alleged violations of the Clean Air Act at its cement plant in Mojave, Calif. In addition to the penalty, CPC will spend an estimated $1.3 million on pollution controls that will reduce harmful emissions of nitrogen oxides (NOx) and sulfur dioxide (SO2), pollutants that can lead to childhood asthma and smog.
“This settlement will bring state of the art controls to a major source of air pollution and secures significant reductions in harmful pollutants,” said Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division of the Department of Justice. “The Mojave plant is one of the largest emitters of nitrogen oxide pollution in California. As a result of the Clean Air Act compliance requirements in the consent decree, residents in the surrounding region will enjoy cleaner and healthier air.”
“Air pollution from cement plants can travel significant distances downwind, crossing state lines and creating region-wide air quality and health problems,” said Cynthia Giles, assistant administrator for EPA’s Office of Enforcement and Compliance Assurance. “Today’s settlement will ensure the proper pollution controls are installed to reduce emission levels and protect communities across the Southwest.”
The $1.425 million penalty is one of the largest settlements for a single cement facility.
The plant is located in Kern County, Calif., which has some of the worst air pollution in the country. The pollutants covered in the settlement contribute to the formation of ground-level ozone or smog. Exposure to even low levels of ozone can cause respiratory problems, and repeated exposure can aggravate pre-existing respiratory diseases.
“The citizens of Kern County deserve to have clean and healthy air,” stated Benjamin B. Wagner, U.S. Attorney for the Eastern District of California. “The significant penalty that the defendant will pay, along with the pollution controls it is installing, underscore the commitment of this office and the Justice Department to protecting the air our children breathe and the environment they live in.”
The government’s complaint alleges that CPC made significant modifications to its plant, resulting in increased emissions of NOx, SO2 and carbon monoxide, without first obtaining a Clean Air Act-required permit and without installing necessary pollution control equipment. Major sources of air pollution are required to obtain such permits before making changes that would result in a significant emissions increase of any pollutant.
The settlement ensures that the proper equipment, estimated to cost $1.3 million to install and $500,000 per year to operate, will be installed to reduce future emission levels. These measures are expected to reduce pollution each year from the plant by at least 1,200 tons of NOx and 360 tons of SO2.
Since 2005, EPA has been focusing on improving compliance with the new source review provisions of the Clean Air Act among industries that have the potential to cause significant amounts of air pollution, including the cement manufacturing industry.
EPA is continuing its commitment to reducing air pollution from cement plants by making it one of EPA’s National Enforcement Initiatives for 2011-2013. SO2 and NOx, two key pollutants emitted from cement plants, are converted in the air into fine particles of particulate matter that can cause severe respiratory and cardiovascular impacts, and premature death. Reducing these harmful air pollutants will benefit the communities located near the CalPortland facility, particularly communities disproportionately impacted by environmental risks and vulnerable populations, including children.
The proposed consent decree was lodged with the U.S. District Court for the Eastern District of California, and will be subject to a 30-day public comment period. A copy of the consent decree will be available on the Justice Department website: www.justice.gov/enrd/Consent_Decrees.html .
More information on the settlement: www.epa.gov/compliance/resources/cases/civil/caa/calportland.html .
More about EPA’s National Enforcement Initiatives:
www.epa.gov/compliance/data/planning/initiatives/index.html .
Army Captain Pleads Guilty in Virginia to Submitting<br /> False Housing and Travel ClaimsRead the Press Release
WASHINGTON – A captain in the U.S. Army pleaded guilty today in federal court in Alexandria, Va., to making more than $68,000 in false housing and travel claims, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Neil H. MacBride for the Eastern District of Virginia.
Lisa A. Dean, 38, of Alexandria, pleaded guilty before U.S. District Court Judge Gerald Bruce Lee in the Eastern District of Virginia to a criminal information charging her with two counts of making a false claim against the United States. According to court documents, Dean was stationed in Bamberg, Germany, from 2002 to 2010. Dean admitted that, beginning in 2003, she submitted false housing allowance forms claiming that her dependent mother was living in San Francisco, when in fact she was living in Arizona where the housing rates were lower. Dean admitted that from August 2006 through September 2011, she received a total of $58,167 in excess housing allowance for her mother to which she was not entitled. Dean also admitted that in the fall of 2010, she submitted false travel vouchers claiming that she moved her mother from San Francisco to her new duty station in Alexandria, when in fact no such move occurred. Dean was paid $10,222 as a result of the false travel vouchers.
Dean faces up to five years in prison and a $250,000 fine for each offense, as well as a term of supervised release following her prison term. Dean is also responsible for restitution in the amount of $68,389. Sentencing has been scheduled for Feb. 17, 2012.
This case is being prosecuted by Trial Attorney Richard B. Evans of the Criminal Division’s Public Integrity Section and Charles F. Connolly, Assistant U.S. Attorney in the U.S. Attorney’s Office of the Eastern District of Virginia. The case is being investigated by the Army Criminal Investigation Command.
14 December 2011
US Clean Water Act Settlement in Chicago to Reduce Sewage OverflowsRead the Press Release
WASHINGTON – The Department of Justice, the U.S. Environmental Protection Agency (EPA), and the Illinois Attorney General’s Office today announced a Clean Water Act (CWA) settlement with the Metropolitan Water Reclamation District of Greater Chicago (MWRD) to resolve claims that untreated sewer discharges were released into Chicago area waterways during flood and wet weather events. The settlement will safeguard water quality and protect human health by capturing stormwater and wastewater from the combined sewer system, which services the city of Chicago and 51 communities.
“These much needed upgrades to Chicago’s sewer infrastructure will reduce combined sewage overflows and the public’s exposure to harmful pathogens,” said Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division of the Department of Justice. “The use of innovative green infrastructure in the city’s urban core will reduce runoff and flooding, and improve the quality of the environment where people live.”
“Today’s settlement will prevent polluted stormwater runoff from flowing through Chicago area neighborhoods and into local waterways,” said Cynthia Giles, Assistant Administrator for EPA’s Office of Enforcement and Compliance Assurance. “Combining innovative stormwater management practices, like rain gardens, with necessary infrastructure overhauls will protect people’s health and provide area residents with improved recreational opportunities.”
“This settlement mandates that MWRD make critical structural changes to improve the quality of Chicago’s waterways,” said Illinois Attorney General Lisa Madigan. “By requiring green infrastructure projects, the agreement will also help reduce runoff and flooding for Chicago area residents.”
“This consent decree requires MWRD to invest in green roofs, rain gardens and other green infrastructure to prevent basement flooding in the neighborhoods that are most severely impacted by sewer overflows,” said EPA Region 5 Administrator Susan Hedman. “The enforceable schedule established by this consent decree will ensure completion of the deep tunnel and reservoir system to control untreated sewage releases into Chicago area rivers and Lake Michigan.”
Under the settlement, the Metropolitan Water Reclamation District will work to complete a tunnel and reservoir plan to increase its capacity to handle wet weather events and address combined sewer overflow discharges. The project will be completed in a series of stages in 2015, 2017 and 2029. The settlement also requires MWRD to control trash and debris in overflows using skimmer boats to remove debris from the water so it can be collected and properly managed, making waterways cleaner and healthier.
MWRD is also required to implement a green infrastructure program that will reduce stormwater runoff in areas serviced by MWRD by distributing rain barrels and developing projects to build green roofs, rain gardens or use pervious paving materials in urban neighborhoods. MWRD has also agreed to pay a civil penalty of $675,000.
Raw sewage contains pathogens that threaten public health, leading to beach closures and public advisories against fishing and swimming. This problem particularly affects older urban areas, where minority and low-income communities are often located. Keeping raw sewage and contaminated stormwater out of the waters of the United States is one of EPA’s National Enforcement Initiatives for 2011 to 2013. The initiative focuses on reducing discharges from sewer overflows by obtaining cities’ commitments to implement timely, affordable solutions to these problems, including the increased use of green infrastructure and other innovative approaches.
The proposed consent decree will be subject to a 30-day public comment period. A copy of the consent decree will be available on the Justice Department website: www.justice.gov/enrd/Consent_Decrees.html.
Learn more about EPA’s National Enforcement Initiatives: www.epa.gov/compliance/data/planning/initiatives/initiatives.html#msos.
Three Patient Recruiters for Miami Home Health Companies Sentenced to Prison in $25 Million Health Care Fraud SchemeRead the Press Release
WASHINGTON – Two patient recruiters for a Miami health care agency were sentenced today to 18 and 12 months in prison, respectively, for their participation in a $25 million home health Medicare fraud scheme, announced the Department of Justice, the FBI and the Department of Health and Human Services (HHS).
U.S. District Judge Joan A. Lenard in Miami sentenced Oscar Martinez, 54, to 18 months in prison, three years of supervised release and ordered Martinez to pay $390,000 in restitution. Judge Lenard sentenced Lesder Casanova, 40, to 12 months in prison, three years of supervised release and ordered Casanova to pay $195,000 in restitution.
In addition, on Dec. 12, 2011, co-conspirator patient recruiter Raul Alvarez, 48, was sentenced by Judge Lenard to 10 months in prison for his role in the fraud scheme. Alvarez was also sentenced to three years of supervised release and ordered to pay $118,000 in restitution.
Alvarez, Martinez and Casanova each pleaded guilty earlier this year to one count of conspiracy to commit health care fraud. They were each ordered to pay their restitution jointly and severally with co-defendants.
According to court documents, Casanova was a patient recruiter for ABC Home Health Care Inc., a Miami home health care agency that purported to provide home health and physical therapy services to Medicare beneficiaries. Alvarez and Martinez were patient recruiters for Florida Home Health Care Providers Inc., another related Miami home health care agency. According to court documents, ABC and Florida Home Health only existed to defraud Medicare.
Alvarez, Martinez and Casanova admitted that beginning in approximately January 2006 and continuing until approximately March 2009, they recruited Medicare beneficiaries who would allow ABC and Florida Home Health to bill Medicare for home health care and therapy services that were medically unnecessary and/or never provided. Alvarez, Martinez and Casanova solicited and received kickbacks and bribes from the owners and operators of ABC and Florida Home Health in return for the recruited patients. According to their pleas, Alvarez, Martinez and Casanova knew that the patients they recruited did not qualify for the services billed to Medicare. In addition, the defendants knew that the patient files for their recruited patients were falsified in order to make it appear that the patients qualified for the services.
As a result of the participation of Alvarez, Martinez and Casanova in the illegal scheme, the Medicare program was billed approximately $118,000, $390,000 and $195,000, respectively, for purported home health care services that were not medically necessary and/or were not provided.
Last week, Dr. Jose Nunez was sentenced to 40 months in prison for his role in the fraud scheme and two nurses, Luisa Morciego and Eneida Fry, were each sentenced to 24 months in prison for their roles in the scheme. Another patient recruiter, Vincente Guerra-Nistal, was sentenced to 18 months in prison in October 2011.
The sentences were announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; John V. Gillies, Special Agent-in-Charge of the FBI’s Miami Field Office; and Special Agent-in-Charge Christopher Dennis of the HHS Office of Inspector General (HHS-OIG), Office of Investigations Miami Office.
This case is being prosecuted by Trial Attorney Joseph S. Beemsterboer of the Criminal Division’s Fraud Section. The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Miami.
Since their inception in March 2007, Medicare Fraud Strike Force operations in nine locations have charged more than 1,140 defendants who collectively have falsely billed the Medicare program for more than $2.9 billion. In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.
Philip Morris and R.J. Reynolds Settle with Justice Department over Tobacco-Industry Document DatabasesRead the Press Release
WASHINGTON – The country’s two biggest tobacco companies have agreed to improve public access to internal tobacco-industry documents and to pay $6.25 million into a court fund that will go to support the country’s largest online collection of tobacco documents, the Justice Department announced today. The agreement is part of the United States’ landmark case against the country’s largest cigarette companies, filed in federal court in Washington. The settlement is with Philip Morris USA and its parent Altria Group, and with R.J. Reynolds Tobacco Company.
The agreement resolves a dispute between the tobacco companies and the United States about the online document databases that the court ordered in 2006. The court ruled then that Philip Morris, R.J. Reynolds and other cigarette companies had suppressed internal documents, information and research, as part of a broad campaign to deliberately deceive the American people about smoking’s health effects, nicotine addiction, manipulating cigarette design to increase addiction, light- and low-tar cigarettes and marketing to youth. As a result, the court ordered the companies to provide public access to all documents they turned over in all smoking-and-health lawsuits in the United States for the next 15 years, through online document websites and through a hard-copy archive known as the Minnesota Depository.
The agreement today resolves a longstanding dispute over certain obligations the tobacco companies have with respect to these online databases. The agreement requires Philip Morris and R.J. Reynolds to pay a total of $6.25 million into a court fund over the next four years. The court fund will turn the money over to the University of California - San Francisco (UCSF), which runs the Legacy Tobacco Documents Library, http://legacy.library.ucsf.edu . The UCSF collection went online in 2000, and provides Internet access to more than 13 million internal tobacco company documents, many of them originally revealed during lawsuits against individual tobacco companies. Researchers have published hundreds of peer-reviewed articles about the tobacco industry’s actions and internal knowledge, based on documents uncovered in the UCSF collection. The money UCSF receives under this proposal will be used to improve access to and the functionality of its online database of tobacco documents.
“To prevent future wrongdoing, the court ordered the tobacco companies to make all documents they disclosed in certain types of lawsuits publicly available for the next 15 years and to pay more than $6 million to maintain the document database,” said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. “This agreement helps make sure that these documents will be accessible to researchers, journalists, students, lawyers, the government and the public at large – anyone who is interested in learning more about the defendants’ efforts to mislead consumers about the effects of smoking.”
The proposed consent order will not become final until it is reviewed and signed by the court.
Trial Attorneys Daniel Crane-Hirsch and Josh Burke of the Civil Division’s Consumer Protection Branch represented the United States.
Owners of Houston Mental Health Company and Assisted Living Facility Indicted for Alleged Roles in $90 Million Medicare Fraud SchemeRead the Press Release
WASHINGTON – Two owners of a Houston mental health care company, Spectrum Care P.A., and the owner of a Houston assisted living facility were arrested today on charges related to their alleged participation in a $90 million Medicare fraud scheme, announced the Department of Justice, the Department of Health and Human Services (HHS) and the FBI.
Mansour Sanjar, 78, Cyrus Sajadi, 64, and Chandra Nunn, 33, all of Houston, were arrested today in Houston and are expected to make their initial appearances in federal court today and tomorrow. An indictment filed in the Southern District of Texas charges Sanjar, Sajadi and Nunn with conspiracy to commit health care fraud and conspiracy to pay and receive illegal health care kickbacks.
“These defendants allegedly participated in a scheme to cheat the Medicare program out of more than $90 million,” said Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division. “The indictment alleges that Spectrum billed Medicare for mental health services when patients were actually watching movies, playing bingo or engaging in other activities. Our efforts over the past three years to combat Medicare fraud have been unprecedented, and today’s arrests are another example.”
“This case is another excellent example of the partnership and cooperation between the U.S. Attorney’s Office, the Department of Justice and our investigating agencies,” said U.S. Attorney Kenneth Magidson of the Southern District of Texas . “We will continue to work closely with each other to ensure those who engage in such fraudulent health care practices are brought to justice.”
According to the indictment, Sanjar and Sajadi orchestrated and executed a scheme to defraud Medicare beginning in 2006 and continuing until their arrest today. Sanjar and Sajadi owned Spectrum Care P.A., a Houston mental health company that purportedly provided partial hospitalization programs (PHP). A PHP is a form of intensive outpatient treatment for severe mental illness. Sanjar and Sajadi allegedly submitted false and fraudulent claims to Medicare through Spectrum.
According to the indictment, Nunn owned a Houston assisted living facility. The indictment alleges that Sanjar and Sajadi paid kickbacks to Nunn and other owners and operators of assisted living facilities and to patient brokers in exchange for delivering ineligible Medicare beneficiaries to Spectrum. In some cases, the patients received a portion of those kickbacks.
Sanjar and Sajadi allegedly billed Medicare for treatments purportedly provided to these recruited patients. According to the indictment, the treatments were medically unnecessary or never provided at all. The indictment alleges that Spectrum billed Medicare for more than $90 million in medically unnecessary services.
Today’s arrests were announced by Assistant Attorney General Breuer of the Justice Department’s Criminal Division; U.S. Attorney Magidson of the Southern District of Texas; Special Agent in Charge Stephen L. Morris of the FBI’s Houston Field Office; Special Agent in Charge Mike Fields of the Dallas Regional Office of HHS’s Office of the Inspector General (HHS-OIG), the Texas Attorney General’s Medicaid Fraud Control Unit (MFCU); Joseph J. Del Favero, Special Agent in Charge of the Chicago Field Office of the Railroad Retirement Board, Office of Inspector General (RRB-OIG); and Scott Rezendes, Special Agent in Charge of Field Operations of the Office of Personnel Management, Office of Inspector General (OPM-OIG).
The case is being prosecuted by Trial Attorneys Laura Cordova and Allan J. Medina and Acting Deputy Chief Sam S. Sheldon of the Criminal Division’s Fraud Section with assistance from Trial Attorneys Jennifer Ambuehl and Aixa Maldonado-Quinones of the Criminal Division’s Asset Forfeiture and Money Laundering Section. The case was investigated by the FBI, HHS-OIG, MFCU, RRB-OIG and OPM-OIG and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Texas.
Since their inception in March 2007, Medicare Fraud Strike Force operations in nine locations have charged more than 1,140 defendants who collectively have falsely billed the Medicare program for more than $2.9 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, 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 Police Officer of Puerto Rico Convicted for Role in Providing Security for Drug TransactionsRead the Press Release
WASHINGTON – A former police officer of Puerto Rico has been convicted by a federal jury in San Juan, Puerto Rico, for his role in providing security for drug transactions, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and Special Agent in Charge Joseph S. Campbell of the FBI’s San Juan Division.
Javier A. Diaz Castro, 30, was convicted on Dec. 12, 2011, of two counts of conspiracy to possess with intent to distribute more than five kilograms of cocaine, two counts of attempting to possess with the intent to distribute more than five kilograms of cocaine, and two counts of possession of a firearm in furtherance of a drug transaction. Diaz was charged in an indictment unsealed on Oct. 6, 2010, along with 88 other law enforcement officers in Puerto Rico and 44 other individuals, as part of the FBI undercover operation known as Guard Shack.
According to the indictment and information presented in court, on at least two occasions in 2010, Diaz provided security for what he believed were a series of illegal drug deals, but which in fact were part of the undercover FBI operation. Diaz, a 10-year veteran of the police force, was assigned to the frauds unit at the time of the transactions. According to information presented at trial, Diaz was brought into the scheme by another police officer of Puerto Rico.
In return for the security he provided, based on his departmental training and using his service weapon, Diaz received cash payments of $2,000 per transaction.
U.S. District Judge Gustavo A. Gelpi scheduled sentencing for March 19, 2012. At sentencing, Diaz faces a mandatory minimum sentence of 20 years in prison and a maximum penalty of life in prison.
The case was prosecuted by Trial Attorneys Eric L. Gibson and Barak Cohen of the Criminal Division’s Public Integrity Section. The case was investigated by the FBI. The U.S. Attorney’s Office for the District of Puerto Rico also participated in the investigation and prosecution of this case.
Florida Man Sentenced to More Than 19 Years in Prison <br /> for Transportation of Child PornographyRead the Press Release
WASHINGTON – Walter Rufus Stanley Waters Jr. of New Port Richey, Fla., was sentenced today to 19 years and seven months in prison and a lifetime of supervised release for transportation of child pornography, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney Robert E. O’Neill of the Middle District of Florida and Special Agent in Charge Steven E. Ibison of the FBI’s Tampa Field Office.
Waters was sentenced by U.S. District Judge Elizabeth A. Kovachevich in Tampa, Fla.
In September 2011, Waters, 46, pleaded guilty to one count of transportation of child pornography. According to court documents and proceedings, in August 2010, Waters uploaded multiple images and videos of child pornography to a social networking site. A search warrant was subsequently executed at Waters’s residence. Waters admitted that he downloaded and possessed multiple images of child pornography. He also admitted to uploading the images to various websites.
This case was investigated by the FBI. The case was prosecuted by Trial Attorney Andrew M. McCormack of Child Exploitation and Obscenity Section (CEOS) in the Justice Department’s Criminal Division and Assistant U.S. Attorney Jennifer Peresie of the Middle District of Florida. The Seattle Police Department provided assistance in the investigation.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. attorneys’ offices and CEOS, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
CD and DVD Counterfeiter and Supplier Both Sentenced in Atlanta to PrisonRead the Press Release
WASHINGTON – Two individuals were sentenced this week in Atlanta for their involvement in a counterfeit DVD and CD ring, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Sally Quillian Yates for the Northern District of Georgia.
Charles Ndhlovu, 34, was sentenced on Dec. 12, 2011, by U.S. District Judge William S. Duffey Jr. to 51 months in prison and Scott Ahn, 42, was sentenced yesterday by Judge Duffey to 19 months in prison. Ndhlovu and Ahn also were ordered to serve three years of supervised release following their prison terms. Ahn was ordered to pay $25,000 in restitution to the Recording Industry Association of America and $15,000 in restitution to the Motion Picture Association of America.
Ahn pleaded guilty on Jan. 14, 2010, to one count of conspiracy to commit criminal copyright infringement, to traffic in counterfeit goods and to traffic in counterfeit labels. Ndhlovu was convicted by a federal jury on July 28, 2011, of one count of trafficking in counterfeit labels and two counts of criminal copyright infringement.
“These sentences send an important message that criminal counterfeiting will not be tolerated,” said Assistant Attorney General Breuer. “The sale of counterfeit goods and the theft of intellectual property harm businesses, consumers and artists alike. We will continue to investigate and prosecute individuals who seek to profit illegally by stealing the works of others, including those who knowingly support the criminal activity.”
“These defendants mass-produced hundreds of thousands of counterfeit music CDs and DVD movies in a pirating operation that appeared to be the largest of its kind in the southeastern United States,” said U.S. Attorney Yates. “Their victims included consumers, who were not getting genuine products, as well as the thousands of Americans who earn their livelihoods from the legitimate creation of their art.”
“The wholesale theft of intellectual property and copyrighted material as was seen in this case simply cannot be tolerated,” said Brian D. Lamkin, Special Agent in Charge, FBI Atlanta Field Office. “The FBI is well positioned to investigate such criminal enterprises which attempt to profit off of the creativity and hard work of others and will continue to work with its various law enforcement partners to bring such individuals to justice.”
“The theft of intellectual property undermines our economy and deprives our creative artists of the full value of their work,” said Brock D. Nicholson, special agent in charge of U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI) for Georgia and the Carolinas. “Protecting legitimate business interests is a priority for HSI and our law enforcement partners. We are dedicated to protecting the jobs, the income and the tax revenue that disappear when criminals and criminal organizations traffic in stolen content for their own profit.”
According to evidence at trial, Ndhlovu reproduced thousands of infringing copies of copyrighted CDs and DVDs, purchased corresponding counterfeit labels and packaging, and assembled the final product that he ultimately sold. Evidence at trial also showed that Ndhlovu reproduced thousands of CDs and DVDs per week for distribution. Ahn assisted in supplying Ndhlovu with blank DVDs and CDs knowing that Ndhlovu and others intended to reproduce infringing copies of copyrighted music and movies onto such digital media.
The sentenced defendants were among 13 charged by a federal grand jury on May 19, 2009, in an indictment alleging various copyright, trademark and counterfeit goods offenses. Five other defendants were sentenced earlier this year. One was placed on probation for a year; the other four were sentenced to prison terms ranging from two to five years. The court found that Ahn conspired with co-defendants and others to reproduce and distribute hundreds of thousands of copyright infringing music CDs and movie DVDs which, if legitimate, would have been worth more than $3.7 million.
The case was prosecuted by Assistant U.S. Attorney Brian Pearce in the Northern District of Georgia and Senior Counsel John H. Zacharia of the Computer Crime and Intellectual Property Section in the Justice Department’s Criminal Division. The case was investigated by special agents of the FBI and the ICE-HSI, together with officers of the Atlanta Police Department Organized Crime Unit; Fulton County, Ga., Sheriff’s Office; College Park, Ga., Police Department; and East Point, Ga., Police Department. Assistance was provided by the Recording Industry Association of America and the Motion Picture Association of America.This case is part of efforts being undertaken by the Department of Justice Task Force on Intellectual Property (IP Task Force) to stop the theft of intellectual property. Attorney General Eric Holder created the IP Task Force to combat the growing number of domestic and international intellectual property crimes, protect the health and safety of American consumers, and safeguard the nation’s economic security against those who seek to profit illegally from American creativity, innovation and hard work. The IP Task Force seeks to strengthen intellectual property rights protection through heightened criminal and civil enforcement, greater coordination among federal, state and local law enforcement partners, and increased focus on international enforcement efforts, including reinforcing relationships with key foreign partners and U.S. industry leaders. To learn more about the IP Task Force, go to www.justice.gov/dag/iptaskforce.
Bridgeport, Conn., Man Involved in 2005 Triple Murder Sentenced to Life in PrisonRead the Press Release
WASHINGTON - A Bridgeport, Conn., man was sentenced on Monday by U.S. District Judge Stefan R. Underhill to life in prison for his role in the murder of three Bridgeport residents in August 2005, said Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney David B. Fein for the District of Connecticut
Azikiwe Aquart, aka “Z” and “Ziggy,” 32, pleaded guilty on Aug. 26, 2011, to three counts of murder in aid of racketeering. In pleading guilty, Aquart admitted that he agreed to participate in what he believed would be a robbery with his brother and others. Aquart admitted that after he and his co-conspirators entered the apartment, he murdered James Reid, while other participants in the crime murdered Tina Johnson and Basil Williams.
According to court documents, statements made in court and evidence introduced during the spring 2011 trial of Azibo Aquart, Azikiwe Aquart’s brother, Azibo Aquart was the founder and leader of a drug trafficking group that primarily sold crack cocaine out of an apartment building on Charles Street in Bridgeport. Azibo Aquart and his associates participated in acts of violence, such as threats and assaults, to maintain their control over the group’s drug distribution activities at the Charles Street Apartments. In the summer of 2005, Azibo Aquart and his associates became involved in a drug trafficking dispute with Johnson, a resident of Charles Street Apartments who sometimes sold smaller quantities of crack cocaine without the approval of Azibo Aquart. On the morning of Aug. 24, 2005, Azibo Aquart, Azikiwe Aquart and others entered an apartment at the Charles Street housing facility and murdered Johnson, her boyfriend Reid and her friend Williams. The three victims were bound with duct tape and brutally beaten to death with baseball bats.
On May 23, 2011, after a month-long trial, a federal jury in New Haven, Conn., found Azibo Aquart guilty of the murders of Johnson, Reid and Williams. On June 15, 2011, the jury voted unanimously to impose the federal death penalty against Azibo Aquart for his role in the murders.
This case was investigated by the FBI, Bridgeport Police Department, Connecticut State Police, Connecticut Department of Correction’s Intelligence Unit, U.S. Immigration and Customs Enforcement - Homeland Security Investigations, U.S. Marshals Service, Bridgeport States Attorney’s Office and U.S. Attorney’s Office.
This case is being prosecuted by Assistant U.S. Attorneys Tracy L. Dayton, Peter D. Markle, Alina P. Reynolds of the U.S. Attorney’s Office for the District of Connecticut, and Trial Attorney Jacabed Rodriguez-Coss of the Criminal Division’s Capital Case Unit.
Attorney General Holder Appoints Eight New U.S. Attorneys to Advisory CommitteeRead the Press Release
WASHINGTON - Attorney General Eric Holder announced today the appointments of eight new U.S. Attorneys to serve two-year terms on the Attorney General’s Advisory Committee (AGAC): Laura E. Duffy of the Southern District of California; Timothy J. Heaphy of the Western District of Virginia; Brendan V. Johnson of the District of South Dakota; Pamela C. Marsh of the Northern District of Florida; Carmen Milagros Ortiz of the District of Massachusetts; Robert L. Pitman of the Western District of Texas; James L. Santelle of the Eastern District of Wisconsin; and Carter M. Stewart of the Southern District of Ohio. Their terms are effective Jan. 1, 2012.
“These U.S. Attorneys bring a wealth of experience and diversity to the AGAC, and I will be relying on each of them for their wise counsel as we continue to work together with our law enforcement partners to advance the department’s efforts to preserve our national security, reduce violent crime and gang violence, promote civil rights, and ensure fairness in the marketplace,” said Attorney General Holder.
The Attorney General’s Advisory Committee, created in 1973, represents the voice of the U.S. Attorneys and plays a crucial role in advancing the department’s law enforcement mission as well as advising the Attorney General on policy, management and operational issues impacting the Offices of the U.S. Attorneys.
A brief bio on each appointee is below:
Laura E. Duffy was presidentially appointed U.S. Attorney for the Southern District of California on June 2, 1010. Previously she served as an Assistant U.S. Attorney in the district as Deputy Chief of the General Crimes Section (2008-2010) as well as in the Narcotics Enforcement Section (1997-2007). Prior to joining the U.S. Attorney’s Office, she served in the Department of Justice’s Criminal Division as a trial attorney in the Narcotics and Dangerous Drug Section (1994-1997) and Money Laundering Section (1993-1994).
James L. Santelle was presidentially appointed U.S. Attorney for the Eastern District of Wisconsin on Jan. 4, 2010. Prior to his appointment, Santelle served as the Justice Attaché in the U.S. Embassy, Baghdad, Iraq (2006-2008). Previously, he served as Chief of the Civil Division in the Western District of Michigan (2004-2005), and Principal Deputy Director for the Executive Office for U.S. Attorneys (1999-2001). From 1985-2010, he served in various positions in the Eastern District of Wisconsin. U.S. Attorney Santelle serves as chair of the Advisory Committee’s Security Working Group.
Carter M. Stewart was presidentially appointed U.S. Attorney for the Southern District of Ohio on Sept. 30, 2009. Previously he served as a Litigation Associate with Vorys, Sater, Seymour and Pease LLP (2005-2009); Assistant U.S. Attorney for the Northern District of California (2003-2005); and Litigation Associate with Bingham McCutchen LLP (1999-2002). U.S. Attorney Stewart chairs the Advisory Committee’s Child Exploitation and Obscenity Working Group.
Brendan V. Johnson was presidentially appointed U.S. Attorney for the District of South Dakota on Oct. 16, 2009. Prior to his appointment, he was a Partner with Johnson, Heidepriem, Abdallah and Johnson LLP (2005-2009); Deputy State’s Attorney in Minnehaha County, S.D., (2003-2005); and Legal Advisor to Tim Johnson for Senate (2002). U.S. Attorney Johnson serves as chair of the Advisory Committee’s Native American Issues Subcommittee.
Pamela C. Marsh was presidentially appointed U.S. Attorney for the Northern District of Florida on June 25, 2010. Previously she served as Counsel for Akerman Senterfitt (2006-2010); Assistant U.S. Attorney for the Middle District of Florida (1999-2006); Associate with Akerman Senterfitt (1997-1999); and Associate with Annis, Mitchell, Cockey, Edwards & Roehn, P.A. (1996-1997).
Robert L. Pitman was presidentially appointed U.S. Attorney for the Western District of Texas on Oct. 3, 2011. Prior to his appointment, he served as a U.S. Magistrate Judge in the Western District of Texas (2003-2011). Previously he served in the district as Deputy U.S. Attorney (2001-2003); Interim U.S. Attorney (2001); Austin, Texas, Division Chief (1997-2001); and Assistant U.S. Attorney (1990-1996). He also served as Attorney Advisor in the General Counsel’s Office, Executive Office for U.S. Attorneys (1996-1997), and as an Associate with Fulbright & Jaworski LLP (1989-1990).
Carmen Milagros Ortiz was presidentially appointed U.S. Attorney for the District of Massachusetts on Nov. 6, 2009. Prior to her appointment she served as an Assistant U.S. Attorney for the district (1998-2010). Previously she served in the District Attorney’s Office for Middlesex County, Mass., as Director of District Courts (1992-1994) and Director of Training (1991-1992); Legal Counsel for the Committee on Foreign Relations with the U.S. Senate (1992); Training Coordinator and Program Associate for the Center of Criminal Justice at Harvard Law School (1988-1991); Attorney with the Law Offices of Marinelli & Morisi (1988-1989); Assistant District Attorney in Middlesex County (1983-1988); and a trial attorney in the Honors Program at the Department of Justice (1981-1983). U.S. Attorney Ortiz chairs the Advisory Committee’s Health Care Fraud Working Group.
Timothy J. Heaphy was presidentially appointed U.S. Attorney for the Western District of Virginia on Oct. 16, 2009. Previously he was a Partner with McGuire Woods LLP (2006-2009); Deputy Managing U.S. Attorney for the district (2003-2005); Assistant U.S. Attorney for the District of Columbia (1994-2003); and an Associate with Morrison & Foerster LLP (1992-1994). U.S. Attorney Heaphy chairs the Advisory Committee’s LECC/Victim/Community Issues Subcommittee.
The following is a list of the full 2012 Advisory Committee:
Paul J. Fishman, U.S. Attorney, District of New Jersey, Chair
Loretta E. Lynch, U.S. Attorney, Eastern District of New York, Vice Chair
Steven M. Dettelbach, U.S. Attorney, Northern District of Ohio
Laura E. Duffy, U.S. Attorney, Southern District of California
Stephanie A. Finley, U.S. Attorney, Western District of Louisiana
Timothy J. Heaphy, U.S. Attorney, Western District of Virginia
Brendan V. Johnson, U.S. Attorney, District of South Dakota
Pamela Cothran Marsh, U.S. Attorney, Northern District of Florida
Carmen Milagros Ortiz, U.S. Attorney, District of Massachusetts
Robert L. Pitman, U.S. Attorney, Western District of Texas
Stephanie M. Rose, U.S. Attorney, Northern District of Iowa
James L. Santelle, U.S. Attorney, Eastern District of Wisconsin
Carter M. Stewart, U.S. Attorney, Southern District of Ohio
Benjamin B. Wagner, U.S. Attorney, Eastern District of California
John F. Walsh, U.S. Attorney, District of Colorado
Sally Quillian Yates, U.S. Attorney, Northern District of Georgia
Ronald C. Machen, U.S. Attorney, ex officio District of Columbia
James Lang, Criminal Chief, ex officio District of Massachusetts
John Parker, Civil Chief, ex officio , Northern District of Texas
13 December 2011
Three Hitachi-LG Data Storage Executives Agree to Plead Guilty for Participating in Bid-Rigging and Price-Fixing Conspiracies Involving Optical Disk DrivesRead the Press Release
WASHINGTON – Three Korean Hitachi-LG Data Storage Inc. (HLDS) executives have agreed to plead guilty and to serve prison time in the United States for their participation in a series of conspiracies to rig bids and fix prices for the sale of optical disk drives, the Department of Justice announced today.
According to the felony charges filed today in U.S. District Court in San Francisco, Young Keun Park, Sang Hun Kim and Sik Hur, aka Daniel Hur, conspired with co-conspirators to suppress and eliminate competition by rigging bids for optical disk drives sold to Dell Inc. and Hewlett-Packard Company (HP) and/or fixing prices for optical disk drives sold to Microsoft Corporation. The three HLDS executives participated in the conspiracies at various times between approximately November 2005 and September 2009. Under the plea agreement, Park and Kim each have agreed to serve eight months in prison and Hur has agreed to serve seven months in prison. Each has also agreed to pay a $25,000 criminal fine. HLDS is a joint venture between Hitachi Ltd., a Japanese corporation, and LG Electronics Inc., a Republic of Korea corporation.
“Today’s plea agreements demonstrate the Antitrust Division’s continued commitment to protect competition in the high tech industry,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “The division will continue to pursue and prosecute those who participate in bid-rigging and price-fixing conspiracies that harm businesses and consumers in the optical disk drive industry.”
Optical disk drives are devices such as CD-ROM, CD-RW (ReWritable), DVD-ROM and DVD-RW (ReWritable) that use laser light or electromagnetic waves to read and/or write data and are often incorporated into personal computers and gaming consoles.
Under the plea agreements, which are subject to court approval, Park, Kim and Hur have also agreed to assist the government in its ongoing investigation into the optical disk drive industry.
According to the charges, from approximately November 2005 until September 2009, Park participated in the conspiracies as HLDS’s vice president and chief marketing officer in charge of optical disk drive sales. The department said that Park had supervisory responsibility for HLDS’s Dell, Microsoft and HP accounts. The department said that Kim participated in the conspiracies at various times as HLDS’s team leader in charge of the HP and Dell accounts and deputy chief marketing officer from approximately November 2005 until September 2009. According to the charges, Hur participated in HP-related conspiracies at various times as HLDS’s team leader, account leader and account manager in charge of the HP account from approximately November 2005 until June 2009.
According to the court documents, Dell hosted optical disk drive procurement events in which bidders would be awarded varying amounts of optical disk drive supply depending on where their pricing ranked. From approximately February 2009 to September 2009, Park and Kim participated in a series of conspiracies involving meetings and conversations with co-conspirators to discuss bidding strategies and prices of optical disk drives. As part of the conspiracies, Park, Kim and co-conspirators submitted bids at collusive and noncompetitive prices and exchanged information on sales, market share and the pricing of optical disk drives to monitor and enforce adherence to the agreements.
The department said that from approximately June 2007 to March 2008, Park and co-conspirators participated in a conspiracy involving meetings and conversations in Taiwan and the Republic of Korea to discuss and to fix the prices of optical disk drives sold to Microsoft. As part of the conspiracy, Park and co-conspirators also exchanged information on the sales of optical disk drives to monitor and enforce adherence to the agreed-upon prices.
According to the court documents, HP also hosted optical disk drive procurement events in which participants would be awarded varying amounts of optical disk drive supply depending on where their pricing ranked. From approximately November 2005 to June 2009, Kim, Park, Hur and co-conspirators participated in a series of conspiracies involving meetings and discussions to predetermine bidding strategies and prices of optical disk drives, resulting in the submission of collusive and noncompetitive bids for HP’s procurement events. Kim, Par, Hur and co-conspirators also exchanged information on sales, market share and the pricing of optical disk drives to monitor and enforce adherence to the agreements
This is the department’s second round of charges resulting from its ongoing investigation into the optical disk drive industry. On Nov. 8, 2011, HLDS pleaded guilty in U.S. District Court in San Francisco to 14 counts of violating the federal antitrust laws between approximately June 2004 and September 2009. HLDS also pleaded guilty to one count of participating in a scheme to defraud in connection with an April 2009 procurement event. On the same day, HLDS was sentenced to pay a $21.1 million criminal fine and has agreed to assist the department in its ongoing investigation into the optical disk drive industry.
Park, Kim and Hur are charged with multiple violations of the Sherman Act. Each count carries a maximum fine of $1 million and up to 10 years in prison. 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.
This case is part of an ongoing joint investigation of the Department of Justice Antitrust Division’s San Francisco Office and the FBI in San Francisco and Houston. Anyone with information concerning illegal or anticompetitive conduct in the optical disk drive 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 .
Retired Army Major Sentenced to 24 Months in Prison for Engaging in Money Laundering Related to Contracting in Support of Iraq WarRead the Press Release
WASHINGTON - A retired major in the U.S. Army was sentenced today to 24 months in prison for engaging in money laundering of criminally derived property totaling $400,000, which he received from a contractor following his deployment to Kuwait, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division.
Charles Joseph Bowie Jr., 45, of Georgetown, Texas, was sentenced by U.S. District Judge Xavier Rodriguez in the Western District of Texas, San Antonio Division. In addition to his prison term, Bowie was sentenced to three years of supervised release and was ordered to pay $400,000 in restitution.Bowie pleaded guilty in May 2011 to a criminal information charging him with one count of engaging in monetary transactions in property derived from specified unlawful activity. According to court documents, Bowie, a major in the U.S. Army at the time, served in Kuwait from April 2004 to April 2005, in support of Operation Iraqi Freedom. While in Kuwait, Bowie conspired with John Cockerham, also a U.S. Army major at the time, who directed a government contractor to pay Bowie money in exchange for the award of a bottled water contract. As part of his guilty plea, Bowie admitted that he entered into a sham consulting agreement with the contractor in an effort to conceal the four $100,000 payments he received from the contractor between July 2005 and February 2006.
On Jan. 31, 2008, Cockerham pleaded guilty to participating in a bribery and money laundering scheme. He was sentenced on Dec. 2, 2009, to 210 months in prison and ordered to pay $9.6 million in restitution.
This case is being prosecuted by Criminal Division Trial Attorneys Richard B. Evans of the Public Integrity Section and Mark W. Pletcher of the Fraud Section. Assistant U.S. Attorney Susan Biggs for the Western District of Texas, San Antonio Division, is providing assistance in the case.The case is being investigated by the Army Criminal Investigation Command, the Defense Criminal Investigative Service, the FBI, the Internal Revenue Service, the Special Inspector General for Iraq Reconstruction, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations and the International Contract Corruption Task Force.
Justice Department Resolves Citizenship Status Discrimination Charge Against Pennsylvania Employer Sernak FarmsRead the Press Release
WASHINGTON – The Justice Department announced today that it has reached a settlement agreement with S.W.J.J. Inc., or Sernak Farms, based in Weatherly, Penn., to settle allegations that Sernak engaged in discrimination on the basis of citizenship status by preferring to hire temporary visa holders over U.S. citizen applicants and adversely treating its U.S. citizen employees. The underlying charge was filed by Philadelphia Legal Assistance on behalf of eight U.S. citizens residing in Puerto Rico.
The Department of Justice investigation indicated that Sernak hired three foreign national workers under the H2-A visa program without considering hiring three of the eight U.S. citizens because of the belief that H2-A visa holders are more diligent than U.S. workers. Of the five U.S. citizens it did hire, the department’s investigation suggested that Sernak treated them differently than Sernak’s foreign national employees in their terms and conditions of employment, and then dismissed them because of their citizenship status. The Immigration and Nationality Act (INA) generally prohibits employers from hiring or terminating employees because of their citizenship status.
Under the terms of the settlement, Sernak has agreed to pay $30,000 in back pay to the eight injured parties, who are U.S. citizens residing in Puerto Rico. Sernak has also agreed to provide its employees training on the anti-discrimination requirements of the Immigration and Nationality Act (INA), adopt nondiscrimination policies with respect to recruitment and hiring, and maintain and submit records to the Department of Justice for the three-year term of the agreement.
“All workers who are authorized to work in the United States have the right to look for a job without encountering discrimination because of their immigration status or national origin,” said Thomas E. Perez, Assistant Attorney General for the Justice Department’s Civil Rights Division. “We are glad to have reached a settlement with Sernak and we look forward to continuing our work with public and private employers to educate them about anti-discrimination protections and employer obligations under the law.”
The Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC) is responsible for enforcing the anti-discrimination provision of the INA, which prohibits employers from discriminating against work-authorized individuals on the basis of citizenship status or national origin in hiring, firing, recruitment or referral for a fee. Attorneys Richard Crespo and A. Baltazar Baca represented OSC in this matter.
For more information about protections against employment discrimination under federal immigration law, call OSC’s worker hotline at 1-800-255-7688 (1-800-237-2525, TDD for hearing impaired), OSC’s employer hotline at 1-800-255-8155 (1-800-362-2735, TDD for hearing impaired), or 202-616-5594; email [email protected] ; or visit the website.
Justice Department Enters into a Consent Decree with Bolivar County, Miss., SheriffRead the Press Release
WASHINGTON – The Department of Justice announced today that it has entered into a consent decree that, if approved by the court, will resolve the department’s claims that H.M. Grimmett, sheriff of Bolivar County, Miss., retaliated against Robert E. Brown, a former employee of the sheriff.
The government’s complaint, which was filed along with a consent decree in the U.S. District Court for the Northern District of Mississippi, alleges that the sheriff, through the acts of Warden Thomas Taylor, subjected Mr. Brown to discrimination in violation of Title VII of the Civil Rights Act of 1964. Specifically, the complaint alleges that Mr. Brown was terminated by Warden Taylor from his position as chief of security at the Bolivar County Regional Correctional Facility (BCRCF) because Mr. Brown filed a charge of discrimination with the Equal Employment Opportunity Commission (EEOC).
Under the terms of the consent decree, the sheriff will implement policies and procedures addressing employment discrimination and the avenues by which BCRCF employees may submit complaints of discrimination. The sheriff will also use, at the sheriff’s expense, the Outreach, Education and Training Section of the EEOC’s Birmingham District Office to provide live training to all of the sheriff’s employees with supervisory responsibilities on the law of equal employment opportunity, including Title VII’s prohibition against subjecting persons who engage in activity protected under Title VII to retaliation. Additionally, the sheriff will pay Mr. Brown a $53,500 monetary award.
“Title VII protects employees from retaliation when they oppose employment discrimination. The Department of Justice is committed to enforcing Title VII’s anti-retaliation provisions, which are critical to its anti-discrimination protections,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “A person cannot be terminated from his position for filing a charge of discrimination.”
“All workers have the right to go to work without facing discrimination and without having to suffer retaliation for engaging in protected activity under Title VII,” said Felicia C. Adams, U.S. Attorney for the Northern District of Mississippi. “We hope this case sends a strong message that this type of activity is unacceptable and that the Department of Justice will vigorously pursue such violations of Title VII.”
Additional information about the Civil Rights Division is available on its website at www.justice.gov/crt .
Greek Shipping Company, Master and Chief Engineer of M/V Agios Emilianos Convicted for Intentional Cover-Up of Oil Pollution and Obstruction of JusticeRead the Press Release
WASHINGTON – Ilios Shipping Company S.A., pleaded guilty in federal court in New Orleans for violating the Act to Prevent Pollution from Ships (APPS) and obstruction of justice, announced Assistant Attorney General Ignacia S. Moreno and U.S. Attorney Jim Letten.
Ilios operated the M/V Agios Emilianos, a 738 foot, 36,573 ton bulk carrier cargo ship that hauled grain from New Orleans to various ports around the world. According to the plea agreement, from April 2009 until April 2011, oily bilge waste and sludge was routinely discharged from the vessel directly into the sea without the use of required pollution prevention equipment. During that time, the crew intentionally covered up the illegal discharges of oil waste by falsifying the vessel’s oil record book.
The master of the vessel, Valentino Mislang, previously pleaded guilty to conspiracy to obstruct justice for his role in destroying evidence and instructing crewmembers to lie to the Coast Guard during an inspection of the vessel in April 2011. According to Mislang, a senior manager of Ilios directed the destruction of computer records and ordered Mislang to tell crewmembers to lie to the Coast Guard.
The chief engineer of the vessel, Romulo Esperas, previously pleaded guilty to conspiracy to obstruct justice for his role in falsifying the vessel’s oil record book and directing the discharge of oily bilge waste and sludge directly into the sea. According to Esperas, a senior manager of Ilios directed him to discharge the vessel’s oily waste into the sea and refused to provide funding for the proper discharge of the oily waste to shore-side facilities.
All discharges of sludge or oily bilge waste from a vessel are required to be recorded in the vessel’s oil record book. However, none of the illegal discharges were recorded in the oil record book for the M/V Agios Emilianos.
According to Mislang and Esperas, the company directed them to use a complex system to create the impression that the vessel was consuming the maximum amount of fuel under its charter agreements when in fact it was not. The result was that charterers would overpay Ilios for fuel. Mislang would send daily fuel consumption reports: one to Ilios reporting actual fuel consumption and another to the charterer reporting maximum possible fuel consumption. When the vessel was in port, Esperas would direct that engineers install false sounding tubes into the vessel’s fuel tanks so that when the charterer measured the quantity of fuel in the tank, the soundings would show the tank emptier than it actually was.
If the court accepts the terms of the plea agreement, Ilios will pay an overall criminal penalty of $2 million, $250,000 of which will be in the form of an organizational community service payment to the National Fish and Wildlife Foundation and used to fund projects aimed at the restoration of marine and aquatic resources in the Eastern District of Louisiana. Ilios will also be required to implement an environmental compliance plan, which will ensure that any ship operated by Ilios complies with all maritime environmental requirements established under applicable international, flag state, and port state laws. The plan ensures that Ilios’s employees and the crew of any vessel operated by Ilios are properly trained in preventing maritime pollution. An independent monitor will report to the court about Ilios’s compliance with its obligations during the period of probation.
This case was investigated by the U.S. Coast Guard Investigative Service and the Environmental Protection Agency-Criminal Investigation Division. The case was prosecuted by Emily Greenfield from the U.S. Attorney's Office of the Eastern District of Louisiana and by Ken Nelson of the Environmental Crimes Section of the Environment and Natural Resources Division of the Department of Justice.
Eight Former Senior Executives and Agents<br /> of Siemens Charged in Alleged $100 Million Foreign Bribe SchemeRead the Press Release
WASHINGTON – Eight former executives and agents of Siemens AG and its subsidiaries have been charged for allegedly engaging in a decade-long scheme to bribe senior Argentine government officials to secure, implement and enforce a $1 billion contract with the Argentine government to produce national identity cards, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Preet Bharara for the Southern District of New York and Ronald T. Hosko, Special Agent in Charge of the FBI, Washington Field Office’s Criminal Division.
The defendants charged in the indictment returned late yesterday are:
- Uriel Sharef, a former member of the central executive committee of Siemens AG;
- Herbert Steffen, a former chief executive officer of Siemens Argentina;
- Andres Truppel, a former chief financial officer of Siemens Argentina;
- Ulrich Bock, Stephan Signer and Eberhard Reichert, former senior executives of Siemens Business Services (SBS); and
- Carlos Sergi and Miguel Czysch, who served as intermediaries and agents of Siemens in the bribe scheme.
The indictment charges the defendants and their co-conspirators with conspiracy to violate the Foreign Corrupt Practices Act (FCPA) and the wire fraud statute, money laundering conspiracy and wire fraud.
“Today’s indictment alleges a shocking level of deception and corruption,” said Assistant Attorney General Breuer. “The indictment charges Siemens executives, along with agents and conduits for the company, with committing to pay more than $100 million in bribes to high-level Argentine officials to win a $1 billion contract. Business should be won or lost on the merits of a company’s products and services, not the amount of bribes paid to government officials. This indictment reflects our commitment to holding individuals, as well as companies, accountable for violations of the FCPA.”
“As alleged, the defendants in this case bribed Argentine government officials in two successive administrations and paid off countless others in a successful effort to secure a billion dollar contract,” said U.S. Attorney Bharara. “When the project was terminated, they even sought to recover the profits they would have reaped from a contract that was awarded to them illegitimately in the first place. Bribery corrupts economic markets and creates an unfair playing field for law-abiding companies. It is critical that we hold individuals as well as corporations accountable for such corruption as we are doing today.”
“Backroom deals and corrupt payments to foreign officials to obtain business wear away public confidence in our global marketplace,” said FBI Special Agent in Charge Hosko of the Washington Field Office’s Criminal Division. “The investigation into this decades-long scheme serves as an example that the FBI is committed to curbing corruption and will investigate those who try to advance their businesses through foreign bribery.”
According to the indictment, the government of Argentina issued a tender for bids in 1994 to replace an existing system of manually created national identity booklets with state of the art national identity cards (the DNI project). The value of the DNI project was $1 billion. In 1998, the Argentine government awarded the DNI project to a special-purpose subsidiary of Siemens AG.
The indictment alleges that during the bidding and implementation phases of the project, the defendants and their co-conspirators caused Siemens to commit to paying nearly $100 million in bribes to sitting officials of the Argentine government, members of the opposition party and candidates for office who were likely to come to power during the performance of the project. According to the indictment, members of the conspiracy worked to conceal the illicit payments through various means. For instance, Bock made cash withdrawals from Siemens AG general-purpose accounts in Germany totaling approximately $10 million, transported the cash across the border into Switzerland and deposited the funds into Swiss bank accounts for transfer to officials. Bock, Truppel, Reichert and other conspirators also allegedly caused Siemens to wire transfer more than $7 million in bribes to a bank account in New York disguised as a foreign exchange hedging contract relating to the DNI project. Over the duration of the conspiracy, the conspirators allegedly relied on at least 17 off-shore shell companies associated with Sergi, Czysch and other intermediaries to disguise and launder the funds, often documenting the payments through fake consulting contracts.
In May 1999, according to the indictment, the Argentine government suspended the DNI project, due in part to instability in the local economy and an impending presidential election. When a new government took power in Argentina, and in the hopes of getting the DNI project resumed, members of the conspiracy allegedly committed Siemens to paying additional bribes to the incoming officials and to satisfying existing obligations to officials of the outgoing administration, many of whom remained in influential positions within the government.
When the project was terminated in May 2001, members of the conspiracy allegedly responded with a multi-faceted strategy to overcome the termination. According to the indictment, the conspirators sought to recover the anticipated proceeds of the DNI project, notwithstanding the termination, by causing Siemens AG to file a fraudulent arbitration claim against the Republic of Argentina in Washington, D.C. The claim alleged wrongful termination of the contract for the DNI project and demanded nearly $500 million in lost profits and expenses. Members of the conspiracy allegedly caused Siemens to actively hide from the tribunal the fact that the contract for the DNI project had been secured by means of bribery and corruption, including tampered witness statements and pleadings that falsely denied the existence of corruption.
In related actions, the indictment also alleges that members of the conspiracy continued the bribe scheme, in part to prevent disclosure of the bribery in the arbitration and to ensure Siemens’ ability to secure future government contracts in Argentina and elsewhere in the region. In four installments between 2002 and 2007, members of the conspiracy allegedly caused Siemens to pay approximately $28 million in further satisfaction of the obligations. Conspirators continued to conceal these additional payments through various means. For example, Sharef, Truppel and other members of the conspiracy allegedly caused Siemens to transfer approximately $9.5 million through fictitious transactions involving a Siemens business division that had no role in the DNI project. They also caused Siemens to pay an additional $8.8 million in 2007 under the legal cover of a separate arbitration initiated in Switzerland by the intermediaries to enforce a sham $27 million contract from 2001 between SBS and Mfast Consulting, a company controlled by their co-conspirator intermediaries, which consolidated existing bribe commitments into one contract. The conspirators caused Siemens to quietly settle the arbitration, keeping all evidence of corruption out of the proceeding. The settlement agreement included a provision preventing Sergi, Czysch and another intermediary from testifying in, or providing information to, the Washington arbitration.
Siemens’s corrupt procurement of the DNI project was not exposed during the lifespan of the conspiracy, and, in February 2007, the arbitral tribunal in Washington sided with Siemens AG, awarding the company nearly $220 million on its DNI claims, plus interest. On Aug. 12, 2009, following Siemens’ corporate resolutions with the U.S. and German authorities – new management of Siemens caused Siemens AG to forego its right to receive the award and, as a result, the company never claimed the award money.
The indictment charges the defendants with conspiracy to violate the anti-bribery, books and records and internal control provisions of the FCPA; conspiracy to commit wire fraud; conspiracy to commit money laundering; and substantive wire fraud.
The charges announced today follow the Dec. 15, 2008, guilty pleas by Siemens AG and its subsidiary, Siemens S.A. (Siemens Argentina), to criminal violations of the FCPA. As part of the plea agreement, Siemens AG and Siemens Argentina agreed to pay fines of $448.5 million and $500,000, respectively.
In a parallel civil action, the Securities and Exchange Commission (SEC) announced charges against executives and agents of Siemens. The department acknowledges and expresses its appreciation of the significant assistance provided by the staff of the SEC during the course of these parallel investigations.
Today’s charges follow, in large part, the laudable actions of Siemens AG and its audit committee in disclosing potential FCPA violations to the department after the Munich Public Prosecutor’s Office initiated an investigation. Siemens AG and its subsidiaries disclosed these violations after initiating an internal FCPA investigation of unprecedented scope; shared the results of that investigation; cooperated extensively and authentically with the department in its ongoing investigation; and took remedial action, including the complete restructuring of Siemens AG and the implementation of a sophisticated compliance program and organization.
The department and the SEC closely collaborated with the Munich Public Prosecutor’s Office in bringing this case. The high level of cooperation, including sharing information and evidence, was made possible by the use of mutual legal assistance provisions of the 1997 Organization for Economic Cooperation and Development Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.
The case is being prosecuted by Principal Deputy Chief Jeffrey H. Knox of the Criminal Division’s Fraud Section, and by Assistant U.S. Attorneys Jason P. Hernandez and Sarah McCallum of the U.S. Attorney’s Office for the Southern District of New York. The Fraud Section of the Justice Department’s Criminal Division and the Complex Frauds Unit of the U.S. Attorney’s Office for the Southern District of New York are handling the case. The case was investigated by FBI agents who are part of the Washington Field Office’s dedicated FCPA squad. The Criminal Division’s Office of International Affairs provided significant assistance in this matter.
12 December 2011
Virginia Contractor Pleads Guilty to Kickback Scheme and Subscribing to a False Tax ReturnRead the Press Release
WASHINGTON — A Virginia contractor pleaded guilty today to participating in a scheme to steer contracts to him for repair, maintenance and renovation work at healthcare and nursing home facilities owned by Medical Facilities of America Inc. (MFA), the Department of Justice announced.
According to a two-count felony charge filed today in U.S. District Court for the Western District of Virginia, Gary L. Johns, a resident of Salem, Va., conspired with other individuals to steer contracts for repair, maintenance and renovation at MFA healthcare and nursing home facilities throughout Virginia from about March 2006 until at least December 2006. The department said that as part of the conspiracy, an MFA employee who oversaw the bidding process for repair, maintenance and renovation contracts at MFA facilities steered contracts to Johns’ company, Salem Commercial Design, in return for kickbacks. According to the plea agreement, which is subject to court approval, Johns has agreed to cooperate with the department’s ongoing investigation.
According to the court document, the MFA employee created fictitious competitor bids that were higher than the quotes submitted by Johns and other co-conspirator venders, to create the false appearance of competition. The MFA employee directed subordinates to solicit quotes only from Johns. Johns paid more than $124,000 in kickbacks to the MFA employee and received MFA contracts totaling more than $1 million. The department said that as a result of the kickback scheme, MFA was deprived of competitive pricing to its financial detriment. Johns was also charged with making and subscribing to a false 2006 tax return, which is the year in which Johns received payment on the MFA contracts.
Johns is charged with conspiracy to commit mail fraud for the kickback scheme, which carries a maximum penalty of 20 years in prison and a $250,000 criminal fine. Johns is also charged with making and subscribing to a false tax return, which carries a maximum penalty of three years in prison and a $250,000 criminal fine, together with the cost of prosecution. The maximum fines for each of these 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 maximums.
The charge is the latest to arise out of the department’s ongoing fraud investigation into the award of repair, maintenance and renovation contracts at facilities owned by MFA. The investigation is being conducted by the Antitrust Division’s Philadelphia Field Office, the U.S. Attorney’s Offices for the Western District of Virginia, the FBI in Roanoke, Va., and the Internal Revenue Service-Criminal Investigation in Roanoke. Anyone with information concerning fraudulent behavior relating to the award of contracts by MFA should contact the Antitrust Division’s Philadelphia Field Office at 215-597-7405 or visit www.justice.gov/atr/contact/newcase.htm.
Tennessee Construction Company and Georgia Department of Transportation Agree to Pay $1.5 Million Penalty to Resolve Clean Water Act ViolationsRead the Press Release
WASHINGTON – Wright Brothers Construction Co., of Charleston, Tenn., and the Georgia Department of Transportation (GDOT) have agreed to pay a $1.5 million penalty and spend more than $1.3 million to offset environmental damages to resolve alleged violations of the Clean Water Act (CWA), the Department of Justice and the Environmental Protection Agency (EPA) announced today. The civil penalty is one of the largest ever under the CWA provisions prohibiting the unauthorized discharge of dredged or fill material into waters of the United States.
The complaint alleges that between 2004 and 2007, Wright Brothers, with approval from GDOT, piped and buried all or portions of seven primary trout streams in violation of the CWA. Wright Brothers was hired by GDOT to dispose of excess soil and rock generated during two GDOT highway expansion projects in northeast Georgia. The contracts between GDOT and Wright Brothers specifically required Wright Brothers to obtain written environmental clearance from GDOT prior to using any site as a fill site. GDOT approved sites that included streams considered to be waters of the United States.
Burying and piping streams can destroy valuable aquatic habitat and threatens water quality. The reduced water quality may have adversely impacted downstream trout populations, which are a major recreational resource to the region. All of the streams that were filled are tributaries of either Lake Burton or Tallulah Falls Lake.
“Construction projects, including important expansions of highway infrastructure, must be conducted in full compliance with the Clean Water Act, which protects our nation’s waterways, aquatic habitats and recreational resources from harm,” said Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division of the Department of Justice. “This settlement will restore and mitigate pollution of area streams for the benefit of the people of Georgia.”
“Dumping dirt and waste rock into our nation’s waters threatens water quality and aquatic habitats,” said Cynthia Giles, Assistant Administrator for EPA’s Office of Enforcement and Compliance Assurance. “Today’s settlement will restore damaged streams, protecting trout habitat and recreational opportunities for the people of northeastern Georgia.”
“Through this enforcement action, we are sending a strong message about the importance of protecting headwater streams in the Southeast,” said Gwendolyn Keyes Fleming, EPA Region 4 Regional Administrator. “The streams impacted by the violations are designated by the state of Georgia as primary trout streams, which provide essential cold water habitat for a variety of species, support the robust recreational fishing industry in north Georgia, and thereby impact the health and well-being of many families.”
In Atlanta, U.S. Attorney Sally Quillian Yates said, “The citizens of Rabun County deserve to have our tributaries and streams kept free of unauthorized fill material and similar pollutants. This significant monetary agreement underscores the commitment of this office and the Justice Department to our water supply, its life sources and the environment.”
Under the settlement, Wright Brothers and GDOT must perform injunctive relief measures, including purchasing 16,920 mitigation credits at an estimated retail cost of $1.35 million to offset the impacts to waters of the United States that cannot be restored. The credits must be purchased from mitigation banks servicing the area in which the violations occurred. A mitigation bank is a wetland, stream or other aquatic resource area that has been set aside for the purpose of providing compensation for impacts to aquatic resources that occurred under a federal, state or local permit.
Wright Brothers and GDOT will also remove piping from and restore the bed and bank of 150 feet of stream channel that was impacted from their disposal activities. The estimated cost of this work is $25,000. When complete, the restorative measures required under the settlement will mitigate the 2,800 feet of stream impacted by the CWA violations.
The settlement is subject to a 30 day comment period and final court approval. A copy of the consent decree will be available on the Justice Department website: www.justice.gov/enrd/Consent_Decrees.html.
More on this settlement: www.epa.gov/compliance/resources/cases/civil/cwa/wrightbrothers.html.
Minnesota-Based Medtronic Inc. Pays US $23.5 Million to Settle Claims That Company Paid Kickbacks to PhysiciansRead the Press Release
WASHINGTON – Medtronic Inc. of Fridley, Minn., has agreed to pay the United States $23.5 million to resolve allegations that it violated the False Claim Act by using physician payments related to post-market studies and device registries as kickbacks to induce doctors to implant the company’s pacemakers and defibrillators, the Justice Department announced today.
Post-market studies are intended to assess the clinical performance of a medical device or drug after that device or drug has been approved by the Food and Drug Administration. Registries are collections of data maintained by a device manufacturer concerning its products that have been sold and implanted in patients.
The United States contends that Medtronic caused false claims to be submitted to Medicare and Medicaid by using two post-market studies and two device registries as vehicles to pay participating physicians illegal kickbacks to induce them to implant Medtronic pacemakers and defibrillators. Although Medtronic collected data and information from participating physicians, each of the studies and registries required a new or previous implant of a Medtronic device in each patient, and in each case Medtronic paid participating physicians a fee ranging from approximately $1,000 to $2,000 per patient. The United States contends that Medtronic solicited physicians for the studies and registries in order to convert their business from a competitor’s product and/or persuade the physicians to continue using Medtronic products.
“Patients who rely on their healthcare providers to implant vital medical devices expect that those decisions will be made with the patients’ best interests in mind,” said Tony West, Assistant Attorney General for the Civil Division. “Kickbacks, like those alleged here, distort sound medical judgments with financial incentives paid for by the taxpayers.”
“Medicare and Medicaid beneficiaries depend on their physicians to make decisions based on sound medical judgment, especially when they are choosing which pacemaker or defibrillator to implant,” said B. Todd Jones, U.S. Attorney for the District of Minnesota. “Medical device manufacturers must not be permitted to use improper payments to cloud that judgment.”
“Today’s settlement highlights one of the key purposes of the Anti-Kickback law – to ensure that the judgment exercised by health care providers in treating Medicare and Medicaid patients is not influenced by unlawful payments,” said Benjamin Wagner, U.S. Attorney for Eastern District of California.
“Patients trust that decisions to implant certain pacemakers or other medical devices are based on their own health interests and not influenced by kickbacks,” said Daniel R. Levinson, Inspector General of the Department of Health and Human Services. “Companies distorting medical decision-making through kickbacks can expect that OIG investigators and our law enforcement partners will actively investigate and prosecute such unlawful conduct.”
The settlement resolves allegations contained in two whistleblower lawsuits filed under the qui tam provisions of the False Claims Act that are pending in Minnesota and California, respectively. As part of today’s resolution, the whistleblowers will receive payments totaling more than $3.96 million from the federal share of the recovery.
This resolution is part of the government’s emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover nearly $6.5 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 are more than $8.5 billion.
This settlement was the result of an investigation by the Justice Department’s Civil Division, the U.S. Attorney’s Office for the District of Minnesota, the U.S. Attorney’s Office for the Eastern District of California, the Office of Inspector General at the U.S. Department of Health and Human Services and the FBI.
Longtime Associate of the New England La Cosa Nostra <br /> Sentenced to 30 Months in Prison for Extortion and Racketeering ConspiracyRead the Press Release
WASHINGTON – Thomas Iafrate, 70, of Johnston, R.I., was sentenced today in U.S. District Court in Providence, R.I., to 30 months in prison for participating in an extortion and racketeering conspiracy involving “protection” payments from several Rhode Island businesses, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Peter F. Neronha for the District of Rhode Island.
Iafrate also was sentenced by U.S. District Judge William E. Smith to three years of supervised release. Iafrate pleaded guilty on July 21, 2011, to one count of conspiracy to participate in a racketeering enterprise. Iafrate admitted to the court that he was an associate of the New England La Cosa Nostra (NELCN).
According to information presented in court, Iafrate was an associate of the NELCN enterprise while working as a longtime bookkeeper for various Providence adult entertainment businesses, including the Satin Doll, Cadillac Lounge and Northeast Sales. Iafrate participated in the racketeering conspiracy by setting aside and by delivering extortion payments to members of the NELCN, including co-defendant Luigi Manocchio, on behalf of the owners. All three businesses were owned by the same people.
Four alleged members and associates of the NELCN, including an alleged former boss, were charged with crimes involving racketeering, extortion and related crimes in a superseding indictment unsealed in Providence on March 1, 2011. Iafrate was initially charged in an indictment unsealed in January 2011 as part of a coordinated nationwide takedown of organized crime figures. At that time, 91 leaders, members and associates of seven organized crime families of La Cosa Nostra were charged with federal crimes in four judicial districts, including Rhode Island.
The superseding indictment charged longtime NELCN boss Luigi Manocchio, aka “Louie,” “Baby Shacks,” “the Professor” and “the Old Man,” and Iafrate with racketeering conspiracy, extortion conspiracy and extortion. Richard Bonafiglia and Theodore Cardillo also are charged with racketeering conspiracy and extortion conspiracy. A second superseding indictment returned on Sept. 22, 2011, charged Edward Lato, aka “Eddy”; Alfred Scivola, aka “Chippy”; Raymond R. Jenkins, aka “Scarface”; and Albino Folcarelli aka “Albie” related to their alleged participation in the NELCN. An indictment is merely an allegation and defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Manocchio, Bonafiglia, Lato, Scivola, Jenkins and Folcarelli are detained while awaiting trial. Cardillo is free on bond while awaiting trial.
The cases against the eight defendants are being prosecuted by Trial Attorney Sam Nazzaro of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorney William J. Ferland of the District of Rhode Island.
The matter was investigated by the District of Rhode Island’s Organized Crime Task Force, which includes law enforcement agents from the FBI, Rhode Island State Police, the Providence Police Department and the Internal Revenue Service’s Criminal Investigations Division.
Houston-Area Tax Return Preparer Pleads GuiltyRead the Press Release
WASHINGTON – Eddye Lovely of Tomball, Texas, pleaded guilty today to three counts of aiding and assisting in the preparation of false tax returns, the Justice Department and Internal Revenue Service (IRS) announced. Lovely appeared before U.S. District Judge Nancy F. Atlas in Houston.
According to the plea agreement, Lovely owned and operated a Houston return preparation business, called “The Tax Master,” at which he prepared false income tax returns that included certain false Schedule A itemized deductions that the client did not make and fraudulent Schedule C business losses that the clients did not operate.
After Lovely was indicted in April 2011 on 14 counts of aiding and assisting in the preparation of false tax returns, he persisted in the preparation of false tax returns despite a court order requiring him not to prepare any tax returns while on release in the case. According to the plea agreement, after his release, Lovely aided and assisted in the preparation of materially false 2010 tax returns for two additional clients. These tax returns were materially false in that they featured fabricated Schedule C losses for businesses that the taxpayers did not own or operate, as well as false or inflated Schedule A deductions for charitable contributions and/or job search costs.
The tax loss associated with the three counts to which Lovely pleaded guilty is $74,964. Lovely faces a maximum prison sentence of nine years and a fine of up to $750,000. Judge Atlas set sentencing for Feb. 29, 2012.
The case was investigated by IRS-Criminal Investigation and prosecuted by Trial Attorneys Tracy Gostyla and Kathryn Ward of the Justice Department’s Tax Division.
More information about the Tax Division and its enforcement efforts is available at www.usdoj.gov/tax/.
Former US Army National Guard Captain Sentenced to 15 Months in Prison for Receiving Bribes at Bagram Airfield, AfghanistanRead the Press Release
WASHINGTON – A former captain in the U.S. Army National Guard was sentenced today in federal court in Chicago to 15 months in prison for receiving bribes from military contractors in return for the award of Department of Defense (DOD) contracts during his deployment to Bagram Airfield, Afghanistan, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division.
John Mihalczo, 47, of Homosassa, Fla., was sentenced by U.S. District Judge Matthew F. Kennelly of the Northern District of Illinois. In addition to his prison term, Mihalczo was sentenced to one year of supervised release and was ordered to pay $115,000 in restitution to the Department of Defense.
Mihalczo pleaded guilty in June 2009 to a criminal information charging him with three counts of bribery. According to the information and other documents filed in the case, Mihalczo was deployed to Bagram Airfield from March 2003 until March 2004. Mihalczo was, among other things, the motor pool officer, who controlled a large fleet of leased vehicles, as well as a contracting officer’s representative, who oversaw the delivery of various goods at Bagram Airfield, including concrete barriers.
While serving in Afghanistan, Mihalczo accepted approximately $35,000 in cash and money orders from two different military contractors in return for exercising his influence in the award of DOD contracts. Mihalczo also participated in another scheme with another military contractor, in which Mihalczo fraudulently verified the delivery of concrete barriers that were never delivered to Bagram Airfield. As part of this scheme, Mihalczo and the military contractor split $80,000 in overpayments made by DOD. In total, the loss to the United States from these offenses was at least as much as $115,000. Mihalczo is the ninth defendant sentenced in this investigation. Nine additional defendants remain to be sentenced.
This case is being prosecuted by Trial Attorney Mark W. Pletcher of the Criminal Division’s Fraud Section , and investigated by the Army Criminal Investigations Division, the Defense Criminal Investigative Service and the Department of the Air Force, Office of Special Investigations, with assistance from the Special Inspector General for Afghanistan Reconstruction.
Assistant Attorney General Breuer Recognizes Criminal Division Employees and Others at Annual Criminal Division Awards CeremonyRead the Press Release
WASHINGTON – Assistant Attorney General for the Criminal Division Lanny A. Breuer today recognized current and former Criminal Division employees and others for their outstanding achievements in public service at the Annual Criminal Division Awards Ceremony.
“The dedicated public servants we are recognizing today have each made significant achievements in furthering the mission of the Justice Department,” said Assistant Attorney General Breuer. “They have worked tirelessly to help protect our communities and keep our nation safe. We are grateful for their extraordinary contributions to the department and to the country.”
Assistant Attorney General Breuer presented the Henry E. Petersen Memorial Award to former chief of the Computer Crime and Intellectual Property Section (CCIPS), Michael M. DuBose. The Petersen Award is the highest award given by the Criminal Division. It recognizes exceptional service by an individual who has made a lasting contribution to the division. The award honors the memory of Henry Petersen – Assistant Attorney General of the Criminal Division during the Watergate era and a former chief of the Organized Crime and Racketeering Section in the 1960s.
Mr. DuBose served for more than 20 years in the federal government. He has held numerous positions throughout the Justice Department and the Criminal Division. Most recently, he served as a deputy chief and chief of CCIPS. His leadership in intellectual property (IP) led to an 800 percent increase in IP prosecutions over a four-year period. Mr. DuBose oversaw numerous important prosecutions, including the prosecution of Albert Gonzalez, the leader of the largest credit card data breach in history. Mr. DuBose improved the department’s efforts on computer forensics and collection of electronic evidence, helping to develop CCIPS’s Cybercrime Laboratory into an internationally respected and renowned resource for prosecutors. Mr. DuBose retired from the Department of Justice in the fall of 2011.
Assistant Attorney General Breuer presented the John C. Keeney Award for Exceptional Integrity and Professionalism to Paul O’Brien, director of the Criminal Division’s Office of Enforcement Operations. John C. Keeney served in the Department of Justice for nearly 60 years, under 12 U.S. presidents and 23 attorneys general, retiring in September 2010 as Deputy Assistant Attorney General for the Criminal Division. The John C. Keeney Award recognizes an employee who has demonstrated outstanding professionalism and integrity over a sustained period of time or an employee who has displayed extraordinary strength of character in a unique situation, as Mr. Keeney displayed during his years of service to the federal government.
Mr. O’Brien joined the department as an Assistant U.S. Attorney for the Western District of Tennessee in 1995, following his service in the U.S. Marine Corps, and has since served the department in several capacities. He has supervised and prosecuted complex narcotics and money laundering cases, as well as fraud, corruption, child pornography, firearms, counterfeiting and immigration offenses. In February 2010, Mr. O’Brien was appointed to the position of director of the Office of Enforcement Operations in the Criminal Division.
The Mark M. Richard Memorial Award was presented to Kenneth Harris, associate director of the Criminal Division’s Office of International Affairs. The award was created in memory of Mark M. Richard, who served the Criminal Division from 1967 to 2007, and is given to a Criminal Division employee in recognition of extraordinary vision and leadership in fighting international crime. Mr. Richard saw the crucial importance of making law enforcement a central part of our foreign policy.
Mr. Harris received this award for his work in improving international cooperation in the fight against crime and terrorism. Over the last 15 years, he has played a critical role in negotiating many of the most significant law enforcement treaties and agreements to which the United States is a party.
Assistant Attorney General Breuer also presented the Assistant Attorney General’s Awards to multiple recipients in recognition of individual and group performance in fulfilling the Criminal Division’s mission, priorities and management goals.
The Assistant Attorney General’s Award for Exceptional Service was presented to Hank Walther, Benton Curtis, Sam Sheldon and Benjamin Singerof the Criminal Division’s Fraud Section for their extraordinary efforts in leading the investigation and prosecution of Medicare fraud in Medicare Fraud Strike Force cities across the country. This team oversaw the two largest health care fraud takedowns in the United States and the prosecution of more than 300 defendants this fiscal year. They were responsible for expanding the strike force from seven to nine cities this year and supervising a team of approximately 20 prosecutors.
The second Exceptional Service award was presented to the group responsible for the successful investigation and prosecution of Lee Bentley Farkas: Patrick Stokes, Robert Zink, Charles Reed, Brigham Cannon and Jennifer Gindin of Criminal Division’s Fraud Section; Jeannette Gunderson of the Criminal Division’s Asset Forfeiture and Money Laundering Section; Charles Connolly, Paul Nathanson and Lisa Porter of the U.S. Attorney’s Office in the Eastern District of Virginia; Aileen Hudgins, Ed Slagle and Chasity Gatsonof the Office of the Special Inspector General for the Troubled Asset Relief Program; Peter Emerzian, Paul Conlon and Kari Meyerof the Office of the Special Inspector General for the Federal Housing Finance Agency; John Crawford and Lance Endyof the Office of the Inspector General for the Federal Deposit Insurance Corporation; David Mosakowski, Timothy Mowery and Keith Williams of the Office of the Inspector General of the Department of Housing and Urban Development; and Scott Turner, John Gardner and Katherine Alfaro of the FBI.
The Farkas case is one of the most significant criminal prosecutions brought in the wake of the financial crisis. It involved the sale of billions of dollars in fake mortgage loan assets, causing approximately $3.5 billion in aggregate losses to a variety of institutional and individual victims. After a 10-day jury trial, Farkas was convicted of 14 counts of conspiracy, wire fraud, bank fraud and securities fraud. Farkas was sentenced to 30 years in prison, ordered to forfeit more than $35 million and ordered to pay restitution to victims totaling approximately $3.5 billion. Six co-conspirators were also convicted and sentenced to prison for their roles in the scheme.
The final Exceptional Service award was presented to Mark Anthony Maldonadoand Marlon Cobar of the Criminal Division’s Narcotic and Dangerous Drug Section for their extraordinary work in establishing a groundbreaking program and associated initiatives to address the security threat posed by the major Mexican drug cartels. These two attorneys worked with the Mexican government to establish fully vetted and trained investigative teams of Mexican law enforcement agents and prosecutors to work closely with Justice Department prosecutors and U.S. federal law enforcement. These accomplishments are part of the Criminal Division’s efforts to increase cooperation with our Mexican partners and enhance their law enforcement capacity.
The Assistant Attorney General’s Award for Distinguished Service was presented to Kirby Heller and Deborah Watsonof the Criminal Division’s Appellate Section for their exceptional work in the successful appeal of sanctions imposed upon federal prosecutors in the case of Dr. Ali Shaygan.
The Award for Distinguished Service was also presented to Andrea Sharrin, Christopher Merriam, Jason Gull and John Zachariaof the Criminal Division’s CCIPS for their work on developing critical law enforcement tools for combating intellectual property crime. Through a combined program of legislative drafting and education, and highly skilled inter- and intra-agency efforts, this team helped ensure that law enforcement’s ability to adequately address intellectual property crime is both appropriately preserved and enhanced.
Another Award for Distinguished Service was presented to t he core team of U.S.-based prosecutors, special agents, computer forensic specialists and intelligence analysts responsible for the transnational enforcement operation targeting an online child pornography bulletin board entitled “Lost Boy.” The recipients include: James Fottrell, Johnathan Bridbord , Richard Kaplan , Andrew McCormack and James Silver of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS); Adrienne Mitchell, Catherine Connell , David Brassanini , Steven Garrard, Mark Zimmerman, Michael Osborn and Monique Bueno of the FBI; Brian Bone of the U.S. Postal Inspection Service; and Joey Blanch and Yvonne Garcia of the U.S. Attorney’s Office for the Central District of California.
The members of the Lost Boy bulletin board and the individuals with whom they associated are responsible for the sexual exploitation of more than 200 children around the world. Prior to the Lost Boy investigation, most of these individuals had never been arrested. As a result of the investigation , child sex offenders throughout the world are in custody and no longer pose a danger to children. Many of the child victims have been identified and rescued, and the enterprise that facilitated their abuse and victimization has been dismantled.
The Distinguished Service Award also was presented to the team responsible for the prosecution of three Pakistani citizens who pleaded guilty to conspiring to provide material support to a designated foreign terrorist organization. Recipients include: William Ho-Gonzalez and Stephen Curran of the Criminal Division’s Human Rights and Special Prosecutions Section; Lolita Lukose of the National Security Division; John Han and Anthony Asuncion of the U.S. Attorney’s Office for the District of Columbia; Heather Hodges, the former U.S. Ambassador to Ecuador; Gabriel Garcia, Cesar Cabrera, William Hunter and Francisco Estupinan of U.S. Immigration and Customs Enforcement (ICE) in Quito, Ecuador; Anthony Ruffule, Jeffrey Klinko and Sir Streeter of ICE Atlanta; Mohammad Yousaf of ICE Islamabad; Daniel Johns, Joel Dugan, Courtney Scharn, Shedrick Curry and Laura Garcia of the FBI; Shawn Bray, Kevin Smith, Emily Genung and Kathleen O’Connell of INTERPOL; Magdalena Boynton of the Criminal Division’s Office of International Affairs; and Jeannette Arocho of ICE U.S. Southern Command. The investigation led to the arrest of the three Pakistani citizens after they agreed to and took steps to help smuggle a person they believed to be a Pakistani Taliban member into the United States.
Another Award for Distinguished Service was presented to Michelle Swaney, Jennifer Hodge and Michelle Hill of the Criminal Division’s Office of Enforcement Operations for their exceptional efforts in modernizing and improving the operations of the Electronic Surveillance Unit. This unit reviews requests from U.S. attorneys’ offices for approval to seek court orders to conduct wiretaps in major federal investigations. This management team decreased Title III review turnaround time, increased the quality and consistency of the Title III review process and improved training and communication with the field.
The Award for Distinguished Service was also presented to Charles Bennett Jr., of the Criminal Division’s International Criminal Investigative Training Assistance Program (ICITAP), for advancing and sustaining an effective working partnership with host nation law enforcement officials, and expanding ICITAP’s scope of development activities in Pakistan. Mr. Bennett worked closely with Pakistan officials to help build their law enforcement capacity to combat crime and terrorism.
The final Distinguished Service Award was presented to Cody Skipper of the Criminal Division’s Organized Crime and Gang Section and Van Vincent of the U.S. Attorney’s Office in the Middle District of Tennessee for their exceptional work in an 11-defendant racketeering and firearms case involving the national street gang known as the Traveling Vice Lords. Mr. Skipper and Mr. Vincent led a team of local and federal law enforcement officers who worked seamlessly together and obtained convictions for all of the racketeering counts, including those involving murders and attempted murders, triggering life sentences for three defendants.
Assistant Attorney General Breuer presented the Excellence in Management Award to Kevin Carwile, chief of the Criminal Division’s Capital Case Unit (CCU), and Todd Simpson, the director of the Information Technology (IT) staff in the Criminal Division’s Office of Administration. The award recognizes individuals in the division who exhibit innovative thinking, business acumen and proven leadership in administration and management.
Under Mr. Carwile’s leadership, CCU trial attorneys now prosecute capital cases in courts throughout the nation against the most violent criminals involved in truly heinous crimes. Today, CCU trial attorneys are involved in some capacity in more than 80 percent of the cases in which the attorney general has directed the department to seek the death penalty. These cases are among the most challenging the department litigates given the crimes at issue and the complexities of the capital process.
Mr. Simpson is recognized for the remarkable progress and unprecedented changes he has brought to the Criminal Division. He has implemented many efficiencies in the division’s IT system, including remote connectivity, web hosting, efficient use of the network operations center, Blackberry service improvements and overall system stability. His contributions include saving the division more than $5 million.
Assistant Attorney General Breuer presented the Award for Outstanding Contributions by a New Employee to Jennifer Saulino in the Criminal Division’s Fraud Section. The newly established award recognizes the outstanding contributions of a new employee with fewer than five years of service to the Criminal Division.
Ms. Saulino joined the division’s Fraud Section in January 2010. Her efforts greatly contributed to the success of the Medicare Fraud Strike Force. She investigated and prosecuted more than 20 defendants in connection with the American Therapeutic Corporation case, a $200 million community mental health care case; tried three criminal health care fraud cases; and obtained three of the largest health care fraud prison sentences in United States’ history.
The Lois B. Bundy Exceptional Service Award for Administrative Support was presented to Danny Foster of the Criminal Division’s Public Integrity Section. This award recognizes a present or former non-attorney employee whose administrative support has made a lasting contribution to the Criminal Division by best exemplifying the commitment, dedication, interpersonal skills, sensitivity, keen judgment and enthusiasm that Ms. Bundy displayed during her distinguished 34 years of service in the Criminal Division.
Mr. Foster has been a critical member of the Public Integrity Section team for more than 12 years. He is relied upon for everything related to administration in the section, and he is integral to the success of the Public Integrity Section’s mission. Mr. Foster provides invaluable support to the Section, working nights, weekends, holidays and anytime that the attorneys need help.
ICE Homeland Security Investigations (HSI) AttachéGabriel Garcia was also recognized with a Certification of Appreciation for his invaluable contributions to the Extraterritorial Criminal Travel Strike Force program, a joint partnership between the Criminal Division and ICE HSI. Mr. Garcia was one of the primary architects in the establishment and development of the program and has overseen significant disruptions and dismantlement of human smuggling networks.
9 December 2011
US Files Lawsuit in Miami to Block Promotion of Tax Fraud SchemeRead the Press Release
WASHINGTON - The United States has sued Sharon Angulo and Claudia Zuloaga to bar them from promoting an alleged tax fraud scheme and from preparing federal tax returns for others, the Justice Department announced today.
The civil injunction suit, filed in the Southern District of Florida, alleges that Angulo and Zuloaga, both of Miami, help customers use Internal Revenue Service (IRS) Forms 1099-OID to report fictitious income tax withholding. According to the government complaint, the customers file federal tax returns claiming tax refunds based on the fake withholding. The complaint states that the defendants have prepared or assisted in the preparation of at least 19 tax returns reporting false withholding and claiming fraudulent tax refunds totaling more than $3 million.
The government’s complaint asks the court to require Angulo and Zuloaga to pay the U.S. Treasury the funds they received from customers who paid them a percentage of the tax refunds received through the scheme. The complaint also asks the court to order the defendants to provide the government with a list of all persons who have purchased any products, services or advice from Angulo and Zuloaga in the past three years as part of the scheme.
Claiming bogus tax refunds based on false Forms 1099-OID is one of the IRS’s Dirty Dozen Tax Scams for 2011 . In the past decade, the Justice Department’s Tax Division has obtained injunctions against hundreds of tax fraud promoters and unscrupulous tax preparers. Information about these cases is available on the Justice Department website .
New Orleans Police Officer Convicted of Obstruction of Justice and PerjuryRead the Press Release
WASHINGTON – Ronald Mitchell, 33, an officer with the New Orleans Police Department (NOPD), was convicted today of obstructing justice and committing perjury during the course of a federal civil suit related to the shooting death of civilian Danny Brumfield in September 2005, announced the Department of Justice.
According to evidence presented at trial, Mitchell gave false deposition testimony during the course of a federal civil lawsuit filed by Danny Brumfield’s wife against the city of New Orleans by intentionally providing false and misleading information regarding the events that took place regarding the fatal shooting. Evidence proved that Mitchell shot and killed Danny Brumfield on Sept. 3, 2005, on Convention Center Boulevard in New Orleans. During a deposition in November 2007, Mitchell gave sworn testimony claiming that immediately after the shooting, he exited the patrol car and checked Brumfield’s vital signs.
However, the jury found that Mitchell’s deposition testimony was false and was given in order to attempt to influence the outcome of the civil suit by misleading the plaintiff’s attorneys. Mitchell knew that he never exited the car to check Brumfield’s vital signs or render aid to the victim.
The jury convicted Mitchell of one count of obstructing justice and one count of committing perjury. Another defendant, Ray Jones, 34, was acquitted of one count of obstructing justice and one count of committing perjury.
“Rather than upholding his oath as a public official, this officer lied and obstructed justice to cover-up the true facts regarding the tragic death of Mr. Brumfield,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Justice Department is committed to holding officers who engage in criminal conduct accountable, and is continuing in the ongoing process of restoring the community’s confidence in the New Orleans Police Department.”
“Today’s verdict is further evidence of our commitment, in partnership with the Department of Justice Civil Rights Division, the FBI and the New Orleans Police Department to fairly and aggressively challenge corruption within NOPD’s ranks – for our citizens and our community,” said Jim Letten, U.S. Attorney for the Eastern District of Louisiana . We will never tolerate either abuses or deceit by anyone charged with the protection of the public.”
Mitchell faces a maximum penalty of up to 20 years in prison for obstructing justice and up to five years for committing perjury. Sentencing is scheduled for March 7, 2012.
This case was investigated by the New Orleans Field Office of the FBI, and is being prosecuted by Assistant U.S. Attorney Michael Magner for the Eastern District of Louisiana and Trial Attorney Christopher Lomax of the Justice Department’s Civil Rights Division.
Iowa Insurance Agent to Pay US to Resolve False Claims Allegations on the Federal Crop Insurance ProgramRead the Press Release
WASHINGTON – Russell Hawley and Hawley Insurance Inc. of Vail, Iowa, have agreed to pay the United States $834,897.50 to settle allegations that they caused false claims to be submitted to the Federal Crop Insurance Corporation, the Justice Department announced today.
The settlement resolves a lawsuit filed under the False Claims Act against Russell Hawley, the principal owner of Hawley Insurance, in federal district court in Sioux City, Iowa. The lawsuit alleged that Hawley submitted forged crop insurance applications and other false documents to a private insurance company designated by the United States to sell federally-reinsured crop insurance policies. The government was required to pay out on these policies when the insured crops failed.
“We expect insurance agents who participate in the federal crop insurance program to submit honest and accurate information,” said Tony West, Assistant Attorney General for the Department’s Civil Division. “The department is committed to protecting the integrity of the federal crop insurance program by aggressively pursuing false statements and claims at every level.”
“This settlement shows the continuing commitment by the U.S. Attorney’s Office for the Northern District of Iowa to investigate and recover any improper payments under the Federal crop insurance program and to partner with our colleagues in the Civil Division when necessary to remedy crop insurance fraud,” said Stephanie Rose, U.S. Attorney for the Northern District of Iowa.
Michael Hand, Deputy Administrator for the U.S. Department of Agriculture’s Risk Management Agency, Compliance Division, stated, “this case confirms that insurance agents who participate in the federal crop insurance program are responsible for the policy documents that they submit on behalf of farmers.”
Assistant Attorney General West noted that the settlement with Hawley and Hawley Insurance was the result of a coordinated effort among the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Northern District of Iowa, the U.S. Department of Agriculture’s Office of Inspector General and the Risk Management Agency.
Identity Thief Sentenced in Virginia to 12 Years in Prison for Managing East Coast Credit Card Fraud RingRead the Press Release
WASHINGTON – A Brooklyn, N.Y., man was sentenced today in U.S. District Court in Alexandria, Va., to 12 years in prison for operating a credit card fraud ring that used counterfeit credit cards encoded with stolen account information up and down the East Coast of the United States, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Neil H. MacBride for the Eastern District of Virginia.
Jonathan Oliveras, 26, was sentenced by U.S. District Judge Gerald Bruce Lee. In addition to his prison term, Oliveras was ordered to forfeit $770,646 and to serve three years of supervised release. Oliveras pleaded guilty on Aug. 10, 2011, to one count of wire fraud and one count of aggravated identity theft.
In his plea, Oliveras admitted that he managed a ring of co-conspirators who used stolen credit card account information in New York, New Jersey and the Washington, D.C., area. According to court documents, Oliveras sent payments to individuals he believed to be in Russia for the stolen account information. Oliveras then distributed the stolen account information, which was re-encoded onto plastic cards and used to purchase gift cards. The gift cards were used to buy merchandise that ultimately was returned for cash.
Federal and local law enforcement executing a search warrant in July 2010 at Oliveras’ apartment found, among other things, credit card encoding equipment and more than 2,300 stolen credit card numbers. According to court documents, credit card companies have identified thousands of fraudulent transactions using the account numbers found in Oliveras’ possession, totaling more than $750,000.
The case was prosecuted by Michael Stawasz, a Senior Counsel in the Criminal Division’s Computer Crime & Intellectual Property Section and Special Assistant U.S. Attorney in the Eastern District of Virginia, and Assistant U.S. Attorney Ryan Dickey of the U.S. Attorney’s Office for the Eastern District of Virginia. The case was investigated jointly by the Washington Field Offices of both the U.S. Secret Service and the FBI, with assistance from the New York and New Jersey Field Offices of both agencies.
Former New York Con Ed Manager Sentenced to Serve 70 Months in Prison for Fraud, Bribery and Tax CrimesRead the Press Release
WASHINGTON — A former Consolidated Edison of New York (Con Ed) manager was sentenced today to serve 70 months in prison for participating in schemes to accept approximately $807,000 in bribes from two Con Ed industrial pipe supply vendors, the Department of Justice announced.
James M. Woodason of Edison, N.J., was also sentenced in U.S. District Court in Manhattan by Judge Denise L. Cote to pay a $12,500 criminal fine and to pay $342,000, as well as from 10 to 20 percent of Woodason’s total compensation and benefits earned through his employment with Con Ed during the charged periods, for a total of approximately $528,000 in restitution to be paid by Woodason and his co-conspirators to Con Ed on a joint and several basis. On Nov. 19, 2010, Woodason, a former department manager of purchasing at Con Ed, pleaded guilty to a four-count felony charge alleging that he accepted bribe payments from two industrial pipe supply vendors, in exchange for steering contracts to each of those vendors.
According to court documents, Woodason was responsible for purchasing and awarding contracts for millions of dollars in goods and services and managing inventory on behalf of Con Ed. Woodason accepted approximately $297,000 from one vendor in a bribery scheme that took place from approximately November 2003 through approximately August 2008. Woodason accepted approximately $45,000 in bribe payments from another vendor in a bribery scheme that took place from approximately January 2009 until approximately August 2010. The department said that Woodason had also agreed to take an additional $465,000 in bribes from that vendor.
According to court documents, in addition to two separate conspiracies, Woodason also pleaded guilty to one count of bribery for receiving a $20,000 cash bribe payment related to the 2009-2010 conspiracy and to one count of income tax evasion for failing to report bribes he received as income in the tax years 2004 through 2008.
On Aug. 5, 2010, Woodason was arrested in connection with this investigation by special agents of the FBI and the Internal Revenue Service (IRS)-Criminal Investigation.
Following the terms of his plea agreement, Woodason also paid $155,109 owed to the IRS as a result of the schemes and did not contest forfeiture of a $20,000 cash bribe payment found in the search of his home on the day of his arrest.
Con Ed is a regulated utility headquartered in Manhattan. It provides electric service to approximately 3.2 million customers and gas service to approximately 1.1 million customers in New York City and Westchester County, N.Y. Con Ed received more than $10,000 in federal funding each year between 2003 through 2010. Con Ed cooperated with the department’s investigation.
Including Woodason, a total of four individuals and two companies have been charged as part of this investigation. The remaining five defendants are awaiting sentencing.
These charges arose from an ongoing federal antitrust investigation of bid rigging, bribery, fraud and tax-related offenses in the power generation industry. The investigation is being conducted by the Antitrust Division’s New York Field Office, with the assistance of the FBI and the IRS-Criminal Investigation. Anyone with information concerning bid rigging, bribery, tax offenses or fraud in the power generation industry should contact the FBI’s New York Division at 212-384-3720 or the Antitrust Division’s New York Field Office at 212-335-8000, or visit www.justice.gov/atr/contact/newcase.htm.
Former Army Corps of Engineers Employee Sentenced to 20 Months in Prison for Accepting Bribes from Iraqi ContractorsRead the Press Release
WASHINGTON - A former employee of the U.S. Army Corps of Engineers stationed in Baghdad, Iraq, was sentenced today in the Eastern District of Virginia to 20 months in prison for conspiring to receive bribes from Iraqi contractors involved in the U.S.-funded reconstruction efforts, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Neil H. MacBride for the Eastern District of Virginia and Assistant Director in Charge James W. McJunkin of the FBI’s Washington Field Office.
Thomas Aram Manok, 51, of Chantilly, Va., was sentenced by U.S. District Judge Anthony J. Trenga. In addition to his prison term, Manok was sentenced to three years of supervised release. Judge Trenga ordered a forfeiture hearing to be held on Jan. 13, 2012. Manok pleaded guilty on Sept. 19, 2011.
Manok admitted to using his official position to conspire with Iraqi contractors to accept cash bribes in exchange for recommending that the U.S. Army Corps of Engineers approve contracts and other requests for payment submitted by the contractors to the U.S. government. According to court documents, in March and April 2010, Manok agreed to receive a $10,000 payment from one such contractor who had been involved in constructing a kindergarten and girls’ school in the Abu Ghraib neighborhood of Baghdad and had sought Manok’s influence in having requests for payment approved by the U.S. Army Corps of Engineers. According to court documents, Manok was to receive an additional bribe payment from the contractor once the contractor’s claim had been approved. Manok also admitted that he intended to conceal the payments from authorities by transferring them, via associates, from Iraq to Armenia.
This case was investigated by the FBI’s Washington Field Office, the Department of Defense Office of the Inspector General, the Army Criminal Investigation Command and the Defense Criminal Investigative Service, as participants in the International Contract Corruption Task Force. The case is being prosecuted by Assistant U.S. Attorney Paul J. Nathanson of the Eastern District of Virginia and Trial Attorney Mary Ann McCarthy of the Criminal Division’s Fraud Section.
This prosecution is part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information about the task force visit: www.stopfraud.gov.
Brooklyn Accountant Pleads Guilty to Tax CrimesRead the Press Release
WASHINGTON – Silford Warren, of Queens, N.Y., pleaded guilty to failing to pay over employment taxes in connection with his ownership of Silford Warren, CPA PC, the Justice Department and Internal Revenue Service (IRS) announced today.
U.S. District Court Judge William F. Kuntz presided over the plea hearing in the U.S. District Court in Brooklyn, N.Y. The plea agreement and filed criminal information indicated that Warren under-reported his employees’ salaries to the IRS from 2006 through 2008. Moreover, Warren did not collect, truthfully account for, and pay over employment taxes of approximately $108,000.
According to the plea agreement, Warren is required to pay restitution to the IRS in the amount of $184,263. The restitution amount includes taxes owed by his failing to pay over the employment taxes due to the IRS and the amount of tax resulting from Warren’s filing of false corporate income tax returns for 2005 through 2008.
Warren faces a potential maximum sentence of five years in prison and a fine of up to $250,000. Sentencing is tentatively scheduled for May 4, 2012.
The announcement of Warren’s plea was made by Loretta E. Lynch, U.S. Attorney for the Eastern District of New York; John A. DiCicco, Principal Deputy Assistant Attorney General for the Justice Department’s Tax Division; and Charles R. Pine, Special Agent-in-Charge of the New York Field Office of the IRS-Criminal Investigation (IRS-CI).
U.S. Attorney Lynch and Principal Deputy Assistant Attorney General DiCicco thanked the IRS-CI agents who investigated the case and Tax Division Trial Attorneys Tino M. Lisella and Sean R. Delaney who are prosecuting the case.
8 December 2011
Wachovia Bank N.A. Admits to Anticompetitive Conduct by Former Employees in the Municipal Bond Investments Market and Agrees to Pay $148 Million to Federal and State AgenciesRead the Press Release
WASHINGTON – Wachovia Bank N.A., which is now known as Wells Fargo Bank N.A., has entered into an agreement with the Department of Justice to resolve the company’s role in anticompetitive activity in the municipal bond investments market and has agreed to pay a total of $148 million in restitution, penalties and disgorgement to federal and state agencies, the Department of Justice announced today.
As part of its agreement with the department, Wachovia admits, acknowledges and accepts responsibility for illegal, anticompetitive conduct by its former employees. According to the non-prosecution agreement, from 1998 through 2004, certain former Wachovia employees at its municipal derivatives desk entered into unlawful agreements to manipulate the bidding process and rig bids on municipal investment and related contracts. These contracts were used to invest the proceeds of, or manage the risks associated with, bond issuances by municipalities and other public entities.
“The illegal conduct at Wachovia Bank corrupted the bidding practices for investment contracts and deprived municipalities of the competitive process to which they were entitled,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “Today’s resolution achieves restitution for the victims harmed by Wachovia’s anticompetitive conduct and ensures that Wachovia disgorges its ill-gotten gains and pays penalties for its illegal conduct. We are committed to ensuring competition in the financial markets and our investigation into anticompetitive conduct in the municipal bond derivatives industry continues.”
Under the terms of the agreement, Wachovia agrees to pay restitution to victims of the anticompetitive conduct and to cooperate fully with the Justice Department’s Antitrust Division in its ongoing investigation into anticompetitive conduct in the municipal bond derivatives industry. To date, the ongoing investigation has resulted in criminal charges against 18 former executives of various financial services companies and one corporation. Nine of the 18 executives charged have pleaded guilty.
The Securities and Exchange Commission (SEC), the Internal Revenue Service (IRS), the Office of the Comptroller of the Currency (OCC) and 26 state attorneys general also entered into agreements with Wachovia requiring the payment of penalties, disgorgement of profits from the illegal conduct and payment of restitution to the victims harmed by the manipulation and bid rigging by Wachovia employees, as well as other remedial measures.
As a result of Wachovia’s admission of conduct; its cooperation with the Department of Justice and other enforcement and regulatory agencies; its monetary and non-monetary commitments to the SEC, IRS, OCC and state attorneys general; and its remedial efforts to address the anticompetitive conduct, the department agreed not to prosecute Wachovia for the manipulation and bid rigging of municipal investment and related contracts, provided that Wachovia satisfies its ongoing obligations under the agreement.
Earlier this year, JPMorgan Chase & Co. and UBS AG also entered into agreements with the Department of Justice and other federal and state agencies to resolve anticompetitive conduct in the municipal bond derivatives market. In July 2011, JPMorgan agreed to pay a total of $228 million in restitution, penalties and disgorgement to federal and state agencies for its role in the conduct. In May 2011, UBS AG agreed to pay a total of $160 million in restitution, penalties and disgorgement to federal and state agencies for its participation in the anticompetitive conduct.
The department’s ongoing investigation into the municipal bonds industry is being conducted by the Antitrust Division, the FBI and the IRS-Criminal Investigation. The department is coordinating its investigation with the SEC, the OCC and the Federal Reserve Bank of New York. The department thanks the SEC, IRS, OCC and state attorneys general for their cooperation and assistance in this matter.
The Antitrust Division, SEC, IRS, FBI, state attorneys general and OCC are members of the Financial Fraud Enforcement Task Force. President Obama established the interagency task force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information about the task force, visit www.stopfraud.gov.
Three Charged with Fraud in Florida Foreclosure Rescue SchemeRead the Press Release
WASHINGTON – Lisa Wright, 46, and Cathy Saffer, 52, of Pompano Beach, Fla., were charged today with a conspiracy to defraud homeowners and banks in a foreclosure rescue scheme, announced the Department of Justice. Also charged was Barrington Coombs, 57, a certified public accountant of Weston, Fla., who participated in the scheme. A federal grand jury in the Southern District of Florida returned an indictment charging Wright and Saffer with one count of conspiracy, three counts of mail fraud and three counts of wire fraud. The grand jury charged Coombs with one count of conspiracy and one count of wire fraud.
The indictment states that Wright and Saffer operated an alleged business called Foreclosure Solution Specialists (FSS) from 2006 to 2009. Through FSS, Wright and Saffer allegedly targeted homeowners facing foreclosure, advertising that FSS could assist those homeowners in remaining in their homes. According to the indictment, when contacted by distressed homeowners seeking assistance, Wright and Saffer misrepresented to those homeowners that their homes would be sold to investors. Wright and Saffer also allegedly claimed that customers could remain in their homes after the sales and promised them an opportunity to repurchase the homes at a later date. According to the indictment, rather than selling the homes to legitimate investors, Wright and Saffer designed sham sales to straw purchasers whom they paid to participate in the scheme.
The indictment further alleges that Wright and Saffer made numerous misrepresentations on loan applications regarding the purchasers’ net worths, incomes and employment histories in order to induce lenders to fund loans. The indictment alleges that, as part of the scheme, Wright and Saffer paid Coombs to sign a letter which falsely vouched for the fraudulent information on various loan applications.
According to the indictment, these sham sales drew equity out of the homes, which Wright and Saffer pocketed for their own purposes. After doing so, Wright and Saffer allowed the loans to go into foreclosure. Homeowners ultimately lost all of the equity in their homes, and most of the victims were forced to move out of their homes.
“Protecting Americans from financial fraud is one of our top priorities,” said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. “Foreclosure rescue scams, like the one alleged here, are especially insidious because they seek to take advantage of those most at risk of losing everything. These charges demonstrate that we will aggressively prosecute individuals who we believe prey on homeowners struggling in these tough financial times.” This investigation is part of the Department of Justice’s continued nationwide focus on mortgage fraud.
Charges contained in the indictment are simply accusations, and not evidence of guilt. Evidence supporting the charges must be presented to a federal trial jury, whose duty is to determine guilt or innocence.
The case was investigated by the FBI. The case is being prosecuted by Christopher E. Parisi, a Trial Attorney at the Civil Division’s Consumer Protection Branch.
Sixth San Francisco MS-13 Member Sentenced to Life in PrisonRead the Press Release
WASHINGTON – The sixth San Francisco-area member of La Mara Salvatrucha (MS-13) convicted in August 2011 on racketeering related charges was sentenced today to life in prison, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Melinda Haag of the Northern District of California and Clark Settles, Special Agent in Charge for U.S. Immigration and Custom Enforcement’s (ICE) Homeland Security Investigations (HSI) in San Francisco.
Guillermo Herrera, aka “Sparky,” 21, was sentenced by U.S. District Judge William Alsup in the Northern District of California. Herrera and his five codefendants were convicted by a jury on Aug. 30, 2011, after a five-month trial. Codefendants Marvin Carcamo, aka “Cyco,” 31; Angel Noel Guevara, aka “Peloncito,” 31; Moris Flores, aka “Slow Pain,” 22; Erick Lopez, aka “Spooky,” 23; and Jonathon Cruz-Ramirez, aka “Soldado,” 22, were all sentenced to life in prison on Nov. 30, 2011.
“Mr. Herrera and his fellow MS-13 gang members spread fear and violence throughout the Bay Area,” said Assistant Attorney General Breuer. “They committed horrific acts of assault and murder on behalf of their criminal enterprise. Today’s sentence marks another important step forward in our steadfast efforts to protect Americans from violent crime.”
“Hopefully these sentences help to bring closure to the victims and family members who suffered needlessly from the senseless acts of violence that these individuals committed,” U.S. Attorney Haag said. “These individuals terrorized a community. For their crimes, they will spend the rest of their lives behind bars.”
“While nothing can make amends for the suffering this defendant and his fellow gang members caused, the court’s actions ensure these cold-blooded criminals will never again be able to hold our communities hostage to fear,” said Special Agent Settles. “And though this longstanding case is drawing to a close, HSI’s efforts are ongoing as we continue to work closely with local law enforcement to identify, attack and dismantle transnational street gangs that are attempting to stake out turf in the Bay Area.”
MS-13 is a violent, transnational gang organized in local chapters called “cliques.” Herrera was a member of the 20th Street clique of MS-13.
According to evidence presented at trial, the 20th Street clique has operated in the Mission District of San Francisco since the 1990s, and grew more violent and aggressive as membership increased and the gang expanded. The 20th Street clique primarily warred with rival gang members, but also engaged in extortion and narcotics distribution. The evidence at trial showed that Herrera joined the 20th Street clique of MS-13 in 2007 and participated in the extortion or “taxing” of a group of individuals who sold fraudulent documents on MS-13 turf, centered at 20th and Mission Streets. MS-13 members demanded a portion of the profits these individuals earned and used violence and threats of violence to obtain their percentage.
According to evidence presented at trial, on July 11, 2008, Herrera shot and killed Armando Estrada, one of many individuals MS-13 extorted. Cruz-Ramirez drove Herrera to 20th and Mission Streets, where Herrera spotted Estrada, chased him and shot him in the back of the head at close range with a shotgun. The motive for the murder was for MS-13 to maintain control over the group it extorted, a group that had resisted 20th Street members the previous day. Both Cruz-Ramirez and Herrera were convicted of the racketeering murder of Armando Estrada.
On Nov. 29, 2011, in a separate trial, a jury convicted 20th Street member Danilo Velasquez of multiple racketeering offenses. Velasquez’s codefendant, Luis Herrera, aka “Killer,” and brother of Guillermo Herrera, pleaded guilty mid-trial to seven racketeering related counts, including use of a firearm causing the murder of Moises Frias. Luis Herrera is scheduled to be sentenced by Judge Alsup on Jan. 24, 2012. Velasquez is scheduled to be sentenced on Feb. 14, 2012, and faces a maximum sentence of life in prison.
These cases were prosecuted by Trial Attorney Theryn Gibbons of the Organized Crime and Gang Section in the Justice Department’s Criminal Division and Assistant U.S. Attorneys W.S. Wilson Leung, Wil Frentzen, Andrew Scoble and David Hall of the Strike Force and Violent Crimes Section of the Northern District of California. The cases were investigated by ICE HSI, with the assistance of the San Francisco Police Department and the Daly City Police Department.
San Diego Investment Manager Indicted in Utah for Alleged Role in $25 Million Fraud SchemeRead the Press Release
WASHINGTON – A San Diego, Calif., investment manager was arrested today on charges filed in district court in Salt Lake City for his alleged role in a $25 million investment fraud scheme, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney David B. Barlow for the District of Utah, Special Agent in Charge David Johnson of the FBI’s Salt Lake City Field Office and Special Agent in Charge Paul A. Camacho of the Internal Revenue Service-Criminal Investigation (IRS-CI) Las Vegas Field Office.
An indictment unsealed today in the District of Utah charges Robert L. Holloway, 54, with four counts of wire fraud and one count of making and subscribing a false income tax return. He was arrested this morning in San Diego, Calif., and made his initial appearance in the Southern District of California.
According to the indictment, Holloway operated an investment entity named US Ventures LC, which was founded in 1999. Holloway served as the chief executive officer and managing partner of US Ventures. The indictment alleges that from October 2005 until at least April 2007, Holloway recruited investors for US Ventures by making false representations about the investment entity. According to the indictment, Holloway falsely claimed that US Ventures used proprietary trading software that was consistently profitable; that US Ventures had more than $32 million under management and generated returns of 0.8 percent per trading day; and that US Ventures would retain a 30 percent share of investors’ profits as a management fee. The indictment alleges that US Ventures raised more than $25 million from investors for its trading activities.
During the course of US Ventures’ existence, Holloway allegedly generated and distributed reports to investors containing false daily returns on their investments, which did not disclose that US Ventures was in fact steadily losing money. According to the indictment, between October 2005 and April 2007, US Ventures lost more than $10 million in trading. The indictment alleges that the “profit” figures on the investor reports were entirely fabricated. Holloway and US Ventures also made “profit distributions” to investors that consisted of funds solicited from new investors, not actual profits.
The indictment also alleges that Holloway misappropriated investors’ funds for a variety of personal expenses, including supporting his then-wife’s eBay business and Holloway’s lifestyle. During 2006 alone, Holloway diverted more than $1.2 million in investor funds to a business account used for his personal use despite the fact that, as alleged in the indictment, he falsely filed a false personal tax return for 2006 in which he claimed a gross income of only $27,500.
The maximum penalty for wire fraud is 20 years in prison and a fine of $250,000 for each count. The maximum penalty for the tax evasion charge is three years in prison and a fine of $100,000.
An indictment is merely an accusation, and a defendant is presumed innocent unless proven guilty in a court of law.
This case is being prosecuted by Trial Attorney Thomas B.W. Hall and Deputy Chief Charles La Bella of the Fraud Section in the Justice Department’s Criminal Division and Assistant U.S. Attorney Mark Y. Hirata for the District of Utah. The case was investigated by the FBI’s Salt Lake City Field Office and the IRS-CI’s Las Vegas Field Office. The department thanks the Commodity Futures Trading Commission and the Securities and Exchange Commission for their assistance in the investigation.
This prosecution is part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information about the task force visit: www.stopfraud.gov.
Peruvian Artifact RepatriatedRead the Press Release
WASHINGTON - A gold Moche monkey head was returned to the government of Peru today in a repatriation ceremony at the Peruvian Embassy in Washington, D.C., announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Charles M. Oberly III for the District of Delaware.
The Moche culture flourished in Peru from the first through eighth centuries AD. Moche nobility were buried in tombs with important symbols of power, often made of gold. Due to the dry climate, the bodies and artifacts have been preserved through the years. In 1987, the royal tombs were discovered in northern Peru, including the Sipan region. Shortly thereafter, tomb raiders descended on the sites, looking for gold. They found it, including the gold monkey head (circa 300 AD). The monkey head ended up in a private collection in the United States. The collector subsequently donated the monkey head to the Museum of New Mexico, Palace of the Governors in Santa Fe, N.M.
The Museum of New Mexico entered into a memorandum of understanding with the government of Peru to return the monkey head to its rightful place in Peru.
“This repatriation is the result of the joint efforts of this office, the FBI Art Crime Team, the Department of Justice Office of International Affairs, the New Mexico Attorney General’s Office and the Museum of New Mexico,” said U.S. Attorney Charles M. Oberly III. “I commend all parties for their efforts in producing this positive outcome. In particular, I commend the Museum of New Mexico for its selfless and noble action in returning this invaluable artifact to Peru. Artifacts like this Moche monkey head represent the history not only of the source country, in this case Peru, but the history of all mankind. We hope that this repatriation will help repair at least some of the damage caused by the looting of Moche sites.”
This matter was investigated by Assistant U.S. Attorney David L. Hall, who has an extensive history in handling cases involving ancient artifacts,who became involved in the investigation in 2007 in his capacity as special prosecutor, FBI Art Crime Team. The Criminal Division’s Office of International Affairs provided significant assistance in this matter.
Owner of Miami-Area Mental Health Company Sentenced to 35 Years in Prison for Orchestrating $205 Million Medicare Fraud SchemeRead the Press Release
WASHINGTON – The owner of a fraudulent Miami-area mental health care company, American Therapeutic Corporation (ATC), was sentenced today to 35 years in prison for orchestrating a $205 million Medicare fraud scheme, announced the Department of Justice, the FBI and the Department of Health and Human Services (HHS).
Judith Negron, 40, was sentenced by U.S. District Judge James Lawrence King in the Southern District of Florida. Judge King ordered Negron to pay more than $87 million in restitution, jointly and severally with her co-defendants. Negron was also sentenced to three years of supervised release following her prison term. Two other owners of ATC, Lawrence Duran and Marianella Valera, were sentenced in September 2011 to 50 and 35 years in prison, respectively, for their roles in the scheme. These sentences are the three longest prison sentences ever imposed in a Medicare Fraud Strike Force case.
On Aug. 24, 2011, after a six-day trial, a federal jury in the Southern District of Florida found Negron guilty of 24 felony counts, including conspiracy to commit health care fraud, health care fraud, conspiracy to pay and receive illegal health care kickbacks, conspiracy to commit money laundering, money laundering and structuring to avoid reporting requirements.
Evidence at trial demonstrated that Negron, along with Duran and Valera, masterminded and executed a scheme to defraud Medicare beginning in 2002 and continuing until they were arrested in October 2010. Evidence at trial established that the three owners submitted false and fraudulent claims to Medicare through ATC, a Florida corporation headquartered in Miami that purportedly operated partial hospitalization programs (PHPs) in seven different locations throughout South Florida and Orlando. A PHP is a form of intensive treatment for severe mental illness. Negron and her co-conspirators also used a related company, American Sleep Institute (ASI), to submit fraudulent Medicare claims.
According to the evidence at trial, Negron, Duran, Valera and others paid bribes and kickbacks to owners and operators of assisted living facilities and halfway houses and to patient brokers in exchange for delivering ineligible patients to ATC and ASI. In some cases, the patients received a portion of those kickbacks. Throughout the course of the conspiracy, millions of dollars in kickbacks were paid in exchange for Medicare beneficiaries, who did not qualify for PHP services, to attend treatment programs that were not legitimate PHP programs, so that ATC and ASI could bill Medicare for more than $205 million in unnecessary or illegitimate services.
According to the evidence, Negron and her co-conspirators used another company they owned and operated, Medlink Professional Management Group Inc., to conceal the fraud and kickback scheme from Medicare and law enforcement. Once Medicare paid ATC and ASI for the fraudulently billed services, Duran, Valera and others transferred the money to Medlink. Evidence at trial showed that Negron and her co-conspirators used Medlink to pay millions of dollars in kickback payments by using an extensive money laundering scheme.
Evidence at trial demonstrated that Negron signed kickback checks to patient recruiters whose only jobs at ATC were to provide patients from halfway houses or assisted living facilities. Evidence at trial also established that Negron and others caused the alteration of patient files and therapist notes for the purpose of making it falsely appear that patients being treated by ATC qualified for PHP treatments and that the treatments provided were legitimate PHP treatments. For instance, evidence established that Negron would “robo-sign” patient files, meaning she would sign patient documents as a supervising therapist without having treated the patients. The evidence also showed that Negron signed files as though she had been in two places at the same time, in Boca Raton and Homestead, Fla. Evidence further revealed that Negron knew doctors were similarly signing patient files without reading them or seeing the patients. In some cases, Negron provided the doctors with the files for their signature. According to evidence presented at trial, Negron and her co-conspirators billed Medicare for PHP treatment, including group psychotherapy, provided to a patient who was in a neuro-vegetative state, who would not lift her head or respond. The evidence also showed that Negron and her co-conspirators caused doctors to refer ATC patients to ASI even though the patients did not qualify for sleep studies.
Negron has been in federal custody since her conviction.
ATC and Medlink pleaded guilty in May 2011 to conspiracy to commit health care fraud. ATC also pleaded guilty to conspiracy to defraud the United States and to pay and receive illegal health care kickbacks. The corporations were sentenced to five years of probation per count and ordered to pay restitution of $87 million. Both corporations have been defunct since their owners were arrested in October 2010. A top manager, Margarita Acevedo, was sentenced in September 2011 to 91 months in prison.
Today’s sentence was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; Special Agent-in-Charge John V. Gillies of the FBI’s Miami Field Office; and Special Agent-in-Charge Christopher Dennis of the HHS Office of Inspector General (HHS-OIG), Office of Investigations Miami office.
The case was prosecuted by Trial Attorney Jennifer L. Saulino and Acting Assistant Chief Benjamin D. Singer of the Criminal Division’s Fraud Section. The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.
Since its inception in March 2007, the Medicare Fraud Strike Force operations in nine locations have charged more than 1,140 defendants that collectively have billed the Medicare program for more than $2.9 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to www.stopmedicarefraud.gov.
Justice Department and States Address Prisoner RecidivismRead the Press Release
The Department of Justice’s Office of Justice Programs (OJP) today sponsored a forum of policymakers from all 50 states to focus on improving success rates for people released from prison. The event positioned states to set goals, or to expand on existing goals, for reducing recidivism through cost-effective strategies in their communities.
“In this time of economic challenges, we must continue to use every tool and strategy at our disposal to protect the American people while reducing costs to taxpayers,” said Attorney General Eric Holder. “Today’s national forum demonstrates the Justice Department’s firm commitment to working with its partners in the states and non-governmental organizations to improve public safety by supporting efforts to assist formerly incarcerated people as they return to their communities to become productive members of our society.”
In partnership with the Council of State Governments, the Association of State Correctional Administrators, the Public Welfare Foundation and the Pew Center on the States, OJP’s Bureau of Justice Assistance (BJA) is working with all 50 states to identify and pursue cost-effective strategies on their investments in public safety. Following today’s forum, participants will begin setting measurable goals for reducing recidivism; creating plans to achieve these goals by drawing on the latest research and experiences from the field; and identifying benchmarks state and federal policymakers can use to track progress.
“Evidence-based strategies integrated with federal support provide states with the opportunity to increase public safety while saving money,” said OJP Assistant Attorney General Laurie O. Robinson. “Today’s forum allows corrections directors and policymakers to come together to brainstorm ideas and set measurable goals for significant reductions in recidivism.”
A Pew Center on the States report presented today demonstrated that reducing states’ recidivism rates by just 10 percent could collectively save states more than $635 million a year in averted prison costs. Experts pointed to research showing how certain strategies can help reduce recidivism, including concentrating supervision and treatment resources on those most likely to reoffend.
“The Bureau of Justice Assistance has directed considerable energy and resources to supporting local programs and state-level policy changes that make better use of limited public dollars,” said BJA Director Denise E. O’Donnell. “It’s now our hope that government agencies and community-based organizations will adopt evidenced-based strategies to reduce recidivism.”
The Office of Justice Programs (OJP), headed by Assistant Attorney General Laurie O. Robinson, provides federal leadership in developing the nation’s capacity to prevent and control crime, administer justice and assist victims. OJP has six bureaus and offices: the BJA; the Bureau of Justice Statistics; the National Institute of Justice; the Office of Juvenile Justice and Delinquency Prevention; the Office for Victims of Crime; and the Office of Sex Offender Sentencing, Monitoring, Apprehending, Registering, and Tracking (SMART). More information about OJP and its components can be found at www.ojp.gov
Houston Investment Manager Indicted in Utah for Alleged Role in $72 Million Fraud SchemeRead the Press Release
WASHINGTON – An investment manager based in Houston was arrested today on charges filed in federal court in Salt Lake City for his alleged role in a $72 million investment fraud scheme, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney David B. Barlow for the District of Utah, Special Agent in Charge David Johnson of the FBI’s Salt Lake City Field Office and Special Agent in Charge Paul A. Camacho of the Internal Revenue Service-Criminal Investigation (IRS-CI) Las Vegas Field Office.
An indictment unsealed today in the District of Utah charges Robert J. Andres, 60, with five counts of wire fraud. He was arrested this morning in Houston and is expected to make his initial appearance tomorrow in the Southern District of Texas.
According to the indictment, Andres operated Winsome Investment Trust, an investment entity, and served as its sole manager, attorney and trustee. The indictment alleges that from October 2005 until at least January 2011, Andres recruited investors for Winsome by misrepresenting Winsome’s assets and asset allocation and the way in which funds were invested.
Between October 2005 and April 2007, Andres allegedly raised more than $39 million from Winsome investors by disseminating false and misleading Winsome balance sheets and by representing to investors that Andres would invest all of their funds in a trading program or a mostly automated trading business.
The indictment alleges that between April 2007 and January 2011, Andres used false and misleading information to raise an additional $32 million from new investors. Furthermore, Andres allegedly failed to disclose that new investors’ funds would be used to pay earlier investors. The indictment also alleges that Andres used new investor funds to make purported “profit” payments to earlier investors to create the false impression that Winsome was profitable. During this period, Andres allegedly misappropriated approximately $2.2 million in investor proceeds for personal use, including hotel bills and living expenses.
The maximum penalty for each count of wire fraud is 20 years in prison and a fine of $250,000 for each count.
An indictment is merely an accusation, and a defendant is presumed innocent unless proven guilty in a court of law.
This case is being prosecuted by Trial Attorney Thomas B.W. Hall and Deputy Chief Charles La Bella of the Fraud Section in the Justice Department’s Criminal Division and Assistant U.S. Attorney Mark Y. Hirata for the District of Utah. The case was investigated by the FBI’s Salt Lake City Field Office and the IRS-CI Las Vegas Field Office. The department thanks the Commodity Futures Trading Commission and the Securities and Exchange Commission for their assistance in the investigation.
This prosecution is part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information about the task force visit: www.stopfraud.gov.
Four Romanian Nationals Charged with Allegedly Participating in Multimillion Dollar Scheme <br /> to Hack into and Steal Credit Card Data from U.S. MerchantsRead the Press Release
WASHINGTON – Four Romanian nationals were charged in an indictment unsealed yesterday in federal court for their alleged participation in an international multimillion dollar scheme to remotely hack into and steal payment card data from hundreds of U.S. merchants’ point of sale computer systems, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney John P. Kacavas of the District of New Hampshire and Special Agent In Charge Steven Ricciardi of the U.S. Secret Service, Boston Field Office.
Adrian-Tiberiu Oprea, 27, of Constanta, Romania; Iulian Dolan, 27, of Craiova, Romania; Cezar Iulian Butu, 26, of Ploiesti, Romania; and Florin Radu, 23, of Rimnicu Vilcea, Romania,were charged in a four-count indictment filed in the District of New Hampshire with conspiracy to commit computer fraud, wire fraud and access device fraud. Oprea was arrested last week in Romania and is currently in custody there. Dolan and Butu were arrested upon their entry into the United States on Aug. 13 and Aug. 14, 2011, respectively, and remain in United States custody. Radu remains at large.
According to the indictment, from approximately 2008 until May 2011, Oprea, Dolan, Butu and Radu conspired to remotely hack into more than 200 U.S.-based merchants’ point-of-sale (POS) or “checkout” computer systems in order to steal customers’ credit, debit and gift card numbers and associated data (collectively referred to as “credit card data”). A POS system allows merchants to process customer purchases, including those made using credit, debit and gift cards, and typically includes a computer, monitor, integrated credit card processing system, signature capture device and a customer pin pad device. Merchant victims include more than 150 Subway restaurant franchises (which is less than 1 percent of all Subway restaurants), located throughout the United States, including in the District of New Hampshire, as well as more than 50 other identified retailers. According to the indictment, members of the conspiracy have compromised the credit card data of more than 80,000 customers, and millions of dollars of unauthorized purchases have been made using the compromised data.
If convicted, the defendants face a maximum of five years in prison for each count of conspiracy to commit computer related fraud, 30 years in prison for each count of conspiracy to commit wire fraud and five years in prison for each count of conspiracy to commit access device fraud. They also face fines up to twice the amount of the fraud loss and restitution.
The case was investigated by the U.S. Secret Service and is being prosecuted by Assistant U.S. Attorney Arnold H. Huftalen of the District of New Hampshire and Trial Attorney Mona Sedky of the Computer Crime and Intellectual Property Section in the Justice Department’s Criminal Division. The Office of International Affairs in the Justice Department’s Criminal Division provided assistance. Subway Headquarters assisted in the investigation.
The details contained in the indictment are allegations. The defendants are presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Former U.S. Air Force Master Sergeant Sentenced to 40 Months in Prison for Receiving Bribes in Return for the Award of Contracts at Bagram Airfield, AfghanistanRead the Press Release
WASHINGTON – A former Master Sergeant in the U.S. Air Force was sentenced yesterday to 40 months in prison for conspiring to and receiving bribes from military contractors in return for the award of Department of Defense contracts during his deployment to Bagram Airfield, Afghanistan, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.
Patrick W. Boyd, 44, of Gainesville, Fla., was sentenced by U.S. District Judge Matthew F. Kennelly of the Northern District of Illinois. In addition to his prison term, Boyd was sentenced to one year of supervised release and was ordered to pay $130,000 in restitution.
Boyd pleaded guilty in June 2008 to a superseding indictment charging him with three counts of conspiracy to commit bribery and three counts of bribery. According to the superseding indictment and other documents filed in the case, Boyd served as a warranted contracting officer in Afghanistan from September 2004 to January 2005. While serving in Afghanistan, Boyd and his co-conspirators made separate agreements with three military contractors – Naweed Bakhshi Company, Northern Reconstruction Organization and Top’s Construction – to receive $30,000 cash from each company in return for the award of particular contracts. Boyd then awarded contracts for concrete bunkers and barriers and asphalt paving services to the contractors. The contractors each delivered $30,000 to Boyd’s co-conspirators, who divided the bribe monies among themselves and Boyd. Boyd is the eighth defendant sentenced in this investigation. Ten additional defendants remain to be sentenced in the Northern District of Illinois and the District of Hawaii.
On Dec. 6, 2011, Judge Kennelly sentenced former Lieutenant Robert Moore, one of Boyd’s conspirators, to 15 months in prison and one year of supervised release and ordered Moore to pay $120,000 in restitution. In addition to his participation in the corrupt award of contracts in return for money, Moore also conspired to and received bribes for fraudulently verifying the receipt of concrete bunkers and barriers that were, in fact, never delivered to Bagram Airfield. Another conspirator, former Major Christopher West, will be sentenced on Dec. 20, 2011.
In a related case, on Dec. 5, 2011, Judge Kennelly sentenced Sergeant Sheryl Ayeni to one year in prison and one year of supervised release and ordered Ayeni to pay $30,000 in restitution. Ayeni, who served at Bagram Airfield at the same time as Boyd, Moore and West, received approximately $30,000 in bribe money in return for permitting payment of a local Afghan military contractor in U.S. dollars, which is a violation of relevant Department of Defense regulations.
This case is being prosecuted by Trial Attorney Mark W. Pletcher of the Criminal Division’s Fraud Section , and investigated by the Army Criminal Investigations Division, the Defense Criminal Investigative Service and the Department of the Air Force, Office of Special Investigations, with assistance from the Special Inspector General for Afghanistan Reconstruction.
Former Los Angeles Resident Pleads Guilty in Plot to Attack Seattle Military Processing CenterRead the Press Release
SEATTLE – A former Los Angeles man pleaded guilty today in connection with the June 2011 plot to attack a military installation in Seattle, announced Jenny A. Durkan, U.S. Attorney for the Western District of Washington; Lisa Monaco, Assistant Attorney General for National Security; and Laura M. Laughlin, Special Agent-in-Charge of the FBI Seattle office.
Walli Mujahidh, aka "Frederick Domingue, Jr.," 32, pleaded guilty to conspiracy to murder officers and agents of the United States, conspiracy to use weapons of mass destruction and unlawful possession of a firearm. If the plea agreement is accepted by the court, Mujahidh will be sentenced to between 27 and 32 years in prison under the terms of the agreement. Following the prison term, Mujahidh will be on federal supervised release for the rest of his life. Mujahidh is scheduled to be sentenced by U.S. District Judge James L. Robart on April 16, 2012.
“This defendant tried to carry out a plot to kill American servicemen and women, and other innocent citizens who happened to be at the federal facility on the day of the planned attack,” said U.S. Attorney Durkan. “I applaud the FBI, Seattle Police Department and the Joint Terrorism Task Force for their work in disrupting this plot and bringing Walli Mujahidh to justice. I also want to thank the many leaders of the Muslim Community who have worked with my office to ensure that acts of a few are not used to condemn the faith of many.”
“Today’s plea underscores the threat posed by homegrown violent extremists and the need for continued vigilance to detect and dismantle their plots. I applaud the many agents, analysts and prosecutors who worked together to thwart this planned attack before anyone was harmed,” said Assistant Attorney General Monaco.
“The FBI is pleased that Mr. Mujahidh accepted responsibility for his actions, but this case remains a chilling reminder that there is constant work to be done,” said FBI Special Agent-in-Charge Laughlin. “The FBI’s Joint Terrorism Task Force continues to work tirelessly to detect, disrupt and dismantle threats to our community.”
The other defendant in the case, Abu Khalid Abdul-Latif, aka “Joseph Anthony Davis,” 33, of Seattle, remains scheduled for trial in May 2012.
Law enforcement first became aware of the plot when a citizen alerted them that he/she had been approached about participating in the attack and supplying firearms to the conspirators. The person then agreed to work with law enforcement, which began monitoring Abdul-Latif and Mujahidh. Since early June, the conspirators were captured on audio and videotape discussing a violent assault on the Military Entrance Processing Station (MEPS). The MEPS is where each branch of the military screens and processes enlistees. In addition to housing many civilian and military employees, the building houses a federal daycare center.
In his plea agreement, Mujahidh admits that he became aware of the planned attack in May 2011, and in early June was making plans to travel to Seattle from Los Angeles to participate in the attack. Mujahidh arrived in Seattle on June 21, 2011, and in a meeting with a person who was working with law enforcement, Mujahidh suggested going into the MEPS with machine guns and grenades and killing everyone there.
The next day, the person working with police brought some firearms, which had been rendered inoperable by law enforcement, to a meeting with Mujahidh and Abdul-Latif. The men were arrested after they took possession of the weapons. Mujahidh is prohibited from possessing firearms due to a felony conviction in California for theft.
The case is being prosecuted by the U.S. Attorney’s Office for the Western District of Washington, with assistance from the Counterterrorism Section of the Justice Department’s National Security Division.
The investigation is being conducted by the FBI’s Joint Terrorism Task Force, which has investigators from federal, state and local law enforcement. The Bureau of Alcohol, Tobacco, Firearms & Explosives (ATF) contributed significant expertise to this investigation.
Cargolux Airlines International Executives Plead Guilty for Fixing Surcharge Rates on Air Cargo ShipmentsRead the Press Release
WASHINGTON — Two executives of Luxembourg-based Cargolux Airlines International S.A. have each pleaded guilty and agreed to serve 13 months in prison for participating in a conspiracy to fix cargo rates for international air shipments, the Department of Justice announced.
Ulrich Ogiermann, the former president and CEO, and current employee of Cargolux, and Robert Van de Weg, the senior vice president of sales and marketing for Cargolux, pleaded guilty today to the charges contained in an indictment filed on Oct. 28, 2010, in U.S. District Court in West Palm Beach, Fla. Ogiermann and Van de Weg pleaded guilty to conspiring with others to suppress and eliminate competition by fixing and coordinating certain surcharges, including security and fuel surcharges, charged to customers located in the United States and elsewhere for air cargo shipments including shipments to and from the United States. According to the indictment, Ogiermann participated in the conspiracy from at least as early as October 2001 until at least February 2006, and Van de Weg participated in the conspiracy from at least as early December 2003 until at least February 2006. Under the plea agreements, Ogiermann and Van de Weg have also each agreed to pay a $20,000 criminal fine and to cooperate with the department’s ongoing investigation.
Air cargo carriers transport a variety of cargo shipments, such as heavy equipment, perishable commodities and consumer goods, on scheduled international flights.
Including Ogiermann and Van de Weg, a total of 22 airlines and 21 executives have been charged in the Justice Department’s ongoing investigation into price fixing in the air transportation industry. To date, more than $1.8 billion in criminal fines have been imposed and four executives have been sentenced to serve prison time.
Ogiermann and Van de Weg are charged with price fixing in violation of the Sherman Act, which carries a maximum fine of $1 million and up to 10 years in prison. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
Today’s guilty pleas are the result of a joint investigation into the air transportation industry being conducted by the Antitrust Division’s National Criminal Enforcement Section and the Atlanta Field Office, the FBI’s Atlanta Field Office, the Department of Transportation’s Office of Inspector General and the U.S. Postal Service’s Office of Inspector General. Anyone with information concerning price fixing or other anticompetitive conduct in the air transportation industry is urged to call the Antitrust Division’s National Criminal Enforcement Section at 202-307-6694, visit www.justice.gov/atr/contact/newcase.htm or call the FBI’s Atlanta Field Office at 404-679-9000.
Bloods Gang Member Pleads Guilty to Federal Racketeering ChargesRead the Press Release
WASHINGTON – A Nashville, Tenn., man pleaded guilty today in federal court to charges of conspiring to participate in racketeering activity related to his membership in the Bloods gang criminal enterprise , announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney for the Middle District of Tennessee Jerry E. Martin.
William Walden, 23, aka “Wild Bill,” pleaded guilty before U.S. District Judge Aleta Trauger in the Middle District of Tennessee to one count of conspiracy to participate in racketeering activity.
According to court documents, Walden and other Bloods gang members and associates agreed to commit multiple acts of murder, robbery and narcotics trafficking on behalf of the Bloods gang. Walden and numerous Bloods gang members met on a regular basis at various locations throughout the Middle District of Tennessee, including Shelby Park, Cedar Hill Park and the Galaxy Star Drug Awareness and Gang Prevention Center in Nashville, to report on gang-related business, collect dues, commit disciplinary actions against fellow gang members, discuss acts of violence against rival gang members and initiate or “jump in” new members by beating them for a period of time, among other things.
Walden admitted to being a Bloods member and to engaging in specific criminal activity in support of the criminal enterprise, such as possessing cocaine with an intent to sell it, possessing a Glock 9mm semi-automatic firearm and assaulting Bloods gang member Joedon Bradley during a gang meeting at the Galaxy Star Drug Awareness and Gang Prevention Center. These acts occurred at various times during March and June 2010.
Sentencing is scheduled for March 23, 2012. The plea agreement states that the appropriate sentence is a term of 10 years in prison.
The case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives; the Metropolitan Nashville Police Department; the Gallatin, Tenn., Police Department; with assistance from the U.S. Marshals Service and the Davidson County, Tenn., District Attorney’s Office.
The case is being prosecuted by Assistant U.S. Attorney Scarlett Singleton of the Middle District of Tennessee and Trial Attorney Cody L. Skipper of the Organized Crime and Gang Section in the Justice Department’s Criminal Division.
7 December 2011
Virginia Man Pleads Guilty in Scheme to Conceal Pakistan Government Funding for His U.S. Lobbying EffortsRead the Press Release
WASHINGTON – Syed Ghulam Nabi Fai, 62, a U.S. citizen and resident of Fairfax, Va., pleaded guilty today to conspiracy and tax violations in connection with a decades-long scheme to conceal the transfer of at least $3.5 million from the government of Pakistan to fund his lobbying efforts in America related to Kashmir.
The guilty plea was announced by Lisa Monaco, Assistant Attorney General for National Security; Neil MacBride, U.S. Attorney for the Eastern District of Virginia; John DiCiccio, Principal Deputy Assistant Attorney General for the Tax Division; James McJunkin, Assistant Director in Charge of the FBI Washington Field Office; and Jeannine Hammett, Acting Special Agent in Charge of the Internal Revenue Service (IRS) Criminal Investigation’s Washington, D.C., Field Office.
At a hearing before U.S. District Court Judge Liam O’Grady in the Eastern District of Virginia, Fai pleaded guilty to a two-count criminal information. Count one of the information charges Fai with conspiracy to: 1) falsify, conceal and cover up material facts he had a duty to disclose in matters within the jurisdiction of executive branch agencies of the U.S. government; and to 2) defraud the Treasury Department by impeding the lawful functions of the IRS in the collection of revenue. Count two of the information charges Fai with endeavoring to impede the administration of tax laws.
Fai, who was arrested on July 19, 2011, faces a maximum potential sentence of five years in prison for the conspiracy count and a maximum three years in prison for the tax violation. Judge O’Grady set sentencing for March 9, 2012. As part of his plea agreement, Fai has agreed to forfeit his interest in $142,851.32 seized by the government in July 2011.
Fai served as the director of the Kashmiri American Council (KAC), a non-governmental organization in Washington, D.C., that held itself out to be run by Kashmiris, financed by Americans and dedicated to raising the level of knowledge in the United States about the struggle of the Kashmiri people for self-determination. But according to court documents, the KAC was secretly funded by officials employed by the government of Pakistan, including the Inter-Services Intelligence Directorate (ISI).
“Syed Fai today admitted his role in a decades-long scheme to conceal the fact that the government of Pakistan was secretly funding his efforts to influence U.S. policy on Kashmir,” said Assistant Attorney General Monaco.
“For the last 20 years, Mr. Fai secretly took millions of dollars from Pakistani intelligence and lied about it to the U.S. government,” said U.S. Attorney MacBride. “As a paid operative of ISI, he did the bidding of his handlers in Pakistan while he met with U.S. elected officials, funded high-profile conferences and promoted the Kashmiri cause to decision-makers in Washington.”
“The Tax Division is committed to prosecuting any individual who illegally uses the tax-exempt status of charitable entities to promote or conceal federal crimes,” said Principal Deputy Assistant Attorney General DiCiccio.
“Mr. Fai purposefully hid financial transactions from the U.S. government, with intentions that his scheme to fund lobbying efforts by a foreign government would go unnoticed,” said FBI Assistant Director in Charge McJunkin. “The FBI will detect and defeat those who attempt to surreptitiously exert foreign influence on our government by using agents who conceal their foreign affiliation.”
“The illegal activity in this case, including tax charges and abuse of charitable organizations, harms all Americans, as we all have to pay our fair share for the government services and protections that we enjoy,” said IRS Special Agent in Charge Hammett.
The Scheme
Today, Fai admitted that, from 1990 until about July 18, 2011, he conspired with others to obtain money from officials employed by the government of Pakistan, including the ISI, for the operation of the KAC in the United States, and that he did so outside the knowledge of the U.S. government and without attracting the attention of law enforcement and regulatory authorities.
To prevent the Justice Department, FBI, Department of Treasury and the IRS from learning the source of the money he received from officials employed by the government of Pakistan and the ISI, Fai made a series of false statements and representations, according to court documents. For example, Fai told FBI agents in March 2007 that he had never met anyone who identified himself as being affiliated with the ISI and, in May 2009, he falsely denied to the IRS on a tax return for the KAC that the KAC had received any money from foreign sources in 2008.
In addition, according to court documents, Fai sent a letter in April 2010 to the Justice Department falsely asserting that the KAC was not funded by the government of Pakistan. Later that year, Fai falsely denied to the IRS that the KAC had received any money from foreign sources in 2009. In July 2011, Fai falsely denied to FBI agents that he or the KAC received money from the ISI or government of Pakistan.
In fact, Fai repeatedly submitted annual KAC strategy reports and budgetary requirements to Pakistani government officials for approval. For instance, in 2009, Fai sent the ISI a document entitled “Plan of Action of KAC / Kashmir Centre, Washington, D.C., for the Fiscal Year 2010,” which itemized KAC’s 2010 budget request of $658,000 and listed Fai’s plans to secure U.S. congressional support for U.S. action in support of Kashmiri self-determination.
Fai also admitted that, from 1990 until about July 18, 2011, he corruptly endeavored to obstruct and impede the due administration of the internal revenue laws by arranging for the transfer of at least $3.5 million to the KAC from employees of the government of Pakistan and the ISI.
According to court documents, Fai accepted the transfer of such money to the KAC from the ISI and the government of Pakistan through his co-defendant Zaheer Ahmad and middlemen (straw donors), who received reimbursement from Ahmad for their purported “donations” to the KAC. Fai provided letters from the KAC to the straw donors documenting that their purported “donations” to the KAC were tax deductible and encouraged these donors to deduct the transfers as “charitable” deductions on their personal tax returns. Fai concealed from the IRS that the straw donors’ purported KAC “donations” were reimbursed by Ahmad, using funds received from officials employed by the ISI and the government of Pakistan.
This investigation is being conducted by the FBI’s Washington Field Office and the IRS Criminal Investigation’s Washington Field Office.
The prosecution is being handled by Assistant U.S. Attorneys Gordon Kromberg and Daniel Grooms of the U.S. Attorney's Office for the Eastern District of Virginia; Trial Attorney John Gibbs of the Counterterrorism Section of the Justice Department’s National Security Division; and Special Assistant U.S. Attorney Allison Ickovic from the Justice Department’s Tax Division.
Virginia Man Convicted for Filing a False Refund Claim Based on Fraudulent IRS formsRead the Press Release
WASHINGTON - Richard Jaensch, a self-employed plumber residing from Annandale, Va., was found guilty today by a federal jury sitting in Alexandria, Va., of one count of corruptly endeavoring to impede the Internal Revenue Service (IRS), one count of filing a false claim for a refund, and four counts of failing to file tax returns for 2004 through 2007, the Justice Department and the IRS announced today.
Jaensch faces a potential maximum prison sentence of 12 years and a fine of up to $900,000 when he is sentenced on March 2, 2012.
According to evidence introduced at trial, Jaensch failed to file personal income tax returns between 2002 and 2007, despite the fact that he was required to do so by law. The first tax return he filed after 2002 was a false 2008 tax return claiming a $774,052 refund based on false Forms 1099-OID that the defendant submitted to the IRS. Over the years, to obstruct the IRS, Jaensch filed numerous frivolous documents and pleadings in Fairfax County, Va.; provided false information to the IRS; and filed a false 2008 federal income tax return, IRS Form 1040.
The evidence also showed that Jaensch caused his wife to present letters to her employer directing them to stop withholding federal income taxes from her salary. The IRS began levying his wife’s paycheck and bank accounts to satisfy her outstanding tax liability and Jaensch continued his obstructive conduct by filing or causing his wife to file correspondence with the IRS claiming that the IRS could not instruct her employer to withhold taxes from her paycheck.
Jaensch’s wife, Janet Jaensch, was a former high-level civilian employee in the Department of the Navy during the time that she was not filing tax returns at her husband’s direction. She pleaded guilty to willfully failing to file a tax return and will be sentenced on Dec. 13, 2011.
This case was investigated by the IRS-Criminal Investigation’s Washington Field Office. Assistant U.S. Attorney Gene Rossi from the U.S. Attorney’s Office for the Eastern District of Virginia and Trial Attorneys Jason Poole and Caryn Finley of the Justice Department’s Tax Division prosecuted the case on behalf of the United States.
More information about the Justice Department’s Tax Division and its enforcement efforts is available at www.usdoj.gov/tax/.
Operator of Detroit School and Day Care Pleads Guilty to Tax EvasionRead the Press Release
WASHINGTON – Robert G. Murdock, 64, of Southfield, Mich., pleaded guilty today to tax evasion, the Justice Department and Internal Revenue Service (IRS) announced. According to documents filed with the court, Murdock owned and operated a children’s day care center in Detroit called Kids Expectations, a Detroit elementary school called Metropolitan Academy of Detroit, and a payroll company called Metro Teaching Staff at various times from 1997 through 2007. During this period, Murdock accumulated unpaid federal payroll tax liabilities for his three businesses. When the IRS attempted collection actions such as levying on the corporate bank accounts, Murdock would incorporate new entities, often with similar names, obtain new Employer Identification Numbers for them from the IRS, and open new bank accounts, all for the purpose of moving assets out of the reach of the IRS.
According to the plea agreement, Murdock also evaded his personal taxes by filing false documents with the IRS and paying for personal expenditures out of business bank accounts and providing false information to IRS employees.
Murdock faces a potential maximum prison sentence of five years, a fine of up to $250,000 and restitution to the IRS of $200,000. Sentencing was set for Feb. 14, 2012.
Barbara McQuade, U.S. Attorney for the Eastern District of Michigan; John A. DiCicco, Principal Deputy Assistant Attorney General for the Justice Department’s Tax Division; and Erick Martinez, Special Agent In-Charge, IRS-Criminal Investigation made the announcement.
The case was investigated by Special Agents of the IRS - Criminal Investigation Division. Trial Attorney Shawn T. Noud of the Tax Division and Assistant U.S. Attorney Ross MacKenzie prosecuted the case.
Additional information about the Justice Department's Tax Division and its enforcement efforts may be found at www.justice.gov/tax .
Melville, N.Y., Business Owner Pleads Guilty to Failure to Pay over Employment TaxesRead the Press Release
WASHINGTON - Louis Alba pleaded guilty today in U.S. District Court in Central Islip, N.Y., to failing to pay over to the Internal Revenue Service (IRS) employment taxes, the Justice Department and IRS announced today.
According to court documents, Alba owned and operated CDJ Builders Corporation, a construction business in Melville that operated at construction sites in the New York Metropolitan area. Alba admitted that between 2004 and 2010, CDJ failed to pay over to the IRS approximately $779,387 in Federal Insurance Contributions Act (FICA) taxes and federal income taxes that CDJ withheld from its employees’ paychecks.
Alba faces a potential maximum sentence of five years in prison and a $250,000 fine. Judge Leonard D. Wexler, who is presiding over the matter, has not set a sentencing date.
The case was investigated by IRS - Criminal Investigation and is being prosecuted by Trial Attorneys Mark Kotila and Jeffrey B. Bender of the Justice Department’s Tax Division. The case is CR-11-730.
Additional information about the Tax Division and its enforcement efforts is available at www.usdoj.gov/tax .
Louisiana Man Sentenced to 10 Years in Prison for Operating Coffee Vending Business Fraud in FloridaRead the Press Release
WASHINGTON – Manuel Rodriguez, 47, of Lafayette, La., was sentenced today to 120 months in prison and three years supervised release for committing fraud in connection with a coffee machine business opportunity scheme, the Justice Department and the U.S. Postal Inspection Service announced. Additionally, he was ordered to pay more than $1.1 million in restitution. On Sept. 28, 2011, a federal jury in Fort Lauderdale, Fla., found Rodriguez guilty after a two-week trial. The jury found Rodriguez guilty on all seven counts submitted to it, one count of conspiracy and six counts of wire fraud.
At trial, witnesses testified that Rodriguez engaged in his scheme through the operation of three Florida companies: M & D Gourmet Coffee Inc. of Boca Raton, Fla.; Coffee Heaven LLC of Deerfield Beach, Fla.; and Divino Trio Coffee & Vending Company of Ft. Lauderdale. The jury heard testimony that the defendant and a co-conspirator made similar misrepresentations to consumers in connection with each of these companies with the same effect – a loss of tens of thousands of dollars per consumer.
Specifically, victims at trial testified that the defendant and his businesses offered a business package that included coffee machines, locations in which to place those machines, and on-going support and assistance in the operation of a coffee machine business. Witnesses explained that they lost amounts from $15,000 to $192,000 in the scheme. They testified that the defendant told them that their machines would sell enough coffee to recoup their investment in 12 to 18 months, and that this representation was false.
Victims also told the jury that while the defendant promised that the coffee machines would be placed in high-quality locations that would generate numerous sales, what was delivered were poor locations which generated few, if any, sales. Some victims testified that they received no machines at all.
“The court’s sentence should give fair warning to fraudsters who pad their pockets by imposing financial hardship on innocent victims,” said Tony West, Assistant Attorney General for the Justice Department’s Civil Division. “If you exploit consumers, we will be aggressive in our efforts to prosecute and hold you accountable.”
“We are committed to vigorously prosecuting financial fraud,” said Wifredo Ferrer, U.S. Attorney for the Southern District of Florida. “Fraudulent telemarketers must realize that they will be pursued and brought to justice.”
“The Postal Inspection Service has investigated scores of individuals and dozens of companies like the ones involved here,” said U.S. Postal Inspector in Charge, Henry Gutierrez, based in Miami. “Those investigations have led to felony convictions and significant terms of incarceration. The American public must remain vigilant to avoid sophisticated schemes that try to take advantage of our natural desire to prosper by owning businesses like this one.”
Assistant Attorney General West commended the investigative efforts of the U.S. Postal Inspection Service and the Federal Trade Commission. The case was prosecuted by attorneys John Claud and Matthew Ebert of the Justice Department’s Consumer Protection Branch.
Client of UBS and Swiss Cantonal Bank Indicted for Conspiracy to Defraud the IRSRead the Press Release
WASHINGTON – A federal grand jury in Fort Lauderdale, Fla., has returned an indictment charging Amir Zavieh of San Francisco with conspiring to defraud the Internal Revenue Service (IRS), the Justice Department and IRS announced today.
According to the indictment, Zavieh, a naturalized U.S. citizen, opened a secret Swiss bank account with UBS AG in Zurich, Switzerland, in March 1989. In 2000, Zavieh executed a document that directed UBS not to disclose his identity and ownership of the account to the IRS. Zavieh concealed the secret account at UBS by placing his domestic assets in the name of a nominee and failing to file income tax returns. One year in which Zavieh did file an income tax return, he failed to report on the return either the secret Swiss account or the income generated by that account.
The indictment further alleges that Zavieh closed his secret UBS account in 2009 after his former UBS banker, Renzo Gadola, advised Zavieh that Martin Lack, Gadola’s former colleague at UBS and then-business partner, could transfer the contents on the UBS account to a new account to be opened at a Swiss cantonal bank. Further, Gadola advised Zavieh to transfer only Swiss Francs from UBS to the cantonal bank in order to avoid detection.
The indictment also alleges that Gadola and Lack managed Zavieh’s secret account at the Swiss cantonal bank until Lack demanded that Zavieh provide him with a Form W-9 which would document that Zavieh was the owner of the account and subject to U.S. taxation. Zavieh refused and Lack transferred management of the secret Swiss account to another Swiss asset manager, who would not require Zavieh to provide a Form W-9.
According to the indictment, Zavieh fabricated a false story about the ownership of the assets in the secret Swiss accounts at UBS and Cantonal Bank in order to conceal the defendant’s ownership and control of assets and income from the IRS. He also made false statements to federal law enforcement agents regarding his ownership and control of the secret Swiss accounts.
On Dec. 22, 2010, Renzo Gadola, a citizen and resident of Switzerland, pleaded guilty to a one-count information charging him with conspiring to defraud the IRS. He has been cooperating with the Justice Department and IRS in providing information about his former U.S. clients who evaded their income taxes and his former Swiss colleagues who assisted those U.S. taxpayers. On Nov. 18, 2011, Senior District Judge James L. King sentenced Gadola to 60 months probation and ordered him to return to the United States at least once each year to assist the Justice Department in its ongoing investigations of illegal cross border banking.
On Aug. 2, 2011, a federal grand jury in Fort Lauderdale, returned an indictment charging Lack, a citizen and resident of Switzerland, with conspiring to defraud the IRS. According to that indictment, Lack assisted numerous U.S. customers to conceal their assets and income through the use of secret Swiss bank accounts. To date, Lack has not been arrested and remains at large.
As alleged in the indictment, U.S. citizens have an obligation to report to the IRS on Schedule B of their U.S. Individual Income Tax Return, Form 1040, whether they had a financial interest in, or signature authority over, a financial account in a foreign county in a particular year by checking “Yes” or “No” in the appropriate box and identifying the country where the account was maintained. They further have an obligation to report all income earned from foreign financial accounts on the tax return and to pay the taxes due on that income. Separately, U.S. citizens with a financial interest in, or signatory authority over, a foreign financial account worth more than $10,000 in a particular year, must also file an Foreign Bank and Financial Accounts form with the Treasury disclosing such an account by June 30 of the following year.
The conspiracy count carries a maximum penalty of five years in prison and a $250,000 fine.
This case is being prosecuted by Trial Attorneys Mark F. Daly and Michelle M. Petersen and Senior Litigation Counsel Kevin Downing of the Justice Department’s Tax Division, and Assistant U.S. Attorney Bertha Mitrani of the U.S. Attorney’s Office for the Southern District of Florida and was investigated with the assistance of the IRS.
An indictment is only an allegation of criminal conduct and is not evidence of guilt. A person is presumed innocent until and unless proven guilty beyond a reasonable doubt in a court of law.