Latest Records
Newest first across public DOJ and U.S. Attorney press releases.
23 November 2011
Seven Ohio Men Arrested for Hate Crime Attacks Against Amish MenRead the Press Release
CLEVELAND – Seven Ohio men were arrested today on charges that they committed and conspired to commit religiously-motivated physical assaults in violation of the Matthew Shepard-James Byrd Hate Crimes Prevention Act. The arrests were announced today by Thomas E. Perez, Assistant Attorney General for the Civil Rights Division and Steven M. Dettelbach, U.S. Attorney for the Northern District of Ohio.
The criminal complaint, filed in Cleveland, charges Samuel Mullet Sr., Johnny S. Mullet, Daniel S. Mullet, Levi F. Miller, Eli M. Miller and Emanuel Schrock, all of Bergholz, Ohio; and Lester S. Mullet, of Hammondsville, Ohio, with willfully causing bodily injury to any person, or attempting to do so by use of a dangerous weapon, because of the actual or perceived religion of that person. The maximum potential penalty for these violations is life in prison.
According to the affidavit filed in support of the arrest warrants, the defendants conspired to carry out a series of assaults against fellow Amish individuals with whom they were having a religiously-based dispute. In doing so, the defendants forcibly restrained multiple Amish men and cut off their beards and head hair with scissors and battery-powered clippers, causing bodily injury to these men while also injuring others who attempted to stop the attacks. In the Amish religion, a man’s beard and head hair are sacred.
This case is being investigated by the Cleveland Division of the FBI and is being prosecuted by Assistant U.S. Attorney Bridget M. Brennan of the U.S. Attorney’s Office for the Northern District of Ohio and Deputy Chief Kristy Parker of the Civil Rights Division’s Criminal Section.
A criminal complaint is merely an accusation. All defendants are presumed innocent of the charges until proven guilty beyond a reasonable doubt in court.
Hungarian Citizen Pleads Guilty to Hacking into Marriott Computers and Extorting Employment from the CompanyRead the Press Release
WASHINGTON – A Hungarian citizen pleaded guilty today to intentionally causing damage by transmitting a malicious code to Marriott International Corporation computers and to threatening to reveal confidential information obtained from the company’s computers if Marriott did not offer him a job.
The guilty plea was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney for the District of Maryland Rod J. Rosenstein and Special Agent in Charge David Beach of the U.S. Secret Service, Washington Field Office.
Attila Nemeth, 26, pleaded guilty in the District of Maryland before U.S. District Judge J. Frederick Motz.
According to Nemeth’s plea agreement, on Nov. 11, 2010, Nemeth sent an initial email to Marriott personnel, advising that he had been accessing Marriott’s computers for months and had obtained proprietary information. Nemeth threatened to reveal this information if Marriott did not give him a job maintaining the company’s computers. On Nov. 13, 2010, after receiving no response from Marriott, Nemeth sent another email containing eight attachments, seven of which were confirmed as documents stored on Marriott’s computer system. These documents included financial documentation and other confidential and proprietary information. Nemeth admitted that through an infected email attachment sent to specific Marriott employees he was able to install malicious software on Marriott’s system that gave him a “backdoor” into the system. Using the “backdoor,” Nemeth was able to access proprietary email and other files belonging to Marriott.
According to the plea agreement, on Nov. 18, 2010, Marriott created the identity of a fictitious Marriott employee for the use by the U.S. Secret Service in an undercover operation to communicate with Nemeth. Nemeth, believing he was communicating with Marriott human resources personnel, continued to call and email the undercover agent, and demanded a job with Marriott in order to prevent the public release of the Marriott documents. Nemeth emailed a copy of his Hungarian passport as identification and offered to travel to the United States.
On Jan. 17, 2011, Nemeth arrived at Washington Dulles Airport on a ticket purchased by Marriott, for an “employment interview.” The “interview” was conducted by a Secret Service agent assuming the role of the Marriott employee with whom Nemeth believed he had been communicating. During the course of the “interview,” Nemeth admitted that he accessed Marriott’s computer systems; stole Marriott’s confidential and proprietary information; and initiated the emails to Marriott threatening to publicly release Marriott’s data unless he was given a job on his terms by Marriott. To further prove his identity as the perpetrator, Nemeth demonstrated exactly how he accessed the Marriott network; his continued ability to access the Marriott network; and the location of the stolen Marriott proprietary data on a computer server located in Hungary.
As a result of the compromise of its computer network, Marriott was compelled to engage more than 100 of its employees in a thorough search of its network to determine the scope of the compromise and to identify the data that may have been compromised. The loss to Marriott as a result of the intentional damage caused by Nemeth is between $400,000 and $1 million dollars in salaries, consultant expenses and other costs associated with Nemeth’s intrusion.
Nemeth faces a maximum penalty of 10 years in prison for the transmission of the malicious code and a maximum of five years in prison for threatening to expose confidential and proprietary information if Marriott did not give him a job. Sentencing is scheduled for Feb. 3, 2012, at 11 a.m. Nemeth remains detained.
The case is being investigated by the U.S. Secret Service and prosecuted by Special Assistant U.S. Attorney Anthony V. Teelucksingh assigned from the Computer Crime and Intellectual Property Section of the Justice Department’s Criminal Division.
Fair Housing Lawsuit Filed Against the University of Nebraska at Kearney for Discrimination Against Students with Psychological and Emotional DisabilitiesRead the Press Release
WASHINGTON – The Justice Department today filed a lawsuit against the University of Nebraska at Kearney (UNK), the Board of Regents of the University of Nebraska and employees of UNK for violating the Fair Housing Act by discriminating against students with disabilities.
The lawsuit, filed in the U.S. District Court for Nebraska, charges that UNK and its employees engaged in a pattern or practice of violating the Fair Housing Act or denied rights protected by the act by denying reasonable accommodation requests by students with psychological or emotional disabilities seeking to live with emotional assistance animals in university housing. The suit also charges that UNK requires students with psychological disabilities to disclose sensitive medical and other information that is unnecessary to evaluate their accommodation requests. This lawsuit arose as a result of a complaint filed with the Department of Housing and Urban Development (HUD) by a student enrolled at UNK who sought to live with an emotional assistance dog that had been prescribed.
“The Fair Housing Act requires housing providers to give reasonable accommodations for people with disabilities so that all have equal housing opportunities. The Fair Housing Act also ensures that when people seek an accommodation, they are not required to disclose medical information that is overly intrusive and invasive in order to receive an accommodation,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Justice Department will continue its vigorous enforcement of fair housing laws that protect the rights of people with psychological or emotional disabilities so that they will have full opportunity to find housing as the law requires.”
The lawsuit seeks a court order prohibiting future discrimination by the defendants, monetary damages for those harmed by the defendants’ actions, and a civil penalty. Any individuals who have information relevant to this case are urged to contact the Housing and Civil Enforcement Section of the Civil Rights Division at 1-800-896-7743, ext. 92.
The federal Fair Housing Act prohibits discrimination in housing on the basis of race, color, religion, sex, familial status, national origin and disability. More information about the Civil Rights Division and the laws it enforces is available at www.usdoj.gov/crt . Individuals who believe that they have been victims of housing discrimination can call the Housing Discrimination Tip Line at 1-800-896-7743, e-mail the Justice Department at [email protected] , or contact HUD at 1-800-669-9777.
The complaint is an allegation of unlawful conduct. The allegations must still be proven in federal court.
California Youth Counselor Pleads Guilty to Producing Child PornographyRead the Press Release
WASHINGTON – A Pleasant Hill, Calif., youth counselor pleaded guilty today in federal court in Oakland, Calif., to producing child pornography, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Melinda Haag of the Northern District of California.
Thomas Perez Jewell, 54, pleaded guilty before U.S. District Judge Phyllis J. Hamilton in the Northern District of California to one count of production of child pornography.
Jewell admitted to sexually molesting two minor victims and to producing child pornography of the molestation. According to court documents, Jewell was employed as a youth counselor and therapist. Jewell’s molestation offenses were discovered when law enforcement executed a search warrant on his residence for suspected possession of child pornography.
Jewell has been in custody since his arrest on Nov. 18, 2011. He is scheduled to be sentenced on Feb. 29, 2012, before Judge Hamilton in Oakland. At sentencing, Jewell will face a minimum mandatory sentence of 15 years in prison and a maximum sentence of 30 years in prison, a fine of up to $250,000 and a maximum term of life on supervised release. Jewell will be required to register as a sex offender in accordance with state and federal law.
The case is being prosecuted by Assistant U.S. Attorney Joshua Hill and Trial Attorney Mi Yung Park of the Child Exploitation and Obscenity Section (CEOS) in the Justice Department’s Criminal Division. This case was investigated by the FBI; the Pleasant Hill Police Department; the Martinez, Calif., Police Department; and the Walnut Creek, Calif., Police Departments.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and the Criminal Division’s CEOS, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov .
22 November 2011
United States Files Complaint Against BestCare Laboratory Services Alleging False Claims for Medicare FundsRead the Press Release
WASHINGTON – The United States filed a complaint against BestCare Laboratories, Inc. and its founder and principal, Karim A. Maghareh, in the U.S. District Court for the Southern District of Texas, the Justice Department announced today. The suit alleges that the defendants knowingly misrepresented the distances traveled by its lab technicians to artificially increase reimbursement from Medicare for mileage-based technician travel allowance fees.
According to the complaint, BestCare transported laboratory test specimens as air cargo from nursing home customers located in the Austin, Dallas/Ft. Worth, El Paso, San Antonio and Waco areas to BestCare’s laboratory close to Houston, but claimed mileage for ground travel as though its technicians personally drove the specimens one-way or round-trip between those cities and its lab in Houston. The complaint also alleges that Mr. Maghareh supervised BestCare’s day-to-day operations and directed or authorized the false billing. BestCare is a clinical laboratory founded in 2002.”
“There’s no question that health care providers are entitled to recover their reasonable costs for services they actually deliver, but we have zero patience for those who invent or inflate Medicare reimbursement claims,” said Assistant Attorney General for the Civil Division Tony West. “As today demonstrates, the Justice Department will vigorously enforce the False Claims Act to protect our seniors and safeguard the Medicare trust fund.”
“Our office is dedicated to recovering tax payer dollars misappropriated from Medicare,” said Kenneth Magidson, U.S. Attorney for the Southern District of Texas. “We are committed to aggressively litigating civil suits against dishonest providers to protect the seniors who depend on Medicare.”
The original lawsuit was filed by Richard Drummond under the qui tam, or whistleblower, provisions of the False Claims Act. The qui tam provisions allow private parties, called “relators,” to sue on behalf of the United States persons or companies they believe have knowingly submitted false claims for government funds. Relators are entitled to receive 15 to 25 percent of any recovery if the United States intervenes in the suit, as it has here, or 25 to 30 percent if the United States declines intervention. Defendants who violate the False Claims Act are liable for three times the government’s damages plus civil penalties.
This action 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.
U.S. Pharmaceutical Company Merck Sharp & Dohme to Pay Nearly One Billion Dollars over Promotion of Vioxx®Read the Press Release
WASHINGTON – American pharmaceutical company Merck, Sharp & Dohme has agreed to pay $950 million to resolve criminal charges and civil claims related to its promotion and marketing of the painkiller Vioxx® (rofecoxib), the Justice Department announced today. Under the terms of the resolution, Merck will plead guilty to a one-count information charging a single violation of the Food Drug and Cosmetic Act (FDCA) for introducing a misbranded drug, Vioxx®, into interstate commerce. Under the terms of its plea agreement with the United States, Merck will plead guilty to a misdemeanor for its illegal promotional activity and will pay a $321,636,000 criminal fine.
Merck is also entering into a civil settlement agreement under which it will pay $628,364,000 to resolve additional allegations regarding off-label marketing of Vioxx® and false statements about the drug’s cardiovascular safety. Of the total civil settlement, $426,389,000 will be recovered by the United States, and the remaining share of $201,975,000 will be distributed to the participating Medicaid states. The settlement and plea conclude a long-running investigation of Merck’s promotion of Vioxx®, which was withdrawn from the marketplace in September 2004.
Merck’s criminal plea relates to misbranding of Vioxx® by promoting the drug for treating rheumatoid arthritis, before that use was approved by the Food and Drug Administration (FDA). Under the provisions of the FDCA, a company is required to specify the intended uses of a product in its new drug application to FDA. Once approved, the drug may not be marketed or promoted for so-called “off-label” uses – any use not specified in an application and approved by FDA – unless the company applies to the FDA for approval of the additional use. The FDA approved Vioxx® for three indications in May 1999, but did not approve its use against rheumatoid arthritis until April 2002. In the interim, for nearly three years, Merck promoted Vioxx® for rheumatoid arthritis, conduct for which it was admonished in an FDA warning letter issued in September 2001.
The parallel civil settlement covers a broader range of allegedly illegal conduct by Merck. The settlement resolves allegations that Merck representatives made inaccurate, unsupported, or misleading statements about Vioxx’s cardiovascular safety in order to increase sales of the drug, resulting in payments by the federal government. It also resolves allegations that Merck made false statements to state Medicaid agencies about the cardiovascular safety of Vioxx, and that those agencies relied on Merck’s false claims in making payment decisions about the drug. Finally, like the criminal plea, the civil settlement also recovers damages for allegedly false claims caused by Merck’s unlawful promotion of Vioxx for rheumatoid arthritis.
“When a pharmaceutical company ignores FDA rules aimed at keeping our medicines safe and effective, that company undermines the ability of health care providers to make the best medical decisions on behalf of their patients,” said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. “As this plea agreement and civil settlement make clear, we will not hesitate to pursue those who skirt the proper drug approval process and make misleading statements about the safety and efficacy of their products.”
“Today’s resolution appropriately reflects the severity of Merck’s conduct; it is yet another reminder that the United States will not tolerate misconduct by drug companies that bends the rules and puts patient safety at risk,” announced Carmen M. Ortiz, U.S. Attorney for the District of Massachusetts. “Any marketing activity that ignores the importance of FDA approval, or that makes unsupported safety claims about a drug is unacceptable, and will be pursued vigorously in both the criminal and civil arena.”
As part of the settlement, Merck has also agreed to enter into an expansive corporate
integrity agreement with the Office of Inspector General of the Department of Health and
Human Services (HHS-OIG), which will strengthen the system of reviews and oversight procedures imposed on the company. Although Vioxx is no longer on the market, this ongoing monitoring of Merck’s conduct is aimed to deter and detect similar conduct in the future.
“We will continue to work with our law enforcement partners to aggressively investigate and prosecute pharmaceutical companies – no matter how large – when they improperly market their products,” said Daniel R. Levinson, Inspector General of the United States Department of Health and Human Services. “Merck’s comprehensive corporate integrity agreement requires top company officials to complete annual compliance certifications, and obligates Merck to post information about physician payments on its website.”
This case was handled by the Justice Department’s Civil Division and the U.S. Attorney’s Office for the District of Massachusetts. The investigation was conducted by HHS-OIG, the FBI, the Office of Criminal Investigations for the FDA, the Veterans Administration’s Office of Criminal Investigations, the Office of the Inspector General for the Office of Personnel Management, the National Association of Medicaid Fraud Control Units, and the offices of various state attorneys general.
U.S. Files Suit Against California Company for Allegedly Violating the Telemarketing Sales RuleRead the Press Release
WASHINGTON - The United States has filed suit against Sonkei Communications Inc., and its principal corporate officers, Peter Turpel and Joseph Turpel, the Justice Department announced today. The government’s complaint, filed in U.S. District Court for the Central District of California, alleges that the defendants violated the Federal Trade Commission’s (FTC) Telemarketing Sales Rule (TSR) through their telemarketing service, which facilitates delivery of robocalls by telemarketers claiming to offer products and services to consumers throughout the United States, including home security systems, grant procurement programs, and credit card services. Sonkei is based in Newbury Park, Calif.
The TSR established the National Do Not Call Registry for consumers who do not wish to receive certain telemarketing calls, and generally prohibits calling these consumers. The TSR also prohibits “robocalls,” that is, telephone calls that deliver a prerecorded message if the seller has not first obtained the recipient’s consent to receive these calls.
The government’s complaint alleges that the defendants assisted and facilitated abusive practices by their telemarketing customers, including calling telephone numbers registered on the National Do Not Call Registry and placing unauthorized robocalls to consumers, in violation of the Telemarketing Sales Rule.
In addition, the complaint alleges that the illegal calls allegedly placed by the defendants’ customers have generated tens of thousands of complaints from consumers and businesses. In its lawsuit, the government asks the court to impose civil penalties for the defendants’ conduct and to enjoin them from further TSR violations. The complaint, which the Justice Department filed with the assistance of the FTC, is based on the FTC’s investigation of the defendants’ telemarketing service.
“The Telemarketing Sales Rule, including the Do Not Call Registry, aims to shield consumers from a barrage of sales calls they don’t want which push products they don’t need,” said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. “We will work with the FTC to identify and penalize those who violate the rule and can’t take ‘no’ for an answer.”
Individuals who believe they have received calls in violation of the TSR should register their complaints with the FTC. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant (www.ftccomplaintassistant.gov/) or call 1-877-FTC-HELP (1-877-382-4357). This case is being prosecuted by Department of Justice, Civil Division, Consumer Protection Branch attorneys Sondra Mills and Matthew Ebert.
Justice Department Signs Agreement with Upshur County, Texas, to Ensure Civic Access for Persons with DisabilitiesRead the Press Release
WASHINGTON – The Justice Department today announced an agreement with Upshur County, Texas, to improve access to all aspects of civic life for people with disabilities. The agreement was reached under Project Civic Access (PCA), the department’s wide-ranging initiative to ensure that cities, towns and counties throughout the country comply with the Americans with Disabilities Act (ADA).
“Access to civic life is a fundamental part of American society, and people with disabilities must have the opportunity to participate in local government programs, services and activities on an equal basis with their neighbors,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division . “Upshur County has made an important commitment to achieving ADA compliance, and this agreement serves as a roadmap to that important end. I commend Upshur County officials for working with the Justice Department to provide equal access to all of its programs, services, and activities.”
“The ability of all citizens to enter a courthouse or a polling place to vote is central to our democracy,” said John M. Bales, U.S. Attorney for the Eastern District of Texas. “Our office, in conjunction with the Civil Rights Division, will continue to work with Upshur County and other counties to make all public facilities in the Eastern District fully accessible.”
As part of the PCA initiative, Justice Department investigators, attorneys and architects survey state and local government facilities, services and programs in communities across the country to identify the modifications needed for compliance with ADA requirements. Based on these surveys, agreements are tailored to address the steps each community must take to improve access. This agreement is the 196th under the PCA initiative.
Under the agreement announced today, Upshur County will take important steps to improve access to county programs for individuals with disabilities, such as:
- Making physical modifications to its facilities so that parking, routes into the buildings, entrances, public telephones, restrooms, service counters and drinking fountains are accessible to persons with disabilities.
- Posting, publishing and distributing a notice to inform members of the public about Title II of the ADA and how it applies to the county’s programs, services and activities.
- Implementing and reporting to the Department of Justice the county’s written procedures for providing information about the county’s accessible programs, services and activities and their locations.
- Appointing an ADA Coordinator and adopting a grievance procedure to handle grievances submitted under the ADA.
- Implementing effective communication policies approved by the Department of Justice to ensure people with disabilities have access to county programs and services, including county law enforcement agencies.
- Developing policies and procedures and planning to ensure that people with disabilities are afforded equal, integrated access to emergency management programs, including emergency preparedness, notification, evacuation, sheltering, response, clean up and recovery.
- Implementing a plan to ensure the accessibility of sidewalks, transportation stops and pedestrian crossings by installing accessible curb ramps throughout the county.
- Establishing and implementing a policy to ensure that county web pages are accessible to people with disabilities.
Today’s agreement was reached under Title II of the ADA, which prohibits discrimination against people with disabilities by state and local governments. The agreement will remain in effect for three years from Nov. 22, 2011, or until all actions required by the agreement have been completed, whichever is later. The department will actively monitor compliance with the agreement until all required actions have been completed.
For more information on today’s agreement, the PCA initiative, or the ADA Best Practices Tool Kit for State and Local Governments, please visit the ADA website at www.ada.gov or call the toll-free ADA Information Line at 800-514-0301 or 800-514-0383 (TTY). People interested in finding out more about today’s agreement with Upshur County, please visit www.ada.gov/upshur_co_tx_pca/upshur_co_tx_sa.htm.
Indiana Man Sentenced to 315 Years in Prison for Producing and Trafficking Child PornographyRead the Press Release
WASHINGTON – A Bloomington, Ind., man was sentenced today in the Southern District of Indiana to 315 years in prison for multiple charges relating to his production and trafficking of child pornography, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Joseph H. Hogsett of the Southern District of Indiana.
David R. Bostic, 25, was sentenced by U.S. District Judge Jane E. Magnus-Stinson. In addition to Bostic’s prison term, Judge Magnus-Stinson also sentenced Bostic to lifetime supervised release.
“Mr. Bostic committed heinous acts of sexual abuse against the most vulnerable in our society,” said Assistant Attorney General Breuer. “He memorialized these unspeakable crimes by producing photographs of his abuse and distributing them to an international network of child predators. No prison term can undo the pain and suffering Mr. Bostic has caused. But today’s sentence sends a strong message that child sexual exploitation will be punished severely.”
“This defendant is among the most dangerous offenders ever prosecuted by this office,” said U.S. Attorney Hogsett. “My heart goes out to the many victims in this case, but we can say today that thanks to the efforts of prosecutors and our law enforcement partners, this man will never again be able to prey on the most innocent among us.”
“This case is considered one of the most significant child pornography matters ever investigated by the FBI,” said Deputy Assistant Director Michael S. Welch of the FBI’s Cyber Division. “This case resulted in the identification and rescue of approximately two dozen children from inside and outside the United States.”
Bostic pleaded guilty on June 6, 2011, to producing child pornography images of five children, all four years of age and younger, including one child who was only two months old. Bostic distributed some of these images to several individuals around the world in exchange for other child pornography, some of which was material produced by those trading partners.
Bostic also pleaded guilty for his role in an international conspiracy to traffic in child pornography primarily involving images of minors under five years of age. Bostic initially gained the trust of the principal administrator of that group by providing the child pornography images he produced.
This case was the result of the significant efforts of the FBI, with assistance from the Indiana State Police; the Kokomo, Ind., Police Department; and the Brownsburg, Ind., Police Department.
The case was prosecuted by Assistant U.S. Attorney A. Brant Cook of the Southern District of Indiana and Trial Attorney Michael Grant of the Child Exploitation and Obscenity Section in the Justice Department’s Criminal Division.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and the Criminal Division’s CEOS, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
Fair Housing Lawsuit Filed Against California Municipality for Discriminating Against Families with ChildrenRead the Press Release
WASHINGTON – The Justice Department filed a lawsuit yesterday against a California municipality and a homeowners’ association for discriminating against families with children in violation of the Fair Housing Act.
The lawsuit, filed in the U.S. District Court for the Northern District of California, alleges that the city of Santa Rosa, a California municipality, and La Esplanada Unit 1 Owners’ Association, a homeowners’ association, sought to restrict residency at a condominium complex to seniors aged 55 and older. While the law allows such an exemption, the suit alleges that neither the city nor the homeowners’ association took the necessary steps, such as routine age-verification procedures, to qualify for the exemption in a way that was consistent with the Fair Housing Act. Consequently, their actions unlawfully denied and made housing unavailable to families with children. The lawsuit seeks a court order prohibiting future discrimination by the defendants, monetary damages for those harmed by the defendants’ actions and a civil penalty.
“It is critical that families with children have opportunities to find housing. A housing developer or a municipality cannot deny housing to families with children and restrict its housing to seniors 55 years and older unless they comply with the requirements set forth in the Fair Housing Act,” said Thomas E. Perez, Assistant Attorney General for the Justice Department’s Civil Rights Division. “The Justice Department will continue to vigorously enforce fair housing laws that protect the rights of families with children.”
This lawsuit arose as a result of a complaint filed with the Department of Housing and Urban Development (HUD) by the owner and representative of a portion of the condominium development that was the subject of the defendants’ enforcement actions. After HUD investigated the complaint, it issued a charge of discrimination and the matter was referred to the Justice Department.
“When Congress made it illegal to discriminate against families with children in housing, it carved out an exemption for senior communities, setting clear standards those communities must meet if they wish to exclude families with children,” said John Trasviña, HUD Assistant Secretary for Fair Housing and Equal Opportunity. “HUD and the Department of Justice remain committed to ensuring that no community unlawfully denies families with children much-needed housing opportunities.”
The federal Fair Housing Act prohibits discrimination in housing on the basis of race, color, religion, sex, familial status, national origin and disability. More information about the Civil Rights Division and the laws it enforces is available at www.usdoj.gov/crt . Individuals who believe that they have been victims of housing discrimination can call the Housing Discrimination Tip Line at 1-800-896-7743, e-mail the Justice Department at [email protected] , or contact HUD at 1-800-669-9777.
The complaint is an allegation of unlawful conduct. The allegations must still be proven in federal court.
Detroit-Area Foot Doctor Pleads Guilty to Medicare Fraud SchemeRead the Press Release
WASHINGTON – A Detroit-area foot doctor pleaded guilty today for his participation in a Medicare fraud scheme, announced the Department of Justice, FBI and the Department of Health and Human Services (HHS).
Errol Sherman pleaded guilty before U.S. District Judge Gerald E. Rosen in the Eastern District of Michigan to one count of health care fraud. At sentencing, Sherman faces a maximum penalty of 10 years in prison and a $250,000 fine.
According to the plea documents, Sherman is a Doctor of Podiatric Medicine licensed in the State of Michigan. Between January 2003 and December 2006, Sherman billed Medicare and Blue Cross Blue Shield of Michigan for a procedure known as an “avulsion of the nail plate” or “nail avulsion” procedure. Sherman billed for this procedure thousands of times with respect to hundreds of beneficiaries during that time period. According to court documents, Medicare was billed by Sherman for nail avulsion procedures that were never rendered.
Today’s guilty plea was announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade; Special Agent in Charge Andrew G. Arena of the FBI’s Detroit Field Office; and Special Agent in Charge Lamont Pugh III of the HHS Office of Inspector General’s (OIG) Chicago Regional Office.
This case was prosecuted by Trial Attorney Catherine K. Dick of the Criminal Division’s Fraud Section and Assistant U.S. Attorney John K. Neal of the Eastern District of Michigan. The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan.
Since their inception in March 2007, the Medicare Fraud Strike Force operations in nine districts have charged more than 1,140 individuals who collectively have falsely billed the Medicare program for more than $2.9 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.
Department of Justice Challenges Utah’s Immigration LawRead the Press Release
WASHINGTON – The Department of Justice today challenged Utah’s immigration law, which comes after recent lawsuits in Arizona, Alabama and South Carolina.
In a complaint, filed in the District of Utah, the department states that several provisions of Utah’s H.B. 497 are preempted by federal law. The provisions were enacted on March, 15, 2011.
The department’s lawsuit comes after several months of constructive discussions with Utah state officials. Notwithstanding today’s lawsuit, department officials expect this important dialogue to continue.
The department’s complaint states that H.B. 497 clearly violates the Constitution because it attempts to establish state-specific immigration policy. The law creates and mandates immigration enforcement measures that interfere with the immigration priorities and practices of the federal government in a way which is not cooperative with the primary federal role in this area. The law’s mandates on law enforcement could lead to harassment and detention of foreign visitors and legal immigrants who are in the process of having their immigration status reviewed in federal proceedings and whom the federal government has permitted to stay in this country while such proceedings are pending.
The federal government has the ultimate authority to enforce federal immigration laws and the Constitution does not permit a patchwork of local immigration policies. A state setting its own immigration policy interferes with the federal government’s enforcement efforts.
“A patchwork of immigration laws is not the answer and will only create further problems in our immigration system,” said Attorney General Eric Holder. “The federal government is the chief enforcer of immigration laws and while we appreciate cooperation from states, which remains important, it is clearly unconstitutional for a state to set its own immigration policy. We will continue to monitor and coordinate with our federal partners as we remain concerned about the potential impact of these state laws.”
“This kind of legislation diverts critical law enforcement resources from the most serious threats to public safety and undermines the vital trust between local jurisdictions and the communities they serve,” said Department of Homeland Security Secretary Janet Napolitano. “The Department will continue to enforce federal immigration laws in Utah in smart, effective ways that focus our resources on criminal aliens, recent border crossers, repeat and egregious immigration law violators and employers who knowingly hire illegal labor.”
The department notified Utah state officials of its position that the Utah’s Immigrant Guest Worker statutes, H.B. 116 and H.B. 469, are clearly preempted by federal law. Given that the provisions do not take effect until 2013, and in light of the constructive conversations the department continues to have with Utah officials about these provisions pursuant to the Justice Department’s long-standing policy of exploring resolution short of litigation before filing suit against a state, the department is not challenging these provisions today. If, however, Utah fails to comply with federal law in this area, the department will not hesitate to take the legal action necessary to vindicate the important federal interests in this matter before these laws go into effect.
The suit was filed on behalf of the Departments of Justice, Homeland Security and State, which share responsibilities in administering federal immigration law. The department will soon request a preliminary injunction to enjoin enforcement of the certain provisions of H.B. 497.
The Justice Department previously challenged S.B. 1070, H.B. 56, and Act No. 69 on federal preemption grounds in Arizona, Alabama and South Carolina, respectively. The department continues to review immigration-related laws that were passed in Indiana and Georgia. Courts have enjoined key parts of the Arizona, Alabama, Georgia and Indiana state laws and temporarily restrained enforcement of Utah’s law.
Civil Contempt Sanctions Assessed Against Arizona Company That Allegedly Targeted Fraud VictimsRead the Press Release
WASHINGTON – A federal judge in Arizona has held Mesa, Ariz.-based Business Recovery Services (BRS) and its owner, Brian Hessler, in civil contempt of court for violating the terms of a preliminary injunction, the Department of Justice announced today. BRS sells kits that the company purports help individuals who purchased so-called “ill-fated” business opportunities recover their money. The injunction required the defendants to stop charging consumers for recovery goods and services without waiting until seven business days after the customer successfully recovered money lost in a previous transaction.
U.S. District Court Judge James A. Teiborg found that the defendants, and their affiliate, Home-Based Business Consulting LLC, violated the preliminary injunction. The court ordered BRS and Hessler to refund money paid by consumers who were shown to have been sold recovery kits in violation of the order, ordered defendants to pay the government’s attorneys’ fees, and gave the defendants 30 days to change their business practices to follow the preliminary injunction before fines and coercive sanctions would be assessed.
“This is a case of adding insult to injury,” said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. “These defendants preyed on consumers who had already lost money in scams and collected fees regardless of whether they were successful in getting back a single dime for these victims.”
The action was filed by the Justice Department’s Consumer Protection Branch on March 1, 2011, at the request of the Federal Trade Commission (FTC). In its complaint, the government alleged that BRS and Hessler telemarketed products and services they claimed would help consumers recover money they had lost to business opportunity and work-at-home operations, and sold hundreds of variations of do-it-yourself kits tailored to particular schemes and priced up to $499. The complaint asserted that the defendants violated the Telemarketing Sales Rule by misrepresenting the nature and effectiveness of their services, and by accepting payments from consumers for recovery goods and services without waiting until seven business days after the consumers received recovered money, as required by the Telemarketing Sales Rule.
At the time the suit was filed, the Department of Justice sought, and the court issued, a preliminary injunction requiring the defendants to stop charging customers for recovery goods and services in violation of the Telemarketing Sales Rule. At the hearing on the preliminary injunction, the United States established that the defendants collected money from their customers immediately upon sale of the recovery kits, without regard to when or whether the customer ever recovered any funds lost earlier. The court later held the defendants in contempt for continuing their practices in violation of the preliminary injunction.
Consumers who have been victims of telemarketing fraud should attempt to get their money back, and alert law enforcement about the violation. Steps to take that may be helpful include the following:
- Write your credit card company and dispute the amount paid that was based on fraud, if you paid with a credit card, whether or not you already paid the bill;
- Write a letter to your state’s attorney general and to your local Better Business Bureau complaining about the scam, and send a copy to the person who obtained your money;
- Write a letter or complain online to the Consumer Financial Protection Bureau, which supervises banks, credit unions, and other financial companies. Complaints may be filed online at: https://help.consumerfinance.gov/app/ask_cc_complaint ;
- File a complaint with the FTC. This can be done online at: www.ftccomplaintassistant.gov/ .
Assistant Attorney General West thanked the FTC for their assistance with this litigation. The case was prosecuted by Trial Attorney Jessica Gunder of the Consumer Protection Branch of the Civil Division of the Department of Justice.
21 November 2011
Statement of U.S. Attorney General Holder on the Passing of Former U.S. Deputy Assistant Attorney General for the Criminal Division Jack KeeneyRead the Press Release
Attorney General Eric Holder released the following statement today on the passing of former Deputy Assistant Attorney General for the Criminal Division Jack Keeney:
“For the last six decades, Jack Keeney served the Department of Justice with dedication, integrity and an unshakeable commitment to the rule of law. As the longest-serving federal prosecutor in the history of the United States, the contributions that he made – to the Justice Department and to the nation he was so proud to serve – are beyond measure. And I am one of many who have been grateful to count him as a mentor, advisor and friend.
“Although Mr. Keeney will be sorely missed, his legacy will live on – in the Justice Department building that bears his name, in the standard of excellence that he established in the department’s Criminal Division, in the work of countless attorneys that he mentored throughout his career, and in the inspiration that he will continue to provide public servants across our nation.”
President Barack Obama Grants Pardons and CommutationRead the Press Release
WASHINGTON – Today President Barack Obama granted pardons to five individuals and commutation of sentence to one individual:
PARDONS:
· Lesley Claywood Berry Jr. - Loretto, Ky.
Offense : Conspiracy to manufacture, possess with intent to distribute, and distribute marijuana, 21 U.S.C. §§ 841 and 846.
Sentence : April 29, 1988; District of Minnesota; three years in prison.
· Dennis George Bulin - Wesley Chapel, Fla.
Offense : Conspiracy to possess with intent to distribute in excess of 1,000 pounds of marijuana, 21 U.S.C. §§ 841(a)(1) and 846 and 18 U.S.C. § 2.
Sentence : March 10, 1987; Middle District of Alabama; five years of probation and $20,000 fine.
· Ricky Dale Collett - Annville, Ky.
Offense : Aiding and abetting in the manufacture of 61 marijuana plants, 21 U.S.C. § 841(a)(1) and 18 U.S.C. § 2.
Sentence : March 7, 2002; Eastern District of Kentucky; one year of probation conditioned on 60 days of home detention.
· Martin Kaprelian - Park Ridge, Ill.
Offense : Conspiracy to transport stolen property in interstate commerce, 18 U.S.C. § 371; transporting stolen property in interstate commerce, 18 U.S.C. § 2314; concealing stolen property that was transported in interstate commerce, 18 U.S.C. § 2315.
Sentence : Feb. 1, 1984; Northern District of Illinois; nine years in prison, five years of probation.
· Thomas Paul Ledford - Jonesborough, Tenn.
Offense : Conducting and directing an illegal gambling business, 18 U.S.C. § 1955.
Sentence : June 12, 1995; Eastern District of Tennessee; one year of probation conditioned on performance of 100 hours of community service.
COMMUTATION:
· Eugenia Marie Jennings - Alton, Ill.
Offense : Distribution of cocaine base, 21 U.S.C. § 841(a)(1).
Sentence : Feb. 23, 2001; Southern District of Illinois; 262 months in prison, eight years of supervised release, $1,750 fine.
Terms of commutation : Prison sentence to expire on Dec. 21, 2011, leaving intact and in effect the eight-year term of supervised release with all its conditions and all other components of the sentence.
New Jersey Man Pleads Guilty in $670 Million Fraud SchemeRead the Press Release
WASHINGTON – A certified public accountant (CPA) and purported outside auditor for Provident Capital Indemnity Ltd. (PCI) pleaded guilty today for his role in a $670 million fraud scheme involving victims throughout the United States and abroad.
The guilty plea was announced today by U.S. Attorney for the Eastern District of Virginia Neil H. MacBride and Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.
“Mr. Castillo used his position as a CPA to give PCI an air of legitimacy that provided their clients the peace of mind to invest millions,” said U.S. Attorney MacBride. “Auditors stand as a gatekeeper to fraud, and we are aggressively pursuing those who abuse their position to facilitate the fraud rather than take steps to put a stop to it. I want to commend the outstanding work of the Virginia Securities and Financial Fraud Task Force for detecting and disrupting this massive, ongoing international fraud before the scheme victimized even more investors.”
“Mr. Castillo played an integral role in a multi-million dollar fraud scheme that harmed investors throughout the United States and abroad,” said Assistant Attorney General Breuer. “Trading on his qualification as a CPA, he created false documents that concealed the true nature of PCI’s operations. We are determined to continue holding accountable those who commit financial fraud, and prey upon unsuspecting investors.”
Jorge Luis Castillo, 56, a resident of New Jersey, pleaded guilty before U.S. District Judge John A. Gibney in the Eastern District of Virginia to conspiring to commit mail and wire fraud, which carries a maximum penalty of 20 years in prison. Castillo is scheduled to be sentenced on May 22, 2012.
According to a statement of facts filed with Castillo’s plea agreement, PCI was an insurance and reinsurance company registered in the Commonwealth of Dominica and doing business in Costa Rica. PCI sold financial guarantee bonds to companies selling life settlements, or securities backed by life settlements, to investors. These bonds were marketed to PCI’s clients as a way to alleviate the risk of insured beneficiaries living beyond their life expectancy. The clients, in turn, typically explained to their investors that the financial guarantee bonds ensured that the investors would receive their expected return on investment irrespective of whether the insured on the underlying life settlement lived beyond his or her life expectancy.
Castillo admitted today that he conspired with Minor Vargas Calvo, 60, the president and majority owner of PCI, to prepare audited financial statements that falsely claimed that PCI had entered into reinsurance contracts with major reinsurance companies. These claims, which were supported by a letter from Castillo stating that he conducted an audit of PCI’s financial records, were used to assure PCI’s clients that the reinsurance companies were backstopping the majority of the risk that PCI had insured through its financial guarantee bonds.
Castillo admitted that he never performed an audit of PCI’s financial statements and that, in fact, he personally created the statements he claimed to be independently auditing. He also admitted that he and others at PCI knew that the company never actually entered into reinsurance contracts with any major companies. Castillo also admitted that he and other conspirators provided the false financial statements and fraudulent independent auditors’ report to Dun & Bradstreet (D&B), which D&B relied on in compiling its commercial reports on PCI and issuing its 5A rating of PCI’s financial strength.
From 2004 through 2010, PCI sold approximately $670 million of bonds to life settlement investment companies located in various countries, including the United States, the Netherlands, Germany and Canada. PCI’s clients, in turn, sold investment offerings backed by PCI’s bonds to thousands of investors around the world. Purchasers of PCI’s bonds were allegedly required to make up-front payments of six to 11 percent of the underlying settlement as “premium” payments to PCI before the company would issue the bonds.
Court records state that Castillo received approximately $84,000 from his work as the purported outside auditor of PCI from 2004 through 2010.
Vargas, a citizen and resident of Costa Rica, and PCI were charged in a superseding indictment on Oct. 5, 2011, with one count of conspiracy to commit mail and wire fraud, three counts of mail fraud and three counts of wire fraud. Vargas was also charged with three counts of money laundering. Vargas was arrested on Jan. 19, 2011, at the John F. Kennedy International Airport in New York, and has been incarcerated pending trial, scheduled to be held on Feb. 13, 2012. An indictment is a formal accusation of criminal conduct, not evidence. A defendant is presumed innocent unless and until convicted.
This continuing investigation is being conducted by the U.S. Postal Inspection Service, Internal Revenue Service and FBI, with assistance from the Virginia State Corporation Commission, the Texas State Securities Board and the New Jersey Bureau of Securities. This case is being prosecuted by Assistant U.S. Attorneys Michael S. Dry and Jessica Aber Brumberg of the Eastern District of Virginia and Trial Attorney Albert B. Stieglitz Jr. of the Fraud Section in the Justice Department’s Criminal Division.
The U.S. Securities and Exchange Commission (SEC) conducted a parallel investigation and in January 2011 filed a parallel civil enforcement action against PCI, Vargas and Castillo. The department thanks the SEC for its assistance in this matter.
The investigation has been coordinated by the Virginia Financial and Securities Fraud Task Force, an unprecedented partnership between criminal investigators and civil regulators to investigate and prosecute complex financial fraud cases in the nation and in Virginia specifically. The task force is an investigative arm of the President’s Financial Fraud Enforcement Task Force, an interagency national task force.
President Obama established the 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.
Justice Department Settles Housing Discrimination Lawsuit in Rolla, MissouriRead the Press Release
WASHINGTON -The Justice Department today announced that Roger Harris, Hediger Enterprises Inc., Carroll Management Group, Forum Manor Associates L.P. and Forum Manor LLC have agreed to pay $295,000 in monetary damages and civil penalties to resolve a Fair Housing Act lawsuit alleging sexual harassment, race and sex discrimination, retaliation and intimidation at Forum Manor Apartments, a federally-subsidized apartment complex in Rolla, Missouri.
The lawsuit, filed late on Friday, alleges that Mr. Harris, the former manager of Forum Manor, engaged in a pattern or practice of sexual harassment, race and sex discrimination, and retaliation, intimidation or coercion against current and prospective tenants. The lawsuit further alleges that Hediger Enterprises Inc., Carroll Management Group, Forum Manor Associates L.P. and Forum Manor LLC, which owned and managed the property, are liable for Mr. Harris’ actions.
The consent decree, once approved by the court, requires the defendants to pay $260,000 to thirteen victims and $35,000 to the United States as a civil penalty. The consent decree also prohibits all of the defendants from engaging in discrimination, and it requires that the corporate defendants create non-discrimination policies for its properties and participate in fair housing training to prevent such conduct in the future. It also prevents Mr. Harris from managing federally-subsidized properties in the future and limits his ability to manage other types of rental properties.
“No one should have to endure harassment, intimidation or discrimination in order to have housing for their family. It is illegal and a clear abuse of trust for managers and owners of federally-subsidized properties, whose job it is to provide safe and affordable housing to those in need, to engage in or condone harassment, intimidation and discrimination against tenants and applicants,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “This settlement sends the message that the Justice Department will not tolerate this conduct and will take aggressive action against those who participate in it.”
“The Fair Housing Act protects individuals from harassment and discrimination in housing based on race and gender, and shields them from retaliation when they come forward to report it,” said John Trasviña, Assistant Secretary for Fair Housing and Equal Opportunity. “HUD and the Department of Justice will continue to vigorously protect the rights of all people to live in their homes, free from discrimination.”
This lawsuit arose out of complaints filed with the U.S. Department of Housing and Urban Development (HUD) by several former tenants and applicants of Forum Manor. After investigating the complaints, HUD issued a charge of discrimination and referred the case to the Department of Justice after one of the complainants elected to have the case heard in federal court.
Fighting illegal housing discrimination is a top priority of the Department of Justice. The federal Fair Housing Act prohibits discrimination in housing based on race, color, religion, national origin, sex, disability and familial status. More information about the Civil Rights Division and the laws it enforces is available at www.justice.gov/crt. Individuals who believe that they may have been victims of housing discrimination can call the Housing Discrimination Tip Line at 1-800-896-7743, e-mail the Justice Department at [email protected], or contact HUD at 1-800-669-9777.
18 November 2011
Second Conviction for Prince George’s, Maryland, County Tax DefierRead the Press Release
WASHINGTON – Andrew Isaac Chance of Clinton, Md., was convicted of filing a false retaliatory lien against a federal prosecutor and for filing three false claims for income tax refunds, the Justice Department, Internal Revenue Service (IRS) and Treasury Inspector General for Tax Administration (TIGTA) announced today. U.S. District Judge for the District of Maryland Alexander Williams Jr. presided over the federal jury trial in Greenbelt, Md.
According to testimony and evidence presented at trial, Chance was convicted in 2007 for filing a false claim for an income tax refund for the tax year 2005. Shortly after he was released from prison for that crime, he filed a UCC Financing Statement with the Maryland Department of Assessments and Taxation, falsely claiming that the federal prosecutor, who prosecuted the 2007 case, owed him $1.313 billion. The evidence showed that Chance filed a similar lien against a Maryland state prosecutor for her role in prosecuting him for crimes relating to his attempts to cash the fraudulently obtained U.S. Treasury check for the 2005 tax return. According to the evidence, Chance admitted to a federal agent, when arrested in December 2010 in relation to the current indictment, that he had filed the liens because the prosecutors had “done him wrong.”
The evidence at trial established that a year after filing the false lien, Chance filed three false claims for tax refunds for tax years 2007, 2008 and 2009, seeking a total of $900,000. These three false tax returns were almost identical to the 2005 return for which he was previously convicted. On the 2005 tax return, Chance claimed he was the Andrew Chance Trust. On the 2007-2009 returns, he claimed he was the Andrew I Chance Trust. On each return in the current case, Chance claimed $300,000 in refunds based on completely false income and withholding amounts. The government introduced evidence that, despite having claimed withholdings on the false returns, Chance had no withholdings and, in fact, had demanded that Metro, from which he retired as a station manager in 1999, not withhold taxes from his retirement pay.
“This verdict is a clear message that filing false retaliatory liens against federal officials, including federal prosecutors who are simply doing their jobs, is illegal and will be punished,” said Deputy Assistant Attorney General Ronald A. Cimino of the Justice Department’s Tax Division.
Chance was on federal supervised release and state probation at the time of the conduct giving rise to this indictment. He still faces court actions related to those release violations.
Chance faces maximum punishment of up to 25 years in prison and $1 million in fines. Judge Williams scheduled sentencing for Feb. 15, 2012.
The case was investigated by the IRS and the Treasury Inspector General for Tax Administration, and prosecuted by Tax Division Trial Attorneys Jen E. Ihlo and Erin B. Pulice.
Additional information about the Justice Department’s Tax Division and its enforcement efforts is available at www.usdoj.gov/tax.
Former Washington, D.C., Tax Return Preparer Sentenced to Three Years for Preparing False ReturnsRead the Press Release
WASHINGTON – Onuoha “Iggy” Nwokoro was sentenced today in federal district court in Washington, D.C., for willfully aiding and assisting in the preparation of a false income tax return for 2004, the Justice Department and Internal Revenue Service (IRS) announced today. U.S. District Judge Richard J. Leon sentenced Nwokoro to 36 months in prison and ordered him to pay $510,389 in restitution to the IRS.
On Aug. 30, 2011, Nwokoro pleaded guilty to willfully aiding and assisting in the preparation of a false tax return for 2004. According to court documents, from January 2005 through April 2007, Nwokoro operated BBC Tax Services, also known as BBC Tax and Medical Billing Services, a tax preparation business in Washington. For tax years 2004, 2005 and 2006, Nwokoro prepared and electronically filed tax returns for his clients that included fictitious business income and expenses for what purported to be a computer systems business. Nwokoro admitted to preparing at least 41 false returns, causing a tax loss of more than $530,000. According to the plea agreement, Nwokoro also admitted that his own 2004, 2005 and 2006 personal tax returns were false in that they under-reported his income by $585,537.
The case was investigated by IRS - Criminal Investigation and prosecuted by Tax Division Trial Attorneys Jorge Almonte and Jeffrey B. Bender.
Additional information about the Justice Department’s Tax Division and its enforcement efforts is available at www.usdoj.gov/tax .
Former Executive Director of the American Samoa Special Services Commission Pleads Guilty to Conspiracy to Steal More Than $325,000 in Americorps Grant FundsRead the Press Release
WASHINGTON - The former executive director of the American Samoa Special Services Commission (the commission) pleaded guilty today to conspiracy to steal more than $325,000 in AmeriCorps grant funds, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.
Mine S. Pase, 62, of Pago Pago, American Samoa, pleaded guilty to a one-count criminal information in U.S. District Court for the District of Columbia before U.S. District Judge Reggie B. Walton.
According to court documents, between approximately March 2001 and October 2010, Pase served as the commission’s executive director. As an agency of the American Samoa government, the commission administered community-based programs and services for the benefit of the people of American Samoa, including tutoring, literacy training, conservation efforts and counseling. To fund its mission, the commission relied exclusively on AmeriCorps grants from the Corporation for National and Community Service. From approximately January 2002 through October 2010, the commission and its programs received a total of $9,416,698 in AmeriCorps grant funds.
Pase admitted that she arranged for herself, commissioners, commission staff and others to receive federal grant funds for their personal benefit. According to court documents, Pase and her staff received $109,532 in federal grant funds for official business trips that they did not take. In addition, among other things, Pase, commissioners and commission staff received approximately $78,889 in federal grant funds to pay for retreats to Apia, Western Samoa, and separately spent $89,313 on meals for the commission’s staff, when Pase knew that such expenditures were not authorized under the grants and that the commission had no legal authority to use the funds in that manner.
According to court documents, Pase arranged for her and her family members to receive $28,009 as payment for office space used by commission programs that was severely damaged and in need of repairs. In addition, Pase’s daughter also received $19,665 as payments under a bogus “lease agreement,” when in fact Pase owned and controlled the vehicle that was purportedly being leased by the commission.
Pase admitted that she knew at the time that she and others had no legal entitlement to receive these federal grant funds and she had no intention of repaying the money to the commission or the federal government, or requiring others to repay the money.
The charge of conspiracy to commit theft of federal grant funds carries a maximum prison sentence of five years and a $250,000 fine. Sentencing has been scheduled for March 23, 2012, before Judge Walton.
The case is being prosecuted by Trial Attorney Edward J. Loya Jr. of the Criminal Division’s Public Integrity Section. The case is being investigated by special agents of the Office of Inspector General for the Corporation for National and Community Service, with assistance from special agents of the FBI-Honolulu Division, American Samoa Resident Agency.
Former Alabama Corrections Officer Pleads Guilty to Violating the Civil Rights of an InmateRead the Press Release
WASHINGTON – The Justice Department announced today that Scottie T. Glenn, 28, a former corrections officer of the Alabama Department of Corrections, pleaded guilty in U.S. District Court in Montgomery, Ala., to one count of violating the civil rights of a former inmate and to one count of conspiring with other corrections officers to cover up the incident. Today’s plea is the result of an ongoing federal investigation into allegations of civil rights violations at the Ventress Correctional Facility in Clayton, Ala .
The guilty plea arises out of an incident that occurred at the Ventress prison on Aug. 4, 2010, when an inmate, identified in court documents as R.M., was severely beaten, suffered significant injuries and died the following day in a Montgomery hospital. Today in court, Glenn admitted that he escorted R.M. in handcuffs to an office at the prison, knowing that R.M. would be beaten in retaliation for a prior incident. Glenn also admitted that he and other officers, at the direction of another officer, identified in court documents as Officer A, lied in written reports and lied to investigators to cover up the incident.
The civil rights charge carries a maximum penalty of 10 years in prison. The conspiracy charge carries a maximum penalty of 5 years in prison.
This case is being investigated by the Dothan office of the FBI. This case is being prosecuted by Trial Attorney Patricia Sumner of the U.S. Department of Justice’s Civil Rights Division and Assistant U.S. Attorneys Susan Redmond and Jerusha Adams of the U.S. Attorney’s Office for the Middle District of Alabama.
Fifteen Additional Alleged Members or Associates of the Almighty Latin Kings and Queen Nation, Including Current and Former Chicago Police Officers, Charged with Racketeering Conspiracy and Other Related CrimesRead the Press Release
WASHINGTON – Fifteen alleged members or associates of the Almighty Latin Kings and Queen Nation (Latin Kings) have been indicted for their alleged roles in a racketeering conspiracy in Hammond, Ind., and elsewhere, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney David Capp of the Northern District of Indiana.
The 15-count third superseding indictment returned by the federal grand jury on Nov. 16, 2011, and unsealed today in Hammond includes 15 new defendants who are charged with conspiracy to engage in racketeering activity from August 1989 until the date of the third superseding indictment. Also included in the third superseding indictment is one new count of conspiracy to murder in aid of racketeering activity against Brandon Clay, 24, aka “Cheddar,” “Swiss,” “Slick,” 24, of Chicago, who was charged previously in the indictment.
“The indictment unsealed today alleges that members of the Latin Kings across the Midwestern United States engaged in a years-long pattern of violence, including numerous murders, to control their territory and fund their illicit activities,” said Assistant Attorney General Breuer. “The indictment also alleges that two Chicago police officers assisted the Latin Kings in carrying out their crimes. Corruption of the kind alleged here is shocking, and cannot be tolerated. We will continue doing everything in our power to stop gang violence, and hold those responsible – including any public officials involved – to account. ”
“The gang and violent crime problem in this area is a regional problem that crosses state lines as well as city and town boundaries,” said U.S. Attorney Capp. “This indictment is the result of a regional cooperative federal-local law enforcement effort. We will continue thisregional effort and we will continue to focus on criminal street gangs.”
The following individuals are charged and named in the third superseding indictment:
- Hiluterio Chavez, 41, aka “Tails,” and “Zeus,” 41, of Chicago;
- Sergio Robles, 23, aka “Checko,” 23, of Hammond;
- Emiliano Esparza, 40, aka “Ken Milleano,” “Kent,” and “Double G,” of Chicago;
- Paulino Salazar, 29, aka “Chino,” of Chicago;
- Santiago Gudino, 27, aka “Creeper,” 27, of Hammond;
- Gabriel Jalomos, 24, aka “Sneaky,” of Chicago;
- Oscar Gonzalez, 21, aka “Puppet,” of Hammond;
- David Lira, 38, aka “Flaco,” of Lansing, Ill.;
- Victor Meza Jr., 23, aka “Shadow,” of Hammond;
- Antonio Gudino, 30, aka “Chronic,” of Indiana;
- Bianca Fernandez, 22, of Chicago;
- Serina Arambula, 22 of Chicago;
- Alex Guerrero, 41, of Chicago; and
- Antonio C. Martinez Jr., 40, of Chicago.
Previously charged in the case are: Clay; Alexander Vargas, 34, aka “Pacman,” of Highland, Ind.; Sisto Bernal, 45, aka “Cisco” and “Shug,” of Chicago; Jason Ortiz, 28, aka “Creeper,” of Chicago; Martin Anaya, 41, aka “Left,” of Chicago; and Ivan Quiroz, 30, of Posen, Ill. One individual is not named in the indictment.
Nine individuals were taken into custody today and made their initial appearances before U.S. Magistrate Judge Andrew P. Rodovich in federal court in Hammond. Nine individuals, including three newly charged in the third superseding indictment, already were in the custody of law enforcement and will be arraigned before Judge Rodovich on a later date. Salazar and Lira are considered fugitives.
The third superseding indictment alleges that the Latin Kings gang was responsible for at least 19 murders, including juveniles and one pregnant woman, in the Chicago/Northwest Indiana area and Big Spring, Texas. In one instance, Bernal, Santiago Gudino, Robles, Jalomos and others allegedly caused Jonathan Zimmerman to be transported to Hammond and then murdered him for using counterfeit currency to purchase drugs.
According to this indictment, Clay, Fernandez, Arambula and others participated in the conspiracy to murder Edward Delatorre and another individual on Nov. 26, 2006. Vargas then allegedly attempted to arrange for others to shoot at people who were attending Delatorre’s funeral on Dec. 2, 2006. On the same day, Vargas directed Quiroz, Chavez and other Latin Kings “enforcers” to increase their efforts to murder leaders of the Latin Dragon gangs in retaliation for the Oct. 2, 2006, murder of Vargas’ younger brother. Months later, the indictment alleges Robles, Salazer, Chavez and another Latin Kings member bet on who would be the first to successfully carry out Vargas’ order to kill a Latin Dragon leader. On Feb. 25, 2007, the indictment alleges that Vargas, Ortiz, Clay, Quiroz and other Latin Kings members participated in the murder of Latin Dragons leaders James Walsh and Gonzalo Diaz outside of the Soprano’s Bar in Griffith, Ind.
The third superseding indictment also alleges that Guerrero and Martinez, while employed as officers with the Chicago Police Department, committed armed robberies on behalf of Bernal, in some instances while in uniform and driving Chicago Police Department-issued vehicles. The indictment alleges that on one occasion, Guerrero and Martinez were assisted by Chavez, a Latin Kings member, during which time they robbed between $30,000 and $40,000 in drug proceeds. The indictment alleges Guerrero and Martinez stole drugs and weapons in addition to cash. In certain instances, Guerrero and Martinez allegedly were given a portion of the funds they stole as payment for committing the armed robberies.
In addition to the alleged acts of violence, the superseding indictment also alleges that the Latin Kings distributed more than 150 kilograms of cocaine and 1,000 kilograms of marijuana. The indictment also seeks forfeiture.
According to the third superseding indictment, the Latin Kings is a nationwide gang that originated in Chicago and has branched out throughout the United States, including to Texas. The Latin Kings is a well organized street gang that has specific leadership and is comprised of regions that include multiple chapters.
As alleged in the third superseding indictment, the Latin Kings enforces its rules and promotes discipline among its members, prospects and associates through murder, attempted murder, conspiracy to murder, assault and threats against those who violate the rules or pose a threat to the Latin Kings. Members are required to follow the orders of higher-ranking members, including taking on assignments often referred to as “missions.”
This case is being investigated by the FBI; the Bureau of Alcohol, Tobacco, Firearms and Explosives; the Drug Enforcement Administration; Immigration and Customs Enforcement; the National Gang Targeting, Enforcement & Coordination Center (GangTECC); the National Gang Intelligence Center; the Chicago Police Department; the Griffith Police Department; the Highland Police Department; the Hammond Police Department; and the Houston Police Department.
The case is being prosecuted by Joseph A. Cooley of the Criminal Division’s Organized Crime and Gang Section and David Nozick of the U.S. Attorney’s Office for the Northern District of Indiana.
The third superseding indictment is not evidence of guilt. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Alabama Return Preparer Sentenced to 18 Months for Preparing False Income Tax ReturnsRead the Press Release
WASHINGTON - Chiquita Q. Broadnax, a resident of Montgomery County, Ala., was sentenced today to 18 months in prison by Judge Mark Fuller of the Middle District of Alabama for her involvement in a fraudulent tax return perpetration scheme, the Justice Department and the Internal Revenue Service (IRS) announced.
According to the court documents, Broadnax was employed by James E. Moss as a tax return preparer at a tax return preparation business, known as Flash Tax, from December 2004 through January 2007. During her employment at Flash Tax, Broadnax prepared and filed at least 900 tax returns, the majority of which contained false information designed to illegally obtain higher refunds to which her clients were not entitled. Moss trained Broadnax to prepare false tax returns in order to obtain higher tax refunds for Flash Tax clients by inflating or deflating specific numbers and/or by adding totally fictitious numbers to the return. Moss was convicted early this month by an Alabama jury for orchestrating this fraudulent tax return preparation scheme.
John A. DiCicco, Principal Deputy Assistant Attorney General for the Justice Department’s Tax Division commended the IRS special agents who investigated this case and Tax Division Trial Attorneys Charles M. Edgar Jr., Michelle Petersen and Thomas Krepp who prosecuted the case.
Additional information about the Justice Department’s Tax Division and its enforcement efforts is available at www.usdoj.gov/tax .
17 November 2011
Lead Administrator of Online Child Pornography Bulletin Board Pleads Guilty in Maryland to Child Pornography Conspiracy ChargeRead the Press Release
WASHINGTON – A Cumberland, Md., man pleaded guilty yesterday for his role as a lead administrator of an online child pornography bulletin board.
The guilty plea was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge William Winter of U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI); and Postal Inspector in Charge Daniel S. Cortez of the U.S. Postal Inspection Service (USPIS), Washington Division.
George Sell, 70, pleaded guilty before U.S. District Judge Alexander Williams Jr. of the District of Maryland to conspiracy to transport child pornography.
According to his plea agreement, from December 2006 through August 2008, Sell and others conspired to operate “Country Lounge,” a secure web-based bulletin board dedicated to trading images of child pornography. Members could join this group only upon invitation and after approval by the group’s administrators, including Sell. To obtain access to the bulletin board, members needed a log-in username and password. Members were instructed by a specific set of rules and guidelines on how to post images via “Country Lounge” to avoid detection from law enforcement. As of August 2008, 142 members belonged to the bulletin board, which was hosted on computer servers in Virginia and Texas. In October 2008, the bulletin board was seized by law enforcement authorities.
According to court documents, Sell conspired with other individuals to take control of “Country Lounge” from its former owner and administrator, directed the creation and operation of a new “Country Lounge,” and received technical advice and assistance from co-conspirators to obtain his goal of creating and operating a new “Country Lounge.” From December 2006 through July 2008, Sell was the “root administrator” and day-to-day manager of the bulletin board and conspired to transport images of child pornography. Sell admitted that he directed the daily management of the bulletin board, including direction over its layout and content, membership and the “rules” of the board.
In November 2009, ICE HSI special agents executed a search warrant at Sell’s residence and removed two computer hard-drives and other items. A forensic review of these items found them to contain multiple images of child pornography, many of which he obtained from “Country Lounge.”
As part of his plea agreement, Sell is subject to the Sex Offender Registration and Notification Act (SORNA), and must register as a sex offender in the place where he resides, where he is an employee and where he is a student.
Judge Williams scheduled sentencing for Jan. 25, 2012. As part of the plea agreement, Sell and the government have agreed that if the court accepts the plea agreement, a sentence of 10 years in prison is the appropriate disposition of the case.
One of Sell’s co-conspirators, Terry Lee Nolley, pleaded guilty on Oct. 25, 2011, for his participation in the bulletin board. Nolley is scheduled to be sentenced on Jan. 25, 2012.
This case resulted from a two-year international investigation called Operation Nest Egg, as part of Project Safe Childhood. Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov. Details about Maryland’s program are available at www.justice.gov/usao/md/Safe-Childhood/index.html.
This case is being prosecuted by Trial Attorneys Jennifer Toritto Leonardo and Darcy Katzin of the Criminal Division’s CEOS and Assistant U.S. Attorney Stacy Belf of the District of Maryland. The case was investigated by ICE HSI, USPIS and the NASA Office of Inspector General.
Justice Department Opens Investigation into the Miami Police DepartmentRead the Press Release
MIAMI– The Justice Department announced today that it has opened a civil investigation into allegations of excessive use of deadly force by members of the city of Miami Police Department (MPD), in accordance with the pattern or practice provision of the Violent Crime Control and Law Enforcement Act of 1994.
The department’s investigation will seek to determine whether there are systemic violations of the Constitution or federal law by officers of MPD. During the course of the investigation, the Justice Department will consider all relevant information, particularly the efforts that MPD has undertaken to ensure compliance with federal law and the experiences and views of the community. The Justice Department has taken similar steps involving a variety of state and local law enforcement agencies, both large and small, in jurisdictions such as Newark, N.J.; Seattle; Puerto Rico; New Orleans; and the District of Columbia.
This matter is being investigated by attorneys and staff from the Special Litigation Section of the Department of Justice’s Civil Rights Division and the U.S. Attorney’s Office for the Southern District of Florida. They will be assisted by experienced law enforcement experts. The department welcomes the views of anyone wishing to provide relevant information. If you have any information, please feel free to contact the department at 1-877-218-5228 , or via email at [email protected].
Justice Department Files Fair Housing Lawsuit Against the Owners and Managers of Rental Homes in Mississippi for Discrimination Against Families with ChildrenRead the Press Release
WASHINGTON – The Justice Department today filed a lawsuit against the owners and managers of 23 rental homes in Magee, Miss., for violating the Fair Housing Act by discriminating against families with children.
The lawsuit, filed in the U.S. District Court for the Southern District of Mississippi, charges that Marcus Manly Magee III, Ina Magee and M.M. and S. Inc. engaged in a pattern or practice of violating the Fair Housing Act or denied rights protected by the act by establishing and implementing occupancy standards limiting the number of children in the rental homes owned and/or leased by the defendants. The suit also charges that, by refusing to rent a three-bedroom home to a woman with four children because she had too many children under their occupancy guidelines, the defendants violated the Fair Housing Act.
“The Fair Housing Act ensures that families cannot be denied housing based on policies that discriminate against children,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Justice Department will continue its vigorous enforcement of fair housing laws that protect the rights of families with children so that families will have full opportunity to find housing as the law requires.”
This lawsuit arose as a result of a complaint filed with the Department of Housing and Urban Development (HUD) by a woman with four daughters who was searching for a three-bedroom rental home in Magee. The woman’s search led her to M.M. and S. Inc., which leases a number of houses in the area. However, when she contacted M.M. and S. Inc. and spoke with Marcus and Ina Magee, they told her that she had too many children to rent a three-bedroom home. While the defendants’ occupancy policy allowed five individuals to occupy the house, it permitted no more than three of the occupants to be children. The defendants established similar limitations on the number of children that could live in their two- and four-bedroom rental homes. After HUD investigated the complaint, it issued a charge of discrimination and the matter was referred to the Justice Department.
“For over twenty years, the Fair Housing Act has made it unlawful to discriminate against families with children, and that includes occupancy standards that unfairly limit the number of children who can reside in a dwelling,” said John Trasviña, HUD Assistant Secretary for Fair Housing and Equal Opportunity. “HUD and the Department of Justice will continue to enforce fair housing laws that protect the rights of families with children."
The lawsuit seeks a court order prohibiting future discrimination by the defendants, monetary damages for those harmed by the defendants’ actions, and a civil penalty. Any individuals who have information relevant to this case are urged to contact the Housing and Civil Enforcement Section of the Civil Rights Division at 1-800-896-7743, ext. 92.
The federal Fair Housing Act prohibits discrimination in housing on the basis of race, color, religion, sex, familial status, national origin and disability. More information about the Civil Rights Division and the laws it enforces is available at www.usdoj.gov/crt. Individuals who believe that they have been victims of housing discrimination can call the Housing Discrimination Tip Line at 1-800-896-7743, e-mail the Justice Department at [email protected], or contact HUD at 1-800-669-9777.
The complaint is an allegation of unlawful conduct. The allegations must still be proven in federal court.
Houston Patient Recruiter Sentenced to 21 Months in Prison for Medicare Fraud Scheme Involving Claims of Hurricane Damage to Power WheelchairsRead the Press Release
WASHINGTON – A patient recruiter for a Houston durable medical equipment (DME) company was sentenced today to 21 months in prison for her role in a health care fraud scheme involving power wheelchairs, announced the Department of Justice, FBI and the Department of Health and Human Services (HHS).
Marion Beverly Metoyer, 57, of Dayton, Texas, was sentenced by U.S. District Judge Gray Miller in the Southern District of Texas. Metoyer was convicted by a jury on May 26, 2011, of one count of conspiracy to commit health care fraud, three counts of health care fraud, one count of conspiracy to defraud the United States and to receive health care kickbacks and two counts of receiving kickbacks.
Three co-conspirators were also sentenced today: Johnny Lee Andrews, 59, of Houston; Monica Renee Perry, 44, of Abbeville, La.; and Melvin Barnes, 61, of Humble, Texas. Andrews and Perry were each sentenced to 15 months in prison and Barnes was sentenced to one year of probation. Andrews, Perry and Barnes pleaded guilty on Sept. 23, 2010, to one count of conspiracy to commit health care fraud.
According to court documents, Helen Etinfoh was the owner and operator of Luant & Odera Inc., a Houston-area DME company doing business as Tonni Medical Equipment & Supplies. Metoyer, Andrews, Perry and Barnes were patient recruiters for Luant and were paid kickbacks in exchange for providing the company with beneficiaries in whose names bills could be submitted to Medicare. In addition to recruiting patients, Barnes and Andrews were also delivery drivers for Luant. Etinfoh and other co-conspirators submitted false and fraudulent claims to Medicare for medically unnecessary DME, including power wheelchairs, wheelchair accessories and motorized scooters.
According to court documents, Luant billed Medicare under a special code that designated the power wheelchairs as replacements for wheelchairs lost during hurricanes that hit the Houston area in fall 2008, based on representations from Metoyer, Andrews, Perry and Barnes. In fact, the hurricanes did not damage the wheelchairs. Certain beneficiaries did not even have a power wheelchair before receiving the ones provided to them by Luant. Luant used the hurricane code because it allowed the company to submit claims to Medicare without a doctor’s order.
Metoyer, Andrews, Perry and Barnes visited the homes of beneficiaries in whose names claims were submitted to Medicare, and offered the beneficiaries free power wheelchairs in exchange for their Medicare information. The power wheelchairs were often billed to Medicare at more than $6,000 per chair. In total, Luant fraudulently billed Medicare approximately $3 million.
Etinfoh was convicted by a federal jury of health care fraud in April 2010, and was sentenced to 41 months in prison. Paula Whitfield, a patient recruiter for Luant, was also convicted by a federal jury in April 2010, and was sentenced to 21 months in prison.
Today’s sentences were announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Kenneth 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) and the Texas Attorney General’s Medicaid Fraud Control Unit (MFCU).
The case was prosecuted by Trial Attorney Laura M.K. Cordova and Assistant Chief Sam S. Sheldon of the Criminal Division’s Fraud Section. The case was brought as part of the Medicare Fraud Strike Force, supervised by the U.S. Attorney’s Office for the Southern District of Texas and the Criminal Division’s Fraud Section.
Since their inception in March 2007, Medicare Fraud Strike Force operations in 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.
HSBC India Client Indicted for Tax Evasion and Failing to Report Foreign Bank AccountsRead the Press Release
WASHINGTON – A federal grand jury in San Jose, Calif., Wednesday indicted Ashvin Desai of San Jose on three counts of tax evasion, two counts of willfully aiding the preparation of materially false tax returns and three counts of failing to file Reports of Foreign Bank and Financial Accounts (FBARs), the Justice Department and Internal Revenue Service (IRS) announced.
According to the indictment, Desai, the owner of a medical device company, his wife and his two adult children maintained millions of dollars in undeclared bank accounts in India at The Hongkong and Shanghai Banking Corporation Ltd. (HSBC). During 2009, Desai maintained approximately $8.8 million in his undeclared accounts at HSBC in India. Desai attempted to evade his income taxes for tax years 2007-2009 by filing false tax returns that failed to report $1,306,810 of interest income, and that falsely reported that he did not have an interest in, or signature authority over, bank accounts located in a foreign country . Desai also prepared false tax returns for his children for tax year 2009 that failed to report approximately $189,000 of interest income paid by HSBC in India, and that falsely reported that the children did not have an interest in bank accounts located in a foreign country.
The indictment further alleges that during 2009 Desai closed an account he maintained at HSBC in England and directed that the funds from that account be transferred to a bank account maintained at HSBC in Dubai in the name of one of his children, and that, for tax years 2007-2009, Desai failed to file FBARs to report his foreign bank accounts to the Department of Treasury.
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 FBAR form with the Treasury disclosing such an account by June 30 of the following year.
Each tax evasion charge carries a maximum penalty of five years in prison and a $250,000 fine. The false tax return charges each carry a maximum penalty of three years in prison and a $250,000 fine. The failure to file an FBAR charges each carry a maximum penalty of 10 years in prison and a $500,000 fine.
This case is being prosecuted by Senior Litigation Counsel John E. Sullivan and Trial Attorney Melissa S. Siskind of the Justice Department’s Tax Division, with the assistance of Assistant U.S. Attorney Thomas Moore of the U.S. Attorney’s Office for the Northern District of California, 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.
Fort Lauderdale, Fla.-Area Assisted Living Facility Manager Pleads Guilty to Fraud and Kickback SchemeRead the Press Release
WASHINGTON – The manager of a Fort Lauderdale, Fla.-area assisted living facility and owner of a purported community mental health center pleaded guilty yesterday for his role in a Medicare fraud kickback scheme that funneled patients through a fraudulent mental health company, American Therapeutic Corporation (ATC), announced the Department of Justice, FBI and Department of Health and Human Services (HHS).
Ramchand Ramrup, aka Ramy Ramrup, 35, pleaded guilty before U.S. District Judge Marcia G. Cooke in Miami to one count of conspiracy to commit health care fraud. Ramrup was the manager and operator of Boynton Beach Assisted Living Facility (BBALF) and the owner of a purported community mental health center called Florida Behavioral Specialists Inc.
Ramrup admitted that in exchange for illegal health care kickbacks, he agreed to provide Medicare beneficiaries who resided at BBALF to ATC for intensive mental health treatment called partial hospitalization program (PHP) services. ATC purported to operate PHPs in seven different locations throughout south Florida and Orlando. According to court documents, Ramrup was paid approximately $40 per Medicare beneficiary per day the beneficiary attended ATC for purported PHP treatment. ATC paid the kickbacks by check made out to Florida Behavioral Specialists Inc.
According to court documents, Ramrup knew that ATC would fraudulently bill Medicare for the PHP treatment that his referrals would purportedly receive at ATC. Ramrup admitted that he did not refer beneficiaries to ATC because a physician had ordered PHP treatment. He referred beneficiaries to ATC because, among other things, he would receive kickbacks, his referrals were covered by Medicare and they were willing to attend ATC.
According to court filings, ATC’s owners and operators paid kickbacks to owners and operators of assisted living facilities and halfway houses and to patient brokers in exchange for delivering ineligible patients to ATC and its related company, the American Sleep Institute (ASI). In some cases, the patients received a portion of those kickbacks. Throughout the course of the ATC conspiracy, millions of dollars in kickbacks were paid in exchange for Medicare beneficiaries who did not qualify for PHP services. The ineligible beneficiaries attended treatment programs that were not legitimate so that ATC and ASI could bill Medicare more than $200 million in medically unnecessary services.
According to the plea agreement, Ramrup’s participation in the fraud resulted in more than $873,200 in fraudulent billing to the Medicare program. At sentencing, scheduled for Feb. 8, 2012, Ramrup faces a maximum of 10 years in prison and a $250,000 fine.
ATC, its management company Medlink Professional Management Group Inc., and various owners, managers, doctors, therapists, patient brokers and marketers of ATC, Medlink and ASI, were charged with various health care fraud, kickback, money laundering and other offenses in two indictments unsealed on Feb. 15, 2011. ATC, Medlink and nine of the individual defendants have pleaded guilty or have been convicted at trial. Other defendants are scheduled for trial April 9, 2012, before U.S. District Judge Patricia A. Seitz.
The guilty plea was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; John V. Gillies, Special Agent-in-Charge of the FBI’s Miami field office; and Special Agent-in-Charge Christopher B. Dennis of the HHS Office of Inspector General (HHS-OIG), Office of Investigations Miami office.
The case is being prosecuted by Trial Attorneys Steven Kim and Jennifer L. Saulino of the Criminal Division’s Fraud Section. The case was investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.
Since its inception in March 2007, the Medicare Fraud Strike Force operations in nine locations have charged more than 1,140 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.
Florida-Based Sea Star Line LLC Agrees to Plead Guilty and Its Former President Is Indicted for Price Fixing on Coastal Freight Services Between the Continental United States and Puerto RicoRead the Press Release
WASHINGTON – Sea Star Line LLC has agreed today to plead guilty and to pay a $14.2 million criminal fine for its role in a conspiracy to fix prices in the coastal water freight transportation industry, the Department of Justice announced. Additionally, a federal grand jury in San Juan, Puerto Rico, returned an indictment against Frank Peake, the former president of Sea Star Line, for his role in the same conspiracy.
According to a one-count felony charge filed today in U.S. District Court for the District of Puerto Rico, Sea Star Line, whose principal place of business is in Jacksonville, Fla., engaged in a conspiracy to fix rates and surcharges for water transportation of freight between the continental United States and Puerto Rico from as early as May 2002, until at least April 2008. According to a one-count indictment filed today in the same district, Peake participated in the conspiracy from at least as early as late 2005, until at least April 2008.
Sea Star Line transports a variety of cargo shipments, such as heavy equipment, perishable food items, medicines and consumer goods, on scheduled ocean voyages between the continental United States and Puerto Rico.
According to the court documents, Sea Star Line, Peake and co-conspirators carried out the conspiracy by agreeing during meetings and communications to allocate customers of Puerto Rico freight services and to rig bids and fix the rates and surcharges to be charged to purchasers of water transportation of freight between the continental United States and Puerto Rico. The department said that Sea Star Line, Peake and co-conspirators also engaged in meetings for the purpose of monitoring and enforcing adherence to the agreed-upon rates and sold Puerto Rico freight services at collusive and noncompetitive rates.
In addition to today’s charges, as a result of this investigation, on April 30, 2011, Horizon Lines LLC was sentenced to pay a $15 million criminal fine, and five former shipping executives from both Sea Star Line and Horizon Lines have been sentenced to pay a total of nearly $85,000 in criminal fines and to serve more than 11 years in prison, collectively.
Sea Star Line and Peake are charged with price fixing in violation of the Sherman Act, which carries a maximum fine of $100 million for corporations, and a maximum penalty of 10 years in prison and a $1 million fine for individuals. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
Today’s charges arose from an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the coastal water freight transportation industry, which is being conducted by the Antitrust Division’s National Criminal Enforcement Section; the Baltimore Resident Agency of the Department of Defense’s Office of the Inspector General, Defense Criminal Investigative Service (DCIS); the Miami Field Office of the Department of Transportation’s Office of Inspector General; and the Jacksonville Field Office of the FBI. Anyone with information concerning anticompetitive conduct in the coastal water freight 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 contact DCIS’s Baltimore Resident Agency at 410-347-1620.
Florida Man Sentenced to 20 Years in Prison for $30 Million Investment Fraud SchemeRead the Press Release
WASHINGTON – A Gainesville, Fla., man was sentenced today in the Middle District of Florida to 20 years in prison for orchestrating a $30 million investment fraud scheme, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Robert E. O’Neill of the Middle District of Florida.
David Lewalski, 48, was sentenced by U.S. District Judge James D. Whittemore. The court also ordered Lewalski to forfeit $29.8 million and numerous computers and computer equipment that are traceable to proceeds of the offense.
According to court documents, Lewalski and others acting at his direction solicited money from investors in Florida and throughout the country based on false statements that Lewalski could earn them up to 10 percent interest per month in the foreign currency (forex) market. Based on these and other fraudulent promises, Lewalski received approximately $30 million from more than 500 investors. Lewalski invested only a small portion of these investor funds in trading activities and generated little if any profits trading foreign currency. Lewalski paid out purported “interest payments” totaling approximately $15 million to investors using other investors’ money to perpetuate the fraud.
Lewalski also spent lavishly on himself, his friends and his family. Lewalski spent millions of dollars of investors’ money on high-end real estate in New York City, private jets, clothing, luxury automobiles, such as Porches and a Ferrari, and jewelry, including a gold and diamond Rolex watch.
This case is being prosecuted by Trial Attorney Henry Van Dyck of the Fraud Section in the Justice Department’s Criminal Division and Assistant U.S. Attorney Mandy Riedel. The case was investigated by the U.S. Postal Inspection Service, the Florida Department of Law Enforcement and the Florida Office of Financial Regulation, with assistance from the U.S. Commodity Futures Trading Commission and the Florida Office of the Attorney General.
16 November 2011
Former Tuscaloosa County, Ala., Sheriff’s Sergeant Pleads Guilty to Tasing Restrained InmatesRead the Press Release
WASHINGTON – Former Tuscaloosa, Ala., Sheriff’s Sergeant, Althea Mallisham, 52, pleaded guilty today in a federal court in Birmingham, Ala., to three counts of assault with a dangerous weapon while acting under color of law for wrongfully using a Taser during three separate incidents over a four month period in 2008, announced the Justice Department.
In the factual basis supporting her plea, Mallisham admitted that on three separate occasions while she was on duty as a Tuscaloosa Sheriff’s sergeant, she used an X26 Taser to electro-shock three different pre-trial detainees as a means of punishment. In each instance, the pre-trial detainee was either restrained in handcuffs or securely locked in a jail cell. At no time, however, did the three detainees pose a physical threat to any officers or other detainees when they were electro-shocked. In each instance, Mallisham willfully exceeded and abused her authority under state law.
“This correction officer deliberately inflicted significant pain on those entrusted to her care for no legitimate law enforcement purpose,” said Thomas E. Perez, Assistant Attorney General for Civil Rights. “Her criminal behavior undermines the dedicated efforts of the vast majority of officers who serve honorably. The Justice Department is committed to holding officers who engage in such criminal acts accountable.”
“Law enforcement officers are entrusted with great power so they can do their job and protect the public,” said Joyce White Vance, U.S. Attorney for the Northern District of Alabama. “Most officers respect that power and the laws they are sworn to uphold, performing their duties with honor and integrity. It is important that officers who use unreasonable force have to answer for their action.”
Sentencing for Mallisham is scheduled for March 15, 2012. She faces up to 10 years in prison and a maximum fine of $250,000, for each count.
This case was investigated by the Tuscaloosa resident agency of the FBI’s Birmingham Field Office. The case was prosecuted by Trial Attorney D.W. Tunnage of the Justice Department’s Civil Rights Division, along with Assistant U.S. Attorney Tamarra Matthews Johnson for the Northern District of Alabama.
Former Pittsfield, Mass., Entrepreneur Sentenced to<br /> More Than Five Years in Prison for Financial CrimesRead the Press Release
WASHINGTON - A former Pittsfield man was sentenced late yesterday in federal court for his role in a series of frauds and attempts to avoid paying taxes, as well as lying to federal authorities and financial institutions about his illegal activities, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Carmen M. Ortiz for the District of Massachusetts; William P. Offord, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation (IRS-CI) - Boston Field Office; and Theodore L. Doherty III, Special Agent in Charge of the New England Regional Office of the U.S. Department of Transportation, Office of Inspector General (DOT-OIG).
Michael J. Armitage , 56, was sentenced by U.S. District Judge Michael A. Ponsor to 66 months in federal prison to be followed by five years of supervised release. Armitage was ordered to forfeit $24,010, and pay restitution of $1.5 million to the IRS; $191,819 to the Massachusetts Department of Revenue; $4.2 million to the Federal Transit Administration; and $215,138 to the Pioneer Valley Transit Authority. Armitage pleaded guilty in October 2010 to three counts of false statements to a federally insured financial institution; three counts of tax evasion; one count of false statements to a federal official; one count of conspiracy, one count of false claims; and one count of endeavoring to obstruct a federal audit.
According to court documents, Armitagedid not file a single personal federal income tax return between 1993 and 2006 in spite of receiving millions of dollars in income from sources such as Power Development Co. LLC (PDC), an energy company that hefounded and controlled. In addition, in 1999, Armitagewas required to repay more than $1 million to PDC for money that he had misappropriated, including approximately $340,000 in checks that he had written to himself but fraudulently mislabeled in PDC’s check register as payable to others.
From February 2001 to April 24, 2006, Armitageexecuted a scheme to defraud United Bank, located in West Springfield, Mass., in connection with three separate loans. According to court documents, Armitageused or submitted various false or fraudulent documents to perpetrate these fraud schemes, including a 2001 personal financial statement that omitted any debts owed to the IRS or to PDC and on which he claimed that his taxes were settled through 1999, and a 2001 personal federal income tax return that he signed and dated but never filed with the IRS.
In addition, between Aug. 20, 2001, and Oct. 18, 2006, Armitage attemptedto avoid paying taxes that had been previously assessed for three separate years: 1995, 1996 and 1998. Armitage engaged in severalefforts to avoid paying taxes for these years. He withheld material information from his tax representative. He directed his tax representative to contact an IRS Revenue Officer and claim that delinquent returns would be filed, when he did not intend to provide the tax representative with the information to prepare the returns. He made materially false statements to an IRS Revenue Officer. He purposely withdrew funds recently deposited in his bank account to maintain a low account balance. He diverted payments due to himself to other accounts, including his wife’s bank account, the bank account of another company that he controlled, and an escrow account belonging to another person. Finally, he used funds froman account that he controlledto pay credit cards issued in his name, all to conceal income and avoid collection.
In another scheme, from Nov. 30, 2004, through at least July 5, 2006, Armitage conspired with co-defendants EV Worldwide LLC (EVW), a company that he controlled, and Christopher Willson, another executive of EVW, to defraud the Federal Transit Administration. According to court documents, Armitage and his co-defendants submitted false, fraudulent and fictitious invoices for payment through the Pioneer Valley Transit Authority as part of a federal research grant into an electric bus and battery project. On these invoices, Armitage falsely claimed that the Federal Transit Administration’s share of the project costs did not exceed the maximum 50 percent. He also sought reimbursement for fictitious, inflated or ineligible expenses, and/or falsely claimed that certain milestone achievements warranted payment of EVW Worldwide’sclaimed expenses. Through the fraudulent invoices, Armitage, Willson and EVW received $703,097 to which they were not entitled, and used this money for their own benefit as well as the benefit of another company that Armitage and Willson founded in Canada. After the Department of Transportation, Office of Inspector General commenced an audit in 2006, Armitage repeatedly lied to and attempted to obstruct the auditors.
Willson, who was convicted at trial in June 2011 on one count of conspiracy to defraud the United States and to commit wire fraud, six counts of wire fraud and four counts of false claims, is scheduled to be sentenced on Nov. 29, 2011, at 2:30 p.m.
The case investigated by IRS-CI and the DOT-OIG. The Defense Contract Audit Agency also assisted with the investigation. The case is being prosecuted by Assistant U.S. Attorney Steven H. Breslow for the District of Massachusetts; Senior Litigation Counsel William M. Welch II of the Justice Department’s Criminal Division; and Trial Attorneys Kevin Driscoll and Edward J. Loya Jr. of the Criminal Division’s Public Integrity Section.
15 November 2011
Virginia Store Owner Pleads Guilty to Trafficking in Counterfeit GoodsRead the Press Release
WASHINGTON – Belal Amin Alsaidi, 30, of Buffalo, N.Y., pleaded guilty today to trafficking in counterfeit goods, 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.
Alsaidi pleaded guilty before U.S. Magistrate Judge M. Hannah Lauck in Richmond, Va., to one count of trafficking in counterfeit goods. In his guilty plea, Alsaidi admitted that he sold shoes and apparel that he knew were counterfeit at his two stores in Petersburg, Va., from May 2007 until March 2009. Alsaidi also admitted that he purchased these counterfeit goods from an individual in New York.
According to court documents, Alsaidi received more than 1,400 packages of counterfeit merchandise at his stores from New York over a 23-month period. The merchandise bore fake trademarks for companies such as Nike, NFL, Lacoste, True Religion and Coogi.
Sentencing is scheduled for Feb. 23, 2012, at 9:30 a.m., before U.S. Chief Judge James R. Spencer in Richmond . At sentencing, Alsaidi faces a maximum penalty of 10 years in prison and a $2 million fine.
This case is an example of the type of efforts being undertaken by the Department of Justice Task Force on Intellectual Property (IP Task Force). 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/ .
The case is being prosecuted by Assistant U.S. Attorney David T. Maguire and Trial Attorney Kendra R. Ervin of the Criminal Division’s Computer Crime & Intellectual Property Section. The investigation was conducted by the FBI’s Richmond Division.
Pennsylvania Man Charged with Copyright Infringement of Sports BroadcastsRead the Press Release
WASHINGTON – Charges of copyright infringement were unsealed today in federal court in Philadelphia against a Pennsylvania man for allegedly infringing on copyright protected broadcasts of hockey games, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Zane David Memeger for the Eastern District of Pennsylvania.
The seven-count indictment alleges that Michael Moore, 44, of Chadds Ford, Penn., infringed the copyright protected works during seven six-month periods between May 2006 and June 2010.
The indictment alleges that HDHOCKEY.TV was a website that offered for sale DVDs containing recordings of copyrighted television broadcasts of hockey games and other copyrighted works such as team and player profiles, from the National Hockey League (NHL) and other professional hockey leagues. It also alleges that BROADSTREETBULLY.COM was a website offering for sale monthly subscriptions that enabled subscribers to download an unlimited number of video clips of copyrighted television broadcasts of hockey games, and other copyrighted works such as team and player profiles, from the NHL and other professional hockey leagues. The indictment alleges that neither site had the permission of the NHL or any other professional hockey league to reproduce or distribute these recordings.
Charges contained in an indictment are merely allegations, and the defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
The maximum penalty for each count of copyright infringement is five years in prison. The indictment also seeks forfeiture.
The case was investigated by the FBI and the U.S. Postal Inspection Service. The case is being prosecuted by Assistant U.S. Attorney Albert S. Glenn for the Eastern District of Pennsylvania and Trial Attorney Evan Williams of the Criminal Division’s Computer Crime and Intellectual Property Section.
Former Bryan County, Okla., Sheriff’s Office Lieutenant Indicted for Civil Rights Violations and Obstruction of JusticeRead the Press Release
WASHINGTON – A federal grand jury sitting in Muskogee, Okla., returned an indictment today charging former Bryan County, Okla., Sheriff’s Lieutenant Kevin Bennett Holt, 48, of Achille, Okla., with federal civil rights violations and related acts of obstruction of justice, the Justice Department announced.
The six-count indictment charges Holt with criminal civil rights violations for tasing a female arrestee on two occasions and for tasing two male inmates during incidents in September and November 2010 in Bryan County. Specifically, the indictment charges Holt with deprivation of rights under color of law, falsifying a written statement, and lying to the FBI.
An indictment is only an accusation and the defendant is presumed innocent unless and until proven guilty. Upon conviction, the civil rights counts in the indictment each carry a maximum sentence of 10 years in prison. The false statement count carries a maximum sentence of 20 years, and the charge of lying to the FBI carries a maximum sentence of five years. Each count also carries a maximum fine of $250,000.
This case is being investigated by the Oklahoma City Division of the FBI, and is being jointly prosecuted by Assistant U.S. Attorney G. Dean Burris from the U.S. Attorney’s Office for the Eastern District of Oklahoma, and Trial Attorney Ryan R. McKinstry from the Civil Rights Division of the Department of Justice.
Former Alabama State Legislator Pleads Guilty to BriberyRead the Press Release
WASHINGTON – Terry Spicer, a former Alabama state legislator, pleaded guilty today in U.S. District Court for the Middle District of Alabama to a one-count criminal information charging him with federal program bribery for accepting cash and other things of value from a businessman and his lobbyist in return for the use of his official position and influence, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and Special Agent in Charge Lewis M. Chapman of the FBI’s Mobile Field Office.
Spicer, 46, of Elba, Ala., served as a member of the Alabama House of Representatives for the 91st District, Coffee County, from 1998 to 2010. According to court documents, from 2006 to 2010, Spicer accepted bribes from Jarrod Massey, a former lobbyist in Montgomery, Ala., and his client, Ronnie Gilley. In particular, Spicer admitted he received cash, campaign services and a ski vacation from Massey in exchange for Spicer using his official position to obtain lobbying business for Massey. Spicer also admitted he accepted campaign contributions and entertainment concert tickets from Alabama businessman Ronnie Gilley in return for Spicer’s official assistance in favor of Gilley’s business projects and interests. Both Massey and Gilley have pleaded guilty to paying and offering bribes to Spicer and other legislators.
Spicer faces a maximum penalty of 10 years in prison, a $250,000 fine and three years of supervised release following his prison term. Spicer also has agreed to forfeit $40,000. A sentencing date has not been set.
The case is being prosecuted by Deputy Chiefs Justin V. Shur and M. Kendall Day; Trial Attorneys Edward T. Kang, E. Rae Woods, Eric G. Olshan, and Barak Cohen of the Criminal Division’s Public Integrity Section; and Senior Litigation Counsel Brenda K. Morris of the Criminal Division. The case is being investigated by the FBI.
Alabama Tax Business Owner Pleads Guilty to Using Stolen Identities to Obtain Tax RefundsRead the Press Release
MONTGOMERY, Ala. – Marsha Elmore of Wetumpka, Ala., the owner of a tax preparation business called Community Tax, pleaded guilty today to charges related to her use of stolen identities to fraudulently obtain tax refunds, the Justice Department and the Internal Revenue Service (IRS) announced. Elmore pleaded guilty to one count each of filing a false claim, wire fraud and aggravated identity theft. On Aug. 31, 2011, she had been charged with those crimes as part of a 32-count indictment returned by a federal grand jury in Montgomery, Ala.
According to her plea agreement and other court documents, Elmore’s fraudulent activity ran from 2009 until July 2011, when she was arrested by the IRS on a criminal complaint. She unlawfully obtained the names, Social Security numbers and dates of births of various individuals and used them to file false tax returns through Community Tax. Those tax returns claimed refunds that were directed to bank accounts and debit cards that Elmore controlled. Elmore also filed false tax returns using online filing websites. Altogether, Community Tax and Elmore were linked to almost 1,400 tax returns during this time period. In her plea agreement, Elmore admitted that she personally filed many false returns through Community Tax.
Sentencing has not yet been scheduled. Elmore faces a minimum of two years and up to 27 years in prison, as well as up to three years of supervised release, mandatory restitution and a fine of up to $750,000 or twice the loss caused by her offenses.
The case was investigated by Special Agents of the IRS - Criminal Investigation. Trial attorneys Jason H. Poole and Michael Boteler of the Justice Department’s Tax Division, and Todd Brown, Assistant U.S. Attorney for the Middle District of Alabama, are prosecuting the case.
Additional information about the Justice Department’s Tax Division and its enforcement efforts may be found at www.justice.gov/tax.
14 November 2011
U.S. Attorney General Holder and Dominican Prosecutor General Jiménez Sign Agreement to Share $7.5 Million in Forfeited AssetsRead the Press Release
SANTO DOMINGO – Attorney General Eric Holder joined today with Dominican Prosecutor General Radhamés Jiménez Peña in Santo Domingo, Dominican Republic, to announce the signing of a case-specific agreement to share approximately $7.5 million in forfeited assets between the United States and the Dominican Office of the Prosecutor General. The United States expects to recover an additional approximately $30 million in forfeited assets as part of the agreement.
“Today’s signing ceremony marks the fourth time in 10 years that America’s government has recognized – through asset sharing – the remarkable forfeiture assistance that Dominican authorities have afforded to the United States,” Attorney General Holder said. “As we look to the future, I am confident that we’ll be able to build on this strong record ofpartnership, and that the scope of our collective efforts will only continue to grow.”
The agreement represents approximately 20 percent of the estimated $37.5 million in forfeited assets located in the Dominican Republic that stem from a conspiracy led by brothers Carlos, Luis and Jose Benitez, who allegedly defrauded the U.S. Medicare program of approximately $80 million.
The U.S. Marshals Service is working with its Dominican counterparts to liquidate the complex assets. The assets include more than 30 commercial and residential real estate assets, most of which are income-producing properties, including a water park, a soft drink distribution center, multi-unit motel complexes and waterfront condominium apartments.
The assets involved were ordered forfeited by the U.S. District Court for the Southern District of Florida as part of two civil forfeiture cases filed in that district. The Benitez brothers were charged criminally in June 2008 in the Southern District of Florida by prosecutors from the Justice Department’s Criminal Division and U.S. Attorney’s Office in Miami, as part of the Medicare Fraud Strike Force, and remain fugitives. Anyone with information about their location should contact the FBI.
The asset sharing between the United States and the Dominican Republic in this case is based upon the dedicated assistance provided since August 2009 by the Dominican Office of the Prosecutor General. Under the leadership of Prosecutor General Jiménez, the Dominican Office of the Prosecutor General has provided invaluable assistance to U.S. authorities in connection with the civil forfeiture cases in the United States stemming from the Benitez brothers investigation.
Additional information on the case-specific agreement can be found at www.blogs.usdoj.gov/blog/archives/1743.
Miami-Area Patient Recruiter Pleads Guilty to Fraud and Kickback SchemeRead the Press Release
WASHINGTON – The owner and president of a Miami-area transportation company pleaded guilty today for her role in a Medicare fraud kickback scheme that funneled patients through a fraudulent mental health company, American Therapeutic Corporation (ATC), announced the Department of Justice, FBI and Department of Health and Human Services (HHS).
Isabel Roque, 55, pleaded guilty before U.S. Magistrate Judge Edwin G. Torres in Miami to one count of conspiracy to commit health care fraud. Roque was the president of Isa & Yami Inc., which purported to provide patient transportation services in Miami.
According to court documents, Roque agreed to provide Medicare beneficiaries to ATC for partial hospitalization program (PHP) services in exchange for kickbacks. A PHP is a form of intensive treatment for severe mental illness. ATC purported to operate PHPs in seven different locations throughout south Florida and Orlando. According to court documents, Roque provided Medicare beneficiaries to four of ATC’s locations, including facilities in Boca Raton, Broward, Homestead and Miami.
Roque admitted that she knew the beneficiaries whom she referred to ATC did not need PHP treatment. Roque also knew that ATC fraudulently billed the Medicare program for the PHP services provided to the beneficiaries she referred. Roque often coached her referrals on what to say to doctors and therapists at ATC so that they could receive purported PHP services. According to court documents, Roque also paid kickbacks to the beneficiaries whom she referred to ATC in exchange for those beneficiaries agreeing to attend ATC.
According to court filings, ATC’s owners and operators paid kickbacks to owners and operators of assisted living facilities and halfway houses and to patient brokers in exchange for delivering ineligible patients to ATC and its related company, the American Sleep Institute (ASI). In some cases, the patients received a portion of those kickbacks. Throughout the course of the ATC conspiracy, millions of dollars in kickbacks were paid in exchange for Medicare beneficiaries who did not qualify for PHP services. The ineligible beneficiaries attended treatment programs that were not legitimate so that ATC and ASI could bill Medicare more than $200 million in medically unnecessary services.
According to the plea agreement, Roque’s participation in the fraud resulted in more than $3.8 million in fraudulent billing to the Medicare program. At sentencing, scheduled for Jan. 5, 2012, Roque faces a maximum of 10 years in prison and a $250,000 fine.
ATC, its management company Medlink Professional Management Group Inc., and various owners, managers, doctors, therapists, patient brokers and marketers of ATC, Medlink and ASI, were charged with various health care fraud, kickback, money laundering and other offenses in two indictments unsealed on Feb. 15, 2011. ATC, Medlink and nine of the individual defendants have pleaded guilty or have been convicted at trial. Other defendants are scheduled to begin trial on April 9, 2012, before U.S. District Judge Patricia A. Seitz.
Today’s guilty plea was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; John V. Gillies, Special Agent-in-Charge of the FBI’s Miami field office; and Special Agent-in-Charge Christopher B. Dennis of the HHS Office of Inspector General (HHS-OIG), Office of Investigations Miami office.
The case is being prosecuted by Trial Attorneys Steven Kim and Jennifer L. Saulino of the Criminal Division’s Fraud Section. The case was investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.
Since its inception in March 2007, the Medicare Fraud Strike Force operations in nine locations have charged more than 1,140 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.
10 November 2011
Tenth Person Pleads Guilty in Scheme to Fraudulently Control Condominium Homeowners’ Associations in Las VegasRead the Press Release
WASHINGTON – A Las Vegas woman pleaded guilty today for her role in a scheme to fraudulently gain control of condominium homeowners’ associations (HOAs) in the Las Vegas area so that the HOAs would direct business to a certain law firm and construction company, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, Special Agent in Charge Kevin Favreau of the FBI Las Vegas Field Office, Sheriff Doug Gillespie of the Las Vegas Metropolitan Police Department and Special Agent in Charge Paul Camacho of the Internal Revenue Service-Criminal Investigation (IRS-CI).
Denise Keser, 44, pleaded guilty before U.S. District Judge Gloria M. Navarro in the District of Nevada to one count of conspiracy to commit mail and wire fraud. Keser is the tenth person to plead guilty in connection with the scheme to defraud HOAs in the Las Vegas area.
Keser admitted that from approximately April 2006 through at least February 2007, she participated in a scheme to control various HOA boards of directors so that the HOA boards would award the handling of construction-related lawsuits and remedial construction contracts to a law firm and construction company designated by Keser’s co-conspirators.
According to plea documents, in order to accomplish this scheme, Keser’s co-conspirators acted as straw purchasers of properties in numerous Nevada HOA communities. Keser admitted that she was aware that co-conspirators managed and operated the payments associated with maintaining the straw properties by running a so-called “Bill Pay Program,” by which co-conspirators funded the properties at the direction of a co-conspirator. Many of the payments were wired from California to Nevada.
According to plea documents, the straw purchasers and individuals who acquired a transferred interest in properties agreed to run for election to the respective HOA boards. These co-conspirators were paid in cash, check or promised things of value for their participation, all of which resulted in a personal financial benefit to the co-conspirators.
Keser admitted that she was aware that her co-conspirators employed deceitful tactics to ensure they would win HOA board elections. Keser observed her co-conspirators using mailing lists to mail voting ballots to homeowners who would vote for certain co-conspirators. Keser and her co-conspirators, as instructed by another co-conspirator, used Keser’s position as property manager at the Chateau Nouveau condominium complex to send emails to homeowners that were intended to smear the reputation of bona fide board members.
According to plea documents, once elected to the board of directors, co-conspirator board members would meet with other co-conspirators in order to manipulate board votes, including the selection of property managers, contractors and general counsel for the HOA and attorneys to represent the HOA. Keser and other co-conspirator property managers were paid in cash, check or things of value for using their positions to gain inside information and provide it to co-conspirators in furtherance of their efforts to obtain remediation and construction defect repair and construction defect litigation work on behalf of the HOAs. Keser admitted that she knew that others were paid or received things of value by or on behalf of their co-conspirators for their assistance in purchasing properties, obtaining HOA membership status and rigging elections.
Keser admitted that in approximately September 2006, she agreed to open a new property management company, which would be owned and controlled by co-conspirators, for the purpose of managing the HOA board at Chateau Nouveau and other condominium complexes. As compensation for her participation in the conspiracy, Keser was given a weekly salary, among other things, from her co-conspirators. Keser admitted that she concealed from the bona fide homeowners the true nature of her relationship, and that of the property management company that she headed, with her co-conspirators.
Keser’s sentencing is scheduled for July 26, 2012. The maximum sentence for conspiracy to commit mail fraud and wire fraud is 30 years in prison.
The case is being prosecuted by Deputy Chief Charles La Bella and Trial Attorneys Nicole H. Sprinzen and Mary Ann McCarthy of the Criminal Division’s Fraud Section. The case is being investigated by the FBI, IRS-CI and the Las Vegas Metropolitan Police Department, Criminal Intelligence 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 .
Pittsburgh Crips Member Sentenced to 88 Months in Prison <br /> on Racketeering ChargesRead the Press Release
WASHINGTON – A Pittsburgh man was sentenced today to 88 months in prison for conspiring to conduct a racketeering enterprise, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney David J. Hickton of the Western District of Pennsylvania.
Aaron Ford, 22, aka “.40 Cal.,” pleaded guilty on July 12, 2011, to one count of conspiracy to engage in a racketeering enterprise before Senior U.S. District Judge Gustave Diamond. Ford was also ordered to serve three years of supervised release following his prison term.
According to the guilty plea, Ford and others participated in a pattern of racketeering activity that included robberies at gun point; attempted murders; distribution of cocaine, heroin and crack cocaine; and obstruction of justice and witness intimidation.
According to court documents, Ford was a member of the Brighton Place Crips, a criminal street gang that controlled an area of Brighton Place and Morrison Street, also known as the Mad Cave, and Federal Street in the Northside area of Pittsburgh. The Brighton Place Crips were formed in the early 1990s; in 2003, it formed an alliance with the Northview Heights/ Fineview Crips. This alliance expanded the gang’s drug trafficking territory, and increased the number of gang members and associates available to preserve and protect the gang’s power, territory and profits through violence.
The Brighton Place/Northview Heights Crips gang maintains exclusive control over drug trafficking in these neighborhoods through continuous violence and intimidation of rivals and witnesses. Members of the gang support each other through payment of attorneys’ fees and bonds, as well as payments to jail commissary accounts and support payments to incarcerated members’ families.
In addition, gang members had violent confrontations with members of the rival Manchester OG’s and other street gangs operating in the Northside Section of Pittsburgh. Members and associates obtained greater authority and prestige within the enterprise based on their reputation for violence and their ability to obtain and sell a steady supply of illegal drugs. According to court documents, the Brighton Place/Northview Heights Crips gang members identify themselves by wearing blue, flashing Crips gang hand signals, and using phrases such as “Cuz,” “C-Safe,” “Loc” and “G.K.”
According to court documents, Ford was considered a soldier for the gang, providing protection for the enterprise through the possession and use of firearms, and committing acts of violence.
Ford is one of 26 defendants charged in February 2010 with being members or associates of the Brighton Place/Northview Heights Crips, a racketeering enterprise. This prosecution resulted from a Project Safe Neighborhoods Task Force investigation that began in 2005. To date, all members or associates of the Brighton Place/ Northview Heights Crips who were charged in this indictment have pleaded guilty to racketeering charges.
This case is being prosecuted by Assistant U.S. Attorneys Charles A. Eberle and Troy Rive tti of the Western District of Pennsylvania and Trial Attorney Kevin Rosenberg of the Criminal Division’s Organized Crime and Gang Section. The case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives; the City of Pittsburgh Bureau of Police; the Allegheny County, Penn., Police Department; and the Allegheny County Sheriff’s Office.
Justice Department Reaches Agreement with First Niagara Bank N.A. and HSBC Bank USA N.A. on DivestituresRead the Press Release
WASHINGTON – The Department of Justice announced today that First Niagara Bank N.A. and HSBC Bank USA N.A. have agreed to sell 26 branch offices in the Buffalo, N.Y., area with approximately $1.6 billion in deposits, to resolve antitrust concerns from the sale of HSBC’s branch network in upstate New York to First Niagara. HSBC is selling 195 branches in New York and Connecticut to First Niagara for approximately $1 billion. The department said that, without the divestitures, the acquisition likely would have an adverse effect on competition in the Buffalo area for retail banking or small business banking services.
Under the agreement with the Justice Department’s Antitrust Division, the companies will divest 26 HSBC branches located in Erie, Niagara and Orleans counties, N.Y. The divestitures will include the commercial loans associated with the divested branches.
“With the divestiture, consumers and small businesses in the Buffalo area will continue to enjoy the benefits of competition in banking services,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.
The proposed merger is subject to the final approval of the Office of the Comptroller of the Currency (OCC). The department said that it will advise the OCC that it will not challenge the merger provided that the parties divest the branch offices specified in the agreement and associated loans and deposits; and provided that the parties commit to the OCC that they will comply with the agreement with the department.
First Niagara Bank N.A., headquartered in Buffalo, is a wholly owned subsidiary of First Niagara Financial Group. First Niagara Bank has about $31 billion in assets and about $19 billion in deposits. It has branch offices in Connecticut, Massachusetts, New York and Pennsylvania.
HSBC Bank USA N.A., headquartered in McLean, Va., is the principal subsidiary of HSBC USA Inc., an indirect wholly owned subsidiary of HSBC North America Holdings Inc. As of June 30, 2011, HSBC Bank USA N.A. has about $195 billion in assets and operates 470 branches throughout the United States.
The branches to be divested are:
Bank
State
County
Address
City
Zip
Deposits as of June 30, 2011
(000s)
HSBC
NY
Erie
5556 Main St
Williamsville
14221
$185,043
HSBC
NY
Erie
2344 Niagara Falls Blvd
Tonawanda
14150
$60,804
HSBC
NY
Erie
6525 Transit Rd
East Amherst
14051
$78,888
HSBC
NY
Erie
366 Kenmore Ave
Buffalo
14223
$80,380
HSBC
NY
Erie
3107 Bailey Ave
Buffalo
14215
$40,937
HSBC
NY
Erie
2635 Main St
Buffalo
14214
$9,853
HSBC
NY
Erie
201 Amherst St
Buffalo
14207
$54,500
HSBC
NY
Erie
4455 Transit Rd
Williamsville
14221
$88,067
HSBC
NY
Erie
5151 Broadway
Depew
14043
$83,916
HSBC
NY
Erie
703 Ridge Rd
Lackawanna
14218
$48,530
HSBC
NY
Erie
306 West Ferry St
Buffalo
14213
$49,346
HSBC
NY
Erie
2345 Union Rd
West Seneca
14224
$113,559
HSBC
NY
Erie
1017 Broadway
Buffalo
14212
$17,867
HSBC
NY
Erie
1107 Lovejoy St
Buffalo
14206
$31,906
HSBC
NY
Erie
9094 Erie Rd
Angola
14006
$41,005
HSBC
NY
Erie
8591 Main St
Eden
14057
$43,765
HSBC
NY
Erie
4191 North Buffalo St
Orchard Park
14127
$59,489
HSBC
NY
Erie
11 Main St
Hamburg
14075
$105,526
HSBC
NY
Niagara
2952 Saunders Settlement Rd
Sanborn
14132
$37,924
HSBC
NY
Niagara
8301 Niagara Falls Blvd
Niagara Falls
14304
$78,000
HSBC
NY
Niagara
721 Center St
Lewiston
14092
$86,889
HSBC
NY
Niagara
150 Main St
Lockport
14094
$108,905
HSBC
NY
Niagara
5740 South Transit Rd
Lockport
14904
$31,510
HSBC
NY
Niagara
8683 Main St
Barker
14012
$24,029
HSBC
NY
Niagara
Main St & Park Ave
Middleport
14105
$31,681
HSBC
NY
Orleans
514 Main St
Medina
14103
$51,284
Justice Department Asks Federal Court to Shut Down South Florida Tax PreparerRead the Press Release
WASHINGTON – The United States has sued Kenia Marrero seeking to bar her and her business, Kenia Immigration Services, from preparing federal tax returns for others, the Justice Department announced today.
The civil injunction complaint, filed in U.S. District Court for the Southern District of Florida, alleges that Marrero of Miami prepares federal income tax returns for customers that fraudulently understate their tax liabilities by using fabricated deductions, business expenses and first-time homebuyer tax credits. The lawsuit alleges that Marrero offers immigration services through her business, including assistance in obtaining work permits and visas, and uses that customer base to obtain tax preparation customers.
According to the complaint, an Internal Revenue Service (IRS) investigation revealed that 98 percent of the income tax returns prepared by Marrero and audited by the IRS resulted in tax deficiencies. The lawsuit alleges that the tax harm caused by Marrero’s misconduct could be as much as $1.4 million.
Return preparer fraud is on the IRS list of the Dirty Dozen Tax Scams for 2011 . In the past decade the Justice Department has obtained hundreds of injunctions to stop the promotion of tax-fraud schemes and the preparation of fraudulent returns. More information about these cases is available on the Justice Department website .
Justice Department Announces Dismissal of Case Regarding Conditions at the Dallas County JailRead the Press Release
WASHINGTON – The Justice Department announced today that District Court Judge David C. Godbey has granted the request of the department and Dallas County to end court supervision of a lawsuit concerning conditions at the Dallas County Jail. The department and the county had entered into a comprehensive settlement agreement in 2007 that required specific remedial measures be taken at the Dallas County Jail regarding medical care, mental health care, sanitation and environmental health to alleviate conditions that violated the constitutional rights of individuals confined to the jail.
In light of the progress the county has made in complying with the agreed order regarding the conditions at the jail, the United States has joined Dallas County in filing a notice of termination ending court oversight. Dallas County has implemented the remedial measures so that inmates at the jail are safe and receive the services necessary to meet their constitutional rights.
Dallas County Jail is the seventh largest jail in the United States. The average daily census is more than 6300 inmates with more than 100,000 people being booked-in per year. Approximately 50 percent of the inmates at intake have acute or chronic medical/mental health conditions, including approximately 22 percent with mental health conditions.
As a result of the agreed order, more than 6,000 inmates are now seen monthly in 12 jail clinics ranging from dialysis, respiratory care, dental, orthopedic, to HIV and infection disease management and more than 3200 inmates receive medications daily. The number of deaths at the jail has decreased by 45 percent. Staffing levels in all medical disciplines have been increased (almost doubled) and are now adequate to provide services.
Key essential health services are now being provided including: health screening for all inmates upon arrival and then on a yearly basis; TB screening for all inmates; acute and intermediate medical in-patient care; chronic and urgent in-patient care; acute and intermediate mental health in-patient care; crisis stabilization, chronic mental health care; and a nationally recognized suicide prevention program.
In 2006, the Justice Department issued a findings letter that highlighted that prior to the agreed order, inmates died and suffered unnecessary injuries due to the lack of adequate medical and mental health care being provided at the jail. The jail’s intake screening process failed to identify the health needs of incoming inmates, notwithstanding the population’s particular vulnerabilities to mental illness and suicide. Health assessments were rarely completed. As a result, inmates failed to receive adequate care for urgent and/or emergent medical conditions. Inmates with communicable diseases such as tuberculosis, and other infectious diseases were not appropriately screened, treated, or isolated.
“We commend Sheriff Valdez, Dallas County, Parkland Hospital and jail staff for their willingness to work aggressively to address the problems found. It is a jurisdiction’s basic responsibility to protect those persons in its custody from harm. We have worked cooperatively with Dallas County officials to ensure that the constitutional rights of Dallas County Jail inmates are protected,” said Thomas E. Perez, Assistant Attorney General for Civil Rights. “We also want to make sure that jurisdictions understand that when they act in good faith and comply with a settlement, the United States will join in seeking the end of court oversight,” said Perez.
“This agreed order was designed to protect the rights of the inmates at the Dallas County Jail,” said Sarah Saldaña, U.S. Attorney for the Northern District of Texas. “We thank the county and the sheriff for their cooperation in achieving this important goal.”
The case was litigated by the Special Litigation Section of the Justice Department’s Civil Rights Division. In addition, the division received support and assistance from John R. Parker, Civil Division Chief from the U.S. Attorney’s Office for the Northern District of Texas.
Fort Lauderdale-area Halfway House Owners Plead Guilty to Kickback SchemeRead the Press Release
WASHINGTON – The two managers and operators of a Fort Lauderdale, Fla.-area halfway house company pleaded guilty today for their role in a Medicare fraud kickback scheme that funneled patients through a fraudulent mental health company, American Therapeutic Corporation (ATC), announced the Department of Justice, FBI and Department of Health and Human Services (HHS).
Robert Jenkins, 36, and Nikki Jenkins, 36, each pleaded guilty before Chief U.S. District Judge Federico A. Moreno in the Southern District of Florida to one count of conspiracy to solicit and receive health care kickbacks. Robert and Nikki Jenkins, who are married, were the managers and operators of Life 4 Life Inc., which operated several halfway houses in Fort Lauderdale.
According to court documents, Robert and Nikki Jenkins agreed to refer Medicare beneficiaries who resided at Life 4 Life halfway houses to ATC for partial hospitalization program (PHP) services. A PHP is a form of intensive treatment for severe mental illness. ATC purported to operate PHPs in seven different locations throughout south Florida and Orlando. The Jenkins admitted that they recruited Medicare beneficiaries for their halfway houses whom they could refer to ATC in exchange for health care kickbacks. The Jenkins knew that ATC would bill the Medicare program for PHP services provided to the beneficiaries they referred to ATC, and they knew receiving such kickbacks was illegal.
According to court filings, ATC’s owners and operators paid kickbacks to owners and operators of assisted living facilities and halfway houses and to patient brokers in exchange for delivering ineligible patients to ATC and its related company, the American Sleep Institute (ASI). In some cases, the patients received a portion of those kickbacks. Throughout the course of the ATC conspiracy, millions of dollars in kickbacks were paid in exchange for Medicare beneficiaries who did not qualify for PHP services. The ineligible beneficiaries attended treatment programs that were not legitimate so that ATC and ASI could bill Medicare more than $200 million in medically unnecessary services.
According to the plea agreement, the Jenkins’s participation in the fraud resulted in more than $157,980 in fraudulent payments from the Medicare program. At sentencing, scheduled for Dec. 19, 2011, Robert and Nikki Jenkins each face a maximum of five years in prison and a $250,000 fine.
ATC, its management company Medlink Professional Management Group Inc., and various owners, managers, doctors, therapists, patient brokers and marketers of ATC, Medlink and ASI, were charged with various health care fraud, kickback, money laundering and other offenses in two indictments unsealed on Feb. 15, 2011. ATC, Medlink and nine of the individual defendants have pleaded guilty or have been convicted at trial. Other defendants are scheduled to begin trial on April 9, 2012, before U.S. District Judge Patricia A. Seitz.
Today’s guilty plea was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; John V. Gillies, Special Agent-in-Charge of the FBI’s Miami field office; and Special Agent-in-Charge Christopher B. Dennis of the HHS Office of Inspector General (HHS-OIG), Office of Investigations Miami office.
The case is being prosecuted by Trial Attorneys Steven Kim and Jennifer L. Saulino of the Criminal Division’s Fraud Section. The case was investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.
Since its inception in March 2007, the Medicare Fraud Strike Force operations in nine locations have charged more than 1,140 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.
Former Arizona Army National Guard Member Charged with Participating in Bribery and Drug Trafficking ConspiracyRead the Press Release
WASHINGTON – A former member of the Arizona Army National Guard was charged today for his alleged role in a widespread bribery and illegal drug trafficking conspiracy that operated from January 2002 through March 2004, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.
The 10-count indictment returned today in U.S. District Court in Arizona charges Adalberto Valenzuela, 31, of Tucson, Ariz., with two counts of conspiracy, two counts of bribery, two counts of bribery involving programs receiving federal funds, two counts of Hobbs Act extortion under color of official right and two counts of possession with intent to distribute cocaine. The charges arise from Operation Lively Green, an undercover FBI investigation that began in December 2001.
According to the indictment, Valenzuela was a corporal in the Arizona Army National Guard at the time he participated in the conspiracy. Valenzuela allegedly conspired to enrich himself by obtaining cash bribes from individuals he believed to be illegal narcotics traffickers, but who were actually FBI agents. The indictment alleges that in return for the bribes, Valenzuela used his official position as a corporal in the Arizona Army National Guard to assist, protect and participate in the activities of an illegal narcotics trafficking organization that was transporting and distributing cocaine within Arizona and from Arizona to other locations in the southwestern United States. In order to protect the shipments of cocaine, Valenzuela allegedly wore official uniforms and carried official forms of identification, used official vehicles, and used his official authority where necessary to prevent police stops, searches and seizures of the narcotics.
According to the indictment, Valenzuela transported cocaine on two separate occasions and, as a result, received bribe payments totaling $7,000 for the 40 kilograms of cocaine involved.
In 2006, an arrest warrant was issued for Valenzuela. Repeated attempts to locate and contact him have been unsuccessful. Valenzuela is now considered a fugitive and anyone with information regarding his whereabouts is encouraged to contact their local FBI office.
If convicted on the conspiracy charges, Valenzuela faces a maximum of five years in prison. The bribery and Hobbs Act charges each carry maximum prison sentences of 20 years. The federal program bribery charges each carry a maximum penalty of 10 years in prison, as do each of the drug conspiracy and possession charges. Valenzuela also faces a maximum $250,000 fine for each charged count.
To date, 57 additional defendants have been convicted and sentenced on related charges as part of Operation Lively Green. An additional 14 defendants have pleaded guilty in the Western District of Oklahoma in a related investigation known as Operation Tarnish Star.
Operation Lively Green cases are part of a joint investigation being conducted by the Southern Arizona Corruption Task Force (SACTF), which includes the FBI, the Drug Enforcement Administration, the U.S. Immigration and Customs Enforcement at the Department of Homeland Security, and the Tucson Police Department. The Arizona Air National Guard, Air Force Office of Special Investigations, Defense Criminal Investigative Service and the Criminal Investigation Division of the Internal Revenue Service are also participating in the investigation.
The case is prosecuted by Trial Attorneys Peter Koski and Monique Abrishami of the Criminal Division’s Public Integrity Section.
An indictment is a formal accusation of criminal conduct, not evidence. A defendant is presumed innocent unless and until convicted through due process of law.
Federal Court Bars Eastern Pennsylvania Woman from Preparing Tax ReturnsRead the Press Release
WASHINGTON – A federal court in Philadelphia has permanently barred Dorthea Alexander from preparing federal tax returns for others, the Justice Department announced today. The civil injunction order, to which Alexander agreed without admitting the government’s allegations, was signed by Judge R. Barclay Surrick of the U.S. District Court of the Eastern District of Pennsylvania.
The government complaint in the case alleged that Alexander, of Leola, Pa., claimed bogus dependent exemptions, charitable donation and other deductions, and tax credits on customers’ tax returns during her employment as tax supervisor at Pawn Plus Inc. in Lancaster, Pa. The injunction order requires Alexander to send a copy of the order to all customers for whom she, or anyone under her direction, prepared a federal tax return since Jan. 1, 2005, and to give the government a list of those customers.
In the past decade, the Justice Department’s Tax Division has obtained injunctions against hundreds of tax return preparers and tax fraud promoters. Information about these cases is available on the Justice Department website .
Department of Justice Announces Compensation for Servicemembers as Part of Settlement with Bank of AmericaRead the Press Release
WASHINGTON – The Justice Department announced today that, as part of its settlement with BAC Home Loans Servicing LP, a subsidiary of Bank of America Corporation, servicemembers whose homes were unlawfully foreclosed upon will each receive a minimum $116,785 plus compensation for any equity lost to compensate them for the bank’s alleged violation of the Servicemember Civil Relief Act (SCRA).
Bank of America agreed to pay $20 million to approximately 160 servicemembers who were illegally foreclosed on between 2006 and the middle of 2009. Under the agreement, Bank of America agreed to provide information about its foreclosures from mid 2009-2010 and will pay damages in the same minimum amount to those servicemembers whose homes were illegally foreclosed upon to compensate for the loss of their homes. The review is on-going.
“The men and women serving our nation should not have to worry about a bank foreclosing on their home while they bravely serve our country,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Justice Department will vigorously enforce the laws that protect servicemembers while they do the difficult and necessary work of protecting our country. We have and will continue to work hard to ensure that servicemembers receive the full protections of the law and relief they deserve in a timely fashion.”
On May 26, 2011, the department announced a settlement with BAC Home Loans Servicing LP, formerly known as Countrywide Home Loans Servicing LP, which resolved allegations that the bank unlawfully foreclosed on servicemembers’ homes in violation of the SCRA. This is the largest SCRA settlement ever reached by the department. The Department of Defense also provided critical assistance in identifying the servicemembers whose rights were violated.
Beginning on Nov. 14, 2011, letters will be sent to 157 servicemembers to notify them of the amount of money that they may receive under the settlement. The settlement agreement set a deadline for the end of November 2011 for the Justice Department to determine the amount of damages to which servicemembers may be entitled.
The SCRA provides critical additional consumer and other protections to the men and women serving our nation in the military – its enactment was a recognition that those who are making great sacrifices to protect us deserve our full support at home.
For more information on the Justice Department’s work to protect servicemembers, please visit www.servicemembers.gov .
Caltrans to Pay $10 Million to Remediate the Presidio’s Mountain Lake and to Re-route Highway 1 Drainage to Avoid Future ContaminationRead the Press Release
WASHINGTON -- Federal officials announced a civil settlement with the state of California Department of Transportation (Caltrans) resolving claims brought by the Presidio Trust and the U.S. Army resulting from Caltrans’ construction and operation of Highway 1 (also known as Park Presidio Boulevard) through the Presidio of San Francisco. Under the settlement, Caltrans is required to pay $5.5 million toward the remediation of Mountain Lake sediment contamination, fund and construct runoff diversion projects to eliminate future discharges to Mountain Lake, and reimburse a portion of the United States’ legal costs. The total settlement is valued at $13.5 million.
The settlement resolves the United States’ claims for breach of a 1938 permit that authorized Caltrans to build Highway 1 through the Presidio and required Caltrans to repair any damage caused by construction and operation of the highway. The United States filed an action in federal court in January 2009 alleging that runoff from Highway 1 has contaminated Mountain Lake sediment with lead, copper, zinc and other substances, and that highway drainage facilities are in need of repair or replacement. Under the terms of the settlement, Caltrans will pay $5.5 million to the United States for remediation of Mountain Lake, $4 million for re-configuring the Mountain Lake overflow pipeline, $500,000 for the Presidio’s legal costs, and will fund and construct a run-off diversion project, at an estimated cost of $3.5 million, so that contaminants from Highway 1 will no longer enter Mountain Lake.
“Today marks a step forward to preserve and protect Mountain Lake, which is one of the city’s only natural lakes and is an integral part of San Francisco’s treasured Presidio,” said Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division at the Department of Justice. “After decades of lead and other contamination of Mountain Lake, today’s settlement will fund both the cleanup and the infrastructure to protect this natural resource long into the future.”
The Presidio is located within the Golden Gate National Recreation Area and features significant natural, historic, scenic, cultural and recreational resources. Mountain Lake lies at the southern edge of the Presidio and is one of the few natural lakes in San Francisco and the only lake within the Presidio. Mountain Lake attracts migratory birds, resident wildlife and frequent human visitors, and fronts a neighborhood park, playground and a small beach. A walking path and trail surrounds a large part of Mountain Lake, which is accessible by foot and bicycle.
“The Trust is working closely with regulators to ensure that the cleanup of Mountain Lake is protective of human health and the environment,” said Eileen Fanelli, Environmental Remediation Manager for the Presidio Trust. “This settlement with Caltrans will allow us to stay on schedule and complete the remediation of lake sediment by 2013.”
The settlement is subject to a 30-day public comment period that begins with the posting of a notice in the Federal Register. The consent decree will be available for viewing at www.justice.gov/enrd/Consent_Decrees.html .