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16 November 2011
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 .
9 November 2011
Ninth Person Pleads Guilty to Scheme to Fraudulently Control Condominium Homeowners’ Associations in Las VegasRead the Press Release
WASHINGTON – A Las Vegas man pleaded guilty today for his 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).
Daniel Solomon, 39, pleaded guilty before U.S. District Judge Lloyd D. George in the District of Nevada to one count of conspiracy to commit mail and wire fraud. Solomon is the ninth person to plead guilty in connection with the scheme to defraud HOAs in the Las Vegas area.
Solomon admitted that from approximately January 2006 through February 2009, he 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 Solomon’s co-conspirators.
Solomon admitted that he acted as a straw purchaser at the Vistana condominium complex. Solomon’s co-conspirators provided the down payments and monthly payments, including HOA dues and mortgage payments for the property and were the true owners of the property. According to plea documents, Solomon signed and submitted false and fraudulent loan applications and closing documents to a financial institution in order to finance and close on the property on behalf of his co-conspirators. Solomon represented that the unit would be “owner occupied” when in fact it was not. Solomon lived in another unit purchased by co-conspirators in furtherance of the conspiracy.
According to plea documents, Solomon’s co-conspirators managed and operated the payments associated with maintaining straw properties owned and controlled by co-conspirators by running a so-called “Bill Pay Program,” by which co-conspirators funded the properties through several limited liability companies at the direction of a co-conspirator. Many of the payments were wired from California to Nevada.
Solomon admitted that once he purchased the property at Vistana for his co-conspirators, he purported to become a member of the HOA community and ran for election to the Vistana HOA board of directors. Solomon admitted that he breached his statutory fiduciary duty to the homeowners by accepting from his co-conspirators compensation, gratuity and other remuneration that improperly influenced, or reasonably appeared to influence, his decisions, resulting in a conflict of interest.
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. Solomon either attended these meetings or took direction from co-conspirators who attended these meetings instructing him to vote in furtherance of the conspiracy. Solomon admitted that he used his position on the board to vote in a manner directed by and favorable to certain co-conspirators. Specifically, Solomon participated in the following votes, among others: on or about July 20, 2007, a vote to agree to settle a construction defect lawsuit for $19 million; on or about Sept. 7, 2007, a vote to award a construction defect remediation contract to the co-conspirator construction company; and on or about Nov. 16, 2007, a vote to pay $1.5 million to the co-conspirator construction company, which was followed by several other votes for payment to the same co-conspirator, related to construction defect remediation work.
Solomon’s sentencing is scheduled for Feb. 23, 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.
Justice Department Files Complaint Against City of Pittsfield, Mass., for Violating the Employment Rights of a U.S. Navy ReservistRead the Press Release
WASHINGTON – The Justice Department announced today the filing of a complaint against the city of Pittsfield, Mass., for violating the rights of a U.S. Navy Reservist under the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA).
The lawsuit alleges that the city violated Pittsfield firefighter Jeffrey Rawson’s rights by passing him over for promotion to lieutenant in the Pittsfield Fire Department because of his military service obligations. In November 2009, Rawson took a promotional exam for a lieutenant position. Based on the results of the examination, Rawson was ranked second on the promotional list. In July 2010, the city informed Rawson that he was being skipped for promotion and that a firefighter ranked lower on the promotional list was instead being promoted to lieutenant. The lower ranked firefighter was promoted to lieutenant in September 2010.
Rawson initially filed a complaint with the Labor Department’s Veterans’ Employment and Training Service, which investigated the matter, determined that the complaint had merit, and referred the matter to the Justice Department. The lawsuit also alleges that, subsequent to Rawson’s complaint, the city again violated USERRA when it retaliated against him by refusing to reinstate him to the list of firefighters eligible to serve as an acting lieutenant.
USERRA prohibits civilian employers from discriminating against military reservists such as Rawson with respect to civilian employment opportunities, including promotions, based on their past, current, or future uniformed service obligations. The federal law also prohibits employers from retaliating against uniformed services members for exercising their rights under USERRA, including filing a complaint.
Among other things, the suit seeks to provide Rawson with a retroactive promotion to lieutenant ahead of the lower ranked firefighter who was promoted in September 2010, the lost wages and benefits that Rawson would have enjoyed if he had not been passed over for promotion, and liquidated damages.
“No servicemember should be prevented from advancing in his or her civil career because of military duties,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Civil Rights Division is committed to protecting the rights of those who, through their bravery and sacrifice, secure the rights of all Americans.”
U.S. Attorney for the District of Massachusetts Carmen M. Ortiz said, “Our service men and women make the ultimate sacrifice by serving our country. We simply cannot let employers disadvantage them based on their military service or military status.”
This case is being handled by the Employment Litigation Section of the Justice Department’s Civil Rights Division and the Civil Division of the U.S. Attorney’s Office for the District of Massachusetts. Additional information about USERRA can be found on the Justice Department’s websites, www.usdoj.gov/crt/emp and www.servicemembers.gov, as well as the Labor Department’s website at www.dol.gov/vets/programs/userra/main.htm.
Colombian Paramilitary Leader Sentenced in Miami to 33 Years in Prison for Drug Trafficking and Narco-TerrorismRead the Press Release
WASHINGTONCarlos Mario Jimenez-Naranjo, aka “Macaco,” a paramilitary leader and one of Colombia’s most notorious drug traffickers, has been sentenced to 33 years in prison by U.S. District Judge Joan A. Lenard in Miami for leading an international drug trafficking conspiracy that supported a foreign terrorist organization, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Wifredo A. Ferrer for the Southern District of Florida.
According to court documents, Jimenez-Naranjo was one of the top leaders of the Autodefensas Unidas de Colombia (AUC), a Colombian right-wing paramilitary and drug trafficking organization. The AUC is a U.S. Department of State-designated foreign terrorist organization. From the mid 1990s through 2007, Jimenez-Naranjo led the Bloque Central Bolivar (BCB), a group within the AUC, commanding an estimated 7,000 armed combatants. Jimenez-Naranjo controlled large areas where cocaine was produced, and his organization was responsible for exporting thousands of kilograms of cocaine from Colombia to Central America, Mexico and the United States using seaports and clandestine airstrips. Jimenez-Naranjo was extradited from Colombia to the United States on May 7, 2008, based on a provisional arrest warrant from separate indictments in the District of Columbia and in the Southern District of Florida.
On Jan. 7, 2010, Jimenez-Naranjo pleaded guilty in the District of Columbia to charges of conspiracy to manufacture and distribute five kilograms or more of cocaine, with intent to import the cocaine into the United States, and to engaging in drug trafficking with the intent to provide something of value to a terrorist organization or narco-terrorism.
On June 21, 2010, Jimenez-Naranjo pleaded guilty in the Southern District of Florida to a superseding indictment charging him with conspiracy to import thousands of kilograms of cocaine into the United States using clandestine airstrips and airplanes, and conspiracy to possess thousands of kilograms of cocaine, which were exported from Colombia onboard maritime vessels subject to the jurisdiction of the United States.
The two cases were consolidated in the Southern District of Florida for sentencing. Jimenez-Naranjo was sentenced on May 9, 2011, and the sentencing was unsealed today.
“Mr. Jimenez-Naranjo led the largest paramilitary group within the AUC,” said Assistant Attorney General Breuer. “Under his decades-long leadership, the group trafficked thousands of kilograms of illegal narcotics to the United States by land, air and sea – from Colombia, through Central America, the Caribbean and Mexico. Mr. Jimenez-Naranjo’s sentence is a step forward in our efforts to stem the illegal flow of narcotics to the United States and hold dangerous drug traffickers accountable.”
“Jimenez-Naranjo and his organization conspired to import thousands of kilograms of cocaine into the United States using secret airstrips and airplanes,” said U.S. Attorney Ferrer. “Transnational drug trafficking organizations, like this one, threaten the security of our borders and endanger the safety and well-being of our citizens. For this reason, we in South Florida remain determined and focused on the mission of eradicating these dangerous organizations.”
“Investigations such as this clearly define the connection between drugs and terrorism,” said Special Agent in Charge Mark R. Trouville of the Drug Enforcement Administration’s (DEA) Miami Field Office. “International narco-terrorist organizations oppress communities in their home countries through force and corruption, and fund these activities by supplying illegal drugs in our communities. Every time DEA and our federal and international law enforcement partners dismantle a drug trafficking organization that funds or supports terrorism, we remove a serious threat and stop a funding source for terrorist acts.”
“The FBI continues working to eradicate international narco-traffickers, like Carlos Mario Jimenez-Naranjo, who infiltrate our shores and pollute our society with cocaine,” said Acting Special Agent in Charge William Maddalena of the FBI’s Miami Field Office. “I especially want to thank the Colombian National Police for their assistance and cooperation in this case.”
“ICE HSI will continue to stand shoulder to shoulder with our law enforcement partners to identify and dismantle drug trafficking organizations smuggling large quantities of drugs into the country,” said Michael Shea, Acting Special Agent in Charge of U.S. Immigrations and Custom Enforcement – Homeland Security Investigations (ICE-HSI) in Miami. “Those who think that they are safely beyond our reach should think twice. HSI and its partners are vigilant and these criminal actors will be arrested and brought to justice.”
The evidence from the two cases established that Jimenez-Naranjo’s drug trafficking organization processed and manufactured multi-ton quantities of cocaine in Colombia-based laboratories and exported that cocaine from Colombia to Central America, Mexico and elsewhere, some of which was ultimately imported into the United States . During the same time, Jimenez-Naranjo permitted the proceeds of his cocaine production and trafficking activities to be used to facilitate and finance the activities of the AUC. Jimenez-Naranjo’s laboratories processed coca paste and crystallized and converted it into cocaine HCL, producing between 200 and 500 kilograms of cocaine HCL per month at their peak. Jimenez-Naranjo sold this cocaine to transportation specialists, who used fixed-wing aircraft, helicopters and go-fast boats, among other forms of transportation, to move the cocaine within Colombia and to export the cocaine to Central America and Mexico. Jimenez-Naranjo also maintained his own airstrips for his narcotic trafficking and charged other traffickers a fee to use his airstrips.
According to court documents, Jimenez-Naranjo also earned money through the BCB’s control of certain areas of Colombia. Specifically, taxes were levied upon other narcotics traffickers who needed passage through BCB-controlled territories. Jimenez-Naranjo used the proceeds from his drug trafficking activities to finance the activities of the AUC and specifically the BCB. Narcotics profits enabled the BCB to purchase weapons and other needed supplies for the BCB narcotics trafficking and other AUC activities. In addition, the cocaine profits were used to pay taxes to other AUC groups who similarly charged the BCB for the passage of the BCB’s narcotics through their territories. The BCB and Jimenez-Naranjo were able to maintain tight control of their territories in Colombia through bribery and intimidation of corrupt members of the Colombia government, including law enforcement, politicians and the military.
Following the demobilization of Jimenez-Naranjo and the BCB in 2005 as part of Colombia’s Justice and Peace Law, Jimenez-Naranjo was incarcerated but continued his cocaine trafficking activities. In conjunction with those activities, Jimenez-Naranjo continued to support individuals and organizations that had engaged in, or were engaging in, terrorism or terrorism-related activity, including individuals who had been part of his armed group but who had not demobilized. Jimenez-Naranjo used co-defendants and others to continue to manage the organization’s drug trafficking operations from prison in Colombia, including collecting taxes from other drug traffickers, some of whom continued their involvement in the AUC .
Under the terms of the to the extradition request, the United States provided assurances to the Government of Colombia that a life sentence would not be sought, but would seek instead a term of years. This assurance is made for all defendants extradited from Colombia to the United States.
The U.S. government expressed its grateful appreciation to the government of Colombia and the Colombia National Police for their assistance and support during the investigations, arrest and extradition.
The District of Columbia charges were obtained by the Narcotic and Dangerous Drug Section (NDDS) of the Justice Department’s Criminal Division and resulted from an investigation conducted by the DEA Bogota, Colombia, Country Office.
The Southern District of Florida charges were obtained by the U.S. Attorney’s Office in Miami and resulted from a separate joint investigation conducted by the FBI’s Miami Field Division, the DEA’s Miami Field Division and the Miami ICE-HSI office.
These cases were prosecuted by Assistant U.S. Attorney Andrea Hoffman and Alejandro O. Soto from the U.S. Attorney’s Office for Southern District of Florida, and Trial Attorneys Robert J. Raymond of the Criminal Division’s NDDS, and Glenn C. Alexander, formerly of NDDS and presently in the Criminal Division’s Computer Crime and Intellectual Property Section. NDDS Judicial Attachés in Bogotá provided crucial support and assistance on this matter. The Criminal Division’s Office of International Affairs also provided assistance. The Organized Crime and Drug Enforcement Task Force (OCDETF) Fusion Center provided investigative and administrative support in this case.
Buffalo Developer Indicted for Illegally Filling over 90 Acres of Wetlands in Amherst, N.Y.Read the Press Release
WASHINGTON – A New York developer and his companies were indicted today on federal charges that they conspired to illegally fill jurisdictional wetlands, announced Assistant Attorney General Ignacia S. Moreno for the Justice Department’s Environment and Natural Resources Division and U.S. Attorney William Hochul for the Western District of New York.
William L. Huntress and his companies, Acquest Transit LLC and Acquest Development LLC, were charged in the Western District of New York for illegally filling wetlands in Amherst, N.Y., as detailed in the seven count indictment. The defendants are scheduled to make their initial appearances in federal court in the Western District of New York on Nov. 10, 2011. This indictment follows affirmative civil suits filed by the Department of Justice in 2009 seeking to prevent the defendants from filling wetlands in both Amherst and at an unrelated site.
The indictment describes a scheme to illegally fill wetlands situated on a 96-acre parcel sitting upstream from Tonawanda and Ransom Creeks. As alleged in the indictment, the defendants purchased the property with the intent of commercially developing the site and were aware of the presence of the wetlands at the time of that purchase. After the purchase, and despite knowing that wetlands were present, the defendants, and others acting at the defendants’ direction, filled a portion of these wetlands by installing both a roadway and a “fill pad” on the site.
According to court documents, Huntress and other conspirators concealed the illegal wetland filling by concealing documents from the Environmental Protection Agency (EPA), making false statements to federal law enforcement officers and disregarding both administrative and judicial orders enjoining the defendants from further earth-moving activities on the site.
The indictment charges the defendants with conspiracy to defraud the United States and to violate the Clean Water Act; substantive Clean Water Act counts; obstruction of justice; false statements; concealment of material facts; and contempt of court.
The Clean Water Act counts of the indictment each carry a maximum possible term of three years in prison and a potential $50,000 fine for each day the violations occurred. The conspiracy and false statements counts of the indictment each carry a maximum possible term of five years in prison and a fine of $250,000, twice the gross gain to the defendants or twice the gross loss to a victim. The obstruction of justice count of the indictment carries a maximum possible sentence of 20 years in prison and similar fines.
An indictment is a mere accusation, and all defendants are presumed innocent until and unless convicted in a court of law.
This case was investigated by Special Agents from the EPA's Criminal Investigation Division. The case is being prosecuted by Assistant U.S. Attorney Aaron J. Mango of the Western District of New York and Todd W. Gleason of the Environmental Crimes Section of the Environment and Natural Resources Division of the U.S. Department of Justice.
8 November 2011
New York Resident Sentenced in Miami in Connection with Fraudulent Business Opportunity SchemesRead the Press Release
WASHINGTON – Michael Eisenberg, a resident of Long Island, N.Y., was sentenced Monday in connection with a series of fraudulent business opportunity ventures, the Justice Department and the U.S. Postal Inspection Service announced. Eisenberg was sentenced by U.S. District Judge Joan A. Lenard in Miami to 28 months in prison, a $7,500 fine, at least $15,000 in restitution and three years supervised release.
On July 19, 2011, Eisenberg pleaded guilty to conspiracy to commit wire fraud for his operation of two firms, Atomic Vending and Energy Vend, both located on Long Island. The criminal information charging Eisenberg alleged that he served as an owner and salesman for Atomic Vending and Energy Vend from March 2008 to March 2010. Each firm sold business opportunities to the public for a minimum price of approximately $6,000.
As the government alleged, potential investors were told they would receive a vending “route.” In pleading guilty, Eisenberg admitted that he and others made a number of false claims about the profits generated by the firms’ vending machines. In addition, he admitted salesmen led potential buyers to believe that they would recoup their investment in a year or less. Eisenberg admitted that he misrepresented that “locating companies” would find high traffic, high profit locations in which to place the vending machines. In reality, as the government alleged, buyers earned little to no money from their investments.
Prior to Atomic Vending, Eisenberg had operated another business opportunity firm called Lifestyle Vending. In December 2006, the Justice Department brought a civil case against Lifestyle Vending and Eisenberg, alleging that they made unsubstantiated claims to business opportunity buyers. The case resulted in entry of a federal court order barring Eisenberg and others from misrepresenting business opportunities. After entry of the federal court order in the Eastern District of New York in March 2008, the information stated, Eisenberg founded Atomic Vending and, later, Energy Vend, to continue the deceptive sales practices of Lifestyle Vending. In the sentence announced today, Judge Lenard increased Eisenberg’s period of incarceration based upon his violation of the 2008 federal court order.
“Fraud schemes like this one target consumers who are trying to start a small business and earn an honest living,” said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. “This defendant not only misled investors about business opportunities; he continued to defraud people after being ordered by a court to stop. We believe the judge appropriately took this behavior into account when issuing her sentence.”
Assistant Attorney General West and Wifredo Ferrer, U.S. Attorney for the Southern District of Florida, commended the investigative efforts of the Postal Inspection Service, which investigated the case. The case was prosecuted by trial attorney Richard Goldberg of the Civil Division of the Department of Justice.
Miami-Area Patient Recruiter Pleads Guilty in $25 Million Health Care Fraud SchemeRead the Press Release
WASHINGTON – A patient recruiter of a Miami health care agency pleaded guilty yesterday for her participation in a $25 million home health Medicare fraud scheme, announced the Department of Justice, the FBI and the Department of Health and Human Services (HHS).
Beatriz Torres-Cruz, 50, pleaded guilty before U.S. District Judge Joan A. Lenard in Miami to one count of conspiracy to commit health care fraud and one count of solicitation of health care kickbacks. Torres-Cruz was charged in a February 2011 indictment. According to plea documents, Torres-Cruz was a patient recruiter for Florida Home Health Providers Inc., a Miami home health care agency that purported to provide home health and physical therapy services to Medicare beneficiaries. According to court documents, Florida Home Health billed the Medicare program for expensive physical therapy and home health care services that were medically unnecessary and/or never provided. Court documents allege that the medically unnecessary services were prescribed by doctors, including Jose Nunez, M.D. Nunez was also charged in the February 2011 indictment along with Torres-Cruz and 19 other co-conspirators.
Torres-Cruz admitted that, beginning in approximately January 2006 and continuing until approximately March 2009, she, along with co-defendants, offered and paid kickbacks and bribes to Medicare beneficiaries in return for those beneficiaries allowing Florida Home Health to bill Medicare for services that were medically unnecessary and/or never provided. Torres-Cruz solicited and received kickbacks and bribes from the owners and operators of Florida Home Health in return for her patient recruiting. Torres-Cruz knew that the patients she recruited for Florida Home Health did not qualify for the services billed to Medicare.
As a result of Torres-Cruz’s participation in the illegal scheme, Medicare was billed approximately $195,000 for purported home health care services that were not medically necessary and/or were not rendered.
Seventeen other co-conspirators have pleaded guilty for their roles in the fraud scheme, including Dr. Nunez.
Sentencing has been scheduled for Jan. 30, 2012.
The charge of conspiracy to commit health care fraud carries a maximum prison sentence of 10 years and the charge of solicitation of health care kickbacks carries a maximum prison sentence of five years. The defendant also face fines and terms of supervised release, as well as forfeiture of any property or proceeds derived from her criminal activities.
Today’s charges were announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; John V. Gillies, Special Agent-in-Charge of the FBI’s Miami field office; and Special Agent-in-Charge Christopher Dennis of the HHS Office of Inspector General (HHS-OIG), Office of Investigations Miami office.
This case is being prosecuted by Trial Attorneys Joseph S. Beemsterboer and Jonathan Baum of the Criminal Division’s Fraud Section. The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Miami.
Since their inception in March 2007, Medicare Fraud Strike Force operations in nine locations have charged more than 1,140 defendants who collectively have falsely billed the Medicare program for more than $2.9 billion. In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.
Justice Department Requires Divestiture to Preserve Health-Insurance Competition in MontanaRead the Press Release
WASHINGTON – The Department of Justice announced today that it will require New West Health Services Inc. to sell the majority of its commercial health-insurance business to a third-party buyer and provide additional relief in order to preserve health-insurance competition in Montana. The divestiture and other relief would allow Blue Cross and Blue Shield of Montana Inc. to proceed with an agreement with five of New West’s six hospital owners to purchase health insurance from Blue Cross exclusively for six years. The department said that without the divestiture and additional relief, competition w ould have been substantially reduced in commercial health-insurance markets in Montana by effectively eliminating New West as a competitor, resulting in higher prices and lower quality services. New West is one of only two significant competitors to Blue Cross in the sale of commercial health insurance in the Billings, Bozeman, Helena and Missoula areas of Montana.
The Justice Department’s Antitrust Division, along with the Montana Attorney General’s Office, filed a civil antitrust lawsuit in U.S. District Court for the District of Montana to block the proposed agreement. At the same time, the department filed a proposed settlement that, if approved by the court, would resolve the lawsuit and the department’s competitive concerns.
“This settlement ensures that Montana residents will continue to benefit from competitive choices for commercial health insurance,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “We are committed to preserving competition in the health-insurance industry because competition spurs insurers to lower prices, enhance services and increase quality.”
According to the complaint, the original transaction would have effectively eliminated competition between Blue Cross and New West and decreased the number of significant competitors in the affected markets from three to two, allowing Blue Cross to increase prices and reduce the quality of its commercial health-insurance plans. The complaint alleges that the transaction likely will cause New West to exit the markets for commercial health insurance because, once the five hospital owners stopped purchasing health insurance from New West, they likely would have significantly reduced their support for New West and its efforts to win commercial health-insurance customers. These anticompetitive effects would have been exacerbated by a provision in the parties’ agreement that requires Blue Cross to give the hospital owners two seats on Blue Cross’ board of directors if the hospitals do not compete with Blue Cross in the sale of commercial health insurance, the department said.
The proposed settlement prevents the agreement from harming competition by providing a new entrant with the necessary assets to compete in the commercial health-insurance markets in Montana. Under the proposed settlement, New West must promptly divest its remaining commercial health-insurance business to an acquirer with the intent and capability to be an effective competitor. The department has tentatively approved PacificSource Health Plans, based in Springfield, Ore., as the acquirer, and the hospital owners must first attempt to sell the assets to PacificSource before selling to another purchaser. Furthermore, the hospital owners must enter three-year contracts with the acquirer to provide health-care services on terms that are substantially similar to their existing contractual terms with New West. At the acquirer’s option, New West and the five hospital owners must also use their best efforts to assign the health-care provider contracts that are not under their control to the acquirer or to lease New West’s provider network to the acquirer for up to three years. The department said that these requirements are important because to compete effectively, health insurers need a network of health-care providers at competitive rates.
The proposed settlement also contains provisions to prevent Blue Cross from interfering with the acquirer’s ability to compete effectively. Under the proposed settlement, Blue Cross must notify the department and the state of Montana before it uses exclusive contracts with health-insurance brokers, or exclusive or most-favored-nation provisions in its agreements with health-care providers.
The Justice Department worked closely with the Montana Attorney General’s office in its investigation of the agreement between Blue Cross and New West’s owners. “This is another example of close cooperation between the department’s Antitrust Division and state antitrust officials resulting in an outcome that protects competition and benefits consumers,” said Acting Assistant Attorney General Pozen.
Blue Cross and Blue Shield of Montana Inc., the largest health insurer in Montana, is a non-profit corporation based in Helena. In 2010, Blue Cross reported revenues of approximately $530 million.
New West Health Services Inc., the third-largest health insurer in Montana, is a Montana non-profit corporation, also based in Helena. In 2010, New West reported revenues of $120 million.
The five hospital owners are:
- Billings Clinic, a 370-bed hospital in Billings;
- Bozeman Deaconess Health Services Inc., an 86-bed hospital in Bozeman;
- Community Medical Center Inc., a 143-bed hospital in Missoula;
- Northern Montana Health Care Inc., a 49-bed hospital in Havre, Mont; and
- St. Peter’s Hospital, a 122-bed hospital in Helena.
PacificSource Health Plans is a non-profit health-insurance company based in Springfield. In 2010, PacificSource reported revenues of approximately $735 million.
The proposed settlement, along with the department’s competitive impact statement, will be published in the Federal Register, as required by the Antitrust Procedures and Penalties Act. Any person may submit written comments concerning the proposed settlement within 60 days of its publication to Joshua H. Soven, Chief, Litigation I Section, Antitrust Division, U.S. Department of Justice, 450 Fifth St., N.W., Suite 4100, Washington, D.C. 20530. At the conclusion of the 60-day comment period, the court may enter the settlement upon a finding that it is in the public interest.
Hawaiian Firearms Business Owner Convicted of Federal Tax OffensesRead the Press Release
HONOLULU – Arthur Lee Ong of Honolulu was convicted by a federal jury Monday of conspiracy to defraud the United States and tax evasion, the Justice Department and Internal Revenue Service (IRS) announced today. District Judge Leslie Kobayashi presided over the case.
According to evidence introduced at trial, Ong, the owner and operator of Thunder Bug Inc., doing business in the state of Hawaii as Magnum Firearms, failed to report to the IRS millions of dollars of income he earned from the sale of firearms and related products to federal, state, county and military agencies, as well as to the general public. The evidence at trial showed that Ong, with the assistance of others, created multiple sham trusts in 1990 for the purpose of hiding his income and assets.
The evidence further showed that Ong stopped filing personal income tax returns beginning in 1994 and also filed false tax returns on behalf of the sham trusts that fraudulently reported to the IRS that the income from his businesses was attributable to these trusts and not to him. The evidence at trial established that Ong evaded more than $600,000 in federal income taxes from 2000 to 2006.
District Judge Kobayashi set sentencing for March 1, 2012. Ong faces a maximum prison sentence of 35 years and a fine of up to $1.75 million.
The case resulted from an investigation by IRS - Criminal Investigation and was prosecuted by Trial Attorneys Timothy J. Stockwell and Todd Kostyshak of the Justice Department’s Tax Division.
7 November 2011
Point Blank Pays U.S. $1 Million for the Sale<br /> of Defective Zylon Bulletproof VestsRead the Press Release
WASHINGTON - Debtor companies Point Blank Solutions Inc. (formerly DHB Industries Inc.), Point Blank Body Armor Inc. and Protective Apparel Corporation of America Inc. (collectively, “Point Blank”) have paid the United States $1 million to resolve allegations that they violated the False Claims Act by knowingly manufacturing and selling defective Zylon bulletproof vests, the Justice Department announced today. The payment was made to the United States at the closing of the sale of the bankrupt companies’ assets.
The United States alleged that the Pompano Beach, Fla.,and Jacksboro, Tenn., companies manufactured and sold Zylon bulletproof vests despite possessing information showing that the Zylon materials degraded quickly over time and were not suitable for ballistic use. The Point Blank vests were purchased by the federal government, and by various state, local, and tribal law enforcement agencies that were partially reimbursed by the United States under the Justice Department’s Bulletproof Vest Partnership Grant Program.
“Companies that manufacture and sell defective bulletproof vests to the government not only cheat the taxpayers, they put the lives of our men and women in law enforcement at risk,” said Tony West, Assistant Attorney General for the Justice Department’s Civil Division. “We will hold accountable those who were aware of the problems with Zylon vests, yet continued to sell them anyway.”
This settlement is part of a larger investigation of the body armor industry’s use of Zylon in body armor. The United States has settled with nine other participants in the Zylon body armor industry for more than $61 million. Additionally, the United States has pending lawsuits against Toyobo Co., the manufacturer of the Zylon fiber, and Honeywell Inc., Second Chance Body Armor Inc. and First Choice Armor Inc., which were involved in the production or sale of Zylon body armor. As part of today’s agreement, Point Blank has pledged cooperation with the United States’ ongoing efforts.
Assistant Attorney General West acknowledged the contributions of the many government agencies assisting the ongoing investigation of those who participated in manufacture and sale of Zylon vests, including the Justice Department’s Civil Division; the U.S. Attorney’s Office for the District of Columbia; the General Services Administration, Office of the Inspector General; the Department of Homeland Security, Office of Inspector General; the Department of the Treasury’s Inspector General for Tax Administration; the Defense Criminal Investigative Service; the U.S. Army Criminal Investigative Division; the Air Force Office of Special Investigations; the Department of Energy, Office of the Inspector General; the U.S. Agency for International Development, Office of the Inspector General; and the Defense Contracting Audit Agency.
Member of Barrio Azteca Gang Pleads Guilty in El Paso, Texas, to <br /> Racketeering ConspiracyRead the Press Release
WASHINGTON – A member of the Barrio Azteca (BA) gang pleaded guilty today to racketeering conspiracy, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Robert Pitman for the Western District of Texas, FBI Assistant Director of the Criminal Investigative Division Kevin Perkins and Administrator Michele M. Leonhart of the U.S. Drug Enforcement Administration (DEA).
Jorge Diaz, 33, aka “Payaso,” and “Narizon,” of El Paso, Texas, pleaded guilty before U.S. Magistrate Judge Norbert J. Garney in the Western District of Texas, El Paso Division, to racketeering conspiracy.
According to court documents, Diaz is a member of the BA, which began in the late 1980s as a violent prison gang and has expanded into a transnational criminal organization. The BA is primarily based in West Texas; Juarez, Mexico; and throughout state and federal prisons in the United States and Mexico. The gang has a militaristic command structure and includes captains, lieutenants, sergeants and soldiers – all with the purpose of maintaining power and enriching its members and associates through drug trafficking, money laundering, extortion, intimidation, violence, threats of violence and murder.
According to court documents, members and associates of the BA have engaged in a host of criminal activity committed since Jan. 1, 2003, including drug trafficking, extortion, money laundering, kidnapping and murder, including the March 13, 2010, murders in Juarez of U.S. Consulate employee Leslie Ann Enriquez Catton, her husband Arthur Redelf and Jorge Alberto Salcido Ceniceros, the husband of a U.S. Consulate employee.
The BA profits by importing heroin, cocaine and marijuana into the United States from Mexico. BA members and associates also allegedly charge a “street tax” or “cuota” on businesses and criminals operating in their turf. These profits are used to support BA members in prison by funneling money into prison commissary accounts of gang leaders and to pay for defense lawyers or fines. The “cuota” profits are also allegedly reinvested into the organization to purchase drugs, guns and ammunition.
According to the plea agreement, for more than a year, Diaz maintained extortion fees provided to him by other BA members based on fees they charged drug dealers operating on BA turf. Upon receiving these funds, Diaz coordinated the distribution of that money to jailed BA leaders. Diaz also admitted that he had reason to know the BA gang and its associates had trafficked more than 30 kilograms of heroin and 150 kilograms of cocaine. According to the plea agreement, Diaz will receive a prison term of 20 years, if approved by U.S. District Court Judge Kathleen Cardone.
Thirty-five members and associates of the BA gang, including Diaz and 10 others who have pleaded guilty, were charged in a third superseding indictment unsealed in March 2011 with various counts of racketeering, murder, drug offenses, money laundering and obstruction of justice.
The case is being prosecuted by Trial Attorney Joseph A. Cooley of the Criminal Division’s Organized Crime and Gang Section, Trial Attorney Brian Skaret of the Criminal Division’s Human Rights and Special Prosecutions Section and the U.S. Attorney’s Office of the Western District of Texas - El Paso Division. The U.S. Attorney’s Office for the District of New Mexico provided significant assistance in this case, including Assistant U.S. Attorney Sarah Davenport. Valuable assistance was provided by the Criminal Division’s Offices of International Affairs and Enforcement Operations.
The case was investigated by the FBI. Special assistance was provided by the DEA; the Bureau of Alcohol, Tobacco, Firearms and Explosives; Immigration and Customs Enforcement; the U.S. Marshals Service; U.S. Customs and Border Protection; Federal Bureau of Prisons; U.S. Diplomatic Security Service; the Texas Department of Public Safety; the Texas Department of Criminal Justice; El Paso Police Department; El Paso County Sheriff’s Office; El Paso Independent School District Police Department; Texas Alcohol and Beverage Commission; New Mexico State Police; Dona Ana County, N.M., Sheriff’s Office; Las Cruces, N.M., Police Department; Southern New Mexico Correctional Facility and Otero County Prison Facility New Mexico.
Justice Department to Monitor Elections in California, Massachusetts, Mississippi, Ohio and TexasRead the Press Release
WASHINGTON – The Justice Department announced today that the Civil Rights Division will monitor elections on Nov. 8, 2011, in Alameda County, Calif.; Springfield, Mass.; Humphreys, Leflore, Panola and Wilkinson Counties, Miss.; Lorain County, Ohio; and Jasper, Texas. The monitoring will ensure compliance with the Voting Rights Act of 1965. The Voting Rights Act prohibits discrimination in the election process on the basis of race, color or membership in a minority language group.
Under the Voting Rights Act, the Justice Department is authorized to ask the U.S. Office of Personnel Management (OPM) to send federal observers to jurisdictions that are certified by the attorney general or by a federal court order. Federal observers will be assigned to monitor polling place activities in Humphreys, Leflore, Panola and Wilkinson Counties based on the attorney general’s certification and in Alameda and Lorain Counties based on court orders. The observers will watch and record activities during voting hours at polling locations, and Civil Rights Division attorneys will coordinate the federal activities and maintain contact with local election officials.
In addition, Justice Department personnel will monitor polling place activities in the cities of Springfield and Jasper. A Civil Rights Division attorney will coordinate federal activities and maintain contact with local election officials in each city.
Each year, the Justice Department deploys hundreds of federal observers from OPM, as well as departmental staff, to monitor elections across the country. To file complaints about discriminatory voting practices, including acts of harassment or intimidation, voters may call the Voting Section of the Justice Department’s Civil Rights Division at 1-800-253-3931.
Visit www.justice.gov/crt/voting/index.php for more information about the Voting Rights Act and other federal voting laws.
Justice Department Files Suit Against Pittsburgh Woman for FACE ViolationsRead the Press Release
WASHINGTON - The Justice Department today filed a civil complaint in the U.S. District Court for the Western District of Pennsylvania against Meredith Parente for violating the Freedom of Access to Clinic Entrances Act (FACE Act).
According to court documents, in January 2011, Ms. Parente used physical force against two volunteer escorts who were accompanying a patient into the Planned Parenthood of Western Pennsylvania Liberty Avenue clinic. The FACE Act prohibits the use of force against any person providing or obtaining reproductive health services, or those seeking to do so, with the intent to injure, intimidate or interfere with that person.
“Individuals obtaining medical care should not have to fear physical assault,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “We will aggressively enforce the law so that people can have access to clinics. The right to free speech does not include the right to use force against individuals seeking or providing reproductive health services.”
This civil action was filed by the Civil Rights Division Special Litigation Section Deputy Chief Julie Abbate and Trial Attorneys Michelle Leung and Aaron Fleisher.
Jury Convicts Illinois Man for Production and Possession <br /> of Child PornographyRead the Press Release
WASHINGTON – A Riverton, Ill., man has been convicted for production and possession of child pornography, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney James A. Lewis for the Central District of Illinois.
Jeffrey Price, 47, was convicted late Friday, Nov. 4, 2011, by a federal jury after two hours of deliberation on one count of production and one count of possession of child pornography.
Price was indicted in November 2009, following his arrest on Oct. 22, 2009, on a federal criminal complaint. Price has remained in the custody of the U.S. Marshals Service since his arrest.
During Price’s trial, which began on Nov. 1, 2011, the government presented evidence that showed between November 2003 and March 2004, Price coerced and photographed a child engaged in sexually explicit conduct. Evidence also was presented that showed Price possessed more than 900 images and 20 movies that depict children engaged in sexually explicit activity.
Price’s sentencing is scheduled for March 12, 2012. Production of child pornography carries a mandatory minimum penalty of 15 years in prison and a maximum of 30 years in prison. Possession of child pornography carries a maximum penalty of 10 years in prison. Both charges carry maximum terms of lifetime supervised release following any prison terms.
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 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 via the Internet as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
The case was prosecuted by Assistant U.S. Attorneys Greggory R. Walters and Elly Peirson of the Central District of Illinois and CEOS Assistant Deputy Chief Alexandra Gelber. The case was investigated by the U.S. Immigration and Customs Enforcement Office of Homeland Security Investigations and the Springfield, Ill., Police Department with assistance provided by the Illinois Department of Children and Family Services and the Sangamon County, Ill., Child Advocacy Center.
Federal Court Shuts Down Tax Return Preparer Siblings in Southern CaliforniaRead the Press Release
WASHINGTON – A federal court has permanently barred Karen Berry, Carla Berry and their tax preparation business, N.C.K. Services Inc., from preparing federal tax returns for others, the Justice Department announced today. The civil injunction order, entered by Judge Virginia A. Phillips of the U.S. District Court for the Central District of California, also prohibits the Berrys from promoting or selling any tax service that advises customers to attempt to violate the tax laws.
According to the government complaint, the Berrys, who are sisters from Rialto, Calif., prepared returns claiming false and inflated itemized deductions for mortgage interest and unreimbursed employee business expenses resulting, in most cases, in undeserved refunds for their customers. According to the court’s order, the falsified tax returns cost the United States millions of dollars in tax revenue. The court also found that N.C.K. Services retained copies of legitimately prepared returns but destroyed copies of its fraudulently prepared returns.
As noted in the court’s order, Karen and Carla Berry had previously pleaded guilty to conspiring to defraud the United States, aiding and assisting in the preparation of a false tax return, and willfully filing a false tax return. They were each sentenced to six years in federal prison.
Return preparer fraud is one of the IRS’s “Dirty Dozen” tax scams for 2011. In the past ten years, the Justice Department’s Tax Division has obtained injunctions against hundreds of return preparers and tax-fraud promoters. Information about these cases is available on the Justice Department website.
4 November 2011
Two Individuals Sentenced in Connection with $2.5 Million Reverse Mortgage and Loan Modification SchemeRead the Press Release
WASHINGTON – Two individuals – a loan officer and a title agent – have been sentenced by U.S. District Court Judge William P. Dimitrouleas in Ft. Lauderdale, Fla., for their participation in a nationwide $2.5 million reverse mortgage fraud scheme, the Justice Department announced today.
Kimberly Mackey, 47, of Pittsburgh, was sentenced to 60 months in prison, five years of supervised release and ordered to pay more than $1.6 million in restitution. Marcos Echevarria, 29, of Palm Beach, Fla., was sentenced to 24 months in prison, five years of supervised release and ordered to pay more than $1.6 million in restitution. Louis Gendason, 42, of Delray Beach, Fla., and John Incandela, 24, of Palm Beach are scheduled to be sentenced on Dec. 16, 2011.
A reverse mortgage, also known as a Home Equity Conversion Mortgage, allows borrowers who are at least 62 years of age to convert the equity in their homes into a monthly stream of income, or a line of credit. Unlike the traditional mortgage loan scenario, in which borrowers make monthly payments to a mortgage lender in satisfaction of their outstanding loan, in a reverse mortgage loan scenario, the mortgage lender purchases borrowers’ equity and makes installment payments to the borrower.
According to the information and statements made during the August 2011 hearing in the case, from May 2009 through November 2010, the defendants engaged in a reverse mortgage scheme that defrauded unwitting borrowers, Genworth Financial Home Equity Access Inc., and the Federal Housing Administration (FHA). Working as loan officers, Incandela and Echevarria solicited seniors to refinance their existing mortgages with a reverse mortgage loan financed by Genworth. To qualify the borrowers for these loans, a third defendant, Gendason, altered real estate appraisals to fraudulently inflate the value of the borrowers’ properties. In fact, however, none of the borrowers had sufficient equity in their properties to qualify for a reverse mortgage. The defendants then submitted the fraudulently inflated appraisals to Genworth. Based on the false documentation, Genworth approved and the FHA insured more than $2.5 million in reverse mortgage loans.
As part of the scheme, Mackey, a licensed title agent, fraudulently closed the Genworth loans and did not pay off the borrowers’ existing mortgage loans. Mackey attempted to conceal the fraudulent loan closings by preparing false settlement documents that showed that the existing mortgages had, in fact, been paid off. The defendants divided up the loan proceeds and used the money for their personal benefit.
The defendants further engaged in a loan modification scheme to conceal the existence of the Genworth reverse mortgage transactions from the original mortgage lenders, whose loans remained unpaid. To this end, Gendason, Incandela and Mackey conspired to create fictitious offers to buy some of the borrowers’ properties, in the form of “short sales.” A short sale is a sale of real estate in which the sale proceeds are less than the balance owed on the loan to the mortgage lender, but avoids foreclosure and related costs. In other instances, to hide the existence of the Genworth reverse mortgage loan from the original lenders, the defendants made monthly mortgage payments to the borrowers’ original lenders.
The sentences were announced by Tony West, Assistant Attorney General for the Justice Department’s Civil Division; Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida; Timothy A. Mowery, Special Agent in Charge, U.S. Department of Housing and Urban Development, Office of Inspector General (HUD-OIG); Jose A. Gonzalez, Special Agent in Charge, Internal Revenue Service-Criminal Investigation (IRS-CI); Henry Gutierrez, Inspector in Charge, U.S. Postal Inspection Service; John V. Gillies, Special Agent in Charge, FBI, Miami Field Office; and J. Thomas Cardwell, Commissioner, State of Florida’s Office of Financial Regulation.
“These defendants orchestrated a mortgage fraud scheme targeting some of the most vulnerable and valuable members of our community – our elders,” said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. “The court’s stiff sentences reflect the seriousness of their crime and the Justice Department’s resolve to fight financial fraud perpetrated against consumers.”
The case was investigated by HUD-OIG, IRS-CI, the U.S. Postal Inspection Service, the FBI and the Florida’s Office of Financial Regulation, with assistance from the U.S. Secret Service and Genworth Financial Home Equity Access. The case was prosecuted Kevin J. Larsen, a Trial Attorney in the Justice Department’s Consumer Protection Branch, and Assistant U.S. Attorneys Jeffrey H. Kay and Thomas Lanigan.
Self-Proclaimed “Governor” of Alabama and Wife Convicted of Tax FraudRead the Press Release
WASHINGTON – A federal jury in Montgomery, Ala., today convicted Monty Ervin and Patricia Ervin of conspiracy to defraud the United States and three counts of tax evasion, the Justice Department announced. The jury also convicted Patricia Ervin of one count of structuring transactions to avoid bank reporting requirements. The jury’s verdict culminated a two-week trial that began Oct. 25, 2011, in Dothan, Ala.
Based on the evidence introduced at trial, the Ervins amassed hundreds of investment properties over the last decade, receiving more than $9 million in rental income. Despite receiving this income, the couple paid nothing in federal income taxes. When confronted by the Internal Revenue Service (IRS) in 2006, the Ervins proclaimed that they were not United States citizens, and as “sovereigns,” did not consider themselves subject to federal or state law.
Monty Ervin and Patricia Ervin also filed numerous documents in probate court renouncing their U.S. citizenship. In one such filing, Monty Ervin declared himself the “governor” of Alabama in its “original jurisdiction.” The Ervins had a license plate on their vehicle which law enforcement witnesses testified was associated with a “sovereign citizens” organization.
The Ervins owned and managed Southern Realty, a property management company in Dothan. As the evidence showed at trial, the couple concealed their assets from the IRS by placing investment properties into the names of nominees – “trusts” and “trustees.” The “trustees” named on property deeds testified that they were not involved in the sale or purchase of the properties and that the Ervins “stamped” their signatures onto official property records. Patricia Ervin also structured deposits into Southern Realty’s bank account in an effort to evade federal currency reporting requirements.
In addition to hundreds of real estate investment properties, the evidence also showed that the Ervins had amassed beachfront condominium units in their own names including a $1.3 million unit they paid for in cash and, when investigated by the IRS, transferred those properties into the names of bogus “trusts” and “trustees.” Additionally, the government introduced into evidence $350,000 of gold coins apparently buried in their yard.
The Ervins were indicted by a federal grand jury in Montgomery in February 2011. In March, Monty Ervin was arrested by a U.S. Marshal’s Service Fugitive Task Force in Naples, Fla., with a notebook containing the latitude and longitude coordinates of an island off the coast of Honduras.
Sentencing for both defendants is scheduled for Jan. 23, 2012, before the U.S. District Court Judge Myron Thompson. Patricia Ervin faces a maximum of 25 years in federal prison and a maximum fine of $1.25 million. Monty Ervin faces a maximum of 20 years in federal prison and a maximum fine of $1 million.
This case was investigated by IRS-Criminal Investigation and is being prosecuted by Tax Division Trial Attorneys Michael Boteler and Justin Gelfand, and by Assistant U.S. Attorney Todd Brown of the Middle District of Alabama.
Man Indicted in Pittsburgh for Possession of Child PornographyRead the Press Release
WASHINGTON – Alexander Brent, 40, was indicted yesterday by a federal grand jury in Pittsburgh for possession of child pornography, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney David J. Hickton for the Western District of Pennsylvania, and Robin Dalgleish, Inspector in Charge, U.S. Postal Inspection Service (USPIS), Pittsburgh Division.
According to the indictment, from December 2009 to December 22, 2010, while accompanying a member of the armed forces in Germany, Brent possessed visual depictions of minors engaged in sexually explicit conduct.
If convicted, Brent faces a maximum sentence of 10 years in prison. Brent also faces a term of supervised release of five years to life following his prison sentence and will be required to register as a sex offender in any jurisdiction in which he lives, works or attends school.
This case is being investigated by USPIS. Trial Attorney Andrew McCormack of the Child Exploitation and Obscenity Section (CEOS) in the Justice Department’s Criminal Division and Assistant U.S. Attorney Craig W. Haller are prosecuting the case.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and CEOS, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
The details contained in the indictment are allegations. The defendant is presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Indiana Waste Treatment Company, Its Owner and a Manager Charged with Conspiracy and Violating the Clean Water ActRead the Press Release
WASHINGTON – Tierra Environmental and Industrial Services, Inc., a centralized waste treatment facility in East Chicago, Ind., its owner and a manager were charged yesterday with conspiracy and felony violations of the Clean Water Act in a seven-count indictment returned by a federal grand jury, the Department of Justice announced.
Tierra Environmental, owner Ronald Holmes and manager Stewart J. Roth have been charged with illegally discharging wastewater into the sewers of the Hammond Sanitary District from a closed facility.
Tierra, located at 3821 Indianapolis Blvd., is a centralized waste treatment facility that charges customers to dispose of their polluted wastewater. Tierra advertised itself as specializing in spill remediation; bio-waste cleanup; waste brokerage; hazardous and non-hazardous transportation services; industrial wastewater/sludge removal and disposal; grease trap cleaning and tank cleaning for hotels and restaurants; and liquid waste transportation and disposal from food processors, distributors and manufacturers in all industries. Tierra collected both hazardous and non-hazardous liquid wastes from customers, using a number of vacuum trucks and tanker tractor-trailer trucks. Tierra had facilities for limited storage, separation and solidification of non-hazardous wastes.
According to the indictment, Tierra’s East Chicago facility did not hold a permit to discharge industrial waste to the East Chicago Sanitary District’s sewer system and the facility’s connection to that sanitary sewer system had been sealed shut. The company therefore had to transport wastewaters it collected from customers to other facilities for final treatment and/or disposal.
The indictment alleges that the conspiracy was undertaken for the purpose of avoiding expenses associated with treating and/or paying other facilities to lawfully treat, store, or dispose of wastewaters collected from customers. The indictment alleges that the defendants conspired to achieve this objective by transporting wastewater to a shut-down, unpermitted facility located at 3, 141st Street, Hammond, Ind., that was owned and/or controlled by Ronald Holmes. There, the wastewater was discharged directly to the Hammond Sanitary District’s sewer system.
Holmes was the owner of Tierra, and also served as its president and secretary. Roth was a Project Manager at Tierra. Roth had been with Tierra since 2005.
The Clean Water Act makes it a felony to knowingly discharge trucked or hauled pollutants into a publicly-owned treatment works (POTW) from a discharge point not designated by the POTW.
If convicted, Holmes and Roth face up to five years in prison on the conspiracy count and three years on each of the Clean Water Act counts, as well as a criminal fine of up to $250,000 for each count. The company may also face fines and probation.
The allegations in the indictment are mere accusations and all persons are presumed innocent until and unless proven guilty beyond a reasonable doubt in a court of law.
The case was investigated by the Northern District of Indiana Environmental Crimes Task Force, including agents from the U.S. Environmental Protection Agency’s Criminal Investigation Division, the Indiana Department of Environmental Management- Office of Criminal Investigations, the U.S. Department of Transportation, Office of Inspector General, and the U.S. Coast Guard Criminal Investigative Service. The case is being prosecuted by the U.S. Attorney’s Office for the Northern District of Indiana and the Environmental Crimes Section of the Justice Department’s Environment and Natural Resources Division.
Former Allegheny County, Pennsylvania, Jail Major Indicted for Assaulting an InmateRead the Press Release
PITTSBURGH - James Donis, 47, a former major at the Allegheny County, Penn., Jail, and a resident of Glenshaw, Penn., has been indicted by a federal grand jury in Pittsburgh on civil rights charges stemming from an April 2010 incident in which Donis allegedly punched an inmate in the face, the Justice Department announced today .
The three-count indictment charges Donis with a felony civil rights violation, falsifying documents related to the incident and making false statements to an agent of the FBI.
If convicted, the defendant faces a maximum penalty of 10 years in prison on the civil rights charge, a fine of $250,000, or both; a maximum penalty of 20 years in prison on the obstruction of justice charge, a fine of $250,000 or both; and a maximum penalty of five years in prison on the false statements charge, a fine of $250,000 or both.
Assistant U.S. Attorney Amy L. Johnston from the Western District of Pennsylvania and Civil Rights Division Trial Attorney Patricia A. Sumner are prosecuting this case on behalf of the government.
The FBI conducted the investigation leading to the indictment in this case.
An indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Former Airline Executive Pleads Guilty in Schemes to Defraud Illinois-Based Ryan International AirlinesRead the Press Release
WASHINGTON – A former executive of Ryan International Airlines, a charter airline company located in Rockford, Ill., pleaded guilty today in U.S. District Court in West Palm Beach, Fla., to participating in kickback schemes to defraud Ryan, the Department of Justice announced.
W ayne E. Kepple, the former vice president of ground operations for Ryan, pleaded guilty to felony charges filed on Sept. 29, 2011, in U.S. District Court in Fort Lauderdale, Fla. The charges against Kepple stem from a kickback scheme involving Robert A. Riddell, the former owner and operator of an airline security and ground service company, as well as separate kickback schemes involving David A. Chaisson, the former owner and operator of an Indiana flight management services company, James E. Murphy, the former owner and operator of a Florida aviation fuel supply company, and others.
On Aug. 12, 2011, Chaisson and Murphy pleaded guilty to participating in different conspiracies to defraud Ryan by making kickback payments to Kepple in exchange for winning contracts for their respective companies. On Oct. 17, 2011, Riddell pleaded guilty to participating in a conspiracy with Kepple to defraud Ryan. Today’s plea is the fourth to arise out of the Antitrust Division’s ongoing investigation into fraud and anticompetitive conduct in the airline charter services industry.
Ryan provides air passenger and cargo services for corporations, private individuals, professional sports teams and the U.S. government, including the U.S. Department of Defense, the U.S. Department of Homeland Security and the U.S. Marshals Service.
According to court documents, Kepple was in charge of contracting with providers of goods and services on behalf of Ryan and approving the invoices submitted by the providers to Ryan for payment. From October 2005 through at least August 2009, Kepple participated in three separate conspiracies in which he received kickback payments of more than $520,000 from Riddell, Murphy, Chaisson and others in exchange for Kepple awarding them Ryan airline services and fuel contracts. According to court documents, the payments from Chaisson and Riddell included the proceeds of fabricated invoices submitted by their companies to Ryan.
Kepple was charged with three counts of conspiracy to commit wire fraud and honest services fraud, as well as three counts of wire fraud. Each count carries a maximum sentence of 20 years in prison and a $250,000 criminal 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 amount is greater than the statutory maximum fine.
The investigation is being conducted by the Antitrust Division’s Atlanta Field Office and the National Criminal Enforcement Section and the U.S. Department of Defense’s Office of Inspector General, with assistance from the U.S. Attorney’s Office for the Southern District of Florida. Anyone with information concerning anticompetitive conduct in the airline charter services industry is urged to call the Antitrust Division’s Atlanta Field Office at 404-331-7100 or visit www.justice.gov/atr/contact/newcase.htm.
Florida Man Sentenced to 90 Years in Prison <br /> for Production of Child PornographyRead the Press Release
WASHINGTON – Wesley William Brandt of Davenport, Fla., was sentenced today to 90 years in prison and a lifetime of supervised release for production of child pornography, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney for the Middle District of Florida Robert E. O’Neill and Susan McCormick, Special Agent-in-Charge for U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI).
Brandt was sentenced by U.S. District Judge Elizabeth A. Kovachevich in Tampa, Fla.
In June of 2011, Brandt, 46, pleaded guilty to three counts of production of child pornography. According to court documents and proceedings, in February 2008, Brandt, posing as a 17-year-old boy, began communicating online with a 13-year-old girl from Colorado. During these communications and through the use of other online personas, Brandt threatened and coerced the Colorado victim to produce sexually explicit photographs of herself and her 6-year-old sister. Specifically, Brandt threatened to create a public website and post sexually explicit images of the victim if she did not send him additional sexually explicit images of herself. Brandt was also introduced to the 13-year-old female cousin of the Colorado victim and similarly threatened and coerced her to produce sexually explicit photographs of herself. A subsequent search of Brandt’s home yielded computers and computer storage devices containing multiple images of child pornography.
This case was investigated by ICE’s HSI . This case was prosecuted by Trial Attorney Andrew M. McCormack of the Criminal Division’s Child Exploitation and Obscenity Section and Assistant U.S. Attorney Stacie B. Harris of the Middle District of Florida.
Federal Court Orders Iowa Construction Company to Pay Employment TaxesRead the Press Release
WASHINGTON – A federal court has ordered Advanced Underground Construction LLC and William David Ward II to begin paying employment taxes to the United States on a timely basis, the Justice Department announced today. According to the complaint in a government lawsuit, Advanced Underground Construction is a construction company based in Grimes, Iowa, and Ward is its owner.
The preliminary injunction order, entered by Judge Harold D. Vietor of the U.S. District Court for the Southern District of Iowa, remains in effect while the government’s lawsuit is pending. According to the order, the defendants did not oppose the entry of the injunction, which requires them to deposit and pay the employment taxes, make all related tax return filings, and certify to the government that they have done so. Violation of an injunction can result in civil and criminal sanctions, including fines and imprisonment.
The government complaint alleges that, between the third quarter of 2004 and the present, Ward and the company repeatedly failed to make required employment tax deposits to the United States and instead used taxes withheld from employees’ wages as working capital, a practice sometimes referred to as “pyramiding.” The complaint further alleges that the defendants’ misconduct has resulted in a balance due to the government of more than $370,000, for which the government is seeking a judgment against the company.
In the past decade, the Justice Department’s Tax Division has obtained hundreds of injunctions prohibiting a wide variety of improper conduct, including the pyramiding of employment taxes. Information about these cases is available on the Justice Department website .
3 November 2011
Remaining Co-Founder of NinjaVideo.net Pleads Guiltyto Criminal Copyright ConspiracyRead the Press Release
WASHINGTON – A co-founder of NinjaVideo.net, a website that provided millions of users with the ability to illegally download infringing copies of copyright-protected movies and television programs in high-quality formats, pleaded guilty today to conspiracy to commit copyright infringement.
The guilty plea was announced by U.S. Attorney Neil H. MacBride for the Eastern District of Virginia Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Immigration and Customs Enforcement Director John Morton.
Justin A. Dedemko, 28, of Brooklyn, N.Y., pleaded guilty today before U.S. District Judge Anthony J. Trenga in the Alexandria Division of the Eastern District of Virginia. Dedemko’s fellow co-founders Matthew David Howard Smith and Hana Amal Beshara pleaded guilty on Sept. 23, 2011, and Sept. 29, 2011, respectively, to conspiracy and criminal copyright infringement.
According to the statement of facts, during the early part of the conspiracy, Dedemko was responsible for locating infringing content on the Internet and uploading the infringing content to servers used by the NinjaVideo.net website, some of which were located in the Eastern District of Virginia. Later in the conspiracy, Dedemko focused on marketing, which included conversations with companies interested in placing advertisements on the NinjaVideo.net website.
According to the statement of facts, NinjaVideo generated a total of $505,000 in income from Internet advertising and visitor donations during the course of the conspiracy. Dedemko admitted that he personally received $58,004 of these funds, and agreed to pay restitution in that amount.
At sentencing, scheduled for Feb. 24, 2012, Dedemko faces a maximum penalty of five years.
Dedemko’s guilty plea follows the guilty pleas of four of five co-conspirators indicted on Sept. 9, 2011. In addition to Smith and Beshara, Joshua David Evans, who served as one of NinjaVideo’s main uploaders, pleaded guilty on Oct. 25, 2011, to conspiracy and criminal copyright infringement. Jeremy Lynn Andrew, who served as head of security for NinjaVideo.net, also pleaded guilty on Oct. 25, 2011, to conspiracy. Sentencings will be held on Dec. 16, 2011, for Smith; Jan. 6, 2012, for Beshara; Jan. 27, 2012, for Evans; and Feb. 3, 2012, for Andrew. An arrest warrant has been issued for the last remaining indicted co-conspirator, Zoi Mertzanis of Greece, who also allegedly served as one of the website’s main uploaders.
The case is being prosecuted by Assistant U.S. Attorneys Jay V. Prabhu and Lindsay A. Kelly and Trial Attorney Glenn Alexander of the Criminal Division’s Computer Crime & Intellectual Property Section.
The investigation was conducted by the National Intellectual Property Rights Coordination Center (IPR Center). The IPR Center is one of the U.S. government’s key weapons in the fight against criminal counterfeiting and piracy. As a task force, the IPR Center uses the expertise of its 19 member agencies to share information, develop initiatives, coordinate enforcement actions, and conduct investigations related to IP theft. Through this strategic interagency partnership, the IPR Center protects the public's health and safety, the U.S. economy and the war fighters.
To report IP theft or to learn more about the IPR Center, visit www.IPRCenter.gov .
This case is part of efforts being undertaken by the Department of Justice Task Force on Intellectual Property (IP Task Force) to stop the theft of intellectual property. Attorney General Eric Holder created the IP Task Force to combat the growing number of domestic and international intellectual property crimes, protect the health and safety of American consumers, and safeguard the nation’s economic security against those who seek to profit illegally from American creativity, innovation and hard work. The IP Task Force seeks to strengthen intellectual property rights protection through heightened criminal and civil enforcement, greater coordination among federal, state and local law enforcement partners, and increased focus on international enforcement efforts, including reinforcing relationships with key foreign partners and U.S. industry leaders. To learn more about the IP Task Force, go to www.justice.gov/dag/iptaskforce .
Louisiana Man Pleads Guilty to Threatening Four Hispanic MenRead the Press Release
WASHINGTON – Mark Gautreau, 50, pleaded guilty today in federal court in New Orleans for shooting two men on the Bonnet Carre Spillway in St. Charles Parish, La., on Aug. 20, 2006, announced the Department of Justice.
In the factual basis supporting his plea, Gautreau admitted that he was in the parking lot near his truck when he told a bystander that he intended to “shoot some Mexicans.” Gautreau admitted he then loaded ammunition into his 12-gauge shotgun, and drove off. Gautreau also admitted that, once he reached the area where four Hispanic men were fishing, he got out of his truck and fired his shotgun one time. The shotgun blast hit two of the Hispanic men, who suffered injuries that required hospitalization. Gautreau admitted that the four Hispanic men did not shoot at him or threaten him in any way that would require him to defend himself.
“This violent attack against Latino victims has no place in our country,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division of the Justice Department. “The department is committed to prosecuting these cases, wherever they arise.”
“Unprovoked acts of aggression – especially those fueled by prejudice will be met with firm justice,” said U.S. Attorney for the Eastern District of Louisiana Jim Letten. “We in the United States Attorney’s Office will continue in our seamless partnership with the Department of Justice Civil Rights Division and the FBI to ensure that everyone in our communities remain free from fear of harm and exploitation.”
Gautreau pleaded guilty to one count of assault with a dangerous weapon within the maritime and territorial jurisdiction of the United States.
Sentencing for Gautreau is scheduled for Feb. 9, 2012. He faces up to 10 years in prison and a maximum fine of $250,000.
This case was investigated by the New Orleans office of the FBI. The case was prosecuted by Trial Attorney Angie Cha of the Civil Rights Division and Assistant U.S. Attorney Emily Greenfield.
Justice Department Settles with Lowe’s Hardware Store for USERRA ViolationsRead the Press Release
PORTLAND, ORE. – Lowe’s, a national hardware store chain, has agreed to settle the Justice Department’s claims alleging that the company violated the Uniform Services Employment and Reemployment Rights Act (USERRA) when it terminated the employment of Matthew King, a U.S. Army Guard member and Iraq War veteran, without just cause. The complaint which was filed with a consent decree will resolve the matter if approved by the U.S. District Court in Portland, Ore. The consent decree details the terms of the settlement and includes a lump sum payment of $45,000 to King, for back pay and liquidated damages.
USERRA requires employers to reemploy a servicemember returning from military service in a position he or she would have attained had they not been called away for military service. After reemploying a service member such as Mr. King, an employer also must retain the servicemember in employment for a year unless there is good cause to terminate the employment, altering the “at will” status under which many individuals are typically employed.
Lowe’s hired King in April 2008. In September 2008, King provided Lowe’s a copy of his military orders deploying him to Iraq. King spent approximately a year in Iraq and returned to Oregon in May 2010 after being honorably discharged. Upon his return, King initially sought unemployment benefits on the basis of his federal military discharge, but never actually received any unemployment benefits. He sought reemployment with Lowe’s and was rehired there. Within a couple of months, however, Lowe’s human resource department received notice of King’s initial application for unemployment benefits and summoned him to a meeting. Although King tried to explain to the human resources personnel that he had applied for unemployment before being reemployed by Lowe’s and because he had been discharged by the military, Lowe’s fired King on the spot and made no further attempt to investigate the matter, even though King attempted to provide clarifying information from Oregon’s unemployment office to Lowe’s.
After the Veterans’ Employment and Training Service (VETS) investigation determined that Lowe’s had wrongfully terminated King without cause, the Department of Labor referred the matter to the Justice Department. The Civil Rights Division coordinated with the U.S. Attorney’s Office in Portland to represent Mr. King in his USERRA claims against Lowe’s.
“Our servicemembers need to know we will have their backs at home, including the right to have their job restored with their former employer when they return home after serving our country,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Justice Department will vigorously enforce the law to ensure that an individual who has sacrificed so much to serve this country has a fair opportunity to be reemployed as the law provides.”
“Employers in Oregon are on notice that we will enforce the rights of our veterans seeking reemployment as protected under federal law,” said U.S. Attorney for the District of Oregon Amanda Marshall.
Servicemembers who believe their employment rights have been violated may report these violations to VETS. More information about USERRA and how to contact the local VETS office can be found at www.dol.gov/vets/ . Please visit www.servicemembers.gov to learn about how the Justice Department is protecting the rights of servicemembers.
The case was handled by Assistant U.S. Attorney Adrian Brown and Special Counsel for the Employment Litigation Section of the Civil Rights Division Jodi Danis.
Former “Most Wanted” Health Care Fraud Fugitives Sentenced to 14 Years in Prison for $9.1 Million Detroit Medicare Fraud SchemeRead the Press Release
WASHINGTON – Two sisters who owned a fraudulent Detroit-area medical clinic and who are former “Most Wanted” health care fraud fugitives were each sentenced in Miami today to 14 years in prison for their leading roles in a $9.1 million Medicare fraud scheme, announced the Department of Justice, the FBI and the Department of Health and Human Services (HHS).
Caridad Guilarte, 54, and Clara Guilarte, 57, were sentenced by U.S. District Judge Cecilia M. Altonaga in the Southern District of Florida. The Guilartes were also sentenced to three years of supervised release and were ordered to pay approximately $6 million in restitution, jointly with co-defendants.
The Guilartes pleaded guilty on Aug. 24, 2011, to one count of conspiracy to commit health care fraud and one count of conspiracy to commit money laundering. The sisters were charged in an indictment unsealed in June 2009 in the Eastern District of Michigan. After fleeing the United States to Panama and then Venezuela to avoid arrest, they were placed on the HHS-Office of Inspector General (HHS-OIG) Most Wanted Fugitives list. They were arrested on March 13, 2011, by law enforcement authorities in Colombia and were returned to the United States on March 14, 2011. The Guilartes consented to have their cases transferred to the Southern District of Florida for plea and sentencing. As part of her plea, Caridad Guilarte agreed to forfeit approximately $465,000, which was seized by the FBI as part of its investigation.
According to court documents, the Guilartes opened Dearborn Medical Rehabilitation Center (DMRC) in November 2005 solely for the purpose of defrauding Medicare. DMRC purported to be an infusion clinic that administered infusions of exotic and expensive medications to patients suffering serious illnesses, such as HIV and Hepatitis-C. Between November 2005 and March 2007, DMRC submitted more than $9 million in claims to Medicare for infusion treatments and related services.
The Guilartes admitted that they purchased only a small fraction of the medications billed to Medicare. The Medicare beneficiaries who visited DMRC did not need infusion treatments, but instead came to DMRC because they were bribed to do so with the payment of cash kickbacks. The Guilartes recruited a number of individuals to assist them in defrauding Medicare, including beneficiary recruiters, who paid cash kickbacks, and a doctor, to give the clinic an appearance of legitimacy.
Medicare paid in excess of $6 million to DMRC. The Guilartes laundered the proceeds of the fraud through various co-conspirators and a series of shell corporations, which had no legitimate business function. More than 10 individuals have pleaded guilty to health care fraud and/or money laundering in connection with the DMRC scheme.
The sentencing was announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade; U.S. Attorney for the Southern District of Florida Wifredo Ferrer; Special Agent in Charge of the FBI’s Detroit Field Office Andrew G. Arena; Special Agent in Charge Lamont Pugh III of the HHS-OIG’s Chicago Regional Office.
The cases were prosecuted by Acting Assistant Chief Benjamin D. Singer of the Fraud Section in the Justice Department’s Criminal Division, Assistant U.S. Attorney for the Eastern District of Michigan Philip A. Ross, and Special Assistant U.S. Attorney for the Eastern District of Michigan Thomas W. Biemers. The cases were investigated by the FBI and HHS-OIG, and were brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan.
Since their inception in March 2007, Medicare Fraud Strike Force operations in nine locations have charged more than 1,140 defendants who collectively have falsely billed the Medicare program for more than $2.9 billion. In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov .
Former Soldier and Civilian Contract Recruiter Pleads Guilty for Role in Wire Fraud Scheme to Obtain Recruiting BonusRead the Press Release
WASHINGTON - A former soldier who also served as a civilian contract recruiter pleaded guilty today to conspiracy to obtain approximately $164,000 in fraudulent recruiting bonuses from various U.S. military components and their contractor, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.
Christopher Castro, 30, of San Antonio, Texas, pleaded guilty before Chief U.S. District Judge Fred Biery to one count of conspiracy to commit wire fraud. Castro was indicted on Sept. 13, 2011, along with Xavier Aves, 40, of San Antonio; Grant E. Bibb, 40, of Eagle Pass, Texas; Jesus Torres-Alvarez, 31, of El Paso, Texas; Paul Escobar, 31, of San Antonio; and Richard Garcia, 28, of San Antonio.
According to court documents filed in U.S. District Court for the Western District of Texas, Castro served at different times in the Army National Guard and the Army Reserves from approximately February 2007 through February 2008. He also served as a civilian contract recruiter from approximately June 2007 through October 2009.
According to court documents, between approximately 2005 and approximately 2008, the U.S. Army, the U.S. Army Reserves and the National Guard Bureau entered into contracts with Document and Packaging Broker Inc. to administer recruiting bonus programs designed to offer monetary incentives to soldiers who referred others to join the U.S. military. In addition, the Army managed its own recruiting bonus programs, which offered bonuses to soldiers who referred other individuals to join the Army or the Army Reserves.
Through these recruiting programs, a participating soldier could receive up to $2,000 in bonus payments for every person he referred to serve in the U.S. military. Based on certain milestones achieved by the referred soldier, a participating soldier would receive the recruiting bonus payments in the form of direct deposits and pre-paid debit card payments.
Castro admitted that between approximately August 2007 and March 2009, he and others paid active duty and civilian contract recruiters for the names and Social Security numbers of potential soldiers. Using the names and Social Security numbers he obtained, Castro and others claimed, through online accounts they set up to participate in the recruiting bonus programs, that they were responsible for referring these potential soldiers to join the military, when in fact they were not.
In addition, Castro admitted that, in his capacity as a civilian contract recruiter, he provided names and Social Security numbers of potential recruits to a co-conspirator in exchange for at least $1,500 in cash payments. Castro also admitted that he and another soldier, through an online account established in that soldier’s name, falsely represented that this soldier was responsible for referring potential soldiers to join the military.
Through this scheme, Castro and his co-conspirators obtained a total of at least $164,000 in fraudulent recruiting bonuses, which they arranged to be sent to their designated bank accounts. Castro admitted that he personally directed a total of approximately $26,000 in fraudulent recruiting bonuses to be deposited in his personal bank accounts.
The charge of conspiracy to commit wire fraud carries a maximum prison sentence of five years and a $250,000 fine. Sentencing has been scheduled for April 27, 2012, at 8:30 a.m. before Chief U.S. District Judge Fred Biery.
The case against Castro arises from an investigation involving allegations that former and current soldiers in the San Antonio area engaged in a wide-ranging scheme to obtain fraudulent recruiting bonuses, which, to date, has led to charges against seven individuals.
On Jan. 28, 2010, Ernest Gonzales, 50, of San Antonio, pleaded guilty to a criminal information charging him with one count of conspiracy to commit wire fraud. According to court documents, Gonzales admitted that he participated in the scheme to defraud the Army’s recruiting bonus programs. Gonzales has not yet been sentenced.
The case against Castro’s co-defendants - Aves, Bibb, Torres-Alvarez, Escobar and Garcia, is scheduled for trial on Nov. 21, 2011, in San Antonio. These defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
The case is being prosecuted by Trial Attorneys Edward J. Loya Jr. and Brian A. Lichter of the Criminal Division’s Public Integrity Section. The case is being investigated by agents from the San Antonio Fraud Resident Agency of the Major Procurement Fraud Unit, U.S. Army CID.
Former Lincoln County, Missouri, Sheriff’s Office Detective Indicted for Aggravated Sexual AbuseRead the Press Release
ST. LOUIS – Former Lincoln County, Mo., Sheriff’s Office Detective Scott Edwards, 49, of Troy, Mo. was indicted on civil rights charges for violating the constitutional rights of five women through acts of aggravated sexual abuse and sexual contact, the Justice Department announced today. Edwards was indicted by a federal grand jury on two counts of deprivation of rights under color of law including aggravated sexual abuse; and three counts of deprivation of rights under color of law including sexual contact.
According to the indictment filed in the Eastern District of Missouri, Edwards was a detective for the Lincoln County Sheriff’s Department and served as a “drug court tracker” for the drug court. The Lincoln County Drug Court includes a treatment and rehabilitation program for drug offenders sentenced by the court. The drug court contracts with the Lincoln County Sheriff’s Office to employ law enforcement officers to serve as part-time “drug court trackers” who monitor the whereabouts and curfews of drug court participants as needed. The indictment alleges that Edwards engaged in acts that resulted in bodily injury and included aggravated sexual abuse with two of the female victims, and engaged in acts that included sexual contact with three of the female victims. Additionally, the indictment alleges that Edwards restrained and confined one of the female victims by force, intimidation and deception.
If convicted, Edwards faces possible life in prison.
Anyone who has additional information or believes they may have been a victim of Edwards’ conduct are encouraged to call the FBI St. Louis Office at 314-241-4324.
This case was investigated by the FBI and the Troy Police Department, with the assistance of the Lincoln County Sheriff’s Office. Assistant U.S. Attorney Hal Goldsmith from the Eastern District of Missouri and U.S. Department of Justice Civil Rights Division Trial Attorney Fara Gold are handling the case for the United States.
As is always the case, charges set forth in an indictment are merely accusations and do not constitute proof of guilt. Every defendant is presumed to be innocent unless and until proven guilty.
Five Alleged MS-13 Leaders Indicted in Washington, D.C., on Racketeering Charges, Accused of Ordering and Carrying out Murders and Other AttacksRead the Press Release
WASHINGTON – Five alleged MS-13 leaders, including two accused of directing operations from prisons in El Salvador, have been indicted on federal racketeering and other charges for murders and other violent crimes in the Washington, D.C., area.
The charges were announced today by Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney Ronald C. Machen Jr. of the District of Columbia, U.S. Immigration and Customs Enforcement (ICE) Director John Morton, and Cathy L. Lanier, Chief of the Metropolitan Police Department (MPD).
The 32-count superseding indictment, which was returned on Nov. 1, 2011, and unsealed today in the U.S. District Court for the District of Columbia, charges various defendants with taking part in a racketeering conspiracy, murder in aid of racketeering, kidnapping in aid of racketeering, assault with a deadly weapon in aid of racketeering and other offenses.
The superseding indictment adds a total of six new defendants and expands upon earlier indictments returned since last year against numerous individuals for racketeering and other crimes. The indictment alleges that five new defendants were members of MS-13 at the time of the offenses and that two were international leaders directing and supervising operations of D.C.-based cliques from prisons in El Salvador.
These defendants include: Moises Humberto Rivera-Luna, also known as Santos, 42, who is currently incarcerated in El Salvador; Marvin Geovanny Monterrosa-Larios, 39, also incarcerated in El Salvador; Dennis L. Gil-Bernardez, also known as Pando, 35, currently serving a federal prison sentence for other crimes; Tokiro Rodas Ramirez also known as Perverso, 29, of El Salvador; and Juan Melgar-Hernandez, also known as Triste, 26, of Silver Spring, Md.
If convicted of the charges, all five of these newly named defendants could face maximum terms of life in prison. Gil-Bernardez is charged with murder in aid of racketeering, an offense that could be punishable by death.
The sixth new defendant named in the superseding indictment, Henry Diaz-Antunuez, 18, of Washington, D.C., is charged under District of Columbia law, with one count of first degree murder while armed.
Diaz-Antunuez was arrested on Nov. 2, 2011. Ramirez and Melgar-Hernandez are still being sought by authorities.
A total of 16 defendants now face charges in the case.
The indictment alleges that MS-13 engages in racketeering activity to include murder, narcotics distribution, extortion, robberies, obstruction of justice and other crimes. The indictment specifically states that some of the defendants allegedly participated in assaults against persons they believed to be rival gang members, made threats against persons they believed to be cooperating with law enforcement, and carried out extortions.
“The indictment announced today describes a chilling array of violent crimes, including shootings, stabbings and kidnappings,” said Assistant Attorney General Breuer. “As charged, these crimes were ordered and carried out by MS-13 gang members, some of whom gave their commands from prisons in El Salvador. Violent street gangs such as MS-13 pose a threat to communities nationwide, and we are determined to continue pursuing them aggressively.”
“This indictment alleges that MS-13 gang leaders sought to sow violence in our community from within the walls of El Salvadoran jail cells,” said U.S. Attorney Machen. “The international reach of this indictment is a reflection of our determination to dismantle criminal networks that operate in the District of Columbia and to track those responsible, no matter where they may be.”
“We are resolved to dismantle MS-13 in the Washington area and in other communities across the nation,” said ICE Director Morton. “Violent transnational gangs are a scourge, and ICE will do whatever it can to drive these gangs off of our streets.”
“The indictment of these brazen and dangerous criminals once again shows the resolve of law enforcement to work collectively as a team to bring murderers and violent criminals to justice,” said Chief Lanier. “Our multi-agency efforts are integral in deterring these types of crimes from occurring and protecting our communities and neighborhoods.”
The range of criminal activity alleged in the indictment includes acts committed in recent years in the District of Columbia, Maryland, Virginia and other states. The indictment alleges that there was frequent contact between MS-13 members in the Washington, D.C., metropolitan area and El Salvador, and that persons incarcerated in El Salvador encouraged or ordered assaults and murders.
Rivera-Luna is alleged to be an international leader of MS-13 who was sending orders and advice to an MS-13 clique operating in the Washington area, via cellular telephone calls from his prison cell in El Salvador. The indictment alleges that he and Monterrosa-Larios, also incarcerated in El Salvador, directed that a coalition of MS-13 cliques be formed in the Washington area. They advised local clique members that the coalition’s aim was to seek and kill MS-13 members who were found to be cooperating with law enforcement officials.Among other allegations, the indictment charges Gil-Bernardez and Rivera-Luna with ordering the murder of Louis Alberto Membreno-Zelaya, 27. Membreno-Zelaya was found stabbed to death on Nov. 6, 2008, near 11th Street and Otis Place in Northwest Washington. The murder count against Diaz-Antunuez stems from this killing.
The indictment also alleges that Rivera-Luna authorized the murder of Felipe Enriquez, 25, whose body was found on March 31, 2010, in Montgomery County, Md.
Gil-Bernardez is also charged with murdering Luis Chavez-Ponce, 22, on July 29, 2008, in Riverdale Park, Md., and with shooting a person in April 2008 whom he believed to be a rival gang member. Gil-Bernardez is currently serving a prison sentence on separate charges.
Other defendants facing charges include:
Omar Aguilar, aka Flaco, 22, of Silver Spring, Md.
Wilfredo Mejia, aka Majestic, 26, of Silver Spring, Md.
Michelle Nicole Rios, aka La Licensiada, 21, of Washington, D.C.
Hector Diaz-Flores, aka Littleman, 21, of Washington, D.C.
Manuel Saravia, aka Cholo, 31, of Silver Spring, Md.
Jose Martinez-Amaya, aka Crimen or Mecri, 24, of Annapolis, Md.
Noe Machado-Erazo, aka Gallo, 29, of Wheaton, Md.
Rudis Castro-Martinez, aka Krypta, 20, of Hyattsville, Md.
Mario Lopez-Ramirez, 25, of Honduras.
William Benitez-Saravia, aka Shady, 26, of Manassas, Va.
The indictment alleges various defendants were tied to four murders, three shootings, two stabbings and eight other assaults. The fourth murder is the Dec. 12, 2008, slaying of 14-year-old Giovanni Sanchez, whose body was found in a roadway near 14th and Newton Streets in Northwest Washington.
The prosecution grew out of the efforts of the federal Organized Crime Drug Enforcement Task Force, a multi-agency team that conducts comprehensive, multi-level attacks on major drug trafficking and money laundering organizations. The principal mission of the nationwide program is to identify, disrupt, and dismantle the most serious drug trafficking and money laundering organizations and those primarily responsible for the nation’s drug supply.
An indictment is merely an allegation that defendants have committed a violation of criminal law and is not evidence of guilt. Every defendant is presumed innocent until, and unless, proven guilty in a court of law.
This case is being prosecuted by Trial Attorney Laura Gwinn of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorney Bill O’Malley of the District of Columbia. The case is being investigated by ICE Office of Homeland Security Investigations and the Metropolitan Police Department (MPD).
Assistance was provided by the Montgomery County and the Prince George’s County, Md. Police Departments; the State’s Attorney’s Office for Montgomery County, Md.; the U.S. Attorney’s Office for the District of Maryland; and the U.S. Attorney’s Office for the Eastern District of Virginia.
Detroit-Area Man Arrested in Connection with $30 Million Medicare Home Health SchemeRead the Press Release
WASHINGTON – A Detroit-area resident was charged and arrested today in the Eastern District of Michigan for his alleged leading role in a $30 million Medicare fraud scheme involving home health services, announced the Department of Justice, the Department of Health and Human Services (HHS), the FBI and the HHS-Office of Inspector General (OIG). In addition to the arrest, law enforcement agents executed search warrants at five locations, seizure warrants for 31 bank accounts related to the scheme and suspended Medicare payments to 16 health care companies associated with the scheme.
According to a criminal complaint unsealed today in U.S. District Court in Detroit, Zafar Mehmood, 45, allegedly masterminded a $30 million scheme involving the submission of fraudulent claims submitted to Medicare for services that were medically unnecessary and/or never provided through at least four home health agencies. The four home health agencies named in the complaint are Access Care Home Care Inc. and Patient Care Home Care Inc., in Ypsilanti, Mich., and Hands On Healing Home Care Inc. and All State Home Care Inc., in Detroit.
Mehmood is alleged to have paid kickbacks to patient recruiters and billed Medicare for services that were not medically necessary and/or not performed through Access, Patient Care, Hands On Healing and All State. Mehmood is also accused of laundering the proceeds of the scheme through sham companies and intermediaries.
Mehmood is scheduled to make his initial appearance today before U.S. Magistrate Judge Mona K. Majzoub.
Today’s charges were announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan, 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-OIG Office of Investigation. Including today’s charges, Medicare Fraud Strike Force operations in Detroit have charged a total of 139 individuals in cases involving approximately $174 million in fraudulent billings to Medicare.
The case is being prosecuted by Trial Attorney Gejaa T. Gobena and Catherine Dick of the Criminal Division’s Fraud Section. The investigations were conducted jointly by the FBI and HHS-OIG, as part of the Medicare Fraud Strike Force, supervised by the U.S. Attorney’s Office for the Eastern District of Michigan and the Criminal Division’s Fraud Section.
Since their inception in March 2007, the 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.
Criminal complaints contain merely charges and defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Alabama Return Preparers Found Guilty of Tax CrimesRead the Press Release
WASHINGTON - James E. Moss and Avada L. Jenkins were found guilty today of tax crimes relating to “Flash Tax,” a Montgomery, Ala., tax preparation business owned by Moss, the Justice Department and Internal Revenue Service (IRS) announced. U.S. District Court Judge for the Middle District of Alabama Mark E. Fuller presided over the jury trial of Moss and Jenkins for conspiring to defraud the United States and for aiding and assisting the preparation of false tax returns.
The evidence at trial proved that both Moss and Jenkins, an employee of Flash Tax, prepared false tax returns for customers that fraudulently inflated the amount of refunds due to the customers. Evidence presented at trial showed that the tax loss affiliated with this scheme was more than $75,000.
A sentencing date has not been set, yet. Moss faces a maximum potential sentence of 80 years in prison and a maximum fine of $6.5 million; Jenkins faces a maximum potential sentence of 65 years in prison and a maximum fine of $5.25 million.
The case was investigated by the Internal Revenue Service-Criminal Investigation and was prosecuted by Tax Division Trial Attorneys Charles M. Edgar Jr., Thomas J. Krepp and Michelle M. Petersen.
Additional information about the Justice Department’s Tax Division and its enforcement efforts may be found at www.usdoj.gov/tax .
2 November 2011
Spokane, Wash., Police Officer Convicted of Civil Rights and Obstruction Violations in Connection with Beating Otto ZehmRead the Press Release
WASHINGTON – A federal jury today convicted Spokane, Wash., Police Officer Karl F. Thompson Jr., 64, of civil rights and obstruction charges stemming from his March 18, 2006, beating of an unarmed citizen and an extensive cover-up that followed, the Justice Department announced. Following a taser deployment and a rapid series of baton blows to the head, neck and body, the victim Otto Zehm, 36, was hogtied, stopped breathing, and was transported to the hospital, where he died two days later. Thompson claimed the beating was justified because he felt threatened by a plastic bottle of soda the victim was holding.
The evidence at trial established that on the evening of March 18, 2006, the victim went to a Zip Trip convenience store to buy soda and snacks. Security video introduced at trial showed that the victim shopped for soda, Thompson ran into the store, drew his baton and continued to run toward the victim from behind. Witnesses testified that the victim appeared to be completely unaware of Thompson charging towards him as he selected a plastic bottle of soda to purchase. As the victim turned toward the candy aisle, he saw Thompson rushing towards him with his baton raised. According to trial testimony and store security video, less than 2.5 seconds after the victim turned to see the Thompson running towards him, Thompson delivered two overhand baton blows to the victim’s head, knocking him backwards onto the floor. Witnesses testified that Thompson then stood over the victim and fired taser probes down into chest as he was in the fetal position on the floor beneath him. The victim never returned to his feet, but Thompson continued to deliver overhand baton blows, including a final flurry of seven baton strikes in eight seconds, which was captured by the convenience store’s security cameras.
Evidence at trial established that Thompson went to the convenience store after two teenagers reported that a man fitting the victim’s description had approached a drive-up ATM on foot as they were conducting a transaction, and they felt uncomfortable. After the teenagers pulled away from the ATM, they were unsure whether they had cancelled their transaction. They reported that the man who had been standing near them, approached the ATM and left with something in his hands that looked like money. Prior to Thompson’s first strike, dispatchers made clear that the complainants were not sure whether the man at the ATM had taken any of their money. One of the women at the ATM who called 911 that night testified at trial that she was horrified by Thompson’s rapid series of overhand baton blows to the victim.
Testimony at trial established that Thompson never asked the victim any questions or even mentioned the ATM. Witnesses testified that the victim’s last words were: “All I wanted was a Snickers.” The Spokane Police Department investigated charges against the victim based on a report by Thompson that he had assaulted him. However, the victim was never charged with theft or robbery, and evidence at trial established that police officers found his paycheck on him.
Thompson gave his report of the incident on March 22, 2006, after he knew the victim had died. In his report, Thompson denied hitting the victim in the head with his baton because that would have constituted deadly force, which he acknowledged was not justified in this case. However, trial testimony established that Thompson admitted to Spokane Police Officer Timothy Moses on-scene that night that he had struck the victim in the head and neck with his baton. Witnesses and medical testimony also confirmed that Thompson had delivered baton blows to the victim’s head and neck.
“We are grateful for the jury’s verdict, which vindicates the rights of Otto Zehm,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The defendant was given considerable power to enforce the law, but instead he abused his authority when he brutally beat an innocent man. This prosecution reflects the department’s commitment to prosecuting official misconduct cases, and today’s conviction sends a message that such violent abuse of power will not be tolerated.”
The defendant faces a maximum penalty of up to 30 years in prison.
This case was investigated by the FBI’s Spokane Field Office, and was prosecuted by Trial Attorney Victor Boutros of the Justice Department’s Civil Rights Division and by Assistant U.S. Attorneys Timothy Durkin and Aine Ahmed of the Eastern District of Washington.