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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.
International Arms Dealer Viktor Bout Convicted in New York of Terrorism CrimesRead the Press Release
NEW YORK – International arms dealer Viktor Bout was found guilty today of conspiring to sell millions of dollars worth of weapons to the Fuerzas Armadas Revolucionarias de Colombia (FARC) – a designated foreign terrorist organization based in Colombia – to be used to kill Americans in Colombia, announced the Department of Justice.
“Today, one of the world’s most prolific arms dealers is being held accountable for his sordid past,” said Attorney General Eric Holder. “Viktor Bout’s arms trafficking activity and support of armed conflicts have been a source of concern around the globe for decades. Today, he faces the prospect of life in prison for his efforts to sell millions of dollars worth of weapons to terrorists for use in killing Americans."
“ As the evidence at trial showed, Viktor Bout was ready to sell a weapons arsenal that would be the envy of some small countries,” said U.S. Attorney for the Southern District of New York Preet Bharara. “He aimed to sell those weapons to terrorists for the purpose of killing Americans. With today’s swift verdict, justice has been done and a very dangerous man will be behind bars. I would like to acknowledge the extraordinary efforts of the Drug Enforcement Administration (DEA) agents who investigated this case on three different continents and helped to bring Viktor Bout to justice.”
Bout was arrested in Thailand in March 2008 based on a complaint filed in Manhattan federal court. He was subsequently charged in a four-count indictment in May 2008 and extradited to the Southern District of New York in November 2010. Bout was convicted today of conspiring to kill U.S. nationals; conspiring to kill U.S. officers and employees; conspiring to acquire and use anti-aircraft missiles; and conspiring to provide material support to a designated foreign terrorist organization. The three-week jury trial was presided over by U.S. District Judge Shira A. Scheindlin.
According to the indictment and evidence presented at the trial:
Since the 1990s, Bout has been an international weapons trafficker. As a result of his weapons trafficking activities in Liberia, the U.S. Office of Foreign Assets Control within the Department of Treasury placed him on the Specially Designated nationals list in 2004. The designation prohibits any transactions between Bout and U.S. nationals, and freezes any of his assets that are within the jurisdiction of the United States.
Between November 2007 and March 2008, Bout agreed to sell to the FARC millions of dollars’ worth of weapons – including 800 surface-to-air missiles (SAMs), 30,000 AK-47 firearms, 10 million rounds of ammunition, five tons of C-4 plastic explosives, “ultralight” airplanes outfitted with grenade launchers and unmanned aerial vehicles. Bout agreed to sell the weapons to two confidential sources working with the DEA (the “CSs”), who represented that they were acquiring them for the FARC, with the specific understanding that the weapons were to be used to attack U.S. helicopters in Colombia.
During a covertly recorded meeting in Thailand on March 6, 2008, Bout stated to the CSs that he could arrange to airdrop the arms to the FARC in Colombia, and offered to sell two cargo planes to the FARC that could be used for arms deliveries. He also provided a map of South America and asked the CSs to show him American radar locations in Colombia. Bout said that he understood that the CSs wanted the arms to use against American personnel in Colombia, and advised that, “we have the same enemy,” referring to the United States. He also stated that the FARC’s fight against the United States was also his fight and that he had been “fighting the United States…for 10 to 15 years.” During the meeting, he also offered to provide people to train the FARC in the use of the arms.
The evidence presented at trial included a recording of the March 6, 2008 meeting between Bout, the CSs, his former associate Andrew Smulian, and others. Smulian was charged along with Bout in the government’s March 2008 complaint and pleaded guilty in May 2008 to the four conspiracy counts of which Bout was just convicted. Smulian cooperated with the government and, along with the two CSs, provided testimony at the trial.
Bout faces a maximum sentence of life in prison on counts one through three, including a mandatory minimum sentence of 25 years in prison for count three. He faces a maximum sentence of 15 years in prison on count four.
Bout is scheduled to be sentenced by Judge Scheindlin on Feb. 8, 2012.
The case was investigated by the DEA, with assistance from the Royal Thai Police; the Romanian National Police; the Romanian Prosecutor’s Office Attached to the High Court of Cassation and Justice; the Korps Politie Curacao of the Netherlands Antilles; and the Danish National Police Security Services.
This case was prosecuted by Assistant U.S. Attorneys Anjan Sahni and Brendan R. Mcguire from the U.S. Attorney’s Office’s Terrorism and International Narcotics Unit. The Criminal Division’s Office of International Affairs provided assistance.
Former New Orleans Police Department Lieutenant Sentenced in Connection with Shootings on Danziger BridgeRead the Press Release
WASHINGTON – A former lieutenant with the New Orleans Police Department (NOPD), was sentenced today for his role in a conspiracy to obstruct justice and for misprision of a felony (for concealing a known crime), in connection with a federal investigation of two police-involved shootings that left two civilians dead and four others seriously wounded in the area of the Danziger Bridge in the days after Hurricane Katrina.
Michael Lohman, 41, of Terrytown, La., was sentenced in federal court to serve four years in prison, to be followed by three years of supervised release. During the first year of supervised release, Mr. Lohman is to perform 300 hours of community service. Additionally, he has been ordered to meet with NOPD recruit classes to serve as a warning to officers tempted to disobey the law. The court also imposed a $2500 fine. On Feb. 24, 2010, Lohman pleaded guilty in federal court in New Orleans before U. S. District Court Judge Ivan L. R. Lemelle.
Mr. Lohman admitted to helping with the Sept. 4, 2005, cover up and also admitted – first during his guilty plea and later when he testified at the trial of five fellow officers -- that he knew that the shootings on the bridge were unjustified, and that he helped other officers cover up what had happened on the bridge.
When Lohman arrived on the scene shortly after the shootings, he noticed that there were no guns on or near the dead and wounded civilians. After determining that the involved officers could not come up with any evidence to justify the shooting, he concluded that they had been involved in a “bad shoot.” Rather than reporting the shooting as a bad shoot, Lohman, a well-respected lieutenant with NOPD, participated in a conspiracy that involved, among other things, writing false reports about the incident, planting a gun and making up false witness statements.
Deputy Chief Bobbi Bernstein, a prosecutor on the case, said in court that Lohman’s crimes were reprehensible, and that he needed to be punished with prison time. However, she also asked the judge to sentence Mr. Lohman to less than the five years called for by sentencing guidelines, in recognition of the fact that he provided cooperation that was critical to the prosecution of others. Ms. Bernstein noted that the victims of the Danziger Bridge shooting have been “an inspiration” for the prosecution, and that every recommendation the government has made for sentencing – including any requests the government has made for leniency for cooperating police officers – has been with the blessing of those victims.
“I’m pleased with today’s sentence,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “Mr. Lohman owes a serious debt to society for betraying the badge he had been trusted to wear. But he also deserves some leniency for the critical role he played in allowing other offenders to be brought to justice. The government is outraged by Mr. Lohman’s crimes, but grateful for his cooperation in this case.”
U.S. Attorney Jim Letten stated: “The sentencing of former New Orleans Police Officer Michael Lohman today was the product of his important admission of guilt, his essential and truthful testimony at trial, and the government’s request to the court for leniency by appropriately recognizing his substantial and even critical assistance. Such tremendously important cases and the just results they produce can often only be brought with such cooperation. Moreover, our request that Mr. Lohman’s sentence require his conducting outreach to future NOPD officers was not only appropriate but essential in ensuring that such violations of public trust are not repeated. As United States Attorney and as a citizen, I—along with the prosecution team—believe that our resolution of this case and our request for consideration in sentencing Mr. Lohman is the right course to take.”
David Welker, Special Agent in Charge of the FBI New Orleans field office stated, “The law must be respected by those that are entrusted to enforce it. If the law is to be honored, it must first be respected by those who enforce it. Unfortunately, Lt. Lohman failed to remain faithful to the oath he took as a police officer and as a result tarnished the badge that many wear so proudly.”
This case was investigated by the New Orleans Field Office of the FBI, and was prosecuted by Deputy Chief Bobbi Bernstein and Trial Attorney Cindy Chung of the Justice Department’s Civil Rights Division, along with Assistant U.S. Attorney Ted Carter of the Eastern District of Louisiana.
Federal Court Bars Oregon Man from Promoting Tax-Fraud SchemesRead the Press Release
WASHINGTON – A federal court has permanently barred Robert Pendell from promoting any scheme that assists or advises customers to attempt to violate the tax laws, the Justice Department announced today. The civil injunction order was entered by Judge Owen M. Panner of the U.S. District Court for the District of Oregon. According to the government complaint, Pendell resides in Ashland, Ore.
The United States sued Pendell, Eugene Casternovia, Robert Hagopian, Mark Lyon and their company, the Southern Oregon Resource Center Educational Services (SORCE) in April 2008 to enjoin them from promoting a scheme to conceal their customers’ assets from the Internal Revenue Service. As the government alleged in its amended complaint, and as the court found, Pendell promoted tax scams that involved the sale and use of sham entities through SORCE and a related multilevel marketing organization called Pinnacle Quest International. The court also found that Pendell organized and marketed these programs as a fraudulent means for customers to evade the reporting and payment of federal taxes.
According to the court, injunctions were previously entered against Casternovia and Lyon. In recommending that Pendell be enjoined, U.S. Magistrate Judge Mark D. Clarke cited a 2005 videotaped interview in which Pendell equated the payment of taxes to slavery and stated that SORCE products enabled customers to “reclaim their sovereign rights.” The court found that SORCE had at least 350 customers and, according to its internal records, made more than $1.6 million in 2005 through the sale of its programs.
In the past decade, the Justice Department’s Tax Division has obtained injunctions against hundreds of tax-fraud promoters and unscrupulous tax preparers. Information about these cases is available on the Justice Department website.
Brooklyn, N.Y., Medicare Fraud Strike Force Charges 12 Individuals for Participating in Health Care Fraud Schemes Totaling More Than $95 MillionRead the Press Release
WASHINGTON – Twelve individuals, including three medical doctors, a doctor of osteopathy and a chiropractor, were charged today in the Eastern District of New York for their roles in separate health care fraud schemes that resulted in the submission of more than $95 million in false claims to the Medicare program, announced the Department of Justice, the FBI and the Department of Health and Human Services (HHS).
The defendants are charged with a variety of health care fraud-related and money laundering offenses in two indictments and a superseding indictment filed in federal court in Brooklyn, N.Y. Eleven defendants were arrested or surrendered to authorities today. The last defendant is expected to surrender at a later time.
“Today 12 individuals – including three medical doctors and other licensed health professionals – were charged with participating in sophisticated Medicare fraud and money laundering schemes throughout Brooklyn and Queens ,” said Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division. “According to court documents, these defendants sought to profit by stealing millions of taxpayer dollars from the Medicare program and laundering the proceeds of this illegal activity. The Medicare Fraud Strike Force, which operates in nine cities across the country, will continue to aggressively pursue those intent on cheating American taxpayers and stealing from the Medicare program.”
“These defendants allegedly invested significant time and energy in subterfuge to conceal their ill gotten government funds. Money laundering is a critical part of large scale health care fraud schemes and often the most difficult piece to unravel. Law enforcement will not be deterred by the schemes and evasions used to hide these proceeds of fraud. We will ‘follow the money’ and bring to justice all who would engage in financial transactions designed to disguise the proceeds of Medicare fraud,” stated Loretta E. Lynch, U.S. Attorney for the Eastern District of New York. Ms. Lynch expressed her grateful appreciation to the FBI and HHS-OIG, the agencies responsible for leading the government’s investigation, and thanked the New York State Attorney General’s Office for its assistance.
“What all these criminal schemes have in common is the exploitation of Medicare,” said FBI Assistant Director in Charge Janice K. Fedarcyk. “A program to help seniors manage the costs of health care was here abused to line the pockets of unscrupulous doctors and others. Medicare and Medicaid are taxpayer funded, so the outrageous conduct of these defendants victimized everyone. The FBI is committed to policing health care fraud, to catch the crooks and to rein in costs.”
“Physical therapy fraud and illegal financial kickbacks remain a problem in the Brooklyn area,” said Thomas O’Donnell, Special Agent in Charge of the HHS-Office of Inspector General’s (OIG) New York Region. “So, along with federal and state law enforcement partners, we will target these and similar schemes that divert valuable, scarce Medicare funds.”
According to a superseding indictment, five defendants are charged for their roles in a scheme to launder the proceeds of Medicare fraud at three Brooklyn-area medical clinics: Bay Medical Care PC, SVS Wellcare Medical PLLC and SZS Medical Care PLLC. These clinics allegedly paid kickbacks to Medicare beneficiaries and used the beneficiaries’ names to bill Medicare for approximately $71 million in services that were medically unnecessary and never provided. Larisa Shelabadova, 34, Alexander Zaretser, 31, Anatoly Kraiter, 33, Vladimir Kornev, 52, and Yelena Galper, 38, all of Brooklyn, are charged for participating in the money laundering scheme. The superseding indictment also charges five other individuals who were previously charged for their roles in the scheme in the original indictment filed in October 2010.
A second indictment alleges that six defendants, including three medical doctors and a chiropractor, participated in a fraud scheme at URI Medical Center and Sarang Medical PC, two medical clinics in Flushing, N.Y. The defendants allegedly submitted approximately $11.7 million in false claims to the Medicare program for physical therapy, electric stimulation treatments and other services. Ho Yon Kim, 85, of Flushing; Hoi Yat Kam, 57, of Flushing; Peter Lu, 36, of New York City; John Knox, 54, of Bronx, N.Y.; Elaine Kim, 50, of Bayside, N.Y.; and Gilbert Kim, 59, of Bayside, allegedly provided a variety of spa services such as massages and facials, and billed Medicare for physical therapy and other services that were medically unnecessary and never provided. The indictment alleges that the defendants also recruited Medicare beneficiaries to their clinic by offering lunches and dancing classes, in exchange for the beneficiaries providing their Medicare numbers to be billed for medical services that they did not need and never received.
Emma Poroger, 56, of Staten Island, N.Y., is charged in a third indictment for participating in a scheme to defraud Medicare of approximately $13 million. Poroger, a doctor of osteopathy, allegedly billed Medicare for a variety of services she purported to provide, including vitamin infusion therapy, sleep studies, nerve conduction tests and duplex scans, that were medically unnecessary and never provided.
Today’s charges were announced by Assistant Attorney General Breuer of the Justice Department’s Criminal Division, U.S. Attorney Lynch of the Eastern District of New York, FBI Assistant Director in Charge Fedarcyk and HHS-OIG Special Agent in Charge O’Donnell. The cases were brought as a 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 New York.
Medicare Fraud Strike Force operations are part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT), a joint initiative between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country.
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 (CMS), working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
The cases announced today are being prosecuted by Trial Attorneys Sarah Hall and Katherine Houston from the Fraud Section of the Justice Department’s Criminal Division and Assistant U.S. Attorneys Stephen J. Meyer and William Campos from the Eastern District of New York. The cases are being investigated by agents from the FBI and HHS-OIG. The New York State Attorney General’s Office and CMS provided assistance.
An indictment is merely a charge and defendants are presumed innocent until proven guilty.
To learn more about HEAT, go to: www.stopmedicarefraud.gov
1 November 2011
Owner of Miami Company Sentenced to 46 Months in Prison for Scheme to Defraud the U.S. Export-Import BankRead the Press Release
WASHINGTON – The owner of an export company in Miami was sentenced today to 46 months in prison for his role in a scheme to defraud the Export-Import Bank of the United States (Ex-Im Bank) of approximately $24 million, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division; Osvaldo L. Gratacos, Inspector General of the Ex-Im Bank; Jeannine A. Hammett, Acting Special Agent in Charge of the Internal Revenue Service-Criminal Investigation (IRS-CI) in Washington, D.C.; and Henry Gutierrez, Inspector in Charge of the U.S. Postal Inspection Service (USPIS) in Miami.
Guillermo O. Mondino, 48, was sentenced by Judge Ricardo M. Urbina in U.S. District Court in Washington, D.C. Mondino pleaded guilty on June 23, 2010, to one count of conspiracy to commit mail fraud and one count of money laundering in connection with a scheme to defraud the Ex-Im Bank of approximately $24 million. In addition to his prison term, Mondino was sentenced to three years of supervised release and was ordered to pay $13.3 million in restitution and $2.7 million in forfeiture.
According to court documents, Mondino was the owner of Texon Inc., an export company located in Miami, which purported to export various types of equipment to South and Central America buyers. Mondino admitted that he assisted numerous foreign buyers to obtain fraudulent loans that were insured by the Ex-Im Bank. According to court records, Mondino and others misappropriated the loan proceeds for their own use and benefit. From 2003 through 2009, Mondino, through Texon, assisted foreign buyers to create fraudulent loan applications, financial statements, purchase orders, invoices and bills of lading to falsely represent to various lending banks and the Ex-Im Bank the purchase and export of U.S. goods to buyers in South and Central America. After receiving more than $24 million in Ex-Im Bank insured loan proceeds, Mondino diverted about $6.4 million of the loan proceeds directly to the foreign buyers.
According to court records, all of the loans involving Mondino were fraudulent. As a result of the fraud, the loans went into default, causing the Ex-Im Bank to pay claims to the lending banks on $14.1 million of loans.
The Ex-Im Bank is an independent federal agency that helps create and maintain U.S. jobs by filling gaps in private export financing. The Ex-Im Bank provides a variety of financing mechanisms to help foreign buyers purchase U.S. goods and services.
The case is being prosecuted by Trial Attorney Nicole H. Sprinzen of the Criminal Division’s Fraud Section. The case was investigated by the Ex-Im Bank Office of Inspector General, IRS-CI in Washington, D.C., and USPIS in Miami. Agents were also assisted by the Federal Maritime Commission, South Miami Area Representatives, in the analysis of complex maritime shipping documents.
Lucchese Organized Crime Family Member and Associate Among 13 Arrested, Charged for Racketeering and Other Offenses, Including Illegal Takeover of Publicly Traded CompanyRead the Press Release
WASHINGTON – Thirteen individuals, including an alleged member and an associate of the Lucchese organized crime family, are charged with racketeering and related offenses in an indictment unsealed this morning in conjunction with arrests in the case, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Paul J. Fishman of the District of New Jersey.
The charges stem from the alleged extortionate takeover of FirstPlus Financial Group Inc. (FPFG), a publicly held company in Texas, and the subsequent looting of FPFG by members of the racketeering enterprise through a series of fraudulent consulting agreements and acquisitions involving companies controlled by Nicodemo S. Scarfo and Salvatore Pelullo.
The 25-count indictment filed in Camden, N.J., federal court charges Scarfo, a member of the Lucchese organized crime family of La Cosa Nostra (LCN), and Pelullo, an associate of the Lucchese and Philadelphia LCN families, with racketeering conspiracy and conduct including securities fraud, wire fraud, mail fraud, bank fraud, extortion, interstate travel in aid of racketeering, money laundering and obstruction of justice. The indictment also names Nicodemo D. Scarfo (Scarfo Sr.), the imprisoned former boss of the Philadelphia family of LCN, and Vittorio Amuso, the imprisoned boss of the Lucchese family, as unindicted co-conspirators.
Nine other defendants – including attorneys William Maxwell, Cory Leshner, David Adler, Gary McCarthy and Donald Manno, and certified public accountant Howard Drossner – are also variously charged with racketeering conspiracy, including securities fraud conspiracy, wire fraud, and other offenses. The indictment also charges Scarfo’s wife, Lisa Murray-Scarfo, with conspiracy to commit bank fraud and making false statements on a loan application for her role in securing a fraudulent mortgage to purchase a $715,000 house with proceeds from the racketeering enterprise’s criminal activity. William Maxwell’s brother John Maxwell, William Handley and John Parisi are charged with various offenses related to the conspiracy. Todd Stark is charged with conspiracy to provide ammunition for a 9mm handgun to Scarfo.
A number of the defendants were arrested this morning in a coordinated law enforcement effort by special agents of the FBI; Department of Labor, Office of Inspector General; and the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF). Scarfo, Handley, Leshner, Parisi, Adler, Drossner and Manno were arrested at their residences; Pelullo was arrested in Miami; and William Maxwell was arrested at his Houston office. McCarthy surrendered to the FBI this morning in Philadelphia. Murray-Scarfo is expected to surrender to authorities in Camden. Stark and John Maxwell have yet to be apprehended. The defendants in custody in the New Jersey area will appear this afternoon before U.S. Magistrate Judge Anne Marie Donio in Camden federal court.
“The indictment alleges that Mr. Scarfo and Mr. Pelullo used economic extortion and threats of violence to seize and maintain control of a publicly traded company, successfully removing its entire existing board of directors and management,” said Assistant Attorney General Breuer. “Once in control, they allegedly used their criminal enterprise to extract millions of dollars from the company to fund their lavish lifestyles. This prosecution demonstrates the Justice Department’s resolve to root out the influence of La Cosa Nostra wherever it exists.”
“According to the indictment, the defendants gave new meaning to ‘corporate takeover’ by looting a publicly traded company to benefit their criminal enterprise,” said U.S. Attorney Fishman. “Through rampant self dealing, fraudulent SEC filings and more traditional mob methods, the defendants allegedly stole $12 million from shareholders. Particularly in these economic times, investors should be free to invest in public companies without fear that violent criminal organizations are their puppetmasters. And the public deserves to rely with confidence on corporate officials and professionals whose positions require them to act in the best interest of shareholders, not members of organized crime.”
“The demise of Organized Crime has been greatly exaggerated,” said Michael B. Ward, Special Agent in Charge of the FBI’s Newark Field Office. “Criminal activities have evolved from the back alleys to the board rooms, but the same use of physical threats and intimidation to gain leverage and loot lucrative businesses for personal gain continues to this day. In response, the charges being brought against Nicky Scarfo Jr., Sal Pelullo and others represent law enforcement’s commitment to aggressively target the illegal activity of Organized Crime in any commercial business or venue.”
According to court documents, Scarfo is a made member of the Lucchese family and became a member after an attempt on his life in 1989 following an internal struggle for control of the Philadelphia family. In the mid-1990s while Scarfo Sr. and Amuso were in federal prison in Atlanta, Amuso arranged for Scarfo to become a member of the Lucchese family as a favor to Scarfo Sr. As a member of the Lucchese family, Scarfo was required to earn money and participate in the affairs of the Lucchese family.
According to the indictment, following his release from prison in 2005 on an unrelated charge, Scarfo was placed on supervised release and required to report to a probation officer. According to court documents, by participating in the affairs of what is described in the indictment as the Scarfo-Pelullo Enterprise, Scarfo and other members of the enterprise allegedly engaged in a systematic scheme to deceive and obstruct the probation department and the district court responsible for overseeing Scarfo’s supervised release.
The indictment alleges that in April 2007, Scarfo, Pelullo, Texas attorney William Maxwell and others devised a scheme to take over FPFG, a financial services company in Texas. According to court documents, through threats of physical and economic harm, the Scarfo-Pelullo Enterprise assumed and maintained control of FPFG for the purpose of plundering its assets. The takeover was accomplished by replacing FPFG’s board of directors with new figurehead members who served at the direction of Scarfo, Pelullo and other members of the enterprise. Once the takeover was completed, the figurehead board named William Maxwell as “special counsel” to FPFG, a position that he allegedly used to funnel millions of dollars to himself, Scarfo and Pelullo through fraudulent legal services and consulting agreements. The agreements, as well as FPFG’s fraudulent acquisitions of companies controlled by Scarfo and Pelullo, were allegedly designed to mask the true identity and nature of the control exerted over FPFG and to conceal the source of the money fraudulently conveyed to Scarfo and Pelullo.
According to the indictment, the enterprise succeeded in its criminal objectives with the knowing assistance of Adler, Drossner and McCarthy – who used their positions as professionals to ensure that the enterprise’s criminal activity was not revealed to law enforcement and regulatory authorities, including the U.S. Securities and Exchange Commission (SEC). As a public company, FPFG was required to submit periodic and annual filings to the SEC. The indictment alleges that the enterprise, led by Scarfo and Pelullo, repeatedly submitted false information, or omitted material information, in required SEC filings. As a result, FPFG’s shareholders and the investing public had no idea that FPFG was being controlled by members and associates of organized crime. Manno, an attorney for Scarfo, allegedly abused his position as an attorney to further insulate Scarfo and the enterprise by deceiving Scarfo’s probation officer and the district court. The indictment alleges that Manno’s deception corruptly influenced Scarfo’s supervised release by withholding information from the probation office and the district court regarding Scarfo’s source of income and his contact with convicted felons.
The indictment details a telephone call intercepted by law enforcement on Dec. 5, 2007, that illustrates the corrupt nature of Scarfo and Pelullo’s control of FPFG. According to the indictment, Pelullo called Scarfo to tell him about the sudden death of a former FPFG executive described in the indictment as “Individual #4,” who had provided information to Pelullo and William Maxwell that they used to extort control of FPFG. At the time of his death, Individual #4 was employed by FPFG as a member of its “compliance team.” During the conversation, Scarfo and Pelullo expressed relief regarding Individual #4’s death. After laughing about how he was “crushed” that “the rat is dead,” Pelullo acknowledged that Individual #4 was “the only connection, the only tie to anything.” As the news sunk in to Scarfo, he stated, “Oh boy. Yeah, Sal, you wanna know something though? . . . That’s one that I know you can’t take credit for . . . [laughter] . . . and that’s the natural best thing. You know what I mean? . . . That is so like Enron-ish. You know what I mean?”
The indictment alleges that the enterprise’s criminal activity allowed Scarfo and Pelullo to live lavish lifestyles which included the purchase of an $850,000 yacht, a luxury home for Scarfo, a Bentley automobile for Pelullo, and thousands of dollars in jewelry for Scarfo’s wife, Murray-Scarfo. As a direct result of the enterprise’s criminal activity, FPFG and its shareholders suffered a loss of at least $12 million.
The charges and allegations contained in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
The case is being prosecuted by Trial Attorney Lisa C. Page of the Organized Crime and Gang Section in the Justice Department’s Criminal Division and Assistant U.S. Attorney Steven D’Aguanno of the New Jersey U.S. Attorney’s Office Organized Crime/Gangs Unit in Camden. The case was investigated by the FBI’s Newark Field Office; the Department of Labor, Office of Inspector General, Office of Labor Racketeering and Fraud Investigations, New York Region; and the ATF, Newark. The FBI Philadelphia Field Office and the SEC provided assistance.
Justice Department, Six Cities Work to Prevent Youth ViolenceRead the Press Release
WASHINGTON—Teams of youth violence experts from Boston; Chicago; Detroit; Memphis, Tenn.; Salinas, Calif.; and San Jose, Calif., have concluded a two-day meeting of the National Forum on Youth Violence Prevention. The group, comprised of law enforcement officers, policy and public-health experts, educators, researchers, city officials, social services providers, community and faith leaders, and concerned parents, met this week to share experiences and to continue working to address and to prevent youth and gang violence.
“The work we are doing is sending an unmistakable message: that, in this country, we will not give up on our children when it comes to combating youth violence,” Attorney General Eric Holder said. “The priorities that we set now are what will allow America’s next generation of leaders to rise above the current threats and obstacles, break destructive cycles and seize tomorrow’s opportunities.”
The six participating cities developed comprehensive plans to prevent youth and gang violence in their city, using multi-disciplinary partnerships, balanced approaches and data-driven strategies. They first presented these plans at the Summit on Preventing Youth Violence on April 4-5, 2011, in Washington, D.C. These plans focus on strategies to reduce violence, improve opportunities for youth, and encourage innovation at the local and federal levels. The strategy is already at work in each city, enabling these teams to establish diverse partnerships, leverage limited resources, and raise awareness of the problem and solutions as well as support for young people.
At this working session, the cities discussed strategies, including youth and family engagement, faith and community-based outreach, and intervention and enforcement models such as the Boston Gun Project’s Operation Ceasefire and the CeaseFire-Chicago programs, to support the implementation of their plans. Other topics included how to implement and fund comprehensive strategies in tough economic times, as well as how to improve data-sharing and address reentry concerns.
At the direction of President Obama, the Departments of Justice and Education, along with other participating federal agencies and localities, officially launched the Forum on Oct. 5, 2010. The administration created the forum as a context for participating localities to share challenges and promising strategies with each other and to explore how federal agencies can better support local efforts.
Participating cities were selected on the basis of need, geographic diversity, and willingness and capacity to engage. Along with the Departments of Justice and Education, participating federal agencies include the Departments of Health and Human Services, Housing and Urban Development and Labor, as well as the Office of National Drug Control Policy.
More information on the National Forum on Youth Violence Prevention can be found at: http://findyouthinfo.gov/topic_preventingViolence.shtml .
Justice Department Seeks to Shut Down Detroit Tax Return PreparerRead the Press Release
WASHINGTON – The United States has asked a federal court in Detroit to bar Carlos Brown from preparing federal tax returns for others, the Justice Department announced today. The civil injunction suit alleges that Brown and his business, Express Finance and Processing Services, prepare fraudulent tax returns for customers seeking large refunds based on a frivolous theory called “redemption” or “commercial redemption,” which has been rejected by numerous courts.
The complaint alleges that Brown, a resident of Detroit, prepares returns claiming huge fraudulent refunds based on fabricated income tax withholding reported on false Internal Revenue Service (IRS) Forms 1099-OID. According to the complaint, Brown has allegedly sought more than $13 million in fraudulent refunds on at least 45 tax returns, including a bogus claim on one customer’s return for a refund in excess of $1.75 million.
In the complaint, the government also requests that the court order Brown to provide the government with a list of all persons for whom he has prepared federal tax returns since 2008.
Claiming bogus tax refunds on false Forms 1099-OID is one of the IRS’s “Dirty Dozen” tax scams for 2011. In the past decade, the Justice Department’s Tax Division has obtained injunctions against hundreds of tax fraud promoters and unscrupulous tax return preparers. Information about these cases is available on the Justice Department website .
Justice Department Files Lawsuit Alleging Racial and Familial Status Discrimination in Apartment Complexes in Massillon, OhioRead the Press Release
WASHINGTON - The Justice Department has filed a lawsuit against the owners of Yorkshire Apartments, Thackeray Ledges and Wales Ridge Apartments in Massillon, Ohio, for discriminating on the basis of race and familial status when renting their apartments in violation of the Fair Housing Act.
“No one should be denied housing nor treated differently because of their race when they are trying to find a home for their family,” said Thomas E. Perez, Assistant Attorney General for the Justice Department’s Civil Rights Division. “The Justice Department will vigorously enforce the nation’s civil rights laws to combat housing discrimination.”
“Few things are more fundamental to success and happiness than where we choose to live. Fair and equal access to housing is a cornerstone of our society,” said Steven M. Dettelbach, U.S. Attorney for the Northern District of Ohio. “Apartment owners and managers must treat all tenants, and potential tenants, in a fair and equitable manner without regard to race, national origin or whether they have children. The U.S. Attorney’s Office will actively pursue these cases with the goal of fairness and equity for all.”
The complaint, filed late yesterday, alleges that the defendants and their agents have denied apartments to African-American prospective tenants, misrepresented the availability of units to African-American prospective tenants, and have treated similarly situated African-American and white tenants and prospective tenants differently at three apartment complexes, which are owned and managed by John Ruth doing business as Penson Properties. The complaint also alleges that the defendants have discriminated against families with children, including denying families with children the opportunity to rent upper-level apartments and restricting families with children to basement-level apartments.
The United States’ complaint seeks a court order prohibiting future discrimination by the defendants, and requesting both monetary damages for those harmed by the defendants’ actions, and a civil penalty.
Several former property managers and tenants previously complained to the Stark County, Ohio, Fair Housing Department that they had been discriminated against by the defendants, and their complaints were referred to the Ohio Civil Rights Commission (OCRC) for investigation. Following OCRC’s investigation, OCRC, several individual tenants and former property managers, as well as Stark County filed suit against the defendants. That lawsuit is currently pending in the Northern District of Ohio before the U.S. Judge John R. Adams.
Fighting illegal discrimination in housing is a top priority of the Justice Department. The federal Fair Housing Act prohibits discrimination in housing on the basis of race, color, religion, sex, familial status, national origin and disability. More information about the Civil Rights Division and the laws it enforces is available at www.justice.gov/crt. Individuals who believe that they have been victims of housing discrimination can call the Housing Discrimination Tip Line at 1-800-896-7743, e-mail the Justice Department at [email protected] or contact HUD at 1-800-669-9777.
The complaint is an allegation of unlawful conduct. The allegations must still be proven in federal court.
Federal Court Permanently Bars Two Louisiana Tax PreparersRead the Press Release
WASHINGTON – A federal court in the Middle District of Louisiana has permanently barred Cynthia Peters and Melissa Edwards from preparing federal tax returns for others, the Justice Department announced today. According to the civil injunction suit, Peters, Edwards and their business, Jasmine’s and Melissa’s Tax Service, prepared tax returns for their customers claiming fraudulent tax refunds based on improperly claimed earned income tax credits.
The suit alleges that Peters and Edwards, both of Baton Rouge, La., prepared tax returns that claimed fraudulent refunds by fabricating their customers’ income and creating bogus losses and expenses so that the customers would supposedly qualify for the earned income credit. The pair also allegedly manufactured bogus losses and expenses for fictitious businesses so that their customers could claim larger refunds. The lawsuit alleges that their misconduct caused over $7 million in harm to the government.
According to the government complaint, the two women previously pleaded guilty to willfully aiding and assisting in the preparation and filing of false tax returns. Peters was sentenced to 27 months in prison and ordered to pay $76,908 in restitution to the Internal Revenue Service (IRS), and Edwards was sentenced to 30 months in prison and ordered to pay $56,040 in restitution to the IRS.
Filing false tax forms, including forms with bogus losses, is one of the IRS’s “Dirty Dozen” tax scams for 2011. In the past decade, the Justice Department’s Tax Division has obtained injunctions against hundreds of tax fraud promoters and unscrupulous tax return preparers. Information about these cases is available on the Justice Department website.
Dolton, Ill., Police Officer Arrested on Federal Civil Rights and Obstruction Charges Involving Alleged Use of Excessive ForceRead the Press Release
CHICAGO — A Dolton, Ill., police officer was arrested today on federal civil rights and obstruction of justice charges alleging that he used excessive force against two victims in 2009 and later threatened Dolton’s then police chief during the investigation, the Justice Department announced today. Kevin Fletcher, 34, of Dolton, was indicted on two counts of violating the victims’ civil right to be free from the use of unreasonable force by a person acting under color of law and one count of obstruction of justice. The indictment was returned by a federal grand jury in the Northern District of Illinois last Thursday and unsealed today after Fletcher was arrested.
Fletcher was released on bond after being arraigned today before U.S. Magistrate Judge Maria Valdez in federal court in Chicago. He joined the Dolton Police Department in October 2006.
The indictment alleges that on May 17, 2009, while performing his duties as a police officer, Fletcher used a baton to strike two unnamed victims, identified only as “Victim M” and “Victim W,” in the head, resulting in each victim suffering bodily injury.
The obstruction count alleges that on Feb. 15, 2010, Fletcher threatened to cause bodily injury to Dolton’s then police chief in retaliation for producing records and documents to the federal grand jury investigating Fletcher’s alleged use of excessive force, as well as for providing information to FBI agents conducting the investigation.
The government is being represented in court by Assistant U.S. Attorney Tinos Diamantatos from the Northern District of Illinois and Justice Department Trial Attorney Sanjay Patel.
The civil rights counts each carry a maximum penalty of 10 years in prison and a $250,000 fine, and the obstruction count carries a maximum penalty of 20 years in prison and a $250,000 fine.
An indictment contains only charges and is not evidence of guilt. The defendant is presumed innocent and is entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
31 October 2011
Owner of Houston Health Care Company Sentenced to 41 Months in Prison in Connection with $1.3 Million Medicare Fraud SchemeRead the Press Release
WASHINGTON – An owner and operator of a Houston durable medical equipment (DME) company was sentenced today in Houston federal court to 41 months in prison for his role in a Medicare fraud scheme, announced the Department of Justice, the FBI and the Department of Health and Human Services (HHS).
Ekpedeme Obot, 35, of Houston, was sentenced by U.S. District Judge Lee Rosenthal in Houston. In addition to his prison term, Obot was sentenced to three years of supervised release and was ordered to pay $945,637 in restitution.
Obot pleaded guilty on June 22, 2011, to one count of making false statements relating to health care matters and one count of health care fraud.
According to court documents, Obot was an owner and operator of Praise DME, a company that purported to provide orthotics and other DME to Medicare beneficiaries. According to court documents, Praise submitted claims to Medicare for DME, including orthotic devices, which were medically unnecessary and/or not provided. Many of the orthotic devices were components of an “arthritis kit,” and were purported to be for the treatment of arthritis-related conditions. The arthritis kit generally contained a number of orthotic devices including braces for both sides of the body and related accessories such as heat pads. From March 2007 through August 2008, Obot submitted claims of more than $1.3 million to Medicare and was paid approximately $945,637.
In addition, according to court documents, Obot admitted that he made false statements to Medicare in his supplemental Medicare Enrollment Application when he failed to provide information about a prior felony conviction. Specifically, the Medicare Enrollment Application included a section entitled “Adverse Legal Actions/Convictions,” which required DME providers to list prior felony convictions. Obot was convicted on March 5, 2007, in Harris County, Texas, on a felony theft charge. In his application, he represented only that he had been subject to a recoupment action by Texas Medicaid in November 2006 that was resolved by entering into a payment plan.
Today’s sentence was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Kenneth Magidson of the Southern District of Texas; Special Agent-In-Charge Stephen L. Morris of the FBI’s Houston Field Office; Special Agent-in-Charge Mike Fields of the Dallas Regional Office of HHS’s Office of the Inspector General (HHS-OIG), Office of Investigations; Joseph J. Del Favero, Special Agent-in-Charge of the Chicago Field Office of the Railroad Retirement Board Office of Inspector General; and the Texas Attorney General’s Medicaid Fraud Control Unit (MFCU).
This case was prosecuted by Special Assistant U.S. Attorney Justin Blan and Trial Attorney Laura M.K. Cordova of the Criminal Division’s Fraud Section. The case was brought as part of the Medicare Fraud Strike Force, supervised by the U.S. Attorney’s Office for the Southern District of Texas and the Criminal Division’s Fraud Section.
Since their inception in March 2007, Medicare Fraud Strike Force operations in nine locations have charged more than 1,140 defendants who collectively have falsely billed the Medicare program for more than $2.9 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers..
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov .
Justice Department Settles Lawsuit Against Terrebonne Parish Regarding Unlawful Conditions at Juvenile Detention CenterRead the Press Release
WASHINGTON – Today, the U.S. District Court for the Eastern District of Louisiana in New Orleans entered the revised settlement agreement reached between the United States and Terrebonne Parish as an order of the court. The agreement resolves the United States’ allegations that the Parish had violated the constitutional rights of youth in the Terrebonne Parish Juvenile Detention Center (TPJDC). The United States filed its complaint against the parish on Oct. 4, 2011.
The United States’ investigation of the TPJDC, located in Houma, La., began in November 2009. The United States’ findings included allegations that TPJDC failed to protect its youth from harm, including physical and sexual misconduct by staff on youth. In addition, the United States identified widespread and systemic abuses and failures that contributed to the harms experienced by youth at TPJDC. The agreement contains comprehensive provisions related to incident reporting; use of isolation and discipline; suicide prevention; staff accountability and supervision; reporting allegations of abuse; training; quality assurance; and improved policies, procedures and practices directly tied to detailed outcome measures.
“We commend the administrators of TPJDC, Parish government officials, and their counsel for cooperating with the United States’ investigation and their commitment to reforming TPJDC to ensure that the constitutional rights of juveniles are protected,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “We appreciate that the highest levels of TPJDC and parish government have already taken great strides to begin the process of reform without waiting for a court order.”
Compliance with the agreement will be overseen by an independent monitor jointly selected by the United States and Terrebonne Parish. After an initial compliance tour within 90 days of the effective date of the agreement, the monitor will conduct compliance tours every six months thereafter. The monitor will issue monitoring reports for the parties and the court. In addition, the parish is required to provide monthly reports and updates to the United States and the monitor regarding statistics, data, trends and corrective actions, if any, regarding the status of each substantive category of reform contained within the settlement agreement.
This civil action was filed by the Civil Rights Division Special Litigation Section Deputy Chief Judy Preston and Senior Trial Attorney Je Yon Jung.
The Violent Crime Control and Law Enforcement Act of 1994 authorizes the Department of Justice to seek a remedy for a pattern or practice of conduct that violates the constitutional or federal statutory rights of youth in juvenile justice institutions. Please visit www.justice.gov/crt to learn more about this act and other laws enforced by the department’s Civil Rights Division.
Former Asphalt Manager of Pelican Refinery Pleads Guilty in Louisiana to Air Pollution Causing Negligent EndangermentRead the Press Release
WASHINGTON – The former asphalt facilities manager of Pelican Refining Company LLC (PRC), pleaded guilty today to the crime of negligent endangerment under the Clean Air Act in federal court in Lafayette, La., announced Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division at the Department of Justice and Stephanie A. Finley, U.S. Attorney for the Western District of Louisiana.
Mike LeBleu served as the asphalt facilities manager of the Pelican Refinery in Lake Charles, La., from May 9, 2005, through Oct. 15, 2009. LeBleu was a member of upper management with regard to the asphalt plant and had overall responsibility for the plant’s operations and personnel. According to court documents, LeBleu negligently caused the release of hydrogen sulfide (H2S), an extremely hazardous substance, into the air, which placed other persons in imminent danger of death and serious bodily injury.
LeBleu faces a maximum of one year in prison and a fine of $100,000.
According to the joint factual statement filed with court, during August 2007, LeBleu facilitated the purchase of a load of 64-22 asphalt that had extremely high levels of H2S emissions, between 150 parts per million (ppm) and 1300 ppm. H2S emissions at these levels carry serious health risks, ranging from eye and lung damage to death at the highest levels. The H2S coming off the asphalt was so high that the barge carrying the load was previously denied entry into the Port of Houston. Because of the high H2S levels, LeBleu was able to negotiate a substantial discount. The Pelican Refinery would have to spend almost $25,000 on treatments and chemicals in order to bring the H2S emissions down to safe levels for road construction, but even with the cost of treatment, the savings to the Pelican Refinery amounted to more than $140,000.
LeBleu admitted that he was fully aware of the risks associated with processing asphalt with such high H2S emissions. For example, at the time of treatment, he requested and received from the Asphalt Institute, a draft copy of “Best Management Practices for Asphalt Facility Control of H2S Exposure.” Nevertheless, those best practices were not instituted or followed.
On Aug. 19, 2007, the asphalt arrived at the Pelican Refinery, and under LeBleu’s direction, employees on the asphalt barges were instructed to load approximately 39,438 barrels of the high-H2S asphalt into a tank, known as Tank 80-02. Tank 80-02 was not permitted for H2S emissions, a violation of PRC’s Title V permit. LeBleu understood that the asphalt was in a liquid phase and that H2S would be emitted into the vapor space of the tank. Because that tank was vented to the atmosphere, H2S would escape into the surrounding air, especially given the heated condition of the asphalt. LeBleu himself saw “blue smoke” being emitted from the elbow vents toward the top of the tank, indicating that fumes were being emitted into the atmosphere.
The treatment of the high H2S asphalt was an ongoing process involving mixing and blending that lasted approximately one month, and was completed by the end of September 2007. During the treatment, regular samples of the H2S levels had to be taken. Some of this was done from a tap valve on the side of the tank. Other samples were taken from a hatch at the top of the tank’s roof. LeBleu personally collected some of these samples, but he also was negligent when he ordered his subordinates to collect such samples. These employees had to climb on top of the tank, open a hatch, and insert a sampling device into the hatch. The employees were not provided with “fresh air” breathing equipment as required by industry best practices. Several of these employees noted that their personal H2S monitors indicated exposure to H2S. Other employees that went on top of Tank 80-02 as part of the sampling program reported smelling “rotten eggs” and being overcome with fumes. The smell of rotten eggs is a human indicator for the presence of H2S.
In related cases, PRC pleaded guilty on Oct. 12, 2011, to felony violations of the Clean Air Act and obstruction of justice for its mismanagement of the refinery. Sentencing is scheduled for Dec. 15, 2011. Additionally, the company’s vice-president and general manager, Byron Hamilton, pleaded guilty to Clean Air Act negligent endangerment charges on July 6, 2011. Sentencing has yet to be scheduled for Hamilton.
Under the Crime Victims’ Rights Act, crime victims are afforded certain statutory rights, including the opportunity to attend all public hearings and provide input to the prosecution. Any person adversely impacted is encouraged to visit www.justice.gov/usao/law/vicwit/index.html to learn more about the case and the Crime Victims’ Rights Act or you may contact the Victim Witness Coordinator for the U.S. Attorney’s Office for the Western District of Louisiana, Vicki Chance at 318-676-3600.
The criminal investigation was conducted by the EPA Criminal Investigation Division in Baton Rouge and the Louisiana State Police, with assistance from the Louisiana Department of Environmental Quality. The case is being prosecuted by U.S. Attorney Stephanie Finley, Trial Attorney Christopher Hale and Senior Trial Attorney Richard A. Udell, both with the Environmental Crimes Section of the Environment and Natural Resources Division of the U.S. Department of Justice.
Department of Justice Challenges South Carolina’s Immigration LawRead the Press Release
WASHINGTON – The Department of Justice challenged South Carolina’s recently passed immigration law, Act No. 69, in federal court today.
In a complaint, filed in the District of South Carolina, the department states that certain provisions of Act No. 69, as enacted by the state on June 27, 2011, are unconstitutional and interfere with the federal government’s authority to set and enforce immigration policy, explaining that “the Constitution and federal law do not permit the development of a patchwork of state and local immigration policies throughout the country.” South Carolina’s law clearly conflicts with the policies and priorities adopted by the federal government and therefore cannot stand.
South Carolina’s law is designed to further criminalize unauthorized immigrants and, like the Arizona and Alabama laws, expands the opportunity for police to push unauthorized immigrants towards incarceration for various new immigration crimes by enforcing an immigration status verification system. Similar to Arizona’s S.B. 1070 and Alabama’s H.B. 56, this law will place significant burdens on federal agencies, diverting their resources away from high-priority targets, such as terrorism, drug smuggling and gang activity, and those with criminal records. In addition, the law’s mandates on law enforcement will also result in the harassment and detention of foreign visitors and legal immigrants, as well as U.S. citizens, who cannot readily prove their lawful status.
“Today’s lawsuit makes clear once again that the Justice Department will not hesitate to challenge a state’s immigration law, as we have in Arizona, Alabama and South Carolina, if we find that the law interferes with the federal government’s enforcement of immigration,” said Attorney General Eric Holder. “It is understandable that communities remain frustrated with the broken immigration system, but a patchwork of state laws is not the solution and will only create problems. We will continue to monitor the impact these laws might have on our communities and will evaluate each law to determine whether it conflicts with the federal government’s enforcement responsibilities.”
“DHS continues to enforce federal immigration laws in South Carolina in smart, effective ways that focus our resources on criminal aliens, recent border crossers, repeat and egregious immigration law violators and employers who knowingly hire illegal labor,” said Department of Homeland Security Secretary Janet Napolitano. “This kind of legislation diverts critical law enforcement resources from the most serious threats to public safety and undermines the vital trust between local jurisdictions and the communities they serve, while failing to address the underlying problem: the need for comprehensive immigration reform at the federal level.”
The department filed the lawsuit after consultation with the South Carolina attorney general and South Carolina law enforcement officials. The suit was filed on behalf of the Departments of Justice, Homeland Security and State, which share responsibilities in administering federal immigration law. The department will soon request a preliminary injunction to enjoin enforcement of the law, parts of which go into effect on Jan. 1, 2012, arguing that the law’s operation will cause irreparable harm.
The Justice Department previously challenged S.B. 1070 and H.B. 56 on federal preemption grounds. The department continues to review immigration-related laws that were passed in Utah, Indiana and Georgia. Courts have enjoined key parts of the Arizona, Alabama, Georgia and Indiana state laws and temporarily restrained enforcement of Utah’s law.
View the Complaint
28 October 2011
Statements by Attorney General Holder and Agriculture Secretary Vilsack on Court Approval of Pigford II Settlement AgreementRead the Press Release
WASHINGTON– Attorney General Eric Holder and Agriculture Secretary Tom Vilsack released the following statements on the U.S. District Court for the District of Columbia approval of the historic Pigford II settlement:
“This settlement allows the Department of Agriculture and African-American farmers to focus on the future, and brings us one step closer to giving these farmers a chance to have their claims heard,” said Attorney General Holder. “Accomplishing this settlement has been a top priority of this Administration and I am pleased that the court has approved it.”
“Since my first day at USDA, I made it a priority to treat all Americans with respect and dignity and to ensure equal access to our programs. Court approval of the Pigford settlement is another important step to ensure some level of justice for black farmers and ranchers who faced discrimination when trying to obtain services from USDA,” said Secretary Vilsack. “President Obama, Attorney General Holder and I are thrilled by the court’s approval so we can continue turning the page on this sad chapter in USDA history. In the months and years ahead, we will not stop working to move the Department into a new era as a model employer and premier service provider for all Americans regardless of race, ethnicity or gender.”
On Feb.18, 2010, USDA and the U.S. Department of Justice announced an agreement with African-American farmers to settle the Pigford II litigation for $1.25 billion. Congress passed the Claims Settlement Act that funded the settlement in November 2010, and the bill was signed by President Obama in December 2010. The bill that passed the Senate and House included strong protections against waste, fraud and abuse to ensure integrity of the claims process. The claims process will soon be established and announced for individuals who may have faced discrimination.
In February 2010, the Departments of Justice and Agriculture announced the Pigford II settlement with African American farmers, in October 2010, the departments announced the Keepseagle settlement with Native American farmers, and in February 2011, the departments announced the establishment of a process to resolve the claims of Hispanic and women farmers and ranchers. Earlier this year, USDA also released a Civil Rights Assessment report that detailed an aggressive plan to promote equal access and opportunity at the department. The Department of Agriculture is currently implementing many of the department-wide recommendations that will help USDA improve service delivery to minority and socially disadvantaged farmers and ranchers, and enhance program delivery and outreach to promote diversity, inclusion and accessibility. An overview of these comprehensive efforts is available at www.ascr.usda.gov/new_era_at_cr_.html
Former Owners of Florida Airline Fuel Supply and Indiana Flight Management Services Companies Sentenced to Prison for Conspiring to Defraud Ryan International AirlinesRead the Press Release
WASHINGTON – A former owner and operator of a Florida-based airline fuel supply service company and a former owner and operator of an Indiana-based flight management services company were sentenced today to serve prison time and to pay restitution for conspiring to commit wire fraud and honest services fraud in separate schemes to defraud Ryan International Airlines, a charter airline company located in Rockford, Ill., the Department of Justice announced today.
James E. Murphy, the former owner and operator of a Florida aviation fuel supply company, was sentenced to 23 months in prison and to pay $42,500 in restitution. David A. Chaisson, the former owner and operator of an Indiana flight management services company, was sentenced to 16 months in prison and to pay $50,742.48 in restitution.
On Aug. 12, 2011, Murphy and Chaisson pleaded guilty in separate two-count felony charges in U.S. District Court in Fort Lauderdale, Fla., for participating in different conspiracies with co-conspirators to defraud Ryan by making kickback payments to Wayne E. Kepple, a former vice president of ground operations for Ryan, in exchange for Kepple awarding their respective companies business.
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, Murphy paid more than $130,000 in kickbacks to Kepple, who was responsible for procuring jet fuel for Ryan flights, in exchange for Kepple providing aviation fuel contracts to Murphy’s company and to two other aviation fuel supply companies where Murphy worked as a corporate bookkeeper. In a separate conspiracy, according to court documents, Chaisson paid Kepple more than $60,000 in kickbacks, including payments based on fabricated invoices submitted by Chaisson’s company to Ryan. Chaisson’s company was responsible for managing the ground operations for Ryan flights.
On Sept. 29, 2011, Kepple was charged with conspiracy to commit wire fraud and honest services fraud in three separate kickback schemes to defraud Ryan involving Murphy, Chaisson, Robert Riddell, the former owner and operator of an airline security and ground service company, and others. On Oct. 17, 2011, Riddell pleaded guilty in U.S. District Court in West Palm Beach, Fla., for conspiring with Kepple to defraud Ryan. He is scheduled to be sentenced on Dec. 20, 2011.
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 in Fort Lauderdale. 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.
Attorney General Holder, Federal and State Officials Announce Enforcement Efforts Against Illegal Prescription Drug Distributors in FloridaRead the Press Release
WASHINGTON – Federal authorities, along with state and local law enforcement partners, conducted coordinated enforcement actions today against 22 individuals and one pharmacy allegedly involved in the illegal distribution of prescription drugs. This enforcement action, known as Operation Pill Nation II, was announced by Attorney General Eric Holder, U.S. Drug Enforcement Administration (DEA) Administrator Michele M. Leonhart and U.S. Attorney Robert E. O’Neill for the Middle District of Florida.
“Today’s actions mark important progress in our ongoing fight against one of the nation’s greatest public safety and public health epidemics: prescription drug abuse,” said Attorney General Holder. “Our targeted, aggressive enforcement actions are sending a clear message that in Florida, which has long been an epicenter for the illegal use and distribution of prescription drugs, the days of easily acquiring these drugs from corrupt doctors and pharmacists are numbered.”
“The days of going to Florida to easily obtain dangerous prescription controlled substances from corrupt medical professionals are coming to an end,” said DEA Administrator Leonhart. “DEA, in conjunction with its federal, state and local law enforcement partners, has implemented an aggressive and comprehensive strategy in Florida and throughout the United States to stop the diversion of prescription controlled substances that is fueling our country’s epidemic of prescription drug abuse. Operations such as Pill Nation II illustrate the steadfast determination of DEA and its law enforcement partners in ending Florida’s role as the epicenter for rogue pain clinics in the United States.”
“The heightened cooperation among local, state and federal law enforcement agencies over the past several months demonstrates the commitment to combat this growing problem,” said U.S. Attorney O’Neill. “Those involved in these types of illegal activities should know that we will continue to investigate, enforce and prosecute those responsible for violating their professional oaths and putting lives in danger.”
Among the 22 people arrested today in Orlando and Tampa, Fla., were five doctors and two pharmacists, who have been charged for their alleged roles in illegally distributing prescription drugs. The court documents unsealed and filed today allege the individuals charged illegally diverted controlled substances.
DEA agents, working alongside state and local law enforcement partners, also executed six search warrants in the Tampa area and served two immediate suspension orders to a doctor and a pharmacy. These orders revoke their authority to dispense or prescribe controlled substances. In addition, approximately $500,000 in U.S. currency and assets were seized today.
Prior to today’s actions, efforts undertaken as part of Operation Pill Nation II have led to the arrest of 49 individuals. In addition, the DEA today announced the addition of a third Tactical Diversion Squad in Florida. This new group will be in Orlando and responsible for investigating prescription drug diversion in Central Florida.
Operation Pill Nation I, which was announced in February 2011 in South Florida, has resulted in the arrest of 47 people to date, including 17 doctors and five clinic owners, and the seizure of more than $18.9 million in cash and assets. In addition, more than 70 doctors, six pharmacy owners and five DEA Registered Controlled Substance Distributors have been stripped of their DEA registrations.
Pill mills are operations in which physicians, pharmacies or clinics prescribe controlled substances, without the proper assessment or due care to legitimate patients.
As part of continuing efforts to protect people – especially children and teens – from the dangers of misused or abused prescription drugs, DEA is sponsoring its third National Prescription Drug Take Back Day tomorrow, Oct. 29, 2011. This event allows people to dispose of expired, unused and unwanted prescription drugs at more than 5,000 collection sites throughout the United States, including 17 sites in Tampa and Orlando. During the previous two national Prescription Drug Take Back events, a total of more than 309 tons of prescription drugs were collected nationwide. To learn more about the program or find a Saturday collection site near you, go to: www.deadiversion.usdoj.gov/NTBI/ntbi-pub.pub?_flowId=public-flow.
The cases announced today were investigated by the DEA; the Tampa Police Department; the Manatee County, Fla., Sheriff’s Office; the Lakeland, Fla., Police Department; the Pinellas County, Fla., Sheriff’s Office; the New Port Richey, Fla., Police Department; the Naples, Fla., Police Department; the Fort Myers, Fla., Police Department; the Hillsborough County, Fla., Sheriff’s Office; and the Florida Department of Law Enforcement. The cases are being prosecuted by Assistant U.S. Attorneys for the Middle District of Florida.