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2 November 2011
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.
27 October 2011
Two Pittsburgh Residents Sentenced on Racketeering ChargesRead the Press Release
WASHINGTON – Two Pittsburgh residents were sentenced to prison this week on racketeering charges relating to their involvement with the Brighton Place/Northview Heights Crips, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney David J. Hickton of the Western District of Pennsylvania.
James Pendleton, 30, aka “Jim Bob,” was sentenced today by Senior U.S. District Judge Gustave Diamond to 112 months in prison, to be followed by three years of supervised release. Pendleton pleaded guilty on June 30, 2011, to one count of conspiracy to engage in a racketeering enterprise.
Devon Shealey, 25, was sentenced on Oct. 25, 2011, by Judge Diamond to 57 months in prison. This sentence will run concurrent to a 34-68 year prison sentence he is currently serving for related crimes. Shealey pleaded guilty on Aug. 18, 2011, to one count of violence in the aid of racketeering.
According to the guilty pleas, Pendleton and Shealey were associates of the Brighton Place/Northview Heights Crips street gang, which participated in a pattern of racketeering activity that included multiple acts involving robberies at gun point; attempted murders; distribution of controlled substances, including cocaine, heroin and crack cocaine; and obstruction of justice and witness intimidation.
According to court documents, Pendleton was an associate of the Brighton Place Crips, a criminal street gang that controlled an area of Brighton Place and Morrison Street, also known as the Mad Cave, and Federal Street in the Northside area of Pittsburgh. The Brighton Place Crips were formed in the early 1990s; in 2003, it formed an alliance with the Northview Heights/ Fineview Crips. This alliance expanded the gang’s drug trafficking territory, and increased the number of gang members and associates available to preserve and protect the gang’s power, territory and profits through violence.
The Brighton Place/Northview Heights Crips gang maintains exclusive control over drug trafficking in these neighborhoods through continuous violence and intimidation of rivals and witnesses. Members of the gang support each other through payment of attorneys’ fees and bonds, as well as payments to jail commissary accounts and support payments to incarcerated members’ families.
In addition, gang members had violent confrontations with members of the rival Manchester OG’s, and other street gangs operating in the Northside section of Pittsburgh. Members and associates obtained greater authority and prestige within the enterprise based on their reputation for violence and their ability to obtain and sell a steady supply of illegal drugs. According to court documents, the Brighton Place/Northview Heights Crips gang members identify themselves by wearing blue, flashing Crips gang hand signals, and using phrases such as “Cuz,” “C-Safe,” “Loc” and “G.K.”
According to court documents, Pendleton was a “connect” for the gang, supplying members of the enterprise with cocaine and crack cocaine.
Pendleton and Shealey are two of 26 defendants charged in February 2010 with being members or associates of, and conducting racketeering activity through, the Brighton Place/Northview Heights Crips gang. This prosecution resulted from a Project Safe Neighborhoods Task Force investigation that began in 2005. To date, all members of the Brighton Place/Northview Heights Crips who were charged in this indictment have pleaded guilty to racketeering charges.
This case is being prosecuted by Assistant U.S. Attorneys Charles A. Eberle and Troy Rivetti of the Western District of Pennsylvania and Trial Attorney Kevin Rosenberg of the Criminal Division’s Organized Crime and Gang Section. The case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives; the City of Pittsburgh Bureau of Police; the Allegheny County, Penn., Police Department; and the Allegheny County Sheriff’s Office.
Justice Department Settles Lawsuit with Washington State Company to Enforce Employment Rights of U.S. Air Force ReservistRead the Press Release
WASHINGTON - The Justice Department announced today that it has reached a settlement with James J. Williams Bulk Service Transport Inc. (JJW), its parent company Trans-System Inc. and System TWT Transportation Inc. alleging that the companies violated the Uniformed Services Employment and Reemployment Rights Act (USERRA) by failing to promptly and properly reemploy U.S. Air Force reservist Dave Axtell in April 2009 when he returned from military service in support of Operation Enduring Freedom. The complaint also alleged that the defendants unlawfully terminated Axtell’s employment without cause shortly after he was reemployed. If approved by the court, the settlement would resolve the allegations that the defendants violated the reemployment rights of Axtell.
Subject to certain conditions, USERRA requires employers to promptly reemploy returning service members in the positions they would have held had their employment not been interrupted by military service, or in a position of like seniority, status and pay. In addition, any individual with Axtell’s length of absence for military service who is reemployed cannot be terminated, except for just cause, within one year after the date of reemployment.
According to the department’s complaint, filed in the U.S. District Court for the Western District of Washington in Tacoma, the defendant companies violated USERRA by not promptly or properly reemploying Axtell in his previous pre-service position as a driver supervisor or in a position with comparable seniority, status and pay. The defendants waited three months to reemploy Axtell, and thereafter employed him in an unsalaried, lower status position requiring longer hours. Ultimately, according to the complaint, defendants terminated Axtell’s employment without cause, also in violation of USERRA.
Under the terms of the settlement, embodied in a consent decree that has been submitted for approval to the federal district court in Tacoma, the defendants must pay Axtell $60,000 to compensate him for lost wages and benefits. Among other things, the settlement also requires the defendants to provide training to JJW’s high level officials and human resources staff on the USERRA rights and obligations of employers and covered employees.
“The men and women who bravely serve our nation in the armed forces should not have to sacrifice their jobs to do so. Employers have a legal obligation to ensure returning service members get their jobs back when they return from military duty as required by law,” 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 courage and sacrifice, secure the rights of all Americans.”
“The United States Attorney’s Office is committed to enforcing the laws that protect the rights of those brave men and women who serve our country proudly,” U.S. Attorney for the Western District of Washington Jenny A. Durkan said today. “Our soldiers must be able to serve with the confidence that they will get their jobs back when they return to the workforce and will not be discharged without just cause.”
The case was litigated by Assistant U.S. Attorney J. Michael Diaz in the U.S. Attorney’s Office for the Western District of Washington, in collaboration with Jodi Danis, Special Counsel, and Kristofor Hammond, Senior Trial Attorney, in the Civil Rights Division of the Justice Department. The case stems from a referral from the U.S. Labor Department following an investigation by its Veterans’ Employment and Training Service.
The Justice Department’s Civil Rights Division and the U.S. Attorney’s Offices have given a high priority to the enforcement of service members’ rights under USERRA. Additional information about USERRA can be found on the Justice Department’s websites at www.justice.gov/crt/emp and www.servicemembers.gov, as well as on the Labor Department’s website at www.dol.gov/vets/programs/userra/main.htm.
Justice Department Resolves Lawsuit Alleging Disability Discrimination in Sioux Falls, South DakotaRead the Press Release
WASHINGTON – The Justice Department today announced a settlement of its lawsuit alleging that Equity Homes Inc, PBR LLC, BBR LLC and Shane Hartung violated the Fair Housing Act (FHA) by failing to provide features that would make their multi-family housing developments in Sioux Falls accessible to people with disabilities as required by the Fair Housing Act.
The case originated from discrimination complaints filed with the U.S. Department of Housing and Urban Development (HUD), concerning six Sioux Falls complexes - East Briar Apartments, West Briar Apartments, Kensington Apartments, Beverly Gardens Apartments, Sertoma Hills Apartments and Sertoma Hills Villas. After investigating, HUD issued a charge of discrimination and referred the matter to the Justice Department, which filed this lawsuit in May 2009. In its complaint, the Justice Department named Equity Homes Inc., PBR LLC, BBR LLC and Shane Hartung as defendants liable for violations of the FHA. The complaint also names Scott Snoozy, Myron R. Van Buskirk, Wayne Hansen, Martin McGee and Sertoma Hills Villas Association Inc., the current owners of the properties who were named in order to obtain complete relief.
The settlement filed today, along with a prior consent order entered in this case on July 20, 2011, now fully resolves this matter. Today’s agreement must still be approved by the court. According to the settlement, defendants Equity Homes Inc., BBR LLC and Shane Hartung will modify the six apartment complexes to make them accessible to persons with disabilities and will pay $41,500 in monetary damages to those harmed by the inaccessible housing. The settlements in this case also require these defendants to undergo training on the requirements on the Fair Housing Act and provide periodic reports to the government.
“Building apartments and condominiums that are accessible to persons with disabilities is not an option, it is the law,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “Builders, architects and others who build or design multi-family housing need to consider accessibility at the outset, or they risk much greater expenses to fix the problem later.”
“My office is committed to ensuring that South Dakota’s disabled citizens receive the reasonable accommodations they need to function and live as others do,” said Brendan Johnson, U.S. Attorney for the District of South Dakota. “We will remain vigilant in enforcing our nation’s fair housing laws so that our citizens are not excluded from housing opportunities.”
“Access to a unit brings access to self-sufficiency and independence for people with disabilities,” stated John Trasviña, HUD Assistant Secretary for Fair Housing & Equal Opportunity. “Through industry training and legal compliance, we will make this a reality across the nation.”
The federal Fair Housing Act prohibits discrimination in housing based on race, color, religion, national origin, sex, disability and familial status. Individuals who believe that they may have been victims of housing discrimination should call the Housing Discrimination Tip Line (1-800-896-7743) or email the Justice Department at [email protected]. Such persons may also contact the U.S. Department of Housing and Urban Development at 1-800-669-9777 or at www.hud.gov.
Fair housing enforcement is a priority of the Civil Rights Division. More information about the Civil Rights Division and the laws it enforces is available at www.justice.gov/crt.
Justice Department Files Suit Against Pennsylvania Department of Corrections to Protect Employment Rights of U.S. Army ReservistRead the Press Release
WASHINGTON – The Department of Justice filed a lawsuit today against the Pennsylvania Department of Corrections (PDOC) alleging that it violated the Uniformed Services Employment and Reemployment Rights Act (USERRA) by failing to retroactively promote a U.S. Army Reservist based on his successful performance on a make-up promotional examination after he returned from a military deployment.
Subject to certain conditions, USERRA requires employers to promptly reemploy returning service members in the positions they would have held had their employment not been interrupted by military service or in positions of like seniority, status and pay.
According to the department’s complaint filed in the U.S. District Court for the Middle District of Pennsylvania in Harrisburg, Pa., David C. Fyock’s score on the make-up examination was higher than the score of any person promoted to any of the 13 vacant corrections officer 2 positions filled based on the May 2007 promotional test that he missed. The complaint alleges that if Fyock, of Kennerdell, Pa., had achieved that high score on the May 2007 written examination, he would have been promoted from a corrections officer 1 to a corrections officer 2 position given PDOC’s selection process and Fyock’s background, work record and qualifications.
Despite USERRA’s requirement that employers reemploy returning service members in the positions they would have held if their employment not been interrupted by military service, PDOC refused to promote Fyock after his deployment. In its lawsuit, the department seeks a retroactive promotion to corrections officer 2 for Fyock, as well as lost wages and benefits.
“The Civil Rights Division is strongly committed to protecting the reemployment rights of the men and women who serve our country in uniform,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “No service member should have to forego an opportunity for advancement in his or her civilian career due to military service.”
U.S. Attorney for the Middle District of Pennsylvania Peter J. Smith stated that, “His office strongly supports the rights of service members and the objective of the statute which is to help veterans reclaim their rightful positions in the workforce after they complete their military service.”
The Labor Department’s Veterans’ Employment and Training Service investigated and attempted to resolve Fyock’s USERRA complaint before referring it to the Justice Department for litigation. It has been assigned to Assistant U.S. Attorneys Melissa Swauger and Timothy Judge from the Middle District of Pennsylvania’s Civil Division.
The department’s Civil Rights Division has given a high priority to the enforcement of service members' rights under USERRA. Additional information about USERRA can be found on the Justice Department’s websites at www.usdoj.gov/crt/emp and www.servicemembers.gov , as well as on the Labor Department’s website at www.dol.gov/vets/programs/userra/main.htm.
Eight Northern California Real Estate Investors Agree to Plead Guilty to Bid Rigging at Public Foreclosure AuctionsRead the Press Release
**The fraud charge(s) referenced in this press release were subsequently dismissed on the government’s motion.**
Eight Northern California real estate investors have agreed to plead guilty today for their roles in two separate conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in Northern California, the Department of Justice announced.
Charges were filed today in U.S. District Court for the Northern District of California in San Francisco against Gary Anderson of Saratoga, Calif.; Patrick Campion of San Francisco; James Doherty of Hillsborough, Calif.; Keith Goodman of San Francisco; Troy Kent of San Mateo, Calif.; Craig Lipton of San Francisco; Henry Pessah of Burlingame, Calif.; and Laith Salma of San Francisco.
According to the felony charges, the real estate investors participated in a conspiracy to rig bids by agreeing to refrain from bidding against one another at public real estate foreclosure auctions in San Francisco County and San Mateo County. Doherty, Goodman and Lipton participated in the conspiracy in San Francisco, and Anderson, Campion, Kent, Pessah and Salma participated in the conspiracy in San Mateo.
“The collusion taking place at these auctions allowed the conspirators to line their pockets with funds that otherwise would have gone to lenders and, at times, financially distressed homeowners,” said Sharis Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “The investigation into collusion at these foreclosure auction markets is ongoing, and the Antitrust Division will continue to pursue the perpetrators of these fraudulent schemes until they are brought to justice.”
“The FBI and the Antitrust Division are working closely together to ensure that those who engage in fraudulent bid-rigging and other anticompetitive activities at foreclosure auctions are brought to justice,” said FBI Special Agent in Charge Stephanie Douglas. “We will continue to hold individuals accountable for crimes that damage the real estate market and defraud unsuspecting victims of their right to a fair marketplace.”
The department said that the primary purpose of the conspiracies was to suppress and restrain competition and to conceal payoffs in order to obtain selected real estate offered at San Francisco County and San Mateo County public foreclosure auctions at noncompetitive prices. When real estate properties are sold at these auctions, the proceeds are used to pay off the mortgage and other debt attached to the property, with remaining proceeds, if any, paid to the homeowner.
According to court documents, the eight real estate investors conspired with others not to bid against one another at public real estate foreclosure auctions in Northern California, participating in a conspiracy for various lengths of time between November 2008 and January 2011. The real estate investors were also charged with conspiracies to use the mail to carry out a fraudulent scheme to make payoffs to obtain title to selected real estate at fraudulently suppressed prices, to receive payoffs and to divert money to co-conspirators and away from mortgage holders and others with a legal interest in these properties.
Each violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. Each count of conspiracy to commit mail fraud carries a maximum sentence of 30 years in prison and a $1 million fine. The maximum fine for the Sherman Act charges may be increased to twice the gain derived from the crime or twice the loss suffered by the victim if either amount is greater than the $1 million statutory maximum.
The charges today are the latest cases filed by the department in its ongoing investigation into bid rigging and fraud at public real estate foreclosure auctions in San Francisco, San Mateo, Contra Costa and Alameda counties, Calif. To date, as a result of the investigation, 18 individuals have agreed to plead guilty.
The ongoing investigation into fraud and bid rigging at certain real estate foreclosure auctions in Northern California is being conducted by the Antitrust Division’s San Francisco Office and the FBI’s San Francisco office. Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Antitrust Division’s San Francisco Office at 415-436-6660, visit www.justice.gov/atr/contact/newcase.htm or call the FBI tip line at 415-553-7400.
Today’s charges are part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit www.StopFraud.gov.
26 October 2011
U.S. Virgin Islands Company Sentenced for Illegal Trade of Protected CoralRead the Press Release
WASHINGTON – A U.S. Virgin Islands company was sentenced Wednesday in federal court in St. Thomas, U.S.V.I., for knowingly trading in falsely-labeled, protected black coral that was shipped into the United States in violation of the Endangered Species Act and the Lacey Act, the Department of Justice announced.
On July 15, 2011, GEM Manufacturing LLC, headquartered in St. Thomas, pleaded guilty to seven counts of v iolations of both the Endangered Species Act and the Lacey Act. The Lacey Act makes it a felony to falsely label wildlife that is intended for international commerce. The Endangered Species Act is the U.S. domestic law that implements the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES). Each of the species of black coral is listed in Appendix II of CITES and is subject to strict trade regulations.
GEM was sentenced to pay a criminal fine of $1.8 million. The criminal fine will be apportioned between the Lacey Act Reward Fund and the National Oceanic and Atmospheric Administration (NOAA) Asset Forfeiture Fund, accounts established by Congress to assist U.S. Fish and Wildlife Service (FWS) and NOAA in the enforcement of federal conservation laws. GEM was sentenced to pay an additional $500,000 in community service payments for projects to study and protect black coral.
GEM was also ordered to forfeit dozens of jewelry items, ten artistic sculptures and over 13,655 pounds of raw black coral, the total value of which, at current prices, exceeds $2.17 million. The aggregate financial penalty of $4.47 million makes this the largest for the illegal trade in coral, the largest non-seafood wildlife trafficking financial penalty and the fourth largest for any U.S. case involving the illegal trade of wildlife.
“We face a growing challenge to preserve the world’s coral, which serves as essential habitat for marine biodiversity,” said Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division at the Department of Justice. “We will continue to work with our federal partners to aggressively investigate and prosecute those who violate U.S. law by illegally trading in protected species.”
“I have stated before and reiterate that the U.S. Attorney's Office will vigorously protect the environment,” said U.S. Attorney Ronald W. Sharpe for the District of the U.S. Virgin Islands. “It is critical that we do everything we can to prevent the decline and depletion of coral and other protected flora and fauna so that the environment, in this case the marine environment, may be preserved for our enjoyment and that of future generations.”
“Illegal trade further threatens already fragile coral reef ecosystems. The penalties here should make it clear that the United States will not tolerate trafficking in these protected resources,” said William C. Woody, Chief, U.S. Fish and Wildlife Service (FWS) Office of Law Enforcement.
“Black corals are valuable resources that serve as habitat for a myriad of species in the deep sea,” said Eric Schwaab, assistant NOAA administrator for NOAA's Fisheries Service. “They are slow-growing, and some species can live for hundreds to thousands of years. Effective enforcement and regulation of their trade in support of CITES are among our most important tools in ensuring that collection of these species is sustainable and that their survival in the wild is assured.”
“CBP Officers and Agriculture Specialists in the Caribbean work hand in hand with the U.S. Fish and Wildlife Service to detect and intercept falsely labeled and concealed wildlife from illegally entering into U.S. commerce,” said Marcelino Borges, U.S. Customs & Border Protection (CBP) Director of Field Operations for the Caribbean. “Cooperation and collaboration between U.S. Customs & Border Protection and U.S. Fish & Wildlife Service were critical in the success of this investigation.”
“This sentence sends a clear message to black coral traffickers that we and our federal law enforcement partners are in the business of preventing illegal wildlife trade,” said Roberto Escobar Vargas, special agent in charge of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE-HSI) in Puerto Rico. “We will continue to identify and apprehend those who exploit protected species for commercial gain.”
GEM was sentenced to three and a half years of probation and a 10-point compliance plan that includes an auditing, tracking and inventory control program. GEM was also banned from doing business with its former coral supplier, Peng Chia Enterprise Co. Ltd. and its management team of Ivan and Gloria Chu. GEM was the entity known as “Company X” in the related case of U.S. v. Gloria and Ivan Chu, Case No. 2010-003 (D. Virgin Islands). In January 2010, federal agents arrested the Chus as part of a sting operation in Las Vegas. The Chus were subsequently indicted in 2010 for illegally providing black coral to GEM. On June 23, 2010, Ivan Chu was sentenced to serve 30 months in prison and pay a $12,500 fine. Gloria Chu was sentenced to serve 20 months in prison and pay a $12,500 fine.
Black coral is a precious coral that can be polished to a high sheen, worked into artistic sculptures, and used in inlaid jewelry. Black coral is typically found in deep waters, and many species have long life spans and are slow-growing. Using deep sea submersibles, scientists have observed that fish and invertebrates tend to accumulate around the black coral colonies. Thus, black coral communities serve important habitat functions in the mesophotic and deepwater zones. In the last few decades, pressures from overharvesting, due in part to the wider availability of scuba gear, and the introduction of invasive species have threatened this group of coral. Recent seizures of illegal black coral around the world have led many to believe that black coral poaching is on the rise.
GEM is a manufacturer of high-end jewelry, art, and sculpture items that contain black coral. The vast majority of GEM’s sales are through retail stores called “galleries.” In order to facilitate its operations, GEM Manufacturing LLC operated through several subsidiaries that did business in Florida, Nevada, California, Hawaii, U.S. Virgin Islands, Alaska and the Cayman Islands.
Prior to 2010, GEM’s primary supplier of black coral was a Taiwanese company, Peng Chia Enterprise Co., Ltd., located in Taipei, Taiwan. Peng Chia was, at times, able to obtain CITES export permits from the Taiwanese government, but by 2007, the Taiwanese government had increased scrutiny of the trade and insisted on a proper certificate of origin. Because much of the black coral was of, at best, undeterminable, if not legally questionable origin, it was basically impossible to arrange for a legitimate certificate of origin to be issued.
According to the plea documents, in order to be able to continue to supply GEM with raw black coral, Peng Chia sought other black coral sources in mainland China, routing them through Hong Kong on their way to GEM facilities. None of the shipments from Hong Kong had the required CITES certificates. Instead of being labeled “wildlife,” each shipment was labeled “plastic of craft work” or something similarly deficient. The scheme had been running for at least two years by the time the year 2009 black coral shipments were sent to St. Thomas. The 2009 shipments form the basis of the charges contained in the bill of information.
A GEM company officer (terminated in early 2010) procured black coral from Peng Chia knowing that there were no CITES certificates. Under the supervision of this company officer, other GEM personnel confirmed that it was part of their jobs to receive and sort through incoming boxes of black coral and that none of those boxes arriving from Hong Kong contained CITES certificates. During the period 2007-2009, those same individuals reported seeing boxes containing black coral that were externally labeled as “plastic of craft work.” GEM never ordered plastic and does not use plastic in any of its manufacturing.
In January 2009, GEM agreed to pay Peng Chia $38,965.00 for an order of black coral. After the funds were received in February 2009, Peng Chia used its Chinese supplier and Chinese intermediary to send six separate shipments of black coral to GEM in St. Thomas. Through a then company officer, GEM knew about the false labeling and lack of CITES certificates through emails with Peng Chia. On Aug. 19, 2009, Peng Chia sent a shipment comprised of 10 boxes of black coral that were labeled “plastic of craft work” to GEM. A CBP Contraband Enforcement Team flagged the shipment as suspicious and contacted FWS based in San Juan, Puerto Rico. As part of "Operation Black Gold," boxes from all six of the 2009 shipments were seized as evidence during a search of GEM’s St. Thomas facility in September 2009. None of these six shipments was accompanied by CITES certificates. Boxes from the Aug. 19, 2009, May 10, 2009, and other shipments were falsely labeled as “plastic of craft work.”
The case was investigated by agents of the FWS and NOAA with support from ICE-HSI and CBP. Analysis of coral samples by the FWS’s National Forensics Laboratory in Ashland, Ore., was critical to the investigation. The case is being prosecuted by Christopher Hale of the Justice Department’s Environmental Crimes Section, Environment and Natural Resources Division, and Nelson Jones of the U.S. Attorney’s Office in St. Thomas.
Justice Department Files Lawsuit Against Wisconsin Landlord for Discriminating on the Basis of RaceRead the Press Release
WASHINGTON– The Justice Department announced today a lawsuit against the manager and owner of the Geneva Terrace Apartments in La Crosse, Wisc., alleging discrimination against African-Americans who were seeking to rent apartments at the complex.
The complaint, filed in the U.S. District Court for the Western District of Wisconsin, alleges that the manager and owner of Geneva Terrace, Nicolai Quinn, told prospective African-American renters that apartments were not available when they were, while telling prospective white renters that there were apartments available.
“Every person, regardless of race, should be given the opportunity to live and rent an apartment of their choice free from discrimination,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights. “Today’s lawsuit demonstrates our commitment to ensure equal housing opportunities for all.”
“This office will work to ensure that the residents of this district have the opportunity to rent and live where they choose. Violations of the Fair Housing Act will not be tolerated in this district,” said John W. Vaudreuil, the U.S. Attorney for the Western District of Wisconsin.
“Today’s lawsuit stems from the partnerships between government agencies, HUD and Justice, and between private fair housing councils and HUD to enforce the Fair Housing Act,” stated John Trasviña, HUD Assistant Secretary for Fair Housing and Equal Opportunity. “This civil rights law enforcement network begins, however, with individuals reporting when they believe they may have been subject to housing discrimination.”
As alleged in the complaint, in 2009 and 2010, Quinn told an African-American couple who were interested in renting an apartment in Geneva Terrace that there were no apartments available, even though the complex had posted a sign advertising vacancies. The couple found it suspicious and asked a white friend to contact the complex. Quinn told the white friend that he had available apartments. The couple then reported their experience to the Metropolitan Milwaukee Fair Housing Council (MMFHC), a nonprofit fair housing organization. MMFHC conducted fair housing tests, which confirmed that Quinn was telling African Americans that apartments were not available when they were while showing available apartments to white persons.
The couple also filed a complaint with the Department of Housing and Urban Development, which conducted an investigation and, after issuing a charge of discrimination, referred the matter to the Department of Justice.
The lawsuit seeks an order prohibiting the defendants from engaging in future unlawful discrimination. It also seeks payment of a civil penalty and monetary damages for the persons who were refused the opportunity to rent at Geneva Terrace because of their race.
Fighting housing discrimination 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 or have information related to this lawsuit can call the Housing Discrimination Tip Line at 1-800-896-7743, e-mail the Justice Department at [email protected] or contact the Department of Housing and Urban Development at 1-800-669-9777.
The complaint is an allegation of unlawful conduct. The allegation must be proven in federal court.
Georgia Man Sentenced to Nearly Four Years in Prison in Plot to Supply Iran with U.S. Military Aircraft ComponentsRead the Press Release
MACON, GA. – A Georgia man was sentenced today to 46 months in prison, a $10,000 fine and was ordered to forfeit $160,362 in connection with his efforts to illegally export military components for fighter jets and attack helicopters from the United States to Iran.
Michael Edward Todd, a U.S. national who is president of The Parts Guys LLC, a company in Port Orange, Fla., that maintains a warehouse at the Middle Georgia Municipal Airport in Macon, was sentenced this morning in federal court in the Middle District of Georgia.
The sentence was announced by Lisa Monaco, Assistant Attorney General for National Security; Michael J. Moore, U.S. Attorney for the Middle District of Georgia; Brock Nicholson, Special Agent-in-Charge of the U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations office in Atlanta; Brian D. Lamkin, Special Agent-in-Charge of the FBI’s Atlanta Field Division; and Robert Luzzi, Special Agent-in-Charge of the Commerce Department Office of Export Enforcement (OEE) in Miami.
“This case demonstrates the importance of keeping America’s sensitive military technology from falling into the wrong hands. Today, Michael Todd is being held accountable for his role in a broad conspiracy to supply Iran with advanced military aircraft technology that is restricted for export from the United States,” said Michael J. Moore, U.S. Attorney for the Middle District of Georgia.
Todd was arrested in December 2010 in Atlanta. He, along with his company, The Parts Guys, pleaded guilty to conspiracy to violate the Arms Export Control Act on May 9, 2011. According to court documents, Todd conspired with several others to export components for attack helicopters and fighter jets from the United States to Iran without obtaining the required U.S. export licenses. These components included military parts for the Bell AH-1 attack helicopter, the UH-1 Huey attack helicopter, as well as the F-5 and F-4 fighter jets.
Todd is the second individual defendant to plead guilty and be sentenced in this investigation. Co-defendant Hamid “Hank” Seifi, an Iranian-born U.S. national, and his St. Charles, Ill., company, Galaxy Aviation Services, pleaded guilty on Feb. 24, 2011, to conspiracy to violate the Arms Export Control Act and violating the International Emergency Economic Powers Act in connection with illegal exports of military aircraft components to Iran. On June 22, 2011, Seifi was sentenced to 56 months in prison, followed by three years of supervised release, a fine of $12,500 and forfeiture of $153,950, while Galaxy Aviation, which is now defunct, received a $400 special assessment.
This case was investigated by ICE Homeland Security Investigations in Atlanta, FBI Atlanta Field Division and the Department of Commerce’s OEE.
The prosecution is being handled by Assistant U.S. Attorneys Jennifer Kolman and Danial E. Bennett from the U.S. Attorney’s Office for the Middle District of Georgia and Trial Attorneys Ryan P. Fayhee and Brandon L. Van Grack from the Counterespionage Section of the Justice Department’s National Security Division.
Former Abramoff Colleague Kevin Ring Sentenced to 20 Months in Prison for Conspiracy, Honest Services Fraud and Payment of Gratuities Related to Illegal Lobbying SchemeRead the Press Release
WASHINGTON – Kevin A. Ring, a former lobbyist who worked with Jack A. Abramoff, was sentenced today to 20 months in prison for his role in a scheme to corrupt public officials by providing an illegal stream of things of value, including vacations, employment for a congressman’s wife, meals, drinks, and high-priced tickets to exclusive concerts and sporting events, the Department of Justice announced.
Ring, 41, was sentenced by U.S. District Judge Ellen S. Huvelle in the District of Columbia. Judge Huvelle also sentenced Ring to 30 months of supervised release following his prison term.
On Nov. 15, 2010, a jury convicted former lobbyist Ring of corrupting public officials. The jury found Ring guilty on one count of conspiring to corrupt congressional and executive branch officials by providing things of value to them and their staff members in order to induce or reward those who took official actions benefitting Ring and his clients. In addition, Ring was convicted of one count of paying a gratuity to a public official and three counts of honest services wire fraud for engaging in a scheme to deprive U.S. citizens of their right to the honest services of certain public officials. The jury acquitted Ring on three counts of honest services fraud. A previous federal jury failed to reach a verdict in the case and the court declared a mistrial.
According to evidence presented at trial, as a lobbyist working in Washington, D.C., Ring solicited and obtained business throughout the United States, including with Native American tribal governments operating and interested in operating gambling casinos. Trial testimony established that Ring sought to further his clients’ interests by lobbying public officials in the legislative and executive branches of the federal government. Evidence at trial established Ring to be the “COO of Team Abramoff,” and at one of his sentencing hearings, the court also found that evidence at trial established that Ring was a supervisor of the conspiracy.
Ring and his co-conspirators identified public officials who would perform official actions that would assist Ring and his clients, and then groomed those public officials by providing things of value with the intent of making those public officials more receptive to requests on behalf of their clients in the future. These things of value included all-expenses-paid travel, meals, drinks, golf outings, tickets to professional sporting events, concerts and other events, and an employment opportunity for the wife of a congressman. According to evidence introduced at trial, these things of value were often billed to Ring’s and Abramoff’s clients. Evidence established that Ring and his co-conspirators engaged in this illegal conduct with current and former congressional staff members, including chiefs of staff, as well as officials at the Department of Justice and the White House.Evidence at trial demonstrated the nature of Ring’s lobbying efforts and his attempts to corrupt and reward public officials. In one e-mail message, Ring instructed his co-conspirators to “thank your friends on the Hill and in the Administration. In fact, thank them over and over again this week – preferably for long periods of time and at expensive establishments.” On another occasion, Ring described to a co-conspirator lobbyist what he expected of a public official who had attended a sporting event: “Glad he got a chance to relax. Now he can pay us back.” Similarly, Ring e-mailed a co-conspirator public official and stated: “You are going to eat free off our clients. Need to get us some [appropriations] money.” Testimony at trial from Ring’s co-conspirators described Ring joking about corrupting public officials by saying, “Hello quid, where’s the pro quo.”
Evidence presented at trial demonstrated that Ring corruptly sought assistance from public officials on numerous client projects, such as appropriations and authorizations, congressional letters to executive branch entities, as well as meetings and other legislative and official actions. Evidence at trial showed that Ring corruptly sought, among other actions, $14 million in congressional transportation appropriations and an additional $7 million from the Department of Justice to build a jail.
Ring remains charged with an additional two counts of obstructing justice. Those charges stem from alleged efforts by Ring to thwart criminal and congressional investigations by preventing the reporting of his criminal conduct to federal authorities. The court severed those two counts and Ring is scheduled to stand trial at a later date. Ring is presumed innocent of these charges until proven guilty in a court of law.To date, 20 individuals, including lobbyists and public officials, have pleaded guilty or have been convicted at trial in connection with the investigation into the activities of Abramoff and his associates. Abramoff pleaded guilty in January 2006 to conspiracy to commit honest services fraud, honest services fraud and tax evasion. He was sentenced in September 2008 to 48 months in prison.
The case is being prosecuted by Assistant Chief Nathaniel B. Edmonds of the Criminal Division’s Fraud Section and Deputy Chief Peter Koski of the Criminal Division’s Public Integrity Section. The investigation of this case is being conducted by the FBI’s Washington Field Office and the Department of Justice Office of the Inspector General.
Deputy Attorney General Cole and Department Officials Announce Results of Summer Anti-Violence Initiative in DenverRead the Press Release
DENVER – Deputy Attorney General James M. Cole today announced the results of an anti-violence initiative launched in May 2011 to combat violent crime throughout the city of Denver. Deputy Attorney General Cole was joined by U.S. Attorney for the District of Colorado John Walsh; Bureau of Alcohol, Tobacco, Firearms and Explosive (ATF) Special Agent in Charge Marvin Richardson; Aurora, Colo., Police Chief Daniel Oates; Lakewood, Colo., Police Chief Kevin Paletta; and Denver Police Chief Gerald Whitman.
Since the initiative’s launch, 80 alleged gang members or their associates were charged with a wide range of alleged illegal activity, including felon in possession of a firearm; unlawful possession of machine guns; and possession with intent to distribute. Of the 80 individuals charged, 62 defendants were indicted by a federal grand jury and 18 defendants were charged in state court. Many of the defendants claimed gang ties, including the Aryan Brotherhood, Bloods, Crips, Crenshaw Mafia Gangsters, East Side Oldies, Gallant Knight Insane, Sin City Disciples, Suerno 13, Sons of Silence, Vice Lords and West Side Locos.
Additionally, during the course of the investigation, agents and officers seized more than 120 firearms from gang members, including machine guns, sawed-off shotguns, handguns, silencers and destructive devices. They also seized more than 10,000 rounds of ammunition, as well as numerous drugs, including cocaine, crack cocaine, heroin, methamphetamine, marijuana and Ecstasy.
“Consistent with the Department of Justice’s anti-violence initiative strategy, federal, state and local authorities formed a partnership, combined resources and initiated investigations into gang violence,” said Deputy Attorney General Cole. “ Instead of sitting on the sidelines, the U.S. Attorney’s Office and the ATF, in partnership with the Aurora, Denver and Lakewood Police Departments, and the local District Attorneys, stepped up, focusing on locations where violent gun crime was most likely to occur.”
The two primary goals of the initiative were to prevent gun crime and to investigate gun violence. Federal, state and local law enforcement applied proactive investigative methods to identify violent crime “hot spots” and developed smart and effective law enforcement strategies to address the crime.
“Thanks goes to the brave men and women who investigated these cases, spending long hot summer days, late nights and weekends to investigate armed gang members this past summer,” said U.S. Attorney John Walsh. “Any time you remove gang members and their associates from the streets, and take away their guns, our communities, our neighborhoods, and our cities are much safer as a result.”
“We know from experience that gun violence goes hand-in-hand with gangs and drugs,” said ATF Special Agent in Charge Richardson. “We will continue to fight violent crime by partnering in the investigation and prosecution of those who seek to reduce the quality of life in our communities. ATF will continue our great collaboration with the state, local and federal partners who are similarly dedicated to this mission.”
The anti-violence initiative is part of the department’s Project Safe Neighborhoods (PSN) program – a nationwide, gun-violence reduction initiative. Since its inception in 2001, the PSN program has granted nearly $2 billion in funding to hire new federal and state prosecutors; support investigators; provide training; distribute gun lock safety kits; deter juvenile gun crime; and develop and promote community outreach efforts as well as to support other gun and gang violence reduction strategies.
Convicted Child Molester Sentenced to 10 Years in Prison for Possession of Child PornographyRead the Press Release
WASHINGTON – An Oakland, Calif., man pleaded guilty today to possession of child pornography and was sentenced to 10 years in prison and a life term of supervised release, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Melinda Haag of the Northern District of California.
Robert Edgar Weagle, 63, was sentenced by U.S. District Judge Saundra Brown Armstrong.
According to court documents and information presented at court, Weagle came to the attention of law enforcement in January 2011, after law enforcement encountered an individual who was attempting to download child pornography through a file sharing network. Further investigation revealed that Weagle was a registered sex offender based on his previous conviction for lewd and lascivious acts with a child under the age of 14, and had sexually molested more than 11 minors. On March 11, 2011, law enforcement agents executed a search warrant at Weagle’s residence and seized evidence containing child pornography and later arrested Weagle. Forensic examination of the evidence seized revealed tens of thousands of images and videos of child pornography.
The case was prosecuted by Assistant U.S. Attorney Joshua Hill and Trial Attorney Mi Yung Park of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), and was investigated by the FBI.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and the Criminal Division’s CEOS, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov .
California-Based DFine Inc. to Pay U.S. More Than $2.3 Million to Settle Claims That Company Paid Kickbacks to PhysiciansRead the Press Release
WASHINGTON – DFine Inc. of San Jose, Calif., has agreed to pay the United States $2.39 million to resolve allegations under the False Claims Act (FCA) that the company paid kickbacks to induce physicians to use certain of the company’s devices that are used in treating spinal fractures, the Justice Department announced today.
The United States contends that DFine used customer surveys known as User Preference Evaluations (UPE) as vehicles to pay participating physicians illegal kickbacks to induce them to use the company’s vertebral augmentation devices. Although DFine ostensibly collected product information from participating physicians, each UPE survey required use of a new DFine device in a patient, the majority of whom were Medicare beneficiaries. In each case, DFine paid physicians up to $500 per patient to participate in the survey. The government alleges that DFine provided improper remuneration in the form of travel expenses, lavish dinners, entertainment and promotional speaker fees to doctors located in Chicago and Little Rock, Ark. The United States further alleges that DFine solicited physicians to convert their business from a competitor’s product and/or persuade the physicians to continue using DFine products.
According to the United States, DFine’s alleged conduct violated the Anti-Kickback Statute. Among other things, that law prohibits offering or paying remuneration to induce referrals of items or services covered by Medicare, Medicaid or other federally-funded programs.
“Decisions about devices used to treat serious spinal conditions should be based on the best interests of the patient, not on whether the manufacturer is going to pay a kickback,” said Tony West, Assistant Attorney General for the Justice Department’s Civil Division. “These sorts of improper financial incentives not only undermine the integrity of medical decisions, they also waste taxpayer funds and are unfair to competitors who are trying to play by the rules.”
“We will continue to vigorously pursue and prosecute any individual or company that commits health care fraud, particularly those who provide illegal financial incentives to doctors in order to gain business from federal health care programs,” said Edward L. Stanton III, U.S. Attorney for the Western District of Tennessee. “The Anti-Kickback Statute is a vital resource in eliminating health care fraud, which will in turn cut costs for patients and honest businesses as well as increase the quality of services for those who need care.”
This action was initiated by the filing of a qui tam, or whistleblower, action under the False Claims Act by Brian Eberhard. The act permits a whistleblower file a lawsuit on behalf of the United States and share in any recovery. In this case Mr. Eberhard will receive approximately $250,000.
Also as part of the settlement, DFine has agreed to enter into an expansive corporate integrity agreement with the Office of Inspector General of the Department of Health and Human Services. That agreement provides for procedures and reviews to be put in place to avoid and promptly detect conduct similar to that which allegedly gave rise to this matter.
“The Office of Inspector General strongly supports the investigation and prosecution of device manufacturers who offer lucrative financial incentives to physicians in exchange for the use of their products,” said Derrick Jackson, the Special Agent in Charge at the U.S. Department of Health and Human Services. “Such arrangements interfere with medical decision making and encourage physicians to provide medically unnecessary services.”
This resolution is part of the government’s emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover more than $5.9 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in False Claims Act cases since January 2009 exceed $7.8 billion.
The settlement was the result of an investigation by the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Western District of Tennessee and the Office of Inspector General at the U.S. Department of Health and Human Services.
California Man Sentenced in Las Vegas for Filing False Liens Against Federal EmployeesRead the Press Release
WASHINGTON – Thanh Viet Jeremy Cao of Rancho Santa Margarita, Calif., was sentenced today in Las Vegas before Judge Kent J. Dawson to 41 months in prison for six counts of filing false liens against employees and officers of the federal government, the Justice Department, the Internal Revenue Service (IRS) and the Office of the Treasury Inspector General for Tax Administration (TIGTA) announced.
According to the documents filed in the case, Cao was named defendant in a civil fraud action brought by the Securities and Exchange Commission (SEC) related to an investment scheme. He was also identified as the owner of an asset seized by the U.S. Secret Service (USSS) related to this fraud. Cao was additionally under investigation by the U.S. Attorney’s Office for the Southern District of California and the USSS for criminal offenses arising from the investment scheme. Additionally, he was under investigation by IRS-Criminal Investigation for tax returns he prepared for himself and others that claimed large refunds based upon fictitious tax withholdings.
In response to these proceedings and investigations, Cao filed 22 false liens in the public records of the state of Nevada and Clark County, Nevada, against SEC attorneys, U.S. District Court Judges, U.S. District Court Magistrate Judges, the U.S. Attorney for the Southern District of California, Assistant U.S. Attorneys, USSS special agents and special agents of the IRS. Each lien alleged that the lien victims were “debtors” of Cao for hundreds of millions of dollars. According to the documents filed in the case, Cao admitted that all 22 liens were false and agreed that the liens should be expunged from the public record.
In August 2010, through the joint efforts of the U.S. Attorney’s Office and the Justice Department’s Tax Division, Cao and his business, Phoenix Financial Management Group, were enjoined from preparing tax returns.
This case was investigated by IRS-Criminal Investigation and TIGTA, and prosecuted by Trial Attorneys Christopher Strauss and Joseph Rillotta of the Department of Justice’s Tax Division. More information about the Justice Department’s Tax Division and its enforcement efforts can be found at www.usdoj.gov/tax.
25 October 2011
Two Top Administrators of NinjaVideo Website Plead Guiltyto Criminal Copyright ConspiracyRead the Press Release
WASHINGTON – Joshua David Evans, 34, of North Bend, Wash., and Jeremy Lynn Andrew, 33, of Eugene, Ore., pleaded guilty today for their roles in 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.
The guilty pleas were accepted by U.S. District Judge Anthony J. Trenga in the Alexandria Division of the Eastern District of Virginia, and were 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.
Evans pleaded guilty to one count of conspiracy and one count of criminal copyright infringement related to his role in the Internet release of “Iron Man 2” before the movie reached U.S. theaters. Andrew pleaded guilty to a single count of conspiracy.
According to court documents, Evans was referred to as the “Head God” of the “uploaders,” who were 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. Evans also regularly supervised other uploaders based in North America, who at times numbered more than 10.
Andrew was referred to as the “Ninja Head of Security,” according to court documents. Andrew was one of the administrators of the NinjaVideo.net website, served as a moderator of the NinjaVideo.net forum boards, and assisted with issues related to servers used by NinjaVideo.net.
According to the statements of facts filed with both plea agreements, NinjaVideo.net generated a total of $505,000 in income from Internet advertising and visitor donations during the course of the conspiracy. Evans admitted that he personally received $26,660 of these funds, and Andrew admitted that he personally received $5,250 of these funds. Both defendants agreed to pay restitution in these amounts.
Evans, Andrew and three other alleged co-conspirators were indicted on Sept. 9, 2011, on six charges related to their work with NinjaVideo. Evans and Andrew are the third and fourth co-defendants to plead guilty for their roles. Co-defendants 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. Smith will be sentenced on Dec. 16, 2011, and Beshara will be sentenced on Jan. 6, 2012. An arrest warrant has been issued for the remaining co-defendant in the indictment, Zoi Mertzanis of Greece.
Evans faces a maximum penalty of five years in prison on each count of conspiracy and copyright infringement, as well as a $250,000 fine, restitution and three years of supervised release following any prison term. Evans’ sentencing is scheduled for Jan. 27, 2012. Andrew faces a maximum penalty of five years in prison on the conspiracy count, as well as a $250,000 fine, restitution and three years of supervised release. Andrew’s sentencing is scheduled for Feb. 3, 2012.
The case is being prosecuted by Assistant U.S. Attorneys Jay V. Prabhu and Lindsay A. Kelly of the U.S. Attorney’s Office for the Eastern District of Virginia 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
New Orleans Federal Court Bars Louisiana Woman from Preparing Improper Tax ReturnsRead the Press Release
WASHINGTON – A federal court in New Orleans has permanently barred Tracy Bonds from preparing federal tax returns that willfully or recklessly understate her customers’ tax liabilities, the Justice Department announced today. The civil injunction order, to which Bonds agreed without admitting the government’s allegations, was signed by Judge Eldon E. Fallon of the U.S. District Court for the Eastern District of Louisiana.
The government complaint in the case alleged that Bonds, of Tickfaw, La., whose business is called Tracy’s Tax Service, prepared federal income tax returns that understated her customers’ tax liabilities by improperly claiming the earned income tax credit (EITC). The injunction order requires that Bonds obtain information from her customers to verify that they are eligible for the EITC. Under the order, Bonds must also complete six hours of tax preparation education and must post the injunction order in her place of business for two years so that customers will be aware of the requirements imposed on her.
In the past decade, the Justice Department’s Tax Division has obtained injunctions against hundreds of tax return preparers and tax fraud promoters. Information about these cases is available on the Justice Department website.
Related Documents:
United States v. Tracy Bonds, etc.
Complaint for Permanent Injunction
Order for Permanent Injunction
(PDF document)Portable Document Format (PDF) files may be viewed with a free copy of Adobe Acrobat Reader
Accessibility InformationHost of Child Pornography Online Bulletin Board Pleads Guilty to Transporting Child Pornography and Destruction of RecordsRead the Press Release
WASHINGTON – A Silver Spring, Md., man pleaded guilty today to transporting child pornography and destruction of records in a federal investigation.
The guilty plea was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney for the District of Maryland Rod J. Rosenstein; Postal Inspector in Charge Daniel S. Cortez of the U.S. Postal Inspection Service - Washington Division; and Special Agent in Charge William Winter of U.S. Immigration and Customs Enforcement, Office of Homeland Security Investigations (ICE-HSI).
According to his plea agreement, from approximately December 2006 through August 2008, Terry Lee Nolley, 47, and others conspired to operate “Country Lounge,” a secure web-based bulletin board dedicated to trading images of child pornography. Members were allowed to join this group only upon invitation and after approval by the group’s administrators. As of August 2008, approximately 142 members belonged to Country Lounge.
From December 2006 through July 2008, Nolley was a Web host of Country Lounge and as such, conspired to transport child pornography through servers located in Virginia and maintained by him in Silver Spring. After July 2008, Nolley transferred his web-hosting responsibilities to other co-conspirators, but continued to both view and trade images of child pornography. In October 2008, Country Lounge was seized by law enforcement authorities.
On Nov. 10, 2009, federal agents interviewed Nolley and instructed him not to remove anything from his residence. Later that day, agents executed at search warrant at Nolley’s home and recovered several electronic devices. Nolley admitted that between the interview and the execution of the search warrant, he disposed of four additional hard drives believed to contain child pornography. Specifically, Nolley admitted that he left his home with the four hard drives and after taking steps to evade law enforcement, threw the hard drives into woods at the side of the road, in an effort to impede the federal investigation.
As part of his plea agreement, Nolley must register as a sex offender in the place where he resides, where he is an employee and where he is a student, under the Sex Offender Registration and Notification Act (SORNA).
Nolley faces a mandatory minimum sentence of five years in prison and a maximum of 20 years in prison, followed by up to a lifetime of supervised release for transportation of child pornography. He faces a maximum penalty of 20 years in prison for destruction of records in a federal investigation. U.S. District Judge Alexander Williams Jr. scheduled sentencing for Jan. 25, 2012, at 10:30 a.m.
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. Details about Maryland’s program are available at www.justice.gov/usao/md/Safe-Childhood/index.html .
The case is being prosecuted by Assistant U.S. Attorney Stacy Belf and CEOS Trial Attorney LisaMarie Freitas, with assistance from CEOS Trial Attorneys Darcy Katzin and Jennifer Toritto Leonardo. The case was investigated by the U.S. Postal Inspection Service, ICE-HSI and the NASA Office of Inspector General. The Allegany County, Md., Combined Criminal Investigations Unit (C3I) also provided assistance in this investigation and prosecution.
Five Individuals Indicted in a Fraud Conspiracy Involving Exports to Iran of U.S. Components Later Found in Bombs in IraqRead the Press Release
WASHINGTON – Five individuals and four of their companies have been indicted as part of a conspiracy to defraud the United States that allegedly caused thousands of radio frequency modules to be illegally exported from the United States to Iran, at least 16 of which were later found in unexploded improvised explosive devices (IEDs) in Iraq. Some of the defendants are also charged in a fraud conspiracy involving exports of military antennas to Singapore and Hong Kong.
Yesterday, authorities in Singapore arrested Wong Yuh Lan (Wong), Lim Yong Nam (Nam), Lim Kow Seng (Seng), and Hia Soo Gan Benson (Hia), all citizens of Singapore, in connection with a U.S. request for extradition. The United States is seeking their extradition to stand trial in the District of Columbia. The remaining individual defendant, Hossein Larijani, is a citizen and resident of Iran who remains at large.
The arrests and the indictment were announced by Lisa Monaco, Assistant Attorney General for National Security; Ronald C. Machen Jr., U.S. Attorney for the District of Columbia; John Morton, Director of the Department of Homeland Security’s U.S. Immigration and Customs Enforcement (ICE); Mark Giuliano, Executive Assistant Director of the FBI’s National Security Branch; Eric L. Hirschhorn, Under Secretary of Commerce; and David Adelman, U.S. Ambassador to Singapore.
“Today’s charges allege that the defendants conspired to defraud the United States and defeat our export controls by sending U.S.-origin components to Iran rather than to their stated final destination of Singapore. Ultimately, several of these components were found in unexploded improvised explosive devices in Iraq,” said Assistant Attorney General Monaco. “This case underscores the continuing threat posed by Iranian procurement networks seeking to obtain U.S. technology through fraud and the importance of safeguarding that technology. I applaud the many agents, analysts and prosecutors who worked on this extensive investigation.”
“These defendants misled U.S. companies in buying parts that they shipped to Iran and that ended up in IEDs on the battlefield in Iraq,” said U.S. Attorney Machen. “This prosecution demonstrates why the U.S. Attorney’s Office takes cases involving misrepresentations regarding the intended use of sensitive technology so seriously. We hope for a swift response from Singapore to our request for extradition.”
“ One of Homeland Security Investigations’ (HSI) top enforcement priorities is preventing sensitive technology from falling into the hands of those who might seek to harm American personnel or interests — whether at home or abroad,” said ICE Director Morton. “This international investigation conducted by ICE’s HSI and our law enforcement partners demonstrates the importance of preventing U.S. technology from falling into the wrong hands, where it could potentially be used to kill or injure our military members and our allies. Our agency will continue to work closely through our attachés to identify these criminals, dismantle their networks, and ensure they are fully prosecuted.”
“This multi-year investigation highlights that acquiring property by deceit has ramifications that resonate beyond the bottom line and affects our national security and the safety of Americans worldwide,” said FBI Executive Assistant Director Giuliano. “We continue to work side-by-side with our many partners in a coordinated effort to bring justice to those who have sought to harm Americans. We consider this investigation as the model of how we work cases - jointly with the Department of Homeland Security/Immigration and Customs Enforcement and the Department of Commerce/Office of Export Enforcement and collectively with our foreign partners to address the threats posed by Iranian procurement networks to the national security interests of the United States both here and abroad.”
“These cases are the product of vigorous, cooperative law enforcement focused on denying to Iran items that endanger our coalition forces on the battlefield in Iraq,” said Under Secretary of Commerce Hirschhorn. “We will continue aggressively to go after such perpetrators -- no matter where they operate -- to guard against these types of threats.”
U.S. Ambassador to Singapore, David Adelman, praised the cooperation within the U.S. executive branch agencies and with the Singaporean authorities. “Twenty-first century law enforcement is most effective when countries work collaboratively as evidenced by this strong, cooperative effort between the U.S. and Singapore. Congratulations to all the officials in both our countries who made this happen,” he said.
The Charges
The indictment, which was returned in the District of Columbia on Sept. 15, 2010, and unsealed today, includes charges of conspiracy to defraud the United States, smuggling, illegal export of goods from the United States to Iran, illegal export of defense articles from the United States, false statements and obstruction of justice.
The charged defendants are Iranian national Larijani, 47, and his companies Paya Electronics Complex, based in Iran, and Opto Electronics Pte, Ltd., based in Singapore. Also charged is Wong, 39, an agent of Opto Electronics who was allegedly supervised by Larijani from Iran. The indictment also charges NEL Electronics Pte. Ltd., a company in Singapore, along with NEL’s owner and director, Nam, 37. Finally, the indictment charges Corezing International Pte. Ltd., a company in Singapore that maintained offices in China, as well as Seng, 42, an agent of Corezing, and Hia, 44, a manager, director and agent of Corezing.
Wong, Nam, Seng and Hia allegedly conspired to defraud the United States by impeding U.S. export controls relating to the shipment of 6,000 radio frequency modules from a Minnesota company through Singapore to Iran, some of which were later found in unexploded IEDs in Iraq. Seng and Hia are also accused of conspiring to defraud the United States relating to the shipment of military antennas from a Massachusetts company to Singapore and Hong Kong. Singapore has agreed to seek extradition for Wong and Nam on the charge of conspiracy to defraud the United States relating to the components shipped to Iran, and to seek extradition for Seng and Hia on the charge of conspiracy to defraud the United States relating to the military antenna exports.
In coordination with the criminal actions announced today, the Commerce Department announced the addition of 15 persons located in China, Hong Kong, Iran and Singapore to the Commerce Department's Entity List. In addition to the five individual defendants in this case, the Commerce Department named additional companies and individuals associated with this conspiracy. In placing these parties on the Entity List, the Commerce Department is imposing a licensing requirement for any item subject to Commerce regulation with a presumption that such a license would be denied.
Exports of U.S. Components Later Found in IEDs
According to the indictment, IEDs caused roughly 60 percent of all American combat casualties in Iraq between 2001 and 2007. The first conspiracy alleged in the indictment involved radio frequency modules that have several commercial applications, including in wireless local area networks connecting printers and computers in office settings. These modules include encryption capabilities and have a range allowing them to transmit data wirelessly as far as 40 miles when configured with a high-gain antenna. These same modules also have potentially lethal applications. Notably, during 2008 and 2009, coalition forces in Iraq recovered numerous modules made by the Minnesota firm that had been utilized as part of the remote detonation system for IEDs.
The indictment alleges that, between June 2007 and February 2008, the defendants fraudulently purchased and caused 6,000 modules to be illegally exported from the Minnesota company through Singapore, and later to Iran, in five shipments, knowing that the export of U.S.-origin goods to Iran was a violation of U.S. law. In each transaction, the defendants allegedly told the Minnesota firm that Singapore was the final destination of the goods. The defendants also caused false documents to be filed with the U.S. government, in which they claimed that a telecommunications project in Singapore was the final end-use for the modules. In reality, each of the five shipments was routed from Singapore to Iran via air cargo. The alleged recipient of all 6,000 modules in Iran was Larijani, who had directed Wong, his employee in Singapore, to order them.
According to the indictment, the defendants profited considerably from their illegal trade. The defendants allegedly made tens of thousands of dollars for arranging these illegal exports from the United States through Singapore to Iran.
The indictment alleges that several of the 6,000 modules the defendants routed from Minnesota to Iran were later discovered by coalition forces in Iraq, where they were being used as part of the remote detonation systems of IEDs. In May 2008, December 2008, April 2009, and July 2010, coalition forces found no less than 16 of these modules in unexploded IEDs recovered in Iraq, the indictment alleges.
During this period, some of the defendants were allegedly communicating with one another about U.S. laws prohibiting the export of U.S.-origin goods to Iran. For example, between October 2007 and June 2009, Nam contacted Larijani in Iran at least six times and discussed the Iran prohibitions and U.S. prosecutions for violation of these laws. Nam later told U.S. authorities that he had never participated in illicit exports to Iran, even though he had participated in five such shipments, according to the indictment.
Exports of Military Antennas
The indictment further charges Seng, Hia, and Corezing with a separate fraud conspiracy involving the illegal export of two types of military antenna from the United States. The indictment alleges that these defendants conspired to defraud the United States by causing a total of 55 cavity-backed spiral antennas and biconical antennas to be illegally exported from a Massachusetts company to Singapore and Hong Kong without the required State Department license.
These military antennas are controlled for export as U.S. munitions and are used in airborne and shipboard environments. The indictment states that the biconical antenna, for example, is used in military aircraft such as the F-4 Phantom, the F-15, the F-111, the A-10 Thunderbolt II and the F-16 combat jets.
Seng, Hia and Corezing are alleged to have, among other things, conspired to undervalue the antennas to circumvent U.S. regulations on the filing of shipper’s export declarations to the U.S. government. They also allegedly used false names and front companies to obtain the antennas illegally from the United States.
Additional Misrepresentations
The indictment further alleges that Larijani, based in Iran, made false statements about doing business with an accused Iranian procurement agent and that he attempted to obstruct an official proceeding by the U.S. Department of Commerce.
In January 2010, the Department of Commerce placed Larijani’s company, Opto Electronics, on the Entity List, which is a list of companies to which U.S. businesses cannot export controlled dual-use items without obtaining U.S. government licenses. In response, Larijani repeatedly contacted Commerce Department officials in Washington, D.C., from Iran, requesting that his company be removed from the Entity List, according to the indictment. Commerce officials advised Larijani that, in considering whether his firm should be removed from the list, he needed to disclose whether he or his firm had any involvement with Majid Kakavand or Evertop Services Sdn Bhd.
Kakavand is an accused Iranian procurement agent who has been indicted in the United States, along with his Malaysian company Evertop Services, for illegally exporting U.S. goods to Iran, including to military entities in Iran involved in that nation’s nuclear and ballistic missile programs. Kakavand remains a fugitive and is believed to be in Iran.
According to the indictment, Larijani denied to Commerce officials on three occasions that he or his company, Opto Electronics, had done any business with Kakavand or Evertop Services. In fact, the indictment alleges that Larijani had been in communication with others about his business dealings with Kakavand on at least five occasions from 2006 through 2009.
This investigation was jointly conducted by ICE agents in Boston and Los Angeles; FBI agents in Minneapolis; and Department of Commerce, Bureau of Industry and Security agents in Chicago and Boston. Substantial assistance was provided by the U.S. Department of Defense, U.S. Customs and Border Protection, the State Department’s Directorate of Defense Trade Controls, the Treasury Department’s Office of Foreign Assets Control, and the Office of International Affairs in the Justice Department’s Criminal Division, particularly the Justice Department Attaché in the Philippines, as well as the FBI and ICE Attachés in Singapore.
U.S. law enforcement authorities thanked the government of Singapore for the substantial assistance that was provided in the investigation of this matter.
The prosecution is being handled by Assistant U.S. Attorneys Anthony Asuncion and John W. Borchert of the U.S. Attorney’s Office for the District of Columbia; and Trial Attorneys Jonathan C. Poling and Richard S. Scott of the Counterespionage Section of the Justice Department’s National Security Division.
The public is reminded that an indictment contains mere allegations. Defendants are presumed innocent unless and until proven guilty in a court of law.
Executive Sentenced to 15 Years in Prison for Scheme to Bribe Officials at State-Owned Telecommunications Company in HaitiRead the Press Release
WASHINGTON – The former president of Terra Telecommunications Corp. was sentenced today to 15 years in prison for his role in a scheme to pay bribes to Haitian government officials at Telecommunications D’Haiti S.A.M. (Haiti Teleco), a state-owned telecommunications company. This is the longest sentence ever imposed in a case involving the Foreign Corrupt Practices Act (FCPA). The former executive vice president of Terra was also sentenced today to 84 months in prison for his role in the bribery scheme.
The sentences were announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer for the Southern District of Florida; and Special Agent in Charge Jose A. Gonzalez of Internal Revenue Service, Criminal Investigation Division (IRS-CID), Miami Field Office.
Joel Esquenazi, 52, of Miami, and Carlos Rodriguez, 55, of Davie, Fla., were sentenced by U.S. District Judge Jose E. Martinez in the Southern District of Florida. Judge Martinez also ordered the defendants to forfeit $3.09 million.
Esquenazi and Rodriguez were convicted in August 2011 of one count of conspiracy to violate the FCPA and wire fraud; seven counts of FCPA violations; one count of money laundering conspiracy; and 12 counts of money laundering.
“This sentence – the longest sentence ever imposed in an FCPA case – is a stark reminder to executives that bribing government officials to secure business advantages is a serious crime with serious consequences,” said Assistant Attorney General Breuer. “A company’s profits should be driven by the quality of its goods and services, and not by its ability and willingness to pay bribes to corrupt officials to get business. As today’s sentence shows, we will continue to hold accountable individuals and companies who engage in such corruption.”
“Today’s long prison sentences confirm the serious consequences of ignoring corporate ethics when doing business abroad,” said U.S. Attorney Ferrer. “The FCPA ensures that American businesses are not up for sale.”
“These individuals created a sophisticated way to launder funds by creating shell corporations and false records to conceal bribe payments to foreign government officials,” said IRS Special Agent in Charge Gonzalez. “No matter how sophisticated the scheme, IRS special agents will uncover it and unscrupulous individuals and businesses will be held accountable for their actions as indicated by these sentences.”
According to the evidence presented at trial, Esquenazi was the president and Rodriguez was the executive vice president of Terra, which was headquartered in Miami-Dade County, Fla. Haiti Teleco was the sole provider of land line telephone service in Haiti. Terra had a series of contracts with Teleco that allowed the company’s customers to place telephone calls to Haiti.
At trial, the evidence showed that the defendants participated in a scheme to commit foreign bribery and money laundering from November 2001 through March 2005, during which time the telecommunications company paid more than $890,000 to shell companies to be used for bribes to Teleco officials. Esquenazi and Rodriguez authorized these bribe payments to successive directors of international relations at Teleco.
The purpose of these bribes, according to the evidence presented at trial, was to obtain various business advantages from the Haitian officials for Terra, including the issuance of preferred telecommunications rates, reductions in the number of minutes for which payment was owed, and the continuance of Terra’s telecommunications connection with Haiti. To conceal the bribe payments, the defendants used various shell companies to receive and forward the payments. In addition, they created false records claiming that the payments were for “consulting services,” which were never intended to be performed or actually performed.
Four other individuals were previously convicted and sentenced for their roles in the bribery scheme.
On April 27, 2009, Antonio Perez, a former controller at Terra, pleaded guilty to one count of conspiracy to violate the FCPA and money laundering. On Jan. 12, 2010, he was sentenced to 24 months in prison, which he is currently serving.
On May 15, 2009, Juan Diaz, the president of J.D. Locator Services, pleaded guilty to one count of conspiracy to violate the FCPA and money laundering. He admitted to receiving more than $1 million in bribe money from telecommunications companies. On July 30, 2010, he was sentenced to 57 months in prison, which he is currently serving.
On Feb. 19, 2010, Jean Fourcand, the president and director of Fourcand Enterprises Inc., pleaded guilty to one count of money laundering for receiving and transmitting bribe monies in the scheme. On May 5, 2010, he was sentenced to six months in prison.
On March 12, 2010, Robert Antoine, a former director of international affairs for Haiti Teleco, pleaded guilty to one count of conspiracy to commit money laundering. He admitted to receiving more than $1 million in bribes from Miami-based telecommunications companies. On June 2, 2010, he was sentenced to 48 months in prison, which he is currently serving.
In a superseding indictment, Washington Vasconez Cruz, Amadeus Richers, Cinergy Telecommunications Inc., Patrick Joseph, Jean Rene Duperval and Marguerite Grandison are charged in a related scheme to commit foreign bribery and money laundering from December 2001 through January 2006. No trial date is currently set. An indictment is merely an accusation, and defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.
The government’s investigation is ongoing. The Department of Justice is grateful to the government of Haiti for continuing to provide substantial assistance in gathering evidence during this investigation. In particular, Haiti’s financial intelligence unit, the Unité Centrale de Renseignements Financiers (UCREF), the Bureau des Affaires Financières et Economiques (BAFE), which is a specialized component of the Haitian National Police, and the Ministry of Justice and Public Security provided significant cooperation and coordination in this ongoing investigation.
To learn more about the government’s FCPA enforcement efforts, go to www.justice.gov/criminal/fraud/fcpa .
The case is being prosecuted by Senior Trial Attorneys Nicola J. Mrazek and James M. Koukios of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Aurora Fagan of the Southern District of Florida. The Criminal Division’s Office of International Affairs and Asset Forfeiture and Money Laundering Section also provided assistance in this matter. The cases were investigated by the IRS-CID Miami Field Office.
Department of Justice Seeks to Recover More Than $70.8 Million in Proceeds of Corruption from Government Minister of Equatorial GuineaRead the Press Release
WASHINGTON – The U.S. government has filed civil forfeiture complaints against approximately $70.8 million in real and personal property, which the government alleges is the proceeds of foreign corruption offenses and was laundered in the United States, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Immigration and Customs Enforcement (ICE) Director John Morton.
An amended civil forfeiture complaint has been unsealed in U.S. District Court in the Central District of California and a separate civil forfeiture complaint was filed today in the District of Columbia. According to the complaints, Teodoro Nguema Obiang Mangue (Nguema) used his position and influence as a government minister for Equatorial Guinea to acquire criminal proceeds through corruption and money laundering, in violation of both Equatoguinean and U.S. law. According to the complaints, Nguema is the son of Teodoro Nguema Obiang Mbasogo (Obiang), the president of Equatorial Guinea.
“The complaints announced today allege that, on a modest government salary, Minister Nguema amassed wealth of over $100 million,” said Assistant Attorney General Breuer. “While his people struggled, he lived the high life – purchasing a Gulfstream jet, a Malibu mansion and nearly $2 million in Michael Jackson memorabilia. Alleging that these extravagant items are the proceeds of foreign official corruption, the Department of Justice is seeking to seize them through coordinated forfeiture actions. Through our Kleptocracy Initiative, we are sending the message loud and clear: the United States will not be a hiding place for the ill-gotten riches of the world’s corrupt leaders.”
“This investigation was initiated by ICE Homeland Security Investigations (HSI) in an effort to identify Teodoro Nguema Obiang’s assets in the United States after he was suspected of obtaining his wealth from alleged illicit activities such as the misappropriation of public funds, theft, extortion and embezzlement of the nation’s natural resources,” said ICE Director Morton. “ICE HSI will continue to work with our law enforcement partners both here and abroad to hold these individuals accountable by denying them the enjoyment of their ill-gotten gains.”
According to the complaints, despite an official government salary of less than $100,000 per year, Nguema amassed more than $100 million during a period in which he and an inner circle of individuals who hold critical positions of political and economic power in Equatorial Guinea were the near-exclusive beneficiaries of the extraction and sale of that country’s natural resources . Under Equatoguinean law, the natural resources belong to the people of Equatorial Guinea. The complaints allege that Nguema used intermediaries and corporate entities to acquire numerous assets in the United States, including more than $1.8 million worth of Michael Jackson memorabilia, a $38.5 million Gulfstream G-V jet, a $30 million house in Malibu, Calif., and a 2011 Ferrari automobile valued at more than $530,000.
The cases are being handled by Senior Trial Attorney Janet C. Hudson and Trial Attorney Woo Lee of the Criminal Division’s Asset Forfeiture and Money Laundering Section. The investigation was conducted by ICE HSI Foreign Corruption Investigations Group and the HSI Asset Identification and Removal Group in Miami, with the assistance of the HSI Office of the Special Agent in Charge for Los Angeles.
The cases originated as part of the Justice Department’s Kleptocracy Asset Recovery Initiative, which targets and recovers the proceeds of foreign official corruption that have been laundered into or through the United States. As part of the initiative, the Justice Department will seek to forfeit and recover stolen funds for the benefit of the people of the country from which it was taken.
In 2003, ICE HSI established the Foreign Corruption Investigations Group in Miami to target corrupt foreign officials around the world that attempt to utilize U.S. financial institutions to launder illicit funds. The group conducts investigations into the laundering of proceeds emanating from foreign public corruption, bribery or embezzlement. The objective is to prevent foreign derived ill-gotten gains from entering the U.S. financial infrastructure, to seize identified assets in the United States and recover these funds on behalf of those affected by foreign official corruption.
Individuals with information about possible proceeds of foreign corruption in the United States, or funds laundered through institutions in the United States, should contact ICE HSI at 866-DHS-2ICE, [email protected] or 802-872-6199 if calling from outside the United States.
24 October 2011
Utah Man Pleads Guilty for His Role in Procurement Fraud SchemeRead the Press Release
WASHINGTON — A Utah man pleaded guilty today in federal court in Salt Lake City for his role in a bribery and fraud scheme involving federal procurement contracts, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney David B. Barlow for the District of Utah.
Jose Mendez, 50, of Farr West, Utah, pleaded guilty to one count of conspiracy to commit bribery and procurement fraud, one count of bribery and one count of procurement fraud. Mendez was originally charged in an indictment returned on Oct. 12, 2011, along with Sylvester Zugrav, 68, and Maria Zugrav, 66, owners of Atlas International Trading Company in Sarasota, Fla. The Zugravs are each charged with conspiracy to commit bribery and procurement fraud, and bribery.
According to court documents, while Mendez worked as a procurement program manager for the U.S. Air Force at Hill Air Force Base, in Ogden, Utah, he conspired to enrich himself and others by exchanging money and other things of value for non-public information and favorable treatment in the procurement process. According to the statement of facts, Mendez was offered approximately $1,240,500 in payments and other things of value throughout the course of the conspiracy. Mendez admitted that from approximately 2008 to August 2011, he received more than $185,000 in payments and other things of value, with promises of additional bribe payments if Atlas were to receive future contracts from the U.S. government.
In return for the bribes offered and paid, Mendez admitted he gave Atlas and the Zugravs favorable treatment during the procurement process, including disclosing government budget and competitor bid information, which helped Atlas and the Zugravs in winning contracts.
The maximum penalty for conspiracy is five years in prison and a $250,000 fine. The maximum penalty for procurement fraud is five years in prison and a $250,000 fine, while the maximum penalty for bribery is 15 years in prison and a $250,000 fine, or three times the monetary equivalent of the thing of value, whichever is greater. Mendez also faces forfeiture of his ill-gotten gains. Sentencing for Mendez is scheduled for Feb. 21, 2012, at 2:30 p.m.
The case is being investigated by the FBI and the Air Force Office of Special Investigations. The case is being prosecuted by Trial Attorneys Marquest J. Meeks and Edward P. Sullivan of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Carlos A. Esqueda for the District of Utah.
Las Vegas Attorney Pleads Guilty to Charges Relating to Scheme to Fraudulently Control Condominium Homeowners’ Associations and Scheme to Commit Bank FraudRead the Press Release
WASHINGTON – A Las Vegas attorney 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, and for his role in a scheme to commit bank fraud, 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).
David Amesbury, 57, pleaded guilty before U.S. District Judge James C. Mahan in the District of Nevada to one count of conspiracy to commit mail and wire fraud, and one count of conspiracy to commit bank fraud. Amesbury is the eighth person to plead guilty in connection with the scheme to defraud HOAs in the Las Vegas area. Amesbury also pleaded guilty to participating in a scheme to submit false information to a bank with the intention of obtaining a bank loan for a café in downtown Las Vegas of which he was an owner.
Amesbury admitted that from approximately March 2008 until September 2008, 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 Amesbury’s co-conspirators.
Amesbury admitted that he agreed to run the HOA board elections at the Chateau Nouveau and Pebble Creek condominium complexes in Las Vegas in order to create the appearance that the elections were legitimate and were run by an independent attorney. However, Amesbury admitted he was paid $3,000 by co-conspirators for his assistance in rigging the elections at those HOAs.
Specifically, Amesbury admitted that he allowed the bona fide homeowners at Chateau Nouveau and Pebble Creek to mail their election ballots to his law office under the belief that he would keep them secure until the election. In fact, Amesbury allowed other co-conspirators to have access to the ballots and use his law office for the purpose of opening the ballots and pre-counting the number of votes entered for each candidate. This allowed Amesbury’s co-conspirators to know the number of fake ballots that needed to be created to ensure the co-conspirator up for election won the seat on the HOA board. Amesbury admitted that he ran the boards’ election meetings knowing that he allowed co-conspirators to tamper with the election ballots and that he failed to disclose his relationship to other conspirators to the HOA or its bona fide homeowners.
According to plea documents, the co-conspirators elected to the HOA boards used their positions to hire individuals and companies that would result in a personal financial benefit to the co-conspirators, including the co-conspirator law firm for construction defect litigation, and the co-conspirator construction company for remediation and construction defect repairs.
In connection with the bank fraud charge, Amesbury also admitted that between approximately October 2008 and July 2009, he and his co-conspirators met with loan officers from banks in the Las Vegas area, seeking refinancing of a loan for a breakfast and lunch café located in a downtown Las Vegas office building of which he was part owner. According to court documents, Amesbury failed to inform the banks that another individual operated the café on a day-to-day basis, and of the financial arrangement with that individual.
Amesbury admitted that he and his co-conspirators signed a loan application without informing the bank of the true business arrangement with the café operator, which included false financial statements, knowing that the bank would not issue a loan if the bank knew the true state of affairs.
Amesbury’s sentencing is scheduled for Jan. 23, 2012 at 10 a.m. The maximum sentence for conspiracy to commit mail fraud and wire fraud, as well as conspiracy to commit bank 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 .
General Services Administration Employee Sentenced to Prison for Role in Bribery Scheme as Part of Multi-Year Corruption InvestigationRead the Press Release
WASHINGTON — A General Services Administration (GSA) customer service manager was sentenced today to 30 months in prison for his role in a bribery scheme related to payments he received for awarding GSA contracts to various government contractors, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, GSA Inspector General Brian D. Miller and Assistant Director in Charge James W. McJunkin of the FBI’s Washington Field Office. Eric M. Minor, 45, was sentenced by U.S. District Court Judge Ricardo M. Urbina of the U.S. District Court for the District of Columbia, who also ordered him to pay $118,000 in restitution.
Minor pleaded guilty in May 2011 to a one-count criminal information charging him with bribery. According to the information, from approximately October 2007 until November 2010, Minor served as a customer service manager in the District of Columbia and elsewhere. Minor was responsible for coordinating, planning, estimating, contracting and scheduling work for his field office – the Potomac Service Center – which is responsible for federal buildings and federal leased space in Virginia and the National Capital Region. During the relevant period, Minor devised and executed with others a scheme to obtain approximately $118,000 in cash kickback payments for himself from six government contractors in exchange for using his official position to retain their companies to perform maintenance and construction work at GSA facilities that he managed.
This case marks the culmination of a multi-year covert investigation into corruption by government employees and civilian contractors involved in the award and administration of GSA contracts in the Washington, D.C., metro area. The investigation resulted in the conviction of 11 individuals, including Minor, all of whom pleaded guilty to federal criminal offenses including bribery and conspiracy.
“As the result of this multi-year investigation, 11 federal workers and contractors have been convicted for participating in multiple bribery and kickback schemes,” said Assistant Attorney General Breuer. “Instead of serving taxpayers honestly, these government employees and contractors turned to corruption – steering business to favored individuals in exchange for kickbacks and using bribes to secure government contracts. Taxpayers have a right to know that their dollars are being put to good use, not to line the pockets of corrupt federal employees or contractors. We will continue to punish corrupt behavior wherever we find it.”
“For the past five years, our special agents have brought these corrupt officials to justice one by one,” said GSA Inspector General Miller. “The breadth of this network suggests that some officials believe it is okay to line their own pockets at the expense of taxpayers. We will not tolerate this attitude and will aggressively investigate any situation where ‘business as usual’ includes graft and corruption.”
“Today’s sentencing is a reminder that individuals who scheme to defraud the U.S. Government, violate the public’s trust and will be brought to justice,” said Assistant Director in Charge McJunkin of the FBI’s Washington Field Office. “Through the FBI’s liaison with our government partners, we are able to identify these fraudulent improprieties and bring the full force of the government against those who seek to use tax payer dollars for private gain.”
In addition to Minor, each of the following 10 individuals pleaded guilty to federal offenses relating to bribery and kickback schemes in the award and administration of GSA contracts, and each has been sentenced by U.S. District Court Judge Urbina for their illegal activities:
On Feb. 19, 2008, James Fisher pleaded guilty to one count of bribery related to his work as a planner and estimator for GSA at the White House Property Management Center in the District of Columbia. Fisher was sentenced on May 13, 2008, to 18 months in prison and ordered to pay $40,000 in restitution.
On Aug. 19, 2008, William Dodson pleaded guilty to one count of bribery related to his work as a building manager for GSA at the Potomac Annex in the District of Columbia. Dodson was sentenced on Sept. 10, 2009, to 15 months in prison and ordered to pay $26,200 in restitution.
On Oct. 6, 2008, Daniel Money pleaded guilty to one count of bribery related to his work as a government contractor at the U.S. Tax Court in the District of Columbia. Money was sentenced on Feb. 5, 2009, to 30 months in prison and ordered to forfeit $95,000.
On Aug. 14, 2008, Fred Timbol pleaded guilty to one count of conspiracy to defraud the United States related to his work as a facilities services officer at the U.S. Tax Court in the District of Columbia. Timbol was sentenced on March 5, 2009, to 18 months in prison and ordered to pay $24,143 in restitution.
On June 23, 2008, Oscar Flores pleaded guilty to one count of bribery related to his work as a government contractor at the U.S. Tax Court in the District of Columbia. Flores was sentenced on April 12, 2010, to six months of home confinement, three years of probation, and 300 hours of community service and was ordered to pay a $40,000 fine.
On May 12, 2008, Raj Singla pleaded guilty to one count of bribery related to his work as a mechanical engineer at the Wilbur J. Cohen Building in the District of Columbia. Singla was sentenced on May 27, 2010, to five years of probation and six months of home confinement and was ordered to perform 100 hours of community service. He was also ordered to pay a $75,000 fine and restitution of $74,000.
On Feb. 18, 2010, Suresh Malhotra pleaded guilty to one count of bribery related to his work as a general engineer and project manager for GSA in the District of Columbia. Malhotra was sentenced on May 27, 2010, to five years of probation and nine months of home confinement and was ordered to perform 100 hours of community service. He was also ordered to pay a $60,000 fine and restitution of $57,060.
On June 30, 2010, Tarsem Singh pleaded guilty to one count of bribery related to his work as a consultant for a government contractor working at GSA facilities in the District of Columbia. Singh was sentenced on Nov. 1, 2010, to five years of probation and six months of home confinement and was ordered to pay a $30,000 fine.
On Dec. 16, 2010, Narsinh J. Patel pleaded guilty to one count of bribery related to his work as a government contractor at GSA facilities in the District of Columbia. Patel was sentenced on March 10, 2011, to three years of probation, and was ordered to perform 250 hours of community service and pay a $10,000 fine.
On Jan. 29, 2009, Gary Thompson pleaded guilty to one count of bribery related to his work as a building manager for GSA at the Metropolitan Service Center in Maryland. Thompson was sentenced on Aug. 2, 2011, to nine months in prison, and was ordered to perform 100 hours of community service and forfeit $55,000.
This case is being prosecuted by Trial Attorneys Daniel A. Petalas, Richard B. Evans and Peter Koski of the Criminal Division’s Public Integrity Section. The case was investigated by special agents of the GSA-Office of Inspector General and the FBI’s Washington Field Office.
Arlington, Texas, Man Sentenced to 14 Months in Federal Prison for Arson at an Islamic CenterRead the Press Release
WASHINGTON — Henry Clay Glaspell, 34, of Arlington, Texas, was sentenced by U.S. District Judge Terry R. Means to 14 months in federal prison, following his guilty plea in February 2011 to a hate crime charge stemming from an arson of a children’s playground at the Dar El-Eman Islamic Center in Arlington in July 2010, the Justice Department announced today.
Glaspell admitted that he set fire to playground equipment at the mosque as part of a series of ethnically-motivated acts directed at individuals of Arab or Middle Eastern descent associated with the mosque. Glaspell further admitted that he stole and damaged mosque property, threw used cat litter at the front door of the mosque and shouted racial or ethnic slurs at individuals of Arab or Middle Eastern descent at the mosque on multiple occasions.
Judge Means ordered that Glaspell, who has been on bond, surrender to the Bureau of Prisons on Nov. 21, 2011.
“The defendant targeted Arab-Americans at a mosque where families worship peacefully and children play,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Justice Department is committed to vigorously prosecuting hate crimes against all persons and incidents of this kind will not be tolerated in our country.”
“Religious freedom is one of our most cherished rights, and that right includes the ability to build places of worship and assemble, free from discrimination,” said U.S. Attorney Sarah R. Saldaña of the Northern District of Texas. “This office will continue to prosecute those who commit such reprehensible acts of hatred.”
This case was investigated by Arlington Police Department and the FBI. It was prosecuted by Trial Attorney Victor Boutros from the Justice Department’s Civil Rights Division and Assistant U.S. Attorney Alex Lewis of the Northern District of Texas, with assistance from the Tarrant County District Attorney’s Office.
21 October 2011
Virginia Woman Sentenced to 24 Months in Prison for Role in Extortion Scheme Involving Staged Kidnapping in GuatemalaRead the Press Release
WASHINGTON – A Virginia woman was sentenced today to 24 months in prison for her role in an extortion scheme involving a staged kidnapping in Guatemala, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Neil H. MacBride for the Eastern District of Virginia and John V. Gillies, Special Agent in Charge of the FBI’s Miami Division.
Sheena Flores, 34, of Manassas, Va., was sentenced by U.S. District Judge Gerald Bruce Lee in the Eastern District of Virginia. Flores pleaded guilty in August 2011 to one count of transmitting in foreign commerce, with intent to extort money, a communication containing a threat to injure another person. Judge Lee also sentenced Flores to three years of supervised release to follow her prison term and ordered her to pay $3,000 in restitution.
According to court documents, in July 2010, Flores was living in Guatemala with a child under the age of two who was born in Guatemala. Although Flores had no legal custody rights over the child, Flores had been taking care of the child in Guatemala while her husband was making arrangements to legally bring the child to the United States to live with him and Flores.
On July 6, 2010, from Guatemala, Flores contacted a family member in Manassas by telephone and reported that she and the child had been kidnapped by three men and that the men wanted $5,000 in two hours or they were going to kill Flores and the child. At the time that Flores reported the kidnapping and the ransom demands, Flores was attempting to extort money from her family with a hoax kidnapping and false threats, as she and the child had not been kidnapped.
Upon learning of the kidnapping and believing it to be true, the Flores’ family member called law enforcement authorities in Virginia. Shortly thereafter, FBI agents began investigating the kidnapping and members of the FBI’s Crisis Incident Response Group were dispatched to the family member’s house to monitor the situation and assist the family in negotiating with the kidnappers.
Also on July 6, 2010, Flores’ husband, who was in Manassas, received numerous text messages from Flores’ cellular phone in Guatemala, which repeatedly threatened that Flores and the child would be killed if he did not pay $10,000 in ransom by the next day. Believing that his wife and the child had in fact been kidnapped, Flores’ husband wired a partial ransom payment to Guatemala.
According to court documents, Flores enlisted the help of two men whom she believed were members of the violent gang MS-13 to help carry out the fake kidnapping. Flores and the child were found on July 13, 2010, with the assistance of Guatemalan police.
The case is being prosecuted by Assistant U.S. Attorney Rebeca H. Bellows for the Eastern District of Virginia and Trial Attorney James S. Yoon of the Criminal Division’s Human Rights and Special Prosecutions Section. The Criminal Division’s Office of International Affairs provided assistance.
The case was investigated by the FBI’s Miami Division Extraterritorial Squad, with support from the FBI Legal Attaché Office in San Salvador, El Salvador, and the FBI Transnational Anti-Gang Task Force in Guatemala.
United States and Osage Tribe Announce $380 Million Settlement of Tribal Trust LawsuitRead the Press Release
WASHINGTON – The United States has reached a final settlement of a long-running lawsuit by the Osage Tribe of Oklahoma regarding the United States’ accounting and management of the tribe’s trust funds and non-monetary trust assets. Ignacia S. Moreno, Assistant Attorney General of the Justice Department’s Environment and Natural Resources Division; the Interior Department’s Deputy Secretary David J. Hayes, Solicitor Hilary C. Tompkins, and Bureau of Indian Affairs Director Michael S. Black; the Treasury Department’s General Counsel George W. Madison, and the Osage Tribe’s Principal Chief John Red Eagle and other tribal officials commemorated the settlement during a ceremony at the Department of Interior’s headquarters in Washington today.
“This historic settlement resolves with finality long-standing trust accounting and trust management claims by the Osage Tribe,” said Assistant Attorney General Moreno. “This settlement is the outcome of dedicated efforts by the United States and the Osage Tribe to resolve years of costly and protracted litigation. Today, we come together in the spirit of partnership and mutual respect to recognize an important milestone on a path to a future marked by a stronger government-to-government and trust relationship. This settlement demonstrates the United States’ strong commitment to resolving pending tribal trust accounting and trust management cases in an expedited, fair and just manner.”
“Reaching a final settlement with the Osage Tribe has been a priority for this Administration, and it demonstrates President Obama's commitment to reconciliation and empowerment for American Indian nations,” said Interior’s Deputy Secretary Hayes. “The settlement process was fundamental to respecting the government-to-government relationship between the U.S. government and the Osage Tribe. This agreement marks a new beginning – one of just reconciliation, better communication and strengthened management of tribal trust assets.”
“This settlement is an historic, positive development for Indian country and a major step on the road to reconciliation following years of litigation between the Osage Tribe and the United States,” said Interior Solicitor Tompkins. “This administration has worked in good faith to reach a settlement that is both honorable and responsible. The settlement will allow the United States and the Tribe to foster, cultivate and strengthen their trust relationship as they move together into the future.”
Under the negotiated agreement, executed on Oct. 14, 2011, litigation will end regarding the Department of the Interior’s accounting and management of the tribe’s trust accounts, trust lands and other natural resources, including the tribe’s mineral estate. The United States will pay the tribe $380 million to compensate the tribe for its claims of historical losses to its trust funds and interest income as a result of the government’s management of trust assets. The parties also will implement measures that will lead to strengthened management of the tribe’s trust assets and improved communications between the Department of the Interior and the tribe, including procedures for delivery of periodic statements of account, annual audit information, and information relating to the management of the mineral estate to the tribe. Importantly, the agreement also provides dispute resolution provisions to reduce the likelihood of future litigation.
The Osage Tribe brought its trust accounting and trust management lawsuits in the U.S. Court of Federal Claims (CFC) in 1999 and 2000. Also, the tribe brought a trust accounting case in the U.S. District Court for the District of Columbia in 2004 and dismissed that case in 2010. The CFC litigation included numerous motions, extensive discovery, many rulings, and two trials over 12 years. Between 2006 and 2010, the tribe obtained two judgments from the CFC against the United States for about $331 million on various claims spanning the 1972-2000 period. A trial on significant claims remaining in this case was scheduled to begin in February 2012.
Seventh Guilty Plea in Connection with Scheme to Fraudulently Control Condominium Homeowners' AssociationsRead the Press Release
WASHINGTON – A Las Vegas woman pleaded guilty today for her role in a scheme to fraudulently gain control of condominium homeowners’ associations (HOAs) in the Las Vegas area so that the HOAs would direct business to a certain law firm and construction company, announced Assistant Attorney General Lanny A. Breuer of the 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).
Mary Ann Watts, 64, pleaded guilty before U.S. District Judge James C. Mahan in the District of Nevada to one count of conspiracy to commit mail and wire fraud. Watts is the seventh person to plead guilty in connection with the scheme to defraud HOAs in the Las Vegas area.
Watts admitted that from approximately the spring of 2006 until February 2009, as an employee or operator of property management companies in Las Vegas, she participated in a scheme to control various HOA boards of directors so that the HOA boards would award the handling of construction-related lawsuits and remedial construction contracts to a law firm and construction company designated by Watts’ co-conspirators.
According to plea documents, to accomplish the scheme, co-conspirators used straw purchasers to obtain mortgage loans for units within HOA communities and managed and operated the payments associated with maintaining the straw properties. The co-conspirator straw purchasers agreed to run for election to the respective HOA boards and were paid in cash, by check or promised things of value for their participation, resulting in a personal financial benefit.
According to plea documents, co-conspirators employed deceitful tactics in their attempts to win the board elections, including creating false phone surveys to gather information about voting intentions, using mailing lists to vote on behalf of out-of-town homeowners unlikely to participate in the elections, and submitting fake or forged ballots. The c o-conspirators also attempted to create the appearance that the elections were legitimate by hiring independent attorneys, or “special election masters,” to run the elections. However, these individuals were paid in cash, by check and promised things of value for their assistance in rigging the elections. Watts admitted that in November 2006, at the direction of co-conspirators, she participated in rigging an HOA election at the Vistana community in Las Vegas by ceding her role in the election as community manager and providing the election ballots to a co-conspirator attorney acting as a “special election master.”
According to court documents, once elected, the co-conspirator board members would meet with other co-conspirators to manipulate board votes, including the selection of property managers, contractors and general counsel for the HOA and attorneys to represent the HOA. The co-conspirators created and submitted fake bids for “competitors” to make the process appear to be legitimate while ensuring co-conspirators were awarded contracts.
According to plea documents, co-conspirator community managers and general counsel were paid in cash, by check or things of value for using their positions to gain inside information and recommend that the HOA board hire a co-conspirator for remediation and construction defect repairs and another co-conspirator for the construction defect litigation. Watts admitted that she employed co-conspirators and failed to disclose their conflict of interest to the HOA, in violation of her fiduciary duties.
Watts admitted that in August 2006, she agreed with other co-conspirators to open a new property management company, which would be owned and controlled by the co-conspirators, for the purpose of managing the HOA board at Vistana, as well as Chateau Versailles, Chateau Nouveau and other condominium complexes around the Las Vegas area. Watts admitted that she lived in a unit at Chateau Nouveau and received several months of free rent from her co-conspirators as a bonus for her participation in the scheme. Watts managed all of the company’s expenses and was reimbursed by a co-conspirator. Watts also admitted that she often issued her co-conspirator checks from the HOA’s account and paid several of the co-conspirators’ employees as if they were employed by the property management company in order to conceal the employees’ relationship with the co-conspirator.
Watts admitted that she also used her position as the community manager to allow co-conspirators to create and review the HOA board meeting agendas before the board meeting, so the co-conspirators could meet with the co-conspirator board members to pre-arrange how they would manipulate the upcoming votes. Watts then allowed her co-conspirators to call her phone to speak with the co-conspirator board members during board meetings in order to conceal their relationship.
Watts recommended that the HOA hire individuals and companies designated by her co-conspirators while concealing her and the company’s relationship with the co-conspirators from the bona fide homeowners. In or around November 2006, Watts, at the direction of a co-conspirator, called an emergency executive board meeting for the purpose of getting the board members’ signatures on the contract that was to award a co-conspirator with the construction defect litigation case before the next HOA board election was held.
Sentencing is scheduled for Jan. 20, 2012, at 10 a.m. 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; the Las Vegas Metropolitan Police Department, Criminal Intelligence Section; and the IRS-CI.
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.
Pfizer to Pay $14.5 Million for Illegal Marketing of Drug DetrolRead the Press Release
WASHINGTON – American pharmaceutical company Pfizer Inc. has agreed to pay $14.5 million to resolve False Claims Act allegations related to its marketing of the drug Detrol, the Justice Department announced today. The settlement resolves the last of a group of 10 qui tam, or whistleblower, suits that were filed in the District of Massachusetts and two other districts, beginning in 2003. The other nine suits were settled or dismissed in 2009 as part of the government’s global resolution with Pfizer, under which the company agreed to pay $2.3 billion dollars to resolve civil claims and criminal charges regarding multiple drugs.
The current settlement addresses allegations that Pfizer illegally marketed Detrol, a drug for the treatment of overactive bladder, for use in male patients suffering from benign prostatic hypertrophy and several allied conditions, notably lower urinary tract symptoms and bladder outlet obstruction – all uses for which the Food and Drug Administration (FDA) had not approved the drug as safe and effective. Under the terms of the settlement, the $14.5 million recovery will be divided between the United States and participating state Medicaid programs, with $11,878,846 going to the federal government and $2,621,154 going to state Medicaid programs. Under the qui tam provisions of the False Claims Act, whistleblowers will receive a $3,282,019 share of the federal recovery.
“Whistleblowers play an important role in protecting taxpayer funds from fraud and abuse,” said Tony West, Assistant Attorney General of the Justice Department’s Civil Division. “Settlements like this one help maintain the integrity of FDA’s drug approval process and support important federal and state health care programs.”
“The United States is pleased that Pfizer has agreed to resolve the last of the pending cases that were not settled as part of the 2009 resolution and plea,” said Carmen Ortiz, U.S. Attorney for the District of Massachusetts. “We hope and expect that this is indicative of a commitment to move forward in compliance with the law, and we will continue to watch vigilantly to ensure that Pfizer complies with the law in its sales and marketing of drugs sold to the public.”
The case is U.S. ex rel. Wetherholt and Drimer v. Pfizer, which the United States declined to intervene in and was independently litigated by the relators. The United States subsequently participated closely in efforts to resolve the case.
This settlement is part of the government’s emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover more than $6.3 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department's total recoveries in False Claims Act cases since January 2009 exceed $8.1 billion.
Justice Department Sues U.S. FDA Employee and Former N.Y. Corrections Official to Block Alleged Tax-Fraud SchemeRead the Press Release
WASHINGTON - The United States has sued Rodney Chestnut and Nafeesah Hines to bar them from promoting an alleged tax fraud scheme, the Justice Department announced today. According to the civil injunction complaint, the scheme is based on a frivolous “redemption” theory, which promoters falsely claim allows taxpayers to obtain funds from supposed secret U.S. Treasury accounts. Scheme participants allegedly use Internal Revenue Service (IRS) forms, including Forms 1099-OID and 1099-A, to report large amounts of fictitious income tax withholding, in order to claim large tax refunds.
According to the complaint, Chestnut, of Middle Island, N.Y., is a former corrections captain who promotes the scheme and recruits participants, including some of his former co-workers at the New York City Department of Corrections. He allegedly prepares tax returns for his customers that fraudulently claim huge tax refunds based on the redemption theory.
The complaint also states that Hines, of Jamaica, N.Y., is an employee of the U.S. Food and Drug Administration who prepares or files false forms with the IRS, both for Chestnut’s customers as well as for others. According to the complaint, in 2009 and 2010 Hines prepared or filed more than 3,000 fraudulent forms that falsely reported over $54 million of purportedly withheld income taxes.
Claiming bogus tax refunds based on false Forms 1099-OID is one of the IRS’s “Dirty Dozen” tax scams for 2011. In the past decade, the Justice Department’s Tax Division has obtained injunctions against hundreds of tax-fraud promoters and unscrupulous tax preparers. Information about these cases is available on the Justice Department website.
Justice Department Requires Divestitures in Grupo Bimbo S.A.B. De C.V. and BBU Inc.'s Acquisition of the North American Fresh Bakery Business of the Sara Lee CorporationRead the Press Release
WASHINGTON — The Department of Justice announced today that it has reached a settlement with Grupo Bimbo S.A.B. de C.V., BBU Inc. and the Sara Lee Corporation that requires them to divest brands of sliced fresh bread and associated assets, in order to proceed with Grupo Bimbo and BBU’s acquisition of Sara Lee’s North American Fresh Bakery business. The department said that the acquisition, as originally proposed, would substantially lessen competition in the sale of bagged, sliced fresh bread sold in retail stores in the metropolitan and surrounding areas of San Diego, Los Angeles, San Francisco and Sacramento, Calif.; Kansas City, Kan.; Oklahoma City; Omaha, Neb.; and Harrisburg/Scranton, Penn.
BBU and Sara Lee are respectively the largest and third largest bakers and sellers of sliced fresh bread in the United States. BBU sells sliced bread and baked products under a variety of trade names, including Arnold, Oroweat, Brownberry, Thomas’, Entenmann’s, Boboli, Freihofer’s and Stroehmann’s. Sara Lee sells sliced bread under trade names that include the Sara Lee brand family (including Sara Lee, Sara Lee Classic, Sara Lee Soft & Smooth, Sara Lee Hearty & Delicious and Sara Lee Delightful) and EarthGrains.
The Antitrust Division filed a civil lawsuit today in U.S. District Court in Washington, D.C., to prevent Grupo Bimbo and BBU from acquiring Sara Lee’s North American Fresh Bakery business. At the same time, the department filed a proposed settlement that, if approved by the court, would resolve the competitive concerns alleged in the lawsuit.
“BBU and Sara Lee’s North American Fresh Bakery business aggressively compete head-to-head for sliced fresh bread sold in retail stores,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “Without the divestitures required by the department in eight geographic markets, the combination of BBU and Sara Lee’s North American Fresh Bakery business would likely lead to millions of Americans paying higher prices for sliced fresh bread.”
According to the complaint, Grupo Bimbo and BBU’s acquisition of Sara Lee’s North American Fresh Bakery business would substantially increase concentration in various geographic markets for the sale of fresh bread and eliminate substantial head-to-head competition between BBU and Sara Lee for sliced fresh bread sold in retail stores. BBU and Sara Lee compete for shelf and display space in retailers’ stores by, among other things, offering lower wholesale prices and larger promotional discounts, which lower the prices paid by consumers of sliced bread.
According to the complaint, in the San Diego, Los Angeles, Sacramento and Harrisburg/Scranton areas, BBU and Sara Lee are the two largest sellers of sliced bread. In the San Francisco area, BBU is the largest seller of sliced bread and Sara Lee is the third largest. In the Kansas City and Omaha areas, Sara Lee and BBU are respectively the first and third largest sellers of sliced bread; in the Oklahoma City area, Sara Lee and BBU are respectively the first and fourth largest. In the eight relevant geographic areas, BBU’s post-merger share would range from approximately 52 to 63 percent, with the combination resulting in highly concentrated markets. The department said that the loss of competition likely would have resulted in higher bread prices.
Under the proposed settlement, the companies must divest the rights to sell Sara Lee’s EarthGrains brand and brands in the Sara Lee family (Sara Lee, Sara Lee Classic, Sara Lee Soft & Smooth, Sara Lee Hearty & Delicious and Sara Lee Delightful) in the state of California; Sara Lee’s EarthGrains brand and BBU’s Mrs Baird’s brand in the Kansas City area; Sara Lee’s EarthGrains brand in the Oklahoma City area; Sara Lee’s EarthGrains and Healthy Choice brands in the Omaha area; and Sara Lee’s Holsum and Milano brands in the Harrisburg/Scranton area, as well as the associated manufacturing, distribution and marketing assets required to compete effectively in the sale of those brands in those areas.
Grupo Bimbo is a corporation organized under the laws of Mexico, with headquarters in Mexico City. It controls BBU, a Delaware corporation headquartered in Horsham, Penn., through which Grupo Bimbo carries out its baking business, including but not limited to sliced bread, in the United States. Grupo Bimbo had more than $8 billion in worldwide sales in 2009. In the same year, BBU’s sales in the United States totaled approximately $3.9 billion.
Sara Lee is a corporation organized under the laws of Maryland, with headquarters in Downers Grove, Ill. Sara Lee had more than $10 billion in worldwide revenues in fiscal 2010. In the same year, Sara Lee’s North American Fresh Bakery division had approximately $2.1 billion in sales.
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.
Former United Nations Employee Found Guilty of FraudRead the Press Release
WASHINGTON – Jeffery K. Armstrong, 52, of South Riding, Va., was found guilty today by a federal jury on nine counts of wire fraud for obtaining more than $100,000 in salary payments by fraudulently holding concurrent jobs at the United Nations (U.N.) and the National Labor Relations Board (NLRB).
The guilty verdict was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Neil H. MacBride for the Eastern District of Virginia; Assistant Director in Charge James W. McJunkin of the FBI’s Washington Field Office; and David P. Berry, Inspector General for the NLRB.
Armstrong was indicted on June 28, 2011, by a federal grand jury in the Eastern District of Virginia on nine counts of wire fraud for his scheme to defraud the U.N., an international organization committed to humanitarian and peace-keeping efforts, and the NLRB, an independent agency of the U.S. government.
According to evidence presented in the trial, in March 2008 Armstrong took a leave of absence from his position as a supervisory security specialist with the Department of the Army to accept a full-time position at the U.N. As an assistant chief of the Security and Safety Service at the U.N., Armstrong was responsible for all physical security of U.N. facilities in New York City, among other functions. According to evidence at trial, Armstrong received an annual salary from the U.N. of approximately $160,000. In February 2009, after working at the U.N. for almost a year, Armstrong applied for a position as chief of the security branch within the Division of the Administration at the NLRB in Washington, D.C. In April of 2009, Armstrong became a full time employee at the NLRB, with an annual salary of approximately $121,000.
From approximately April to September 2009, Armstrong was an employee of both the U.N. and the NLRB. Armstrong concealed his dual employment from both employers by, among other things, dissuading NLRB personnel from contacting his supervisor at the U.N., submitting incomplete or inaccurate employment forms to the NLRB, and causing to be mailed to the NLRB false correspondence suggesting that he no longer worked at the U.N. In addition, Armstrong submitted, and occasionally forged, medical leave documentation to the U.N., indicating that he was unable to work and was undergoing medical treatment, despite his full-time employment at the NLRB. According to evidence, Armstrong failed to notify his superiors at both entities of his concurrent employment and received more than $100,000 in concurrent salary.
Armstrong faces a maximum penalty of 20 years in prison when he is sentenced on Jan. 27, 2012.
This case was investigated by the FBI’s Washington Field Office and the NLRB Office of Inspector General. Trial Attorney Eric G. Olshan of the Criminal Division’s Public Integrity Section and Assistant United States Attorney Karen L. Dunn of the Eastern District of Virginia prosecuted the case on behalf of the United States.
20 October 2011
Two Minnesota Women Convicted of Providing Material Support to Al-ShabaabRead the Press Release
Earlier today in federal court in the District of Minnesota, a jury found two Rochester, Minn., women guilty of providing material support to al-Shabaab, a designated terrorist organization.
Following a 10-day trial, the jury convicted Amina Farah Ali, 35, and Hawo Mohamed Hassan, 64, both naturalized U.S. citizens from Somalia, of one count of conspiracy to provide material support to a designated terrorist organization. In addition, Ali was convicted of 12 counts of providing material support to al-Shabaab, while Hassan was also convicted of two counts of making false statements to authorities.
Ali was detained by authorities following today's verdict. Hassan was also detained but will be shortly transferred to a half-way house.
The evidence admitted at trial established that the defendants provided support to al-Shabaab from Sept. 17, 2008, through July 19, 2010. Specifically, the evidence established that Ali communicated by telephone with al-Shabaab members in Somalia who requested financial assistance for al-Shabaab. Ali, Hassan and others raised money for al-Shabaab by soliciting funds door-to-door in Somali communities in Minneapolis, Rochester, and other cities in the United States and Canada. In addition, the defendants raised money by participating in teleconferences that featured speakers who encouraged donations to support al-Shabaab. Ali also raised funds under the false pretense that the funds were for the poor and needy.
Ali and others then transferred funds to al-Shabaab through various money remittance companies. Ali and others used false names to identify the recipients of the funds in order to conceal that the funds were being provided to al-Shabaab. The indictment lists 12 money transfers directed to al-Shabaab by Ali.
The defendants and others committed several overt acts in order to carry out the fund-raising conspiracy. For example, on Oct. 26, 2008, Ali hosted a teleconference during which an unindicted co-conspirator told listeners that it was not the time to help the poor and needy in Somalia; rather, it was time to give to the mujahidin. Ali and Hassan recorded $2,100 in pledges at the conclusion of the teleconference. On Feb. 10, 2009, Ali conducted another fund-raising teleconference during which she told listeners to "forget about the other charities" and focus on "the jihad."
On July 14, 2009, the day after the FBI executed a search warrant at her home, Ali telephoned her primary al-Shabaab contact, saying, "I was questioned by the enemy here . . . . they took all my stuff and are investigating it . . . do not accept calls from anyone." In addition, when Hassan was questioned by agents in an investigation involving international terrorism, she made false statements.
For their crimes, the defendants face a potential maximum penalty of 15 years in prison for the charge of conspiracy to provide material support to a designated terrorist organization. Ali also faces a potential 15 years for each count of providing material support to a terrorist organization, while Hassan faces a potential eight years for each count of making a false statement. U.S. District Court Chief Judge Michael J. Davis will determine their sentences at a future hearing, yet to be scheduled.
This case is the result of an investigation by the FBI's Joint Terrorism Task Force. It is being prosecuted by Assistant U.S. Attorney Jeffrey S. Paulsen and Steven Ward of the Counterterrorism Section of the Justice Department's National Security Division.
Two Indicted for Conspiracy to Provide Material Support to TerroristsRead the Press Release
WASHINGTON – Ali Charaf Damache, an Algerian man who resided in Ireland, and Mohammad Hassan Khalid, a Pakistani citizen and U.S. lawful permanent resident who resided in Maryland, have been charged with conspiracy to provide material support to terrorists in a superseding indictment returned today in the Eastern District of Pennsylvania.
The charges were announced by Lisa Monaco, Assistant Attorney General for National Security; Zane David Memeger, U.S. Attorney for the Eastern District of Pennsylvania; and Mark Giuliano, Executive Assistant Director of the FBI’s National Security Branch.
Damache, aka “Theblackflag,” 46, is charged in the superseding indictment with one count of conspiracy to provide material support to terrorists and one count of attempted identity theft to facilitate an act of international terrorism. Damache was arrested by authorities in Ireland in March 2010 where he is currently being held on unrelated charges. The United States intends to seek his extradition from Ireland to stand trial in the Eastern District of Pennsylvania. If convicted of the charges against him in the superseding indictment, Damache faces a potential sentence of 45 years in prison.
Khalid, aka “Abdul Ba’aree ‘Abd Al-Rahman Al-Hassan Al-Afghani Al-Junoobi W’at-Emiratee,” 18, is charged in the superseding indictment with one count of conspiracy to provide material support to terrorists. Khalid was arrested in Ellicot City, Md., on July 6, 2011, and is currently in custody in the Eastern District of Pennsylvania. If convicted of the charge against him in the superseding indictment, Khalid faces a potential sentence of 15 years in prison.
“Today’s indictment, which alleges a terrorist conspiracy involving individuals around the globe who connected via the Internet -- including a teenager and two women living in America -- underscores the evolving nature of violent extremism.” said Assistant Attorney General Monaco. “I thank the many agents, analysts and prosecutors who helped bring about this case.”
“Protecting the citizens of the United States from acts of terrorism is one of the highest priorities of the Department of Justice,” said U.S. Attorney Memeger. “This case demonstrates that we must remain vigilant within our communities to make sure that we bring to justice those terrorists, of any age or background, who seek to do great harm to our citizens.”
“This investigation highlights the diverse threat environment we face today,” said FBI Executive Assistant Director Giuliano. “As revealed in this case, individuals used the Internet to further their radicalization and contribute to the radicalization of others. The FBI is committed to disrupting individual and group plots and doing so in close coordination with our law enforcement, intelligence and private sector partners.”
The indictment alleges that, from about 2008 through July 2011, Damache and Khalid conspired with Colleen R. LaRose, Jamie Paulin Ramirez and others to provide material support and resources, including logistical support, recruitment services, financial support, identification documents and personnel, to a conspiracy to kill overseas. LaRose, aka “Fatima LaRose,” aka “JihadJane,” pleaded guilty in February 2011 in the Eastern District of Pennsylvania to conspiracy to provide material support to terrorists, conspiracy to kill in a foreign country, false statements, and attempted identity theft. Ramirez pleaded guilty in the Eastern District of Pennsylvania in March 2011 to conspiracy to provide material support to terrorists.
According to the indictment, Damache, Khalid and others devised and coordinated a violent jihad organization consisting of men and women from Europe and the United States divided into a planning team, a research team, an action team, a recruitment team and a finance team; some of whom would travel to South Asia for explosives training and return to Europe to wage violent jihad.
The indictment alleges that Damache, Khalid, LaRose and others recruited men online to wage violent jihad in South Asia and Europe. In addition, Damache, Khalid, LaRose and others allegedly recruited women who had passports and the ability to travel to and around Europe in support of violent jihad. The indictment further alleges that LaRose, Paulin-Ramirez and others traveled to and around Europe to participate in and support violent jihad; and that Khalid and LaRose and others solicited funds online for terrorists.
For example, the indictment alleges that in July 2009, Damache sent an electronic communication using the username “Theblackflag” to Khalid, asking Khalid to recruit online “some brothers that can travel freely . . . with eu passports . . . .[A]nd I need some sisters too.” Damache also allegedly advised Khalid that “sister fatima will be charge of other sister care . . . . [W]e have already organized every thing for her. . . .” The indictment further alleges that Paulin-Ramirez married Damache on the day she arrived with her minor child in Europe to live and train with jihadists, even though she had never met Damache in person, and that, while living together in Europe, the couple began training Ramirez’s minor child in the ways of violent jihad.
Among other things, the indictment further alleges that, in July 2009, Khalid posted or caused to be posted an online solicitation for funds to support terrorism on behalf of LaRose and later sent electronic communications to multiple online forums requesting the deletion of all posts by LaRose after she was questioned by the FBI. In August 2009, Khalid allegedly sent a questionnaire to LaRose in which he asked another potential female recruit about her beliefs and intentions with regard to violent jihad. In addition, Khalid allegedly received from LaRose and concealed the location of a U.S. passport that she had stolen from another individual.
This case was investigated by the FBI’s Joint Terrorism Task Force in Philadelphia, and the FBI Field Divisions in New York, Denver, Washington, D.C., and Baltimore. Authorities in Ireland also provided assistance in this matter.
The case is being prosecuted by Assistant U.S. Attorney Jennifer Arbittier Williams, in the Eastern District of Pennsylvania, and Matthew F. Blue, Trial Attorney from the Counterterrorism Section of the Justice Department’s National Security Division. The Office of International Affairs in the Justice Department’s Criminal Division also provided assistance.
The charges contained in an indictment are mere allegations and defendants are presumed innocent unless and until proven guilty.