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3 October 2011
Justice Department Reaches Agreement with the City of Williamsburg, Virginia, on Bailout Under the Voting Rights ActRead the Press Release
WASHINGTON – The Justice Department filed a consent decree today in the U.S. District Court for the District of Columbia after reaching an agreement with the city of Williamsburg, Va., that will allow for the city’s bailout from its status as a “covered jurisdiction” under the special provisions of Voting Rights Act. If approved by the court, the bailout will exempt the city from the preclearance requirements of Section 5 of the act.
Covered jurisdictions, as determined according to Section 4 of the Voting Rights Act, are required under Section 5 of the act to seek preclearance for any changes in voting qualifications, standards, practices or procedures from the U.S. District Court in the District of Columbia or from the U.S. Attorney General, prior to their implementation. Section 4 of the act provides that a covered jurisdiction may seek to “bailout,” or remove itself from coverage, and therefore be exempted from the preclearance requirements, by seeking a declaratory judgment before a three-judge panel in federal district court. A bailout judgment can only be issued if the court determines that the jurisdiction meets certain eligibility requirements for bailout contained in the statute, including a 10-year record of nondiscrimination in voting-related actions. The act also provides that the attorney general can consent to entry of a judgment of bailout if, based upon investigation, the attorney general is satisfied that the jurisdiction meets the eligibility requirements.
The city of Williamsburg, Va., filed its bailout action in U.S. District Court in Washington, D.C. on Aug. 4, 2011. City officials had contacted the attorney general prior to filing its action, indicating that the city was interested in seeking bailout. The city provided the Justice Department with substantial information, and the department conducted an investigation to determine the city’s eligibility. Based on that investigation, the department is satisfied that the city meets the Voting Rights Act’s requirements for bailout.
“In this case, the department carefully evaluated the information the city provided and conducted its own investigation. After close review, the department is now satisfied that the city is eligible for a bailout,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “I appreciate the city's cooperation and the substantial information it provided. It has enabled us to reach a resolution in a manner envisioned by the Voting Rights Act.”
The consent decree details the legal and factual basis for a bailout determination and, if approved, will grant the city’s request. The court will retain jurisdiction for 10 years. The action can be reopened upon motion of the attorney general or any aggrieved person where the party alleges conduct by the city that would have originally precluded the city from bailing out if it had occurred during the 10 year period preceding entry of the consent decree.
Information about bailout, the Voting Rights Act, and other federal voting laws is available on the Department of Justice website at www.justice.gov/crt/voting/. Complaints may be reported to the Voting Section of the Justice Department’s Civil Rights Division at 1-800-253-3931.
Justice Department Reaches Agreement with James City County, Virginia, on Bailout Under the Voting Rights ActRead the Press Release
WASHINGTON – The Justice Department filed a consent decree today in the U.S. District Court for the District of Columbia after reaching an agreement with James City County, Va., that will allow for the county’s bailout from its status as a “covered jurisdiction” under the special provisions of Voting Rights Act. If approved by the court, the bailout will exempt the county from the preclearance requirements of Section 5 of the act.
Covered jurisdictions, as determined according to Section 4 of the Voting Rights Act, are required under Section 5 of the act to seek preclearance for any changes in voting qualifications, standards, practices or procedures from the U.S. District Court in the District of Columbia or from the U.S. Attorney General, prior to their implementation. Section 4 of the act provides that a covered jurisdiction may seek to “bailout,” or remove itself from coverage, and therefore be exempted from the preclearance requirements, by seeking a declaratory judgment before a three-judge panel in federal district court. A bailout judgment can only be issued if the court determines that the jurisdiction meets certain eligibility requirements for bailout contained in the statute, including a 10-year record of nondiscrimination in voting-related actions. The act also provides that the attorney general can consent to entry of a judgment of bailout if, based upon investigation, the attorney general is satisfied that the jurisdiction meets the eligibility requirements.
James City County, Va., filed its bailout action in U.S. District Court in Washington, D.C. on Aug. 5, 2011. County officials had contacted the attorney general prior to filing its action, indicating that the county was interested in seeking bailout. The county provided the Justice Department with substantial information, and the department conducted an investigation to determine the county’s eligibility. Based on that investigation, the department is satisfied that the county meets the Voting Rights Act’s requirements for bailout.
“In this case, the department thoroughly reviewed all the information submitted and we conducted our own investigation which has satisfied the department that the county is eligible for a bailout,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “I appreciated the county officials’ cooperation in providing the department with substantial information, and moving this matter toward a resolution consistent with vision of the Voting Rights Act.”
The consent decree details the legal and factual basis for a bailout determination and, if approved, will grant the county’s request. The court will retain jurisdiction of the action for 10 years and can reopen the action upon the motion of the attorney general or any aggrieved person alleging conduct by the county that would have originally precluded the county from bailing out if it had occurred during the 10 year period preceding entry of the consent decree.
Information about bailout, the Voting Rights Act, and other federal voting laws is available on the Department of Justice website at www.justice.gov/crt/voting/ . Complaints may be reported to the Voting Section of the Justice Department’s Civil Rights Division at 1-800-253-3931.
30 September 2011
Virginia Real Estate Businessman Sentenced to 10 Years in Prison for Mortgage and Investment Fraud SchemesRead the Press Release
WASHINGTON – Alexander Otis Matthews, a Virginia real estate businessman, was sentenced today to 10 years in prison in connection with mortgage and investment schemes to obtain more than $12 million in fraudulent loans.
The sentencing was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Neil H. MacBride of the Eastern District of Virginia, U.S. Attorney Rod J. Rosenstein of the District of Maryland, Assistant Director James W. McJunkin of the FBI’s Washington Field Office and Special Agent in Charge Richard McFeely of the FBI’s Baltimore Field Office.
Matthews, 46, of Dunn Loring, Va., also was ordered by U.S. District Judge Liam O’Grady to forfeit $7.9 million, which represented the proceeds of the mortgage fraud schemes. In addition, Judge O’Grady ordered Matthews to pay $5,055,250 in restitution to his victims, including three lending entities and 12 private investors, and to serve five years of supervised release following his prison term.
Matthews pleaded guilty on July 15, 2011, in U.S. District Court in the Eastern District of Virginia to one count of bank fraud and one count of wire fraud. Matthews was charged with bank fraud on Nov. 17, 2010, in an indictment filed in the District of Maryland and charged with wire fraud on Feb. 17, 2011, in an indictment filed in the Eastern District of Virginia.
In his guilty plea, Matthews admitted that between November 2005 and May 2011, he orchestrated at least three mortgage fraud schemes in which he used “straw borrowers” with good credit scores to apply for and obtain nearly $11.5 million in fraudulent loans relating to three northern Virginia residential properties. Matthews did so by causing lenders to receive false and inflated income information about the straw borrowers, and Matthews submitted forged and fraudulent documentation to lenders purporting to verify that false information. After attempting to refinance the loans and forestall foreclosure, Matthews ultimately defaulted on the loans for each of the three properties.
According to court documents, from approximately September 2006 through July 2011, Matthews also engaged in a fourth, related scheme to obtain more than $1 million in fraudulent loans from at least 11 residents of Maryland and Virginia. Matthews obtained the loans by promising those individuals high rates of return over short periods of time in exchange for money that Matthews claimed he would invest in various property ventures. Matthews later defaulted on each of those loans, generally paying back no more than 10 percent of the borrowed amounts.
Matthews perpetrated his schemes through various purported real estate entities, including American Investments Real Estate Corporation (AIREC), AIREC Realty, Kibra Construction, Ezana Corporation and Farmville Group LLC.
According to court documents, Matthews continued his criminal behavior after his arrest and while under court supervision. In December 2010, Matthews mailed $1,000 to known witnesses he had been ordered not to contact, and in March 2011, Matthews filed a fraudulent bankruptcy petition using an alias. Similarly, in December 2010 and May 2011, Matthews submitted fraudulent documents to one of the lenders for his northern Virginia properties in which he forged the straw purchaser’s signature without authorization. In June 2011, Matthews was arrested and detained for these violations of his pretrial release conditions.
The case is being prosecuted by Trial Attorneys Ryan S. Faulconer and Peter A. Frandsen of the Criminal Division’s Fraud Section, as well as Assistant U.S. Attorney Jack Hanly for the Eastern District of Virginia. The case is being investigated by the FBI’s Washington and Baltimore Field Offices, with substantial assistance from the Montgomery County, Md., State’s Attorney’s Office and the Alexandria, Va., Office of the U.S. Trustee.
President Obama established the Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
Two Individuals Sentenced in Virginia for Roles in Matching Charitable Funds Fraud SchemeRead the Press Release
WASHINGTON – Stephan Bekale and Jamal Ibraheem were sentenced today in U.S. District Court in Alexandria, Va., for conspiring to commit wire fraud as part of a matching funds scheme, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Neil H. MacBride of the Eastern District of Virginia and Assistant Director in Charge James W. McJunkin of the FBI’s Washington Field Office.
U.S. District Judge T.S. Ellis III sentenced Bekale, 31, of Indianapolis, and Ibraheem, 38, of Bethesda, Md., to 30 months and 12 months in prison, respectively. Additionally, Bekale and Ibraheem were ordered to pay $276,600 in restitution, jointly and severally. Bekale was also ordered to forfeit a BMW vehicle. Bekale and Ibraheem pleaded guilty on July 14, 2011, to one count of conspiracy to commit wire fraud.
According to the indictment and information presented in court, Bekale fraudulently obtained matching funds from Bank of America’s charitable arm after he falsely certified that charitable contributions had been made to his nonprofit organization, “Hoops for Africa,” by Bank of America employees. Ibraheem is a former Bank of America employee who admitted that he falsely certified donations made in his name and that he recruited additional bank employees to participate in Bekale’s fraud scheme.
According to court documents, from approximately March 2007 through May 2009, approximately 31 bank employees, located at three different banking locations, logged onto Bank of America’s website for its Matching Gifts Program and certified that they donated money to “Hoops for Africa.” The fraudulent employee donations to “Hoops for Africa” ranged from $1,300 to $7,500 per donation, and a total of 57 matching gift requests were received by Bank of America’s charitable arm. As a result of those falsely registered donations, Bank of America eventually processed 55 of the transactions and disbursed through its charitable foundation a total of approximately $276,600 in matching gifts to “Hoops for Africa.”
Bekale and Ibraheem were charged in a 10-count indictment unsealed on April 5, 2011, along with three other defendants. Irma DeMartini, of Sterling, Va., pleaded guilty and is scheduled to be sentenced on Oct. 21, 2011. Charges are still pending against co-defendants Reynaldo “Christian” Villarroel and Maritza Villarroel, and they are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
This case is being prosecuted by Assistant U.S. Attorney Mark D. Lytle of the Eastern District of Virginia and Trial Attorney Eric L. Gibson of the Criminal Division’s Public Integrity Section. The case is being investigated by the FBI’s Washington Field Office.
Two California Real Estate Investors Agree to Plead Guilty to Bid Rigging at Public Foreclosure AuctionsRead the Press Release
WASHINGTON – Two California real estate investors have agreed to plead guilty today for their roles in a conspiracy to rig bids and to 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 Oakland, Calif., against Eric Larsen of San Leandro, Calif., and Timothy Powers of Alamo, Calif., for their participation in bid-rigging and mail-fraud conspiracies at public real estate foreclosure auctions in Contra Costa and Alameda counties, Calif. Powers is charged with participating in the conspiracy in Contra Costa County from as early as May 2009 until about December 2010, and Larsen is charged with participating in the conspiracy in Alameda County from as early as February 2009 until about January 2010.
“The Antitrust Division will vigorously pursue fraudulent schemes that eliminate competition from the marketplace and cause financial harm to victims,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “The collusion taking place at these auctions preyed on the misfortune caused by the unprecedented rate of foreclosures and lined the pockets of colluding real estate investors with funds that otherwise would have gone to lenders and, at times, homeowners.”
“The FBI and the Antitrust Division are partners in the fight to bring to justice those who engage in fraudulent anticompetitive practices at foreclosure auctions,” said FBI Special Agent in Charge Stephanie Douglas. “We are committed to holding those individuals accountable for the damage they have done to the real estate market and to unsuspecting victims.”
The department said that the primary purpose of the conspiracies was to suppress and restrain competition and to conceal payoffs in auction records in order to obtain selected real estate offered at public foreclosure auctions in Alameda and Contra Costa counties 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, Larsen and Powers conspired with others not to bid against one another, but instead designate a winning bidder to obtain the title to selected real estate offered at public real estate foreclosure auctions in Contra Costa and Alameda counties. Larsen and Powers also were charged with conspiracies to use the mail to carry out a fraudulent scheme to divert money to co-conspirators away from mortgage holders and others by holding private auctions open only to members of the conspiracy and awarding the selected real estate to the conspirators who submitted the highest bids. These private auctions took place at or near the courthouse steps where the public auctions were held. The department said that Larsen and Powers also took steps to conceal the payoffs to conspirators for not bidding competitively and caused false and misleading statements to be made on records of public auctions regarding the total purchase price of the selected real estate.
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 against Larsen and Powers are the latest cases filed by the department in its ongoing investigation into bid rigging and fraud at public real estate foreclosure auctions in Contra Costa County and Alameda County. To date, as a result of the investigation, 10 individuals have agreed to plead guilty.
The 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 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.
**The fraud charge(s) referenced in this press release were subsequently dismissed on the government’s motion.**
Louisiana-Based LHC Group Inc. Agrees to Pay U.S. $65 Million to Resolve False Claims Act AllegationsRead the Press Release
WASHINGTON - LHC Group Inc. has agreed to pay $65 million, plus interest, to the federal government to resolve allegations that it violated the False Claims Act for false home healthcare billings to the Medicare, TRICARE and Federal Employees Health Benefits programs, the Justice Department announced today. The company also agreed to be bound by the terms of a Corporate Integrity Agreement with the Department of Health and Human Services – Office of Inspector General (HHS-OIG).
LHC, which is based in Lafayette, La., is one of the nation’s largest home health providers. The settlement resolves allegations that, between 2006 and 2008, LHC improperly billed for services that were not medically necessary and for services rendered to patients who were not homebound. Under the False Claims Act, private citizens, known as relators, can bring suit on behalf of the United States and share in any recovery. The relator, Judy Master, will receive over $12 million as her share of the government’s recovery.
“Billing for unnecessary home health services misuses taxpayer dollars because it wastes resources that should be available for patients who are truly in need,” said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. “As we work hard to spend our public health care dollars efficiently, settlements like this help us maintain critical health care programs.”
“The U.S. Attorney’s Office is committed to investigating and aggressively pursuing healthcare providers who seek public funds through unlawful means. This settlement should send a message to all healthcare providers in the Western District of Louisiana, particularly home health providers, that violations of the False Claims Act will continue to receive this office’s full attention and resources,” said Stephanie A. Finley, U.S. Attorney for the Western District of Louisiana.
“Let this case warn health care providers of the risks of failing to adopt effective compliance plans. When providers submit false claims to Medicare, the government will hold them accountable,” said Daniel R. Levinson, HHS Inspector General. “OIG will oversee an integrity agreement with LHC that requires a review of how LHC corrects problems uncovered by audits to prevent future fraud.”
The United States’ investigation was conducted by the U.S. Attorney’s Office for the Western District of Louisiana, the Civil Division of the Department of Justice, HHS-OIG and the Office of Personnel Management’s Office of Inspector General with additional assistance provided by the Department of Defense’s Office of Inspector General.
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 HHS 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 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in False Claims Act cases since January 2009 are more than $7.8 billion.
The case is docketed as United States ex rel. Master v. LHC Group, Inc., No. 07-1117 (W.D. La.).
Justice Department Seeks to Bar Former Owner of Brooklyn, N.Y., Tax Firm from Preparing Federal Tax ReturnsRead the Press Release
WASHINGTON - The United States has filed a lawsuit against Annie P. Williams to bar her from preparing federal tax returns for others, the Justice Department announced today. The government complaint in the civil injunction suit alleges that Williams, the former proprietor of tax preparation firm PPH Tax & Realty Inc. in Brooklyn, N.Y., employed part-time tax preparers who had little or no tax experience and fostered an environment in which fraudulent return preparation was encouraged.
According to the complaint, Williams’ preparers claimed false expense and charitable contribution deductions, bogus dependents, unallowable child and childcare tax credits, and other improper tax credits on customers’ federal income tax returns. The complaint also alleges that firm employees sold other persons’ names and Social Security numbers to customers so that the customers could falsely report that those individuals were their childcare providers for purposes of falsely claiming the childcare tax credit. Employees also allegedly sold fake charitable contribution letters to customers to present to the Internal Revenue Service (IRS) during audits to substantiate false deductions.
According to the complaint, the amount of tax loss resulting from Williams’ improper tax-preparation activities could be as much as $78 million from 2006 through 2009.
The complaint alleges that Williams’ involvement in illegal tax preparation practices spans more than a decade, beginning in Mississippi where she allegedly trained employees of a tax preparation firm operated by her son, Lenardo Carzette Brown, to prepare fraudulent tax returns. The complaint also states that in 2005 a federal court in the Northern District of Mississippi permanently enjoined Brown’s business and its owners from preparing returns. The complaint also alleges that in March 2010 Williams pleaded guilty to federal tax evasion and was sentenced to six months in prison.
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 .
Justice Department Requires Morgan Stanley to Disgorge $4.8 Million in Profits from Anticompetitive AgreementRead the Press Release
WASHINGTON – The Department of Justice today announced a settlement with Morgan Stanley that requires Morgan to pay $4.8 million for violating the antitrust laws by entering into an agreement with KeySpan Corporation that restrained competition in the New York City electricity capacity market. The department said the agreement likely resulted in a price increase for electricity retailers, which, in turn, led to increased electricity prices for consumers.
The department’s Antitrust Division today filed a civil antitrust complaint in U.S. District Court for the Southern District of New York and submitted a proposed settlement that, if approved by the court, would resolve the lawsuit. The settlement provides for disgorgement of profits for a violation of the antitrust laws and requires Morgan to pay $4.8 million to the United States. The department previously entered into a settlement with KeySpan that required the company to disgorge $12 million in profits for its role in the agreement, which was approved by the court in February 2011.
“This settlement with a major financial institution will signal to the financial services community that use of derivatives for anticompetitive ends will not be tolerated,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “Disgorgement of ill-gotten gains, as was paid here, is an effective Antitrust Division tool to remedy harm to competition.”
According to the complaint, in January 2006, KeySpan and Morgan executed a financial derivative for New York City capacity while Morgan simultaneously entered into an off-setting derivative with Astoria Generating Company, KeySpan’s largest competitor in the capacity market. The agreements effectively transferred to KeySpan a financial interest in Astoria’s capacity, thereby ensuring that KeySpan would withhold substantial output from the capacity market and increase prices. For its part, Morgan earned revenues by retaining the spread between the fixed prices of the two derivative agreements. The anticompetitive effects of the Morgan/KeySpan agreement lasted until March 2008, when regulatory conditions eliminated KeySpan’s ability to affect the market price of electricity capacity.
New York City’s electricity generating capacity market was created to ensure that sufficient generation capacity exists to meet expected electricity needs. Electricity retailers serving consumers in the city are required to purchase capacity from generators in amounts related to their expected peak energy demand. Electricity generators offer to sell their capacity to electricity retailers in regularly held auctions.
Morgan Stanley is a Delaware corporation with its principal place of business in New York City. Morgan provides diversified financial services, operating a global asset management business, investment banking services and a global securities business, including a commodities trading division.
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 William Stallings, Chief, Transportation, Energy and Agriculture Section, Antitrust Division, U.S. Department of Justice, 450 5th St. N.W., Suite 8000, Washington, D.C. 20530. At the conclusion of the 60-day comment period, the court may enter the final judgment upon a finding that it serves the public interest.
Justice Department Reaches Settlement with C&F Mortgage Corporation to Resolve Allegations of Lending DiscriminationRead the Press Release
WASHINGTON – The Justice Department announced today that C&F Mortgage Corporation of Midlothian, Va., will revise its pricing policies, conduct employee training and pay $140,000 as part of a settlement to resolve allegations that it engaged in a pattern or practice of discrimination on the basis of race and national origin.
The settlement, which is subject to court approval, was filed in conjunction with the Justice Department’s complaint in U.S. District Court for the Eastern District of Virginia. The complaint alleges that C&F charged greater interest rate markups (overages) and gave lesser discounts (underages) on home mortgage loans made to African-American and Hispanic borrowers, in violation of the Fair Housing Act (FHA) and the Equal Credit Opportunity Act (ECOA).
“Fair and equal access to credit is critical and lenders have a responsibility to have protocols in place that ensure all of their lending programs comply with the law and don’t discriminate,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Civil Rights Division is committed to fair lending enforcement that stops abuses across the entire spectrum of credit markets and to compensating the victims of discriminatory lending. We commend C&F for working cooperatively with the Justice Department in reaching an appropriate resolution of this case.”
“Racial and ethnic bias have no place in the lending market,” said Neil H. MacBride, U.S. Attorney for the Eastern District of Virginia. “We are pleased that C&F is taking steps to compensate the victims and to ensure fair and equal access to credit in the future.”
“The FDIC is committed to ensuring its supervised banks and their subsidiaries comply with fair lending laws,” said Mark Pearce, Director of the Federal Deposit Insurance Corporation’s (FDIC) Division of Depositor and Consumer Protection. “Banks must effectively monitor their subsidiaries to avoid allowing impermissible discrimination to occur. We appreciate the Department of Justice’s efforts to investigate and resolve this matter.”
According to court documents, in 2007, C&F used rate sheets to calculate a “par” or standard interest rate for each borrower based on objective factors related to the borrower’s credit risk and the loan terms; however, C&F then gave its employees wide discretion to charge borrowers more (overages) or less (underages) than the par rate without having in place objective criteria for setting the overages and underages. Prior to 2010, C&F also did not require employees to document the reasons for charging overages or providing underages to borrowers, did not monitor whether these overages and underages resulted in discrimination based on race or national origin, and did not offer detailed fair lending training to its employees. The Justice Department’s complaint alleges that this policy had a disparate impact on African-American and Hispanic borrowers.
The department alleged that in 2010, C&F began to develop uniform policies for all aspects of its loan pricing and to phase out the practice of charging overages to home mortgage borrowers. As part of this settlement, C&F revised these and other pricing policies further to ensure that the interest rates charged for its home mortgage loans are set in a non-discriminatory manner consistent with the requirements of the FHA and the ECOA. The settlement also requires the lender to pay $140,000 to African-American and Hispanic victims of discrimination, monitor its loans for potential disparities based on race and national origin, and provide equal credit opportunity training to its employees. The agreement also prohibits the lender from discriminating on the basis of race or national origin in any aspect of a credit transaction.
The lawsuit originated from a referral by the FDIC to the Justice Department’s Civil Rights Division.
The Civil Rights Division, the U.S. Attorney’s Office for the Eastern District of Virginia, and the FDIC are members of the 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.
A copy of the complaint, as well as additional information about fair lending enforcement by the Justice Department, can be obtained from the Justice Department’s website at www.justice.gov/fairhousing.
Justice Department Files Lawsuit Alleging Disability-Based Housing Discrimination at Salem, Oregon, Apartment ComplexRead the Press Release
WASHINGTON – The Justice Department filed a lawsuit today against the developers, builders and designers of the Gateway Village Apartments, a 275-unit apartment complex in Salem, Ore., for violations of the Fair Housing Act. The lawsuit alleges that the defendants violated the law when they designed and constructed the complex with barriers that make it inaccessible to persons with disabilities.
“Since 1991, the Fair Housing Act has required that when new multifamily housing is built it be accessible to persons with disabilities, so that all persons have equal opportunities to live in multifamily housing across the nation,” said Thomas E. Perez, Assistant Attorney General for the Justice Department’s Civil Rights Division. “When builders build apartment complexes with steps and other barriers, they deny that equal housing opportunity for those with disabilities.”
The suit, filed in U.S. District Court in Portland, Ore., alleges that various barriers at Gateway Village deny persons with disabilities equal access to the 112 ground floor units and their associated public and common use areas. Such barriers include inaccessible building entrances; doors within apartments that are too narrow for wheelchair users; and kitchens and bathrooms that are configured so that persons using wheelchairs cannot use them.
Named in the suit are the developers and builders of the property – Montagne Development Inc., David A. Montagne, William David Jones, Dav II Investment Group LLC and Gateway II LLC – and the firm that designed the property, Multi/Tech Engineering Services Inc. The suit seeks a court order requiring the defendants to retrofit Gateway to bring it into compliance with the Fair Housing Act and monetary damages for persons harmed by the lack of accessibility at the complex.
The lawsuit arises out of a complaint filed with the Department of Housing and Urban Development (HUD) by the Fair Housing Council of Oregon (FHCO), a private nonprofit corporation whose mission is to ensure compliance with fair housing laws for all persons in Oregon and southwest Washington. FHCO inspected Gateway Village and observed accessibility barriers at the property. After conducting an investigation, HUD issued a charge of discrimination and referred the case to the Justice Department.
“T he Fair Housing Council of Oregon has been a steadfast partner in the enforcement of our federal fair housing laws,” said U.S. Attorney for the District of Oregon Dwight Holton. “Their investigations concerning accessible housing play an important role in the civil rights of the people of Oregon.”
“Accessible features are essential to helping people with physical challenges enjoy their home, “said John Trasviña, HUD Assistant Secretary for Fair Housing and Equal Opportunity. “HUD is committed to working with the Justice Department to ensure that developers and builders meet their responsibility to comply with the accessibility requirements of the Fair Housing Act.”
The federal Fair Housing Act prohibits discrimination in housing on the basis of race, color, religion, sex, familial status, national origin and disability. Among other things, the Act requires all multifamily housing constructed after March 12, 1991, to have basic accessibility features, including accessible routes without steps to all ground floor units. More information about the Civil Rights Division and the laws it enforces is available at www.usdoj.gov/crt . Individuals who believe that they may have been victims of housing discrimination at Gateway Village Apartments should contact the U.S. Attorney’s Office for the District of Oregon at 503-471-5577, 855-474-5577 (toll free) or [email protected]. Individuals who believe they may have been victims of housing discrimination elsewhere may contact the Justice Department at 1-800-896-7743 or [email protected] or the Department of Housing and Urban Development at 1-800-669-9777.
The complaint is an allegation of unlawful conduct. The United States bears the burden of proving its case in federal court.
Justice Department Files Lawsuit Against Truman, Minnesota, to Protect the Employment Rights of U.S. Army ReservistRead the Press Release
WASHINGTON - The Department of Justice filed a lawsuit today on behalf of Michael Schutz, a member of the U.S. Army Reserves, against the city of Truman, Minn. The lawsuit alleges that Truman violated the Uniformed Services Employment and Reemployment Rights Act (USERRA) by failing to properly reemploy Schutz and unlawfully moving to terminate his employment as a full-time police officer after he returned from military service in Kuwait.
Subject to certain conditions, USERRA requires employers to promptly reemploy returning service members in the positions they would have held had their employment been not interrupted by military service or in a position of like seniority, status and pay. In addition, employers may not retaliate against servicemember employees seeking to exercise their rights under USERRA.
According to the complaint filed in the U.S. District Court for the District of Minnesota, upon Schutz’s honorable discharge from military service, Truman did not reemploy him in his pre-service position as a full-time police officer. The complaint also alleges that Truman retaliated against Schutz after he filed his USERRA claim by placing him on administrative leave for approximately three weeks and issuing him a notice of intent to terminate his employment shortly thereafter.
In representing Mr. Schutz, the Justice Department is seeking the lost wages and benefits that Schutz would have received if Truman had reemployed him in his pre-service position as the law requires and injunctive relief relating to Truman’s retaliation against Schutz for exercising his USERRA rights.
The complaint also seeks double damages because the defendants’ actions constituted a willful violation of USERRA. The case will be litigated by the U.S. Attorney’s Office based in Minneapolis.
“The men and women who wear our nation’s uniform need to know that they do not have to sacrifice their job at home in order to serve our country,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Civil Rights Division is committed to aggressive enforcement of USERRA to protect the rights of those who, through their bravery and sacrifice, secure the rights of all Americans.”
“Just as our dedicated men and women of the military protect our freedoms overseas, we must protect their interests here at home,” said U.S. Attorney for the District of Minnesota B. Todd Jones. “These soldiers have made many sacrifices, and we cannot allow the loss of a career or appropriate pay when they return home.”
The Justice Department’s Civil Rights Division has given 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 Files Lawsuit Against California Healthcare Provider Alleging DiscriminationRead the Press Release
WASHINGTON – The Justice Department filed a lawsuit today against Generations Healthcare, a healthcare provider with skilled nursing facilities throughout California , alleging that it engaged in a pattern or practice of discrimination by imposing unnecessary documentary requirements on naturalized U.S. citizens and non-U.S. citizens in order to work in the U.S. The Immigration and Nationality Act’s (INA) anti-discrimination provision prohibits employers from placing additional burdens on work-authorized employees during the process of hiring or to verify their employment eligibility based on their citizenship status or national origin.
In February 2010, an applicant for employment, who is authorized to work legally in the United States, applied to work for Generations Healthcare at its St. Francis Pavilion facility in Daly City, Calif. According to the department’s investigation, the company demanded that the applicant produce a permanent resident card, also known as a “green card.” The applicant did not have a green card and instead presented an employment authorization document, which was legal documentation of her authority to work in the United States. The company rejected her valid documentation because it had a future expiration date and told her that it could not hire her unless she presented a green card. As a result, the applicant was unable to obtain employment with the company.
The department’s investigation revealed that Generations Healthcare required all newly hired non-U.S. citizens and naturalized U.S. citizens at its St. Francis Pavilion facility to present specific and extra work authorization documents beyond those required by federal law to prove their status — a burden that was not placed on native-born U.S. citizens.
“Employers are not allowed to impose more burdensome employment eligibility verification procedures on certain workers based on their citizenship status,” said Thomas E. Perez, Assistant Attorney General in charge of the Civil Rights Division. “The Justice Department is committed to vigorously enforcing the anti-discrimination provisions of the Immigration and Nationality Act, including those protecting employees from discriminatory documentary requirements.”
The Office of Special Counsel for Immigration Related Unfair Employment Practices (OSC) is responsible for enforcing the anti-discrimination provision of the INA, which protects work authorized individuals against employment discrimination on the basis of citizenship status or national origin discrimination, including discrimination in hiring and in the employment eligibility verification (Form I-9) process. For more information about protections against employment discrimination under federal immigration law, call OSC’s worker hotline at 1-800-255-7688 (1-800-237-2515, TDD for hearing impaired); OSC’s employer hotline at 1-800-255-8155 (1-800-237-2515, TDD for hearing impaired); e-mail [email protected]/ or visit OSC’s website at www.justice.gov/crt/about/osc
The lawsuit charging Generations Healthcare with discriminatory practices, filed before the Office of the Chief Administrative Hearing Officer within the Executive Office for Immigration Review, is being prosecuted by Phil Telfeyan and A. Baltazar Baca, OSC Trial Attorneys.
Japanese Freight Forwarding Company Agrees to Plead Guilty to Criminal Price-Fixing ChargeRead the Press Release
WASHINGTON – A Japanese freight forwarder has agreed to plead guilty and to pay a $1.84 million criminal fine for its role in a conspiracy to fix certain fees in connection with the provision of freight forwarding services for air cargo shipments from Japan to the United States, the Department of Justice announced today.
According to a charge filed today in U.S. District Court for the District of Columbia, MOL Logistics (Japan) Co. Ltd. engaged in a conspiracy with others to fix and impose certain freight forwarding service fees, including fuel surcharges and various security fees, charged to customers for services provided in connection with air freight forwarding shipments of cargo shipped by air from Japan to the United States from about September 2002 until at least November 2007.
Under the plea agreement, which is subject to court approval, MOL Logistics has also agreed to cooperate with the department’s ongoing antitrust investigation.
The department said that MOL Logistics and its co-conspirators carried out the conspiracy by, among other things, agreeing during meetings and discussions to coordinate and impose certain freight forwarding service fees and charges on customers purchasing freight forwarding services for cargo shipped by air from Japan to the United States. As part of the conspiracy, MOL Logistics and its co-conspirators levied freight forwarding service fees in accordance with the agreements reached and engaged in meetings and discussions for the purpose of monitoring and enforcing adherence to the agreed-upon freight forwarding service fees.
Freight forwarders manage the domestic and international delivery of cargo for customers by receiving, packaging, preparing and warehousing cargo freight, arranging for cargo shipment through transportation providers such as air carriers, preparing shipment documentation, and providing related ancillary services.
MOL Logistics is charged with price fixing in violation of the Sherman Act, which carries a maximum $100 million fine for corporations. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
Including MOL Logistics, 13 companies have agreed to plead guilty and nearly $100 million in criminal fines have been obtained as a result of the Antitrust Division’s ongoing freight forwarding investigation. On Sept. 28, 2011, six companies – Kintetsu World Express Inc.; Hankyu Hanshin Express Co. Ltd.; Nippon Express Co. Ltd.; Nissin Corporation; Nishi-Nippon Railroad Co. Ltd.; and Vantec Corporation – agreed to plead guilty for their roles in a conspiracy to fix and impose certain freight forwarding service fees charged to customers for services provided in connection with air freight forwarding shipments of cargo shipped by air from Japan to the United States from about September 2002 until at least November 2007.
Today’s charge is the result of a joint investigation into the freight forwarding industry being conducted by the Antitrust Division’s National Criminal Enforcement Section, the FBI’s Washington Field Office and the Department of Commerce’s Office of Inspector General. Anyone with information concerning the price fixing or other anticompetitive conduct in the freight forwarding industry is urged to call the Antitrust Division’s National Criminal Enforcement Section at 202-307-6694 or visit www.justice.gov/atr/contract/newcase.htm or call the FBI’s Washington Field Office at 202-278-2000.
Hitachi-LG Data Storage Inc. Agrees to Plead Guilty to Participating in Bid-Rigging and Price-Fixing Conspiracies Involving Optical Disk DrivesRead the Press Release
WASHINGTON – Hitachi-LG Data Storage Inc. has agreed to plead guilty and to pay a $21.1 million criminal fine for its participation in a series of conspiracies to rig bids and fix prices for the sale of optical disk drives, the Department of Justice announced today. This is the department’s first charge resulting from its ongoing investigation into the optical disk drive industry.
A 15-count felony charge was filed today in U.S. District Court in San Francisco against Hitachi-LG Data Storage, a joint venture between Hitachi Ltd., a Japanese corporation, and LG Electronics Inc., a Republic of Korea corporation. Of the 14 counts, seven charge Hitachi-LG Data Storage with conspiring with others to suppress and eliminate competition by rigging bids on optical disk drives sold to Dell Inc.; six counts charge Hitachi-LG Data Storage with rigging bids on optical disk drives sold to Hewlett-Packard Company (HP); and one count charges Hitachi-LG Data Storage with conspiring with others to fix the prices of optical disk drives sold to Microsoft Corporation. The final count charges Hitachi-LG Data Storage for its participation in a scheme to defraud HP in an April 2009 optical disk drive procurement event.
“The bid-rigging and price-fixing conspiracies involving optical disk drives undermined competition and innovation in the high tech industry,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “The Antitrust Division is committed to prosecuting those who harm competition in the optical disk drive industry.”
Under the plea agreement, which is subject to court approval, Hitachi-LG Data Storage has agreed to assist the department in its ongoing investigation into the optical disk drive industry.
Optical disk drives are devices such as CD-ROM, CD-RW (ReWritable), DVD-ROM and DVD-RW (ReWritable) that use laser light or electromagnetic waves to read and/or write data and are often incorporated into personal computers and gaming consoles.
According to the court document, Dell hosted optical disk drive procurement events in which bidders would be awarded varying amounts of optical disk drive supply depending on where their pricing ranked. From approximately June 2004 to approximately September 2009, Hitachi-LG Data Storage and co-conspirators participated in a series of conspiracies involving meetings and conversations to discuss bidding strategies and the prices of optical disk drives. As part of the conspiracies, Hitachi-LG Data Storage and co-conspirators bid on optical disk drives at collusive and noncompetitive prices and exchanged information on sales, market share and the pricing of optical disk drives to monitor and enforce adherence to the agreements.
The department said that from approximately June 2007 to approximately March 2008, Hitachi-LG Data Storage and co-conspirators participated in meetings and conversations in Taiwan and the Republic of Korea to discuss and fix the prices of optical disk drives sold to Microsoft. As part of the conspiracy, Hitachi-LG Data Storage and co-conspirators issued price quotations in accordance with the agreements reached and exchanged information on the sales of optical disk drives to monitor and enforce adherence to the agreed-upon prices.
According to the court document, HP also hosted optical disk drive procurement events in which participants would be awarded varying amounts of optical disk drive supply depending on where their pricing ranked. The department said that from approximately November 2005 to approximately March 2009, Hitachi-LG Data Storage and co-conspirators participated in a series of conspiracies involving meetings and discussions to predetermine pricing and rank order, and submitted collusive and noncompetitive bids for the procurement event.
Hitachi-LG Data Storage is also charged with one count of wire fraud for devising a scheme to subvert HP’s competitive bidding process for an April 2009 procurement event. According to the charge, Hitachi-LG Data Storage executed the scheme through interstate communications, including an email sent by one of its employees to co-conspirators in San Jose, Calif., and the Republic of Korea, that contained first round bidding results and non-public, competitively sensitive information relating to the April 2009 event.
Hitachi-LG Data Storage is charged with multiple violations of the Sherman Act and one violation of the wire fraud statute. Sherman Act violations carry a maximum penalty of a $100 million criminal fine. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims, if either of those amounts is greater than the statutory maximum fine. The wire fraud violation carries a maximum penalty of the greatest of a $500,000 fine, twice the gain a person derived from the offense or twice the loss suffered by the victims.
The ongoing joint investigation is being conducted by the Antitrust Division’s San Francisco Office and the FBI in San Francisco and Houston. Anyone with information concerning illegal or anticompetitive conduct in the optical disk drive industry is urged to call the Antitrust Division’s San Francisco Field Office at 415-436-6660 or visit www.justice.gov/atr/contact/newcase.htm.
Harris County, Texas, Commissioner Pleads Guilty to Making a False Statement to FBI; Real Estate Developer Pleads Guilty to False Tax StatementRead the Press Release
WASHINGTON – Harris County Commissioner Gerald R. Eversole and Houston-based real estate developer Michael D. Surface both pleaded guilty today in federal court in Houston to making false statements, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, Special-Agent-In-Charge (SAC) Stephen L. Morris of the FBI’s Houston Field Office and SAC Rodney E. Clarke of the Internal Revenue Service-Criminal Investigation (IRS-CI) Houston Field Office.
Eversole pleaded guilty to lying to the FBI by falsely denying that he had received items of value from Surface, including $63,000 provided to Eversole to help purchase a new home, and $16,975 provided to Eversole in the form of landscaping expenses on that home.
Surface pleaded guilty to claiming a false tax deduction for the landscaping expenses at Eversole’s home on both his corporate and personal income tax return. U.S. District Judge David Hittner accepted both pleas and set a sentencing date of Jan. 4, 2012.
In a separate case, Surface pleaded guilty to making a false statement to the FBI about his relationship with a former city of Houston official. In that case, Surface pleaded guilty to lying about whether he had provided things of value to Monique McGilbra, the former head of the city’s Building Services Department. U.S. District Judge Lynn Hughes accepted Surface’s plea in this case and set sentencing for Jan. 3, 2011.
“Mr. Eversole lied to the FBI about receiving money and other items of value that Mr. Surface admitted he provided,” said Assistant Attorney General Breuer. “Mr. Surface, in turn, lied on his tax returns about the money he provided to Mr. Eversole to gain influence, and lied to the FBI about providing things of value to a separate Houston city official. The public must be able to trust that its elected officials are fulfilling their duties honestly and without influence from individual favor-seekers. Public officials who are not truthful about the funds they receive must face the consequences of their actions.”
“The FBI will continue to ensure that our public officials are held to a higher standard,” said FBI SAC Morris. “Without honesty, there can be no trust in our democracy.”
“Mr. Surface took an income tax deduction for moneys that he paid to influence a public official - a deduction that he was clearly not entitled to,” said IRS-CI SAC Clarke. “ IRS-CI helps ensure that all Americans, including public officials and others are held to the same standard as regular taxpayers. This action today is an important victory for America’s taxpayers who play by the rules and have no tolerance for those who make up their own rules.”
As part of their guilty pleas, Eversole and Surface both admitted that beginning in 1999, Surface sought and obtained at least five lucrative Harris County contracts to build and house county offices and to provide construction maintenance, among others. Both defendants also admitted Eversole repeatedly voted to approve and renew Surface’s projects and used his official position to ensure funding for these contracts. Eversole also repeatedly recommended and voted to appoint Surface as chairman of the board of the Harris County Sports and Convention Corporation, a quasi-governmental organization charged with overseeing Reliant Stadium and Reliant Park.
Eversole and Surface also admitted that in March 2003, Surface gave $63,000 for the purchase and construction of Eversole’s new home. Both defendants also admitted that in April 2004, Surface gave Eversole $16,975 for residential landscaping expenses at Eversole’s new home.
Eversole admitted that, when interviewed in December 2007 by FBI agents and asked about things of value he had received from Surface, he falsely stated that two birthday gifts were the only items he had received from Surface, when in fact he had received the $63,000 and the $16,975, among other things. Surface admitted that he gave Eversole the $63,000 and the $16,975 with the intent to influence Eversole in connection with the county projects Eversole voted to award to Surface. Surface also admitted that in providing the landscaping expenses, he instructed the landscaper to bill Eversole for $10,000 and send the bill for the remaining $16, 975 to one of Surface’s corporations. Surface then caused that corporation to falsely list the payment as a business expense, which caused his own personal income tax return to under-state his taxable income for the 2004 calendar year.
As part of his plea agreement, Eversole agreed to resign from office and agreed not to seek elected or appointed office for a period of 10 years. Surface, who had previously resigned from the Harris County Sports and Convention Corporation, agreed not to seek any federal, state or local contracts for a period of five years.
As part of his plea agreement in the case involving the city of Houston official, Surface admitted that beginning in 1999, McGilbra supervised the administration of a multi-million dollar contract awarded to The Keystone Group Inc., a corporation owned by Surface and Andrew Schatte, his co-defendant in that case. McGilbra also supervised negotiations between Keystone and the city on another planned contract. Surface admitted that he and others provided McGilbra with free drinks and meals while she was responsible for the existing contract, despite a city prohibition against such gifts. Surface also admitted that he and others caused Keystone to hire McGilbra’s boyfriend, Garland Hardeman, as a “consultant” to Keystone, and that Hardeman provided a portion of these consulting fees back to McGilbra. Surface also admitted that he provided a $1,000 gift certificate to McGilbra for a department store, as well as football tickets. Surface admitted that when he was interviewed by FBI agents, he falsely stated that he had provided nothing other than football tickets to McGilbra. McGilbra previously pleaded guilty for her role in the scheme.
Schatte is currently pending trial, and is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Eversole faces a maximum penalty of five years in prison and a $250,000 fine. Surface faces a maximum penalty of three years prison and a $100,000 fine on the false tax statement charge and five years in prison and a $250,000 fine on the false statement charge.
This case is being prosecuted by Senior Trial Attorney Mary K. Butler and Trial Attorneys John P. Pearson and Peter Mason of the Criminal Division’s Public Integrity Section. The case was investigated by the FBI and IRS-CI.
Former Colombian Maritime Training Instructor and Co-Conspirator Sentenced to Prison on U.S. Drug ChargesRead the Press Release
WASHINGTON – A former Colombian maritime training instructor and a co-conspirator were sentenced to federal prison today for conspiring to transport thousands of kilograms of cocaine from various ports along the coast of Colombia to waiting vessels that transported the cocaine to the United States and other countries, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.
Wilson Jesus Torres-Torres, a Colombian maritime training instructor, and Baudilio Vivero-Cardenas, were sentenced to 144 months and 96 months in prison, respectively. They pleaded guilty on Dec. 30, 2010, before U.S. District Judge Ellen S. Huvelle in the District of Columbia to one count of conspiracy to violate the Maritime Drug Law Enforcement Act.
Torres-Torres and Vivero-Cardenas were charged in a one-count indictment returned in the District of Columbia on Feb. 24, 2009. They were arrested in Colombia on Sept. 30, 2009. Vivero-Cardenas was extradited to the United States on Sept. 2, 2010, and Torres-Torres was extradited to the United States on Sept. 23, 2010.
According to court documents, from September 2005 to February 2009, Torres-Torres and Vivero-Cardenas were members of a Colombian drug trafficking organization based in Buenaventura, Colombia, that transported large quantities of cocaine for various other drug trafficking organizations. The defendants admitted that they used fishing vessels and “go-fast” boats to transport thousands of kilograms of cocaine from various ports along the coast of Colombia to waiting transport vessels on the high seas, which would transport the cocaine to the United States and other countries. According to court documents, the vessels involved in the conspiracy were equipped with high frequency radios, global positioning system devices, satellite telephones, large amounts of fuel, and multiple outboard motors to facilitate the transport of cocaine over long distances on the high seas until the destination or off-loading rendezvous point was reached.
The case was prosecuted by Trial Attorneys Charles D. Griffith Jr., Meredith A. Mills and Tritia L. Yuen of the Criminal Division’s Narcotic and Dangerous Drug Section. The investigation was led by the Drug Enforcement Administration’s Miami Field Division; Washington, D.C., Office; Cartagena, Colombia, Resident Office; and the Special Operations Division. Significant assistance was provided by the U.S. Coast Guard in interdicting and recovering more than 21,000 kilograms of cocaine.
Florida Man Sentenced for Filing False Liens Against Federal Law Enforcement EmployeesRead the Press Release
WASHINGTON – Mark D. Leitner was sentenced to 30 months in prison after pleading guilty in July to filing false liens against federal law enforcement employees and corruptly endeavoring to impede and impair the Internal Revenue Service (IRS), the Justice Department announced today. Northern District of Florida Senior District Court Judge Lacey A. Collier presided over the hearing at the U.S. District Court in Pensacola, Fla.
According to court documents, Leitner apologized for filing false liens against the former U.S. attorney for the Northern District of Florida, the former clerk of court and numerous assistant U.S. attorneys, department trial attorneys and an IRS Criminal Investigation special agent involved in a 2010 tax fraud prosecution against Leitner.
According to the documents filed in the court proceeding, Leitner was previously a defendant in a criminal trial, United States v. Hirmer, et. al., in the Northern District of Florida in March 2010. During that jury trial and after the jury returned the guilty verdict, Leitner publicly filed false maritime liens against the property of the prosecutors, investigators and court personnel involved in the criminal trial. The liens falsely claimed that Leitner was owed $48.489 billion from each individual. On five of the seven false liens, Leitner publicly disclosed individuals’ correct social security numbers and other personal identifying information. Leitner also filed and mailed numerous harassing and frivolous documents to the courts and personnel involved in this case.
Leitner will serve this prison sentence consecutive to the five-year prison sentence he received for his 2010 tax fraud conviction.
The case was investigated by Treasury Inspector General for Tax Administration – Department of Treasury.
Additional information about the Justice Department’s Tax Division and its enforcement efforts can be found at www.usdoj.gov/tax .
Eight California Residents Indicted for Their Roles in Scheme Claiming More Than $19 Million in Fraudulent Tax RefundsRead the Press Release
WASHINGTON – Osman Norales, Genaro De La Fuente, Francisco Ramirez and Ulises Linares were indicted on charges of conspiring to defraud the United States, the Justice Department and Internal Revenue Service (IRS) announced today. The indictment was unsealed in the Central District of California today.
According to the allegations in the indictment, in 2009, Norales, De la Fuente, Ramirez and Linares conspired to defraud the United States by filing more than 400 false Forms 1099-OID claiming more than $80 million in fictitious federal income tax withholdings and by filing more than 35 false individual income tax returns, Forms 1040 and Forms 1040X, that claimed more than $19 million in fictitious federal income tax withholding.
According to the indictment, IRS Forms 1099 are used to report income and withholding to the IRS and are typically issued by employers or other payors such as banks. Original Issue Discount (OID), reported on IRS Form 1099-OID, is a form of interest income typically realized on debt instruments that were issued at a discount or purchased for less than the ultimate redemption value of the debt instrument, such as a bond or certificate of deposit.
According to the indictment, the defendants operated the fraudulent scheme using a partnership based in Rancho Cucamonga, Calif., called “De la Fuente and Ramirez and Associates” (DLFRA). Norales, De La Fuente and Ramirez recruited customers into the fraudulent scheme through seminars and one-on-one consultations, charged individuals up to $3,000 to become customers. Linares prepared the false Forms 1040 claiming large fraudulent refunds based on the fictitious withholding amounts reported on the false Forms 1099-OID and Norales, De la Fuente, Ramirez and Linares then caused the false individual income tax returns to be filed with the IRS. Norales and Ramirez transmitted more than 450 fictitious Forms 1099-OID to the IRS falsely claiming that customers had receive more than $81 million in income that had been turned over to the IRS as federal income tax withholdings.
All four defendants are charged with a conspiracy to defraud the United States and with various counts of filing false claims against the United States. In addition, Norales, De la Fuente and Ramirez are also charged with filing false individual income tax returns for themselves using the 1099-OID scheme.
In addition, four other individuals, Maribel Rincon, Arturo Villarreal, Christine Rincon, as well as tax return preparer Angela Molina of Riverside, Calif., were also each indicted separately for aiding and assisting the filing of false individual income tax returns for themselves and/or others that claimed fraudulent tax refunds ranging from approximately $90,000 to more than $1.5 million.
An indictment is merely an allegation and the defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law. If convicted, Norales, De La Fuente, Ramirez and Linares each face up to 10 years in prison for the conspiracy charge. All of the defendants face up to five years in prison for each false claim charge. In addition, the defendants face fines of up to $250,000 for each count charged in the indictment.
The case was investigated by IRS-Criminal Investigation and is being prosecuted by Justice Department Tax Division Trial Attorney Ignacio Perez de la Cruz and Assistant U.S. Attorney Charles Pell in the Central District of California.
Department of Justice and Partner Agencies Announce Training and Technical Assistance Award toBuild Capacity in Distressed NeighborhoodsRead the Press Release
WASHINGTON – The Department of Justice’s Bureau of Justice Assistance (BJA), together with its partners, the Departments of Housing and Urban Development (HUD), Education, Health and Human Services and Treasury, today announced the selection of the Center for the Study of Social Policy as the Building Neighborhood Capacity Program (BNCP) Training and Technical Assistance Coordinator.
The BNCP is a core component of the administration’s Neighborhood Revitalization Initiative (NRI). Led by the White House Domestic Policy Council, the NRI brings together federal partners to assist local communities in developing and obtaining the tools they need to revitalize distressed neighborhoods that struggle with issues such as crime, poor health, struggling schools, inadequate housing and access to employment.
“Focusing on capacity building in communities across our nation is critical to ensuring neighborhoods of concentrated poverty are revitalized,” said Attorney General Eric Holder. “Through BNCP, we will provide communities with tools to overcome obstacles to revitalization and to achieve sustainable and measurable goals that increase public safety, improve economic growth and enhance resident well-being.”
The NRI’s goal is to help distressed neighborhoods transform themselves into neighborhoods of opportunity – safe places that provide the environments and resources children, youth and adults need to maximize their life outcomes.
“The BNCP is the result of unprecedented collaboration among five agencies,” said U.S. Secretary of Housing and Urban Development Shaun Donovan. “It acknowledges that the challenges communities face are interconnected, and we therefore must respond with comprehensive solutions.”
“All communities must have access to the kind of information, guidance and resources that can empower them to make lasting change,” said U.S. Secretary of Education Arne Duncan. “This important partnership will assist community organizations in furthering their work by building strong partnerships, leveraging public and private resources and using data to address community needs and drive decision making that will dramatically improve educational and economic opportunities.”
Working with BJA, the Center for the Study of Social Policy was chosen to assist to-be-selected neighborhoods in generating the capacity to undertake development of comprehensive neighborhood revitalization plans. The Center also will establish a web-based resource center to provide guidance and resource materials that any community can access. The resource center will be the repository for a collection of tools, literature and experience regarding neighborhood capacity building. This project is being funded through the Departments of Justice, HUD and Education.
“We are very pleased that our five federal agencies have forged this strategic partnership with the Center for the Study of Social Policy to provide assistance to neighborhoods to build community capacity,” said Denise E. O’Donnell, Director of BJA. “Through this partnership, we are developing a capacity-building framework that will serve as a valuable tool for engaging residents and creating partnerships, pooling resources and ensuring strategies are targeted based on what works.”
More information on the BNCP is available at www.bja.gov/grant/nri.html . Information about the Neighborhood Revitalization Initiative is available at www.whitehouse.gov/administration/eop/oua/initiatives/neighborhood-revitalization.
Cleanup Agreement Reached at Former Uranium Mine on Spokane Indian Reservation in Northeastern WashingtonRead the Press Release
WASHINGTON – A settlement agreement has been reached for the cleanup of the Midnite Mine Superfund Site, located on the Spokane Indian Reservation in Northeastern Washington, the Department of Justice and the Environmental Protection Agency (EPA) announced today. The 350 acre site, which is centered around a former open pit uranium mine, poses a potential threat to people’s health and the environment due to the presence of heavy metals and elevated levels of radioactivity.
Under the agreement, filed today with the U.S. District Court for the Eastern District of Washington in Spokane, Wash., Newmont USA Limited, and Dawn Mining Company, LLC will design, construct and implement the cleanup plan for the site that EPA selected in 2006 and also will reimburse EPA’s costs for overseeing the work. Cleanup at the site is expected to cost $193 million. EPA also will be reimbursed for approximately $25 million in costs already incurred. The United States, on behalf of the Department of the Interior, will contribute approximately $54 million toward past and future cleanup activities. Finally, the mining companies have agreed to secure funding that will be available should EPA have to take over the work.
“Under today’s agreement, the mining companies will perform the cleanup of the Midnite Mine. The cleanup will bring important environmental protections to residents of the Spokane Indian Reservation, including the control of radioactive mine waste and the protection of nearby waters from acid mine drainage,” said Ignacia S. Moreno, Assistant Attorney General of the Environment and Natural Resources Division of the Department of Justice. “This settlement means that the long-sought cleanup will be implemented, and gives the Spokane Tribe a role in working with EPA to ensure that the cleanup protects human health and the environment on the Reservation.”
“EPA is committed to ensuring the cleanup of environmental contamination at former mine sites,” said Cynthia Giles, Assistant Administrator for EPA’s Office of Enforcement and Compliance Assurance. “Today’s settlement will ensure that sufficient funds are available to complete the cleanup of the Midnite Mine site, strengthening environmental protection in Indian Country and protecting the families living on the Spokane Indian Reservation.”
The Midnite Mine operated from 1954 to 1964, and again from 1969 to 1981. As a result of the mining operations, approximately 350 acres of land were disturbed, and numerous waste rock piles and two open mine pits are still present at the site.
According to Dennis McLerran, EPA Regional Administrator in Seattle, today’s agreement means the long-anticipated cleanup work can move forward.
“Today’s settlement is great news for the environment and finally gives the Spokane Tribe some certainty,” said Regional Administrator McLerran. “The Tribe has been living with this legacy for too long. EPA is eager to get moving on the cleanup and make the area safe for the families who live and work in the area.”
Actions at the site will include installing a drainage layer and sumps in the two pits left open after mining, consolidating existing waste rock in the pits, and covering the pits to keep surface water out. Ongoing maintenance will include removal and treatment of water that enters from the pit walls.
Officials expect the project’s design phase to last approximately three years, with an additional five to seven years needed to finish construction. Managing contaminated water at the site will continue to be a high priority during construction planning.
EPA will oversee the work to ensure that it follows the cleanup plan and complies with the agreement signed by the parties. The Spokane Tribe, though not a party to the agreement, will support EPA in overseeing the work.
The public now has 30 days to comment on the Consent Decree prior to entry in federal court. The consent decree will be available at www.justice.gov/enrd/Consent_Decrees.html .
More information on the settlement agreement: www.epa.gov/compliance/resources/cases/cleanup/cercla/midnitemine/index.html .
29 September 2011
Two Massachusetts Individuals Charged with Child Pornography OffensesRead the Press Release
WASHINGTON - Two Massachusetts individuals were charged in separate cases today with child pornography offenses, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Carmen M. Ortiz for the District of Massachusetts and Richard DesLauriers, Special Agent in Charge of the FBI’s Boston Division.
Richard A. Doherty Jr., 22, of Fall River, Mass., was charged in an indictment returned today with possession of child pornography. The indictment alleges that on Dec. 15, 2009, Doherty possessed visual depictions of a minor engaged in sexually explicit conduct.
Christopher E. Reardon, 26, of New Bedford, Mass., was charged in an indictment returned today with transportation and possession of child pornography. The indictment alleges that on Oct. 27, 2009, Reardon transported visual depictions of minors engaged in sexually explicit conduct. The indictment also alleges that on April 12, 2010, Reardon possessed additional child pornography.
The possession of child pornography charge carries a maximum penalty of 10 years in prison, to be followed by up to a lifetime of supervised release and a $250,000 fine. The transportation of child pornography charges carries a mandatory minimum sentence of five years in prison and a maximum sentence of 20 years in prison, as well as a lifetime term of supervised release and a $250,000 fine.
The cases were investigated by the FBI. They are being prosecuted by Assistant U.S. Attorney Michael I. Yoon of the U.S. Attorney’s Major Crimes Unit, and Trial Attorney Thomas Franzinger of the Criminal Division’s Child Exploitation & Obscenity Section.
This case was brought as part of Project Safe Childhood. In February 2006, the Department of Justice created Project Safe Childhood, a nationwide initiative designed to protect children from exploitation and abuse. Led by the U.S. Attorneys’ Offices, 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 identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov/.
The details contained in the indictments are allegations. The defendants are presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
SAIC and Others to Pay U.S. More Than $22.6 Million to Resolve False Claims AllegationsRead the Press Release
WASHINGTON – Science Applications International Inc. (SAIC); its subcontractor, Applied Enterprise Solutions LLC (AES); AES CEO Dale Galloway; and former government employees Stephen Adamec and Robert Knesel will pay the United States $22,676,000 to resolve allegations of false claims in a whistleblower suit, the Justice Department announced today. SAIC will pay $20,400,000 and AES and Dale Galloway will pay $2,166,000. Adamec and Knesel are paying $110,000.
The False Claims Act (FCA) suit, filed in June 2009 in the Southern District of Mississippi, alleges that the defendants knowingly violated the FCA when they submitted or caused the submission of false claims and conspired to submit such claims under a contract with the General Services Administration (GSA) in support of the Naval Oceanographic Major Shared Resource Center (NAVO MSRC). That contract was to provide support services for the National Center for Critical Information Processing and Storage (NCCIPS) at the NAVO MSRC. GSA awarded the NCCIPS task order in April 2004 to SAIC, which teamed with Lockheed Martin and AES to perform under the task order. SAIC was paid a total of $116 million under the contract.
The qui tam, or whistleblower, suit alleges that prior to the issuance, and once the NCCIPS solicitation had been publicized, Adamec and Knesel, then government employees, conspired with SAIC, AES, Galloway and Lockheed Martin to ensure that SAIC and its teaming partners were awarded the task order by sharing non-public, advance procurement information with the SAIC team that was not provided to other potential bidders; sharing information about the solicitation with the SAIC team before providing that information to other bidders; and choosing a type of contract and putting language in the solicitation in order to bias the selection process to favor the SAIC team.
“We expect those who contract for the privilege of doing the public’s business to act fairly and abide by the rules, not game the system to get undeserved taxpayer dollars for themselves and their friends," said Tony West, Assistant Attorney General for the Justice Department’s Civil Division. “We will pursue stiff penalties for contractors and federal employees whose illegal conduct defrauds the public and makes it harder for companies that play by the rules to compete.”
The qui tam suit, United States ex rel. Magee v. Lockheed Martin, et al., 1:09cv324 HSO (JMR) (S.D. MS.), was filed by David Magee, a former employee at the NAVO MSRC. The United States intervened in Magee’s action as to all defendants except for Lockheed Martin. The United States previously settled with Lockheed Martin for $2 million.
The investigation was conducted by the Justice Department’s Civil Division, the Defense Criminal Investigative Service, the Naval Criminal Investigative Service and the GSA Office of Inspector General.
The Justice Department’s total recoveries in False Claims Act cases since January 2009 exceed $7.8 billion.
NinjaVideo Founder Pleads Guilty in Virginia to Criminal Copyright ConspiracyRead the Press Release
WASHINGTON – Hana A. Beshara, 29, of Las Vegas, pleaded guilty today for her role in founding 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 plea was announced by U.S. Attorney Neil H. MacBride for the Eastern District of Virginia Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Immigration and Customs Enforcement (ICE) Director John Morton.
Beshara pleaded guilty before U.S. District Judge Anthony J. Trenga in the Eastern District of Virginia to conspiracy and criminal copyright infringement. At sentencing, scheduled for Jan. 6, 2012, Beshara faces a maximum penalty of five years in prison on each count.
According to court documents, Beshara was one of the founders of NinjaVideo.net, which operated from February 2008 until it was shut down by law enforcement in June 2010. The NinjaVideo.net website allowed visitors to download infringing copies of hundreds of television shows and movies, including those still playing in theaters and some that had not yet been released in theaters. Website visitors could download much of the infringing content for free, but visitors who “donated” at least $25 obtained access to private forum boards that contained a wider range of infringing material.
According to court documents, NinjaVideo.net generated additional income from Internet advertising. Beshara admitted that she negotiated agreements with online advertising entities and received income from them. Beshara admitted that she and her co-conspirators collected more than $500,000 in overall proceeds during the website’s two-and-a-half years of operation, with Beshara personally receiving more than $200,000. As part of her plea agreement, Beshara agreed to forfeit assets seized by ICE’s Homeland Security Investigations (HSI) in June 2010, including cash, an investment brokerage account, two bank accounts, a Paypal account and one Internet advertising account.
Beshara, who referred to herself as “Queen Phara” and “the face and the name behind Ninja,” was the day-to-day administrator of NinjaVideo.net, according to court documents. In that role, Beshara supervised the website and at times directed the release of infringing copies of specific movies and television shows, including through uploads of copyrighted works by members of the group to computer servers around the world and in the Eastern District of Virginia.
According to the statement of facts, Beshara frequently released podcasts to communicate with the millions of visitors to NinjaVideo.net. In one such podcast, which Beshara entitled “The NinjaVideo Manifesto,” Beshara boasted about NinjaVideo’s “zero hour releases on TV and movies” – meaning that the website made infringing content available as soon as the legitimate product was released.
On Sept. 9, 2011, Beshara and four other alleged co-conspirators were indicted on six charges related to their work with NinjaVideo.net. Co-defendant Matthew David Howard Smith pleaded guilty on Sept. 23, 2011, to conspiracy and criminal copyright infringement, and will be sentenced on Dec. 16, 2011. The remaining three defendants are scheduled for a jury trial on Feb. 6, 2012.
The case is being prosecuted by Assistant U.S. Attorneys Jay V. Prabhu and Lindsay A. Kelly 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. This criminal investigation is a part of the IPR Center’s groundbreaking In Our Sites Operation, which targets the online sale of counterfeit and pirated commodities. 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 .
Furukawa Electric Co. Ltd. and Three Executives Agree to Plead Guilty to Automobile Parts Price-Fixing and Bid-Rigging ConspiracyRead the Press Release
WASHINGTON – Furukawa Electric Co. Ltd., a supplier of automotive wire harnesses and related products, headquartered in Tokyo, has agreed to plead guilty and to pay a $200 million fine for its role in a criminal price-fixing and bid-rigging conspiracy involving the sale of parts to automobile manufacturers, the Department of Justice announced. Three executives, who are Japanese nationals, have also agreed to plead guilty and to serve prison time in the United States ranging from a year and a day to 18 months. These are the department’s first charges as a result of its ongoing international cartel investigation of price fixing and bid rigging in the auto parts industry.
According to four separate one-count felony charges filed today in U.S. District Court for the Eastern District of Michigan in Detroit, Furukawa and its executives – Junichi Funo, Hirotsugu Nagata and Tetsuya Ukai – engaged in a conspiracy to rig bids for and to fix, stabilize and maintain the prices of automotive wire harnesses and related products sold to customers in the United States and elsewhere. Automotive wire harnesses are automotive electrical distribution systems used to direct and control electronic components, wiring and circuit boards in cars.
“As a result of this international price-fixing and bid-rigging conspiracy, automobile manufacturers paid noncompetitive and higher prices for parts in cars sold to U.S. consumers,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “This cartel harmed an important industry in our nation’s economy, and the Antitrust Division with the Federal Bureau of Investigation will continue to work together to ensure that these kinds of conspiracies are stopped.”
“When companies partner to control and price fix bids or contracts, it undermines the foundation of the United States’ economic system,” said FBI’s Special Agent in Charge Andrew G. Arena. “The FBI is committed to aggressively pursuing any company involved in antitrust crimes.”
According to the plea agreements, which are subject to court approval, Furukawa, Funo, Nagata and Ukai have all agreed to assist the department in its ongoing investigation into the automotive parts industry.
Furukawa has agreed to plead guilty for its role in a conspiracy to rig bids for and to fix the prices of the sale of automotive wire harnesses and related products sold to automobile manufacturers in the United States and elsewhere. The department said that Furukawa participated in the conspiracy from at least as early as January 2000, until at least January 2010.
According to the plea agreements, Funo, Nagata and Ukai have agreed to plead guilty for their roles in the conspiracy and to serve prison time in the United States of a year and a day, 15 months and 18 months, respectively. The department said that Funo, Nagata and Ukai participated in the conspiracy at various times from at least as early as April 2003, until at least July 2009. Funo worked in the Honda sales division of Furukawa in Japan and in the United States as a sales representative, assistant general manager and manager. Nagata was employed by a Furukawa subsidiary in the United States as a general manager of sales and chief financial officer, and by a related joint venture as marketing manager. Ukai worked in Japan in the Honda sales division of Furukawa as a manager, unit chief and general manager.
During at least part of the conspiracy period, Funo and Nagata were employed and engaged in price fixing in the Detroit area.
According to court documents, Furukawa, Nagata, Funo, Ukai and their co-conspirators carried out the conspiracy by agreeing, during meetings and conversations, to allocate the supply of wire harnesses and related products on a model-by-model basis and to coordinate price adjustments requested by automobile manufacturers in the United States and elsewhere. They sold automotive wire harnesses and related products to automobile manufacturers at noncompetitive prices and engaged in meetings and conversations for the purpose of monitoring and enforcing adherence to the agreed-upon bid-rigging and price-fixing scheme.
Furukawa is charged with price fixing in violation of the Sherman Act, which carries a maximum $100 million criminal fine for a corporation. Funo, Nagata and Ukai are also charged with a violation of the Sherman Act, which carries a maximum sentence of 10 years in prison and a $1 million criminal fine for an individual. The maximum fine for both a company and an individual may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
Today’s charges are the first to arise from an ongoing federal antitrust investigation into bid rigging, price fixing and other anticompetitive conduct in the automotive parts industry, which is being conducted by the Antitrust Division’s National Criminal Enforcement Section, and the FBI’s Detroit Field Office. Anyone with information concerning the focus of this investigation is urged to call the Antitrust Division’s National Criminal Enforcement Section at 202-307-6694 or the FBI’s Detroit Field Office at 313-965-2323.
Florida Federal Jury Convicts Man for Business Opportunity Fraud SchemeRead the Press Release
WASHINGTON - A federal jury in Fort Lauderdale, Fla., yesterday found Manuel Rodriguez guilty of fraud in connection with a coffee machine business opportunity scheme, the Justice Department and the U.S. Postal Inspection Service announced. After a two-week trial in which 14 witnesses took the stand, the jury found Rodriguez guilty on all seven counts submitted to it, one count of conspiracy and six counts of wire fraud. Rodriguez was taken into federal custody upon the jury’s verdict. Sentencing is scheduled for Dec. 7, 2011.
At trial, witnesses testified that Rodriguez engaged in his scheme through the operation of three companies: M & D Gourmet Coffee Inc. of Boca Raton, Fla., Coffee Heaven LLC of Deerfield Beach, Fla., and Divino Trio Coffee & Vending Company of Ft. Lauderdale. The jury heard testimony that the defendant and a co-conspirator made similar misrepresentations to consumers in connection with each of these companies with the same effect – a loss of tens of thousands of dollars per consumer.
Specifically, victims at trial testified that the defendant and his businesses offered a business package that included coffee machines, locations in which to place those machines, and on-going support and assistance in the operation of a coffee machine business. Witnesses explained that they lost amounts from $15,000 to $192,000 in the scheme. They testified that the defendant told them that their machines would sell enough coffee to recoup their investment in 12 to 18 months, and that this representation was false. Victims also told the jury that while the defendant promised that the coffee machines would be placed in high-quality locations that would generate numerous sales, what was delivered were poor locations which generated few, if any, sales. Some victims testified that they received no machines at all.
“Protecting consumers from financial fraud is one of our top priorities,” said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. “As the jury’s verdict shows, those who prey on people trying to run a small business will be held accountable.”
“We are committed to vigorously prosecuting financial fraud,” said Wifredo Ferrer, U.S. Attorney for the Southern District of Florida. “Fraudulent telemarketers must realize that they will be pursued and brought to justice.”
The Postal Inspection Service has investigated scores of individuals and dozens of companies like the ones involved here, said U.S. Postal Inspector in Charge, Henry Gutierrez, based in Miami. Those investigations have led to felony convictions and significant terms of incarceration.The American Public must remain vigilant to avoid sophisticated schemes that try to take advantage of our natural desire to prosper by owning businesses like this one.
Assistant Attorney General West commended the investigative efforts of the U.S. Postal Inspection Service and the Federal Trade Commission.The case was prosecuted by attorneys John Claud and Matthew Ebert of the Department of Justice’s Consumer Protection Branch.
28 September 2011
Trident Seafoods Corp. to Pay $2.5 Million to Resolve Clean Water Act Violations and Spend More Than $30 Million to Upgrade Processing PlantsRead the Press Release
WASHINGTON –Trident Seafoods Corp., one of the world’s largest seafood processors, has agreed to pay a $2.5 million civil penalty and invest millions in seafood processing waste controls to settle alleged violations of the Clean Water Act (CWA), the Department of Justice and the U.S. Environmental Protection Agency (EPA) announced today. Unauthorized discharges of seafood processing waste lead to large seafood waste piles on the seafloor, creating anoxic, or oxygen-depleted, conditions that result in unsuitable habitats for fish and other living organisms.
“This agreement will benefit the quality of Alaskan waters, which host a critical habitat for the seafood industry,” said Ignacia S. Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. “The upgrades will enable Trident to achieve and maintain compliance with the Clean Water Act, and will protect Alaskan waters, eliminate waste and create efficiencies that will serve as a model of best business practices for the seafood processing industry.”
“Today’s settlement signals an important change in how seafood processing is managed in Alaska,” said Cynthia Giles, Assistant Administrator for EPA’s Office of Enforcement and Compliance Assurance. “Trident’s investment in fishmeal facilities and commitment to improving its waste management practices will help protect our nation’s waters and set the standard for Alaska’s seafood processing industry.”
The agreement requires Trident to invest an estimated $30-40 million, and potentially more, in source control and waste pile remediation measures. The source control measures include building a fish meal plant in Naknek, Alaska, that will have the capacity to handle at least 30 million pounds of seafood processing waste annually, taking in both its own fish waste and potentially that of other local processors. Trident has also agreed to reduce the amount of seafood processing waste discharged from the Akutan, Cordova, St. Paul and Ketchikan, Alaska, facilities and monitor the amount of seafood processing waste discharged into Starrigavan Bay in Sitka, Alaska. These activities will reduce Trident’s fish processing discharges by a total of more than 105 million pounds annually.
The company has also agreed to remediation measures including studying seafloor waste piles at Trident’s facilities and to monitor and evaluate the decomposition of seafood waste piles in Akutan, Ketchikan and Cordova. Based on the results of these studies, Trident will remove or partially remediate the piles. One seafood processing waste pile in Akutan Harbor is currently estimated to be more than 50 acres in size.
According to Dennis McLerran, EPA Regional Administrator in Seattle, today’s Trident Seafoods Corp. agreement will fundamentally alter Alaska seafood waste discharge practices across the industry.
“Today’s settlement is truly a ‘game changer’,” said EPA’s McLerran. “Trident is definitely changing course and seriously investing in waste management and increased fish meal plant capacity. We share Trident’s view that this settlement will be better for the environment as well as their bottom line. We’re establishing a new ‘best management practices’ yardstick for Alaska’s seafood processing industry.”
The EPA complaint, also filed as part of this legal action, alleges that Trident had more than 480 CWA violations at 14 of its on-shore and off-shore Alaskan seafood processing facilities. The alleged violations include discharging without a necessary permit, exceeding discharge limits, failing to comply with permit restrictions on discharge locations (including discharges into at least two National Wildlife Refuges), creating oxygen-depleting “zones of deposit” or underwater piles of fish processing waste occupying more than the allowed one acre of seafloor. They allegedly also failed to conduct required monitoring and implement required best management practices.
Over the past decade, Trident has been a party to multiple administrative enforcement agreements and judicial consent decrees resolving similar violations at many of the same facilities.
The settlement was lodged in federal court in Seattle, Wash., and is subject to a 30-day public comment period. The consent decree is available at: www.justice.gov/enrd/Consent_Decrees.html.
Six Japanese Freight Forwarding Companies Agree to Plead Guilty to Criminal Price-Fixing ChargesRead the Press Release
WASHINGTON – Six Japanese freight forwarders have agreed to plead guilty and to pay criminal fines totaling $46.8 million for their roles in a conspiracy to fix certain fees in connection with the provision of freight forwarding services for air cargo shipments from Japan to the United States, the Department of Justice announced today. These are the second round of charges filed as a result of the department’s antitrust investigation of the freight forwarding industry.
According to charges filed separately today in U.S. District Court for the District of Columbia, six companies – Kintetsu World Express Inc.; Hankyu Hanshin Express Co. Ltd.; Nippon Express Co. Ltd.; Nissin Corporation; Nishi-Nippon Railroad Co. Ltd.; and Vantec Corporation – engaged in a conspiracy to fix and impose certain freight forwarding service fees, including fuel surcharges and various security fees, charged to customers for services provided in connection with air freight forwarding shipments of cargo shipped by air from Japan to the United States from about September 2002 until at least November 2007.
Under the plea agreements, which are subject to court approval, the six companies have agreed to pay the following criminal fines: Kintetsu World Express, $10,465,677; Hankyu Hanshin Express, $4,522,065; Nippon Express, $21,115,396; Nissin Corporation, $2,644,779; Nishi-Nippon Railroad, $4,673,114; and Vantec Corporation, $3,339,648. Each company has also agreed to cooperate with the department’s ongoing antitrust investigation.
“Including today’s charges, 12 companies have agreed to plead guilty and nearly $100 million in criminal fines have been obtained as a result of the Antitrust Division’s ongoing freight forwarding investigation,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “Prosecuting these kinds of global price fixing conspiracies, that are harmful to the economy and consumers, has been and will continue to be a top priority of the Antitrust Division.”
Freight forwarders manage the domestic and international delivery of cargo for customers by receiving, packaging, preparing and warehousing cargo freight, arranging for cargo shipment through transportation providers such as air carriers, preparing shipment documentation, and providing related ancillary services.
According to the charges, the companies carried out the conspiracy by, among other things, agreeing during meetings and discussions to coordinate and impose certain freight forwarding service fees and charges on customers purchasing freight forwarding services for cargo shipped by air from Japan to the United States. The department said that the companies levied freight forwarding service fees in accordance with the agreements reached and engaged in meetings and discussions for the purpose of monitoring and enforcing adherence to the agreed-upon freight forwarding service fees.
As a result of the department’s investigation into the freight forwarding industry, on Sept. 30, 2010, six international freight forwarders – EGL Inc.; Kühne + Nagel International AG; Geologistics International Management (Bermuda) Limited; Panalpina World Transport (Holding) Ltd.; Schenker AG; and BAX Global Inc. – agreed to plead guilty and to pay criminal fines totaling $50.27 million for their roles in several conspiracies to impose certain charges or fees on customers purchasing international freight forwarding services for cargo freight destined for air shipment to the United States during various periods between 2002 and 2007.
Each company is charged with price fixing in violation of the Sherman Act, which carries a maximum $100 million fine for corporations. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
Today’s charges are the result of a joint investigation into the freight forwarding industry being conducted by the Antitrust Division’s National Criminal Enforcement Section, the FBI’s Washington Field Office and the Department of Commerce’s Office of Inspector General. Anyone with information concerning the price fixing or other anticompetitive conduct in the freight forwarding industry is urged to call the Antitrust Division’s National Criminal Enforcement Section at 202-307-6694 or visit www.justice.gov/atr/contract/newcase.htm or call the FBI’s Washington Field Office at 202-278-2000.
Public Awareness Campaign Launched to Seek New Information in the Murder of Assistant U.S. AttorneyRead the Press Release
SEATTLE – Attorney General Eric Holder joined U.S. Attorney for the Western District of Washington Jenny A. Durkan, the Wales family and the FBI in Seattle today to announce a new media and social media effort to seek information related to the 2001 slaying of Assistant U.S. Attorney Thomas C. Wales. Wales worked as a federal prosecutor in the Western District of Washington for 18 years before he was shot and killed 10 years ago in his home the evening of Oct. 11, 2001.
“Tom was a dedicated public servant, a committed advocate, and a loving father and friend,” Attorney General Holder said. “Although this case remains unsolved, and Tom’s killer remains unknown, our resolve to uncover the truth – and to help Tom’s family, friends, colleagues and neighbors find the answers and the closure that they deserve – has never been stronger.”
“The message to the public is: what you know may matter. Please call. What may seem to you to be a small, insignificant observation could be a critical clue for law enforcement,” said U.S. Attorney Durkan. “It was one month after the 9-11 attacks. Think back, remember what you saw, heard or knew, and use the FBI tip line. You could make the difference.”
In conjunction with the anniversary, the FBI is launching a major media and social media effort to encourage people with information to come forward. Investigators believe there are people who have not yet contacted the FBI, either because they are fearful or they do not believe their information is significant.
This effort includes advertisements in The Seattle Times and The Stranger, on Seattle-area billboards, and in commercials on local radio and television which start today and run through the anniversary of Wales’ death on October 11th. The FBI has also launched a new web page, www.fbi.gov/wales , which is solely committed to posting and receiving information from the public about the Wales case. Additionally, t he FBI will use its existing Facebook, Twitter and YouTube pages to reach the public across the country to seek any new information.
In addition to these efforts, anyone with even the smallest bit of information is encouraged to contact the FBI and can do so confidentially by phone at 1-800 CALL FBI or by email at [email protected] . People can also send anonymous tips to the FBI at PO Box 2755, Seattle, Washington, 98111.
“The murder of Tom Wales was more than a single act of violence against an individual,” said Greg Fowler, FBI Inspector-in-Charge of the case. “It was a crime that impacted many, but no one more than his family. Tom Wales left behind a legacy and a life that cannot be replaced. We remain confident that, with the public’s help, we will find those responsible and bring them to justice. “
The FBI and the Seattle Police Department have led the joint investigation since the beginning. They are joined by staff from the King County Prosecuting Attorney’s Office.
“It is regretful that the suspect in Tom Wales’ murder has not been brought to justice,” said Seattle Police Chief John Diaz. “ We will continue to work with our federal partners and do everything within our investigatory power to solve this heinous crime.”
“Attorney General Holder’s presence is a powerful reminder of the Justice Department’s dedication to pursuing justice in the murder of Tom Wales,” said Dan Satterberg, King County Prosecuting Attorney. “Local prosecutors will continue our partnership with federal investigators on this case. We are determined to solve this terrible crime.”
The compete library of information, including copies of the print and broadcast media pieces, the FBI “Seeking Information” poster, details about the tiplines and more can be found at www.fbi.gov/wales . Additional information regarding the FBI’s efforts is available at www.facebook.com/FBI , twitter.com/#!/FBIPRESSOFFICE and www.youtube.com/user/FBI .
Justice Department Signs Agreement with Warrenton, Virginia, to Ensure Civic Access for People with DisabilitiesRead the Press Release
WASHINGTON - The Justice Department today announced an agreement with the town of Warrenton, Va., to improve access to all aspects of civic life for individuals with disabilities. The agreement was reached under Project Civic Access (PCA), the department’s wide-ranging initiative to ensure that cities, towns and counties throughout the country comply with the Americans with Disabilities Act (ADA). The department has now reached 195 agreements under the PCA initiative, improving access to civic life for more than four million individuals with disabilities nationwide.
“Individuals with disabilities must have the opportunity to participate in local government programs, services and activities on an equal basis with their neighbors,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “I commend Warrenton officials for their commitment to improving access for all residents and visitors with disabilities to the town’s full range of programs and facilities. This agreement represents another important step towards nationwide compliance with the ADA.”
“After a comprehensive review, we are pleased that the town of Warrenton has agreed to take steps to ensure that all of its residents and visitors, including those with a disability, can take full advantage of the town’s facilities and programs,” said Neil H. MacBride, U.S. Attorney for the Eastern District of Virginia.
PCA was initiated to ensure that persons with disabilities have an equal opportunity to participate in civic life, a fundamental part of American society. As part of the PCA initiative, Justice Department investigators, attorneys and architects survey state and local government facilities, services and programs in communities across the country to identify the modifications needed for compliance with ADA requirements. The agreements are tailored to address the steps each community must take to improve access.
Under the agreement announced today, Warrenton officials will take several important steps to improve access for individuals with disabilities, such as:
- Making physical modifications to its facilities so that parking, routes into the buildings, entrances, service areas and counters, restrooms, public telephones and drinking fountains are accessible to persons with disabilities.
- Surveying other facilities and programs and making modifications wherever necessary to achieve full compliance with ADA requirements.
- Implementing a comprehensive plan to improve the accessibility of the town’s sidewalks, transportation stops and pedestrian crossings by installing accessible curb ramps throughout the town.
- Ensuring that buildings and outdoor facilities that will be built or altered by or on behalf of the town comply with the ADA’s architectural requirements.
- Posting, publishing and distributing a notice to inform members of the public of the provisions of Title II of the ADA and their applicability to the town’s programs, services and activities.
- Ensuring that the official website and other Web-based services are accessible to people with disabilities.
- Developing a method for providing information for interested persons with disabilities concerning the existence and location of the town’s accessible services, activities and programs.
- Installing signs at any inaccessible entrance to a facility that would direct individuals with disabilities to an accessible entrance or to information about accessing programs and services at other accessible facilities.
Today’s agreement was reached under Title II of the ADA, which prohibits discrimination against individuals with disabilities by state and local governments. The department will actively monitor compliance with today’s agreement, which will remain in effect for a period of three years or until the department has confirmed that all required actions have been completed, whichever is later.
People interested in finding out more about the ADA, today’s agreement, the PCA initiative, or the ADA Best Practices Tool Kit for State and Local Governments can access the ADA website at www.ada.gov or call the toll-free ADA Information Line at 800-514-0301 or 800-514-0383 (TTY).
The agreement with the town of Warrenton is available at www.ada.gov/warrenton_va_pca/warrenton_va_pca.htm .
Houston-based Principals of A&O Entities Sentenced in Virginia for $100 Million Fraud SchemeRead the Press Release
WASHINGTON – Two principals of A&O Resource Management Ltd. have been sentenced for their roles in a $100 million life settlement fraud scheme, which included more than 800 victims across the United States and Canada.
Today, Adley H. Abdulwahab, 36, of Houston, a hedge fund manager and part owner of A&O, was sentenced to 60 years in prison. Yesterday, the co-founder and vice president of A&O, Christian Allmendinger, 40, also of Houston, was sentenced to 45 years in prison.
U.S. Attorney for the Eastern District of Virginia Neil H. MacBride and Assistant Attorney General Lanny A. Breuer of the Criminal Division made the announcement today after the two A&O principals were sentenced by U.S. District Judge Robert E. Payne.
“The victims of A&O’s scam were looking for a conservative investment, and they were manipulated into believing A&O was a safe, secure, no-risk investment. It was all a big, fat lie; A&O was a sham, a financial house of cards waiting to collapse,” said U.S. Attorney MacBride. “Hundreds of elderly retirees saw their life savings vanish, and their lives have been devastated by their loss. The Virginia Financial and Securities Fraud Task Force is dedicated to pursuing national impact frauds whose scams affect not only those on Wall Street, but folks on Main Street who work hard, play by the rules and try to provide for their families.”
“These defendants used the savings of their unsuspecting, often elderly, investors to live the high life -- luxury houses, fancy cars, and even a 15-karat diamond ring,” said Assistant Attorney General Breuer. “Having wiped out the life savings of many of their victims and stolen funds marked for retirement, Mr. Abdulwahab and Mr. Allmendinger appropriately now face significant prison terms. We will continue to aggressively pursue financial fraud throughout the country, and bring to justice those who illegally use the financial system for personal benefit.”
On Sept. 7, 2010, a federal grand jury returned an 18-count indictment against Abdulwahab, Allmendinger and David White, 41, the former president of A&O. White and four others associated with the fraud scheme pleaded guilty in the fall of 2010. Allmendinger was convicted at trial on March 23, 2011, and Abdulwahab was convicted at trial on June 10, 2011.
According to court records and evidence at trial, the principals at A&O engaged in a scheme to defraud investors by making misrepresentations about such things as A&O’s prior success, its size and office locations, its number of employees, the risks of its investment offerings, and its safekeeping and use of investor funds. Both Abdulwahab and Allmendinger were active in the day-to-day management of the companies, as well as in the marketing of A&O life settlement investment products to investors. Abdulwahab also lied to investors about having a college degree in economics, as well as failing to disclose to investors that he previously pleaded guilty to a felony charge of forgery of a commercial instrument in Texas state court.
When state regulators began to scrutinize A&O’s investment products, Abdulwahab and others manufactured a sham sales transaction to “sell” A&O to a shell corporate entity named Blue Dymond and later to another shell corporate entity named Physician’s Trust. This sale ended Allmendinger’s association with the fraud scheme; however, A&O and Physician’s Trust were still secretly controlled by Abdulwahab and his co-conspirators, who continued the fraud scheme through September 2009. The A&O fraud scheme caused more than 800 investors, many of whom were elderly, to lose more than $100 million. The vast majority lost all of their investment, which represented for many all of the money they had saved for their retirement.
Evidence at trial showed that A&O principals used the investors’ money for personal enrichment, including purchasing multi-million dollar homes, luxury cars, a 15-carat diamond ring and other property.
“The A&O scheme wreaked havoc on the lives of hundreds of investors, and now those responsible will be held accountable as a result of the outstanding and collaborative work of task force members,” said Lorin Reisner, Deputy Director of the U.S. Securities and Exchange Commission’s (SEC) Division of Enforcement
“The U.S. Postal Inspection Service is committed to protecting consumers from falling victim to fraud scheme that facilitate the use of the U.S. Mail. We have dedicated resources, which focus on identifying and eliminating fraud schemes that target consumers and cost citizens and financial institutions billions each year.” said Keith A. Fixel, Inspector in Charge of the U.S. Postal Inspection Service - Charlotte Division.
On June 22, 2011, five individuals connected with the A&O fraud scheme were sentenced: Russell E. Mackert, 52, general counsel for A&O, was sentenced to 188 months in prison; Brent Oncale, 36, former owner and founder of A&O, was sentenced to 120 months in prison; White, the former president of A&O, was sentenced to 60 months in prison; Eric M. Kurz, 47, a wholesaler of A&O investment products, was sentenced to 60 months in prison; and Tomme Bromseth, 69, an A&O sales agent in the Richmond area, was sentenced to 36 months in prison.
This investigation was conducted by the U.S. Postal Inspection Service, Internal Revenue Service and FBI, with significant assistance from the Texas State Securities Board, the Virginia Corporation Commission and the SEC. These cases are being prosecuted by Assistant U.S. Attorneys Michael S. Dry and Jessica Aber Brumberg from the Eastern District of Virginia and Trial Attorney Albert B. Stieglitz Jr., of the Criminal Division’s Fraud Section.
The investigation has been coordinated by the Virginia Financial and Securities Fraud Task Force, an unprecedented partnership between criminal investigators and civil regulators to investigate and prosecute complex financial fraud cases in the nation and in Virginia. The task force is an investigative arm of the President’s Financial Fraud Enforcement Task Force, an interagency national task force.
President Obama established the Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
Hombres de Arkansas sentenciados por delitos federales por odio asociados a agresiones a cinco hombres hispanosRead the Press Release
WASHINGTON - Frankie Maybee, 20, y Sean Popejoy, 19, ambos de Green Forest, Ark., fueron sentenciados por sus papeles en delitos federales por odio, anunció el Departamento de Justicia. Estos son los primeros demandados sentenciados bajo la Ley de Prevención de Delitos de Odio Matthew Shepard y James Byrd Jr., promulgada en octubre de 2009.
Maybee fue sentenciado hoy a 135 meses de prisión, seguidos de tres años de libertad bajo supervisión. Además, se le ordenó que pagara una multa de 10,000 dólares. Popejoy, que testificó contra Maybee, fue sentenciado ayer a 48 meses de prisión, seguidos de tres años de libertad bajo supervisión. Además, se le ordenó que pagara una multa de 5,000 dólares. Maybee y Popejoy también fueron sentenciados a pagar 5,440 dólares en restitución a las víctimas, mancomunada y solidariamente.
Maybee fue condenado el 19 de mayo de 2011 por un gran jurado federal por cinco cargos de cometer un delito federal por odio y un cargo de conspirar para cometer un delito federal por odio. Popejoy se declaró culpable el 16 de mayo de 2011 de un cargo de cometer un delito federal por odio y un cargo de conspirar para cometer un delito federal por odio.
Las pruebas presentadas en el juicio determinaron que a primera hora de la mañana del 20 de junio de 2010, Maybee y Popejoy tomaron como blanco a cinco hombres hispanos que se habían detenido en el estacionamiento de una gasolinera. Si bien Maybee y Popejoy no conocían a los hombres y estos no hicieron o dijeron nada para provocarlos, Maybee y Popejoy les gritaron epítetos raciales y les dijeron que "volvieran a México". Cuando las víctimas se alejaron en sus vehículos, lo coconspiradores los persiguieron en el camión de Maybee. Cuando Maybee y Popejoy alcanzaron a las víctimas, Popejoy sacó el cuerpo por la ventana del lado del pasajero, amenazó a las víctimas con una llave cruz y siguió amenazándolas verbalmente y gritándoles epítetos raciales. Maybee, que estaba al volante de su camión, embistió una y otra vez contra el automóvil de las víctimas, lo que hizo que cruzara al otro carril, saliera del camino, chocara contra un árbol y se prendiera fuego. Las víctimas resultaron heridas de gravedad y una de ellas sufrió heridas que pusieron en riesgo su vida.
"Los hechos de este caso son horrorosos. Cinco hombres casi son asesinados por la sola razón de ser hispanos. La Ley de Prevención de Delitos por Odio Shepard-Byrd nos permitió llevar a estos hombres a la justicia en un modo que hubiera sido imposible hace algunos años", dijo Thomas E. Perez, Secretario de Justicia Auxiliar de la División de Derechos Civiles. "Estas sentencias dejan en claro que el Departamento de Justicia enjuiciará enérgicamente a quienes cometen actos violentos de odio".
"Los actos violentos que se producen solo por la apariencia de la otra persona son horrorosos", dijo Conner Eldridge, Fiscal Federal del Distrito Oeste de Arkansas. "Las cinco víctimas del caso fueron agredidas por ser hispanas. Esto es censurable. Agradecemos a los miembros del jurado - 12 personas de comunidades de todo el norte de Arkansas - por haber analizado detenidamente la evidencia y por responsabilizar a los demandados por sus acciones. Esperamos que actos como este nunca sucedan. Pero, en caso de que sucedan, los enjuiciaremos enérgicamente".
"Los delitos por odio tienen un impacto englobador, ya que sus perpetradores atacan a la víctima e intimidan a comunidades enteras", declaró la Agente Especial a Cargo del Buró Federal de Investigaciones [Federal Bureau of Investigation (FBI)] en Little Rock, Ark. Valerie Parlave. "El FBI seguirá colaborando con sus asociados estatales y locales para investigar y brindar capacitación importante para tratar delitos violentos por odio motivados por prejuicios. También trabajaremos con nuestros asociados comunitarios, como el Grupo de Trabajo de Derechos Civiles de Arkansas, para desarrollar estrategias para enfrentar y reducir los abusos a los derechos civiles".
El caso fue investigado por la División de Fayetteville, Ark. del FBI en cooperación con el Departamento Policial del Estado de Arkansas y la Oficina del Alguacil del Condado de Carroll. Estuvieron a cargo de la acusación en el caso los Abogados Litigantes Edward Chung y Cindy Chung de la División de Derechos Civiles del Departamento de Justicia y la Fiscal Federal Auxiliar Kyra Jenner para el Distrito Oeste de Arkansas.
HSBC India Client Indicted for Conspiracy to Defraud the Internal Revenue ServiceRead the Press Release
WASHINGTON – A superseding indictment was returned today in Milwaukee against Dr. Arvind Ahuja of Greendale, Wis., adding a charge of conspiracy to defraud the Internal Revenue Service (IRS), the Justice Department and IRS announced. Dr. Ahuja was previously indicted in June 2011 on four counts of willfully filing materially false tax returns and four counts of failing to file Reports of Foreign Bank and Financial Accounts (FBARs).
According to the superseding indictment, Dr. Ahuja, a board-certified neurosurgeon, wire transferred and maintained millions of dollars in bank accounts in India and the Bailiwick of Jersey at The Hongkong and Shanghai Banking Corporation Ltd. (HSBC). In 2009, the HSBC bank account in India had a balance of $8,733,785. The superseding indictment alleges that Dr. Ahuja failed to report these bank accounts to the IRS on his 2006-2009 tax returns. The indictment further alleges that Dr. Ahuja failed to report more than $1.2 million in interest income that he earned from his HSBC India account and failed to pay the taxes due on that income. For the 2006-2009 tax years, Dr. Ahuja also failed to file FBARs to report his foreign bank accounts to the Department of the Treasury.
The superseding indictment also alleges that Dr. Ahuja conspired with HSBC bankers who worked at an HSBC India office in New York to conceal from the IRS the existence, ownership and income derived from his undeclared bank accounts at HSBC India and HSBC Jersey. One of these bankers allegedly helped Dr. Ahuja avoid receiving bank statements at his house in Wisconsin, by, among other things, informing an HSBC employee in India that Ahuja “has requested that he does not want any kind of mail at his US or India address. He wants a HOLD on all his accounts . . . he does not wish to receive any mail.” The bankers also allegedly helped Dr. Ahuja access the funds in his undeclared bank accounts when he traveled abroad and transferred money from his undeclared HSBC India account to other undeclared financial accounts in India.
As alleged in the indictment, U.S. citizens have an obligation to report to the IRS on Schedule B of their U.S. Individual Income Tax Return, Form 1040, whether they have a financial interest in, or signature authority over, a financial account in a foreign county in a particular year by checking “Yes” or “No” in the appropriate box and identifying the country where the account was maintained. They further have an obligation to report all income earned from foreign financial accounts on the tax return and to pay the taxes due on that income. Separately, U.S. citizens with a financial interest in, or signatory authority over, a foreign financial account worth more than $10,000 in a particular year, must also file an FBAR form with the Department of the Treasury disclosing such an account by June 30 of the following year.
Dr. Ahuja faces a maximum penalty of five years in prison for the conspiracy charge and a $250,000 fine. Each false tax return charge carries a maximum penalty of three years in prison and a $250,000 fine. The failure to file FBAR charges each carry a maximum penalty of 10 years in prison and a $500,000 fine.
A trial date has not yet been set. An indictment is merely an allegation, and Dr. Ahuja is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
This case is being prosecuted by Senior Litigation Counsel John E. Sullivan and Trial Attorney Melissa S. Siskind, with the assistance of Tracy Johnson, Assistant U.S. Attorney for the Eastern District of Wisconsin and was investigated with the assistance of the IRS.
More information about the Tax Division and its enforcement efforts can be found at www.justice.gov/tax .
Former Guard Charged with Attempting to Communicate National Defense Information to People’s Republic of ChinaRead the Press Release
WASHINGTON – Bryan Underwood, a former contract guard working at a U.S. Consulate in China, has been charged in a superseding indictment with one count of attempting to communicate national defense information to a foreign government, two counts of making false statements and one count of failing to appear in court pursuant to his conditions of release.
The superseding indictment, which was returned today by a federal grand jury in the District of Columbia, was announced by Lisa Monaco, Assistant Attorney General for National Security; Ronald C. Machen Jr., U.S. Attorney for the District of Columbia; and James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office.
Underwood, 31, was first charged in an indictment on Aug. 31, 2011, with two counts of making false statements and was arrested on Sept. 1, 2011. On Sept. 21, 2011, Underwood was scheduled to appear at a status hearing in federal court in the District of Columbia, but failed to do so. The FBI located Underwood in Los Angeles and arrested him there in the early morning hours of Sept. 24, 2011. Underwood will be brought back to the District of Columbia for arraignment on the superseding indictment. If convicted of the charges against him in the superseding indictment, Underwood faces a maximum potential sentence of life in prison.
According to the superseding indictment, from about March 1, 2011, to about Aug. 5, 2011, Underwood knowingly and unlawfully attempted to communicate photographs and other information relating to the national defense to representatives of the People’s Republic of China (PRC), with the intent and reason to believe that these materials would be used to the injury of the United States and to the advantage of a foreign nation.
The indictment further alleges that on Aug. 5, 2011, Underwood made a false statement when he stated to an FBI representative that he was intending to assist the FBI when he wrote a letter stating his “interest in initiating a business arrangement” with the PRC. Underwood also made a false statement, according to the indictment, when he stated to an FBI representative that he was intending to assist the FBI when he took certain photographs of his place of work. Finally, the indictment alleges that Underwood failed to appear in court on Sept. 21, 2011 in accordance with the conditions of his release, after his initial arrest on Aug. 31, 2011.
“ As this case demonstrates, we remain vigilant in protecting America’s secrets and in bringing to justice those who attempt to compromise them,” said Assistant Attorney General Monaco.
“Our national security depends upon our ability to keep our most sensitive information confidential. Bryan Underwood is charged with trying to pass American secrets to China and then lying to cover up his betrayal,” said U.S. Attorney Machen. “I want to congratulate the FBI for so quickly tracking down this defendant in California so that he could be brought back to the District of Columbia to face these charges.”
“The FBI is committed to working with our partners in the U.S. Government to prevent the compromise of U.S. national security information by those who would attempt to sell it for personal gain,” said FBI Assistant Director in Charge McJunkin. “Those who seek to flee from justice should know that the FBI will locate and apprehend them.”
This investigation was conducted by the FBI’s Washington Field Office, with assistance from the State Department’s Bureau of Diplomatic Security. The prosecution is being handled by the U.S. Attorney’s Office for the District of Columbia and Trial Attorney Ryan Fayhee from the Counterespionage Section of the Justice Department’s National Security Division.
Florida Man Indicted for Transportation, Receipt and Possession of Child PornographyRead the Press Release
WASHINGTON – Anthony Mangione, 50, of Parkland, Fla., was charged in an indictment unsealed today with child pornography offenses, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, Special Agent-in-Charge John V. Gillies of the FBI’s Miami field office and Sheriff Al Lamberti of the Broward County, Fla., Sheriff’s Office.
According to the indictment, between March 2010 and September 2010, Mangione allegedly transported and received visual depictions of minors engaging in sexually explicit conduct. The indictment also alleges that Mangione possessed electronically stored messages that contained additional images of child pornography during the same time period.
Mangione was arrested yesterday by FBI agents and detectives from the Broward County Sheriff’s Office. He was arraigned today in U.S. District Court in West Palm Beach, Fla., before U.S. Magistrate Judge James M. Hopkins.
If convicted, Mangione faces a mandatory minimum sentence of five years in prison and a maximum sentence of 20 years in prison on the transportation of child pornography charge, and a mandatory minimum sentence of five years in prison and a maximum sentence of 20 years in prison on the receipt of child pornography charge. In addition, the possession of child pornography charge carries a maximum of 10 years in prison. Mangione also faces a term of supervised release of five years to life following his prison sentence, and will be required to register as a sex offender in any jurisdiction in which he lives, works or attends school.
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by U.S. Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
This case is being investigated by the Broward County Sheriff’s Office and the FBI. CEOS Trial Attorney Andrew McCormack is prosecuting the case.
The details contained in the indictment are allegations. The defendant is presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Federal Court Bars Southern California Man from Preparing Federal Tax ReturnsRead the Press Release
WASHINGTON - A federal court has permanently barred Dennis Giroud from preparing federal tax returns for others, the Justice Department announced today. The civil injunction order, signed by Judge Virginia Phillips of the U.S. District Court for the Central District of California, also prevents Giroud, who operates a business called Refunds R Us, from preparing his own tax returns with fabricated income tax withholding and refund claims.
The government complaint alleges that Giroud of Victorville, Calif., prepares tax returns that claim huge fraudulent refunds based on a frivolous theory called “redemption” or “commercial redemption.” The refunds are allegedly based on fabricated income tax withholding reported on false Internal Revenue Service (IRS) Forms 1099-OID submitted with the returns. According to the complaint, Giroud has sought more than $19 million in fraudulent refunds for more than 100 customers and caused the IRS to issue at least $1.2 million in erroneous refunds. Giroud also allegedly requested more than $1.3 million in bogus refunds for himself using this tax fraud scheme.
The court order requires Giroud to produce to the government a list identifying all persons for whom he prepared federal tax returns or claims for refund for tax years 2006 through 2010.
Filing false tax forms, including false withholding claims, 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 return preparers and tax fraud promoters. Information about these cases is available on the Justice Department website .
Arkansas Men Sentenced for Federal Hate Crimes Related to the Assault of Five Hispanic MenRead the Press Release
WASHINGTON – Frankie Maybee, 20, and Sean Popejoy, 19, both of Green Forest, Ark., were sentenced for their roles in committing federal hate crimes, announced the Justice Department. These are the first defendants to be sentenced under the Matthew Shepard and James Byrd Jr. Hate Crimes Prevention Act, which was enacted in October 2009.
Maybee was sentenced today to 135 months in prison, followed by three years of supervised release and was ordered to pay a $10,000 fine. Popejoy, who testified against Maybee, was sentenced yesterday to 48 months in prison followed by three years of supervised release and was ordered to pay a $5,000 fine. Maybee and Popejoy were also sentenced to pay $5,440 in restitution to the victims, jointly and severally.
Maybee was convicted on May 19, 2011, by a federal jury of five counts of committing a federal hate crime and one count of conspiring to commit a federal hate crime. Popejoy pleaded guilty on May 16, 2011, to one count of committing a federal hate crime and one count of conspiring to commit a federal hate crime.
Evidence presented at trial established that in the early morning hours of June 20, 2010, Maybee and Popejoy targeted five Hispanic men who had pulled into a gas station parking lot. Though Maybee and Popejoy did not know the men and the five did not do or say anything to provoke them, Maybee and Popejoy yelled racial epithets at the men and told them to “go back to Mexico.” When the victims drove away, the co-conspirators pursued them in Maybee’s truck. When Maybee and Popejoy caught up to the victims, Popejoy leaned outside of the front passenger window and waived a tire wrench at the victims, and continued to threaten and hurl racial epithets at the victims. Maybee, driving his truck, rammed into the victims’ car repeatedly, causing the victims’ car to cross the opposite lane of traffic, go off the road, crash into a tree and ignite. The victims were badly injured and one of the victims sustained life-threatening injuries.
“The facts of this case shock the conscience. Five men were almost killed for no reason other than the fact that they are Hispanic. The Shepard-Byrd Hate Crimes Prevention Act allowed us to bring these men to justice in a way that we could not have done just a few years ago,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “These sentences send a clear message that the Justice Department will aggressively prosecute those who perpetrate violent acts of hate.”
“Acts of violence that occur simply because of how someone looks are horrific,” said Conner Eldridge, U.S. Attorney for the Western District of Arkansas. “The five victims in this case were targeted because they are Hispanic. That is reprehensible. We thank the jury – 12 individuals from communities across Northern Arkansas - for their careful consideration of the evidence and for holding the defendants accountable for their actions. We hope that acts like this never occur. However, if they do, we will vigorously prosecute them.”
“Hate crimes have wide-ranging impact, as their perpetrators attack the victim and intimidate entire communities,” stated FBI Little Rock, Ark., Special Agent-in-Charge Valerie Parlave. “The FBI will continue to collaborate with our state and local partners to investigate and provide important training to address violent hate crimes that are bias-motivated. We will also work with our community partners, such as the Arkansas Civil Rights Working Group, to develop strategies to address and reduce civil rights abuses.”
This case was investigated by the FBI’s Fayetteville, Ark., Division in cooperation with the Arkansas State Police Department and the Carroll County Sheriff’s Office. The case was prosecuted by Trial Attorneys Edward Chung and Cindy Chung of the Department of Justice’s Civil Rights Division and Assistant U.S. Attorney Kyra E. Jenner for the Western District of Arkansas.
27 September 2011
Two Miami-Area Residents Plead Guilty in $25 Million Health Care Fraud SchemeRead the Press Release
WASHINGTON – Two Miami-area residents pleaded guilty late yesterday in U.S. District Court in Miami for their participation in a $25 million home health Medicare fraud scheme, announced the Department of Justice, the Department of Health and Human Services (HHS) and the FBI.
Maritza Vidal, 44, and Richard Diaz, 26, each pleaded guilty before U.S. District Judge Joan A. Lenard to one count of conspiracy to commit health care fraud. Vidal and Diaz admitted that they participated in a fraud scheme to bill the Medicare program for expensive physical therapy and home health care services that were prescribed by doctors but were medically unnecessary and never provided.
According to court documents, ABC Home Health Inc. and Florida Home Health Providers Inc., two related Miami home health care agencies, purported to provide home health and therapy services to Medicare beneficiaries. However, according to court documents, the agencies only existed to defraud Medicare. From approximately January 2006 until approximately March 2009, Vidal worked for ABC and Florida Home Health as a registered nurse and a patient recruiter and Diaz worked for Florida Home Health as a patient recruiter
Vidal and Diaz both admitted to recruiting Medicare beneficiaries who would allow ABC and Florida Home Health to bill Medicare for home health care and therapy services that were medically unnecessary and/or never provided. In doing so, the defendants solicited and received kickbacks and bribes from the owners and operators of the home health agencies in return for allowing the companies to bill the Medicare program on behalf of the recruited patients. The defendants knew that the patients they recruited did not qualify for the services billed to Medicare. In addition, the defendants knew that the patient files for their recruited patients were falsified in order to make it appear that the patients qualified for the services.
Vidal admitted that she and her co-defendant nurses falsified patient files for Medicare beneficiaries by describing non-existent symptoms such as tremors, impaired vision, weak grip and inability to walk without assistance. Vidal included these symptoms in patient files to make it appear that the patients were unable to self-inject insulin and were homebound, thus appearing to qualify for home health care benefits under Medicare. Vidal admitted that she knew the beneficiaries did not qualify for and did not receive the services and that the files were falsified so that Medicare could be billed for medically unnecessary services.
As a result of Vidal’s participation in the illegal scheme, Medicare was billed approximately $395,000. As a result of Diaz’s participation in the illegal scheme, Medicare was billed approximately $28,000.
The defendants were originally charged in a February 2011 indictment. Fifteen other co-conspirators have pleaded guilty for their roles in the fraud scheme: Jose Nunez, M.D., Lisandra Alonso, Luisa Morciego, Vicente Guerra, Farah Maria Perez, Licet Diaz, Fidel Castro, Jose Ros, Eneida Fry, Oscar Martinez, Juana Rivas, Lesder Casanova, Ignacio Angulo, Raul Alvarez and Barbara Gonzalez.
Vidal and Diaz are scheduled to be sentenced on Jan. 9. 2012. Sentencings for the other defendants have been scheduled for various dates in October, November and December 2011.
The charge of conspiracy to commit health care fraud carries a maximum prison sentence of 10 years. The defendants also face fines and terms of supervised release, as well as forfeiture of any property or proceeds derived from their criminal activities.
The guilty pleas were announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; John V. Gillies, Special Agent-in-Charge of the FBI’s Miami field office; and Special Agent-in-Charge Christopher B. Dennis of the HHS-Office of Inspector General (HHS-OIG), Office of Investigations Miami office.
This case is being prosecuted by Trial Attorney Joseph S. Beemsterboer and Acting Assistant Chief Benjamin D. Singer of the Criminal Division’s Fraud Section. The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.
Since their inception in March 2007, Strike Force operations in nine locations have charged more than 1,140 individuals who collectively have falsely billed the Medicare program for more than $2.9 billion. In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov .
President of Virginia-Based Connection Newspapers Sentenced to Six Months in Prison for Failing to Pay Employment TaxesRead the Press Release
WASHINGTON – Peter Labovitz of Alexandria, Va., was sentenced to six months in prison for failing to pay employment taxes to the Internal Revenue Service (IRS), the Justice Department and IRS announced today. Labovitz pleaded guilty on July 19, 2011, to willfully failing to pay over to the IRS the federal income taxes and Federal Insurance Contributions Act (FICA) taxes due and owing to the United States for Connections Newspapers LLC for the quarters ending Sept. 30, 2007, and Dec. 31, 2007.
According to the plea agreement and statement of facts, Labovitz was the president of Connection Newspapers, a Northern Virginia newspaper publisher that currently publishes approximately 15 community newspapers throughout Northern Virginia and Maryland. Between 2002 and 2008, Labovitz ran Connection Newspapers’ day-to-day operations, directed employees, approved payments and made financial decisions on behalf of the company. Labovitz admitted that between 2002 and 2008, he caused to be deducted and collected from the total taxable wages of his employees’ federal income taxes and FICA taxes. However, Labovitz failed to timely pay over to the IRS more than $940,000 in federal income taxes and FICA taxes withheld and due and owing to the United States, despite the fact that he was required to do so by law.
In addition to the term of imprisonment, Magistrate Judge John F. Anderson sentenced Labovitz to serve one year of supervised release, six months of which will be served on home confinement.
The case was investigated by the IRS-Criminal Investigation Division and prosecuted by Assistant U.S. Attorney for Eastern District of Virginia Tim Belevetz and Justice Department‘s Tax Division Trial Attorney Caryn Finley.
More information about the Tax Division and its enforcement efforts can be found at www.justice.gov/tax .
Nearly 40 Members and Associates of Bandido Outlaw Motorcycle Gang Charged in Three Districts for Alleged Drug and Firearm OffensesRead the Press Release
WASHINGTON – Nearly 40 members and associates of the Bandido Outlaw Motorcycle Gang (BOMG) were arrested yesterday and today on various firearms and drug-related charges in three judicial districts as part of a coordinated law enforcement effort, announced the Department of Justice and the FBI.
Twenty-eight individuals were charged in the Northern District of Texas in six complaints unsealed today in Dallas with conspiracy to possess and to distribute heroin, methamphetamine and cocaine. One of the defendants was charged with possession of a machine gun. All of the defendants were arrested around the Dallas area, except for one individual, who was arrested in San Francisco today. The defendants will make initial appearances tomorrow in U.S. federal court.
In addition, eight individuals who are members or associates of the BOMG were charged in the District of Colorado with conspiracy, and knowingly possessing with intent to distribute 50 grams or more of methamphetamine and five kilograms or more of cocaine. Six of the individuals were arrested today in the Denver-area, while one defendant was already in state custody and one is at large. According to court documents filed in U.S. District Court in Denver, the BOMG is a self styled “outlaw” motorcycle organization comprised of more than 2,000 members and associates with more than 90 chapters in the United States, Canada, Europe and elsewhere.
Yesterday, FBI agents and local authorities arrested three San Antonio residents in the Western District of Texas as part of the coordinated takedown. San Antonio BOMG Sergeant-At-Arms Gerardo Gomez Jr., 29, aka “Bandido Junior Ray;” San Antonio BOMG member Jason Earl Morris, 33, aka “Sarge;” and Angel Cevallos, 40, were arrested on one charged count of possession with intent to distribute more than 500 grams of cocaine. According to the complaint and supporting affidavit filed in San Antonio, yesterday the defendants were engaged in a drug transaction with undercover agents in which the defendants agreed to sell five kilograms of cocaine for $100,000. The three defendants were arrested by FBI agents after initially fleeing the scene by car. They remain in federal custody.
Indictments and complaints are merely charging documents. Defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
The charge of possession with intent to distribute more than 500 grams of cocaine carries a mandatory minimum prison sentence of five years and a maximum prison sentence of 40 years, as well as a maximum $5 million fine. The charge of possessing a machine gun carries a maximum penalty of 10 years in prison and a $250,000 fine. If convicted of knowingly possessing with intent to distribute methamphetamine or cocaine, those defendants face a mandatory minimum prison term of 10 years, and a maximum of life in federal prison, as well as up to a $4 million fine.
The Dallas charges are the result of a multi-year investigation into the illicit distribution of drugs and firearms by the BOMG and its affiliated support clubs. The investigation was led by the FBI and the Drug Enforcement Administration (DEA).
The Colorado case is being investigated by the FBI and the Denver Metro Gang Task Force.
The San Antonio case is being investigated by the FBI; the DEA; the Bureau of Alcohol, Tobacco, Firearms and Explosives; the Texas Department of Public Safety, the Arlington, Texas, Police Department; the Austin, Texas, Police Department; and the Fort Worth, Texas, Police Department. The San Antonio Police Department also assisted in yesterday’s arrests.
The cases are being prosecuted by Assistant U.S. Attorneys from the Northern District of Texas, the Western District of Texas and the District of Colorado.
Questions regarding the Dallas case, including for a complete list of defendants charged, should be directed to Kathy Colvin at 214-659-8600. Questions regarding the Colorado case should be sent to Jeff Dorschner at 303-454-0243, and questions regarding the San Antonio case should be sent to Daryl Fields at 210-384-7440.
Massachusetts Takes Steps to Require Sheltered English Immersion Training in Response to Justice Department’s LetterRead the Press Release
WASHINGTON – Today, in response to a letter from the Justice Department, the Massachusetts Board of Elementary and Secondary Education voted to grant the Commissioner of Education authority to draft state regulations that will require training of all Sheltered English Immersion (SEI) teachers who instruct English Language Learner (ELL) students. The department’s letter notified Massachusetts that it has violated the Equal Educational Opportunities Act (EEOA) by not mandating adequate training for SEI teachers. The resolution passed by the board today specifically directs the Commissioner to present the proposed regulations to the board by February 2012.
“We applaud the proactive efforts of the Commissioner of Education and the board to enact a regulation to ensure that teachers are adequately prepared to teach ELL students the academic subjects they need to be successful,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “We stand ready to assist the commissioner in this effort, and know that teachers and school districts are eager for Massachusetts to exert leadership in this area as well.”
“Our education system must provide our children with opportunities to develop into productive citizens regardless of their proficiency in English. When English language learners lack properly trained teachers, those opportunities are curtailed,” said U.S. Attorney Carmen M. Ortiz. “We share the goal of continued improvement to Massachusetts schools and look forward to the progress of this collaborative effort.”
The proposed regulation will define the preparation and training that teachers must have in order to instruct ELL students in academic content, along with a plan for implementing the new regulations. The timeline adopted by the board anticipates that the regulations drafted by the commissioner will be published for public comment in March 2012 provided they have received board approval, and contemplates a final board review of the regulations on or about June 2012.
The department’s July 22, 2011, letter informed the state that its voluntary approach to SEI training and ineffective monitoring process over the past seven years violated the EEOA by failing to ensure sufficient numbers of teachers who are qualified to deliver the state-mandated SEI program. The letter further informed the state that its current training did not prepare teachers adequately. To comply with the EEOA, the state must improve and then mandate the improved training to ensure that ELL students receive the services to which the law entitles them. The board’s resolution will require the commissioner to study the quality of the current SEI training further and get input from stakeholders and experts prior to proposing new regulations that will define the training’s content and delivery method and amend the current regulations on educator preparation and licensure.
The anticipated regulation will benefit the nearly 68,000 ELL students in Massachusetts’s public schools. The department’s violations letter stemmed in part from its joint investigation of Boston’s ELL programs with the U.S. Department of Education, which revealed serious shortages of qualified SEI teachers and thousands of ELL students without SEI services. The Department of Justice expects the commissioner’s plan to improve and mandate SEI training will significantly increase the numbers of qualified SEI teachers in all Massachusetts school districts.
The department notes with appreciation the efforts of districts, teachers, and their unions to participate in the current SEI training even in the absence of a state mandate. We look forward to collaborating with Massachusetts and other interested stakeholders to ensure the proposed regulations meet the needs of ELL students and their teachers.
Enforcement of the EEOA is a top priority of the Justice Department’s Civil Rights Division. Additional information about the Civil Rights Division of the Justice Department is available on its website at www.justice.gov/crt.
Kentucky Doctor Pays U.S. $349,860 to Settle False Claims Act AllegationsRead the Press Release
WASHINGTON –Louisville, Ky., physician Dr. Steven H. Stern and his practice, Kentuckiana Center for Better Bone and Joint Health PLLC (KCB) have agreed to pay $349,860 to settle allegations of overbilling Medicare, the Justice Department announced today.
The complaint, initially brought by a former employee of KCB, alleges that Stern and KCB falsely billed Medicare for infusing Infliximab, a drug used to treat rheumatoid arthritis. Specifically, the complaint alleges that Stern and KCB were splitting vials of Infliximab across multiple patients, then billing Medicare as if a whole vial was used for each patient. The complaint alleges that this practice resulted in the submission of fraudulent claims. The alleged overbilling covered a three-year period from December 2003 through December 2006.
“Physicians and other providers who overbill Medicare defraud the government and drive up the cost of health care for us all,” said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. “Recovering taxpayer dollars lost to fraud helps keep strong those critical public health care programs so many people depend on.”
“This case illustrates the importance and value of whistleblower lawsuits under the False Claims Act, said David J. Hale, U.S. Attorney for the Western District of Kentucky. “Because this employee stepped forward to report suspected double-billing of Medicare, we have been able to stop a practice that we believe was costing taxpayers hundreds of thousands of dollars. Pursuing health care and Medicare fraud is a priority of my Office and the Department of Justice. We will continue to work with the Department of Health and Human Services and the public to ensure that fraudulent claims are investigated and those responsible are required to pay.”
“Overbilling Medicare - as the government alleged in this case - is no more to be tolerated than pick pocketing taxpayers’ wallets,” said Derrick L. Jackson, Special Agent in Charge of the Atlanta Region for the Office of Inspector General of the Department of Health and Human Services. “Along with our law enforcement partners we will bring justice to those who see government health programs as nothing more than personal piggy banks.”
In addition, Stern and KCB will pay attorney’s fees, costs and expenses of former KCB employee Suzette L. Sewell-Scheuremann for filing the civil qui tam complaint on behalf of the United States. As a relator (whistle-blower) Sewell-Scheuremann will receive a payment of $70,000 as a relator’s share.
The investigation was conducted by Assistant U.S. Attorney L. Jay Gilbert of the Western District of Kentucky, and J. Jennifer Koh of the Justice Department’s Commercial Litigation Branch. This case was investigated by the Office of Inspector General of the Department of Health and Human Services and AdvanceMed Corporation, Medicare’s Program Safeguard Contractor for Kentucky.
Former Executives from Panasonic Corp., Whirlpool Corp. Subsidiary and Tecumseh Products Co. Subsidiary Indicted in Compressor Price-Fixing ConspiracyRead the Press Release
WASHINGTON — A Detroit federal grand jury returned an indictment today against three former executives from Panasonic Corporation, a Whirlpool Corporation subsidiary and a Tecumseh Products Company subsidiary for their role in an international conspiracy to fix the prices of refrigerant compressors, which are used in refrigerators and freezers in homes and businesses, the Department of Justice announced.
The indictment, returned today in U.S. District Court in Detroit, charges Ernesto Heinzelmann, former president and chief executive officer of Empresa Brasileira de Compressores S.A. (Embraco), a division of Whirlpool S.A.; Gerson Veríssimo, former president of Tecumseh do Brasil Ltda., a subsidiary of Tecumseh Products Company; and Naoki Adachi, general manager of global sales & SE group, refrigeration devices division at Panasonic Corporation, with conspiring to suppress and eliminate competition by coordinating price increases for refrigerant compressors to customers in the United States and elsewhere. Heinzelmann and Veríssimo are charged with participating in the conspiracy from at least as early as Oct.14, 2004, until on or about Dec. 31, 2007. Adachi is charged with participating in the conspiracy from at least as early as May 10, 2006, until on or about Dec. 31, 2007. Heinzelmann, Veríssimo and Adachi are the first executives charged in the ongoing investigation into the worldwide refrigerant compressors market.
Refrigerant compressors take in low-pressure refrigerant, compress it and then pump out a high-pressure vapor, which condenses and subsequently cools devices such as refrigerators and freezers.
“Cracking down on international price fixing cartels has been and will continue to be among the most significant priorities for the Antitrust Division,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “Our investigation into the refrigerant compressors industry has already resulted in two companies – Panasonic and Embraco North America – pleading guilty and paying a total of $140.9 million in criminal fines. Our investigation is continuing.”
According to the indictment, Heinzelmann, Veríssimo and Adachi carried out the conspiracy by participating in or directing the participation of subordinate employees in meetings and conversations to coordinate price increases of refrigerant compressors in the United States and elsewhere. As part of the conspiracy, Heinzelmann, Veríssimo, Adachi and co-conspirators sold and accepted payments for the compressors at collusive and non-competitive prices.
Heinzelmann, Veríssimo and Adachi are charged with price fixing in violation of the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
On Nov. 15, 2010, Panasonic Corporation pleaded guilty and was sentenced to pay a $49.1 million criminal fine, and on Dec.16, 2010, Embraco North America Inc. pleaded guilty and was sentenced to pay a $91.8 million criminal fine.
Today’s charge is the result of a joint investigation into the worldwide refrigerant compressors industry being conducted by the Antitrust Division’s Cleveland Field Office and the FBI’s Detroit Field Office, Ann Arbor, Resident Agency. Anyone with information concerning price fixing or other anticompetitive conduct in the refrigerant compressor industry is urged to call the Antitrust Division’s Cleveland Field Office at 216-687-8400 or visit www.justice.gov/atr/contact/newcase.htm.
Attorney General Holder Convenes Federal Reentry CouncilRead the Press Release
WASHINGTON – Attorney General Eric Holder today convened the second meeting of thefederal interagency Reentry Council to address ways to ensure those returning from prison become productive, law-abiding citizens. Among the topics discussed were $83 million in Fiscal Year 2011 funding the Department of Justice will award for Second Chance Act grants and other reentry programs as well as the latest in a series of “Reentry Myth Busters,” fact sheets intended to educate employers and others about the impact of federal laws on those who are formerly incarcerated and seeking jobs, housing and federal assistance or benefits.
Today’s federal Reentry Council meeting was attended by Department of Labor Secretary Hilda Solis, Department of Health and Human Services Secretary Kathleen Sebelius, Department of Housing and Urban Development Secretary Shaun Donovan and Director of the White House Domestic Policy Council Melody Barnes. In addition to those agencies, the Federal Reentry Council, which meets semi-annually, also includes representatives from the Department of Interior, Department of Agriculture, Department of Education, the Department of Veterans Affairs, the Office of National Drug Control Policy and several other federal agencies. Its mission is to reduce recidivism and victimization; assist those returning from prison, jail or juvenile facilities to become productive citizens; and save taxpayer dollars by lowering the direct and collateral costs of incarceration.
“ We must use every tool at our disposal to tear down the unnecessary barriers to economic opportunities and independence so that formerly incarcerated individuals can serve as productive members of their communities,” said Attorney General Holder. “The Department of Justice today announced it is providing funding to local organizations whose critical work will reduce recidivism and victimization. At the same time, the council is ensuring these individuals and their families have the facts about federal policies and resources governing employment issues, veterans’ benefits and voting rights as they return home.”
The council also released several new “Reentry Myth Busters,” fact sheets designed to clarify existing federal policies that affect formerly incarcerated individuals and their families in areas such as public housing, employment issues, access to benefits, parental rights, and more. The new Myth Busters focus on veterans’ benefits, voting rights, criminal background checks, taxes and Medicaid eligibility.
Laurie O. Robinson, Assistant Attorney General in the Department’s Office of Justice Programs (OJP), also announced that 131 grants were recently awarded with the $83 million appropriated by Congress in Fiscal Year 2011 for the Second Chance Act and other reentry programs.
“The fact that we received more than 1,000 applications for Second Chance funding this year shows that states and communities around the country are working together on reentry issues and community safety,” explained Assistant Attorney General Robinson.
OJP’s Bureau of Justice Assistance (BJA) and Office of Juvenile Justice and Delinquency Prevention (OJJDP) will oversee the grants that will support reentry planning and demonstration projects for adults and juveniles; state, local, and tribal reentry courts; family-based substance abuse treatment programs; reentry programs for adults with co-occurring substance abuse and mental health disorders; mentoring programs; and technology career training projects for incarcerated individuals.
“Here at BJA, we are committed to promoting partnerships among reentry stakeholders and to supporting a coordinated approach to evidence-based reentry programs. We will be collecting data from these grantees so we can learn more about effective reentry programs and, ultimately, quantify the costs and benefits of reentry programs,” said BJA Director Denise E. O’Donnell.
“Formerly incarcerated youth are at high risk for recidivism and need mentoring and other transitional support services,” said Jeff Slowikowski, Acting Administrator of OJJDP. “We are working closely with our partners as they develop and implement evidence-based reentry strategies that can strengthen public safety in their communities and make a difference in the futures of their youth.”
OJP’s National Institute of Justice (NIJ) awarded funding to researchers Alfred Blumstein and Kiminori Nakamura to continue previously funded NIJ research which looked at the “point of redemption" – when a prior arrest no longer distinguishes a person’s risk of future criminal arrests compared to a similar person in the general population.
NIJ’s reentry research portfolio also supports the evaluation of innovative reentry programs, particularly statewide reentry initiatives, and research that examines the process of reentering society within the context of the community, neighborhood and family into which the former offenders return.
To access these studies and NIJ’s entire reentry research portfolio visit www.nij.gov/nij/topics/corrections/reentry/welcome.htm
For more information about the Reentry Council, visit www.nationalreentryresourcecenter.org/reentry-council .
Reentry Myth Busters are available at www.nationalreentryresourcecenter.org/documents/0000/1090/REENTRY_MYTHBUSTERS.pdf .
For more information about reentry and Second Chance, visit www.nationalreentryresourcecenter.org.
26 September 2011
Justice Department Settles Disability Discrimination Suit Against Michigan Developer and ArchitectRead the Press Release
WASHINGTON – The Justice Department announced today that the developer and designers of an apartment complex in Washington Township, Mich., have agreed to settle a lawsuit alleging that they violated the Fair Housing Act when they designed and constructed a 200 unit apartment complex with steps to the front door and other barriers that make it inaccessible to persons with disabilities.
Under the agreement, which must still be approved by the court, developer, Enclave Development LLC, will make extensive modifications to the complex over the next three years to improve accessibility, and Enclave Development and the other defendants will pay $30,000 to compensate persons who have been harmed by the inaccessible design and construction. The case was investigated and brought jointly by the U.S. Attorney’s Office for the Eastern District of Michigan and the Civil Rights Division of the Department of Justice.
“Our federal laws guarantee that persons with disabilities have choices about where they live,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “Enforcement actions like this one illustrate the department’s commitment to removing barriers so that housing is accessible and available for persons with disabilities.”
“The law requires access to housing for people with disabilities, including returning veterans and others with impaired mobility,” said Barbara L. McQuade, U.S. Attorney for the Eastern District of Michigan. “This case is important so that our disabled citizens are not excluded from housing opportunities, which affect every other aspect of life, such as access to transportation, schools and jobs.”
The proposed consent order would settle a lawsuit filed by the department on Jan.12, 2009. Under the settlement, the defendants will:
- Make retrofits to all 200 units in the complex to make them more accessible;
- Ensure that future or ongoing construction meets the accessibility requirements of the Fair Housing Act; and
- Establish a $30,000 fund to pay individuals who were harmed by the lack of accessible features at the properties.
The lawsuit arose after the Fair Housing Center of Metropolitan Detroit conducted accessibility testing at the Enclave Apartments and provided the testing results to the U.S. Attorney’s Office for the Eastern District of Michigan. Defendants include the developer, The Enclave Development LLC; the architects who designed the complexes, Robert Lipka P.C., and Chester Stempien and Associates; and the civil engineer, MCS Associates Inc.
The federal Fair Housing Act prohibits discrimination in housing on the basis of race, color, religion, sex, familial status, national origin and disability. Among other things, the act requires all multifamily housing constructed after March 12, 1991 to have basic accessibility features, including accessible routes without steps to all ground floor units. More information about the Civil Rights Division and the laws it enforces is available at www.usdoj.gov/crt . Individuals who believe that they may have been victims of housing discrimination at the Enclave Apartments should call the Housing Discrimination Tip Line at 1-800-896-7743, mailbox number 95, or the U.S. Attorney’s Office civil rights hotline at 313-226-9151, or email the Justice Department at [email protected] . Individuals who believe they may have been victims of housing discrimination may also contact Department of Housing and Urban Development at 1-800-669-9777.
Boston Scientific Subsidiary Guidant Pays U.S. $9.25 Million to Settle False Claims Act AllegationsRead the Press Release
WASHINGTON – Guidant LLC, a wholly owned subsidiary of Boston Scientific Corp. of Natick, Mass., has agreed to pay the United States $9.25 million to resolve False Claims Act allegations, the Justice Department announced today. The government alleges that the company inflated the cost of replacement pacemakers and defibrillators to federal health care programs by knowingly failing to grant warranty credits and rebates to hospitals for pacemakers and defibrillators that were explanted while covered under a product warranty or another credit program.
The settlement resolves allegations that Guidant actively promoted the longevity and reliability of its pacemakers and defibrillators to physicians in an effort to convince them to purchase Guidant products over competing devices. Guidant reinforced these claims by touting the generous credits available should a device need to be replaced while covered under warranty.
At the same time, Guidant allegedly was fully aware that it failed to grant an appropriate credit to the purchaser of the device in a large number of cases where a product failed while still under warranty. As a result, the United States contends that Guidant submitted invoices to Department of Veterans Affairs hospitals and Department of Defense facilities that overstated the cost for a replacement pacemaker or defibrillator. In addition, Guidant’s alleged submission of inflated invoices for pacemakers and defibrillators to private hospitals caused these hospitals to overstate the cost of these devices on hospital cost reports, resulting in Medicare paying more for pacemakers and defibrillators than it otherwise should have.
“Overcharging for lifesaving medical devices wastes taxpayer dollars,” said Tony West, Assistant Attorney General for the Justice Department’s Civil Division. “As we all look for ways to reduce public expenditures, settlements like this one – which recapture funds that were spent due to fraud – help support important public health care programs that so many people depend on.”
“Protecting the taxpayers’ interest by vigorously enforcing the False Claims Act is a top priority for this office,” said Jerry E. Martin, U.S. Attorney for the Middle District of Tennessee. “Corporations and individuals who bill Medicare and Medicaid should know that the U.S. Attorneys’ Office for the Middle District of Tennessee now has one of largest units in the country devoted to litigating false claims cases, and we will aggressively pursue fraud and abuse.”
The civil settlement resolves allegations contained in a whistleblower lawsuit filed in federal court in the Middle District of Tennessee under the qui tam provisions of the False Claims Act, which allow for private citizens to bring civil actions on behalf of the United States and share in any recovery. As part of today’s resolution, the whistleblower – Robert A. Fry – will receive payments totaling more than $2.3 million from the settlement amount.
“Major device manufacturers will be held accountable for improper marketing strategies,” said Derrick L. Jackson, the Special Agent in Charge of the Department of Health and Human Services Office of Inspector General in Atlanta, “This settlement sends the clear message that defrauding federal health care programs is a losing business proposition.”
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 are more than $ 7.6 billion.
The settlement was the result of an investigation by the U.S. Attorney’s Office for the Middle District of Tennessee, the Justice Department’s Civil Division, and the Offices of Inspector General at the U.S. Department of Defense, Health and Human Services, and Veterans Affairs.
Bloods Gang Member in Nashville Sentenced to Eight Years in PrisonRead the Press Release
WASHINGTON - A Bloods gang member was sentenced today in Nashville, Tenn., to eight years in prison for participating in racketeering activity related to his membership in the Bloods criminal enterprise, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Jerry E. Martin for the Middle District of Tennessee.
Antonio Washington, 22, aka “T.O.,” of Nashville, also was ordered by U.S. District Judge Aleta Trauger to serve five years of supervised release following his prison term. Washington pleaded guilty on June 21, 2011, to the racketeering conspiracy.
According to court documents, Washington and other Bloods gang members and associates agreed to commit multiple acts of robbery, narcotics trafficking and bribery on behalf of the Bloods gang. Washington and numerous Bloods gang members met on a regular basis at various locations throughout the Middle District of Tennessee, including Shelby Park, Cedar Hill Park and the Galaxy Star Drug Awareness and Gang Prevention Center in Nashville, to report on gang-related business, collect dues, commit disciplinary actions against fellow gang members, discuss acts of violence against rival gang members, and initiate or “jump in” new members by beating them for a period of time, among other things.
Washington admitted that on March 28, 2010, during a Bloods gang meeting at Galaxy Star Drug Awareness and Gang Prevention Center, he and numerous other Bloods gang members voted to punish Bloods member Joedon Bradley. Following the vote, the Bloods gang members exited the building and formed a large circle in the backyard behind a wooden fence, where several groups of Bloods gang members violently assaulted Bradley.
According to court documents, on April 14, 2010, Washington and other known Bloods gang members and associates agreed to rob an individual of approximately 30 pounds of marijuana. Washington admitted that, armed with a pistol, he rode in a vehicle with several known Bloods gang members to commit the robbery. However, when Washington and the other Bloods gang members arrived at the location, they were unable to commit the robbery because of the presence of law enforcement in the area.
The case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives; the Metropolitan Nashville Police Department; and the Gallatin, Tenn., Police Department. The U.S. Marshals Service and the Davidson County, Tenn., District Attorney’s Office also provided assistance.
The case is being prosecuted by Assistant U.S. Attorney Scarlett M. Singleton for the Middle District of Tennessee and Trial Attorney Cody L. Skipper of the Criminal Division’s Organized Crime and Gang Section.
23 September 2011
Fourth Las Vegas Resident Pleads Guilty 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 (HOA) 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).
Deborah Genato, 41, pleaded guilty before U.S. District Judge Lloyd D. George in the District of Nevada to one count of conspiracy to commit mail and wire fraud. Genato is the fourth person to plead guilty in connection with the scheme to defraud HOAs in the Las Vegas area.
According to the plea agreement, Genato was the property manager for three condominium complexes in the Las Vegas area, Vistana, Park Avenue and Chateau Nouveau. Genato admitted that from at least as early as February 2007 until at least approximately February 2009, 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 Genato’s co-conspirators.
According to plea documents, in order to accomplish the scheme, co-conspirators used straw purchasers to obtain mortgage loans for units within HOA communities. According to plea documents, Genato’s co-conspirators managed and operated the payments associated with maintaining straw properties owned and controlled by co-conspirators by running a so-called “Bill Pay Program,” by which co-conspirators funded the properties through several limited liability companies at the direction of a co-conspirator. Many of the payments were wired from California to Nevada. Co-conspirators also transferred an interest in some of the units to other co-conspirators to make it appear as if the co-conspirator was a bona fide homeowner.
Court documents indicate that the straw purchasers and those who acquired transferred interest in a unit agreed to run for election to the respective HOA boards. These co-conspirators were paid in cash, check or promised things of value for their participation, all of which resulted in a personal financial benefit to the co-conspirators.
Genato admitted that to ensure that her co-conspirators would win the elections, she and others employed deceitful tactics, such as creating false phone surveys to gather information about homeowners’ voting intentions, using mailing lists to vote on behalf of out-of-town homeowners unlikely to participate in the elections, and submitting fake and forged ballots. Co-conspirators also hired private investigators to find “dirt” on the bona fide candidates in order to create smear campaigns. Genato admitted that she used her position as property manager at Vistana, Park Avenue and Chateau Nouveau to provide mailing lists, labels and other voting materials to create fake election ballots. Genato also admitted that she allowed co-conspirators to gain access to the election ballots that had been mailed into the property management company by the bona fide homeowners prior to the election date.
According to plea documents, another tactic the co-conspirators used to rig certain HOA board elections was to prepare forged ballots for out-of-town homeowners and either cause them to be transported or mailed to California and thereafter to have the ballots mailed back to Las Vegas from various locations around California to make the forged votes for out-of-town homeowners appear to be legitimate.
Court documents indicate that the c o-conspirators also attempted to create the appearance that the elections were legitimate by hiring independent attorneys to run the HOA board elections. The homeowners were led to believe that these “special election masters” were supposed to handle tasks including contacting the bona fide homeowners to inform them of the election, mailing the bona fide homeowners election ballots and voting instructions, collecting and securing the election ballots, and presiding over the HOA board election, including supervising the counting of ballots. However, the “special election masters” too, were paid in cash, check and promised things of value, by or on behalf of Genato’s co-conspirators for their assistance in rigging the elections.
According to plea documents, once elected, the co-conspirator board members would meet with other co-conspirators in order to manipulate board votes, including the selection of property managers, contractors and general counsel for the HOA and attorneys to represent the HOA. Also, the co-conspirators created and submitted fake bids for “competitors” to make the process appear to be legitimate while ensuring co-conspirators were awarded the contract.
Genato admitted that once hired, she and her co-conspirator property manage rs breached their fiduciary duties by receiving and accepting cash, check or things of value for using their positions to gain inside information and recommend that the HOA board hire certain co-conspirators for remediation and construction defect repairs and for construction defect litigation, and concealing their relationship with the co-conspirators from the bona fide homeowners. According to plea documents, this process created the appearance of legitimacy since bona fide homeowners believed the elected board members and property managers were, as fiduciaries, acting in their best interest rather than to advance the financial interests of co-conspirators. Genato admitted that she and her co-conspirators were paid or received things of value for their assistance in purchasing the properties, obtaining HOA membership status, rigging elections, using their positions to manipulate the HOA’s business and to further the goals of the conspiracy and enrich the co-conspirators at the expense of the HOA and the bona fide homeowners
Genato’s sentencing is scheduled for Jan. 6, 2012. The maximum sentence for conspiracy to commit mail fraud and wire fraud is 30 years in prison.
The case is being prosecuted by Deputy Chief Charles La Bella, Assistant Chief Michael Bresnick 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.
Four Alleged New England La Cosa Nostra Members and Associates Charged with Racketeering and Other CrimesRead the Press Release
WASHINGTON – Four alleged members and associates of the New England La Cosa Nostra (LCN), including an alleged Rhode Island leader, have been arrested and charged in a second superseding indictment returned yesterday in federal court in Providence, R.I., with crimes involving racketeering and extortion.
The charges and arrests were announced today by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Peter F. Neronha for the District of Rhode Island; John T. Foley, Assistant Special Agent in Charge (ASAC) of the FBI’s Boston Field Office; Colonel Steven G. O’Donnell, Superintendent of the Rhode Island State Police; and Steven M. Pare, Providence Public Safety Commissioner.
“Relying on violence and intimidation to carry out their illegal activities, organized criminal groups often act as though if they operate in the shadows, they will escape punishment,” said Assistant Attorney General Breuer. “As today’s arrests show, they couldn’t be more wrong. Our law enforcement operations over the past nine months should make clear that we are zeroing in on La Cosa Nostra and other organized criminal groups, and that we will not rest until our work is done.”
“As Attorney General Holder said in New York last January, battling all forms of organized crime, including La Cosa Nostra, remains a priority for the Department of Justice,” said U.S. Attorney Neronha. “It remains a priority because history has demonstrated that, unchecked, it extends its tentacles into our citizens’ everyday lives. Let no one doubt the commitment of law enforcement to keeping this threat off balance and on the run.”
“The methodical nature of this investigation is a credit to the diligence and professionalism of our task force which is composed of the Rhode Island State Police, Providence Police, Internal Revenue Service and the U.S. Attorney’s Office,” said FBI ASAC Foley. “Since its inception, the task force’s combined decades of investigative experience and knowledge of La Cosa Nostra’s criminal schemes has been a blueprint for the extraordinary success that is readily apparent today. In simple terms, the FBI’s Task Force has shattered Omerta, the New England LCN’s code of silence, severely disrupting their criminal activity.”
Charges were unsealed today against Edward Lato, 64, aka “Eddy”; Alfred Scivola, 70, aka “Chippy”; Raymond R. Jenkins, 47, aka “Scarface”; and Albino Folcarelli, 53, aka “Albie” related to their alleged participation in the New England LCN. Lato is charged with racketeering conspiracy, two counts of extortion conspiracy and two counts of travel in aid of racketeering. Scivola is charged with racketeering conspiracy and extortion conspiracy. Folcarelli is charged with extortion conspiracy, and Jenkins is charged with extortion conspiracy and extortion.
Lato, Scivola, Jenkins and Folcarelli were arrested yesterday and today, and made initial appearances in U.S. District Court in Providence today. At the government’s request, all four defendants were detained by U.S. Magistrate Judge David L. Martin.
Previously charged were longtime New England LCN boss Luigi Manocchio and associates Thomas Iafrate, Richard Bonafiglia and Theodore Cardillo. The second superseding indictment contains new allegations regarding Manocchio’s alleged involvement in the extortion of additional businesses and efforts to conceal his unexplained wealth. Iafrate pleaded guilty in July 2011 to racketeering conspiracy. The department announced charges against 127 individuals, including 91 alleged leaders, members and associates – including Manocchio and Iafrate – of LCN families in four districts on Jan. 20, 2011, as part of a coordinated enforcement action against the LCN.The second superseding indictment alleges that since the mid-1980s, the defendants and other New England LCN members and associates used threatened or implied force, violence and fear, to extort monthly cash payments from the owners and operators of the Cadillac Lounge, the Satin Doll, the Foxy Lady, Desire and other adult entertainment businesses in Providence and elsewhere.
According to court documents, the New England LCN family operates in Providence, among other places, and routinely engages in violence and threatens violence to promote a climate of fear, preserve its power, and enrich its members and associates through extortion. The New England LCN has a hierarchical structure, with an administration comprised of a boss, underboss and capos at the top overseeing crews of criminals, including members and associates who commit crimes and serve to insulate the leadership of the enterprise from criminal exposure.
The second superseding indictment alleges that as a capo, Lato was responsible for the Rhode Island New England LCN members and their activities. The indictment also alleges that he received monthly protection payments, in cash, from the owners and operators of certain adult entertainment businesses in Providence, including the Satin Doll and the Cadillac Lounge. At various times, the monthly payments from each of the clubs ranged from $2,000 to $6,000. According to the indictment, after Iafrate and Manocchio were arrested in January 2011, Lato met with another individual in February 2011 to discuss the continuation of the extortion of the Cadillac Lounge, as well as the extortion of other adult entertainment clubs.According to the indictment, Scivola received a portion of the various extortion payments made to the New England LCN by certain adult entertainment businesses, and he assisted Lato and others in carrying out the extortion scheme. The indictment also alleges that Jenkins and Folcarelli were associates of the New England LCN and that, together with Lato, they extorted $25,000 from an individual by using implied threats of violence, including a visit to the individual’s place of employment.
Each charge of racketeering conspiracy, extortion conspiracy and extortion carries a maximum penalty of 20 years in prison and a $250,000 fine. The charge of travel in aid of racketeering carries a maximum penalty of five years in prison and a $250,000 fine. The charges announced today are merely allegations, and defendants are presumed innocent unless proven guilty in a court of law.
The case is being prosecuted by Trial Attorney Sam Nazzaro of the Criminal Division’s Organized Crime and Gang Section and by Assistant U.S. Attorney William Ferland for the District of Rhode Island. The case is being investigated by the FBI, Internal Revenue Service – Criminal Investigation, the Rhode Island State Police and the Providence Police Department.
Founder of NinjaVideo Pleads Guilty to Criminal Copyright ConspiracyRead the Press Release
WASHINGTON – Matthew David Howard Smith, 23, of Raleigh, N.C., pleaded guilty today for his role in founding a website that provided millions of users with the ability to illegally download copyright-protected movies and television programs.
The guilty plea 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 and U.S. Immigration and Customs Enforcement (ICE) Director John Morton.
Smith pleaded guilty before U.S. District Judge Anthony J. Trenga in the Eastern District of Virginia to conspiracy and criminal copyright infringement. At sentencing, scheduled for Dec. 16, 2011, Smith faces a maximum penalty of five years in prison on each count.
According to the court documents, Smith was one of the founders of NinjaVideo, which operated from February 2008 until it was shut down by law enforcement in June 2010. He admitted that he designed many of the operational elements of the website that enabled millions of visitors to illegally download infringing copies of movies and television programs in high-quality formats. Many of the movies offered on the website were still playing in theaters, while others had not yet been released. While visitors to the website were permitted to download infringing copies for free, they were invited to make donations, which provided them access to private forum boards that contained a wider range of infringing material. A premium member obtained the rights to request specific infringing content, which the NinjaVideo administrators would then seek to fulfill.
Smith admitted that he made agreements with online advertising entities to generate income for the website, and he and his co-conspirators collected more than $500,000 during the website’s two-and-a-half years of operation.
On Sept. 9, 2011, Smith was indicted along with four other alleged co-conspirators associated with NinjaVideo. The remaining defendants are scheduled for a jury trial on Jan. 20, 2011.
The case is being prosecuted by Trial Attorney Glenn Alexander of the Criminal Division’s Computer Crime & Intellectual Property Section and Assistant U.S. Attorneys Jay V. Prabhu and Lindsay A. Kelly.
The investigation was conducted by ICE’s Homeland Security Investigations-led National Intellectual Property Rights Coordination Center (IPR Center). This 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.
Former Army Reserve Captain Sentenced to 120 Months in Prison for Soliciting $1.3 Million in Bribes and Conspiring to Traffic HeroinRead the Press Release
WASHINGTON –A former captain in the U.S. Army Reserve stationed in Afghanistan was sentenced today to 120 months in prison for soliciting $1.3 million in bribes from contractors involved in U.S.-funded reconstruction efforts and participating in a conspiracy to traffic heroin from Southeast Asia.
The sentence was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Neil H. MacBride for the Eastern District of Virginia.
Sidharth Handa, 32, was sentenced by U.S. District Judge Anthony J. Trenga in the Eastern District of Virginia. Handa was also ordered to pay $315,000 in restitution. Handa, of Charlotte, N.C., pleaded guilty on June 21, 2011, to soliciting and accepting bribes while serving as a public official and to conspiring to distribute a kilogram of heroin.
“Mr. Handa used his official position assisting the United States’ reconstruction efforts in Afghanistan to line his pockets,” said Assistant Attorney General Breuer. “He promised multi-million dollar contracts to Afghan businessmen in exchange for cash. He was so meticulous about collecting his bribes that he kept track of them on a spreadsheet. We will not tolerate this kind of fraud and abuse. Today’s sentence reflects the disgracefulness of Mr. Handa’s conduct.”
“This case is the largest bribery prosecution to date from our mission in Afghanistan,” said U.S. Attorney MacBride. “From the day he stepped foot in Afghanistan, Mr. Handa negotiated a staggering amount of bribes from contractors in a blatant breach of the trust our military put in him. His actions brought shame to our mission, harmed our reconstruction efforts, and defrauded American taxpayers who funded the contracts he looted.”
According to court records, Handa was stationed in Afghanistan from March through November 2008 and served as the liaison to the local governor and engineers on the Kunar Province Reconstruction Team (PRT). In that position, Handa assisted in awarding reconstruction project contracts funded by the U.S. government to local contractors through a competitive bidding process. Handa admitted that almost immediately upon his arrival in Afghanistan, he became engaged in a scheme to secure bribes from contractors who sought to secure large PRT construction projects. With the help of an Afghan interpreter, Handa typically solicited bribes equal to 10 percent of the overall contract value, though the actual bribe payment was negotiated based on the contractor’s ability to pay. The total value of bribes contractors agreed to pay amounted to $1,323,000, and Handa and the interpreter collected $315,000, which they split evenly.
Handa admitted that after leaving Afghanistan, he tried to collect over $1 million in bribe money that contractors had pledged to pay. A cooperating witness (CW) offered to help Handa collect the money, and through 2010 and early 2011 Handa provided the CW with details of outstanding bribes and other relevant facts to help secure the promised bribes. During the course of these conversations with the CW, Handa indicated that he knew people in the drug business and he and the CW developed plans to sell kilogram quantities of Southeast Asian heroin to Handa’s drug contacts.
According to court documents, on April 7, 2011, Handa met with the CW and an undercover officer in a northern Virginia hotel, where Handa received what he believed was $500,000 in collected bribe payments and acknowledged that he knew the right people to receive the kilogram of heroin the undercover officer showed him. Law enforcement arrested Handa as he was leaving the hotel with the bribe money, a loaded handgun and a spreadsheet detailing specific bribe amounts paid and outstanding.
This case was investigated jointly by member agencies of the International Contract Corruption Task Force, including the Special Inspector General for Afghanistan Reconstruction, the FBI’s Washington Field Office and the Defense Criminal Investigative Service, and also by the Drug Enforcement Administration. The case is being prosecuted by Senor Trial Attorney David Bybee of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Kosta Stojilkovic and Dennis Fitzpatrick of the Eastern District of Virginia.