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15 September 2011
Alabama Real Estate Investors Agree to Plead Guilty to Conspiracy to Rig Bids for the Purchase of Real Estate at Public Foreclosure AuctionsRead the Press Release
WASHINGTON – Two Mobile, Ala., real estate investors and one real estate investment company have agreed to plead guilty today for their roles in a conspiracy to rig bids for the purchase of real estate at public foreclosure auctions in southern Alabama, the Department of Justice announced.
Three separate charges were filed today in U.S. District Court for the Southern District of Alabama in Mobile against Allen K. French, M & B Builders LLC and its co-owner, Harold H. Buchman.
According to the felony charges, the real estate investors participated in a conspiracy to rig bids by agreeing to refrain from bidding against one another at public real estate foreclosure auctions in Mobile County and surrounding areas.
The department said that the primary purpose of the bid-rigging conspiracy was to suppress and restrain competition to obtain selected real estate offered at public foreclosure auctions at noncompetitive prices. When real estate properties are sold at these auctions, the proceeds are used to pay off the mortgage and other debt attached to the property, with remaining proceeds, if any, paid to the homeowner.
“The Antitrust Division continues to vigorously pursue bid-rigging conspiracies at real estate foreclosure auctions, and will work with its law enforcement partners to ensure that the process is fair and open so that consumers will benefit from competition,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.
According to the court documents, the real estate investors conspired with others not to bid against one another at public real estate foreclosure auctions in southern Alabama, participating in a conspiracy for various lengths of time between May 2001 and March 2010. After the conspirators’ designated bidder bought a property at the public auctions, which typically take place at the county courthouse, the conspirators would generally hold a secret, second auction at which each participant would bid the amount above the public auction price he was willing to pay. The highest bidder at the secret, second auction won the property.
FBI Special Agent in Charge Lewis M. Chapman recognized the perseverance of agents and prosecutors in this complex investigation. Chapman stated, “ This investigation sends the message that real estate fraud including antitrust violations will continue to be pursued in these tough economic times, no matter how intricate the scheme.”
French, Buchman and M & B Builders were each charged with one count of bid rigging to obtain selected real estate at foreclosure auctions. M & B Builders also was charged with one count of conspiracy to commit mail fraud. According to court documents, M & B Builders used the U.S. mail in carrying out the conspiracy to defraud financial institutions by paying potential competitors not to bid competitively in the public auctions for foreclosed properties.
Each violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals and a $100 million fine for companies. 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 statutory maximum. Each count of conspiracy to commit mail fraud against a company carries a maximum fine in the amount equal to the greatest of $1 million, twice the gross gain the conspirators derived from the crime, or twice the gross loss caused to the victims of the crime by the conspirators.
The Antitrust Division and the FBI have identified a pattern of collusive schemes among real estate investors aimed at eliminating competition at real estate foreclosure auctions, and today’s charges are part of the department’s ongoing effort to combat this conduct and restore competition to public auctions. The investigation into fraud and bid rigging at certain real estate foreclosure auctions in Southern Alabama is being conducted by the Antitrust Division’s Atlanta Field Office and the FBI’s Mobile Field Office, with the assistance of the U.S. Attorney’s Office for the Southern District of Alabama. Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Antitrust Division’s Atlanta Field Office at 404-331-7100 or visit www.justice.gov/atr/contact/newcase.htm.
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.
14 September 2011
North Carolina Man Pleads Guilty to Terrorism ChargeRead the Press Release
RALEIGH, N.C. – Dylan Boyd , aka “Mohammed,” pleaded guilty today in federal court in New Bern, N.C., to one count of aiding and abetting a conspiracy to provide material support to terrorists, announced Lisa Monaco, Assistant Attorney General for National Security; Thomas G. Walker, U.S. Attorney for the Eastern District of North Carolina; M. Chris Briese, Special Agent-in-Charge of the FBI Charlotte Division; and John F. Khin, Special Agent-in-Charge, Southeast Field Office, Defense Criminal Investigative Service (DCIS).
Boyd, 24, a U.S. citizen and resident of North Carolina, was first charged along with seven other defendants in a federal indictment returned on July 22, 2009. He was arrested on July 29, 2009, and the indictment was unsealed. On Sept. 24, 2009, a federal grand jury returned a superseding indictment in the case.
According to the superseding indictment, from before November 2006 through at least July 2009, Boyd aided and abetted other named defendants and others who conspired to provide material support and resources to terrorists, including currency, training, transportation and personnel. The object of the conspiracy, according to the indictment, was to advance violent jihad, including supporting and participating in terrorist activities abroad and committing acts of murder, kidnapping or maiming persons abroad.
The indictment alleges that, as part of the conspiracy, Boyd assisted other defendants as they prepared themselves to engage in violent jihad and were willing to die as martyrs. They also allegedly offered training in weapons and financing, and helped arrange overseas travel and contacts so others could wage violent jihad overseas. In addition, as part of the conspiracy, the defendants raised money to support training efforts, disguised the destination of such monies from the donors and obtained assault weapons to develop skills with the weapons. Some defendants also allegedly radicalized others to believe that violent jihad was a personal religious obligation.
At sentencing, Boyd faces a potential 15 years in prison followed by three years of supervised release for aiding and abetting a conspiracy to provide material support to terrorists.
Boyd’s father and co-defendant, Daniel Patrick Boyd, pleaded guilty on Feb. 9, 2011, to one count of conspiracy to provide material support to terrorists and one count of conspiracy to murder kidnap, maim and injure persons in a foreign country. Boyd’s brother and co-defendant, Zakariya Boyd, pleaded guilty on June 7, 2011, to one count of conspiracy to provide material support to terrorists. Trial for the remaining co-defendants in custody is scheduled for September 2011.
The investigation was conducted by the FBI Raleigh-Durham Joint Terrorism Task Force, which includes the FBI, the DCIS, the North Carolina Alcohol Law Enforcement, the Raleigh Police Department, the Durham Police Department and the North Carolina Information Sharing and Analysis Center.
The prosecution is being handled by Assistant U.S. Attorneys John Bowler and Barbara D. Kocher of the U.S. Attorney’s Office for the Eastern District of North Carolina, and Trial Attorney Jason Kellhofer of the Counterterrorism Section in the Justice Department’s National Security Division.
New Orleans Man Sentenced in Danziger Bridge CaseRead the Press Release
NEW ORLEANS - David Marion Ryder, a civilian who provided false information about the police-involved shooting on the Danziger Bridge in the wake of Hurricane Katrina, was sentenced today to eight months in prison, the Justice Department announced. Ryder was also sentenced to eight months of home detention following his prison sentence. Ryder, of Opelousas, La., pleaded guilty on April 28, 2010 to illegally possessing a firearm, and for lying to the FBI during the federal investigation of the shooting, which left two civilians dead and four seriously wounded.
“The defendant lied to federal investigators about a horrendous incident that occurred during a devastating time for New Orleans,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The department successfully uncovered the events from that day, and will continue to work with the people of New Orleans in restoring their trust in the police department.”
Ryder was armed and dressed as a law enforcement officer on Sept. 4, 2005, the day of the Danziger Bridge shooting. As a convicted felon, Ryder was prohibited from carrying a firearm. Immediately after the shooting, Ryder lied to New Orleans Police Department (NOPD) investigators, falsely claiming that he had seen a civilian, Lance Madison, firing a weapon at police officers. In fact, Ryder later admitted during his guilty plea in federal court that he had not seen anybody fire at police officers. Madison, whose brother Ronald was one of the two civilians killed during the shooting on the bridge, was arrested on Sept. 4, 2005, in part based on Ryder’s false statement. Madison was eventually released from custody, and a state grand jury later declined to bring charges against him.
During a federal investigation that culminated in the conviction of 10 NOPD officers involved in the shooting and a cover-up that followed, Ryder lied to FBI agents about what he had seen on the bridge. Ryder admitted during his plea hearing that he lied to the FBI when he initially claimed that a civilian running toward the Danziger Bridge had shot at him on Sept. 4, 2005.
During the federal investigation of the Danziger Bridge shooting, five NOPD officers pleaded guilty, admitting their roles in the cover-up and agreeing to cooperate with the prosecution. Five additional officers – Sergeant Kenneth Bowen, Sergeant Robert Gisevius, Sergeant Arthur “Archie” Kaufman, Officer Robert Faulcon and Officer Anthony Villavaso – were convicted at trial on Aug. 5, 2011. Bowen, Gisevius, Faulcon and Villavaso were convicted of civil rights and firearm offenses for unjustifiably shooting the six civilians on the bridge, and all five defendants were convicted of obstructing justice in the wake of the shooting.
The five officers convicted at trial will be sentenced in December. A sixth officer, former Sergeant Gerard Dugue, is scheduled to stand trial in January 2012.
This case was prosecuted by Deputy Chief Bobbi Bernstein and Trial Attorney Cindy Chung of the Civil Rights Division, along with Assistant U.S. Attorney Ted Carter of the U.S. Attorney’s Office for the Eastern District of Louisiana.
Montgomery, Ala., Man Pleads Guilty for Role in Two Tax Fraud and Identity Theft ConspiraciesRead the Press Release
WASHINGTON – Alchico Grant, a resident of Montgomery, Ala., pleaded guilty to his role in two tax fraud and identity theft conspiracies, the Justice Department and the Internal Revenue Service (IRS) announced today. In addition to pleading guilty to one count of conspiracy to defraud the government with respect to claims, Grant pleaded guilty to two counts of theft of government money, property or records, one count of wire fraud and one count of aggravated identity theft.
Along with four other defendants, Grant was indicted by a federal grand jury sitting in Montgomery on Dec. 14, 2010, on a variety of charges stemming from a large-scale tax fraud and identity theft conspiracy based in that city. According to the indictment, plea agreement and other court documents, the conspirators used stolen identities to file more than 500 fraudulent tax returns claiming millions of dollars in false tax refunds over a two-year period in 2009 and 2010. According to the plea agreement, Grant agreed that the loss associated with this case was more than $2.5 million but less than $7 million. He also agreed that this offense involved more than 250 or more victims.
As part of the conspiracy, Grant opened up bank accounts to receive false tax refunds, recruited other individuals to open bank accounts to receive false tax refunds, and directed others to disburse the tax refunds via checks made payable to third-parties. Grant directed the third-parties to cash the checks and to provide a substantial portion of the money to him. Grant also instructed some of the third parties who cashed the checks to provide false statements to law enforcement. Grant pleaded guilty to one count of conspiracy to defraud the United States and two counts of theft of government property.
Alchico Grant and others were also charged in a separate superseding indictment by a federal grand jury in the Middle District of Alabama unsealed on Sept. 7, 2011, on a variety of counts stemming from another identity theft and tax fraud scheme. According to the indictment, plea agreement and other court documents, in 2011, Grant and others used stolen identities to file false tax returns claiming fraudulent refunds. As part of the scheme to defraud, Grant purchased prepaid debit cards and other participants directed false tax refunds to those cards. Grant used the prepaid debit cards to obtain the false tax refunds. Grant pleaded guilty to one count of wire fraud and to one count of aggravated identity theft.
Sentencing has not yet been scheduled. Grant faces a minimum of two years in prison and a maximum of fifty-two years in prison, three years of supervised release, restitution and a maximum fine of $250,000, or twice the loss caused by the offense.
IRS-Criminal Investigation agents investigated this case, and Justice Department Tax Division trial attorneys Jason Poole and Michael Boteler, and Jared Morris, Assistant U.S. Attorney in the Middle District of Alabama are prosecuting the case.
More information about the Tax Division and its enforcement efforts can be found at: www.justice.gov/tax .
Justice Department Awards $118 Million to Enhance, Support Tribal Justice and SafetyRead the Press Release
IGNACIO, Colo.– The Department of Justice today announced grants to nearly 150 American Indian and Alaskan Native nations providing $118.4 million to enhance law enforcement practices, and sustain crime prevention and intervention efforts in eight purpose areas: public safety and community policing; methamphetamine enforcement; justice systems and alcohol and substance abuse; corrections and correctional alternatives; violence against women; elder abuse; juvenile justice; and tribal youth programs.
The awards are made under the department’s Coordinated Tribal Assistance Solicitation (CTAS), a single application for tribal-specific grant programs.
Associate Attorney General Tom Perrelli announced this funding during the department’s 19th annual Four Corners Indian Country Conference in Ignacio, Colo., to an audience of nearly 300 attendees of tribal and federal law enforcement, prosecutors, judges and advocates in the fields of safety and justice. Associate Attorney General Perrelli spoke about the Justice Department’s commitment to enhancing public safety in Indian Country and the importance of a streamlined grant application process for federal funding.
“I am pleased today to announce the Justice Department’s continued investment in programs that offer innovative and comprehensive approaches to public safety and justice in Indian Country,” said Associate Attorney General Perrelli. “Our government-to-government consultations have been critical to our understanding of how to better serve and support our tribal partners. By deepening our engagement with tribal governments, we have sought to help put an end to the unacceptable and sobering crime rates witnessed in Indian Country.”
The department developed CTAS and administered the first round of consolidated grants in September 2010 in response to shared views of tribal leaders that the department’s grant-making process was too cumbersome and needed increased flexibility. Today, tribes seeking funding for more than one purpose area can submit a single grant application, instead of multiple applications.
The grants are administered by the Office of Community Oriented Policing, Office of Justice Programs and the Office on Violence Against Women. The complete list of the fiscal year 2011 CTAS grantees, a CTAS fact sheet and other information about the consolidated solicitation is also available at www.justice.gov/tribal .
Soon after he came into office, Attorney General Eric Holder identified building and sustaining safe and secure tribal nations as one of the Department of Justice’s top priorities. In June of 2009, the department launched a wide-ranging initiative to strengthen public safety in Indian Country. Since that time, the department has taken a number of steps to deepen its commitment to Indian nations and to develop more effective partnership with tribal leaders, police, prosecutors, courts and advocates to address and combat crime.
Former Natchez County, Miss., Officer Sentenced for Theft and Civil Rights ViolationsRead the Press Release
WASHINGTON – DeWayne Johnson, 33, of Natchez, Miss., and a former Natchez Police Department officer, was sentenced yesterday to 30 months in prison by U.S. District Court Judge David Bramlette for crimes related to the theft and subsequent unlawful use of credit cards that belonged to a person in the custody of Johnson while he was on duty, the Department of Justice announced. Johnson was also sentenced to serve two years supervised release.
“Officers are tasked with the duty to protect and serve the public, and when they fail to do so, they violate the public’s trust,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The department will aggressively prosecute any officer that violates the constitutional rights of those in their custody.”
“This sentencing should not reflect negatively on law enforcement or the Natchez Police Department,” said John Dowdy, U.S. Attorney for the Southern District of Mississippi. “There are thousands of law enforcement officers who maintain the highest level of integrity and professionalism as they put their lives on the line every day, but when a cop goes bad and crosses the line, like this defendant, they will be prosecuted and punished just like the criminals they arrest every day.”
“The vast majority of law enforcement officers and officials both uphold and obey the law, wielding the power and authority granted to them with the utmost integrity,” said Daniel McMullen, Special Agent in Charge of the FBI in Mississippi. “The few who violate the trust of their communities, exploiting their government-granted powers, will be caught and tried like any other criminals. The FBI is committed to maintaining trust in law enforcement by holding those who abuse their power accountable.”
Johnson was convicted at trial on March 2, 2011, for violating the civil rights of an arrestee in his custody when he stole credit cards and debit cards belonging to the arrestee. Johnson subsequently entered a guilty plea on July 28, 2010, to conspiring with his cousin, Patricia A. Wilson, to commit identity theft, credit card fraud and bank fraud. Wilson 35, of Ferriday, La., entered a similar guilty plea on July 22, 2010.
According to court documents and evidence at trial, Johnson drove a man under arrest to jail, stopped his patrol car and stole credit and debit cards from the arrestee in his custody. Johnson gave one of the stolen cards to Wilson for personal purchases, and according to Wilson, Johnson used one of the stolen cards to buy sneakers at retail stores in Natchez and later admitted to her that he had tried to use a second stolen card. Evidence at trial showed that the cards were used at a gas station, restaurants and retail stores in Natchez and Vidalia, La.
Wilson was sentenced yesterday by U.S. District Court Judge Bramlette to two years probation.
These cases were investigated by the Jackson, Miss., Division of the FBI and the Mississippi State Office of the Attorney General, and were prosecuted by Trial Attorneys Erin Aslan and Kevonne Small and Fara Gold and AeJean Cha of the Civil Rights Division of the U.S. Department of Justice and Assistant U.S. Attorney Glenda Haynes of the U.S. Attorney’s Office for the Southern District of Mississippi.
Former Heber City, Utah, Resident Indicted in Salt Lake City for Presenting False Claims to the United StatesRead the Press Release
WASHINGTON – April Rampton, formerly a resident of Heber City, Utah, was indicted by a federal grand jury in Salt Lake City with 15 counts of presenting false claims to the United States, the Justice Department and Internal Revenue Service (IRS) announced today.
According to the indictment, in August 2008, Rampton, filed a false amended income tax return in her name claiming an income tax refund of $227,325. Rampton’s false claim was based on the use of false Forms 1099-OID, Original Issue Discount. Thereafter, from October 2008 through February 2009, Rampton caused 14 additional false federal income tax returns to be filed on behalf of other individuals. These other false tax returns also used false Forms 1099-OID and claimed federal income tax refunds totaling more than $3 million.
An indictment merely alleges that a crime has been committed, and a defendant is presumed innocent until proven guilty beyond a reasonable double. If convicted, Rampton faces a maximum of 75 years in prison.
The case is being investigated by IRS-Criminal Investigation and is being prosecuted by Justice Department Tax Division Trial Attorneys Michael Romano and Stuart Wexler.
Detroit-Area Gas Station Owner and His Bookkeeper Convicted of Tax CrimeRead the Press Release
WASHINGTON– A Detroit federal jury today returned a guilty verdict against Elsayed Kazem “Tom” Safiedine and Mary Fawaz, the Justice Department and the Internal Revenue Service (IRS) announced.
The jury found Safiedine and Fawaz guilty of conspiring to defraud the United States by impeding and impairing the lawful functions of the IRS. Safiedine is an officer and member of multiple business entities that operate and lease gas stations in the Detroit area. Fawaz was an officer of one of Safiedine’s business entities and also served as a bookkeeper and office manager for several of Safiedine’s businesses.
According to the evidence presented at trial, from 1998 through 2001, Safiedine and Fawaz arranged for third parties to negotiate checks from Sunoco Incorporated made payable to JSC Corporation, a business operated by Safiedine. The checks from Sunoco Incorporated which totaled $845,000, were not properly reported to the accountant for JSC Corporation and as a result, were not included as income on JSC’s corporate tax returns filed with the IRS. Safiedine and Fawaz participated in the sale of a gas station owned by one of Safiedine’s businesses. The gas station sold for $875,000. Safiedine and Fawaz, however, told their accountant that the gas station sold for only $700,000, resulting in an understatement of $175,000 on the business’s income tax return.
Safiedine and Fawaz each face a maximum penalty of five years in prison and a maximum fine up to $250,000. The court did not set a sentencing date.
Barbara L. McQuade, U.S. Attorney for the Eastern District of Michigan, and John A. DiCicco, Principal Deputy Assistant Attorney General for the Department of Justice, Tax Division, noted the contribution of the IRS Special Agents who investigated this case, Tax Division Trial Attorneys Mark W. Kotila and Tiwana L. Wright, who prosecuted the case, and Paralegal Kimberly Better, who assisted.
More information about the Justice Department’s Tax Division and its enforcement efforts is available at www.usdoj.gov/tax.
Californian Convicted for Evading More Than $150,000 in TaxesRead the Press Release
WASHINGTON – William H. Nurick was convicted of one count of attempted evasion of payment of individual income taxes for the tax year 1995 following a jury trial before U.S. District Judge Dale S. Fischer in Los Angeles, the Justice Department and Internal Revenue Service (IRS) announced today.
According to documentary evidence and testimony presented at trial, in May 2000 Nurick filed an amended 1995 individual income tax return admitting he had a liability of $106,542 and that he took affirmative acts to conceal his ownership and control of assets to deceive the IRS regarding his true ability to pay his balance due. The evidence proved that Nurick used various nominee entities to conceal his interest in and control over bank accounts and real and personal property.
According to trial testimony, in January 2001, Nurick transferred approximately $133,000 from an offshore bank account controlled by him in the name of NG Enterprises to a witness’s offshore bank account. Nurick then, in February 2001, asked the witness for a $140,000 “loan” which was secured by a deed of trust on real estate owned by Nurick in Fresno County, California.
The government’s evidence also proved that, in May 2001, Nurick submitted a false “Offer in Compromise” to the IRS offering to pay $10,000 as full payment for the taxes and interest owed on his then debt of $157,122 for 1995 taxes and interest. The evidence showed Nurick intentionally deceived the IRS by signing a false financial statement under penalties of perjury which included the following false information: that he had a personal net worth of approximately $17,800, a monthly income of $3,333 and monthly expenses of $3,315 (for a net income of $18 monthly), and business assets of only $1,000.
Nurick also failed to list a motor vehicle as an asset, a bank account in Costa Rica with a balance in excess of $200,000 on the day he signed the Offer in Compromise and falsely stated that the Genesis Fund distribution he reported on his 2000 Form 1040 was a “final disposition” when in fact he continued to receive substantial distributions from the Genesis Fund which he did not report to the IRS and which he could have used to pay his 1995 tax liability. According to evidence presented at trial, the Genesis Fund, also known as The Human Element (T.H.E.), was an investment fund which operated from approximately 1994 through 2002. The Genesis Fund literature described foreign currency trading as the principal activity of the fund. Distributions were made from the Genesis Fund during the time period 1994 through 2002. The distributions were not intended to be gifts, loans, or notes which were required to be paid back by the recipient.
The evidence at trial demonstrated that Nurick deliberately and systematically attempted to rid himself of assets between May 2000 and April 2001 in order to willfully evade payment of the balance owed to the IRS for his 1995 income taxes. The evidence proved that he received approximately $1.1 million in distributions from the Genesis Fund between 1995 and 2002, including substantial distributions received between May 2000 and April 2001 from which he could have easily paid the 1995 balance due and intentionally chose not to do so.
Nurick faces up to five years in prison and a $250,000 fine. Judge Fisher scheduled Nurick’s sentencing for Dec. 12, 2011.
13 September 2011
Louisiana Brothers Plead Guilty and Are Sentenced for Knowingly Killing Protected AlligatorsRead the Press Release
WASHINGTON— Two Louisiana brothers pleaded guilty today and were sentenced in U.S. District Court in Baton Rouge, La., for Lacey Act violations for their role in illegally killing American Alligators in violation of the federal Endangered Species Act and Louisiana law, the Department of Justice Environment and Natural Resources Division announced.
According to statements made in court, in October 2005 and in September 2006, Clint Martinez, 44, a licensed alligator hunter, and his brother, Michael Martinez, 47, a licensed alligator helper, guided out-of-state alligator sport hunters who were clients of an outfitter, to areas for which they did not have appropriate state authorization to hunt. In October 2005, the sport hunter clients killed a 10 foot, two-inch trophy-sized alligator. In September 2006, the sport hunter clients killed a 10 foot trophy-sized alligator and a 12 foot, six-inch trophy-sized alligator.
The Martinez brothers, both of Plaquemine, La., were sentenced to serve a three year term of probation during which they will be prohibited from hunting as follows: for one year of the probation the defendants will be prohibited from engaging worldwide in all hunting activities, including guiding, with any kind of weapon; for the remaining two years of probation the defendants will be prohibited from engaging worldwide in all commercial alligator hunting activities, including guiding. In addition, each defendant will pay a $5,000 fine, serve 200 hours of community service, and publish a statement in a newspaper setting forth a brief summary of the offense and its potential penalties, and apologizing for their illegal conduct.
American Alligator hunting is a regulated commercial activity in the state of Louisiana due to severe over-hunting up until the 1960’s, resulting in a drastic population decline. Specifically, the Endangered Species Act prohibits the taking of wild American Alligators unless in compliance with Louisiana’s laws and regulations. Louisiana law requires hunters and helpers to hunt only on property for which alligator tags are issued by the state. Each tag specifies an area where alligator hunting is to occur. By law, licensed hunters and helpers are expected to know what the licensed alligator hunter’s hide tags provide, and hunt only in the area specified for each tag. It is illegal to kill an alligator in an area for which the licensed hunter or helper does not have appropriate hide tags. These regulations setting limitations on alligator hunting have allowed for the alligator population levels in Louisiana to rebound to sustainable levels.
In addition to being listed as a threatened species on the U.S. list of Threatened and Endangered Species, the American alligator also is listed as a crocodilian species on Appendix II of the Convention on International Trade in Endangered Species (CITES). To better regulate trade in crocodilian species, the parties to CITES agreed to a program of requiring a uniquely numbered tag to be inserted into the skin of each animal immediately after it is killed. The tag is to remain with the skin as it travels in interstate or international commerce until it is manufactured into a final consumer product. The secretary of the Interior promulgated special rules for American alligators that implement the CITES tagging program and regulate the harvest of alligators within the United States.
The case is being prosecuted by Shennie Patel and Susan Park of the Environmental Crimes Section of the Justice Department’s Environment and Natural Resources Division. The case was investigated by the Law Enforcement Division of the Louisiana Department of Wildlife and Fisheries and the U.S. Fish and Wildlife Service’s Office of Law Enforcement.
Las Vegas Woman 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, Special Agent in Charge Paul Camacho of the Internal Revenue Service-Criminal Investigation (IRS-CI), and Sheriff Doug Gillespie of the Las Vegas Metropolitan Police Department.
Marcella Triana, 35, pleaded guilty before U.S. District Judge Kent J. Dawson in the District of Nevada to one count of conspiracy to commit mail and wire fraud.
According to the plea agreement, Triana admitted that from at least as early as July 2005 until at least in or about 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 Triana’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. Triana admitted that she agreed to act as a straw purchaser of a property in the Chateau Versailles condominium complex in Las Vegas. Triana admitted that her co-conspirators provided the down payment and monthly payments, including HOA dues and mortgage payments, for the property and were the true owners of the property. She admitted that she signed and submitted a fraudulent loan application and closing documents to a financial institution in order to finance and close on the property on behalf of her co-conspirators. According to plea documents, Triana’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.
Triana also admitted that she agreed to run for election to the HOA board at Chateau Versailles. Once elected to the Chateau Versailles board, Triana breached her statutory fiduciary duty to the homeowners by accepting from her co-conspirators compensation, gratuities and other remuneration that improperly influenced, or reasonably appeared to influence, her decisions, resulting in a conflict of interest. Triana admitted that after being elected to the Chateau Versailles board and accepting payments from her co-conspirators, she voted in a manner directed by and favorable to her co-conspirators, including voting to hire a law firm and construction company designated by her co-conspirators to handle legal and construction work at the condominium.
Triana admitted that she also helped to manipulate the election process at the Park Avenue condominium complex and at other HOA communities to ensure that additional straw purchasers and co-conspirators won positions on the HOA boards and would vote as directed by co-conspirators.
Triana also admitted that she knew that co-conspirators manipulated the election process by creating fake labels and ballots, and supplying homeowner mailing lists to co-conspirators, which were used to create forged ballots for non-voting homeowners. According to plea documents, co-conspirators also used homeowner mailing lists to call out-of-state homeowners in order to gather information about their voting intentions, and to mail forged ballots from California to Las Vegas to make the forged votes for out-of-town homeowners appear to be legitimate.
Triana further admitted that in or about January 2009, after local and federal law enforcement officials executed search warrants at the homes and businesses of several of her co-conspirators, Triana, at the direction of a co-conspirator, further abused her power as a board member at Chateau Versailles by signing two checks on the account of the HOA payable to the co-conspirator. The checks totaled approximately $70,000. According to court documents, this money was used for the purpose of enriching the co-conspirator at the expense of bona fide homeowners.
Triana’s sentencing is scheduled for Dec. 14, 2011. 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, IRS-CI and the Las Vegas Metropolitan Police Department, Criminal Intelligence Section.
This prosecution is part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information about the task force visit: www.stopfraud.gov.
Former North Carolinian Sentenced for Obstructing and Impeding the Internal Revenue ServiceRead the Press Release
WASHINGTON – Maurice Goulet was sentenced today in Charlotte, N.C., by U.S. District Court Judge Robert J. Conrad Jr. to six months in prison for his conviction for corruptly endeavoring to obstruct and impede the due administration of the internal revenue laws, the Justice Department and Internal Revenue Service (IRS), announced today. Goulet pleaded guilty on Feb. 7, 2011.
According to court documents, between at least June 1, 1999 and 2001, Goulet was involved with several cigarette businesses, including, Birdtown Enterprises, Consumer Direct Buyers Network LLC and Greenwood Ventures LLC. Beginning in or about 1999, he obtained and used a series of bogus entities to conduct the cigarette business and to divert and conceal his income and assets from the IRS. Between 1999 and 2001, none of these entities filed tax returns with the IRS.
Goulet further admitted that he took a variety of steps to further conceal his income and assets from the IRS for the purpose of obstructing and impeding the due administration of the Internal Revenue laws, including that he used these nominee entities to purchase assets, including two motor homes and a vehicle in nominee names and entities; he used false Employer Identification Numbers (EIN) on bank accounts; he caused a false lien to be placed on at least one asset; and he made false statements to a special agent with the IRS. Goulet also admitted that prior to 2005, the last personal income tax return, IRS Form 1040, that he filed with the IRS was in 1996.
In addition to the prison term, the court sentenced Goulet to six months of home confinement, one year supervised release and ordered him to pay restitution to the IRS in the amount of $170,717.
This case was investigated by IRS-Criminal Investigation and prosecuted by Assistant U.S. Attorney Mark Odulio of the Western District of North Carolina and Justice Department Tax Division Trial Attorney Caryn Finley.
Final Defendant Pleads Guilty for His Role in International Conspiracy Involving the Forced Labor of Eastern European Women in Detroit-Area Exotic Dance ClubsRead the Press Release
WASHINGTON – A naturalized U.S. citizen originally from Ukraine pleaded guilty today in federal court in Detroit, Mich., for crimes related to an international conspiracy to compel Eastern European women to work in exotic dance clubs in the Detroit metropolitan area, announced the Justice Department. Veniamin Gonikman, 56, who became a fugitive in 2005, was apprehended in Ukraine in January 2011. He is the ninth and final member of the charged conspiracy to be convicted.
According to information presented in court filings, between September 2001 and February 2005, Gonikman, together with his son, Aleksandr Maksimenko, a U.S. citizen, and Michael Aronov, a Lithuanian national, operated Beauty Search Inc., a business that brokered and managed Eastern European women who performed in exotic dance clubs in the Detroit area. The three men recruited a number of these women in Ukraine, facilitated their illegal entry into the United States, and then harbored them for commercial advantage and private financial gain. In 2001, Gonikman facilitated the smuggling into the United States of two young Eastern European women from Ukraine, through Mexico, into the United States, and ultimately to Detroit, where the women were compelled to serve as exotic dancers.
“Human trafficking is the equivalent of modern day slavery. It deprives the victims of their freedom and dignity and it has no place in our country,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Justice Department is committed to the aggressive prosecution of those who rob individuals of their freedom for financial gain.”
“ This conviction brings the final member of this human trafficking ring to justice,” Barbara McQuade, U.S. Attorney for the Eastern District of Michigan. “These defendants treated human beings like a commodity, enticing Eastern European women to come to the United States illegally, then exploiting them for commercial advantage.”
“This conviction closes the door on a human trafficking organization responsible for wreaking havoc on the lives of women who came to the U.S. in pursuit of the American dream,” said Brian M. Moskowitz, Special Agent in Charge of the U.S. Immigration and Customs Enforcement ‘s (ICE) Homeland Security Investigations for Michigan and Ohio. “Unfortunately, we know there are still traffickers out there looking to exploit the most vulnerable among us. Cases like this one serve to strengthen our resolve to protect and defend those who may not be able to evade or escape the grip of this form of modern day slavery."
The lead defendants in this case, Maksimenko and Aronov, pleaded guilty in 2006 to forced labor, immigration, and money laundering charges. Maksimenko was sentenced to fourteen years in prison and ordered to pay $1,570,450 in restitution to the victims. Aronov was sentenced to seven-and-a-half years in prison and ordered to pay $1 million in restitution.
Six other defendants were also convicted in 2006 for their respective roles in the conspiracy, including: Duay Jado, a Greek national, who was sentenced to four years in prison for setting a victim’s car on fire to retaliate for her escape and to intimidate the other victims; two Ukrainian nationals, Eygeniy Propenko and Alexander Bondarenko, who were convicted of visa fraud to facilitate victims’ illegal entry into the United States; and Anna Gonikman-Starchenko, a Ukrainian national formerly married to Gonikman, Niki Papoutsaki, a Greek national formerly married to Aleksandr Maksimenko, and Valentina Maksimenko, a naturalized U.S. citizen also formerly married to Veniamin Gonikman, all three of whom pleaded guilty to obstruction-related charges.
Under the terms of Gonikman’s plea agreement, he faces a maximum sentence of 51 months in prison. Sentencing is scheduled for Jan. 26, 2012, before U.S. District Judge Victoria A. Roberts.
The case was investigated by ICE, the FBI, the Internal Revenue Service and the State Department. The case was prosecuted by Assistant U.S. Attorney Mark Chutkow and Trial Attorney Benjamin J. Hawk of the Civil Rights Division’s Human Trafficking Prosecution Unit. Peter Ziedas, Assistant U.S. Attorney, is handling the asset forfeiture part of the case.
12 September 2011
Two Alabamians Plead Guilty for Role in Tax Fraud ConspiracyRead the Press Release
WASHINGTON – Valerie Byrd and Isaac Dailey, both residents of Montgomery County, Ala., each pleaded guilty to one count of conspiring to defraud the United States, the Department of Justice and the Internal Revenue Service (IRS) announced today.
According to court documents, between February 2011 and April 2011, Byrd conspired with others to fraudulently obtain tax refunds. The conspiracy involved using stolen identities to file false income tax returns claiming refunds. Byrd opened up four bank accounts to receive tax refunds from the scheme. Thirty different refunds, issued in the name of 30 different individuals, were deposited into the bank accounts. To disburse these proceeds, Byrd would transfer the funds to her co-conspirators or withdraw cash. Byrd retained a portion of the proceeds for herself.
Isaac Dailey was previously indicted by a federal grand jury sitting in Montgomery, Ala., on Dec. 14, 2010, on a variety of charges stemming from a large-scale tax fraud and identity theft conspiracy based in Montgomery. According to court documents, the conspirators used stolen identities to file millions of dollars in false tax returns claiming fraudulent refunds over a two-year period in 2009 and 2010. Between January of 2009 and May of 2010, Dailey was responsible for funneling tens of thousands of dollars in false tax refunds to his co-conspirators. Dailey permitted his co-conspirators to deposit fraudulent tax refunds into his bank account. Dailey would withdraw the money, provide the funds to various co-conspirators and retain a portion of each of these transactions.
Sentencing has not yet been scheduled for either Byrd or Dailey. Both face a maximum of 10 years in prison, three years of supervised release, restitution and a maximum fine of $250,000, or twice the loss caused by the offense.
The cases were investigated by Special Agents of the IRS - Criminal Investigation. Trial attorneys Jason H. Poole and Michael Boteler of the Justice Department’s Tax Division, and Assistant U.S. Attorney Jared Morris of the Middle District of Alabama are prosecuting the case.
Additional information about the Justice Department's Tax Division and its enforcement efforts may be found at www.justice.gov/tax.
Three Plead Guilty to Conspiracy to Provide Material Support to the Pakistani TalibanRead the Press Release
WASHINGTON – Three Pakistani citizens pleaded guilty today in the District of Columbia to conspiracy to provide material support to the Tehrik-e Taliban Pakistan (TTP), often referred to as the Pakistani Taliban, a designated foreign terrorist organization.
The guilty pleas were announced by Assistant Attorney General for National Security Lisa Monaco; Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Ronald C. Machen Jr. for the District for District of Columbia; John Morton, Director of U.S. Immigration and Customs Enforcement (ICE); and John V. Gillies, Special Agent in Charge of the FBI Miami Division.
At a hearing today before U.S. District Judge John D. Bates in Washington, D.C., Irfan Ul Haq, 37; Qasim Ali, 32; and Zahid Yousaf, 43, each pleaded guilty to one count of conspiracy to provide material support to a designated foreign terrorist organization. At sentencing, which is scheduled for Dec. 9, 2011, each defendant faces a maximum sentence of 15 years in prison and a fine of up to $250,000. As part of their plea agreements, the defendants have agreed to a stipulated order of removal to Pakistan upon the completion of their criminal sentences.
“Today’s case underscores the threat posed by human smuggling networks that facilitate terrorist travel,” said Assistant Attorney General Monaco. “I thank the many agents, analysts and prosecutors who were responsible for this successful investigation.”
“These defendants sought to smuggle someone they believed to be a member of a terrorist organization from halfway around the world into the United States,” said Assistant Attorney General Breuer. “For financial profit, they were willing to jeopardize the safety and security of the American people. Human smuggling operations pose a serious risk to our national security, and we will continue to work closely with our law enforcement partners at home and abroad to combat this dangerous threat.”
“These criminals were willing to use their human smuggling network to help a terrorist slip across our border without any regard for the consequences,” said U.S Attorney Machen. “Ten years after 9/11, this case reminds us that we must remain aggressive to stop terrorists from infiltrating our homeland and harming our nation.”
“ICE Homeland Security Investigations (HSI) agents will continue to use every available resource to protect the American public from terrorist organizations and individuals who support them,” said ICE Director Morton. “Today’s announcement demonstrates our international resolve to ensuring that our nation is safer and more secure. I applaud the outstanding work conducted by our HSI attaché office in Ecuador who led this extensive investigation. I would also like to commend our HSI office in Atlanta, along with our law enforcement partners in the United States and Ecuador, who assisted us in this case.”
“These criminals said they didn’t care if the men they smuggled ‘swept floors or blow up’ something. As long as they got paid, they did not care if innocent people would be killed in a potential terrorist attack,” said FBI Special Agent in Charge Gillies. “The FBI’s number one priority is counterterrorism and we will continue to work with our partners to protect the U.S. and its people from harm.”
Ul Haq, Ali and Yousaf were arrested in Miami on March 13, 2011, on an indictment filed in the District of Columbia charging them with one count of conspiracy to commit alien smuggling. Based on the defendants’ guilty pleas to terrorism conspiracy charges, the government will dismiss at the sentencing hearing the charges of conspiracy to commit alien smuggling against the defendants.
Ul Haq, Ali and Yousaf admitted that between Jan. 3, 2011, and March 10, 2011, they conspired to provide material support to the TTP in the form of false documentation and identification, knowing that the TTP engages in terrorist activity and terrorism. According to court documents, Ul Haq, Ali and Yousaf conducted a human smuggling operation in Quito, Ecuador, that attempted to smuggle an individual they believed to be a member of the TTP from Pakistan into the United States. The TTP was designated as a foreign terrorist organization by the State Department on Sept. 1, 2010.
Court documents indicate that law enforcement agents directed confidential sources to ask the defendants, who were residing in Ecuador at the time, for their assistance in smuggling a fictitious person from Pakistan to the United States. Over the course of the ensuing negotiations, the defendants were made aware that the person to be smuggled was a member of the TTP who was blacklisted in Pakistan.
According to the court documents, the defendants agreed to move this person from Pakistan into the United States, despite his purported affiliation with the TTP. Ul Haq, according to the court documents, told the confidential sources that it was “not their concern” what the men “want to do in the United States – hard labor, sweep floor, wash dishes in a hotel, or blow up. That will be up to them.” The defendants accepted payment from the confidential sources for the smuggling operation and procured a false Pakistani passport for the purported TTP member.
The investigation was conducted by the HSI attaché office in Quito, Ecuador, with the HSI office in Atlanta, the Miami Division of the FBI and the Ecuadorian National Police.
The investigation was conducted under the Extraterritorial Criminal Travel Strike Force (ECT) program, a joint partnership between the Justice Department’s Criminal Division and HSI. The ECT program focuses on human smuggling networks that may present particular national security or public safety risks, or present grave humanitarian concerns. ECT has dedicated investigative, intelligence and prosecutorial resources. ECT coordinates and receives assistance from other U.S. government agencies and foreign law enforcement authorities.
The Criminal Division’s Office of International Affairs, the U.S. National Central Bureau of INTERPOL, the U.S. Customs and Border Protection, the U.S. Embassy in Quito and the Government of Ecuador provided invaluable support.
The case was prosecuted jointly by prosecutors from the Human Rights and Special Prosecutions Section of the Criminal Division, the Counterterrorism Section of the National Security Division and the U.S. Attorney’s Office for the District of Columbia.
Three Plead Guilty to Conspiracy to Provide Material Support to the Pakistani TalibanRead the Press Release
WASHINGTON – Three Pakistani citizens pleaded guilty today in the District of Columbia to conspiracy to provide material support to the Tehrik-e Taliban Pakistan (TTP), often referred to as the Pakistani Taliban, a designated foreign terrorist organization.
The guilty pleas were announced by Assistant Attorney General for National Security Lisa Monaco; Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Ronald C. Machen Jr. for the District of Columbia; John Morton, Director of U.S. Immigration and Customs Enforcement (ICE); and John V. Gillies, Special Agent in Charge of the FBI Miami Division.
At a hearing today before U.S. District Judge John D. Bates in Washington, D.C., Irfan Ul Haq, 37; Qasim Ali, 32; and Zahid Yousaf, 43, each pleaded guilty to one count of conspiracy to provide material support to a designated foreign terrorist organization. At sentencing, which is scheduled for Dec. 9, 2011, each defendant faces a maximum sentence of 15 years in prison and a fine of up to $250,000. As part of their plea agreements, the defendants have agreed to a stipulated order of removal to Pakistan upon the completion of their criminal sentences.
“Today’s case underscores the threat posed by human smuggling networks that facilitate terrorist travel,” said Assistant Attorney General Monaco. “I thank the many agents, analysts and prosecutors who were responsible for this successful investigation.”
“These defendants sought to smuggle someone they believed to be a member of a terrorist organization from halfway around the world into the United States,” said Assistant Attorney General Breuer. “For financial profit, they were willing to jeopardize the safety and security of the American people. Human smuggling operations pose a serious risk to our national security, and we will continue to work closely with our law enforcement partners at home and abroad to combat this dangerous threat.”
“These criminals were willing to use their human smuggling network to help a terrorist slip across our border without any regard for the consequences,” said U.S Attorney Machen. “Ten years after 9/11, this case reminds us that we must remain aggressive to stop terrorists from infiltrating our homeland and harming our nation.”
“ICE Homeland Security Investigations (HSI) agents will continue to use every available resource to protect the American public from terrorist organizations and individuals who support them,” said ICE Director Morton. “Today’s announcement demonstrates our international resolve to ensuring that our nation is safer and more secure. I applaud the outstanding work conducted by our HSI attaché office in Ecuador who led this extensive investigation. I would also like to commend our HSI office in Atlanta, along with our law enforcement partners in the United States and Ecuador, who assisted us in this case.”
“These criminals said they didn’t care if the men they smuggled ‘swept floors or blow up’ something. As long as they got paid, they did not care if innocent people would be killed in a potential terrorist attack,” said FBI Special Agent in Charge Gillies. “The FBI’s number one priority is counterterrorism and we will continue to work with our partners to protect the U.S. and its people from harm.”
Ul Haq, Ali and Yousaf were arrested in Miami on March 13, 2011, on an indictment filed in the District of Columbia charging them with one count of conspiracy to commit alien smuggling. Based on the defendants’ guilty pleas to terrorism conspiracy charges, the government will dismiss at the sentencing hearing the charges of conspiracy to commit alien smuggling against the defendants.
Ul Haq, Ali and Yousaf admitted that between Jan. 3, 2011, and March 10, 2011, they conspired to provide material support to the TTP in the form of false documentation and identification, knowing that the TTP engages in terrorist activity and terrorism. According to court documents, Ul Haq, Ali and Yousaf conducted a human smuggling operation in Quito, Ecuador, that attempted to smuggle an individual they believed to be a member of the TTP from Pakistan into the United States. The TTP was designated as a foreign terrorist organization by the State Department on Sept. 1, 2010.
Court documents indicate that law enforcement agents directed confidential sources to ask the defendants, who were residing in Ecuador at the time, for their assistance in smuggling a fictitious person from Pakistan to the United States. Over the course of the ensuing negotiations, the defendants were made aware that the person to be smuggled was a member of the TTP who was blacklisted in Pakistan.
According to the court documents, the defendants agreed to move this person from Pakistan into the United States, despite his purported affiliation with the TTP. Ul Haq, according to the court documents, told the confidential sources that it was “not their concern” what the men “want to do in the United States – hard labor, sweep floor, wash dishes in a hotel, or blow up. That will be up to them.” The defendants accepted payment from the confidential sources for the smuggling operation and procured a false Pakistani passport for the purported TTP member.
The investigation was conducted by the HSI attaché office in Quito, Ecuador, with the HSI office in Atlanta, the Miami Division of the FBI and the Ecuadorian National Police.
The investigation was conducted under the Extraterritorial Criminal Travel Strike Force (ECT) program, a joint partnership between the Justice Department’s Criminal Division and HSI. The ECT program focuses on human smuggling networks that may present particular national security or public safety risks, or present grave humanitarian concerns. ECT has dedicated investigative, intelligence and prosecutorial resources. ECT coordinates and receives assistance from other U.S. government agencies and foreign law enforcement authorities.
The Criminal Division’s Office of International Affairs, the U.S. National Central Bureau of INTERPOL, the U.S. Customs and Border Protection, the U.S. Embassy in Quito and the Government of Ecuador provided invaluable support.
The case was prosecuted jointly by prosecutors from the Human Rights and Special Prosecutions Section of the Criminal Division, the Counterterrorism Section of the National Security Division and the U.S. Attorney’s Office for the District of Columbia.
Second California Aftermarket Auto Lights Distributor Agrees to Plead Guilty in Price-Fixing ConspiracyRead the Press Release
WASHINGTON – A second California aftermarket auto lights distributor has agreed to plead guilty for participating in a global conspiracy to fix the prices of aftermarket auto lights, the Department of Justice announced. Aftermarket auto lights are incorporated into an automobile after its original sale, often as repairs following a collision or as accessories and upgrades.
According to a one-count felony charge filed today in U.S. District Court in San Francisco, Maxzone Vehicle Lighting Corp. conspired with others to suppress and eliminate competition by fixing the prices of aftermarket auto lights. The department said that Maxzone, a wholly-owned subsidiary of the Taiwan-based aftermarket auto lights manufacturer Depo Auto Parts Industrial Co. Ltd., participated in the conspiracy from about April 2000 to about Sept. 3, 2008. Under the plea agreement, which is subject to court approval, Maxzone has agreed to pay a $43 million criminal fine and to assist the department in its ongoing investigation into the aftermarket auto lights industry.
According to the charge, Maxzone and co-conspirators participated in a conspiracy in which the participants met and agreed to charge prices of aftermarket auto lights at certain predetermined levels. According to the court documents, the participants in the conspiracy issued price announcements and price lists in accordance with the agreements reached, and collected and exchanged information on prices and sales of aftermarket auto lights for the purpose of monitoring and enforcing adherence to the agreed-upon prices. The department said that the conspirators met in Taiwan, the United States and elsewhere for their discussions.
Maxzone is the second U.S. distributor of aftermarket auto lights to be charged in connection with the department’s ongoing investigation into the aftermarket auto lights industry. On Aug. 30, 2011, the department announced that Sabry Lee (U.S.A.) Inc. was charged and had agreed to plead guilty. Three individuals have also been charged. Polo Shu-Sheng Hsu, the former president and chief executive officer of Maxzone, entered his guilty plea on March 29, 2011, and was sentenced to serve 180 days in prison and to pay a $25,000 criminal fine. Chien Chung Chen, aka Andrew Chen, the former executive vice president of Sabry Lee, pleaded guilty to his participation in the conspiracy on June 7, 2011. He is currently scheduled to be sentenced on Dec. 13, 2011. Homy Hong-Ming Hsu was arrested at Los Angeles International Airport on July 12, 2011, and indicted on July 19, 2011. Homy Hong-Ming Hsu is the vice chairman and second highest-ranking officer of a Taiwan manufacturer of aftermarket auto lights.
Maxzone is charged with violating the Sherman Act, which carries 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.
This case is part of an ongoing joint investigation of the Department of Justice Antitrust Division’s San Francisco Office and the FBI in San Francisco. Anyone with information concerning illegal or anticompetitive conduct in the aftermarket auto lights 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.
Maxim Healthcare Services Charged with Fraud, Agrees to Pay Approximately $150 Million, Enact Reforms After False Billings Revealed as Common PracticeRead the Press Release
NEWARK, N.J. – Maxim Healthcare Services Inc., one of the nation’s leading providers of home healthcare services, has entered into a settlement to resolve criminal and civil charges relating to a nationwide scheme to defraud Medicaid programs and the Veterans Affairs program of more than $61 million.
Today’s announcement was made by Tony West, Assistant Attorney General of the Civil Division of the Department of Justice; J. Gilmore Childers, Acting U.S. Attorney for the District of New Jersey; Tom ODonnell, Special Agent in Charge of the Health and Human Services Office of Inspector General (HHS-OIG) region covering New Jersey; Michael B. Ward, Special Agent in Charge of the FBI’s Newark, N.J., Field Office; and Jeffrey Hughes, Special Agent in Charge of the U.S. Department of Veterans Affairs, Office of the Inspector General (VA OIG), Northeast Field Office.
Maxim was charged today in a criminal complaint with conspiracy to commit health care fraud, and has entered into a deferred prosecution agreement (DPA) with the Department of Justice. The agreement will allow Maxim to avoid a health care fraud conviction on the charges if it complies with the DPA’s requirements. As required by the DPA, which will expire in 24 months if the company meets all of its reform and compliance requirements, Maxim has agreed to pay a criminal penalty of $20 million and to pay approximately $130 million in civil settlements in the matter, including to federal False Claims Act claims.
To date, nine individuals – eight former Maxim employees, including three senior managers and the parent of a former Maxim patient – have pleaded guilty to felony charges arising out of the submission of fraudulent billings to government health care programs, the creation of fraudulent documentation associated with government program billings, or false statements to government health care program officials regarding Maxim’s activities.
The criminal complaint accuses Maxim, a privately-held company based in Columbia, Md., with hundreds of offices throughout the United States, of submitting more than $61 million in fraudulent billings to government health care programs for services not rendered or otherwise not reimbursable. The investigation revealed that the submission of false bills to government health care programs was a common practice at Maxim from 2003 through 2009. During that time period, Maxim received more than $2 billion in reimbursements from government health care programs in 43 states based on billings submitted by Maxim.
“Fraudulent billing for services not rendered uses patients as pawns in a game of corporate greed that puts cash over care and wastes precious taxpayer dollars,” said Assistant Attorney General West. “At a time when we're all looking for ways to reduce public expenditures, settlements like this one recapture taxpayer dollars lost to fraud and abuse, and help ensure that funds are available for the vital health care programs and services that people depend on day in and day out.”
“Maxim, including senior executives, defrauded a system providing needed services to turn money meant for patient care into corporate profits,” said Acting U.S. Attorney Childers. “We will continue to prove our commitment to investigating and prosecuting both companies and individuals whose misconduct robs our nation’s health care programs and those who count on them. It is our hope that Maxim, in cleaning up its own house, will be a lighthouse influencing best practices across the industry.”
“Companies scheming to profit by deceiving patients and defrauding taxpayer-funded government health care programs can expect close scrutiny and aggressive investigation,” said HHS-OIG Special Agent in Charge ODonnell. “We will continue to carefully guard the nation’s vital health programs against those who put greed over patient care.”
“Health care fraud is a considerable problem in New Jersey with residents being victimized by an estimated $7.5 billion in care-related frauds in 2010,” said FBI Special Agent in Charge Ward. “The criminal conduct by Maxim in this instance was significant and systemic, which resulted in both the company and individuals being liable for their actions. The Newark Division of the FBI is committed to its stance of being among the most aggressive offices in pursuit and ultimate prosecution of health care fraud offenders.”
“Today’s announcement demonstrates the Department of Veterans Affairs Office of Inspector General’s commitment to focus investigative resources on companies that choose to pursue profit over the public’s health,” said VA OIG Special Agent in Charge Hughes. “VA OIG applauds the hard work of the Department of Justice and our law enforcement counterparts in bringing about this successful conclusion by aggressively pursuing and prosecuting those who committed fraud against our nation’s federal healthcare programs, including VA’s.”
As part of the DPA, Maxim has stipulated to a statement of facts which mirrors the language of the criminal complaint. In the event that Maxim fails to comply with the provisions of the DPA, Maxim has agreed that the U.S. Attorney’s Office may proceed with its prosecution of Maxim and use the agreed-upon statement of facts against it in the prosecution.
As detailed in the criminal complaint, Maxim, through its former officers and employees, falsely and fraudulently submitted billings to government health care programs for services not rendered or otherwise not reimbursable by government health care programs from 2003 through 2009. In order to conceal the fraud, Maxim’s former officers and employees engaged in various conduct during that time period, including creating or modifying time sheets to support billings to government health care programs for services not rendered. They also submitted billings through licensed offices for care actually supervised by offices which operated without licenses and whose existence was concealed from government health care program auditors and investigators. Additionally, they created or modified documentation relating to required administrative functions associated with billings submitted to government health care programs, including documentation reflecting required training and qualifications of caregivers.
The DPA obliges Maxim to continue cooperating in the government’s ongoing federal and state criminal investigation of former Maxim executives and employees responsible for the alleged conduct at issue, and to develop and operate an effective corporate compliance and governance program that includes adequate internal controls to prevent the recurrence of any improper or illegal activities.
The DPA requires Maxim’s acceptance and acknowledgment of full responsibility for the conduct that led to the government’s investigation.
The settlement requires payment of approximately $130 million to Medicaid programs and the Veterans Affairs program to resolve False Claims Act liability for false home healthcare billings to Medicaid programs and the Veterans Administration under civil agreements relating to this matter. The settlement resolves allegations that Maxim billed for services that were not rendered, services that were not properly documented, and services performed by 13 unlicensed offices. Maxim has agreed to pay approximately $70 million to the federal government and approximately $60 million to 42.
Also included in the settlement is a corporate integrity agreement with HHS-OIG, which requires additional reforms and monitoring under HHS-OIG supervision.
In addition, the company must also retain and pay an independent monitor, who will review Maxim’s business operations and regularly report concerning the company’s compliance with all federal and state health care laws, regulations, and programs. The monitor was selected by the U.S. Attorney’s Office, consistent with U.S. Department of Justice guidelines, after a review of monitor candidates and in consultation with the company. Maxim will be monitored by Peter Keith of the law firm Gallagher, Evelius & Jones, which is headquartered in Baltimore.
Prosecution of Individuals
According to documents filed in these cases and statements made in Trenton, N.J., federal court:
Gregory Munzel, 35, of Charleston, S.C., was employed as a regional account manager, reporting directly to a vice president, responsible for Maxim offices throughout the southeastern United States. He pleaded guilty on Dec. 4, 2009, to one count of making false statements relating to health care fraud matters. During his plea hearing, Munzel admitted that he was aware individuals he supervised were submitting time cards for work that had not actually been done – a practice Munzel said was in response to pressure from Maxim superiors to increase revenue. Munzel also acknowledged forging caregiver credentials such as CPR cards throughout his time at Maxim, in order to make it appear that the caregivers were properly credentialed, when they were not. Munzel indicated he learned the practice from his supervisors when he first joined Maxim, and that those under him engaged in the practice when he took on a leadership role with the company. Munzel is currently scheduled to be sentenced Sept. 29, 2011.
Bryan Lee Shipman, 38, of Athens, Ga., worked for Maxim for 13 years, the last eight as a regional account manager, reporting directly to a vice president. He pleaded guilty on June 17, 2010, to one count of health care fraud. During his plea hearing, Shipman acknowledged that Maxim’s Gainesville, Ga., office operated without a license from 2008 through 2009, and that he and others directed billings from that office to be submitted as if they were from another, licensed office to be approved for reimbursement by the Medicaid program. At one point, when Maxim employees believed a state regulator would be visiting the office, lower-level employees were directed to provide false information to the state regulator in an effort to prevent the Medicaid program from learning about the unlicensed operation of the office. Shipman said his superiors demanded levels of growth based “not on any market analysis, but simply on a belief that dramatic growth was necessary regardless of market conditions.” Shipman is currently scheduled to be sentenced Nov. 16, 2011.
Matthew Skaggs, 39, was employed as a regional account manager, reporting directly to a vice president, responsible for Maxim’s offices in Texas. He pleaded guilty on Sept. 23, 2010, to making false statements relating to health care fraud matters. During his plea hearing, Skaggs acknowledged having knowingly made false statements to a surveyor from Texas’ Medicaid Program, who was investigating the operation of an unlicensed Maxim office in Houston. Skaggs was sentenced on June 10, 2011, to a three-year term of probation and ordered to pay a $4,000 fine.
Andrew Sabbaghzadeh, 29, of Clay, N.Y., was employed as an account manager; and Jason Bouche, 27, of Paradise Valley, Ariz., was employed as a recruiter at Maxim’s Tempe, Ariz., office. They pleaded guilty to health care fraud on Nov. 4, 2009, and April 23, 2010, respectively. During their plea hearings, Sabbaghzadeh and Bouche acknowledged creating fraudulent time cards in order to bill government programs. They acknowledged that in some instances, Maxim employees cut signatures from legitimate time cards and pasted them onto forged time cards in order to submit them for reimbursement. Sabbaghzadeh is currently scheduled to be sentenced on Sept. 26, 2011; Bouche is currently scheduled to be sentenced on Nov. 17, 2011.
Donna Ocansey, 49, of Medford, N.J., was employed as a director of clinical services (supervising nurse) in Maxim’s Cherry Hill, N.J., office. She pleaded guilty on May 28, 2010, to making false statements relating to health care fraud matters. Ocansey, a registered nurse, had responsibility for, among other things, ensuring that Medicaid-required supervisory visits of patients were conducted periodically – meaning that a registered nurse periodically visited each patient to check each patient’s condition and the care the patient was receiving from Maxim Home Health Aides, who lack the skills and training of registered nurses. During her plea hearing, Ocansey acknowledged that she fabricated documentation in order to make it appear that other nurses had conducted Medicaid-mandated supervisory visits, when in fact they had not. Ocansey stated that she fabricated documentation in response to pressure from her superiors at Maxim, who expected her to make sure that all supervisory visits were completed without providing adequate resources for her to do so. Ocansey is currently scheduled to be sentenced Sept. 20, 2011.
Mary Shelly Janvier-Pierre, 42, of Lake Worth, Fla., and Sandy Cave, 39, of West Palm Beach, Fla., pleaded guilty to health care fraud on Feb. 1, 2010, and June 21, 2010, respectively. During their plea hearings, Janvier-Pierre, who had been employed by Maxim’s West Palm Beach office as a licensed practical nurse; and Cave, the mother of a former pediatric patient of Maxim, admitted to their roles in a scheme to fraudulently bill Medicaid through Maxim for services that were not rendered. Janvier-Pierre and Cave acknowledged that they agreed to submit billings as if Janvier-Pierre was taking care of Cave’s child, when in reality she was not. Janvier-Pierre and Cave then split the money Janvier-Pierre received for purportedly providing the care. As a result of the scheme, Maxim was paid more than $70,000 by Florida’s Medicaid program. Janvier-Pierre and Cave are scheduled to be sentenced on Sept. 21, 2011, and Oct. 24, 2011, respectively.
Marion Morton, 45, of North Charleston, S.C., was employed as a home health aide and personal care assistant by Maxim’s Charleston office. He pleaded guilty on May 3, 2010, to one count of making false statements relating to health care fraud matters. During his plea hearing, Morton acknowledged that, at the instruction of Maxim employees, he fabricated timecards reflecting work he had not done. On multiple occasions, Maxim submitted bills to Medicaid based on timecards which showed he worked more than 24 hours on certain days. Morton was sentenced on May 24, 2011, to a three-year term of probation and ordered to pay a $5,000 fine.
All of the defendants pleaded guilty before U.S. District Judge Anne E. Thompson in Trenton federal court.
The health care fraud charge to which Shipman, Sabbaghzadeh, Bouche, Janvier-Pierre and Cave pleaded guilty carries a maximum penalty of 10 years in prison and a maximum fine of $250,000, or twice the amount of loss caused by their offenses. The false statements relating to health care fraud matters charge to which defendants Munzel, Skaggs, Ocansey and Morton pleaded guilty carries a maximum penalty of five years in prison and a maximum fine of $250,000, or twice the amount of loss caused by their offenses.
Maxim’s Remedial Actions
The government’s willingness to enter into a DPA with Maxim is due, in significant part, to the company’s cooperation and the reforms and remedial actions the company has taken – beginning particularly in May 2009 – including significant personnel changes: terminating senior executives and other employees the company identified as responsible for the misconduct; establishing and filling of positions of chief executive officer, chief compliance officer, chief operations officer/chief clinical officer, chief quality officer/chief medical officer, chief culture officer, chief financial and strategy officer, and vice president of human resources; and hiring a new general counsel.
The company has identified and disclosed to law enforcement the misconduct of former Maxim employees, including providing information which has been critical in obtaining the convictions of some of the individuals who have pleaded guilty to date. The company has also significantly increased the resources allocated to its compliance program.
The settlement arises from a lawsuit filed under the False Claims Act. Under the qui tam, or whistleblower, provisions of the act, private citizens may file actions on behalf of the United States and share in any recovery. The whistleblower will receive approximately $15.4 million as his share of the recoveries from the federal government and the states.
The criminal complaint, DPA, civil settlement agreement and guilty pleas are the culmination of a multi-year investigation conducted jointly by special agents and investigators from HHS-OIG, under the direction of Special Agent in Charge ODonnell; FBI, under the direction of Special Agent in Charge Ward; and VA OIG, under the direction of Special Agent in Charge Hughes. The National Association of Medicaid Fraud Control Units (NAMFCU) and the Medicaid Fraud Control Units of the New Jersey, Virginia and Massachusetts Attorney General’s Offices also assisted in coordinating the settlements with the various states.
The government is represented in the prosecution of the criminal case by Assistant U.S. Attorney Jacob T. Elberg of the U.S. Attorney’s Office Health Care and Government Fraud Unit in Newark; and in the civil agreement by Sara McLean of the Department of Justice’s Commercial Litigation Branch, Frauds Section and Assistant U.S. Attorney Alex Kriegsman of the U.S. Attorney’s Office’s Civil Division.
The government’s involvement in this case is part of the United States’ 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 $7.5 billion.
Detroit Man Pleads Guilty to Threatening Couple Because of Their RaceRead the Press Release
WASHINGTON – The Justice Department announced today that Glenn E. Morgan Jr. of Detroit pleaded guilty in federal court to sending a noose and threatening photographs through the mail to a Detroit couple because of their race.
Morgan, 40, admitted in court that in November 2008, he mailed a noose, photographs of black men being lynched and a photograph of the murdered body of Nicole Brown Simpson to the couple because of their race. The envelope Morgan sent to the couple also contained threatening written messages indicating that black men who marry white women should be lynched and that white women who marry black men would share Nicole Brown Simpson’s fate.
“It is inconceivable that acts of hate like this one continue to occur in the year 2011,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The department will vigorously prosecute individuals who threaten or intimidate others because of the color of their skin.”
“Threats and intimidation based on race have no place in our multi-cultural society,” U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade said. “We are committed to protecting the rights and safety of all of our citizens.”
Andrew Arena, Special Agent in Charge of the FBI in Detroit said, “Actions motivated by hate will not be tolerated. The FBI, along with its local, state and federal law enforcement partners will continue to investigate and prosecute those who engage in hate crimes.”
Morgan faces a maximum punishment of 10 years of in prison and a fine of $250,000.
The case was investigated by the FBI. The case was prosecuted by Assistant U.S. Attorney Pamela Thompson from the Eastern District of Michigan, and Trial Attorney Sanjay Patel from the Civil Rights Division of the U.S. Department of Justice.
Delaware Man Pleads Guilty to Production and Transportation of Child PornographyRead the Press Release
WASHINGTON – A Wilmington, Del., man pleaded guilty today to production and transportation of child pornography, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney Charles M. Oberly III of the District of Delaware and John P. Kelleghan, Special Agent in Charge of U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI) in Philadelphia.
Leonard Wasylyk, 49, pleaded guilty before U.S. District Judge Sue L. Robinson in the District of Delaware. Wasylyk has been detained since his Dec. 9, 2010, arrest.
According to statements made and documents filed in court, an undercover agent from the Wilmington office of the Department of Homeland Security HSI identified Wasylyk during an online undercover investigation into a private peer-to-peer network being used to trade images of child pornography. After downloading computer files containing child pornography from Wasylyk’s home computer, federal agents arrested Wasylyk and executed a search warrant at his North Wilmington residence on Dec. 9, 2010. Law enforcement agents recovered a computer from Wasylyk’s bedroom that contained over 60,000 images of child pornography. The majority of the images depicted mostly prepubescent, adolescent and teenage boys engaged in sex acts with other boys or adult males. Through a forensic analysis of Wasylyk’s computer, agents learned that Wasylyk had traded images of child pornography with approximately 150 individuals, with whom he had engaged in over 15,500 instant message chats.
According to court documents, during the forensic review of Wasylyk’s computer, agents discovered more than 60 images of a young boy engaged in sexually explicit conduct with Wasylyk in the bedroom of his Wilmington residence. Agents subsequently identified the child and located him in Southeastern Pennsylvania. The child reported that Wasylyk produced the sexually explicit images when the boy was 12 or 13 years old. Forensic analysis also revealed that Wasylyk distributed the sexually explicit images that he produced to other child sex offenders while bragging about having molested the boy.
At sentencing, scheduled for Jan. 4, 2012, Wasylyk faces a mandatory minimum sentence of 15 years in prison and a maximum sentence of 30 years in prison on the production 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 transportation of child pornography charge. Wasylyk also faces a term of supervised release of five years to life following his prison sentence, and will be required to register as a sex offender in any jurisdiction in which he lives, works or attends school.
This case is being investigated by HSI. This case is being prosecuted by Trial Attorney Thomas Franzinger of the Criminal Division’s Child Exploitation and Obscenity Section and Assistant U.S. Attorney Edward J. McAndrew of the District of Delaware.
Canadian National Sentenced to Serve 50 Months in Prison for Role in Fraud and Money Laundering Conspiracies Involving New Jersey Environmental Protection Agency at Superfund SiteRead the Press Release
WASHINGTON — A former executive at Bennett Environmental Inc. (BEI), a Canada-based company that treats and disposes of contaminated soil, was sentenced today to 50 months in prison for participating in money-laundering and fraud conspiracies in connection with contracts at a Superfund site in New Jersey, as well as impeding a proceeding before the U.S . Securities and Exchange Commission (SEC), the Department of Justice announced. The U.S. Environmental Protection Agency (EPA)-designated Superfund site, Federal Creosote, is located in Manville, N.J.
Robert P. Griffiths was also sentenced in U.S. District Court in Newark, N.J., by Judge Susan D. Wigenton to pay a $15,000 criminal fine and to pay $4,644,378.56 in restitution, joint and severally with co-conspirators to the victim, the EPA. On July 6, 2009, Griffiths pleaded guilty to defrauding the EPA with others by inflating the prices he charged to a prime contractor of the EPA and providing kickbacks to employees of that prime contractor from approximately December 2001 until approximately August 2004 at the Federal Creosote site. Griffiths and his co-conspirators were given the bid prices of BEI’s competitors, which allowed BEI to submit the highest possible bid prices and still be awarded the sub-contracts. On one occasion, Griffiths and his co-conspirators inflated the bid prices to cover approximately $1.3 million in kickbacks and amounts BEI kept for itself. The kickbacks were in the form of money transferred by wire to a co-conspirator’s shell company, lavish cruises for senior officials of the prime contractor, various entertainment tickets, pharmaceuticals and home entertainment electronics. The department said that the co-conspirators were able to allocate at least $43 million in fraudulently awarded sub-contracts to BEI for the removal, treatment and disposal of contaminated soil at the Federal Creosote site and to fraudulently conceal from the U.S. Army Corps of Engineers that BEI had submitted false invoices for the disposal of approximately 20,000 tons of soil.
According to court documents, Griffiths and his co-conspirators also conspired to commit international money laundering, the purpose of which was for Griffiths to profit personally from the fraud and kickback scheme. From approximately February 2003 through approximately September 2004, Griffiths and a co-conspirator who received more than $1 million in kickbacks through his shell company, laundered approximately $207,000 of the kickback proceeds from the co-conspirator’s bank account in New Jersey to a bank account controlled by Griffiths in Ontario, Canada.
In addition, the department said that Griffiths obstructed an official proceeding before the SEC. On or about Nov. 3, 2005, Griffiths made false statements in response to questions asked by the SEC for the purpose of deceiving the SEC and concealing his conduct in the fraudulent scheme. At that time, the SEC was investigating whether Griffiths and others had obtained information not available to the public and relied upon that information to conduct certain securities transactions improperly.
The clean-up at Federal Creosote is partly funded by the EPA. Under an interagency agreement between the EPA and the Army Corps of Engineers, prime contractors oversaw the removal, treatment and disposal of contaminated soil as well as other operations at the Federal Creosote site.
Including Griffiths, a total of three companies and 10 individuals have been charged as part of the investigation. More than $6 millionin criminal fines and restitution have been imposed and five individuals have been sentenced to serve prison time.
Today’s sentence is the result of an ongoing investigation being conducted by the Antitrust Division’s New York Field Office, the EPA Office of Inspector General and the Internal Revenue Service-Criminal Investigation. Anyone with information concerning bid rigging, kickbacks, tax offenses or fraud relating to sub-contracts awarded at the Federal Creosote site or Diamond Alkali sites should contact the Antitrust Division’s New York Field Office at 212-335-8000 or visit www.justice.gov/atr/contact/newcase.htm.
Accenture Pays U.S. $63.675 Million to Settle False Claims Act AllegationsRead the Press Release
WASHINGTON – Accenture LLP has agreed to pay the United States $63.675 million to resolve a whistleblower lawsuit, the Justice Department announced today. The lawsuit, filed in the U.S. District Court for the Eastern District of Arkansas, alleges that Accenture submitted or caused to be submitted false claims for payment under numerous contracts with agencies of the United States for information technology services.
Accenture has agreed to resolve allegations that it received kickbacks for its recommendations of hardware and software to the government, fraudulently inflated prices and rigged bids in connection with federal information technology contracts.
“Kickbacks and bid rigging undermine the integrity of the federal procurement process,” said Tony West, Assistant Attorney General for the Justice Department’s Civil Division. “At a time when we're looking for ways to reduce our public spending, it is especially important to ensure that government contractors play by the rules and don’t waste precious taxpayer dollars.”
“We strive each and every day to bring justice to the citizens of the Eastern District of Arkansas,” stated Christopher R. Thyer, U.S. Attorney for the Eastern District of Arkansas. “Fraudulent business practices that steal hard earned and much needed tax dollars from appropriate use will not be tolerated. The United States Attorney’s Office is committed to pursuing these cases to the full extent of the law.”
The lawsuit was initially filed by Norman Rille and Neal Roberts under the qui tam or whistleblower provisions of the federal False Claims Act, which permit private individuals, called “relators” to bring lawsuits on behalf of the United States and receive a portion of the proceeds of a settlement or judgment awarded against a defendant. The portion of the proceeds to be paid in this case has not yet been resolved.
“Companies profiting off the breach of their government contracts will pay,” said Brian D. Miller, General Services Administration Inspector General.
The case was handled by the Department of Justice’s Civil Division and the US Attorney’s Office for the Eastern District of Arkansas, with the assistance of the Defense Criminal Investigative Service and the Offices of Inspector General of the Department of Energy, the Department of Education, Department of Treasury Tax Administration (TIGTA), General Services Administration, Department of State and Transportation Security Administration.
The Justice Department’s total recoveries in False Claims Act cases since January 2009 are more than $7.5 billion.
9 September 2011
Washington, D.C., Resident Sentenced to 80 Months in Prison for Possession of Child PornographyRead the Press Release
WASHINGTON –Anthony Moreno, 25, of Washington, D.C., was sentenced today to 80 months in prison for one count of possession of child pornography, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney for the District of Columbia Ronald C. Machen Jr.; James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office; Cathy L. Lanier, Chief of the Metropolitan Police Department (MPD); and Brigadier General Kevin J. Jacobsen, Commander for Air Force Office of Special Investigations.
Moreno pleaded guilty to the charge in May 2011 in U.S. District Court for the District of Columbia. He was sentenced by U.S. District Judge Beryl A. Howell. In addition to his prison term, Moreno was sentenced to 10 years of supervised release.
According to information presented during the plea hearing, on Sept. 18, 2010, a law enforcement agent, utilizing a publicly available peer-to-peer Internet file sharing program, observed that Moreno had approximately 299 images of child pornography in his shared-file folders on the network.
On Nov. 26, 2010, law enforcement agents executed a warrant to search Moreno’s computer equipment located at his residence at the Bolling Air Force Base in Washington, D.C. After law enforcement confirmed that Moreno possessed child pornography, Moreno was arrested. Forensic analysis of Moreno’s computer equipment confirmed that he had collected more than 8,800 images and 250 videos of child pornography.
This case was brought as part of the Department of Justice’s Project Safe Childhood initiative. Project Safe Childhood is a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov
This case was prosecuted by Trial Attorney Darcy Katzin of the Criminal Division’s CEOS and Assistant U.S. Attorney David B. Kent of the District of Columbia. The case was investigated by the FBI’s Child Exploitation Task Force, which includes members of the FBI’s Washington Field Office and MPD. The Air Force Office of Special Investigations and CEOS’s High Technology Investigative Unit also assisted in the investigation.
Virginia Woman Sentenced to 60 Months in Prison for Importing and Selling Counterfeit Cisco Computer Networking EquipmentRead the Press Release
WASHINGTON – A Virginia woman was sentenced today to 60 months in prison for leading a sophisticated conspiracy to import and to sell counterfeit Cisco-branded computer networking equipment, laundering criminal proceeds and obtaining her citizenship through fraud, announced U.S. Attorney Neil H. MacBride for the Eastern District of Virginia and Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.
At sentencing, U.S. District Court Judge Gerald Bruce Lee also ordered Chun-Yu Zhao, 43, of Chantilly, Va., to pay $2,709,238 in restitution and to pay a $17,500 fine. Zhao was also ordered to serve three years of supervised release following her prison term. In addition, Judge Lee stripped Zhao of her U.S. citizenship and ordered that the following assets be forfeited to the United States: four homes in Maryland and northern Virginia and three condominiums in Chantilly with a total value of more than $2.6 million; a Porsche Boxster, Porsche Cayenne and Mercedes sedan; and seven bank accounts containing more than $1.6 million. Zhao has been in federal custody since her July 22, 2010, arrest by agents of U.S. Immigration and Customs Enforcement (ICE).
In May 2011, following a three-week trial, a federal jury convicted Zhao of 16 felony counts, including conspiracy to commit importation fraud and to deal in counterfeit goods, importation fraud, dealing in counterfeit goods, obtaining citizenship by fraud, making false statements to law enforcement and money laundering. According to court documents, Zhao and her family members and other co-conspirators in China agreed to lie on declaration forms and to sell shipments of counterfeit Cisco-branded computer networking equipment. Zhao and her co-conspirators used counterfeit labels and packaging to mislead consumers into believing that they were purchasing genuine Cisco products. To evade detection, Zhao and her co-conspirators used various names and addresses in importation documents and hid millions of dollars of counterfeiting proceeds through a web of bank accounts and real estate held in the names of Zhao’s family members. Zhao also fraudulently obtained United States citizenship based on lies on her citizenship application.
The case was investigated by ICE’s Homeland Security Investigations’ Washington, D.C., office, as well as the Office of the Inspector General from the General Services Administration. U.S. Customs and Border Protection made a criminal referral to ICE after intercepting counterfeit products from China destined for addresses associated with Zhao, her business and her family.
The case was prosecuted by Assistant U.S. Attorneys Jay V. Prabhu and Lindsay A. Kelly from the Eastern District of Virginia, and Senior Counsel Michael J. Stawasz from the Computer Crime and Intellectual Property Section in the Justice Department’s Criminal Division.
The sentencing announced today is an example of the type of efforts being undertaken by the Department of Justice Task Force on Intellectual Property (IP Task Force). Attorney General Eric Holder created the IP Task Force to combat the growing number of domestic and international intellectual property crimes, protect the health and safety of American consumers, and safeguard the nation’s economic security against those who seek to profit illegally from American creativity, innovation and hard work. The IP Task Force seeks to strengthen intellectual property rights protection through heightened criminal and civil enforcement, greater coordination among federal, state and local law enforcement partners, and increased focus on international enforcement efforts, including reinforcing relationships with key foreign partners and U.S. industry leaders. To learn more about the IP Task Force, go to www.justice.gov/dag/iptaskforce/.
U.S. Joined False Claims Act Lawsuit Against Florida’s Halifax Hospital Medical Center and Halifax Staffing Inc.Read the Press Release
WASHINGTON – The United States has partially intervened in a lawsuit under the False Claims Act against Halifax Hospital Medical Center and Halifax Staffing Inc. in the U.S. District Court for the Middle District of Florida, the Department of Justice announced today.
The government partially intervened with respect to allegations that Halifax, which is located in Daytona Beach, Fla., violated the Stark law, which prohibits a hospital from billing Medicare for services referred by physicians that have an improper financial relationship with the hospital. The United States alleges that Halifax’s contracts with three neurosurgeons and six medical oncologists were improper, in part, because they either paid physicians more than fair market value, were not commercially reasonable or took into consideration the volume or value of the physicians’ referrals.
“Improper financial arrangements between hospitals and physicians threaten patient safety because personal financial considerations, instead of what's best for the patient, can influence the type of health care that is provided,” said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. “The department is committed to preventing kickbacks that can corrupt the integrity of health care delivery.”
“The Stark law was enacted to prevent financial ties between a physician and an entity providing health care services from influencing the level of care provided to a patient,” said Robert E. O’Neill, U.S. Attorney for the Middle District of Florida. “By bringing cases such as this one, we hope to ensure that precious health care resources are not being wasted as a result of questionable financial relationships between health care providers.”
The lawsuit was initially filed in July 2009 by Elin Baklid-Kunz, currently employed at Halifax Staffing as the director of physician services, under the whistleblower provisions of the False Claims Act. Those provisions authorize private parties to sue on behalf of the United States, and permit the United States to intervene and take over the lawsuit. The whistleblower is entitled to receive a portion of any recovery. In this case, the United States elected to intervene in only a portion of the allegations asserted by Ms. Baklid-Kunz.
The government’s involvement in this case is part of the United States’ 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 $7.5 billion.
U.S. Bureau of Prisons Employee Indicted in Florida for Sexual Abuse of a Ward and False StatementsRead the Press Release
WASHINGTON – U.S. Bureau of Prisons (BOP) employee Jack Chris Jackson, 45, was indicted today on charges of sexual abuse of an inmate and false statements, the Justice Department announced.
The indictment alleges that on or about June 27, 2011, Jackson, while working in the Federal Correctional Institution (FCI) in Miami, engaged in a sexual act with an inmate who was in the defendant’s custodial, supervisory and disciplinary authority. The indictment further alleges that, when questioned on July 1, 2011, the defendant falsely denied having sex with the inmate or any other inmate at FCI.
If convicted, the defendant faces a maximum statutory sentence of 15 years in prison for the sexual abuse charge and a maximum penalty of five years in prison for the false statements charge.
An indictment is merely an accusation, and the defendant is presumed innocent unless proven guilty.
This case was investigated by the FBI and the Department of Justice Office of Inspector General. BOP wardens at FCI and Federal Detention Center provided full assistance and coordination throughout this investigation. The case is being prosecuted by Assistant U.S. Attorney Susan Rhee Osborne of the U.S. Attorney’s Office for the Southern District of Florida and Trial Attorney Henry Leventis of the Civil Rights Division.
Anyone with information concerning these offenses or related criminal conduct is encouraged to contact the FBI at 305-944-9101.
Two Los Angeles Residents Permanently Barred by Federal Court from Forming Trusts for TaxpayersRead the Press Release
WASHINGTON – A federal court in California has permanently barred Gwenn Wycoff and Frank Ozak from forming trusts for others, the Justice Department announced today. The civil injunction order, to which Wycoff and Ozak consented without admitting the allegations against them, was signed by Judge Jacqueline H. Nguyen of the U.S. District Court for the Central District of California.
The government complaint alleged that Wycoff and Ozak, both of Los Angeles, promoted a trust scheme through personal appearances, a website, and a two-volume publication called The Art of Passing the Buck. The defendants allegedly promised their customers that forming so-called “common-law trusts” was a way to “own nothing” but “control everything,” which the defendants allegedly said could help their customers avoid paying taxes. But the court previously determined, in preliminarily enjoining the defendants in March 2011, that such trusts are shams. The complaint alleged that the total tax deficiencies of the four customers mentioned in the preliminary injunction order was more than $1.1 million.
The injunction order also requires Wycoff and Ozak to remove from unsold copies of The Art of Passing the Buck the printed advertisements for their trust-creation business. The order also obligates them to inform all past and future purchasers of that publication that they should not rely on its content in determining a trust’s income tax liability, but should instead seek appropriate professional assistance.
In the past decade, the Justice Department’s Tax Division has obtained hundreds of injunctions against tax-fraud promoters and tax-return preparers. Information about these cases is available on the Justice Department website.
Online Identity Thief Sentenced in Virginia to 14 Years in Prison for Selling Counterfeit Credit Cards Leading to More Than $3 Million in LossesRead the Press Release
WASHINGTON – A Hammond, Ind., man was sentenced today in U.S. District Court in Alexandria, Va., to 14 years in prison for operating an online business that sold counterfeit credit cards encoded with stolen account information, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Neil H. MacBride for the Eastern District of Virginia.
Tony Perez III, 21, was sentenced by U.S. District Judge Liam O’Grady. In addition to his prison term, Perez was ordered to pay $2.8 million in forfeiture and a $250,000 fine and to serve three years of supervised release. Perez pleaded guilty on April 4, 2011, to one count of wire fraud and one count of aggravated identity theft.
In his plea, Perez admitted that he ran an online business that sold counterfeit credit cards encoded with stolen account information. According to court documents, Perez utilized multiple online personas in criminal “carding forums,” Internet discussion groups set up to facilitate buying and selling stolen financial account information and other goods and services to promote credit card fraud. In these forums and in other electronic communications over the Internet, Perez regularly purchased or received stolen credit card account information.
U.S. Secret Service special agents executing a search warrant in June 2010 at Perez’s apartment found a counterfeit credit card manufacturing operation and nearly 21,000 stolen credit card numbers and related information in his computers and email accounts. According to court documents, credit card companies have identified thousands of fraudulent transactions using the card numbers found in Perez’s possession, totaling more than $3 million.
The case was investigated by the U.S. Secret Service and was prosecuted by Michael J. Stawasz, a Senior Counsel for the Computer Crime and Intellectual Property Section of the Justice Department’s Criminal Division and a Special Assistant U.S. Attorney for the Eastern District of Virginia.
Ninja Video Website Operators Charged with Criminal Copyright ConspiracyRead the Press Release
WASHINGTON - A federal grand jury has returned an indictment in Alexandria, Va., charging five individuals with one count of conspiracy and five substantive copyright infringement counts for their involvement with the Internet website NinjaVideo.net, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Neil H. MacBride for the Eastern District of Virginia and U.S. Immigration and Customs Enforcement (ICE) Director John Morton.
According to the indictment returned yesterday, the NinjaVideo website operated from February 2008 until it was shut down by law enforcement in June 2010. NinjaVideo allegedly provided millions of website visitors with the ability to illegally download infringing copies of copyright-protected 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. The website allegedly offered many copyrighted movies and television shows free of charge, and offered access to a greater selection of copyrighted content for a “donation” of at least $25. The website also generated significant revenue through advertising. The defendants allegedly collected more than $500,000 during the website’s two-and-a-half years of operation and facilitated the infringement of millions of dollars of copyrighted movies, television programs and software products.
The indictment charges the following individuals: Hana Amal Beshara, 29, of North Brunswick, N.J., and Matthew David Howard Smith, 23, of Raleigh, N.C. , identified in the indictment as founders and administrators of NinjaVideo; Joshua David Evans, 34, of North Bend, Wash., and Zoi Mertzanis, 36, a resident of Greece, alleged to be two of the most active uploaders of copyrighted material to the site; and Jeremy Lynn Andrew, 33, of Eugene, Ore., the alleged head of security for the website.
The defendants are scheduled to be arraigned on Sept. 16, 2011, at 9:00 a.m. before U.S. District Judge Anthony J. Trenga in the Eastern District of Virginia.
Criminal indictments are only charges and are not evidence of guilt. A defendant is presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
The case is being prosecuted by Assistant U.S. Attorneys Jay V. Prabhu and Lindsay A. Kelly, and Trial Attorney Glenn Alexander of the Criminal Division’s Computer Crime & Intellectual Property Section.
The investigation was conducted by 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.
The indictment announced today is an example of efforts being undertaken by the Department of Justice Task Force on Intellectual Property (IP Task Force). Attorney General Eric Holder created the IP Task Force to combat the growing number of domestic and international intellectual property crimes, protect the health and safety of American consumers, and safeguard the nation’s economic security against those who seek to profit illegally from American creativity, innovation and hard work. The IP Task Force seeks to strengthen intellectual property rights protection through heightened criminal and civil enforcement, greater coordination among federal, state and local law enforcement partners, and increased focus on international enforcement efforts, including reinforcing relationships with key foreign partners and U.S. industry leaders. To learn more about the IP Task Force, go to www.justice.gov/dag/iptaskforce.
CSK Auto Corporation Agrees to Pay $20.9 Million to Resolve Violations of Securities Laws Related to Scheme to Manipulate Corporate EarningsRead the Press Release
WASHINGTON – CSK Auto Corporation, a specialty retailer of automotive parts and accessories and formerly a publicly-traded company, has agreed to pay a $20.9 million penalty to resolve securities law violations stemming from a corporate earnings manipulation and double-billing scheme, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division.
As part of an agreement with the Department of Justice, CSK has accepted responsibility for the illegal conduct of its former employees. According to the non-prosecution agreement, from 2001 through 2006, certain former CSK employees, including senior executives, conspired to willfully manipulate CSK’s earnings. To date, the criminal investigation has resulted in charges against three former CSK executives, all of whom have pleaded guilty. Don W. Watson, CSK’s former chief financial officer, pleaded guilty to conspiracy to commit securities and mail fraud in connection with the scheme. Edward W. O’Brien III, the former controller of CSK, and Gary M. Opper, the former director of credits and receivables at CSK, each pleaded guilty to obstruction of justice for making material false statements during an internal investigation of CSK’s accounting practices.
As part of an agreement with the Department of Justice, CSK has accepted responsibility for the illegal conduct of its former employees. According to the non-prosecution agreement, from 2001 through 2006, certain former CSK employees, including senior executives, conspired to willfully manipulate CSK’s earnings.
According to the agreement, CSK purchased hundreds of millions of dollars in automotive parts and accessories every year from vendors. CSK received vendor allowances, or discounts, on its purchases in return for marketing vendors’ products for sale in CSK’s stores. These allowances reduced CSK’s expenses and thereby increased its pre-tax income. CSK recognized vendor allowances based on anticipated purchases from vendors. According to the agreement, certain employees manipulated CSK’s largest and most lucrative vendor allowance program by concealing amounts it had recognized based on anticipated purchases that ultimately did not take place, thus making the allowances uncollectible. The employees concealed these uncollectible amounts by applying collections for allowances from subsequent years to cover shortfalls in collections from prior years and by moving uncollectible balances to subsequent years. In so doing, the employees gave the false appearance that CSK had collected or was going to collect vendor allowances that it had already recognized as earnings. As a result of these manipulations, the employees caused CSK to conceal approximately $52 million in uncollectable receivables for fiscal years 2002 through 2004. By failing to write off uncollectible balances in these fiscal years, CSK overstated its pre-tax income in its public filings.
According to the agreement, in July 2005, CSK employees attempted to conceal their scheme by billing CSK’s vendors for approximately $30 million in vendor allowances, approximately $15 million of which they knew the vendors did not owe CSK. Additionally, throughout the duration of the scheme, they provided false information to CSK’s independent auditor to further conceal the accounting improprieties.
O’Reilly Automotive Inc., which acquired CSK after the accounting improprieties were uncovered and disclosed to the government, is also a party to the non-prosecution agreement because of its acquisition of CSK. The agreement and monetary penalty recognizes CSK’s timely, voluntary and complete disclosure of the illegal conduct; CSK’s and O’Reilly’s thorough cooperation with the government’s investigation; O’Reilly’s extensive remedial efforts pertaining to CSK’s internal training, compliance and reporting; and O’Reilly’s acquisition of CSK after the illegal conduct was discovered and disclosed to the government. As a result of these mitigating factors, the department agreed not to prosecute CSK or O’Reilly for the manipulation of CSK’s earnings, provided that CSK and O’Reilly satisfy their ongoing obligations under the agreement for a period of two years.
The sentencings for the CSK executives are scheduled to take place in Phoenix in September and November before U.S. District Judge Susan Bolton.
The U.S. Securities and Exchange Commission (SEC) conducted its own investigation, which resulted in a filed action against CSK and pending actions against Watson, O’Brien and Opper. The SEC also referred the conduct to the department.
The case is being prosecuted by Deputy Chief Patrick Stokes and Trial Attorney Andrew H. Warren of the Criminal Division’s Fraud Section. The case is being investigated by the FBI, the IRS-Criminal Investigation and the U.S. Postal Inspection Service. The department thanks those agencies as well as the SEC for their substantial assistance in this matter.
Arizona-Based TriWest Healthcare Alliance Corp. Agrees to Pay $10 Million to Resolve False Claims Act Allegations Concerning the TRICARE ProgramRead the Press Release
WASHINGTON - TriWest Healthcare Alliance Corporation, a contractor to TRICARE Management Activity, has agreed to pay $10 million to resolve civil false claims allegations, the Justice Department announced today. TRICARE is the U.S. medical benefit plan which covers uniformed personnel, retirees, their dependents and reserve components.
The settlement resolves a lawsuit filed by four former TriWest employees, Judi Jerdee, Deborah Thornton, Linda Glassgow and Paige Fiorillo, under the qui tam, or whistleblower provisions, of the False Claims Act. The United States partially intervened in the case on Aug. 29, 2011. The United States and the qui tam plaintiffs allege that between 2004 and 2010, TriWest failed to give TRICARE the benefit of negotiated discounts with service providers under letters of agreement (LOAs). Notwithstanding contractually binding LOAs with health care providers, TriWest submitted claims to TRICARE at higher rates billed by the providers, failing to pass on to TRICARE the savings negotiated through the LOAs. Together, the qui tam relators will receive $1.7 million as their share of the government’s recovery.
“Those who overbill TRICARE threaten to undermine the health care provided to our men and women in uniform,” said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. “At a time when the federal government must tighten its belt, settlements like this one help maintain important programs that people depend on.”
“This office is committed to safeguarding the federal health care programs from fraud and false claims,” said Melinda Haag, U.S. Attorney for the Northern District of California. “Ensuring that the programs receive the contractual savings and deductions to which they are entitled is essential to our commitment.”
This settlement is part of the government’s commitment to combating health care fraud. 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 recoveries in false claims act cases since January 2009 are more than $7.5 billion.
The investigation and settlement of these matters were jointly handled by the Department of Justice’s Civil Division and the U.S. Attorney for the Northern District of California, with assistance from the TRICARE Office of Program Integrity and the Department of Defense’s Criminal Investigative Service.
The case is U.S. ex rel. Jerdee, Thornton, Glassgow and Fiorillo v. TriWest Healthcare Alliance Corp., C 08-4096 SI (N.D. Cal.).
8 September 2011
Missouri CPA Sentenced to 42 Months in Prison for Mail Fraud and Tax EvasionRead the Press Release
WASHINGTON – Murphy Hubbard, a Springfield, Mo., CPA, was sentenced on Sept. 7, 2011, to 42 months in prison for his mail fraud and tax evasion convictions, the Justice Department and Internal Revenue Service (IRS) announced today. Sentence was imposed by District Court Judge Ortrie D. Smith in the Western District of Missouri and follows a plea of guilty to two counts of mail fraud and one count of tax evasion previously entered by the defendant. Hubbard was remanded into custody immediately following the sentencing.
According to court documents, Hubbard owned and operated an accounting and tax business known as The Hubbard Group PC. Hubbard embezzled more than $400,000 from two trusts placed under his control by local families between 1998 and 2009. The first of these trusts, created by Ms. Hazel Beatrice S. Hirst of Springfield designated four local charities as the beneficiaries of her life’s savings. The second trust, established by the heirs of Mr. Noel C. Rummens of Rogersville, Mo., was created for the express purpose of funding educational expenses for Mr. Rummens’s surviving heirs and relatives.
Rather than fulfilling the wishes of these families by faithfully executing their trust agreements, Hubbard instead took the vast majority of this money for himself, using it to pay personal expenses, to buy items such as automobiles and farm equipment and for travel. Virtually all of the money taken from these trusts went unreported to the IRS, resulting in a tax loss of approximately $79,434.
In addition to the 42 month prison term, Judge Smith also ordered Hubbard to pay full restitution to the victims in this case, including $389,221 to the lawful representatives of the estate of Ms. Hirst and the Noel C. Rummens Educational Trust and $79,434 to the IRS.
The case was investigated by the IRS – Criminal Investigation and prosecuted by Tax Division Trial Attorneys Michael C. Boteler and Mitchell S. Bober, and Assistant U.S. Attorney Steven M. Mohlhenrich for the Western District of Missouri.
Additional information about the Justice Department’s Tax Division and its enforcement efforts may be found atwww.usdoj.gov/tax.
Justice Department Requires Divestitures in Cumulus Media Inc.’s Acquisition of Citadel Broadcasting CorporationRead the Press Release
WASHINGTON – The Department of Justice announced today that it will require Cumulus Media Inc., one of the largest operators of radio stations in the United States, to divest three radio stations in two markets in order for Cumulus to proceed with its acquisition of Citadel Broadcasting Corporation. The department said that the transaction, as originally proposed, would substantially lessen competition for radio advertising in Flint, Mich., and Harrisburg-Lebanon-Carlisle, Pa.
The department’s Antitrust Division filed a civil antitrust lawsuit today in U.S. District Court in Washington, D.C., to block the proposed acquisition. At the same time, the division filed a proposed settlement that, if approved by the court, would resolve the lawsuit and the department’s competitive concerns.
“The divestitures required by the consent decree will enable radio advertisers to continue to receive the benefits of competition in Harrisburg and Flint,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.
According to the complaint, Cumulus’s and Citadel’s radio stations compete head-to-head against one another for the business of local and national companies that seek to purchase radio advertising time that targets listeners in Harrisburg-Lebanon-Carlisle and Flint. Cumulus’s acquisition of Citadel would have eliminated the competition in these markets, increasing prices and reducing levels of service in the sale of radio advertising time. Under the terms of the proposed settlement, Cumulus must divest two stations in Harrisburg-Lebanon-Carlisle and one station in Flint to buyers approved by the division. The divestitures will reduce Cumulus’s share in advertising revenues in Harrisburg-Lebanon-Carlisle and Flint to less than 40 percent, preserving choices for advertisers and ensuring competition.
Cumulus, a Delaware corporation headquartered in Atlanta, is one of the four largest radio broadcast companies in the United States in terms of revenue. In 2010, Cumulus reported radio broadcast revenues of approximately $259 million. Citadel, a Delaware corporation headquartered in Las Vegas, is one of the three largest radio broadcast companies in the United States in terms of revenue. For the period between June 1, 2010, and Dec. 31, 2010, Citadel reported net revenues of approximately $444 million.
As required by the Tunney Act, the proposed settlement, along with the department’s competitive impact statement, will be published in the Federal Register. Any person may submit written comments concerning the proposed settlement during a 60-day comment period to John R. Read, Chief, Litigation III Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street, N.W., 4th Floor, 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.
German Shipping Company Sentenced in Puerto Rico to Pay $800,000 Penalty for Intentional Cover-Up of Oil PollutionRead the Press Release
WASHINGTON – Uniteam Marine Shipping GmbH, a German corporation, was sentenced in federal court in San Juan, Puerto Rico, for violating the Act to Prevent Pollution from Ships (APPS) and making false statements to the U.S. Coast Guard, announced Assistant Attorney General Ignacia S. Moreno and U.S. Attorney Rosa Emilia Rodriguez-Velez.
The company was sentenced to pay an $800,000 criminal penalty, to include a $200,000 payment to the National Fish and Wildlife Foundation to fund a community service project in the District of Puerto Rico. In addition, the company was placed on three years of supervised probation and will have to implement a comprehensive advanced training and verification program to continuously monitor vessel operations and train crewmembers to prevent pollution from any ship it operates.
“The Department of Justice will continue to prosecute shipping companies who break the laws that protect our oceans,” said Assistant Attorney General Moreno. “The penalty imposed by this sentence not only holds Uniteam Marine fully accountable for violating the Act to Prevent Pollution from Ships, but also will fund projects that rehabilitate damaged marine ecosystems in Puerto Rico.”
Uniteam Marine Shipping GmbH operated a 16,800 ton, 603 foot ocean going container ship named the M/V CCNI Vado Ligure that was engaged in global commercial trade. On May 10, 2010, the U.S. Coast Guard in San Juan, conducted an inspection of the vessel and discovered an excessive amount of oil in the discharge lines of the vessel’s oil water separator, a pollution prevention device designed to prevent the discharge of oily waste. When the device is operated properly, there should be no oil in the discharge lines. Subsequent investigation revealed that from Jan. 8, 2010, until May 10, 2010, the crew on the vessel manipulated the oil water separator so that is failed to function properly and allowed the illegal discharge of oily bilge wastes directly into the ocean.
All discharges of oil or oily bilge waste from a vessel are required to be recorded in the vessel’s oil record book. However, none of the illegal discharges were recorded in the oil record book for the M/V CCNI Vado Ligure.
“This sentence should serve as an eye opener to vessel owners and operators that choose to violate federal and international environmental laws that destroy our marine environment," said Capt. Drew W. Pearson, Sector San Juan Commander. "The U.S. Coast Guard is committed to protecting the maritime environment and works closely with our dedicated interagency partners and the U.S. Department of Justice to bring criminal environmental offenders to justice. This outcome would not have been possible without the outstanding investigative efforts and professionalism put forth by Sector San Juan pollution investigators and the Coast Guard Investigative Service who worked diligently with Department of Justice prosecutors to properly resolve this case.”
“Because we live on an island, the sea is without a doubt one of our most precious resources. This case should send a strong message that the Department of Justice and the United States Attorney’s Office will prosecute any entity which pollutes our environment to the fullest extent allowed by the law,” said Rosa Emilia Rodríguez-Vélez, U.S. Attorney for the District of Puerto Rico.
The National Fish and Wildlife Foundation will receive $200,000 to fund projects aimed at the restoration of marine and aquatic resources in the District of Puerto Rico, including projects intended to protect and rehabilitate marine mammals and their habitat, including manatees.
During the period of probation, Uniteam will be required to implement an advanced training and verification program which will ensure that any ship operated by Uniteam complies with all maritime environmental requirements established under applicable international, flag state, and port state laws. The program ensures that Uniteam’s employees and the crew of any vessel operated by Uniteam are properly trained in preventing maritime pollution. An independent monitor will report to the court about Uniteam’s compliance with its obligations during the period of probation.
This case was investigated by the U.S. Coast Guard Investigative Service. The case was prosecuted by Marshal Morgan in the U.S. Attorney’s Office in the District of Puerto Rico and by Ken Nelson in the Environmental Crimes Section of the Environment and Natural Resources Division of the Department of Justice.
Former Fort Pierce, Fla., Detective and Tax Preparer Sentenced for Tax FraudRead the Press Release
WASHINGTON – The owner of First Premium Financial Services and a former employee were sentenced today to federal prison for conspiring to defraud the United States in connection with fraudulent tax returns they prepared for clients. Inuka Rhaheed, a former detective with the Fort Pierce, Fla., Police Department, was sentenced to 78 months in prison. Wilens Bertrand, a tax preparer at First Premium, was sentenced to 41 months in prison.
Today’s sentences were announced by Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida; John A. DiCicco, Principal Deputy Assistant Attorney General of the Justice Departments Tax Division; and Jose A. Gonzalez, Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI).
On June 11, 2011, Rhaheed and Bertrand were convicted after a four-day trial. According to evidence introduced at trial, Inuka and his wife Jacqueline Rhaheed owned and worked at First Premium Financial Services, a tax preparation business with offices in Fort Pierce and Vero Beach, Fla. Bertrand worked at the Fort Pierce office of First Premium Financial Services as a tax preparer.
According to the testimony of some of First Premium’s clients, the defendants placed false deductions on client tax returns without the clients’ knowledge or consent. In addition, evidence revealed that First Premium prepared and filed approximately 5,500 tax returns for the 2006-2008 tax years and that approximately 98 percent of those returns made a claim for a tax refund. The resulting total tax loss to the United States, based on expert testimony at trial, was at least $500,000.
According to evidence presented during the trial, clients paid a minimum fee of $300 for tax preparation services at First Premium. Clients included many law enforcement officers, who went to First Premium because they knew Inuka Rhaheed was a former law enforcement officer and trusted him and his business to prepare their taxes. In addition, other clients testified that they went to First Premium because they had heard through word of mouth that First Premium allowed deductions that other tax preparation services would not consider.
In addition to the prison term, the court sentenced Inuka Rhaheed to pay $727,729 in restitution and Bertrand to pay $539,954 in restitution and to serve three years of supervised release.
Jacqueline Rhaheed pleaded guilty to one count of conspiring to defraud the United States on June 2, 2011. Jacqueline Rhaheed is scheduled to be sentenced on Nov. 7, 2011.
U.S. Attorney Ferrer and Principal Deputy Assistant Attorney General DiCicco commended the investigative efforts of the IRS-CI for their work investigating this case. The case was prosecuted by Justin Gelfand, Trial Attorney with the Justice Department’s Tax Division, and Assistant U.S. Attorney Diana M. Acosta of the Southern District of Florida.
More information about the Tax Division and its enforcement efforts can be found at www.justice.gov/tax.
Former CEO of U.S. Telecommunications Company Sentenced to 46 Months in Prison for Bribing Foreign Government OfficialsRead the Press Release
WASHINGTON - A former chief executive officer of Florida-based telecommunications company Latin Node Inc. (LatiNode) was sentenced yesterday to 46 months in prison for paying bribes to former government officials in Honduras, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.
U.S. District Judge Joan A. Lenard for the Southern District of Florida also ordered Jorge Granados, of Miami, to serve two years of supervised release following the prison term.
Granados, 55, pleaded guilty on May 19, 2011, to conspiracy to violate the anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA) in connection with a scheme to pay Honduran officials more than $500,000 in bribes. To date, four former senior executives of LatiNode have pleaded guilty to conspiring to pay bribes to the Honduran officials.
In his guilty plea, Granados admitted to authorizing corrupt payments to foreign government officials for the purpose of securing business advantages for LatiNode from Honduras’s state-owned telecommunications company, Empresa Hondureña de Telecomunicaciones (Hondutel). According to court documents, LatiNode provided wholesale telecommunications services using Internet protocol technology to countries throughout the world, including Honduras. In December 2005, LatiNode learned that it was the sole winner of an “interconnection agreement” with Hondutel, permitting LatiNode to use Hondutel’s telecommunications lines to establish a network between Honduras and the United States and to provide long distance services between the two countries.
According to court documents, Granados and other LatiNode executives, including Manuel Salvoch, the chief financial officer; Manuel Caceres, the vice president for business development; and Juan Pablo Vasquez, the chief commercial officer, agreed to a secret deal to pay bribes to Hondutel officials, including the general manager, a senior attorney for Hondutel, and a minister of the Honduran government who became a representative on the Hondutel Board of Directors. According to court documents, between September 2006 and June 2007, Granados and others caused more than $500,000 in bribes to be paid to the Honduran officials, concealing many of the payments by laundering the money through LatiNode subsidiaries in Guatemala and to accounts in Honduras controlled by the Honduran government officials.
LatiNode pleaded guilty on April 7, 2009, to a one-count information charging the company with a criminal violation of the FCPA and agreed to pay a $2 million fine. The resolution of the criminal investigation of LatiNode reflected, in large part, the actions of eLandia International Inc. in disclosing potential FCPA violations to the department after eLandia’s acquisition of LatiNode in 2007 and discovery of the improper payments.
Salvoch pleaded guilty on Jan. 12, 2011, to conspiracy to violate the FCPA and is scheduled to be sentenced on Dec. 7, 2011. Vasquez pleaded guilty on Jan. 21, 2011, to conspiracy to violate the FCPA and is scheduled to be sentenced on Dec. 8, 2011. Caceres pleaded guilty on May 18, 2011, to conspiracy to violate the FCPA, and is scheduled to be sentenced on Nov. 28, 2011. The three defendants each face prison sentences of up to five years.
The case was prosecuted by Principal Deputy Chief Jeffrey H. Knox and Trial Attorney Amanda Aikman of the Criminal Division’s Fraud Section. Significant assistance was provided by Trial Attorney James M. Koukios. The case was investigated by the FBI’s Miami Field Office and ICE Homeland Security Investigation’s Foreign Corruption Investigations Group in Miami.
El Departamento de Justicia Divulga Averiguaciones en la Investigación del Departamento de Policía de Puerto RicoRead the Press Release
WASHINGTON - Después de una investigación exhaustiva, el Departamento de Justicia anunció hoy sus averiguaciones acerca de que el Departamento de Policía de Puerto Rico [Puerto Rico Police Department (PRPD)] ha exhibido un patrón y prácticas de conducta indebida en violación de la Constitución y la ley federal. La investigación iniciada en julio de 2008 fue llevada a cabo de acuerdo con la Ley de Control de Delitos Violentos y Coacción Legal de 1994 y la Ley Amplia de Control de la Delincuencia y Calles Seguras de 1968.
La investigación exhaustiva e independiente del Departamento de Justicia consistió en un análisis de las prácticas del PRPD, así como participación extensa de la comunidad. Abogados e investigadores del Departamento realizaron entrevistas exhaustivas con el personal de comando y funcionarios comunes en la sede central del PRPD y diez de las 13 áreas policiales del PRPD; participaron en recorridos con agentes y supervisores; participaron en cursos de capacitación en la academia de policías, y analizaron miles de páginas de documentos. La división también se reunió con, y entrevistó, partes interesadas externas, entre las que se incluyeron miembros de la comunidad y de organizaciones locales de derechos civiles.
El Departamento de Justicia encontró causa razonable para creer que ocurrieron patrones y prácticas de conducta inconstitucional y/o violaciones de la ley federal en varias áreas, entre los que se incluyen:
- Uso de fuerza excesiva;
- Uso de fuerza irrazonable y otros tipos de conducta indebida, dise�ados para suprimir el ejercicio de derechos protegidos asociados a la Primera Enmienda; y
- �rdenes de alto, allanamientos y arrestos inconstitucionales.
También surgieron de la investigación pruebas perturbadoras de que, con frecuencia, el PRPD omite actuar ante delitos sexuales e incidentes de violencia doméstica y exhibe prácticas policiales discriminatorias contra personas de ascendencia dominicana, en violación de la Constitución y/o ley federal.
El Departamento de Justicia encontró una serie de deficiencias sistémicas antiguas y enraizadas que provocaron o contribuyeron para estos patrones de conducta ilícita, incluidos:
- La omisión por parte del PRPD de implementar políticas para orientar a los agentes respecto de prácticas policiales lícitas, incluida la aplicación de fuerza;
- Unidades tácticas, a las que se les ha permitido desarrollar subculturas violentas;
- Capacitación insuficiente previa al servicio y durante el servicio;
- Supervisión inadecuada;>
- Sistemas ineficaces de toma de denuncias, investigación y adjudicación;
- Un sistema disciplinario ineficaz;
- Gestión de riesgos limitada; y
- Falta de supervisión y responsabilización externas.
"Hace demasiado tiempo que el Departamento de Policía de Puerto Rico falla en la protección del pueblo de Puerto Rico. Este fracaso es el resultado de deficiencias sistémicas e institucionales profundas y crónicas", dijo Thomas E. Perez, Secretario de Justicia Auxiliar de la División de Derechos Civiles. "Nuestras conclusiones deben servir como cimientos para la transformación del departamento de policía y para ayudar a restaurar la fe de la comunidad en una coacción legal equitativa, justa y efectiva. Nuestro equipo espera con interés trabajar con el pueblo de Puerto Rico, el Gobernador Fortu�o, el Superintendente Emilio Díaz Colón y sus funcionarios en la creación e implementación de un anteproyecto amplio para una reforma sustentable".
A lo largo de la investigación, la división brindó información y ofreció asistencia técnica al PRPD, y el PRPD ha tomado ciertas medidas correctivas. Las conclusiones alcanzadas en la investigación del Departamento de Justicia demuestran que los problemas que enfrenta el PRPD son amplios y están profundamente arraigados en la cultura del PRPD. Para crear una reforma duradera, Puerto Rico debe actuar de forma decisiva, transparente e inmediata. El PRPD debe desarrollar e implementar nuevas políticas y protocolos y capacitar a sus agentes en servicios policiales eficaces y constitucionales. Además, el PRPD debe implementar sistemas que garanticen la responsabilización, promuevan asociaciones entre la policía y la comunidad, mejoren la calidad de los servicios policiales en todo el Estado Libre Asociado y eliminen la parcialidad ilícita en todos los niveles de las decisiones policiales.
El departamento buscará obtener un decreto por consentimiento y trabajará con el PRPD, el Estado Libre Asociado de Puerto Rico y la comunidad en el desarrollo y la implementación de un plan de reforma integral con la supervisión judicial necesaria para corregir las violaciones de la Constitución y la ley federal. Un proceso de reforma transparente, en el que las partes interesadas de la comunidad ocupen un papel integral, renovará el respeto por la Constitución y el imperio de la ley, y restaurará la confianza pública en el PRPD.
Esta investigación fue llevada a cabo por la Sección de Litigios Especiales de la División de Derechos Civiles con la asistencia de profesionales de las fuerzas del orden público, incluidos ex jefes de policía y supervisores que brindaron sus conocimientos profundos y su experiencia.
Se encuentra el resumen ejecutivo y el informe completo en www.justice.gov/crt/about/spl/pr.php. Para obtener más información sobre la División de Derechos Civiles del Departamento de Justicia, visite www.justice.gov/crt.
Department of Justice Releases Investigative Findings on the Puerto Rico Police DepartmentRead the Press Release
WASHINGTON– Following a comprehensive investigation, the Justice Department today announced its findings that the Puerto Rico Police Department (PRPD) has engaged in a pattern and practice of misconduct that violates the Constitution and federal law. The investigation, launched in July 2008, was conducted in accordance with the Violent Crime Control and Law Enforcement Act of 1994 and the Omnibus Crime Control and Safe Streets Act of 1968.
The Justice Department found reasonable cause to believe that a pattern and practice of unconstitutional conduct and/or violations of federal law occurred in several areas, including:
- Use of excessive force;
- Use of unreasonable force and other misconduct designed to suppress the exercise of protected First Amendment rights; and
- Unconstitutional stops, searches and arrests.
In addition to these findings, the investigation uncovered other serious concerns. In particular, the investigation uncovered troubling evidence that PRPD frequently fails to properly investigate and document sex crimes and incidents of domestic violence, and that PRPD engages in discriminatory policing practices that target individuals of Dominican descent. At this time, the division has not made a formal finding of a pattern and practice violation in these areas, in part because PRPD does not adequately collect data to evaluate these issues.
The Justice Department found a number of long-standing and entrenched systemic deficiencies that caused or contributed to these patterns of unlawful conduct, including:
- A failure of PRPD to implement policies to guide officers on lawful policing practices, including the application of force;
- Tactical units that have been permitted to develop violent subcultures;
- Insufficient pre-service and in-service training;
- Inadequate supervision;
- Ineffective systems of complaint intake, investigation and adjudication;
- An ineffective disciplinary system;
- Limited risk management; and
- A lack of external oversight and accountability.
“The Puerto Rico Police Department is broken in a number of critical ways. The problems are wide ranging and deeply rooted, and have created a crisis of confidence that makes it extremely difficult to develop police-community partnerships that are a cornerstone of effective policing,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “Our findings should serve as a foundation to transform the police department and to help restore the community’s trust in fair, just and effective law enforcement. The problems within the PRPD have been present for many years and will take time to fix, but we look forward to continuing our work with the people of Puerto Rico, Governor Luis Fortuño, Superintendent Emilio Díaz Colón and his officers to create and implement a comprehensive blueprint for sustainable reform.”
The Justice Department’s thorough and independent investigation involved an in-depth review of PRPD practices, as well as extensive community engagement. Department attorneys and investigators conducted exhaustive interviews with command staff and rank-and-file officers at PRPD headquarters and 10 of PRPD’s 13 police areas; participated in ride-alongs with officers and supervisors; attended training courses at the police academy; and reviewed thousands of pages of documents. The division also met with and interviewed external stakeholders, including community members and local civil rights organizations.
Throughout the investigation, the division provided feedback and technical assistance to PRPD, and PRPD has taken a number of remedial measures. To create lasting reform, Puerto Rico must act decisively, transparently and immediately. PRPD must develop and implement new policies and protocols, and train its officers in effective and constitutional policing. In addition, PRPD must implement systems to ensure accountability, foster police-community partnerships, improve the quality of policing throughout the commonwealth and eliminate unlawful bias from all levels of policing decisions.
The department will seek to obtain a court enforceable agreement and will work with PRPD, the Commonwealth of Puerto Rico and the community to develop and implement a comprehensive reform plan with the judicial oversight needed to address the violations of the Constitution and federal law.
“The findings are an outgrowth of a transparent, inclusive process in which we heard critical feedback from police officers, community leaders, governmental officials and other key stakeholders. We will continue to actively engage all stakeholders in the process of developing and implementing a comprehensive blueprint for sustainable reform that will reduce crime, ensure respect for the Constitution and restore public confidence in the Puerto Rico Police Department,” continued Assistant Attorney General Perez.
This investigation was conducted by the Special Litigation Section of the Civil Rights Division with the assistance of law enforcement professionals, including former police chiefs and supervisors who provided in-depth knowledge and expertise.
The executive summary and full report can be found at www.justice.gov/crt/about/spl/pr.php . For more information on the Justice Department’s Civil Rights Division, please visit www.justice.gov/crt . If you have any comments or concerns, please feel free to contact us at [email protected] .
7 September 2011
Six Individuals Indicted for Tax Fraud and Identity Theft Schemes in AlabamaRead the Press Release
WASHINGTON – Three separate indictments were returned by a federal grand jury in the Middle District of Alabama charging six different individuals on a variety of charges stemming from tax fraud and identity theft schemes, the Justice Department and Internal Revenue Service (IRS) announced today.
Alchico Grant, of Lowndes County, Ala.; and Melinda Clayton, Veronica Dale and Stephanie Adams, all of Montgomery County, Ala., were charged in a superseding indictment unsealed today on a variety of counts stemming from an identity theft and tax fraud scheme. The 43-count indictment charges all four with conspiring to defraud the United States by filing false claims. Clayton, Dale and Grant are also charged with filing false claims, wire fraud and aggravated identity theft, while Adams is charged with theft of government funds.
According to the superseding indictment, the defendants conspired to fraudulently obtain federal income tax refunds by using stolen identities to file tax returns. Dale illegally obtained stolen identity information during her earlier employment at Electronic Data Systems Inc., and passed that information along to her co-conspirators. Clayton also obtained identity information from other sources. Clayton and Dale electronically filed false tax returns using the stolen identities and had the refunds deposited into bank accounts and prepaid debit cards they controlled. Dale and Grant purchased prepaid debit cards to receive refunds, while Adams made her bank account available to receive refunds.
Clayton and Grant had been charged in the first indictment in this case, which was returned April 27, 2011. The superseding indictment adds charges against both, and also charges Dale and Adams. Clayton had previously been arrested on a criminal complaint on April 8, 2011, following the execution of a search warrant at her house that same day. Grant and Dale had both previously been indicted in December 2010, along with several co-conspirators, for their involvement in an earlier conspiracy to obtain tax refunds using stolen identities.
The same federal grand jury in Montgomery, Ala., returned an indictment charging Chiquanta Davis, aka Nikki Davis, of Montgomery County, with using stolen identities to file false tax returns. She was charged on Aug. 31, 2011 with filing false claims, theft of government funds and aggravated identity theft.
Davis had earlier been charged with making false claims in a criminal complaint that was filed on July 12, 2011. She was arrested two days later. According to the indictment and other court documents, Davis used stolen identities to file false tax returns which fraudulently claimed refunds. Davis had some of the refunds deposited into her own bank accounts. Court documents state that nearly 200 tax returns were electronically filed from an IP address belonging to Davis.
Marsha Elmore of Elmore County, Ala., was also indicted on Aug. 31, 2011, by a federal grand jury in Montgomery, for using stolen identities to file false tax returns. The 32-count indictment charges Elmore with filing false claims, wire fraud and aggravated identity theft.
Elmore was also charged in a criminal complaint that was filed on July 12, 2011, with making false claims. She was arrested two days later. According to the indictment and other court documents, between 2009 and 2011, Elmore owned and operated a tax preparation business called Community Tax, located in Wetumpka, Ala. Elmore used stolen identities to file false tax returns which fraudulently claimed refunds. The indictment and other court documents state that Elmore has been filing false tax returns since 2009 and that 400 tax returns were linked to Elmore in 2011 and 2010.
An indictment merely alleges that crimes have been committed, and the defendants are presumed innocent until proven guilty beyond a reasonable doubt.
If convicted, Grant, Clayton, Dale and Adams face 10 years in prison for the conspiracy charge. Dale, Grant, Clayton, Davis and Elmore face five years in prison for each false claims count. Dale, Grant, Clayton and Elmore face 20 years in prison for each wire fraud count. Dale, Grant and Clayton, Davis and Elmore face a mandatory two year sentence for each aggravated identity theft counts. Adams and Davis also face five years in prison for each theft of government funds count. All the defendants are also subject to fines and mandatory restitution if convicted.
These cases were investigated by Special Agents of the IRS - Criminal Investigation. Trial attorneys Jason H. Poole and Michael Boteler of the Justice Department’s Tax Division, and Assistant U.S. Attorney Jared Morris are prosecuting the case.
More information about the Tax Division and its enforcement efforts can be found at www.justice.gov/tax.
Noted Scientist Pleads Guilty to Attempted EspionageRead the Press Release
WASHINGTON - Stewart David Nozette, a scientist who once worked for the Department of Energy, the Department of Defense, the National Aeronautics and Space Administration and the White House’s National Space Council, pleaded guilty today to attempted espionage for providing classified information to a person he believed to be an Israeli intelligence officer.
The guilty plea, which took place this morning in the U.S. District Court for 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.
Nozette, 54, of Chevy Chase, Md., pleaded guilty to one count of attempted espionage. Senior Judge Paul L. Friedman, who presided at the plea hearing, scheduled a status hearing for Nov. 15, 2011. No sentencing date was set. The plea agreement, which is subject to the judge’s approval, calls for an agreed-upon prison term of 13 years.
Nozette has been in custody since his arrest on Oct. 19, 2009. FBI agents arrested him following an undercover operation in which he provided classified materials on three occasions, including one occasion that forms the basis for today’s guilty plea. He was subsequently indicted by a federal grand jury. The indictment does not allege that the government of Israel or anyone acting on its behalf committed any offense under U.S. laws in this case.
“ Stewart Nozette betrayed America’s trust by attempting to sell some of the nation’s most closely-guarded secrets for profit. Today, he is being held accountable for his actions. As this case demonstrates, we remain vigilant in protecting America’s secrets and in bringing to justice those who compromise them,” said Assistant Attorney General Monaco.
“Stewart Nozette was once a trusted scientist who maintained high-level government security clearances and was frequently granted access to classified information relating to our national defense. Today he is a disgraced criminal who was caught red-handed attempting to trade American secrets for personal profit. He will now have the next 13 years behind bars to contemplate his betrayal,” said U.S. Attorney Machen. “The FBI and its partners deserve tremendous credit for their outstanding work on this case. This investigation and prosecution demonstrate our commitment to identifying and punishing those who would put our national security at risk.”
“Preventing the loss or compromise of high-technology and vital national security information is a top priority of the FBI,” said Assistant Director in Charge McJunkin. “This case is a prime example of what happens when a person decides to sell our nation’s most valuable secrets for individual gain.”
Background
Nozette received a Ph.D. in Planetary Sciences from the Massachusetts Institute of Technology in 1983. He has worked in various capacities on behalf of the U.S. government in the development of state-of-the-art programs in defense and space. For example, Nozette worked at the White House on the National Space Council, Executive Office of the President, from approximately 1989 through 1990. He also worked as a physicist for the U.S. Department of Energy’s Lawrence Livermore National Laboratory from approximately 1990 to 1999, where he designed highly advanced technology.
Among other things, Nozette assisted in the development of the Clementine bi-static radar experiment which purportedly discovered water ice on the south pole of the moon. A version of the Clementine satellite currently hangs on display at the National Air and Space Museum of the Smithsonian Institution in Washington, D.C., and was later hailed as the vanguard of the new “faster, cheaper, better” revolution in space exploration.
Nozette was also the president, treasurer and director of the Alliance for Competitive Technology (ACT), a non-profit organization that he organized in March 1990. Between January 2000 and February 2006, Nozette, through his company, ACT, entered into agreements with several government agencies to develop highly advanced technology. Nozette performed some of this research and development at the U.S. Naval Research Laboratory in Washington, D.C., the Defense Advanced Research Projects Agency in Arlington, Va., and the National Aeronautics and Space Administration Goddard Space Flight Center in Greenbelt, Md.
According to a factual proffer in support of the guilty plea, from 1989 through 2006, Nozette held security clearances as high as TOP SECRET and had regular, frequent access to classified information and documents related to the national defense of the United States. The factual proffer also provides details about the undercover operation that led to Nozette’s arrest.
The Investigation
According to the factual proffer, on Feb. 16, 2007, law enforcement agents executed a search warrant at Nozette’s home in Maryland as part of a fraud investigation and found classified documents. Further investigation into the classified documents revealed that in 2002, Nozette sent an e-mail threatening to take a classified program he was working on, “to [foreign country] or Israel and do it there selling internationally...” As a result of this and other information giving rise to suspicion of espionage, the FBI decided to conduct an undercover operation.
On Sept. 3, 2009, Nozette was contacted via telephone by an individual purporting to be an Israeli intelligence officer from the Mossad, but who was, in fact, an undercover employee of the FBI. During that call, the defendant agreed to meet with the undercover employee that day on Connecticut Avenue N.W., in front of the Mayflower Hotel in downtown Washington, D.C.
Later that day, Nozette met with the undercover employee and had lunch in the restaurant of the Mayflower Hotel. After the undercover employee made it clear that he was a “Mossad” agent, Nozette stated, “Good. Happy to be of assistance.”
After lunch in the hotel restaurant, Nozette and the undercover employee retired to a hotel suite to continue their discussion. During the conversation, the defendant informed the undercover employee that he had clearances “all the way to Top Secret SCI, I had nuclear…,” that “anything that the U.S. has done in space I've seen,” and that he would provide classified information for money and a foreign passport to a country without extradition to the United States.
The defendant and the undercover employee met again on Sept. 4, 2009, at the Mayflower Hotel. During this encounter, Nozette assured the undercover employee that, although he no longer had legal access to any classified information at a U.S. government facility, he could, nonetheless, recall the classified information to which he had been granted access. The defendant said, “It’s in my” head, and pointed to his head.
Undercover Operation Continues
On Sept. 10, 2009, FBI agents left a letter in the prearranged “dead drop” facility for the defendant. In the letter, the FBI asked Nozette to answer a list of questions concerning classified U.S. satellite information. FBI agents also provided signature cards, in the defendant’s true name and an alias, for Nozette to sign and asked the defendant to provide four passport sized photographs for the Israeli passport the defendant requested. The FBI agents also left $2,000 cash for the defendant in the “dead drop” facility, which Nozette retrieved the same day, along with the questions and signature cards.
On Sept. 16, 2009, Nozette left a manila envelope in the “dead drop” facility in the District of Columbia. One of the “answers” provided by the defendant contained information classified as SECRET/SCI which related to the national defense, in that it directly concerned classified aspects and mission capabilities of a prototype overhead collection system and which disclosure would negate the ability to support military and intelligence operations. In addition to disclosing SECRET/SCI information, Nozette offered to reveal additional classified information that directly concerned nuclear weaponry, military spacecraft or satellites, and other major weapons systems.
On Sept. 17, 2009, FBI agents left a second communication in the “dead drop” facility for the defendant. In the letter, the FBI asked Nozette to answer another list of questions concerning classified U.S. satellite information. Nozette retrieved the questions from the “dead drop” facility later that same day.
On Oct. 1, 2009, Nozette left a manila envelope in the “dead drop” facility in the District of Columbia. The FBI also left a cash payment of $9,000 in the “dead drop” facility. Later that day, the FBI agents retrieved the sealed manila envelope left by the defendant. Inside the envelope, FBI agents discovered the encrypted thumb drive that was provided to Nozette on Sept. 17, 2009, which included another set of “answers” from the defendant. The “answers” contained information classified as TOP SECRET/SCI and other information classified as SECRET/SCI. This classified information related to the national defense, in that it directly concerned satellites, early warning systems, means of defense or retaliation against large-scale attack, communications intelligence information, and major elements of defense strategy. (This information is what formed the basis for the charge in today’s guilty plea.)
On Oct. 5, 2009, Nozette left a manila envelope in the “dead drop” facility in the District of Columbia. Later that day, the FBI agents retrieved the sealed manila envelope left by the defendant. Inside the envelope, FBI agents discovered the encrypted thumb drive that was provided to Nozette on Oct. 1, 2009, which included another set of “answers” from the defendant. The “answers” contained information classified as TOP SECRET/SAR. This classified information related to the national defense, in that it directly concerned capabilities of a U.S. military weapon system research and development effort.
Nozette and the undercover employee met again on Oct. 19, 2009, at the Mayflower Hotel. During that meeting, the following exchanges took place:
NOZETTE: “So, uh, I gave you even in this first run, some of the most classified information that there is. . . . I’ve sort of crossed the Rubicon. . . . Now the, uh, so I think when I said like fifty K, I think that was probably too low. . . .The cost to the U.S. Government was two hundred million. . . . to develop it all. Uh, and then that’s not including the launching of it. . .Uh, integrating the satellites. . . . So if you say okay that probably brings it to almost a billion dollars. . . So I tell ya at least two hundred million so I would say, you know, theoretically I should charge you certainly, you know, at most a one percent.”
Nozette was arrested soon after he made these statements. He was subsequently indicted on four charges of attempted espionage. Under the plea agreement, Nozette pleaded guilty to the third count of the indictment, arising out of his passing of TOP SECRET/SCI information on Oct. 1, 2009.
At the time of his arrest, Nozette was awaiting sentencing in another federal case. On Jan. 30, 2009, he pleaded guilty in the U.S. District Court for the District of Columbia to charges of conspiracy to defraud the U.S. government with respect to false claims and tax evasion in an amount up to $399,999. In that case, Nozette agreed to pay restitution of $265,205 to the U.S. government. Nozette is awaiting sentencing in the case. Under terms of today’s plea, the sentence in the fraud case is to run concurrently with the sentence for attempted espionage.
This investigation was conducted by the FBI’s Washington Field Office, with assistance from the Naval Criminal Investigative Service, Naval Audit Service, National Reconnaissance Office, Air Force Office of Special Investigations, Defense Computer Forensics Laboratory, Defense Advanced Research Projects Agency, Defense Criminal Investigative Service, Defense Contract Audit Agency, U.S. Army 902nd Military Intelligence Group, National Aeronautics and Space Administration (NASA) Office of Counterintelligence, NASA Office of Inspector General, Department of Energy , Internal Revenue Service (IRS) Criminal Investigation Division, IRS Tax Exempt & Government Entities group, U.S. Customs and Border Protection and U.S. Postal Inspection Service, as well as other partners in the U.S. intelligence community.
The prosecution is being handled by Trial Attorneys Deborah A. Curtis and Heather M. Schmidt, from the Counterespionage Section of the Justice Department’s National Security Division, and Assistant U.S. Attorney Anthony Asuncion, from the U.S. Attorney’s Office for the District of Columbia.
Medicare Fraud Strike Force Charges 91 Individualsfor Approximately $295 Million in False BillingRead the Press Release
WASHINGTON – Attorney General Eric Holder and Health and Human Services (HHS) Secretary Kathleen Sebelius announced today that a nationwide takedown by Medicare Fraud Strike Force operations in eight cities has resulted in charges against 91 defendants, including doctors, nurses, and other medical professionals, for their alleged participation in Medicare fraud schemes involving approximately $295 million in false billing.
Attorney General Holder and Secretary Sebelius were joined in the announcement by FBI Executive Assistant Director Shawn Henry, Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and HHS Inspector General Daniel R. Levinson.
As part of a coordinated action, 70 individuals were charged by Strike Force prosecutors in indictments unsealed yesterday and today in six cities alleging a variety of Medicare fraud schemes involving approximately $263.6 million in false billings. As part of takedown operations last week, 18 additional defendants were charged in Detroit and one defendant was charged in Miami in cases unsealed on Sept. 1, 2011, for their alleged roles in Medicare fraud schemes involving approximately $29.4 million in fraudulent claims. Additionally, two individuals are scheduled to appear in court today on charges filed on Aug. 24, 2011, for their roles in a separate $2 million health care fraud scheme. This coordinated takedown involved the highest amount of false Medicare billings in a single takedown in Strike Force history.
The joint Department of Justice-HHS Medicare Fraud Strike Force is a multi-agency team of federal, state and local investigators designed to combat Medicare fraud through the use of Medicare data analysis techniques and an increased focus on community policing. Over the course of the past week, approximately 400 law enforcement agents from the FBI, HHS-Office of Inspector General (HHS-OIG), multiple Medicaid Fraud Control Units, and other state and local law enforcement agencies participated in the takedown. In addition to making arrests, agents also executed 18 search warrants in connection with ongoing strike force investigations.
“The defendants charged in this takedown are accused of stealing precious taxpayer resources and defrauding Medicare – jeopardizing the integrity of our health care system and our nation’s most critical health care program for personal gain,” said Attorney General Holder. “Our highly coordinated, nationwide Strike Force operations are working aggressively to combat Medicare fraud and our anti-health care fraud efforts have never been more innovative, collaborative, aggressive – or effective. We will continue to work with our law enforcement partners and partners across government to fight against health care fraud.”
“Today’s arrests are a powerful warning to those who would try to defraud taxpayers and Medicare beneficiaries,” said HHS Secretary Sebelius. “These arrests illustrate close cooperation between the Medicare program that identified these fraudsters and the law enforcement officials who acted swiftly to cut them off. And our efforts to stop criminals don’t end here because the Affordable Care Act gives us new tools to prevent Medicare fraud before it is committed – better protecting seniors and the integrity of the Medicare program for generations to come.”
The defendants charged are accused of various health care fraud-related crimes, including conspiracy to defraud the Medicare program, health care fraud, violations of the anti-kickback statutes and money laundering. The charges are based on a variety of alleged fraud schemes involving various medical treatments and services such as home health care, physical and occupational therapy, mental health services, psychotherapy and durable medical equipment (DME).
According to court documents, the defendants allegedly participated in schemes to submit claims to Medicare for treatments that were medically unnecessary and oftentimes never provided. In many cases, indictments and complaints allege that patient recruiters, Medicare beneficiaries and other co-conspirators were paid cash kickbacks in return for supplying beneficiary information to providers, so that the providers could submit fraudulent billing to Medicare for services that were medically unnecessary or never provided. Collectively, the doctors, nurses, medical professionals, health care company owners and others charged in the indictments and complaints are accused of conspiring to submit a total of approximately $295 million in fraudulent billing.
“The health care system is part of our nation’s infrastructure and we must do everything in our power to protect the integrity of Medicare and the system at large,” said FBI Executive Assistant Director Henry. “Working together as partners, we can stop criminals who seek to steal American taxpayers’ hard-earned dollars and we help ensure our nation’s health care system is there for those who need it.”
“As charged in these indictments, the defendants cover nearly the entire spectrum of healthcare providers, and perpetrated a variety of fraudulent schemes,” said Assistant Attorney General Breuer. “From Brooklyn to Miami to Los Angeles, the defendants allegedly treated the Medicare program like a personal piggy bank. Today’s Strike Force operations should serve as a wake-up call to would-be fraudsters nationwide. With Strike Force teams now in nine cities across the country, and employing sophisticated, data-driven law enforcement methods, we are determined to hold criminally responsible those who defraud Medicare.”
“The warning should be unambiguously clear by now,” said HHS Inspector General Levinson. “We will continue using the combined law enforcement might of Strike Forces around the country to combat health care fraud.”
In Miami, 45 defendants, including one doctor and one nurse, were charged today and yesterday for their participation in various fraud schemes involving a total of $159 million in false billings for home health care, mental health services, occupational and physical therapy, DME and HIV infusion. Another defendant in Miami was charged on Sept. 1, 2011, for a $1 million Medicare fraud scheme. In one case, 24 defendants are charged for participating in a community mental health center fraud scheme involving more than $50 million in fraudulent billing. According to court documents, the defendants allegedly paid patient recruiters to refer ineligible beneficiaries to the mental health center. In some instances, beneficiaries who were residents of halfway houses were allegedly threatened with eviction if they did not agree to attend the mental health center.
In Houston, two individuals were charged today with fraud schemes involving $62 million in false billings for home health care and DME. According to an indictment, one defendant allegedly sold beneficiary information to 100 different Houston-area home health care agencies in exchange for illegal payments. The indictment alleges that the home agencies then used the beneficiary information to bill Medicare for services that were unnecessary or never provided.
Ten defendants were charged in Baton Rouge, La., for participating in schemes involving more than $24 million related to false claims for home health care and DME. According to one indictment, a doctor, nurse and five other co-conspirators participated in a scheme to bill Medicare for more than $19 million in skilled nursing and other home health services that were medically unnecessary or never provided.
Six defendants, including two doctors, were charged in Los Angeles for their roles in schemes to defraud Medicare of more than $10.7 million. In Brooklyn, three defendants, including two doctors, were charged for a fraud scheme involving more than $3.4 million in false claims for medically unnecessary physical therapy. Two defendants, including a doctor, are making initial appearances today in U.S. federal court in Dallas after being charged for a scheme to defraud Medicare of approximately $2.1 million.
In Detroit, 18 defendants, including three doctors, were charged last week for schemes to defraud Medicare of more than $28 million. According to an indictment, 14 of the defendants participated in a home health care scheme that submitted more than $14 million in false claims to Medicare. Finally, four defendants including one doctor were charged in Chicago for their alleged roles in schemes to defraud Medicare of more than $4.4 million.
The Medicare Fraud Strike Force operations are part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT), a joint initiative announced in May 2009 between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country.
Since their inception in March 2007, Strike Force operations in nine locations have charged more than 1,140 defendants who collectively have falsely billed the Medicare program for more than $2.9 billion. In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
The cases announced today are being prosecuted and investigated by Medicare Fraud Strike Force teams comprised of attorneys from the Fraud Section of the Justice Department’s Criminal Division and from the U.S. Attorney’s Offices for the Southern District of Florida, the Eastern District of Michigan, the Eastern District of New York, the Southern District of Texas, the Central District of California, the Middle District of Louisiana; the Northern District of Illinois, and the Northern District of Texas; and agents from the FBI, HHS-OIG, and state Medicaid Fraud Control Units.
An indictment is merely a charge and defendants are presumed innocent until proven guilty.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.
Related Documents
Indictments
Remarks of Attorney General Eric Holder
Remarks of Assistant Attorney General BreuerJustice Department Files Lawsuit Alleging Racial and Sexual Harassment by the Texas Department of Family and Protective ServicesRead the Press Release
WASHINGTON – The Department of Justice announced today the filing of a lawsuit against the Texas Department of Family and Protective Services (DFPS), alleging the agency discriminated against a black male former employee on the basis of race and/or sex by subjecting him to a hostile work environment and then terminating him in violation of Title VII of the Civil Rights Act of 1964, as amended. The suit was filed in federal district court in the Western District of Texas.
According to the department’s complaint, from early 2007 until his termination in July 2007, Michael Lewis was subjected to race- and gender-based slurs and insults and other objectionable conduct by his first- and second-line supervisors. Additionally, the supervisors ignored and even ridiculed his repeated complaints to them about being harassed by one of his assigned clients at DFPS, in contrast to the office’s prior practice of transferring non-black, female investigators from cases in which they experienced harassment from clients. The racial and sexual harassment of Lewis ultimately culminated in his termination.
“All workers have the right to go to work each without facing discrimination and without having to suffer racial and sexual harassment. Public employers should set an example for others by upholding the law and taking prompt and effective action to stop discrimination when it occurs,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Department of Justice will vigorously pursue such violations of Title VII.”
The El Paso, Texas, area office of the Equal Employment Opportunity Commission (EEOC) investigated and attempted to resolve Lewis’s charge of discrimination before referring it to the Department of Justice for litigation. More information about the EEOC is available on its website at www.eeoc.gov.
The enforcement of Title VII is a top priority of the Justice Department’s Civil Rights Division. Additional information about the Civil Rights Division is available on its websites at www.justice.gov/crt/ and www.justice.gov/crt/emp/ .
Former Campaign Treasurer for U.s. Congressman from New Jersey<br /> <br /> Sentenced to 30 Months in Prison for Embezzling Campaign FundsRead the Press Release
WASHINGTON – The former campaign treasurer for Representative Frank LoBiondo of New Jersey was sentenced today to 30 months in prison for embezzling more than $450,000 from the congressman’s election and re-election campaign accounts, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney Paul J. Fishman for the District of New Jersey and Special Agent in Charge Michael B. Ward of the FBI’s Newark, N.J., Field Office.
Andrew J. McCrosson Jr., 60, of Egg Harbor Township, N.J., also was sentenced by Senior U.S. District Judge Joseph E. Irenas to serve three years of supervised release following his prison term, and to pay $458,000 in restitution. McCrosson pleaded guilty on March 4, 2011, in Camden, N.J., to a two-count criminal information charging him with one count of wire fraud and one count of embezzling and converting funds contributed to a federal candidate.
According to court documents and information presented in court, McCrosson was the campaign treasurer for Congressman LoBiondo from 1995 through Aug. 23, 2010. The election and re-election campaign committees were known as LoBiondo for Congress. As campaign treasurer, McCrosson was responsible for maintaining the campaign committee’s financial records, keeping track of contributions to and expenditures of the campaign committee and filing necessary submissions with the Federal Election Commission (FEC). McCrosson was paid a fee for his services ranging between $3,000 and $8,000, either per election cycle or per calendar year.
According to court documents, the campaign committee maintained bank accounts into which campaign contributions were deposited and from which expenditures were paid. During his guilty plea hearing, McCrosson acknowledged that he controlled those bank accounts on behalf of the campaign committee and was responsible for reporting all campaign contributions and expenses to the FEC. McCrosson admitted that from 1995 to August 2010, he wrote checks totaling approximately $458,000 from the LoBiondo for Congress bank accounts to himself without authorization and for no legitimate campaign purpose. According to the court document, McCrosson used the embezzled funds for personal purposes such as the repayment of a federal income tax lien, home mortgage payments, college tuition payments for his children and other living expenses.
McCrosson failed to report to the FEC all of the checks he wrote to himself, in an effort to conceal his theft. McCrosson also admitted that he materially misrepresented in these FEC filings the amount of cash on hand held by the campaign committee in its bank accounts to further conceal his embezzlement from Congressman LoBiondo, the campaign committee, the FEC and the public.
Congressman LoBiondo represents the Second Congressional District of New Jersey which includes all of Salem, Cumberland and Cape May counties and parts of Gloucester, Atlantic and Burlington counties. McCrosson performed his duties as campaign treasurer for the committee from his home in Marmora, N.J., and later from his home in Egg Harbor Township.
The case was investigated by the FBI, and is being prosecuted by Assistant U.S. Attorney Matthew Skahill of the U.S. Attorney’s Office Criminal Division in Camden, as well as Trial Attorneys Tracee Plowell and Nancy Simmons of the Public Integrity Section in the Justice Department’s Criminal Division.
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Fact Sheet: the Department of Justice Ten Years After 9/11Read the Press Release
Ten years after the terrorist attacks of Sept. 11, 2001, the United States has been defined by its resolve, its values and the resilience with which it has overcome this tragedy. The 9/11 attacks and other acts of terrorism have failed to undermine our values or weaken our society. Americans continue to embrace democratic values and fundamental liberties, instead of fear and oppression.
As the Justice Department and the entire nation honor the memory of those who lost their lives in the 9/11 attacks, the department remains fully committed to the fight against those who target Americans and our way of life. The best way to honor the legacies of the victims of 9/11 is to prevent further terrorist attacks on this country, which remains the highest priority and most urgent work of the department.
Even as we pledge continued vigilance against those who target Americans, our nation can be justifiably proud of its response to these threats over the past decade. America is both stronger and safer than it was a decade ago. Ten years after 9/11, al-Qaeda and its affiliates, while still a serious threat, have a severely degraded capability to attack the homeland. As a result of offensive actions abroad and vigilant security measures at home, the U.S. government has reduced terrorists’ capabilities to perpetrate spectacular attacks on American soil.
For its part, the department has improved its ability to identify, penetrate and dismantle terrorist plots as a result of a series of structural reforms; the development of new intelligence and law enforcement tools; and a new mindset that values information sharing and prevention, while vigorously protecting civil liberties and privacy interests. Working with partners in the intelligence community, the military and law enforcement, as well as with communities across America and counterparts around the world, the department has not rested -- and will never rest -- in its efforts to safeguard America.
Even as we strive to thwart 100 percent of the plots against us, we know that violent extremists need only succeed once. While absolute security is not possible and much work remains to be done, the Justice Department and its partners have built a much stronger security architecture to maximize our ability to protect the homeland, and are constantly adapting operations in a way that enhances the nation’s security while further delegitimizing the actions of terrorists.
Below are some of the key actions taken by the department over the past decade to enhance the nation’s counter-terror efforts, while upholding civil liberties and privacy interests. For more information on how the department is commemorating 9/11, please see: www.justice.gov/911. To view this fact sheet online, please see: I.) Protecting America Through Investigation and Criminal Prosecution; II.) Structural Changes to Enhance Counter-Terrorism Efforts; III.) Legal Changes to Enhance Counter-Terrorism Efforts; IV.) Protecting the Privacy and Civil Liberties of Americans; V.) Partnering with the Muslim, Arab and Sikh Communities; and VI.) Partnering with Domestic and International Counterparts.
I. Protecting America Through Investigation and Criminal Prosecution
Over the past decade, the department has successfully and securely used the criminal justice system to convict and incarcerate hundreds of defendants for terrorism and terrorism-related offenses that occurred both in the United States and overseas, including plots targeting both civilian and military targets. These post-9/11 terror prosecutions have proceeded without any terror defendant escaping federal custody or terrorist retaliation against a judicial district.
Over the past three years, America has dealt with some of the most significant terrorist threats to the homeland since 9/11. These threats have become increasingly diverse and decentralized, often making them more challenging to identify and counter. There has been an expanding universe of groups and people targeting our country, including al-Qaeda in the Arabian Peninsula, the Pakistani Taliban and other affiliates, as well as an increasing number of radicalized U.S. citizens and residents. There has also been greater diversity in terms of tactics, with a trend toward smaller, faster-developing plots, rather than larger, long-term plots like those carried out on 9/11.
The Justice Department has played a vital role in combating these emerging threats, and it continues to adapt its operations. During calendar years 2009 and 2010, the Justice Department charged more defendants in federal court with the most serious terrorism offenses than in any two-year period since 9/11. Some of the more significant international terrorism prosecutions in recent years include the following:
- New York Subway Plot: In September 2009, a combined law enforcement and intelligence effort thwarted an al-Qaeda-sponsored plot to attack the New York subway system. Najibullah Zazi and Zarein Ahmedzay pleaded guilty in the Eastern District of New York in February and April 2010, respectively, in connection with their roles in the plot. Co-defendant Adis Medunjanin is currently awaiting trial. Zazi’s cousin also pleaded guilty to helping Zazi obtain al-Qaeda training and obstructing the terrorism investigation, and Zazi’s father and uncle have also been convicted of conspiring to obstruct justice in the terrorism investigation. An additional person was convicted of lying to federal agents in connection with the case. Five additional defendants, including Adnan El-Shukrijumah, who is accused of being a senior leader of al-Qaeda, have also been indicted as part of the investigation.
- Times Square Plot: In June 2010, Faisal Shahzad pleaded guilty in the Southern District of New York to attempting to detonate a car bomb in New York City’s Times Square on the evening of May 1, 2010. Shahzad admitted that he received explosives training from trainers affiliated with the Pakistani Taliban. In October 2010, Shahzad was sentenced to life in prison.
- Mumbai and Denmark Terror Plots: In March 2010, David Headley pleaded guilty in the Northern District of Illinois to a dozen terrorism charges, admitting that he participated in planning the November 2008 terrorist attacks in Mumbai, India, as well as later planning to attack a Danish newspaper that had published cartoons of the Prophet Mohammed. In June 2011, Headley co-defendant Tahawwur Rana was convicted of participating in the Denmark terror conspiracy and providing material support to the Pakistani terrorist organization Lashkar-e-Tayyiba. Six other defendants, including alleged Pakistani terror leader Ilyas Kashmiri and accused Lashkar-e-Tayyiba operative Sajid Mir, have been indicted as part of the investigation.
- Al-Shabaab Terror Recruitment: Since 2009, 19 individuals have been charged in the District of Minnesota as part of “Operation Rhino,” an investigation that has focused on the recruitment of young men from the Minneapolis-area to fight on behalf of the terrorist organization, al-Shabaab, in Somalia. Six of the defendants have pleaded guilty thus far. Many other defendants remain fugitives in Somalia. The earliest group of identified travelers departed in 2007, while others left in 2008 and 2009. Upon arriving in Somalia, the men resided in al-Shabaab safe-houses until constructing an al-Shabaab training camp, where they were trained by a senior member of al-Shabaab and a senior member of al-Qaeda. At least two of the travelers from Minneapolis have died in suicide bomb attacks in Somalia and several others have been killed in combat fighting for al-Shabaab. In other judicial districts, the department has charged numerous other defendants with terror violations involving al-Shabaab.
Countering Homegrown Violent Extremism
In recent years, the Department of Justice has brought charges against an increasing number of individuals, including U.S. citizens and legal permanent residents, who were living in this country; had become radicalized; and had taken steps to act on their extremist beliefs. While some have acted at the direction of foreign terrorist groups, many were lone actors, operating independently of foreign terrorist organizations but motivated or radicalized by terrorist propaganda. Examples of recent homegrown terror prosecutions are below:
- Michael Finton pleaded guilty in May 2011 in the Central District of Illinois to attempted use of a weapon of mass destruction stemming his efforts to detonate a vehicle bomb outside a federal courthouse in Illinois. Finton was sentenced to 28 years in prison.
- Farooque Ahmed pleaded guilty in the Eastern District of Virginia in April 2011 to attempting to provide material support to al-Qaeda and collecting information to assist in planning terrorist attacks on transit facilities in the Washington, D.C., area. He was sentenced to 23 years in prison.
- Daniel Boyd pleaded guilty in February 2011 in the Eastern District of North Carolina to conspiracy to provide material support to terrorists, and conspiracy to kill abroad, stemming from his efforts to recruit and help individuals travel abroad to kill on behalf of violent extremists. Daniel’s son, Zakariya Boyd, pleaded guilty to conspiracy to provide material support to terrorists in June 2011.
- Zachary Chesser pleaded guilty in the Eastern District of Virginia in February 2011 to charges of communicating threats against the writers of the South Park television show, soliciting jihadists to desensitize law enforcement and attempting to provide material support to al-Shabaab. He was sentenced to 25 years in prison.
- Colleen LaRose pleaded guilty in February 2011 in the Eastern District of Pennsylvania to conspiracy to provide material support to terrorists, conspiracy to kill abroad and other charges stemming from her role in a plot to murder a Swedish cartoonist who depicted the Prophet Mohammed. Her co-defendant, Jamie Paulin-Ramirez, pleaded guilty in March 2011 to conspiracy to provide material support to terrorists.
- Hosam Smadi pleaded guilty in May 2010 in the Northern District of Texas to attempted use of a weapon of mass destruction stemming from his efforts to bomb a 60-story skyscraper in Dallas in 2009. Smadi was sentenced to 24 years in prison.
Assisting in the Intelligence-Gathering Process
Over the past decade, in case after case, the Justice Department has sought not just to convict and incarcerate criminals but also to develop cooperators and informants who can be used to hold accountable co-conspirators and others involved in plots against the United States. Some examples from the past 10 years in which valuable information about terrorist organizations has been elicited through the questioning of individuals at different stages of the criminal justice process, are below.
- David Headley, who pleaded guilty in 2010 in the Northern District of Illinois in connection with a plot to bomb a Danish newspaper and his role in planning the 2008 terror attacks in Mumbai, has provided valuable intelligence on those attacks, the terrorist organization Lashkar-e-Tayyiba, and Pakistan-based terrorist leaders. Headley also testified in the trial of c o-defendant Tahawwur Rana, who was convicted in June 2011 of participating in the Denmark terror conspiracy and providing material support to Lashkar-e-Tayyiba.
- Earnest James Ujaama pleaded guilty in 2007 in the Southern District of New York to terrorism charges arising from his efforts to establish a jihad training camp in Bly, Ore., and his efforts to facilitate violent jihad in Afghanistan. Ujaama later testified in the trial of Oussama Kassir, who was charged with a conspiracy in connection with the Bly training camp and with operating numerous terrorist websites. Kassir was found guilty of all 11 counts against him in May 2009, and received a life sentence plus 115 years in September 2009. Ujaama’s testimony was considered instrumental in helping to secure Kassir’s conviction.
- Iyman Faris, who trained and fought in Kashmir and Afghanistan in the late 1980s, provided valuable intelligence about al-Qaeda operations, leaders and plans for attacks in the United States. Faris pleaded guilty in the Eastern District of Virginia to casing a New York City bridge for al-Qaeda, and providing information to al-Qaeda on tools necessary for possible attacks on U.S. targets. He was sentenced in 2003 to 20 years in prison.
- John Walker Lindh pleaded guilty and was sentenced to 20 years in prison in 2002 in the Eastern District of Virginia for supplying services to the Taliban while fighting on the Taliban’s front lines in Afghanistan. As part of his plea agreement, he provided valuable intelligence about training camps and fighting in Afghanistan.
II. Structural Changes to Enhance Counter-Terrorism Efforts
Over the past decade, the Justice Department and its component agencies have fundamentally restructured their operations to better address national security threats and prevent terrorist attacks. Some of the major structural reforms during this period include the following:
Creating the Justice Department’s National Security Division
In 2006, the Justice Department created the National Security Division (NSD), the first new Justice Department division in 49 years, to merge the department’s primary national security components into a single division to more effectively combat national security threats. The division brought together the former Office of Intelligence Policy and Review, the Counterterrorism Section and the Counterespionage Section from separate parts of the department. The new Office of Law and Policy, the Executive Office and the Office of Justice for Victims of Overseas Terrorism have completed the NSD. NSD’s structure is designed to fuse the authorities and capabilities of the law enforcement and intelligence communities to strengthen the government’s national security efforts. Since its inception, some of NSD’s accomplishments include:
- Improved coordination between prosecutors and law enforcement agencies, on the one hand, and intelligence attorneys and the Intelligence Community, on the other, to strengthen the effectiveness of the nation’s counterterrorism efforts.
- Developed and promoted a national counterterrorism enforcement program that has yielded prosecutions against hundreds of defendants as a result of collaboration with department leadership, the FBI, the intelligence community and the U.S. Attorneys’ Offices.
- Re-organized and dramatically increased staffing for the Office of Intelligence (formerly the Office of Intelligence Policy and Review), with three new sections to handle the increased Foreign Intelligence Surveillance Act (FISA) workload, better coordinate FISA litigation and improve national security oversight.
- Reviewed, processed and submitted thousands of FISA applications to the FISA Court on behalf of the government to ensure that intelligence community agencies have the legal authorities necessary to conduct intelligence operations.
- With the lowering of the FISA “wall” between intelligence and law enforcement investigations, NSD has overseen and processed a steady increase in the number of requests to use information from FISA-authorized activities as evidence in criminal prosecutions of terrorists and spies.
- Created and staffed a new Office of Law and Policy to harmonize national security legal and policy functions for the entire department, and to promote important national security priorities, such as updating FISA and other legislation, supporting cyber security efforts and strengthening counter-terrorism capabilities of our partners overseas.
- Funded and staffed the Office of Justice for Victims of Overseas Terrorism, and designated 159 international terrorism events to allow for U.S. victim expense reimbursement.
Transforming the FBI to Meet the New Threat
Since 9/11, the FBI has undertaken the most significant transformation in its history. The bureau has restructured its operations in order to better detect, penetrate and dismantle terrorist enterprises as part of its larger cultural shift to a threat-based, intelligence-driven, national security organization. Today, the FBI serves as a vital link between the intelligence and law enforcement communities, bringing the discipline of the criminal justice system to its domestic intelligence activities in a manner that is consistent with American expectations and protections for privacy and civil liberties. As part of this strategic shift, the FBI has overhauled its counterterrorism operations, expanded its intelligence capabilities, modernized its business practices and technologies, and improved coordination with its partners. Some of the major changes include:
- Established clear priorities emphasizing prevention while ensuring the protection of privacy rights and civil liberties.
- Established the FBI National Security Branch in 2005, which centralized the FBI’s national security programs, including its Counterterrorism Division, Counterintelligence Division, Directorate of Intelligence, Weapons of Mass Destruction Directorate and the Terrorist Screening Center, into a single branch.
- Established Field Intelligence Groups in all 56 FBI field offices and embedded intelligence groups in each operational division at FBI headquarters.
- Doubled the number of FBI intelligence analysts and tripled the number of linguists.
- Created the National Joint Terrorism Task Force (NJTTF) at FBI headquarters, consisting of approximately 41 member agencies.
- Realigned resources , shifting some agents from criminal programs to counterterrorism matters and creating threat-based fusion cells to address the FBI’s top counterterrorism priorities, and to ensure that the collection of intelligence is focused against priority threats.
- Established various units that have enhanced counterterrorism capabilities, including the 24/7 Counterterrorism Watch, which serves as the FBI’s primary point of notification for all potential terrorist threats; the Terrorism Financing Operation Section, which centralizes efforts to track and shut down terrorist financing; and fly teams, which respond to terrorism incidents or threats around the world.
- Created and implemented a new operating manual for domestic operations based on new Attorney General Guidelines that apply across all program areas.
III. Legal Changes to Enhance Counter-Terrorism Efforts
Over the past decade, the Justice Department has worked closely with Congress and other federal agencies to strengthen the nation’s laws against terrorism, update the legal authorities needed to detect and disrupt terror plots, and tear down walls hindering intelligence and law enforcement officials from gathering and sharing information critical to protecting the nation. Some of the most significant changes in this area include the following:
USA PATRIOT Act of 2001 and the USA PATRIOT Act Improvement and Reauthorization Act of 2005
The USA PATRIOT Act, which was enacted in 2001, has helped investigators identify, dismantle and disrupt many terrorist plots. Expiring provisions of the Act were reauthorized by the USA PATRIOT Act Improvement and Reauthorization Act of 2005, and by subsequent legislation in 2009 and 2011, allowing investigators to continue to use these vital authorities. These laws have helped law enforcement and intelligence agencies protect the nation in the following ways:
- Helped tear down the so-called FISA “wall” that prevented effective information sharing between law enforcement and intelligence personnel.
- Allowed federal agents to better track sophisticated terrorists trained to evade detection, and provided national security investigators with tools comparable to those commonly used in criminal cases.
- Updated investigative tools to reflect new technologies and threats, and allowed authorities to obtain search warrants from a single court regardless of where terrorist-related activity occurred.
- Increased penalties for those who commit certain terrorist crimes and those who support them.
- The USA PATRIOT Act Improvement and Reauthorization Act added dozens of additional safeguards to protect privacy interests and civil liberties.
The Foreign Intelligence Surveillance Act (FISA) Amendments Act of 2008
In 2008, legislation was enacted that modernized the Foreign Intelligence Surveillance Act of 1978. The FISA Amendments Act of 2008, which passed with a bipartisan majority of Congress and broad support from the intelligence community, allows intelligence professionals to more quickly and effectively monitor terrorist communications, while protecting the civil liberties of Americans. Among other things, the law accomplishes the following:
- Ensures that the intelligence community has the tools it needs to determine who terrorists are communicating with, what they are saying and what they may be planning.
- Provides critical authorities that allow the intelligence community to acquire foreign intelligence information by targeting foreign persons reasonably believed to be outside the United States.
- Preserves and provides new civil liberties protections for Americans.
- Requires court orders to target Americans for foreign intelligence surveillance, no matter where they are, and requires court review of the procedures used to protect information about Americans.
- Provides critical liability protections for companies whose assistance is necessary to protect the country from terrorist threats.
IV. Protecting the Privacy and Civil Liberties of Americans
As the nation’s primary law enforcement agency, the Justice Department strives to be a model for ensuring that Americans’ privacy and civil liberties are forcefully protected in all the department’s national security efforts. In recent years, the department has dramatically enhanced oversight of its national security activities. It has also restored the department’s Civil Rights Division as the nation’s preeminent civil rights law enforcement agency. In Fiscal Year 2009, there were more federal criminal civil rights cases filed by the Justice Department than in any prior year – and in Fiscal Year 2010, the department broke that record once again. The department’s commitment to civil rights has never been stronger, and protecting the rights of the Muslim and Arab-American communities, and other communities, is a critical part of that commitment. Below are some of the advances the department has made since 9/11:
- The Civil Rights Division and U.S. Attorneys’ Offices have brought federal hate crime charges in 52 post-9/11 backlash cases, with 47 convictions to date. Department attorneys have also coordinated with state and local prosecutors in numerous non-federal criminal prosecutions, in many cases providing substantial assistance.
- The Civil Rights Division has also worked to ensure that Muslims are free to practice their religion without facing illegal barriers or discrimination. Using its authority under the Religious Land Use and Institutionalized Persons Act, the division has taken action in a number of jurisdictions around the country to ensure that land use and zoning decisions are not used to illegally prevent Muslim communities from building places of worship.
- The department appointed its first Chief Privacy and Civil Liberties Officer in 2006, and subsequently created the Office of Privacy and Civil Liberties to support the duties and responsibilities of the Chief Privacy and Civil Liberties Officer. The principal mission of the Office of Privacy and Civil Liberties is to protect the privacy and civil liberties of the American people through review, oversight and coordination of the department’s privacy operations.
- The department’s National Security Division has dramatically enhanced its oversight of FBI national security activities, and in many cases, those of other intelligence community agencies, to ensure adherence to the nation’s laws, rules and regulations, including privacy interests and civil liberties.
- The FBI created the Office of Integrity and Compliance in 2007 to ensure the bureau’s compliance with laws, rules and procedures, not only in national security activities, but in all FBI activities.
- The department developed and issued guidance to federal agencies in 2003 expressly prohibiting racial profiling in federal law enforcement practices.
V. Partnering with the Muslim, Arab and Sikh Communities
In conducting national security investigations and prosecuting cases, the FBI and Justice Department rely on the support, cooperation and trust of the communities we serve and protect. Members of the Muslim and Arab-American communities are valuable partners in a shared effort to combat terrorist threats. They have regularly denounced terrorist acts and those who carry them out, and have provided critical assistance in helping to disrupt terrorist plots and combat radicalization. The department and the FBI regularly engage in extensive outreach efforts with the Muslim and Arab-American communities, and many other communities, to improve our ability to perform our duties in a manner consistent with civil liberties, diversity and a commitment to religious freedom. Among the actions taken since 9/11:
- The Justice Department and the FBI have constructed strong, lasting relationships with national Arab-American, Muslim, Sikh and South Asian American organizations and their leaders.
- The Attorney General has made engagement with the Muslim American and Arab American communities a priority, and U.S. Attorneys are active in reaching out to Muslim communities in their districts, with a special focus on local situations and issues.
- The department’s Civil Rights Division holds bi-monthly meetings that bring together top officials from various federal agencies with representatives of the Muslim, Arab, Sikh and South Asian communities to address civil rights issues.
- The Justice Department’s Community Relations Service has held more than 250 town and community meetings around the country in the last decade, addressing 9/11 backlash discrimination issues against Arab-Americans, Muslims, Sikhs and South Asian-Americans. The Service has also deployed conflict resolution specialists to more than 50 communities to alleviate tensions in the wake of backlash incidents.
- The FBI has launched innovative grassroots programs in each of its 56 field offices to meet the needs of Arab-Americans, Muslims, Sikhs, South Asian-Americans, and other communities within their domains.
- FBI outreach efforts range from formal national-level relationships with established groups to local multi-cultural advisory boards, Citizen’s Academies and youth activities. Most important are the individual relationships established by FBI personnel in the field with leaders in their local communities through regular dialogue and information sharing.
VI. Partnering with Domestic and International Counterparts
In order to address terrorist networks operating around the world, the department has increased its partnerships at every level of government in the United States and has forged strong ties with its counterparts overseas. Some of these efforts include:
Coordinating with Federal, State and Local Partners
- Created Anti-Terrorism Advisory Councils in each U.S. Attorney’s Office to enhance information sharing with state and local authorities in each district, and to enhance communications between the department and U.S. Attorneys on terrorism matters.
- Increased the number of Joint Terrorism Task Forces (JTTFs) around the country from 35 to 104, and increased the number of JTTF personnel from approximately 1,000 to nearly 4,500.
- Helped fund and participate in the 72 information fusion centers that have been created in states and localities around the country since 9/11 to serve as the focal points within the state and local environment for the receipt, analysis, gathering and sharing of threat-related information.
- Partnered with other agencies to establish the Nationwide Suspicious Activity Reporting (SAR) Initiative (NSI), which provides standards, policies and processes for federal, state, local, tribal and territorial law enforcement to share timely, relevant information about behaviors recognized as precursor activities to terrorism. The NSI also is training analysts to recognize patterns and share behavior-related patterns and trends with law enforcement.
- Provided critical participation and support to the multi-agency National Counterterrorism Center (NCTC), which integrates terrorism intelligence, conducts strategic operational planning, and serves as a central repository for terrorism intelligence.
- Provided critical leadership and support to the Terrorist Screening Center, a multi-agency center under the umbrella of the FBI’s National Security Branch that manages the consolidated terrorist watch list.
- Provided critical participation in the multi-agency Foreign Terrorist Tracking Task Force, which provides information that helps keep foreign terrorists and their supporters out of the United States, or leads to their removal, location, detention, surveillance or prosecution.
- Created the FBI Office of Law Enforcement Coordination to build bridges to national, state, municipal, county, tribal and local partners.
Coordinating with International Counterparts
In the past 10 years, the department has leveraged international law enforcement cooperation to target and dismantle terrorist enterprises both at home and abroad. In this area, the department has:
- Expanded the number of FBI Legal Attaché offices in foreign countries from 44, on 9/11, to 62 operation offices and 13 sub-offices today.
- 112 agents and 74 support employees, in 2001, to 182 agents and 107 support personnel, for a total of 289 employees stationed abroad—an increase of nearly 55 percent.
- Responded to hundreds of formal requests from partners around the world for assistance in terrorism investigations, though our global network of Mutual Legal Assistance Treaties.
- Shared thousands of pieces of threat-related information with our international partners.
- Provided critical evidence to other countries for use in terrorism-related prosecutions, and received critical evidence from other countries for use in U.S. terrorism-related prosecutions.
Assistant Attorney General Ignacia S. Moreno Announces New Additions to Senior Management PositionsRead the Press Release
WASHINGTON – Ignacia S. Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division (ENRD), today announced two new members of her senior leadership team.
Bruce S. Gelber has been appointed to serve as the career deputy assistant attorney general, overseeing the work of the division’s Environmental Enforcement Section (EES) and the Environmental Defense Section (EDS). EES is responsible for representing the United States in affirmative civil litigation under the federal pollution control and environmental protection statutes, including the Comprehensive Environmental Response, Compensation, and Liability Act, the Resource Conversation and Recovery Act, the Clean Air Act, the Clean Water Act, the Safe Drinking Water Act and the Oil Pollution Act. EDS represents the United States in complex civil litigation arising under a broad range of environmental statutes, including defending Environmental Protection Agency (EPA) regulations in federal court.
Prior to his appointment, Gelber served as chief of EES for 11 years, one of the largest litigating sections in the Department of Justice. In his role as EES chief, he has supervised some of the section’s most significant cases, including the Justice Department’s civil lawsuit arising from the explosion and sinking of the Deepwater Horizon oil platform in April 2010.
Gelber previously served as an assistant section chief for the litigation group responsible for the EPA Region 3 and 8 dockets. He also served as a senior lawyer in the Region 1 and 2 litigation group and as lead counsel for the government in the superfund litigation over the Love Canal landfill site. Prior to joining the Department of Justice in 1985, Gelber was general counsel of the National Committee Against Discrimination in Housing in Washington, D.C. Gelber received his B.A., summa cum laude, from Cornell University in 1972 and a J.D. from the Harvard Law School in 1975.
“Bruce brings years of outstanding management experience to this important position in the Division, where he has served as my trusted advisor,” said Assistant Attorney General Moreno. “We will continue to benefit from Bruce’s expertise in environmental laws and his leadership in service to the American people.”
Shirley Rivadeneira recently joined ENRD to serve as counsel to the assistant attorney general. In this position she will be responsible for advising the assistant attorney general on several initiatives, such as outreach to the U.S. Attorneys’ Offices, environmental justice, international environmental enforcement, human capital management and other special projects.
Rivadeneira brings to ENRD significant environmental, litigation, regulatory and management experience from both the public and private sectors. She recently worked at the White House, first as director of the Energy and Environment Team and later as director of the Domestic Team in the Presidential Personnel Office. In both roles, Rivadeneira supported the Departments of Justice, Health and Human Services, Energy, Interior, Agriculture, Education, Labor, Transportation, Housing and Urban Development, and the National Aeronautics and Space Administration, EPA, the Office of Personnel Management, the Council on Environmental Quality and the Office of Science Technology Policy. Prior to that, she was an appointee at the U.S. Department of Labor, serving as a special assistant to the assistant secretary for Administration and Management and as an attorney advisor in the Office of the Solicitor, where she worked on developing a grants framework for green jobs training programs.
Before joining the administration, Rivadeneira was a litigation associate at Alston & Bird LLP and Clifford Chance LLP, where she focused on complex commercial litigation, white collar defense, regulatory compliance, environmental law, international arbitration and human rights.
Rivadeneira holds a B.A., with highest honors, from Emory University, and a J.D./M.A. joint-degree from American University, Washington College of Law and the School of International Service. During law school, she was a symposium editor of the Administrative Law Review.
“I am pleased to welcome Shirley to the Department of Justice,” said Assistant Attorney General Moreno. “Her extensive experience in environmental and international law, complex litigation, and record of distinguished service to the Executive branch will serve the division and the American people well.”
Alabama Woman Sentenced 33 Months in Prison for Role in Tax Fraud ConspiracyRead the Press Release
MONTGOMERY, Ala. – Laquanta Grant, a resident of Montgomery County, Ala., was sentenced to 33 months in prison for conspiring to defraud the United States and ordered to pay restitution in the amount of $2,326,738.08, the Justice Department and Internal Revenue Service announced today.
Along with four other defendants, Grant was indicted by a Montgomery, Ala., federal grand jury on Dec. 14, 2010, on a variety of charges stemming from a large-scale tax fraud and identity theft conspiracy based in that city. According to the indictment and other court documents, the conspirators used stolen identities to file millions of dollars in false tax returns claiming fraudulent refunds over a two-year period in 2009 and 2010. During the conspiracy, Grant was responsible for funneling more than $100,000 in fraudulent refunds to her co-conspirators.
According to the indictment and other court documents, in February 2009, Grant caused another person (W.D.) to open a bank account that was used to deposit the fraudulent tax refunds. The false refunds were provided to co-conspirator Veronica Dale and others. Between March 2010 and May 2010, Grant accompanied W.D. to the bank to ensure that W.D. withdrew the fraudulent refunds from the bank account and provided the monies to Grant and her co-conspirators. Between March 2010 and July 2010, Grant received more than $100,000 in checks from Betty Washington, who was also helping move fraudulent refunds, and provided some of the money to Alchico Grant and others. Laquanta Grant retained a portion of the false refunds.
Several other members of the conspiracy have already been sentenced. Wendy Delbridge and Betty Washington, who were not indicted with the other conspirators, both pleaded guilty to charges of conspiring to defraud the United States. Delbridge was sentenced to three years probation with six months of home confinement, while Washington was sentenced to 21 months in prison. One of the individuals indicted with Laquanta Grant, Leroy Howard, pleaded guilty to conspiring to defraud the United States and was sentenced to four years of probation with six months home confinement.
IRS-Criminal Investigation agents investigated this case, and Justice Department Tax Division Trial Attorneys Jason Poole and Michael Boteler, and Jared Morris, Assistant U.S. Attorney in the Middle District of Alabama are prosecuting the case.
More information about the Tax Division and its enforcement efforts can be found at: www.justice.gov/tax .
6 September 2011
New York Stock Broker Sentenced to Prison in International Stock Fraud SchemeRead the Press Release
WASHINGTON - A New York stock broker was sentenced today to 24 months in prison for his role in a wide-ranging international stock fraud scheme involving the illegal use of bulk commercial emails, or “spamming,” to promote thinly-traded Chinese penny stocks, announced A ssistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Barbara McQuade for the Eastern District of Michigan.
Gregg M. S. Berger, 47, of New York, N.Y., was ordered by U.S. District Judge Marianne O. Battani in Detroit to serve three years of supervised release following his prison term. Berger agreed to forfeit $600,000 to the United States.
According to court documents, Berger conspired with Alan Ralsky, Francis Tribble, How Wai John Hui, Scott Bradley and others to carry out a sophisticated stock fraud scheme from January 2005 through December 2007. Ralsky, Tribble, Hui and Bradley have all been convicted and sentenced for their roles in the scheme.
“Mr. Berger used his position as a stock broker to generate more than $30 million in illegal proceeds for his co-conspirators, and more than half a million dollars for himself,” said Assistant Attorney General Breuer. “Today’s sentence reflects our sustained commitment to ensuring the integrity of our financial markets, and to holding accountable those who try to manipulate them.”
“Schemes that manipulate stock prices undermine public confidence in the stock market, and can have serious impact on our economy,” said U.S. Attorney McQuade.
“Illegal activity involving the investment industry has brought financial ruin to many Americans. IRS Criminal Investigation is pleased to bring our forensic accounting skills to this joint venture to put a stop to this and other types of white collar fraud,” said Erick Martinez, Special Agent in Charge of the IRS Criminal Investigation Detroit Field Office.
Berger was indicted in the Eastern District of Michigan in December 2010 and pleaded guilty in April 2011 to conspiring to commit securities fraud and wire fraud.
The charges arose after a multi-year investigation, led by agents from the FBI, with assistance from the U.S. Postal Inspection Service and the Internal Revenue Service (IRS), revealed a sophisticated and extensive operation that largely focused on running a “pump and dump” scheme, whereby the defendants sent spam touting thinly-traded Chinese penny stocks, drove up their stock price, and reaped profits by selling the stock at artificially inflated prices.
In pleading guilty, Berger acknowledged that he established brokerage accounts at the direction of Hui and Tribble, and communicated with Ralsky and Bradley during the conspiracy. Berger’s role was to trade the stocks that were illegally promoted by spam email campaigns, arrange for shares of the stocks to be transferred into the brokerage accounts, and execute stock trades at the direction of Tribble, rather than the direction of the named account holders. Berger also caused the transfer of the proceeds from the trading of the stocks to bank accounts controlled by the conspirators. He also provided confidential account information, including trade amounts, prices, cash balances and wire transfer details to Tribble, Bradley and others involved in the scheme who were not entitled to such information and did not have authorization from the actual named account holders.
The stocks pumped-and-dumped included China World Trade Corporation (CWTD), Pingchuan Pharmaceutical Inc. (PGCN), China Digital Media Corporation (CDGT), World Wide Biotech and Pharmaceutical Co. (WWBP), China Mobility Solutions (CHMS) and m-Wise (MWIS).
According to court documents, during the course of the scheme, Berger caused the sale of approximately 30 million shares of stock, generating approximately $30 million for the co-conspirators and over $600,000 in commissions for Berger.
The case was prosecuted by Assistant U.S. Attorney Terrence Berg of the U.S. Attorney’s Office for the Eastern District of Michigan and Senior Counsel Thomas Dukes of the Criminal Division’s Computer Crime and Intellectual Property Section. The case was investigated by the FBI, IRS and U.S. Postal Inspection Service. The U.S. Securities and Exchange Commission’s Philadelphia Regional Office has provided significant ongoing assistance in this case.
Miami Construction Business Owner Pleads Guilty to Tax FraudRead the Press Release
WASHINGTON – Braynert Marquez of Miami pleaded guilty to a one-count information charging him with aiding and assisting in the preparation and filing of a false employment tax return, the Justice Department and the Internal Revenue Service (IRS) announced today.
According to the plea agreement and information, Marquez operated and at least partly owned two Dade County, Fla., construction companies known as Bema Block Corp. and Bema Group Corp. From 2004 through 2007, Marquez paid employees of Bema Block and Bema Group “off-the-books” wages in two different ways. First, from late 2006 through 2007, Marquez obtained cash to pay his employees by causing Bema Block and Bema Group corporate checks to be issued to DJ Construction Group Inc. DJ Construction was a shell corporation created by others for use in the check cashing scheme. DJ Construction did no actual work for either Bema Block or Bema Group. Marquez caused the checks to be cashed at a check cashing store that was aware of the arrangement. Marquez then caused his employees to be paid with the cash from the checks. In 2007, $698,848.82 in Bema Block and Bema Group checks were written to DJ Construction and cashed to pay employees. Marquez failed to report the cash wages on quarterly employment tax returns and failed to withhold and pay over employment taxes on the wages.
According to court documents, Marquez also caused certain Bema Block employees to be paid with two checks: one payroll check from which the employment taxes were withheld and an additional check with no taxes withheld. The additional check was issued not from Bema Block, but from one of two corporations, MFCM Group Corporation and MJMF Group Corporation, created by Marquez and others solely for this purpose. From 2004 through 2007, Marquez caused approximately $664,535 in checks from MFCM Group and at least $469,049 in checks from MJMF Group to be written to Bema Block employees. Marquez failed to report the wages paid by these checks on quarterly employment tax returns and failed to withhold and pay over employment taxes on the wages.
According to the information, Marquez willfully aided and assisted in the preparation and presentation to the IRS of a false Employer’s Quarterly Federal Tax Return (IRS Form 941) for the calendar quarter ending Dec. 31, 2010. The tax return falsely and fraudulently reported $130,021 in wages, tips and other compensation by Bema Group Corp. to its employees that quarter.
The court scheduled sentencing for Nov. 3, 2011. Marquez faces a maximum of three years in prison, a maximum of one year of supervised release and a fine of $250,000. As part of his plea agreement, Marquez agreed that the United States suffered an employment tax loss of at least $200,000 but not more than $400,000 and he agreed to pay restitution to the IRS in the amount of $280,362.
Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida, and John A. DiCicco, Principal Deputy Assistant Attorney General for the Department of Justice, Tax Division, thanked the IRS Special Agents who investigated this case and Tax Division Trial Attorneys Matthew J. Mueller, Jason H. Poole and Assistant Chief Gregory E. Tortella who are prosecuting the case.
Las Vegas Man Pleads Guilty in Connection with Fraud Scheme to Gain Control of Condominium Homeowners' AssociationsRead the Press Release
WASHINGTON – A Las Vegas man pleaded guilty today for his role in a scheme to fraudulently gain control of condominium homeowners’ associations (HOA) in the Las Vegas area so that the HOAs could direct business to a certain law firm and construction company, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, Special Agent in Charge Kevin Favreau of the FBI’s Las Vegas Field Office and Sheriff Doug Gillespie of the Las Vegas Metropolitan Police Department.
Darryl Scott Nichols, 47, pleaded guilty before U.S. District Judge Philip M. Pro in the District of Nevada to one count of conspiracy to commit mail and wire fraud.
According to the plea agreement, Nichols admitted that, beginning in approximately November 2005, he joined a fraud scheme aimed at controlling various HOA boards of directors so that the HOA boards could award the handling of construction-related lawsuits and remedial construction contracts to a law firm and construction company designated by Nichols’ co-conspirators. According to court documents, the fraud scheme operated from approximately August 2003 through February 2009.
According to court documents, in order to accomplish the scheme, co-conspirators used straw purchasers to obtain mortgage loans for units within HOA communities. Nichols admitted that he became a straw purchaser and used his name and credit to purchase condominiums at the Chateau Versailles, Sunset Cliffs and Palmilla condominium complexes. Nichols admitted that his co-conspirators provided the down payments and monthly payments, including HOA dues and mortgage payments, for the condominiums and were the true owners of the properties. According to plea documents, Nichols' 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.
Nichols admitted that he agreed to run for election to the HOA boards at the condominiums and became a board member at Chateau Versailles and Sunset Cliffs. Once elected to the boards, Nichols breached his statutory fiduciary duty to the homeowners by accepting from his co-conspirators compensation, gratuities and other remuneration that improperly influenced, or reasonably appeared to influence, his decisions – resulting in a conflict of interest. Nichols admitted that after being elected to the boards and accepting payments from his co-conspirators, he subsequently voted in a manner directed by and favorable to his co-conspirators.
According to court documents, to ensure Nichols and other straw purchasers would win HOA board elections, Nichols and his co-conspirators employed deceitful tactics such as creating fake labels and ballots, calling out-of-state homeowners in order to gather information about their voting intentions, and supplying mailing lists to co-conspirators to create forged ballots for non-voting homeowners. Nichols admitted that in approximately June 2008, at the request of his co-conspirators, he agreed to mail forged ballots from California to Las Vegas to make the forged votes for out-of-town homeowners appear legitimate.
Nichols admitted that he was given cash payments for his assistance in purchasing the properties, obtaining HOA membership status, rigging elections, and using his position to manipulate the HOA’s business to enrich the co-conspirators at the expense of the HOA and the legitimate homeowners.
The maximum prison sentence for conspiracy to commit mail fraud and wire fraud is 30 years. Sentencing is scheduled for Dec. 4, 2011.
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 and the Las Vegas Metropolitan Police Department, Criminal Intelligence Section.
This prosecution is part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information about the task force visit: www.stopfraud.gov.
Justice Department Settles Lawsuit Against the City of Winchester, Va., to Enforce Employment Rights of U.S. Marine Corps ReservistRead the Press Release
WASHINGTON - The U.S. Department of Justice announced today that it has reached a settlement with the city of Winchester, Va., to resolve allegations that the city violated the reemployment rights of U.S. Marine Corps reservist Jon Fultz. The suit alleged the city violated Fultz’s reemployment rights under the Uniformed Services Employment and Reemployment Rights Act (USERRA) when he returned to work after military training during which he suffered a knee injury.
The complaint by the Justice Department, filed on behalf of Fultz in the U.S. District Court for the Western District of Virginia, alleged that, in 2009, the city failed to properly reemploy Fultz in his pre-service position as a full duty community resource officer assigned to manage the city police department’s fleet of vehicles. According to the complaint, when Fultz returned to work, the city restored him to his previous fleet manager assignment, but placed him in a temporary “light duty” status he had not requested and which subjected him to removal from his job. Months later, the city removed him from his position without prior notice, purportedly for safety-related reasons, and ultimately terminated his employment.
“The men and women who bravely serve our nation in the armed forces should not have to sacrifice their civilian employment to do so. Employers have a legal obligation to reemploy service members injured during their service in the correct job status when they return from military duty,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Civil Rights Division is committed to protecting the rights of those who, through their bravery and sacrifice, secure the rights of all Americans.”
“The United States Attorney’s Office is committed to enforcing the laws that protect the rights of those brave men and women who serve our country proudly,” U.S. Attorney for the Western District of Virginia Timothy J. Heaphy said today. “Our soldiers must be able to serve with the confidence that they will be restored to their prior employment when they return to the workforce.”
Under the terms of the settlement, embodied in a consent decree that has been submitted for approval to the federal district court in Harrisonburg, Va., the city must provide Fultz with $32,000 in compensation for the lost wages that Fultz claimed he would have received had he been properly reemployed as a full duty community resource officer following his military service. The settlement also requires the city to provide training to its human resources director and its department heads on the rights and obligations of covered employees and their employers under USERRA.
Subject to certain conditions, USERRA requires employers to promptly reemploy returning service members in the position they would have held had their employment not been interrupted by military service, or in a position of like seniority, status, and pay. T his case stems from a referral from the U.S. Labor Department following an investigation by its Veterans’ Employment and Training Service.
The Justice Department’s Civil Rights Division has given a high priority to the enforcement of service members’ rights under USERRA. Additional information about USERRA can be found on the Justice Department’s websites at www.usdoj.gov/crt/emp and www.servicemembers.gov , as well as on the Labor Department’s website at www.dol.gov/vets/programs/userra/main.htm