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24 August 2011
Three New Jersey Investors Plead Guilty to Bid Rigging at Municipal Tax Lien AuctionsRead the Press Release
Three financial investors who purchased municipal tax liens at auctions in New Jersey pleaded guilty today for their roles in a conspiracy to rig bids at tax liens auctions held by municipalities, the Department of Justice announced.
Charges were filed today in U.S. District Court for the District of New Jersey in Newark, N.J., against Isadore H. May of Margate, N.J.; Richard J. Pisciotta Jr. of Long Beach Township, N.J.; and William A. Collins of Medford, N.J.
According to the felony charges, from at least 2003 through approximately February 2009, the investors participated in a conspiracy to rig bids at auctions for the sale of municipal tax liens in New Jersey by agreeing to allocate among certain bidders which liens each would bid on. The investors proceeded to submit bids in accordance with their agreements and purchased tax liens at collusive and non-competitive interest rates.
“The collusion taking place at these auctions is artificially raising the interest rates that financially distressed home and property owners must pay, and is lining the pockets of the colluding investors,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “The Antitrust Division will vigorously pursue these kinds of collusive schemes that eliminate competition from the marketplace.”
The department said that the primary purpose of the conspiracy was to suppress and restrain competition to obtain selected municipal tax liens offered at public auctions at non-competitive interest rates. When the owner of real property fails to pay taxes on that property, the municipality in which the property is located may attach a lien for the amount of the unpaid taxes. If the taxes remain unpaid after a waiting period, the lien may be sold at auction. State law requires that investors bid on the interest rate delinquent homeowners will pay upon redemption. By law, the bid opens at 18 percent interest and, through a competitive bidding process, can be driven down to zero percent. If a lien remains unpaid after a certain period of time, the investor who purchased the lien may begin foreclosure proceedings against the property to which the lien is attached.
According to the court documents, May, Pisciotta and Collins conspired with others not to bid against one another at municipal tax lien auctions in New Jersey. Because the conspiracy permitted the conspirators to purchase tax liens with limited competition, each conspirator was able to obtain liens which earned a higher interest rate. Property owners were therefore made to pay higher interest on their tax debts than they would have paid had their liens been purchased in open and honest competition.
Each violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. The maximum fine for a Sherman Act violation may be increased to twice the gain derived from the crime or twice the loss suffered by the victim if either amount is greater than the $1 million statutory maximum.
Today’s charges are part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force (FFETF). President Obama established the interagency FFETF to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit www.StopFraud.gov.
The ongoing investigation is being conducted by the Antitrust Division’s New York Field Office and the FBI’s Atlantic City, N.J., office. Anyone with information concerning bid rigging or fraud related to municipal tax lien auctions should contact the Antitrust Division’s New York Field Office at 212-335-8000, visit www.justice.gov/atr/contact/newcase.htm or contact the Atlantic City Resident Agency of the FBI at 609-677-6400.
Minnesota Transit Constructors to Pay U.S. $4.6 Million to Resolve False Claims Act LiabilityRead the Press Release
WASHINGTON - Minnesota Transit Constructors Inc. (MnTC), a joint venture comprised of Granite Construction, C.S. McCrossan Inc. and Parsons Transportation Group, as well as a number of subcontractors, have agreed to pay the United States $4.6 million to resolve allegations that they knowingly submitted false claims related to a federally-funded transit construction project in Minneapolis, the Justice Department announced today. The United States alleges that the companies falsely claimed that they had used Disadvantaged Business Enterprises (DBEs) for part of the work on the project when they had not. The U.S. Department of Transportation’s (DOT) DBE program provides assistance to businesses owned by minorities and women, as well as socially and economically disadvantaged individuals, to participate in federally-funded construction and design projects.
MnTC was the prime contractor on the project to design and build the Hiawatha Light Rail Transit System, a light-rail line linking downtown Minneapolis-St. Paul International Airport and the Mall of America. To obtain and maintain their contract, MnTC and its subcontractors were required to comply with the DBE regulations and to accurately report their DBE contracting. MnTC claimed that materials and services for the project were provided by DBEs, when in fact they were provided by non-DBE subcontractors and the DBEs were merely extra participants used to make it appear as if a DBE had performed the work.
“The Disadvantaged Business Enterprises program helps businesses owned by minorities and women work on federal construction projects,” said Tony West, Assistant Attorney for the Civil Division of the Department of Justice. “Those who make misrepresentations in order to participate in this program and obtain federal funds take advantage both of the taxpayers and the businesses that the program is designed to assist.”
“When businesses misrepresent those working with them to obtain government contracts, they violate the law and economically harm subcontractors who already face numerous disadvantages in the workplace,” added B. Todd Jones, U.S. Attorney for the District of Minnesota. “This resolution helps to correct that injustice in this instance.”
The government’s claims were based upon an investigation conducted by the Justice Department’s Civil Division, the U.S. Attorney’s Office for the District of Minnesota, DOT’s Office of Inspector General and the Federal Transit Administration.
“Disadvantaged Business Enterprise (DBE) fraud harms the integrity of the DBE program and law-abiding contractors , including many small businesses, by defeating efforts to ensure a level playing field in which all firms can compete fairly for contracts,” said Michelle McVicker, regional Special Agent-in-Charge of the DOT’s Office of Inspector General. “Our agents and investigators will continue to work with the Secretary of Transportation, the Administrator of Federal Transit and prosecutorial colleagues to expose and shut down DBE fraud schemes that adversely affect public trust and DOT-funded transit programs throughout Minnesota and elsewhere.”
“This violation of law is not acceptable and the Federal Transit Administration will remain vigilant in cracking down on unscrupulous behavior wherever it occurs,” said Administrator Peter Rogoff, Federal Transit Administration. “The spirit and intent of this law is to help level the playing field for small and disadvantaged businesses so they may continue to achieve success while strengthening our economy and our transit systems.”
The Justice Department’s total recoveries in False Claims Act cases since January 2009 have topped $7.5 billion.
Michigan Man Pleads Guilty to Illegal Importation of Polar Bear Trophy from CanadaRead the Press Release
WASHINGTON – Rodger Dale DeVries, 73, a resident of Jenison, Mich., has pleaded guilty to illegally importing a polar bear trophy mount in 2007 from Canada into Michigan in violation of the Marine Mammal Protection Act (MMPA), announced Ignacia S. Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division and Donald A. Davis, U.S. Attorney for the Western District of Michigan.
According to the plea agreement, the defendant obtained a license from the Nunavut Territory in Canada to hunt and kill a polar bear from the Foxe Basin in November 2000. DeVries knew that polar bears from the Foxe Basin could not be imported into the United States, so the defendant had the polar bear trophy stored in Canada.
The MMPA prohibits importation of polar bear trophies or parts unless the Secretary of the Interior has made a determination that, in doing so, the region would still maintain sustainable population levels. The Secretary has not made such a determination for the Foxe River Basin, and therefore, DeVries’ importation violated the MMPA. Since May of 2008 when polar bears were listed as “threatened” under the Endangered Species Act, the MMPA automatically prohibited the importation of polar bear parts or trophies for personal use from any part of Canada.
On July 3, 2007, DeVries traveled to Canada. He picked up the polar bear trophy from a storage unit, and, along with his two minor grandsons, put the polar bear trophy in his own boat and traveled from a boat harbor in Ontario, Canada, across the border to port in Raber Bay, Mich. A few days later, the defendant moved the trophy to his home and then sold the boat.
“The polar bear is an ecological and cultural treasure of the American and Canadian Arctic,” said Assistant Attorney General Moreno. “We will not tolerate the illegal importation of polar bear trophies and will fully prosecute all violations of federal law.”
Mr. Devries entered the plea on Aug. 22, 2011, before U.S. Magistrate Judge Timothy P. Greeley in Grand Rapids, Mich. The sentencing is currently scheduled for Sep. 8, 2011.
The maximum statutory sentence for this criminal violation is one year in prison and a maximum fine of $100,000.
The case was investigated by the U.S. Fish and Wildlife Service’s Office of Law Enforcement, and prosecuted by U.S. Attorney Davis and David Kehoe of the Justice Department’s Environment and Natural Resources Division, Environmental Crimes Section.
Massachusetts Man Arrested and Charged in Child Pornography CaseRead the Press Release
WASHINGTON – A Lowell, Mass., man charged with transportation and possession of child pornography made his initial appearance today in U.S. District Court in Boston, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney Carmen M. Ortiz of the District of Massachusetts and Special Agent in Charge Richard DesLauriers of the FBI Boston Division.
William H. Noble, 46, of Lowell, was charged in an indictment unsealed yesterday with one count of transportation of child pornography and one count of possession of child pornography. Noble was arrested yesterday in the District of Massachusetts.
According to the indictment, in April 2009, Noble allegedly transported visual depictions of minors engaging in sexually explicit conduct. The indictment also alleges that Noble possessed additional images of child pornography.
In a separate indictment unsealed in the District of Massachusetts on Aug. 17, 2011, Steven Saunders, 28, was charged with one count of possession of child pornography. Saunders, a current resident of Chula Vista, Calif., and a former resident of Groton, Mass., was arrested on Aug. 17, 2011, in the Southern District of California. According to the indictment, on April 15, 2009, Saunders allegedly possessed visual depictions of minors engaging in sexually explicit conduct.
The maximum sentence for each count of possession of child pornography is 10 years in prison, lifetime supervised release and a $250,000 fine. The maximum sentence for each count of transportation of child pornography is 20 years in prison, lifetime supervised release and a $250,000 fine.
These cases are being prosecuted by Trial Attorney Thomas Franzinger of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS) and Assistant U.S. Attorney Michael I. Yoon of District of Massachusetts Major Crimes Unit. The cases are being investigated by the FBI. The Groton Police Department is also investigating the case against Noble.
These cases were brought as part of Project Safe Childhood. In February 2006, the Department of Justice created Project Safe Childhood, a nationwide initiative designed to protect children from online exploitation and abuse. Led by the U.S. Attorneys’ Offices and the Criminal Division’s CEOS, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend, and prosecute individuals who exploit children, as well as identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov/.
The details contained in the indictments are allegations. The defendants are presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Iowa Company Pleads Guilty to Participating in Ready-Mix Concrete Price-Fixing and Bid-Rigging ConspiracyRead the Press Release
WASHINGTON - An Iowa ready-mix concrete company pleaded guilty today to participating in a price-fixing and bid-rigging conspiracy for the sales of ready-mix concrete, the Department of Justice announced.
According to a one-count felony charge filed on Aug. 15, 2011, in U.S. District Court in Sioux City, Iowa, Great Lakes Concrete Inc., a producer of ready-mix concrete with headquarters in Spencer, Iowa, participated in a conspiracy with another ready-mix concrete company to fix prices and rig bids for ready-mix concrete sold in the northern district of Iowa. The department said the company participated in the conspiracy beginning at least as early as January 2008 and continuing until as late as August 2009.
Ready-mix concrete is a product comprised of cement, aggregate (sand and gravel), water and other additives. The concrete generally is produced in a concrete plant and is transported by concrete-mixer trucks to work sites, where it is used in various types of construction projects, including buildings and roads.
According to court documents, Kent Robert Stewart, the president of Great Lakes Concrete, participated in the conspiracy by engaging in conversations and reaching agreements regarding the conspirators’ price lists and project bids for ready-mix concrete sold in the northern district of Iowa. Great Lakes Concrete then accepted payment for those sales at collusive and noncompetitive prices, the department said. On May 24, 2010, Stewart pleaded guilty in U.S. District Court in Sioux City to participating in a conspiracy to fix prices and rig bids of the sale of ready-mix concrete, and, on Feb. 8, 2011, was sentenced to serve a year and a day in prison and to pay a $83,427.09 criminal fine.
Great Lakes Concrete is charged with violating the Sherman Act, which carries a maximum fine of $100 million for corporations. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
Today’s guilty plea arose from an ongoing federal antitrust investigation of the ready-mix concrete industry in Iowa and surrounding states. As a result of the investigation, three individuals have been convicted and sentenced to serve prison time, and, including Great Lakes Concrete, four ready-mix concrete companies have pleaded guilty and are awaiting sentencing.
The investigation is being conducted by the Antitrust Division’s Chicago Field Office, the FBI’s Sioux City Resident Agency and the U.S. Department of Transportation’s Office of the Inspector General, with the assistance of the U.S. Attorney’s Office in Sioux City. Anyone with information concerning bid rigging, price fixing or territorial allocation related to the ready-mix concrete industry in Iowa and its surrounding states should contact the Antitrust Division’s Chicago Field Office at 312-353-7530 or visit www.justice.gov/atr/contact/newcase.htm.
Google Forfeits $500 Million Generated by Online Ads & Prescription Drug Sales by Canadian Online PharmaciesRead the Press Release
PROVIDENCE, R.I – Online search engine Google Inc. has agreed to forfeit $500 million for allowing online Canadian pharmacies to place advertisements through its AdWords program targeting consumers in the United States, resulting in the unlawful importation of controlled and non-controlled prescription drugs into the United States, announced Deputy Attorney General James M. Cole; Peter F. Neronha, U.S. Attorney for the District of Rhode Island; and Kathleen Martin-Weis, Acting Director of the U.S. Food and Drug Administration’s Office of Criminal Investigations (FDA/OCI). The forfeiture, one of the largest ever in the United States, represents the gross revenue received by Google as a result of Canadian pharmacies advertising through Google’s AdWords program, plus gross revenue made by Canadian pharmacies from their sales to U.S. consumers.
The shipment of prescription drugs from pharmacies outside the United States to customers in the United States typically violates the Federal Food, Drug and Cosmetic Act and in the case of controlled prescription drugs , the Controlled Substances Act. Google was aware as early as 2003, that generally, it was illegal for pharmacies to ship controlled and non-controlled prescription drugs into the United States from Canada.
The importation of prescription drugs to consumers in the United States is almost always unlawful because the FDA cannot ensure the safety and effectiveness of foreign prescription drugs that are not FDA-approved because the drugs may not meet FDA’s labeling requirements; may not have been manufactured, stored and distributed under proper conditions; and may not have been dispensed in accordance with a valid prescription. While Canada has its own regulatory rules for prescription drugs, Canadian pharmacies that ship prescription drugs to U.S. residents are not subject to Canadian regulatory authority, and many sell drugs obtained from countries other than Canada which lack adequate pharmacy regulations.
“The Department of Justice will continue to hold accountable companies who in their bid for profits violate federal law and put at risk the health and safety of American consumers,” said Deputy Attorney General Cole. “This settlement ensures that Google will reform its improper advertising practices with regard to these pharmacies while paying one of the largest financial forfeiture penalties in history.”
“This investigation is about the patently unsafe, unlawful, importation of prescription drugs by Canadian on-line pharmacies, with Google’s knowledge and assistance, into the United States, directly to U.S. consumers,” said U.S. Attorney Neronha. “It is about taking a significant step forward in limiting the ability of rogue on-line pharmacies from reaching U.S. consumers, by compelling Google to change its behavior. It is about holding Google responsible for its conduct by imposing a $500 million forfeiture, the kind of forfeiture that will not only get Google’s attention, but the attention of all those who contribute to America’s pill problem.”
“Today’s agreement demonstrates the commitment of the Food and Drug Administration to protect the US consumer and hold all contributing parties accountable for conduct that results in vast profits at the expense of the public health,” said FDA/OCI Acting Director Martin-Weis. “The result of this investigation has been a fundamental transformation of Internet pharmacy advertising practices, significantly limiting promotion to US consumers by rogue online pharmacies. This accomplishment could not have been possible without the resourceful commitment of the Rhode Island United States Attorney’s Office, as well as the tireless efforts of our law enforcement partners detailed to the OCI Rhode Island Task Force.”
An investigation by the U.S. Attorney’s Office in Rhode Island and the FDA/OCI Rhode Island Task Force revealed that as early as 2003, Google was on notice that online Canadian pharmacies were advertising prescription drugs to Google users in the United States through Google’s AdWords advertising program. Although Google took steps to block pharmacies in countries other than Canada from advertising in the U.S. through AdWords, they continued to allow Canadian pharmacy advertisers to target consumers in the United States. Google was aware that U.S. consumers were making online purchases of prescription drugs from these Canadian online pharmacies, and that many of the pharmacies distributed prescription drugs, including controlled prescription drugs, based on an online consultation rather than a valid prescription from a treating medical practitioner. Google was also on notice that many pharmacies accepting an online consultation rather than a prescription charged a premium for doing so because individuals seeking to obtain prescription drugs without a valid prescription were willing to pay higher prices for the drugs.
Further, from 2003 through 2009, Google provided customer support to some of these Canadian online pharmacy advertisers to assist them in placing and optimizing their AdWords advertisements, and in improving the effectiveness of their websites.
In 2009, after Google became aware of the investigation by the Rhode Island U.S. Attorney’s Office and the FDA/OCI Rhode Island Task Force of its advertising practices in the online pharmacy area, and as a result of that investigation, Google took a number of steps to prevent the unlawful sale of prescription drugs by online pharmacies to U.S. consumers. Among other things, Google began requiring online pharmacy advertisers to be certified by the National Association of Boards of Pharmacy’s Verified Internet Pharmacy Practices Sites program, which conducts site visits; has a stringent standard against the issuance of prescriptions based on online consultations; and, most significantly, does not certify Canadian online pharmacies. In addition, Google retained an independent company to enhance detection of pharmacy advertisers exploiting flaws in the Google’s screening systems.
Under the terms of an agreement signed by Google and the government, Google acknowledges that it improperly assisted Canadian online pharmacy advertisers to run advertisements that targeted the United States through AdWords, and the company accepts responsibility for this conduct. In addition to requiring Google to forfeit $500 million, the agreement also sets forth a number of compliance and reporting measures which must be taken by Google in order to insure that the conduct described in the agreement does not occur in the future.
The investigation of Google had its origins in a separate, multimillion dollar financial fraud investigation unrelated to Google, the main target of which fled to Mexico. While a fugitive, he began to advertise the unlawful sale of drugs through Google’s AdWords program. After being apprehended in Mexico and returned to the United States by the U.S. Secret Service, he began cooperating with law enforcement and provided information about his use of the AdWords program. During the ensuing investigation of Google, the government established a number of undercover websites for the purpose of advertising the unlawful sale of controlled and non-controlled substances through Google’s AdWords program.
The investigation was led by Assistant U.S. Attorneys Andrew J. Reich and Richard B. Myrus of the District of Rhode Island, and FDA/OCI Special Agent Jason Simonian. The FDA/OCI Rhode Island Task Force is comprised of law enforcement agents and officers from FDA/OCI; Internal Revenue Service – Criminal Investigation; U.S. Immigration and Customs Enforcement-Homeland Security Investigations; U.S. Postal Inspection Service; Rhode Island State Police; Rhode Island National Guard; Rhode Island Department of the Attorney General; East Providence Police; and North Providence Police. Corbin A. Weiss, Senior Counsel with the Criminal Division’s Computer Crime & Intellectual Property Section, and Sarah Hawkins, FDA Senior Counsel, assisted the Rhode Island U.S. Attorney’s Office in this matter.
Former “Most Wanted” Health Care Fraud Fugitives Plead Guilty to $9.1 Million Detroit Medicare Fraud SchemeRead the Press Release
WASHINGTON - Two sisters who owned a fraudulent Detroit-area medical clinic and who are former “Most Wanted” health care fraud fugitives pleaded guilty today in Miami for their leading roles in a $9.1 million Medicare fraud scheme, announced the Department of Justice, the FBI and the Department of Health and Human Services (HHS).
Caridad Guilarte, 54, and Clara Guilarte, 57, each pleaded guilty before U.S. District Judge Cecilia M. Altonaga to one count of conspiracy to commit health care fraud and one count of conspiracy to commit money laundering. The sisters were charged in an indictment unsealed in June 2009 and were placed on the HHS Office of Inspector General (HHS-OIG) Most Wanted Fugitives list. They were arrested on March 13, 2011, by law enforcement authorities in Colombia and were returned to the United States on March 14, 2011.
In pleading guilty, the Guilarte sisters admitted that in approximately March 2005, they opened Dearborn Medical Rehabilitation Center (DMRC), in Dearborn, Mich., with the express intent to defraud the Medicare program. DMRC routinely billed Medicare for exotic and expensive medications that were medically unnecessary and were never provided. Although they billed Medicare for millions of dollars of these medications, the Guilartes admitted that they and their co-conspirators at the clinic had purchased only a small fraction of the medications.
The Guilartes admitted that Medicare beneficiaries were not referred to DMRC by their primary care physicians, or for any other legitimate medical purpose, but were recruited to come to the clinic through the payment of cash kickbacks. In exchange for those kickbacks, the Medicare beneficiaries would visit the clinic and sign documents indicating that they had received the services billed to Medicare. Patients were prescribed medications not based on need, but based on what medications were likely to generate the greatest reimbursements from Medicare.
According to court documents, Caridad and Clara Guilarte laundered the proceeds of the health care fraud through shell corporations in order to conceal the source and ownership of the funds stolen from Medicare.
The Guilartes admitted that between approximately March 2005 and March 2007, they caused the submission of approximately $9.1 million in false and fraudulent claims to the Medicare program for services purportedly provided at DMRC. Medicare paid approximately $6 million on those claims.
The defendants consented to have their case transferred to the Southern District of Florida for plea and sentencing. Caridad Guilarte also consented to the forfeiture of $464,096 seized from bank accounts she controlled.
At their sentencing, scheduled for Nov. 3, 2011, the Guilartes face a maximum of 10 years in prison for each count of conspiracy to commit health care fraud and 20 years in prison for each count of conspiracy to commit money laundering.
The guilty pleas were announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Barbara L. McQuade for the Eastern District of Michigan; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; Inspector General Daniel R. Levinson of the HHS-OIG; and Special Agent in Charge Andrew G. Arena of the FBI’s Detroit Field Office.
The case is being prosecuted by Trial Attorney Gejaa T. Gobena of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Philip A. Ross of the Eastern District of Michigan and Adam Schwartz of the Southern District of Florida. The Criminal Division’s Office of International Affairs provided assistance. The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorneys’ Offices for the Eastern District of Michigan and the Southern District of Florida.
Since their inception in March 2007, Medicare Fraud Strike Force operations in nine locations have charged more than 1,000 defendants who collectively have falsely billed the Medicare program for more than $2.3 billion. In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov .
Florida Woman Charged with Witness Tampering, False Statements and Obstruction of Justice in Relation to Her Husband’s DisappearanceRead the Press Release
WASHINGTON – A Gainesville, Fla., woman was charged in a seven-count indictment filed yesterday in the Northern District of Florida for her alleged role in the obstruction of a multinational investigation into the disappearance of her husband, James Hogan, then an employee in the U.S. Consulate in Curacao, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney Pamela Cothran Marsh for the Northern District of Florida, Ambassador Eric J. Boswell of the Bureau of Diplomatic Security and John V. Gillies, Special Agent in Charge of the FBI’s Miami Field Office.
Abby Beard Hogan, 50, was charged with two counts of making false statements to federal law enforcement officials, one count of witness tampering and four counts of obstruction of justice. According to the indictment, on the night of Sept. 24, 2009, James Hogan, an employee at the U.S. Consulate in Curacao, a Caribbean island that was part of the Netherlands Antilles, left his home on foot and subsequently disappeared. The next day, a diver located his blood-stained clothing on a local beach. American officials and the government of Curacao and the Kingdom of the Netherlands opened an investigation into the disappearance of James Hogan.
The indictment alleges that, during the course of the investigation, Abby Hogan repeatedly provided false information to U.S. law enforcement about the time period before James Hogan’s disappearance and withheld relevant information. Abby Hogan allegedly denied, among other things, that she was having an extramarital affair and that she and her husband had argued about the affair on the night of Sept. 24, 2009. Additionally, the indictment alleges that Abby Hogan deleted multiple emails discussing the events leading up to and surrounding her husband’s disappearance. The indictment also alleges that Abby Hogan instructed at least one person to conceal information from investigators.
The indictment is merely an allegation, and a defendant is presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Abby Hogan faces a maximum of five years in prison for each false statement count and 20 years in prison for each count of witness tampering and obstruction of justice.
The case is being prosecuted by Senior Trial Attorney Teresa Wallbaum of the Criminal Division’s Human Rights and Special Prosecutions Section and Assistant U.S. Attorney Frank Williams for the Northern District of Florida. The Criminal Division’s Office of International Affairs provided assistance. The case is being investigated by the U.S. Department of State, Diplomatic Security Service and the FBI’s Miami Field Office and Legal Attache Office in Bridgetown, Barbados. Assistance was also provided by Curacao law enforcement authorities.
23 August 2011
Owner of Miami-Area Mental Health Care Corporation Convicted on All Counts for Orchestrating $205 Million Medicare Fraud SchemeRead the Press Release
WASHINGTON – A federal jury today convicted a Miami-area owner of a mental health care company, American Therapeutic Corporation (ATC), for orchestrating a fraud scheme that resulted in the submission of more than $205 million in fraudulent claims to Medicare, announced the Department of Justice, FBI and Department of Health and Human Services (HHS).
After a six-day trial, a jury in the Southern District of Florida found Judith Negron, 40, guilty of 24 felony counts, including conspiracy to commit health care fraud, health care fraud, conspiracy to pay and receive illegal health care kickbacks, conspiracy to commit money laundering, money laundering and structuring to avoid reporting requirements. Negron was charged in a superseding indictment unsealed on Feb. 15, 2011.
“Judith Negron and her co-conspirators masterminded one of the largest fraud schemes ever prosecuted by the Medicare Fraud Strike Force,” said Assistant Attorney General Lanny A. Breuer of the Criminal Division. “They brazenly submitted more than $200 million in fraudulent claims to the Medicare program. Ms. Negron may have thought she could scam the American taxpayer with impunity. Today a Miami jury showed her otherwise, and now she has found out that the price of Medicare fraud is extremely high.”
“Through bribery, kickbacks, and the creation of false patient files and other documents, Negron and her co-conspirators submitted hundreds of millions of dollars in fraudulent claims to Medicare for community mental health treatments for ineligible patients,” said U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida. “After a week-long trial, a jury convicted Negron of orchestrating this massive fraud scheme. She and her co-defendants now face the prospect of lengthy prison sentences. The U.S. Attorney’s Office will continue to lead the battle against Medicare fraud and abuse.”
Evidence at trial demonstrated that Negron, along with ATC co-owners Lawrence Duran and Marianella Valera, masterminded and executed a scheme to defraud Medicare beginning in 2002 and continuing until they were arrested in October 2010. Duran and Valera pleaded guilty to all charges against them in April 2011. Evidence at trial established that the three owners submitted false and fraudulent claims to Medicare through ATC, a Florida corporation headquartered in Miami that operated purported partial hospitalization programs (PHPs) in seven different locations throughout South Florida and Orlando. A PHP is a form of intensive treatment for severe mental illness. Negron and her co-conspirators also used a related company, American Sleep Institute (ASI), to submit fraudulent Medicare claims.
According to the evidence at trial, Negron, Duran, Valera and others paid bribes and kickbacks to owners and operators of assisted living facilities (ALFs) and halfway houses and to patient brokers in exchange for delivering ineligible patients to ATC and ASI. In some cases, the patients received a portion of those kickbacks. Throughout the course of the conspiracy, millions of dollars in kickbacks were paid in exchange for Medicare beneficiaries, who did not qualify for PHP services, to attend treatment programs that were not legitimate PHP programs, so that ATC and ASI could bill Medicare for more than $200 million in unnecessary or illegitimate services.
According to the evidence, Negron and her co-conspirators used another company they owned and operated, Medlink Professional Management Group Inc., to conceal the fraud and kickbacks scheme from Medicare and law enforcement. Once Medicare paid ATC and ASI for the fraudulently billed services, Duran, Valera and others transferred the money to Medlink. Evidence at trial showed that Negron and her co-conspirators used Medlink to pay millions of dollars in kickback payments by using an extensive money laundering scheme.
Evidence at trial demonstrated that Negron signed kickback checks to patient recruiters whose only jobs at ATC were to provide patients from halfway houses or assisted living facilities. Evidence at trial also established that Negron and others caused the alteration of patient files and therapist notes for the purpose of making it falsely appear that patients being treated by ATC qualified for PHP treatments and that the treatments provided were legitimate PHP treatments. For instance, evidence established that Negron would “robo-sign” patient files, meaning she would sign patient documents as a supervising therapist without having treated the patients. The evidence also showed that Negron signed files as though she had been in two places at once, in Boca and Homestead, Fla., at the same time. Evidence further revealed that Negron knew doctors were similarly signing patient files without reading them or seeing the patients. In some cases, Negron provided the doctors with the files for their signature. According to evidence presented at trial, Negron and her co-conspirators billed Medicare for PHP treatment, including group psychotherapy, provided to a patient who was in a neuro-vegetative state, who would not lift her head or respond. The evidence also showed that Negron and her co-conspirators caused doctors to refer ATC patients to ASI even though the patients did not qualify for sleep studies.
According to evidence at trial, the defendant and her co-conspirators concealed the fraud scheme by, among other things, creating false medical records in patient charts, concealing kickback payments as “transportation” payments, and creating sham companies with fake employee files to launder money.
Following today’s verdict, U.S. District Judge James Lawrence King remanded Negron into custody. A sentencing date for Negron has not yet been scheduled.
Duran and Valera have been in federal custody since their arrests in October 2010 and are scheduled to be sentenced on Sept. 14, 2011, at 9:30 a.m. Negron, Duran and Valera each face a maximum of 10 years in prison for each count of conspiracy to commit health care fraud and each count of health care fraud; five years in prison for each count of conspiracy to pay and receive health care kickbacks; 20 years in prison for each count of conspiracy to commit money laundering; 10 to 20 years in prison for each count of money laundering; and 10 years in prison for each count of structuring to avoid reporting requirements. The defendants’ assets were frozen at the time of their arrests through civil forfeiture proceedings.
Co-conspirator Margarita Acevedo, also charged in the February 2011 superseding indictment, pleaded guilty on April 7, 2011, for her role in the fraud scheme and is also scheduled for sentencing on Sept. 14, 2011.
Today’s guilty verdict was announced by Assistant Attorney General Breuer; U.S. Attorney Ferrer; John V. Gillies, Special Agent-in-Charge of the FBI’s Miami Field Office; and Special Agent-in-Charge Christopher Dennis of the HHS Office of Inspector General (HHS-OIG), Office of Investigations Miami office.
The criminal case is being prosecuted by Trial Attorney Jennifer L. Saulino and Acting Assistant Chief Benjamin D. Singer of the Criminal Division’s Fraud Section. A related civil action is being handled by Vanessa I. Reed and Carolyn B. Tapie of the Civil Division and Assistant U.S. Attorney Ted L. Radway of the Southern District of Florida. The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.
Since their inception in March 2007, Medicare Fraud Strike Force operations in nine locations have charged more than 1,000 defendants that collectively have billed the Medicare program for more than $2.3 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov .
Miami-Area Medical Equipment Company Owners Sentenced to Prison for Medicare Fraud SchemeRead the Press Release
WASHINGTON – The husband and wife owners and operators of a Miami-area medical equipment company were sentenced today to 70 months and 37 months in prison, respectively, for participating in a durable medical equipment (DME) health care fraud scheme, announced the Department of Justice, the FBI and the Department of Health and Human Services (HHS).
Obel Martinez, 39, and Damaris Gil, 30, previously pleaded guilty on May 24, 2010, before U.S. District Judge Donald M. Middlebrooks in Miami to one count of conspiracy to commit health care fraud. Martinez and Gil were owners and operators of OM Best Help Corporation, a company they admitted to incorporating for the purpose of defrauding the Medicare program.
In addition to their prison terms, Judge Middlebrooks sentenced Martinez and Gil each to three years of supervised release. Martinez and Gil also were ordered to pay $474,662 in restitution jointly and severally with each other.
According to plea documents, Martinez and Gil, through OM Best, submitted false and fraudulent claims to Medicare for DME and other medical items and services that were medically unnecessary and not prescribed by a doctor or licensed health care provider. Martinez and Gil used without authorization the Medicare billing identifiers of licensed medical doctors and represented to Medicare that the doctors had prescribed the DME and medical services in question, when they had not. Martinez and Gil knew that the Medicare beneficiaries, on whose behalf claims were submitted to Medicare by OM Best, never received the DME or services purportedly provided by OM Best.
According to court documents, Martinez and Gil submitted approximately $1.1 million in false claims to Medicare. Medicare paid $474,662 to OM Best based on these fraudulent claims.
Today’s sentences were announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; John V. Gillies, Special Agent-in-Charge of the FBI’s Miami field office; and Special Agent-in-Charge Christopher Dennis of the HHS Office of Inspector General (HHS-OIG), Office of Investigations Miami office.
This case was prosecuted by Trial Attorney Sarah M. Hall of the Criminal Division’s Fraud Section. The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.
Since their inception in March 2007, Medicare Fraud Strike Force operations in nine locations have charged more than 1,000 defendants who collectively have falsely billed the Medicare program for more than $2.3 billion. In addition, HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to www.stopmedicarefraud.gov.
Miami-Area Doctor Pleads Guilty in $25 Million Health Care Fraud SchemeRead the Press Release
WASHINGTON – A Miami-area medical doctor who owned two medical offices pleaded guilty today for his participation in a $25 million home health Medicare fraud scheme, announced the Department of Justice, FBI and the Department of Health and Human Services (HHS).
Jose Nunez, 63, pleaded guilty before U.S. District Judge Joan A. Lenard in Miami to one count of conspiracy to commit health care fraud. According to plea documents, Nunez provided home health care and therapy prescription referrals to ABC Home Health Care Inc. and Florida Home Health Care Providers Inc., Miami home health care agencies that purported to provide home health and therapy services to Medicare beneficiaries.
Nunez admitted that he knew co-conspirators at ABC and Florida Home Health operated the agencies in order to bill the Medicare program for expensive physical therapy and home health care services that were medically unnecessary and/or were never provided. The medically unnecessary services were prescribed by Nunez and other doctors.
According to court documents, beginning in approximately January 2006, and continuing until approximately March 2009, Nunez prescribed medically unnecessary services, including home health and therapy prescriptions, plans of care and medical certifications in exchange for kickbacks and bribes. The kickbacks and bribes were paid to Nunez by nurses, patient recruiters and the owners and operators of ABC and Florida Home Health. According to plea documents, Nunez furthered the scheme by falsifying patient files with descriptions of non-existent medical conditions for the Medicare beneficiaries, including hand tremors, unsteady gait and poor vision. These symptoms were included to make it appear that the patients were unable to self-inject insulin and were homebound, thus appearing to qualify for home health care benefits under the Medicare program. Nunez knew that the files were falsified so that Medicare could be billed for medically unnecessary therapy and home health-related services. As a result of Nunez’s participation in the illegal scheme, the Medicare program was billed approximately $1.5 million for purported home health care services that were medically unnecessary and/or were never provided.
Three other co-conspirators – Lisandra Alonso, Luisa Morciego and Vicente Guerra – have pleaded guilty for their roles in the fraud scheme.
Sentencing has been scheduled for Dec. 5, 2011.
The charge of conspiracy to commit health care fraud carries a maximum prison sentence of 10 years. The defendant also faces fines and terms of supervised release, as well as forfeiture of any property or proceeds derived from his criminal activities.
Today’s guilty plea was announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; John V. Gillies, Special Agent-in-Charge of the FBI’s Miami field office; and Special Agent-in-Charge Christopher Dennis of the HHS Office of Inspector General (HHS-OIG), Office of Investigations Miami office.
This case is being prosecuted by Trial Attorney Joseph S. Beemsterboer of the Criminal Division’s Fraud Section. The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.
Since their inception in March 2007, Strike Force operations in nine locations have charged more than 1,000 individuals who collectively have falsely billed the Medicare program for more than $2.3 billion. In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov .
22 August 2011
Justice Department to Monitor Elections in MississippiRead the Press Release
WASHINGTON – The Justice Department announced today that it will monitor primary runoff elections on Aug. 23, 2011, in Bolivar, Noxubee, Tunica and Wilkinson Counties in Mississippi to ensure compliance with the Voting Rights Act of 1965. The Voting Rights Act prohibits discrimination in the election process on the basis of race, color or membership in a minority language group.
Under the Voting Rights Act, the Justice Department is authorized to ask the U.S. Office of Personnel Management (OPM) to send federal observers to jurisdictions that are certified by the attorney general or by a federal court order. Federal observers will be assigned to monitor polling place activities in Bolivar, Noxubee and Wilkinson Counties based on the attorney general’s certification. The observers will watch and record activities during voting hours at polling locations, and Civil Rights Division attorneys will coordinate the federal activities and maintain contact with local election officials.
In addition, Justice Department personnel will monitor polling place activities in Tunica County. A Civil Rights Division attorney will coordinate federal activities and maintain contact with local election officials.
Each year, the Justice Department deploys hundreds of federal observers from OPM, as well as departmental staff, to monitor elections across the country. To file complaints about discriminatory voting practices, including acts of harassment or intimidation, voters may call the Voting Section of the Justice Department’s Civil Rights Division at 1-800-253-3931.
Visit www.justice.gov/crt/voting/index.php for more information about the Voting Rights Act and other federal voting laws.
Justice Department Settles Allegations of Immigration-Related Employment Discrimination Against Missouri Pork ProducerRead the Press Release
WASHINGTON — The Justice Department today reached a settlement with Farmland Foods Inc., a major producer of pork products in the United States, resolving allegations that it engaged in a pattern or practice of discrimination by imposing unnecessary and excessive documentary requirements on non-U.S. citizens and foreign-born U.S. citizens when establishing their authority to work in the United States. Farmland Foods, a subsidiary of Smithfield Foods Inc., is headquartered in Kansas City, Mo. The settlement resolves the lawsuit between the United States and Farmland filed in June 2011.
The lawsuit, initiated by the Civil Rights Division’s Office of Special Counsel for Immigration Related Unfair Employment Practices (OSC), was based on an OSC investigation revealing that Farmland required all newly hired non-U.S. citizens and some foreign-born U.S. citizens at its Monmouth, Illinois plant to present specific and, in many cases, extra work-authorization documents beyond those required by federal law. In the case of non-U.S. citizens, Farmland required the presentation of a specific work-authorization document issued by the Department of Homeland Security, such as a permanent resident card or an employment authorization document, rather than allowing the employee to choose which document(s) to present from the list of acceptable documents on the Employment Eligibility Verification Form I-9. Farmland also required additional work authorization documents, generally by requiring social security cards, even when employees had already produced other documents establishing work authority. In the case of foreign-born naturalized U.S. citizens, Farmland sometimes required evidence of citizenship, such as certificates of naturalization or U.S. passports, even when those individuals had other means of proving their work authority. Farmland’s demand for specific or excessive documents to establish work authority violated the anti-discrimination provision of the Immigration and Nationality Act (INA).
In addition to ending its impermissible document requests and modifying its employment eligibility verification process, Farmland has agreed to pay $290,400 in civil penalties, the highest civil penalty paid through settlement since enactment of the INA’s anti-discrimination provision in 1986. Farmland also agreed to monitoring and reporting provisions, as well as training for their human resources personnel.
“The Justice Department is committed to protecting the right of all work-authorized employees, regardless of their citizenship or immigration status, to work without having to overcome extra and discriminatory hurdles during the hiring process,” said Thomas E. Perez, the Assistant Attorney General in charge of the Civil Rights Division. “We are pleased to have reached this agreement, and we will continue to rely upon both public education and focused enforcement to prevent and deter employers from engaging in discriminatory I-9 practices. ”
The lawsuit, filed before the Office of the Chief Administrative hearing officer (OCAHO) within the Executive Office for Immigration Review, was prosecuted by Erik Lang and Phil Telfeyan, OSC Trial Attorneys, based on an investigation conducted by Alexandra Vince, an OSC Equal Opportunity Specialist.
The Office of Special Counsel for Immigration Related Unfair Employment Practices is responsible for enforcing the anti-discrimination provision of the INA, which protects work authorized individuals against employment discrimination on the basis of citizenship status or national origin discrimination, including discrimination in hiring, firing and the employment eligibility verification (Form I-9) process. For more information about protections against employment discrimination under federal immigration law, call OSC’s worker hotline at 1-800-255-7688 (1-800-237-2515, TDD for hearing impaired) or OSC’s employer hotline at 1-800-255-8155 (1-800-237-2515, TDD for hearing impaired), e-mail [email protected] or visit OSC’s website at www.justice.gov/crt/about/osc .
High-Ranking Member of Mexican Gulf Cartel Extradited to the United States to Face Drug Conspiracy ChargesRead the Press Release
WASHINGTON – Aurelio Cano-Flores, aka “Yankee” and “Yeyo,” a high-ranking member of the Mexican Gulf Cartel, has been extradited to the United States from Mexico to face drug conspiracy charges, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and Administrator Michele M. Leonhart of the Drug Enforcement Administration (DEA).
Cano-Flores, 39, made his initial appearance today before U.S. Magistrate Judge John M. Facciola in the District of Columbia, after being extradited to the United States on Aug. 19, 2011. Cano-Flores was ordered detained in federal custody pending trial. Cano-Flores had been in the custody of Mexican authorities pending extradition since his arrest on June 10, 2009.
Cano-Flores was charged, along with 19 other defendants, in a superseding indictment returned on Nov. 4, 2010. He is charged with conspiracy to manufacture and distribute five kilograms or more of cocaine and 1,000 kilograms or more of marijuana for importation into the United States.
“As charged in the indictment, Cano-Flores led the Gulf Cartel’s drug trafficking activities in Camargo, Mexico,” said Assistant Attorney General Breuer. “Cano-Flores was allegedly responsible for ensuring that multi-ton quantities of cocaine, heroin and marijuana were shipped into the United States, and that the illegal drug proceeds were subsequently funneled back into Mexico. Together with our counterparts across the border, the Justice Department is committed to bringing cartel leaders and associates to justice for their crimes, and the violence and destruction they cause.”
“Today we have brought to a court of law Aurelio Cano-Flores, a major drug trafficker connected to the extreme violence of the Los Zetas and Gulf Cartels and who allegedly is responsible for transporting multi-ton quantities of drugs into the United States,” said DEA Administrator Leonhart. “This is part of a concerted, combined, and coordinated effort by Mexico and the United States to target the command and control of the drug trafficking cartels. This extradition is another example of our enduring commitment to bring to justice violent criminals who deny justice to others, and whose drugs are a threat to both our nations.”
According to court documents, Cano-Flores was a high-ranking member of the Gulf Cartel when it worked in close partnership with Los Zetas, collectively known as “The Company.” The Gulf Cartel allegedly transported shipments of cocaine and marijuana by motor vehicles from Mexico to cities in Texas for distribution to other cities within the United States. The indictment alleges that Cano-Flores, his co-defendants and others organized, directed, and carried out various acts of violence against Mexican law enforcement officers and rival drug traffickers to retaliate against and to intimidate anyone who interfered with, or who were perceived to potentially interfere with, the cocaine and marijuana trafficking activities of the Gulf Cartel.
According to the indictment, from June 2006 until his arrest, Cano-Flores’s role was to oversee drug trafficking activities in Camargo, Nuevo Leon, Mexico, including procuring for distribution significant quantities of cocaine, heroin and bulk marijuana. Cano-Flores also is alleged to have coordinated the movement of illegal narcotics from Mexico into the United States as well as the repatriation of drug proceeds into Mexico. The Gulf Cartel controls most of the cocaine and marijuana trafficking through the Matamoros, Mexico, corridor to the United States. Los Zetas began as the enforcement wing of the Gulf Cartel, but has emerged in recent years as an independent drug trafficking organization.
On April 15, 2009, under the Foreign Narcotics Kingpin Designation Act, the President identified Los Zetas as a Significant Foreign Narcotics Trafficker. On July 20, 2009, the U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) also identified the leadership of Los Zetas, Heriberto Lazcano-Lazcano and Miguel Angel Trevino Morales, as Significant Foreign Narcotics Traffickers. Both men are named as co-defendants in the indictment charging Cano-Flores. On July 25, 2011, an executive order was issued that blocks the transfer, payment or export of property belonging to certain transnational criminal organizations, including Los Zetas.
The department expressed its gratitude and appreciation to the government of Mexico for its cooperation and assistance in the apprehension and extradition of Cano-Flores.
An indictment is merely an allegation, and a defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
If convicted, Cano-Flores faces a mandatory minimum of 10 years in prison and a maximum penalty of life in prison.
The case is being prosecuted by trial attorneys from the Criminal Division’s Narcotic and Dangerous Drug Section. The Criminal Division’s Office of International Affairs provided significant assistance in the extradition. The investigation in this case was led by the DEA’s Houston Field Division and the DEA Bilateral Investigation Unit.
Department of Health and Human Services Employee Pleads Guilty to Theft of Government FundsRead the Press Release
WASHINGTON — An employee of the Department of Health and Human Services (HHS) pleaded guilty today in U.S. District Court in Asheville, N.C., to theft of approximately $114,494 in government funds, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.
Jihan S. Cover, 33, of Arden, N.C., pleaded guilty before Magistrate Judge Dennis L. Howell in the Western District of North Carolina to a one-count criminal information charging her with theft of government property. According to the criminal information, filed Aug. 11, 2011, Cover has worked as a purchasing agent with the National Institutes of Health (NIH), National Cancer Institute (NCI), a subdivision of HHS, from 2006 through the present. Cover’s sole job function involved procuring authorized items and services for NIH/NCI using assigned government credit cards or purchase cards.
According to court documents, between June 2009 and December 2010, Cover, who received regular training in the proper use of purchase cards, admitted using and causing to be used NIH/NCI purchase cards assigned to her in more than 250 unauthorized personal transactions totaling approximately $114,494.
According to the plea agreement, Cover used and caused the purchase cards to be used to make more than 170 personal purchases totaling approximately $16,000 from Amazon.com for toys, exercise equipment, books, clothes and other personal items. Almost all of these items were shipped to Cover’s residence in Arden. In addition, Cover admitted to using the purchase cards to pay off more than $29,000 in balances she accrued with various cash advance and payday loan vendors. Cover also made more than $47,000 in payments to personal accounts she created on PayPal, an online payment website.
In addition, Cover admitted that she tried to conceal her actions by submitting various dispute forms to the bank servicing her purchase cards, claiming that she did not recognize certain charges or did not authorize them, when in fact, she knowingly made or caused to be made the personal charges. During the guilty plea hearing, Cover admitted that in January and June 2011, she lied to investigators, claiming that she had reimbursed the personal transactions she made with her NIH/NCI purchase cards using her personal bank account, which in fact she knew she had not done. Previously, when confronted by her supervisor at NIH/NCI regarding suspicious transactions, Cover claimed falsely that she had been the victim of identity theft, when in fact she knew that she had caused the transactions.
At sentencing Cover faces up to 10 years in prison and a $250,000 fine. The government is also seeking forfeiture of $114,494. A sentencing date has not been set.
This case is being prosecuted by Trial Attorney Eric G. Olshan of the Criminal Division’s Public Integrity Section. This case was investigated by the HHS Office of Inspector General.
19 August 2011
Justice Department Opens Investigation into the Antelope Valley Stations of the Los Angeles County Sheriff’s DepartmentRead the Press Release
LOS ANGELES – The Justice Department has opened a civil investigation into allegations of discriminatory policing by Los Angeles County Sheriff’s Department (LASD) members based in the cities of Lancaster and Palmdale, Calif. The investigation will focus on allegations that the Lancaster and Palmdale stations of the LASD are engaged in a pattern or practice of discrimination on the basis of race or national origin in violation of the Violent Crime Control and Law Enforcement Act of 1994, and the anti-discrimination provisions of the Omnibus Crime Control and Safe Streets Act of 1968, Title VI of the Civil Rights Act of 1964 and the Fair Housing Act.
The Justice Department will seek to determine whether there are systemic violations of the Constitution or federal law, including the Fair Housing Act, by deputies of these LASD stations. The investigation will focus on allegations that the LASD has sought to identify during routine traffic stops individuals who use Housing Choice Vouchers, commonly known as Section 8, to subsidize housing costs for low income families. In addition, the investigation will examine allegations that t he LASD has conducted warrantless searches of African-American families’ homes under the auspices of housing authority compliance inspections, and that housing authority investigators based in the Lancaster and Palmdale sheriff’s stations have been accompanied by sheriff’s deputies as they conduct routine housing contract compliance checks. At times, it is alleged that the deputies approach the Section 8 recipient’s home with guns drawn and in full SWAT armor and conduct searches and questioning themselves, unrelated to the housing program.
In addition, the Justice Department has an ongoing investigation under the Fair Housing Act of the cities of Palmdale and Lancaster, as well as of the Housing Authority of the County of Los Angeles, to determine whether there has been a systematic effort to discriminate against African-Americans and Latinos.
During the course of the investigation of the LASD, the Justice Department will consider all relevant information, particularly the efforts that LASD has undertaken to ensure compliance with federal law. The Justice Department has taken similar steps involving a variety of state and local law enforcement agencies, both large and small, in jurisdictions such as New York, Ohio, New Jersey, Pennsylvania, the District of Columbia and Louisiana.
This matter is being investigated by attorneys from the Special Litigation Section and Housing and Civil Enforcement Section of the Department of Justice’s Civil Rights Division. The department welcomes any information from the community. If you have any comments or concerns, please feel free to contact the department at 1-877-218-5228 , or via email at [email protected].
Businessman Pleads Guilty in Utah to Tax ChargeRead the Press Release
WASHINGTON - Scott Robertson pleaded guilty before U.S. Magistrate Judge Brooke C. Wells in Salt Lake City to one count of making and subscribing a false tax return for 2003, the Department of Justice and the Internal Revenue Service (IRS) announced today.
According to the plea agreement, beginning in at least 2000 and continuing until at least 2007, Scott Robertson was the chief executive officer and co-owner of Infinia Healthcare LLC, which owned several long-term care facilities in Utah, Arizona, Kansas and Minnesota. During this same time period, Robertson had ownership interest in a number of other entities affiliated with Infinia Healthcare, including Robertson Properties-Two and Maryland Capital LLC.
According to the plea agreement, between 2003 and 2005, Robertson earned substantial income from Infinia Healthcare through unofficial, non-salary payments. Robertson filtered some of these payments through Maryland Capital LLC to his personal bank accounts and failed to accurately report this additional income to the IRS. He further admitted that he filed a false U.S. Individual Income Tax Return, Form 1040, for tax year 2003 with the IRS, knowing that the return substantially understated the total income he earned from Infinia Healthcare and its affiliates and substantially understated the tax due and owing for 2003. According to the plea agreement, Robertson agreed that the tax loss is more than $200,000 but less than $400,000.
Robertson faces a maximum sentence of three years in prison and a fine of $250,000.
This case was investigated by the IRS-Criminal Investigation in Salt Lake City and is being prosecuted by Justice Department Tax Division Trial Attorneys Monica B. Edelstein and Kimberly M. Shartar.
Additional information about the Justice Department’s Tax Division and its enforcement efforts may be found at www.usdoj.gov/tax.
18 August 2011
Two Men Plead Guilty to Racially-Motivated Assault in New MexicoRead the Press Release
ALBUQUERQUE - Paul Beebe and Jesse Sanford of Farmington, N.M., pleaded guilty today in U.S. District Court in Albuquerque, N.M., to federal hate crime charges related to a racially-motivated assault on a 22-year-old developmentally disabled man of Navajo descent, the Department of Justice announced. A third defendant, William Hatch, of Fruitland, N.M., pleaded guilty in June 2011 to conspiracy to commit a federal hate crime.
Beebe, Hatch and Sanford were indicted by a federal grand jury in November, 2010 on one count of conspiracy and one count of violating the Matthew Shepard and James Byrd Jr. Hate Crimes Prevention Act (Shepard/Byrd Act). They were the first defendants ever to be charged under this law, which was enacted in October 2009. Beebe pleaded guilty to one count of violating the Shepard/Byrd Act, and Sanford pleaded guilty to one count of conspiracy to commit a violation of the Shepard/Byrd Act.
“Deplorable, hate-filled incidents like this one have no place in a civilized society,” said Assistant Attorney General for the Civil Rights Division Thomas Perez. “The Justice Department is committed to using all the tools in our law enforcement arsenal, including the Matthew Shepard and James Byrd Jr. Hate Crimes Prevention Act, to prosecute acts of hate.”
“ No one anywhere, but especially in a state like New Mexico that prides itself on its ethnic, racial and cultural diversity, should be victimized because of what he or she happens to be,” said U.S. Attorney for the District of New Mexico Kenneth J. Gonzales. “The young victim in this case was assaulted, branded and scarred because he happens to be a Native American – that simply is inexcusable and criminal. Today’s guilty pleas demonstrate the law enforcement community’s resolve to bring to justice anyone who victimizes a person because of the color of their skin or ethnic heritage.”
During the plea hearing, Beebe and Sanford admitted that Beebe took the victim to his apartment, which was adorned in racist paraphernalia, including a Nazi flag and a woven dream catcher with a swastika in it. After the victim had fallen asleep, the defendants began defacing the victim’s body by drawing on him with blue, red and black markers. Once the victim awoke, Beebe branded the victim, who sat with a towel in his mouth, by heating a wire hanger on a stove and burning the victim’s flesh, causing a permanent deep impression of a swastika in his skin. The defendants used a cell phone to create a recording of the victim in which they coerced him to agree to be branded.
The defendants also admitted that they defaced the victim’s body with white supremacist and anti-Native American symbols, including shaving a swastika in the back of the victim’s head and using markers to write the words “KKK” and “White Power” within the lines of the swastika. The defendants further mocked the victim’s heritage by drawing an ejaculating penis and testicles on the victim’s back, telling him that they were drawing his “native pride feathers,” all the while recording the incident on a cell phone to later play for law enforcement, as “proof” that the victim consented to their acts.
“As the primary federal agency responsible for investigating allegations regarding violations of federal civil rights statutes, the FBI stands committed to protecting the freedoms of all Americans,” said Carol K.O. Lee, Special Agent in Charge of the Albuquerque Division of the FBI. “We remain dedicated to working with our state and local partners to aggressively investigate hate crimes and other civil rights violations. I would like to commend the Civil Rights Division of the U.S. Department of Justice, U.S. Attorney Kenneth Gonzales, the San Juan County District Attorney’s Office and the Farmington Police Department for their work on this case. I also am proud of the FBI agents who investigated this crime and helped bring the defendants to justice.”
These guilty pleas were the result of a cooperative effort between U.S. Attorney’s Office for the District of New Mexico, the U.S. Department of Justice Civil Rights Division and the San Juan, N.M., County District Attorney’s Office. This case was investigated by the Albuquerque Division of the FBI in cooperation with the Farmington Police Department. It is being prosecuted by Assistant U.S. Attorney Roberto Ortega for the District of New Mexico and Special Litigation Counsel Gerard Hogan and Trial Attorney Fara Gold of the Civil Rights Division.
Puerto Rican-based Shipping Company Sentenced to Pay $700,000 Penalty for Intentional Cover-Up of Oil PollutionRead the Press Release
WASHINGTON – Epps Shipping Company, a Liberian corporation doing business out of Carolina, Puerto Rico, was sentenced in federal court for violating the Act to Prevent Pollution from Ships (APPS) and making false statements to U.S. Coast Guard inspectors, announced Assistant Attorney General Ignacia S. Moreno and United States Attorney Rosa Emilia Rodriguez-Velez.
The company was sentenced to pay a $700,000 criminal penalty to include a $100,000 payment towards community service projects to rehabilitate and protect coral reefs in Guanica Bay, Puerto Rico. In addition, the company was placed on five years of supervised probation and will have to implement a comprehensive Environmental Compliance Plan to continuously monitor and evaluate pollution prevention from any ship it owns or operates.
“This sentence puts the international shipping industry on notice that there are serious consequences for violations of the Act to Prevent Pollution from Ships and making false statements to the United States Coast Guard,” said Ignacia S. Moreno, Assistant Attorney General of the Justice Department’s Environment and Natural Resources Division. “For its criminal violations of the law, Epps will pay a significant criminal penalty, serve five years of probation, institute an environmental compliance plan designed to prevent further violations, and will be subject to independent monitoring. Epps also will fund projects to protect coral reefs in Puerto Rico.”
Epps Shipping Company owned and controlled the M/V Carib Vision, a commercial ship that was engaged in the transportation of molasses throughout the Caribbean region. On Nov. 6, 2010, the U.S. Coast Guard conducted an inspection of the vessel in the port of San Juan, P.R. The Coast Guard learned from inspecting the engine room and interviewing crewmembers that the vessel’s Oil Water Separator and other pollution prevention equipment was inoperable and could not be used to treat the vessel’s oily waste prior to it being discharged overboard. The investigation revealed that prior to Nov. 6, 2010, the crew of the vessel used the emergency bilge discharge system to dump its oily waste directly overboard without first processing it through the ship’s pollution prevention equipment as required. All overboard discharges of oil or oily bilge wastewater are required to be recorded in the vessel’s Oil Record Book. None of these discharges were recorded in the Oil Record Book for the M/V Carib Vision.
“Today's sentence demonstrates the United States' steadfast commitment to safeguarding the marine environment,” said Rear Admiral William D. Baumgartner, Coast Guard Seventh District Commander. “We applaud the efforts of the many environmentally responsible companies, but will hold non-compliant corporations and their officers accountable for violating environmental laws. Coast Guard Sector San Juan investigators and the Coast Guard Investigative Service (CGIS) did a great job investigating and preparing this case. I am grateful for the hard work and dedication of the Department of Justice for bringing this case to a proper resolution.”
During the period of probation, Epps Shipping Company will be required to implement a comprehensive Environmental Compliance Plan (ECP) which will ensure that any ship owned or operated by Epps complies with all maritime environmental requirements established under applicable international, flag state, and port state laws. The ECP ensures that Epps’ employees and the crew of any vessel owned or operated by Epps are properly trained in preventing maritime pollution. An independent monitor will report to the court about Epps’ compliance with its obligations during the period of probation.
This case was investigated by the U.S. Coast Guard. 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.
Pittsburgh Crips Member and Associate Plead Guilty for Roles in Illegal Gang ActivityRead the Press Release
WASHINGTON - A Crips gang member and associate each pleaded guilty today in federal court in Pittsburgh to racketeering charges, announced Assistant Attorney General Lanny A. Breuer of the Justice Department's Criminal Division and U.S. Attorney David J. Hickton of the Western District of Pennsylvania.
Jamar Pharr, 27, of Pittsburgh, aka "Brownway," pleaded guilty to one count of conspiracy to engage in a racketeering enterprise before Senior U.S. District Judge Gustave Diamond in the Western District of Pennsylvania. Devon Shealey, 25, of Pittsburgh, pleaded guilty before Judge Diamond to one count of violence in aid of racketeering (VICAR).
In addition, yesterday Karl Anger, 22, aka "K-Loc," was sentenced by Judge Diamond to 58 months in prison for conspiracy to participate in a racketeering enterprise, consecutive to 72 months he is currently serving on a state court conviction for an aggravated assault shooting, for a total of 130 months in prison. The shooting was also charged in the federal indictment as part of the racketeering conspiracy. Anger pleaded guilty on Jan. 19, 2011, to the federal racketeering conspiracy charge.
According to court documents, members and associates of the gang participated in a pattern of racketeering activity that included robberies at gun point; attempted murders; distribution of heroin and crack cocaine; obstruction of justice and witness intimidation. The three defendants were members or associates of different gangs in the Northside area of Pittsburgh that formed an alliance in 2003 to expand the gang's drug trafficking territory and increase the gang's membership to better protect their territory and profits. Members of the gang, known as the Brighton Place/Northview Heights Crips, maintained exclusive control over drug trafficking in these neighborhoods through continuous violence and intimidation of rivals and witnesses. Gang members supported each other through payment of attorneys' fees and bonds, as well as payments to jail commissary accounts and support payments to incarcerated members' families.
Gang members had violent confrontations with members of the rival Manchester OGs, and other street gangs operating in the Northside area of Pittsburgh. Members and associates obtained greater authority and prestige within the enterprise based on their reputation for violence and their ability to obtain and sell a steady supply of illegal drugs. According to court documents, the Brighton Place/Northview Heights Crips gang members identify themselves by wearing blue, flashing Crips gang hand signals, and using phrases such as "Cuz," "C-Safe," "Loc" and "G.K."
According to court documents, Pharr was considered a respected member and leader in the enterprise. Pharr had a reputation for violence, and instructed other members and associates of the enterprise as to how to conduct the affairs of the enterprise, including how to possess and distribute firearms and controlled substances, and how to commit acts of violence and witness intimidation. Pharr also distributed controlled substances, including heroin.
According to Shealey's plea agreement, he was involved in shooting at a member of the Manchester OGs, in an effort to gain entry in the Crips gang. According to information presented at sentencing, Anger obstructed justice when he tried to convince the victim in his assault case not to testify.
At sentencing, Pharr and Shealey each face maximum prison sentences of 20 years. According to Shealey's plea agreement, his prison sentence on the VICAR charge to which he pleaded guilty will run concurrently with the 34 to 68 year sentence he is currently serving as a result of prior convictions for armed robbery, gun possession and witness intimidation Shealey is scheduled to be sentenced on Oct. 19, 2011, at 11:00 a.m., and Pharr on Dec. 15, 2011, at 10:00 a.m.
Pharr, Shealey and Anger are three of 26 defendants charged in February 2010 with being members or associates of, and conducting racketeering activity through, the Brighton Place/Northview Heights Crips gang. This prosecution resulted from a Project Safe Neighborhoods Task Force investigation that began in 2005. To date, 23 members or associates of the Brighton Place/ Northview Heights Crips who were charged in this indictment have pleaded guilty to racketeering charges.
This case is being prosecuted by Assistant U.S. Attorneys Charles A. Eberle and Troy Rivetti of the Western District of Pennsylvania and Trial Attorney Kevin Rosenberg of the Criminal Division's Organized Crime and Gang Section. The case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives; the City of Pittsburgh Bureau of Police; the Allegheny County, Penn., Police Department; and the Allegheny County Sheriff's Office.
Maryland Man Sentenced to 30 Months in Prison for Importing and Selling Counterfeit Cisco Computer Networking EquipmentRead the Press Release
WASHINGTON – Donald H. Cone, 48, of Frederick, Md., was sentenced today in Alexandria, Va., to 30 months in prison for his role in a sophisticated conspiracy to import and sell counterfeit Cisco-branded computer networking equipment, 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.
U.S. District Court Judge Gerald Bruce Lee also ordered Cone to pay $143,300 in restitution and to serve three years of supervised release following his prison term. A federal jury convicted Cone and a co-conspirator, Chun-Yu Zhao of Chantilly, Va., in May 2011 after a three-week trial. Zhao will be sentenced on Sept. 9, 2011.
According to the evidence introduced at trial, Zhao, Cone and Zhao’s family members in China operated a large-scale counterfeit computer networking equipment business under the names of JDC Networking Inc. and Han Tong Technology (Hong Kong) Limited. JDC Networking Inc., located in Virginia, altered Cisco products by using pirated software, and created labels and packaging in order to mislead consumers into believing the products it sold were genuine Cisco products. To evade detection, Zhao used various names and addresses in importation documents, and hid millions of dollars of counterfeit proceeds through a web of bank accounts and real estate held in the names of family members in China.
The case was investigated by U.S. Immigration and Customs Enforcement’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 Cone, Zhao and JDC Networking Inc.
The case was prosecuted by Assistant U.S. Attorneys Jay Prabhu and Lindsay Kelly from the Eastern District of Virginia, and Senior Counsel Michael 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/ .
Justice Department Announces Agreement to Protect Prisoners from Life-threatening Conditions at Erie County, New York, FacilitiesRead the Press Release
WASHINGTON– The Justice Department announced today that it has filed a stipulated order of dismissal to resolve its lawsuit concerning conditions of confinement at the Erie County Holding Center (ECHC), a pre-trial detention center in Buffalo, N.Y., and the Erie County Correctional Facility (ECCF), a correctional facility in Alden, N.Y. The lawsuit, which the department filed on Sept. 30, 2009, in federal court in the Western District of New York, alleged that conditions at the facilities routinely and systemically deprive prisoners of constitutional rights through inadequate medical and mental health care, failures to protect prisoners from harm, and deficiencies in environmental health and safety.
“As the Supreme Court confirmed over 35 years ago, ‘There is no iron curtain drawn between the Constitution and the prisons of this country,’” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The relief that we have obtained through this agreement will ensure that prisoners in Erie County are no longer denied the basic constitutional rights that humanity affords to them. This agreement follows on the heels of last year’s settlement on suicide prevention to reverse the tide of years of neglect and harm at the Erie County facilities.”
“This is a historic agreement. As a result of the government’s lawsuit, the county of Erie will be making broad and significant changes that will ensure the prisoners at ECHC and ECCF will be afforded their rights under the Constitution, such as comprehensive mental health care and medical care and protection from harm,” said William J. Hochul, Jr., U.S. Attorney for the Western District of New York.
On June 22, 2010, the department resolved a portion of its lawsuit against Erie County regarding suicide prevention and related mental health care following a series of suicides that occurred after the United States filed suit. However, individuals with mental illness continued to suffer as a result of lack of appropriate treatment in ECHC and ECCF, and were also subjected to excessive uses of force by staff. The stipulated order entered by the court today requires Erie County to implement a comprehensive mental health program for its prisoners, including:
Screening and assessment of individuals by qualified mental health professionals within designated time periods;
Referral of individuals with mental health issues for treatment within designated time periods on an emergent, urgent or routine basis;
Provision of clinically appropriate mental health treatment at outpatient, residential and crisis levels of care; and
Implementation of medication administration policies to ensure that psychotropic medications are prescribed and delivered in a timely and clinically appropriate manner.
In order to implement this comprehensive mental health treatment program, Erie County has increased the number of mental health staff at its facilities. This stipulated order, coupled with the June 2010, stipulated settlement agreement, will afford individuals held at ECHC and ECCF with appropriate mental health care.
Erie County also has agreed to enhance its provision of medical care at the facilities, including maintaining complete and unified medical and mental health records at the location where each prisoner is actually housed, in order to ensure continuity of treatment and care. Erie County will also establish quality assurance reviews for its medical and mental health treatment programs to analyze and correct trends that present risk of harm to prisoners.
The stipulated order also includes comprehensive provisions aimed at addressing sexual abuse at ECHC and ECCF by changing the way the county investigates allegations of sexual abuse by prisoners and staff, including appointing a sexual abuse coordinator within the facilities, offering counseling services for victims of sexual abuse, and increasing training and awareness on prison rape and sexual violence. Additionally, the stipulated order includes provisions to ensure proper investigation of allegations of violence and excessive force.
Independent consultants will monitor compliance with the medical and mental health provisions of the stipulated order and the previously ordered suicide prevention settlement. The c ourt will retain the ability to enforce the terms of both settlements.
Additional information about the Special Litigation Section of the Justice Department’s Civil Rights Division can be found at www.usdoj.gov/crt/split/index.html .
Former Owner of New York City Garment Assembly Company Pleads Guilty for Failing to Pay Employment TaxesRead the Press Release
WASHINGTON – David Chui, a resident of Queens, N.Y., pleaded guilty to failing to pay employment taxes in connection with his former ownership of a garment assembly business, the Justice Department and Internal Revenue Service (IRS) announced today.
According to the plea agreement and criminal information, from at least 2005 through 2008, Chui owned and operated New Shanghai Fashions, a garment assembler in Manhattan. Between the fourth quarter of 2005 and continuing through at least the third quarter of 2008, Chui did not collect, truthfully account for, and pay over employment taxes of nearly $220,000 from his employees’ wages. In addition, the plea agreement requires Chui to pay restitution to the IRS in the amount of $439,918.61, which encompasses both the employment taxes that he failed to withhold from his employees and his obligation, as an employer, to pay over a matching portion of those employment taxes.
Chui faces a maximum sentence of five years in prison, a maximum of three years supervised release and a fine of up to $250,000.
This case was investigated by IRS-Criminal Investigation and is being prosecuted by the U.S. Attorney’s Office for the Southern District of New York Complex Frauds Unit. Special Assistant U.S. Attorney and Department of Justice Tax Division Trial Attorney Tino M. Lisella is in charge of the prosecution.
Sentencing is tentatively scheduled for Nov. 18, 2011.
17 August 2011
U.S. Files Lawsuit Against Bollinger Shipyards for Material False Statements Made to the Coast GuardRead the Press Release
WASHINGTON - The United States has filed suit in U.S. District Court in Washington, D.C., against Bollinger Shipyards Inc., Bollinger Shipyards Lockport LLC and Halter Bollinger Joint Venture LLC, the Justice Department announced. The suit alleges that Bollinger, which is headquartered in Lockport, La., made material false statements to the Coast Guard under the Deepwater Program.
The government’s complaint alleges that Bollinger proposed to convert existing 110-Ft Patrol Boats (WPBs) into 123-Ft WPBs by extending the hulls 13 feet and making additional improvements. As a result of Bollinger’s misrepresentations about the hull strength of the converted vessels, the Coast Guard awarded a contract to convert eight Coast Guard 110 foot cutters to 123 foot cutters. The first converted cutter, the Matagorda, suffered hull failure when put into service. An investigation by the Coast Guard and the prime contractor, Integrated Coast Guard Systems, concluded that the calculation of hull strength reported by Bollinger to the Coast Guard prior to the conversion was false. Efforts to repair the Matagorda and the other converted vessels were unsuccessful. The cutters are unseaworthy and have been taken out of service.
“Companies which make false statements to win Coast Guard contracts do a disservice to the men and women securing our borders,” said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. “We will take action against those who undermine the integrity of the public contracting process by providing substandard equipment to our armed services personnel.”
The government’s suit seeks damages from Bollinger under the False Claims Act for the loss of the eight now unseaworthy vessels. The investigation of the case was conducted by the Department of Justice Civil Division, the Department of Homeland Security Office of the Inspector General and the Coast Guard.
Ohio Wildlife Officer Charged with Lacey Act CrimesRead the Press Release
WASHINGTON – A federal grand jury in Cincinnati, Ohio, returned a four-count indictment today, charging Allan Wright, 45, of Russellville, Ohio, with trafficking in and making false records for illegally harvested white-tailed deer (Odocoileus virginianus) in violation of the Lacey Act. Wright is employed as a wildlife officer for the Ohio Department of Natural Resources, Division of Wildlife.
Among other things, the Lacey Act makes it a crime for a person to knowingly transport or sell wildlife in interstate commerce when the wildlife was taken or possessed in violation of state law. The Lacey Act also makes it a crime for a person to knowingly make or submit a false record, account or label for wildlife which has been transported in interstate commerce.
The indictment charges that Wright knowingly sold and provided an Ohio resident hunting license to a South Carolina resident during the 2006 white-tailed deer season. According to the indictment, Wright falsely entered an Ohio address for the hunter in order to obtain a resident license. Ohio law makes it a crime to procure a hunting license by fraud, deceit, misrepresentation or any false statement. Ohio law also makes it a crime to hunt without a valid hunting license. The indictment charges that the hunter killed three white-tailed deer using the illegal license. Wright personally “checked in” the three deer, again providing the fraudulent Ohio address. The hunter then transported the deer back to South Carolina.
The indictment also alleges that Wright, using his authority as a wildlife officer, seized white-tailed deer antlers from a hunter who had killed a deer illegally during the 2009 white-tailed deer season. The indictment alleges that, rather than dispose of the antlers through court proceedings, Wright caused the antlers to be transported to another individual in Michigan. The indictment charges that Wright then filed an official state form which falsely reported that he had personally destroyed the antlers.
Two of the four counts charged in the indictment are felonies punishable by up to five years in prison and a $250,000 fine per count. The remaining two counts are misdemeanors punishable by up to one year in prison and a $100,000 fine per count.
An indictment is merely an accusation and a defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt.
The case is being investigated by the U.S. Fish & Wildlife Service, Office of Law Enforcement. The case is being prosecuted by Trial Attorney James B. Nelson of the Department of Justice’s Environmental Crimes Section of the Environment and Natural Resources Division.
Justice Department Requires Divestitures in Order for Regal Beloit Corporation to Proceed with Its Acquisition of A.O. Smith Corporation’s Electric Motor BusinessRead the Press Release
WASHINGTON – The Department of Justice announced today that it has reached a settlement that will require Regal Beloit Corporation (RBC) to divest its U.S. business for electric motors for pool and spa pumps to SNTech Inc. and to divest A.O. Smith Corporation’s (AOS) development work and related assets for draft inducers for high-efficiency furnaces to Revcor Inc., in order to proceed with RBC’s acquisition of AOS’s electric motor business. The department said that without the divestitures the acquisition would lead to higher prices, lower quality products, less customer service and less innovation in each of these markets.
The department said that the acquisition, as originally proposed, would combine two of the three leading suppliers of electric motors for pool and spa pumps in the United States. The acquisition also would have eliminated the most likely entrant into the market for draft inducers for furnaces with a thermal efficiency of 90 percent or greater (90+ draft inducers), a market in which RBC has a near monopoly.
The Department of Justice’s Antitrust Division filed a civil antitrust lawsuit today in U.S. District Court for the District of Columbia to block the proposed acquisition. At the same time, the department filed a proposed settlement that, if approved by the court, would resolve the competitive concerns alleged in the lawsuit.
“The acquisition as originally proposed would have lessened the vigorous competition that currently exists among manufacturers of electric motors for pool and spa pumps resulting in higher prices and lower quality products,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “The acquisition also would have eliminated the firm best positioned to challenge Regal Beloit Corporation’s dominance in the market for draft inducers for high-efficiency furnaces.”
The department’s complaint alleges that the proposed acquisition would eliminate the significant competition between RBC and AOS in the already highly concentrated markets for electric motors for pool and spa pumps in the United States. The complaint also alleges that the proposed acquisition would eliminate the potential competition from AOS in the 90+ draft inducer market, in which RBC has a near monopoly.
The proposed settlement requires RBC to divest the assets used to design, manufacture and sell RBC motors used in pool and spa pump applications. The department has concluded that SNTech will integrate the divestiture assets into its current operations to create a viable competitor in the markets for electric motors for pool and spa pumps. The proposed settlement also requires that RBC divest the assets necessary to continue the design and development of AOS’s 90+ draft inducers. The department concluded that Revcor will integrate the divestiture assets into its current operations and replace the potential competition lost by RBC’s acquisition of AOS’s electric motor business. The divestitures to SNTech and Revcor will remedy the competitive concerns alleged in the complaint.
Electric motors sold for use in pool and spa pumps must be uniquely engineered and assembled to meet the size and performance specifications of the individual pump. In addition to size and energy efficiency, specification variables include the capacity of the impeller, speed, current/voltage, whether the motor is operated continually or sporadically, and whether the pump has more than one speed of operation.
Furnace draft inducers are specialized blowers for the movement of air and the expulsion of hot combustion gases produced by gas-fired furnaces. They perform an important safety function by extracting harmful combustion gases and venting those gases outside. Furnaces are classified according to their thermal efficiency, which is the percentage of energy used to heat the air and that is not lost with the vented combustion gases. Draft inducers are designed for the specific thermal efficiency of each furnace. More modern furnaces with higher thermal efficiency, typically referred to as 90 percent thermal efficiency or 90+, use draft inducers based on more advanced technology.
RBC, headquartered in Beloit, Wis., manufactures mechanical and electrical motion control and power generation products. RBC had revenues of approximately $2.2 billion in 2010.
AOS, headquartered in Milwaukee, is made up of two operating units: the water products business and the electric motor business. AOS is one of North America’s largest manufacturers of electric motors for residential and commercial applications. In 2010, AOS had revenues of approximately $1.5 billion, with approximately $700 million of that amount from electric motors and related products.
SNTech, headquartered in Phoenix, manufactures low-cost smart electric motors used in air moving applications.
Revcor, headquartered in Carpentersville, Ill., manufactures air moving products, including blowers and fans.
As required by the Tunney Act, the proposed settlement, along with a 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 Maribeth Petrizzi, Chief, Litigation II Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street, N.W., Suite 8700, Washington, D.C. 20530. At the conclusion of the 60-day comment period, the U.S. District Court for the District of Columbia may approve the proposed settlement upon finding it is in the public interest.
Four Individuals Convicted in $4.7 Million Louisiana Medicare Fraud SchemeRead the Press Release
WASHINGTON – The owner of a Baton Rouge, La., durable medical equipment (DME) company, a medical doctor and two patient recruiters were each convicted late yesterday for their roles in a $4.7 million Medicare fraud scheme, announced the Department of Justice, the FBI, the Department of Health and Human Services and the Medicaid Fraud Control Unit (MFCU) of the Louisiana State Attorney General’s Office.
After a two-week trial, Nnanta Felix Ngari, Dr. Sofjan Lamid, Henry Lamont Jones and Ernest Payne were each convicted by a federal jury in the Middle District of Louisiana of one count of conspiracy to commit health care fraud and one count of conspiracy to defraud the United States and to pay and receive illegal health care kickbacks.
Ngari owned and operated Unique Medical Solution Inc., a Baton Rouge-area DME supplier that specialized in the provision of power wheelchairs to Medicare beneficiaries. Evidence at trial established that beginning in late 2003, Ngari paid recruiters, including Jones and Payne, to locate and solicit Medicare beneficiaries to attend “health fairs” hosted by Jones and Payne at churches and other locations. At the health fairs, doctors, including Dr. Lamid, prescribed the beneficiaries power wheelchairs that were medically unnecessary. The prescriptions were used by Ngari to submit false and fraudulent claims, on behalf of Unique, to Medicare. According to information presented at trial, the doctors, including Dr. Lamid, were paid illegal kickbacks by Payne and Jones based on the number of power wheelchair prescriptions generated at the health fairs. Jones and Payne were also paid kickbacks by Ngari on a per prescription basis.
Between 2003 and 2009, Unique submitted approximately $4.7 million in claims to Medicare for purported services. Medicare paid Unique approximately $2.5 million for these claims.
A sentencing date has not yet been scheduled. Both conspiracy counts carry a maximum penalty of 10 years in prison and a $250,000 fine.
The verdicts were announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Donald J. Cazayoux Jr. of the Middle District of Louisiana; Mike Fields, Special Agent-in-Charge of HHS-Office of Inspector General (OIG) Dallas regional office; David Welker, Special Agent-in-Charge of the FBI’s New Orleans Division; and Louisiana State Attorney General James Buddy Caldwell.
The case was prosecuted by Trial Attorneys Ben Curtis and David Maria of the Criminal Division’s Fraud Section. The case was investigated by the FBI, HHS-OIG and MFCU of the Louisiana State Attorney General’s Office. The case was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Middle District of Louisiana.
Since their inception in March 2007, Medicare Fraud Strike Force operations in nine locations have charged more than 1,000 defendants that collectively have billed the Medicare program for more than $2.3 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov .
Former Worth County Sheriff Pleads Guilty to Violating the Civil Rights of Eight Women in MissouriRead the Press Release
WASHINGTON – The Department of Justice announced today that Neal Wayne “Bear” Groom, former sheriff of the Worth County, Mo., Sheriff’s Office, pleaded guilty to depriving eight Missouri women of their civil rights by coercing the women to expose parts of their bodies to him, which was in violation of the Fourth Amendment prohibition against unreasonable seizures .
As part of the plea, Groom admitted that while he was sheriff of Worth County, he coerced the women into exposing unclothed parts of their bodies to him and that he photographed some of the women, which in some cases included their exposed breasts. Groom used the guise of checking the women for injuries or evidence of drug injections to coerce the women into revealing different parts of their bodies to him. By pleading guilty, Groom admitted that he invaded the personal privacy of the victims by coercing them to expose their breasts to him for no legitimate law enforcement purpose.
Groom faces a maximum punishment of 12 months in prison and a potential fine of up to $100,000 for each of the eight counts.
“Such egregious misconduct by those entrusted to uphold our laws will not be tolerated,” stated Assistant Attorney General for the Civil Rights Division Thomas E. Perez. “The Department of Justice will continue to vigorously prosecute these cases.”
“Law enforcement officials are not above the law,” said U.S. Attorney for the Western District of Missouri Beth Phillips. “When they abuse their authority by violating the civil rights of the citizens they are sworn to protect, they will be held accountable.”
This case was investigated by the FBI and the Missouri State Highway Patrol, and is being prosecuted by Assistant U.S. Attorney David M. Ketchmark from the U.S. Attorney’s Office and Trial Attorney Shan Patel from the Civil Rights Division of the Department of Justice.
16 August 2011
Three Fishermen, Seafood Wholesaler and Associated Employees Indicted for Obstruction of Justice and the Illegal Harvest and Sale of New Jersey OystersRead the Press Release
WASHINGTON – A 15-count indictment returned by a federal grand jury in Camden, N.J., was unsealed today following the arrest of six individuals from New Jersey and Maryland, and the seizure or restraint of 10 oyster fishing boats in New Jersey, announced Ignacia S. Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division, and Paul J. Fishman, U.S. Attorney for the District of New Jersey.
The indictment charges the six individuals and two related companies with creating false reports and records of harvested oysters, trafficking in illegally harvested oysters, obstruction of justice, and charges five of the individuals and the two companies with conspiracy to commit those crimes.
The individuals charged were Thomas Reeves, Todd Reeves, and Renee Reeves, of Port Norris, N.J.; Kenneth W. Bailey of Heislerville, N.J.; Mark Bryan of New Market, Md.; and Pamela Meloney of Secretary, Md. The charged businesses are Reeves Brothers in Port Norris, N.J., which is owned and operated by Thomas and Todd Reeves and Harbor House Seafood in Seaford, Del., which is co-owned by Mark Bryan.
According to the indictment, from 2004 through 2007, Thomas and Todd Reeves were oyster fishermen who owned the oyster dealer business Reeves Brothers where Renee Reeves worked. The Reeves would create reports and records required by state and federal law that claimed they harvested fewer oysters than they actually did, and they would take more oysters from the Delaware Bay than they were allowed under New Jersey law. The fair market retail value of the Reeves’ illegal harvest during this time was well in excess of $600,000, and they over-harvested their quota in some years by as much as 90 percent.
Also alleged in the indictment, to help hide their illegal harvest, the Reeves, and Mark Bryan and Pamela Meloney at Harbor House, would create and maintain records that falsely indicated the amount of oysters the Reeves actually sold to Harbor House. To help prevent the discovery of their actions, Bryan and Meloney provided to law enforcement officers investigating the matter records of Harbor House’s purchases from the Reeves that Bryan and Meloney knew were false.
The indictment alleges that Bryan and Meloney created false records of Harbor House’s purchases from another Port Norris area oyster fisherman, Kenneth W. Bailey. Like the Reeves, in 2006 and 2007, Bailey would create reports and records required by state and federal law that claimed he harvested fewer oysters than he actually did, and he would take more oysters from the Delaware Bay than allowed under New Jersey law.
The indictment identifies 10 vessels that were used by the Reeves and/or Bailey to engage in their illegal harvest, and that are therefore subject to forfeiture to the United States upon a conviction of some of the offenses charged in the indictment. To ensure that the vessels are available for forfeiture in the same condition that they presently are, five of these vessels (the Janet R, Amanda Laurnen, Miss Lill, Crab Daddy and Conch Emperor) were seized by the U.S. Marshals. The other five vessels (the Martha Meerwald, Louise Ockers, Linda W, Turkey Jack and Beverly Ray Bailey) have been made subject to a restraining order that prohibits their use or operation pending the outcome of the trial.
An indictment is merely an accusation, and a defendant is presumed innocent unless and until proven guilty in a court of law.
The maximum penalty for five of the obstruction of justice counts is up to 20 years in prison and a $250,000 fine, for the individuals. The maximum penalty for each of the remaining violations by the individuals includes up to five years in prison and a $250,000 fine. The maximum penalty for the corporations is up to five years of probation and a fine in an amount that is the greater of $500,000 or twice the gross gain, for each count.
The case was investigated by the National Oceanic and Atmospheric Administration, Office of Law Enforcement, and The New Jersey Department of Environmental Protection, Division of Fish and Wildlife. The case is being prosecuted by Wayne D. Hettenbach of the Environmental Crimes Section of the Justice Department’s Environment and Natural Resources Division, and Assistant U.S. Attorney Matthew T. Smith of the U.S. Attorney’s Office for the District of New Jersey.
Retired Army Colonel Sentenced to 12 Months in Prison for Bribery Scheme Involving Department of Defense Contracts in IraqRead the Press Release
WASHINGTON — A retired colonel in the U.S. Army was sentenced today to 12 months in prison for her role in a scheme to pay bribes for contracts awarded in support of the Iraq war, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division.
Levonda J. Selph, 57, was sentenced by U.S. District Judge Reggie B. Walton of the District of Columbia. In addition to her prison term, Selph was sentenced to three years of supervised release and was ordered to pay a $5,000 fine and $9,000 in restitution.
Selph pleaded guilty in June 2008 to an information charging her with one count of bribery and one count of conspiracy. According to the information, in 2005, then-Lt. Colonel Selph served as chair of a selection board for a $12 million contract to build and operate several Department of Defense warehouses in Iraq. Selph accepted fraudulent bids from a co-conspirator contracting firm, and helped that firm to win the contract award. In return for these actions, Selph accepted a vacation to Thailand and other things of value totaling approximately $9,000.
This case is being prosecuted by Trial Attorney Richard B. Evans of the Criminal Division’s Public Integrity Section and Trial Attorneys Mark W. Pletcher and Emily W. Allen of the Criminal Division’s Fraud Section and the Antitrust Division.
The case is being investigated by special agents of the Army Criminal Investigation Command; Defense Criminal Investigative Service; the Special Inspector General for Iraq Reconstruction; U.S. Immigration and Customs Enforcement’s Homeland Security Investigations; and the FBI Washington Field Office.
Phoenix Telemarketing Duo Indicted in Conspiracy Case Involving 25 Counts of Mail and Wire FraudRead the Press Release
SEARCH THE SITE August 16, 2011PHOENIX – Two people have been charged in a 26-count indictment with 15 counts of mail fraud, 10 counts of wire fraud and one count of conspiracy in connection with a fraud scheme involving an Arizona business entity known as The Results Group (TRG). Edward Longoria, 41 of Laguna Beach, Calif., and Amber Halvorson, 34, of Phoenix, self-surrendered to the U.S. Marshals Service on August 12, 2011.
According to the indictment, between June 2004 and November 2006, Longoria and Halvorson owned and operated TRG, through which they deceptively sold Internet-based business opportunities to victims throughout the United States. Victims paid TRG between $99 and $599 to design and build websites "affiliated" with online retail companies such as amazon.com, overstock.com and gambling-related websites. Victims were told they would receive commissions from the retailers when consumers purchased products through the victims' website.
The indictment alleges that the defendants misrepresented to victims they were likely to earn a substantial income, in some instances upwards of $50,000 per month, with little risk. Victims were also promised assistance from TRG "marketing coaches" and a money-back, satisfaction guarantee. Additionally, TRG contacted victims after the initial sale of the website, soliciting $1,000 to $10,000 for fraudulent advertising programs. Victims were led to believe that purchasing the advertisement would make their businesses more profitable. It is estimated that there are several thousand victims with losses exceeding $20 million.
Each wire and mail fraud count carries a potential sentence of 30 years in prison, because this case involves allegations of telemarketing fraud, and a potential fine of $250,000. The maximum penalty for the conspiracy count is five years and a $250,000 fine.
Potential victims of this scheme may track the progress of the case by visiting the following link located on the U.S. Attorney for the District of Arizona's website: http://www.justice.gov/usao/az/us_v_longoria_etal.html. Potential victims may also leave a voice message at 602-514-7679; calls will be returned by a victim witness specialist in the order in which they are received.
An indictment is simply the method by which a person is charged with criminal activity and raises no inference of guilt. An individual is presumed innocent until competent evidence is presented to a jury that establishes guilt beyond a reasonable doubt.
The investigation preceding the indictment was conducted the U.S. Postal Inspection Service. The prosecution is being handled by Peter Sexton and Dominic Lanza, Assistant U.S. Attorneys, District of Arizona, Phoenix.
CASE NUMBER: CR-11-1565-PHX (DGC)
RELEASE NUMBER: 2011-178(Longoria et al)Help us combat the proliferation of sexual exploitation crimes against children.
Justice Department Signs Agreement to Ensure Civic Access for People with Disabilities in MarylandRead the Press Release
WASHINGTON - The Justice Department today announced an agreement with Montgomery County, Md., and Maryland National Capital Park and Planning Commission (MNCPPC), to improve access to all aspects of civic life for persons with disabilities. The agreement was reached under Project Civic Access (PCA), the department’s wide-ranging initiative to ensure that cities, towns and counties throughout the country comply with the Americans with Disabilities Act (ADA).
“Access to public programs and facilities is a civil right, and individuals with disabilities must have the opportunity to participate in local government programs, services and activities on an equal basis with their neighbors,” said Roy L. Austin Jr., Deputy Assistant Attorney General for the Civil Rights Division . “Montgomery County has made significant progress towards achieving ADA compliance, and this agreement sets out a realistic plan for the county to accomplish its goal. Maryland National Capital Park and Planning Commission officials will be evaluating all of its parks for ADA compliance. I commend county and park officials for working with the Justice Department to provide equal access to all of its programs, services, and activities.”
As part of the PCA initiative, Justice Department investigators, attorneys and architects survey state and local government facilities, services and programs in communities across the country to identify the modifications needed for compliance with ADA requirements. Based on these surveys, agreements are tailored to address the steps each community must take to improve access. This agreement is the 194th under the PCA initiative.
Under the agreement announced today, Montgomery County and MNCPPC will take important steps to improve access to county programs for individuals with disabilities, such as:
Making physical modifications to facilities surveyed by the department so that parking, routes to buildings, entrances, service areas and counters, restrooms, public telephones and drinking fountains are accessible to persons with disabilities;
Implementing plans to survey all other county and MNCPPC facilities and programs and to make modifications wherever necessary to achieve full compliance with the ADA;
Providing effective communication;
Ensuring that county programs for victims of domestic violence and abuse are accessible to persons with disabilities;
Posting, publishing and distributing a notice to inform members of the public of the provisions of Title II and their applicability to the county’s programs, services and activities;
Administering a grievance procedure for resolving complaints of violations of Title II of the ADA;
Planning and preparing emergency management procedures to include individuals with disabilities, including emergency preparedness, notification, evacuation, sheltering, response, clean up and recovery, and making modifications to ensure equal and integrated access;
Ensuring that the county’s official website and other web-based services are accessible to people with disabilities; and
Implementing a comprehensive plan to improve the accessibility of the county’s sidewalks and pedestrian crossings by installing accessible curb ramps throughout Montgomery County.
Montgomery County was founded in 1776. Rolling land and small hills make up most of the county’s 497 square miles, with 15 square miles of water, including rivers, streams, lakes and reservoirs and 28,435 acres of parkland. Montgomery County is now the most populous county in the state of Maryland. According to census data, more than 107,000 Montgomery County residents have a disability. MNCPPC operates more than 53,000 acres of parkland, offering a variety of facilities, recreation and sporting fields. Their facilities include nature centers, conference centers and community centers. Historic sites, recreation buildings and group picnic areas are also found on the parkland.
Today’s agreement was reached under Title II of the ADA, which prohibits discrimination against individuals with disabilities by state and local governments. The agreement will remain in effect for six years from Aug. 16, 2011. The department will actively monitor compliance with the agreement until all required actions have been completed.
For more information on the PCA initiative or the ADA Best Practices Tool Kit for State and Local Governments, please visit the ADA website at www.ada.gov or call the toll-free ADA Information Line at 800-514-0301 or 800-514-0383 (TTY). People interested in finding out more about today’s agreement with Montgomery County and MNCPPC, please visit www.ada.gov/montgomery_co_pca/montgomery_co_sa.htm .
Justice Department Seeks to Require Iowa Construction Company<br /> to Pay Employment Taxes It Withholds from Employees’ WagesRead the Press Release
WASHINGTON - The United States has filed a lawsuit in an Iowa federal court against a Des Moines, Iowa, metro area company, Advanced Underground Construction LLC and its principal, William David Ward II, the Justice Department announced today. The civil injunction suit asks the court to stop the defendants’ alleged repeated failures to pay to the U.S. employment taxes that are withheld from employees’ wages.
The government complaint alleges that between the third quarter of 2004 and the present date, the defendants repeatedly failed to make required employment tax deposits to the United States for nine quarters, instead using taxes withheld from employees’ wages as working capital, a practice sometimes referred to as “pyramiding.” The government’s complaint further alleges that the defendants’ misconduct has resulted in a balance due to the government of more than $370,000.
According to the complaint, the defendants have made minimal payments of their tax debts, and government attempts to induce voluntary compliance have failed. The complaint seeks an injunction requiring the defendants to timely deposit and pay withheld employment taxes, and to timely file all employment tax returns.
California-Based Taleo Corp. Agrees to Pay U.S. $6.49 Million<br /> to Resolve False Claims Act AllegationsRead the Press Release
WASHINGTON - Taleo Corp. has agreed to pay the United States $6.49 million to resolve allegations that it knowingly caused false claims to be submitted to the Transportation Security Administration (TSA) of the Department of Homeland Security (DHS), the Justice Department announced today.
In 2002, CPS Human Resource Services contracted with TSA to perform human resource services. Taleo, which is based in Dublin, Calif., subcontracted with CPS to provide supporting software. Taleo’s subcontract stated that Taleo would charge its commercial list rates with certain discounts.
The United States alleged that Taleo's commercial list rates were usually based on a customer's actual number of employees, but that Taleo charged TSA a higher rate that was not based on the agency's actual number of employees. If Taleo had followed the normal procedure, the rate TSA was charged would have been lower.
“Those who do business with federal agencies must be honest and play by the rules,” said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. “We are committed to protecting taxpayer dollars by pursuing contractors who overcharge the government.”
The government’s investigation was conducted by the Justice Department’s Civil Division, the U.S. Attorney’s Office for the District of Columbia and DHS’ Office of Inspector General.
This settlement resolves allegations filed by a former Taleo employee under the whistleblower provisions of the False Claims Act, United States ex rel. Hetland v. Taleo Corp., No. 08-cv-0801 (CKK) (D.D.C.). The False Claims Act authorizes private parties to sue on behalf of the United States for fraud and to share in any recovery.
“This settlement demonstrates our office’s continued commitment to target companies that “pad” their prices in an attempt to “pad” their pockets,” said Ronald C. Machen Jr., U.S. Attorney for the District of Columbia. “This office is committed to protecting the public and recovering funds that were obtained through misrepresentations, fraud, and abuse.”
This settlement is part of the government’s aggressive efforts to combat fraud through the use of powerful enforcement tools such as the False Claims Act. The Justice Department's total recoveries in False Claims Act cases since January 2009 are more than $7.5 billion.
15 August 2011
Settlement Will Resolve Clean Air Act Penalties and Repay Portion of Clean up Costs from Danvers, Mass. Explosion in 2006Read the Press Release
WASHINGTON – The United States has reached agreement with the owners and a former operator of an inks and paint products manufacturing facility in Danvers, Mass., that exploded and burned in 2006 the day before Thanksgiving.
Under a consent decree lodged today by the U.S. Department of Justice on behalf of the Environmental Protection Agency (EPA), the owners and operator will pay the U.S. Government a projected $1.3 million, including cash and the net proceeds from sale of the facility property, assuming the property sells for its appraised value. Most of that recovery will go to reimburse EPA for its $2.7 million in costs of cleaning up hazardous waste after the explosion.
In addition, operator C.A.I. Inc. will pay EPA a penalty of $100,000 to settle allegations that conditions at the facility violated the General Duty Clause in Section 112(r) of the Clean Air Act. Today's consent decree resolves claims in a complaint against former operator C.A.I. and owners Sartorelli Realty LLC and Roy A. Nelson as Trustee of the Nelson Danvers Realty Trust. A separate consent decree with former operator Arnel Company Inc. was entered by the court in July 2011. The settlement amounts in both consent decrees were based on demonstrations by the settling defendants of limited financial resources.
“Failure to adhere to the Clean Air Act’s general duty obligations can lead to serious, potentially deadly accidents and harm to the environment,” said Ignacia S. Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. “Today’s settlement underscores the importance of industry’s compliance with the law to ensure the protection of human health and the environment for the benefit of the American people.”
“This case demonstrates that a failure to implement basic safety mechanisms and follow obligations under the law can have dire consequences,” said Curt Spalding, regional administrator of EPA’s New England office. “The extent of damage from this explosion shows why it is so important that facilities follow basic chemical safety practices. Companies that fail to comply with laws that protect public health and our environment will be held accountable.”
EPA’s cleanup action and investigation were undertaken as a result of the explosion and chemical fire that occurred on Nov. 22, 2006, at the C.A.I. and Arnel industrial building in Danvers. On the night before Thanksgiving, a series of explosions demolished the manufacturing facility. C.A.I. and Arnel stored and used considerable quantities of ignitable and flammable substances in their manufacturing of solvent-based ink, paint, thinners and/or industrial coatings.
The explosion and subsequent fire destroyed the 12,000 square foot building, and the surrounding commercial and residential community experienced significant structural and property damage from the blast. Approximately 24 homes and six businesses were severely damaged and subsequently demolished; another 70 homes were damaged. An estimated 300 residents within a half-mile radius of the facility were evacuated by the Danvers fire department. Firefighting efforts lasted nearly 17 hours. While several people were injured and hospitalized, no fatalities occurred.
From Nov. 2006 to March 2007, EPA performed a removal of hazardous substances released or threatened to be released to the environment as a result of the explosion. EPA fenced off the site, took air samples, drained vats, totes and underground storage tanks, removed drums of chemicals, pumped off stormwater runoff, and removed soil, debris and scrap steel.
After the incident, EPA, in close coordination with other federal and state agencies, investigated the facility operators’ compliance with various federal laws, including the General Duty Clause of the Clean Air Act. Under the agreement, operator C.A.I. will pay EPA a penalty of $100,000 to settle EPA allegations that the following conditions at the facility, among others, contributed to the General Duty Clause violations: failure to identify the hazards of operating an ink mixing process overnight without proper ventilation; lack of appropriate ventilation, lack of vapor detectors and alarms to detect buildup of dangerous vapors while workers were not present, lack of automatic shut-off valves that could shut down processes if human operators forgot to do so, failure to have the proper fire permits, and lack of explosion venting construction.
C.A.I.’s penalty also resolved a claim under Section 114(a) of the Clean Air Act for failure to respond to an EPA request for information related to the company’s handling of extremely hazardous substances.
More Information:
The consent decree, lodged in the U.S. District Court for the District of Massachusetts, is subject to a 30-day public comment period and approval by the federal court. A copy of the consent decree will be available on the Justice Department website at www.usdoj.gov/enrd/Consent_Decrees.html .
The General Duty Clause of the Clean Air Act: www.epa.gov/osweroe1/docs/chem/gdc-fact.pdf .
Nautilus Hyosung Holdings Agrees to Plead Guilty to Obstruction of Justice for Submitting False Documents in a Merger InvestigationRead the Press Release
WASHINGTON – Nautilus Hyosung Holdings Inc. has agreed to plead guilty and pay a $200,000 criminal fine for obstruction of justice in connection with a premerger filing and investigation by the Antitrust Division, the Department of Justice announced today. Nautilus Hyosung Holdings, an automated teller machine (ATM) manufacturer, is a wholly-owned subsidiary of Korea-based Nautilus Hyosung Inc. (NHI). The false documents were submitted to the government by NHI on behalf of Nautilus Hyosung Holdings in contemplation of the acquisition of Triton Systems of Delaware Inc., a competing manufacturer of ATM systems. The department said that the parties abandoned the proposed acquisition of Triton before the Antitrust Division reached a decision whether to challenge the transaction.
According to a two-count felony charge filed today in U.S. District Court in Washington, D.C., in or about July and August 2008, NHI, as the parent company of Nautilus Hyosung Holdings, submitted false documents to the Department of Justice and the Federal Trade Commission (FTC) in conjunction with mandatory premerger filings made under the Hart-Scott-Rodino Antitrust Improvement Act. After receiving the premerger filings, the Antitrust Division opened a civil merger investigation of the proposed acquisition. The department said that in September 2008, NHI submitted additional false documents in response to a document request from the Antitrust Division.
According to court documents, an executive of a company affiliated with, and acting on behalf of, Nautilus Hyosung Holdings and NHI altered and directed other corporate employees to alter existing corporate documents with the intent to impair their integrity and availability for use in an official proceeding. The department said that, among other things, the alterations misrepresented and minimized the competitive impact of the proposed acquisition on the market for ATMs in the United States.
The Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, requires companies contemplating mergers and acquisitions valued above certain thresholds to make filings with the Department of Justice and the FTC. The federal antitrust agencies have authority to investigate and challenge such proposed transactions under Section 7 of the Clayton Act and Section 1 of the Sherman Act, if the transactions may substantially lessen competition or create a monopoly.
According to court documents, subsequent to these false submissions to the Antitrust Division in connection with its merger investigation, NHI and Nautilus Hyosung Holdings voluntarily disclosed that numerous documents had been altered before being submitted to the government. Since the time of that admission, NHI and Nautilus Hyosung Holdings have cooperated in the department’s criminal investigation of the full nature and scope of the alleged obstructive conduct, and have committed to continue their cooperation in the department’s ongoing investigation.
Nautilus Hyosung Holdings is charged with obstruction of justice, which carries a maximum criminal fine of $500,000 per count. Nautilus Hyosung Holding’s agreed-upon criminal fine of $100,000 per count is subject to court approval and takes into consideration the nature and extent of the company’s disclosure of wrongdoing and its cooperation in the department’s investigation.
The ongoing investigation is being conducted by the Antitrust Division’s National Criminal Enforcement Section. Anyone with information concerning anticompetitive conduct or obstruction of justice in antitrust matters is urged to call the Antitrust Division’s National Criminal Enforcement Section at 202-307-6694 or visit www.justice.gov/atr/contact/newcase.htm .
Michigan Woman Sentenced to Two Years in Prison for Selling More Than $400,000 in Counterfeit Business SoftwareRead the Press Release
WASHINGTON – A Michigan woman was sentenced today to two years in prison for selling more than $400,000 worth of counterfeit computer software, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Barbara L. McQuade for the Eastern District of Michigan.
Jacinda Jones, 31, of Ypsilanti, Mich., also was ordered by U.S. District Court Judge David M. Lawson in Detroit to serve three years of supervised release following her prison term and to pay $441,035 in restitution. Jones pleaded guilty on April 20, 2011, to one count of criminal copyright infringement. According to documents filed in court, Jones grossed more than $400,000 between July 2008 and January 2010 by selling more than 7,000 copies of pirated business software at discounted prices through the website www.cheapdl.com. The software had a retail value of more than $2 million and was owned by several companies, including Microsoft, Adobe, Intuit and Symantec . Jones’ activities came to the attention of the U.S. Immigration and Customs Enforcement (ICE) agents, who made several undercover purchases of the pirated business and utility software.
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 Trial Attorney Thomas Dougherty of the Computer Crime and Intellectual Property Section in the Justice Department’s Criminal Division. The investigation was conducted by National Intellectual Property Rights Coordination Center (IPR Center) in Crystal City, Va., and by ICE’s Office of Homeland Security Investigations in Detroit.
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/ .
Braintree, Mass., Waste Facility Agrees to Spend More Than $1.7 Million to Settle Alleged Hazardous Waste ViolationsRead the Press Release
WASHINGTON – In a settlement valued at more than $1.7 million, Clean Harbors of Braintree Inc. has agreed to pay a significant penalty and perform additional projects, to settle a complaint filed by the U.S. Department of Justice on behalf of the Environmental Protection Agency (EPA), regarding numerous violations of hazardous waste management and emergency planning laws at the company’s Braintree, Mass., facility.
Under the settlement, Clean Harbors will pay a $650,000 penalty and will spend $1,062,500 on a Supplemental Environmental Project (SEP) consisting of planting approximately 1400 trees in low-income and historically-disadvantaged environmental justice areas in the city of Boston. It is expected that Clean Harbors will work with the city of Boston Parks and Recreation Department to implement the project over a two-year period.
Clean Harbors also will comply with an enhanced waste analysis plan that goes beyond what is currently required in its hazardous waste permit. This plan will help to ensure that the hazardous waste Clean Harbors receives and generates will be properly characterized and managed. Further, Clean Harbors has installed and will maintain a vapor collection system for its tanks that will collect and treat volatile organic compound (VOC) emissions, which contribute to smog.
“This agreement illustrates the commitment by the U.S. Department of Justice and EPA to protecting communities from the potential dangers of hazardous waste and to fulfilling important environmental justice goals,” said Ignacia S. Moreno, Assistant Attorney General of the Justice Department’s Environment and Natural Resources Division. “Under the settlement, Clean Harbors will take additional steps to ensure it properly characterizes and manages hazardous waste.”
EPA identified nearly 30 violations of both the Resource Conservation and Recovery Act (RCRA) and the Emergency Planning and Community Right-To-Know Act (EPCRA) at a site inspection of the Braintree Clean Harbors facility that took place in June 2007. Those violations included inadequate waste characterization, the failure to properly maintain its hazardous waste tanks, inadequate secondary containment, and improper storage of incompatible wastes. At the time of the inspection, many of the company’s hazardous waste tanks were deteriorating and in poor condition. EPA monitoring detected releases of VOC emissions from some of the tanks. In July 2007, EPA issued an administrative order directing Clean Harbors to immediately address numerous conditions identified during the inspection that could have posed a danger to human health or the environment. Clean Harbors came into compliance soon after the 2007 order. Inspectors from the Massachusetts Department of Environmental Protection (MassDEP) participated in the June 2007 inspection and provided support to EPA during the settlement process. In a separate consent order, MassDEP required Clean Harbors to replace all of the old storage tanks, as well as implement numerous other needed infrastructure upgrades at the facility. Clean Harbors has purchased and installed new hazardous waste tanks.
“This settlement underscores how important it is that companies and individuals handling and managing hazardous wastes carefully adhere to the protective requirements EPA and MassDEP have established for these substances,” said Curt Spalding, regional administrator of EPA’s New England office. “Complying with these standards helps reduce the possibility of a chemical release that could put the community and the environment at risk. I am also pleased that under this settlement a large number of trees will be planted, which will improve air quality and the quality of life for Boston citizens.”
“This project will assist the city of Boston's tree planting program, providing hundreds of additional street trees in the neighborhoods. Increasing the tree canopy will result in endless environmental benefits for our residents and is a priority,” said Mayor Thomas M. Menino.
The facility performs hazardous materials management and disposal services including drummed and bulk waste processing and consolidation, transformer decommissioning, PCB storage and processing, blending of waste used as supplemental fuel by cement kilns or industrial furnaces, and pretreatment of waste to stabilize it before it is sent to permitted landfills.
More Information on EPA Hazardous Waste Enforcement in New England: www.epa.gov/region1/enforcement/waste/index.html .
More information on the settlement: www.justice.gov/enrd/Consent_Decrees.html .
12 August 2011
Former Owners of Florida Airline Fuel Supply and Indiana Flight Management Services Companies Plead Guilty in Schemes to Defraud Ryan International AirlinesRead the Press Release
WASHINGTON – A former owner and operator of a Florida-based airline fuel supply service company and a former owner and operator of an Indiana-based flight management services company pleaded guilty today to participating in separate schemes to defraud Ryan International Airlines, a charter airline company located in Rockford, Ill., the Department of Justice announced. The charges announced today are the first to arise out of the Antitrust Division’s ongoing investigation into fraud and anticompetitive conduct in the airline charter services industry.
On July 21, 2011, James E. Murphy, the former owner and operator of a Florida aviation fuel supply company, and David A. Chaisson, the former owner and operator of an Indiana flight management services company, were charged in separate two-count felony charges in U.S. District Court in Fort Lauderdale, Fla. Murphy and Chaisson were charged with participating in different conspiracies with co-conspirators to defraud Ryan by making kickback payments to a procurement official at Ryan in exchange for the official awarding their respective companies business. Ryan provides air passenger and cargo services for corporations, private individuals, professional sports teams and the U.S. government, including the U.S. Department of Defense, the U.S. Department of Homeland Security and the U.S. Marshals Service.
According to court documents, from as early as October 2005 through at least September 2008, Murphy participated in a conspiracy in which Murphy paid more than $130,000 in kickbacks to a Ryan official responsible for procuring jet fuel for Ryan flights in exchange for the Ryan official providing aviation fuel contracts to Murphy’s company, and to two other aviation fuel supply companies where Murphy worked as a corporate bookkeeper.
In a separate conspiracy, according to court documents, from as early as January 2005 through at least July 2008, Chaisson paid the same Ryan official more than $60,000 in kickbacks, including payments based on fabricated invoices submitted by Chaisson’s company to Ryan. Chaisson’s company was responsible for managing the ground operations for Ryan flights.
Both Murphy and Chaisson are charged with one count of conspiracy to commit wire fraud and honest services fraud, as well as one substantive count of wire fraud. Each count carries a maximum sentence of 20 years in prison and a $250,000 criminal fine for individuals. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either amount is greater than the statutory maximum fine.
The investigation is being conducted by the Antitrust Division’s Atlanta Field Office and the National Criminal Enforcement Section and the U.S. Department of Defense’s Office of Inspector General, with assistance from the U.S. Attorney’s Office in Fort Lauderdale. Anyone with information concerning anticompetitive conduct in the airline charter services industry is urged to call the Antitrust Division’s Atlanta Field Office at 404-331-7100 or visit www.justice.gov/atr/contact/newcase.htm .
Former NASDAQ Managing Director Sentenced to 42 Months in Prison for Insider TradingRead the Press Release
WASHINGTON – Donald Johnson, a former managing director of the NASDAQ Stock Market, was sentenced today to 42 months in prison for engaging in insider trading on multiple occasions based on material, non-public information he obtained in his capacity as a NASDAQ executive. Johnson was also ordered to forfeit $755,066.
The sentence was announced today by Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney for the Eastern District of Virginia Neil H. MacBride.
Johnson, 57, of Ashburn, Va., was sentenced by U.S. District Judge Anthony J. Trenga in the Eastern District of Virginia. Johnson pleaded guilty on May 26, 2011, to one count of securities fraud. In pleading guilty, he admitted that, from 2006 to 2009, he purchased and sold stock in NASDAQ-listed companies based on material, non-public information, or inside information, that he obtained through his position as an executive at NASDAQ.
“Mr. Johnson’s insider status at one of our nation’s largest securities exchanges gave him access to highly sensitive information, which allowed him to anticipate the rise and fall of certain stocks,” said Assistant Attorney General Breuer. “Armed with this insider information, Mr. Johnson made investing look easy. He pocketed hundreds of thousands of dollars. But he did it by exploiting his trusted position to gain an unfair – and illegal – advantage in the market. Today’s sentence should leave no doubt in the minds of investors inclined to cheat that insider trading is a serious crime, with serious consequences.”
“Insider trading is an insidious crime that threatens the integrity of our financial markets, especially when the illegal trades are made by a trusted securities exchange official,” said U.S. Attorney MacBride. “Mr. Johnson used his position at NASDAQ to make quick profits from sensitive information companies provided him. He learned what every other trader on Wall Street must now realize: We’re watching, and when you’re caught you’ll face serious time in prison.”
According to court documents, from August 2006 to September 2009, Johnson was a managing director on NASDAQ’s market intelligence desk in New York. The market intelligence desk provides trading analysis and market information to the companies that list on NASDAQ. According to court documents, Johnson monitored the stock of companies traded on NASDAQ and offered NASDAQ-listed companies information and analyses concerning trading in their own stock. To enable him to perform these services, NASDAQ-listed companies routinely entrusted Johnson with material, non-public information about their company, including advance notice of announcements concerning earnings, regulatory approvals and personnel changes. Johnson admitted that he repeatedly used this information to purchase or sell short stock in various NASDAQ-listed companies shortly before the information was made public. He would then generate substantial gains by reversing those positions soon after the announcement. According to court documents, in order to conceal his illegal trading, Johnson executed these trades in a brokerage account in his wife’s name. Johnson failed to disclose this account to NASDAQ in violation of NASDAQ rules.
Johnson admitted in his plea that he made illegal purchases and sales of stock in NASDAQ-listed companies on at least eight different occasions. In addition, at sentencing, Johnson did not dispute that he engaged in insider trading on a ninth occasion, and the court ordered forfeiture based on proceeds from all nine instances. The companies whose securities he traded were Central Garden and Pet Co.; Digene Corporation; Energy Conversion Devices, Inc.; Idexx Laboratories Inc.; Pharmaceutical Product Development Inc.; and United Therapeutics Corporation. According to court documents, Johnson traded ahead of important announcements by these companies. For example, in November 2007, Johnson used inside information related to successful trial results for United Therapeutics’ drug Viveta (now called Tyvaso) to purchase shares of United Therapeutics before the trial results were announced. Soon after the announcement, Johnson sold the shares and gained more than $175,000 in profits. According to court documents, in July 2009, Johnson again improperly used inside information he obtained from United Therapeutics about the approval of its drug Tyvaso to purchase the company’s shares before the approval was announced. He sold the shares after the announcement and gained more than $110,000 in profits.
The Securities and Exchange Commission (SEC) has filed a related civil enforcement action against Johnson in the Southern District of New York.
This case is being prosecuted by Trial Attorney Justin Goodyear of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Raymond E. Patricco Jr., of the Eastern District of Virginia. The department recognizes the substantial assistance of the SEC, which conducted its own investigation and referred the conduct to the department. The department also recognizes the substantial assistance of the U.S. Postal Inspection Service, which conducted the criminal investigation. The Financial Industry Regulatory Authority also provided assistance. Brigham Cannon, formerly a Trial Attorney of the Criminal Division, also assisted with the investigation.
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 Member of Virginia House of Delegates<br /> Sentenced to 114 Months in Prison for Bribery and ExtortionRead the Press Release
WASHINGTON – Phillip A. Hamilton, a former member of the Virginia House of Delegates, was sentenced today to 114 months in prison after he was previously convicted of soliciting employees of Old Dominion University (ODU) for a paid position in exchange for introducing a budget amendment to fund the position, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Neil H. MacBride for the Eastern District of Virginia.
“Phillip Hamilton traded on his influence in one of the oldest legislative bodies in the United States for a paid position at Old Dominion University, netting himself approximately $80,000 over two years,” said Assistant Attorney General Breuer. “Today he learned that betraying the trust of Virginia’s citizens and his fellow legislators has a much higher price. For his acts of bribery and extortion, he will now spend 114 months in prison – an example to public officials and the electorate that the Justice Department will vigorously pursue those who abuse their public office. The Criminal Division’s Public Integrity Section and our partners in the U.S. Attorneys’ Offices are committed to rooting out self-dealing by public officials and holding them accountable when they misuse their positions for personal gain.”
“Today is a sad day in the history of the Commonwealth,” said U.S. Attorney MacBride. “Phil Hamilton used his powerful influence as a 20-year state legislator to extort officials at ODU and became the first elected legislator in Virginia to be convicted of selling his position for personal gain. We hope his conviction and sentence will serve as a reminder to every elected official in the Commonwealth that they must uphold the public’s trust or face similar consequences.”
U.S. District Judge Henry E. Hudson also ordered Hamilton, 59, to serve two years of supervised release following his prison term and directed him to self surrender to authorities on or before Sept. 19, 2011. Hamilton was convicted by a jury in Richmond, Va., on May 11, 2011, of one count of federal program bribery and one count of extortion under color of official right.
Hamilton was elected in 1988 to represent the 93rd District in the Virginia House of Delegates, which includes Newport News and James City County, Va. As part of his duties, Hamilton sat on the Elementary & Secondary Education Subcommittee of the Virginia House Appropriations Committee.
According to the Jan. 5, 2011, indictment and evidence presented at trial, from August 2006 through February 2007, Hamilton solicited employees of ODU for a position as director for the ODU Center for Teacher Quality and Educational Leadership. The center’s objective was to train teachers for success in urban school environments. During this period, Hamilton simultaneously introduced a budget amendment that would establish and fund the center, including his salary as the director.
According to an email that Hamilton sent to an ODU official on Dec. 21, 2006, which was admitted as evidence at trial, Hamilton stated that the current budget did not include any funding for the center, his retirement payments from another source were being reduced in May 2007, and he would need to supplement his current income. Evidence at trial showed that an ODU official assured Hamilton in December 2006 and January 2007 that if ODU obtained funding from the Virginia General Assembly for the creation of the center, then Hamilton would have a job at the center. During this same period, in January 2007, Hamilton introduced a budget amendment in the House of Delegates to appropriate $1 million in fiscal year 2007-2008 (July 1, 2007 – June 30, 2008) for a “Center for Teacher Quality and Educational Leadership.” The amendment passed the full committee unanimously.
On Feb. 24, 2007, after a conference between the Virginia house and senate that resulted in an amendment to appropriate $500,000 to ODU for the center – for which Hamilton voted in favor - the budget bill was passed. The next day, according to evidence at trial, Hamilton and ODU officials exchanged emails about Hamilton receiving the director job. Approximately three people applied in response to a job posting for the position; however, none of them were interviewed. Hamilton, who was awarded the job, never submitted an application.
In June 2007, Hamilton and an ODU official signed an employee contract indicating, among other things, that Hamilton would direct the center and seek continual funding for the center. The contract also stated that Hamilton would be paid $40,000 per year. From approximately July 2007 through July 2009, Hamilton collected approximately $80,000 from ODU.
Evidence at trial showed that Hamilton took numerous steps to conceal this arrangement, including telling ODU officials not to mention his name in connection with the center to members of the Virginia Senate Finance Committee; advising an ODU official to tell a Virginia senate staffer that the official, and not Hamilton, was the director of the center; and unsuccessfully attempting to persuade ODU leadership not to release incriminating emails in response to a Freedom of Information Act request that ODU had received.
The case was prosecuted by Trial Attorney David V. Harbach II of the Criminal Division’s Public Integrity Section and Supervisory Assistant U.S. Attorney Robert J. Seidel Jr. of the Eastern District of Virginia. The case was investigated by the FBI.
Former Illinois Firefighter Sentenced to 30 Years in Prison<br /> for Child Exploitation ChargesRead the Press Release
WASHINGTON – A former Rochester, Ill., firefighter was sentenced today to 30 years in prison and lifetime supervised release for child exploitation charges, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney for the Central District of Illinois James A. Lewis.
Justin D. Weaver, 27, was sentenced by U.S. District Judge Richard Mills in the Central District of Illinois. Weaver pleaded guilty on Jan. 27, 2011, to one count of production of child pornography, one count of possession of child pornography and one count of destruction of evidence. At his plea hearing, Weaver admitted to molesting a child under the age of 12 and producing child pornography of that molestation.
Weaver is also required to register as a sex offender in accordance with state and federal law.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
The case was prosecuted by Assistant U.S. Attorney Elly Peirson of the Central District of Illinois and Trial Attorney Mi Yung Park of the Criminal Division’s CEOS. The case was investigated by the U.S. Immigration and Customs Enforcement; the Springfield, Ill., Police Department; the Adams County, Ill., Sheriff’s Department; and CEOS’s High Technology Investigative Unit.
Federal Court Shuts Down Chicago-Area Tax Return PreparerRead the Press Release
WASHINGTON – A federal court has permanently barred a woman and her suburban Chicago business from preparing federal tax returns for others, the Justice Department announced today. In the civil injunction order, issued by Judge William J. Hibbler of the U.S. District Court for the Northern District of Illinois, the court found that LaShawn Littrice and her South Holland, Ill., business, Diamond Accounting & Financial Services, falsified and manufactured expenses and deductions, and made false claims for the earned income tax credit on their customers’ tax returns. The court also found that Littrice filed returns using another return preparer’s identification number without that preparer’s knowledge.
According to the court order, an Internal Revenue Service (IRS) examination of 718 tax returns prepared by Littrice and Diamond Accounting found tax deficiencies on all but 20 of those returns. In papers filed with the court, the government estimated tax losses of nearly $12 million from the defendants’ misconduct.
The court also noted that in June 2010, Littrice was convicted of 14 counts of willfully aiding or assisting in preparing and presenting false and fraudulent tax returns and was sentenced to 42 months in prison.
The IRS has listed return preparer fraud as one of its “Dirty Dozen” tax scams for 2011. In the past decade, the Justice Department’s Tax Division has obtained hundreds of injunctions to stop the promotion of tax fraud schemes and the preparation of fraudulent tax returns. Information about these cases is available on the Justice Department website .
11 August 2011
Virginia Woman Pleads Guilty in Relation to Staged Kidnapping in GuatemalaRead the Press Release
WASHINGTON – A Virginia woman pleaded guilty today in relation to a staged kidnapping in Guatemala, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney Neil H. MacBride for the Eastern District of Virginia and John V. Gillies, Special Agent in Charge of the FBI Miami Division.
Sheena Flores, 34, of Manassas, Va., pleaded guilty before U.S. District Judge Gerald Bruce Lee to one count of transmitting in foreign commerce, with intent to extort money, a communication containing a threat to injure another person. At sentencing, scheduled for Oct. 21, 2011, Flores faces a maximum sentence of 20 years in prison.
According to court documents, in July 2010, Flores was living in Guatemala with a child under the age of two who was born in Guatemala. On July 6, 2010, from Guatemala, Flores contacted a family member in Manassas by telephone and reported that she and the child had been kidnapped by three men and that the men said that they wanted $5,000 in two hours or they were going to kill Flores and the child. Later that day, a family member of Flores in Manassas received numerous text messages from Flores’ cellular telephone in Guatemala threatening to kill Flores and the child if family members did not pay $10,000 in ransom by the next day. Believing that Flores and the child had in fact been kidnapped, a family member wired $3,000 from the Eastern District of Virginia to Guatemala. At the time that Flores reported the kidnapping and the ransom demands, Flores knew that she and the child had not been kidnapped and was simply attempting to extort money from her family.
The case is being prosecuted by Assistant U.S. Attorney Rebeca H. Bellows for the Eastern District of Virginia and Trial Attorney James S. Yoon of the Criminal Division’s Human Rights and Special Prosecutions Section. The Criminal Division’s Office of International Affairs provided assistance. The case is being investigated by the FBI’s Miami Division Extraterritorial Squad.
Three Men Charged in Louisiana for Civil Rights ViolationsRead the Press Release
WASHINGTON - The Justice Department today announced that three men were charged for their role in intentionally attempting to intimidate and interfere with African-American students who were attending Beekman Junior High School in Beekman, Morehouse Parish, La.
According to the bill of information filed in the District Court for the Western District of Louisiana, on or about Nov. 6, 2007, Brian Wallis, James Lee Wallis Jr. and Tony L. Johnson, acting together, tied a noose around a dead raccoon’s neck and hung it from the flagpole located in front of Beekman Junior High School. The bill of information further alleges that the three men hung the raccoon in the noose to intimidate and interfere with the African-American students because of their race and color and because they were attending Beekman Junior High School, which is a public school.
Johnson, Brian Wallis and James Lee Wallis Jr. face a maximum penalty of one year in jail.
On Sept. 24, 2010, a federal grand jury returned an indictment against Christopher Shane Montgomery, who initially claimed responsibility for the act, in connection with this incident. Based upon additional information developed during the course of this investigation, the charges against Montgomery have been dismissed.
This case was investigated by the FBI and is being prosecuted by Senior Litigation Counsel Mark Blumberg and Trial Attorney Christine M. Siscaretti of the Justice Department’s Civil Rights Division, and Assistant U.S. Attorney Mary J. Mudrick of the U.S. Attorney’s Office for the Western District of Louisiana, Shreveport Office.
A bill of information is merely an accusation, and the defendants are presumed innocent unless proven guilty.
The City of Newport, R.I., Will Upgrade Facilities and Pay Fine to Settle Clean Water ViolationsRead the Press Release
WASHINGTON – Under the terms of a settlement filed today in federal court, the city of Newport has agreed to eliminate illegal discharges of sewage into Narragansett Bay from its wastewater treatment plant and wastewater collection system. The city has also agreed to take actions to reduce the pollutants associated with storm sewer discharges to Easton’s Beach; purchase and distribute rain barrels to residents in order to capture stormwater for reuse; and take other actions to encourage low impact development.
The U.S. Environmental Protection Agency (EPA) estimates that Newport will spend about $25 million to address these issues. The city will also pay a $170,000 penalty to be split between the federal and state governments.
The settlement is the result of a federal and state enforcement action brought by the U.S. Department of Justice, on behalf EPA, the State of Rhode Island through the Rhode Island Department of Environmental Management, and the National Environmental Law Center on behalf of Environment Rhode Island and certain Rhode Island citizens. The consent decree alleged that Newport violated the federal Clean Water Act, including illegal discharges of sewage and stormwater containing bacteria and other pollutants that pose threats to human health and the environment.
Under this consent decree, Newport is required to develop a comprehensive, system wide plan to address discharge violations at its wastewater treatment plant and eliminate overflows from its wet weather sewage treatment facilities at Wellington Avenue and Washington Street and from other points in its collection system. Planned actions include identifying and removing extraneous sources of water from its collection system by eliminating stormwater connections and repairing or replacing leaky pipes. The city will also take measures to reduce the levels of bacteria in discharges from its storm sewer system to Easton’s Beach.
“Today’s agreement will help eliminate harmful overflows of sewage and stormwater by requiring comprehensive improvements to Newport’s aging sewer system – improvements that are required in order to bring the city into compliance with the Clean Water Act,” said Ignacia S. Moreno, Assistant Attorney General of the Justice Department’s Environment and Natural Resources Division. “Today, Newport joins a growing list of cities across the country that have met the challenge of upgrading their systems, and in doing so are improving public health and the environment for their residents.”
While negotiating this agreement, the city has been taking corrective action and working cooperatively with all federal, state and environmental parties involved.
“EPA expects all municipalities to pay attention to critical elements of their wastewater infrastructure,” said Curt Spalding, regional administrator of EPA’s New England office. “Maintaining these municipal assets reduces the risk of service disruptions, the environmental and economic impacts associated with untreated sewage discharges and avoids the potentially higher costs to repair or replace them when they fail. This settlement will ultimately result in significant improvements to water quality and create a cleaner and healthier environment for the Newport community.”
“Newport’s waters are treasured by all Rhode Islanders – they are vital to our ecology, economy, and quality of life,” said John Rumpler, senior attorney for Environment Rhode Island. “The city’s decision to take responsibility for ending its pollution will be appreciated for generations to come.”
The consent decree, filed in the U.S. District Court for the District of Rhode Island, is subject to a 30-day public comment period and approval by the federal court. Once it is published in the Federal Register, a copy of the consent decree will be available on the Justice Department Web site at www.justice.gov/enrd/Consent_Decrees.html .
EPA’s work enforcing the Clean Water Act in New England: www.epa.gov/region1/enforcement/water/index.html .
Mansfield, Texas, Man Admits to Theft of Government Property and Aggravated Identity TheftRead the Press Release
WASHINGTON – Thomas W. Richardson of Mansfield, Texas, pleaded guilty to one count of theft of government property and one count of aggravated identity theft before the Honorable Jane J. Boyle in Dallas, the Department of Justice and Internal Revenue Service (IRS) announced today.
Richardson admitted that within a two day period from April 15, 2006, to April 17, 2006, he filed or caused to be filed 29 fraudulent 2005 IRS Forms 1040, U.S. Individual Income Tax Returns, according to the written statement filed by Richardson. Each federal income tax return claimed a refund of between $215,801 and $473,832. Richardson admitted that the refunds claimed by all 29 tax returns totaled $7,922,657. Richardson further admitted that each tax return was filed claiming the married filing jointly election and listed two taxpayers, husband and wife. In each case the Social Security numbers reported on the tax returns were assigned to individuals and in most cases, the names on the tax returns matched the names of the individuals to whom the Social Security numbers were assigned. Richardson admitted that the tax returns were prepared without the authorization of the 58 taxpayers listed on the tax returns. All of the returns directed that the IRS pay the money to one of Richardson’s bank accounts. According to Richardson’s statement, the IRS paid out seven refunds for a total $1,865,401 between May 12, 2006 and May 19, 2006. All but $31,149 was recouped by the IRS.
Sentencing has been set for Dec. 1, 2011, and Richardson remains free on bail pending sentencing. Richardson faces a sentence of up to 12 years in prison, and a fine of $250,000.
James Jacks, U.S. Attorney for the Northern District of Texas, and John A. DiCicco, Principal Deputy Assistant Attorney General for the Justice Department’s Tax Division, commended the efforts of the IRS-Criminal Investigation agents who investigated the case and Tax Division Trial Attorneys Robert A. Kemins and Jed Silversmith, as well as Assistant U.S. Attorney Joe Revesz, who are prosecuting the case.
More information about the Tax Division and its enforcement efforts can be found at www.justice.gov/tax.
Former Russell County, Ala., Sheriff Deputy Pleads Guilty to Civil Rights Charge for Assaulting a Handcuffed ManRead the Press Release
WASHINGTON – The Justice Department announced today that Kirby Dollar, 37, a former detective with the Russell County Sheriff’s Office, pleaded guilty in federal court in Montgomery, Ala., for his role in the assault of a handcuffed man.
According to the information presented in court, on Nov. 26, 2010, Dollar participated in the assault of a man who w as in custody. At the time, the victim was handcuffed, lying on the ground and not resisting. The victim suffered serious bodily injury.
“Law enforcement officers are granted a great amount of power to carry out their critical public safety responsibilities. They cannot be allowed to abuse that power to violate the rights of individuals in their custody,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Justice Department will vigorously prosecute those who cross the line to engage in acts of criminal misconduct.”
“This office will aggressively prosecute those who use their law enforcement powers to violate the civil rights of others while in their custody. I applaud the FBI and Alabama Bureau of Investigation for their prompt and thorough investigation of this matter,” said George L. Beck Jr., U.S. Attorney for the Middle District of Alabama.
“The FBI’s resources will always be devoted to ensure that civil rights protections are afforded to all citizens, said Lewis M. Chapman, Special Agent in Charge of the FBI’s Mobile, Ala., Field Office. “The public must have trust in those who enforce the law.”
Under the terms of the plea agreement, Dollar faces a maximum sentence of 57 months in prison.
The trial against Dollar’s co-defendant, Timothy Watford, is scheduled to begin on Aug. 22, 2011 . Watford is presumed innocent until proven guilty.
The case was investigated by the Mobile Division of the FBI and the Alabama Bureau of Investigation and is being prosecuted by Assistant U.S. Attorneys Nathan D. Stump and Jared H. Morris of the Middle District of Alabama, and Trial Attorney Benjamin J. Hawk of the Civil Rights Division.
10 August 2011
U.S. Marine Corps Gunnery Sergeant from South Carolina Pleads Guilty for Role in Scheme to Steal Military Equipment in IraqRead the Press Release
WASHINGTON – A U.S. Marine Corps (USMC) gunnery sergeant pleaded guilty today to conspiring to steal more than 70 electrical generators from two USMC bases in Iraq in 2008, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Bill Nettles for the District of South Carolina.
Eric Scott Hamilton, 40, of Pelzer, S.C., pleaded guilty before U.S. District Judge J. Michelle Childs in the District of South Carolina to a criminal information charging him with two counts of conspiracy to steal public property.
According to court documents, Hamilton was stationed from May to September 2008 at Camp Fallujah, Iraq, where he was in charge of a military storage yard containing electrical generators and other equipment for use by USMC units in Iraq. Hamilton admitted that while he was stationed at Camp Fallujah, he entered into a scheme with a USMC officer to facilitate the theft of electrical generators from the base by private Iraqi contractors. Hamilton admitted that he identified the generators to be stolen, painted markings on them to designate them for theft by Iraqi contractors, and facilitated access to the storage yard by the contractors’ trucks to load and remove the generators. Hamilton also entered into a separate scheme with a private Iraqi contractor to facilitate that contractor’s theft of electrical generators from the base. Both of these theft schemes continued after the USMC closed Camp Fallujah in approximately October 2008 and relocated personnel there to Camp Ramadi, Iraq. According to court documents, Hamilton was assigned at Camp Ramadi from October to December 2008.
In pleading guilty, Hamilton admitted that he received more than $124,000 in payments from the USMC officer and the Iraqi contractor in return for facilitating the theft of more than 70 generators from Camps Fallujah and Ramadi. Hamilton received the funds through cash payments in Iraq, checks issued to Hamilton’s wife in the United States by the USMC officer’s wife, and wire transfer payments to a bank account in the United States. Hamilton sent home approximately $43,000 of the cash he received from the thefts at Camp Fallujah by concealing it among American flags contained in foot lockers that he mailed from Iraq to his wife. The investigation into this case continues.
At sentencing, Hamilton faces maximum penalties of five years in prison, a $250,000 fine and three years of supervised release following a prison term. As part of his guilty plea, Hamilton has agreed to pay $124,944 in restitution to the United States. A sentencing date has not yet been set by the court.
This case is being prosecuted by Special Trial Attorney David H. Laufman of the Criminal Division’s Fraud Section, on detail from the Special Inspector General for Iraq Reconstruction (SIGIR), and by Assistant U.S. Attorney William C. Lucius from the U.S. Attorney’s Office for the District of South Carolina. The case is being investigated by SIGIR and the Defense Criminal Investigative Service.
Los Angeles Jury Convicts Two Church Pastors and Their Employee of $14.2 Million Medicare Fraud SchemeRead the Press Release
WASHINGTON – Two pastors of a now defunct Los Angeles church and a woman they employed at their fraudulent durable medical equipment (DME) supply companies were convicted late yesterday of conspiracy and health care fraud charges in connection with a $14.2 million Medicare fraud scheme, announced the Departments of Justice and Health and Human Services (HHS).
After a two-week trial in federal court in Los Angeles, a jury found Christopher Iruke, 60; his wife, Connie Ikpoh, 49; and Aura Marroquin, 30, guilty of multiple charges. Iruke was found guilty of one count of conspiracy to commit health care fraud and 17 counts of health care fraud. Ikpoh and Marroquin were each found guilty of one count of conspiracy to commit health care fraud and four counts of health care fraud. Marroquin was found not guilty of one count of health care fraud. According to evidence presented at trial, Iruke, Ikpoh and Marroquin billed Medicare for power wheelchairs, orthotics and other DME that were not medically necessary or never provided.
“Mr. Iruke and his wife were persistent and brazen in their efforts to steal millions from the Medicare program,” said Assistant Attorney General Lanny A. Breuer of the Criminal Division. “They opened four different companies to perpetrate their fraud, recruited parishioners from their church and others to help carry it out, and then used the spoils to buy fancy cars and other luxuries. In short, they treated the Medicare program like a personal till. Yesterday, a jury in Los Angeles struck back, and now Mr. Iruke and his co-conspirators will find out the true cost of their shameful scheme.”
“This verdict sends a strong message of deterrence to all engaged in schemes to defraud Medicare,” said U.S. Attorney André Birotte Jr. for the Central District of California. “My office has worked closely with the Justice Department’s Medicare Fraud Strike Force to crack down on such crimes. We will continue to vigorously prosecute these cases in the future and we look forward to our continued partnership with the Strike Force in that effort.”
“Pastors Christopher Iruke and Connie Ikpoh abused their positions of trust and persuaded those who blindly trusted in them to steal millions of dollars from taxpayers and Medicare,” said Glenn R. Ferry, the Los Angeles Region’s Special Agent in Charge for the Office of Inspector General (OIG) of HHS. “These verdicts show yet again that Iruke, Ikpoh, and others like them, can count on being aggressively pursued and brought to justice.”
“These convictions will undoubtedly deter others from planning to abuse government programs created to help elderly and disabled Americans,” said Steven Martinez, Assistant Director in Charge of the FBI in Los Angeles. “The FBI is committed to continuing to identify individuals using small business as a front for a criminal enterprise at the expense of our health care system.”
According to evidence introduced at trial, Iruke and Ikpoh were pastors at Arms of Grace Christian Center, a church that operated from 5700 Crenshaw Boulevard in Los Angeles, where Iruke and Ikpoh also operated Pascon Medical Supply, a fraudulent DME supply company. Iruke and Ikpoh hired several of their parishioners at Arms of Grace to assist them in running Pascon and another fraudulent DME supply company, Horizon Medical Equipment and Supply Inc. Horizon was owned by Ikpoh, who also worked as a nurse at two Los Angeles-area hospitals.
According to evidence presented at trial, Iruke, Ikpoh, Marroquin and their co-conspirators used fraudulent prescriptions and documents that Iruke purchased from a number of illicit sources to bill Medicare for expensive, high-end power wheelchairs and orthotics that were medically unnecessary or never provided. These power wheelchairs cost approximately $900 per wheelchair wholesale, but were billed to Medicare at a rate of approximately $6,000 per wheelchair.
Evidence introduced at trial established that when it appeared to Iruke that he would have to close Pascon due to an audit by Medicare, Iruke convinced his sister, Jummal Joy Ibrahim, and a member of Arms of Grace, Asia Fowler, to allow him to use their names and identities to open two new fraudulent DME supply companies. These companies, Contempo Medical Equipment Inc. and Ladera Medical Equipment Inc., also operated from Los Angeles. After Pascon and Horizon closed, Iruke, Ikpoh, Marroquin and their co-conspirators continued to operate the fraud scheme from Contempo and Ladera.
Witnesses who sold fraudulent prescriptions and documents to Iruke testified that they and others paid cash kickbacks to street-level marketers to offer Medicare beneficiaries free power wheelchairs and other DME in exchange for the beneficiaries’ Medicare card numbers and personal information. These witnesses testified that they and their associates used this information to create fraudulent prescriptions and medical documents which they sold to Iruke and the operators of other fraudulent DME supply companies for $1,100 to $1,500 per prescription. One witness testified that Iruke was nicknamed the “Trash Man” because he purchased fraudulent prescriptions in bulk and took prescriptions that other DME supply company operators did not want, including prescriptions for beneficiaries who lived outside of Los Angeles. In some instances, Iruke and his co-conspirators used the Medicare card numbers and identities of beneficiaries who were dead to bill Medicare for DME.
Trial testimony established that Iruke took extensive efforts to conceal the fraud scheme and his involvement with the companies. One witness who worked at the companies testified that Iruke directed her and Marroquin to refer to the fraudulent prescriptions and documents he purchased as “donuts” or “jobs” because Iruke feared law enforcement was listening to their conversations. This witness also testified that Iruke directed her and Marroquin to lie to state and Medicare inspectors about his involvement with Contempo and Ladera when the inspectors visited the companies. Evidence introduced at trial established that during an August 2009 interview with federal law enforcement agents at Ladera, Marroquin lied repeatedly about how Ladera obtained business and Iruke’s involvement with the company.
Witness testimony established that shortly after agents visited Ladera, Iruke called a meeting at a park, and directed Marroquin and Darawn Vasquez, a member of Arms of Grace who worked at the supply companies, not to talk to law enforcement. Iruke provided Marroquin and Vasquez with cellular telephones, and directed them to use the phones in order to prevent law enforcement from intercepting their conversations. After this meeting, Iruke and Vasquez met at Arms of Grace, and shredded evidence of the fraud scheme. When the shredder overheated, Iruke and Vasquez flushed the evidence down the toilet.
Witness testimony and evidence introduced at trial also established that within a few weeks of the agents visiting Ladera, Iruke closed Contempo and Ladera, which prompted agents to serve Iruke and his attorneys with subpoenas for the files of the companies. Instead of producing the files, Iruke directed that the files be brought to an auditorium used by Arms of Grace, where Iruke, Ikpoh, Marroquin and others altered and destroyed documents within the files to remove evidence of the fraud scheme. Law enforcement agents found Marroquin with these files when they arrested her.
Evidence introduced at trial showed that as a result of this fraud scheme, Iruke, Ikpoh, Marroquin and their co-conspirators submitted more than $14.2 million in fraudulent claims to Medicare, and received approximately $6.6 million in reimbursement payments from Medicare. The evidence at trial showed that Iruke and Ikpoh diverted most of this money from the bank accounts of the supply companies to pay for the fraudulent prescriptions and documents which Iruke purchased to further the scheme, and to cover the leases on their Mercedes vehicles, home remodeling expenses and other personal expenses.
Iruke, Ikpoh and Marroquin were originally charged with Ibrahim, Vasquez and Fowler in an October 2009 indictment. Vasquez and Ibrahim pleaded guilty to conspiracy and false statement charges in February 2011 and March 2011, respectively, and are awaiting sentencing. The charges against Fowler were dismissed during trial.
U.S. District Court Judge Terry J. Hatter scheduled sentencing for Iruke, Ikpoh and Marroquin for Nov. 14, 2011. The maximum penalty for each conspiracy count and each fraud count is 10 years in prison.
The guilty verdicts were announced by Assistant Attorney General Breuer of the Criminal Division; U.S. Attorney Birotte for the Central District of California; Tony Sidley, Assistant Chief of the California Department of Justice, Bureau of Medi-Cal Fraud and Elder Abuse; Special Agent-in-Charge Ferry of the Los Angeles Region HHS-OIG; and Assistant Director Martinez in Charge of the FBI’s Los Angeles Field Office.
The case was prosecuted by Trial Attorney Jonathan Baum of the Criminal Division’s Fraud Section and Assistant U.S. Attorney David Kirman of the Central District of California. The case was investigated by HHS-OIG with assistance from the California Department of Justice. The case was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Central District of California.
Since their inception in March 2007, Strike Force operations in nine locations have charged more than 1,000 defendants who collectively have falsely billed the Medicare program for more than $2.3 billion. In addition, HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov .