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10 August 2011
Justice Department Settles Allegations of Immigration-Related Employment Discrimination Against Summit Steel Fabricators in HoustonRead the Press Release
WASHINGTON – The Justice Department today reached a settlement agreement with Summit Steel Fabricators Inc. in Houston resolving allegations that the company engaged in a pattern or practice of discrimination against non-citizens in the employment eligibility verification process. According to the department’s findings, the company had a policy of requiring newly hired workers who are not U.S. citizens to present specific documentation, such as a permanent resident card or resident alien card, even if they had already presented other documents sufficient to establish their employment eligibility under federal law. U.S. citizens, by contrast, were not required to present any specific documents.
Under the terms of the settlement agreement, Summit Steel will alter its practices to ensure that citizens and non-citizens are treated equally in the employment eligibility verification process, and pay a civil penalty of $15,400. Summit Steel has also agreed to train its human resources personnel about employers’ responsibilities to avoid discrimination in the employment eligibility verification process, to produce Forms I-9 for inspection, and to provide periodic reports to the Department for three years.
“Employers have a responsibility to conduct the employment eligibility verification process in a non-discriminatory manner, and all workers have the right to look for work without facing discrimination based on their citizenship status,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “We are pleased to have reached a settlement in this matter, and we look forward to continuing to work with all employers to educate them about their obligations under federal law.”
The Civil Rights Division’s Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC) is responsible for enforcing the anti-discrimination provision of the INA, which protects work-authorized individuals against discrimination in hiring, firing and recruitment or referral for a fee on the basis of citizenship status and national origin. The INA also protects all work-authorized individuals from discrimination in the employment eligibility verification process and from retaliation.
For more information about protections against employment discrimination under federal immigration law, call OSC’s worker hotline at 1-800-255-7688 (1-800-237-2515, TDD for hearing impaired), OSC’s employer hotline at 1-800-255-8155 (1-800-237-2515, TDD for hearing impaired), or 202-616-5594; e-mail [email protected]; or visit OSC’s website at www.justice.gov/crt/about/osc.
Former TSA Employee Pleads Guilty to Federal Hate Crime for Assaulting Elderly Somali ManRead the Press Release
WASHINGTON – George Thompson, 64, a former employee of the Transportation Security Administration in Minneapolis, pleaded guilty today in federal court to violating the Matthew Shepard and James Byrd Jr. Hate Crimes Prevention Act by assaulting an 83-year-old Somali man on May 4, 2010, the Department of Justice announced today.
According to information presented during the plea hearing, Thompson targeted the elderly man because he had a red beard, which caused Thompson to believe that the victim was a Muslim and an African immigrant. Thompson admitted that he assaulted the man solely because the victim was Muslim and Somali. During the assault, Thompson yelled that the victim should go back to Africa.
“ As this successful prosecution makes clear, acts of violence targeted at individuals because of their race or religion will not be permitted in the United States, and will be prosecuted to the fullest extent of the law,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The department will continue to vigorously enforce the Matthew Shepard and James Byrd Jr. Hate Crimes Prevention Act, and all the laws under our jurisdiction, to protect the rights of all individuals.”
“Physical violence motivated by racial or religious hatred exacerbate fear and tear at the fabric of our society,” said B. Todd Jones, U.S. Attorney for the District of Minnesota. “When warranted by the facts and circumstances, we will vigorously prosecute these crimes, which are violations of federal law. Here in Minnesota we have vibrant and diverse communities and should be celebrating that fact, not assaulting people because of it.”
Thompson faces a maximum sentence of 10 years in prison for this crime.
This case was investigated by the Office of Inspector General at the Department of Homeland Security. The case was prosecuted by Assistant U.S. Attorney Ann M. Anaya and Trial Attorney Nicole Lee Ndumele of the Civil Rights Division.
Brooklyn Man Pleads Guilty to Online Identity Theft Involving More Than $700,000 in Reported FraudRead the Press Release
WASHINGTON – A Brooklyn, N.Y., man pleaded guilty today in U.S. District Court in Alexandria, Va., for his role in managing a credit card fraud operation that operated throughout the East Coast of the United States, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Neil H. MacBride of the Eastern District of Virginia.
Jonathan Oliveras, 26, pleaded guilty before U.S. District Judge Gerald Bruce Lee in the Eastern District of Virginia to a two-count criminal information charging him with wire fraud and aggravated identity theft. Oliveras admitted to managing a scheme to purchase stolen credit card account information through the Internet from individuals believed to be in Russia. Oliveras also admitted to distributing the purchased information to individuals in the New York, New Jersey and Washington, D.C., metropolitan areas so that it could be used to make fraudulent purchases.
In pleading guilty, Oliveras admitted to illegally possessing information from 2,341 stolen credit card accounts as well as equipment to put that information onto counterfeit credit cards. According to information presented in court, companies have reported to the government more than 4,400 fraudulent charges totaling $770,674 on accounts illegally possessed by Oliveras. Oliveras also possessed 409 gift, debit or credit cards used as part of the scheme, which had a total stored value of $42,688.
Sentencing for Oliveras is scheduled Oct. 28, 2011, at 9:00 a.m. EDT. He faces a maximum penalty of 20 years in prison and a fine of $1,541,349 on the wire fraud charge, and two years in prison and a $250,000 fine on the identity theft charge.
The case is being prosecuted by Michael Stawasz, a Senior Counsel in the Criminal Division’s Computer Crime & Intellectual Property Section and Special Assistant U.S. Attorney in the Eastern District of Virginia, and Assistant U.S. Attorney Ryan Dickey of the U.S. Attorney’s Office for the Eastern District of Virginia. The case was investigated jointly by the Washington Field Offices of both the U.S. Secret Service and the FBI, with assistance from the New York and New Jersey Field Offices of both agencies .
9 August 2011
Pennsylvania Man Pleads Guilty to Terrorist Solicitation and Firearms OffenseRead the Press Release
WASHINGTON – Emerson Winfield Begolly, 22, of New Bethlehem, Pa., pleaded guilty today in Pittsburgh to soliciting others to engage in acts of terrorism within the United States and to using a firearm during and in relation to an assault on FBI agents.
The plea was announced by Lisa Monaco, Assistant Attorney General for National Security; David J. Hickton, U.S. Attorney for the Western District of Pennsylvania; Neil H. MacBride, U.S. Attorney for the Eastern District of Virginia; James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office; and Michael A. Rodriguez, Special Agent in Charge of the FBI Pittsburgh Division.
“Today’s guilty plea underscores the need for continued vigilance against homegrown extremism and use of the Internet to incite violence,” said Assistant Attorney General Monaco.
“Too often prosecutions arise only after a perpetrator commits actions ending in tragedy,” said U.S. Attorney Hickton. “On this occasion, I commend the FBI for taking proactive steps to protect the people of the United States before any such tragedy could occur. I am proud of the coordination and cooperation of the various offices involved in this investigation in bringing Mr. Begolly to justice efficiently.”
“Jihadist propaganda on the Internet is a serious threat to our safety, and today’s plea is the latest example of our Office’s efforts to aggressively identify and prosecute homegrown terrorists,” said Neil H. MacBride, U.S. Attorney for the Eastern District of Virginia. “Extreme radicalization can happen anywhere, and this case underscores the need for continued vigilance against homegrown terror threats.”
“On a daily basis, Americans are faced with a complex threat environment that includes homegrown extremists who use web forums to share information and incite violence,” said Assistant Director in Charge McJunkin and Special Agent in Charge Rodriguez. “As this case unfolded, the FBI in Washington, DC and Pittsburgh, in close coordination with the Department of Justice and U.S. Attorney’s offices in Pittsburgh and Alexandria, Virginia, worked quickly and effectively to eliminate the threat against U.S. citizens.”
According to information presented by the government in court, Begolly was an active administrator on the Ansar al-Mujahideen English Forum (AMEF), which is an internationally used Islamic extremist Internet forum. Using the pseudonym of Abu Nancy, Begolly systematically solicited jihadists to use firearms, explosives and propane tanks against targets such as police stations, post offices, Jewish schools and daycare centers, military facilities, train lines, bridges, cell phone towers and water plants.
In the summer of 2010, Begolly urged jihadists on the AMEF to “write their legacy in blood.” Begolly promised a special place in the afterlife for violent action in the name of Allah. Following the reported shootings in Northern Virginia at the Pentagon and the Marine Corps Museum in October 2010, Begolly posted a comment online that praised the shootings and hoped the shooter had followed his previous postings encouraging similar acts of violence. On Dec. 28, 2010, Begolly further solicited his AMEF audience to violence by posting a manual on how to manufacture a bomb.
Days later, on Jan. 4, 2011, FBI agents were assaulted by Begolly as they attempted to prevent him from reaching a loaded 9 mm semi-automatic handgun, which he had concealed on his body. While violently struggling with the agents, Begolly bit the agents on their fingers in an attempt to free himself to reach his firearm. His actions are consistent with a posting in which he urged his audience not to be taken alive by law enforcement, to always carry a loaded firearm, and to aggressively resist any law enforcement encounter including biting fingers if necessary.
Senior U.S. District Court Judge Maurice B. Cohill scheduled sentencing for Nov. 29, 2011.
These cases are being investigated by the FBI Washington Field Office and the FBI Pittsburgh Field Office. Assistant U.S. Attorney Neil Hammerstrom of the U.S. Attorney’s Office for the Eastern District of Virginia’s National Security and International Crime Unit; Assistant U.S. Attorney James Kitchen of the U.S. Attorney’s Office for the Western District of Pennsylvania; and Trial Attorney Stephen Ponticiello of the Counterterrorism Section in the Justice Department’s National Security Division are prosecuting the cases.
Four Florida Men Charged in Boston with Defrauding Homeowners in Home Loan Modification ScamRead the Press Release
WASHINGTON - Four Florida men were arrested today on charges that they defrauded homeowners in Massachusetts and elsewhere in connection with a home loan modification scam, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Carmen M. Ortiz for the District of Massachusetts and Christy Romero, Acting Special Inspector General for the Troubled Asset Relief Program (SIGTARP).
A 20-count indictment was unsealed today in federal court in Boston, charging Christopher S. Godfrey, 42, of Delray Beach, Fla.; Dennis Fischer, 40, of Highland Beach, Fla.; Vernell Burris Jr, 51, of Boynton Beach, Fla.; and Brian M. Kelly, 34, of Boca Raton, Fla., with conspiracy, wire fraud, mail fraud and misuse of a government seal. The defendants were arrested today by SIGTARP agents and will make their initial appearances in U.S. District Court in West Palm Beach, Fla., tomorrow at 10 a.m. EDT.
According to the indictment, Godfrey was the president and Fischer was the vice president and treasurer of a Florida company called Home Owners Protection Economics Inc. (HOPE). Burris was the manager and primary trainer of HOPE telemarketers, while Kelly was one of the principal telemarketers as well as a trainer for other HOPE telemarketers.
The indictment alleges that from January 2009 through May 2011, the defendants made, and instructed their employees to make, a series of misrepresentations to induce financially distressed homeowners looking for a federally-funded home loan modification to pay HOPE a $400-$900 up-front fee in exchange for HOPE’s home loan modifications, modification services and “software licenses.” According to the indictment, these misrepresentations included claims that homeowners were virtually guaranteed, with HOPE’s assistance, to receive a loan modification under the Home Affordable Modification Program (HAMP), which is part of TARP and is a federally-funded mortgage assistance program. Additional misrepresentations to homeowners included that HOPE was affiliated with the homeowner’s mortgage lender, that the homeowner had been approved for a home loan modification, that homeowners could stop making mortgage payments while they waited for HOPE to arrange their loan modification and that HOPE would refund the customer’s fee if the modification was not successful. HOPE also claimed that it operated as a non-profit organization.
In exchange for these up-front fees, HOPE allegedly sent its customers, including homeowners in Massachusetts, a do-it-yourself application package that was nearly identical to the application the U.S. government provides free of charge. HOPE instructed customers to fill out the application and submit it to their mortgage lender. According to the indictment, the HOPE customers who did use the provided forms to apply on their own for loan modifications had no advantage in the application process, and, in fact, most of their applications were denied. Through these misrepresentations, HOPE was able to persuade thousands of homeowners collectively to pay more than $3 million in fees to HOPE.
Godfrey and Fischer were charged with one count of conspiracy, nine counts of wire fraud, nine counts of mail fraud and one count of misuse of a government seal. Burris and Kelly were charged with one count of conspiracy, nine counts of wire fraud and nine counts of mail fraud. Each count of conspiracy and misuse of a government seal carries a maximum penalty of five years in prison and a $250,000 fine. Each count of mail and wire fraud carries a maximum penalty of 20 years in prison and a $250,000 fine. All of the defendants face possible orders of restitution.
An indictment is merely an allegation and defendants are presumed innocent unless and until proven guilty in a court of law.
The case was investigated by SIGTARP and is being prosecuted by Assistant U.S. Attorney Adam Bookbinder in the Computer Crimes Unit at the U.S. Attorney’s Office, and Mona Sedky of the Computer Crime and Intellectual Property Section in the Justice Department’s Criminal Division.
Alabama Man Sentenced to 30 Months in Prison for Role in Tax Fraud ConspiracyRead the Press Release
WASHINGTON – Eric Bernard Caldwell, a resident of Montgomery County, Ala., was sentenced today to 30 months in prison, the Justice Department and the Internal Revenue Service (IRS) announced. Judge William Albritton of the Middle District of Alabama also ordered Caldwell to pay $386,100.41 in restitution to the IRS.
According to court documents, Caldwell was part of a conspiracy to file false federal tax returns using stolen identities. Caldwell would provide identity information to co-conspirator Ora Mae Adamson, who would file the returns, in exchange for a cut of the illicit refunds generated by the false tax returns.
During the period in which Caldwell was a member of the conspiracy, the group defrauded the United States of approximately $380,000. Two other members of the conspiracy have already been sentenced. Adamson was sentenced to 46 months in prison on March 10, 2011, while another co-conspirator, Jeffrey Leon Ceaser, was sentenced to 36 months in prison on March 2, 2011. In all, the conspiracy defrauded the United States of more than $600,000.
John A. DiCicco, Principal Deputy Assistant Attorney General for the Department of Justice’s Tax Division, and George L. Beck Jr., U.S. Attorney for the Middle District of Alabama, commended the IRS special agents who investigated this case and Tax Division Trial Attorneys Jason Poole and Michael Boteler who prosecuted the case.
More information about the Tax Division and its enforcement efforts can be found at www.justice.gov/tax .
8 August 2011
U.S. Files Complaint Against Education Management Corp. Alleging False Claims Act ViolationsRead the Press Release
WASHINGTON – The United States has intervened and filed a complaint in a whistleblower suit pending under the False Claims Act against Education Management Corp. (EDMC) and several affiliated entities, the Justice Department announced today. In its complaint, the government alleges that EDMC falsely certified compliance with provisions of federal law that prohibit a university from paying incentive-based compensation to its admissions recruiters that is tied to the number of students they recruit. Congress enacted the incentive compensation prohibition to curtail the practice of paying bonuses and commissions to recruiters, which resulted in the enrollment of unqualified students, high student loan default rates and the waste of program funds.
“Colleges should not misuse federal education funds by paying improper incentives to admissions recruiters,” said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. “Working with the Department of Education, we will protect both students and taxpayers from arrangements that emphasize profits over education.”
“Federal tax dollars must be protected from abuse,” said David J. Hickton, U.S. Attorney for the Western District of Pennsylvania. “This action against EDMC seeks to recover a portion of the $11 billion in federal student aid which EDMC allegedly obtained through false statements and which enriched the company, its shareholders and executives at the expense of innocent individuals seeking a quality education.”
The False Claims Act allows for private citizens to file whistleblower suits to provide the government information about wrongdoing. The government then has a period of time to investigate and decide whether to take over the prosecution of the allegations or decline to pursue them and allow the whistleblower to proceed. If the United States proves that a defendant has knowingly submitted false claims, it is entitled to recover three times the damage that resulted and a penalty of $5,500 to $11,000 per claim. When the government intervenes, the whistleblower can collect a share of 15 to 25 percent of the United States’ recovery.
The suit was originally filed by Lynntoya Washington, a former EDMC admissions recruiter, who later filed an amended complaint, jointly with Michael T. Mahoney, a former director of training for EDMC’s Online Higher Education Division. The states of California, Florida, Illinois and Indiana have also intervened as plaintiffs.
The suit is United States ex rel. Washington et al. v. Education Management Corp. et al., Civil No. 07-461 (W.D. Pa.).
This matter was investigated by the Commercial Litigation Branch of the Justice Department’s Civil Division; the U.S. Attorney’s Office for the Western District of Pennsylvania; and the Department of Education, Office of Inspector General.
Justice Department Reaches Settlement with Pickens County, Ala., Board of Education to Eliminate Racial DisparitiesRead the Press Release
WASHINGTON - The Department of Justice today announced that it has entered into a settlement agreement with private plaintiffs and the Pickens County, Ala., Board of Education that requires the board to institute a series of educational reforms designed to eliminate the remaining vestiges of its formerly segregated school system.
Under the terms of the agreement, the board, in collaboration with the state of Alabama, will develop policies and programs to eliminate observed racial disparities in student discipline, grade retention, graduation rates and post-graduate scholarships. The agreement further obligates the board to intensify its efforts to recruit minority applicants for faculty and administrative positions, and to take steps to ensure that the assignment of certified and non-certified staff to district schools does not result in nor reinforce racially identifiable schools.
In conjunction with the parties’ agreement, the state of Alabama will establish and operate an early learning center that will provide educational services to four-year old children in Pickens County at no cost to parents. The state has also agreed to provide substantial training and educational expertise to assist the board in executing its obligations under the agreement, as well as its desegregation obligations more broadly.
“Equal access to educational opportunities is a fundamental civil right. This creative and comprehensive remedial plan will enhance educational opportunities for all students and puts the Pickens County School District on a path to unitary status,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “I thank all parties for their cooperation in reaching this agreement. Importantly, the state of Alabama is willing to invest scarce resources in a school district that is demonstrably committed to fulfilling its desegregation obligations.”
“The citizens of our state benefit when parties come together, as here, to ensure that all children, regardless of race, have equal access to the best possible educational opportunities,” said U.S. Attorney Joyce White Vance of the Northern District of Alabama.
The enforcement of existing desegregation orders and Title IV of the Civil Rights Act is a top priority of the Justice Department’s Civil Rights Division. Additional information about the Civil Rights Division of the Justice Department is available on its website at www.justice.gov/crt .
5 August 2011
Two Telecommunications Executives Convicted by Miami Jury on All Counts for Their Involvement in Scheme to Bribe Officials at State-Owned Telecommunications Company in HaitiRead the Press Release
WASHINGTON—Joel Esquenazi and Carlos Rodriguez, former executives of Terra Telecommunications Corp., have been convicted by a federal jury on all counts for their roles in a scheme to pay bribes to Haitian government officials at Telecommunications D’Haiti S.A.M (Haiti Teleco), a state-owned telecommunications company. The jury reached its verdict yesterday after five hours of deliberations, following a two-and-a-half-week trial.
The convictions were announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer for the Southern District of Florida; and Special Agent in Charge Jose A. Gonzalez of Internal Revenue Service, Criminal Investigation Division (IRS-CID), Miami Field Office.
“These defendants authorized more than $800,000 in illegal bribe payments to Haitian officials in exchange for business advantages – a clear violation of the FCPA,” said Assistant Attorney General Breuer. “This verdict is another powerful example that bribery of government officials – whether at home or abroad – has serious consequences. In finding the defendants guilty on all charged counts, the jury sent an unmistakable message that paying off foreign officials does not, in fact, pay off.”
“These individuals conspired and made corrupt payments to foreign government officials for the purpose of securing business advantages for their company,” said U.S. Attorney Ferrer. “The FCPA helps to create a more level playing field in which businesses can compete fairly and sends the message that American businesses are simply not up for sale.”
“These convictions send a strong and clear message that we will aggressively pursue investigations on subjects that use shell companies to launder funds,” said IRS Special Agent in Charge Gonzalez. “IRS-CID will utilize its financial investigative expertise to unravel any complex money laundering scheme leaving no financial stones unturned.”
Joel Esquenazi, 52, of Miami, and Carlos Rodriguez, 55, of Davie, Fla., were convicted of one count of conspiracy to violate the Foreign Corrupt Practices Act (FCPA) and wire fraud; seven counts of FCPA violations; one count of money laundering conspiracy; and 12 counts of money laundering.
According to the evidence presented at trial, Esquenazi was the president and Rodriguez was the executive vice president of Terra, which was headquartered in Miami-Dade County, Fla. Haiti Teleco was the sole provider of land line telephone service in Haiti. Terra had a series of contracts with Teleco that allowed the company’s customers to place telephone calls to Haiti.
According to the evidence presented at trial, the defendants participated in a scheme to commit foreign bribery and money laundering from November 2001 through March 2005, during which time the telecommunications company paid more than $890,000 to shell companies to be used for bribes to Teleco officials. Esquenazi and Rodriguez authorized these bribe payments to successive directors of international relations at Teleco.
The purpose of these bribes, according to the evidence presented at trial, was to obtain various business advantages from the Haitian officials for Terra, including the issuance of preferred telecommunications rates, reductions in the number of minutes for which payment was owed, and the continuance of Terra’s telecommunications connection with Haiti. To conceal the bribe payments, the defendants used various shell companies to receive and forward the payments. In addition, they created false records claiming that the payments were for “consulting services,” which were never intended to be performed or actually performed.
Esquenazi was remanded to the custody of the U.S. Marshals. Rodriguez remains free on bond. Sentencing for both defendants currently is scheduled for Oct. 13, 2011.
On April 27, 2009, Antonio Perez, a former controller at Terra, pleaded guilty to one count of conspiracy to violate the FCPA and money laundering. On Jan. 12, 2010, he was sentenced to 24 months in prison, which he is currently serving.
On May 15, 2009, Juan Diaz, the president of J.D. Locator Services, pleaded guilty to one count of conspiracy to violate the FCPA and money laundering. He admitted to receiving more than $1 million in bribe money from telecommunications companies. On July 30, 2010, he was sentenced to 57 months in prison, which he is currently serving.
On Feb. 19, 2010, Jean Fourcand, the president and director of Fourcand Enterprises Inc., pleaded guilty to one count of money laundering for receiving and transmitting bribe monies in the scheme. On May 5, 2010, he was sentenced to six months in prison.
On March 12, 2010, Robert Antoine, a former director of international affairs for Haiti Teleco, pleaded guilty to one count of conspiracy to commit money laundering. He admitted to receiving more than $1 million in bribes from Miami-based telecommunications companies. On June 2, 2010, he was sentenced to 48 months in prison, which he is currently serving.
In a superseding indictment, Washington Vasconez Cruz, Amadeus Richers, Cinergy Telecommunications Inc., Patrick Joseph, Jean Rene Duperval and Marguerite Grandison are charged in a related scheme to commit foreign bribery and money laundering from December 2001 through January 2006. No trial date is currently set. An indictment is merely an accusation, and defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.
The conspiracy to commit violations of the FCPA and wire fraud count carries a maximum penalty of five years in prison and a fine of the greater of $250,000 or twice the value gained or lost. The FCPA counts each carry a maximum penalty of five years in prison and a fine of the greater of $100,000 or twice the value gained or lost. The conspiracy to commit money laundering count carries a maximum penalty of 20 years in prison and a fine of the greater of $500,000 or twice the value of the property involved in the transaction. The money laundering counts each carry a maximum penalty of 20 years in prison and a fine of the greater of $500,000 or twice the value of the property involved in the transaction. The indictment also seeks forfeiture which will determined by the court at a later date.
The government’s investigation is ongoing. The Department of Justice is grateful to the government of Haiti for continuing to provide substantial assistance in gathering evidence during this investigation. In particular, Haiti’s financial intelligence unit, the Unité Centrale de Renseignements Financiers (UCREF), the Bureau des Affaires Financières et Economiques (BAFE), which is a specialized component of the Haitian National Police, and the Ministry of Justice and Public Security provided significant cooperation and coordination in this ongoing investigation.
To learn more about the government’s FCPA enforcement efforts, go to www.justice.gov/criminal/fraud/fcpa.
The case is being prosecuted by Senior Trial Attorneys Nicola J. Mrazek and James M. Koukios of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Aurora Fagan of the U.S. Attorney’s Office for the Southern District of Florida. The Criminal Division’s Office of International Affairs also provided assistance in this matter. The cases were investigated by the IRS-CID Miami Field Office.
Two Chinese Defendants Plead Guilty in Brooklyn, N.Y., to Trafficking in Counterfeit PerfumeRead the Press Release
WASHINGTON – Two defendants, Shaoxiong Zhou, 42, and Shaoxia Huang, 33, both of Shantou, Guangdong, China, have pleaded guilty to trafficking in counterfeit perfume, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Loretta E. Lynch for the Eastern District of New York.
Zhou pleaded guilty today before U.S. Chief Magistrate Judge Steven M. Gold in Brooklyn, N.Y., to one count of trafficking in counterfeit goods. Huang pleaded guilty before Magistrate Judge Gold on Aug. 3, 2011, to one count of trafficking in counterfeit goods.
In their guilty pleas, Zhou and Huang admitted offering to supply counterfeit perfume to prospective buyers at a Las Vegas trade show in August 2010. A cargo shipment containing counterfeit perfumes was ultimately purchased and shipped to the United States in 2011. That shipment, which was seized by U.S. Customs and Border Protection upon arrival in the United States, was found to contain more than 30,000 units of perfume bearing counterfeit marks and made to resemble fragrance products from several well-known brands, including Lacoste, Polo Black and Armani Code.
At sentencing, both defendants face maximum penalties of 10 years in prison and a $2 million fine. Sentencing dates have not been set by the court.
The case is part of a federal investigation of the importation and distribution of counterfeit perfume and cosmetics products being conducted by the Assistant Special Agent in Charge, John F. Kennedy International Airport, of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations. The case is being prosecuted by Senior Counsel Jason Gull of the Computer Crime and Intellectual Property Section in the Justice Department’s Criminal Division.
The guilty plea 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/.
Pittsburgh Crips Leader Pleads Guilty to Racketeering ChargesRead the Press Release
WASHINGTON – Robert Colbert, of Pittsburgh, pleaded guilty today in federal court to charges of conspiring to conduct a racketeering enterprise, 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.
Robert Colbert, 30, aka “Ballz,” pleaded guilty to one count of conspiracy to engage in a racketeering conspiracy before Senior U.S. District Judge Gustave Diamond in the Western District of Pennsylvania.
According to the guilty plea, Colbert and others participated in a pattern of racketeering activity that included robberies at gun point; attempted murders; distribution of cocaine, heroin and crack cocaine; obstruction of justice and witness intimidation.
According to court documents, Colbert was a member of the Brighton Place Crips, a criminal street gang that controlled an area of Brighton Place and Morrison Street, also known as the Mad Cave, and Federal Street in the Northside area of Pittsburgh. The Brighton Place Crips were formed in the early 1990s; in 2003, it formed an alliance with the Northview Heights/ Fineview Crips. This alliance expanded the gang’s drug trafficking territory, and increased the number of gang members and associates available to preserve and protect the gang’s power, territory and profits through violence.
The Brighton Place/Northview Heights Crips gang maintains exclusive control over drug trafficking in these neighborhoods through continuous violence and intimidation of rivals and witnesses. Members of the gang support each other through payment of attorneys’ fees and bonds, as well as payments to jail commissary accounts and support payments to incarcerated members’ families.
In addition, gang members had violent confrontations with members of the rival Manchester OGs, and other street gangs operating in the Northside Section of Pittsburgh. Members and associates obtained greater authority and prestige within the enterprise based on their reputation for violence and their ability to obtain and sell a steady supply of illegal drugs. According to court documents, the Brighton Place/Northview Heights Crips gang members identify themselves by wearing blue, flashing Crips gang hand signals, and using phrases such as “Cuz,” “C-Safe,” “Loc” and “G.K.”
According to court documents, Colbert was considered a respected member and leader in the enterprise, due to his reputation for violence, as well as his demonstrated ability to instruct other members and associates on how to conduct gang affairs, including the possession and distribution of firearms, acts of violence, the possession and distribution of controlled substances and acts of witness intimidation. Colbert was also a distributor of controlled substances, including crack cocaine.
Colbert is one of 26 defendants charged in February 2010 with being members 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, 21 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 Rive tti 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.
New Orleans Police Officers Convicted of Civil Rights Violations in Danziger Bridge CaseRead the Press Release
WASHINGTON – A federal jury today convicted five officers from the New Orleans Police Department (NOPD) on 25 counts in connection with the federal prosecution of a police-involved shooting on the Danziger Bridge in the days after Hurricane Katrina and an extensive cover-up of those shootings, the Justice Department announced today. The incident resulted in the death of two civilians and the wounding of four others. The defendants will be sentenced before U.S. District Court Judge Kirk Englehardt on Dec. 14, 2011.
Four officers – Kenneth Bowen, Robert Gisevius, Robert Faulcon and Anthony Villavaso – were convicted in connection with the shootings of multiple victims, two of whom died. The four officers and a supervisor, Arthur “Archie” Kaufman, also were convicted of helping to obstruct justice during the subsequent investigations.
The evidence at trial established that officers Bowen, Gisevius, Faulcon and Villavaso opened fire on an unarmed family on the east side of the bridge, killing 17-year-old James Brissette, and wounding Susan Bartholomew, 38; Leonard Bartholomew III, 44; the Bartholomew’s daughter, Lesha, 17; and the Bartholomew’s nephew, Jose Holmes, 19. The Bartholomew’s 14-year-old son ran away from the shooting and was fired at, but was not injured.
According to testimony, the second shooting occurred minutes later on the west side of the bridge, where officers shot at brothers Lance and Ronald Madison, killing Ronald, a 40-year-old man with severe mental disabilities. Witnesses testified that Faulcon shot Ronald Madison in the back as Ronald Madison ran away. Furthermore, Bowen stomped and kicked Ronald Madison while wounded, but not yet dead. Ronald Madison later died at the scene.
“The officers convicted today abused their power and violated the public’s trust during the aftermath of Hurricane Katrina – exacerbating one of the most devastating times for the people of New Orleans,” said Attorney General Eric Holder. “I am hopeful today’s verdict brings justice for the victims and their family members, helps to heal the community andcontributes to the restoration of public trust in the New Orleans Police Department.”
The four officers convicted of killing civilians face potential multiple life sentences. The officers face additional penalties for the remaining counts, which include charges related to a conspiracy to cover-up what had happened on the bridge, and conspiracies to file charges against two of the victims, Lance Madison and Jose Holmes, on the basis of false evidence.
According to testimony at trial, officers at the scene of the shooting arrested Lance Madison and charged him with eight counts of attempting to kill police officers. Officers collected no guns or shell casings on the day of the shooting, and 30 casings they collected more than a month later were fired by officers rather than civilians. Madison was held in jail for three weeks, but was eventually released without indictment.
The evidence at trial established that Kaufman joined the other four defendants in a conspiracy to cover-up what had happened on the bridge and to make the shootings appear justified. According to testimony, Kaufman obtained a gun from his home and claimed to have found the gun at the bridge on the day after the shooting, and he also made up witnesses and then created statements from the fictional witnesses to help justify the shooting. There was also testimony that Kaufman held a meeting in an abandoned and gutted out NOPD building, where he instructed officers involved in the shooting to get their stories straight before giving formal audiotaped statements about the shooting.
Kaufman, who concluded in a formal report that the shooting was justified and that Lance Madison and Jose Holmes should be arrested, was also found guilty of conspiring with other officers to have Madison and Holmes prosecuted on the basis of false evidence.
Kaufman faces a maximum penalty of 120 years in prison.
The trial follows guilty pleas by five former NOPD officers who admitted that they participated in a conspiracy to obstruct justice and cover-up what happened on Sept. 4, 2005. The officers include former Lieutenant Michael Lohman, former Detective Jeffrey Lehrmann, and former Officers Michael Hunter, Robert Barrios and Ignatius Hills, all of whom testified during the trial.
This case was investigated by the FBI’s New Orleans Field Office, and was prosecuted by Deputy Chief Bobbi Bernstein and Trial Attorney Cindy Chung of the Justice Department’s Civil Rights Division, along with Assistant U.S. Attorney Theodore Carter of the Eastern District of Louisiana.
New Approach Launched to Reduce Tribal Alcohol and Substance Abuse ProblemsRead the Press Release
WASHINGTON – Attorney General Eric Holder, Department of Health and Human Services (HHS) Secretary Kathleen Sebelius and Department of the Interior (DOI) Secretary Ken Salazar today announced a new federal framework to assist American Indian and Alaska Native communities in achieving their goals in the prevention, intervention and treatment of alcohol and substance abuse.
The framework, captured in a Memorandum of Agreement (MOA) signed by Attorney General Holder, Secretary Sebelius and Secretary Salazar was published in the Federal Register today: www.gpo.gov/fdsys/pkg/FR-2011-08-05/pdf/2011-19816.pdf. It was called for in the Tribal Law and Order Act of 2010, which President Obama signed into law in July 2010.
The MOA describes how the Office of Indian Alcohol and Substance Abuse established in HHS’ Substance Abuse and Mental Health Services Administration (SAMHSA) will coordinate tribal substance abuse programs across the federal government with a special emphasis on promoting programs geared toward reaching youth and offering alternatives to incarceration.
“A truly holistic approach is necessary when addressing substance abuse in Indian Country because we know that where alcohol and substance abuse are prevalent, public safety concerns are similarly prevalent,” said Attorney General Holder. “This new office will help further the commitment of the Justice Department and our partner agencies to build and sustain safe, secure and healthy tribal communities.”
“Alcoholism and addiction are among the most severe public health and safety problems facing American Indian and Alaska Native people,” said HHS Secretary Sebelius. “It doesn’t have to be this way. With help that is based in the rich Indian culture these conditions just like other heath conditions can be successfully prevented and treated.”
“There is a clear need to align, leverage, and coordinate federal resources so that we can best support tribal efforts to build healthy and safe communities,” said DOI Secretary Salazar. “This new office will serve as the federal focal point for this critically important work.”
An interdepartmental coordinating council will guide the overall direction of the new federal effort to improve its work with tribal communities beginning with determining the scope of the problem – identifying and assessing national, state, tribal and local alcohol and substance abuse programs and resources; and creating standards for programs.
“The collaboration among agencies and departments that got us to this announcement today is already paying off,” SAMHSA Administrator Pamela S. Hyde said. “Our work with tribal communities has resulted in a new $50 million budget proposal in 2012 for Tribal Prevention Grants, better understanding of law enforcement and judicial training needs, and serious new work and investments in suicide prevention in Indian country.”
Justice Department Sues to Shut Down Alabama Tax Return PreparerRead the Press Release
WASHINGTON – The United States has filed a lawsuit seeking to stop Lakeisha Pearson from preparing federal tax returns for others, the Justice Department announced today. The government’s civil injunction complaint alleges that Pearson of Birmingham, Ala., operated under the trade names “LGS Tax Service,” “PositiveEndeavors LLC” and “AGA Tax Service,” and improperly claimed the earned income tax credit (EITC) on her customers’ tax returns to generate false or overstated tax refunds. Pearson also allegedly failed to comply with legal requirements for determining her customers’ eligibility for the EITC and the amount of their EITC claims.
The EITC is a refundable federal income tax credit for low-to-moderate-income working individuals and families. When the credit exceeds the amount of taxes owed, it results in a tax refund to those who claim and qualify for the credit. To qualify for the credit, taxpayers must have earned income from employment, self-employment or another source and meet certain other requirements.
According to the complaint, Pearson prepared almost 2,000 tax returns for tax years 2008 through 2011, more than 92 percent of which claimed the EITC. Pearson allegedly prepared returns fraudulently reporting income or improperly claiming individuals as a “qualifying child” in order to inflate or generate false EITC claims for her customers. According to the complaint, the Internal Revenue Service (IRS) estimates that the harm to the government from Pearson’s misconduct could be as high as $8.3 million.
The IRS has listed return preparer fraud as one of its “Dirty Dozen” tax scams for 2011. In the past 10 years, the Justice Department’s Tax Division has obtained injunctions against hundreds of unscrupulous tax return preparers and tax fraud promoters. Information about these cases is available on the Justice Department website .
4 August 2011
Two Mexican Nationals Plead Guilty to Conspiracy to Commit Sex TraffickingRead the Press Release
MIAMI – The Justice Department announced today that two Mexican nationals, Israel Cortes-Morales, 31, and Alberto Cortes-Castro, 30, pleaded guilty in federal district court in Miami to charges of conspiring to commit sex trafficking of Mexican women.
According to the information presented in court, from 1999 through December 2010, the defendants forced multiple victims from Mexico to engage in prostitution in the United States for the defendant’s financial benefit.
With false promises of a better life, legitimate employment and marriage, the defendants lured victims from their homes in Mexico, knowing that they would actually force the women to be prostitutes here. The victims were compelled, through threats, psychological coercion and other means, to work within a prostitution circuit that spanned the east coast of the United States, including Miami.
“Human trafficking of this kind deprives its victims of their freedom and dignity, and will not be tolerated in this country. We will aggressively prosecute any individual who exploits others in this way for their own personal gain,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division.
Sentencing has been scheduled for Oct. 28, 2011. The case against a third defendant, Ernesto Cortes-Castro, 25, remains pending.
Earlier this year, Mexican authorities successfully prosecuted a third defendant, Jorge Velasquez, 24, for his role in the sex trafficking conspiracy. Velasquez was sentenced in Mexico to 18 years and three months in prison. Mexico prosecuted Velasquez along with three other Mexican traffickers.
The case is being prosecuted by Assistant U.S. Attorneys Marlene Rodriquez and Roy Altman, and Benjamin Hawk, Trial Attorney in the Civil Rights Divisions Human Trafficking Prosecution Unit.
Peace Corps Volunteer Charged with Sexually Abusing Children in South AfricaRead the Press Release
WASHINGTON - A Peace Corps volunteer was arrested today and charged in a federal criminal complaint with traveling from the United States to South Africa to engage in illicit sexual conduct with multiple children who were all younger than six years of age.
The arrest and charge were announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney David B. Fein for the District of Connecticut; Kathy A. Buller, Peace Corps Inspector General; and Bruce M. Foucart, Special Agent in Charge of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) office in Boston.
The criminal complaint alleges that Jesse Osmun, 31, of Milford, Conn., traveled to South Africa on Jan. 29, 2010. On March 25, 2010, Osmun was sworn in as a Peace Corps volunteer and began service as a volunteer at the Umvoti Aids Center (UAC) in Greytown, South Africa. The UAC is a non-governmental organization that provides support to the residents of the Greytown area affected by the AIDS virus. UAC also provides education, food and other child development services to children between the ages of three and 15. The UAC also has a center for the younger children often referred to as the preschool.
According to the complaint, Osmun, while volunteering at the UAC preschool, sexually molested at least five minor girls, all of whom were under the age of six, for approximately one year. The complaint also alleges that Osmun engaged in illicit sexual conduct with one of the girls, who is approximately five-years-old, twice a week over the course of five months.
“Mr. Osmun is charged with a shocking breach of the power entrusted to him as a Peace Corps volunteer,” said Assistant Attorney General Breuer. “Allegedly, he repeatedly sexually abused five minor girls under the age of six -- horrific crimes. Along with the international operation we announced yesterday -- Operation Delego -- this case is another example that the Justice Department will do everything in its power to bring to justice those who would exploit children, whether at home or abroad.”
“This defendant is alleged to have sexually abused very young girls, sometimes in exchange for candy, while he served as a Peace Corps volunteer at an AIDS center in South Africa,” said U.S. Attorney Fein. “We are committed to prosecuting those who sexually exploit children, the most vulnerable in society, in this country and abroad. I want to commend the diligent, swift and coordinated efforts of the Peace Corps’ Office of Inspector General and ICE Homeland Security Investigations in investigating this matter and arresting this individual.”
“We are committed to vigorous investigation and prosecution of those who exploit the mission of the Peace Corps to prey on innocent victims,” said Peace Corps Inspector General Buller.
“This arrest represents the very essence of the determination of federal, state and local law enforcement authorities to capture an individual whose primary objective, allegedly, was to sexually abuse vulnerable children,” said ICE HSI Special Agent in Charge Foucart. “I hope that this arrest sends a clear message that we will continue to aggressively pursue individuals who engage in this behavior to ensure that there is no place to hide here in the United States or anywhere in the world.”
After being confronted by the UAC program manager in May 2011, Osmun resigned from the Peace Corps. Osmun returned to the United States on June 2, 2011.
Following Osmun’s arrest today at his Milford residence, he appeared before U.S. Magistrate Judge Holly B. Fitzsimmons in Bridgeport, Conn., and has been ordered detained.
If convicted of the charge of traveling outside of the United States to engage in sexual conduct with a minor, Osmun faces a maximum penalty of 30 years in prison and a fine of $250,000.
A complaint is an allegation, and the defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
This case is being investigated by the Peace Corps Office of Inspector General and ICE HSI. Investigative assistance has been provided by members of the South African Police Service (SAPS); ICE’s attaché office in Pretoria, South Africa; the ICE Cybercrimes Center in Fairfax, Va., and the U.S. Department of State’s regional security office in Durban, South Africa. The case is being prosecuted by U.S. Attorney Fein, Assistant U.S. Attorney Krishna R. Patel and Trial Attorney Bonnie Kane of the Criminal Division’s Child Exploitation and Obscenity Section.
Metropolitan St. Louis Sewer District in Missouri to Pay $4.7 Billion to Cut Sewer OverflowsRead the Press Release
WASHINGTON – The Metropolitan St. Louis Sewer District (MSD) has agreed to make extensive improvements to its sewer systems and treatment plants, at an estimated cost of $4.7 billion over 23 years, to eliminate illegal overflows of untreated raw sewage, including basement backups, and to reduce pollution levels in urban rivers and streams, the Department of Justice and the U.S Environmental Protection Agency (EPA) announced today. This injunctive relief is historic in its scope and importance to the people of St. Louis.
The settlement reached between the United States, the Missouri Coalition for the Environment Foundation and MSD, requires MSD to install a variety of pollution controls, including the construction of three large storage tunnels ranging from approximately two miles to nine miles in length, and to expand capacity at two treatment plants. These controls and similar controls that MSD has already implemented will result in the reduction of almost 13 billion gallons per year of overflows into nearby streams and rivers.
MSD will also be required to develop and implement a comprehensive plan to eliminate more than 200 illegal discharge points within its sanitary sewer system. Finally, MSD will engage in comprehensive and proactive cleaning, maintenance and emergency response programs to improve sewer system performance and to eliminate overflows from its sewer systems, including basement backups, releases into buildings and onto property.
“We are fully committed to vigorous enforcement of the Clean Water Act, and will continue to work in partnership with EPA to advance the goal of clean water for all communities in our nation’s cities,” said Ignacia S. Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. “The people of St. Louis, including those who live in minority and low-income communities, will receive tangible, lasting benefits from this significant settlement.”
“St. Louis, America’s Gateway City, grew up alongside the Mississippi. Unfortunately, for too long it treated the river’s tributaries as a dumping ground for sewage,” EPA Regional Administrator Karl Brooks said. “By moving forward with this Clean Water Act settlement, the community is facing its responsibilities. This agreement will bring jobs and long-term economic investments while significantly improving the environment for future generations.”
Today’s settlement will also significantly advance the use of large scale green infrastructure projects to control wet weather sewer overflows by requiring MSD to invest at least $100 million in an innovative green infrastructure program, focused in environmental justice communities in St. Louis. Environmental justice communities include low income or minority communities who have suffered a disproportionate burden from air, water or land pollution. Green infrastructure involves the use of properties to store, infiltrate and evaporate storm water to prevent it from getting into the combined sewer system. Examples of potential green infrastructure projects include green roofs, bioretention, green streets, rain barrels, rain gardens and permeable pavement.
MSD, in conjunction with the city of St. Louis economic redevelopment authorities, will transform numerous vacant or abandoned properties to productive use – helping to revitalize disadvantaged communities and resulting in cleaner air and green space. MSD will conduct public education and outreach, and collaborate with local residents and neighborhood groups, including those representing minority and/or low-income neighborhoods, in selecting the locations of green infrastructure projects.
MSD has also committed to spending $230 million in a mitigation program to alleviate flooding and another $30 million in enhanced pipe lining program, both of which are focused exclusively in environmental justice areas. These programs and the pioneering green infrastructure program of the settlement will further the Department of Justice and EPA’s work to advance environmental justice.
In addition to improving its sewer system and treatment plants, MSD will spend $1.6 million on a supplemental environmental project to implement a voluntary sewer connection and septic tank closure program for low-income eligible residential property owners who elect to close their septic tanks and connect to the public sewer. MSD will also pay a civil penalty of $1.2 million to the United States.
MSD’s sewer system collects and treats domestic, commercial and industrial wastewater from a population of approximately 1.4 million in the city of St. Louis and nearly all of St. Louis County. The system covers more than 525 square miles, and includes seven wastewater treatment plants, 294 pumping stations and more than 9,630 miles of sewer lines, making it the fourth largest sewer system in the United States.
The settlement resolves the claims brought by the United States in a lawsuit filed in June 2007 which the Missouri Coalition for the Environment Foundation later intervened under the citizen suit provisions of the federal Clean Water Act. In that lawsuit, among other things, the United States alleged that on at least 7,000 occasions between 2001 and 2005, failures in MSD’s sewer system resulted in overflows of raw sewage into residential homes, yards, public parks, streets and playground areas.
Overflows pose a significant threat to public health and water quality because raw sewage can have high concentrations of bacteria from fecal contamination, as well as disease-causing pathogens and viruses. These overflows can occur in basements, backyards, city streets, and directly into stream and rivers. This settlement goes a long way in preventing these overflows.
Today’s settlement is the latest in a series of Clean Water Act settlements that will reduce the discharge of raw sewage and contaminated stormwater into United States’ rivers, streams and lakes. Keeping raw sewage and contaminated stormwater out of the waters of the United States is one of EPA’s National Enforcement Initiatives for 2011 to 2013. The initiative focuses on reducing discharges from sewer overflows by obtaining cities’ commitments to implement timely, affordable solutions to these problems, including the increased use of green infrastructure and other innovative approaches.
The settlement, lodged today in U.S. District Court for the Eastern District of Missouri, is subject to a 30-day public comment period and court approval. A copy of the consent decree and its appendices is available on the Department of Justice website at www.justice.gov/enrd/Consent_Decrees.html .
Las Vegas Real Estate Agent Pleads Guilty to Tax Fraud and Bankruptcy Fraud ChargesRead the Press Release
WASHINGTON – German A. Posada of Las Vegas pleaded guilty before U.S. District Judge Philip M. Pro to charges of filing a false 2004 individual income tax return and making a false statement in a bankruptcy proceeding, the Justice Department and the Internal Revenue Service (IRS) announced today.
According to court documents and statements made in court, Posada admitted to filing a false individual income tax return, Form 1040, for 2004 that under-reported the income from his business as a real estate agent in the Las Vegas area. Between 2003 and 2005, Posada earned commission income from International Realty and another realtor. He asked that International Realty issue some of his commission checks in the name of his then-girlfriend, and deposited those checks into a bank account in her name. Posada also admitted under-reporting his business income on his 2003 Form 1040 and failing to file a timely 2005 Form 1040, despite knowing of his legal duty to report the approximately $557,212 in income that he received in 2005.
According to court documents and statements made in court, in 2005, Posada filed for bankruptcy in the U.S. Bankruptcy Court for the District of Nevada. In his May, 13, 2005, bankruptcy petition, and again in his Aug. 2, 2005, amended petition, he made false statements, including that: he had no current income; he had received no income during the two years immediately preceding 2005; and 17 creditors held unsecured non-priority claims totaling $466,885 against him. Then, on Sept. 2, 2005, at a meeting of creditors, Posada falsely testified under oath before the bankruptcy trustee that he had received “one or two” and “probably two” commissions since May 13, 2005, when in fact he knew that he had received at least 19 commission checks totaling $130,575 during that time period.
As part of his plea agreement, Posada agreed to pay restitution to the IRS in the amount of $212,016, and to pay restitution to any victims of the bankruptcy fraud, in an amount to be determined by the court at sentencing.
Sentencing has been set for Dec. 5, 2011, and Posada remains free on bail pending sentencing, where he faces a maximum sentence of three years in prison on the tax charge and five years in prison on the bankruptcy fraud charge.
Principal Deputy Assistant Attorney General John A. DiCicco of the Justice Department’s Tax Division and U.S. Attorney for the District of Nevada Daniel G. Bogden commended the investigative efforts of the IRS Criminal Investigation agents who investigated the case and Tax Division trial attorneys John P. Scully and Thomas W. Flynn, who are prosecuting the case.
More information about the Tax Division and its enforcement efforts can be found at www.justice.gov/tax.
Justice Department Sues City of Joliet, Illinois, to Preserve Affordable Housing for City ResidentsRead the Press Release
WASHINGTON – The Department of Justice today filed a lawsuit against the city of Joliet, Ill., alleging that the city violated the Fair Housing Act and the Housing and Community Development Act by taking a series of actions, culminating in the taking through eminent domain a federally-subsidized affordable housing development, that would displace more than 750 residents with low incomes, more than 95 percent of whom are African-American.
The complaint, filed today in the U.S. District Court for the Northern District of Illinois, alleges that the city of Joliet violated the Fair Housing Act when it took actions to condemn the Evergreen Terrace apartment complex, which provides 356 units of affordable housing in Joliet. Due to the lack of affordable housing in and around Joliet, and because the city has failed to produce a meaningful plan to counteract the effect of eliminating 356 units of affordable housing, many of the residents would be left with nowhere in the city to live if the condemnation action is successful.
The complaint alleges that the effect of the city’s actions and proposed actions is “to limit or reduce the number of Black or African-American residents residing within the city of Joliet. Such actions, if carried out, would have a disproportionate adverse impact on African-Americans and operate to perpetuate segregation in Joliet.”
“Particularly in today’s economy, the city of Joliet’s proposed actions would have a devastating and unacceptable impact on Evergreen Terrace residents, who are disproportionately African-American,” said Thomas E. Perez, Assistant Attorney General for Civil Rights. “Today’s action is a reminder that when local governments take unjustified actions that reduce opportunities for affordable housing, they risk violating federal anti-discrimination laws.”
“The city of Joliet continues to try to condemn Evergreen Terrace while neglecting to propose any realistic plan for relocating its residents within the city, making it necessary for the federal government to take steps to protect the housing rights of these residents,” said Patrick J. Fitzgerald, U.S. Attorney for the Northern District of Illinois.
The rents at Evergreen Terrace are subsidized by the U.S. Department of Housing and Urban Development (HUD) under the Section 8 program. Approximately 731 of 764 residents, or 95.6 percent, are African-American, while approximately 16 percent of Joliet’s 147,433 residents identified themselves as Black or African-American in the 2010 census.
Beginning in 2001, the owners of Evergreen Terrace applied to HUD to restructure the mortgages under the Multifamily Assisted Housing Reform and Affordability Act (MAHRA), in return for a commitment to continue providing affordable housing at Evergreen Terrace over the life of the mortgage. MAHRA, a statute enacted in 1997, established a process by which the secretary of HUD was to evaluate whether to approve restructuring of loans for Section 8 complexes like Evergreen Terrace. Consistent with MAHRA, HUD’s contractors, the Illinois Housing Development Authority and a private consulting firm, conducted an independent assessment of Evergreen Terrace and considered the input of interested third parties, including the city of Joliet.
Although the city contended that the property was blighted, HUD’s contractors determined that the city’s objections lacked merit and that there was a critical need for affordable housing in Joliet that would not be met if the restructuring for Evergreen Terrace was not approved. Based on these conclusions, HUD approved the restructuring in 2005. In response, the city filed an action to take Evergreen Terrace by eminent domain.
Due to the mortgage restructuring, HUD is a defendant in the condemnation action, which is currently pending in the Northern District of Illinois. The United States will seek to consolidate today’s lawsuit with the pending condemnation action. A tenant of Evergreen Terrace filed a fair housing complaint with HUD in 2009, alleging that Joliet’s actions violated the Fair Housing Act. HUD referred the complaint to the Department of Justice, in accordance with a provision in the Fair Housing Act that authorizes the department’s enforcement when HUD refers a complaint alleging discriminatory zoning or land use practices by a local government.
Additionally, the lawsuit alleges that the city’s actions violate Section 109 of the Housing and Community Development Act (HCDA), which prohibits unlawful discrimination in any program or activity funded in whole or in part by HUD through HCDA programs. The United States alleges that the city’s Department of Economic and Community Development, which in 2010 received more than $1 million from such programs, has been and will continue to be involved in Joliet’s actions to condemn and Evergreen Terrace.
The lawsuit seeks a court order that would, among other things, enjoin the city from proceeding with the condemnation action without ensuring that there will be sufficient and adequate affordable housing for those persons who would be displaced from Evergreen Terrace and require it to take steps to prevent the recurrence of any similar discriminatory conduct. The lawsuit also seeks monetary damages for persons harmed by the city’s actions and a civil penalty.
The federal Fair Housing Act prohibits discrimination in housing based on race, color, religion, national origin, sex, disability and familial status. Fair housing enforcement is a priority of the Civil Rights Division. More information about the Civil Rights Division and the laws it enforces is available at www.justice.gov/crt . Individuals who believe that they may have been victims of housing discrimination can call the Housing Discrimination Tip Line at 1-800-896-7743, email the Justice Department at [email protected] , or contact the U.S. Department of Housing and Urban Development at 1-800-669-9777.
The complaint is an allegation of unlawful conduct. The allegations in the complaint must still be proven in federal court.
Justice Department Reaches Settlement with VeriFone and Hypercom After Gores Group is Determined to be Acceptable Buyer for Point-of-Sale Terminals BusinessRead the Press Release
WASHINGTON – The Department of Justice announced today that, in order for VeriFone Systems Inc. to complete its acquisition of Hypercom Corp., it must divest Hypercom’s U.S. point-of-sale (POS) terminals business to an entity sponsored by Gores Group LLC, a private equity fund. The department said that the divestiture should eliminate the merger’s potential to harm competition in the sale of POS terminals.
The department filed a lawsuit on May 12, 2011, in U.S. District Court for the District of Columbia, alleging that the proposed transaction would eliminate important competition in the sale of POS terminals and that a proposed divestiture to the only other significant provider of POS terminals, Ingenico, did not remedy the competitive concerns with the merger. VeriFone and Hypercom together control more than 60 percent of the U.S. market for the POS terminals used by the largest retailers. They are two of only three substantial sellers of other types of POS terminals.
Shortly after the filing of the lawsuit, on May 20, 2011, VeriFone and Hypercom abandoned the proposed divestiture to Ingenico and entered into settlement negotiations with the department to find an alternative buyer. Today, the department filed a proposed settlement, which requires the divestiture to the alternative buyer – Gores Group – that, if approved by the court, would resolve the competitive concerns of the lawsuit.
“The Department of Justice’s proposed remedy ensures that competition will remain in point-of-sale terminals markets,” said Christine Varney, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “The proposed sale of the Hypercom assets to Gores will create an independent and significant competitor in the United States, both right now and into the future.”
To remedy the department’s competitive concerns, VeriFone and Hypercom will be required to sell Hypercom’s U.S. POS terminals business to Gores. This includes physical assets, personnel, intellectual property rights, transitional support and all other assets necessary for Gores to become a viable competitor in this industry. If the assets are not sold to Gores within 20 days following entry of the final judgment, a trustee will be empowered to sell the assets to another buyer acceptable to the United States, in its sole discretion.
VeriFone is a Delaware corporation headquartered in San Jose, Calif. VeriFone earned more than $1 billion in worldwide revenues in its last fiscal year, ending in October 2010.
Hypercom is a Delaware corporation headquartered in Scottsdale, Ariz. Hypercom earned more than $450 million in worldwide revenues in 2010.
Gores Group is a private equity firm headquartered in Los Angeles. Currently, Gores has more than $4 billion in equity under active management.
As required by the Tunney Act, the proposed 10-year settlement, along with the department’s competitive impact statement, will be published in the Federal Register. Any person may submit written comments concerning the proposed settlement during a 60-day comment period to James J. Tierney, Chief, Networks and Technology Enforcement Section, 450 Fifth Street, N.W., Suite 7100, Washington, D.C. 20530. At the conclusion of the 60-day comment period, the U.S. District Court for the District of Columbia may enter the proposed settlement upon finding that it is in the public interest.
Former Willacy Detention Center Contract Security Officer Pleads Guilty to Sexual Abuse of a Female Detainee in TexasRead the Press Release
WASHINGTON – The Justice Department announced today that former Contract Security Officer Edwin Rodriguez, 30, pleaded guilty to engaging in sexual abuse of a female detainee under his supervision and control. The sexual act occurred inside the Willacy Detention Center while Rodriguez was on duty.
According to documents filed in Court, on Oct. 26, 2008, Rodriguez was working as a Contract Security Officer at the Willacy Detention Center in Raymondville, Texas, and was assigned to pick up meal trays from the various housing “pods” inside the detention center. Rodriguez encountered the victim outside one of the pods as she dropped off empty trays from her pod. Rodriguez pulled the victim into the guard’s bathroom located adjacent to the victim’s pod and engaged in intercourse with her. The female detainee immediately reported the sexual abuse to two individuals, including a former female contract security officer supervising her pod.
“Officers in correctional facilities are entrusted with a great deal of power so that they can carry out their critical public safety responsibilities. This officer abused his power, violating the civil rights of a detainee under his supervision, and violating the public trust,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Justice Department will continue to aggressively prosecute law enforcement officers who abuse their authority in this manner.”
Sentencing is scheduled for Oct. 31, 2011, at 1:30 P.M., before U.S. District Court Judge Hilda G. Tagle in the Brownsville Division of the Southern District of Texas.
The case has been investigated by agents from the Department of Homeland Security’s Office of Professional Responsibility in Harlingen, Texas. The case is being prosecuted by Assistant U.S. Attorney Kebharu Smith, Houston Division and Civil Rights Division Trial Attorney Adriana Vieco.
Detroit-Area Strip Club Owner Sentenced to One Year in Prison for Using Computer Program to Delete Clubs’ Sales to Cheat on TaxesRead the Press Release
WASHINGTON -- Nicholas J. Faranso of Farmington Hills, Mich., was sentenced today by U.S. District Court Judge John Corbett O’Meara in the Eastern District of Michigan to one year and one day in prison for conspiring to defraud the United States, the Department of Justice and the Internal Revenue Service (IRS) announced. Faranso pleaded guilty on Jan. 12, 2011.
According to court documents, Faranso was the owner of two strip clubs: BT’s in Dearborn, Mich., and Tycoon’s in Detroit. From 2001 through 2004, both establishments used a computerized point of sales system which produced guest checks and electronically tracked and recorded sales. Court documents reveal that, in 2001, Faranso purchased a computer software program called Journal Sales Remover from Theodore Kramer, a self-employed computer software salesman. This computer software program was specifically designed to remove a portion of the actual sales from the computerized point of sales systems. The program would make it appear that Faranso’s clubs received less income than they actually did.
Faranso directed Kramer to put the Journal Sales Remover program onto his businesses’ computer systems in order to help Faranso cheat on the businesses’ taxes. From about 2001 to about 2004, at Faranso’s request, Kramer made periodic visits to Faranso’s clubs to run the Journal Sales Remover program to remove a substantial amount of the actual sales from the computerized sales systems. Faranso then provided the reduced sales figures to his accountant. As a result, Faranso falsified the clubs’ tax returns by understating their gross receipts by more than $500,000. Kramer previously pleaded guilty to one count of conspiracy on Nov. 17, 2010.
In addition to the prison term, Faranso was sentenced to two years of supervised release and ordered to pay $6,000 in restitution.
Barbara L. McQuade, U.S. Attorney for the Eastern District of Michigan, and John A. DiCicco, Principal Deputy Assistant Attorney General for the Justice Department’s Tax Division, commended the IRS Special Agents who investigated this case and Tax Division Trial Attorneys Kenneth C. Vert and Tiwana L. Wright, who prosecuted the case.
More information about the Tax Division and its enforcement efforts can be found at www.justice.gov/tax .
Attorney General Eric Holder Appoints Sharis Arnold Pozenas Acting Assistant Attorney General, Antitrust DivisionRead the Press Release
Attorney General Eric Holder announced today the appointment of Sharis Arnold Pozen as Acting Assistant Attorney General of the Department of Justice’s Antitrust Division.
“Sharis is a highly experienced antitrust enforcer and I am confident that she will continue to lead the Antitrust Division in its mission to vigorously enforce the antitrust laws,” said Attorney General Holder. “Sharis has been actively engaged in all significant antitrust matters before the division, and her appointment will ensure that the decision-making on pending antitrust matters is seamless.”
Pozen will become Acting Assistant Attorney General upon the departure of Assistant Attorney General Christine Varney.
Pozen came to the department’s Antitrust Division in February 2009, as Chief of Staff and Counsel, and has served as a key deputy to Varney.
Pozen is instrumental in the overall enforcement and management of the division and played a leading role on several matters, including in the healthcare, technology, energy and agriculture industries. This includes the department’s pending lawsuit against Blue Cross and Blue Shield of Michigan (BCBSM), which alleges that BCBSM’s agreements with hospitals stifle competition, and a settlement with United Regional Health Care System of Wichita Falls, Texas, that prohibited anticompetitive contracts with health insurers–the first case brought by the department since 1999 that challenged a monopolist with engaging in traditional anticompetitive unilateral conduct.
Pozen was the lead antitrust official for the CPTN Holdings LLC and Novell Inc. matter in which the division required the companies to change the terms of their proposed merger in order to address open source concerns.
Pozen also led the division’s efforts in the litigation and settlement involving George’s Inc. in which the department required George’s to make important capital improvements at its Harrisonburg, Va., poultry processing facility, and in the Stericycle Inc./Healthcare Waste Solutions Inc. deal in which the department required divestitures to preserve competition for waste treatment services in the New York City metropolitan area.
Pozen was also an important principal in the department’s joint agriculture workshops with the U.S. Department of Agriculture, its update of the Horizontal Merger Guidelines and its revision of the division’s Merger Remedy Guidelines.
Prior to joining the department, she was Practice Group Director and a partner in Hogan & Hartson’s (now Hogan Lovells) Antitrust, Competition and Consumer Protection Group where she worked from 1995 to February 2009, on a variety of antitrust matters in the technology and healthcare industries.
Prior to joining Hogan & Hartson, Pozen worked for five years at the Federal Trade Commission as an Attorney Advisor, as Assistant to the Director of the Bureau of Competition and as a staff attorney.
Pozen received her B.A. from Connecticut College in 1986 and her J.D. from Washington University in 1989.
Alabama Return Preparers Charged with Conspiracy, Identity Theft, Filing False Tax Returns and Lying to Federal AgentsRead the Press Release
WASHINGTON – Yumeitrius Manuel and Margaret Kirksey, both of Montgomery, Ala., were indicted by a federal grand jury today on charges of conspiracy, identity theft, wire fraud, false claims and lying to federal agents, the Justice Department and Internal Revenue Service (IRS) announced.
According to the indictment, Manuel and Kirksey each owned and ran separate tax return preparation businesses in Montgomery, which operated out of the same physical location. The indictment alleges that Manuel and Kirksey agreed to fraudulently inflate tax refunds by placing false information on their clients’ tax returns. The indictment further alleges that they filed tax returns in the names and Social Security numbers of individuals who did not know about, and did not authorize, the filing of tax returns on their behalf.
An indictment merely alleges that a crime has been committed, and a defendant is presumed innocent until proven guilty beyond a reasonable doubt.
If convicted, Manuel and Kirksey each face a maximum of 10 years in prison for the conspiracy charge, a maximum of five years in prison for each false claims charge, a maximum of 20 years in prison for each wire fraud charge and a minimum of two years in prison for each aggravated identity theft count. Additionally, Manuel faces a maximum of five years in prison for lying to a federal agent. Kirksey faces a maximum fine of $2 million for all counts charged in the indictment and Manuel faces a maximum fine of $2.225 million for all counts charged in the indictment.
This case was investigated by the IRS-Criminal Investigation and is being prosecuted by Tax Division Trial Attorneys Justin Gelfand and Jason Poole.
3 August 2011
UBS Client Pleads Guilty to Filing False Tax ReturnRead the Press Release
WASHINGTON - Robert E. Greeley, a resident of San Francisco, pleaded guilty today to charges of filing a false federal income tax return, the Justice Department and Internal Revenue Service (IRS) announced. Greeley appeared before U.S. District Court Judge Charles R. Breyer in San Francisco and accepted responsibility for concealing more than $13 million in two bank accounts he had with UBS in Switzerland. On June 14, 2011, Greeley was charged with one count of filing a false federal individual income tax return for the 2008 tax year. Judge Breyer scheduled sentencing for Nov. 9, 2011.
According to the plea agreement, Greeley admitted that in 2002 and 2004, with the assistance of UBS banker Renzo Gadola, he opened two bank accounts at UBS in Switzerland in the names of Meyrin Investors and Exchange Preferred Limited, both Cayman Islands nominee entities. Greeley admitted that he was the beneficial owner of Meyrin Investors and Exchange Preferred Limited, and that he directed the financial transactions concerning these bank accounts.
According to the plea agreement, Greeley admitted that between 2002 and 2008, the Meyrin Investors bank account’s highest total net asset balance was $2,855,894 and the Exchange Preferred Limited bank account’s highest total net asset balance was $12,616,881. Greeley further admitted that between 2003 and 2008, he earned more than $734,000 in interest income in the two UBS Switzerland bank accounts and that none of the interest income was reported on any tax return that he filed with the IRS.
According to the plea agreement, U.S. citizens who have a financial interest in, or signature or other authority over, a financial account or accounts in a foreign country with assets in excess of $10,000 at any time during a particular calendar year are required to file with the U.S. Department of Treasury a Report of Foreign Bank and Financial Accounts on Form TD F 90-22.1 (FBAR). Greeley admitted that between 2002 and 2008, he failed to file FBARs with the Department of Treasury and did not otherwise disclose to the IRS his interest in and control over the UBS accounts. Greeley further admitted that between 2002 and 2008 he willfully failed to disclose on his tax returns that he had an interest in, or signature or other authority over, a financial account in a foreign country.
According to the plea agreement, Greeley also admitted that on or about April 15, 2009, he filed a false U.S. Individual Income Tax Return, Form 1040, for the 2008 tax year, which he signed under the penalties of perjury. Greeley admitted that he willfully failed to report both his financial interest in and signature authority over the two bank accounts at UBS Switzerland and interest income of more than $146,000 that he earned from these two UBS Switzerland bank accounts on his 2008 tax return.
In addition to pleading guilty, as set forth in the plea agreement, Greeley agreed to pay a civil FBAR penalty of more than $6.8 million for his failure to file FBARs as required by law.
Department of Justice Tax Division Principal Deputy Assistant Attorney General John A. DiCicco and Melinda Haag, U.S. Attorney for the Northern District of California, commended the investigative efforts of the IRS agents involved in this case. The prosecution is being handled by Trial Attorneys Christopher Maietta and Jennifer Laraia of the Justice Department’s Tax Division.
More information about the Justice Department’s Tax Division and its enforcement efforts is available at www.justice.gov/tax/ .
Two Loan Officers and One Title Agent Charged in $2.5 Million Reverse Mortgage and Loan Modification Scheme Plead Guilty in MiamiRead the Press Release
MIAMI – Louis Gendason of Delray Beach, Fla.; Kimberly Mackey of Pittsburgh; and John Incandela, of Palm Beach, Fla., pleaded guilty today to one count of conspiracy to commit wire fraud for their participation in a $2.5 million Home Equity Conversion Mortgage, or reverse mortgage, fraud scheme .
The guilty pleas were announced today by Tony West, Assistant Attorney General for the Civil Division of the U.S. Department of Justice; Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida; Timothy A. Mowery, Special Agent in Charge, U.S. Department of Housing and Urban Development, Office of Inspector General (HUD-OIG); Jose A. Gonzalez, Special Agent in Charge, Internal Revenue Service, Criminal Investigation Division (IRS-CID); Henry Gutierrez, Inspector in Charge, U.S. Postal Inspection Service; John V. Gillies, Special Agent in Charge, FBI, Miami Field Office; and J. Thomas Cardwell, Commissioner, State of Florida’s Office of Financial Regulation.
A reverse mortgage allows borrowers, who are at least 62 years of age, to convert the equity in their homes into a monthly stream of income, or a line of credit. Unlike the traditional mortgage loan scenario, in which borrowers make monthly payments to a mortgage lender in satisfaction of their outstanding loan, in a reverse mortgage loan scenario, the mortgage lender purchases borrowers’ equity and makes installment payments to the borrower.
According to the information and statements made during today’s plea hearing, from May 2009 through November 2010, the defendants engaged in a reverse mortgage scheme that defrauded unwitting borrowers, Genworth Financial Home Equity Access Inc. and the Federal Housing Administration (FHA). Gendason and Incandela, working as loan officers at 1st Continental Mortgage, with offices in Fort Lauderdale and Boca Raton, Fla, solicited individuals, ages 62 and older, from around the country to refinance their existing mortgages with a reverse mortgage loan financed by Genworth, located in Rancho Cordova, Calif. To qualify the borrowers for the loans, Gendason altered real estate appraisals to fraudulently inflate the value of the borrowers’ properties. In fact, however, none of the borrowers had sufficient equity in their properties to qualify for a reverse mortgage. The defendants then submitted the fraudulently inflated appraisals to Genworth. Based on the false documentation, Genworth approved and the FHA insured more than $2,572,813 in reverse mortgage loans.
As a further part of the conspiracy, Mackey, a licensed title agent and proprietor of Real Estate One Land Services Inc. (REO), located in Pittsburgh, fraudulently closed the Genworth loans, failing to pay off the borrowers’ existing mortgage loans. Genworth wired the loan proceeds to Mackey as the designated closing agent for 1st Continental. Mackey attempted to conceal the fraudulent loan closings by preparing false HUD-1 settlement documents that showed that the existing mortgages had, in fact, been paid off. Between May 2009 and November 2010, Mackey received loan proceeds from Genworth totaling $2,572,813.19. Mackey fraudulently diverted at least $988,086.33 to a bank account controlled by Incandela and Gendason, who used this money for their personal benefit.
Thereafter, to perpetuate the fraud, the defendants engaged in a loan modification scheme to conceal the existence of the Genworth reverse mortgage transactions from the original mortgage lenders, whose loans remained unpaid. To this end, Gendason, Incandela and Mackey conspired to create fictitious offers to buy some of the borrowers’ properties, in the form of “short sales.” A short sale is a sale of real estate in which the sale proceeds are less than the balance owed on the loan to the mortgage lender, but avoids foreclosure and related costs. In other instances, to hide the existence of the Genworth reverse mortgage loan from the original lenders, the defendants made monthly mortgage payments to the borrowers’ original lenders.
Sentencing for Gendason, 42, has been scheduled for Nov. 8, 2011, at 1:15 P.M. before U.S. District Court Judge William P. Dimitrouleas. Sentencing for Mackey, 46, and Incandela, 24, has been scheduled for Nov. 3, 2011 at 1:30 P.M. before U.S. District Court Judge William P. Dimitrouleas. At sentencing, the defendants face a maximum statutory term 30 years in prison.
The remaining defendant, Marcos Echeverria, is scheduled to appear in court on Aug. 10, 2011.
The case was investigated by HUD-OIG, IRS-CID, the U.S. Postal Inspection Service, the FBI and the Florida’s Office of Financial Regulation, with assistance from the U.S. Secret Service and Genworth Financial Home Equity Access. The case is being prosecuted by Assistant U.S. Attorneys Jeffrey H. Kay and Thomas Lanigan, and Kevin J. Larsen, a Trial Attorney forthe Department of Justice’s Office of Consumer Protection Litigation.
Justice Department Resolves Lawsuit Alleging Religious Discrimination by Walnut, CaliforniaRead the Press Release
WASHINGTON – The Justice Department today announced a settlement with the city of Walnut, Calif., resolving allegations that the city violated the Religious Land Use and Institutionalized Persons Act of 2000 (RLUIPA) when it denied the Chung Tai Zen Center of Walnut a permit to construct a Buddhist house of worship on property owned by the Zen Center, thus forcing the Zen Center to move to another facility in Pomona, Calif. The settlement, which must still be approved by a federal district judge, resolves the lawsuit between the United States and the city of Walnut.
“Religious freedom is among our most cherished rights, and our nation’s laws prohibit cities and towns from discriminating based on religion when they make zoning decisions related to houses of worship,” said Thomas Perez, Assistant Attorney General of the Civil Rights Division. “We are pleased that we have reached an agreement with the city of Walnut that prohibits inferior treatment of any religious organization that seeks to build a house of worship in compliance with local zoning laws.”
“The Justice Department has a cherished tradition of protecting the civil rights of all Americans,” said André Birotte Jr., U.S. Attorney for the Central District of California. “The settlement in the case against the city of Walnut is another step toward promoting religious liberty for all people, regardless of their faith or religious denomination.”
The case arose from the city’s handling and ultimate denial of the Zen Center’s application for a zoning permit to operate a Buddhist house of worship. Under the Walnut code, houses of worship may operate in the area in which the Zen Center wanted to build its facility if granted a conditional use permit. The government’s complaint alleged that, until it denied the Zen Center’s application in January 2008, the city had not rejected any application for a conditional use permit to build, expand or operate a house of worship since at least 1980. The complaint further alleged that the city treated the Zen Center differently than similarly situated religious and non-religious facilities. For example, the complaint alleges that in August 2008, the city approved a conditional use permit for a Catholic church that, when completed, will be larger than the Zen Center’s proposed facility. The complaint also alleges that between 1998 and 2003, the city built a civic center complex two blocks from Zen Center’s former location in Walnut.
The city has agreed, as part of settlement, not to impose differential zoning or building requirements on other houses of worship. The city also agreed that its leaders and managers, and certain city employees, will attend training on the requirements of RLUIPA. In addition, the city will adopt new procedures that clarify its appeals process for houses of worship, and will report periodically to the Justice Department.
RLUIPA, enacted in 2000, prohibits religious discrimination in land use and zoning decisions. Persons who believe that they been subjected to religious discrimination in land use or zoning may contact the Housing and Civil Enforcement Section of the Justice Department’s Civil Rights Division at 1-800-896-7743. Additional information about the Justice Department’s efforts to combat religious discrimination may be found at www.justice.gov/crt/spec_topics/religiousdiscrimination/ .
Attorney General and DHS Secretary Announce Largest U.S. Prosecution of International Criminal Network Organized to Sexually Exploit ChildrenRead the Press Release
WASHINGTON – Attorney General Eric Holder and Department of Homeland Security (DHS) Secretary Janet Napolitano announced today the unsealing of three indictments and one complaint charging a total of 72 individuals for their participation in an international criminal network dedicated to the sexual abuse of children and the creation and dissemination of graphic images and videos of child sexual abuse throughout the world. Attorney General Holder and Secretary Napolitano announced the charges with Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, Director of U.S. Immigration of Customs Enforcement (ICE) John Morton and U.S. Attorney Stephanie Finley of the Western District of Louisiana.
Operation Delego, an ongoing investigation that was launched in December 2009, targeted the 72 charged defendants and more than 500 additional individuals around the world for their participation in Dreamboard – a private, members-only, online bulletin board that was created and operated to promote pedophilia and encourage the sexual abuse of very young children, in an environment designed to avoid law enforcement detection. To date, 52 of the 72 charged defendants have been arrested in the United States and abroad. Members traded graphic images and videos of adults molesting children 12 years-old and under, often violently, and collectively created a massive private library of images of child sexual abuse. The international group prized and encouraged the creation of new images and videos of child sexual abuse – numerous Dreamboard members sexually abused children, produced images and videos of the abuse, and shared the images and videos with other members of Dreamboard. Operation Delego represents the largest prosecution to date in the United States of individuals who participated in an online bulletin board conceived and operated for the sole purpose of promoting child sexual abuse, disseminating child pornography and evading law enforcement.
“The members of this criminal network shared a demented dream to create the preeminent online community for the promotion of child sexual exploitation but for the children they victimized, this was nothing short of a nightmare,” said Attorney General Holder. “This operation marks another important step forward in our work to protect children across - and beyond - this country. Our nation’s fight to protect the rights, interests, and safety of children goes on, and it will continue to be a top priority of this Justice Department.”
“This operation is an example of the good work that DHS, through its principal investigative arm, ICE Homeland Security Investigations (HSI), does every year in cooperation with our domestic and international law enforcement partners to protect children,” said Secretary Napolitano. “We take our responsibility to protect our children seriously, and this case is a prime example of how cooperation can bring real results.”
“As alleged in court documents, Dreamboard was a self-described global ‘community’ of pedophiles dedicated to the relentless victimization and exploitation of children 12 and under,” said Assistant Attorney General Breuer. “Using sophisticated methods to evade detection by law enforcement, Dreamboard members allegedly used the power and anonymity of the Internet to motivate each other to commit their horrific acts of sexual abuse of minors and trading in child pornography. The charges unsealed today show the department’s continued commitment to a strategy of targeting the most sophisticated child exploitation networks, at home and abroad. No matter how savvy online predators think they are, we will find them, dismantle their networks, and bring them to justice.”
“These indictments capture the activity of a major, global child pornography and exploitation enterprise whose primary objective was to sexually abuse vulnerable children,” said U.S. Attorney Finley. “I hope that these charges send a clear message that we will prosecute to the fullest extent of the law those who participate in this type of activity. We will continue to aggressively pursue these criminals to ensure that there is no place to hide – not in the United States, not anywhere around the globe.”
“The dismantling of Dreamboard is another stark warning to would-be child predators who think they can trade in child pornography and commit heinous acts against innocent children while hiding behind pseudonyms and other technological tricks,” said ICE Director John Morton. “As these criminals try new techniques to digitally erase their trail, ICE's Homeland Security Investigations along with our U.S. and international law enforcement partners continue to upgrade our strategies and technology to track down the depraved individuals who bring suffering to children.”
According to court documents filed in the Western District of Louisiana and elsewhere, Dreamboard members employed a variety of measures designed to conceal their criminal activity from detection by law enforcement. Members communicated using aliases or “screen names,” rather than their actual names. Links to child pornography posted on Dreamboard were required to be encrypted with a password that was shared only with other members. Members accessed the board via proxy servers, which routed Internet traffic through other computers so as to disguise a user’s actual location and prevent law enforcement from tracing Internet activity. Dreamboard members also encouraged the use of encryption programs on their computers, which password-protect computer files to prevent law enforcement from accessing them in the event of a court-authorized search.
Membership was tightly controlled by the administrators of the bulletin board, who required prospective members to upload child pornography portraying children 12 years of age or younger when applying for membership. Once they were given access, members were required continually to upload images of child sexual abuse in order to maintain membership. Members who failed to follow this rule would be expelled from the group.
According to court documents, Dreamboard members were divided into groups based on status and ranking. The highest level of membership was “Super VIP.”. Individuals who obtained that title had created new images of child pornography by molesting children and shared those images with the board administrators. The next level of membership was “Super VIP,” which was comprised of trusted members of the website. The next level after Super VIP was the VIP rank. Individuals in the lowest level of membership were called Members. Those in the lower ranks could only access a limited quantity of child pornography on the bulletin board. The higher the rank, the more material was available to the member. Individuals advanced to higher levels of membership by providing child abuse images that the individual had produced, providing a large number of images, or providing images that had never been seen before.
The bulletin board included rules of conduct, printed in English, Russian, Japanese and Spanish. The rules required prospective members to upload material depicting children under the age of 12 engaged in sexually explicit activity. Approved members were required to observe strict posting rules designed to encourage members to disseminate large quantities of child pornography, thwart efforts by law enforcement to identify members of the board, and encourage members to sexually abuse children in order to produce new material for the board. The board rules also required members to organize postings based on the type of content. One particular category was entitled “Super Hardcore.” The rules for that category described in graphic language that the only posts permitted were those involving adults having violent sexual intercourse with “very young kids” who were being subjected to both physical and sexual abuse and were obviously “in distress, and or crying.”
All 72 of the defendants are charged with conspiring to advertise and distribute child pornography, and 50 of them are also charged with engaging in a child pornography enterprise. The charges and arrests were conducted in three separate phases over the course of the operation. Twenty-eight defendants were charged and 19 were arrested during phase one of the operation; 22 defendants were charged and 17 were arrested during phase two of the operation; and 22 defendants were charged and 16 arrested during phase three of the operation.
Thirteen of the 52 individuals arrested have pleaded guilty. To date, 20 of the 72 charged individuals remain at large and are known only by their online identities. Efforts to identify and apprehend these individuals continue.
Four of the 13 individuals who have pleaded guilty for their roles in the conspiracy have been sentenced to prison. On May 10, 2011, Timothy Lee Gentry, 33, of Burlington, Ky., was sentenced to 25 years in prison. On May 31, 2011, Michael Biggs, 32, of Orlando, Fla., was sentenced to 20 years in prison. On June 22, 2011, Michael Childs, 49, of Huntsville, Ala., was sentenced to 30 years in prison. On July 14, 2011, Charles Christian, 49, of Tilton, Ill., was sentenced to more than 22 years in prison. Each defendant also received a lifetime of supervised release following his release from prison as part of their sentence.
Operation Delego involved extensive international cooperation to identify and apprehend Dreamboard members abroad. Through coordination between ICE; the Department of Justice; Eurojust, the European Union’s Judicial Cooperation Unit; and dozens of law enforcement agencies throughout the world, 19 Dreamboard members across five continents and 13 countries have been arrested to date outside the United States, including two of the five lead administrators of the board. Those countries include Canada, Denmark, Ecuador, France, Germany, Hungary, Kenya, the Netherlands, the Philippines, Qatar, Serbia, Sweden and Switzerland. Numerous foreign investigations related to Operation Delego remain ongoing. The location and arrest of Dreamboard members abroad have led to the capture and investigation of other global targets.
To date, law enforcement has confirmed that 15 arrested Dreamboard members personally created child pornography. For example, during his July 11, 2011, guilty plea, Anthony Sowders, 28, of Middlesboro, Ky., admitted that he posted on Dreamboard sexually explicit images of female children that he had created via a webcam. Efforts by federal, state, local and international law enforcement to locate and identify the victims of sexual abuse and exploitation by Dreamboard members are ongoing.
Operation Delego is a spinoff investigation from leads developed through “Operation Nest Egg,” the prosecution of another online group dedicated to the sharing and dissemination of child pornography. Operation Nest Egg was a spinoff investigation developed from leads related to another international investigation, “Operation Joint Hammer,” which targeted transnational rings of child pornography trafficking.
An indictment is merely an allegation and defendants are presumed innocent until proven guilty.
The case is being prosecuted by Assistant U.S. Attorney John “Luke” Walker of the Western District of Louisiana and Trial Attorneys Keith Becker and Anitha Ibrahim of the Child Exploitation and Obscenity Section (CEOS) of the Justice Department’s Criminal Division. The Criminal Division’s Office of International Affairs provided substantial assistance. The investigation was conducted by ICE HSI, the Child Exploitation Section of ICE’s Cyber Crime Center, CEOS, CEOS’s High Technology Investigative Unit, and 35 ICE offices in the United States and 11 ICE attaches offices in 13 countries around the world, with assistance provided by numerous local and international law enforcement agencies across the United States and throughout the world.
The investigation was part of Operation Predator, a nationwide ICE initiative to identify, investigate and arrest those who prey on children, including human traffickers, international sex tourists, Internet pornographers, and foreign-national predators whose crimes make them deportable.
ICE encourages the public to report suspected child predators and any suspicious activity through its toll-free hotline at 1-866-DHS-2ICE. This hotline is staffed around the clock by investigators.
$1 Million Settlement Reached for Natural Resource Damages at Superfund Site in MassachusettsRead the Press Release
BOSTON– A $1-million settlement has been reached for natural resource damages (NRD) at the Blackburn & Union Privileges Superfund Site in Walpole, Mass., the Departments of Justice and Interior (DOI), and the Office of the Massachusetts Attorney General announced today.
The Blackburn & Union Privileges Superfund Site includes 22 acres of contaminated land and water in Walpole. The contamination resulted from the operations of various industrial facilities dating back to the 19th century that exposed the site to asbestos, arsenic, lead and other hazardous substances.
The private parties involved in the settlement include two former owners and operators of the site, W.R. Grace & Co.– Conn. and Tyco Healthcare Group LP, as well as the current owners, BIM Investment Corp. and Shaffer Realty Nominee Trust.
From about 1915 to 1936, a predecessor of W.R. Grace manufactured asbestos brake linings and clutch linings on a large portion of the property. From 1946 to about 1983, a predecessor of Tyco Healthcare operated a cotton fabric manufacturing business, which used caustic solutions, on a portion of the property.
In a 2010 settlement with U.S. Environmental Protection Agency (EPA), the four private parties agreed to perform a remedial action to clean up the site at an estimated cost of $13 million. The consent decree lodged today resolves both state and federal NRD liability claims; it requires the parties to pay $1,094,169.56 to the state and federal natural resource trustees, the Massachusetts Executive Office of Energy and Environmental Affairs (EEA) and DOI, for injuries to ecological resources including groundwater and wetlands, which provide habitat for waterfowl and wading birds, including black ducks and great blue herons. The trustees will use the settlement funds for natural resource restoration projects in the area.
“This settlement demonstrates our commitment to recovering damages from the parties responsible for injury to natural resources, in partnership with state trustees,” said Bruce Gelber, Acting Deputy Assistant Attorney General of the Justice Department’s Environment and Natural Resources Division.
“The citizens of Walpole have had to live with the environmental impact of this contamination for many years,” Attorney General Martha Coakley said. “We are pleased that today’s agreement will not only require the responsible parties to reimburse taxpayer dollars, but will also provide funding to begin restoring or replacing the wetland and other natural resources.”
The consent decree was lodged in the U.S. District Court for Massachusetts. A portion of the funds, $300,000, will be distributed to the EEA-sponsored groundwater restoration projects; $575,000 will be used for ecological restoration projects jointly sponsored by EEA and the U.S. Fish and Wildlife Service (FWS).
In addition, $125,000 will go for projects jointly sponsored by EEA and FWS that achieve both ecological and groundwater restoration; $57,491.34 will be allocated for reimbursement for the FWS’s assessment costs; and $36,678.22 will be distributed as reimbursement for the commonwealth’s assessment costs.
“This settlement provides the means for a range of projects designed to compensate the public for decades of groundwater and other ecological damage at this site. I encourage local citizens and organizations to become engaged in the public process that will take place as we solicit, take comment on, and choose these projects in the months ahead,” said Energy and Environmental Affairs Secretary Richard K. Sullivan Jr., who serves as the Commonwealth’s Natural Resources Damages trustee.
“This settlement will help restore habitat for fish and wildlife in the Neponset River watershed,” said Tom Chapman of the FWS New England Field Office. “We look forward to working with the commonwealth and local stakeholders to implement restoration.”
“More than 100 years-worth of industrial activities at this site caused major environmental contamination to the Neponset River, nearby wetlands and to groundwater below the site,” said Commissioner Kenneth Kimmell of the Massachusetts Department of Environmental Protection (MassDEP), which will staff the Trustee Council for the Commonwealth. “We will ensure that the community and the public will be active participants in the process to use these NRD funds to restore the injured natural resources.”
Under the federal Comprehensive Environmental Response, Compensation and Liability Act, EEA and DOI, acting through the FWS, are the designated state and federal natural resource Trustees for the site. The site has been listed on the EPA’s National Priorities List since 1994.
The consent decree is subject to a public comment period and court approval. A copy of the consent decree and instructions about how to submit comments is available on www.usdoj.gov/enrd/Consent_Decrees.html .
After the consent decree is approved, EEA and FWS will develop proposed restoration plans to use the settlement funds for restoration projects. The proposed restoration plans will also be made available to the public for review and comment.
Assistant Attorney General Matthew Brock of Massachusetts Attorney General Coakley's Environmental Protection Division handled this matter. Attorney Jennifer Davis of MassDEP, Attorney Anna Blumkin of EEA and MassDEP’s NRD Coordinator Karen Pelto also worked on this settlement.
2 August 2011
Pittsburgh Crips Gang Member Sentenced to 125 Months in PrisonRead the Press Release
WASHINGTON – A Pittsburgh man was sentenced today to 125 months in prison for conspiring to conduct a racketeering enterprise related to his membership in a Pittsburgh Crips gang, 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.
Kevin Underwood, 30, aka “J-Reed,” pleaded guilty on March 23, 2011, before Senior U.S. District Judge Gustave Diamond in the Western District of Pennsylvania to one count of conspiracy to engage in a racketeering enterprise.
According to the guilty plea, Underwood and others participated in a pattern of racketeering activity that included robberies at gun point; attempted murders; distribution of cocaine, heroin and crack cocaine; obstruction of justice and witness intimidation.
According to court documents, Underwood was a member of the Brighton Place Crips, a criminal street gang that controlled an area of Brighton Place and Morrison Street, also known as the Mad Cave, and Federal Street in the Northside area of Pittsburgh. The Brighton Place Crips were formed in the early 1990s; in 2003, it formed an alliance with the Northview Heights/ Fineview Crips. This alliance expanded the gang’s drug trafficking territory, and increased the number of gang members and associates available to preserve and protect the gang’s power, territory and profits through violence.
The Brighton Place/Northview Heights Crips gang maintains exclusive control over drug trafficking in these neighborhoods through continuous violence and intimidation of rivals and witnesses. Members of the gang support each other through payment of attorneys’ fees and bonds, as well as payments to jail commissary accounts and support payments to incarcerated members’ families.
In addition, gang members had violent confrontations with members of the rival Manchester 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, Underwood was considered a respected member and leader of the enterprise due to his reputation for violence, as well as his demonstrated ability to instruct other members as to how to conduct the affairs of the enterprise, including the possession and distribution of firearms, acts of violence, the possession and distribution of controlled substances, and acts of witness intimidation. Underwood also distributed heroin on behalf of the Crips gang.
Underwood is one of 26 defendants charged in February 2010 with being members 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, 20 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 Rive tti of the Western District of Pennsylvania and Trial Attorney Kevin L. 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.
Micronesian Couple Pleads Guilty in Washington to Withholding Passport in Connection with Human Trafficking ViolationsRead the Press Release
TACOMA, Wash.– Edk Kenit, 29, and Choimina Lukas, 31, a Micronesian couple living in Longview, Wash., pleaded guilty today to document servitude in connection with a scheme to compel the labor of an 18-year-old woman, also from Micronesia. They each face a maximum sentence of five years in prison and a fine of up to $250,000.
Kenit and Lukas admitted in federal court in the Western District of Washington that in March 2010 they recruited the victim to travel from Micronesia to be their domestic servant and arranged for her passport and travel to the United States. Immediately upon her arrival the defendants took control of the victim’s passport as part of their scheme to compel the victim to work as their domestic servant, providing full-time childcare, cooking and cleaning services without compensation. Kenit and Lukas also admitted that they obtained a Social Security card in the victim’s name which they concealed from her. The defendants then caused the victim to obtain full-time employment at a local chicken processing plant and required that the victim cash her pay checks and give the earnings to them. This employment lasted for five months and was in addition to the domestic services the victim continued to provide. Kenit and Lukas admitted that throughout the scheme they isolated the victim by not permitting her to have friends, go out of the house unmonitored, or participate in social gatherings unrelated to family activities. The entire scheme lasted nearly one year before the victim escaped.
“The defendants’ exploitation of a vulnerable young woman is intolerable,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “Human trafficking is a scourge and the Justice Department will continue to vigorously prosecute persons who engage in such conduct.”
“We will continue to target human traffickers, whether they be in our rural communities or our larger metropolitan areas,” said U.S. Attorney for the Western District of Washington Jenny A. Durkan. “I commend the citizens who acted to assist this young victim, and the dedicated law enforcement officers who are leading the way to stop this terrible type of exploitation.”
This case was investigated by Homeland Security Investigations, the Seattle Police Department High Risk Victims Unit and the Longview Police Department. Law enforcement received critical help from non-governmental organizations which specialize in providing services to victims of crime. The case is being prosecuted jointly by Assistant U.S. Attorney Ye-Ting Woo in the Western District of Washington and Trial Attorney Daniel Weiss of the Civil Rights Division’s Human Trafficking Prosecution Unit.
Miami-Area Resident Pleads Guilty to Participating in $200 Million Medicare Fraud SchemeRead the Press Release
WASHINGTON – A Miami-area resident pleaded guilty today in U.S. District Court in Miami for his role in two separate fraud schemes that resulted in the submission of more than $200 million in fraudulent claims to Medicare, announced the Department of Justice, the FBI and the Department of Health and Human Services (HHS).
Nelson Fernandez, 42, admitted to participating in a fraud scheme that was orchestrated by the owners and operators of American Therapeutic Corporation (ATC); its management company, Medlink Professional Management Group Inc.; and the American Sleep Institute (ASI). ATC, Medlink and ASI were all Florida corporations headquartered in Miami. ATC 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. ASI purported to provide diagnostic sleep disorder testing.
Fernandez pleaded guilty to 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. Fernandez was charged in an indictment unsealed on Feb. 15, 2011, in the Southern District of Florida.
According to court filings, ATC’s owners and operators paid 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 ATC and ASI 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 PHPs so that ATC and ASI could bill Medicare for the medically unnecessary services. According to court filings, to obtain the cash required to support the kickbacks, the co-conspirators laundered millions of dollars of payments from Medicare.
In pleading guilty, Fernandez admitted to serving as a patient broker and providing patients to ATC and ASI in exchange for kickbacks in the form of checks and cash. The amount of the kickback was based on the number of days each patient spent at ATC.
According to court documents, Fernandez also conspired to commit health care fraud through Priority Home Health. Fernandez admitted that Priority Home Health submitted more than $14.7 million in fraudulent billings to Medicare. Fernandez and his co-conspirators recruited Medicare beneficiaries to Priority Home Health who did not qualify for home health services. According to court documents, Fernandez recruited some of the same beneficiaries to attend ATC.
According to the plea agreement, Fernandez’s participation in the ATC fraud resulted in $8 million in fraudulent billings to the Medicare program. His participation in the Priority Home Health fraud resulted in $14.7 million in fraudulent billings to the Medicare program.
Sentencing for Fernandez is scheduled for Jan. 17, 2012, at 8:30 a.m. Fernandez faces a maximum penalty of 15 years in prison and a $250,000 fine.
ATC, Medlink and the owners and the lead manager of ATC, Medlink and ASI were each charged with multiple health care fraud-related and money laundering counts in a superseding indictment unsealed on Feb. 15, 2011. Lawrence Duran and Marianella Valera, two of the three owners, and Margarita Acevedo, the lead manager of ATC and Medlink, have pleaded guilty for their roles in the scheme, admitting that more than $200 million in billings were submitted to the Medicare program as a part of the scheme. They are scheduled to be sentenced on Sept. 14, 2011, by U.S. District Judge James Lawrence King in the Southern District of Florida. In addition, Medlink and ATC have pleaded guilty. Trial against the third owner charged in the superseding indictment, Judith Negron, is scheduled to begin Aug. 15, 2011. A defendant is presumed innocent unless proven guilty beyond a reasonable doubt in a court of law.
The indictment charging Fernandez also charges 17 other individuals for their roles in the fraud scheme. Co-defendants Dr. Alan Gumer, Joseph Valdes, James Edwards and Adrianna Mejia have all pleaded guilty for their roles in the scheme. Trial against the remaining 13 co-defendants is scheduled to begin on Nov. 7, 2011, before U.S. District Judge Judge Patricia A. Seitz.
Today’s guilty plea was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s 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.
The criminal case is being prosecuted by Trial Attorney Jennifer L. Saulino 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 its inception in March 2007, the 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 UBS Banker Charged with Helping U.S. Taxpayers Use Secret Swiss Bank Accounts to Evade U.S. TaxesRead the Press Release
WASHINGTON – Martin Lack, a former UBS AG banker who is currently an independent asset manager, has been charged with conspiracy to defraud the United States, the Justice Department and the Internal Revenue Service (IRS) announced today.
According to the indictment, Lack, a citizen and resident of Switzerland, founded his own investment management firm, Lack & Partner Asset Management AG in Zurich in 2002. According to the indictment, Lack assisted U.S. customers to open and maintain secret bank accounts at a Swiss cantonal bank headquartered in Basel, Switzerland, with the assistance of a private banker at the bank. The indictment alleges that Lack traveled to the U.S. to conduct banking for U.S. customers with undeclared accounts and conducted currency transactions in the U.S. in violation of federal banking and currency reporting laws.
According to the indictment, Lack encouraged his customers not to participate in the IRS voluntary disclosure program and he offered to provide his customers with falsified bank documents to conceal the source of the funds in their undeclared bank accounts. The indictment further alleges that Lack gave a U.S. customer with an undeclared bank account a cell phone and instructed the customer to only contact him using the cell phone and not to use a U.S. land line.
The indictment further alleges that Lack feared that he would be arrested by U.S. law enforcement following the investigation of UBS AG, so, in November 2010, he sent his associate, Renzo Gadola, to meet with a client at a Miami hotel to persuade that client not to disclose to the U.S. that the client owned and controlled a bank account at a regional bank headquartered in Basel. The undeclared bank account allegedly was funded when the client provided Lack with approximately $445,000 in cash during two meetings in New Orleans in 2007. According to the indictment, at the Nov. 6, 2010, meeting in Miami, Gadola encouraged the customer not to disclose the undeclared cantonal bank account to U.S. authorities, telling the customer that there was a “99.9 percent chance the client had nothing to worry about because the “likelihood . . .that they will somehow. . . find out about the account is practically zero percent.” Lack also allegedly encouraged this client not to disclose the undeclared bank account at the cantonal bank to the U.S. authorities and offered to provide the client with falsified bank documents to make the funds in the account appear as though they were the proceeds of a loan. On Dec. 22, 2010, Gadola pleaded guilty to conspiring to defraud the United States. He is scheduled to be sentenced before District Judge James King of the Southern District of Florida on Nov. 18, 2011.
Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida; John DiCicco, Principal Deputy Assistant Attorney General for the Justice Department’s Tax Division; and Jose A. Gonzalez, Special Agent in Charge of the Internal Revenue Service - Criminal Investigation (IRS-CI) Miami Field Office, commended the investigative efforts of the IRS agents involved in this case, as well as Senior Litigation Counsel Kevin M. Downing, Trial Attorney Mark F. Daly, Trial Attorney Michelle M. Petersen of the Tax Division, and Assistant U.S. Attorney Bertha Mitrani, who are prosecuting the case.
A criminal indictment is only an accusation and a defendant is presumed innocent until proven guilty. If convicted, the defendant faces a maximum of five years in prison and a maximum fine of $250,000.
More information about the Justice Department’s Tax Division and its enforcement efforts is available at www.usdoj.gov/tax/.
Federal Court in Los Angeles Bars California Man from Preparing Federal Tax Returns for OthersRead the Press Release
WASHINGTON – A federal court in Los Angeles has permanently barred Benjamin Aparicio from preparing federal tax returns for others, the Justice Department announced today. The civil injunction order, to which Aparicio consented, was signed by Judge R. Gary Klausner of the U.S. District Court for the Central District of California.
According to the government complaint, Aparicio, a resident of Fillmore, Calif., who conducted business as BA Income Services in Santa Paula, Calif., engaged in a pattern of claiming false and inflated tax deductions for his customers. The government also alleged that Aparicio advised his customers to form limited liability companies that had no business purpose and subsequently prepared tax returns that used the sham business entities to deduct his customers’ personal expenses. According to the complaint, a sample of 53 returns prepared by Aparicio for tax years 2002 through 2005 and audited by the Internal Revenue Service (IRS) resulted in understated tax liabilities of more than $400,000.
According to the complaint, on October 25, 2010, Aparicio pleaded guilty to three counts of a 17-count federal indictment charging him with, among other things, aiding and assisting in the preparation of false income tax returns. The complaint states that on April 18, 2011, Aparicio was sentenced to 18 months in prison, three years of supervised release and restitution in the amount of $357,100.
Return preparer fraud is one of the IRS’s“Dirty Dozen” tax scams for 2011. In the past 10 years, the Justice Department’s Tax Division has obtained injunctions against hundreds of tax return preparers and tax fraud promoters. Information about these cases is available on the Justice Department website.
1 August 2011
U.S. Army Sergeant Major and Former Army Sergeant Plead Guilty to Bribery and Conspiracy Charges Related to Department of Defense Contract in AfghanistanRead the Press Release
WASHINGTON - A current U.S. military service member and a former U.S. military service member pleaded guilty on Aug. 1, 2011, to bribery and conspiracy charges related to their roles in accepting $50,000 for the award of a Department of Defense contract in Afghanistan, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney for the District of Hawaii Florence Nakakuni.
Retired Army Sergeant Charles O. Finch, 45, of Mililani, Hawaii, and Sergeant Major Gary M. Canteen, 42, of Delaware, each pleaded guilty before U.S. District Judge Leslie E. Kobayashi in the District of Hawaii, one day before their trial was scheduled to begin. Finch and Canteen each pleaded guilty to one count of conspiracy to commit bribery and to defraud the United States, and Finch also pleaded guilty one count of bribery.
According to court documents, Finch and Canteen were deployed to Bagram Airfield, Afghanistan, in 2004 and 2005. Finch was assigned as the Noncommissioned Officer In Charge (NCOIC) of Operations Support. As NCOIC, Finch was responsible for line haul, or trucking, services into and out of Bagram involving the distribution of goods destined for American and coalition soldiers throughout Afghanistan. In addition, as NCOIC, Finch participated in evaluating, recommending and facilitating the award of line haul contracts. As part of the contract solicitation and award process, Finch assisted with the technical evaluation and rating of each prospective line haul contractor, which the contracting office relied upon prominently in making the award of line haul contracts.
Finch admitted that, in advance of the award of a line haul contract in 2004, he conspired with Canteen and others to accept a $50,000 bribe in return for exercising his influence to recommend and facilitate the award of the contract to AZ Corporation, a military contractor in Afghanistan. According to court documents, the bribe was paid on Sept. 27, 2004, via wire transfer into a bank account in the name of Da Spot Inc., a clothing and souvenir shop in Pearl City, Hawaii, owned by Canteen. Two weeks later, Finch authored a memorandum recommending that AZ receive a line haul contract, which was, in fact, awarded to AZ on Oct. 15, 2004. According to contract documents, AZ was ultimately paid approximately $20 million for services invoiced under this contract.
Canteen admitted that he provided his bank account information to receive the $50,000 payment from AZ Corporation. Canteen withdrew $25,000 of the funds for his personal use, and gave $24,000 to Finch in February 2005, after they returned home to Hawaii from Afghanistan.
Sentencing for Finch and Canteen is scheduled for Jan. 19, 2012. Finch faces up to 15 years in prison and a fine of $250,000 or three times the value of the bribe on the bribery count, and up to five years in prison and a fine of $250,000 on the conspiracy count. Canteen faces up to five years in prison and a fine of $250,000. The maximum fine could be increased to twice the gain derived from the crimes or twice the loss suffered by the victims of the crimes if those amounts are greater than the statutory maximum fine.
The cases are being prosecuted by Trial Attorneys Mark W. Pletcher and Emily W. Allen of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Marshall Silverberg of the District of Hawaii. The cases are being investigated by the Army Criminal Investigations Division, the Defense Criminal Investigative Service, the Air Force Office of Special Investigations, the Special Inspector General for Afghanistan Reconstruction and members of the International Contract Corruption Task Force (ICCTF).
Maryland Resident Sentenced to 12 Months in Prison for Conspiracy to Deal in Explosive MaterialsRead the Press Release
WASHINGTON – Dennis Coster, 58, of White Hall, Md., was sentenced today to 12 months in prison followed by three years of supervised release for conspiracy to deal in explosive materials and to create a false entry in a required record, the Justice Department announced. U.S. Judge Marvin J. Garbis of the District of Maryland ordered the forfeiture of $437,000, the value of the proceeds of the offense, and ordered that the company Coster operated, Fireworks Productions Inc., to pay a $65,000 criminal fine.
In pleading guilty, Coster admitted that from January 2000 through July 2005, Coster and Fireworks Productions sold more than 1,000 pounds of explosive materials in the form of display fireworks to an individual who was not licensed to purchase them, and who then illegally resold the display fireworks. Coster and Fireworks Productions admitted that they created invoices that under-represented the quantity of display fireworks that were actually sold to the co-conspirator to conceal the diversion of explosive materials and to prevent the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) from discovering the scheme of diverting and reselling the display fireworks.
Display fireworks are the large fireworks that are intended to be used in shows, under the supervision of a trained pyrotechnician. Due to the danger presented by these explosives, federal law requires that any person dealin g in display fireworks must first obtain a federal explosives license or permit from the ATF. The latest report from the Consumer Product Safety Commission (CPSC) indicates that there were reports of three fireworks-related deaths and an estimated 8,600 hospital emergency room treated injuries in 2010.
“When display fireworks fall into the hands of those without proper training, the results can be deadly,” said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. “As this conviction and sentence demonstrate, we are committed to working with our federal partners to protect consumers from the illegal sale of fireworks and other explosive materials.”
“ATF works to educate and ensure compliance with the explosives industry, due to the dangerous nature of these materials,” says ATF Special Agent in Charge Theresa R. Stoop. “Dennis Coster’s participation in the illegal sale of explosives materials violates Federal explosives regulations, and defies our mission in safeguarding explosives to keep the public safe.”
“The manufacture and sale of professional grade fireworks to consumers is not only illegal, but potentially deadly,” said CPSC Chairman Inez Tenenbaum. “The cooperation among CPSC, ATF and the Justice Department on this case is an example of how government can work together to keep the public safe and hold accountable those who seek to put consumers in harm’s way.”
The case was investigated by the ATF and the CPSC. The matter was prosecuted by Jessica Gunder and Richard Goldberg from the Justice Department’s Office of Consumer Protection Litigation.
Justice Department to Monitor Elections in MississippiRead the Press Release
WASHINGTON – The Justice Department announced today that it will monitor primary elections on Aug. 2, 2011, in Bolivar, Clay, Copiah, Humphreys, Jefferson Davis, Noxubee, Panola, Quitman, Sunflower, Tallahatchie 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 these 11 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.
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 Employment Discrimination Lawsuit Against the Tucson Unified School District in ArizonaRead the Press Release
WASHINGTON – The Department of Justice announced today that it has entered into a consent decree with the Tucson Unified School District (TUSD) that, if approved by the U.S. District Court for the District of Arizona, will resolve the department’s complaint alleging sex and/or national origin discrimination in violation of Title VII of the Civil Rights Act of 1964, as amended. The complaint alleges that the TUSD discriminated against Donna Guzman, Marcia Vela, Veronica Leon, Jimmy Miranda and Eddie Montano, female and/or Hispanic custodial employees of its Rincon/University High School (RHS), by subjecting them to harassment and a hostile work environment based on sex and/or national origin.
The complaint, which was filed along with the proposed consent decree in the U.S. District Court for the District of Arizona, alleges that the TUSD violated Title VII by failing to take effective action that would stop one of its employees – a white, male custodian – from subjecting his co-workers to a series of harassing and abusive comments based on their sex and/or national origin, and subjecting Guzman and Vela to physical intimidation based on their sex and/or national origin, after the female and/or Hispanic co-workers had complained about his behavior to RHS and TUSD supervisory personnel numerous times.
Under the terms of the consent decree, TUSD must pay a total of $45,000 to Guzman, Vela, Leon, Miranda and Montano in compensatory damages. The consent decree also provides for injunctive relief requiring the TUSD to enforce its policies and procedures that prohibit sex and national origin discrimination and to train its officers and other employees on the prevention of sex and national origin discrimination.
“The Justice Department is committed to the vigorous enforcement of all federal civil rights laws under its jurisdiction, including Title VII’s prohibition against harassment in the workplace,” said Thomas E. Perez, Assistant Attorney General of the Civil Rights Division. “This lawsuit should send a clear message that the Department will take necessary action to eliminate and remedy the effects of unlawful harassment in our public sector workplaces.”
The lawsuit is based on two charges of discrimination filed by Guzman and Vela with the Equal Employment Opportunity Commission (EEOC). After investigating the charges, finding reasonable cause to believe that the TUSD had discriminated against the charging parties and their similarly-situated co-employees and unsuccessfully attempting to conciliate the matter, the EEOC referred the charges to the department. More information about the EEOC is available at www.eeoc.gov.
The enforcement of Title VII and other federal employment discrimination laws is a top priority of the Justice Department’s Civil Rights Division. Additional information about the Civil Rights Division and its work is available on its website at www.justice.gov/crt
Justice Department Settles Allegations of Employment Discrimination in Promotion of Police Sergeants in New JerseyRead the Press Release
WASHINGTON – The Department of Justice announced today that it has entered into a settlement that, if approved by the court, will resolve the department’s allegations that the state of New Jersey and the New Jersey Civil Service Commission (collectively “New Jersey”) violated Title VII of the Civil Rights Act of 1964 by discriminating against African-Americans and Hispanics in the promotion of police sergeants throughout the state.
Title VII’s prohibitions of discrimination in employment on the basis of race, color, sex, national origin or religion proscribe not only intentional discrimination, but also the use of employment practices (e.g., written examinations and qualification standards) that result in disparate impact, unless the employer can prove that such practices are job related and consistent with business necessity. The United States’ complaint, filed in the U.S. District Court for the District of New Jersey in Newark, alleges that New Jersey’s use of a written examination to select candidates for promotion to police sergeant disproportionately excluded African-American and Hispanic candidates since 2000, and was not proven job related and consistent with business necessity.
“Police officers, whose daily responsibilities include protecting the public and ensuring the safety of others, have the right to be free from discrimination on the basis of race or national origin on the job,” said Thomas Perez, Assistant Attorney General for the Civil Rights Division. “The Department of Justice will challenge discrimination in employment on the basis of race or national origin, whether that discrimination is intentional or the result of promotional practices that have discriminatory impact. The department commends New Jersey for working to put in place new promotion procedures that comply with Title VII and to provide relief to those African-American and Hispanic officers who have been harmed by the prior practices challenged by the department.”
Under state law, the New Jersey Civil Service Commission is responsible for establishing procedures for the promotion of law enforcement officers in local jurisdictions participating in the state’s civil service system. According to the United States’ complaint, the state’s pass/fail use of its written examination for screening candidates for promotion to police sergeant, and its use of candidates’ scores on the written examination to certify candidates in descending rank order on eligible lists from which appointments were made, resulted in a disparate impact upon African-Americans and Hispanics. The use of the exam in this manner was inappropriate for several reasons, including the fact that the pass/fail use of the written exam did not usefully distinguish between candidates who were qualified to perform the job of police sergeant, nor did the rank-order use of the exam meaningfully distinguish between candidates who were more or less qualified to do the job.
The Justice Department filed a motion today requesting that the court provisionally enter a consent decree executed by the parties setting forth the terms of the settlement; and schedule an initial fairness hearing regarding the terms of the decree.
The consent decree requires that New Jersey no longer use the written examination challenged by the United States for selecting police sergeants and requires that New Jersey develop a new lawful selection procedure that complies with Title VII.
The consent decree, if approved by the court, also requires that New Jersey pay one million dollars into settlement funds towards back pay to African-American and Hispanic officers who were harmed by the promotional practices challenged by the United States and who are determined to be eligible for relief. Additionally, African-American and Hispanic officers determined to be eligible for relief under the consent decree may receive a priority offer of promotion to police sergeant positions. All claimants must pass the new, lawful selection procedure developed by New Jersey under the decree before being considered for a priority promotion and meet the lawful qualifications required of all officers promoted to police sergeant.
More information about Title VII and other federal employment laws is available on the Department of Justice website at www.usdoj.gov/crt/emp/index.html.
Department of Justice Challenges Alabama Immigration LawRead the Press Release
WASHINGTON - The Department of Justice challenged the state of Alabama’s recently passed immigration law, H.B. 56, in federal court today.
In a complaint and brief filed in the Northern District of Alabama, the department said that various provisions of H.B. 56 conflict with federal immigration law and undermine the federal government’s careful balance of immigration enforcement priorities and objectives. The brief filed today makes clear that, while the federal government values state assistance and cooperation with respect to immigration enforcement, a state cannot set its own immigration policy, much less pass laws that conflict with federal enforcement of the immigration laws.
Alabama’s law is designed to affect virtually every aspect of an unauthorized immigrant’s daily life, from employment to housing to transportation to entering into and enforcing contracts to going to school. H.B. 56 further criminalizes mere unlawful presence and, like Arizona’s law, expands the opportunities for Alabama police to push aliens toward incarceration for various new immigration crimes by enforcing an immigration status verification system.
Consistent with the department’s position in United States v. Arizona, in which the department last year successfully obtained a preliminary injunction against Arizona’s S.B. 1070, the brief said that the mandates that H.B. 56 imposes on Alabama law enforcement may also result in the harassment and detention of foreign visitors, legal immigrants and even U.S. citizens who may not be able to readily prove their lawful status. In addition, H.B. 56 will place significant burdens on federal agencies, diverting their resources away from dangerous criminal aliens and other high-priority targets. In addition to interfering with law enforcement, H.B. 56 imposes further burdens on children by demanding that students prove their lawful presence, which could discourage parents from enrolling their children in school.
“Today’s action makes clear that s etting immigration policy and enforcing immigration laws is a national responsibility that cannot be addressed through a patchwork of state immigration laws,” said Attorney General Eric Holder. “The department is committed to evaluating each state immigration law and making decisions based on the facts and the law. To the extent we find state laws that interfere with the federal government’s enforcement of immigration law, we are prepared to bring suit, as we did in Arizona.”
“DHS continues to enforce federal immigration laws in Alabama and around the country in smart, effective ways that focus our resources on criminal aliens and employers who knowingly hire illegal labor, as well as continue to secure our border,” said Department of Homeland Security Secretary Janet Napolitano. “Legislation like this diverts critical law enforcement resources from the most serious threats to public safety and undermines the vital trust between local jurisdictions and the communities they serve. We continue to support comprehensive reform of our immigration system at the federal level because this challenge cannot be solved by a patchwork of inconsistent state laws.”
Birmingham Chief of Police A.C. Roper believes that the Alabama immigration law will hamper local law enforcement’s ability to police the community effectively. Roper stated that the law will require the Birmingham Police Department to “expend scarce resources on immigration matters at the expense of” municipal priorities.
The department filed the suit after consultation with the Alabama governor, Alabama attorney general and Alabama law enforcement officials. The suit was filed on behalf of the Departments of Justice, Homeland Security and State, which share responsibilities in administering federal immigration law, and the Department of Education was also consulted. The department has requested a preliminary injunction to enjoin enforcement of the law, parts of which go into effect on Sept. 1, 2011, arguing that the law’s operation will cause irreparable harm.
29 July 2011
U.S. Sues Mortgage Lending Business President & Founder in Connection with HUD Insured LoansRead the Press Release
WASHINGTON – The United States has filed a civil lawsuit against Robert S. Luce, founder and president of MDR Mortgage Corp., a mortgage lending business located in Palatine, Ill., the Justice Department announced today. MDR participated in mortgage insurance programs administered by the U.S. Department of Housing and Urban Development’s (HUD) Federal Housing Administration (FHA). The United States’ complaint seeks recovery under the False Claims Act and civil penalties under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA).
According to the complaint filed today in the U.S. District Court for the Northern District of Illinois, Luce was indicted on April 7, 2005, for mail fraud, wire fraud, obstruction of justice and making false statements. Between April 2005 and October 2008, Luce represented to HUD, and caused MDR employees to represent to HUD, that he was not under criminal investigation or indictment. These statements were false at the time they were made, and Luce knew they were false at the time he or other MDR employees made them. Because Luce was under indictment, MDR was not entitled to originate mortgage loans under FHA requirements. Yet, MDR originated more than 90 FHA-insured loans that later defaulted.
HUD was required to pay more than $1.6 million in insurance claims to holders of the defaulted mortgage notes, as well as costs and expenses on these loans. MDR is no longer participating in the HUD insurance programs.
“The FHA is intended to help families achieve the dream of home ownership,” said Tony West, Assistant Attorney General of the Justice Department’s Civil Division. “Mortgage lenders who lie in order to reap the benefits of these insurance programs, as is alleged here, undermine the integrity of these programs and misuse taxpayer funds that are meant to support single family housing.”
In the interest of fostering home ownership by low and moderate income households, HUD, through the FHA, insures lenders against losses on mortgage loans made to buyers of single family housing. Through its single-family mortgage insurance program, HUD lowers the cost of mortgage loans for qualifying families and guarantees the repayment of insured loans that go into default, thereby protecting the lender against loan default and minimizing the risk of loss on mortgages that meet certain requirements. Approved HUD-FHA lenders, such as MDR, have the authority to originate FHA-insured mortgage loans, which then are often resold to another lender. If the homeowner defaults on the loan and the lender forecloses, the lender may submit a claim under which HUD will pay the balance of the loan, related interest and other costs, and assume ownership and possession of the property.
The investigation leading to the filing of this complaint has been conducted by the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Northern District of Illinois, HUD and HUD’s Office of Inspector General, all of whom are part of the Financial Fraud Enforcement Task Force. President Obama established the interagency task force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
Former Army Official Sentenced to 18 Months in Prison for Accepting Illegal Gratuities from Contractors in IraqRead the Press Release
WASHINGTON – A former U.S. Army lieutenant colonel was sentenced today to 18 months in prison for accepting illegal gratuities from multiple Iraqi contractors and for stealing from Iraqi fuel reserves, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.
David Charles Pfluger, 56, of Abilene, Texas, was sentenced today by U.S. District Judge Sam Cummings in the Western District of Texas. Judge Cummings also sentenced Pfluger to three years of supervised release and ordered the defendant to pay $24,000 in restitution. Pfluger pleaded guilty to a four count indictment charging him with one count of conspiracy, two counts of accepting gratuities, and one count of conversion of third party property by a U.S. official.
According to court documents, Pfluger was deployed to Forward Operating Base Ridgway in Iraq, and assigned the role of “Mayor” of the base. As the “Mayor,” he was the officer in charge of the physical facilities of the base and had extensive contact with the various local contractors doing work on the base. While serving in this role, Pfluger agreed with a U.S. Army translator and various local contractors to accept gratuities in the form of cash, jewelry and clothing from various contractors. The gratuities were paid in return for official acts Pfluger performed which benefitted the contractors, including encouraging contracts for those contractors, relaxing security procedures for them and providing them fuel from Iraqi fuel reserves which he had no authority to access. Pfluger received the money, jewelry and clothing in Iraq and sent it home through U.S. mail, often hiding the money inside books and letters. In total, Pfluger admitted to receiving approximately $11,500 in cash from this scheme, plus an unknown amount of clothing and jewelry.
This case was prosecuted by Special Trial Attorney Christopher L. Peele of the Criminal Division’s Fraud Section, on detail from the Special Inspector General for Iraq Reconstruction. The case was being investigated by the Army Criminal Investigations Division, the Special Inspector General for Iraq Reconstruction, the Defense Criminal Investigative Service and the FBI.
Florida Man Pleads Guilty to $30 Million Investment Fraud SchemeRead the Press Release
WASHINGTON – David R. Lewalski, formerly of Gainesville, Fla., pleaded guilty today to mail fraud in connection with his operation of a $30 million investment fraud scheme, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Robert E. O’Neill of the Middle District of Florida.
Lewalski, 47, pleaded guilty before U.S. Magistrate Judge Mark A. Pizzo in the Middle District of Florida and faces a maximum penalty of 20 years in prison.
According to court documents, the defendant, who operated a company called Botfly LLC, willfully engineered and executed a scheme to defraud by promising victim investors that he could generate returns of up to 10 percent per month, compounded monthly, through his trading in the foreign currency (forex) market. In fact, the defendant operated an investment fraud scheme. The defendant and others working at his direction raised approximately $29,851,598 from victim investors, but the defendant used only a small percentage of those funds for forex trading (approximately $2.6 million), the vast majority of which he lost.
Lewalski admitted that instead of trading in the foreign currency market as he promised, he used the bulk of victim investor funds to make payments to other investors in order to perpetuate the scheme and make it appear as if he was generating the promised returns. Lewalski paid investors $14,339,887 in “returns” that he led them to believe were generated by his forex trading when, in reality, he was merely paying them with other victim investors’ funds. Lewalski also spent millions of dollars of victim investor funds on personal expenses, including high end real estate, private jet travel, luxury automobiles, computer equipment and jewelry.
This case is being prosecuted by Assistant U.S. Attorney Mandy Riedel and Trial Attorney Henry Van Dyck of the Criminal Division’s Fraud Section. The case was investigated by the U.S. Postal Inspection Service, the Florida Department of Law Enforcement, and the Florida Office of Financial Regulation, with assistance from the Florida Office of the Attorney General.
Today’s guilty plea is part of efforts being undertaken by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
For more information on the task force, visit www.StopFraud.gov .
Dow Chemical Agrees to Pay $2.5 Million Penalty to Resolve Air, Water and Waste Violations at Its Midland Michigan ComplexRead the Press Release
WASHINGTON – The Dow Chemical Company has agreed to pay a $2.5 million civil penalty to settle alleged violations of the Clean Air Act, Clean Water Act and the Resource Conservation and Recovery Act at its chemical manufacturing and research complex in Midland, Michigan, the Department of Justice and Environmental Protection Agency (EPA) announced today.
In addition to paying a penalty, Dow will implement a comprehensive program to reduce emissions of volatile organic compounds (VOCs) and hazardous air pollutants (HAPs) from leaking equipment such as valves and pumps. These emissions – known as “fugitive” emissions because they are not discharged from a stack but rather leak directly from equipment - are generally controlled through work practices, such as monitoring for and repairing leaks. The settlement requires Dow to implement enhanced work practices, including more frequent leak monitoring, better repair practices, and innovative new work practices designed to prevent leaks. In addition, the enhanced program requires Dow to replace valves with new “low emissions” valves or valve packing material, designed to significantly reduce the likelihood of future leaks of VOCs and HAPs.
“This compliance program should serve as a model for industry and will go a long way to assure future violations will not happen again at this facility,” said Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division at the Department of Justice. “Dow worked cooperatively with the government to resolve this matter and in doing so set an example for responsible compliance with our nation’s environmental laws.”
“Communities near large industrial facilities depend on EPA to enforce our nation’s environmental laws and protect public health and the environment,” said Cynthia Giles, Assistant Administrator for EPA’s Office of Enforcement and Compliance Assurance. “Today’s settlement with Dow will reduce the potential for future violations and protect communities from emissions of hazardous air pollutants.”
According to the 24-count complaint, filed simultaneously with the settlement today in the Eastern District of Michigan, Dow allegedly violated Clean Air Act requirements for monitoring and repairing leaking equipment, for demonstrating initial and continuous compliance with regulations applicable to chemical, pharmaceutical, and pesticide plants, and for failing to comply with reporting and recordkeeping requirements. The complaint also asserts that Dow violated the Clean Water Act’s prohibition against discharging pollutants without a permit and violated the Resource Conservation and Recovery Act’s requirements for hazardous waste generators.
The consent decree is subject to a 30 day comment period and final approval by the court. A copy of the consent decree is available on the Department of Justice web site at www.usdoj.gov/enrd/Consent_Decrees.html
More information on the settlement: www.epa.gov/compliance/resources/cases/civil/mm/dowchemical.html
28 July 2011
Repeat Offender Shipping Firm Sentenced in New Orleans to Pay $ 1 Million and Banned in “Magic Pipe” CaseRead the Press Release
WASHINGTON – Four corporations involved in owning and operating a fleet of vessels regularly visiting New Orleans were today sentenced to pay a $1 million penalty and banned from doing business in the United States for the next five years by Judge Carl J. Barbier, the Justice Department announced.
Stanships Inc. (Marshall Islands), Stanships Inc. (New York), Standard Shipping Inc. and Calmore Maritime Ltd., collectively the owners and operator of the M/V Americana, a Panamanian registered cargo vessel, each pleaded guilty on April 12, 2011, in New Orleans to 32 felony counts for violations of the Act to Prevent Pollution from Ships, Ports and Waterways Safety Act and obstruction of justice.
As part of the sentence, the court prohibited the shipping conglomerate from conducting further business in the United States during the maximum five year period of probation. The owner of the companies was also personally banned from being involved in the ownership or technical management of ships trading in the United States. Of the $1 million penalty, Judge Barbier ordered that $250,000 be devoted to organizational community service to help conservation, protection, restoration and management projects to benefit fish and wildlife habitats and resources in the Eastern District of Louisiana.
The government’s investigation of the M/V Americana started when a crew member told the U.S. Coast Guard during an inspection of the ship on Nov. 29, 2010, that the ship was illegally dumping sludge and oily waste overboard using a so-called “magic pipe” to bypass required pollution prevention equipment. The crew member provided the Coast Guard with cell phone photos taken at sea showing the use of the bypass. According to an agreed upon factual statement filed in court, the defendants have admitted the following:
Sludge and oily waste from the vessel’s engines was transferred to a fuel tank and then deliberately pumped overboard.
The ship had an unreported leak between a ballast and fuel tank that led to overboard discharges of oil contaminated waste from both tanks.
A black “comet streak” stain of apparent oil was visible on the outside of the ship in the immediate vicinity of the overboard valve when the ship was in New Orleans in December 2010.
The metal bypass pipe used to dump oily waste overboard was hidden from view when the ship was in port.
A false Oil Record Book was created to conceal the illegal discharges. Ships are required to keep an Oil Record Book in which internal transfers and overboard discharges are fully recorded. The log is regularly inspected by the Coast Guard to assure compliance with U.S. and international law and to make sure ships are not a threat to U.S. ports and waters.
The defendants also were charged with violating the Ports and Waterways Safety Act because they failed to report a hazardous situation that threatened U.S. ports and waters, involving the failure of the ship’s generators. After a voyage in which the ship had lost power for several days at sea, the ship arrived at the Southwest Pass, La. The master, who opposed proceeding to port until the problem was corrected, was directed by a shore-side manager to write an email indicating that the ship had two generators. This was communicated to the Coast Guard which then allowed the ship to enter the Mississippi River. However, the agency was not told that neither of the two generators was fully operational or able to power the ship, and that there was no backup since a third generator was completely inoperable. Because of the hazardous situation, the master ordered tug boats to guide the ship into port.
Stanships Inc. (Marshall Islands) is a repeat offender. It committed new crimes after it was sentenced on Sep. 29, 2010, for deliberate discharges in U.S. waters and concealing illegal pollution in falsified ship records from the M/V Doric Glory. In that case, U.S. District Judge Helen G. Berrigan of the Eastern District of Louisiana ordered the defendant to implement a comprehensive environmental compliance plan and pay $700,000 in criminal fines and an additional $125,000 as community service payments. On April 27, 2011, Judge Berrigan revoked probation for Stanships Inc. (Marshall Islands) and banned the company’s vessels from further trade in the United States.
“The crimes of Stanships, a repeat offender, warrant the sanction that it be banned from conducting further business in America,” said Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division of the Department of Justice. “This prosecution sends the message that deliberate violations of environmental laws will not be tolerated.”
“Deliberate pollution and intentional falsification of environmental records are serious crimes. This case was also significant because the misconduct took unacceptable risks with Louisiana’s ports and waters, as well as the safety of the ship. Prosecutions such as this are designed to protect the future of our water, rivers, and wetlands and to ensure that the regulated community is truthful with the Coast Guard.” said Jim Letten, U.S. Attorney for the Eastern District of Louisiana.
“Today's sentence demonstrates the United States' steadfast commitment to safeguarding the marine environment. We applaud the efforts of the many environmentally responsible companies, but will hold non-compliant corporations and their officers accountable for violating environmental laws. I am grateful for the hard work and dedication of the Coast Guard investigators and Department of Justice for bringing this case to proper resolution,” said Rear Adm. Roy A. Nash, Eighth District Coast Guard commander."
“Protection of our aquatic resources continues to be of utmost importance to the Coast Guard. This sentencing should send a message that repeat offenders will be investigated and prosecuted to the fullest,” said Special Agent in Charge Damon Rodriguez, Coast Guard Investigative Service, Gulf Region.
“Today’s action demonstrates that neither the government nor the public will tolerate the flagrant and repeated violation of U.S. laws,” said Ivan J. Vikin, Special Agent in Charge of EPA’s criminal enforcement program in Louisiana. “The government contends that the defendant not only failed to carry out the terms of its probation, it knowingly released oil into our oceans after the sentence was passed. The oceans must be protected from shipping companies that look to cut corners by dumping waste improperly.”
This case was investigated by the U.S. Coast Guard Criminal Investigative Services and the EPA Criminal Investigation Division, with assistance from Sector New Orleans, Eight Coast Guard District Office of the Judge Advocate. The case was prosecuted by Assistant U.S. Attorneys Emily K. Greenfield and Dorothy Manning Taylor, and Senior Trial Attorney Richard A. Udell of the Environmental Crimes Section of Department of Justice Environment and Natural Resources Division.
Louisiana Man Sentenced to 15 Years in Prison for Shooting at Home of Three Hispanic MenRead the Press Release
WASHINGTON – The Justice Department announced today that Johnny Mathis, 48, of Lecompte, La., was sentenced to 15 years in prison by U.S. District Court Judge Dee Drell for shooting at the home of three Hispanic men because of the victims’ race and national origin.
Testimony at today’s sentencing hearing established that on June 15, 2008, Mathis fired three shots from a shotgun at the home of three Hispanic men who lived across the street from Mathis’ home in the Western District of Louisiana. After hearing two shots, the victims fled their house. Once outside, the victims watched as Mathis fired a third shot into the trees and then entered the victims’ house, left briefly and then returned. Minutes later, the victims’ house was engulfed in flames as Mathis exited. Subsequent investigation determined that the fire started in the kitchen where the victims had seen Mathis.
Mathis pleaded guilty on April 27, 2011, to criminal interference with the right to fair housing and using a firearm during a crime of violence.
“This kind of senseless and violent act has no place in this country. All people, regardless of race, have a right to be safe in their homes,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Justice Department is committed to prosecuting those who violate our most critical federal civil rights laws.”
“Everyone should feel safe, especially in the place where they live,” said Stephanie A. Finley, U.S. Attorney for the Western District of Louisiana. “We hope today’s sentence sends a message that this type of activity is not taken lightly. Law enforcement will continue to investigate, and our office will continue to prosecute those who interfere with the right of others to peacefully live in their homes.”
The case was investigated by the FBI, and it was prosecuted by Assistant U.S. Attorney Mary Mudrick of the Western District of Louisiana and Nicole Lee Ndumele, a Trial Attorney in the Department of Justice’s Civil Rights Division.
Jury Convicts Member of Counterfeit DVD and CD<br /> Trafficking GroupRead the Press Release
WASHINGTON – Charles Ndhlovu was convicted today for his participation in a counterfeit DVD and CD ring, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Sally Quillian Yates for the Northern District of Georgia.
A federal jury in the Northern District of Georgia convicted Ndhlovu of one count of trafficking in counterfeit labels and three counts of criminal copyright infringement. Ndhlovu and his co-defendants were originally indicted in May 2009. Ndhlovu was charged with additional counts in a superseding indictment returned by a grand jury on May 20, 2011.
The jury returned its verdict today after three days of trial and six hours of deliberation. The evidence at trial established that other defendants named in the May 2009 indictment rented space at a warehouse on Metropolitan Parkway in Atlanta, where they “burned,” or copied DVDs and CDs and produced counterfeit labels and packaging. According to the evidence at trial, Ndhlovu purchased labels and blank digital media for use in manufacturing the infringing DVD and CD copies of copyrighted material and distributing them to retail outlets. The entire criminal enterprise was responsible for the distribution of illegal products that, if legitimate, would have been valued at more than $12 million.
The charges each carry a maximum sentence of five years in prison. In addition, the defendant faces a fine of up to $250,000 on each count. A sentencing hearing has not yet been scheduled.
The case was prosecuted by Assistant U.S. Attorney Brian Pearce in the Northern District of Georgia and Senior Counsel John H. Zacharia of the Criminal Division’s Computer Crime and Intellectual Property Section (CCIPS). The case was investigated by the FBI and U.S. Immigration and Customs Enforcement of the Department of Homeland Security, together with the Atlanta Police Department Organized Crime Unit, Fulton County Sheriff’s Office, College Park Police Department, and East Point Police Department, with assistance from the Recording Industry Association of America.
Caterpillar Inc. to Pay $2.55 Million Penalty to Resolve Clean Air Act ViolationsRead the Press Release
WASHINGTON – Caterpillar Inc. has agreed to pay a $2.55 million civil penalty to settle alleged Clean Air Act violations for shipping more than 590,000 highway and non-road engines without the correct emissions controls, the Justice Department and Environmental Protection Agency (EPA) announced today. Caterpillar also allegedly failed to comply with emission control reporting and engine-labeling requirements. Engines operating without proper emissions controls can emit excess nitrogen oxides (NOx), particulate matter and other air pollutants that impact people’s health, potentially causing respiratory illnesses and aggravating asthma.
The Clean Air Act requires the use of certified after-treatment devices (ATDs) that control engine exhaust emissions once the emissions have exited the engine and entered the exhaust system. Typical ATDs include catalytic converters and diesel particulate filters. Correct fuel injector and fuel map settings are also crucial for proper engine emission control. Caterpillar allegedly shipped over 590,000 engines to vehicle assemblers without the correct ATDs and with improperly configured fuel injector and map settings. In some cases, the mis-configured engines were incorporated into vehicles which resulted in excess emissions of NOx and particulate matter into the environment.
“This settlement demonstrates our commitment to enforcing the Clean Air Act’s requirement that engine manufacturers take steps to ensure engines are equipped with emissions controls that are essential to protecting public health from harmful air pollution,” said Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division of the Department of Justice. “Caterpillar will pay a substantial civil penalty for shipping engines that did not comply with these Clean Air Act requirements, and under this settlement, it must continue its recall and correction of engines that do not have correctly configured emissions controls.”
“The enforcement of vehicle emissions standards, labeling and reporting requirements is critical to protecting the air we breathe and ensuring that companies play by the rules,” said Cynthia Giles, assistant administrator for EPA’s Office of Enforcement and Compliance Assurance. “Today’s settlement will protect public health and create a level playing field for companies that meet their environmental obligations.”
The consent decree requires Caterpillar to continue its recall of non-compliant engines to install the correct ATDs and correct the fuel injector and fuel map settings. In addition to the recall, Caterpillar will mitigate the effects of the excess emissions from the non-conforming engines through permanent retirement of banked emission credits. Caterpillar will also improve its reporting of emission control system defects, as required under the Clean Air Act.
The state of California, through the Air Resources Board, is also settling its claims for violations arising from the sale in California of improperly configured engines. California will receive $510,000 of the civil penalty.
The Caterpillar settlement was lodged today in the U.S. District Court for the District of Columbia and is subject to a 30-day public comment period. The consent decree is available at www.justice.gov/enrd/Consent_Decrees.html
Attorney General Holder, Justice Department Officials Hold Listening Conference with Tribal Leaders in Rapid City & Pine Ridge Reservation, South DakotaRead the Press Release
WASHINGTON – Attorney General Eric Holder and other administration officials met this week with tribal leaders and advocates to discuss issues of tribal safety and domestic violence in Rapid City, S.D., and Pine Ridge Reservation, S.D. The tribal listening conference coincided with the one year anniversary of President Obama’s signing of the Tribal Law and Order Act (TLOA) into law—a measure aimed at helping both tribal governments and the federal government better address the unique public safety challenges facing Native American communities across the country.
Attorney General Holder, Associate Attorney General Thomas J. Perrelli, Assistant Attorney General Ignacia Moreno of the Environment and Natural Resources Division, Department of Interior Bureau of Indian Affairs Secretary Larry Echo Hawk, and 30 U.S. Attorneys engaged in a host of conversations, on topics including combating violence against women, protecting tribal lands, honoring traditional Native American values, and training tribal prosecutors and police forces.
Attorney General Holder also participated in a special wreath laying ceremony at Wounded Knee. He is the first administration official since President Clinton in 1999 to visit the historic site.
“Nearly half a century ago, following his tenure as Attorney General, Robert Kennedy traveled to here Pine Ridge to signal the U.S. government’s commitment to ensuring peace, security, opportunity, justice on tribal lands. Today, this commitment lives on – and it has been renewed, and strengthened, by this Administration,” said Attorney General Holder. “I’m especially proud that, through the implementation the Tribal Law and Order Act and other critical efforts, the Justice Department’s work to protect and empower people in Indian Country have never been stronger or more effective.”
Soon after he came into office, Attorney General Holder identified building and sustaining safe and secure tribal communities as one of the Department of Justice’s top priorities. In June of 2009, the department launched a wide-ranging initiative to strengthen public safety in Indian Country. Since that time, the department has taken a number of steps to deepen its commitment to tribal communities and to develop more effective partnership with tribal leaders, police, prosecutors, courts and advocates to combat crime in tribal communities.
Also this week, the Justice Department is hosting the 2011 National Intertribal Youth Summit in Santa Fe, N.M., convening 175 young men and women from nearly 50 tribal communities across the country for the week-long summit. The summit features administration officials from the White House and the Departments of Justice, Interior, Health and Human Services and Education, and provides an opportunity for Obama administration officials to hear directly from youth in Indian Country.
Last week, the Obama Administration unveiled a new proposal for legislation to combat the epidemic rates of violence against Native women in Indian Country. The proposed legislation offers a broader set of tools for federal and tribal law enforcement agencies to hold perpetrators of domestic violence accountable for their crimes. It builds on the philosophy of the TLOA by recognizing that tribal authorities, in collaboration with their federal partners, are best able to address crime in their communities if they are given the tools, authorities and resources needed to do it.
For a list of the Justice Department’s accomplishments in Indian Country, please visit: www.tribaljusticeandsafety.gov/docs/indian-country-accomplishments.pdf
27 July 2011
Justice Department Reaches Agreement with Bedford County, Virginia, on Bailout Under the Voting Rights ActRead the Press Release
WASHINGTON – The Justice Department has reached an agreement with Bedford County, Va., that, if approved by the court, will allow for the county’s bailout from its status as a “covered jurisdiction” under the special provisions of Voting Rights Act, and thereby exempt the county from the preclearance requirements of Section 5 of the act. The agreement is in the form of a consent decree filed today in the U.S. District Court for the District of Columbia.
Under Section 5 of the Voting Rights Act, certain covered jurisdictions, determined according to Section 4 of the act, are required to seek preclearance for any changes in voting qualifications, standards, practices or procedures from the U.S. District Court in Washington, D.C., or from the U.S. Attorney General, prior to their implementation. Section 4 of the act provides that a covered jurisdiction may seek to “bailout,” or remove itself from such coverage, and therefore be exempted from the preclearance requirements, by seeking a declaratory judgment before a three-judge panel in federal district court. Such a bailout judgment can only be issued if the court determines that the jurisdiction meets certain eligibility requirements for bailout contained in the statute, including a 10-year record of nondiscrimination in voting-related actions. The act also provides that the attorney general can consent to entry of a judgment of bailout if, based upon investigation, the attorney general is satisfied that the jurisdiction meets the eligibility requirements.
Bedford County, Va., filed its bailout action in U.S. District Court in Washington, D.C. on March 8, 2011. County officials had contacted the attorney general prior to filing its action, indicating that the county was interested in seeking bailout. The county provided the Justice Department with substantial information, and the department conducted an investigation to determine the county’s eligibility. Based on that investigation, the department is satisfied that the county meets the Voting Rights Act’s requirements for bailout.
“In this case, the department carefully evaluated the information the county provided to us and conducted our own investigation, which has satisfied the department that the county is eligible for a bailout,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “I appreciate the cooperation of county officials in providing the department with substantial information, and moving toward a resolution of this matter in the way envisioned by the Voting Rights Act.”
The consent decree details the legal and factual basis for a bailout determination and, if approved, will grant the county’s request. The court will retain jurisdiction of the action for 10 years and can reopen the action upon the motion of the attorney general or any aggrieved person alleging conduct by the county that would have originally precluded the county from bailing out if it had occurred during the 10 year period preceding entry of the consent decree.
Information about bailout, the Voting Rights Act, and other federal voting laws is available on the Department of Justice website at www.justice.gov/crt/voting/. Complaints may be reported to the Voting Section of the Justice Department’s Civil Rights Division at 1-800-253-3931.