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14 July 2011
Federal Court Permanently Shuts Down Iowa Tax PreparersRead the Press Release
WASHINGTON – A federal court has permanently barred Howard Musin, his wife Jill Schwartz-Musin and their three companies from preparing federal tax returns for others, the Justice Department announced today. The three businesses named in the court’s civil injunction order are SSC Services Inc., M-S Services Inc. and Schwartz’s Systems Corporation. Trial evidence showed that the Musins reside in Clive, Iowa.
Following an eight-day trial, U.S. District Court Judge John A. Jarvey found that the defendants engaged in a wide variety of misconduct in preparing tax returns for their customers, many of which were distributors for Shaklee Corporation, a large multi-level marketing firm. According to court documents, the couple improperly claimed business expense deductions on customers’ returns for costs of personal items . Court documents also state that the Musins attempted to hide their improper deductions, including disguising nearly $70,000 in personal cattery expenses for a customer who bred cats as a hobby by listing them as business expenses of the customer’s computer consulting business.
According to evidence presented at trial, Schwartz-Musin worked for the Internal Revenue Service (IRS) from 1972 to 1978, and for part of that time she was a criminal investigator. The complaint alleges that Schwartz-Musin became a tax return preparer in 1982 and, in 2000, pleaded guilty to one criminal count of obstructing the administration of the tax laws. The court found that, the earlier criminal conviction notwithstanding, the defendants created and submitted a backdated, false form to the IRS during a customer audit in 2006 in a fraudulent attempt to justify an improper deduction.
The case was investigated by IRS Revenue Agents Jean Lane and Kathleen Roberts, and was handled by Tax Division attorneys Miranda Bureau, Sean Beaty and Ann Reid.
In the past decade, the Justice Department’s Tax Division has obtained injunctions against hundreds of unscrupulous tax return preparers and tax scam promoters. More information about these cases is available on the Justice Department website .
13 July 2011
Washington Business Owner Sentenced to 18 Months in Prison for Participating in Conspiracy to Defraud the United States and Making False Claims on Government ContractRead the Press Release
WASHINGTON – A founder and president of a Washington-area design firm was sentenced today to 18 months in prison for her role in a conspiracy to defraud the United States in the award of a government contract for U.S. Department of Homeland Security’s (DHS) Immigration and Customs Enforcement (ICE), the Department of Justice announced today.
Darlene Mathis-Gardner was also sentenced by Judge Richard J. Leon to 36 months of supervised release after her incarceration and to pay $389,738 in restitution to ICE. Mathis-Gardner was charged with the conspiracy in U.S. District Court for the District of Columbia on April 8, 2011, and she pleaded guilty on April 18, 2011.
According to the two-count felony charge, Mathis-Gardner conspired with others to defraud the United States in order to obtain the award of a contract by the General Services Administration (GSA) for interior design work to be performed on Potomac Center North, a building in the southwest of Washington that ICE was renovating as a new headquarters. Mathis-Gardner provided false information and documents to GSA officials in order to obtain the contract. According to the court documents, Mathis-Gardner and her co-conspirators misrepresented their company’s background and qualifications and created fictitious documentation of the company’s past performance in order to convince government officials that they were qualified to perform the work. Based on the misrepresentations and false documents, the government awarded Mathis-Gardner’s company a contract worth approximately $1.3 million. The department said that the conspiracy to fraudulently obtain the contract took place from in or about March 2007 until at least in or about June 2007.
The charges further state that once the contract was obtained, Mathis-Gardner knowingly presented invoices to GSA that falsely overstated the number of hours that her firm had worked. The department said that the falsely inflated invoices were submitted during the period between June 2007 and January 2009. According to the court documents, as a result of the charged offenses, ICE suffered a loss of $389,738.
Mathis-Gardner’s plea arose from an investigation into procurement fraud occurring against ICE conducted by the Antitrust Division’s National Criminal Enforcement Section (NCES) and the ICE Office of Professional Responsibility.
Anyone with information concerning collusion or fraud by businesses seeking ICE contracts is urged to call NCES at 202-307-5777, visit www.justice.gov/atr/contact/newcase.htm or contact the DHS tipline at 1-877-2INTAKE or [email protected].
Three Miami-Area Residents Plead Guilty to Participating <br /> in $200 Million Medicare Fraud SchemeRead the Press Release
WASHINGTON – Three Miami-area residents pleaded guilty today in U.S. District Court in Miami for their roles in a fraud scheme that resulted in the submission of more than $200 million in fraudulent claims to Medicare, the Department of Justice, the FBI and the Department of Health and Human Services (HHS) announced.
Joseph Valdes, 30; James Edwards, 65; and Adriana Mejia, 40, each 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, Fla. A PHP is a form of intensive treatment for severe mental illness. ASI purported to provide diagnostic sleep disorder testing.
Valdes and Edwards each 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. Mejia pleaded guilty to one count of conspiracy to commit money laundering. All three defendants were 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 PHP programs so that ATC and ASI could bill Medicare for more than $200 million in 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, Valdes admitted to serving as a marketer for ATC and Medlink and paying kickbacks to patient brokers and owners and operators of assisted living facilities and halfway houses in exchange for providing patients to attend ATC’s facilities. Edwards admitted to serving as a patient broker and providing patients to ATC in exchange for kickbacks in the form of checks and cash based on how many days each patient attended ATC. Mejia admitted to serving as a money launderer and creating fictitious entities and bank accounts in order to convert millions of dollars of Medicare payments into cash.
According to the plea agreements, Valdes’s and Edwards’s participation in the scheme resulted, respectively, in $9.9 million and $8.16 million in fraudulent billings to the Medicare program. Mejia’s money laundering resulted in $2.25 million in laundered funds.
Edwards and Mejia are scheduled to be sentenced on Jan. 18, 2011 and Valdes is scheduled to be sentenced on Jan. 19, 2011. Valdes and Edwards each face a maximum penalty of 15 years in prison and a $250,000 fine. Mejia faces a maximum penalty of 20 years in prison and a $4.5 million 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; Margarita Acevedo, the lead manager; ATC; and Medlink have each pleaded guilty for their roles in the scheme. They are scheduled to be sentenced on Sept. 14, 2011, by U.S. District Judge James Lawrence King. Trial against the third owner charged in the superseding indictment, Judith Negron, is scheduled to begin Aug. 15, 2011.
The indictment charging Valdes, Edwards and Mejia also charges 15 other individuals for their roles in the fraud scheme. Co-defendant Alan Gumer, MD, pleaded guilty on June 30, 2011. Trial against the remaining 14 co-defendants is scheduled for Nov. 7, 2011 before Judge Patricia A. Seitz.
Today’s guilty pleas were announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; John V. Gillies, Special Agent-in-Charge of the FBI’s Miami field office; and Special Agent-in-Charge Christopher 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 .
New Hampshire Man Pleads Guilty to Computer Intrusion<br /> into Former Employer’s Computer SystemsRead the Press Release
WASHINGTON - Lawrence R. Marino, a 41-year-old from Goffstown, N.H., pleaded guilty today in federal court to computer intrusion, stemming from his repeated hacks into his former employer’s computer systems, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and Acting U.S. Attorney Michael J. Gunnison for the District of New Hampshire.
Marino pleaded guilty before U.S. District Court Judge Steven J. McAuliffe in Concord, N.H., to a one-count criminal information charging him with computer intrusion.
Marino admitted at the plea hearing that from May 2009 through September 2009, he repeatedly hacked into the computer systems of his former employer, OneSky Jets. OneSky, which is based in Manchester, N.H., provides charter flight services to customers around the country. According to the criminal information, while employed at OneSky, Marino acquired other employees’ log-in credentials for their OneSky email accounts. After Marinos’ employment at OneSky was terminated, he began working for a Regent Jet, a competitor private jet company. While employed at Regent Jet, Marino repeatedly accessed the email accounts of OneSky employees and obtained information about OneSky’s existing and prospective customers. Marino also hacked into OneSky’s computer system and obtained a copy of a database with tens of thousands of customer names and other information. According to the court document, Marino used this illegally-obtained customer information to then solicit new customers on behalf of Regent Jet.
A sentencing hearing has been scheduled for Oct. 17, 2011, at 11:30 a.m. EDT. At sentencing, Marino faces a maximum penalty of five years in prison and a fine of up to $250,000, and restitution.
The case was investigated by the FBI. The case is being prosecuted by Assistant U.S. Attorney Arnold Huftalen of the U.S. Attorney’s Office for the District of New Hampshire and Mona Sedky of the Computer Crime and Intellectual Property Section of the Justice Department’s Criminal Division.
Manager of Miami Health Care Agency and Registered Nurse Plead Guilty in $25 Million Health Care Fraud SchemeRead the Press Release
WASHINGTON – The manager of a Miami health care agency and a registered nurse pleaded guilty today for their participation in a $25 million home health Medicare fraud scheme, announced the Department of Justice, the FBI and the Department of Health and Human Services (HHS).
Lisandra Alonso, 33, and Luisa Morciego, 39, each pleaded guilty before U.S. District Judge Joan A. Lenard in Miami to one count of conspiracy to commit health care fraud. Alonso and Morciego were charged in a February 2011 indictment. According to plea documents, Alonso was a manager and patient recruiter for ABC Home Health Care. Morciego was a registered nurse and worked for ABC and Florida Home Health Care Providers Inc. ABC and Florida Home Health were Miami home health care agencies that purported to provide home health and physical therapy services to Medicare beneficiaries. According to court documents, ABC and Florida Home Health were operated for the purpose of billing the Medicare program for expensive physical therapy and home health care services that were medically unnecessary and/or were never provided. Court documents allege that the medically unnecessary services were prescribed by doctors, including Jose Nunez, M.D., and Francisco Gonzalez, M.D. Nunez and Gonzalez were also charged in the February 2011 indictment along with Alonso, Morciego and 17 other co-conspirators.
According to court documents, beginning in approximately January 2006 and continuing until approximately March 2009, Alonso taught the owners and operators of ABC how to operate a fraudulent home health agency. Alonso explained the structure of the corrupt scheme, specifically the importance of recruiters, kickbacks, doctors, beneficiaries and Medicare billing. Alonso negotiated kickback payment rates between patient recruiters and the ABC owners and operators, and distributed the kickback payments to patient recruiters on behalf of the ABC owners and operators. Alonso also served as a patient recruiter for ABC. She paid kickbacks and bribes to beneficiaries in return for those beneficiaries allowing ABC to bill Medicare for services that were medically unnecessary and/or never provided.
Alonso also taught nurses at ABC how to falsify patient files for Medicare beneficiaries to make it appear that such beneficiaries qualified for home health care and therapy services from ABC. Alonso taught the nurses to do so by, among other things, describing in the nursing notes and patient files non-existent symptoms such as tremors, impaired vision, weak grip and inability to walk without assistance. These symptoms were described to make it appear that the patients qualified for home health care benefits under Medicare. Alonso admitted that the files were falsified so that ABC could bill Medicare for medically unnecessary services. Nurses employed by ABC also paid kickbacks to Alonso in return for being assigned patients at ABC.
As a result of Alonso’s participation in the illegal scheme, the Medicare program was billed approximately $17 million for home health care services that were medically unnecessary and/or were never provided.
According to court documents, from January 2006 to March 2009, Morciego worked as a registered nurse for ABC and Florida Home Health. During that time, Morciego falsified patient files for Medicare beneficiaries to make it appear that the beneficiaries qualified for home health care and therapy services. Morciego knew that the beneficiaries did not actually qualify for and did not receive the services. Morciego described in nursing notes and patient files symptoms that were non-existent, such as tremors, impaired vision, weak grip and inability to walk without assistance. Morciego admitted that the files were falsified so that ABC and Florida Home Health could bill Medicare for medically unnecessary services.
As a result of Morciego’s participation in the fraud schemes at ABC and Florida Home Health, Medicare was billed approximately $296,000 for services that were medically unnecessary and/or were never provided.
Morciego is scheduled to be sentenced on Dec. 5, 2011. Alonso is scheduled to be sentenced on Oct. 3, 2011. The charge of conspiracy to commit health care fraud carries a maximum prison sentence of 10 years. The defendants also face fines and terms of supervised release, as well as forfeiture of any property or proceeds derived from their criminal activities.
Drs. Nunez and Gonzalez are scheduled to begin trial on Oct. 10, 2011. An indictment is merely a charge and defendants are presumed innocent until proven guilty.
Today’s guilty pleas were announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; John V. Gillies, Special Agent-in-Charge of the FBI’s Miami field office; and Special Agent-in-Charge Christopher Dennis of the HHS Office of Inspector General (HHS-OIG), Office of Investigations Miami office.
This case is being prosecuted by Trial Attorney Joseph S. Beemsterboer of the Criminal Division’s Fraud Section. The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.
Since their inception in March 2007, Medicare Fraud Strike Force operations in nine locations have charged more than 1,000 defendants who collectively have falsely billed the Medicare program for more than $2.3 billion. In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov .
Justice Department Sues to Stop Nationwide “Welfare Benefit Plan” Tax SchemeRead the Press Release
WASHINGTON – The Justice Department is seeking to block a husband and wife from operating a scheme that allegedly helps high-income individuals attempt to improperly avoid income taxes by funneling money through purported “welfare benefit plans,” the Justice Department announced today. The civil injunction suit was filed in federal court in Chicago against Tracy L. Sunderlage and his wife, Linda Sunderlage, of Huntley, Ill. SRG International, Ltd., of Nevis, West Indies, and three related Illinois companies – SRG International U.S. LLC, Maven U.S. LLC and Randall Administration LLC – were also named as defendants.
According to the complaint, the defendants claim to operate plans that provide benefits like life and health insurance to participating companies’ employees, when in fact the scheme is simply a mechanism for the companies’ owners to receive purportedly tax-free or tax-deferred income for their personal use. Tracy Sunderlage and the two SRG International companies allegedly market the scheme to h igh-income professionals who own small, closely held companies. Tracy Sunderlage allegedly tells scheme participants that their companies’ contributions to these plans are tax-deductible.
In the alleged current version of the scheme, each participant’s company makes supposedly tax-deductible payments to a purported benefit plan operated by Maven and Randall Administration. The company’s contributions are allegedly transferred into an account within an Anguilla company in which they are invested until the owner terminates from the program and receives the assets for his or her personal use. The complaint alleges that many participants own these foreign accounts through offshore trusts, which Tracy Sunderlage and SRG International Ltd. often help to establish.
The complaint alleges that participants from across the country have transferred at least $239 million to the purported welfare benefit plans and that total contributions may exceed $300 million.
Tracy Sunderlage has allegedly been involved with other tax schemes as well. According to the complaint, he has promoted the use of offshore “asset protection” trusts and an offshore “business protection plan.” In addition, the complaint states that he participated in the illegal Aegis trust scheme and promoted it to at least one welfare benefit scheme participant.
The Internal Revenue Service has warned t hat many programs claiming to provide substantial tax deductions through contributions to purported welfare benefit plans are, in fact, abusive tax schemes. In April, a federal judge in Los Angeles permanently enjoined a California man who allegedly promoted sham welfare-benefit plans.
In the past decade, the Justice Department’s Tax Division has obtained hundreds of injunctions against promoters of tax schemes and preparers of fraudulent tax returns. Information about these cases is available on the Justice Department website .
Former Washington County, Missouri, Chief Deputy Sentenced to 10 Years in Prison for Beating Four InmatesRead the Press Release
WASHINGTON - Vernon Wilson, former Chief Deputy of the Washington County Sheriff’s Department in Potosi, Mo., was sentenced today in U.S. District Court in St. Louis, for violating the civil rights of four former inmates of the Washington County Jail on four separate occasions, the Justice Department announced today. Wilson was sentenced to 10 years in prison, followed by three years of supervised release.
A jury found Wilson guilty on March 3, 2011, of beating two of the inmates and arranging for the beatings of two other inmates. Wilson was also convicted of two counts of lying to the FBI about his role in two of the attacks. According to evidence presented at trial, on two occasions, Wilson struck inmates repeatedly in the face, banging their heads into a concrete wall. On two other occasions, Wilson orchestrated the beatings of inmates by instigating another inmate, who was known for fighting, to assault them. Both times Wilson rewarded his inmate accomplice for the beatings by giving him cigarettes. As a result of one of these orchestrated beatings, the victim had to be hospitalized for his serious injuries, which included a broken orbital bone.
“Corrections officers are charged with the very important task of maintaining security and discipline in their facilities,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “When corrections officers seek to inflict unjustified punishments on inmates by inciting and inflicting beatings, they threaten the very fabric of our criminal justice system, and they will be prosecuted by the Department of Justice.”
“We are pleased with the sentence for Vernon Wilson because his actions affected more than those he physically abused,” said Special Agent in Charge Dennis L. Baker of the FBI St. Louis Division. “He undermined the public's trust in law enforcement.”
Wilson’s daughter, Valeria Wilson Jackson, 26, a former employee of the Sheriff’s Department who worked under Vernon Wilson’s supervision, previously pleaded guilty on July 14, 2010, to one count of obstruction of justice for lying to the FBI about her role in one of the beatings. Jackson was sentenced on March 10, 2011, to five years of probation, including six months of home confinement.
These cases were both investigated by the St. Louis Division of the FBI and were prosecuted by Trial Attorneys Fara Gold and Patricia A. Sumner of the Civil Rights Division of the U.S. Department of Justice.
Florida Telecommunications Company, Two Executives, an Intermediary and Two Former Haitian Government Officials Indicted for Their Alleged Participation in Foreign Bribery SchemeRead the Press Release
WASHINGTON - Cinergy Telecommunications Inc., Cinergy’s president and director, the president of Florida-based Telecom Consulting Services Corp. and two former Haitian government officials have been charged in a superseding indictment for their alleged roles in a foreign bribery, wire fraud and money laundering scheme, announced 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 and Special Agent in Charge Jose A. Gonzalez of the Internal Revenue Service - Criminal Investigation’s (IRS-CI) Miami Field Office.
According to the superseding indictment, the defendants allegedly participated in a scheme to commit foreign bribery and money laundering from December 2001 through January 2006. The indictment alleges that during this time period Cinergy and its related company, Uniplex Telecommunications Inc., allegedly paid more than $1.4 million to shell companies to be used for bribes to foreign officials of the Republic of Haiti’s state-owned national telecommunications company, Telecommunications D’Haiti (Haiti Teleco).
According to court documents, Cinergy and Uniplex executed a series of contracts with Haiti Teleco that allowed the companies’ customers to place telephone calls to Haiti. The bribe payments allegedly were authorized by Washington Vasconez Cruz, the telecommunications companies’ president, and Amadeus Richers, the companies’ director, and were allegedly paid to Haitian government officials at Haiti Teleco, including Patrick Joseph and Jean Rene Duperval. According to the superseding indictment, the purpose of these bribes was to obtain various business advantages from the Haitian officials for Cinergy and Uniplex, including preferred telecommunications rates and credits toward sums owed. To conceal the bribe payments, the defendants allegedly used various shell companies to receive and forward the payments, including J.D. Locator Services, Fourcand Enterprises and Telecom Consulting Services.
The six defendants charged in the superseding indictment are:
Washington Vasconez Cruz, 63, of Miami, the president of Cinergy and Uniplex, is charged with one count of conspiracy to violate the Foreign Corrupt Practices Act (FCPA) and to commit wire fraud, six counts of FCPA violations, one count of conspiracy to commit money laundering and 19 counts of money laundering;
Amadeus Richers, 60, of Pembroke Pines, Fla., and Brazil, the then-director of Cinergy and Uniplex, is charged with one count of conspiracy to violate the FCPA and to commit wire fraud, six counts of FCPA violations, one count of conspiracy to commit money laundering and 19 counts of money laundering;
Cinergy Telecommunications Inc., a privately-held telecommunications company incorporated in Florida, is charged with one count of conspiracy to violate the FCPA and to commit wire fraud, six counts of FCPA violations, one count of conspiracy to commit money laundering and 19 counts of money laundering;
Patrick Joseph, 49, of Miami and Haiti, a former general director for telecommunications at Haiti Teleco, is charged with one count of conspiracy to commit money laundering;
Jean Rene Duperval, 44, of Miramar, Fla., and Haiti, a former director of international relations for telecommunications at Haiti Teleco, is charged with two counts of conspiracy to commit money laundering and 19 counts of money laundering; and
Marguerite Grandison, 42, of Miramar, the former president of Telecom Consulting Services Corp., and Duperval’s sister, is charged with two counts of conspiracy to commit money laundering and 19 counts of money laundering.
The superseding indictment also charges Duperval and Grandison with laundering corrupt payments authorized by Joel Esquenazi and Carlos Rodriguez on behalf of another Florida telecommunications company.
Duperval was charged previously in the indictment returned on Dec. 7, 2009, with one count of conspiracy to commit money laundering and 12 counts of money laundering. Grandison was previously charged with one count of conspiracy to violate the FCPA and to commit wire fraud, seven counts of FCPA violations, one count of conspiracy to commit money laundering and 12 counts of money laundering.
Esquenazi and Rodriguez were charged in the initial December 2009 indictment and are unaffected by the superseding indictment. They are scheduled to stand trial on July 18, 2011.
An indictment is merely an accusation, and defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt in a court of law.
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 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 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 superseding indictment also gives notice of criminal forfeiture.
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.
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, the former director of international affairs for Haiti Telco, 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.
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.
The case is being prosecuted by Senior Trial Attorneys Nicola J. Mrazek and James M. Koukios of the Criminal Division’s Fraud Section, with the assistance of the U.S. Attorney’s Office for the Southern District of Florida. The Office of International Affairs in the Justice Department’s Criminal Division also provided assistance in this matter. The cases were investigated by the IRS-CI Miami Field Office.
Final Co-conspirator Sentenced to 10 Years in Prison for Role in Texas HomicideRead the Press Release
WASHINGTON – A New Caney, Texas, woman was sentenced to 10 years in prison today for her role in a homicide that took place in Nacogdoches, Texas, in August 2007, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney John M. Bales for the Eastern District of Texas.
Carrie Christine Wood, 38, pleaded guilty before U.S. District Judge Marcia Crone in Beaumont, Texas, on Feb. 17, 2011, to committing violent crime in aid of racketeering activity related to the murder of David Mitchamore.
According to information presented in court, Wood was a close associate and confidant of her co-defendant, Carl Carver, a general of the Aryan Brotherhood of Texas (ABT). The ABT is a race-based, state-wide organization that operates inside and outside of state and federal prisons throughout Texas and the United States. The ABT enforces its rules and promotes discipline among its members, prospects and associates through murder, attempted murder, conspiracy to murder, assault, robbery and threats against those who violate the rules or pose a threat to the enterprise. Members, and oftentimes associates, are required to follow the orders of higher ranking members, often referred to as “direct orders.”
According to court documents, Mitchamore, aka “Super Dave,” an ABT member, and his girlfriend, Christie Rochelle Brown, were murdered by Wood’s co-defendant Brent Stalsby as a result of a “direct order” issued by Carver because of Mitchamore’s failure to repay an outstanding debt he allegedly owed to an Aryan Brotherhood general. Wood communicated the direct order from Carver to Charles Cameron Frazier, who then responded to the jail where Carver was incarcerated to receive further instructions from Carver about Mitchamore’s punishment. The bodies of Mitchamore and Brown were discovered in Nacogdoches County on Aug. 10, 2007.
On June 27, 2011, Carver was sentenced to life in prison. On May 25, 2011, Brent Stalsby was sentenced to life in federal prison and Terry Stalsby, who was present when the “direct order” issued by Carver was delivered to Frazier, was sentenced to 162 months in federal prison. Frazier was sentenced on June 22, 2011, to life in prison. April Flanagan was sentenced on April 26, 2011, to 180 months in prison after she admitted, among other things, that she knew and approved of the plan to murder Mitchamore, and provided ABT members with the shotgun used to murder Mitchamore and Brown.
“With today’s sentencing of Carrie Wood, all of the conspirators involved in the murders of David Mitchamore and Christie Brown have now been held accountable for their crimes,” said Assistant Attorney General Breuer. “Whether gang members and their associates pull the trigger or provide support for violent crimes, they will be brought to justice. ABT traffics in fear, intimidation and violence. But, as this case shows, the department is committed to dismantling criminal enterprises like ABT and holding their members criminally responsible.”
“With the conviction and sentencing of Carrie Wood, the last remaining defendant in this case has answered for her crimes,” said U.S. Attorney Bales. “We promised to bring David Mitchamore’s and Christie Brown’s killers to justice and we have done that. But equally important is our commitment and effort to neutralize the ABT in east Texas. To that end, we will continue to investigate and prosecute the criminal activities of the ABT until we have completely diminished its menace. The agents and officers working on this case and others like it are doing a superlative job for their fellow citizens – I congratulate them.”
This case was investigated by the FBI; the Bureau of Alcohol, Tobacco, Firearms and Explosives; the National Gang Targeting, Enforcement and Coordination Center (Gang-TECC); the Nacogdoches Sheriff’s Department; the Nacogdoches Police Department; the Angelina County, Texas, Sheriff’s Department; the Texas Department of Public Safety; and the Texas Rangers. The case is being prosecuted by the Office of the U.S. Attorney in Lufkin, Texas, and the Criminal Division’s Organized Crime and Gang Section, in full cooperation with the Nacogdoches County District Attorney’s Office.
Federal Court Bars Idaho Woman from Promoting “Form 1099-OID” Tax SchemeRead the Press Release
WASHINGTON – A federal court has permanently barred Penny Jones from preparing federal tax returns for others and from promoting the use of false tax forms, the Justice Department announced today. The civil injunction order, entered by Judge Edward J. Lodge in U.S. District Court for the District of Idaho, found that Jones operated a tax preparation business using a post office box in Shelley, Idaho, and prepared more than 400 federal tax returns claiming fraudulent tax refunds exceeding $168 million.
The court also found that Jones prepared various false Internal Revenue Service (IRS) forms, including Form 1099-OID, for use in requesting refunds based on phony claims of large income tax withholding. The court order says the scheme is rooted in the long-discredited “redemption” theory which, according to its proponents, allows taxpayers to use IRS forms to access secret Treasury accounts to satisfy their tax liabilities. The court found that this theory has been “routinely rejected” by other courts, that the forms attached to tax returns prepared by Jones were “phony,” and that Jones knew her actions were fraudulent.
The court order requires Jones to provide the government with a list identifying all persons for whom she prepared federal tax returns for tax years 2005 through 2009.
Return preparer fraud and bogus refund claims based on false Forms 1099-OID are two of the IRS’s “Dirty Dozen” tax scams for 2011. In the past decade, the Justice Department’s Tax Division has obtained injunctions against hundreds of dishonest return preparers and tax fraud promoters. Information about these cases is available on the Justice Department website .
Armor Holdings Agrees to Pay $10.2 Million Criminal Penalty to Resolve Violations of the Foreign Corrupt Practices ActRead the Press Release
WASHINGTON – Armor Holdings Inc. has entered into an agreement with the Department of Justice to pay a $10.29 million penalty to resolve violations of the Foreign Corrupt Practices Act (FCPA), announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and Assistant Director in Charge James W. McJunkin of the FBI’s Washington Field Office.
According to the non-prosecution agreement, at the time of the conduct at issue, Armor was headquartered in Jacksonville, Fla., and was listed on the New York Stock Exchange. At that time, the company manufactured security products, vehicle armor systems, protective equipment and other products primarily for use by military, law enforcement, security and corrections personnel. On July 31, 2007, Armor was acquired by BAE Systems Inc. and is currently a subsidiary of BAE.
According to the agreement, Armor accepts responsibility for its subsidiary’s payment of more than $200,000 in commissions to a third-party sales agent, a portion of which it knew was to be passed on to a U.N. procurement official to induce the official to award two separate U.N. contracts to Armor’s subsidiary. The contracts were for the sale of approximately $6 million of body armor. Armor also acknowledged that it falsely recorded the commission payments on its books and records. In addition, Armor admitted that it kept off its books and records approximately $4.4 million in additional payments to agents and other third-party intermediaries used by its Products Group to assist it in obtaining business from foreign government customers. Armor acknowledged that it failed to devise and maintain an appropriate system of internal accounting controls.
In a related matter, Armor reached a settlement today with the U.S. Securities and Exchange Commission (SEC) and agreed to pay more than $5.69 million in disgorgement of profits, including pre-judgment interest, and a civil money penalty.
The Justice Department’s agreement recognizes Armor’s complete voluntary disclosure of the conduct; its internal investigation and cooperation with the department and the SEC; the fact that the conduct took place prior to the acquisition of Armor by BAE; and Armor’s extensive remedial efforts undertaken before and after its acquisition by BAE. Due to Armor’s implementation of BAE’s due diligence protocols and review processes, its application of BAE’s compliance policies and internal controls to all Armor businesses, its extensive remediation and improvement of its compliance systems and internal controls, as well as the enhanced compliance undertakings included in the agreement, Armor is not required to retain a corporate monitor. Armor will be required to report to the department on implementation of its remediation and enhanced compliance efforts every six months for the duration of the agreement.
In addition to the $10.29 million penalty, the agreement requires that Armor continue to implement rigorous internal controls and that it cooperate fully with the department.
This case is being handled by Trial Attorney Laura Perkins of the Criminal Division’s Fraud Section with assistance from the FBI’s Washington Field Office’s dedicated FCPA squad.
The Justice Department acknowledges and expresses its appreciation for the assistance provided by the SEC’s Division of Enforcement.
Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa
12 July 2011
Patient Recruiter Sentenced to 27 Months in Prison <br /> in Connection with Detroit-Area Infusion Therapy SchemesRead the Press Release
WASHINGTON – A patient recruiter for three Detroit-area clinics was sentenced to 27 months in prison for his role in fraud schemes that attempted to defraud the Medicare program of more than $15 million, the Departments of Justice and Health and Human Services (HHS) announced.
Arnaldo Rosario, 30, was sentenced by U.S. District Judge Gerald E. Rosen in the Eastern District of Michigan. In addition to the prison term, Rosario was sentenced to three years of supervised release and was ordered to pay, jointly and severally with other defendants in the case, $10,765,325 in restitution.
Rosario pleaded guilty to one count of conspiracy to commit health care fraud on Aug. 18, 2009. According to court documents, Arnaldo Rosario admitted that he was responsible for overseeing and facilitating the payment of cash kickbacks to Medicare beneficiaries who visited Sacred Hope Medical Center Inc., Dearborn Medical Rehabilitation Center Inc. (DMRC) and Xpress Center Inc. (XPC). In exchange for the cash kickbacks, the beneficiaries would visit the clinics and sign documents falsely indicating that they had received services that were then billed to Medicare. According to information contained in his plea documents, Rosario admitted to obtaining cash on a daily basis from his co-conspirators to pay the beneficiaries cash kickbacks. After obtaining the cash, Rosario admitted that he would then distribute the money to several other co-defendants who were responsible for recruiting and paying the kickbacks to the beneficiaries. Arnaldo Rosario admitted to being directed to pay bonuses to the co-defendants if they were able to recruit additional Medicare beneficiaries to come to Sacred Hope, DMRC or XPC.
Rosario admitted that, between approximately March 2006 and March 2007, he and his co-conspirators caused the submission of approximately $15.3 million in false and fraudulent claims to Medicare for services supposedly provided at Sacred Hope, DMRC and Xpress Center. Based on the fraudulent claims, Medicare paid approximately $10,765,325.
Today’s sentence was announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade; Special Agent in Charge Andrew G. Arena of the FBI’s Detroit Field Office; and Special Agent in Charge Lamont Pugh III of the HHS Office of Inspector General’s (HHS-OIG) Chicago Regional Office.
The case was prosecuted by Assistant Chief Benjamin D. Singer and Trial Attorney Gejaa T. Gobena of the Criminal Division’s Fraud Section, and Assistant U.S. Attorney John K. Neal of the Eastern District of Michigan. 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 Eastern District of Michigan.
Since its inception in March 2007, Medicare Fraud Strike Force operations in nine districts have obtained indictments of 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 .
Justice Department and EPA Officials Focus on Environmental Justice in Newark, New JerseyRead the Press Release
NEWARK, N.J. – Senior environmental enforcement officials from the U.S. Justice Department and Environmental Protection Agency (EPA) toured sites in Newark, N.J., today and met with federal partners and with environmental and community organizations to discuss mutual efforts to address environmental challenges and enforce environmental laws, and in particular efforts to achieve environmental justice.
Officials included Ignacia S. Moreno, Assistant Attorney General of the Environment and Natural Resources Division; Paul J. Fishman, U.S. Attorney for the District of New Jersey; and Cynthia Giles, Assistant Administrator for the EPA Office of Enforcement Compliance Assurance. They were joined by Judith A. Enck, EPA Region 2 Administrator; and Lisa F. Garcia, EPA Senior Advisor for Environmental Justice.
The goal of environmental justicea major priority of the Department of Justice and the EPA, isto provide all Americans – regardless of their race, ethnicity or income status – full protection under the nation’s environmental laws and protection from pollution, hazardous waste and toxic substances.
“The people of New Jersey understand the critical importance of environmental protection, and the real world consequences of industrial pollution,” said Assistant Attorney General Moreno. “By enforcing the nation’s environmental laws in a fair and even-handed way, we are taking steps to ensure that we achieve environmental justice. We are listening to communities and giving voice to those that have too frequently suffered an unfair burden from pollution in America.”
“New Jersey has seen an unjust share of environmental damage, and we have the opportunity and obligation to do something about it,” said U.S. Attorney Fishman. “Specific, targeted criminal and civil enforcement actions can make a real difference to our environment - preserving it for those who treasure it and punishing those who break laws that protect it.”
“Enforcement is a powerful tool in advancing environmental justice and deterring illegal pollution,” said Assistant Administrator Giles. “We are aggressively going after pollution problems that make a difference in communities, like keeping raw sewage and contaminated stormwater out of our nation’s waters and cutting toxic air pollution that affects communities’ health.”
“Low income communities across the country have historically shouldered a heavy pollution burden,” said Judith A. Enck, EPA Regional Administrator. “Just because someone lives in a low income neighborhood, they should not be exposed to air pollution, toxic chemicals, degraded water quality or have less access to parks and open space. The EPA is committed to protecting public health and environmental quality in every part of the country. With improved environmental quality should also come opportunities for job creation.”
Justice Department Files Lawsuit Against Louisiana Alleging Violations of the National Voter Registration ActRead the Press Release
WASHINGTON – The Department of Justice announced today that it has filed a lawsuit against the state of Louisiana and a number of Louisiana state agencies and officials alleging that the state has violated its obligations under the National Voter Registration Act (NVRA).
The complaint, filed today in the U.S. District Court for the Middle District of Louisiana, alleges that Louisiana has violated the NVRA by failing to provide voter registration services at offices providing public assistance and serving persons with disabilities in Louisiana. Specifically, the complaint alleges that Louisiana officials have not routinely offered voter registration forms, assistance and services to the state’s eligible citizens who apply, recertify or provide a change address for public assistance or disability services, or benefits.
“The voting process begins with registration. Therefore, it is essential that all citizens have unfettered access to voter registration opportunities,” said Thomas E. Perez, Assistant Attorney General for the Justice Department’s Civil Rights Division. “The department is committed to enforcing the National Voter Registration Act so that neither income nor disability status stands in the way of equal voter registration opportunities for all citizens.”
The lawsuit seeks a court order declaring that the defendants have failed comply with the requirements of Section 7 of the NVRA, and requiring Louisiana to take all necessary steps to come into compliance with federal law. The suit seeks to require Louisiana to effectively publicize the required voter registration opportunities and provide the court with a remedial plan that will ensure future compliance.
Congress enacted the NVRA in 1993 in part to enhance citizen participation in elections by making voter registration opportunities readily available and accessible to the largest possible segment of the American public. In addition to requiring that voter registration be offered at motor vehicle offices and by mail, the NVRA also mandates that states offer voter registration through agencies that provide essential services to citizens with disabilities and low income citizens. Congress found that if it did not require states to offer voter registration at public assistance and disability services agencies, it would exclude a large segment of American citizens from having convenient opportunities to participate in our democracy.
More information about the NVRA and other federal voting laws is available on the Department of Justice website at www.justice.gov/crt/about/vot/ . Complaints about discriminatory voting practices may be reported to the Voting Section of the Justice Department’s Civil Rights Division at 1-800-253-3931.
Federal Court Bars Three Men from Promoting “Intermediary Transaction” Tax ShelterRead the Press Release
WASHINGTON – A federal court has permanently barred Charles Klink, Caleb Grodsky and Steven Block from promoting abusive tax shelters known as “intermediary transactions” and “distressed asset trusts,” the Justice Department announced today. The civil injunction orders, to which the three men consented without admitting to the allegations against them, were entered by Judge Joseph Irenas of the U.S. District Court for the District of New Jersey. The court orders require the defendants to give the government a list of all persons who participated in any tax plan or arrangement that they promoted since Jan. 1, 2000.
According to the government complaint , Klink and Grodsky, who are both attorneys in Southern California, and Block, who resides in Louisville, Ky., and has worked in the financial services industry for more than two decades, received millions of dollars from customers across the country for helping them dispose of corporate assets without paying federal corporate income taxes on the resulting capital gain income. The complaint alleges that the three men used an intricate web of trusts and corporations to act as intermediaries between their customers, who owned closely held corporations, and buyers who wanted to purchase the corporations’ assets.
The complaint alleges that the defendants purchased all of the stock in a customer’s corporation shortly before or after the asset sale. They then allegedly falsely told the customer that, following defendants’ purchase of the corporation, the defendants would restructure the corporation into a profitable new business and have it pay the corporation’s federal income taxes resulting from the asset sale. However, according to the complaint, rather than pay the taxes owed after the asset sale, the defendants allegedly claimed deductions for sham fees and bogus bad debt write-offs generated from distressed-asset-trust tax shelters to offset most or all of the capital gains. The defendants also allegedly took steps to siphon off the corporation’s assets, leaving it with no funds to pay any taxes due once the Internal Revenue Service learned of the scheme and assessed taxes.
The complaint against Klink, Grodsky and Block alleges that they have caused the corporations they acquired to deduct improperly more than $112 million of distressed consumer receivables. The government estimates that the tax loss resulting from their promotion of the tax schemes at issue in this case exceeds $40 million.
In the past decade, the Justice Department’s Tax Division has obtained hundreds of injunctions against promoters of tax schemes and preparers of fraudulent tax returns. Information about these cases is available on the Justice Department website .
11 July 2011
Virginia Couple Sentenced for Conspiracy to Defraud the United StatesRead the Press Release
WASHINGTON – A husband and wife from Mathews County, Va., were sentenced today for conspiring to impair and obstruct the Internal Revenue Service (IRS) in the ascertainment and assessment of federal income taxes from 2001 through 2010, the Justice Department and the IRS announced. John Scott Miles was sentenced to 30 months in prison and Kathryn Charles Miles was sentenced to 20 months in prison. Both were sentenced to three years of supervised release and ordered to pay $215,591.27 in restitution.
John Miles and Kathryn Miles were charged in October 2010 and pleaded guilty in March 2011 before U.S. District Judge Raymond A. Jackson in Norfolk, Va., who sentenced them today.
At their plea hearings, Kathryn Miles and John Miles admitted to earning taxable income as the owners and operators of a construction business named “Scotts Construction” and “KCM Construction & Design.” Kathryn Miles also admitted to earning taxable income as a nurse at various Virginia hospitals. The Miles’ joined American Rights Litigators, a business they knew sold and promoted tax avoidance methods, in 2001 and maintained an annual membership. Kathryn Miles admitted that, in 2005 and 2006, she submitted six tax returns to the IRS in which she falsely claimed that she earned no wages and in which she did not disclose the operation of her construction business. She submitted falsified tax documents with each tax return. John Miles admitted that he did not file tax returns during the time of the conspiracy.
U.S. Attorney for the Eastern District of Virginia Neil H. MacBride and Principal Deputy Assistant Attorney General for the Tax Division John A. DiCicco commended the investigative efforts of the IRS agents involved in this case, as well as Assistant U.S. Attorney Brian Samuels and Tax Division Trial Attorney Justin Gelfand, who are prosecuting this case on behalf of the United States.
For more information on the Tax Division and its enforcement efforts, please visit www.justice.gov/tax.
Statement of Deputy Attorney General James Cole Regarding Information Requests for Multiple Sales of Semi-Automatic Rifles with Detachable MagazinesRead the Press Release
WASHINGTON – Deputy Attorney General James Cole issued the following statement today regarding information requests for multiple sales of semi-automatic rifles with detachable magazines in select states along the Southwest Border:
“The international expansion and increased violence of transnational criminal networks pose a significant threat to the United States. Federal, state and foreign law enforcement agencies have determined that certain types of semi-automatic rifles – greater than .22 caliber and with the ability to accept a detachable magazine – are highly sought after by dangerous drug trafficking organizations and frequently recovered at violent crime scenes near the Southwest Border. This new reporting measure -- tailored to focus only on multiple sales of these types of rifles to the same person within a five-day period -- will improve the ability of the Bureau of Alcohol, Tobacco, Firearms and Explosives to detect and disrupt the illegal weapons trafficking networks responsible for diverting firearms from lawful commerce to criminals and criminal organizations. These targeted information requests will occur in Arizona, California, New Mexico, and Texas to help confront the problem of illegal gun trafficking into Mexico and along the Southwest Border.”
Detroit-Area Men Plead Guilty to Tax EvasionRead the Press Release
WASHINGTON – Two Michigan residents pleaded guilty to tax evasion, the Justice Department and the Internal Revenue Service (IRS) announced today. A federal grand jury in Detroit returned an indictment against David A. Cusumano and Henry Nino in January 2011.
According to court documents, Cusumano was a mechanical engineer from Plymouth, Mich., and Nino was an electrician from Northville, Mich. Both men admitted to committing tax evasion by failing to file income tax returns and maintaining Employee’s Withholding Allowance Certificates (IRS Forms W-4) with their employers that falsely claimed they were exempt from tax withholding.
According to court documents, both men admitted to using the services of Florida-based tax fraud promoter American Rights Litigators/Guiding Light of God Ministries (ARL/GLGM). Nino and Cusumano both paid ARL/GLGM to submit false and obstructive correspondence to the IRS and to their banks, and to submit complaints to the Treasury Inspector General for Tax Administration that falsely accused IRS employees of criminal conduct.
According to court documents, Nino attempted to prevent the IRS from collecting his unpaid taxes for the years 1996, 1997 and 2000-2003 by transferring title of his personal residence to a nominee entity called the Michigan Natural Group, using money orders to make mortgage payments, cashing paychecks rather than depositing them in a bank account, and submitting fake financial instruments to the Department of the Treasury in purported payment of his tax liabilities.
According to court documents, in addition to the actions carried out by ARL/GLGM on his behalf, Cusumano attempted to evade the assessment of his 2003-2008 taxes by failing to file tax returns for each of these years as required by law and by submitting fake financial instruments to the Department of the Treasury in purported payment of his tax liabilities.
In August 2004, a federal district judge permanently enjoined the operators of ARL from the sale of a nationwide tax scam. In April 2008, a federal court in Florida sentenced two promoters of ARL, as well as ARL client Wesley Snipes, to prison for tax offenses. In August 2010, three promoters of ARL were each sentenced in the District of Columbia to 10 years in prison, along with ARL founder Eddie Ray Kahn, who was sentenced to 20 years in prison.
The total tax loss associated with Nino’s conduct, for sentencing purposes, is $366,088 and the total tax loss associated with Cusumano’s conduct, for sentencing purposes is $390,185.
The charges against Cusumano and Nino carry a maximum sentence of up to five years in prison. Sentencing is scheduled for Oct. 20, 2011.
The case was investigated by IRS-Criminal Investigation, and Tax Division Trial Attorneys Melissa Siskind and Jeffrey McLellan are prosecuting the case.
More information about the Justice Department’s Tax Division and its enforcement efforts is available at www.justice.gov/tax/ .
California Firm to Pay U.S. $400,000 to Resolve False ClaimsRead the Press Release
WASHINGTON – PRIDE Industries, and its subsidiary, PRIDE Industries One, has agreed to pay the United States $400,000 to resolve allegations that it knowingly submitted false claims relating to a contract to provide maintenance services at the Department of the Army’s Ft. Bliss Army Base in El Paso, Texas, the Justice Department announced today.
The maintenance contract at Ft. Bliss is part of the AbilityOne Program, which procures contracts for goods or services in order to provide employment opportunities to people who are blind or have other significant disabilities. Under this mandatory source program managed by the Committee for Purchase From People Who Are Blind or Severely Disabled, a federal agency, contractors must ensure that 75 percent of all direct labor hours are performed by severely disabled employees. Between 2007 and 2010, PRIDE, which is based in Roseville, Calif., employed a large number of temporary, non-disabled employees as part of its maintenance staff but did not count their hours as part of its overall ratio. Accordingly, PRIDE reported false ratio numbers to NISH, the central nonprofit agency designated by the committee to help oversee the AbilityOne Program, as well as to the committee itself.
In addition, PRIDE overcharged the Department of the Army under its maintenance contract by adding unallowable costs and charging too much for labor.
“Providing jobs for disabled workers is a critical purpose of the AbilityOne Program,” said Assistant Attorney General for the Civil Division Tony West. “This resolution demonstrates that the Department will vigorously pursue government contractors who overcharge on their contracts as well as misstate the number of non-disabled workers they actually employ.”
“Ensuring the integrity of federal contracting programs is one of the objectives of the Affirmative Civil Enforcement unit in the U.S. Attorney’s Office,” said U.S. Attorney for the Eastern District of California Benjamin B. Wagner. “Results like these help accomplish that objective.”
The government’s investigation of PRIDE was initiated by a lawsuit filed under the False Claims Act’s qui tam or whistleblower provisions, which permit private parties to sue for false claims on behalf of the United States and to share in any recovery. The whistleblowers in this case, Timothy Hediger and Lois Perez, will receive $68,000 of the settlement.
“Today’s announcement is a testament to our solid and continued partnership with the Department of Justice and other law enforcement agencies in the fight against fraud,” said James Podolak, director of the Army Criminal Investigation Command’s Major Procurement Fraud Unit. “This clearly demonstrates our continued commitment to rooting out fraud, large or small, in the Department of the Army and that our commitment is stronger than ever.”
The government’s investigation was conducted by the Justice Department’s Civil Division; the U.S. Attorney’s Office for the Eastern District of California; the Army Criminal Investigation Command’s Major Procurement Fraud Unit; the Defense Criminal Investigative Service; and the Defense Contract Audit Agency.
8 July 2011
U.S. Army Contractor Sentenced to 42 Months in Prison for Stabbing at Kandahar Airfield in AfghanistanRead the Press Release
WASHINGTON – A U.S. Army contractor was sentenced today to 42 months in prison for stabbing another individual with a knife at Kandahar Airfield in Afghanistan, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney Neil H. MacBride for the Eastern District of Virginia and James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office.
Sean T. Brehm, 45, of Capetown, South Africa, was sentenced by U.S. District Judge Anthony J. Trenga in the Eastern District of Virginia. Brehm pleaded guilty in April 2011 to one count of assault resulting in serious bodily injury. Judge Trenga also sentenced Brehm to three years of supervised release to follow his prison term.
According to court documents, the stabbing took place on Nov. 25, 2010. At the time of the stabbing, Brehm was working as a contractor for DynCorp International LLC, a U.S. Army contractor in Afghanistan. According to court documents, the stabbing resulted in serious bodily injury to the victim, who was a contractor with the U.S. Agency for International Development. The victim underwent emergency surgery immediately following the incident.
Brehm was charged under the Military Extraterritorial Jurisdiction Act (MEJA), a statute that gives U.S. courts jurisdiction to prosecute crimes committed outside the United States by, among others, contractors or subcontractors of the Department of Defense.
The case is being prosecuted by Assistant U.S. Attorney Ronald L. Walutes Jr. for the Eastern District of Virginia and Trial Attorney James S. Yoon of the Criminal Division’s Human Rights and Special Prosecutions Section.
The case was investigated by the FBI’s Washington Field Office. The U.S. Army Criminal Investigation Division and the International Security Assistance Force Military Police conducted the military investigation. The Office of Military Justice for Regional Command - South and 10th Mountain Division, and the Office of the Staff Judge Advocate for Regional Command - South provided invaluable assistance.
Justice Department Reaches Agreement with Rappahannock, Virginia, on Bailout from the Voting Rights ActRead the Press Release
WASHINGTON – The Justice Department announced that it has reached an agreement with Rappahannock County, Va., that will allow for the county and its two political subdivisions, the Rappahannock County School District and the town of Washington, to bail out from their status as “covered jurisdictions” under the special provisions of the Voting Rights Act, and thereby exempt these jurisdictions from the preclearance requirements of Section 5 of the Voting Rights Act. The agreement is in the form of a consent decree filed today in the U.S. District Court for the District of Columbia, and must be approved by the court.
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 for the District of Columbia or from the U.S. Attorney General, prior to their implementation. Section 4 of the act provides that a covered jurisdiction may seek to “bail out,” 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 U.S. District Court for the District of Columbia. A bailout judgment can be issued only 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 only if, based upon investigation, the attorney general is satisfied that the jurisdiction meets the eligibility requirements.
Rappahannock County filed its bailout action in the U.S. District Court for the District of Columbia on June 17, 2011. Counsel for the county contacted the attorney general prior to filing the action, indicating that the county was interested in seeking a 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 provided by the county and conducted its own investigation, which has satisfied us 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 the information requested, and in 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 by the court, 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.
Iowa Company Pleads Guilty to Participating in Ready-Mix Concrete Price-Fixing ConspiracyRead the Press Release
WASHINGTON – An Iowa-based company pleaded guilty today to participating in a price-fixing conspiracy for the sales of ready-mix concrete, the Department of Justice announced.
According to a one-count felony charge filed on June 24, 2011, in U.S. District Court in Sioux City, Iowa, VS Holding Co., which formerly operated as Alliance Concrete Inc., a producer of ready-mix concrete with headquarters in Orange City, Iowa, participated in a conspiracy with another ready-mix concrete company to fix prices for ready-mix concrete sold in the northern district of Iowa. The department said the company participated in the conspiracy beginning at least as early as January 2006 and continuing until as late as January 2008.
Ready-mix concrete is a product comprised of cement, aggregate (sand and gravel), water and other additives. The concrete generally is produced in a concrete plant and is transported by concrete-mixer trucks to work sites, where it is used in various types of construction projects, including buildings and roads.
According to the court documents, Steven VandeBrake, the former president of VS Holding Co., participated in the conspiracy by engaging in discussions and reaching agreements regarding the conspirators’ prices for ready-mix concrete sold in the northern district of Iowa. VS Holding Co. then accepted payment for those sales at collusive and noncompetitive prices, the department said.
VS Holding Co. is charged with violating the Sherman Act, which carries a maximum fine of $100 million for corporations. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
Today’s plea is the result of an ongoing federal antitrust investigation of the ready-mix concrete industry in Iowa and its surrounding states. As a result of the investigation, three individuals have been convicted and sentenced to serve prison time, and, including VS Holding Co., three ready-mix concrete companies have pleaded guilty and are awaiting sentencing.
The investigation is being conducted by the Antitrust Division’s Chicago Field Office, the FBI’s Sioux City Resident Agency and the Department of Transportation’s Office of the Inspector General, with the assistance of the U.S. Attorney’s Office in Sioux City. Anyone with information concerning bid rigging, price fixing or territorial allocation related to the ready-mix concrete industry in Iowa and its surrounding states should contact the Antitrust Division’s Chicago Field Office at 312-353-7530 or visit www.justice.gov/atr/contact/newcase.htm.
Georgia Couple Pleads Guilty to Human Trafficking ChargesRead the Press Release
WASHINGTON – Juna Gwedolyn Babb, 56, and Michael J. Babb, 55, both of Ellenwood, Ga., pleaded guilty today in federal court to felony offenses related to a scheme to compel the labor of a young woman from the Kingdom of Swaziland in southern Africa, announced the Department of Justice.
“Schemes like this one target the most vulnerable in our society,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The department is committed to prosecuting individuals who engage in acts that exploit individuals who wish to work in our country.”
“This case reminds us that modern day slavery is occurring in our communities,” said U.S. Attorney Sally Quillian Yates. “This young woman believed that she was only traveling to the United States for a brief visit to help with a wedding. Instead, she was compelled to labor for the defendants for more than two years. It is especially disturbing that the victim was exploited by a minister and his wife.”
“Human trafficking, while taking on many forms, consists primarily of those who prey on the vulnerabilities of others for personal gain,” said FBI Special Agent in Charge Brian D. Lamkin. “That was, in fact, the case in this matter as a young woman from Swaziland was being forced into labor and was unsure of who to turn to for help. The FBI continues to aggressively pursue all allegations of human trafficking matters and is proud of the role that it played in bringing this case to a successful conclusion.”
“Few crimes are more shocking than the trafficking of human beings in this country,” said Brock Nicholson, Special Agent in Charge of the U.S. Immigration and Customs Enforcement’s (ICE) Office of Investigations in Atlanta. “No one should have to live in a world of isolation and forced servitude. Together with our federal, state and local partners, ICE Homeland Security Investigations is committed to protecting those who cannot protect themselves.”
According to the indictment and information presented in court, in or about March 2005, Juna Babb, while visiting the Kingdom of Swaziland, invited the victim, then a 29 year-old cook, to travel to the United States to cater for a family wedding. In fact, there was no wedding, and Juna Babb instead intended to harbor the woman in the United States and compel her to work as a housekeeper in her home for little or no pay. Subsequently, upon the victim’s arrival at the defendant’s home in Ellenwood, Juna Babb concealed her from detection by law enforcement while compelling her housekeeping services from in or about June 2005, through in or about February 2007. During this time, Juna Babb also threatened the victim over the debt she owed for her travel to the United States, and with arrest and deportation because she was in the United States illegally.
Michael Babb, a minister, knew of his wife’s harboring of the victim, as well as the fact that Juna Babb was compelling the victim’s labor. However, Michael Babb failed to notify an authority of the United States as soon as possible of the alien harboring, and affirmatively concealed his wife’s crime by denying that the victim worked as the defendants’ housekeeper to special agents of the FBI.
Juna Babb pleaded guilty to the offense of harboring an alien for financial gain, which carries a maximum penalty of 10 years in prison. Michael Babb pleaded guilty to the offense of misprision of a felony for concealing his wife’s criminal conduct and for lying to federal agents. This offense carries a maximum penalty of three years in prison. The defendants each agreed to pay $25,000 in restitution to the victim for her unpaid labor.
This case was investigated by the FBI and ICE. The case was prosecuted by Assistant U.S. Attorneys Richard Moultrie Jr. and Stephanie Gabay-Smith, and Deputy Chief Karima Maloney and Trial Attorney Nicole Lee Ndumele of the Civil Rights Division.
Former Port Isabel Detention Officer Charged with Violating Civil Rights of DetaineeRead the Press Release
WASHINGTON – A federal indictment returned by a McAllen, Texas, grand jury on June 7, 2011, charging former Port Isabel Detention Center Lieutenant Raul Leal with using excessive force on a detainee, obstruction of justice and lying to a federal agent was unsealed today following Leal’s arrest, the Justice Department announced.
Leal, 31, formerly of Harlingen, Texas, and currently of Albany, Ga., was arrested by special agents of the Department of Homeland Security Office of Inspector General (DHS-OIG) in Albany today without incident. Leal made an initial appearance before a U. S. Magistrate Judge in Albany, Texas, and has been ordered released on bond. The case will be prosecuted in the Brownsville Division of the Southern District of Texas. Leal is expect ed to appear for arraignment on the charges on a date to be set by the court in the near future.
The three count indictment was a result of an investigation conducted by special agents of the McAllen Field Office of DHS-OIG regarding an incident which occurred on June 14, 2009, at the Port Isabel Detention Center. According to the indictment, on that date, Leal allegedly assaulted an immigrant detainee by kicking him in the face resulting in a fracture of the detainee’s orbital bone. The indictment also accuses Leal of obstruction of justice alleging he knowingly concealed, covered up, falsified and made false entries in a detention center report dated June 15, 2009, about the incident. Leal is also charged with making a false statement to DHS-OIG agents when in September 2009 he claimed that the detainee had sustained the facial fracture when the detainee’s face inadvertently struck his knee.
The violation of civil rights charge carries a maximum statutory sentence of 10 years in prison, upon conviction. Obstruction of justice carries a maximum sentence of 20 years in prison. Making false statements to a federal agent carries a maximum sentence of five years in prison, upon conviction. All three counts carry a maximum fine of up to $250,000.
Assistant U.S. Attorney Kebharu Smith of the Southern District of Texas and Civil Rights Division Trial Attorney Saeed Mody are prosecuting this case.
Co-Owner of Two Health Care Companies Convicted on Multiple Health Care Fraud ChargesRead the Press Release
WASHINGTON – The co-owner of two health care companies was convicted late yesterday on multiple health care fraud charges related to his participation in a scheme to defraud Medicare, announced the Departments of Justice and Health and Human Services (HHS).
A federal jury in the Central District of California found Evans Oniha, 49, guilty of one count of conspiracy to commit health care fraud, four counts of health care fraud and one count of false statements relating to health care matters. Camillus Ehigie, 50, who co-owned and operated the health care companies with Oniha, pleaded guilty on July 5, 2011, to multiple health care fraud charges in connection with his participation in the fraud scheme. Oniha and Ehigie were indicted in February 2011. The indictment also seeks forfeiture from the defendants.
Oniha and Ehigie co-owned Caravan Medical Supplies Inc., a durable medical equipment (DME) company, and Prosperity Home Health Services Inc., a purported home health agency. According to the indictment, from October 2002 to February 2011, Oniha and Ehigie conspired with others to defraud Medicare by paying “marketers” for access to Medicare beneficiary information and fraudulent prescriptions and other documents for DME and home health services. The defendants used the fraudulent documents obtained from the marketers to submit and cause the submission of false claims to Medicare for DME and home health services that were not medically necessary, and that often were not provided to Medicare beneficiaries. According to court documents, Oniha and Ehigie caused Caravan to submit approximately $5.8 million in fraudulent claims to Medicare for DME purportedly provided by Caravan. The defendants caused Prosperity to submit approximately $8 million in fraudulent claims to Medicare for home health services purportedly provided by Prosperity. According to court documents, Ehigie also owned another DME company, Osbed Medical Supply. Ehigie caused Osbed to submit $6.1 million in fraudulent claims to Medicare.
Oniha is scheduled to be sentenced on Sept. 19, 2011, and Ehigie is scheduled to be sentenced on Jan. 30, 2012.
The case is being prosecuted by Trial Attorney William G. Kanellis and Deputy Chief Charles La Bella of the Criminal Division’s Fraud Section. The case was investigated by the FBI and HHS Office of Inspector General (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 Central District of California.
Since its inception in March 2007, Medicare Fraud Strike Force operations in nine locations have charged more than 1,000 defendants that collectively have billed the Medicare program for more than $2.3 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.
7 July 2011
North Carolina Corporate Hog Farm and President Plead Guilty to Violating the Clean Water ActRead the Press Release
WASHINGTON – Freedman Farms, Inc. and its president, William B. Freedman, pleaded guilty yesterday in federal court in New Bern, N.C., to violating the Clean Water Act when they discharged hog waste into a stream that leads to the Waccamaw River, the Department of Justice’s Environment and Natural Resources Division and the U.S. Attorney’s Office for the Eastern District of North Carolina announced today.
After a week of trial that began on June 28, 2011, Freedman Farms pleaded guilty to a felony violation of the Clean Water Act for discharging hog waste into Browder’s Branch, a tributary to the Waccamaw River that flows through the White Marsh, a large wetlands complex. Freedman Farms, located in Columbus County, N.C., is in the business of raising hogs for market, and this particular farm had some 4,800 hogs. The hog waste was supposed to be directed to two lagoons for treatment and disposal. In December 2007, hog waste was discharged from Freedman Farms directly to Browder’s Branch. William Freedman pleaded guilty to a misdemeanor violation of the Clean Water Act for his role in the discharge.
“Owners and operators of concentrated animal feeding operations must comply with the nation’s Clean Water Act for the protection of America’s streams, wetlands, and rivers,” said Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division at the Department of Justice. “Freedman and his farm failed to do so and should be held accountable for polluting waterways and wetlands in Columbus County and the Waccamaw River watershed.”
“The hog industry is vital to North Carolina. However, we must protect our natural resources that affect other vital interests in our beautiful state,” said U.S. Attorney George E.B. Holding. “In order to assure the well-being of all, we must ensure that everyone takes care of these precious and finite resources.”
“Large farms and dairies can cause serious damage to the environment if they illegally discharge wastewater into nearby lakes, rivers, and streams,” said Maureen O’Mara, Special Agent in Charge of EPA’s criminal enforcement program for North Carolina. “That is why EPA has made addressing violations by concentrated animal feeding operations an enforcement priority. In this case, waste products from nearly five thousand hogs went directly into a sensitive wetland area, jeopardizing the safety and health of water and wildlife. This guilty plea demonstrates that farm owners must obey the law and will be held responsible for their actions.”
The Clean Water Act is a federal law that makes it illegal to knowingly or negligently discharge a pollutant into a water of the United States. The act includes as waters of the United States those that have a significant nexus to a traditional navigable water.
According to the plea agreement, the government and the corporate defendant have jointly asked the court to sentence Freedman Farms to pay $1.5 million, serve a term of five years’ probation, and publish a public apology. Under the plea agreement for William Freedman, the defendant faces up to one year in prison.
If the court decides to accept the plea agreement, the sentencing hearing for both defendants will take place on a date to be scheduled by the court, before U.S. Chief District Judge Louise W. Flanagan.
The case was investigated by the U.S. Environmental Protection Agency (EPA) Criminal Investigation Division and the North Carolina State Bureau of Investigation, with assistance from the EPA Science and Ecosystem Support Division. The case is being prosecuted by the Assistant U.S. Attorney Gaston Williams of the Eastern District of North Carolina, and Trial Attorney Mary Dee Carraway of the Environmental Crimes Section of the Justice Department’s Environment and Natural Resources Division.
JPMorgan Chase Admits to Anticompetitive Conduct by Former Employees in the Municipal Bond Investments Market and Agrees to Pay $228 Million to Federal and State AgenciesRead the Press Release
JPMorgan Chase & Co. has entered into an agreement with the Department of Justice to resolve the company’s role in anticompetitive activity in the municipal bond investments market and has agreed to pay a total of $228 million in restitution, penalties and disgorgement to federal and state agencies, the Department of Justice announced today.
As part of its agreement with the department, JPMorgan admits, acknowledges and accepts responsibility for illegal, anticompetitive conduct by its former employees. According to the non-prosecution agreement, from 2001 through 2006, certain former JPMorgan employees at its municipal derivatives desk, entered into unlawful agreements to manipulate the bidding process and rig bids on municipal investment and related contracts. These contracts were used to invest the proceeds of, or manage the risks associated with, bond issuances by municipalities and other public entities.
“By entering into illegal agreements to rig bids on certain investment contracts, JPMorgan and its former executives deprived municipalities of the competitive process to which they were entitled,” said Assistant Attorney General Christine Varney in charge of the Department of Justice’s Antitrust Division. “Today’s agreements ensure that JPMorgan will pay restitution to the municipalities harmed by its anticompetitive conduct, disgorge its profits from the illegal activity and pay penalties for the criminal conduct. We are committed to rooting out anticompetitive activity in the financial markets and our investigation into the municipal bond derivatives industry, which has led to criminal charges against 18 former executives, remains active and ongoing.”
Under the terms of the agreement, JPMorgan agrees to pay restitution to victims of the anticompetitive conduct and to cooperate fully with the Justice Department’s Antitrust Division in its ongoing investigation into anticompetitive conduct in the municipal bond derivatives industry. To date, the ongoing investigation has resulted in criminal charges against 18 former executives of various financial services companies and one corporation. One of these charged executives, James Hertz, is a former JPMorgan employee. Nine of the 18 executives charged have pleaded guilty, including Hertz.
The Securities and Exchange Commission (SEC), the Internal Revenue Service (IRS), the Office of the Comptroller of the Currency (OCC), the Federal Reserve Board (Fed) and 25 state attorneys general also entered into agreements with JPMorgan requiring the payment of penalties, disgorgement of profits from the illegal conduct and payment of restitution to the victims harmed by the manipulation and bid rigging by JPMorgan employees, as well as other remedial measures.
As a result of JPMorgan’s admission of conduct; its cooperation with the Department of Justice and other enforcement and regulatory agencies; its monetary and non-monetary commitments to the SEC, IRS, OCC, Fed and state attorneys general; and its remedial efforts to address the anticompetitive conduct, the department agreed not to prosecute JPMorgan for the manipulation and bid rigging of municipal investment and related contracts, provided that JPMorgan satisfies its ongoing obligations under the agreement.
In May 2011, UBS AG agreed to pay a total of $160 million in restitution, penalties and disgorgement to federal and state agencies for its participation in anticompetitive conduct in the municipal bond derivatives market.
The department’s ongoing investigation into the municipal bonds industry is being conducted by the Antitrust Division, the FBI and the IRS-Criminal Investigation. The department is coordinating its investigation with the SEC, the OCC and the Federal Reserve Bank of New York. The department thanks the SEC, IRS, OCC, Fed and state attorneys general for their cooperation and assistance in this matter.
The Antitrust Division, SEC, IRS, FBI, state attorneys general, OCC and Fed are members 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. For more information about the task force, visit www.stopfraud.gov.
DOJ, FTC Announce Changes to Streamline the Premerger Notification FormRead the Press Release
WASHINGTON – Following a public comment period, the Department of Justice and the Federal Trade Commission (FTC) have made changes to reduce the filing burden and streamline the form parties must file when seeking antitrust clearance of proposed mergers and acquisitions under the Hart-Scott-Rodino (HSR) Act and the Premerger Notification Rules.
The revisions are part of ongoing efforts by the department and the FTC to review their regulations, ensure that the rules are necessary and up-to-date, and eliminate unnecessary or potentially overly burdensome reporting requirements for business. The changes will make the HSR form easier to complete, reduce the burden for most filers and make the premerger notification review program more effective for both agencies.
The revised HSR form deletes several categories of information that over time have proven unnecessary in a preliminary merger review. For example, HSR filers will no longer be required to provide copies of documents – whether in hard copy or via electronic link – filed with the Securities and Exchange Commission, report economic code “base year” data or give a detailed breakdown of all the voting securities to be acquired. The new form also will require filers to provide the department and the FTC with narrowly focused additional documents that will help expedite the merger review process.
The revised form changes certain kinds of required reporting, such as revenue information by the North American Industry Classification System (NAICS) code, and the identity of holders and holdings of the entities making a filing. In addition, new concepts are introduced that are designed to expedite the antitrust review, including reporting information about “associates” of the acquiring person. Changes also include minor revisions to the HSR Rules to address omissions from the 2005 Rule changes involving unincorporated entities.
The Revision Process
Last August the department and the FTC sought public comments on the proposed changes. The agencies worked together to modify the original proposal in response to these comments to clarify the proposed amendments and to ensure that they accurately reflect both agencies’ interests in streamlining the HSR form. This will reduce burdens on businesses while still enabling the department and the FTC to obtain the information and documents they need in their merger review process.
The revised Rules can be found at www.ftc.gov/os/fedreg/2011/07/110707hsrfrn.pdf.
Armor Group North America and Its Affiliates Pay $7.5 Million to Resolve False Claims Act AllegationsRead the Press Release
WASHINGTON - Armor Group North America Inc. (AGNA) and its affiliates have paid the United States $7.5 million to resolve allegations that AGNA submitted false claims for payment on a State Department contract to provide armed guard services at the U.S. Embassy in Kabul, Afghanistan, the Justice Department announced today. The settlement resolves U.S. claims that in 2007 and 2008, AGNA guards violated the Trafficking Victims Protection Act (TVPA) by visiting brothels in Kabul, and that AGNA’s management knew about the guards’ activities. The settlement also resolves allegations that AGNA misrepresented the prior work experience of 38 third country national guards it had hired to guard the Embassy, and that AGNA failed to comply with certain Foreign Ownership, Control and Influence mitigation requirements on the embassy contract, and on a separate contract to provide guard services at a Naval Support Facility in Bahrain.
The settlement resolves a whistleblower suit filed in the U.S. District Court for the District of Columbia. The lawsuit was initially filed under seal by James Gordon against AGNA, ArmorGroup International plc, G4S plc and Wackenhut Services Inc. under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private individuals, called “relators”, to bring lawsuits on behalf of the United States and receive a portion of the proceeds of a settlement or judgment awarded against a defendant. Mr. Gordon will receive $1.35 million of the settlement proceeds. During 2007 and early 2008, Mr. Gordon was employed by AGNA, as its director of operations.
The case remained under seal to permit the United States to investigate the allegations and determine whether it would join the lawsuit. Under the False Claims Act, the United States may recover three times the amount of its losses, plus civil penalties. On April 29, 2011, the
United States joined the suit.
“These contracts are put in place to provide essential support to personnel who are serving in our missions overseas,” said Tony West, Assistant Attorney General for the Civil Division. “The Department of Justice will actively pursue its legal remedies where contractors falsely claim taxpayer dollars for services that fall short of material requirements in their government contracts.”
“Americans deserve to know that their tax dollars are being spent wisely and consistent with our values,” said U.S. Attorney Ronald C. Machen Jr. “Our office has targeted government contractors who fail to meet their obligations to the American people. With this settlement, the U.S. Attorney’s Office for the District of Columbia has now recovered more than $140 million in False Claims Act cases so far this year.”
“The Department of State appreciates the work done by the Department of Justice and the Office of the Inspector General in bringing this case to resolution. The Department of State takes any allegation of contractor misconduct seriously and works as part of the inter-agency community to ensure it is adjudicated properly,” said Ambassador Eric J. Boswell, Assistant Secretary of State for Diplomatic Security.
The Deputy Inspector General for the Department of State, Harold Geisel, said, “We’re pleased with the successful resolution of this case, and I commend the dedication of our OIG investigators. Our efforts should reinforce to American taxpayers that oversight of their tax dollars is taken seriously.”
Assistant Attorney General West and U.S. Attorney Machen thanked the joint investigation team, which includes Special Agents with the Department of State Office of Inspector General, and representatives from the Department of State and the Department of the Navy, for their efforts in the investigation of this matter.
6 July 2011
Miami Contractor Sentenced to 18 Months in Prison for Employment Tax FraudRead the Press Release
MIAMI – Reynaldo Orozco was sentenced to 18 months in prison by U.S. District Court Judge Adalberto Jordan for filing a false employment tax return, the Justice Department and the Internal Revenue Service (IRS) announced today. Orozco was also ordered to pay $504,047 in restitution to the United States.
Orozco previously pleaded guilty to one count of filing a false employment tax return on March 22, 2011. According to court documents, during 2004 through 2007, Orozco owned and operated Rock Construction Builders Inc. (RCB), a construction business located in Miami-Dade County. Orozco admitted that he issued RCB corporate checks to various other corporations holding them out to be legitimate subcontractors. In truth, these corporations did not perform work for RCB. Orozco cashed the checks at local check cashing stores and used the bulk of the cash obtained in this manner to pay RCB employees. Orozco failed to report the cash wages on quarterly employment tax returns and failed to withhold and pay over employment taxes on the wages.
From 2004 through 2007, RCB failed to report approximately $3,294,426 in cash wages to the IRS. Based on the conduct described above, the United States Treasury suffered an employment tax loss of approximately $504,047.
Wilfredo A. Ferrer, U.S. Attorney for the Southern District of Florida, 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 Matthew J. Mueller and Gregory E. Tortella, who prosecuted the case.
Louisiana Oil Refinery Vice-President Pleads Guilty to Air Pollution Causing Negligent EndangermentRead the Press Release
WASHINGTON – The vice-president and general manager of the Pelican Refinery in Lake Charles, La., today pleaded guilty to federal negligent endangerment charges under the Clean Air Act before U.S. District Judge Richard T. Haik in Lafayette, La., announced Ignacia S. Moreno, Assistant Attorney General of the Environment and Natural Resources Division of the Department of Justice, and Stephanie A. Finley, U.S. Attorney for the Western District of Louisiana.
Byron Hamilton, 66, oversaw operations at the Lake Charles refinery since 2005 from an office in Houston. According to the charges filed in federal court, Hamilton negligently caused the release of hazardous air pollutants, including hydrogen sulfide, an extremely hazardous substance, into the air which placed persons in imminent danger of death and serious bodily injury.
The federal investigation was initiated after a March 2006 inspection by the Louisiana Department of Environmental Quality and EPA when inspectors found unsafe operating conditions, including unpermitted releases of hydrogen sulfide, storage of crude oil in unrepaired storage tanks, failure to repair emissions monitoring and control equipment, and the use of plastic children’s swimming pools to contain petroleum leaks.
In pleading guilty, Hamilton acknowledged that his negligence in overseeing operations at the refinery was a proximate cause of the releases and associated risks. Hamilton faces up to one year in prison and a $200,000 fine for each of the two Clean Air Act counts.
According to a joint factual statement filed in federal court:
- The company that Hamilton managed had no company budget, no environmental department and no environmental manager;
- In order to comply with a permit issued under the Clean Air Act, the refinery was required to use certain key pollution prevention equipment, but that equipment was either not functioning, poorly maintained, improperly installed, improperly placed into service and/or improperly calibrated, such that there were releases of pollutants into the atmosphere and at the refinery;
- It was a routine practice for over a year to use a standard signal flare gun to re-light the process flare at the refinery which was designed to burn off toxic gasses and provide for the safe combustion of potentially explosive chemicals because the pilot light was not functioning properly;
- Sour crude oil was stored in a tank that was not properly placed into service and remained in the tank after the roof sank;
- A caustic scrubber designed to remove hydrogen sulfide from emissions was bypassed; and
- A continuous emission monitoring system (CEMS) designed to measure hydrogen sulfide levels in emissions was not working properly.
In 2005 and 2006, the Pelican refinery processed “sour” crude supplied by its owners that had high concentrations of hydrogen sulfide (H²S), a highly toxic and flammable gas inherent to sour crude oil refining. H²S is classified as an “extremely hazardous substance.” It has a characteristic odor of “rotten eggs” at low concentrations. Refinery workers reported smelling H²S as well as having their personal H²S monitors “go off” from time-to-time. Pelican Refining Company had no procedure to record, track, report or mitigate H²S releases. At higher concentrations H²S paralyzes the sense of smell so that its odor is no longer perceived and can result in death.
The government’s investigation of the Pelican Refinery is continuing. Under the Crime Victims’ Rights Act, crime victims are afforded certain statutory rights including the opportunity to attend all public hearings and provide input to the prosecution. Any person adversely impacted is encouraged to visit www.justice.gov/usao/law/vicwit/index.html to learn more about the case and the Crime Victims’ Rights Act or you may contact the Victim Witness Coordinator for the U.S. Attorney’s Office, Western District of Louisiana, Vicki Chance at 318-676-3600.
The investigation is ongoing and is being conducted by the EPA Criminal Investigation Division in Baton Rouge and the Louisiana State Police, with assistance from the Louisiana Department of Environmental Quality. The case is being prosecuted by U.S. Attorney Stephanie Finley and federal environmental prosecutors Richard A. Udell, Christopher Hale and Rocky Piaggione of the Environmental Crimes Section of the Environment and Natural Resources Division of the U.S. Department of Justice.
Justice Department Obtains Comprehensive Agreement Regarding the State of Delaware's Mental Health SystemRead the Press Release
WASHINGTON - The Justice Department today announced that it has entered into a comprehensive agreement with the state of Delaware that will transform Delaware’s mental health system and resolve violations of the Americans with Disabilities Act (ADA). The ADA and the Supreme Court’s landmark decision in Olmstead v. L.C. afford individuals with disabilities the right to receive services in the most integrated settings appropriate to their needs, and today’s agreement will ensure individuals in Delaware can exercise that right.
The Justice Department in 2008 began its investigation of Delaware’s state hospital, and modified the scope of the investigation in 2010 to focus on violations of the ADA throughout the mental health system. The state worked cooperatively with the Justice Department to negotiate an agreement resolving alleged violations of the ADA.
“Across the country we are enforcing the rights of people with disabilities, affirmed by the Supreme Court more than a decade ago, to live and receive services in their communities,” said Thomas E. Perez, Assistant Attorney General for Civil Rights. “The services that the state of Delaware has agreed to provide under this agreement will enable people with mental illnesses living in Delaware to reside successfully in their homes and communities, rather than entering costly segregated facilities. As states around the country work to breathe life into the rights promised by the ADA and Olmstead, this agreement demonstrates Governor Markell and Attorney General Biden’s vision and leadership.”
The agreement expands community mental health services so that Delaware can serve people with severe and persistent mental illness in the most integrated settings appropriate to those individuals’ needs. Over the next five years, Delaware will prevent unnecessary hospitalization by expanding and deepening its crisis services, including a hotline, crisis walk-in centers, mobile crisis teams, crisis apartments and short term crisis stabilization programs. Delaware will also provide assertive community treatment teams, intensive case management, and targeted case management to individuals living in the community who need support to remain stable. In addition, the state will offer scattered-site supported housing to everyone in the agreement’s target population who needs that housing support. Finally, Delaware will offer supports for daily life, including supported employment, rehabilitation services and peer and family supports.
The Civil Rights Division enforces the ADA, which authorizes the attorney general to investigate whether a state is serving individuals in the most integrated settings appropriate to their needs. Visit www.justice.gov/crt to learn more about the Olmstead decision, the ADA and other laws enforced by the Justice Department’s Civil Rights Division.
The agreement in this case protecting the rights of individuals with mental illness in Delaware are due to the efforts of the following Special Litigation Section attorneys: Jonathan Smith, Chief; Judy Preston, Deputy Chief; Alison Barkoff, Special Counsel for Olmstead Enforcement; David Deutsch and Deena Fox, Trial Attorneys. In addition, the division received support and assistance from Shannon Hanson, Assistant U.S. Attorney for the District of Delaware.
Coinciding with One-Year Anniversary of “Operation Stolen Dreams,” Three Loan Officers and a Title Agent Charged in $2.5 Million Reverse Mortgage and Loan Modification SchemeRead the Press Release
WASHINGTON – The Justice Department announced today the unsealing of a criminal information earlier today, charging four defendants – Louis Gendason, 42, of Delray Beach, Fla.; Kimberly Mackey, 46, of Pittsburgh; John Incandela, 24, and Marcos Echevarria, 29, both of Palm Beach, Fla. – with conspiracy to commit wire fraud involving a nation-wide reverse mortgage scam that defrauded elderly borrowers, financial institutions and the Department of Housing and Urban Development (HUD). 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. Three of the defendants made their initial appearances at the federal courthouse in Fort Lauderdale, Fla., earlier today. If convicted, the defendants each face a statutory maximum term of up to 30 years in prison and a fine of up to $1 million. These charges coincide with the one-year anniversary of “Operation Stolen Dreams,” the department’s anti-mortgage fraud enforcement initiative announced by Attorney General Eric Holder last June.
These latest charges demonstrate the department’s continued commitment to the identification and eradication of mortgage fraud. The scheme charged today contains many of the characteristics common to mortgage fraud around the country. The information charges Louis Gendason, John Incandela and Marcos Echevarria with using a Florida-based loan modification business known as Lower My Debts.com L.L.C. as a front to identify elderly borrowers who were financially-vulnerable. They are alleged to have in their capacity as loan officers at 1st Continental Mortgage LLC. solicited borrowers to refinance their existing mortgages with a reverse mortgage loan financed by Genworth Financial Home Equity Access Inc. To induce Genworth and HUD to fund and insure the reverse mortgage loans, the defendants allegedly changed the unwitting borrowers’ real estate appraisal reports to fraudulently represent equity in the properties. The information alleges that Gendason, Incandela and Echevarria originated fraudulent loans on properties located in seven different states between May 2009 and November 2010 exceeding $2.5 million.
As a further part of the charged conspiracy, a fourth defendant, Kimberly Mackey, a licensed title agent and proprietor of the Pittsburgh title agency Real Estate One Land Services Inc., fraudulently closed the Genworth loans by failing to pay off the seniors’ existing liens. Instead, Mackey wired nearly $1 million in Genworth loan proceeds to the business checking account for Lower My Debts.com. She conspired to conceal the fraudulent loan closings from financial institutions by preparing written settlement documents which falsely represented that the borrowers’ existing mortgages had, in fact, been paid off. In some instances, after Mackey wired the loan proceeds to bank accounts in Florida controlled by her co-conspirators, she is alleged to have assisted them with defrauding the banks holding the borrowers’ first mortgages by negotiating fake short sales. This was designed to induce these banks to release their valid liens on the seniors’ properties at a fraction of their existing loan balance. All of the defendants are accused of pocketing the illegally-obtained loan proceeds.
“Protecting Americans from financial fraud is one of our top priorities,” said Tony West, Assistant Attorney General of the Justice Department’s Civil Division. “With these charges, we are taking another important step in the effort we began with Operation Stolen Dreams by holding accountable those whom we believe lined their own pockets with money that should have gone to help vulnerable seniors.”
“These defendants preyed on senior citizens on fixed and modest incomes. While legitimate loan modifications and reverse mortgages are useful tools to help those who need it, we will remain vigilant to make sure these tools are not misused by those who seek to line their own pockets,” said Wifredo Ferrer, U.S. Attorney for the Southern District of Florida. “We urge potential borrowers to use caution when entrusting their homes and savings to those offering financial alternatives, including loan modifications and reverse mortgages.”
This case was investigated by agents from the HUD-Office of Inspector General; the Internal Revenue Service-Criminal Investigation; the U.S. Postal Inspection Service; the FBI Miami Field Office; and the state of Florida’s Office of Financial Regulation. The case was prosecuted by Trial Attorney Kevin J. Larsen from the Civil Division’s Office of Consumer Protection Litigation, along with Assistant U.S. Attorneys Jeffrey H. Kay and Thomas P. Lanigan from the U.S. Attorney’s Office for the Southern District of Florida.
Anyone with knowledge of such schemes is encouraged to contact the HUD hotline at 1-800-347-3735.
Initiated in June 2010, Operation Stolen Dreams targeted mortgage fraudsters throughout the country and was the largest collective enforcement effort ever brought to bear in confronting mortgage fraud. The operation was organized by the Mortgage Fraud Working Group of President Obama’s interagency Financial Fraud Enforcement Task Force, which was established to lead an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The President’s Financial Fraud Enforcement 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. Operation Stolen Dreams targeted 1,517 criminal defendants nationwide, included 525 arrests, and involved an estimated loss of more than $3 billion.
The operation also resulted in 191 civil enforcement actions and the recovery of more than $196 million. Combating mortgage fraud continues to be a primary focus of the Civil Division. Since the end of Operation Stolen Dreams last June, Civil Division attorneys have continued to vigorously pursue mortgage fraud cases throughout the country, working with our partners in the U.S. Attorneys’ Offices and various federal agencies, specifically including HUD.
Brooklyn Neurologist Pleads Guilty in Health Care Fraud SchemeRead the Press Release
WASHINGTON – Leonard Langman, M.D., a neurologist who owned and operated a Brooklyn, N.Y., medical clinic pleaded guilty today for his role in a scheme to defraud Medicare; the U.S. Department of Labor, Office of Workers’ Compensation Programs (OWCP); the New York State Workers’ Compensation Board (NYS-WCB); the New York State Insurance Fund (SIF) and various private health insurance carriers, announced the Departments of Justice and Health and Human Services.
Dr. Langman pleaded guilty before U.S. District Judge Kiyo A. Matsumoto in Brooklyn to one count of health care fraud.
According to court documents, from January 2006 to December 2009, Dr. Langman caused false and fraudulent claims to be submitted to Medicare, OWCP, NYC-WCB, SIF and others. Langman submitted claims for services that were not provided; misrepresented the services he provided by billing for a level of service higher than that which he performed; double-billed different health care benefit programs for the same service provided to the same beneficiary; and billed for services purportedly performed when he was out of the country.
At sentencing, Dr. Langman faces a maximum sentence of 10 years in prison. Sentencing is scheduled for Dec. 2, 2011.
The guilty plea was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Loretta E. Lynch for the Eastern District of New York and Special Agent-in-Charge Thomas O’Donnell of the Department of Health and Human Services, Office of Inspector General (HHS-OIG).
The case is being prosecuted by Trial Attorney James Hayes of the Criminal Division’s Fraud Section. HHS-OIG, the U.S. Postal Service, Office of Inspector General and the New York State Workers Compensation Board, Office of Inspector General conducted the investigation. The case was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of New York.
Since their inception in March 2007, Strike Force operations in nine locations have charged more than 1,000 defendants who collectively have falsely billed the Medicare program for more than $2.3 billion. In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov .
Assistant Attorney General Varney Announces Departure from Antitrust DivisionRead the Press Release
WASHINGTON – Christine Varney, Assistant Attorney General of the Antitrust Division, announced her resignation from the Department of Justice today, effective as of Aug. 5, 2011.
“Christine Varney led the Antitrust Division with great distinction through a period when the department confronted a number of proposed mergers and other matters that could have led to higher prices, lower quality products and less innovation in a recovering economy. There is no doubt that her tireless work helped protect consumers and businesses from anticompetitive conduct and preserved competition in America’s economy,” said Attorney General Eric Holder. “I will miss her leadership.”
“I am grateful for my two and a half years of service as Assistant Attorney General of the Antitrust Division,” Assistant Attorney General Varney said. “From the start of my time here, it has been a tremendous privilege to work with the department’s leadership and the dedicated professionals in the Antitrust Division.”
Shortly after confirmation, Assistant Attorney General Varney withdrew a previous department report that lowered the enforcement standards under Section 2 of the Sherman Act.
Assistant Attorney General Varney next worked with the Federal Trade Commission (FTC) to update the Horizontal Merger Guidelines, including by hosting a series of workshops and receiving public comments on proposed revisions to the Guidelines. Most recently, Assistant Attorney General Varney released a new Merger Remedy Guide. These policy undertakings combine to bring new levels of transparency and certainty to antitrust enforcement in the United States.
Under Assistant Attorney General Varney’s leadership, the division enhanced its focus on large international cartel cases as well as financial institution price-fixing cases in the U.S. municipal bond market. As a result, these cases have brought a billion dollars in fines and restitution to the victims of those conspiracies. In the last fiscal year, the division brought 60 cases on the criminal side, charging 84 defendants. In that year, the division obtained over $550 million in fines, more than $24 million in restitution and prison sentences totaling over 71 years.
Under Assistant Attorney General Varney’s leadership, the Antitrust Division also challenged several proposed mergers or industry practices that, if allowed to proceed, would have diminished competition and harmed consumer welfare, including NASDAQ OMX Group Inc. and IntercontinentalExchange Inc.’s joint bid to acquire NYSE Euronext; API Healthcare Corporation’s proposed merger with Kronos Inc.; and Blue Cross Blue Shield of Michigan’s attempt to purchase Physicians Health Plan of Mid-Michigan (PHP). Other transactions including LiveNation/TicketMaster; Comcast/NBC; Google/ITA were significantly altered by the parties in order to secure division approval.
During Assistant Attorney General Varney’s tenure, the Antitrust Division also strengthened its partnerships with agencies around the government to successfully prosecute crimes against the competitive process and review transactions in regulated industries. Under her leadership, the division worked closely with the Federal Communications Commission, the Securities and Exchange Commission, the Internal Revenue Service, the Commodity Futures Trading Commission, the Department of Transportation, the Federal Energy Regulatory Commission, the FTC and state attorneys general on a variety of cross-cutting civil and criminal issues. This collaboration includes the division’s ongoing investigation to resolve anticompetitive activity in the municipal bond investments market as well as a number of civil enforcement and competition policy matters.
Under Assistant Attorney General Varney’s leadership, the department and the U.S. Department of Agriculture joined together to host a series of workshops around the country to discuss competition and regulatory issues faced by the agriculture industry. More than 4,000 attendees — many traveling great distances — attended workshops in Ankeny, Iowa; Normal, Ala.; Madison, Wis.; Fort Collins, Colo.; and Washington, D.C. More than 230 people during more than 10 hours of public testimony were heard. In addition, the department received in excess of 18,000 comments to the division’s website.
In her role as head of the U.S. Delegation to the Organisation for Economic Co-Operation and Development’s Competition Committee and Chair of its Working Party, Assistant Attorney General Varney brought focus to the issues of international due process, procedural fairness and transparency - a critical issue for businesses and consumers in a global economy.
Assistant Attorney General Varney joined the department in April 2009 after being confirmed by the U.S. Senate. She previously served in government from 1993 to 1997 as an assistant to President Bill Clinton and FTC’s Commissioner.
5 July 2011
Tennessee Man Sentenced to Life in Prison for Racially-Motivated KillingRead the Press Release
WASHINGTON– The Justice Department announced today that Dale Mardis, 57, was sentenced today to life in prison, with no possibility of parole, for the racially-motivated killing of Shelby County, Tenn., Code Enforcement Officer Mickey Wright. Mardis was sentenced by U.S. District Judge Bernice Donald.
Mardis pleaded guilty on March 21, 2011, to the racially-motivated killing of Officer Wright. Last week, federal prosecutors and investigators discovered that Mardis murdered another man, Henry Ackerman, in the summer of 1998. They confronted Mardis with the new information on July 1, 2011, and Mardis confessed to the second murder.
Judge Donald imposed the life sentence after Mardis dropped his objections to the sentencing recommendation and admitted that his killing of Wright was first-degree murder. In addition to agreeing to the federal life sentence, Mardis also agreed to plead guilty to first-degree murder for the murder of Ackerman in Shelby County Criminal Court, and to be sentenced to life for that killing as well.
Mardis murdered Mickey Wright on April 17, 2001, and was federally indicted for the killing in January 2008 after pleading no contest to a state court murder charge.
“This defendant committed a heinous act of hate-filled violence, and today's life sentence sends an unmistakable message that such conduct will not be tolerated in our society,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “I am hopeful that this sentence will bring some sense of justice for Mickey Wright's loved ones.”
“Although nothing can ever undo their tragic loss, Mickey Wright’s family can take some comfort that Dale Mardis will never again set foot outside of a prison and never again breathe free air,” said U.S. Attorney Edward L. Stanton, III. “This life sentence marks an important day for the Wright family and for all the people of Memphis. Dale Mardis’s fate proves to the community that hate-crime murders remain a top priority of my office and of the whole federal government.”
“Brutal hate crimes like the one committed by Dale Mardis tear at the fabric of our society, and the Memphis Office of the FBI, through its Civil Rights Task Force, will aggressively pursue those who commit such crimes, aiding victims and helping to heal communities in the process,” said Special Agent in Charge of the Memphis FBI Field Office Amy Hess.
The case was investigated by the FBI and the Shelby County Sheriff’s Department. FBI Special Agent Tracey Harris and former Shelby County Detective Sergeant Joe T. Everson were the lead investigators on the case. The case was prosecuted by U.S. Attorney Edward L. Stanton, III; Assistant U.S. Attorney Stephen C. Parker, head of the Civil Rights Unit at the U.S. Attorney’s Office; and Jonathan T. Skrmetti, who began work on the case as a Trial Attorney with the Civil Rights Division of the U.S. Department of Justice and who is now an Assistant U.S. Attorney in Memphis.
Justice Department Sues Nation’s Largest Mortgage Insurance Provider for Discrimination Against Women on Paid Maternity LeaveRead the Press Release
WASHINGTON – The Justice Department announced today that it has sued the Mortgage Guaranty Insurance Corporation (MGIC), the nation’s largest mortgage insurance company, and two of its underwriters, Elgina Cunningham and Kelly Kane, for violating the Fair Housing Act by discriminating against women on paid maternity leave.
The suit, filed on July 5, 2011, in the U.S. District Court for the Western District of Pennsylvania, alleges that MGIC required women on paid maternity leave to return to work before the company would insure their mortgages. Most mortgage lenders require applicants seeking to borrow more than 80 percent of their home’s value to obtain mortgage insurance, meaning MGIC’s denials to women on maternity leave could cost those women the opportunity to obtain a home loan.
“No woman should be denied the opportunity to receive a mortgage loan simply because she has just given birth,” said Thomas E. Perez, Assistant Attorney General for the Justice Department’s Civil Rights Division. “Our nation’s fair housing laws prohibit this kind of discrimination, and the Justice Department is committed to aggressive enforcement of those laws.”
“It defies belief that, in 2011, any institution would discriminate against a mother for legally and properly taking leave after the birth of a child,” said U.S. Attorney for the Western District of Pennsylvania David Hickton. “My office will not stand idly by while parents suffer discrimination in lending simply for taking maternity or paternity leave.”
This lawsuit arose as a result of a complaint filed with the U.S. Department of Housing and Urban Development (HUD) by a Wexford, Penn., loan applicant. After investigating the complaint, HUD issued a charge of discrimination and referred the case to the Department of Justice after the complainant elected to have the case heard in federal court. The suit alleges that the defendants’ conduct constitutes discrimination based on sex and familial status, and seeks a court order prohibiting future discrimination by the defendants, monetary damages for those harmed by the defendants’ actions and a civil penalty.
The federal Fair Housing Act prohibits discrimination in housing and mortgage lending based on race, color, religion, national origin, sex, disability and familial status. More information about the Civil Rights Division and the laws it enforces is available at www.usdoj.gov/crt. Individuals who believe that they may have been victims of housing or lending discrimination can call the Housing Discrimination Tip Line at 1-800-896-7743, e-mail the Justice Department at [email protected], or contact HUD at 1-800-669-9777.
Justice Department Settles Fair Housing Lawsuit Against Michigan Mobile Home Operators for Discrimination Against Families with ChildrenRead the Press Release
WASHINGTON – The Justice Department today announced the settlement of a lawsuit alleging that the owner and operators of a Monroe, Mich., mobile home park violated the Fair Housing Act by discriminating against families with children. The case was brought by the Justice Department’s Civil Rights Division and the U.S. Attorney’s Office for the Eastern District of Michigan.
“In today’s economy, it is more important than ever that working families with children have the fair access to housing guaranteed by law” said Thomas E. Perez, Assistant Attorney General for the Justice Department’s Civil Rights Division. “We are committed to the aggressive enforcement of our nation’s fair housing laws.”
“People who are struggling to find housing for their families should not have their choices limited by illegal advertisements and policies,” said Barbara L. McQuade, U.S. Attorney for the Eastern District of Michigan.
The lawsuit, filed today along with the settlement in the U.S. District Court for the Eastern District of Michigan in Detroit, alleged that Tel-Clinton Trailer Courts Inc. – the owner and operator of Shamrock Village Mobile Home Park in Monroe – engaged in a pattern or practice of violating the Fair Housing Act by maintaining policies that prevented families with more than one child from residing there. The lawsuit also named as defendants Eugene J. Ponzio, the president of Tel-Clinton, and Mildred E. Wampler, the resident manager at Shamrock Village.
Under the settlement agreement, which must still be approved by the U.S. District Court, the defendants will pay $27,500 in damages and civil penalties, including a fund for individuals who suffered damages as a result of the defendants’ conduct. The defendants will also develop and maintain non-discrimination policies at Shamrock Village and provide fair housing training to their employees.
The government’s lawsuit arose when a family contacted the Fair Housing Center of Southeastern Michigan, a private non-profit organization located in Ann Arbor, Mich., after Shamrock Village told them that they could not live there because they were expecting their second child. The Fair Housing Center conducted fair housing testing at Shamrock Village, which confirmed that the defendants discriminated against families with children. The family filed a separate lawsuit, which settled earlier this year.
The federal Fair Housing Act prohibits discrimination in housing on the basis of race, color, religion, sex, familial status, national origin and disability. More information about the Civil Rights Division and the laws it enforces is available at www.usdoj.gov/crt . Individuals who believe that they may have been victims of housing discrimination at Shamrock Village Mobile Home Park should call the Housing Discrimination Tip Line at 1-800-896-7743, mailbox number 9993, or the U.S. Attorney’s Office’s civil rights hotline at 313-226-9151 or email the Justice Department at [email protected] . Individuals who believe they may have been victims of housing discrimination may also contact Department of Housing and Urban Development at 1-800-669-9777.
Justice Department Announces Agreement Protecting the Rights of Chinese and Spanish-Speaking Voters in Alameda County, CaliforniaRead the Press Release
WASHINGTON — The Civil Rights Division and the U.S. Attorney’s Office for the Northern District of California announced today an agreement with Alameda County, Calif., to ensure compliance with provisions of the Voting Rights Act that require the county to provide election materials and information in Spanish and Chinese.
“The right to vote is the foundation of our democracy, and language barriers should never keep citizens from accessing that right,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “Today’s agreement ensures that Alameda County’s Spanish and Chinese-speaking citizens will be able to cast an effective ballot and successfully participate in the electoral process. I congratulate Alameda County for their earnest cooperation in resolving this matter.”
The consent decree with Alameda County, which must still be approved by the federal district court, provides for a comprehensive language assistance program for Spanish and Chinese limited English proficient voters, including the dissemination of election-related materials and information in Spanish and Chinese. The consent decree requires the presence of trained bilingual election officials at polling places on election day. Further, Alameda County must make sure that all Spanish and Chinese-language signage is displayed as prominently as the English-language signage at the polling places throughout the county. The consent decree also establishes that Alameda County will develop an advisory group of interested community members and organizations that will assist the county in determining how to most effectively provide election materials, information, and assistance to Spanish and Chinese-speaking voters. The consent decree also provides that federal observers may monitor election day activities in polling places in Alameda County.
The Voting Rights Act requires that jurisdictions determined by the Census Bureau to have a substantial population of minority-language citizens, such as Alameda County, provide voting materials and assistance in the covered minority language as well as in English. Enforcement of the protections of the Voting Rights Act is a significant priority for the Civil Rights Division. Information about 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.
El Departamento de Justicia Anuncia Acuerdo para Proteger los Derechos de Electores de Habla Hispana y China en el Condado de Alameda, CaRead the Press Release
WASHINGTON – El Departamento de Justicia anunció hoy un acuerdo con el Condado de Alameda, CA, para asegurar el cumplimiento de las disposiciones de la Ley de Derechos Electorales que exigen que el condado provea materiales e información electorales en español y chino.
“El derecho al voto es la base de nuestra democracia, y las barreras idiomáticas jamás deben privar a los ciudadanos de ejercer ese derecho", dijo Thomas E. Perez, Secretario de Justicia Auxiliar a cargo de la División de Derechos Civiles del Departamento de Justicia. “El acuerdo de hoy asegura que los ciudadanos de habla hispana y china del Condado de Alameda puedan emitir un voto efectivo y participar con éxito en el proceso electoral. Felicito al Condado de Alameda por su cooperación enfática para resolver este asunto".
El Decreto por Consentimiento con el Condado de Alameda, el que aún requiere aprobación del Tribunal de Distrito, provee un programa de asistencia idiomática integral para electores hispanos y chinos con conocimientos limitados del idioma inglés, incluida la diseminación de materiales e información electorales en español y chino. El Decreto por Consentimiento exige la presencia de oficiales electorales bilingües capacitados en los lugares de votación el Día de Elecciones. Asimismo, el Condado de Alameda debe asegurar que todos los carteles en idioma español y chino estén en lugares tan visibles como los carteles en idioma inglés en los lugares de votación de todo el Condado. El Decreto por Consentimiento también establece que el Condado de Alameda desarrollará un Grupo Asesor de miembros de la comunidad y organizaciones interesados que ayudará al Condado a determinar cómo proveer materiales, información y asistencia electorales de la manera más eficiente a electores de habla hispana y china. El Decreto por Consentimiento también dispone que observadores federales pueden controlar las actividades el Día de Elecciones en los lugares de votación en el Condado de Alameda.
La Ley de Derechos Electorales exige que las jurisdicciones que el Buró de Censos determine que tienen una población sustancial de ciudadanos de idiomas minoritarios, tales como el Condado de Alameda, provean materiales electorales y asistencia en el idioma minoritario cubierto así como en inglés. El hacer valer las protecciones de la Ley de Derechos Electorales es una prioridad importante para la División de Derechos Civiles. Para obtener información sobre la Ley de Derechos Electorales y otras leyes federales electorales, visite el portal del Departamento de Justicia en www.justice.gov/crt/voting/. Se podrán presentar quejas a la Sección de Votación de la División de Derechos Civiles del Departamento de Justicia al 1-800-253-3931.
1 July 2011
Justice Department Seeks to Shut Down Louisiana Tax PreparersRead the Press Release
WASHINGTON – The United States has filed a lawsuit in federal court in New Orleans seeking to bar two women and their tax preparation companies from preparing federal tax returns for others, the Justice Department announced today.
The government’s civil injunction complaint alleges that Cathy Vinnett, her daughter Lashanda Vinnett (both of whom reside in Destrehan, La.), and their companies – M&C Tax Service, D&C Tax Service, River Parish Tax Professionals and Remarkable Tax Services – prepared federal tax returns for customers that claimed fraudulent tax refunds based on fabricated telephone excise tax credits, earned income tax credits and first time homebuyer tax credits. The suit alleges that the Vinnetts retained most of the resulting refunds for themselves, without telling their customers. According to the complaint, the bogus refund claims have resulted in a tax harm to the government that could be as much as $2.2 million.
Return preparer fraud is on the Internal Revenue Service’s list of the “Dirty Dozen” tax scams for 2011. Over the past decade, the Justice Department’s Tax Division has obtained hundreds of injunctions to stop the promotion of tax fraud schemes and the preparation of false tax returns. More information about these cases is available on the Justice Department website .
Federal Court Permanently Bars Detroit Woman from Preparing Federal Tax ReturnsRead the Press Release
WASHINGTON – A federal court has permanently barred Tracey R. Randolph from preparing federal tax returns for others, the Justice Department announced today. The civil injunction order, to which Randolph consented, was signed by Judge Mark Goldsmith of the U.S. District Court for the Eastern District of Michigan. The order requires Randolph to provide the government with a list of all persons for whom she prepared returns for tax years 2003 through 2009.
The government complaint in the case alleged that Randolph of Detroit included fabricated deductions for charitable donations, employee business expenses and other expenses on tax returns that she prepared since 2006. The complaint further alleged that Randolph instructed her customers under audit by the Internal Revenue Service (IRS) to give false statements and fabricated documents to the IRS in order to give the false impression that the bogus deductions claimed on the returns were legitimate.
The same federal court previously entered a permanent injunction against Machista Choice. According to the government complaint, Choice of River Rouge, Mich., was Randolph’s former business partner with whom she worked under the business names “Nedra’s Way Tax Service” and “Olivia’s Way Tax Service.” The complaint alleged that Choice also prepared tax returns that included fabricated deductions.
Return preparer fraud is one of the IRS’s “Dirty Dozen” tax scams for 2011. In the past decade, the Justice Department’s Tax Division has obtained injunctions against hundreds of tax return preparers and tax fraud promoters. Information about these cases is available on the Justice Department website .
Departments of Justice and Education Reach Agreement with Tehachapi, California, Public Schools to Resolve Harassment AllegationsRead the Press Release
WASHINGTON – The Departments of Justice and Education reached a settlement agreement with the Tehachapi Unified School District in Tehachapi, Calif., to resolve an investigation into the harassment of a middle school student based on his nonconformity with gender stereotypes. Title IV of the Civil Rights Act of 1964 and Title IX of the Education Amendments of 1972 each prohibit harassment based on sex, including harassment based on nonconformity with gender stereotypes and sexual harassment.
In September 2010, Jacobsen Middle School student Seth Walsh committed suicide at the age of 13. In October 2010, the Department of Education received a complaint alleging that Walsh had been the victim of severe and persistent peer-on-peer sex-based harassment while he was a student at Jacobsen. After receiving the complaint, the Department of Education initiated an extensive investigation into the circumstances leading to Walsh’s death and, together with the Department of Justice, worked collaboratively with the school district to resolve the violations.
The investigation found that Walsh suffered sexual and gender-based harassment by his peers. The investigation also found that Walsh was targeted for harassment for more than two school years because of his nonconformity with gender stereotypes, including his predominantly female friendships and stereotypically feminine mannerisms, speech and clothing. The departments determined that the harassment, which included ongoing and escalating verbal, physical and sexual harassment by other students at school, was sufficiently severe, pervasive and persistent to interfere with his educational opportunities. Despite having notice of the harassment, the district did not adequately investigate or otherwise respond to it. Based on the evidence gathered in the investigation, the departments concluded that the school district violated Title IX and Title IV.
Under the terms of the resolution agreement, the district will take a variety of steps to prevent sexual and gender-based harassment at all of its schools, to respond appropriately to harassment that occurs and to eliminate the hostile environment resulting from harassment. The district has agreed to revise its policies and regulations related to sexual and gender-based harassment and to retain a consultant to provide mandatory trainings on sexual and gender-based harassment for all students, administrators, teachers, counselors and other staff who interact with students. In addition, the district will assess the presence of sexual and gender-based harassment in its schools through school climate surveys, adopt appropriate actions to address issues identified by those surveys and form an advisory committee of administrators, students and parents to advise the district on school climate issues related to sex-based harassment.
“All students have the right to go to school without fearing harassment on the basis of their sex, including because they do not conform to gender stereotypes. Seth’s story and others like it sadly demonstrate that a school’s failure to address and prevent harassment can have tragic consequences,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “We commend the school district for working with the departments to address this matter effectively and encourage other school districts to take affirmative steps to ensure that all students can go to school without facing discrimination and harassment.”
“We know that if students aren't safe, then students aren't learning,” said Assistant Secretary of Education for Civil Rights Russlynn Ali. “Bullying, sexual harassment and gender stereotyping – of any student, including LBGT students -- have no place in our nation’s schools. We must work to stop those abusive behaviors when they take place, repair their harmful effects, and prevent them from happening in the future. Today's announcement is an important step in that direction.”
The enforcement of Title IV and Title IX are top priorities of the Justice Department’s Civil Rights Division. Additional information about the Civil Rights Division is available on its website at www.justice.gov/crt . Enforcement of Title IX is also a top priority of Department of Education’s Office for Civil Rights. Additional information about the Office for Civil Rights is available on its website at www2.ed.gov/about/offices/list/ocr/index.html .
30 June 2011
Washington, D.C.-based Academy for Educational Development Pays More Than $5 Million to Settle False Claims Act AllegationsRead the Press Release
WASHINGTON – The Academy for Educational Development (AED) in Washington, D.C., has agreed to settle allegations that the company submitted false claims to the United States Agency for International Development (USAID) in connection with two cooperative agreements under which AED provided foreign assistance in Afghanistan and Pakistan, the Justice Department announced today. Although certain terms of the settlement are contingent on future events, the agreement ensures that the United States will receive more than $5 million, and potentially could receive more than $15 million, to settle these claims.
The government alleges that AED failed to ensure that its actions under two cooperative agreements with USAID complied with applicable regulations concerning competition in procurements, adherence to contract specifications, and supervision of its subcontractors. The government further alleges that AED failed to inform USAID that AED had discovered defects in AED’s systems of internal controls and that certain of AED’s subcontractors may have engaged in corruption and other wrongful activities.
The two cooperative agreements covered by the settlement are the Federally Administered Tribal Area Livelihood Development Program (FATA-LDP) in Pakistan and the Higher Education Project in Afghanistan. AED’s alleged misconduct resulted in substandard work and the government being overcharged for services and goods.
“Fraud in connection with critical assistance programs overseas not only wastes taxpayer dollars, but can also put lives at risk and undermine our foreign relations,” said Tony West, Assistant Attorney General for Civil Division of the Department of Justice. “Working with our federal partners, we will use the strong tools at our disposal to fight procurement fraud no matter where in the world it occurs.”
“When our government undertakes foreign assistance programs around the world, it must be able to trust its partners,” said U.S. Attorney Ronald C. Machen Jr. “Contractors cannot be allowed to turn a blind eye to requirements designed to prevent fraud and corruption. This settlement should make contractors realize how serious we are about preserving the integrity of foreign assistance programs.”
In 2009, USAID’s Office of Inspector General learned of AED’s allegedly wrongful conduct in connection with the company’s overseas operations. As a result of additional investigation, USAID in May 2010 terminated for cause the FATA-DP agreement, one of the two cooperative agreements covered by the settlement agreement. In December 2010, USAID suspended AED from doing additional business with the federal government.
“The investigation that led to the settlement agreement is an example of the ongoing partnership between U.S. law enforcement agencies and Pakistani officials to help protect U.S. taxpayers,” said USAID Inspector General Donald A. Gambatesa.
Assistant Attorney General West noted that the settlement was the result of a coordinated effort among the Justice Department’s Civil Division; the U.S. Attorney’s Office for the District of Columbia; USAID, including its Office of Inspector General; the International Corruption Unit of the FBI; and the Pakistan National Accountability Bureau.
United States Sues Seattle-Area Man to Bar Him from Promoting Alleged “Form 1099-OID” Tax Fraud SchemeRead the Press Release
WASHINGTON – The United States has sued a Seattle-area man to stop him from promoting an alleged tax fraud scheme, the Justice Department announced today. The government’s civil injunction complaint alleges that John Lloyd Kirk promotes the use of fabricated Internal Revenue Service (IRS) Forms 1099-OID to report fictitious income tax withholding. Kirk’s customers allegedly file federal tax returns claiming huge tax refunds based on the fake withholding.
According to the complaint, Kirk, who resides in Des Moines, Wash., promotes the scheme through his business, the Indian Nations Advocate Law Office. Kirk allegedly holds seminars in the western United States and sells DVDs of his seminars to promote the tax scam. The complaint states that at least 31 of Kirk’s customers have used the scheme to make fraudulent tax refund claims totaling approximately $8 million.
Claiming bogus tax refunds based on false Forms 1099-OID is one of the IRS’s “Dirty Dozen” tax scams for 2011. In the past decade, the Justice Department’s Tax Division has obtained injunctions against hundreds of tax fraud promoters and unscrupulous tax return preparers. Information about these cases is available on the Justice Department website .
Statement of the Attorney General Regarding Investigation into the Interrogation of Certain DetaineesRead the Press Release
“O n January 2, 2008, Attorney General Michael Mukasey appointed Assistant United States Attorney John Durham of the District of Connecticut to conduct a criminal investigation into the destruction of interrogation videotapes by the Central Intelligence Agency. On August 24, 2009, based on information the Department received pertaining to alleged CIA mistreatment of detainees, I announced that I had expanded Mr. Durham’s mandate to conduct a preliminary review into whether federal laws were violated in connection with the interrogation of specific detainees at overseas locations. I made clear at that time that the Department would not prosecute anyone who acted in good faith and within the scope of the legal guidance given by the Office of Legal Counsel regarding the interrogation of detainees. Accordingly, Mr. Durham’s review examined primarily whether any unauthorized interrogation techniques were used by CIA interrogators, and if so, whether such techniques could constitute violations of the torture statute or any other applicable statute.
“In carrying out his mandate, Mr. Durham examined any possible CIA involvement with the interrogation of 101 detainees who were in United States custody subsequent to the terrorist attacks of September 11, 2001, a number of whom were determined by Mr. Durham to have never been in CIA custody. He identified the matters to include within his review by examining various sources including the Office of Professional Responsibility’s report regarding the Office of Legal Counsel memoranda related to enhanced interrogation techniques, the 2004 CIA Inspector General’s report on enhanced interrogations, additional matters investigated by the CIA Office of Inspector General, the February 2007 International Committee of the Red Cross Report on the Treatment of Fourteen “High Value Detainees” in CIA Custody, and public source information.
“Mr. Durham and his team reviewed a tremendous volume of information pertaining to the detainees. That review included both information and matters that had never previously been examined by the Department. Mr. Durham has advised me of the results of his investigation, and I have accepted his recommendation to conduct a full criminal investigation regarding the death in custody of two individuals. Those investigations are ongoing. The Department has determined that an expanded criminal investigation of the remaining matters is not warranted.
“As I noted at the time I announced the expansion of Mr. Durham’s authority, the men and women in our intelligence community perform an incredibly important service to our nation, and they often do so under difficult and dangerous circumstances. They deserve our respect and gratitude for the work they do. However, I concluded based on information available to me then, and continue to believe now, that the Department needed to thoroughly examine the detainee treatment issue. I am confident that Mr. Durham’s thorough review has satisfied that need.”
Pittsburgh Resident Pleads Guilty to Racketeering ChargesRead the Press Release
WASHINGTON – A Pittsburgh man 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.
James Pendelton, 30, aka “Jim Bob,” pleaded guilty before Senior U.S. District Judge Gustave Diamond to one count of conspiracy to engage in a racketeering enterprise.
According to the guilty plea, Pendelton and others participated in a pattern of racketeering activity that included multiple acts involving robberies at gun point; attempted murders; distribution of controlled substances, including cocaine, heroin and crack cocaine; and obstruction of justice and witness intimidation.
According to court documents, Pendelton associated with 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, Pendelton was a “connect” for the gang, supplying gang members with cocaine and crack cocaine.
Pendelton 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, 17 members or associates of the Brighton Place/ Northview Heights Crips who were charged in this indictment have pleaded guilty to racketeering charges. Pendleton’s sentencing is scheduled for Oct. 12, 2011.
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.
Miami-Area Psychiatrist Pleads Guilty for Role in $200 Million Medicare Fraud SchemeRead the Press Release
WASHINGTON - A Miami-area psychiatrist pleaded guilty today in U.S. District Court in Miami for his part in a fraud scheme that resulted in the submission of more than $200 million in fraudulent claims to Medicare, the Department of Justice, FBI and Department of Health and Human Services (HHS) announced.
Dr. Alan Gumer, 64, of Tamarac, Fla., pleaded guilty to one count of conspiracy to commit health care fraud. Gumer was charged on Feb. 15, 2011, with one count of conspiracy to commit health care fraud and four counts of health care fraud.
According to court documents, Gumer was a psychiatrist at American Therapeutic Corporation (ATC), a Florida corporation headquartered in Miami. ATC purported to operate 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.
Gumer admitted that he signed evaluations, notes and other documents in medical files for patients who did not need the treatment for which ATC billed Medicare. Specifically, as a psychiatrist, Gumer knew that the patients attending ATC did not need intensive mental health treatment, and that the treatments offered by ATC were not the type of intensive treatments a PHP should provide. Gumer admitted that he signed these files without examining the patients, or writing and reading the statements he was signing. Gumer also admitted to writing prescriptions for psychiatric medications for patients who did not need them in order to make it appear to Medicare that the patients qualified for PHP treatment. According to court documents, Gumer also referred hundreds of ATC patients to a related company, the American Sleep Institute (ASI), for unnecessary diagnostic sleep disorder testing.
According to court filings, Gumer’s co-defendants and 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 PHP programs so that ATC and ASI could bill Medicare for more than $200 million in medically unnecessary services.
According to the plea agreement, Gumer’s participation in the fraud resulted in $19.3 million in fraudulent billing to the Medicare program. Sentencing for Gumer is scheduled for Jan 19, 2012. Gumer faces a maximum of 10 years in prison and a $250,000 fine.
ATC, its management company Medlink Professional Management Group Inc., and the owners and lead manager of ATC, Medlink and ASI, were charged with various health care fraud, money laundering and other offenses in a separate superseding indictment unsealed on Feb. 15, 2011. Two of the three owners and the lead manager, as well as both ATC and Medlink, have pleaded guilty and have admitted to the fraudulent scheme and that more than $200 million in billings were submitted to the Medicare program as a part of the scheme. They are scheduled for sentencing on Sept. 14, 2011, by U.S. District Court Judge James Lawrence King. The trial of the third owner charged in the separate superseding indictment is scheduled to begin on Aug. 15, 2011.
The remaining 17 co-defendants named in the indictment in which Gumer was charged are scheduled to stand trial on Nov. 7, 2011, before U.S. District Judge Patricia A. Seitz.
An indictment is merely an accusation and defendants are presumed innocent unless and until proven guilty in a court of law.
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. 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 .
Las Vegas Physician to Pay U.S. $5.7 Million to Resolve False Claims Act Allegations Related to Radiation Oncology Services and Other ProceduresRead the Press Release
WASHINGTON – Rakesh Nathu, a Las Vegas physician, has agreed to pay the United States $5.7 million plus interest to settle allegations that he submitted false claims to federal health care programs for various radiation oncology services, including intensity modulated radiation therapy, the Justice Department announced today. Intensity modulated radiation therapy is a sophisticated radiation treatment indicated for specific types of cancer where extreme precision is required to spare surrounding organs or healthy tissue.
The government alleges that Nathu submitted improper claims to Medicare, TRICARE and the Federal Employees Health Benefits Plan from 2007 through 2009 in which he double billed for several procedures affiliated with radiation treatment plans, billed for certain high reimbursement radiation oncology services when a different, less expensive service should have been billed and billed for medically unnecessary radiation oncology services.
“We expect that physicians who participate in federal health care programs will bill for their services accurately and honestly,” said Tony West, Assistant Attorney General for the Department’s Civil Division. “Double or excessive billing for procedures and services, as we've alleged here, won't be tolerated by the Department of Justice or the taxpayers who pay for it.”
“Patients, employees, and others who suspect billing fraud on the part of doctors should not hesitate to report such fraud to federal authorities,” said U.S. Attorney for the District of Nevada Daniel G. Bogden. “Persons who file dishonest claims with the government in order to enrich themselves will be investigated and aggressively pursued by the Department of Justice.”
Assistant Attorney General West also noted that the settlement with this physician was the result of a coordinated effort among the Justice Department’s Civil Division, the U.S. Attorney’s Office for the District of Nevada and the Department of Health and Human Services’ Office of Inspector General.
“This case is about stealing millions of dollars from taxpayers,” said Daniel R. Levinson, Inspector General of the Department of Health and Human Services. “And we’ll continue to fight this kind of unconscionable abuse of our Medicare program.”
This resolution is part of the government’s emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of HHS in May 2009. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover more than $5.7 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in False Claims Act cases since January 2009 are more than $7.3 billion.
Justice Department Sues to Stop Orange County, California, Man<br /> from Selling Billions in Fake Tax CreditsRead the Press Release
WASHINGTON – The United States has sued an Orange County, Calif., man to stop him from selling bogus tax credits, the Justice Department announced today. According to the civil injunction complaint filed in a Los Angeles federal court, Lamar Ellis of Brea, Calif., fraudulently claims to have billions of dollars in federal research tax credits that the government supposedly granted him for purported scientific breakthroughs. The complaint states that Ellis claims to be a retired medical doctor, researcher and inventor.
The complaint alleges that Ellis has advertised his purported ownership of fake tax credits on various websites and has issued phony documents to individuals purporting to give them credits that can be used to reduce their tax obligations. Ellis has allegedly partnered with the Southwest Louisiana Business Development Center, a community development entity, in an attempt to sell $24 billion of fictitious tax credits.
According to the complaint, in 1998 the U.S. Securities and Exchange Commission sued Ellis for his involvement in a fraudulent investment scheme involving Ellis’s claimed invention of a “detoxification system” that could purportedly detoxify people of drugs or alcohol in as little as 15 minutes. The complaint states that Ellis and his co-defendants allegedly offered to sell unregistered stock in Ellis’s company, Lamelli Inc., as part of that scheme. According to the complaint, a court found that they falsely claimed to investors that the detoxification system had been approved by the National Institutes of Health and that Lamelli had received a grant from the Food and Drug Administration. The government alleges that a court ordered Ellis to disgorge his profits from the fraud and to pay a penalty.
In the last decade, the Justice Department’s Tax Division has obtained hundreds of injunctions to stop tax fraud promoters and unscrupulous tax return preparers. Information about these cases is available on the Justice Department website .