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26 May 2011
Two Individuals Convicted of Importing and Selling Counterfeit Cisco Computer Networking EquipmentRead the Press Release
WASHINGTON – Chun-Yu Zhao, of Centreville, Va., and Donald H. Cone, of Frederick, Md., were convicted by a federal jury in Alexandria, Va., for their roles in a sophisticated scheme to import and sell counterfeit Cisco-branded computer networking equipment, announced U.S. Attorney Neil H. MacBride for the Eastern District of Virginia and Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.
In addition to the conspiracy conviction, Zhao was convicted of 15 additional counts, including importation fraud, trafficking in counterfeit goods and labels, false statements to law enforcement, false statements in naturalization and money laundering. She was acquitted on one count of false statements and one count of money laundering. The jury reached its verdict on May 24, 2011, after a 12-day trial and nearly four days of deliberations. Today, the jury returned a verdict regarding the forfeiture of numerous assets associated with Zhao, including two Porsches, one Mercedes, seven bank accounts containing more than $1.6 million, and four homes and three condominiums with a total value of more than $2.6 million.
“Zhao operated the U.S. headquarters of a Chinese company that was in the business of stealing intellectual property and defrauding customers,” said U.S. Attorney MacBride. “Customs and Border Protection and criminal investigators from Immigration and Customs Enforcement did an exceptional job of detecting this operation, despite the numerous false names and addresses used by Zhao to fly beneath the radar for many years. Zhao’s days of taking in millions of dollars from unsuspecting U.S. consumers and businesses are over.”
“Zhao and her co-conspirators trafficked in counterfeit networking equipment, to the detriment of consumers and of Cisco,” said Assistant Attorney General Breuer. “Intellectual property crime is a serious threat, and one that we are working hard with our law enforcement partners to fight. These guilty verdicts are strong signals to would-be counterfeiters and other intellectual property criminals that fighting these crimes is a priority for this Justice Department.”
“The creation, trafficking and sale of counterfeit goods is not a victimless crime,” said John Torres, U.S. Immigration and Customs Enforcement (ICE), Homeland Security Investigations (HSI) Special Agent in Charge in the District of Columbia. “Products that are produced and sold illegally do harm to trademark holder’s brand name and to consumers who thought they were obtaining a genuine product. This case is an example of a scheme that robbed the legitimate companies that made these products, undermined the U.S. economy by robbing Americans of jobs, stifled American innovation and promoted other types of crime like money laundering.”
According to the evidence introduced at trial, Zhao, Cone and Zhao’s family members in China operated a large-scale counterfeit computer networking equipment business under the name of Han Tong Technology (Hong Kong) Limited. Zhao and her associates used a number of sophisticated schemes to defraud U.S.-based purchasers through a Virginia-based company called JDC Networking Inc. JDC Networking Inc. altered Cisco products by using pirated software, and created labels and packaging in order to mislead consumers into believing the products it sold were genuine Cisco products. To evade detection, Zhao used various names and addresses in importation documents, and hid millions of dollars of counterfeit proceeds through a web of bank accounts and real estate held in the names of her family members in China.
Sentencing for Cone is scheduled for Aug. 19, 2011, at 9:00 a.m. Zhao is scheduled to be sentenced on Aug. 26, 2011, at 9:00 a.m. At sentencing, the defendants face a maximum sentence of five years in prison and a $250,000 fine on the conspiracy charge. Zhao also faces 20 years in prison and a $250,000 fine for each count of importation and sale of improperly declared goods, as well as 20 years in prison and a $500,000 fine or twice the value of the property involved in the transaction for money laundering. She faces a maximum of 10 years in prison on each count of trafficking in counterfeit goods and a $2 million fine. On the false statement in naturalization charge, she faces 10 years in prison and a $250,000 fine. Finally, she faces 10 years in prison and a fine of $250,000 or twice the amount of the transaction on the charge of monetary transactions with criminally derived proceeds.
The case was investigated by ICE HSI’s Washington, D.C., Office, as well as the offices of the Inspector Generals from the General Services Administration and the U.S. Department of the Interior. U.S. Customs and Border Protection made a criminal referral to the department after intercepting counterfeit products from China destined for addresses associated with Zhao and JDC Networking Inc.
The case is being prosecuted by Assistant U.S. Attorneys Jay Prabhu and Lindsay Kelly from the Eastern District of Virginia, and Senior Counsel Michael Stawasz from the Computer Crime and Intellectual Property Section in the Justice Department’s Criminal Division.
The conviction announced today is part of a larger department-wide effort led by the Department of Justice Task Force on Intellectual Property (IP Task Force). Attorney General Eric Holder created the IP Task Force to combat the growing number of domestic and international intellectual property crimes, protect the health and safety of American consumers, and safeguard the nation’s economic security against those who seek to profit illegally from American creativity, innovation and hard work. The IP Task Force seeks to strengthen intellectual property rights protection through heightened criminal and civil enforcement, greater coordination among federal, state and local law enforcement partners, and increased focus on international enforcement efforts, including reinforcing relationships with key foreign partners and U.S. industry leaders. To learn more about the IP Task Force, go to www.justice.gov/dag/iptaskforce/.
Three Convicted of Sex Trafficking, Forced Labor and Immigration Offenses on Long Island, N.Y.Read the Press Release
WASHINGTON – A federal jury in Central Islip, N.Y., today found Antonio Rivera, 36, and Jason Villaman, 33, guilty of conspiracy, sex trafficking, forced labor, alien harboring and alien transportation, the Justice Department announced today. John Whaley, 31, was convicted of conspiracy, forced labor, alien harboring and alien transportation. The charges arose in connection with the defendants operation of two bars, Sonidos de la Frontera in Lake Ronkonkoma, N.Y., and La Hija del Mariachi, in Farmingville, N.Y. Rivera was the owner of the bars, and Whaley and Villaman transported the victims to and from the bars. Villaman also worked as a security guard at Sonidos de la Frontera.
The government’s evidence at trial established that the defendants and others compelled undocumented Latin American women from Honduras, Guatelmala, Mexico and El Salvador, hired as waitresses in Rivera’s bars to engage in commercial sex acts by using violence, fraud, coercion and threats of deportation.
“Human trafficking of this kind is the equivalent of modern day slavery. It deprives its victims of their freedom and dignity, and it has no place in our country,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “This case should serve as a reminder that the Justice Department is committed to the aggressive prosecution of those who rob individuals of their freedom for financial gain.”
“Those who exploit vulnerable individuals for personal gain will be prosecuted to the full extent of the law,” said U.S. Attorney Loretta E. Lynch. “We are committed to ensuring that everyone receives the full protection of our laws.” U.S. Attorney Lynch also thanked the Defense Criminal Investigative Service for its assistance in this case.
“This investigation and the resulting guilty verdicts prove that there is no tolerance in our society for this form of unbridled abuse and cruel exploitation of women,” said ICE/HSI Special Agent- In- Charge James T. Hayes. “This outcome further solidifies our resolve to work closely with other law enforcement agencies to root out those criminals who mistakenly view the most vulnerable among us as easy prey.”
“I congratulate the U.S. Attorney’s Office for the Eastern District of New York as well as the U.S. Department of Justice Civil Rights Division for the successful prosecution of this human trafficking case,” said Suffolk County Police Commissioner Richard Dormer. “I appreciate the difficult task the detectives and agents had overcoming the fear that these undocumented women expressed during this investigation. This case sends an important message to all undocumented persons who may be here illegally and are being victimized: the law enforcement community and prosecutors will not tolerate your criminal exploitation; if you come forward, we will protect you.”
“A jury has convicted these men of serious crimes that degraded and exploited particularly vulnerable women,”said FBI Assistant Director-in-Charge Janice K. Fedarcyk. “Through violence and other means, the women were coerced into sexual servitude. The FBI is committed to protecting victims and potential victims of sexual predators.”
“IRS Special Agents are an integral part of financial investigations,” said IRS Special Agent-in-Charge Charles R. Pine. “If the case involves money, as in sex trafficking, we provide value in tracking down money trails. We always welcome the opportunity to provide financial investigative assistance to our law enforcement partners.”
When sentenced by U.S. District Judge Sandra J. Feuerstein, the defendants face a maximum term of life in prison on the sex trafficking and conspiracy to commit sex trafficking offenses, and 20 years for the forced labor, alien harboring, and transportation of aliens offenses. In addition, the defendants face a fine equal to twice the pecuniary gain resulting from their crimes.
The government’s case was prosecuted by Assistant U.S. Attorneys Demetri M. Jones and Licha Nyiendo, and Senior Litigation Counsel John Cotton Richmond of the Civil Rights Division’s Human Trafficking Prosecution Unit.
San Diego Attorney Sentenced for Tax CrimesRead the Press Release
WASHINGTON – A San Diego attorney was sentenced by U.S. District Judge John A. Houston to 10 months in prison for evading taxes on at least $3 million in unreported income from 2000 to 2002, the Department of Justice and Internal Revenue Service (IRS) announced today. Judge Houston also ordered Craig Shaber, the attorney, to pay $555,000 in restitution to the IRS and to serve three years of supervised release. Shaber was indicted on conspiracy and tax evasion charges on Aug. 14, 2009, and subsequently pleaded guilty to tax evasion on Oct. 21, 2010.
According to the indictment, plea agreement and other documents filed in U.S. District Court in San Diego, between 1999 and 2002, Shaber and Steven Wright, a San Diego accountant, fraudulently acquired control of numerous public shell companies by, among other things, installing nominee officers and directors and submitting false registration statements and reports to the U.S. Securities and Exchange Commission (SEC) and the National Association of Security Dealers (NASD). Shaber and Wright earned millions of dollars from the sale of the public shell companies and deposited the proceeds into bank accounts in the names of Bonaventure Capital Ltd., International Solutions and one of Shaber’s client trust accounts. In 2002, Shaber and Wright received $260,000 in cash from the sale of one of the companies. In 2003, the SEC filed a complaint related to Shaber’s and Wright’s conduct selling the public shell companies.
Shaber then evaded taxes on the millions of dollars earned from the sale of the public shell companies. He withdrew the proceeds from the bank accounts for his own personal benefit in such a way that it concealed the fact that he received income from the stock scheme. Shaber disbursed these funds to various bank accounts in the names of nominee entities that he controlled and used accounts in the names of nominee entities to pay for personal expenses to help conceal his receipt of the income. Some of the nominee entities held title to various assets, which also helped conceal Shaber’s receipt of taxable income and his control over some of these assets.
The department said that Shaber also filed false individual federal income tax returns from 2000 to 2002 that failed to report income earned from the shell company scheme. Shaber and Wright also caused the filing of false corporate federal income tax returns that helped disguise their receipt of taxable income. According to the indictment, Shaber used the proceeds from the shell company scheme to purchase numerous luxury items, including his personal residence in Coronado, Calif., a McDonnell Douglas helicopter, a World War II-era Tigercat airplane, a Plymouth Prowler, a Porsche 996 Turbo and artwork.
Wright was sentenced on March 21, 2011, before U.S. District Judge Marilyn L. Huff in San Diego to three months in prison, three months community confinement and three years of supervised release. Wright also was ordered to pay a $2,000 fine and $378,000 in restitution for evading more than $380,000 in taxes from 2000 to 2002. Wright previously pleaded guilty on Aug. 14, 2009, and cooperated with the government in the prosecution of Shaber.
These cases are being prosecuted by Tax Division trial attorneys Christopher Maietta and Timothy J. Stockwell, and were investigated by the IRS-Criminal Investigation Division. Additional information about the Justice Department’s Tax Division and its enforcement efforts may be found at www.usdoj.gov/tax.
Lufkin, Texas, Man and Woman Sentenced to Federal Prison for Nacogdoches, Texas, MurdersRead the Press Release
WASHINGTON – A Lufkin, Texas, man and woman have been sentenced to federal prison for their part in a double homicide 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.
Brent Stalsby, 30, was sentenced yesterday to life in federal prison by U.S. District Judge Marcia Crone. Stalsby pleaded guilty on Jan. 21, 2011, to committing a violent crime in aid of racketeering activity. Specifically, Stalsby admitted that he murdered David Mitchamore and Christy Rochelle Brown. Terry Stalsby, 29, pleaded guilty on Jan. 21, 2011, to charges of serving as an accessory after the fact in the murder of Brown and was sentenced yesterday to 162 months in federal prison.
According to information presented in court, Carl Carver was a general of the Aryan Brotherhood of Texas (ABT), a race-based, state-wide organization that operates inside and outside of state and federal prisons throughout the state of 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 information presented in court, Mitchamore, aka “Super Dave,” an ABT member, and Brown, his girlfriend, were murdered by 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 Carver, an ABT general. The bodies of Mitchamore and Brown were discovered in Nacogdoches County on Aug. 10, 2007. According to information presented in court, Terry Stalsby was present when the “direct order” issued by Carver was delivered to Charles Cameron Frazier; however, Brent Stalsby was the triggerman for both murders. Terry Stalsby also actively participated in a plan to conceal the gang members’ roles in the murders after they took place.
Carver pleaded guilty on Jan. 19, 2011, to committing a violent crime in aid of racketeering activity and admitted that he had participated in Mitchamore’s murder. Frazier pleaded guilty on Jan. 14, 2011, to his roles in the murders and is awaiting sentencing.
This case is being investigated by the FBI; the Bureau of Alcohol, Tobacco, Firearms and Explosives; the National Gang Targeting, Enforcement and Coordination Center (Gang-TECC); the National Gang Intelligence Center; 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.
Justice Department Settles with Bank of America and Saxon Mortgage for Illegally Foreclosing on ServicemembersRead the Press Release
WASHINGTON - The Justice Department today announced settlements with two lenders under the Servicemembers Civil Relief Act (SCRA) to resolve allegations that the lenders wrongfully foreclosed upon active duty servicemembers without first obtaining court orders, in violation of the SCRA. Combined, the settlements provide more than $22 million in monetary relief for the victims.
Under the first settlement , BAC Home Loans Servicing LP, formerly known as Countrywide Home Loans Servicing LP, a subsidiary of Bank of America Corporation, will pay $20 million to resolve a lawsuit alleging that Countrywide foreclosed on approximately 160 servicemembers between January 2006 and May 2009 without court orders. In addition to the $20 million, Countrywide agreed to pay any servicemember wrongfully foreclosed in the period from June 2009 through 2010. The complaint alleges that Countrywide did not consistently check the military status of borrowers on whom it foreclosed through at least May 31, 2009. The complaint was filed in the Central District of California, where Countrywide is headquartered.
Under the second settlement, Saxon Mortgage Services Inc., a subsidiary of Morgan Stanley, will pay $2.35 million to resolve a lawsuit alleging that Saxon foreclosed on approximately 17 servicemembers between January 2006 and June 2009 without court orders. In addition to the $2.35 million, Saxon agreed to pay any servicemember wrongfully foreclosed in the period from July 2009 through 2010. The complaint alleges that Saxon failed to consistently or accurately check the military status of borrowers on whom it foreclosed through at least June 30, 2009. The complaint was filed in the Northern District of Texas, where Saxon is headquartered.
“The men and women who serve our nation in the armed forces deserve, at the very least, to know that they will not have their homes taken from them wrongfully while they are bravely putting their lives on the line on behalf of their country,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division of the Department of Justice. “The Civil Rights Division is committed to aggressively enforcing those laws that protect the rights of servicemembers. All lenders have an obligation to do their part to work with servicemembers while these brave men and women focus on keeping us safe. The Justice Department also thanks the Department of Defense for its critical assistance in identifying servicemembers whose rights were violated”
“Countrywide Home Loans failed to protect and respect the rights of our servicemembers, failed to comply with clearly mandated procedures and foreclosed against homeowners who are valiantly serving our nation,” said André Birotte Jr, U.S. Attorney for the Central District of California. “Military families lost their homes when Countrywide violated the law, causing undue stress to wartime personnel who have been protected from such actions since the Civil War.”
“With the numerous sacrifices our servicemembers make while they are serving our country, the last thing they need to worry about is whether or not their families will be forced from their homes,” said James T. Jacks, U.S. Attorney for the Northern District of Texas. “These lenders’ callous disregard for the SCRA, a law which was designed to insulate these patriots from unlawful foreclosures and other civil and financial obligations while they are on active duty, is deplorable and I applaud the Department’s Civil Rights Division’s efforts in identifying and seeking remedies for these wronged service members.”
Of the approximately 160 servicemembers upon whom Countrywide foreclosed without obtaining court orders, Countrywide allegedly foreclosed in many instances where it knew, or should have known, about their military status. The victims include individuals who have served honorably in Iraq and Afghanistan. The Department of Justice initiated its SCRA investigation of Countrywide in response to a referral by the U.S. Marine Corps regarding an active duty servicemember who was facing foreclosure by Countrywide.
Under the consent decree, Countrywide will establish a settlement fund of $20 million to compensate the servicemembers upon whom Countrywide foreclosed between January 1, 2006, and May 31, 2009. In addition to this settlement fund, Countrywide has agreed to compensate any additional SCRA-eligible individuals on whom Countrywide foreclosed without court orders between June 1, 2009, and Dec. 31, 2010. The consent decree also requires numerous corrective measures, including SCRA training for Countrywide employees and agents, developing modified SCRA policies and procedures and referring future SCRA complaints to the Justice Department. Countrywide will also repair any negative credit report entries related to the allegedly wrongful foreclosures and will not pursue any remaining amounts owed under the mortgages. Countrywide now will check the Defense Manpower Data Center’s website and its own files prior to conducting any foreclosure, and will not foreclose in violation of the SCRA if the borrower is in military service or is otherwise protected by the SCRA.
Of the approximately 18 servicemembers upon whom Saxon foreclosed without obtaining court orders, Saxon allegedly foreclosed on at least 10 servicemembers when Saxon knew or should have known about their military status. The servicemembers Saxon foreclosed on include men and women who have served honorably in Iraq, some of whom were severely injured in the line of duty or suffer from post-traumatic stress disorder. The Department of Justice initiated its SCRA investigation in response to an inquiry from Sergeant James Hurley, who resolved his claims against Saxon earlier this year in a confidential settlement.
Under the consent decree, Saxon will establish a settlement fund of $2.35 million to compensate the servicemembers upon whom Saxon allegedly wrongfully foreclosed between 2006 and 2009. In addition to this settlement fund, Saxon also has agreed to compensate any additional SCRA-eligible servicemembers on whom Saxon foreclosed without court orders between July 1, 2009, and Dec. 31, 2010. The consent decree also requires numerous corrective measures, including SCRA training for Saxon employees and agents, developing modified SCRA policies and procedures, and referring future SCRA complaints to the Justice Department. Saxon will also repair any negative credit report entries related to the wrongful foreclosures and will not pursue any remaining amounts owing under the mortgages. Saxon now will check the Defense Manpower Data Center’s website and its own files prior to conducting any foreclosure, and will not foreclose in violation of the SCRA if the borrower is in military service or is otherwise protected by the SCRA.
The division’s SCRA investigations have resulted in litigation or settlements enforcing SCRA’s provisions for termination of residential lease agreements, protection against enforcement of storage liens on towed vehicles without court orders, reduction of interest rates to six percent on credit obligations, and a prohibition against paying pre-payment penalties on mortgage loans when a servicemember must move for military service.
President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit www.stopfraud.gov .
Servicemembers and their dependents who believe that their SCRA rights have been violated should contact the nearest Armed Forces Legal Assistance Program office. Please consult the military legal assistance office locator at http://legalassistance.law.af.mil and click on the Legal Services Locator. Additional information about the Justice Department’s enforcement of the SCRA and the other laws protecting servicemembers is available at www.servicemembers.gov. Servicemembers who believe they may have been victims, can contact the Justice Department directly at 1-800-896-7743, mailbox 6 for Countrywide or 1-800-896-7743, mailbox 995 for Saxon.
Houston Federal Jury Convicts Patient Recruiter of Medicare Fraud Involving Claims of Hurricane Damage to Power WheelchairsRead the Press Release
WASHINGTON – Marion Beverly Metoyer, a patient recruiter for a Houston durable medical equipment (DME) company, was convicted today by a Houston federal jury of health care fraud related to a power wheelchair fraud scheme, the Departments of Justice, Health and Human Services (HHS) and the FBI announced.
After a four-day trial, Metoyer, 57, of Dayton, Texas, was convicted on one count of conspiracy to commit health care fraud, three counts of health care fraud, one count of conspiring to receive illegal kickbacks for referring Medicare beneficiaries, and two counts of receiving illegal kickbacks for referring Medicare beneficiaries.
According to evidence presented at trial, Helen Etinfoh was the owner and operator of Luant & Odera Inc., a Houston-area DME company doing business as Tonni Medical Equipment & Supplies. Metoyer was a recruiter for Luant who was paid kickbacks in exchange for providing the company with beneficiaries in whose names bills could be submitted to Medicare. Etinfoh and other co-conspirators submitted false and fraudulent claims to Medicare for medically unnecessary DME, including power wheelchairs, wheelchair accessories and motorized scooters.
Evidence at trial showed that, based on representations from Metoyer and other recruiters, Luant would bill Medicare under a special code that designated the power wheelchairs as replacements for wheelchairs lost during hurricanes that hit the Houston area in fall 2008. In fact, the hurricanes did not damage the wheelchairs. Certain beneficiaries testified that they did not even have a power wheelchair before receiving the ones provided to them by Luant. Luant used the hurricane code because it allowed the company to submit claims to Medicare without a doctor’s order.
At trial, beneficiaries in whose names claims were submitted to Medicare testified that recruiters whom they had never met, including Metoyer, came to their homes and offered them free power wheelchairs in exchange for their Medicare information. The power wheelchairs were often billed to Medicare at more than $6,000 per chair.
Etinfoh was previously convicted by a federal jury of health care fraud in April 2010, and was sentenced to 41 months in prison. Paula Whitfield, a patient recruiter for Luant, was also convicted by a federal jury in April 2010, and was sentenced to 21 months in prison. Melvin Barnes, Johnnie Lee Andrews and Monica Rene Perry, each a patient recruiter for Luant, pleaded guilty to conspiracy to commit health care fraud and await sentencing.
At sentencing, Metoyer faces maximum penalties of 10 years in prison for the health care fraud conspiracy; 10 years in prison for committing health care fraud; five years in prison for conspiring to receive illegal kickbacks for referring Medicare beneficiaries; and five years in prison for receiving an illegal kickback for referring a Medicare beneficiary. A sentencing date has not been set.
Today’s guilty jury verdict was announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney José Angel Moreno of the Southern District of Texas; Acting Special Agent-In-Charge Russell D. Robinson of the FBI’s Houston Field Office; Special Agent-in-Charge Mike Fields of the Dallas Regional Office of HHS’s Office of the Inspector General (HHS-OIG), Office of Investigations; and the Texas Attorney General’s Medicaid Fraud Control Unit (MFCU).
The case was tried by Trial Attorney Laura Cordova and Assistant Chief Sam S. Sheldon of the Criminal Division’s Fraud Section. The case was brought as part of the Medicare Fraud Strike Force, supervised by the U.S. Attorney’s Office for the Southern District of Texas and the Criminal Division’s Fraud Section.
Since their inception in March 2007, Strike Force operations in nine locations have obtained indictments of 1,000 individuals who collectively have falsely billed the Medicare program for more than $2.3 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov .
Former Nasdaq Executive Pleads Guilty to Insider TradingRead the Press Release
WASHINGTON – A former managing director of the NASDAQ Stock Market pleaded guilty today for his participation in an insider trading scheme in which he purchased and sold stock in NASDAQ-listed companies based on material, non-public information he obtained in his capacity as a NASDAQ executive, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney Neil H. MacBride of the Eastern District of Virginia and Postal Inspector in Charge of Criminal Investigations Gerald O’Farrell of the U.S. Postal Inspection Service (USPIS).
Donald Johnson, 56, a resident of Ashburn, Va., pleaded guilty before U.S. District Judge Anthony J. Trenga in the Eastern District of Virginia to one count of securities fraud. In pleading guilty, he admitted that he purchased and sold stock in NASDAQ-listed companies based on material, non-public information, or inside information, on several different occasions from 2006 to 2009.
“Mr. Johnson was a fox in a hen-house,” said Assistant Attorney General Breuer. “NASDAQ-listed companies entrusted him with their sensitive, non-public information so that he could provide them with analyses about their stock. He then used that very information to cheat the system and make an illegal profit. Insider trading by a gatekeeper on a securities exchange is a shocking abuse of trust, and must be punished. The integrity of our securities markets is vital to the U.S. economy, and the Justice Department is determined to take on insider trading at every level.”
“Don Johnson used sensitive, confidential information as an executive at NASDAQ to pad his retirement by more than $600,000,” said U.S. Attorney MacBride. “He thought he could get away with it by using his wife’s account and inside information to make relatively small trades just a few times a year. But he learned what every other trader on Wall Street must now realize: We’re watching.”
“The U.S. Postal Inspection Service continues to identify and aggressively investigate those who commit securities fraud,” said Postal Inspector in Charge of Criminal Investigations O’Farrell. “The agency has placed a team of highly trained Postal Inspectors at the Department of Justice in Washington, D.C., working in partnership with Department of Justice attorneys, to assure that criminals who defraud innocent citizens are prosecuted to the fullest extent of the law.”
According to court documents, from 2006 to September 2009, Johnson was a managing director on NASDAQ’s market intelligence desk in New York. The market intelligence desk provides trading analysis and market information to the companies that list on NASDAQ. According to court documents, Johnson monitored the stock of companies traded on NASDAQ and offered NASDAQ-listed companies information and analyses concerning trading in their own stock. To enable him to perform these services, NASDAQ-listed companies routinely entrusted Johnson with material, non-public information about their stock, including advance notice of announcements concerning earnings, regulatory approvals and personnel changes. Johnson admitted that he repeatedly used this information to purchase or sell short stock in various NASDAQ-listed companies shortly before the information was made public. He would then generate substantial gains by reversing those positions soon after the announcement. According to court documents, to conceal his illegal trading, Johnson executed these trades in a brokerage account in his wife’s name. Johnson failed to disclose this account to NASDAQ in violation of NASDAQ rules.
Johnson admitted that he made illegal purchases and sales of stock in NASDAQ-listed companies on at least eight different occasions, generating gains totaling more than $640,000. The companies whose securities he traded were Central Garden and Pet Co.; Digene Corporation; Idexx Laboratories Inc.; Pharmaceutical Product Development Inc.; and United Therapeutics Corporation. According to court documents, in November 2007, Johnson used inside information related to successful trial results for United Therapeutics’ drug Viveta (now called Tyvaso) to purchase shares of United Therapeutics before the trial results were announced. Soon after the announcement, Johnson sold the shares and gained more than $175,000 in profits. According to court documents, in July 2009, Johnson used inside information about the approval of its drug Tyvaso to purchase shares of United Therapeutics before the approval was announced. He sold the shares after the announcement and gained more than $110,000 in profits.
Johnson is scheduled to be sentenced on Aug. 12, 2011. The maximum penalty for securities fraud is 20 years in prison and a fine of $5 million.
In a related action, the Securities and Exchange Commission today filed a civil enforcement action against Johnson in the Southern District of New York.
This case is being prosecuted by Trial Attorney Justin Goodyear of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Raymond E. Patricco Jr., of the Eastern District of Virginia. The Department would like to recognize the substantial assistance of the Securities and Exchange Commission. The case was investigated by USPIS. The Financial Industry Regulatory Authority also provided assistance. Brigham Cannon, formerly a Trial Attorney of the Criminal Division, also assisted with the investigation.
This prosecution is part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information about the task force visit: www.stopfraud.gov .
Areté Sleep to Pay the United States $650,000 to Resolve False Claims Act AllegationsRead the Press Release
WASHINGTON – Areté Sleep LLC, Areté Sleep Therapy LLC and Areté Holdings LLC have agreed to pay the United States $650,000 to settle allegations that their sleep medicine and durable medical equipment facilities in Arizona and Texas submitted false claims to Medicare, the Justice Department announced today.
Today’s settlement resolves False Claims Act allegations that, from Nov. 1, 2002, through Dec. 31, 2009, Areté made false claims to Medicare for diagnostic sleep tests performed by technicians lacking the licenses or certifications required by Medicare rules and regulations. The settlement also resolves related allegations that Areté made false claims to Medicare for medical devices resulting from these same technicians’ tests.
On Jan. 26, 2011, Areté filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court in the District of Arizona. Areté has agreed to pay the False Claims Act settlement from the proceeds of the sale of its assets.
“The Department of Justice is committed to preventing waste, fraud and abuse in the Medicare program and ensuring that these funds are not spent on care that does not meet Medicare’s standards,” said Tony West, Assistant Attorney General for the Justice Department’s Civil Division.
“Cheating Medicare harms not only the health care of others but all taxpayers,” said Dennis K. Burke, U.S. Attorney for the District of Arizona. “This settlement demonstrates the ongoing efforts of our office to recover taxpayer dollars for the Medicare program.”
All three Arete entities were named as defendants in a whistleblower lawsuit brought under the False Claims Act, which permits private citizens, known as “relators,” to bring lawsuits on behalf of the United States and receive a portion of the proceeds of any settlement or judgment awarded against a defendant. Relator Amanda Drews will receive $107,250 as her share of the recovery.
“Every Medicare dollar is precious, so we expect the program will only be billed for properly provided services,” said Glenn R. Ferry, Special Agent in Charge, Los Angeles Region, Office of Inspector General (OIG) of the Department of Health & Human Services (HHS). “Maintaining the integrity of Medicare is a top OIG priority.”
The investigation and settlement were the result of a coordinated effort among the U.S. Attorney’s Office for the District of Arizona, the Commercial Litigation Branch of the Justice Department’s Civil Division and HHS-IG.
“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 HHS Secretary Kathleen Sebelius 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 over $7.3 billion.”
25 May 2011
North Carolina Pilot Indicted for Filing False Tax Returns and Obstructing the IRSRead the Press Release
WASHINGTON – Charles Alexander Davis formerly of Mooresville, N.C., was indicted by a federal grand jury in Charlotte, N.C., on 10 counts of willfully filing materially false tax returns and one count of obstructing and impeding the Internal Revenue Service (IRS), the Department of Justice and the IRS announced. The indictment was returned on May 19, 2011, and was unsealed today in U.S. District Court for the Western District of North Carolina.
According to the indictment, Davis’s employer, an international airline carrier, withheld little or no federal income tax from Davis’s wages for years 1997 through 2005 because Davis previously had falsely represented that he was exempt from income tax withholding. The department said, in April 2006, Davis filed five fraudulent amended income tax returns for 1996 through 2000, falsely claiming that he earned little or no adjusted gross income in each of those years.
The indictment further alleges that subsequently, from April 2008 to February 2009, Davis filed five fraudulent individual income tax returns for 2004 through 2008, reporting false amounts of federal income tax withheld for each of those years and requesting fraudulent refunds from the IRS in amounts up to approximately $1.5 million. During IRS efforts to collect Davis’s tax debt, the indictment alleges, Davis obstructed and impeded the IRS in numerous ways, including submitting fraudulent payment documentation to the IRS and concealing his assets and income in a nominee bank account.
Davis had his initial appearance on May 20, 2011, in Puerto Rico, where he was apprehended.
If convicted, Davis faces a maximum potential sentence of 33 years in prison and a maximum fine of $2.75 million. An indictment is merely an allegation, and Davis is presumed innocent unless and until proven guilty beyond reasonable doubt in a court of law.
The case is being prosecuted by Assistant U.S. Attorney Jenny Grus Sugar and Tax Division Trial Attorney Kevin C. Lombardi. The case was investigated by the IRS-Criminal Investigation Division.
More information about the Department of Justice’s Tax Division and its enforcement efforts can be found at www.usdoj.gov/tax.
Justice Department Settles Case Against South Bend, Indiana, Public Transportation Corporation to Defend Employment Rights of Army ReservistRead the Press Release
WASHINGTON – The Department of Justice announced today that it has resolved claims made by Stephen Ralston against the South Bend, Ind., Public Transportation Corporation (TRANSPO) under the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA).
Subject to certain conditions, USERRA requires employers to promptly reemploy returning service members to the position they would have held had their employment not been interrupted by military service, or in a position of like seniority, status and pay. USERRA also prohibits an employer from denying, among other things, retention in employment to a member of the uniformed services on the basis of that membership, performance of service or service obligation.
The complaint in this case, which was filed along with a proposed consent decree in the U.S. District Court for the Northern District of Indiana, alleges that TRANSPO violated various sections of USERRA by, among other things, failing to properly reemploy Mr. Ralston after his military obligations ended, and discriminating against Mr. Ralston because of his military obligations. Mr. Ralston, who was employed by TRANSPO in January 2008, was activated to full-time military duty and deployed to Iraq. After Mr. Ralston’s military obligations concluded in November 2009, he promptly applied for reinstatement with TRANSPO. On his first day back at TRANSPO in December 2009, Mr. Ralston was informed by TRANSPO’s assistant general manager that Ralston’s position would cease to exist after Dec. 31, 2009. On Dec. 31, 2009, TRANSPO delivered a letter to Mr. Ralston stating that he was being discharged that day. No other TRANSPO employee was discharged that day. Under the terms of the consent decree, TRANSPO will pay Mr. Ralston $45,000 in back pay.
“Our country values its military reservists and the sacrifices they make. No service member should be disadvantaged because he or she heeded the call to duty,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Civil Rights Division of the Department of Justice is fully committed to protecting the employment rights of persons who serve in the armed services.”
“Our commitment to returning service members is complete and unwavering,” said Ray Jefferson, Assistant Secretary of Labor for Veterans’ Employment and Training. “Members of our Armed Forces volunteered for the duty of protecting our nation, our values, our interests and our way of life. It is our duty to support them when they need assistance after returning home.”
The Justice Department’s lawsuit was filed after the Veterans’ Employment and Training Service of the Department of Labor referred the complaints filed by Mr. Ralston to the Justice Department upon completion of its investigation and unresolved settlement efforts. USERRA provides that the Department of Justice may appear on behalf of, and act as attorney for, persons whose complaints are referred to Department of Justice by the Department of Labor.
This case was handled jointly by the Office of the U.S. Attorney for the Northern District of Indiana and the Employment Litigation Section of the Civil Rights Division. Wayne Ault, Assistant U.S. Attorney, and Hector Ruiz, Senior Trial Attorney, served as counsel for plaintiff. The Justice Department’s Civil Rights Division has given a high priority to the enforcement of service members’ rights under USERRA. Additional information about USERRA can be found on the Justice Department’s websites at www.usdoj.gov/crt/emp and www.servicemembers.gov as well as on the Labor Department’s website at www.dol.gov/vets/programs/userra/main.htm.
Justice Department Honors Citizens, Law Enforcementat National Missing Children’s Day CeremonyRead the Press Release
WASHINGTON – Deputy Attorney General James Cole spoke at the annual National Missing Children’s Day ceremony today at the Justice Department’s Great Hall, honoring missing children, their families, child advocates and others who protect the safety of children.
“Protecting our children is one of the department’s highest priorities and we will continue to work with other federal agencies and organizations to ensure timely, accurate and thorough responses to missing and exploited children,” said Deputy Attorney General Cole. “Through efforts like the Defending Childhood initiative and the Federal Agency Task Force on Missing and Exploited Children, we will continue our efforts to prevent child abductions and exploitation as well as ensure that those who are responsible for such crimes are punished.”
Protecting children is a priority of Attorney General Eric Holder, who launched Defending Childhood in 2010 to address the issue of children exposed to violence. The department also supports the work of the National Center for Missing & Exploited Children; the Internet Crimes Against Children Task Force Program, a national network of 61 coordinated task forces addressing online child exploitation; and the AMBER Alert Program, instrumental in the recovery of 540 abducted children since its creation in 1996.
The Department announced the release of two Spanish translations of publications: Cuando su Niño desaparece: Una guía para la supervivencia de la familia (When Your Child Is Missing: A Family Survival Guide, 4th edition), providing advice about what to do when your child is missing, and how best to assist law enforcement in the search, and El Delito del Secuestro Familiar: La perspectiva de hijos y padres (The Crime of Family Abduction: A Child’s and Parent’s Perspective), offering insights into how a child abduction by a family member affects the child and the family.
The ceremony included remarks by Jeff Slowikowski, Acting Administrator of the Office of Juvenile Justice and Delinquency Prevention, followed by presentations of awards in the following categories:
Attorney General’s Special Commendation Award: Recognizes extraordinary efforts of an Internet Crime Against Children (ICAC) task force, an ICAC affiliate agency, or an individual assigned to an ICAC task force or affiliate agency for making significant investigative or program contributions to the ICAC task force program.
Recipients: Detective Gary Jackson, Miami Police Department; Detective Felix Mendigutia, Hialeah, Fla., Police Department; Special Agent Tim Aucoin, U.S. Secret Service, Miami; and Assistant U.S. Attorney Maria Medetis, Southern District of Florida, who worked to identify and locate a sexual predator and four child victims he was sexually abusing. The defendant received a 130-year prison sentence.
Missing Children’s Law Enforcement Award: Recognizes the extraordinary efforts of a law enforcement officer who made a significant investigative or program contribution to the safety of children.
Recipient: Sheriff David Barber, Knox County, Ohio, Sheriff’s Office, coordinated a high-profile investigation including federal, state, and local law enforcement and led to the safe recovery of an abducted 13-year-old girl.
Missing Children’s Citizen Award: Honors the extraordinary efforts of private citizens for their unselfish acts to safely recover missing or abducted children.
Recipient: Heather Picklesimer, Postmaster Relief, U.S. Postal Service, Ducktown, Tenn., whose work with the U.S. Postal Inspection Service led to the successful recovery of a missing infant.
Missing Children’s Child Protection Award: Honorsthe extraordinary efforts of a law enforcement officer who made a significant investigative or program contribution to protecting children from abuse or victimization.
Recipient: Detective Dana Ward, York, Pa., City Police Department, who served as a key drafter of protocols for the York County Child Abduction Response Team (CART). This team received full certification, becoming the first CART certified in Pennsylvania, and only the 12th such certified team in the United States. Ward was a primary investigator in a 2010 case in which two York parents were arrested and charged with five counts of child endangerment after they hid their five children in a squalid row house with no heat, electricity or running water.
Missing Children’s Art Contest Award:
Recipient : Julianna Hinton, a fifth grader at Oak Grove Upper Elementary , Hattiesburg, Miss., was selected as the 2011 Missing Children’s Art Contest winner for her depiction of a bald eagle with wings outstretched to protect our country’s missing children, clutching an AMBER Alert banner.
President Ronald Reagan proclaimed May 25, 1983, the first National Missing Children’s Day to remember Etan Patz, a 6-year-old boy who disappeared from a New York City street corner on that day in 1979. Missing Children’s Day honors his memory of children still missing.
OJP, headed by Assistant Attorney General Laurie O. Robinson, provides federal leadership in developing the nation’s capacity to prevent and control crime, administer justice, and assist victims. OJP has seven components: the Bureau of Justice Assistance; the Bureau of Justice Statistics; the National Institute of Justice; the Office of Juvenile Justice and Delinquency Prevention; the Office for Victims of Crime; the Community Capacity Development Office, and the Office of Sex Offender Sentencing, Monitoring, Apprehending, Registering, and Tracking. More information about OJP is at www.ojp.gov .
Jackson County, Michigan, Man Arrested and Charged with Obstructing the IRS in Form 1099-OID SchemesRead the Press Release
WASHINGTON – Karl Herrington of Parma, Mich., was arrested today on charges of two counts of corruptly endeavoring to obstruct the administration of the internal revenue laws, and five counts of filing false tax forms with the Internal Revenue Service (IRS), the Department of Justice, the Treasury Inspector General for Tax Administration (TIGTA) and the IRS announced. The indictment was returned on May 12, 2011, and was unsealed today in U.S. District Court in Detroit.
According to the indictment, Herrington submitted false forms to the IRS to intimidate and harass state and local government officials and employees. These included Forms 1099-OID falsely reporting that Herrington paid original issue discount, which is taxable as interest, to law enforcement personnel and judges involved in a criminal case against him in Jackson County. In that case, Herrington was charged with being an accessory after the fact for harboring his wife, who was wanted for outstanding arrest warrants.
The indictment also alleges that Herrington sent false Forms 1099-OID to federal attorneys prosecuting a criminal tax case against his wife in the Northern District of Ohio in order to interfere with that case. Among the false tax forms Herrington is accused of filing was an individual income tax return for himself falsely reporting federal tax withheld of over $8 million.
If convicted, Herrington faces a maximum potential sentence of 21 years in prison and a maximum fine of $1.5 million. An indictment is merely an allegation, and Herrington is presumed innocent unless and until proven guilty beyond reasonable doubt in a court of law.
Tax Division Trial Attorneys Kenneth Vert and Jeffrey McLellan are litigating the case for the United States.
Federal Court Bars Chicago Woman from Preparing Federal Tax ReturnsRead the Press Release
WASHINGTON – A federal court has permanently barred Martha A. Jones of Chicago from preparing federal tax returns for others, the Justice Department announced today. The civil injunction order, to which Jones consented without admitting the allegations against her, was signed by U.S. District Court Judge Gary Feinerman for the Northern District of Illinois.
The government complaint in the case alleged that Jones included fabricated charitable contributions, employee business expenses and other deductions on tax returns that she prepared since 2005. The complaint alleged, for tax years 2005 through 2008, the Internal Revenue Service (IRS) examined 56 of the returns that Jones prepared and found inaccuracies in all of them. According to the complaint, the tax losses to the United States from Jones’s misconduct could exceed $1 million.
The complaint also alleged that Jones failed to sign her customers’ returns as the paid preparer, even after being advised by the IRS that she was legally required to sign them. 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 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.
El Departamento de Justicia homenajea a ciudadanos, fuerzas del orden público en ceremonia del Día Nacional de Niños DesaparecidosRead the Press Release
WASHINGTON - El Secretario de Justicia Adjunto James Cole habló en la ceremonia anual del Día Nacional de Niños Desaparecidos hoy en el Gran Salón del Departamento de Justicia, y prestó homenaje a los niños desaparecidos, sus familias, defensores de menores y otros que protegen la seguridad de los niños.
"La protección de nuestros niños es una de las más altas prioridades del departamento, y seguiremos trabajando con otras dependencias federales y organizaciones para asegurar respuestas oportunas, precisas y exhaustivas al tema de los menores desaparecidos y explotados", dijo el Secretario de Justicia Adjunto Cole. "A través de iniciativas como "Defensa de la Niñez" y la Fuerza de Tarea de Dependencias Federales para Niños Desaparecidos y Explotados", seguiremos adelante con nuestra labor de prevenir los secuestros y la explotación de niños, así como asegurar que los responsables por dichos delitos reciban castigo".
El proteger a los niños es una prioridad del Secretario de Justicia de los Estados Unidos Eric Holder, quien lanzó la iniciativa "Defensa de la Niñez" en 2010 para tratar de la problemática de los niños expuestos a la violencia. El departamento también promueve la labor del Centro Nacional para Niños Desaparecidos y Explotados; el Programa de la Fuerza de Tarea de Delitos en Internet contra Menores, una red nacional de 61 fuerzas de tarea coordinadas dedicadas a combatir la explotación de niños en Internet; y el Programa Alerta AMBER, instrumental para la recuperación de 540 niños secuestrados desde su creación en 1996.
El Departamento anunció el lanzamiento de dos traducciones al español de publicaciones: Cuando su niño desaparece: Una guía para la supervivencia de la familia (When Your Child Is Missing: A Family Survival Guide, 4ª edición), la que brinda consejos acerca de qué hacer si su hijo ha desaparecido, y cómo ayudar mejorar a las fuerzas del orden público en la búsqueda, y El Delito del secuestro familiar: La perspectiva de hijos y padres (The Crime of Family Abduction: A Child’s and Parent’s Perspective), la que ayuda a comprender cómo el secuestro de un niño por un familiar afecta al niño y a la familia.
La ceremonia incluyó comentarios de Jeff Slowikowski, Administrador Interino de la Oficina de Justicia Juvenil y Prevención de la Delincuencia, seguidos de presentaciones de premios en las siguientes categorías:
Premio Mención de Honor Especial del Secretario de Justicia de los Estados Unidos: Presta reconocimiento a la labor extraordinaria de una fuerza de tarea de Delitos en Internet contra Menores [Internet Crime Against Children (ICAC)], una dependencia afiliada a la ICAC, o una persona asignada a una fuerza de tarea ICAC o dependencia afiliada por la realización de aportes significativos de investigación o programas al programa de fuerzas de tarea ICAC.
Destinatarios: Detective Gary Jackson, Departamento de Policía de Miami; Detective Felix Mendigutia, Departamento de Policía de Hialeah, Fla.,; Agente Especial Tim Aucoin, Servicio Secreto de EE.UU., Miami; y Fiscal Federal Auxiliar Maria Medetis, Distrito Sur de Florida, quienes trabajaron en identificar y ubicar a un predador sexual y cuatro víctimas menores contra quienes cometía abuso sexual. El demandado recibió un sentencia de prisión de 130 años.
Premio Nacional Niños Desaparecidos para las Fuerzas del Orden Público: Presta reconocimiento a la labor extraordinaria de un agente de las fuerzas del orden público que haya realizado un aporte significativo de investigación o programa para la seguridad de los niños.
Destinatario: Alguacil David Barber, Condado de Knox, Ohio, Oficina del Alguacil, coordinó una investigación de alto perfil que incluyó a las fuerzas del orden público federales, estatales y locales y llevó a la recuperación de una niña secuestrada de 13 años de edad, sana y salva.
Premio Nacional Niños Desaparecidos para Ciudadanos: Presta homenaje a la labor extraordinaria de ciudadanos privados por sus actos desinteresados para lograr la recuperación de niños desaparecidos o secuestrados, sanos y salvos.
Destinataria: Heather Picklesimer, Relieve de Administrador de Correos, Servicio Postal de EE.UU., Ducktown, Tenn., cuyo trabajo con el Servicio de Inspección Postal de EE.UU. permitió la recuperación exitosa de un bebé desparecido.
Premio Nacional Niños Desaparecidos de Protección de Menores: Presta homenajea la labor extraordinaria de un agente de las fuerzas del orden público que haya realizado un aporte significativo de investigación o programa para la protección de menores contra el abuso o su victimización.
Destinatario: Detective Dana Ward, Departamento de Policía de la Ciudad de York, Pa., quien fue redactora clave de protocolos para el Equipo de Respuesta al Secuestro de Menores [Child Abduction Response Team (CART)] del Condado de York. Este equipo recibió certificación integral y pasó a ser el primer equipo CART certificado en Pensilvania y apenas el 12º con dicha certificación en los Estados Unidos. Ward fue la principal investigadora en un caso en 2010 en el que dos padres de York fueron arrestados y acusados de cinco cargos de puesta en peligro de menores, después de que escondieron sus cinco hijos en una casa adosada mugrienta sin calefacción, electricidad o agua corriente.
Premio del Concurso de Arte de Niños Desaparecidos:
Destinataria: : Julianna Hinton, una alumna del quinto grado de la Escuela Primera Superior de Oak Grove, Hattiesburg, Miss., fue elegida ganadora del Concurso de Arte de Niños Desaparecidos de 2011 por su retrato de un águila americana con las alas abiertas para proteger a los niños desaparecidos de nuestro país, aferrada a una bandera de Alerta AMBER.
El Presidente Ronald Reagan proclamó el 25 de mayo de 1983 el primer Día Nacional de Niños Desaparecidos en memoria de Etan Patz, un niño de 6 años de edad que desapareció de una esquina de una calle de la Ciudad de Nueva York ese día en 1979. El Día de los Niños Desaparecidos presta homenaje a los niños aún desaparecidos.
La Oficina de Programas Judiciales [Office of Justice Programs (OJP)], encabezada por la Secretario de Justicia Auxiliar Laurie O. Robinson, provee liderazgo federal en el desarrollo de la capacidad de la nación de prevenir y controlar la delincuencia, administrar justicia y prestar asistencia a víctimas. La OJP tiene siete componentes: el Buró de Asistencia Judicial; el Buró de Estadísticas Judiciales; el Instituto Nacional de Justicia; la Oficina de Justicia Juvenil y Prevención de la Delincuencia; la Oficina para Víctimas del Delito; la Oficina de Desarrollo de Capacidad Comunitaria y la Oficina de Sentencias, Control, Aprehensión, Registro y Rastreo de Delincuentes Sexuales. Para obtener más información acerca de la OJP, visite www.ojp.gov.
24 May 2011
New Jersey UBS Client Sentenced for Failing to Report More Than $1 Million in Swiss Bank AccountRead the Press Release
NEWARK, N.J. – An Oradell, N.J., man was sentenced today to three years of probation – including 12 months of home confinement with electronic monitoring – after admitting he failed to file a Report of Foreign Bank and Financial Accounts (FBAR), concealing more than $1 million in Swiss bank accounts, U.S. Attorney Paul J. Fishman and Principal Deputy Assistant Attorney General John A. DiCicco of the Justice Department’s Tax Division announced.
Harry Abrahamsen previously pleaded guilty before U.S. District Judge Dennis M. Cavanaugh to an information charging him with one count of willful failure to file an FBAR. Judge Cavanaugh also imposed the sentence today in Newark federal court.
According to documents filed in this case and statements made in court, at his plea hearing, Abrahamsen admitted that he failed to file an FBAR for calendar year 2005. Abrahamsen also failed to report his account at UBS AG in Switzerland on his individual income tax return for that year, and failed to report a second account opened in the name of Lucille Abrahamsen Jackson, his daughter. Additionally, Abrahamsen failed to report income deposited in and earned on the UBS bank accounts. The UBS accounts, originally opened in 1992, were transferred into the name of Primrose Properties S.A., a nominee Panamanian corporation, in 2000. Abrahamsen established Primrose in early 2000 with the assistance of a Swiss lawyer and Swiss banker, in order to hide these accounts from the Internal Revenue Service (IRS).
Abrahamsen also admitted that he funded the UBS accounts with approximately $1.3 million in false and inflated expenses paid by his pre-press printing business, SJT Imaging Inc., to a Swiss company. The inflated expenses were then deducted on SJT Imaging Inc.’s corporate tax returns, which allowed Abrahamsen to under report personal income for the years 1999, 2000, 2001, 2002 and 2003.
UBS entered into a deferred prosecution agreement in February 2009, in which the bank admitted to helping U.S. taxpayers hide accounts from the IRS. As part of its agreement, UBS provided the U.S. government with the identities of, and account information for, certain U.S. customers of UBS’ cross-border business.
U.S. citizens who have an interest in, or signature or other authority over, a financial account in a foreign country with assets in excess of $10,000 are required to disclose the existence of such account on Schedule B, Part III of their individual income tax returns. Additionally, U.S. citizens must file an FBAR with the U.S. Treasury disclosing any financial account in a foreign country with assets in excess of $10,000 in which they have a financial interest, or over which they have signature or other authority.
In addition to the term of probation with home confinement, Judge Cavanaugh ordered Abrahamsen to pay back taxes, interest and penalties totaling more than $600,000. As a condition of his guilty plea, Abrahamsen has also agreed to pay an FBAR penalty in excess of $300,000.
Jackson pleaded guilty on Nov. 18, 2010, before Judge Cavanaugh to an information charging her with willfully subscribing to a false tax return and was sentenced yesterday to a year of probation.
U.S. Attorney Fishman and Principal Deputy Assistant Attorney General DiCicco commended special agents of IRS – Criminal Investigation, under the direction of Special Agent in Charge Victor W. Lessoff, for the investigation leading to today’s sentence.
The government is represented by Assistant U.S. Attorney Stacey A. Levine of the U.S. Attorney’s Office Criminal Division and Trial Attorney Michael C. Vasiliadis of the Department of Justice’s Tax Division.
Miami-Area Owners and Operators of Medical Equipment Company Plead Guilty to Medicare FraudRead the Press Release
WASHINGTON – Two Miami-area residents who were owners and operators of a durable medical equipment (DME) company, pleaded guilty today for their roles in a scheme to defraud Medicare, the Departments of Justice and Health and Human Services (HHS) announced.
Obel Martinez and Damaris Gil, a married couple, each pleaded guilty before U.S. District Judge Donald M. Middlebrooks in the Southern District of Florida to one count of conspiracy to commit health care fraud.
According to plea documents, Martinez and Gil incorporated and operated OM Best Help Corp. in 2006 for the purpose of defrauding Medicare. OM Best purportedly specialized in the provision of DME and prescription drugs to Medicare beneficiaries.
According to court documents, starting in 2008, Martinez and Gil submitted and caused the submission of approximately $1,089,234 in fraudulent claims to the Medicare program. The defendants and their co-conspirators used without authorization the Medicare billing identifiers of licensed medical doctors and falsely represented to Medicare that the doctors had prescribed DME, when, in fact, the doctors had not done so. The defendants also knew that the Medicare beneficiaries, on whose behalf claims were submitted to Medicare by OM Best, never received the items OM Best billed to Medicare.
Sentencing for Martinez and Gil is scheduled for Aug. 23, 2011. Each defendant faces a maximum of 10 years in prison.
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 was prosecuted by Trial Attorney Sarah M. Hall of the Criminal Division’s Fraud Section. The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.
Since their inception in March 2007, Medicare Fraud Strike Force operations in nine locations have charged more than 1,000 defendants who collectively have falsely billed the Medicare program for more than $2.3 billion. In addition, 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 .
Jenkens & Gilchrist Attorneys, Former BDO Seidman CEO and Deutsche Bank Broker Found Guilty in New York of Multi-Billion Dollar Criminal Tax Fraud SchemeRead the Press Release
NEW YORK – Paul M. Daugerdas, Donna M. Guerin, Denis M. Field and David Parse were convicted today in Manhattan federal court for their roles in a tax shelter scheme in which they designed, marketed and implemented fraudulent tax shelters used by wealthy individuals to avoid paying taxes to the Internal Revenue Service (IRS), announced Preet Bharara, U.S. Attorney for the Southern District of New York; John A. DiCicco, Principal Deputy Assistant Attorney General for the Justice Department’s Tax Division; and Victor S.O. Song, Chief of the IRS Criminal Investigation. Together, Daugerdas, Guerin and Field made $130 million in profits from the 10-year scheme.
Raymond Craig Brubaker, 55, of Plano, Texas, a banker at Deutsche Bank who was also charged along with the defendants, was acquitted by the jury on all counts. U.S. District Judge William H. Pauley III presided over the 10-week trial.
“The multi-billion dollar tax fraud scheme perpetrated by this corrupt group of attorneys, accountants and bankers was stunning in scope, and today’s guilty verdicts are a just result,” said U.S. Attorney Bharara. “These privileged professionals wove an intricate web of deceit that spanned nearly a decade, enabling them to enrich themselves and their well-heeled clients to the tune of hundreds of millions of dollars. Surely there are many Americans who dread April 15th, but they put their checks in the mail nonetheless. These defendants thought they were above the law and found out the hard way that they were not. I commend the career prosecutors from my office and the Tax Division, along with the agents of the IRS, who have all devoted countless hours to bring this case to a successful conclusion.”
“ Today’s verdict sends a loud and clear message that dishonest tax professionals will be held accountable for their crimes,” said Principal Deputy Assistant Attorney General DiCicco. “The Justice Department will continue to pursue the lawyers, accountants, and others who enrich themselves at the public’s expense by selling abusive tax shelters."
“Promoting and marketing tax shelter transactions intended to conceal the true facts from the IRS isn't tax planning; it's criminal activity,” Chief of IRS-Criminal Investigation Song. “People trust their attorneys and Certified Public Accountants to hold the highest standards when dealing in financial transactions. Today’s conviction of the defendants reinforces our commitment to every American taxpayer to identify and to prosecute those who devise illegal tax shelters. It's a matter of fostering confidence in the tax system and compliance with the law.”
According to the trial evidence and other documents filed in the case:
From 1994 through 2004, Daugerdas, a lawyer and the former head of the Chicago Office of the Jenkens & Gilchrist law firm (J&G) and its tax practice; Guerin, a tax lawyer and shareholder at J&G’s Chicago Office; Field, the former chief executive officer and chairman of the board of the accounting firm BDO Seidman, former head of its national tax practice, and one of three heads of BDO’s “Tax Solutions Group” (TSG); and Parse, a former Deutsche Bank broker, participated in a scheme to defraud the IRS by designing, marketing, implementing and defending fraudulent tax shelters. All of the defendants are certified public accountants.
As part of their scheme, the defendants and others undertook to prevent the IRS from: detecting their clients’ use of these shelters; (understanding how the transactions operated to produce the tax results reported by the clients; learning that the shelters were marketed as cookie-cutter products designed to eliminate or reduce large tax liabilities; learning that the clients were not seeking profit-making investment opportunities, but were instead seeking huge tax benefits; and learning that, from the outset, all the clients intended to complete a pre-planned series of steps that had been designed by the defendants to lead to the specific tax benefits sought by the clients. The defendants created, and assisted in creating, transactional documents and other materials that falsely and fraudulently described their clients’ motivations for entering into the tax shelters and for taking various steps in order to yield the tax benefits.
As a result of the scheme, the defendants made millions of dollars in fees, commissions and bonuses. For example, Daugerdas made $95 million and Guerin made $17 million from the sale of the shelters. Field received $18 million in distributions and bonuses. Daugerdas, Field, and Parse also utilized the tax shelters for themselves in order to evade personal tax liabilities on the substantial income they were receiving from these fraudulent tax shelters. For example, Daugerdas used the shelters to reduce the income taxes he owed on the $95 million he made in fees on the illegal shelters to less than $8,000; without the shelters, he would have owed more than $32 million in taxes.
Daugerdas, 60, of Wilmette, Ill.; Guerin, 50, of Elmhurst, Ill.; and Field, 53, of Naples, Fla., were each convicted of conspiring to defraud the IRS and to evade taxes, and of corruptly endeavoring to obstruct and impede the internal revenue laws. The defendants were also convicted on multiple counts of tax evasion relating to the use of various tax shelters for specified clients, and of mail fraud. Daugerdas also was convicted of tax evasion based on his use of fraudulent tax shelters to eliminate or reduce his personal income tax liabilities between 1999 and 2001. Parse 49, of Elmhurst, was found guilty of mail fraud and obstructing internal revenue laws.
On the conspiracy charge, each defendant faces a maximum penalty of five years in prison; three years’ supervised release; a fine of the greatest of $250,000 or twice the gross gain to the defendant or twice the gross loss to the IRS; and restitution. On the mail fraud charge, each defendant faces a maximum penalty of 20 years in prison. Each count of tax evasion carries a maximum penalty of five years in prison; three years’ supervised release; a fine of the greatest of $250,000 or twice the gross gain to the defendant or twice the gross loss to the IRS; and costs of prosecution. Each defendant also faces a maximum penalty of three years in prison; one year supervised release; and a fine of the greatest of $250,000 or twice the gross gain to the defendant or twice the gross loss to the IRS on the charge of corruptly endeavoring to obstruct and impede internal revenue laws.
The defendants are scheduled to be sentenced by Judge Pauley on Oct. 14, 2011, at 2:00 p.m.
Several other defendants involved in the case have previously pleaded guilty:
Erwin Mayer, 47, of Winnetka, Ill., a lawyer and former shareholder at J&G’s Chicago Office in its tax practice.
Robert Greisman, 60, of Deerfield, Ill., a tax partner in BDO’s Chicago Office and a member of BDO’s tax solutions group.
Charles W. Bee Jr., 65, of Fredericksburg, Va., a former BDO Seidman Vice Chairman and board member.
Michael Kerekes, 48, of Santa Monica, Calif., a principal of BDO Seidman and a former member of BDO’s TSG and Tax Opinion Committee.
Adrian Dicker, 56, of Princeton Junction, N.J., a former Vice Chairman of BDO Seidman and TSG member.
In December 2010, as part of a non-prosecution agreement with the U.S. Attorney’s Office, Deutsche Bank AG agreed to pay $553,633,153 to the United States, and also admitted criminal wrongdoing, in connection with its participation in financial transactions which furthered the fraudulent tax shelters engineered by the defendants.
This prosecution is being handled by the U.S. Attorney’s Office’s Complex Frauds Unit. Assistant U.S. Attorneys Stanley Okula and Jason Hernandez, and Department of Justice Tax Division Assistant Section Chief Nanette L. Davis are in charge of the prosecution.
Former White Mountain Apache Tribal Police Officer Charged with Civil Rights ViolationsRead the Press Release
WASHINGTON – A federal grand jury in Phoenix returned a two-count indictment today charging former White Mountain Apache Tribal police officer, Glenn Cromwell, with federal crimes in connection with maliciously abandoning Anthony Archuleta and Barry Lowe in dangerously cold weather conditions in December 2008.
Today’s indictment was announced by Thomas E. Perez, Assistant Attorney General for the Civil Rights Division of the Department of Justice; Dennis K. Burke, U.S. Attorney for the District of Arizona; and Robert C. Rudge Jr., Acting Special Agent in Charge of the FBI Phoenix Field Office.
The indictment alleges that on Dec. 2, 2008, Cromwell transported a 29-year-old man who was in custody to a remote area, and then abandoned him in extreme cold weather conditions, resulting in bodily injury. The indictment also charges that on Dec. 6, 2008, Cromwell transported a 56-year-old man, who was also in custody, to a remote location, and then abandoned him in extreme cold weather conditions, resulting in bodily injury.
The indictment charges Cromwell with two counts of deprivation of civil rights. Cromwell faces a possible maximum sentence of 20 years in prison.
The ongoing case is being investigated by the Phoenix Field Office of the FBI, and is being prosecuted by Trial Attorney D.W. Tunnage of the Justice Department’s Civil Rights Division, along with Assistant U.S. Attorney Alison S. Bachus for the District of Arizona.
An indictment is merely an accusation, and the defendant is presumed innocent unless proven guilty.
Federal Court Bars Arizona Family from Preparing Federal Tax ReturnsRead the Press Release
WASHINGTON – A federal court has barred a family of tax preparers in Overgaard, Ariz., from preparing federal tax returns for others, the Justice Department announced today. The court’s preliminary injunction order against Shelia Young, Deane Young and Kennith Defoor will remain in effect while a related criminal case against the defendants proceeds in court.
The government complaint in the civil injunction case alleged that the Youngs and Defoor promoted fraudulent tax schemes through their companies, Accurate Consulting LLC, and D4 Accounting, Consulting, Tax Services Inc. According to the complaint, these schemes included manipulating the amount of income and federal tax withholdings claimed on their customers’ tax returns, resulting in bogus claims for tax refunds. The complaint further states that, since 2001, the Youngs and Defoor prepared at least 337 federal tax returns requesting fraudulent tax refunds, often in amounts exceeding $100,000.
The three family members allegedly prepared frivolous tax returns that cumulatively claimed more than $24 million in fraudulent refunds and resulted in the Internal Revenue Service (IRS) issuing approximately $2.3 million in erroneous refunds. The complaint alleged that the Youngs and Defoor asserted fraudulent “zero income” and “commercial redemption” tax schemes and regularly submitted false IRS forms on behalf of their customers that reported both fictitious interest income and tax withholdings.
The IRS described the zero income and commercial redemption schemes as frivolous in its publication The Truth About Frivolous Tax Arguments . Return preparer fraud, bogus refund claims based on frivolous arguments, and claims of zero wages are also three of the “Dirty Dozen” tax scams identified by the IRS 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’s website .
Attorney General Calls for Action to Protect Children<br /> from Violence in New TV Public Service AnnouncementRead the Press Release
WASHINGTON – A public service announcement (PSA) featuring Attorney General Eric Holder began airing this week on the Investigation Discovery network. This 30-second PSA is part of the Attorney General’s Defending Childhood initiative to address the issue of children’s exposure to violence.
“This PSA calls on all of us to take action to protect our children from violence in communities across the country,” said Attorney General Holder. “We can protect and heal the most vulnerable among us and transform the country for the better—one child at a time.”
The goals of the initiative are to prevent children’s exposure to violence as victims and witnesses, to mitigate the negative effects that children exposed to violence experience, and to develop knowledge about and increase public awareness of this issue.
A key component of the Defending Childhood initiative is a multi-year demonstration program to develop comprehensive, community-based strategies to prevent and reduce the impact of children’s exposure to violence in their homes, schools and communities. In 2010, eight planning grants were awarded to begin this process to the City of Boston; the City of Portland, Maine; the Chippewa Cree Tribe of Montana; the City of Grand Forks, N.D.; the Cuyahoga County, Ohio, Board of Commissioners; the Multnomah County, Oreg., Department of Human Services; the Rosebud Sioux Tribe, S.D.; and Shelby County, Tenn.
Defending Childhood involves collaborative efforts across the Department of Justice and other federal agencies including the Departments of Health and Human Services and Education. Critical partners outside the federal government include state, local and tribal law enforcement agencies, national experts, practitioners and advocates.
The PSA was distributed nationally through the Department of Justice YouTube channel. Detailed information on Defending Childhood is located at: www.justice.gov/ag/defendingchildhood
The PSA can be viewed at: www.justice.gov/video.php?id=15
The script follows:
Our children are exposed to violence every day—in their neighborhoods, in their schools, even in their own homes.
Exposure to violence can have a devastating and lifelong impact.
Through community action and leadership at the national level…
We’re identifying the children who need our help.
I’m Attorney General Eric Holder.
And I’m asking those of you who have a role in a child’s life—to take action.
Through your attention and early intervention, we can help children in need to heal, to thrive.
Together, we can change their lives and their futures.
Join the Justice Department in Defending Childhood.
Alabama Tax Preparer Sentenced for Identity Theft and Filing False Tax ReturnsRead the Press Release
WASHINGTON – A resident of Elmore, Ala., was sentenced to 60 months in prison for stealing identities and using them to file false tax returns, the Justice Department and Internal Revenue Service (IRS) announced today.
On Feb. 22, 2011, after a four-day trial, a jury in Montgomery, Ala., convicted Sharon Thurman of 14 counts of making false claims, two counts of theft of government money and two counts of aggravated identity theft. According to the indictment and evidence introduced during trial, Thurman owned and operated Sharon’s Tax Service in Elmore. Between January and April 2008, Thurman filed 14 fraudulent tax returns in which she unlawfully attempted to obtain tax refunds intended for individuals whose identities she stole.
At trial, 14 victims of identity theft testified that they did not file, and did not request Thurman to file the tax returns she filed in their names and Social Security numbers. Two victims in whose name she received payment from the IRS testified that they never received any money from Thurman. All 14 victims testified that, to the best of their knowledge, they had never met Thurman and had never been to Sharon’s Tax Service.
U.S. District Judge W. Harold Albritton III also ordered Thurman to serve three years of supervised release.
Principal Deputy Assistant Attorney General John A. DiCicco of the Justice Department’s Tax Division and U.S. Attorney for the Middle District of Alabama Leura G. Canary commended the IRS Criminal Investigation special agents who investigated the case as well as Tax Division Trial Attorneys Justin Gelfand and Michael Boteler, and Assistant U.S. Attorney Jared Morris, who are prosecuting the case.
Additional information about the Justice Department’s Tax Division and its enforcement efforts can be found at www.usdoj.gov/tax.
23 May 2011
New Jersey UBS Client Sentenced for Failing to Report More Than $750,000 in Swiss Bank AccountRead the Press Release
NEWARK, N.J. – A Hillsdale, N.J., woman was sentenced today to probation after admitting she filed a false tax return and concealed more than $750,000 in a Swiss bank account, New Jersey U.S. Attorney Paul J. Fishman and Principal Deputy Assistant Attorney General John A. DiCicco of the Justice Department’s Tax Division announced.
Lucille Abrahamsen Jackson pleaded guilty on Nov. 18, 2010, to an information charging her with willfully subscribing to a false tax return. Jackson entered her guilty plea before U.S. District Judge Dennis M. Cavanaugh, who also imposed the sentence today in Newark federal court.
According to documents filed in this case and statements made in court, Jackson admitted that she signed and filed a false tax return for 2005 that failed to disclose her UBS account and income generated from the account’s assets. Jackson also failed to file a Report of Foreign Bank or Financial Accounts (FBAR) with respect to the UBS account. The account, originally opened in 1992, was transferred in 2000 into the name of Primrose Properties S.A., a nominee Panamanian corporation. Jackson’s father, Harry Abrahamsen, established Primrose in 2000 with the assistance of a foreign lawyer and a Swiss banker, in order to hide the account from the Internal Revenue Service (IRS). On April 12, 2010, Abrahamsen pleaded guilty to a federal charge of failing to file an FBAR, admitting he concealed more than $1 million in Swiss bank accounts. He is scheduled to be sentenced on May 24, 2011, by Judge Cavanaugh.
U.S. citizens who have an interest in, or signature or other authority over, a financial account in a foreign country with assets in excess of $10,000 are required to disclose the existence of such account on Schedule B, Part III of their individual income tax returns. Additionally, U.S. citizens must file an FBAR with the U.S. Treasury disclosing any financial account in a foreign country with assets in excess of $10,000 in which they have a financial interest, or over which they have signature or other authority.
Jackson admitted that her failure to file the FBAR and her failure to disclose the existence of the UBS account on her personal income tax returns allowed her to underreport personal income for the years 2000 through 2007. In 2003, the account reached a high balance of more than $759,376.
UBS entered into a deferred prosecution agreement in February 2009, in which the bank admitted to helping U.S. taxpayers hide accounts from the IRS. As part of its agreement, UBS provided the U.S. government with the identities of, and account information for, certain U.S. customers of UBS’ cross-border business.
As a condition of her guilty plea, Jackson has agreed to pay an FBAR penalty of $379,688.
U.S. Attorney Fishman and Principal Deputy Assistant Attorney General DiCicco commended special agents of IRS – Criminal Investigation, under the direction of Special Agent in Charge Victor W. Lessoff, for the investigation leading to today’s sentence.
The government is represented by Assistant U.S. Attorney Stacey A. Levine of the U.S. Attorney’s Office Criminal Division and Trial Attorney Michael C. Vasiliadis of the Department of Justice’s Tax Division.
Lender to Pay $300,000 to Settle Allegations Involving Small Business Administration LoanRead the Press Release
WASHINGTON – Garsh Lending LLC, a lender located in Miami, has agreed to pay the United States $300,000 to settle allegations involving a Small Business Administration (SBA) loan, the Justice Department announced today.
The allegations relate to the SBA’s 504 loan program, which offers small businesses long-term, fixed-rate financing to acquire major fixed assets for expansion or modernization. A portion of the financing for 504 projects comes from independent third party lenders. Garsh, acting as the third party lender in this instance, loaned the borrower money and agreed to provide the SBA written notice of default on the loan. The United States alleges that the borrower missed payments on its loan with Garsh before the 504 loan had closed, yet Garsh failed to provide the required notice of default. The borrower never made any payments on the 504 loan, which was backed by an SBA guarantee.
“The SBA offers valuable assistance to small businesses and contributes to our nation’s economic development,” said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. “The Justice Department will continue to protect the integrity of these important programs and safeguard the taxpayer dollars spent to make them effective."
“The SBA is an important program aimed at helping small businesses to expand and modernize,” said U.S. Attorney for the Southern District of Florida Wifredo Ferrer. “Compliance with loan repayment requirements is crucial to the success of the program. The U.S. Attorney’s Office will continue to help monitor and enforce compliance to protect the soundness of the SBA program.”
SBA General Counsel Sara Lipscomb said, “Increased lender oversight is a priority of the Office of General Counsel, and this recovery is part of that commitment.”
The settlement resulted from a collaborative effort by several federal agencies, including the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Southern District of Florida and the SBA.
Leadership, Members and Associates of the Philadelphia La Cosa Nostra Family Charged with Racketeering Conspiracy and Related CrimesRead the Press Release
WASHINGTON – A superseding indictment was unsealed today against 13 members and associates of the Philadelphia organized crime family of La Cosa Nostra (LCN), including its current boss and underboss. The indictment charges various crimes involving racketeering conspiracy, extortion, loan sharking, illegal gambling and witness tampering.
The charges were announced today by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Zane David Memeger for the Eastern District of Pennsylvania; William H. Ryan Jr., Acting Attorney General for the Commonwealth of Pennsylvania; George C. Venizelos, Special Agent in Charge of the FBI’s Philadelphia Field Division; Special Agent in Charge Eric Hylton of the Philadelphia office of Internal Revenue Service (IRS)-Criminal Investigations; Philadelphia Police Commissioner Charles H. Ramsey; Pennsylvania State Police Commissioner Frank Noonan; and Superintendent of the New Jersey State Police Colonel Rick Fuentes
The defendants charged in the 50-count superseding indictment are Philadelphia LCN family boss Joseph Ligambi, Philadelphia LCN family underboss Joseph Massimino, George Borgesi, Martin Angelina, Anthony Staino Jr., Gaeton Lucibello, Damion Canalichio, Louis Monacello, Louis Barretta, Gary Battaglini, Robert Verrecchia, Eric Esposito and Robert Ranieri.
All but two of the defendants were arrested today and will make initial court appearances in U.S. District Court in Philadelphia at 1:30 pm. EST. Borgesi and Canalichio are already serving federal prison sentences for previous convictions.
“Today’s arrests and charges are the largest enforcement action in a decade against La Cosa Nostra in Philadelphia,” said Assistant Attorney General Breuer. “We have pried loose La Cosa Nostra’s grip on power and influence in the United States. But there is still work to be done. We will continue use all the tools at our disposal – including wiretaps, undercover operations and consensual recordings - to build cases against these individuals, and to bring them to justice.”
“It goes without saying that Philadelphia has a rich and vibrant history steeped in government, law and order,” said U.S. Attorney Memeger. “Indeed, the documents which form the basis of our government and the rule of law in this country were signed here. Unfortunately, there continues to exist within Philadelphia a criminal element which refuses to abide by our laws and continues to use force and violence to instill fear and exert power in order to make money. Today, we make clear that such activity will not be tolerated by my office and that La Cosa Nostra remains a priority for the Department of Justice.”
“The significance of the extensive and long-term investigative effort that has resulted in the unsealing of this indictment and the arrests today is that it represents our continuing commitment to the dismantling of the Philadelphia LCN crime syndicate family,” said FBI Special Agent-in-Charge Venizelos. “The FBI in Philadelphia and all of its law enforcement partners will remain focused on identifying and destroying the elements of organized crime that have long victimized Philadelphia and its surrounding communities.”
According to the superseding indictment, the Philadelphia LCN family is one of a number of LCN families based in various cities throughout the United States. The Philadelphia LCN family is led by a boss, who has authority over the activities of the members and associates of organization. If a boss is sent to prison, he appoints an “acting boss” to direct the organization’s affairs. In addition to the boss, the administration of the Philadelphia LCN includes an underboss and consigliere who together oversee crews of criminals led by captains, who in turn supervise organized crime soldiers and associates.
The superseding indictment alleges that for more than a decade, 10 of the defendants, including Ligambi as the boss and Masimino as the underboss, as well as other members and associates of the Philadelphia LCN family, conspired to conduct and participate in the affairs of the Philadelphia LCN family through a pattern of racketeering activity and through the collection of unlawful debts. The alleged racketeering activity includes numerous acts involving extortion, extortionate extensions of credit through usurious loans, extortionate collections, illegal gambling and witness tampering. The organization’s collection of unlawful debts allegedly relates to its loan sharking operations and debts that arose from their illegal gambling businesses.
For example, according to the superseding indictment, Ligambi, Massimino, Staino and other conspirators allegedly ran illegal electronic gambling device businesses, providing video poker machines and other gambling devices for bars, restaurants, convenience stores, coffee shops and other locations in Philadelphia and its suburbs, and then collected the illegal gambling proceeds. After federal law enforcement agents seized 34 of their illegal electronic gambling devices, Ligambi, Massimino and Staino allegedly forced the owners of another illegal electronic gambling device business to sell their illegal businesses to them, including 34 machines.
In another example, the superseding indictment charges that from 2002 to 2006 Massimino extorted yearly tribute payments from a bookmaker to the Philadelphia LCN family so that the bookmaker could avoid personal harm and disruption of the illegal bookmaking business.
According to the superseding indictment, the defendants promoted and furthered their illegal money-making activities through violence, actual and implied threats of violence, and the cultivation and exploitation of the Philadelphia LCN family’s long-standing reputation for violence. The defendants also used this reputation for violence to intimidate and prevent victims and witnesses from cooperating with law enforcement. The indictment alleges various instances where defendants used phrases such as “chop him up” and “put a bullet in your head” when threatening victims. In one instance, Canalicho allegedly used a bat to beat a victim for not paying a loan debt.
The superseding indictment alleges that some of the defendants continued their racketeering activities even after being sent to prison. For example, Borgesi and Massimino, while in prison, allegedly generated criminal proceeds for themselves and the Philadelphia LCN family by using intermediaries to operate criminal businesses and to make extortionate demands at their direction.
Each charge of racketeering conspiracy, collection of unlawful debt, collection of extensions of credit through extortionate means, making extortionate extensions of credit, financing extortionate extensions of credit and witness tampering carries a maximum penalty of 20 years in prison and a $250,000 fine. The illegal gambling charges each carry a maximum penalty of five years in prison and a $250,000 fine.
The case is being prosecuted by Trial Attorney John S. Han of the Criminal Division’s Organized Crime and Gang Section, Assistant U.S. Attorneys David E. Troyer and Frank A. Labor III for the Eastern District of Pennsylvania, and Senior Deputy Attorney General Heather A. Castellino of the Pennsylvania Office of Attorney General.
The case is being investigated by the FBI, the IRS-Criminal Investigations, the U.S. Department of Labor Office of Labor Racketeering and Fraud Investigations, Office of Inspector General, the Pennsylvania State Police, the New Jersey State Police and the Philadelphia Police Department. Additional assistance was provided by the New Jersey Department of Corrections.
An indictment is merely an accusation and each defendant is presumed innocent until and unless they are proven guilty.
Justice Department Seeks to Shut Down South Florida Tax PreparersRead the Press Release
WASHINGTON – The United States has asked a federal court to permanently bar two Broward County, Fla., tax preparers and their business from preparing federal tax returns for others, the Justice Department announced today. The civil injunction suit alleges that Ronald Jerome Scriven, Danesa L. Webb and their business, Tamijah International LLC, prepare returns for customers that report false income and expenses and falsely claim several tax credits, including the first-time-homebuyer credit.
Congress enacted the first-time-homebuyer credit in 2008 to strengthen the real estate market and help the economy. It allowed persons who have not owned a home in the previous three years to claim a credit of up to $8,000 against their federal income taxes if they bought a home after April 8, 2008. Congress later expanded the program to allow current homeowners to claim the credit for a purchase of a new home, under certain conditions. The credit has since expired.
The government complaint, filed in the Southern District of Florida, alleges that the defendants claimed the credit on their customers’ tax returns even though they knew the customers had not bought new homes. The complaint also alleges that the defendants claimed fabricated business deductions and education credits on some customers’ returns, and that they failed to report the proper amount of customers’ income on other returns. At times, according to the complaint, the defendants prepared returns for persons without those persons’ knowledge and charged exorbitant fees for their services.
Return preparer fraud is identified by the IRS as one of the “Dirty Dozen” tax scams taxpayers are urged to avoid. In the past decade, the Justice Department’s Tax Division has obtained hundreds of injunctions to stop the promotion of tax fraud schemes and the preparation of fraudulent returns. Information about these cases is available on the Justice Department website .
Justice Department Files Antitrust Lawsuit to Stop H&R Block Inc. from Buying TaxACTRead the Press Release
WASHINGTON — The Department of Justice filed a civil antitrust lawsuit today to block the proposed acquisition by H&R Block Inc. of TaxACT, a digital do-it-yourself tax preparation software provider. The department said that the proposed deal would substantially lessen competition in the growing U.S. digital do-it-yourself tax preparation software market, resulting in higher prices and reduced innovation and quality for products that are used annually by millions of American taxpayers.
The Department of Justice’s Antitrust Division filed its lawsuit in U.S. District Court in Washington, D.C., to prevent H&R Block from acquiring 2SS Holdings Inc., an entity within TA IX L.P. and the maker of TaxACT.
Between 35 and 40 million taxpayers use digital software products, either on the provider’s website or uploaded onto the taxpayers’ computers, to prepare and file their federal and state income taxes. Currently, three companies account for 90 percent of all sales of digital do-it-yourself tax preparation products, and the acquisition would combine H&R Block and TaxACT, respectively the second- and third-largest providers of digital do-it-yourself tax preparation products, the department said.
“The combination of H&R Block and TaxACT would likely lead to millions of American taxpayers paying higher prices for digital do-it-yourself tax preparation products,” said Christine Varney, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “In addition, TaxACT has aggressively competed in the digital do-it-yourself tax preparation market with innovations such as free federal filing. If this merger is allowed to proceed, that type of innovation will be lost.”
On Oct. 13, 2010, H&R Block agreed to purchase 2SS Holdings in a transaction valued at $287.5 million.
According to the department’s complaint, H&R Block’s acquisition of 2SS Holdings would eliminate a company that has aggressively competed with H&R Block and disrupted the U.S. digital do-it-yourself tax preparation market through low pricing and product innovation. By ending the head-to-head competition between TaxACT and H&R Block, American taxpayers would be left with only two major digital do-it-yourself tax preparation providers. This would lead to higher prices, lower quality, and reduced innovation. In addition, by taking control of the TaxACT business, which has been a maverick in the market, it would be easier for H&R Block to coordinate on prices, quality, and other business decisions with the other remaining industry leader – Mountain View, Calif.-based Intuit, which makes personal finance programs such as Quicken and TurboTax – the department said.
The complaint includes statements from H&R Block presentations and emails, such as:
· A primary benefit for H&R Block in acquiring TaxACT is: “Elimination of competitor.”
· In discussing the potential acquisition of TaxAct, one of the “[s]trategic [o]pportunities” of the acquisition is: “Acquire TaxACT and eliminate the brand to regain control of industry pricing and further price erosion.”
· The rationale for launching the H&R Block’s free online product was “[t]o match competitor offerings and stem online share loss to Intuit and TaxACT.”
· “Retail volume at Staples [is] at risk due to introduction of TaxACT [r]etail software on combined display.”
The department also alleges that by eliminating TaxACT, a significant, disruptive and aggressive competitor, the acquisition would likely substantially lessen competition between H&R Block and Intuit by facilitating coordination between them. H&R Block would likely degrade TaxACT’s free product and H&R Block and Intuit would increase the prices for their paid products. An internal H&R Block email said, “The other possible strategic consideration is that Intuit and HRB together would have 84% of the digital market and we both obviously have great incentive to keep this channel profitable.”
H&R Block is a Missouri corporation headquartered in Kansas City, Mo. H&R Block is one of the world’s largest tax service providers, utilizing more than 100,000 trained tax professionals. The company, with its H&R Block At Home products, is the second largest provider of digital do-it-yourself tax preparation products. In its fiscal year 2010, ending April 30, 2010, H&R Block prepared more than 23 million tax returns worldwide and earned revenues of more than $3.8 billion. Its digital do-it-yourself tax preparation product was used in 2010 by more than 5.9 million customers to prepare and file their federal and state income tax returns.
2SS Holdings, the maker of the TaxACT digital do-it-yourself tax preparation products, is a Delaware corporation headquartered in Cedar Rapids, Iowa. 2SS Holdings is the third-largest digital do-it-yourself tax preparation product provider in the United States, and the second-largest provider of such products online through the Internet. TaxACT products were used in 2010 by more than 5 million customers to prepare and file their federal and state income tax returns.
TA IX L.P. is a limited partnership organized and existing under the laws of Delaware and headquartered in Boston. TA IX L.P. is the majority shareholder of 2SS Holdings.
20 May 2011
VeriFone, Hypercom and Ingenico Abandon Plans to Divest Point of Sale Business to Ingenico Following Justice Department LawsuitRead the Press Release
WASHINGTON —VeriFone Systems Inc., Hypercom Corp. and Ingenico S.A. have abandoned plans for Hypercom to divest its U.S. point-of-sale (POS) business to Ingenico, the Department of Justice announced today. Their decision to abandon the divestiture came just one week after the department’s Antitrust Division filed a lawsuit to block the proposed acquisition by VeriFone of Hypercom and to block the proposed divestiture of Hypercom’s U.S. business to Ingenico. The department’s lawsuit to block the overall deal between VeriFone and Hypercom is still pending, and as the companies have publicly reported, the department is in discussions with them to identify an alternative buyer that is acceptable to the department.
“We are gratified that the parties recognized the anticompetitive nature of the agreement and abandoned its divestiture plan promptly,” said Christine Varney, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “Our discussions with the companies will continue as they seek to find an alternative buyer that will resolve the department’s antitrust concerns.”
POS terminals are used by retailers and other firms to accept electronic payments such as credit cards and debit cards. The three companies manufacture more than 90 percent of all POS terminals in the United States.
The department’s complaint alleged that the merger of VeriFone and Hypercom would result in a dominant POS terminal manufacturer that would likely raise prices and reduce innovation, quality, product variety and service. The complaint also alleged that the proposed divestiture to Ingenico did not adequately resolve the competitive concerns raised by the VeriFone/Hypercom transaction.
VeriFone is a Delaware corporation headquartered in San Jose, Calif. VeriFone earned more than $1 billion in worldwide revenues in its last fiscal year, ending in October 2010.
Hypercom is a Delaware corporation headquartered in Scottsdale, Ariz. Hypercom earned more than $450 million in worldwide revenues in 2010.
Ingenico is a French corporation with worldwide revenues in 2010 of more than $1.3 billion.
United States Announces Bankruptcy Settlement with Oil Company in Wake of October 2009 Explosions and FireRead the Press Release
WASHINGTON – Under a settlement agreement lodged today in federal bankruptcy court in Delaware, Caribbean Petroleum Corp., Caribbean Petroleum Refining L.P., and Gulf Petroleum Refining Corp. – Puerto Rico (collectively, CAPECO) will pay more than $8.2 million to address environmental liabilities relating to CAPECO’s former petroleum distribution facility in Bayamón, Puerto Rico, and more than 170 service stations owned or leased by CAPECO throughout Puerto Rico.
The $8.2 million payment will reimburse the Environmental Protection Agency (EPA) and the U.S. Coast Guard for cleanup costs incurred at the Bayamón facility during the bankruptcy, and cover penalties for violations of the Clean Water Act (CWA) and Resource Conservation and Recovery Act (RCRA) during the bankruptcy. The settlement also provides the United States with allowed general unsecured claims in excess of $18 million. These claims are for cleanup costs and penalties for violations of the CWA and RCRA before the bankruptcy, and will be paid based on the availability of funds in the bankruptcy estate.
CAPECO filed Chapter 11 petitions in the bankruptcy court in August 2010 following a series of catastrophic explosions and fires at the Bayamón facility on Oct. 23, 2009. The explosions, measuring 2.8 on the earthquake Richter scale, destroyed 15 above-ground storage tanks and damaged another 17 above-ground storage tanks, releasing approximately 30 million gallons of petroleum. EPA, serving as lead federal agency, conducted emergency cleanup actions with funds from the Oil Spill Liability Trust Fund administered by the U.S. Coast Guard’s National Pollution Funds Center. In February 2011, the United States filed proofs of claim against CAPECO in the bankruptcy proceeding, seeking to recover cleanup costs as well as penalties for violations of the CWA and RCRA.
The bankruptcy settlement is part of a broader settlement that includes three non-bankruptcy agreements announced on May 2, 2011 between EPA and Puma Energy Caribe LLC, under which Puma will perform cleanup work at the Bayamón facility. A fourth non-bankruptcy agreement, among Puma, the EPA and the Commonwealth of Puerto Rico, requires that Puma undertake comprehensive compliance measures at 147 of the service stations and make environmentally beneficial improvements at the service stations that are not required by regulations. Puma acquired the Bayamón facility and 147 service stations on May 11, 2011, through a court-ordered bankruptcy sale. CAPECO has also agreed to pay $850,000 to address the costs of investigation and remediation that is determined to be needed at service stations not acquired by Puma
“This bankruptcy settlement and the earlier agreements with Puma Energy are the result of a commitment by the United States to clean up the contaminated CAPECO site after the catastrophic explosions and fires in October 2009,” said Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division at the Department of Justice. “Today’s settlement will send a message to the regulated community that they cannot declare bankruptcy and avoid environmental liabilities.”
“Today’s bankruptcy settlement and the earlier agreements with the new owner, Puma, will advance the ongoing work to clean up the former CAPECO facility,” said EPA Regional Administrator Judith Enck. “EPA is encouraged that Puma has agreed to perform necessary environmental work. EPA will continue to ensure that the cleanup of this facility, and compliance efforts at the service stations, are done properly and that the health of people in the surrounding communities is protected.”
The bankruptcy settlement is subject to approval by the bankruptcy court. Before approval, the settlement agreement will be lodged with the court for a period of seven days to afford members of the public an opportunity to comment on the settlement.
Two Aryan Brotherhood of Texas Gang Members <br /> Plead Guilty to Racketeering ChargesRead the Press Release
WASHINGTON – Two members of the Aryan Brotherhood of Texas (ABT) prison-based gang pleaded guilty today in federal court to racketeering aggravated assault in the 2008 beating of a gang prospect in Tomball, Texas, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney José Angel Moreno for the Southern District of Texas.
Shane Everett Dallmeyer, 30, aka “Lock Jaw,” and Michael Raymond Burkett, 33, aka “Redneck,” each pleaded guilty today to one count of committing violent crimes in aid of racketeering activity in Houston before Senior U.S. District Judge Ewing Werlein Jr.
According to the guilty pleas, Dallmeyer and Burkett were members of ABT , a powerful race-based, state-wide organization that operates inside and outside of state and federal prisons throughout Texas and the United States. The ABT was established in the early 1980s within the Texas prison system. The ABT modeled itself after and adopted many of the precepts and writings of the Aryan Brotherhood, a California-based prison gang that was formed in the California prison system during the 1960s. According to court filings, the ABT was primarily concerned with the protection of white inmates and white supremacy/separatism. Over time, however, the ABT has expanded its criminal enterprise to include illegal activities for profit.
According to information presented in court, 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 the guilty pleas, Dallmeyer and Burkett participated in the beating of an ABT prospect member at the home of another ABT gang member in Tomball, Texas, on Sept. 22, 2008. The ABT prospect, who sustained serious bodily injury, was beaten by ABT gang members because he allegedly violated certain ABT rules of conduct.
On April 29, 2011, ABT gang member Stephen Kyle Knebel, 33, aka “Lil Evil,” pleaded guilty to racketeering aggravated assault. Fellow gang member, Bobby Dan Teets, 45, aka “Bull,” pleaded guilty to the same charge in December 2010.
Dallmeyer, Burkett, Knebel and Teets all face a maximum sentence of 20 years in prison. Sentencing for Dallmeyer and Burkett is scheduled for Aug. 12, 2011. Sentencing for Teets is scheduled for July 25, 2011, and sentencing for Knebel is scheduled for July 29, 2011.
This case is being investigated by a multi-agency task force consisting of the Bureau of Alcohol, Tobacco, Firearms and Explosives; the Drug Enforcement Administration; the FBI; the U.S. Marshals Service; the Texas Rangers; the Texas Department of Public Safety; the Montgomery County, Texas, Precinct 4 Constable’s Office; the Montgomery County, Texas, Sheriff’s Department; the Houston Police Department-Gang Division; and the Harris County, Texas Sheriff’s Office.
The case is being prosecuted by David Karpel of the Criminal Division’s Organized Crime and Gang Section and Jay Hileman of the U.S. Attorney’s Office for the Southern District of Texas.
Samuel K. Crocker Is Appointed United States Trustee for Tennessee, KentuckyRead the Press Release
WASHINGTON - Samuel K. Crocker has been appointed by Attorney General Eric Holder as U.S. Trustee for Tennessee and Kentucky (Region 8), and will assume his duties in June, the Executive Office for U.S. Trustees announced today. Mr. Crocker replaces Daniel M. McDermott, the U.S. Trustee for Region 9 (Ohio and Michigan), who has also served as U.S. Trustee for Region 8 since January 2011.
Mr. Crocker has engaged in the private practice of law in Nashville, Tenn., for more than 25 years, primarily representing bankruptcy debtors, creditors and trustees. In addition, since 1984 he has been a member of the panel of chapter 7 trustees in the Middle District of Tennessee. He has also served as a trustee in numerous chapter 11 cases.
Mr. Crocker has argued cases before the Fifth, Sixth and Eleventh Circuit Courts of Appeal. He is a former board member of the Mid-South Commercial Law Institute, which presents an annual seminar in Nashville on commercial law and bankruptcy issues, and a former board member and past president of the National Association of Bankruptcy Trustees. An authority on bankruptcy and trustee-related matters, Mr. Crocker speaks at bankruptcy seminars and training programs around the country and writes articles for scholarly journals and other bankruptcy publications. Mr. Crocker received his law degree from the University of Mississippi School of Law in Oxford, Miss., and his Bachelor of Arts degree from Vanderbilt University in Nashville.
The U.S. Trustee Program (USTP) is the component of the Justice Department that protects the integrity of the bankruptcy system by overseeing case administration and litigating to enforce the bankruptcy laws. The USTP has 21 regions and 95 field offices. Region 8 is headquartered in Memphis, with offices in Nashville and Chattanooga, Tenn., and Louisville and Lexington, Ky.
Contact:Jane Limprecht, Public Information Officer
Executive Office for U.S. Trustees
(202) 305-7411President Barack Obama Grants PardonsRead the Press Release
WASHINGTON – Today President Barack Obama granted pardons to the following eight individuals:
Randy Eugene Dyer – Burien, Wash.
Offense: Conspiracy to import marijuana (hashish), 21 U.S.C. § 963; conspiracy to remove baggage from the custody and control of the U.S. Customs Service and convey false information concerning an attempt to damage a civil aircraft, 18 U.S.C. § 371.
Sentence: June 19, 1975; Western District of Washington; five years in prison and two years of special parole (special parole term subsequently vacated.)
Danny Alonzo Levitz - Angola, Ind.
Offense: Conspiracy, 18 U.S.C. § 371.
Sentence: Aug. 18, 1980; Northern District of Indiana; two years of probation, $400 fine.
Michael Ray Neal - Palm Coast, Fla.
Offense: Manufacture, assembly, modification and distribution of equipment for unauthorized decryption of satellite cable programming, 47 U.S.C. § 605(e)(4).
Sentence: May 31, 1991, as amended June 2, 1992; Eastern District of Virginia; six months in prison, three years of supervised release conditioned on six months of home confinement, $2,500 fine.
Edwin Alan North - Wolcottville, Ind.
Offense: Transfer of a firearm without payment of transfer tax, 26 U.S.C. § 5861(e).
Sentence: Aug. 18, 1980; Northern District of Indiana; six months of unsupervised probation.
Allen Edward Peratt Sr. - Sioux Falls, S.D.
Offense: Conspiracy to distribute methamphetamine, 21 U.S.C. §§ 841(a)(1) and 846.
Sentence: July 23, 1990, as amended May 29, 1991; District of South Dakota; 30 months in prison, five years of supervised release.
Christine Marie Rossiter - Lincoln, Neb.
Offense: Conspiracy to distribute less than 50 kilograms of marijuana, 21 U.S.C. §§ 841(a)(1) and 846.
Sentence: Oct. 7, 1992; District of Nebraska; three years of probation conditioned on performance of 500 hours of community service.
Patricia Ann Weinzatl - Prentice, Wis.
Offense: Structuring transactions to evade reporting requirements, 31 U.S.C. § 5324(a)(3).
Sentence: Aug. 15, 2001; Western District of Wisconsin; three years of probation, $5,000 fine.
Bobby Gerald Wilson - S ummerton, S.C.
Offense: Aiding and abetting the possession and sale of illegal American alligator hides (Lacey
Act), 16 U.S.C. § 3373(d)(1)(B) and 18 U.S.C. § 2.
Sentence: Dec. 19, 1985, as amended May 13, 1986; Southern District of Georgia; three and one-half months in prison, five years of probation conditioned on performance of 300 hours of community service.
Massachusetts Man Sentenced to Five Years in Prison for Child Pornography ChargesRead the Press Release
WASHINGTON – Timothy S. Kelly, 40, of North Attleboro, Mass., was sentenced today to five years in prison and five years of supervised release following his prison term for receipt and possession of child pornography, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney for the District of Massachusetts Carmen M. Ortiz and Bruce M. Foucart, Special Agent in Charge, U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) in Boston.
Kelly was sentenced by U.S. District Court Judge Richard G. Stearns in Boston. On Feb. 23, 2011, Kelly pleaded guilty to four counts of receipt of child pornography and one count of possession of child pornography. In pleading guilty, Kelly admitted to using an online chat program to communicate with and transmit pictures to others in real time. In these chats, Kelly received images of child pornography and discussed his sexual interest in girls between the ages of 8 and 13 years old. During the execution of a federal search warrant at his residence, Kelly admitted to collecting and trading child pornography since 2003. The images he received and possessed included depictions of prepubescent children engaging in sexually explicit conduct. Kelly previously was employed as a swim coach for the Attleboro YMCA and North Attleboro High School.
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by U.S. Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
The case was prosecuted by Assistant U.S. Attorney Michael I. Yoon of the District of Massachusetts and CEOS Trial Attorney Bonnie L. Kane of the Criminal Division, in coordination with the Bristol County District Attorney’s Office. The case against Kelly was investigated by ICE HSI with the North Attleboro Police Department providing significant assistance.
Iowa Ready-Mix Concrete Company Pleads Guilty to Participating in Price-Fixing and Bid-Rigging ConspiraciesRead the Press Release
WASHINGTON - An Iowa ready-mix concrete company pleaded guilty to participating in three separate conspiracies to fix prices and/or rig bids for the sales of ready-mix concrete, the Department of Justice announced today.
According to a three-count felony charge filed on May 18, 2011, in U.S. District Court in Sioux City, Iowa, GCC Alliance Concrete Inc., a producer of ready-mix concrete headquartered in Orange City, Iowa, participated in separate conspiracies with three different companies involving agreements to fix prices and/or to rig bids for ready-mix concrete sold to various companies in the northern district of Iowa and elsewhere. The department said that the conspiracies took place during various time periods starting as early as January 2006 to as late as August 2009. Under the terms of the plea agreement, GCC Alliance Concrete has agreed to pay a criminal fine, as determined by the court.
Ready-mix concrete is a product comprised of cement, aggregate (sand and gravel), water and other additives. The concrete generally is produced in a concrete plant and is transported by concrete-mixer trucks to work sites, where it is used in various types of construction projects, including buildings and roads.
According to court documents, GCC Alliance Concrete participated in conspiracies through its former sales manager, Steven VandeBrake, in which he engaged in discussions concerning project bids for sales of ready-mix concrete, submitted rigged bids at collusive and noncompetitive prices to customers in Iowa and elsewhere and accepted payment for sales of ready-mix concrete at predetermined prices. VandeBrake also engaged in discussions and reached agreements regarding the prices on the conspirators’ annual price lists for ready-mix concrete sold in Iowa on behalf of GCC Alliance Concrete, the department said.
GCC Alliance Concrete is charged with violating the Sherman Act, which carries a maximum fine of $100 million for corporations. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
Today’s charge arose from an ongoing federal antitrust investigation of the ready-mix concrete industry in Iowa and surrounding states. As a result of the investigation, on May 26, 2010, VandeBrake pleaded guilty to participating in the conspiracies and, on Feb. 8, 2011, was sentenced to serve 48 months in prison and to pay a criminal fine of $829,715. On the same day, Kent Robert Stewart, the president of another Iowa ready-mix concrete company, was sentenced to serve a year and a day in prison and to pay a $83,427 criminal fine for conspiring with VandeBrake to fix prices and rig bids. Stewart pleaded guilty on May 24, 2010. Chad Van Zee, the president of another Iowa ready-mix concrete company, pleaded guilty on Dec. 6, 2010, to conspiring with VandeBrake to fix prices of ready-mix concrete. Van Zee is scheduled to be sentenced on June 21, 2011.
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 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.
International Competition Network Presents Vision for Its Second DecadeRead the Press Release
WASHINGTON – At its 10th annual conference in The Hague, the Netherlands, the International Competition Network (ICN) adopted new materials on how to assess market dominance, resolve cartel cases and manage competition projects effectively, the Department of Justice announced today. The organization also presented a comprehensive evaluation of how competition agencies use the ICN’s merger-related materials, and unveiled the first four teaching modules of a “virtual university” of competition law and practice.
The ICN conference, hosted by the Netherlands Competition Authority, was held on May 18-20, 2011. Almost 500 delegates participated, representing over 90jurisdictions from around the world, and included competition experts from international organizations and the legal, business, consumer and academic communities. Officials from the Department of Justice Antitrust Division and the Federal Trade Commission (FTC) led the U.S. delegates at the conference. The conference showcased the accomplishments of ICN working groups on mergers, unilateral conduct, cartels, competition advocacy and competition agency effectiveness.
“As we celebrate the 10th anniversary of the ICN this year, it is important to recognize how much our international cooperation and coordination efforts have enhanced antitrust enforcement worldwide,” said Assistant Attorney General Christine Varney of the Department of Justice’s Antitrust Division. “By working cooperatively on cases when possible and by sharing best practices we can continue to promote effective antitrust enforcement and competition globally.”
The ICN’s Merger Working Group aims to promote best practices in the design and operation of merger review regimes. Co-chaired by the Department of Justice and the Irish Competition Authority, the working group presented a comprehensive assessment of the use and impact of 10 years of ICN work on mergers and an evaluation of new work areas to help make merger review more effective. Rachel Brandenburger, Special Advisor, International to Assistant Attorney General Varney, led the conference discussion of current trends and developments in merger enforcement.
The Cartel Working Group produced a paper on cartel case resolution methods and compiled submissions from more than 60 member agencies to add to the world’s largest collection of cartel awareness and outreach materials. Belinda Barnett, Criminal Deputy General Counsel of the Department of Justice’s Antitrust Division, participated in a panel discussion on cartel enforcement awareness and outreach.
The conference highlighted the work of the Agency Effectiveness Working Group, which is developing a competition agency manual as a resource to enhance agencies’ effectiveness and efficiency. FTC Chairman Leibowitz presented opening remarks and participated in a panel discussion on the effective management of competition agencies. New materials were presented on such topics as project delivery and knowledge management.
“Sharing views and techniques with our foreign counterparts allows us all to identify best practices to apply in our home jurisdictions,” Chairman Leibowitz said. “As it enters its second decade, the ICN continues to build on the momentum and successes of its first 10 years. This year’s conference again demonstrated how the ICN serves as a critical platform for enhancing the effectiveness of competition agencies and maximizing our ability to act as effective consumer champions.”
The conference also showcased the ICN Curriculum Project, a project led by FTC Commissioner and ICN Vice Chairman Kovacic to create a “virtual university” of training materials on competition law and practice. The materials include video lectures and other resources gathered into an online interactive educational center.
Other developments included the work of the Unilateral Conduct Working Group, which promotes convergence and sound enforcement of laws governing conduct by firms with market power. Co-chaired by the FTC and Germany’s competition authority, the Bundeskartellamt, the working group drafted the initial section of a “workbook” for agency investigators on determining market dominance and substantial market power. Randolph W. Tritell, Director of the FTC’s Office of International Affairs, presented opening remarks for a session on the competitive analysis of loyalty discounts and rebate programs.
The Advocacy Working Group prepared a competition advocacy toolkit with an overview of the advocacy process and guidance tools for agencies, and presented the results of evaluating its existing work on conducting market studies. In addition, the Netherlands Competition Authority, the conference’s host agency, conducted a panel and presented a report on the role of consumer welfare in competition enforcement.
The ICN was created in October 2001, when the DOJ and FTC joined antitrust agencies from 13 other jurisdictions to increase understanding of competition policy and promote convergence toward best practices around the world. The ICN now includes 117 member agencies from 103 jurisdictions.
ICN documents are available at www.internationalcompetitionnetwork.org.
19 May 2011
Justice Department Files Lawsuit Alleging Disability-Based Housing Discrimination at Nine Apartment Complexes in Three StatesRead the Press Release
WASHINGTON – The Justice Department today filed a lawsuit against the owners, developers and design professionals involved in the design and construction of nine multi-family housing complexes in Mississippi, Louisiana and Tennessee. The nine complexes comprise more than 2,000 apartments with more than 800 ground-floor units that are required by the Fair Housing Act to contain accessible features. Eight of the complexes contain leasing offices that are required by the Americans with Disabilities Act (ADA) to contain accessible features.
The complaint names the Bryan Company; Bryan Construction Company Inc.; Steve Bryan; Mid-South Houston Partners; Mid-South Development LLC (aka MSD LLC); the Vineyards Apartments LLC; Equity Properties LLC (formerly known as Windsor Lake Apartment LP); Cypress Lake Development LLC; Stephen G. Hill; Pickering Firm Inc. (aka Pickering Inc.); Larry Singleton (dba Singleton Hollomon Architects); H D Lang and Associates Inc.; Richard A. Barron, Architect; Shows Dearman & Waits Inc.; Timothy R. Burge, PA (dba Professional Associates Inc.); Canizaro Cawthon Davis (formerly known as Canizaro Trigiani Architects); Smith Engineering & Surveying Inc. (aka Smith Engineering Firm Inc., aka S.E.C.O. Inc., dba Smith Engineering Co. Inc.); Evans-Graves Engineers; and J.V. Burkes & Associates Inc. as the parties responsible for violating these laws. The complaint also names eleven current owners as necessary parties in whose absence complete relief cannot be afforded.
The suit, filed in the U.S. District Court for the Southern District of Mississippi, alleges that the nine properties are inaccessible to persons with disabilities because they, for example, lack accessible pedestrian routes; lack accessible parking; have steep cross and running slopes; have doors that are not sufficiently wide enough to allow passage by persons in wheelchairs; have insufficient accessible routes into and through the units; have light switches, electrical outlets, thermostats and other environmental controls in inaccessible locations; and/or have kitchens and bathrooms that are inaccessible to persons in wheelchairs. Further, the complaint alleges that the leasing offices are inaccessible to persons with disabilities because, for example, they lack accessible pedestrian approach routes, lack compliant parking spaces, have inaccessible counters, and/or have inaccessible door hardware.
“The Fair Housing Act and the Americans with Disabilities Act include provisions to ensure that persons with disabilities have opportunities to find and live comfortably in multifamily housing across the nation,” said Thomas E. Perez, Assistant Attorney General for the Justice Department’s Civil Rights Division. “The department will continue its vigorous pursuit of equal housing opportunities for all people, including those with disabilities.”
“The design and construction of multi-family apartment complexes must comply with the Fair Housing laws and the Americans with Disabilities Act,” said John M. Dowdy, U.S. Attorney for the Southern District of Mississippi. “My office remains vigilant in its efforts to eradicate discrimination and to ensure that persons with disabilities have legally accessible accommodations in which to live. We will remain steadfast in making sure that developers, owners, architects and civil engineers design and develop apartments and other buildings which comply with these laws.”
The suit seeks a court order declaring that the defendants’ actions violate the Fair Housing Act and the ADA, prohibiting the defendants from engaging in future discrimination in the design and construction of multi-family housing; requiring the defendants to bring the covered multi-family dwellings, and public and common use areas into compliance with fair housing laws; and awarding monetary damages to persons harmed by the defendants’ discriminatory housing practices.
The federal Fair Housing Act prohibits discrimination in housing based on race, color, religion, national origin, sex, disability and familial status. Title III of the ADA requires, among other things, that public accommodations comply with specific requirements related to architectural standards to ensure accessible public and common use areas. 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 can call the Housing Discrimination Tip Line at 1-800-896-7743, email the Justice Department at [email protected], or contact the U.S. Department of Housing and Urban Development at 1-800-669-9777.
Former Department of Defense Employee Pleads Guilty to Stealing Financial Assistance Funds Intended for Service MembersRead the Press Release
WASHINGTON – A former civilian employee of the Department of Defense pleaded guilty today in Columbus, Ga., to conversion of Army Emergency Relief (AER) funds while he was employed at Camp Humphreys in the Republic of Korea, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division.
Tyrone L. Ellis, 56, of Columbus, pleaded guilty today in U.S. District Court for the Middle District of Georgia to one count of conversion. Ellis was charged in an indictment returned on Oct. 27, 2010, and unsealed following his arrest on Nov. 3, 2010.
The AER is a private, non-profit organization that serves as the emergency financial assistance organization for the U.S. Army. AER’s operations are financed by voluntary contributions from active and retired soldiers during an annual fund raising campaign, as well as by unsolicited contributions, repayment of outstanding loans and income from reserve funds.
As part of his guilty plea, Ellis admitted that he worked as an Assistant Army Emergency Relief Officer at Camp Humphreys in 2005 and 2006. During that time period, Ellis was tasked with providing AER loans and grants to service members and their families in financial need. Ellis admitted that he approved grants for a dozen soldiers that were greater than the amounts they needed, and that he requested and received approximately $9,250 back from the grant recipients, which he converted to his own use. Ellis also admitted making false statements to investigators in 2006 when questioned about the allegations.
At sentencing, scheduled for Aug. 25, 2011, Ellis faces up to 10 years in prison and a $250,000 fine.
This case is being prosecuted by Trial Attorneys John P. Pearson and Richard B. Evans of the Criminal Division’s Public Integrity Section, and is being investigated by the Army Criminal Investigation Division, with assistance from the Defense Criminal Investigative Service and U.S. Army Audit Agency.
Former CEO of U.S. Telecommunications <br /> Company Pleads Guilty to Foreign Bribery ConspiracyRead the Press Release
WASHINGTON – Jorge Granados, the former chief executive officer of Miami-based telecommunications company Latin Node Inc. (LatiNode), pleaded guilty today to conspiring to pay bribes to government officials in Honduras, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division. To date, four former senior executives of LatiNode have pleaded guilty to conspiring to pay bribes to the Honduran officials.
Granados, 54, pleaded guilty before U.S. District Judge Joan A. Lenard in U.S. District Court in Miami to conspiracy to violate the anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA).
“Jorge Granados today admitted to authorizing illegal bribe payments to Honduran officials, and now he must pay for his crime,” said Assistant Attorney General Lanny A. Breuer of the Criminal Division. “Foreign bribery undermines competition in the marketplace, and weakens democratic institutions. CEOs and other corporate executives should know that now, more than ever, violating the Foreign Corrupt Practices Act will lead to criminal prosecution.”
“Today’s plea reflects the FBI’s commitment to aggressively pursue individuals and businesses that engage in corruption around the globe,” said Special Agent in Charge John V. Gillies of the FBI’s Miami Field Office. “Those who elect to pay illegal bribes to further their business interests in the United States or abroad should know that they are not beyond the reach of the FBI. We will work with our law enforcement partners and prosecutors to bring these corrupt individuals to justice.”
“Business executives should beware that paying bribes in foreign countries leads to prosecution in the United States,” said U.S. Immigration and Customs Enforcement (ICE) Director John Morton. “Our Foreign Corruption Investigative group will continue to provide resources and support to our international partners in an effort to fight corrupt business practices.
According to court documents, LatiNode provided wholesale telecommunications services using Internet protocol technology to countries throughout the world, including Honduras. In December 2005, LatiNode learned that it was the sole winner of an “interconnection agreement” with Empresa Hondureña de Telecomunicaciones (Hondutel), the wholly state-owned telecommunications authority in Honduras. The agreement permitted LatiNode to use Hondutel’s telecommunications lines in order to establish a network between Honduras and the United States, and to provide long distance services between the two countries.
According to court documents, Granados and other LatiNode executives, including Manuel Salvoch, the chief financial officer; Manuel Caceres, the vice president for business development; and Juan Pablo Vasquez, the chief commercial officer agreed to a secret deal to pay bribes to Hondutel officials, including the general manager, a senior attorney for Hondutel and a minister of the Honduran government who became a representative on the Hondutel Board of Directors. According to court documents, between September 2006 and June 2007, LatiNode executives paid more than $500,000 in bribes to the Honduran officials, concealing many of the payments by laundering the money through LatiNode subsidiaries in Guatemala and to accounts in Honduras controlled by the Honduran government officials. Granados admitted that he authorized bribe payments.
At sentencing, scheduled for Aug. 22, 2011, Granados faces up to five years in prison and a fine of the greater of $250,000, or twice the value gained or lost.
On April 7, 2009, LatiNode pleaded guilty to a one-count information charging the company with a criminal violation of the FCPA. As part of the plea agreement, LatiNode agreed to pay a $2 million fine. The resolution of the criminal investigation of LatiNode reflected, in large part, the actions of eLandia International Inc. in disclosing potential FCPA violations to the department after eLandia’s acquisition of LatiNode in 2007 and discovery of the improper payments. Granados and Caceres were charged in a Dec. 14, 2010, indictment with violations of the FCPA and international money laundering. On Dec. 17, 2010, criminal informations were filed against Salvoch and Vasquez, charging them with conspiracy to violate the FCPA. Salvoch, Vasquez and Caceres pleaded guilty to conspiracy to violate the FCPA on Jan. 12, 2011, Jan. 21, 2011, and May 18, 2011, respectively. The three defendants face prison sentences of up to five years.
The case is being prosecuted by Acting Senior Deputy for Litigation Jeffrey H. Knox and Trial Attorney Amanda Aikman of the Criminal Division’s Fraud Section. Significant assistance was provided by Trial Attorney James M. Koukios. The case was investigated by the FBI’s Miami Field Office and ICE Homeland Security Investigation’s Foreign Corruption Investigations Group in Miami.
Federal Court Bars Ohio Accountant and Former Business Partner from Promoting Oil-and-Gas Tax Fraud SchemeRead the Press Release
WASHINGTON – A federal court has permanently barred two men from promoting an alleged tax fraud scheme involving interests in purported oil and gas wells, the Justice Department announced today. Judge James L. Graham of the U.S. District Court for the Southern District of Ohio entered the permanent injunction orders against Daniel D. Weddington of Newark, Ohio, and James R. Earl of Heath, Ohio. Both men were preliminarily enjoined in 2008. A third defendant, Jeffrey L. Gaumer of Newark, N.J., was permanently enjoined in 2008. All three men agreed to the permanent injunctions without admitting to the government’s allegations against them in the amended complaint.
Weddington recently pleaded guilty in federal court to two counts of aiding and assisting the filing of false income tax returns and one count of obstructing the administration of the internal revenue laws in connection with his role in the oil-and-gas well scheme.
The amended complaint in the civil injunction case alleged that Weddington, Earl and Gaumer marketed a scheme to claim tax deductions for fictitious well-drilling costs to more than 200 customers across the country. Customers allegedly paid for their purported investments using sham notes that were supposedly paid off by fictitious gas royalty payments from fictitious wells. The amended complaint also alleged that the defendants used a shell corporation, Aurora Capital Group Inc., to issue sham letters of credit to customers in an attempt to make the customers’ sham notes appear legitimate, so as to deceive the Internal Revenue Service (IRS).
The amended complaint also asserted that Weddington is a public accountant, that Gaumer is a certified public accountant in the same accounting firm, and that they prepared tax returns for the majority of the scheme’s participants. According to the amended complaint, the IRS estimated that the scam caused tax revenue losses of $5.7 million to $6.9 million from 2001 to 2004.
In the past decade, the Justice Department’s Tax Division has obtained hundreds of injunctions against tax return preparers and tax fraud promoters. Information about these cases is available on the Justice Department website .
Bank Director Charged with Hiding Foreign AssetsRead the Press Release
WASHINGTON - A Boston venture capitalist and director at Boston Private Bank and Trust Company was charged with failing to report his foreign bank account and income to the Department of the Treasury. Principal Deputy Assistant Attorney General of the Department of Justice’s Tax Division John A. DiCicco, U.S. Attorney for the District of Massachusetts Carmen M. Ortiz and William P. Offord, Special Agent in Charge of the Internal Revenue Service (IRS) Criminal Investigation, Boston Division made the announcement today.
According to the criminal information and plea agreement filed today, from 2003 to 2008, Michael Schiavo, 53, of Westford, Mass., held an account in his name at HSBC Bank Bermuda (formerly the Bank of Bermuda). In 2006, with the assistance of his business partner Peter Schober, Schiavo arranged to have income from a venture capital investment directed to Schober’s secret account at UBS AG in Switzerland. From there, Schiavo’s share of the investment, $99,273, was wired to his HSBC Bank Bermuda account. Schiavo knew that this payment was taxable income in the United States, but deliberately chose not to report it, or the interest income that accrued in the HSBC Bank Bermuda account, to the IRS. In so doing, Schiavo deprived the IRS out of $40,624 in taxes.
U.S. citizens and resident aliens have an obligation to report to the IRS on the Schedule B of a U.S. Individual Income Tax Return, Form 1040, whether that individual has a financial interest in, or signature authority over, a financial account in a foreign country in a particular year by checking “Yes” or “No” in the appropriate box and identifying the country where the account was maintained. U.S. citizens and resident aliens have an obligation to report all income earned from foreign bank accounts on the tax return and to pay the taxes due on that income. These same taxpayers who have a financial interest in, or signature authority over, one or more financial accounts in a foreign country with an aggregate value of more than $10,000 at any time during a particular year are required to file with the Department of the Treasury a Report of Foreign Bank and Financial Accounts, Form TD F 90-22.1 (the FBAR). The FBAR for the applicable year is due by June 30 of the following year.
According to the criminal information and plea agreement, on Oct. 6, 2009, following widespread media coverage of UBS’s disclosure to the IRS of account records for undeclared accounts held by U.S. taxpayers and the IRS’s Voluntary Disclosure Program, Schiavo made a “silent disclosure” by preparing and filing FBARs and amended Forms 1040 for tax years 2003 to 2008, in which he reported the existence of his previously undeclared account at HSBC Bank Bermuda. He made such filings notwithstanding the availability of the IRS’s Offshore Voluntary Disclosure Program. The Offshore Voluntary Disclosure Program was a program administered by the IRS that was intended to serve as a vehicle for U.S. taxpayers to attempt to avoid criminal prosecution by disclosing their previously undeclared offshore accounts and paying tax on the income earned in those accounts. On its website, the IRS strongly encourages taxpayers to come forward under the Offshore Voluntary Disclosure Program and warns them that taxpayers who instead make silent disclosures risk being criminally prosecuted for all applicable years.
According to the criminal information and plea agreement, Schiavo also admitted that for tax years 2003 through 2008, he willfully failed to file FBARs with the Department of the Treasury and failed to disclose that he had an interest in a financial account in HSBC Bank Bermuda. He further admitted that for tax years 2003 through 2008, he prepared, signed under penalties of perjury, and filed false individual income tax returns with the IRS that falsely represented that he did not have an interest in any foreign financial accounts. According to the plea agreement, Schiavo agreed to pay a civil money penalty of $76,283, half the value of high balance of the HSBC Bank of Bermuda account, for failing to file the FBAR.
Schiavo faces up to five years in prison, followed by three years of supervised release and a $250,000 fine. Schober was charged separately with failing to disclose his secret UBS AG bank account and is awaiting sentencing.
The case was investigated by the IRS-Criminal Investigation Division. It is being prosecuted by Assistant U.S. Attorney Andrew E. Lelling of the U.S. Attorney’s Office Economic Crimes Unit and Trial Attorney Mark Daly of the Tax Division of the Department of Justice.
Attorney General Eric Holder Honors Prosecutors, Law Enforcement Partners and Victim Advocates for Work Combating Child ExploitationRead the Press Release
WASHINGTON – Attorney General Eric Holder today honored 52 prosecutors, law enforcement partners and victim advocates in 13 communities for their leadership protecting children from sexual abuse and exploitation. The awards were presented at the 2011 National Strategy Conference on Combating Child Exploitation in San Jose, Calif.
Attorney General Eric Holder has made one of the department’s four key priorities the protection of those most vulnerable – children, the elderly, and victims of hate crimes, human trafficking and exploitation.
“Through their work in urban, rural and tribal communities – and through cutting-edge online efforts – these individuals are advancing bold, innovative and collaborative solutions to keep our children safe from all forms of exploitation and abuse,” said Attorney General Holder. “By focusing on prevention and intervention, as well as proven enforcement and prosecution strategies, these award recipients are strengthening our ability to protect children in need and at risk, and to bring offenders to justice.”
Focused on protecting children from sexual abuse and exploitation, the conference held this week in San Jose is bringing together more than 1,000 investigators, agents and prosecutors from all levels of government to receive state-of-the-art instruction in investigative techniques, court room advocacy, digital forensics, behavioral profiling, victim advocacy and community outreach.
The conference is sponsored by the department’s Project Safe Childhood Initiative and Office of Juvenile Justice and Delinquency Prevention’s Internet Crimes Against Children Task Force Program.
Attorney General Holder presented the award for Outstanding Overall Partnership Coalition to the San Diego Internet Crimes Against Children (ICAC) Task Force The group of 20 members and affiliates are honored for their efforts in combating child exploitation crimes and promoting safer and more secure communities throughout the Southern District of California.
The San Diego (ICAC) Task Force employs a number of successful strategies to combat child exploitation, which include: training across jurisdictions on topics of mutual interest; cross-designated state law enforcement offices as Special Deputy U.S. Marshals; regular meetings with full and part-time members; and an emphasis on coordination between the district attorney’s office and U.S. Attorney’s office.
Attorney General Holder presented the award for Outstanding Community Outreach Efforts to three prosecutors and a community relations officer in the Southern District of Texas U.S. Attorney’s Office for the launch of their effort, “Internet Safety—It’s Not Just the Computer Anymore.” Since its launch in January 2010, the program has held discussions on Project Safe Childhood and Internet safety with more than 2,500 educators, parents and students. The program’s continued growth and development includes a total of 12 Assistant U.S. Attorneys making presentations, in both English and Spanish, to teachers, school administrators, parents and youth.
The four award winners from the Southern District of Texas U.S. Attorney’s Office are Robert Stabe, Deputy Chief of the Criminal Division; Sherri Zack, Assistant U.S. Attorney; Megan Paulson, Assistant U.S. Attorney; and Rob Barnes, Community Relations Coordinator. They are being honored for their launch of, “Internet Safety—It’s Not Just the Computer Anymore.”
Attorney General Holder presented the award for Outstanding Multi-Agency Operation to four Washington, D.C., law enforcement officials. The four award winners are Timothy Palchak, Detective for the D.C. Metropolitan Police Department; Chadwick M. Elgersma, Associate Division Counsel of the FBI; Scott Schelble, Relief Supervisor for the National Capital Response Squad of the FBI; and Keith Becker, Trial Attorney for the Child Exploitation/Obscenity Section of the Justice Department.
The awardees are honored for their work in a series of child pornography, enticing and traveler cases, which led to the rescues of four child victims from three separate homes. The prosecutions began as a single distribution of child pornography case which, on account of the extraordinary efforts by these four individuals, resulted in the successful prosecution of six sexual offenders. Four of the offenders were “hands-on” child sexual abusers who produced child pornography in four jurisdictions. The offenders were sentenced to lengthy prison terms ranging from 15 to more than 27 years in prison.
Attorney General Holder presented the award for Outstanding Multi-Agency Operation to three North Carolina and Massachusetts law enforcement officials. The three award winners are E. Michael Smith Jr., Special Agent for the North Carolina State Bureau of Investigation; Gregory D. Squire, Special Agent for U.S. Immigration and Customs Enforcement in Boston; and Joe Exum Jr., Assistant U.S. Attorney for the Eastern District of North Carolina.
The awardees are honored for their work which led to the rescue of a six-year-old child exploitation victim and successful prosecution of the sex offender. In collaboration with state, local and federal authorities, the U.S. Attorney’s Office for the Eastern District of North Carolina prosecuted and convicted a sex offender for exploitation of a six-year-old child, obtaining the maximum sentence of 50 years in prison. While the sentence is significant, the most compelling aspect of the case is the apparent seamlessness with which a federal agent in Boston, coordinated with a state law enforcement agent in North Carolina, who in turn worked with state, federal and local law enforcement and prosecutors to follow through on the lead. This group exhibited exceptional cooperation and a swift response so that a child in rural North Carolina could be rescued quickly.
Attorney General Holder presented the award for Superior Performance in Victim Services to Felice Weiler, the Victim and Witness Specialist for the U.S. Attorney’s office of the Northern District of Illinois, for her outstanding work on behalf of victims in the prosecution of a sex offender.
Attorney General Holder presented the award for Outstanding Prevention Strategy to Tommy Loftis, Law Enforcement Coordinator for the U.S. Attorney’s Office for the Southern District of Alabama for his presentation, “The Hidden Dangers of the Digital Age,” promoting child Internet safety. During the past three years, Loftis has presented an informative and captivating program to more than 15,000 students and 5,000 parents throughout the Southern District of Alabama.
Attorney General Holder presented the award for Outstanding Overall Partnership Coalition to seven Florida and Hawaii law enforcement offices. The seven office awardees are the Broward, Fla., Sheriff’s Office; Miami-Dade Police Department; Miami Beach Police Department; the Honolulu Division of the FBI; the Miami Division of the FBI; the U.S. Secret Service Miami office; and the U.S. Attorney’s Office for the Southern District of Florida.
The offices are honored for their work in combating domestic sex trafficking of minors in South Florida. Through close partnerships, shared resources and tireless work, the group’s efforts have resulted in the indictment of more than 16 cases, charging more than 25 defendants for the domestic sex trafficking of minors. In 2010, the U.S. Attorney’s Office in Southern Florida had approximately five cases proceed to trial involving the sex trafficking of minors. Despite the many significant challenges faced by the prosecution teams, all defendants were found guilty.
Attorney General Holder presented the award for Outstanding Prevention Strategy to nine Ohio law enforcement officials affiliated with the Franklin County, Ohio, Internet Crimes Against Children (ICAC) Task Force. The nine award winners are Deputy Chief Steve Martin of the Franklin, Ohio, County Sheriff’s Office; Corporal Dan Johnson of the Franklin County Sheriff’s Office; Detective Marcus Penwell of the Franklin County Sheriff’s Office; Detective Jane Junk of the Columbus, Ohio, Police Department; Officer John Priest of the Upper Arlington, Ohio, Police Department; Detective Brett Peachey of the Westerville, Ohio, Police Department; Officer Steve Grubbs of the Westerville Police Department; Agent Justin Myers of Homeland Security Investigations; and Assistant U.S. Attorney Michael J. Hunter.
The awardees are honored for their work in combating child exploitation crimes throughout the Southern District of Ohio. Established in May of 2009, the Franklin County ICAC Task Force has demonstrated innovation and a consistent ability to adapt its techniques and practices to aggressively target child exploitation offenders in Central Ohio for arrest and prosecution. The ICAC employs several innovative strategies to combat child exploitation, including the training of multiple officers in computer forensics, partnering with federal agencies, cross-deputizing task force officers as federal agents and coordinating a prosecution strategy with the U.S. Attorney’s Office. Its successes include arresting more than 180 child exploitation defendants – including nine repeat offenders – executing more than 150 search warrants, identifying 10 child victims and referring 27 cases for federal prosecution.
Attorney General Holder presented the award for Outstanding Interdiction Strategy to two U.S. postal inspectors. The award winners are William E.S. Beaty, Postal Inspector for the Seattle Division of the U.S. Postal Inspection Service, and Gary Nork, Postal Inspector for the Phoenix Division of the U.S. Postal Inspection Service.
The two awardees are honored for their work to ensure that a sex offender would not exploit children through the Internet and U.S. Mail. Working together, these two postal inspectors from two different states not only devised a strategy to identify the suspect and interdict the communications, but also secured the prosecution of the sex offender. Within 48 hours of receiving a complaint from the National Center for Missing and Exploited Children, these postal inspectors acted to rescue a 12-year-old boy from a dangerous predator.
Attorney General Holder presented the award for Outstanding Local Prosecutor’s Office to Utah Attorney General Mark Shurtleff for his efforts in combating child exploitation crimes and promoting safer and more secure communities throughout the state of Utah.
Led by Utah Attorney General Mark L. Shurtleff, the Utah Internet Crimes Against Children (ICAC) Task Force has conducted more than 700 investigations of child exploitation; engaged in community outreach with parents and children to discuss online safety; set up Utah’s Amber Alert program; and established the first statewide Child Abduction Response Team in Utah. The Utah Attorney General’s Office and the ICAC have also collaborated with other agencies, resulting in several significant child exploitation prosecutions by the U.S. Attorney’s Office for the District of Utah.
Arkansas Jury Finds Man Guilty of Federal Hate Crime Related to the Assault of Five Hispanic MenRead the Press Release
WASHINGTON –Frankie Maybee, 20, of Green Forest, Ark., was convicted today by a federal jury today of five counts of committing a federal hate crime and one count of conspiring to commit a federal hate crime, announced the Justice Department. This is the first conviction at trial for a violation of the Matthew Shepard and James Byrd Jr. Hate Crimes Prevention Act, which was enacted in October 2009. Maybee faces a maximum of 55 years in prison, and a fine of up to $250,000 per violation.
On May 16, 2011, co-defendant Sean Popejoy, 19, of Green Forest, pleaded guilty in federal court to one count of committing a federal hate crime and one count of conspiring to commit a federal hate crime in connection with this matter.
Evidence presented at trial established that in the early morning hours of June 20, 2010, Maybee and Popejoy conspired to and did threaten and injure five Hispanic men who had pulled into a gas station parking lot. The co-conspirators pursued the victims in a truck. When the co-conspirators caught up to the victims, Popejoy leaned outside of the front passenger window and waived a tire wrench at the victims, and continued to threaten and hurl racial epithets at the victims. Maybee, driving his truck, rammed into the victims’ car repeatedly, which caused the victims’ car to cross the opposite lane of traffic, go off the road, crash into a tree and ignite. As a result of Maybee and his co-conspirators’ actions, the victims suffered bodily injury, including one victim who sustained life-threatening injuries.
“The defendants targeted five men because they were Hispanic, and today’s verdict shows that the Justice Department is committed to vigorously prosecuting individuals who perform acts of hate because of someone’s race or national origin,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “We will continue to use the Matthew Shepard and James Byrd Jr. Hate Crimes Prevention Act, and every other tool in our law enforcement arsenal, to identify and prosecute hate crimes whenever they occur.”
“ We thank the jury for their careful consideration, and for their verdict. It is horrific that acts of violence are committed against complete strangers because of their race,” Conner Eldridge, U.S. Attorney for the Western District of Arkansas. “In this case, five Hispanic men stopped to fill up their car with gas and were violently run off the road, causing severe injuries and nearly causing death to one of them. In the Western District of Arkansas, we will continue to prosecute acts of violence that are motivated by hatred of another’s race. ”
This case was investigated by the FBI’s Fayetteville, Ark., Division in cooperation with the Arkansas State Police Department and the Carroll County Sheriff’s Office. The case was prosecuted by Trial Attorney Edward Chung of the Department of Justice’s Civil Rights Division and Assistant U.S. Attorney Kyra E. Jenner for the Western District of Arkansas.
18 May 2011
Texas Egg Producer Will Pay $1.9 Million Penalty to Resolve Clean Water Act ViolationsRead the Press Release
WASHINGTON – Mahard Egg Farm Inc., a Texas corporation operating in both Texas and Oklahoma, has agreed to pay a $1.9 million penalty to resolve claims that the company failed to comply with the Clean Water Act at its egg production facilities, announced the Department of Justice and the Environmental Protection Agency (EPA). The civil penalty is the largest ever to be paid in a federal enforcement action involving a concentrated animal feeding operation (CAFO), and is in addition to approximately $3.5 million that Mahard will spend on remedial measures to bring the company into compliance with the law and protect the environment and people’s health.
The Clean Water Act complaint, filed jointly with the settlement by the United States and the states of Texas and Oklahoma, alleges that Mahard operated one facility without a permit and discharged pollutants into area waterways. Mahard also allegedly discharged pollutants or otherwise failed to comply with the terms of its permits at six other facilities, including its newest facility near Vernon, Texas, where it also failed to comply with the Texas Construction Storm Water General Permit and to ensure safe drinking water for its employees. The states of Texas and Oklahoma also alleged similar violations of state laws.
“This agreement is the result of extensive cooperation between the states of Texas and Oklahoma and the federal government to address multiple violations of the Clean Water Act at Mahard facilities,” said Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division at the Department of Justice. “Ensuring the lawful handling of CAFO wastes will mean cleaner steams and waterways in Texas and Oklahoma, which is important for aquatic habitats, safe drinking water and public recreation.”
“By working with the Department of Justice and our state partners in Texas and Oklahoma, we have reached a significant settlement that reflects the seriousness of Mahard’s violations,” said Cynthia Giles, Assistant Administrator for EPA’s Office of Enforcement and Compliance Assurance. “Large animal feeding operations that fail to comply with our nation’s environmental laws threaten public health and the environment and put smaller farming operations at a disadvantage.”
Most egg production facilities generate various wastes, including wet or dry manure from chicken houses, wastewater from the egg-washing process and compost from chicken carcasses. If done properly, these wastes may be sold or contained on-site in manure storage lagoons prior to being applied to nearby fields. However, the joint complaint alleges that, as a result of Mahard’s historic practice of over-applying waste to its fields, the soils at its facilities are extremely high in nutrients (nitrogen and phosphorus). During and after rainfall, these nutrients are discharged into area streams and waterways. In addition, at several facilities, Mahard abandoned inactive and improperly designed manure lagoons rather than closing them as required by law.
As part of this settlement, Mahard has committed to comprehensive, system-wide changes in order to bring each of its seven CAFO facilities into compliance with applicable state and federal laws, permits and regulations and to restore the lands so as to prevent future discharges to area waterways. The settlement mandates the performance of specific requirements, such as proper lagoon closures, groundwater monitoring, and the construction and maintenance of buffer strips along area waterways within the facility boundaries. It also requires on-going land restoration and management measures, such as restrictions on the land application of manure and on livestock grazing.
Preventing animal waste from contaminating surface and ground waters of the United States is one of EPA’s National Enforcement Initiatives for 2011-2013. The initiative continues EPA’s focus on large and medium sized CAFOs that are discharging pollution without or in violation of a permit.
The settlement, lodged today in the U.S. District Court for the Northern District of Texas, is subject to a 30-day public comment period and approval by the federal court. A copy of the consent decree is available on the Justice Department website at: www.justice.gov/enrd/Consent_Decrees.html .
Justice Department Reaches Agreement with Berkshire Hills Bancorp and Legacy Bancorp on DivestituresRead the Press Release
WASHINGTON – The Department of Justice announced today that Berkshire Hills Bancorp Inc. and Legacy Bancorp Inc. have agreed to sell four branch offices in Berkshire County, Mass., with approximately $158 million in deposits, to resolve antitrust concerns about the companies’ pending merger. The department said that, with the divestitures, the merger would not have an adverse effect on competition in local markets for retail banking or small business banking services. The combined entity will be worth almost $4 billion in assets and have a total of 69 branches in three states.
Under the agreement with the Justice Department’s Antitrust Division, the companies will divest four Legacy branches located in North Adams, Pittsfield, Lee and Great Barrington, Mass. The divestitures will include the commercial loans associated with the divested branches.
“With the divestiture, consumers and small businesses in Berkshire County will continue to enjoy the benefits of competition in banking services,” said Christine Varney, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.
The proposed merger is subject to the final approval of the Office of Thrift Supervision (OTS). The department said that it will advise the OTS that it will not challenge the merger provided that the parties divest the branch offices specified in the agreement and associated loans and deposits; and provided that the parties commit to the OTS that they will comply with the agreement with the department.
Berkshire Hills Bancorp is a Delaware corporation, the main subsidiary of which is Berkshire Bank, a Massachusetts savings bank headquartered in Pittsfield. Berkshire has about $2.9 billion in assets and about $2.1 billion in deposits. It offers banking and financial products and services at 50 branches in Massachusetts, eastern New York and southern Vermont. Twelve of those branches are located in Berkshire County.
Legacy Bancorp is a savings and loan holding company also headquartered in Pittsfield. It has approximately $917 million in total assets and $676 million in deposits. Legacy has a total of 19 branches in western Massachusetts and eastern New York, 11 of which are in Berkshire County.
The branches to be divested are:
Bank
State
County
Address
City
Zip
Deposits as of June 30, 2010 (000s)
Legacy
Mass.
Berkshire
331 State Road
North Adams
01247
$18,365
Legacy
Mass.
Berkshire
609 Merrill Road
Pittsfield
01201
$45,760
Legacy
Mass.
Berkshire
76 Park Street
Lee
01238
$48,179
Legacy
Mass.
Berkshire
700 Main Street
Great Barrington
01230
$45,822
Houston Medical Equipment Company Owner Sentenced to 84 Months in Prison for Health Care Fraud Scheme Involving More Than $2 Million in False BillingsRead the Press Release
WASHINGTON – The owner of a Houston-area durable medical equipment (DME) company was sentenced to 84 months in prison for her role in a Medicare fraud scheme, the Departments of Justice and Health and Human Services (HHS) announced.
Doris Vinitski, a Houston-area resident, was sentenced yesterday by U.S. District Court Judge Nancy F. Atlas in the Southern District of Texas. Vinitski pleaded guilty in April 2010 to one count of conspiracy to commit health care fraud.
According to court documents, Vinitski, 46, was the owner of Onward Medical Supply, a Houston-area DME company. Onward began billing Medicare for fraudulent DME in 2003. In pleading guilty, Vinitski admitted she paid kickbacks, sometimes $1,000 per patient, to recruiters who brought patients to Onward. Vinitski and her co-conspirator and estranged husband, John Lachman, then billed Medicare for DME that these patients either did not need or never received, including power wheelchairs and orthotic devices. Lachman also pleaded guilty in April 2010 to one count of conspiracy to commit health care fraud and was sentenced to 26 months in prison. According to court documents, the fraud scheme at Onward resulted in more than $2 million in fraudulent billing to Medicare.
Nine additional defendants involved in the Onward fraud scheme are currently serving prison sentences. One remaining defendant is awaiting sentencing in the Eastern District of Texas.
The sentence was announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney José Angel Moreno of the Southern District of Texas; Russell D. Robinson, Acting Special Agent-in-Charge of the FBI’s Houston Office; Special Agent-in-Charge Mike Fields of the Dallas Regional Office of the HHS Office of Inspector General (OIG), Office of Investigations; and Texas Attorney General Greg Abbott on behalf of the Texas Attorney General’s Medicaid Fraud Control Unit (MFCU).
The cases were prosecuted by Trial Attorney Jennifer L. Saulino and Acting Assistant Chief O. Benton Curtis III of the Criminal Division’s Fraud Section. The cases were investigated by the FBI, HHS-OIG and MFCU.
The case was brought as part of the Medicare Fraud Strike Force, supervised by the U.S. Attorney’s Office for the Southern District of Texas and the Criminal Division’s Fraud Section. Since March 2007, Medicare Fraud Strike Force operations in nine locations have charged more than 1,000 defendants who 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 .
Co-owner of North Carolina Company Arrested for Defrauding Commodities Trading Investors of More Than $3.2 MillionRead the Press Release
WASHINGTON – The principal and co-owner of Integra Capital Management LLC, a North Carolina company, was arrested in Denton, N.C., today for defrauding commodities trading investors of more than $3.2 million, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Anne M. Tompkins of the Western District of North Carolina.
Nicholas Cox, 34, a North Carolina resident, is charged in an indictment returned on May 17, 2011, by a federal grand jury in the Western District of North Carolina, with one count of conspiracy to commit mail fraud, seven counts of mail fraud and one count of conspiracy to commit money laundering. Following his arrest, Cox made his initial appearance today before U.S. Magistrate Judge David Cayer in Charlotte, N.C.
The indictment alleges that between September 2006 and January 2009, Cox and his co-conspirator, Rodney Whitney, who was also a principal and co-owner of Integra, engaged in a scheme to defraud investors in commodity trading pools operated by Cox and Whitney through Integra. According to the indictment, Integra was established for the purpose of pooling investors’ funds in commodity pools, and investing in commodity futures and foreign currency exchange (forex) trading. Cox and Whitney allegedly provided false and fraudulent information, including prospectuses, contracts, tax forms, account statements and other documents, to current and prospective investors to obtain and misappropriate more than $3.29 million in investor funds.
According to the indictment, Cox and Whitney falsely represented, among other things, that Integra’s managers had more than 30 years of combined market experience; that Integra paid dividends of 2 to 5 percent of the investor’s initial investment, which was derived from Integra’s trading profits; and investors could remove their principal investments within five days upon giving notice to Integra. The indictment alleges that Cox and Whitney used the monies invested by later investors to pay promised monthly investment returns to earlier investors, to purchase real estate, to fund other business ventures, and to purchase automobiles and other personal goods and services.
Whitney was charged on March 2, 2011, in a criminal information for his role in the scheme. On March 21, 2011, Whitney pleaded guilty to one count of conspiracy to commit mail and wire fraud and one count of conspiracy to commit money laundering.
The maximum sentence for each count of mail fraud and conspiracy to commit mail fraud is 20 years in prison. The maximum sentence for each count of conspiracy to commit money laundering is 10 years in prison.
The case is being prosecuted by Trial Attorneys Nicole H. Sprinzen and Luke B. Marsh of the Criminal Division=s Fraud Section and Benjamin Bain-Creed of the U.S. Attorney’s Office for the Western District of North Carolina. The case is being investigated by the U.S. Postal Inspection Service.
An indictment is merely a charge and defendants are presumed innocent until proven guilty.
This prosecution is part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information about the task force visit: www.stopfraud.gov.
Attorney General Holder Names Sheila L. Birnbaum as Special Master of September 11th Victim Compensation FundRead the Press Release
WASHINGTON – Attorney General Eric Holder today announced that he has chosen Sheila L. Birnbaum to head the September 11th Victim Compensation Fund program. Birnbaum, a life-long New Yorker, has decades of experience resolving complicated litigation. Birnbaum gained recognition and regard from the victims community for her work mediating a settlement of $500 million for 92 families of victims of the September 11th terrorist attack on the World Trade Center.
Birnbaum will administer the fund created under the James Zadroga 9/11 Health & Compensation Act, signed into law by President Obama on Jan. 2, 2011. The bill reactivates the September 11th Victim Compensation Fund that operated from 2001-2003, expanding the pool of applicants to include first responders and other individuals who experienced latent physical injuries associated with the attacks or with debris removal.
“Sheila Birnbaum brings extensive experience, credibility and unique insight to this important role,” said Attorney General Holder. “She has worked closely with, and won the trust of, the families of 9/11 victims with whom she worked. I know that under her direction, the fund will be administered in a manner that is sensitive and fair to those who have suffered so much from the September 11th attacks.”
“As a life-long New Yorker, the opportunity to serve the country and the 9/11 community in this way is a tremendous honor,” Birnbaum said. “My first priority will be to sit down with the people who will be most affected by the program, and see how we can design a program that is fair, transparent and easy to navigate. The fund needs to get up and running quickly. At the same time, I want to make sure we do it right.
“Ken Feinberg laid a great foundation during the fund’s first iteration, and I plan to build upon it,” continued Birnbaum.
The fund is expected to become fully operational after funding appropriated for its administration becomes available on Oct. 1, 2011. Birnbaum indicated that she will publish proposed regulations to govern the program as soon as possible, and take public comment on those proposed regulations over the summer before finalizing them.
In 2006, 9/11 victims and corporate defendants jointly asked Judge Alvin K. Hellerstein to appoint Birnbaum to mediate 95 wrongful death and personal injury cases. Birnbaum successfully mediated 92 of them. Judge Hellerstein called her work “extraordinary” and noted that she had gained credibility with the 9/11 community. In a March 5, 2009, order Hellerstein wrote, “She allowed each of the plaintiffs’ families to express their loss and the quality of the lives lost on September 11. She absorbed their losses and their pain with empathy. . . . She gained plaintiffs’ confidence.”
Birnbaum, the daughter of a grocery store owner in Harlem, N.Y., attended James Monroe High School, and graduated from Hunter College as the first person in her family to attend college. She taught the fourth grade at P.S. 62 in the Bronx, N.Y., before attending New York University School of Law. Since law school, she has taught at both Fordham University School of Law and NYU School of Law, where she became Associate Dean. She is now a partner at Skadden, Arps, Slate, Meagher & Flom, and the chair of the firm’s Mass Torts Litigation Group.
Birnbaum has an extensive career in public service. Among other positions, she has served as the first president and founding member of Judges and Lawyers Breast Cancer Alert; as a member on the New York State Judicial Commission on Minorities; as Executive Director for the U.S. Court of Appeals for the Second Circuit’s Task Force for Racial, Ethnic and Gender Fairness; as Chair for the Commission on Fiduciary Appointments; and as President of the New York Women’s Bar Association.
For additional information on the Victim Compensation Fund or to sign up for email updates, please visit: www.justice.gov/vcf/ .
17 May 2011
Tenaris S.A. Agrees to Pay $3.5 Million Criminal Penalty<br /> to Resolve Violations of the Foreign Corrupt Practices ActRead the Press Release
WASHINGTON – Tenaris S.A., a publicly traded corporation headquartered in Luxembourg, has agreed to pay a $3.5 million penalty for violations of the Foreign Corrupt Practices Act (FCPA), and has entered into a non-prosecution agreement with the Department of Justice, announced Assistant Attorney General Lanny A. Breuer for the Justice Department’s Criminal Division.
Tenaris, a global manufacturer and supplier of steel pipe products and related services to the oil and gas industry throughout the world, admitted that its employees and agents offered and made improper payments to officials of OJSC O’ztashqineftgaz (OAO), an Uzbekistan state-controlled oil and gas production company, and failed to record such payments accurately in Tenaris’s books and records. In connection with four public bids to provide oilfield pipe and related services for energy extraction and transportation projects, Tenaris retained an agent to obtain competitors’ bid information, which Tenaris then used to secretly submit revised bids to its advantage. Tenaris agreed to pay the agent 3.5 percent of the value of four separate contracts, while being aware or substantially certain that the agent would pay all or a portion of the money to one or more OAO employees.
According to the agreement, Tenaris voluntarily disclosed this conduct to the department in a timely and complete manner, conducted an internal investigation, provided thorough, real-time cooperation to the department and the U.S. Securities and Exchange Commission (SEC), and undertook extensive remediation, including voluntary enhancements to its compliance program. The criminal penalty in this case constitutes a substantially reduced monetary penalty and reflects the department’s commitment to providing meaningful credit to Tenaris for its extraordinary cooperation with the department. As outlined in the agreement, Tenaris has agreed to fully cooperate with investigations by law enforcement authorities of the company’s corrupt payments and to adhere to a set of enhanced corporate compliance and reporting obligations.
FCPA enforcement action documents can be found at www.justice.gov/criminal/fraud/fcpa . Information about the Principles of Federal Prosecution of Business Organizations can be found at www.justice.gov/usao/eousa/foia_reading_room/usam/title9/28mcrm.htm
In a related matter, Tenaris reached a settlement today with the SEC in which Tenaris entered into a deferred prosecution agreement and agreed to pay $5,428,338 in disgorgement and prejudgment interest. Tenaris also agreed to comply with certain undertakings regarding its FCPA compliance program.
The case is being prosecuted by Assistant U.S. Attorney Jerrob Duffy, formerly a Trial Attorney in the Criminal Division’s Fraud Section. The department acknowledges and expresses its appreciation for the significant assistance provided by the staff of the SEC and the FBI’s Houston Field Office during the course of this investigation .
Justice Department Settles ADA Complaint Involving Children with Autism and Other Disabilities at Preschool Program in Baldwin Park, Calif.Read the Press Release
WASHINGTON – The Justice Department today announced a settlement agreement under the Americans with Disabilities Act (ADA) with a state-funded private preschool program, Beginning Montessori Academy, located in Baldwin Park, Calif. The Justice Department initiated its investigation of the Montessori Academy after a student’s parent filed a complaint alleging violations of Title III of the ADA. The parent filed the complaint after the school alerted her that the student was not accepted to the school for the following year, despite having been a student there for some time.
Under the terms of the settlement agreement, the Montessori Academy will ensure that it will not discriminate against any individual on the basis of disability, including autism. The Montessori Academy agrees to provide children with disabilities an equal opportunity to attend the Montessori Academy and to participate in all programs, services or activities. The school has also agreed to make reasonable modifications in policies, practices or procedures when such modifications are necessary to afford its child care services and facilities to children with disabilities, except when doing so would cause a fundamental alteration of its services or when the child’s participation in programs, services or activities causes a direct threat to others. The Montessori Academy will also pay $5,000 to the party affected by the school’s previous policies.
“All children deserve access to educational services, and making sure that schools are fully accessibile to children with disabilities is a necessary part of integrating individuals with disabilities into all aspects of American life,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The department is committed to vigorously enforcing Title III of the ADA.”
Title III of the ADA prohibits private entities that offer public accommodations, like the Montessori Academy, from excluding people with disabilities, including people with autism, from full and equal enjoyment of the services provided. Anyone interested in learning more about federal disability rights statutes can call the Justice Department’s toll-free ADA information line at 800-514-0301, 800-514-0383 (TTY), or visit the ADA website at www.ada.gov . For more information about the Civil Rights Division, visit its website at www.justice.gov/crt or follow @civilrights on Twitter.
Justice Department Resolves Citizenship Status Discrimination Charge Against New Jersey Employer Iflowsoft LLCRead the Press Release
WASHINGTON – The Justice Department announced today that it has reached a settlement agreement with Iflowsoft LLC, a computer programming services provider in Iselin, N.J., to settle allegations that Iflowsoft engaged in a pattern or practice of citizenship status discrimination by preferring to hire temporary visa holders over U.S. citizens.
According to the department’s findings, Iflowsoft posted several job advertisements for IT professionals expressing a preference for temporary visa holders (specifically H-1B transfers and/or OPT candidates). The facially discriminatory advertisements deterred the charging party, a U.S. citizen, from applying to Iflowsoft. In addition, the department found Iflowsoft hired an H1-B visa holder without considering a qualified U.S. citizen applicant. The Immigration and Nationality Act (INA) generally prohibits employers from discriminating based on citizenship status during the hiring process.
Under the terms of the settlement, Iflowsoft has agreed to pay $6,400 in civil penalties and $7,158.49 in back pay to two U.S. citizens who were qualified for the positions advertised and applied, or would have applied for the positions. Iflowsoft has also agreed to provide its employees training on the INA anti-discrimination requirements, adopt nondiscrimination policies with respect to recruitment and hiring, and maintain and submit records to the United States for the three-year term of the agreement.
“ All workers who are authorized to work in the United States, whether they are citizens or not, have the right to look for a job without facing discrimination,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “We are pleased to have reached a settlement with Iflowsoft and look forward to continuing to work with public and private employers to educate them about anti-discrimination protections and employer obligations under the law.”
The Civil Rights Division’s Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC) is responsible for enforcing the INA anti-discrimination provision, which prohibits employers from discriminating against work-authorized individuals on the basis of citizenship status or national origin in hiring, firing, recruitment or referral for a fee.
For more information about protections against employment discrimination under federal immigration law, call OSC’s worker hotline at 1-800-255-7688 (1-800-237-2525, TDD for hearing impaired), OSC’s employer hotline at 1-800-255-8155 (1-800-362-2735, TDD for hearing impaired), or 202-616-5594; email [email protected] ; or visit the website at www.justice/gov/crt/osc .
Justice Department Antitrust Officials to Participate in 10th Annual International Competition Network Conference in the Hague, the NetherlandsRead the Press Release
WASHINGTON – Department of Justice Antitrust Division officials will participate in the 10th annual International Competition Network (ICN) conference in The Hague, The Netherlands, from May 18-20, 2011. At the conference, senior government antitrust officials, private sector antitrust experts and representatives of intergovernmental organizations will meet to discuss competition issues and recent accomplishments of ICN working groups on areas of antitrust enforcement policy, including unilateral conduct, mergers, cartels, advocacy and agency effectiveness.
Conference panels will discuss promoting the use of competition principles in government actions, anti-cartel enforcement awareness and outreach, effective operation of competition agencies, trends in merger enforcement, analysis of loyalty discounts and rebates, and competition enforcement and consumer welfare. Member agencies also will finalize work programs for the upcoming year and engage in long-term planning.
In October 2001, the Department of Justice and the Federal Trade Commission (FTC) joined with antitrust agencies from 13 other jurisdictions around the world (Australia, Canada, the European Union, France, Germany, Israel, Italy, Japan, Korea, Mexico, South Africa, the United Kingdom and Zambia) to create the ICN. The ICN now includes 117 member agencies from 103 jurisdictions. The goal of the ICN is to provide a forum for antitrust agencies to address competition enforcement and policy issues of common interest.
The following portions of this year’s conference will be open to the press:
WEDNESDAY, MAY 18 (Day 1)
9:00 a.m. (The Hague), 3:00 a.m. (EDT) – Opening Remarks
The conference opening will include remarks by Henk Don, Acting Chairman of the Board, Netherlands Competition Authority, and Joaquín Almunia, Vice President of the European Commission and European Commissioner of Competition.
10:15 a.m. (The Hague), 4:15 a.m. (EDT) – ICN Curriculum Project
FTC Commissioner William Kovacic will present the ICN Curriculum Project, including its first video training materials that will become part of the ICN’s “virtual university” on competition law and practice for competition agency officials.
11:00 a.m. (The Hague), 5:00 a.m. (EDT) – Advocacy Session
John Fingleton, Chief Executive, UK Office of Fair Trading, will join a panel to discuss the use of competition principles in government actions.
2:30 p.m. (The Hague), 8:30 a.m. (EDT) – Cartel Session
Belinda Barnett, Criminal Deputy General Counsel of the Department of Justice’s Antitrust Division, will join a discussion on public awareness and outreach in the context of cartel enforcement, moderated by Alexander Italianer, Director General, Directorate for Competition in the European Commission.
THURSDAY, MAY 19 (Day 2)
10:45 a.m. (The Hague), 4:45 a.m. (EDT) – Agency Effectiveness Session
FTC Chairman Jon Leibowitz will present remarks and participate in a panel discussion on effectively managing competition agencies.
2:30 p.m. (The Hague), 8:30 a.m. (EDT) – Special Project Session
Jarig van Sinderen, Chief Economist, Netherlands Competition Authority, will focus on a special project undertaken by the Netherlands Competition Authority on competition enforcement and consumer welfare.
3:15 p.m. (The Hague), 9:15 a.m. (EDT) – Merger Session
Rachel Brandenburger, Special Advisor, International to Assistant Attorney General Christine Varney of the Department of Justice’s Antitrust Division, will moderate a panel on current trends and developments in merger enforcement.
FRIDAY, MAY 20 (Day 3)
10:35 a.m. (The Hague), 4:35 a.m. (EDT) – Unilateral Conduct Session
Randolph W. Tritell, Director of the FTC’s Office of International Affairs, will present opening remarks preceding a panel debate on “Arguing the Case: Scrutinizing a Loyalty Discount and Rebate Case from All Sides.”
11:20 a.m. (The Hague), 5:20 a.m. (EDT) – Closing
The conference will be held at the World Forum in The Hague, The Netherlands. More information about the conference can be found at www.icn-thehague.org/page.php. ICN documents are available at www.internationalcompetitionnetwork.org.