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17 May 2011
Former Puerto Rico Senator Jorge De Castro Font Sentenced to 60 Months in Prison for Honest Services Wire Fraud and Conspiracy to Commit ExtortionRead the Press Release
WASHINGTON — Jorge De Castro Font, 47, a former senate majority leader in the Commonwealth of Puerto Rico, was sentenced today to 60 months in prison after pleading guilty to 20 counts of honest services wire fraud and one count of conspiracy to commit extortion, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney for the District of Puerto Rico Rosa Emilia Rodríguez-Vélez. De Castro Font also was sentenced in Puerto Rico by U.S. District Judge Francisco A. Besosa to serve three years of supervised release following his prison term.
De Castro Font pleaded guilty on Jan. 21, 2009, to engaging in a scheme to deprive the people of Puerto Rico of his honest services as a legislator. De Castro Font also pleaded guilty to one count of conspiracy to commit extortion through fear of economic harm and under color of official right. De Castro Font was charged with these and other related offenses on Oct. 2, 2008.
“Former senator de Castro Font abused his elected position for his own financial benefit. By trading dollars for official acts, he undermined the trust that the people of Puerto Rico placed in him,” said Assistant Attorney General Breuer. “Today’s prison sentence shows that ultimately corruption doesn’t pay. The Public Integrity Section and its law enforcement partners will continue to pursue elected officials aggressively, and seek stiff sentences for those convicted.”
“The sentence imposed by the court today sends a strong message to public officials who engage in self-dealing and use their public office for financial gain. Public corruption crimes are serious offenses that will be stiffly punished by the courts,” said U.S. Attorney Rodríguez-Vélez. “These crimes involve betrayal of the public trust constituents placed in the elected official. But the consequences transcend the boundaries of a particular case. Public corruption crimes corrode our representative form of government, undermine the public’s confidence in its public officials, and subvert the very essence of democracy. The District of Puerto Rico remains committed to continuing to investigate and prosecute public corruption crimes as one of our top priorities.”
“Let this conviction and sentencing send a stark message to all public servants that the sale of influence and public corruption will not be tolerated by the FBI or the law-abiding citizens of Puerto Rico,” said Luis Fraticelli, Special Agent in Charge of the FBI-San Juan Field Office. “The FBI will continue to be vigilant so as to root out all public corruption. As I have said before, corruption affects every facet of society, particularly the hard working and honest people.”
In his guilty plea, de Castro Font admitted that from Jan. 2, 2005, through August 2008, he directly and indirectly solicited between approximately $500,000 and $525,000 in cash payments and other benefits, such as campaign contributions in excess of the legal limits, lodging, private flights, meals and other things of value, from individuals. De Castro Font admitted that he engaged in official acts on behalf of some of these individuals who had provided him with these undisclosed benefits, including proposing legislation, preventing legislative projects to be voted or acted upon, and persuading other legislators to vote for or against legislation.
De Castro Font also admitted to participating in a conspiracy to obtain cash and other benefits from five individuals he acknowledged that he knew felt if they did not provide him with the financial benefits requested, de Castro Font could use his official position to harm their financial interests.
On Dec. 4, 2008, Alberto Goachet, a political consultant and aide to de Castro Font, pleaded guilty to participating in the conspiracy to launder illegal campaign contributions and other payments. Goachet admitted that he and others laundered the money through the use of fake invoices purporting to reflect legitimate payments to a political consulting firm owned by Goachet. Goachet admitted that the false invoices were meant to conceal a businessman’s illegal payments to de Castro Font. Goachet also admitted that in August 2008 he falsely claimed in an interview with the FBI that the invoices were legitimately written for services rendered to the businessman and denied that the money was intended for de Castro Font. Goachet was sentenced in March 2009 to three months in prison, three months of home detention and three years of supervised release.
The case was prosecuted by Assistant U.S. Attorneys Jacqueline Novas, Timothy R. Henwood and Ernesto López-Soltero of the U.S. Attorney’s Office for the District of Puerto Rico, and Trial Attorney Peter Koski of the Criminal Division’s Public Integrity Section. The case was investigated by the FBI’s San Juan Field Office.
Attorney General Holder Announces Appointment of Juan Osuna as Director for the Executive Office for Immigration ReviewRead the Press Release
WASHINGTON – Attorney General Eric Holder today announced the appointment of Juan Osuna as the permanent Director for the Executive Office for Immigration Review (EOIR) at the Department of Justice.
“Having served with the department for over a decade, Juan has developed an extensive knowledge of immigration litigation and issues, and demonstrated himself to be a diligent and thoughtful advocate and manager,” said Attorney General Holder. “I am confident he will lead this office with the highest standards of professionalism, integrity and dedication.”
EOIR was created on Jan. 9, 1983, through an internal department reorganization which combined the Board of Immigration Appeals (BIA) with the Immigration Judge function previously performed by the former Immigration and Naturalization Service (INS) (now part of the Department of Homeland Security). The Office of the Chief Administrative Hearing Officer was added in 1987.
EOIR is headed by a director who is responsible for the supervision of the Chairman of BIA, the Chief Immigration Judge, the Chief Administrative Hearing Officer and all agency personnel. EOIR has more than 1,300 employees in its 59 immigration courts nationwide, at the BIA and at EOIR headquarters in Falls Church, Va.
“I am honored by the Attorney General’s appointment and look forward to continuing to serve the department and the American people on these important issues,” Osuna said.
Osuna has served as Acting Director of EOIR since December 2010. Prior to that, he worked as an Associate Deputy Attorney General focusing on immigration policy, Indian country matters, pardons and commutations and other issues. Before joining the Deputy Attorney General’s office, he worked as a Deputy Assistant Attorney General in the department’s Civil Division, where, in addition to handling immigration policy, he also oversaw civil immigration-related litigation in the federal courts. Previously he served as chairman of the BIA. He was first appointed to the BIA in 2000 and became chairman in 2008.
While at the BIA, Osuna put in place a number of reforms and oversaw the attorney general’s 2006 reform plan, which increased the quality and transparency of the board’s decisions, and he adjudicated hundreds of appeals from decisions of immigration judges made in removal proceedings.
Osuna also teaches immigration policy at George Mason University School of Law in Arlington, Va.
Osuna received a B.A. from George Washington University, a law degree from American University’s Washington College of Law and a master’s degree in law and international affairs from American University’s School of International Service.
16 May 2011
NASDAQ OMX Group Inc. and IntercontinentalExchange Inc. Abandon Their Proposed Acquisition of NYSE Euronext After Justice Department Threatens LawsuitRead the Press Release
WASHINGTON – The NASDAQ OMX Group Inc. and IntercontinentalExchange Inc. abandoned their joint bid to acquire NYSE Euronext after the Department of Justice informed the companies that it would file an antitrust lawsuit to block the deal. The department said that the acquisition would have substantially eliminated competition for corporate stock listing services, opening and closing stock auction services, off-exchange stock trade reporting services and real-time proprietary equity data products.
On April 1, 2011, NASDAQ joined with the IntercontinentalExchange to submit an unsolicited bid to acquire NYSE. At the time of its announcement, the proposed bid was worth approximately $11.3 billion. If consummated, the deal would have given NASDAQ control over NYSE’s stock listings business, stock trading venues and market data licensing operations. NYSE’s futures businesses, located primarily in Europe, would have been sold to the IntercontinentalExchange.
“The companies’ decision to abandon their bid for NYSE Euronext eliminates the competitive concerns developed during our investigation,” said Christine Varney, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “The acquisition would have removed incentives for competitive pricing, high quality of service, and innovation in the listing, trading and data services these exchange operators provide to the investing public and to new and established companies that need access to U.S. stock markets.”
NYSE and NASDAQ operate the major stock exchanges in the United States. NYSE owns the New York Stock Exchange, the oldest exchange in the United States and referred to by many simply as the “Big Board”; NYSE Arca, an all-electronic exchange; and NYSE Amex, which caters to small and mid-size companies. NASDAQ operates The NASDAQ Stock Market, NASDAQ OMX BX (formerly the Boston Stock Exchange) and NASDAQ OMX PSX (formerly the Philadelphia Stock Exchange). The market value of the companies and funds listed on NASDAQ and NYSE U.S. exchanges is approximately $18 trillion, with more than $14 trillion listed on NYSE exchanges and $4 trillion on NASDAQ.
The department’s investigation revealed that NYSE and NASDAQ are the only competitors in several businesses vital to the success of U.S. equity markets. NYSE and NASDAQ compete aggressively for listing customers as they are effectively the only companies providing corporate stock listing services in the United States. In order for a company to sell its stock to investors on a public exchange in the United States, the company must first “list” or register its shares with an exchange. Once listed, the company’s stock can be bought or sold on any stock exchange in the United States, off-exchange at certain broker-dealers and on licensed alternative trading systems. Listing stock exchanges act as “gatekeepers” to public equity markets, allowing only certain companies that meet rigorous standards to list and attract investment capital from the public.
NYSE and NASDAQ are also the only two providers of stock auction services that are used every day at the open and close of trading, as well as at certain other times of market imbalance, the department said. At most times, the process of determining a price for a stock occurs in a robust market, with numerous buyers and sellers actively negotiating prices. However, at certain times the market cannot determine a price in this way. For example, a long line of orders builds up every night waiting to execute at the moment the market opens. These orders are based on information revealed overnight, which is not reflected in the market price at the close of the previous day. Similarly, at the end of each trading day, major market participants place large orders to balance their portfolios, potentially creating large imbalances in order flows and distorting prices, the department said. Both NYSE and NASDAQ have developed special auctions to handle these unique order flows at the open and close of each trading day.
NYSE and NASDAQ provide trade reporting facilities for the reporting of stock trades occurring outside of a stock exchange and are currently the only two entities that compete to collect this data. This reporting business is vital for the proper dissemination of information about off-exchange trading, which today accounts for roughly 30 percent of all stock trading in the United States, the department said.
NASDAQ and NYSE are the largest two competitors providing certain real-time proprietary equity data products. These products reflect, for example, the prices and quotes on the several NASDAQ and NYSE stock exchanges as well as information and data collected by the NASDAQ and NYSE trade reporting facilities for trades occurring off the stock exchanges.
NYSE is a publicly traded Delaware corporation with its principal place of business located in New York, N.Y. NYSE was created by the merger between NYSE Group Inc. (NYSE Group) and Euronext N.V. in 2007. In 2010, NYSE earned more than $3 billion in revenues from sales within the United States.
NASDAQ is a publicly traded Delaware corporation with its principal place of business also located in New York, N.Y. In 2010, NASDAQ earned more than $2.5 billion in revenues from sales to customers located in the United States.
IntercontinentalExchange is a publicly traded Delaware corporation with its principal place of business located in Atlanta. IntercontinentalExchange operates exchanges, over-the-counter markets and clearing houses to support derivates trading and settlement. In 2010, IntercontinentalExchange earned $609 million in revenues within the United States.
Justice Department Settles Allegations of Immigration-Related Employment Discrimination Against Maricopa Community College DistrictRead the Press Release
WASHINGTON – The Justice Department today reached a settlement agreement with the Maricopa County Community College District in Arizona, resolving allegations that the district engaged in a pattern or practice of discrimination against non-citizens in the hiring and employment-eligibility verification process. The district, which consists of 10 community colleges and two skill centers, has agreed to pay $45,760 in civil penalties and $22,123 in back pay to settle a lawsuit filed by the Justice Department on Aug. 30, 2010.
According to the department’s findings, the district had a policy of requiring newly hired workers who are not U.S. citizens but are authorized to work to present specific documentation that is not required by federal law. In accordance with that policy, at least two individuals were denied the opportunity to begin their employment despite having produced documentation sufficient to establish their employment eligibility. Specifically, a lawful permanent resident who accepted an adjunct mathematics faculty appointment and an honor student who was to begin a federal work-study position were not permitted to work when they did not comply with the district’s excessive and discriminatory documentary requirements. Both individuals will receive full back pay.
Under the terms of the settlement agreement, the district will alter its practices to ensure that citizens and non-citizens are treated equally in the employment eligibility verification process. The district has also agreed to train its human resources personnel about employers’ non-discrimination responsibilities in the employment eligibility verification process, to produce Forms I-9 for inspection, and to provide periodic reports to the department for three years.
“Employers have a responsibility to conduct the employment-eligibility verification process in a non-discriminatory manner,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “We are pleased to have reached this agreement with the district, and we look forward to continuing to work with all employers, both public and private, to educate them about their obligations under federal law.”
The Immigration and Nationality Act (INA) includes a provision designed to protect lawful workers who may look or sound foreign by prohibiting employers from treating non-citizens differently than U.S. citizens in the I-9 process. When Congress enacted this provision as part of the Immigration Reform and Control Act of 1986, it sought to strike a balance between immigration worksite enforcement and the civil rights of workers. While employers are banned from hiring unauthorized workers, they must also treat all work-authorized individuals the same regardless of citizenship status or national origin.
The Civil Rights Division’s Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC) is responsible for enforcing the anti-discrimination provision of the INA, which protects work authorized individuals against discrimination in hiring, firing and recruitment or referral for a fee on the basis of citizenship status and national origin. The INA also protects all work-authorized individuals from discrimination in the employment eligibility verification process and from retaliation.
For more information about protections against employment discrimination under federal immigration law, call OSC’s worker hotline at 1-800-255-7688 (1-800-237-2515, TDD for hearing impaired), OSC’s employer hotline at 1-800-255-8155 (1-800-237-2515, TDD for hearing impaired); email [email protected] ; or visit OSC’s website atwww.justice.gov/crt/about/osc .
Justice Department Announces ADA Settlement with Intercity Bus Company, MegabusRead the Press Release
WASHINGTON – The Justice Department today announced a comprehensive settlement agreement under the Americans with Disabilities Act (ADA) with intercity bus service providers Megabus USA L.L.C., and Megabus Northeast L.L.C., which are located in Chicago and Elizabeth, N.J., respectively. The Justice Department initiated its investigation of Megabus as part of its ongoing review of the private transportation industry. In particular, the department has been investigating accessibility of private transportation operations for individuals with disabilities.
Under the terms of the settlement agreement, Megabus will ensure that all of the vehicles in its intercity service are fully accessible to individuals with disabilities, including individuals who use wheelchairs or other mobility aids. Megabus will also alter its online reservation services so that passengers with disabilities are able to access schedule information and make reservations in the same manner and using the same reservation system as other passengers. Megabus will pay a $55,000 civil penalty to the United States, and $12,500 in damages to a complainant who was not permitted to use the ramp on a passenger bus, and who was forced to transfer out of his wheelchair rather than be secured in the wheelchair, as required by federal regulations, during his trip from New York, to Baltimore. The United States credits Megabus for their cooperation throughout the investigation and their willingness to address the deficiencies identified.
“Commercial passenger buses are an affordable and growing sector of the transportation industry, and making sure that they are fully accessible to individuals 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 the transportation requirements of the ADA.”
Title III of the ADA prohibits specified private transportation providers like Megabus from excluding persons with disabilities, including persons with mobility impairments, 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 access the ADA website at www.ada.gov .
Former Kershaw County, South Carolina, Sheriff’s Department Officer Sentenced for Assaulting a Handcuffed ArresteeRead the Press Release
WASHINGTON – The Justice Department announced today that Oddie Tribble, 51, a former deputy sheriff with the Kershaw County, S.C., Sherriff’s Office, was sentenced to 63 month in prison and three years of supervised release by U.S. District Judge Cameron McGowan Currie for using excessive force on a man in his custody on Aug. 5, 2010. Tribble was also ordered to pay restitution of $5,109.25 to the victim.
According to evidence presented at trial, Tribble struck Charles Shelley, 38, a handcuffed arrestee, more than 25 times with a metal baton, lacerating his skin and fracturing his leg. The assault was captured by video cameras at the Kershaw County Detention Center. Eyewitnesses to the beating, including law enforcement officers, testified that they were shocked to see the unjustified attack by a police officer. A jury found Tribble guilty of violating Shelley’s rights on Feb. 3, 2011.
“ The defendant was granted considerable power to enforce the law, but instead abused his authority when he beat a handcuffed man entrusted to his care,” stated Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “This prosecution reflects the department’s commitment to rooting out official misconduct, and today’s sentence sends a message that such violent abuse will not be tolerated.”
“Oddie Tribble’s conviction and sentence demonstrate that we are a nation of laws, and that no man is above the law, most especially those of us that are responsible for enforcing the same.” said U.S Attorney Bill Nettles.
This case was investigated by the Columbia, S.C., Division of the FBI with assistance from the South Carolina Law Enforcement Division, and was prosecuted by First Assistant U.S. Attorney Beth Drake, Assistant U.S. Attorney Tara McGregor, and Civil Rights Division Trial Attorney Christopher Lomax.
Arkansas Man Pleads Guilty to Federal Hate Crime Related to the Assault of Five Hispanic MenRead the Press Release
WASHINGTON – The Justice Department announced today that Sean Popejoy, 19, of Green Forest, Ark., 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. This is the first conviction for a violation of the Matthew Shepard and James Byrd Jr. Hate Crimes Prevention Act, which was enacted in October 2009.
Information presented during the plea hearing established that in the early morning hours of June 20, 2010, Popejoy admitted that he was part of a conspiracy to 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. The co-conspirator rammed into the victims' car, 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 the co-conspirators’ actions, the victims suffered bodily injury, including one victim who sustained life-threatening injuries.
“James Byrd, Jr. and Matthew Shepard were brutally murdered more than a decade ago, and today the first defendant is convicted for a hate crime under the critical new law enacted in their names,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “It is unacceptable that violent acts of hate committed because of someone’s race continue to occur in 2011, and the department will continue to use every available tool to identify and prosecute hate crimes whenever and wherever they occur.
“It is terrible and disturbing that violence motivated by hatred of another’s race continues to occur,” said Conner Eldridge, U.S. Attorney for the Western District of Arkansas. “We are committed to prosecuting such crimes in the Western District of Arkansas.”
If convicted, the defendant faces a maximum punishment of 15 years in prison.
This case is being investigated by the FBI’s Fayetteville Division in cooperation with the Arkansas State Police Department and the Carroll County Sheriff’s Office. The case is being prosecuted by Trial Attorney Edward Chung of the Department of Justice’s Civil Rights Division and Assistant U.S. Attorney Kyra Jenner for the Western District of Arkansas.
14 May 2011
Six Individuals Charged for Providing Material Support <br /> to the Pakistani TalibanRead the Press Release
MIAMI – Six individuals located in South Florida and Pakistan have been indicted in the Southern District of Florida on charges of providing financing and other material support to the Pakistani Taliban, a designated foreign terrorist organization. The charges were announced today by Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida; John V. Gillies, Special Agent in Charge, FBI Miami Field Office, and the members of the South Florida Joint Terrorism Task Force (JTTF).
The four-count indictment charges Hafiz Muhammed Sher Ali Khan (hereafter “Khan”), 76, a U.S. citizen and resident of Miami; his son Irfan Khan, 37, a U.S. citizen and resident of Miami; and one of his other sons, Izhar Khan, 24, a U.S. citizen and resident of North Lauderdale, Fla. Three other individuals residing in Pakistan, Ali Rehman, aka “Faisal Ali Rehman;” Alam Zeb; and Amina Khan, aka “Amina Bibi,” are also charged in the indictment. Amina Khan is the daughter of Khan and her son, Alam Zeb, is Khan’s grandson.
All six defendants are charged with conspiring to provide, and providing, material support to a conspiracy to murder, maim and kidnap persons overseas, as well as conspiring to provide material support to a foreign terrorist organization, specifically, the Pakistani Taliban. Defendants Khan, Rehman and Zeb are also charged with providing material support to the Pakistani Taliban.
FBI agents arrested Hafiz Khan and his son Izhar Khan today in South Florida. They are scheduled to make their initial appearance in federal court in Miami at 1:30 p.m. on Monday, May 16, 2011. In addition, Irfan Khan was arrested in Los Angeles and is expected to make his initial appearance there. If convicted, each faces a potential 15 years in prison for each count of the indictment. The remaining defendants are at large in Pakistan.
The defendants are originally from Pakistan. Hafiz Khan is the Imam at the Miami Mosque, also known as the Flagler Mosque, in Miami. His son, Izhar Khan, is an Imam at the Jamaat Al-Mu’mineen Mosque in Margate, Fla. The indictment does not charge the mosques themselves with any wrongdoing, and the individual defendants are charged based on their provision of material support to terrorism, not on their religious beliefs or teachings.
U.S. Attorney Wifredo A. Ferrer stated, “Despite being an Imam, or spiritual leader, Hafiz Khan was by no means a man of peace. Instead, as today’s charges show, he acted with others to support terrorists to further acts of murder, kidnapping and maiming. But for law enforcement intervention, these defendants would have continued to transfer funds to Pakistan to finance the Pakistani Taliban, including its purchase of guns. Dismantling terrorist networks is a top priority for this office and the Department of Justice.”
“Today terrorists have lost another funding source to use against innocent people and U.S. interests. We will not allow this country to be used as a base for funding and recruiting terrorists,” said John V. Gillies, Special Agent in Charge of the FBI’s Miami Office. “I remind everyone that the Muslim and Arab-American members of our community should never be judged by the illegal activities of a few.”
This investigation was initiated by the FBI in conjunction with the JTTF based upon a review of suspicious financial transactions and other evidence; it was not an undercover sting. According to the allegations in the indictment, from around 2008 through in or around November 2010, the defendants provided money, financial services, and other forms of support to the Pakistani Taliban. The Pakistani Taliban, also known as Tehrik-e Taliban Pakistan, Tehrik-I-Taliban, Tehrik-e-Taliban, and Tehreek-e-Taliban, is a Pakistan-based terrorist organization formed in December 2007 by an alliance of radical Islamist militants. On Aug. 12, 2010, the U.S. State Department formally designated the Pakistani Taliban as a Foreign Terrorist Organization, under Section 219 of the Immigration and Nationality Act.
According to the indictment, the Pakistani Taliban’s objectives include resistance against the lawful Pakistani government, enforcement of strict Islamic law known as Sharia, and opposition to the U.S. and coalition armed forces fighting in Afghanistan. The Pakistani Taliban has committed numerous acts of violence in Pakistan and elsewhere, including suicide bombings that resulted in the death of civilians and Pakistani police, army, and government personnel, and other acts of murder, kidnapping and maiming. The Pakistani Taliban has also been involved in, or claimed responsibility for, numerous attacks against U.S. interests, including a December 2009 suicide attack on a U.S. military base in Khost, Afghanistan, along the border with Pakistan, which killed seven U.S. citizens; an April 2010 suicide bombing against the U.S. Consulate in Peshawar, Pakistan, which killed six Pakistani citizens; and the attempt by Faisal Shahzad to detonate an explosive device in New York City’s Times Square on May 1, 2010. Most recently, on May 13, 2011, the Pakistani Taliban claimed responsibility for the suicide attacks that killed at least 80 people at a military training facility in northwestern Pakistan. The Pakistani Taliban has links to both al-Qaeda and the Taliban in Afghanistan.
As set forth in the indictment, the defendants sought to aid the Pakistani Taliban’s fight against the Pakistani government and its perceived allies, including the United States, by supporting acts of murder, kidnapping and maiming in Pakistan and elsewhere, in order to displace the lawful government of Pakistan and to establish strict Islamic law known as Sharia.
To this end, the defendants, assisted by others in the United States and Pakistan, conspired to provide and provided material support to the Pakistani Taliban by soliciting, collecting and transferring money from the United States to supporters of the Pakistani Taliban, primarily using bank accounts and wire transfer services in the United States and Pakistan. According to the indictment, these funds were intended to purchase guns for the Pakistani Taliban, to sustain militants and their families, and generally to promote the Pakistani Taliban’s cause. In addition, the indictment alleges that defendant Khan supported the Pakistani Taliban through a madrassa, or Islamic school, that he founded and controlled in the Swat region of Pakistan. Khan has allegedly used the madrassa to provide shelter and other support for the Pakistani Taliban and has sent children from his madrassa to learn to kill Americans in Afghanistan.
According to the allegations in the indictment, the defendants endorsed the violence perpetrated by the Pakistani Taliban. On one occasion in July 2009, defendants Khan and Irfan Khan participated in a recorded conversation in which Khan called for an attack on the Pakistani Assembly that would resemble the September 2008 suicide bombing of the Marriott Hotel in Islamabad, Pakistan. On another occasion in September 2010, Hafiz Khan participated in a conversation in which he stated that he would provide that individual with contact information for Pakistani Taliban militants in Karachi, and upon hearing that mujahideen in Afghanistan had killed seven American soldiers, declared his wish that God kill 50,000 more.
In closing, Mr. Ferrer noted, “Let me be clear that this is not an indictment against a particular community or religion. Instead, today’s indictment charges six individuals for promoting terror and violence through their financial and other support of the Pakistani Taliban. Radical extremists know no boundaries; they come in all shapes and sizes and are not limited by religion, age or geography.”
Mr. Ferrer commended the investigative efforts of the FBI, U.S. Customs and Border Protection, U.S. Department of State, Broward Sheriff’s Office, Miami-Dade Police, City of Miami Police, City of Miramar Police, City of Margate Police, and the Florida Department of Environmental Protection, and the members of the South Florida Joint Terrorism Task Force. The case is being prosecuted by Assistant U.S. Attorneys John Shipley and Sivashree Sundaram, from the U.S. Attorney’s Office for the Southern District of Florida, and Trial Attorney Stephen Ponticiello from the Counterterrorism Section of the Justice Department’s National Security Division.
An indictment is only an accusation and a defendant is presumed innocent until and unless proven guilty.
13 May 2011
Justice Department to Monitor Elections in TexasRead the Press Release
WASHINGTON – The Justice Department announced today that it will monitor municipal elections on May 14, 2011, in Galveston, Jefferson, Liberty, Medina and San Patricio Counties in Texas to ensure compliance with the Voting Rights Act of 1965. The Voting Rights Act prohibits discrimination in the election process on the basis of race, color or membership in a minority language group. In addition, the act requires certain covered jurisdictions to provide language assistance during the election process. The monitored jurisdictions are required to provide language assistance in Spanish.
Under the Voting Rights Act, the Justice Department is authorized to ask the U.S. Office of Personnel Management (OPM) to send federal observers to jurisdictions that are certified by the attorney general or by a federal court order. Federal observers will be assigned to monitor polling place activities in Galveston, Jefferson and Medina Counties based on the attorney general’s certification. The observers will watch and record activities during voting hours at polling locations in these counties, and Civil Rights Division attorneys will coordinate the federal activities and maintain contact with local election officials.
In addition, Justice Department personnel will monitor polling place activities in Liberty and San Patricio Counties. Civil Rights Division attorneys will coordinate federal activities and maintain contact with local election officials.
Each year, the Justice Department deploys hundreds of federal observers from OPM, as well as departmental staff, to monitor elections across the country. To file complaints about discriminatory voting practices, including acts of harassment or intimidation, voters may call the Voting Section of the Justice Department’s Civil Rights Division at 1-800-253-3931.
Visit www.justice.gov/crt/voting/index.php for more information about the Voting Rights Act and other federal voting laws.
Former CFO of National Auto Parts Retailer Pleads Guilty to Scheme to Manipulate Corporate EarningsRead the Press Release
WASHINGTON – Don W. Watson, former chief financial officer (CFO) of CSK Auto Corp. (CSK), pleaded guilty today in U.S. District Court for the District of Arizona to conspiracy to commit securities and mail fraud in connection with a scheme to misstate the company’s reported earnings from 2001 through 2006, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division; Kevin Perkins, Assistant Director of the FBI’s Criminal Investigative Division; Inspector in Charge Pete Zegarac of the U.S. Postal Inspection Service (USPIS) Phoenix Division; and Victor S.O. Song, Chief of the Internal Revenue Service-Criminal Investigation (IRS-CI).
Watson, 55, of Gilbert, Ariz., pleaded guilty before U.S. District Judge Susan R. Bolton. Watson admitted that, from 2001 to 2006, he and others conspired to misstate CSK’s income by concealing that the company had tens of millions of dollars in vendor rebates that CSK had claimed as income but were never collected. The rebates were in fact not owed to the company or could not be collected and therefore should have been written off CSK’s books. As a result of the fraud scheme, CSK reported tens of millions of dollars more in pre-tax income than it in fact earned.
“Don Watson made the crucial mistake of thinking he was above the law,” said Assistant Attorney General Breuer. “He used his position as CFO to manipulate CSK’s books and lie about the company’s true worth. In doing so, he misled shareholders and the investing public. We are determined to continue investigating and prosecuting corporate executives who, like Watson, should know better.”
“Fraud and dishonest dealings have no place in the American marketplace. The FBI and our law enforcement partners will use our resources to identify and investigate companies like CSK that do not follow the rules,” said Assistant Director Perkins of the FBI’s Criminal Investigative Division.
“The U.S. Postal Inspection Service will continue to partner with fellow law enforcement agencies to bring those conducting mail fraud to justice,” said Phoenix Division Postal Inspector in Charge Zegarac. “Postal Inspectors will continue to aggressively investigate those who use the US Mail to perpetuate schemes manipulating corporate earnings.”
“High-ranking corporate officials hold positions of trust not only in their companies but also in the eyes of the public. In this investigation, Mr. Watson broke that trust by misstating CSK’s receivables and pre-tax income in its annual reports by millions of dollars,” said IRS-CI Chief Song. “The license to run a business is not a license to conduct criminal activity.”
According to court documents, CSK operated under the brand names Checker Auto Parts, Schucks Auto Supply and Kragen Auto Parts. During the time of the conspiracy, CSK was the largest specialty retailer of auto parts and accessories in the western United States and one of the largest such retailers in the entire United States.
According to court documents, CSK purchased hundreds of millions of dollars worth of auto parts every year. Its vendors gave CSK allowances, or rebates, for products CSK purchased in exchange for CSK using the allowances for marketing of the vendors’ products for sale in its stores. By reducing the cost to CSK of the products it purchased from vendors, the rebates increased CSK’s income. Watson admitted that, instead of writing off rebates that CSK had claimed but could not collect, he and others concealed the uncollectible amounts by causing vendor rebates from later years to be moved to cover the shortfalls in prior years and by causing vendors to be billed for rebates CSK was not owed.
As a result of the scheme, CSK misstated its receivables and pre-tax income in its annual reports (Forms 10-K) in fiscal years 2002, 2003 and 2004 by approximately $10 million, $23 million and $19 million, respectively.
Watson and the former president and chief operating officer of CSK were originally indicted on April 7, 2009. The conspiracy charge carries a maximum penalty of five years in prison and a $250,000 fine. Sentencing for Watson has been scheduled for Sept. 19, 2011.
In related actions, Edward W. O’Brien III, the former controller of CSK, and Gary M. Opper, the former director of credits and receivables at CSK, pleaded guilty to obstruction of justice in April 2009. O’Brien and Opper admitted to making material false statements during an internal investigation of CSK’s accounting practices knowing the information would be passed on to the Securities and Exchange Commission (SEC), which was conducting an investigation into misstatements of CSK’s expenses and income from 2001 through 2004 with regard to vendor allowances. Sentencings for O’Brien and Opper are scheduled for July 25, 2011, before Judge Bolton.
The case was prosecuted by Deputy Chief Patrick Stokes and Trial Attorney Jennifer R. Taylor of the Criminal Division’s Fraud Section, with assistance from the U.S. Attorney’s Office for the District of Arizona. The case was investigated by the FBI, IRS-CI and USPIS. The Department would also like to acknowledge the substantial assistance of the SEC in the investigation.
Federal Court Bars Houston-Area Tax Preparers from Preparing Federal Tax Returns for OthersRead the Press Release
WASHINGTON – A federal court has permanently barred Houston-area tax preparers Christopher Helton and Marcia Johnson from preparing federal tax returns for others, the Justice Department announced today. The civil injunction order against Johnson was signed by Judge David Hittner of the U.S. District Court for the Southern District of Texas. Helton previously consented to a similar injunction.
According to the government complaint, Helton and Johnson, doing business as M.C. Tax Service, M.C. Tax Interprise and M.J. Tax Service, repeatedly claimed false tax credits and deductions on their customers’ federal tax returns. The most common alleged misconduct was blatantly fraudulent claims for a credit for gasoline or other fuel that the customers purportedly bought and used in their businesses. Under federal tax law, the fuel tax credit is limited to off-highway use of fuels, such as in the agricultural industry. But Helton and Johnson allegedly claimed the credit for customers – in one instance, a day care provider – whose occupations clearly did not involve off-highway fuel use. According to the complaint, Helton and Johnson also repeatedly made false claims for the earned income tax credit.
Return preparer fraud is one of the IRS’s “Dirty Dozen” tax scams for 2011. In the past ten years, the Justice Department’s Tax Division has obtained injunctions against hundreds of tax-return preparers and tax-fraud promoters. Information about these cases is available on the Justice Department website .
Brooklyn Physical Therapist Pleads Guilty to Fraud Scheme Involving False Billings to MedicareRead the Press Release
WASHINGTON – A Brooklyn physical therapist pleaded guilty today for his role in submitting false and fraudulent claims to Medicare for physical therapy services that were medically unnecessary and never provided, announced the Departments of Justice and Health and Human Services (HHS).
Aleksandr Kharkover, 49, pleaded guilty before U.S . Magistrate Judge Marilyn Go in the Eastern District of New York to an indictment charging him with five counts of health care fraud. Kharkover faces a maximum of 10 years in prison for each count of health care fraud. His sentencing has not yet been scheduled.
According to the indictment, between January 2005 and July 2010, Kharkover caused the submission of approximately $11.9 million in false and fraudulent claims to Medicare for physical therapy services that were not performed and were not medically necessary. According to the indictment, Kharkover hired individuals who were not certified as physical therapy assistants to purportedly provide physical therapy to Medicare beneficiaries.
The guilty plea was announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney Loretta E. Lynch of the Eastern District of New York, Assistant Director-in-Charge Janice K. Fedarcyk of the FBI’s New York field office and Special Agent-in-Charge Thomas O’Donnell of the HHS Office of Inspector General (HHS-OIG).
The case is being prosecuted by Trial Attorney Katherine Houston of the Criminal Division’s Fraud Section, and was investigated by HHS-OIG and the New York State Office of the Medicaid Inspector General.
This case was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of New York.
Since their inception in March 2007, 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 $3.2 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 .
12 May 2011
Statement of the Attorney General on Proposed Extension of FBI Director Mueller's TermRead the Press Release
WASHINGTON – The Attorney General made the following statement today:
“In the wake of the September 11, 2001 attacks, Bob Mueller led the transformation of the FBI into what today is the world’s pre-eminent counterterrorism agency. One of the most respected prosecutors of his generation before joining the FBI as its Director, he has earned the confidence of two Presidents for his ability to lead and his calmness under fire.
“A short-term legislative change will allow Bob to remain at the FBI for an additional two years so the President’s counterterrorism team can continue to work together seamlessly. The United States faces ongoing threats from terrorists intent on attacking us both at home and abroad, and it is crucial that the FBI have sustained, strong leadership to confront that threat. There is no better person for that job than Bob Mueller. I hope he will be allowed to continue providing the able leadership and unquestioned integrity for which he is known for the remainder of the President’s term.”
Massachusetts Man Sentenced to Five Years in Prison for Child Pornography ChargesRead the Press Release
WASHINGTON – Douglas L. Wright, 41, of North Chelmsford, Mass., was sentenced to five years in prison to be followed by 10 years of supervised release for transportation and possession of child pornography, announced Assistant Attorney General of the Criminal Division Lanny A. Breuer, U.S. Attorney for the District of Massachusetts Carmen M. Ortiz, and Richard DesLauriers, Special Agent in Charge of the FBI Boston Field Office.
Wright was sentenced yesterday by U.S. District Court Judge Joseph L. Tauro in Boston. On Feb. 17, 2011, Wright pleaded guilty to one count of transportation of child pornography and one count of possession of child pornography. In pleading guilty, Wright admitted to using an online, peer-to-peer file sharing program to transmit computer files containing visual depictions of prepubescent minors engaging in sexually explicit conduct. Wright, a former middle school teacher, also admitted to being interested in child pornography for several years.
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. The case against Wright was investigated by the FBI with the Chelmsford Police Department providing significant assistance.
Justice Department Sues to Halt “Sham Cemetery” Tax ScamsRead the Press Release
WASHINGTON – The United States is seeking to bar three men from promoting alleged tax shelter schemes involving sham cemetery investments, the Justice Department announced today. The government has filed a civil injunction lawsuit in federal court in Washington, D.C., against Michael A. Strauss of Herndon, Va.; his son, Patrick B. Strauss, of Washington, D.C.; and Joseph C. Barreiro of Poughkeepsie, N.Y.
According to the government complaint, the Strausses and Barreiro promoted illegal tax schemes to customers located in Northern Virginia, Maryland and Washington, D.C. Through these scams, they allegedly received millions of dollars from their customers and concocted approximately $35 million in fake partnership losses and phony charitable contribution deductions, which they falsely told their customers could be used to offset their federal income taxes. The complaint alleges that the three men falsely promised their customers $5 of tax benefits for every $1 that they “invested.” The defendants allegedly sold the schemes through shell entities, which they controlled, called Burial Specialists LLC, Memorial Specialists LLC and Dignified Charitable Burials.
The complaint states that the men falsely told their customers that Burial Specialists had bought a “license” worth more than $90 million from a company called Southern Dorchester LLC using a $90 million “promissory note.” The license purportedly gave Burial Specialists the right to future profits from performing funeral services at a purported cemetery in Spotsylvania County, Va. According to the complaint, the defendants also falsely claimed that Burial Specialists could annually deduct a portion of the license’s supposed value and then pass on millions of dollars in losses to the customers. The government contends that there was no arm’s-length sale by Southern Dorchester and that Michael Strauss and Barreiro fabricated the $90 million “license” value, along with the accompanying $90 million “promissory note,” to generate fake tax benefits. The defendants also allegedly used the fictitious promissory note to siphon off, for their personal benefit, funds that they told their customers were being “invested.”
According to the complaint, the defendants undertook a virtually identical scheme using Memorial Specialists and a supposed cemetery in Lloyd, N.Y., as well as a third scheme using Dignified Charitable Burials that generated bogus charitable contribution deductions.
In the past decade, the Justice Department’s Tax Division has obtained hundreds of injunctions to stop the promotion of abusive or fraudulent tax schemes and the preparation of fraudulent tax returns. Information about these cases is available on the Justice Department website .
Justice Department Files Antitrust Lawsuit to Stop VeriFone <br /> from Buying Hypercom and Entering into Anticompetitive Divestiture Agreement with IngenicoRead the Press Release
WASHINGTON — The Department of Justice filed a civil antitrust lawsuit today to block the proposed acquisition by VeriFone Systems Inc. of Hypercom Corp. The department said that the proposed deal would substantially lessen competition in the sale of point-of-sale (POS) terminals in the United States, resulting in higher prices and reduced innovation, quality, product variety, and service.
The department said that although VeriFone and Hypercom proposed a fix to resolve the antitrust concerns with the merger, it did not adequately resolve the competitive concerns. The department filed its lawsuit in U.S. District Court in Washington, D.C.
POS terminals are used by retailers and other firms to accept electronic payments such as credit cards and debit cards. VeriFone and Hypercom together control more than 60 percent of the U.S. market for the POS terminals used by the largest retailers. They are two of only three substantial sellers of other types of POS terminals.
“The combination of VeriFone and Hypercom would likely lead to retailers paying higher prices for POS terminals,” said Christine Varney, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “The proposed divestiture does not resolve the significant competitive concerns posed by the merger, and in some ways exacerbates them.”
On Nov. 17, 2010, VeriFone agreed to purchase Hypercom in a transaction valued at $485 million. In an effort to resolve antitrust issues with the merger, Hypercom announced on April 4, 2011, that it had entered into an agreement to sell its U.S. business to Ingenico S.A., the largest provider of POS terminals worldwide and the only other significant competitor to VeriFone and Hypercom in the United States.
According to the department’s complaint, the planned sale of Hypercom’s U.S. POS terminal business to Ingenico does not resolve the antitrust concerns raised by the VeriFone/Hypercom transaction because the assets are to be sold to another significant competitor in the market in a manner that does not create a new, independent, long-term competitor. In addition, the structure of the agreements between Ingenico and VeriFone, the only two significant POS sellers in the United States post-merger, enhances VeriFone and Ingenico’s ability to coordinate pricing for all POS terminals.
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 Alpharetta, Ga. 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.
Former Massachusetts Direct Mail Printing Executive Sentenced to Serve 30 Months in Prison for His Role in Fraud Conspiracies and Tax EvasionRead the Press Release
WASHINGTON — A former employee of two Massachusetts-based customer relationship management agencies that purchase direct mail advertising services was sentenced today for participating in fraud conspiracies and committing tax evasion relating to his receipt of more than $1.8 million in kickbacks, the Department of Justice announced.
Reed A. Richard of Carlisle, Mass., was sentenced in U.S. District Court in Boston by Judge Douglas P. Woodlock to serve 30 months in prison, to pay a $250,000 criminal fine and to pay $35,500 in restitution. On Dec. 14, 2010, Richard pleaded guilty to conspiring with others to defraud his employers, Mullen Advertising Inc. and PreVision Marketing LLC, by accepting kickbacks from two direct mail advertising printing brokers in exchange for awarding printing work to the companies that the brokers represented. Richard also pleaded guilty to one count of tax evasion for tax years 2004 and 2005 for falsely claiming substantial personal expenses as business expenses. The department said that the conspiracies took place from approximately January 2000 through approximately February 2006.
Direct mail advertising allows companies to specifically target potential customers and contact them with tailored offers, promotional materials or advertisements using the U.S. mail.
According to the court documents, as a vice president of direct marketing production services of Mullen Advertising, and later as a senior production manager of PreVision Marketing, Richard was responsible for procuring direct mail printing services by obtaining competitive bids from printing companies, awarding contracts, reviewing invoices and authorizing payment. As part of the conspiracies, Richard approved invoices, issued by or through the printing brokers, while knowing that they were fraudulently inflated to include the kickbacks he was to receive. The department said that a portion of these overcharges were passed from the brokers to Richard as kickback payments. According to the court documents, in order to conceal his role in the scheme, Richard used a shell company which purportedly provided consulting services to the printing brokers but was in fact a vehicle for Richard to receive the kickbacks. In addition to the conspiracies, Richard claimed substantial illegitimate business deductions on his company’s federal income tax returns. The department said that, as a result, he under-reported his corporate and personal taxable income, resulting in a total tax loss of approximately $170,000.
Today’s sentencing is a result of an ongoing investigation into the direct mail printing industry being conducted by the Antitrust Division’s New York Field Office, with the assistance of the Internal Revenue Service (IRS)-Criminal Investigation, in Springfield, Mass.
Anyone with information concerning fraud, antitrust or tax offenses relating to the direct mail printing industry should contact the Antitrust Division’s New York Field Office at 212-264-9308, visit www.justice.gov/atr/contact/newcase.htm or contact the IRS-Criminal Investigation’s Springfield Office at 413-785-0090.
California Man Sentenced to Four Years in Prison for Attempting<br /> to Extort Child Pornography from MinorRead the Press Release
WASHINGTON – A Fremont, Calif., man was sentenced yesterday to four years in prison and to pay a $20,000 fine for possessing child pornography and attempting to extort additional child pornography images of an underage girl whom he harassed via the social networking website Facebook, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Melinda Haag of the Northern District of California.
James Dale Brown, 28, pleaded guilty on Feb. 2, 2011, before U.S. District Court Judge Phyllis J. Hamilton in the Northern District of California. In pleading guilty, Mr. Brown admitted that from December 2008 through April 2009, under the username “Bob Lewis,” he repeatedly contacted a girl he knew to be 14 years old via her Facebook webpage. Prior to contacting the victim, Brown had obtained a revealing photograph of the victim. Brown informed the victim that he had this photograph, and others, and suggested that he would delete all the pictures of her “from the Internet” only if she sent him a video of herself engaging in sexually explicit conduct. To force her to send such a video, Brown threatened to expose explicit images of the victim then in his possession to the victim’s friends, who were also minors. Despite Brown’s consistent harassment, the victim resisted his efforts for several months. To carry out his threats, on April 18, 2009, Brown sent two Internet links to the victim’s friend, also a minor, which directed the victim’s friend to an explicit image of the victim. On April 23, 2009, FBI agents executed a search warrant on Brown’s Fremont residence. Brown was arrested on Aug. 26, 2010.
This is the first case involving the attempted extortion of a minor for child pornography via a social networking website, such as Facebook, to be prosecuted in the Northern District of California.
The case was prosecuted by Trial Attorney Mi Yung Park of Child Exploitation and Obscenity Section (CEOS) in the Justice Department’s Criminal Division and Assistant U.S. Attorney Joshua Hill of the Northern District of California. The case was investigated by the FBI.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and the Criminal Division’s 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 .
Arizona Man Sentenced to 180 Months in Prison for Engaging in a Child Exploitation EnterpriseRead the Press Release
WASHINGTON – David Dean, 43, of Peoria, Ariz., was sentenced today to 180 monthsin prison and a lifetime of supervised release for engaging in a child exploitation enterprise, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney David J. Hickton for the Western District of Pennsylvania and U.S. Immigration and Customs Enforcement (ICE) Director John Morton.
“The members of this criminal enterprise committed the most unthinkable of crimes – they trafficked in chilling images of children and infants being brutally, sexually abused. And, they used a social networking website to distribute these images so that they could reach as many other like-minded individuals as they could,” said Assistant Attorney General Breuer. “Our children, who are the most vulnerable and innocent in our society, deserve every measure of protection we can give them. As this prosecution shows, we will use every tool we have to attack and dismantle these illegal child exploitation networks.”
“ This prosecution also illustrates the ripe environment for child predators that exists though the internet. The defendants in this case found kinship online, validating their shared desire to engage in sex with children, and to seek sexual gratification through sharing horrific and degrading images of children,” said U.S. Attorney Hickton. “We must respond to this threat with the full force of federal law enforcement and its many partners across agencies, jurisdictions, state lines, and national borders. I am committed to this effort, and we will not stop until we eradicate this evil.”
“Possession of child pornography is not a victimless crime,” said ICE Director Morton. “Those who engage in this criminal behavior should be forewarned that ICE, along with our law enforcement partners, will use every tool at our disposal to end the sexual exploitation of our children and keep them safe wherever they live.”
On June 17, 2010, Dean pleaded guilty before U.S. District Court Judge Arthur A. Schwab in Pittsburgh to one count of engaging in a child exploitation enterprise. According to court documents and proceedings, Dean and others distributed images and videos of children being sexually abused to other members of an international group that had restricted membership and was formed on a social networking website. Members of the group distributed to one another thousands of sexually explicit images and videos of children, many of which graphically depicted prepubescent, male children, including some infants, being sexually abused and sometimes sodomized or subjected to bondage.
Seven co-defendants have previously pleaded guilty and been sentenced to prison as a result of this investigation.
This case was investigated by ICE’s Homeland Security Investigations and the High Technology Investigative Unit of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS). Assistant U.S. Attorney Craig W. Haller and CEOS Trial Attorney Andrew McCormack prosecuted the case.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and 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 .
11 May 2011
Pennsylvania Man Pleads Guilty for Cross BurningRead the Press Release
WASHINGTON – Michael Duane Bracken, of Bolivar, Penn., pleaded guilty today to a charge related to the burning of a cross in the yard of an African-American juvenile in November 2009, the Justice Department announced today. Bracken is the last of three adult defendants to enter a guilty plea in the case, following Michael Francis Bealonis and Kenneth Paul Stiffey Jr.
Bracken, 23, pleaded guilty to conspiracy to interfere with the housing rights of another in federal court in Pittsburgh before Senior U.S. District Judge Alan N. Bloch. Information presented during the plea hearing established that Bracken and his co-conspirators agreed to burn a cross at a home of a family with three minor children, one of whom is African-American. Bracken was principal in constructing the cross on Nov. 14, 2009, and burning a smaller “practice cross” to assess how it would burn. After the 6-foot wooden cross was constructed and doused in accelerant, Bracken and others applied gasoline to the cross. One of the co-conspirators then took the cross, jumped the fence onto the backyard of the victim’s property, stuck it into the ground and ignited it.
“The burning cross is an unmistakable symbol of bigotry and hate, and to use it to threaten a family with violence because the race of a child is intolerable in this nation. That such incidents occur in 2011 is a reminder of the civil rights challenges we still face,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “We will continue to aggressively prosecute hate crimes of this kind.”
“This case underscores our commitment to vigorously pursue those who commit crimes driven by hatred or intolerance,” stated U.S. Attorney for the Western District of Pennsylvania, David J. Hickton.
Judge Bloch remanded Bracken to the custody of the U.S. Marshals pending sentencing, which has been set for Sept. 1, 2011. The law provides for a maximum punishment of 10 years in prison and a $250,000 fine.
The case was investigated by the FBI, together with the Pennsylvania State Police. The case is being prosecuted by Assistant U.S. Attorney Soo C. Song from the U.S. Attornery's Office for the Western District of Pennsylvania and Trial Attorney Patricia A. Sumner from the Civil Rights Division of the Department of Justice.
Microsoft Antitrust Final Judgment Expires May 12Read the Press Release
The Department of Justice issued the following statement today marking the May 12, 2011, expiration of the final judgment the department obtained as part of its historic Microsoft antitrust case
WASHINGTON – As a result of the Department of Justice Antitrust Division’s efforts in the Microsoft case and final judgment, the competitive landscape changed allowing the marketplace to operate in a fair and open manner bringing about increased innovation and more choices for consumers. The final judgment also prevented Microsoft from continuing to engage in exclusionary behavior that was harmful to American businesses and consumers.
The Microsoft final judgment, which has been in effect since 2002, was designed to eliminate Microsoft’s illegal practices, to prevent recurrence of the same or similar practices and to restore the potential for competition from software products known as “middleware.” To that end, the judgment protected the development and distribution of middleware – including web browsers, media players and instant messaging software – thereby increasing choices available to consumers.
The final judgment proved effective in protecting the development and distribution of middleware products and prevented Microsoft from continuing the type of exclusionary behavior that led to the original lawsuit. Microsoft no longer dominates the computer industry as it did when the complaint was filed in 1998. Nearly every desktop middleware market, from web browsers to media players to instant messaging software, is more competitive today than it was when the final judgment was entered. In addition, the final judgment helped create competitive conditions that enabled new kinds of products, such as cloud computing services and mobile devices, to develop as potential platform threats to the Windows desktop operating system.
Since the entry of the final judgment, there have been a number of developments in the competitive landscape relating to middleware and to personal computer (PC) operating systems generally that suggest that the final judgment accomplished its goal of fostering competitive conditions among middleware products, unimpeded by anticompetitive exclusionary obstacles erected by Microsoft.
The Microsoft final judgment was unique in creating a technical committee empowered to assist the department, the U.S. District Court for the District of Columbia and a group of states involved in the case. Given the technical nature of Microsoft’s obligations under the final judgment, the technical committee members and their staff proved invaluable to the enforcement of the final judgment.
Background
In 1998, the department and attorneys general for 19 states plus the District of Columbia, filed suit against Microsoft alleging violation of the antitrust laws. The core allegation in the original lawsuit, upheld by the U.S. Court of Appeals in June 2001, was that Microsoft had unlawfully maintained its monopoly in PC operating systems by excluding competing middleware that posed a nascent threat to the Windows operating system. Specifically, the court of appeals upheld the district court’s conclusion that Microsoft engaged in unlawful exclusionary conduct by using contractual provisions to prohibit computer manufacturers from supporting competing middleware products on Microsoft’s operating system, prohibiting consumers and computer manufacturers from removing access to Microsoft’s middleware products in the operating system, and reaching agreements with software developers and third parties to exclude or impede competing middleware products.
The Department of Justice worked extensively with two groups of plaintiff states (the New York Group and the California Group) with similar final judgments in this matter. The level and depth of cooperation between the department and the states is a model for federal-state civil law enforcement.
Certain provisions in the Microsoft final judgment expired in November 2007. Other provisions relating to Microsoft’s obligation to make certain interoperability information available to third parties have twice been extended with Microsoft’s consent. As these issues have now been resolved, it is appropriate for the final judgment to expire.
Former U.S. Army Major Pleads Guilty to Money Laundering Charge Related to Contracts Supporting Iraq WarRead the Press Release
WASHINGTON - A retired major in the U.S. Army pleaded guilty today in San Antonio to accepting $400,000 from a contractor following his deployment to Kuwait, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.
Charles Joseph Bowie Jr., 45, of Georgetown, Texas, pleaded guilty today before U.S. Magistrate Judge Nancy Stein Nowak in the Western District of Texas to a criminal information charging him with one count of engaging in monetary transactions in property derived from specified unlawful activity. According to the court document, Bowie served in Kuwait from April 2004 to April 2005 in support of Operation Iraqi Freedom. While serving in Kuwait, Bowie became friends with former U.S. Army Major John Cockerham, who directed a government contractor to pay Bowie money in exchange for the award of a bottled water contract. Bowie admitted that he received four wire transfers of approximately $100,000 each from the contractor between July 2005 and February 2006. Bowie also admitted that he entered into a sham consulting agreement with the contractor to conceal the payments.
Cockerham pleaded guilty in February 2008 to participating in a complex bribery and money laundering scheme while working as an Army contracting officer in Kuwait. According to court documents, he was responsible for awarding contracts for services to be delivered to troops in Iraq, including bottled water. In return for awarding these contracts, Cockerham admitted receiving more than $9 million in bribe proceeds. Cockerham admitted that once he agreed to take money in exchange for awarding contracts, he directed contractors to pay Bowie and others in order to conceal the receipt of bribe payments. In December 2009, Cockerham was sentenced to 210 months in prison.
In addition to John Cockerham, his wife, Melissa Cockerham, pleaded guilty in February 2008 to money laundering for accepting $1.4 million on her husband’s behalf, and admitted that she stored the money in safe deposit boxes at banks in Kuwait and Dubai. Carolyn Blake, John Cockerham’s sister, pleaded guilty in March 2009 to money laundering for accepting more than $3 million on John Cockerham’s behalf, and admitted that she stored the money in safe deposit boxes at banks in Kuwait. Additionally, Nyree Pettaway, John Cockerham’s niece, pleaded guilty in July 2009, to conspiring with him, Blake and others to obstruct the investigation of money laundering related to his receipt of bribes. In December 2009, Melissa Cockerham was sentenced to 41 months in prison, Carolyn Blake was sentenced to 71 months in prison and Nyree Pettaway was sentenced to 12 months in prison.
Bowie faces up to 10 years in prison and a fine of $250,000 or twice the amount of the criminally derived property he received. In addition, Bowie has agreed to pay $400,000 in restitution to the United States. A sentencing date has not yet been scheduled by the court.
This case is being prosecuted by Trial Attorney Richard B. Evans of the Criminal Division’s Public Integrity Section, and Trial Attorneys Mark W. Pletcher and Emily W. Allen of the Criminal Division’s Fraud Section. The case is being investigated by the Army Criminal Investigations Division, the Defense Criminal Investigative Service, the FBI, the Internal Revenue Service, the Special Inspector General for Iraq Reconstruction and U.S. Immigration and Customs Enforcement at the Department of Homeland Security.
Former Member of Virginia House of Delegates Convicted of Bribery and ExtortionRead the Press Release
WASHINGTON – Phillip A. Hamilton, a former member of the Virginia House of Delegates, today was convicted by a jury in Richmond, Va., of soliciting employees of Old Dominion University (ODU) for a paid position at the same time he was introducing legislation to fund the position, 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.
“Phil Hamilton sold his services as a legislator to get a job at ODU. He promised to use his influence as a powerful, 20-year delegate to get ODU funding, but it came with a price – they had to pay him $40,000 a year,” said U.S. Attorney MacBride. “Bribery and extortion are never just the cost of doing business in government. Today’s guilty verdict should serve as a reminder to every legislator of the trust the public has in our elected officials. Never betray that trust. Never sell your office. And never forget that if you do, we will hold you accountable.”
“Mr. Hamilton abused his political office for personal gain,” said Assistant Attorney General Breuer. “His sweetheart deal ensured that only he would be considered for a position he created and shepherded through the Virginia General Assembly. Americans deserve more from their representatives, and today a Virginia jury showed that citizens will not tolerate these abuses.”
Hamilton, 59, was convicted today of one count of federal program bribery and one count of extortion under color of official right. He faces a maximum of 10 years in prison on the bribery charge and up to 20 years in prison on the extortion charge when he is sentenced on Aug. 12, 2011.
Hamilton was elected in 1988 to represent the 93rd District in the Virginia House of Delegates, which includes Newport News and James City County, Va. As part of his duties, Hamilton sat on the Elementary & Secondary Education Subcommittee of the Virginia House Appropriations Committee.
According to the Jan. 5, 2011, indictment and evidence presented at trial, from August 2006 through February 2007, Hamilton solicited employees of ODU for a position as director for the ODU Center for Teacher Quality and Educational Leadership. The center’s objective was to train teachers for success in urban school environments. During this period, Hamilton simultaneously introduced legislation that would establish and fund the center, including his salary as the director.
According to an email that Hamilton sent to an ODU official on Dec. 21, 2006, which was admitted as evidence at trial, Hamilton stated that the current budget did not include any funding for the center, his retirement payments from another source were being reduced in May 2007, and he would need to supplement his current income. Evidence at trial showed that an ODU official assured Hamilton in December 2006 and January 2007 that if ODU obtained funding from the Virginia General Assembly for the creation of the center, then Hamilton would have a job at the center. During this same period, in January 2007, Hamilton introduced a budget amendment in the House of Delegates to appropriate $1 million in fiscal year 2007-2008 (July 1, 2007 – June 30, 2008) for a “Center for Teacher Quality and Educational Leadership.” The amendment passed the full committee unanimously.
On Feb. 24, 2007, after a conference between the Virginia house and senate that resulted in an amendment to appropriate $500,000 to ODU for the center – for which Hamilton voted in favor - the budget bill was passed. The next day, according to evidence at trial, Hamilton and ODU officials exchanged emails about Hamilton receiving the director job. Approximately three people applied in response to a job posting for the position; however, none of them were interviewed. Hamilton, who was awarded the job, never submitted an application.
In June 2007, Hamilton and an ODU official signed an employee contract indicating, among other things, that Hamilton would direct the center and seek continual funding for the center. The contract also stated that Hamilton would be paid $40,000 per year. From approximately July 2007 through July 2009, Hamilton collected approximately $80,000 from ODU.
Evidence at trial showed that Hamilton took numerous steps to conceal this arrangement, including telling ODU officials not to mention his name in connection with the center to members of the Virginia Senate Finance Committee; advising an ODU official to tell a Virginia senate staffer that the official, and not Hamilton, was the director of the center; and unsuccessfully attempting to persuade ODU leadership not to release incriminating emails in response to a Freedom of Information Act request that ODU had received.
The case is being prosecuted by Trial Attorney David V. Harbach II of the Criminal Division’s Public Integrity Section and Supervisory Assistant U.S. Attorney Robert J. Seidel Jr. of the Eastern District of Virginia. The case was investigated by the FBI.
Federal Court Bars North Georgia Man from Promoting Form 1099-OID Tax SchemeRead the Press Release
WASHINGTON – A federal court has permanently barred Atlanta-area financial planner T. Michael Haney from promoting the use of Internal Revenue Service (IRS) Forms 1099-OID to support false tax withholdings, the Justice Department announced today. The civil injunction order, to which Haney consented, was signed by Judge Clarence Cooper of the U.S. District Court for the Northern District of Georgia.
The government complaint alleged that Haney advised his customers to prepare false IRS forms, such as Form 1099-OID, to request fraudulent refunds based on phony claims of large income tax withholding. According to the complaint, Haney’s customers have submitted fraudulent refund claims of more than $3.5 million. The court order requires Haney to provide the government with a list of all persons to whom he sold his “OID” program since Jan. 1, 2007, and to provide them with a copy of the injunction order.
Claiming bogus tax refunds based on false Forms1099-OID is identified by the IRS as one of the “Dirty Dozen” tax scams that taxpayers are urged to avoid. Since 2001, the Justice Department’s Tax Division has obtained hundreds of injunctions to stop the promotion of tax fraud schemes and the preparation of fraudulent tax returns. Information about these cases is available on the Justice Department website .
Another Individual Sentenced in Miami in Connection with Costa Rica-Based Business Opportunity Fraud VenturesRead the Press Release
WASHINGTON – Gregory Britt Fleming was sentenced today in connection with a series of Costa Rica-based business opportunity fraud ventures, the Justice Department and the U.S. Postal Inspection Service announced. Fleming was sentenced by Judge Marcia G. Cooke to a term of 60 months in prison and five years of supervised release. Additionally, he was ordered to pay more than $2.5 million in restitution.
Two other defendants in this case previously pleaded guilty and have been sentenced. On Oct. 27, 2010, Donald Williams was sentenced to 78 months in prison. On April 20, 2011, Silvio Carrano was sentenced to 97 months in prison, three years supervised release and ordered to pay more than $9 million in restitution.
Beginning in June 2004, Carrano, Donald Williams, Fleming and their co-conspirators fraudulently induced purchasers in the United States to buy business opportunities in Apex Management Group Inc., USA Beverages Inc., Twin Peaks Gourmet Coffee Inc., Cards-R-Us Inc., Premier Cards Inc., The Coffee Man Inc. and Nation West Distribution Company. The business opportunities the defendants sold cost thousands of dollars each, and most purchasers paid at least $10,000. Each company operated for several months, and after one company closed, the next opened. The various companies used bank accounts, office space and other services in the Southern District of Florida and elsewhere.
The defendants, using aliases, participated in a conspiracy that used various means to make it appear to potential purchasers that the businesses were located entirely in the United States. In reality, Carrano, Donald Williams and Fleming operated out of Costa Rica to fraudulently induce potential purchasers in the United States to buy the purported business opportunities.
The companies made numerous false statements to potential purchasers of the business opportunities. Potential purchasers were falsely told they would likely earn substantial profits; that prior purchasers of the business opportunities were earning meaningful profits; that purchasers would sell a guaranteed minimum amount of merchandise, such as greeting cards and beverages; and that the business opportunity worked with locators familiar with the potential purchaser’s area who would secure or had already secured high-traffic locations for the potential purchaser’s merchandise stands.
The companies employed various types of sales representatives, including fronters, closers and references. A fronter spoke to potential purchasers when the prospective purchasers initially contacted the company in response to an advertisement. A closer subsequently spoke to potential purchasers to close deals. References spoke to potential purchasers about the financial success they purportedly had experienced since purchasing one of the business opportunities. As part of his plea, Fleming acknowledged that he conspired to commit fraud while working at USA Beverages and Nation West.
“The court’s sentences provide fair warning to business opportunity fraudsters who try to impose financial hardship on innocent, hardworking victims,” said Tony West, Assistant Attorney General for the Justice Department’s Civil Division. “The Department of Justice will continue to seek stiff sentences for those who exploit consumers to make a quick buck for themselves.”
“Fraudulent business opportunity sellers must realize that all finanical fraud will be prosecuted vigorously. This is true even if the schemers operate from outside of the United States,” said Wifredo Ferrer, U.S. Attorney for the Southern District of Florida. “International law enforcement cooperation eliminates safe havens for those who cheat American citizens from overseas.”
Each of the companies was registered as a corporation and rented office space to make it appear to potential purchasers that its operations were fully in the United States. Apex was registered as a Florida corporation and rented office space in Ft. Lauderdale, Fla., while USA Beverages was registered as a Florida and New Mexico corporation and rented office space in Las Cruces, N.M. Twin Peaks was registered as a Florida and Colorado corporation and rented office space in Fort Collins, Colo. Cards-R-Us was registered as a Nevada corporation and rented office space in Reno, Nev. Premier Cards was registered as a Colorado and Pennsylvania corporation and rented office space in Philadelphia. Coffee Man and Nation West were both registered as Colorado corporations and rented office space in Denver. These locations made it appear to potential purchasers that the businesses were located entirely in the United States when in fact they were not.
“Telemarketing fraud that exploits American consumers and abuses the U.S. Mails will be investigated thoroughly, whereever it arises. This international and domestic investigation illustrates the Postal Inspection Service’s resolve to protect the American public from financial fraud in all its forms,” said Henry Gutierrez, U. S. Postal Inspector in Charge in Miami.
Assistant Attorney General West and U.S. Attorney Ferrer commended the investigative efforts of the Postal Inspection Service. The case is being prosecuted by trial attorneys Jeffrey Steger and Alan Phelps with the U.S. Department of Justice Office of Consumer Protection Litigation.
10 May 2011
Two Arkansas Men Plead Guilty to Firebombing an Interracial Couple’s HomeRead the Press Release
WASHINGTON – Two Arkansas men pleaded guilty today in U.S. District Court in Little Rock, Ark., to charges related to their involvement in the firebombing of the house of an interracial couple, the Justice Department announced.
During the plea proceedings, Dustin Hammond of Sharp County, Ark., and Jake Murphy of Scott County, Ark., admitted that on the night of Jan.14, 2011, while at a party in Evening Shade, Ark., they and two other men devised a plan to firebomb an interracial couple’s home. Thereafter, all four co-defendants drove from Evening Shade to the victims’ house in Hardy, Ark. Upon arrival, the co-defendants constructed three Molotov cocktails and threw them at the house. The couple was also barraged with racial slurs and threatened with future violence if they did not leave Arkansas. The victims’ house sustained some damage during the incident. The victims were not injured.
Hammond and Murphy pleaded guilty to one count of conspiracy against rights and one count of criminal violation of housing rights.
“Firebombing a family’s home because of their race is a deplorable act of hate that will not be tolerated in our country,” said Thomas E. Perez, Assistant Attorney General of the Civil Rights Division. “The Justice Department will vigorously prosecute those who resort to violent acts motivated by hate.”
Hammond and Murphy face a maximum penalty of 20 years in prison. Sentencing has been set for Aug. 12, 2011. The remaining co-defendants are scheduled to go to trial on May 31, 2011.
This case was investigated by the Little Rock, Ark., Division of the FBI and is being prosecuted by Assistant U.S. Attorney John Ray White of the Eastern District of Arkansas and Trial Attorney Henry Leventis of the Civil Rights Division.
Shell Oil Companies to Pay $2.2 Million to Resolve Allegations of Royalty Underpayments from Federal LandsRead the Press Release
WASHINGTON – Shell Oil Company and other Shell affiliates have agreed to pay the United States $2.2 million to resolve claims that the companies violated the False Claims Act by knowingly underpaying royalties owed on natural gas produced from federal leases, the Justice Department announced today. Shell Oil Company is the U.S.-based subsidiary of Royal Dutch Shell, a multinational oil company, and is a leading producer of oil and natural gas.
Congress has authorized federal and Indian lands to be leased for the production of natural gas in exchange for the payment of royalties on the value of the gas that is produced. Each month companies are required to report to the U.S. Department of the Interior (DOI) the amount of royalty that is due. This settlement resolves claims by the United States that the Shell defendants improperly deducted from royalty values the cost of boosting gas up to pipeline pressures, and improperly reported processed gas as unprocessed gas to reduce royalty payments.
In June 2003, Shell paid $56 million to settle claims that it knowingly underpaid royalties related to natural gas and natural gas liquids produced from federal lands located in the Gulf of Mexico. Today’s settlement resolves claims related to Shell’s on-shore federal leases.
“Natural gas is a non-renewable resource. When the United States allows companies to remove gas from public lands that belong to all of us, we must require those companies to pay all of the royalties they owe, because those funds support important federal programs from which we all benefit,” said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. “Through cases like this, we are keeping our commitment to protect public lands and the valuable resources they contain."
“We are required to ensure that energy companies accurately report production and pay the required royalties,” said Chris Henderson, Acting Assistant Secretary for the DOI’s Office of Policy, Management and Budget. “We will continue to pursue any case where companies do not follow the rules.”
Today’s settlement arises from a lawsuit filed by Harrold Wright under the False Claims Act. Under the qui tam, or whistleblower, provisions of the act, private citizens may file actions on behalf of the United States and share in any recovery. Because Mr. Wright is deceased, his heirs will receive $572,000 as their share of the settlements. The United States intervened against Shell for the purpose of completing this settlement, and had previously intervened as to the claims settled in 2003, but had otherwise declined to intervene in the allegations against Shell. The Justice Department previously intervened against several other defendants in the Wright lawsuit. Total settlements in the case to date exceed $233 million.
The investigation and settlement of this matter was jointly handled by the Justice Department’s Civil Division and the U.S. Attorney for the Eastern District of Texas, with assistance from the Department of the Interior’s Office of Natural Resources Revenue, Office of the Solicitor and Office of the Inspector General.
The case is U.S. ex rel. Wright v. Chevron USA, Inc. et al., 5:03-CV-264 (E.D. Tex.) .
National Disaster Fraud Hotline Available to Report Tornado and Flood-Related FraudRead the Press Release
WASHINGTON - In response to recent natural disasters in several states, and subsequent relief efforts, the National Center for Disaster Fraud (NCDF) is reminding the public to be aware of and report any instances of alleged fraudulent activity related to relief operations and funding for victims.
Members of the public can report fraud, waste, abuse or allegations of mismanagement involving disaster relief operations through the National Disaster Fraud Hotline toll free at (866) 720-5721 or the Disaster Fraud email at [email protected] . The telephone line is staffed by a live operator 24 hours a day, seven days a week.
Members of the public are reminded to apply a critical eye and do their due diligence before giving contributions to anyone soliciting donations on behalf of flood or tornado victims. Solicitations can originate from emails, websites, door-to-door collections, mailings and telephone calls, and similar methods.
In response to a significant amount of fraud associated with federal disaster relief programs that went into effect following Hurricanes Katrina, Rita and Wilma, a Joint Command Center was established in Baton Rouge, La., in 2005. The command center, now known as the National Center for Disaster Fraud, has received and screened more than 39,000 complaints of disaster fraud and referred more than 25,000 of those to law enforcement for investigation. The NCDF – based on its extensive expertise and established infrastructure – has helped victims of fraud related to Hurricanes Katrina, Rita, Wilma, Ike and Gustav, as well as those affected by severe storms in more than 20 different states, earthquakes, tsunamis, wildfires and Deepwater Horizon oil spill.
More than 20 federal agencies participate in the center, allowing it to act as a centralized clearinghouse of information. To date, the Department of Justice has charged more than 1,300 defendants in 47 judicial districts throughout the country for disaster fraud related to Hurricanes Katrina, Rita and Wilma, the Gulf Coast oil spill and other disasters.
Man Indicted for Tax Evasion in TennesseeRead the Press Release
WASHINGTON – Jimmie Duane Ross was indicted by a federal grand jury in Knoxville, Tenn., for five counts of tax evasion, the Justice Department and Internal Revenue Service (IRS) announced today. The April 5, 2011, indictment was unsealed today, May 10, 2011, following Ross’s arrest.
According to the indictment, in 1999, Ross, who at all times relevant to the indictment resided in Sevierville, Tenn, received a monetary award of $840,000 as a result of an employment dispute with a former employer. Ross failed to pay taxes on this amount and evaded the payment of such taxes by, among other things, filing a false mortgage upon his residence and a false lien upon his vehicle, dealing extensively in cash, and directing funds to an offshore bank account. Additionally, during tax years 2004 through 2007, Ross earned commissions for referring clients to Guardian Trust Company Ltd., a purported offshore investment company. However, he evaded his taxes for those years by funneling his commissions through a nominee offshore entity that he controlled.
An indictment merely alleges that a crime has been committed, and a defendant is presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Ross faces a sentence of up to five years in prison and a $250,000 fine for each count of conviction.
The case was investigated by IRS-Criminal Investigation and is being prosecuted by Department of Justice – Tax Division Trial Attorneys Tracy Gostyla and Kevin Lombardi.
More information about the Justice Department’s Tax Division and its enforcement efforts is available at www.usdoj.gov/tax/.
Man Convicted in Miami in Connection with Costa Rica-Based Business Opportunity Fraud VenturesRead the Press Release
WASHINGTON – Following a two-week trial, a federal jury in Miami today convicted Sirtaj “Tosh” Mathauda on 12 felony counts related to a fraudulent business opportunity scheme, the Justice Department announced. The jury convicted Mathauda of conspiracy, nine counts of mail fraud and two counts of wire fraud.
A federal grand jury returned a second superseding indictment again Mathauda on March 30, 2010, charging that he and his co-conspirators operated a string of bogus companies known as Apex Management Group, USA Beverages Inc., Omega Business Systems and Nation West Distribution. The companies operated largely out of phone rooms in Costa Rica and marketed to residents in the United States. The companies sold opportunities to own and operate vending machine routes, beverage distributorships and greeting card distributorships. The so-called “business opportunities” were promoted as including retail display racks or vending machines, high-traffic locations in which they would be placed, and assistance in maintaining and operating such businesses. The promises of good locations and business assistance were fabricated.
As the evidence presented at trial showed, Mathauda owned, managed or worked at the fraudulent companies in Costa Rica, one after another, from 2004 through early 2009. Salesmen in the phone rooms told potential customers that the companies were located in the United States and would provide profitable distribution routes for vending machines or retail display racks. Salesmen said that the companies had a track record of success, claims that were backed up by phony references pretending to be satisfied customers of the companies in calls to customers. Many of the references were in reality the salesmen for the companies.
Several of Mathauda’s co-conspirators, including his brother, Dilraj “Rosh” Mathauda, as well as Stephen Schultz, Silvio Carrano, Donald Williams, Patrick Williams and Gregory Fleming, previously pleaded guilty in Miami in connection with their roles in the fraudulent business opportunity scam. All of these defendants were charged as part of the government’s continued nationwide crackdown on business opportunity fraud.
“Business opportunity fraud imposes major financial hardship on innocent, hardworking victims,” said Tony West, Assistant Attorney General for the Justice Department’s Civil Division. “The Department of Justice will continue to prosecute aggressively those who are exploiting consumers to make a quick buck for themselves.”
Mathauda faces a maximum sentence of 25 years in prison on each count of conviction, a possible fine and mandatory restitution.
“This verdict demonstrates that individuals living outside of the United States will not be allowed to use technology to commit fraud on the American public. This investigation illustrates our resolve to protect American consumers from business scams, wherever they occur,” said U.S. Postal Inspector in Charge, Henry Gutierrez, based in Miami.
Assistant Attorney General West commended the investigative efforts of the Postal Inspection Service, as well as the Federal Trade Commission, which previously brought a related civil suit and made a criminal referral. This matter was prosecuted by trial attorneys in the Justice Department’s Office of Consumer Protection Litigation.
Justice Department Files Antitrust Lawsuit Challenging George’s Inc.’s Acquisition of Tyson Foods Inc.’s Harrisonburg, Va., Poultry Processing ComplexRead the Press Release
WASHINGTON – The Department of Justice filed a civil antitrust lawsuit today challenging George’s Inc.’s acquisition of Tyson Foods’ Harrisonburg, Va., chicken processing complex. The department said that based on the information gathered thus far, the acquisition eliminates substantial competition between the two companies for the procurement of services of chicken growers in the Shenandoah Valley area.
The department’s lawsuit, filed in U.S. District Court in Harrisonburg requests that the court declare the acquisition to be unlawful under the antitrust laws and order appropriate equitable relief, such as divestiture of the Harrisonburg complex.
“The department’s lawsuit alleges that George’s acquisition of Tyson’s Harrisonburg chicken processing facility would reduce growers’ ability to receive competitive prices for their services,” said Christine Varney, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “America’s farmers deserve competitive prices and terms for the sale of their services, and the Antitrust Division will vigorously pursue anticompetitive acquisitions that stand in the way of achieving that goal.”
Chicken processors, such as Tyson and George’s, are also referred to in the industry as “integrators.” Integrators typically contract with farmers to grow chickens that are then transported to plants for processing. The processors provide the chicks and the feed, and the growers provide the housing and labor. Feed is delivered on a regular basis and since it is costly to transport grown chickens long distances, processors typically contract with growers that are located close to the processors’ plants and feed mills.
Prior to the acquisition, three chicken processors – Tyson, George’s and JBS/Pilgrim’s Pride – competed in Virginia’s Shenandoah Valley region for the services of local chicken growers. By combining the Tyson plant with George’s Edinburg, Va., operations, the sale decreased the number of processors in the area to two, reducing competition for grower services.
Tyson and George’s publicly announced the acquisition on March 18, 2011. Upon learning of the proposed acquisition, the department’s Antitrust Division opened an investigation into the proposed deal. The department sought information on the potential competitive effects of the transaction, and George’s proposed business justifications for purchasing the Harrisonburg plant. On Saturday, May 7, despite the parties’ awareness of the department’s serious antitrust concerns about the transaction, and without providing a response to the information requested by the department, George’s and Tyson entered into an asset purchase agreement and simultaneously closed the transaction.
The acquisition was not required to be reported under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, which requires companies to notify and provide information to the department and the Federal Trade Commission before consummating certain size acquisitions. The purchase price of the transaction was less than the minimum reporting threshold.
George’s, headquartered in Springdale, Ark., is the 15th largest chicken processor in the United States, with output of more than 20 million pounds of chicken per week. In addition to its Shenandoah Valley operations, George’s processes chicken in Springdale, Ark., and Cassville, Mo.
Tyson Foods, headquartered in Springdale is the largest chicken processor in the United States, with output of more than 205 million pounds of chicken per week.
JBS/Pilgrim’s Pride, headquartered in Greely, Colo., is the second largest chicken processor in the United States, with output of more than 160 million pounds of chicken per week.
Former Executive of Illinois Refuse Container Repair Company Sentenced to Serve 16 Months in Prison for Conspiring to Defraud the City of ChicagoRead the Press Release
WASHINGTON — A former president of an Illinois refuse disposal container repair company was sentenced today for his role in a conspiracy to commit mail and wire fraud in connection with bids on a contract for the repair of refuse carts for the city of Chicago, the Department of Justice announced today.
Douglas E. Ritter, an Illinois resident, was sentenced by U.S. District Court Judge Ruben Castillo to serve 16 months in prison and to pay $35,303 in restitution for his participation in a conspiracy to defraud the city of Chicago on a contract for the repair of refuse carts from as early as November 2004 to as late as September 2008. Ritter, along with his business partner Steven Fenzl, was charged in an indictment filed on April 21, 2009, in U.S. District Court in Chicago. Ritter pleaded guilty to the conspiracy on June 3, 2010. Fenzl, a California resident, was found guilty by a jury on Sept. 28, 2010, of one count of conspiracy to commit mail and wire fraud, two counts of mail fraud and one count of wire fraud. Fenzl is scheduled to be sentenced on June 15, 2011.
According to the indictment, Ritter, Fenzl and their co-conspirator conspired to deceive city of Chicago officials about the number of legitimate, competitive bids submitted for the contract. Specifically, Ritter and his co-conspirators fraudulently induced other companies to submit bids for the contract at prices determined by Ritter and his co-conspirators and greater than the price for which Ritter’s company had submitted a bid. The department said that included in these bids were fraudulent documents indicating that, if awarded the contract, the bidder would enter into subcontracts to purchase goods or services for a specified percentage of the contract from a minority-owned business and a women-owned business, as required by the city of Chicago. According to the indictment, Ritter and his co-conspirators also fraudulently certified to the city on Ritter’s company’s bid that it had not entered an agreement with any other bidder relating to the price named in any other bid submitted to the city for the contract.
Today’s sentencing resulted from an ongoing investigation of the refuse cart repair industry being conducted by the Antitrust Division’s Chicago Field Office and the city of Chicago’s Office of Inspector General.
Anyone with information concerning bid rigging or other anticompetitive conduct involving government or private contracts with the city of Chicago is urged to call the Antitrust Division’s Chicago Field Office at 312-353-7530 or visit www.justice.gov/atr/contact/newcase.htm .
California Company, Its Two Executives and Intermediary Convicted by Federal Jury in Los Angeles on All Counts for Their Involvement in Scheme to Bribe Officials at State-Owned Electrical Utility in MexicoRead the Press Release
WASHINGTON – Lindsey Manufacturing Company, an Azusa, Calif., company, two of its executives and a Mexican intermediary today were convicted by a federal jury on all counts for their alleged roles in a scheme to pay bribes to Mexican government officials at the Comisión Federal de Electricidad (CFE), a state-owned utility company. The jury reached its verdict after one day of deliberations, following a five-week trial.
The convictions were announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney André Birotte Jr. for the Central District of California; Steven M. Martinez, Assistant Director in Charge of the FBI’s Los Angeles Field Office; and Victor S.O. Song, Chief of Internal Revenue Service-Criminal Investigation (IRS-CI).
“Today’s guilty verdicts are an important milestone in our Foreign Corrupt Practices Act (FCPA) enforcement efforts,” said Assistant Attorney General Breuer. “Lindsey Manufacturing is the first company to be tried and convicted on FCPA violations, but it will not be the last. Foreign corruption undermines the rule of law, stifling competition and the health of international markets and American businesses. As this prosecution shows, we are fiercely committed to bringing to justice all the players in these bribery schemes – the executives who conceive of the criminal plans, the people they use to pay the bribes, and the companies that knowingly allow these schemes to flourish. Bribery has real consequences.”
“Bribery is not a victimless crime,” said U.S. Attorney Birotte. “Not only does it damage citizens’ confidence in their own government, it also damages the integrity of the global marketplace. The Department of Justice remains committed to prosecuting violations of the FCPA to ensure that the payment of bribes can no longer be viewed simply as the cost of doing business in a foreign nation. Bribery, wherever it occurs, will carry the potential cost of criminal prosecution, hefty fines and prison terms.”
“The FBI investigates corruption and allegations of bribery to ensure that U.S.-based companies do business on an even playing field,” said FBI Assistant Director in Charge Martinez of the FBI’s Los Angeles Field Office . “The guilty verdicts announced today should send a strong message to large public corporations and small businesses alike, that bribing foreign officials to obtain a competitive advantage is a crime and will be prosecuted.”
“IRS Criminal Investigation provides financial investigative expertise in our work with our law enforcement partners,” said Chief Song of IRS-CI. “Pooling the skills of each agency makes a formidable team as we investigate allegations of wrong-doing.”
Keith E. Lindsey, 66, of La Canada, Calif., and Steve K. Lee, 60, of Diamond Bar, Calif., were convicted of one count of conspiracy to violate the FCPA and five counts of FCPA violations. Angela Maria Gomez Aguilar, 56, of Cuernavaca , Mexico, was convicted of one count of money laundering conspiracy. The court entered a judgment of acquittal prior to the jury’s verdict on one substantive count of money laundering against Angela Aquilar.
Angela Aguilar’s husband, Enrique Aguilar, 56, also of Cuernavaca, Mexico, is charged with conspiracy to violate the FCPA, violations of the FCPA and money laundering violations. He remains a fugitive, and is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law. The defendants were charged in a superseding indictment returned by a federal grand jury in Los Angeles on Oct. 21, 2010.
According to the evidence presented at trial, CFE is responsible for supplying electricity in Mexico, and contracts with Mexican and foreign companies for goods and services to help supply electricity services to its customers. Enrique and Angela Aguilar were directors of Grupo Internacional de Asesores S.A. (Grupo), which purported to provide sales representation services for companies doing business with CFE.
According to evidence presented at trial, Lindsey Manufacturing hired Grupo to serve as its sales representative in Mexico and to obtain contracts for it from CFE. Lindsey Manufacturing makes emergency restoration systems and other equipment used by electrical utility companies. Many of Lindsey Manufacturing’s clients were foreign, state-owned utilities, including CFE, which was one of the company’s most significant customers. Grupo received a percentage of the revenue Lindsey Manufacturing realized from its contracts with CFE.
From approximately February 2002 until March 2009, according to evidence presented at trial, Lindsey Manufacturing, Lindsey, Lee and others orchestrated a scheme in which Enrique Aguilar was paid a 30 percent commission on all the goods and services Lindsey Manufacturing sold to CFE, even though this was a significantly higher commission than previous sales representatives for the company had received. According to evidence presented at trial, Lindsey and Lee understood that all or part of the 30 percent commission would be used to pay bribes to Mexican officials in exchange for CFE awarding contracts to Lindsey Manufacturing. The costs of goods and services sold to CFE allegedly were increased by 30 percent to ensure that the added cost of paying the bribes was absorbed by CFE and not by Lindsey Manufacturing.
According to evidence presented at trial, fraudulent invoices were submitted from Grupo to Lindsey Manufacturing for 30 percent of the CFE contract price. Lindsey and Lee then caused the money requested in the fraudulent invoices to be wired into Grupo’s brokerage account, knowing that the invoices were fraudulent and that at least part of the funds were being used as bribes.
The evidence at trial established that in the months leading up to the hiring of Enrique Aguilar, Lindsey and Lee learned that Enrique Aguilar had a corrupt relationship with a top CFE official. In fact, according to evidence presented at trial, Lindsey and Lee complained to CFE about the way in which contracts were being awarded. The month after their complaint was rebuffed, Lindsey and Lee hired Enrique Aguilar. An employee of Lindsey Manufacturing testified at trial that in 2000, prior to hiring Enrique Aguilar, the employee and Lee discussed Aguilar’s possible representation of the company. The employee said he told Lee, “if we cannot defeat the enemy, might as well join the enemy.” The evidence at trial established that within months of hiring Enrique Aguilar, Lindsey Manufacturing began receiving contracts from CFE and over the course of the next seven years received more than $19 million in CFE business. The evidence also showed that Keith Lindsey and Lee wired approximately $5.9 million of that money directly to Grupo.
Evidence established that Angela Aguilar authorized money in the Grupo account to be used to buy a CFE official a $297,500 Ferrari Spyder and a $1.8 million yacht, as well as to pay more than $170,000 towards the official’s credit card bills. She also authorized the transfer of $500,000 to the brother and mother of another CFE official.
Angela Aguilar was arrested on Aug. 10, 2010, on a criminal complaint when she travelled to Houston from Mexico. She was ordered detained and removed to the Central District of California, where she remains in custody pending sentencing.
Sentencing for Lindsey Manufacturing, Lindsey and Lee is scheduled for Sept. 16, 2011. Angela Aguilar’s sentencing is scheduled for Aug. 12, 2011. The defendants face a maximum penalty of five years in prison and a fine of the greater of $250,000 or twice the value gained or lost on the FCPA conspiracy charge. Each of the five FCPA counts carries a maximum penalty of five years in prison and a fine of the greater of $100,000 or twice the value gained or lost. The money laundering conspiracy count carries a maximum penalty of 20 years in prison and a fine of the greater of $500,000 or twice the value of the property involved in the transaction. The government is seeking forfeiture against all defendants.
The case is being prosecuted by Senior Trial Attorneys Nicola J. Mrazek and Jeffrey A. Goldberg of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Douglas M. Miller in the Central District of California. The case was investigated by the FBI’s Los Angeles Field Office and the IRS-CI Los Angeles Field Office, with the assistance of the Department of Homeland Security Office of Inspector General. Significant assistance was provided by the Criminal Division’s Office of International Affairs. The Department of Justice also thanks Mexican authorities for their ongoing assistance in this matter.
9 May 2011
Uzbek Man Sentenced for Role in Multi-National Racketeering and Forced Labor EnterpriseRead the Press Release
WASHINGTON – An Uzbek national was sentenced today for his role as the leader of a illicit enterprise that engaged in numerous criminal activities including forced labor, fraud in foreign labor contracting, visa fraud, mail fraud, identity theft, tax evasion and money laundering, the Department of Justice announced. Abrorkhodja Askarkhodjaev was sentenced to 12 years in prison and three years of supervised release, and was ordered to pay $172,000 in restitution to the foreign worker fraud and forced labor victims in addition to restitution for harm caused by other aspects of the criminal enterprise. Askarkhodjaev pleaded guilty in October 2010, to racketeering conspiracy, fraud in foreign labor contracting, evasion of corporate employment tax and identity theft.
As leader of this multi-national criminal enterprise, whose members included nationals of Uzbekistan, Moldova and the United States, Askarkhodjaev arranged for the recruitment and exploitation of dozens of workers from Jamaica, the Dominican Republic, the Philippines and elsewhere, many of whom were recruited with false promises concerning the terms, conditions and nature of their employment. Once in the United States, the workers were held in overcrowded apartments and compelled into service and hospitality jobs in as many as 14 states. Members of the criminal enterprise withheld much of the victims’ earnings and threatened them with deportation and financial penalties if they refused to comply with the defendants’ demands.
“The defendant directed a criminal organization that, out of pure greed, exploited the hopes and dreams of scores of foreign workers, degrading them through threats and deceit,” said Assistant Attorney General for the Civil Rights Division Thomas E. Perez. “The Department of Justice will continue to vigorously prosecute these cases and dismantle criminal networks that prey on vulnerable victims.”
“This case was the first in the country in which forced labor trafficking was charged as part of a Racketeer Influenced and Corrupt Organizations Act, or RICO, conspiracy,” said U.S. Attorney for the Western District of Missouri Beth Phillips. “Hundreds of illegal aliens working in 14 states were victims of modern-day slavery, including employees at hotels in the Kansas City, Mo., area and in Branson, Mo.”
Co-defendants Kristin Dougherty, Ilkham Fazilov, Viorel Simon, Nodirbek Abdollayev, Jakhongir Kakhkarov, Alexandru Frumusache and Abdukakhar Azizkhodjaev were previously sentenced for their respective roles in this criminal enterprise. Dougherty was convicted of racketeering, racketeering conspiracy and wire fraud, and was sentenced to 60 months in prison. Fazilov was convicted of racketeering conspiracy and was sentenced to 41 months in prison. Simon was convicted of racketeering conspiracy and fraud in foreign labor contracting, and was sentenced to 25 months in prison. Abdoollayev was convicted of racketeering and was sentenced to 21 months in prison. Kakhkharov and Azizkhodjaev were convicted of racketeering conspiracy and misprision of a felony respectively, and both were sentenced to time served. Andrew Cole, who was convicted of racketeering conspiracy and fraud in foreign labor contracting, is scheduled to be sentenced on May 10, 2011.
This case is being prosecuted by Assistant U.S. Attorney William L. Meiners, Special Assistant U.S. Attorney Trey Alford and Deputy Chief Jim Felte of the Civil Rights Division. It was investigated by the U.S. Immigration and Customs Enforcement Office of Homeland Security Investigations, the FBI, the U.S. Department of Labor- Office of the Inspector General, the Internal Revenue Service- Criminal Investigations, the Kansas Department of Revenue- Criminal Investigations, U.S. Citizenship and Immigration Services and the Independence, Mo., Police Department in conjunction with the Human Trafficking Rescue Project.
Latin Kings Leader in Maryland Sentenced to 23 Years in Prison for Racketeering Conspiracy Including Attempted MurdersRead the Press Release
WASHINGTON - Brandon Smith, aka “Little One” and “King Little One,” 26, of Hyattsville, Md., was sentenced today to 23 years in prison by U.S. District Judge Alexander Williams Jr. for conspiracy to participate in a racketeering enterprise, in connection with his gang activities as a member and leader of the Almighty Latin King and Queen Nation (Latin Kings). Smith also was ordered to serve five years of supervised release following his prison term.
The sentence was announced by Assistant Attorney General Lanny A Breuer of the Justice Department’s Criminal Division; U.S. Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Theresa R. Stoop of the Bureau of Alcohol, Tobacco, Firearms and Explosives - Baltimore Field Division; Chief J. Thomas Manger of the Montgomery County, Md., Police Department; Montgomery County State’s Attorney John McCarthy; Interim Chief Mark Magaw of the Prince George’s County, Md., Police Department; and Prince George’s County State’s Attorney Angela Alsobrooks.
According to Smith’s plea agreement, the Latin Kings is a violent street gang with thousands of members across the country and overseas. The Latin Kings have a detailed and uniform organizational structure, which is outlined – along with various “prayers,” codes of behavior and rituals – in a written “manifesto” widely distributed to members throughout the country. Members of the Latin Kings are also traditionally given “King Names” or “Queen Names,” which are names other than their legal names by which they are known to members of the gang and to others on the street. At the local level, groups of Latin Kings are organized into “tribes,” including the Royal Lion Tribe, MOG, Sun Tribe and UTL.
Smith was a member of the MOG and UTL Tribes in Maryland, joining the MOG Tribe in January 2009. On Jan. 16, 2009, Smith and other Latin Kings members and associates from Maryland, traveled to New York City to attend a Latin Kings meeting at the Amazura Night Club in Queens, New York. After the meeting, as Smith and other Latin Kings members were standing in front of the Amazura, a car pulled up in front of the club and a man opened fire yelling “Mara, Mara!” (referring to rival gang MS-13). Smith admitted that he returned fire, emptying his 9mm semi-automatic Taurus. During the shooting, four Latin Kings were shot, as well as a limousine driver, who was driving by and was struck in the leg by the cross-fire.
According to the plea agreement, late in the evening on Jan. 31, 2009, Smith and several Latin Kings members and associates went to a residence in Wheaton, Md. Smith, the enforcer for the MOG tribe at the time, ordered an individual into the basement laundry room and demanded that he make the Latin Kings crown sign with his hands, while two other Latin Kings held the individual at gunpoint. From late in the evening on Jan. 31, 2009, and continuing into the early morning hours of Feb, 1, 2009, Smith threatened the individual, pacing in front of him with a knife, and telling the individual not to “drop” the crown (move his hands from the crown position). Smith admitted that at one point, he slashed the individual across the face, stating that he wanted to see the individual “leaking” on the floor and that the victim was going to leave the house in a body bag. Smith instructed another Latin Kings member to shoot the individual in the heart if he dropped his crown, at which point the other Latin Kings member cocked the gun. Smith called the leader of the MOG Tribe on speaker phone and told him that he had sliced the victim and planned to murder him. According to court documents, Montgomery County police officers arrived on the scene at about this time and directed everyone to leave the residence. After being threatened by Smith and others not to “snitch,” the victim wore a mask to cover his face as he left the residence. However, law enforcement had the victim remove his mask and discovered his wound.
According to court documents, during the evening of July 8, 2009, Smith and other members and associates of the UTL tribe attempted to murder another individual in Germantown, Md. The individual was walking on a residential street with two friends when a car approached and several people got out and began chasing the individual, who was able to hide for several minutes. When the individual left his hiding place, he was chased again. The individual was hit in the back of the head and fell to the ground. Smith admitted that he and the other UTL members and associates beat the individual with a bat-like object, and kicked, punched and stabbed the individual multiple times. In fact, the victim was stabbed with such force that the blade of the knife broke off during the attack and was recovered at the scene. The victim was taken to the hospital and treated for the multiple stab wounds he sustained.
Seven co-defendants previously pleaded guilty to the racketeering conspiracy and an eighth was convicted after trial.
The ATF-led Regional Anti-Gang Enforcement (RAGE) Task Force, which includes the Gaithersburg, Md., Police Department; the Montgomery County Department of Police; the Montgomery County State’s Attorney’s Office; the Prince George’s County Police Department; the Prince George’s County State’s Attorney’s Office; the Montgomery County Sheriff’s Office; the Maryland National Capital Park Police - Prince George’s County Division; and the Maryland State Police; as well as the New York City Police Department , the U.S. Secret Service and the Internal Revenue Service - Criminal Investigation provided assistance in the investigation and prosecution.
The case was prosecuted by Assistant U.S. Attorneys Emily Glatfelter and David Salem, and Trial Attorney Lara M. Peirce with the Criminal Division’s Gang Unit.
Justice Department Opens Investigation into the Newark, N.J., Police DepartmentRead the Press Release
NEWARK, N.J. – The Justice Department announced today that it has opened a civil pattern or practice investigation into the Newark, N.J., Police Department (NPD) involving allegations of use of excessive force, discriminatory policing, whether detainees confined to holding cells are subjected to unreasonable risk of harm and whether officers retaliate against citizens who legally attempt to observe or record police activity. The investigation is in accordance with the pattern or practice provision of the Violent Crime Control and Law Enforcement Act of 1994, the anti-discrimination provisions of the Omnibus Crime Control and Safe Streets Act of 1968 and Title VI of the Civil Rights Act of 1964.
The Justice Department will determine whether there are systemic violations of the constitution or federal law by officers of the NPD. During the course of the investigation, the Justice Department will consider all relevant information, including all efforts that Newark has undertaken to ensure compliance with federal law. The Justice Department has engaged in similar reviews of a variety of state and local law enforcement agencies, both large and small, in jurisdictions such as New York, Ohio, Washington, Pennsylvania, the District of Columbia, Louisiana and California.
This matter is being investigated jointly by attorneys from the Special Litigation Section of the Department of Justice’s Civil Rights Division and the U.S. Attorney’s Office for the District of New Jersey. The department welcomes any information from the community. If you have any comments or concerns, please feel free to contact the department at 855-281-3339, via email at [email protected] or submit a complaint using our web site at www.justice.gov/usao/nj/files/CivilRightsComplaint.pdf .
Illinois Man Admits Plotting to Bomb Federal Courthouse <br /> and Is Sentenced to 28 Years in PrisonRead the Press Release
WASHINGTON – Michael C. Finton, aka “Talib Islam,” pleaded guilty today to attempting to bomb the federal courthouse in Springfield, Ill., in September 2009 and was immediately sentenced to serve 28 years in prison, announced Todd Hinnen, Acting Assistant Attorney General for National Security, U.S. Attorney James A. Lewis of the Central District of Illinois, and Armando Fernandez, Acting Special Agent in Charge of the FBI Springfield Division.
At a hearing today in East St. Louis, Ill., Finton, 31, a U.S. citizen and resident of Decatur, Ill., appeared before U.S. District Judge David R. Herndon and entered a plea of guilty to one count of attempted use of a weapon of mass destruction (an explosive bomb) against property owned by the United States. Judge Herndon sentenced Finton to 336 months in prison in accordance with the terms of his plea agreement with the government.
“Michael Finton is one of a number of young Americans over the past two years who, under the influence of a radical and violent ideology, have sought to carry out acts of terrorism in the United States,” said Acting Assistant Attorney General Hinnen. “Although a coordinated undercover law enforcement investigation thwarted Mr. Finton's plot to destroy the federal courthouse in Springfield, this case underscores the need to remain vigilant against the threat posed by homegrown extremism.”
“Michael Finton tried to bomb our federal courthouse with the intent to kill innocent civilians, committed public servants and dedicated first responders,” said U.S. Attorney Lewis. “This terrible attempt was prevented through the excellent investigative work of the Springfield FBI Joint Terrorism Task Force and assisting law enforcement agencies.”
“The investigation of Michael Finton is a significant accomplishment in the FBI’s mission to protect the United States from terrorist attack. The dedication and professionalism of the Springfield Joint Terrorism Task Force and the U.S. Attorney’s Office in this case have made America safer,” said FBI Acting Special Agent in Charge Fernandez.
According to the plea agreement and other documents filed in court, Finton admitted that on Sept. 23, 2009, he traveled from Decatur to Springfield, where he knowingly took possession of a truck that he believed contained a bomb with approximately one ton of explosives. The explosive device was actually inert. Finton drove the truck to the Paul Findley Federal Building and Courthouse at 600 East Monroe Street, where he parked immediately outside the federal building and across the street from an office used by a U.S. Congressman.
At the time he parked the truck, Finton activated a timer connected to the explosive device, which he believed was large enough to destroy the federal building and the congressman’s office. After Finton parked the van and armed the device, he locked the truck and got into a vehicle with an undercover law enforcement agent whom he believed was associated with the al-Qaeda terrorist organization. Finton then used a cell phone to attempt to remotely detonate the purported bomb after he and the undercover agent had driven a safe distance away.
Prior to Sept. 23, 2009, according to filed court documents, Finton met on several occasions with an undercover law enforcement officer whom Finton believed was acting on behalf of al-Qaeda. During a meeting on July 29, 2009, Finton proposed the federal building in Springfield as a target and proposed that two vehicle-borne bombs be used, the first to do the initial damage, and the second to attack the responders. Finton also suggested that if the bomb was big enough it might also “take out” the office of the congressman across the street from the federal building.
Finton has remained detained in the custody of the U.S. Marshals Service since his arrest on Sept. 23, 2009.
The case was investigated by the Springfield FBI Joint Terrorism Task Force and assisting law enforcement agencies. Assistant U.S. Attorney Eric I. Long of the Central District of Illinois, and Trial Attorney Alamdar Hamdani of the Counterterrorism Section at the Justice Department’s National Security Division, prosecuted the case.
Former U.S. Marshals Service Employee Sentenced to 21 Months <br /> in Prison for Theft of $104,000 in U.S. Government FundsRead the Press Release
WASHINGTON – A former U.S. Marshals Service (USMS) employee was sentenced today to 21 months in prison for theft of $104,000 in U.S. government funds, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.
Sno H. Rush, 40, of Upper Marlboro, Md., was also ordered by U.S. District Judge Colleen Kollar-Kotelly to pay restitution of $104,000, and to serve three years of supervised release following her prison term. Rush pleaded guilty on Oct. 12, 2010, to one count of theft of government property.
According to court documents, Rush worked as an administrative officer for the USMS in the District of Columbia Superior Court from October 1998 to November 2008. Rush’s responsibilities included, among other things, handling payroll-related matters for the USMS, authorizing payment to USMS employees and outside entities, drafting and signing U.S. Treasury checks for USMS expenditures, and directing and supervising other USMS employees to draft and sign such checks.
During her guilty plea, Rush admitted that between April 2006 and February 2009, she unlawfully used a USMS credit card for personal expenses totaling approximately $15,000. In addition, Rush admitted creating a fictitious employee in the USMS payroll system and submitting falsified time-and-attendance records for the employee, resulting in fraudulent payments totaling $31,000 between November 2007 and October 2008, which Rush converted to her personal use. Rush also admitted that between June 2007 and November 2008, she caused to be issued $51,000 in U.S. Treasury checks to pay down the balance on a personal credit card, disguising the theft with fraudulent business invoices she created to make the payments appear legitimate. According to the plea agreement, Rush converted an additional $7,000 in U.S. Treasury checks used to pay the balance on another personal credit card. In total, Rush admitted stealing approximately $104,000 in USMS funds.
This case was prosecuted by Trial Attorney Eric G. Olshan of the Criminal Division’s Public Integrity Section. This case was investigated by the Department of Justice Office of the Inspector General.
Former Tax Planning Firm Executive Sentenced in Salt Lake City for Tax OffenseRead the Press Release
WASHINGTON - Patrick Merrill Brody was sentenced on May 6, 2011, to 10 months of prison, 12 months of supervised release and ordered to pay the costs of prosecution for willfully failing to file a federal income tax return for 2001, the Justice Department and Internal Revenue Service (IRS) announced today.
Brody’s sentencing by U.S. District Court Judge Clark Waddoups followed a week-long trial in October 2010. According to the evidence at trial, Brody’s obligation to file a tax return for 2001 arose from the income he received for work in connection with his tax planning firm, Merrill Scott & Associates. The business was shut down and placed into receivership by the Securities and Exchange Commission (SEC) in early 2002 for alleged securities fraud. The civil suit resulted in a judgment against Brody for more than $16 million. Brody earned more than $500,000 in income from Merrill Scott & Associates during 2001, but deliberately failed to report the income and its tax liability on a federal income tax return.
This case was investigated by IRS-Criminal Investigation and was prosecuted by Tax Division Trial Attorneys Brian Bailey and Elizabeth Hadden.
More information about the Justice Department’s Tax Division and its enforcement efforts is available at www.usdoj.gov/tax/.
California Company and Its CEO Sentenced for Conspiring<br /> to Illegally Export Industrial Valves to IranRead the Press Release
WASHINGTON – GWC Valve International Inc., a company headquartered in Bakersfield, Calif., and its chief executive officer, David Meador, 52, were sentenced today in the Eastern District of California for conspiracy to export services related to industrial valves to Iran.
The sentences were announced by Todd Hinnen, Acting Assistant Attorney General for National Security; Benjamin B. Wagner, U.S. Attorney for the Eastern District of California, and John Morton, Director of U.S. Immigration and Customs Enforcement (ICE).
At a hearing in federal court in Fresno, Calif., U.S. District Court Judge Anthony W. Ishii sentenced GWC Valve International to a criminal fine of $300,000 and five years of corporate probation and ordered the company to forfeit $410,833.82. The judge also sentenced Meador to 13 months in prison, followed by three years of supervised release. The government has already received $110,000 in payments from the defendants.
On June 24, 2010, both GWC Valve International and Meador pleaded guilty to conspiring to violate the International Emergency Economic Powers Act and the Iranian Transactions Regulations. According to court documents filed in the case, between July 2005 and May 2008, Meador and others conspired to cause the export of financial and technical services related to the sale of the industrial valves to Iran without having first obtained the required licenses and authorization from the U.S. Treasury Department’s Office of Foreign Assets Control. U.S. persons are prohibited from engaging in commercial transactions involving Iran.
As part of the conspiracy, GWC and Meador received orders from customers in Iran for industrial valves, totaling more than $2.16 million, then entered into contracts with these customers and caused the valves to be manufactured on behalf of Iranian customers. The defendants also concealed that Iranian customers were the true recipients of the valves by once falsely asserting that the GWC office in the United Arab Emirates was the end user of the goods and on several occasions altering or omitting references to the Iranian banks and end-users in correspondence about the sales.
This case was the product of an extensive investigation by the Department of Homeland Security’s U.S. Immigration and Customs Enforcement. The case was prosecuted by Trial Attorney Ryan Fayhee of the Counterespionage Section in the Justice Department’s National Security Division, and Assistant U.S. Attorney Duce Rice of the U.S. Attorney’s Office for the Eastern District of California.
6 May 2011
Two Clinic Owners and a Money Launderer Convicted in <br /> $9.1 Million Medicare Fraud Scheme in DetroitRead the Press Release
WASHINGTON—Two owners of a fraudulent Detroit-area medical clinic, Martin and Joaquin Tasis, and a man who helped them launder the proceeds of the fraud, Leoncio Alayon, were convicted today by a federal jury in Detroit for their roles in a $9.1 million Medicare fraud scheme, the Departments of Justice and Health and Human Services (HHS) announced.
Martin Tasis and Joaquin Tasis were each convicted of one count of conspiracy to commit health care fraud, one count of conspiracy to pay health care kickbacks and three counts of health care fraud. Martin Tasis was also convicted of one count of conspiracy to commit money laundering and one count of money laundering, and found not guilty on one money laundering count. Alayon was convicted of one count of conspiracy to commit money laundering and two counts of money laundering.
According to evidence presented during the one-week trial, Martin and Joaquin Tasis were owners of Dearborn Rehabilitation and Medical Center (DMRC), a fraudulent HIV-infusion therapy clinic located in Dearborn, Mich. The Tasis brothers oversaw the payment of kickbacks to patients whose Medicare information was then used by DMRC to fraudulently bill Medicare for treatments they never received. Evidence showed that DMRC, an outpatient clinic that purported to specialize in infusion and injection therapy, was established for the sole purpose of defrauding Medicare.
Between November 2005 and March 2007, DMRC billed approximately $9.1 million in claims to Medicare for injection therapy services that were never provided and were not medically necessary. Medicare paid approximately $6 million of those claims. The Tasis brothers used Alayon and a bogus “research” company to launder hundreds of thousands of dollars in proceeds of the fraud.
Evidence presented at trial showed that the Tasis brothers and their co-conspirators helped relocate the highly lucrative infusion therapy fraud scheme from South Florida to Michigan after increased law enforcement scrutiny in South Florida. Evidence at trial showed that Medicare beneficiaries were not referred to DMRC by their primary care physicians, or for any other legitimate medical purpose, but rather were recruited to come to the clinic through the payment of cash kickbacks. DMRC then billed Medicare for expensive medications, purportedly given to treat HIV and Hepatitis-C, which were never administered. For example, evidence at trial showed that DMRC billed $9.1 million to Medicare, but purchased only $36,000 in medication and medical supplies.
Once Medicare started paying the co-conspirators, Martin Tasis enlisted a family friend, Leoncio Alayon, to help him launder the proceeds of the fraud through a shell corporation in Florida called Infinity Research Corp. Evidence at trial showed that Infinity Research Corp. had no employees, did no research and was based at Alayon’s residence. Alayon, after taking a commission, distributed the laundered proceeds to Martin Tasis, Joaquin Tasis and their co-conspirators.
Including today’s guilty verdicts, 12 individuals involved with DMRC have been convicted for their roles in the DMRC scheme. Defendants Clara Guilarte and Caridad Guilarte are currently awaiting trial on charges related to their alleged roles at DMRC. An indictment is merely a charge and defendants are presumed innocent until proven guilty.
A sentencing date for the Tasis brothers and Alayon has not yet been scheduled by the court. Each count of conspiracy to commit health care fraud, health care fraud and money laundering carries a maximum penalty of 10 years in prison and a $250,000 fine. The conspiracy to commit money laundering count carries a maximum penalty of 20 years in prison and a $500,000 fine, and the conspiracy to pay health care kickbacks carries a maximum penalty of five years in prison and a $250,000 fine.
Today’s verdicts were announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade; Special Agent in Charge Andrew G. Arena of the FBI’s Detroit Field Office; and Special Agent in Charge Lamont Pugh III of the HHS Office of Inspector General’s (HHS-OIG) Chicago Regional Office.
The case was prosecuted by Trial Attorney Gejaa T. Gobena of the Criminal Division’s Fraud Section and Assistant U.S. Attorney for the Eastern District of Michigan Philip Ross, with assistance from Fraud Section Trial Attorney Catherine Dick. The FBI and HHS-OIG conducted the investigation.
The case was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan. Since their inception in March 2007, Medicare Fraud Strike Force operations in nine locations have charged more than 1,000 individuals who collectively have falsely billed the Medicare program for more than $2.3 billion. In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the HEAT team, go to: www.stopmedicarefraud.gov .
Justice Department Requires Divestitures in Unilever's Acquisition of Alberto-Culver CompanyRead the Press Release
WASHINGTON – The Department of Justice announced today that it has reached a settlement with Unilever and Alberto-Culver Co. that requires them to divest two hair care brands in order to proceed with Unilever’s $3.7 billion acquisition of Alberto-Culver. The department said that the transaction, as originally proposed, would substantially lessen competition in three product markets – value shampoo, value conditioner and hairspray sold in retail stores. Value shampoos and conditioners are the lowest priced shampoos and conditioners sold in retail stores, typically selling for less than two dollars a bottle.
The department’s Antitrust Division filed a civil antitrust lawsuit today in U.S. District Court in Washington, D.C., to block the proposed transaction between three Unilever entities – Unilever N.V., Unilever PLC and Conopco Inc. – and Alberto-Culver. At the same time, the department filed a proposed settlement that, if approved by the court, would resolve the competitive concerns alleged in the lawsuit.
“Without the divestitures required by the department, consumers would have paid higher prices for value shampoo and conditioner and for hairspray sold in retail stores,” said Christine Varney, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.
Under the proposed settlement, the companies must divest Alberto-Culver’s Alberto VO5 brand and Unilever’s Rave brand, as well as associated assets. The Alberto VO5 brand consists of value shampoo and conditioner, hairspray, mousse and other hair styling products. The Rave brand consists of hairspray and mousse products.
According to the complaint, the acquisition would eliminate significant head-to-head competition between the merging parties for value shampoo, value conditioner and hairspray sold in retail stores. In the case of value shampoo and conditioner, it would reduce the number of significant competitors in the value shampoo and conditioner markets from three to two, leaving Unilever with approximately 90 percent of those markets. In the case of hairspray, Unilever’s post-merger share of the market would be approximately 46 percent, with the combination resulting in a highly concentrated market. This loss of competition likely would have resulted in higher prices for value shampoo and conditioner, and hairspray products.
During the investigation of the transaction, the department’s Antitrust Division cooperated with the Office of Fair Trading in the United Kingdom, the Federal Competition Commission in Mexico and South Africa’s Competition Commission. Both Unilever and Alberto-Culver provided waivers, in a timely way, to facilitate the effective international cooperation in this case, the department said.
“Maintaining close working relationships with competition agencies around the world and having open dialogues with our counterparts are important ways of enhancing competition and protecting consumers in the United States and internationally,” said Assistant Attorney General Varney.
Unilever N.V. and Unilever PLC are corporations with headquarters in Rotterdam of the Netherlands and London, respectively. They wholly own Conopco Inc., a New York corporation. Unilever sells consumer products in more than 100 countries under brands such as Hellmann’s, Lipton, Surf, Dove, Suave and Vaseline. Unilever had sales of $62 billion in 2010.
Alberto-Culver Co., a Delaware corporation headquartered in Melrose Park, Ill., sells consumer products in more than 100 countries under brands such as TRESemmé, Alberto VO5, Noxzema, Nexxus, St. Ives, Static Guard and Mrs. Dash. Alberto Culver had sales of $1.6 billion for the fiscal year ending Sept. 30, 2010.
The proposed settlement, along with the department’s competitive impact statement, will be published in the Federal Register, as required by the Antitrust Procedures and Penalties Act. Any person may submit written comments concerning the proposed settlement within 60 days of its publication to Joshua H. Soven, Chief, Litigation I Section, Antitrust Division, U.S. Department of Justice, 450 Fifth St., N.W., Suite 4100, Washington, D.C. 20530. At the conclusion of the 60-day comment period, the court may enter the settlement upon a finding that it is in the public interest.
5 May 2011
Seafood Wholesaler Owners Sentenced in Alabama for Selling Falsely Labeled Fish, Smuggling and Misbranding of Seafood ProductsRead the Press Release
WASHINGTON– Karen L. Blyth and David H. M. Phelps were sentenced yesterday in federal court in Mobile, Ala., to 33 months and 24 months in prison, respectively. The pair was also fined $5,000 each, and barred for three years from working in the seafood industry or owning any seafood related business.
Blyth and Phelps had been convicted in January 2011 of 13 felony offenses for their roles in purchasing and selling farm-raised Asian catfish and Lake Victoria perch falsely labeled as grouper, selling foreign farm-raised shrimp falsely labeled as U.S. wild caught shrimp, selling shrimp they falsely claimed to be larger, more expensive shrimp than they actually were, and for buying fish they knew had been illegally imported into the United States. Blyth and Phelps, on the eve of trial on January 24, 2011, pleaded guilty to the offenses, which included one conspiracy count, nine violations of the Lacey Act, two counts of receiving smuggled goods and one count of misbranding. A third defendant charged in the case, John J. Popa, of Lisbon, Conn. had previously pleaded guilty to similar offenses, and is scheduled to be sentenced on May 26, 2011.
“These significant sentences are appropriate penalties for Blyth and Phelps, who committed multiple felonies in conspiring to scam consumers with falsely labeled, cheaper fish substitutes from Asia and Africa,” said Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division of the Department of Justice. “Their fraudulent scheme artificially deflated the cost of wild-caught fish, and gave them an unacceptable economic advantage over law abiding fisherman.”
“These prosecutions and the sentences that were imposed today should send a clear message that instances of consumer fraud will not be tolerated and that this U.S. Attorney’s Office will continue to aggressively protect local seafood consumers and all components of the local seafood market and industry,” said Kenyen R. Brown, U.S. Attorney for the Southern District of Alabama.
Blyth, of Paradise Valley, Ariz., was the co-owner and president of two companies, Consolidated Seafood Enterprises Inc., located in Phoenix, and Reel Fish and Seafood, Inc., located in Pensacola, Fla., which traded in a variety of seafood products. Phelps, of Scottsdale, Ariz., co-owned Consolidated Seafood and Reel Fish and served as a vice president in both companies. John J. Popa of Pensacola, managed and co-owned Reel Fish with Blyth and Phelps and served as the company’s vice president.
The defendants used Consolidated Seafood to buy frozen fillets of a type of farm raised catfish from Vietnam within the genus Pangasius, called sutchi, that they knew had been imported into the U.S. and falsely declared as wild caught sole, in order to avoid anti-dumping duties that were owed on this product. Anti-dumping duties went into effect on frozen fillets of sutchi, basa and swai in Jan. 2003, after an investigation by the Department of Commerce established that this product was being sold in the United States at less than fair value and were therefore injuring domestic catfish producers. In all, the defendants conspired to falsely label and buy approximately 283,500 pounds of farm raised sutchi, which was imported without $145,625 of anti-dumping duties having been paid.
Some of the fish seized during the investigation tested positive for malachite green and Enrofloxin, both of which are prohibited from use in U.S. food. Malachite green is a chemical compound often used in overseas fish farming, and Enrofloxin is an antibiotic used in some foreign fish farming but for which there is zero tolerance by the FDA in food sold in the U.S. The defendants ultimately received 81,000 pounds of this illegally imported sutchi, and sold 34,100 pounds of it to Reel Fish, which in turn sold it to customers in Alabama, Florida and elsewhere.
The defendants changed the marking on this sutchi and other imported basa to grouper, and sold it to customers in Alabama, Florida and Mississippi as more desirable grouper, at a higher cost. The defendants sold over 100,000 pounds of this falsely labeled basa and sutchi to these customers.
Blyth and Phelps also were sentenced for buying over 25,000 pounds of Lake Victoria perch from Africa, mislabeling and selling this fish as grouper and snapper to customers in Alabama and Florida at a higher cost, and in greater quantities than if it had been accurately labeled.
The defendants also conspired to mislabel and create false labels for shrimp they sold to customers in these areas. The defendants, through Reel Fish, would repackage farm raised foreign shrimp as U.S. wild caught shrimp. The defendants would also falsely label the shrimp as being larger than they were. By falsely labeling the shrimp in these manners, the defendants were able to sell more and charge more for the shrimp that they sold.
The case was investigated by the National Oceanic and Atmospheric Administration, Office of Law Enforcement; the Department of Homeland Security, Immigration and Customs Enforcement; the U.S. Air Force Office of Special Investigations; the Department of Defense, Defense Criminal Investigative Service. The case was prosecuted by Wayne D. Hettenbach and Susan L. Park of the Environmental Crimes Section of the Department of Justice Environment and Natural Resources Division, and Deborah A. Griffin of the U.S. Attorney’s Office for the Southern District of Alabama.
Maryland Man Sentenced to 84 Months in Prison for Defrauding Cisco Systems Inc.Read the Press Release
WASHINGTON – Iheanyi Frank Chinasa, 39, of Gaithersburg, Md., was sentenced today to 84 months in prison for his participation in a scheme to defraud Cisco Systems Inc., announced Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney Neil H. MacBride of the Eastern District of Virginia and Michael Morehart, Special Agent in Charge of the FBI Richmond, Va., Field Office.
Chinasa also was ordered by Chief U.S. District Judge James R. Spencer to pay restitution of $18,761,825, jointly and severally with co-defendant Robert Kendrick Chambliss, and to serve three years of supervised release following his prison term. Chinasa was convicted on Feb. 7, 2011, by a federal jury in Richmond of one count of conspiracy to commit mail and wire fraud, eight counts of mail fraud, one count of wire fraud and one count of obstruction of an official proceeding.
Chinasa and Chambliss, 31, of Henrico, Va., were indicted on Aug. 18, 2010. Chambliss pleaded guilty on Jan. 12, 2011, to conspiring to commit mail fraud and wire fraud. Chambliss was sentenced on April 13, 2011, to 12 months and one day in prison and ordered to pay $18,761,825 in restitution.
According to court records and evidence at trial, Chinasa and Chambliss engaged ina scheme to defraud Cisco. As part of the scheme, Chinasa manufactured counterfeit computer networking and telecommunications equipment. He or Chambliss would then contact Cisco, falsely claiming that they were having trouble with a Cisco product covered by a warranty. Cisco would issue replacement parts, but its warranty required return of the allegedly defective product. To satisfy that return policy, Chinasa and Chambliss would send their counterfeit product to Cisco.
The case was prosecuted by Assistant U.S. Attorney Michael C. Moore of the Eastern District of Virginia and Trial Attorney Kevin B. Muhlendorf of the Criminal Division’s Fraud Section. The case was investigated by the FBI.
Justice Department Reaches Settlement with Citizens Republic Bancorp Inc. and Citizens Bank Regarding Alleged Lending Discrimination in DetroitRead the Press Release
WASHINGTON – Citizens Republic Bancorp Inc. (CRBC) and Citizens Bank of Flint, Mich., will open a loan production office in an African-American neighborhood in Detroit, invest approximately $3.6 million in Wayne County, Mich., and take other steps as part of a settlement to resolve allegations that they engaged in a pattern or practice of discrimination on the basis of race and color, the Justice Department announced today.
The settlement, which remains subject to court approval, was filed in conjunction with the Justice Department’s complaint in the U.S. District Court for the Eastern District of Michigan. The complaint alleges that CRBC, as the successor to Republic Bank, and Citizens Bank violated the Fair Housing Act and the Equal Credit Opportunity Act, which prohibit financial institutions from discriminating on the basis of race and color in their mortgage lending practices. The lawsuit alleges that Citizens Bank, and Republic Bank before it, have served the credit needs of the residents of predominantly white neighborhoods in the Detroit metropolitan area to a significantly greater extent than they have served the credit needs of majority African-American neighborhoods. Those neighborhoods are easily recognized because t he Detroit metropolitan area has long had highly-segregated residential housing patterns, especially for African-Americans.
“Discrimination in the provision of lending services based on race deprives communities of access to credit and leaves the residents of minority neighborhoods vulnerable to predatory lenders. This type of discrimination is part of the web of intolerable practices that stripped vast amounts of wealth from communities of color in the last decade,” said Thomas E. Perez, Assistant Attorney General in charge of the Justice Department’s Civil Rights Division. “We are pleased that Citizens Bank will partner with the Detroit community to invest in an area that was long neglected, particularly by the former Republic Bank.”
U.S. Attorney for the Eastern District of Michigan Barbara McQuade added: “Today’s settlement will bring badly needed resources to Detroit and surrounding areas in Wayne County to assist in neighborhood stabilization. It will also broaden opportunities for home ownership for families who have been unlawfully denied credit. We applaud the bank’s cooperation and commitment to community development.”
“Racial or other illegal discrimination has no place in our credit markets,” said Federal Reserve Governor Sarah Bloom Raskin. “We are pleased that this settlement is designed to increase fair access to credit.”
Under the settlement, CRBC and Citizens Bank will invest $1.625 million in a partnership with the city of Detroit to aid in neighborhood stabilization by providing existing homeowners with matching grants of up to $5,000 to fund exterior improvements, $1.5 million in a special financing program to increase the amount of credit the banks extend to majority African-American areas in Wayne County, and spend $500,000 for outreach to potential customers, promotion of their products and services, and consumer financial education. Citizens Bank also will open a loan production office in a majority African-American area in Detroit and conduct fair lending training for its employees. The agreement also prohibits CRBC and Citizens Bank from discriminating on the basis of race or color in any aspect of a residential real estate-related or credit transaction.
The lawsuit originated from a 2010 referral by the Board of Governors of the Federal Reserve System to the Justice Department’s Civil Rights Division. Citizens Bank is a member of the Federal Reserve System.
The Civil Rights Division, the U.S. Attorney’s Office for the Eastern District of Michigan and the Board of Governors of the Federal Reserve System are members of the Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit www.StopFraud.gov .
A copy of the complaint, as well as additional information about fair lending enforcement by the Justice Department, can be obtained from the Justice Department’s website at www.justice.gov/fairhousing .
Federal Court Bars North Carolina Man from Promoting Alleged Tax Fraud SchemeRead the Press Release
WASHINGTON – A federal court has permanently barred a North Carolina man from selling an alleged tax fraud scheme, the Justice Department announced today. According to the government complaint , Andrew DeDominicis (formerly known as Andrew Brown) of Dallas, N.C., promoted the formation and use of a “corporation sole” to help his customers improperly avoid paying federal income taxes. The civil injunction order, to which DeDominicis consented, was entered by Judge Martin Reidinger of the U.S. District Court for the Western District of North Carolina.
According to the complaint, some states authorize an entity known as a corporation sole to enable religious leaders to hold property and conduct business for the benefit of a legitimate religious entity. The complaint states that DeDominicis falsely informed his customers that their corporations sole would be treated as churches and will not need to file federal income tax returns.
The court also required DeDominicis to give a copy of the injunction order to each customer who bought a corporation sole from him and to remove from his websites any material promoting the use of corporations sole.
In the past decade, the Justice Department’s Tax Division has obtained hundreds of injunctions to stop the promotion of tax-fraud schemes like corporations sole. Details of these cases are available on the Justice Department website .
4 May 2011
Washington Man Agrees to Order Barring Him from Reproductive Clinic and SurroundingsRead the Press Release
WASHINGTON – The U.S. District Court for the Western District of Washington ordered that John C. Kroack must adhere to a 25-foot buffer zone around a Planned Parenthood Reproductive Health Services Clinic in Lynnwood, Wash. The court order is the result of a consent decree entered into by Kroack to resolve a civil complaint filed against him by the United States for violation of the Freedom of Access to Clinic Entrances Act (FACE Act). Kroack, a 53-year-old resident of Mountlake Terrace, Wash., will also pay $5,000, with $4,000 suspended assuming that no other violations occur.
The complaint filed by the United States alleged that, on Jan. 7, 2010, Kroack entered the Planned Parenthood clinic’s front door and physically and verbally intimidated the clinic staff, while kicking and throwing his shoulder against a locked door that separated the clinic waiting room from the exam rooms. Kroack refused to leave the clinic until local law enforcement arrived and placed him under arrest. Police subsequently searched Kroack’s vehicle in the clinic parking lot and discovered a machete and several “army-style” bags containing netting, rip cord, tools and camouflage clothing. The FACE Act prohibits the physical obstruction of any person providing or obtaining reproductive health services with the intent to intimidate or interfere with that person.
“Protecting the right to provide or obtain reproductive health services free from the threat of harm, intimidation or physical obstruction is vital to safeguarding the constitutional rights of all Americans,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Department of Justice will continue to aggressively enforce the FACE Act against those who seek to violate the rights of their fellow Americans to safely provide or obtain such services.”
“This resolution protects patients’ right to obtain healthcare services free from threats or intimidation, and it protects healthcare providers’ right to a safe workplace,” said U.S. Attorney Jenny A. Durkan.
This civil action was filed by the Civil Rights Division Special Litigation Section Deputy Chief Julie Abbate and Trial Attorney William Nolan and Assistant U.S. Attorney Michael Diaz of the Western District of Washington.
United States Sues to Shut Down Eastern Pennsylvania Tax PreparerRead the Press Release
WASHINGTON – The United States has sued Dorthea Alexander of Leola, Pa., seeking to bar her from preparing federal tax returns for others, the Justice Department announced today. The civil injunction suit alleges that Alexander claimed false tax deductions, credits and exemptions on customer tax returns during her employment as tax supervisor at Pawn Plus Inc. in Lancaster, Pa.
According to the government complaint in the case, Alexander allegedly fabricated deductions for charitable donations, business expenses, medical expenses and other miscellaneous expenses to reduce her customers’ reported tax liabilities. The complaint states that she also used the names and social security numbers of unrelated individuals to claim improper dependent exemptions for her customers, sometimes charging customers extra for doing so.
In one instance cited in the complaint, Alexander allegedly told a customer that he “could use some dependents,” which would give him a larger tax refund. She allegedly then listed as dependents on his tax return the names and social security numbers of people whom the customer did not know, and charged the customer a fee for claiming those dependents equal to half of the resulting inflated tax refund.
According to the complaint, the total harm to the government from Alexander’s misconduct for the 2004 through 2007 tax years could be as high as $10.8 million.
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-fraud promoters and unscrupulous tax-return preparers. Information about these cases is available on the Justice Department website .
UBS AG Admits to Anticompetitive Conduct by Former Employees in the Municipal Bond Investments Market and Agrees to Pay $160 Million to Federal and State AgenciesRead the Press Release
UBS AG has entered into an agreement with the Department of Justice to resolve anticompetitive activity in the municipal bond investments market and has agreed to pay a total of $160 million in restitution, penalties and disgorgement to federal and state agencies, the Department of Justice announced today.
As part of its agreement with the department, UBS admits, acknowledges and accepts responsibility for illegal, anticompetitive conduct by its former employees. According to the non-prosecution agreement, from 2001 through 2006, certain former UBS employees at its municipal reinvestment and derivatives desk and related desks, entered into unlawful agreements to manipulate the bidding process and rig bids on municipal investment contracts. These contracts were used to invest the proceeds of, or manage the risks associated with, bond issuances by municipalities and other non-profit entities.
“UBS and its former executives engaged in illegal conduct that corrupted the competitive process and harmed municipalities, and ultimately taxpayers, nationwide,” said Assistant Attorney General Christine Varney. “Today’s agreements with UBS ensure that restitution is paid to the victims of the anticompetitive conduct, that UBS pays penalties and disgorges its ill-gotten gains. The Antitrust Division will continue to use every tool at our disposal to root out illegal activity in financial markets that disrupts the competitive process.”
Under the terms of the agreement, UBS agrees to pay restitution to victims of the anticompetitive conduct and to cooperate fully with the Justice Department’s Antitrust Division in its ongoing investigation into anticompetitive conduct in the municipal bond derivatives industry. To date, the ongoing investigation has resulted in criminal charges against 18 former executives of various financial services companies and one corporation. Four of these charged executives are former UBS employees: Mark Zaino, Peter Ghavami, Gary Heinz and Michael Welty. Nine of the 18 executives charged have pleaded guilty, including Mark Zaino.
The Securities and Exchange Commission (SEC), the Internal Revenue Service (IRS) and 25 state attorneys general also entered into agreements with UBS requiring the payment of penalties, disgorgement of profits from the illegal conduct and payment of full restitution to the victims harmed by the manipulation and bid rigging by UBS employees.
As a result of UBS’s admission of conduct; its cooperation with the Department of Justice and the SEC, the IRS and the state attorneys general; its monetary and non-monetary commitments to the SEC, IRS and state attorneys general; and its remedial efforts to address the anticompetitive conduct, the department agreed not to prosecute UBS for the manipulation and bid rigging of municipal investment contracts, provided that UBS satisfies its ongoing obligations under the agreement.
In December 2010, Bank of America agreed to pay a total of $137.3 million in restitution to federal and state agencies for its participation in anticompetitive conduct in the municipal bond derivatives market.
The department’s ongoing investigation into the municipal bonds industry is being conducted by the Antitrust Division, the FBI and the IRS Criminal Investigation. The department is coordinating its investigation with the SEC, the Office of the Comptroller of the Currency (OCC) and the Federal Reserve Bank of New York.
The Antitrust Division, SEC, IRS, FBI, state attorneys general, OCC and Federal Reserve Bank are members of the Financial Fraud Enforcement Task Force. President Obama established the interagency task force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information about the task force, visit www.stopfraud.gov.
Pharmaceutical Giant, Serono, Agrees to Pay $44.3 Million to Settle False Claims Act CaseRead the Press Release
WASHINGTON - P harmaceutical manufacturers Serono Laboratories Inc., EMD Serono Inc., Merck Serono S.A, and Ares Trading S.A. have agreed to pay $44.3 million to resolve False Claims Act allegations in connection with the marketing of the drug Rebif, the Justice Department announced.
The settlement resolves allegations that Serono paid health care providers from the launch of Rebif in about January 2002 through December 2009, to induce them to promote or prescribe Rebif, a recombinant interferon injectable that is used to treat relapsing forms of multiple sclerosis. Serono is alleged to have made payments to providers for hundreds of speaker training meetings and programs, as well as payments for attending consultant, marketing and advisory board meetings, all at upscale resorts and other locations. Serono’s actions allegedly resulted in the submission of false claims to federal health care programs including Medicare and Medicaid for the payment of Rebif, i.e., claims that were tainted by kickbacks.
“It’s imperative that medical determinations are guided by a patient's needs, not tainted by illegal incentives or fraud,” said Tony West, Assistant Attorney General of the Civil Division. “We are committed to ensuring that the chronically ill and other vulnerable members in our communities who rely on Medicare and Medicaid programs receive the best possible care.”
“Health care decisions must be based solely upon what is best for the individual patient and not on which pharmaceutical company is paying the doctor the biggest kickback,” said Rod J. Rosenstein, U.S. Attorney for the District of Maryland. “All consumers have the right to know that their health care provider’s judgment about medications they should take has not been undermined by kickbacks from pharmaceutical manufacturers.”
“In settling this second case with Serono, the Office of the Inspector General extended Serono’s existing corporate integrity agreement by three years, and required enhanced provisions such as specifically requiring that company directors and senior executives take responsibility for ensuring and monitoring compliance with federal law,” said Daniel R. Levinson, Inspector General of the Department of Health and Human Services (HHS-OIG). “If we can alter the cost-benefit calculus of some directors and executives, OIG can influence corporate behavior without putting access to government health care benefits at risk.”
Under the agreement announced today, the proceeds from the settlement will be split between the federal government and various states, with the United States receiving $34.6 million to resolve the federal claims and the states receiving $9.7 million to settle their respective claims under Medicaid.
The settlement 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), 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 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 approximately $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 have topped $7.3 billion.
The settlement was the result of an investigation by the U.S. Attorney’s Office for the District of Maryland with assistance from HHS-OIG; the Department of Defense Criminal Investigative Service; and the Civil Division of the U.S. Department of Justice.