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8 April 2011
Justice Department Settles Allegations of Immigration-Related Employment Discrimination in Iowa Against LF Staffing Services Inc.Read the Press Release
WASHINGTON – The Justice Department today announced that it has reached a settlement agreement with LF Staffing Services Inc., located in Cedar Rapids, Iowa, to resolve allegations that LF Staffing Services engaged in employment discrimination by improperly pre-screening job applicants and rejecting valid work authorization documents presented by certain groups of immigrant workers.
The department found that LF Staffing Services did not permit job applicants to begin the application process unless they were able to present documents sufficient to establish their employment eligibility and further failed to permit at least one individual who presented valid Employment Authorization Documents (EADs) to apply for employment. The Immigration and Nationality Act (INA) prohibits employers from refusing to honor valid employment authorization documents on the basis of citizenship status or national origin.
“The INA’s anti-discrimination provision protects all authorized workers from unfair documentary requests during the Form I-9 process,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Justice Department is committed to stopping workplace discrimination against citizens and work-authorized non-citizens alike.”
Under the terms of the settlement, LF Staffing Services Inc. has agreed to pay $1,100 in civil penalties and full back pay to the injured party. LF Staffing Services will also train its human resources personnel about employers’ nondiscrimination responsibilities in the I-9 process, and will provide periodic reports to the department.
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); e-mail [email protected]; or visit OSC’s website at www.justice.gov/crt/about/osc.
Justice Department Requires Google Inc. to Develop and License Travel Software in Order to Proceed with Its Acquisition of ITA Software Inc.Read the Press Release
WASHINGTON – The Department of Justice announced today that in order for Google Inc. to proceed with its proposed acquisition of ITA Software Inc., the department will require Google to develop and license travel software, to establish internal firewall procedures and to continue software research and development. The department said that the proposed settlement will protect competition for airfare comparison and booking websites and ensure those websites using ITA’s software will be able to power their websites to compete against any airfare website Google may introduce. The department said that the acquisition, as originally proposed, would have substantially lessened competition among providers of comparative flight search websites in the United States, resulting in reduced choice and less innovation for consumers.
The department said that Google will also be required to provide mandatory arbitration under certain circumstances and provide for a formal reporting mechanism for complainants if Google acts in an unfair manner.
The Department of Justice’s Antitrust Division filed a civil antitrust lawsuit today in U.S. District Court in Washington, D.C., to block the proposed acquisition. At the same time, the department filed a proposed settlement that, if approved by the court, would resolve the competitive concerns of the lawsuit.
“The Department of Justice’s proposed remedy promotes robust competition for airfare websites by ensuring those websites will continue to have access to ITA’s pricing and shopping software,” said Joseph Wayland, Deputy Assistant Attorney General of the Department of Justice’s Antitrust Division. “The proposed settlement assures that airfare comparison and booking websites will be able to compete effectively, providing benefits to consumers.”
Under the proposed settlement, Google will be required to continue to license ITA’s QPX software to airfare websites on commercially reasonable terms. QPX conducts searches for air travel fares, schedules and availability. Google will also be required to continue to fund research and development of that product at least at similar levels to what ITA has invested in recent years. Google will also be required to further develop and offer ITA’s next generation InstaSearch product to travel websites, which will provide near instantaneous results to certain types of flexible airfare search queries. InstaSearch is currently not commercially available, but is in development by ITA.
To prevent abuse of commercially sensitive information, Google will be required to implement firewall restrictions within the company that prevent unauthorized use of competitively sensitive information and data gathered from ITA’s customers. The proposed settlement delineates when and for what purpose that data may be used by Google. Google is also prohibited from entering into agreements with airlines that would inappropriately restrict the airlines’ right to share seat and booking class information with Google’s competitors. Finally, the proposed settlement provides for a formal reporting mechanism for complainants if Google acts in an unfair manner.
Google Inc. is the largest search engine in the United States. Google is a Delaware corporation with its principal place of business in Mountain View, Calif., and with 2009 revenues of more than $23 billion.
ITA Software Inc. is a leading producer of airfare pricing and shopping systems in the United States. ITA is headquartered in Cambridge, Mass.
As required by the Tunney Act, the proposed five-year settlement, along with the department’s competitive impact statement, will be published in the Federal Register. Any person may submit written comments concerning the proposed settlement during a 60-day comment period to James J. Tierney, Chief, Networks and Technology Enforcement Section, 450 Fifth Street, N.W., Suite 7100, Washington, D.C. 20530. At the conclusion of the 60-day comment period, the U.S. District Court for the District of Columbia may enter the proposed settlement upon finding that it is in the public interest.
Justice Department Requires Divestiture in Stericycle Inc.'s Acquisition of Healthcare Waste SolutionsRead the Press Release
WASHINGTON – The Department of Justice announced today that it will require Stericycle Inc. to divest an asset used in the treatment of infectious waste in order to proceed with its acquisition of Healthcare Waste Solutions Inc. (HWS). The department said the transaction, as originally proposed, would substantially lessen competition in the provision of infectious waste treatment services to hospitals and other health care facilities in the New York City metropolitan area, resulting in higher prices and reduced service.
The department’s Antitrust Division, along with the attorney general of the state of New York, filed a civil antitrust lawsuit today in U.S. District Court in Washington, D.C., to block the proposed transaction. At the same time, the department and the New York attorney general filed a proposed settlement that, if approved by the court, would resolve the competitive concerns alleged in the lawsuit.
“Without the divestiture required by the department, critical healthcare facilities in the New York City metropolitan area would have lost the benefits of competition for the provision of infectious waste treatment services and faced higher prices for those services,” said Christine Varney, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.
According to the complaint, the acquisition would remove a significant competitor in the treatment of infectious waste in an already highly concentrated market. The proposed acquisition would reduce from three to two the number of competitors with local transfer stations, leaving Stericycle and HWS with approximately 90 percent of the New York City metropolitan area’s infectious waste treatment market. This loss of competition likely would have resulted in higher prices and lesser quality of service for New York City area health care providers.
Under the proposed settlement, Stericycle and HWS must divest HWS’s transfer station located in the Bronx, N.Y., to a viable purchaser approved by the department. Transfer stations are facilities at which infectious waste collected by daily route trucks is transferred onto tractor trailers for efficient shipment of the waste to distant treatment facilities.
Stericycle is a Delaware corporation with its principal place of business in Lake Forest, Ill. Stericycle is a worldwide provider of infectious waste treatment services, and the largest provider in the United States, with operations in all 50 states. In 2009, Stericycle’s U.S. revenues totaled $913 million.
HWS is a Delaware corporation with its principal place of business in Cincinnati, Ohio. It is the second largest U.S. provider of infectious waste treatment services, with operations in 15 states. Its total revenues in 2009 were about $31 million.
As required by the Tunney Act, the proposed settlement will be published in the Federal Register. Any person may submit written comments concerning the proposed settlement during a 60-day comment period to Maribeth Petrizzi, Chief, Litigation II Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street, N.W., Suite 8700, Washington, D.C. 20530. At the conclusion of the 60-day comment period, the U.S. District Court for the District of Columbia may enter the proposed settlement upon finding that it is in the public interest.
Johnson & Johnson Agrees to Pay $21.4 Million Criminal Penalty <br /> to Resolve Foreign Corrupt Practices Act and Oil for Food InvestigationsRead the Press Release
WASHINGTON – Johnson & Johnson (J&J) has agreed to pay a $21.4 million criminal penalty as part of a deferred prosecution agreement with the Department of Justice to resolve improper payments by J&J subsidiaries to government officials in Greece, Poland and Romania in violation of the Foreign Corrupt Practices Act (FCPA), the Justice Department’s Criminal Division announced today. The agreement also resolves kickbacks paid to the former government of Iraq under the United Nations Oil for Food Program.
J&J is headquartered in New Brunswick, N.J., and is listed on the New York Stock Exchange. The company manufactures and sells medical devices, pharmaceuticals and consumer health care products.
“Today, Johnson & Johnson has admitted that its subsidiaries, employees and agents paid bribes to publicly-employed health care providers in Greece, Poland and Romania, and that kickbacks were paid on behalf of Johnson & Johnson subsidiary companies to the former government of Iraq under the United Nations Oil for Food program,” said Principal Deputy Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division.” “Johnson & Johnson, however, has also cooperated extensively with the government and, as a result, has played an important role in identifying improper practices in the life sciences industry. As today’s agreement reflects, we are committed to holding corporations accountable for bribing foreign officials while, at the same time, giving meaningful credit to companies that self-report and cooperate with our investigations.”
According to the agreement, J&J has acknowledged responsibility for the actions of its subsidiaries, employees and agents who made various improper payments to publicly-employed health care providers in Greece, Poland and Romania in order to induce the purchase of medical devices and pharmaceuticals manufactured by J&J subsidiaries. J&J also acknowledged that kickbacks were paid on behalf of J&J subsidiary companies to the former government of Iraq under the United Nations Oil for Food Program in order to secure contracts to provide humanitarian supplies. A criminal information, filed in U.S. District Court in the District of Columbia in connection with the deferred prosecution agreement, charges J&J subsidiary DePuy Inc. with conspiracy and violations of the FCPA in connection with the payments to public physicians in Greece.
The agreement recognizes J&J’s timely voluntary disclosure, and thorough and wide-reaching self-investigation of the underlying conduct; the extraordinary cooperation provided by the company to the department, the SEC and multiple foreign enforcement authorities, including significant assistance in the industry-wide investigation; and the extensive remedial efforts and compliance improvements undertaken by the company. In addition, J&J received a reduction in its criminal fine as a result of its cooperation in the ongoing investigation of other companies and individuals, as outlined in the U.S. Sentencing Guidelines. J&J’s fine was also reduced in light of its anticipated resolution in the United Kingdom. Due to J&J’s pre-existing compliance and ethics programs, extensive remediation, and improvement of its compliance systems and internal controls, as well as the enhanced compliance undertakings included in the agreement, J&J was not required to retain a corporate monitor, but it must report to the department on implementation of its remediation and enhanced compliance efforts every six months for the duration of the agreement.
In a related matter, J&J reached a settlement today with the SEC under which it agreed to pay more than $48.6 million in disgorgement of profits, including pre-judgment interest.
This case is being prosecuted by Trial Attorney Kathleen M Hamann of the Criminal Division’s Fraud Section with assistance from the FBI’s Washington Field Office’s dedicated FCPA squad. The Criminal Division’s Office of International Affairs provided assistance in this matter.
The Justice Department acknowledges and expresses its appreciation for the significant assistance provided by the authorities of the 8th Ordinary Interrogation Department of the Athens Court of First Instance and the Athens Economic Crime Squad in Greece; the 5th Investigation Department of the Regional Prosecutor’s Office in Radom, Poland; the Fraud Squad of the West Yorkshire Police Department in the United Kingdom; and the SEC’s Division of Enforcement, as well as the coordination and cooperation with the authorities of the United Kingdom’s Serious Fraud Office.
Houston Registered Nurse Pleads Guilty in Connection with an Alleged $5.2 Million Medicare Fraud SchemeRead the Press Release
WASHINGTON – A registered nurse employed by a Houston health care company pleaded guilty today in connection with an alleged $5.2 million Medicare fraud scheme, announced the Departments of Justice and Health and Human Services (HHS).
Adelma Casas Sevilla, 54, pleaded guilty before U.S. District Court Judge Nancy Atlas in Houston to one count of conspiracy to commit health care fraud. According to court documents, Family Healthcare Group, a home health care company, purported to provide skilled nursing to Medicare beneficiaries. According to court documents, Family Group hired co-conspirators to recruit Medicare beneficiaries for the purpose of filing claims with Medicare for skilled nursing that was medically unnecessary and/or not provided. After the Medicare beneficiaries were recruited, Casas Sevilla, in her capacity as a registered nurse, fraudulently signed plans of care stating that the beneficiaries needed home health care when in fact she knew the beneficiaries were not home-bound and not in need of skilled nursing.
At sentencing, scheduled for July 21, 2011, Casas Sevilla faces a maximum sentence of 10 years in prison for the health care fraud conspiracy count.
Today’s guilty plea was announced by Assistant Attorney General of the Criminal Division Lanny A. Breuer; U.S. Attorney José Angel Moreno of the Southern District of Texas; Special Agent-in-Charge Richard C. Powers of the FBI’s Houston Field Office; Special Agent-in-Charge Mike Fields of the Dallas Regional Office of HHS Office of Inspector General (HHS-OIG), Office of Investigations; and Texas Attorney General Greg Abbott.
This case is being prosecuted by Trial Attorneys Charles D. Reed and Laura Cordova, and Assistant Chief Sam S. Sheldon of the Criminal Division’s Fraud Section. The case was brought as part of the Medicare Fraud Strike Force, supervised by the U.S. Attorney’s Office for the Southern District of Texas and the Criminal Division’s Fraud Section.
Since their inception in March 2007, Medicare Fraud Strike Force operations in nine locations have charged more than 1,000 defendants who collectively have falsely billed the Medicare program for more than $2.3 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov .
Former Jena, La., Corrections Officer Pleads Guilty to Criminal Sexual ActivityRead the Press Release
WASHINGTON - The Justice Department announced today that Joseph Taunton, 31, from Jonesville, La., a former corrections officer at the LaSalle Parish Detention Center in Jena, La., pleaded guilty in federal court for engaging in a sexual act with a federal detainee.
During his guilty plea, Taunton admitted that on Dec. 16, 2010, while working as an officer at the detention center, he engaged in a sexual act with a federal detainee under his supervision.
“Those who are sworn to protect our citizens will be held accountable when they violate the public trust and abuse the rights of individuals in their custody,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division.
“The defendant violated his oath; he crossed the line. This kind of behavior by prison employees can not and will not be tolerated, and we will continue to prosecute these types of cases,” said Stephanie Finley, U.S. Attorney for the Western District of Louisiana.
Sentencing is scheduled for July 28, 2011. Taunton faces a maximum penalty of 15 years in prison, a $250,000 fine, or both.
Today’s plea resulted from the work of the Department of Homeland Security – Office of Inspection General. The case is being prosecuted by Assistant U.S. Attorney Mary Mudrick of the Western District of Louisiana and Trial Attorney Angie Cha of the Civil Rights Division of the U.S. Department of Justice.
Former Employee of U.S. Embassy in Baghdad<br /> Sentenced to 42 Months in Prison for Stealing Nearly $250,000Read the Press Release
WASHINGTON – A former employee of the U.S. Embassy in Baghdad, Iraq, was sentenced today in U.S. District Court in Alexandria, Va., to 42 months in prison for stealing nearly $250,000 intended for the payment of shipping and customs services for the embassy, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Neil H. MacBride for the Eastern District of Virginia.
Osama Esam Saleem Ayesh, 36, was also ordered to pay $243,416 in restitution and a $5,000 fine, as well as to serve three years of supervised release following his prison term. A federal jury convicted Ayesh on two counts of theft of public money and one count of engaging in acts affecting a personal financial interest. Ayesh was arrested at Dulles International Airport on Aug. 16, 2010, and indicted on Oct. 15, 2010, on the charges for which he was convicted.
Ayesh, a resident of Jordan, was hired by the Department of State as a shipping and customs supervisor at the embassy in Baghdad, who oversaw the shipments of personal property of embassy officials and personnel in Iraq. His duties required that he maintain close contact with local Iraqi companies and vendors with expertise in clearing goods through Iraqi customs. As a State Department employee, Ayesh was aware that he would be subject to the conflict of interest laws of the United States that prohibit government employees from using their position for personal profit.
According to court records, Ayesh used his State Department computer to create a phony e-mail account in the name of a real Iraqi contractor and used that e-mail account to impersonate the contractor in communications with embassy procurement officials. He also established a bank account in Jordan under his wife’s name to further his criminal scheme and falsified wire transfer instructions that directed U.S. government electronic funds transfers to that account.
Court records and evidence at trial showed that Ayesh was personally involved in establishing and operating blanket purchase agreements for the provision of customs clearance and delivery services to the U.S. Embassy in Baghdad. From November 2008 to June 2010, Ayesh submitted false invoices in the name of an Iraqi contractor – which Ayesh fabricated on blank stationery he kept in his embassy apartment – and caused the U.S. Department of State to wire $243,416 to his wife’s account in Jordan.
This case was prosecuted by David Laufman of the Criminal Division’s Fraud Section, who is on detail to the Department of Justice from the Special Inspector General for Iraq Reconstruction, and Assistant U.S. Attorney Thomas McQuillan of the Eastern District of Virginia. The Criminal Division’s Office of International Affairs provided assistance in this matter. The case was investigated by special agents of the State Department’s Office of Inspector General and the FBI’s Washington Field Office.
Attorney General Holder Recognizes Seven Individuals, Three Organizations for Outstanding Service <br /> to Crime VictimsRead the Press Release
WASHINGTON – Attorney General Eric Holder today at an awards ceremony hosted by the Department of Justice recognized seven individuals and three organizations for outstanding work on behalf of crime victims.
The Attorney General’s Annual Victims’ Service Awards are presented as a prelude to the nation’s observance of National Crime Victims’ Rights Week, April 10-16, 2011. This year’s theme —“Reshaping the Future, Honoring the Past” — highlights the importance of crime victims’ rights and recognizes individuals and organizations that demonstrate a commitment to this effort.
“Each of the leaders, legal advocates, public servants and concerned citizens here today are part of a powerful, national movement—one that inspired the passage of the historic 1984 Victims of Crime Act (VOCA) that created the Crime Victims Fund, as well as the 1994 crime bill and the Violence Against Women Act,” said Attorney General Holder. “We commend these individuals and serviceproviders who, when faced with emerging challenges, seek out new ways to protect our communities, and to more effectively assist and empower crime victims.”
“Today’s Justice Department is working with medical and law enforcement professionals, service providers and crime victim advocates to reach those victims most in need of help,” said Attorney General Holder. “We’re also evolving to meet new challenges and emerging threats. As criminals adapt to an inter-connected world, – in partnership with law enforcement – we are working hard to serve victims of youth violence, cybercrime, identify theft, human trafficking and fraud.”
The award presentation, along with the Candlelight Observance held yesterday in Washington, D.C., was organized by the Department of Justice’s Office of Justice Programs (OJP) and its Office for Victims of Crime (OVC). In addition to the attorney general, others participating in today’s awards ceremony were Assistant Attorney General for OJP Laurie O. Robinson and OVC Acting Director Joye E. Frost.
The recipients of today’s awards were nominated by their colleagues in the victim service and criminal justice fields. These awards recognize their courageous responses in the aftermath of a crime; their professional efforts to better serve the needs of victims of human trafficking, identity theft and elder abuse; and their assurance that victims receive the compensation and other services available to them at the state and local level. The following awards were presented by the attorney general:
National Crime Victim Service Award: Honors extraordinary efforts in direct service to crime victims.
· Recipient: House of Ruth Maryland (HRM), for assisting victims of domestic violence and serving as the state’s first shelter for battered women and their children. HRM is one of the most comprehensive domestic violence centers in the country. Its services include emergency shelter services, transitional house, a 24-hour crisis hotline, counseling for victims and their children, legal advocacy, a legal clinic and a variety of outreach and education programs to change beliefs and attitudes towards domestic violence in the community.
Award for Professional Innovation in Victim Services: Recognizes a program, organization or individual that has helped expand the reach of victims’ rights and services.
· Recipient: Elder Abuse Forensic Center (EAFC), Orange County, Calif., for providing direct services for the prevention, assessment and treatment of elder abuse and neglect. EAFC addresses cases of elder abuse and neglect using a multidisciplinary collaboration of area agencies. EAFC takes all of the resources available from existing elder advocacy agencies and channels them to combat and prosecute elder mistreatment.
Volunteer for Victims Award: Honors individuals for their uncompensated efforts to reach out to victims.
· Recipient: Pamela Faith Young McCarter, M.D., York, Penn., for providing invaluable assistance to two victims of human trafficking, as well as information to federal authorities that led to the conviction of three human traffickers. Dr. McCarter became an important advocate for the two victims and has continued to help them rebuild their lives and obtain appropriate services.
Special Courage Award: Recognizes individuals who have demonstrated extraordinary bravery in the aftermath of a crime or who have performed a courageous act on behalf of a crime victim.
· Recipient: Nicole M. Robinson, Clinton, Md., for being an outspoken advocate for the victims of identity theft and its devastating impacts. Almost immediately following her victimization, Ms. Robinson testified before the Federal Trade Commission on a victim impact panel. Her willingness to share her experience was an act of courage that has resulted in significant strides in the government and business community’s response to identity theft.
Allied Professional Award: Recognizes an individual or an organization outside the victim assistance field for services or contributions to the victims’ field.
· Recipient: The Honorable Ronald Reinstein, Phoenix, for diligently enforcing Arizona’s Victims’ Bill of Rights and ensuring that crime victims’ voices were heard in the courtroom. Judge Reinstein is a strong proponent of improving the judiciary to address the concerns of crime victims. During his judicial career, Judge Reinstein established an ad hoc committee to review, modify and develop a more understandable and effective restitution process for victims in his county.
· Recipient: Sarah Deer, St. Paul, Minn., for dedicating herself to addressing and ending the crime of sexual violence against Native American women. Her vast knowledge about issues related to addressing the epidemic levels of sexual violence against Native American women and jurisdiction issues was vital in the development of a series of comprehensive recommendations in Amnesty International’s 2007 report Maze of Injustice. This report drew congressional attention to sexual violence against Native American women and contributed to the 2010 enactment of the Tribal Law and Order Act.
Ronald Wilson Reagan Public Policy Award: Honors an individual whose leadership, vision and innovation results in significant changes to public policy and practice benefiting crime victims.
· Recipient: Brooks Douglass, Malibu, Calif., for serving victims of crime and changing state legislation to help guide victims through the criminal justice system. As an Oklahoma State Senator, Mr. Douglas authored and worked to pass numerous crime rights’ bills and laws, including the Oklahoma Victims’ Bill of Rights, which dramatically changed the state criminal justice system. He also worked to pass laws regulating rights to restitution; confidentiality of victim information; rights of victims to attend all court proceedings; rights to be informed of case status; and right of victims to attend the execution of their loved one’s convicted killer.
Federal Service Award: Honors exceptional contributions and extraordinary impact on behalf of victims in Indian Country, on military installations, in national parks or in other areas governed by federal jurisdiction.
· Recipient: Robert S. Mueller III, Washington, D.C., for serving victims with unparalleled commitment as a federal prosecutor, Assistant Attorney General, U.S. Attorney, Acting Deputy Attorney General and Director of the FBI. Director Mueller assumed the leadership of the FBI one week before the September 11th attacks. Shortly after assuming his duties, Director Mueller signed an order establishing the Office for Victim Assistance (OVA). Since OVA was created, the FBI has demonstrated, both nationally and internationally, that victim assistance can be incorporated into the operational side of a law enforcement agency with dual benefits for investigations and victims.
· Recipient: Charlotte Leigh Moerbe, Ph.D., Fort Sam Houston, Texas, for supporting several hundred military members recovering from sexual violence. In 2004, Dr. Moerbe created the Lackland Sexual Assault Prevention and Outreach (SAPO) program which is the largest Air Force sexual assault response and training program. Dr. Moerbe has created and oversees two additional volunteer trainer programs. The SAPO Representative Program includes more than 180 military personnel who provide sexual assault awareness and education for the general population located at Lackland, Texas. A second volunteer pool works primarily with the student population at Lackland.
Crime Victims Fund Award: Recognizes individuals or teams for their outstanding work in pursuing federal criminal offenders and imposing and collecting the criminal fines.
· Recipient: Financial Litigation Unit, U.S. Attorney’s Office, Eastern District of Texas, Tyler, Texas, for its efforts to maximize fine collections on behalf of the Crime Victims Fund and the restitution payments to victims of crime. The Financial Litigation Unit (FLU) assures defendants meet their responsibilities to victims in restitution cases, by coordinating with prosecutors and investigating agencies to prevent fraudulent asset transfers, or the hiding of assets, by defendants.
Arkansas Men Charged with Federal Hate Crime Related to the Assault of Five Hispanic MenRead the Press Release
WASHINGTON – The Justice Department announced today the arrest of Sean Popejoy, 19, and Frankie Maybee, 20, both of Green Forest, Ark., on charges related to a racially-motivated assault on five Hispanic men. A federal grand jury in the Western District of Arkansas returned an indictment on April 5, 2011, charging Popejoy and Maybee with federal hate crime charges and conspiracy to commit a federal hate crime.
According to the indictment, Popejoy and Maybee have been charged with one count of conspiracy and five counts of violating the Matthew Shepard and James Byrd Jr. Hate Crimes Prevention Act, which was enacted in October 2009. Specifically, the indictment alleges that on June 20, 2010, the defendants yelled anti-Latino epithets at the victims while at a gas station parking lot. When the victims drove away, the defendants chased after them in the defendants’ truck. The defendants eventually caught up to the victims’ car and repeatedly rammed their truck into the victims’ car, causing the victims’ car to go off the road, overturn and ignite. All five of the victims were physically injured as a result of the defendants’ actions.
If convicted, the defendants face maximum penalties of 10 years in prison on each of the civil rights charges.
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 U.S. Attorney Conner Eldridge and Assistant U.S. Attorney Kyra Jenner for the Western District of Arkansas and Trial Attorney Edward Chung of the Department of Justice’s Civil Rights Division.
An indictment is merely an accusation, and the defendants are presumed innocent unless proven guilty.
7 April 2011
Miami-Area Marketing Director Pleads Guilty for Her Role in Community Mental Health Care Fraud Scheme Involving More Than $100 Million in Fraudulent Medicare ClaimsRead the Press Release
WASHINGTON – A Miami-area resident pleaded guilty today in U.S. District Court in Miami for her role in managing a community mental health care fraud scheme that resulted in the submission of more than $100 million in fraudulent claims to Medicare, the Departments of Justice and Health and Human Services (HHS) announced.
Margarita Acevedo pleaded guilty before U.S. Magistrate Judge Barry L. Garber to one count of conspiracy to commit health care fraud and one count of conspiracy to pay and receive illegal health care kickbacks. In pleading guilty, Acevedo admitted that since 2005, she served as the marketing director for American Therapeutic Corporation (ATC), a Florida corporation headquartered in Miami that operated purported partial hospitalization programs (PHPs) in seven different locations throughout South Florida and Orlando. A PHP is a form of intensive treatment for mental illness.
Acevedo admitted that as marketing director, her job was to orchestrate the payment of kickbacks and bribes used to recruit Medicare beneficiaries to attend ATC and a related company, American Sleep Institute (ASI). Acevedo admitted that the Medicare beneficiaries recruited by ATC and ASI, were not eligible to receive the PHP and sleep study services that ATC and ASI billed to Medicare, and that the services were not medically necessary. During the period of her involvement in the fraud scheme, the defendant admitted that she and her co-conspirators caused between $100 million and $200 million in fraudulent claims to be submitted to Medicare for services purportedly provided at ATC and ASI.
According to court documents, Acevedo and others paid kickbacks to owners and operators of assisted living facilities (ALFs) and halfway houses and to patient brokers in exchange for providing ineligible patients to ATC and ASI. Acevedo and her co-conspirators knew that Medicare beneficiaries were recruited regardless of their medical needs and in some cases the beneficiaries received a portion of the kickbacks. Acevedo and her co-conspirators actively recruited ALF and halfway house owners and operators and patient brokers to participate in this kickback scheme. Acevedo admitted that she and other co-conspirators paid and caused the payment of millions of dollars in kickbacks in exchange for Medicare beneficiaries to attend ATC and ASI programs for which they did not qualify so that ATC and ASI could bill Medicare for medically unnecessary services.
Acevedo also admitted that she and her co-conspirators engaged in elaborate and sophisticated measures to conceal their fraudulent activities from Medicare and from law enforcement.
Acevedo and her co-conspirators were charged in a superseding indictment unsealed on Feb. 15, 2011. The superseding indictment alleges that ATC and ASI submitted a total of more than $200 million in claims to Medicare.
Today’s guilty plea was announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; John V. Gillies, Special Agent-in-Charge of the FBI’s Miami field office; and Special Agent-in-Charge Christopher Dennis of the HHS Office of Inspector General (HHS-OIG), Office of Investigations Miami office.
This case is being prosecuted by Trial Attorneys Jennifer L. Saulino and Joseph S. Beemsterboer of the Criminal Division’s Fraud Section. The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.
Since its inception in March 2007, the Medicare Fraud Strike Force operations in nine locations have charged more than 1,000 defendants that collectively have billed the Medicare program for more than $2.3 billion.In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.
Justice Department Files Suit Against Woman for FACE Act Violations Against Kansas PhysicianRead the Press Release
WASHINGTON – The Justice Department today filed a civil complaint in the U.S. District Court for the District of Kansas against Angel Dillard for violating the Freedom of Access to Clinic Entrances Act (FACE Act).
According to court documents, on or about Jan. 15, 2011, Dillard mailed a threatening letter to a doctor training to perform abortions in Wichita, Kan. The letter, among other threatening language, referenced explosives placed under the doctor’s car. The FACE Act prohibits threats of force against any person providing or obtaining reproductive health services, with the intent to intimidate or interfere with that person.
Among other things, Dillard wrote: “Thousands of people are already looking into your background, not just in Wichita, but from all over the U.S. They will know your habits and routines. They will know where you shop, who your friends are, what you drive, where you live. You will be checking under your car everyday-because maybe today is the day someone places an explosive under it.” Later Dillard added: “We will not let this abomination continue without doing everything we can to stop it.”
In its complaint, the United States seeks an order preventing Dillard from contacting the doctor and from coming within 250 feet of the doctor, her home, car or place of business. The complaint also seeks monetary damages.
“Protecting the right of reproductive health services providers to do their jobs free from the threat of harm is of the utmost importance,” 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.”
“The murder of Dr. George Tiller brought home to many of us the terrible potential for violence and the need to use every legal means at our disposal to prevent it,” said Barry Grissom, U.S. Attorney in the District of Kansas.
This civil action was filed by the Civil Rights Division Special Litigation Section Deputy Chief Julie Abbate and Trial Attorney Aaron Fleisher.
Justice Department Files Lawsuit in Alaska Against Air Methods Corporation and LifeMed Alaska LLC to Enforce Employment Rights of Army National Guard MemberRead the Press Release
WASHINGTON — The Justice Department today announced that it has filed a lawsuit alleging that Air Methods Corp. and LifeMed Alaska LLC willfully violated the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) by discriminating against and failing to reemploy Chief Warrant Officer Third Class Jonathon L. Goodwin of Wasilla, Alaska. The suit was filed in federal district court in Alaska.
Under USERRA, an employer is prohibited from discriminating against service members because of their membership in the military, past military service or future service obligations. In addition, and subject to certain limitations, USERRA requires that service members who leave their civilian jobs to serve in the military be reemployed promptly by their civilian employers in the positions they would have held if their employment had not been interrupted by military service or in positions of comparable seniority, pay and status.
Goodwin has been a member of the Army National Guard for almost 20 years, with honorable service as both a fixed-wing and helicopter pilot. The Justice Department’s complaint alleges that Goodwin was employed by Air Methods as a helicopter pilot when he was called upon for a nine month period of active duty, including a period of deployment to Iraq. According to the complaint, at the end of his deployment, Goodwin sought to be reemployed by Air Methods and assigned to a contract helicopter pilot position with LifeMed Alaska. The complaint alleges that LifeMed refused to accept Goodwin for the contract position due to LifeMed’s bias against recently returned service members as well as an unwillingness to accommodate Goodwin’s possible future military obligations. The complaint also alleges that Air Methods furthered LifeMed’s discriminatory action by refusing to assign Goodwin to the LifeMed contract and, consequently, failed to offer Goodwin proper reemployment
“When Congress enacted USERRA, it was to protect our men and women in uniform from experiencing exactly this kind of injustice,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Justice Department is committed to vigorously enforcing federal laws that protect the employment rights of our service members.”
The case stems from a referral by the Department of Labor following an investigation by the Department of Labor’s Veterans’ Employment and Training Service. The case will be jointly litigated by the Civil Rights Division and the U.S. Attorney’s Office in Alaska.
Additional information about USERRA can be found on the Justice Department website: www.servicemembers.gov and www.usdoj.gov/crt/emp , as well as on the Labor Department’s website at www.dol.gov/vets/programs/userra/main.htm .
Justice Department Asks Court to Allow IRS to Seek HSBC India Bank Account RecordsRead the Press Release
WASHINGTON - The United States is seeking an order from a federal court in San Francisco authorizing the Internal Revenue Service (IRS) to request information from HSBC Bank USA, N.A. about U.S. residents who may be using accounts at The Hong Kong and Shanghai Banking Corporation in India (HSBC India) to evade federal income taxes, the Justice Department announced today.
The government filed a petition with the court to allow the IRS to serve what is known as a “John Doe” summons on the bank. The IRS uses a John Doe summons to obtain information about possible tax fraud by people whose identities are unknown. If approved, the John Doe summons would direct HSBC USA to produce records identifying U.S. taxpayers with accounts at HSBC India, many of whom are believed by the government to have hidden their accounts from the IRS.
According to documents filed with the government’s petition, on Jan. 26, 2011, a grand jury in Newark, N.J., indicted Vaibhav Dahake of Somerset, N.J., charging him with conspiracy to defraud the United States by using undeclared accounts in the British Virgin Islands and at HSBC India to evade his income taxes. According to those documents, employees of HSBC Holdings plc and its affiliates operating in the United States assured Dahake that accounts maintained in India would not be reported to the IRS.
The government alleges that, according to HSBC’s website, in 2002 HSBC India opened a “representative office” at an HSBC USA office in New York City to enable “Non-Resident Indians” (NRIs) living in the United States to open accounts in India. In 2007, HSBC India allegedly opened a second representative office at an HSBC USA office in Fremont, Calif., purportedly “to make banking transactions more convenient for the NRI community based in California.” Although HSBC India closed those offices in June 2010, the government alleges that NRI clients may still access their accounts at HSBC India from the United States. According to the petition documents, NRI clients have told IRS investigators that NRI representatives in the United States assured the clients that they could invest in accounts at HSBC India without paying U.S. income tax on interest earned on the accounts and that HSBC would not report the income earned on the HSBC India accounts to the IRS.
“The Department of Justice is committed to ensuring that all U.S. taxpayers meet their obligations to declare and pay taxes on foreign bank accounts,” said John A. DiCicco, Principal Deputy Assistant Attorney General for the Justice Department’s Tax Division. “The ability to hide accounts in foreign countries is rapidly dwindling. We will continue working hand-in-hand with the IRS to enforce the tax laws against those who are using offshore accounts – wherever they are located – to evade taxes.”
“The IRS continues to focus its attention on international tax evasion,” said IRS Commissioner Douglas Shulman. “This summons request is focused on obtaining more information to help us determine if additional actions are needed. As I’ve said all along, our international efforts are not about just one country or one bank – it’s about our wider effort to ensure compliance with the nation’s tax laws.”
Federal law requires U.S. taxpayers to pay federal income taxes on all income earned worldwide. U.S. taxpayers must also report foreign financial accounts if the total value of the accounts exceeds $10,000 at any time during the calendar year. A willful failure to report a foreign account can result in a penalty of up to 50 percent of the amount in the account at the time of the violation.
Additional information about the offshore compliance initiative of the Justice Department’s Tax Division, including its enforcement efforts against Swiss bank UBS AG, is available here.
Four Men and One Woman from Arkansas Indicted on Charges Stemming from the Firebombing of an Interracial Couple’s HomeRead the Press Release
WASHINGTON – Jason Barnwell, 37, of Evening Shade, Ark.; Gary Dodson, 32, of Waldron, Ark.; Jake Murphy, 19, also of Waldron; and Dustin Hammond, 20, of Hardy, Ark., were indicted by a federal grand jury on civil rights charges and other federal charges stemming from their participation in an incident in January 2011 involving Molotov cocktails thrown at and into the home of a mixed-race couple living near Hardy, Ark. The couple was also barraged with racial slurs and threatened with future violence if they did not leave Arkansas. Wendy Treybig, 31, of Evening Shade, Ark., was indicted for obstruction of justice for her role in trying to cover up the incident.
Specifically, Barnwell, Dodson, Murphy and Hammond are charged with one count of conspiracy to interfere with the housing rights of another, one count of interfering with the housing rights of another, one count of possessing an unregistered firearm, one count of using fire in the commission of a felony, and one count of using a destructive device in furtherance of a crime of violence. Barnwell is also charged with unlawfully possessing a firearm.
If convicted, Barnwell faces up to 85 years in prison. If convicted, Dodson, Murphy and Hammond face up to 70 years in prison. If convicted, Treybig faces up to 20 years in prison.
This investigation was led by the Joint Terrorism Task Force (JTTF) of the FBI and the Bureau of Alcohol, Tobacco, Firearms and Explosives; along with the Arkansas State Police; the Hardy and Waldron Police Departments; and the Scott and Sharp County Sheriff's Offices.
The charges set forth in an indictment are merely allegations. The defendants are presumed innocent until proven guilty.
Comverse Technology INC. Agrees to Pay $1.2 Million Penalty to Resolve Violations of the Foreign Corrupt Practices ActRead the Press Release
WASHINGTON - Comverse Technology Inc. (CTI), a New York City headquartered corporation, has agreed to pay a $1.2 million penalty for violations of the Foreign Corrupt Practices Act (FCPA), announced Assistant Attorney General Lanny A. Breuer of the Criminal Division. CTI, through its main operating subsidiary Comverse Inc. and Comverse Inc.’s subsidiaries, is a global provider of software and software systems for communication and billing services.
According to the non-prosecution agreement, CTI has accepted responsibility for violating the books and records provisions of the FCPA arising from and related to CTI’s failure to record accurately certain improper payments that were made between 2003 and 2006 by employees and a third-party agent of Comverse Inc. subsidiaries to individuals connected to OTE, a Greek telecommunications provider, in order to obtain purchase orders. The payments, totaling approximately $536,000, were inaccurately characterized as legitimate agent commissions in the books and records of Comverse Ltd., a wholly owned subsidiary of Comverse Inc. that is based in Tel Aviv, Israel.
The agreement recognizes the company’s thorough self-investigation and the results of its investigation, voluntary disclosure of the underlying conduct, and full cooperation with the department. CTI has also undertaken extensive remedial efforts and overhauled its overall compliance culture, including through the implementation of mandatory training programs focused on anti-corruption and the use of third-party agents and intermediaries, as well as more rigorous accounting controls for the approval of third-party payments.
As a result of these mitigating factors, the department has agreed not to prosecute CTI or its subsidiaries for failing to maintain accurate books and records, provided that CTI satisfies its obligations under the agreement for a period of two years. Those obligations include ongoing cooperation, payment of the $1.2 million penalty, and the continued implementation of rigorous internal controls.
In a related matter, CTI reached a settlement today with the U.S. Securities and Exchange Commission in which it agreed to pay approximately $1.6 million in disgorgement and pre-judgment interest.
This case is being handled by Trial Attorney Amanda Aikman of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Ilene Jaroslaw of the U.S. Attorney’s Office for the Eastern District of New York. The department acknowledges and expresses its appreciation for the significant assistance provided by the staff of the SEC during the course of this investigation.
6 April 2011
Tax Defendant Indicted for Filing False Liens for Billions of Dollars Against Federal Law EnforcementRead the Press Release
WASHINGTON - Mark D. Leitner has been indicted by a grand jury in the Northern District of Florida for filing false liens against federal law enforcement, corruptly endeavoring to impede and impair the Internal Revenue Service (IRS), and public disclosure of another’s Social Security number in the commission of illegal activity, the Justice Department announced today.
According to the indictment, Leitner was previously a defendant in a criminal trial, United States v. Hirmer, et. al., in the Northern District of Florida in March 2010. A jury in Pensacola, Fla., found him guilty of conspiracy to defraud the IRS after a month-long jury trial.
According to the indictment, during the jury trial and after the jury returned the guilty verdict, Leitner caused false maritime liens to be publicly filed against the property of prosecutors, investigators and court personnel involved in the criminal trial. The liens falsely claimed that Leitner was owed $48.489 billion from each individual. On five of the seven false liens, Leitner publicly disclosed individuals’ correct Social Security numbers; this information was publicly available in each state where the liens were filed. Leitner also filed and mailed numerous harassing and frivolous documents to the court and personnel involved in this case.
An indictment merely alleges that a crime has been committed, and a defendant is presumed innocent until proven guilty beyond a reasonable doubt. Each count of filing false liens carries a penalty of up to 10 years in prison and a $250,000 fine. Each count of Social Security fraud carries a maximum penalty of up to five years in prison and a $250,000 fine. The corruptly obstructing the IRS charge carries a maximum penalty of up to three years in prison and a $250,000 fine.
The case was investigated by Treasury Inspector General for Tax Administration, Department of Treasury.
Additional information about the Justice Department’s Tax Division and its enforcement efforts may be found at www.usdoj.gov/tax .
Shenandoah, Pennsylvania, Man Sentenced for Involvement in the Fatal Beating of Luis RamirezRead the Press Release
WASHINGTON – Colin Walsh, 19, of Shenandoah, Pa., was sentenced today to 55 months in prison for his role in the fatal beating of Luis Ramirez, the Justice Department announced today. Walsh was also ordered to serve three years of supervised release and pay $550 to the Pennsylvania victim compensation fund, as well as a special assessment.
On April 8, 2009, Walsh pleaded guilty to one felony violation of the Federal Fair Housing Act for his role in aiding and abetting Brandon Piekarsky, 19, and Derrick Donchak, 21, in the beating of Ramirez. Walsh testified against Piekarsky, Donchak and members of the Shenandoah Police Department in two federal trials. On Oct. 14, 2010, a federal jury in the Middle District of Pennsylvania found Piekarsky and Donchak guilty of violating the Federal Fair Housing Act for fatally beating Ramirez because he was Latino and because they did not want him living in Shenandoah. On Jan. 27, 2011, a federal jury in the Middle District of Pennsylvania found former Shenandoah police officer William Moyer and former Shenandoah Police Chief Matthew Nestor guilty of offenses related to the obstruction of the state and federal investigations into the fatal beating.
According to evidence presented at the federal trials, on July 12, 2008, Piekarsky, Donchak and Walsh came upon Ramirez in a park after leaving a community festival. Piekarsky and Donchak, and several of their friends, including Walsh, attacked Ramirez. During the course of the beating, some of the assailants yelled racial epithets in which they repeatedly referred to Ramirez in derogatory racial terms and told him: “this is Shenandoah. This is America. Go back to Mexico.” According to testimony, Donchak beat Ramirez while holding a thick piece of metal identified at trial as a “fist pack.” Walsh punched Ramirez in the face and Piekarsky kicked Ramirez in the head as he lay prone on the ground. After Piekarsky kicked Ramirez, he told a bystander who was married to a Latino man to “tell your Mexican friends to get out of Shenandoah or you will be lying next to him.” After the fight concluded, Ramirez was air-lifted to Geisinger Regional Medical Center, where he died of massive head injuries. The jury also heard evidence that, immediately following the beating, Donchak conspired with members of the Shenandoah Police Department and others to obstruct the investigation of the assault.
“Acts of racially-motivated violence like this one have no place in America. Their occurrence is a reminder that bigotry persists in 2011,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division of the Department of Justice. “The Civil Rights Division will vigorously enforce the rights of every American.”
This case was investigated by special agents from the FBI’s Philadelphia Division and was prosecuted by Myesha Braden and Gerard V. Hogan of the Civil Rights Division’s Criminal Section with the assistance of the U.S. Attorney’s Office for the Middle District of Pennsylvania.
New Jersey Wastewater Treatment and Chemical Supply Company and Owner Sentenced for Their Role in Fraud ConspiracyRead the Press Release
WASHINGTON — A Laurel Springs, N.J., wastewater treatment and chemical supply company and its owner were sentenced today for participating in a fraud conspiracy in connection with sub-contracts for wastewater treatment supplies and services at two Superfund sites in New Jersey, the Department of Justice announced today. The Environmental Protection Agency (EPA)-designated Superfund sites are the Federal Creosote Superfund site in Manville, N.J., and the Diamond Alkali Superfund site in Newark, N.J.
John Drimak Jr. was sentenced in U.S. District Court in Newark by Judge Susan D. Wigenton to serve 18 months in prison, to pay a $30,000 criminal fine and to pay $283,241 in restitution to the victim, the EPA. J.M.J. Environmental Inc. was also sentenced to pay $283,241 in restitution. The company and its owner pleaded guilty on July 23, 2008, to rigging bids and allocating certain sub-contracts at Federal Creosote from approximately the spring of 2002 to approximately May 2007. Drimak also pleaded guilty to one count of conspiracy to defraud the EPA at Federal Creosote and to defraud Tierra Solutions Inc. at Diamond Alkali. Tierra Solutions is a general contractor based in The Woodlands, Texas. As part of the conspiracy, Drimak participated in a false invoicing and kickback scheme from January 2002 until May 2007. He also pleaded guilty to filing false income tax returns for 2002 through 2005.
According to court documents, Drimak paid approximately $411,000 in kickbacks to co-conspirators, at both the Federal Creosote and Diamond Alkali sites, in exchange for their assistance in allocating certain sub-contracts to J.M.J. Environmental. The department said that the kickbacks were in the form of checks, cash, paid vacations, home renovations, boat trailers and payment of personal business expenses.
The cleanup at Federal Creosote is partly funded by the EPA. An interagency agreement between the EPA and the Army Corps of Engineers designated that the EPA hire the prime contractors at Federal Creosote. According to a settlement with the EPA and the New Jersey Department of Environmental Protection, Tierra Solutions was required to fund remedial action and maintenance of Diamond Alkali. Tierra Solutions hired the prime contractor for the remedial action and maintenance of Diamond Alkali.
Including Drimak and J.M.J Environmental, 10 individuals and three companies have been charged in this investigation. More than $3 million in criminal fines and restitution have been imposed and four individuals have been sentenced to jail.
Today’s sentence is the result of an ongoing investigation being conducted by the Antitrust Division’s New York Field Office, the EPA’s Office of Inspector General and the Internal Revenue Service-Criminal Investigation. Anyone with information concerning bid rigging relating to contracts awarded at Federal Creosote or Diamond Alkali should contact the Antitrust Division’s New York Field Office at 212-264-9308 or visit www.justice.gov/atr/contact/newcase.htm.
JGC Corporation Resolves Foreign Corrupt Practices Act Investigation and Agrees to Pay a $218.8 Million Criminal PenaltyRead the Press Release
WASHINGTON – JGC Corporation has agreed to pay a $218.8 million criminal penalty to resolve charges related to the Foreign Corrupt Practices Act (FCPA) for its participation in a decade-long scheme to bribe Nigerian government officials to obtain engineering, procurement and construction (EPC) contracts, the Justice Department’s Criminal Division announced today.
With today’s resolution, each of the four companies in the TSKJ joint venture, the former chairman of the U.S. joint venture partner, and several other individuals have now been held accountable for a massive conspiracy to bribe Nigerian government officials to obtain lucrative construction contracts,” said Principal Deputy Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division. “The approximately $1.5 billion in criminal and civil penalties that have been imposed on the members of the joint venture far exceed their profits from the scheme. Foreign bribery is a serious crime, and as this case makes clear, we are investigating and prosecuting it vigorously.”
The department filed a deferred prosecution agreement and a criminal information today against JGC in U.S. District Court for the Southern District of Texas. The two-count information charges JGC with one count of conspiracy and one count of aiding and abetting violations of the FCPA. JGC is a Japanese engineering and construction company headquartered in Yokohama, Japan.
JGC, Kellogg Brown & Root Inc. (KBR), Technip S.A. and Snamprogetti Netherlands B.V. comprised the four-company TSKJ joint venture that was awarded four EPC contracts by Nigeria LNG Ltd. (NLNG) between 1995 and 2004 to build LNG facilities on Bonny Island. The government-owned Nigerian National Petroleum Corporation (NNPC) was the largest shareholder of NLNG, owning 49 percent of the company. The EPC contracts to build liquefied natural gas (LNG) facilities on Bonny Island, Nigeria, were valued at more than $6 billion.
According to court documents, JGC authorized the joint venture to hire two agents - Jeffrey Tesler and a Japanese trading company - to pay bribes to a range of Nigerian government officials, to assist JGC and the joint venture in obtaining the EPC contracts. The joint venture hired Tesler as a consultant to pay bribes to high-level Nigerian government officials, including top-level executive branch officials, and hired the Japanese trading company to pay bribes to lower-level Nigerian government officials. At crucial junctures preceding the award of EPC contracts, JGC’s co-conspirators met with successive holders of a top-level office in the executive branch of the Nigerian government to ask the office holders to designate a representative with whom TSKJ should negotiate bribes to Nigerian government officials. TSKJ paid approximately $132 million to a Gibraltar corporation controlled by Tesler and more than $50 million to the Japanese trading company during the course of the bribery scheme. According to court documents, JGC intended for these payments to be used, in part, for bribes to Nigerian government officials.
Under the terms of the deferred prosecution agreement, the department agreed to defer prosecution of JGC for two years. JGC agreed to retain an independent compliance consultant for a term of two years to review the design and implementation of its compliance program, to enhance its compliance program to ensure that it satisfies certain standards, and to cooperate with the department in ongoing investigations. If JGC abides by the terms of the deferred prosecution agreement, the department will dismiss the criminal information when the term of the agreement expires.
In a related criminal case, KBR’s successor company, Kellogg Brown & Root LLC, pleaded guilty in February 2009 to charges related to the FCPA for its participation in the scheme to bribe Nigerian government officials. Kellogg Brown & Root LLC was ordered to pay a $402 million fine and to retain an independent compliance monitor for a three-year period to review the design and implementation of its compliance program. In another related criminal case, the department filed a deferred prosecution agreement and criminal information against Technip in June 2010. According to that agreement, Technip agreed to pay a $240 million criminal penalty and to retain an independent compliance monitor for two years. In July 2010, the department filed a deferred prosecution agreement and criminal information against Snamprogetti, which also agreed to pay a $240 million criminal penalty.
In other related criminal cases, KBR’s former CEO, Albert “Jack” Stanley, pleaded guilty in September 2008 to conspiring to violate the FCPA for his participation in the bribery scheme. Tesler and Wojciech J. Chodan, a former salesperson and consultant of a United Kingdom subsidiary of KBR, were indicted in February 2009 on FCPA-related charges for their participation in the bribery scheme. In March 2011, Tesler was extradited from the United Kingdom and subsequently pleaded guilty to conspiring to violate and violating the FCPA and agreed to forfeit $148,964,568. In December 2010, Chodan was extradited from the United Kingdom and subsequently pleaded guilty to conspiring to violate the FCPA and agreed to forfeit $726,885.
The criminal case is being prosecuted by Assistant Chief William J. Stuckwisch and Deputy Chief Patrick F. Stokes of the Criminal Division’s Fraud Section, with investigative assistance from the FBI-Houston Division. The Criminal Division’s Office of International Affairs provided substantial assistance. Significant assistance was provided by the SEC’s Division of Enforcement and by authorities in France, Italy, Switzerland and the United Kingdom.
Alabama Doctor and Husband Charged with Tax EvasionRead the Press Release
WASHINGTON – Donna Paul and her husband, William Paul, formerly of Montgomery, Ala., were indicted by a federal grand jury and charged with four counts of tax evasion for the tax years 2004 through 2007, the Justice Department and Internal Revenue Service (IRS) announced today.
John A. DiCicco, Principal Deputy Assistant Attorney General for the Tax Division, and Leura G. Canary, U.S. Attorney for the Middle District of Alabama, made the announcement.
According to the indictment, Donna Paul is a board-certified physician with a specialty in rheumatology. She and her husband operated several non-profit organizations that provided medical services. The Pauls attempted to evade the assessment of Donna Paul’s income by falsely characterizing her income as loans, by making false statements to IRS employees, and by deliberately causing the non-profit organizations to not file tax returns. Donna Paul did not file a U.S. Individual Income Tax Return, IRS Form 1040, between 2003 and 2007 and William Paul has not filed an IRS Form 1040 since the 1980s.
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, the Pauls both face a maximum of 20 years in prison and a maximum fine of $1 million.
This case was investigated by IRS-Criminal Investigation and is being prosecuted by Tax Division Trial Attorneys Justin Gelfand and Michael Boteler.
More information about the Justice Department’s Tax Division and its enforcement efforts is available at www.usdoj.gov/tax/.
5 April 2011
Verizon Communications Pays United States $93.5 Million to Resolve False Claims Act AllegationsRead the Press Release
WASHINGTON - Verizon Communications Inc. has paid the United States $93,525,410.96 in order to resolve allegations that the company overcharged the General Services Administration (GSA) on invoices dealing with government-wide voice and data telecommunications services contracts, the Justice Department announced today.
Verizon subsidiary MCI Communications Services Inc. dba Verizon Business Services is alleged to have invoiced GSA for a variety of federal, state and local taxes and surcharges in violation of the contracts or applicable regulations in connection with the FTS2001 and FTS2001 Bridge contracts. The department’s joint investigation with GSA’s Office of the Inspector General (OIG) found that Verizon and MCI submitted false claims under the contracts for the reimbursement of property taxes, common carrier recovery charges and unallowable surcharges, charges that are not directly reimbursable under the FTS2001 contracts.
“Corporations that contract to provide services to federal, state and local governments must play by the rules,” said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. “We will protect taxpayers against those who seek to charge more than they deserve.”
“A government contract is not a blank check,” said U.S. Attorney Ronald C. Machen Jr. “Contractors who overbill the government will be aggressively pursued and required to make the taxpayers whole. This $93 million recovery should make contractors realize that we are firmly committed to ensuring the integrity of corporate billing practices with respect to government programs.”
Stephen M. Shea and 2Probe LLC filed the qui tam or whistleblower complaint on behalf of the government. The case is captioned United States ex rel. Stephen M. Shea and 2Probe LLC v. Verizon Communications Inc., Civ. No. 1:07CV00111 (GK) (D.D.C.).
“This case is another demonstration of the value of OIG audits in pursuing, proving, and recovering overbillings on government programs,” said GSA Inspector General Brian D. Miller.
This settlement was the result of a coordinated effort by the Commercial Litigation Branch of the Justice Department’s Civil Division, the U.S. Attorney’s Office for the District of Columbia and GSA’s Office of Inspector General and Office of General Counsel.
Iraq – U.S. Joint Coordination Committee for Law Enforcement and Judicial CooperationRead the Press Release
BAGHDAD – The Governments of Iraq and the United States of America held their first meeting of the Joint Coordination Committee (JCC) for Law Enforcement and Judicial Cooperation under the auspices of the U.S.-Iraq Strategic Framework Agreement.
The JCC meeting, held over the weekend, was co-chaired by the Honorable Medhat al-Mahmoud, the Chief Justice and President of the Iraqi Higher Judicial Council (HJC), and U.S Deputy Attorney General James M. Cole.
The meeting builds on efforts to enable an enduring strategic partnership to increase capacity in Judicial Security, Detentions, and the Police Development Program.
Chief Justice Medhat underscored Iraq's commitment to the Strategic Framework Agreement and hailed the close cooperation between the Department of Justice and the HJC in the field of the rule of law, protection of judges, and court security. He also praised the Embassy’s efforts to introduce modern technology to some Iraqi courts and its positive effects on expediting the judicial process.
Deputy Attorney General Cole reaffirmed the commitment of the United States to the Iraqi people. “The great progress that has been made toward the goals of our Strategic Framework Agreement should encourage us to persist in meeting the challenges of what remains to be done in Law Enforcement and Judicial Cooperation,” he told the committee members. Mr. Cole highlighted that, “As we all know, effective rule of law critically underpins” the goals of the Strategic Framework Agreement, and “sets the rules for the political process; it sustains the framework of national unity, and it secures the range of property rights essential to economic prosperity.”
The heads and representatives of the principal law enforcement and rule of law ministries and agencies from the Governments of Iraq and the United States discussed current areas of cooperation and particular challenges that will require robust collaboration in the future, including in the areas of detentions, police development, and judicial security.
The two sides agreed to continue efforts to expand cooperation across Iraq’s law enforcement and judicial sectors under the auspices of the Strategic Framework Agreement and pursue together a shared vision of a long-term, multidimensional bilateral relationship that contributes to growing peace and prosperity in Iraq and security and stability in the Middle East.
German Security Company Pays U.S. 6,529,042 Euros to Settle False Claims AllegationsRead the Press Release
WASHINGTON – Securitas GmbH Werkschutz has paid the United States 6,529,042 Euros (approximately $9.1 million) to settle allegations that the German company billed the Army, under contracts to provide security at U.S. Army installations in Germany, for guard hours not actually worked, the Justice Department announced today. The United States alleged that the overcharging violated the False Claims Act and brought counterclaims based on fraud in several actions that Securitas had filed against the Army in the Court of Federal Claims in Washington, D.C., seeking additional compensation under one of the contracts at issue, Securitas GmbH Werkschutz v. United States, Nos. 07-255/6/7C (Fed. Cl.)
Under the terms of the settlement agreement, Securitas paid the United States the 6,529,042 Euros to resolve its potential liability under the False Claims Act, other anti-fraud provisions and the common law. Securitas also agreed to dismiss its own claims in the Court of Federal Claims against the Army, totaling 4,449,658 Euros (approximately $5.7 million).
“We won't tolerate military contractors who overcharge the American taxpayers for services,” said Tony West, Assistant Attorney General of the Justice Department’s Civil Division. “This case illustrates that the United States will pursue the full range of potential remedies for false or fraudulent claims to ensure defense contractors are dealing fairly with the American people.”
The Army Criminal Investigations Command and Defense Criminal Investigative Service participated in the investigation of this matter, with the assistance of the Defense Contract Audit Agency and the German criminal police.Five Individuals Indicted for Alleged Roles in Scheme to Defraud Program Providing Matching Funds Contributions to Non-Profit OrganizationRead the Press Release
WASHINGTON – A 10-count federal indictment was unsealed today in the Eastern District of Virginia charging Stephen Bekale, Reynaldo “Christian” Villarroel, Maritza Villarroel, Irma DeMartini and Jamal Ibraheem with conspiring to commit wire fraud, wire fraud and money laundering, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Neil H. MacBride of the Eastern District of Virginia.
According to the indictment, Bekale, 31, of Indianapolis, fraudulently obtained matching funds from Bank of America’s charitable arm after he allegedly falsely certified that charitable contributions had been made to his nonprofit organization “Hoops for Africa” by Bank of America employees. His co-defendants, Martiza Villarroel, 34, of Clifton, Va.; Irma DeMartini, 28, of Sterling, Va.; Jamal Ibraheem, 38, of Bethesda, Md.; and Reynaldo Villarroel, 38, of Bolivia, are former Bank of America employees who allegedly received kickbacks from Bekale for falsely certifying that donations were made in their names and/or for recruiting additional bank employees to participate in Bekale’s fraud scheme.
Bekale was arrested by FBI agents today in Indianapolis, and he made his initial appearance in U.S. District Court for the Southern District of Indiana. The remaining four defendants will be arraigned in U.S. District Court in Alexandria, Va., at a later date.
According to the indictment, from approximately March 2007 through May 2009, approximately 31 Bank of America employees at three different banking locations logged onto the website for Bank of America’s Matching Gifts Program and certified that they donated money to “Hoops for Africa.” The alleged fraudulent employee donations to “Hoops for Africa” ranged from $1,300 to $7,500 per donation, and a total of 57 matching gift requests were received by Bank of America’s charitable arm. As a result of those falsely registered donations, Bank of America eventually processed 55 of the transactions and disbursed through its charitable foundation approximately $276,600 in matching gifts to “Hoops for Africa.” Bekale is also charged with conducting a monetary transaction using the proceeds of the fraud.
An indictment is merely an allegation, and defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
The defendants face a maximum penalty of 20 years in prison and a $250,000 fine for each count of wire fraud. Bekale faces an additional maximum penalty of 10 years in prison and a $250,000 fine on the money laundering charge.
This case is being prosecuted by Assistant U.S. Attorney Mark D. Lytle of the Eastern District of Virginia and Trial Attorney Eric L. Gibson of the Criminal Division’s Public Integrity Section. The case is being investigated by the FBI.
Attorney General Eric Holder Commends City Officials, Leaders for Their Plans to Prevent Youth ViolenceRead the Press Release
WASHINGTON – Attorney General Eric Holder today commended teams from six cities across the country for developing comprehensive plans to reduce youth violence in their communities. Mayors, U.S. Attorneys and other officials from Boston; Chicago; Detroit; Memphis, Tenn.; Salinas, Calif.; and San Jose, Calif. presented their plans at the Summit on Preventing Youth Violence, April 4-5, in Washington, D.C.
“Addressing childhood exposure to violence – and implementing bold, innovative and collaborative solutions – is a top priority for this administration,” said Attorney General Holder. “The great strength of this week’s forum lies in the broad scope of expertise and the multi-disciplinary partnerships that have been forged within the cities represented. The comprehensive plans put forward this week, as part of the administration’s National Forum on Youth Violence Prevention, send a powerful message – that, in this country, we will not give up on our children.”
The summit is part of the National Forum on Youth Violence Prevention launched by President Obama in October 2010. The goal of the forum is to use multi-disciplinary partnerships, balanced approaches and data-driven strategies to address youth violence. These six cities were selected based on need, geographic diversity, willingness and capacity to develop comprehensive plans. More localities are expected to join the forum.
In addition to the Department of Justice, the Departments of Education, Health and Human Services, Housing and Urban Development, Labor and the White House Office of National Drug Control Policy provide technical assistance to the forum’s participating cities.
More details about the forum and summaries of the city plans are available at: www.findyouthinfo.gov .
4 April 2011
Virginia Contractor Pleads Guilty to Kickback Scheme and Failure to File Tax ReturnRead the Press Release
WASHINGTON — A Virginia contractor pleaded guilty to participating in a scheme to steer contracts to him for repair, maintenance and renovation work at healthcare and nursing home facilities owned by Medical Facilities of America Inc. (MFA), the Department of Justice announced today.
Edward T. Fodrey, a resident of Norfolk, Va., pleaded guilty in U.S. District Court in Norfolk to conspiring with other individuals to steer contracts for repair, maintenance and renovation at MFA healthcare and nursing home facilities. According to the two-count felony charge filed on March 30, 2011, from about May 2006 until at least December 2006, Fodrey conspired with an MFA employee who oversaw the bidding process for repair, maintenance and renovation contracts at MFA facilities in North Carolina and Virginia. That MFA employee steered contracts to Fodrey in return for kickbacks.
According to the court document, the MFA employee created fictitious competitor bids that were higher than the quotes submitted by Fodrey and other co-conspirator venders, to create the appearance of competition. The MFA employee directed subordinates to solicit quotes only from Fodrey or other conspiring vendors. The MFA employee specified the amount Fodrey should quote to MFA as well as the amount of the kickback on each of the contracts. Fodrey paid more than $200,000 in kickbacks to the MFA employee and received contracts totaling more than $750,000. The court document states that as a result of the kickback scheme, MFA was deprived of competitive pricing to its financial detriment. Fodrey was also charged with failing to file a tax return for 2006, which is the year in which Fodrey received payment on the MFA contracts. According to the plea agreement, Fodrey has agreed to cooperate with the department’s ongoing investigation.
Fodrey is charged with conspiracy to commit mail fraud for the kickback scheme, which carries a maximum penalty of 20 years in prison and a $250,000 criminal fine. Fodrey is also charged with failure to file an income tax return, which carries a maximum penalty of one year in prison and a $100,000 criminal fine. The maximum fines for each of these charges may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximums.
The charge is the first to arise out of the department’s ongoing fraud investigation into the award of repair, maintenance and renovation contracts at facilities owned by MFA being conducted by the Antitrust Division’s Philadelphia Field Office, the U.S. Attorney’s Offices for the Eastern District of Virginia and the Western District of Virginia, the FBI in Roanoke, Va., and the Internal Revenue Service-Criminal Investigation in Roanoke, Va. Anyone with information concerning fraudulent behavior relating to the award of contracts by MFA should contact the Antitrust Division’s Philadelphia Field Office at 215-597-7405 or visit www.justice.gov/atr/contact/newcase.htm.
Two Chinese Nationals Charged with Illegally Attempting to Export Military Satellite Components to the PRCRead the Press Release
WASHINGTON – Two Chinese nationals have been indicted by a federal grand jury in Alexandria, Va., for attempting to obtain radiation-hardened microchips, which are prohibited defense items used in the military and aerospace industry.
Neil H. MacBride, U.S. Attorney for the Eastern District of Virginia; Todd Hinnen, Acting Assistant Attorney General for National Security; John P. Torres, Special Agent in Charge for U.S. Immigration and Customs Enforcement (ICE), Office of Homeland Security Investigations (HSI) in Washington, D.C.; and Robert E. Craig, Special Agent in Charge of the Defense Criminal Investigative Service’s (DCIS) Mid-Atlantic Field Office, made the announcement after the indictment was unsealed.
Hong Wei Xian, aka “Harry Zan,” 32, and Li Li, aka “Lea Li,” 33, both from the People’s Republic of China (PRC), were charged in a two-count indictment accusing them of conspiring to violate the Arms Export Control Act and to smuggle goods from the United States and the attempted export of U.S. Munitions List items in violation of the Arms Export Control Act. If convicted, they face a maximum penalty of five years in prison for the conspiracy charge and 20 years in prison on the export violation charge. Xian and Li will make their initial appearance at 2:00 p.m. at the Alexandria federal courthouse.
According to the indictment, Xian is the president of Beijing Starcreates Space Science and Technology Development Company Limited (Beijing Starcreates), and Li is the company’s vice president. Among other things, Beijing Starcreates engages in the business of importing and selling programmable read-only memory microchips to China Aerospace Science and Technology Corporation, which is controlled by the PRC government and plays a substantial role in the research, design, development and production of strategic and tactical missile systems and launch vehicles for the PRC.
Since 1990, the U.S. government has maintained an arms embargo against the PRC that prohibits the export, re-export, or re-transfer of any defense article to the PRC. Prohibited defense articles are placed on the U.S. Munitions List, which includes spacecraft systems and associated equipment. A programmable read-only memory microchip (PROM) serves to store the initial start-up program for a computer system and is built to withstand the conditions present in outer space.
According to the indictment, neither Xian nor Li applied for nor received a license from the United States to export defense articles of any description; however, from April 2009 to Sept. 1, 2010, the two are charged with contacting a company in the Eastern District of Virginia and seeking to export thousands of radiation-hardened PROMs from that company.
The indictment states that Xian and Li knew a license was required, but did not seek to obtain one because it was difficult, time-consuming, and would require them to identify the end user and describe the end use. They are accused of conspiring to break up orders into multiple shipments and designate countries outside of the PRC for delivery to avoid drawing attention to the orders.
On Sept. 1, 2010, the defendants were arrested in Hungary pursuant to a U.S. provisional arrest warrant and were transferred into the custody of U.S. Marshals on April 1, 2011, after they waived extradition. They arrived in the Eastern District of Virginia late April 1, 2011.
This case was investigated by ICE HSI and DCIS, with assistance from ICE HSI Office of International Affairs and the Department of Justice’s Office of International Affairs. Assistant U.S. Attorney James P. Gillis of the Office’s National Security and International Crime Unit, and Trial Attorney Brandon L. Van Grack of the Justice Department’s National Security Division are prosecuting the case on behalf of the United States.
Criminal indictments are only charges and not evidence of guilt. A defendant is presumed to be innocent until and unless proven guilty.
North Carolina Hospital to Pay U.S. $1.9 Million to Resolve Allegations Related to Kyphoplasty and Other ProceduresRead the Press Release
WASHINGTON – Rex Healthcare, a 655-bed hospital in Raleigh, N.C., has agreed to pay the United States $1.9 million, plus interest, to settle allegations that it submitted false claims to Medicare, the Justice Department announced today. The government alleges that the hospital routinely submitted claims to Medicare for a variety of minimally-invasive procedures during the period 2004 through 2007, which the hospital classified as inpatient admissions in order to increase its reimbursement from Medicare, despite the absence of medical necessity justifying the more expensive inpatient admissions.
The allegations arise from a lawsuit that was brought under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private citizens with knowledge of fraud against the government to bring an action on behalf of the United States and to share in any recovery. The lawsuit was filed in 2008 in federal district court in Buffalo, N.Y., by former Kyphon employees Craig Patrick and Charles Bates. They will receive a total of approximately $80,000 as their share of the settlement proceeds for those claims related to kyphoplasty claims. The settlement also involves claims related to a variety of other minimally-invasive procedures that the hospital classified as inpatient admissions in order to increase its reimbursement when less costly outpatient visits would have been appropriate.
“We pursue cases like this because when hospitals submit false claims in order to increase their Medicare reimbursement, as we allege here, it artificially drives up the cost of health care, leaving taxpayers to foot the inflated bill," said Tony West, Assistant Attorney General for the Justice Department’s Civil Division.
“This settlement shows the continuing commitment by the U.S. Attorney’s Office for the Western District of New York to investigate and recover any improper billings for kyphoplasty procedures and to partner with our colleagues in other U.S. Attorney Offices when necessary to remedy similar billing abuses related to non-kyphoplasty procedures,” said William J. Hochul Jr., U.S. Attorney for the Western District of New York.
“This resolution demonstrates the department’s ability to coordinate efficiently among districts and with our partners at the U.S. Department of Health and Human Services to achieve a comprehensive and fair result,” said George E.B. Holding, U.S. Attorney for the Eastern District of North Carolina. “We are committed to ensuring that Medicare funds are expended appropriately in all cases.”
“Submitting inflated claims - as Rex Healthcare is alleged to have done - drains critically-needed dollars from government health care programs,” said Daniel R. Levinson, Inspector General for the U.S. Department of Health and Human Services. “OIG is committed to working closely with our law enforcement partners to pursue and hold accountable entities that defraud Medicare and ultimately U.S. taxpayers.”
Assistant Attorney General West noted that the settlements with these hospitals were the result of a coordinated effort among the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Western District of New York, the U.S. Attorney’s Office for the Eastern District of North Carolina and the Department of Health and Human Services’ Office of Inspector General.
This resolution is part of the government’s emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover approximately $5.3 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 $6.8 billion.
Justice Department Refers Five Accused 9/11 Plotters to Military CommissionsRead the Press Release
WASHINGTON – The Justice Department today announced that the cases involving Khalid Sheikh Mohammed and four other Guantanamo Bay detainees accused of conspiring to commit the Sept. 11, 2001 terror attacks have been referred to the Defense Department to proceed in military commissions and that the federal indictment against these defendants that was returned under seal by a grand jury in the Southern District of New York on Dec. 14, 2009 has been unsealed and dismissed.
“As the indictment unsealed today reveals, we were prepared to bring a powerful case against the 9/11 defendants in federal court, and had this case proceeded as planned, I’m confident our justice system would have performed with the same distinction that has been its hallmark for more than two hundred years,” said Attorney General Eric Holder. “Unfortunately, Members of Congress have intervened and imposed restrictions blocking the administration from bringing any Guantanamo detainees to trial in the United States. While we will continue to seek to repeal those restrictions, we cannot allow a trial to be further delayed for the victims of the 9/11 attacks or their families. I have full faith and confidence in the reformed military commission system to appropriately handle this case as it proceeds.”
The Attorney General, in consultation with the Secretary of Defense, determined that Khalid Sheikh Mohammed, Walid Bin Attash, Ramzi Bin Al-Shibh, Ali Abdul Aziz Ali and Mustafa Al-Hawsawi are eligible for military commission charges and referred their cases to the Defense Department.
Earlier today, federal prosecutors from the Southern District of New York and the Eastern District of Virginia unsealed and moved to dismiss the indictment returned in federal court in Manhattan that charged these defendants for their roles in the Sept. 11, 2001 attacks that damaged or destroyed four commercial aircraft in New York, Virginia and Pennsylvania; the Twin Towers of the World Trade Center and surrounding property in New York; and the Pentagon in Virginia, resulting in the deaths of 2,976 persons. A federal judge today granted the motion to dismiss the indictment.
The 10-count, 80-page indictment charged each of the defendants with conspiracy to commit acts of terrorism transcending national boundaries; acts of terrorism transcending national boundaries; conspiracy to commit violent acts and destroy aircraft; violence on and destruction of aircraft; conspiracy to commit aircraft piracy; aircraft piracy; murder of U.S. officers and employees; destruction of property by means of fire and explosives; and conspiracy to kill Americans.
The federal indictment specifically alleged that Khalid Sheikh Mohammed, who was closely associated with Usama Bin Laden and, who in 1999 proposed to Bin Laden a terror plot that would use airplanes as missiles to crash into buildings, served as the operational leader of the Sept. 11, 2001 plot. Walid Bin Attash participated in the plot, by among other things collecting information on matters related to airport and airplane security measures, according to the indictment.
Ramzi Bin Al-Shibh, according to the indictment, tried to become one of the pilot hijackers, but repeatedly failed to obtain a visa for entry into the United States and instead managed the plot by among other things sending money to hijackers in the United States from abroad. Ali Abdul Aziz Ali allegedly facilitated the plot by among other things sending money to hijackers in the United States from abroad. Mustafa Al-Hawsawi allegedly facilitated the plot by among other things helping hijackers travel to the United States and facilitating their efforts upon arrival.
Attorney General Holder thanked federal prosecutors from the U.S. Attorney’s Offices for the Southern District of New York and the Eastern District of Virginia, as well as the hundreds of federal agents and analysts from across the government who spent years investigating and working to bring federal charges against these defendants.
The military commission system was substantially reformed by the Military Commissions Act of 2009, which the administration worked with Congress to enact, as well as the 2010 revised Manual for Military Commissions.
Related Documents:
Khalid Sheikh Mohammed Indictment
Nolle Prosequi and Unsealing Order
Joint Statement of Attorney General Eric Holder <br /> and Italian Minister of Justice Angelino Alfano <br /> Regarding Continued CooperationRead the Press Release
WASHINGTON - U.S. Attorney General Eric Holder and Italian Minister of Justice Angelino Alfano today met at the U.S. Department of Justice in Washington, D.C., to re-affirm the joint commitment of the United States and Italy to strengthen cooperation in the ongoing fight against terrorism and transnational organized crime. The two countries enjoy a long bilateral relationship in justice matters, and also work together to promote broader international collaboration through multilateral treaties like the United Nations Convention Against Transnational Organized Crime (known as the Palermo Convention) and the Council of Europe Convention on Cybercrime.
“For three decades, the United States and Italy have had notable successes in jointly fighting organized crime, terrorism and other common threats to the security and prosperity of our two nations,” said Attorney General Holder. “For example, Italian authorities recently arrested a fugitive in Sicily who is charged with racketeering conspiracy in the United States, and coordinated that arrest with the largest one-day sweep of La Cosa Nostra defendants in U.S. history. We are grateful for the close collaboration that is provided daily by the Italian Ministry of Justice under the leadership of Minister Alfano, as well as from prosecutors and police throughout Italy.”
Law enforcement officials in the United States and Italy work together on a broad range of issues. Counterterrorism remains a top priority, and officials tackle criminal activities from drug trafficking to money laundering, and from illegal arms exports to cybercrime.
“Bilateral relations between the United States and Italy in the law enforcement arena represent an important pillar of global legal and security cooperation,” said Italian Minister of Justice Alfano. “I greatly appreciate working with U.S. Attorney General Holder, whose clear vision and problem-solving approach have added significant value to our security relations.”
In their discussions, Attorney General Holder and Minister Alfano underlined the importance of maintaining the excellent bilateral exchange of information and evidence between the United States and Italy in the fight against organized crime and terrorism, in particular under the recently updated treaties between the two countries on extradition and mutual legal assistance in criminal matters. These treaties streamline communication in urgent fugitive matters and incorporate technological developments like video-conferencing for taking witness testimony, while also providing a high level of protection for personal information.
1 April 2011
U.S. Files Complaint Against Texas-Based Healthpoint Ltd. Under the False Claims ActRead the Press Release
WASHINGTON – The United States has filed a complaint against Healthpoint Ltd., alleging civil False Claims Act violations arising from the company’s sale of an unapproved prescription drug that was ineligible for payment under Medicaid and Medicare, the Justice Department announced today. In the complaint, filed in the District of Massachusetts, the government alleges that the Ft. Worth, Texas-based subsidiary of DFB Pharmaceuticals Inc., submitted false statements concerning the regulatory status of Xenaderm to the United States, thereby causing false or fraudulent prescription claims for the unapproved drug to be submitted to Medicaid and Medicare.
Xenaderm, a skin ointment primarily used to treat bed and pressure sores, otherwise known as “decubitus ulcers,” was launched by Healthpoint in 2002 without any approval by the Food and Drug Administration (FDA). Xenaderm contains trypsin as an active ingredient, which is intended to function in the unapproved drug as a debriding agent, i.e., for the removal of dead tissue around a wound. In the 1970s, however, the FDA determined on at least two separate occasions that trypsin was ineffective as a debriding agent and rescinded the market approval for products containing trypsin as a debriding agent. As a result of these determinations, Xenaderm, which came onto the market much later, was ineligible for reimbursement under Medicaid and Medicare.
The government’s complaint alleges that Healthpoint knew Xenaderm was unapproved, and knew of or recklessly disregarded the FDA notices concerning trypsin’s lack of effectiveness as a debriding agent. According to the complaint, Healthpoint nonetheless falsely represented to the United States that the drug was eligible for Medicaid and Medicare reimbursement. As a result of Healthpoint’s false statements, the United States alleges that Healthpoint caused Medicaid and Medicare to pay tens of millions of dollars for an unapproved drug that was ineligible for reimbursement.
“The complaint filed today underscores our commitment to pursuing manufacturers that provide false information to obtain taxpayer dollars for unapproved and ineffective drugs,” said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice.
“This action reflects our continued efforts to ensure that drug manufacturers do not evade the drug approval process or cause the government to pay for less than effective drugs,” said Carmen Ortiz, U.S. Attorney for the District of Massachusetts.
Prior to filing its complaint, the United States filed a notice of intervention in an action against Healthpoint that was commenced under the qui tam or whistleblower provisions of the False Claims Act. U.S. ex rel. Constance Conrad v. Healthpoint, 02-CV-11738-NG (D.Mass.). The False Claims Act allows for private persons to file whistleblower suits to provide the government information about wrongdoing. Under the statute, if it is established that a person has submitted or caused others to submit false or fraudulent claims to the United States, the government can recover treble damages and $5,500 to $11,000 for each false or fraudulent claim filed. If the government is successful in resolving or litigating its claims, a proper whistleblower can receive a share of between 15 percent to 25 percent of the amount recovered.
“The problem with unapproved drugs is that FDA does not know what is in them, whether they are effective or safe, or how they are made.” said FDA Commissioner Margaret M. Hamburg, MD. "FDA routinely works together with companies to ensure that safe, effective products are available for Americans. As this case demonstrates, when companies place consumers at risk by selling drugs without required FDA approval, they should not profit from that."
This investigation was conducted by the Justice Department’s Civil Division, the U.S. Attorney's Office for the District of Massachusetts, the Office of Inspector General of the Department of Health and Human Services and the FDA.
Pennsylvania Man Pleads Guilty for Cross BurningRead the Press Release
WASHINGTON – Kenneth Stiffey Jr. of Robinson, Penn., pleaded guilty yesterday to a charge related to the burning of a cross in the yard of an African-American victim in November 2009, the Justice Department announced today.
Stiffey, 21, pleaded guilty to conspiracy to interfere with the housing rights of another in federal court in Pittsburgh before Senior U.S. District Judge Maurice B. Cohill. Information presented during the plea hearing established that a cross burning occurred on Nov. 14, 2009, at a residence in Robinson that was home to a family with three minor children, one of whom is African-American. The investigation revealed that Stiffey and his co-conspirators agreed to burn a cross in the backyard of the home of the African-American minor victim. After the cross was constructed and doused in accelerant, Stiffey transported the 6-foot wooden cross to a garage owned by Stiffey’s family. Together with co-conspirators, Stiffey carried the cross into his garage and supplied additional gasoline, which was poured on 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, using a cigarette lighter, ignited it around 11 p.m.
“This defendant used an unmistakable symbol of hate to threaten a family with violence simply because the race of a child. These incidents are a reminder of the civil rights challenges we still face today,” 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 prosecute those who commit crimes driven by hatred or intolerance,” stated U.S. Attorney for the Western District of Pennsylvania David J. Hickton.
On Feb. 9, 2011, co-conspirator Michael Francis Bealonis pleaded guilty to conspiracy to interfere with the housing rights of another in federal court in Pittsburgh.
Sentencing has been set for July 26, 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. Attorney's Office for the Western District of Pennsylvania and Trial Attorney Patricia A. Sumner from the Civil Rights Division of the Department of Justice.
Justice Department Reaches Agreement with Hancock Holding Company and Whitney Holding Corporation on DivestituresRead the Press Release
WASHINGTON – The Department of Justice announced today that Hancock Holding Company and Whitney Holding Corporation have agreed to sell eight branch offices in Louisiana and Mississippi, with approximately $202 million in deposits, to resolve antitrust concerns about the companies’ pending merger. The department said that, with the divestitures, the merger would not have an adverse effect on competition in local markets for retail banking or small business banking services. As a result of the proposed acquisition, Hancock will become the 32nd largest bank in the nation, with about $20 billion in assets and about $16 billion in total deposits.
Under the agreement with the Justice Department’s Antitrust Division, the companies will divest Whitney’s entire branch network in the Biloxi and Gulfport area in Mississippi, which includes seven branches in Harrison and Hancock Counties, with $155.4 million of deposits. In addition, the companies will divest one Whitney branch with $46.7 million of deposits in Washington Parish, La. The department said that the divestitures will include the commercial loans associated with the divested branches.
“With the divestiture, consumers and small businesses in local markets in Louisiana and Mississippi will continue to enjoy the benefits of competition in banking services,” said Christine Varney, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.
The proposed merger is subject to the final approval of the Board of Governors of the Federal Reserve System. The department said that it will advise the Federal Reserve Board that it will not challenge the merger provided that the parties divest the branch offices specified in the agreement and associated loans and deposits; and provided that the parties commit to the Federal Reserve Board that they will comply with the agreement with the department.
The Hancock Holding Company, headquartered in Gulfport, is the parent company of Hancock Bank (Florida and Mississippi), Hancock Bank of Louisiana and Hancock Bank of Alabama. Hancock has about $8.2 billion in assets. It offers banking and financial products and services at more than 180 locations.
Whitney Holding Corporation is headquartered in New Orleans and has approximately $11.5 billion in assets. Its primary bank subsidiary is Whitney National Bank, which operates a branch network in Alabama, Florida, Louisiana, Mississippi and Texas.
The branches to be divested are:
Bank
State
County
Address
City
Zip Code
Deposits as of June 30, 2010 (000s)
Whitney
Miss.
Harrison
2605 Pass Road
Biloxi
39531
$16,634
Whitney
Miss.
Harrison
1300 25th Avenue
Gulfport
39501
$40,423
Whitney
Miss.
Harrison
11281 U.S. Highway 49
Gulfport
39503
$14,927
Whitney
Miss.
Harrison
573 Courthouse Road
Gulfport
39507
$16,935
Whitney
Miss.
Harrison
198 Klondyke Road
Long Beach
39560
$14,730
Whitney
Miss.
Hancock
800 Highway 90
Bay Saint Louis
39521
$35,701
Whitney
Miss.
Hancock
4402 Kalani Drive
Diamond-head
39525
$16,051
Whitney
La.
Washington
600 Columbia Street
Bogalusa
70429
$46,658
Founder and Treasurer of Washington D.C. Labor Union Charged with Stealing Pension Funds for Personal Use, Violating a Court Order and Obstructing InvestigationRead the Press Release
WASHINGTON – The founder and treasurer of the National Association of Special Police and Security Officers (NASPSO) was charged today in a superseding indictment with mail fraud, theft from a labor organization, obstruction of justice, criminal contempt and various recordkeeping offenses related to his operation of a pension plan for NASPSO members. NASPSO is a labor union representing private security guards assigned to protect federal buildings in the Washington, D.C., metro area.
The charges were announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; Mabel Capolongo, Director of the Philadelphia Regional Office of the Employee Benefits Security Administration of the Department of Labor; Robert L. Panella, Special Agent in Charge of the Office of Inspector General, Office of Labor Racketeering and Fraud Investigations of the Washington, D.C. Regional Office, and Mark Wheeler, Director of the Washington District Office of the Office of Labor Management Standards.
Caleb Gray-Burriss, 60, of Washington, D.C., will be arraigned on April 4, 2011, in U.S. District Court for the District of Columbia. Gray-Burriss originally was charged in June 2010 with four counts of mail fraud.
According to the superseding indictment, from approximately June 2004 through February 2011, Gray-Burriss wrote numerous checks to himself or to other third parties from the checking account where he had placed funds intended for the NASPSO pension plan. The superseding indictment alleges that Gray-Burriss spent more than $100,000 of the pension plan funds in this way, while at the same time falsely maintaining that it was an operational fund that he was properly administering and that was providing benefits to the beneficiaries. Gray-Burriss previously settled a civil suit which, in part, addressed his unlawful conduct with respect to NASPSO-sponsored health and benefit plans.
The superseding indictment charges Gray-Burriss with criminal contempt of a court order after he allegedly stole money from the NASPSO treasury to pay his personal fines due in the civil settlement. The superseding indictment also alleges that Gray-Burriss resumed his involvement with NASPSO-sponsored health and pension plans after the civil lawsuit was settled, even though he was prohibited by court order from doing so.
In addition, the superseding indictment charges that Gray-Burriss, while an officer and employee of NASPSO, stole more than $115,000 in NASPSO funds through unauthorized salary increases and bonuses to himself, cash withdrawals from ATMs, reimbursement for unauthorized vacations and trips to casinos, personal dental work, and other goods and services. Gray-Burriss also allegedly unlawfully used NASPSO funds to pay his parking tickets and personal fines in a civil lawsuit. Finally, the superseding indictment charges Gray-Burriss with two counts of obstructive of justice for concealing and/or destroying NASPSO records and attempting to induce a witness to withhold testimony and records during the grand jury investigation.
An indictment is merely an allegation, and a defendant is presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Gray-Burriss faces a maximum penalty of 20 years in prison and a $250,000 fine on each of the mail fraud and obstruction of justice charges. The theft from a labor organization charge carries a maximum penalty of five years in prison and a $250,000 fine. Gray-Burriss also faces additional penalties if convicted of the criminal contempt and recordkeeping charges.
The investigation leading to the superseding indictment of Gray-Burriss was conducted by investigators from three agencies of the U.S. Department of Labor – the Employee Benefits Security Administration, the Office of Labor Management Standards and the Office of Inspector General, Office of Labor Racketeering and Fraud Investigations. The case is being prosecuted by Trial Attorney Vincent Falvo of the Criminal Division’s Organized Crime and Racketeering Section.
Former TBW Ceo Pleads Guilty to $1.5 Billion Fraud SchemeRead the Press Release
WASHINGTON – Paul Allen, the former chief executive officer at Taylor, Bean & Whitaker (TBW), pleaded guilty today to making false statements and conspiring to commit bank and wire fraud for his role in a $1.5 billion fraud scheme that contributed to the failure of TBW.
The guilty plea was announced today by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Neil H. MacBride for the Eastern District of Virginia; Acting Special Inspector General Christy Romero for the Troubled Asset Relief Program (SIGTARP); Assistant Director in Charge James W. McJunkin of the FBI’s Washington Field Office; Michael P. Stephens, Inspector General of the Department of Housing and Urban Development (HUD-OIG); Jon T. Rymer, Inspector General of the Federal Deposit Insurance Corporation (FDIC-OIG); Steve A. Linick, Inspector General of the Federal Housing Finance Agency (FHFA-OIG); and Victor F. O. Song, Chief of the Internal Revenue Service (IRS) Criminal Investigation.
Allen, 55, of Oakton, Va., pleaded guilty to a two-count criminal information before U.S. District Judge Leonie M. Brinkema in the Eastern District of Virginia. Allen faces a maximum penalty of five years in prison for each count when he is sentenced on June 21, 2011.
According to a statement of facts submitted with his plea agreement, Allen joined TBW in 2003 as its CEO and reported directly to its chairman. He admitted in court that from 2005 through August 2009, he and other co-conspirators engaged in a scheme to defraud financial institutions that had invested in a wholly-owned lending facility called Ocala Funding. Ocala Funding raised money by selling asset-backed commercial paper to financial institutions, including Deutsche Bank and BNP Paribas , and used the money to purchase TBW mortgages. The facility was managed by TBW and had no employees of its own.
According to court records, shortly after Ocala Funding was established, Allen learned there were inadequate assets backing its commercial paper, a deficiency referred to internally at TBW as a “hole” in Ocala Funding. Allen admitted that in an effort to cover up the hole and to mislead investors, he told a co-conspirator to produce reports that concealed the hole. He also admitted that he knew that these misleading reports were sent to Ocala Funding investors and other third parties.
Allen also admitted in court that he kept the chairman of TBW informed of the collateral shortfall, and that in the fall of 2008, Allen was told that the hole had been moved from Ocala Funding to Colonial Bank. At the time that TBW ceased operations, the hole was approximately $1.5 billion. According to court documents, as a result of the Ocala Funding fraud scheme, Freddie Mac, Colonial Bank and Ocala Funding investors believed they had an undivided ownership interest in thousands of the same mortgage loans.
Court records state that in March 2009, Allen was directed to approach a private equity investor to secure capital to meet a $300 million private capital requirement the U.S. Department of Treasury set for Colonial Bank to receive $553 million from the Troubled Assets Relief Program (TARP). Although Allen failed to secure the funding from the investor, he admitted in court that the TBW chairman represented to others that the investor was a $50 million participant and that the chairman diverted $5 million from Ocala Funding to an escrow account in the investor’s name. This deception caused Colonial Bank to falsely announce publicly it had met its $300 million capital raise contingency and to send a letter to the FDIC that all investors had met a 10 percent escrow deposit requirement. Colonial Bank never received any TARP funds.
In court today, Allen also admitted to making false statements in a letter he sent to the U.S. Department of Housing and Urban Development, through Ginnie Mae, regarding TBW’s audited financial statements for the fiscal year ending on March 31, 2009. In this letter, Allen omitted that the delay in submitting the financial data was attributed to concerns its independent auditor had raised about the financing relationship between TBW and Colonial Bank. Instead, Allen falsely attributed the delay to a new acquisition and TBW’s switch to a compressed 11-month fiscal year.
To date, five other individuals have pleaded guilty for their roles in this and related fraud schemes.
The case is being prosecuted by Deputy Chief Patrick Stokes and Trial Attorney Robert Zink of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Charles Connolly and Paul Nathanson of the Eastern District of Virginia. This case was investigated by SIGTARP, FBI’s Washington Field Office, FDIC-OIG, HUD-OIG, FHFA-OIG and the IRS Criminal Investigation. The Financial Crimes Enforcement Network (FinCEN) of the Department of the Treasury also provided support in the investigation.
This prosecution was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information about the task force visit: www.stopfraud.gov
Former Northern Virginia Resident Arraigned on Charges of Tax Evasion and Impeding the IRSRead the Press Release
WASHINGTON – Thomas J. Ernst, formerly a resident of McLean and Arlington, Va., was arraigned today in the Eastern District of Virginia. Ernst was indicted March 10, 2011, for one count of corruptly endeavoring to impede the Internal Revenue Service (IRS), three counts of tax evasion for 2004, 2005 and 2006, and two counts of failing to file corporate tax returns in 2004 and 2005, the Justice Department and IRS announced today. Ernst appeared today before the Honorable U.S. District Court Judge Claude M. Hilton.
According to the indictment, Ernst was the president and chief executive officer of Medicure Plus Inc., a health insurance benefits administration company. From 2000 through 2006, Medicure operated as a third party administrator of the Postmasters’ Benefits Plan (PBP), the health benefits carrier for the National League of Postmasters (NLP). Medicure and NLP entered into a 10 year guaranty agreement under which Medicure managed PBP’s operations; NLP paid Medicure $166,000 each month plus a $33,000 administrative fee.
According to the indictment, between 2001 and 2007, Ernst corruptly endeavored to obstruct and impede the due administration of the IRS by causing Medicure to make payments from its corporate bank account for numerous personal expenses, including: a summer rental house; more than $1.5 million in payments to himself, his wife, sister-in-law and children; his son’s Georgetown University college education; and various property purchases and rentals. None of these payments were included on any personal income tax return as income to Ernst. Additionally, Ernst used nominee bank accounts, purchased and leased assets in the names of his children and sister-in-law and created fictitious documents to conceal his income and ownership of assets from the IRS.
Ernst did not file U.S. Individual Income Tax Returns, Forms 1040 with the IRS for 2001 through 2006 and is charged with evading his taxes in 2004, 2005 and 2006. Further, Ernst failed to cause Medicure to ever file a corporate income tax return, Form 1120, and he is charged with failing to file a Medicure corporate income tax return in 2004 and 2005.
An indictment is merely a formal charge by the grand jury. The defendant is presumed innocent unless and until proven guilty in U.S. District Court. If convicted, the defendant faces a maximum potential sentence of 20 years in prison. The trial date has been scheduled for Aug. 2, 2011, before Judge Hilton.
This case was investigated by IRS Criminal Investigation and is being prosecuted by Assistant U.S. Attorney Charles Connolly and the Department of Justice’s Tax Division Trial Attorneys Caryn Finley and Thomas Krepp.
More information about the Justice Department’s Tax Division and its enforcement efforts is available at www.usdoj.gov/tax/.
Antitrust Division Issues 2011 Edition of Its Annual NewsletterRead the Press Release
WASHINGTON – The Department of Justice’s Antitrust Division today issued the 2011 edition of its annual newsletter on its website. The newsletter provides information about the recent activities and accomplishments of the Antitrust Division for the general public as well as the legal and business communities.
The newsletter includes a message from Assistant Attorney General Christine Varney as well as articles about the Antitrust Division’s enforcement actions in the criminal, merger and civil non-merger areas over the past year. The newsletter also highlights the division’s accomplishments: the filing of 60 criminal cases and obtaining fines in excess of $550 million against corporations and individuals in FY 2010, filing its first unilateral conduct case arising solely under Section 2 of the Sherman Act since 1999 and maintaining competition in a variety of areas directly affecting U.S. consumers, including health care and health insurance, air and rail transportation, employment, credit cards, access to cable and Internet programming and steel production.
The newsletter also features articles about the division’s international program, the revised Horizontal Merger Guidelines, the joint DOJ/USDA agriculture workshops, the joint DOJ/FTC/PTO workshop and competition advocacy.
The newsletter can be found at www.justice.gov/atr/public/division-update/2011. Within each article, hyperlinks are provided so that the reader can easily access relevant documents such as press releases, court filings and speeches.
31 March 2011
Two New Orleans Police Officers Sentenced in Post-Katrina Shooting and Burning of Henry GloverRead the Press Release
WASHINGTON – Former New Orleans Police Department (NOPD) Officer David Warren was sentenced today in connection with the post-Katrina shooting death of Henry Glover, and current NOPD Officer Greg McRae was sentenced for the subsequent burning of Glover’s remains and obstruction of justice.
Former NOPD Officer Warren was sentenced to 25 years and nine months in prison for his involvement in the Sept. 2, 2005, shooting death of civilian Henry Glover. As part of the restitution order, Warren will also pay $7,642.32 to Glover’s family for funeral expenses. Warren was found guilty by a federal jury of a civil rights violation, resulting in death, for shooting Glover, and for using a firearm to commit manslaughter.
Current NOPD Officer McRae was sentenced to 17 years and three months in prison, three years of supervised release and restitution in the amount of $6,000 for his involvement in the burning of Mr. Glover’s body. McRae was convicted of two civil rights violations, one count of obstructing justice and one count of using fire during the commission of a felony. One of the civil rights counts charged that McRae willfully used fire to destroy a civilian’s property by burning and destroying a car, and the other civil rights count charged that he willfully deprived Glover’s family members of their right to seek redress in the courts for his death.
Evidence presented at trial established that Warren, while stationed on a second floor lookout, shot Glover, who was a floor below him and running away. Glover’s brother and a friend flagged down a passing motorist, “Good Samaritan” William Tanner, who put the wounded Glover in his car to try to get medical attention for him. However, when the group of men drove up to a makeshift police station seeking help for Glover, police officers surrounded the men at gunpoint, handcuffed them and let Glover die in the back seat of the car. McRae then drove off with Tanner’s car, with Glover’s body inside, and burned both the body and the car with a traffic flare.
“Instead of upholding their oath to protect and serve the people of New Orleans in the days after Hurricane Katrina, these officers abused their power, and violated the law and the public trust,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “Today's sentence brings a measure of justice to the Glover family and to the entire city.”
“Today’s sentences send a powerful message that no one is above the law, and that those who are sworn to protect our citizens are never, under any circumstances, relieved of their sacred responsibilities under our Constitution. We will continue to do everything in our power—and use every law and weapon in our arsenal of justice to make certain that our police never abuse power they wield. Today is an important step forward for the courageous Glover family and the people of New Orleans, and an important move toward the city’s healing and rebuilding,” said Jim Letten, U.S. Attorney for the Eastern District of Louisiana.
David Welker, FBI Special Agent in Charge for Louisiana, said, “Today’s sentences are a result of the continued diligence and commitment of the FBI to aggressively and fairly pursue civil rights violations, with the goal of bringing to justice those who abuse the very citizens they are entrusted to protect and serve.”
This case was investigated by the New Orleans Field Office of the FBI, and was prosecuted by Trial Attorney Jared Fishman of the Justice Department’s Civil Rights Division, and Assistant U.S. Attorneys Tracey Knight and Michael Magner for the Eastern District of Louisiana.
Taiwanese Shipping Company Convicted for Discharging Oily Bilge Waste into the Waters of American SamoaRead the Press Release
WASHINGTON – Koo’s Shipping Company S.A., a Taiwanese corporation, pleaded guilty in federal court to charges of making false statements, knowingly failing to fully and accurately maintain an oil record book as required by international treaty and U.S. law, and for knowingly discharging oily bilge waste into Pago Pago Harbor, American Samoa, without using proper pollution prevention equipment, announced Assistant Attorney General Ignacia S. Moreno and U.S. Attorney for the District of Columbia Ronald C. Machen Jr. The plea took place before the Honorable Gladys Kessler in U.S. District Court for the District of Columbia.
The company was sentenced to pay a $750,000 criminal fine and pay $250,000 towards community service projects in American Samoa, and was placed on probation for three years. The community service payment will be split equally between the National Marine Sanctuary Foundation and the National Fish and Wildlife Foundation for environmental restoration and protection projects in American Samoa.
“We will aggressively prosecute vessel companies who willfully violate the laws enacted to protect our oceans,” said Assistant Attorney General Moreno, head of the Environment and Natural Resources Division for the Department of Justice. “Koo’s is paying a just price for knowingly discharging oily waste into the ecologically sensitive harbor of Pago Pago. This penalty will help restore and protect the environment of American Samoa.”
“This million dollar penalty will deter others from illegally dumping oil into our oceans and harbors, while at the same time providing resources to clean up our environment,” said U.S. Attorney Machen. “The sentence also requires Koo’s to establish a comprehensive program to prevent future environmental violations. We hope that forward-looking companies will establish similar programs to protect our natural resources rather than face the threat of criminal prosecution and hefty fines.”
“I am extremely proud of the combined efforts of the U.S. and American Samoa governments, as well as our industry partners in Pago Pago, that resulted in the first conviction of illegal dumping in American Samoan waters,” said Captain Joanna M. Nunan, Commander of the Coast Guard Sector in Honolulu. “The $1 million sentence, including $250,000 in coral reef restoration projects, sends the strong message that polluting our waters will not be tolerated.”
Koo’s Shipping Company S.A. owned and operated a 4,491 gross ton 396 foot commercial ocean going ship named the M/V Syota Maru that carried frozen fish and fish products primarily in the Pacific Ocean and into American Samoa. On Aug. 17, 2010, the U.S. Coast Guard Marine Safety Detachment in American Samoa conducted an inspection of the vessel in Pago Pago. The Coast Guard learned, from inspecting the engine room and interviewing crewmembers, that the crew had been discharging oily bilge waste directly into the ocean without using the required pollution prevention equipment. The Coast Guard inspection lasted several days, and on Aug. 19, 2010 and Aug. 26, 2010, the Coast Guard witnessed and learned that the crew was dumping oily bilge waste directly into Pago Pago Harbor without using proper pollution prevention equipment.
All discharges of oil or oily bilge waste from a vessel into the sea, even if illegal, are required to be recorded in the vessel’s Oil Record Book. None of these discharges were recorded in the Oil Record Book for the M/V Syota Maru.
“The oceans must be protected from shipping companies that look to cut corners by illegally dumping oily waste,” said Nick Torres, Special Agent in Charge of EPA’s criminal enforcement program in American Samoa. “Laws are enacted to prevent the oceans from being used as dumping grounds. Today’s action shows that shipping companies that violate those laws will be held fully accountable for their crimes. The resolution of this case is good news for the American Samoan people and their environment.”
“Today's sentencing was both a success and benchmark, demonstrating the importance of continued joint efforts by federal law enforcement to enforce violations of U. S. and international maritime laws throughout the vast area of the South Pacific,” said Joshua J. Masterson, Special Agent-in-Charge of Coast Guard Investigative Service-Pacific Region. “Considering the volume of commercial fishing companies operating in and around the various U. S. Pacific Islands, we are likely just scratching the surface.”
The National Marine Sanctuary Foundation will receive $125,000 for the benefit of the Fagatele National Marine Sanctuary in American Samoa. The funds will be used for the abatement, cleanup, and remediation of pollution in the sanctuary; and restoration of injured resources, particularly including coral reefs. The National Fish and Wildlife Foundation will also receive $125,000 for the preservation and restoration of coral reefs in or near American Samoa.
“Where criminal activity does damage to natural resources, it is a matter of good public policy that penalties are returned to those resources to mitigate the damage caused and to further protect them,” said Jason Patlis, President and CEO of the National Marine Sanctuary Foundation.
“The National Fish and Wildlife Foundation is pleased to be a recipient of the community service funds resulting from this prosecution,” said Tom Kelsch, Director of Conservation for the Foundation. “These funds will support vital conservation projects that will benefit coral reefs in and around American Samoa.”
During the period of probation, Koo’s will be required to implement a comprehensive Environmental Compliance Plan (ECP) which will ensure that each of the ships owned or operated by Koo’s complies with all maritime environmental requirements established under applicable international, flag state, and port state laws. The ECP establishes training programs for Koo’s employees and a compliance manager who will be responsible for implementing the training program and making certain that Koo’s complies with various audits and laws governing Koo’s seagoing vessels. An independent monitor will report to the court about Koo’s compliance with its obligations during the period of probation.
This case was investigated by the U.S. Coast Guard and the U.S. Environmental Protection Agency. The case was prosecuted by Frederick W. Yette from the U.S. Attorney's Office for the District of Columbia and by Ken Nelson in the Environmental Crimes Section of the Environment and Natural Resources Division of the Department of Justice.
Justice Department Opens Investigation into the Seattle Police DepartmentRead the Press Release
WASHINGTON – The Justice Department announced today that it has opened a pattern or practice investigation into allegations of use of excessive force and discriminatory policing by members of the Seattle Police Department (SPD), pursuant to 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 seek to determine whether there are systemic violations of the Constitution or federal law by officers of the SPD. During the course of our investigation, the Justice Department will consider all relevant information, particularly the efforts that Seattle has undertaken to ensure compliance with federal law. The Justice Department has taken similar steps in a variety of state and local law enforcement agencies, both large and small, in jurisdictions such as New York, Ohio, New Jersey, Pennsylvania, the District of Columbia and California.
Today’s announcement is separate from any ongoing federal criminal investigation involving the Seattle Police Department.
This matter is being investigated jointly by attorneys from the Civil Rights Division’s Special Litigation Section and the U.S. Attorney’s Office for the Western District of Washington. The Department welcomes any information from the community. If you have any comments or concerns, please feel free to contact us at [email protected] or 855-203-4479.
Former TBW Financial Analyst Pleads Guilty to $1.5 Billion Fraud SchemeRead the Press Release
WASHINGTON – Sean W. Ragland, a former senior financial analyst at Taylor, Bean & Whitaker (TBW), pleaded guilty today to conspiring to commit bank and wire fraud for his role in a scheme that defrauded approximately $1.5 billion from financial investors in TBW’s mortgage lending facility, Ocala Funding.
The guilty plea was announced today by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Neil H. MacBride for the Eastern District of Virginia; Acting Special Inspector General Christy Romero for the Troubled Asset Relief Program (SIGTARP); Assistant Director in Charge James W. McJunkin of the FBI’s Washington Field Office; Michael P. Stephens, Inspector General of the Department of Housing and Urban Development (HUD OIG); Jon T. Rymer, Inspector General of the Federal Deposit Insurance Corporation (FDIC OIG); Steve A. Linick, Inspector General of the Federal Housing Finance Agency (FHFA OIG); and Victor F. O. Song, Chief of the Internal Revenue Service (IRS) Criminal Investigation.
Ragland, 37, of San Antonio, Texas, pleaded guilty before U.S. District Judge Leonie M. Brinkema in the Eastern District of Virginia. Ragland faces a maximum penalty of five years in prison when he is sentenced on June 21, 2011.
According to a statement of facts submitted with his plea agreement, in 2005 TBW established a wholly-owned lending facility called Ocala Funding. Ocala Funding raised money by selling asset-backed commercial paper to financial institutions, including Deutsche Bank and BNP Paribas , and used the money to purchase TBW mortgages. The facility was managed by TBW and had no employees of its own.
Ragland had tracking and reporting responsibilities with respect to Ocala Funding, and today he admitted that from 2006 through August 2009, he and other co-conspirators engaged in a scheme to mislead investors and auditors as to the financial health of the lending facility. According to court records, shortly after Ocala Funding was established, Ragland learned there were inadequate assets backing its commercial paper. Ragland tracked this deficiency, which was referred to internally at TBW as a “hole” in Ocala Funding. He reported the status of the “hole” to senior TBW executives, including its CEO and CFO. Ragland was also aware that TBW co-conspirators were improperly transferring hundreds of millions of dollars from Ocala Funding to TBW accounts. At the time that TBW ceased operations, the hole was approximately $1.5 billion.
Ragland admitted that, at the direction of other co-conspirators, he prepared documents that inaccurately and intentionally inflated figures representing the aggregate value of the loans held in Ocala Funding or under-reported the amount of outstanding commercial paper. He sent this false information to the financial institution investors, other third parties and an outside audit firm.
To date, four other individuals have pleaded guilty to charges for their roles in this and related fraud schemes.
The case is being prosecuted by Deputy Chief Patrick Stokes and Trial Attorney Robert Zink of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Charles Connolly and Paul Nathanson of the Eastern District of Virginia. This case was investigated by SIGTARP, FBI’s Washington Field Office, FDIC OIG, HUD OIG, FHFA OIG and the IRS Criminal Investigation. The Financial Crimes Enforcement Network (FinCEN) of the Department of the Treasury also provided support in the investigation.
This prosecution was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information about the task force visit: www.stopfraud.gov .
Florida Man Indicted for Bankruptcy FraudRead the Press Release
WASHINGTON – A St. Petersburg, Fla., man was arrested today on bankruptcy fraud charges, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Robert E. O'Neill of the Middle District of Florida.
An indictment unsealed today in U.S. District Court for the Middle District of Florida charges Jon Jerald Hammill, 39, with three counts of bankruptcy fraud. If convicted on all counts of the indictment, Hammill faces a maximum penalty of 20 years in prison. The indictment also notifies Hammill that the United States is seeking to forfeit the proceeds of the bankruptcy fraud.
According to the indictment, on or about Feb. 10, 2009, Hammill filed a Chapter 7 bankruptcy petition with the U.S. Bankruptcy Court for the Middle District of Florida. The indictment alleges that throughout the bankruptcy proceeding, Hammill made materially misleading omissions and false statements to conceal funds he received from Botfly LLC and his relationship with Botfly LLC, a Florida corporation that purported to offer investments in the foreign currency markets.
The indictment alleges that Hammill lied under oath in sworn testimony before the bankruptcy trustee, in which he stated that he had disclosed all of his assets but he failed to disclose that he had received more than $100,000 from Botfly prior to the filing of his bankruptcy petition. The indictment also alleges that Hammill made additional materially false statements and omissions in his sworn bankruptcy petition. Hammill allegedly failed to list in his petition his ownership of a Florida shell corporation, Jon J. Hammill P.A., when he was required to do so, and falsely stated that his work for that corporation had ended in 2006. Hammill also failed to disclose his relationship with Botfly. According to the indictment, from February 2008 to April 2010, Hamill and his corporation received approximately $1.5 million from Botfly. These funds were proceeds of investments by Hammill with Botfly and compensation for work which Hammill and his corporation performed on behalf of Botfly.
The president of Botfly, David R. Lewalski, has been charged in a superseding indictment with mail and wire fraud for his participation in a foreign currency investment fraud scheme that he allegedly perpetrated through Botfly.
An indictment is merely a formal charge and the defendant is presumed innocent unless, and until, proven guilty.
This case is being prosecuted by Trial Attorney Glenn Chernigoff of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Mandy Riedel of the Middle District of Florida. The case is being investigated by the U.S. Postal Inspection Service, the Florida Department of Law Enforcement and the Florida Office of Financial Regulation, with assistance from the Florida Office of the Attorney General. The Office of the U.S. Trustee in Tampa, Fla., also provided substantial assistance.
Today’s charges are part of efforts under way by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information about the task force visit: www.stopfraud.gov .
Department of Justice, Federal Trade Commission Seek Public Comment on Proposed Statement of Antitrust Enforcement Regarding Accountable Care OrganizationsRead the Press Release
WASHINGTON – The Department of Justice and the Federal Trade Commission (FTC) today issued a joint statement about how the agencies will enforce U.S. antitrust laws in regard to new Accountable Care Organizations (ACOs) – groups of health care providers that will collaborate under the new Affordable Care Act of 2010 to improve health care quality and reduce costs.
The joint proposed policy statement solicits public comment on the antitrust agencies’ proposed guidance to ensure that newly formed ACOs can innovate to serve Medicare beneficiaries and patients with private health insurance, without raising competitive concerns. The proposed policy statement would create an antitrust “safety zone” for certain ACOs and establish an expedited antitrust review process for others.
“Providing Americans with quality health care at affordable prices has been and will continue to be a priority for this administration, and the intergovernmental effort on providing guidance to ACOs enhances these goals,” said Christine Varney, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “The Antitrust Division supports innovative, collaborative and cost saving efforts – that comply with the antitrust laws – to improve health care and reduce costs to all Americans.”
The department vigorously enforces the antitrust laws in the health care sector. Over the past 20 years, the department has conducted more than 60 substantial investigations into the conduct of health insurance plans, hospitals and physicians. These investigations have resulted in a number of enforcement actions, including successful challenges to health plan and hospital mergers and physician boycotts. These actions have protected consumers from anticompetitive conduct, resulting in lower prices for and higher quality of health care services. The department has also provided the industry with substantial guidance. In 1996, the department and the FTC issued joint Statements of Antitrust Enforcement Policy in Health Care. Also, over the past two decades, the department has issued more than 62 business review letters that responded to inquiries from industry participants about the antitrust issues involved in many different types of practices.
The Affordable Care Act of 2010 encourages health care providers to form integrated organizations to jointly offer services in order to reduce costs and improve the quality of patient care in the United States. The goal of these joint provider organizations – ACOs – is to better coordinate care, leading to efficiencies and cost savings for consumers. Under the act, ACOs will serve fee-for-service Medicare beneficiaries through Medicare’s Shared Savings Program and must sign up with the Department of Health and Human Services’ Centers for Medicare and Medicaid Services (CMS) to participate in the program for at least three years.
The department and the FTC recognize that ACOs may generate opportunities for health care providers to innovate in both the Medicare and commercial markets to achieve the cost savings Congress intended when establishing the Shared Savings Program. At the same time, however, the agencies also understand that collaborations among otherwise independent health care providers – as will occur through the formation of ACOs – may raise competitive concerns. The department and the FTC have developed jointly the proposed antitrust policy statement to coordinate competition analysis with CMS’s review of ACO applications, to ensure the newly formed organizations do not lead to reduced competition and higher prices for consumers.
The joint policy statement is intended to ensure that health care providers have the antitrust guidance they need to form procompetitive ACOs. It describes: the ACOs to which it will apply; when the department and the FTC will apply particular antitrust analysis to those ACOs; an antitrust safety zone for certain ACOs; an expedited CMS-mandated antitrust review process for other ACOs; and options for ACOs to gain additional antitrust clarity if they fall outside the safety zone but below the CMS-mandated antitrust review trigger, including expedited antitrust review.
The department and the FTC have committed to complete the expedited review within 90 days of receiving the required documents and information from the ACO. The department and the FTC will establish a joint ACO Working Group to collaborate and discuss issues arising out of ACO reviews. This process will allow ACOs to rely on the expertise of both agencies and will ensure efficient, cooperative and expeditious reviews.
In addition, the joint policy statement identifies five types of conduct that an ACO can avoid to reduce significantly the likelihood of antitrust concern.
The department and the FTC are accepting public comment on the proposed policy statement through May 31, 2011. The agencies are seeking comments from health care providers, payers, consumers, antitrust practitioners and other stakeholders on issues including:
– Whether and, if so, why the guidance in the proposed policy statement should be changed;
– Whether other data sources exist that ACO applicants could use to determine relevant primary service area (PSA) shares for: physician services rarely used by Medicare beneficiaries (e.g., pediatrics, obstetrics); and inpatient hospital services located in states where all-payer hospital discharge data are unavailable; and
– Whether providing the documents and information required to obtain an expedited antitrust review will present an undue burden on ACO applicants.
Comments can be submitted electronically at www.ftc.gov/os/publiccomments.shtm. The Federal Register notice announcing the proposed policy statement contains information on submitting comments via mail and can be found at www.ftc.gov/opp/aco/. The proposed policy statement is available at www.justice.gov/atr/public/guidelines/269155.pdf.
Department of Justice and Federal Trade Commission Sign Antitrust Cooperation Agreement with ChileRead the Press Release
WASHINGTON – Christine Varney, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division, today signed an antitrust cooperation agreement with the Chilean antitrust agency on behalf of the Department of Justice. The agreement also was signed by Federal Trade Commission Chairman Jon Leibowitz and Felipe Irarrázabal, Chile’s National Economic Prosecutor. The agreement will enable the antitrust agencies in the two countries to improve their law enforcement relationship.
The new agreement contains provisions for antitrust enforcement cooperation and coordination, conflict avoidance and consultations with respect to enforcement actions, and technical cooperation and is subject to effective confidentiality protections.
The U.S. antitrust agencies and Chile’s Office of the National Economic Prosecutor, the agency that enforces Chile’s competition law, have steadily improved their ties, both bilaterally and under the terms of the U.S.-Chile Free Trade Agreement.
“This new agreement is a significant step in developing a close relationship between the antitrust agencies of the United States and Chile. It is an important tool that will be used to protect consumers in both countries,” said Assistant Attorney General Varney. “Together, the provisions in the agreement provide a sound basis for enhanced cooperation on a day-to-day basis, while minimizing possible conflicts between the two nations’ antitrust enforcement activities. We look forward to working more closely with our Chilean colleagues at a time when sound antitrust enforcement is a high priority in both the United States and Chile.”
“Chile has one of the most advanced antitrust systems in Latin America,” said FTC Chairman Jon Leibowitz. “They are natural partners for us, and I’m pleased that we can formalize and strengthen the great relationship we have with them.”
Highlights of the new agreement include:
- Mutual acknowledgment of the importance of antitrust cooperation, including information sharing and possible coordination of enforcement actions when pursuing enforcement activities with regard to related matters;
- Agreement to take each others’ important interests into account in order to minimize possible conflicts arising out of antitrust enforcement actions; and
- Agreement to maintain the confidentiality of any sensitive information provided by the other party.
The agreement signed today does not change existing law in either country. Chile has had a law dedicated to the preservation of competition since 1973. This cooperation agreement is similar in substance to those previously signed by the U.S. antitrust agencies with Brazil, Canada, the European Union (EU), Israel, Japan and Mexico.
Colombian Narcotics Trafficker Pleads Guilty to Conspiracy to Import Hundreds of Kilograms of Cocaine into the United StatesRead the Press Release
WASHINGTON – Colombian drug trafficker Carlos Ojeda-Herrera pleaded guilty today before U.S. District Judge Ellen S. Huvelle in the District of Columbia to conspiring and attempting to transport shipments of 700- 800 kilograms of cocaine from Isla de Margarita, off the coast of Venezuela, to vessels waiting on the high seas to transport the drugs to Florida, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division.
According to court documents, Ojeda-Herrera was unaware that the transportation organization he hired to import the cocaine was actually a Drug Enforcement Administration (DEA) undercover crew representing themselves to be drug traffickers. Co-defendant Julio Ramirez pleaded guilty on March 25, 2011, to conspiracy for his role in the scheme.
Ojeda-Herrera and Ramirez were charged on Aug. 12, 2004, in a superseding indictment with conspiracy to distribute and possess with intent to distribute cocaine and heroin, knowing and intending that the drugs would be imported into the United States. Ojeda-Herrera was also charged with attempted distribution of five kilograms or more of cocaine, knowing and intending that the drugs would be imported into the United States.
According to court documents, between January 2001 and February 2002, confidential sources and undercover DEA agents posed as a boat crew willing to transport loads of cocaine from international waters off the coast of Venezuela into the United States. This undercover DEA crew was hired by the Ojeda-Herrera organization to transport 700-800 kilogram loads of cocaine from Isla de Margarita to the United States. On Feb. 8, 2001, a boat sent by Ojeda-Herrera to deliver approximately 700-800 kilograms of cocaine to the DEA undercover boat encountered a storm at sea and capsized off the coast of Isla de Margarita.
Arrangements for the delivery of cocaine to the undercover DEA crew continued through March 2002. According to court documents, due to losses of cocaine suffered by the organization in Colombia, however, Ojeda-Herrera temporarily suspended attempts to deliver cocaine to the DEA undercover crew. Instead, the organization began transporting small shipments of cocaine and heroin to Puerto Rico in order to earn enough money to pay the organization’s narcotics-related debts.
On May 22, 2002, a member of the Ojeda-Herrera organization was arrested in San Juan, Puerto Rico, after delivering approximately 18 kilograms of heroin to undercover DEA agents. At the direction of Ojeda-Herrera, a boat captain based on Margarita Island had smuggled approximately 40 kilograms of heroin into Puerto Rico concealed inside of fully operating diesel batteries aboard a sailboat.
According to the plea agreement, Ojeda-Herrera is to be sentenced to 17 years in prison to be followed by five years of supervised release. Ramirez and Ojeda-Herrera are subject to a minimum mandatory sentence of 10 years in prison. The guilty pleas were provisionally accepted by the court, subject to the preparation of pre-sentence investigation reports for each defendant.
The sentencing hearing for Ojeda-Herrera is scheduled for June 16, 2011, at 1:45 p.m. Ramirez’s sentencing is scheduled for June 7, 2011, at 9:15 a.m. Both hearings will be held before Judge Huvelle.
The case was prosecuted by Trial Attorneys Mark Maldonado, Tritia L. Yuen and Stephen May of the Criminal Division’s Narcotic and Dangerous Drug Section. The investigation was led by the DEA Bilateral Case Group, the DEA Orlando District Office and the Florida Department of Law Enforcement.
Alleged Aryan Brotherhood Members <br /> Charged for Roles in Jefferson County, Texas, ShootingRead the Press Release
WASHINGTON - Two alleged members and associates of the Aryan Brotherhood of Texas (ABT) were arraigned today on charges related to their alleged roles in the 2009 shooting of a man in Jefferson County, Texas, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney John M. Bales of the Eastern District of Texas.
The indictment, returned by a federal grand jury on Mar. 17, 2011, and unsealed today, charges Joshua Mark Bodine, aka “Desperado,” 31, of Vidor, Texas, and John Oliver Manning, aka “Fish,” 59, of Pasadena, Texas, with violent crimes in aid of racketeering activity. The alleged activities include conspiracy to assault, assault, using and carrying a firearm during a crime of violence, possession of a firearm after a felony conviction, possession of a stolen firearm, possession with intent to distribute a controlled substance, and possession of a firearm in furtherance of a drug trafficking crime. The defendants have been in custody since their arrest in March 2011 on charges contained in a criminal complaint.
According to the indictment, the ABT is a powerful race-based, state-wide organization that operates inside and outside of state and federal prisons throughout Texas and the United States. The ABT was established in the early 1980s within the Texas prison system. It modeled itself after and adopted many of the precepts and writings of the Aryan Brotherhood, a California-based prison gang that was formed in the California prison system during the 1960s. According to the indictment, previously, the ABT was primarily concerned with the protection of white inmates and white supremacy/separatism. Over time, the ABT expanded its focus to create a criminal enterprise that includes illegal activities for profit.
According to the indictment, the ABT enforces its rules and promotes discipline among its members, prospects and associates through murder, attempted murder, conspiracy to murder, assault, robbery and threats against those who violate the rules or pose a threat to the enterprise. Members, and oftentimes associates, are required to follow the orders of higher-ranking members, often referred to as “direct orders.”
The indictment alleges that on Sep. 7, 2009, Manning shot and wounded ABT associate Matthew Fails in Nederland, Texas, on the orders of Bodine. It is alleged that the order was given because of Fails’ outstanding drug debt.
Bodine and Manning appeared before U.S. Magistrate Judge Earl S. Hines today for arraignment. If convicted, they each face up to life in prison.
This case is being prosecuted by the U.S. Attorney’s Office for the Eastern District of Texas and the Criminal Division’s Gang Unit. The case is being investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives.
An indictment is merely an accusation and defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
30 March 2011
U.S. Government Offers up to $5 Million Reward for Information Regarding Shootings of Two Ice AgentsRead the Press Release
WASHINGTON - The Departments of Justice, State and Homeland Security today jointly announced a reward of up to $5 million for information leading to the arrest and/or conviction of individuals allegedly responsible for the murder of U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI) Special Agent Jaime Zapata and the attempted murder of ICE HSI Special Agent Victor Avila.
The FBI, in conjunction with ICE, has established a 24-hour tip line based in the United States to process the information. Individuals in the United States with information are encouraged to call 1-866-859-9778. Individuals in Mexico can provide information by calling +001 800-225-5324. Spanish language speakers will be available using either number. Anyone wishing to email information can do so by visiting: https://tips.fbi.gov . All information is considered confidential.
Also today the Government of Mexico announced a reward of up to 10 million pesos for information leading to the arrest of individuals allegedly responsible for the murder and attempted murder. Individuals can call (55) 53-46-15-44 and (55) 53-46-00-00, extension 4748 in Mexico City. Outside of Mexico City, individuals can call 01-800-831-31-96 to provide information. Information may also be sent to the following email address: [email protected]. More information about the Government of Mexico’s award can be found at www.recompensas.gob.mx.
Zapata and Avila were ambushed in Mexico on Feb. 15, 2011, as they were traveling in their U.S. government-issued vehicle from the state of San Luis Potosi to Mexico City. Mexican authorities have detained several individuals in connection with this incident and the investigation continues at this time.
The U.S. reward is being offered by the U.S. government through the U.S. Department of State’s Narcotics Rewards Program, which was established by Congress in 1986. Additional information on this program can be found at: www.state.gov/p/inl/narc/rewards/index.htm .
Massachusetts Man Indicted on Child Pornography ChargesRead the Press Release
WASHINGTON – Donald F. Slason, 57, of Dedham, Mass., was arrested today on child pornography charges, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney for the District of Massachusetts Carmen M. Ortiz and Bruce M. Foucart, Special Agent in Charge of Homeland Security Investigations (HSI) of the Department of Homeland Security in Boston.
Slason was arrested on an indictment filed under seal in the District of Massachusetts on March 23, 2011, and unsealed today, which charges him with one count of transportation of child pornography and one count of possession of child pornography.
The penalty for transportation of child pornography is a mandatory minimum of five years in prison and a maximum of 20 years in prison. Possession of child pornography carries a maximum of 10 years in prison.
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 against Slason was investigated by HSI and the Dedham Police Department. The case is being 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 details contained in the indictment are allegations. The defendant is presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Former Employee of Charlotte, North Carolina-Based Bank Pleads Guilty for His Role in Falsifying Bank Records Involving Proceeds of Municipal BondsRead the Press Release
WASHINGTON — A former bank employee pleaded guilty today for his participation in a conspiracy related to contracts for the investment of municipal bond proceeds and other municipal finance contracts, the Department of Justice announced.
According to charges filed today in U.S. District Court in New York City, Brian Scott Zwerner, a resident of Atlanta, engaged in a conspiracy to falsify bank records related to the marketing profits for a type of contract, known as an investment agreement, and other municipal finance contracts, including derivative contracts. Public entities throughout the United States, such as state, county and local governments and agencies, invested the proceeds of bonds issued in these contracts. According to the plea agreement, Zwerner has agreed to cooperate with the department’s ongoing investigation.
“Today’s guilty plea demonstrates the Antitrust Division’s commitment to vigorously pursue and prosecute crimes in the financial services industry that harm competition,” said Christine Varney, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.
According to the court document, the Charlotte, N.C.-based bank that employed Zwerner was a provider of investment agreements and other municipal finance contracts to public entities. Public entities seek to invest money from a variety of sources, primarily the proceeds of municipal bonds that they issued, to raise money for, among other things, public projects. Public entities typically hire a broker to conduct a competitive bidding process for the award of the investment agreements. Competitive bidding for these agreements is the subject of regulations issued by the Department of the Treasury and is related to the tax-exempt status of the bonds
The department said in the court document that Zwerner was the manager of the Municipal Derivatives Trading Desk at the bank. According to the court document, Zwerner engaged in the conspiracy from at least as early as January 1999 until approximately May 2002. Among other objectives, Zwerner and co-conspirators falsified bank records related to marketing profits so that the bank could pay kickbacks to brokers, including Rubin/Chambers, Dunhill Insurance Services Inc., also known as CDR Financial Products, a Beverly Hills, Calif.-based financial products and services firm. Specifically, Zwerner understated the marketing profits on trade tickets for certain investment agreements or other municipal finance contracts so that money could be held back and accumulated in an off-the-books account in order to pay the kickbacks. According to the court document, trade tickets are reports that record the essential terms of investment agreements. The department said that the kickbacks were in exchange for brokers, including CDR, manipulating the competitive bidding process so that the bank would be the winning bidder for certain investment agreements and other municipal finance contracts.
The false bank records conspiracy for which Zwerner is charged carries a maximum penalty of five years in prison and a $250,000 fine. The maximum fine for this offense may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
This is the ninth guilty plea to arise from an ongoing investigation into the municipal bonds industry, which is being conducted by the Antitrust Division’s New York and Cleveland Field Offices, the FBI and Internal Revenue Service-Criminal Investigation. The department is coordinating its investigation with the Securities and Exchange Commission, the Office of the Comptroller of the Currency and the Federal Reserve Bank of New York.
Three former employees of CDR have pleaded guilty to bid-rigging and fraud conspiracies in relation to the ongoing investigation. Five other individuals have pleaded guilty to charges related to the ongoing investigation. In October 2009, CDR, two of its employees and one former employee were charged for participating in bid-rigging and fraud conspiracies and related crimes. The CDR trial is scheduled to begin on Jan. 9, 2012. In addition, six other former executives at financial service companies or financial institutions have been indicted as a result of this investigation and are awaiting trial.
Today’s guilty plea is part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit www.StopFraud.gov.
Anyone with information concerning bid rigging and related offenses in any financial markets should contact the Antitrust Division’s New York Field Office at 212-264-0390 or the FBI at 212-384-5000, or visit www.justice.gov/atr/contact/newcase.htm.
Alabama Sisters Indicted for Tax Fraud and Identity TheftRead the Press Release
MONTGOMERY, Ala. – Loretta and Tracey Fergerson were indicted by a federal grand jury in the Middle District of Alabama on a variety of charges stemming from an identity theft and tax fraud conspiracy, the Justice Department and the Internal Revenue Service (IRS) announced today. The sisters were charged in a 22-count indictment that was returned on March 23, 2011, and unsealed Tuesday.
The Fergerson sisters were charged with conspiring to defraud the United States, filing false claims, wire fraud and aggravated identity theft. According to the indictment, Loretta Fergerson operated Fast Tax Cash, a tax return preparation business in Montgomery, Ala., from January 2005 to February 2008. The defendants’ conspiracy spanned over one year and involved using stolen identities to file tax returns claiming fraudulent refunds.
The indictment alleges that Tracey Fergerson unlawfully obtained the names and Social Security numbers of individuals. Loretta Fergerson would then electronically file false tax returns using the names and Social Security numbers Tracey provided. Loretta was then able to apply for and obtain refund anticipation loans from banks based on the false tax returns.
An indictment merely alleges that crimes have been committed, and the defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Loretta and Tracey Fergerson each face a maximum of 129 years in prison.
IRS-Criminal Investigation agents investigated this case, and Justice Department Tax Division Trial Attorneys Charles M. Edgar Jr. and Michael Boteler are prosecuting the case.
More information about the Justice Department’s Tax Division and its enforcement efforts is available at www.usdoj.gov/tax/.